United States v. George Grace, Sr. ( 2014 )

Case: 12-30926 Document: 00512639851 Page: 1 Date Filed: 05/22/2014
REVISED MAY 22, 2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 12-30926 May 21, 2014
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
GEORGE L. GRACE, SR.,
Defendant-Appellant.
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:10-CR-143
Before DAVIS, BARKSDALE, and ELROD, Circuit Judges.
PER CURIAM:*
Defendant-Appellant George Grace, Sr. (“Grace”), the former mayor of a
small town in Louisiana, appeals his conviction for corruption-related offenses,
as well as his sentence. We affirm his conviction, vacate the sentence imposed
by the district court, and remand for further proceedings consistent with this
opinion.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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I.
Grace is the former mayor of the City of St. Gabriel, LA. The Federal
Bureau of Investigation (“FBI”) began investigating reports of corruption
involving Grace in 2006 after it received a tip from local law enforcement in St.
Gabriel. From late 2006 through the summer of 2010, the FBI conducted a
series of four undercover investigations into Grace’s conduct. Those
investigations included: 1) relief efforts in St. Gabriel after Hurricane Katrina
(“the Hurricane Katrina Scheme”); 2) a vendor doing business with the City of
St. Gabriel (“the City Vendor Scheme”); 3) the sale and development of real
estate in St. Gabriel (“the Real Estate Scheme”); and 4) a fictional product for
cleaning garbage cans known as the Cifer 5000 (the “Cifer Scheme”).
Following the FBI investigation, a grand jury returned a 13-Count
indictment against Grace. After trial, a jury convicted Grace on seven of the
thirteen Counts. Grace now appeals his conviction on the following five Counts:
a) Count 1, charging a violation of the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq.; b) Count 8, charging
federal program bribery in violation of 18 U.S.C. § 666; c) Count 9, charging
honest services and property mail fraud in violation of 18 U.S.C. §§ 1341 and
1346; d) Count 11, charging honest services and property wire fraud in
violation of 18 U.S.C. §§ 1343 and 1346; and e) Count 13, charging use of an
interstate facility (telephone) in aid of racketeering in violation of 18 U.S.C. §
1952. Finally, Grace also appeals the 22-year sentence imposed by the district
court.
The Counts which Grace appeals involve two of the four schemes
mentioned above: the Real Estate Scheme and the Cifer Scheme, which we will
discuss below, including the facts relevant to those schemes.
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II.
We address Grace’s convictions in four groups: a) Count 9 for honest
services fraud and property mail fraud in violation of 18 U.S.C. §§ 1341 and
1346, and Count 11 for mail and wire fraud in violation of 18 U.S.C. §§ 1343and 1346; b) Count 13 for use of a telephone to violate the Louisiana state
public bribery statute in violation of 18 U.S.C. § 1952; c) Count 8 for federal
program bribery in violation of 18 U.S.C. § 666; and d) Count 1, the RICO
violation.
a. Grace’s convictions in Counts 9 and 11
The charges in Counts 9 and 11 concern two official letters of support
Grace provided to undercover FBI Special Agent Darin McAllister
(“McAllister”) and cooperating FBI witness William Myles (“Myles”) during a
sting operation. Agent McAllister and Myles posed as representatives of Cifer
5000 (“Cifer”), a fictitious company which provided garbage-can-cleaning
services. Agent McAllister operated under the alias of “DJ,” and held himself
out as the financial partner in the Cifer business. In exchange for several
thousand dollars, Grace provided letters supporting Cifer to Agent McAllister
and Myles. In these letters, Grace, in his official position as Mayor of St.
Gabriel, strongly endorsed Cifer and falsely represented that he was in the
process of bringing the Cifer service to his City. The letter Grace gave to Agent
McAllister was intended to persuade potential private investors to invest
money in Cifer (the “Private Investor Letter”). The letter Grace gave to Myles
was intended to help Cifer secure a grant from the Environmental Protection
Agency (the “EPA Letter”).
Grace argues that the convictions in Counts 9 and 11 should be vacated
for three reasons. First, his conviction in Count 9 should be vacated because
he was not permitted to examine Agent McAllister at trial, which violated his
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right to due process. Second, the convictions on both Counts 9 and 11 should
be set aside because there was insufficient evidence to show that Grace had
the specific intent to defraud potential investors and the EPA of money. And
third, the convictions should be vacated because the district court improperly
instructed the jury that it is not a defense that the public official involved
would have performed the official action regardless of the bribe.
i. Due Process
Grace was convicted in Count 9 for honest services and mail fraud, in
violation of 18 U.S.C. §§ 1341 and 1346, for causing the mailing of the Private
Investor Letter to Agent McAllister, who was posing as “DJ.” In the Letter,
Grace vouched for the Cifer service as Mayor of St. Gabriel and falsely claimed
he had presented the idea of using the service to the city council and they were
making progress toward a contract with Cifer. In exchange for writing the
Letter, Agent McAllister wired Grace $8,000 to pay for Grace and his associate
to travel to Libya and Uganda. Agent McAllister’s recorded statements to
Grace during the sting operation were introduced at trial, but he did not testify.
Instead, when called as a witness by Grace, Agent McAllister properly asserted
his Fifth Amendment privilege against self-incrimination which arose out of
an unrelated investigation for fraud-related offenses. Grace contends his
inability to examine Agent McAllister violated his right to due process under
the Fifth Amendment, and therefore his conviction in Count 9 should be
vacated.
The parties dispute the standard of review because they disagree
whether Grace sufficiently objected at trial so as to preserve the error. We
conclude, however, that this argument is without merit regardless of which
standard of review is applied. At trial, Grace made the only arguable objection
available to him under the Sixth Amendment’s Confrontation Clause. That
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objection is meritless. Agent McAllister’s statements were not admitted for
their truth. The government never contended they were true. To the contrary,
they were obviously untrue as they were made in the context of a sting
operation. The statements were admitted to show that the offer of a payment
was made to Grace, who then accepted the offer. What Agent McAllister said
(as opposed to the truth of the statement) and Grace’s response are direct
evidence of the crime. “[T]he Confrontation Clause does not bar the use of
testimonial statements for purposes other than establishing the truth of the
matter asserted. Instead, to constitute a Confrontation Clause violation, the
statement must be used as hearsay—in other words, it must be offered for the
truth of the matter asserted.” 1
Nor does the admission of Agent McAllister’s recorded statements violate
Grace’s right to due process. A violation of a defendant’s rights under the Due
Process Clause of the Fifth Amendment “requires some showing that the
evidence lost would be both material and favorable to the defense.” 2 Grace fails
to show that McAllister’s testimony would have been either favorable to his
defense or material. He speculates that, on cross-examination, he would have
been able to establish that Grace was not attentive during his conversations
with McAllister and did not hear McAllister’s statements. But Grace testified
at trial that he heard McAllister’s statements which linked payments to the
writing of the Private Investor Letter. Also, evidence of this scheme was
1 United States v. Polidore, 690 F.3d 705, 719 n.15 (5th Cir. 2012) (citations and internal
quotation marks omitted); see also United States v. Tolliver, 400 F. App’x 823, 830 (5th Cir.
2010) (“Statements not offered for their truth, even if testimonial in nature, are not subject
to [the protections of the Confrontation Clause].”) (citing United States v. Holmes, 406 F.3d
337, 349 (5th Cir. 2005)).
2United States v. Valenzuela-Bernal, 458 U.S. 858, 873 (1982); see also United States v.
Villanueva, 408 F.3d 193 (5th Cir. 2005).
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corroborated by the Letters provided to both Agent McAllister and Myles,
Grace’s confession during an FBI interview, and, in some instances, Myles’s
testimony. Both the Confrontation Clause and due process arguments are
meritless. Thus, the district court did not err when it admitted the recorded
conversations which included Agent McAllister’s statements.
ii. Insufficient Evidence
Grace next contends that his convictions in Counts 9 and 11 should be
set aside because the evidence was insufficient to prove he had specific intent
to defraud the Cifer investors. Count 9 charged Grace with honest services and
mail fraud for providing the Private Investor Letter, discussed above. To obtain
a conviction for mail fraud under § 1341, the government must prove “(1) a
scheme to defraud; (2) the use of the mails to execute the scheme; and (3) the
specific intent to defraud.” 3 Count 11 charged Grace with use of the wires in
connection with a scheme to defraud the EPA of money and property, in
violation of 18 U.S.C. §§ 1343 and 1346. The elements of wire fraud under §
1343 are: “(1) a scheme to defraud and (2) the use of, or causing the use of, wire
communications in furtherance of the scheme.” 4 In order to convict for the
federal crime of honest services fraud under § 1346, the government “‘must
prove that the conduct of a state official breached a duty respecting the
provision of services owed to that official’s employer under state law.’” 5 In
Count 11, the fraud was based on the letter that Grace signed and sent to the
EPA praising Cifer to assist Cifer in obtaining a grant from the EPA to finance
the Cifer services in St. Gabriel and other cities. Like the Private Investor
3 United States v. Bieganowski, 313 F.3d 264, 275 (5th Cir. 2002) (citation omitted).
4 United States v. Stalnaker, 571 F.3d 428, 436 (5th Cir. 2009).
5United States v. Whitfield, 590 F.3d 325, 348 (5th Cir. 2009) (quoting United States v.
Brumley, 116 F.3d 728, 734 (5th Cir. 1997) (en banc)).
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Letter, the EPA Letter contained false representations by Grace that the City
was progressing toward implementing the Cifer system. Myles wired Grace
$1,000 into his personal account in exchange for providing the Letter.
Again, the parties dispute the standard of review. We find that,
regardless of which standard is applied, Grace’s sufficiency argument is
meritless.
Grace argues that the evidence presented by the government was
sufficient to prove, at most, that he had knowledge the fraud would occur, and
not that he had the specific intent to defraud.
Mail and wire fraud both require a specific intent to defraud. 6 The
district court properly instructed the jury that “[a]n ‘intent to defraud’ means
an intent to deceive or cheat someone,” 7 and that the jury “may also consider
the natural and probable results of any acts the defendant knowingly did or
did not do, and whether it is reasonable to conclude that the defendant
intended those results.” The jury was entitled to find from the evidence that
Grace knew the Letters he wrote contained false representations, and that
Grace’s objective was to persuade investors and the EPA to give money based
in part on those lies. Grace admitted as much in an FBI interview, and at trial.
For example, when asked by the Assistant U.S. Attorney, “And you had no
problem with the fact thatthey [Myles and Agent McAllister] were going to use
a false letter to raise money?” Grace responded, “That would be on them . . . as
far as I was concerned.” 8 Here, the evidence of Grace’s knowledge of the
6 See United States v. Bernegger, 661 F.3d 232, 240 (5th Cir. 2011) (mail fraud); United States
v. Radley, 632 F.3d 177, 185 (5th Cir. 2011) (wire fraud).
7 FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS (Criminal Cases) § 2.59 (2001).
8 In addition, the following testimony from Grace on cross examination reveals his knowledge
of the falsehoods:
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scheme and the role his Letters played in furthering the scheme was sufficient
for the jury to find that Grace acted with the specific intent required for Counts
9 and 11.
iii. Improper Jury Instruction
Third, Grace argues that this court should vacate his convictions in
Counts 9 and 11 because the district court issued an improper jury instruction
as to honest services fraud. Grace claims the district court erred when it issued
the following jury instruction: “It is not a defense [to honest services fraud] to
claim that a public official would have lawfully performed the official action in
question even without having accepted a thing of value.”
Honest services fraud in the form of bribery requires proof of a quid pro
quo and, therefore, the Government must prove “a specific intent to give or
receive something of value in exchange for an official act.” 9 According to Grace,
the jury instruction was improper because if an “official would have performed
Q: So you’re – if I understand it correctly, you were okay with letting this false,
fraudulent letter out to investors because you didn’t figure that they would
ultimately invest anything. So you were fine with that; is that what you’re
saying?
A: I didn’t think there were any businessmen anywhere who would not look at
the facts and the figures before they would invest that kind of money in a
venture like that. If anybody would be venture capitalists, they would want to
know the populations, the facts and the figures from those six towns that he
was talking about, and that would not give anybody cause to invest $2 to 3
million, Mr. Amundson.
Q: So you didn’t mind lying to them?
A: He wanted the letter; I gave it.
Q: That’s a “yes” or a “no,” sir.
A: Yes.
9 United States v. Sun-Diamond Growers of Cal., 526 U.S. 398, 404–05 (1999) (emphasis in
original).
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the specified act anyway, the official would not have taken the bribe with the
intent to be influenced, and there would have been no corrupt exchange.”
Grace failed to raise this objection at the trial court. We therefore review
this argument for plain error, and find that the district court did not err in
giving this instruction.
As the Government correctly points out, Skilling v. United States holds
that honest services fraud under 18 U.S.C. § 1346 encompasses only bribery
and kickback schemes. 10 To define “bribery” and “kickbacks,” the Court in
Skilling directed courts to look to federal statutes defining similar crimes, such
as 18 U.S.C. §§ 201 (defining bribery of federal officials) and 666 (defining
bribery concerning federally funded entities). 11 We have interpreted § 666 to
mean that a public official can be guilty of bribery “even if he has no intention
of actually fulfilling his end of the bargain.” 12 The decisive factor is that the
public official has “corruptly entered into a quid pro quo, knowing that the
purpose behind the payment that he has received, or agreed to receive, is to
induce or influence him in an official act.” 13 The jury instruction was
consistent with Skilling. It is enough that Grace took the money with the
knowledge that it was intended to influence him, even if he would have written
the Letters without the payment. Accordingly, the district court committed no
error, plain or otherwise, in giving this instruction, regardless of the standard
of review.
b. Grace’s conviction in Count 13
10 130 S. Ct. 2896, 2928–31 (2010).
11 Id. at 2933–34.
12 United States v. Valle, 538 F.3d 341, 347 (5th Cir. 2008).
13 Id.9
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Grace’s conviction in Count 13 involves his use of his official influence as
Mayor of St. Gabriel to promote the Cifer system. Grace helped organize
meetings to introduce a group of fellow mayors from nearby cities to Myles and
Agent McAllister. These meetings were organized to provide Myles and Agent
McAllister the opportunity to discuss the Cifer system with the other mayors,
and assist Myles and Agent McAllister in selling the Cifer service to their
cities. During the meetings, Myles expressed his desire to obtain contracts with
each of the cities, and made it clear he was willing to pay the mayors for their
support. After at least two of the meetings, Grace accepted a $2,000 payment
from Myles and Agent McAllister for his work in promoting the Cifer service
with the other mayors, and the use of his official influence to persuade them.
Grace argues his conviction in Count 13 should be vacated for two
reasons: first, because there was insufficient evidence presented at trial that
his conduct constituted an “official action” as Mayor of St. Gabriel; and second,
because the district court’s jury instruction on “official action” was overbroad.
i. Sufficiency of the evidence
Grace was convicted in Count 13 for use of a telephone in aid of
racketeering in violation of 18 U.S.C. § 1952, which makes it a federal crime to
use an interstate facility with the intent to carry on any “unlawful activity,”
including bribery in violation of state law. 14 Specifically, the jury found that
Grace had used a telephone with the intent of committing the offense of bribery
under Louisiana law when he accepted $2,000 from Myles in exchange for
14 See 18 U.S.C. § 1952 (b) (defining “unlawful activity” as “extortion, bribery, or arson in
violation of the laws of the State in which committed or of the United States, . . . .”). Section
1952 provides, in relevant part, “Whoever . . . uses the mail or any facility in interstate or
foreign commerce, with intent to . . . promote, manage, establish, carry on, or facilitate the
promotion, management, establishment, or carrying on, of any unlawful activity . . . shall be
fined under this title, imprisoned not more than 5 years, or both . . . .” 18 U.S.C. § 1952 (a).
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promoting the Cifer service with other mayors. The Louisiana public bribery
statute, Louisiana Revised Statutes Section 14:118(A), prohibits the receipt of
a bribe “with the intent to influence [a person’s] conduct in relation to [one’s]
position, employment or duty.” 15 Grace argues that his promotion of the Cifer
service with other mayors outside of St. Gabriel, and use of his influence with
those mayors, did not fall within the scope of the official conduct described in
the state statute.
Grace did not raise this objection at trial, so we review this claim for
plain error.
We look to Louisiana law for the elements of its crime of bribery. The
Louisiana Supreme Court has stated that the “gravamen” of the offense
denounced in § 14:118 “is the giving or offering to give (as well as the
acceptance or offer to accept) anything of present or prospective value to the
specifically delineated public . . . official with the intent of influencing his
conduct ‘in relation to his position, employment, or duty’ as such.” 16
Unable to cite a Louisiana case to support his position, Grace contends
that the Louisiana Supreme Court has “analogized” the definition of a public
official’s “position, employment, or duty” under § 14:118 to an “official act”
under the federal public bribery statute, 18 U.S.C. § 201. According to Grace,
his exercise of influence over other mayors does not constitute an “official act”
under federal law. However, based on this record the jury was entitled to find
that Grace’s promotion of the Cifer service was within the range of official
15 LA. REV. STAT. ANN. § 14:118(A).
16 State v. Smith, 212 So.2d 410, 414 (La. 1968); United States v. L’Hoste, 609 F.2d 796, 807
(5th Cir. 1980) (“The inquiry under the Louisiana statute . . . is whether the gift is made, not
as a Quid pro quo for specific action, but with the intent to influence the conduct of the public
servant in relation to his position, employment, or duty.”).
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action under federal law. The definition of “official act” is quite broad,
encompassing “any decision or action on any question, matter, cause, suit,
proceeding or controversy, which may at any time be pending, or which may
by law be brought before any public official, in such official’s official capacity,
or in such official’s place of trust or profit.” 17 “Official acts that violate an
official’s official duty are not limited to those proscribed by statutes and written
rules and regulations, but may also be found in ‘established usage,’ because
‘duties not completely defined by written rules are established by settled
practice, and action taken in the course of their performance must be regarded
as within the provisions of the above-mentioned statutes against bribery.’” 18
Grace contends his official mayoral duties were limited to those he owed
to the City of St. Gabriel, and that payments for promoting the Cifer service
outside of St. Gabriel fall outside the range of those duties. However, both the
record in this case and prior decisions of this court support a different
conclusion. 19 Grace’s executive assistant testified that Grace’s regular
contacts with other mayors were part of his official duties. Other area mayors
also testified that consulting with fellow mayors about city vendors was part
of each mayor’s official duties.
Thus, we conclude that the jury was entitled to find Grace’s exercise of
influence over mayors of other cities in exchange for payments from Myles and
17 18 U.S.C. § 201(a)(3).
18United States v. Parker, 133 F.3d 322, 326 (5th Cir. 1998) (quoting United States v.
Birdsall, 233 U.S. 223, 231 (1914)).
19 See United States v. Bustamante, 45 F.3d 933, 938 (5th Cir. 1995) (United States
Congressman performed an official act when he used his influence in an effort to persuade
the U.S. Air Force to award a contract to a particular private contractor); United States v.
Heard, 709 F.3d 413, 422 (5th Cir. 2013) (an employee with Federal Protective Services
performed an official act when he provided the General Services Administration with a
favorable reference for a particular contractor).
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Agent McAllister constituted an official action, and his conviction in Count 13
should not be vacated based on this argument.
ii. Improper jury instruction
Grace next argues that the district court’s jury instruction on “official
action” in Count 13 was improper because it was “overbroad.” 20
We review this ruling for abuse of discretion. 21 The first part of the jury
instruction at issue stated:
The term “official action” includes every act that is within the
range of official duty of a public official and includes any decision
or action on any question, matter, cause, suit, proceeding or
controversy, which may at any time be pending, or which may, by
law, be brought before any public official in such public official’s
capacity or in such official’s official place of trust or profit.
Grace takes issue with this part of the instruction because he claims it
has broadened the offense to include conduct that does not fall within the
statutory definition of official action under 18 U.S.C. § 201. 22 The only
language added by the district court not included in § 201 is near the beginning
of its jury instruction, where it said that an official action “includes every
20 The district court defined “official action” in its instruction in Counts 9 and 11 charging
honest services fraud, but did not do so in its instruction in Count 13. Grace objected to the
definition of “official action” for Counts 9 and 11 during the charge conference. However, an
“official action” is also required for conviction in Count 13. Because Grace objected to the
district court’s definition of this term when he had the opportunity to do so in Counts 9 and
11, his claim of the same error to the courts’ definition of the term in Count 13 was also
preserved.
21 United States v. Richardson, 676 F.3d 491, 506 (5th Cir. 2012).
22 Section 201 defines “official act” as:
[A]ny decision or action on any question, matter, cause, suit, proceeding or
controversy, which may at any time be pending, or which may by law be
brought before any public official, in such official’s official capacity, or in such
official’s place of trust or profit.
18 U.S.C. § 201(a)(3).
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action that is within the range of official duty of a public official.” This
language mirrors the Supreme Court’s opinion in United States v. Birdsall,
which stated that “[e]very action that is within the range of official duty comes
within” the purview of official action. 23 “In numerous instances, duties not
completely defined by written rules are clearly established by settled practice,
and action taken in the course of their performance must be regarded as within
[the meaning of “official action”].” 24 The language used by the district court in
its instruction is consistent with Birdsall, and it did not err when it issued this
part of the instruction. 25
Grace then shifts his focus to the end of this jury instruction, which
states, “It is not necessary that the public official have the authority to make
a binding decision on the matter in question. Rather, official acts include the
exercise of official influence through advice or recommendation to others.”
Grace’s complaint with this section of the instruction is that “influence” is too
vague, and includes both the exercise of influence by virtue of official power as
well as the exercise of influence by virtue of personal respect. This is a
23233 U.S. at 230. See also United States v. Heard, 709 F.3d 413, 421 (5th Cir. 2013) (“We
have recognized that the definition [of ‘official action’] is intended to ‘include any decision or
action taken by a public official in his capacity as such,’ and official acts are ‘not limited to
those within the official’s specific authority.’” (quoting United States v. Parker, 133 F.3d 322,
326 (5th Cir. 1998))).
24 Id. at 231.
25 We are aware of the D.C. Circuit’s position that the broad language in “Birdsall did not . .
. stand for the proposition that every action within the range of official duties automatically
satisfies § 201’s definition.” Valdes v. United States, 475 F.3d 1319, 1323 (D.C. Cir. 2007).
Assuming arguendo that the D.C. Circuit is correct, we nevertheless conclude that the district
court here did not abuse its discretion in light of the fact that it employed § 201’s specific
language regarding the type of action that falls within the term “official action”—i.e., “any
decision or action on any question, matter, cause, suit, proceeding or controversy, which may
at any time be pending, or which may by law be brought before any public official, such
official’s official capacity.” § 201(a)(3) (emphasis added). Moreover, as we explained above,
Grace’s actions fit comfortably within the statutory definition of “official action.”
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meritless argument. The instruction itself describes only “official influence”;
there is no room for an interpretation which would include personal influence.
c. Grace’s conviction in Count 8
Grace argues this conviction should be vacated due to the erroneous
admission of Myles’s lay opinion testimony. 26 Grace was convicted in Count 8
for bribery involving programs which receive federal funds, in violation of 18
U.S.C. § 666. This conviction involves the Real Estate Scheme, 27 in which he
and Myles participated in ongoing negotiations regarding the sale and
development of two properties in St. Gabriel: a 17-lot property which Grace
owned personally (the “Personal Property”), and a larger, 90-lot property which
was owned by the City (the “City Property”). Myles first approached with
overtures about purchasing the City Property. During the course of the
negotiations, Grace attempted to convince Myles to purchase the Personal
Property. As an incentive to do so, Grace would give Myles the opportunity to
purchase and develop the City Property without having to endure the public
bidding process. Also during the negotiations, Grace offered to funnel money
from various federal government programs to Myles in exchange for
purchasing the Personal Property. Grace provided Myles with backdated
letters which falsely represented the zoning of the properties to help Myles
secure a $900,000 loan from a bank. Grace also accepted various cash
payments from Myles throughout this time, and offered to use his influence as
26 Grace also takes issue with the testimony of FBI Special Agent Tonja Sablatura. Grace
objected to that part of Sablatura’s testimony which was relevant to Count 8, and the district
court sustained the objection. Therefore, by the time the case went to the jury, the district
court had directed the jury to disregard the agent’s testimony as it related to this count, so
any error was harmless because juries are presumed to follow instructions. See, e.g., Wllogix
v. Accenture, L.L.P., 716 F.3d 867, 876 (5th Cir. 2013).
27This scheme pre-dated the Cifer scheme which forms the factual basis for Counts 9, 11,
and 13.
15
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Mayor to make Myles a minority owner in a proposed racetrack and casino
truck stop. Neither project was realized.
Grace argues that Myles’s testimony was improper because it was
unhelpful to the jury since Grace’s statements were easily understood without
the aid of additional interpretation.
Where a party properly objects before the district court, this court
reviews the admissibility of lay opinion testimony for abuse of discretion. 28
To be admissible under Rule 701 of the Federal Rules of Evidence, a lay
opinion must be rationally based on the perception of the witness and helpful
to a clear understanding of the witness’ testimony or the determination of a
fact at issue. 29 “[T]he distinction between lay and expert witness testimony is
that lay testimony ‘results from a process of reasoning familiar in everyday
life,’ while expert testimony ‘results from a process of reasoning which can be
mastered only by specialists in the field.’” 30 “A lay opinion must be based on
personal perception, must be one that a normal person would form from those
perceptions, and must be helpful to the jury.” 31
The district court explained why it allowed Myles to testify about his
understanding of Grace’s statements as follows:
In this case, the jury’s understanding of Grace’s recorded
statements to Myles would be greatly assisted by Myles’ testimony
concerning such statements. Grace appears to the Court to be a
savvy and experienced politician, based on evidence presented so
far, with a rather savvy and experienced knack for engaging in off-
the-record conversations and the use of “sign language.”
28 United States v. El-Mezain, 664 F.3d 467, 511 (5th Cir. 2011).
29 Fed. R. Evid. 701.
30United States v. Ebron, 683 F.3d 105, 136–37 (5th Cir. 2012) (quoting United States v.
Yanez Sosa, 513 F.3d 194, 200 (5th Cir. 2008)).
31 Id. (citing United States v. Riddle, 103 F.3d 423, 428 (5th Cir. 1997)).
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While discussing the so-called corrupt transactions, based on the
evidence presented, Grace appears to be keenly aware of the
possibility that law enforcement may, in fact, be monitoring his
conversations. As a result, these purportedly clear statements by
the defendant, Grace, are anything but clear when put into proper
context.
Grace appears to have practiced and refined the art of solicitation
where the words out of his mouth are not always intended to match
their intended and purportedly clear meaning.
The record supports the district court’s reasons for admitting Myles’s lay
opinion testimony. Because Grace’s statements “did not always speak for
themselves,” Myles’s testimony on the true meaning of these statements was
helpful to the jury’s understanding of this evidence. 32 Moreover, because
Myles was a participant in the conversations, and he testified to his
understanding of the communications, his testimony is “rationally based on his
perceptions.” 33 The district court therefore did not abuse its discretion in
admitting Myles’s testimony.
32 See United States v. Flores, 63 F.3d 1342, 1359 (5th Cir. 1995). The following is an example
of Myles’s testimony relating to his recorded conversations with Grace:
Q [to Myles]: All right. On this clip here, when Mayor Grace says, “We can
talk. We ain’t got that much tricky business to talk about,” then goes on to say,
“But I’m just letting you know why I say what I say, you know, what do you
understand him to be telling you here?”
A [From Myles]: Well the only tricky business we got is that he - - he told me
that, basically, if I wanted to play, if I gave him $170,000, then I got the right
to do the other thing [the City Property]. That’s the only business Mayor Grace
and I have at this time that’s tricky business.
But when he says - - and you have to look at the totality of it. He’s just talked
about wire. He’s just talked about “I don’t talk in the car.” Here you see him
saying, “I’m just letting you know why I say what I say.”
Mayor Grace is a strong leader, and so you’ll see that he thinks that I’m naïve,
he thinks I’m green, and so he’s letting me know why he say certain things.
Because you’ll see later on he may say one - - he may preach one thing, but he
don’t practice it. So he’s kind of letting me know how he operates.
33 United States v. Parsee, 178 F.3d 374, 379–80 (5th Cir. 1999) (citing Flores, 63 F.3d at
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d. Grace’s conviction in Count 1
Finally, Grace contends that reversal of his conviction in Counts 8, 9, 11,
and 13 requires that his RICO conviction in Count 1 be reversed because the
jury would not have found him to have committed multiple Racketeering Acts.
This argument hinges upon our reversal of Grace’s convictions in the other
Counts. Because we affirm those convictions, this argument fails.
III.
For his last issue, Grace challenges the sentence imposed by the district
court, claiming it erred in calculating the amount of loss for the EPA and
Private Investor Letters at $3 million each. In support of this argument, Grace
points to an almost identical case from this court, United States v. Nelson. 34
Nelson involved a related FBI undercover operation to the operation in
Grace’s case. This court vacated the defendant’s sentence because of an error
in the intended loss calculation for the drafting of two letters of support, one to
the EPA and one to private investors. 35 These letters are almost identical to
the EPA and Private Investor Letters in the instant case. Based on Nelson’s
belief that the letter would “assist the Cifer folks” in obtaining grants, the
district court in Nelson valued the intended loss of the EPA letter at $4 million
and the private investor letter at $2 million. On appeal, this court determined
that those calculations were incorrect. As to the EPA letter, the court found
there was “insufficient evidence to adequately differentiate between legitimate
funding Cifer could have received from the EPA, and any benefits that Nelson
intended to stem from this false statement in his letter that he had met with
1342).
34 732 F.3d 504 (5th Cir. 2013).
35 Id. at 521–24.
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other mayors regarding Cifer and similar projects.” 36 The court in Nelson
concluded that this was a case “in which the amount of loss cannot reasonably
be determined, and it may therefore be more appropriate to use ‘the gain that
resulted from the offense as an alternative measure of loss.’” 37 The court
posited that the “most appropriate valuation of the EPA letter may be the
amount Nelson received for writing it,” 38 which was $10,000. The court also
vacated the district court’s intended loss calculation of $2 million for the
private investor letter based on similar reasons. 39
The district court’s intended loss calculation in Grace’s case contains
similar flaws. For the EPA Letter, the intended loss calculation of $3 million
is based on a statement by an FBI Agent to Grace that he was “gonna get . . .
3 to 4 million dollars per city” in grants as a result of the Letter. Just as in
Nelson, the Letter was not a grant application and did not specify a requested
grant amount. Grace was paid $1,000 to draft the EPA Letter. For the Private
Investor Letter, the intended loss calculation of $3 million was based on an
agent’s statement to Grace that the Letter would be used to raise $2–3 million
in capital. Again, the Letter did not specify a requested amount. Grace was
paid $8,000 in exchange for providing the Letter.
Thus, we vacate the district court’s sentence and remand to the district
court for a recalculation of the appropriate loss amount.
36 Id. at 522.
37 Id. (citing U.S. SENTENCING GUIDELINES § 2B1.1, cmt. 3(B)).
38 Id. at 522–23.
39Id. at 524 (“Because we have concluded that a loss recalculation for the EPA letter is
appropriate on remand, and because the district court’s reasoning with regard to the private
investor letter relied in part on Nelson’s general expectation to generate ‘a large sum of
money,’ we deem that closer scrutiny is advisable regarding the valuation of the private
investor letter.”).
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IV.
For the foregoing reasons, we AFFIRM the conviction, but VACATE the
sentence and REMAND this case for resentencing in light of this opinion.
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