Filed: September 29, 1998
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Nos. 95-5312(L)
(CR-94-208-WN)
United States of America,
Plaintiff - Appellee,
versus
Bruce C. Bereano,
Defendant - Appellant.
O R D E R
The court amends its opinion filed August 28, 1998, as follows:
On page 7, first full paragraph, lines 10-11 -- "E.D. VA." is corrected to read
"E.D. Va."
On page 8, first full paragraph of continuation of footnote 5, line 4 -- the
opening parenthesis before "a scheme" is deleted.
On page 9, first paragraph, lines 7-8 -- the phrase "complaints about Bereano’s
billing" is corrected to read "complaints about the defendant’s billing."
- 2 -
On page 18, first paragraph, line 4 -- the phrase "told the jury that Bereano used"
is corrected to read "told the jury that the defendant used."
On page 18, first paragraph, line 5 -- the phrase "inferred that Bereano had been
charged" is corrected to read "inferred that the defendant had been charged."
For the Court - By Direction
/s/ Patricia S. Connor
Clerk
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 95-5312
BRUCE C. BEREANO,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v. No. 95-5395
BRUCE C. BEREANO,
Defendant-Appellee.
Appeals from the United States District Court
for the District of Maryland, at Baltimore.
William M. Nickerson, District Judge.
(CR-94-208-WN)
Argued: December 5, 1997
Decided: August 28, 1998
Before WILLIAMS, Circuit Judge,
WILSON, Chief United States District Judge for the
Western District of Virginia, sitting by designation, and
MORGAN, United States District Judge for the
Eastern District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed in part and vacated and remanded as to sentencing by
unpublished opinion. Judge Morgan wrote the majority opinion, in
which Judge Williams joined. Chief Judge Wilson wrote an opinion
concurring in part and dissenting in part.
_________________________________________________________________
COUNSEL
ARGUED: M. Albert Figinski, Stuart Ross Berger, WEINBERG &
GREEN, L.L.C., Baltimore, Maryland, for Appellant. Dale Preston
Kelberman, Assistant United States Attorney, Baltimore, Maryland,
for Appellee. ON BRIEF: Lynne A. Battaglia, United States Attor-
ney, Stephen S. Zimmerman, Assistant United States Attorney, Balti-
more, Maryland, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
MORGAN, District Judge:
On May 26, 1994, Bereano, an attorney and a registered Maryland
lobbyist, was charged with eight counts of mail fraud. On November
30, 1994, the jury found Bereano guilty on seven counts of mail fraud.1
Four of Bereano's lobbying clients were billed $150.00 each for "leg-
islative entertainment" in their September 1, 1990 bills; those
amounts were found to actually represent reimbursements for unau-
thorized campaign contributions. Bereano appeals, arguing first that
there was insufficient evidence to support a conviction of mail fraud
under 18 U.S.C. § 1341 (1994), second that the indictment insuffi-
ciently pled violations of 18 U.S.C. § 1346 (1994), third that the trial
court abused its discretion in permitting the Government to offer evi-
dence of Maryland state election laws to prove the defendant's motive
and intent, fourth that the trial court erred in denying defendant's
_________________________________________________________________
1 Count 8 was dismissed pursuant to Bereano's motion for a judgment
of acquittal.
2
motion for individualized voir dire, and finally that the trial court
improperly allowed the Government to use a witness's grand jury tes-
timony as evidence. The Government cross-appeals, arguing first that
the trial court erred in refusing to enhance the defendant's sentence
for "losses" incurred of more than $10,000 and second that the trial
court erred in departing downward from the applicable sentencing
guidelines range by two levels. For the reasons that follow, we affirm
the judgment of the district court in part and vacate and remand as to
sentencing.
I.
On May 26, 1994, the Grand Jury returned an eight count indict-
ment charging Bereano with mail fraud under 18 U.S.C. §§ 1341 and
1346. The indictment was predicated on two theories, the knowing
and willful scheme: (1) to defraud clients of money and property by
submitting bills which included false statements of expenses incurred
and (2) to defraud clients of their right to Bereano's honest and loyal
services. The indictment described a three-part scheme: (1) Bereano
requested employees of the law firm of Bereano & Resnick and vari-
ous family members to draw checks for political contributions which
were distributed to candidates through Bereano's political action com-
mittee ("PAC"); (2) the employees and family members received
reimbursements through checks from Bereano's law firm often with
false notations concerning the check's true purpose; and (3) the reim-
bursements were pro-rated among Bereano's clients' bills under the
heading of "legislative entertainment." The retainer agreements
between Bereano and his lobbying clients did not include authoriza-
tion to make such contributions. The clients only agreed to pay
Bereano a fixed retainer for his lobbying services and "reasonable and
necessary expenses," such as photocopying, long distance phone calls,
and "legislative entertainment," which Bereano defined as meals and
entertainment, including sports events and concerts.
Prior to trial, several in limine motions were presented concerning
which testimony would be admissible at trial. The use of Maryland
state election laws was an issue included in the limine motions. The
trial court determined that a violation of the Maryland state election
laws was both unnecessary and insufficient to prove mail fraud viola-
tions, thereby precluding the defendant from proving and arguing his
3
compliance with same. However, in the course of trial, the court
found that the state election laws could properly be admitted to show
Bereano's intent and motive. Evidence concerning the Maryland elec-
tion laws was admitted through two means. First, during its case in
chief, the Government offered Exhibit 155 which was a letter written
by Bereano to one of his clients explaining the Maryland election
laws as he understood them, and the letter had the relevant copies of
the statutes attached. The letter with attachments was admitted into
evidence. During Bereano's motion for judgment of acquittal, the
Government argued that the letter was relevant to show what Bereano
knew of the Maryland election laws. The trial court allowed the letter
and the Maryland election law statutes to be presented to the jury and
instructed the jury that the laws were relevant to Bereano's motive
and intent only.
Second, during closing remarks, the Government again made sev-
eral references to the Maryland election laws. The prosecutor even
stated that Bereano violated those laws. After the trial concluded with
guilty verdicts, defense counsel again moved for a judgment of
acquittal or, alternatively, for a new trial in response to these remarks.
The trial court denied the motion, but stated that the amount of harm
shown at trial was "de minimis."
Another issue prior to trial concerned voir dire. Bereano requested
extended and individual voir dire based upon allegedly adverse pub-
licity targeted at Bereano's lobbying practices and at lobbyists gener-
ally. The trial court rejected Bereano's request. The procedure
followed at trial involved three steps. First, the trial judge asked the
entire jury pool general questions concerning media exposure and
potential biases. Second, those responding affirmatively to general
questions directed to the whole panel were questioned individually
about potential biases against lobbyists and several individuals voiced
negative opinions about lobbyists. However, none of those individuals
with negative opinions were chosen for jury service. Third, after com-
pleting the individual questioning of selected veniremen, the trial
judge then repeated questions relative to lobbyists to the panel as a
whole.
The grand jury testimony at issue was given by Sandra Steed
O'Hearn, Bereano's bookkeeper and manual biller of lobbying cli-
4
ents. O'Hearn testified before the grand jury that Bereano instructed
her to bill his lobbying clients for a pro-rated portion of various politi-
cal contributions under the category of legislative expenses. At trial,
O'Hearn denied that a policy, plan or scheme existed for falsely bill-
ing clients, and the prosecution impeached her by reading certain
questions and answers from her grand jury testimony. O'Hearn testi-
fied that she did not remember such testimony before the grand jury.
The grand jury transcript was never shown to O'Hearn, despite sev-
eral requests by her and her attorney made prior to trial,2 and the tran-
script was not entered into evidence at trial.
Other testimony at the trial included each alleged victim testifying
that they perceived no fraud either in 1990 when they paid their fraud-
ulent bills or at the time of the court proceedings.3 However, the cli-
ents also testified that they never authorized Bereano to make political
contributions nor did they agree to pay them. While O'Hearn testified
that not all expenses entered into the computer were necessarily billed
to clients, several of Bereano's employees testified to writing checks
to Bereano's PAC for which they were later reimbursed. However,
none of these employees knew whether any lobbying client was billed
for the political contributions made. Finally, there was documentary
evidence admitted at trial including: (1) the two check stubs for reim-
bursements to O'Hearn with names of Bereano's clients listed on the
stubs and "#110 per BCB," which is the billing code for legislative
entertainment and Bereano's initials; (2) checks to Bereano's PAC by
firm employees and family members and checks reimbursing those
employees for contributions made; (3) computer generated cash flow
reports marking various reimbursements and legislative entertainment
expenses as "billed off;" (4) bills to clients noting legislative enter-
tainment expenses with no corresponding explanation; and (5) letters
_________________________________________________________________
2 The Government further asserts that defense counsel had a copy of
O'Hearn's grand jury testimony. Bereano's motion in limine on this
issue supports this contention in that defense counsel complains that the
prosecution did not identify the pages he was reading from enabling
defense counsel to "follow along and identify the accuracy of his quota-
tion of the grand jury testimony."
3 These same clients also testified at Bereano's sentencing hearing that
they did not feel victimized.
5
written by Bereano to clients explaining his understanding of Mary-
land election laws and including copies of those laws.4
The jury found Bereano guilty of all seven counts of mail fraud. On
April 21, 1995, the district court entered a judgment of conviction on
all seven counts and sentenced Bereano to a five year term of proba-
tion with six months of that time to be served in community confine-
ment, 500 hours of community service and a fine of $20,000. The
sentence was imposed as to each of the seven counts of conviction,
with all sentences to run concurrently. Further, a special assessment
of $350 was imposed. However, the court granted Bereano a stay of
the sentence pending appeal based upon its observation that this case
"is a close case" with a "number of appellate issues" which warranted
a stay.
II.
In reviewing the sufficiency of the evidence, the appellate court
"will sustain the jury's verdict `if there is substantial evidence, taking
the view most favorable to the Government, to support it.'" United
States v. Jackson, 124 F.3d 607, 610 (4th Cir. 1997) (quoting Glasser
v. United States, 315 U.S. 60, 80 (1942)). "Substantial evidence is
evidence that a reasonable finder of fact would accept as adequate and
sufficient to support a conclusion of a defendant's guilt beyond a rea-
sonable doubt." Id.
In order to establish the crime of mail fraud, the Government must
prove a scheme to defraud and the use of the mails in the execution
of that scheme. See Periera v. United States, 347 U.S. 1, 8 (1954). In
addition, the Government must establish that Bereano acted with the
requisite intent to defraud. The scheme to defraud must be intended
to deprive the victims of money or property, see McNally v. United
States, 483 U.S. 350, 355 (1987), or their right to honest services. See
United States v. Bryan, 58 F.3d 933, 942 (4th Cir. 1995); 18 U.S.C.
§ 1346 (1994). While the Government must prove an intent to
defraud, it is not necessary for the Government to establish that the
_________________________________________________________________
4 The admission of this evidence is assigned as error by Bereano and
the jury was instructed to consider it only as evidence of Bereano's
motive and intent.
6
victim actually suffered a loss, only that Bereano intended such. See
United States v. Barber, 668 F.2d 778, 784-85 (4th Cir.), cert. denied,
459 U.S. 829 (1982).
Bereano argues that this Circuit should follow the lead of the Sec-
ond Circuit and hold that more than a mere intent to deceive his cli-
ents is required. Instead, Bereano argues the Government must prove
an actual intent to defraud and some type of contemplated harm
which Bereano asserts does not exist in this case. See United States
v. Starr, 816 F.2d 94, 98 (2d Cir. 1987); United States v. Regent
Office Supply Co., 421 F.2d 1174, 1182 (2d Cir. 1970); United States
v. D'Amato, 39 F.3d 1249, 1256-57 (2d Cir. 1994). This Circuit has
not held that contemplated harm is necessary in order to establish
mail fraud. See United States v. Butler, 704 F. Supp. 1351, 1354 (E.D.
Va. 1989) (noting that the view that a finding of "contemplated
harm" is required was adopted by the Second Circuit only, "and is in
opposition to the rule in the majority of the Circuits. The Court does
not agree that this situation represents so significant a split in the Cir-
cuits that the Fourth Circuit's eventual view is doubtful."), aff'd, 905
F.2d 1532 (4th Cir.), cert. denied, 498 U.S. 900 (1990). Other Circuits
are split as to whether contemplated harm is necessary.5 Yet, regard-
_________________________________________________________________
5 Some circuits have followed the Second Circuit's lead and required
some contemplated harm to be present to establish intent to defraud. See,
e.g., United States v. Cochran, 109 F.3d 660, 668 (10th Cir. 1997) ("We
acknowledge that where actual harm exists as a natural and probable
result of a scheme, fraudulent intent may be inferred. But we agree that
in the absence of actual or potential harm, evidence independent of the
alleged scheme must be adduced to show fraudulent intent towards the
alleged victim." (citations omitted)); United States v. Jain, 93 F.3d 436,
441 (8th Cir. 1996) ("`The scheme to defraud need not have been suc-
cessful or complete. Therefore, the victims of the scheme need not have
been injured. However, the Government must show that some actual
harm or injury was contemplated by the schemer.'" (emphasis in origi-
nal) (quoting D'Amato, 39 F.3d at 1257)), cert. denied, ___ U.S. ___,
117 S.Ct. 2452 (1997); United States v. Stouffer , 986 F.2d 916, 922 (5th
Cir. 1993) ("The element of fraudulent intent, in turn, requires a showing
that defendants contemplated or intended some harm to the property
rights of their victims."); United States v. St. Gelais, 952 F.2d 90, 95 (5th
Cir.) ("`Only a showing of intended harm will satisfy the element of
fraudulent intent.'" (quoting United States v. Starr, 816 F.2d 94, 98 (2d
7
less of the standard adopted, the Government argues and we agree
that contemplated harm is present in this case. The contemplated
harm is Bereano's fraudulent transfer to his clients of his cost of
doing business which cost took the form of political contributions.
The result would be the same if a different element of the cost of
doing business was involved. For example, if he had apportioned his
office rent among his clients under the heading of legislative enter-
tainment, the contemplated harm element, if required, would have
been satisfied. Therefore the evidence was sufficient to convict
Bereano of § 1341 mail fraud violations.
Bereano relies on statements of the victims that no harm has
occurred in arguing that no contemplated harm is present. Such issues
are not decided at the whim of the perceived victim. The perception
of the victim or target of the scheme is ultimately irrelevant to
whether Bereano devised a scheme, or acted with the requisite intent
to defraud. See United States v. Brien, 617 F.2d 299, 311 (1st Cir.)
("If a scheme to defraud has been or is intended to be devised, it
makes no difference whether the persons the schemers intended to
defraud are gullible or skeptical, dull or bright. These are criminal
statutes, not tort concepts. The only issue is whether there is a plan,
scheme or artifice intended to defraud."), cert. denied, 446 U.S. 919
(1980); see also United States v. Maxwell, 920 F.2d 1028, 1036 (D.C.
_________________________________________________________________
Cir. 1987))), cert. denied, 506 U.S. 965 (1992); United States v. Utz, 886
F.2d 1148, 1150 (9th Cir. 1989) (requiring "an intent to obtain money or
property from the victim of the deceit." (citations and internal quotation
marks omitted)), cert. denied, 497 U.S. 1005 (1990).
Other Circuits have held that no contemplated harm must be shown.
See United States v. Frost, 125 F.3d 346, 354 (6th Cir. 1997) ("A defen-
dant does not commit mail fraud unless he possesses the specific intent
to deceive or defraud . . .; a scheme to defraud must involve [i]ntentional
fraud, consisting in deception intentionally practiced to induce another to
part with property or to surrender some legal right, and which accom-
plishes the end designed." (citations and internal quotation marks omit-
ted)). Still others have merely defined the intent to defraud as "an intent
to mislead the victim by inducing an uninformed consent to part with
money or property." United States v. Allard, 926 F.2d 1237, 1242 (1st
Cir. 1991) (citations omitted).
8
Cir. 1990) (same); United States v. Bryza, 522 F.2d 414, 422 (7th Cir.
1975) (employee may be convicted of defrauding employer of "honest
and faithful services" even if victim took no retributive action and
was satisfied with defendant's performance. "[T]he defendant's intent
must be judged by his actions, not the reaction of the mail fraud vic-
tims."), cert. denied, 426 U.S. 921 (1976). But see D'Amato, 39 F.3d
at 1257 (holding that because alleged corporate victims had no com-
plaints about defendant's billing or about the services, perceived no
fraud and felt no harm, the lawyer, by disguising the nature of his ser-
vices on bills sent to his clients, merely deceived the clients as
opposed to defrauding them).
Further, while his clients argue that they were satisfied with
Bereano's services, they also testified that they did not authorize and
would not have knowingly paid for the political contributions
Bereano made. In support of this testimony, the client's retainer
agreements only called for payment of Bereano's lobbying services
and to reimburse him for "necessary and reasonable expenses,"
including "legislative entertainment." "Legislative entertainment" was
defined as wining and dining legislators, providing tickets to sporting
events, and the like. The retainer agreements do not authorize
Bereano to make political contributions, nor did the clients authorize
such expenses by any other means.
Sending a false bill to a third party through the mails with the nec-
essary criminal intent is a classic violation of the mail fraud statute.
See United States v. Alexander, 748 F.2d 185 (4th Cir. 1984), cert.
denied, 472 U.S. 1027 (1985); United States v. Perkal, 530 F.2d 604
(4th Cir.), cert. denied, 429 U.S. 821 (1976). Accepting the reason-
able inferences in favor of the Government, the totality of the evi-
dence presented is sufficient to support a finding that Bereano had a
specific intent to defraud, including contemplating harm to his clients,
thereby supporting his conviction on the seven mail fraud counts
under § 1341.
III.
Federal Rule of Criminal Procedure 7(c)(1) requires that an indict-
ment "shall be a plain, concise and definite written statement of the
essential facts constituting the offense charged." In order for the
9
indictment to be sufficient, the Court of Appeals must not find that
"the indictment as a whole is so vague that it violates defendants'
rights." United States v. American Waste Fibers Co., Inc., 809 F.2d
1044, 1046 (4th Cir. 1986). Whether an indictment properly charges
an offense "is a matter of law which we may consider de novo if
Bereano made a timely objection to the indictment." United States v.
Darby, 37 F.3d 1059, 1062 (4th Cir. 1994), cert. denied, 514 U.S.
1097 (1995).
Bereano begins by challenging the sufficiency of the indictment.
"[A]n indictment is sufficient if it, first, contains the elements of the
offense charged and fairly informs a defendant of the charge against
which he must defend, and second, enables him to plead an acquittal
or conviction in bar of future prosecutions for the same offense."
Hamling v. United States, 418 U.S. 87, 117 (1974); see also Darby,
37 F.3d at 1063 ("An indictment must contain the elements of the
offense charged, fairly inform a defendant of the charge, and enable
Bereano to plead double jeopardy as a defense in a future prosecution
for the same offense. . . . Moreover, the indictment must include
every essential element of an offense, or else the indictment is invalid;
and mere reference to the applicable statute does not cure the defect."
(citations and internal quotation marks omitted)). Further, "[t]he
indictment may incorporate the words of the statute to set forth the
offense, but the statutory language `must be accompanied with such
a statement of the facts and circumstances as will inform the accused
of the specific offense, coming under the general description, with
which he is charged.'" United States v. Yefsky, 994 F.2d 885, 893 (1st
Cir. 1993) (quoting Hamling, 418 U.S. at 117-18.)
First, Bereano argues that because he never held public office, "ap-
plication of § 1346 to him overreached constitutional bounds." How-
ever, there is no indication that § 1346 only applies to public officials.
Section 1346 of the statute reads "For the purposes of this chapter, the
term `scheme or artifice to defraud' includes a scheme or artifice to
deprive another of the intangible right of honest services."
The plain language of the statute does not restrict its application to
public officials. Further, § 1346 was a response by Congress to the
Supreme Court's decision in McNally v. United States, 483 U.S. 350
(1987). Prior to McNally, numerous circuit courts, including this Cir-
10
cuit, held that the mail fraud statute covered not only schemes to
defraud others of property, but also schemes designed to defraud oth-
ers of "intangible rights," including the public's right to honest gov-
ernment. See McNally, 483 U.S. at 356. In addition to the right to
honest Government, pre-McNally cases held that the intangible rights
covered included an employer's or other principal's right to the hon-
est, faithful and disinterested services of its employees or agents, usu-
ally involving a breach of a fiduciary duty. Specific examples include
cases where courts found a violation of the "honest and faithful ser-
vices" right where an employee took kickbacks from third parties,
embezzled company funds, owned a hidden interest in a firm with
which his company did business, or traded in the securities market
with inside information. See, e.g., United States v. Dial, 757 F.2d 163,
168-69 (7th Cir.), cert. denied, 474 U.S. 838 (1985); United States v.
Lemire, 720 F.2d 1327, 1335-36 (D.C. Cir. 1983), cert. denied, 467
U.S. 1226 (1984); United States v. Seigel, 717 F.2d 9, 14 (2d Cir.
1983); United States v. Bohunus, 628 F.2d 1167, 1174-75 (9th Cir.),
cert. denied, 447 U.S. 928 (1980); United States v. McCracken, 581
F.2d 719, 721-22 (8th Cir. 1978).
McNally attempted to limit the definition of "honest and faithful
services," but this Circuit has held that Congress meant to return the
definition to its pre-McNally scope through enacting § 1346. See
Bryan, 58 F.3d at 942; United States v. ReBrook, 58 F.3d 961, 966-
67 (4th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 431 (1995). Thus,
the "honest and faithful services" concept embodied in the statute
covers not only circumstances where an agent defrauds his principal
by stealing money from the principal, but also where an agent
defrauds his principal of his "honest and faithful services" when he
breaches his fiduciary duty and conceals material information from
his principal, coupled with the necessary intent and use of the mails
and wires. See, e.g., United States v. Wallach, 935 F.2d 445, 463 (2d
Cir. 1991), cert. denied, 508 U.S. 939 (1993); United States v.
Ballard, 663 F.2d 534, 541 (5th Cir. 1981); United States v. Von
Barta, 635 F.2d 999, 1006 (2d Cir. 1980), cert. denied, 450 U.S. 998
(1981); United States v. Bush, 522 F.2d 641, 648 (7th Cir. 1975), cert.
denied, 424 U.S. 977 (1976); United States v. ReBrook, 837 F. Supp.
162, 167-168 (S.D.W. Va. 1993), aff'd in part and rev. in part, 58
F.3d 961 (4th Cir.), cert. denied, 116 S.Ct. 431 (1995). Therefore,
§ 1346 is not limited to public officials.
11
Second, Bereano focuses on the requirement that the breach must
be material and that there must be an intent to defraud. See, e.g.,
Cochran, 109 F.3d at 667 ("[I]t would give us great pause if a right
to honest services is violated by every breach of contract or every
misstatement made in the course of dealing. . . . [Therefore,] § 1346
must be read against a backdrop of the mail and wire statutes, thereby
requiring fraudulent intent and a showing of materiality." (citations
omitted)); McEvoy Travel Bureau, Inc. v. Heritage Travel, Inc., 904
F.2d 786, 791 (1st Cir. 1990) ("However, not every use of the mails
or wires in furtherance of an unlawful scheme to deprive another of
property constitutes mail or wire fraud. . . . Nor does a breach of con-
tract in itself constitute a scheme to defraud. . . . Rather, the scheme
must be intended to deceive another, by means of false or fraudulent
pretenses, representations, promises or other deceptive conduct."
(citations omitted)), cert. denied, 498 U.S. 992 (1990); Mandel, 591
F.2d at 1363 ("Thus, the breach of fiduciary duty must be linked with
some actionable fraud in order for the proscriptions of the mail fraud
statute to apply."); United States v. Venneri , 736 F.2d 995, 997 (4th
Cir. 1984) ("`Any breach of fiduciary duty by a corporate employee
effected in part by the use of the mails may be a violation of the fed-
eral mail fraud statute, at least when accompanied by concealment or
a failure to disclose relevant material information.'" (quoting United
States v. Shamy, 656 F.2d 951, 957 (4th Cir. 1981), cert. denied, 455
U.S. 939 (1982), vacated on other grounds, 886 F.2d 743 (4th Cir.
1984), cert. denied, 469 U.S. 1035 (1984))); United States v.
Feldman, 711 F.2d 758, 763 (7th Cir. 1983) ("Yet not every breach
of duty by an employee works as a criminal fraud, . . . and receipt of
secret profits, standing alone, cannot support a mail fraud conviction
. . . . Such activities must be accompanied by a scheme formed with
the intent to defraud. . . . When an employee breaches a fiduciary
duty to disclose information to his employer, that breach of duty can
support a mail or wire fraud conviction only if the non-disclosed
information was material to the conduct of the employer's business
and the nondisclosure could or does result in harm to the employer."
(citations omitted)); United States v. Hess, 591 F.2d 1347, 1363 (4th
Cir. 1979) ("Thus, the breach of fiduciary duty must be linked with
some actionable fraud in order for the proscription of the mail fraud
statute to apply."). Such an argument is a challenge to the sufficiency
of the evidence.
12
Reviewing the evidence in the light most favorable to the Govern-
ment, there is a reasonable basis for finding that the issue of billing
clients for unauthorized contributions to candidates was material.
While Bereano's clients testified that they were indeed satisfied with
Bereano's services, they also testified that they had not authorized
contributions made to political candidates. Their understanding of the
contents of "legislative entertainment" did not include these political
contributions. Some clients further testified that the candidates to
whom Bereano contributed were ones the clients specifically declined
to support or were candidates opposed to ones the clients did support.
However, it is not an element of the offense for the Government to
prove that his clients would have likely contested the bills when they
were first received had the clients known the true content of "legisla-
tive entertainment." The clients were billed for expenditures which
they did not authorize and billed under a fraudulent category. This
evidence is sufficient to uphold a finding of materiality.
To the extent that Bereano is claiming the indictment is too vague
in its allegations of honest services, such issue was rejected by this
Court in United States v. Bryan, 58 F.3d 933 (4th Cir. 1995). In
Bryan, a public official argued that the indictment failed to allege an
independent specific statute or regulation violated as part of the mail
fraud scheme. See id. at 940. Alternatively, Bryan argued that in the
absence of such a statute or regulation, he had no way of knowing that
his conduct would be deemed criminal. See id. at 941. The Court
rejected this argument, holding that there was sufficient definition to
the "deprivation of the intangible right of honest services" concept
developed in the courts to put Bereano on notice. See id. at 941-42.
The Court noted that "[t]o the extent that this amounts to an argument
that § 1346 should be declared void for vagueness, we are unper-
suaded." Id. at 941. Based on our prior decisions, the statute is not too
vague to put Bereano on notice of the charges he faces.
As the trial court concluded, the indictment sufficiently alleges a
scheme to defraud under § 1346. The indictment alleges that Bereano
was an attorney and lobbyist who was retained by various clients to
represent their interests. Indictment ¶ 1, 3. As such, the indictment
alleges he owed "a fiduciary duty to each of his lobbying clients to
act honestly and faithfully for and on behalf of the clients." Indict-
ment ¶ 3. The indictment alleges that Bereano defrauded those clients
13
of not only property, but his "honest and faithful services" as well.
Indictment ¶ 7(b). The indictment describes Bereano's scheme to
defraud in that he submitted fraudulent bills to his clients, which mis-
represented payments he made to reimburse others for nominee cam-
paign contributions they made at Bereano's behest. Indictment, ¶ 8-
16. Specifically, ¶ 16 alleges that Bereano "falsely represented to his
lobbying clients on their periodic bills the expenses actually incurred
on their behalf, by fraudulently including in those bills the amounts
of the repayment checks used to reimburse the employees and family
members for political contributions, which were falsely billed to cli-
ents as, among other things, legislative entertainment." The indict-
ment further describes how Bereano concealed this material
information from his clients, such as concealing his identity as a con-
tributor. Indictment ¶ 18. Further, in response to Bereano's argument
that somehow all the allegations in paragraphs 8-16 only describe the
scheme to defraud under § 1341 described in ¶ 7(a), there is no delim-
itation as to what ¶ 8-16 refers. Paragraphs 8-16 follow the descrip-
tions in both ¶ 7(a) referring to § 1341 and ¶ 7(b) referring to § 1346
or § 1341. There is no heading specifically describing ¶ 8-16 as acts
only supporting § 1346. When the indictment is read as a whole,
therefore, it is a "plain, concise and definite statement of the facts
constituting the offense" as the indictment asserts Bereano's fiduciary
duty and asserts that he falsely billed his clients. Therefore, the indict-
ment contained the elements of the offense and met the requirement
to fairly inform Bereano of the charges against him.
Further, even if the indictment lacked sufficient particularity as to
§ 1346, or there was insufficient evidence to uphold a conviction for
mail fraud based on this section, the conviction will be affirmed when
another sufficient basis for the conviction exists. See Griffin v. United
States, 502 U.S. 46, 52-60 (1991); United States v. McDonough, 56
F.3d 381, 390 (2d Cir. 1995) (conviction under mail fraud indictment
will stand if evidence indicates statute violated in either of two ways
charged). In this case, there was sufficient evidence for conviction
under § 1341.
14
IV.
A.
Bereano argues that the trial court erred in admitting evidence con-
cerning Maryland election laws.6 The trial court's ruling on the
admissibility of evidence is reviewed for an abuse of discretion. See
United States v. Heater, 63 F.3d 311, 320 (4th Cir. 1995), cert.
denied, ___ U.S. ___, 116 S.Ct. 796 (1996).
This Circuit has previously concluded that a prosecution for mail
fraud does not require the Government to establish proof of any viola-
tion of an underlying state law or regulation. See Bryan, 58 F.3d at
940. However, evidence of state election laws may be admissible to
show knowledge and intent. See United States v. Grubb, 11 F.3d 426,
433 (4th Cir. 1993) (evidence of the judicial canon of ethics was
admissible and relevant to prove intent and absence of mistake, when
coupled with an appropriate limiting instruction); United States v.
Reamer, 589 F.2d 769, 770 (4th Cir.) (evidence of state law and Code
of Professional Responsibility admissible to prove intent in trial
against attorney for mail fraud), cert. denied , 440 U.S. 980 (1978);
United States v. Morlang, 531 F.2d 183, 191-92 n.16 (4th Cir. 1975)
(holding the standard of conduct of HUD employees in trial of HUD
director admissible).
In response to objections made in this case to the prosecutor's clos-
ing arguments, the trial judge ruled the "[prosecutor] was very cir-
_________________________________________________________________
6 Bereano also argues that the Government implied that Bereano had
committed perjury. Any implication by the Government in closing argu-
ment that Bereano had committed perjury by submitting false campaign
contribution reports is reviewed for plain error as the first objection made
concerning this issue was on appeal. See United States v. Mitchell, 1 F.3d
235, 242 (4th Cir. 1993); St. Gelais, 952 F.2d at 95. "To establish plain
error, [a defendant] must establish that (1) the asserted defect in the trial
was, in fact, error; (2) the error was plain; and (3) the error affected his
substantial rights." Jackson, 124 F.3d at 614 (citing United States v.
Olano, 507 U.S. 725, 732 (1993)). Any implication made was within the
context of what Bereano's motive and intent were. Therefore, no plain
error exists for admitting the evidence on this basis.
15
cumspect in the way he approached it and that he did not cross the
line." All references to the state election laws were made within the
context of Bereano sending the statutes to his clients, allegedly show-
ing what his understanding of the law was. The statements by the
prosecutor implying that Bereano was actually violating the law rep-
resented a minor portion of an extensive argument and were reported
within a three-page span of the transcript of the closing argument
which totaled forty pages. Finally, the trial judge, who was in the best
position to weigh this issue, gave a limiting instruction that the Mary-
land election laws only went to prove Bereano's motive and intent.
There is a presumption that a jury will follow a district court's limit-
ing instruction. See United States v. Powers, 59 F.3d 1460, 1468 (4th
Cir. 1995) (emphasizing that limiting instructions generally obviate
any prejudice), cert. denied, ___ U.S. ___, 116 S.Ct. 784 (1996);
United States v. Salva, 745 F.2d 840, 844 (4th Cir. 1984) (same), cert.
denied, 470 U.S. 1031 (1985). The trial judge was correct in holding
that the Maryland election laws were irrelevant in proving mail fraud
violations. When the veil of the Maryland election laws is lifted from
the evidence, it reveals a clearly visible scheme to fraudulently bill
clients for unauthorized political contributions. Whether the election
law evidence should have been admitted to show motive and intent
presents a close question, but the evidence of mail fraud against
Bereano is clear. Therefore, even if the trial court erred in admitting
the election law evidence, given its instructions to the jury, any possi-
ble error was harmless. Bereano's understanding of the election laws
arguably explains his motive and intent for choosing the particular
scheme which he utilized. Further, Bereano asserted a defense of
good faith. This evidence may be probative of bad motive or intent
as opposed to good faith.
B.
In reviewing a claim of prosecutorial misconduct, the Court
reviews the claim to determine whether the conduct "so infected the
trial with unfairness as to make the resulting conviction a denial of
due process." United States v. Morsley, 64 F.3d 907, 913 (4th Cir.
1995) (citations and internal quotation marks omitted), cert. denied
and sub nom., McKoy v. United States, ___ U.S. ___, 116 S.Ct. 749
(1996). This Circuit has held that "`the test for reversible prosecu-
torial misconduct generally has two components: that (1) the prosecu-
16
tor's remarks or conduct must in fact have been improper and (2) such
remarks or conduct must have prejudicially affected Bereano's sub-
stantial rights so as to deprive the defendant of a fair trial.'" United
States v. Mitchell, 1 F.3d 235, 240 (4th Cir. 1993) (quoting United
States v. Brockingham, 849 F.2d 872, 875 (4th Cir. 1988)) (quoted in
United States v. Chorman, 910 F.2d 102, 113 (4th Cir. 1990));
Morsley, 64 F.3d at 913. This Court has noted a number of factors in
evaluating the issue of prejudice to Bereano, namely "`(1) the degree
to which the prosecutor's remarks have a tendency to mislead the jury
and to prejudice the accused; (2) whether the remarks were isolated
or extensive; (3) absent the remarks, the strength of competent proof
introduced to establish the guilt of the accused; and (4) whether the
comments were deliberately placed before the jury to divert attention
to extraneous matters.'" Mitchell, 1 F.3d at 241 (citing United States
v. Harrison, 716 F.2d 1050, 1052 (4th Cir. 1983) (quoted in
Chorman, 910 F.2d at 113)), cert. denied, 466 U.S. 972 (1984);
Morsley, 64 F.3d at 913.
"It is often said and often forgotten that the duty of a prosecuting
attorney is not to convict defendants but to try them fairly. Absolute
fairness is a counsel of perfection. But the prosecutor should hold
himself to the highest practicable standard of fairness." McFarland v.
United States, 150 F.2d 593, 594 (D.C. Cir. 1945). Bereano argues
that prosecutorial misconduct occurred in that the prosecution first
argued that the state election laws were immaterial to mail fraud, but
then relied upon the same state election laws in opposing his motion
for judgment of acquittal and in arguing that Bereano was guilty dur-
ing closing arguments. Bereano asserts that this is prosecutorial over-
reaching and that "such references were a culmination of a string of
errors which permeated the trial."
Prosecutorial misconduct warrants the reversal of a conviction only
in rare and egregious cases. For example, a conviction was overturned
when the prosecution prejudiced the appellant's substantial rights by
repeatedly referring to a conviction of another participant in the same
conspiracy and the appellant's relationship to that co-conspirator. See
Mitchell, 1 F.3d at 241-44. The Court based its conclusion on such
factors as calling into question evidence not before the jury, the prose-
cution's case could withstand a sufficiency of evidence challenge but
was not overwhelming, the prosecution deliberately made improper
17
comments before the jury in order to divert the jury's attention, and
the district court failed to give a limiting instruction to the jury. See
id. at 241-42. In contrast, no reversible error was found when the
prosecution told the jury that the defendant used different names and
inferred that the defendant had been charged with murder and rape previ-
ously, neither of which were true; the prosecution said in opening
statements that even a condemned man gets a last meal while the vic-
tim did not; and the victim's bloodstained underclothes were kept
conspicuously displayed for several hours. See McFarland, 150 F.2d
at 593-94.7
_________________________________________________________________
7 More recent examples of circumstances not warranting reversal
include: United States v. Burns, 104 F.3d 529, 537 (2d Cir. 1996) (hold-
ing that prosecution's applauding after defense counsel's summation was
not prosecutorial misconduct because there were curative instructions
given and sufficient evidence to convict without the misconduct); United
States v. Collins, 78 F.3d 1021, 1039-40 (6th Cir. 1996) (holding
instances of laughter, gestures and facial expressions by prosecutor may
have been improper, but fell far short of reversible error), cert. denied,
___ U.S. ___, 117 S.Ct. 189 (1996); Mills v. Singletary, 63 F.3d 999,
1013-14 (11th Cir. 1995) (holding prosecutor's pretrial solicitation of
comments about potential jurors from county sheriff, deputy sheriff, bai-
liff, clerk of court and victim's father was not prosecutorial misconduct
because the conduct was not brought to the attention of anyone on venire
list), cert. denied, ___ U.S. ___, 116 S.Ct. 1837 (1996); United States v.
Wiley, 29 F.3d 345, 351-52 (8th Cir.) (characterization of defendant as
a "criminal" and "drug dealer" did not deprive defendant of a fair trial),
cert. denied, 513 U.S. 1005 (1994); United States v. Chambers, 944 F.2d
1253, 1272 (6th Cir. 1991) (holding no prosecutorial misconduct
occurred when prosecution drew picture of courtroom indicating where
drug defendant was sitting and nodded and winked to government wit-
ness during her testimony), cert. denied, 502 U.S. 1112 (1992);
Grochulski v. Henderson, 637 F.2d 50, 53-54 (2d Cir.) (holding that
although prosecutor visited homes of various alibi witnesses in order to
obtain statements about their forthcoming testimony, visits were limited
to minimum necessary and occurred only because defense had notified
prosecution of its intent to put witnesses on stand at time later than that
fixed by New York statute governing adversary notice of alibi witnesses,
and therefore, there was no evidence of prosecutorial misconduct, despite
claim that prosecutor intimidated witnesses), cert. denied, 450 U.S. 927
(1981); United States v. Bashaw, 509 F.2d 1204, 1205 (9th Cir. 1975)
(holding prosecutor's comment during summation "that the defendant's
18
When evaluating the factors identified by this Circuit in answering
this question, we must first determine "the degree to which the prose-
cutor's remarks have a tendency to mislead the jury and prejudice the
accused. . . ." Mitchell, 1 F.3d at 241. First, this argument was made
in the context of Bereano's knowledge of the law as it tended to prove
whether he had acted in good faith which is a proper purpose as noted
by the trial court. Also relevant to this inquiry is whether the trial
court gave a limiting instruction concerning that evidence. Unlike
Mitchell, the judge did give a limiting instruction to the jury in this
case telling them that the information concerned what Bereano knew
about the election laws and what his intent was. The trial judge also
redacted reference to the election laws from the indictment before it
was made available to the jury. Given this limiting instruction and the
redaction, the comments were not prejudicial, they did not mislead the
jury and they did not prejudice the accused. Therefore, this factor
weighs in favor of the Government.
Second, we must determine whether the remarks were pronounced
and persistent. While several allegedly inappropriate remarks were
made by the prosecution, they were made within the context of what
Bereano knew the law to be, which went to motive, intent, and lack
of good faith. Further, the comments were few in comparison to forty
pages of transcript covering the Government's closing arguments.
Finally, the trial judge recognized the issue and ruled that the prosecu-
_________________________________________________________________
evidence doesn't meet its burden of showing the defendant did not com-
mit the crime charged" was improper, but was legally harmless, where
district judge immediately instructed jury that it must not accept the
statements of counsel as to the law, jury was carefully instructed that it
rested upon the prosecution to prove defendant's guilt beyond a reason-
able doubt, and evidence of defendant's guilt was overwhelming). But
see Drake v. Kemp, 762 F.2d 1449, 1458-60 (11th Cir. 1985) (holding
prosecutor's closing argument in sentencing phase of capital murder
prosecution, in which prosecutor cited two state Supreme Court decisions
which were over 100 years old to urge jury not to consider mercy in
imposing sentence, was misleading and prejudicial; as evidence implicat-
ing defendant in murder was not overwhelming, improper argument ren-
dered sentencing hearing fundamentally unfair), cert. denied, 478 U.S.
1020 (1986).
19
tion's statements were proper. Therefore, this factor also weighs in
favor of the Government.
Third, as for the amount of properly admitted evidence available
against Bereano, the trial court described the evidence as "thin" and
"obscure." However, when the election law issue is put aside, the
remaining evidence of fraud is clear. The alleged victims of the fraud
all testified to the fact that they believe they received the full benefit
of Bereano's services. However, they all testified that they did not
authorize, by contract or otherwise, political contributions being
charged to them. Had such victims not authorized the wining and din-
ing of legislators, the billing of same to clients under the heading of,
for example, legal research would be similarly fraudulent. Therefore,
this factor also weighs somewhat in favor of the Government.
Fourth, we must assess "whether the comments were deliberately
placed before the jury to divert attention to extraneous matters."
Mitchell, 1 F.3d at 241. The knowing violation of Maryland state
election laws arguably was evidence showing a lack of good faith by
Bereano.8
The totality of the Mitchell factors weigh in favor of the Govern-
ment, albeit some factors more than others. Accordingly the Govern-
ment's argument did not "so infect the trial with unfairness as to make
the resulting conviction a denial of due process." Morsley, 64 F.3d at
913 (citations and internal quotation marks omitted).
C.
An indictment may not be "`amended except by resubmission to
the grand jury.'" United States v. Leichtman , 948 F.2d 370, 376 (7th
Cir. 1991) (quoting Russell v. United States, 369 U.S. 749, 770
(1962)); see also Stirone v. United States, 361 U.S. 212, 215-16
(1959). If an amendment occurs, the conviction "is reversible per se."
Id. However, an amendment to an indictment is not fatal in two cir-
_________________________________________________________________
8 The Government made that argument in its closing statement, stating:
"In deciding whether Mr. Bereano acted in good faith honestly, or
whether he acted with the intent to deceive, you are entitled to consider
whether he believed he was violating the state's election laws. . . ."
20
cumstances. First, there is no amendment when the change is "merely
a matter of form," such as a correction for a typographical or clerical
error or a misnomer, a formal change to the date specified in the
indictment within limits, or an inconsistency amounting to a simple
matter of semantics. See id. Second, an indictment is not amended if
"all that has happened is that the evidence or the charges submitted
to the trial jury wind up being simply a more limited version of the
charges in the indictment. An indictment may be narrowed, either
constructively or in fact, without resubmitting it to the grand jury." Id.
Bereano claims there was an impermissible amendment of the
indictment. A change to the indictment is an impermissible amend-
ment if the change broadens the charges presented to the jury allow-
ing them to consider more or different offenses than the grand jury
charged. For example, if the indictment charges a RICO conspiracy
among individuals "associated with an enterprise, to wit . . . the
DeCavalcante Family of La Cosa Nostra," but the jury is only
instructed that the defendants are associated with"an enterprise," then
an amendment has occurred. See Leichtman, 948 F.2d at 377-78.
"[T]he more general instruction would allow the defendants to be
convicted of an enterprise other than the one charged in the indict-
ment, violating [the defendant's] right to be tried only on the charges
approved by the grand jury . . . ." Id. at 377.
In this case, Bereano was charged with eight counts of mail fraud.
References to the Maryland state election laws were redacted in two
places: first, in ¶ 6, the indictment recited the provisions of Md. Code
Ann. Art. 33, §§ 26-29,9 and second, in ¶ 18(2), the indictment recited
that an outcome of the previously described scheme was to allow
_________________________________________________________________
9 Paragraph 6 of the indictment reads:
At all relevant times material to the Indictment, the Annotated
Code of Maryland, Article 33, section 26-29 prohibited any indi-
vidual or corporate entity from contributing in excess of $1,000
to any one candidate or in excess of a total of $2,500 to any
group of candidates in any primary or general election for public
office in the state of Maryland and prohibited any individual or
corporate entity from contributing in excess of $2,500 to any
Maryland state political action committee in any primary or gen-
eral election.
21
Bereano to "(2) make political contributions in excess of the limita-
tions imposed by Maryland election law."10 Neither reference to the
Maryland state election laws is contained within the section labeled
"The Scheme and Artifice to Defraud." When redactions are made to
portions of the indictment not contained within the description of the
scheme, no constructive amendment has occurred. See United States
v. Schnabel, 939 F.2d 197, 203 (4th Cir. 1991) ("`[T]he contested lan-
guage is in a predicate paragraph and therefore is not an element of
the offense charged. `In determining whether there has been a vari-
ance between pleading and proof, it is the charging paragraphs that
are to be examined.'" (quoting United States v. Jordan, 626 F.2d 928,
931 (D.C. Cir. 1980)). Further, the jury was instructed that violations
of the state election laws could only be considered on motive and
intent, the converse of Bereano's alleged good faith defense. See
Bryan, 58 F.3d at 941-42 (holding mail fraud conviction does not
require the government to establish proof of any violation of an
underlying state law). Therefore, the redaction of the indictment was
not prejudicial to Bereano.
V.
"A trial court has wide latitude in conducting voir dire. The court
abuses its discretion only `where the court's restriction hinders a
defendant's opportunity to make reasonable use of his challenges.'"
United States v. Muldoon, 931 F.2d 282, 286 (4th Cir. 1991) (quoting
King v. Jones, 824 F.2d 324, 326 (4th Cir. 1987)); see also Ham v.
South Carolina, 409 U.S. 524, 527-28 (1973); United States v.
Bakker, 925 F.2d 728, 733 (4th Cir. 1991) ("A trial court has broad
_________________________________________________________________
10 Paragraph 18 reads in full:
By means of the foregoing scheme and artifice, BRUCE C.
BEREANO was able to: (1) conceal the true identities of the
actual contributors of campaign contributors of campaign funds;
(2) make political contributions in excess of the limitations
imposed by Maryland state election law; (3) cause candidates to
file false campaign finance reports, thereby concealing the true
identity of the contributor to the candidate's campaign; (4) cause
his own lobbying activity reports to be false; and (5) defraud his
lobbying clients of approximately $16,000 to reimburse BRUCE
C. BEREANO for said political contributions.
22
discretion to control the scope of questions during voir dire." (cita-
tions omitted)). Therefore, the standard of review for the trial court's
questions in voir dire is one of harmless error, see Muldoon, 931 F.2d
at 286, and the standard for the conduct of voir dire generally is an
abuse of discretion. See Bakker, 925 F.2d at 733.
"It is well settled that a trial judge may conduct voir dire without
allowing counsel to pose questions directly to the potential jurors" as
well as "question prospective jurors collectively rather than individu-
ally." Bakker, 925 F.2d at 734 (citing Fed. R. Crim. P. 24(a)); see also
Mu'Min v. Virginia, 500 U.S. 415, 431 (1991); Wells v. Murray, 831
F.2d 468, 472-74 (4th Cir. 1987) (individual voir dire not required in
spite of public castigation of jurors for lenience in prior case). Indi-
vidual questioning is especially unnecessary when the trial court "pro-
vides for individual questioning of a juror whose initial responses
prove less than satisfactory and offers potential jurors the opportunity
to speak with the court privately." Bakker, 925 F.2d at 734. Lastly,
"`it is not required . . . that jurors be totally ignorant of the facts and
issues involved [in the case] . . . . It is sufficient if the juror can lay
aside his impression or opinion and render a verdict based on the evi-
dence presented in court.'" Id. at 734 (citing Irvin v. Dowd, 366 U.S.
717, 722-23 (1961)).
Bereano requested extended and individual voir dire predicated on
numerous newspaper articles that depicted Bereano as "the merchant
of death" and "evil incarnate." The trial court denied this request.
Instead, the trial judge began by asking questions to elicit whether the
jurors knew of the case through media coverage. As to those members
of the venire who responded to the collective voir dire, the judge
questioned veniremen individually during bench conferences and
allowed the attorneys to do the same. Also at those bench confer-
ences, the judge elicited biases the jurors might have against lobby-
ists, and some individuals were excused on such grounds. The trial
judge then asked questions to the entire venire panel to elicit any prej-
udices against lobbyists that may exist. The judge questioned the
jurors about several aspects of political life including lobbyists, politi-
cal campaigns, and PACs.11 No juror responded to the judge's inqui-
_________________________________________________________________
11 The trial judge presented the following two questions:
23
ries. The voir dire of the jurors lasted two days. While the length of
questioning is not relevant to the determination of whether voir dire
was proper, see Bakker, 925 F.2d at 733, it is an indication of the
thoroughness of the trial judge in inviting the jurors to communicate
any potential problems they might have had.
The process used by the trial judge was identical to the process
used in United States v. ReBrook, 58 F.3d 961, 969 (4th Cir.), cert.
denied, ___ U.S. ___, 116 S.Ct. 431 (1995), and United States v.
Bakker, 925 F.2d 728, 733 (4th Cir. 1991). In ReBrook, the defendant
was concerned with prejudicial pretrial publicity. Id. The trial court
questioned the potential jurors generally about pretrial publicity, their
knowledge of the defendants and related matters. Id. The court indi-
vidually questioned potential jurors whose responses suggested preju-
dice. Id. This Circuit found that the process was effective in insuring
a fair and impartial jury. Id. In Bakker, this Circuit held the denial of
individual voir dire was proper when the court "provided for individ-
ual questioning of a juror whose initial responses prove less than sat-
isfactory and offers potential jurors the opportunity to speak with the
_________________________________________________________________
"The first question is whether you hold any particular opinion or
opinions about lobbyists or the practice of lobbying elected offi-
cials that might affect your ability to render a fair and impartial
verdict in this case? And along with that, although it is not nec-
essarily tied to it, is the question as to whether you hold any
opinion or opinions about Political Action Committees, or the
making of political contributions again that might affect your
ability to be fair and impartial with respect to a verdict in this
case. If anybody has any such opinions, come on up here and
express them at the bench."
There was no response to this question. The court then further inquired,
asking "Is there anybody here who has any business or any social rela-
tionships with any lobbyists?" When a juror responded, the judge asked
what the association was and whether the association would make the
juror partial, to which the juror answered "Not at all, Your Honor." The
judge then followed those questions with questions concerning whether
any juror ran for political office or was an officer or actively involved
in a campaign or political organization. There were no responses to these
questions.
24
court privately." 925 F.2d at 734. Based upon this precedent and the
circumstances of this case, no abuse of discretion occurred with
respect to voir dire.
VI.
Bereano assigns error because the transcript of the grand jury testi-
mony used to impeach O'Hearn was not admitted into evidence and
the prosecution relied on the grand jury testimony in its closing argu-
ments. Bereano first raised his objection in his motion in limine
directly preceding the Government's closing argument. When a
defendant objects to the manner in which evidence is presented, the
issue is reviewed under the "harmless error" standard. See Fed. R.
Crim. P. 52(a). Under Rule 52(a), "[a]ny error, defect, irregularity or
variance which does not affect substantial rights shall be disre-
garded." Because Bereano objected to the use of the grand jury testi-
mony prior to its use in closing arguments, error which may have
occurred through the use of the grand jury testimony in closing argu-
ments, if any, is reviewed for harmless error.
Federal Rule of Evidence 613 provides that:
(a) Examining witness concerning prior statement. In
examining a witness concerning a prior statement made by
the witness, whether written or not, the statement need not
be shown nor its contents disclosed to the witness at that
time, but on request the same shall be shown or disclosed
to opposing counsel.
(b) Extrinsic evidence of prior inconsistent statement of
witness. Extrinsic evidence of a prior inconsistent statement
by a witness is not admissible unless the witness is afforded
an opportunity to explain or deny the same and the opposite
party is afforded an opportunity to interrogate the witness
thereon, or the interests of justice otherwise require.
In arguing this assignment of error, Bereano analogizes to cases
involving oral statements that hold that "it is reversible error [for the
Government] to fail to produce the person to whom the statement was
25
purportedly made to contradict the witness." United States v. Bohle,
445 F.2d 54, 73 (7th Cir. 1971); see also United States v. Harris, 542
F.2d 1283, 1307 (7th Cir. 1976). However, there is a clear difference
between using prior inconsistent oral statements and transcribed prior
inconsistent statements under oath. Therefore, there is a distinction
between cases governing oral statements and the present situation.
The transcribed grand jury testimony could have been admitted
into evidence if defense counsel had objected at the time O'Hearn tes-
tified. However, this omission was not error. First, Bereano had an
opportunity to clarify the grand jury testimony. Further, the Govern-
ment had a copy of the statement available if the defense had
requested a copy. See United States v. McCall , 85 F.3d 1193, 1197
(6th Cir. 1996) (noting it is proper for the Government to present the
prior inconsistent statements during cross-examination); United States
v. Hudson, 970 F.2d 948, 955 (1st Cir. 1992) (holding Rule 613 does
not "require that the witness be confronted with the statement while
on the witness stand, but rather, only that the witness be available to
be recalled in order to explain the statement during the course of the
trial.") (citations omitted). However, no request for a copy was made.
Likewise, instead of objecting to the failure of the Government to
admit the grand jury transcript while O'Hearn was testifying, the
defense remained silent concerning the incident until after both par-
ties had rested. The issue was raised for the first time directly before
the Government's closing argument. Bereano gave the court no
opportunity to correct any allegedly improper omission of evidence.
Second, the Government correctly followed the procedure laid out
in Federal Rule of Evidence 613 that deals with prior statements. It
properly laid a foundation for the statement. On cross-examination,
O'Hearn was asked and denied that there was any practice or policy
at the firm to bill the clients fraudulently. On redirect, O'Hearn
claimed she could not recall whether Bereano instructed her to bill
political contributions as reimbursement expenses. The Government
then read questions and answers from her grand jury testimony in
which she testified that Bereano gave her instructions regarding how
to bill clients for these political contributions. When asked if she
remembered giving these answers to the grand jury, O'Hearn testified
that she could not remember. O'Hearn's lack of memory concerning
her prior inconsistent statements can be construed as either a denial
26
or an admission of her prior statements. Therefore, use of the grand
jury testimony was proper impeachment evidence12 and the Govern-
ment relied upon it in its closing argument as such. The Government
recounted O'Hearn's earlier testimony that Bereano never directed
her to bill expenses as legislative entertainment. The Government
then read her earlier grand jury testimony which directly contradicted
her trial testimony and emphasized that "somehow, somehow Sandra
Steed O'Hearn could not remember that" and that"she had forgetfuli-
tis." The Government concluded by arguing that O'Hearn was either
lying before the grand jury or at trial and that the jury could infer that
"[s]he was lying to protect Bruce Bereano." Accordingly, the Govern-
ment's reference to O'Hearn's grand jury testimony was proper
impeachment evidence and no error occurred.
VII.
The Government objects to the trial court's determination that there
_________________________________________________________________
12 This Circuit also permits grand jury testimony to be used as substan-
tive evidence under Federal Rules of Evidence 801(d)(1)(A) or 803(24).
Grand jury testimony can be used as substantive evidence under Federal
Rules of Evidence 801(d)(1)(A) if declarant is subject to cross-
examination at trial. See United States v. Stockton, 788 F.2d 210, 219
n.14 (4th Cir. 1986) ("Simmons' prior testimony before the grand jury
would be hearsay, were it not for Fed. R. Evid. 801(d)(1)(A), which
exempts from the definition of hearsay prior inconsistent statements
made by a witness at trial, if those statements were made `under oath
subject to the penalty of perjury at a trial, hearing, or other proceeding.'
Testimony before grand jury falls within the scope of the rule."); United
States v. Grandison, 780 F.2d 425, 431 (4th Cir. 1985) (holding grand
jury testimony admissible to protect against "turncoat" witness), cert.
denied, 459 U.S. 934 (1990); United States v. DiCaro, 772 F.2d 1314,
1321 (7th Cir. 1985), cert. denied, 475 U.S. 1081 (1986); United States
v. Murphy, 696 F.2d 282, 284 (4th Cir. 1982) (holding grand jury testi-
mony is admissible under Rule 801(d)(1) if declarant testifies at trial and
is cross-examined and if the grand jury testimony was given under oath),
cert. denied, 461 U.S. 945 (1983). However, this Court holds that the
grand jury testimony was properly relied upon only as impeachment evi-
dence, and there is sufficient evidence to support Bereano's conviction
without considering O'Hearn's grand jury testimony as substantive evi-
dence.
27
was only $600 of "loss" to these victims as that term is defined under
the Sentencing Guidelines. We review de novo the district court's
legal interpretation of the term "loss" under the Sentencing Guidelines
as well as the factors the court considers. See United States v.
Castner, 50 F.3d 1267, 1274 (4th Cir. 1995); United States v.
Reddeck, 22 F.3d 1504, 1511 (4th Cir. 1994); United States v.
Chatterji, 46 F.3d 1336, 1340 (4th Cir. 1995). However, "`to the
extent that the determination of the amount of loss is a factual matter,
we review only for clear error.'" Castner, 50 F.3d at 1274 (quoting
United States v. West, 2 F.3d 66, 71 (4th Cir. 1993)).
Loss is defined as the "value of the money, property, or services
unlawfully taken." U.S. Sentencing Guidelines Manual § 2F1.1, com-
ment. (n.7) (1995). The Guidelines further provide that "the loss need
not be determined with precision. The court need only make a reason-
able estimate of the loss . . . ." USSG § 2F1.1, comment. (n.8). How-
ever, "[t]he cumulative loss produced by a common scheme or course
of conduct should be used in determining the offense level, regardless
of the number of counts of conviction." USSG § 2F1.1, comment.
(n.6).
The trial court noted several reasons to support its holding that no
enhancement for loss sustained was warranted. These reasons, noted
as follows, were improperly considered in determining whether a loss
enhancement is warranted: (1) the clients may have benefitted from
the fraud,13 (2) the assertion that Bereano received little benefit,14 and
_________________________________________________________________
13 See Castner, 50 F.3d at 1276 (notwithstanding the alleged benefit to
clients, "the payment fraudulently obtained in excess of the amount to
which a defendant is legally entitled . . . is [the] measure of the amount
of loss for sentencing purposes" and the argument that loss occurred
because parts were received faster and cheaper was irrelevant); United
States v. Rothberg, 954 F.2d 217, 219 (4th Cir. 1992) (reversing the trial
court's decision that because the bank could benefit in the future by col-
lecting on the existing collateral underlying a false loan application, the
amount of loss was too speculative).
14 See United States v. Campbell , 42 F.3d 1199, 1205 (9th Cir. 1994)
("We do not subtract the costs of pulling off the caper when we calculate
the value of the stolen property."), cert. denied, 514 U.S. 1091 (1995);
United States v. Schweitzer, 5 F.3d 44, 47 (3rd Cir. 1993) (refusing to
deduct the amount of the bribe paid in calculating benefit under the
guidelines).
28
(3) the clients' desire that Bereano should be dealt with leniently.15
In addition, the trial court found that the Government failed to
establish that $16,000 of loss was sustained as opposed to $600.
When requesting a sentence enhancement, the Government bears the
burden of proving, by a preponderance of the evidence, the victim's
losses. See Reddeck, 22 F.3d at 1512. In support of that determination,
we agree that the Government's factual evidence failed in several
ways. First, many of the check stubs and other documents showing
that clients had been falsely billed were not presented to the sentenc-
ing court. Even if they had been, the total amount of all the check
stubs submitted at trial was $1300 and only two of these stubs, total-
ing $600, clearly showed that the reimbursements paid would be
billed to the clients as "legislative entertainment." Second, many of
the documents showing which clients were billed for which portions
of the political contributions were destroyed.16 The bills do not note
justifications for the various "legislative entertainment" expenses, but
there was no connection proven between specific contributions and
specific "legislative entertainment" charges beyond the two specific
check stubs totaling $600. Finally, there was evidence of computer
printouts noting that political contributions were"billed off," imply-
ing clients were billed improperly for these expenses, but there was
_________________________________________________________________
15 See Reddeck, 22 F.3d at 1512 (holding the sentencing guidelines do
not provide for "an abstract factoring of a victim's residual and subjec-
tive `satisfaction.' Calculation of lost value requires an objective stan-
dard, usually measured by the `fair market value.'" (citing USSG
§ 2B1.1, comment. (n. 2)).
16 After inquiries were made by a legislator concerning one of
Bereano's contributions, many of O'Hearn's notes designating which cli-
ents were billed for which contributions were destroyed for fear of dis-
covery. The few notes that survived became the basis for these mail
fraud allegations. The Government asserts that other allegations of over-
billing, i.e. that a total of $16,000 worth of overbilling occurred, were not
criminally pursued because, though the Government had evidence in the
form of check stubs and client bills that overbilling had occurred, the
destruction of the notes in regard to those transactions made the specifics
of who was overbilled on which occasions most difficult to prove beyond
a reasonable doubt. As noted above, only two check stubs clearly showed
that clients were billed for political reimbursements and those two stubs
totaled only $600.
29
testimony alleging that not all items marked billed off in the computer
meant that clients were billed for those expenses. Based upon the
insufficiency of the Government's evidence, the trial court's refusal
to enhance Bereano's sentence based on losses over $10,000 is
affirmed.
VIII.
The Government also noted its objection to the trial court's reason-
ing for downwardly departing. Previously, this Court applied a multi-
part analysis which involved:
(1) a de novo standard [of review] to determine whether the
reasons the district court used to support its departure
encompassed a factor not adequately taken into consider-
ation by the Sentencing Commission in formulating the
guidelines, (2) a clearly erroneous standard to review
whether the district court had adequate factual support to
depart on the basis of the factor, (3) an abuse of discretion
standard to determine whether the factor is of sufficient
importance to justify a sentence outside the guideline range,
and (4) an abuse of discretion standard to review whether
the extent of the departure was reasonable.
United States v. Hairston, 96 F.3d 102, 106 (4th Cir. 1996) (citations
and internal quotations omitted). However, Koon v. United States,
___ U.S. ___, 116 S.Ct. 2035, 2048 (1996), abolished the "de novo"
review under the above multi-layered test and substituted a "unitary
abuse of discretion standard." This "unitary abuse of discretion stan-
dard" includes:
a legal analysis as to whether the Commission listed certain
factors as forbidden, discouraged or encouraged departure
bases. We do not accord a district court's legal conclusions
on these questions any particular deference. However, we do
defer to a sentencing court's fact-based determination as to
whether the presence of a suggested feature removed a case
from the "heartland" for which the guideline was designed.
Because "[a] district court by definition abuses its discretion
30
when it makes an error of law," our overall review is thus
for abuse of discretion.
Hairston, 96 F.3d at 106-07 (citing Koon , ___ U.S. at ___, 116 S.Ct.
at 2048); see also United States v. Rybicki, 96 F.3d 754, 757 (4th Cir.
1996); United States v. Brock, 108 F.3d 31, 33 (4th Cir. 1997) ("The
[Koon] Court explained that when assessing whether a potential basis
for departure was adequately considered by the Commission in for-
mulating the guidelines, the correct inquiry necessarily focuses on
whether the factor is addressed by the guidelines, policy statements,
or official commentary and whether it is encompassed within the
heartland of situations to which the guidelines were intended to
apply." (citing Koon, ___ U.S. ___, 116 S.Ct. at 2044-45)).
The reasons given by the trial court justifying the downward depar-
ture in essence are two-fold: (1) Bereano did not profit from his
crime; and (2) the victims do not feel defrauded. Using the above
standard of review, we must review the use of these factors for any
legal errors constituting an abuse of discretion.
Defendant's first argument is akin to this court's reasoning in
United States v. Seacott, 15 F.3d 1380 (4th Cir. 1994). In that case,
the district court reasoned that the Guidelines did not take into
account the possibility that a defendant would be motivated by rea-
sons other than his own personal gain in the context of misapplying
funds in violation of 18 U.S.C. § 657 (1994). See id. at 1387. We held
that such reasoning was a "legally insufficient reason to depart from
the applicable Guidelines range." Id. There, as here, a departure based
on the belief that a crime was committed "without concern for [a
defendant's] own economic self-interest" is clear error. Id. The
Guidelines consider both harm to the victim and gain to the defen-
dant, and therefore, a lack of profit motive reason used to depart is
in direct contravention to the Guidelines. See id. "The same amount
has been taken from the victim no matter what the fate of the funds.
The aim of the criminal law in this area is to deter misapplication of
funds for any reason." Id. Therefore, reliance on this factor is legal
error.17
_________________________________________________________________
17 It is difficult to accept the proposition that Bereano did not benefit,
as the amount of political contributions was a part of the "overhead" of
his lobbying practice. The result would be the same if he billed clients
for office rent or car payments under the heading of"legislative enter-
tainment."
31
As to the perceptions of the victims, the Guidelines contain several
provisions for adjustments to a sentence based on the effect of the
crime on a victim. See, e.g., USSG §§ 5K2.1, 5K2.2, 5K2.3, 5K2.4,
5K2.8, and 5K2.10. None of these provisions, however, justify a
departure when the victim allegedly does not perceive being wronged.
The Sentencing Commission considered enhancement for aggravating
circumstances, and downward departures for lesser harms. Further,
the trial court considered the victims' perceptions when deciding not
to enhance the loss calculation. Since we have found that this factor
should not be considered in enhancing the loss calculation, double
counting is no longer an issue. However, we find that the use of that
factor as a basis for granting a downward departure is also impermis-
sible. See United States v. Ellen, 961 F.2d 462, 468 (4th Cir.), cert.
denied, 506 U.S. 875 (1992). The trial court relied upon this factor
when it stated
I am limiting the [downward] departure to only two-levels,
because I find some merit to the concerns that have been
expressed by the Government. One [concern] as Mr. Kelber-
man has put it [is] we are riding the same horse to some
extent by reason of the fact that no loss enhancement was
applied [due to the victims' statement that they did not feel
defrauded.]
In light of the Koon decision, which this Court notes post-dated the
trial court's ruling, the trial court relied upon impermissible reasons
for granting a downward departure. Accordingly, sentencing is
vacated and remanded for the district court's reconsideration.
IX.
In conclusion, we affirm the jury's verdict and the district court's
upholding of this verdict which finds Bereano guilty of mail fraud.
The evidence is sufficient to uphold conviction under either 18 U.S.C.
§ 1341 or § 1346; the Maryland election laws were irrelevant and if
their presentation to the jury was error, it was harmless error; there
was no abuse of discretion in the voir dire procedure employed; and
the use of grand jury testimony was proper impeachment evidence
and was not error. Further, the district court did not err in calculating
the loss sustained in regard to the sentence enhancement sought by
32
the Government. Based upon recent precedent, however, we hold that
the district court abused its discretion in granting a downward depar-
ture. Accordingly, Bereano's sentence is vacated, and his sentencing
is remanded to the district court for reconsideration in light of Koon,
Rybicki, and this Court's findings.
AFFIRMED IN PART AND VACATED
AND REMANDED AS TO SENTENCING
WILSON, Chief District Judge, concurring in part and dissenting in
part:
I concur with the majority's opinion except for part VI, in which
the majority concludes that the district court properly permitted the
government to read extremely damaging, and I believe clearly unad-
mitted, grand jury testimony during closing argument. I, therefore,
respectfully dissent from this part of the opinion.
The rule that guides my dissent is quite basic: counsel may not read
to the jury in closing argument material not in evidence. See Graham
v. United States, 257 F.2d 724, 730 (6th Cir. 1958); see also United
States v. Morsley, 64 F.3d 907, 913 (4th Cir. 1995) ("The prosecutor's
statement that McKoy had pled guilty to Count 91 when no such fact
was in evidence was unquestionably improper."). At trial, the govern-
ment questioned Bereano's bookkeeper, Sandra O'Hearn, about
Bereano's involvement in billing and about her purported grand jury
testimony. O'Hearn exculpated Bereano and answered that she could
not recall what she had been asked and what she had answered before
the grand jury. The government never followed up by seeking to
introduce that testimony. In closing argument, however, the govern-
ment read the unadmitted, purported grand jury testimony at length
and commented:
Now, if you don't believe her, and you have good reason
not to believe her because her testimony was diametrically
opposed to what she said in the Grand Jury, you then have
to ask yourself the next question. Well, if she's lying, who
is she lying for and why is she lying? That one you can fig-
ure out. She wasn't lying to help the government. She was
33
lying to protect Bruce Bereano. An innocent man, ladies and
gentlemen, does not need a bookkeeper to lie for him.
(emphasis added). I would find no fault had the prosecutor argued that
O'Hearn's memory lapse was less than candid. However, he read
O'Hearn's purported grand jury testimony as established fact and
argued that it flatly contradicted her trial testimony. O'Hearn appears
to have been a key player in these events, and the assertion that her
trial testimony was diametrically opposed to her grand jury testimony
was a powerful argument. The argument is more than problematic,
however, because the court never admitted her grand jury testimony
at trial, and the testimony is not even a part of the record in this court.
Thus, all we have is the prosecutor's questions and O'Hearn's
response that she could remember neither the questions nor her
answers before the grand jury. This exchange produced not even a
scintilla of evidence to support the argument that O'Hearn's grand
jury testimony conflicted with her trial testimony.1 Because I cannot
conclude on this record that the error did not affect the outcome of
the trial, I respectfully dissent.2
_________________________________________________________________
1 I also dissent from the second sentence of the third paragraph on page
5 of part I, in which the majority states: "O'Hearn testified before the
grand jury that Bereano instructed her to bill his lobbying clients for a
pro-rated portion of various political contributions under the category of
legislative expenses." I dissent from this characterization because, as
stated above, the grand jury testimony was not admitted and is not a part
of the record before us.
2 The majority states that O'Hearn's failure to recollect her grand jury
testimony could be construed "as either a denial or an admission of her
prior statements," and that the government therefore could use the grand
jury testimony for impeachment purposes. I do not agree that the jury,
simply from O'Hearn's failure to recollect a series of statements made
18 months earlier, could infer that she made the statements as recited by
the government. See Bingham v. Zolt, 66 F.3d 553, 566 (2d Cir. 1995)
(noting, in rejecting party's argument that the jury improperly was
allowed to infer that he was lying, that "[i]n a sidebar, the trial judge did
note that the jury could infer Zolt was lying. However . . . the judge
meant that the jury could credit documentary evidence where Zolt
claimed not to remember . . . [and] at no time did the judge instruct the
34
jury that a witness's inability to recall constituted evidence of the facts
asserted in an attorney's question.").
Additionally, the government used the purported grand jury testimony,
not only for impeachment, but for its substantive content. The govern-
ment referenced O'Hearn's testimony in the context of attempting to
prove Bereano's knowledge and participation in the billing scheme, and
stated that "like it or not, Miss O'Hearn's testimony helps our case
immeasurably." The word "testimony" in this sentence could refer only
to O'Hearn's grand jury testimony, because O'Hearn testified at trial that
Bereano had not directed a scheme to bill the clients for the political con-
tributions. This use of the grand jury testimony, even under the majori-
ty's analysis, was improper.
Finally, the fact that the grand jury testimony could have been admit-
ted at trial, as the majority points out, is irrelevant. Having failed to enter
the testimony into evidence, the government could not base its closing
argument upon it. See Johnson v. United States, 347 F.2d 803, 805 (D.C.
Cir. 1965) ("It is elementary . . . that counsel may not premise arguments
on evidence which has not been admitted.").
35