`
`
`
`APPENDIX TABLE OF CONTENTS
`United States Court of Appeals for the Ninth Circuit
`Opinion, United States v. Ellison, 704 Fed. Appx.
`616 ...................................................................... 1a
`Order granting motion to extend stay of mandate,
`January 5, 2018,
`United States Court of Appeals for the Ninth
`Circuit, United States v. Ellison ..................... 24a
`Order granting motion to stay mandate, October 23,
`2017,
`United States Court of Appeals for the Ninth
`Circuit, United States v. Ellison ...................... 26a
`Order denying petition for rehearing en banc, United
`States Court of Appeals for the Ninth Circuit,
`October 13, 2017, United States v. Ellison ..... 28a
`United States District Court for the District of Idaho
`Memorandum Decision and Order, February 10,
`2014, United States v. Swenson ...................... 29a
`United States District Court for the District of Idaho
`Memorandum Decision and Order, August 15,
`2014, United States v. Swenson ...................... 39a
`Excerpts from District Court’s Jury Instructions,
`United States v. Swenson................................. 70a
`Jury Verdict, United States v. Swenson ................. 87a
`
`
`
`
`
`1a
`United States Court of Appeals for the Ninth Circuit
`______________________
`United States v. Ellison
`______________________
`June 5, 2017, Argued and Submitted, Seattle,
`Washington; August 15, 2017, Filed
`______________________
`No. 14-30180, No. 14-30183, No. 14-30184, No. 14-
`30185
`
`
`UNITED STATES OF AMERICA, Plaintiff -Appellee,
`v. MARK A. ELLISON, Defendant-Appellant,
`UNITED STATES OF AMERICA, Plaintiff-Appellee,
`v. DAVID D. SWENSON, Defendant-Appellant,
`UNITED STATES OF AMERICA, Plaintiff-Appellee,
`v. JEREMY S. SWENSON, Defendant-Appellant,
`UNITED STATES OF AMERICA, Plaintiff-Appellee,
`v. DOUGLAS L. SWENSON, Defendant-Appellant,
`Notice: PLEASE REFER TO FEDERAL RULES OF
`APPELLATE
`PROCEDURE
`RULE
`32.1
`GOVERNING THE CITATION TO UNPUBLISHED
`OPINIONS.
`Judges: Before: FERNANDEZ, CALLAHAN, and
`IKUTA, Circuit Judges.
`
`
`
`
`
`
`
`
`
`2a
`Opinion
`MEMORANDUM*
`Douglas Swenson, Mark Ellison, David Swenson,
`and Jeremy Swenson (collectively, the Appellants)
`appeal their convictions after a joint jury trial. All of
`the Appellants also appeal their restitution orders,
`and Douglas, David, and Jeremy also appeal their
`prison sentences. The Appellants worked for the
`DBSI Group1 and were convicted for their roles in
`defrauding investors in fifteen investment offerings.
`Each of the Appellants was convicted of securities
`fraud,2 and Douglas was also convicted of wire fraud.3
`We affirm the Appellants’ convictions and sentences
`in virtually all respects; however, we vacate the
`restitution order against Ellison, David, and Jeremy,
`and remand for the district court for recalculation of
`the amount.
`(A) Jury Instructions
`The Appellants challenge a number of jury
`instructions given in their joint trial. Each challenge
`fails.
`(1) Scheme to defraud
`The Appellants hypothesize that the district
`court’s Instruction 40, which defines “a scheme to
`defraud” for the securities and wire fraud charges,
`
`
`* This disposition is not appropriate for publication and is not
`precedent except as provided by 9th Cir. R. 36-3.
`1 ”DBSI Group” refers to the whole DBSI group of companies.
`2 15 U.S.C. 78j(b), 78ff(a); 18 U.S.C. 2; see also 17 C.F.R.
`240.10b-5.
`3 18 U.S.C. 1343.
`
`
`
`
`
`
`
`
`
`3a
`could have allowed the jury to convict them for
`silence, even in the absence of a duty to disclose any
`information to investors. The district court did not
`abuse its discretion in formulating this instruction.
`See United States v. Lloyd, 807 F.3d 1128, 1164-1165
`(9th Cir. 2015). In general, guilt for securities fraud
`and wire fraud “is not restricted solely to isolated
`misrepresentations or omissions.” Blackie v. Barrack,
`524 F.2d 891, 903 n.19 (9th Cir. 1975); see 17 C.F.R.
`240.10b-5(a), (c); see also Affiliated Ute Citizens of
`Utah v. United States, 406 U.S. 128, 152-153, 92 S.
`Ct. 1456, 1471-72, 31 L. Ed. 2d 741 (1972); United
`States v. Woods, 335 F.3d 993, 997-998 (9th Cir.
`2003). Moreover, in this case, it was undisputed that
`a number of statements were made to investors in
`connection with the
`investment offerings. Cf.
`Chiarella v. United States, 445 U.S. 222, 226, 100 S.
`Ct. 1108, 1113, 63 L. Ed. 2d 348 (1980). Because
`statements were made to investors, the securities
`laws imposed a duty to disclose material facts
`necessary to render those statements not misleading,
`regardless of whether any fiduciary relationship with
`investors existed. See S.E.C. v. Fehn, 97 F.3d 1276,
`1290 n.12 (9th Cir. 1996); Hanon v. Dataproducts
`Corp., 976 F.2d 497, 504 (9th Cir. 1992); see also 17
`C.F.R. 240.10b-5(b). On this record, the instruction
`was correct and did not mislead the jury. See United
`States v. Smith, 831 F.3d 1207, 1219 (9th Cir. 2016).4
`(2) Materiality
`
`
`4 We decline to consider Douglas’s conclusory assertion in his
`reply brief that the jury’s verdicts were inconsistent. See United
`States v. Romm, 455 F.3d 990, 997 (9th Cir. 2006); Greenwood
`v. FAA, 28 F.3d 971, 977 (9th Cir. 1994).
`
`
`
`
`
`
`
`
`
`4a
`The Appellants argue that Instruction 30, which
`defines materiality for securities fraud, did not tell
`the jury to consider the purported omission or
`misstatement in light of all the circumstances.5 At
`bottom, “‘materiality depends on the significance the
`reasonable investor would place on the withheld or
`misrepresented information,’”6 and a reasonable
`investor would consider all of the circumstances in
`determining whether a false statement or omitted
`fact was significant.7 By referring to a reasonable
`investor, the instruction adequately communicated
`that the jury should consider relevant circumstances
`in evaluating materiality. See United States v. Hofus,
`598 F.3d 1171, 1174 (9th Cir. 2010). We reject the
`Appellants’ speculation that the jury could have
`convicted them based on inadequate evidence of
`materiality:
`there was sufficient evidence
`to
`support the jury’s verdicts. See Griffin v. United
`States, 502 U.S. 46, 59–60 (1991). We also reject the
`Appellants’ suggestion that the jury should have been
`told to consider information that was made available
`to third parties, but not to investors, when it
`evaluated the materiality of a particular fact to a
`reasonable investor. See United States v. Bingham,
`992 F.2d 975, 976 (9th Cir. 1993) (per curiam)
`
`
`5 We decline to consider Douglas’s argument in reply regarding
`the degree of importance required to establish materiality. See
`Romm, 455 F.3d at 997.
`6 No. 84 Empl.-Teamster Joint Council Pension Tr. Fund v. Am.
`W. Holding Corp., 320 F.3d 920, 934 (9th Cir. 2003); see also
`United States v. Tarallo, 380 F.3d 1174, 1182 (9th Cir. 2004),
`amended, 413 F.3d 928, 928 (9th Cir. 2005).
`7 See TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449
`(1976) (defining materiality in terms of the “‘total mix’ of
`information made available”).
`
`
`
`
`
`
`
`
`
`5a
`(materiality is evaluated in the context of the
`“information available to the buyer of the . . . stock”).
`(3) Defense of investor negligence
`Instruction 41 told the jury that it was not a
`defense that “investors may have been gullible,
`careless, naive or negligent.” The Appellants argue
`that the instruction undermined the requirement
`that materiality be determined objectively, and that
`they should have been allowed to argue that investor
`carelessness was a defense where the government
`argued that they were guilty and pointed to victim
`investors who failed to understand the disclosures.
`We review this claim for plain error because the
`Appellants did not object to the district court’s
`formulation of this instruction on this ground. See
`United States v. Anderson, 741 F.3d 938, 945-946,
`946 n.5 (9th Cir. 2013).
`The instruction correctly stated the law8 because
`materiality is determined objectively, so that a
`victim’s negligence is not a defense. United States v.
`Lindsey, 850 F.3d 1009, 1015-1016 (9th Cir. 2017);
`see also United States v. Reyes, 577 F.3d 1069, 1075
`(9th Cir. 2009). The government did present
`testimony from victim investors who said that they
`had been deceived, but the Appellants were not
`precluded
`from arguing that, nevertheless, a
`reasonable investor would not have been. However, if
`the form of the instruction injected some ambiguity,
`and even if it was plain error to so instruct,9 the
`Appellants have not demonstrated that the error
`
`8 See Smith, 831 F.3d at 1216.
`9 See United States v. Della Porta, 653 F.3d 1043, 1052 (9th Cir.
`2011); United States v. Bear, 439 F.3d 565, 569 (9th Cir. 2006).
`
`
`
`
`
`
`
`
`
`6a
`affected the outcome of their trial, and therefore fail
`to demonstrate plain error. See United States v.
`Ameline, 409 F.3d 1073, 1078 (9th Cir. 2005) (en
`banc). First, while the Appellants argue that nothing
`was misleading or omitted, the materiality of the
`financial information in question was essentially
`uncontroverted. See Bear, 439 F.3d at 570; see also
`United States v. Jenkins, 633 F.3d 788, 802 (9th Cir.
`2011); S.E.C. v. Murphy, 626 F.2d 633, 653 (9th Cir.
`1980). Second, in order for the error to have affected
`the verdict, the jury would had to have drawn the
`“far-fetched inference”10 that: (1) the Appellants’
`statements, omissions, or actions would not have
`been considered important by a reasonable investor,
`and (2) the Appellants should still be convicted
`because those statements or actions nevertheless
`deceived these unreasonable victims. There would be
`no “genuine possibility that the jury convicted”
`Appellants on that basis. See Bear, 439 F.3d at 568,
`570.
`(4) Good faith and willfullness
`Although some of the Appellants proposed their
`own jury instruction regarding good faith, they did
`not object to the district court’s definition of
`“willfully.” Thus, we review the instruction regarding
`willfullness for plain error. See Anderson, 741 F.3d at
`945-946. The district court’s Instruction 30 correctly
`stated the law regarding the intent11 required for
`securities fraud: “‘willfully’ . . . means intentionally
`
`10 See Smith, 831 F.3d at 1220; see also Middleton v. McNeil,
`541 U.S. 433, 438, 124 S. Ct. 1830, 1833, 158 L. Ed. 2d 701
`(2004) (per curiam).
`11 United States v. O’Hagan, 521 U.S. 642, 665-666,(1997); see
`also 15 U.S.C. 78ff(a).
`
`
`
`
`
`
`
`
`
`7a
`undertaking an act that one knows to be wrongful,”
`and “does not require that the actor know specifically
`that the conduct was unlawful.” Tarallo, 380 F.3d at
`1188. The definition of “willfully” that typically
`applies to other crimes does not apply to securities
`fraud. Id. at 1186-1188; see also 15 U.S.C. 78ff(a).
`Because the
`instruction correctly defined the
`requisite intent, the Appellants were not entitled to a
`separate good faith instruction. United States v.
`Green, 745 F.2d 1205, 1209 (9th Cir. 1984); see also
`United States v. Shipsey, 363 F.3d 962, 967-968 (9th
`Cir. 2004).
`(B) Sufficiency of the evidence
`We have carefully reviewed the record, and
`construed
`in the
`light most favorable to the
`prosecution, there was a plethora of evidence from
`which a rational juror could have found that each
`Appellant was guilty of the crimes for which he was
`convicted. See United States v. Nevils, 598 F.3d 1158,
`1161 (9th Cir. 2010) (en banc).
`There was sufficient evidence to support a
`determination that Douglas, with the requisite
`willful
`intent, approved the Private Placement
`Memoranda (PPMs) for the various investment
`offerings, each of which contained materially
`misleading statements regarding the
`financial
`viability of DBSI Master Leaseco, Inc. (Master
`Leaseco), DBSI, Inc. (formerly known as DBSI
`Housing, Inc.), and the Master Lease Portfolio (MLP),
`and regarding the use of investors’ “Accountable
`Reserves”
`funds
`for
`the
`company’s ongoing
`operations. In the words of one witness, investors had
`to go on “an Easter egg hunt to figure out what’s going
`on.” For example, there were misleading statements
`
`
`
`
`
`
`
`
`
`8a
`regarding: (1) DBSI, Inc.’s net worth, including
`substantial receivables from technology company
`affiliates and whether those were current assets; (2)
`the use of investors’ accountable reserves; (3) the
`financial health of the MLP properties overall; (4) the
`assets of Master Leaseco; and (5) the status and
`shutdown of FOR1031. Moreover,
`there was
`sufficient
`evidence
`to
`support
`the
`jury’s
`determination that the statements were material and
`would have misled a reasonable investor, even in the
`absence of expert testimony, especially when the
`PPMs and accompanying financial statements were
`not prepared according to Generally Accepted
`Accounting Principles (GAAP). Jenkins, 633 F.3d at
`802, 802 n.3; cf. Sparling v. Daou (In re Daou Sys.,
`Inc.), 411 F.3d 1006, 1016 (9th Cir. 2005) (violating
`GAAP by overstating revenues may state a claim for
`securities fraud (accounting fraud)). The existence of
`evidence inconsistent with an intent to defraud is
`beside the point, because the jury was entitled to
`credit the evidence suggesting Douglas’s willful
`intent to deceive investors. See Nevils, 598 F.3d at
`1169.
`There was also sufficient evidence to support a
`determination that Ellison, Jeremy, and David
`committed securities fraud. At the very least, it was
`sufficient to show that they aided and abetted a
`fraudulent act, practice, or course of business. 17
`C.F.R. 240.10b-5(c); see also 18 U.S.C. 2(a).12
`
`
`12 The jury was properly instructed regarding aiding and
`abetting liability in Instruction 33. See Rosemond v. United
`States, U.S. , , 134 S. Ct. 1240, 1245 (2014); United States
`v. Garcia, 400 F.3d 816, 819 (9th Cir. 2005); see also United
`States v. Dearing, 504 F.3d 897, 901 (9th Cir. 2007).
`
`
`
`
`
`
`
`
`
`9a
`For example, there was evidence that (1) Ellison
`approved the PPMs that contained misleading
`statements, despite being repeatedly informed by
`others about their misleading nature, and despite
`knowing that investors wanted more transparency
`about the financial condition of DBSI Group and the
`MLP, and Ellison attempted to dissuade an employee
`from continuing to question the misleading nature of
`the statements; (2) David knew the state of DBSI
`Group because he was a senior executive who
`received regular reports and attended regular
`meetings at which the financial difficulties of the
`MLP and DBSI, Inc. were discussed, and David
`approved language in the PPMs that investors’
`Accountable Reserves could not be used for the
`company’s general operations, even though he told
`another DBSI Group employee that the funds could
`be used for that purpose; (3) Jeremy annually
`directed that money be transferred into the Master
`Leaseco account just before its audits in order to
`inflate the account balance, served on a committee
`responsible for monitoring the repayment of loans
`made from the account (although the evidence also
`showed that repayments were not made), was on the
`committee responsible for lending money from the
`2008 Notes Offering to the technology companies, and
`was also present at meetings where concerns
`regarding the MLP’s and DBSI, Inc.’s finances were
`discussed, including concerns about whether it was
`misleading not to show the loans to affiliated
`technology companies as a separate line item in
`DBSI, Inc.’s financial statements.13
`
`13 We also reject Jeremy’s argument that his securities fraud
`convictions are inconsistent with Douglas’s convictions for wire
`fraud and for committing securities fraud by other, additional
`
`
`
`
`
`
`
`
`
`10a
`(C) Conduct required to violate Rule 10b-5(a) or
`
`(c)
`
`The Appellants argue that their convictions
`pursuant to Rule 10b-5(a) and (c) cannot stand
`because a conviction for violating those provisions
`must be premised on conduct separate
`from
`misrepresentations or omissions that violate Rule
`10b-5(b). See WPP Lux. Gamma Three Sarl v. Spot
`Runner, Inc., 655 F.3d 1039, 1057-1058 (9th Cir.
`2011). Assuming without deciding that this principle
`applies in the context of a criminal prosecution, there
`was evidence of the fraudulent scheme or course of
`business beyond the misrepresentations made to
`investors in connection with the securities sales: for
`example,
`Douglas’s
`withholding
`important
`information from his own sales staff; Jeremy’s
`directing money transfers into the Master Leaseco
`account; Ellison’s attempt to dissuade employees
`from pursuing greater transparency; and David’s
`efforts to conceal from lenders DBSI Group’s sales of
`properties to TIC investors. Thus, the Appellants’
`convictions were supported by evidence of conduct
`beyond isolated misrepresentations and omissions.
`See Affiliated Ute, 406 U.S. at 153, 92 S. Ct. at 1472;
`cf. WPP Lux., 655 F.3d at 1057-1058.14
`(D) Agent Morse’s credibility
`
`means. Even if there were some inconsistency (which there is
`not), it would not undermine the validity of Jeremy’s
`convictions. United States v. Hart, 963 F.2d 1278, 1281 (9th Cir.
`1992).
`14 We decline to address Jeremy’s conclusory assertion that his
`convictions violated the Double Jeopardy clause of the Fifth
`Amendment. Greenwood, 28 F.3d at 977; see also U.S. Const.
`amend. V.
`
`
`
`
`
`
`
`
`
`11a
`The Appellants argue that the district court erred
`by providing two instructions to the jury regarding
`Federal Bureau of Investigation
`(FBI) Agent
`Rebekah Morse’s use of a mobile device during a
`sidebar conference while she was testifying: (1) that
`Morse was not transmitting text messages during the
`sidebar, but rather was entering a code to turn off her
`device (the “First Instruction”), and (2) that the jury
`should disregard the First Instruction because (a)
`while Agent Morse gave that explanation for her
`behavior under oath, it had subsequently been
`determined that Agent Morse exchanged text
`messages with her husband during a sidebar, and (b)
`that the jury could consider those facts in assessing
`her credibility (the “Second Instruction”).
`(1) Vouching
`We review the Appellants’ argument that the
`district court vouched for Agent Morse for plain error
`because the Appellants did not contemporaneously
`object on this ground. United States v. Brooks, 508
`F.3d 1205, 1209 (9th Cir. 2007). While we are dubious
`that a judge can be said to vouch for a witness,15 even
`if it did occur here, it did not constitute plain error.
`The First Instruction merely indicated that there had
`been no message, and the Second Instruction told the
`jury to disregard the first one and indicated, in effect,
`that she may have been untruthful and that the jury
`could consider that. That was
`favorable, not
`prejudicial, to the Appellants.
`(2) Rule 605
`
`
`15 We note that the government conceded in the district court
`that the First Instruction constituted vouching.
`
`
`
`
`
`
`
`
`
`12a
`The Appellants further argue that the First and
`Second Instructions violated Federal Rule of
`Evidence 605 by adding evidence outside the trial
`record. See United States v. Berber-Tinoco, 510 F.3d
`1083, 1091 (9th Cir. 2007). Assuming a Rule 605
`violation, any error was harmless, and, indeed,
`beneficial to the Appellants. See id. at 1092-1093;
`United States v. Heredia, 483 F.3d 913, 923 (9th Cir.
`2007).
`(3) Impeachment evidence
`The Appellants argue that the district court erred
`by excluding evidence related to Agent Morse’s
`texting pursuant to Federal Rule of Evidence 403.
`The district court properly exercised its discretion16
`to determine that any evidence beyond what the jury
`had already been told was more prejudicial than
`probative, and was cumulative. See United States v.
`Vallejo, 237 F.3d 1008, 1016 (9th Cir.), amended by
`246 F.3d 1150, 1150 (9th Cir. 2001). For the same
`reason, the exclusion of evidence did not violate the
`Appellants’ right to present a complete defense. See
`Haischer, 780 F.3d at 1284.
`(E) Courtroom closures
`The Appellants claim that the closure of two sets
`of proceedings violated their right to a public trial:
`the closure of a portion of the pre-trial hearing in
`which FBI Agent Martinen testified (the “Martinen
`Hearing”)
`and
`the
`closure
`of
`certain
`proceedings related to Agent Morse’s texting (the
`“Morse Proceedings”). See U.S. Const. amend. VI;
`
`
`16 United States v. Haischer, 780 F.3d 1277, 1281 (9th Cir. 2015);
`see also Fed. R. Evid. 403.
`
`
`
`
`
`
`
`
`
`13a
`United States v. Waters, 627 F.3d 345, 360 (9th Cir.
`2010).
`(1) Martinen Hearing
`Assuming that the public trial right attached to
`the Martinen Hearing,17 the district court did not err
`by closing the courtroom for about half an hour while
`Agent Martinen testified regarding another agent.
`The district court identified an important interest
`that would be prejudiced by a public hearing;18 the
`closure was narrowly tailored to the portion of the
`Martinen Hearing concerning whether Agent
`Martinen’s destruction of certain documents was
`related to her purported fear of the other agent (it
`was not);19 the district court considered the
`alternative of Appellants asking questions without
`specifying the other agent’s involvement;20 and the
`district court’s findings are clear in context and
`sufficient to enable appellate review.21 The district
`court did not err by closing the courtroom for
`foundational
`consideration of whether Agent
`Martinen’s issues with the other agent were related
`to her destruction of certain documents related to this
`case.
`(2) Morse Proceedings
`
`
`17 See Waters, 627 F.3d at 360-361.
`18 See Waller v. Georgia, 467 U.S. 39, 45, 104 S. Ct. 2210, 2215,
`81 L. Ed. 2d 31 (1984).
`19 See United States v. Yazzie, 743 F.3d 1278, 1289 (9th Cir.
`2014).
`20 See id. at 1289-1290.
`21 See id. at 1290.
`
`
`
`
`
`
`
`
`
`14a
`As to the Morse proceedings, the Appellants’
`statements, actions, and failures to object constituted
`a waiver of any public trial rights they had. See
`United States v. Perez, 116 F.3d 840, 845 (9th Cir.
`1997) (en banc); see also Levine v. United States, 362
`U.S. 610, 618-620, 80 S. Ct. 1038, 1043-1044, 4 L. Ed.
`2d 989 (1960); United States v. Rivera, 682 F.3d 1223,
`1232-1233, 1233 n.6 (9th Cir. 2012). Moreover, the
`matters taken up were administrative details
`regarding preservation of evidence and how to
`proceed with the jury while information was being
`gathered. See United States v. Ivester, 316 F.3d 955,
`959 (9th Cir. 2003). No public trial rights attached.
`(F) Voir dire
`The district court did not abuse its discretion22
`when it refused to ask the venire about any bias any
`of them had with respect to the Church of Jesus
`Christ of Latter-Day Saints. No supplemental
`question was required because this case did not
`involve religion, let alone any purported religious
`bias,23 and because the Appellants sought to uncover
`merely a “general impression or prejudice against a
`group.”24 The Appellants presented no evidence
`suggesting that religious bias was “‘an actual and
`likely source of prejudice’” in this case.25
`
`
`22 United States v. Anekwu, 695 F.3d 967, 978 (9th Cir. 2012).
`23 Id. at 980.
`24 United States v. Toomey, 764 F.2d 678, 682 (9th Cir. 1985).
`25 United States v. Jones, 722 F.2d 528, 530 (9th Cir. 1983)
`(quoting United States v. Robinson, 475 F.2d 376, 381, 154 U.S.
`App. D.C. 265 (D.C. Cir. 1973)). The district court’s references
`to anti-LDS bias summarized the Appellants’ arguments and
`were not findings of fact.
`
`
`
`
`
`
`
`
`
`15a
`(G) Required disclosure of defense non-
`impeachment evidence
`The Appellants argue that the district court
`violated their constitutional rights by requiring them
`to provide reciprocal discovery to the government by
`disclosing the non-impeachment documents they
`intended to use at trial.26 See Fed. R. Crim. P.
`16(b)(1)(A); United States v. Swenson, 298 F.R.D.
`474, 477-78 (D. Idaho 2014); see also United States v.
`Fort, 472 F.3d 1106, 1109 (9th Cir. 2007); United
`States v. Aceves-Rosales, 832 F.2d 1155, 1156 (9th
`Cir. 1987). The district court properly refused to limit
`Appellants’ production obligation to those exhibits
`they planned to introduce with their own witnesses
`by refusing to cabin their “case-in-chief” to the period
`after which they called their first witness at trial,
`because a defendant may establish his defense by
`cross-examining the government’s witnesses. See,
`e.g., United States v. Hernandez-Meza, 720 F.3d 760,
`762-763, 765 (9th Cir. 2013) (failure of proof defense);
`Notaro v. United States, 363 F.2d 169, 174 (9th Cir.
`1966) (affirmative defense).27 The district court’s
`order did not violate Rule 16.
`Because the district court’s order merely enforced
`Appellants’ reciprocal discovery obligations,28 it did
`not violate their constitutional rights. See United
`
`26 That did not include documents that could be used for
`impeachment, even if they had some non-impeachment content
`also.
`27 Moreover, the Appellants’ alternative temporal definition of
`case-in-chief would impinge on the district court’s discretion to
`“determine generally the order in which parties will adduce
`proof.” Geders v. United States, 425 U.S. 80, 86 (1976).
`28 See Fed. R. Crim. P. 16(a)(1)(E).
`
`
`
`
`
`
`
`
`
`16a
`States v. Urena, 659 F.3d 903, 908-909 (9th Cir.
`2011). Moreover, the scope of the order was properly
`limited to the production of non-impeachment
`evidence—i.e., to evidence that was “offered to show
`an alternative view of the truth.”29
`(H) Redaction and limited admission of exhibit
`Douglas30 argues that the district court should not
`have limited the jury’s consideration of exhibit 7452
`(an email from Ellison to the legal department
`regarding additional disclosures to be made in
`connection with the PPM accompanying the 2008
`Notes Offering) to its reflection of Ellison’s state of
`mind. The district
`court properly
`limited
`consideration of the email because it was hearsay,
`and was relevant only insofar as it was true that
`Ellison indeed believed that additional disclosures
`were necessary. See Fed. R. Evid. 801(c)(2).31
`Douglas’s argument that the district court abused
`its discretion when it redacted the references to him
`in exhibit 7452 fares no better. See Larez v. City of
`Los Angeles, 946 F.2d 630, 642 (9th Cir. 1991). Their
`relevance lay only in the truth of the matters asserted
`by Ellison in the email: that is, the references to
`Douglas were relevant only insofar as Ellison
`accurately reported that Douglas had “reached the
`
`29 Bemis v. Edwards, 45 F.3d 1369, 1372 (9th Cir. 1995).
`30 All of the Appellants join this argument, but they do not assert
`any arguments other than those raised by Douglas; thus, their
`challenges fail for the same reasons that his do.
`31 To the extent there was any error in giving the limiting
`instruction, it was harmless, especially in light of the fact that
`there was no dispute that the 2008 Notes PPM contained
`additional disclosures, or
`that Ellison approved
`those
`disclosures.
`
`
`
`
`
`
`
`
`
`17a
`same conclusion” and agreed with him that more
`disclosure was needed. They were properly redacted.
`(I) Admission of prior testimonial statements by
`co-defendants
`The district court admitted several out-of-court
`statements made by Ellison, Jeremy, and David,
`which the government conceded were testimonial.
`Because the district court did not instruct the jury to
`consider each statement as evidence only against the
`declarant,32 and not against his co-defendants,
`admission
`of
`the
`statements
`violated
`the
`confrontation rights33 of each non-declarant co-
`defendant.34 The only remaining question is whether
`the errors were harmless beyond a reasonable doubt.
`United States v. Nguyen, 565 F.3d 668, 675 (9th Cir.
`2009).
`The errors were harmless. As to Jeremy, David,
`and Ellison, each
`statement
`concerned
`the
`declarant’s personal responsibilities and knowledge
`of the state of DBSI Group’s operations and finances.
`None of the statements implicated those non-
`declarants or supported a disputed element of the
`government’s case against them. See United States v.
`Hoac, 990 F.2d 1099, 1105 (9th Cir. 1993); cf. Nguyen,
`565 F.3d at 675 (error not harmless where statement
`helped to establish the defendant’s knowledge). As to
`
`32 None of the Appellants requested a limiting instruction,
`despite the district court’s invitation to them to do so.
`33 U.S. Const. amend. VI; Richardson v. Marsh, 481 U.S. 200,
`206, 107 S. Ct. 1702, 1706-1707, 95 L. Ed. 2d 176 (1987).
`34 See Melendez-Diaz v. Massachusetts, 557 U.S. 305, 314 n.4,
`129 S. Ct. 2527, 2534 n.4, 174 L. Ed. 2d 314 (2009); United States
`v. Sauza-Martinez, 217 F.3d 754, 760 (9th Cir. 2000).
`
`
`
`
`
`
`
`
`
`18a
`Douglas, one statement referred to him expressly by
`name, but it merely identified him as potentially
`having determined the amount of accountable
`reserves for certain properties; the existence of
`accountable reserves for each property was not in
`dispute, and
`thus
`the
`statement was not
`incriminating. See Hoac, 990 F.2d at 1105. Douglas
`argues that the other statements incriminated him
`because they
`implicated DBSI Group, and a
`statement about DBSI Group was tantamount to a
`statement about him. However, DBSI Group was a
`large organization and the case was not presented on
`an alter ego theory. Even if the statements were
`somewhat incriminating of Douglas, they were not
`about his own actions and were minimally
`incriminating when compared to the other evidence
`in the case. That is, at most they were “merely
`cumulative of other overwhelming and essentially
`uncontroverted evidence properly admitted.” United
`States v. Gillam, 167 F.3d 1273, 1277 (9th Cir. 1999).
`In
`light
`of
`all
`of
`the
`other
`evidence
`regarding Douglas’s guilt, the statements were
`harmless beyond a reasonable doubt.
`(J) Admission of evidence of undisclosed loans
`We review de novo35 whether the district court
`properly characterized evidence related to DBSI
`Group’s failure to inform lenders that properties
`securing their loans were sold to TIC investors as
`evidence of “other act[s]” pursuant to Federal Rule of
`Evidence 404(b). This evidence was admissible as
`evidence of the very acts charged in the indictment.
`Loftis, 843 F.3d at 1176-1177. The practice was part
`
`35 United States v. Loftis, 843 F.3d 1173, 1176 n.1 (9th Cir.
`2016).
`
`
`
`
`
`
`
`
`
`19a
`and parcel of Appellants’ scheme to defraud and their
`efforts to mislead TIC investors36 regarding their
`purchases: an encumbered property where the very
`sale to the TIC investors could trigger a technical
`default and ultimately, foreclosure on the property.
`Moreover, the practice allowed DBSI Group to
`acquire properties at a lower cost, and DBSI Group
`would not have been able to purchase and resell
`certain properties without those benefits. Because
`“Rule 404(b) applies solely to evidence of ‘other’ acts,”
`the district court properly determined that the rule
`did not bar the admission of this evidence. See id.; see
`also United States v. Vizcarra-Martinez, 66 F.3d
`1006, 1012-1013 (9th Cir. 1995).
`(K) Constructive amendment of the indictment
`Jeremy and David argue that the indictment was
`constructively amended because it did not charge
`fraud
`related
`to Master Leaseco, but
`the
`prosecution’s evidence included Jeremy’s moving
`money into Master Leaseco’s accounts prior to its
`audits. See United States v. Ward, 747 F.3d 1184,
`1189, 1192 (9th Cir. 2014).37 We reject this argument
`because the Master Leaseco fraud was sufficiently
`charged in the indictment. The indictment was not
`constructively amended. See United States v. Hartz,
`458 F.3d 1011, 1021 (9th Cir. 2006).38
`
`
`36 There was no e