United States Court of Appeals
For the First Circuit
Nos. 09-1590
09-1614
UNITED STATES OF AMERICA,
Appellee,
v.
ROBERT L. NEWELL and JAMES J. PARISI, JR.
Defendants, Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. George Z. Singal, U.S. District Judge]
Before
Torruella, Ripple,* and Lipez,
Circuit Judges.
Mary A. Davis, with whom Tisdale & Davis, P.A. was on brief,
for appellant Newell.
George T. Dilworth, with whom David M. Kallin and Drummond
Woodsum & MacMahon were on brief, for appellant Parisi, Jr.
Margaret D. McGaughey, Appellate Chief, with whom Paula D.
Silsby, United States Attorney, was on brief, for appellee.
July 11, 2011
*
Of the Seventh Circuit, sitting by designation.
TORRUELLA, Circuit Judge. This case stems from extensive
financial mismanagement at the Passamaquoddy Tribe Indian Township
Reservation (the "Tribe") in Down East Maine. Defendants Robert
Newell, the former governor of the Tribe, and James Parisi, Jr.,
the Tribe's former finance director, were convicted for conspiracy
to defraud the United States under 18 U.S.C. § 371, as well as
violations of 18 U.S.C. §§ 287, 666 and 669, involving the misuse
of federal grant and tribal monies. On appeal, Newell and Parisi
raise a host of issues related to the federal court's jurisdiction
over "internal tribal matters," the sufficiency of the evidence,
the lower court's jury instructions, sentencing, and the
restitution order entered against them. For the reasons explained
below, we vacate Parisi's conviction on count five and remand for
clarification of certain issues related to the restitution order,
but otherwise affirm.
I.
The following facts are drawn from the parties' filings
supplemented by the record as necessary, and are presented in the
light most favorable to the verdict. See United States v. Poulin,
631 F.3d 17, 18 (1st Cir. 2011).
-2-
A. Background
The Passamaquoddy Tribe is a federally recognized Indian
tribe located in northern Maine.1 The Tribe is relatively small,
with fewer than seven hundred residents. It relies in large part
on federal grant and contract money for its financial survival.
During the period of time at issue -- roughly, September 2002 to
September 2006, i.e., Newell's tenure as tribal governor -- the
Tribe received between five and eight million dollars annually in
federal grants and contracts.
The Tribe's political leadership consists of a governor
and tribal council. In addition, the Tribe shares a 12-member
joint tribal council with its sister reservation in Princeton,
Maine. Council members receive no official salary, but many are
employed by the tribal government in other capacities, are
reimbursed for travel expenses, and receive "honoraria" that
approximate a salaried employee's vacation pay. The tribal
government provides administrative services to the tribal programs,
including bookkeeping and accounting services.
The Tribe receives funding from the Bureau of Indian
Affairs ("BIA") and the Department of Health and Human Services
("HHS") through the Indian Self-Determination and Education
Assistance Act. These grants are used to fund myriad tribal
1
There are two Passamaquoddy reservations; this case concerns
solely the Indian Township reservation located near Princeton,
Maine.
-3-
services, including the police, fire, child welfare and wildlife
and parks departments, the housing authority, the Tribe's courts
and schools, and the Indian health center. The Tribe additionally
receives funding from HHS's Substance Abuse and Mental Health
Services Administration ("SAMHSA") for an HIV awareness and
substance abuse prevention program. The Tribe received a
Department of Justice ("DOJ") COPS program grant for police
equipment and training, as well as funding from the Environmental
Protection Agency ("EPA") for its environmental department and from
the Department of Housing and Urban Development ("HUD") for its
housing authority. Each of the federal contracts and grants
included terms and conditions specifying how they were to be used.
Generally, the contracts required the Tribe to use the funds to pay
for allowable direct costs of the identified programs, as well as
specified amounts of the indirect costs incurred by the tribal
government for administrative services. The awarded funds
generally could not be diverted for non-contract or grant purposes
without a contract amendment or agency approval.2
In addition to the federal grants and contracts, the
Tribe had income from its ownership interests "in three companies
[Dragon Cement, Creative Apparel and Northeast Blueberry Company]
2
A tribe receiving BIA funds under a "638 contract" may
reallocate funds intended for one program to another program funded
by the contract unless the funds have a separate funding code.
However, BIA funds cannot be diverted to non-BIA programs.
-4-
that it purchased with money it received under the Indian Claims
Settlement Act." This income was on the order of "several million
dollars . . . annually."
Newell served as the Tribe's governor from 1986 to 1993,
and again from 2002 to 2006. Newell served as his own finance
director for the first year of his most recent term, but in the
fall of 2003 he hired Parisi to fill the position. Parisi had
worked as a banker but did not have experience with federal
contracts. In addition to Parisi, the finance department was
composed of several bookkeepers and a federal grant compliance
officer, Linda Lewey. Despite his official job title, Parisi
appeared to have had little actual authority, and would refer most
questions to Newell. There is also evidence that Parisi may have
been somewhat ostracized by at least some of his co-workers as he
was not a member of the Tribe.
During his tenure as governor, Newell exercised extensive
control over tribal governance in general, and the Tribe's finances
in particular. Newell would transfer funds between the various
accounts to pay for unauthorized expenses, including salaries for
individuals who did not actually work for the programs that were
funding them. Newell also caused the Tribe's various programs to
"loan" hundreds of thousands of dollars each year to the Tribe
which he then disbursed in the form of "general assistance" to
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Tribe members, including friends, family and political supporters.3
These loans were by and large never repaid.
We now sketch briefly the details of the transactions
relevant to the current appeals, leaving aside those uncontested on
appeal. Our discussion is somewhat condensed in light of the large
multitude of transactions, which were spread over a number of
years, involved a large cast of supporting characters, several
distinct funding sources, and the arcana of accounting practices
for federal grants and contracts.
B. The financial mismanagement
In 2003, the Tribe received a three-year, $350,000-per-
year grant from SAMHSA to fund its HIV and substance abuse program,
known as the Wonahkik program. The Wonahkik program ramped up
slowly. Roger Paul, the Wonahkik program coordinator, testified at
trial that the program did not "get a staff to start getting things
actually done" until January of 2004. As of October of 2003, the
program had only spent $86,354 of the $350,000 grant. In
September, Newell and Elizabeth Neptune, the director of the health
center, wrote to SAMHSA requesting permission to carry over the
remainder into the next fiscal year. In October, Faye Socobasin,
the Tribe's SAMHSA bookkeeper, filed a "269" form with SAMHSA
showing that the Tribe had $236,645 in unspent grant funds. Lewey,
3
The Tribe's General Assistance Office was set up to provide cash
assistance and other forms of assistance to needy tribal members.
All general assistance had to be approved by the governor.
-6-
the Tribe's federal grant compliance officer, signed off on the
form. Parisi was hired at around this time.
In February 2004, before SAMHSA had responded to the
request, Newell directed that the unspent funds be used to
reimburse the Tribe for salaries it had paid to three tribal
councilors despite the fact that they did not actually work for the
Wonahkik program.4 Newell insisted that the grant money "had to be
spent," and that if the Wonahkik program wasn't going to spend it,
"the Tribe would." Socobasin, at Lewey's instruction, then
prepared a journal entry form for the Tribe's records indicating
that the three individuals had been paid out of the SAMHSA grant on
or before September 30, 2003, the last day of the fiscal year.
Parisi signed the journal entry.
When SAMHSA notified the Tribe in April 2004 that it
would not permit the unused funds to be rolled over, Newell wrote
back, stating, among other things, that the Tribe's initial 269
report had been in error, and that the Tribe had spent an
additional $129,044 of the SAMHSA grant in salary expenditures in
FY 2003. Subsequently, Socobasin prepared a revised 269 form
reflecting the additional $129,044 expenditures, again dated to
appear as if they had occurred in September of 2003. Socobasin
4
The individuals that Newell and Parisi paid through these grants
worked for the tribal government, just not for the programs that
were funded by the federal grants. In other cases, the "ghost"
employees were employed at least part-time with the relevant
programs.
-7-
refused to backdate the charges unless either Parisi or Newell
approved it. Parisi, rather than Lewey, subsequently signed the
revised 269 form. Newell told Socobasin that Parisi should sign
the revised 269 "so we can blame it all on him." In June 2004,
SAMHSA relented, and approved the Tribe's request to roll over the
unused grant funds.
It was during this time that the tribal council learned
that the Tribe's budget had been overspent to the tune of $1.6
million. At a contentious council meeting, Newell admitted he had
been using SAMHSA funds to pay council members, but insisted he had
the authority to do so. The council voted to strip Newell of
administrative authority, but backtracked when it came out that
this meant they would no longer receive general assistance
payments. The council insisted that subsequent checks, with the
exception of payroll and housing authority checks, be signed by two
council members. Undeterred and largely unimpeded, Newell was able
to secure the cooperation of sympathetic council members or, in
other cases, circumvent the council entirely by transferring funds
through online or wire transfers.
The Tribe continued to pay the salaries of council
members and other non-health center "ghost" employees with the
health center's funds throughout FY 2004. Wonahkik was not the
only program that saw its budget raided. Funds were "loaned" to
the tribal government from the Indian Health Services ("IHS")
-8-
contract, state Medicaid payments, and EPA and BIA grants. Several
of the tribal health services administrators objected, but Newell
and Parisi continued to authorize the payments. Parisi promised
that the non-employees would be taken off the health center's
payroll, and that the funds would be restored. When pressed by
Paul about the missing funds, Parisi replied that it was "normal"
for Tribes to use incoming grant money to pay pressing non-grant
related bills, and to replenish the funds later with other income,
an explanation that Paul conceded he found "reasonable."
Despite the earlier troubles, SAMHSA approved funding for
the Wonahkik grant for a second year. This time around, however,
SAMHSA required that the Tribe submit itemized claims for approved
expenses. Thus, when Parisi requested $81,779 in reimbursement
from SAMHSA in February of 2005, the claim was denied because it
was not correctly itemized. Parisi resubmitted correctly itemized
forms to SAMHSA in March, but because the requested amount included
the salaries of individuals who did not work for Wonahkik, SAMHSA
ultimately refused to pay for those claims.
Neither Newell nor Parisi was accused of lining their own
pockets. (Parisi appears to have been motivated mostly by a desire
to retain his employment with the Tribe). Newell, however, did
improperly redirect federal grant money to help friends and family.
For instance, shortly after Newell took office in the fall of 2002,
he refused to release funds that the BIA had awarded the Tribe
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through its Housing Improvement Program. Instead, he spent the
money on his friends, family, and tribal council members and their
families, including William Nicholas, the Tribe's current governor.
Similarly, in June of 2004, Newell had Carol Roehrich, the Tribe's
BIA bookkeeper, issue his son, Roger, a check for $1020, ostensibly
to reimburse Roger for the costs of attending training in Boston.
Alex Nichols, Roger's supervisor, knew that Roger did not attend
training in Boston and asked Roger to return the money. Newell
insisted that Roger needed help, and the funds were never repaid.
On other occasions, Newell dipped into Housing Authority funds for
wedding donations, unspecified small loans, travel reimbursement
for his son, Eric, and "general assistance" for two other Tribe
members.
Despite his efforts to keep the political wheels well-
greased, by the spring of 2005, Newell was facing increasing
opposition to his leadership. Several of the health center
administrators -- including Roger Paul, the head of Wonahkik, and
Elizabeth Neptune, the health center's director -- participated in
an anti-Newell protest and went to federal investigators with their
complaints. Newell responded by cleaning house, firing Paul,
Neptune and three other health center administrators. Bookkeepers
who protested the interfund "loans" found themselves suspended.
Newell then reassured Don Payne, the new head of the health center,
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that although health center funds were being used for other
purposes, the funds would be restored.
The misapplication of funds continued apace, and the
Tribe's financial situation deteriorated further. As of the fall
of 2005, the Tribe owed $866,000 to the BIA and IHS grants. The
Tribe had budgeted $621,000 in "tribal assistance" in FY 2005, but
had spent nearly three times that amount. Newell continued to try
to cover the Tribe's costs by "borrowing" money from the incoming
federal grants, and Parisi continued to offer assurances to the
affected programs that the funds would be repaid. Although some of
the non-employees who had been drawing salaries from the grants
were finally removed at this point, some remained, and others were
added on.
Newell and Parisi received multiple warnings at around
this time that their conduct was of questionable legality. In
early 2005, the Tribe's outside auditor warned them that "pooling"
federal funds was permissible, but that the funds should only be
used for allowable purposes, a point reiterated by Lewey, the
federal grant compliance officer, and Roehrich, the BIA
bookkeeper.5 Harry Schade, a former finance director for the
5
Ronald Smith, the Tribe's outside auditor, testified at trial
that interfund transfers were a "necessary part of the business" in
light of the complexity of tribal finances, and that he had advised
Newell and Parisi that they were consistent with accepted
government practices, provided the money was returned and accounted
for within "a reasonable time frame." Smith did not specify
precisely what such a time frame would be, but suggested "a week"
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Tribe, was brought back in June of 2005 to help Newell and Parisi
sort out the Tribe's increasingly desperate finances. However,
Schade's repeated demands that non-approved employees be taken off
the health center's payroll were ignored.
Newell and Parisi were also put on notice by warnings
from various federal officials. IHS officials confronted Newell
and Parisi in August 2005 about delinquent audits and interfund
transfers. Despite the fact that Schade and Payne had asked the
IHS not to release the funds because Newell and Parisi were raiding
the accounts, the IHS was satisfied with Newell and Parisi's
assurances that the funds would not be misused and that they would
conduct an audit. IHS then agreed to a lump sum wire transfer of
$2,000,000 for FY 2006. Within a week, over $400,000 had been
diverted to the tribal government at Newell's direction. Newell
and Parisi directed the health center to "loan" the tribal
government a further $200,000 over the next two months. In a by-
now-familiar scene, Schade protested and was subsequently fired.
IHS officials began inquiring as to why so little of the grant
funds remained, but were rebuffed by Newell.
One of the "loans" in question occurred in November of
2005. At this point in time, the Tribe, together with its sister
Pleasant Point reservation, was engaged in an effort to place a
referendum question on the 2007 ballot asking for approval of a
as an example.
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combined race track and casino, otherwise known as a Racino. The
Joint Tribal Council hired an outside firm to solicit the necessary
signatures to ensure that the question was placed on the ballot.
Newell realized that the Tribe lacked the funds to pay for its
share of the expenses and so decided once again to dip into his
federal slush fund, a/k/a the health center budget. Parisi
transmitted Newell's request to Frances Neptune, the IHS
bookkeeper, who drew up a check for $33,000. After the payment was
approved by two tribal council members, it was picked up by Joseph
Socobasin, the Tribe's lieutenant governor and delivered to the
Joint Tribal Council. This money was never returned to the health
center.
As he neared the end of his term, Newell must have
realized that the game was up, as the Tribe's financial situation
had become increasingly precarious at the same time that federal
investigators were closing in on him. In the spring of 2006, the
situation had become so dire that in order to meet the Tribe's
payroll obligations, Newell directed Parisi to transfer funds from
the tribal employees' 401K account, and directed the account
bookkeeper not to file the mandatory report with the company that
managed the 401K program. Parisi also directed the payroll clerk
to pay only net salaries, meaning that state and federal tax
withholdings, 401K contributions, state garnishments for child
support or back taxes, and rent (for those employees who lived in
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HUD housing) were not paid. Among the sources tapped to cover
payroll was a DOJ COPS grant for the Tribe's police department.
The grant's remaining $30,000 of unspent funds was pressed into
service to meet the Tribe's payroll obligations. When Newell left
office in September, after losing the election to William Nicholas,
the Tribe only had enough money left to pay one person's salary --
Newell's.
When Newell stepped down as governor, "the Tribe's
employees had not been paid in two weeks, worker's compensation
payments had not been made, vendors and programs were owed over $3
million, and the Tribe owed federal programs $1.7 to $1.8 million."
In addition, the health center -- regularly raided by Newell -- had
outstanding debts of approximately $850,000. An audit subsequently
revealed that the Tribe had no cash available, owed other funds
approximately $1.6 million, lost $2 million from its general fund,
and had once again overspent its general assistance budget by
approximately $1.1 million.
In the spring of 2008, Newell and Parisi were charged by
indictment with thirty counts of misapplying federal funds, making
false statements to federal agencies, submitting false claims, and
misapplying retirement, police, housing authority and other program
funds, as well as conspiracy to defraud the United States.6
6
For reference, a summary of the charges brought against Newell
and Parisi is attached as an appendix.
-14-
C. Trial
At trial, Newell argued that he believed in good faith
that he had the authority to act as he did, and that his intent had
been to help the Tribe's impoverished and needy residents. Parisi
argued that he was an outsider who simply did as Newell instructed.
The jury found Newell guilty of all counts except count 10, and
found Parisi guilty of counts 1, 5, 8, 9, 11-15, 29 and 30. Both
defendants moved for acquittal, and Parisi moved for a new trial.
Both defendants' motions were denied by the district court.
Newell's guideline range was determined to be 151 to 188
months. The court sentenced him instead to concurrent 60 month
terms on counts 2, 3, 7-9, 11, 29 and 30, and concurrent 31 month
terms on counts 1, 4-6 and 12-28, followed by three years of
supervised release. Parisi's guidelines range was determined to be
51-63 months. The court sentenced him to a year and a day, also
followed by three years of supervised release. In addition, under
the Mandatory Victim Restitution Act (MVRA), codified at 18 U.S.C.
§ 3663, the court imposed a restitution order of $1,741,876.18 on
Newell and $1,602,516.13 on Parisi, payable jointly and severally.7
7
Newell's restitution order was composed of: (1) $305,693.77 to
the IHS; (2) $195,895.35 to HHS; (3) $782,693 to the BIA; (4)
$45,230.05 to the EPA; (5) $30,000 to the DOJ COPS program; (6)
$23,796,96 to the Maine Office of Substance Abuse; (7) $43,367.50
to the Tribe's retirement fund; (8) $215,199.55 to the tribal
government; and (9) $100,000 to On Point underwriting.
Parisi's restitution order was identical, except for (4) and
(8). The district court found by a preponderance of the evidence
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This appeal followed.
II. Did the district court have jurisdiction?
Newell, joined by Parisi, first contends that counts 1,
2, 29 and 30 fall outside the jurisdiction of the federal courts.
Essentially, the appellants argue that the Passamaquoddy Tribe has
negotiated agreements with the state of Maine and the federal
government granting them exclusive jurisdiction over "internal
tribal matters," and that the conduct charged in counts 1, 2, 29
and 30 should be understood as such.
We note that the parties appear to have conflicting
understandings of the nature of the claim being raised. The
government appears to construe the claim as one of "tribal
sovereign immunity," and contends that Parisi, at least, has waived
any such claim. Parisi, for his part, insists that the argument
instead concerns our subject matter jurisdiction, and hence avoids
the "[o]rdinary raise-or-waive rules" which the government seeks to
enforce against him. See Cabán-Hernández v. Philip Morris USA,
Inc., 486 F.3d 1, 5 (1st Cir. 2007).8
that Parisi was not responsible for the losses to the EPA, and
deducted amounts tied to "acquitted conduct" from (8), lessening
the amount he was required to pay the tribal government to
$121,069.55.
8
There is some support for the government's interpretation.
Prior to trial, Newell presented a motion to dismiss asserting a
"privilege based upon the sovereignty and sovereign immunity of the
Passamaquoddy Tribe." The motion, which was ultimately denied by
the district court, cited the same statutory authority to support
the "tribal sovereign immunity" claim as the (allegedly)
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As we have noted, an "objection to subject matter
jurisdiction is not waivable and may be raised for the first time
on appeal." F.A.C., Inc. v. Cooperativa de Seguros de Vida de
Puerto Rico, 449 F.3d 185, 189 (1st Cir. 2006). Even if the same
claims were presented below as a sovereign immunity defense, this
does not preclude the defendants from appealing to them, now, to
challenge our jurisdiction. Our review is de novo. Miller v.
Nichols, 586 F.3d 53, 58-59 (1st Cir. 2009) ("The existence of
federal subject matter jurisdiction . . . [is a] question[] of law,
subject to de novo review in this court.").
Relations between the Tribe and the state and federal
government are governed by an agreement that the parties arrived at
after the Passamaquoddy filed suit in the 1970s, asserting claims
to nearly two-thirds of Maine's land mass. The Tribe and the state
of Maine eventually reached a settlement, in which the Tribe "in
many respects gained the powers of a municipality under Maine law."
Akins v. Penobscot Nation, 130 F.3d 482, 484 (1st Cir. 1997). The
settlement granted the Tribe recognition under federal law as a
tribe, as well as entitlement to a portion of the income from an
$81.5 million settlement fund established by Congress. See 25
U.S.C. §§ 1723-24. In exchange, the Tribe's claims to Maine's
territory were extinguished, and the Tribe agreed that "with very
jurisdictional argument before us on appeal. The sovereign
immunity argument presented there appears to have transmogrified
into an argument anent subject matter jurisdiction here.
-17-
limited exceptions," it was "subject to the laws of Maine." Akins,
130 F.3d at 485; see also Penobscot Nation v. Fellencer, 164 F.3d
706, 708 (1st Cir. 1999) (noting that "Maine was permitted to
extend its jurisdiction over the Nation to a greater degree than
most states exercise over other Indian Tribes"). The agreement
between the Tribe and the state of Maine was memorialized in the
Act to Implement the Maine Indian Claims Settlement, 30 M.R.S.A.
§§ 6201-14 (the "Implementing Act"). The Implementing Act was
subsequently ratified by Congress in the Maine Indian Claims
Settlement Act, at 25 U.S.C. §§ 1721-35 (the "Settlement Act").
Section 6206 of the Implementing Act states, in material
part, that "internal tribal matters, including . . . tribal
organization, tribal government, tribal elections and the use or
disposition of settlement fund income shall not be subject to
regulation by the State." 30 M.R.S.A. § 6206. This limitation on
state jurisdiction was incorporated into the federal Settlement Act
by reference. See 25 U.S.C. § 1725(f) ("The Passamaquoddy Tribe
. . . [is] hereby authorized to exercise jurisdiction, separate and
distinct from the civil and criminal jurisdiction of the State of
Maine, to the extent authorized by the Maine Implementing Act, and
any subsequent amendments thereto."). We have interpreted the
Settlement Act to interpose a bar to federal jurisdiction over
"internal tribal matters." See Akins, 130 F.3d at 485 ("[T]he
Nation in certain capacities functions as a municipality of Maine
-18-
and is reachable under state and federal law in that capacity, but
when it functions as a tribe as to internal tribal matters, it is
not.").
The operative question is, accordingly, whether the
conduct alleged in counts 1, 2, 29 and 30 constitute "internal
tribal matters." Newell's argument is that the government's
attempt to enforce 18 U.S.C. § 666(a)(1)(A) against him reaches
"internal tribal matters" because "the allocation of tribal money
amongst tribal accounts only affects tribal members, not
nonmembers" and concerns only matters of "tribal organization,
tribal government, and the use or disposition of settlement fund
income."9 He argues that "[f]ederal jurisdiction over these
allegations would be contrary to the purpose of the Settlement
Acts, which is to allow the Tribe to handle internal tribal
matters, particularly internal government matters."
9
Section 666(a)(1)(A) reads: "Whoever, if the circumstance
described in subsection (b) of this section exists -- being an
agent of an organization, or of a State, local, or Indian tribal
government, or any agency thereof, embezzles, steals, obtains by
fraud, or otherwise without authority knowingly converts to the use
of any person other than the rightful owner or intentionally
misapplies property that is valued at $5000 or more, and is owned
by, or is under the care, custody, or control of such organization,
government, or agency . . . shall be fined under this title,
imprisoned not more than 10 years, or both." 18 U.S.C. § 666
(a)(1)(A). The referred to circumstance is "that the organization,
government, or agency receives, in any one year period, benefits in
excess of $10,000 under a Federal program involving a grant,
contract, subsidy, loan, guarantee, insurance, or other form of
Federal assistance." Id. § 666(b).
-19-
Not surprisingly, Newell neglects to mention that
Congress specifically exempted the Tribe from several federal
criminal statutes in the Settlement Act -- but that § 666 is not
one of those exempted. See 25 U.S.C. § 1725(c). Indeed, Congress
specifically included Indian Tribes within the ambit of § 666(a),
which explicitly applies to agents of "Indian tribal government."
These observations suggest that assertion of federal jurisdiction
over counts 1, 2, 29 and 30 was not improper.10
10
We do not say that there could never be a challenge to the
enforcement of § 666(a)(1)(A) against the Penobscot or
Passamaquoddy Tribes. Although conditioned on the receipt of
federal funds, § 666(a)(1)(A) does not actually require the
misapplied funds to themselves be federal funds. The
jurisdictional question would thus be more difficult if the
indictment alleged misapplication of settlement fund income, the
use or disposition of which is specifically exempted by the
Implementing Act. See 30 M.S.R.A. § 6206 ("[T]he use or
disposition of settlement fund income shall not be subject to
regulation by the State.").
However, Newell has alleged only that "tribal income includes,"
and that the "statute reaches" settlement fund income, but has not
provided any more precise explanation of how counts 1, 2, 29 and 30
do so. What is evident is that these counts contain specific
allegations of conspiracy to defraud the United States and the
intentional misapplication of the Indian Township Housing
Authority's Project Income and NAHASDA accounts, the Tribe's BIA
638 contract, the tribal employees' retirement fund, and a DOJ COPS
grant. It is possible that some of these sources (perhaps the
Tribe's retirement funds and/or the Housing Authority's Project
Income account) were made up of settlement fund income. But we
simply cannot say from the record whether this is so. Moreover,
because Newell did not raise this issue below, there are no
relevant factual findings.
We have never considered whether there might, on some facts, be
a conflict between § 666(a)(1)(A) and 30 M.S.R.A. § 6206. In light
of the undeveloped factual basis for the claims, we do not decide
the issue today.
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Although "tribes generally retain the right to self-
government, [they] are nonetheless subject to federal criminal
jurisdiction of both a specified and more general nature." United
States v. Boots, 80 F.3d 580, 593 (1st Cir. 1996) (internal
citations omitted). In Boots, the defendants were accused, inter
alia, of defrauding the Passamaquoddy Reservation of the honest
services of their police chief by attempting to bribe him. One of
the defendants claimed that he should have been acquitted "in
deference to tribal sovereignty." Id. at 592. We rejected this
claim, noting that the violations he was charged with "are not
specific to Native Americans, but rather are of general
applicability," and that even if such crimes "may involve 'an
independent federal interest to be protected,' . . . it is unclear
that one is required." Id. at 593 (internal citations omitted).
Conspiring to defraud the United States and misapplying
federal funds are, like the crimes defined by the wire fraud
statute at issue in Boots, crimes of general applicability.
Therefore, even were we to accept Newell's claim that there is no
federal interest in how the Tribe transfers its money between its
accounts, it is not clear that any "peculiarly federal interest" is
in fact required for such a statute to apply to the Tribe. Id., 80
F.3d at 593. Moreover, a less tendentious description of Newell's
conduct would in any case suggest that there may well be a relevant
federal interest, viz. an interest in ensuring that federal grants
-21-
and contracts are spent in the way the government intends them to
be spent. As the Supreme Court has held, when federal agencies
spend taxpayer dollars, Congress has an interest in ensuring that
this money is "not frittered away in graft or on projects
undermined when funds are siphoned off." Sabri v. United States,
541 U.S. 600, 605 (2004) (rejecting claim that § 666(a)(2) -- the
anti-bribery portion of the statute at issue here -- required proof
of a nexus between the federal funds received and the alleged
bribe). When "money can be drained off here because a federal
grant is pouring in there . . . [i]t is certainly enough that the
statutes condition the offense on a threshold amount of federal
dollars defining the federal interest." Id. at 606. Congress
presumably agreed that there was such an interest when it made
§ 666(a) explicitly applicable to Indian tribal governments.
Moreover, despite rather mysterious invocations of tribal self-
governance, Newell has not managed to explain how holding him, qua
governor of a Tribe that received millions of dollars a year in
federal financial assistance, criminally responsible for extensive
misuse of federal funds would interfere with a "right integral to
self-government." Boots, 80 F.3d at 593.
Finally, in Akins, a case about a tribe's timber
harvesting policies, we emphasized five factors that were "strong
considerations" to take into account in deciding whether a dispute
about tribal practices constitutes an internal tribal matter.
-22-
Akins, 130 F.3d at 486-87. These factors are (1) whether the
practice in question "purports to regulate only members of the
tribe," or if "the interests of non-members" are "at issue"; (2)
whether it "regulates the very land that defines the territory of
the Nation"; (3) whether it concerns the use of a natural resource
derived from the land; (4) whether it "implicate[s] or impair[s]
any interest of the state of Maine"; and (5) whether construing the
challenged practice as an internal tribal matter "is consistent
with prior legal understandings." Id. at 486-87. Applying these
factors to the current case reveals the following. First, the
interests of non-members -- at the very least, those of the federal
agencies in ensuring that the funds they award are properly spent
-- are clearly implicated. Second, the funds at issue include
state funds (count 10 alleged misuse of state Medicaid funds).
Finally, as our discussion has just indicated, prior legal
understandings support our finding that the challenged conduct does
not constitute an internal tribal matter.11
Because the conduct alleged in counts 1, 2, 29 and 30
involves mismanagement of federal grants and contracts, which are
subject to regulations that the Tribe is not free to ignore, we
hold that the conduct alleged in these counts do not constitute
internal tribal matters. We emphasize that the case before us
11
The other two Akins factors -- whether the practice concerns the
Tribe's use of its lands, or natural resources from the lands -- do
not apply here.
-23-
rests on malfeasance involving federal grant money, in which the
federal interest is clear. It would be a different case if the
counts attempted to apply § 666 to mismanagement of settlement fund
income. We express no opinion as to whether such a prosecution
would or would not implicate the internal tribal matters exception
to federal jurisdiction under the Implementing and Settlement Acts.
III. Was the evidence sufficient?
We now turn to Parisi's contentions that the evidence
failed, in several key respects, to sufficiently support the jury's
verdict. "We review a sufficiency claim de novo, drawing all
reasonable inferences in favor of the verdict to determine whether
a rational jury could find each element of the crime beyond a
reasonable doubt." United States v. Scott, 564 F.3d 34, 39 (1st
Cir. 2009).
A. Count 1
Parisi challenges the sufficiency of the evidence
supporting his conviction under count one, for conspiracy to
misapply government property in violation of 18 U.S.C.
§ 666(a)(1)(A), and to misapply the funds and assets of a health
care program, in violation of 18 U.S.C. § 669.12 To prove its case,
12
The governing conspiracy statute is 18 U.S.C. § 371, which
reads, in pertinent part, "If two or more persons conspire either
to commit any offense against the United States, or to defraud the
United States, or any agency thereof in any manner or for any
purpose, and one or more of such persons do any act to effect the
object of the conspiracy, each shall be fined under this title or
imprisoned not more than five years, or both."
-24-
the government had to show beyond a reasonable doubt that "(1) a
conspiracy existed; (2) the defendant knew of and voluntarily
participated in the conspiracy; and (3) there was an overt act in
furtherance of the conspiracy." United States v. Muñoz-Franco, 487
F.3d 25, 45 (1st Cir. 2007).
Parisi challenges his conspiracy conviction under heading
(1). Parisi argues that a conspiracy consists of an agreement
between two or more individuals to disregard or disobey the law,
United States v. Drougas, 748 F.2d 8, 15 (1st Cir. 1984), and that
simply doing what his employer asked of him was insufficient to
establish such an "agreement." The question is thus whether the
evidence was sufficient to allow a rational jury to conclude,
beyond a reasonable doubt, that Parisi and Newell came to an
agreement to "disregard or disobey" §§ 666(a)(1)(A) and 669, i.e.,
the statutes prohibiting the misapplication of government funds
generally and the funds and assets of a health care benefit program
specifically.
We have noted in similar circumstances that "[a] formal
agreement [between co-conspirators] is not required; rather '[t]he
agreement may be shown by a concert of action, all the parties
working together understandingly, with a single design for the
accomplishment of a common purpose.'" Muñoz-Franco, 487 F.3d at
45-46 (internal citation omitted) (quoting Am. Tobacco Co. v.
United States, 147 F.2d 93, 107 (6th Cir. 1944)). In that case,
-25-
employees of a bank and a development company were convicted for
conspiring under 18 U.S.C. § 371 to commit bank fraud, misapply
bank funds and make false entries in the books and records of the
bank. Id. at 45. We dismissed their sufficiency of the evidence
challenge, noting that the two bank officials "directly supervised"
and "worked closely with" the developer's loans, that the developer
and his employee "submitted many certifications for work not yet
completed," that one of the bank officials "repeatedly approved"
those certifications, that the same bank official "met frequently"
with the developer's employee regarding the status of their
business ventures, and that the bank officials failed to disclose
material information to the bank's Board of Directors. We held
that this was sufficient to allow a jury to infer an agreement
among the four defendants to defraud the bank. Id. at 46.
The nature of the evidence in this case is similar. The
evidence presented at trial showed, for instance, that Newell
channeled money from the accounts of various federally funded
programs into non-approved uses. These "interfund transfers" were
recorded as "loans," and while some were ultimately repaid, others
were not. Some of these expenditures went toward paying payroll
and general assistance, as well as the salaries of "ghost
employees," individuals who either no longer worked at the various
grant-funded programs, or did not work for the time claimed.
Parisi signed off on financial status reports filed with the
-26-
federal agencies that were funding the programs, certifying that
the money was spent in accordance with the grant's terms. Parisi
was well aware that the grant money could not be used
indiscriminately; indeed, he was repeatedly told as much by the
fund administrators themselves. Nevertheless, Parisi continued to
divert federal grant funds, including funds provided by SAMHSA
intended for the Tribe's health center, to payroll and tribal
government expenses. Parisi promised bookkeepers at these
federally-funded programs that the ghost employees would be removed
from payroll, but that did not happen. Similarly, Parisi assured
the manager of the Tribe's health center (funded by federal SAMHSA
grants) that the diverted funds would be repaid, although very
little ultimately was. This conduct persisted for a period of
nearly three years.
The evidence presented against Parisi was sufficient to
establish that even if there was no express agreement with Newell,
nonetheless there was an implied or tacit agreement. Newell
ordered that federal funds be misapplied and Parisi saw that they
were. This was the requisite "concert of action" evincing a
"common purpose." See Muñoz-Franco, 487 F.3d at 45-46. We will
not disturb the jury's verdict as to count one.13
13
Parisi insists that he was not conspiring with Newell but rather
"merely doing what Newell instructed him to do." This misconstrues
the issue. The issue is not why Parisi may have agreed to
participate in Newell's schemes; it is whether he so agreed. The
answer to that question is not affected one way or the other by the
-27-
B. Count 5
Parisi next contends that he was improperly convicted
under count five, which alleged that he made a materially false
statement with regard to how $215,599.43 of a SAMHSA grant intended
for the Tribe's Wonahkik substance abuse and HIV prevention
programs was spent. Parisi signed and submitted a "financial
status report" with HHS claiming this amount was spent in
accordance with grant purposes. In reality, $129,044.67 was spent
to pay "ghost employees" -- Dennis Tomah, Sr., Dana Newell, and
John Stevens -- who did not work for those programs during the
relevant time period. Parisi's claims on appeal are, first, that
the government's evidence did not prove that his submission was
"knowing[] and willful[]" as required by 18 U.S.C. § 1001(a)(2)
and, second, that the form was in any case not "material" as it was
improperly filled out.14
"To establish a violation of 18 U.S.C. § 1001, the
government must prove that the defendant knowingly and willfully
made or used a false writing or document, in relation to a matter
observation that Parisi's only reason for being involved was
because he was employed by the Tribe.
14
Section 1001(a)(2) provides that "[e]xcept as otherwise provided
in this section, whoever, in any matter within the jurisdiction of
the executive, legislative, or judicial branch of the Government of
the United States, knowingly and willfully . . . (2) makes any
materially false, fictitious, or fraudulent statement or
representation . . . shall be fined under this title, imprisoned
not more than 5 years or . . . or both."
-28-
within the jurisdiction of the United States government, with
knowledge of its falsity." United States v. McGauley, 279 F.3d 62,
69 (1st Cir. 2002). "Willfulness . . . means nothing more in this
context than that the defendant knew that his statement was false
when he made it or . . . consciously disregarded or averted his
eyes from its likely falsity." United States v. Gonsalves, 435
F.3d 64, 72 (1st Cir. 2006).
Parisi contends that the government produced no evidence
showing that he knew that Tomah, Newell and Stevens had not worked
in the Wonahkik program during the specified time. The form
referenced a period of time prior to Parisi's employment at the
reservation, and the jury acquitted Parisi of actually misapplying
those particular funds (count three).
An examination of the trial transcript reveals the
following: at trial, Faye Socobasin (the tribal bookkeeper who
actually filled out the form that Parisi later signed) was asked by
the prosecutor if she had conversed with "either" Parisi or Newell
about the inappropriate use of the funds. She said she had, and
the prosecutor continued, "so you did have a conversation with
Robert Newell about this?" to which she replied, "Yes." The
prosecutor then asked if she discussed the matter with Parisi, and
she replied that "with Jim Parisi, I -- what I can remember is I
just did the 269 [the financial status report] and told him that it
-29-
had to be signed." The prosecutor then went on to establish that
Parisi in fact signed the 269 form.
Three days later, Linda Lewey, the Tribe's federal grant
compliance officer, testified that Parisi was present at two
meetings during which the issue of what to do about the unused
money in the SAMHSA grant was discussed. The first meeting was
apparently in December of 2003, when the decision was taken to
request permission from HHS to "roll over" the unused money into
the next fiscal year's budget. Lewey appears not to have been
questioned as to what, specifically, transpired at the second
meeting. As before, the prosecutor moved immediately to discuss
whether Parisi had in fact signed off on the fraudulent financial
reports.
The most specific testimony on the issue of Parisi's
knowledge of the falsehoods contained in the 269 form appears to
have been provided by Roger Paul, the Wonahkik program coordinator.
The prosecutor asked Paul whether he ever discussed payment of non-
program employees with Parisi. His reply was: "I don't remember
that issue exactly. There were many occasions I spoke to
Mr. Parisi, and there was one occasion I spoke to Mr. Parisi about
the finances, and I remember Mr. Parisi saying, well, that's what
Governor Newell wants done, and that's why we're doing it this
way." However, this statement is ambiguous in at least two key
respects. First, Paul testified only that he discussed "finances"
-30-
with Parisi. And, second, it is unclear when Paul had this
conversation with Parisi. Even if Paul's testimony is sufficient
to show that Parisi knew of the unauthorized use of SAMHSA funds,
if the revelation occurred after the false 269 form had already
been filed, it would shed little light on the crucial question of
whether Parisi knew the form to be false at the time of filing.
The evidence the government amassed as to Parisi's guilt
on count five clearly establishes that Parisi signed the 269 form,
and that the 269 form misrepresented that certain expenses were
properly charged to the SAMHSA grant. However, the evidence as to
whether Parisi at this point knew that the information he was
filing was materially incorrect -- that Tomah, Newell and Stevens
had not worked for Wonahkik in FY 2003 -- appears to be skimpy at
best. The time period in question was prior to Parisi's employment
with the Tribe, and we see no reason to believe that he knew,
within a few months of his arrival, where every tribal member had
worked in the previous fiscal year. Conversely, of course, the
inference of knowledge becomes increasingly pressing as Parisi
became more and more deeply involved with, and received warning
after warning about, Newell's on-going financial tomfoolery.
Perhaps one could conclude from the evidence presented
that it was possible that ParisI knew the 269 form to contain false
statements. But we do not see how a reasonable person could view
the evidence as establishing such knowledge beyond a reasonable
-31-
doubt. Accordingly, we find that the evidence was not sufficient
to convict Parisi under count 5.15
C. Counts 12-15
Parisi was convicted of counts 12-15, which assert that
Parisi filed fraudulent claims for reimbursement to SAMHSA
officials in the fiscal year ending on September 30, 2005, in
violation of 18 U.S.C. § 287.16 Parisi challenges his convictions
on these counts because he claims that the government failed to
prove that the forms at issue were material. They were not
material, Parisi claims, because one of them -- the form underlying
count 12 -- was returned to him "because it was not in a format in
which [HHS] was willing to review it," and because the government
did not pay the claims listed on the forms underlying counts 13-15.
The plain language of § 287 makes no mention of
materiality as an element of the offense. Parisi argues that we
should nevertheless read materiality into the statute, as the
Eighth and Fourth Circuits have done. See United States v. Adler,
15
Because we vacate the conviction, Parisi's additional contention
that the 269 form was not "material" because it was incomplete and
was not relied upon by agency officials is moot. It is in any case
without merit, for the reasons noted in section C, infra.
16
"Whoever makes or presents to any person or officer in the
civil, military, or naval service of the United States, or to any
department or agency thereof, any claim upon or against the United
States, or any department or agency thereof, knowing such claim to
be false, fictitious, or fraudulent, shall be imprisoned not more
than five years and shall be subject to a fine in the amount
provided in this title." 18 U.S.C. § 287.
-32-
623 F.2d 1287, 1291 n.5 (8th Cir. 1980); United States v. Snider,
502 F.2d 645, 652 n.12 (4th Cir. 1974). In contrast, the Fifth,
Ninth, Tenth and Second Circuits have held that § 287 does not
require proof of the materiality of the false statement. See
United States v. Upton, 91 F.3d 677, 685 (5th Cir. 1996); United
States v. Taylor, 66 F.3d 254, 255 (9th Cir. 1995); United States
v. Parsons, 967 F.2d 452, 455 (10th Cir. 1992); United States v.
Elkin, 731 F.2d 1005, 1009-10 (2d Cir. 1984), overruled on other
grounds by United States v. Ali, 68 F.3d 1468 (2d Cir. 1995).
Finally, the Third Circuit has split the difference and concluded
that materiality sometimes is, and sometimes is not, an element
under § 287. See United States v. Saybolt, 577 F.3d 195, 200 (3d
Cir. 2009).
This case does not require us to express a view as to
whether materiality is an element under 18 U.S.C. § 287. This is
because Parisi's claim cannot succeed either way. As we have noted
in other statutory contexts, a statement need not actually deceive
to qualify as "material." Rather, "materiality requires only that
the fraud in question have a natural tendency to influence, or be
capable of affecting or influencing, a government function. The
alleged concealment or misrepresentation need not have influenced
the actions of the Government agency, and the Government agents
need not have been actually deceived." United States v. Corsino,
812 F.2d 26, 30 (1st Cir. 1987) (citing United States v. Markham,
-33-
537 F.2d 187, 196 (5th Cir. 1976)); see also United States v.
Moran, 393 F.3d 1, 13 (1st Cir. 2004).17
It is thus clear that Parisi's claims would be unavailing
even were we to read materiality into § 287. The forms Parisi
submitted were expressly designed to cause the SAMHSA
administrators to pay on claims that were not authorized by the
terms of the SAMHSA grant. Although the 270 form at issue in count
twelve was returned to Parisi because it was improperly formatted,
it contained the substance of the relevant false claims, which
substance was re-submitted several days later in the correct
format.18 As our precedent on materiality makes clear, that SAMHSA
17
Perhaps one might wonder whether this understanding of
materiality -- taken from the context of § 1001 -- is appropriate
in the context of § 287. Parisi, however, is in no position to
raise this argument. Parisi's argument for reading materiality
into § 287 in the first place rests on the putative statutory
history of §§ 287 and 1001. He argues that § 1001 includes an
explicit reference to materiality because it was designed to
address false statements, which, unlike the false claims penalized
in § 287, was not a common law term of art that already implicitly
incorporated a materiality requirement. Therefore, § 287 does not
include a reference to materiality simply because -- according to
Parisi -- doing so would have been otiose. We express no view on
the veracity of this account of the distinction between §§ 287 and
1001, but note that if Parisi is correct, then it stands to reason
that materiality under § 1001 ought to be identical to that under
§ 287, as the former (allegedly) only makes explicit what is anyway
implicit in the latter.
18
The false claims at issue in counts 12-15 were requests for
reimbursement from SAMHSA for the salaries of the same three tribal
council members that were the subject of counts 3 and 5. None of
these council members worked for the Wonahkik program. Although it
is plausible that Parisi did not know of the fraudulent nature of
these claims with respect to the initial 269 form -- filed shortly
after he began working at the Tribe -- these forms were filed more
-34-
administrators were not ultimately deceived into paying out on the
fraudulent claims at issue in counts 12-15 does not bear on the
materiality of the fraudulent misrepresentations. Corsino, 812
F.2d at 30. For these reasons, the evidence was sufficient to show
that the misrepresentations contained on the forms underlying
counts 12-15 were "material."19
D. Counts 1, 8, 9, 11, 29, 30
Finally, Parisi attacks his conviction under counts 1, 8,
9, 11, 29 and 30 on the grounds that the government failed to prove
"the necessary criminal intent of acting willfully." The relevant
statutes are §§ 666(a)(1)(A) and 669; the former alleges that
than a year after he was hired. Parisi does not contend that he
did not know, at this point, that these individuals did not work
for Wonahkik and so were not eligible to have their salaries paid
by SAMHSA.
19
Our conclusion here means that there is no need to dwell on
Parisi's complaint (which Newell joins) that the district court
erred in failing to instruct the jury on materiality with respect
to counts 12-15 (the counts alleging violations of § 287). Even
assuming that materiality is an element under § 287, the failure to
instruct the jury on materiality is subject to harmless error
review. See Neder v. United States, 527 U.S. 1, 9 (1999) ("Unlike
such defects as the complete deprivation of counsel or trial before
a biased judge, an instruction that omits an element of the offense
does not necessarily render a criminal trial fundamentally unfair
or an unreliable vehicle for determining guilt or innocence.").
Harmless error review requires ascertaining "whether it appears
beyond a reasonable doubt that the error complained of did not
contribute to the verdict obtained." Id. at 15 (internal quotation
marks and citation omitted). Our conclusion entails that even if
the district court erred in not giving the requested materiality
instruction -- and we certainly do not say it did -- that error was
harmless as the evidence of materiality was more than sufficient to
support the convictions under this standard.
-35-
Parisi "intentionally misapplie[d]" property, whereas the latter
alleges that he "knowingly and willfully" embezzled, stole or
converted the assets of a health care benefit program. Parisi
insists that he had "no motive to disobey or disregard the law, as
he gained no benefit from the transfers."
Parisi's argument is that in order to obtain a conviction
under either of these statutes, the government needed to show that
he acted "willfully," meaning that the government had to show that
he acted with an illicit motive. See Bryan v. United States, 524
U.S. 184, 192 n.12 (1998) (explaining that the term "willful" in a
criminal statute "generally means an act done with a bad
purpose."). Parisi supports his contention by suggesting that when
allegedly fraudulent acts are not "themselves wrongful," then the
government must additionally show illicit motive. See Fed. Deposit
Ins. Corp. v. Elder Care Servs., 82 F.3d 524, 572 (1st Cir. 1996)
(noting that "[n]ormally, a party suggesting fraud or bad faith is
expected to point to the misconduct (lies, rigged account books,
self-dealing by a fiduciary) that reflects the bad faith or
constitutes the fraud," but acknowledging that "on some occasions
the inference of fraud or bad faith might be compelled by the
combination of motive and outcome.").
There appears to be scant law on the necessary mens rea
under either §§ 666(a)(1)(A) or 669, and we do not attempt here to
define the precise criminal intent required by these statutes. In
-36-
particular, we do not express any view as to whether the government
is required to prove a self-interested motive under either
§ 666(a)(1)(A) or § 669. It is sufficient for our purposes to note
that, even if Parisi's argument were correct, the evidence
presented was sufficient to support a finding of illicit motive.
After all, Parisi evidently did have a "motive to disobey or
disregard the law," and derived a very concrete benefit from doing
so: continued employment with the Tribe. Although not the direct
beneficiary of the financial maneuvers he executed on Newell's
behalf, Parisi benefitted indirectly by avoiding the fate of others
who protested and subsequently found themselves out of a job.
Thus, even if proof of an illicit motive or personal benefit was
required -- an issue we do not resolve today -- the existence of
such a motive or benefit was supportable from the facts. We
discern no error in the jury's verdicts on this score.
IV. Were the Pinkerton instructions misleading?
Both appellants contend that the district court erred in
twice giving the jury a Pinkerton instruction because doing so
could have misled the jury. When an appellant claims that a jury
instruction would "tend[] to confuse or mislead the jury on the
controlling issues," we review for abuse of discretion. United
States v. Silva, 554 F.3d 13, 21 (1st Cir. 2009) (quoting United
States v. Ranney, 298 F.3d 74, 79 (1st Cir. 2002) (internal
quotation marks omitted). In assessing a challenge to a trial
-37-
court's jury instructions, we must bear in mind that "[a] trial
judge has broad discretion in deciding how best to communicate
complicated legal rules to a lay jury." DeCaro v. Hasbro, Inc.,
580 F.3d 55, 63 (1st Cir. 2009). In addition, "[w]hen reviewing a
district court's instructions to the jury, we look at the charge as
a whole, not in isolated fragments." United States v. Taylor, 54
F.3d 967, 976 (1st Cir. 1995); United States v. García-Pastrana,
584 F.3d 351, 385 (1st Cir. 2009).
A Pinkerton instruction tells the jury that they may hold
a defendant liable for a criminal offense in which the defendant
did not personally participate if it was committed during the
course of and in furtherance of the conspiracy of which he was a
member. See United States v. Pinkerton, 328 U.S. 640, 645-48
(1946); United States v. Hansen, 434 F.3d 92, 103 (1st Cir. 2006).
The district court gave the jury a Pinkerton instruction once when
instructing on counts 29 and 30, and again when instructing on
counts 3, 7, 8, 9, 10 and 11. Both Newell and Parisi objected
before the court instructed the jury, and Parisi objected again
after the instructions were given.
Appellants argue that by giving the Pinkerton instruction
twice, the court created an undue risk that the jury would draw the
inference that a person who had committed the substantive offense
must have been a conspirator as well. See United States v.
Sánchez, 917 F.2d 607, 612 n.4 (1st Cir. 1990) (cautioning against
-38-
automatically providing a Pinkerton instruction in cases "where the
jury is being asked . . . to infer, on the basis of a series of
disparate criminal acts, that a conspiracy existed"). But see
United States v. Wester, 90 F.3d 592, 597 (1st Cir. 1996)
(rejecting challenge to Pinkerton instruction on grounds that in
some cases "some interplay between the jury's assessment of guilt
on the substantive counts and the conspiracy charge is both natural
and appropriate," and that "the fact that substantive crimes were
carried out by the defendants, following discussions between them,
may well make the fact of agreement more likely").
As the government notes, the two Pinkerton instructions
were not duplicative, but rather were addressed to two distinct
sets of offenses -- the misapplication of tribal funds in counts 29
and 30 and the misapplication of government and health care funds
in counts 3, 7, 8, 9, 10 and 11. Even if giving the instruction
twice created a risk that the jury would improperly infer the
existence of a conspiracy, there was a converse risk that failing
to adequately instruct the jury that vicarious liability was
available on these distinct sets of charges would itself have
misled the jury. (The appellants do not contend that Pinkerton
liability was in fact impermissible on either set of charges).
Moreover, it is worth bearing in mind that the appellants were
facing a thirty-count indictment, alleging violations of five
separate statutes in dozens of transactions occurring over the span
-39-
of approximately four years. The trial took eleven days, and the
jury instructions alone occupy approximately forty pages in the
trial transcript. Under these circumstances, it was well within
the court's discretion to decide whether providing the Pinkerton
instruction twice would serve to clarify or to confuse.
V. Were specific unanimity instructions required?
Many of the counts in the indictment -- specifically,
counts 2, 7, 8, 9, 11, 29 and 30 -- alleged multiple fraudulent
transactions. Each of these counts listed multiple instances of
the misapplication of funds occurring within discrete one-year
windows. The appellants now object that the structure of the
indictment was duplicitous and violated their right to a unanimous
verdict. See Fed. R. Crim. P. 31(a). The gist of the appellants'
complaint is that counts 2, 7, 8, 9, 11, 29 and 30 of the
indictment allowed the jury to vote to convict even though they may
have disagreed as to which specific acts of intentional
misapplication were proven beyond a reasonable doubt. Some of the
jurors could have thought, for instance, that the appellants had
intentionally misapplied funds on only a particular subset of
occasions, whereas other jurors could have thought that they had
misapplied funds on a different subset of occasions. Despite this
disagreement, the jurors could still have all agreed that the
government had proven that appellants had intentionally misapplied
at least some funds, and voted to convict on that basis. The
-40-
question is whether unanimity on that proposition would be
sufficient to sustain the convictions.
Normally, "[a] party's entitlement to a unanimity
instruction presents a question of law," meaning that "the district
court's answer to that question engenders de novo review." United
States v. Lee, 317 F.3d 26, 35 (1st Cir. 2003). However, in this
case, neither Newell nor Parisi raised the issue below, so we
review for plain error. United States v. Pagán-Santini, 451 F.3d
258, 267 (1st Cir. 2006); United States v. Puerta, 38 F.3d 34, 40-
41 (1st Cir. 1994). Plain error is established by showing not only
that error occurred, but that it was plain or obvious, violated
substantial rights, and "seriously affected the fairness,
integrity, or public reputation of judicial proceedings." United
States v. Pérez-Montañez, 202 F.3d 434, 442 (1st Cir. 2000)
(quoting United States v. Olano, 507 U.S. 725, 732 (1993)).
The characterization of the issue as one of jury
"unanimity" is in some respects misleading. No one disputes that
conviction requires unanimous agreement amongst the jurors. The
issue is rather what it is that they must be unanimous about. This
question is subtle and difficult, and raises two closely related
sets of issues. The first is: when is a disputed fact -- e.g.,
whether the crime occurred on a Monday or a Tuesday, with a knife
or a gun, against this or that victim -- one that the jury must
unanimously agree upon, and when is it merely dispensable detail?
-41-
And the second is: when is a defendant's conduct one violation of
a statute, and when is it many?
Although the basic issue raised in this portion of the
appeal concerns the second question -- potential duplicity in the
indictment -- the government devotes substantial energy to
resisting the appellants' argument on grounds that proof of a
specific transaction is not an element under the relevant statutes.
But, as we now explain, even if not always in the most perspicuous
manner, our cases have distinguished between unanimity as to a
crime's elements and unanimity as to a crime's instances.
A. Unanimity as to a crime's elements
The government points us toward United States v. Lee, 317
F.3d 26 (1st Cir. 2003). In Lee, the defendant was convicted under
18 U.S.C. § 1029(a)(3), which prohibited possession of "fifteen or
more . . . counterfeit or unauthorized access devices." Lee
claimed that the jury was required to agree on which fifteen
unauthorized credit cards he actually possessed. After considering
the statutory text, relevant legal traditions, the structure of the
law, its legislative history and implications for unfairness, see
Lee, 317 F.3d at 37, we, on de novo review, rejected the claim and
held that "the identity of the particular devices possessed by a
defendant is not an element" under 18 U.S.C. § 1029(a)(3). Id. at
40. We cautioned, however, that "[a]scertainment of the level at
-42-
which unanimity is required . . . tends to be offense-specific."
Id. at 37.
The government insists that Lee controls the outcome here
as well. If so, then the appellants' claims are doomed. If a
claim fails under de novo review, then it must of course also fail
under plain error review. So the question is whether Lee governs.
It does not.
The government fails to appreciate that the appellants
are not contending that the jury had to be given a specific
unanimity instruction because proof of a specific transaction is an
element of § 666(a)(1)(A), i.e., that the government must in every
prosecution under § 666(a)(1)(A) show a single, unambiguous
qualifying transaction. What the appellants are claiming is rather
that the indictment brought against them bundled multiple discrete
violations of the statute under single counts, meaning that, in the
absence of a specific unanimity instruction, it is unclear which
(if any) of the referenced crimes commanded the jury's unanimous
assent. This claim is fundamentally not about the "elements" of
§ 666(a)(1)(A); it is about the structure of the indictment. See
United States v. Holley, 942 F.2d 916, 927 (5th Cir. 1991)
(distinguishing alternative mentes reae for a single killing from
"the situation where a single count as submitted to the jury
-43-
embraces two or more separate offenses, though each be a violation
of the same statute").20
This latter issue was not broached in Lee. The statute
at issue in Lee, 18 U.S.C. § 1029(a)(3), defined the crime in terms
of possession of "fifteen or more" unauthorized credit cards. The
text of the statute thus supported our finding that the statute did
not consist of "fifteen acts of possessing an unauthorized credit
card, but, rather, a single act of possession of fifteen such
devices." Lee, 317 F.3d at 39-40. As we noted, the starting point
of the analysis was the text of the statute, and the statute in
that case made it reasonably clear that "Congress's emphasis was
not on the identity of the actual items . . . but, rather, on the
possession thereof." Id. at 38.
Because § 1029(a)(3) defined an offense in terms of
possession of "fifteen or more" unauthorized credit cards, it was
clear that even if some of the jurors thought that Lee possessed
this pile of cards while other jurors thought he possessed that
pile, either way Lee could have committed no more, and no less,
than a single violation of § 1029(a)(3). The same cannot be said
of the indictment brought against Newell and Parisi.
20
The other material statute in the challenged counts is § 669.
Oddly, however, the parties focus their discussion exclusively on
§ 666(a)(1)(A). Our analysis, accordingly, is also focused
exclusively on § 666(a)(1)(A).
-44-
The government claims that the elements of an offense
under § 666 are:
1) the defendant was an agent of an Indian
tribal government; 2) who embezzled, stole,
fraudulently obtained or willingly converted
property worth at least $5000 of tribal
property [sic]; and 3) did so during a time
when the tribal government received more than
$10,000 in any one year from a qualifying
federal assistance program.
Counts 2, 7, 8, 9, 11, 29 and 30 of the indictment each
contained descriptions of numerous transactions. With a few
exceptions, each of these transactions would seem, on its face, to
be enough to make out an independent violation of § 666(a)(1)(A).
For instance, count two claimed that Newell was "an agent" of the
Tribe, that the tribe "received benefits in excess of $10,000
through contract, grants, and cooperative agreements with U.S.
Departments and agencies," and that he "intentionally misapplied"
the following funds: (1) approximately $50,130 from the BIA Housing
Improvement Program, and (2) approximately $44,000 from the Indian
Township Housing Authority. In light of the government's
characterization of the elements of § 666(a)(1)(A), it appears that
proof of either (1) or (2) would have been sufficient to make out
a complete violation. It thus appears that the appellants have a
point when they complain that the challenged counts presented "two
or more distinct violations of the same statute . . . lumped
together in a single count," an allegation that the government, for
its part, does not deny.
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But if it is true that, for instance, misapplying $50,130
in BIA funds and misapplying $44,000 of Indian Township Housing
Authority funds constitute discrete violations of the statute, then
count two did not allege two different ways of committing one and
the same crime, as in Lee, but rather alleged two entirely distinct
crimes. Under these circumstances, an undifferentiated guilty
verdict on count two would leave it entirely unclear whether the
jurors unanimously agreed (a) that Newell had misapplied the
$50,130 in BIA funds; (b) that he had misapplied the $44,000 in
Indian Township Housing Authority funds; (c) that he had misapplied
both; or (d) that he had misapplied either the BIA or the Housing
Authority funds, although they were not in agreement as to which.
In short, if a specific unanimity instruction was required, it was
not because proof of which specific funds were misapplied is an
"element" under § 666(a)(1)(A), but because this indictment was
duplicitous in consolidating multiple complete offenses under
single counts. Lee did not address this issue, and does not govern
this case.
The government has insisted in this appeal that the
bundled allegations merely specify "alternate means of committing
a crime," and therefore no specific unanimity instruction was
required. As we have noted, it is true that a jury does not need
to agree upon "a single means of commission" of a crime. See Schad
v. Arizona, 501 U.S. 624, 631 (1991); see also Fed. R. Crim. P.
-46-
7(c) ("A count may allege that the means by which the defendant
committed the offense are unknown or that the defendant committed
it by one or more specified means."). However, it does not follow
from the fact that unanimity is not required with respect to
alternative means of committing one and the same criminal act that
unanimity is not required with respect to multiple instances of the
same type of criminal act.21
B. Unanimity as to a crime's instances
The transactions detailed in counts 2, 7, 8, 9, 11, 29
and 30 occurred on various dates and involved misapplications from
various sources. Count two, for instance, merely specifies that at
some point between October 1, 2002 and September 30, 2003, Newell
misapplied some funds from the BIA and also some other funds from
21
To conclude otherwise would be to conflate two distinct senses
of "alternate means of committing a crime." The distinction is
easily illustrated. Suppose, for instance, that there is some
doubt as to whether A robbed B with a knife or a pistol. The
government may obtain a conviction for armed robbery even if some
of the jurors believe A used a knife and others believe he used a
gun. But one thing the government certainly could not do is to
charge A with two armed robberies -- once with the knife, and once
with the gun. The appellants' complaint in this case raises the
latter concern, but the government's response addresses the former.
Indeed, were the facts sufficient to support two distinct armed
robberies -- if, say, A robbed B with a knife and then, feeling
peckish, returned at a later point and robbed B again with a pistol
-- the jury would be required to unanimously agree which of the
crimes the government had proven. The point of specific unanimity
instructions is, presumably, to preserve this right to a unanimous
verdict regardless of whether the government decides to charge the
two armed robberies in separate counts or to instead fold them into
a single duplicitous one.
-47-
the Indian Township Housing Authority. The question now is how
many statutory violations the alleged conduct states.
We cannot evade this question because the Supreme Court
has indicated, on at least two separate occasions, that the jury is
required to unanimously agree as to which instances of a crime the
defendant committed. In Schad, the Supreme Court rejected a
challenge to Arizona's murder statute, which permitted conviction
on a theory of either premeditation or felony murder. In his
concurrence, Justice Scalia concurred with the plurality largely on
grounds of legal tradition, and disavowed the plurality's
explanation for why "it is permissible to combine in one count
killing in the course of robbery and killing by premeditation."
Schad, 501 U.S. at 651 (Scalia, J., concurring). After all,
despite their "moral equivalence," Justice Scalia noted that "[w]e
would not permit . . . an indictment charging that the defendant
assaulted either X on Tuesday or Y on Wednesday."22
Later, in Richardson v. United States, 526 U.S. 813, 815
(1999), the Court held that a jury must agree unanimously as to the
individual violations making up the "series of violations" element
under the federal continuing criminal enterprise statute ("CCE"),
21 U.S.C. § 848(a). The majority specifically cited Justice
Scalia's warning in Schad as authority for the proposition that
22
Schad was decided by a plurality. Hence, Justice Scalia's vote
was necessary to the outcome.
-48-
"the Constitution itself limits a State's power to define crimes in
ways that would permit juries to convict while disagreeing about
means, at least where that definition risks serious unfairness and
lacks support in history or tradition." Id. at 820.
We have described the type of indictment singled out by
Justice Scalia in Schad, and subsequently emphasized in Richardson,
as duplicitous -- that is, as one that "join[s] in a single count
. . . two or more distinct and separate offenses." United States
v. Canas, 595 F.2d 73, 78 (1st Cir. 1979). We must, therefore, now
turn our attention squarely to the question of whether the
transactions bundled under counts 2, 7, 8, 9, 11, 29 and 30 were
duplicitous -- that is, whether they described distinct violations
of §§ 666(a)(1)(A) and 669. If they did, then the failure to give
specific unanimity instructions was error. If not, then not.
Determining whether the challenged counts were
duplicitous is no easy matter.23 In some cases the standard for
individuating crimes is obvious -- we count murders, for instance,
by counting bodies. But in other cases, determining how many
crimes were committed is much less clear. See, e.g., United States
23
We have not always needed to engage in extended analysis of the
allowable unit of prosecution under plain error. For instance, in
United States v. Leahy, 473 F.3d 401, 409-10 (1st Cir. 2007), we
were able to sidestep analysis of this thorny question because
First Circuit precedent had already established the unit of
prosecution under the relevant statute. This is not the case here;
the unit of prosecution under § 666(a)(1)(A) appears not to have
been previously considered by this court.
-49-
v. Rivera Ramos, 856 F.2d 420, 422-23 (1st Cir. 1988). The text of
§ 666 offers little guidance. Section 666(a)(1)(A) refers to
"property that is valued at $5000 or more and is owned by, or is
under the care, custody or control of" qualifying institutions.
Section 669 refers to "any of the moneys, funds, securities,
premiums, credits, property, or other assets of a health care
benefits program." Neither clearly specifies the baseline unit of
prosecution. Although the statute is conditioned upon the
organization's receipt of over $10,000 in benefits from a Federal
program "in any one year period," § 666(b), this is consistent
with either (a) treating all qualifying transactions within a one-
year period as aggregated together to state one offense under § 666
(a)(1)(A), or (b) treating each qualifying transaction as an
independent offense. The text of the statute thus fails to specify
the allowable unit of prosecution.
The legislative history of § 666 indicates that it was
enacted as part of the Comprehensive Crime Bill of 1984, and that
it was
designed to create new offenses to augment the
ability of the United States to vindicate
significant acts of theft, fraud, and bribery
involving Federal monies which are disbursed
to private organizations or State and local
governments pursuant to a Federal program.
United States v. Cicco, 938 F.2d 441, 444 (3d Cir. 1991) (citing S.
Rep. No. 98-225, at 369 (1983), reprinted in 1984 U.S.C.C.A.N.
-50-
3182, 3510). This history does not illuminate Congress's preferred
unit of prosecution.
There is a "surprising paucity of federal case law
identifying the unit of prosecution for § 666." United States v.
Nystrom, No. 07-30100, 2008 WL 4833984, at *10 (D.S.D. Nov. 4,
2008). We have previously held that the government may aggregate
transactions occurring within a one-year time period in order to
meet the $5000 jurisdictional minimum of § 666(a)(1)(A). United
States v. Cruzado-Laureano, 404 F.3d 470, 484 (1st Cir. 2005).
Cruzado-Laureano relied on a case from the Sixth Circuit, United
States v. Sanderson, 966 F.2d 184, 189 (6th Cir. 1992), which
concluded that aggregation to meet the jurisdictional minimum is
permissible when the transactions are part of a single scheme. See
also United States v. Hines, 541 F.3d 833, 837 (8th Cir. 2008)
(interpreting aggregation of transactions for purpose of § 666
generally); United States v. Webb, 691 F. Supp. 1164, 1168 (N.D.
Ill. 1988) ("[A]ggregation is permissible where the thefts are part
of a single plan.").
These cases are not dispositive of the present
controversy. These cases were concerned with the propriety of
aggregation when the transactions involved sums which fell below
the jurisdictional minimum and hence did not make out independent
violations of § 666. However, one of the rationales for allowing
aggregation under such circumstances is to ensure that poorly
-51-
motivated officials do not evade liability under § 666 simply by
stealing less than $5000 at a time. See Webb, 691 F. Supp. at
1168; Sanderson, 966 F.2d at 189. Worries about opportunistic
evasion of liability do not apply to transactions that involve sums
larger than the statutory minimum. Since most of the bundled
transactions in this case involved sums greater than $5000, it is
not clear whether this line of precedent would support the
aggregation that occurred in this case. But see United States v.
Urlacher, 784 F. Supp. 61, 64 (W.D.N.Y. 1992) (holding that the
unit of prosecution under § 666(a)(1)(A) is "'$5,000 or more,' from
whatever source, in any one year period in which the government or
agency at issue receives more than $10,000 in Federal aid.").
Fortunately, we are not completely without compass. We
have previously given more general consideration to the
individuation of criminal transactions. See United States v.
Verrecchia, 196 F.3d 294, 297-301 (1st Cir. 1999). In Verrecchia,
an undercover sting caught the defendant attempting to fence stolen
firearms. When he was arrested, the police discovered weapons in
both his truck and in the adjacent barn. Verrecchia was
subsequently charged with (among other things) one count related to
the two weapons found in the truck and another for the twenty-one
weapons found in the barn, under the auspices of the federal felon-
in-possession statute, 18 U.S.C. § 922(g)(1). Id. at 296.
Verrecchia contended that the counts were duplicitous insofar as
-52-
they each alleged multiple crimes, and that it was plain error not
to instruct the jury that they had to agree on which gun or guns he
was shown to have possessed. Id. at 297.
We rejected the claim under plain error review, and held
that "[c]ontrary to Verrecchia's contention, . . . the government
could not have properly charged him with twenty-three separate
crimes for the twenty-three different guns he allegedly possessed."
Id. at 298. We relied in part on the Supreme Court's decision in
Bell v. United States, 349 U.S. 81 (1955), and in part on the
overwhelming consensus from other courts of appeals that "the
simultaneous possession of multiple firearms . . . constitutes only
one crime." Verrecchia, 196 F.3d at 297.
In Bell, the Supreme Court emphasized the "presupposition
of our law to resolve doubts in the enforcement of a penal code
against the imposition of harsher punishment." Bell, 349 U.S. at
83. Therefore, "if Congress does not fix the punishment for a
federal offense clearly and without ambiguity, doubt will be
resolved against turning a single transaction into multiple
offenses." Id. at 84. Accordingly, after finding that the
language of § 922(g)(1) (referring to "any firearm") was, like the
language of the Mann Act at issue in Bell (18 U.S.C. § 2421,
referring to "any woman or girl"), ambiguous as to the allowable
unit of prosecution, and finding no indication of Congress's clear
intent "to treat each possession of a firearm as a separate
-53-
violation," we applied Bell in holding that the government properly
charged him with two offenses rather than twenty-three -- one for
the two guns found in the truck and the other for the twenty-one
guns found in the shed. Verrecchia, 196 F.3d 298.
The government cites Verrecchia for the proposition that
"[w]here separate instances of the same act are grouped in a single
count . . . there is no duplicity." This is a serious
misunderstanding of Verrecchia. After all, on this view, the
indictment in Verrecchia should have contained only one count,
encompassing all twenty-three guns. But we quite clearly held that
"the indictment here correctly grouped the firearms into counts
based on the place of possession." Id. at 298. Moreover, Bell, on
which we relied, did not say that every instance of the same type
of criminal act could be lumped together under one count. It said
that, for the sake of lenity, a single transaction should not be
split up into multiple offenses. The focus on the transaction as
the unit of prosecution explains why there were two counts in
Verrecchia, rather than either one or twenty-three: possession of
the guns in the truck counted as one transaction, and possession of
the guns in the shed counted as another. Thus, Verrecchia
permitted bundling of guns by transaction, not simply qua instances
of the same type of criminal act. See also United States v.
Waldman, 579 F.2d 649, 654 (1st Cir. 1978) (identifying appropriate
unit of prosecution under 15 U.S.C. § 77(q)a to be "separate
-54-
transactions accompanied by the use of the mails). But see United
States v. Campbell, No. 90-1130, 1990 WL 151318, at *1-2 (1st Cir.
July 19, 1990) (treating unit of prosecution under 26 U.S.C. § 5861
(d) as possession of the "individual firearm").24
But if, as we held in Verrecchia, the fact that some guns
are stored in a shed and others in a truck parked next to it is
sufficient to constitute two distinct transactions, then there is
a compelling claim that misapplying funds from agency A in March
and misapplying funds from agency B in July is also sufficient to
constitute two distinct transactions. Thus, far from supporting
the government's position, Verrecchia appears to seriously
undermine it. In light of Verrecchia, insofar as the conduct
aggregated under counts 2, 7, 8, 9, 11, 29 and 30 involved distinct
transactions, the counts must be deemed to bundle within their
ambit multiple distinct violations of § 666(a)(1)(A).
There is thus reason to believe that the indictment
brought against Newell and Parisi was constitutionally infirm. For
24
Focus on the transaction as the unit of prosecution, at least
when Congress has left the issue open, is consistent with how we
have treated claims of multiplicity in an indictment. Multiplicity
is the converse of duplicity: it alleges that the government seeks
multiple punishments for the same offense via an impermissibly
repetitive indictment. In addressing multiplicity challenges, we
have noted that "an inquiring court must determine whether the
facts undergirding each count can be treated as a distinct unit of
prosecution." United States v. Pires, No. 10-1062 (1st Cir.
April 6, 2011) at *12. In applying this test, we focus on whether
there is evidence that might establish that the conduct in question
constitutes "separate and distinct transactions." Id.
-55-
the only sense in which it is true that a duplicitous count merely
specifies "alternate means of committing" some crime is in the
sense in which it is true that an indictment that alleges that A
killed B on Monday, C on Tuesday and D on Wednesday specifies
"alternate means" of committing a single instance of the crime of
murder. The Supreme Court has made quite clear that this form of
indictment violates a defendant's right to a unanimous verdict.
See Richardson, 526 U.S. at 820; Schad, 501 U.S. at 651 (Scalia,
J., concurring).
Other circuits have come to similar conclusions. In
United States v. Holley, the Fifth Circuit held that an indictment
that charged counts of perjury on the basis of multiple statements
required a specific unanimity instruction, as the "government was
required to prove dissimilar facts to show the knowing falsity of
each statement." Holley, 942 F.2d at 928-29. The Holley court
specifically relied on Justice Scalia's warning against duplicitous
indictments in Schad. Id. at 927; see also United States v. Bins,
331 F.2d 390, 393 (5th Cir. 1964) (noting that a two-count
indictment, each count of which alleged multiple acts of uttering
and publishing false documents in violation of 18 U.S.C. § 1010,
was duplicitous, as "[t]he filing of each false document would
constitute a crime, and each should be alleged in a separate and
distinct count of the indictment."). The Third Circuit has held
that the unanimity requirement extends to an indictment that
-56-
includes "several transactions or occurrences, any of which could
constitute one of the acts proscribed by the charged statutes."
United States v. Beros, 833 F.2d 455, 460-61 (3d Cir. 1987). The
Beros court noted that "just as the sixth amendment requires jury
unanimity in federal criminal cases on each delineated offense that
it finds a defendant culpable . . . it must also require unanimity
regarding the specific act or acts which constitutes that offense.
Absent such certainty, the unanimity requirement would provide too
little protection in too many instances." Id. at 461. The Seventh
Circuit came to the same conclusion in a case very similar to
Holley. See United States v. Fawley, 137 F.3d 458, 471 (7th Cir.
1998). But see United States v. Margiotta, 646 F.2d 729, 733 (2d
Cir. 1981) (holding that the "policy" considerations behind the
unanimity requirement suggest "that a single count of an indictment
should not be found impermissibly duplicitous whenever it contains
several allegations that could have been stated as separate
offenses . . . but only when the failure to do so risks unfairness
to the defendant.").
The risks of serious unfairness presented by a
duplicitous indictment are apparent. In conditions where jurors
disagree among themselves as to just which offenses the evidence
supports, the defendant may nevertheless wind up convicted because
the jurors agree that the evidence showed that he had committed an
offense, even if it was ambiguous as to which one. See United
-57-
States v. Valerio, 48 F.3d 58, 63 (1st Cir. 1995). In other words,
although a jury may return a guilty verdict even if the jurors
disagree about how a specific crime was committed, this is quite
different from allowing a jury to return a guilty verdict when they
disagree even as to which crime or crimes were committed. The
Supreme Court emphasized just this kind of danger in Richardson,
warning that the lack of a unanimity instruction could cover up
"wide disagreement among the jurors about just what the defendant
did, or did not, do." Richardson, 526 U.S. at 819; see also Beros,
833 F.2d at 460 (observing that a general unanimity instruction is
likely to be inadequate "where the complexity of the case, or other
factors, creates the potential that the jury will be confused.").
Secondly, in criminal cases, the government is still
ostensibly required to prove the defendant's guilt beyond a
reasonable doubt. See United States v. Ayewoh, 627 F.3d 914, 930
(1st Cir. 2010) (Thompson, J., dissenting). In aggregating
multiple instances of the same crime, the prosecution may bundle
together alleged offenses that are strongly supported by the
evidence with ones that are only moderately, or even weakly,
supported by the evidence. If a jury does not specifically
indicate that it has assented to each alleged offense, then by
assenting to the bundle it has done no more than indicate its
agreement with the proposition that the defendant is guilty of
some, though perhaps not all, of the charged conduct. (And it may
-58-
not have even indicated that much, if the jurors did not agree
which offense was committed -- which, again, we simply do not know
without an specific jury instruction). The consequences of
conviction on that count may potentially lead to punishment over
and above what the government's proof actually sustains. This is
a danger we have stressed before, albeit in the context of
unanimity as to a crime's elements rather than duplicity per se.
See Lee, 317 F.3d at 36 (noting that "the unanimity requirement
. . . helps to ensure that no defendant will be convicted unless
the government has carried its burden of proving guilt beyond a
reasonable doubt," and that "leaving jurors free to convict despite
disagreements about critical facts will imperil the integrity of
the reasonable doubt standard.").
For these reasons, we hold that charges 2, 7, 8, 9, 11,
29 and 30 were duplicitous, and that the failure to provide a
specific unanimity instruction was error.
C. If there was error, was it plain?
Nevertheless, despite our concern about the form of the
indictment in this case, we cannot lose sight of the fact that
these issues were not raised below and so are before us on plain
error review. As we have noted on an earlier occasion, the hurdle
of plain error "nowhere looms larger than in the context of alleged
instructional errors." United States v. Paniagua-Ramos, 251 F.3d
242, 246 (1st Cir. 2001).
-59-
Although we have concluded that the failure to provide a
specific unanimity instruction was error and violated the
appellants' right to a unanimous jury verdict, this alone is not
sufficient to satisfy the rigors of plain error review. To prevail
under plain error requires showing, among other things, that any
error of law was plain -- that is, that it was "obvious and clear
under current law." Smith v. Kmart Corp., 177 F.3d 19, 26 (1st
Cir. 1999).
We cannot say that the error here met that standard. We
note that this court has previously rejected a claim substantially
similar to that brought by the appellants, albeit with fairly
minimal analysis. See Pagán-Santini, 451 F.3d at 267. Moreover,
as we noted in Pagán-Santini, "the law is less clear than it might
be as to when juror unanimity is required in the face of
alternative paths to a verdict." Id.; see also United States v.
Marino, 277 F.3d 11, 32 (1st Cir. 2002) (declining to find plain
error in trial court's failure to give specific unanimity
instruction with respect to charge of conspiracy to murder thirteen
individuals on grounds of the "unsettled state of the law.") It
appears not to have gotten any clearer since then.
In light of the presence of some, even if not exactly
overwhelming, countervailing authority, and because of the lack of
doctrinal clarity in this area -- the relevant unit of prosecution
under § 666(a)(1)(A), the crucial issue underpinning the
-60-
appellants' claim, appears not to have been hitherto addressed by
this circuit -- we cannot say with confidence that any error here
was plain.
We emphasize, however, that because we hold that the
indictment was impermissibly duplicitous, plain error review may
prove to be cold comfort for similarly defective charging
instruments going forward.
VI. Should Newell have been sentenced under § 450d?
Newell claims that the district court erred in sentencing
him pursuant to 18 U.S.C. §§ 666 and 669 rather than 25 U.S.C.
§ 450d, despite the fact that he was charged with, and convicted
of, violating only the former statutes. Section 666 criminalizes
the intentional misapplication of funds by an official of an
organization receiving over $10,000 per year in federal funds, and
carries a maximum sentence of ten years; § 669 criminalizes
intentional misapplication of the assets of "health care benefit
program," again setting a statutory cap of ten years imprisonment.
By contrast, § 450d imposes a maximum sentence of two years for
tribal officers who are convicted of misapplying funds received
under the Indian Self-Determination and Education Assistance Act.
Section 450d is, Newell insists, specifically directed to Indian
officials unlike the general purpose §§ 666 and 669 statutes.
Newell argues that the rule of lenity, as well as the principle of
statutory construction favoring specific statutes over general
-61-
statutes, require that he be sentenced under § 450d,
notwithstanding that one is usually sentenced under the statute
that one is accused of violating.
"[Q]uestions of statutory interpretation that bear on
sentencing" engender de novo review. United States v. Vidal-
Reyes, 562 F.3d 43, 48 (1st Cir. 2009).
In support of his position, Newell cites the dissenting
opinion in United States v. Largo, 775 F.2d 1099 (10th Cir. 1985)
(McKay, J., dissenting). In Largo, the majority upheld the
defendant's sentence under 18 U.S.C. § 641 for misapplying federal
funds, rejecting the argument that the defendant should have been
sentenced under § 450d. Id. at 1102. The dissenting judge
disagreed, explaining that, because § 450d specifically applied to
tribal officers and carried a lighter maximum sentence, remand for
resentencing under 25 U.S.C. § 450d was required. Id.
Newell's argument is not persuasive. The statute under
which Newell was charged explicitly applies to tribal officers,
undermining Newell's contention that Congress intended prosecution
of tribal officers to be governed exclusively by 25 U.S.C. § 450d.
See 18 U.S.C. § 666(a)(1) (referring specifically to "agent[s] of
. . . Indian tribal government."). Moreover, Newell's proposed
application of the rule of lenity is questionable. The rule of
lenity, which favors narrow construction of ambiguous criminal
statutes, is of little import in choosing between the application
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of overlapping criminal statutes. In any case, absent a
discriminatory motive on the part of prosecutors, "what charge to
file . . . generally rests entirely in the prosecutor's
discretion." United States v. Bucci, 582 F.3d 108, 113 (1st Cir.
2009) (internal citations and alterations omitted). Consequently,
we discern no error and reject Newell's request for resentencing
under 25 U.S.C. § 450d.
VII. Calculation of the restitution order
Parisi objects to the restitution order of approximately
$1.6 million that was entered against him. He contends that the
restitution order should be remanded to the district court to
correct a multitude of alleged errors. We address Parisi's
contentions one by one. As is well-established, "[w]e review
restitution orders for abuse of discretion and the subsidiary
findings of fact for clear error. If the appellant's challenge is
based on a legal conclusion, we review that conclusion de novo.
Where the defendant has failed to object below . . . we review only
for plain error." United States v. Antonakopoulos, 399 F.3d 68,
83-84 (1st Cir. 2005) (citation omitted).
A. Who were the victims?
Parisi argues that "to the extent there were any victims,
they were the [tribal] programs which did not have use of the
funds." The federal agencies to whom Parisi is required to make
restitution are not "victims" of his conduct, he claims, because
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even if "the federal government's funds were not utilized as
intended, the federal government turned over the right to possess
those funds when it transferred the funds to" the Tribe.
The restitution order is governed by the Mandatory Victim
Restitution Act, codified at 18 U.S.C. § 3663. As it happens, the
statute includes a definition of "victim": "a person directly and
proximately harmed as a result of the commission of an offense for
which restitution may be ordered including, in the case of an
offense that involves as an element a scheme, conspiracy, or
pattern of criminal activity, any person directly harmed by the
defendant's criminal conduct in the course of the scheme,
conspiracy, or pattern." 18 U.S.C. § 3663(a)(2).
We have noted, as Parisi concedes, that governmental
entities may, "without dispute," be considered victims under the
MVRA. United States v. Janosko, No. 10-1046, 2011 WL 1366436, at
*1 (1st Cir. Apr. 12, 2011). What, then, is the basis of Parisi's
claim that the agencies were not victims of his conduct? The
closest he comes to pressing the point is his assertion, noted
above, that the agencies lost any right to possess the relevant
funds once they were granted to the Tribe. But this contention
misses the point entirely. If the federal agencies were harmed, it
was not by losing possession of the funds -- these were, after all,
grants -- but rather by not having the funds go to the designated
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programs.25 For Parisi to have so much as a shadow of a claim that
the federal agencies were not his victims, he would have to show
why that kind of frustrated expectation is not a cognizable harm
under the MVRA.26 But he nowhere makes any such allegation. We
therefore consider the claim waived, and do not address it.
Parisi spends a good deal of his discussion of
restitution claiming that a restitution order would work a
"fundamental unfairness." Parisi claims that misuse of federal
grant money was standard practice at the Tribe long before he
arrived on the scene, and that the tribal council was well aware of
this fact. Parisi claims that the tribal council acknowledged, in
a May 2004 meeting, both that they were seriously overspending
their budget and that federal SAMHSA grant money was being siphoned
25
The legislative history of § 666 makes this point clear, as
§ 666 was designed to cover the situation in which "even though
title to the monies may have passed, the Federal Government clearly
retains a strong interest in assuring the integrity of such program
funds." Cicco, 938 F.2d at 445 (quoting S. Rep. No. 225, at 369
(1983), reprinted in 1984 U.S.C.C.A.N. 3182, 3510).
26
This is consistent with United States v. Cornier-Ortiz, 361 F.3d
29, 41-42 (1st Cir. 2004), in which we vacated a restitution order
requiring the defendant, who had been convicted under
§ 666(a)(1)(A), to compensate HUD for intentionally misapplied
funds. There, we emphasized that even though the defendant had
intentionally misapplied the funds, the work that the funds were
meant to pay for had actually been completed, a fact pointed out by
the government's own witness. Id. at 42. In light of the lack of
evidence as to any actual loss, ordering restitution under these
circumstances would, we found, "be an unfair windfall to HUD." Id.
In this case, however, although the misapplied funds were arguably
used for the benefit of the Tribe, they were used in contravention
of their specified purposes.
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off to pay their own salaries. In short, Parisi's claim is that
the tribal council was entirely aware of and complicit in Newell's
financial shenanigans, and that he should not be made to compensate
the Tribe for the financial consequences of "decisions of the
tribal political leadership, including the governor and tribal
council members," particularly when he, as a tribal outsider, had
no say in making these decisions.
This is an argument about whether or not what he did
ought to be considered a crime, or perhaps whether it is fair to
punish him while not punishing the other allegedly complicit
parties. It does not appear to be an argument about whether there
was error in calculating the restitution order. Parisi had an
opportunity to present this argument to a jury of his peers. We
will not reopen the matter now.
B. How harmful was it?
Parisi next challenges the inclusion of specific amounts
in the restitution order. Parisi disputes the following five
amounts: (1) $129,044 relating to the SAMHSA funds at issue in
counts three and five; (2) $33,000 spent on a Racino referendum
effort, as well as other transfers from the health center's budget
over which he had no control; (3) $15,900 of housing authority
funds; and (4) a $30,000 DOJ COPS grant.27
27
In his opening brief, Parisi contested the inclusion of $229,000
from count eleven, claiming that he had been acquitted on that
count. The government pointed out that Parisi was in fact
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Before we address these contentions, however, we must
first determine whether these claims were preserved. The
government claims that Parisi did not properly object to some, and
possibly any, of the specified amounts at sentencing. The
government claims that Parisi only objected at sentencing to (3),
the Racino expenditures, and that it was raised only with respect
to the guidelines calculation rather than the size of the
restitution order itself. Paragraphs 71-72 of the PSR detailed the
use of health center funds to pay for the Racino effort. Parisi
objected to paragraph 71 on the ground that he had no authority to
initiate or stop the use of the $33,000 for the Racino effort, and
he repeated this contention at the sentencing hearing. The
government's position appears to be that although Parisi objected
to the inclusion of the Racino funds, he did not object to the
"amount" imposed.
We do not know what to make of this contention. Parisi's
claim was that the Racino funds should not have been included at
all, from which it follows that in his view the correct amount was
zero. Moreover, the government's contention that "[t]he sentencing
transcript reveals only one reference to any of the four" disputed
amounts is belied by the record. Parisi's objections to the PSR's
inclusion of the $129,044 in SAMHSA funds can be found on pages 8-
convicted on count eleven. Parisi conceded the point in his reply
brief, but then substituted a challenge to the $30,000 COPS grant
instead.
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10 of the sentencing transcript. His objections to the DOJ COPS
grant can be found on pages 15-16. The discussion of Parisi's
involvement with transfers from the Housing Authority, although
more elliptical, can be found on page 8. The objections were
preserved.
1. $129,044 of SAMHSA funds
Parisi first contests the inclusion of the $129,044
deriving from the misapplication of SAMHSA funds used to pay ghost
employee salaries in the early part of 2004. Parisi argues that he
was not the cause of this loss under the standard announced in
United States v. Vaknin, 112 F.3d 579, 589 (1st Cir. 1997).
In Vaknin, we held that a "modified but for standard of
causation is appropriate for restitution under the [Victim and
Witness Protection Act]," meaning that "the government must show
not only that a particular loss would not have occurred but for the
conduct underlying the offense of conviction, but also that the
causal nexus between the conduct and the loss is not too attenuated
(either factually or temporally)." Id. at 589-90. We cautioned
that "what constitutes sufficient causation can only be determined
case by case, in a fact-specific probe." Id.28
28
Vaknin interpreted the predecessor to the MVRA, the Victim and
Witness Protection Act ("VWPA"). However, we have noted that "the
causation language of the MVRA is the same as that in the VWPA,
making it appropriate for us to turn to Vaknin for guidance" in
interpreting the MVRA. United States v. Cutter, 313 F.3d 1, 7 (1st
Cir. 2002). There is a further wrinkle, however, insofar as the
VWPA was amended after Vaknin to clarify that restitution may be
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Parisi was acquitted of count three, which alleged the
actual misapplication, but was convicted of count five, which
alleged filing false statements with HHS relating to the misuse of
the SAMHSA funds.29 Although the timing is not entirely clear, it
appears that the funds were disbursed no later than May 2004, i.e.,
before the falsified 269 forms were filed with HHS. The form
therefore could not have been a "but for" cause in causing HHS to
disburse the funds. See id. at 589 ("Restitution should not be
ordered in respect to a loss which would have occurred regardless
of the defendant's conduct."). This sum therefore should not have
been included under Vaknin.30
ordered for harms caused not just by a defendant personally, but
also by his or her co-conspirators as well, at least so long as
those harms were "reasonably foreseeable." See United States v.
Collins, 209 F.3d 1, 4 (1st Cir. 1999). Similar language is
contained in the MVRA. See 18 U.S.C. § 3663(a)(2). Nevertheless,
even if the eligible sources of harm are more numerous now than
they were under Vaknin, this is a distinct issue from what it takes
to count as having caused the harm, on which Vaknin remains
authoritative.
29
As noted above, we vacate Parisi's conviction on this count on
grounds of insufficient evidence that he knew the forms to be
false.
30
To be clear, we do not base our conclusion here on our holding
that the evidence was insufficient to convict Parisi for knowingly
making false statements to HHS. See United States v. Watts, 519
U.S. 148, 156 (1997) (noting, in a pre-Booker Guidelines case, that
"application of the preponderance standard at sentencing generally
satisfies due process.") Our conclusion is based on First Circuit
precedent as to which harms are compensable under the MVRA.
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2. $33,000 Racino effort and Health Center transfers
Parisi also contests the inclusion of $33,000 used by the
tribal government to pay for expenses stemming from an effort to
get a referendum question on the November 2007 ballot asking for
voter approval of a Racino. Less specifically, he challenges the
inclusion of any of the "transfers from the Health Center account
used to make PTIT's payroll." Parisi does not provide a specific
dollar amount, but the challenge appears to account for over $1
million of the $1.6 million restitution order.
In both cases, the gist of Parisi's argument is that he
was not the "cause" of these losses, as the decision to make those
illicit transfers was made by Newell and other members of the
Tribe's political leadership. Newell, in many cases with the
tribal council's express consent, made the decision to transfer
funds from federal grants to pay for, among other things, the
council members' own salaries. Similarly, the $33,000 check to the
Joint Tribal Council to cover the cost of the Racino referendum
effort was authorized by Newell and approved by three separate
council members. It was delivered to the Joint Tribal Council by
Joe Socobasin, the Tribe's lieutenant governor at the time. It
does not appear that Parisi had any say in deciding whether to
support the Racino effort in the first place, or where the funds to
do so would come from. The entirety of Parisi's involvement with
this check appears to be that Newell ordered him to have it drawn
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up, an order that he in turn conveyed to Frances Neptune, the
Tribe's IHS bookkeeper. The Tribe's habit of playing fast and
loose with federal grant money, Parisi argues, was present "before
[Parisi] arrived . . . and continued after he left." Therefore, he
contends, he was not a cause of the losses under Vaknin.
The uncontroverted evidence in the record does indeed
suggest that Parisi may have been set up by Newell to take the fall
for the Tribe's corrupt financial practices. Unfortunately for
Parisi, however, it is well established that defendants can be
required to pay restitution for the reasonably foreseeable offenses
of their co-conspirators. Collins, 209 F.3d at 4. As we noted
above, even if Parisi's role was as limited as he suggests --
carrying out or transmitting Newell's orders -- that is sufficient
to support his conviction for conspiring with Newell to misapply
federal funds. Since at some point the financial impropriety must
have been glaringly obvious, and since there is no question that
Parisi's co-conspirator, Newell, caused the transfers, Parisi's
challenge to the inclusion of these amounts must be denied.
Parisi's reliance on United States v. Neal, 36 F.3d 1190,
1200-01 (1st Cir. 1994), is misplaced. It is true that we held in
Neal that a person who aided others in committing a bank robbery,
but did not actually participate in the robbery itself, could not
be required on that basis alone to make restitution for the full
amount of the loss suffered by the bank. However, as we made clear
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in Neal, Congress has insisted on a different standard when a
defendant has been convicted of a federal crime that "require[s]
proof of a scheme, conspiracy, or pattern of criminal conduct."
Id. at 1200; see also Collins, 209 F.3d at 3.31 Unlike the
defendant in Neal, Parisi was most definitely convicted of such a
crime. Therefore, the reckoning of the losses that may be laid at
his doorstep is substantially broader than it otherwise would have
been.
3. $15,900 Indian Township Housing Authority
Parisi claims that the district court erred in including
$15,900 based on transfers from the Indian Township Housing
Authority. The district court, Parisi argues, explicitly conceded
that Parisi was not involved in these transfers but went ahead and
included them in the restitution order anyway. Our review is for
abuse of discretion.
Parisi claims that the district court found that Parisi
"had nothing to do" with the transfers from the Housing Authority.
It is not clear from the record whether or not the district court
made such a finding. The portion of the sentencing transcript on
which Parisi relies shows that the parties were disputing another
matter -- Parisi's contention that the PSR should reflect that he
31
The operative statutory language of the VWPA, at issue in Neal
and Collins, is identical to that of the MVRA, applicable here.
Compare Neal, 36 F.3d at 1200 (discussing VWPA), and Collins, 209
F.3d at 2-3 (same), with 18 U.S.C. § 3663(a)(2) (MVRA).
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never transferred money to accounts outside the tribal government's
control. The court overruled Parisi's objection, and stated that
it "takes into account the parenthetical added to paragraph 26, and
with that addition believes the paragraph to be accurate."32
However, while the referenced parenthetical does include Parisi's
insistence that he had nothing to do with the Housing Authority
transfers, no actual discussion of that claim is reflected in the
sentencing transcript, as the discussion instead was focused on the
issue of his responsibility for transferring money to non-tribal
accounts.
Also bearing on our analysis here is the fact that many
of these transfers from the Housing Authority's funds appear to
have been undertaken exclusively by Newell for his own purposes --
e.g., a "donation" for the marriage of "Mr. and Mrs. Tammy Newell,"
unspecified "loans" in small amounts, compensation to Newell
himself for "mileage," and medical assistance to Tribe members
whose relationship to Newell and/or Parisi is unexplained. In the
absence of an explicit ruling by the district court, we are left
uncertain whether the district court viewed these transfers as not
within the scope of the (tacit) agreement between Newell and
32
The parenthetical reads, "Parisi advised that he never
transferred any money from a federally-funded account to an account
outside the control of the [Tribe]. He only transferred federal
funds between [Tribe]-controlled accounts, and always at the
Governor's direction. Parisi had nothing to do with Housing
Authority transfers."
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Parisi, but mistakenly did not deduct them from the overall
restitution order, or if the court concluded that they were,
appearances notwithstanding, indeed part of the overall conspiracy.
Particularly in light of the extensive number of transactions
involved, and the factual complexity of the case, both
possibilities seem equally plausible. Because of the ambiguity in
the record, we remand the restitution order to the district court
to clarify its disposition of the $15,900 Indian Township Housing
Authority transfers.
4. $30,000 DOJ COPS grant
Parisi raises a similar contention in his reply brief as
to the inclusion of $30,000 based on the misapplication of a DOJ
COPS grant. The district court stated that "[b]oth sides seem to
agree that the PSR is inaccurate to the extent it states that
Mr. Parisi requested the transfer of those funds. The statement
will not be considered by the court." Nevertheless, the
restitution order included this amount. Parisi's suggestion is
that this was an oversight. The government's somewhat gnostic
counter-suggestion is that the district court ruled only that it
"would not consider at sentencing" the PSR's claim that Parisi had
requested the transfer, but that it nevertheless intended to
include the $30,000 in the restitution order.
Once again, it is simply unclear on the record what the
district court intended. It is possible that the district court
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concluded that the $30,000 DOJ COPS transfer was to be excluded
from consideration. But we are not in a position to assert as much
with any confidence.
However, Parisi only raised this issue in his reply
brief. As we have noted, "issues raised for the first time in an
appellant's reply brief are generally deemed waived." United
States v. Torres, 162 F.3d 6, 11 (1st Cir. 1998). Parisi attempts
to circumvent this rule by characterizing the DOJ COPS grant issue
as merely another instance of the restitution order including
"acquitted conduct." But Parisi was not in fact acquitted of this
conduct. He was convicted of count 30, which, among other things,
alleged misapplication of the COPS grant. The claim is therefore
procedurally defaulted.
C. Repayment of misapplied funds
Parisi next argues that the district court failed to
consider "amounts that were misapplied but subsequently repaid."
As before, our review is for abuse of discretion.
Parisi argues that some of the moneys that were
transferred from the federal grants into the Tribe's general
accounts were subsequently repaid by the Tribe. Therefore, it was
error to base the restitution order on the initial quantity
transferred rather than the amount net repayments. Parisi argues
that the restitution order "grossly exaggerates" the actual losses,
and notes that restitution must be gauged by "actual loss" to the
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victim, United States v. Galloway, 509 F.3d 1246, 1253 (10th Cir.
2007), and that the burden is on the government to establish the
amount of the loss. 18 U.S.C. § 3664(e).
Unfortunately, Parisi fails to provide any details about
the alleged repayments. He fails to specify to whom the payments
were made, who they were made by, when they were made, or how much
was repaid. At sentencing, the district court heard from the
parties as to whether those Tribe members whose retirement accounts
had been affected by the misuse of earmarked money had been
compensated, and that the government conceded that "five or six"
such individuals had in fact been repaid. Neither party put
forward a specific dollar amount that had been repaid.33
The MVRA stipulates that "[a]ny dispute as to the proper
amount or type of restitution shall be resolved by the court by the
preponderance of the evidence." 18 U.S.C. § 3664(e). As it does
not appear that Parisi disputed the inclusion of allegedly repaid
amounts in the PSR or at sentencing, we do not discern any abuse of
discretion on this score.
D. The Excessive Fines clause
Finally, Parisi claims that the imposition of the
approximately $1.6 million restitution order is a violation of the
33
Count 30 of the indictment charged Newell and Parisi of
misapplying $45,824 from the Tribe's retirement fund; the judgment
entered against Parisi ordered restitution in the amount of
$43,367.50.
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Excessive Fines Clause of the Eighth Amendment because (a) the
funds were spent on tribal government expenses, (b) Parisi did not
personally benefit from the funds in question, (c) he does not have
the resources to repay such an amount, and (d) the size of the
order will "prevent him from achieving any reasonable livelihood."
We have never held that the Excessive Fines Clause of the
Eighth Amendment applies to restitution. The circuits that have
considered challenges to restitution orders under the Excessive
Fines clause have held that where the restitution order reflects
the amount of the victim's loss no constitutional violation has
occurred. See United States v. Lessner, 498 F.3d 185, 205-06 (3d
Cir. 2007); United States v. Newsome, 322 F.3d 328, 342 (4th Cir.
2003); United States v. Dubose, 146 F.3d 1141, 1145 (9th Cir. 1998)
(noting that "[w]here the amount of restitution is geared directly
to the amount of the victim's loss caused by the defendant's
illegal activity, proportionality is already built in."). This is
not surprising, as restitution is inherently proportional, insofar
as the point of restitution is to restore the victim to the status
quo ante. Restitution is distinct in this regard from forfeiture,
as Parisi concedes.
In this case, the amount of restitution ordered was the
sum of the moneys that Parisi was found to have misapplied or for
which he submitted false claims. Even assuming that restitution
orders may be challenged under the Excessive Fines clause, the
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restitution ordered in this case would not therefore violate
Parisi's rights.
VIII. Conclusion
For the reasons given above, we vacate Parisi's
conviction on count five, reduce the restitution order entered
against him by $129,044, remand for further clarification of
whether the Indian Township Housing Authority transfers were meant
to be included in the restitution order, and otherwise affirm.
Vacated and Remanded.
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