April 21, 2019

Tenth Circuit: Witness Improperly Usurped Role of Jury by Opining on Lawfulness of Conduct

The Tenth Circuit Court of Appeals issued its opinion in United States v. Richter on Friday, July 31, 2015.

Brandon Richter and Tor Olson were former CEOs of Executive Recycling, Inc., a waste removal and recycling business in Colorado, Utah, and Nebraska. Executive also offered electronics recycling, promising customers that Executive would domestically recycle or destroy electronics that could not be resold and would do so in an environmentally friendly manner. However, between 2005 and 2008, Executive sold many items to Hong Kong and China for export, including cathode ray tubes (CRTs) that were eventually reused in new monitors or refurbished. One shipment, the GATU shipment, was featured on 60 Minutes because the CRTs were broken and could not be reused. The 60 Minutes episode attracted the attention of the EPA, ICE, and Colorado Attorney General’s Office. An EPA investigator asked Richter to supply records of Executive’s shipments over a three-year period, but Richter produced only four records, including an altered copy of the GATU invoice. A later federal search warrant uncovered many more shipping records and revealed that Richter had destroyed the original GATU invoice.

The government charged Executive, Richter, and Olson in the U.S. District Court for the District of Colorado with 13 counts of mail and wire fraud, one count of exporting hazardous waste in violation of the Resource Conservation and Recovery Act (RCRA), and one count of smuggling hazardous waste. The government contended defendants violated laws concerning hazardous waste when they exported the CRTs overseas, and their actions were contrary to the representations they made to their customers. The government also charged Richter and Olson with obstruction of justice. Before trial, defendants moved to dismiss the wire and mail fraud counts, arguing their customers were not deprived of money because they obtained the benefit they paid for—removal of electronic waste—and they were not deprived of property because the e-waste had no value to the consumers. The district court denied the motions. Defendants also disagreed with the jury instructions regarding “hazardous waste.” At trial, Richter and Olson argued that even if broken CRTs are regulated hazardous waste, they did not know the CRTs were broken. Following the trial, the jury returned verdicts against Richter and Olson on six counts of wire fraud, one count of mail fraud, and one count of smuggling. Richter was also convicted of obstructing justice based on his destruction of the original GATU invoice. Richter was sentenced to 30 months’ imprisonment followed by three years’ supervised release and was ordered to pay $70,144 in restitution. Olson was sentenced to 14 months’ imprisonment with three years’ supervised released and was ordered to pay $17,536 in restitution. They timely appealed.

The Tenth Circuit first evaluated Defendants’ contention that the jury instruction incorrectly defined waste under Colorado law, and that even if the instruction was correct they lacked fair notice that the definition might be criminally enforced against them. Reviewing the strictures of the RCRA, the Tenth Circuit noted that the RCRA makes it a crime to export hazardous waste without filing the proper notice of intent to export with the EPA or without consent of the receiving country. Colorado also has its own regulations, the Colorado Hazardous Waste Management Act, which generally mirrors the RCRA. However, the Colorado Act does not contain rules regarding broken CRTs and instead regulates the disposal of CRTs under its universal waste regulations. Richter and Olson argued that the jury instruction improperly defined hazardous waste by including a requirement that waste must be reused for its original intended purpose to be excluded. The Tenth Circuit ultimately disagreed, finding that since the Colorado statute was ambiguous it must look to legislative intent, which was to comply with the RCRA. The Tenth Circuit rejected Richter’s and Olson’s challenge to the jury instruction.

Defendants next argued that the government did not prove that they committed mail and wire fraud because their customers were not deprived of money or property. Defendants contended that since their customers’ property was relinquished to them for disposal, it was no longer the customers’ concern how the disposal occurred. The Tenth Circuit again disagreed, finding that the customers expected their waste to be disposed of within the United States using environmentally sound practices. Defendants would not have retained their customers if not for their deceptions. The wire and mail fraud convictions were affirmed.

The Tenth Circuit next addressed Defendants’ contention that the testimony of Mr. Smith was improperly admitted as lay witness testimony and exceeded the bounds of permissible testimony by infringing on the province of the jury. The Tenth Circuit examined Mr. Smith’s testimony, which included testimony that CRTs that had been removed from their housings were waste because they could not be used again for their original intended purpose without processing, and found that it was expert testimony. The Tenth Circuit further found that the scope of Mr. Smith’s testimony improperly instructed the jury on how it should rule. Because the Tenth Circuit found that the district court erred in allowing Mr. Smith’s testimony, it evaluated whether the error was harmless and found it was not. The government relied heavily on Mr. Smith’s testimony to prove whether the CRT use was improper, since he testified that CRTs could not be considered recycled if they had been “processed,” and Mr. Smith failed to define processing or explain its significance. The Tenth Circuit reversed the convictions.

Finally, the Tenth Circuit examined Richter’s conviction for obstruction of justice based on his destruction of the GATU invoice. The Tenth Circuit found that Mr. Smith’s testimony did not have a substantial impact on the obstruction of justice charge because there was plenty of evidence beyond Mr. Smith’s testimony.

The Tenth Circuit reversed Defendants’ convictions for smuggling and fraud and remanded for further proceedings. The Tenth Circuit affirmed Richter’s conviction for obstruction of justice.

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