United States v. Anthony Millan ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 12 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-50445
Plaintiff-Appellee, D.C. No. 2:13-cr-00885-GW-2
v.
MEMORANDUM*
ANTHONY DAVID MILLAN,
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 15-50446
Plaintiff-Appellee, D.C. No. 2:13-cr-00885-GW-1
v.
MACK MACHEN, AKA Machen, Dr.,
AKA Henry Machen Patrick,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted February 6, 2018
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: W. FLETCHER, BERZON,** and OWENS, Circuit Judges.
Defendants-Appellants Anthony Millan and Mack Machen appeal from jury
convictions for mail and wire fraud. They also challenge the district court’s
restitution orders. As the parties are familiar with the facts, we do not recount
them here. We have jurisdiction under 28 U.S.C. § 1291, and we reverse
appellants’ convictions.
1. For two reasons, the district court erred in permitting the government’s
fraud examiner to offer lay opinions under Fed. R. Evid. 701, rather than
subjecting the examiner and her methodology to expert-witness scrutiny under Fed.
R. Evid. 702. First, the examiner conceded that in interpreting and categorizing
Catch 22’s financial transactions, she relied on representations of fact made to her
by the government’s investigating agents. Each of these out-of-court
representations was hearsay. See Fed. R. Evid. 801(c). The examiner’s opinions
about the proper classification of C22’s expenditures were therefore not based
wholly on her “firsthand knowledge or observation,” United States v. Lopez, 762
F.3d 852, 864 (9th Cir. 2014), and thus failed to satisfy Rule 701(a). Second, the
examiner’s financial classifications were based on technical or specialized
knowledge acquired through her education and experience as a fraud examiner.
**
Judge Berzon was drawn to replace Judge Reinhardt following his
death. Ninth Circuit General Order 3.2h. Judge Berzon has read the briefs,
reviewed the record, and listened to oral argument.
2
They therefore failed to satisfy Rule 701(c).
Moreover, because the examiner’s charts summarized her inadmissible lay
opinions, the district court erred in admitting those charts. See Fed. R. Evid. 1006;
see also United States v. Rizk, 660 F.3d 1125, 1130 (9th Cir. 2011).
2. These errors were not harmless. The fraud examiner’s testimony and
charts were essential to the government’s case at trial: No other witness offered
testimony in support of the government’s allegations that “virtually none of the
money provided by victims to invest in C22 was used to provide bridge loans or
for any of the other purposes represented to the victims”; that appellants “provided
their telemarketers with commissions of approximately 20 percent of all the
victims’ money they brought in”; and that appellants “used the remainder of the
victims’ money to fund their own lavish lifestyles.” We are not persuaded that the
jury would have convicted appellants absent the fraud examiner’s erroneously
admitted testimony and charts. See United States v. Cardenas-Mendoza, 579 F.3d
1024, 1033 (9th Cir. 2009); see also United States v. Christian, 749 F.3d 806, 813-
14 (9th Cir. 2014) (citing Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457,
460, 466-67 (9th Cir. 2014) (en banc)). Moreover, the evidence in the record is
insufficient to show that the testimony offered at trial would have been admitted as
expert evidence under Rule 702, given the serious and valid concerns that the
defendants raised about the fraud examiner’s methods. See United States v. Lloyd,
3
807 F.3d 1128, 1156 (9th Cir. 2015).
3. Because we reverse appellants’ convictions on other grounds, we need
not address their constructive-amendment and variance arguments or their
challenge to the district court’s restitution orders. See, e.g., Shafer v. Cty. of Santa
Barbara, 868 F.3d 1110, 1114 n.2 (9th Cir. 2017).
REVERSED AND REMANDED.
4
FILED
United States v. Millan, Nos. 15-50445; United States v. Machen, 15-50446
JUL 12 2018
OWENS, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I respectfully dissent. In my view, any error in allowing the government’s
fraud examiner to testify under Fed. R. Evid. 701 and in admitting the examiner’s
charts was harmless. See United States v. Figueroa-Lopez, 125 F.3d 1241, 1246-
47 (9th Cir. 1997); United States v. Maher, 645 F.2d 780, 784 (9th Cir. 1981) (per
curiam) (“Since the testimony was admissible expert opinion, any alleged error
committed by the trial judge in admitting the evidence under the lay opinion rule
was harmless.”). I would also reject appellants’ constructive-amendment and
variance arguments, which rest on a strawman misreading of the indictment.
Finally, I would affirm the district court’s restitution orders as amply supported by
the jury’s verdicts. See United States v. Gamma Tech Indus., Inc., 265 F.3d 917,
927 n.10 (9th Cir. 2001).