`
`PRECEDENTIAL
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`______________
`
`No. 19-2775
`______________
`
`UNITED STATES OF AMERICA
`
`v.
`
`DONNA FALLON,
` Appellant
`______________
`
`
`
`No. 19-2788
`______________
`
`UNITED STATES OF AMERICA
`
`v.
`
`DEAN VOLKES,
` Appellant
`______________
`
`No. 19-2792
`______________
`
`UNITED STATES OF AMERICA
`
`
`
`
`
`
`
`v.
`
`DEVOS LTD LLC d/b/a GUARANTEED RETURNS,
`Appellant
`
`______________
`
`On Appeal from the United States District Court
`for the Eastern District of Pennsylvania
`(District Court Nos. 2-14-cr-00574-003, 2-14-cr-00574-002,
`& 2-14-cr-00574-001)
`District Judge: Petrese B. Tucker
`______________
`
`Argued: March 16, 2021
`______________
`
`Before: KRAUSE, PHIPPS, and FUENTES, Circuit Judges.
`
`(Filed: September 30, 2022)
`
`
`Robert J. Cleary [ARGUED]
`William C. Komaroff
`James R. Anderson
`Proskauer Rose LLP
`11 Times Square
`New York, NY 10036
`
`
`
`Lisa A. Mathewson [ARGUED]
`The Law Offices of Lisa A. Mathewson, LLC
`123 S. Broad Street, Suite 810
`Philadelphia, PA 19109
`
`
`Counsel for Appellant Donna Fallon
`
`2
`
`
`
`
`
`
`
`
`Counsel for Appellant Dean Volkes
`
`Counsel for Appellant DEVOS, LTD
`
`
`Douglas E. Grover
`Richard H. Dolan [ARGUED]
`Thomas A. Kissane
`Schlam Stone & Dolan LLP
`26 Broadway
`New York, NY 10004
`
`
`
`William M. McSwain
`Robert A. Zauzmer
`Patrick J. Murray
`Elizabeth M. Ray
`Nancy Rue [ARGUED]
`Office of United States Attorney
`615 Chestnut Street, Suite 1250
`Philadelphia, PA 19106
`
`
`
`Counsel for Appellee United States of America
`______________
`
`OPINION OF THE COURT
`______________
`
`
`FUENTES, Circuit Judge.
`
`The three Appellants—Devos LTD LLC, which trades
`under the name “Guaranteed Returns”; Dean Volkes, the
`company’s owner and Chief Executive Officer; and Donna
`Fallon, the company’s Chief Financial Officer and Volkes’s
`sister—appeal their convictions arising from multiple schemes
`to defraud
`their clients,
`including
`the United States
`
`3
`
`
`
`
`
`
`
`
`Government. For the reasons explained herein, we will vacate
`Appellants’ conviction for conspiracy to launder money,
`vacate the sentences, and remand for resentencing, including a
`recalculation of the forfeiture award. For all other convictions,
`we will affirm.
`
`Background
`
`I.
`
`
`Factual Background
`
`A.
`Guaranteed Returns was a “reverse distributor” of
`pharmaceutical products. It provided inventory management
`services to healthcare providers (such as hospitals, pharmacies,
`long-term care facilities, and doctors’ offices) by returning
`unused or expired pharmaceutical drugs
`to
`the drug
`manufacturers, for which the provider can normally receive a
`refund.
` Because healthcare providers need multiple
`pharmaceuticals from a variety of manufacturers, each with
`different return policies for their products, reverse distributors
`perform this service for their clients in exchange for a fee,
`which is typically a percentage of the return value of the drugs.
`
`To obtain a refund, the provider must either physically
`return the pharmaceutical to the manufacturer, or certify that it
`has been destroyed. The manufacturer then issues the refund,
`either in the form of a credit to the healthcare provider’s
`account at the relevant wholesaler,1 or as a money refund by a
`wire transfer or check. Reverse distributors like Guaranteed
`
`1 Most healthcare providers purchase their pharmaceutical
`products through wholesale distributors rather than through
`individual manufacturers. A healthcare provider therefore may
`have an account with a wholesaler of a drug, not with the
`manufacturer of the drug.
`
`4
`
`
`
`
`
`
`
`
`Returns manage this process for their clients: a provider sends
`its pharmaceuticals to the reverse distributor who returns the
`drugs on the provider’s behalf. As a consequence, both the
`drugs and the funds that reverse distributors receive from
`manufacturers for returning those drugs are the property of the
`healthcare-provider clients.
`
`Providers will also send non-returnable pharmaceuticals
`reverse distributors.
` These
`include unexpired
`to
`pharmaceuticals that the providers no longer need but that may
`become eligible for a refund upon expiration. These are
`commonly known as “indates.”2 Reverse distributors can keep
`track of these indates, “age” them until they are returnable, and
`then submit them for a refund when the time comes.
`
`To run their operations efficiently, reverse distributors
`return all pharmaceuticals eligible for a refund to a single
`manufacturer in one “batch.” These batches can be comprised
`of different drugs submitted on behalf of different healthcare
`providers. The manufacturer, in accordance with its policy,
`will then either credit the individual healthcare provider’s
`account at the relevant wholesaler, or remit a lump-sum
`payment to the reverse distributor who then issues refunds—
`less a service fee—to its healthcare-provider clients whose
`drugs were in the batch. For Guaranteed Returns, the lump-
`sum refunds were wired directly to the company’s general
`operating account, and the company then issued refund checks
`from that account to the relevant clients, less a service fee.3
`
`2 These products are still “in date,” meaning that they are not
`yet expired.
`3 The operating account was used to receive and distribute
`money relating to the operation of the business, including to
`make vendor payments and to pay operating expenses such as
`
`5
`
`
`
`
`
`
`
`
`Guaranteed Returns used a database management software
`called FilePro to track the information necessary to determine
`how much money to remit to which clients from the lump-sum
`refunds. Each healthcare-provider client had a separate account
`in FilePro. This software tracked the pharmaceuticals
`received, to which client they belonged, the date they arrived,
`and the date of return, among other information. For indates,
`FilePro also tracked the date on which these pharmaceuticals
`would become eligible for a refund.
`
`In 2001, the Government started doing business with
`Guaranteed Returns. The Department of Defense (“DoD”)
`contracted with Guaranteed Returns to handle pharmaceutical
`returns for a number of government facilities. DoD and
`Guaranteed Returns entered into another agreement in 2007.
`Guaranteed Returns’s proposal for the second contract
`specifically stated that it would inventory, warehouse, and age
`the Government’s indates, and then return the indates when
`eligible, for its usual fee. Guaranteed Returns’s 2001 contract
`did not refer to indates by name, but the company specifically
`included indates in the 2007 contract. The company also
`required its clients to use a return authorization form when
`sending drugs for credit that purported to give Guaranteed
`Returns wide discretion concerning pharmaceuticals that were
`not “immediately creditable.”4
`
`
`freight, payroll, and expenses related to the company’s
`facilities.
`4 App. 6101–02 (“Guaranteed Returns reserves the right, in its
`sole discretion, to dispose, remit, donate and/or otherwise
`receive product that it believes not to be in an immediately
`creditable state without claim for remuneration.”).
`
`6
`
`
`
`
`
`
`
`
`investigating Guaranteed
`The Government began
`Returns after the District of Columbia noticed that it did not
`receive
`the full refund on a return of some of
`its
`pharmaceuticals.5 The Defense Criminal Investigative Service
`investigated, and the Government eventually uncovered a
`series of schemes that Guaranteed Returns used to defraud its
`clients. Four such schemes are described below.
`
`
`1.
`
`The Indates Scheme
`
`Volkes devised and implemented a scheme to return
`indated drugs to manufacturers on Guaranteed Returns’s own
`behalf—not on behalf of the client who owned the drugs—and
`to keep the refund money. To do this, in 2007, Volkes
`instructed his IT staff to change the programming in FilePro to
`divide each of Guaranteed Returns’s clients
`into
`two
`categories: “managed” and “unmanaged.” “Managed” clients
`were thought to pay close attention to whether they received
`refunds or credits for indates, while “unmanaged” clients were
`thought not to do so. The computer program diverted indates
`from unmanaged clients by reclassifying them as the property
`of Guaranteed Returns, listing them in FilePro as the property
`of a non-existent client labeled “GRX Stores.” The program
`did not affect the indates for “managed” clients. When
`Guaranteed Returns received the lump-sum payment from
`manufacturers for returning a batch of pharmaceuticals, it
`would pay “managed” clients the amount owed but kept for
`itself the amount that should be owed to “unmanaged” clients
`for the indate refunds. To ensure that the scheme was not
`uncovered, when submitting batches of pharmaceuticals to
`
`5 The return in question was for $600,000 worth of recently
`expired Cipro, which the District of Columbia had stockpiled
`for availability in case of an anthrax attack.
`
`7
`
`
`
`
`
`
`
`
`manufacturers for refunds, Guaranteed Returns attributed each
`drug to the healthcare provider from whom Guaranteed
`Returns had diverted the drug.
`
`
`2.
`
`The G-13 Scheme
`
`Volkes also devised a scheme to divert indates from
`managed clients. In late 2010, he instructed his IT staff to
`reclassify every thirteenth expiring indate product of a
`managed client as the property of GRX Stores, if the value of
`the product was less than $3,000. Volkes wanted to avoid
`stealing products that were so valuable that they might catch
`the client’s attention.
`
`
`3.
`
`The Three-Year Cutoff Scheme
`
`In 2011, Volkes developed another scheme to divert
`indates from managed clients. Volkes instructed his IT staff to
`reclassify indates that were received more than three years
`earlier as the property of the GRX Stores.
`
`
`4.
`
`Adjustment Scheme
`
`Not all of Guaranteed Returns and Volkes’s schemes
`involved indates. In fall 2010, Volkes directed his IT staff to
`create a program that “adjusted” downward the amount of
`refunds that were due to certain clients. This adjustment
`program skimmed a certain percentage from the lump-sum
`refund that was owed to clients and reassigned it to the fictious
`GRX Stores. Volkes had the program installed on Fallon’s
`computer so that Fallon could decide when to run the
`adjustment program and what percentage to skim from the
`clients’ refunds. Volkes did this in order to repay a loan he had
`taken out to satisfy a civil judgment against him issued by a
`Missouri court.
`
`8
`
`
`
`
`
`
`
`
`
`
`5.
`
`Money Laundering Conspiracy
`
`In addition to the fraud schemes, the Government
`alleged that Guaranteed Returns, Volkes, and Fallon conspired
`to launder the fraud proceeds corresponding to the indate
`products that had been diverted from clients and reclassified as
`belonging to GRX Stores. Since the company received all
`refund payments as a lump-sum from manufacturers, the
`Government alleged that the fraud proceeds were initially
`commingled with the “legitimate” refunds due to clients, as
`well as the company’s service fees, in the lump-sum refund
`received into the company’s general operating account. Once
`clients were paid, the Government alleged that Appellants
`transferred the fraud proceeds out of the general operating
`account and eventually into Volkes’s personal account through
`a series of complex transactions designed to conceal the nature,
`location, source, ownership, and control of these proceeds.
`
`B.
`The Government brought 64 charges against
`Guaranteed Returns, Volkes, and Fallon.6 Counts 1–23
`charged Guaranteed Returns and Volkes with wire fraud,7 and
`Counts 24–40 charged them with mail fraud arising from the
`same schemes.8 Counts 41–52 charged all Appellants with
`
`Procedural History
`
`
`6 The Government obtained a superseding indictment against
`Appellants. We refer to this superseding indictment as the
`“indictment” for brevity.
`7 In violation of 18 U.S.C. § 1343.
`8 In violation of 18 U.S.C. § 1341.
`
`9
`
`
`
`
`
`
`
`
`mail fraud,9 Count 53 charged Guaranteed Returns and Volkes
`with theft of Government property in the form of more than
`$27 million worth of pharmaceutical products,10 and Count 54
`charged all Appellants with conspiracy to launder money.11
`
`After a seven-week trial, Guaranteed Returns was
`convicted on all counts; Volkes was convicted on Counts 1–55
`and 62–64; and Fallon was convicted on Counts 41–52, 54, and
`56–61. The jury acquitted on the remaining counts. All
`Appellants moved for a judgment of acquittal or a new trial,
`which the District Court denied.
`
`The indictment also listed two forfeiture counts. The
`first count sought forfeiture of $180,673,777, and the second
`sought forfeiture attributable to Appellants’ money laundering
`conspiracy. Both counts sought substitution of other assets if
`those sought were commingled or not traceable. After the
`jury’s trial verdict, the District Court held a one-day forfeiture
`trial, at which the Government sought to proceed against two
`bank accounts. The jury found that the funds in those accounts
`were subject to forfeiture.
`
`At sentencing, the Court sentenced Fallon to one year
`and one day in prison, followed by three years’ supervised
`
`9 In violation of 18 U.S.C. §§ 1341, 1349.
`10 In violation of 18 U.S.C. §§ 641, 2. See also App. 383.
`11 In violation of 18 U.S.C. § 1956(h). Additionally, Count 55
`charged a conspiracy to obstruct justice, while Counts 56–59
`and 62–63 charged substantive obstruction of justice, and
`Counts 60, 61, and 64 charged making false statements. These
`charges are not the subject of any specific challenges on
`appeal.
`
`10
`
`
`
`
`
`
`
`
`release, and sentenced Volkes to five years’ imprisonment,
`with three years’ supervised release.12 The Court sentenced
`Guaranteed Returns to five years’ probation with restrictions
`on how the company may operate. The Court also ordered
`Appellants to pay two restitution awards. The first restitution
`amount was $94,737,868.16, to be paid jointly and severally
`by Volkes and Guaranteed Returns. The second restitution
`amount was $515,221.89, to be paid jointly and severally by
`Volkes, Fallon, and Guaranteed Returns.13 Finally, the Court
`entered a forfeiture judgment of $114,832,445.62 against
`Guaranteed Returns.
`
`Discussion
`
`The District Court had jurisdiction over this federal
`criminal prosecution under 18 U.S.C. § 3231. We have
`appellate jurisdiction under 28 U.S.C. § 1291 to review the
`convictions, and under 18 U.S.C. § 3742 to review the
`sentences. Our standard of review varies with each challenge
`that Appellants raise to their convictions and sentences. We
`address each challenge and the corresponding standard of
`review in the sections below.
`
`The 2011 Warrant Was Not a General
`A.
`Warrant
`
`II.
`
`
`Fallon argues that the very first search warrant that the
`Government obtained
`in
`the
`investigation was an
`unconstitutional general warrant. This Court reviews the facts
`
`12 Fallon and Volkes do not appeal the custodial aspects of their
`sentences.
`13 Volkes and Guaranteed Returns were therefore ordered to
`pay a total restitution award of $95,253,090.05.
`
`11
`
`
`
`
`
`
`
`
`determined at a suppression ruling for clear error, but exercises
`plenary review over the application of law to those facts.14
`
`On March 29, 2011, the Government obtained five
`search warrants, including one authorizing a search of
`Guaranteed Returns’s headquarters in Holbrook, New York.15
`When executing this warrant, the agents found significant
`amounts of evidence relating to Guaranteed Returns’s fraud
`schemes,
`including hard drives
`that Fallon had
`told
`investigators the company did not have. Before trial,
`Appellants moved to suppress all the evidence obtained under
`the 2011 warrant.16 They argued that the warrants were
`insufficiently particularized and therefore unconstitutional
`general warrants, but the District Court disagreed and denied
`the motion to suppress. Appellants repeat these contentions on
`appeal, but we agree with the District Court that the 2011
`warrant was sufficiently particularized.
`
`
`
`14 United States v. Perez, 280 F.3d 318, 336 (3d Cir. 2002).
`15 Specifically, the Government obtained authorization to
`search Guaranteed Returns’s headquarters, warehouse, and a
`safe deposit box held at a local bank, as well as the residences
`of two employees of the company’s information technology
`department.
`16 Before trial Appellants also sought to suppress evidence
`uncovered under a 2014 search warrant. Appellants’ opening
`briefs do not challenge any aspect of the 2014 warrants.
`Appellants have thus waived any argument relating to these
`warrants. See United States v. Pelullo, 399 F.3d 197, 222 (3d
`Cir. 2005), as amended (Mar. 8, 2005) (“It is well settled that
`an appellant’s failure to identify or argue an issue in his
`opening brief constitutes waiver of that issue on appeal.”).
`
`12
`
`
`
`
`
`
`
`
`The Fourth Amendment protects the “right of the people
`to be secure in their persons, houses, papers, and effects,
`against unreasonable searches and seizures.”17 It also requires
`warrants to be supported by probable cause and to “particularly
`describ[e] the place to be searched, and the persons or things
`to be seized.”18 Although the phrase “general warrants” does
`not appear in the text of the Fourth Amendment, the term refers
`to a specific form of authorization abhorred by the founders,
`which authorized “a general, exploratory rummaging in a
`person’s belongings.”19 Accordingly, the particularization
`requirement was included to prohibit these general warrants.20
`A general warrant is one that is insufficiently particularized in
`either the places to be searched or the persons or things to be
`seized.21
`
`Whether a warrant is sufficiently particularized depends
`on the nexus between the evidence to be sought or seized and
`the alleged offenses.22 Where a warrant affidavit provides
`probable cause to believe that it will uncover evidence of a
`wide-ranging and
`long-lasting
`scheme with multiple
`participants, an equally broad search for such evidence is
`permissible.23 In United States v. Yusuf, this Court held that
`
`
`17 U.S. Const. amend. IV.
`18 Id.
`19 Coolidge v. New Hampshire, 403 U.S. 443, 467 (1971),
`holding modified by Horton v. California, 496 U.S. 128 (1990).
`20 Id.
`21 United States v. Christine, 687 F.2d 749, 753 (3d Cir. 1982).
`22 United States v. Yusuf, 461 F.3d 374, 394 (3d Cir. 2006).
`23 Id.
`
`13
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`
`
`
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`
`
`warrants that sought a broad range of documents and records
`were not general warrants because “(1) they specified that
`agents were searching for evidence of several specifically
`enumerated federal crimes; (2) the search was limited in time
`to [an eleven-year period]; and (3) the evidence sought was
`limited to records pertaining to [specified corporations and
`defendants].”24 The offenses in Yusuf also included mail fraud
`and money laundering.25
`
`The warrant here is strikingly similar to the one in
`Yusuf. In both cases, the Government sought a broad range of
`business records relating to multi-year schemes of mail fraud
`and a money laundering conspiracy. The alleged schemes here
`were arguably broader than those in Yusuf since they involved
`vastly larger sums and many more defrauded clients, and they
`therefore needed much more information to put together.
`Despite this greater breadth, the warrants here were precisely
`as limited as those in Yusuf: the Government sought
`Guaranteed Returns’s records relating to five enumerated
`federal offenses, identified by statutes, and limited to a ten-year
`period. This warrant is not impermissibly general.
`
`Furthermore, the Government argues that, even if the
`warrant was deficient, the good-faith exception would prevent
`suppression here. We agree. Under the good-faith exception
`to the exclusionary rule, if an officer relies in good faith on a
`warrant later found to be deficient, evidence obtained pursuant
`to that warrant should be suppressed only if the officer had—
`or may be fairly charged with—knowledge of the deficiency.26
`
`
`24 Id. at 395.
`25 Id. at 378.
`26 United States v. Leon, 468 U.S. 897, 922–23 (1984).
`
`14
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`
`We have also recognized that an officer’s reliance on a warrant
`would not be reasonable and thus would not trigger the good-
`faith exception if “the warrant was so facially deficient that it
`failed to particularize the place to be searched or the things to
`be seized.”27 The 2011 warrant here is not so deficient. The
`warrant contains an extensive recitation of the place to be
`searched and the items to be seized, with further hand-written
`limitations added by the magistrate judge. Under these
`circumstances, suppression would not serve to deter future law
`enforcement misconduct, and the evidence seized pursuant to
`the 2011 warrant is admissible.
`
`Civil Contract Law Expert and Proposed
`B.
`Jury Instructions
`
`Appellants next argue that the District Court erred in
`precluding expert testimony on civil contract law. We review
`the District Court’s decision to exclude expert testimony for
`abuse of discretion.28
`
`
`1.
`
`Proposed Testimony of Prof. Finkelstein
`
`Appellants sought to have University of Pennsylvania
`Carey Law School Professor Claire Finkelstein testify in their
`defense. They argued that her testimony on civil contract law
`would oppose
`that of Guaranteed Returns’s
`sales
`representatives and clients who testified regarding their
`understandings of
`the company’s contracts and return
`authorization forms, and would also demonstrate that there was
`
`
`27 United States v. Zimmerman, 277 F.3d 426, 437 (3d Cir.
`2002).
`28 United States v. Heinrich, 971 F.3d 160, 163 (3d Cir. 2020).
`
`15
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`
`
`
`a reasonable interpretation of those documents that was
`consistent with Appellants’ good faith.
`
`The Government opposed this testimony, claiming that
`contract law could be considered governing, and that the Court
`would instruct the jury as to the governing law. Lay witnesses,
`on the other hand, discussed the contract terms and other
`representations based on their personal knowledge and
`involvement, and did not purport to interpret them. The
`District Court agreed with the Government, finding that the
`expert testimony would be confusing and unnecessary, without
`expressly citing to a rule of evidence, but presumably
`excluding it under Federal Rules of Evidence 403 and 702,
`respectively. Later, in denying Appellants’ motion for a new
`trial, the District Court addressed its prior rulings in more
`depth, finding that the testimony was properly excluded under
`three Federal Rules of Evidence: (1) under Rule 401 because
`the testimony was irrelevant to the criminal fraud case before
`the jury; (2) under Rule 403 because the marginal probative
`value of the testimony would be substantially outweighed by
`the danger of confusing the jury; and (3) under Rule 702
`because the testimony would not have been helpful to the jury
`as expert witness testimony. Appellants attack all three
`rationales on appeal but fail to demonstrate an abuse of
`discretion.
`
`a)
`
`Exclusion as Confusing Under
`Rule 403
`
`At trial, the District Court stated that Prof. Finkelstein’s
`testimony should be excluded because it “would have a
`tendency to confuse the jurors.”29 Under Rule 403, a district
`court may exclude otherwise relevant evidence “if its probative
`
`
`29 App. 4377.
`
`16
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`value is substantially outweighed by a danger of . . . confusing
`the issues.”30 The commands of Rule 403 are “inexact,
`‘requiring sensitivity on the part of the trial court to the
`subtleties of
`the particular situation, and considerable
`deference on the part of the reviewing court to the hands-on
`judgment of the trial judge.’”31 “We will not disturb the
`District Court’s ruling unless it was arbitrary or irrational.”32
`Where, as here, the District Court did not explicitly articulate
`the balancing test on the record, we may either conclude that
`the Court implicitly performed the test; or, if we find that the
`District Court did not perform it, we may perform the test
`ourselves on review.33
`
`We find that the District Court implicitly performed the
`Rule 403 balancing test. It heard detailed argument on this
`question and raised the issue of confusion with defense
`counsel, noting that admitting the testimony could “turn this
`case into a contract case even though it’s a fraud case.”34 The
`District Court’s concern is understandable: having a well-
`credentialed law professor testify as an expert on contract law
`would inevitably cause the jury to believe that the contractual
`
`
`30 Fed. R. Evid. 403.
`31 Egan v. Del. River Port Auth., 851 F.3d 263, 275 (3d Cir.
`2017) (quoting United States v. Vosburgh, 602 F.3d 512, 537
`(3d Cir. 2010)).
`32 Vosburgh, 602 F.3d at 537 (quoting United States v. Kellogg,
`510 F.3d 188, 197 (3d Cir. 2007) (internal quotation marks
`omitted).
`33 See Egan, 851 F.3d at 276 (citing United States v. Eufrasio,
`935 F.2d 553, 572 (3d Cir. 1991)).
`34 App. 4373.
`
`17
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`terms were at issue in the case. The Government also argued
`that the confusion could extend to the relevant source of law,
`substituting the expert’s testimony for the District Court’s
`instructions. Excluding evidence that could confuse the
`dispositive issue in the case is not an abuse of discretion.35
`
`Additionally, under Rule 403, the risk of confusion to
`the jurors must be offset against the probative value of the
`evidence, and here the probative value was small. Appellants’
`rationale for admitting Prof. Finkelstein’s testimony was to
`demonstrate that their interpretations of the contracts were
`reasonable, and could support a defense of good faith.
`However, as an expert, Prof. Finkelstein could not testify as to
`Volkes’s subjective good faith or actual belief; she could only
`address what was a reasonable interpretation of the contracts.
`And to demonstrate a good faith belief negating his intent,
`Volkes did not need to show that he held a reasonable
`interpretation of the contracts, only that he did in fact believe
`that the contracts entitled him to keep indate refunds. An
`unreasonable belief would suffice.36 Prof. Finkelstein’s
`testimony was therefore properly excluded under Rule 403
`because it had very limited probative value, which was clearly
`outweighed by the risk of confusing the jury.
`
`
`
`35 McKenna v. City of Phila., 582 F.3d 447, 461 (3d Cir.
`2009) (excluding police directives on use of force in § 1983
`case on excessive force as it could confuse the jury as to the
`relevant violation under consideration).
`36 See Cheek v. United States, 498 U.S. 192, 203–04 (1991);
`United States v. Jimenez, 513 F.3d 62, 75 (3d Cir. 2008)
`(noting that good faith negates intent to defraud).
`
`18
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`b)
`
`Exclusion as Not Helpful under
`Rule 702 and as Irrelevant under
`Rule 401
`
`The District Court’s other rationale for exclusion at trial
`was that Prof. Finkelstein’s expert testimony would not be
`helpful to the jury.37 Under Rule 702(a), an expert may testify
`in the form of an opinion if the expert’s “specialized
`knowledge will help the trier of fact to understand the evidence
`or determine a fact in issue.”38 Expert testimony is “helpful”
`if it is sufficiently tied to the facts of the case such that it will
`help the jury resolve a factual dispute.39
`
`As previously discussed, the probative value of Prof.
`Finkelstein’s expert testimony on contract law was small. The
`testimony would not help the jury determine a fact in issue
`because there was no genuine factual dispute as to whether
`Guaranteed Returns entered into contracts with its clients.
`Appellants could be convicted of mail and wire fraud even if
`they had behaved consistently with their obligations under the
`contracts, because the relevant question was their intent to
`defraud. To the extent that Prof. Finkelstein’s opinion bears
`on the relevant governing law of the case, it would be unhelpful
`under Rule 702 “because it would usurp the District Court’s
`pivotal role in explaining the law to the jury.”40
`
`
`37 App. 4377 (finding that Prof. Finkelstein’s testimony “is not
`something that is necessary to have an expert testify”).
`38 Fed. R. Evid. 702(a).
`39 United States v. Schiff, 602 F.3d 152, 173 (3d Cir. 2010).
`40 Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 217 (3d
`Cir. 2006).
`
`19
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`The same rationale indicates why Prof. Finkelstein’s
`testimony was not relevant under Rule 401. Evidence is
`relevant if it has “any tendency to make a fact [of consequence
`in determining the action] more or less probable than it would
`be without the evidence.”41 As Prof. Finkelstein could not
`testify to the only fact of consequence—Appellants’ subjective
`beliefs—her testimony did not bear on any of Appellants’ guilt.
`Prof. Finkelstein’s testimony was therefore properly excluded.
`
`
`2.
`
`Contract Law Jury Instructions
`
`In the alternative, Appellants claim that the District
`Court should have instructed the jury on principles of civil
`contract law and included an instruction that a breach of
`contract is not fraud. We review a denial of a requested jury
`instruction for abuse of discretion.42
`
`Appellants characterize this argument as the denial of a
`theory of the defense, but this is not strictly accurate.
`Appellants’ theory was that they acted in good faith, and they
`claim that principles of civil contract law would support this
`inference. Even assuming that this standard applies, the
`argument still fails. A defendant is entitled to a theory-of-
`defense jury instruction if (1) he proposes a correct statement
`of the law; (2) his theory is supported by the evidence; (3) the
`theory of defense is not part of the charge; and (4) the failure
`to include an instruction of the defendant’s theory would deny
`him a fair trial.43
`
`
`
`41 Fed. R. Evid. 401.
`42 Jimenez, 513 F.3d at 74.
`43 United States v. Sussman, 709 F.3d 155, 178 (3d Cir. 2013).
`
`20
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`Appellants cannot meet this standard. The good-faith
`defense was already part of the jury charge. The District Court
`instructed the jury that “[a] person acts in good faith when he
`or she has an honestly held belief, opinion, or understanding
`that his or her conduct was not unlawful, even though that
`belief, opinion, or understanding turns out to be inaccurate or
`incorrect.”44 This is a correct statement of the law that
`permitted the jury to find in Appellants’ favor, with or without
`concluding that they complied with their contract obligations.
`Instructions on civil contract law are not supported by the
`evidence here, as they would not bear on Appellants’ good
`faith for the reasons discussed above. In addition, Appellants
`cannot demonstrate that denying their proposed instruction on
`contract law deprived them of a fair trial. The jury was
`instructed on the good faith defense, and the District Court
`therefore did not err in not instructing the jury on civil contract
`law.
`
`
`Constructive Amendment to Indictment’s
`C.
`Mail Fraud Counts 41–52
`
`Appellants claim that the Government constructively
`amended Counts 41–52 by varying their proof at trial from the
`charges presented to the grand jury. Our review of a
`constructive amendment claim is plenary.45
`
` A
`
` constructive amendment occurs where “the evidence
`and jury instructions at trial modify essential terms of the
`charged offense in such a way that there is a substantial
`
`
`44 App. 5428.
`45 United States v. Centeno, 793 F.3d 378, 389 n.10 (3d Cir.
`2015).
`
`21
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`likelihood that the jury may have convicted the defendant for
`an offense differing from the offense the indictment returned
`by the grand jury actually charged.”46 Trial evidence,
`arguments, or the district court’s own instructions can all form
`the basis of constructive amendments.47 A constructive
`amendment is per se reversible error because it deprives a
`defendant of his Fifth Amendment right to be tried on charges
`presented to the grand jury.48 The “key inquiry” in a
`constructive amendment claim “is whether the defendant was
`convicted of the same conduct for which he was indicted.”49
`
`Counts 41–52 charged Appellants with mail fraud. The
`indictment claimed that Guaranteed Returns, Volkes, and
`Fallon told clients that their negotiated fees were “all
`inclusive,” but in rea
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