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United States of America v. Brent Roger Wilkes

October 19, 2011

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
BRENT ROGER WILKES,
DEFENDANT-APPELLANT.



D.C. No. 07-cr-00330-LAB Appeal from the United States District Court for the Southern District of California Larry A. Burns, District Judge, Presiding

The opinion of the court was delivered by: Alarcon, Senior Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted

August 29, 2011-Pasadena, California

Before: Arthur L. Alarcon, Diarmuid F. O'Scannlain, and Barry G. Silverman, Circuit Judges.

Opinion by Judge Alarcon

OPINION

Brent Wilkes appeals his convictions on multiple counts of conspiracy, honest services wire fraud, bribery, and money laundering. This case centered around the political corruption of former California Congressman Randall "Duke" Cunningham, who provided lucrative government defense contracts to Wilkes and others in exchange for expensive meals, lavish trips, a houseboat in Washington, D.C., and mortgage payments for his multi-million dollar home in San Diego County. Wilkes appeals his convictions.

I

Brent Wilkes, a San Diego native, worked as an accountant in the early 1990s. In 1993, he became a lobbyist for Audre Co., a San Diego based software company. As Audre's lobby-ist, Wilkes met with members of Congress to sell Audre's document conversion system to government agencies. Wilkes left Audre in 1994. In 1995, Wilkes drafted a congressional proposal for a government-funded program to convert documents into electronic format, which he named Automated Data Conversion Systems ("ADCS Program"). Wilkes then started his own company named after that program, ADCS, Inc. ("ADCS"). In May 1995, Wilkes hired his nephew, Joel Combs, to work as a software person for ADCS. Wilkes later hired a consultant, Mitchell Wade, to assist ADCS in obtaining government contracts. Michael Williams was also hired as vice president of operations for ADCS.

From ADCS's inception, Wilkes traveled from San Diego to Washington, D.C. to meet with Congressmen Cunningham and Duncan Hunter to secure the appropriation of federal funding for the ADCS Program. In 1997, Cunningham was appointed to the House Appropriations Committee, which had the power to add money (i.e. earmarks) to the President's budget. To solicit his support for ADCS's programs, Wilkes expended tens of thousands of dollars on meals for Cunningham, treated the Congressman to trips, and devised a plan to give Cunningham over $100,000 disguised as payments for Wilkes's purchase of the "Kelly C," the houseboat on which Cunningham lived while in Washington, D.C. In return for the benefits he gave Cunningham, Wilkes received government contracts worth millions of dollars through Cunningham's earmarks.

In 1998, with Cunningham's support, ADCS received a government contract to scan documents in Panama for the Department of Defense ("DOD"). Wilkes regularly billed the government for poor work, work never done, and equipment he supposedly bought for the government. When government officials expressed their concerns about ADCS, Wilkes used Cunningham's influence to pressure them to continue to fund contracts for the company.

In 2000, Wilkes and Cunningham began seeking government funding through another document scanning and conversion program called the Global Infrastructure Data Capture Program ("GIDC"). When the DOD decided to redirect millions of dollars from Wilkes's scanning project to another use, Wade, acting on Wilkes's behalf, threatened to have a DOD official fired. Cunningham intervened, and government officials caved in to his pressure by diverting to Wilkes millions of dollars from counter-terrorism funds.

In 2001, Wilkes and Wade shifted their focus from contracts for document conversion to contracts to supply equipment and software for the Office of the Secretary of Defense ("OSD"). Wade testified that, with Cunningham's support, he and Wilkes marked up - by as much as 600% - the price of off-the-shelf equipment they sold to the government. Despite the high profit margins on the supply contracts, Wilkes and Wade failed to deliver the equipment that was requested by the government.

By 2001, Wade also began building his own relationship with Cunningham and made various secret payoffs to the Congressman. In 2003, Wade had managed to insert his own company, MZM, Inc., in place of ADCS, as the prime contractor for the OSD contract. Cunningham made additional appropriations requests for MZM, Inc.

In August 2003, seeing that Wade's earmarks were getting bigger, Wilkes treated Cunningham to a lavish Hawaiian vacation filled with a variety of diversions including fine dining, scuba diving, and evenings with prostitutes. In return, Cunningham earmarked $16 million for Wilkes and Wade as part of the GIDC program the following month and listed GIDC as one of his two top priorities in 2004.

In 2004, Cunningham was responsible for securing millions of dollars in appropriations for Wilkes's and Wade's benefit. In exchange, Wade paid off a first mortgage in Cunningham's residence in the amount of $500,000 and, through a complicated series of financial transactions among multiple companies, Wilkes paid off $525,000 on Cunningham's second mortgage.

In 2005, the San Diego Union-Tribune published an article exposing Wade's bribery scheme. Wade began cooperating with prosecutors. In August 2005, ADCS's offices were searched, and Wilkes's business records and computers were seized.

On February 13, 2007, a federal grand jury returned a 25-count Indictment against Wilkes. On May 10, 2007, a federal grand jury returned a 25-count Superseding Indictment against Wilkes. Wilkes's jury trial commenced on October 3, 2007. At trial, Wilkes requested immunity for defense witness Michael Williams, who he contended would offer testimony that contradicted the testimony of several immunized prosecution witnesses. The district court denied Wilkes's request based on its conclusion that it could not compel a defense witness's immunity absent a finding of prosecutorial misconduct.

On November 5, 2007, after four days of deliberation, the jury found Wilkes guilty on thirteen counts: one count of conspiracy (18 U.S.C. § 371), ten counts of honest services wire fraud (18 U.S.C. §§ 1343 and 1346 ), one count of bribery of a public official (18 U.S.C. § 201), and one count of money laundering (18 U.S.C. § 1956(a)(1)(B)(i)). After the district court discharged the jury, it imposed criminal forfeiture against Wilkes in the amount of $636,116. The district court also imposed a fine against Wilkes in the amount of $500,000.

The district court issued its written judgment on February 19, 2008. Wilkes timely filed his notice of appeal on February 19, 2008. The district court had jurisdiction pursuant to 18 U.S.C. § 3231. This court has jurisdiction to review the district court's final judgment pursuant to 28 U.S.C. § 1291.

II

Wilkes challenges his convictions on multiple grounds. First, he argues that his Fifth and Sixth Amendment rights were violated when the district court declined to compel use immunity for defense witness Michael Williams. Having reviewed this issue de novo, we remand in part for an eviden- tiary hearing regarding whether the district court should have granted Williams use immunity pursuant to United States v. Straub, 538 F.3d 1147 (9th Cir. 2008), a case decided by this court after the district court declined to grant use immunity to Williams.

Wilkes also argues on appeal that his Fifth and Sixth Amendment rights were violated: (1) when prosecutors failed to comply with the mandates of Brady v. Maryland, 373 U.S. 83 (1963) and Giglio v. United States, 405 U.S. 150 (1972);

(2) when prosecutors committed misconduct by engaging in improper closing arguments; and, (3) when the district court refused to grant Wilkes's request to continue the trial to allow time for him to prepare. Wilkes further contends that there was insufficient evidence of honest services fraud, bribery, and money laundering to support his convictions, and that the jury was misinstructed on those offenses. He also maintains that the recent holding in Skilling v. United States, 130 S. Ct. 2896 (2010) compels reversal on all counts because the prosecution relied on multiple honest services fraud theories, including the conflict-of-interest/undisclosed self-dealing theory later invalidated in Skilling. Finally, Wilkes asserts that the criminal forfeiture judgment violates the Sixth Amendment since the jury did not return a verdict on that charge. We affirm because we conclude the district court did not commit reversible error in its rulings on these issues.

III

A

Wilkes argues that his Fifth and Sixth Amendment rights were violated when the district court declined to compel use immunity for defense witness Williams. "The question of whether a district court erred by refusing to compel use immunity is a mixed question of law and fact that we review de novo. Factual findings underlying the district court's ruling are reviewed for clear error." Straub, 538 F.3d at 1156 (citingUnited States v. Alvarez, 358 F.3d 1194, 1216 (9th Cir. 2004)).

Wilkes maintains that the district court should have compelled the prosecution to grant use immunity to defense witness Williams because had he been granted immunity, his testimony would have corroborated Wilkes's testimony and directly contradicted the testimony of immunized government witnesses. The government contends that Wilkes was not entitled to compelled use immunity for Williams because Wilkes failed to provide a valid offer of proof of Williams's testimony in the presence of the witness's counsel and counsel for the government. Wilkes's ex parte proffer to the district court was thus meaningless, the government argues, because there was no reason to believe Williams would have testified as Wilkes proffered.

At trial, the district court concluded that Wilkes had demonstrated Williams would invoke his Fifth Amendment privilege if called to testify, and that the exercise of that privilege would be valid. Over the objection of the government, the district court allowed the defense to make a proffer as to Williams's testimony at an ex parte sidebar conference. The transcript of the proffer was filed under seal. The government did not have access to defense counsel's proffer to the district court until we granted its motion to have those portions of the record unsealed just prior to oral argument in this appeal. The transcript of the sidebar conference indicates that Williams would testify that:

in 1998 he began working with ADCS as part of his employment. He began managing and overseeing all major projects, especially and including the Panama project. He oversaw all the work. There was real work being performed. He would testify about adverse conditions that work was being done [sic], the timetable and the fact that the employees were working long hours. He would testify about the equipment that Mr. Wilkes purchased on his own and brought to Panama. The dispute about the bar-coding of the equipment and he would . . . also [be] greatly important to the relationship between the prime [contractor] . . . to that which was MCSI . . . He can speak to Joel Combs and what Combs did or didn't do, even though Mr. Combs readily admits he is a ball dropper. . . . [G]iven the proper context, Mr. Williams can explain this gentleman's intent to go off on his own which is going to be central to [the] defense.

ER 3678.

The district court concluded that "[g]iven the proffer of [Wilkes's counsel] at sidebar, I find that Mr. Williams would have admissible relevant testimony to offer. It would not be cumulative. And given the proffer, as I said, it would be exculpatory." ER 2477-79. The district court stated:

I have to tell you the proffer I have as to what this fellow can offer strikes me as material and relevant evidence that the defense would want to present to counter some of what's been presented by the United States through immunized witnesses.

The court, having fully heard all counsel, denies the motion to convey use immunity. Here, as I said, unless it's somehow tethered to the suggestion of prosecutorial misconduct, I don't think it's appropriate for the court to make determinations of who gets immunity and who doesn't.

In the first instance, under our system of Government, that's a prosecutorial decision. And unless I can find that the way in which discretion was exer- cised was unfair so as to deny the defendant a due process right, then it's not appropriate for me to substitute my judgment for that of the prosecutor. I do have a concern about the effect of not granting immunity in this case, but I would have the same concern if it was a different privilege implicated over which I'd have no authority to pierce the privilege and order a witness to testify, any number of other privileges. So it's an effect that the criminal justice system lives with and accommodates. And that alone, contrary to a broad reading of Westerdahl, is not sufficient to authorize me to exercise authority to grant use immunity pursuant to 18 U.S.C. § 6003.

ER 2480-94.

B

[1] After Wilkes was convicted, this court clarified the two-part test by which the defendant may seek to compel the prosecutor to grant use immunity as a matter of due process. In Straub, we held that a district court can compel a defense witness's immunity absent a finding of prosecutorial misconduct, where "in exceptional cases, the fact-finding process may be so distorted through the prosecution's decisions to grant immunity to its own witness while denying immunity to a witness with directly contradictory testimony that the defendant's due process right to a fair trial is violated." Straub, 538 F.3d at 1166. Under the clarified test, the defendant must first show that the defense witness's testimony was relevant. Id. at 1157. Second, the defendant must show either that

(a) the prosecution intentionally caused the defense witness to invoke the Fifth Amendment right against self-incrimination with the purpose of distorting the fact-finding process; or (b) the prosecution granted immunity to a government witness in order to obtain that witness's testimony, but denied immunity to a defense witness whose testimony would have directly contradicted that of the government witness, with the effect of so distorting the fact-finding process that the defendant was denied his due process right to a fundamentally fair trial.

Id. at 1162. The "relevance requirement is minimal, . . . . [and

t]he defendant need not show that the testimony sought was either clearly exculpatory or essential to the defense." Id. at 1163 (internal quotation marks and citations omitted). Moreover, the "test requires only that the proffered defense testimony directly contradict[s] the government witness's testimony on a relevant issue, not that the testimony would have compelled the jury to exonerate the defendant." Id. "[T]estimony satisfies the test for 'directly contradictory' [where] the testimony, if ...


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