United States Court of Appeals
For the First Circuit
No. 00-2116
UNITED STATES OF AMERICA,
Appellee,
v.
ALEXANDER BLASTOS,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Steven J. McAuliffe, U.S. District Judge]
Before
Torruella, Circuit Judge,
Campbell and Bownes, Senior Circuit Judges.
Bjorn Lange, Assistant Federal Defender, with whom Federal
Defender Office was on brief, for appellant.
Jean B. Weld, Assistant United States Attorney, with whom
Paul M. Gagnon, United States Attorney, and Michael J. Gunnison,
Assistant United States Attorney, were on brief, for appellee.
July 19, 2001
BOWNES, Senior Circuit Judge. The defendant-appellant,
Alexander Blastos, was convicted by a jury of one count of wire
fraud. He was sentenced to sixty months in prison, three years
of supervised release, and a special assessment of $100.00. On
appeal, the defendant argues that his conviction should be
reversed and he should be awarded a new trial because the jury
instruction was erroneous. He also contends that, if the
conviction is affirmed, the case should be remanded to the
district court for resentencing because the district court erred
in calculating the "loss" under section 2F1.1(b)(M) of the
United States Sentencing Guidelines ("U.S.S.G."). We disagree
on both points and affirm the district court.
I. Background
On January 28, 1999, a grand jury in the District of
New Hampshire returned a one count indictment against the
defendant, charging him with wire fraud in violation of 18
U.S.C. § 1343. The indictment charged the defendant with
devising "a scheme and artifice to defraud, and for obtaining
money and property by means of false and fraudulent pretenses,
representations and promises." The indictment alleged that the
defendant "falsely and fraudulently posed as a man of vast
wealth, and used this and other misrepresentations to attempt to
obtain at auction a yacht known as the 'Argo' or 'Christina'
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from the Government of Greece." The yacht had been owned by
Aristotle Onassis. The indictment also alleged that, as part of
the scheme and artifice, the defendant obtained and attempted to
obtain various other goods and services, including loans, travel
expenses, meals, a Mycenaean dagger blade, and yacht management,
design, and engineering services. The indictment listed ten
interstate and international telefaxes made or caused to be made
by the defendant.
The evidence at trial in fact showed that the defendant
posed as a man of great wealth by falsifying loan agreements,
investment statements and his net worth. When in 1993, the
defendant bid $2.1 million on the yacht, his bid was accepted by
the Greek government. Over the course of the next year, his
charade continued. He used "his" yacht, which in reality he did
not yet own, as collateral for other business ventures and
engaging yacht decorators and designers. The facts make clear
that Blastos was far from the wealthy man he pretended to be;
for the years 1991 through 1995, the defendant reported income
totaling only $2,600. He was the ultimate con man.
Jury trial commenced on April 4, 2000. At the close
of the government's case, the defendant moved, pursuant to Fed.
R. Crim. P. 29, for a directed verdict of acquittal; this motion
was denied. The defendant rested without calling any witnesses.
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He then renewed his Rule 29 motion for a directed verdict of
acquittal; this motion was also denied.
The district court instructed the jury and the
defendant objected to the jury charge, arguing that "materiality
should have been alleged as a separate element of the offense of
wire fraud." He also argued that the district court should have
instructed the jury pursuant to his proposed jury instruction,
which included, inter alia, what the defendant contended was the
"materiality" element of 18 U.S.C. § 1343. The district court
denied the defendant's objection. The jury returned a guilty
verdict. On August 21, 2000, the district court sentenced the
defendant to sixty months' imprisonment, three years of
supervised release, and a special assessment of $100.00. This
appeal followed.
II. Discussion
A. Jury Instruction
The defendant first argues that the district court
erroneously instructed the jury on the element of materiality.
He contends that the district court's instruction failed to
comply with the Supreme Court's decision in Neder v. United
States, 527 U.S. 1, aff'd after remand, 197 F.3d 1122 (11th Cir.
1999), cert. denied, 530 U.S. 1261 (2000), which held, inter
alia, that materiality is an element of wire fraud. The
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government argues that, although the instruction "may not
strictly comply with the holding of Neder . . ., the issue of
'materiality' was squarely placed before the jury in the court's
instructions . . . [and] the jury verdict would have been the
same even if the court had specifically instructed the jury that
'materiality' was an element of 'scheme and artifice to
defraud.'"
In Neder, the Court held that "the omission of an
element is an error that is subject to harmless-error analysis."
527 U.S. at 15. Assuming arguendo the district court omitted a
sufficient materiality instruction, we apply a harmless-error
analysis and ask whether the conviction can stand because the
error was harmless, 1 that is, whether "it appears beyond a
reasonable doubt that the error complained of did not contribute
to the verdict obtained." Neder, 527 U.S. at 15 (citing Chapman
v. California, 386 U.S. 18, 24 (1967)); see also Sustache-
Rivera v. United States, 221 F.3d 8, 18 (1st Cir.), cert.
denied, U.S. , 121 S. Ct. 1364 (2000); United States v.
1 The government admittedly "splits hairs" when discussing
which standard of review we should apply--either "harmless-
error" or "plain error"--depending on whether a proper objection
was made thereby preserving the argument. We need not discuss
the intricacies of this point because we ultimately determine
that the defendant's argument cannot survive even a harmless
error review.
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Escobar-De Jesus, 187 F.3d 148, 162 (1st Cir. 1999), cert.
denied, 528 U.S. 1176 (2000).
The defendant requested that the district court include
the following instruction in its charge to the jury:
The indictment charges the defendant
with Wire Fraud.
In order to sustain this charge, the
government must prove each of the following
elements beyond a reasonable doubt:
First, that there was scheme and
artifice to defraud or to obtain money or
property by false and fraudulent pretenses,
representations or promises, as alleged in
the indictment;
Second, that such pretenses,
representations, or promises were
material[;]
Third, that the defendant knowingly
and willfully participated in the scheme or
artifice to defraud, with knowledge of its
fraudulent nature and with specific intent
to defraud; and
Fourth, that in execution of that
scheme, the defendant used or caused the use
of wire communication in interstate or
foreign commerce as specified in the
indictment.
* * * *
The second element that the government
must prove beyond a reasonable doubt is that
the false and fraudulent representation
[sic] pretenses, representations, and
promises related to a material fact or
matter. A material fact is one which a
reasonable person would consider important
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in determining his or her choice of action
in the transaction in question. The
government does not have to prove that a
victim or victims actually relied on that
representation in making a decision.
The district court instructed the jury on the elements
of the crime of wire fraud as follows:
In order to carry its burden of proof
with regard to the crime of wire fraud, as
charged in the indictment, the government
must prove each of the following essential
elements beyond a reasonable doubt:
First, the existence of a scheme to
defraud or to obtain money or property by
means of false or fraudulent pretenses,
substantially as charged in the indictment.
Second, the defendant's knowing and
willful participation in this scheme with
the intent to defraud.
And third, the use of interstate or
foreign wire communications, on or about the
dates alleged, in furtherance of this
scheme.
* * * *
The term false or fraudulent pretenses
means any false statements or assertions
that concern a material aspect of the matter
in question, that were either known to be
untrue when made or that were made with
reckless indifference to their truth and
that were made with the intent to defraud.
They include actual, direct false statements
as well as half-truths and the knowing
concealment of facts.
A material fact or matter is one that
has a natural tendency to influence or be
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capable of influencing the decision-maker to
whom it was addressed. . . .
The Supreme Court has held that "a false statement is
material if it has a natural tendency to influence, or [is]
capable of influencing, the decision of the decisionmaking body
to which it was addressed." Neder, 527 U.S. at 16 (alteration
in original) (internal quotation marks omitted). After review
of the entire record, we hold that no jury could reasonably find
that the false and fraudulent pretenses, representations or
promises made by the defendant were not material as they had the
natural tendency to influence the decisionmaker.
The record establishes that the defendant was a
convincing liar. The record is replete with deliberate
misrepresentations made by the defendant with the intent to
influence the decisionmaker. Some examples of this are as
follows.
From the time that the defendant's $2.1 million bid for
the yacht was accepted, he constantly assured the Greek
government that he had sufficient funds to take possession of
the yacht, when in fact he did not. To that end, the defendant
directed his assistant, Judith Tonks, to draw up a fictitious
payment bond in the amount of $2,122,449 under the fictitious
name "Trans Global Guarantee Company, Ltd." This fake bond was
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forged with a signature of S. Abraham Goldberg, and was faxed to
the Greek government.
The defendant further directed Tonks to send a letter
to the representative of the Greek government saying: "To
further answer your query in regard to the status of funds, be
assured that the $2,146,000 US dollars for the acquisition of
the boat is currently and has been available." In a letter sent
three months later, the defendant assured the Government of
Greece that five deposits representing payment for the yacht
would be made to the proper account by the end of the week. A
few days later, the defendant directed Tonks to send a telefax
stating that he would forward $500,000 from his personal funds,
but would need to delay payment in full.
The Government of Greece, however, never saw a penny.
The fact that the Greek government did not sell the yacht to the
next highest bidder and allowed the defendant to drag his feet
for nearly seven months, keeping the yacht off the market for
that time, is strong evidence that it relied on the defendant's
statements. Others relied on the defendant's fraudulent
statements and misrepresentations. For example, the yacht
broker testified that she spent six months working on behalf of
the defendant and incurred considerable expense in the process.
She testified that she relied on the defendant's claim that he
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owned the Christina. On this uncontroverted record, no
reasonable jury could find that the defendant was anything but
a liar and a con man, who deliberately made misrepresentations,
with the intent to influence the decisionmaker.
The failure to instruct the jury on "materiality" as
a specific element of wire fraud was therefore harmless error.
Moreover, we note that the district court gave an instruction on
materiality that, although it did not meet the specific
requirements of Neder, accomplished the same purpose. Finding
that the error was harmless, we affirm the defendant's
conviction.
B. Sentencing
Having affirmed the defendant's conviction, we turn now
to his second argument on appeal, which concerns his sentence.
The defendant contends that the district court erred in
calculating the "loss" under U.S.S.G. § 2F1.1(b) (1994) and
urges us to remand the case to the district court for
resentencing. At sentencing, the district court increased the
base offense level by twelve levels after calculating the loss
to be between $1.5 million and $2.5 million. The district court
found a reasonable estimate of the potential or intended loss to
be the face value of the $2.1 million fraudulent bond issued by
the fictitious Trans Global Guarantee Company Ltd. The
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defendant argues that the loss should be measured only by the
actual goods or services rendered to him.
We review the district court's interpretation of the
loss provisions of the Guidelines de novo and review its factual
findings only for clear error. United States v. Carrington, 96
F.3d 1, 6 (1st Cir. 1996). "In fraudulent loan application
cases . . . the loss is the actual loss to the victim . . . .
However, where the intended loss is greater than the actual
loss, the intended loss is to be used." U.S.S.G. § 2F1.1,
application note 7(b). We have held, in United States v.
Haggert, 980 F.2d 8, 12 (1st Cir. 1992), that there are two
types of fraud:
The first type of fraud implicates the "true
con artist," who never intends to perform
the undertaking, such as the terms of the
contract or loan repayments, but who intends
only to pocket the money without rendering
any service in return. The second type of
fraud involves a person who would not have
attained the contract or loan but for the
fraud, but who fully intends to perform. In
the latter case, and only in the latter
case, is the intended loss not to be
considered for sentencing.
Id. at 12-13 (footnote omitted) (citing United States v.
Schneider, 930 F.2d 555, 558 (7th Cir. 1991)). It is clear from
the record that the defendant was the "true con artist," and
therefore that the district court committed no legal error in
sentencing the defendant according to the intended loss.
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We have held that "[i]ntended loss need not be
determined with precision: [t]he court need only make a
reasonable estimate of the loss, given the available
information." United States v. Stein, 233 F.3d 6, 18 (1st
Cir.), cert. denied, U.S. , 121 S. Ct. 1406 (2000)
(internal quotation marks omitted) (second alteration in
original). Based on the evidence, the district court determined
the reasonable estimate of the intended loss to be the face
value of the $2.1 million fraudulent bond issued by the
fictitious Trans Global Guarantee Company. After careful review
of the record, we hold that this does not constitute clear
error. The district court properly calculated the "loss"
provision of the Guidelines and we affirm the defendant's
sentence.
III. Conclusion
For the reasons stated above, we affirm both the
defendant's conviction and his sentence. Affirmed.
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