FILED
APR 06 2018
NOT FOR PUBLICATION
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, Nos. 14-50515, 14-50536,
14-50545 & 15-50540
Plaintiff-Appellee,
D.C. No. 8:12-cr-00090-AG-1
v. 8:12-cr-00090-AG-2
8:12-cr-00090-AG-3
CRAIG MARTIN SHULTS, 8:12-cr-00090-AG-6
JOSEPH HAYMORE,
PAUL LICAUSI, MEMORANDUM*
SYLVIA MELKONIAN, AKA Sylvia
Ibarra,
Defendants-Appellants.
Appeals from the United States District Court
for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Argued and Submitted December 4, 2017
Pasadena, California
Before: TASHIMA and BERZON, Circuit Judges, and KENNELLY,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Matthew F. Kennelly, United States District Judge for
the Northern District of Illinois, sitting by designation.
Craig Shults, Joseph Haymore, Paul Licausi, and Sylvia Melkonian appeal
their convictions for wire fraud under 18 U.S.C. § 1343. Shults and Haymore also
appeal their sentences. The convictions involved a scheme to sell investors
distressed residential properties without disclosing known issues with the title and
physical quality of the homes.
The defendants raise six issues on appeal. First, all defendants claim the
trial court erroneously denied their motion to sever their joint trial. Second,
Haymore and Licausi argue the trial court wrongly admitted two exhibits. Third,
Haymore, Licausi, and Melkonian contend their convictions were supported by
insufficient evidence. Fourth, all defendants argue the prosecution engaged in
misconduct. Fifth, Shults challenges the role enhancement the trial court applied to
his sentence. Sixth, Haymore argues the district court erroneously calculated the
loss amount and restitution order when determining the sentence to impose.
First, the defendants waived review of the district court’s denial of their
motion to sever by failing to renew the motion at the close of evidence. A
severance motion must be renewed at the close of evidence or it is waived, unless
the movant “can show either that he diligently pursued severance or that renewing
the motion would have been an unnecessary formality.” United States v. Decoud,
2
456 F.3d 996, 1008 (9th Cir. 2006) (citation omitted). Neither exception applies.
When the trial court denied a pretrial motion to sever, it stated that its ruling was
accompanied by “a very, very, strong statement of that being without prejudice to
the presentation of additional facts along the way.” The defendants allege that, as
the trial progressed, additional facts supporting severance emerged—yet they did
not renew the motion when those facts were introduced. Thus the renewal of the
motion at the close of evidence would not have been an unnecessary formality.1
Second, we uphold the trial court’s admission of Exhibits 173 and 175-A.
“We review a district court’s finding that evidence is supported by a proper
foundation for an abuse of discretion.” United States v. Tank, 200 F.3d 627, 630
(9th Cir. 2000). Federal Rule of Evidence 901(a) requires that the proponent
“make only a prima facie showing of authenticity so that a reasonable juror could
find in favor of authenticity.” United States v. Chu Kong Yin, 935 F.2d 990, 996
(9th Cir. 1991) (internal quotation marks and citation omitted). At issue is the
admission of Exhibit 173, an e-mail from Haymore to Shults with an attached
PowerPoint, and Exhibit 175-A, an e-mail from Licausi to Shults with an attached
1
To the extent the defendants challenge the denial of the timely pretrial
motion to sever, the district court did not abuse its discretion in refusing severance
at the time it was requested without prejudice to the issue being renewed at trial.
See United States v. Kaplan, 554 F.2d 958, 966 (9th Cir. 1977).
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real estate agreement. The foundation for both exhibits was provided by Norman
Southerby, to whom Shults forwarded both e-mails, who authenticated each exhibit
through the “testimony of a witness with knowledge.” Fed. R. Evid. 901(b)(1).
The exhibits were also adequately authenticated by supporting circumstantial
evidence. See Fed. R. Evid. 901(b)(4). First, Justin Hannah testified that he
introduced Shults and Haymore around the time the e-mails were exchanged.
Next, Manuel Ramirez, an associate of Shults, testified that Shults was e-mailed a
PowerPoint presentation and that Shults discussed with Haymore and Licausi how
the PowerPoint presentation would be used. Finally, Cory Cooper, an employee at
Haymore’s company, testified that the PowerPoint attached to Shults’s e-mail to
Haymore included contents that were also included in other PowerPoints compiled
by Haymore’s company. Moreover, the e-mails bore the e-mail addresses used by
Haymore, Licausi, and Shults. See United States v. Fluker, 698 F.3d 988, 999 (7th
Cir. 2012) (use of the defendant’s e-mail address was circumstantial evidence that
the proffered e-mail from the defendant was authentic).
Once a party has introduced enough evidence to allow a reasonable juror to
find that an exhibit is what it is claimed to be—as the recipient of an e-mail may
do, based upon knowledge through receipt of the item—further arguments about
the reliability of the exhibit go to the weight the jury should give it, not its
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admissibility. Given Southerby’s testimony and the supporting circumstantial
evidence, the trial court did not abuse its discretion by admitting the exhibits.
Finally, we have considered the defendants’ Confrontation Clause and Best
Evidence Rule arguments and conclude they lack merit.
Third, we affirm the convictions of Haymore, Licausi, and Melkonian, each
of whom contests the sufficiency of evidence underlying his or her conviction.
We review the evidence in the light most favorable to the prosecution and
determine whether a rational trier of fact could have found the elements of the
offense beyond a reasonable doubt. United States v. Nevils, 598 F.3d 1158, 1163-
64 (9th Cir. 2010) (en banc). The elements of wire fraud are (1) the existence of a
scheme to defraud, (2) the use of wire, radio, or television to further the scheme,
and (3) a specific intent to defraud. 18 U.S.C. § 1343; United States v. Sullivan,
522 F.3d 967, 974 (9th Cir. 2008).
The Government introduced sufficient evidence to convince a rational trier
of fact that Haymore and Licausi engaged in a scheme of fraudulent conduct with
specific intent to defraud. This included evidence that Haymore and Licausi
continued to provide real estate for Shults to sell after learning of title issues with
the properties. The Government also offered evidence showing that Haymore and
Licausi, at the onset of the scheme, shared with Shults a PowerPoint and contract
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that contained promises, including prompt delivery of title, that were never
fulfilled for many buyers. Likewise, the Government presented sufficient evidence
to convince a rational trier of fact that Melkonian also had the requisite intent.
Melkonian was apprised of the significant title issues with the properties being
sold, but continued to aid Shults in the sales of the property long after these issues
arose. Finally, the Government also introduced sufficient evidence of the use of
the wires for Haymore, Licausi, and Melkonian. Each conviction was supported
by sufficient evidence.
Fourth, the prosecution did not engage in misconduct that warrants reversal.
We review the record de novo to determine if prosecutorial misconduct occurred,
and for plain error to determine whether reversal is warranted where, as here, the
defendants did not object contemporaneously to the misconduct. United States v.
Flores, 802 F.3d 1028, 1034 (9th Cir. 2015).
The defendants challenge certain statements as impermissible “vouching,”
which is misconduct. Vouching occurs when a prosecutor’s statement “improperly
introduce[s] . . . the prosecutor’s experience with similar cases . . . as a means of
commenting on the defense’s case.” United States v. Wright, 625 F.3d 583, 611
(9th Cir. 2010). The Court agrees that the prosecutor, when he twice analogized
the defendants’ cases to conduct in “every fraud case” he had worked on, engaged
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in improper vouching. But because the statement was partially invited by the
defense’s argument, isolated, and of limited severity, the Court concludes that the
statements do not warrant reversal. United States v. Koon, 34 F.3d 1416, 1445-46
(9th Cir. 1994), rev’d on other grounds, 518 U.S. 81 (1996).
The prosecutor’s other statements challenged by the defendants do not
constitute misconduct. First, the prosecutor’s mention of his “next gang case,”
made while describing the consequences of the defense’s line of reasoning in a
hypothetical future case, was not misconduct, as the prosecutor did not reference
gangs in a way that would encourage the jury to convict the defendants for
“reasons wholly irrelevant to [their] own guilt or innocence.” Id. at 1443 (internal
quotation marks and citations omitted). Second, the prosecutor’s characterization
of the reasonable doubt standard was not misconduct, as it fairly characterized the
burden placed upon the jury. Third, the prosecution’s objection to the introduction
of certain evidence as hearsay was not misconduct. A prosecutor who objects to
the defense’s exhibit as hearsay, whose objection is ultimately denied, and against
whom the exhibit is used in closing has not committed misconduct. Finally, the
cumulative effect of the prosecution’s conduct does not warrant reversal. Unlike in
United States v. Wallace, 848 F.2d 1464, 1475-76 (9th Cir. 1988), in which the
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defendant’s conviction relied on limited evidence, the defendants’ convictions in
the present case were premised on ample evidence establishing their guilt.
Fifth, we affirm the district court’s application of a four-level role
enhancement to Shults’s sentence. The Court reviews Shults’s first argument, that
the trial court misapplied the Sentencing Guidelines, for abuse of discretion.
United States v. Rodriguez-Castro, 641 F.3d 1189, 1192 (9th Cir. 2011). The trial
court did not abuse its discretion by failing to make specific factual findings when
determining the proper role enhancement. United States v. Ponce, 51 F.3d 820,
826 (9th Cir. 1995) (“The district court need not make specific findings of fact in
support of an upward role adjustment.”) (citation omitted).
We review Shults’s second argument, that the facts do not support his
“leader” enhancement, for clear error. Rodriguez-Castro, 641 F.3d at 1192. The
trial court did not clearly err. Not only did Shults facilitate and lead the seminars
at which the investors were deceived, he exercised authority over Melkonian
during the fraudulent scheme, which is sufficient to warrant the enhancement.
United States v. Barnes, 993 F.2d 680, 685 (9th Cir. 1993) (affirming leadership
enhancement applied to defendant who exercised authority over one other
individual).
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Finally, we affirm the district court’s calculation of $1.4 million as the
amount of loss attributable to Haymore. We apply de novo review to Haymore’s
first argument, that the trial court wrongly found the amount of loss by a
preponderance of evidence, rather than clear and convincing evidence. United
States v. Berger, 587 F.3d 1038, 1042 (9th Cir. 2009). The trial court did not err
by using the preponderance standard to find the amount of loss. The
preponderance standard is appropriate to find the facts relating to the extent of a
conspiracy or a fraudulent scheme, such as wire fraud. Id. at 1048-49.
We review Haymore’s second argument, that the trial court miscalculated
the amount of loss, for clear error. United States v. Kimbrew, 406 F.3d 1149, 1151
(9th Cir. 2005). The trial court “need only make a reasonable estimate,” which is
“entitled to appropriate deference,” as “[t]he sentencing judge is in a unique
position to assess the evidence.” U.S.S.G. § 2B1.1 cmt. 3(C). The total losses
associated with the scheme were approximately $6 million: $4 million in 2009
and, after Haymore departed the scheme, $2 million in 2010. Haymore contends
that the trial court clearly erred by using losses incurred in 2009 and 2010 to
calculate his amount of loss. We disagree; the trial court did not use losses from
2010. The court based its estimate of loss for Haymore on its estimate for Shults.
During Shults’s sentencing, the Government repeatedly stated it was attempting to
9
prove that he was responsible for $4 million in losses—the amount of loss
attributable to the 2009 conduct. During Haymore’s sentencing, the trial court
interrupted his counsel twice to suggest it had based Shults’s sentence on $4
million of losses (the 2009 losses), not $6 million (the sum of 2009 and 2010
losses). The trial court ultimately discounted Haymore’s losses by $600,000 from
its finding for Shults. Thus the loss amount and restitution order were not clearly
erroneous.
AFFIRMED.
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United States v. Craig Shults
Combined Opinion