United States of America v. Brian J. Newmark

* Hon. A. Wallace Tashima, Senior Judge, United States Court of Appeals for the Ninth Circuit,
sitting by designation.
NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 08-3356
UNITED STATES OF AMERICA
v.
BRIAN J. NEWMARK,
Appellant
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-06-cr-00447-GP-1)
District Judge: Hon. Gene E.K. Pratter
Submitted Under Third Circuit LAR 34.1(a)
February 10, 2010
Before: SLOVITER, ROTH and TASHIMA, Circuit Judges*
(Filed: March 12, 2010)
OPINION

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TASHIMA, Circuit Judge.
Brian Newmark appeals his conviction and sentence of 24 months’ imprisonment
for a single count of wire fraud, under 18 U.S.C. § 1343. (App. 1-3.) We have
jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742, and we will affirm.
I.
Newmark owned and operated companies that performed advertising and
marketing services for Barry Bohmueller, an estates attorney. (App. 611-12, 615-18, 631,
760.) Newmark employed Victoria Larson and hired an independent contractor, John
Wight. (App. 548, 631-32, 759.) None of the three individuals has ever been an attorney.
(App. 721.)
Larson placed a sales call to Arthur Walker and Thomas Walker (the “Walkers”),
elderly, unmarried and childless brothers who lived together in a house they jointly owned
and whose assets were valued in excess of $3.5 million. (App. 270-72, 325-37, 608-09,
721.) The Walkers requested estate planning services from Bohmueller’s firm. (App.
363-64.) They also signed “Consultation Request Forms,” asking Bohmueller to set up a
“free, no-obligation consultation with a financial services representative who is also a
licensed insurance agent.” (App. 362-63, 406-09.)
Wight delivered and explained the Bohmueller-prepared documents to the
Walkers. (App. 370-72.) The Walkers introduced Wight to neighbors as their lawyer,
and Wight did not correct them. (App. 249, 309.) After the Walkers executed the

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documents, Wight, pursuant to Newmark’s companies’ business model, shifted to
pitching them insurance-related and financial products. (App. 772-76.) Wight then
discussed the Walkers’ investment objectives with Newmark, who recommended selling
the Walkers charitable gift annuities. (App. 780-81, 785-86.)
Wight persuaded the Walkers to execute contracts to purchase six annuities using
the bulk of their net worth. (App. 721, 819-23.) The purchase required the Walkers to
liquidate and transfer assets that were being managed by Morgan Stanley. (App. 288-90.)
A Morgan Stanley representative visited the Walkers’ home and convinced them to
rescind their liquidation instructions because they did not need to purchase the annuities
in order to accomplish their goals. (App. 292-93.)
After learning of the Morgan Stanley visit, Wight returned to the Walkers’ home
with a portable fax machine. (App. 293-94, 622.) Wight conveyed information about the
Morgan Stanley visit over the phone to Newmark, who composed two letters that were to
be from Arthur and Thomas Walker, respectively, complaining about the Morgan Stanley
visit. (App. 622, 1232.) Newmark faxed the letters to Wight, who had the Walkers sign
them. (App. 622.) The letters were then faxed to Morgan Stanley’s Scranton,
Pennsylvania, office. (Id.) A week later, Wight returned with two more letters
complaining of Morgan Stanley’s failure to transfer the funds. (App. 624-25.) These
letters were signed and faxed to Morgan Stanley’s New York City office. (Id.)
Morgan Stanley still having failed to comply with the Walkers’ request, Newmark

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called Morgan Stanley’s compliance department in New York City and spoke to Chris
Zeyer about the firm’s failure to transfer the funds. (App. 460-64.) The same day,
Newmark sent a fax to Zeyer, in which Newmark referred to the Walkers as “my clients.”
(App. 468-69, 648-49.) The fax transmittal sheet had “Bohmueller Law Offices”
letterhead, which Newmark later testified in a deposition he “must have made . . . up.”
(App. 648, 1239.) The fax also referred to “our attorney’s office” having contacted an
individual at Morgan Stanley regarding the delayed transfer. (App. 471.) After the call,
Zeyer completed a “verbal complaint form” from his handwritten notes, identifying
Newmark as the Walkers’ attorney. (App. 462-65, 481.)
Morgan Stanley eventually released the assets, enabling the Walkers to purchase
the six annuities. Newmark’s company earned $230,408 in commission, from which it
paid Wight $69,740. (App. 721.) Eventually, the Walkers came to feel unsatisfied with
the annuities and retained an attorney, who sued Newmark, Wight, and others in federal
court. (App. 547-51, 725.) The lawsuit settled. (App. 725.)
A Grand Jury indicted Newmark and Wight, charging them with mail and wire
fraud, and charging Newmark with making a false declaration under oath (in connection
with discovery responses he submitted in the civil suit). (App. 107-14.) The jury
acquitted Wight of two counts and the District Court declared a mistrial as to his third.
(App. 1224.) The jury convicted Newmark of three of his five counts. (App. 1224.) The

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The indictment charged that Defendants “knowingly devised1
and intended to devise a scheme to defraud [the Walkers], and to
obtain money and property from [the Walkers] by means of false
5
District Court entered a judgment of acquittal on two of three counts for which the jury
had convicted, leaving a conviction for a single count of wire fraud based on the fax
Newmark transmitted to Zeyer. (App. 2.)
On appeal, Newmark argues that the evidence was insufficient to support
conviction, that the district court erred in refusing to give an “ordinary prudence” jury
instruction, and that the district court miscalculated “loss” for sentencing purposes.
(Appellant’s Br. 17-19.)
II.
We exercise plenary review of the District Court’s denial of a motion for judgment
of acquittal based on insufficient evidence. See United States v. Silveus, 542 F.3d 993,
1002 (3d Cir. 2008). We must determine whether the evidence, viewed in the light most
favorable to the government, would allow a rational trier of fact to convict. See United
States v. Hart, 273 F.3d 363, 371 (3d Cir. 2001) (internal citations and quotation marks
omitted).
Newmark contends that the evidence failed to show that he knowingly and
willfully devised or participated in the particular scheme to defraud alleged in the
indictment. (Blue 17-18.) He argues that the scheme alleged in the indictment was to
defraud the Walkers, and the only misrepresentations by Newmark were directed at1

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and fraudulent pretenses, representations, and promises.” (App.
108.)
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Morgan Stanley, not the Walkers. (Id.; see also Blue 23.)
Newmark concedes that evidence showed the following: Newmark drafted and
faxed letters to Wight for the Walkers to sign, telling Morgan Stanley to transfer the
Walkers’ funds; Newmark made misrepresentations to Zeyer at Morgan Stanley;
Newmark obtained an “enormous benefit” upon purchase of the annuities; Newmark, as
owner and manager of his companies, held supervisory control over Wight. (Gray 6.)
This evidence, although circumstantial, is sufficient for a rational trier of fact to have
found beyond a reasonable doubt that Newmark knowingly and willfully devised or
participated in the scheme to defraud. See United States v. Pearlstein, 576 F.2d 531, 541
(3d Cir. 1978) (holding that requisite knowledge of fraudulent purpose can be
demonstrated circumstantially).
Specifically, Newmark participated in the scheme when he drafted the letters
necessary to transfer the Walkers’ assets and when he interacted with Zeyer at Morgan
Stanley. See United States v. Olatunji, 872 F.2d 1161, 1168 (3d Cir. 1989) (holding that
misrepresentations need not be made to the ultimate victim for mail fraud). That
Newmark “made up” a letterhead to misrepresent that he was an attorney – the same type
of deception employed by Newmark’s paid associates – supports the inference that
Newmark also “devised” the scheme, or at least knew of its fraudulent purpose. The jury

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could find further support in the fact that Newmark received a greater cut of the
commission, cf. Pearlstein, 576 F.2d at 542 (noting that “relative lack of success enjoyed
by” defendant salesmen compared with principals suggested they lacked knowledge of
scheme’s fraudulent purpose), and held a position as owner and manager of the
companies, cf. id. (noting that fact that defendant salesmen “held no positions of
authority” and were never “involved in the management” of the company suggested they
lacked knowledge of scheme’s fraudulent purpose).
Accordingly, we conclude that “there was substantial evidence adduced . . . from
which the jury reasonably could have inferred that [the defendant] knew of the fraudulent
purpose of the . . . enterprise and willfully participated therein.” See id. at 541. The
District Court did not err in denying Newmark’s motion for a new trial.
III. Newmark argues that the District Court plainly erred in not giving a jury
instruction defining “scheme to defraud” as a scheme “reasonably calculated to deceive
persons of ordinary prudence and comprehension.” See United States v. Coyle, 63 F.3d
1239, 1243 (3d Cir. 1995) (“The scheme [to defraud] ‘need not be fraudulent on its face
but must involve some sort of fraudulent misrepresentations or omissions reasonably
calculated to deceive persons of ordinary prudence and comprehension.’” (quoting
Pearlstein, 576 F.2d at 535)). He argues that the alleged error was “compounded” by the
District Court’s instruction that “[i]t is immaterial that the alleged victims may have acted
gullibly, carelessly, naively or negligently, which led to their being defrauded.” (App.

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To succeed under plain error review, Newmark must show that2
(1) the court erred; (2) the error was plain; and (3) the error
affected substantial rights, meaning that the error prejudiced the
jury’s verdict. See Johnson v. United States, 520 U.S. 461, 466-
67 (1997). If all three elements are established, we may exercise
our discretion to award relief. Id.
“A material fact is a fact that would be of importance to a3
reasonable person in making a decision about a particular matter
or transaction.” (App. 1184.)
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1191.) Because Newmark did not object at trial, we review the District Court’s refusal to
give an “ordinary prudence” jury instruction for plain error. See United States v. Antico,
275 F.3d 245, 265 (3d Cir. 2001).2
The Government’s argument that the materiality instruction adequately covers the3
“ordinary prudence” instruction, although supported by a district court case, see United
States v. Zomber, 358 F. Supp. 2d 442, 459 (E.D. Pa. 2005), is unavailing. The
materiality instruction concerns whether a reasonable person would consider a fact
important, whereas the “ordinary prudence” instruction concerns whether a reasonable
person would be deceived by a scheme. Moreover, because of the apparent tension
between an instruction that a victim’s gullibility or negligence is no defense and an
instruction that a scheme must be calculated to deceive a person of ordinary prudence and
comprehension, there is some force to Newmark’s argument that the error was
compounded by the district court’s inclusion of the former instruction.
Nonetheless, under the plain error standard, we conclude that the omission of the
“ordinary prudence” instruction did not prejudice the jury’s deliberations. See United

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States v. Haywood, 363 F.3d 200, 207 (3d Cir. 2004). Although there was evidence the
Walkers signed documents that could be read to indicate that Wight was not an attorney,
see App. 1229 (engagement letter stating delivery agent not licensed attorney); App.
1240-41 (consultation request form stating licensed insurance agent would provide
consultation), this evidence was outweighed by the countervailing evidence that Wight
affirmatively represented himself as an attorney.
Accordingly, we decline to exercise our discretion to conclude that the District
Court committed plain error. See United States v. Olano, 507 U.S. 725, 736 (1993)
(holding that discretion should only be exercised where the error “seriously affects the
fairness, integrity or public reputation of judicial proceedings” (alterations, citations, and
quotation marks omitted)).
IV.
We exercise plenary review over the District Court’s interpretation of “loss” for
purposes of United States Sentencing Guidelines (“U.S.S.G.”) § 2F1.1. See United States
v. Badaracco, 954 F.2d 928, 936 (3d Cir. 1992). “Loss” is defined as the value of the
money, property, or services unlawfully taken. See Coyle, 63 F.3d at 1250. “[T]he loss
need not be determined with precision. The court need only make a reasonable estimate
of the loss, given the available information.” U.S.S.G. § 2F1.1 (2000), Commentary n.9.
The District Court calculated a loss of $900,000, based on the value of the
securities at the time of their sale ($3.5 million), less the value of the annuity received in

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Newmark also argues that because the actual loss is “too4
complex and unusual to measure ‘correctly,’ . . . the defendant’s
gain from the fraud is . . . the only fair measure of ‘loss.’” See
United States v. Yeaman, 194 F.3d 442, 456-57 (3d Cir. 1999).
The calculation method used in the Pre Sentence Investigation
Report belies the notion that the actual loss is too complex to
measure.
Maurello was impliedly overruled by the Sentencing5
Commission in 2001. However, it is nonetheless instructive here
because, for ex post facto reasons, the 2000 version of the
Sentencing Guidelines applies.
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exchange ($2 million), less the tax benefits obtained by making a contribution of the
difference ($600,000). (App. 55-56 (adopting PSR ¶¶ 22-25, 30-36).) Newmark argues
that this calculation fails to account for the $316,000 in capital gains taxes the Walkers
avoided and the non-monetary value to the Walkers of making a charitable contribution.4
(Blue 48-49.)
We conclude that the avoidance of capital gains taxes is too speculative to be
considered value actually gained because it is not clear when, if at all, the Walkers would
have sold their stocks. The non-monetary value is not properly considered because there
is evidence that the Walkers did not want to make this type of charitable contribution.
See United States v. Maurello, 76 F.3d 1304, 1311 (3d Cir. 1996) (holding that clients
who obtain satisfactory services have received something of value, while dissatisfied
clients have not).5
Moreover, we conclude that any error was harmless. See United States v. Flores,
454 F.3d 149, 162 (3d Cir. 2006) (holding that any error in imposing sentencing increases

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The District Court calculated a guidelines range of 30 to 376
months and, applying the Section 3553(a) factors, imposed a
sentence of 24 months. (App. 61-67.) Taking into account the
capital gains taxes allegedly avoided, the applicable range would
have been 27 to 33 months. (Blue 48.)
based upon loss calculation and other guidelines was harmless, where sentence imposed
fell within the guidelines range that would have applied without the alleged errors). Here,
as in Flores, the District Court applied the 18 U.S.C. § 3553(a) factors, rather than a
specific departure or variance, to impose a sentence that fell below both the guidelines
range the District Court calculated and the range that would be applicable without the
alleged errors. Thus it is clear that any “error did not affect the district court’s selection6
of the sentence imposed.” United States v. Langford, 516 F.3d 205, 218 (3d Cir. 2008)
(noting that harmless error may exist in “unusual case[s],” like Flores, where the sentence
was a discretionary sentence imposed “based on 3553(a)'s parsimony provision” rather
than a specific variance or departure).
V.
For the reasons set forth, we will affirm the judgment of the District Court.

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