Articles Posted in Interpreting Statutes

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Lester and Nancy Sadler, a husband and wife, ran a series of pain management clinics in Ohio.

As the Sixth Circuit explained, “these were not conventional plain clinics.” For example, at one clinic

patients would arrive well before it opened, filling the clinic’s parking lot and the lots of nearby businesses. While waiting for the clinic to open, the patients used drugs and traded prescription forms for cash in the parking lots. The patients often traveled long distances (and in large groups) to come to the Sadlers’ shops, sometimes as much as 316 miles in a roundtrip, even though most of the patients lived much closer to other clinics.

pills-out-of-bottle-1394618-m.jpgIt’s impressive to have a client base that loyal. Many businesses would do a lot to be known as the company that folks would travel many miles to visit.

How did the pain management clinics distinguish themselves? Perhaps it was their service. Here’s how the Sixth Circuit described what happened when patients got inside the clinic:

After paying their $150 appointment fee (cash only), they met an “assessor” who would review the patients’ healthfacts “day sheet” and hand the patients an already completed prescription form. Clinic staff sometimes filled out these day sheets and prescription forms weeks in advance, pulling the content from the patients’ last day sheet and prescription and altering them slightly to make sure they didn’t look the same. Patients then stepped into an office, where they met the doctor for a minute or two. After that, they left the clinic (some “almost skipping,” reported one witness) with a signed prescription for a fresh supply of hydrocodone, oxycodone or other pain medications in hand. As many as 100 people per day completed this “five minute[]” process of assessment and prescription

With customers leaving your office “almost skipping” you can see why people would drive from miles around. What business wouldn’t want such a reaction?

Though, as it happens, the Sadler’s clinics may have gone too far in their quest for client service. You know you’ve crossed a line when you start making up clients to help. That’s not good customer service; that’s hubris.

The clinics also treated phantom patients. Each month, Nancy would announce to the clinic staff that “it was time to do the charts,” meaning it was time to update the medical treatment files for a long list of people who had never set foot in the clinics. R. 326 at 35. The Sadlers used the names of family members for these charts. Lester’s dad had a chart, as did two of the Sadlers’ children, Kyle and Levi, though none of them ever needed the clinics’ services. Staff members would then write prescriptions for these non-existent patients, the doctor would sign the prescriptions, and clinic staff would fill the prescriptions at a local pharmacy. The pain pills found their way to David Michael Journey, a relative of the Sadlers and an occasional clinic employee, who sold the pills on the street at a significant profit.

Doubtless Mr. Journey’s clients were also happy with his service, but at that point the business does seem to be shifting from its retail base into wholesaling. It’s a too common journey – a company gets good at one thing, then wants to expand into something it has no business doing – like when J. Peterman opened stores. (Because, of course, the whole point of J. Peterman was the catalog? If you see they’re stuff in a store you know its just overpriced cloth)

At some point, unfortunately, the DEA began to think that the Sadler’s pain clinics were not completely in compliance with all applicable regulations. And, to make things worse, some of those regulations were found in Title 18 of the United States Code.

The Sadlers were charged with a number of controlled substances offenses. And Nancy Sadler was charged with wire fraud and money laundering.

After a trial, the jury found them both guilty of most of the controlled substances charges and found Nancy Sadler guilty of wire fraud and money laundering.

Lester was sentenced to 151 months, and Nancy was sentenced to 210 months.

Though, on appeal, the Sixth Circuit, in United States v. Sadler, reversed Nancy’s conviction on the wire fraud count. It’s a cool issue – here’s what happened.

First, to prove wire fraud, the government has to prove that Nancy “knowingly used an interstate wire communication to further a scheme to defraud [someone] of their money or property.”

The government argued that the “someone” here are the drug companies that distrubute the drugs that Nancy, in turn, distributed. There’s no question that Nancy lied to the drug companies – the only interesting issue is whether she deprived them of property.

The government says she did – after all, the don’t have the pills anymore. The Sixth Circuit smacks it down. Here’s how:

The government’s opening bid offers this answer: Nancy deprived the distributors of their pills. Well, yes, in one sense: The pills were gone after the transaction. But paying the going rate for a product does not square with the conventional understanding of “deprive.” Cleveland, 531 U.S. at 19; Webster’s Third New International Dictionary 606 (2002). Stealing the pills would be one thing; paying full price for them is another. Case law reinforces that the conventional meaning of “deprive” applies in the fraud context. To be guilty of fraud, an offender’s “purpose must be to injure,” Horman v. United States, 116 F. 350, 352 (6th Cir. 1902), a common-law root of the federal fraud statutes, see Neder v. United States, 527 U.S. 1, 21-25 (1999); Restatement (Second) of Torts § 531 (“One who makes a fraudulent misrepresentation is subject to liability . . . for pecuniary losses suffered.”). Nancy may have had many unflattering motives in mind in buying the pills, but unfairly depriving the distributors of their property was not one of them. As to the wire-fraud count, she ordered pills and paid the distributors’ asking price, nothing more.

Lying isn’t always fraud.

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When you go to a restaurant, you have to pay for the meal – there’s a quid pro quo. But you don’t have to leave a tip (we’re leaving aside situations where you have a large party and they automatically add 18%). A tip you leave because you want to note and appreciate the service you received. Maybe a tip is expected, but a waiter can’t sue you for not leaving one.

So too with bribes, gratutities, and law makers. If a member of Congress makes a deal with you where you’ll give him $10,000 in exchange for voting for your favorite bill, that’s a bribe. But if he votes for your favorite bill and then you send him $10,000 because you’re excited about his vote, that’s a gratuity.

As the Supreme Court has said,

for bribery there must be a quid pro quo — a specific intent to give or receive something of value in exchange for an official act. An illegal gratuity, on the other hand, may constitute merely a reward for some future act that the public official will take (and may already have determined to take), or for a past act that he has already taken.

A high-profile case in Puerto Rico highlights the difference – and establishes that, in the First Circuit at least – a gratuity is not a violation of 18 U.S.C. § 666.

Section 666 is the federal statute that prohibits corrupt acts with state and local government actors. It says that any one who is an agent of a state or local government and “corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with” that person’s work as an agent of the government, has violated section 666(a)(1).

Similarly, anyone who “corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward” any one who is an agent of a state or local government violates section 666(a)(2).

The First Circuit held that this language doesn’t prohibit mere gratuities.

What Happens In Vegas

Juan Bravo Fernandez – or Mr. Bravo – was the President of Ranger American, a private security firm.

Hector Martinez Maldondad – Mr. Martinez – was a member of the Senate of the Commonwealth of Puerto Rico.

Mr. Martinez was the chair of the Public Safety Committee. In 2005, it was considering some legislation that would have been very favorable to Mr. Fernandez – Senate Projects 410 and 471.

As the First Circuit tells it in United States v. Martinez:

muai-thai-fighting-1-385141-m.jpg

On May 14, 2005, prominent Puerto Rican boxer Felix “Tito” Trinidad was scheduled to fight Ronald Lamont “Winky” Wright at the MGM Grand Hotel & Casino in Las Vegas, Nevada. On March 2, Bravo purchased four tickets to the fight at a cost of $1,000 per ticket. The same day, Martinez submitted Senate Project 410 for consideration by the Puerto Rico Senate. On April 20, Martinez presided over a Public Safety Committee hearing on Senate Project 471 at which Bravo testified. The next day, Bravo booked one room at the Mandalay Bay Hotel in Las Vegas. On May 11, Martinez issued a Committee report in support of Senate Project 471.

I suppose it goes without saying that the trips were really nice.

Both men were charged with a number of things – including charges involving the giving or receiving of a bribe in violation of 18 U.S.C. § 666.

The Jury Instructions

Here’s part of how the jury was instructed:

I instruct you that a defendant is not required to have given, offered, or agreed to give a thing of value before the business, transaction, or series of transactions. Rather, the Government may prove that defendant Bravo gave, offered, or agreed to give the thing of value before, after, or at the same time as the business, transaction, or series of transactions. Therefore, the government does not need to prove that defendant Bravo gave, offered, or agreed to offer the trip to Las Vegas before defendant Martínez performed any official action or series of acts.

Of course, if you give someone cash after they perform a service, instead of before, that’s a tip, rather than a bribe.

Another part of the instruction makes it a little clearer:

the Government does not need to prove that defendant Martinez solicited, demanded, accepted or agreed to accept the trip to Las Vegas before defendant Martinez performed any official act or series of acts.

Again, this looks a whole lot like the government can get a conviction if there’s just some relationship between the money and the official act, rather than that the money caused the official act – which you’d need for bribery.

The government’s closing argument didn’t walk back from this. The government said:

These instructions clarify that — that it doesn’t matter if the trip was offered before official acts were taken, at the same time official acts were taken, or after official acts were taken, because the crime is offering or accepting the trip with intent to influence or reward.

These instructions, on these facts, allowed the First Circuit to conclude that the jury was instructed that Mr. Martinez or Mr. Bravo could be convicted if they merely received a gratuity, rather than a bribe.

Does section 666 criminalize gratuities?

The First Circuit said yes.

The statute criminalizes anyone who gives something to a state legislator (and others) with an intent to “influence or reward” that person. A number of circuits have held that the “or reward” bit of this includes gratuities. United States v. Anderson, 517 F.3d 953 (7th Cir. 2008); United States v. Ganim, 510 F.3d 134, 150 (2d Cir. 2007); United States v. Zimmerman, 509 F.3d 920, 927 (8th Cir. 2007).

The other way to read this is that the “or reward” applies to situations where the agreement was made before the official action, but the payment came later. If that’s the case – and the deal was hatched, and “reward” just means paying off the previously agreed on sum in exchange for the official act – then this applies to bribes. It doesn’t additionally criminalize bribery.

So, if you go into a restaurant and tell the waiter “I’ll give you a $20 tip if you never let my iced tea glass get empty” then, because there’s a qui pro quo, you’ve converted the tip from a gratuity to a bribe (except that it’s completely legal to refill an iced tea glass frequently).

The First Circuit thought this was a plausible reading – and also noted that if you don’t read it this way, it gets odd.

There are different punishments for bribes and gratuities if you’re bribing a federal official. If it’s a bribe of a federal official, the statutory maximum is 15 years. If it’s just a gratuity, then the max is two years.

But for section 666 applying to state officials, any violation has a statutory maximum of 10 years.

The First Circuit thought it would be pretty odd to have such a high statutory maximum if Congress intended section 666 to apply to gratuities, that are normally capped at 2 years for federal officials.

For these reasons, and others, the convictions were vacated.

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Does marriage fraud happen in the marriage, or at the wedding? As it happens, marriage fraud, at least according to the Eleventh Circuit, is a bit of a misnomer – it’s really better thought of as wedding fraud.

The statute is 8 U.S.C. § 1325(c). It says that it’s a marriage fraud whenever “[a]ny individual who knowingly enters into a marriage for the purpose of evading any provision of the immigration laws.” The case is United States v. Rojas.

2.jpgYunier Rojas and Soledad Marino were friends. Good friends, but just friends. Apparently not even friends with benefits. Just friends.

Ms. Marino is an Argentinian who had overstayed her nonimmigrant visa. Mr. Rojas, as a friend, married her so that she could stay in the country.

The happy day was April 23, 2007.

Two years later, Ms. Marino sent in an application to adjust her status, as a result of her marriage. She sent in a marriage license from April 2007, as well as a list of addresses where she had lived with Mr. Rojas as a married couple.

Folks from Immigration and Customs Enforcement – ICE – interviewed the couple, together.

The interview didn’t go well. As a result of discrepancies between what they said, the interviewers decided to interview the couple separately. The two gave different answers about their marriage. One suspects that they were more substantive than whether her favorite flavor of ice cream was really pistachio.

Finally, the ICE agents told the couple that they thought the marriage was a fraud. Both Mr. Rojas and Ms. Marino admitted that it was.

Mr. Rojas signed a statement saying that he and Ms. Marino were just friends – and that he married her so she could stay in the country.

As often happens when folks volunteer information about their own criminal conduct, law enforcement responded charitably – the government indicted Mr. Rojas.

The indictment came on April 27, 2012.

This was, of course, five years and four days after April 23, 2007 – the day the couple were married.

Mr. Rojas filed a motion to dismiss the indictment, which was denied.

On appeal, the Eleventh Circuit, per curiam, in an opinion that didn’t require argument, held that the crime of marriage fraud is completed on the day that the couple enters into the marriage.

This is because the criminal conduct is “knowingly enter[ing] into a marriage” that’s a sham to defeat immigration laws.

The government argued that the crime of immigration fraud was not complete until the couple lied to the government about the purpose of the marriage. That, after all, is when the government first learned that a crime had happened.

Since the purpose of entering in a sham marriage – according to the government – is to lie to immigration, the couple has to actually finish lying to immigration for the crime to be done.

The Eleventh Circuit rejected this argument.

To prove marriage fraud, the government must show that (1) the defendant knowingly entered into a marriage (2) for the purpose of evading any provision of the immigration laws.2 See 8 U.S.C. § 1325(c). It is undisputed that Rojas and Marino married on April 23, 2007. It is likewise undisputed that Rojas, at the time he entered into the marriage, did so for the purpose of violating the immigration laws–namely, using the marriage to adjust Marino’s immigration status. Filing for immigration benefits may serve as circumstantial evidence of the defendant’s unlawful purpose and may lead, as it did in this case, to charges and prosecution for making a false, fictitious, or fraudulent statement to DHS, in violation of 18 U.S.C. § 1001(a)(2). The plain language of the marriage fraud statute, however, cannot plausibly be read to require that a defendant take the additional step of filing for immigration benefits in order for the crime to be complete.

The district court abused its discretion by holding otherwise.

So, Mr. Rojas is free to go. Though I suspect that the statute of limitations on lying to the ICE investigators may not have run yet.

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United States v. Izurieta is an odd opinion. Turns out the Eleventh Circuit was a very good defense attorney in this case.

Two brothers – Yuri and Anneri Izurieta – ran an import/export business. They brought food into the United States from Central America.

999830__3.jpgThey were charged with not following FDA procedures when they brought food into the country that – according to a trial stipulation – contained e coli and salmonella.

They were convicted at trial.

They appealed and raised some interesting issues – a Confrontation Clause challenge, a challenge to some of the prosecutor’s statements during the trial, and an issue about how the sentence was calculated.

Everyone showed up for oral argument ready, presumably, to talk about these issues. The briefs had been filed. The issues were clear. I’d like to think the defense lawyer was wearing a new suit.

Then, at oral argument, the Eleventh Circuit panel asked whether the indictment in the case actually set out something that is a violation of the criminal law of the United States.

As it happens, it didn’t.

So, there’s a practice pointer for defense lawyers – check to make sure that an indictment accuses the person charged with something that is actually a crime.

Here are the details.

The brothers were charged with seven counts:

Count 1 charged a conspiracy to unlawfully import in violation of 18 U.S.C. § 371. Counts 2 – 7 charged the Izurietas with the failure “to redeliver, export, and destroy with FDA supervision” five shipments.

More specifically, Counts 2 through 7 charged a violation of 18 U.S.C. § 545, which says,

Whoever fraudulently or knowingly imports or brings into the United States, any merchandise contrary to law, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law . . . Shall be fined under this title or imprisoned not more than 20 years, or both.

So the “contrary to law” part is really important.

Here, the brothers violated an FDA regulation which provided for civil, but not criminal penalties. Does section 545 convert the violation of that regulation into a crime?

The Ninth Circuit had previously weighed in on this in 2008 in United States v. Alghazouli, 517 F.3d 1179, 1187 (9th Cir. 2008) and found that section 545 doesn’t do the alchemy of converting not criminal regulations into criminal ones.

There, relying in part on an 1892 Supreme Court case that held that “[i]t is necessary that a sufficient statutory authority should exist for declaring any act or omission a criminal offence” in the course of striking down a conviction for violating a bookkeeping regulation under the Oleomargarine Act (which, seriously, sounds insane. You should read more about it here and here).

The Fourth Circuit, on the other hand, held in United States v. Mitchell, 39 F.3d 465 (4th Cir. 1994), that section 545 criminalizes the violation of otherwise noncriminal regulations when the underlying regs are “legislative” in nature because, really, we’re not going to lead the world in prison population without everyone doing their part.

The Eleventh Circuit ragged a bit on the Ninth Circuit’s opinion, then noted that

lenity remains an important concern in criminal cases, especially where a regulation giving rise to what would appear to be civil remedies is said to be converted into a criminal law.

Because of ambiguity about whether the regulations that these brothers violated could be prosecuted criminally, the Eleventh Circuit held that, under the rule of lenity, they couldn’t be.

The indictment, then, didn’t allege a violation of the criminal law. And the brothers’ convictions were vacated.

Gentle reader, you may be wondering whether, procedurally, this is kosher. Can it be that an appellate court can first raise whether the indictment charges a violation of the law at oral argument?

It can, because the issue is jurisdictional. If there’s no adequate allegation of a crime, then the court of appeals doesn’t have jurisdiction to hear the case. So, if there’s a jurisdictional error, that can be raised at any point.

As the Eleventh Circuit noted,

In Seher, we held that this court is required to raise sua sponte the jurisdictional issue of whether the indictment sufficiently alleges an offense in violation of the laws of the United States provided the mandate has not issued on direct appeal. Seher, 562 F.3d at 1359.

Also, the opinion was written by Judge Jane Restani, a judge on the United States Court of International Trade, sitting by designation on the Eleventh Circuit. You don’t see that very often.

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Tamatha Hilton was the bookkeeper for a company called Woodsmith’s. Woodsmith’s made furniture. Ms. Hilton made bad decisions.

Specifically, for a few years, she took checks written by Woodsmith’s customers and gave them to her husband, Jimmy Hilton. Mr. Hilton did not work at Woodsmith’s.

Mr. Hilton gave the checks to his ex-wife, Jacqueline Hilton. Ms. Hilton opened a bank account at Suntrust in her name, saying that she was the owner of a company called Woodsmiths Furniture Company.

She was not.

She was, however, the owner of a pre-printed stamp from an office supply store that said checks made out to Woodsmiths should be deposited into her Suntrust Account.

You can probably guess how that was used.

1390098_garden_chairs_2.jpgOver two years Woodsmiths lost around $650,000 to Ms. Hilton’s Suntrust Account.

The three were charged with identity theft, mail fraud, mail theft, money laundering, conspiracy, passing forged securities, and making a false statement to a financial institution.

At trial, Ms. Hilton was acquitted of making a false statement to a financial institution. Everyone else was convicted of everything else.

In their appeal to the Fourth Circuit, resolved in United States v. Hilton, Mr. and Ms. Hilton challenged their convictions for identity theft, on very clever grounds:

Jimmy and Jacqueline appeal their convictions for identity theft and aggravated identity theft, in violation of 18 U.S.C. §§ 1028(a)(7) and 1028A (the identity theft statutes). They argue that the conduct charged, namely, the use of the stamp bearing Woodsmiths’ name in endorsing the stolen checks, did not constitute a violation of the identity theft statutes, because the language of those statutes does not encompass the act of stealing the identity of a corporation.

Ultimately, the Fourth Circuit agreed.

Noting that,

In light of the serious consequences flowing from a criminal conviction, the rule of strict construction rests on the principle that “no [person] shall be held criminally responsible for conduct which he could not reasonably understand to be pro- scribed.” Accordingly, although “[t]he simple existence of some statutory ambiguity is not sufficient” to trigger automatic resolution of the ambiguity in favor of a defendant, “we will construe [a] criminal statute strictly and avoid interpretations not clearly warranted by the text.”
(internal citations omitted)

The statute, 18 U.S.C. § 1028(a)(7) makes it illegal to transfer, possess, or use “a means of identification of another person with the intent to commit, or to aid or abet, or in connection with, any unlawful activity that constitutes a violation of [f]ederal law, or that constitutes a felony under any applicable [s]tate or local law.” The vicious § 1028A – which imposes a two-year consecutive mandatory minimum if someone commits and identity theft crime in connection with another felony – uses the same language.

In the definition section for both statute defines “means of identification” as “any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual.”

Under the Dictionary Act – the Act that defines terms used in federal statutes if there isn’t another definition that’s more closely tailored – “person” includes corporations. “Individual” though, might not.

Because that’s an ambiguous question, the Fourth Circuit held that the identity theft statute does not apply to corporations.

we are left with a “grievous ambiguity or uncertainty in the statute[s],” and we decline to speculate regarding Congress’ intent. Instead, faced with the choice of two plausibly valid interpretations, “we yield to the rule of lenity.”
(internal citations omitted)

Though the convictions for mail fraud, mail theft, money laundering, conspiracy, and passing forged securities still stood. The folks who were convicted were remanded for resentencing.

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Sometimes a boat ride – a three hour cruise – can take you places you could never have anticipated.

For Yimmi Bellaizac-Hurtado, Pedro Felipe Angulo-Rodallega, Albeiro Gonzalez-Valois, and Luis Carlos Riascos-Hurtado, a ride in a wooden boat off the coast of Panama took them to the Eleventh Circuit, the Bureau of Prisons, and through the heart of the Constitution’s grant of power to Congress to make laws to punish “Offenses against the Law of Nations.”

Welcome to the Jungle

The four men were spotted in Panamanian waters by the United States Coast Guard in 2010. Their boat was wooden and had no lights or flag.

1383970_fishing_boat.jpgThe Coast Guard told the Panamanian National Aero-Naval Service. I’m guessing that’s both their navy and air force, but the webpage Google gives me for them is down. Tech support is probably out chasing fishing boats.

Anyway, the Aero-Naval Service chased the boat. It ran to land, and the four men jumped off and ran into the jungle.

The Aero-Naval Service found 760 kilos of cocaine in the boat. This did not diminish their interest in the four men.

Give Me Your Tired, Your Poor, Your Huddled Masses

The four men were caught in the jungle. The United States and Panama agreed that they would he prosecuted in the United States.

A grand jury in Miami indicted the four for “conspiracy to possess with intent to distribute five kilograms or more of cocaine, and for actual possession with intent to distribute five kilograms or more of cocaine, on board a vessel subject to the jurisdiction of the United States.”

For the statutory provisions undergirding this charge, see 46 U.S.C. §§ 70503(a), 70506 and 21 U.S.C. § 960(b)(1)(B).

Astute readers may be wondering what it means to be “on board a naval vessel operating in the jurisdiction of the United States.” How bounded is the jurisdiction of the United States – if at all?

Or, more belligerently, what gives Congress the right to make laws about operating a fishing boat with 760 kilograms of cocaine off the shore of Panama?

Congress’s view, apparently, is that it has this power because of the Constitution. Our Constitution contains a provision, at Article I, section 8, clause 10, which says that Congress can “define and punish . . . Offences against the Law of Nations.”

These four men – this huddled mass – clearly had good counsel. They filed a motion to dismiss the case against them because Congress does not have the authority to regulate drug-laden fishing boats in Panama.

The district court was uninterested in this argument. The motion was referred to a magistrate judge who denied the motion. As the Eleventh Circuit summarized it:

The magistrate judge reasoned that the district court had jurisdiction because the defendants were operating a stateless vessel and that the Act was constitutional as applied because Congress and several courts had determined that drug trafficking was “universally condemned” by various nations with “reasonably developed” legal systems.

The district court adopted the magistrate judge’s findings.

Movin’ On Up

The men pled guilty, with an agreement that they can challenge whether Congress has the power to criminalize their conduct. They were sentenced to between 25 to 90 months in prison and went to the Eleventh Circuit.

In United States v. Belliaizac-Hurtado, the Eleventh Circuit reversed.

Offenses Against the Law of Nations

The Supreme Court, according to the Eleventh Circuit, has said that the Offenses Against the Law of Nations clause covers three things: “the power to define and punish piracies, the power to define and punish felonies committed on the high seas, and the power to define and punish offenses against the law of nations.”

This isn’t a case of piracy, and it isn’t a case of a felony committed on the high seas.

The Eleventh Circuit held that the power to define and punish offenses against the law of nations is limited only to offenses which are “customary violations of international law.”

Congress can’t expand what’s meant by the law of nations under this Clause. For example, the Supreme Court held (in 1820) that Congress can’t define piracy to include murder and then have murder be punishable under a grant of power from this clause:

Nor is it any objection to this opinion, that the law declares murder to be piracy. These are things so essentially different in their nature, that not even the omnipotence of legislative power can confound or identify them. Had Congress, in this instance, declared piracy to be murder, the absurdity would have been felt and acknowledged; yet, with a view to the exercise of jurisdiction, it would have been more defensible than the reverse, for, in one case it would restrict the acknowledged scope of its legitimate powers, in the other extend it. If by calling murder piracy, it might assert a jurisdiction over that offence committed by a foreigner in a foreign vessel, what offence might not be brought within their power by the same device?

It goes on like that. And makes you grateful for Scalia’s writing.

Ok – so Congress can’t just make up new “law of nations” to expand its power under this Clause. The Eleventh Circuit, relying on a practically recent Supreme Court opinion, held that,

on the issue whether Congress must declare the conduct to be an offense against the law of nations to exercise its power under the Offences Clause, the Supreme Court has explained that “[w]hether the offense as defined is an offense against the law of nations depends on the thing done, not on any declaration to that effect by congress.” United States v. Arjona, 120 U.S. 479, 488, 7 S. Ct. 628, 632 (1887).

The law of nations, then, is the same as “customary international law.” And the Eleventh Circuit defines “customary international law” as the “general and consistent practice of states followed by them from a sense of legal obligation.”

The court of appeals goes on to note that

“Private criminal activity will rarely be considered a violation of customary international law because private conduct is unlikely to be a matter of mutual legal concern”

From that it falls out relatively straightforwardly that PWID in a fishing boat in Panama isn’t within the power of Congress to regulate under this statutory framework.

Preserved in Amber

This opinion reads like it’s preserved in amber. Doubtless it’s an artifact of being about an area of law where there’s been no action since the 19th Century.

But still, the idea that categories of legal things have essences that Congress can’t define away is precious. And, in the criminal realm at least, almost completely absent.

Congratulations, though, to our four Panamanian friends. I hope that if they’re prosecuted in Panama for what it surely a violation of Panamanian law, that they get credit for the time they served in the land of the free.

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If you’re ever involved in a bank fraud case, you should probably read the Second Circuit’s opinion reversing Mr. Felix Nkansah’s bank fraud conviction. If the government wants to convict someone for bank fraud, the Second Circuit says they’ve got to show that the person was trying to defraud a bank (as opposed to trying to defraud someone or something else).

The Company You Keep

Felix Nkansah fell in with some bad company.

He worked with a number of other people to steal identity information for people, like names, dates of birth, and social security numbers. Specifically, he stole this information from hospitals, childcare databases, and foster care.

The group then filed false tax returns with the names and social security numbers they had stolen. Cleverly, they didn’t file tax returns that showed taxes were owed. Instead, they filed returns that triggered tax refunds.

The fraudulent returns had refunds that totaled more than two million dollars. The group actually received a little more than half a million dollars.

When the refund checks came to a group member, the member would forge a signature on the check and deposit it in a bank account that the group controlled.

Mr. Nkansah was charged with conspiracy to file false claims with the IRS, filing false claims with the IRS, bank fraud, aggravated identity theft in connection with the bank fraud, and identity theft.

He was convicted of all of them at trial.

1390009_dollar.jpgThe Second Circuit

On appeal, though, the Second Circuit reversed his conviction for bank fraud. This was tax fraud, sure. But bank fraud? Nope.

Let’s start at the start – with 18 U.S.C. § 1344, the bank fraud statute:

Whoever knowingly executes, or attempts to execute, a scheme or artifice–
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;
[is guilty of bank fraud]

Mr. Nkansah argued on appeal that there was a lot of evidence that he intended to defraud the federal Treasury, but there wasn’t any evidence that he intended to defraud a bank.

While defrauding the Treasury is really bad, he was convicted of bank fraud. And there wasn’t evidence that he committed that crime.

In fact, Mr. Nkansah argued that there was no reason to think that the banks lost money through this whole transaction. As the Second Circuit summarized it:

In essence, he argues that the banks were no more victims of his deceptions than a bank in which someone opens an account under a false identity to conceal funds from a spouse or business partner.

The Second Circuit agreed with the law undergirding the prosecution:

Appellant is correct that the bank fraud statute is not an open-ended, catch-all statute encompassing every fraud involving a transaction with a financial institution. Rather, it is a specific intent crime requiring proof of an intent to victimize a bank by fraud. See United States v. Rubin, 37 F.3d 49, 54 (2d Cir. 1994). “[A] federally insured or chartered bank must be the actual or intended victim of the scheme.”

Summarizing all of this,

The government had to prove beyond a reasonable doubt that appellant intended to expose the banks to losses.

The Evidence Of What Was In Mr. Nkansah’s Mind

The government had two kinds of evidence to try to show that Mr. Nkansah intended to defraud the banks. First, they relied on statements made to other folks in the group.

Mr. Nkansah had talked to others about which banks would be least likely to discover the scheme. The Second Circuit rejected these arguments –

While these concerns surely support an inference of an intent to avoid detection, on this record they have no probative value as to an intent to injure the banks.

Second, the government tried to show that because the bank was actually going to suffer a loss – or the bank said it was going to suffer a loss – that was enough to show that Mr. Nkansah thought the bank would suffer a loss.

The Second Circuit has allowed such an inference where a person forged a check and went to the bank to cash it (though, interestingly, the court of appeals said such an inference isn’t required). But this isn’t such a case – here Mr. Nkansah had a legitimate check (which was issued under false pretenses). That exposes the issuer of the check to a loss, but not, on these facts, the bank.

Because there was no evidence to support the conclusion that Mr. Nkansah intended to defraud the banks – as opposed to the Treasury – his conviction for bank fraud was reversed.

As was his conviction for aggravated identity theft based on the bank fraud.

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Ronda Nixon’s career was on the upswing. She had logged her time as a Mary Kay Cosmetics representative. She had spent time in a job working at a small law firm – first as an assistant and then she worked her way up to bookkeeper and paralegal.

Finally, she was ready to make her move. She left her old jobs behind to go to law school. She was moving on up.

1031341_makeup_kit.jpgUnfortunately, her former boss – Garis Pruit – took ill. While he was recovering from surgery, he received a call from the bank.

His bank wanted to know why he was delinquent on his line of credit.

Mr. Pruitt thought Ms. Nixon had paid it off already.

An audit was performed. The audit found evidence that Ms. Nixon wasn’t so much paying the law firm’s bills, as she was paying her own bills with the law firm’s money.

Specifically, she had access to the firm’s American Express card.

She also had access to a Mary Kay Cosmetics credit card processing mechanism – so she could charge the firm’s Amex to her Mary Kay account and take home the money.

She also wrote herself some checks from the firm’s account. And she created a line of credit for the firm – that went to her – at the American Express Bank.

Here’s how the Sixth Circuit, in United States v. Nixon, summarized the charges:

Nixon was indicted on eleven counts of wire fraud, in violation of 18 U.S.C. § 1343 (one count for each credit card charge that ended up in her [Mary Kay] account), two counts of bank fraud, in violation of 18 U.S.C. § 1344 (one count for each of . . . two checks written from the American Express Bank line of credit), three counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A (one count for using Pruitt’s social security number and signature to set up and use the account at American Express Bank and two counts for each of the checks that she forged in Pruitt’s name), and one count of using an unauthorized access device, in violation of 18 U.S.C. § 1029(a)(2) (for charging more than $1,000 on the firm’s credit card without authorization).

The jury convicted her on every count.

On appeal, Ms. Nixon was represented by a former Bristow FellowAnnie Owens at Wilmer Hale.

Ms. Owens argued for Ms. Nixon that the access device fraud conviction was not supported by sufficient evidence to allow a jury to convict.

Access device fraud under section 1029(a)(2) requires fraud involving as access device (it’s really well named). “Access device” for these purposes, under 1029(e), means:

any access device that is lost, stolen, expired, revoked, cancelled, or obtained with intent to defraud

Thus, as the Sixth Circuit noted,

Key to the charged offense is that the intent to defraud be present both when the “access device” is obtained and when it is later used.

The Sixth Circuit concluded that the law firm Amex was not an “access device” as the term is used in the statute.

As the court of appeals said,

Here, the uncontradicted proof established that Pruitt had authorized Nixon to obtain the American Express credit card for his firm’s use. Because there was no proof at trial that Nixon had the intent to defraud Pruitt or the firm at the time she obtained the credit card (as opposed to her later unauthorized use of the card), the government did not prove an essential element of the crime.

Congratulations to Ms. Nixon who is going back for resentencing on the other 16 counts of conviction.

Congratulations too to Ms. Owens for her work on this side of the criminal defense world.

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Glorious Shaver, Andrew White, and Jermel Lewis knew of a speakeasy in North Philadelphia.

A woman named Jeanette Ketchmore would buy bottles of booze and sell drinks from then for four or five dollars in her home. Some of those bottles of booze crossed state lines before making it to Ms. Ketchmore’s house.

1254218_glass_of_whiskey.jpgShe was not licensed by the state or local government to provide these drinks.

Messrs. Shaver, White, and Lewis were not content to drink at Ms. Ketchmore’s home. Instead, they decided to rob it at 5:30 in the morning on November 8, 2005.

They were caught and prosecuted in state court. After a year in state court, the federal government decided to prosecute – to protect the interests of those bottles of alcohol that crossed state lines.

The three men were indicted in federal court in Philadelphia for Hobbs Act Robbery.

They were convicted, and, in United States v. Shavers, the Third Circuit affirmed their Hobbs Act robbery convictions (if you’re interested in the commerce clause and the Hobbs Act, there is a lengthy discussion that may be interesting. Though, SPOILER ALERT, the defendants lose).

But that’s not all – there were also witness-tampering charges against Messrs. Shaver and White that resulted in an interesting and important opinion from the Third Circuit.

Messrs. Shaver and White made a number of calls from a jail while they had been charged in state court trying to encourage witnesses to the speakeasy robbery to have a different memory.

They were charged with violating 18 U.S.C. § 1512(b)(2)(1), which says that it’s a crime to:

use[] intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to–
(1) influence, delay, or prevent the testimony of any person in an official proceeding . . .

The trouble is, official proceeding is later defined by section 1515(a)(1)(A) as a federal proceeding.

Does a state court proceeding count as an official proceeding for the purposes of the witness tampering statute?

The Third Circuit says no, relying on Arthur Anderson LLP v. United States:

In Arthur Anderson LLP v. United States, the United States Supreme Court reviewed convictions under § 1512(b)(2)(A) and (B). 544 U.S. 696, 698 (2005). The Court held that to satisfy the “official proceeding” requirement under those subsections, the Government must show a “nexus” between the defendant’s conduct and a particular proceeding. Id. at 707- 08. To meet that nexus requirement, the Government must prove that the defendant “ha[d] in contemplation [a] particular official proceeding” when he or she attempted to interfere with evidence or a witness. Id. at 708. The proceeding need not have been pending or about to be instituted, but it must have been foreseeable. Id. at 707-08.

The government argued that the Supreme Court sotto vocce narrowed Arthur Anderson in Fowler v. United States. There, a bank robber shot a police officer after a bank robbery.

Mr. Fowler was charged under section 1512(a)(1)(C), which applies to people who kill someone – or try to – to avoid prosecution.

The Supreme Court held that for a prosecution under 1512(a)(1)(C) the government only had to show a reasonable likelihood that the person killed would have communicated with law enforcement that could have made it to federal law enforcement.

This is, of course, a different standard than the defendant-specific foreseeability requirement in Arthur Anderson.

Yet, the Supreme Court in Fowler never cites Arthur Anderson.

In light of that silence in Fowler, and the different ends of a prosecution under 1512(a) and one under 1512(b) – namely that the first involves someone dying and not the second – the Third Circuit held that Arthur Anderson and Fowler are simply different doctrinal boxes.

The Third Circuit concludes:

This . . . leads us to the logical conclusion that there are at least two lines of jurisprudence developing separately under the VWPA: one for the investigation-related provisions, such as § 1512(b)(3) and (a)(1)(C), and one for the “official proceeding” provisions, such as § 1512(b)(1) and (b)(2). See Ronda, 455 F.3d at 1288 (observing that the link to a federal proceeding in the investigation-related provisions is less stringent than the “official proceeding” requirement in § 1512(b)(1) and (2)). Hence, we hold that a successful prosecution under § 1512(b)(1) requires proof, beyond a reasonable doubt, that the defendant contemplated a particular, foreseeable proceeding, and that the contemplated proceeding constituted an “official proceeding,” as defined by § 1515(a)(1)(A).

Messrs. Shavers and White were charged under § 1512(b)(1) – which requires proof of a particular foreseeable federal proceeding. Because their efforts to tamper with witnesses were efforts to tamper with a state court proceeding, the Third Circuit concluded that the conviction for trying to tamper with the federal case must fail.

As the court of appeals noted:

It is clear from the transcript of the telephone calls that Shavers’s and White’s efforts were directed at preventing potential witnesses of the speakeasy robbery from testifying at their upcoming hearing in Pennsylvania state court. There is no evidence that they contemplated any other proceeding.

The convictions for witness tampering were vacated.

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It’s exceptionally rare for the Fourth Circuit to reverse a life sentence for someone who caused another person to die in the course of a botched bank robbery. And when the panel that heard the appeal has both Judges Wilkinson, and Niemeyer – whoa nelly – that’s one whopper of a government error.

1097248_guard_with_machine_gun.jpgA Bank Robbery Gone Bad

September 28, 2008 did not turn out the way Larry Whitfield had planned.

His hope was to start the day with a bank robbery. He went to a credit union in North Carolina with a friend, a .357 magnum, and an assault rifle.

As he walked into the credit union’s vestibule, a metal detector in the vestibule locked the inner doors of the credit union. Thwarted, Mr. Whitfield shook the doors of the financial institution.

They did not yield.

Mr. Whitfield and his companion sped away.

A Chase Gone Bad

Mr. Whitfield and his companion separated. Eventually, as the police pursued, he broke into the home of an elderly couple – Herman and Mary Parnell.

Ms. Parnell was home. Mr. Parnell was not.

Mr. Whitfield called a friend to come get him. Ms. Parnell was very upset – panicked and breathing oddly – to have Mr. Whitfield in his house.

Mr. Whitfield’s friend later testified that Mr. Whitfield told Ms. Parnell at one point – “[M]a’am, just calm down. I’m probably more scared than you are, and I’m actually just trying to leave.”

Ms. Parnell said she was short of breath and Mr. Whitfield tried to give her a glass of water and aspirin. His friend suggested that he call and ambulance. He didn’t.

Ms. Parnell died of a heart attack.

Mr. Whitfield fled out the back door, and was caught by the police and arrested.

Mr. Whitfield Is Indicted

Mr. Whitfield was charged in federal court with attempted bank robbery, an number of weapons counts, and violating 18 U.S.C. § 2113(e).

Section 2113(e) is a strange one. Here’s what it says:

Whoever, in committing [bank robbery or attempted bank robbery], or in avoiding or attempting to avoid apprehension for the commission of such offense, or in freeing himself or attempting to free himself from arrest or confinement for such offense, kills any person, or forces any person to accompany him without the consent of such person, shall be imprisoned not less than ten years, or if death results shall be punished by death or life imprisonment.

As the Fourth Circuit explained in Mr. Whitfield’s case, United States v. Whitfield,

[Section] 2113(e) encompasses three alternative offenses pertinent to this case — penalizing a defendant who, in evading apprehension for an attempted bank robbery: (1) “kills any person” (the “killing offense”); or (2) “forces any person to accompany him without the consent of such person” (the “forced accompaniment offense”); or (3) “forces any person to accompany him without the consent of such person” and “death results” (the “death results offense”).

Oddly, Mr. Whitfield’s indictment did not charge him with each of these offenses – or even the third one. Instead, his indictment said,

LARRY WHITFIELD did knowingly enter and attempt to enter Fort Financial Credit Union . . . with intent to commit therein a felony affecting that credit union, in violation of 18 U.S.C. § 2113(a), . . . as set forth in COUNT ONE of this Indictment; and in avoiding or attempting to avoid apprehension for said offense, forced M.P. to accompany him without her consent, and killed M.P.

He was charged with violating the first and second offenses set out in section 2113(e), but not the third (the one that kind of obviously looks like it applies).

The Case Goes To The Jury

Mr. Whitfield’s case went to trial.

Mr. Whitfield’s counsel noted the error in how the indictment was written and how it did not include the third element. The district court was unmoved.

At the end of trial, the jury was instructed that there are two ways of violating section 2113(e) and,

[w]ith respect to the second way of violating this statute, if you find that the defendant forced Mary Parnell to accompany him, you must also decide whether that forced accompaniment resulted in Mary Parnell’s death.

The jury found Mr. Whitfield guilty of forcing Mary Parnell to accompany him, and also found that Mr. Whitfield’s forced accompaniment caused Mary Parnell’s death.

At sentencing, the district court determined that Mr. Whitfield was subject to a mandatory life term for his conviction on the forcible accompaniment charge.

Mr. Whitfield was sentenced to life on the forcible accompaniment when death results charge – indeed, the judgment described the offense as “[f]orced accompaniment while attempting to avoid apprehension for an attempted bank robbery resulting in death.”

He was sentenced to an additional 300 months on a number of other charges arising out of his attempted bank robbery and flight.

The Fourth Circuit Vacates Mr. Whitfield’s Conviction

He appealed.

The Fourth Circuit held that the three offenses in set out in section 2113(e) are indeed three separate offenses:

[W]e are content to adhere to the Supreme Court’s nomenclature and describe § 2113(e) as creating “separate offenses by the specification of distinct elements.” See Jones, 526 U.S. at 252.15 More specifically, the killing offense requires proof that a defendant “kill[ed] any person.” The forced accompaniment offense necessitates proof that a defendant “force[d a] person to accompany him without the consent of such person.” And the death results offense — although entailing the lesser-included forced accompaniment offense — requires further proof that “death result[ed].”

Because Mr. Whitfield wasn’t indicted for violating the separate “death results” charge, even though he was later convicted for it – and sentenced to life for it – his conviction and sentence violated his right to be indicted by a grand jury.

As the Fourth Circuit put it,

[B]y instructing on the uncharged death results offense, the district court constructively amended Count Four to broaden the possible bases for conviction beyond those presented to the grand jury. When such a constructive amendment is found, the error is fatal and reversible per se.

Though, Mr. Whitfield was convicted for a violation of section 2113(e) other than on the “death results” language.

And he’ll be resentenced for that on remand.

The range is between 10 years and life.