United States v. Griffin

REVISED MARCH 25, 2003
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 01-20368
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
FLORITA BELL GRIFFIN, TERRENCE BERNARD ROBERTS, JOE LEE WALKER,
Defendants-Appellants.
Appeals from the United States District Court
For the Southern District of Texas
March 10, 2003
Before JOLLY, SMITH, and DeMOSS, Circuit Judges.
DeMoss, Circuit Judge:
Appellants Florita Bell Griffin (Griffin), Terrence Bernard
Roberts (Roberts), and Joe Lee Walker (Walker) were tried before a
jury and found guilty of conspiracy, bribery, money laundering, and
mail fraud. On appeal, Griffin, Roberts, and Walker (referred to
jointly as "Appellants") challenge the sufficiency of the evidence,
a number of the district court's evidentiary rulings, and the
calculation of their sentences. In addition, Roberts and Walker
contend that they were constructively denied counsel. We AFFIRM in
part, REVERSE in part, and REMAND to the district court for
proceedings consistent with this opinion.
I. FACTUAL AND PROCEDURAL BACKGROUND
The Texas Department of Housing and Community Affairs (TDHCA)
is the state agency that administers federal and state funds
allocated for use in providing affordable housing and community
services to low-income households. During 1997 and 1998, TDHCA
received $184,767,578.00 and $196,350,078.00, respectively in
federal funds. With these funds, the agency administers 25
different federal programs, one of which is the allocation of
federal income tax credit incentives (tax credits) that serve as
incentives for developers to build housing projects in which
certain rental units are set aside for occupancy by low-income
persons at reduced rent. TDHCA receives approximately 150 to 200
applications for allocation of tax credits annually, and
approximately $24 to $25 million in tax credits are available for
allocation annually in Texas.
The affairs of the TDHCA are conducted by a nine-member board
of directors, all of whom are state officials. Board members are
not paid for their services. When applications for tax credit
allocations are submitted, the TDHCA staff scores each application
based on subjective and objective factors, and submits a list of
recommended applications to a committee made up of three members
from the board of directors for review. If the recommended
2
applications are approved by the three-member committee, the board
of directors then votes on whether to grant final approval for the
allocation of the tax credits on these same applications.
Griffin was appointed to the TDHCA board of directors in 1995.
Prior to her appointment, Griffin worked as a planner for the city
of Bryan, Texas. In 1997, Griffin chaired the three-member
committee that made recommendations to the full board on tax credit
applications. In addition, Griffin did consulting work for persons
or companies that did business with TDHCA.
Mitchell, a Texas certified public accountant, had prepared
housing tax credit applications to the TDHCA for developers on over
160 projects, and 130 of them had been approved. Roberts was a
real estate agent who worked for the Brazos Valley Community Action
Agency (BVCAA) in 1995, where he was the director of housing
projects. BVCAA is a private nonprofit organization that receives
funds from the TDHCA and provides affordable housing to low-income
households. After meeting at a housing seminar in Austin, Texas,
Mitchell and Roberts decided to submit an application for tax
credits to build a low-income housing project.
Mitchell and Roberts formed a partnership named “One Golden
Oaks, Ltd.,” with Roberts having a 51 percent ownership in the
partnership. The record indicates that Mitchell was aware that by
doing so, One Golden Oaks, Ltd. would be classified as a
historically underutilized business (HUB) because Roberts is
African-American, which would result in additional points being
3
awarded to their tax credit application with the TDHCA. Mitchell
was to serve as the financial partner, and Roberts was to serve as
the managing partner. Mitchell agreed to pay Roberts a weekly
salary of $1,250.00 from Mitchell's personal funds for Roberts’
services to their partnership.
Roberts recommended that Barry Hammond (Hammond) be used as
the general contractor to build the project. Roberts had met
Hammond in December 1996. At that time, Hammond was working with
his wife Michelle as a self-employed home builder of single family
residences. Roberts told Hammond that he could offer Hammond's
customers down payment assistance. Roberts and Hammond entered an
agreement in which Roberts would provide down payment assistance
and both of them would share the profits on the sale of each home.
A few homes were built as a result of this agreement.
After doing business together, Roberts decided he wanted
Hammond to meet Griffin. Roberts and Griffin were friends, and
Griffin had served as a consultant to the BVCAA. Roberts
introduced Hammond to Griffin in January 1997. The record
indicates that Roberts told Hammond that Griffin was on the TDHCA
and was responsible for approving millions of dollars each year for
developers and builders.
After Griffin met Hammond, she told him that she wanted to see
one of the homes he had built. Subsequently, Roberts told Hammond
that Griffin was impressed with the home he built and that she
wanted to participate in their home building agreement. Griffin
4
told Hammond and Roberts that she could bring to their arrangement
interim construction, down payment, and land acquisition assistance
from TDHCA. Shortly thereafter, Griffin suggested to Roberts and
Hammond that Walker be brought into the project to help buy
property and to get it zoned. Roberts and Hammond consented, and
all four agreed to split the profits evenly among themselves.
Previously, Hammond had built five to ten houses a year.
Under the new arrangement, however, it was anticipated that over
100 houses would be built annually. Griffin suggested that a
corporation be formed to ensure that each received his share of the
profits. On March 20, 1997, Barry Hammond Homes Incorporated
(BHHI) was created. Hammond, Roberts, Griffin, and Walker agreed
that the ownership of BHHI and its profits would be split evenly
among themselves. In addition, it was agreed that Walker would be
paid a salary of $2,500.00 a month after Griffin suggested that
Walker be required to work in BHHI's office space rather than at a
bail bond company. The record indicates that at this time, the
only money BHHI was making was from the sale of previously
contracted single family homes.
As indicated in a copy of BHHI's bylaws recovered during a
search of Griffin's residence, stock certificates were issued.
Some of the stock certificates were filled out by Michelle Hammond
and kept at BHHI's place of business in a corporate book.
Hammond's and Walker's stock certificates reflected that each
received 25,000 shares, which were issued in their names. Roberts'
5
stock certificates were issued in his mother's name, Johnnie
Roberts. Griffin's stock certificates were first placed in the
name of J & G Construction. Later, Griffin had the stock
certificates placed in the name of Arkofa Consulting Corporation
(Arkofa), which is owned by Griffin's brother-in-law, Arlee Griffin
Jr.
Subsequent to the incorporation of BHHI, Griffin, Walker, and
Roberts held meetings to discuss building Mitchell's and Roberts’
housing project, Golden Oaks On Sandy Point Apartments (hereinafter
referred to as "the Golden Oaks project"). Those meetings took
place on a weekly basis through October 1997. At one of the
meetings, Griffin made a list of everyone's duties in the
corporation. Hammond's duties were to act as a project supervisor,
keep up with material costs, check off on every completed house,
schedule tasks, and perform long range planning. Michelle
Hammond's duties were administrative support. Roberts was
responsible for marketing and sales. Walker's duties were to
manage funds, do the bidding on jobs, handle legal work,
participate in marketing, handle change orders, and policies and
procedures. Griffin's duties were described as to "create
opportunity." Significantly, there was never any written
consulting agreement between Griffin and BHHI.
Mitchell and Roberts, acting as partners of One Golden Oaks,
Ltd., submitted an application for a tax credit allocation for the
6
Golden Oaks project in June 1997.1 The application was filled out
in the name of One Golden Oaks, Ltd. as owner/developer. Roberts
signed the application as the managing general partner and Mitchell
signed as the financial general partner. BHHI was listed as the
general contractor with Hammond's signature as president. The plan
was to build forty two-story fourplexes consisting of 160
apartments.
The record indicates that Walker presented Mitchell with a
contract to have BHHI be the builder on the Golden Oaks project.
Mitchell believed that only Hammond and Walker were partners in
BHHI. Mitchell was unaware that Griffin had an ownership interest
in the corporation.
On September 13, 1997, the TDHCA tax credit allocation
committee met to consider the staff report on tax credit
applications for 1997. Walker and Roberts attended this meeting,
which was chaired by Griffin. A staff member read aloud the names
of 66 proposed projects, which represented requests for a total of
$27,110,996 in tax credits. One Golden Oaks was one of the 66
projects on the list.2 In one unanimous vote in which Griffin
participated, the allocation committee agreed that tax credits
1
The best evidence of what the parties in this case contemplated
as the terms and conditions of the proposed Golden Oaks project can
be found in the application that One Golden Oaks, Ltd. submitted to
the TDHCA. Government's Exhibit 3.
2
The Golden Oaks project is noted on the list as "Golden Oaks on
Sandy."
7
should be allocated to all of the projects on the list.
On September 15, 1997, the TDHCA board of directors met to
consider a number of housing matters, including the list of 66
projects vying for the allocation of tax credits for 1997. The
entire list of 66 projects was approved for the allocation of tax
credits by a vote of seven ayes and one abstention. As a result of
the vote, in which Griffin participated, the Golden Oaks project
was allocated $10 million in tax credits over a 10 year period with
an estimated ultimate cash value of $7.329 million. Walker and
Roberts were present at this meeting. Griffin did not disclose her
indirect connection (as a shareholder of BHHI) with the Golden Oaks
project before participating in this vote or the previous committee
vote two days earlier.
After being approved for the allocation of tax credits, One
Golden Oaks, Ltd. was required to pay a $40,000.00 commitment fee.
Mitchell, as the financial partner of One Golden Oaks, Ltd., put up
the commitment fee. At that time, One Golden Oaks, Ltd. also
obtained a loan of $450,000.00 from John Hoover (Hoover), using
part of the loan proceeds to purchase from BHHI the tract of land
described in its application and giving a deed of trust on such
land as security for this loan.
Meanwhile, BHHI began having financial trouble. As indicated
by the record, BHHI's financial trouble was partly due to the
salary being paid to Walker. Another reason was that BHHI paid
$5,000.00 in earnest money to purchase 30 lots in a subdivision
8
called Shadow Wood for the purpose of building homes. BHHI
intended to build homes at that location by obtaining land
acquisition and down payment assistance through TDHCA. Hammond,
Walker, Roberts, and Griffin participated in completing the
application for assistance, which was submitted to TDHCA in 1997.
However, TDHCA's underwriting department determined that the
application was insufficient for evaluation and notified BHHI.
Leslie Donaldson, the manager of TDHCA's credit underwriting
department who was responsible for evaluating the Shadow Wood
project, testified that she was contacted by Griffin at a time when
it was unheard of for board members to contact the staff. Griffin
inquired about the status of the Shadow Wood application and what
was needed to correct any deficiencies. Griffin also asked
Donaldson to send her a copy of the deficiency notice and to keep
her advised of the status of the application. According to
Donaldson, no other board member had ever contacted her with
respect to any project during her time with TDHCA.
As a result of BHHI’s paying the $5,000.00 for the Shadow Wood
project, Hammond told Walker that they were not going to be able to
make payroll that week. A few days later, however, Griffin
presented BHHI a check for $19,167.00, which was dated June 19,
1997. The check was from KRR Construction and was made payable to
BHHI. Griffin told Hammond that she was loaning the money to BHHI.
KRR Construction was named as the managing general partner on a
TDHCA tax credit application for a project called Prairie Estates.
9
Griffin later voted to approve the Prairie Estates application on
September 15, 1997, during the same board meeting at which she
voted to approve the Golden Oaks project's tax credit application.
Hammond testified that BHHI had not performed any work for KRR
Construction, and that KRR Construction did not owe BHHI any money.
However, Joseph Kemp (Kemp), who was a former member of the TDHCA
board and the owner of KRR Construction, testified that he paid
Walker $19,167.00 to assist him in preparing a study for an
application to TDHCA for tax credits after he left the board. Kemp
paid Walker for the study even though it was not of any help to
him. Walker then did a second study, which also was of no help to
Kemp. Kemp later hired a third party for $4,500.00 to do a study
that was eventually submitted with his TDHCA tax credit
application.
Hammond testified that he used the $19,167.00 that Griffin
gave BHHI to make the corporation's payroll. On the same day that
Griffin gave BHHI the check, Griffin had Michelle Hammond create an
invoice dated May 23, 1997, from BHHI to KRR Construction charging
$19,167.00 for consulting and site planning. In addition, Hammond
and Walker signed a promissory note in the amount of $19,167.00
from BHHI to J & G Construction dated June 23, 1997, which was
created by Walker pursuant to Griffin's instructions. According to
Hammond, BHHI had not done any business with J & G Construction and
had not done anything to owe it money. Significantly, Manson B.
Johenson, who is the sole owner and employee of J & G Construction,
10
testified that he never authorized anyone to enter into a
promissory note on behalf of J & G Construction and that BHHI never
owed J & G Construction $19,167.00.
BHHI paid back portions of the $19,167.00 to Griffin beginning
on September 5, 1997, when it issued a check to Griffin's husband,
Richard W. Griffin, from money it received from a construction
draw. Griffin's signature was on the back of the check and the
memorandum on the check read "soil investigation." An invoice
dated August 1997, which was written on "Richard W. Griffin, Ph.D."
letterhead, billed BHHI for $5,000.00 for soil investigation on a
108 acre tract in Bryan, Texas. The top of the document had the
name of "Genesis Planning, Inc." written on it, which was Griffin's
consulting company. Both Hammond and his wife Michelle testified
that Richard Griffin never did any work for BHHI.
In order to build the Golden Oaks project, One Golden Oaks
Ltd. needed to obtain land. Mitchell relied on Roberts to select
the land. The record indicates that Roberts told Mitchell that
Richard Smith (Smith) owned land that would be appropriate for the
project, but that Smith would not return his calls. Roberts also
told Mitchell that Walker knew Smith, and Smith owed Walker a
favor. Roberts believed that Walker could successfully negotiate
the purchase of the land. Mitchell agreed to pay Walker $5,000.00
to negotiate the purchase price of the land and to apply for zoning
with the city of Bryan, Texas. Smith, however, testified that
Roberts had not tried to contact him about buying the land before
11
Walker made inquiries. In fact, Walker first contacted Smith in
1995 about buying the land, telling Smith that he had an investment
group interested in the land.
Smith owned approximately 130 acres and did not want to
subdivide the land. As a result, Walker was able to negotiate the
purchase of all 130 acres at $2,000.00 per acre on behalf of BHHI.
BHHI in turn sold 23.208 acres to One Golden Oaks, Ltd. for
$15,000.00 an acre. Twelve acres were intended for the Golden Oaks
project. The remaining 11.208 acres were purchased for a possible
second phase project at the recommendation of Roberts. Mitchell
was never told how much BHHI paid for the land.
Before these land transactions occurred, Hammond, Roberts,
Walker, and Griffin discussed the fact that there was going to be
money and land left over. They agreed to split the remaining land,
which was approximately 108 acres, evenly among themselves. About
40 acres of the remaining acres were in the flood plain, so Griffin
suggested the land be divided into eight parcels, four parcels
inside and four parcels outside the flood plain. Each member of
BHHI would receive one parcel from the flood plain and one parcel
from outside the flood plain.
Griffin had Don Garrett Engineering subdivide the property.
Kenneth Ray Havel (Havel), who assisted in dividing the remainder
property, asked Griffin for instructions on how she wanted the land
to be divided. Havel noted that equal parts would not be of equal
value because of the location of roads through the property.
12
Griffin told Havel that she still wanted equal parts. Hammond,
Roberts, Walker, and Griffin drew straws to see who would receive
which parcels of land. Hammond drew the piece that had the best
location. Roberts, however, told Hammond that Griffin should
receive that parcel because she approved the projects and had
loaned BHHI $19,167.00 without being fully repaid. As a result,
Hammond drew again and Griffin received the parcel of land that was
considered the best.
After the survey of the land was completed, Roberts requested
additional copies. Quitclaim deeds were prepared by Roberts at
Walker's house. Hammond's parcels were titled in his own name.
Walker's were put in the name of his son, Bryce Walker. Roberts'
were put in the name of his mother, Johnnie Roberts. Griffin had
her portion of the land put in the name of Arkofa.
Arlee Griffin testified that he never gave Griffin permission
to use Arkofa's name in connection with any enterprise. Arlee
Griffin further testified that Griffin first told him on
Thanksgiving 1997 about putting property in Arkofa's name, noting
that she would give him details later. Approximately a week later,
Griffin sent Arlee Griffin documents to sign, which assigned the
land to Griffin. Arlee Griffin testified that he never discussed
the details of the transaction with Griffin. In addition, Arlee
Griffin testified that in April 1998, Griffin asked him to sign a
second quitclaim deed in relation to the same property, which
assigned the rights of the property from Arkofa to Walker.
13
According to Arlee Griffin, he had no idea why Griffin asked him to
sign the property rights over a second time.
On October 17, 1997, three checks in the amount of $3,347.66
were issued to Hammond, Johnnie Roberts, and Walker from BHHI. The
check issued to Johnnie Roberts was endorsed by both Johnnie
Roberts and Roberts. A fourth check was issued on October 31,
1997, to Walker from BHHI in the amount of $2,370.71. Both Hammond
and his wife Michelle testified that that money was Griffin's, but
that she requested the money be issued to her through Walker. The
record also reflects that an undated invoice for $479.00 and an
invoice for $497.95 dated October 20, 1997, for concrete work on
Griffin's garage were billed to BHHI. The fourth check, combined
with the two invoices, totaled $3,347.66, which is the same amount
as the three checks issued to Hammond, Johnnie Roberts, and
Walker.
On October 26, 1997, BHHI received a check for $28,890.65 from
a title company, which was the amount of money left over from the
land BHHI sold to One Golden Oaks, Ltd. From that money, $9,500.00
was paid to Loan Consultants, Inc. on October 16, 1997, for a
seminar on how to start a mortgage company. Griffin, Walker, and
Roberts attended the seminar. Another $6,000.00 was used to pay
contractors and payroll that week. The remaining $13,000.00 was
split four ways among the partners of BHHI.
In November 1997, Hammond, Michelle Hammond, Roberts, Walker,
and Griffin met at a restaurant where Walker and Roberts told
14
Hammond that Griffin wanted another construction company for the
Golden Oaks project. Roberts said that Griffin was willing to pay
Hammond $20,000.00 for his 28 acres and to give him $77,000.00 for
his interest in the Golden Oaks project. Hammond refused the offer
because he did not want to miss out on his share of the money
expected from the tax credits allocated to the Golden Oaks project.
In early December 1997, Michelle Hammond overheard Roberts,
Walker, and Griffin discuss the creation of Lee Commercial
Construction Management (LCCM) for the purpose of replacing BHHI as
general contractor. After learning of this, Hammond became afraid
that he was going to be cut out of the Golden Oaks project. As a
result, Hammond decided to tape record the next conversation he had
with Roberts and Walker. Hammond first called Roberts and asked if
LCCM had been created yet, and Roberts told him no. Hammond also
asked if he and Michelle were going to be cut out of the Golden
Oaks project or the Shadow Wood project. Roberts told him that
they were not being cut out of the projects even though LCCM was
being incorporated. Hammond reiterated that he was afraid that he
was being cut out of the Golden Oaks project. Roberts responded
that he should not be worried because Griffin had no control over
who received profits. Roberts also stated that "all [Griffin] got
control over is to [sic] keeping us from getting more projects."
During the conversation, Roberts told Hammond that Griffin
suggested that no stock be issued in LCCM. Hammond voiced his
concern about that fact, and Hammond suggested that Walker join
15
them in the conversation so Hammond could express his concern.
After Walker joined them for a three-way conversation, Hammond
repeated his concern about LCCM’s not issuing stock and asked if
they were still going to split the profits four ways. Walker
responded by saying he did not have any answers. However, Walker
said that Griffin had acknowledged that Hammond would be out of the
deal only if he agreed to sell his stock.
Walker also said that he had asked Griffin if she wanted to
cut Hammond out of the Shadow Wood project and that she told him
no. Walker then stated that Hammond could not expect Griffin to
come to the office and explain what the group was doing, but that
he did not expect Griffin to keep either Roberts or himself from
informing Hammond about the progress they were making. Walker also
noted that Griffin was still talking about splitting the profits
four ways.
Walker incorporated LCCM on December 8, 1997. Both Roberts
and Walker suggested to Mitchell that One Golden Oaks Ltd. use LCCM
in place of BHHI because Hammond had a drug problem and had left
Bryan, Texas. The record indicates that One Golden Oaks, Ltd.
agreed to replace BHHI with LCCM as the general contractor on the
Golden Oaks project.3 However, when Mitchell and Roberts, on
behalf of One Golden Oaks, Ltd., attempted to get interim financing
3
Although the record indicates that LCCM replaced BHHI as the
contractor for the Golden Oaks project, the record does not contain
an amended TDHCA application evidencing this change.
16
for the Golden Oaks project, they were unsuccessful because LCCM
could not get a performance bond because Walker had no previous
construction experience as a building contractor.
One Golden Oaks, Ltd. had until April 22, 1998, to get an
interim construction loan or it would lose the allocation of tax
credits. Mitchell and Roberts agreed that they needed a new
contractor. Nevertheless, Mitchell agreed to pay LCCM for its
continued involvement in the project. On January 30, 1998, One
Golden Oaks Ltd. contracted to pay LCCM $92,000.00 for construction
services, with $20,000.00 paid up front. In a second contract, One
Golden Oaks Ltd. agreed to pay LCCM $35,000.00, with $15,000.00 up
front for its continued help in obtaining zoning for the project.
In a third contract, One Golden Oaks Ltd. agreed to pay LCCM
$38,000.00, with $15,000.00 up front, to obtain financing for the
project. LCCM received and cashed two $15,000.00 checks and one
$20,000.00 check as a result of those contracts.
Walker withdrew $23,333.00 in cash from LCCM's account on
January 30, 1998, which was the same day that three checks from One
Golden Oaks Ltd. were deposited. On February 5, 1998, a cashier's
check for $23,333.00, dated January 30, 1998, was deposited into
Griffin's bank account. The cashier's check showed LCCM as the
remitter and Arkofa as payee. Arlee Griffin testified that he
never knew about the check. In addition, although Arlee Griffin's
name appears on the back of the check, he never endorsed it.
Notably, at trial, Griffin admitted that LCCM did not owe Arkofa
17
$23,333.00.
Of the remaining $26,667.00 deposited into LCCM's account,
$13,333.00 was issued in the form of a check to Ozell Roberts. Of
that amount, $8,333.00 was deposited into Roberts' savings account
and $5,000.00 was then withdrawn in cash. Another check for
$5,300.00 was drawn on the LCCM account, payable to cash and signed
by Walker.
In 1998, Stephen Weiss (Weiss), a real estate developer who
owned construction and property management companies in
Connecticut, New York, and Texas, was looking for land for a tax
credit project. Arlee Griffin, who had introduced Weiss to Griffin
in the spring of 1996, suggested that he consider a piece of
property consisting of 21 acres in Bryan, Texas, adjacent to the
Golden Oaks project. Weiss learned that Walker owned the property
that Arlee Griffin recommended. Walker informed Weiss that he
wanted $500,000.00 for the 21 acres. Although Weiss thought the
price was high, he was willing to proceed with the purchase if a
tax credit allocation supported the price. Weiss later learned
from the title report, because of the quitclaim deeds referencing
Arkofa that Arlee Griffin might have an interest in the land.
Nevertheless, Weiss entered into a contract with Walker to buy
the 21 acres contingent upon his obtaining all municipal approvals
and approval by TDHCA for tax credit allocation for the intended
project called Glen Oaks Village. On April 24, 1998, a promissory
note in the amount of $425,000.00 was executed from Walker to
18
Arkofa in exchange for the same property described in the quitclaim
deed from Arkofa to Walker. The record indicates that Walker did
nothing to owe Arkofa $425,000.00. Ultimately, the Glen Oaks
Village project's zoning application was turned down by the city of
Bryan, and the project's tax credit application was withdrawn.
Eventually, Hammond brought Mitchell a copy of the tape
recording from the three-way telephone conversation he had with
Roberts and Walker. Mitchell learned from Hammond that his partner
Roberts also was a partner in BHHI and had profited from the land
sale between One Golden Oaks Ltd. and BHHI. Moreover, Mitchell
learned that Griffin was a 25 percent owner of BHHI and that she
also had profited from the land sale.
As a result, Mitchell decided to record a conversation with
Roberts on May 4, 1998. Mitchell wanted an explanation concerning
money that he had paid to Walker for services not performed.
Roberts said that Walker's response concerning that information was
that Walker did not owe Mitchell an explanation. Mitchell also
wanted to know who owned BHHI and LCCM. When Mitchell asked
Roberts about the ownership of those companies, Roberts told him
that Walker had said he was a partner with Hammond in BHHI and that
Walker owned LCCM. When asked if BHHI was owned by just Hammond
and Walker, Roberts said yes. Roberts never told Mitchell that he
and Griffin were also part owners of BHHI.
Furthermore, Mitchell told Roberts that his attorney found out
that the land BHHI purchased from Smith was no longer owned by the
19
corporation, but that it had been deeded to four people. Mitchell
noted that one of the deeds was in the name of Bryce Walker and the
other was in the name of Johnnie Roberts. When Mitchell asked
Roberts how his mother ended up with the land, Roberts said that
Hammond owed him $96,000.00. Mitchell also noted that he was aware
that Hammond and Arkofa had 21 acres of land. When asked, Roberts
denied knowing who owned Arkofa. In response, Mitchell stated that
if Arkofa was owned by Griffin or one of her family members, "it's
not going to be good, let me tell ya." When Mitchell asked Roberts
about the $28,890.65 left over from BHHI's land purchase from
Smith, Roberts told Mitchell that he did not receive any of that
money and he did not know who got the money.
Based on what Mitchell learned from Hammond and his telephone
call with Roberts, he decided to seek the advice of his attorney
concerning the legality of the activities that had transpired.
Mitchell's attorney contacted the U.S. Attorney's Office, which in
turn contacted the F.B.I. The F.B.I.'s investigation into the
matter ultimately resulted in a grand jury’s issuing a seven count
indictment on April 23, 1999.
Count 1 charged Griffin, Roberts, and Walker with conspiracy
to: (1) violate 18 U.S.C. § 666(a)(1)(A) relative to theft by fraud
of property valued at $5,000.00 or more, which was in the custody
and control of the TDHCA; (2) violate 18 U.S.C. § 666(a)(1)(B)
relative to accepting something valued at $5,000.00 or more, with
the intent to corruptly influence business transactions of the
20
TDHCA; (3) violate 18 U.S.C. § 666(a)(2) relative to corruptly
giving something valued at $5,000.00 or more, with the intent to
influence business transactions of the TDHCA; and, (4) violate
18 U.S.C. § 1956(a)(1)(B)(i) relative to money laundering; all in
violation of 18 U.S.C. § 371 for conspiracy to defraud the United
States.4 Count 2 charged Griffin, Roberts and Walker for theft or
aiding and abetting a theft from an organization that receives
benefits under a federal assistance program in violation of 18
U.S.C. §§ 666(a)(1)(A) and 2. Count 3 charged Griffin with
soliciting and accepting a bribe in connection with the business of
an organization that receives benefits under a federal assistance
program in violation of 18 U.S.C. § 666(a)(1)(B). Count 4 charged
Roberts and Walker with bribery of an agent of an organization that
receives benefits under a federal assistance program in violation
of 18 U.S.C. § 666(a)(2). Count 5 charged Griffin and Walker with
money laundering proceeds that were obtained as part of the illegal
transactions in Counts 1, 2, and 3, all in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i). Count 6 charged Griffin, Roberts, and Walker
with mail fraud in violation of 18 U.S.C. § 1341 for using the mail
to deliver a pre-application for One Golden Oaks to the Honorable
Lonnie Stabler, the Mayor of the City of Bryan, Texas. Count 7
charged Griffin and Walker with mail fraud in violation of 18
4
It should be noted that the conspiracy count (Count 1) does not
contain any allegations about conspiracy to violate the Mail Fraud
Statute as described in Counts 6 and 7 of the Indictment.
21
U.S.C. § 1341 for using the mail to deliver a pre-application for
Glen Oaks Village to the Honorable Lonnie Stabler, the Mayor of the
City of Bryan, Texas.
The case was tried to a jury from October 16, 2000 to November
2, 2000. All three defendants were found guilty on all of the
counts with which they were charged. On March 28, 2001, the
district court sentenced Griffin to 87 months in the Bureau of
Prisons as to Counts Two, Three, and Five; and she received 60
months in the Bureau of Prisons as to Counts One, Six, and Seven.
All of Griffin's sentences were to run concurrently. Both Roberts
and Walker were sentenced to a total of 57 months. In addition,
the court imposed a three year term of supervised release on all
three Appellants and assessed a $100.00 special assessment for each
count of conviction. Furthermore, the court held the Appellants
jointly responsible for $783,455.00 in restitution to Mitchell.
Griffin filed her notice of appeal on April 4, 2001. Roberts and
Walker filed their notices of appeal on April 6, 2001, and April
16, 2001, respectively.
II. DISCUSSION
Roberts and Walker appeal their convictions arguing that the
government failed to present sufficient evidence that they were
aware Griffin was using her state position to fraudulently obtain
tax credits. As a result, they assert that the government failed
as a matter of law to present sufficient evidence to convict them
22
of the specific intent crimes for which they were convicted.
Roberts and Walker also contend that their respective attorneys
were not serving their best interests, but rather those of Griffin.
Therefore, they both argue that their representations were
constitutionally deficient because they were constructively denied
counsel. Moreover, Roberts and Walker contend that the district
court erred by applying sentencing guidelines based on gains
unrelated to the alleged crimes for which they were convicted as
well as on the unrealistic expectations of profits instead of any
proven reasonable revenues.
Griffin appeals her convictions arguing that the district
court erred in allowing Ms. Daisy Stiner (Stiner), former executive
director of the TDHCA, to read and explain various provisions of
the Texas Penal Code concerning Griffin's ethical requirements and
violations of the law. Griffin also asserts that the district
court erred by allowing the government to put on F.B.I. Agent
Robert Martin (Martin) as one of its earliest witnesses to present
the testimony of a traditional witness. In addition, Griffin
asserts the district court erred when it refused to allow Griffin
to testify to conversations that she had with other persons on the
ground that the conversations constituted hearsay, and for refusing
to allow Griffin's counsel to argue Texas state law on ethics to
the jury during closing arguments. Furthermore, Griffin contends
that the district court erred in failing to dismiss Count Five of
the indictment for insufficiency of the evidence to convict for
23
money laundering, and Counts Six and Seven of the indictment for
insufficiency of the evidence to convict for mail fraud. Finally,
Griffin argues that the district court erred in calculating her
sentence.
A. Whether the district court abused its discretion by allowing
Daisy Stiner, director of the TDHCA, to testify on state law
provisions; and, if so, whether it was harmless.
Griffin argues that the district court abused its discretion
by allowing Stiner to testify regarding applicable state law. This
Court reviews a district court's evidentiary rulings for abuse of
discretion. United States v. Miranda, 248 F.3d 434, 440 (5th
Cir.), cert. denied, 122 S. Ct. 410 (2001). We also review the
district court's admission or exclusion of expert testimony for
abuse of discretion. United States v. Wise, 221 F.3d 140, 157 (5th
Cir. 2000), cert. denied, 121 S. Ct. 1488 (2001). Expert testimony
that has been admitted erroneously is subject to harmless error
analysis. Id.Stiner testified on behalf of the government as its first
witness. Notably, she was never qualified as an expert witness.
Stiner was asked to read from a number of state statutes. Although
Griffin's counsel did not object to the reading of the statutes
because they were relevant, her counsel did object when the
government's lawyer asked Stiner hypothetical questions on the
applicability of those statutes. The district court overruled the
objection. Griffin asserts that Stiner's answers to the
24
hypothetical questions amounted to giving expert testimony on the
law without being qualified as an expert. Although Stiner was not
qualified as an expert in the law, she was permitted to give
opinion testimony as a lay witness under Rule 701 of the Federal
Rules of Evidence, which allows a lay witness to give opinion or
inference testimony that is: “(a) rationally based on the
perception of the witness, (b) helpful to a clear understanding of
the witness' testimony or the determination of a fact in issue, and
(c) not based on scientific, technical, or other specialized
knowledge within the scope of Rule 702." FED. R. EVID. 701.
The record reflects that Stiner testified as to her
understanding of the state ethics rules and what TDHCA employees
were instructed about those rules. In addition, the record
reflects that Stiner's testimony was based on her own perceptions,
was testimony that could be helpful to the jury in understanding
the issues in the case, and certainly did not require specialized
knowledge. However, the record also reflects that Stiner testified
to her own interpretation of the law, which is error. See Huff v.
United States, 273 F.2d 56, 61 (5th Cir. 1959). Where objected to
testimony is cumulative of other testimony that has not been
objected to, the error that occurred is harmless. United States v.
Sotelo, 97 F.3d 782, 798 (5th Cir. 1996).
We find any error that occurred from the district court
allowing Stiner to testify as to the meaning of the law was
25
harmless because her testimony was cumulative of other witnesses'
testimony. For example, Karen Lundquist, general counsel for the
Texas Ethics Commission, testified to the meaning of "personal or
private interest" in a decision before the board under Tex. Govt.
Code § 572.058, as did David Mattax, chief of the Financial
Litigation Division of the Attorney General's Office. Lundquist
also testified on the Ethics Commission's issuance of advisory
opinions under the Texas Government Code. In addition, Griffin
called Larry Paul Manley, an attorney and CEO of TDHCA, to testify
on his opinion of state ethics law as to a board member’s having an
interest in the proposal before the board. Therefore, viewing the
record in its entirety and the cumulative nature of Stiner's
testimony, the error that occurred was harmless.
B. Whether the district court abused its discretion in allowing
F.B.I. Agent Martin to testify and use a chart to give an overview
of the case; and, if so, whether it was harmless.
Griffin also contends that the district court abused its
discretion in allowing Martin to give "conclusionary hearsay
testimony on ultimate jury issues that were crucial to the case."
As noted above, we review a district court's evidentiary rulings
for abuse of discretion. Miranda, 248 F.3d at 440. We consider
any errors under the harmless error doctrine. United States v.
Taylor, 210 F.3d 311, 314 (5th Cir. 2000). We affirm evidentiary
rulings "unless they affect a substantial right of the complaining
party." Id.26
As the government's second witness, Martin testified to the
F.B.I.'s investigation in this case. In so doing, he used a chart
containing pictures of persons and symbols for the entities
involved in the alleged conspiracy. While Martin was testifying,
the prosecutor referred to a picture of Roberts on the chart and
asked Martin to explain Roberts' role in the alleged conspiracy.
Martin's testimony also included the statement: “Dr. Griffin is on
the TDHCA board, has voting authority over tax credit projects.
She also is a 25-percent owner in B. Hammond Homes." On cross-
examination, Martin admitted that his statement that Griffin owned
25 percent of BHHI was not based on personal knowledge but on what
someone told him.
Griffin's attorney objected on the basis of hearsay on more
than one occasion during Martin's testimony. The prosecutor
responded that Martin's impression of Roberts' role was not being
offered for the truth of the matter asserted, but to give a broad
version as to what the agents did during their investigation and
why they did it. The prosecutor stated that evidence in support of
Martin's impressions would be presented later during the trial.
The prosecutor also stated that the government had documents to
back up Martin's testimony. The district court overruled the
objection and allowed the testimony to continue in an overview
manner in order to orient the jury because of the complexity of the
case. However, the district court made it clear at various points
during Martin's testimony that he was presenting his own or the
27
F.B.I.'s point of view and that he did not have personal knowledge
of all the facts or statements about which he testified.
Griffin argues that Martin's testimony was improper because he
was never qualified as an expert witness under Rule 702 of the
Federal Rules of Evidence, and because the government did not
establish a factual foundation for lay witness opinion under Rule
701 of the Federal Rules of Evidence. Furthermore, Griffin asserts
that there was nothing for Martin to summarize because Stiner was
the first witness and did not testify to most of the facts of the
case. Moreover, she insists that it was improper for the district
court to characterize Martin's testimony as the F.B.I.'s point of
view.
"There is an established tradition, both within this circuit
and in other circuits, that permits a summary of evidence to be put
before the jury with proper limiting instructions." United States
v. Scales, 594 F.2d 558, 563 (5th Cir. 1979) (citations omitted).
However, "[t]he purpose of the summaries in these cases is simply
to aid the jury in its examination of the evidence already
admitted." Id. (citing United States v. Downen, 496 F.2d 314 (10th
Cir. 1974)). Here, of course, the evidence had not yet been
presented. Martin, therefore, was testifying more as an "overview
witness" than a summary witness. See United States v. Cline, 188
F. Supp. 2d 1287, 1299 (D. Kan. 2002) (labeling the government's
witness who defendant asserted was being called to “testify before
28
there is any evidence admitted to summarize and who will give
essentially a second opening statement" as an "overview witness").
This Court has never had the opportunity to address the use of
an overview witness where the witness is put on the stand to
testify before there has been any evidence admitted for the witness
to summarize. We unequivocally condemn this practice as a tool
employed by the government to paint a picture of guilt before the
evidence has been introduced. Permitting a witness to describe a
complicated government program in terms that do not address witness
credibility is acceptable. However, allowing that witness to give
tendentious testimony is unacceptable. Allowing that kind of
testimony would greatly increase the danger that a jury "might rely
upon the alleged facts in the [overview] as if [those] facts had
already been proved," or might use the overview "as a substitute
for assessing the credibility of witnesses" that have not yet
testified. Scales, 594 F.2d at 564. We hold, therefore, that the
district court abused its discretion in allowing the government to
utilize Martin as an overview witness to testify to issues in
dispute.
We now must determine if the district court's abuse of
discretion was harmless error. We have chosen to use our precedent
on summary witness testimony to help guide our analysis in this
case because that body of law is the most analogous issue to the
one before this Court on which we have previously ruled.
29
In Scales, we permitted the use of a summary chart in a
complex case, noting that "[t]he facts summarized were entirely
objective, and . . . uncontested," there was no credibility issue,
the summary was neutral, and the trial judge gave a limiting
instruction. Id. at 564.
In United States v. Meshack, the government made use of a
chart that presented the defendant's financial transactions and was
used as an aid during a witness's testimony. 225 F.3d 556, 581
(5th Cir. 2000) Although the district court did not give a proper
limiting instruction, we found that there was no plain error
because: (1) the chart was not admitted into evidence; (2) the
chart did not go to the jury room; (3) the defense had an
opportunity to cross-examine the witness about the chart; and, (4)
the defense did not show on appeal that the chart contained
misleading or erroneous information. Id. at 582.
In Taylor, the government made use of an organizational chart
similar to the one here that showed pictures of the people involved
in a drug conspiracy and their relationships. 210 F.3d at 314.
The government placed the chart before the jury during opening
statements and when the witnesses were questioned about it. Id.
at 314-315. However, at other times the chart was turned away from
the jury. Id. at 315. At the close of the government's case, the
chart was admitted into evidence as a summary of testimony. Id.Defense counsel objected to the chart both before opening
30
statements and when the prosecutor moved its admission into
evidence. Id. The district court gave two instructions on the
chart's use. Id. The court instructed the jury after the
government's opening statement that "the chart reflected what the
government believed the facts to be, but that it would be up to
them to evaluate whether it was an accurate depiction of the
events." Id. The second instruction, which was given after the
chart was admitted into evidence, instructed the jury that "the
chart should be evaluated just like any other evidence and should
be given whatever weight the jury deemed appropriate." Id.We noted in Taylor:
[T]he use of charts as "pedagogical" devices intended to
present the government's version of the case is within
the bounds of the trial court's discretion to control the
presentation of evidence under Rule 611(a) [of the
Federal Rules of Evidence]. Such demonstrative aids
typically are permissible to assist the jury in
evaluating the evidence, provided the jury is forewarned
that the charts are not independent evidence.
Id. (internal quotations and citations omitted). We held that it
was error to admit the chart because we found that it did not
accurately reflect the underlying record or testimony. Id. at 316.
We held that this was not harmless error because the chart gave the
defendant a more central role in the conspiracy than the evidence
supported, and the chart was before the jury throughout the trial.
Id.The record in this case indicates that the district court did
31
not give a limiting instruction to the jury aside from stating that
Martin's testimony consisted of impressions. Significantly,
defense counsel did not ask for limiting instructions. The record,
however, also indicates that Martin's testimony and use of the
chart were meant to clarify the roles of the various participants
in the alleged fraudulent tax credit scheme, which was arguably
complicated and difficult to understand.
Furthermore, as in Meshack, the record reflects the district
court clearly noted that defense counsel would have an opportunity
to cross-examine Martin and expose any of his testimony that was
not supported by admissible evidence. Also, the chart used by
Martin was not admitted into evidence or sent into the jury room.
Moreover, Griffin has not shown this Court that the information
provided by Martin's testimony or the chart was misleading or
erroneous. Rather, the record indicates that Martin's overview
testimony and the chart were supported by other witnesses'
testimony and exhibits admitted into evidence. Martin's testimony,
viewed in light of the record as a whole, had little, if any,
affect on the jury's verdict. We conclude, therefore, that
Martin's testimony and the use of the chart were harmless.
C. Whether the evidence is sufficient to support Griffin's money
laundering conviction.
"In evaluating a challenge to the sufficiency of the evidence,
we view the evidence in the light most favorable to the verdict and
uphold the verdict if, but only if, a rational juror could have
32
found each element of the offense beyond a reasonable doubt."
United States v. Brown, 186 F.3d 661, 664 (5th Cir. 1999). In
order to find that the defendant committed the offense of money
laundering under 18 U.S.C. § 1956(a)(1)(B)(i), "the government must
prove that the defendant: (1)conducted or attempted to conduct a
financial transaction, (2) which the defendant knew involved the
proceeds of unlawful activity, and (3) which the defendant knew was
designed to conceal or disguise the nature, location, source,
ownership, or control of the proceeds of the unlawful activity."
United States v. Burns, 162 F.3d 840, 847 (5th Cir. 1998).
Griffin asserts there is insufficient evidence to support her
conviction for money laundering. She moved for a judgment of
acquittal at the close of the government's evidence, which was
denied by the district court. The government argues that Griffin
committed money laundering by concealing her ownership of the land
she received from BHHI and placing it in the name of Arkofa, her
brother-in-law Arlee Griffin's company. Although Griffin
acknowledges that she put the land in Arkofa's name, she argues
that she did not have the requisite "intent to conceal" because she
had her brother-in-law deed the property back to her nine days
later and because both Walker and Roberts were aware of this
transaction. Notably, there is no evidence in the record that the
property was ever deeded back to Griffin. Rather, the record
indicates that she had her brother-in-law deed the property to
33
Walker.
There is no doubt that Griffin engaged in a financial
transaction, satisfying the first prong of the test. We also find
that a jury could reasonably infer that she had knowledge that what
she was doing was unlawful, which satisfies the second prong of the
test. Under Texas law, as an officer of the state, Griffin had a
duty to not “accept other employment or compensation that could
reasonably be expected to impair [her] independence of judgment in
the performance of [her] official duties. . . ." TEX. GOVT. CODE ANN.
§ 572.051(3) (Vernon 2001). In addition, Griffin could not
"intentionally or knowingly . . . accept[] . . . any benefit as
consideration for [her] decision, opinion, recommendation, vote, or
other exercise of [her] discretion as a public servant. . . ."
TEX. PENAL CODE ANN. § 36.02 (Vernon 2001). Even if Griffin was only
a consultant to BHHI as she claims, she accepted money from BHHI to
work on the Golden Oaks project and then voted in favor of the
project as a TDHCA board member without disclosing her indirect
connection with it. We conclude, therefore, that a jury could
reasonably infer that she accepted a benefit--ownership in BHHI
and/or profits from BHHI's transactions–-in exchange for her vote.
Lastly, Griffin did deed property she received from BHHI to her
brother-in-law. However, there is no public record of the property
ever being transferred back to Griffin. Rather, even if Griffin
had considered having the property deeded back to her, the record
34
indicates that she had her brother-in-law deed the property to
Walker so he could sell it. Thus, a jury could have reasonably
interpreted Griffin's transfer of the property to her brother-in-
law and then to Walker as an act of concealment, satisfying the
third prong of the test.
Griffin argues that her co-conspirators' knowledge of this
transaction shows she was not concealing anything. This Court,
however, has held that "concealment can be established by showing
that 'the transaction is part of the larger scheme designed to
conceal illegal proceeds.'" United States v. Pipkin, 114 F.3d 528,
534 (5th Cir. 1997) (citation omitted). As we have already
discussed above, the record indicates that all of the co-
conspirators, including Griffin, participated in the larger scheme
to obtain tax credits by bribing Griffin for her vote as a member
of TDHCA's board of directors. Walker's and Roberts' knowledge of
Griffin's transfer of property to her brother-in-law does not
necessarily mean that she did not attempt to conceal the bribery
scheme. Rather, the jury could have reasonably found that all of
the Appellants participated in this concealment, as evidenced by
the fact that they placed money and property they received from the
Golden Oaks project in the names of people other than themselves.
We conclude, therefore, that the evidence was sufficient to support
Griffin's money laundering conviction.
D. Whether the evidence is sufficient to support the Appellants'
mail fraud convictions.
35
Appellants moved for a directed verdict of acquittal on the
charges of mail fraud at the close of the government's evidence,
claiming that there was insufficient evidence to convict under
Counts 6 and 7 of the indictment. Count 6 of the indictment
charged that Griffin, Walker, and Roberts committed mail fraud by
mailing a pre-application notification for tax credits for the
Golden Oaks project to the City of Bryan, Texas, for the purpose of
defrauding the TDHCA, State of Texas, United States, and to obtain
money and property by false pretenses. Count 7 of the indictment
charged that Griffin and Walker committed mail fraud by mailing a
pre-application notification for tax credits for the Glen Oak
Village project to the City of Bryan, Texas, for the purpose of
defrauding the TDHCA, State of Texas, United States, and to obtain
money and property by false pretenses. On appeal, the Appellants
renew their argument that there was insufficient evidence of mail
fraud to support a violation of 18 U.S.C. § 1341. Section 1341 of
Title 18 of the United States Code prohibits the use of the mails
in furtherance of "any scheme or artifice to defraud, or for
obtaining money or property by means of false or fraudulent
pretenses, representations, or promises. . . ."
Walker and Roberts contend, as they do for all of the counts
for which they were convicted, that there is no support for their
mail fraud convictions because they were not aware of Griffin's
intent to vote for their project. Griffin, however, relies on
36
Cleveland v. United States in which the Supreme Court held that,
for the purposes of 18 U.S.C. § 1341, state and municipal licenses
are not property in the hands of the official licensor. 531 U.S.
12, 15 (2000).5 Griffin contends that tax credits are like
licenses in that they do not exist until they are issued and,
therefore, the district court should have dismissed Counts 6 and 7.
The government, however, argues that tax credits are a valuable
commodity and an economic incentive, unlike the licenses at issue
in Cleveland, which mainly implicated a regulatory concern of the
state.
Furthermore, the government contends on appeal that the
district court instructed the jury that "[a] 'scheme to defraud'
included any scheme to deprive another of money, property, or of
the intangible right to honest services by means of false or
fraudulent pretenses, representations, or promises." The
government, citing United States v. Powers, 168 F.3d 741 (5th Cir.
1999), argues that because the jury was instructed on both the
defrauding of property and honest services theories, and the
evidence supports either, this Court should affirm because the jury
had a right to consider both theories. Griffin, however, replies
that the district court's instruction amounts to a constructive
amendment of Counts 6 and 7. Section 1346, which provides that
5
Cleveland was decided five days after the end of appellants’
trial, which explains why appellants did not mention it in their
objections at trial.
37
"the term 'scheme or artifice to defraud' includes a scheme or
artifice to deprive another of the intangible right of honest
services," is not referred to in either Count 6 or 7 of the
indictment; and the words "intangible right to honest services" do
not appear anywhere in the indictment. Likewise, in its jury
argument, the government did not refer in any manner to the
provisions of section 1346 nor to the specific language of the
district court's instructions. We first address whether tax
credits can be property in the hands of the TDHCA and then whether
the jury instructions amounted to a constructive amendment.
1. Tax credits as property.
We conclude that, in accordance with the Supreme Court's
decision in Cleveland, there was insufficient evidence to support
a conviction of mail fraud under 18 U.S.C. § 1341 because the low-
income housing tax credits were not property until they had been
issued. Cleveland involved a Louisiana law that authorizes the
State to award nontransferable, annually renewable licenses to
operate video poker machines. 531 U.S. at 15. Under the law,
applicants for the licenses must meet certain requirements designed
to ensure that they have good character and fiscal integrity. Id.The defendants were indicted on RICO charges in connection with a
scheme to bribe state legislators to vote in a manner favorable to
the video poker industry. Id. at 16. Included in the indictment
was the predicate act of mail fraud in violation of 18 U.S.C. §
381341. Id. at 16-17. The indictment alleged the defendants
fraudulently concealed in their applications that they were the
true owners of a certain business establishment because they had
financial and tax problems that could have undermined their chances
to receive the video poker licenses. Id. at 17.
The defendants moved to dismiss the indictment claiming that
the alleged fraud did not deprive the State of property under
section 1341. Id. The government, however, argued that the State
had a property right in the licenses before they were issued
because the State received a substantial amount of money in
exchange for each license and continued to receive payments from
licensees as long as the licenses were in effect. Id. at 21. The
government also argued that the State had significant control over
the licenses’ issuance, renewal, suspension, and revocation, which
indicated the licenses were property. Id. at 21-22.
The Supreme Court in Cleveland agreed with the defendants and
reversed their mail fraud convictions, holding that section 1341
does not reach fraud in obtaining a state or municipal license.
The Court found that the gaming licenses were not property in the
government regulator's hands and section 1341 speaks only to the
protection of money and property. Id. at 20. Any benefit that the
government derives from Section 1341 must be limited to the
government's interests as a property holder. Id. at 19-20. In
reaching this conclusion, the Court noted that it did not doubt
39
that Louisiana had a substantial economic stake in the video poker
industry. Id. at 22. Although the State collected up front
processing fees for each license, the Court noted that the State
received "the lion's share of its expected revenue not while the
licenses remain in its own hands, but only after they have been
issued to licensees.” Id. (emphasis in original) The licenses,
noted the Court, do not generate an ongoing stream of revenue
before they are issued. Id. According to the Court, finding that
the processing fees amounted to a property right would result in
"the conclusion that States have property rights in any license or
permit requiring an up front fee, including drivers' licenses,
medical licenses, and fishing and hunting licenses," which the
government conceded were "purely regulatory." Id.The Court, in Cleveland, then addressed the government's
contention concerning the State's right to control the issuance,
renewal, and revocation of video poker licenses. The Court noted
that the "intangible rights of allocation, exclusion, and control
amount to no more and no less than Louisiana's sovereign power to
regulate." Id. at 23.
Furthermore, the Court held that the government's reading of
the mail fraud statute would result in a sweeping expansion of
federal criminal jurisdiction without a clear statement of intent
from Congress. Id. at 24. The Court stated:
Equating issuance of licenses or permits with deprivation
40
of property would subject to federal mail fraud
prosecution a wide range of conduct traditionally
regulated by state and local authorities. We note in
this regard that Louisiana's video poker statute
typically and unambiguously imposes criminal penalties
for making false statements on license applications.
Id. Thus, as it had in previous cases, the Court noted that
"'unless Congress conveys its purpose clearly, it will not be
deemed to have significantly changed the federal-state balance' in
the prosecution of crimes.’" Id. at 25 (quoting Jones v. United
States, 529 U.S. 848, 858 (2000)). In addition, the Court noted
that it has instructed that "’ambiguity concerning the ambit of
criminal statutes should be resulted in favor of lenity.’" Id.(quoting Rewis v. United States, 401 U.S. 808, 812 (1971)).
Therefore, to the extent that the meaning of the word "property"
might be ambiguous as used in section 1341, the Court concluded
that "’it is appropriate, before [the Court] choose[s] the harsher
alternative, to require that Congress should have spoken in
language that is clear and definite.’" Id. (quoting United States
v. Universal C.I.T. Credit Corp., 344 U.S. 218, 222 (1952)).
We conclude that Cleveland is controlling in this case.
Unissued tax credits have zero intrinsic value. Therefore, tax
credits are not property when they are in the TDHCA's possession.
As a result, section 1341 does not reach fraud in obtaining the
allocation of tax credits in this case. The tax credits at issue
derive from Congress' Tax Reform Act of 1986. Each year, state and
41
local agencies are granted low-income housing tax credits by the
United States Treasury Department. Local entities then reallocate
these tax credits to qualified low-income projects. TDHCA is the
only entity in the State of Texas with the authority to reallocate
tax credits under this program. Once tax credits have been
allocated, they cannot be transferred from the property to which
they were allocated. If the tax credits cannot be used because the
property to which they were allocated does not become a low-income
residence, the federal government reclaims the tax credits. The
tax credits are not actually issued on a project involving new
construction, as was the case for the Golden Oaks project, until
the rental units actually have been constructed and placed in
service at reduced rent for low-income occupants. Once the tax
credits have been issued on a property, the owner can sell limited
partnership interests in the property so that investors can take
advantage of the tax credits allocated to that project. See
generally 26 U.S.C. § 42.
As with the issuance of the gaming licenses in Cleveland,
THDCA collects up front fees such as application fees and
commitment fees. Beyond those fees, however, TDHCA does not derive
any benefit, gain, or income from tax credits while it possesses
them. After the tax credits have been issued, TDHCA also may
collect some fees such as an annual compliance monitoring fee.
However, those fees amount to nothing more than program fees
42
necessary to carry out the State's power to regulate the issuance
of the tax credits. In fact, the benefit that the State of Texas
receives from those fees is minute compared to the benefit that is
realized from the creation of affordable rental housing, which is
the goal of the tax credit program. Unquestionably, that benefit
is not realized when the tax credits have been allocated to the
State for distribution. Rather, that benefit is realized only
after the tax credits actually have been issued into the
developers' possession so they can be sold to investors who can use
them to offset their federal income tax obligations. In sum, the
only property interest the State has in the tax credits is purely
abstract or theoretical, even after the entire transaction between
the State and a developer is completed. Unissued tax credits,
therefore, do not amount to economic property as contemplated by
section 1341 while they are in the TDHCA's possession.
2. Constructive amendment to Counts 6 and 7.
"A constructive amendment occurs when the trial court 'through
its instructions and facts it permits in evidence, allows proof of
an essential element of a crime on an alternative basis permitted
by the statute but not charged in the indictment.'" United States
v. Arlen, 947 F.2d 139, 144 (5th Cir. 1991) (quoting United States
v. Slovacek, 867 F.2d 842, 847 (5th Cir. 1989)). There is no doubt
that the Fifth Amendment guarantees a criminal defendant that he
will only be tried on the charges that have been alleged in an
43
indictment handed down by a grand jury, which "cannot be 'broadened
or altered except by the grand jury.'" Id. (quoting United States
v. Chandler, 858 F.2d 254, 256 (5th Cir. 1988)”)”. As the Supreme
Court has explained:
To allow the prosecutor, or the court, to make a
subsequent guess as to what was in the minds of the grand
jury at the time they returned the indictment would
deprive the defendant of a basic protection which the
guaranty of the intervention of a grand jury was designed
to secure. For a defendant could then be convicted on
the basis of facts not found by, and perhaps not even
presented to, the grand jury which indicted him.
Russell v. United States, 369 U.S. 749, 770 (1962).
Therefore, when a constructive amendment has occurred and
error has been properly preserved, we have made it clear that "the
conviction cannot stand; there is no prejudice requirement."
United States v. Mikolajczyk, 137 F.3d 237, 243 (5th Cir. 1998).
However, neither Griffin's attorney nor counsel for Walker and
Roberts objected to the district court's instruction that included
the deprivation of an intangible right of honest services language.
As a result, we must review this issue for plain error. United
States v. Dixon, 273 F.3d 636, 639-40 (5th Cir. 2001). Under this
standard of review, we may correct forfeited errors only if (1)
there was an error, (2) the error was clear or obvious, and (3) the
error affected the defendant's substantial rights. See United
States v. Olano, 507 U.S. 725, 731-34 (1993); Dixon, 273 F.3d at
639-40. Even if these three conditions are met, this Court may
44
correct a forfeited error only if it "'seriously affect[s] the
fairness, integrity, or public reputation of the judicial
proceedings.'" Olano, 507 U.S. at 736 (quoting United States v.
Atkinson, 297 U.S. 157, 160 (1936)).
We find that the requirements for granting relief under the
plain error standard of review have been satisfied. There is no
doubt that the district court erred by instructing the jury that a
scheme to defraud includes “a scheme to deprive another of the
intangible right to honest services” because the indictment did not
contain a reference to 18 U.S.C. § 1346 or its language. And, that
error was obvious. Furthermore, we can not permit the district
court to second guess "what was in the mind[] of the grand jury at
the time [it] returned the indictment." Russell, 369 U.S. at 770.
To do so would violate the Appellants' Fifth Amendment right to
indictment by a grand jury and undermine the public's faith in the
integrity of our judicial proceedings. Therefore, we hold that the
district court's jury instruction amounted to a constructive
amendment of Counts 6 and 7 of the indictment.
Based on the foregoing, we hold that unissued tax credits do
not amount to economic property under 18 U.S.C. § 1341. We also
hold that the district court's jury instruction constructively
amended Counts 6 and 7 of the indictment. Therefore, the
Appellants' mail fraud convictions must be reversed.
E. Whether the government failed to present sufficient evidence
that Walker and Roberts were aware of Griffin's activities and,
45
therefore, failed as a matter of law to present sufficient evidence
to support their convictions of the specific intent crimes.
Walker and Roberts contend that the government failed to
present sufficient evidence that they were aware of Griffin's
criminal activities. Where counsel failed to move for a judgment
of acquittal at the close of the government's case, the sufficiency
of the evidence challenge is reviewed only to determine if the
defendant's conviction constitutes a manifest miscarriage of
justice. United States v. Maldonado, 735 F.2d 809, 817 (5th Cir.
1984). Although a motion for a judgment of acquittal was
eventually filed by counsel for Griffin after both sides had
closed, neither Walker's nor Roberts' counsel filed such a motion
at the close of the government's case. Therefore, the standard of
review here is the manifest miscarriage of justice standard. Id.In reviewing the record, this Court "must consider all the
evidence, direct and circumstantial, in the light most favorable to
the jury's verdict, accepting all reasonable inferences and
credibility choices in favor of that verdict." Id.As already discussed above, we have concluded that low-income
housing tax credits are not property in the hands of the State for
purposes of mail fraud under 18 U.S.C. § 1341. Rather, the tax
credits become property only after they have been issued and are in
the control of the developers and investors of the projects to
which the tax credits have been allocated. Therefore, for the same
reasons discussed above, Walker's and Roberts' mail fraud
46
convictions must be reversed.
In addition to their mail fraud convictions, Walker and
Roberts were convicted of (1) aiding and abetting Griffin in
committing theft of tax credits in violation of 18 U.S.C. §§ 2 and
666(a)(1)(A); (2) aiding and abetting the bribery of Griffin with
money and land with the intent to influence Griffin to vote to
approve the Golden Oaks project's tax credit application in
violation of 18 U.S.C. § 666(a)(2); and (3) with conspiracy to
commit theft, bribery, and money laundering in violation of 18
U.S.C. § 371. In addition, Walker was convicted of aiding and
abetting in the laundering of bribery proceeds in violation of 18
U.S.C. § 1956(a)(1)(B)(I).
A person who aids or abets the commission of an offense
against the United States is punishable as a principal. 18 U.S.C.
§ 2. To establish aiding and abetting under 18 U.S.C. § 2, "the
defendant 'must have (1) associated with a criminal venture, (2)
participated in the venture, and (3) sought by action to make the
venture successful.'" United States v. Carreon-Palacio, 267 F.3d
381, 389 (5th Cir. 2001) (citation omitted). In order to convict
on the theft of tax credits in violation of 18 U.S.C. §
666(a)(1)(A), the jury must find that the government agent
knowingly converted government property valued at more than
$5,000.00 to the use of another. To be guilty of bribery under 18
U.S.C. § 666(a)(2), a defendant must "corruptly give[], offer[], or
47
agree[] to give anything of value to any person, with intent to
influence or reward an agent of an organization or of a State . .
. in connection with any business, transaction, or series of
transactions of such . . . agency involving anything of value of
$5000.00 or more." And, as previously noted, in order to convict
for the laundering of bribery proceeds under 18 U.S.C. §
1956(a)(1)(B)(i), the government must prove that the defendant "(1)
conducted or attempted to conduct a financial transaction, (2)
which he knew involved the proceeds of unlawful activity, (3) with
the intent either to conceal or disguise the nature, location,
source, ownership, or control of the proceeds of unlawful
activity." Pipkin, 114 F.3d 528, 534 (5th Cir. 1997).
Walker and Roberts insist that the government did not prove
that they had sufficient knowledge to be convicted under the above
statutes. Specifically, they argue that the government did not
prove that they knew Griffin was going to vote on the Golden Oaks
project's tax credit application, planned for her to vote on the
application, or knew that she was not going to disclose her
interest in the project. Walker and Roberts note that although
Hammond testified that Griffin's role was to vote on projects for
BHHI and to use her influence, Hammond did not specifically testify
that they were aware of that role. The government, on the other
hand, asserts that the evidence of Walker's and Roberts' leadership
roles in the scheme, the money they received, their acts of
48
deception in concealing that money by placing it in other people's
names, and their attendance at meetings with Griffin and Hammond to
discuss the Golden Oaks project prior to Griffin's vote shows that
they had sufficient knowledge of the scheme to support their
convictions.
Although the government did not provide much in the way of
direct evidence of Walker's and Roberts' knowledge concerning the
bribery scheme, we conclude that it provided adequate
circumstantial evidence from which knowledge could have been
inferred by the jury. This Court has held that a jury can infer a
defendant's knowledge of the scope of the conspiracy from the
defendant's important role in that conspiracy. See, e.g., United
States v. Hayles, 471 F.2d 788, 793 (5th Cir. 1973)(evidence that
defendants were leaders in counterfeiting conspiracy supported, in
part, convictions for conspiracy, making counterfeit money with
intent to defraud, possessing counterfeit money with intent to
defraud, and transfer of counterfeit money with intent to defraud).
We also have held that proof of a close association between the
defendant and a key player in the conspiracy can be probative of
the defendant's guilty knowledge. See, e.g., United States v.
Beckner, 134 F.3d 714, 720 (5th Cir. 1998) (acknowledging that,
where counsel has intimate association with client's activities, a
jury may reasonably infer knowledge of their illegal nature, even
absent direct evidence).
49
The evidence in the record is sufficient for a jury to infer
that Walker and Roberts played a role in the bribery scheme, and
that they had a close association with Griffin, whom the government
alleges was the key player in the scheme. Walker's role, according
to the evidence presented by the government, was to represent
Griffin's interest throughout the scheme. The record indicates
that Walker was paid a salary by BHHI at Griffin's discretion and
that he accepted a large portion of Griffin's share of the monetary
proceeds from the land sale in his name. Walker was later deeded
Griffin's portion of the land so that it could be sold to Stephen
Weiss. Moreover, evidence was presented to show that Walker
created a false promissory note from BHHI to J & G construction in
the amount of $19,167.00 to guarantee BHHI's debt to Griffin; that
LCCM was placed in his name so he could control the money; that he
received $23,333.00 from Mitchell on behalf of LCCM and paid it to
Griffin through Arkofa; that he endorsed the $8,216.72 check from
BHHI to LCCM, and used the proceeds to pay Griffin; and, that he
kept a written record of the $19,167.00 debt BHHI owed to Griffin.
Finally, the government presented evidence that Walker offered to
act as a liaison by speaking to Griffin about Hammond's concern
that he was going to be cut out of the Golden Oaks project, which
indicates that Walker and Griffin had a close association.
In addition, the record contains evidence that Roberts' role
was to convince Mitchell to use BHHI to build the Golden Oaks
project and to use Walker to obtain the land. As a result, the
50
government argued that Roberts defrauded TDHCA by intentionally
involving BHHI in the scheme wherein Griffin's ownership interest
in the corporation and her receipt of land and money from Walker,
Roberts, and Hammond, in exchange for her vote to approve the
project, was not disclosed. In support of that contention, the
government presented evidence that Roberts' role in convincing
Mitchell to use Walker to obtain the land for the Golden Oaks
project was crucial to the scheme because it made Mitchell's
purchase money available to pay the bribe to Griffin. Lastly, the
government showed that Roberts played a crucial role in introducing
Griffin and Walker to Hammond for purposes of entering into the
agreement to share ownership of BHHI.
This Court also has held that guilty knowledge can be inferred
from deception. See, e.g., United States v. Thomas, 120 F.3d 564,
570 (5th Cir. 1997) (defendant's "patently false statement [was]
circumstantial evidence of [defendant's] guilty knowledge"). The
record in this case indicates that the government presented
evidence that Walker and Roberts placed the land they received in
third party names. Further, Roberts placed cash disbursements he
received in the name of his mother; and he later placed $13,333.00
of the $50,000.00 check Mitchell wrote for Walker's services in the
name of Ozell Roberts. Moreover, during the recorded conversation
Roberts had with Mitchell, Roberts denied being one of the owners
of BHHI when the evidence clearly shows that was not true. Also,
51
Roberts claimed that he did not receive any of the $28,000.00
disbursement from the land sale when the record indicates that he
did. We conclude that the above evidence is sufficient for a jury
to impart knowledge to both Walker and Roberts as a result of
deception.
Therefore, we conclude that there was sufficient evidence in
the record for a jury to find that Walker and Roberts had knowledge
of the bribery scheme. The record contains evidence that they both
played an integral part in the scheme and had a close association
with Griffin, the key player in the scheme. The record also
contains enough evidence of Walker's and Roberts' use of deception
to conceal the scheme.
F. Whether the district court erred in restricting Griffin's
testimony of her out-of-court conversations.
Griffin contends that the district court erred in refusing to
let her testify to the contents of conversations that she had with
Walker and Roberts, though the court allowed her to testify
regarding the topics of those conversations. Griffin's counsel did
not object to this ruling by the district court, so plain error
review applies. As noted above, to withstand plain error review
(1) there must have been an error, (2) that was clear or obvious,
and (3) that affected the defendant's substantial rights. Olano,
507 U.S. at 731-34; Dixon, 273 F.3d at 639-40. Even if these
conditions are met, the error must have seriously affected "the
fairness, integrity, or public reputation of the judicial
52
proceedings" before it will be corrected by this Court. Olano, 507
U.S. at 736; Dixon, 273 F.3d at 640.
Griffin argues that she sought to introduce the testimony
concerning her out-of-court conversations to show her state of mind
or intent, and not to show the truth of the statements made during
the conversations. According to Griffin, therefore, the testimony
was not hearsay. Ultimately, Griffin argues that the jury was
unable to determine if what she did and said was reasonable because
she could not explain what precipitated her actions.
Griffin has not made it clear to this Court how her
substantial rights have been affected by the district court's
decision not to allow her to testify to the content of her out-of-
court statements. A review of the record, furthermore, reveals no
effect to Griffin's substantial rights or the integrity of the
trial. Therefore, we conclude that under the plain error standard,
there is no basis for reversal on this issue.
G. Whether the district court abused its discretion by allowing
evidence of similar incidences of misconduct by Griffin.
This Court reviews the admission of extrinsic acts evidence
for abuse of discretion. United States v. Route, 104 F.3d 59, 63
(5th Cir. 1997). The admissibility of evidence of other acts is
controlled by Rule 404(b) of the Federal Rules of Evidence, which
states:
Evidence of other crimes, wrongs, or acts is not
admissible to prove the character of a person in order to
show action in conformity therewith. It may, however,
53
be admissible for other purposes, such as proof of
motive, opportunity, intent, preparation, plan,
knowledge, identity, or absence of mistake or accident,
provided that upon request by the accused, the
prosecution in a criminal case shall provide reasonable
notice in advance of trial, or during trial if the court
excuses pretrial notice on good cause shown, of the
general nature of any such evidence it intends to
introduce at trial.
FED. R. EVID. 404(b). We employ a two-part test to determine whether
evidence is admissible under Rule 404(b): "(1) whether the
evidence is relevant to an issue other than the defendant's
character and (2) whether the evidence possesses probative value
that is not outweighed substantially by the danger of unfair
prejudice and is otherwise admissible under Rule 403." Route, 104
F.3d at 63. "Evidence that is 'inextricably intertwined' with the
evidence used to prove the crime charged is not 'extrinsic'
evidence under Rule 404(b). “Such evidence is considered
'intrinsic' and is admissible 'so that the jury may evaluate all
circumstances under which the defendant acted.'" United States v.
Navarro, 169 F.3d 228, 233 (5th Cir. 1999) (quoting United States
v. Royal, 972 F.2d 643, 647 (5th Cir. 1992) (citation omitted)).
Three witnesses testified to extrinsic acts by Griffin.
Griffin's attorney objected to the testimony of these witnesses.
The district court, however, overruled the objections concluding
that the testimony went to the issue of knowledge and intent
concerning Griffin's use of her office for personal gain.
Brenda Jenkins, executive director of the Texas Public Utility
54
Commission in 1996, testified that the General Services Commission
was planning on awarding a contract worth between $4 million and
$10 million to move the Public Utility Commission from leased space
to government-owned space. The process for awarding the contract
involved issuing a state-wide request for bids. Jenkins stated
that Griffin came to her office with two men to discuss the
possibility of doing the work. Griffin identified herself as a
commissioner with TDHCA and stated that as they were all "Aggies"
from Texas A&M University, Jenkins should consider using her
influence to help them get the contract. The record indicates that
Jenkins did not enter any agreement to help Griffin obtain the
contract.
Jenkins' testimony clearly was extrinsic because it had
nothing to do with the case at hand. However, the government notes
that it called Jenkins as a rebuttal witness, after Griffin
testified that she had never used her position as a board member
for personal gain. Griffin called two people who worked at TDHCA
to testify that they were never influenced by her. Jenkins then
testified on rebuttal as to Griffin's alleged attempt to influence
her on the Public Utility Commission's contract.
In United States v. Gibson, James Gibson was charged with
conspiracy to manufacture and to possess with intent to distribute
methamphetamine, possession of methylamine and maintaining a place
for the purpose of manufacturing and distributing a controlled
55
substance. 55 F.3d 173, 175 (5th Cir. 1995). Melvin Hazelton was
indicted as part of the same conspiracy and pled guilty to one
count pursuant to a plea agreement. Hazelton testified against
Gibson. Id. Gibson's defense was that he was completely innocent
of involvement in or even knowing of the production and
distribution of methamphetamine, and that Hazelton was lying. Id.
at 180. In rebuttal, the government called a witness to testify
that Gibson had sold him "speed" several times, but there was no
indication that these sales were related to any of the charged
conduct. Id. at 179. The district court admitted the testimony,
and we affirmed. We found that the evidence was relevant because
it "merely completed the picture as to appellant's true involvement
in and knowledge of the drug world, thereby correcting a distorted
view of appellant's testimony." Id. at 180. We find Gibson to be
akin to the case at hand in that Jenkins' rebuttal testimony
refuted Griffin's claim that she never used her position to
influence anyone.
Paul Todd, senior administrator of BVCAA, testified during the
government's case-in-chief and on rebuttal. He testified on direct
that Roberts was the housing director of BVCAA and had contacts
with TDHCA. He further testified on direct and on rebuttal that
Griffin proposed to act as a consultant to BVCAA on a low-income
housing project that would be funded by TDHCA, while Griffin was on
the TDHCA board. BVCAA did not participate in the proposed
56
project.
The government argues that Todd's testimony provided
background information on Griffin's and Roberts' relationship and
their experience in funding housing projects through TDHCA. We
agree. Moreover, Todd's testimony concerning Griffin’s having
approached him about the low-income housing project goes directly
to Griffin's involvement in the conspiracy. The evidence clearly
has probative value that outweighs any prejudice given the other
evidence presented on Griffins and Roberts' relationship and the
conspiracy.
Finally, Leslie Donaldson, manager of the credit underwriting
department at TDHCA, testified that Griffin contacted her directly
about a tax credit application for the Shadow Wood project. The
record indicates that Griffin requested that Donaldson fax her a
memorandum regarding the deficiencies in the application and that
Donaldson keep her advised throughout the process. According to
Donaldson, that form of contact by a TDHCA commissioner was
"absolutely unheard of." The record, nevertheless, indicates that
Donaldson did fax the requested information to Griffin, and
followed up with Griffin throughout the process.
The government argues that Donaldson's testimony about the
Shadow Wood project was intrinsic evidence because that project
involved the same participants as this case. In addition, the
government claims that the down payment on the land for the Shadow
Wood project was part of the reason BHHI was having financial
57
problems. But, the district court admitted the evidence as
extrinsic because it went to knowledge and intent only. Although
Griffin argues that knowledge, intent, and motive were not at issue
at trial because her defense was that she did not own any part of
BHHI and had done nothing wrong, the government still bore the
burden of proving that she acted with the requisite intent when she
voted on the tax credit applications and took bribes. Also, we
note that Donaldson was called as a rebuttal witness, so her
testimony was properly admitted to rebut Griffin's claim that she
had never tried to influence anyone.
Therefore, we conclude that the district court did not abuse
its discretion by allowing in evidence of similar incidences of
misconduct by Griffin. Jenkins' and Donaldson's testimony was
rebuttal evidence. Todd's testimony had probative value that
outweighed any prejudice given the other evidence presented during
the trial.
H. Whether the district court abused its discretion by limiting
Griffin's attorney's closing argument.
We review the rulings of a district court concerning
statements made during a closing argument to which a party
preserved an objection for abuse of discretion. United States v.
Kang, 934 F.2d 621, 627 (5th Cir. 1991). When a party fails to
preserve an objection to a district court's limitations on an
attorney's closing argument, we review any alleged error for plain
error only. United States v. Baptiste, 264 F.3d 578, 591 n.10 (5th
58
Cir. 2001).
The record reflects that during closing argument, Griffin's
attorney attempted to present an argument concerning the statutes
related to Texas' ethics laws, and that Griffin had not violated
those laws. The government objected. In response, the district
court did not specifically sustain the objection. Rather, the
district court explained that although the parties could argue the
relevance of state law, the case ultimately was one of federal law.
Griffin's attorney then continued his closing argument,
discussing Griffin's relationship with TDHCA and noting that the
former employees of TDHCA who testified during the trial still had
some form of business relationship with TDHCA. Griffin's attorney
also stated that the ethical standards brought up by the government
were for the state legislature to decide and that even if the jury
did not agree with those laws, only the state legislature could
change them, not the federal prosecutors. The district court then
told Griffin's attorney that he needed to get back to the issues at
hand and noted that Griffin was "not a former member [of TDHCA],
she's not accused of being a former member. She is accused of
being a member and then taking certain actions." Griffin's
attorney responded: "Well, I certainly do know that, Your Honor,
but this is my argument." The district court responded: "I
understand. Let's not get off--I just don't want the jury to get
off on any of--." Griffin's attorney then continued his argument
moving on to a different topic.
59
Griffin contends that the protestation, "Your Honor, but this
is my argument," is sufficient to constitute a viable objection.
Griffin further argues that her attorney's statement should amount
to an objection particularly considering the fact that the district
court interrupted the closing argument and indicated that the
lawyer was not properly addressing the issues. Thus, Griffin
asserts that the district court abused its discretion by
interrupting her attorney's closing argument in the manner it did.
We do not agree that Griffin's attorney's protestation was a
viable objection. Nevertheless, whether we apply an abuse of
discretion standard or plain error standard, we conclude that the
record does not support a finding that the district court
improperly limited the closing argument. The district court made
clear to the jury that it should follow the elements of the crime
as laid out in the court's charge, and that what the attorneys were
rightfully doing during their closing arguments was arguing the
evidence. Although Griffin's attorney was able to argue that she
did not violate Texas law, it was not improper for the district
court to tell him to move on when he started arguing that it was up
to the Texas legislature to change Texas' ethics laws, not the
federal prosecutor, as that has no relevance to the case.
Therefore, any limitation on Griffin's closing argument that
resulted from the district court's interruption did not amount to
an abuse of discretion or plain error.
60
I. Whether Walker and Roberts were constructively denied counsel.
Walker and Roberts did not argue to the district court that
they were constructively denied counsel. Generally, this Court
cannot determine a claim of inadequate representation on direct
appeal when the claim has not been raised before the district
court. United States v. Freeze, 707 F.2d 132, 138 (5th Cir. 1983).
"Only when the record is sufficiently developed with respect to
such a claim, will we determine the merits of the claim." Id.(citing United States v. Phillips, 664 F.2d 971, 1040 (5th Cir.
1981)).
Walker and Roberts argue that they were constructively denied
counsel because their lawyers deferred to Griffin's counsel and
thereby represented only Griffin's interests. They also argue that
their lawyers failed to subject the government's case to meaningful
adversarial testing. Specifically, Walker and Roberts complain
that their attorneys did not raise the defense that they were
unaware of Griffin's illegal activities because doing so would have
been inconsistent with Griffin's defense that she did not own part
of BHHI and therefore had done nothing wrong.
Additionally, Walker and Roberts argue that their attorneys
did not make motions for separate trials. Furthermore, their
attorneys did not object when the government elicited testimony
that was damaging to them. In particular, the government elicited
evidence of the sale of land to Mitchell by BHHI for $15,000.00 an
61
acre, even though BHHI had only paid $2,000.00 an acre for the
land. Walker and Roberts argue that this land sale was irrelevant
to the charged counts, even though the government argues that the
sale showed a concert of action in relation to BHHI and revealed
the source of the bribe to Griffin. Walker and Roberts also point
out that the district court expressed concern at several points
during the trial that Griffin's attorney seemed to be representing
everyone, even though Walker and Roberts might have different
interests.
Notably, Griffin's attorney filed "boilerplate" objections to
Walker's sentencing on his behalf, which were the same as those
filed for Griffin and not specific to Walker's interests. The
district court, however, refused to allow Griffin's attorney to
represent Walker because of his loyalty to Griffin, who had
different legal and factual positions. The district court also
questioned Roberts' attorney as to whether he truly was
"comfortable that he has represented Roberts' interests without
regard to Griffin." The district court then reiterated that it had
told Walker and his counsel "in no uncertain terms, that Mr. Walker
needed separate counsel, truly separate counsel."
In order for an attorney's assistance to be so defective as to
require reversal of the conviction, the defendant must make two
showings:
First, the defendant must show that counsel's performance
was deficient. This requires showing that counsel made
errors so serious that counsel was not functioning as the
62
"counsel" guaranteed the defendant by the Sixth
Amendment. Second, the defendant must show that the
deficient performance prejudiced the defense. This
requires showing that counsel's errors were so serious as
to deprive the defendant of a fair trial, a trial whose
result is reliable.
Strickland v. Washington, 466 U.S. 668, 687 (1984). However, the
defendant need not make a specific showing of prejudice in a
limited number of cases. These include: (1) "the complete denial
of counsel," such as "if the accused is denied counsel at a
critical stage of his trial;” (2) situations in which "counsel
entirely fails to subject the prosecution's case to meaningful
adversarial testing;” and, (3) "on some occasions when although
counsel is available to assist the accused during trial, the
likelihood that any lawyer, even a fully competent one, could
provide effective assistance is so small that a presumption of
prejudice is appropriate without inquiry into the actual conduct of
the trial." United States v. Cronic, 466 U.S. 648, 659-660 (1984).
"A constructive denial of counsel occurs in only a very narrow
spectrum of cases where the circumstances leading to counsel's
ineffectiveness are so egregious that the defendant was in effect
denied any meaningful assistance at all." Gochicoa v. Johnson, 238
F.3d 278, 284 (5th Cir. 2000)(citation omitted). Walker and
Roberts allege that their representation at trial completely failed
to subject the prosecution's case to meaningful adversarial testing
and, therefore, they were constructively denied counsel.
In Burdine v. Johnson, this Court held that the defendant was
63
denied counsel and was entitled to a presumption of prejudice when
his lawyer repeatedly slept as evidence was being introduced
against him. 262 F.3d 336, 338 (5th Cir. 2001) (en banc).
Additionally,
[w]e have found constructive denial in cases involving
the absence of counsel from the courtroom, conflicts of
interest between defense counsel and the defendant, and
official interference with the defense; and have stated
that constructive denial will be found when counsel fails
to subject the prosecution's case to any meaningful
adversarial testing.
Gochicoa, 238 F.3d at 284. However,
we have refused to find a constructive denial where
defense counsel investigated only certain issues, where
counsel's trial presentation was "somewhat casual," where
counsel failed to pursue a challenge based on racial bias
in jury selection, to object to a variation between the
indictment and the jury charge, or to raise a meritorious
issue on appeal. Thus, prejudice is presumed, and
Washington's second prong inapplicable, only when the
defendant demonstrates that counsel was not merely
incompetent but inert, distinguishing shoddy
representation from no representation at all. When the
defendant complains of errors, omissions, or strategic
blunders, prejudice is not presumed; bad lawyering,
regardless of how bad, does not support the per se
presumption of prejudice.
Id. at 284-85 (citations and internal quotations omitted). The
attorneys' acts of which Walker and Roberts complain fall in this
latter group of cases. The record indicates that there was no
complete absence of counsel, no actual conflict between the
attorneys and their clients, and no official interference. In
addition, Walker's and Roberts' attorneys made opening statements,
albeit after the government's case. Both attorneys also questioned
64
some of the witnesses and made closing statements. We find,
therefore, that prejudice cannot be presumed in this case.
Furthermore, Walker and Roberts have not shown this Court that
their counsels' performance was deficient under the first prong of
Washington. In other words, they have not shown that their
counsels' errors were serious enough to constitute a deficiency, or
that they suffered actual prejudice. A decision by co-defendants
to proceed with a unified defense is one of trial strategy, and not
a basis for an ineffective assistance claim. See United States v.
Mooney, 769 F.2d 496, 499-500 (8th Cir. 1985).
Additionally, although Walker and Roberts argue that their
attorneys were deficient in failing to seek separate trials, the
Supreme Court has indicated that a severance of co-defendants'
trials should be granted "only if there is a serious risk that a
joint trial would compromise a specific trial right of one of the
defendants, or prevent the jury from making a reliable judgment
about guilt or innocence." Zafiro v. United States, 506 U.S. 534,
539 (1993). We have found that a defendant did not suffer
prejudice from the joinder of his trial with a co-defendant when
there was sufficient evidence to convict the defendant. See United
States v. Broussard, 80 F.3d 1025, 1036-37 (5th Cir. 1996).
Lastly, Walker and Roberts have not shown prejudice in that the
outcome of the trial would have been different absent any alleged
errors. We find, therefore, that Walker and Roberts were not
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constructively denied counsel.
J. Whether the district court erred in sentencing the Appellants
in its calculations of the benefits to be received from the bribes,
the existence of multiple bribes, and the amount of restitution
owed to Mitchell.
All three Appellants assert that the district court erred in
calculating their sentences. In reviewing a sentence imposed by a
district court under the federal sentencing guidelines, "’we review
the trial court's findings of fact for clear error and review
purely legal conclusions or interpretations of the meaning of a
guideline de novo.’" United States v. Canada, 110 F.3d 260, 262-63
(5th Cir. 1997) (quoting United States v. Kimbrough, 69 F.3d 723,
733 (5th Cir. 1995). Clear error exists if this court is left with
a definite and firm conviction that a mistake has been made.
Estate of Jameson v. Commissioner, 267 F.3d 366, 370 (5th Cir.
2001).
As to Griffin's sentence, the district court applied a total
offense level of 29 and a criminal history category of I. The
district court began with a base offense level of 10 under U.S.S.G.
§ 2C1.1, which is applicable to offenses under 18 U.S.C. §
666(a)(1)(B). The court then increased the offense level by 2
under U.S.S.G. § 2C1.1(b)(1) because it found that there was more
than one bribe. The court also increased the offense level by an
additional 13 under U.S.S.G. § 2C1.1(b)(2)(A) because it found
that the value of the benefit to be received from the offenses was
$3.1 million. In addition, the court increased the offense level
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by 2 under U.S.S.G. § 3B1.1(c) for her role in the offense, and by
2 under U.S.S.G. § 3C1.1 for obstruction of justice. These
increases resulted in a total offense level of 29. Walker's and
Roberts' offense levels were similarly increased by two on a
finding of more than one bribe, and by 13 on the calculation of
approximately a $3.1 million benefit to be received from the
offenses.
The Appellants argue that there was only one bribe alleged in
the indictment, and that it was error to find two bribes. Further,
the Appellants contend that the only benefit to be received by BHHI
from the Golden Oaks project bribe was the $403,289.00 in profit to
BHHI, as stated by Mitchell in a line item in the tax credit
application that he prepared. The district court also included in
its calculations the $216,000.00 for the 108 acres left over from
the land that Smith sold to BHHI, the $61,522.00 salary that
Roberts received from One Golden Oaks Ltd., the $400,000.00
developer's fee that Roberts anticipated from completing the
project, and the $120,000.00 anticipated profit on the Shadow Wood
project. The Appellants argue that the $2.4 million profit
calculation is incorrect, and that the additional amounts were not
part of the benefit to be received and should not be taken into
account. Rather, Appellants argue that $403,289.00, which was the
amount listed as the contractor profit on the Golden Oaks project's
tax credit application, should have been used.
The amount of benefit to be received is a fact finding issue
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that is reviewed for clear error. United States v. Chmielewski,
196 F.3d 893, 894 (7th Cir. 1999); see also United States v.
Bankston, 182 F.3d 296, 317 (5th Cir. 1999), vacated on other
grounds sub nom. Cleveland v. United States, 529 U.S. 1017 (2000).
The district court need not determine the value of the benefit with
precision. United States v. Landers, 68 F.3d 882, 884 n.2 (5th
Cir. 1995). In fact, in determining the amount of benefit to be
received, courts may consider the expected benefits, not only the
actual benefits received. See, e.g., Chmielewski, 196 F.3d at 894-
95; United States v. Thickstun, 110 F.3d 1394, 1400 (9th Cir.
1997).
The guideline commentary defines the value of "the benefit
received or to be received" as "the net value of such benefit."
U.S.S.G. § 2C1.1(b)(2)(A), comment. (n.2). The commentary provides
two examples:
(1) A government employee, in return for a $500 bribe,
reduces the price of a piece of surplus property offered
for sale by the government from $10,000 to $2,000; the
value of the benefit received is $8,000. (2) A $150,000
contract on which $20,000 profit was made was awarded in
return for a bribe; the value of the benefit received is
$20,000. Do not deduct the value of the bribe itself in
computing the value of the benefit received or to be
received. In the above examples, therefore, the value of
the benefit received would be the same regardless of the
value of the bribe.
U.S.S.G. § 2C1.1, comment. (n.2). We have stated that these
examples make clear that "direct costs should be deducted from the
gross value of the contract." Landers, 68 F.3d at 884.
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Applying these principles, we find that the district court
clearly erred in calculating the Appellants' sentences. First, we
find that the district court clearly erred in determining BHHI's
anticipated profit to be $2.4 million, which was the difference
between what BHHI allegedly was going to bill One Golden Oaks, Ltd.
and what the actual building costs were projected to be. We can
find no evidence in the record to indicate BHHI intended to bill
One Golden Oaks, Ltd. $7.5 million. We also cannot find any
evidence to support the district court's conclusion that building
costs were projected to be $5.1 million. There is nothing in the
record to support the district court's finding that the profit
expected by the Appellants was $2.4 million. Apparently, the
district court adopted the figure of $2.4 million as the profit to
be made by BHHI, as described in the Appellants' PSRs, which is the
major item in the $3.1 million benefits.
The Golden Oaks project's tax credit application is the best
indicator in the record as to what the expected costs and profits
were. Mitchell specifically noted in the tax credit application
that BHHI's expected profit was $403,289.00, which we conclude is
the best available evidence of what BHHI's expected profit was.
Second, we agree with the Appellants' argument that the
benefit received should not have included the $216,000.00 that BHHI
earned from the land sale to One Golden Oaks, Ltd. This sale had
nothing to do with any bribe concerning Griffin's vote for the
Golden Oaks project's tax credit application. Mitchell hired
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Roberts to obtain land for the project, which he did. As a
sophisticated businessman, Mitchell knew or should have known the
potential costs of purchasing land in the location intended for the
project. Roberts' act of making a profit off of his own business
partner may be unethical and possibly actionable in a civil
lawsuit; but it was not a crime and we do not believe it can be
included within the scope of the bribe in this case.
Third, we do not believe that the benefit received should have
included Roberts' salary amounting to $61,5226 or his anticipated
$400,000 expected bonus. Both the salary and bonus were negotiated
with Mitchell before any bribery scheme came into being. And,
Roberts would have received these amounts regardless of any bribes
had the project been completed. Again, these amounts were
negotiated with Mitchell, a sophisticated businessman, who clearly
viewed the salary and bonus as part of the cost of doing business.
These amounts cannot be included in the scope of the bribery
scheme.
Fourth, we conclude that the $120,000 expected profit from the
Shadow Wood project should not have been considered as part of the
benefit received. The record includes very little testimony
concerning this potential project. Regardless, the record clearly
indicates that Griffin never voted on this project, nor was there
6
The Appellants' PSRs indicated that Roberts received $61,529.94
in salary from Mitchell. During the Appellants' sentencing
hearings, however, the district court stated that the amount of
Roberts' salary was $61,522.
70
any evidence that she intended to so. Furthermore, the indictment
does not even include a charge that refers to this project or a
bribe for Griffin's vote. Therefore, the $120,000 should not have
been included in the calculations.
We conclude that the expected benefit to the Appellants should
have been the $403,289.00, which is stated in the tax credit
application; and it was clear error for the district court to
include the other amounts discussed above. As a result, the
Appellants' sentences must be recalculated to account for this
change.
Similarly, we conclude that the district court erred in
applying a two level increase as a result of concluding that there
were two bribes in this case. Our reading of the indictment is
that there was only one bribe charged--the bribe for Griffin's vote
on the Golden Oaks project. As noted above, though there was some
testimony concerning other intended projects such as Shadow Wood,
they had nothing to do with the bribe charged in this case.
Therefore, this two level increase should not have been applied.
Lastly, we question the district court's determination that
Mitchell is owed $783,455.00 in restitution, which was based on the
amount of restitution recommended in the Appellants' PSRs. There
are two puzzling aspects of this determination in the PSRs. First,
the PSRs suggest that Mitchell is qualified to receive restitution
under 18 U.S.C. § 3663(a) because he is a "proximate victim," who
suffered financial harm resulting from the Appellants' criminal
71
conduct. Secondly, the PSRs indicate the amount of restitution
owed to Mitchell by adding the $61,529.947 in salary that he paid
to Roberts; the $328,133.87 for the land purchased for the Golden
Oaks project; credit card charges totaling $2,570.22; and
$391,221.05 for development costs including appliances, application
fees and lumber.
We are not convinced that the amount of restitution suggested
by the PSRs and ordered by the district court is justified. We
cannot speak to the credit card charges incurred by Mitchell
because the record does not indicate what they were for and when
they were incurred. However, as we noted above, Roberts' salary
and the land purchase occurred before the fruition of the bribery
scheme and were part of what Mitchell clearly viewed as acceptable
costs of putting the project together. Therefore, these amounts
should not be included in any restitution figure.
Further, the development costs noted in the PSRs also should
not be included for restitution. These costs had nothing to do
with the bribery scheme, and would have been incurred had there
never been a bribery scheme. Again, Mitchell agreed to these costs
as part of doing business.
We note that this Court has expressly held that a victim who
is "directly and proximately harmed" in the context of 18 U.S.C. §
3663A may be entitled to restitution. See United States v.
7
See supra note 5.
72
Mancillas, 172 F.3d 341, 343 (5th Cir. 1999) (citing United States
v. Hughey, 147 F.3d 423, 437 (5th Cir. 1998)). However, we also
have restricted "the award of restitution to the limits of the
offense." Id. Our reading of the record indicates that any losses
incurred by Mitchell resulted from the Golden Oaks project
collapsing because of BHHI's or LCCM's inability to obtain interim
financing and performance bonds. This collapse had nothing to do
with the bribery scheme for which the Appellants were charged.
Rather, Mitchell was a sophisticated businessman who should have
been able to evaluate whether a construction company was capable of
performing a particular project.
The record does not indicate that there was a separate hearing
detailing whether Mitchell qualifies for restitution as a
“proximate victim” and what amount he should receive if he does
qualify. Therefore, on remand, the district court should conduct
a hearing to determine Mitchell's status as a "direct and
proximate" victim, and the amount of restitution that is
"attributable to the specific conduct supporting the offense of
conviction." Hughey, 147 F.3d at 437
III. CONCLUSION
We REVERSE the Appellants' convictions on counts 6 and 7 for
mail fraud. We AFFIRM the Appellants' convictions on the other
counts for which they were indicted. We vacate the sentence of
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each Appellant and REMAND this case for resentencing in light of
our opinion. The district court also should conduct a hearing for
the purpose of determining whether Mitchell qualifies as “a direct
and proximate victim” and for the purpose of determining the
quantum of restitution, if any, to which he may be entitled.
AFFIRMED IN PART, REVERSED IN PART and REMANDED.
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