United States Court of Appeals
For the First Circuit
Nos. 14–1227
14–1250
UNITED STATES OF AMERICA,
Appellee,
v.
CHRISTOPHER S. GODFREY; DENNIS FISCHER,
Defendants, Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Lynch, Chief Judge,
Thompson and Kayatta, Circuit Judges.
William J. Lovett, with whom Anthony E. Fuller, Melissa
Baldwin, and Collora LLP were on brief, for appellant Godfrey.
Robert L. Sheketoff on brief for appellant Fischer.
Stephan E. Oestreicher, Jr., with whom Carmen M. Ortiz, United
States Attorney, Adam J. Bookbinder, Assistant United States
Attorney, Mona Sedky, Attorney, Criminal Division, Leslie R.
Caldwell, Assistant Attorney General, and Sung-Hee Suh, Deputy
Assistant Attorney General, were on brief, for appellee.
May 26, 2015
KAYATTA, Circuit Judge. In 2009, when many homeowners
faced foreclosure, defendants Christopher Godfrey and Dennis
Fischer started and ran a company that purported to sell mortgage
modifications. For a hefty price, the company actually sold a
doctored version of a free government form. Securing sales
nationwide, company employees systematically lied to customers
through personalized mailings and cold calls. After the company
bilked distressed homeowners across the country for almost two
years, law enforcement officials came knocking, a grand jury handed
down indictments, and Godfrey and Fischer were convicted of mail
fraud, wire fraud, and misuse of a government seal, as well as
conspiring to commit these crimes.
On appeal, Godfrey and Fischer challenge their
convictions by advancing four arguments: (1) the district court
violated their confrontation rights by admitting into evidence
customer complaints and cease-and-desist letters from regulators;
(2) the district court constructively amended the indictment by
admitting evidence of their lies to the IRS and then allowing the
jury to convict them based on those lies; (3) the district court
erred in instructing the jury on the elements of the charged misuse
of a government seal; and (4) the district court abused its
discretion by not dismissing a juror for bias mid-trial. Finding
none of these arguments persuasive, we affirm.
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I. Background1
In early 2009, the federal government started the Home
Affordable Modification Program ("HAMP") to provide financial
relief during the foreclosure crisis. HAMP provided incentives for
lenders to modify existing loans when homeowners had financial
hardship and an ability to repay under new terms. To apply for
HAMP relief, homeowners filled out a Request for Modification and
Affidavit form, available for free on the Treasury Department's
website. That form had a free counseling hotline number: the
Homeowner's HOPE hotline (888–995–HOPE).2 Submission of the form
simply started a process, the outcome of which was ultimately
dependent on whether the applicant's lender approved a mortgage
modification. At some major banks, a mere ten percent of
applicants received relief through the HAMP program.
Seeing a market for financial snake oil, Godfrey and
Fischer founded a Florida company--Home Owner Protection Economics,
Inc. ("HOPE"). According to its bylaws, HOPE was a "nonprofit
organization," established "exclusively for charitable,
scientific[,] and education purposes." HOPE purported to sell
mortgage modifications for an up-front fee of $400 to $900. After
1
Our resolution of the issues does not hinge on the lens
through which we view the evidence, so we summarize that evidence
in a simple and straightforward manner, albeit one that recognizes
that the jury voted to convict.
2
This number connected applicants with counselors approved by
the Treasury Department.
-3-
receiving the fee, HOPE provided the homeowner with an application
form that differed in just one respect from the Treasury
Department's free HAMP form: HOPE's phone number (877–HOPE–801)
replaced the government's official phone number (888–995–HOPE).
Located in Delray Beach, Florida, HOPE operated out of a
"boiler room." The room contained rows of cubicles filled with
telemarketers.3 Godfrey, the president,4 and Fischer, the vice
president,5 sat atop a raised platform overlooking the room.
Vernell Burris, the general manager,6 sat "shoulder-to-shoulder"
with Godfrey and Fischer on the platform.
Godfrey and Fischer paid employees on commission only,
and fired employees "daily" for making too few sales. Fischer
recruited labor from nearby drug rehabilitation facilities because,
in his view, those people "were manipulative . . . [and] smooth
about lying." Few new employees lasted more than a week.
Godfrey and Fischer encouraged their employees to lie.
For example, when Burris first started working at HOPE, he had
3
At its peak, HOPE employed 42 telemarketers.
4
Godfrey provided the initial investment for HOPE. He also
bought "lead" lists of information about homeowners who were behind
on mortgages.
5
Fischer was in charge of recruiting and training
telemarketers. He gave guidance to new employees about how to make
sales.
6
Burris assisted with recruiting and training telemarketers,
as well as handling complaints from upset customers.
-4-
trouble making sales. Fischer encouraged him to tell customers,
among other lies, that HOPE had a "98 percent success rate" in
achieving loan modifications. As already mentioned, the record
suggested that only around ten percent of applications at major
banks achieved modification through HAMP. Brian Kelly, one of
HOPE's top-selling telemarketers, estimated that only four or five
of his 150-plus customers acquired a modification. Godfrey
instructed employees to say at the beginning of the process that
their request for loan modification was approved, and required only
the completion of additional paperwork and, of course, the receipt
of a check. In fact, the loan modification request could never
have been granted at the outset of the process, much less by HOPE
rather than the lender.
After not receiving the benefits promised to them,
customers complained both to HOPE and to state authorities. Many
sent e-mails directly to Godfrey and Fischer trying to get refunds.
In general, the complaints informed defendants that customers felt
misled and had sought refunds with no success. Burris generally
fielded customer complaints, but he discussed them with Godfrey and
Fischer. Six states sent cease-and-desist letters directly to
HOPE.7 Those letters--addressed to HOPE--informed HOPE that it
lacked a license required to engage in loan modification services.
7
Cease-and-desist letters came from Washington, New
Hampshire, Connecticut, Maine, Oregon, and Illinois.
-5-
A letter from Maine's Bureau of Financial Institutions informed
HOPE that its solicitations were deceptive.
In response to the cease-and-desist letters, Godfrey
constructed a list of "do not call states," including HOPE's home
state of Florida.8 In January 2011, Fischer distributed a
restrictive covenant for employees to read and sign. That covenant
forbade employees from making misrepresentations and from
disclosing HOPE's business methods. According to Burris, the
covenant was intended to "cover our butt[s]" in case the government
ever investigated HOPE.
Godfrey and Fischer enjoyed lavish trips with their ill-
gotten gains. When funds ran low, Godfrey instructed Burris to
"[l]et the dogs out," i.e., do whatever necessary to increase
sales. All told, HOPE raked in over $3.2 million, before the
scheme came to an end when authorities searched HOPE's office in
April 2011.
In August 2011, a grand jury indicted Godfrey, Fischer,
Burris, and Kelly for mail fraud, 18 U.S.C. § 1341, wire fraud, id.
§ 1343, misuse of a government seal,9 id. § 1017, and conspiracy to
8
Defendants told Burris: "It's our backyard. Stay out of
Florida. We don't want to get shut down, and we damn sure don't
want the Attorney General from Florida . . . coming after us."
9
Only Godfrey and Fischer were charged with misusing a
government seal.
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commit these crimes, id. § 371.10 Burris and Kelly pleaded guilty
and testified against Godfrey and Fischer. Nine of HOPE's victims
also testified. After an eight-day trial, the jury convicted
Godfrey and Fischer on all counts.11 The district court sentenced
them each to 84 months in prison.
II. Analysis
A. Confrontation Clause Challenge
At trial, the principal defense was that Godfrey and
Fischer did not know of their "rogue" employees' fraudulent sales
tactics.12 Countering this defense, the government introduced
thirty-two emails from complaining customers addressed to either
Godfrey or Fischer, and six cease-and-desist letters addressed to
10
The indictment outlined HOPE's various material falsehoods,
including: (1) HOPE was affiliated with the homeowner's mortgage
lender; (2) the homeowner had been approved for a home loan
modification; (3) the homeowner would receive a specified reduction
in his or her monthly mortgage payment amount or interest rate; (4)
HOPE had a near perfect record of obtaining modification; (5) HOPE
was able to greatly increase the homeowner's chance of obtaining a
modification, in part because of its connections with mortgage
lenders; (6) homeowners could stop making mortgage payments while
they waited for HOPE to arrange their loan modification; (7) HOPE
operated as a non-profit entity; and (8) HOPE would refund the
customer's up-front fee if the modification were not successful.
11
Counts 6 and 15 were dismissed because the customer to whom
those counts related was unavailable to testify.
12
In the words of Godfrey's trial counsel: "Well, I'm not
going to tell you that the testifying customers were not defrauded.
. . . They were lied to, for sure, but who lied to them? Brian
Kelly lied to them. . . . But there is no link between Chris
Godfrey and Dennis Fischer and those lies"; "this trial is a
misguided attempt . . . to hold the owners of a company criminally
responsible for the misdeeds of their employees."
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HOPE. The district court admitted these communications for the
limited purpose of showing that Godfrey and Fischer had notice of
customers complaining about fraudulent activities. The district
court admitted the communications without redaction and gave
multiple limiting instructions.13
13
Specifically, the district court instructed the jury
regarding the cease-and-desist letters as follows:
Now, the letters from the state entities include
certain allegations about what HOPE was doing that the
entities say were not terrific. These documents are
being offered for the sole purpose of showing that there
was notice to Mr. Godfrey and/or Mr. Fischer, that there
were people who were complaining and there were these
entities that were complaining.
They cannot be used by you for the truth of what's
contained in the letter. So . . . as a result of seeing
these letters, you cannot determine that, in fact, . . .
[the defendants] did wrong.
The court similarly instructed the jury regarding the customer
complaints:
They're not in for whatever these people thought of
HOPE or whatever else is going on. They're simply in
evidence for the purpose of showing that there were
complaints and that Mr. Godfrey and/or Mr. Fischer were
recipients of some or all of these complaints. That's
it.
And, as part of the final jury charge, the district court
instructed as follows:
Note that there were certain exhibits . . . that
were offered and admitted for a limited purpose. So, for
example, there were a bunch of emails that contain some
kind of complaint by somebody and those were offered into
evidence and admitted for one purpose only, which is to
show that the defendants had notice that people were
unhappy. They cannot be used by you for the truth of
what's contained in them. That is, what is actually
-8-
Defendants argue that statements in the complaints and
cease-and-desist letters describing fraudulent activity by HOPE
employees were testimonial hearsay, and thus were submitted to the
jury--over objection--in violation of the Sixth Amendment's
Confrontation Clause. The simple answer to this argument is that
these exhibits were not offered to prove the truth of the
assertions of wrongdoing contained within the exhibits. Rather,
they were offered to disprove the defendants' principal defense:
that they did not know what their employees were doing. Neither
the rules of evidence, see Fed. R. Evid. 801(c)(2), nor the
Confrontation Clause, Williams v. Illinois, 132 S. Ct. 2221, 2235,
2256, 2268 (2012), prohibits such a use. See generally United
States v. Cruz-Díaz, 550 F.3d 169, 176 (1st Cir. 2008) ("Out-of-
court statements offered . . . for the limited purpose of showing
what effect the statement had on the listener . . . are not
hearsay.").
But, say defendants, there was no need for the jury to
see the substance of the complaints. Of course there was. Because
the complaints described alleged fraudulent sales tactics, one can
infer that Godfrey and Fischer had notice that their employees were
likely engaged in such tactics. Had the complaints and letters
claimed only that HOPE employees were unlawfully parking in a
said[,] . . . you cannot take that as the truth.
-9-
neighbor's parking lot, the nexus to the proffered defense would
have been severed.
Second, even were this a Confrontation Clause violation,
we would find it harmless beyond a reasonable doubt. See United
States v. Cameron, 699 F.3d 621, 652 (1st Cir. 2012) (when deciding
whether violation was harmless, we consider whether "statements
were merely cumulative," "the strength of corroborating or
contradicting evidence," and the case's "overall strength"
(internal quotation marks omitted)). There was no dispute at trial
that the company's employees made the fraudulent sales that we have
described and about which the customers and regulators complained.
So, even if the jury considered the complaints for the purpose of
showing that those customers were defrauded, nothing material would
have been added to the case. The government's case, too, was not
merely strong; it was overwhelming. The notion that, perched like
commanders in the bow of a Roman galley, Godfrey and Fischer had no
idea that their hired crew was systematically rowing the ship in
circles strikes us--as it undoubtedly struck a jury that took
little over three hours to find Godfrey and Fischer guilty--as
preposterous.
B. Constructive Amendment Claim
Under the rubrics of "constructive amendment," and
"prejudicial variance," defendants merge two arguments. First,
they point out that one of the facts alleged in the indictment to
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show that HOPE did not operate as a nonprofit was a premature
assertion that the IRS had denied HOPE's "application for federal
non-profit status." In fact, the IRS did not deny HOPE's
application for tax exempt status as a non-profit corporation until
two weeks after the indictment was issued (but before trial).14
Second, defendants complain that the government put into evidence
HOPE's application to the IRS, and it pointed out to the jury that
the application contained false statements, such as a gross
understatement of the defendants' salaries.
Collectively, argue defendants, the error in the
indictment and the submission of the false application created a
constructive amendment in the form of a "pivot" from a charge that
defendants misled consumers about how HOPE operated into a charge
that defendants misled the IRS. We review claims of constructive
amendment and prejudicial variance de novo. United States v.
Celestin, 612 F.3d 14, 24 (1st Cir. 2010) (constructive amendment);
United States v. Gomez, 716 F.3d 1, 7 (1st Cir. 2013) (prejudicial
variance).
A material falsehood must be proven to convict a
defendant of mail or wire fraud. See Neder v. United States, 527
U.S. 1, 25 (1999). The manner and means section of the
indictment's conspiracy count outlined many of HOPE's material
14
The government did not object to amending the indictment
to remove that factually incorrect statement, but defendants
objected, so the court left matters alone.
-11-
falsehoods. See note 7, supra. Those charged falsehoods included
the following: "HOPE operated as a non-profit entity." The
indictment elaborated on that material falsehood as follows:
In an effort to portray HOPE as a
legitimate entity whose goal was to help
struggling homeowners, HOPE telemarketers
repeatedly told potential customers that HOPE
was a "non-profit."
In fact, HOPE had obtained its Florida
non-profit status by fraudulently
misrepresenting its corporate purpose, as
"Provide Consumers Education for purpose of
managing personal debt."
Furthermore, HOPE did not operate as a
legitimate non-profit entity. The IRS
recognized this and rejected HOPE's
application for federal non-profit status.
The IRS provided HOPE with a detailed analysis
to support its conclusion that HOPE operated
as a commercial entity. GODFREY and FISCHER
used a substantial amount of money from HOPE's
business accounts for personal expenses,
including restaurant dining, fitness club
memberships, department store purchases,
international travel, liquor store purchases,
and swimming pool maintenance.
(emphasis added).
The substance of that charged material falsehood--that
HOPE telemarketers falsely represented HOPE as a legitimate non-
profit entity--remained unaltered through trial and verdict. The
jury instructions limited the jury precisely to these charges,
identifying phone calls and mailings to consumers as the wire and
mail communications, and identifying the consumers as the target of
fraudulent representations. In short, the jury convicted Godfrey
and Fischer for precisely the mail and wire fraud for which they
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were charged. All that changed was that the government dropped one
piece of evidence (a pre-indictment IRS denial) cited to prove that
HOPE was not a legitimate nonprofit.
A constructive amendment "occurs where the crime charged
has been altered, either literally or in effect, after the grand
jury last passed upon them." United States v. Mubayyid, 658 F.3d
35, 49 (1st Cir. 2011) (internal quotation marks omitted). The
elimination of a piece of evidence supporting the material
falsehood, by contrast, was a mere variance. See id. at 48
(variance occurs when evidence offered at trial "proves facts
materially different from those alleged in the indictment"). "In
short, when a change le[aves] the substance of the charge
unaffected, the switch d[oes] not usurp the prerogative of the
grand jury." United States v. Dowdell, 595 F.3d 50, 67–68 (1st
Cir. 2010) (alterations in original) (internal quotation marks
omitted). A variance is grounds for reversal "if it affected the
defendant's 'substantial rights'--i.e., the rights to have
sufficient knowledge of the charge against him in order to prepare
an effective defense and avoid surprise at trial, and to prevent a
second prosecution for the same offense." United States v. Fisher,
3 F.3d 456, 463 (1st Cir. 1993) (internal quotation marks
omitted).15
15
A variance is also grounds for reversal if there is
"prejudicial spillover." Fisher, 3 F.3d at 463.
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Here, the government listed eight different
misrepresentations to support the mail and wire fraud charges. The
incorrect fact that the government dropped from its proof (a pre-
indictment IRS denial) served as just one fact supporting only one
of those eight misrepresentations, any one of which could have
supported conviction on the charged crime. The defendants would
have us lose sight of the forest by focusing on just one tree. See
Mubayyid, 658 F.3d at 53–54 (where government supplies more
specificity than required, a change in that surplusage does not
affect the charge's substance); see also United States v. Miller,
471 U.S. 130, 136 (1985). Nor did this drop in evidence put them
at any risk of double jeopardy, as the government never argued that
the jury should convict defendants for lying to the IRS (i.e., an
offense for which they were not charged).
Nor, finally, was there any reason that the government
should have been precluded from putting the application itself into
evidence as relevant to the charged offense. The fact that
defendants felt it necessary to lie in describing their pay from
HOPE was directly relevant to proving their knowledge of the
material falsehood.
C. Instructions on Misuse of Government Seal
The jury convicted defendants of misuse of a government
seal under 18 U.S.C. § 1017. In relevant part, the statute
criminalizes the use of a document to which a government seal has
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been fraudulently affixed where the user acts with knowledge of the
document's fraudulent character, and with wrongful or fraudulent
intent.16 In addressing the charged violation of this statute, the
district court instructed the jury that the government had to prove
three elements beyond a reasonable doubt to convict under 18 U.S.C.
§ 1017:
One, that the defendant procured or
transferred a document to which was affixed
the seal of the Department of the Treasury.
Two, that the defendant knew that the seal had
been fraudulently affixed to the document;
and, three, that the defendant acted with a
fraudulent intent when he did that.
Defendants argue that this instruction was erroneous
because it failed to tell the jurors that they also needed to find
that the seal was fraudulently affixed to or impressed on the
document. We disagree. The charge as given efficiently made clear
that, in order to convict, the jurors needed to find that
defendants "knew that the seal had been fraudulently affixed to the
16
The statute states:
Whoever fraudulently or wrongfully affixes or
impresses the seal of any department or agency of the
United States, to or upon any certificate, instrument,
commission, document, or paper or with knowledge of its
fraudulent character, with wrongful or fraudulent intent,
uses , buys, procures, sells, or transfers to another any
such certificate, instrument, commission, document, or
paper, to which or upon which said seal has been so
fraudulently affixed or impressed, shall be fined under
this title or imprisoned not more than five years, or
both.
18 U.S.C. § 1017 (emphasis added).
-15-
document." See 18 U.S.C. § 1017. The jurors could not logically
make such a finding unless they also concluded that the seal was
indeed fraudulently affixed. Such a conclusion was inevitable.
Each time one of the ersatz forms was printed onto a piece of
paper, the seal was affixed to the paper for a fraudulent purpose.
Defendants' use of the documents therefore plainly constituted that
which the statute on its face criminalizes: "us[ing]" a "document
. . . to which or upon which [the] seal has been . . .
fraudulently affixed or impressed . . . ." Id.; see also United
States v. Goodyke, 639 F.3d 869, 872 (8th Cir. 2011).
D. Biased Juror Claim
Defendants argue that the district court's denial of
their request to remove Juror No. 7 deprived them of their
constitutional guarantee to an impartial jury. On the fifth day of
trial, the government presented evidence that several of HOPE's
victims had received yellow postcards from HOPE. Juror No. 7
subsequently approached the court clerk and revealed that she had
received a similar-looking mailer two or three years ago. When
asked at voir dire whether this prior experience caused her "any
feelings or biases or views about this case," Juror No. 7 replied,
"I don't know. What do you think?" After her response elicited
laughter in the courtroom, the district court followed up:
Court: No. The question is--I think the
question he's asking is do you--will it affect
your ability to decide this case fairly based
on what you hear in the courthouse?
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Juror No. 7: I don't think so. I mean, I
didn't do anything with it. It didn't cause
me any grief. I feel that I was probably a
target.
Court: Do you have any--did your remembering
this in any way change your view of this case,
such a view as you may have at this point?
Juror No. 7: I don't think so.
Defendants claim that Juror No. 7 bore bias as a matter
of law and in fact. They note that, prior to trial, the court had
excused other prospective jurors who had more attenuated
connections with the facts of the case. Defendants also make much
of the government's theory that defendants "specifically targeted
people who were at [a] very vulnerable time[] in their lives."
We review the district court's ruling on a claim of juror
bias for clear abuse of discretion. United States v. Lowe, 145
F.3d 45, 48 (1st Cir. 1998). In assessing juror bias claims, "the
deference due to district courts is at its pinnacle: 'A trial
court's findings of juror impartiality may be overturned only for
manifest error.'" Skilling v. United States, 561 U.S. 358, 396
(2010) (quoting Mu'Min v. Virginia, 500 U.S. 415, 428 (1991)).
That being said, the presence of even a single biased juror
requires reversal. See Parker v. Gladden, 385 U.S. 363, 366 (1966)
(defendant "was entitled to be tried by 12, not 9 or even 10,
impartial and unprejudiced jurors").
-17-
Juror No. 7 did not bear what we call "bias as a matter
of law." Bias as a matter of law is reserved for only
"exceptional" or "extreme" circumstances. See, e.g., United States
v. Burgos-Montes, No. 13–2305, 2015 WL 2223304, at *12 (1st Cir.
2015); see also Smith v. Phillips, 455 U.S. 209, 222 (1982)
(O'Connor, J., concurring) (suggesting as exceptional situations
when the juror is an "employee of the prosecuting agency," or was
a "witness"). Mere receipt by a juror prior to trial of a similar
mailer, likely from another company, is simply not an extreme
situation warranting a finding of implied bias. Cf. Lowe, 145 F.3d
at 48–49 (no implied bias where juror in rape case was a survivor
of attempted rape).
Nor did the district court abuse its discretion in
finding that the juror bore no bias in fact. The juror's "[w]hat
do you think?" response was apparently flip, as noted by defense
counsel, and could certainly be read as expressing skepticism that
the receipt of a similar form or card could render her unable to
decide the case fairly. Juror No. 7 subsequently said that the
yellow card did not cause her much grief. She was asked point
blank a second time whether her prior experience affected her views
of the case, and she said, "I don't think so." Compare Lowe, 145
F.3d at 49 (no abuse of discretion where juror said, "I don't think
so" in response to judge's question whether her prior experience as
survivor of attempted rape would affect her ability to serve on
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jury in rape case). The record does not cause us to think the
district court's credibility finding here constituted a manifest
abuse of discretion. Wainwright v. Witt, 469 U.S. 412, 428 (1985)
(juror credibility determinations are "peculiarly within a trial
judge's province.").17
III. Conclusion
We affirm Godfrey's and Fischer's convictions.
17
Although defendants do not make anything of it, more
potentially problematic was the exchange at the end of voir dire
when the district court asked yet again whether Juror No. 7 had any
"doubt but that you can fairly try this case." Juror No. 7's
literal reply to that question was, "I believe so." The lack of
any reaction or comment by the trial judge or counsel suggests,
however, that everyone present understood her response to mean that
she could fairly try the case. Given the standard of review, there
is nothing in the record here to suggest the district court abused
its discretion.
That being said, we are taken aback by the prosecution's
effort to cause us to think the literal record reads other than it
does. The actual transcript reads precisely as follows:
Court: Do you have any doubt but that you can fairly try
this case regardless of what the card may have said or
what it said to you?
Juror No. 7: I believe so.
Rather than arguing that the exchange, in context, need not be read
literally, the prosecution in its brief edited its quote of the
transcript to read as follows: "Finally, the court asked whether
'you can fairly try this case . . . .' The juror said she
'believe[d]' she could."
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