## Facts

- Richard I. Berger was president, CEO, and board chair of Craig Consumer Electronics, Inc., a consumer electronics wholesaler.
- Craig operated under a revolving credit agreement allowing borrowing against accounts receivable and inventory, conditioned on accurate daily borrowing-base reports and related financial disclosures to lender banks.
- The government proved Craig, under Berger’s direction, falsified borrowing-base reports and supporting information to obtain more credit than permitted.
- The scheme included overstating receivables and inventory, concealing defaults under the credit agreement, and hiding that the credit line was overdrawn.
- Craig also provided false or incomplete information to auditors, resulting in false or misleading SEC filings about its financial condition and loan defaults.
- A superseding indictment charged multiple offenses, including conspiracy, loan fraud, falsifying corporate books, and securities fraud; a jury convicted Berger on twelve counts.
- The district court imposed incarceration, ordered over $3.14 million in restitution under the Mandatory Victim Restitution Act (MVRA), and imposed a sentence and fine the government challenged.

## Issues

1. Whether the district court’s communications with the deliberating jury improperly coerced a verdict.
2. Whether an informal meeting between the judge and jurors outside Berger’s presence violated his right to be present at every stage of trial, and if so, whether any violation required reversal.
3. Whether the district court used an incorrect materiality standard or misleading jury instruction for securities fraud based on misstatements or omissions in SEC filings.
4. Whether the indictment pleaded the materiality element of the securities fraud counts with sufficient particularity.
5. Whether the MVRA restitution order was authorized and properly tied to losses directly and proximately caused by the fraud.
6. On the government’s cross-appeal, whether the sentence and fine had to be vacated and remanded for resentencing under the post-Booker advisory Guidelines framework.

## Decision

- The Ninth Circuit affirmed Berger’s convictions on all challenged counts.
- The court held the district judge’s jury communications, viewed in context, did not coerce a verdict.
- The court held any error from the judge’s informal meeting with jurors outside Berger’s presence (with counsel’s consent) was harmless because it was not a critical, merits-related proceeding and caused no prejudice.
- The court upheld the securities fraud materiality instruction as consistent with the reasonable-investor “total mix” standard.
- The court held the indictment sufficiently alleged materiality and gave adequate notice of the securities fraud charges.
- The court affirmed the MVRA restitution order as supported by direct and proximate causation of victim losses.
- The court vacated the sentence and fine and remanded for resentencing consistent with Booker.

## Legal Principles

- Jury-coercion claims are assessed under the totality of the circumstances; permissible encouragement to continue deliberations is not coercion absent pressure to reach a verdict or targeting of minority jurors.
- A defendant has a right to be present at trial stages that bear a reasonably substantial relation to the opportunity to defend; non-substantive judge-juror interactions may be subject to harmless-error review.
- In securities fraud, a fact is material if there is a substantial likelihood that a reasonable investor would view it as important, or if disclosure would significantly alter the total mix of available information.
- An indictment is sufficient if it alleges each element (including materiality), describes the nature of the falsity and context, and provides adequate notice to prepare a defense and plead double jeopardy.
- The MVRA mandates restitution for qualifying fraud offenses against property when losses are directly and proximately caused by the criminal conduct.
- After Booker, sentencing must proceed under an advisory Guidelines regime; errors in applying a mandatory approach require vacatur and remand for resentencing.

## Conclusion

The Ninth Circuit left Berger’s fraud and securities convictions and MVRA restitution intact, rejecting claims of jury coercion, absence from an informal judge-juror meeting, instructional error on materiality, and defective pleading, but vacated the sentence and fine for resentencing under the advisory post-Booker framework.


United States v. Berger, 473 F.3d 1080 (9th Cir. 2007)