Daniel Castro was a high-ranking person in the Philadelphia Police Department. And the Third Circuit’s opinion in his case – United States v. Castro – may just be the most awesome published opinion I’ve seen in months.
Mr. Castro was charged with three separate extortion conspiracies and also with making a false statement to federal agents – a violation of 18 U.S.C. § 1001.
The jury hung on the extortion charges. They convicted on the false statement charge.
He pled to one extortion conspiracy to avoid retrial and the plea agreement had an appeal waiver.
Yet, despite that, the Third Circuit reversed his false statement conviction because the government hadn’t proven it. The Third Circuit held that he was so clearly not guilty of making a false statement that it would be a manifest injustice to not reverse on those grounds – so the appeal waiver didn’t bar their consideration of the issue.
The (Not) False Statement
Mr. Castro had a friend, Rony Moshe. Mr. Castro lost some money in a bad investment. He thought of his losses as a debt owed to him by the person he invested with – a man named Encarnacion. Mr. Moshe proposed that he could refer some tough debt collectors to help Mr. Castro collect this “debt” from Mr. Encarnacion. Mr. Moshe really went out of his way to try to work with Mr. Castro.
As you may have already suspected, Mr. Moshe was also an FBI informant.
After a lot of back and forth and a lot of regrettable statements on wires, Mr. Moshe gave Mr. Castro some money that he told Mr. Castro came from Encarnacion. In fact, it came from the FBI.
The FBI interviewed Mr. Castro. The asked him if he ever got money from Mr. Encarnacion.
Mr. Castro said that he did not. Though of course he thought that he did. Though he didn’t – the money came from the FBI.
His statement that he didn’t get any money from Encarnacion was the basis of his false statement conviction.
Failing to Fib
On appeal, Mr. Castro argued that this wasn’t a false statement. In fact, it was a true statement – he did not, in fact, get any money from Encarnacion.
Mr. Castro didn’t know that the statement was true – he intended to lie. But, despite his best efforts, he failed to fib.
The Third Circuit set out the standard for a false statement prosecution:
To establish a violation of §1001, the government [is] required to prove each of the following five elements: (1) that [the accused] made a statement or representation; (2) that the statement or representation was false; (3) that the false statement was made knowingly and willfully; (4) that the statement or representation was material; and (5) that the statement or representation was made in a matter within the jurisdiction of the federal government.
The second element is plain as day. And Mr. Castro’s statement wasn’t false. So, the Third Circuit reversed his conviction for making a false statement.
The Government’s (Rejected) Arguments
The government was unhappy with this result – Mr. Castro thought he was committing a crime, even if he actually wasn’t. The Third Circuit empathized, but disagreed:
In the broadest sense, it is surely so that Castro was morally wrong even if not legally guilty, but our legal system does not convict people of being bad. If they are to be convicted, it is for specific crimes, and the government here undertook the burden of proving that Castro had committed each element of the specific crime set forth in § 1001. It failed to do that.
The government was really unhappy with this result. They argued that there’s a “sting operation exception” to the requirement that a person make a false statement for there to be a successful false statement prosecution. Undercover operations do odd things to the truth. Many is the time I’ve sat with someone after they’ve been arrested in a sting and the predominant emotion is betrayal. Folks just can’t get over being lied to by someone who turned out to be a federal agent.
The Third Circuit didn’t much care for the “sting operation exception”
The ready and dispositive response to that argument is that, even if a “sting exception” to the strictures of § 1001 is a good idea, it is simply not in the statute. Congress knows how to pass laws that penalize statements made to law enforcement officers by a defendant who incorrectly believes the statements to be false. Compare 18 U.S.C. § 1956(a)(1) (“knowing” laundering of funds “which in fact involves the proceeds” of a crime), with id. §1956(a)(3) (intentional laundering of funds “represented to be” proceeds of a crime). But it did not do so when it enacted § 1001, and we are not free to amend the law.
In a desperate move, the government then argued that the money really came “from” Encarnacion, even though they came from the FBI.
The Third Circuit’s response – “It is not clear how the quotation marks around the word “from” in that sentence help the argument.”
As a result, Mr. Castro’s false statement conviction was reversed.
So many ways to be wrong, but morally and in terms of what happened. Yet they add up to make something so right.