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United States v. Spangler

United States Court of Appeals, Ninth Circuit

January 15, 2016

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
MARK F. SPANGLER, Defendant-Appellant

Argued and Submitted, Seattle, Washington: December 10, 2015.

Page 703

Appeal from the United States District Court for the Western District of Washington. D.C. No. 2:12-cr-00133-RSM-1. Ricardo S. Martinez, District Judge, Presiding.

SUMMARY[**]

The panel affirmed convictions on twenty-four counts of wire fraud, seven counts of money laundering, and one count of investment-adviser fraud.

The panel held that the district court did not abuse its discretion in barring on relevancy grounds the defendant's expert witness from testifying, and held that any error was harmless. The panel rejected the defendant's contention that exclusion of the expert's testimony violated his Sixth Amendment right to present a defense.

The panel held that the district court did not abuse its discretion in admitting testimony regarding the defendant's status as a fiduciary, introduced to explain why the defendant's clients did not question his documents and reports, where the investors' lay understandings of the defendant's fiduciary obligations demonstrated how he was able to accomplish the alleged fraud, and where any concerns about the jurors' equating violations of fiduciary duty with criminal liability were put to rest by the district court's careful instructions on the elements of the offenses and the absence of breach of fiduciary duty as a consideration in determining guilt.

The panel rejected the defendant's contention that the district court violated his Fifth Amendment rights when it declined to strike Count 33, which alleged that the defendant committed investment-adviser fraud by violating 15 U.S.C. § 80b-6 (prohibiting investment advisers from engaging in certain conduct) without mentioning 15 U.S.C. § 80b-17 (through which violations of § 80b-6 are made criminal) and without using the word " willful."

The panel concluded that cumulative error analysis is inapposite, as the defendant has not demonstrated any errors.

Suzanne Lee Elliott (argued), Law Office of Suzanne Lee Elliott, Seattle, Washington, for Defendant-Appellant.

Teal Luthy Miller (argued), Assistant United States Attorney; Annette L. Hayes, Acting United States Attorney, United States Attorneys' Office, Western District of Washington, Seattle, Washington, for Plaintiff-Appellee.

Before: M. Margaret McKeown and Richard C. Tallman, Circuit Judges, and Joan Humphrew Lefkow,[*] Senior District Judge. Opinion by Judge Lefkow.

OPINION

Page 704

LEFKOW, Senior District Judge:

Mark F. Spangler appeals his jury convictions on twenty-four counts of wire fraud (18 U.S.C. § 1343), seven counts of money laundering (18 U.S.C. § 1957), and one count of investment-adviser fraud (15 U.S.C. § 80b-17). We focus on three of Spangler's arguments raised on appeal: (1) that the district court abused its discretion in barring his expert witness from testifying, and that the exclusion of the expert's testimony violated his Sixth Amendment right to present a defense; (2) that the district court abused its discretion in permitting testimony about his status as a fiduciary; and (3) that the district court violated his Fifth Amendment rights by failing to strike count 33 from the second superseding indictment.[1] We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

BACKGROUND[2]

On May 14, 2013, a grand jury returned a second superseding indictment charging Spangler with twenty-five counts of wire fraud, seven counts of money laundering, and one count of investment-adviser fraud. At trial, the government presented evidence of the following:

Spangler was a registered investment adviser and a one-time chairman of the National Association of Personal Financial

Page 705

Advisors. From the early 1980s until 2011, Spangler headed a Seattle investment firm known during the relevant time period as The Spangler Group, which serviced between twenty and twenty-five client families at any given time.

In 1998, Spangler set up five investment funds, two of which--the Equity Investors Group, LLC (Equity) and the Income Investors Group, LLC (Income)--are particularly relevant for purposes of this appeal. Spangler's clients expected that the money they put into Equity and Income would be invested in publicly-traded companies and that investment decisions would be made by an outside investment manager, rather than Spangler. These expectations found support in the private placement memoranda (PPMs) for the funds. Indeed, the 1998 version of the PPM for Equity, which was drafted by William Carleton, Spangler's attorney, provided that " the securities in which [Equity] invests are expected to be traded in public markets" and that Spangler would use Southeastern Asset Management, Inc. to make investment decisions. Both PPMs provided that the funds' investment objectives could be changed only by a two-thirds vote of the owners.

The PPMs also contained disclaimers, which the defense emphasized at trial. For example, the PPMs warned clients that the investments to be made involved a " high degree of risk" and that " no investment in these securities should be made by any person who is not in a position to lose the entire amount of such investment." At ...


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