Lead Opinion
Appellant-Defendant Kenneth Fairley appeals his jury conviction for theft of
I.
After a six-day trial, a jury found Kenneth Fairley guilty of two counts of theft of government funds and one count of conspiracy to commit theft of government funds. The charges arose from a conspiracy between Fairley and another man, Arthur Fletcher, to submit inflated construction bills to a United States government-backed. affordable housing program. Fair-ley was sentenced to 36 months imprisonment, concurrent as to all three counts.
i. The HUD Grant
The United States Department of Housing and Urban Development (HUD).operates the HOME investment program, which aims to increase availability of affordable housing. Through the HOME program, HUD partners with “participating jurisdictions,” which in turn certify nonprofit Community Housing Development Organizations (CHDOs). Certified CHDOs are eligible to receive HUD grants for construction and renovation of affordable housing units. ‘
Fairley served as executive director of Pinebelt Community Services, Inc., a nonprofit organization. In March 2010, the city of Hattiesburg, Mississippi, a HUD participating jurisdiction,'designated Pinebelt as an approved CHDO. In August 2010, Hat-tiesburg and Pinebelt entered into a contract under which Pinebelt agreed to develop three low-income housing units, and Hattiesburg agreed to reimburse Pinebelt with Up to $100,000 of HOME program funds. The agreement also provided for Pinebelt to receive up to $18,637.60 in operating funds in addition to the HOME funds. The parties later amended the contract, and- agreed that Pinebelt would instead renovate two > single' family homes: 202 South Street and 127 East 5th Street.
In July and August 2011, Pinebelt submitted two “request[s] for funds” to Hat-tiesburg totaling $98,000. The requests were signed by Fairley, and ostensibly sought reimbursement for “services rendered and allowable costs/expenditures” associated with rehabilitating the South Street and 5th Street homes. After receiving the requests, Hattiesburg paid Pine-belt $98,000.
ii. The Government’s Case
At trial the government presented evidence that Fairley conspired with his old
. An agent with the Office of the Inspector General testified that Fairley admitted to him that Interurban did no work on, the South Street and 5th Street properties. The same agent testified that Fletcher admitted that Interurban did not work on the Pinebelt projects, but that Fletcher had allowed Fairley to use Interurban’s name to qualify for HUD grants.
An IRS agent testified that a review of Pinebelt’s finances showed that Pinebelt spent only approximately $88,000 renovating the two properties. The agent also documented several transfers, described as “seed money” necessary to secure the contract with Hattiesburg, from a' charity controlled by Fletcher to Pinebelt.
iii. Fairley’s Gase
In his defense, Fairley disputed the government’s, contention that Interurban did no work, and described the transfers from Fletcher’s charity as loans and donations. Fairley also challenged the government’s interpretation of HOME program regulations and the government’s accounting. A HUD consultant called by Fairley testified that CHDOs may properly be reimbursed under HOME for operating expenses, including salaries. Fairley showed that, although HUD did investigate and suspend Pinebelt, the investigation found Pinebelt and Hattiesburg’s documentation to be “satisfactory” and HUD eventually lifted Pinebelt’s suspension.
Fairley also called an accountant and former IRS agent who testified that Pine-belt spent—including overhead costs—approximately $185,000 rehabilitating the South Street and 5th Street properties between August 2010 and August 2011. In addition, a construction contractor-‘called by Fairley estimated that the value of Pinebelt’s work on the two properties totaled approximately $149,000. Finally, Fairley elicited testimony that at least ten different contractors and between 15 and 20 volunteers worked on the two projects, and that Interurban had, .in fact, worked on the projects.
iv. The Verdict
The jury found Fairley guilty on all three counts. The verdict form read as follows: .
*204 1. On Count 1 of the Indictment, conspiracy to commit theft in violation of18 U.S.C. § 371 , we, the jury, find the Defendant Kenneth E. Fairley, Sr.:
_ Guilty _ Not Guilty
2. On Count 2 of the Indictment, knowingly and willfully receiving, retaining, concealing, or converting any money, property, or thing of value belonging to the United States having an aggregate value of more than $1,000 in violation of18 U.S.C. § 641 , we, the jury, find the Defendant Kenneth E. Fairley, Sr.:
_ Guilty _ Not Guilty
3. On Count 3 of the Indictment, knowingly and willfully receiving, retaining, concealing, or converting any money, property, or thing of value belonging to the United States having an aggregate. value of more than $1,000 in violation of18 U.S.C. § 641 , we, the jury, find the Defendant Kenneth E. Fairley, Sr.:
_ Guilty _ Not Guilty
The jury placed an “X” next to “Guilty” for all three counts. For counts two and three, the jury crossed out “retaining” and “concealing” on the verdict form, leaving only “receiving” and “converting” as the operative verbs. When the verdict was read aloud by the district court’s clerk, the clerk omitted the crossed out words.
II.
Count one of the indictment charged Fairley with conspiracy to commit theft of government property in violation of
i. 18 U.S.C. § 6U "
Title 18, United States ■ Code, Section 641 criminalizes two distinct acts. The first paragraph of § 641 makes- it a crime to:
(1) “embezzle[ ], steal[], purloin[], or knowingly convert[ ] to [the defendant’s] own use or the use of another”;
(2) “a thing of value of the United States.”
(1) “receive[ ], conceal[ ], or retain[ ]”;
(2) a thing of value of the United States;
(3) “with the intent to convert it to [the defendant’s] use or gain”;
(4) “knowing it to have been embezzled, stolen,-purloined or converted.”
Even though § 641’s two paragraphs target separate acts,
Further, the verbs animating § 641’s first two paragraphs are not fungible. The verbs in paragraph one—embezzle, steal, purloin, and convert—describe takings or possessions that are fraudulent or otherwise illegal. Paragraph two’s verbs—receive, conceal, and retain—are broader, and cover innocent as well as illicit acts.
The government disagrees. It argues that § 641 is divided into separate paragraphs merely for historical reasons, and that this distinction has,no bearing on this case. The government purports to cite authority in support, but its cases miss the mark. Some state generally that § 641 covers a broad range of conduct. See Morissette v. United States,
In short, nothing cited by the government causes us to doubt what is clear from both the statutory text and prior cases: section 641’s first two paragraphs describe two distinct criminal acts, with distinct ele
ii. The Indictment
Fairley challenges counts two and three of the indictment as insufficient.
" [1] Fairley concedes that he did not object to his indictment below, and we therefore review the indictment’s sufficiency for plain error. United States v. McGilberry,
“ ‘[T]he validity of an indictment is governed by practical; not technical considerations,’ and ‘[t]he basic purpose behind an indictment1 is to inform a defendant of the charge against him[.]’ ” United States v. Cooper,
The Fifth Circuit’s pattern jury instruction for paragraph one of § 641 lists three elements:'
First: That the money [property] [thing of value] described in the i-ndictment belonged to the United States government and had a value in excess of $1,000 at the time alleged;
Second-, That the defendant embezzled [stole] [knowingly converted] such món-*207 ey [property] [thing of value] to the defendant’s own use [to the use of another]; and
Third: That the defendant did so knowing the money [property] [thing of value] was not his and with intent to deprive the owner of the use [benefit] of the money [property] [thing of value].
Fifth Circuit Pattern Jury Instruction (Criminal Cases) § 2.27 (2015) (brackets in original); see also United States v. Pruett,
Fairley cites nothing suggesting that inserting additional words to describe a defendant’s conduct may invalidate an otherwise competent indictment. See United States v. Valencia,
This court has often noted that the “minimal constitutional standards” that an indictment must meet “do ‘not compel a ritual of words.’ ” Ramos,
iii. Jury Instructions
Fairley argues that, by conflating elements of § 641’s theft and receiving prongs, the jury instruction and verdict form incorrectly stated the law. A jury instruction must: (1) correctly state the law, (2) clearly instruct the jurors, and (3) be factually supportable. United States v. Phea,
Fairley did not object below, and we therefore review the instruction for plain error.
The district court instructed the jury regarding count two as follows:
Count 2 of the indictment accuses defendant Kenneth E. Fairley, Sr. of violating Title 18 of the United States Code, Section 641, which makes it illegal to knowingly and willfully receive, retain, conceal or convert any money, property or thing of value belonging to the United States having an aggregate value of more than $1,000.
For you to find the defendant Kenneth Fairley guilty of this crime, you must-be convinced that the government has prov*209 en each of the ■ following beyond a 'reasonable doubt:
• First, that the money described in Count 2 of the indictment belonged to the United States and had a value in excess of $1,000 at the time alleged;
• [S]econd, that the defendant, Fairley, knowingly and willfully converted, received, retained, concealed or converted such money; and,
• [T]hird, that defendant Fairley did so with intent to convert said money to his use or the use of another (emphasis and bullets added).11
The court’s charge for count three did not materially differ. These instructions departed from the pattern language we have previously adopted for § 641’s “theft” paragraph in two ways. First, the district court’s instructions replaced some pattern verbs in the second element—embezzle, steal, and knowingly convert—with verbs drawn from § 641’s “receiving” paragraph—receive, retain, and conceal.
In mixing the elements of “stealing” and “receiving,” the district court failed to adequately charge as to either. The instructions as given permitted the jury to convict upon finding that Fairley: (1) knowingly and willfully received United States money, (2) with intent to'convert it to his use. The first, “theft” paragraph of § 641 prohibits converting United States money, but says nothing about receiving -with intent to convert. And the second, “receiving” paragraph prohibits receiving with intent to convert, but only when the defendant acts “knowing [the money] to have been embezzled, stolen, purloined, or converted.”
The verdict form repeated the error. It states:
On Count 2[/3] of the Indictment, knowingly and willfully receiving, retaining, concealing, or converting any money, property, or thing of value belonging to the United States having an aggregate value of more than $1,000 in violation of18 U.S.C. § 641 , we, the jury, find the Defendant Kenneth E. Fairley, Sr.:*210 ■ __ ■ Guilty _ Not Guilty
(emphasis added).
Like the jury charge, the verdict form used verbs from § 641’s receiving paragraph, but omitted the requirement that the defendant knew the money had been embezzled, stolen, purloined,.or converted. But unlike the jury instruction, the verdict form made no mention of an intent to convert.
The district court’s erroneous jury instruction was plain' error. The failure to require proof of each element of conviction affected Fairley’s substantial rights. See United States v. Gaudin,
Fairley did not dispute at trial that he received government funds. As his lawyer put it in closing: “Everybody agrees Pine-belt received the ninety-eight from the city. We agree on that. Got it in blue.” Rather, Fairley argued that, he properly spent HUD funds on renovating the two properties. He called several witnesses to support his theory' that Pinebelt spent more money renovating the two properties than it received from the government. Fairley also disputed the government’s interpretation of what expenses were properly reimbursable under the HOME Program. In short, Fairley sought to show that the government got the benefit it sought in exchange for its $98,000. Permitting the jury to convict on mere receipt with intent to convert therefore directly undermined Fairley’s defense theory.
further, the effect of the jury instructions was compounded by errors in the verdict form and indictment. When it began deliberating, the jury had been provided three different recitations of the elements necessary to convict -under § 641— instruction, verdict form, and indictment. Each of: these differed from the others, and none correctly stated § 641’s elements. All included verbs from the receiving prong, but none included the requirement that the defendant act knowing the property in question has been embezzled, stolen, purloined, or converted. Only one of the three included the element of acting with intent to convert the property. ■
The impact of these errors was also amplified by the government’s argument to the jury. See United States v. Chagra,
The government argues that these errors were cured by the jury’s uninvited modification of the jury form. As noted, the jury crossed out “retaining” and “concealing” on the verdict form, leaving only “receiving” and “converting” as the operative verbs in counts two and three. According to the government, by crossing out “retaining” and “concealing,” the jury indicated that they had unanimously found that Fairley both “received” and “converted” government money. This, to the government, cures any issue with the indictment or instructions, because knowing conversion is prohibited by paragraph one of § 641 and the term appears in the indictment, instruction, and verdict form.
The unprompted and unexplained verdict form modifications do not dissuade us in our discretion from finding plain error here. “Federal courts have long held that additional jury notations that are. not directly responsive to the jury charge and verdict form are surplusage, and are to be ignored.” Great Pines Water Co. v. Liqui-Box Corp.,
The government’s argument that the cross-outs were, in fact, responsive to the jury charge is belied by the transcript. As noted,' the district court' explained at length that the jury did not need to find that Fairley received, retained, concealed, and converted; they could convict on a-unanimous finding that Fairley did any one of the four acts. The trial judge never told the jury to .indicate which of the four acts supported its verdict or to cross out verbs they did not find unanimously. Accordingly, affirming Fairley’s conviction
In short, the elements of § 641 were confused by the government’s argument, the indictment, the jury instructions, and the verdict form. The combined error directly undermined Fairley’s defense theory and permitted the jury to convict for a non-offense. This error seriously affected the fairness and integrity of Fairley’s trial, and could have meant the difference between conviction and acquittal. We therefore vacate Fairley’s conviction under counts two and three.
iv. Count One
Fairley was also convicted of count one, which charged that Fairley conspired to commit theft of government money in violation of § 641. Fairley argues that his conviction on this count must be vacated as well. Fairley points to no actual error in how count one was presented in the indictment, jury instructions, verdict form, or government’s argument. Nor could he: all were true to § 641’s theft prong. Rather, Fairley argues that because count one rested on the same substantive offense as counts two and three, misstatements of the elements supporting count two and three necessitate vacating count one.
The district court instructed the jury that the first element of count one was “that the defendant and at least one other person made an agreement to commit the crime of theft of government money, as charged 'in the indictment” (emphasis added). The verdict form also described the offense as “theft” and referenced the indictment. Count one of the indictment charged that Fairley and Fletcher conspired to:
defraud the United States or commit offenses against the United States as follows:
Embezzle, steal, purloin, or knowingly convert to their use or the use of another any record, voucher, money, or thing of value of the United States or an agency thereof, in violation of Section 641, Title 18, United States Code (emphasis added).
Finally, as noted, the government’s closing argument distinguished between “theft of government money” as charged in count
Further, count one does not encompass the retention, concealment, and conversion of government money charged in counts two and three. Although count one describes the conduct that led to receiving the HUD grants underlying counts two and three, actual receipt of those funds is not listed as an overt act committed in furtherance of the conspiracy. The list of overt acts includes the “seed money” transfers from Fletcher to Fairley, Fair-ley’s submission of an engagement letter, and the later requests for funds. But it omits actual receipt.
Given this separation, and the high threshold of plain error review, Fairley’s conviction on count one stands.
III.
At trial, the government prominently featured tape recorded conversations between Fairley and Arthur Fletcher. The district court admitted Fletcher’s portion as non-hearsay statements by a coconspir-ator. Fairley’s objection was overruled, and he now appeals.
A statement is not hearsay if “[t]he statement is offered against an opposing party and ... was made by the party’s coconspirator during and in furtherance of the conspiracy.” Fed. R. Evid. 801(d)(2)(E). To introduce a statement under this rule, the proponent must show by a preponderance of the evidence: “(1) the existence of the conspiracy; (2) the statement was made by a co-conspirator of the party; (3) the statement was made during the course of the conspiracy; and (4) the statement was made in furtherance of the conspiracy.” United States v. Hall,
Fairley argues that the government failed to establish that the statement was made during the course of the conspiracy or in furtherance of it. According to Fairley, the recorded statements were made in December 2012 and the conspiracy between Fairley and Fletcher ended in July 2011. Fairley further argues that because the conversations chiefly concern Fletcher’s attempt to recover money from Fairley, the two men were acting as adversaries and could not have been speaking in furtherance of a joint conspiracy. We review the district court’s ruling for abuse of discretion. United States v. Robinson,
Fairley’s argument misunderstands the nature of the coconspirator exception. Fairley focuses on the overt acts charged in the indictment as part of the conspiracy, which run only until August 2011. But “the evidentiary rule of conspiracy is founded on concepts of agency law” and therefore “differs from conspiracy as a crime.” El-Mezain,
Fairley and Fletcher’s recorded conversations themselves confirm the continuing nature of the venture. Although contentious, the gist is Fletcher trying to collect money that he advanced to Fairley in the expectation he would be ¡reimbursed with HUD funds. This underscores rather than negates the ongoing nature of the venture: the' two men had not yet concluded their joint venture. . ■
Furthermore, during the calls, Fairley repeatedly references plans to continue working together- in the future. He says:
• “I know that these three,' that the four of us collectively [Fairley, Fletcher, Pinebelt, and another person], gonna find a way to complete the Fifth Street 'project and will find a way to complete the Sixth Street projects, such that the city and [HUD] will be happy with the process and happy with the money spent and the, and the turn out of the project, and release the money.”
• “[T]his has always been a money making proposition even now, in the future between [Interurban] and Pinebelt.”
• “[T]he next time when we, when do this ... on the Sixth Street house, ... we gonna have an understanding before we get started.” ■
• “1⅛ gonna move forward Fletch. I have heard you loud and clear. And, uh, I’m movin’ forward to get this ■ stujf completed so we can be on the same team. Get the monies paid back, that’s what I’m sayin’ to you. To get the monies that’s been allocated to us paid back.”
• “I just wanna make sure that as we do this thing now we goin’ forward. Now, I know there’s no [HUD] representative in this,' diggin’ in ...” (emphasis added).
These statements, combined with the government’s ample evidence of the existence of a conspiracy between ' Fairley ' and Fletcher, show that the conspiracy remained in effect at the time the conversations were recorded.
Fairley’s argument that the statements were not made in furtherance of the conspiracy also fails. We have repeatedly cautioned “that the ‘in furtherance’' requirement is not to be construed too strictly lest the purpose of the exception be defeated.” United States v. Cornett,
Accordingly, we hold that the district court did not abuse its discretion by admitting the challenged recordings.
IV.
Finally, Fairley contests two sentencing factors applied by the district court. First, Fairley asserts that the court improperly calculated Fairley’s loss amount. Second,
i. Loss Amount
The district court’s loss-amount calculation is a factual finding reviewed for clear error. United States v. Hebron,
The court calculated Fairley’s intended loss amount by combining: (1) its determination of the actual loss associated with the contract for the South Street and 6th Street properties, and (2) its estimate of the intended loss on a second HUD home renovation contract signed by Pinebelt in October 2011, but later voided by HUD. Specifically, as to the completed August 2010 contract, the court' subtracted $37,776,05 in legitimate labor and materials expenses from the total $98,000 received pursuant to the HUD grant and arrived at a loss of $60,223.96, For the uncompleted October 2011 contract, the court reduced the total value of that contract, $118,637.60, by 38.5%—consistent with the proportion of grants received for legitimate expenses in the first contract— for a loss of $72,962. In other words, the district court assumed for loss calculation purposes that, had the October.2011 contract not been rescinded, Fairley would have realized the same illicit gain as a percentage of the contract amount as he had under the August 2010 contract.
Fairley contests both the district court’s method and its actual loss calculation. Regarding the calculation, Fairley maintains that the court should have credited his evidence concerning additional expenditures on the South Street and Fifth Street properties. The court rejected Fair-ley’s evidence, finding that it. included overheard expenses that .could not be reimbursed under the terms of the contract, as well as expenses for storm damage repair after the contract was completed.' The court instead credited the testimony of an IRS agent, who calculated Pinebelt’s total permissible costs under the contract as $37,776.05. The district court’s choice to rely on the credible testimony of the agent and other government witnesses, rather than Fairley’s competing experts, was not clearly erroneous. See United States v. Sotelo,
Fairley also argues that he should have received credit for the actual value of the South Street and 5th Street properties. But Pinebelt was paid pursuant to a grant program that took no interest in the properties to be renovated. Although a later agreement between the City of Hatties-burg and Pinebelt contemplated foreclosure, this agreement was signed several months after Pinebelt was paid. Fairley presented no evidence that the City ever foreclosed or took any ownership in the property, or that HUD, the victim, would be reimbursed even if the city had. Accordingly, the district court concluded that the value of the South Street and 5th Street properties was “irrelevant.” This finding was not clearly erroneous.
As to the method of calculation, Fairley asserts that the district court im-permissibly speculated when it increased Fairley’s loss amount based on the uncompleted October 2011 contract. See Nelson,
Because the district court’s method for calculating loss is consistent with past approaches approved by this court, and its conclusion is not clearly erroneous, Fair-ley’s argument on this point fails.
ii. Abuse of Position of Trust
Fairley also disputes the district court’s application of an enhancement for abuse of a position of trust pursuant to United States Sentencing Guidelines Manual § 3B1.3. Section 3B1.3 provides for a two point increase in the defendant’s offense level “[i]f the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense[.]” U.S.S.G. § 3B1.3. “This court applies a two-part test to determine whether there has been an abuse of trust: ‘(1) whether the defendant occupies a position of trust and (2) whether the defendant abused her position in a manner that significantly facilitated the commission or concealment of the offense.’ ” United States v. Miller,
Fairley served as executive director of Pinebelt, an approved Community Housing Development Organization under HUD’s HOME Investment Partnerships Program. In this role, Fairley occupied a position of trust with respect to HUD that mirrors the role of a DME provider under Medicaid and Medicare. Testimony elicited at trial showed that HUD, through Hattiesburg, relied on Pi-nebelt’s representations of its own expenses in seeking reimbursement.
V.
For the forgoing reasons, we VACATE Fairley’s conviction on counts two and three and REMAND to the district court for further proceedings consistent with this opinion. We AFFIRM Fairley’s conviction on count one.
. See United States v. McRae,
. Fairley was also sentenced to 36 months of supervised release and was assessed a fine of $30,000, restitution of $60,223.95 and a $300 special assessment.
. Fletcher was indicted with Fairley, but pled guilty to a related charge before trial. Fletcher did not testify at Fairley’s trial.
, Fletcher’s charity raised money from third party donations. Fletcher profited from the scheme by shifting this money to his company, Interurban.
. The transcript for both counts reads: "On Count 2[/3] of the indictment, knowingly and willfully receiving or converting any money
. See also United States v. Zettl,
. Although Fairley argues that jury instruction errors as to counts two and three undermine his conviction under count one, he expressly disclaimed any argument that count one, as charged in tjie indictment, was independently insufficient.
. Any potential duplicity challenge is forfeited by Fairley’s failure to object-before the district court; See United States v. Stanford,
. Fairley has forfeited any argument concerning the government's wholesale omission of the third element, which covers knowledge and intent. If he had raised the argument, we would likely reject it. In United States v. Lester, we upheld an indictment charging conversion of postal funds that "traced the exact language of the statute” but' did not include "a formal, express allegation of criminal intent.”
. Fairley contends that he is spared plain error review because the district court reject- . ed proposed alternative instructions. The record does not reflect this. More importantly, even if Fairley did propose other language, "[a] party who objects to any portion of the instructions or to a failure to give a requested instruction must inform the court of the specific objection and the grounds for the objection .... Failure to object in accordance with this rule precludes appellate review, except as permitted under Rule 52(b).” Fed. R. Crim. P. 30(d). At oral argument, Fairley’s attorney suggested that trial counsel not only proposed alternative language, but also specifically objected to the § 641 "state of mind” instruction at the charge conference. As simultaneously acknowledged at oral argument, this assertion is not reflected in the record before us. It also contradicts Fairley's brief, which states "the defense did not object at trial either to the instructions or to the language of the verdict form[.]”
. The court later corrected its repetition of "converted.”
. The district court made very clear that the jury did not need to find that Fairley did all of these four acts, and could convict on a unanimous finding that Fairley did any one of them:
The government-does not have to prove all of these for you to return a guilty verdict on these charges. Proof beyond a reasonable doubt on one is enough. But in order to return a ver—a guilty verdict, all of you must agree on the same one that has been proven. All of you must agree that the government proved beyond a reasonable doubt that the defendant knowingly and willfully received money, property or thing of value belonging to the United States, or all of you must agree that the government proved beyond a reasonable doubt that the defendant knowingly aAd willfully concealed money, property or thing of value belonging to the United States, or all of you must agree that the government proved beyond a reasonable doubt that the defendant knowingly and willfully retained money, property or thing of value belonging to the United States, or all of you must agree that the government proved beyond a reasonable doubt that the defendant knowingly and willfully converted money, property or thing of value belonging to the United States,
. This discussion compares the jury’s actual instruction to a proper instruction for conversion under paragraph one of § 641, The government has never argued that the instructions were proper under a paragraph two receiving theory, which, as noted, requires that the defendant acted "knowing [the government property] to have been embezzled, stolen, purloined or converted!.]" § 641.
. In its brief before this court, the government confirms its belief that counts, two and three do not merely charge Fairley with theft of government money under § 641’s first paragraph. The government asserts that “[t]he [Fifth Circuit] pattern instruction for § 641 addresses only the first paragraph of the statute and thus only a modified version would apply to the charges in this case” (emphasis added). At oral argument, the government appeared to still be unsure what crime Fairley was actually convicted of. When pressed, the government's attorney said: "I think that the best reading of the result is that [Fairley] was guilty of conversion.”
. We also observe that the government’s interpretation of the notes is not the only plausible one. For instance, maybe the jury found that "retaining” and "concealing” were not supported by the evidence, crossed them out, unanimously found that one of the remaining verbs was present, realized they had a conviction, and concluded deliberations without ever considering the final verb. Or maybe the foreperson made the alteration on his or her own. Or maybe the jury did exactly what the government assumes. On this record, we simply cannot know.
. Fairley also argues that the jury instruction impermissibly enlarged the indictment by including “receiving” as one of Fairley’s criminal acts. Constructive amendment, however, "occurs if the jury is permitted to convict on 'an alternative basis permitted by the statute but not charged in the indictment.’ ” United States v. Daniels,
. Notably, Fairley's opening brief devotes only a single sentence—with no supporting authority—to arguing that errors in counts two and three invalidated count one. Fairley does expand this argument in his reply brief, but still fails to cite authority. In our independent analysis, we note that our court reversed a conspiracy conviction based on an erroneous instruction in a separate but related substantive count. See United States v. Smithers,
. Fairley did not object to admission of this recording.
. $60,223.95 $72,962 $98,000 “ $118,637.60 = 61.5%
. One of Fairley's witnesses, a HUD consultant, agreed that HUD "assume[s]” that the money given to a CHDO "is going to be spent in a way that’s consistent with the program[.]”
Dissenting Opinion
dissenting in part:
When a defendant raises an issue for the first time on appeal, any mistake he shows can only be a basis for vacating the conviction if, among other things, the defendant can prove that the error affected his substantial rights. United States v. Olano,
If speculation about what the jury thought is allowed in a prejudice analysis, how can we ignore powerful evidence of what the jury actually thought? The jury provided' that with its cross-outs showing that-it found Fairley guilty under the conversion theory for which the instruction was proper. The only plausible meaning of the jury’s crossing out “retaining” and “concealing” is as a response to the court’s unanimity instruction:
All of you must agree that the government proved beyond a reasonable doubt that the defendant knowingly and willfully received money, property or thing of value belonging to the United States, or all of you must agree that the government proved beyond a reasonable doubt that the defendant knowingly and willfully concealed money, property or thing of value belonging to the United States, or all of. you must agree that the government proved beyond a reasonable doubt that the defendant knowingly and-willfully retained money, property or thing of value belonging to the United States, or all of you must agree that the govemment proved beyond a reasonable doubt that the defendant knowingly and willfully converted money, property or thing of value belonging to. the United States.
The district court thus read the verdict aloud as a finding of guilt only for the offenses that were not deleted: “knowingly receiving or converting any money.” That verdict is the one to which the jury assented with a show of hands.
But the majority opinion says we cannot consider- the cross-outs in assessing the impact of the instruction error because “additional jury notations that are not directly responsive to the jury charge and verdict form are surplusage and are to be ignored.” Maj. Op. at 211. Even accepting that principle as stated, it does not bar consideration of the cross-outs given the trial court’s view that they were ,a response to the court’s unanimity instruction. And any rule placing juiy notations off limits is not as firm as the majority opinion suggests; courts typically frame it as a matter of discretion.
In conducting the prejudice inquiry, I would thus consider the cross-outs which demonstrate that the jury found Fairley guilty under the permissible conversion theory. Indeed, the jury’s responsiveness to the unanimity instruction shows that it might have picked up on some of the errors in the instruction that went unnoticed by counsel and the court. Cf. Plough v. Baltimore & Ohio R. Co.,
Even if we cannot consider the cross-outs, I still do not believe Fairley, has met his plain-error burden of showing that the instruction error affected the verdict. The fear is that the flawed instructions allowed the jury to convict- only oh a finding that Fairley received or retained money from the government with the intent to convert it, but that he never actually got around to converting it (becaüse if he had actually converted the money, that would be a crime). On the facts of this case, there is riot much daylight between these two theories as the majority opinion acknowledges. Maj. Op. at 21Ó. Given that the jury had to find that Fairley intended to convert the public funds, when did he intend for that conversión to occur if'not when the government sent him the money? No theory of post-receipt theft was advanced at trial, which means that Fairley’s intent to convert must have already manifested itself. The thrust of Fairley’s defense was that the money was used for a proper purpose of renovating the properties! That would have defeated ari “intent to convert” element just as much as it would have defeated an element of actual conversion. If anything, Fairley’s defense may have stood a better chance with the erroneous “intent to convert”’ language because he argued that the /disagreement with the government stemmed from different views about what
All this has said nothing about the final and more demanding condition that must be met before we can vacate a verdict for a reason not presented to the trial court: that the error seriously affected the “fairness, integrity, or public reputation of judicial proceedings.” Olano,
I therefore would affirm the guilty verdicts on all three counts.
. The majority opinion’s attempt to come up with other possible reasons for the cross-outs ' is thus at odds with the district court’s understanding. Maj. Op, at 212 n.62. But even if those theories are remote possibilities, they do not help Fairley because he bears the burden of demonstrating prejudice and certainly the most likely reason for the cross-outs is the unanimity requirement.
. See, e.g., Statler v. United States,