As Seen On TV

United States v. Salim, No. 10-3648-cr (2d Cir. August 24, 2012) (Walker, Lynch, CJJ)

Mamdouh Salim, incarcerated on terrorism charges, stabbed and nearly killed an MCC guard in a misguided attempt to induce the district court to grant him a change of counsel. For that crime, he pled guilty to conspiracy to murder, and the attempt to murder, a federal official. At his sentencing, the court refused to apply the guidelines’ terrorism enhancement - it sentenced him to 32 years’ imprisonment - then declined to resentence him on a  Crosby remand.  In the circuit’s first decision in the case, which was a cross-appeal, the court rejected Salim’s challenges to his sentence, but agreed with the government that it was error not to apply the terrorism enhancement. See “How Not To Seek A Change of Counsel,” posted December 6, 2008.

This opinion concern’s Salim’s appeal after the resentencing, in which the district court sentenced him to life without parole. The circuit affirmed.

Before the resentencing, Salim’s counsel had written to the court and asked that Salim’s presence be waived or, alternatively, that Salim be present by videoconference. The court agreed to this latter proposal, and conducted a brief colloquy over the video feed at which Salim explained that he did not wish to be brought back to the Southern District because the last time that happened prison guards beat him. When the court asked whether he waived his right to be present, he said, “I don’t want to come to the Court. So I’m not going to be subjected to being beaten up ...,” and“[t]herefore, ... I am waiving my right to appear before you.”

The circuit agreed with Salim that this was not a valid waiver. The court began by holding that the constitutional right to be present, codified in Fed.R.Cr.P. 43, requires physical presence and is “not satisfied by participation through video conference.” While the right to presence can be waived, the waiver must be knowing and voluntary. Moreover, although it is possible that an attorney can waive the right on the defendant’s behalf, Salim’s attorney’s letter did not demonstrate a knowing and voluntary waiver. It merely said that counsel had “recently spoken to” Salim and that Salim wished to be allowed to waive his personal presence. Since this letter did not address knowingness and voluntariness, it was not a valid waiver.

Salim’s remarks during his colloquy with the court were no better. His stated desire to avoid coming to court so that he would not be beaten by local prison guards suggested that his waiver was the result of “fears of intimidation and physical abuse,” and not of his own free will. And there was no record evidence to suggest that Salim was lying about his fear or that the fear he expressed was not “reasonably grounded.” The record also suggested that he might have wished to attend in person if his “safety could be reasonably assured.” By analogy to a Faretta colloquy, the circuit held that the district court should have done more to assure that Salim’s waiver was knowing and voluntary.

That said, however, the circuit concluded that this error was subject to plain error review and that Salim could not establish that he was prejudiced. Salim probably satisfied the first two parts of the plain error test - there was an “error” that was “plain.” But he did not satisfy the third and fourth because he did not prove that his presence would have affected the outcome of the proceeding. Here, the district court had issued a written opinion in advance of the sentencing rejecting his arguments for leniency and explaining that its earlier decision to impose a sentence less than life had been infected by legal error.  In addition, Salim’s appearance by video did not prevent him from making “any statement [seeking leniency] he chose” to the court. 

Finding that "Relevant" Conduct is not "Relevant Conduct," the Circuit Remands

United States v. Wernick, No. 10-2974-cr (2d Cir. August 8, 2012) (McLaughlin, Sack, Lynch, CJJ)

Defendant Wernick was convicted after trial of, inter alia, one count of child enticement - he persuaded two teenagers to meet with him. At his sentencing, the court factored in three other acts involving the abuse or attempted sex abuse of young children as “relevant conduct.”  The circuit concluded that the acts involving the young children, although clearly “relevant” to Wernick’s sentencing, were not “relevant conduct” under the sentencing guidelines.

The guideline under which Wenick was sentenced, § 2G1.1, has a specific offense characteristic involving the sex abuse of individuals other than those in the count of conviction:  if the “relevant conduct” to the offense of conviction includes “prohibited sexual conduct in respect to more than one victim,” regardless of whether that victim is specified in the count of conviction, each such victim should be “treated as if contained in a separate count of conviction.” Thus, a separate calculation under that guideline is undertaken for each victim - those in the count of conviction and those in the “relevant conduct ”- then each is treated as a separate “group” under the Chapter 3 "grouping" rules. Here, the acts involving the young children added four levels to Wernick’s already very high offense level.

The circuit concluded that the acts involving the young children were not “relevant conduct” in Wernick’s case and that including them in the offense level was plain error. Section 1B1.3 requires the sentencing court to determine the “relevant conduct” for purposes of applying an offense guideline's specific offense characteristics. “Relevant conduct,” includes “acts ... committed ... by the defendant” that occurred “during the commission of the offense, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense.” 

If these criteria are met, under § 2G1.1 conduct against victims other than those covered by the conviction can be “relevant conduct.” But here, the acts against the young children did were not covered by § 1B1.3 because they did not occur "during” the offenses against the teenagers, even though there was a “temporal overlap” between the conduct with the young children and that with the teenagers. “One criminal act does not become ‘relevant’ to a second act under the Guidelines by the bare fact of the temporal overlap.” The acts have to be connected in the same course of conduct - the example the circuit gives is a bank robber who assaults a guard during the robbery - otherwise “the second event is literally a coincidence.” The guidelines “do not define ‘relevant’ as ‘during’ in a purely temporal sense.”

Here, the government did not offer any evidence that Wernick, “for example, simultaneously engaged in sexual activities with teenagers and young children, or that he was able to use the fact of his pursuit of sex with children to persuade the teenagers to have sex with him.” The acts against the young children, as bad as they were, were not “relevant conduct” to the acts against the teenagers “in the sense contemplated by the” guidelines.

Nor was it enough that these acts could have been covered by the language of the charging instrument. That the government could have proven the conduct against the children at trial but did not did not make it relevant conduct. 

The guideline error here constituted plain error. There was an “error,” that was “plain.” It also affected Wernick’s substantial rights and called into question the fairness or integrity of the proceedings because of the serious effect it had on Wernick’s sentence: the district court used a range of 324 to 405 months’ imprisonment - it sentenced Wernick to 360 months - but absent the error the range would have been 210 to 262 . 

The court noted that a remand for resentencing, “while not costless, does not invoke the same difficulties as a reamnd for retrial.” Here, given the magnitude of the impact on the guideline calculation and the “relavitly low cost of correcting the miscalculation,” the court remanded for resentencing.

The court closed by recognizing that this decision “has an air of the academic and technical” and might be seen by some as slighting the “seriousness and obvious materiality of Wernick’s persistent pattern of abuse of minors.” But this is the “nature of guideline sentencing,” and such “technical analysis” is only part of the sentencing process. On remand, the district court “remains entitled to exercise its discretion” and “may make its own evaluation of the characteristics of the defendant” and the other § 3553(a) factors.

Cash Cow

United States v. Wagner-Dano, No. 10-4593-cr (2d Cir. May 14, 2012) (Winter, Livingston, CJJ, Rakoff, DJ)

Melissa Wagner-Dano was a bookkeeper in upstate New York, where she worked for a small town and two large dairy farm cooperatives. She stole more than $1 million from her employers through unauthorized withdrawals from their bank accounts, using used the money for various personal projects. Wagner-Dano covered her tracks by transferring funds among the employers’ accounts. As the scheme unraveled, she blamed the missing funds on computer errors, then repaid some of the money from her personal bank account. Finally, she threw in the towel, admitted her crime and pled guilty to wire fraud.

On appeal, she claimed that several errors in her presentence report rendered her 78-month, top-of-the-range sentence procedurally unreasonable. Wagner-Dano had detailed these objections to the Probation Department, which had explained them in the addendum to the report, but at sentencing her counsel referred to - but did not elaborate on - them.

The circuit concluded that some of these objections were resolved by the district court’s adoption of the findings of the presentence report. Others, however, were at least arguably not, because they involved more complex discussions of Wagner-Dano’s motivations at various stages of the criminal activity and coverup. Nevertheless, the circuit concluded that Wagner-Dano’s failure to press these claims at the sentencing hearing limited the court’s review to plain error: "We review for plain error where, as here, an appellant asserts that the district court neglected to address an objection to the PSR in violation of Rule 32(i)((B), but that appellant failed to alert the district court of this procedural issue after the district court made its findings." In reaching this result, the court extended existing precedent that, where an appellant argues for the first time on appeal that the district court failed to consider the § 3553(a) sentencing factors, appellate review is for plain error only.

The circuit noted that if "the defendant or the Government believes that a particular factual issue is material and the district court neglects to address the issue at sentencing, it is not difficult - indeed, it should be intuitive - to bring this procedural error to the district court’s attention." In so holding, the court also seemingly abrogated a line of cases under the precursor to Rule 32(i)(3), the 1983 through 1994 version, which was codified as Rule 32(c)(3)(D). But the court noted that subsequent versions of the relevant portion of Rule 32 had been specifically intended to reduce the burdens on district courts and confine the purpose of the rule to resolving factual issues that were material to the sentence itself. And the court also noted that it has not recently remanded cases to remedy an unpreserved "technical violation" of Rule 32(i)(3).

Applying the plain error standard here, the court affirmed, since none of the matters that Wagner-Dano claimed the district court failed to address would have been likely to affect her sentence.

Comment: This decision once again demonstrates the importance of thorough, focused advocacy at sentencing, particularly where an appeal is likely.

Gain? Wait!

United States v. Zangari, No. 10-4546-cr (2d Cir. April 18, 2012) (Cabranes, Pooler, Wesley, CJJ)

In this decision, the court found that the district court’s restitution order, which was based on the defendant's gain instead of the victims' loss, was error, but not plain error. It accordingly affirmed.

Defendant Zangari was a securities broker in the securities-lending departments of two major banks.  He engaged in unauthorized stock-loan transactions with financial institutions that had a relationship with one of his co-workers, and received a portion of the kickbacks, approximately $65,000.  His employers  suffered “losses in the form of unrealized profit.”

Zangari pled guilty to a Travel Act conspiracy, and was sentenced under USSG § 2B4.1, the commercial bribery guideline. The PSR used the $65,000 figure as the loss calculation, recommending an enhancement for a loss between $30,000 and $70,000. Although neither bank had submitted a loss affidavit, the PSR used Zangari’s gain as a proxy for their losses. The report equated the kickback amount the banks’ lost profit on the transactions, but did not detail how it reached this conclusion.

Zangari never objected to the loss calculation, and the district court used it both for calculating his guidelines and for fixing the amount of restitution.  On appeal, however, Zangari argued that the restitution order was illegal because the victims suffered no loss.

The circuit agreed that the restitution order was erroneous. The restitution statutes require that the order reflect the “full amount of each victim’s loss.” But here, the district court based the order instead on Zangari’s gain. While this is acceptable for calculating the loss for guidelines purposes - an application note permits using gain as a substitute for loss where the loss “reasonably cannot be determined” - the substitution is not permissible for calculating restitution.  Indeed, every circuit to consider the question has reached the same result, even in “hard cases.”

It is true that there are cases where there is a direct correlation between the defendant’s gain and the victim’s loss; in such situations the gain is a “measure of” but not a “substitute for” the loss.  But here, there was no such correlation. In the stock-loan transactions at issue the securities and collateral involved were returned to their previous owners at the end of the loan. “Therefore, any loss to the identified victims in this case could only have come in the form of opportunity cost.” And those losses were not equivalent to the sham finders fees that produced Zangari’s gain.

Accordingly, the order was error, and the error was “plain.” Nevertheless, the circuit declined to exercise its discretion to correct it because Zangari failed to show prejudice by demonstrating that the amount would have been less had it been properly calculated.  Rather, he insisted only that the banks’ failure to file affidavits of loss showed that they suffered no loss at all. The circuit disagreed: “the fact that the victims did not claim a loss does not mean that they did not sustain” one.

The circuit also thought this might even be a case of “salutary error,” in that it was possible that the restitution award “in fact understated the victims’ actual losses.”  Zangari pled guilty to being a member of an “industry-wide” conspiracy, and could have been held liable for all of the losses of all of the victims affected by it along with, under § 3663A(b)(4), the expenses they incurred in their internal investigations, including attorneys fees and accounting costs.

Cain is Able

United States v. Cain, 09-0707-cr (2d Cir. January 31, 2012) (Newman, Lynch, CJJ, Restani, JCIT)

This is a case, oddly enough, about trees. Appellant David Cain, Jr., proprietor of David’s Tree Service, assisted by his brother, Chris Cain, a cousin, Jamie Soha, and others, was trying to corner the tree service and logging market in northwestern New York State. To get there, they engaged in acts of violence, extortion and even arson, and were convicted of substantive and conspiracy RICO counts and of other, related crimes.

All convictions were affirmed except for Chris Cain’s on the RICO counts. The circuit found that the district court’s “pattern” instruction was erroneous and, as to Chris Cain, the error, although not flagged below, was plain.

The RICO statute requires proof of a “pattern of racketeering activity” - at least two acts, the last of which occurred within ten years after the commission of the one before it. But the Supreme Court requires more than just temporal proof - the prosecution must prove that the racketeering acts are “interrelated” and that there is “continuity or a threat of continuity.” The Second Circuit has distilled this rule into two distinct parts: “horizontal relatedness” means that the acts must be shown to be related to one another; “vertical relatedness” means that the acts must be shown to have a nexus to the enterprise (this concept includes “continuity”). Here, the district court charged only the statutory language with respect to timing. This was error, both as to the substantive RICO count and the RICO conspiracy count, since the conspiracy statute includes the pattern requirement.

Turning to plain error review, the circuit easily concluded that there was (1) an “error” that was (2) “plain,” that is, “obvious,” since the circuit’s rule on relatedness and continuity had been “well established” by a “substantial body of case law” long before this trial took place.

The third prong - whether the error affected a defendant’s “substantial rights” - was a “closer question.” To meet this test, the error must be “prejudicial, which means that there must be a reasonable probability that the error affected the outcome of the trial.” For David Cain and Soha, there was “no such possibility. The jury independently convicted them of several counts of extortion that were also RICO predicates, and those verdicts “overwhelmingly demonstrated that the same objective motivated each act of extortion” - to increase David Cain’s market share and “enrich [his] associates.” The extortions were also clearly not aimed uniquely at the victims; their purpose was to secure David Cain’s dominance in the tree service business in the area, a goal that plainly posed a threat of future acts, as needed, to eliminate other competitors or new entrants into the market.

For Chris Cain, however, the court reached a different result. He was not charged in the three extortions that made up the core of the RICO case against his brother, and the evidence connecting Chris Cain’s unlawful activities to the criminal enterprise was “remarkably thin.” The only RICO predicate that both Chris and David were convicted of was a 1994 vehicle arson, which the government had conceded on appeal was insufficiently proven. And the remaining racketeering acts that the jury found to have been proven as to Chris were “not so clearly linked to each other or to the enterprise itself” that a rational jury, properly instructed, could necessarily have found that they constituted a pattern of racketeering activity.

Those acts were: a marijuana distribution conspiracy , the arson of a residence, a different arson and insurance fraud in connection with a rental property owned by Cain’s parents and a home invasion robbery. But none of those offenses involved David Cain, his tree service business or the other participants in the racketeering acts, and there was no “apparent connection” among the crimes themselves.

Finally, prong four, the court held that the erroneous instruction “seriously affect[ed] the fairness, integrity [and] public reputation of judicial proceedings” pertaining to Chris Cain, such that the circuit was warranted in exercising its discretion to correct it.

Plain Terror

United States v. Marcus, No. 07-4005-cr (2d Cir. December 7, 2010) (Calabresi, Straub, Wesley, CJJ)

This is Marcus’ second go-round in the circuit. He won the first time, in August of 2008, (see “Sex Post Facto”, posted August 18, 2008). The government got cert, and the Supreme Court reversed, holding that the first panel had used an incorrect plain error standard. In this decision, on remand from the Supremes, Marcus had only a partial win.

The underlying conduct is particularly disturbing. From October of 1998 through June of 1999, Marcus was in a consensual, albeit kinky, sexual relationship with “Jodi.” This nature of the relationship changed in October 1999 when Jodi refused to recruit her sister to become one of Marcus’ “sex slaves.” In response, Marcus “punished” Jodi severely, and began to terrorize her regularly. With this, the relationship became nonconsensual.

In January of 2000, Marcus directed Jodi to move to New York and forced her to create a website called “Slavespace.” She worked eight or nine hours a day on the site but Marcus received all of the revenues. This was not a voluntary arrangement. Even after she found full time work of her own, Marcus made her continue working on the site, and would brutalize her physically and sexually if he was unhappy with her efforts. The trial evidence described a particularly harrowing “punishment” that occurred in April of 2001.

In March of 2001, Jodi told Marcus that she wanted to end their arrangement. He said he would let her go if she endured one final punishment, but she was so terrorized by the punishment that she did leave. A few months later, the woman with whom she was living told Marcus that she did not want Jodi there any more. Jodi moved out and their contact gradually diminished, ending entirely in 2003.

In 2007, the government charged Marcus with violating the federal forced labor statute, 18 U.S.C. § 1589, and the sex trafficking statute, 18 U.S.C. § 1591(a)(1). Those statutes were enacted on October 28, 2000, but the indictment charged Marcus with violating them from January of 1999 through October of 2001. Marcus did not seek a jury instruction based on the statutes’ enactment date, nor did he raise any issue about retroactive application in his Rule 29 motion.

On his appeal, however, he argued that the statutes were applied to him retroactively in violation of the Ex Post Facto Clause. The panel, reviewing this unpreserved claim, applied binding circuit precedent, under which plain error review required a new trial if there was “any possibility, how matter how unlikely,” that an “uninstructed jury would have convicted the defendant based exclusively on pre-enactment conduct.” It accordingly vacated the conviction on both counts. A concurrence, authored by then-Judge Sotomayor, pointed out that although the panel was bound by the circuit’s existing plain error test, this test was inconsistent with Supreme Court precedent. The concurrence would have vacated only the sex trafficking count and would have affirmed the forced labor count because for that count the was “no plausible argument” that the jury would have differentiated between Marcus’ pre-and post enactment conduct.

On the government’s appeal, the Supreme Court reversed and remanded because the “any possibility however remote” standard was indeed inconsistent with that Court’s plain error review precedents.

In this do-over, the original panel, with Calabresi substituting for Sotomayor, agreed with the original opinion’s concurrence. It found that there could only be plain error under the fourth prong of the plain error test - the error must have “seriously affected the fairness, integrity or public reputation of” the proceedings - if there was a “reasonable probability that the jury would not have convicted him absent the error.”

Here, with respect to the forced labor statute, there was no such “reasonable probability.” The government presented post-enactment evidence sufficient to satisfy the elements of that statute. The forced labor on the “Slavespace” began in January of 2000, before the statute’s October enactment, but continued into at least June of 2001 - the April 2001 punishment episode was itself post-enactment. Thus, the jury would have found that Marcus obtained Jodi’s labor through the threat of serious physical harm and actual physical harm - the statutory standard - after October of 2000. Nor would there have been any “reasoned basis” for a jury to differentiate between Marcus’ pre- and post- enactment conduct. Indeed, if anything Marcus’ use of force against Jodi increased post-enactment.

By contract, however, the court adhered to his original ruling on the sex trafficking conviction. In fact, the government conceded on this point. Marcus transported Jodi to New York in early 2000, before the statute was enacted. From then on, he harbored her there. Thus, the conduct supporting this conviction “differed materially before and after October 2000 such that there is a reasonable probability that the erroneous jury charge affected the outcome of the trial” and the “fairness integrity or public reputation of the proceedings.”

Reefer Gladness

United States v. Needham, No. 06-5652-cr (2d Cir. May 14, 2010) (Cabranes, Katzmann, Parker, CJJ)

The three defendants here were part of a larger group that was in the business of robbing drug dealers of drugs and drug proceeds. They were all convicted of a Hobbs Act conspiracy, which included robberies of cocaine and heroin dealers, and each was also convicted of one substantive count involving the robbery of a marijuana dealer. Consistent with circuit law at the time, the district court instructed the jury that “all illegal drug activity, even if it is purely local in nature,” affects interstate commerce. While the defendants’ appeal was pending, the circuit held that this instruction was wrong: proof of drug trafficking does not automatically prove an affect on interstate commerce. Instead, “even in drug cases, the jury must find such an effect as part of its verdict.” Finding plain error in the interstate commerce jury charge here, a divided panel court reversed the defendants’ substantive, marijuana-related robbery convictions, but affirmed on the conspiracy count.

The Majority’s View

Under current circuit law, the interstate effect cannot be “presumed” when the object of a robbery is to obtain illegal drugs or drug proceeds. This element, like any other, must be found by jury beyond a reasonable doubt.

Accordingly, the court treated the error here as a charge error, because the charge withheld an element from the jury’s consideration. But, since this was a plain error case, rather than assessing the record to determine whether the error was harmless, the court considered whether the error “affected substantial rights”; that is, “whether the error was prejudicial.” To make this decision, the majority “closely examine[d] the record to determine whether the jury, had it been properly instructed, would have found the jurisdictional element satisfied, or whether the government failed to prove this element beyond a reasonable doubt.”

The entire panel found the interstate element satisfied for the defendants’ conspiracy conviction. A conspiracy that “targets cocaine and heroin, and the proceeds from their sale, undoubtedly meets” the relevant legal standard - the “possibility or potential of an effect on interstate commerce, not an actual effect” - because those drugs “cannot be produced in New York, and thus necessarily travel in interstate commerce.” Thus, even though the government introduced no evidence to support this proposition, the jury was “capable of concluding, based on its lay knowledge, that cocaine is imported into the United States.” This, according to the court, satisfied the jurisdictional element “beyond a reasonable doubt.”

But two judges had a different view of the substantive convictions involving robberies of marijuana dealers. Apart from the large amounts of money involved in those robberies, the government “offered no evidence to support an interstate nexus,” such as proof that the marijuana originated out of state, was sold to out-of-state-customers, or that the victims crossed state lines in conducting their business or would have purchased goods in interstate commerce with the proceeds.

And, according to the majority, “marijuana may be grown, processed, and sold entirely within New York.” Thus, “reviewing for prejudice,” the majority found that the erroneous jury charge “may very well have affected the outcome of the district court proceedings.” The proof was “simply too bare to establish, without more, the required interstate nexus,” even though that nexus need be only “subtle or slight.” The majority refused to find that effect based solely on the amount of money involved in the robberies: “the sheer amount of money, standing alone, does not demonstrate an interstate effect.”

The Dissent

Judge Cabranes had a different view. He agreed that the jury instruction was erroneous. But he had “no trouble concluding beyond a reasonable doubt that the jury would have returned the guilty verdict even absent the instruction that was given.” He found no possibility that “the jury in this case could have concluded that the robberies at issue involved marijuana that was grown, processed, and sold entirely within New York” and was “confident” that the jurors would have found that at least some of the drugs or proceeds derived from interstate or foreign commerce “based on their lay knowledge and common sense.”

Moreover, Judge Cabranes was also “confident that a properly instructed jury would have found the required effect on commerce even if the jury had assumed that the marijuana in question was grown, processed, and sold entirely within New York.” To him, Congress actually has Commerce Clause power to prohibit the local cultivation and use of marijuana, thus, the robbery of the proceeds of even homegrown marijuana is covered by the Hobbs Act.

Comment

This decision prompts a couple of issues that require some further thought.

First, this decision reveals a serious problem with current Second Circuit interstate commerce jurisprudence. According to the court, the government need not introduce any evidence at all of interstate commerce for robberies involving heroin, cocaine or their proceeds, even though this is an element of the offense. There is dangerous and a slippery slope here. Many federal crimes have an interstate commerce element as the jurisdictional hook, and there is a real danger that this “we don’t need any evidence, just the jurors’ common sense” approach could be extended to other criminal statutes. Could jurors use their “common sense” to conclude that, say, stolen property from other states so commonly ends up in New York that the government need not introduce evidence on this element? A better rule would be to require the government actually introduce evidence on interstate commerce in every case where it is an element, and not just some of them. This would hardly be a burden - any law enforcement officer who knows anything about drugs could be an “expert” on the question.

The second weird thing about this decision is the relief granted. Although the majority found a prejudicial charge error on the substantive counts, it did not vacate those counts and remand for a new trial, as it typically does when there is a charge error, even one that dilutes or eliminates an element. Instead, the court reversed the convictions on the marijuana-based counts, which is typically the relief granted only where the court has found the evidence insufficient. Why would the majority secretly treat this as a sufficiency case, and not say what it is doing?

Money Disorder

United States v. Garcia, No. 08-1621-cr (2d Cir. December 1, 2009) (Jacobs, Sack, Lynch, CJJ)

In Cuellar v. United States, 128 S.Ct. 1994 (2008), the Court held that, for the crime of transportation money laundering under 18 U.S.C. § 1956(a)(2)(B)(i), the government most prove more than that the money was hidden during its transportation. Rather, it must prove that the “purpose,” not merely the effect, of the transportation was to conceal or disguise the nature, location, source, ownership or control of the money. Thus, the government must prove not just how the money was moved, but why it was moved. The Second Circuit has held that this holding applies equally to “transaction” money laundering under 18 U.S.C. § 956(a)(1)(B)(i), which makes it a crime to engage in certain financial transactions, including the transfer or delivery of cash, for those same purposes.

Here, the court held that, in light of these principles, Garcia’s guilty plea to transaction money laundering lacked a factual basis.

During his allocution, Garcia admitted that he “went to get some money” that he believed was dirty. But when the judge asked whether he understood that his picking up cash “was in fact part of a larger scheme to conceal or disguise the source or ownership of the funds,” he replied “no.” His counsel then proffered that Garcia agreed to pick up the money and deliver it to someone else knowing that the funds were the proceeds of illegal activity and would not be declared as income. He also proffered that Garcia concealed the funds in a cargo truck that was also carrying legitimate cargo. After confirming that Garcia knew that the packages of money were wrapped so as to conceal their contents, the district judge accepted his plea.

Although Garcia challenged the sufficiency of his plea for the first time on appeal, the circuit vacated the plea. The court first noted that Garcia's acknowledgment of his understanding of the nature of the charge was not enough. The particular charge was “[]complicated and [not] readily understandable by the average layman.” Moreover, Garcia’s allocution “demonstrated actual confusion about the critical concealment element of the offense.” Nothing in his colloquy showed his understanding “that the transaction [had to] be designed to conceal a listed attribute of the funds - or [contained] an admission that Garcia had such a purpose.”

Having found error, the court had no trouble finding plain error here: “the additional elements necessary for Rule 52(b) relief flow naturally under the present circumstances.” Although Cuellar was not decided until after the plea, whether an error is “plain” is “determined by reference to the law as of the time of the appeal,” by which time it was clearly plain. And the error affected Garcia’s substantial rights. The record presented a “reasonable probability that, had Garcia fully understood the nature of the crime he was charged with, he would not have pled guilty.”

Hart's Desire

United States v. Draper, No. 07-2301-cr (2d Cir. January 20, 2009)(Newman, Calabresi, Sotomayor, CJJ)

Defendants Hart and Draper were members of LRP, a drug gang that operated in Brooklyn. In July of 2001, LRP members robbed and murdered a rival. One of the LRP members involved in the killing, Clinton Davy, was picked up and questioned by New York City police officers. Over the next several months, Davy implicated another LRP member, Cory Marcano, ultimately giving information that led to Marcano’s arrest. After Marcano’s arrest, Davy was assaulted on three separate occasions for being a “snitch.”

Relevant to this appeal is the third such beating, which occurred on August 8, 2003. Hart, Draper and other LRP members entered Davy’s apartment and beat him with “a clothing iron, electrical cords, and bleach.” They discussed shooting him too, but the police arrived before they had the chance. Two days later, on April 10, Davy, who had been meeting only with local police and prosecutors, met with federal agents and prosecutors for the first time.

After a jury trial, Hart and Draper were convicted, inter alia, of retaliating against a witness, in violation of 18 U.S.C. § 1513(b)(2) and (f). On appeal, the court held both that the district court improperly charged the jury and that the evidence was insufficient on those counts.

The statute makes it an offense to harm someone, or threaten to do so, “with intent to retaliate” against him for giving information about the commission of a federal offense to a “law enforcement officer.” A “law enforcement officer” is defined specifically as one employed by the federal government. Thus, where the witness initially had contact with state authorities, “the government must provide sufficient evidence that the witness’s contact with law enforcement officials extended beyond her initial contact with the local police, and involved federal officers.”

Here, the jury charge did not require the government to prove that “at least one of the law enforcement officials” that Davy contacted before being beaten was an “officer or employee of the Federal Government.” This was error. In addition, the undisputed facts were that Davy did not have contacts with federal agents prior to his attack. He testified that his first contact with the feds was two days after the attack.

The court accordingly reversed the convictions on the retaliation counts and ordered their dismissal.

Comment

This case is noteworthy for a surprising reason: the defendants did not raise this issue themselves, either in the district court or on appeal. They did not object to the incorrect jury instruction, and their sufficiency argument on appeal was that there was insufficient evidence that they had retaliatory intent. Here, the circuit itself flagged the issue and ordered post-argument briefing on it. Thus, this reversal overcame both the plain error rule and the rule that “ordinarily” arguments not raised on appeal are “deemed abandoned.” The court invoked its “discretion to overlook such failure if a manifest injustice would otherwise result.”

Another tidbit: There is some dispute as to whether the sufficiency of the evidence is to be measured against the charge as given. Under this opinion, it is not.

The Three Racketeers

United States v. Riggi, No. 06-1280-cr (2d Cir. September 4, 2008) (Jacobs, Calabresi, Sack, CJJ)

Defendants Vitabile, Abramo and Schifilliti were all long-time members of the Decavalcante crime family. Vitabile was consignliere for thirty-five years, Abramo had been a captain since the late 1980's and Schifilliti had held that same title since 1991. They were also part of the family’s administration. After a three-week trial, a jury convicted them of racketeering and racketeering conspiracy - comprising ten predicate acts - and five substantive counts. Included in the mix were several murder conspiracies, extortion, loansharking and securities fraud.

At trial, to bolster the testimony of its cooperating witnesses and augment some otherwise underwhelming recordings, the government introduced into evidence the plea allocutions of eight non-testifying co-defendants. On appeal, the circuit agreed that this violated Crawford and that the violation amounted to plain error. It vacated the convictions and remanded for a new trial.

The court spent little time on the first two prongs of plain error analysis: the district court made an error that was, at least in retrospect, plain. But the circuit also concluded that the error affected the defendants’ substantial rights because the plea allocutions “undoubtedly prejudiced the jury and influenced” the verdict.


1. The Impact of the Allocutions

First, the court held that “prejudice arose from the sheer number of plea allocutions admitted to prove the multiple conspiracies in this case.” The “repetitive nature” of the eight allocutions “suggested that the conspiracy was so widespread that it would be plausible for the jury to assume” that these defendants were participants too, “simply by their long and close association” with those who had pled.

Also, many of the conspiracies described by the allocutions “were overlapping such that evidence of one tended to support the existence of another.” Plea allocutions “confirming the existence of one of the linked conspiracies naturally reinforced the evidence of the others.” This created an “echo chamber of implied guilt” and magnified the prejudicial effect of the pleas.

Third, the detailed content of the allocutions “corresponded to elements of the crimes charged,” which bolstered the government’s proof in those areas. In some instances the allocutions “touched directly” on issues that were central to the defense. Other allocutions undermined specific defense arguments, and still others “contained detailed information that invited the jury to make improper assumptions regarding the defendants’ roles in the crimes.”

2. Error Not Cured by Limiting Instructions

Here, the district court gave the standard pre-Crawford limiting instruction that told the jury that it could consider the allocutions as proof that the particular conspiracy under consideration existed, but that it would have to look to other evidence to determine whether any defendant was a member. Here, however, the appellate court found conclusive evidence that the jury could not follow those instructions - the jury convicted the defendants on every substantive count supported by a plea allocution, but where no allocution was offered in support of a substantive account, the jury acquitted. Moreover, this same “general pattern” held for the RICO predicates. “The correlation between the verdicts and the plea allocutions strongly suggests that the jury was improperly influenced by the inadmissible evidence.”

3. The Government’s Evidence Was Otherwise Weak

Here, the court found that the government’s case was not overwhelming, and thus that it was likely that the allocutions substantially influenced the jury. The testimony of the cooperating witnesses “contained inconsistencies and contradictions” and the government, anticipating these, promised in its opening that their accounts would be corroborated by “other evidence,” including the eight allocutions.

The government also seemed to “betray[] anxiety” about its physical evidence, admitting in its opening that the taped conversations the jury would hear did not really implicate these defendants.

4. Use and Misuse of the Allocutions Pervaded the Government’s Summation

Perhaps most importantly, the court noted that the government repeatedly referred to the allocutions in its summation and rebuttal summations, and sometimes held them out as proof of something more than the mere existence of the conspiracies that they described.

For example, the government on numerous occasions told the jury that allocutions bolstered the cooperating witnesses’ testimony as to specific crimes.

Also, after the defendants argued that the allocutions proved only that the defendants who pled guilty were murders, the government rebutted by telling the jury that those allocutions showed that the cooperators were not “the only violent guys in the Decavalcante family.” In a similar vein, the government improperly used the allocutions to rebut defense arguments that the defendants’ conversations about murdering certain victims were not serious. The government rebutted that the defendants must have meant what they said because others involved in those same conversations pled guilty.

Finally, the government’s “last words” to the jury were “(again) to consider the plea allocutions as evidence of the crimes charged against the defendants, and not merely of evidence of the existence of the conspiracies.”

5. Sufficiency of the Evidence

Two defendants also argued that the evidence against them was insufficient as to certain discreet offenses. The court, following its usual - and probably wrong - rule that sufficiency review includes improperly admitted evidence, had little trouble finding legally sufficient evidence. That said, however, the court expressed “no opinion” as to whether there would be sufficient evidence without the improperly admitted allocutions.

Affirm Stance

United States v. Walker, 06-0594-cr (2d Cir. June 19, 2008) (Jacobs, Leval, Cabranes, CJJ)

The evidence at Walker's drug trial included: (1) recordings of two drug-related meetings with a cooperating co-defendant in which they discussed both past and future drug activity and in which the cooperator gave Walker money to pay for a previous shipment; (2) Walker's two detailed confessions about his drug dealing activities; and (3) the testimony of four of his associates.

In addition, a DEA agent testified, and it was this testimony that was the subject of the appeal. Here, the circuit agreed that the government elicited “numerous” instances of “improper testimony” from the agent. This included: (1) highly prejudicial statements about the DEA’s investigation of Walker; (2) information the agent developed that “corroborated” Walker’s guilt, such as hearsay reports from other agents that drug customers had implicated Walker; (3) lengthy testimony that cooperating witnesses and other informants had confirmed Walker’s involvement in drug dealing, again, all of which was hearsay; (4) the agent’s unfavorable assessment of Walker’s character; (5) the agent’s vouching for the credibility of other witnesses; and, perhaps most shockingly, (6) his "personal assurance that the government’s entire case was reliable.” The agent also “several times asserted his own belief that” Walker was guilty and “made direct assertions about” Walker’s drug dealing as if the agent had witnessed the activity himself, when in fact he had not.

The circuit carefully cataloged these numerous improprieties, and rejected the government’s theory of admissibility, which was that this was all "background" testimony. Here, the testimony was not properly admitted as “background,” since there was no need for that “background” to implicate Walker directly. For example, the agent could have testified that a coconspirator explained the provenance of the drugs he was selling, without going on to explain that the coconspirator had implicated Walker. Accordingly, the portions of the "background" evidence that “prejudicially incriminated Walker” clearly violated Rule 403.

What is most shocking about this trial, however, is not the government’s dirty tactics. It is that the defense did not object to any of it. Thus, on appeal, Walker had to surmount the plain error standard. The circuit cut the defense a bit of slack - it recognized that the government “ambushed” it by carefully crafting questions that would not give advance warning that the agent's answer would contain something improper. Accordingly, the defense often “did not have a fair opportunity to object until after the jury had heard the damaging matter, when it was already difficult to limit or cure the harm.” Nevertheless, the appellate court could not get past the fact that the defense let this all happen.

In the end, the court was genuinely torn as to whether it should reverse this conviction on plain error grounds. Here, the evidence “powerfully demonstrated the defendant’s guilt” and he did not “take steps to curtail the abusive practice.” On the other hand, the court did not want to “condone or reward an abusive disregard of the rules” by the government. In the end, it affirmed, in light of the overwhelming evidence of guilt. The court could not find plain error here, although it strongly hinted that it would have reversed if the testimony had been objected to.

OBJECT LESSONS

United States v. Villafuerte, Docket No. 06-1292-cr (2d Cir. September 21, 2007) (Walker, Cabranes, CJJ, Goldberg, DJ)

United States v. Hirlman, Docket No. 05-3677 -cr (2d Cir. September 27, 2007) (Winter, Walker, Sack, CJJ)

These two cases, although not related, together provide new insights into an extremely important area - the need to preserve sentencing issues for appeal.

Villafuerte is a very disturbing case. For nearly two decades, the conventional wisdom in the Second Circuit has been that appellate claims relating to the procedural aspects of sentencing - e.g., whether the court understood its departure authority, made adequate legal findings in support of an enhancement, or gave the defendant an opportunity to allocute - would be reviewed on appeal, even where there was no specific objection pointing out the procedural failing.

Villafuerte changes all that. In this case, the Circuit holds that the most common post-Booker claims about procedural unreasonableness - that the district court did not make adequate findings under § 3553(a), and that it did not provide a sufficient statement of reasons under § 3553(c), which are neither “novel” nor “complex” - must be objected to at the time of sentencing. If not, they are reviewed only for plain error, under the stringent standards of Fed.R.Crim.P. 52(b) and United States v. Olano, 507 U.S. 725 (1993). Here, the court had no trouble concluding that such claims, raised for the first time on appeal, were not plain error. It affirmed.

Hirlman, on the other hand, decided six days later, gives a nice lesson in how to do what Villafuerte requires.

In this case, a government appeal of the sentences of two brothers, the government argued that Judge Elfvin did not give adequate notice of its decision to depart from the Guidelines and did not make adequate findings in support of the departures. The government also registered objections in the district court that were specific enough to preserve those claims.

At the first brother’s resentencing, the judge did not say why he had selected the particular sentence. The prosecutor asked for findings, and the court said that it would provide them later, in writing, but never did so. At the second brother’s resentencing, the government did even more, objecting specifically to the court’s failure to give adequate notice of its intention to depart downward, and “press[ing] the court to explain” the departure, which it did not do. The Circuit reviewed the government's claims and vacated the sentences. It probably would have done so anyway, but it certainly did not help that the government objected with specificity.

Comment: It now appears that prudent lawyers must do something akin to what the AUSA did in Hirlman. Here’s something to try if words fail: “Respectfully, your honor, the defense does not believe that the court has made adequate findings in support of the sentence, because ...” or something like that.

One can easily foresee the ugly kettle of fish that the court has opened for itself in Villafuerte. Given the many procedural requirements of the sentencing statutes (and let us not forget Rule 32, as well), post-Booker sentences are open to a large number of procedural challenges on appeal. Thus, the court is going to have to resolve preservation/plain-error questions in a large number of cases that previously would have been more quickly and easily disposed of by simply ruling on the particular claim that has been raised. The Circuit could well end up having to develop an entirely new body of preservation jurisprudence for sentencing appeals - something that is entirely unnecessary, since the previous system worked just fine.

Villafuerte is also clearly in tension with the court’s recent decisions bouncing Anders briefs that did not address what were surely unpreserved claims of procedural unreasonableness. How this tension will play itself out remains to be seen.

An additional word about Hirlman: The Circuit remanded the case to a different judge, using unusually critical language about Judge Elfvin and his record on appeal. At least one assistant federal defender in the Western District feels that this portion of the opinion was both unnecessary and gratuitous; Judge Elvfin is no longer hearing criminal cases, thus a remand to different judge would have happened as a matter of course.