United States v. James Baxter, II , 761 F.3d 17 ( 2014 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 9, 2014 Decided August 8, 2014
No. 12-3074
UNITED STATES OF AMERICA,
APPELLEE
v.
JAMES ODELL BAXTER, II,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:03-cr-00516-1)
Cheryl J. Sturm argued the cause and filed the briefs for
appellant.
Peter S. Smith, Assistant U.S. Attorney, argued the cause
for appellee. With him on the brief were Ronald C. Machen Jr.,
U.S. Attorney, and Elizabeth Trosman and Sherri Berthrong,
Assistant U.S. Attorneys. Suzanne G. Curt, Assistant U.S.
Attorney, entered an appearance.
Before: GARLAND, Chief Judge, SRINIVASAN, Circuit
Judge, and WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Chief Judge GARLAND.
2
GARLAND, Chief Judge: James O. Baxter, II was convicted
on multiple counts of defrauding the Washington Teachers
Union. We have previously described the charges against him
as arising from “a seven-year orgy of greed,” during which he
and others “stole millions of dollars” from the union. United
States v. Hemphill, 514 F.3d 1350, 1353 (D.C. Cir. 2008).
Baxter now appeals the district court’s denial of his motion to
vacate his convictions pursuant to 28 U.S.C. § 2255. Although
we grant Baxter’s motion for a certificate of appealability to
consider two of his three challenges, we conclude that he is not
entitled to relief and therefore affirm the judgment of the district
court.
I
The following description of the facts is taken from the trial
record and from this court’s decision on direct review of
Baxter’s convictions, Hemphill, 514 F.3d at 1353-54, 1361-63.
In 1994, the Washington Teachers Union (WTU) elected
new leadership, including Barbara Bullock as president, Esther
Hankerson as vice president, and James O. Baxter, II as
treasurer. In 1996, Bullock hired Gwendolyn Hemphill as her
executive assistant and WTU office manager. At all relevant
times, Baxter was the WTU’s treasurer. As treasurer, one of his
duties included countersigning checks (also signed by either
Bullock or Hankerson) for the WTU account. Bullock, Baxter,
and Hemphill, with the help of other coconspirators, defrauded
the WTU of millions of dollars between 1995 and 2002. See
Hemphill, 514 F.3d at 1353-54.
The fraud was effectuated in several ways. One involved
WTU American Express cards, issued to Bullock, Hankerson,
and Baxter, which the conspirators used to charge thousands of
dollars in personal expenses. Hemphill, 514 F.3d at 1353-54.
3
Bullock’s spending was particularly extravagant. It totaled more
than $1.2 million and included custom-made clothing,
silverware, crystal, and a piano. J.A. 604, 607-17, 917-19
(Bullock Test.).1 Some of the credit card bills were paid directly
with WTU checks signed by Bullock and Baxter. Id. at 612-14,
650.
In addition, Hemphill wrote and Baxter signed WTU checks
to Bullock’s driver, Leroy Holmes, for amounts far in excess of
Holmes’ salary. Holmes then cashed the checks, giving some
money to Hemphill and depositing other money in Bullock’s
personal account. Hemphill, 514 F.3d at 1354. Similarly,
Hemphill wrote and Baxter signed checks to a shell corporation,
Expressions Unlimited, that Hemphill’s son-in-law, Michael
Martin, and his friend, Errol Alderman, created. See Hemphill,
514 F.3d at 1363; J.A. 1347-49, 1364-68 (Martin Test.). Martin
deposited some of the checks in Expressions Unlimited’s
account and cashed others. Thereafter, he and Alderman wrote
checks to Bullock on Expressions’ account, which they
deposited in her personal account along with the money from the
checks they had cashed. J.A. 1354-55, 1367-70 (Martin Test.).
Bullock then wrote checks on her personal account to pay some
of the American Express bills. J.A. 668-69 (Bullock Test.).
Apparently she did so to make it seem that she was paying for
personal expenditures out of her personal account, when in fact
the money Bullock used came from the union.
Baxter personally benefitted from the fraud. He wrote
several checks to himself on the WTU general account, which
he designated as “pension” payments during a period of time
when no other employee was receiving pension payments
1
When asked at trial whether it was fair to say that she liked to
shop, Bullock responded: “No, that’s not fair. I love to shop.” J.A.
601.
4
because there was no money in the WTU pension fund.
Hemphill, 514 F.3d at 1362-63; J.A. 693-95, 724-28 (Bullock
Test.). He also used union funds and the WTU credit cards to
make personal purchases, including $19,660 for Washington
Wizards basketball tickets for his and his coconspirators’
personal use, and $5,000 in art for his home. Hemphill, 514
F.3d at 1362-63.
The government also presented evidence of Baxter’s
involvement in concealing the crimes. He signed numerous
fraudulent checks to himself, Bullock, Hemphill, Holmes, and
Expressions Unlimited. Id. at 1363. In addition, he signed a
fraudulent LM-2 (an annual financial report made by the WTU
to the Internal Revenue Service) that did not include money paid
to Hemphill or Holmes, even though notes recovered from his
house recorded those payments. Id. at 1362. In Baxter’s files,
the government recovered drafts of fraudulent financial reports
that his coconspirators had faxed to him. Hemphill, 514 F.3d at
1362. One of those drafts contained handwritten notes showing
how to falsely allocate the debits -- arising from the
conspirators’ personal American Express charges -- to other
budget categories. Id. Over half a million dollars in such
charges were reclassified to the “employee benefit expense” and
“travel and meeting expense” categories on those fraudulent
financial documents. See Jury Trial Tr. 5490, United States v.
Baxter, No. 03-CR-516 (D.D.C. Aug. 10, 2005).
By early 2002, the fraud had so depleted the union’s funds
that it could not pay membership fees it owed to its parent
organization, the American Federation of Teachers (AFT). The
coconspirators then devised a scheme to make up the shortfall.
Hemphill, 514 F.3d at 1354. Under a collective bargaining
agreement that the WTU had reached with the District of
Columbia Public Schools, the WTU’s member teachers were
entitled to a pay raise. As a result, each teacher owed a
5
supplemental lump sum dues payment to the WTU. J.A. 773-74
(Bullock Test.). Properly calculated, that dues payment was not
enough to make up the shortfall, so the conspirators simply
changed that amount. Instead of deducting $16.09 in union dues
from each teacher’s paycheck, Baxter proposed deducting
$160.09 and, if discovered, passing it off as a clerical error.
Hemphill, 514 F.3d at 1354, 1362. Teachers who noticed the
discrepancy alerted the AFT, which then contacted federal
authorities. Hemphill, 514 F.3d at 1354.
After the government was alerted to the situation, the FBI
recovered evidence from Baxter’s home computer that showed
the extent of his involvement in the dues scheme, as well as in
a potential further cover-up. The WTU had sent a letter to the
District of Columbia Office of Pay and Retirement, instructing
the Office to deduct the $160.09 from the teachers’ paychecks.
An FBI computer specialist found a copy of the letter with the
$160.09 figure in Baxter’s email outbox. That letter was last
printed on April 17, 2002. But the FBI specialist found that the
letter had been saved again on September 23, 2002 -- after the
investigation began -- in Baxter’s “My Documents” file. This
time, the letter used the $16.09 amount. See Jury Trial Tr. 3836-
50, United States v. Baxter, No. 03-CR-516 (D.D.C. July 14,
2005).
A grand jury indicted Baxter, Hemphill, and James A.
Goosby (the WTU’s accountant) on November 20, 2003.
Bullock, Holmes, Martin, and Alderman all pled guilty and
testified for the government. Baxter was charged in 23 counts,
including conspiracy to commit fraud and other offenses, wire
fraud, mail fraud, making false statements, embezzlement from
a labor union, theft, money laundering, and conspiracy to
commit money laundering. J.A. 219-59. The trial against the
three defendants lasted twelve weeks. The jury acquitted
Goosby, but convicted Baxter and Hemphill on all counts.
6
Hemphill, 514 F.3d at 1354. On June 5, 2006, Baxter was
sentenced to 120 months’ imprisonment. Id.
Baxter and Hemphill appealed, and on February 8, 2008,
this court affirmed the district court’s judgment as to both
defendants on all counts. Id. at 1353. The Supreme Court
denied Baxter’s petition for certiorari on November 10, 2008,
Baxter v. United States, 555 U.S. 1020 (2008), and denied his
petition for reconsideration on January 12, 2009, Baxter v.
United States, 555 U.S. 1130 (2009).
On January 11, 2010, Baxter filed a motion to vacate his
sentence pursuant to 28 U.S.C. § 2255.2 The district judge
denied Baxter’s motion for § 2255 relief on August 28, 2012,
based on “the parties’ briefs,” “the entire record,” and the
knowledge the judge acquired from “[h]aving presided over
petitioner’s trial and sentencing.” J.A. 480-81. On November
9, 2012, Baxter applied for a certificate of appealability, which
the judge denied on January 10, 2013. J.A. 485.
Thereafter, Baxter filed a notice of appeal from the denial
of his § 2255 motion and moved for a certificate of appealability
from this court. In challenging his conviction, Baxter raises
three principal claims. First, he argues that the government
2
Section 2255 provides:
A prisoner in custody under sentence of a court established
by Act of Congress claiming the right to be released upon
the ground that the sentence was imposed in violation of the
Constitution or laws of the United States . . . may move the
court which imposed the sentence to vacate, set aside or
correct the sentence.
28 U.S.C. § 2255(a).
7
violated its obligations under Brady v. Maryland, 373 U.S. 83
(1963), when it failed to turn over evidence that Bullock
suffered from bipolar disorder. Second, he argues that his
conviction for conspiracy to commit fraud and other offenses
must be vacated because it was based on an honest-services
fraud theory that is invalid under Skilling v. United States, 561
U.S. 358 (2010). Finally, he argues that his conviction for
money laundering and conspiracy to commit money laundering
is invalid under this court’s decision in United States v.
Adefehinti, 510 F.3d 319 (D.C. Cir. 2007). We consider these
arguments in Parts II, III, and IV below.
II
Barbara Bullock pled guilty to the fraud and associated
charges that are the centerpiece of this appeal. At her January
2004 public sentencing hearing, she sought leniency on the
ground that she suffered from bipolar disorder, which she
claimed gave rise to her “obsession with shopping.” Sent’g Tr.
21 (Gov’t Supp. App’x 25), United States v. Bullock, No. 03-
CR-435 (D.D.C. Jan. 30, 2004). Baxter’s trial commenced in
May 2005, more than a year later, and Bullock testified against
him. Baxter charges that the government failed to disclose
Bullock’s bipolar disorder prior to trial, and that the failure
violated its responsibilities under Brady v. Maryland. The
government responds that Brady does not require disclosure of
the information concerning Bullock’s disorder because that
information was not material.3
3
The government also argues that the information does not fall
within the Brady rule because the government did not “withhold” or
“suppress” it, since it was part of Bullock’s testimony at her January
2004 public sentencing hearing, and the transcript was filed on the
district court’s public docket in June 2004. Gov’t Br. 14. Because we
conclude that Baxter has failed to show the information was material
8
“Unless a . . . judge issues a certificate of appealability, an
appeal may not be taken to the court of appeals from . . . the
final order in a proceeding under section 2255.” 28 U.S.C.
§ 2253(c)(1)(B). When the district judge has denied a
certificate, as the judge did here, the applicant may seek one
from the court of appeals. Fed. R. App. P. 22(b). The
Antiterrorism and Effective Death Penalty Act (AEDPA)
provides that such a certificate may issue “only if the applicant
has made a substantial showing of the denial of a constitutional
right.” 28 U.S.C. § 2253(c)(2); see Slack v. McDaniel, 529 U.S.
473, 483-84 (2000). This means that the prisoner must show,
“at least, that jurists of reason would find it debatable whether
the petition states a valid claim of the denial of a constitutional
right.” Slack, 529 U.S. at 478.
Under Brady, “the State violates a defendant’s right to due
process if it withholds evidence that is favorable to the defense
and material to the defendant’s guilt or punishment.” Smith v.
Cain, 132 S. Ct. 627, 630 (2012). “[E]vidence is ‘material’
within the meaning of Brady when there is a reasonable
probability that, had the evidence been disclosed, the result of
the proceeding would have been different.” Id. (internal
quotation marks omitted). It is the “petitioner’s burden . . . to
establish a reasonable probability of a different result.”
Strickler v. Greene, 527 U.S. 263, 291 (1999); see United States
v. Johnson, 519 F.3d 478, 488 (D.C. Cir. 2008).
Baxter has not even attempted to show how evidence of
Bullock’s bipolar disorder might have changed the outcome of
his trial. The only thing he says is that he could have used it
“effectively to impeach” her testimony, Baxter Br. 26, and that
“[b]ipolar disorder is material because it casts doubt on the
ability and willingness of Ms. Bullock to tell the truth,” id. at 43.
under Brady, we do not address this argument.
9
But he does not say how he would have used evidence of this
illness to impeach her testimony or why it would have cast doubt
on her ability or willingness to tell the truth. We have no doubt
that medical records can be the “grist for effective cross-
examination,” Reply Br. 18, but such a conclusory assertion is
insufficient to establish materiality. Cf. United States v. George,
532 F.3d 933, 937 (D.C. Cir. 2008) (holding that a district court
did not err in barring cross-examination about a witness’ bipolar
disorder because nothing in the defendant’s proffer indicated
that it “would reasonably cast doubt on her ability or willingness
to tell the truth”); id. (“Mental illness is not a generic badge of
incompetence or dishonesty.”). Bullock was extensively cross-
examined at trial, particularly on the ground that her desire for
a reduced sentence gave her a motive to inculpate Baxter, and he
does not explain what additional impeachment value her
disorder would have had.
Moreover, even if the evidence could have been used to
successfully impeach Bullock, the probability of a different
outcome depends on the context of all of the evidence offered at
trial. See Smith, 132 S. Ct. at 630. Other than declaring that
Bullock was a “crucial witness,” Baxter Br. 43, Baxter does not
explain why her impeachment would likely have resulted in a
different verdict. To the contrary, the evidence of Baxter’s guilt
was overwhelming, even if Bullock’s testimony had been
compromised. See Hemphill, 514 F.3d at 1362-63. Baxter’s
mere declaration to the contrary is insufficient to meet his
burden.4 Accordingly, we conclude that Baxter has not stated a
4
Baxter makes the related claim that his trial counsel was
ineffective under Strickland v. Washington, 466 U.S. 668 (1984), for
failing to discover that Bullock suffered from bipolar disorder.
Because one prong of the Strickland test requires a defendant to show
prejudice from any alleged ineffectiveness of counsel, this claim fails
for the same reason his Brady claim fails. See Strickland, 466 U.S. at
10
Brady claim that “jurists of reason” would find debatable, and
we therefore deny his request for a certificate of appealability.5
III
Baxter argues that his conviction on Count 1 was invalid in
light of Skilling v. United States, 561 U.S. 358 (2010). Count 1
charged Baxter and others with conspiracy to commit offenses
against the United States, in violation of 18 U.S.C. § 371. The
count charged the following offenses as among the objects of the
conspiracy: (1) mail and wire fraud to obtain money and
property, in violation of 18 U.S.C. §§ 1341 and 1343; and (2)
mail and wire fraud to deprive the WTU of its intangible right
to the defendants’ honest services, in violation of 18 U.S.C.
§§ 1341, 1343, and 1346.6 The judge instructed the jury that it
694 (“[T]he appropriate test for prejudice finds its roots in the test for
materiality of exculpatory information not disclosed to the defense by
the prosecution . . . .”); Montgomery v. Bobby, 654 F.3d 668, 679 n.4
(6th Cir. 2011) (“[I]t is well settled that the test for prejudice under
Brady and Strickland is the same.” (internal quotation marks
omitted)).
5
Baxter also contends that the district court abused its discretion
in failing to grant an evidentiary hearing to develop his Brady claim.
A “district judge’s decision not to hold an evidentiary hearing before
denying a § 2255 motion is generally respected as a sound exercise of
discretion when the judge denying the § 2255 motion also presided
over the trial in which the petitioner claims to have been prejudiced.”
United States v. Morrison, 98 F.3d 619, 625 (D.C. Cir. 1996); accord
United States v. Toms, 396 F.3d 427, 437 (D.C. Cir. 2005). We see no
abuse of discretion and no warrant for granting a certificate of
appealability on this issue.
6
As the Supreme Court explained in Skilling: “The mail- and
wire-fraud statutes criminalize the use of the mails or wires in
11
could find Baxter guilty if the government proved he conspired
to commit any of the charged object offenses. J.A. 1528.7 And
the verdict form allowed the jury to return a general verdict on
Count 1, without specifying upon which object it had based the
conspiracy conviction. See J.A. 254.8
In Skilling, the Supreme Court held that the honest-services
fraud statute, which prohibits a “scheme or artifice to deprive
another of the intangible right of honest services,” 18 U.S.C.
§ 1346, “proscribe[s] bribes and kickbacks -- and nothing
more.” Skilling, 561 U.S. at 410. The government had neither
alleged nor proved that Skilling received bribes or kickbacks.
Id. at 413. “Because the indictment alleged three objects of the
conspiracy -- honest-services wire fraud, money-or-property
wire fraud, and securities fraud,” the Court held that “Skilling’s
conviction [wa]s flawed.” Id. at 414. As the Court noted,
furtherance of ‘any scheme or artifice to defraud, or for obtaining
money or property by means of false or fraudulent pretenses,
representations, or promises.’ 18 U.S.C. § 1341 (mail fraud); § 1343
(wire fraud). The honest-services statute, § 1346, defines ‘the term
“scheme or artifice to defraud”’ in these provisions to include ‘a
scheme or artifice to deprive another of the intangible right of honest
services.’” 561 U.S. at 369 n.1.
7
“[T]he government is entitled to prove criminal acts in the
disjunctive, notwithstanding that the indictment charges them in the
conjunctive.” United States v. Coughlin, 610 F.3d 89, 106 (D.C. Cir.
2010) (citing Griffin v. United States, 502 U.S. 46, 56-60 (1991)).
8
Although the parties discuss Count 1 as if it merely charged a
conspiracy to commit fraud (by wire and mail), it also charged as
objects of the conspiracy embezzlement from a labor organization, in
violation of 29 U.S.C. § 501(c), and making false statements in
violation of 18 U.S.C. § 1001. Because the parties do not focus their
arguments on these objects, we do not discuss them.
12
“constitutional error occurs when a jury is instructed on
alternative theories of guilt and returns a general verdict that
may rest on a legally invalid theory.” Id. (citing Yates v. United
States, 354 U.S. 298 (1957)). The Court did not vacate
Skilling’s conviction, however, because errors of this “variety
are subject to harmless-error analysis.” Id. Instead, it remanded
the case for the court of appeals to determine whether the error
was harmless. Id. at 414 & n.46.
As in Skilling, it is undisputed that the scheme at issue in
this case involved neither bribes nor kickbacks, and that the
judge did not instruct the jury that honest-services fraud was so
limited. Moreover, like Skilling’s jury, Baxter’s was instructed
on alternative theories of guilt and returned a general verdict on
Count 1 that may have rested on the legally invalid honest-
services fraud theory. Accordingly, Baxter maintains that his
conviction on Count 1 constituted constitutional error under
Skilling.9
1. As we noted above, Baxter may not take an appeal on this
issue unless we grant a certificate of appealability, and we may
do so only if “jurists of reason would find it debatable whether
the petition states a valid claim of the denial of a constitutional
9
Baxter contends that his convictions on the counts of substantive
mail and wire fraud violations were also erroneous because they were
tainted by the invalidity of the Count 1 conspiracy count. That is so,
he says, because on those counts the trial court instructed the jury that
it could convict him of foreseeable offenses committed by his
coconspirators during the course of the conspiracy, pursuant to
Pinkerton v. United States, 328 U.S. 640 (1946). J.A. 1529. We do
not reach this contention in light of the disposition we reach on his
challenge to Count 1.
13
right.” Slack, 529 U.S. at 478.10 Baxter points to Skilling as
demonstrating that his trial was tainted by constitutional error
because of the possibility that the jury rested its verdict on the
honest-services fraud theory of conspiracy. While the
government contends that the court’s instruction on honest-
services fraud amounted to harmless error because the flawed
instruction did not have a “substantial and injurious effect or
influence in determining the jury’s verdict,” Hedgepeth v.
Pulido, 555 U.S. 57, 58 (2008) (internal quotation marks
omitted), we conclude that jurists of reason would find debatable
whether the submission of the invalid honest-services theory to
the jury was harmless. We therefore grant the certificate of
appealability.
2. Although we grant a certificate of appealability, there is
another hurdle that Baxter must overcome before we can address
the merits of his appeal. Baxter did not challenge his conviction
on the honest-services fraud theory at trial or on direct appeal.
As a consequence, he “procedurally defaulted the claim he now
10
Slack also held that, “when the district court denies a habeas
petition on procedural grounds without reaching the prisoner’s
underlying constitutional claim, a [certificate of appealability] should
issue . . . if the prisoner shows, at least, that jurists of reason would
find it debatable whether the petition states a valid claim of the denial
of a constitutional right, and that jurists of reason would find it
debatable whether the district court was correct in its procedural
ruling.” Id. (emphasis added). Although there was a procedural
default in this case, see infra Part III.2, the district court did not deny
the § 2255 motion on procedural grounds, and we therefore consider
only the first prong of the Slack test in deciding whether to grant a
certificate of appealability.
14
presses on us.” Bousley v. United States, 523 U.S. 614, 621
(1998); see id. at 620-22.11
In Bousley, the Court explained that, “[w]here a defendant
has procedurally defaulted a claim by failing to raise it on direct
review, the claim may be raised in habeas only if the defendant
can first demonstrate either [1] ‘cause’ and actual ‘prejudice,’
. . . or [2] that he is ‘actually innocent.’” Id. at 622 (citations
omitted); see also McQuiggin v. Perkins, 133 S. Ct. 1924, 1931-
32 (2013). Baxter does not argue that there was a “cause” that
excused the procedural default.12 Instead, he relies on the
“actual innocence” exception, contending that his innocence of
fraud on the honest services theory suffices to excuse his
procedural default.
11
The government does not assert that Baxter also defaulted his
claim on timeliness grounds, as it does with respect to his Adefehinti
claim, see infra Part IV. Rather, it concedes that Baxter’s claim based
on Skilling, which was not decided until June 2010, was timely. Gov’t
Br. 4 & n.4.
12
The fact that the Supreme Court had not yet decided Skilling at
the time of Baxter’s 2005 trial or 2008 direct appeal is insufficient to
demonstrate “cause.” As the Court explained in Bousley, “[w]hile we
have held that a claim that ‘is so novel that its legal basis is not
reasonably available to counsel’ may constitute cause for a procedural
default, . . . petitioner’s claim does not qualify as such [because the
claim] . . . was most surely not a novel one.” 523 U.S. at 622. It was
not novel, the Court said, because “the Federal Reporters were replete
with cases involving” such challenges. Id. The same was true at the
time of Baxter’s trial regarding the Skilling-like claim that he raises
here. See, e.g., United States v. Rybicki, 354 F.3d 124, 144 (2d Cir.
2003) (en banc); United States v. Welch, 327 F.3d 1081, 1106 (10th
Cir. 2003); United States v. Easton, 54 F. App’x 242, 243-44 (8th Cir.
2002); United States v. Frost, 125 F.3d 346, 371 (6th Cir. 1997); id.
at 370 n.7 (collecting cases).
15
In response, the government again contends that the Skilling
error was harmless. Gov’t Br. 22. This contention, however,
puts the cart before the horse because we cannot address the
merits of Baxter’s Skilling claim unless he overcomes his
procedural default. We therefore begin (and end) with the
question of Baxter’s actual innocence.
“To establish actual innocence, petitioner must demonstrate
that, in light of all the evidence, it is more likely than not that no
reasonable juror would have convicted him.” Bousley, 523 U.S.
at 623 (internal quotation marks omitted); see United States v.
Caso, 723 F.3d 215, 218-19 (D.C. Cir. 2013). But convicted
him of what? In all previous “actual innocence” cases except
Bousley (which we discuss below), the Supreme Court has
required the petitioner to demonstrate his actual innocence of the
offense of which he was convicted.13
Although the Court has not yet considered the meaning of
“actual innocence” in the context of a case in which a jury
returned a general verdict when instructed on alternative theories
of guilt, the rationale for the “actual innocence” exception to
procedural default dictates that the defendant must show his
13
See, e.g., McQuiggin, 133 S. Ct. at 1936 (remanding for further
proceedings to determine whether the petitioner’s challenge to his
murder conviction met the actual innocence standard); Schlup v. Delo,
513 U.S. 298, 332 (1995) (same); House v. Bell, 547 U.S. 518, 555
(2006) (concluding that the petitioner made the requisite showing of
actual innocence regarding his murder conviction to overcome
procedural default); see also Sawyer v. Whitley, 505 U.S. 333, 340
(1992) (“A prototypical example of ‘actual innocence’ in a colloquial
sense is the case where the State has convicted the wrong person of the
crime.”).
16
innocence of each of the alternative theories.14 As the court
explained in McQuiggin, “[t]his rule, or fundamental
miscarriage of justice exception, is grounded in the ‘equitable
discretion’ of habeas courts to see that federal constitutional
errors do not result in the incarceration of innocent persons.”
133 S. Ct. at 1931 (quoting Herrera, 506 U.S. at 404). Or, as
the Court put it in McCleskey v. Zant, the exception is designed
to excuse procedural barriers to relief in only a “narrow class”
of “extraordinary instances when a constitutional violation
probably has caused the conviction of one innocent of the
crime.” 499 U.S. 467, 494 (1991). Unless Baxter can show that
he is innocent of both money-and-property fraud and honest-
services fraud, he cannot show that the Skilling error “probably
has caused the conviction of one innocent of the crime” of
14
This is true at least when conviction on each of the other
theories would lead to the same or a greater sentence than conviction
on the invalid theory. See Caso, 723 F.3d at 223 (stating, in the
context of evaluating an offense the government forwent because of
a plea bargain, that “we should not require a person to spend 30 years
in prison on an erroneous . . . conviction because he was guilty of [a
less serious] offense that would carry a [lesser] sentence.”). In this
case, there is no claim that conviction on a money-and-property theory
would have led to a different (or lesser) sentence than conviction on
an honest-services theory. See Baxter Presentence Investigation
Report ¶¶ 46-47 (grouping the conspiracy count, the substantive
counts that were its objects, and the money laundering counts together
“because . . . the offense level is determined largely on the basis of the
total amount of harm or loss”; noting that, in those circumstances, the
“offense level applicable to the Group is the offense level
corresponding to the aggregated quantity” and that the court is to
apply “the offense guideline that produces the highest offense level”;
and concluding that the money laundering conspiracy count produced
the highest offense level).
17
which he was convicted: namely, conspiring to commit mail
and wire fraud. Moreover, if we were to apply the exception
whenever any one of several alternative theories of fraud were
ruled invalid, it would no longer remain, as the Court
contemplated, a “rare” exception “only . . . applied in the
extraordinary case,” id. at 321. See McQuiggin, 133 S. Ct. at
1928 (noting that the “standard is ‘demanding’ and seldom met”
(quoting House, 547 U.S. at 538)).
Bousley considered what a defendant must show to prove
his “actual innocence” when he pled guilty pursuant to a plea
agreement, rather than -- as in the Court’s other cases -- when he
was convicted after a trial. Kenneth Bousley pled guilty to
“using” a firearm during a drug trafficking crime in violation of
18 U.S.C. § 924(c)(1), a provision that makes it unlawful to use
or carry a firearm during such a crime. After the Supreme Court
clarified that “using” means “active employment,” see Bailey v.
United States, 516 U.S. 137, 143 (1995), Bousley supported his
28 U.S.C. § 2255 motion with a claim that his guilty plea was
involuntary because he had been misinformed about the
elements of the § 924(c)(1) offense. The Court held that,
although Bousley had procedurally defaulted his challenge by
failing to raise it on direct appeal, a court could still review his
claim in habeas if he could establish his actual innocence of the
offense to which he pled guilty. Bousley, 523 U.S. at 622-23.
Moreover, the Court stated that, “[i]n cases where the
Government has forgone more serious charges in the course of
plea bargaining, petitioner’s showing of actual innocence must
also extend to those charges.” Id. at 624.
In Bousley, the government argued that the petitioner should
have to demonstrate that he was actually innocent of both
“using” and “carrying” a firearm in violation of § 924(c)(1).
The Court rejected the argument, holding that he need
demonstrate only that he did not “use” the firearm as defined in
18
Bailey. 523 U.S. at 624. It did so, the Court said, because
“petitioner's indictment charged him only with ‘using’ firearms
in violation of § 924(c)(1) . . . [a]nd there [wa]s no record
evidence that the Government elected not to charge petitioner
with ‘carrying’ a firearm in exchange for his plea of guilty.” Id.
In Baxter’s case, by contrast, the indictment charged alternative
means of violating the charged statute: It charged him with
conspiring to commit mail and wire fraud on both honest-
services and money-and-property theories. J.A. 225-26. Thus,
Bousley further supports the conclusion that Baxter must
demonstrate his actual innocence of both objects of the
conspiracy.15
Baxter maintains that he should not have to demonstrate his
actual innocence of money-and-property fraud because we
cannot be sure that his jury did not convict him on the invalid
honest-services theory. Thus, he argues, the instruction had a
“‘substantial and injurious effect or influence in determining the
jury’s verdict.’” Baxter Br. 37 (quoting Hedgpeth, 555 U.S. at
58). But this is the standard for harmful error on the merits, see
Hedgpeth, 555 U.S. at 58, not for the actual innocence required
to overcome a procedural bar. The type of “actual innocence”
claim that Baxter presses is “‘not itself a constitutional claim,
but instead a gateway through which a habeas petitioner must
pass to have his otherwise barred constitutional claim considered
on the merits.’” Schlup, 513 U.S. at 315 (quoting Herrera, 506
15
In Caso, we suggested that the most likely rationale for
Bousley’s rule -- that the showing of actual innocence must extend to
more serious, and likely equally serious, charges forgone in exchange
for a plea bargain -- is that the rule ensures “the defendant does not
receive an unjustified ‘windfall.’” Caso, 723 F.3d at 223 (quoting
Lewis v. Peterson, 329 F.3d 934, 936 (7th Cir. 2003)). This rationale
applies a fortiori to alternative theories of an offense upon which a
defendant was actually charged and convicted.
19
U.S. at 404). Without a demonstration of actual “innocence,
even the existence of a concededly meritorious constitutional
violation is not in itself sufficient to establish a miscarriage of
justice that would allow a habeas court to reach the merits of a
barred claim.” Id. at 316.
In sum, we conclude that, to establish “actual innocence” to
overcome his procedural default, Baxter must demonstrate that
“it is more likely than not that no reasonable juror would have
convicted him” of the offense of which he was convicted,
Bousley, 523 U.S. at 623 (internal quotation marks omitted).
That offense was conspiracy to commit either honest-services
fraud or money-or-property fraud, and Baxter must demonstrate
his actual innocence of that offense.
3. Baxter cannot show that it is more likely than not that he
was actually innocent of conspiracy to commit money-or-
property fraud. Indeed, Baxter’s briefs say nothing in support
of such a showing, other than to declare that he “was not
stealing money and/or property from the WTU,” Baxter Br. 30,
and that he “obtained nothing to which he was not entitled as
Treasurer.” Reply Br. 21. The evidence is entirely to the
contrary, as we laid out in Part I above, and as we said in our
decision on Baxter’s direct appeal:
For approximately seven years, Bullock,
Hemphill, Baxter, and friends appropriated for their
own benefit much of the money union members paid as
dues. They embezzled these funds through several
channels, including American Express (Amex) cards
issued on WTU’s account, checks written for
fraudulent purposes and for excessive amounts, and
payments to a front company, Expressions Unlimited.
All union checks required two signatures, those of
Bullock and Baxter, the union’s president and treasurer
20
respectively. These two, therefore, had the key to the
union treasury.
Initially, Bullock and Baxter simply used their
WTU Amex cards for personal expenses, and they
spent quite a lot. But the thefts became more
audacious when Hemphill was hired as Bullock's
secretary and then also became the union’s
bookkeeper. . . .
Between 1995 and 2002, the conspirators stole
millions of dollars from WTU and spent it on such
things as a $50,000 silver set for Bullock’s house, a
wedding reception for Hemphill’s son, $29,000 in
dental work for her and her husband, $19,000 in
Washington Wizards tickets for Baxter and Bullock,
car insurance for him, and art for his house.
Sometimes they simply wrote themselves checks from
the union treasury. After WTU received an infusion of
cash from the inflated assessment in 2002, Hemphill
and Baxter wrote themselves more checks totaling
$18,805 and $31,000, respectively.
514 F.3d at 1354. Baxter’s briefs neither say anything, nor point
to any evidence, that would cause us to reach a different
conclusion here than we did on direct appeal.
In sum, although it is clear that Baxter was innocent of
conspiring to commit honest-services fraud because the scheme
did not involve bribery or kickbacks, it is equally clear that he
cannot show he was actually innocent of conspiracy to commit
money-or-property fraud. Accordingly, he cannot overcome the
procedural default that bars us from considering his Skilling
claim on the merits.
21
IV
Finally, Baxter contends that his conviction for money
laundering under 18 U.S.C. § 1956(a)(1)(B)(i) was invalid in
light of this court’s decision in United States v. Adefehinti, 510
F.3d 319 (D.C. Cir. 2007).
Once again, Baxter requires a certificate of appealability to
proceed and, once again, we grant it. See supra Part III.1.
Baxter’s Adefehinti claim, while not explicit, appears to be that
he was convicted under a legally invalid theory of money
laundering because the alleged money laundering was not
distinct from the crimes that produced the funds that were
laundered. This would make his Adefehinti claim similar to his
Skilling claim. See Skilling, 561 U.S. at 414 (“[C]onstitutional
error occurs when a jury . . . returns a general verdict that may
rest on a legally invalid theory.”). The underlying question of
what legally constitutes money laundering is a difficult one, and
we therefore conclude that “jurists of reason would find it
debatable whether [Baxter’s] petition states a valid claim of the
denial of a constitutional right,” Slack, 529 U.S. at 478. See
Adefehinti, 510 F.3d at 322 (“It seems clear that . . . the
necessary intent to conceal requires ‘something more’ than the
mere transfer of unlawfully obtained funds, though that
‘“something more” is hard to articulate.’” (quoting United States
v. Esterman, 324 F.3d 565, 572 (7th Cir. 2003))).
But Baxter again faces another hurdle. Under AEDPA,
Baxter had one year from “the date on which [his] judgment of
conviction bec[ame] final” to file his § 2255 motion. 28 U.S.C.
§ 2255(f)(1). Baxter agrees that his conviction became final on
November 10, 2008, the date the Supreme Court denied his
petition for a writ of certiorari. See United States v.
Aguirre-Ganceda, 592 F.3d 1043, 1045 (9th Cir. 2010)
(agreeing with “the seven other circuits that have reached th[e]
22
issue” that a conviction becomes final when a petition for
certiorari is denied, not when a subsequent petition for rehearing
is denied). But he did not file the motion until more than a year
after that date, not until January 11, 2010, thus rendering his
filing untimely.
Although Baxter acknowledges that his motion was
untimely, he maintains that he is entitled to equitable tolling. A
federal habeas petitioner “is entitled to equitable tolling only if
he shows (1) that he has been pursuing his rights diligently, and
(2) that some extraordinary circumstance stood in his way and
prevented timely filing.” McQuiggin, 133 S. Ct. at 1931
(quoting, inter alia, Holland v. Florida, 560 U.S. 631, 649
(2010)) (internal quotation marks omitted); see United States v.
McDade, 699 F.3d 499, 503 (D.C. Cir. 2012). The only
circumstance that Baxter proffers is that he “relied on orders
entered by the district judge” that enlarged the time for filing
until July 15, 2010. Baxter Br. 27-28. But the district court did
not enter that order until January 14, 2010, two months after the
filing deadline had passed and three days after Baxter filed his
motion. See Order on Motion for Leave to File, United States
v. Baxter, No. 03-CR-516 (D.D.C. Jan. 14, 2010). Needless to
say, Baxter could not have let the deadline pass in reliance upon
an order that the court had not yet entered.
Although he has procedurally defaulted, that is, yet again,
not the end of the matter. In McQuiggin v. Perkins, the Supreme
Court held that “actual innocence, if proved, serves as a gateway
through which a petitioner may pass whether the impediment is
a procedural bar . . . or . . . expiration of the statute of
limitations” contained in AEDPA. 133 S. Ct. at 1928. Baxter
maintains that he is, in fact, actually innocent of “money
laundering” under 18 U.S.C. § 1956. As we said above, to
demonstrate actual innocence, “the petitioner must demonstrate
that, in light of all the evidence, it is more likely than not that no
23
reasonable juror would have convicted him” of that offense,
Bousley, 523 U.S. at 623 (quoting Schlup, 513 U.S. at 327-28);
see Caso, 723 F.3d at 218-19. This, the Supreme Court
“stress[ed]” in McQuiggin, is a “demanding” standard. 133 S.
Ct. at 1936.
The provision of the money laundering statute at issue in
Baxter’s case applies to:
Whoever, knowing that the property involved in a
financial transaction represents the proceeds of some
form of unlawful activity, conducts . . . such a financial
transaction which in fact involves the proceeds of
specified unlawful activity-- . . . (B) knowing that the
transaction is designed in whole or in part-- (i) to
conceal or disguise the nature, the location, the source,
the ownership, or the control of the proceeds of
specified unlawful activity.
18 U.S.C. § 1956(a)(1)(B)(i). Baxter’s claim of actual
innocence rests on our statement in Adefehinti that the
“‘transaction or transactions that created the criminally derived
proceeds must be distinct from the money laundering
transaction.’” Baxter Br. 41 (quoting Adefehinti, 510 F.3d at
324).16 In other words, to launder money, a defendant must have
money to launder. Or, as the statute says, a money laundering
16
See also Adefehinti, 510 F.3d at 322 (“The money laundering
statute . . . has no application to the transparent division or deposit of
[illegally obtained] proceeds.”); id. at 324 (“Having carried out a fraud
of which concealment was an integral part, defendants cannot be
charged with the same concealment a second time, as if it were the sort
of independent manipulation of the proceeds required for money
laundering.”).
24
transaction must “in fact involve[] the proceeds of specified
unlawful activity.” 18 U.S.C. § 1956(a)(1).
Because he seeks to invoke the actual innocence exception
to the statute of limitations in 28 U.S.C. § 2255(f), Baxter bears
the burden to show actual, “factual innocence.” Bousley, 523
U.S. at 623-24. But he has made no serious attempt to pinpoint
what a reasonable juror would -- or would not -- consider
proceeds and why subsequent transactions involving those
proceeds could not manifest an intent “to conceal or disguise the
nature, the location, the source, the ownership, or the control of
the proceeds,” as required by § 1956(a)(1)(B)(i). The treatment
of the subject in Baxter’s opening brief covers less than a page.
It merely recites the elements of money laundering and then
claims that “no matter how the facts are twisted, the transactions
that created the criminally derived proceeds are not separate and
distinct from the money laundering transaction.” Baxter Br. 41.
Because he does not revisit the claim in his reply brief at all, this
one sentence constitutes his entire argument on the subject.
Without more, we cannot conclude that it is more likely
than not that no reasonable juror would find an intent to conceal
based on transactions that took place after proceeds existed. For
example, Baxter signed WTU checks that initially went to a
front company, Expressions Unlimited, and to a frontman,
LeRoy Holmes. Hemphill and Bullock then instructed the fronts
to transfer the proceeds to Bullock’s personal account before she
paid her WTU credit card bills out of her supposedly personal
funds. See supra Part I. A reasonable juror could conclude that
those transactions involved unlawful proceeds and that those
transfers by the fronts were designed to conceal the money’s
illicit origins. Such a juror might infer that the conspirators
feared that direct payment of such bills out of the fronts’
accounts might stir the curiosity of a vigilant WTU employee or
external auditor reviewing credit card statements, more so than
25
would portraying the payment as merely that of an employee
paying her personal expenses out of her personal account.
Baxter’s terse briefing of the issue fails to explain why such an
inference by a juror would be unreasonable, and we cannot
independently verify its reasonableness because Baxter has
presented such a meager and non-analytical account of the
evidence.
Accordingly, we cannot say it is more likely than not that
no reasonable juror would have found the requisite concealment
in transactions occurring after proceeds existed. Indeed, we note
that, on direct appeal, Baxter and Hemphill raised a nearly
identical argument -- that they could not be convicted of money
laundering because the government did not prove that the
transactions creating the proceeds were distinct from the
transactions laundering them. See Baxter Br. 30-32, Hemphill
Br. 52-55, Hemphill, 514 F.3d 1350 (D.C. Cir. 2008) (No. 06-
3089).17 In response, we concluded, tersely, that there was
“abundant proof of the acts of concealment.” Hemphill, 514
F.3d at 1362.18 In effect, then, we have already concluded that
17
See also Baxter Hemphill Br. 32 (“In short, the Government’s
theory at trial impermissibly allowed the jury to commingle the initial
transactions that formed the basis of the unlawful activity with the
transactions that ‘washed’ those illegal proceeds ‘clean’” (quoting
United States v. Seward, 272 F.3d 831, 836 (7th Cir. 2001)));
Hemphill Hemphill Br. 55 (“[I]n effect, the Government claimed that
it could prove embezzlement and have it punished as money
laundering.”). Although Baxter’s Hemphill brief did not cite
Adefehinti (which issued after oral argument in Hemphill but before
the opinion was released), it did cite United States v. Seward, 272 F.3d
at 836, a case upon which Adefehinti relied for the same proposition.
See Adefehinti, 510 F.3d at 324.
18
Although this portion of the Hemphill opinion was addressed to
Hemphill’s money laundering challenge, Baxter expressly joined that
26
a reasonable juror could have found Baxter guilty of money
laundering. Baxter’s briefing of the issue on this appeal
provides no support -- and no reference at all to relevant
evidence -- for the opposite proposition. As a consequence, he
has failed to shoulder his burden to show the actual innocence
required to overcome his untimely filing.
V
For the foregoing reasons, we conclude that Baxter is not
entitled to relief. The judgment of the district court is
Affirmed.
portion of her brief. See Baxter Hemphill Br. 16 n.1.