United States v. David Musk

Filing

OPINION FILED - THE COURT: Steven M. Colloton, Raymond W. Gruender and Duane Benton AUTHORING JUDGE:Duane Benton (PUBLISHED) [4050917] [12-3320]

United States Court of Appeals
For the Eighth Circuit
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No. 12-3320
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United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
David L. Musk
lllllllllllllllllllll Defendant - Appellant
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Appeal from United States District Court
for the District of Nebraska - Omaha
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Submitted: June 11, 2013
Filed: July 2, 2013
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Before COLLOTON, GRUENDER, and BENTON, Circuit Judges.
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BENTON, Circuit Judge.
A jury convicted David L. Musk on three counts of wire fraud under 18 U.S.C.
§ 1343. Musk testified at trial. After his brief direct testimony, the government crossexamined him. Musk attempted to invoke his Fifth Amendment rights. The district

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court1 ruled that the scope of the cross-examination was proper, and thus that Musk
waived his rights as to the questioning. Musk appeals, asserting that his crossexamination testimony was improperly compelled. Having jurisdiction under 28
U.S.C. § 1291, this court affirms.
I.
David L. Musk operated an investment business in Omaha. He contacted
several developers in need of capital (e.g., real estate developers, movie producers),
indicating his company could fund large projects. Musk told them his investors
required FBI and Interpol background checks, which he would perform for $600.
Based in part on these false representations, Musk was indicted on three counts of
wire fraud for “having devised or intending to devise [a] scheme or artifice to
defraud.” 18 U.S.C. § 1343.
At trial, Musk testified in his own defense. Before testifying, he waived his
Fifth Amendment rights through a colloquy with both his counsel and the district
court. The direct examination focused on Musk’s representations about the
background checks. He testified he did not intend to deceive anyone, and that he
actually meant he completed background checks using public search engines.
On cross-examination, Musk admitted he included these representations to
sound impressive to investors. The government then asked about other
representations Musk made to developers, specifically whether he said that he had
connections to wealthy funding sources such as Warren Buffett’s Berkshire Hathaway,
and members of the Walgreen and Wrigley families. Musk objected to these
questions as outside the scope of direct examination and protected by the Fifth

1

The Honorable Joseph F. Bataillon, United States District Judge for the District
of Nebraska.
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Amendment. The district court overruled this objection – and similar objections –
several times, ruling that Musk could not waive the Fifth Amendment only as to part
of the indictment. The court also ruled that the questions were proper because Musk
opened the door to questioning about intent.
On several occasions, the judge contemplated ordering a mistrial, but eventually
allowed the trial to proceed. After re-direct, Musk challenged the government’s recross on the same Fifth Amendment grounds, which the district court denied. During
that exchange, the district court told Musk’s counsel that he could have a mistrial, but
would be sanctioned with all trial costs. Musk declined to seek a mistrial.
The jury convicted Musk on all three counts. He was sentenced to 48 months’
imprisonment on each count, to be served concurrently. The court also ordered
restitution of $126,715.
II.
“A court’s determination of whether a witness has a valid claim for exercising
the Fifth Amendment privilege against self-incrimination is highly fact-intensive.
Accordingly, [this court] review[s] a district court’s decision not to permit a witness
to invoke his Fifth Amendment privilege for abuse of discretion.” United States v.
Allmon, 594 F.3d 981, 984-85 (8th Cir. 2010).
A.
No person “shall be compelled in any criminal case to be a witness against
himself.” U.S. Const. amend. V. “A criminal defendant who takes the stand in his
own behalf ‘cannot avoid testifying fully.’” United States v. Williams, 87 F.3d 249,
253 (8th Cir. 1996), quoting Jenkins v. Anderson, 447 U.S. 231, 236 n.3 (1980). “By
volunteering to become a witness the accused also volunteered to answer all relevant
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inquires about the charge against him.” Nash v. United States, 405 F.2d 1047, 1055
(8th Cir. 1969).
At trial, Musk initially made a knowing waiver of the Fifth Amendment. The
waiver occurred on the record after an inquiry by his counsel as well as the court. At
oral argument on appeal, Musk’s counsel stressed that he did not want this court to
decide this case based on the scope of cross-examination – but rather, that in any
event, the testimony was compelled. Not so. “The privilege is waived for the matters
to which the witness testifies, and the scope of the ‘waiver is determined by the scope
of relevant cross-examination.’” Mitchell v. United States, 526 U.S. 314, 321 (1999),
quoting Brown v. United States, 356 U.S. 148, 154-55 (1958). Musk may not want
this case decided on that ground, but the Supreme Court demands it. The case Musk
discussed with the district court, Raffel v. United States, 271 U.S. 494, 496-97 (1926),
holds that a Fifth Amendment waiver permits all relevant testimony within the bounds
of the law of evidence:
The immunity from giving testimony is one which the defendant
may waive by offering himself as a witness. When he takes the stand in
his own behalf, he does so as any other witness, and within the limits of
the appropriate rules he may be cross-examined as to the facts in issue.
He may be examined for the purpose of impeaching his credibility. His
failure to deny or explain evidence of incriminating circumstances of
which he may have knowledge may be the basis of adverse inference,
and the jury may be so instructed. His waiver is not partial; having once
cast aside the cloak of immunity, he may not resume it at will, whenever
cross-examination may be inconvenient or embarrassing.
If, therefore, the question asked of the defendant were logically
relevant, and competent within the scope of the rules of
cross-examination they were proper questions, unless there is some
reason of policy in the law of evidence which requires their exclusion.

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The issue is whether the cross-examination here was within the proper scope.
The scope of the cross-examination is largely within the district court’s discretion.
United States v. Smith, 591 F.3d 974, 981 (8th Cir. 2010). “Cross-examination
should not go beyond the subject matter of the direct examination and matters
affecting the witness’s credibility.” Fed. R. Evid. 611(b).
On direct examination, Musk testified that when he said he would perform
background checks, he was referring only to online search engines. He further
testified that he included the representations about FBI and Interpol background
checks in order “[t]o weed out anyone with a checkered past,” in other words, “to
scare them off” from seeking funding in the first place. As the district court correctly
ruled, this testimony about his intent permitted cross-examination about his true intent
for including the representations. On cross-examination, he admitted including them
so he “sounded impressive.” To support the government’s theory that the
representations were meant to defraud people, the prosecutor asked about other
misrepresentations Musk made to developers. Specifically, the prosecutor asked
about representations Musk made about connections to Berkshire Hathaway, the
Walgreens, and the Wrigleys. The district court properly ruled these questions were
within the scope because they helped establish that the representations about the
investments were fraudulent.
Musk relies on United States v. Crawford, 438 F.2d 441 (8th Cir. 1971). The
defendant there was accused of selling drugs to Mr. and Mrs. Parker. Crawford, 438
F.2d at 442-43. On direct, Crawford testified he had not met Mrs. Parker until the end
of the relevant time period, and had never sold drugs to the Parkers. Id. at 443. On
cross-examination, the prosecutor asked if Crawford knew any addicts or people
convicted of drug crimes. Id. Crawford said he did not. Id. After then inquiring
specifically about the Parkers, the prosecutor asked about three other individuals –
completely unrelated to the case. Id. When Crawford confirmed he knew each one,
the prosecutor asked him whether he knew about their drug crimes. Id.
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As to the unrelated individuals, this court held that the scope of proper crossexamination was exceeded because Crawford “did not open the door to questions
regarding his association with unsavory characters.” Id. at 444. However, this court
held: “The Defendant, by testifying that he had not met Mrs. Parker until September
26 and that he had never sold narcotics to her or her husband, opened himself to a
searching examination of his dealings with them in narcotics.” Id. In this case, Musk
made several representations to the developers he solicited as potential clients. The
representations were in the course of the same solicitations and made to the same
people. When Musk testified about his intent in including some of the false
representations, he opened the door to questioning relevant to his intent – including
questions about other representations.
Further, Rule 611(b) permits questioning on “matters affecting the witness’s
credibility.” Fed. R. Evid. 611(b). The objected-to testimony was on matters
affecting Musk’s credibility because he admitted making false representations to
developers. The testimony is subject to Rule 403’s restriction that the probative value
of the evidence not be outweighed by the risk of unfair prejudice. See Fed. R. Evid.
403. The admission of evidence is only reversible under Rule 403 for a clear and
prejudicial abuse of discretion. United States v. McCorkle, 688 F.3d 518, 521 (8th
Cir. 2012). “Damaging evidence is always prejudicial; the question is whether the
evidence is unfairly prejudicial.” United States v. Tyerman, 701 F.3d 552, 563 (8th
Cir. 2012). “If a defendant takes the stand, his credibility is placed in issue, and the
Government is entitled to attack it by cross-examination. Counsel should be given
wide latitude in cross-examination.” United States v. Wallace, 722 F.2d 415, 416 (8th
Cir. 1983). Musk’s credibility was at issue because he took the stand. The objectedto questions concerned misrepresentations Musk made about the same investment
opportunities. The district court did not err by admitting this testimony.

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B.
Musk contends that his testimony was improperly compelled because the
district court threatened him with economic sanctions:
All right. Well, first of all, he waived his Fifth Amendment right
when he took the stand and I understand that it’s subject to what is
appropriately within the scope – generally the scope of the crossexamination. I ruled that the questions by the government were within
the scope of cross – within the scope of the examination and then I
compelled him to testify 'cause he can’t selectively choose what he wants
to take the Fifth on and what he doesn’t want to take the Fifth on and
then I ordered him to testify accordingly.
So if – if you want a mistrial because I did that, then I’m certainly
willing to give you the mistrial but if I do that, I’m going to ask the
government to tell me how much it cost them to put the case on, I’m
going to figure out how much it cost us to have the jury and then I’m
going to impose sanctions against you in that amount. That’s – that’s
how it goes. So it’s up to you. Whatever you want to do, Mr. Davis.
After that statement, Musk declined to seek a mistrial. He argues that this “threat”
from the district court rendered his testimony involuntary.
Musk first relies on Lefkowitz v. Turley, 414 U.S. 70 (1973). There, architects
challenged a statute that required State contractors to waive their right to testify in
disputes with the State. Turley, 414 U.S. at 82-83. If the contractors did not comply,
they were ineligible for State-contracted work. Id. The statute was prescriptive, and
the witness was forced to testify no matter the circumstances. Id. The Court struck
down the statute. Id. The crucial distinction here, however, is that the waiver
occurred at trial, not before a dispute arose. Further, the proposed sanction here was
related to specific acts at trial, not imposed by an arbitrary statute. The district court
here was only explaining its view that sanctions would be appropriate for a mistrial.
See, e.g., Hazeur v. Keller Indus., 983 F.2d 1061, 1993 WL 14973, at *4 (5th Cir.
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Jan. 11, 1993) (per curiam) (summary calendar), citing Waible v. McDonald’s Corp.,
935 F.2d 924, 926 (8th Cir. 1991). This does not rise to the level of involuntary
testimony contemplated in Turley, and the district court’s statement was not error.
In Minnesota v. Murphy, 465 U.S. 420 (1984), the Court held that the defendant
was not deterred from claiming the privilege by a threat of probation revocation.
Murphy, 465 U.S. at 439. In the course of the Court’s discussion, it clarified the issue
in “penalty cases” such as Turley and Murphy: “In each of the so-called ‘penalty’
cases, the state not only compelled an individual to appear and testify, but also sought
to induce him to forgo the Fifth Amendment privilege by threatening to impose
economic or other sanctions ‘capable of forcing the self-incrimination which the
Amendment forbids.’” Id. at 434, quoting Lefkowitz v. Cunningham, 431 U.S. 801,
806 (1977). This quotation demonstrates two ways Musk’s testimony was not
improperly compelled. First, Musk was not “compelled” to “appear and testify.” He
decided to testify on his own behalf, acknowledging that it opened him up to crossexamination within the rules of evidence. Second, the threat of sanctions did not
“[seek] to induce him to forgo the Fifth Amendment privilege.” Musk had already
waived the privilege and given testimony. It was within the district court’s discretion
to deny the motion for mistrial, because the testimony was proper. The threat of
sanctions did not coerce Musk into forfeiting his Fifth Amendment privilege – he did
so voluntarily and before any discussion of sanctions.
Musk contends that the proper remedy for an improper assertion of Fifth
Amendment rights is to strike the direct testimony. See United States v. Baker, 721
F.2d 647, 650 (8th Cir. 1983). Baker did not hold that this was the only permissible
remedy, only that the district court there did not err in doing so. Id. In Baker, the
testimony in question was from the president of a corporation responding to a
summons to produce the company’s books and records in a tax investigation. Id. at
649. At the hearing, Baker testified he had produced all such records. Id. He refused
to answer any questions on cross-examination. Id. Here, however, there was an
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explicit waiver of the Fifth Amendment. Musk testified on both direct and crossexamination. Musk was permitted to, and did, object to questions as outside the scope
of direct examination. This procedure was designed to protect Musk and was first
offered by his counsel:
So what I think we should do in order to produce a record – I don’t want
him to take the Fifth Amendment in front of the jury anymore. I want to
keep – I’ll make my – interpose my objections in terms of outside the
scope but I think if you outside the presence of the jury order my client
to answer those prospective questions, then he’s going to have to do so
and I preserve my record with respect to his Fifth Amendment.
As described above, the district court properly ruled that all of the questioning was
within the proper scope of cross-examination, and Musk provided testimony in
response to those questions. It was within the district court’s discretion to direct him
to answer, and to contemplate contempt if he refused to do so. Brown, 356 U.S. at
152-53, 157. Musk’s knowing waiver subjected him to questioning within the proper
scope, and the district court properly admitted such testimony.
*******
The judgment of the district court is affirmed.
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