United States v. Pankhurst

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________________
No. 96-20563
_______________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee/Cross-Appellant,
versus
JOSEPH PANKHURST,
Defendant-Appellant/Cross-Appellee.
_________________________________________________________________
Appeals from the United States District Court
for the Southern District of Texas
_________________________________________________________________
July 21, 1997
Before SMITH, BARKSDALE, and BENAVIDES, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
The principal issue at hand is whether, prior to a sua sponte
downward departure, the district court must give FED. R. CRIM. P. 32
pre-sentencing notice to the Government. Joseph Pankhurst appeals
his conviction under 18 U.S.C. § 201(b)(1)(A) for “corruptly
giv[ing] ... [$10,000] to [a] public official ... with ... intent
... to influence [an] official act”; he challenges both the jury
instruction describing the “official act” (“acceptance of an offer
by [Pankhurst] to purchase a loan being sold ... by the Resolution
Trust Corporation”) and the sufficiency of the evidence, especially
concerning his corrupt intent. The Government cross-appeals from
the downward departure, in part because it was not given notice.
We AFFIRM the conviction, but VACATE and REMAND for resentencing.
I.
Pankhurst and his wife owned Atlas Oil Company. In early
1992, Pankhurst, through Atlas Oil, acquired Jetera Fuels
Terminaling Corporation for only $2,500. But, Jetera was burdened
with a $5.6 million debt on two loans from TexasBanc Savings (TBS),
with monthly payments of approximately $60,000 and with Jetera’s
property as security. TBS had failed prior to Atlas Oil’s
acquisition of Jetera; the TBS loans were managed by the Resolution
Trust Corporation (RTC), which, inter alia, had the power to
foreclose on Jetera’s property in event of default.
In mid-1992, although Jetera was not in default on either loan
and was profitable, Pankhurst, as chairman of Jetera, requested
that the RTC consolidate the loans and reduce the principal to
$1.75 million. The RTC responded that the loans had been grouped
with others for sale, and that their terms could not be negotiated
then. Later that year, Jetera defaulted on the loans.
In response to the default, the RTC advised Pankhurst that it
would order an appraisal and environmental assessment of Jetera.
Pankhurst, again on behalf of Jetera, again requested loan
consolidation and reduction.
In June 1993, Pankhurst, now on behalf of Atlas Oil Company,
offered to the RTC to purchase for $500,000 either the Jetera
property or the Jetera loans. In response, Ronnie Hooks, a
contract employee for the RTC who was acting as senior asset
manager for TBS, met with Pankhurst at the RTC’s offices in
Houston, Texas.
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Hooks advised Pankhurst at the meeting that the RTC had
received competing offers for the property securing the loans; that
Jetera’s appraised value was approximately $800,000; that the RTC
was receiving approximately 70% of the appraised value for similar
properties; and that, therefore, if Pankhurst increased his offer
from $500,000 to $560,000, it might be accepted. Pankhurst
increased his offer accordingly. And, later in the discussions,
Pankhurst placed a stack of cash on the table. At this meeting,
Hooks informed Pankhurst that he did not have the authority to
accept Pankhurst’s $560,000 offer to the RTC; in addition, he
neither accepted nor rejected Pankhurst’s offer of cash.
Concerning the cash placed on the table, Pankhurst testified
that he had asked if an attorney would be necessary, and whether
Hooks knew anyone willing to act as a consultant during the
negotiations with the RTC; that he stated to Hooks that he had seen
advertisements about former RTC employees offering to work as
consultants; that he opened his briefcase in order to show Hooks
such an advertisement, stating that he had seen about “ten of
these”; and that some cash also happened to be in the briefcase,
because he was about to make a deposit and, therefore, a deposit
slip was bound to the top of the cash. On the other hand, Hooks
testified that he understood the “ten of these” comment to be a
reference to ten similar piles of cash.
Hooks reported Pankhurst’s actions concerning the cash to the
RTC. An investigation ensued, with Hooks assisting the FBI. In
recorded telephone conversations, Hooks and Pankhurst discussed
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different documents Pankhurst would have to submit to the RTC, and
the amount of Hooks’ “consulting fee”, which they set at $10,000.
During these recorded conversations, Hooks told Pankhurst that
he did not want to meet at obvious places. They met at a hotel;
Pankhurst then took Hooks to Pankhurst’s car.
At the car, Hooks, wearing a recording device, stated that he
had more work to do to get Pankhurst the deal he wanted from the
RTC; that he had been afraid when Pankhurst first approached him
about the deal in the RTC offices; and that, within a few days, he
could obtain acceptance of Pankhurst’s offer to the RTC.
At that point, Pankhurst said that he would pay Hooks half of
the $10,000 then and the other half when his offer to the RTC was
accepted. He handed Hooks a binder labeled “corporate records”;
the binder contained cash. Pankhurst gave Hooks part of the cash
and said he would keep the rest in the trunk of his automobile.
Hooks delivered to the FBI the binder received from Pankhurst.
It contained $5,000 in cash.
At Hooks’ request, the two men met two days later at the same
hotel. Again, Hooks was wearing a recording device and they met in
Pankhurst’s car. Pankhurst handed Hooks a letter offering
$560,000, a settlement document, and a $2,000 earnest money check.
In turn, Hooks gave Pankhurst a letter accepting the offer, and
explained that Atlas Oil would be the purchaser and that the
transaction would probably close by the end of the month. When
Hooks asked about job opportunities, Pankhurst suggested that Hooks
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work for him. Pankhurst also gave Hooks the second $5,000 in a
brown manila envelope, telling him to “put this in your briefcase”.
Pankhurst was arrested at the subsequent, videotaped meeting
he was instructed to attend to close the transaction. He was
convicted by a jury of bribery of a public official, a violation of
18 U.S.C. § 201(b)(1)(A). Pankhurst’s motions, during and after
trial, for judgment of acquittal were denied, as was his motion for
new trial.
At sentencing, consistent with the recommendation in the
Presentence Report, the Government urged a guidelines sentencing
range of 51 to 63 months. Instead, the district court, without
having given Rule 32 pre-sentencing notice of a possible downward
departure, ruled that the guidelines did not apply adequately to
Pankhurst’s offense and ordered a downward departure. Because of
the resulting low offense level, and the fact that Pankhurst was a
first offender, probation was a sentencing option. Pankhurst was
placed on probation for one year (with home confinement) and fined
$50,000. The sentence was stayed pending appeal.
II.
Pankhurst challenges the description for the “official act”
used in the jury charge and claims there was insufficient evidence
for conviction, in part because of a claimed failure to prove
corrupt intent. The Government challenges the downward departure,
contending in part that it made a sufficient objection at
sentencing about not being given notice of a possible departure.
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A.
Pankhurst’s one count indictment contained two possible
grounds for conviction. He was charged with violating subparts (A)
and (B) of 18 U.S.C. § 201(b)(1), which proscribes:
[d]irectly or indirectly, corruptly giv[ing],
offer[ing] or promis[ing] anything of value to
any public official ... with intent ...
(A) to influence any official act; or
(B) to influence such public official ... to
commit or aid in committing ... any fraud ...
on the United States....
18 U.S.C. § 201(b)(1). But, the court did not submit subpart (B)
(fraud) to the jury as a possible basis for conviction.
Accordingly, the only possible basis for conviction was an intent
“to influence an official act” (subpart (A)), not an intent to
effect a fraud on the United States (subpart (B)).
Accordingly, the court instructed the jury that it could
return a guilty verdict only if it found, beyond a reasonable
doubt, both that Pankhurst “directly or indirectly gave, offered or
promised $10,000 to Ronald Hooks, a public official”; and that
Pankhurst “did so corruptly [defined for the jury as “done
intentionally with an unlawful purpose”], with intent to influence
an official act by a public official”. The “official act” was
defined as the act described in the indictment; therefore, the
pertinent portion of the indictment was included then in the
charge:
Pankhurst, did directly and indirectly
corruptly give, offer, and promise ... $10,000
... to a public official, namely Ronald
Hooks[,] ... with the intent to influence an
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official act and to influence a public
official, namely Ronald Hooks, to commit and
aid in committing a fraud upon the United
States. That is the acceptance of an offer by
the defendant to purchase a loan being sold to
the public by the Resolution Trust
Corporation.1
The court’s proposed charge had not contained a definition or
description of the “official act” in issue. At the earlier charge
conference, in his objections to that proposed charge, Pankhurst’s
counsel had contended, in a very general way, that the court should
add such a definition or description. But, other than referring to
the language in the indictment, Pankhurst’s counsel did not offer
a definition. And, when the court stated that the description in
the indictment would constitute the definition for the “official
act”, Pankhurst’s counsel did not object to the inclusion of the
fraud language also contained there. Restated, he did not request
that the fraud language be redacted. In fact, he agreed to the
indictment, which included the fraud language, being used as the
description or definition of the official act.
Now, however, on appeal with different counsel, Pankhurst
asserts that the court committed reversible error in its “official
act” instruction. Pankhurst complains that, instead of granting
his “request[] ... [to] instruct the jury specifically what they
must find as the ‘official act’”, the court used the indictment for
that purpose. Likewise, he complains, most belatedly, that the
1
Concerning the difference in punctuation surrounding
“that is” in the last sentence of the above-quoted transcribed
charge and in the indictment, see note 2, infra.
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indictment contained language concerning fraud as a possible aim of
the payment to Hooks, making conviction on the fraud element
possible, even though the court refused to submit that element to
the jury. In the alternative, Pankhurst urges, again most
belatedly, that, because the fraud language was left in, it should
have been defined.
But, again, Pankhurst did not object to the inclusion of the
fraud language, nor to the failure to define fraud, when the court
opted to use the indictment to describe the official act. As
noted, Pankhurst had, however, requested earlier that the court
define the official act. On the other hand, as also noted, he did
not provide or suggest a definition, other than agreeing to the
indictment’s language being incorporated for that purpose.
Therefore, were Pankhurst challenging only the inclusion of
the fraud language, we would, at most, review only for plain error.
E.g., United States v. Calverley, 37 F.3d 160, 162-64 (5th Cir.
1994)(en banc). (In fact, as discussed infra, based on the
colloquy at the charge conference, the issue presented is quite
close to being invited error.)2 However, because Pankhurst did
2
As for the inclusion of the fraud language, Pankhurst
claims also that it caused confusion and deprived him of a fair
trial. The indictment was provided to the jury for its
deliberation. As indicated in note 1, supra, for the “official
act” description, the punctuation used in the indictment is
slightly different from that used in the transcript of that portion
of the jury charge when the district court, in response to
Pankhurst’s request for a definition of the official act, verbally
incorporated part of the indictment in defining the official act.
The pertinent part of the indictment reads: “with the intent to
influence an official act and to influence a public official,
namely Ronald Hooks, to commit and aid in committing a fraud upon
the United States, that is, the acceptance of an offer by the
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object generally at the charge conference to the failure of the
proposed charge to describe or define the official act, we will,
most dubitante, review, under our usual standard, the refusal to
grant the requested instruction. (The detailed review that follows
is also for the purpose of demonstrating further the total lack of
merit in this issue.)
defendant to purchase a loan being sold to the public by the
[RTC].” (Emphasis added.) As reflected in the portion of the
charge quoted in the text, supra, the transcript of the charge, as
read to the jury, uses a period, instead of a comma, between “upon
the United States” and “that is” and does not have a comma after
“that is”. It reads in part: “with the intent to influence an
official act and to influence a public official ... to commit ...
a fraud upon the United States. That is the acceptance of an
offer....”
Of course, the court reporter was simply transcribing the
trial judge’s verbal inclusion of this part of the indictment. The
version seen by the jury was in the indictment. We note this
punctuation difference only as a hyper-technical partial response
to Pankhurst’s hyper-technical, semantic contention about jury
confusion.
Pankhurst urges that the phrase “that is” caused confusion
because the act described after “that is” (acceptance of
Pankhurst’s offer for the loan) might be understood to refer to the
“influence fraud” portion of the charge, as opposed to the
“influence an official act” portion; and that, as a result, both
the indictment and charge were “vague and ambiguous”, making it
doubtful that the jury returned a unanimous verdict as to what the
“official act” was and, therefore, deprived him of his right to a
fair trial.
We disagree. First, the pertinent portions of the indictment
and the charge are neither vague nor ambiguous. It is clear that,
in each, the act described after “that is” refers to the official
act as well as to fraud. And, in any event, Pankhurst did not
present this objection at trial; again, even if there were an
error, we would review only for plain error. Once again, new
(appellate) counsel is raising a point that former (trial) counsel
apparently felt, correctly, was not a source of error. In sum,
there was no error.
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Jury charges are reviewed only for an abuse of discretion; we
determine “whether the court’s charge, as a whole, is a correct
statement of the law and whether it clearly instructs jurors as to
the principles of law applicable to the factual issues confronting
them.” United States v. McKinney, 53 F.3d 664, 676 (5th Cir.)
cert. denied, 116 S. Ct. 261 (1995). If the trial court refuses a
requested instruction, the requesting party must demonstrate that
the proposal: (1) was a correct statement of the law; (2) was not
substantially covered in the charge as a whole; and (3) concerned
an important point in the trial such that failure to instruct the
jury on the issue seriously impaired the defendant’s ability to
present a given defense. United States v. Smithson, 49 F.3d 138,
142 (5th Cir. 1995) citing, United States v. Chaney, 964 F.2d 437,
444 (5th Cir. 1992).
Obviously, with respect to the first part of the test,
Pankhurst suffers greatly from his failure to submit to the
district court a specific definition of the “official act”. As
provided for by FED. R. CRIM. P. 30, he should have submitted a
written request; he did not even verbally offer a definition.
Needless to say, without a specific proposal to review, we cannot
say that the definition which Pankhurst may have wanted would have
been legally correct. His failure to submit a definition to the
court deprives us of the very subject of the requested appellate
review. Pankhurst’s mere (assumed) objection to the instruction
is, in short, ineffective, and, most arguably, brings our review of
this issue to a close.
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But, in any event, the charge, as a whole, substantially
covered Pankhurst’s request. Even assuming that the incorporation
of part of the indictment in the charge possibly suggested fraud to
the jury as a possible intended result of the charged bribe, fraud
was not a permissible basis for conviction, because the court
removed the fraud portion of the indictment from the jury’s
consideration. Again, the jury was charged only under subpart (A)
(intent to influence official act).
As stated, in reviewing jury instructions, we look at the
instructions as a whole. McKinney, 53 F.3d at 676. As given to
the jury, the factual allegation underlying inducing fraud was
exactly the same as that for influencing an official act: “That is
the acceptance of an offer by [Pankhurst] to purchase a loan being
sold to the public....” This intent was the only one listed in the
indictment and the only one argued by the Government. In the trial
court’s exercise of discretion, it determined that the intent
element of § 201(b)(1)(A) was satisfied, under the facts of this
case, if the jury found that Pankhurst had intended, through
payment of $10,000 to Hooks, to influence the RTC to accept his
offer.
While the jury charge may have also erroneously included a
description of this intent as § 201(b)(1)(B) “fraud”, that will not
defeat the fact that such intent also satisfied the “official act”
prong of § 201(b)(1)(A). See note 2, supra. The Government still
had to prove, beyond a reasonable doubt, that Pankhurst intended to
influence the RTC’s acceptance of his offer. Therefore, the jury
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charge substantially covered Pankhurst’s request, as that request
would not have changed the burden on the Government or the possible
defenses available to Pankhurst.
As noted, Pankhurst changed counsel after trial. Concerning
this requested instruction issue, it is most enlightening that, in
closing argument, Pankhurst’s trial counsel pushed the fraud
concept vigorously:
They charged that Joe Pankhurst with intent
corruptly gave $10,000 to Ronnie Hooks with
the intent to influence an official act. And
here is the official act: To commit and aid in
committing a fraud upon the United States,
that is the acceptance of an offer by the
defendant to purchase a loan being sold to the
public by the Resolution Trust Corporation.
First place, it wasn’t being sold to the
public, it failed right there. But in the
second place, he wasn’t trying to get to
perpetrate a fraud. He was trying to do a
reasonable business deal...
(Emphasis added.) In short, Pankhurst combined fraud and
influencing the official act. As discussed below, this was his
apparent strategy. Moreover, as noted, the defenses available to
Pankhurst were exactly the same as if the court had granted his
request and had therefore defined or described the official act in
some other way; Pankhurst still had to counter the Government’s
contention that he had intended, through a payment to Hooks, to
influence the RTC’s acceptance of his offer.
It bears repeating that Pankhurst agreed to the indictment’s
being included in place of some other definition of the “official
act”. As referenced earlier, we will not hold that agreement to
constitute invited error, because Pankhurst had, at least, earlier
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requested a definition, even though the request was very general,
if not vague, and even though he did not provide the desired
language. But, as also reflected in this record, Pankhurst’s
subsequent agreement to the indictment’s being used as the
definition, supplemented by his comments during the charge
conference, as illuminated by responding comments by the trial
judge, certainly cause the claimed error to border on invited
error. This is demonstrated further by the fact that Pankhurst’s
post-verdict motions for judgment and for new trial urge, inter
alia, that the jury had to find fraud, and that the evidence was
insufficient on that point. In essence, what we are being
presented with on appeal, in part, is appellate counsel’s quite
different view of the case from that of trial counsel. It goes
without saying that points raised at trial are the points that
control on appeal.
In sum, pursuant to our three-part review in regard to refusal
of a requested instruction, there was no reversible error. In
fact, as discussed ad nauseum, Pankhurst’s appellate counsel have
tried, in large part most improperly, to present a point of error
where there was none. They have, for the most part, attempted to
“rewrite history”. They fail. The record is clear; what took
place, took place. With the instructions, to which he agreed,
Pankhurst’s trial counsel was given, and permitted to do, exactly
what he wanted, to argue exactly what he wanted to argue.
In responding to Pankhurst’s contentions about the jury
charge, the Government’s brief points out what is immediately
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obvious from reviewing the charge conference and a few related
documents. The Government notes, inter alia, that Pankhurst did
not submit a proposed instruction prior to the conference; that the
trial court “essentially granted Pankhurst’s instruction request”;
that Pankhurst did not object to the included fraud language,
limiting review to plain error on that point; and that,
“[c]onceivably, Pankhurst ‘invited’ the error of which he now
complains”. Despite these serious, and correct, charges by the
Government, Pankhurst does not have one word in response in his
“Brief For the Cross-Appellee And Reply Brief For The Appellant”.
Instead, that brief deals only with the sentencing issue raised in
the Government’s cross-appeal.
This lack of response concerning an issue that, based on our
exhaustive review, has no merit further fuels our concern about why
this point was raised, and, especially, how it was
presented/briefed. Pankhurst’s appellate counsel have fallen far
short of making a fair, much less accurate, presentation of the
charge conference and related issues. They have presented an issue
totally lacking in merit. Counsel are warned that such conduct in
the future may result in sanctions being imposed against them.
B.
In district court, Pankhurst preserved our usual standard of
review for his sufficiency issue by moving, at the close of the
Government’s case and at the close of the evidence, under FED. R.
CRIM. P. 29(a), for a judgment of acquittal, contending, inter alia,
that the evidence was insufficient to prove criminal intent beyond
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a reasonable doubt. See United States v. Castaneda-Cantu, 20 F.3d
1325, 1329-30 (5th Cir. 1994); United States v. Knezek, 964 F.2d
394, 399-400 & n.14 (5th Cir. 1992). (After the verdict, Pankhurst
unsuccessfully moved for such judgment or for new trial and, later,
for reconsideration of the denial of that motion.) Therefore, the
standard of review is whether the evidence, as viewed in the light
most favorable to the verdict, would permit a rational trier of
fact to find Pankhurst guilty beyond a reasonable doubt. United
States v. Jaramillo, 42 F.3d 920, 922-23 (5th Cir.), cert. denied,
U.S. , 115 S. Ct. 2014 (1995); Castaneda-Cantu, 20 F.3d at
1330.
A conviction under 18 U.S.C. § 201(b)(1)(A) requires: (1) that
Pankhurst directly, or indirectly, corruptly gave, offered or
promised anything of value; (2) to any public official; (3) with
intent to influence any official act. United States v. Tomblin, 46
F.3d 1369, 1376 (5th Cir. 1995). The evidence showed that
Pankhurst negotiated with the RTC to purchase the Jetera loans;
that, during these negotiations, he showed Hooks a stack of cash
and said an acceptance of his offer would be worth ten of them;
that, in surreptitious, but recorded, meetings, Pankhurst handed
Hooks a “corporate records” binder which instead contained $5000 in
cash, and then offered, and later delivered, the other half of the
$10,000 when he received acceptance of his offer to the RTC; and
that Pankhurst attempted to close his “deal” with the RTC.
In short, there was sufficient evidence that money was offered
to Hooks, a public official, and that the goal was to influence the
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RTC’s acceptance of Pankhurst’s loan purchase offer, an official
act. In addition, as both shown above and discussed further below,
the evidence was more than sufficient regarding the requisite
“corrupt” intent in offering the $10,000 to Hooks.
There was evidence that, without corrupt intent, Pankhurst was
offering the $10,000 to Hooks as some type of “consulting fee” (as
if that could be without such intent), and this view is supported
by the fact that the loan-purchase offer Pankhurst made to the RTC
could have been accepted by the RTC regardless of any influence on
the part of Hooks. This is further corroborated by the fact that,
at the sham closing, Pankhurst was careful that none of the
documents contained any misstatements to the RTC. (Although this
meeting was videotaped, Pankhurst’s trial counsel failed, through
claimed oversight, to offer the tape in evidence. Post-trial, it
was submitted to the court by Pankhurst’s trial counsel for
consideration on sentencing.) Regardless of these facts,
Pankhurst’s claim fails for a number of reasons.
First, despite complaining of an apparent lack of integrity
among the jury, Pankhurst does not contend there was juror
misconduct or any external pressure on the jury to convict. He
points to a pre-sentencing letter to the trial judge from the jury
foreperson, which stated that “... we ha[d] no proof that Mr.
Pankhurst intentional[ly] walked into the Resolution Trust
Corporation’s office on the day in question and offered to bribe
Mr. Hooks”; that the reason the jury decided to convict was because
on Friday, when they were deadlocked at 9-3 to convict, they were
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told that, if they did not then reach a verdict, they would return
on Monday, and, as a result, the three holdouts quickly changed
their minds; and that, despite the professed lack of proof of
intent, the jury voted to convict because Pankhurst was wealthy and
had retained an expensive lawyer.
This does not rise to the level of noticeable juror
misconduct. (At sentencing, the court advised counsel that the
letter had been submitted; Pankhurst’s lawyer had known of its
probable submission and his inquiry about the letter prompted the
court’s reference to it. Despite suggesting that he might do so,
Pankhurst did not seek to move for a new trial based on it.
Reference to the letter, and the court’s deferring action on it
“until the matter arises”, are included in the court’s sentencing-
ruling, quoted infra.) In any event, Pankhurst raises only
sufficiency, not juror misconduct; the points made about the jury
do not affect our sufficiency analysis. Restated, the objective
sufficiency standard obviously does not include examination of jury
deliberations or the jurors’ true feelings; instead, we examine the
evidence to determine whether it was sufficient for a rational jury
to convict. Jaramillo, 42 F.3d at 922-23.
As discussed, the evidence was more than sufficient. For
example, it included recordings of the two meetings in which
Pankhurst gave the $10,000 -- in $5,000 increments -- to Hooks.
These recordings include discussion about their first meeting, at
the RTC office, during which Pankhurst placed the money on the
table. As reflected by the recording of the second
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hotel/automobile meeting, Hooks stated: “But it scared me when you
walked into the office and ... laid that fee on the table and said,
‘hey, ... I need a consultant’ or something. It scared me ... and
I had to give it some thought.” Pankhurst replied: “Of course, ...
but who’s got time to do the romance deal and the little tap dance;
... here it is; and ... that’s the way I saw it.”
Hooks testified that Pankhurst offered him $10,000 to act as
“consultant” throughout the negotiation process. The manner of the
transfer of the cash, at surreptitious meetings and hidden in a
“corporate records” binder and in a plain brown manila envelope,
point to Pankhurst’s corrupt intent. Moreover, the fact that the
second half of the payment to Hooks was not to be made until after
Pankhurst received acceptance of his offer to the RTC points to the
fact that this was not a consultant fee, but a quid pro quo for the
RTC’s acceptance of Pankhurst’s offer.
This was a classic case for a jury. The competing evidence
may seem convincing to some, but it presents merely an alternative
to the decision a rational jury could reach. The contention that
Pankhurst did not want to mislead the RTC in any of the closing
documents, Pankhurst’s testimony that he was attempting to hire
Hooks as a “consultant” and that he thought this sort of
transaction was legal and common, and the testimony about his good
character, do not render the other evidence insufficient as a basis
for conviction by a rational jury. Under these circumstances we
cannot upset the verdict. E.g., United States v. Pettigrew, 77
F.3d 1500, 1518 (5th Cir. 1996)(“The evidence need not exclude
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every reasonable hypothesis of innocence ... and the jury is free
to choose among reasonable constructions of the evidence.”).
Finally, Pankhurst contends that the evidence was insufficient
to prove that the loan he was attempting to purchase was in fact
being sold to the public. The issue is meritless. The indictment
charged that the official act which Pankhurst attempted to
corruptly influence was the acceptance of his offer to purchase the
loan. The indictment states further, unnecessarily for purposes of
§ 201(b)(1)(A), that the loan had been offered for sale to the
public. This description of the loan Pankhurst was trying to
purchase was surplusage; even if the evidence did not support a
finding that the loan was offered to the public, the statute was
satisfied and the conviction must stand.
In the alternative, Pankhurst seeks a new trial. We review
denials of such motions for abuse of discretion. E.g., United
States v. Giraldi, 86 F.3d 1368, 1374 (5th Cir. 1996). For the
reasons given above, the district court did not abuse its
discretion.
C.
The challenge to the district court’s sua sponte downward
departure is premised on both a lack of notice and the basis for
the departure. In urging that the departure should be affirmed,
Pankhurst counters, inter alia, that the Government failed to
object to the departure -- both to lack of notice and on the
merits.
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As hereinafter discussed, we conclude, based on our review of
the record, that the Government’s lack-of-notice objection was
sufficient, even though it could - and should - have been far more
specific. And, we conclude that, because the requisite Rule 32
notice of a possible downward departure was not given, we must
remand for resentencing; therefore, we do not reach whether the
departure would be upheld. For our analysis, a most detailed
review of Pankhurst’s sentencing process is required. Moreover,
this detailed presentation highlights the extremely careful
attention and painstaking analysis given the merits of the
sentencing issue/departure question by the district court.
The Presentence Report (PSR) recommended that Pankhurst’s
required base offense of 10 under U.S.S.G. § 2C1.1(a), for bribery
of a public official, be increased, as required by § 2C1.1(b)(2)
(“Specific Offense Characteristics”); a 14-level increase was
recommended, on the basis that the requisite “benefit” to be
received in return for the $10,000 payment was $5,053,000.
(Pursuant to § 2C1.1(b)(2), because the “benefit” exceeded $2,000,
reference was made to the table in § 2F1. (“Fraud or Deceit”); the
offense level is to be increased by 14 if the loss exceeds $5
million.)
Because Pankhurst (a first offender) had a criminal history
category of I, the guidelines sentencing range was 51-63 months.
Pursuant to Rule 32(b)(4)(B), the PSR commented on possible
sentencing adjustments; it recommended, inter alia, against a
reduction for acceptance of responsibility, and, critical to the
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issue at hand, stated that the probation officer did not have any
information concerning either the offense or Pankhurst which would
justify a departure from the guidelines’ sentencing range.
In his pre-sentencing filing in response to the PSR, Pankhurst
stated that, in addition to prosecuting Pankhurst, the Government
had
sought to ruin him financially in the business
world. That ruination has been extremely
effective. This is a factor that has not been
taken into consideration adequately by the
Sentencing Commission and entitles [Pankhurst]
to a downward departure.
The Government’s pre-sentencing response objected to Pankhurst’s
downward departure demand, stating with regard to the claimed
attempt to “ruin” Pankhurst that, as with all convictions, there
had been a press release.
At sentencing, in support of the PSR’s recommendation that
the benefit was in excess of $5 million, the Government urged that
the loss was greater than that: simply put, Pankhurst had offered
$560,000 for the loans to Jetera, for which slightly more than $5.6
million was owed, and which were secured by the Jetera property;
deducting that $560,000 from the approximate $5.6 million owed left
a benefit in excess of $5 million.
As he had in his objections to the PSR, Pankhurst countered at
sentencing that there was no “benefit” (thus leaving the offense
level at 10), asserting that, even without the $10,000 payment to
Hooks, Pankhurst would have still acquired the loans/property for
the $560,000 offered. Along that line, Pankhurst pointed out that,
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in fact, the RTC later accepted only $419,000 for the property, far
less than the $560,000 Pankhurst had offered.
In the alternative, Pankhurst urged that, at most, the gain,
not benefit, would have been what Atlas Oil (the actual offeror --
owned by Pankhurst) might have realized later if it had both
acquired the property and sold it; using the offer of $560,000 and
the then-appraised value of $800,000, this sale would have resulted
in a gain of $240,000. But, Pankhurst argued that, because neither
event occurred, there was no “benefit” for guidelines purposes,
again leaving the offense level at 10.
Having an offense level no greater than 10 was critical for
Pankhurst. As noted supra, for a “first offender” such as
Pankhurst, and with that offense level, the sentencing court “may
substitute probation for a prison term”. U.S.S.G. Ch. 1 Pt. A 4(d)
(1995).
After hearing extensive and detailed argument concerning the
parties’ vastly different positions as to the § 2C1.1(b)(2)
“benefit”, the court stated: “When I hear two intelligent lawyers
as thoroughly familiar with the facts as you two, in this much
disagreement, I just wonder if there is not a problem in the
guidelines.” (Emphasis added.) (The sentencing judge’s comments
were consistent with his views expressed three weeks earlier, at
the originally-scheduled sentencing hearing; that hearing was
continued because of Pankhurst’s late receipt of the Government’s
response to his objections to the PSR. Prior to continuing that
earlier hearing, the court heard similar argument by Pankhurst on
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why there was no “benefit”; the court indicated then that it was
open on the issue.)
After further detailed argument, the court stated:
We can stop right now on one point. I do not
believe there was any actual gain. There was
a possible remote potential gain, at least one
level removed, that [Pankhurst] might have
wound up with a corporation [Atlas Oil] with a
piece of property that might be worth
$800,000, that [Pankhurst] got for $560,000.
Following further argument over “benefit”, vel non, the court
stated:
You both are absolutely right up to a certain
point. I think this is a unique fact
situation. I think what Mr. Pankhurst did was
offer a bribe to do something that he could
have done without a bribe. It was a, excuse
the technical term, a dumb thing to do. And
it constituted a violation of the law.
What we are talking about now is what the
appropriate punishment would be and whether
the sentencing guidelines covers it. And I am
slowly becoming convinced that because of the
facts in this case, it is not something that I
can find in the guidelines. I am having a
real struggle with it.
(Emphasis added.)
Following yet further argument as to “benefit”, and apparently
taking hope in the court’s twice-expressed concerns that the
incident under consideration was not covered by the guidelines,
Pankhurst urged, for the first time, a downward departure on that
basis, claiming that the situation had “not [been] taken into
consideration adequately” by the Guidelines. But, as the
Government immediately pointed out, this departure-basis was
totally different from the basis urged in Pankhurst’s pre-hearing
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submission, discussed supra. As noted, and as the Government
pointed out to the district court, Pankhurst had then claimed
entitlement to a departure, but only on the basis that the
Government had ruined his ability to do business. As the
Government had discussed in its filed response to the earlier filed
departure demand, the Government pointed out to the sentencing
judge that Pankhurst based this entitlement claim on harm
supposedly resulting from a press release about his conviction.
Following even more argument, the court ruled:
All right. I have given this matter a great
deal of thought. I have considered, with the
probation officers, their various addenda and
supplements.
And I believe that the probation officers are
correct, and I adopt their report, that the
base offense level is ten; that the potential
benefit to Mr. Pankhurst through his ownership
of the [Atlas Oil] stock was most likely the
difference between $560,000 and $800,000.
I believe that $800,000 was the appraised
value of the property at the time [Pankhurst]
made the $560,000 offer, and therefore I
believe that is the benefit [Pankhurst]
intended to receive.
With his criminal history category of one, his
guideline imprisonment range at that point
would be 27 to 33 months.
His argument that he is entitled to a two
level decrease for acceptance of
responsibility is a close one. But I have
never heard him admit that he offered the
money to Mr. Hooks for the purpose of
influencing Mr. Hooks to do something.
Certainly he would not admit that he offered
it as a bribe. Therefore I cannot give him
acceptance of responsibility.
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I am not impressed with the letter from the
foreperson of the jury [discussed supra]. We
will take that up if the matter arises.
But I do want to point out [that] page 7 of
the latest version [1995] of the guidelines
manual has this sentence in it[:] [“]The
commission of course has not dealt with the
single acts of aberrant behavior that still
may justify probation at higher levels through
departures.[”]
And what they are referring to is [U.S.S.G. §]
5K2.0 and 18 [U.S.C. §] 3553. And pursuant to
those provisions, I find that there exists
mitigating circumstances of a kind and a
degree not adequately taken into consideration
by the Sentencing Commission in formulating
the guidelines, and therefore the sentence
should be different from that provided in the
guidelines. Specifically, the difference, the
increase over the ten level.
I think the facts in this case are so peculiar
and in such a strange state that the
guidelines do not apply adequately in that
increase. Therefore I am going to sentence
him at level 10.
Pursuant to the resulting option given the court because of
that low offense level to place Pankhurst on probation, rather than
in prison, Pankhurst was given probation for one year, with a
condition of home confinement. He was also fined $50,000. Later,
the court remarked: “Mr. Pankhurst, because of the very peculiar
facts of this case, I am giving you a break which the Government is
going to be very upset about. I may have sentenced you both to [an
appeal to the Fifth Circuit in] New Orleans.”
The court had not put the parties on notice of this possible
-- and now just announced -- basis for departure. But, unlike its
objection earlier in the hearing, when Pankhurst seized on this
basis for the first time, the Government did not object, after the
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sentencing-ruling, on the ground that the court was departing
downward without giving Rule 32 pre-sentencing notice. Instead,
at this point (post-ruling), the Government objected only to the
basis for the departure, and objected later to the court’s not
imposing sentence within the range recommended by the PSR.
The judgment, entered six days after the sentencing hearing,
provided that the PSR was adopted, except that the court found a
lower “benefit” ($240,000 instead of $5 million), resulting in an
8, instead of a 14, level increase. This resulted in a total
offense level of 18, with a sentencing range of 27 to 33 months, as
had been stated in the court’s verbal sentencing-ruling. The
following reason was then given for the downward departure,
consistent with that given at sentencing and pursuant to 18 U.S.C.
§ 3553(b) and U.S.S.G. § 5K2.0: “The Court finds that the nature of
the offense, representing a single, criminal act, is a mitigating
circumstance of a kind, or to a degree, not adequately taken into
consideration by the Sentencing Commission, pursuant to U.S.S.G.
5K2.0.”
Before we can reach the merits of the basis for the departure,
we must consider the Government’s contention that it was denied the
requisite Rule 32 notice of the court’s intent to depart downward.
It is undisputed that the court did not give such notice to the
parties. And, prior to sentencing, the only departure-basis urged
by Pankhurst was the claim that he was “entitled” to a downward
departure because the Government had “ruin[ed] him financially”.
But, as noted, after the court alluded twice at sentencing to a
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possible basis for a § 5K2.0 departure, Pankhurst’s counsel seized
upon it:
I think that this is a proper case for a
departure because the guidelines has not taken
into consideration adequately the
circumstances of this case, and under the
catchall provision of the guidelines and the
Code, and I have cited that to Your Honor in
the memorandum.
As also noted, the Government objected immediately:
Judge, the government would object to a
downward departure. [Pankhurst’s counsel]
specifically said that the basis for his
downward departure was because the Government
had basically ruined his client’s ability to
do business by sending an alleged press
release to Dunn & Bradstreet.
In short, the Government objected promptly to the fact that
the departure, alluded to by the court, was being requested by
Pankhurst on a new ground for which the Government had not received
pre-hearing notice. Restated, at that point in the hearing, the
objection alerted the court, as well as Pankhurst, that the
Government had not received notice of this new departure-basis,
later used by the court. Such lack-of-notice, the Government
contends, violates the rule enunciated in United States v. Burns,
501 U.S. 129 (1991).
1.
Prior to reaching this contention, we must decide whether the
Government’s objection, including combined with those post-ruling,
is sufficient; that is, whether it presented/described adequately
a lack-of-notice ground. Pankhurst urges that it did not; and that
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we should, therefore, review only for plain error. See United
States v. Hawkins, 87 F.3d 722, 730 (5th Cir. 1992).
The objection to the basis seized by Pankhurst and ultimately
used by the court certainly alerted the court that the sentencing
hearing had moved to new territory for which the Government had not
been given notice. As the court moved to this new territory off
and on during the hearing, both before and after the Government
objected to the new departure-basis when Pankhurst seized upon it,
the Government should have better articulated its lack-of-notice
objection, on the assumption that the sentencing court seemed
inclined increasingly to use that basis.
But, surely, the court was aware when it ruled that it was
utilizing a departure-basis sua sponte, without having given
notice; and that, because of a lack of notice from both the court
and Pankhurst, the Government had not had an opportunity to comment
consistent with Rule 32. Part of the court’s awareness had to come
from the Government’s earlier objection when Pankhurst urged this
same -- new -- basis. On this record, the lack-of-notice objection
was sufficient. See United States v. Knight, 76 F.3d 86, 87 (5th
Cir. 1996). Accordingly, we turn to whether notice was required.
2.
Under Burns, Rule 32 requires that, before a district court
may depart upward, the defendant must have notice, either in the
PSR (see Rule 32(b)(4)(B)), or in a pre-hearing submission by the
Government, or from the court. Our court so held prior to Burns.
See United States v. Otero, 868 F.2d 1412, 1415 (5th Cir. 1989).
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However, our court has never expanded the holdings in Otero and
Burns to the situation at hand -- the Government’s not receiving
notice of a possible downward departure.
Nevertheless, at least four other circuits have held that the
rule applies to downward departures. See United States v. Alba,
933 F.2d 1117 (2d Cir. 1991); United States v. Maddox, 48 F.3d 791(4th Cir. 1995); United States v. Andruska, 964 F.2d 640 (7th Cir.
1992); United States v. Green, 105 F.3d 1321 (9th Cir. 1997).
Apparently, no circuit has held to the contrary. We join those
circuits and hold that notice must be given to the Government
before a district court may depart downward. This result is
mandated by Rule 32, Burns, and Otero.
Rule 32 states that “the court must afford counsel for the
defendant and for the Government an opportunity to comment on the
probation officer’s determinations and on other matters relating to
the appropriate sentence....” FED. R. CRIM P. 32(c)(1). In other
words, the Rule provides that the Government is due the same notice
as is the defendant.
For this very reason, Burns noted that, for the issue in that
case (pre-upward departure notice to a defendant), it would be
equally appropriate to frame the issue as
whether the parties are entitled to notice
before the district court departs upward or
downward from the Guidelines range. Under
Rule 32, it is clear that the defendant and
Government enjoy equal procedural
entitlements.
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Burns, 501 U.S. at 135 n.4 (emphasis added). Along these lines,
Burns otherwise supports the application of its holding to the
Government, as well as the defendant, for a downward departure.
Burns reasoned (as did Otero, 868 F.2d at 1415) that Rule 32
is intended to achieve focused adversarial development of the
issues pertinent to a particular sentence. 501 U.S. at 135.
Furthermore, the Rule explicitly gives the defendant the right to
comment on a particular departure before it is imposed; Burns
reasoned that, for this right to be meaningful, it must carry with
it the right to notice of a possible departure. Id. at 136. As
noted, the Government has the same comment-right; concomitantly, it
must have the same notice-right.
The sentencing hearing for this case offers an excellent
example of why such notice is required, as well as the benefit that
will flow to the sentencing court as a result. The district court
was troubled greatly by the facts at hand and extensively and most
insightfully developed the question. Had the Government, and
Pankhurst, been on notice of the new, possible departure-basis,
they could have been of great assistance to the court through the
resulting/subsequent legal research, briefing, and argument.
For example, as stated in the judgment, the court felt that
“the nature of the offense, representing a single, criminal act, is
a mitigating circumstance of a kind, or to a degree, not adequately
taken into consideration by the Sentencing Commission, pursuant to
U.S.S.G. 5K2.0." Had the parties been on notice, they could have
better assisted the court in determining, as a further example,
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whether “the nature of the offense, representing a single criminal
act” had been considered by the Sentencing Commission in imposing
the § 2C1.1(a) base offense level of 10; the Government urges here
that this base offense level does reflect such consideration.
As another possible aid to the court, the parties could have
explored, or developed further, the introductory commentary to
U.S.S.G. § 2C (“Offenses Involving Public Officials”):
The Commission believes that pre-guidelines
sentencing practice did not adequately reflect
the seriousness of public corruption offenses.
Therefore, these guidelines provide for
sentences that are considerably higher than
average pre-guidelines practice.
U.S.S.G. § 2 Pt. C Introductory Commentary.
As yet another example, the extensive commentary to § 2C1.1
might have provided further ground that could have been developed
to assist the court. And, finally, counsel would have been far
more able during the hearing to present and argue the other
relevant portions of the guidelines and the case law.
Accordingly, due to the lack of notice, we must remand the
case to the district court for resentencing, including giving the
Government and Pankhurst notice and an opportunity to respond to,
and otherwise comment on, the noticed possible ground(s) for
departure.
III.
For the foregoing reasons, the conviction is AFFIRMED; the
sentence is VACATED; and this case is REMANDED to the district
court for resentencing, consistent with this opinion.
AFFIRMED in PART; VACATED and REMANDED in PART
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BENAVIDES, Circuit Judge, specially concurring.
I concur in the judgment of the majority affirming appellant’s
conviction and remanding for resentencing.
Appellant contends that the district court abused its
discretion by incorporating in its jury charge the original
indictment. He argues that the indictment should have been
redacted to omit any reference to the government’s theory that he
sought to influence a public official to commit a fraud upon the
United States. As the majority correctly observes, the proof at
trial focused on the government’s other theory, i.e, that appellant
sought to influence an official act. Compare 18 U.S.C. §
201(b)(1)(A) with id. § 201(b)(1)(B).
Because trial counsel did not object to use of the unredacted
indictment, review is for plain error. FED. R. CRIM. P. 52(b). Even
assuming that it was error to submit the original indictment to the
jury, and that the error was “plain” in the sense of being “clear”
or “obvious,” appellant has demonstrated no effect on his
substantial rights. Cf. United States v. Calverley, 37 F.3d 160,
162-64 (5th Cir. 1994). Accordingly, this first claim fails.
Appellant also argues that the district court erred in its
jury charge by failing to define the “official act” which he
allegedly attempted to influence. The court refused defense
counsel’s request to define the official act for the jury, instead
referring the jury to the unredacted indictment. Appellant
contends that this was confusing in that the jury may have
concluded that the “official act” was the unspecified and unproven
“fraud” mentioned in the indictment.
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Any confusion on this score was invited, if not manufactured,
by defense counsel in his closing argument to the jury. Appellant
complains that the jury charge regarding the “official act” was
“ambiguous and confusing . . . in light of counsel’s arguments;”
yet it was defense counsel who described the “official act” as the
“fraud” alleged in the indictment.3 This circuit will not reverse
on the basis of invited error, absent manifest injustice. United
States v. Sanchez, 988 F.2d 1384, 1392 (5th Cir. 1993). There was
no such injustice in this case. It is clear from the record
evidence and the comments of the district court that the official
3
Defense counsel argued to the jury:
They charged that Joe Pankhurst with intent corruptly
gave $10,000 to Ronnie Hooks with the intent to influence
an official act. And here is the official act: To
commit and aid in committing a fraud upon the United
States, that is the acceptance of an offer by the
defendant to purchase a loan being sold to the public by
the Resolution Trust Corporation. . . . [H]e wasn’t
trying to get to perpetuate a fraud. He was trying to do
a reasonable business deal.
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act which appellant allegedly sought to influence was the RTC’s
sale of the note.4
Appellant’s sufficiency claims are meritless. Accordingly, I
would affirm appellant’s conviction. However, I would vacate and
remand his sentence for the reasons expressed by the majority. I
therefore concur in the judgment.
4
As the district court explained to the jury at the beginning
of the trial:
Mr. Pankhurst is charged with giving a $10,000 payment to
Mr. Hooks to influence Mr. Hooks to sell him the note.
That’s what the case, basically, is about.
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