George Ryan v. United States , 688 F.3d 845 ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 10-3964
G EORGE H. R YAN S R.,
Petitioner-Appellant,
v.
U NITED S TATES OF A MERICA,
Respondent-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 10 C 5512—Rebecca R. Pallmeyer, Judge.
On Rem and from
the Supreme Court of the United States
A RGUED JULY 20, 2012—D ECIDED A UGUST 6, 2012
Before E ASTERBROOK, Chief Judge, and W OOD and
T INDER, Circuit Judges.
E ASTERBROOK, Chief Judge. George Ryan, formerly
Secretary of State and then Governor of Illinois, was
convicted of violating RICO (the Racketeer Influenced
and Corrupt Organizations Act), the mail-fraud statute,
2 No. 10-3964
the Internal Revenue Code, and a law forbidding lies to
federal investigators. His convictions and sentence were
affirmed on appeal. United States v. Warner, 498 F.3d 666,
rehearing en banc denied, 506 F.3d 517 (7th Cir. 2007),
cert. denied, 553 U.S. 1064 (2008).
The judge told the jury that it could convict Ryan of
mail fraud if he either accepted bribes or concealed
receipt of payments that created a conflict of interest. The
theory behind the second method of conviction was
that the state had an intangible right to Ryan’s honest
services, and that secret payments interfered with the
state’s enjoyment of that right even if Ryan did not
take the money in exchange for decisions over which
he had control on behalf of the state. The instructions
were accurate statements of the law under 18 U.S.C.
§1341 and §1346, as this court understood the mail-fraud
offense at the time. See United States v. Bloom, 149 F.3d
649 (7th Cir. 1998). But in Skilling v. United States, 130
S. Ct. 2896, 2932–33 (2010), the Supreme Court disagreed
with Bloom. It held that only bribery or kickbacks
can be used to show honest-services fraud. Id. at 2931.
Ryan then asked for collateral relief under 28 U.S.C.
§2255. He did not contest the lying or tax convictions
but did challenge the mail-fraud and RICO convictions.
RICO makes it a crime to operate an organization (here,
the state of Illinois) through a pattern of predicate
crimes. 18 U.S.C. §1962(d). The indictment alleged that
mail frauds constituted the predicate crimes; thus a
defect in the mail fraud convictions could vitiate the
RICO conviction as well. The United States agreed with
No. 10-3964 3
Ryan that his petition was timely—waiving any defense
under §2255(f)—and did not contend that there is any
difference between the sort of review available on a
petition under §2255 and the kind available on direct
appeal. Skilling arose on direct appeal, and the Court
remanded with instructions to determine whether the
error was harmless. 130 S. Ct. at 2934. See also Black v.
United States, 130 S. Ct. 2963, 2970 (2010). Ryan asked
the district court to engage in harmless-error analysis
under §2255 as well. The United States did not disagree
with Ryan that a harmless-error inquiry was appro-
priate, though it stoutly argued that the error was in-
deed harmless—as the district court held in a thorough
opinion. 759 F. Supp. 2d 975 (N.D. Ill. 2010).
At oral argument this court questioned whether the
same standard should be used on direct appeal and
collateral attack. We directed the parties to file supple-
mental memoranda concerning that subject. Once again
the United States failed to contend that the standards
differ. We concluded, however, that the standards are
materially different, and that on collateral review the
appropriate question is whether the evidence was suf-
ficient to convict under the correct instructions. We
held that the record contains more than enough evi-
dence to convict Ryan under the legal standards
articulated in Skilling and affirmed the district court’s
decision. 645 F.3d 913 (7th Cir. 2011).
The Supreme Court held Ryan’s petition for certiorari
until it decided Wood v. Milyard, 132 S. Ct. 1826 (2012),
which presented questions concerning a court’s power,
4 No. 10-3964
in a case concerning collateral review of a criminal convic-
tion or sentence, to decide an appeal on a ground that
the prosecutor did not advance. The opinion in Wood
articulates several conclusions: (1) that a court of ap-
peals is entitled to deny collateral relief on a procedural
ground that the prosecutor has forfeited by overlooking
it, but not on a ground that the prosecutor has waived;
(2) that the power to decide an appeal on a forfeited
ground should be used only in exceptional cases; and
(3) that a prosecutor’s considered decision to refrain
from raising a known procedural issue is waiver. The
Court then remanded Ryan’s case with instructions to
reconsider in light of Wood. 132 S. Ct. 2099 (2012).
We received position statements from the parties, see
Circuit Rule 54, and the appeal was reargued.
The United States asks us to reinstate our decision
of last year, telling us that, no matter what it said in
the memorandum filed after the first argument, it now
agrees with everything we wrote about the difference
between direct appeal and collateral review under §2255.
It maintains that the post-argument memorandum of
2011 forfeited, and did not waive, the legal principles
addressed in our opinion. The gist of the United States’
position in 2012 is that it just didn’t realize what a
strong procedural argument it had in 2011 and would
have asserted it vigorously had its lawyers then been
more astute. That does not distinguish our situation
from Wood, however; there, too, the state’s lawyers
adopted the court of appeals’ position after finally
waking up to the strength of the procedural defense.
No. 10-3964 5
The Supreme Court found a waiver in Wood because the
state knew about a potential defense and told the court
that it was not asserting it. That’s exactly what happened
here. The United States Attorney learned at oral argu-
ment that there was a potential procedural argument,
then informed the court that the argument was not
being asserted. Why a litigant comes to such a deci-
sion is irrelevant, and a mistake in reaching a decision
to withhold a known defense does not make that deci-
sion less a waiver. This court is neither authorized nor
inclined to delve into the deliberational process that
preceded a decision by the United States Attorney;
we must respect the decision announced in court. See,
e.g., In re United States, 398 F.3d 615 (7th Cir. 2005);
United States v. Zingsheim, 384 F.3d 867 (7th Cir. 2004). We
therefore turn to the harmless-error inquiry, framed as
if this were a direct appeal.
This does not mean that we have a direct appeal; the
real direct appeal was resolved in 2007. Ryan was sen-
tenced to 78 months in prison on one RICO count.
This is the only sentence he is still serving. All of the
others—60-month sentences on seven mail-fraud con-
victions, 60-month sentences on three false-statement
counts, and 36-month sentences on four tax counts—ran
concurrently with each other and with the RICO sentence,
and all have expired. Section 2255 allows a person to
contest ongoing imprisonment, and it is the single
RICO sentence that underlies Ryan’s imprisonment
today. The jury was told that, to convict Ryan on the
RICO charge, it had to find a pattern of criminality in-
cluding at least two acts of criminal mail fraud. The
6 No. 10-3964
jury convicted Ryan on seven mail-fraud counts, so if at
least two of these are valid after Skilling then the RICO
conviction is valid as well.
Ryan’s challenge to expired sentences may or may not
be moot as a technical matter. A collateral attack
begun while custody continues can continue afterward
to stave off collateral consequences. See Spencer v.
Kemna, 523 U.S. 1, 7–14 (1998). Ryan has not identified
any collateral consequences of the mail-fraud convic-
tions (such as deprivation of the right to vote or hold
office) that would not equally be required by the RICO
conviction—not to mention the three false-statement
convictions and the four tax convictions, which have
not been challenged. Even on direct appeal, courts are
free to pretermit decision about convictions producing
concurrent sentences, when the extra convictions do
not have cumulative effects. As a practical matter, the
concurrent-sentence doctrine was abrogated for direct
appeal when Congress imposed a special assessment
of $50 (now $100) for each separate felony conviction.
See Ray v. United States, 481 U.S. 736 (1987); 18 U.S.C.
§3013(a)(2). A collateral attack under §2241, §2254, or
§2255 contests only custody, however, and not fines
or special assessments.
An attempt to decide on collateral review whether each
of the seven mail-fraud convictions was valid would
smack of an advisory opinion—something that no waiver,
however deliberate, can authorize. Ryan has not argued
that the district judge would have given a lower sen-
tence on the RICO count had she believed, say, that
No. 10-3964 7
only four of the mail-fraud convictions represented
bribes, and the other three represented undisclosed
conflicts of interest. After all, a district judge may base
a sentence on established misconduct whether or not
that misconduct has led to a conviction. We therefore do
not think that Wood poses an obstacle to confining our
attention today to the validity of the RICO count,
though we add that, before Ryan’s mail-fraud sentences
expired, the district judge gave careful consideration
to each of the seven and found all of them valid
after Skilling.
The district judge told the jury that it could find
criminal mail fraud (for purposes of both RICO and the
seven stand-alone charges) if it found either (a) that
Ryan took bribes (private payment for official services
rendered, where the payment was designed to influence
those official acts) or (b) that Ryan accepted undisclosed
payments that created a conflict of interest, even though
he did not do anything in exchange. The first possibility
survived Skilling, and the second did not. Ryan main-
tains that the jury may have convicted him on (b) alone.
Whenever the law changes in this fashion after a jury’s
verdict, it is difficult to reconstruct what would have
happened if the instructions had been different; the
judge’s and the litigants’ understanding of the law at the
time is bound to influence how they present and argue
a case, as well as how the jury evaluates it. But Skilling
and Black said that harmless-error analysis remains pos-
sible, so we must reconstruct as best we can.
Mail-fraud convictions were reaffirmed on remand
in both Skilling and Black. See United States v. Skilling,
8 No. 10-3964
638 F.3d 480 (5th Cir. 2011); United States v. Black, 625 F.3d
386 (7th Cir. 2010). Like the district judge, we conclude
that at least two of them remain valid for Ryan too, in
the strong sense that the jury must have found bribery
and not just a failure to disclose a conflict of interest.
We have three principal reasons.
First, Ryan was convicted on four tax counts, which
involved omitting income from tax returns. Bribes are
“income” under the Internal Revenue Code; gifts from
friends are not income. The jury was so instructed. The
jury also was told that it should acquit Ryan if he
believed that the money he received was a gift, rather
than a payment for favors delivered in return, even if
his belief was wrong. By convicting on the tax counts,
the jury found that Ryan knowingly accepted payment
in exchange for official acts—that he was bribed, rather
than just that he failed to disclose gifts to the public.
Second, both sides argued this case to the jury as one
about bribery. The prosecutor produced evidence that
Lawrence Warner, Ryan’s co-defendant, provided him
and his family with extensive benefits. The district judge
summarized:
[T]he benefits flowing from Warner to Ryan in-
cluded favorable construction and insurance
benefits to Ryan’s family members; investments
in Ryan’s son’s business; and favorable financial
treatment of Comguard, a business involving
Ryan’s brother. As Ryan himself notes, Warner
wrote a $3,185 check to pay for the band that
played at Ryan’s daughter’s wedding and held
No. 10-3964 9
two major fund-raisers for Ryan, raising a total
of $250,000. The government also provided cir-
cumstantial evidence that Ryan received cash
from Warner and others.
759 F. Supp. 2d at 997–98 (citations to the record omitted).
These payments underlay three of the mail-fraud con-
victions (Counts 2, 3, and 8). Ryan’s lawyers vigorously
argued that these benefits were tokens of friendship,
and that he did nothing in return for them. If some
of his acts assisted Warner, or Warner’s associates, that
happened only because Ryan concluded in the exer-
cise of independent judgment that the public interest
required the actions favorable to Warner. The prosecutor
might have replied that, even if that was true, the jury
still should convict because Ryan did not disclose the
payments. But that’s not what the prosecutor argued.
He told the jury that it needed to find that Ryan re-
ceived improper “benefits”—and in context these refer-
ences to “benefits” meant “bribes.” In other words, the
prosecutor did not try to take advantage of the portion
of the instructions that Skilling later disapproved. Both
prosecution and defense presented this case to the jury
as a dispute about whether Ryan took bribes. The
verdict shows that the jury found in the prosecu-
tion’s favor.
The line of reasoning in the preceding paragraph per-
suaded the district judge—who also conducted the six-
month trial and thus had the best perspective on what
practical issues influenced the verdict—as it also
persuades us. Ryan maintains, however, that the pros-
10 No. 10-3964
ecutor did not set this up as a binary choice: find bribery
and convict, or find gift (or mistake) and acquit. The
prosecutor told the jury that it did not need to find a
quid pro quo in order to convict. And that, Ryan main-
tains, means that the prosecutor was arguing that the
jury could convict based on secrecy rather than bribery.
We think that this misunderstands what the pros-
ecutor meant by “quid pro quo.” A dispute developed
at trial about whether the prosecution had to show that
a particular payment from Warner to Ryan matched a
particular decision that Ryan made to confer benefits
on Warner. The prosecutor denied that matching was
necessary and contended that taking money in ex-
change for a promise (explicit or reasonably implied) to
deliver benefits in return is bribery; it isn’t necessary
to show that Warner’s paying for the band at the
wedding could be matched against a particular decision
Ryan made in exchange. The district judge told the jury
that the prosecutor was right about this. Thus when the
prosecutor denied that it was necessary to show a quid
pro quo, he was not arguing that it was unnecessary
to show bribery; he was arguing that Ryan’s lawyers
had defined bribery too narrowly. This aspect of the
prosecutor’s argument did not invite a conviction based
on nondisclosure, rather than the receipt of bribes.
Our third principal reason for finding the error in the
jury instructions harmless comes from analysis of the
arguments pro and con about particular counts. What
we have said so far is general, but there were detailed
submissions to the jury on each mail-fraud count (and
No. 10-3964 11
thus on each potential predicate crime under RICO). We
agree with the district judge’s analysis. Rather than
restate it, we reproduce the discussion concerning
Count 2, the first of the mail-fraud counts (759 F. Supp. 2d
at 998–99; citations omitted):
Count Two of the indictment charged that the
mailing of a check from the State of Illinois to
American Detail & Manufacturing Co. (“ADM”)
was in furtherance of the scheme to defraud. The
evidence at trial showed that Ryan intervened on
Warner’s behalf in order to get James Covert, head
of the Secretary of State’s vehicle-services divi-
sion, to withdraw contract specifications that
might have caused ADM to lose a valuable ve-
hicle registration stickers contract. At the time,
ADM was Warner’s client, and prior to Ryan’s di-
rect intervention, Warner represented to Covert
that he had “authority to speak for Secretary Ryan”
and wanted ADM to retain the contract.
In ruling on the sufficiency of the evidence in
support of this count, the court noted that jurors
had been instructed that if Ryan had acted in good
faith—he claimed that his instructions to Covert
were motivated by legitimate law-enforcement
concerns—they should not convict him on this
count. The jurors convicted Ryan despite this
instruction, and the court observed that “Ryan’s
direct intervention on Warner’s behalf, and his
attempt to conceal his intervention by directing
Covert to withdraw the specifications quietly,
12 No. 10-3964
amply support the jury’s verdict with respect
to Count Two.”
Paragraph 3 of the summary indictment de-
scribes the Warner transaction, charging that it
was part of the scheme that Ryan “performed and
authorized official actions to benefit the finan-
cial interests of . . . Warner . . . . The official
actions Ryan performed and authorized in-
cluded: Awarding, and authorizing the award of,
contracts and leases, and intervening in govern-
mental processes related thereto and causing
contractual payments to be made to benefit the
financial interests of defendant Warner.” Para-
graph 4 describes the receipt of benefits by Ryan,
explaining that “[i]t was further part of the
scheme that defendant Ryan and certain third
parties affiliated with Ryan received personal
and financial benefits from defendant Warner . . .
while defendant Ryan knew that such benefits
were provided with intent to influence and
reward Ryan in the performance of official acts.”
In order to convict Ryan on Count Two, the
jurors had to believe one of three theories: either
(1) Ryan concealed a conflict-of-interest related
to the ADM contract; (2) Ryan misused his office
for private gain in discussing the contract with
Covert; or (3) Ryan accepted benefits (bribes) from
Warner in exchange for his intervention. The
first theory does not stand on its own. The only
conflict of interest presented to the jury relating
No. 10-3964 13
to ADM was Ryan’s relationship with Warner
and Warner’s involvement in this contract. There-
fore, if the jury found that Ryan concealed a con-
flict of interest (theory (1)), it necessarily had to
find that he had misused his office for private
gain (theory (2)), or that he had accepted benefits
from Warner in exchange for favors relating to
ADM (theory (3)). The misuse of office theory
(2) might stand alone if the jury believed that
Ryan decided for some illegitimate reason—
unrelated to the benefits Warner provided to
Ryan—to coerce Covert into withdrawing the
specifications. But the only motivations Ryan
had to interfere with this contract were for legiti-
mate law-enforcement reasons, as the defense
suggested, or to compensate Warner for the
stream of benefits he provided, as the Govern-
ment urged. The jury rejected the good faith mo-
tive. Accordingly, the jury could only have con-
victed him on this count if it believed that his
conduct was a response to the stream of benefits.
Ryan suggests that the only “private gain” he
received for his intervention in this transaction
was the approval of his friend. As explained
earlier, however, the jurors must have rejected
this argument; they were specifically instructed
that if the benefits Ryan received from Warner
were merely the proceeds of a friendship, they
could not be the basis for a conviction. The court
concludes that the jury must have found Ryan
accepted gifts from Warner with the intent to
influence his actions.
14 No. 10-3964
The Government did present the awarding of
contracts and leases in these terms. In closing,
the Government urged:
George Ryan, as a public official, had a duty
to provide honest services to the people of the
state of Illinois who had elected him. And
the evidence in this case has shown that he
repeatedly violated that duty. He violated
that duty by giving state benefits, like con-
tracts and leases, to his friends—Warner,
Swanson, Klein—while at the same time
they were providing various undisclosed
financial benefits to him and his family and to
his friends. The benefits included free vaca-
tions, loans, gifts, campaign contributions,
as well as lobbying money that Ryan assigned
or directed to his buddies. In short, Ryan
sold his office. He might as well have put up
a ‘for sale’ sign on the office.
Further, the Government presented a valid “stream
of benefits,” “retainer,” or “course of conduct”
bribery theory when it explained that
this is not a case in which a public official
had a specific price for each official act that he
did, like a menu in a restaurant where you
pick an item and it has a particular price. The
type of corruption here—that type of corrup-
tion where you give me this, I will give you
that, is often referred to as a quid pro quo. The
corruption here was more like a meal plan
No. 10-3964 15
in which you don’t pay for each item on the
menu. Rather, there is a cost that you pay, an
ongoing cost, and you get your meals. And
for Warner, Swanson, and Klein it was not a
cash bar. This was an open bar during Ryan’s
terms as secretary of state and as governor.
While Ryan is correct that the Government also
suggested Ryan could be convicted based on a
conflict of interest, as explained earlier, that was
not a tenable independent theory that would
have supported conviction of Ryan on Count Two.
The district court went on to conclude that the other two
mail-fraud counts related to Warner (Counts 3 and 8) must
be analyzed identically. 759 F. Supp. 2d at 1000. And with
this we reach three, more than enough to sustain the
RICO conviction and sentence.
The district judge conducted a similar analysis for
each of the remaining mail-fraud counts, id. at 1000–04,
and the application of the mail-fraud theories to
finding predicate offenses under RICO, id. at 1004. Rep-
etition in this opinion is unnecessary. We don’t con-
sider these other four counts, but readers should not
infer that we disagree with any part of the district
court’s analysis. We just think it unnecessary, given
that the sentences for all seven mail-fraud convictions
have expired.
Our opinion last year held, 645 F.3d at 918–19, that the
evidence is sufficient to support a finding of mail fraud,
on all counts, under Skilling. The Supreme Court did not
instruct us to reconsider that portion of our decision.
16 No. 10-3964
The district court’s order denying Ryan’s motion for
relief under §2255 therefore is
AFFIRMED .
8-6-12