PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
Nos. 09-3467, 09-3731 & 09-3965
_______________
UNITED STATES OF AMERICA
v.
CHRISTOPHER G. WRIGHT,
Appellant (No. 09-3467)
RAVINDER S. CHAWLA,
Appellant (No. 09-3731)
ANDREW TEITELMAN.
Appellant (No. 09-3965)
_______________
On Appeal from the United States District Court
For the Eastern District of Pennsylvania
(D.C. Criminal Action No. 2-08-cr-00450-001/002/004)
District Judge: Honorable Eduardo C. Robreno
_______________
Argued September 21, 2011
_______________
Before: AMBRO, CHAGARES,
and VANASKIE, Circuit Judges
(Opinion filed: January 4, 2012)
Lisa A. Mathewson, Esquire (Argued)
123 South Broad Street, Suite 810
Philadelphia, PA 19109
Counsel for Appellant
Christopher G. Wright
Peter Goldberger, Esquire (Argued)
50 Rittenhouse Place
Ardmore, PA 19003
Counsel for Appellant
Ravinder S. Chawla
Ellen C. Brotman, Esquire (Argued)
Montgomery, McCracken, Walker & Rhoads
123 South Broad Street, 28th Floor
Philadelphia, PA 19109
Counsel for Appellant
Andrew Teitelman
William A. DeStefano, Esquire
Terri A. Pawelski, Esquire
Buchanan Ingersoll & Rooney PC
50 South 16th Street
Two Liberty Place, Suite 3200
Philadelphia, PA 19102-2555
2
Counsel for Appellants
Ravinder S. Chawla & Andrew Teitelman
Zane David Memeger, Esquire
United States Attorney
Robert A. Zauzmer, Esquire
Assistant U.S. Attorney
Jennifer Arbittier Williams, Esquire (Argued)
Assistant U.S. Attorney
Michael J. Bresnick, Esquire
Office of United States Attorney
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106
Counsel for Appellee
_______________
OPINION OF THE COURT
_______________
AMBRO, Circuit Judge
A jury convicted appellants Christopher G. Wright,
Ravinder (“Ravi”) S. Chawla, and Andrew Teitelman
(“Appellants”) of honest services fraud in violation of, inter
alia, 18 U.S.C. § 1346, mail fraud (referred to below as
“traditional” fraud) in violation of, inter alia, 18 U.S.C.
§ 1341, and conspiracy to commit these offenses in violation
of 18 U.S.C. § 371. After sentencing, the Supreme Court’s
decision in Skilling v. United States, 130 S. Ct. 2896 (2010),
affected the law of honest services fraud. Among other
arguments on appeal, Appellants challenge the sufficiency of
the evidence and assert that Skilling undermines their
convictions. We agree that Skilling requires a new trial on
3
Appellants’ honest services fraud convictions and that
prejudicial spillover tainted their traditional fraud convictions.
We thus vacate and remand.
I. Background
From 2005 through 2007, Wright was Chief of Staff to
Philadelphia City Councilman John “Jack” Kelly. 1 Wright
was also a realtor. Chawla owned the real estate firm World
Acquisition Partners (“World Acquisition”), and Teitelman,
an attorney, did most of the firm’s legal work. Teitelman was
not a World Acquisition employee, but his offices were in its
office suite, and most of his work came from World
Acquisition. Chawla and Teitelman befriended Wright when
Wright had an office in the same building.
This case concerns a series of gifts that Chawla,
Teitelman, or both gave Wright and a simultaneous series of
official acts that Wright took on behalf of World Acquisition.
Wright received a free stint in an apartment, free legal
services, and was promised commissions on World
Acquisition deals. At the same time, Wright shepherded a
bill that Chawla favored through Kelly’s office, arranged
meetings about a World Acquisition development, and
communicated with City of Philadelphia offices for World
Acquisition.
More specifically, Wright received three main
benefits. First, he lived at least part-time in an apartment
(with a free parking space) for 14 months without paying rent.
World Acquisition had contracted to buy a building at 2000
Delancey Street in Philadelphia, then sold its right to buy the
1
Councilman Kelly was not implicated in any of the crimes
charged against Appellants.
4
building to another purchaser. Meanwhile, Wright was in
divorce proceedings and struggled with alcohol abuse.
Teitelman, concerned for Wright, helped him move into one
of the building’s vacant units. The parties contest the extent
to which Chawla knew about this arrangement. The new
purchaser’s agent soon discovered Wright, who left the
apartment months later after the new purchaser sought to
evict him.
Second, Wright received free legal help from
Teitelman and his associate. When the Delancey Street
building’s new owner attempted to evict Wright, Teitelman
defended him. Teitelman also took over negotiations with the
lawyer for Wright’s wife when Wright could no longer afford
his previous divorce lawyer. Finally, Teitelman defended
Wright in a bank foreclosure against Wright’s marital home.
For all that work, Teitelman billed Wright but $350, and did
so only after Teitelman learned that the FBI was investigating
their relationship. As with the apartment, the parties contest
Chawla’s involvement.
Third, Wright was promised commissions in his
capacity as a realtor. He occasionally “brought deals” to
World Acquisition in the same manner that any realtor could,
but none of those deals succeeded, so Wright never earned
anything. On one occasion, World Acquisition granted
Wright and his partner the exclusive right to approach a buyer
for a $100 million property. Had Wright succeeded in
making the sale, he would have earned a commission of $6
million, but that deal also fell through. Chawla offered
Wright “liaison work” as well, 2 but Wright declined that
offer.
2
In an email about the River City project, discussed below,
Wright concluded to Chawla that “I am there if you need
5
While he was receiving those benefits, Wright took
three sets of actions as Councilman Kelly’s Chief of Staff that
tended to benefit World Acquisition. First, Wright helped
Kelly propose and pass a “mechanical parking” ordinance.
Philadelphia law required developers planning to install
mechanical parking to get a zoning variance, a time-
consuming process. At Teitelman’s behest, Wright set up a
meeting at which Chawla and his partner suggested that Kelly
change that law. Kelly, who usually took a pro-development
stance, agreed. Chawla and Teitelman prodded Wright to
make the bill a priority, and Kelly soon after introduced the
bill. The City Council passed it by a vote of 15-0.
Second, Wright helped Chawla oppose an ordinance
that would cripple a planned World Acquisition project.
Chawla envisioned a large development called “River City”
south and west of Philadelphia’s Logan Square, where low-
rise residences predominate. When the neighborhood
association protested, Wright arranged a meeting between
Chawla and association leaders. Afterward, Wright wrote
Chawla and Teitelman advising that his “role as Jack’s Chief
of Staff” should be to focus City staff on River City’s
benefits. Nonetheless, in the face of continued opposition,
the City Council passed a building-height restriction that
thwarted the River City plans. Kelly joined the 15-0 vote.
Third, Wright worked with other City offices on World
Acquisition’s behalf. When the Parking Authority was
me.” In his brief reply twelve minutes later, Chawla wrote:
“Thanks for your offer. . . . We will need your help on going
forward with this project and would like to retain you as our
consultant to handle liaison work. We will discuss when we
meet next.”
6
selling a certain property, Wright forwarded public
information about its “request for proposal” process to
Chawla and Teitelman. Wright also arranged a walkthrough
of the property. He obtained public information for World
Acquisition from Philadelphia Gas Works through a high-
level official rather than through the main call center.
Finally, Wright worked with the City’s Department of
Licenses and Inspections on a certification that the River City
property was not encumbered with zoning violations. City
Council staff often did so for their constituents, though this
certification was unusually complicated.
In 2008, a federal grand jury returned a fourteen-count
indictment against Chawla, Teitelman, Wright, and Chawla’s
brother Hardeep. The indictment charged honest services
fraud, traditional fraud, conspiracy to commit both kinds of
fraud, and bribery in connection with a federally funded
program. After a four-week jury trial, including five days of
deliberations, the jury convicted Chawla, Teitelman, and
Wright on three counts: (1) conspiracy to commit honest
services and traditional fraud (Count One); (2) honest
services fraud for the apartment arrangement (Count Ten);
and (3) traditional fraud for the apartment arrangement
(Count Twelve). The jury further convicted Chawla alone on
one honest services count for offering Wright liaison work
(Count Three). It acquitted on the other ten counts and
acquitted Hardeep Chawla of all counts.
The District Court sentenced Wright to 48 months’
imprisonment, Chawla to 30 months, and Teitelman to 24
months, followed in each case by two years of supervised
release. It also imposed fines and special assessments on
each person. After sentencing, they filed timely appeals to
our Court. The District Court had jurisdiction under 18
U.S.C. § 3231, and we have jurisdiction under 28 U.S.C.
§ 1291.
7
Appellants challenge their convictions on the grounds
that: (1) the evidence was insufficient to convict them on any
count; (2) the jury instructions on honest services fraud
constitute error after the Supreme Court’s intervening
decision in Skilling; (3) if the honest services fraud
convictions are vacated for any reason, the traditional fraud
convictions must be as well due to “prejudicial spillover;” (4)
the Government constructively amended the indictment; (5)
the District Court allowed inadmissible evidence; and (6) it
improperly calculated Appellants’ Guidelines sentencing
ranges.
We stayed the briefing schedule pending the Supreme
Court’s decision in Skilling. After that decision, all
defendants were released on bail without the Government’s
objection.
II. Discussion
A. Honest Services Fraud: Sufficiency of the
Evidence
“Honest services fraud” has proven hard to define. We
recently reviewed its history at length, see United States v.
Riley, 621 F.3d 312, 326-27 (3d Cir. 2010), so a shorter
treatment is sufficient here. The District Court instructed the
jury that it could convict for honest services fraud under
either a “conflict of interest” theory (whereby it is fraud for a
public servant not to disclose a conflict of interest resulting in
personal gain) or a “bribery” theory (whereby it is fraud for a
public servant to accept benefits in exchange for taking an
official action). At the time, this instruction properly stated
our law. See United States v. Panarella, 277 F.3d 678, 690
(3d Cir. 2002). However, the Supreme Court later construed
“honest services fraud” to exclude the conflict-of-interest
theory, holding that this interpretation of the statute would
8
render it unconstitutionally vague. Skilling, 130 S. Ct. at
2927-35. The jury’s general verdict, encompassing both
theories, could thus be defective.
Appellants contend that the evidence was insufficient
to convict them on the bribery theory alone, requiring that we
vacate their convictions. This contention echoes their motion
for a judgment of acquittal under Federal Rule of Criminal
Procedure 29, which the District Court denied.
“The burden on a defendant who raises a challenge to
the sufficiency of the evidence is extremely high.” United
States v. Lore, 430 F.3d 190, 203 (3d Cir. 2005) (quoting
United States v. Serafini, 233 F.3d 758, 770 (3d Cir. 2000)).
We must affirm the jury’s verdict so long as “there is
substantial evidence that, when viewed in the light most
favorable to the government, would allow a rational trier of
fact to convict.” United States v. Lee, 612 F.3d 170, 178 (3d
Cir. 2010) (quotation marks and citation omitted).
We thus turn to the definition of honest services fraud.
The bribery theory, which is the only theory left standing to
convict for honest services fraud in our case,3 “requires a quid
pro quo,” United States v. Kemp, 500 F.3d 257, 281 (3d Cir.
2007), that is, “a specific intent to give or receive something
of value in exchange for an official act.” United States v.
Sun-Diamond Growers of Cal., 526 U.S. 398, 404-05 (1999)
(emphasis in original). (The Supreme Court has contrasted
3
In addition to bribery, Skilling held that honest services
fraud may encompass kickbacks. 130 S. Ct. at 2932
(“Reading [28 U.S.C.] § 1346 to proscribe bribes and
kickbacks—and nothing more—satisfies Congress’
undoubted aim . . . .”). Kickbacks are not at issue here.
9
bribery with a gratuity, which is “merely a reward for some
future act that the public official will take[,] and may already
have determined to take[,] or for a past act that he has already
taken.” Id. at 405.) The bribery theory does not require that
each quid, or item of value, be linked to a specific quo, or
official act. Rather, a bribe may come in the form of a
“stream of benefits.” United States v. Bryant, 655 F.3d 232,
240-41 (3d Cir. 2011). The public official need not even
perform the official acts if he stood ready to do so having
intended to accept a bribe. Id. Intent is the determinant.
“The key to whether a gift constitutes a bribe is whether the
parties intended for the benefit to be made in exchange for
some official action; [indeed,] the government need not prove
that each gift was provided with the intent to prompt a
specific official act.” Kemp, 500 F.3d at 282.
An honest services fraud prosecution for bribery after
Skilling thus requires the factfinder to determine two things.
First, it must conclude that the payor provided a benefit to a
public official intending that he will thereby take favorable
official acts that he would not otherwise take. Second, it must
conclude that the official accepted those benefits with the
intent to take official acts to benefit the payor. See Bryant,
655 F.3d at 240-41; Kemp, 500 F.3d at 281-82. The intent of
both parties may be inferred from circumstantial evidence.
“The quid pro quo can be implicit, that is, a conviction can
occur if the Government shows that [the official] accepted
payments or other consideration with the implied
understanding that he would perform or not perform an act in
his official capacity ‘under color of official right.’” United
States v. Antico, 275 F.3d 245, 257 (3d Cir. 2001).
As noted, the jury convicted all three Appellants on
Count One, conspiracy to commit honest services fraud in
violation of 18 U.S.C. § 371. “The specific elements of
conspiracy to violate federal law are: . . . an agreement to
10
commit an offense proscribed by federal law; . . . the
defendants intentionally joining in the agreement; [and] one
of the conspirators committing an overt act . . . in furtherance
of the conspiracy.” United States v. Rigas, 605 F.3d 194, 206
n.9 (3d Cir. 2010) (en banc). In the honest services fraud
context, the Government must prove overt acts in furtherance
of a quid pro quo, such as mutual and contemporaneous
benefits.
There were mutual and contemporaneous benefits in
this case. Teitelman provided Wright a free place to live and
free legal services. As we discuss below, Chawla likely knew
of their arrangement and could have encouraged it. That
arrangement supported the convictions of all three Appellants
on Count Ten, a specific instance of alleged honest services
fraud. Chawla also was undeniably involved in extending
Wright his exclusive potential commission, and Teitelman
sent the email expressly granting that opportunity. In
addition, Chawla sent Wright the email offering him “liaison
work,” which was the basis for his conviction on Count
Three. At the same time, Wright helped Chawla bring
mechanical parking to Kelly’s attention. Thereafter, Wright
made sure that Councilman Kelly’s office quickly prepared a
bill and had Kelly introduce it. Wright also set up meetings
for Chawla to persuade the Logan Square Neighborhood
Association to support River City. He did so even though his
boss, Kelly, planned to vote for the anti-River City height
restriction because Logan Square’s councilman supported it.
Finally, Wright used his influence and knowledge to work
with City agencies on World Acquisition’s behalf more
effectively than Chawla or Teitelman could.
Intent, which the Government must prove both for
conspiracy in Count One and for the specific frauds in Counts
Three and Ten, is the more difficult question. Parties to a
bribery scheme rarely reduce their intent to words, but the law
11
does not require that. “The official and the payor need not
state the quid pro quo in express terms, for otherwise the
law’s effect could be frustrated by knowing winks and nods.
The inducement from the official is criminal . . . if it is
implied from his words and actions . . . .” Evans v. United
States, 504 U.S. 255, 274 (1992) (Kennedy, J., concurring in
part and in the judgment). Furthermore, Count One is a
conspiracy charge, and “the very nature of the crime of
conspiracy is such that it often may be established only by
indirect and circumstantial evidence.” United States v.
Brodie, 403 F.3d 123, 134 (3d Cir. 2005). Inferring mental
state from circumstantial evidence is among the chief tasks of
factfinders. We rely on the good sense of jurors (and, where
applicable, trial judges) to distinguish intent from knowledge
or recklessness where the direct evidence is necessarily
scanty.
In this case, a reasonable jury could find that each
Appellant had fraudulent intent. Therefore, Appellants have
failed to show that the evidence against them was insufficient,
as a jury could find that the Government had proven each of
the elements of honest services fraud and conspiracy to
commit it. We consider the inferences that a jury could have
made about each Appellant in turn.
First, consider Wright. The language of some of his
emails could persuade a jury that he intended to be
influenced. For example, the request-for-proposal
information about the Parking Authority property that Wright
provided to Chawla and Teitelman was publicly available.
But in advising Chawla of a certain deadline, Wright added
that “[t]he party must sign in and this will be [a] public record
- it would not be [a] good thing for me to sign for this RFP -
so you should do it or someone from [World Acquisition]
should do [it.]” Regarding River City, Wright emailed
Chawla (copying Teitelman) without prompting to offer his
12
help. “[Y]ou need someone to contact and monitor City
Planning efforts,” Wright wrote. “My role as Jack’s Chief of
Staff should be to keep City Planning’s focus on what [R]iver
[C]ity will . . . bring to . . . Philadelphia’s tax base/economy
for the next twenty years.”
This is the language of collaboration and influence. In
the spring of 2007, the date of both emails, Wright was living
in the Delancey Street apartment and receiving Teitelman’s
legal help. Mere simultaneity does not create an exchange,
but, coupled with the emails, a jury could infer intent. In
addition, the Government presented other evidence that could
indicate Wright’s intent. In one heated exchange with Kelly
in the summer of 2006, Kelly told Wright that he should be
paying rent for the apartment and that Wright’s relationship
with World Acquisition should be “squeaky clean.” Though
he knew it was an issue, Wright lived in the apartment for a
year thereafter without paying rent.
Second, a jury could infer that Chawla knew of and
approved the benefits that Wright received. The contract
under which Chawla sold his rights to buy 2000 Delancey
Street, the site of Wright’s free apartment, forbade Chawla
from putting new tenants there. Wright’s presence before
closing would risk the deal’s collapse. Yet, sometime around
the closing, a friend had told Chawla that Wright was “happy
and comfortable” in the apartment. Chawla, rather than being
surprised or upset, “was happy about that.” Chawla also
conceded to Kelly in mid-2007 that “Andy [Teitelman] gives
[Wright] free legal advice.” Teitelman was Chawla’s lawyer
working in Chawla’s office. As Teitelman was representing
Wright in a divorce, a foreclosure, and an eviction, it is
plausible that Chawla approved of it. A reasonable jury could
combine that knowledge with Chawla’s emails to infer
fraudulent intent. Chawla told Teitelman to “chase Chris” on
the mechanical parking issue, which Teitelman promptly did.
13
And when he learned unfavorable news about River City,
Chawla wrote Wright, requesting simply: “Chris: Please call
Andy or me asap. Thanks.” Shortly thereafter, Wright
arranged for Chawla to meet with the Logan Square
Neighborhood Association. Finally, in the email on which his
Count Three conviction was based, Chawla proposed that
Wright handle “liaison work” for World Acquisition, though
he declined.
Third, it is plausible that Teitelman intended to help
influence Wright. There is no dispute that Teitelman got
Wright fourteen free months in an apartment with a parking
space in an affluent neighborhood. When the agent of the
Delancey Street building’s new owner found Wright there,
everyone passed the buck to Teitelman, who promised to
have Wright moved out when the owner requested. Instead,
Teitelman defended Wright in the eviction attempt, drafting
the answer to the eviction complaint referred to in Count Ten.
And there is no dispute that Teitelman acted as Wright’s
personal lawyer in other matters when Wright could no longer
afford one. Teitelman himself sent many of the emails
soliciting official acts from Wright, and he (Teitelman) was
copied as a recipient on most others. A jury could infer that
Teitelman conferred these benefits on Wright so that he
would help the business of Teitelman’s main client, Chawla.
Thus, drawing all possible inferences in the
Government’s favor, a reasonable jury could have found that
Chawla and Teitelman conferred benefits on Wright intending
to secure his favors, and that Wright accepted those benefits
intending to aid Chawla and Teitelman. The evidence was
therefore sufficient to convict Appellants of honest services
fraud, and conspiracy to commit that fraud, under the bribery
theory alone.
14
B. Honest Services Fraud: Erroneous Jury
Instruction
Appellants also challenge their honest services fraud
convictions in Counts One, Three, and Ten on the ground that
Skilling rendered the District Court’s jury instructions
erroneous. Both sides agree that the “jury [was] instructed on
multiple theories of guilt, one of which is improper.”
Hedgpeth v. Pulido, 555 U.S. 57, 61 (2008) (per curiam). In
light of Skilling, the jury should have been instructed on the
bribery theory but not the conflict-of-interest theory.
“This determination, however, does not necessarily
require reversal of the [honest services fraud] conviction[s];
. . . errors of [this] variety are subject to harmless-error
analysis.” Skilling, 130 S. Ct. at 2934. We presume that such
errors are not harmless “unless it can be ‘prove[d] beyond a
reasonable doubt that the error complained of did not
contribute to the verdict obtained.’” United States v. Waller,
654 F.3d 430, 434 (3d Cir. 2011) (quoting Chapman v.
California, 386 U.S. 18, 24 (1967)). That Appellants
objected to the District Court’s honest services fraud
instruction on other grounds suffices to preserve this issue for
our review. See Black v. United States, 130 S. Ct. 2963, 2970
(2010) (“[B]y properly objecting to the honest-services jury
instructions at trial, Defendants secured their right to
challenge those instructions on appeal.”).
We do not believe that the Government has proven
beyond a reasonable doubt that the jury instruction on the
conflict-of-interest theory did not affect the honest services
verdict. That theory required nondisclosure of a financial
interest that could conflict with a public official’s duty to
provide honest services. See Panarella, 277 F.3d at 690.
There is ample evidence on which the jury could have
convicted Appellants under that theory. By contrast, the
15
evidence supporting the bribery theory, while sufficient, is
less than the “overwhelming” evidence needed to hold that an
error is “harmless beyond a reasonable doubt.” United States
v. Balter, 91 F.3d 427, 440 (3d Cir. 1996).
In particular, the jury may have drawn inferences
about Appellants’ intent that would not sustain a verdict
based on the bribery theory. In the sufficiency-of-evidence
context, we must draw all reasonable inferences in the
Government’s favor. Without that constraint here, we believe
that other inferences about Appellants’ intent are plausible.
As above, we will address the intent of each Appellant in
turn.
First, Wright may have intended not to be influenced,
but merely to do his job. By reputation and by his own trial
testimony, Councilman Kelly favored developers and
business interests. He also testified that constituent services
advancing his policy goals were part of Wright’s job. Wright
therefore could not “pick and choose” which developers he
would assist. Kelly no less than Chawla encouraged Wright
to make mechanical parking a priority in his office. On cross-
examination, Kelly approved of Wright’s other “official acts”
as within the scope of his job. Kelly’s legislative assistant
also testified that while Chawla and his brother “called a lot,”
they were among many constituents who did so. The
President of the Northeast Philadelphia Chamber of
Commerce, for example, testified that Wright went personally
to visit with its members and worked with many City
departments on their behalf. When Chawla’s requests
extended beyond “constituent services,” as in his offer of
liaison work, Wright declined. On this evidence, the jury
could have acquitted Wright of honest services fraud under
the bribery theory because he lacked the required intent to be
influenced.
16
Second, it is not clear beyond doubt that the jury found
Chawla seeking to bribe Wright. The Government presented
little evidence that Chawla directed Teitelman’s gifts or even
that he was closely involved with them. There was no direct
evidence that Chawla knew that Wright stayed in the
apartment for free until well after Wright had performed the
official acts at issue. This is a critical distinction because,
were Wright paying, his tenancy could not constitute a gift.
The jury thus could have inferred that Chawla knew only that
Teitelman had found Wright a place to live. And while
Chawla knew of Teitelman’s free legal services for Wright,
there is no evidence that he asked Teitelman to perform them.
Chawla openly admitted knowledge of these legal services
when Kelly was asking him about his ties to Wright in a
conversation that the FBI instigated and recorded. Moreover,
Chawla’s brief emails do not necessarily show sinister intent.
High-level executives are known for quick missives tapped
out on mobile devices between meetings. The jury thus might
have concluded that while Chawla knew the possible
ramifications of Teitelman’s gifts to Wright, he did not intend
thereby to influence Wright.
Third, Teitelman’s friendship with Wright offers a
motive for his generosity other than fraud. The evidence
establishes, and the Government does not dispute, that Wright
and Teitelman were close friends. It is equally clear that
Wright was in dire personal straits at the time. His mother
had just died of cancer, he was embroiled in a marital fight
and divorce, he was essentially broke, and he was drinking
heavily. Teitelman was among Wright’s few friends who
intervened and helped him enter rehabilitation. Those same
friends agreed that Wright should walk to work in Center City
Philadelphia rather than drive to and from his brother’s home.
While friendship is no bar to an honest services fraud
conviction (as the parties involved are often friends), these
facts show a close friendship. Here, the jury could have
17
found that friendship, not fraud, motivated Teitelman to find
the apartment in Center City and to act as Wright’s lawyer.
In addition to these alternate inferences about
Appellants’ intent, the context of the trial suggests that the
jury may have convicted based on the erroneous conflict-of-
interest instruction. See Virgin Islands v. Martinez, 620 F.3d
321, 338 (3d Cir. 2010) (“While many . . . cases focus on the
quantum of evidence against the defendants, harmless-error
analysis must, by necessity, take into account the totality of
the circumstances.” (citation omitted)). For example, the
Government insisted in its opening argument that public
disclosure forms exist to ensure that “public service is not
being tainted.” It also linked the Pennsylvania ethics laws to
bribery in its closing arguments. And the jury instructions
themselves devoted about eight times more words to the
conflict-of-interest theory than they did to the bribery theory.
Considering these plausible alternate inferences about
Appellants’ intent and a trial environment that emphasized
the conflict-of-interest theory, we cannot say that the
erroneous instruction did not contribute to the verdict. We
therefore vacate Appellants’ honest services fraud convictions
and remand for a new trial.
C. Traditional Mail Fraud: Sufficiency of the
Evidence
Appellants’ other convictions were for traditional mail
fraud. In addition to charging a conspiracy to commit honest
services fraud, Count One charged that Appellants conspired,
in violation of 18 U.S.C. § 371, to commit traditional fraud.
Count Twelve, the only specific instance of traditional fraud
in the indictment, charged that Appellants committed mail
fraud in violation of, inter alia, 18 U.S.C. § 1341. The jury
convicted on both counts. Appellants challenge these
18
convictions, as they challenged their honest services fraud
convictions, on the ground that the evidence was insufficient.
Our standard of review in the sufficiency-of-evidence
context, while technically plenary, is stringent. To repeat, we
must affirm the jury’s verdict so long as “there is substantial
evidence that, when viewed in the light most favorable to the
government, would allow a rational trier of fact to convict.”
Lee, 612 F.3d at 178 (quotation marks and citation omitted).
This challenge thus “‘places a very heavy burden on [the]
appellant[s].’” United States v. Dent, 149 F.3d 180, 187
(citation omitted).
We read § 1341 to contain three elements: “(1) a
scheme to defraud; (2) use of the mails to further that scheme;
and (3) fraudulent intent.” United States v. Jimenez, 513 F.3d
62, 81 (3d Cir. 2008) (quotation marks and citation omitted).
We have elaborated that “‘fraudulent representations, as the
term is used in [section] 1341, may be effected by deceitful
statements or half-truths or the concealment of material facts
and the devising of a scheme for obtaining money or property
by such statements or concealments.’” United States v.
Olatunji, 872 F.2d 1161, 1167 (3d Cir. 1989) (modification in
original) (quoting United States v. Allen, 554 F.2d 398, 410
(10th Cir. 1977)).
Traditional mail fraud under § 1341 involves
defrauding a private party of money or property, whereas
honest services fraud under § 1346 involves defrauding the
public of an official’s “honest services.” (Unlike honest
services fraud, Skilling did not disturb the law of traditional
fraud.) Both Count Ten and Count Twelve were based on the
same facts: Wright’s occupancy of the Delancey Street
apartment and the answer that Teitelman mailed in Wright’s
19
eviction case. 4 But whereas Count Ten charged that the
scheme defrauded Philadelphia’s citizens of Wright’s honest
services, Count Twelve charged that the scheme defrauded
the building’s owner, PBRG, of rent payments.
We believe that, under the demanding standard of
review applied here, we cannot say the evidence was
insufficient to convict Appellants of traditional fraud. We
consider each of the three elements of traditional mail fraud
in turn.
The first element is that there was a fraudulent scheme.
A reasonable jury could have found that Appellants sought to
defraud PBRG of Wright’s rent. PBRG bought the building
to renovate it and convert it to condominiums. For that
reason, PBRG’s principal, Robert Guttman, testified that he
“certainly wanted to know” how many units of the mostly
vacant building were occupied. Yet at the closing no one
mentioned that Wright had just moved in. That was not for
want of opportunity. Guttman had bought his right to
purchase the building from Chawla, and Teitelman formed
PBRG as an entity for the purpose of Guttman and his brother
buying buildings from World Acquisition. Moreover, at
closing Guttman was provided with a document that listed
Wright’s apartment as empty. The Government presented no
evidence that Chawla or Teitelman prepared that document.
But it would be possible for a jury to infer that, because
Chawla had sold PBRG its right to purchase the building, he
had to approve the list.
Appellants contend that, far from concealing Wright’s
presence, as Olatunji requires, they were forthright about it.
4
These facts also formed part of the basis for the conspiracy
charged in Count One.
20
When PBRG’s realtor found Wright while inspecting the
building, Wright did not make up a story about his presence
there or say that he was paying rent. The Government also
does not contest that Wright complained to PBRG’s initial
building manager about his apartment’s plumbing.
Ultimately, Appellants argue, any scheme to conceal Wright
from PBRG failed, as PBRG served him with an eviction
notice early in 2007.
A reasonable jury need not have found these
arguments persuasive. Chawla knew that it was important to
PBRG that the building be as vacant as possible. A jury
could have concluded that Wright’s absence on the closing
documents constituted concealment of his presence there. It
could also conclude that Wright’s outreach to building
managers was consistent with a scheme to defraud, as those
managers may have assumed that PBRG had approved what
Wright was doing.
The second element of traditional mail fraud is that the
mailing alleged for mail fraud purposes—the answer that
Teitelman’s associate filed in Wright’s eviction case—
furthered the alleged fraudulent scheme. Appellants point out
that “a mailing cannot . . . be considered even incident to an
essential part of the scheme[] when it occurs after the scheme
has reached fruition.” United States v. Yusuf, 536 F.3d 178,
187 (3d Cir. 2008). Any scheme to defraud PBRG by
concealing Wright’s occupancy, Appellants argue, must have
ended by the time that Teitelman’s associate mailed a public
legal document admitting that Wright was there. Therefore,
they contend, the sole alleged mailing could not have
furthered the scheme.
A reasonable jury could have viewed the nature of the
scheme differently, so that it did not end as soon as PBRG
became aware of Wright’s presence. The indictment alleges
21
that the nature of the scheme was “[t]o continue allowing
[Wright] the free use of the Delancey Street Apartment and
parking space . . . .” The affirmative misstatement alleged
toward that end was the claim, made in the mailed answer,
that Wright had PBRG’s permission to live in the building.
Viewing the scheme in this way, a jury could conclude that
the mailed answer furthered the scheme.
The third element is that the defendant(s) knew about
the alleged scheme and, therefore, could have had the
requisite intent to defraud. Chawla and Wright each claim
that, to the extent that any such scheme existed, he did not
know about it. Chawla asserts that there was no evidence that
he knew of Wright’s eviction, though he knew that Wright
was in the apartment and that Teitelman was helping him
with legal issues. Wright similarly points to the lack of
evidence that he knew about his exclusion from the closing
documents or about any false statements made on his behalf
during his eviction proceedings.
The Government responds with two arguments that a
reasonable jury could have found persuasive. First, the
evidence was sufficient for the jury to make the necessary
inferences. Wright, as Teitelman’s client, could have known
what documents were being filed on his behalf. Indeed,
Wright asked Teitelman to handle the eviction complaint.
And Chawla told Kelly in 2007 that he knew that Wright was
living in the building and that Wright was tight on money.
Second, even if Chawla and Wright did not personally know
of or intend a fraud, co-conspirators act as mutual agents for
one another. See, e.g., United States v. Pungitore, 910 F.2d
1084, 1147 (3d Cir. 1990). As such, each becomes
responsible for the acts of the other. On these grounds, a jury
could have inferred not only that Wright and Chawla knew
about the scheme to defraud but also that they intended it.
22
Teitelman raises a fourth issue in his brief. He asserts
that if Appellants did conceal any information from PBRG,
that information was not material, as the law requires. See
Neder v. United States, 527 U.S. 1, 16 (1999) (“[A] false
statement is material if it has ‘a natural tendency to influence,
or [is] capable of influencing, the decision of the
decisionmaking body to which it was addressed.’” (quoting
United States v. Gaudin, 515 U.S. 506, 509 (1995))).
Teitelman argues that Wright’s presence was not material
because it did not impair PBRG’s ability to convert the
building into condominiums. However, Guttman testified
that the presence of any renters or squatters in the building
would have been material to him as, in effect, its purchaser.
A reasonable jury could have determined, then, that
information about Wright’s presence might have changed
Guttman’s mind about the building’s value.
Based on the evidence recounted above, a reasonable
jury could conclude that Appellants agreed on a scheme to
defraud PBRG of payment for Wright’s tenancy by
concealing his presence, that the answer mailed in Wright’s
eviction case furthered that scheme, and that all three
Appellants knew of the scheme and intended that it succeed.
Therefore, a reasonable jury could have convicted Appellants
under 18 U.S.C. § 1341 and our interpretations thereof.
D. Traditional Mail Fraud: Prejudicial Spillover
Appellants’ traditional fraud convictions may be
tainted by “prejudicial spillover” from the honest services
fraud convictions that we vacate and remand. When two
charges are closely linked and we vacate a conviction on one
of them, we must ensure that the error on the vacated charge
has not affected the remaining charge. If there has been such
prejudicial spillover, we must order a new trial on the
23
remaining charge as well. United States v. Murphy, 323 F.3d
102, 122 (3d Cir. 2003).
We apply a two-step test for prejudicial spillover.
First, we ask “whether the jury heard evidence that would
have been inadmissible at a trial limited to the remaining
valid count[s].” United States v. Cross, 308 F.3d 308, 317
(3d Cir. 2002). If all evidence on the discarded counts (here,
the honest services fraud counts) would remain admissible at
a trial on the remaining valid counts (here, the traditional
fraud counts), then our inquiry ends. We would remand for
resentencing on the valid counts only.
If some evidence would be inadmissible, then we
proceed to the second step. There, we ask whether that
evidence (the “spillover evidence”) was prejudicial. Id. We
answer that question by weighing four factors: “whether (1)
the charges are intertwined with each other; (2) the evidence
for the remaining counts is sufficiently distinct to support the
verdict on these counts; (3) the elimination of the invalid
count significantly changed the strategy of the trial; and (4)
the prosecution used language of the sort to arouse a jury.”
Murphy, 323 F.3d at 118 (quotation marks omitted) (citing
United States v. Pelullo, 14 F.3d 881, 898-99 (3d Cir. 1994)).
We evaluate these factors in a light “‘somewhat favorable to
the defendant.’” Murphy, 323 F.3d at 122 (quoting Pelullo,
14 F.3d at 898). If the otherwise inadmissible evidence was
prejudicial, we remand for a new trial on the “tainted” count.
Applying this two-step test, we hold that there was
spillover evidence from the honest services convictions to the
traditional fraud convictions and that it was prejudicial. As to
the first step, much of the evidence at this trial would be
inadmissible at a hypothetical trial on traditional mail fraud
alone. The bulk of the prosecution concerned Wright’s
allegedly corrupt relationship with Chawla and Teitelman.
24
Proving that Appellants defrauded PBRG of rent would not
require proving that Wright was a public servant, that Chawla
and Teitelman sought to influence him, or that he sought to be
influenced. Evidence of the latter sort fills most of this case’s
four-volume appendix.
Specifically, the following evidence likely would be
inadmissible at a trial on traditional mail fraud alone: (1)
Kelly’s testimony about Wright’s official duties as his Chief
of Staff; (2) the testimony of City agency staff 5 about their
interactions with Wright, which the Government alleges were
undertaken to aid Chawla and Teitelman; (3) the testimony of
Russell Meddin of the Logan Square Neighborhood
Association about Wright’s work on the River City project;
(4) the myriad emails among Appellants about the mechanical
parking proposal and River City; (5) any evidence pertaining
to a $1,000 check that Chawla’s brother Hardeep gave to
Wright at a holiday party; and (6) the testimony by the
Executive Director of the Pennsylvania State Ethics
Commission and the General Counsel to the Philadelphia
Board of Ethics regarding Wright’s disclosure obligations
under state law (which pertained only to the conflict-of-
interest theory of honest services fraud). This evidence is
essentially irrelevant to the question of whether Appellants
schemed to defraud PBRG of rent. See Fed. R. Evid. 401,
402.
5
These agency staff included the head of Major Tax
Enforcement, the Tax Enforcement Administrator, the
Director of Corporate Communications at Philadelphia Gas
Works, the Contract Administration Manager for the
Philadelphia Parking Authority, and a clerk in the Licenses
and Inspections Department.
25
The Government counters that the enumerated
evidence would be relevant to show Appellants’ motive to
conceal Wright’s tenancy from PBRG. As we explained in
Cross, “[t]he existence of an overarching scheme can provide
circumstantial evidence of a defendant’s guilt by explaining
his motive in committing the alleged offense.” 308 F.3d at
322-23. However, were motive the sole purpose of this
considerable body of evidence, a trial court likely would
exclude some of it under Federal Rule of Evidence 403 or
404. 6 The probative value on the question of motive in
several hundred pages of testimony and documentary
evidence is outweighed by the costs of “needless presentation
of cumulative evidence.” Also, insofar as the evidence
portrays Appellants as corrupt, any probative value on motive
could be outweighed by its danger of unfair prejudice. And
because the “motive” evidence tends to show one type of
fraud (honest services) in a trial about another type
(traditional), it may be inadmissible character evidence under
Rule 404(b).
For these reasons, acknowledging the generous
discretion that these rules vest in district courts, much of the
enumerated evidence would be inadmissible at a trial on
Count Twelve alone. Here, as in Murphy, “the quantum of
6
Rule 403 provides that “[t]he court may exclude relevant
evidence if its probative value is substantially outweighed by
a danger of one or more of the following: unfair prejudice,
confusing the issues, misleading the jury, undue delay,
wasting time, or needlessly presenting cumulative evidence.”
Rule 404(a)(1) provides that “[e]vidence of a person’s
character or character trait is not admissible to prove that on a
particular occasion the person acted in accordance with the
character or trait.”
26
evidence . . . would not be necessary absent the [honest
services fraud] theory.” 323 F.3d at 121.
We thus proceed to the second step of the prejudicial
spillover inquiry. Weighing the four Pelullo factors, we
conclude that the otherwise inadmissible evidence was
prejudicial.
First, the traditional fraud charge was intertwined with
the honest services fraud charges. The same facts underlay
both Count Ten (honest services) and Count Twelve
(traditional): Wright’s presence in the apartment and the
answer that Teitelman’s associate filed in the eviction case.
As in Pelullo, the charges “described similar, if not identical,
methods used in the alleged frauds.” 14 F.3d at 898.
Furthermore, because Count One charged both an honest
services fraud conspiracy and a traditional fraud conspiracy,
the jury instructions on that Count intermingled the two
theories. The Government points out that, because the jury
did not convict on all counts, it must have understood the
counts separately. Cf. Lee, 612 F.3d at 181 (holding that
charges were not intertwined, in part, because the jury
convicted on one but acquitted on the other). But in this case
the jury convicted all three Appellants on the two counts most
likely to be confused.
Second, there was scant evidence that would support a
traditional fraud conviction yet be distinct from the honest
services fraud charges. The apartment was the most valuable
of the alleged bribes that Wright accepted. Yet without his
stint there being rent-free—the crux of the traditional fraud
charge—the jury could not characterize it as a bribe or as an
impediment to Wright’s honest services. Thus little of the
traditional fraud evidence is independent of the honest
services fraud evidence.
27
Third, the parties’ strategy likely would have differed
in a trial on traditional mail fraud alone. We have addressed
this factor in much the same way that we address the first part
of the prejudicial spillover test. Namely, we assess the extent
to which the parties would have called different witnesses
and, correspondingly, the extent to which their opening and
closing arguments would have differed. See Lee, 612 F.3d at
182-83; Pelullo, 14 F.3d at 898-99. In this case, the parties
would not have needed to present evidence or opening and
closing arguments about the allegedly corrupt relationships
among Wright, Chawla, and Teitelman.
Fourth and finally, the prosecution’s language about
honest services fraud was “of the sort to arouse a jury.” In its
opening argument, for example, the Government told the jury
that “[t]he Chawla brothers bought big, big properties, but
they didn’t buy them to . . . develop them, no, they . . . ma[de]
a quick profit with no investment in time or rehabilitation.”
As for Wright, “he was seduced by that money, the free
apartment, the potential for future wealth,” seduction that
eventually “had become a full-blown affair.” The closing
argument used similar rhetoric that likewise did not pertain to
the traditional fraud charge. The Government proclaimed that
“Chris Wright was bought and paid for . . . to do their
personal bidding, to be their personal public servant,” and that
he “was no longer looking after the good of the City of
Philadelphia.” This language speaks for itself. It is
provocative, and it went well beyond Appellants’ motive for
allegedly defrauding PBRG.
Having concluded that both parts of the inquiry are
satisfied, we hold that there was prejudicial spillover in this
case. We therefore vacate Appellants’ traditional fraud
convictions as well as their honest services fraud convictions,
and remand for a new trial.
28
III. Conclusion
We believe that the evidence was sufficient to convict
Appellants on each count. However, the Skilling decision that
followed trial made the District Court’s instructions on honest
services fraud incorrect. Because our law of honest services
fraud leaves so much to intent and because intent leaves so
much to the jury’s ability to make reasonable inferences, we
cannot say that this error was harmless. Further, as the
evidence of honest services fraud overlapped substantially
evidence submitted on traditional fraud, prejudicial spillover
tainted Appellants’ traditional fraud convictions. We thus
vacate all four counts of conviction and remand for a new
trial. 7
7
In this context, we need not reach Appellants’ constructive
amendment, evidentiary, and sentencing challenges.
29