Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
8-23-2004
USA v. Pepsny
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-2810
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NOT PRECEDENTIAL
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Case Nos: 03-2810 & 03-2928
UNITED STATES OF AMERICA
v.
DONNA PEPSNY,
Appellant in No. 03-2810
_______________
UNITED STATES OF AMERICA
v.
IRENE DIFEO,
Appellant in No. 03-2928
_______________
On appeal from the United States District Court
for the District of New Jersey
(D.C. Nos. 01-CR-00047-03, 01-CR-00047-02)
District Judge: The Honorable Alfred M . Wolin
_______________
Argued June 16, 2004
Before: Alito, Smith & Wallace, Circuit Judges*
(Filed: August 23, 2004)
*
The Honorable J. Clifford Wallace, Senior United States Circuit Judge for
the Ninth Circuit, sitting by designation.
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_________________
OPINION OF THE COURT
_________________
WALLACE, Circuit Judge.
Donna Pepsny appeals from her conviction and sentence on five counts of
wire fraud, 18 U.S.C. § 1343, and one count of conspiracy, id. § 371. Irene DiFeo
appeals from her conviction and sentence on four counts of wire fraud, id. § 1343,
and one count of conspiracy to commit wire fraud, id. § 371. We have jurisdiction
over the consolidated appeals pursuant to 18 U.S.C. § 3742 and 28 U.S.C. § 1291.
We affirm in part, reverse in part, and remand for further proceedings.
I.
We first examine the District Court’s decision to exclude the proposed
expert testimony of Tomas Norton. We review the exclusion of expert testimony
for abuse of discretion. See United States v. Mathis, 264 F.3d 321, 335-42 (3d
Cir. 2001). To prove the defendants acted with the requisite criminal intent, the
government presented evidence of the defendants’ involvement in seemingly
fraudulent real estate practices; from this evidence, the jury was to infer that the
defendants intended to mislead home buyers. Pepsny and DiFeo contend that
Norton’s testimony was to inform the jury that these highly suspicious facts are
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not necessarily indicative of fraud and that the defendants, as real estate brokers,
may have been minor participants in the scheme at issue. The defendants argue
that Norton’s testimony would have “assist[ed] the trier of fact to understand the
evidence” and would have assisted the jury in “determin[ing] a fact in issue,”
namely the defendants’ state of mind. F ED. R. EVID. 702; see, e.g., United States
v. Kelly, 888 F.2d 732, 743-44 (11th Cir. 1989) (holding that testimony on
professional standards of conduct “was very relevant to [the defendant’s] intent
and state of mind”).
However, we need not decide whether the District Court abused its
discretion because we agree with the government that Norton’s exclusion was
harmless. The record is replete with testimonial evidence that directly implicates
the defendants in a scheme that, among other things, falsified documents and made
material misrepresentations to home buyers. This evidence would have
overwhelmed the defendants’ efforts to have the jury draw a competing inference
based on Norton’s generalized testimony. In short, “after an examination of the
record, . . . it is highly probable that the jury would have reached the same
decision absent the identified error,” Mathis, 264 F.3d at 343 (internal quotation
marks and citation omitted), and we therefore do not reverse the defendants’
convictions on this ground.
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In any event, disallowing Norton’s testimony did not violate the
defendants’ Sixth Amendment rights. The District Court’s ruling was not
“arbitrary or disproportionate to any legitimate evidentiary or procedural purpose.”
Virgin Islands v. Mills, 956 F.2d 443, 446 (3d Cir. 1992); see also United States v.
Scheffer, 523 U.S. 303, 308 (1998) (“[W]e have found the exclusion of evidence
to be unconstitutionally arbitrary or disproportionate only where it has infringed
upon a weighty interest of the accused.”).
II.
Our review of the District Court’s response to a question posed by the jury
during deliberations is plenary provided the defendants raised a sufficient
objection at the time to properly preserve the issue. See United States v. Lee, 359
F.3d 194, 203 (3d Cir. 2004). Since neither defendant explicitly objected to the
District Court’s proposed response, the critical question is whether the discussion
as a whole alerted the court to the opposition of the defendants and thus informed
the court of possible errors in its proposed response.
The question is close, but we conclude that the defendants preserved this
issue for appeal by opposing the District Court’s proposal to answer the inquiry
directly instead of simply referring the jury back to the original instructions.
Although the defendants “did not explicitly state that [they were] objecting to the
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[supplemented] instruction, the colloquy between the court and counsel . . . , and
the context in which this conversation took place (an on-the-record conference to
discuss . . . the charge),” provided the District Court with “sufficient notice of a
possible error in the . . . jury instruction.” United States v. Russell, 134 F.3d 171,
178 (3d Cir. 1998). Therefore, our “[r]eview of the legal standard enunciated in a
jury instruction is plenary, but review of the wording of the instruction, i.e., the
expression, is for abuse of discretion.” United States v. Yeaman, 194 F.3d 442,
452 (3d Cir. 1999) (internal citation omitted). “This Court reviews jury
instructions to determine whether, ‘taken as a whole, they properly apprized the
jury of the issues and the applicable law.’” Id. (quoting Dressler v. Busch Entm’t
Corp., 143 F.3d 778, 780 (3d Cir. 1998)).
The jury clearly was inquiring about the “Pinkerton doctrine,” i.e., whether
the defendants could be vicariously liable for substantive crimes committed by co-
conspirators before the defendants entered the conspiracy. See United States v.
Cross, 308 F.3d 308, 311-12 n.4 (3d Cir. 2002), citing United States v. Pinkerton,
328 U.S. 640, 647 (1946). The District Court should have answered the question
in the negative instead of the affirmative: the defendants could not be convicted of
substantive offenses occurring before they became members of the conspiracy.
See United States v. Trotter, 529 F.2d 806, 810 (3d Cir. 1976). The court’s
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response was not saved by also referring to the instructions already given.
Therefore, the District Court’s instructions to the jury, taken as a whole and as
supplemented by its reply to the jurors’ query, contain the wrong legal standard.
See Lee, 359 F.3d at 203; United States v. Gordon, 290 F.3d 539, 545 (3d Cir.
2002) (reiterating that a charge can be “erroneous where it misstated the law
despite having stated the law correctly just before the misstatement”).
We next inquire whether this error was harmless. See United States v.
McCulligan, 256 F.3d 97, 101 (3d Cir. 2001) (“[N]on-structural constitutional
errors, including the failure to submit an element of a crime to the jury, are subject
to harmless error review.”). The government has not demonstrated that it is
“highly probable that the error did not contribute to the judgment” on the
substantive counts. Cross, 308 F.3d at 326 (internal quotation marks and citations
omitted). This nonharmless error, in the absence of any indication that the jury
found the defendants joined the conspiracy prior to the commission of a particular
substantive offense, dooms all the defendants’ convictions for wire fraud. We
therefore reverse DiFeo’s convictions on counts two, three, six, and eight, and
Pepsny’s convictions on counts four, five, seven, nine, and ten.
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We do not address DiFeo’s other challenges to the District Court’s jury
instructions given that they are limited to the substantive wire fraud convictions
we have vacated.
III.
As DiFeo failed to object to the prosecutor’s remarks at trial, we review her
allegations of prosecutorial misconduct for plain error. United States v. Irizarry,
341 F.3d 273, 306 (3d Cir. 2003). There was none. DiFeo has not “demonstrate[d
that] prosecutorial misconduct [resulted in] an egregious error or a manifest
miscarriage of justice.” Id. (internal quotation marks and citations omitted)
(second brackets in original). The record shows that the prosecution elicited
testimony concerning the buyer’s vulnerability and recalled it during closing
argument to rebuff DiFeo’s suggestion that the purchasers consummated the
transactions freely and knowingly. Moreover, the prosecutor’s remarks on
DiFeo’s religious convictions were fair comments on the evidence and the defense
summation, not an invitation to convict DiFeo on the basis of the sincerity of her
beliefs.
IV.
We undertake plenary review of DiFeo’s argument that the District Court
should have excluded losses incurred by lending institutions in setting her offense
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level under United States Sentencing Guidelines (U.S.S.G.) section 2F1.1 (1995).
See United States v. Maurello, 76 F.3d 1304, 1308 (3d Cir. 1996). As a “specific
offense characteristic[],” see id. § 2F1.1(b)(1), loss is “determined on the basis of,”
inter alia, (1) “all reasonably foreseeable acts and omissions of others in
furtherance of [a] jointly undertaken criminal activity,” id. § 1B1.3(a)(1)(B); see
also id. § 1B1.3, cmt. n.2, and (2) “all harm that resulted from the acts and
omissions specified” in subsection (a)(1), id. § 1B1.3(a)(3). DiFeo cannot assert
that she was unaware of the harm that would eventually befall the financial
institutions who owned the mortgage notes. The calculations accord with section
2F1.1’s commentary on “fraudulent loan application cases,” see id. cmt. n.7(b),
and provide “a reasonable estimate of the loss,” id. cmt. n.8.
DiFeo’s attempt to offset the amount of loss by benefits purportedly gained
by the buyers is unavailing. These benefits were not the product of DiFeo’s
efforts, and the cases DiFeo cites are distinguishable since they involved
defendants who furnished bona fide, competent services to the individuals they
were otherwise defrauding. See United States v. Hayes, 242 F.3d 114, 119 (3d
Cir. 2001); Maurello, 76 F.3d at 1311-13. The District Court did not err.
In a notice to us subsequent to oral argument, DiFeo, citing Blakely v.
Washington, 124 S. Ct. 2531 (2004), challenges the nine-level increase to her base
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offense level for having caused losses in excess of $400,000. On appeal, however,
DiFeo did not contest the computation of the dollar sums included in the amount
of loss calculation (i.e., she did not dispute the propriety of the judge’s fact-
finding). Rather, she simply argued that these losses should not have been
included in the calculation (i.e., she took issue with the application of the
Sentencing Guidelines). Thus, while we have rejected DiFeo’s attack on the
District Court’s Guidelines application, we have not said anything regarding the
underlying factual determinations. Since we remand for resentencing, DiFeo can
attempt to raise the Blakely issue in the District Court.
V.
In sum, we REVERSE and VACATE the defendants’ convictions on counts
two through ten and remand for a new trial on those counts. We AFFIRM each
defendant’s conviction on count one and remand for re-sentencing.
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