Unpublished Disposition, 880 F.2d 1324 (9th Cir. 1983)

Nos. 86-5212, 86-5225 and 86-5218.

United States Court of Appeals, Ninth Circuit.

Before ALARCON and NELSON, Circuit Judges, and MARILYN H. PATEL, District Judge.² 

MEMORANDUM³ 

Michael Garrett, Maurice Bennett and Lolita McFarland appeal their convictions, following a jury trial, on eleven counts of mail fraud and one count of conspiracy to commit mail fraud. They argue that 1) there was insufficient evidence to convict them of mail fraud, and 2) there was insufficient evidence to convict them of conspiracy to commit mail fraud. Garrett also contends that the district court abused its discretion by denying his motion to sever. We affirm the decision below on all grounds raised by these motions.

The charges in this case stem from a purported three-car automobile accident which occurred on the evening of September 21, 1983 in Compton, California. Viewed in the light most favorable to the government, the evidence produced at trial is as follows.

Defendant McFarland, the mother of defendant Garrett and the grandmother of defendant Bennett, was driving one of the cars and was returning home from a bingo game. Defendants Garrett and Bennett were driving the other vehicles. The passengers in the cars driven by Garrett and Bennett were McFarland's three sons and one daughter-in-law, and were also named as defendants in this case. McFarland was not carrying any passengers in her car.

On September 27, 1983, McFarland reported the accident to a senior claims representative from Prudential Insurance Company, the carrier for her automobile liability policy. McFarland stated that she ran into the second car, driven by Bennett, when the first car stopped suddenly. During the conversation with the representative, McFarland asserted that the driver of the first car was at fault. She did not reveal the familial connections among the parties to the accident.

In a second conversation the same day with the Prudential representative, McFarland altered her version of the accident. She reported that the accident had been entirely her fault because she had been looking away from the road and had inadvertently hit the second car, which had then caromed into the first car.

Prudential paid the claim for property damage, but then launched an investigation because it was noticed that the claimed medical damages were disproportionate to the alleged damage to the automobiles. At trial, Mark Persic, a Prudential representative, stated that the company paid the property damage before it learned about the familial relationships among the insured and the claimants. Prudential never paid the medical expenses and those claims were not pursued after the attorneys representing the family members withdrew.

The seven co-defendants were charged with participating in a conspiracy to defraud an insurance company by staging the three-car automobile accident and by submitting false insurance claims for property damage and medical expenses, in violation of 18 U.S.C. §§ 371 and 1341. At trial, Gerald Kamm, a Prudential investigator, testified that he interviewed the various defendants and that they told him that they did not know the other parties in the accident. On a tape of one of the interviews which was played for the jury, defendant Bennett gave tentative responses to Kamm's questions, changed his responses, and then stated that he did not know the other persons involved in the accident. Kamm also testified that he attempted to obtain medical records for the defendants' treatment at three different clinics, but was shown no evidence of the defendants' treatment. Kamm further stated that he was harassed by personnel at several of the clinics when he inquired about the defendants' treatment records.

Additionally, Kamm used a map to show that the routes allegedly followed by the three defendants did not in fact intersect at the site of the purported accident. The map revealed that the purported destination of one co-defendant would have taken the defendant in the opposite direction from where the accident allegedly occurred.

The government also introduced the testimony of a postal inspector who had listened in on a wiretapped conversation between co-defendant Fareed Muwwakkil (a passenger in Garrett's car) and an employee at one of the therapy centers. In that conversation, Muwwakkil discussed the medical bills of co-defendants Kenneth Williams and Harold Bennett. Muwwakkil said that he thought the medical bills were low, and suggested that the two co-defendants get additional treatments.

Defendants Garrett and McFarland testified in their defense. Garrett stated that before the accident, the occupants of the other automobiles had gone to the same bingo game McFarland had attended. In her report to the insurance company representative, McFarland stated that she had not seen her relatives at the bingo game. Yet at trial, McFarland described her departure from the parking lot of the bingo game as follows: "So I suppose I had to catch up with my children because the traffic was very light as I got close to home."

After the government rested its case, the seven co-defendants moved to dismiss for insufficiency of the evidence under Rule 29 of the Federal Rules of Criminal Procedure. The court denied the motion. The jury found the defendants guilty of eleven counts of mail fraud and one count of conspiracy to commit mail fraud.

The district court had jurisdiction under 18 U.S.C. § 3231. This court's jurisdiction rests on 28 U.S.C. § 1291.

Prior to trial, defendant Garrett moved to sever his trial from that of co-defendant Fareed Muwwakkil on the ground that the proposed admission of the tape recording in which Muwwakkil discussed a strategy to inflate medical bills would be unduly prejudicial to Garrett's defense. The district court denied the motion, finding that there had been an insufficient showing of any prejudice that might result from a failure to sever.

Federal Rule of Criminal Procedure 14 provides that the district court may order severance when a defendant may suffer substantial prejudice by a joint trial with the other defendants. In general, "defendants jointly charged are to be tried jointly." United States v. Van Cauwenberghe, 827 F.2d 424, 431 (9th Cir. 1987), cert. denied, --- U.S. ----, 108 S. Ct. 773 (1988) (quoting United States v. Ramirez, 710 F.2d 535, 545 (9th Cir. 1983)). Furthermore, "serious consideration must be given to judicial economy." United States v. Polizzi, 801 F.2d 1543, 1553 (9th Cir. 1986). We review the district court's denial of Garrett's motion under the abuse of discretion standard. Van Cauwenberghe, 827 F.2d at 431. To win reversal of the district court's decision, Garrett must demonstrate that the alleged prejudice deprived him of the opportunity for a fair trial. Id.

The district court rejected defendant Garrett's argument that the admission of Fareed Muwwakkil's taped conversation would create significant prejudice. The court found that Garrett had made only generalized allegations regarding prejudicial effects. Contrary to Garrett's contention that the recording concerned a separate conspiracy or conduct unrelated to the conspiracy charged in the indictment, the evidence showed that it was an integral part of the conspiracy. Muwwakkil was a passenger in one of the vehicles and was also a relative of the other co-defendants. In the indictment he is charged with masterminding the conspiracy and coordinating the referral of the false insurance claims. His statements go to the heart of the conspiracy and are clearly in furtherance of it. The district court therefore properly rejected Garrett's contention that the conviction concerned a separate conspiracy.

The district court also expressed its concern that severance would result in multiple trials on essentially the same set of facts. On appeal, Garrett fails to articulate how the joint trial prejudiced his ability to receive a fair trial. It is worth noting that the tape recording does not once refer to Garrett by name.

The defendant's citations to Bruton v. United States, 391 U.S. 123 (1968) and United States v. Pendegraph, 791 F.2d 1462 (11th Cir. 1986), are entirely inapposite. Those cases establish that where a defendant who will not testify makes statements which are admitted in a joint trial, implicating a co-defendant, the court's failure to sever violates the Confrontation Clause of the Sixth Amendment. See Bruton, 391 U.S. at 136-37; Pendegraph, 791 F.2d at 1465. Here, however, the Muwwakkil tape was offered as a co-conspirator statement made during the course of the conspiracy and in furtherance of it. See Fed.R. of Evid. 801(d) (2) (E). Garrett's rights under the Confrontation Clause were not affected by the tape's admission. See Bourjaily v. United States, 483 U.S. 171, 181 (1987) (statements admissible under Rule 801(d) (2) (E) also uphold requirements of Confrontation Clause).

The district court did not abuse its discretion in denying Garrett's motion for severance. We therefore affirm the decision below on this ground.

In reviewing a motion to overturn a conviction for insufficient evidence, we examine the evidence in the light most favorable to the government to determine whether there was sufficient evidence from which a rational trier of fact could conclude beyond a reasonable doubt that defendants were guilty of each of the essential elements of the crime charged. Jackson v. Virginia, 443 U.S. 307, 319 (1979); United States v. Penagos, 823 F.2d 346, 347 (9th Cir. 1987).

To prove a conspiracy under 18 U.S.C. § 371, the following elements must be shown: 1) an agreement to engage in criminal activity, 2) one or more overt acts in furtherance of the conspiracy, and 3) the requisite intent necessary to commit the underlying offenses. United States v. Indelicoso, 800 F.2d 1482, 1483 (9th Cir. 1988) (citing United States v. Kiriki, 756 F.2d 1449, 1453 (9th Cir. 1985)). The criminal agreement need not be explicit; the trier of fact may infer the existence of an implicit agreement from the circumstantial evidence. Id. (citing Ianelli v. United States, 420 U.S. 770, 777 n. 10 (1975)).

Mail fraud, as established by 18 U.S.C. § 1341, includes the following essential elements: 1) a scheme to defraud and 2) a knowing use of the mails in furtherance of the scheme. United States v. Buckley, 689 F.2d 893, 897 (9th Cir. 1982), cert. denied, 460 U.S. 1086 (1983). One commits mail fraud if one participates in a scheme to defraud with knowledge that the use of the mails will normally follow, or when it should reasonably be anticipated that the mails will be used, even though such use may not actually be intended. United States v. Dadanian, 818 F.2d 1443, 1446 (9th Cir. 1987), modified on rehearing, 856 F.2d 1391 (1988) (citing Pereira v. United States, 347 U.S. 1, 8-9 (1954)). Furthermore, " ' [i]t is well settled ... that so long as one participant in a fraudulent scheme causes a use of the mails in execution of the fraud, all other knowing participants in the scheme are legally liable for that use of the mails.' " Dadanian, 818 F.2d at 1446 (quoting United States v. Toney, 598 F.2d 1349, 1355 (5th Cir. 1979), cert. denied, 444 U.S. 1033 (1980)).

The indictment in this case charged defendants Garrett, McFarland, Bennett and others with conspiring to stage an automobile accident and to submit fraudulent claims to McFarland's insurer. The indictment also charged that defendants made numerous mailings which violated the mail fraud statute and which were intended to accomplish this scheme.

Garrett admits that the defendant family members agreed not to tell the insurance company that they were related. He nevertheless contends that the failure to disclose the familial relationship improperly formed the basis of the criminal charge, since such behavior cannot rise to the level of a federal crime. However, Garrett's argument confuses relevant evidence bearing upon the charge with the substantive crime itself. The trial court specifically instructed the jurors that the defendants' concealment of their relationship did not by itself demonstrate the existence of a scheme to defraud. The trial court also instructed the jury that it could not convict the defendants unless it found that the accident had been staged.

There was more than enough evidence for the jury to convict Garrett and McFarland on the charges of mail fraud and conspiracy to commit mail fraud. The coordinated actions of the defendants provide strong circumstantial evidence of an agreement. The improbability that the events of September 21, 1983 were merely coincidental further supports the inference that co-defendants planned the accident. Numerous inconsistencies would also have allowed a rational jury to disbelieve the testimony of defendants Garrett and McFarland at trial.

United States v. Fuel, 583 F.2d 978 (8th Cir. 1978), cert. denied, 439 U.S. 1127 (1979), cited by defendant McFarland, is not relevant to the instant case. In Fuel, the Eighth Circuit reversed the related defendants' convictions for conspiracy to commit mail fraud because the government failed to produce any statement or admission, or any circumstantial evidence, which could establish the existence of an agreement. Id. at 981. The Eighth Circuit also held that the government did not show that the alleged automobile accidents were staged or nonexistent. Id.

In the instant case, the jury concluded that the accident was staged. The inconsistency in the claimed routes of the three cars, McFarland's testimony about "catching up" with her children, and her initial denial that the parties were related, were all facts and circumstances from which a reasonable jury could infer the existence of a sham accident. Garrett's altered testimony regarding the destination of his vehicle, and McFarland's denial that she saw her relatives at the bingo game also bolster the inference of a staged accident. Moreover, there were no witnesses (other than the co-defendants) to the accident. With this evidence, the jury could reasonably discount the explanation of Garrett and McFarland at trial that they had lied concerning their family relationship only because their attorneys had refused to represent their insurance claims after discovering the familial relationships.

The government also produced sufficient evidence for a reasonable jury to infer that McFarland and Garrett participated in an agreement to submit false claims. McFarland changed her story regarding the responsibility for the accident thereby enabling her to receive benefits. She was the only insurance policyholder among co-defendants. The inflated medical bills, the intercepted conversation with the therapy clinic, and the absence of any medical records supporting the co-defendants' claims also support the jury's finding that the co-defendants had agreed upon a course of action.

McFarland's citations to United States v. Price, 623 F.2d 587 (9th Cir.), cert. denied, 449 U.S. 1016 (1980), and Windsor v. United States, 384 F.2d 535 (9th Cir. 1967), are also unavailing. Both cited cases concerned defendants who were only peripherally involved with the alleged conspiracy, and the government provided no direct evidence of intent or knowledge on their part. By contrast, McFarland's participation and representations to the insurance company were central to the submission of medical claims. Furthermore, her concealment of her relationship to the claimants and her inconsistent testimony support the jury's conclusion that she was involved with the conspiracy.

We therefore hold that the jury could rationally conclude beyond a reasonable doubt that defendants Garrett and McFarland were guilty of mail fraud and conspiracy to commit mail fraud.

Defendant Bennett argues that his conviction should be overturned because the government's evidence failed to show that the automobile accident was staged. The jury was specifically instructed that it must determine that the accident was staged if it was to return a guilty verdict. As discussed above, there was sufficient evidence for the jury to conclude that the accident was in fact staged, and that defendant Bennett was guilty of the crimes charged.

AFFIRMED.