Re: Joinder

United States v. Page, No. 10-3150-cr (2d Cir. September 16, 2011) (Walker, Hall, Chin, CJJ)

Defendant was tried on five drug counts and a felon-in-possession count. In the district court, he moved to sever the gun count so that the jury considering the drug charges would not learn that he had a felony conviction. The court denied the motion and the circuit, finding no prejudice, affirmed.

Background

In 2007 and 2008, Page was selling drugs - first crack, then heroin - in Norwich, Connecticut. During this time, he became involved in an altercation outside a bar, and brandished a gun; to avoid trouble, he stashed the gun at his girlfriend’s apartment. Agents raided the apartment the next day and found the gun and some drugs.

Page ultimately faced a six-count indictment; the first five counts alleged drug offenses - although the government ultimately dropped one of these - and count six charged the felon-in-possession. The district court refused to sever count six, noting that Page’s stipulation to the felony conviction did not describe its underlying facts, and that there would be a limiting instruction. These together assured a lack of undue prejudice. Page was convicted, and received a 210-month sentence.

The Circuit’s Decision

On appeal, Page argued that the gun count should have been severed, or at least bifurcated, from the others, citing United States v. Jones, 16 F.3d 487 (2d Cir. 1994). But the circuit found no abuse of discretion, particularly given the heavy burden of establishing prejudice by an allegedly improper joinder.

First, there was a “sufficient logical connection” between the drug counts and the gun count. The gun was recovered along with some of the drugs and Page admitted that both were his. For this reason, separate trials would have required “much of the same evidence.” Evidence of the presence of the drugs in his girlfriend’s apartment would have been probative of his knowing possession of the gun, while conversely, at a separate drug trial, evidence of the gun would have been admissible as a “tool of the trade.”

In addition, the district court took adequate measures to avoid prejudice. The stipulation was bare-bones and the limiting instruction was adequate, even though it did not specifically charge that the prior conviction could not be considered in relation to the narcotics counts.

Finally, there was overwhelming evidence against Page - his own confession and the testimony of the girlfriend.

The court also distinguished Jones on its facts. There, the felon-in-possession count appeared only in a superseding indictment after the jury deadlocked 10 to 2 for acquittal in a bank robbery case. Although the court reversed the bank robbery conviction because the felon-in-possession should have been severed, it did so because it looked to the court like the government had added the count only to “buttress its case” on the robbery. There was also a “retroactive misjoinder” problem with respect to a second felon-in-possession charge. But, since neither of those “unique circumstances” was present here, the district court did not abuse its discretion in refusing to follow Jones.

Jones does not stand for the proposition that a felon-in-possession count must always be severed or bifurcated from other charges. Where “there is a logical connection between” them, a “similarity in the evidence necessary to prove the different charges,” the trial court takes steps to limit the prejudice and gives a proper limiting instruction, and there is no unfair prejudice, it is not an abuse of discretion to refuse to sever or bifurcate. If, on the other had, the district court concludes that a bifurcation would “better protect the defendant from prejudice than a limiting instruction would” it is free to do so.

Government’s “Question[able],” “Troub[ling]” and “Disingenous” Conduct Results in an Affirmance. Huh?

United States v. Blech, No 05-3600-cr (2d Cir. April 23, 2008) (Sotomayor, Parker, Hall, CJJ).

Two defendants who were convicted of securities and related frauds appealed on the ground that their cases were misjoined, and one advanced a Brady claim. The court affirmed, but only out of apparent deference to the district court’s findings under the “abuse of discretion” standard.

The Severance Issue

This case went to trial on a thirteen-count indictment that alleged two separate fraud schemes. The first involved appellant Brandon, who, along with others, defrauded customers of Credit Bancorp of more than $200,000,000. The second scheme involved appellant Wexler, who also defrauded Credit Bancorp customers, but in a different way. The district court denied their severance motions, and both were convicted.

The defendants’ severance claim was unusually strong. Although the two schemes shared some participants, and both targeted Credit Bancorp customers, they were otherwise completely distinct. Nevertheless, the appellate court found no error.

The court held that the joinder was permissible under Rule 8(b), even though the two schemes were not - and could not - have been charged as a single conspiracy. Rule 8(b) was still satisfied because the indictment alleged a sufficient overlap in parties and transactions. Nor were the defendants prejudiced by the joinder; the court cited the small risk of “spillover prejudice” and the district court’s limiting instructions.

Nevertheless, the court noted, “[W]e question the government’s decision to try the two conspiracies together.” Neither defendant knew of the other’s activities, it did not appear that one scheme would have been admissible background evidence during the trial of the other had they been severed, and the government unfairly “lump[ed] together all of the conspirators during its rebuttal summation.” So why did it affirm? The district court did not abuse its discretion “given the flexibility of the standard.”

The Brady Claim

Many, many months before trial, the government produced more than two hundred boxes of discovery. One week before trial, it provided to defendant Brandon exculpatory information - the grand jury testimony of a cooperating witness. It waited until the eve of trial to turn over even more Brady material - the FBI agent’s notes of that cooperator’s debriefing. These materials supported Brandon’s claim that he was unaware of the unlawful aims of the conspiracy with which he was charged.

Nevertheless, the circuit found no Brady violation, even though the government “disingenuous[ly]” argued that the material was not exculpatory. In fact, the court concluded that the evidence “quite obviously could be viewed as” favorable to Brandon. The government also disingenuously argued that the evidence was not exculpatory because there was other evidence of guilt, another ridiculous assertion that the court rejected.

But it still affirmed, because the district court found no bad faith (it seems that, here, the government reserved its bad faith for its appellate briefs), and “we do not go to far as to overturn that conclusion.” The court also noted that there was “no probability” that the late disclosure affected the outcome of Brandon’s case. It did provide, however, a stern warning that the government “should have” complied with Brady, but that, of course, gets Brandon nowhere.

Comment

Enough of the free passes! If the court is really serious about curtailing such sharp practice on the part of the government, it needs to start reversing convictions in cases like this.

Joint Pain

United States v. Shellef, No. 06-1495-cr (2d Cir. November 8, 2007) (Pooler, Sack, Wesley, CJJ)

In this decision applying Fed.R.Cr.P 8, the court held that counts were improperly joined against two separate defendants, and that the misjoinders were not harmless. The decision also has an interesting discussion of some unusual wire fraud theories.

Defendants Shellef and Rubenstein were tried together on tax and wire fraud charges. At the same trial, Shellef alone was tried on tax evasion charges relating to some of his personal and business dealings. Both were convicted of all counts.

The tax and mail fraud charges arose from the defendants’ efforts to purchase and resell CFC-113, a highly regulated, ozone-depleting industrial solvent upon which, Congress, in an effort to phase out its use, imposed an excise tax. However, the tax does not apply to CFC-113 reclaimed as part of a recycling process, or CFC-113 that is sold or manufactured for export.

The defendants were charged with attempting to avoid this excise tax, beginning in 1997 or 1998, through a series of complex business transactions. In very brief, they falsified documents so that it would appear that CFC-113 that they had purchased and resold was either reclaimed or was being shipped for export. Similar misstatements duped their suppliers into not charging them the excise tax.

Shellef alone was also charged with tax evasion - he understated his income and assets - relating to his personal and business returns for the 1996 tax year. At trial, Shellef moved to sever the 1996 tax counts from the others, and Rubenstein joined in the motion, all without success.

The circuit reversed. Tax counts can be joined with other crimes from which the tax offenses arose, as when a defendant is prosecuted for fraud and for not paying taxes on the proceeds. Here, however, Shellef’s 1996 tax counts were unrelated to the other charges. The government’s only claimed connection was that all related in some way to the sale of CFC-113 (a claim unsupported by the record for the 1996 conduct) and that all arose from the same businesses. But the circuit held that this was insufficient to support joinder in the prosecution of Shellef under Rule 8(a).

The court further held that the government failed to show that this misjoinder was harmless. The 1996 conduct would have been inadmissible at a trial on the other counts under Rule 404(b), because the earlier acts would have led the jury to “reason that if Shellef was willing to lie to the IRS in 1996 he would be willing subsequently to lie to others” or to interpret the 1996 conduct as an “indication of Shellef’s general mendacity.” The court also held that, for similar reasons, the 1996 evidence probably prejudiced the jury’s assessment of the other counts. The absence of any limiting instructions on these issues compounded this prejudice.

After a much less detailed analysis, the court also held that Shellef’s 1996 tax counts were misjoined against Rubenstein. The court simply noted that this was true for “many of the same reasons” that they were misjoined against Shellef, but did not give any specifics. Interestingly, and with no real analysis at all, the court held that Shellef’s 1996 misdeeds posed an “arguably greater” potential for prejudice against Rubenstein, even though that conduct had nothing at all to do with him.

This opinion is also notable for its discussion of the theories of wire fraud advanced in the indictment, the “no-sale” theory and the “tax liability” theory. The no-sale theory posited that Shellef’s misrepresentations to his supplier constituted fraud because the supplier would not have made the sale if it knew of his true plans to improperly sell the chemical domestically. However, the court held that this is not enough. A scheme that does no more than cause a victim to enter into a transaction it would otherwise avoid is not fraud. Fraud is present only if the scheme depends “for [its] completion on a misrepresentation of an essential element of the bargain.” Here, because the indictment alleged only that Shellef’s misrepresentation induced his supplier to enter into the transaction, but did not charge that the misrepresentation had “relevance to the object of the contract,” the indictment was legally insufficient on a “no sale” theory.

The indictment was sufficient, however, on the alternative “tax liability” theory. This theory was that Shellef induced his supplier to continue to sell the chemical without paying the excise tax or including it in the sales price. This was sufficient because it deprived the supplier of money it should have been entitled to - the tax - and it is irrelevant that that money was to be passed on to the IRS. It was sufficient that the supplier “had a right to” the money and that Shellef’s scheme was intended to deprive the supplier of it.