United States v. Miller

953 F.3d 1095

UNITED STATES of America, Plaintiff-Appellee,

v.James Robert MILLER, Defendant-Appellant.

Nos. 17-50338

18-50449

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 10, 2020 Pasadena, California

Filed March 20, 2020

Katherine Kimball Windsor (argued), Law Office of Katherine Kimball Windsor, Pasadena, California, for Defendant-Appellant.

Rebecca Suzanne Kanter (argued), Assistant United States Attorney; Daniel E. Zipp, Special Attorney for the United States; Robert S. Brewer Jr., United States Attorney; William P. Barr, United States Attorney General; United States Attorney’s Office, San Diego, California; for Plaintiff-Appellee.

Before: Paul J. Watford and Mark J. Bennett, Circuit Judges, and Jed S. Rakoff,^* District Judge.

RAKOFF, District Judge:

A jury in the Central District of California convicted defendant-appellant James Miller of five counts of wire fraud and four counts of filing false tax returns, finding that he had embezzled over $300,000 from the company for which he served as managing member and president. Miller now appeals his conviction, as well as the district court’s denial of various pre- and post-trial motions seeking dismissal of the indictment, additional discovery, and other forms of relief.

This appeal presents two main questions. The first is whether the jury charge misstated the law by instructing that wire fraud under 18 U.S.C. § 1343 requires the intent to "deceive or cheat" rather than the intent to "deceive and cheat." We conclude that the charge was erroneous. Several other circuit courts have long held that the crime of wire fraud requires the specific intent to utilize deception to deprive the victim of money or property, i.e., to cheat the victim, and we now align the law of the Ninth Circuit with that of the other circuits and with recent Supreme Court precedent. Nevertheless, we find that the erroneous instruction was harmless in this case.

The second question here presented is whether an Assistant U.S. Attorney (AUSA) from the Central District of California who had a personal and financial interest in the outcome of this case impermissibly tainted the prosecution by involving himself in the early stages of the investigation and then continuing to express interest in the case even after the entire U.S. Attorney’s Office for the Central District of California recused itself from the matter. We are deeply troubled by this Assistant’s disregard of elementary prosecutorial ethics. But we also note that as soon as the Department of Justice became aware of the impropriety, it took every necessary step to cure any resulting taint, including turning over the entire prosecution of the case to disinterested prosecutors from the Southern District of California. We therefore hold that the misconduct of the Central District Assistant does not entitle Miller to any relief.

Because we also find Miller’s remaining arguments to be without merit, we affirm his conviction.

Background

Trial testimony established that, during the relevant time period, defendant-appellant James Miller served as the president and managing member of an online retail platform called MWRC Internet Sales, LLC. Some years earlier, an entrepreneur named Russell Lesser, who was Miller’s long-time friend, had founded MWRC and recruited Miller to work for the company. As he took on more senior roles, Miller’s job responsibilities grew to include management of MWRC’s day-to-day finances, with limited oversight by Russell Lesser.

In 2009, Miller, who was experiencing personal financial difficulties, began writing himself checks from one of MWRC’s bank accounts. He did so without the knowledge or consent of Russell Lesser or anyone else at MWRC. By the end of 2010, he had issued a total of about $130,000 to himself and had paid back roughly $30,000. In March 2011, Miller disclosed to Russell Lesser a hint of what he had done, but falsely told Lesser that he had only written himself checks totaling $30,000. Upon hearing this, Lesser told Miller, "you can’t do that. That is stealing." Miller then expressed remorse and promised to never write himself checks again.

Miller only kept this promise for two months. He then wrote himself another $3,000 check on April 29, 2011, and over the rest of 2011 and 2012, wrote himself around fifty additional checks from MWRC, totaling additional amounts of another $200,000 or so. To disguise his payments, Miller often listed them in MWRC’s ledger as internal transfers between the company’s two bank accounts. Russell Lesser eventually noticed that these ledger entries did not correspond to actual deposits into the purported recipient account. He then obtained bank records and cancelled checks, which led to his discovery of the continuing check-writing fraud. By the time of this discovery, Miller had embezzled about $330,000 from MWRC.¹ Miller had also failed to report any of this money as income on his tax returns.

Based on the foregoing, a grand jury indicted Miller on five counts of wire fraud in violation of 18 U.S.C. § 1343 and four counts of filing false federal tax returns in violation of 26 U.S.C. § 7206(1). Miller pled not guilty on all counts and proceeded to trial in June 2017. His chief defense was that he always intended to (and eventually did) pay back the full amount he had taken from MWRC. He also argued that he always believed the funds to be loans that he was authorized to issue to himself. At the conclusion of trial, however, the jury convicted Miller on all counts.

On September 11, 2017, the trial court sentenced Miller to nine months’ imprisonment, to run concurrently on all counts, two years of supervised release, and a special assessment of $900. Miller is on bail pending disposition of this appeal.

At trial, Miller requested a jury instruction stating that, to be guilty of wire fraud, he must have intended to "deceive and cheat" MWRC. The trial court, however, delivered the Ninth Circuit’s model jury instruction, which states that wire fraud instead requires only the intent to "deceive or cheat" (emphasis supplied) the victim. As his first issue on this appeal, Miller argues that this jury instruction misstated the law.

The facts that give rise to Miller’s second issue on appeal occurred early in the investigation of this case. Indeed, Miller goes so far as to speculate about whether law enforcement would even have investigated him in the first place were it not for the early involvement of Russell Lesser’s son, Gregory ("Greg") Lesser, an AUSA in the U.S. Attorney’s Office for the Central District of California and himself a 1.25% member of MWRC. Upon learning from his father of Miller’s embezzlement, Greg Lesser called a friend at the FBI to report Miller.² This outreach, Miller argues, may well have expedited, or otherwise influenced, the agency’s decision to open an investigation and to begin coordinating with prosecutors in the Central District office. In addition, over the next three weeks, the FBI arranged a meeting at which Russell Lesser, wearing a wire, confronted Miller about his check-writing, leading to some admissions from Miller.³

It was not until approximately three weeks after he had first called his friend in the FBI that Greg Lesser reported his obvious conflict-of-interest in the Miller case to his supervisor in the Central District. At that point the supervisor recused the entire office and turned over the matter to the U.S. Attorney’s Office for the Southern District of California.⁴ However, unbeknownst to the Southern District prosecutors, Greg Lesser continued for a while to maintain a tangential but still inappropriate level of involvement in the case. For example, as detailed below, AUSA Lesser had additional direct and indirect contact with Special Agent Swanson concerning the progress of the case.

The Government disclosed all of this to Miller well in advance of trial, at which point Miller filed a motion for additional discovery into Greg Lesser’s involvement in the case. The district court denied this motion except to order the Government to produce the grand jury testimony from Miller’s indictment proceedings in order to confirm that the grand jury was not presented with testimony that was tainted by Greg Lesser’s involvement. After the Government produced the grand jury transcripts, Miller filed a motion to dismiss the indictment with prejudice on two grounds. First, Miller moved to dismiss the indictment under the Due Process Clause of the Fifth Amendment or, alternatively, under the trial court’s supervisory powers, because of Greg Lesser’s role as an interested prosecutor. See United States v. Restrepo , 930 F.2d 705, 712 (9th Cir. 1991). Second, Miller moved to dismiss the indictment under the Due Process Clause because of allegedly false testimony that was presented to the grand jury. The district court denied both grounds, leading to Miller’s second main issue on this appeal.

Discussion

I. The Jury Instructions

At trial, the Government requested that the court charge the jury that, to be guilty of wire fraud, a defendant must have acted with the intent to "deceive or cheat." As thus stated in the alternative, Miller could theoretically have been convicted of deceiving MWRC (as, for example, through the false ledger entries), even if he had no intent to cheat MWRC, that is to, "deprive [MWRC] of something valuable by the use of deceit or fraud," Merriam-Webster’s Collegiate Dictionary, 10^th ed. (1997). The defense, based on its view that Miller’s alleged belief that his withdrawals were simply "loans" meant that he lacked an intent to cheat, requested an instruction that wire fraud requires the intent to "deceive and cheat." Over the defense’s objection, but in line with existing Ninth Circuit pattern instructions, the district court gave the Government’s proposed instruction, and Miller now appeals his conviction on the ground that this instruction misstated the law.

We review de novo whether a trial court’s...