FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 14-30232
Plaintiff-Appellee,
D.C. No.
v. 4:13-cr-00065-BMM-3
GARY JOSEPH CONTI,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the District of Montana
Brian M. Morris, District Judge, Presiding
Argued and Submitted
August 31, 2015—Seattle, Washington
Filed October 21, 2015
Before: Alfred T. Goodwin, Ronald M. Gould,
and Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Gould
2 UNITED STATES V. CONTI
SUMMARY*
Criminal Law
The panel affirmed the district court in a case in which the
defendant was convicted of, inter alia, conspiracy to defraud
the United States in violation of 18 U.S.C. § 371.
The defendant and his co-conspirators, through their
affiliation with the federally funded Po’Ka Project, stole or
helped steal millions of dollars in grant funding that
otherwise could have gone to provide mental health and
substance abuse treatment to Blackfeet Indian youth. The
count at issue rested on § 371’s “defraud” clause, which
includes the element of “deceitful or dishonest means,” but
the district court instructed the jury only on § 371’s “offense”
clause, which sets forth an alternate means of commission of
the offense and does not include the element of deceitful or
dishonest means.
The panel observed that to the extent United States v.
Caldwell, 989 F.2d 1056 (9th Cir. 1993), held that the failure
to instruct the jury on an essential element of the crime is per
se prejudicial, it is inconsistent with the subsequent Supreme
Court decision in Neder v. United States, 527 U.S. 1 (1999),
which does not permit a jury instruction error to be
considered a structural error. The panel concluded that
Caldwell is therefore overruled, and need not be followed to
the extent it held otherwise.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. CONTI 3
The panel held that the district court’s instructions, which
did not include the element of “deceitful or dishonest”
conduct, were erroneous, but that there was no plain error
affecting the defendant’s substantial rights under Fed. R.
Crim. P. 52(b) because the government presented strong and
convincing evidence of deceitful and dishonest means, and
the defendant’s evidence is not sufficient to support a
contrary finding.
The panel resolved other issues in a jointly-filed
memorandum disposition.
COUNSEL
Larry Jent, Williams & Jent, LLP, Bozeman, Montana, for
Defendant-Appellant.
Michael W. Cotter, United States Attorney, Carl E. Rostad
(argued) and Bryan T. Dake, Assistant United States
Attorneys, United States Attorney’s Office, Great Falls,
Montana, for Plaintiff-Appellee.
OPINION
GOULD, Circuit Judge:
Gary Conti appeals his jury convictions and sentence for
bankruptcy fraud (18 U.S.C. § 157), conspiracy to defraud the
United States (18 U.S.C. § 371), scheme to commit wire
fraud against the United States and the Blackfeet Indian Tribe
(18 U.S.C. § 1343), and conspiracy to submit false claims
(18 U.S.C. § 286). Conti and his co-conspirators, through
4 UNITED STATES V. CONTI
their affiliation with the federally funded Po’Ka Project, stole
or helped steal millions of dollars in grant funding that
otherwise could have gone to provide mental health and
substance abuse treatment to Blackfeet youth. Conti was
tried twice and convicted on twenty-seven counts.
Conti’s conviction on Count 1 rested on a charge for
which the jury instructions did not match the indictment. The
sole question we consider here is whether an error in jury
instructions here amounted to “plain error” under Fed. R.
Crim. P. 52(b). For the reasons that follow, we affirm Conti’s
conviction on Count 1.1
One of Conti’s twenty-seven convictions was for
conspiracy to defraud the United States under the general
conspiracy statute, 18 U.S.C. § 371. This statute criminalizes
conspiracy “either to commit any offense against the United
States, or to defraud the United States.” 18 U.S.C. § 371
(emphasis added). This court has held that the separate
clauses in the statute create two alternate means of
commission of the offense. United States v. Smith, 891 F.2d
703, 712 (9th Cir. 1989). To convict on a charge under the
“defraud” clause, the government must show that the
defendant (1) entered into an agreement (2) to obstruct a
lawful government function (3) by deceitful or dishonest
means and (4) committed at least one overt act in furtherance
of the conspiracy. United States v. Caldwell, 989 F.2d 1056,
1059 (9th Cir. 1993); see also Hammerschmidt v. United
States, 265 U.S. 182, 188 (1924). This circuit’s model jury
instructions for the “defraud” clause of § 371 (No. 8.21)
include the element of “deceitful or dishonest means,”
1
We resolve all other issues and affirm the district court in a
memorandum disposition filed jointly with this opinion.
UNITED STATES V. CONTI 5
whereas the instructions for the “offense” clause (No. 8.20)
do not.
Here the “defraud” clause was the basis of the Count 1
indictment, but the district court instructed the jury only on
the “offense” clause. Jury instructions Nos. 4 and 5, which
were used at trial, parallel Ninth Circuit model instruction
8.20 under the “offense” clause. They omit the “defraud”
language from a reprinting of 18 U.S.C. § 371, and they do
not include the essential element of “deceitful or dishonest”
conduct. Conti contends that these instructions allowed the
jury to convict him on Count 1 without finding an essential
element.
In Caldwell, the jury found a defendant bookkeeper guilty
of conspiring to defraud the United States, but the district
court did not instruct the jury on the essential element of
“deceitful or dishonest means.” Caldwell, 989 F.2d at 1060.
Instead, the instructions allowed the jury to convict if it found
a plan to “obstruct” or “impede” the IRS, even if the
defendant did not do so dishonestly. Id. The Ninth Circuit
reversed the conviction, holding that failure to instruct the
jury on an essential element of a crime is constitutional error
because it permits a conviction without finding the defendant
guilty of that element. Id. And because the Sixth
Amendment requires the jury to find all elements of the
crime, the court in Caldwell concluded that the error in the
instructions was not harmless. Id. at 1061.
To the extent Caldwell held that the failure to instruct the
jury on an essential element of the crime is per se prejudicial,
it is inconsistent with the subsequent Supreme Court decision
in Neder v. United States, 527 U.S. 1, 8 (1999), which does
not permit a jury instruction error to be considered a
6 UNITED STATES V. CONTI
structural error. Therefore, Caldwell is overruled, and we
need not follow it, to the extent it held otherwise. See Miller
v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003).2
We follow the Supreme Court’s guidance in Neder.
There, the Supreme Court held that a similar error in jury
instructions, failure to submit the element of materiality to the
jury in a fraud prosecution, does not amount to a “structural”
error warranting automatic reversal, but instead is subject to
harmless error analysis.3 An error is harmless if it appears
“beyond a reasonable doubt that the error complained of did
not contribute to the verdict obtained.” Chapman v.
California, 386 U.S. 18, 24 (1967). Neder rejected the
defendant’s argument that “a finding of harmless error may
be made only upon a determination that the jury rested its
verdict on evidence that its instructions allowed it to
consider,” and because the jury did not consider the omitted
element of materiality, it could not be harmless. 527 U.S. at
17. As Neder explained, “at bottom this is simply another
form of the argument that a failure to instruct on any element
of the crime is not subject to harmless-error analysis.” Id.
Rather, the reviewing court must “conduct a thorough
examination” of the evidence in the record and ask whether
“it is clear beyond a reasonable doubt that a rational jury
would have found the defendant guilty absent the error.” Id.
2
Under this standard set in our en banc opinion in Miller v. Gammie, our
panel is not bound by a prior precedent that is “clearly irreconcilable” with
a subsequent Supreme Court opinion.
3
Structural errors that warrant automatic reversal are rare, and include
Gideon v. Wainwright, 372 U.S. 335 (1963) (complete denial of counsel);
Tumey v. Ohio, 273 U.S. 510 (1927) (biased trial judge); and Vasquez v.
Hillery, 474 U.S. 254 (1986) (racial discrimination in selection of grand
jury).
UNITED STATES V. CONTI 7
“[W]here a reviewing court concludes beyond a reasonable
doubt that the omitted element was uncontested and
supported by overwhelming evidence, such that the jury
verdict would have been the same absent the error, the
erroneous instruction is properly found to be harmless.” Id.
By contrast, if “the defendant contested the omitted element
and raised evidence sufficient to support a contrary
finding—it should not find the error harmless.” Id. at 19.
Because Conti did not object to the missing element in the
jury instruction, we review his claim not just for harmless
error, but for plain error. Fed. R. Crim. P. 52(b). A circuit
court has discretion to correct a plain error that meets several
requirements. First, there must be an “error,” a deviation
from a legal rule that is not waived. United States v. Puckett,
556 U.S. 129, 135 (2009); see also United States v. Olano,
507 U.S. 725, 732–33 (1993). Waiver, the intentional
relinquishment of a known right, differs from forfeiture,
which is the failure to timely assert a right. Olano, 507 U.S.
at 733. Second, the error must be “plain,” meaning “clear” or
“obvious.” Id. at 734. Third, the error must affect substantial
rights, meaning it was prejudicial, or there was a “reasonable
probability” that it “affected the outcome of the district court
proceedings.” Id.; United States v. Marcus, 560 U.S. 258,
262 (2010). Finally, an appellate court may exercise its
discretion to correct a forfeited error only if the error
“seriously affects the fairness, integrity, or public reputation
of judicial proceedings.” Olano, 507 U.S. at 736; see also
Johnson v. United States, 520 U.S. 461, 469–70 (1997).
We apply these standards to determine whether the
conviction on Count 1 is a plain error. First, there is an error
because although Conti did not object to the invalid jury
instructions at trial, he has not intentionally relinquished or
8 UNITED STATES V. CONTI
abandoned his ability to challenge them on appeal. See
Olano, 507 U.S. at 733–34. Second, the error was plain or
obvious because the jury instructions clearly do not match the
indictment.
We next address whether the error affected “substantial
rights.” We have held that an omission of an element from a
jury instruction that is harmless, under the standard set forth
in Neder, does not affect a defendant’s substantial rights for
purposes of plain error review. United States v. Tuyet Thi-
Bach Nguyen, 565 F.3d 668, 677 (9th Cir. 2009). We must
“conduct a thorough examination” of all the evidence in the
record and ask whether the omitted element was supported by
sufficient evidence. Neder, 527 U.S. at 17. Cases that have
upheld convictions rendered on incomplete or erroneous jury
instructions have relied on “strong and convincing evidence”
that the prosecution has adequately proved the missing
element of the crime. United States v. Perez, 116 F.3d 840,
848 (9th Cir. 1997); see also United States v. Smith, 282 F.3d
758 (9th Cir. 2002) (holding that the omission of an element
from jury instructions was not plain error where the
underlying fact supporting the element was “undisputed”
based on the “uncontradicted testimony” of a government
witness); Tuyet Thi-Bach Nguyen, 565 F.3d at 677 (holding
the defendant’s substantial rights were not affected because
of “overwhelming evidence” of the missing element). We
must also consider whether the defendant contested the
omitted element “and raised evidence sufficient to support a
contrary finding,” Neder, 527 U.S. at 19, and finally whether
“the jury verdict would have been the same absent the error.”
Id. at 17.
A review of the trial record of evidence regarding the
omitted element (that Conti acted with “deceitful or dishonest
UNITED STATES V. CONTI 9
means” in participating in the scheme to steal millions of
grant dollars from the United States) shows that the
government presented substantial evidence on this element
during the course of the trial. Among other evidence, the
government introduced emails showing that other participants
in the scheme considered Conti to be someone who would
“come up with” in-kind services to meet grant requirements,
and could help explain invoices for in-kind services that
supposed contributors did not remember contributing. Other
emails sent by Conti indicated that he fabricated invoices for
in-kind audit documentation, including changing the dates of
work done and “adding a few things” to give the
documentation “some diversity.” Further, emails showed that
Conti suggested ways to retroactively meet the in-kind
contribution requirements of a prior year and fabricated the
documentation and dollar amounts of the services
“contributed.” In one email, Conti asked a supposed
contributor of in-kind services to verify the contribution by
signing an invoice Conti had prepared, or alternatively to
“delete this message” if she was not comfortable with the
idea. A witness testified that the invoice sent to the supposed
contributor was for fraudulently inflated amounts. Finally,
the government adduced testimony that Conti knew the
invoices he helped prepare were “false and fraudulent.”
On the other hand, the record shows that Conti contested
the omitted element, arguing that the government’s case
rested on circumstantial evidence. Conti’s counsel asserted
at trial that “you can’t accidentally commit fraud . . . you
have to know what you’re doing. You have to have intent to
defraud. That’s one of the elements. The government’s own
witness agreed that [Conti], in that respect, did not intend to
defraud.” Conti’s counsel also claimed that Conti could not
be part of a conspiracy to defraud if his misrepresentations
10 UNITED STATES V. CONTI
were intended to give money back to the community, and “he
doesn’t know the objective of doing it falsely.”
In support of this defense, Conti elicited testimony that he
had not been involved in creating the fabricated invoices.
Conti also adduced testimony that he had actually performed
the work reflected in his own invoices. Finally, one witness
conceded on cross-examination that he did not know whether
Conti was aware of certain fraudulent activities.
After carefully considering the extensive trial record, we
conclude that on balance, the government presented “strong
and convincing evidence” of deceitful and dishonest means,
Perez, 116 F.3d at 848, and Conti’s evidence is not
“sufficient to support a contrary finding,” Neder, 527 U.S. at
19. We hold that the prosecution adequately proved the
missing element of the crime, see Perez, 116 F.3d at 848, and
that there is not a “reasonable probability” that the error in
jury instructions affected the outcome. See Marcus, 560 U.S.
at 262. We conclude that there was no plain error affecting
Conti’s substantial rights.4
AFFIRMED.
4
Because we conclude that the error did not affect Conti’s substantial
rights, we need not reach the final question whether it “seriously affects
the fairness, integrity, or public reputation of judicial proceedings.”
Olano, 507 U.S. at 736.