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v Aggarwal
17 F.3d 737 (5th Cir. 03/17/1994)
UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 93-4436
decided: March 17, 1994.
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
RATTAN LAL AGGARWAL, DEFENDANT-APPELLANT.
Appeal from the United States District Court for the Eastern District of Texas.
D.C. DOCKET NUMBER 4 92 CR 19. JUDGE Paul Brown
For Plaintiff-Appellee: Bob Wortham, USA, H.S. Garcia, AUSA, Sherman, TX.
For Defendant-Appellant: E.X. Martin, III, Dallas, TX. SLOTNICK & BAKER,
Mark M. Baker, New York, NY.
Before Jones and DeMOSS, Circuit Judges, and Cobb,*fn* District Judge.
Author: Demoss
DeMOSS, Circuit Judge:
A jury convicted defendant/appellant Rattan Lal Aggarwal of one count of conspiracy
and four counts of wire fraud in connection with his participation in a fraudulent
loan scheme. Aggarwal appeals on several grounds. Finding no basis for reversal,
we AFFIRM Aggarwal's conviction and sentence.
Aggarwal raises seven points of error, claiming that: (1) there was insufficient
evidence to convict him; (2) the trial court erred in denying Aggarwal's motion
to depose an unavailable witness; (3) the trial court erred in refusing to
dismiss the indictment due to late disclosure of Brady material; (4) the government's
expert witnesses violated Federal Rule of Evidence 704 by giving legal definitions
and implied opinions on the defendant's state of mind; (5) the trial court
erred by refusing to dismiss the indictment for vindictive prosecution; (6)
the trial court erred by refusing to give Aggarwal's proposed jury instructions
on knowledge, willfulness and intent; and (7) the trial court erred during
sentencing by refusing to consider Aggarwal's request for downward departure.
I. DISCUSSION
A: Sufficiency of the Evidence
Aggarwal claims there was insufficient evidence to support his conviction
because the government did not prove that he had the required specific intent
to commit a fraud.
Aggarwal was convicted of wire fraud under 18 U.S.C. § 1343*fn2 and of
conspiracy under 18 U.S.C. § 371.*fn3 The government thus had the burden
of proving (1) a scheme to defraud that involved use of the wires; and (2)
that Aggarwal had the specific intent to commit fraud in furtherance of the
scheme. United States v. Rochester, 898 F.2d 971, 976 (5th Cir. 1990); United
States v. Fagan, 821 F.2d 1002, 1008 (5th Cir. 1987), cert. denied, 484 U.S.
1005, 98 L. Ed. 2d 649, 108 S. Ct. 697 (1988).
In assessing a challenge to the sufficiency of the evidence, we must consider
the evidence in the light most favorable to the verdict and must afford the
government the benefit of all reasonable inferences and credibility choices.
United States v. Stouffer, 986 F.2d 916, 921-22 (5th Cir.), cert. denied, 126
L. Ed. 2d 80, 114 S. Ct. 115 (1993). The evidence is sufficient if a rational
trier of fact could have found the essential elements of the offense beyond
a reasonable doubt based upon the evidence presented at trial. Jackson v. Virginia,
443 U.S. 307, 319, 61 L. Ed. 2d 560, 99 S. Ct. 2781 (1979); United States v.
Kim, 884 F.2d 189, 192 (5th Cir. 1989). The intent necessary to support a conviction
can be demonstrated by direct or circumstantial evidence that allows an inference
of an unlawful intent, and not every hypothesis of innocence need be excluded.
United States v. McAfee, 8 F.3d 1010, 1014 (5th Cir. 1993); United States v.
Aubrey, 878 F.2d 825, 827 (5th Cir.), cert. denied, 493 U.S. 922, 107 L. Ed.
2d 269, 110 S. Ct. 289 (1989); United States v. Henry, 849 F.2d 1534, 1536
(5th Cir. 1988).
According to the indictment, Aggarwal was involved in a scheme in which the
conspirators collected "advance fees" of $10,000 to $120,000 from
potential borrowers by fraudulently promising to arrange pre-approved multi-million-dollar
loans from foreign lending institutions. The conspirators were Aggarwal, who
was self-employed as a broker of financial loan packages under the name of
RACORP, Inc.; Edwin E. Whitis, II and Deanna J. Whitis, who were officers and
directors of Commerce National Exchange Corporation ("CNEC"); and
John Brumfield, a CNEC employee. Edwin Whitis pleaded guilty to a lesser charge
and testified at trial for the government. Whitis admitted to having sought
to defraud the potential borrowers, and testified that Aggarwal was part of
the scheme. Other government witnesses, including Deanna Whitis and other former
CNEC employees, testified that Aggarwal was the "big boss" who gave
Edwin Whitis instructions, and that Whitis could not have come up with such
a scheme on his own. CNEC placed advertisements in the Wall Street Journal
claiming it could pre-approve 100 percent funding of loans with lending commitments
direct from banks via fax or letter. Aggarwal provided a reference letter for
CNEC, allowing it to meet the strict requirements of the Wall Street Journal
advertisement acceptance policy. Victims were told falsely that the conspirators
had been successful in obtaining funding for numerous clients. In reality,
no potential borrower ever received a loan. Victims who asked for a reference
were directed to call a pre-arranged number, where they talked to a "former
client" who was in reality Deanna Whitis using a false name.
Aggarwal was in charge of arranging the loan commitments from European banks
through the ExportFinazierungsBank ("Export Bank") in Vienna, Austria.*fn4
Aggarwal also gave Edwin Whitis instructions on drafting the contracts to be
signed by the victims. The contracts obligated the borrower to acquire an irrevocable
letter of credit or prime bank guarantee to serve as collateral. The conspirators
did not help the victims obtain the guarantees; they wanted the victims to
default in this obligation, because then the victims would lose the advance
fee. The government, in its arguments to the jury, characterized the scheme
as a "chicken-and-egg" situation. Edwin Whitis testified that Aggarwal
told him that the guarantee companies "couldn't deliver the collateral
in the first place." According to trial testimony, funding was highly
unlikely because the required collateral/guarantee was virtually impossible
to obtain for the required terms. Several government witnesses testified that
if a borrower had the credit to obtain that kind of collateral, he or she would
have no reason to purchase one of CNEC's "loan commitments." The
government's expert witness on international banking, Robert Rendell, put it
this way:
"This security provision was something impossible for [the victim] to
meet, because she could not obtain the letter of credit without the funds,
and she could not get the funds without the letter of credit, so she was sort
of stuck in limbo. And therefore, this [loan] commitment was of no use to her
because she could never draw down the funds."
Whitis said he and Aggarwal had an agreement to split the advance fees, which
amounted to more than $3 million. Aggarwal admitted having received at least
$1.5 million in transfers from CNEC. Whitis and Aggarwal spoke daily and Aggarwal
gave instructions on how to handle disgruntled victims. The business plans
taken from the victims by CNEC were placed in a file cabinet and never sent
to Aggarwal, and thus never sent to any source of funding. Whitis testified
that the only purpose for taking the business plans was to lend the scheme
an air of legitimacy. The government's expert Rendell stated that no legitimate
institution would lend or commit the millions of dollars contemplated in this
scheme without a detailed business plan setting out how the money would be
used. Another government expert, John Shockey, called the scheme "a typical
advance fee scam."
Aggarwal testified in his own defense and claimed that he was unaware of the
scheme to defraud committed by Whitis, and that he earned whatever fees he
received because he was ready and willing to provide the loan commitment if
the borrower would obtain the required collateral.
The government argued that Aggarwal's intent to defraud the potential borrowers
can be inferred from the evidence, including the facts that Aggarwal received
$1.5 million in transfers from CNEC, that he was in contact with Whitis daily,
and that, of the dozens of "clients," not one ever received the promised
loan.
Considering the evidence in light most favorable to the verdict, we hold that
a rational jury could have found the required elements of wire fraud and conspiracy,
including the most contested element, namely Aggarwal's intent to join the
conspiracy and defraud the potential borrowers. Therefore, we hold that the
evidence is sufficient to support Aggarwal's conviction.
B: Denial of Rule 15(a) Motion to Take Deposition
Aggarwal claims the trial court erred by denying his motion under Federal
Rule of Criminal Procedure 15(a) to depose an unavailable witness. The rule
allows such depositions when "due to exceptional circumstances of the
case it is in the interest of Justice that the testimony of a prospective witness
of a party be taken and preserved for use at trial." Fed. R. Crim. P.
15. The district court decides when "exceptional circumstances" exist,
subject to appellate review for abuse of discretion. United States v. Allie,
978 F.2d 1401, 1405 (5th Cir. 1992), cert. denied, 123 L. Ed. 2d 281, 113 S.
Ct. 1662 (1993).
In this case, the trial court denied Aggarwal's motion to depose Charles Zani,
a consultant of the Export Bank, regarding the status of the Export Bank's
license.*fn5 The court refused to allow the deposition on the basis that Aggarwal's
motion was untimely, that the testimony would be hearsay, and that the issue
was "not essential to the defense of this case." Aggarwal argues
that exceptional circumstances existed because Zani, a citizen of France, would
not voluntarily enter the United States because he feared arrest. He also contends
that the Export Bank's ability or inability to do business was "crucial
to the government's case."
The district court did not abuse its discretion in finding that there were
no exceptional circumstances. The government's central theory of the case at
trial did not rest on the Export Bank's inability to do business. Rather, the
government's main argument was the "chicken-and-egg" analogy -- that
the victims were put into a no-win situation where they could not obtain the
required collateral and were forced to default. In addition, Aggarwal's expert
was allowed to explain that the Export Bank was not the lending bank, but merely
an agent bank, a function it could serve regardless of the formal status of
its license in Austria.
Alternatively, we affirm the trial court's denial of Aggarwal's motion on
the basis of unexcused delay. Even though the 15(a) motion was filed about
a month before the case finally went to trial on its third setting, it was
untimely in that it was about a month after the court's deadline for pretrial
motions. Aggarwal contended that it took until November 19, 1992, to "identify
and locate" Zani, but the evidence shows that Aggarwal knew of Zani and
how to contact him as early as 1986.
Denial of a Rule 15(a) motion for untimeliness is not an abuse of discretion.
United States v. Dearden, 546 F.2d 622, 625 (5th Cir.), cert. denied, 434 U.S.
902, 54 L. Ed. 2d 188 (1977); United States v. Whiting, 308 F.2d 537, 541 (2d
Cir. 1962), cert. denied, 372 U.S. 919, 9 L. Ed. 2d 725, 83 S. Ct. 734 (1963);
United States v. Broker, 246 F.2d 328, 329 (2d Cir. 1957), cert. denied, 78
S. Ct. 63, 2 L. Ed. 2d 49, 355 U.S. 837 (1957); See also 2 CHARLES A. WRIGHT & ARTHUR
R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 242 & nn. 4-5 (1982 & Supp.
1993)("The rule is silent on when a motion for a deposition is to be made.
It should be made promptly, and a motion for a deposition that will delay the
trial may be rejected as untimely.").*fn6 In addition, we will not disturb
the trial court's determination that this was not an exceptional circumstance.
C: Late Disclosure of Brady Material
Aggarwal claims that the trial court erred by refusing to impose sanctions
on the government for violation of his rights under Brady v. Maryland, 373
U.S. 83, 87, 10 L. Ed. 2d 215, 83 S. Ct. 1194 (1968). Brady and its progeny
hold that the government violates due process when it suppresses material evidence
favorable to the defense. Evidence is "material" only if there is
a reasonable probability that the verdict would have been different had the
evidence been disclosed to the defendant, or if, in light of the nondisclosure,
the reviewing court's confidence in the guilty verdict is undermined. Jones
v. Butler, 864 F.2d 348, 354 (5th Cir. 1988), cert. denied, 490 U.S. 1075,
104 L. Ed. 2d 653, 109 S. Ct. 2090 (1989).
About two weeks before Aggarwal's trial, the government obtained several documents,
written in German, which stated that the Export Bank retained some ability
to do business even after its license was revoked. According to an informal
translation obtained by defense lawyers, a letter from a "Dr. Gruber," an
Austrian Judge, explained that in Austria, an administrative appeal of the
bank's license revocation restores the status quo, as if the license had never
been revoked. The government did not give these documents to the defense until
the morning trial began.
Aggarwal contends that the Export Bank's license status was a material issue,
and that therefore the late disclosure of these documents was a Brady violation
obligating the trial court to dismiss the indictment, order a mistrial, or
alternatively allow continuance to depose "Dr. Gruber" under Rule
15(a). He is mistaken. Even though the indictment alleged that the loan commitments
were worthless because the Export Bank's license had been revoked, the government
avoided the license issue at trial and instead focused on its "chicken-and-egg" argument.
The fact of the revocation came up several times during testimony, but, as
stated above, Aggarwal's expert was given a chance to explain that the bank
could still serve as an agent bank. In the trial, the Export Bank's license
was a peripheral issue not material to the defense. We hold that no Brady violation
occurred.
D: Opinions on Ultimate Issues
Aggarwal claims that the government's expert witnesses, by using terms like "scam," "fraudulent," and "fraud," violated
Federal Rule of Evidence 704(b).*fn7 Aggarwal says the government's experts
used the words too often in characterizing the loans in this case, thus implying
that Aggarwal had the required intent to commit fraud. The government, however,
points out that (1) its witnesses used these words mostly to describe the area
of their expertise (Shockey worked for the "fraud unit" of the Office
of the Comptroller of the Currency); (2) the defense expert used the "offending
words" even more than the government experts; and (3) the government experts
never commented directly on Aggarwal's state of mind; and (4) Rule 704(a) allows
expert testimony that "embraces an ultimate issue to be decided by the
trier of fact," so an expert opinion that the loan scheme was "fraudulent" is
not improper. In addition, because the defense did not object to these words
during trial, we will reverse only for plain error, United States v. Vaquero,
997 F.2d 78, 83 (5th Cir.), cert. denied sub. nom., Taylor v. United States,
126 L. Ed. 2d 578, 114 S. Ct. 614 (1993)., and no such error is apparent here.
E: Vindictive Prosecution
The conviction now on appeal was based on the second indictment of Aggarwal
in this case. Aggarwal was initially indicted on November 16, 1988 for wire
fraud, conspiracy and other crimes in connection with the same loan scheme
that was made the basis of this appeal. He agreed to cooperate with the government
and entered into an agreement to waive indictment and plead guilty to a one-count
information alleging misprision of felony, with the indictment being dismissed
at sentencing. Aggarwal was sentenced to 12 months and appealed his sentence
to the Fifth Circuit. The Fifth Circuit, 909 F.2d 1480 (5th Cir. July 18, 1990,
TABLE), vacated the guilty plea and sentence because Aggarwal had not been
adequately informed that he was subject to a term of supervised release, and
because the base offense level was incorrectly calculated. On remand, Aggarwal
refused to again waive indictment and plead to the information. The government
re-indicted Aggarwal on May 21, 1992.
Aggarwal argues that the 1992 indictment carried "far more severe penalties," than
the one-count information alleging misprision of felony, and therefore improperly
penalized him for exercising his right to appeal. However, this argument misses
the point. The 1992 indictment should be compared with the 1988 indictment,
not with the misprision charge in the information to which Aggarwal agreed
to plead guilty. The government points out correctly that when Aggarwal after
his appeal refused to waive indictment and plea to the information, "the
deal was off and the parties were back to square one." Under the original
indictment in 1988, Aggarwal was subject to possible statutory punishment of
250 years of imprisonment. In contrast, the re-indictment in 1992 subjected
him to a possible 45 years of imprisonment. The misprision charge in the information
carried a maximum penalty of 3 years. The proper comparison is between the
two indictments, and there was no vindictiveness, because Aggarwal's exposure
to punishment decreased, rather than increased, in the second indictment. Byrd
v. McKaskle, 733 F.2d 1133, 1136 (5th Cir. 1984)(stating that "threshold
question" in examining a claim of vindictiveness is whether the defendant
was subjected to a more severe charge).
Even if Aggarwal had been subjected to a harsher penalty after his appeal,
the inquiry would not end there. United States v. Guthrie, 789 F.2d 356, 361
(5th Cir. 1986) ("That more severe charges have been employed is not dispositive,
for the Due Process Clause is not offended by all possibilities of increased
punishment upon retrial after appeal, but only by those that pose a realistic
likelihood of vindictiveness."). The appellate court "must examine
the prosecutor's actions in the context of the entire proceedings," and
if there is any indication that the prosecutor had a legitimate reason (other
than vindictiveness) for increasing the charges, then no presumption of vindictiveness
is created. United States v. Krezdorn, 718 F.2d 1360, 1365 (5th Cir. 1983)(en
banc), cert. denied, 465 U.S. 1066, 79 L. Ed. 2d 742, 104 S. Ct. 1416 (1984).
The prosecutor's decision to re-indict Aggarwal on considerably lesser charges
than those brought in the original indictment was motivated by the desire to
see that Justice was done, not to punish appellant for taking an appeal. The
district court, in its order denying Aggarwal's motion for release pending
appeal, stated this view:
"The fact that plaintiff decided to appeal his initial sentence after
his plea of guilty to an information charging misprision of felony, and now
faces possible incarceration on a longer duration, is evidence of a calculated
gamble on the part of the defendant, and not malicious prosecution by the government.
Plaintiff's malicious prosecution claim is without merit and does not raise
a substantial question of law or fact."
The trial court's argument is convincing. The Supreme Court has held that
changes in the charging decision are often an integral part of plea negotiations
and are an inaccurate measure of improper prosecutorial "vindictiveness." United
States v. Goodwin, 457 U.S. 368, 380, 73 L. Ed. 2d 74, 102 S. Ct. 2485 (1982).
There was no "vindictiveness" in this case.
F: Refusal of Proposed Jury Instructions
Aggarwal claims the trial court erred in refusing to give his proposed jury
instructions, which read as follows:
"Members of the Jury: In evaluating whether the defendant acted 'knowingly,'
'willfully,' or 'intentionally' with regard to the fraudulent scheme alleged
in the indictment and to which Edwin Whitis has testified, you may consider
whether defendant needed to have knowledge of any of Mr. Whitis' actions or
statements to have met his responsibilities of securing commitments from different
banks in Europe. Thus, if you find that all that defendant needed to do in
order to earn his fee was simply secure a commitment from a European bank,
and that such fee was thereupon rightfully earned regardless of any false representations
that Whitis would have made to the borrowers, then you may consider such finding
in furtherance of determining whether defendant lacked any motive to have knowingly
aided Whitis to commit the alleged fraud.
Similarly, if you find that despite the revocation of its license, the Export
Finance Bank was fully authorized to act as a fiduciary and thereby secure
loan commitments for American borrowers from other European banks, which loan
commitments had the effect of authorizing defendant to collect a fee, then
you may consider that factor as well in determining whether defendant needed
to have any knowledge of Mr. Whitis' admitted false representations to borrowers
and hence whether, here again, defendant lacked any motive to have been a part
of Mr. Whitis' fraudulent scheme."
A district court's refusal of a defendant's proposed jury instructions is
reviewed for abuse of discretion; the trial Judge has substantial latitude
in formulating the jury charge. United States v. Sellers, 926 F.2d 410, 413
(5th Cir. 1991); United States v. Rochester, 898 F.2d 971, 978 (5th Cir. 1990).
We may reverse only if the requested instruction (1) is substantially correct;
(2) was not substantially covered in the charge actually delivered to the jury;
and (3) concerns an important point such that failure to give it seriously
impaired the defendant's ability to effectively present a given defense. Rochester,
898 F.2d at 978; United States v. Mollier, 853 F.2d 1169, 1174 (5th Cir. 1988).
Here, the court instructed the jury basically that to find defendant guilty
of aiding and abetting a fraud, the jury must find that he had the intent to
defraud. Aggarwal argues that the given charge did not adequately present his
defense to the jury, because the jury did not fully understand that he did
not need to know about Whitis' actual criminal activities in order to legitimately
benefit from them in good faith. We disagree. The government points out, and
Aggarwal concedes, that the given jury charge was taken substantially from
the Fifth Circuit Pattern Jury Instructions and gave correct legal definitions
of "knowingly" and "willfully." Aggarwal, through his own
testimony and arguments of counsel, was able to adequately present his defense.
We hold that there was no abuse of discretion in refusing the requested instructions.
G: Refusal to Consider Downward Departure
At sentencing Aggarwal asked the trial court to depart downwards to bring
his sentence more in line with the sentence he received for pleading guilty
to misprision of felony. The trial court said nothing, and did not depart downwards.
Aggarwal argues on appeal that perhaps the court mistakenly believed that it
did not have the power to depart. The record does not support this contention.
At the beginning of the sentencing hearing the court commented that it realized
counsel was making legal arguments to support a downward departure. The court
went on to hear these arguments, plus those of the government for an upward
departure, before imposing a term of imprisonment within the guideline range.
We will not review a district court's refusal to depart from the Sentencing
Guidelines unless the refusal was in violation of the law. United States v.
McKnight, 953 F.2d 898, 906 (5th Cir.), cert. denied, 119 L. Ed. 2d 594, 112
S. Ct. 2975 (1992).
II. CONCLUSION
For the reasons we have stated, we find no basis for reversal; therefore we
AFFIRM Aggarwal's conviction and sentence.
Disposition
AFFIRMED.
Judges Footnotes
*fn* District Judge of the Eastern District of Texas, sitting by designation.
Opinion Footnotes
*fn2 This provision punishes one who "transmits [money or messages] by
means of wire" to further "any scheme or artifice to defraud, or
for obtaining money or property by means of false or fraudulent pretenses." 18
U.S.C. 1343.
*fn3 This provision provides penalties when "two or more persons conspire
... to commit any offense against the United States ... and one or more of
such persons do any act to effect the object of the conspiracy." 18 U.S.C. § 371.
*fn4 At some point the Export Bank's license was revoked, but as we explain
in Parts B and C, the license issue was not crucial to the government's case.
*fn5 The trial court also denied Aggarwal's later request to depose "Dr.
Gruber," an Austrian administrative Judge identified in a German-language
letter dealing with the Export Bank's license. This letter is discussed in
connection with Aggarwal's Brady claim.
*fn6 Aggarwal cites United States v. Farfan Carreon, 935 F.2d 678, 680 (5th
Cir. 1991), claiming that it supports his position that his motion was not
untimely. But Farfan Carreon can be distinguished. In that case, even though
the motion was filed on the morning of trial, neither side objected on the
basis of timeliness, and timeliness was not at issue on appeal. Instead,
the trial court's denial of the Rule 15(a) motion was reversed when the appellate
court found "exceptional circumstances."
*fn7 Rule 704 states: "(a) Except as provided in subdivision (b), testimony
in the form of an opinion or inference otherwise admissible is not objectionable
because it embraces an ultimate issue to be decided by the trier of fact.
(b)
No expert witness testifying with respect to the mental state or condition
of a defendant in a criminal case may state an opinion or inference as
to whether the defendant did or did not have the mental state or condition
constituting
an element of the crime charged or of a defense thereto. Such ultimate
issues are for the trier of fact alone."