UNITED STATES OF AMERICA, Plaintiff - Appellee, v. KENNETH R. SPIRITO, Defendant - Appellant.
No. 20-4393
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
May 31, 2022
PUBLISHED
Appeal from the United States District Court for the Eastern District of Virginia, at Newport News. Raymond A. Jackson, District Judge. (4:19-cr-00043-RAJ-DEM-1)
Argued: September 24, 2021 Decided: May 31, 2022
Before GREGORY, Chief Judge, MOTZ, and THACKER, Circuit Judges.
Reversed and vacated in part, affirmed in part, and remanded by published opinion. Chief Judge Gregory wrote the opinion, in which Judge Motz and Judge Thacker joined.
ARGUED: Erin Harrigan, GENTRY LOCKE, Richmond, Virginia, for Appellant. Brian James Samuels, OFFICE OF THE UNITED STATES ATTORNEY, Newport News, Virginia, for Appellee. ON BRIEF: Raj Parekh, Acting United States Attorney, Alexandria, Virginia, Lisa R. McKeel, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Newport News, Virginia, for Appellee.
In 2012, Kenneth R. Spirito and members of the Peninsula Airport Commission began searching for an airline carrier that would bring low-cost air service and attendant passenger traffic to Newport News-Williamsburg International Airport. They came upon a start-up airline called People Express; but People Express had trouble securing funding. So Spirito spearheaded an effort to use restricted state and federal funds as collateral to secure a bank loan for People Express. After People Express defaulted on the loan and millions of dollars were lost, Spirito was indicted, tried, and convicted of federal program fraud, money laundering, and perjury. On apрeal, Spirito maintains that there was insufficient evidence to support conviction on some counts, as well as that the district court erred by refusing to give a particular jury instruction, excluding a certain piece of evidence, and entering a forfeiture money judgment without notice. Finding one of these arguments persuasive, we reverse the conviction on Count 19 (a federal program fraud charge for three credit card transactions), and affirm the district court‘s judgment of convictions and sentences as to the other counts.
A.
Kenneth R. Spirito served as Executive Director of the Newport News-Williamsburg International Airport from 2009 to 2017, and the Peninsula Airport Commission (PAC)—made up of six individuals appointed by the City of Newport News and City of Hampton—serves as the airport‘s governing body.1 In his role, Spirito executed the decisions of the PAC and oversaw the airport‘s daily operations.
The airport receives funds from at least five government programs (individually and collectively, PAC funds). State Entitlement funds are subject to Virginia state law and are regulated by the Virginia Department of Aviation (DOAV). These funds can be used for capital projects, and the airport must report its use annually via Entitlement Utilization Reports. The Federal Aviation Administration (FAA) oversees the remaining four programs: (i) the Airport Improvement Program requires airport revenue to cover operating and capital needs; (ii) passenger facility charges may be used for FAA-approved airport development projects and the airport must submit reports detailing its use against specific projects; (iii) Small Community Air Service Development (SCASD) funds are reimbursable grants for marketing and air service development after the incursion of expenses related to flights operating at a loss; and (iv) the Regional Air Service Enhancement Group (RAISE) provides $700,650 in matching funds for money the airport receives from the SCASD and such funds are to be placed in escrow. At trial, all state and federal regulators testified that, under relevant regulations, manuals, and policies, PAC funds could not be used to collateralize a loan or subsidize an airline. Several witnesses testified that Spirito knew of these restrictions and that he could contact regulators to clear up any ambiguity regarding the restrictions.
In 2012, AirTran Airways stopped providing services at the airport. As a result, the airport lost low-cost air service and attendant passenger traffic. Hoping to abate the negative effect on the airport and local community, Spirito and PAC member James Bourey tried to identify and recruit a new air service provider. Eventually, they came upon People Express. At the time, People Express was not operational, but it obtained terminal space rent free at the airport with plans to make the airport its headquarters and start flying by the fall of 2012. But it could not attract investors, so People Express remained grounded.
As 2014 began, People Express still had no planes in the air. It planned a deal with another airline—Vision Airways—to lease planes and crew for use under the People Express name. This deal required People Express to raise at least $10 million. The airline eventually applied for funding from TowneBank, a regional bank headquartered in Virginia. Uninterested in giving People Express a loan because of its lack of tax returns, lack of profitability, and significant debts, TowneBank decided in May 2014 that it would extend a $5 million loan if the airline procured a guarantor and a third-party source of cash collateral. TowneBank required the cash collateral to be placed in accounts with the bank. Once these accounts were funded, the money could not be removed without the bank‘s approval.
About two weeks later, it became official: then-PAC Chairperson LaDonna Finch executed various contracts on behalf of the PAC to guarantee performance of a $5 million line of credit issued by TowneBank to People Express. PAC members testified that they did not fully understand the implications of or appreciate that PAC funds would be used as collateral for the loan.2 And they relied on Spirito for advice and recommendations related to the management of PAC funds. As Spirito confirmed during cross-examination: [The PAC] executed the [loan] agreement . . . . The funding was my idea.3 J.A. 2103.
The testimony of Special Agent Christopher Waskey, as well as the bank records introduced at trial, revealed which PAC funds were used to populate each collateral account. Counts 1-6 of the superseding indictment, charging misapplication of funds in violation of
- Count 1: $720,000 in State Entitlement funds;
- Count 2: $1,280,000 million in airport revenue;
- Count 3: $700,650 in RAISE funds;
- Count 4: $565,000 in airport revenue;
- Count 5: $385,000 in Passenger Facilities Charges; and
- Count 6: $460,119.37 in State Entitlement funds.
Counts 7-11, also charging misapplication of funds in violation of
- Count 7: $148,213.96 in State Entitlement funds;
- Count 8: $26,000 in Passenger Facilities Charges;
- Count 9: $666,666.66 in State Entitlement funds;
- Count 10: $13,000 in Passenger Facilities Charges; and
- Count 11: $249,312.79 in State Entitlement funds.
But ultimately, the $5 million loan was not enough to keep People Express in the air. People Express drew down the entire line of credit by August 2014 (one month after the loan‘s inception), suspended sеrvice in September 2014, and defaulted on the loan in January 2015. In early 2015, TowneBank called the loan and cleaned out the collateral accounts to satisfy People Express’ debt.
B.
Evidence adduced at trial suggested that Spirito, at the time he ordered the collateral accounts funded and after, concealed the fact that PAC funds were used to guarantee a commercial loan.
For example, the titles Spirito gave to each collateral account—State Entitlement, SCASD, and RAISE—did not reflect the PAC funds placed into the accounts. J.A. 1666; see also J.A. 36–37. The State Entitlement account contained State Entitlement funds, airport revenue, and passenger facility charges. See J.A. 1664, 1670, 1875, 2017. The SCASD account contained airport revenue. J.A. 1664–65. And the RAISE account contained RAISE funds and passenger facility charges. J.A. 1669.
In one instance, in the fall of 2014, Spirito instructed airport staff to delay submitting audited financial statements to the City of Newport News because he was concerned that the loan guaranty would be reflected as a potential liability.
In another instance, in May 2014, Spirito submitted a discretionary funds application to the DOAV, but did not tell the state that, at the same time, State Entitlement funds were being committed аs collateral for a loan. And Spirito did not include the loan guaranty in the airport‘s 2014 Entitlement Utilization Report.
The airport did not file its 2015 and 2016 Entitlement Utilization Reports by the relevant deadlines. After several follow-up requests, the reports were submitted in October 2016. As to the 2015 report, Spirito directed the inclusion of an entry entitled Air Service Development in the amount of $3.5 million. In early 2017, more than two years after the loan was collateralized and defaulted, Carr revealed in response to an inquiry about the line item that the funds were used for a loan guaranty.
And in another instance, in January 2017, after learning of the defaulted loan via a news article, the FAA emailed Spirito, asking: How much was paid and specifically what type of funds were used to make the payment? J.A. 2086. In his response, Spirito stated that State Entitlement, SCASD, and RAISE funds were used, and listed amounts for each. See J.A. 2346. He did not reveal that passenger facility charges and airport revenue were also used. This conduct underlies Count 18, charging falsification of records in federal investigations, in violation of
Earlier on, when People Express failed, Spirito circulated press talking points that discussed [f]unds used to help launch an [a]ir [s]ervice, but did not reference the loan guaranty. J.A. 2165. At one point, Spirito told the owner of the airport restaurant that his career in the airline industry
And all the regulator witnesses testified that Spirito did not ask if the PAC funds could be used to guarantee a commercial loan, and they were informed only well after the fact that PAC funds were used this way.
C.
In May 2017, the PAC terminated Spirito‘s employment as Executive Director, after discovering that he used an airport credit card to buy a vehicle warranty and pay for repairs to his personal vehicle. Spirito characterized the auto expenses as vehicle maintenance on reimbursement receipts and admitted that he made these purchases and later remitted funds back to the Airport Commission in the amount of approximately $5,800. This conduct underlies Count 19, charging misapplication of funds in violation of
In 2018, Spirito filed a civil defamation suit against the PAC and certain airport employees. He eventually provided testimony in a deposition during which he testified about several matters related to the loan guaranty. He denied using airport revenue as collateral for the loan and said he told the PAC that airport revenue could not be used for this purpose; claimed that he opposed the loan guaranty; and denied his role in dеsigning the collaterization schedule. The statements Spirito made during this civil deposition underlie Counts 20, 21, and 23, charging perjury in violation of
D.
A superseding indictment charged Spirito with 24 counts, and a forfeiture allegation sought a monetary judgment of $3,817,931.29.
Spirito proceeded to trial on February 25, 2020. During his case-in-chief, Spirito sought to present evidence that, in 2017, the Virginia General Assembly passed Senate Bill 1417, which amended
At the close of his case, Spirito asked the district court to provide the following limiting instruction:
[E]vidence of alleged violations as to any . . . handbooks, rules, publications, guidelines and regulations should not be considered by you as a violation of criminal law per se. You may consider, however, evidence of the . . . handbooks, rules, publications, guidelines and regulations as you would any other evidence in determining whether or not the defendant
had the required intent to violate the criminal statute charged in the indictment.
J.A. 2182. The district court refused this instruction, finding that the charge, as a whole, is sufficient to avoid any confusion that this conduct has to be a violation of [a] criminal statute. J.A. 2216.
The jury returned guilty verdicts on all but one of the counts, acquitting Spirito on one perjury charge (Count 22).
E.
Spirito filed post-trial motions for judgments of acquittal, challenging all counts of conviction. The district court denied these motions except as to Count 24, the conviction for obstruction of justice.
On July 1, 2020, the government filed a motion for a preliminary order of forfeiture, requesting a $3,817,931.29 money judgment, as well as forfeiture of two Wells Fargo bank accounts and two Jeeps. Five days later, on July 6, the district court entered the order.5 According to trial counsel, [t]he [preliminary] order expressly incorporates itself into the Judgment. United States v. Spirito, No. 4:19-CR-43, (E.D. Va., Pacer No. 138 at 2) (citing Preliminary Order of Forfeiture, ¶ 9); see Preliminary Order of Forfeiture, J.A. 2484 (Pursuant to
On July 15, the district court departed below the advisory sentencing guidelines range, and sentenced Spirito to 48 months of probation, with a special condition of home detention for 30 months. The district court also ordered Spirito to pay $2,511,153.16 in criminal restitution.6
Spirito timely appealed. He challenges the sufficiency of the evidence supporting some of his convictions, as well as the district court‘s decision not to provide the requested jury instruction; exclusion of evidence regarding the change in state law; and issuance of a forfeiture order without notice.
II.
A.
The Court reviews challenges to the sufficiency of evidence de novo. United States v. Graham, 796 F.3d 332, 373 (4th Cir. 2015). If, viewing the evidence in the light most favorable to the government, the Court concludes there is substantial evidence to uphold the jury‘s decision, this Court will affirm the verdict. Burks v. United States, 437 U.S. 1, 17 (1978). Substantial evidence is such evidence that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant‘s guilt beyond a reasonable doubt. United States v. Hager, 721 F.3d 167, 179 (4th Cir. 2013). In reviewing the sufficiency of the evidence, the Court allow[s] the government the benefit of all reasonable inferences from the facts proven to those sought to be established, United States v. Tresvant, 677 F.2d 1018, 1021 (4th Cir. 1982), and does not weigh the credibility of the evidence or resolve conflicts in the evidence, United States v. Beidler, 110 F.3d 1064, 1067 (4th Cir. 1997). Reversal of a conviction for insufficient evidence is limited to cases where the prosecution‘s failure is clear. United States v. Foster, 507 F.3d 233, 244–45 (4th Cir. 2007).
1.
Spirito first argues that there was insufficient evidence for the jury to find him guilty of federal program fraud, as charged in Counts 1-11. Section 666 prohibits an agent of an organization receiving in any one-year period federal benefits in excess of $10,000 from embezzl[ing], steal[ing], obtain[ing] by fraud or otherwise without authority knowingly convert[ing] to the use of any person other than the rightful owner or intentionally misappl[ying] property owned or controlled by that organization and carrying a value of $5000 or more.
Spirito concedes that the government prosecuted him under the theory of intentional misapplication. Opening Br. at 28. Spirito argues that, for several reasons, there was insufficient evidence for a reasonable jury to conviсt him under this theory. These reasons include that he (i) acted with[] authority; (ii) did not receive a bribe, kickback, or personal benefit; and (iii) did not obtain[] the property of another or deprive another of their property. Opening Br. at 28, 30–31.
First, Spirito contends that he acted at the direction and with the authority of the PAC. The district court concluded otherwise, explaining: [T]he Government presented adequate evidence to support the jury‘s conclusion that the Defendant—not the [Airport Commission], [its] employees, or [its] counsel—was responsible for allocating restricted funds for a loan guarantee to [People Express]. J.A. 2527. We agree, and Spirito‘s attempt to blur the facts to prove otherwise is unavailing.
To be clear, the PAC executed the loan guaranty, but Spirito single-handedly decided how to fund the collateral accounts that were pledged in support of the loan. The evidence adduced at trial demonstrated that he knew of the restrictions on the PAC funds; he selected the PAC funds to be placed in the collateral accounts; he named the collateral accounts; he directed the funding of the collateral accounts; and he knew that the PAC would be unable to withdraw funds from the collateral acсounts without TowneBank‘s permission.
The evidence also suggested that Spirito knew that his actions were unauthorized and illegal. He did not seek clarification from state and federal regulators; he used misleading titles on the collateral accounts; he concealed use of the PAC funds by delaying submission of audited financial statements and Entitlement Utilization Reports, and by omitting mention of the loan in the Entitlement Utilization Reports and press talking points; he lied about the use of the PAC funds when directly questioned by the FAA and lied about other issues related to the loan and collateral accounts when questioned during the civil deposition; and, at one point, he proclaimed that his career would be over if the loan guaranty went public. This evidence permits a reasonable jury to conclude Spirito did not act at the direction and with the authority of the PAC.
Second, Spirito argues that he did not intentionally misapply the funds because he received no bribe, kickback, or personal benefit. Opening Br. at 31. But nothing in the statute suggests that a bribe, kickback, or personal benefit must flow from the intentional misapplication of property. The Second Circuit spells this point out well:
Section 666(a)(1)(A) prohibits embezzling, stealing, obtaining by fraud, converting, or intentionally misapplying funds. The first four prohibitions cover any possible taking of money for one‘s own use or benefit. Intentional misapplication, in order to avoid redundancy, must mean intentional misapplication for otherwise legitimate purposes; if it were for illegitimate purposes, it would be covered by the prohibitions against embezzlement, stealing, obtaining by fraud, or conversion.
United States v. Urlacher, 979 F.2d 935, 938 (2d Cir. 1992). Other sister circuits have also refused to limit intentional misapplication under
Third, Spirito maintains that he did not obtain the property of another or deprive another of their property. But the statute requires the misapplication of property owned by, or under the care, custody, or control of another—it does not require the defendant to obtain the property or deprive the owner of the property.
Spirito further argues that he made a mere regulatory decision regarding the funds and, even if the decision was bad or made for sinister reasons, it does not amount to the misapplication of property. Opening Br. at 31–33. To support this argument, Spirito points to a recent Supreme Court case: United States v. Kelly, 140 S. Ct. 1565 (2020). In Kelly, two officials in the administration of former New Jersey Governor Chris Christie conspired to shut down toll lanes on the George Washington Bridge to punish the mayor of Fort Lee for refusing to endorse Christie‘s reelection bid. Id. at 1569–70. A jury convicted the two government officials under
2.
Having found that Spirito‘s federal program fraud convictions under Counts 1-11 are affirmed, his appeal with respect to the money laundering convictions under Counts 12-17 can now be disposed of rather easily. His sole argument is that the money laundering convictions cannot stand because his federal program fraud convictions are infirm. Opening Br. at 35. Because we affirm his federal program fraud convictions, his sole argument for reversing his money laundering convictions fails.
3.
Spirito next argues that there was insufficient evidence for a reasonable jury to find that his statements to a federal agency as charged in Count 18 were false and made with the requisite intent to impede an investigation. Title
According to Spirito, the government did not provide sufficient evidence for a jury to find that he violated
In his email response to the FAA, Spirito stated that the loan used about $3.5 million in State Entitlement Funds, $300,000 in SCASD funds, and $700,000 in RAISE funds. S.A. 420. This response was false because it omitted mention of the airport revenue and passenger facility charges used and mentions SCASD funds, which were not in fact ever used.
Spirito‘s arguments to the contrary are unavailing. First, he asserts that
Second, Spirito suggests that he did not knowingly provide a false statement because any falsehood he may have told was unwitting. Opening Br. at 45. This argument is belied by the record. Spirito was questioned about his email response while on the stand, and he did not claim that his answers were mistaken; he maintained that he responded accurately.
For these reasons, the evidence was sufficient for a reasonable jury to find that Spirito‘s statements to a federal agency as charged in Count 18 were false and made with the requisite intent to impede an investigation, in violation of
4.
Spirito next challenges the federal program fraud conviction related to the three unauthorized credit card transactions, as charged in Count 19.
Recall that
The question presented is whether
Court [] rejects Defendant‘s request to
We first look to the language of the statute to resolve this dispute. The government correctly states that, though subsection (b) prohibits converting the funds of an organization that receives, “in any one year period, benefits in excess of $10,000,”
Our reading is not contrary to clearly expressed congressional intent. Congress enacted
Our conclusion that
The government states that “[t]he First Circuit has ruled that by the plain text of the [statute] the one-year limitation in
The government misreads the decisions it cites. The Newell court said that cases like the one at bar did not resolve the controversy before it, explaining:
658 F.3d at 24-25 (citing Cruzado-Laureano, 404 F.3d 470; Hines, 541 F.3d 833). The question in Newell was whether the transactions bundled under counts 2, 7, 8, 9, 11, 29 and 30 were duplicitous—that is, whether they described distinct violations of[Those] cases were concerned with the propriety of aggregation when the transactions
involved sums which fell below the jurisdictional minimum and hence did not make out independent violations of § 666 . However, one of the rationales for allowing aggregation under such circumstances is to ensure that poorly motivated officials do not evade liability under§ 666 simply by stealing less than $5000 at a time. See Webb, 691 F. Supp. at 1168; Sanderson, 966 F.2d at 189. Worries about opportunistic evasion of liability do not apply to transactions that involve sums larger than the statutory minimum. Since most of the bundled transactions in this case involved sums greater than $5000, it is not clear whether this line of precedent would support the aggregation that occurred in this case.
Moreover, contrary to the government‘s suggestion, the Ayala court also did not decide whether a one-year temporal limitation applies in a case like this one; instead, it concluded that it need not decide because, “even if the district court erred in failing to treat
We cannot accept this unreasonable interpretation of the record. Spirito first obligated funds to which he was not entitled on November 25, 2014—the day he first swiped his airport-issued credit card to cover an impermissible expenditure; this transaction happened to be posted on the credit card statement on November 28. S.A. 444; see also J.A. 1817-25. He last obligated funds to which he was not entitled on November 27, 2015—the day he used the credit card to pay for a third unauthorized expenditure; this transaction happened to be posted on November 30. S.A. 465; see also J.A. 1810. Whether we look to the November 25, 2014 and November 27, 2015 credit card transaction dates, or the November 28, 2014 and November 30, 2015 credit card transaction posting dates, the conversions occurred over the course of one year and two days. The government does not explain why we should mix-and-match the transaction and transaction posting dates when considering this issue. In our view, it seems illogical to resolve this issue by considering the transaction date related to one conversion and the posting date related to another conversion. Nor does the government explain how Spirito managed to obligate funds when the repairs began (and before any credit card transaction occurred).
Because
5.
Spirito further complains that there was insufficient evidence for a reasonable jury to find that his sworn statements charged in Counts 20, 21, and 23 were false and material to the civil matter in which those statements were made. Recall that Count 20 charged Spirito with making false statements when he testified that he did not divert airport revenue for the loan guaranty. J.A. 361-63. Count 21 charged Spirito with making false statements when he testified that he opposed the loan guaranty while the PAC supported it. J.A. 364-65. And Count 23 charged him with making false statements when he testified that he did not know that TowneBank would not lend money to People Express without a loan guaranty and that he had no role in selecting and authorizing the funds to be placed in the collateral accounts. J.A. 369-71.
A defendant commits perjury under
“A statement is material if it has a natural tendency to influence, or is capable of influencing, the decision-making body to which it was addressed.” United States v. Littleton, 76 F.3d 614, 617-18 (4th Cir. 1996). This Court observed in Wilkinson that, because “a deponent‘s testimony is not actually addressed to a decision-making body,” the materiality standard “does not neatly apply when, as here, the defendant is charged with committing perjury during a civil deposition.” 137 F.3d at 225.
The Second and Fifth Circuits have adopted broad standards for evaluating the materiality of a statement made during a civil deposition. United States v. Holley, 942 F.2d 916, 924 (5th Cir. 1991) (explaining that material statements include those “with respect to matters properly the subject of and material to the deposition, even if the information elicited might ultimately turn out not to be admissible at a subsequent trial“); United States v. Kross, 14 F.3d 751, 754 (2d Cir. 1994) (explaining that statements made in civil depositions
Spirito encourages this Court to adopt a narrower approach. But more importantly, Spirito contends that, “[i]n order to answer [the materiality] question, the government must offer evidence to show, at a minimum, the nature of the underlying civil proceeding.” Opening Br. at 52. Here, Spirito argues, “the government did not introduce any evidence about the nature of the underlying civil litigation and pointed simply to the evidence adduced at trial regarding the program fraud counts in the criminal case.” Id.
But this is not true. Consider the following exchange during Spirito‘s cross-examination:
Q. And describe what happened . . . when you first interacted with the agents.
A. Well, the doorbell rang, and I answered the door, and a gentleman and a representative from the . . . Department of Transportation . . . identified themselves. They . . . said, [w]e would like to ask you some questions about the People Express loan and, I guess, the airport‘s involvement in that. . . .
Q. Now, at that time, did you think or know that you were a susрect?
A. Well, no. No. Because I was involved in a civil suit and . . . they were going to ask me questions. I assumed they were . . . . going to ask me questions about the People Express loan and the airport‘s involvement while my civil suit was in federal court.
Q. You were the plaintiff in that civil suit?
A. Yes.
J.A. 2064-66, 2093 (emphasis added).Q. You were suing the Peninsula Airport Commission, correct?
A. Yes. . . .
Q. All right. Now, did there come a point [during] the [] visit where you spoke with your lawyer?
A. Well, . . . I invited them in the house, and when it became apparent to me that I probably should have my attorney at the time at least on the phone, because I just didn‘t know what to do, I mean . . . was going to answer the questions, but I didn‘t want to have—you know, I had a light bulb go off in my head, like, oh, maybe it‘s going to interrupt my civil suit, and I don‘t know if that conflicts. So I contacted my attorney, and my attorney said, in fact, it was going to, possibly. . . . So we were going to contact them at a later date, but the civil suit was getting heavier and heavier post-February.
Q. Okay. And ultimately, agents came back to your house in May of 2019, correct?
A. Yes. . . .
Q. And, Mr. Spirito, in the course of that deposition, you were also asked many questions about the credit card usage that you‘ve testified to about here today, correct?
A. Yes. Q. Because your performance and some of the issues that occurred while you were employed at the airport were issues that were subjects of inquiry at the deposition?
A. That‘s correct.
Spirito‘s argument—which focuses on whether the government offered any evidence of the underlying proceedings—fails becausе, as can be seen, the government did offer such evidence during the trial. Spirito testified that, when investigators first attempted to interview him, he was a plaintiff in a civil lawsuit against the PAC. He “assumed” the investigators were “going to ask [him] questions about the [People Express] loan and the airport‘s involvement,” which he thought were so connected to his civil defamation suit that answering the investigator‘s questions may “interrupt” or “conflict[]” with the civil suit. J.A. 2065-66. And, “[his] attorney said, in fact, it was going to, possibly.” Id. Though both Spirito and his attorney used qualifying language to describe the potential impact of the deposition testimony on the underlying civil suit, the government did present evidence on the underlying civil defamation case and that evidence was sufficient for a reasonable jury to find that Spirito‘s false declaration met even the more stringent materiality standards.
B.
Spirito next contends that the district court erroneously rejected his request to instruct the jury that a violation of a policy, guideline, or regulation does not amount to a crime, thereby inviting the jury to convict him for civil infractions, not federal program fraud and money laundering.
This Court reviews a district court‘s refusal to give a jury instruction for abuse of discretion. United States v. Brooks, 928 F.2d 1403, 1408 (4th Cir. 1991). Such refusal is only reversible error if the instruction (i) was correct; (ii) was not substantially covered by the court‘s charge to the jury; and (iii) dealt with some point in the trial so important that failure to give the requested instruction seriously impaired the defendant‘s ability to conduct his defense. United States v. Lewis, 53 F.3d 29, 32 (4th Cir. 1995).14
Spirito asked the district court to instruct the jury that:
J.A. 2182. The district court refused this instruction, finding that “the charge, as a whole, is sufficient to avoid any confusion that this conduct has to be a violation of [a] criminal statute.” J.A. 2216. To be sure, the proposed instruction is a correct statement of law and would draw a clear line between the appropriate use of civil regulations to define the contours of a criminal law and the inappropriate replacement of a[E]vidence of alleged violations as to any . . . handbooks, rules, publications, guidelines and regulations should not be considered by you as a violation of criminal law per se. You may consider, however, evidence of the . . . handbooks, rules, publications, guidelines and regulations as you would any other evidence in determining whether or not the defendant had the required intent to violate the criminal statute charged in the indictment.
As to federal program fraud, the district court instructed:
J.A. 2335-36. As to the “intentional misapplication” theory, the district court explained:In order to prove the defendant guilty . . . , the government must prove each of the following elements beyond a reasonable doubt: Number one, . . . the defendant was an agent of . . . The Peninsula Airport Commission . . . ; Number two, that in calendar years of 2014 and 2015, the Peninsula Airport Commission received federal benefits in excess of $10,000; Three, that the defendant . . . intentionally misapplied property; Four, that such property was in the care, custody, and control of the Peninsula Airport Commission; and, Five, that the provider of such property had an aggregate value of at least $5,000.
J.A. 2337. And as to intent, the district court said:To intentionally misapply money or property means to intentionally use money or property of the [] Airport Commission knowing that such use is unauthorized or unjustifiable or wrongful. Misapplication includes the wrongful use of the money or property for an unauthorized purpose, even if such use benefitted the [] Airport Commission.
J.A. 2327-29.The term “intentionally[]” . . . means that he knowingly performed an act, deliberately and willfully on purpose as contrasted with accidentally, carelessly, or unintentionally. . . .
The intent of a person or the knowledge that a person possesses at any given time may not ordinarily be proved directly because there‘s no way of scrutinizing the workings of the human mind. In determining the issue of what a person knew or what a person intended at a particular time, you may consider any statements made or acts done or omitted by that person and all other facts and circumstances received in evidence which may aid in your determination of that person‘s knowledge or intent. . . . It is entirely up to you, however, to decide what facts to find from the evidence received in the trial.
The jury instructions make clear that, to convict Spirito, the jury must conclude that he “misapplied” the funds—i.e., used them for “an unauthorized purpose“—and that he did so “intentionally“—not accidentally. Spirito‘s civil violation-transformed-to-crime accusation cannot be reconciled with the district court‘s separate and distinct instruction on “intent,” which makes clear that something more than a regulatory violation is required. This specific-intent aspect of the instruction disabuses a juror of any notion that mere misapplication of funds or violation of a regulation, standing alone, amounts to criminal liability.15 See United States v. Herder, 594 F.3d 352, 360-61 (4th Cir. 2010) (sustaining jury charge that did not include a “mere proximity” instruction because the instructions given required proof of knowledge and control). Nor was there
Thus, the district court did not abuse its discretion in denying Spirito‘s requested jury instruction.
C.
Spirito also challenges the district court‘s exclusion of evidence related to a change in state law and another entity‘s operations under that law. Spirito asserts that this evidence was critical to his defense against the government‘s theory that he acted in violation of state policies in allocating airport funds. We afford substantial deference to the district court‘s decision to admit or exclude evidence and will not reverse absent an abuse of discretion. See United States v. White, 810 F.3d 212, 227 (4th Cir. 2016).
Trial counsel sought to introduce evidence of the January 2017 letter written by the Virginia Secretary of Transportation and a copy of the legislation discussed in it, explaining:
J.A. 1934-35. The trial court denied trial counsel‘s request to introduce evidence of the amended state statute, explaining: “No, it doesn‘t follow. It may follow that they amended the law in some way. It doesn‘t mean that it was not improper or unlawful before the fact.” J.A. 1935. We agree.[W]hen the jury has to determine if there was a misappropriation, they will have to determine if there was a law that this use of State entitlement funds violated, and in determining if there‘s been a violation of the law, . . . a relevant factor . . . is . . . if the people who make the laws decided they had to change it so as to make this act subsequently illegal. . . . [I]f the legislature turns around and changes the law for the specific reason of making this illegal, then it can follow . . . that before they changed the law, it wasn‘t illegal.
Evidence of the amended state statute would not help the jury determine the legality of Spirito‘s actions because, even if the state legislature added a line that makes obvious the prohibition on the conduct that catalyzed this case, it does not mean that the conduct was lawful before the statute‘s amendment.
Even if the district court had abused its discretion, any error was harmless. See
D.
Finally, we consider Spirito‘s arguments regarding the forfeiture money judgment. To the extent that Spirito‘s cursory reference to the forfeiture amounting to an excessive fine in violation of the
We weigh several factors to determine whether a challenged forfeiture amounts to an excessive fine: (i) the nature and extent of the illegal aсtivity; (ii) whether the defendant fit into the class of persons for whom the statute was principally designed; (iii) the harm caused by the charged crime; (iv) the amount of the forfeiture and its relationship to the authorized penalty; and (v) the relationship between the crime charged and other crimes. United States v. Bajakajian, 524 U.S. 321, 337-39 (1998). Spirito concedes that he did not raise this excessive fine issue below. Thus, plain error review applies.
As an initial matter, Spirito‘s laundering activities, which involved $3,817,931.29, could have subjected him to a criminal fine of up to $7,635,862.58—a total that far exceeds the amount to be forfeited. “Such punishment does not suggest ‘a minimal level of culpability.‘” United States v. Jalaram, Inc., 599 F.3d 347, 356 (4th Cir. 2010) (quoting Bajakajian, 524 U.S. at 339). In addition, Spirito argues that “to hold him responsible for the full amount of the loss is grossly disproportional to the gravity of [his] actions” because the PAC voted to issue and carry out the contractual obligations associated with the loan, and ultimately, “he acted with the best of intentions and without obtaining any personal benefit.” Opening Br. at 56-57. Even if true, Spirito does not explain how these facts pull him outside of the class of persons for whom the money laundering statute was principally designed, negate the harm caused by his money laundering activities, or change the close relationship between the money laundering and federal program fraud crimes. For these reasons, we find that the forfeiture order does not constitute an excessive fine and, at a minimum, any contrary conclusion on the part of the district court did not rise to the level of plain error.
Spirito also argues that the district court erred in entering a forfeiture order without providing him notice and an opportunity to be heard. Under the rule governing forfeiture in criminal cases, a court shall not enter a judgment of forfeiture unless the defendant first receives notice via the indictment or information that the government will seek forfeiture as part of any sentence.
Spirito complains that the district court signed the preliminary order less than 14 days after the draft order was submitted by the government, thereby depriving him of any meaningful opportunity to challenge the money judgment as a violation of his
In United States v. Martin, 662 F.3d 301, 307 (4th Cir. 2011). We explained that Rule 32.2‘s requirement that district courts “include the forfeiture when orally announcing the sentence or [] otherwise ensure that the defendant know of the forfeiture at sentencing” is “not [meant] to create a coercive sanction, but to ensure that a defendant is on notice as to all aspects of his sentence, including forfeiture.” Id. at 309 (emphasis omitted). We affirmed the criminal forfeiture of the appellants’ assets because “there [was] no dispute that [the] [a]ppellants were fully aware of both the pending forfeiture itself and . . . the exact amount.” Id. The appellants “[did] not—and indeed could not—argue that they were caught off-guard” because the district court held hearings on forfeiture, in which both the fact of liability and the amount were determined, and made clear at the end of the final forfeiture hearing that it intended to enter the forfeiture order. Id.
This case presents no substantial difference. Spirito had notice that forfeiture would be a part of his case through the issuance of a Presentence Investigation Report, motion for a preliminary order of forfeiture, and preliminary order of forfeiture—the latter two of which noted the precise forfeiture amount. J.A. 2600, 2465-66, 2474, 2479, 2481-83.19 And trial counsel conceded, in Spirito‘s reply to his Motion to Stay Forfeiture Pending Appeal filed
Ultimately, because Spirito, like the appellant in Martin, was “indisputably on notice at the time of sentencing that the district court would enter [a] forfeiture order[]” and had ample opportunity to object, “we refuse to vacate the district court‘s [] forfeiture order[].” 662 F.3d at 309-10.
III.
For the foregoing reasons, we reverse and vacate the conviction and sentence on Count 19, and affirm the convictions, sentences, and judgment on the remaining counts. We remand to the district court with instructions to conduct such further proceedings as may be appropriate and consistent with this opinion.
REVERSED AND VACATED IN PART, AFFIRMED IN PART, AND REMANDED
Notes
(Continued)We do not suggest, and need not find, that this aggregation has no bounds. Although the statute does not explicitly articulate a temporal limitation, it does provide a context clue. To be prosecuted under
§ 666(a) , “the circumstance described in subsection (b) of [that] section [must] exist[ ].”18 U.S.C. § 666(a) . The relevant “circumstance” is that the government organization “receives, in any one year period, benefits in excess of $10,000 under a Federal program.” [18 U.S.C. § 666(b) ]. And the one-year period must be “a continuous period that commences no earlier than twelve months before the commission of the offense or that ends no later than twelve months after the commission of the offense” and may include “time both before and after the commission of the offense.” [18 U.S.C. § 666(d)(5) ]. Conditioning the commission of the offense on the “exist[ence]” of this “circumstance” at least suggests a temporal limit.