United States v. Hoeffner , 626 F.3d 857 ( 2010 )


Menu:
  •                REVISED DECEMBER 14, 2010
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT   United States Court of Appeals
    Fifth Circuit
    FILED
    November 18, 2010
    No. 09-20781
    Lyle W. Cayce
    Clerk
    UNITED STATES OF AMERICA
    Plaintiff-Appellee
    v.
    WARREN TODD HOEFFNER
    Defendant-Appellant
    Appeal from the United States District Court
    for the Southern District of Texas
    Before KING, HIGGINBOTHAM and GARZA, Circuit Judges.
    PER CURIAM:
    The defendant appeals from the district court’s order denying his motion
    to dismiss on double jeopardy grounds. The defendant, an attorney, represented
    clients bringing silicosis claims against insureds of The Hartford Financial
    Services Group. He was indicted for wire fraud and mail fraud after he made
    several payments to employees of The Hartford out of the proceeds from
    settlements with The Hartford. During the course of a six-week trial, the
    government abandoned an honest services fraud allegation in the indictment,
    instead focusing on a money and property fraud allegation. The jury failed to
    reach a verdict, and the district court granted a mistrial. In this interlocutory
    No. 09-20781
    appeal, we consider whether the government’s abandonment of the honest
    services fraud theory precludes retrial on the money and property fraud theory.
    For the following reasons, we hold that retrial is not precluded on the money and
    property fraud theory.
    I. FACTUAL AND PROCEDURAL BACKGROUND
    A.    Factual Background
    Warren Todd Hoeffner, an attorney, represented over 900 individuals who
    brought silicosis and other silica-related claims against manufacturers and
    sellers of silica-containing products and related protective equipment. Among
    the insurers of these companies was The Hartford Financial Services Group
    (“The Hartford”). Rachel Marie Rossow was a claims supervisor working for one
    of The Hartford’s subsidiaries and was responsible for settling claims and
    recommending appropriate settlement amounts for claims against The Hartford.
    John Prestage was a claims handler, and his supervisor was Rossow. Both
    Rossow and Prestage worked on the silica claims Hoeffner brought against The
    Hartford’s insureds.
    In 2002, Hoeffner began contacting the insurers for the silicosis
    defendants, including The Hartford, and offering to settle his clients’ claims. In
    the following months, Hoeffner successfully settled his clients’ claims with most
    of the defendants and received nearly $56 million in settlement payments, $34
    million of which came from The Hartford. Hoeffner received a contingency fee
    of 40% of the settlement amounts.
    During the settlement discussions, Hoeffner met with Rossow and
    Prestage several times. He funded trips for Rossow and Prestage to Laguna
    Beach, California, New York City, and Palm Beach, Florida. Also, unbeknownst
    to The Hartford, Hoeffner paid Rossow approximately $2.6 million and Prestage
    approximately $760,000 out of the funds that he received from the settlements
    with The Hartford. Among the payments that Hoeffner made to Rossow and
    2
    No. 09-20781
    Prestage were several checks drawn from Hoeffner’s IOLTA trust account which
    were mailed to Rossow and Prestage, a wire transfer from Hoeffner’s IOLTA
    trust account to an account owned by Rossow, and a wire transfer to New
    Country Motors in Hartford, Connecticut for the purchase of two BMW
    automobiles, one each for Rossow and Prestage.
    B.       The Indictment
    In a superceding indictment dated March 8, 2008,1 Hoeffner, Rossow, and
    Prestage were charged with one count of conspiracy to commit mail and wire
    fraud, one count of conspiracy to commit money laundering, two counts of wire
    fraud, five counts of mail fraud, and six counts of money laundering.2
    The conspiracy to commit wire and mail fraud count alleged that the
    defendants did “knowingly devise and intend to devise a scheme and artifice to
    defraud and to obtain money and property by means of false and fraudulent
    pretenses, representations and promises . . . .” The indictment also alleged the
    “manner and means” of the conspiracy, alleging “[i]t was part of the conspiracy
    that”:
    17. Defendant Hoeffner would and did make payments to
    defendants Rossow and Prestage, through bribes and kickbacks, for
    recommending that subsidiaries of The Hartford pay certain
    amounts to settle the claims of his clients against The Hartford, its
    subsidiaries and its Insureds.
    18. Defendants Hoeffner, Rossow and Prestage would and did
    falsely promise, pretend and represent to subsidiaries of The
    Hartford . . . that the settlement amounts of the claims against The
    Hartford . . . were appropriate amounts to settle the claims and in
    the best interests of The Hartford . . . , well knowing that the
    defendants intended that some of that money (the “Settlement
    1
    The original indictment was filed on June 25, 2007. The superseding indictment is
    substantially similar to the original indictment except that it adds an additional count of
    money laundering. All references to the indictment refer to the superseding indictment.
    2
    See 
    18 U.S.C. § 371
     (conspiracy); 
    18 U.S.C. § 1343
     (wire fraud); 
    18 U.S.C. § 1341
     (mail
    fraud); 
    18 U.S.C. § 1957
     (money laundering).
    3
    No. 09-20781
    Funds”) would instead be funneled by and through Hoeffner to
    Rossow and Prestage.
    19. Defendants would and did cause subsidiaries of The
    Hartford to pay more than $34,000,000.00 in Settlement Funds,
    knowing that more than $3,000,000.00 of those funds would be used
    to pay bribes and kickbacks to Rossow and Prestage.
    The indictment then alleged various wires and mailings as part of the
    execution of the scheme. In each of the substantive wire and mail fraud counts,
    the indictment alleged, under the heading “The Scheme and Artifice to Defraud,”
    the defendants . . . did knowingly devise and intend to devise a
    scheme and artifice to defraud The Hartford and its subsidiaries . . .
    of their right to the honest services of Prestage and Rossow, and to
    obtain money and property from The Hartford and its subsidiaries
    . . . by means of false and fraudulent pretenses, representations and
    promises, . . . including the concealment of material facts.
    The substantive counts each contained a “manner and means” section with
    allegations identical to those in Paragraphs 17, 18, and 19 of the conspiracy
    count.
    C.     The Trial
    The district court severed the proceedings against Hoeffner from those
    against Rossow and Prestage, and Hoeffner was tried before a jury from August
    20, 2009 through October 2, 2009. In support of the honest services fraud
    allegation, the government initially presented evidence that Hoeffner had made
    payments to Rossow and Prestage from the settlement funds in the form of
    bribes and kickbacks.3 In support of the money and property fraud allegation,
    the government presented evidence that The Hartford would not have engaged
    3
    We note that the defendant and the government seemed to have conflicting ideas of
    what, exactly, Hoeffner may have been bribing Rossow and Prestage to do. The defendant took
    the position that the indictment alleged that the bribes were given to Rossow and Prestage in
    exchange for their recommending inflated or overvalued settlement amounts. The
    government, on the other hand, initially presented evidence that Hoeffner bribed Rossow and
    Prestage to expedite the settlement approval process because he was concerned about possible
    impending tort reforms that would make settlement more unlikely.
    4
    No. 09-20781
    in settlement discussions with Hoeffner had it known that its employees were
    going to receive a portion of the settlements.
    Hoeffner conceded at trial that he made the payments to Rossow and
    Prestage, but he offered several theories of defense. He offered evidence that the
    settlement amounts were fair—i.e., the settlement amounts were not inflated or
    overvalued, so Hoeffner could not have bribed Rossow and Prestage because he
    had not received any gain in return. In relation to that theory, Hoeffner
    presented evidence that Rossow and Prestage were too low in The Hartford
    hierarchy to exert any influence over the settlement amounts. Hoeffner also
    testified that he had been extorted into making the payments when Rossow and
    Prestage threatened to stall the settlement approvals indefinitely.4
    As the trial progressed, the government retreated from its theory that
    Hoeffner committed honest services fraud by paying bribes and kickbacks to
    Rossow and Prestage. Instead, the government took the position that the mere
    fact of the concealed payments to employees of The Hartford constituted a
    scheme to obtain money and property from The Hartford. The government also
    renounced the honest services fraud allegation during closing argument, asking
    the jury to focus instead on the money and property fraud allegation in the
    indictment.
    During the jury charge conference, the government informed the district
    court that it wished to withdraw the honest services fraud theory from the jury’s
    consideration completely.5 As a result, the district court, over the defendant’s
    objection, removed all references to honest services fraud, as well as bribes and
    4
    As part of this defense, Hoeffner presented evidence that Rossow was having an affair
    with David Cain, a high-level executive at The Hartford, and Hoeffner testified that he
    believed the extortion was done at Cain’s direction or at least with his approval.
    5
    The government attempted to redact all references to bribes and kickbacks and honest
    services fraud from the indictment. The defendant objected to the redactions, and the district
    court sent the unaltered indictment to the jury.
    5
    No. 09-20781
    kickbacks, from the jury instructions for the substantive fraud counts,6 though
    the instruction for the conspiracy count still contained a reference to bribes and
    kickbacks.7
    After three days of deliberation, the jury informed the district court that
    it was unable to reach a unanimous verdict. The district court then granted the
    defendant’s request for a mistrial. Following the mistrial, the government
    immediately sought to retry the defendant on the same indictment. On October
    19, 2009, the defendant filed a motion to dismiss the indictment on double
    jeopardy grounds. The defendant argued below, as he does here, that the
    government abandoned the entire indictment when it abandoned the honest
    6
    The judge instructed the jury as follows with regard to the substantive wire and mail
    fraud counts:
    For you to find the defendant guilty of this crime, you must be convinced
    that the government has proved each of the following beyond a reasonable
    doubt:
    First: That the defendant knowingly created a scheme and artifice to
    obtain money and property from The Hartford and its subsidiaries, by means of
    false and fraudulent pretenses, representations and promises, including the
    concealment of material facts by falsely promising, pretending and representing
    that the settlement amounts of the claims against The Hartford, its subsidiaries
    and its insureds were appropriate amounts to settle the claims in the best
    interest of The Hartford, its subsidiaries and its insureds, well knowing that the
    defendant and Rachel Rossow and John Prestage intended that some of the
    settlement money would instead be funneled through the defendant to Rossow
    and Prestage.
    ...
    A “scheme to defraud” includes any scheme to deprive another of money or
    property by false and fraudulent pretenses, representations or promises.
    7
    The instruction for the conspiracy count was substantially the same as the
    instruction for the substantive fraud counts, except that it required the jury to find that the
    defendant engaged in a “scheme and artifice to defraud The Hartford and its subsidiaries by
    paying bribes and kickbacks to Rachel Rossow and John Prestage . . . for their recommending
    that The Hartford pay settlement amounts or to obtain money and property from The
    Hartford . . .” (emphasis added).
    6
    No. 09-20781
    services fraud theory at trial. This abandonment, according to the defendant,
    had the effect of a dismissal and precludes retrial on the money and property
    fraud theory.
    On November 18, 2009, before the district court ruled on the defendant’s
    motion to dismiss, the government obtained a second superseding indictment,
    which contained no reference to the honest services fraud theory or to bribes and
    kickbacks.      On November 19, 2009, the district court denied, without
    explanation, the defendant’s motion to dismiss. The defendant filed his notice
    of appeal the next day.
    II.    DISCUSSION
    A.    Standard of Review
    We review de novo the district court’s order denying the defendant’s
    motion to dismiss the indictment on double jeopardy grounds, but we accept as
    true the district court’s underlying factual findings unless clearly erroneous.
    United States v. Mauskar, 
    557 F.3d 219
    , 227 (5th Cir. 2009) (quoting United
    States v. Gonzalez, 
    76 F.3d 1339
    , 1342 (5th Cir. 1996)). In this interlocutory
    appeal, we are concerned only with the defendant’s claim of double jeopardy, and
    we do not address the sufficiency of any of the allegations in the indictment. See
    Abney v. United States, 
    431 U.S. 651
    , 663 (1977).
    B.    Theories of Liability in the Indictment
    We first decide whether the indictment alleged one theory of mail and wire
    fraud or two. The gravamen of the defendant’s appeal is that the indictment
    contains only an honest services fraud theory of liability, which he calls the
    “bribes for lies” theory. According to the defendant, when the government
    abandoned the honest services fraud theory at trial, the government in effect
    abandoned the indictment completely, constructively dismissing the charges
    against him and terminating jeopardy with regard to all of the mail and wire
    fraud counts. The government, on the other hand, contends that the indictment
    7
    No. 09-20781
    also alleged a scheme to obtain money and property, independent of the honest
    services fraud theory, and that it did not abandon the entire indictment when
    it abandoned the honest services fraud theory.
    “The [Supreme] Court has long recognized that an indictment may charge
    . . . the commission of any one offense in several ways.” United States v. Miller,
    
    471 U.S. 130
    , 136 (1985). Indeed, “[i]t is well-established in this Circuit that a
    disjunctive statute may be pleaded conjunctively and proved disjunctively.”
    United States v. Haymes, 
    610 F.2d 309
    , 310 (5th Cir. 1980).
    The mail and wire fraud statutes are drafted in the disjunctive. They
    provide that “[w]hoever, having devised or intending to devise any scheme or
    artifice to defraud, or for obtaining money or property by means of false or
    fraudulent pretenses, representations or promises,” uses the mail or wires is
    guilty of mail or wire fraud.     
    18 U.S.C. §§ 1341
    , 1343 (emphasis added).
    Section 1346 further defines the scope of punishable offenses, providing that a
    “‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another
    of the intangible right of honest services.” 
    18 U.S.C. § 1346
    . Though the
    statutes criminalize the use of the mails and wires for “a variety of schemes,”
    United States v. McMillan, 
    600 F.3d 434
    , 447 (5th Cir. 2010), they provide at
    least two means of committing mail or wire fraud: (1) a scheme or artifice to
    deprive another of his intangible right to honest services; and (2) a scheme or
    artifice to obtain money or property, see United States v. Ratcliff, 
    488 F.3d 639
    ,
    644 (5th Cir. 2007) (noting at least three different schemes punishable by the
    mail and wire fraud statutes).
    The indictment at issue in this case tracks the language of the statute
    exactly except that the honest services fraud and the money and property fraud
    are charged in the conjunctive. In Paragraph 15 of the conspiracy count, the
    indictment alleges that the defendant conspired with Rossow and Prestage “[t]o
    knowingly devise and intend to devise a scheme and artifice to defraud and to
    8
    No. 09-20781
    obtain money by means of false and fraudulent pretenses” (emphasis added).
    Similarly, in each of the substantive mail and wire fraud counts, the indictment
    alleges that the defendant, along with Rossow and Prestage, “did knowingly
    devise and intend to devise a scheme and artifice to defraud The Hartford and
    its subsidiaries. . . of their right to the honest services of Prestage and Rossow,
    and to obtain money and property from The Hartford and its subsidiaries . . . by
    means of false and fraudulent pretenses . . . , including the concealment of
    material facts” (emphasis added). We do not agree with the defendant that the
    indictment alleges only one theory of liability. The indictment tracks the
    language of the mail and wire fraud statutes, which provide for at least two
    means of committing mail and wire fraud, and thus alleges at least two means
    of violating the statutes. See United States v. Gordon, 
    780 F.2d 1165
    , 1171 (5th
    Cir. 1986) (“[A]n indictment which tracks the statutory language is sufficient to
    charge mail fraud [or] wire fraud.”) (internal citations omitted).
    Our conclusion is bolstered by our recent decision in United States v.
    Brown (Brown II), 
    571 F.3d 492
     (5th Cir. 2009). In that case, several former
    Merrill Lynch executives were indicted and convicted, along with two Enron
    executives, for wire fraud in connection with a scheme to artificially enhance
    Enron’s 1999 earnings. 
    Id. at 494
    .          We vacated their original convictions,
    holding that the indictment did not allege a viable honest services fraud theory.8
    See United States v. Brown (Brown I), 
    459 F.3d 509
    , 517 (5th Cir. 2006). When
    the government sought to retry the defendants for wire fraud, they appealed,
    arguing that a retrial would violate the Double Jeopardy Clause. Brown II, 
    571 F.3d at 496
    . We held that retrial would not violate the Double Jeopardy Clause,
    because, even though the government was precluded from retrying the
    8
    “The panel reasoned that while honest services fraud generally involves bribery,
    kickbacks, or self-dealing, the defendants’ conduct was disassociated from such actions.”
    Brown II, 
    571 F.3d at 496
    .
    9
    No. 09-20781
    defendants on the honest services theory, the money and property theory had
    survived. 
    Id. at 498
    .
    The language in the Brown indictment mirrors the language of the
    indictment in this case. The Brown indictment’s conspiracy count alleged that
    “[the defendants] conspired to . . . knowingly and intentionally devise a scheme
    and artifice to defraud Enron and its shareholders, including to deprive them of
    the intangible right of honest services of its employees, and to obtain money and
    property by means of materially false and fraudulent pretenses . . . .” 
    Id.
     at 495
    n.6 (emphasis added). The substantive wire fraud counts similarly alleged that
    the defendants had “devised a scheme and artifice to defraud Enron and its
    shareholders, including to deprive them of the intangible right of honest services
    of its employees, and to obtain money and property by means of materially false
    and fraudulent pretenses . . . .” 
    Id.
     (emphasis added). Based on this language,
    the defendants in Brown argued, as Hoeffner does here, that the “indictment
    charged as the object of the wire fraud only the deprivation of the intangible
    right of honest services.” 
    Id.
     at 496–97. We rejected that argument, holding
    that the defendants could be retried on the money and property fraud theory,
    which survived after the government redacted the indictment to remove the
    references to the honest services fraud theory. 
    Id. at 498
    .
    Despite the clear language of the indictment, Hoeffner argues that the
    indictment, taken in its entirety, alleges only honest services fraud. In support
    of his assertion, the defendant points to Paragraphs 17 through 19 in the
    manner and means section of the conspiracy count, which are repeated verbatim
    in the substantive fraud counts. Paragraph 17 alleges that the defendant made
    payments to Rossow and Hoeffner “through bribes and kickbacks” for
    recommending settlement amounts to The Hartford. Paragraph 18 alleges that
    the defendant, Rossow, and Prestage falsely represented that the settlement
    amounts were in The Hartford’s best interests, “well knowing that the
    10
    No. 09-20781
    defendants intended that some of that money would instead be funneled by and
    through Hoeffner to Rossow and Prestage.” Finally, Paragraph 19 states that
    more than $3 million of the funds that the defendant received were “used to pay
    bribes and kickbacks to Rossow and Prestage.”                These paragraphs taken
    together, the defendant argues, signal that the indictment alleges a single
    scheme involving bribes and kickbacks, and therefore a single theory of liability
    based on honest services fraud.
    We are unpersuaded by the defendant’s argument. The defendant fixates
    on the “bribes and kickbacks” language in the manner and means sections of the
    indictment, but disregards the allegation, contained in every count, that he
    engaged in a scheme to obtain money and property from The Hartford through
    false and fraudulent pretenses when he, Rossow, and Prestage concealed the
    payments from The Hartford. The core of the defendant’s argument is that the
    indictment did not allege a money and property fraud theory because the only
    scheme to defraud was premised on bribes and kickbacks. That argument is not
    a double jeopardy claim, and it is not properly before us on interlocutory review
    because it goes to the sufficiency of the money and property fraud theory and not
    to its existence in the indictment.9 See Brown II, 
    571 F.3d at 498
    ; Abney, 
    431 U.S. at 663
    .
    Nor are we persuaded by the defendant’s argument that the indictment,
    to the extent it alleges two theories of liability, alleges two theories of honest
    services fraud—one based on bribery and the other for undisclosed self-dealing.
    At oral argument, the defendant’s counsel urged us to consider the history of
    honest services fraud in this circuit in order to convince us that the reference to
    9
    The defendant also asserts that the indictment does not state an offense for money
    and property fraud absent the honest services fraud allegation and the bribes and kickbacks
    language. He contends that a scheme involving mere “payments” that were not disclosed, as
    opposed to bribes and kickbacks that were not disclosed, would render the indictment
    unconstitutionally vague. This argument also goes to the sufficiency of the complaint, which
    we are not permitted to review at this point.
    11
    No. 09-20781
    “concealment” in the indictment refers to undisclosed self-dealing, a now-defunct
    species of honest services fraud, and not concealment for the purpose of
    obtaining money and property.
    To understand the defendant’s argument, we must consider the state of
    the law before Skilling v. United States, — U.S. —, 
    130 S. Ct. 2896
     (2010). In
    Skilling, an Enron executive was indicted for honest services fraud for his
    undisclosed self-dealing related to Enron’s spiral into bankruptcy. 
    Id. at 2908
    .
    The government argued that the honest services fraud statute permitted
    prosecution for two species of fraud related to intangible rights: bribery and
    undisclosed self-dealing. 
    Id.
     at 2931–32. The Court rejected that argument,
    holding that honest services fraud is actionable only for schemes involving bribes
    and kickbacks. 
    Id. at 2933
    .
    The defendant argues that the references to concealment in the indictment
    must have been based on the government’s pre-Skilling attempts to indict
    defendants for honest services fraud based on undisclosed self-dealing. As
    evidence, the defendant notes that § 1346, which defines scheme to defraud as
    including deprivation of the right to honest services, is cited only in the
    substantive fraud counts, which is also where the word “concealment” appears
    in the indictment.    The defendant believes that this juxtaposition is not
    coincidental, and that the “concealment” alleged in the indictment must be that
    Rossow and Prestage concealed their self-dealing from their employer.
    This argument is not persuasive. Counts 3 through 9 of the indictment,
    the substantive fraud counts, allege that the defendant engaged in a scheme and
    artifice “to obtain money and property from The Hartford . . . by means of false
    and fraudulent pretenses . . . , including the concealment of material facts.” The
    indictment uses the term “concealment” to explain that one of the “false and
    fraudulent pretenses” employed by the defendant to obtain money and property
    was the concealment of material facts. The reference to § 1346 does not appear
    12
    No. 09-20781
    until the last sentence of each count, whereby the indictment alleges that the
    acts described in the count were “[i]n violation of Title 18, United States Code,
    Sections [1341 and 1343], 1346, and 2.” As the government concedes, the
    indictment does contain an honest services fraud allegation in addition to the
    money and property fraud allegation. We do not connect the word “concealment”
    with honest services fraud based on undisclosed self dealing because it is clear
    from the indictment that concealment appears in connection with the money and
    property fraud allegation. To the extent that the indictment may have alleged
    honest services fraud with regard to undisclosed self-dealing, we find that the
    allegation was separate and apart from the money and property fraud
    allegation.10
    C.     Government Abandonment of a Theory
    Having decided that the indictment does, in fact, allege two theories of
    liability, we next must determine the consequence of the government’s
    abandonment of one of those theories. The Double Jeopardy Clause provides:
    “[N]or shall any person be subject for the same offense to be twice put in
    jeopardy of life or limb.” U.S. Const. amend V. “As traditionally understood, the
    Double Jeopardy Clause precludes multiple prosecutions and multiple
    punishments for the same offense.” Brown II, 
    571 F.3d at 497
     (internal quotation
    omitted); see also Brown v. Ohio, 
    432 U.S. 161
    , 165 (1977). T h e D o u b l e
    Jeopardy Clause is not implicated, however, “when[] the State seeks a second
    trial after its first attempt to obtain a conviction results in a mistrial because the
    jury has failed to reach a verdict. . . . [T]he second trial does not put the
    defendant in jeopardy ‘twice.’” Yeager v. United States, — U.S. —, 
    129 S. Ct. 2360
    , 2366 (2009). “Instead, a jury’s inability to reach a decision is the kind of
    10
    We note that the indictment in Skilling alleged, along with the invalid honest services
    fraud theory, a money and property fraud theory. See Skilling, 
    130 S. Ct. at 2934
     (“[T]he
    indictment alleged three objects of the conspiracy—honest-services wire fraud,
    money-or-property wire fraud, and securities fraud.”).
    13
    No. 09-20781
    ‘manifest necessity’ that permits the declaration of a mistrial and the
    continuation of the initial jeopardy that commenced when the jury was first
    impaneled.” 
    Id.
    The Double Jeopardy Clause operates to “preclude[] the Government from
    relitigating any issue that was necessarily decided by a jury’s acquittal in a prior
    trial.” 
    Id.
     This is because “‘[w]hen an issue of ultimate fact has once been
    determined by a valid and final judgment’ of acquittal, it ‘cannot be litigated’ in
    a second trial for a separate offense.” Id. at 2367 (quoting Ashe v. Swenson, 
    397 U.S. 436
    , 443 (1970)). We have held that when a prosecutor opts to voluntarily
    discontinue a trial after jeopardy has attached, the dismissal functions as an
    acquittal on the charge, and issues implicated by the dismissed counts are
    deemed to be resolved in the defendant’s favor. Humphries v. Wainwright, 
    584 F.2d 702
    , 705–06 (5th Cir. 1978).
    To determine which issues, if any, were necessarily decided in the
    defendant’s favor during a previous trial, we must “‘examine the record of [the]
    prior proceeding, taking into account the pleadings, evidence, charge, and other
    relevant matter.’” Yeager, 
    129 S. Ct. at 2367
     (quoting Ashe, 
    397 U.S. at 444
    ).
    “[T]he inquiry ‘must be set in a practical frame and viewed with an eye to all the
    circumstances of the proceedings.’” 
    Id.
     (quoting Ashe, 
    397 U.S. at 444
    ). “[A]
    defendant invoking Ashe has ‘the burden . . . to demonstrate that the issue
    whose relitigation he seeks to foreclose was actually decided in the first
    proceeding.’” United States v. Whitfield, 
    590 F.3d 325
    , 371 (5th Cir. 2009)
    (quoting Dowling v. United States, 
    493 U.S. 342
    , 350 (1990)).
    Here, we do not have the benefit of a jury verdict on the honest services
    fraud theory.     Both the government and the defendant agree that the
    government abandoned the honest services fraud allegation during trial. The
    parties also agree that this abandonment of the honest services fraud theory had
    the effect of acquitting the defendant with regard to that theory.              See
    14
    No. 09-20781
    Humphries, 
    584 F.2d at
    705–06. We therefore assume, without deciding, that
    the abandonment functioned as an acquittal of the defendant with regard to the
    honest services fraud theory only.
    Assuming that the government’s abandonment of the honest services fraud
    theory functioned as an acquittal on that theory only, and assuming that, as a
    result, the acquittal necessarily decided certain issues in the defendant’s favor,
    we must determine which issues, if any, were decided in the defendant’s favor
    such that the government is now precluded from litigating them in a subsequent
    trial. The relevant inquiry is whether the issue “was a critical issue of ultimate
    fact” in the previous proceeding. Yeager, 
    129 S. Ct. at 2368
    ; see also Humphries,
    
    584 F.2d at
    705–06. In Humphries, the prosecutor voluntarily dismissed a
    charge, after jeopardy had attached, that the defendant had been driving while
    intoxicated. 
    584 F.2d at 704
    . We held that the dismissal, which functioned as
    an acquittal, had decided in the defendant’s favor one of two possible critical
    facts: either that he was not driving or that he was not intoxicated. 
    Id.
     at
    705–06.   We accepted the district court’s finding, which was based on an
    examination of the record and circumstances of the prior proceeding, that the
    dismissal had decided that the defendant was not intoxicated. 
    Id.
     Thus, any
    further prosecution for vehicular manslaughter by intoxication was barred
    because the element of intoxication had already been decided by the previous
    dismissal. 
    Id. at 706
    .
    We look to the record of the proceedings in this case to determine whether
    any issues have been decided in the defendant’s favor. The elements of honest
    services fraud include (1) a scheme to deprive another of the right to honest
    services; (2) use of the mails and/or wires to execute the scheme; and (3)
    materiality of the falsehoods employed in the scheme. Ratcliff, 
    488 F.3d at
    643–44. We conclude that the only issue decided in the defendant’s favor by the
    government’s abandonment of the honest services fraud theory was based on the
    15
    No. 09-20781
    first element—the defendant did not engage in a scheme to deprive The Hartford
    of its right to honest services. Based on the government’s attempts to redact the
    words “bribes and kickbacks” from the indictment, its failure to present evidence
    that the payments were bribes, and its failure to argue that the payments were
    bribes, we find that the government’s abandonment decided, at most, that the
    payments Hoeffner made to Rossow and Prestage cannot be characterized as
    bribes or kickbacks. Because the defendant did not contest the fact of the
    payments, we conclude that this fact was not decided in the defendant’s favor.
    Retrial on the money and property fraud theory is not precluded because
    the government need not prove that the defendant deprived The Hartford of its
    rights to the honest services of its employees or that the payments must be
    characterized as bribes or kickbacks. Indeed, in a mail or wire fraud case
    premised on a scheme to obtain money or property, “[t]he issue is whether the
    victims’ property rights were affected by the misrepresentations.” McMillan,
    
    600 F.3d at 449
    .
    The defendant argues that, even if the indictment alleged two theories of
    liability, both theories were predicated on the same scheme to defraud The
    Hartford—the payment of bribes and kickbacks to Rossow and Prestage—which
    the government abandoned. In support of this argument, he again points us to
    the manner and means sections of the indictment. In each count, after the
    indictment alleges both a scheme to deprive The Hartford of the honest services
    of its employees and a scheme to obtain money and property from The Hartford,
    the indictment goes on to state “It was part of the scheme and artifice to defraud
    that [Hoeffner paid bribes and kickbacks to Rossow and Prestage].” According
    to the defendant, the government abandoned the entire manner and means
    section when it abandoned the honest services fraud theory and admitted that
    the payments were not bribes or kickbacks, leaving no manner and means of
    committing money and property fraud.
    16
    No. 09-20781
    Again, we believe the defendant’s real complaint is that the indictment
    failed to allege a separate scheme to obtain money and property.11 As we noted
    above, the indictment does in fact allege that the defendant engaged in a scheme
    to obtain money and property from The Hartford by means of false and
    fraudulent pretenses. Furthermore, it is not clear that the entire manner and
    means section refers to the honest services fraud theory and not the money and
    property fraud theory. For instance, Paragraph 18 contains no reference to
    bribes or kickbacks. But even if the entire manner and means section of the
    indictment related only to the honest services fraud theory, the defendant’s
    complaint about the indictment’s failure to allege a manner and means of
    committing money and property fraud goes to the sufficiency of the indictment,
    a matter which we cannot review on this interlocutory appeal. See Brown II, 
    571 F.3d at 498
    ; Abney, 
    431 U.S. at 663
    .
    In arguing that the government is precluded from retrying him on a money
    and property fraud theory, the defendant relies heavily on United States v. Gray,
    
    705 F. Supp. 1224
     (E.D. Ky. 1988), and United States v. Slay, 
    717 F. Supp. 689
    (E.D. Mo. 1989). In Gray, the government indicted the defendants for mail
    fraud, alleging four distinct theories, including two intangible rights theories
    (similar to the honest services theory allowed by § 1346). 
    705 F. Supp. at 1226
    .
    After the defendants were convicted of mail fraud, the Supreme Court reversed
    11
    Early in the trial the defendant brought an emergency motion to disclose the grand
    jury materials, arguing that the government had constructively amended the indictment. He
    was concerned that the government was presenting only evidence that Hoeffner, Rossow, and
    Prestage had concealed the payments and not presenting any evidence that the payments were
    bribes or kickbacks. The district court denied the motion, stating “I believe that the defense
    was appraised from the very first status conference as to what the government’s theory of this
    case was. The defense disagreed with it, but they knew about it.”
    Even assuming the government’s proof at trial varied from the indictment such that the
    indictment was constructively amended, retrial would not be precluded on double jeopardy
    grounds. See United States v. Mize, 
    820 F.2d 118
    , 119–20 (5th Cir. 1987) (reversal based on
    a constructive amendment of the indictment does not bar conviction based on retrial of an
    indictment containing proper allegations).
    17
    No. 09-20781
    their convictions, holding that the mail fraud statute in force did not support the
    intangible rights theory of prosecution. See McNally v. United States, 
    483 U.S. 350
    , 359–60 (1987).12         On remand, the government sought to retry the
    defendants on the remaining theories of mail fraud, which included a money and
    property fraud theory. Gray, 
    705 F. Supp. at 1231
    . The court held that retrial
    was precluded because, although it was alleged in the indictment and technically
    instructed to the jury, the government had abandoned the money and property
    fraud theory at trial by failing to present any evidence or argument to support
    that theory. 
    Id.
     at 1231–32.
    Similarly, in Slay, the indictment alleged multiple theories of mail fraud,
    including honest services fraud and money and property fraud theories. 
    717 F. Supp. at 690
    . The jury convicted the defendant of mail fraud, but the Supreme
    Court released its decision in McNally before the defendant was sentenced. 
    Id. at 691
    . The government sought to retry the defendant on the money and
    property fraud theory, but the district court dismissed the indictment on double
    jeopardy grounds. 
    Id. at 696
    . The court found that, while the indictment alleged
    a money and property fraud theory and the jury was technically instructed on
    the theory, the government had abandoned the money and property theory
    during trial by failing to present any evidence or argument related to that
    theory. 
    Id.
     at 695–96.
    The defendant’s reliance on these cases is misplaced. We agree with the
    defendant that the holdings of these cases demonstrate that once the
    government abandons a theory by failing to present any evidence related to the
    theory, the government cannot seek to retry a defendant on the abandoned
    theory. But this case is factually distinct from Slay and Gray. Whereas in those
    cases the government failed to present any evidence of money and property fraud
    12
    In response to McNally, Congress quickly enacted 
    18 U.S.C. § 1346
    , which specifically
    allows prosecution under the mail fraud statute for a scheme to deprive honest services.
    18
    No. 09-20781
    and focused its attention on honest services fraud, in this case the government
    focused its attention on the money and property fraud theory, paying little
    attention to the honest services fraud theory. Therefore, retrial is not precluded
    on the government’s unabandoned money and property fraud theory.
    The defendant also relies heavily on Saylor v. Cornelius, 
    845 F.2d 1401
    (6th Cir. 1988) and United States v. Cavanaugh, 
    948 F.2d 405
     (8th Cir. 1991).
    We find the defendant’s reliance on these cases equally unconvincing. In both
    cases, the defendant was indicted on two theories of liability. See Saylor, 
    845 F.2d at 1402
     (murder by conspiracy and murder as an accomplice); Cavanaugh,
    
    948 F.2d at 412
     (murder and assault resulting in serious bodily injury). In each
    case, the jury convicted the defendant on one theory but failed to return any
    verdict with regard to the other theory. Saylor, 
    845 F.2d at 1404
    ; Cavanaugh,
    
    948 F.2d at 412, 414
    . The defendants’ convictions were reversed for insufficient
    evidence with regard to the convicted theory, and the government sought to retry
    the defendants on the other theory. Saylor, 
    845 F.2d at 1404
    ; Cavanaugh, 
    948 F.2d at
    411–12. Both the Sixth Circuit and the Eighth Circuit held that retrial
    was precluded because jeopardy had terminated with regard to the second theory
    when the jury failed to return a verdict. Saylor, 
    845 F.2d at 1404, 1408
    ;
    Cavanaugh, 
    948 F.2d at 414, 417
    . In this case, however, jeopardy has not
    terminated with regard to the money and property fraud theory because the
    jury’s failure to reach a verdict was the result of a mistrial, not a product of the
    government’s failure to obtain a verdict on the theory.
    We hold that the Double Jeopardy Clause bars retrial on the honest
    services fraud theory in the indictment. Retrial is not precluded, however, on
    the money and property fraud theory. Therefore, it was not error for the district
    court to deny the defendant’s motion to dismiss the indictment.
    CONCLUSION
    For the foregoing reasons, the order of the district court is AFFIRMED.
    19
    

Document Info

Docket Number: 09-20781

Citation Numbers: 626 F.3d 857

Filed Date: 12/14/2010

Precedential Status: Precedential

Modified Date: 3/3/2020

Authorities (21)

United States v. Whitfield , 590 F.3d 325 ( 2009 )

United States v. Gonzalez , 76 F.3d 1339 ( 1996 )

Bankr. L. Rep. P 68,233 United States of America v. H. B. ... , 610 F.2d 309 ( 1980 )

United States v. McMillan , 600 F.3d 434 ( 2010 )

Lloyd Virgil Saylor v. Clarence Cornelius, Judge, Harlan ... , 845 F.2d 1401 ( 1988 )

McNally v. United States , 107 S. Ct. 2875 ( 1987 )

United States v. James C. Gordon , 780 F.2d 1165 ( 1986 )

United States v. Mary Catherine Mize , 820 F.2d 118 ( 1987 )

Phillip Dennis Humphries v. Louie L. Wainwright, Director ... , 584 F.2d 702 ( 1978 )

United States of America, Plaintiff-Appellant-Cross-... , 488 F.3d 639 ( 2007 )

united-states-v-jessee-dean-cavanaugh-united-states-of-america-v-paul , 948 F.2d 405 ( 1991 )

Ashe v. Swenson , 90 S. Ct. 1189 ( 1970 )

United States v. Miller , 105 S. Ct. 1811 ( 1985 )

United States v. Gray , 705 F. Supp. 1224 ( 1988 )

United States v. Mauskar , 557 F.3d 219 ( 2009 )

United States v. Brown , 571 F.3d 492 ( 2009 )

Abney v. United States , 97 S. Ct. 2034 ( 1977 )

Brown v. Ohio , 97 S. Ct. 2221 ( 1977 )

Dowling v. United States , 110 S. Ct. 668 ( 1990 )

United States v. Slay , 717 F. Supp. 689 ( 1989 )

View All Authorities »