United States Court of Appeals
For the First Circuit
No. 05-1645
UNITED STATES OF AMERICA,
Appellee,
v.
GARY P. DECICCO,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
Before
Torruella and Lynch, Circuit Judges,
and Lasker,* Senior District Judge.
Joseph S. Oteri, with whom Kimberly Homan were on brief, for
appellant.
Robert E. Richardson, Assistant United States Attorney, with
whom Michael J. Sullivan, United States Attorney, were on brief,
for appellee.
March 2, 2006
*
Of the Southern District of New York, sitting by designation.
TORRUELLA, Circuit Judge. On September 27, 2000, a grand
jury sitting in Boston, Massachusetts returned an indictment
charging Gary P. DeCicco ("appellant") with four counts of mail
fraud, in violation of 18 U.S.C. § 1341, in connection with claims
for insurance proceeds submitted in the wake of two 1995 fires
(Counts 1-4), and two counts of use of fire to commit a felony, in
violation of 18 U.S.C. §§ 844(h)(1) & (2) (Counts 5-6). Although
DeCicco was eventually acquitted on the use-of-fire counts, he was
convicted on the four mail fraud counts. He now appeals this
conviction. After careful consideration, we affirm.
I. Background
A.
In August 1989, DeCicco bought a building located at 17
Rear Heard Street in Chelsea, Massachusetts for $60,000. Earlier
that year, before buying the building, he had applied to the City
of Chelsea ("Chelsea") for a permit to use the building as a
warehouse for two moving companies that he owned. The building,
however, was surrounded by residential buildings and had only a
narrow driveway providing access. Chelsea therefore denied the
appellant's application.
DeCicco nonetheless went ahead with the purchase.
Although the building price was only $60,000, he obtained a loan of
$104,000 from Somerset Bank, secured by a mortgage on the property.
Notwithstanding the denial of the occupancy permit, DeCicco
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initially tried to use the building as a warehouse. He was,
however, prevented from doing so by Chelsea. As a result, he ended
up with a significant mortgage on a building he could not use for
the purpose he desired. By August 1991, he was in arrears on the
mortgage, and Somerset Bank informed him that it was intending to
initiate foreclosure proceedings. Moreover, the appellant had two
other obligations to Somerset Bank by this time: a $400,000 loan
used to build a new warehouse in Revere, Massachusetts ("Revere"),
and a short-term, $80,000 commercial loan. The appellant was
falling behind on the Revere loan as well.
In October 1991, DeCicco obtained insurance on the Rear
Heard Street building from the Lincoln Insurance Company
("Lincoln"). However, he misrepresented that the premises were
occupied, and after this fact was discovered upon inspection,
Lincoln, on March 3, 1992, sent a cancellation notice by certified
mail to the appellant. The notice advised the appellant that his
insurance policy would be cancelled effective March 13, 1992 at
12:01 a.m.
Just twenty-nine hours before the insurance was to lapse,
a fire occurred at the Rear Heard Street building. Investigators
determined that the fire was intentionally set using a liquid
accelerant at the base of the support pillars in a manner designed
to bring the building down. The Fire Department responded quickly,
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however, and such little damage occurred that the appellant did not
file a claim.
Following the cancellation of the Lincoln policy, the
Rear Heard Street building went for three years without insurance.
At some point during this period, the appellant retained Richard
Stewart ("Stewart"), an accountant, to help him prepare income tax
returns for the years 1992, 1993, and 1994. In December 1994,
Stewart informed the appellant that, based on the information
available to him and the draft returns he had prepared, the
appellant owed $1,246,298 in federal and state taxes and penalties
for 1992, 1993, and 1994. The draft returns reflected some
deductions for expenses, but they did not reflect deductions for
such business expenses as payroll. Based on Stewart's training and
experience, he estimated that the appellant's tax liability might
have been reduced by as much as ninety percent if the appellant had
documentation for these expenses.
Aside from his significant personal income tax liability,
DeCicco also continued to have other financial issues during this
period. He owed a total of $65,673.56 to Revere in property taxes.
He was also in significant arrears on property taxes for the Rear
Heard Street building in Chelsea. By July 1995, the amount he owed
to Chelsea had ballooned to approximately $12,000. Finally, he
still owed almost $95,000 to Somerset Bank in connection with the
loan used to purchase the Rear Heard Street building, which was
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essentially vacant, and which he was expressly forbidden to use in
connection with his moving companies.
In May 1995, facing all of these financial pressures,
DeCicco once again attempted to obtain insurance on the Rear Heard
Street building. On May 17, 1995, the Scottsdale Insurance Company
("Scottsdale") issued the appellant an insurance policy providing
coverage of up to $125,000 for the building.
Less than two months later, on July 9, 1995, the building
was intentionally set on fire for a second time, with at least four
separate fires started on the second floor of the warehouse. The
Fire Department again responded quickly, and the fires were
extinguished. However, twelve days later, on July 21, 1995, a
third fire was intentionally set in the building in the early
morning hours. This was a multiple-alarm fire, requiring Chelsea
to call for aid from Revere, Everett, and Boston to fight the fire.
It took approximately four hours to extinguish the blaze. In the
end, the building was completely destroyed. The fire also damaged
a neighboring garage; melted the siding on a nearby building; and
destroyed the kitchen, bathroom, and pantry on the third floor of
another building.
Given the extensive damage, Chelsea ordered the appellant
to demolish what was left of the building. The appellant asked
Kevin Mahoney ("Mahoney") to perform the work. Mahoney discussed
the matter with his cousin, Randy Adamson, and then agreed to
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demolish the building for $13,800, a price that the appellant
accepted. Mahoney and Adamson, using helpers and equipment,
demolished the building and removed the rubble in approximately six
days. The appellant paid Mahoney with an initial check of $4,000
and then later paid the remaining $9,800.
DeCicco then sought the assistance of a public claims
adjustor, Terence Lynn ("Lynn"), to assist in filing his claim with
Scottsdale, to recover pursuant to the insurance policy for the
destruction of the building. However, almost immediately a number
of points of contention arose between the appellant and Scottsdale.
In early September 1995, in a communication between Lynn and
Scottsdale regarding the appellant's claim, an issue arose
regarding whether the building was vacant at the time of the fire.
This was important, because according to the terms of the
Scottsdale policy, recovery for a fire loss could be reduced by
fifteen percent if the building was vacant when the fire occurred.
On September 19, 1995, as this issue regarding vacancy was pending,
the appellant's insurance broker, Justin Kaan, faxed to Lynn a
document signed by the appellant and purporting to set forth
certain items that were in the warehouse at the time of the fire,
including dollies, a piano, a desk, chairs, and a couch.
Scottsdale's fire investigator, however, saw no evidence of dollies
or a piano when he examined the remains of the building after the
fire.
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There were other controversies as well. On September 20,
1995, Lynn sent a letter to Scottsdale's representative, John
Bottini ("Bottini"). Lynn wrote that "I have enclosed a copy of
the wrecking bill in the amount of $23,681, which was performed as
a result of an emergency raze or repair order issued by the
municipality shortly after the occurrence of the loss." The
enclosed demolition bill purported to bear the signature of Arthur
Adamson. However, according to Mahoney, who actually did the
demolition work with Randy Adamson, DeCicco only paid $13,800, the
agreed-upon price for the work. Furthermore, both Randy Adamson
and his mother stated that the signature on the demolition bill
submitted to Bottini was not that of Arthur Adamson (who died in
1997), nor was the bill on his letterhead.
On October 17, 1995, Lynn mailed to Bottini another
letter in which he again mentioned the $23,681 demolition bill.
Included with this letter was the partial sworn statement in proof
of loss referenced in Count 1 of the indictment and a request for
an advance payment of $25,000. In an attempt to get Scottsdale to
issue this advance payment, Lynn's letter stated, among other
things: "We both know that Massachusetts is a so-called broad
evidence rule state. The disagreements as to value and loss are
still subject to indemnification of the insured whose indebtedness
to the mortgagee as of this date of loss was $97,016.29 and who has
incurred a wrecking bill of $23,681." Scottsdale thereafter
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forwarded Lynn a $25,000 check -- the Count 2 mailing -- which Lynn
sent to Somerset Bank, which was named as a loss payee because of
its mortgage on the property.
On January 2, 1996, Lynn sent a letter to Bottini
enclosing a proposed sworn statement in proof of loss seeking to
achieve a final settlement of the losses and again noting, among
other things, that "the incurred cost of wrecking the structure was
$23,681 . . . ." Lynn also claimed in this letter that the
appellant had made extensive renovations to the building, including
installation of a hot air heating system, an electrical system, a
two-piece bath, a new roof, skylights, and a $10,000 power lift.
However, the appellant had told Bottini shortly after the fire that
the warehouse had had neither heat nor electricity. Furthermore,
Scottsdale's fire investigator saw no evidence of a power lift and
noted that neither the heating system nor the electrical system had
been operational at the time of the fire. Bottini was never
provided with any documentation to support DeCicco's claimed
improvements. He rejected the proposed proof of loss.
Bottini and Lynn eventually negotiated a settlement, and
on February 7, 1996, Lynn sent Bottini a letter -- the Count 3
mailing -- containing a sworn proof of loss reflecting the
settlement figures of $95,283 for the building and $23,681 for the
demolition, for a total of $118,964. Bottini states that had he
known that the actual cost of the demolition was less than $23,681,
-8-
he would not have agreed to the final settlement amount, and had
Scottsdale been aware that the actual amount incurred was less, it
would not have paid that amount. Bottini, however, acknowledged
that $23,681 was a fair figure for the demolition, given the
building's size.
On February 27, 1996, Scottsdale sent a check to Lynn in
the amount of $91,964 -- the Count 4 mailing -- the settlement
amount minus two $1,000 deductibles and the $25,000 advance
payment. That check listed as payees DeCicco, Lynn, Somerset Bank,
and Chelsea.1 DeCicco took the check to a bank and deposited it.
Although it appeared that the check had been endorsed by each of
the payees, the endorsements of both Joseph Bianco on behalf of
Somerset Bank and Alicia Silverberg on behalf of Chelsea were
forged; indeed, no one named Alicia Silverberg had ever worked for
the Chelsea City Treasurer's Office. Somerset Bank did ultimately
receive insurance proceeds in the form of a Bank of Boston check
from the appellant in the amount of $92,500, which satisfied the
mortgage on the Rear Heard Street building in full. Bianco
understood that this payment represented the Scottsdale insurance
proceeds. Chelsea, however, never received payment for the real
estate taxes.
1
At the time of the fire, Chelsea was owed between $12,000 and
$16,000 in real estate taxes. It had priority of payment from the
insurance proceeds.
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B.
On September 27, 2000, the grand jury sitting in Boston
returned its indictment, charging the appellant with four counts of
mail fraud, and two counts of use of fire to commit a felony. With
respect to the four mail fraud counts, the indictment alleged in
one paragraph (paragraph 5) that DeCicco caused the destruction of
the warehouse by fire. It alleged in a separate paragraph
(paragraph 4) that "following the damage by fire . . . [DeCicco]
would and did cause the submission . . . of false and fraudulent
claims for building loss insurance proceeds." The language of
paragraph 4 does not make the alleged falsity of DeCicco's claims
conditional upon any other acts on his part, nor does it specify
that the claims were false for a certain reason. Paragraph 4 is
therefore broad enough to support not just the theory that
DeCicco's claims were fraudulent because he caused the fire, but
also the theory that his claims were fraudulent for independent
reasons, regardless of how the fire may have started. The other
two counts, regarding use of fire to commit a felony, charged the
appellant with violations of 18 U.S.C. §§ 844(h)(1) & (2) based on
the fires that occurred at the Rear Heard Street building on
July 9, 1995 and July 21, 1995.
On April 14, 2003, prior to trial, the district court
granted the appellant's motion to exclude evidence, pursuant to
Fed. R. Evid. 403 and 404(b), regarding (1) the March 1992 fire
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that occurred at the same property involved in the indicted counts,
and (2) testimony of Stewart, DeCicco's accountant, regarding
DeCicco's income tax liabilities. The government appealed from
this ruling, and this Court reversed the district court's exclusion
of the evidence. See United States v. DeCicco, 370 F.3d 206 (1st
Cir. 2004) ("DeCicco I").
The case proceeded to trial on November 8, 2004. One of
the government's key witnesses was the accountant Stewart, who
testified not only about the amount of DeCicco's tax liability --
the issue before this Court on the prior appeal -- but also about
the fact that Stewart had sought additional documentation from
DeCicco to support claimed deductions which would have reduced
DeCicco's tax liability. DeCicco objected to this additional
testimony by Stewart. The district court, however, ruled that the
testimony was admissible.
At the conclusion of the government's evidence, DeCicco
made a motion, pursuant to Fed. R. Crim. P. 29, that there was
insufficient evidence for a reasonable jury to find him guilty
beyond a reasonable doubt, particularly as to the use-of-fire
counts. The district court granted the appellant's motion for a
required finding of not guilty as to one of the counts charging the
appellant with use of fire to commit a felony but denied the motion
as to the mail fraud counts and the other count charging use of
fire to commit a felony.
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When the appellant put on his case, he called several
witnesses, including Terence Lynn, the public claims adjustor, and
Lawrence Maddeford, who lived next to the Rear Heard Street
building. Maddeford observed that kids would hang out at the
building all the time, breaking through the boarded-up windows to
gain access. Despite Maddeford registering numerous complaints
with the police, the building essentially became a clubhouse for
the kids for several years. After the fire destroyed the building,
that was the end of the clubhouse.
At the conclusion of DeCicco's case, he renewed his Rule
29 motion. The district court entertained argument on the issue
again, noting that although it had denied the motion with respect
to Count Six (the remaining use-of-fire count), it would "like the
government's argument, in view of the fact there appears to be a
witness [Maddeford] -- seems to me a very credible witness -- who
raised a great doubt as to whether or not these what you call
vagrants or kids constituted a nuisance did, in fact, cause the
fire." After argument, the district court granted the appellant's
motion for a required finding of not guilty as to the other count
charging use of fire to commit a felony. The court also issued an
order to the parties that they were not to argue to the jury during
closing arguments that the appellant was, or was not, responsible
for the fires.
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On November 17, 2004, the jury found the appellant guilty
on all four remaining mail fraud counts. The district court
sentenced DeCicco to two years of probation, a $7,500 fine, and
restitution of $9,881. It is this conviction that he appeals here.
II. Constructive amendment and material variance claims
DeCicco's first claim is that there was a constructive
amendment of his indictment, or alternatively, that there was a
material variance between the indictment and proof that affected
his substantial rights. In United States v. Fisher, 3 F.3d 456
(1st Cir. 1993), we described the difference between a
"constructive amendment" and a "material variance":
A constructive amendment occurs when the
charging terms of the indictment are altered,
either literally or in effect, by prosecution
or court after the grand jury has last passed
upon them. A variance occurs when the
charging terms remain unchanged but when the
facts proved at trial are different from those
alleged in the indictment. A constructive
amendment is considered prejudicial per se and
grounds for reversal of a conviction.
Variance is grounds for reversal only if it
affected the defendant's "substantial rights"
-- i.e., the rights to have sufficient
knowledge of the charge against him in order
to prepare an effective defense and avoid
surprise at trial, and to prevent a second
prosecution for the same offense.
Id. at 462-63 (internal quotation marks and citations omitted); see
also United States v. Arcadipane, 41 F.3d 1, 6 (1st Cir. 1994)
(variance requires reversal of a conviction "if it is both material
and prejudicial").
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A. Standard of review
In assessing DeCicco's "constructive amendment" and
"material variance" claims, we must first determine the appropriate
standard of review. The appellant claims that because these issues
were preserved through his objections at trial, de novo review is
appropriate. The government argues in opposition that the
appellant made no such objections; as a result, we should review
for "plain error." See United States v. Olano, 507 U.S. 725, 731
(1993).2
In the district court, DeCicco twice moved for judgments
of acquittal, arguing that there was insufficient evidence that he
was responsible for the fires to permit the use-of-fire counts to
go to the jury and that "the other counts are conditioned upon a
finding of guilt on Counts 5 and 6 [the use-of-fire counts] in
terms of using the fire to actually commit the . . . mail fraud
counts . . . ." At two different points -- both after the
conclusion of the government's case and after the conclusion of the
appellant's case -- the district court made apparent its
disagreement with such a proposition, based on its assessment that
DeCicco could be guilty of mail fraud, even if he were not
responsible for the fires, if he simply took advantage of the fires
by submitting an inflated bill for the demolition costs.
2
The appellant does concede that if de novo review does not
apply, "plain error" is the proper standard of review.
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Nevertheless, DeCicco argues here that these motions sufficed to
preserve his objection that the district court would be
constructively amending the indictment if it allowed him to be
tried for a scheme to defraud other than the one charged in the
indictment, namely, a scheme to cause the destruction of the Rear
Heard Street building by fire in order to fraudulently claim
insurance proceeds for the loss of the building. He also states
that these motions were sufficient to preserve his objection that
the district court was effecting a material variance between
indictment and proof that affected his substantial rights.
We fail to see, however, how the motions cited by DeCicco
can be deemed "constructive amendment" or "material variance"
objections. Despite his attempt to spin them that way, the
arguments he made in support of his motions were merely an
articulation of his view that no charges would survive if the
district court granted the motions, particularly with regard to the
use-of-fire counts. Moreover, after the district court clearly
stated its belief -- twice -- that the indictment comprehended the
theory that the appellant had taken advantage of the fires by
submitting false insurance claims, the appellant interposed no
objection or argument that this would constitute a "constructive
amendment" of the indictment or a "material variance" between
indictment and proof. Under Fed. R. Crim. P. 51(b), a party may
preserve a claim of error by informing the court -- when the court
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ruling or order is made or sought -- of the party's objection to
the court's action and the grounds for that objection. Here,
however, the appellant took no such action.3
In light of these facts, we believe that DeCicco did not
preserve his objections and that the "plain error" test should
apply in this instance. Under this standard, there must have been
an error, the error must have been "plain," and the error must have
affected the substantial rights of the appellant. See Olano, 507
U.S. at 732. If all three elements are satisfied, we have the
authority to order correction of the error, but we are not required
to do so. Id. at 735. We exercise this discretion only where the
plain error "seriously affect[s] the fairness, integrity or public
reputation of judicial proceedings." Id. at 736 (internal citation
and quotation marks omitted).
B. Constructive amendment
The appellant makes two separate "constructive amendment"
claims. First, he reads the indictment to include one theory and
one theory only: that he had devised a scheme to submit insurance
3
In his reply brief, the appellant admits as much. He concedes
that his trial counsel did not use the term "constructive
amendment." He also notes that when he responded "Okay" after the
district court had handed down its ruling that there could still be
a mail fraud even absent the use-of-fire counts, he was simply
acknowledging the court's position, not acquiescing in its
correctness. This may be true, but however he characterizes his
response, it was not sufficient to preserve his claim of error
under the standard in Fed. R. Crim. P. 51(b). In the end, as we
shall discuss, even had counsel preserved the objection, there was
no error.
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claims to Scottsdale which were false and fraudulent because he
caused the fires (i.e., as the one who started the fires, he was
not entitled to any recovery). However, he notes that after the
district court ruled that the government had presented insufficient
evidence that DeCicco was responsible for the fires, the government
shifted its theory in its closing arguments to discuss how the
appellant had devised a scheme to submit insurance claims to
Scottsdale which were false and fraudulent for reasons entirely
independent of whether he caused the fires. When the government
made this shift, he argues, it impermissibly broadened the possible
bases for conviction beyond those set forth in the indictment
returned by the grand jury. This shift in theory, from one in
which DeCicco's responsibility for the fires was an essential
component of the fraudulent scheme to one in which it was
unnecessary, constituted a constructive amendment of the indictment
in violation of the Fifth Amendment Grand Jury clause. This shift
broadened the scheme charged in the indictment because it permitted
his conviction to rest on claims for insurance proceeds which were
fraudulent for any reason, not just because DeCicco was responsible
for the fires.
The appellant, however, misreads the indictment. He is
incorrect in maintaining that the indictment did not encompass
claims for insurance proceeds that were fraudulent for reasons
other than that he had caused the fires. The indictment alleged,
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in two separate and distinct paragraphs, two separate and distinct
ways in which the appellant perpetrated mail fraud: (1) by causing
the submission to Scottsdale of false and fraudulent claims for
building loss insurance proceeds, and (2) by actually causing the
damage to and destruction of the Rear Heard Street building by
fire. In other words, the indictment contained two completely
separate theories. In the first theory, DeCicco committed mail
fraud because he submitted false and fraudulent claims for
insurance proceeds after the fire, however it may have started. In
the second theory, the appellant committed mail fraud for a
different reason. The claims that he submitted were false and
fraudulent because he caused the fire (and therefore was not
entitled to any recovery).
Accordingly, the mail fraud counts of the indictment were
not dependent on the theory that the appellant had caused the
fires. Instead, they were so fashioned as to comprehend that one
could take advantage of a fire and commit mail fraud even without
having caused the fire. In other words, the appellant's
misrepresentations -- for example, in the fraudulent demolition
bill or in the phony list of property in the warehouse at the time
of the fire or in the letter sent by Lynn to Bottini listing
improvements made to the property by DeCicco -- could be used to
show he committed mail fraud, regardless of whether he started the
fires. As such, when the government made the shift complained of
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by the appellant, the government was not exceeding the scope of the
indictment but was merely operating with its confines.
Both parties point to the Supreme Court's decision in
United States v. Miller, 471 U.S. 130 (1985), to support their
respective positions. We think Miller clearly shows that there was
no "constructive amendment" in this case. In Miller, the defendant
was convicted of two counts of mail fraud, in violation of 18
U.S.C. § 1341. The indictment in the case alleged a scheme to
defraud with two distinct components; specifically, the indictment
alleged both that the defendant had defrauded his insurer by
consenting to a burglary in advance and by then lying to the
insurer regarding the amount of copper wire which was stolen during
that burglary. The trial evidence, however, went only to the
allegation that the defendant had lied regarding his copper-wire
claim. The government moved to strike the portion of the
indictment that alleged the defendant's pre-knowledge of the
burglary, but, when the defendant opposed that motion, the entire
indictment went to the jury. The defendant was convicted, and on
appeal, complained that both prongs of his indictment were not
satisfied.
The Supreme Court affirmed Miller's conviction, finding
that the pre-knowledge of the burglary in Miller's indictment
constituted a segregable component of the charged scheme to
defraud, and that the evidence presented regarding the inflated
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copper-wire claim was sufficient to support a conviction. The
Court noted that nothing new was added to the grand jury's
indictment and that "Miller was tried on an indictment that clearly
set out the offense for which he was ultimately convicted."
Miller, 471 U.S. at 140.
In the present case, the indictment similarly contains
two distinct and segregable components. As we have demonstrated
above, and contrary to the appellant's assertion that the
indictment in this case "did not specify any separable,
independently fraudulent scheme on which conviction based on a
narrower scheme than that charged in the indictment might validly
rest," the indictment at issue here alleged two separate and
distinct ways in which the appellant perpetrated mail fraud,
neither of which was dependent on the other. And just as in
Miller, where the removal of the allegation of complicity in the
burglary resulted in a permissible narrowing of the indictment,
leaving intact the theory that the defendant had submitted inflated
insurance claims, so too could the deletion of the allegation of
complicity in the fires here result in a permissible narrowing of
the indictment, leaving intact the separate theory that the
appellant had submitted claims that were false and fraudulent for
reasons unrelated to whether he had started the fires.
DeCicco's second "constructive amendment" claim is as
follows: The indictment charged him with submitting false and
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fraudulent claims for building loss insurance proceeds, but the
centerpiece of the government's argument to the jury urging it to
convict DeCicco of mail fraud was not a false and fraudulent claim
for building loss insurance proceeds at all -- it was a claim for
reimbursement for demolition expenses which the government
contended was falsely inflated. DeCicco supports his argument by
pointing to how the Scottsdale insurance settlement had two
independent components: one amount for the loss of the building,
and another amount for the demolition costs. The two were
completely separate. He similarly notes how the Scottsdale policy
expressly differentiates between building loss and debris removal.
In his eyes, the government's reliance on the demolition bill
created the strong possibility that he was convicted of an offense
other than that charged by the grand jury. This, therefore,
constituted a constructive amendment of the indictment.
We, however, do not find this argument convincing. The
indictment is not tied to any particular provision of the
settlement agreement or the Scottsdale policy. As a result, we
believe that the grand jury, when issuing its indictment, was
speaking generically about "building loss" and was not using the
specific definition of that phrase as provided for in the
settlement agreement or the Scottsdale policy. We also think it
inconceivable that the grand jury in this instance would issue an
indictment limited only to "building loss" proceeds, as that term
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was used in the settlement agreement or the Scottsdale policy, when
there was ample evidence that the appellant had also submitted
false and fraudulent claims relating to "demolition" or "debris
removal" expenses, as those terms were used in the settlement
agreement and the Scottsdale policy.
We find, therefore, that there was no "constructive
amendment" of the indictment in this instance. Since there was no
error, appellant cannot possibly satisfy the "plain error"
standard.
C. Material variance
Even if there was no constructive amendment, the
appellant argues that there was, at a minimum, a material variance
between indictment and proof. In this iteration of his argument,
appellant concedes that the charging terms of the indictment are
not in dispute. However, he claims that the facts proved at trial
were different from those alleged in the indictment. In his view,
the indictment alleged facts relating to one theory -- namely, that
his insurance claims were false and fraudulent because he had
caused the fires to occur. The facts presented at trial, however,
related to another theory -- that his insurance claims were false
and fraudulent because he had submitted false documentation in
support of his claims. This was a variance, and it was one that
affected his "substantial rights" in two ways: 1) he had
insufficient notice to be able to prepare an effective defense to
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the new theory which the government argued to the jury; and 2) he
was prejudiced by the continuing use of evidence which had been
admitted solely because it was relevant to the use-of-fire counts.4
This claim, however, fails at its foundation. Once
again, the appellant misconstrues the indictment. As we related
above, the indictment clearly comprehended the theory that
DeCicco's insurance claims were false and fraudulent for reasons
unrelated to whether he had caused the fires. In particular, they
were false and fraudulent because he had submitted false
documentation in support of his claims. The sworn statements in
proof of loss and the insurance settlement checks discussed in the
indictment clearly related to this theory. Moreover, the facts
that were presented at trial related to this theory. For example,
facts were presented that he had provided a false demolition bill,
that he had provided a phony list of property in the warehouse at
the time of the fire, and that he had falsely listed improvements
made to the property in the letter sent to Bottini. These
falsities all led to the fraudulent sworn statements in proof of
4
As the government correctly points out, this second argument is
not an argument that the appellant purportedly was prejudiced by a
variance, but rather an argument that he was prejudiced by the
admission of certain evidence. However, prejudice resulting from
the admission of certain evidence is not what was meant by
compromising "substantial rights" in the "material variance"
context. See United States v. Tormos-Vega, 959 F.2d 1103, 1115
(1st Cir. 1992) ("Substantial rights" refers to the rights of a
defendant to "have sufficient knowledge of the charge against him
in order to prepare an effective defense and avoid surprise at
trial, and to prevent a second prosecution for the same offense.").
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loss referenced in the indictment and were what prompted the
insurance settlement checks sent by Scottsdale that were also
referenced in the indictment. Thus, the facts proved at trial were
not different from those alleged in the indictment, and there was
no variance. Since there was no variance, we do not reach the
question of whether such an alleged variance was material or
whether the appellant's substantial rights were affected.
III. Potential violation of the district court's order
The appellant next argues that the government committed
reversible misconduct in its closing arguments to the jury. Before
the closing arguments commenced, the district court instructed the
parties that they were not to argue to the jury that DeCicco was,
or was not, responsible for the fires. The appellant here argues
that the government violated this order when it explicitly argued
to the jury that DeCicco had a motive to want the building gone.
Such an argument, contends the appellant, the jury could only have
interpreted as suggesting DeCicco's responsibility for the fires.
Appellant, in particular, points to the following statements by the
government during closing arguments:
Now finally, there was this argument that the
defendant got nothing out of this. I suggest
to you, just use your common sense. You've
got a building that's useless. You've got a
building that people are chasing you after.
You've got a building where your tax
liabilities for the property are ballooning as
time goes on. And you owe the bank a lot of
money. . . .
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This defendant had every incentive to want
that building gone, to be rid of that
building. And by getting [Scottsdale] to get
him off the hook and basically pay the entire
mortgage, everything that was due and owing to
the bank on that, as well as everything he had
to pay to Kevin Mahoney and Randy Adamson to
take the building down, you can't say that the
defendant got nothing. He got the entire
benefit of that. He got completely free and
clear of that horrible investment that he made
for whatever reason back in 1989.
Trial Tr. 5-93-94 (emphasis added). This argument, the appellant
argues, was highly prejudicial and warrants reversal of his
conviction.
On this issue, the appropriate standard of review is
clear. Because DeCicco did not object to the government's closing
arguments, we review for plain error. See Olano, 507 U.S. at 732.
After reviewing the record, we do not believe that the
government violated the district court's order when it stated that
the appellant "had every incentive to want that building gone, to
be rid of that building." For several reasons, we think that in
making such a statement, the government was addressing the
appellant's desire to have the building gone in an economic sense
(as in "gone from his portfolio"). We also think this is how a
jury would have understood such a statement.
First, and most importantly, we look at the context in
which these words were uttered. At the time the government made
the statement at issue here, it was discussing the nature of
appellant's investments, tax liabilities, and mortgages. The
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government was not discussing any allegations that the appellant
was responsible for the fires. The context of the government's
statement leads us to believe that the government desired only to
discuss how the appellant sought to maximize his recovery from
Scottsdale and rid himself entirely of a horrible investment
through the submission of false claims. See Whitman v. Am.
Trucking Ass'ns, 531 U.S. 457, 466 (2001) ("Words that can have
more than one meaning are given content, however, by their
surroundings."); California v. Brown, 479 U.S. 538, 543 (1987)
(discussing the relevance of the noscitur a sociis canon -- which
literally means "it is known from its associates" and instructs
that "the meaning of an unclear word or phrase should be determined
by the words immediately surrounding it" -- in assessing the
validity of a jury instruction); Neal v. Clark, 95 U.S. 704, 708-09
(1878) ("copulatio verborum indicat acceptationem in eodem sensu --
the coupling of words together shows that they are to be understood
in the same sense. And where the meaning of any particular word is
doubtful or obscure, . . . the intention of the party who has made
use of it may frequently be ascertained and carried unto effect by
looking at the adjoining words." (citing Broom's Legal Maxims, p.
450)).
We also read the government's statement as a response to
the appellant's earlier comment that he had gained nothing from the
alleged fraud. Appellant's counsel had stated:
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I just want to point out to you again what
I've said all along. When you're out there
deliberating, remember, Gary got nothing out
of this. It cost Gary money out of his
pocket. Gary lost an asset, a building, that
although it was tough to get to, was described
as the triple-thick walls, huge beams, a good,
solid building he had and he lost. Gary had
no reason -- there was no rhyme, no reason for
Gary to do anything.
Trial Tr. 5-89. The government's statement was an attempt to
address this argument. In stating that the appellant "had every
incentive to want that building gone, to be rid of that building,"
the government was attempting to counter the appellant's argument
and show that the appellant did indeed reap a benefit from the
alleged mail fraud. The complained-of statement addressed the
appellant's motive in committing the fraud -- namely his desire to
have a troublesome financial investment removed from his portfolio
by having Scottsdale pay off his mortgage and the entire cost of
demolition.
We therefore find that the government did not violate the
district court's order to refrain from discussing the appellant's
responsibility for the fires. Once again, the appellant fails to
show the error required under the "plain error" test.
IV. The accountant's testimony
DeCicco's final argument is that the district court erred
in admitting the testimony of his accountant Stewart regarding his
(DeCicco's) missing expense documentation. We review the admission
of evidence under Fed. R. Evid. 404(b) for abuse of discretion.
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United States v. Smith, 292 F.3d 90, 98 (1st Cir. 2002). "[A]n
abuse of discretion occurs when a relevant factor deserving
significant weight is overlooked, or when an improper factor is
accorded significant weight, or when the court considers the
appropriate mix of factors, but commits a palpable error of
judgment in calibrating the decisional scales." United States v.
Gilbert, 229 F.3d 15, 21 (1st Cir. 2000) (citing United States v.
Roberts, 978 F.2d 17, 21 (1st Cir. 1992) (internal quotation marks
omitted)).
In DeCicco I, we held that the district court abused its
discretion in excluding the testimony of DeCicco's accountant,
Richard Stewart, regarding DeCicco's outstanding income tax
liabilities, concluding that it was relevant to DeCicco's motive to
commit arson and mail fraud and, hence, admissible under Fed. R.
Evid. 404(b). We also found that the evidence was not excludable
under Fed. R. Evid. 403, because "when offered for the limited
purpose of showing motive, and viewed in the context of the
government's charges, any danger of unfair prejudice in this case
is minimal." DeCicco, 370 F.3d at 214.
When Stewart's testimony was offered at trial, the
government informed the district court that it intended to elicit
from Stewart not just the amount of tax liability which he had
calculated -- the issue before this Court in DeCicco I -- but also
that Stewart had sought additional documentation from DeCicco to
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support claimed deductions which would have reduced DeCicco's tax
liability to about ten percent of what Stewart had calculated. The
appellant objected to this additional testimony by Stewart. The
district court, however, ruled that the testimony was admissible
because this Court said that it was.
Appellant contests this ruling, noting that although this
Court has ruled that Stewart's testimony regarding DeCicco's tax
liabilities was admissible under Fed. R. Evid. 404(b), the question
of Stewart's testimony regarding DeCicco's failure to provide him
with documentation supporting expenses he claimed as deductions was
not before the Court. Contrary to the district court's position,
appellant argues that this Court's decision in DeCicco I did not
require it to admit this portion of Stewart's testimony.
We believe that the district court made the correct
decision in admitting the evidence. Federal Rule of Evidence
404(b) provides that:
Evidence of other crimes, wrongs or acts is
not admissible to prove the character of a
person in order to show action in conformity
therewith. It may, however, be admissible for
other purposes, such as proof of motive,
opportunity, intent, preparation, plan,
knowledge, identity or absence of mistake
. . . .
Fed. R. Evid. 404(b). Therefore, as we noted in DeCicco I, "mere
propensity evidence is never admissible solely to show a character
inclined towards unlawful behavior. The same evidence may be
admissible, however, even if it may be construed as propensity
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evidence, if it is used to show any of the other elements set out
in the rule." DeCicco, 370 F.3d at 210-11 (citations omitted).
We use a two-part test to evaluate the admissibility of
evidence under Rule 404(b). First, we must determine whether the
evidence in question has any "special relevance" exclusive of
defendant's character or propensity. See United States v.
Sebaggala, 256 F.3d 59, 67 (1st Cir. 2001) (the proffered evidence
"must not merely show a defendant's reprehensible character or
predisposition toward knavery . . . ."). Second, even if some
"special relevance" is found, the evidence must nonetheless be
excluded if its probative value is substantially outweighed by the
danger of unfair prejudice. "Rule 404(b) incorporates sub silentio
the prophylaxis of Federal Rule of Evidence 403." Id.
Regarding the first prong of the test, the appellant
argues that "Stewart's testimony regarding DeCicco's failure to
provide him with the documentation necessary to reduce his tax
liability by 90% was not relevant to the question of DeCicco's
motive to commit arson or mail fraud, nor did the government ever
articulate a basis for its admissibility under Rule 404(b)." He
states that this was evidence which the jury would have used purely
for propensity purposes. In his eyes, the jury would draw only two
conclusions from this evidence: (1) that DeCicco had misrepresented
his business expenses to Stewart in hopes of limiting his tax
liability, and (2) that his businesses must have been conducted
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dishonestly if he could not produce even something so routine as
payroll records. Thus, the jury would have reasoned that because
DeCicco had attempted to defraud the federal and state taxing
authorities and because he must have been conducting his businesses
in a dishonest manner, as evidenced by the lack of even the most
routine recordkeeping, he was more likely to have perpetrated a
fraud on Scottsdale. As such, he argues, this evidence was pure
propensity evidence and should not have been admitted under the
first prong of Rule 404(b).
We, however, believe that Stewart's testimony relating to
the missing expense documentation contained a "special relevance"
exclusive of DeCicco's character and propensity. In particular,
such testimony was relevant to DeCicco's motive for committing the
charged mail fraud offenses.
In DeCicco I, we came to a similar conclusion when we
stated that Stewart's testimony relating to DeCicco's tax
liabilities could be used "in order to show for what purpose the
fraudulently obtained insurance proceeds were intended" -- i.e., to
show that the money obtained from Scottsdale would be used to
defray DeCicco's tax liabilities. DeCicco, 370 F.3d at 214. In
this appeal, we find that Stewart's testimony relating to the
missing expense documentation also related to DeCicco's motive, but
in a different way. In his opening, DeCicco had argued that he had
to have been making a lot of money to generate such large tax
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liabilities and therefore had no motive to commit the charged
fraud. Stewart's testimony relating to the missing expense
documentation helped provide a response to this contention. It was
used to show that the appellant's net income was likely
significantly less than the available documentation suggested and
that the appellant likely did not have money on hand to pay what he
owed. Thus, Stewart's testimony helped the government demonstrate
that DeCicco did indeed have a motive to fraudulently obtain
insurance proceeds from Scottsdale -- i.e., the alleged mail fraud
provided him with the funds he needed to pay his debts.5
The appellant also argues that Stewart's testimony should
be excluded under Fed. R. Evid. 403, which is incorporated into the
second prong of the Rule 404(b) test, because any probative value
which Stewart's testimony had was substantially outweighed by the
effect of unfair prejudice. However, this argument fails as well,
because, as we stated in DeCicco I, "we are of the view that, when
5
In other words, Stewart's testimony about DeCicco's missing
expense documentation was used to show that DeCicco was not as
wealthy as he claimed. The fact that DeCicco could not produce
documentation to support some of his claimed expenses could lead
one to believe that perhaps DeCicco had expenses that were "off the
books." For example, perhaps he paid certain employees with cash
in order to avoid payroll taxes. If this was the case and DeCicco
did in fact have a number of additional expenses beyond those that
were covered in his documentation, his net income would have been
less than he had claimed it was. And if his net income was less
than he claimed it was, he would have had difficulty paying off his
debts. Thus, DeCicco did indeed have a motive to commit mail
fraud. Such a fraud would have provided him with extra funds to
pay off his income taxes, his property taxes, and his mortgages and
commercial loans.
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offered for the limited purpose of showing motive, and viewed in
the context of the government's charges, any danger of unfair
prejudice in this case is minimal." DeCicco, 370 F.3d at 214. We
continue to hold this belief, and it is fatal to DeCicco's claim
here. Accordingly, we find that the district court did not abuse
its discretion in admitting Stewart's testimony about DeCicco's
missing expense documentation.
V. Conclusion
For the reasons stated above, we affirm the judgment of
the district court.
Affirmed.
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