A recent D.C. Circuit Court of Appeals decision narrows the ability of the government to revisit uncharged crimes against a person whose plea has been vacated due to a change in the law.
In 2007, Russell Caso had pleaded guilty to conspiracy to commit honest-services wire fraud, in violation of 18 U.S.C. §§ 371, 1343 and 1346, based on certain conduct during his employment as U.S. Rep. Curt Weldon’s chief of staff. Caso was sentenced to three years’ probation, including a 170-day term of home confinement. In entering its plea agreement with Caso, the government had forgone the right to charge Caso also with a violation of the false statements statute for failing to include certain payments on his annual disclosure statement required by virtue of his status as a federal employee.
Shortly after Caso was sentenced, the U.S. Supreme Court handed down its decision in Skilling v. United States, 130 S. Ct. 2896 (2010) – a decision that substantially limited the permissible reach of Section 1346, the honest-services fraud statute – with the result that Caso was indisputably innocent of the crime for which he was charged and convicted. The government did not dispute this point but nevertheless opposed Caso’s motion to vacate his conviction.
The government argued that Caso had procedurally defaulted his Skilling challenge because he had not directly appealed his conviction on the ground that the conduct to which he pleaded did not constitute an offense, and therefore was barred from raising this issue on a habeas petition. The government also argued that Caso had failed to satisfy the narrow conditions for excusing such a default that the Supreme Court set out in Bousley v. United States, 523 U.S. 614 (1998): (1) “cause” for the default and “actual prejudice” resulting therefrom; or (2) that the defendant is “actually innocent.”
In denying Caso’s petition (which argued only the second of these exceptions), the District Court agreed with the government, and focused on the Bousley Court’s rule that, “[i]n cases where the Government has forgone more serious charges in the course of plea bargaining, petitioner’s showing of actual innocence must also extend to those charges.” (emphasis added) Based on that rule, the District Court held that Caso had to demonstrate his “actual innocence” not only of the crime for which he was charged and convicted (honest-services wire fraud) but also of the separate uncharged offense of making a false statement, a crime that the government argued was at least equally serious as the honest-services fraud charge. Because Caso could not show his actual innocence of the false statement charge in light of the admissions he made as part of his plea agreement, the District Court denied his motion to vacate his conviction and sentence.
The D.C. Circuit reversed this decision based its reading of what constitutes “more serious charges” under Bousley. In doing so, the appeals court rejected the government’s argument that seriousness is to be determined based on the statutory maximum sentence for each crime, and found it far more logical to base the question of seriousness on the way in which each crime is treated in the United States Sentencing Guidelines. Quoting the Supreme Court’s Gall decision, the court noted that Guidelines calculations are still “the starting point and initial benchmark” for every sentencing decision and that “district courts must begin their analysis with the Guidelines and remain cognizant of them throughout the sentencing process.”
The court also noted that the United States Attorneys’ Manual, in directing prosecutors to charge “the most serious offense that is consistent with the nature of the defendant’s conduct,” explains that “[t]he ‘most serious’ offense is generally that which yields the highest range under the sentencing guidelines.”
The court also noted that statutory maxima provide the parties with little useful information in the context of plea negotiations, in part because courts rarely sentence defendants to the statutory maxima. Because the Guidelines treat a violation of the false statements statute less seriously than honest-services fraud, the Court of Appeals held that the forgone false statement charge was not “more serious,” and that Caso need not show his innocence of that charge to support his claimed right to vacating of his conviction for honest services fraud.
The fact that that the D.C. Circuit relied upon the Guidelines as the justification for its ruling is particularly interesting given that recent attacks on the reasonableness of some of the Guidelines (particular the Section 2B1.1 loss tables) have sapped the Guidelines of some of their authority. It is possible that this ruling could change the way in which prosecutors structure their pleas, but circumstances such as this one, in which a defendant is found innocent of convicted charges because of a change in the law, are rare enough that this is not likely. To the extent that courts face similar cases, they will have to address issues left unresolved by the D.C. Circuit, such as whether there must be contemporaneous evidence that prosecutors considered the forgone charge at the time, and whether a crime of “equal seriousness” (and not “more serious”) falls within the Bousley rule.
The Supreme Court will soon be considering whether to take up an interesting question involving when monetary sanctions may be imposed for prosecutorial misconduct. More than 50 former federal judges and U.S. attorneys are pushing to get an 11th Circuit Court of Appeals ruling from last year overturned. In early August, the former judges and prosecutors signed onto an amicus brief that urges the Supreme Court to grant certiorari in United States v. Shaygan. The defendant is appealing the appeals court’s overturning of a lower court’s award of more than $600,000 in attorneys’ fees to him after the unsuccessful prosecution of his case.
Shaygan, a Miami doctor, was charged with trafficking illegal drugs following the overdose death of a patient. Events leading up to his trial demonstrated serious ethical questions about the prosecutors’ handling of the case. For instance, after Shaygan’s counsel moved to suppress testimony that was illegally obtained, in an act of retaliation the prosecution filed a 141-count superseding indictment. The prosecution initiated a collateral witness-tampering investigation in what defendants saw as a bad-faith effort to disqualify petitioner’s counsel on the eve of trial. And, in a “knowing and intentional” violation of court orders and discovery obligations, the prosecution withheld material information from both the court and the defendant. These actions led the trial court to impose sanctions because the prosecutors’ misconduct constituted “conscious and deliberate wrongs that arose from the prosecutors’ moral obliquity and egregious departures from the ethical standards to which prosecutors are held.”
The government appealed to the 11th Circuit, where a sharply divided panel overturned the trial court. The circuit’s rationale was based upon its interpretation of the statute,the Hyde Amendment, that provides for the award of attorneys’ fees and other litigation expenses “where the court finds that the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust.”
The circuit ruled that sanctions were not appropriate because the superseding indictment was objectively valid. And if the underlying (or superseding) indictment could be deemed objectively reasonable, the prosecution could not be held vexatious or frivolous and thus attorneys’ fees were not merited. See our earlier discussion of this issue in this blog.
The court’s holding raised the eyebrows of many former federal judges and prosecutors as well as scholars. Their main contention appears to be the 11th Circuit’s reading of the clause “vexatious, frivolous, or in bad faith.” The amicus brief filed on behalf of the former judges and prosecutors raised two main arguments for why the 11th Circuit’s decision was wrong: (1) based upon the canons of statutory construction, sanctions under the Hyde Amendment are appropriate when prosecutors act in subjective bad faith, even if an indictment is supported by probable cause; (2) acknowledging a subjective standard helps judges control their courtrooms and provides a necessary tool to address prosecutorial misconduct.
The first argument focuses on the “or” in the Hyde Amendment’s provision for sanctions where a prosecutor’s position is found to be “vexatious, frivolous, or in bad faith.” The amici argue that the disjunctive “or” separates the “bad faith” prong from the “vexatious” and “frivolous” prongs, indicating that bad faith can serve as an alternative basis for relief under the Hyde Amendment. Their reading of the statute, they argue, “comports with our basic principles of criminal justice. Our system’s greatness rests, in part, on our insistence that the process be conducted in a principled, clean manner. Thus, for example, we permit the guilty to go free when the evidence against them was obtained in violation of their Fourth Amendment rights. We suppress coerced confessions, even when they bear every indicia of reliability. And we do not permit the prosecution even of a guilty person on the grounds of that person’s race. ”
The amici’s second argument emphasizes the need to provide judges with control over their courtrooms, and the need to impose appropriate sanctions for prosecutorial misconduct. To rein in the overzealous, overreaching, or rabid prosecutor, the Hyde Amendment sanctions provide an important mechanism to restore control. The amici note that other sanctions, such as complaints with bar associations, have proved ineffective over the years and that prosecutors are immune from most lawsuits relating to their official conduct.
It remains to be seen whether the Court will take up the Shaygan case — the chances of the Court ever granting certiorari are pretty slim. But a strongly-worded amicus brief from more than 50 former prosecutors and judges and a notably sharp divide in the 11th Circuit could persuade the Court.
On May 3, 2012, Ifrah Law filed an amicus curiae brief in the U.S. Supreme Court on behalf of the Justice Fellowship and a group of law professors who practice in the areas of criminal law and sentencing. The brief was filed in the case of Rubashkin v. United States, a highly publicized case in which Sholom Rubashkin, the former operator of a kosher slaughter house, was sentenced to 27 years in prison in 2009 for 86 counts of financial fraud.
Rubashkin’s bid for a new trial after his conviction in federal court in Iowa was denied by the U.S. Court of Appeals for the 8th Circuit in 2011. Earlier this year, he filed a petition to the Supreme Court for certiorari.
The brief filed by Ifrah Law contends that that principles applied by the 8th Circuit in affirming Rubashkin’s sentence “are at odds with the principles applied by at least three other Circuit Courts of Appeal” and “could have a very negative impact on the law and policy of federal sentencing under advisory guidelines.”
Federal appeals courts, the brief contends, have the duty to ensure that all criminal sentences are “procedurally reasonable,” which includes the idea that sentences must not include unwarranted disparities with the sentences imposed for similar defendants who committed similar crimes.
Appeals courts, the brief says, have uniformly held that in order to permit meaningful appellate review on this issue, trial judges need to state on the record their reasons for accepting or rejecting the arguments that were made for or against the sentence that they imposed. “There is no way for the appellate court to determine whether the trial court considered [an] argument if the court does not address it explicitly,” the Ifrah brief said.
In the Rubashkin case, the trial court “failed to make any record that it considered the defendant’s non-frivolous argument regarding the need to avoid unwarranted sentencing disparities,” the brief points out. This failure, the brief says, is at variance with the rule in at least three other federal circuit courts of appeal.
Accordingly, the brief urges the Supreme Court to accept the case and to resolve the circuit conflict.
In addition, Rubashkin is also seeking Supreme Court review on a different issue – that the federal trial judge, Linda Reade, had in effect become part of the prosecution team by actively engaging in the planning of a raid on Rubashkin’s facility by federal agents and helping the agents plan their strategy. The “Sentencing Law and Policy” blog has used the term “prosecutorial and judicial misconduct” to refer to the judge’s alleged activity and the prosecution’s failure to inform the defendants about it.
We hope that the Supreme Court accepts this case and takes a step toward curbing the excessive concentration of power in the hands of federal prosecutors and judges.
In November 2011, we at Ifrah Law expressed our views on a number of current issues in our blogs, Crime in the Suites and FTC Beat. This post summarizes and wraps up our thoughts from the month.
ACLU Wins FOIA Appeal on Prosecutors’ Use of Cell Phone Location Data
The Justice Department must turn over the names and docket numbers of numerous cases in which the government accessed cell phone location data without probable cause or a warrant.
Options for Suing the Federal Government Under Bivens Unlikely to Expand
U.S. Supreme Court argument indicates that the Justices are unlikely to extend Bivens to cover cases against private employees.
Judge Imposes 15-Year Sentence in FCPA Case; Appeal to Follow
This case will test the Justice Department’s expansive definition of “foreign official” under the statute.
High Court Hears Argument in GPS Fourth Amendment Case
The Justices grapple with issues of search and seizure in an online, wired world.
In Appeal of Construction Fraud Case, DOJ Seeks Tougher Sentences
This case, arising from Boston’s “Big Dig” project, will test the limits of a trial judge’s sentencing discretion.
Self-Regulation Reigns, for Now, on Consumer Data Privacy Issues
The online advertising industry is inching its way to more comprehensive policies regarding the collection of consumer data.
Google, Microsoft Assume Roles of Judge, Jury and Executioner on the Web
The Internet giants cancel the Web connections of companies that are accused by the government of mortgage fraud but have not been convicted.
New House Hearing Shows Strength of Hill Support for Legal Online Gaming
Many members of Congress remain serious that legal and technical obstacles can be overcome and that legislation can be passed in this area.
Convicted of Fraud but Changed Their Lives; Appeals Court Takes Note
A couple committed mortgage fraud back in the late ‘90s. The 7th Circuit gives them sentencing credit for self-rehabilitation.
More Big Pharma Companies Cough Up Big Dollars in DOJ Settlements
How high will these settlements go? The government has the power to strong-arm drug companies into settlements. How much will it demand?
Federal Criminal (Other), Federal Criminal Procedure, Federal Sentencing, Fraud, Internet Law, White-collar crime
In August 2010, a unanimous panel of the U.S. Court of Appeals for the D.C. Circuit ruled that if police wish to attach a GPS device to a criminal suspect’s car without a warrant, they first need to go to a judge and obtain a warrant based on probable cause.
The act of attaching such a device to a vehicle, the court said, is a “search” that requires a warrant under the Fourth Amendment because this type of surveillance is so pervasive and invasive that no one would have a reasonable expectation that it would occur. At the time, we expressed agreement with the appeals court’s ruling, and we continue to hold that view.
On November 8, 2011, the U.S. Supreme Court heard argument on this important case, in which 21st-century technology came face to face with the constitutional requirements of the Fourth Amendment. The case is United States v. Jones, No. 10-1259, and grows out of the placing by D.C. police of a GPS tracker on the Jeep Cherokee belonging to Antoine Jones, then a nightclub owner in the District of Columbia. The surveillance led to the seizure of 97 kilograms of cocaine and $850,000 in cash, but the D.C. Circuit threw out the conviction.
The justices did not seem to tip their hand for either side in the argument, asking difficult questions both to the attorney from the U.S. solicitor general’s office who argued in favor of the surveillance and to the lawyer for the arguing in favor of Jones.
Justice Samuel Alito put the question very clearly early in the argument: “It seems to me the heart of the problem that’s presented by this case and will be presented by other cases involving new technology is that in the pre-computer, pre-Internet age much of the privacy . . . that people enjoyed was not the result of legal protections or constitutional protections; it was the result simply of the difficulty of traveling around and gathering up information.”
“But with computers,” Justice Alito continued, “it’s now so simple to amass an enormous amount of information about people that consists of things that could have been observed on the streets, information that was made available to the public. . . . So how do we deal with this? Do we just say, well, nothing is changed, so that all the information that people expose to the public – is fair game? There is no search or seizure when that is obtained, because there isn’t a reasonable expectation of privacy?”
Michael Dreeben of the SG’s office replied that this case actually does not involve a “particularly dramatic change,” and that if society wishes to deal with GPS surveillance directly, the remedy would be in the passage of legislation.
Later, in response to vigorous questioning by the Justices, Stephen Leckar, arguing for Jones, said, “I think the workable rule and the simplest rule that should be adopted is this. I think the Court should say to the law enforcement agency: You came here looking for a rule; we are going to give you a rule. If you want to use GPS devices, get a warrant, absent exigent circumstances or another recognized exception to the Fourth Amendment.”
Leckar’s view continues to make sense to us. It is very difficult, based on the argument, to predict what the high court will actually do.
Federal Criminal (Other)
On November 16, 2010, the Los Angeles-based Daily Journal published an article by Jeffrey Hamlin, an associate at Ifrah PLLC, on a recent U.S. District Court ruling. The following is the full text of the article.
Earlier this year, the U.S. Supreme Court, in the much-watched case of former Enron executive Jeffrey Skilling, limited the federal “honest services” statute to traditional or “paradigmatic” bribery and kickback schemes. The criminal statute prohibits “a scheme or artifice to deprive another of the intangible right of honest services.” Skilling and others contended that the statute was unconstitutionally vague. The Court’s ruling in their favor was a blow to prosecutors.
In the wake of Skilling, prosecutors are coming up with novel theories to salvage “honest services”-type cases that don’t involve traditional bribery or kickback schemes. Recently, a federal district judge in New York decided that one such theory can proceed in court. We are quite dubious that the judge is headed in the right direction. It seems as if the same vagueness that the Court objected to in Skilling is returning.
The case involved Joseph Queri, a former executive with Dick’s Sporting Goods, and Benjamin Viloski, a former real estate attorney for Dick’s. Prosecutors alleged that Queri and Viloski defrauded Dick’s in connection with the company’s development of new stores in Pennsylvania. According to the government, the defendants controlled companies that ostensibly provided brokerage and consulting services to landowners and real estate developers with an interest in the expansion. Queri and Viloski invoiced the landowners and developers for the bogus services and kept the money themselves. In August 2009, a federal grand jury returned an indictment, which included eleven counts of mail fraud, wire fraud and related conspiracy charges.
In early 2010, Queri and Viloski asked the court to dismiss these counts. Among other things, the defendants argued that the “honest services” charges were based on a criminal statute that was unconstitutionally vague, the issue that was then pending in Skilling. The prosecution replied that, even if the “honest services” statute were found unconstitutional, the government had alleged other viable theories of mail and wire fraud, including fraud that involved the deprivation of intangible property. What was that intangible property? It was valuable information that could affect the company’s business decisions – specifically, it was the very fact of the defendants’ self-dealing. The trial court reserved judgment on this contention pending the U.S. Supreme Court’s decision in Skilling.
After the June 2010 Skilling ruling, the judge dismissed all portions of the indictment against Queri and Viloski related to honest-services fraud. The judge, however, held that the government could go ahead with its “intangible property rights” theory that Queri and Viloski had defrauded Dick’s by failing to disclose their self-dealing. The court relied on Second Circuit case law, which recognizes that a business entity has an intangible property interest in controlling the use of its assets.
Strictly speaking, the Skilling Court’s limiting construction of the honest-services statute is not relevant to whether undisclosed conflicts of interest may be prosecutable under some other statute. That said, the government’s novel “intangible rights” theory should fail based on principles similar to those stated in Skilling.
The Skilling Court was concerned with fair notice. If the honest services statute was unconstitutionally vague about whether deprivation of “honest services” encompassed self-dealing, what can be said for the notion that the mail and wire fraud statutes protect an employer’s intangible right to potentially valuable information – when that information is itself the fact that the employees are engaged in self-dealing?
When courts consider whether something is “property” for purposes of the mail and wire fraud statutes, they ask whether the interest is a traditionally recognized, enforceable property right. They have declined to recognize property interests in abstract realities that may impact the value of business property. Otherwise, Gatorade would have had an intangible property interest in information about Tiger Woods’ marital infidelities. And the Minnesota Vikings would have an intangible property interest in information about Brett Favre’s sexting scandal.
Moreover, even if the mail and wire fraud statutes are susceptible to such broad construction, they must be considered impermissibly vague, especially after Skilling. Employees cannot possibly have fair notice of criminal liability based on a failure to disclose adverse information about themselves to an employer. And the uncertainty invites arbitrary and discriminatory enforcement. These are the very ills Skilling sought to avoid.
Moreover, there is some indication that the Supreme Court majority in the Skilling case would accept this argument.
In a footnote, Justice Ruth Bader Ginsburg wrote in her majority opinion that “if Congress were to take up the enterprise of criminalizing ‘undisclosed self-dealing by a public official or private employee,’ it would have to employ standards of sufficient definiteness and specificity to overcome due process concerns.” She concluded that “these questions and others call for particular care in attempting to formulate an adequate criminal prohibition in this context.” We agree.
We wrote recently that the very recent Supreme Court decision in United States v. Skilling, limiting the reach of the federal “honest services” statute, may have an immediate impact on the ongoing case against Kevin A. Ring, a former associate of Jack Abramoff. See “Skilling Having Impact on Pending Honest Services Fraud Cases,” July 28, 2010.
But last week, U.S. District Judge Ellen Segal Huvelle gave prosecutors more leeway than some had expected in their pursuit of political corruption charges against Ring. Ring’s attorneys at Miller & Chevalier had argued vociferously for a judgment of acquittal on the grounds that Skilling had limited the application of the “honest services” statute to an actual bribery or kickback scheme that involves a misrepresentation to the public.
But Judge Huvelle rejected the contention that prosecutors now need to prove a quid pro quo bribery arrangement. She said it would be enough for the Department of Justice to bring sufficient evidence that would permit a jury to “infer” that bribery occurred. Ring has been charged with providing tickets, restaurant meals, and other gifts to members of Congress and other officials, allegedly in exchange for “official” favors.
Ring was tried last year on the charges, but the trial ended in a hung jury. Judge Huvelle’s decision last week permits prosecutors to try again.
Judge Huvelle’s ruling is one of the first to interpret Skilling, and she chose a pro-prosecution path. Of course, all that she did is to permit the case to go ahead to a possible second trial. But this is at least one bit of data that should caution defense attorneys that even after Skilling, there may still be room for prosecutors to pursue charges of political corruption if they can create inferences that bribery or kickbacks have taken place.
The Main Justice website has been covering this case extensively. See its posting on the latest ruling.
On June 24, 2010, the U.S. Supreme Court handed down its much-awaited ruling in Skilling v. United States, which limited the scope of honest-services fraud. The next step is to look at the lower courts and see how they are interpreting the Skilling decision.
After comments made very recently by U.S. District Judge Ellen Segal Huvelle in a high-profile case in the District of Columbia, prosecutors may need to rethink their case against Kevin A. Ring, a former associate of disgraced lobbyist Jack Abramoff, in the light of Skilling.
During a July 6 status conference in Ring’s case, prosecutor Peter Koski reportedly insisted that Skilling would have “no impact whatsoever” on the government’s prosecution of Ring. But Huvelle apparently disagreed. According to an article posted on the Blog of Legal Times, Huvelle answered that the once-broad honest-services fraud statute “is not an unlimited category now.” She said the “ ‘arena’ today is different . . . . There’s a new definition of bribery and materiality.”
Ring must be heartened. In September 2008, he was indicted for acts relating to his work with Abramoff. Of 10 counts in the Indictment, six alleged honest services wire fraud; one alleged illegal gratuity payments. More than a year later, Ring’s first trial concluded with a hung jury. Aware that the Supreme Court would either strike down or provide significant guidance regarding honest-services fraud, Judge Huvelle delayed the start of Ring’s second trial. Formerly, the statute had been used to prosecute defendants for using interstate communications systems to defraud citizens of the honest services of public officials, whether through schemes involving bribery, kickbacks or illegal gratuities, or schemes designed to conceal conflicts of interest. After the Skilling ruling, the statute reaches only schemes involving bribery or kickbacks.
If Ring had been charged with bribery, one could understand Koski’s position that Skilling does not affect his case. But he wasn’t. Moreover, the government must be a little concerned that it did not get a conviction for illegal gratuity payments –a crime that is easier to prove than bribery.
Perhaps the prosecution is just playing hardball. In any case, the parties are ready for battle. On July 13, the government filed its Bill of Particulars, which alleges essential elements of bribery: the “things of value” Ring allegedly gave to public officials, the recipients, and the official acts that those “things of value” were intended to influence. Six days later, Ring filed his motion requesting, among other things, a judgment of acquittal on the honest-services fraud counts.
In her three-day Supreme Court confirmation hearing, nominee Elena Kagan expressed very few views on substantive issues that might give observers a clue as to how she would vote as a Justice. Criminal law and sentencing issues were no exception, as the nominee did not tip her hand much on these matters.
One interesting tidbit emerged, however. Kagan was asked on June 30, 2010, the third day of the hearings, by Sen. Dick Durbin (D-Ill.) about her views on the disparity between the sentences imposed for trafficking in crack and powder cocaine, a disparity that tends to produce racially skewed punishments, with black defendants drawing longer sentences.
She responsed, “It is a policy issue, quintessentially. There’s nothing that the Supreme Court or that any court can do about it. It’s really one that Congress has to decide.”
This reply is, of course, consistent with the views that Kagan generally espoused at the hearings about the necessarily limited role of the courts in policy-making. It is interesting, though, that she was so quick to dismiss the possibility of judicial action to resolve the disparity. It may suggest that in white-collar and sentencing cases, Kagan as a justice, if confirmed, would strongly advocate deference to Congress when criminal defendants challenge the statutes under which they are convicted or sentenced.