United States v. Shotts , 145 F.3d 1289 ( 1998 )

PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 96-6634
D. C. Docket No. CR-95-PT-310-S
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JESSE WOODROW SHOTTS,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Alabama
(July 10, 1998)
Before BLACK, Circuit Judge, and HILL and HENDERSON, Senior Circuit
Judges.
HILL, Senior Circuit Judge:
Jessee W. Shotts appeals his convictions and sentences on various counts of
mail fraud and obstruction of justice. For the following reasons, we affirm in part and
reverse in part.
I.
Jessee W. Shotts is a criminal defense attorney in Birmingham, Alabama. In
the 1980's, he also ran a bail bond business called J & J Bonding Co. In 1990, the
Alabama Supreme Court promulgated a rule that prohibited attorneys from having an
interest in a bail bond business. Shotts closed J & J Bonding Co., and a new
corporation called JC Bail Bonds, Inc. (“JC”) was formed. Shotts’ wife, Jerri Grant,
was the sole shareholder. Subsequently, she transferred her shares to Donald Long,
who later transferred his shares to David Pettus. At no time did Shotts own any stock
in JC.
Shotts directed his secretary, Kandy Kennedy, to mail applications and money
to various municipalities to obtain licenses for the business. These applications
named Long as the owner of the business. Shotts also directed Kennedy to prepare
the annual certification, which stated that Long was the owner of the company and
that no lawyer had any interest in the company.
The new firm began to operate in the fall of 1990. On three occasions, Shotts
took Long to Judge Jack Montgomery’s house. Montgomery was a state district court
judge in Birmingham. On each occasion, Shotts would go into Judge Montgomery’s
house alone and return with bonds signed by Montgomery, but otherwise blank.
Shotts referred to these pre-approved bonds as “Jack” bonds. They were used as
2
appearance bonds by JC, but without showing JC as the surety. If the defendant did
not appear in court as required, JC had no liability on the bond.
In 1992, the Federal Bureau of Investigation (FBI) began an investigation into
allegations of corruption on the part of Judge Montgomery and obtained a wire tap of
his home phone. In late 1992, the FBI intercepted a phone call from Shotts to Judge
Montgomery in which Shotts asked him to sign a bond for a prisoner in another
county. When Montgomery responded that he didn’t know if he could sign the bond
because he had no jurisdiction in that county, Shotts said he “had 5,000 reasons to
try.” Montgomery then told Shotts to come to his house.
That evening, the FBI executed a search warrant on Judge Montgomery’s
house. They found $31,000 in the house. The next day, Montgomery resigned from
office.1
After the search of Montgomery’s house, Shotts was called to testify before a
grand jury investigating Montgomery. He was asked whether he owned JC Bail
Bonds, Inc. He answered that he did not. He was also asked whether he had any
interest in or was associated with a bail bond business, but he invoked his Fifth
Amendment privilege and refused to answer.
1
Montgomery was subsequently indicted and pled guilty, but was killed by a
gunshot before he was sentenced. This case, however, concerns only allegations of
mail fraud, perjury and obstruction of justice.
3
In November of 1995, Shotts was indicted and charged with conspiracy to
commit mail fraud in violation of 18 U.S.C. § 371 (Count 1) and fifteen counts of
substantive mail fraud, in violation of 18 U.S.C. § 1341 (Counts 2-16). The
indictment also charged five counts of bribery (of Montgomery) in violation of 18
U.S.C. § 666 (Counts 17-21), and six counts of obstruction of justice – one charging
that Shotts made false statements to the grand jury in violation of 18 U.S.C. § 1623(Count 26) and the remainder based upon witness tampering (Counts 22, 23, 24, 25
and 27), in violation of 18 U.S.C. § 1512. On February 23, 1996, a jury convicted
Shotts on Counts 1-16, conspiracy to commit mail fraud and mail fraud, and three of
the obstruction of justice counts.2
Shotts appeals each of his convictions. He challenges the legal sufficiency of
the mail fraud counts and the constitutionality of the obstruction of justice counts. He
also contends that the evidence was insufficient to convict him on any of the
obstruction of justice counts. Finally, he asserts errors in his sentences.
II.
Shotts claims that Counts 1-17 must be reversed because the allegations of mail
fraud are insufficient as a matter of law. The mail fraud statute prohibits the use of
2
The court dismissed Counts 23 and 27 upon the government’s motion, and
Count 25 upon motion for acquittal. The jury acquitted Shotts of Counts 17-21.
4
the mails in furtherance of “a scheme to defraud, or for obtaining money or property
by means of false or fraudulent pretenses, representations, or promises.” 18 U.S.C.
§ 1341. In McNally v. United States, 483 U.S. 350, 360 (1987), the Supreme Court
rejected the government’s argument that the statute protects intangible rights, and held
that the government must allege and prove that the victim was deprived of money or
property. Shortly thereafter, the Court further explained that the statute extends to
intangible property, but reiterated that Section 1341 is “limited in scope to the
protection of property rights.” Carpenter v. United States, 484 U.S. 19, 26-27 (1987)
(citing McNally, 483 U.S. at 360).
Shotts was charged in Count 1 with conspiracy to commit mail fraud. The
indictment alleges that “[i]t was a part of the conspiracy that the defendant and his co-
conspirators would . . . cause to be delivered by mail . . . business licenses, license
renewal notices, [and] payments for licenses . . . .” Counts 2-17 allege substantive
violations of mail fraud and charge that “[i]t was a part of the scheme that the business
and the defendant’s nominees and agents would then obtain and renew licenses from
various municipalities to do business as professional bondsmen.” All of the
substantive mail fraud counts allege either the mailing of a bail bond license renewal
notice with a check or the receipt back in the mail of the license itself.
The government's theory was that these business licenses were property as
5
contemplated by McNally and Carpenter. During the trial, the government argued
that the business licenses were property. The government requested and the court
instructed the jury that “[a] business license may be considered property." Therefore,
Shotts’ convictions for mail fraud and conspiracy to commit mail fraud may be
affirmed only if the licenses he obtained were “property” under Section 1341.3 We
review de novo a challenge to the legal sufficiency of the indictment. United States
v. Shenberg, 89 F.3d 1461, 1478 (11th Cir. 1996).
This is an issue of first impression in this circuit and one on which the other
circuits are divided. The majority of the circuits have held that a business license is
not property and cannot support a Section 1341 mail fraud conviction. See e.g.,
3
The government argues that, because the indictment also alleges that part of
the scheme was to obtain money, Shotts’ conviction may stand even if these licenses
are not property under Section 1341, relying on United States v. Range, 94 F.3d 614(11th Cir. 1996). Even if Range were applicable, we could affirm Shotts’ conviction
only if we were able to determine with “absolute certainty” that the jury found that
one of the purposes of the scheme was to obtain money. Id. at 620 (quoting United
States v. Miller, 84 F.3d 1244, 1257 (10th Cir. 1996)). The government concedes,
however, that in this case there is a “problem” in determining what the jury found
because its verdict was a general one. The government argues that this problem is
overcome because “it is evident from a reading of the indictment that the main
purpose of the scheme was to obtain money.” (emphasis added). No authority is cited
for the proposition that, if the “main” purpose of a scheme is to obtain money, we can
be assured the jury found the defendant guilty of seeking to accomplish it. Nor do
we think there is any such authority. A general verdict which may rest upon an
insufficient legal theory must be reversed. Griffin v. United States, 502 U.S. 46, 57
(1991); United States v. Martinez, 14 F.3d 543, 553 (11th Cir. 1994).
6
United States v. Schwartz, 924 F.2d 410 (2d Cir. 1991) (export license); United States
v. Granberry, 908 F.2d 278 (8th Cir. 1990) (school bus driver permits); Toulabi v.
United States, 875 F.2d 122 (7th Cir. 1989) (taxi operator license); United States v.
Kato, 878 F.2d 267 (9th Cir. 1989) (private pilot license); United States v. Murphy,
836 F.2d 248 (6th Cir. 1988) (license to conduct bingo game). Most of these courts
have reasoned that a business license represents nothing more than an "expression of
the government's regulatory imprimatur.” Schwartz, 924 F.2d at 418. For example,
the Second Circuit held that “[t]he government’s power to regulate does not a fortiori
endow it with a property interest in the license.” Id. at 417.4 On the other hand, some
circuits have held that a business license is sufficient property to support a mail fraud
conviction. United States v. Salvatore, 110 F.3d 1131,1140 (5th Cir. 1997) (video
poker license); United States v. Bucuvalas, 970 F.2d 937 (1st Cir. 1992) (liquor
license); United States v. Martinez, 905 F.2d 709 (3d Cir. 1990) (medical license).
This division among the circuits is not surprising since neither McNally nor
Carpenter define the “property” protected by the mail fraud statute. Both merely
teach that the term is “to be interpreted broadly,” McNally, 483 U.S. at 356, but not
4
Many of these courts imply that a license may be some form of property in the
hands of the licensee if the license may not be revoked without due process of law.
See, e.g., Murphy, 836 F.2d at 253; Granberry, 908 F.2d at 279; Kato, 878 F.2d at
269; Ferrara, 701 F. Supp. at 41.
7
so broadly as to include “intangible rights.” Carpenter, 484 U.S. at 25.
In Carpenter, however, the Supreme Court relied upon two of its prior opinions
to hold that confidential business information is property. Id. at 26 (citing
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001-1004 (1984) and Dirks v. S.E.C.,
463 U.S. 646, 653 n. 10 (1983)). Both of these opinions relied exclusively upon state
law to define property. In Monsanto, the Court noted the “basic axiom that
‘[p]roperty interests . . . are not created by the Constitution. Rather, they are created
and their dimensions are defined by existing rules or understandings that stem from
an independent source such as state law.’” 467 U.S. at 1001 (quoting Webb’s
Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980) (quoting Board of
Regents v. Roth, 408 U.S. 564 (1972))).
Three years later, in considering whether a cable television franchise is Section
1341 property, the Seventh Circuit held that, under Carpenter, it must look for the
answer in state law. Borre v. United States, 940 F.2d 215, 219 (7th Cir. 1991) (“It is
logical, therefore, for this court to look to state law in determining whether a cable
television franchise constitutes “property” for purposes of the mail fraud statute”).
The First Circuit agrees. Bucuvalas, 970 F.2d at 944 (noting the Supreme Court’s
“consistent resort to state common law and statutory law defining ‘property’”). Two
of the three circuits which have since held business licenses to be property have
8
located that definition in state law. Salvatore, 110 F.3d at 1139 (Louisiana’s interest
in video poker license defined by its Video Poker Law); Bucuvalas, 970 F.2d at 944(liquor license is property under both Massachusetts statutory and common law).5 We
too have implied in dicta that state law defines property for Section 1341 purposes.
United States v. Italiano, 894 F.2d 1280, 1285 n.6 (11th Cir. 1990) (“franchises are
considered property both generally and under Florida law”).
Resort to state law has, not surprisingly, led to directly conflicting results. For
example, in the Third Circuit under Martinez, fraud in connection with a mailed
application for a medical license is a federal crime. In the First Circuit, on the other
hand, such a prosecution apparently would be dismissed for failure to state an offense.
United States v. Ferrara, 701 F. Supp. 39 (E.D.N.Y.) (mail fraud prosecution
dismissed because state has no property interest in medical license), aff’d without
opinion, 868 F.2d 1268 (1988). Similarly, one commits mail fraud in the Fifth Circuit
if false statements are made in connection with a mailed application for a gambling
license, Salvatore, but not in the Ninth Circuit. United States v. Dadanian, 856 F.2d
1391 (9th Cir. 1988) (scheme to obtain gambling license did not affect government’s
interest as a property holder). Fraud in a liquor license application sustains a mail
5
The only other circuit to hold a license to be property located that interest in
federal decisional law. Martinez, 905 F.2d at 714-15 (medical license).
9
fraud conviction in the First Circuit, Bucuvalas, but apparently not in the Eleventh
Circuit. Arrington v. Dickerson, 915 F. Supp. 1503, 1509 (M.D. Ala. 1995) (liquor
license not property of any sort in Alabama).
These inconsistencies are the result of differences in state-created property
interests. What one state regards as property may not be so recognized in another.6
Furthermore, the split in the circuits on this issue is due not only to differences
in state law, but to differences in the licenses under review. “A state’s property
interest in its licenses derives at least in part from the character of the licenses
themselves.” Bucuvalas, 110 F.3d at 1141. A particular license may signify nothing
more than an intent to regulate, while another type of license may signify the state’s
intent to participate in that industry. Id. (“video poker licenses are different than other
types of licenses”). A license to drive a taxi, see Toulabi, 875 F.2d at 124, may not
be a property interest in any state; a medical license may be considered property in
most states. Martinez, 905 F.2d at 705 (Pennsylvania); Medical Ass’n of State of
Alabama v. Shoemake, 656 So.2d 863, 867 (Ala. Civ. App. 1995); Lowe v. Scott, 959
6
For this reason, conflicting definitions of mail fraud among the various circuits
may well be aggravated by conflicting definitions of mail fraud within a circuit.
Whether mail fraud is committed in Texas for the mailing of a fraudulent application
for a video poker license (if they had video poker) would seem to depend upon
whether Texas law creates a property interest in that license. That question is not
answered by Salvatore which rests upon Louisiana law.
10
F. 2d 323, 334 (1st Cir. 1992) (Rhode Island); Mishler v. Nevada State Bd. of Medical
Examiners, 896 F.2d 408, 409 (9th Cir. 1990) (Nevada); Watts v. Burkhart, 854 F.2d
839, 842 (6th Cir. 1988) (Tennessee); Keney v. Derbyshire, 718 F.2d 352 (10th Cir.
1983) (New Mexico).
As state law appears to control the definition of property under Section 1341,
what constitutes mail fraud apparently is susceptible to fifty different interpretations.7
What constitutes mail fraud in Alabama may be insufficient to convict in Florida.
Whether or not one finds such a result surprising, it is, apparently, the law.8
7
One final reason for the differences among the circuits is that many of the
circuits are not looking at state law to determine whether the charged offense
constitutes a deprivation of property. These circuits have looked to federal law for
that answer. Dadanian, 856 F.2d at1392 (Ninth Circuit citing McNally and Carpenter
to hold gambling license not property ); Murphy, 836 F.2d at 253 (Sixth Circuit citing
McNally to hold bingo license not property);Granberry, 908 F.2d at280 (Eighth
Circuit citing Murphy to hold school bus operator permit not property); Kato, 878
F.2d at 269 (Ninth citing Murphy and itself in Dadanian in holding pilot’s license not
property); Schwartz, 924 F.2d at 417 (Second Circuit citing Kato, Murphy, Granberry
and itself in a prior case not involving a license, United States v. Evans, 844 F.2d 36(2d Cir. 1988), to hold arms export license not property); and Ferrara, 701 F. Supp.
at 42 (citing Evans and Murphy to hold medical license not property). It is interesting
to note that all of the circuits which rely on federal decisional law conclude that there
is no property in a business license; but the three circuits which do find a property
right in a license, Bucuvalas (1st Cir.), Salvatore (5th Cir.), and Martinez (3d Cir.) rely
on interpretations of specific state laws.
8
Defining a federal crime by reference to state law is an unusual feature of the
mail fraud statute. Even though the crime in all circuits is use of the mail to obtain
property by fraud, one who embarks upon fraud would do well to consult state law to
find out if he is obtaining property. If so, it is a federal crime. If the fraud is carefully
11
Therefore, we look to Alabama law to determine whether a municipal bail bond
license is government property in Alabama.
Shotts maintains that a business license is not property in Alabama. It is true
that the Supreme Court of Alabama has held that a license to operate a bar or a
package store is not property. Ott v. Everett, 420 So. 2d 258, 261 (Ala. 1982); Ott v.
Moody, 283 Ala. 288, 216 So. 2d 177 (Ala. 1968); O’Bar v. Town of Rainbow City,
269 Ala. 247, 112 So. 2d 790 (Ala. 1959) (“There is no contract, vested right or
property in a license as against the power of a state or municipality to revoke it in a
proper case.”) In Alabama, “[a] license to engage in the sale of intoxicants is merely
a privilege with no element of property right or vested interest of any kind.”
Broughton v. Alabama Alcoholic Beverage Control Bd., 348 So. 2d 1059, 1060 (Ala.
Civ. App. 1977) (citing Moody). A federal court in Alabama has recognized that
Alabama law creates no protected property interest in a liquor license. Arrington v.
Dickerson, 915 F. Supp. 1503, 1509 (M.D. Ala. 1995) (citing Broughton).
Neither does Alabama recognize any property interest in a salvage operator’s
business license. Spradlin v. Spradlin, 601 So. 2d 76, 77 (Ala. 1992). The Spradlin
practiced in a state which defines the thing obtained as not being property, one may
escape federal prosecution. We note, however, that “the requirement that statutes give
fair notice cannot be used as a shield by one who is already bent on serious
wrongdoing.” United States v. Griffin, 589 F.2d 200, 207 (5th Cir. 1979).
12
court reiterated that Alabama recognizes no property interest in any business license
as against the right of the state to revoke it. Id.9
The government does not dispute that Alabama law controls the definition of
property under Section 1341. Neither does the government appear to disagree that
under Alabama law, no one has a property interest in these bail bond licenses prior to
their issuance.10 The government, however, makes the very intriguing argument that
“[a]t the moment the licenses were typed they became property within the meaning of
the mail fraud statute.” Because the “municipalities still controlled them” at that
point, the licenses were government property11 and obtaining them by fraud supports
Shotts’ mail fraud convictions.
The government finds support for its position in several cases which hold that
9
On the other hand, Alabama does recognize a property interest in a
professional license. Medical Ass’n of Alabama v. Shoemake, 656 So. 2d 863, 867
(Ala. Civ. App. 1995) (medical license); Averi v. Alabama State Bd. of Podiatry, 567
So. 2d 343, 344 (Ala. Civ. App. 1990) (medical license); Huckaby v. Alabama State
Bar, 631 So. 2d 855, 857 (Ala. 1994) (law license). The right to practice these
professions in Alabama is “constitutionally protected as a valuable property right”
which cannot be deprived without due process of law. Huckaby, 631 So. 2d at 857.
The government apparently concedes that these licenses are not analogous to the bail
bond licenses at issue in this case as it does not even cite them, much less argue that
they control.
10
The government states, “[t]hus, even under Alabama law, licenses are indeed
some form of property, at least once they are issued.”
11
Apparently the government subscribes to the theory that possession in nine-
tenths of the law.
13
even though an unissued license is not property, it may be property upon issuance.
See, e.g., Murphy, 836 F.2d at 253; Granberry, 908 F.2d at 279; Kato, 878 F.2d at
269; Ferrara, 701 F. Supp. at 41. The government’s contention appears to be that
issuance of a bail bond license occurs at the moment it is typed.
While this is certainly a creative approach, we are not persuaded by it. First of
all, none of these cases holds that even an issued license is Section 1341 property.
These courts have merely noted that whatever an issued business license might be to
the licensee, it is definitely not the property of the state,12 either before or after
issuance. Therefore, even if a license becomes property upon being typed, it would
not be the state’s property. Under these cases, it merely “might” become the property
of the licensee.
Furthermore, those courts which distinguish between an issued and unissued
license have premised this distinction upon the due process rights which may inure to
the licensee upon issuance of the license. Toulabi, 875 F.2d at 125 (“license may be
property from the driver’s perspective, in the sense that he may not be compelled to
surrender the entitlement except on proof of wrongdoing”); Kato, 878 F.2d at 269
12
We are aware that these are municipal licenses, but will ignore the distinction
between the state and its subdivisions for the purposes of this discussion since we
believe it irrelevant to the issue of whether the business licenses are the property of
the government.
14
(“licenses, while ‘property’ of the recipient once issued, are not property of the
government either before or after they are issued”); Murphy, 836 F.2d at 253-54 (the
bingo license may well be “property” once issued . . . but certainly an unissued
certificate of registration is not property of the State of Tennessee and once issued, it
is not the property of the State of Tennessee.”). The Supreme Court also recognizes
this form of “property” in a license. Mackey v. Montrym, 443 U.S. 1, 10 n.7 (1979)
(driver’s license); Dixon v. Love, 431 U.S. 105 (1977) (driver’s license); Barry v.
Barchi, 443 U.S. 55, 64 n. 11 (1979) (license to train horses).13
This recognition of a form of property in a license stems from the modern
theory that property is a “bundle of rights.”14 See United States v. Frost, 125 F.3d
13The Fifth Circuit has expressed its impatience with the “esoteric” distinction
between issued and unissued licenses. Salvatore, 110 F.3d at 1140. We do not agree,
however, that the courts making this distinction “provide no justification whatsoever
for making the distinction.” Id. We also do not agree that the distinction is based
upon the idea that a license has “great value in the hands of the licensee but an
unissued license has negligible value in the hands of the government.” Id. at 1140.
The distinction seems quite clearly to be based upon the difference in the rights which
attach to the license in the hands of the licensee.
14
See Charles A. Reich, 73 Yale L.J. 733 (1964). On the other hand, some
courts have understood McNally to direct them to the esoterica of ancient property law
to divine whether a particular item is some form of property. See e.g., Bucuvalas, 970
F.2d at 945 (license is a property right analogous to fee simple determinable with a
possibility of reverter); Turoff, 701 F. Supp. at 987(discussing whether a license
might be an easement in gross). In fact, the Fifth Circuit, in holding a video poker
license to be property in the face of specific statutory language to the contrary (“Any
license issued or renewed under the provisions of this Chapter is not property . . .” ),
15
346, 367 (6th Cir. 1997). These rights, however, may exist only in a particular set of
hands. The right of due process prior to revocation of a license, for example, exists
only in the hands of the licensee. If this is property, it is not the state’s property.
These cases, therefore, do not support the government’s theory that Alabama
has a property interest in a bail bond license.15 Even if such a license might be
considered the licensee’s property, from the government’s perspective the license is
“a promise not to interfere rather than a sliver of property.” Toulabi, 875 F.2d at 125.
The government has offered no other theory of how these licenses might be
considered the property of Alabama.16 We conclude that, under Alabama law, a
municipal license to operate a bail bonds business is not government property, either
did so because “when determining whether something is ‘property’ for purposes of
the federal mail fraud statute, it is appropriate to look not only to state statutes but also
to ‘traditional property law.’” 110 F.3d at 1142.
15
The only other cases cited by the government in support of its position are
Bucuvalas, Martinez and United States v. Turoff, 701 F. Supp. 981 (E.D.N.Y. 1988).
Turoff is inapposite because the New York City taxicab medallions held to be property
were “tangible personal property” which had a substantial market value. 701 F. Supp.
at 987. The court in Turoff specifically noted that “[a] mere license, on the other hand,
is nothing more than a personal, revocable privilege.” Id. at 988. Bucuvalas and
Martinez are inapposite because neither interprets Alabama law, much less the status
of a bail bond license in Alabama.
16
Nor has the government called to our attention any Alabama statute which
creates these licenses so that we might review it to see what interest the state might
have in them. Cf. Ward v. United States, 845 F.2d 1459, 1462 (7th Cir. 1988) (Illinois
statute creates a security interest in a bail bond which might be sufficient to support
a mail fraud prosecution).
16
before or after being typed. We hold, therefore, that neither the mailing of a
fraudulent application for such a license nor the receipt in the mail of the license
constitutes the federal crime of mail fraud under 18 U.S.C. § 1341. We reverse
Shotts’ mail fraud convictions because the jury may have convicted upon that legally
insufficient theory.17
III.
Shotts was convicted in Count 26 of making a false material declaration before
the grand jury (“perjury”) in violation of 18 U.S.C. § 1623 by stating that he did not
“own” a bail bonds business. He argues that this conviction must be reversed because
this testimony was “literally true.” We review this question of law de novo.
Shenberg, 89 F.3d at 1478.
Before the grand jury, Shotts was advised he was a target, and asked the
following questions:
Q: Do you own a bail bonds business?
A: No, sir.
Q: Have you been associated in some fashion with a bail bonds business?
A: I would at this time invoke my right of self-incrimination, Your Honor.
Q: All right.
A: I have a client that is a bail bonds company.
Q: Well, have you in the past either been an officer in or had an interest in a
bail bonds company, any time prior to today?
A: I would respectfully decline to answer the question on the ground it might
17
See Note 3 supra.
17
tend to incriminate me.
Shotts contends that the question regarding his “ownership” of the bail bonds
business was “fundamentally ambiguous” and that, even so, his answer was “literally
true.” If so, Shotts’ conviction for perjury is due to be reversed.
The Supreme Court has held that a perjury conviction under 18 U.S.C. § 1621cannot be based upon a statement, however misleading or incomplete, that is the
“literal truth.” Bronston v. United States, 409 U.S. 352, 360 (1973). An answer to a
question may be non-responsive, or may be subject to conflicting interpretations, or
may even be false by implication. Nevertheless, if the answer is literally true, it is not
perjury. Id. at 362.
Bronston has been extended to Section 1623, under which Shotts was
convicted. United States v. Abrams, 568 F.2d 411, 421 (5th Cir. 1978). In Abrams,
the defendant was convicted of violating Section 1623 based upon her testimony
before the grand jury in response to questions about what she “would do” rather than
what she had actually done. Her answers to the poorly phrased questions were
literally true. The Fifth Circuit reversed her conviction.18
Many other courts have reversed convictions based upon “literally true”
18
We are, of course, bound by this holding. Bonner v. City of Pritchard, 661
F.2d 1206, 1209 (11th Cir. 1981) (en banc).
18
answers. United States v. Boone, 951 F. 2d 1526, 1536 (9th Cir. 1991); United States
v. Lighte, 782 F.2d 367, 372 (2d Cir. 1986); United States v. Eddy, 737 F.2d 564, 567
(6th Cir. 1984); United States v. Niemiec, 611 F.2d 1207, 1210 (7th Cir. 1980); United
States v. Tonelli, 577 F.2d 194, 198 n.3 (3d Cir. 1978); United States v. Paolicelli, 505
F.2d 971, 973 (4th Cir. 1974). For example, in Eddy, the Sixth Circuit reversed a
Section 1623 conviction where the defendant denied submitting an “official” college
transcript and diploma to a government agency. The denial was “literally true”
because the defendant had submitted falsified, not official, documents. 737 F. 2d at
567-69. In Boone, the defendant denied going through certain company files and
taking out documents. His conviction was reversed because the denial was literally
true since the discarded documents were kept in different files. 951 F.2d at 1536.
Finally, in Tonelli, the government qualified its question by defining a particular term.
The defendant’s answer to the question so defined was literally true, and the
prosecutor made no further reference to any “other concepts” that he might have
intended to be included within the question. In reversing the perjury conviction, the
Third Circuit observed that “[T]he defendant could be said to have evaded the broad
‘other concepts’ which the prosecutor wished to probe. A charge of perjury, however,
is not a substitute for careful questioning on the part of the prosecutor. . . .” 577 F.2d
at 198.
19
Shotts maintains that his answer, like those above, was literally true. Under
Alabama law, a corporation is “owned” by its shareholders. See American Cast Iron
Pipe Co. v. Commerce & Industry In. Co., 481 So. 2d 892, 896 (Ala. 1985) (“In
Alabama, the shareholders are the equitable owners of corporate assets, including real
property.”); Williams v. North Alabama Exp., Inc., 263 Ala. 581, 83 So. 2d 330, 333
(Ala. 1955) (“stockholders owing all the shares of stock of a corporation are the
equitable owners of its assets”). See generally H. Henn & J. Alexander, Laws of
Corporations at 491 (Practicing Law Institute, 1991) (“shareholders ‘own’ the
corporation . . .”).
It is undisputed that Shotts never owned any of the shares of stock of the JC
Bail Bonds business. His answer to the question whether he “owned” the company
was literally true as a matter of both Alabama and general law.19
Furthermore, Shotts was not asked whether he had “nominees” own the bail
bond business for him. When asked whether he was “associated with” or had “an
interest in” a bail bonds company, he invoked his Fifth Amendment privilege not to
19
Ordinarily, absent a finding of fundamental ambiguity, a reviewing court’s
role is quite limited. Where, however, the defendant’s answer is literally true, we need
not decide whether the question itself was so fundamentally ambiguous it could not
sustain a perjury conviction. Nevertheless, we note that if the government is correct
that, in some sense, Shotts “owned” the bail bond business, then the question was
fundamentally ambiguous. The government may not send people to prison for failing
to correctly guess the government’s meaning. See Lighte, 782 F.2d at 374.
20
answer. These responses indicate that Shotts was unwilling to perjure himself
regarding his association with JC Bail Bonds, and permit an inference that his
willingness to answer the “ownership” question was because he knew that under the
law he was not the “owner” of the corporation.20 See United States v. Marchisio, 344
F.2d 653, 661 (2d Cir. 1965) (we may consider extrinsic evidence that demonstrates
how a declarant interpreted a question).
The government’s argument is that Shotts ignores the “context” of his
testimony. He was, “in fact,” the owner even if he didn’t own the stock. He had told
others he “owned” the business. When asked before the grand jury if he owned a bail
bond business, “he knew . . . what was meant by the question.” No authority is cited.
A perjury conviction must rest on the utterance by the accused of a false
statement; it may not stand on a particular interpretation that the questioner places
upon an answer. Lighte, 782 F.2d at 374 (citing Bronston, 409 U.S. at 360). The
government cannot require Shotts to interpret its question in a way that is contrary to
the law of Alabama, and he may not be convicted of perjury if he does not. Bronston
expressly places on the questioner the burden of pinning the witness down to the
specific object of the inquiry. Id. As then Chief Justice Burger wrote, “Precise
20
Indeed, had “ownership” of the business led to acquittal instead of conviction,
and Shotts had testified that he was the owner of the business, the government might
still have charged him with lying to the grand jury.
21
questioning is imperative as a predicate for the offense of perjury.” 409 U.S. at 362.
“If a witness evades, it is the lawyer’s responsibility to recognize the evasion and to
bring the witness back to the mark, to flush out the whole truth with the tools of
adversary examination.” Id. Any “special problems arising from the literally true but
unresponsive answer are to be remedied through the ‘questioner’s acuity’ and not by
a federal perjury prosecution.” Bronston, 409 U.S. at 362.
Furthermore, the prosecutor’s purpose must be to obtain the truth. Perjury, of
course, thwarts that proper purpose. It must not be the prosecutor’s purpose, however,
to obtain perjury, thus avoiding more precise questions which might rectify the
apparent perjury.
Under these circumstances, we reverse Shotts’ conviction for making a false
statement to the grand jury. Even if Shotts’ answer was evasive, nonresponsive,
intentionally misleading and arguably false, it was literally true and cannot support a
conviction under Section 1623.
IV.
Shotts appeals his conviction on Count 24 of the indictment which charges that
he violated 18 U.S.C. § 1512 (b)(3). This section makes it a crime to:
knowingly use[ ] intimidation or physical force, threaten [ ], or corruptly
persuade [ ] another person, or attempt to do so . . . with intent to . . .
hinder, delay or prevent the communication to a law enforcement officer
. . . of information relating to the commission or possible commission of
22
a Federal offense . . . .
The indictment alleges that Shotts committed the offense by “corruptly
persudad[ing] and attempt[ing] to corruptly persuade an employee of his law office
to not tell anything to law enforcement agents investigating Jack Montgomery’s
activities.” Shotts asserts that his conviction on this count must be reversed because
the “corruptly persuade” language of Section 1512(b) is unconstitutionally vague and
overbroad, and also because the government did not prove the charged crime.
The constitutional claim is one of first impression in this circuit, and we review
it de novo. United States v. Paradies, 98 F.3d 1266, 1282 (11th Cir. 1996). In
reviewing the sufficiency of the evidence, we construe it in the light most favorable
to the government, United States v. Tapia, 59 F.3d 1137 (11th Cir. 1995), resolving all
questions of reasonable inference and credibility in the government’s favor. United
States v. Lyons, 53 F.3d 1198 (11th Cir. 1995).
Shotts’ constitutional attack on Section 1512(b) relies on United States v.
Poindexter, 951 F.2d 369, 378 (D.C. Cir. 1991). Poindexter had been President
Reagan’s National Security Advisor. He was accused of lying during the course of
a congressional investigation of the Iran-Contra affair and charged under 18 U.S.C.
§ 1505 which prohibits the making of a false statement to the Congress. The District
of Columbia Circuit reversed his conviction, holding that the term “corruptly” as used
23
in Section 1505 was unconstitutionally vague as applied to Poindexter’s actions. The
court reasoned that the term was so imprecise that “men of common intelligence must
necessarily guess at its meaning and differ on its application.” Id. at 378.
Shotts urges us to extend the Poindexter view of Section 1505's “corruptly” to
Section 1512(b). We have recently declined a similar invitation. United States v.
Brenson, 104 F.3d 1267 (11th Cir. 1997). In Brenson, the defendant urged us to
extend Poindexter to 18 U.S.C. § 1503(a), the omnibus clause of the federal
obstruction-of-justice statute, which makes it a crime to “corruptly” endeavor to
obstruct the due administration of justice. We refused, holding that Section 1505 and
1503 are too materially different for the construction of one to guide the construction
of the other, and that Poindexter is limited to the specific illegal conduct charged in
that case.21 Id. at 1280.
We again decline to extend Poindexter to another section of the obstruction-of-
justice statutes. We continue to believe that Poindexter must be read narrowly, and
not as a broad indictment of the use of “corruptly” in the various obstruction-of-justice
21
The challenge in Brenson was to Section 1503(a) as applied in that case. The
Fifth Circuit, in binding precedent, had already upheld the use of “corruptly” in
Section 1503 against a facial attack. United States v. Howard, 569 F.2d 1331, 1337
n.9 (5th Cir. 1978).
24
statutes.22
On the contrary, we agree with the Second Circuit that “corrupt” as used in
Section of 1512(b) is neither unconstitutionally overbroad or vague. United States v.
Thompson, 76 F.3d 442 (2d Cir. 1996). In Thompson, the Second Circuit rejected the
argument, also advanced here by Shotts, that Section 1512(b) criminalizes persuasion
and is, therefore, an impermissible regulation of protected speech. The court noted
that Section 1512(b) does not prohibit all persuasion, but only that which is “corrupt.”
By targeting only such persuasion as is “corrupt,” Section 1512(b) clearly limits only
constitutionally unprotected speech, and is not, therefore, overbroad. Id. at 452.
Thompson also rejected Shotts’ argument that Section 1512(b) is
unconstitutionally vague. The Second Circuit noted that the same language in Section
1503(a), the omnibus obstruction-of-justice provision, has long been upheld as
meaning with an “improper purpose.” See e.g., United States v. Cintolo, 818 F.2d
980, 990-91 (1st Cir. 1987); United States v. Rasheed, 663 F.2d 843, 852 (9th Cir.
1981); United States v. Fasolino, 586 F.2d 939, 941 (2d Cir. 1978); Martin v. United
22
In fact, the District of Columbia Circuit itself has avoided extending its
interpretation of Section 1505 to Section 1512(b). United States v. Morrison, 98 F.3d
619, 629 (D.C. Cir. 1996). In upholding Morrison’s conviction against the claim that
the “corrupt” language in Section 1512(b) is unconstitutionally vague, the court held,
instead, that the evidence against him was sufficient to establish that he had persuaded
another to violate a legal duty, which, even under Poindexter, satisfies the
“corrupt”element of these statutes. Id.25
States, 166 F.2d 76, 79 (4th Cir. 1948). So defined, “corrupt” is a scienter requirement
which provides adequate notice of what conduct is proscribed. Id. (citing Village of
Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 499 (1982)).
Section 1512(b), concluded the Second Circuit, is not unconstitutionally vague
because it forbids only persuasion with an improper purpose.
We are aware that a majority of a panel of the Third Circuit has declined to
follow Thompson. United States v. Farrell, 126 F.3d 484 (3d Cir. 1997). The majority
viewed the application of Section 1503's definition of “corrupt” to Section 1512(b) to
be inappropriate because “corruptly” provides the only intent element of Section
1503, while Section 1512 contains explicit intent elements in addition to the term
“corruptly.” Id. at 489-90. “Thus, because the ‘improper purposes’ that justify the
application of § 1512(b) are already expressly described in the statute, construing
‘corruptly’ to mean merely ‘for an improper purpose’ (including those described in
the statute) renders the term surplusage, a result that we have been admonished to
avoid.” Id. (citing Ratzlaf v. United States, 510 U.S. 135, 141 (1994)). The majority
concluded that “more culpability is required [to violate Section 1512(b)] than that
involved in the act of attempting to discourage disclosure in order to hinder an
investigation.” Id. at 489.
This conclusion drew a strong dissent, however, which noted that both the
26
legislative history of Section 1512 and prior decisions support the Second Circuit’s
contrary position in Thompson. Id. at 492 (Campbell, J. dissenting). Section 1512's
“corrupt persuasion” language was added by Congress in 1988.23 Senator Biden, one
of the drafters of the 1988 Amendments, stated at the time that the intention was
“merely to include in section 1512 the same protection of witnesses from non-coercive
influence that was (and is) found in section 1503.” Id. The “motivated by an
improper purpose” definition of “corrupt” in Section 1512(b), then, is correctly
informed by Section 1503's long-standing interpretation.
Furthermore, the scienter role played by “corruptly” is not redundant, according
to the dissent, because “not all actions taken with the intent to hinder or obstruct
justice necessarily violate § 1503 or § 1512.” Id. at 493. For example, Section 1512
does not prohibit constitutionally protected speech, even if such conduct has the effect
of hindering an investigation. Id. (citing Thompson, 76 F.3d at 452).
We believe that the Second Circuit and the dissent in Farrell have the better
reasoned position on this issue. It is reasonable to attribute to the “corruptly
persuade” language in Section 1512(b), the same well-established meaning already
attributed by the courts to the comparable language in Section 1503(a), i.e., motivated
23
The amendment appeared in the Anti-Drug Abuse Act of 1988, Pub. L. No.
100-690, 102 Stat. 4181.
27
by an improper purpose. We are unwilling to follow the Third Circuit’s lead in
imposing a requirement for an additional level of culpability on Section 1512(b) in the
absence of any indication that Congress so intended and in the face of persuasive
evidence that it did not.
By prohibiting only that persuasion which has an improper purpose, Section
1512(b) does not impermissibly limit protected speech, and provides adequate notice
that such persuasion is proscribed. Therefore, we hold that the term “corruptly” as
used in 18 U.S.C. § 1512(b) is neither unconstitutionally broad nor vague.24
Having upheld Section 1512 against Shotts’ constitutional attack, we turn now
to Shotts’ contention that the government did not present sufficient evidence that he
corruptly persuaded his secretary, Kandy Kennedy, not to talk to law enforcement
agents investigating Montgomery. The evidence offered by the government in support
of this charge was the following testimony by Kennedy:
Q: Were there any conversations in the office about the FBI after Mr.
Montgomery’s house was searched?
24
We have also upheld the use of the term “corruptly” in 18 U.S.C. § 7212(a)
against a vagueness attack. United States v. Popkin, 943 F.2d 1535 (11th Cir. 1991).
In Popkin, we reached the conclusion that “corruptly” is used for the purpose of
“‘forbidding those acts done with the intent to secure an unlawful benefit either for
oneself or for another.’” Id. at 1540 (quoting United States v. Reeves, 752 F.2d 995(5th Cir. 1985). Thus defined, we held the term “gives clear notice of the breadth of
activities that are proscribed.” Id.28
A: Yes.
Q: Was Mr. Shotts present?
A: Yes
Q: Did he say anything about the FBI to you?
A: I asked him about it. I asked him.
Q: What did he say?
A: He said just not say anything and I wasn’t going to be bothered.
Shotts asserts that this testimony proves only that Kennedy asked Shotts about
talking to the FBI and that he observed that if she did not talk to the FBI, she would
not be bothered. He maintains that the testimony is insufficient to prove that he
threatened or intimidated her, offered her any inducement, or persuaded her in any
way not to talk to the FBI.
The government argues that Shotts’ use of the term “bother” could have
included the possibility of Kennedy’s being prosecuted and jailed for her involvement
with the bail bond business. In this context, the government contends that Shotts’
comment was an attempt to frighten Kennedy into not talking to the FBI.
The jury was correctly charged that they must find that Shotts acted “knowingly
and dishonestly with the specific intent to subvert or undermine the integrity or truth-
seeking ability of an investigation by a federal law enforcement officer.” The jury
heard Kennedy’s testimony. While not overwhelming, the jury could reasonably have
inferred from this testimony that Shotts was attempting with an improper motive to
persuade Kennedy not to talk to the FBI. There was sufficient evidence from which
29
the jury has determined the facts. Therefore, we affirm Shotts’ conviction on this
count.
V.
Shotts was convicted in Count 22 of instructing his employee, Larry Eddy, to
destroy “Jack bonds” in violation of 18 U.S.C. § 1512(b)(2). This section makes is
a crime to “corruptly persuade” someone to destroy evidence with the intent to impair
its availability for use in an official proceeding.
Shotts has two complaints about his conviction on this count.25 First, he asserts
that there was insufficient evidence that the bonds were actually destroyed, and
second, that the indictment is deficient because it did not allege the official proceeding
in which the destroyed evidence was to be used.
Larry Eddy did not testify at trial. The evidence on this count was in the
testimony of Kandy Kennedy. She testified that after Montgomery’s house was
searched, the following took place:
Q: What if anything did he say about what had happened.
A: Nothing. We just took the Jack Bonds out of my desk drawer and they were
taken away and destroyed.
Q: Who is “we?”
A: I took them out. I either handed them to Jesse or Larry Eddy but Larry Eddy
25
We have dealt with Shotts’ constitutional challenge to this conviction based
upon the alleged vagueness of Section 1512(b)'s “corruptly persuade” language. See
Section IV. above.
30
was instructed to destroy them.
Q: Who instructed Larry Eddy to destroy the Jack bonds?
A: Jesse Shotts.
The government offered no further proof that the bonds were actually
destroyed. The jury was instructed that it must find that Shotts corruptly persuaded
and caused Eddy to destroy the bonds. Shotts contends that the jury was required to
find that Eddy actually destroyed the bonds, and that Kennedy’s testimony was
insufficient to establish this fact. We review these contentions de novo. United States
v. Waymer, 55 F.3d 564, 574 (11th Cir. 1995).
Neither party has cited any authority to us regarding whether the statute requires
that the evidence actually be destroyed. Even assuming that the statute requires such
an event to occur, however, Kennedy’s testimony is sufficient proof that it did.
Kennedy’s testimony was that she took the bonds out of her desk drawer, she handed
them to “Jesse” or to Eddy, Shotts instructed Eddy to destroy them, and they were
“taken away and destroyed.” The jury was instructed that they must find that Shotts
intended to cause a person to destroy the bonds. Kennedy’s testimony can reasonably
support that inference. The jury must have drawn this inference because they
convicted Shotts on this count. We find no merit to this claim.
Neither are we persuaded that this count is legally insufficient for failure to
identify the official proceeding at which the evidence would have been presented. See
31
United States v. Murphy, 762 F.2d 1151, 1153 (1st Cir. 1985) (failure to identify in any
way the official proceeding did not sufficiently apprize defendants of charges). Count
22 realleges the Introduction to the indictment. Paragraphs five through seven of the
Introduction describe the FBI’s investigation and the federal grand jury proceedings
before which Jack Montgomery and Shotts were called to testify. Such allegations
meet the requirements of Murphy.
VI.
Shotts’ convictions were divided into two groups by the Presentence Report and
subsequently by the district court at sentencing. The first group contained the
convictions on the mail fraud counts and the perjury count. These sentences must be
set aside because we have reversed Shotts’ convictions on these counts.
The second group contained Shotts’ convictions on Counts 24 and 26, the
obstruction of justice counts, which we affirm. Shotts’ final argument on appeal is
that his sentence on these counts was incorrectly calculated under the Sentencing
Table. An incorrect calculation under the Sentencing Table is reviewed as an
incorrect application of the Sentencing Guidelines. Williams v. United States, 503
U.S. 193, 201 (1992). This court reviews de novo the district court’s interpretation and
application of the guidelines. United States v. Zapata, 139 F.3d 1355, 1357 (11th Cir.
1998).
32
The obstruction of justice counts had an adjusted offense level of 14. With a
criminal history category I, the guideline range for an offense level of 14 is 15-21
months. The district court imposed a sixty-month sentence on these counts, to run
concurrently with the sixty-month sentence imposed on the separately grouped mail
fraud counts.26 Shotts contends that this sentence was erroneous as a matter of law
and must be vacated.27
The government argues that because Shotts was convicted on multiple counts,
the district court looked to and correctly sentenced under Sentencing Guideline
Section § 5G1.2. The government concedes, however that “If these were the only two
crimes on which the defendant was convicted, his argument may have some merit.”
Because we have reversed Shotts’ mail fraud and perjury convictions, he stands now
convicted of only these two obstruction of justice counts. Accordingly, we shall
vacate his sentence on these two counts and remand for re-sentencing on them.
VII.
Counts 1 through 17 of the indictment are insufficient as a matter of law
26
The district court rejected any upward departure that might explain the
sentence.
27
Although Shotts did not raise this objection at sentencing, we consider it
because an incorrect application of the Sentencing Guidelines is plain error. Williams
v. United States, 503 U.S. 193, 201 (1992).
33
because they allege that Shotts deprived Alabama of its property in the form of a bail
bond license and under Alabama law, such license is not property. Count 26 must be
reversed because Shotts’ alleged false statement to the grand jury was literally true
and cannot form the basis for a perjury conviction. Counts 22 and 24 are neither
legally nor constitutionally deficient, and the proof on these counts was sufficient to
sustain Shotts’ convictions on them.
Accordingly, the convictions on Counts 1 through 17, and 26 are REVERSED
and the sentences on these counts are VACATED. The convictions on Counts 22 and
24 are AFFIRMED, but the sentences on these two counts are VACATED and the
case is REMANDED.
34