United States v. Martinez-Maldonado , 913 F.3d 244 ( 2019 )

United States Court of Appeals
For the First Circuit
No. 18-1358
UNITED STATES OF AMERICA,
Appellee,
v.
JUAN BRAVO-FERNÁNDEZ,
Defendant, Appellant.
____________________
No. 18-1370
UNITED STATES OF AMERICA,
Appellee,
v.
HÉCTOR MARTÍNEZ-MALDONADO,
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Francisco A. Besosa, U.S. District Judge]
Before
Howard, Chief Judge,
Torruella and Kayatta, Circuit Judges.
Martin G. Weinberg, with whom Kimberly Homan, were on brief,
for appellant Bravo-Fernández.
Abbe David Lowell, with whom Christopher D. Man and Winston
& Strawn LLP were on brief, for appellant Martínez-Maldonado.
Vijay Shanker, U.S. Department of Justice, Criminal Division,
Appellate Section, with whom Brian A. Benczkowski, Assistant
Attorney General, Matthew S. Miner, Deputy Assistant Attorney
General, Peter M. Koski, Public Integrity Section, and Gwendolyn
Amelia Stamper, Public Integrity Section, were on brief, for
appellee.
January 17, 2019
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TORRUELLA, Circuit Judge. Because everything old is new
again, 1 Defendants Juan Bravo-Fernández ("Bravo") and Héctor
Martínez-Maldonado ("Martínez") come before us for a third time.
See United States v. Bravo-Fernández, 790 F.3d 41 (1st Cir. 2015);
United States v. Fernández, 722 F.3d 1 (1st Cir. 2013). In this
appeal, they seek to overturn their 2017 convictions for federal
program bribery under 18 U.S.C. § 666, arguing primarily that
evidence stipulated to early in the proceedings was insufficient
to convict.
Among the elements of § 666, the government was required
to establish that the entity Martínez represented as an agent, in
this case the Commonwealth of Puerto Rico, received at least
$10,000 in federal "benefits" within the meaning of that statute.
The government did not meet this burden. Accordingly, we must
reverse defendants' convictions for federal program bribery.
I.
The pertinent facts and procedural background are
examined in detail in Bravo-Fernández, 790 F.3d at 43-45, and
Fernández, 722 F.3d at 6-8, for which we only sketch a high-level
overview of that account here.
1 Peter Allen, Everything Old Is New Again, in Continental
American (A&M Records 1974).
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This case traces its origin to 2010, when Bravo and
Martínez were charged with federal program bribery in violation of
§ 666, among other things. The charges stemmed from payments that
Bravo made in 2005 involving a trip to Las Vegas to which he
invited Martínez, then a Puerto Rico senator. According to the
government, Bravo used the trip to bribe Martínez in exchange for
his support of pending legislation that would have favored Bravo's
business, Ranger American, a local security company.
Bravo and Martínez were first tried and found guilty of
federal program bribery in 2011, an outcome which they successfully
challenged before this court. See Fernández, 722 F.3d at 6, 39.
In that initial appeal, we ruled that § 666 only criminalizes
bribery, not gratuities, and that the evidence presented at trial,
together with the jury instructions, could have led the jury to
improperly convict on either a "bribery" or "gratuity" theory.
Id. 16-17, 23-26. Because it was insufficiently clear to discern
which theory the jury relied on to reach its verdict, we vacated
defendants' convictions on the § 666 counts and remanded for
potential re-prosecution. Id. at 26-28, 39.
On remand, Bravo and Martínez moved for judgment of
acquittal, arguing that double jeopardy barred their renewed
prosecution. Bravo-Fernández, 790 F.3d at 43, 49. The district
court rejected this contention, after which defendants sought
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refuge before our court once again. Id. at 43. This time,
however, defendants' appeal was unsuccessful and we affirmed the
district court's decision on the double jeopardy issue. Id.
Defendants' further appellate endeavor before the Supreme Court
reached a similar result. See Bravo-Fernández v. United States,
137 S. Ct. 352 (2016).
Bravo and Martínez faced their second trial in May 2017,
and once again a jury found them guilty of federal program bribery
under § 666. Those proceedings devolved into the instant appeal,
the latest stage in this case's arduous journey.
II.
We are able to reduce the several questions that have
been raised before us2 to the only one that merits our decisional
attention and mandates the outcome of this appeal: Whether the
government introduced evidence at trial to satisfy the
jurisdictional element under 18 U.S.C. § 666(b) that the government
entity involved received "benefits in excess of $10,000 under a
Federal program." (emphasis added). Where, as here, defendants
have preserved a sufficiency challenge, we review de novo a
2 Defendants also challenge, among other things, the sufficiency
of the evidence other than that presented to satisfy the
jurisdictional element, the propriety of the jury instructions,
some of the district court's evidentiary rulings, and their
sentences. Our decision on the sufficiency issue makes it
unnecessary to reach the merits of such challenges.
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district court's denial of their motion for judgment of acquittal.
United States v. Acevedo-Hernández, 898 F.3d 150, 161 (1st Cir.
2018).
To maintain a conviction for federal program bribery,
the government must prove beyond a reasonable doubt that the party
receiving the bribe was an agent of an entity that "receives, in
any one year period, benefits in excess of $10,000 under a Federal
program involving a grant, contract, subsidy, loan, guarantee,
insurance, or other form of Federal assistance." 18 U.S.C.
§ 666(b). This requirement is often referred to as the
"jurisdictional element" of § 666. See, e.g., United States v.
McLean, 802 F.3d 1228, 1240 (11th Cir. 2015). And not all federal
funds constitute "benefits" under the statute. See Fischer v.
United States, 529 U.S. 667, 681 (2000) ("Any receipt of federal
funds can, at some level of generality, be characterized as a
benefit. The statute does not employ this broad, almost limitless
use of the term."); see also United States v. Dubón-Otero, 292
F.3d 1, 7 n.7 (1st Cir. 2002) (acknowledging that there exists
"compensation of the type excluded by § 666 (c)" including
salaries, wages and expenses paid in the usual course of business).
In Fischer, the Supreme Court explained that only federal monies
that "promote[] well-being," such as those which provide
individuals with "financial help in time of sickness, old age, or
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unemployment," may qualify as "benefits." Fischer, 529 U.S. at
677 (citing Webster's Third New International Dictionary 204
(1971)). Critically, "[t]o determine whether an organization
participating in a federal assistance program receives 'benefits,'
an examination must be undertaken of the program's structure,
operation, and purpose." Id. at 681. The government has the
burden of producing adequate evidence for this examination to
occur.
In resolving if the § 666(b) jurisdictional element was
satisfied, we find it instructive to begin by comparing the
evidence that the government offered on this key element during
the 2011 trial with that it presented in the 2017 proceedings
leading to this appeal.
At defendants' first trial, the government introduced
evidence specifically tailored to establishing the § 666
jurisdictional requirement. An employee of the Puerto Rico
Treasury Department testified for the government that "the Senate
of Puerto Rico childcare program (known as the Food Program for
the Care of Children and Adults) receive[d] funding from the
Government of the United States." United States v. Bravo-
Fernández, 828 F. Supp. 2d 441, 455 (D.P.R. 2011), rev'd in part,
vacated in part sub nom. United States v. Fernández, 722 F.3d 1
(1st Cir. 2013). The witness further averred, with the support
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of documentation also admitted into evidence, that the Puerto Rico
Senate annually received around $20,000 in federal funds for the
childcare program during the relevant period. Id. at 456. This
provided the basis for the district court to conclude in its
resolution of the Rule 29 motion for judgment of acquittal that
"[t]he federal assistance received by the Senate of Puerto Rico
for [its] childcare program clearly qualifies as a 'benefit'
provided under a federal program" for purposes of § 666(b). Id.
In contrast, the record of the second trial is barren of
evidence showing disbursement of federal "benefits" to the Senate
of Puerto Rico or even to the Commonwealth as a whole. All we
have is a stipulation the parties accorded prior to trial providing
that "in fiscal year 2005[,] the Commonwealth of Puerto Rico
received more than $10,000 in federal funding. Specifically, from
October 1, 2004, to September 30, 2005, the Commonwealth of Puerto
Rico received over $4.7 billion in federal funds." (emphasis added)
Later, on the first day of trial during a conference about
preliminary jury instructions, the district judge asked counsel
whether this stipulation allowed him to inform jurors that the
§ 666 jurisdictional element had been met. Counsel for defendant
Martínez responded that the court should not instruct so because
"the . . . law . . . doesn't equate funds with benefits, and the
statute says benefits. . . . We have stipulated to the amount of
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money, but not that [the jurisdictional] element has been
satisfied." Incredibly, this clear warning of things to come went
unattended and the government proceeded to present its case in
chief without introducing any evidence to cover this gaping hole
in its case.
Following the close of the government's case, defendants
made a Rule 29 motion for a verdict of acquittal in which they
specifically argued that the government failed to establish the
existence of $10,000 in benefits under a federal program. The
district court denied this motion without explanation. In
charging the jury, the district court stated that § 666 only
required jurors to find that the Commonwealth received federal
"funds of more than $10,000." No instruction was given on what
constitutes a benefit, and the word "benefits" does not appear
even once throughout the instructions. Counsel for defendant
Martínez objected to the instruction's language, but that
objection was summarily overruled by the district court.
Given the foregoing, and in keeping with our own
precedent and that of the Supreme Court, we can only conclude that
the government failed to meet its burden of establishing that the
entity Martínez represented as an agent received the amount of
benefits required under § 666(b). The government's arguments to
the contrary are futile.
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First, the government directs us to a paragraph in our
2013 opinion in Fernández, which examined defendants' 2011 trial
and noted that:
[D]uring 2005 -- the year of the charged conduct -- the
Commonwealth received over $4.7 billion in federal
funds. Because Martínez . . . [is an] agent[] of the
Commonwealth, the evidence was sufficient to show that
[he is an] agent[] of a "government . . . [that]
receives, in any one year period, benefits in excess
of $10,000 under a Federal program."
722 F.3d at 9 (quoting 18 U.S.C. § 666(b)). This statement that
the jurisdictional element was satisfied in defendants' first
trial, the government purports, should also control here because
of the law of the case doctrine, which "bars a party from
resurrecting issues that either were, or could have been, decided
on an earlier appeal." United States v. Matthews, 643 F.3d 9, 12-
13 (1st Cir. 2011) (citation omitted). But our statement in
Fernández is not dispositive as it was neither essential to our
holding there nor could the issue now before us have been decided
in that initial appeal. Contrary to what the government contends,
defendants did not argue about the funds-benefits distinction in
their first appeal. See Brief for Appellant Bravo at 25-27, United
States v. Fernández, 722 F.3d 1 (1st Cir. 2013)(No. 12-1289); Brief
for Appellant Martínez at 25-28, United States v. Fernández, 722
F.3d 1 (1st Cir. 2013)(No. 12-1290). And they had no reason to
do so because, as explained above, the government introduced
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specific evidence at that first trial to establish the existence
of the requisite amount of federal benefits. The issue before us
in that case was whether Martínez was an "agent" of the
Commonwealth, not whether "benefits" as used in the statute were
received. Thus, the statement from Fernández the government
relies on is nothing but dicta that "lack[s] any binding or
preclusive effect." Sexual Minorities Uganda v. Lively, 899 F.3d
24, 29 (1st Cir. 2018).
Second, the government contends that both the Supreme
Court in Fischer and our decision in Dubón-Otero, 292 F.3d at 4,
command an inquiry into the nature of federal funds to determine
if they are benefits under § 666 only when the payments are
disbursed "indirectly" to the receiving entity. This argument is
also without merit. In fact, the one reference we made in Dubón-
Otero to the distinction between entities that receive payments
directly from the federal government and those that do not was
that "[i]t makes no difference [whether an agency] received this
money indirectly. It is now well established that benefits under
§ 666 are not limited solely to primary target recipients or
beneficiaries." 292 F.3d at 9 (citing United States v. Fischer,
168 F.3d 1273, 1278 (11th Cir. 1999) ("[T]he plain language of
§ 666(b) does not distinguish between an organization . . . that
receives 'benefits' directly under a federal program and an
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organization . . . that receives 'benefits' as an assignee under
a federal program.")). Indisputably, this language affords no
credit to the government's theory. Moreover, the reach of Fischer
is not limited to only those cases involving indirect receipt of
federal monies. To the contrary, the Supreme Court's reasoning
in Fischer, particularly its concern for the proper federal balance
in this type of case, is by its very nature generally applicable.
See Fischer, 529 U.S. at 681.
In a final attempt to save a sinking ship, the government
asserts that the stipulation specifying the amount of federal funds
received by the Commonwealth was sufficient to satisfy the § 666
jurisdictional element. The government takes the position that a
"jury, exercising common sense and relying on general knowledge,
can reasonably infer that the federal funds constituted
'benefits.'" It is tempting to agree with the government here.
As judges who hear cases arising out of federal benefit programs
and who are familiar with how such programs are funded, we are
certain that there are federal benefit programs that provide far
more than $10,000 to the Commonwealth and its instrumentalities.
The question remains, however, whether those programs are funded
by the $4.7 billion in federal funds that go directly to the
Commonwealth. Perhaps the federal benefit programs enjoyed in
Puerto Rico are financed through other federal monies, leaving the
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$4.7 billion to be spent on infrastructure, salaries, and other
expenditures that may or may not constitute "benefits" under
Fischer? In any event, we see nothing in the record that tells
us whether any juror would certainly know the answer to these
questions, nor did the government secure a stipulation supplying
such answers.
It is unclear, too, where we would stop if we accept the
government's invitation to rely on jurors' knowledge of federal
funding to fill gaps in the government's proof. Suppose the
government puts in no evidence about any federal funds at all.
Could jurors simply fill-in the gap based on their "common sense"
and "general knowledge" that large amounts of federal funds are
sent to the Commonwealth government each year?
Under the government's approach, the jurisdictional
element in many federal criminal cases could be satisfied by
similar reliance on jurors' extra-record knowledge. For example,
one could claim that any juror would know that all banks are
engaged in, or at least affect, interstate commerce, or that a
bank is likely FDIC insured. Yet, the failure to offer any actual
proof of these relatively obvious jurisdictional facts has
repeatedly proved fatal to criminal prosecutions. See United
States v. Leslie, 103 F.3d 1093, 1102-3 (2d Cir. 1997) (reversing
conviction because government "did not provide even the slenderest
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of threads" upon which to hang the interstate commerce
jurisdictional element); United States v. Sliker, 751 F.2d 477,
484 (2d Cir. 1984) (affirming conviction based on oral testimony
of FDIC-insured status, but warning the government of failure to
"ask the simple question that would avoid the need for judicial
consideration of what should be a non-problem"); see also United
States v. Davis, 726 F.3d 357, 366-7 (2d Cir. 2013) (holding that
the government had failed to meet its burden by assuming that a
federal installation on federal land automatically came within
federal jurisdiction, but affirming after taking judicial notice
of the fact at the government's behest).
We have considered the Third Circuit's recent decision
in United States v. Willis, 844 F.3d 155 (3d Cir. 2016), in which
the government relied on proof that the Government of the Virgin
Islands received $150 million in federal funds. The Willis court
took a different route than that urged by the government in this
case. Rather than relying on juror common sense, the court in
Willis held that federal funds paid to a territorial government
were a benefit to that government because they "significantly
supported the government." Id. at 168. We do not see, though, how
that type of financial support to a local government equates to a
"benefit" of the type required by Fischer. As in this case, it
does not appear that any federal program was specifically
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identified in Willis, prohibiting the ability to determine, under
Fischer's "benefits" analysis, whether the funds received by the
Government of the Virgin Islands were used for such promotion of
well-being.
Despite its insistence that the Fischer analysis need
only be applied if it is "difficult" to determine whether the
federal payments were benefits, the government seems blind to the
fact that without reference to a specific federal program it is
not only difficult but impossible to make such a determination.
Again, the stipulation entered between the parties made no
reference to "benefits" or, for that matter, to any federal
program. The stipulation also did not provide information
regarding the intended or actual use of any portion of the $4.7
billion in federal funds. It only provided that the "Commonwealth
of Puerto Rico received over $4.7 billion in federal funds" during
the relevant time period. Concluding that such a stipulation
sufficed to satisfy the jurisdictional element would counter the
plain language of § 666(b) requiring proof that the government
entity involved received "benefits in excess of $10,000 under a
Federal program." It would also contravene the government's
burden to put forth evidence about the federal program's
"structure, operation, and purpose" in order to make ascertainable
whether an entity received "benefits" under § 666(b). Fischer,
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529 U.S. at 681. Most of our sister circuits to have addressed
this issue agree.3 To hold otherwise and conclude that any receipt
of federal funds is enough to satisfy the jurisdictional element
would transmute § 666 into the general bribery statute that the
Fischer court warned against and "upset[] the proper federal
balance." Id.
III.
For the reasons explained above, we conclude that the
government failed to establish an essential element of the crime
it charged defendants with. We need not go further and hereby
reverse Bravo's and Martínez's § 666 convictions. We direct the
district court to enter a judgment of acquittal on both charges.
3 See, e.g., United States v. Paixao, 885 F.3d 1203, 1206 (9th
Cir. 2018) ("[N]ot all payments under federal programs qualify as
'benefits' . . . . [T]he inquiry turns on the attributes of the
federal program[.]") (citation omitted); United States v. Pinson,
860 F.3d 152, 166 (4th Cir. 2017) ("Because any receipt of federal
funds could 'at some level of generality' be characterized as a
benefit, . . . the Court provided guidelines to distinguish between
covered federal payments ('benefits') and non-covered payments.");
United States v. McLean, 802 F.3d 1228, 1237 (11th Cir. 2015)
("[T]he government must prove beyond a reasonable doubt that the
individual worked for an entit[y] which receive[d] . . . funds
. . . in connection with programs defined by a sufficiently
comprehensive structure, operation, and purpose to merit
characterization of the funds as benefits under § 666(b)."
(citation and internal quotation marks omitted)); United States v.
Zyskind, 118 F.3d 113, 115 (2d. Cir. 1997) ("[T]here must exist a
specific statutory scheme authorizing the Federal assistance in
order to promote or achieve certain policy objectives.") (quoting
S. Rep. No. 98-225, at 370 (1983)).
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