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United States v. Federico

United States District Court, N.D. California

December 2, 2019

United States of America, Plaintiff,
Brian Federico, Defendant.



         Following a nearly two-week trial, a jury quickly convicted defendant Brian Federico on all three counts tried against him: a single count of conspiracy to commit mail fraud under 18 U.S.C. § 1349, and two individual counts of mail fraud. Federico now moves under Federal Rule of Criminal Procedure 29 for acquittal on Counts Two and Three.[1] (Dkt. No. 460.) Federico asserts that the evidence at trial was insufficient as a matter of law to convict Federico of substantive mail fraud, as charged in Counts Two and Three. Federico further contends that he is entitled to an acquittal on Count Two because the applicable statute of limitation had lapsed when the indictment was filed on December 6, 2012. The government opposes both grounds, and avers that Federico has waived any statute of limitations argument by failing to timely raise it before or during trial.

         Having carefully reviewed the record, the papers submitted on each motion, the parties' oral arguments at the hearing held on November 22, 2019, and for the reasons set forth more fully below, the Court Denies the motion for acquittal on counts two and three pursuant to Federal Rule of Criminal Procedure 29.


         A judgment of acquittal is only merited if a court, when viewing the evidence in the light most favorable to the government, determines that a rational fact finder could not have found the defendant guilty beyond a reasonable doubt of the crimes with which he was charged. See Jackson v. Virginia, 443 U.S. 307, 324 (1979). See also United States v. Nevils, 598 F.3d 1158, 1164-67 (9th Cir. 2010) (en banc); United States v. Milwitt, 475 F.3d 1150, 1154 (9th Cir. 2007). “There is sufficient evidence to support a conviction if, viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” United States v. Magallon-Jimenez, 219 F.3d 1109, 1112 (9th Cir. 2000). When considering a Rule 29 motion for acquittal, “[t]he government is entitled to all reasonable inferences that can be drawn from the evidence.” United States v. Alexander, 48 F.3d 1477, 1490 (9th Cir. 1995) (en banc) (quoting United States v. Lucas, 963 F.2d 243, 247 (9th Cir. 1992)). Furthermore, “it is the exclusive function of the jury to determine the credibility of witnesses, resolve evidentiary conflicts, and draw reasonable inferences from proven facts.” United States v. Rojas, 554 F.2d 938, 943 (9th Cir. 1977).


         A. Mailing Element of Mail Fraud Counts

         Federico avers that the government did not establish beyond a reasonable doubt that the defendant made use of the mail for purposes of Counts Two and Three. Specifically, Federico claims that because evidence demonstrates that checks from Matrix Services, Inc. (“Matrix”) could have been created and distributed from other offices, including from the Orange, California office which was overseeing the project, “the origin and method of delivery of the checks are shrouded in enough uncertainty that no rational juror could have concluded beyond a reasonable doubt that the checks were in fact mailed.” (Dkt. No. 466.) Relying primarily on United States v. Lo, 231 F.3d 471 (9th Cir. 2000), Federico asserts that the evidence is insufficient because there is a missing chain of custody that the two checks at issue were actually mailed from Matrix to Imperial Shotcrete, Inc. (“Imperial”). See Id. at 477 (“To accept attenuated circumstantial facts of the kind presented here as sufficient to meet the mailing element would, as a practical matter, eradicate the significant of the disjunctive consideration that governs which fraud crimes may be prosecuted in the federal judicial system and which are to remain solely state matters.”). The government opposes.

         In general, the Ninth Circuit has affirmed “circumstantial evidence” in form of “routine custom and practice” of a business “to support the inference” that a document was indeed mailed. See United States Brackenridge, 590 F.2d 810, 811 (9th Cir. 1979) (evidence to support mail fraud sufficient where employee initialed check and manager established routine custom and practice for handling mailed requests). See also Id. (“Direct proof of mailing was not required.”); United States v. Green, 745 F.2d 1205, 1208 (9th Cir. 1984) (“Direct proof mailing is not required . . . . Evidence of routine custom and practice can be sufficient to support the inference that something is mailed.”).

         The Court finds sufficient evidence in the record exists for a rational juror to conclude that that the government proved the mailing element of mail fraud beyond a reasonable doubt to convict Federico on Counts Two and Three. Here, the mailed documents, i.e. the checks, were themselves admitted as evidence. (See Trial Exhibits 73B, 400A-C through 442B; see also Dkt. No. 462 at 6.) The record reflects custom and practice evidence from witnesses of the sending party, Matrix, establishing that such checks were routinely mailed to Imperial as a normal business practice. (Trial Transcript at 4:80:8-26 (Kevin Cavanah); 724:10-23 (Kevin Laney); 798:16-19 (Laney); 807:13-23 (Laney); 931:22-932:22 (Khary Sands).) This testimony was confirmed by separate witnesses from Imperial that checks from Matrix were received via mail. (Trial Transcript at 1067:20-1068:22 (Miguel Ibarria).) The record further reflects that while other Matrix offices have the capabilities to issue checks, including another located in-state in Orange, California, such checks were generally sent from the office located in Tulsa, Oklahoma. (Trial Transcript at 798:16-799:4 (Laney).) Moreover, the local office located in Suisun City, California did not have the infrastructure to issue checks. (Trial Transcript at 480:8-17 (Cavanah); 724:10-23 (Laney); 814:14-20 (Laney).) Under the general Ninth Circuit authority, such a showing would suffice to support the mailing element of a mail fraud charge.

         Federico's arguments on the import of Lo do not dictate otherwise. Lo is inapposite because, as summarized above, here, the government introduced more evidence than in that case. Lo concerned a failure by the government to introduce any direct evidence of the mailed document's existence, and testimony adduced at trial consisted entirely of the usual custom and practice evidence that would otherwise be enough to satisfy the mailing element. Indeed, Lo expressly recognized that “where the question is whether a document that did exist and did reach its destination was in fact mailed rather than arriving in some other manner, some small measure of custom and practice evidence is likely to be a necessary link in the chain of mailing evidence.” 231 F.3d at 477. “[I]n those circumstances, there is no plausible negative inference to be drawn from the absence of more direct evidence, ” and thus, custom and practice evidence would suffice. Id. In faulting the government for failing to provide a copy of the mailed document into evidence, the Ninth Circuit stated that “business organizations ordinarily do keep copies or records of critical documents, particularly legally required documents, ” and that, despite this, “the absence of any direct evidence of the document's existence was not explained at trial.” Id. Therefore, there was “a strong negative inference to be drawn here from the nature of the evidence produced that would be inappropriate where the custom and practice is limited to matters as to which direct evidence is unlikely to be available.” Id.

         Here, this situation is markedly different. There is no dispute that the government placed the mailed documents - i.e. the checks - underlying both Counts Two and Three into evidence. The government further adduced testimony from witnesses as to the usual custom and practice at Matrix that checks were routinely sent by mail from its Tulsa, Oklahoma office.[2] Moreover, unlike in Lo and other cases limited to the testimony of the sending party, testimony from the receiving party of the mailed documents - Imperial - confirmed that the usual custom and practice was for Matrix to mail the checks to Imperial. Federico's assertions that Lo no longer allows circumstantial evidence established by the custom and practice of a business is contradicted by decisions subsequent to Lo which routinely affirm similar circumstantial evidence. See United States v. Dimiceli, 693 Fed.Appx. 689, 689 (9th Cir. 2017) (“Sufficient evidence supports the mail-fraud convictions, including the use of mails in furtherance of the scheme to defraud. Employees of the relevant county recorder's offices testified that, after recording deeds of trust, deeds routinely are mailed to banks . . . . [despite that] employees testified that rare exceptions existed.”); United States v. Eglash, 640 Fed.Appx. 644, 647 (9th Cir. 2016) (“Here, the government presented evidence of mailing through custom-and-practice testimony offered by two claim representatives. We have held that such testimony supplies sufficient, albeit, circumstantial, proof of mailing under these circumstances. . . . We therefore affirm.”); United States v.Hirokawa, 342 Fed.Appx. 242, 248 (9th Cir. 2009) (sufficient evidence where accounting systems manager testified as to the agency's procedures and notations on document indicated it had been sent via United States mail). Thus, this evidence suffices under Ninth Circuit authority in concluding that a rational juror could have found that the government proved the mailing element of mail fraud beyond a reasonable doubt.

         Accordingly, the Court Denies the motion for acquittal on this ground.

         B. Statute of Limitations

         1. Whether Federico Waived the Statute of ...

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