## Facts

- Center Art Galleries (CAG) established two ERISA-covered employee pension plans funded solely by employer contributions; CAG served as plan administrator.
- Marvin L. Wiseman (vice president) and William D. Mett (president/sole shareholder) served as trustees of both plans.
- After CAG suffered severe financial difficulties in the early 1990s, Wiseman and Mett withdrew about $1.6 million from the plans between March 1990 and November 1991.
- The withdrawn funds were deposited into CAG’s general operating accounts to pay business expenses.
- Employees were not informed of the withdrawals, and CAG did not disclose certain withdrawals on a Form 5500 filing for one plan.
- Defendants characterized the withdrawals as a “loan” intended to keep the company operating for employees’ benefit and claimed employees implicitly would have approved.
- A grand jury indicted Wiseman and Mett on 16 counts, including embezzlement from an employee benefit plan under 18 U.S.C. § 664.
- After a first jury conviction and appellate reversal due to attorney–client privilege errors, defendants, following rejection of proposed jury instructions, waived a jury and submitted the case to a bench trial on the prior trial transcripts and exhibits; the district court again convicted them on all counts.

## Issues

1. Whether the defendants’ waiver of the right to a jury trial and submission to a bench trial on the first trial record was knowing, intelligent, and voluntary under Federal Rule of Criminal Procedure 23(a).
2. Whether the evidence was sufficient to prove embezzlement or willful conversion of ERISA plan assets under 18 U.S.C. § 664, including the required intent, despite the defendants’ “loan” theory and asserted employee consent.
3. Whether the district court correctly applied the Sentencing Guidelines, including calculation of “loss” and related adjustments.

## Decision

- The Ninth Circuit held the jury-trial waivers were valid: written waivers were executed, the government consented, and the district court’s colloquy adequately confirmed defendants understood the consequences of a bench decision on the existing record.
- The court rejected the claim that rejection of proposed jury instructions coerced the waivers; choosing a bench trial after an adverse ruling was treated as a strategic choice, not involuntariness.
- The court affirmed the convictions, concluding the record supported findings that defendants willfully converted plan assets: large undisclosed withdrawals, transfer into employer operating accounts, lack of contemporaneous loan documentation, and nondisclosure to participants and regulators supported criminal intent.
- The court reversed in part on sentencing, concluding aspects of the loss calculation and related guideline applications required correction, and remanded for resentencing.

## Legal Principles

- A jury-trial waiver under Federal Rule of Criminal Procedure 23(a) is valid when it is in writing, the government consents, the court approves, and the record shows a knowing and voluntary choice.
- A defendant’s decision to waive a jury after an adverse ruling (including on proposed instructions) does not, by itself, render the waiver involuntary.
- Under 18 U.S.C. § 664, an ERISA plan fiduciary may be convicted for willful conversion of plan assets when plan funds are diverted into an employer’s general accounts without proper disclosure and without legitimate, documented plan-compliant authorization; a post hoc “loan” characterization does not preclude a finding of intent.
- Informal or hypothetical participant consent does not excuse a fiduciary’s undisclosed diversion of plan assets contrary to fiduciary obligations and required reporting.
- Sentencing for § 664 offenses must apply Guideline loss calculations and related adjustments using supportable findings; errors in loss computation require resentencing.

## Conclusion

The Ninth Circuit affirmed Wiseman’s and Mett’s ERISA plan embezzlement convictions because the undisclosed transfer of plan funds to the employer’s operating accounts, without documentation or reporting, supported willful conversion under § 664, but it vacated parts of the sentences and remanded for recalculation and resentencing under the Sentencing Guidelines.


United States v. Wiseman, 274 F.3d 1235 (9th Cir. 2001)