United States Court of Appeals
For the First Circuit
No. 00-1822
UNITED STATES OF AMERICA,
Appellee,
v.
GEORGE SERAFINO,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge]
Before
Torruella, Circuit Judge,
Cyr, Senior Circuit Judge,
and Lipez, Circuit Judge.
Richard Abbott for appellant.
Kevin O'Regan, Assistant United States Attorney, with whom
James B. Farmer, United States Attorney, was on brief for appellee.
March 7, 2002
CYR, Senior Circuit Judge. Appellant George Serafino
challenges the judgments of conviction and sentence entered
following his jury trial, in the United States District Court for
the District of Massachusetts, for mail fraud, money laundering,
and conspiracy. See 18 U.S.C. §§ 1341, 1346, 1956, 371. We affirm
the district court judgments in all respects.
I
BACKGROUND
While employed by Milton Bradley Company ("MBC"),
Serafino and codefendant Arthur Peckham participated in a kickback
scheme whereby Peckham, MBC's vice president, instructed MBC's
vendors, Frank Gentile, Inc. ("Gentile") and Edaron, Inc.
("Edaron"), to inflate various charges on their invoices to and
lease agreement with MBC, and to divert the surplus funds —
totaling more than $840,000 — either directly to these defendants
or indirectly to two companies owned by Serafino. Neither
defendant disclosed the kickbacks to MBC.1
II
DISCUSSION
A. The Motion to Sever
Serafino first contends that the district court abused
its discretion in denying his motion to sever his trial from
1
Although convicted on the same charges, as well as a tax
evasion charge, see 26 U.S.C. § 7201, Peckham has not appealed.
2
Peckham's. See Fed. R. Crim. P. 14. This contention is predicated
on (i) a statement by Peckham's counsel during opening argument
that Peckham was not directing Serafino in the alleged money-making
enterprise, and (ii) an admission by Peckham that the monies
Gentile ultimately disbursed to Peckham and Serafino were equal in
amount. Serafino insists that these statements were fatally
antagonistic to his anticipated defense: viz., that he was an
unwitting dupe who blindly carried out orders in the fraudulent
scheme devised by Peckham.
We discern no plain abuse of discretion. See United
States v. Sotomayor-Vazquez, 249 F.3d 1, 16-17 (1st Cir. 2001)
(prescribing "plain abuse of discretion" standard of review and
noting "strong preference in the federal system for jointly trying
defendants involved in related crimes, . . . unless 'there is a
serious risk that a joint trial would compromise a specific trial
right of one of the defendants or prevent the jury from making a
reliable judgment about guilt or innocence'") (citation omitted).
Even assuming, arguendo, that Serafino and Peckham presented
somewhat antagonistic defenses, Serafino would have had to
demonstrate that the "defenses [were] so irreconcilable as to
involve fundamental disagreement over core and basic facts," United
States v. Peña-Lora, 225 F.3d 17, 34 (1st Cir. 2000) (citation
omitted; emphasis added), cert. denied, 531 U.S. 1114 (2001), such
that "the jury unjustifiably [would] infer that this conflict alone
3
demonstrate[d] that both [defendants] [were] guilty," United States
v. Talavera, 668 F.2d 625, 630 (1st Cir. 1982) (emphasis added).
A thorough record review has disclosed no such
irreconcilability. Serafino never disputed that the MBC vendors
funneled payments through his companies' accounts, and Peckham's
contention that he was neither the mastermind nor the driving force
behind the scheme did not necessarily require that the jury either
accept or reject the defense that Serafino was an unwitting
participant.
B. The Testimony of Agent Kavrakis
Next, Serafino insists that the district court abused its
discretion by admitting in evidence the trial testimony offered by
IRS Agent Harry Kavrakis. Serafino asserts that the government
failed to provide adequate advance notice of the nature of the
Kavrakis testimony, which focused on the financial benefits
Serafino realized from the kickback scheme and constituted an
improper attempt to establish tax evasion even though the
indictment included no such charge.
Although a tax evasion charge likewise may have turned
upon whether Serafino received unreported income, the government's
proffer relating to Serafino's receipt of these kickbacks
constituted crucial evidence, inter alia, that he knowingly
participated in the mail fraud conspiracy. Thus, unquestionably
the Kavrakis testimony — that Serafino realized financial benefits
4
from the scheme — was independently relevant to the mail fraud,
money laundering, and conspiracy counts as well. See, e.g., United
States v. Isabel, 945 F.2d 1193, 1203 (1st Cir. 1991) (noting that
evidence of receipt of financial benefits may be probative of
defendant's intent to facilitate conspiracy). Finally, the trial
record plainly belies any contention that Serafino did not know the
nature of the Kavrakis testimony sufficiently in advance of trial.2
C. The Expert Witness Instruction
Serafino next contends that it was reversible error to
instruct the jury, sua sponte, that Kavrakis was testifying as an
expert witness for the government. Since no objection was
asserted, either during or following the jury charge, we review
only for plain error. See United States v. Lemmerer, 277 F.3d 579,
591 (1st Cir. 2002) (no "plain error" unless ruling was clearly or
obviously erroneous, affected defendant's substantial rights and
impaired the right to fair trial). We discern no plain error.
First, even though it was not requested by the
government, the expert witness instruction was arguably correct.
That is, presumably Kavrakis was qualified to testify as an
"expert" regarding the amount of Peckham's outstanding tax
liability on the tax evasion count. Indeed, during the trial there
2
Serafino challenges the admission of Exhibit 675 as well,
which summarized the Kavrakis testimony regarding Serafino's
receipt of the kickbacks. As Serafino did not object at trial,
however, and the evidence was highly relevant, we discern no plain
error.
5
were open references to Kavrakis as an "expert," both by the
government ("our expert witness") and by the district court ("The
testimony of the Government's expert was that Mr. Peckham had a
good deal more income than he reported."). Yet the defense
asserted no objection. Although it may well have been more prudent
to instruct the jury, in specific terms, that Kavrakis was to be
considered an expert witness in regard to the tax evasion issue
only, viewed in context the sua sponte charge certainly did not
"blindside" the defense, nor was it obviously erroneous.
Furthermore, the district court's passing reference to
Kavrakis as an "expert" did not, in all probability, substantially
impair Serafino's right to a fair trial, given that (i) by its
express terms the jury charge applied exclusively to Kavrakis'
"opinions," and the jury common-sensically would not have regarded
the Kavrakis testimony — "number-crunching" the figures summarized
in Exhibit 675 — as an expert "opinion," but rather as an objective
rendition of the historical data demonstrating that Serafino had
received proceeds from the fraudulent scheme,3 and (ii) the
district court immediately mitigated whatever special aura the jury
3
The jury instruction stated: "You have heard testimony from
an expert witness, Harry Kavrakis. An expert witness has special
knowledge or experience that allows the witness to give an opinion.
Expert testimony should be considered just like other testimony.
You may adopt it or reject it. In weighing the expert opinion
received in evidence in this case, you should consider the
soundness of his reasons for his opinion, and whether the opinion
is supported by other evidence in the case. Remember that you
alone decide how much weight it should be given."
6
might otherwise have attached to the term "expert," by emphasizing
that "[e]xpert testimony should be considered just like other
testimony." (Emphasis added.)
D. The Selective Prosecution Claim
Serafino next contends that the district court abused its
discretion in rejecting his request for an evidentiary hearing
regarding whether he had been prosecuted vindictively by the
government based on his involvement in the kickback scheme, even
though various other participants were never prosecuted. See
United States v. Graham, 146 F.3d 6, 9 (1st Cir. 1998). Since the
government is presumed to have exercised its prosecutorial
responsibilities in good faith, however, defendants are not
entitled to evidentiary hearings on their selective or vindictive
prosecution claims unless they first identify facts tending to
demonstrate (i) that the government refrained from prosecuting
others who were "similarly situated," and (ii) that the reasons for
any such discrimination were illegitimate. See id. Serafino
managed neither showing.
First, unlike Serafino, who received several thousands of
dollars in kickbacks, the MBC vendors who disbursed the kickbacks
received no proceeds for their personal benefit; second, the MBC
vendors provided their full cooperation to the prosecution. See,
e.g., Bordenkircher v. Hayes, 434 U.S. 357, 361-62 (1978) (noting
that, without more, the government's decision to indict a defendant
7
who rejects a plea agreement normally is not deemed vindictive for
purposes of a selective prosecution claim). Moreover, other MBC
officials, such as its former president, George Ditomassi, were
implicated only by Serafino's uncorroborated allegations of their
complicity in the scheme, including his bald accusation that he
placed some kickback proceeds, in cash, in the trunk of Ditomassi's
automobile, an allegation which the government — quite
understandably — was not able to verify. See, e.g., United States
v. Peterson, 233 F.3d 101, 105 (1st Cir. 2000) (noting propriety of
government's consideration of an important discrepancy in the
respective levels of participation by two individuals in narcotics
distribution scheme for purposes of assessing whether the two were
"similarly situated" for purposes of determining whether to
prosecute). Since Serafino's "selective prosecution" allegations
were not colorable, the district court correctly declined to
conduct an evidentiary hearing.
E. Sufficiency of Evidence: Deprivation
of Property or Honest Services
Serafino further contends that the government adduced
insufficient evidence on the mail fraud charge, in that it failed
to establish either that MBC sustained a loss of "property or other
items of economic value by false pretenses," or that Serafino
engaged in "a scheme to defraud MBC of [its employee's] honest
services by false pretenses." United States v. Martin, 228 F.3d 1,
15-16 (1st Cir. 2000); see 18 U.S.C. § 1346. Serafino argues that
8
(i) he was convicted only on the counts involving kickbacks from
Edaron, not on those involving Gentile; (ii) MBC suffered no
financial harm due to the Edaron kickbacks, since Peckham had no
control over MBC's decision to do business with Edaron, and MBC
presumably received full value from Edaron for those contract
services because Edaron was the low bidder in an "arms length"
transaction; and (iii) the government failed to adduce any evidence
that Edaron's lease to MBC was not for fair market value. Finally,
Serafino argues that MBC was deprived of neither Peckham's nor
Serafino's honest services, since the government failed to prove
that any MBC policy prohibited its employees from retaining
undisclosed kickbacks from MBC vendors. These contentions are
belied by the record as well.4
In the first place, Serafino was not acquitted of all
counts relating to the Gentile kickbacks; the conspiracy charged in
count 1 explicitly encompassed these kickbacks. Second, Peckham
expressly instructed both Gentile and Edaron to inflate their
charges to MBC, on both contracts and leases, and to pass the
resulting windfall along to him and Serafino. The evidence of the
deliberate inflation of these charges, together with the remittance
of the resulting surplus to the codefendants, plainly sufficed to
4
We review all direct and circumstantial evidence, and the
reasonable inferences therefrom, as a whole and in the light most
favorable to the government, abjuring plenary assessments of
witness credibility, to determine whether a rational jury could
have found all elements of the charged offense beyond a reasonable
doubt. See Martin, 228 F.3d at 10.
9
establish the requisite cognizable financial harm to MBC under
section 1346. Cf. United States v. Jain, 93 F.3d 436, 441-42 (8th
Cir. 1996) (vacating mail-fraud verdict against psychiatrist who
received kickbacks from hospital for patient referrals, since all
patients needed hospitalization in any event and apparently
received their money's worth in quality medical care). Finally,
the government called MBC officials who testified — not
surprisingly — that MBC imposed on its employees a duty of loyalty
which would have required Peckham and Serafino to inform MBC that
they were receiving kickbacks from any MBC vendors. It is
undisputed that no such disclosure was ever made by Serafino.5
F. Sufficiency of Evidence; Foreseeability of Use of Mails
Finally, Serafino contends that the government adduced
insufficient evidence that he reasonably could have foreseen use of
the mails in furtherance of the kickback scheme, see United States
v. Royal, 100 F.3d 1019, 1030 (1st Cir. 1996) (noting that the
5
Further, Serafino faults the district court's refusal to
grant his request that the verdict form require the jury to
indicate whether its mail-fraud verdicts were based on a
deprivation of property, a deprivation of honest services, or both.
First, there is no question that the district court, in its jury
instruction, amply differentiated between the two types of
deprivation, so that the jury was well aware of the distinction.
The only question, therefore, is whether a jury in a mail fraud
case should be required to enter a special verdict. There is no
authority whatsoever for such a proposition. See, e.g., Martin,
228 F.3d at 16 (noting that mail fraud conviction may rest on proof
of either form of deprivation); United States v. Ellis, 168 F.3d
558, 562 (1st Cir. 1999) (noting that review of trial court's
refusal to require special verdict form is for "abuse of
discretion" only, since such practice is "generally disfavored" in
criminal cases).
10
defendant need not have used the mails, but must reasonably have
foreseen their use by others to facilitate conspiracy), since
Gentile and Edaron did not mail the kickback checks to Serafino's
two companies. As Serafino failed to preserve this issue in his
motions for judgment of acquittal, we may reverse the judgment of
conviction only if Serafino demonstrates a "clear and gross
injustice." United States v. Van Horn, 277 F.3d 48, 54 (1st Cir.
2002). He has not done so.
The government established, beyond a reasonable doubt,
that MBC mailed its invoices and lease payments to Gentile and
Edaron, and through that eminently foreseeable mechanism delivered
the very monies Edaron and Gentile "kicked back" to the
codefendants. No more evidence was needed. See United States v.
Woodward, 149 F.3d 46, 63 (1st Cir. 1998) (noting that use of mails
may be either central or merely "incidental" to mail or wire fraud
scheme) (emphasis added).6
6
Serafino further contends that the district court erred in
attributing between $200,000 and $350,000 to him for sentencing
purposes. See U.S.S.G. § 2F1.1(b). Given the perfunctory
treatment accorded this issue on appeal, however, we deem it
waived. See United States v. Bongiorno, 106 F.3d 1027, 1034 (1st
Cir. 1997). Nevertheless, we note that the record contains ample
uncontroverted evidence that Gentile and Edaron funneled $560,000
into Serafino's two companies, neither of which had legitimate
business dealings either with Gentile or Edaron. Nonetheless, the
district court generously discounted the amount of loss it
attributed to Serafino. See United States v. Blastos, 258 F.3d 25,
30 (1st Cir. 2001) (§ 2F1.1(b) loss calculation reviewed only for
clear error).
11
As the remaining contentions advanced by appellant are
utterly lacking in merit, no separate discussion is warranted.
Accordingly, the judgments of conviction and sentence are affirmed.
Affirmed.
12