Christopher v. Miles , 342 F.3d 378 ( 2003 )

United States Court of Appeals
Fifth Circuit
F I L E D
August 6, 2003
IN THE UNITED STATES COURT OF APPEALS Charles R. Fulbruge III
Clerk
FOR THE FIFTH CIRCUIT
_____________________
No. 02-51062
_____________________
CHARLES SIMPSON CHRISTOPHER
Petitioner - Appellant
v.
R D MILES, WARDEN, FEDERAL CORRECTION INSTITUTE BASTROP
Respondent - Appellee
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
_________________________________________________________________
Before KING, Chief Judge, and DAVIS and BENAVIDES, Circuit
Judges.
KING, Chief Judge:
Petitioner-Appellant Charles Simpson Christopher appeals the
decision of the district court denying his request for relief
pursuant to 28 U.S.C. § 2241 from his conviction for eleven
counts of wire fraud and ten counts of interstate transportation
of stolen goods. Because we conclude that Christopher’s claim
fails to satisfy the 28 U.S.C. § 2255 savings clause, we vacate
the district court’s judgment and remand with orders to dismiss
Christopher’s petition for lack of jurisdiction.
I. FACTS AND PROCEDURAL BACKGROUND
In 1988, Christopher served, for a period of about eighty
days, as the vice president of Resolute Holdings Company
(“Resolute”). During Christopher’s tenure, Resolute applied to
three different state regulatory agencies for approval of its
proposed acquisition of two insurance companies, Diamond Benefits
of Arizona (“Diamond”) and American Universal of Rhode Island
(“American”). At the time, George Reeder was the president and
majority stockholder of Resolute.
In seeking these regulatory approvals, Christopher and
Reeder made certain assurances to the state regulators, including
an assurance that Resolute would not use the assets of acquired
companies to pay for the purchases and an assurance that the
collateral Resolute tendered would be clear of any pre-existing
liens. Resolute acquired Diamond and American in the summer of
1988. However, contrary to the given assurances, Resolute used
the assets of Diamond and American to pay the purchase price and
to clear liens on real estate (owned by Reeder) that had been
used as collateral by Resolute. After Resolute acquired American
and Diamond, Christopher and Reeder looted the companies’ assets,
converting millions of dollars for their own purposes.
Christopher was fired from Resolute in September of 1988. In
1993, both American and Diamond went into receivership.
2
In 1993, Christopher and Reeder were indicted with multiple
counts of wire fraud in violation of 18 U.S.C. § 1343 and
interstate transportation of stolen goods in violation of 18
U.S.C. § 2314. Both statutes prohibit schemes to obtain “money
or property by means of false or fraudulent pretense.” 18 U.S.C.
§ 1343 (2000); id. § 2314. The indictment alleges Christopher
and Reeder had acquired both the regulatory approvals and money
by means of fraud and false representations.
After a 1995 jury trial, Christopher was convicted in the
District Court for the District of Rhode Island with eleven
counts of wire fraud and ten counts of interstate transportation
of stolen goods. The court sentenced Christopher to a term of
imprisonment of 121 months, three years of supervised release,
and restitution to American and Diamond in the total amount of
$26,700,000.
Christopher moved for a new trial on the grounds that his
convictions were invalid because he had not defrauded anyone out
of a recognizable property interest. The district court denied
the motion, finding that the regulatory approvals that Resolute
had obtained qualified as property interests within the meaning
of the statutes. Christopher appealed this finding, and the
First Circuit affirmed. United States v. Christopher, 142 F.3d
46 (1st Cir. 1998).
Christopher then filed a timely petition to vacate his
sentence pursuant to 28 U.S.C. § 2255 in the Rhode Island
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district court. His § 2255 petition did not assert that
regulatory approval was not a property interest; at the time,
First Circuit precedent foreclosed such an argument. United
States v. Bucuvalas, 970 F.2d 937, 945 (1st Cir. 1992) (holding
that alcoholic beverage and entertainment licenses constituted
“property” within the meaning of the mail fraud statutes). After
Christopher filed his § 2255 petition, the Supreme Court, in
United States v. Cleveland, 531 U.S. 12 (2000), held that a
government’s interest in licensing an activity was not a property
interest for purposes of conviction under the mail fraud
statutes. Id. at 15 (“We conclude that permits or licenses of
this order do not qualify as ‘property’ within § 1341's compass.
It does not suffice, we clarify, that the object of the fraud may
become property in the recipient’s hands; for purposes of the
mail fraud statute, the thing obtained must be property in the
hands of the victim.”).
Christopher then filed a motion to amend his § 2255 petition
to include a claim based on Cleveland. The district court held
that Christopher’s Cleveland claim was untimely and that, even
assuming Cleveland stated a new rule of constitutional law, the
case did not apply retroactively. Christopher v. United States,
146 F. Supp. 2d 146, 151 (D.R.I. 2001). Christopher did not
thereafter continue to pursue relief on these grounds under
§ 2255.
4
In November 2001, Christopher filed a petition for habeas
relief pursuant to 28 U.S.C. § 2241 in the District Court for the
Western District of Texas (where he is incarcerated), rearguing
his Cleveland claim. The magistrate judge assigned to the case
found that § 2241 relief was available to Christopher because he
had satisfied the § 2255 “savings clause” test. However, the
magistrate also found that Christopher’s conviction was valid
notwithstanding Cleveland because both the grand jury indictment
and the trial jury instruction described the scheme as a
fraudulent attempt to obtain money, not a fraudulent attempt to
obtain the regulatory licenses that Cleveland had invalidated as
a grounds for conviction under the mail fraud statutes. The
district court adopted the magistrate’s position and issued a
final judgment denying relief.
Christopher now appeals to this court, raising the Cleveland
issue once again.
II. CHRISTOPHER’S § 2241 CLAIM BASED ON CLEVELAND
Christopher brought an initial § 2255 petition in the
district court in which he was convicted; this petition did not
raise the Cleveland issue. When he attempted to bring a second
§ 2255 petition to address the applicability of this intervening
Supreme Court decision to his own case, the district court denied
the petition as failing to meet the stringent statutory standards
for filing a second or successive petition. See 28 U.S.C. § 2255
(2000):
5
A second or successive motion must be certified as
provided in section 2244 by a panel of the appropriate
court of appeals to contain —
(1) newly discovered evidence that, if proven and
viewed in light of the evidence as a whole,
would be sufficient to establish by clear and
convincing evidence that no reasonable
factfinder would have found the movant guilty
of the offense; or
(2) a new rule of constitutional law, made
retroactive to cases on collateral review by
the Supreme Court, that was previously
unavailable.
Id. Because Cleveland did not state a retroactively applicable
new rule of constitutional law, the district court rejected
Christopher’s successive § 2255 petition.
Christopher now attempts to raise the Cleveland issue by
means of a § 2241 petition.1 While § 2241 is more typically used
to challenge the execution of a prisoner’s sentence, a federal
prisoner may bring a petition under § 2241 to challenge the
legality of his conviction or sentence if he can satisfy the
mandates of the “savings clause” of § 2255. Reyes-Requena v.
United States, 243 F.3d 893, 900-01 (5th Cir. 2001).
Under § 2241, we review the district court’s findings of
fact for clear error and conclusions of law de novo. Wesson, 305
F.3d at 346. Section 2255 states:
1
Because Christopher is petitioning under § 2241, he is
not required to obtain a certificate of appealability in order to
proceed on appeal. Wesson v. United States Penitentiary
Beaumont, Tx., 305 F.3d 343, 346 (5th Cir. 2002).
6
An application for a writ of habeas corpus in behalf of
a prisoner who is authorized to apply for relief by
motion pursuant to this section, shall not be entertained
if it appears that the applicant has failed to apply for
relief, by motion, to the court which sentenced him, or
that such court denied him relief, unless it also appears
that the remedy by motion is inadequate or ineffective to
test the legality of his detention.
28 U.S.C. § 2255 (2000) (emphasis added). The burden falls on
the petitioner to demonstrate that the § 2255 remedy is
inadequate or ineffective. Reyes-Requena, 243 F.3d at 901. We
have, however, recognized that the savings clause represents only
a “limited exception” and that the petitioner’s burden in
demonstrating the inadequacy of the § 2255 remedy is a stringent
one. Id. at 901-02.
A petitioner seeking relief under the § 2255 savings clause
must demonstrate three things: (1) his claim is based on a
retroactively applicable Supreme Court decision; (2) the Supreme
Court decision establishes that he was “actually innocent” of the
charges against him because the decision decriminalized the
conduct for which he was convicted; and (3) his claim would have
been foreclosed by existing circuit precedent had he raised it at
trial, on direct appeal, or in his original § 2255 petition. Id.
at 904; see also Jeffers v. Chandler, 245 F.3d 827, 830 (5th Cir.
2001). “[T]he core idea is that the petitioner may have been
imprisoned for conduct that was not prohibited by law.” Reyes-
Requena, 243 F.3d at 903.
7
We can assume arguendo that Christopher is able to satisfy
the first and third requirements, because he fails to demonstrate
that the intervening Supreme Court decision, Cleveland, renders
him actually innocent of the charges for which he was convicted.
The magistrate judge and the district court found that
Christopher satisfied this prong merely by “claiming that he has
been imprisoned for non-criminal conduct,” noting that we
concluded that the petitioner in Reyes-Requena satisfied the
actual innocence prong of the savings clause test by claiming
that he was imprisoned for conduct that had later been
decriminalized. However, this conclusion misreads the Reyes-
Requena test.
The petition in Reyes-Requena was convicted pursuant to 18
U.S.C. § 924(c)(1) of the “use” of a firearm during a drug-
trafficking offense, even though the facts of the case
demonstrated only that he had been found in possession of the
firearms. Reyes-Requena, 243 F.3d at 904 n.29. When an
intervening Supreme Court decision clarified that a conviction
for “use” under § 924(c)(1) required the “active employment” of
the firearm, Bailey v. United States, 516 U.S. 137, 145 (1959),
Reyes-Requena (who had already filed an unsuccessful § 2255
petition) brought a successive § 2255 petition based on this new
decision. We held that Bailey did not meet the requirements for
a second or successive § 2255 petition but that, treating the
petitioner’s request as a § 2241 petition, his claim fell within
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the scope of the § 2255 savings clause. Reyes-Requena, 243 F.3d
at 900-01.
We stated that the petitioner satisfied the actual innocence
prong by claiming that he had been imprisoned for non-criminal
conduct. However, important to this conclusion was the
government’s concession that, under Bailey, Reyes-Requena’s
conviction for use of a firearm could not stand; there was no
evidence in the record that Reyes-Requena had actually used the
weapon during the commission of the drug-trafficking offense.
Id. at 904 & n.29. Thus, the petitioner’s claim that he was
actually innocent along with the government’s concession that the
facts would not support conviction under the new interpretation
of the law allowed the petitioner to satisfy the actual innocence
prong. See also Jeffers, 253 F.3d at 831 (“‘Actual innocence’
for the purposes of our savings clause test could only be shown
if Jeffers could prove that based on a retroactively applicable
Supreme Court decision, he was convicted for conduct that did not
constitute a crime.”) (emphasis added).
We must examine the merits of the petitioner’s claim to
determine whether the intervening Supreme Court decision has
rendered him actually innocent of the charges upon which he was
convicted. Christopher was, as noted, convicted on eleven counts
of wire fraud under § 1343 and ten counts of interstate
transportation of stolen goods under § 2314. Christopher argues
that the Cleveland decision invalidates his conviction because he
9
was convicted on the grounds that he deprived state regulators of
their property interest in issuing regulatory approvals.
However, an examination of the indictment and the jury charge
reveals that Christopher’s crimes went far beyond the fraudulent
procurement of regulatory approvals.
While the indictment does charge Christopher with defrauding
the state regulators, the indictment also contains multiple
allegations that Christopher and Reeder misappropriated money
from the insurance companies and their policyholders. For
example, Paragraph 34 charges that:
The DEFENDANTS defrauded American Universal, Canadian
Universal [another insurance company], Diamond Benefits,
and their policyholders and the holders and beneficiaries
of the annuity contracts by false and fraudulent
pretenses, representations, and promises and by
converting, taking by fraud, and misappropriating to
their own use and benefit moneys belonging to American
Universal and Diamond Benefits.
Similarly, other paragraphs of the indictment charge the
defendants with transferring approximately $18 million owed to
Diamond into the defendants’ bank account (¶ 36) and using
approximately $29 million in monies taken from American and
Diamond for personal benefits, to pay off liens on personal real
estate, and other purposes “unrelated to the business” of
American and Diamond (¶ 37). The indictment nowhere defines
“property” under the wire fraud statute to include state
regulatory approval. Thus, even assuming that the taking of the
regulatory approvals no longer satisfies the statutory definition
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of “property”, the indictment contained sufficient charges for
which Christopher could have been convicted “for obtaining money
or property by means of false or fraudulent pretenses.” Unlike
the defendant in Cleveland who was charged under the wire fraud
statutes solely with the fraudulent acquisition of regulatory
licenses, Christopher was charged with fraud both in acquiring
the licenses and in looting the insurance companies of their
assets.
In addition, the jury charge did not instruct the jury that
regulatory approval constituted a property interest within the
meaning of the statute. In fact, the jury charge makes only two
references at all to the regulatory licenses:
The Defendant denies these allegations and has pleaded
not guilty claiming that there was no scheme to defraud.
That he made full disclosure to all the regulatory
agencies.
. . .
You have heard evidence about various insurance
regulatory orders. The violation of an insurance
regulatory order is not itself a crime. However, you may
consider all evidence or lack of evidence of such a
violation in determining whether the Defendant committed
the offenses charge[d] in the indictment.
When informing the jury of the nature of the charges brought
against Christopher under § 1343, the district court
characterized them as follows:
In Count One the Government contends that beginning in or
about November of 1987 and continuing to in or about
September 1988 in the District of Rhode Island and
elsewhere the Defendant knowingly, willfully and
unlawfully devised a scheme to obtain money by false
11
pretenses . . . in violation of Title 18 United States
Code Section 1343.
Counts Two through Eleven also allege that beginning in
or about November of 1987 and continuing to in or about
September 1988 in the District of Rhode Island and
elsewhere the Defendant knowingly, willfully and
unlawfully devised a scheme to obtain money by false
pretenses . . . all in violation of Title 18 United
States Code Section 1343.
Thus, as the magistrate judge correctly noted, the jury charge
refers to Christopher’s acts as a scheme to obtain money, not
property.
Further, the court did not instruct the jury that they must
find that Christopher defrauded the regulatory bodies in order to
convict him on the wire fraud counts. The court explained the
statutory language of § 1343 to the jury by telling them that, in
order for the jury to find Christopher guilty, the government
must have proven:
[t]hat the Defendant knowingly devised or knowingly
participated in a scheme or artifice to defraud; and
second, that the Defendant did so with the specific
intent to defraud and, third, in furtherance of the
scheme or artifice to defraud the Defendant knowingly
transmitted or caused to be transmitted in interstate
commerce a wire transfer or money.
Therefore, even in light of Cleveland, the jury charge in this
case did not instruct the jury on a legally deficient theory of
liability.
Christopher argues that, because the jury returned only a
general verdict on the counts, there is no way to know whether
they based their guilty verdict upon a finding that the
12
defendants defrauded the insurance companies out of money or that
the defendants defrauded the state regulators out of their (now
defunct) property interests in the regulatory approvals. We
dealt with a similar situation in United States v. Saks, 964 F.2d
1514 (5th Cir. 1992). In that case, the defendants were
convicted of bank fraud under 18 U.S.C. § 1344, and the district
court explained in the jury charge that § 1344 could include a
scheme or artifice to defraud others out of either “something of
value such as money” or of the “intangible right to honest
services.” Id. at 1520. When the Supreme Court later held that
the mail fraud statutes did not cover intangible rights, United
States v. McNally, 483 U.S. 350 (1987), the defendants argued
that their convictions had to be vacated because the jury
received a legally deficient charge.
We found any error in the jury charge to be harmless,
concluding that “the ‘bottom line’ of the scheme or artifice had
the inevitable result of effecting monetary or property losses.”
Id. at 1521. In other words, the erroneous instruction was
harmless beyond a reasonable doubt because, “given the factual
circumstances of the case, the jury could not have found the
defendant guilty without making the proper factual finding as to
that element” of the crime. Id. (quotation omitted).
Applying the same analysis to this case, we conclude that
Christopher’s challenge under § 2241 fails. For one thing,
unlike in Saks, the jury charge here did not contain a legally
13
deficient instruction on the law. Additionally, even if the jury
were to have found that Christopher’s scheme started with
defrauding regulators out of regulatory approvals, the indictment
alleged and the evidence at trial demonstrated that the “bottom
line” of the scheme was to defraud the insurance companies of
their assets. The fraudulent acquisition of regulatory approvals
was merely incidental to the broader purpose of the scheme –
defrauding the insurance companies and their policyholders out of
millions of dollars.
Because this action unquestionably violates the wire fraud
statute, Christopher has failed to prove that he was actually
innocent of the crimes with which he was charged and convicted.
Accordingly, Christopher is not entitled to use the savings
clause of § 2255 to challenge his underlying conviction by
petitioning under § 2241. He has failed to demonstrate that
§ 2255 was inadequate or ineffective to test the legality of his
detention.
III. CONCLUSION
We VACATE the judgment of the district court and REMAND with
instructions to DISMISS Christopher’s § 2241 petition for lack of
jurisdiction.
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