United States v. John L. Ciccone

Citations: 219 F.3d 1078; 2000 Cal. Daily Op. Serv. 5995; 2000 Daily Journal DAR 7929; 2000 U.S. App. LEXIS 17254; 2000 WL 986689Docket: 98-10483

Court: Court of Appeals for the Ninth Circuit; July 19, 2000; Federal Appellate Court

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John L. Ciccone appeals his conviction and sentence related to conspiracy, wire fraud, money laundering, and forfeiture. The U.S. Court of Appeals for the Ninth Circuit affirms the conviction and sentence. Ciccone owned Feed America Inc., a telemarketing firm in Las Vegas, where he orchestrated a fraudulent scheme from March 1994 to October 1995. This involved solicitors contacting individuals who had previously engaged with telemarketers, falsely informing them they had won prizes and soliciting substantial payments to "claim" these prizes. Victims were repeatedly contacted until they complied, receiving only a small fraction of their payment back and a low-value gift, while actual charitable donations were negligible. Ciccone crafted a persuasive script for solicitors, emphasizing exclusivity and special recognition for the victims, which misled them into believing they had won something significant, thereby intensifying the deceit. Testimonials from victims and solicitors at the trial highlighted the manipulative nature of the solicitations and the false sense of urgency created by Ciccone's sales tactics.

Feed America failed to deliver on its promises, as it did not have a Board of Directors and only refunded ten percent of victims' payments, providing them with low-value gifts instead. From over $2.3 million received, only about $149,000 was donated to legitimate charities, while approximately $2 million was misappropriated into Ciccone's personal account. Testimony revealed Ciccone's active involvement in the operations of Feed America, including hiring and supervising solicitors, managing donor lists, and handling customer complaints. A superseding indictment on March 18, 1998, charged Ciccone with conspiracy, wire fraud, money laundering, and forfeiture. Following an eight-day trial, he was found guilty on all counts on April 6, 1998, and sentenced to 168 months in prison, with upward adjustments for money laundering and victim vulnerability.

Ciccone challenges his conviction on four grounds: exclusion of evidence regarding satisfied donors, insufficient evidence of a fraudulent scheme, lack of proof of his participation in a conspiracy, and violation of his rights under Brady v. Maryland. The court rejected these arguments, affirming the conviction. It held that the exclusion of evidence about satisfied donors did not constitute an abuse of discretion, as such evidence was not necessary to prove specific intent for fraud and money laundering.

Ciccone's argument relies on the precedent set in United States v. Thomas, where evidence of customer benefits was deemed relevant to specific intent in a fraud case. Thomas, convicted for misrepresenting fruit prices, asserted he lacked intent to defraud since growers ultimately profited. The court ruled that excluding evidence of these profits was a reversible error, as it was crucial to understanding Thomas' intent and the scheme's nature. In Ciccone's case, however, the evidence he sought to introduce did not demonstrate any actual benefit to donors but rather their mistaken belief in receiving a benefit. The court noted that there was no indication the donors were aware of the misappropriation of their funds, thus making their opinions irrelevant to Ciccone's intent. The court cited previous rulings supporting the exclusion of similar evidence when it does not pertain directly to the defendant's intent. Consequently, the court found no abuse of discretion in excluding Ciccone's evidence. Additionally, Ciccone claimed the government failed to prove that his scheme was designed to deceive reasonable individuals. He referenced past rulings defining a fraudulent scheme in terms of its calculated deception of ordinary prudence. The court reaffirmed that specific intent can be established by examining the scheme itself, without requiring the government to meet Ciccone's proposed standard.

The definition of "specific intent" does not require the government to prove that a scheme was designed to deceive individuals of ordinary prudence and comprehension, as established in United States v. Hanley. This precedent clarifies that it is sufficient for the government to show that the defendants' scheme could deceive, irrespective of the gullibility of those deceived. The court emphasized that the wire-fraud statute is intended to protect both naive and experienced individuals, with special consideration for the former. 

Ciccone argued that the government lacked sufficient evidence to convict him of wire fraud, which requires proof of participation in a fraudulent scheme and the use of wires to further that scheme. The court reiterated that knowledge of the fraudulent nature can be established through circumstantial evidence and that the evidence must be viewed in favor of the prosecution. The court found ample evidence to support Ciccone's conviction, as he admitted that solicitors defrauded victims but claimed he was not a knowing participant. However, testimony indicated that Ciccone himself made calls to victims, undermining his claim of non-involvement.

Ciccone, as owner and president of Feed America, is implicated in fraudulent telemarketing practices, despite not personally making calls. The court established that liability exists if one knows that prohibited actions will occur in the normal course of business. Evidence includes Ciccone providing victim lists to solicitors and a deceptive sales pitch with numerous false claims, such as misleading statements about a nonexistent competition and a non-existent board of directors. The prosecution did not violate its obligation to disclose evidence under Brady v. Maryland. Ciccone argued that the government failed to disclose information regarding two witnesses, Happy Van Oder and Ann Lane, who both worked with the FBI. However, the court found that the government did not suppress material evidence that would have influenced the trial outcome, as both witnesses testified openly about their FBI involvement. Consequently, the court concluded there was no Brady violation related to the non-disclosure of this information.

Ciccone contends that the government failed to disclose the presentence report (PSR) of co-schemer William F. Miller, which detailed Miller's extensive criminal history, including multiple arrests for offenses such as DUI, wire fraud, and defrauding an innkeeper. Despite this omission, the court concluded it did not significantly prejudice Ciccone's defense, as the evidence against him was substantial and he effectively cross-examined Miller, who acknowledged his criminal background and issues with alcoholism. 

Ciccone also challenges his sentence, specifically a 12-point upward adjustment imposed by the district court. He disputes two aspects: the determination that the victims were vulnerable, which led to a two-point increase under § 3A1.1, and the inclusion of charitable contributions in the total losses calculated from Feed America's fraudulent activities. The court found no error in the upward adjustment, affirming that Ciccone's scheme specifically targeted vulnerable victims and that such "reloading" tactics justify the sentence enhancement based on precedents. The appeals court reviews the district court's applications of the Sentencing Guidelines de novo and factual findings for clear error, ultimately supporting the district court's decisions.

The district court found that Feed America intentionally targeted victims of prior telemarketing schemes, supported by testimony from solicitors who received lists of individuals previously defrauded. These individuals were often not financially well-off and were repeatedly solicited for donations after their initial contributions, with promises of greater rewards. The court concluded that these victims were vulnerable due to their repeated targeting for further fraudulent solicitations.

Ciccone contested the district court's calculation of the total amount unlawfully taken from victims, arguing that expenses related to cash awards, trinkets, and charitable donations should be deducted. However, the court upheld its calculation, referencing precedent that allows for the total amount taken to be assessed without deducting refunds or prizes, as these expenditures merely prolonged the fraudulent operation by enhancing the organization's appearance of legitimacy. Consequently, the district court's decision to disregard these deductions was affirmed. Ciccone's conviction and sentence were upheld.