USA v. Tamika Riley

Filing 920100916

Opinion

P R E C E D E N T IA L U N IT E D STATES COURT OF APPEALS F O R THE THIRD CIRCUIT ___________________ N o s . 08-3361, 08-3413, 08-3758, and 08-3759 ___________________ U N IT E D STATES OF AMERICA, Appellant in 08-3758 & 08-3759 v. T A M IK A RILEY AND SHARPE JAMES Tamika Riley, Appellant in 08-3361 S h a rp e James, Appellant in 08-3413 ___________________ O n Appeal from the United States District Court f o r the District of New Jersey (D .C . No. 2-07-cr-00578) D is tric t Judge: Honorable William J. Martini ___________________ A rg u e d April 13, 2010 Before: SLOVITER and NYGAARD, Circuit Judges, and R E S T A N I,* Judge

(O p in io n Filed: September 16, 2010) ___________________

G e ra ld Krovatin ARGUED

Honorable Jane A. Restani, Chief Judge of the United S ta te s Court of International Trade, sitting by designation.

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K ro v a tin Klingeman 7 4 4 Broad Street S u ite 1903 N e w a rk , NJ 07102 A la n D. Bowman ARGUED S u ite 105 G a te w a y One N e w a rk , NJ 07102 A tto rn e ys for Appellants N o r m a n Gross ARGUED O f f ic e of United States Attorney C a m d e n Federal Building & Courthouse 4 0 1 Market Street P .O . Box 2098, 4th Floor C a m d e n , NJ 08101 P a u l J. Fishman R alp h J. Marra, Jr. G e o rg e S. Leone O f f ic e of United States Attorney 9 7 0 Broad Street Room 700 N e w a rk , NJ 07102 A tto rn e ys for Appellee ___________________ O P IN I O N OF THE COURT ___________________ R E S T A N I, Judge. D e f en d a n t-A p p e lla n ts and Cross-Appellees (" A p p e lla n ts " ) Sharpe James ("James") and Tamika Riley (" R ile y" ) were convicted in the United States District Court for th e District of New Jersey of three counts of mail fraud (Counts 1 ­ 3 ) as part of a scheme to convey City-owned property in v io la tio n of 18 U.S.C. § 1341 and 2, one count of fraud (Count 2

4 ) involving a local government receiving federal funds in c o n n e c tio n with the fraudulent sale of City-owned properties in v io la tio n of 18 U.S.C. § 666(a)(1)(A) and 2, and one count of c o n s p ir a c y (Count 5) to defraud the public of James's honest s e rv ic e s contrary to 18 U.S.C. §§ 1341 and 1346, in violation of 1 8 U.S.C. § 371. These five counts are collectively called the " L a n d Fraud Counts." Additionally, Riley was convicted of th re e counts of housing assistance mail fraud in violation of 18 U .S .C . § 1341 and 2, and three counts of tax fraud for her failure to report income in violation of 26 U.S.C. § 7206(1). Appellants a p p e a l the Land Fraud Counts. For the following reasons we w ill reverse the convictions on Count 5 and affirm the c o n v ic tio n s on Counts 1­4. I. F a c tu a l Background and Procedural History A. F a cts

T h e jury convicted Sharpe James and Tamika Riley of the L a n d Fraud Counts for engaging in a fraudulent scheme to assist R ile y's purchase of City-owned parcels of real property under th e South Ward Redevelopment Plan ("SWRP"). Sharpe James w a s the Mayor of Newark, New Jersey for twenty years between Ju ly 1986 and June 2006. James was also a New Jersey State S e n a to r representing the 29th Legislative District from 1999 u n til 2008. Tamika Riley, who had an intimate relationship with J a m e s , was the owner and chief executive officer ("CEO") of T a m ik a Riley, Inc. ("TRI"), a public relations firm specializing in the entertainment industry. 1. S o u t h Ward Redevelopment Plan

In the aftermath of the 1967 Newark riots, many residents a b a n d o n e d the city, and the market for properties substantially e ro d e d . During this time, home ownership was extremely low an d lenders often would not provide financing to acquire p r o p e r ty in Newark. In 1998, in order to address these problems, N e w a rk adopted the SWRP, which was designed to sell parcels o f distressed, City-owned real property at low prices to prea p p ro v e d developers, without advertisement and public bidding. 3

In exchange, the purchaser contracted to construct new or re n o v a te d housing on those parcels,1 which would then be sold, o c c u p ied , and returned to the City's tax rolls, in order to re v ita liz e the residential real estate market and redevelop N e w a rk . T h e New Jersey Department of Economic and Housing D e v e lo p m e n t ("DEHD") managed the SWRP process. Initially, th e DEHD conducted a pre-qualification process that screened a p p lic a n ts to ensure they had experience in the construction of re sid e n tia l property and the ability to finance the projects. Once D E H D approved an application, department officials drafted a re so lu tio n and the contracts, which were then reviewed by the a tto rn e ys in the Newark Corporate Counsel's Office ("Corporate C o u n se l") ,2 the City Clerks office, and the Municipal Council.3 A f ter the resolutions were approved by the Municipal Council, th e DEHD was responsible for enforcing the contractual p r o v i sio n s to renovate the distressed properties. T h e SWRP proved successful and profitable to p a rtic ip a n ts early on. By 2001-2002, the market for Newark real e sta te surged and applicants for SWRP property flooded the D E H D with requests. This success prompted the Municipal

The contracts specifically forbade "speculation in l a n d h o ld in g ." Supplemental Appendix For the United States (" S A " ) 611:217; 1456 § 17(a). "Speculation" involved purchasing th e real property merely for resale at a higher price, rather than for r e n o v a ti o n . C o rp o ra te Counsel reviewed the resolutions and contracts f o r form and legality. T h e city of Newark elects both a Mayor, who is the chief o f the city, and a Municipal Council, which serves as the le g is l a t u r e . The Mayor is empowered, subject to Municipal C o u n c il approval, to sell real property owned by the City. The M u n ic ip a l Council, without conducting its own investigation, re v ie w e d and considered the DEHD resolutions to determine w h e t h e r it would authorize the contracts. 4
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C o u n c il to pressure the program to accommodate "local e n tre p re n e u rs " and minorities with little or no development e x p e rie n c e. Thus, the DEHD abandoned the pre-qualification p ro c e ss and no longer required applicants to have development e x p e rie n c e so long as an applicant had "the right team" to fulfill th e obligations under the contract. 2. J a m e s 's Control Over the SWRP

James was very involved in the SWRP process as were h is subordinates. Basil Franklin ("Franklin") served as Chief of H o u s in g Production under the James Administration and re p o rte d directly to James's Deputy Mayor who was also the D ire c to r of the DEHD. James met frequently with his Deputy M a yo r to discuss the availability and allocation of properties u n d e r the SWRP.4 The Deputy Mayor would then direct F r a n k lin to approve the SWRP application of those who had b e e n recommended by James. D u rin g the time period at issue, James and the Municipal C o u n c il disagreed as to who had the power to select eligible p e rs o n s to receive City property under the SWRP. After the M u n ic ip a l Council prevailed in litigation against the Mayor re g a rd in g this issue, James successfully sponsored legislation in 2 0 0 4 , Senate Bill 967, that authorized the Mayor alone to select p e rs o n s eligible for SWRP property. 3. J a m e s and Riley's Relationship and R ile y ' s Acquisition of SWRP Properties

In 1999, Riley introduced the Mayor to a Newark-born p ro f e s s io n a l basketball player, Eric Williams ("Williams").

In 2005, a friend of James went to James's home and asked h im how to acquire property through the SWRP. James revealed d e ta ile d knowledge about which parcels were available for sale, w h o had acquired such properties in the past, and stated that if his f r ie n d applied for property he would "take care of" the process. S A 506:37. 5

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W illia m s had recently signed a contract with the Boston Celtics a n d was interested in investing in his home town of Newark. Shortly after the Williams introduction, James's Deputy Mayor b ro u g h t Riley and her friend to Franklin's office and told F ran k lin that James wanted him to "help these ladies acquire s o m e property." SA 229:172. Franklin knew that Riley had no e x p e rie n c e as a real estate developer, but at the time Riley a p p lie d for property the pre-qualification process had been a b a n d o n ed . B o th James and Riley contest the duration of their in tim a te relationship. Nonetheless, James was aware that the C ity transferred real estate parcels to Riley because in his official c a p a c ity as Mayor, James signed each of the contracts tran sfe rrin g the properties to TRI. Riley maintained calendars a n d daily "agenda" lists containing innumerable notations re g a rd in g her communications with James about the status of her a c q u is itio n s of City-owned property from 2001 through 2006. James was also copied on a letter "advising" Riley that certain C ity-o w n e d properties were set aside for acquisition by her c o m p a n y. Further, in April 2000, Riley wrote a letter to James, th a n k in g him for his assistance in helping her to obtain Cityo w n e d properties. R ile y acquired City-owned property in three phases. Phase I consisted of four properties and Phase II consisted of th re e properties. Although the Municipal Council approved the s a le of five other Phase III parcels to Riley in 2002, she was u n a b le to close on the properties because James informed F ra n k lin that the City "will not do any more business with T a m ik a Riley until further notice." SA 235:196. In 2004, Riley resu m ed her pursuit of the SWRP properties (amended Phase III) a n d the Municipal Council authorized the sale of four other p ro p e rtie s to Riley. R ile y developed only two of all the parcels she purchased u n d e r the SWRP. As to those properties that she did not

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d e v e lo p , Riley quickly turned around and sold them for a profit.5 R ile y's access to SWRP property ended in 2006, however, when a new mayoral administration instituted legal proceedings to b lo ck the sale of the properties to her. B. T h e Indictment, Trial, and Sentencing

In July 2007, a federal grand jury sitting in Newark re tu rn e d a 33-count indictment. The District Court severed the f irs t twenty counts and the Government submitted a redacted and re n u m b e r e d indictment (hereinafter, "Indictment").6 Counts 1­5 o f the Indictment, the Land Fraud Counts, include Counts 1­3, w h ic h charged James and Riley with mail fraud as part of the s c h e m e to convey City-owned property to Riley between 2002 a n d 2005, in violation of 18 U.S.C. §§ 1341 and 2.7 Count 4 c h a rg e d James and Riley with fraud involving a local g o v e rn m e n t receiving federal funds, in connection with the f ra u d u len t sale of City-owned properties to Riley in 2005, in v io la tio n of 18 U.S.C. §§ 666(a)(1)(A) and 2. Count 5 charged J a m e s and Riley with conspiracy to defraud the public of J a m e s 's honest services between 1999 and 2006, contrary to 18 U .S .C . §§ 1341 and 1346, in violation of 18 U.S.C. § 371. Counts 6­9 (collectively, the "Housing Fraud Counts") charged R ile y with housing assistance fraud in violation of 18 U.S.C. § § 1341 and 2. Finally, Counts 10­13 (collectively, the "Tax F r a u d Counts") charged Riley with tax evasion in violation of 26 U .S .C . § 7206(1).

For example, Riley paid $18,000 for the Phase II properties a n d without making any improvements sold them for $80,000 a m o n th later. T h e group of severed counts charged James with a scheme to defraud the City of Newark of money and property through the m is u s e of City of Newark credit cards. T itle 18 U.S.C. § 2 states that "[w]hoever commits an o f f e n s e against the United States or aids, abets, counsels, c o m m a n d s , induces or procures its commission, is punishable as a p rin c ip a l." 18 U.S.C. § 2. 7
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T ria l began on February 26, 2008. On April 16, 2008, f o llo w in g five weeks of testimony, the jury convicted James and R ile y on all five Land Fraud Counts and Riley on Counts 6­13. On July 23, 2008, the District Court denied Appellants' post-trial m o tio n s . The District Court sentenced James and Riley to a c u sto d ia l sentence of twenty-seven months and fifteen-months re sp e c tiv e ly. James and Riley appealed the Land Fraud c o n v i c tio n s and the Government cross-appealed the sentences.8 II. D is c u s s io n

T h is Court has jurisdiction to hear the instant appeal p u rs u a n t to 28 U.S.C. § 1291. The appeal is limited to the Land F r a u d Counts (Counts 1­5). In light of the recent United States S u p re m e Court decision in Skilling v. United States, 130 S. Ct. 2 8 9 6 (2010), Appellants seek a reversal of Count 5, the c o n s p ir a c y to defraud the public of James's honest services.9 J a m e s also argues that if Count 5 falls, then all the Land Fraud C o u n t s should fall. Although we will reverse Appellants' c o n v ic tio n s under Count 5, we do not find that there is spillover p reju d ice sufficient to taint Counts 1­4. Further, we will affirm th e convictions under Counts 1­4 because the District Court did n o t err when it denied Appellants' post trial motions.1 0

Riley does not appeal her housing assistance fraud or tax f r a u d convictions. S k illin g was decided after this appeal was argued and was n o t available to the District Court, but we are bound by it. See U n ite d States v. Asher, 854 F.2d 1483, 1487 (3d Cir. 1988); see a ls o Griffith v. Kentucky, 107 S. Ct. 708, 716 (1987) ("[A] new ru le for the conduct of criminal prosecutions is to be applied re tro a c tiv e ly to all cases, state or federal, pending on direct review o r not yet final, with no exception for cases in which the new rule co n stitu tes a `clear break' with the past."). In itia lly, the Government sought to cross-appeal the se n ten c e s of both Appellants because the District Court allegedly d id not apply any adjustment under the honest services guideline. I n light of Skilling, however, the Government considers the cross8
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A.

S k illin g v. United States and Appellants' Honest S er v ices Fraud Convictions Under Count 5 1. S k i llin g v. United States

In June 2010, the United States Supreme Court decided S k illin g and addressed the issue of whether the jury properly co n v icted Skilling of conspiracy to commit honest services wire f ra u d . Skilling, 130 S. Ct. at 2907. Jeffrey Skilling, a longtime E n ro n officer, was Enron's chief executive officer from F e b ru a ry until August 2001, when he resigned. Id. Less than f o u r months after Skilling resigned from Enron, the company d e c lar e d bankruptcy. Id. The jury convicted Skilling "with c o n sp ira c y to commit securities and wire fraud; in particular, it a lleg e d that Skilling had sought to `depriv[e] Enron and its s h a re h o ld e rs of the intangible right of [his] honest services.'" Id. at 2908. T h e Supreme Court considered the scope and c o n stitu tio n a lity of the honest services statute and determined th a t "[t]o preserve the statute without transgressing c o n stitu tio n a l limitations," § 1346 criminalizes only "fraudulent s c h e m e s to deprive another of honest services through bribes or k ic k b a c k s ." Skilling, 130 S. Ct. at 2928, 2931. The Supreme C o u rt rejected the Government's argument that § 1346 should a ls o encompass "undisclosed self-dealing by a public official . . . [ su c h as] the taking of official action by the [official] that f u rth e rs his own undisclosed financial interests while purporting to act in the interests of those to whom he owes a fiduciary d u ty." Id. at 2932 (internal quotation marks and citation o m itte d ). Because the Government in Skilling did not allege that S k illin g accepted bribes or kickbacks, the Supreme Court d e te rm in e d that Skilling's honest services fraud conviction was flaw ed and vacated the Fifth Circuit's affirmance of Skilling's c o n sp ira c y conviction. Id. at 2934­35. 2. T h e Effect of Skilling on Appellants'

appeal to be moot. 9

H o n e s t Services Fraud Convictions (C o u n t 5) A p p e lla n ts argue that the Indictment and the District C o u rt's jury instructions with regard to honest services fraud are in c o n sis te n t with the Supreme Court's decision in Skilling and th e re f o re , the conviction under Count 5, "Conspiracy to Use the U .S . Mail to Defraud the Public of Defendant James's Honest S e rv ic e s," must be dismissed. Although James and Riley c h a llen g e d the honest services charge on various bases, they did n o t argue below that honest services fraud was void for v a g u e n e s s or should be limited to bribes or kickbacks.11 T h e re f o re , the most appropriate standard of review is plain error u n d e r Federal Rule of Criminal Procedure 52(b).1 2 United States v . Marcus, 130 S. Ct. 2159, 2164 (2010). Pursuant to Federal R u le of Criminal Procedure 52(b), an appellate court may re c o g n ize a "plain error that affects substantial rights," even if th a t error was "not brought to the court's attention." Fed. R. C r im . P. 52(b). Thus, a n appellate court may, in its discretion, correct an error n o t raised at trial only where the appellant demonstrates th a t (1) there is an "error"; (2) the error is "clear or o b v io u s , rather than subject to reasonable dispute"; [and] ( 3 ) the error "affected the appellant's substantial rights, w h ic h in the ordinary case means" it "affected the
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In particular, Appellants argued that the jury instructions to Count 5 were invalid because the District Court required merely a general finding of a violation of a common-law fiduciary re la tio n s h ip between a public servant and the public, rather than req u irin g a violation of a specific statute prohibiting non-disclosure o f a conflict of interest. In light of Skilling and the disposition of C o u n t 5, we need not address this claim. W h ile we have applied a plain error standard here, one c o u ld view its application here as somewhat harsh, given the d e f en d a n t's objection to the breadth of the honest services charge, s e e supra note12, and a Supreme Court opinion that was not easy to predict. 10
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o u tc o m e of the district court proceedings." M a rc u s, 130 S. Ct. at 2164 (citing Puckett v. United States, 129 S . Ct. 1423, 1429 (2009)). "If all three conditions are met, an a p p e lla te court may then exercise its discretion to notice a f o rf e ite d error, but only if (4) the error seriously affect[s] the f a irn e ss , integrity, or public reputation of judicial proceedings." Johnson v. United States, 520 U.S. 461, 467 (1997) (quotation m ark s and citation omitted). i. P la in Error Review

T h e first inquiry is whether the District Court erred b e c au s e it failed to charge the jury in accordance with the S u p re m e Court's limitation of honest services fraud in Skilling. The District Court charged the jury, consistent with the In d ic tm e n t, that a conviction with respect to Count 5, " C o n s p ira c y to Use the U.S. Mail to Defraud the Public of D e f en d a n t James's Honest Services," could be found if James b r e a c h e d one or more of the following three duties of honest s e rv ic e s as a public official owed to the State of New Jersey and th e City of Newark: (i) . . . knowingly committing acts related to his official p o s itio n s that were unauthorized exercises of his official f u n c tio n s for the purpose of obtaining and receiving m o n e y and benefits for himself and others from the g o v e rn m e n ts that he represented, contrary to N.J. Stat. A n n . § 2C:30­2;1 3

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New Jersey Statute § 2C:30-2 states in pertinent part that, [ a ] public servant is guilty of official misconduct when, w ith purpose to obtain a benefit for himself or another or to injure or to deprive another of a benefit . . . [h]e c o m m its an act relating to his office but constituting an u n a u th o riz e d exercise of his official functions, knowing th a t such act is unauthorized or he is committing such act in an unauthorized manner. 11

(ii) as part of his fiduciary duty and his obligation p u rs u a n t to the circumstances set forth in Title 18, United S ta te s Code, Section 666(a)(1)(A),1 4 to refrain from s te a lin g , taking by fraud, misapplying and m is a p p ro p ria tin g the assets of his public employers; and (iii) as part of his fiduciary duty, to disclose conflicts of in te re st to his public employers in official matters over w h ich defendant JAMES exercised, and attempted to e x e r c is e , official authority and discretion, and to recuse h im se lf where he had such conflicts of interest. A p p e n d ix on Behalf of Appellant Tamika Riley ("RA") 152­53. As an introduction to all three, however, the District Court in s tru c te d the jury that honest services fraud does not require a s c h e m e to defraud another to obtain money or property, and c o u ld instead be based on a violation of a duty of honest, faithful a n d disinterested service.1 5 The law of this circuit, prior to

N. J. Stat. Ann. § 2C:30-2. S e c tio n 666(a)(1)(A), in its pertinent part, makes any agent o f a State or local government who "embezzles, steals, obtains by f r a u d , or otherwise without authority knowingly converts to the use o f any person other than the rightful owner or intentionally m is a p p lie s . . . property," liable for a federal offense. 18 U.S.C. § 666(a)(1)(A).
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T h e District Court Judge specifically instructed the jury

th a t [ s ]in c e honest services mail fraud does not require a scheme to defraud another to obtain money or property, I will now in s tr u c t you on what a scheme to defraud another of honest s e rv ic e s means . . . . [T]he right to honest services is the rig h t that comes from a relationship of trust that one forms w ith another individual or with an institution. This is k n o w n in the law as a fiduciary relationship. [A] fiduciary is prohibited from acting to enrich himself on behalf of the p rin c ip a l. Since the fiduciary acts and speaks for the p rin c ip a l, the fiduciary also owes the principal that he 12

S k illin g , did not require a different charge than that given by the D is tric t Court Judge here. See United States v. Antico, 275 F.3d 2 4 5 , 264 (3d Cir. 2001) (holding that honest services fraud c o n stitu te d a duty "to disclose material information affecting an o f f ic ia l's impartial decision-making and to recuse himself . . . re g a rd le ss of a state or local law codifying a conflict of in ter e st" ). In light of Skilling, however, the failure to limit h o n e s t services fraud to "bribes and kickbacks," Skilling, 130 S. C t. at 2928, now constitutes legal error, see United States v. R e to s , 25 F.3d 1220, 1229 (3d Cir. 1994) (stating that under R u le 52(b) "[a] deviation from a legal rule is error" (internal q u o tatio n marks and citation omitted)). F o r the same reason the second inquiry is met. An " e rro r" is plain, clear, or obvious "where the error was unclear at th e time of trial but becomes clear on appeal because the a p p lic a b le law has been clarified." Retos, 25 F.3d at 1230 (citin g United States v. Olano, 113 S. Ct. 1770, 1777 (1993)). In A p ril 2008, at the time of trial, there was no plain error in the h o n e st services fraud charge given by the District Court Judge b e c au s e it was consistent with the law of this circuit. See A n t ic o , 275 F.3d at 264. The error became clear and obvious, h o w e v e r, when the Supreme Court's decision in Skilling, on J u n e 24, 2010, narrowed honest services fraud to "bribes and k ic k b a ck s ." Skilling, 130 S. Ct. at 2928. Thus, the error at issue h e re is a plain error and not "subject to reasonable dispute." Marcus, 130 S. Ct. at 2164 (internal quotation marks and citation o m i tt e d ) . T h e third inquiry is whether the district court's plain error a f f e c ted appellant's substantial rights. As mentioned above, this

serves a duty of frankness and candor in matters that are of m a te ria l importance to the principal. . . . A public official is a fiduciary for the public and the government he serves . . . [and] owes a duty of honest, faithful and disinterested serv ice to the public and that official's public employer. S A 1202:59­1203:62. 13

n o rm a lly occurs where the error "affect[s] the outcome of the d is tric t court proceedings." Marcus, 130 S. Ct. at 2164 (q u o ta tio n marks and citation omitted). The Government c o n c e d e s that the third alternative description of duty charged to th e jury under honest services fraud is now "invalid" in light of S k illin g , but argues that James and Riley would have been c o n v ic te d under either of the other two theories of duty. "[I]f the ju ry was instructed on alternative theories of guilt and may have re lie d on an invalid one" it is subject to harmless-error review. Hedgpeth v. Pulido, 129 S. Ct. 530, 530, 532­33 (2008) (per c u ria m ). Thus, we are called upon to perform what is essentially a harmless error inquiry. ii. H a r m le ss Error Review

"The test for harmless error is whether it is `highly p ro b a b le that the error did not contribute to the judgment.'" United States v. Vosburgh, 602 F.3d 512, 540 (3d Cir. 2010) (c itin g United States v. Dispoz-O-Plastics, Inc., 172 F.3d 275, 2 8 6 (3d Cir. 1999)). The Government argues, in essence, that th e error is harmless because the first two alternative theories of d u ty under Count 5 remained valid bases for finding a Count 5 c o n sp ira c y post-Skilling. T h is argument is not persuasive, however, because of the m a n n e r in which the now-erroneous description of honest serv ices fraud was interwoven throughout the Count 5 jury c h a rg e . The very title of Count 5, "Conspiracy to Use the U.S. M a il to Defraud the Public of Defendant James's Honest S e rv ic e s," invites the application of the District Court's charge to the jury regarding honest services fraud to the entire count. As indicated, the jury instructions for Count 5 began with an o v e r -a r c h in g umbrella description of James's fiduciary duty as a p u b l ic official, which included the now-erroneous honest s e rv ic e s definition. Shortly thereafter, the instructions charged th a t the "Indictment alleges that the Defendant James had the f o llo w in g [three] duties." SA 1203:62. Although the G o v e rn m e n t argues that these three theories are "alternative" f o rm s of conspiracy liability, and the first two are separate and d is tin c t from James's violation of honest services obligations 14

b a se d on his failure to disclose his conflict of interest, the D istric t Court Judge did not make such a clear distinction in his c h a r g e to the jury. Rather, the broad definition of honest s e rv i c e s seems to apply to all three duties. W h ile it is true that the jury convicted James of a s u b s ta n tiv e violation referred to in one of the alternative d e sc rip tio n s of duty, 18 U.S.C. § 666 (Count 4), we cannot be c e r ta in of how the jury utilized the broad definition of an honest s e rv ic e s violation given in connection with the entire conspiracy c h a rg e . This is particularly true because the charge was d e sc rib e d as "Conspiracy to Use the U.S. Mail to Defraud the P u b lic of James Honest Services," and because of the general m a n n e r in which the Government argued for conviction on C o u n t 5. Rather, it appears highly probable that the nowe rro n e o u s honest services fraud definition contributed to the c o n v ic tio n s on Count 5. The plain error, therefore, was not h a r m le s s . L a stly, because all three conditions are met this Court can c h o o se to exercise its discretion only if "the error seriously a f fe c t[ s] the fairness, integrity, or public reputation of judicial p ro c e ed in g s ." United States v. Cotton, 535 U.S. 625, 631 (2 0 0 2 ). "We have held previously that affirming a conviction w h e re the government has failed to prove each essential element o f the crime beyond a reasonable doubt affect[s] substantial rig h ts, and seriously impugns the fairness, integrity and public re p u ta tio n of judicial proceedings." United States v. Jones, 471 F .3 d 478, 480 (3d Cir. 2006) (quotation marks and citations o m itte d ) . It is clear that as far as a conspiracy to commit honest s e rv ic e s fraud, as set forth in 18 U.S.C. § 1346, the Government d id not prove that fraud occurred by means of bribes or kickback a s is now required by Skilling. Appellants focused on the d e f in itio n of honest services because that was the heart of Count 5 . In the context of this case, where the fraudulent act is the n o n -d is c lo s u re of a conflict of interest, it would demean the ju d ic ia l process to attempt to put the genie back in the bottle by e ss e n tia lly rewriting the charge to the jury on Count 5 and a ss u m in g the jury made distinctions the Government did not b rin g out in its summation. 15

3.

P r e ju d i c ia l Spillover

J a m e s argues that all of his convictions hinged on the h o n e s t services doctrine and thus all the Land Fraud Counts must f a ll with Count 5. "Generally, invalidation of the convictions u n d e r one count does not lead to automatic reversal of the c o n v ic tio n s on other counts." United States v. Pelullo, 14 F.3d 8 8 1 , 897 (3d Cir. 1994). Rather, prejudicial spillover analysis re q u ire s a finding that "there was a spillover of evidence from th e reversed count that would have been inadmissible at a trial lim ite d to the remaining count." United States v. Cross, 308 F .3 d 308, 319 (3d Cir. 2002). "If the answer is `no,' then our a n a lys is ends, as the reversed count cannot have prejudiced the d e f e n d a n t." Id. at 318. If the answer is "yes," however, "we m u st ask whether the error was harmless, that is, whether it is h ig h ly probable that the error did not prejudice the jury's verdict o n the remaining counts." United States v. Gambone, 314 F.3d 1 6 3 , 181 (3d Cir. 2003). Harmlessness is determined by co n d u ctin g a four-part inquiry into whether, (1 ) the charges are intertwined with each other; (2) the e v id e n c e for the remaining counts is sufficiently distinct to support the verdict on th[ose] counts; (3) the e lim in a tio n of the invalid count significantly changed the s tra te g y of the trial; and (4) the prosecution used language o f the sort to arouse the jury. U n ite d States v. Murphy, 323 F.3d 102, 118 (3d Cir. 2003) (q u o tatio n marks omitted) (citing Pelullo, 14 F.3d at 898­99). W ith respect to the first Cross prong, whether there is n o w -in a d m iss ib le evidence stemming from the reversed count, p o s t-C ro s s cases have universally analyzed the admissibility of th e evidence supporting the fallen count in a hypothetical trial lim ite d to the remaining count. See e.g., United States v. Lee, 6 1 2 F.3d 170, 180 (3d Cir. 2010); United States v. Atiyeh, 402 F .3 d 354, 373­74 (3d Cir. 2005); Murphy, 323 F.3d at 118; G am b o n e, 314 F.3d at 181 (3d Cir. 2003). Appellants, however, h a v e not pointed to any specific evidence admitted at trial that w o u ld now be inadmissible as a result of the reversal of Count 5. 16

N o n e th e le ss , James argues that there is indeed spillover p re ju d ic e because of the intertwined nature of the Land Fraud C o u n ts (Counts 1­5) and the pervasive theme of honest services f r a u d throughout this case. In order to address Appellants' a rg u m e n ts we will assume arguendo that there is some leeway in th e application of the Cross threshold inquiry. C o u n ts 1­3 charged James and Riley with substantive m a il fraud as part of the scheme to convey City-owned property to Riley between 2000 and 2006, in violation of 18 U.S.C. § 1341. The federal mail fraud statute states in relevant part th a t, [ w ]h o e v e r, having devised or intending to devise any s c h e m e or artifice to defraud, or for obtaining money or p r o p e r ty by means of false or fraudulent pretenses, re p re se n ta tio n s , or promises . . . deposits or causes to be d e p o site d any matter or thing whatever to be sent or d eliv ere d by any private or commercial interstate carrier . . . any such matter or thing, shall [have committed a fe d era l offense]. 1 8 U.S.C. § 1341. Thus, in order to find a defendant guilty of m a il fraud under § 1341, the prosecution must prove that: (1) th e re was a scheme to defraud; (2) the defendant acted with the in te n t to defraud; and (3) the defendant used the mails to further o r carry out the scheme. United States v. Jimenez, 513 F.3d 62, 8 1 (3d Cir. 2008) (citing United States v. Pharis, 298 F.3d 228, 2 3 4 (3d Cir. 2002)). C o u n t 4 charged James and Riley with fraud and m is a p p lic a tio n of public property involving a local government re c eiv in g federal funds, in connection with the fraudulent sale of C ity-o w n e d properties to Riley in 2004 and 2005, in violation of 1 8 U.S.C. § 666(a)(1)(A). Section 666(a)(1)(A), in its pertinent p a rt, states that any agent of a State or local government who " e m b e z z le s, steals, obtains by fraud, or otherwise without a u th o rity knowingly converts to the use of any person other than th e rightful owner or intentionally misapplies, property," is liable

17

fo r a federal offense. 1 6 18 U.S.C. § 666(a)(1)(A). A s discussed above, Count 5 charged James and Riley w ith "Conspiracy to Use the U.S. Mail to Defraud the Public of D e f e n d a n t James's Honest Services," contrary to 18 U.S.C. § § 1341 and 1346, in violation of 18 U.S.C. § 371.1 7 Section 1 3 4 6 states that "[f]or the purposes of this chapter, the term `sc h e m e or artifice to defraud' includes a scheme or artifice to d e p riv e another of the intangible right of honest services." 18 U .S .C . § 1346. In all five of the Land Fraud Counts, fraud, p a rtic u la rly fraud in the form of an undisclosed conflict of in te re st, was the common thread and the core element of the c h a rg e . The question remains, however, as to whether there is a n y difference between the fraud charged under §§ 1341 and 666 a n d the honest services fraud charged under § 1346. This d is tin c tio n is best seen through a review of the general history of m a il fraud and honest services mail fraud. C o n g re ss enacted the original mail fraud provision in 1 8 7 2 and proscribed the use of the mails to advance "any scheme o r artifice to defraud." McNally v. United States, 483 U.S. 350, 3 5 6 (1987). In 1909, Congress codified the Supreme Court's d e c is io n in Durland v. United States, 161 U.S. 306 (1896), and c o n f irm e d that the purpose of the mail fraud statute was to p ro te c t property rights. McNally, 483 U.S. at 357. The amended
16

Section 666 was "designed to create new offenses to a u g m e n t the ability of the United States to vindicate significant acts o f theft, fraud, and bribery involving Federal monies which are d isb u rse d to private organizations or State and local governments p u rs u a n t to a Federal program." United States v. Cicco, 938 F.2d 4 4 1 , 444 (3d Cir. 1991) (internal quotation marks and citation o m i tt e d ) . S e c tio n 371 states that it is a federal offense "[i]f two or m o re persons conspire either to commit any offense against the U n ite d States, or to defraud the United States, or any agency th e re o f in any manner or for any purpose, and one or more of such p e rs o n s do any act to effect the object of the conspiracy . . . ." 18 U .S .C . § 371. 18
17

sta tu te prohibited, as it does today, "any scheme or artifice to d e f ra u d , or for obtaining money or property by means of false or f ra u d u le n t pretenses, representations, or promises." 18 U.S.C. § 1341. Subsequent Courts of Appeals decisions emphasized "C o n g ress' disjunctive phrasing . . . [and] interpreted the term `sc h e m e or artifice to defraud' to include deprivations not only o f money or property, but also of intangible rights." Skilling, 1 3 0 S. Ct. at 2926. Thus, the doctrine of honest services fraud w a s born and the Supreme Court in Skilling attributes its u ltim a te development to the Fifth Circuit's opinion in Shushnan v . United States, 117 F.2d 110 (1941). Id. O v e r the next forty-six years, Courts of Appeals most o f te n applied the theory of honest services fraud to the bribery of p u b lic officials. Id. Courts eventually extended the theory to the p riv a te sector and "by 1982, all Courts of Appeals had embraced th e honest-services theory of fraud." Id. at 2927. In 1987, h o w e v e r, the Supreme Court addressed the constitutionality of th e honest-services doctrine and limited the mail fraud statute to th e protection of property rights. McNally, 483 U.S. at 359­60. The following year, Congress responded unequivocally and u n a m b i g u o u s ly. Congress amended the law and reinstated the in t a n g ib l e right to honest services under the Anti-Drug Abuse A c t of 1988. Cleveland v. United States, 531 U.S. 12, 19­20 (2 0 0 0 ); see 18 U.S.C. § 1346. O v e r the next two decades courts were "[a]lert to § 1346's potential breadth" and as a result "the Courts of A p p e a ls [were] divided on how best to interpret the statute." Skilling, 130 S. Ct. at 2928. The Supreme Court noted that a lth o u g h circuit courts have disagreed on several issues, in c lu d in g "whether § 1346 prosecutions must be based on a v i o la tio n of state law,1 8 . . . whether a defendant must co n tem p late that the victim suffer economic harm, . . . [or] w h e th e r the defendant must act in pursuit of private gain," Id. at 2 9 2 8 n.37, none of the courts "had throw[n] out the statute as

This was the focus of Appellants disagreement with the D is tric t Court's honest services charge. 19

18

irre m e d iab ly vague." Id. at 2928. Thus, Skilling sought to c o n stru e the intent of Congress in its promulgation of § 1346 and h eld that "§ 1346 criminalizes only the bribe-and-kickback core o f the pre-McNally case law." Id. at 2931. In observing this back and forth between the courts and C o n g re ss , it appears that to distinguish between the fraud of § § 1341 and 666, as opposed to that of § 1346, one must look to th e object of the deprivation and not the underlying fraudulent a c t. The underlying fraudulent act (e.g., the misrepresentation or o m is s io n of a material fact) can be exactly the same in all three p ro v isio n s, as is the case here.1 9 Consequently, despite James's c o n ten tio n , the mere fact that Counts 1­3 charge Appellants with a "Scheme to Improperly Favor Close Companion Through F ra u d u len t Sale of City Properties," does not render the counts a u to m a tic a lly invalid under Skilling. Although, as indicated, the u n d e rlyin g fraudulent act in these counts is non-disclosure of a c o n f lic t of interest, which makes it seem very near to honest s e rv i c e s fraud, what distinguishes Counts 1­3 from honest s e rv ic e s fraud is the object of the fraud. U n d e r § 1341, the deprivation at issue is "money or p r o p e r ty." Under § 666(a)(1)(A), the deprivation is also " p r o p e r ty." Under § 1346, the deprivation of one's honest s e rv ic e s is "biased decision making for personal gain." 2 0 United
19

Fraud in and of itself is difficult to construe and "is not c a p ab le of precise definition." United States v. Goldblatt, 813 F.2d 6 1 9 , 624 (3d Cir. 1987). We have stated that fraud can be " m e a s u re d in a particular case by determining whether the scheme d e m o n s tra te d a departure from fundamental honesty, moral u p rig h tn e ss , or fair play and candid dealings in the general life of th e community." Id. B ec au se § 1346 is only applicable to the mail and wire f ra u d chapter of Title 18, the honest services doctrine does not a p p ly to the "fraud of property" of § 666(a)(1)(A). Section 1346 s ta te s, "[f]or the purposes of this chapter, the term `scheme or a rtif ic e to defraud' includes a scheme or artifice to deprive another o f the intangible right of honest services." 18 U.S.C. § 1346. 20
20

S ta te s v. Antico, 275 F.3d 245, 264 (3d Cir. 2001). Nonetheless, the Government need not prove actual loss to the lo c a lity to satisfy the elements of the mail fraud statute. United S ta te s v. Copple, 24 F.3d 535, 544 (3d Cir. 1994). It seems, th e re f o re , that the risk of exposure to such a loss of money or p ro p e rty is sufficient to distinguish §§ 1341 and 666(a)(1)(A) fra u d from honest services fraud.2 1 See United States v. Asher, 8 5 4 F.2d 1483, 1494 (3d Cir. 1988).2 2 Here, the District Court

"This chapter" refers to Chapter 63, "Mail Fraud and Other Fraud O f f en s e s ." Section 666, on the other hand, is in Chapter 31, " E m b e z z le m e n t and Theft." W ith respect to Count 4, intentional misapplication of p ro p e rty under § 666(a)(1)(A), is also a possible basis for c o n v ic tio n , which implicates a risk of loss of tangible property. In Asher, we illuminated this distinction between what is d e p riv e d under mail fraud as opposed to that of honest services f ra u d . As mentioned above, the Supreme Court in McNally in v a lid a te d the honest services doctrine and scaled back § 1341 m a il fraud to "fraud of money or property." Before Congress rein stated the honest services doctrine, this circuit and many others w e re required to distinguish between those cases that were raised p u rs u a n t to the recently invalidated honest services doctrine and th o s e that properly fell within the scope of a "scheme to defraud of m o n ey or property." See, e.g., Asher, 854 F.2d at 1489­1494. In m a k in g this distinction, we determined that, A l t h o u g h the outcomes in the post-McNally cases . . . v ar[ ied ] depending on the facts, indictments, and jury in s tru c tio n s of the particular case, a common thread running th ro u g h each of these cases [could] be discerned. While we re c o g n iz e that cases may fall on either side of the M c N a lly/C a rp e n ter line, those cases that have sustained mail f ra u d convictions have done so where the "bottom line" of the s c h e m e or artifice had the inevitable result of effecting m o n e ta ry or property losses to the employer or to the state. T h is common thread appears despite references in the in d ictm e n ts, proofs, or instructions to violations of intangible 21
22 21

c h a rg e d that the alleged scheme must contemplate depriving a n o th e r of money or property. The Government demonstrated th a t the scheme was to get property into Riley's control when o t h e rs more qualified than Riley were waiting in line for these p r o p e r tie s . Whether or not the City of Newark actually lost m o n e y or experienced significant delay in the rehabilitation of th e properties involved in Riley's transactions, there was risk of th a t occurrence because of her lack of experience and privileged p o s itio n . Neither is likely to encourage optimal performance u n d e r the program. In fact, Riley did not perform her contractual o b lig a tio n s. The jury had these facts before it when it c o n sid e re d the Appellants' fraudulent intentions and whether the sch em e was to deprive another of money or property. Further, th e District Court did not refer to honest services fraud in its jury in s tru c tio n on mail fraud in the earlier counts. There seems to be little likelihood that the jury used the conflict of interest u n d e rlyin g all of the fraud claims to satisfy the additional e le m e n ts of the separately charged and argued Counts. Consequently, there is no purpose in further addressing the fourp a rt harmlessness test as we are convinced that this case presents n o exception warranting departure from step-one of the Cross a n a lysis . There was no evidence relevant to Count 5 that would n o t have been admitted with respect to Counts 1­4.

rights. E s s e n tia l ly, therefore, where rights are involved whose v io la tio n would lead to no concrete economic harm, and w h e r e those rights are the only rights involved in the case, M c N a lly's proscriptions would prevent upholding conviction o n appeal. Where, on the other hand, a violation of the rights in v o lv e d would result in depriving another of something of v alu e , and the indictment, the proofs and the instructions are b a se d on that fact, then the presence of intangible rights lan g u a g e will not prove fatal on appeal. A s h e r, 854 F.2d at 1494. This discussion leads to the conclusion th at mail fraud under § 1341 requires that the fraud, at the very le a st, expose the allegedly defrauded party to actual or potential lo s s of money or property. 22

B.

M o tio n for a Judgment of Acquittal

J a m e s and Riley assert that the District Court committed re v e rs ib le error when it denied their motion for a judgment of a c q u itta l on Counts 1­5. Because of our disposition as to Count 5 , we will address this allegation with respect to Counts 1­4 o n ly. "We exercise plenary review over a district court's grant o r denial of a motion for acquittal based on the sufficiency of the e v id e n c e, applying the same standard as the district court." United States v. Silveus, 542 F.3d 993, 1002 (3d Cir. 2008). I n reviewing the sufficiency of the evidence, "we must v ie w the evidence in the light most favorable to the G o v e rn m e n t." United States v. Pearlstein, 576 F.2d 531, 534 (3 d Cir. 1978). This Court affords "deference to a jury's f in d in g s . . . [and] draw[s] all reasonable inferences in favor of th e jury verdict." United States v. Anderskow, 88 F.3d 245, 251 (3 d Cir. 1996) (internal quotation marks and citation omitted). The jury's verdict will be overturned "only when the record c o n ta in s no evidence, regardless of how it is weighted, from w h ic h the jury could find guilt beyond a reasonable doubt." United States v. Miller, 527 F.3d 54, 62 (3d Cir. 2008) (quoting U n ite d States v. Thayer, 201 F.3d 214, 218­19 (3d Cir. 1999)). Because the reviewing court must treat all of the incriminating e v id e n c e as true and credible, "[t]he burden on a defendant who ra ise s a challenge to the sufficiency of the evidence is extremely h ig h ." United States v. Lore, 430 F.3d 190, 203­04 (3d Cir. 2 0 0 5 ) (citing United States v. Serafini, 233 F.3d 758, 770 (3d C ir. 2000)). A s discussed above, to sustain a conviction of Counts 1 ­ 3 , mail fraud under § 1341, the prosecution must prove that: (1 ) there was a scheme to defraud; (2) the defendant acted with th e intent to defraud; and (3) the defendant used the mails to f u rth e r or carry out the scheme. Jimenez, 513 F.3d at 81 (citing P h a ris, 298 F.3d at 234). Count 4 required the Government to p ro v e the following five elements: (1) James was an agent of the g o v e r n m e n t of the City of Newark; (2) the City of Newark was a lo c a l government, that in a one-year period received federal b e n e f its under the federal program involving a grant, contract, 23

s u b s id y, loan, guarantee, insurance, or other form of Federal a ss is ta n c e in excess of $10,000; (3) James embezzled, stole, o b tain e d by fraud, or otherwise without authority knowingly c o n v e rte d or intentionally misapplied property; (4) such property b e lo n g e d to, was in the care, custody, or control of the City of N e w a rk ; and (5) the value of such property obtained by his c o n d u c t was $5000 or more. 18 U.S.C. § 666(a). Aiding and a b e ttin g violations of §§ 1341 and 666 was also charged. 1. Jam es

Ja m e s challenges the sufficiency of the evidence with re s p e c t to the "scheme to defraud" element of Counts 1­4. Specifically, James argues that the Government did not prove f ra u d because: (1) the intimate relationship between James and R ile y was not proven; (2) James did not "improperly" favor R ile y because Riley was not treated any differently than any o th e r prospective developer; (3) James's only "act" with respect to Riley and the properties was ministerial in nature because he m e re ly signed contracts that were previously reviewed by the C o rp o ra te Counsel and approved by the Municipal Council; (4) a n y omission of their alleged relationship was not material b e c au s e the existence of any relationship between James and R ile y would not have disqualified Riley from acquiring property; a n d (5) James did not receive any benefit because of the nond is c lo s u re . These allegations will be addressed in turn. F irst, Riley conceded at trial that they had an intimate re la tio n s h ip . Further, the Government presented evidence that in d ica tes that Appellants went on multi-day vacations to C a lif o rn ia and the Dominican Republic, and had frequent in te ra c tio n s of both a personal and business nature. For ex am p le, James and Riley attended sporting events together, su c h as the U.S. Open and boxing matches, and appeared at a B ro a d w a y performance together in New York City. Additionally, Johnny Jones ("Jones"), James's close political c o n f id a n t, personally helped Riley obtain a lease to City-owned o ff ice space for TRI even though his position in the Newark G o v e rn m e n t did not normally involve such minor matters. Indeed, when Riley was not satisfied with the renovations of the 24

o f f ic e space, she threatened to contact the Mayor regarding the is s u e . James attended the grand opening of the TRI office and c u t the ribbon at the occasion. James also directed his security d e tail, while on duty, to use his credit card, purchase, and install a n air conditioner in the bedroom of Riley's apartment. A m e m b e r of this same security detail testified that on one o c c as io n James, upon hearing that Riley called, stated he did not w a n t to talk to Riley because she was "dating someone." In light o f this evidence presented by the Government, a reasonable jury c o u ld have found sufficient evidence to support a finding of an in tim a te relationship between James and Riley. S e c o n d , James argues that he did not "improperly" favor R ile y because Riley was not treated any differently than any o t h e r prospective developer. The facts, taken in a light most f a v o ra b le to the Government, indicate that Riley had a "twentyfo u r direct connect" to James, and that James was Riley's " ` h o o k ' in the City." This relationship resulted in Riley's access to City-owned properties that were otherwise unavailable to m o s t people without development experience. Prospective b u ye rs were supposed to have personal experience in the c o n stru c tio n of residential property and the ability to obtain f in a n c in g for the projects. After the pre-qualification process w a s abandoned, the applicant was supposed to be surrounded by th e right "team" of people who had the experience or financial c a p ac ity to deliver what was required under the SWRP. The e v id e n c e suggests that Riley had none of the above. Franklin k n e w that Riley had no experience as a real estate developer and w o u ld not have qualified to acquire SWRP properties as the p ro g ra m was initially operated. Further, Riley did not find a d e v e lo p e r for the properties until after she was awarded the c o n tr a c ts for the Phase I properties, and thus did not otherwise h a v e a "team" surrounding her when she received the first p r o p e r tie s . D e sp ite this fact, James's Deputy Mayor and Director of D E H D , Alfred Faiella ("Faiella"), brought Riley and her friend to Franklin's office and told him that James wanted Franklin to

25

" h e lp these ladies acquire some property." 2 3 Riley subsequently re c eiv e d a list of City-owned property available for purchase and in April 2000, Riley sent a letter to James thanking him for " o p e n i n g doors" and helping her acquire City-owned properties. The Government also presented two witnesses who were ex p erien ce d real estate developers in the Newark area, and were u n a b l e to obtain approval for City-owned property. In the case o f Wendee Bailey ("Bailey"), because she was unable to obtain C ity property, she began by renovating, financing, and finding b u ye rs for two of Riley's Phase I properties. In the end, h o w e v e r, Riley sold Bailey the subsequent properties outright w ith o u t undertaking any renovations of her own. In one in s ta n c e, Bailey purchased three properties from Riley for $ 8 0 ,0 0 0 -- p ro p e rtie s for which Riley paid a total of $18,000. Consequently, the jury could have reasonably inferred that James tre a ted Riley differently from other developers and improperly fa v o red her. T h ird , James argues that his only "act" with respect to the p ro p e rtie s was purely ministerial because he merely signed c o n tra c ts that were previously reviewed by the Corporate C o u n s e l and approved by the Municipal Council. The evidence p re se n te d , however, allows for a different conclusion regarding J a m e s 's control over the SWRP process. The SWRP was c o n sid e re d James' "baby." James met frequently with his D e p u ty Mayor Faiella, who was also Director of the DEHD, and F a iella occasionally told Franklin that James wanted certain p e rs o n s to receive particular parcels of SWRP property. In at least one instance, when Franklin did not follow up o n the request by someone "sent" by James, James called F r a n k lin personally and directed him to meet with the applicant

James contests the admissibility of this statement. As d isc u ss e d below, however, the District Court did not abuse its d is c re tio n when it admitted the alleged hearsay statement. See in f ra Part II.E. 26

23

a g a in .2 4 James also demonstrated his control over the SWRP p ro c ess by informing friends as to how they could acquire p ro p erty through the SWRP and indicating he would "take care o f " their application. In the case of Prentis Thompson ("T h o m p so n "), James showed Thompson a stack of paperwork re g a rd in g applications for SWRP properties that James kept in h is home. James revealed detailed knowledge about which p a rc e ls were available for sale and who had acquired such p ro p e rtie s in the past and represented that he was "in charge" of th e process. F u rth e r, James insured his ability to select eligible people f o r SWRP properties through his position as a New Jersey State S e n a to r. James and the Municipal Council disagreed as to who h a d the power to select eligible persons to receive City property u n d e r the SWRP. After the Municipal Council prevailed in litig a tio n against the Mayor regarding the issue, James s u c c es s f u lly sponsored legislation in 2004, Senate Bill 967, that au th o rize d the Mayor alone to exercise that power. J a m e s was well aware that the City was transferring real e sta te parcels to Riley. In his official capacity as Mayor, James s ig n e d each of the contracts transferring the properties to TRI. Riley maintained calendars and daily "agenda" lists containing in n u m e ra b le notations regarding her communications with James a b o u t the status of her acquisitions of City-owned property from 2 0 0 1 through 2006. James was also copied on a letter " a d v is in g " Riley that certain City-owned properties were being s e t aside for acquisition by her company. A d d itio n a lly, James was able to stop and start the d is p o s itio n of properties to Riley. In September 2002, Riley sent

James called Franklin and told him to meet James at a fu rn itu re store in Newark, but Jackie Mattison ("Mattison"), J a m e s 's former Chief of Staff, met Franklin there in his stead. M a ttis o n told Franklin that he wanted to acquire some property and w h e n Franklin failed to follow-up on Mattison's request, James c a lle d Franklin and directed him to meet with Mattison again. 27

24

F ran k lin a proposal for the purchase of the initial Phase III p ro p e rtie s, which was approved by the DEHD and the Municipal C o u n c il. After the contracts were signed, but before Riley was a b le to close on the Phase III properties, James informed F ra n k lin that the City "will not do any more business with T a m ik a Riley until further notice," and Riley never acquired th o s e properties. In 2004, however, Riley resumed her pursuit of S W R P properties and the Municipal Council authorized the sale o f four other properties to Riley. Consequently, the jury could h a v e reasonably concluded that James's relationship to the S W R P was not purely ministerial. J a m e s also argues that any control he may have exercised o v e r the SWRP process was "cured" by the review of each c o n tra c t conducted by the Newark Corporate Counsel, the City C lerk 's office and the Municipal Council. A reasonable jury c o u ld have concluded otherwise, however, because James does n o t contest that he did not disclose his relationship with Riley. As established above, there is sufficient evidence for a jury to h a v e concluded that Appellants had an intimate relationship. The SWRP contracts for properties expressly prohibited an o f f ic ia l of Newark to "have any personal interest, direct or in d ire c t, in the Contract." SA 1530. The Government presented tw o witnesses, Joanne Watson ("Watson"), former head of N e w a rk 's Corporate Counsel's office, and Augusto Amador, a M u n ic ip a l Council member during the time at issue, who stated th a t Appellants' relationship would have been material to their d e c is io n to approve the contracts. Thus, the evidence taken in a lig h t most favorable to the Government suggests that review of th e contracts by other City government entities could not have " c u re d " James's control over the SWRP process because they d id not possess the information necessary to properly assess the le g i tim a c y of the contracts. F o u r th , James argues that any omission of their alleged re la tio n s h ip was not material because the existence of any re la tio n s h ip between James and Riley would not have d is q u a lif ie d Riley from acquiring property. A misrepresentation o r omission is material when it has a "natural tendency to in f lu e n c e, or [is] capable of influencing, the decision of the 28

d e c is io n m a k in g body to which it was addressed." United States v . Wells, 519 U.S. 482, 489 (1997) (quoting Kungys v. United S ta te s, 485 U.S. 759, 770 (1988)). As discussed above, the G o v ern m en t presented two witnesses who approved Riley's c o n tra c ts -- a Municipal Council member and the former head of th e Newark Corporate Counsel's Office--and both stated that th e y would have regarded Riley's intimate relationship with Ja m e s as material to the decision to approve the property tra n sa c tio n . Watson stated that even if the relationship had been te rm in a te d at the time James signed the contracts it would have b e e n material to the Corporate Counsel's decision and thus sh o u ld have been disclosed. Consequently, a reasonable jury c o u ld have found James' omission of his intimate relationship w ith Riley was material and thus, even if the relationship would n o t have per se barred Riley from acquiring property, it should h a v e been disclosed. F if th , James argues that there can be no extension of c rim in a l liability for a fraud where the defendant did not receive a n y cognizable benefit because of the non-disclosure. To s u p p o rt a fraud conviction it is "not necessary for the G o v e rn m e n t to demonstrate that [the defendant] personally b e n e fitte d from [the] scheme." United States v. Goldblatt, 813 F .2 d at 624. Even if a benefit to the defendant was required, h o w e v e r, a reasonable jury could have concluded that James b e n e f itte d through his personal relationship with Riley. By p ro v id in g a means for Riley to gain income from the City's a s s e ts , James was otherwise relieved from expending his own. Thus, a reasonable jury could have concluded that James did re c eiv e a cognizable benefit even though he did not accept d i re c tly any of the proceeds from Riley's sale of the properties. 2. R ile y

L a stly, Riley argues that she did not have the requisite in te n t to commit § 1341 mail fraud (Counts 1­3) and that the e v id e n c e only supported a conclusion that Riley intended to c o m p l y with her contractual obligations as she understood them w ith the advice of counsel. In light of the evidence, however, a re a so n a b le jury could conclude that Riley had the requisite intent 29

to defraud. The SWRP contract specifically states that "[t]he R e d e v elo p e r represents and agrees that its purchase of the P ro p e rty, and its other undertakings pursuant to the Contract, a re , and will be used, for the purpose of redevelopment of the P r o p e rty and not for speculation in land holding." SA 1456 ¶ 1 7 (a ). Riley developed two of the four properties from Phase I in accordance with her obligations under the contract. Riley s u b m itte d pictures of the two redeveloped parcels to support her a p p lic a tio n for the Phase II properties, but omitted mention of th e two Phase I properties she sold without renovation. Riley s o ld the Phase II properties without making any improvements. Again, with respect to the Phase III properties, Riley asserted th a t she planned to redevelop the properties and that she had re n o v a ted the properties from Phases I and II. Riley again sold th e Phase III properties without undertaking any improvements to the properties. Juries may infer intent from circumstantial e v id e n c e. See United States v. D'Amato, 39 F.3d 1249, 1256 (2 d Cir. 1994) (stating that in determining sufficiency of the e v id e n c e "pieces of evidence must be viewed not in isolation but in conjunction . . . and the jury's verdict may be based on c irc u m s ta n tia l evidence" (internal quotation marks and citations o m itte d )). Thus, a reasonable jury could have concluded that R iley's intent to defraud was demonstrated by her promises to r e n o v a te the SWRP properties and her failure to fulfill those c o m m itm e n ts for all but two of the properties she received. F u rth e r, for similar reasons, Riley's intent to defraud is n o t abated by any alleged reliance on her lawyers. Riley's f o rm e r attorneys testified that they did not "advise her" that her a c tiv itie s violated her contractual obligations. If Riley had d is c u ss e d the legality of her schemes with her lawyers, and they a d v is e d her that her actions were legal, such evidence might h a v e refuted her intent to defraud the City of Newark. See U n ite d States v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991) (sta tin g in the context of securities law that "conversations with c o u n se l regarding the legality of his schemes would have been d ire c tly relevant in determining the extent of his knowledge and, a s a result, his intent"). The testimony indicates, however, that R ile y employed the attorneys primarily to help her sell the p ro p e rtie s and neither provided counsel regarding her 30

o b lig a tio n s under the SWRP. What the evidence does show, as m e n tio n e d above, is that the SWRP applications and contracts w e re clear that Riley had an obligation to renovate the p ro p e rties . Riley demonstrated her understanding of this o b lig a tio n by her misrepresentation to the Municipal Council th a t she renovated the properties she sold and her promises to u n d e rta k e such renovations with respect to future properties. Thus, a reasonable jury could have determined that the evidence w a s sufficient to demonstrate Riley's intent to defraud the City o f Newark even if her lawyers did not advise her of the nature of h e r acts. In conclusion, a review of the evidence presented at trial le a d s us to conclude that a rational jury could have found that Ja m e s defrauded the City of Newark and Riley had the requisite in te n t to defraud the City.2 5 The District Court did not err when it denied a motion for judgment of acquittal based on the in su ff icien cy of the evidence. In proper deference to the jury's v e rd ic t, the convictions for Counts 1­4 will be affirmed. C. J o in d e r and Lack of Severance of Riley's Tax O ffen se Counts

W e review de novo whether joinder is proper under F e d e ra l Rule of Criminal Procedure 8(b). See Jimenez, 513 F.3d a t 82. We review a district court's denial of a motion to sever u n d e r Federal Rule of Criminal Procedure 14 for abuse of

The Government argues that to convict James on Count 4, th e jury was not required to find that he acted with the intent to d e f ra u d or participated in a scheme to defraud. Rather, the c o n v ic tio n could have been based on a finding that James " m is a p p lie d " City property. The Government argues that the e v id e n c e proved that James misapplied the SWRP properties by c a u sin g them to be transferred to Riley, not for the authorized p u rp o s e of ren