United States v. Gorski , 880 F.3d 27 ( 2018 )

United States Court of Appeals
For the First Circuit
No. 16-2471
UNITED STATES OF AMERICA,
Appellee,
v.
DAVID E. GORSKI,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor, IV, U.S. District Judge]
Before
Thompson, Kayatta, Barron,
Circuit Judges.
Tracy A. Miner, with whom Seth B. Orkand and Demeo LLP were
on brief, for appellant.
Randall E. Kromm, Assistant United States Attorney, with whom
William D. Weinreb, Acting United States Attorney, was on brief,
for appellee.
January 18, 2018
BARRON, Circuit Judge. A jury in the District of
Massachusetts convicted David Gorski of conspiring between late
2005 and 2010 to defraud the United States, in violation of 18
U.S.C. § 371, by knowingly procuring government contracts for his
construction company on the false premise that the company was
owned and controlled by military veterans who became disabled in
connection with their military service. The jury also convicted
Gorski of four counts of wire fraud, in violation of 18 U.S.C.
§ 1343. The District Court sentenced Gorski to thirty months of
imprisonment and entered an order of forfeiture, in the form of a
money judgment, in an amount exceeding $6.7 million, which the
District Court determined was the amount of the proceeds of
Gorski's crimes.
Gorski brings three challenges in this appeal. First,
Gorski seeks to reverse the convictions on the ground that the
government's evidence against him was insufficient. Second, he
contends that the District Court should have at least ordered a
new trial in light of certain statements that the prosecutor made
during closing arguments, which Gorski claims violated his
constitutional rights. Finally, Gorski challenges the forfeiture
order and money judgment. We affirm.
I.
The charges against Gorski pertain to his role as founder
and vice president of a general contracting and construction
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services company, Legion Construction, Inc. Gorski developed the
plan for the company in late 2005. From 2006 to 2010, Legion took
advantage of federal programs in which certain federal agencies
awarded government contracts on a preferential basis to small
businesses owned and controlled by military veterans who were
disabled in connection with their military service. To be eligible
for these programs, Legion, through Gorski in his role as the
company's vice president, certified in its bids for government
contracts that it was a "service-disabled veteran-owned small
business," or SDVOSB, within the meaning of the regulations
governing the programs.
To qualify as an SDVOSB under those regulations, an
SDVOSB had to be of a certain size and had to meet the following
two requirements.1 See 38 C.F.R. § 74.1 (2010); 38 C.F.R. § 74.1
1 The Small Business Act mandates a goal for the federal
government of awarding "not less than 3 percent of the total value
of all prime contract and subcontract awards for each fiscal year"
to "small business concerns owned and controlled by service-
disabled veterans." 15 U.S.C. § 644(g)(1)(A)(ii). The Act permits
the government's contracting officers, under specified
circumstances, to award no-bid contracts to SDVOSBs and to restrict
competition for certain contracts to SDVOSBs. Id. § 657f(a)-(b).
In 2004, then-President George W. Bush ordered all federal agencies
to develop a strategy for using the no-bid and restricted-
competition provisions to meet the three-percent goal. Exec. Order
No. 13360, 3 C.F.R. 231 (2005).
The Small Business Administration and the Department of
Veterans Affairs separately promulgated regulations governing
their SDVOSB programs pursuant in part to their respective
rulemaking and contracting powers under their organic statutes.
See 15 U.S.C. §§ 634(b)(6), 637; 38 U.S.C. §§ 501, 513. The Small
Business Administration's regulations were in effect as of 2005,
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(2008); 13 C.F.R. § 125.8(g) (2005). First, one or more veterans
who had become disabled in connection with their military service
must have unconditionally owned at least fifty-one percent of the
business seeking the contract. See 38 C.F.R. § 74.3 (2010); 38
C.F.R. § 74.3 (2008); 13 C.F.R. § 125.9 (2005). Second, one or
more service-disabled veteran owners must have controlled the
business. See 38 C.F.R. § 74.4 (2010); 38 C.F.R. § 74.4 (2008);
13 C.F.R. § 125.10 (2005).
With respect to this latter requirement, the regulations
during all relevant time periods specified several criteria that
service-disabled veteran owners had to satisfy in order to
establish that they controlled the business. For example, a
service-disabled veteran owner must have held the highest officer
position in the business, and, while holding the position, that
service-disabled veteran owner, together with any others, must
have controlled "both the day-to-day management and long-term
decision-making" of the business. 38 C.F.R. § 74.4 (2010); 38
C.F.R. § 74.4 (2008); accord 13 C.F.R. § 125.10 (2005). In 2008,
the regulations added an additional criterion to establish
control: A service-disabled veteran had to be the highest
compensated employee in the business, absent a showing that it
and the regulations of the Department of Veterans Affairs were
adopted in 2008 and then amended in 2010. The parties agree that
those regulations governed the SDVOSB programs of all the federal
agencies with which Legion contracted as an SDVOSB.
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would benefit the business for a non-veteran to earn more. 38
C.F.R. § 74.4 (2008); see also 38 C.F.R. § 74.4 (2010). And,
beginning in 2010, to establish control over the management of the
business, service-disabled veteran owners had to work full-time at
the business. 38 C.F.R. § 74.4 (2010).
Gorski, who is not himself a service-disabled veteran,
certified on behalf of Legion in its bids for government contracts
during the relevant time span that the company was compliant with
the SDVOSB requirements. Over the years, Legion bid on and won
over 200 government contracts based on Gorski's certifications
that Legion was an SDVOSB. Those contracts were valued at over
$110 million.
In 2010, however, a rival company filed a protest with
the Small Business Administration that challenged Legion's SDVOSB
status with respect to a contract that the government awarded to
Legion that year. Although the agency ruled in Legion's favor, a
subsequent criminal investigation by federal law enforcement
concluded that, from 2006 to 2010, Gorski had been unlawfully
certifying Legion as an SDVOSB in order to fraudulently obtain
government contracts for Legion.
In October of 2012, the government charged Gorski in the
United States District Court for the District of Massachusetts
with one count of conspiracy to defraud the United States, in
violation of 18 U.S.C. § 371, and four counts of wire fraud, in
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violation of 18 U.S.C. § 1343. With respect to the conspiracy
charge, the indictment alleged that between late 2005 and 2010
Gorski agreed with "other persons and entities" to defraud the
United States "by impairing, impeding, and defeating the lawful
governmental function of [various federal agencies] in the
implementation, execution, and administration of the SDVOSB
program." The indictment further alleged that the conspirators
carried out this agreement by, among other things, procuring
government contracts for Legion after Gorski, on behalf of the
company, falsely certified in the bids for those contracts between
2006 and 2010 that Legion was an SDVOSB.
With respect to the four counts of wire fraud, the
indictment alleged that, as part of this conspiracy to defraud the
United States, on four occasions Gorski faxed or emailed documents
in interstate commerce that were related to the fraudulent scheme.
Finally, the indictment provided notice of the government's
intention, upon a successful wire fraud conviction, to seek
forfeiture pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C.
§ 2461(c) of any property constituting the proceeds of Gorski's
crimes.
Gorski was tried over the course of twelve days in June
of 2016. At the close of the evidence, Gorski moved for acquittal
on all counts based on what he contended was the insufficiency of
the evidence against him. The District Court denied the motion,
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and the jury convicted Gorski on all counts. Gorski then renewed
his motion for acquittal on all counts on the ground that the
government had failed to put forth sufficient evidence that he had
intended to defraud the United States. He also moved in the
alternative for a new trial on the ground that certain statements
made by the prosecutor in closing arguments improperly drew the
jury's attention to his decision not to testify and thus also
improperly shifted the burden of proof to him.2
The District Court denied both motions. The District
Court then sentenced Gorski to thirty months of imprisonment and
fined him $1 million.
In addition, the government moved for an order of
forfeiture, in the form of a money judgment, in the amount of the
proceeds traceable to Gorski's crimes. The government submitted
that those proceeds consisted of all the money that Gorski and his
wife received from Legion since its formation, including payments
made to them after the end date of the charged conspiracy. The
government alleged that those proceeds amounted to more than $6
million. Gorski filed an opposition to the government's motion.
Gorski conceded that the proceeds of his crimes were subject to
forfeiture, but he contended that those proceeds excluded both the
2 Gorski's motion raised additional grounds for a new trial,
but he has abandoned those other grounds on appeal.
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money received by his wife from Legion and money that Gorski
received from Legion after the end date of the charged conspiracy.
After a forfeiture hearing, the District Court agreed
with the government and entered a forfeiture order, in the form of
a money judgment, in the amount of $6,756,205.65. The District
Court then reduced Gorski's fine to $10,000. Gorski now brings
this appeal.
II.
Gorski first challenges the sufficiency of the evidence
against him with respect to his convictions for both conspiracy to
defraud the United States and wire fraud. Gorski preserved this
challenge below in his motion for acquittal. We review the denial
of that motion de novo, drawing all inferences in favor of the
government. United States v. George, 841 F.3d 55, 61 (1st Cir.
2016) (citing United States v. Chiaradio, 684 F.3d 265, 281 (1st
Cir. 2012)).
A.
To make out a case of conspiracy to defraud the United
States under 18 U.S.C. § 371 against Gorski, the government had to
prove that Gorski agreed with at least one other person to defraud
the United States, that an overt act was taken by one of the
conspirators in furtherance of that agreement, and that Gorski
knowingly participated in the conspiracy. See United States v.
Ngige, 780 F.3d 497, 503 (1st Cir. 2015) (citing United States v.
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Serunjogi, 767 F.3d 132, 139 (1st Cir. 2014)). A conspirator must
have not only an "intent to agree" but also an "intent to
effectuate the commission of the substantive offense." United
States v. Piper, 35 F.3d 611, 615 (1st Cir. 1994).3
The government's theory at trial was that Gorski agreed
with others -- and then acted on that agreement -- to obtain
government contracts for Legion by certifying that the company was
an SDVOSB, even while knowing that Legion did not qualify as an
SDVOSB under the applicable regulations. To prove that theory,
the government introduced evidence to show that Legion was not
compliant with the SDVOSB regulations in several ways, and that
Gorski knew as much.
3
The District Court instructed the jury, as to conspiracy to
defraud the United States (and wire fraud), that the government
had to prove beyond a reasonable doubt that Gorski acted "with the
specific intent" to defraud the United States -- "that is, with a
bad purpose either to disobey or to disregard the law." The
District Court further instructed the jury: "If the defendant
acted in good faith, he cannot be guilty of the crime. If the
defendant had a good faith belief that he was obeying the law,
even if that belief was mistaken, he did not have the necessary
knowledge and intent to commit the crime." Neither party objected
to the instructions below. On appeal, Gorski purports to fault
the District Court for not giving a good-faith instruction. But,
the District Court plainly provided one. And, in any event, "we
have held that [a] separate instruction on good faith is not
required . . . where the court adequately instructs on intent to
defraud," and Gorski does not challenge the instruction on intent
to defraud. United States v. Berroa, 856 F.3d 141, 161 (1st Cir.
2017) (alterations in original) (quoting United States v.
Christopher, 142 F.3d 46, 55 (1st Cir. 1998)).
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On appeal, Gorski does not contend that the government
put forth insufficient evidence to show that Legion failed to
comply with the SDVOSB regulations and that, accordingly, Gorski
certified that Legion was an SDVOSB on a false premise. For
example, Gorski does not challenge the sufficiency of the
government's evidence indicating that, although two service-
disabled veterans -- Joseph Steen and Peter Ianuzzi -- alone or
together held at least fifty-one percent of Legion's shares at all
relevant times, their ownership was not "unconditional," as
required under the SDVOSB regulations. 38 C.F.R. § 74.3 (2010);
38 C.F.R. § 74.3 (2008); 13 C.F.R. § 125.9 (2005). Nor does he
contend that the government's evidence was insufficient to support
its theory that it was Gorski who actually controlled "both the
day-to-day management and long-term decision-making" of the
business, notwithstanding that either Steen or Ianuzzi formally
occupied Legion's highest office as president at all relevant
times. 38 C.F.R. § 74.4 (2010); 38 C.F.R. § 74.4 (2008); accord
13 C.F.R. § 125.10 (2005).
Gorski does contend, however, that the government's
evidence was insufficient to prove that he intended to defraud the
United States. Accordingly, he contends that the evidence was
insufficient to show that he had the requisite mens rea to commit
the offense of which he was convicted, given that in his view the
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evidence showed at most only that he had certified that Legion was
an SDVOSB when it was not, conduct which is not itself criminal.
As an initial matter, we observe that the evidence
sufficed to permit a jury to find that Gorski was aware that there
were requirements under the SDVOSB program pertaining to a service-
disabled veteran's ownership and control over the business. For
example, an attorney whom Gorski had hired in 2007 to help
restructure the company testified that Gorski had told her that he
knew what the SDVOSB regulatory requirements were. Thus, the
question with respect to Gorski's mens rea turns on whether the
jury could have permissibly found that he also knew that Legion
did not comply with those regulatory requirements when he certified
that it did. And, we think the evidence was more than sufficient
to permit a jury reasonably to so conclude.
We begin with the government's evidence regarding the
requirement that the ownership of an SDVOSB by one or more service-
disabled veterans be "unconditional." The government submitted
agreements from 2007 between Legion and, separately, Steen and
Ianuzzi -- the two service-disabled veterans who held shares in
Legion -- showing that Legion maintained a right to purchase their
shares at a specified price before either of them could sell their
shares to someone else. Gorski acknowledges as much, and he makes
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no argument that such a restriction on their stock ownership was
permissible under the regulations.4
Gorski nevertheless contends that he could not be found
to have had the requisite mens rea to convict him because he
contends that the evidence showed that he imposed the restriction
only on the basis of the advice of his attorney who drafted "the
offending provisions." But, this argument fails because the
evidence showed that he had written a letter to the attorney
specifying that the restriction should be included in the terms of
the agreements. Thus, a jury would not have been required to
believe that Gorski imposed the restriction solely on the advice
of the attorney.
The government also put forth evidence from which a jury
could have permissibly inferred that it was implausible that Gorski
believed at the relevant times that Legion was compliant with the
other SDVOSB requirement -- namely, that one or more service-
disabled veterans control the business's day-to-day management and
long-term decision-making. See United States v. Serrano, 870 F.2d
1, 7 (1st Cir. 1989) (reasoning that a defendant's knowledge of a
fraudulent scheme can be supported by circumstantial evidence
4 Gorski does point out, with respect to this evidence, that
13 C.F.R. § 125.9 permitted an SDVOSB to "change its ownership
. . . so long as one or more service-disabled veterans own and
control it after the change." But, the fact that the regulations
permitted a change in ownership has no bearing on the government's
evidence that Steen and Ianuzzi could not sell their shares freely.
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showing that lack of such knowledge would be "implausible"). From
Legion's founding until 2007, the evidence at trial showed, the
only service-disabled veteran owner of Legion was Steen. And, the
government offered testimony from multiple witnesses, as described
below, supporting the government's theory that Gorski recruited
Steen, who died in 2010, to serve as a president for Legion in
title only and without any real responsibilities.
For example, a veteran acquaintance of Gorski who was
also Steen's friend, Louis Cimaglia, testified that Gorski
identified Steen -- whom Gorski had not previously known -- to
serve as the president of the company Gorski was creating after
calling Cimaglia by phone and asking if he "knew a disabled
veteran." According to Cimaglia's testimony, Steen happened to be
sitting next to him at the time, so Cimaglia passed Steen the
phone, and thus began Gorski's and Steen's partnership.
Next, Steen's financial adviser, William Cole,
testified. He recounted that, during a lunch meeting to discuss
Gorski's business pitch to Steen, Gorski told the adviser that
Gorski needed Steen for the business because of "his veteran's
status," and that Steen would not have to invest any money or take
on any fiduciary responsibilities.
Finally, Steen's wife testified. She stated that Steen
had worked exclusively as an elevator mechanic and inspector since
serving in the Korean War and that, at the time Gorski reached out
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to Steen to start a construction company, Steen was retired and
already "very, very sick."
Gorski does assert in his appellate briefs that he had
intended for Steen to be a controlling partner and that, in light
of Steen's absence from Legion, he brought Ianuzzi aboard to "stay
in compliance" with the regulations. But, he identifies almost no
supporting evidence for this assertion, let alone evidence that
would have compelled the jury to find in his favor on this score.5
In addition to the evidence showing that Gorski had no
expectation that Steen would exercise control over Legion, the
government also offered substantial evidence that Steen did not in
fact exercise such control. Numerous former Legion employees
testified that they had never seen Steen at Legion. In fact,
Gorski himself concedes in his opening brief on appeal that Steen
was "absent" from Legion.
5 Gorski does point to Legion's initial indemnity agreement,
in which Steen personally guaranteed Legion's performance on its
contracts, and to bank records showing that Steen could withdraw
money from Legion's bank accounts. But, Steen's decision to put
his personal assets on the line for the company by means of the
indemnity agreement does not necessarily indicate that Gorski
intended for him to control the company. Nor does Steen's access
to Legion's bank accounts necessarily indicate such. Indeed,
Gorski's wife also had such access, yet no party has suggested
that she controlled Legion. Finally, Gorski cites only Ianuzzi's
testimony to support his claim that Gorski made Ianuzzi a partner
to ensure Legion's regulatory compliance. But, Ianuzzi did not
mention that reason when asked why he and Gorski entered into
ownership discussions.
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Moreover, the government submitted evidence showing that
Gorski was aware that Steen, as an absentee president, played no
real role in Legion's management or decision-making. For example,
in a 2007 letter from Gorski to Steen that was admitted into
evidence, Gorski apprised Steen of several significant
developments at Legion that had occurred "over the past couple of
months." Those developments included Gorski's addition of Ianuzzi
as a new partner, the opening of a new office location, and the
fact that Gorski was "in the process of restructuring the company
to gain bonding capacity." A jury could reasonably conclude that
it would have been implausible for Gorski to have believed that,
whatever the precise meaning of the control requirement was, it
could be satisfied by being absent from the business and having no
real role in such significant decisions.
To be sure, the evidence showed that, in 2007, Ianuzzi
acquired an ownership stake in Legion, and it is undisputed that,
as an owner of Legion, Ianuzzi worked at the company and was more
involved in its day-to-day construction work than Steen was. In
fact, Ianuzzi, who was Gorski's chief witness, testified that he
was "always in the field getting the buildings built and project[s]
complete," while Gorski ran the administrative side of the
business. Ianuzzi further testified that management of Legion was
a "team effort," and specifically that he hired and fired employees
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along with Gorski and that they made decisions together regarding
projects on which to bid.
Nevertheless, even during the time period when Ianuzzi
was on board, the evidence more than sufficed to permit a jury
reasonably to conclude that Gorski knew that Legion was not in
compliance with the applicable control requirement. After all,
the jury could have found that Ianuzzi's testimony was not
credible. See United States v. Kantengwa, 781 F.3d 545, 556 (1st
Cir. 2015) ("When examining sufficiency of the evidence, we . . .
resolve all credibility disputes in the verdict's favor." (quoting
United States v. Conley, 186 F.3d 7, 19 (1st Cir. 1999)) (internal
quotation marks and footnote omitted)). For example, on appeal,
Gorski points to no testimony that corroborated Ianuzzi's account
of his managerial authority.6 And, four former employees at Legion
testified for the government that to their knowledge Gorski alone
was responsible for managerial decisions -- at least up until the
time of the bid protest challenging Legion's SDVOSB status in 2010.
Finally, the government submitted evidence that sufficed
to show that Legion failed to comply with heightened regulatory
requirements for establishing a service-disabled veteran's control
6At trial, Gorski called five former Legion employees (in
addition to Ianuzzi) who testified that Ianuzzi served in a
supervisory role on certain construction projects. However, the
government contends that the testimony was "equivocal" with
respect to Ianuzzi's management role, and Gorski does not suggest
otherwise.
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over an SDVOSB, and that Gorski knew as much. These heightened
requirements were adopted in 2008 and 2010.
The government pointed in this regard to an SDVOSB rule
adopted in 2008, which required that, in order to establish the
requisite control over an SDVOSB, a service-disabled veteran
generally had to be the company's highest compensated employee.
See VA Veteran-Owned Small Business Verification Guidelines, 73
Fed. Reg. 29024, 29029 (May 19, 2008). With respect to this
requirement, Legion's outside accountant, Jeffrey Folan, testified
that, upon approaching Gorski about a federal grand jury subpoena
that he had received in November of 2010 regarding his work for
Legion, Gorski told him: "Well, I think I have a couple of black
eyes." According to Folan's testimony, Gorski told Folan that one
of the "black eyes" was Gorski's compensation in 2008, which Folan
testified Gorski remembered "might be out of alignment with what
the rules are for the federal program." In fact, tax filings
submitted by the government showed that in 2008 (and 2009) Gorski
earned compensation that was several magnitudes more than the
compensation of Legion's service-disabled veteran owners. Folan
further testified that in the summer of 2010 Gorski approached him
with various proposals for how Gorski could get money out of the
company other than through his salary in order "to alleviate red
flags."
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The government also pointed to a regulatory change in
February of 2010, which required that any service-disabled veteran
owner work full-time at the SDVOSB in order to establish control
over it. See VA Veteran-Owned Small Business Verification
Guidelines, 75 Fed. Reg. 6098, 6104 (Feb. 8, 2010). The
government's evidence sufficed to show that, despite this
regulatory change, Steen remained an absentee owner of the company
until a rival company filed the bid protest challenging Legion's
status as an SDVOSB in March of 2010. Only after the bid protest,
the evidence sufficed to show, did Steen transfer his remaining
shares to Ianuzzi, who replaced Steen as Legion's president. To
prove that Gorski sought to cover up Legion's failure to comply
with the new rule in the interim, the government offered evidence
that the documents prepared by Legion's outside counsel to execute
the buy-out were backdated to a date before the regulatory change.
To be sure, there was no direct evidence that Gorski himself caused
the documents to be backdated. There was, however, evidence
showing that Gorski sought (unsuccessfully) to backdate Legion's
revised indemnity agreement reflecting the company's new
structure. Thus, a jury could have permissibly inferred from that
evidence that Gorski sought to backdate the restructuring
documents as well to make it appear that Legion was in compliance
with the regulatory requirements, even if Legion's outside
attorneys were unaware that this was Gorski's aim.
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Despite all this evidence offered by the government with
respect to Gorski's mens rea, he nevertheless contends for one
additional reason that the jury could not have found beyond a
reasonable doubt that he intended to defraud the United States.
He points in this regard to evidence showing that he "consulted
with attorneys and accountants at two critical periods during the
purported conspiracy" -- specifically, when Legion was
restructured in 2007 and 2010. Gorski contends that his
willingness to seek the assistance of these professionals shows
unequivocally that he intended in good faith to comply with the
SDVOSB regulations.
However, as the government points out, none of this
evidence about what Gorski did in 2007 and thereafter required the
jury to find in Gorski's favor regarding whether he had the
requisite intent to defraud prior to 2007. Nor did this evidence
require the jury to find in his favor on this score with respect
to the rest of the charged conspiracy.
The mere act of seeking the help of attorneys and
accountants in restructuring the company does not necessarily
establish an intent to comply with the SDVOSB regulations. In
fact, the attorney whom Gorski hired to draft corporate
restructuring documents in 2007 testified that Gorski had not hired
her to advise him on Legion's compliance with the SDVOSB
regulations, that she was not familiar with those regulations, and
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that Gorski had told her that he knew what the regulatory
requirements were.7 And, although Gorski points to evidence
showing that he sought out specialists on federal contract set-
aside programs to execute the 2010 restructuring, a jury could
have reasonably found, in light of the government's other evidence
of Gorski's mens rea, that he was merely seeking to give a post
hoc patina of legitimacy to the fraudulent scheme.8
To the extent that Gorski is suggesting that he relied
in good faith on advice that he received from the attorneys and
accountants regarding Legion's compliance with the SDVOSB
regulations, and thus that he did not intend to fail to comply
with regulatory requirements, the record does not show that Gorski
provided the attorneys and accountants with accurate information
about Steen's and Ianuzzi's actual ownership of and involvement in
7
As Gorski points out, the attorney also testified that she
drafted certain technical provisions in the restructuring
documents, which provisions the government invoked to show
Legion's non-compliance with the SDVOSB regulations. However, as
we indicated above in connection with the government's evidence
that Gorski knowingly violated the requirement that an SDVOSB be
owned unconditionally by service-disabled veterans, the record
contains a letter from Gorski to this attorney with an "outline of
items" that he wanted her to address in the restructuring,
including the key provisions at issue.
8Gorski does point out that Folan, Legion's outside
accountant, testified that Gorski had told him around the time of
the 2010 restructuring that Gorski intended to comply with the
SDVOSB regulations and that Gorski believed that Legion was in
fact compliant. However, Gorski's self-serving statements hardly
required the jury to find in his favor regarding his mens rea,
given the strength of the government's countervailing evidence.
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the firm. And, thus, the record does not establish that, on the
basis of his reliance on any advice that he received from those
professionals, he had a good-faith intent to comply with the
regulatory requirements even though the company in fact flouted
them.9
For these reasons, we conclude that there was more than
sufficient evidence for the jury to have found beyond a reasonable
doubt that Gorski had the specific intent to defraud the United
States, notwithstanding the role outside attorneys and accountants
played in the restructuring of Legion in 2007 and 2010. Gorski's
challenge to the sufficiency of the evidence of his conspiracy to
defraud the United States therefore fails, and we thus affirm the
denial of his motion for acquittal with respect to this conviction.
B.
Gorski also challenges the sufficiency of the evidence
to convict him on four counts of wire fraud. To convict Gorski of
wire fraud under 18 U.S.C. § 1343, the government had to prove
that he knowingly and willfully participated in a scheme to defraud
by means of false pretenses, and that he used interstate wire
9 Gorski does point to a response to the 2010 bid protest
drafted by Legion's outside attorneys, which stated that "Legion
has at all relevant times been a qualified and eligible [SDVOSB]
and remains so today." But, the statement relied on information
provided by Steen and Ianuzzi in affidavits, which the jury could
have permissibly found that Gorski knew to have misrepresented
their roles at Legion.
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communications in furtherance of the scheme. See United States v.
Cassiere, 4 F.3d 1006, 1011 (1st Cir. 1993) (citing Serrano, 870
F.2d at 6).
Gorski does not dispute the sufficiency of the
government's evidence showing that he used interstate wire
communications on four occasions in connection with the alleged
fraudulent scheme. Nor, again, does he challenge the sufficiency
of the evidence showing that Legion procured those contracts on
the false premise that it was compliant with the SDVOSB
regulations. Rather, he challenges only the sufficiency of the
evidence showing that he intended to defraud the United States
because of what he says was his good-faith intent to comply with
the SDVOSB regulations. That challenge therefore fails for the
same reasons that his sufficiency challenge with respect to his
conspiracy conviction fails. Thus, we affirm the District Court's
denial of Gorski's motion for acquittal as to the wire fraud
convictions, too.
III.
Gorski next contends that, assuming the evidence against
him was sufficient, the District Court erred in denying his motion
for a new trial, given certain statements that the prosecutor made
to the jury during closing arguments. Gorski claims that the
statements improperly drew attention to his decision not to testify
- 22 -
and also thereby improperly shifted the burden of proof to him,
such that his convictions must be vacated.
The statements at issue occurred during the rebuttal
portion of the closing arguments. The prosecutor sought to rebut
Gorski's good-faith defense by arguing to the jury: "Remember,
he's the one doing all these things, but he wants you to blame the
lawyers, blame the accountants, blame the brokers, blame the
contracting officers. That's what he wants because at the end of
the day he can't face the music. He can't stand in front of you."
Gorski's counsel objected. The District Court then gave
the following curative instruction to the jury: "Let me caution
the jury the defendant has a constitutional right not to testify,
and no inference of any kind can be drawn from the fact that he
did not testify." Gorski's counsel did not ask for a different
instruction.
After the jury returned a guilty verdict, Gorski moved
for a new trial on the ground that the prosecutor's statement to
the jury that Gorski "can't face the music" and "can't stand in
front of you" improperly drew the jury's attention to his decision
not to testify, thus violating his Fifth Amendment right against
self-incrimination, and also improperly shifted the burden of
proof to Gorski. At the hearing on that motion, the District Court
remarked that the statements were "unfortunate and should not have
been made" but did not order a new trial because the District Court
- 23 -
found that the statements were harmless. The District Court
reasoned that it had immediately issued a curative instruction and
that it had "modified [its] standard instruction" on the
defendant's constitutional right not to testify during its charge
to the jury in order "to make it a little bit stronger."
We review the District Court's denial of a motion for a
new trial for abuse of discretion. United States v. Rodriguez,
675 F.3d 48, 58 (1st Cir. 2012) (citing United States v. Boylan,
898 F.2d 230, 262 (1st Cir. 1990)). A defendant is not entitled
to a new trial on the basis of a prosecutor's improper statements
to the jury unless they resulted in prejudice to the defendant.
Id. at 62 (citing United States v. Giorgi, 840 F.2d 1022, 1037
(1st Cir. 1988)). With respect to whether a prosecutor's improper
statements during closing arguments resulted in such prejudice,
"[w]e afford the district court substantial deference . . . ,
reflecting the trial judge's familiarity with the case." United
States v. Carpenter, 494 F.3d 13, 24 (1st Cir. 2007).
Where a defendant contends that statements by a
prosecutor violated the defendant's Fifth Amendment right against
self-incrimination and thereby also impermissibly shifted the
burden of proof to the defendant, we have said that the test for
prejudice is "whether the prosecutor's misconduct so poisoned the
well that the trial's outcome was likely affected, thus warranting
a new trial." Rodriguez, 675 F.3d at 62 (quoting United States v.
- 24 -
Azubike, 504 F.3d 30, 39 (1st Cir. 2007)) (internal quotation marks
omitted). The prejudice analysis turns on a three-part inquiry
into: (1) "whether the prosecutor's conduct was isolated and/or
deliberate"; (2) "whether the trial court gave a strong and
explicit cautionary instruction"; and (3) "whether it is likely
that any prejudice surviving the instruction could have affected
the outcome of the case."10 Id. (quoting United States v. Gentles
619 F.3d 75, 81-82 (1st Cir. 2010)) (internal quotation mark
omitted).
Gorski does not suggest that the prosecutor's statements
were anything more than an isolated incident of prosecutorial error
in the course of the trial. But, he does contend that the error
constituted a deliberate attempt to violate his Fifth Amendment
right against self-incrimination because, in his view, the
prosecutor's statements to the jury that Gorski "can't face the
music" and "can't stand in front of you" obviously referred to
Gorski's decision not to testify.
The government disputes this point. The government
suggests that the prosecutor made the statements "in reference to
10
Gorski's opening brief refers to four, rather than three,
factors that we indicated were relevant to the prejudice analysis
in United States v. Balsam, 203 F.3d 72, 87 n.19 (1st Cir. 2000).
The government points out in its brief that those four factors are
subsumed by our three-factor inquiry, and Gorski's reply brief
does not press an alternative theory but rather refers exclusively
to the three-factor inquiry.
- 25 -
Gorski's decision to sit with his family in the gallery rather
than at counsel table" during the trial, which the District Court
had permitted him to do.
We need not decide who is right. The first factor is
not necessarily dispositive. See United States v. Zarauskas, 814
F.3d 509, 516 (1st Cir. 2016). And, here, the District Court gave
a curative instruction immediately following the problematic
statements. The instruction did not specifically strike those
statements or instruct the jury to disregard them, as the
instruction in Rodriguez did. See Rodriguez, 675 F.3d at 63. But,
Gorski did not ask for a stronger instruction, and we have found
an instruction to be sufficiently curative in similar
circumstances where the instruction cautioned the jury of the
defendant's right not to testify without either striking them or
issuing a "disregard" directive. See Zarauskas, 814 F.3d at 516.
On appeal, Gorski does claim that the curative
instruction was insufficient because it was "calm and delivered in
a normal tone of voice," whereas the prosecutor's statements were
"delivered forcefully and dramatically, while shouting." Gorski
cites no authority, however, that indicates this difference should
matter, and we do not see why it should, given that "[i]t is a
well established tenet of our judicial system that juries are
presumed to follow [curative] instructions." Rodriguez, 675 F.3d
- 26 -
at 63 (first alteration in original) (quoting Gentles, 619 F.3d at
82).
Gorski also contends that the curative instruction did
not address the risk that the prosecutor's statements shifted the
burden of proof to Gorski. But, to the extent that drawing
attention to Gorski's decision not to "face the music" or "stand
before" the jury can be construed as placing the burden of proof
on Gorski, Gorski's challenge on that ground is -- as the
government suggests -- derivative of his Fifth Amendment argument
that the statements improperly suggested that Gorski should have
testified. Thus, an instruction that cured any prejudice resulting
from drawing attention to Gorski's decision not to testify would
also necessarily cure any prejudice from burden-shifting
attributable to the prosecutor's remarks.
As to whether that instruction sufficed to ensure that
the "unfortunate" statements did not so poison the well as to
warrant a new trial, we conclude that, for the reasons elaborated
in Part II of our opinion, the government's case against Gorski
was too strong for it to have been an abuse of discretion for the
District Court to have determined that the prosecutor's statements
were harmless in light of the curative instruction. As we
explained, the government put forth a wealth of evidence in support
of its theory that Gorski certified Legion as an SDVOSB even though
he was well aware that it was not compliant with the SDVOSB
- 27 -
regulations. And, while Gorski contends that his consultation
with outside attorneys and accountants in 2007 and 2010 established
his good-faith intent to comply with those regulations, the
evidence he puts forward on that score is far too minimal to
establish prejudice.
We did say in United States v. Hardy, 37 F.3d 753 (1st
Cir. 1994), on which Gorski relies, that an improper statement by
a prosecutor may still be significant enough to poison the well in
a "close" case, notwithstanding the provision of a curative
instruction. Id. at 759. But, in Hardy, in which the defendant
was convicted for unlawfully possessing firearms and ammunition,
id. at 756, we explained that the case was close because "the
government's case against [the defendant] largely rested on the
credibility of [the arresting officer]" and, even then, "the jury
was required to draw a number of inferences in order to convict
[the defendant]." Id. at 759. In particular, the arresting
officer was the only witness who testified with respect to the
defendant's possession of the firearms and ammunition, yet,
according to his testimony, he never saw the defendant with a
firearm or ammunition and merely heard a "soft thud" on the ground
near where the defendant had been standing and where a later search
discovered two firearms with ammunition. Id.
Here, by contrast, the verdict did not turn on the
credibility of one witness, who provided only circumstantial
- 28 -
evidence. Far from it, as we have explained at some length. Thus,
in light of the strength of the evidence supporting the verdict,
we conclude that -- even assuming the prosecutor's statements were
improper and deliberate -- the District Court acted within its
discretion in ruling that its instruction likely cured any
prejudice, and that any surviving prejudice could not in this case
have so poisoned the well as to affect the jury's verdict.11 We
therefore conclude that the District Court did not abuse its
discretion in denying Gorski's motion for a new trial.
IV.
Finally, we turn to Gorski's remaining challenge, which
is to the forfeiture order and money judgment. The District Court
entered an order of forfeiture, in the form of a money judgment,
in an amount totaling more than $6.7 million, which it determined
were the "proceeds" traceable to Gorski's crimes, pursuant to 18
U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c). Gorski challenges
the validity of the money judgment, as well as the amount of the
forfeiture. We review preserved legal challenges to forfeiture
11 As noted above, during its charge to the jury, the District
Court also supplemented its immediate curative instruction with a
stronger instruction on the defendant's constitutional right not
to testify than it normally would have given during a jury charge.
As Gorski points out, in Hardy we discounted the curative effect
of a later instruction given during the charge to the jury that
followed an immediate curative instruction because that later
instruction did not specifically address the prosecutor's improper
remark. Hardy, 37 F.3d at 757 n.3. But, a strengthened
instruction during the jury charge certainly did no harm here.
- 29 -
orders de novo, but we review unpreserved challenges for plain
error. United States v. Ponzo, 853 F.3d 558, 589 (1st Cir. 2017).
A.
We begin by dispensing with Gorski's challenge to the
money judgment. In his reply brief, Gorski challenges the federal
courts' practice of issuing money judgments in forfeiture orders,
by which the government may seize future assets to satisfy the
forfeiture order. Gorski contends that the practice is no longer
valid under Honeycutt v. United States, 137 S. Ct. 1626 (2017),
which the Supreme Court issued after initial briefing in this case.
Honeycutt held that a defendant may not be held jointly
and severally liable under a certain forfeiture statute, 21 U.S.C.
§ 853, for property that a co-conspirator, but not the defendant,
acquired from the crime. Id. at 1630. The Court reasoned that
the forfeiture statute did not authorize joint and several
liability. Id. at 1632-34.
Gorski seizes on that reasoning to contend that money
judgments in forfeiture orders now must be considered invalid
because the forfeiture statutes do not expressly authorize money
judgments. However, by Gorski's own account, our existing
precedent is to the contrary. See United States v. Hall, 434 F.3d
42, 59-60 (1st Cir. 2006). And, Honeycutt does not permit us to
reach a different result as a three-judge panel, given that -- as
Gorski himself acknowledges -- Honeycutt "did not rule on the
- 30 -
issue" that he has presented to us. See United States v. Monteiro,
871 F.3d 99, 108 (1st Cir. 2017) (citing United States v.
Mouscardy, 722 F.3d 68, 77 (1st Cir. 2013)).
B.
With that issue out of the way, we turn to Gorski's
challenge to the forfeiture amount. The District Court found that
more than $6.7 million was subject to forfeiture as the proceeds
of Gorski's crimes. That amount represented all the money that
Gorski and his wife received from Legion, including dividends,
salary, bonuses, and corporate payment for personal goods such as
a swimming pool at Gorski's home. However, Gorski contends that
the District Court erred by not crediting against this amount
either (1) tax payments that Gorski made to the government on his
income from Legion or (2) the fair market value of his work on
construction projects that benefitted the government.
Gorski assigns this error based on alternative grounds.
First, he claims that the District Court misapplied the statutory
definition of the forfeitable "proceeds" under § 981. Second, he
contends that, assuming the forfeiture statute does not require
the credit, the forfeiture amount ordered by the District Court
violates the Eighth Amendment, because it is grossly
disproportionate to the gravity of Gorski's crimes and would
deprive him of his livelihood. He also contends that, in those
circumstances, the statute fails rational basis review under the
- 31 -
Equal Protection and Due Process Clauses. The government disagrees
with Gorski as to whether he preserved these challenges below and
also defends the amount of forfeiture on the merits.
1.
We begin with Gorski's statutory challenge. Section
981(a)(1)(C) provides that "[a]ny property, real or personal,
which constitutes or is derived from proceeds traceable to a
violation of" certain specified statutes -- which the parties agree
include the wire fraud statute -- is subject to forfeiture to the
United States.12 Although § 981 pertains to civil forfeiture,
§ 2461(c) provides that the government may seek criminal
forfeiture whenever civil forfeiture is authorized in connection
with a criminal offense.
Section 981, as a whole, includes multiple definitions
of "proceeds." See Stefan D. Cassella, Asset Forfeiture Law in
the United States § 25-4, at 910–18 (2d ed. 2013 & Supp. 2016).
But, the parties agree that § 981(a)(2)(B)'s so-called "net
profits" provision provides the relevant definition of "proceeds"
in this case. That definition provides in full:
12
The specified crimes include "any offense constituting
'specified unlawful activity' (as defined in section 1956(c)(7) of
this title)." 18 U.S.C. § 981(a)(1)(C). In turn, § 1956(c)(7) of
Title 18 encompasses "any act or activity constituting an offense
listed in section 1961(1) of this title," which includes a
violation of § 1343, the wire fraud statute under which Gorski was
convicted.
- 32 -
In cases involving lawful goods or lawful
services that are sold or provided in an
illegal manner, the term "proceeds" means the
amount of money acquired through the illegal
transactions resulting in the forfeiture, less
the direct costs incurred in providing the
goods or services. The claimant shall have
the burden of proof with respect to the issue
of direct costs. The direct costs shall not
include any part of the overhead expenses of
the entity providing the goods or services, or
any part of the income taxes paid by the
entity.
18 U.S.C. § 981(a)(2)(B).
Gorski contends that the District Court erred in
applying this definition of "proceeds" by failing to credit either
the payments that Gorski made to the government for his personal
income taxes on the income that he drew from Legion or the fair
market value of his work on the government construction projects.
Gorski reasons that the statute's exclusion from the forfeiture
amount of "direct costs incurred in providing the goods or
services" applies to all defendants, whether individuals or
entities. And, he says, the provision then expressly specifies
that only an "entity" defendant's income taxes cannot constitute
"direct costs," which, in his view, implies that his personal
income tax payments on his income from Legion do constitute
excludable "direct costs." Belatedly at oral argument, Gorski
further argued that the fair market value of his work was also an
excludable "direct cost" on the theory that he had to pay for the
cost of labor -- whether performed by him or someone else -- in
- 33 -
order to carry out the government construction projects that were
part of his fraudulent scheme.
We, however, agree with the government that Gorski did
not present this novel statutory argument concerning "direct
costs" to the District Court. Gorski did ask in the forfeiture
hearing -- albeit not in his papers opposing the government's
forfeiture motion -- for a credit of at least several hundred
thousand dollars that reflected both his income tax payments to
the government and his compensation from Legion for services
rendered on government projects. However, Gorski never argued in
the forfeiture hearing that his tax payments and compensation could
be credited as "direct costs" under § 981(a)(2)(B)'s definition of
"proceeds." Nor did he object when the District Court stated that
Gorski "incurred no direct costs" within the meaning of the
statute.
With respect to his income tax payments, Gorski
contended below only that "there should be some consideration" of
the fact that he paid his taxes because "the government got the
benefit of that." And, with respect to crediting his compensation,
he argued below for doing so only "because there's no dispute that
Mr. Gorski worked and that these buildings got built." Moreover,
there is no indication in the record that the District Court
understood those arguments to be tied to the statutory theory of
"direct costs" that Gorski raises on appeal. In fact, the District
- 34 -
Court rejected Gorski's request to credit his tax payments and
compensation precisely because Gorski had not explained how such
credits would be tethered to § 981(a)(2)(B)'s definition of
"proceeds" (or any other source of law).13
Because Gorski failed to preserve this issue, our review
is for plain error. See United States v. Delgado-Sánchez, 849
F.3d 1, 6 (1st Cir. 2017) (citing United States v. Sánchez-Berríos,
424 F.3d 65, 74 (1st Cir. 2005)). And, we find no such error.
Gorski offers no clear supporting authority for his novel statutory
argument. Nor is it at all clear that it has any basis. Even if
income taxes paid by Legion in providing construction services to
the government might be considered a "direct cost[] incurred in
providing the . . . services," it is not plain how the personal
income taxes paid by Gorski on the income that he drew from Legion
could be a "direct cost" incurred in providing those services. 18
U.S.C. § 981(a)(2)(B). Similarly, even if we assume that
compensation paid by a business to an employee might be a "direct
cost" incurred by the business in providing its services, it is
13 Gorski did object at the end of the forfeiture hearing
"that the statute only applies to entities, and Mr. Gorski is not
an entity." However, in context, that objection seems to be a
reference to the District Court's suggestion that the entirety of
§ 981(a)(2)(B) might apply only to entities, not individuals.
Regardless of the nature of the objection, Gorski did not develop
below the argument he presses on appeal -- namely, that the
provision applies to both individuals and entities, but that
"direct costs" has a different meaning for individuals.
- 35 -
not plain how that compensation when received by the employee could
also be said to be a direct cost incurred by the employee. Nor
does Gorski make any argument as to how his theory could succeed
under the plain error standard.
2.
Gorski's constitutional arguments fare no better.
During the forfeiture hearing, the District Court noted its own
view that not crediting taxes that Gorski had paid to the
government on income from Legion that was subject to forfeiture is
"not proportionate or fair. There are possible constitutional
issues under the Eighth Amendment perhaps or perhaps due process
[or] equal protection." The District Court also stated that it
had "some reservations as to forfeiting Mr. Gorski's salary because
he did perform work. He provided value to the government, and
something about that seemed unfair as well, to forfeit everything
he was paid." However, despite its openness to the idea, the
District Court concluded that Gorski had not developed any
constitutional (or equitable) argument that would allow it to
credit Gorski's tax payments or his compensation.14
14
The District Court also concluded that, insofar as "equity"
would permit a credit for such fair market compensation, Gorski
had failed to identify any amount that would be a reasonable
estimate of the market value of his services that the record would
support. The District Court did note that there was evidence
regarding the annual compensation of an executive project manager
at Legion (around $50,000 to $85,000). And, the District Court
also stated that fair market compensation for Gorski would probably
- 36 -
Gorski points out that he did object at the close of the
forfeiture hearing that the forfeiture amount "has an Eighth
Amendment violation potential." But, he never developed any Eighth
Amendment argument during the forfeiture hearing. On that score,
he did not argue below, as he does on appeal, that the forfeiture
amount will deprive Gorski of his livelihood. Nor did he make any
equal protection or due process argument.
As with Gorski's statutory argument, Gorski also failed
to develop below the constitutional argument that he presses on
appeal -- namely, that a credit for his tax payments and
compensation is constitutionally required. Thus, our review is
for only plain error, a standard Gorski cannot meet. We are aware
of no clear supporting authority for this constitutional argument.
Nor does Gorski argue otherwise. Accordingly, we affirm the
District Court's forfeiture order and money judgment.
V.
For the foregoing reasons, the judgment of the District
Court is affirmed.
be around $100,000 to $120,000 per year. But, the District Court
concluded that, in the end, it did not have any evidence of that
compensation amount other than what the one project manager earned.
Accordingly, the District Court ruled that, even if there was a
legal basis for equitably crediting Gorski's compensation, Gorski
had not established a necessary predicate for that equitable
credit.
- 37 -