United States v. Goodson

REVISED - August 5, 1999
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
________________________
No. 97-31057
________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee-Cross-Appellant,
v.
LARRY S. BANKSTON; MARIA F. GOODSON,
Defendants-Appellants-Cross-Appellees
CARL W. CLEVELAND; FRED H. GOODSON,
Defendants-Appellants.
_________________________________________________________________
________________________
No. 98-30471
________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
MARIA F. GOODSON,
Defendant-Appellant.
ALEXANDROS F. GOODSON; TRUCK STOP GAMING LTD.,
Intervenors-Appellants.
_________________________________________________________________
Appeals from the United States District Court
for the Eastern District of Louisiana
_________________________________________________________________
July 21, 1999
Before KING, Chief Judge, and REAVLEY and BENAVIDES, Circuit
Judges.
BENAVIDES, Circuit Judge:
Larry Bankston (“Bankston”), Fred Goodson, Maria
Goodson, and Carl Cleveland (“Cleveland”) appeal from their June
27, 1997, convictions and October 15, 1997, sentences for various
offenses related to criminal activity in the Louisiana video
poker industry. Fred Goodson and Cleveland, along with Alex
Goodson, Maria Goodson, and Truck Stop Gaming, Inc. (“TSG,
Inc.”), additionally appeal the district court’s judgment of
forfeiture of Truck Stop Gaming, Ltd. (“TSG, Ltd.”) and TSG, Inc.
as part of the RICO enterprise. The Government cross-appeals,
challenging the district court’s calculation of both Bankston’s
and Maria Goodson’s sentences. For the reasons set forth below,
we affirm the Appellants’ convictions and sentences and the
forfeiture of TSG, Ltd. and TSG, Inc.
I. BACKGROUND
Fred Goodson and his family had been in the truck stop
business in Slidell, Louisiana for 20 years. In early 1992, the
Goodson family formed TSG, Ltd. and its corporate partner, TSG,
Inc., in order to participate in the video poker business at
their Slidell truck stop. Fred Goodson and Carl Cleveland’s law
firm, Cleveland, Barrios, Kingsdorf & Casteix (“CBK&C”), loaned
Goodson’s adult children, Alex and Maria, the start-up capital
for TSG, Ltd.1 With the legal assistance of CBK&C, a
1
Those loans were secured by promissory notes, payable on demand, with 10% annual
interest.
partnership in commendam was established. Alex and Maria each
owned 49% of TSG, Ltd. as limited partners.2 TSG, Inc. owned the
remaining 2% as general partner.3 Fred Goodson managed TSG, Ltd.
CBK&C also helped the Goodsons prepare and submit to the
Louisiana State Police applications for an owner/operator’s
gaming license for TSG, Ltd. The gaming applications required
partnerships seeking a license to identify their partners, to
submit personal financial statements for all partners, and to
affirm that the listed partners were the sole beneficial owners,
that no partner had an arrangement to hold his interest as “an
agent, nominee or otherwise,” or a present intention to transfer
any interest in the partnership at a future time. The initial
application submitted on behalf of TSG, Ltd. identified Maria and
Alex Goodson as the limited partners and TSG, Inc. as the general
partner. The application listed no other persons or entities as
having any ownership interest in TSG, Ltd. The initial license
application did disclose, however, that Fred Goodson and CBK&C
had loaned Maria and Alex all initial capital. That same
application also identified Fred Goodson as general manager of
the business. TSG, Ltd. submitted renewal applications in 1993,
1994, and 1995, which also listed no additional ownership
interests.4
2
TSG, Ltd.’s Agreement of Partnership was signed by Alex and Maria and filed with the
Louisiana Secretary of State.
3
Alex and Maria owned equal shares of TSG, Inc.
4
In August 1994, Maria Goodson executed a “Sale of Partnership Interest and Pledge
3
In 1994, as a part of an unrelated federal investigation of
alleged corruption involving Louisiana legislators, the F.B.I.
obtained court authorization to conduct electronic surveillance
of the office of Louisiana State Senator Larry Bankston. The
authorization was based on a series of consensually recorded
conversations that took place in September and October 1994
between Bankston and Robert Miller, a cooperating witness.
According to the FBI, the Bankston-Miller conversations indicated
that Bankston was engaged in a scheme to extort an interest in a
casino proposed by the Jena Choctaw tribe, in exchange for his
influence in ensuring government approval of the casino.
During the course of its electronic surveillance--limited to
the interception of communications concerning the alleged Jena
Choctaw scheme--the FBI recorded a conversation between Bankston
and Fred Goodson. In that conversation, the two men discussed,
in detail, Goodson’s truck stop business. Neither man mentioned
the Jena Choctaw scheme. Approximately 20 minutes into their
discussion, Goodson broached the subject that would form the
basis for the present multi-party, multi-count indictment. Armed
with the recording of Bankston and Goodson’s 44-minute
conversation, the FBI obtained court authorization for electronic
surveillance on Goodson’s home and businesses.
On October 4, 1996, the Government charged now former
Louisiana State Senators Benjamin “Sixty” Rayburn and Larry
Agreement,” which conveyed to Benny Rayburn, the adult son of co-defendant Benjamin
“Sixty” Rayburn, a 4.99% interest in TSG, Ltd. Rayburn’s 4.99% interest was not disclosed in
any renewal application.
4
Bankston; video poker entrepreneur Fred Goodson; his daughter,
Maria Goodson; family attorney, Carl Cleveland; and the family’s
accountant, Joe Morgan, with a combination of racketeering,
racketeering conspiracy, mail fraud, conducting an illegal
gambling business, money laundering, tax conspiracy, false
declaration under penalty of perjury, aiding and abetting a false
declaration under penalty of perjury, and interstate
communications in aid of racketeering.5 Most of the charges
against the Goodsons, Cleveland, and Joe Morgan related to the
establishment, licensing, and operation of TSG, Ltd. The
Government alleged that the defendants had schemed to defraud
state regulators in obtaining video poker licenses for TSG, Ltd.,
and to obtain favorable legislation affecting Louisiana’s video
poker industry. Specifically, the Government alleged that the
defendants obtained a gaming license for TSG, Ltd. in 1992 and
renewed in 1993, 1994, and 1995, by fraudulently concealing the
identity of the true owners of the company, Fred Goodson and Carl
Cleveland.6 According to the Government, Goodson and Cleveland
concealed their ownership in order to avoid the probing inquiry
of the State’s suitability assessment.
5
The Government did not indict Fred Goodson’s son, Alex
Goodson, but subsequently named him an unindicted co-conspirator.
Alex Goodson joins the instant action as an intervenor in the
forfeiture proceedings.
6
Alex and Maria Goodson were from inception and remain the
record owners of TSG, Ltd. and its corporate general partner,
TSG, Inc.
5
Trial commenced on May 12, 1997, and lasted six weeks.
Following more than seven days of deliberation, the jury returned
a mixed verdict, finding four of the defendants--Carl Cleveland,
Fred Goodson, Maria Goodson, and Larry Bankston--guilty of
certain counts.7 The jury acquitted the remaining two
defendants--Senator Rayburn and Joe Morgan--on all counts.
On October 15, 1997, The district court sentenced the four
convicted defendants. Both Cleveland and Fred Goodson received
terms of imprisonment of 121 months. Maria Goodson received a
six-month term of imprisonment to be followed by six months of
home detention. Bankston received a 41-month term of
imprisonment and a fine of $20,000.
The defendants filed timely notices of appeal as to their
convictions and sentences. On November 14, 1997, the Government
filed a notice of cross-appeal relating to the sentences of
Bankston and Maria Goodson.
Following Fred Goodson’s and Carl Cleveland’s convictions
for RICO and RICO conspiracy, the Government sought forfeiture
of, inter alia, their alleged interests in TSG, Ltd. and TSG,
7
Cleveland was convicted on one count of RICO, one count of RICO conspiracy, two
counts of mail fraud (in connection with the 1994 and 1995 TSG, Ltd. gaming license renewal
applications), four counts of money laundering, one count of tax conspiracy, and one count of
aiding and abetting the filing of a false tax return. Like Cleveland, Fred Goodson was convicted
of one count of RICO, one count of RICO conspiracy, and two counts of mail fraud (in
connection with the 1994 and 1995 TSG, Ltd. gaming license renewal applications). The jury
additionally convicted Goodson of five counts of money laundering and three counts of the use of
interstate communications in aid of state bribery. His daughter, Maria, was found guilty of one
count of mail fraud in connection with TSG, Ltd.’s 1995 license renewal application. Former
Senator Bankston was found guilty of two counts of committing and/or aiding and abetting
interstate communications in aid of racketeering.
6
Inc. On August 26, 1997, the district court entered a judgment
ordering the forfeiture of TSG, Ltd. and TSG, Inc. The district
court noted that the jury’s verdict and the evidence in the
criminal trial record proved beyond a reasonable doubt that
Goodson and Cleveland had an interest in TSG, Ltd. and TSG, Inc.
and that those entities were part of the RICO enterprise. On
October 21, 1997, The district court entered the final order of
forfeiture.
On October 31, 1997, Alex and Maria Goodson, as record
owners of TSG, Ltd. and TSG, Inc., filed separate petitions of
intervention in the forfeiture proceedings, asserting their
ownership interests in the two companies. On February 4, 1998,
the district court conducted an evidentiary hearing on their
petitions, and on April 15, 1998, the district court denied their
claims. The district court ruled that Fred Goodson and Carl
Cleveland were the “true owners” of TSG, Ltd. and TSG, Inc. and
that their ownership interests had been properly forfeited to the
Government. Alex and Maria Goodson and TSG, Inc. appeal from
that ruling.
II. DISCUSSION
A. Wiretap Evidence
1. Application Omissions
Fred Goodson and Larry Bankston argue that the district
court erred in refusing to suppress the evidence obtained from
the Bankston wiretap. Both appellants additionally argue that
the district court erred in denying their request for an
7
evidentiary hearing pursuant to Franks v. Delaware, 438 U.S. 154,
98 S. Ct. 2674 (1978).
Before trial, Bankston filed a motion to suppress the
wiretap evidence. Fred Goodson, Maria Goodson, and Carl
Cleveland joined the motion.8 Bankston contended that the
November 25, 1994, affidavit completed by Agent Jones in support
of the wiretap application contained fatal omissions and
misrepresentations. His motion described an “exculpatory”
conversation between Bankston and Miller that had been omitted
from the wiretap application and claimed that the FBI told Miller
to stop recording after that conversation. Bankston asserted
that the false statements and/or omissions were deliberately or
recklessly made. He accompanied his motion with an offer of
proof including affidavits and sworn testimony.
The district court, after hearing arguments by counsel and
reviewing submissions, denied Bankston’s request for a Franks
evidentiary hearing. The court found that Bankston had failed to
make the requisite showing that the affiant, Agent Jones, had
intentionally misled the District Court and tricked the Court
into issuing the wiretap authorization and that the omissions
were material such that they negated probable cause.
8
On appeal, Maria Goodson and Carl Cleveland cross-incorporate Fred Goodson and
Bankston’s suppression arguments. However, neither Maria nor Cleveland meets our standing
requirements as articulated in United States v. Scasino, 513 F.2d 47 (5th Cir. 1975). Because we
conclude that the district court did not err in admitting the wiretap evidence, we need not consider
Cleveland’s argument that he has standing despite Scasino.
8
We review de novo the denial of a Franks v. Delaware
evidentiary hearing. See United States v. Dickey, 102 F.3d 157,
162 (5th Cir. 1996) (reviewing the denial of a Franks hearing in
the context of a search warrant); United States v. Guerra-Marez,
928 F.2d 665, 671 (5th Cir. 1991) (applying the Franks standard
and reviewing de novo the decision of the district court to
validate a wiretap order). In Franks v. Delaware, the Supreme
Court held that a defendant is entitled to an evidentiary hearing
to contest the validity of a search warrant if he makes a
substantial preliminary showing that (1) allegations in a
supporting affidavit were a deliberate falsehood or made with a
reckless disregard for the truth and (2) the remaining portion of
the affidavit is not sufficient to support a finding of probable
cause. See Franks, 438 U.S. 154, 171, 98 S. Ct. 2674, 2684
(1978). We have explained that "even if the defendant makes a
showing of deliberate falsity or reckless disregard for the truth
by law enforcement officers, he is not entitled to a hearing if,
when material that is the subject of the alleged falsity or
reckless disregard is set to one side, there remains sufficient
content in the warrant affidavit to support a finding of probable
cause.” United States v. Privette, 947 F.2d 1259, 1261 (5th Cir.
1991) (quoting Franks, 438 U.S. at 171-72, 98 S. Ct. at
2684-85)).
We have applied Franks to instances of omission where, as
here, an affidavit falls squarely within the dictates of 18
U.S.C. § 2518. United States v. Tomblin, 46 F.3d 1369, 1377 (5th
9
Cir. 1995) (noting that “[o]missions or misrepresentations can
constitute improper government behavior”). In such cases of
omitted information, the logic of Privette holds firm: a
defendant is not entitled to an evidentiary hearing if a wiretap
authorization would lawfully have issued after correcting the
supporting affidavit by supplying any material omissions.
Therefore, in determining whether Fred Goodson and Bankston were
improperly denied an evidentiary hearing on their motion to
suppress, we need only consider Agent Jones’s affidavit--
corrected to contain the allegedly exculpatory conversation--and
determine whether that reconstructed affidavit satisfies the
wiretap requirements contained in 18 U.S.C. § 2518.
If the Jones affidavit were revised to include the omitted
information, the affidavit would describe conversations
suggesting that between September 19 and October 31, 1994, the
cooperating witness, Miller, and Bankston had discussed a scheme
to exchange Bankston’s influence for an ownership interest in the
Jena Choctaw casino. In particular, the affidavit would reveal
that Bankston had met with Jena Choctaw Chief Jackson several
times, had agreed to provide the Jena Choctaw tribe with
“political cover,” and had been telephoned frequently by Chief
Jackson. The affidavit would also state that, in a sixth
conversation with Miller on October 31, 1994, Bankston had
declared that he was “fini” and that his present intention was
“to stay away from . . . this entire thing.” The affidavit would
additionally include statements made by Bankston to Miller at the
10
conclusion of that October 31, 1994, conversation expressing
Bankston’s “willing[ness] to proceed” with the project if
“something could be worked out to his satisfaction.”
a. Probable Cause
An application for a wiretap must demonstrate probable cause
to believe that the target has committed, is committing, or will
commit a crime, as well as “probable cause for belief that
particular communications concerning that offense will be
obtained through such interception.” 18 U.S.C. § 2518(3)(a)-(b).
We evaluate probable cause utilizing a totality-of-the-
circumstances test. See Dickey, 102 F.3d at 162. In light of
Miller’s multiple statements to the FBI that Bankston was
negotiating a deal in which he would extort an undisclosed
interest in the Jena Choctaw casino, the multiple taped
conversations containing statements that corroborated this tip
from Miller, and the ambiguity of any exculpatory statements in
the October 31 conversation, we find that the reconstructed
affidavit would establish sufficient probable cause to authorize
electronic surveillance on November 25.9
b. Necessity
9
Our finding of probable cause includes a finding that
“particular communications” concerning that offense would have
been “obtained through such interception.” See 18 U.S.C.
§ 2518(3)(b). The October 31, 1994, conversation between Miller
and Bankston in no way undermines probable cause to believe that
Bankston would have committed the Jena Choctaw scheme and that
particular communications concerning the scheme would occur
either in Bankston’s office or on his phone.
11
Bankston and Goodson also argue that the application failed
to meet the dictates of 18 U.S.C. § 2518(3)(c), which requires
the Government to show and the issuing judge to find that “normal
investigative procedures have been tried and have failed or
reasonably appear to be unlikely to succeed if tried or to be too
dangerous.” 18 U.S.C. § 2518(3)(c). The Government “need not
prove exhaustion of every conceivable option before a wiretap
order may issue.” Guerra-Marez, 928 F.2d at 671.
Here, the FBI included in its 21-page wiretap application a
detailed account of the investigative techniques it had employed
in making its case against Bankston. Agent Jones stated in his
November 25, 1994, affidavit that the use of electronic
surveillance was necessary because Bankston had made it clear to
Miller that he would not include him in any potentially
incriminating conversations with third parties.10
We have affirmed wiretap orders based upon similar
affidavits. See, e.g., United States v. Krout, 66 F.3d 1420,
1425 (5th Cir. 1995) (explaining that the informants or
undercover agents could not infiltrate the conspiracy at high
enough levels); United States v. Collins, 972 F.2d 1385, 1412
(5th Cir. 1992) (noting that consensual monitoring would be
impossible, as it was unlikely that the informant would be
present during the illegal activity). Agent Jones’s affidavit
10
In his talks with Miller, Bankston had alluded to
conversations that he would be having with his stockholder
nominee as well as other people in Louisiana whom he had to
satisfy out of his five-percent hidden ownership interest in the
Jena Choctaw casino.
12
provides sufficient information to meet the requirements of
§ 2518(3)(c). The omission of the October 31 conversation does
not impact our finding of “necessity,” nor does the fact that the
FBI failed to inform the issuing court that Miller had been told
to cease recording his conversations with Bankston. Regardless
of whether Miller continued to record his conversations with
Bankston, Miller was unlikely to be present during the talks
between Bankston and his Louisiana contacts. Therefore, a need
for electronic surveillance existed.
2. Minimization
Bankston and Fred Goodson contest the district court’s
factual finding that the FBI properly minimized the interception
of communications outside the scope of the wiretap order. In
particular, Bankston and Goodson dispute the interception of
their December 1994 conversation, which included no mention of
the Jena Choctaw tribe casino scheme and did not broach the
subject of criminal activity until approximately twenty minutes
into the conversation. We review determinations of the
reasonableness of minimization efforts for clear error. See
United States v. Wilson, 77 F.3d 105, 112 (5th Cir. 1996).
Section 2518 implements “the constitutional mandate . . .
that wiretapping must be conducted with particularity,” United
States v. Daly, 535 F.2d 434, 440 (8th Cir. 1976) (citation
omitted), by requiring electronic surveillance to “be conducted
in such a way as to minimize the interception of communications
not otherwise subject to interception.” 18 U.S.C. § 2518(5).
13
The Government’s efforts to minimize nonrelevant conversations
must be “objectively reasonable” in light of the circumstances
confronting the interceptor. Scott v. United States, 436 U.S.
128, 136-143, 98 S. Ct. 1717, 1723-27 (1978); see also United
States v. Hyde, 574 F.2d 856, 869 (5th Cir. 1978) (explaining
that the minimization standard applies a test of reasonableness
to the particular facts of each case) (citing Daly, 535 F.2d at
441). Neither the Fourth Amendment nor 18 U.S.C. § 2515,
however, requires government agents to avoid intercepting all
nonrelevant conversations when conducting a wiretap
investigation. See Scott, 436 U.S. at 137-140, 98 S. Ct. 1723-
24.
We consider three factors in deciding the objective
reasonableness of efforts to minimize: (1) the “nature and scope
of the criminal enterprise under investigation;” (2) the
“Government’s reasonable inferences of the character of a
conversation from the parties to it;” and (3) the “extent of
judicial supervision.” Hyde, 574 F.2d at 869. Here, consistent
with our precedent, the district court found that the FBI’s
efforts to minimize were reasonable in light of the fact that (1)
the criminal investigation involved “a potentially wide-ranging
conspiracy in which the coconspirators had not been identified;”
(2) Goodson reported to Bankston “specific details of Goodson’s
truck stop business that one would not normally provide to one
who was not a participant in the endeavor;” and (3) the issuing
court had determined, based on regularly submitted ten-day
14
reports, including the results of interceptions, that the
Government was acting in a proper manner.
Bankston reurges statistical analyses he presented to the
district court to question the Government’s minimization efforts.
Bankston’s reliance on statistics is unpersuasive. First, the
district court rightly pointed out that Bankston’s statistics,
even if taken as accurate, showed minimization efforts that were
reasonable. Second, the Supreme Court has discouraged the use of
statistics, explaining that “blind reliance on the percentage of
nonpertinent calls intercepted is not a sure guide to the correct
answer.” Scott, 436 U.S. at 140, 98 S. Ct. at 1724.
Goodson argues that the criminal nature of the December 1994
conversation could not have been immediately apparent because the
subject of criminal activity was not broached until approximately
twenty minutes into the conversation and that, by this point,
agents should have already ceased monitoring the conversation.
Goodson analogizes an agent’s monitoring of communications
concerning crimes not the subject of a wiretap order to an
officer’s seizure of contraband pursuant to the plain view
doctrine. Goodson cites United States v. Johnson, 539 F.2d 181
(D.C. Cir. 1976), in support of his novel plain view analogy. In
particular, Goodson points to the following language from
Johnson: “Like an officer who sees contraband in plain view from
a vantage point where he has a right to be, one properly
overhearing unexpected villainy need not ignore such evidence.”
See id. at 188. Goodson then attempts to graft onto the Scott
15
objective reasonableness inquiry the plain view doctrine’s
probable cause requirement. He urges us to find that an agent
monitoring “windfall” communications must, at the time of the
monitoring, have probable cause to believe that the communication
concerns criminal activity.
Caselaw does not support such a probable cause requirement.
We are unaware of any case in which an appellate court employed a
probable cause analysis to determine whether to suppress non-
minimized, “other criminal activity” communications. Moreover,
requiring probable cause that a windfall communication itself
concerns criminal activity is inconsistent with the objective
reasonableness inquiry. Adding a probable cause analysis would
require that monitoring agents be more than reasonable in their
efforts to minimize. Goodson’s approach would require that
agents be gifted with “prescience” and the ability to “‘know in
advance what direction the conversation will take.’” United
States v. Cox, 462 F.2d 1293, 1301 (8th Cir. 1972) (quoting
United States v. LaGorga, 336 F. Supp. 190, 196 (W.D. Penn.
1971)). Consistent with Scott, we conclude that the district
court did not commit clear error in determining that the FBI’s
minimization efforts were objectively reasonable.
B. Choice of Counsel
Fred Goodson argues that the district court erred in
denying, on grounds of conflict, his motion to associate Michael
16
Fawer as additional counsel.11 Goodson complains that the
district court’s ruling constitutes error in light of both his
and Rayburn’s knowing waiver of any conflict of interest and the
sworn statements averring unawareness of any actual or potential
conflict of interest submitted by Michele Fournet (counsel for
Goodson), Michael Fawer, and Arthur Lemann.
We review a district court’s finding of a conflict of
interest for abuse of discretion. See United States v. Sotelo,
97 F.3d 782, 791 (5th Cir. 1996). Although a district court must
“recognize a presumption in favor of petitioner’s counsel of
choice,” “that presumption may be overcome not only by a
demonstration of actual conflict but by a showing of a serious
potential for conflict.” Wheat v. United States, 486 U.S. 153,
164, 108 S. Ct. 1692, 1700 (1988). This is true even where a
defendant expresses a desire to waive the potential conflict.
See Sotelo, 97 F.3d at 791.
The crux of Goodson’s argument is that the district court’s
veto of his choice of counsel without finding any “special
circumstances” beyond the fact of multiple representation amounts
to a per se rule that multiple representation would never be
permissible. Goodson contends that such a per se rule
11
Michael Fawer represented Goodson’s co-defendant, former Louisiana State Senator
Rayburn, through the investigative stage of this case. Fawer assisted Rayburn in responding to
three grand jury subpoenas, had discussions with the Government regarding the nature of the
charges being considered against Rayburn, and appeared in court on behalf of Rayburn at the
initial appearance, as well as later to argue motions.
On November 5, 1996, Fawer withdrew as counsel for Rayburn, and Arthur A. Lemann,
III replaced Fawer as counsel for Rayburn. On February 24, 1997, Goodson moved the district
court to associate Fawer as additional counsel for him.
17
contravenes Supreme Court and Fifth Circuit precedent that has
recognized the advantages of common defenses. Goodson
additionally argues that the four potential areas of conflict
elucidated by the district court exist in every case of multiple
representation and that appellate courts have regularly found
that conflicts do not arise in those contexts.12
Goodson’s argument is flawed. First, the district court in
no way established a per se rule against joint representation.
The district court applied the Sixth Amendment and the Supreme
Court’s Wheat analysis to the facts developed at the hearing
before the magistrate judge. On the basis of those facts, The
district court concluded that institutional interests and
interests of the defendant warranted a denial of Goodson’s motion
to associate Fawer. Second, neither the Supreme Court nor this
Circuit has adopted a “special circumstances” test for
determinations of conflict in joint representation. Although the
Supreme Court’s 1980 Cuyler decision does include “special
circumstances” language, it does so only in discussing when a
state court, sua sponte, needs to “initiate inquiries into the
propriety of multiple representation.” Cuyler v. Sullivan, 446
U.S. 335, 346, 100 S. Ct. 1708, 1717 (1980). Third, the cases
upon which Goodson relies to show that joint representation is
12
The district court outlined four areas of potential conflict: (1) because a plea by
Goodson would be adverse to Rayburn’s interests, Fawer would have a conflict in advising
Goodson regarding plea negotiations; (2) evidence could develop at trial that pitted one
defendant’s interest against the other’s; (3) Goodson’s and Rayburn’s interests could diverge at
sentencing, over issues such as their respective roles in the offense; and (4) because Fawer
received confidences from Rayburn, Fawer’s cross-examination of Rayburn would be problematic.
18
permissible despite possible conflicts of interest involve claims
of ineffective assistance of counsel. In those cases, the courts
employed a retrospective, record-based inquiry in order to
determine whether an attorney was operating under a conflict of
interest. Their findings of “no conflict” are of limited
usefulness here, where the district court predicated its denial
of the motion to associate counsel on a finding of serious
potential conflict. Goodson fails to appreciate the distinction
between a retrospective inquiry of actual conflict and a
prospective inquiry into serious potential conflict.
The evaluation of the facts and circumstances of each case
under the Wheat standard “must be left primarily to the informed
judgment of the trial court.” Wheat, 486 U.S. at 164, 108 S. Ct.
at 1700. The district court made specific findings as to four
potential areas of serious conflict. We find that the district
court did not abuse its discretion in denying Goodson’s motion to
associate Fawer.
C. Louisiana Video Poker License as “Property”
Maria Goodson and Attorney Cleveland assert that a Louisiana
video poker license is not “property” for purposes of the mail
fraud statute, 18 U.S.C. § 1341. Less than two years ago, we
reached a contrary conclusion in United States v. Salvatore, 110
F.3d 1131 (5th Cir. 1997). Bound by our prior decision, we do
not revisit this issue.
D. Fair Notice
19
Maria Goodson and Cleveland argue that, at the time of their
mail fraud offenses, they did not have fair notice that the acts
charged were crimes. They claim that they did not have notice
(1) that unissued video poker licenses constituted property under
the mail fraud statute, and (2) that certain information needed
to be reported to the Louisiana State Police on the video poker
license applications. We find these arguments devoid of merit.
“The test of whether a statute is unconstitutionally vague
so as to deprive fair notice is whether it provides a person of
ordinary intelligence a reasonable opportunity to know what is
proscribed.” United States v. Brewer, 835 F.2d 550, 553 (5th
Cir. 1987). With regard to the first claim, we note that, at the
time of the charged conduct, a circuit split existed as to
whether or not unissued licenses constituted property for
purposes of the mail fraud statute. Although we had not yet
ruled on the issue, at least two circuits had found that unissued
licenses are property for mail fraud purposes. Accordingly, we
conclude that, assuming each to be of ordinary intelligence,
Maria Goodson and Cleveland had reasonable opportunity to know
that their conduct could be proscribed by the mail fraud statute.
Cf. United States v. Brumley, 116 F.3d 728, 732 (5th Cir. 1997)
(en banc) (“Constructions of a statute announced by the Supreme
Court or lower courts can give citizens fair warning, even if the
cases are not fundamentally similar.” (quotation marks omitted)).
We are equally unpersuaded by Maria Goodson and Cleveland’s
claim that they did not have fair notice that the Louisiana State
20
Police required disclosure of indefinite and contingent plans to
acquire an equity interest in a video poker licensee at some
unspecified time in the future, or an ownership or other interest
in a licensee of less than five percent. The “Affidavit of Full
Disclosure” that accompanied the initial and renewal applications
explicitly required that video poker applicants be the “sole
beneficial owner of any direct or indirect interest in or to a
licensed gaming operation . . . except such as having been
reported in writing to the Louisiana State Police.” The
affidavit required that applicants attest that they had (1) “no
agreements or understandings with any other person and no present
intent to hold as agent, nominee, associate, third party or
otherwise any direct or indirect interest whatsoever in or to the
licensed gaming operation” and (2) “no agreements or
understandings with any other person and no present intent to
transfer at any future time any interest whatsoever . . . .” We
find that this language provided a person of ordinary
intelligence adequate notice that ownership interests in any
amount must be disclosed to the Louisiana State Police.
Similarly, we find the “agreement or understanding” language
sufficiently broad to include indefinite and contingent plans to
acquire equity interests at some unspecified future time. We
therefore conclude that Maria Goodson and Cleveland had fair
notice.
E. State Law “Ownership” Jury Instructions
21
Cleveland, Fred Goodson, and Maria Goodson claim that the
district court erred in refusing to charge the jury concerning
certain state-law concepts of ownership. The district court
refused to give the requested instructions because, inter alia,
the state-law concepts did “not go to the guilt or innocence of
the defendants.” We review a district court’s refusal to provide
a requested instruction for abuse of discretion. See United
States v. Pennington, 20 F.3d 593, 599 (5th Cir. 1994). Although
we have recognized the importance of instructing on legal
concepts significant to a theory of defense, see, e.g., United
States v. Cavin, 39 F.3d 1299, 1310 (5th Cir. 1994) (reversing a
conviction because the court failed to instruct on state ethical
rules relevant to an attorney’s theory of defense), we have never
required that a district court instruct a jury on peripheral
concepts that do not directly implicate an essential element of
the charged offense.
Cleveland argues that the ownership instructions were
directly relevant to both his guilt or innocence and that of Fred
and Maria Goodson. According to Cleveland, the critical issue to
be decided by the jury was whether TSG, Ltd.’s license
applications contained “fraudulent representations or omissions,”
that is, whether in keeping with the Government’s theory of the
case, the mailed video poker license applications failed to
disclose hidden interests of Fred Goodson and Carl Cleveland in
22
TSG, Ltd., as owners, option holders, or pledge recipients.13
Cleveland contends that the jury could not fairly decide who
owned TSG, Ltd. without knowing whether Goodson or Cleveland had
enforceable ownership interests under state law.
We disagree. The jury was instructed to find whether the
video poker license applications were fraudulent in so far as
affidavits submitted by Maria and Alex Goodson failed to mention
any (1) agreements or understandings with any other persons to
hold their interests as a nominee, agent or otherwise, and/or
(2) agreements or understandings with any other person and a
present intent to transfer at any future time any interest
whatsoever in TSG, Ltd. Whether the “agreements or
understandings” were enforceable under state law is not relevant
to the question of whether Maria and Alex Goodson failed to
disclose such arrangements to the Louisiana State Police.
Accordingly, we find that the district court did not abuse its
discretion in refusing to charge the jury as requested by
Appellants. See Pennington, 20 F.3d at 600 (explaining that
reversal is warranted only if the requested instruction (1) was a
substantially correct statement of the law, (2) was not
substantially covered in the charge as a whole, and (3) concerned
an important issue in the trial).
13
The district court instructed the jury that an essential element of mail fraud—distinct
from specific intent—is that a defendant knowingly created a scheme to defraud. Such a scheme,
according to the district court’s instructions, must involve false or fraudulent representations or
omission reasonably calculated to deceive persons of ordinary prudence and comprehension.
23
Fred Goodson, Maria Goodson, and Cleveland also challenge
the district court’s supplemental instruction to the jury. In
particular, they contend that the district court erred in giving
a supplemental instruction that ignored state-law ownership
principles and embraced the Government’s theory that ownership
could be determined simply from informal discussions.
After deliberations began, the jury sought clarification of
three issues: (1) the legal definition of a partnership in
commendam, (2) how much control is given up by partners, and (3)
who appoints a general manager. In response, the district court
provided the jury a general description of a partnership in
commendam and the authority of the general and limited partners.
The court concluded its supplemental instruction by charging the
jury, over defense objections: “It is for you to determine based
on all the evidence in the case what the parties’ arrangements
were as to control, ownership and management of Truck Stop
Gaming, Ltd.”
We find no reversible error.
A trial judge enjoys wide latitude in deciding how to
respond to a question from the jury. “When evaluating
the adequacy of supplemental jury instructions, we ask
whether the court’s answer was reasonably responsive to
the jury’s question and whether the original and
supplemental instructions as a whole allowed the jury
to understand the issue presented to it.”
United States v. Mann, 161 F.3d 840, 864 (5th Cir. 1998)
(footnotes omitted) (quoting United States v. Stevens, 38 F.3d
167, 170 (5th Cir. 1994)). In this case, the court’s
supplemental instruction was reasonably responsive to the jury’s
24
questions. Moreover, as mentioned above, satisfaction of state
law requirements for ownership transfers was not a critical issue
to be decided by the jury.
F. Travel Act Jury Instructions
Bankston was convicted on two Travel Act counts, which
incorporated Louisiana’s public bribery statute. He argues that
his conviction ought to be reversed because the district court
abused its discretion in failing to submit to the jury proposed
charges on gift, attempted bribery, and circumstantial evidence.
First, Bankston asserts that he was entitled to an
instruction that it is legal for a legislator to receive a gift.
Such an instruction, however, was unnecessary given the district
court’s charge that the Government had to prove beyond a
reasonable doubt that Bankston, as the receiver of the bribe,
acted “with the specific intent to be influenced in his
conduct . . . as a Louisiana senator.” Whether Bankston could
lawfully receive a gift was wholly irrelevant to the jury’s
inquiry. Because the district court’s Travel Act instruction was
clear, detailed, and substantially covered the charge suggested
by Bankston, the court’s refusal to instruct on gift does not
amount to error.
Second, Bankston, complains that the district court refused
to instruct the jury on the lesser included offense of attempted
bribery under Louisiana law. He argues that, in Louisiana, such
an instruction is not discretionary and that, had the jury found
only attempted bribery, the elements of the Travel Act charge
25
would not have been met. In federal prosecutions for violations
of the Travel Act, we have never required that district courts
instruct on lesser included offenses. Accordingly, we find
Bankston’s argument to be devoid of merit.
Third, Bankston argues that the district court committed
reversible error by failing to instruct on Louisiana’s
“circumstantial evidence rule.” Because we have squarely
rejected efforts to graft non-substantive points of state law
into RICO charges, Bankston’s claim fails. See, e.g., United
States v. Brown, 555 F.2d 407, 418 n.22 (5th Cir. 1977)
(explaining that "’the reference to state law in the federal
statute is for the purpose of defining the conduct prohibited’
and is not meant to incorporate the state statute of limitations
or procedural rules” (quoting United States v. Revel, 493 F.2d 1,
3 (5th Cir. 1974))).
G. Witness Testimony
Cleveland, Fred Goodson, and Maria Goodson claim that the
Government elicited improper witness testimony from two law
enforcement officials, FBI Special Agent Gross and State Police
Lieutenant Blackwelder. They launch four attacks on Gross and
Blackwelder’s testimony: (1) that both witnesses testified to
legal conclusions, (2) that both witnesses gave testimony in the
form of opinion, (3) that both witnesses testified as to
“ultimate issue[s] of fact,” and (4) that Gross’s testimony
exceeded his limited “summary” capacity. Evidentiary rulings
26
are reviewed for abuse of discretion. See General Electric Co.
v. Joiner, ___ U.S. ___, ___, 118 S. Ct. 512, 517 (1997).
We find that the district court did not abuse its disretion
in permitting the challenged testimony. Because neither Gross
nor Blackwelder was designated as an expert witness, most of the
caselaw that Cleveland cites for the proposition that a witness
cannot testify in the form of an opinion is inapplicable. Unlike
expert witnesses, lay persons are allowed more leeway under the
Federal Rules in testifying in the form of opinions. See Fed. R.
Evid. 701. Lay persons are explicitly allowed to testify in the
form of opinion or inference on “ultimate issue[s] to be decided
by the trier of fact.” Fed. R. Evid. 704. Additionally,
witnesses can testify in more than one capacity. See United
States v. Castillo, 77 F.3d 1480, 1499 (5th Cir. 1996) (noting
that a summary witness could testify in multiple capacities).
Accordingly, Special Agent Gross could have testified as a lay
fact witness as well as a summary witness. Having reviewed both
Agent Gross’s and Lieutenant Blackwelder’s testimony, we find no
reversible error.
H. Magazine Article Admission
Fred Goodson, Carl Cleveland, and Bankston challenge the
district court’s admission of a magazine article titled “Lies,
Bribes and Videotape,” found in the FBI’s search of Fred
Goodson’s office. The district court admitted the article during
redirect examination of FBI Special Agent Gross and instructed
the jury that the article was being admitted not for the truth of
27
the matter asserted, but solely on the issue of the state of mind
of Fred Goodson, i.e., to contradict his assertions that he
lacked knowledge and sophistication about politics and the types
of transactions at issue. Evidentiary rulings are accorded
considerable deference on appeal; “error may not be predicated
upon a ruling which admits or excludes evidence unless a
substantial right of the party is affected.” Fed. R. Evid.
103(a); see United States v. Brito, 136 F.3d 397, 412 (5th Cir.
1998).
Fred Goodson and Cleveland contest the admissibility of the
article both as to relevance and as to prejudicial effect. Even
were the article both irrelevant and prejudicial, however, its
admission did not affect a substantial right of either Goodson,
Cleveland, or Bankston. First, the district court did not allow
introduction of the article by the Government until redirect
examination. Second, the district court permitted only “narrow
clarifying” references to the article in light of the defense’s
introduction, on cross examination, of other documents etc. that
had been found in the same folder as the “Lies, Bribes and Video
Tape” article. Third, the Government’s redirect regarding the
disputed article constituted less than four pages of transcript.
Fourth, on recross, the defense had the opportunity to question
Agent Gross in detail about the subject matter of the article and
elicited from him representations that the investigation
described in the article in no way involved “anybody in this
room.”
28
For these reasons, we find that the admission of the “Lies,
Bribes and Video Tape” article did not affect a substantial right
of any appellant.
I. Prosecutor’s Closing Remarks
All appellants claim that in his rebuttal argument the
prosecutor made improper and inflammatory remarks, inviting the
jury to convict the defendants in order to “make a change” and to
“start taking back [their] state.” Appellants argue that the
district court’s subsequent instruction failed to cure the taint
of the improper closing and that reversal is therefore
required.14
A criminal defendant bears a substantial burden when
attempting to demonstrate that improper prosecutorial comments
constitute reversible error. "’A criminal conviction is not to
be lightly overturned on the basis of a prosecutor's comments
standing alone.’" United States v. Lowenberg, 853 F.2d 295, 302
(5th Cir. 1988) (quoting United States v. Young, 470 U.S. 1, 11,
105 S. Ct. 1038, 1044 (1985)). Improper prosecutorial comments
require reversal only if the comments substantially affected the
defendant's right to a fair trial. See United States v. Murrah,
14
The district court, both at trial and in its opinion on defendants’ motions for new trial,
recognized the impropriety of the prosecutor’s “make a change” closing. At the conclusion of the
prosecutor’s argument, the court instructed the jury to disregard the prosecutor’s improper
remarks:
I would like to instruct you again that this case is not about the general conditions
in the state of Louisiana. To the extent that Mr. Manger made reference to that in
his closing argument, you are instructed to disregard the comments about the
general condition of Louisiana state government as it relates to education or other
issues.
29
888 F.2d 24, 27 (5th Cir. 1989). In evaluating the extent to
which prosecutorial comments affected a defendant's right to a
fair trial, three factors are considered: the magnitude of the
prejudicial effect of the remarks, the efficacy of any cautionary
instruction, and the strength of the evidence of the defendant's
guilt. See United States v. Casel, 995 F.2d 1299, 1308 (5th Cir.
1993).
Here, the inflammatory remarks, to which defense counsel
objected at trial, came at the end of the prosecutor’s rebuttal
argument. The improper prosecutorial comments responded to
improper arguments made by counsel for Rayburn. Any prejudicial
effect inhering to the Goodsons, Bankston, and/or Cleveland, it
seems, would have been substantially less than that attaching to
Rayburn. Rayburn’s acquittal therefore suggests that the jury
was not influenced by the improper comments.15
With regard to the efficacy of the district court’s
instruction, the court more than once instructed the jury to
disregard the improper arguments. The language the court adopted
when instructing the jury for the second time was in part
borrowed from the words of Bankston’s attorney. We find
sufficiently curative both the district court’s repeated
instruction to disregard the improper argument as well as its
caution to the jury that lawyer argument was not evidence.
15
Appellants argue that Rayburn’s “sympathy” acquittal is of little significance because he
was 80 years old at the time of the trial. Rayburn, however, was not the only defendant acquitted
of charges. The fact that each appellant was found not guilty on some counts suggests that the
jury reached its verdict free of the taint of the prosecutor’s improper remarks.
30
Finally, as to the strength of the evidence of guilt, our
review of the trial record in its entirety reveals that the
evidence presented by the Government was sufficient to support
each of the convictions against each of the appellants. Thus, we
conclude that the prosecutorial comments did not substantially
affect the Goodsons’, Cleveland’s, or Bankston’s respective
rights to a fair trial.
J. Sufficiency of the Evidence
Fred Goodson, Maria Goodson, and Larry Bankston contest the
sufficiency of the evidence to support their respective
convictions. In evaluating the sufficiency of the evidence on
appeal, we consider the evidence in the light most favorable to
the Government, drawing all reasonable inferences in support of
the jury's verdict. See United States v. Lopez, 74 F.3d 575, 577
(5th Cir. 1996). The evidence is sufficient if a rational trier
of fact could have found the essential elements of the crime
beyond a reasonable doubt. See Jackson v. Virginia, 443 U.S.
307, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560 (1979); United
States v. Gaytan, 74 F.3d 545, 555 (5th Cir. 1996). The evidence
need not exclude every reasonable hypothesis of innocence or be
wholly inconsistent with every conclusion except that of guilt,
and the jury is free to choose among reasonable constructions of
the evidence. See Lopez, 74 F.3d at 577.
We address the arguments raised by each appellant in turn.
1. Fred Goodson
31
Fred Goodson argues that the evidence is insufficient to
support his two-count conviction for mail fraud because it fails
to establish that he had the specific intent to commit fraud.
To establish a mail fraud violation under 18 U.S.C. § 1341,
the Government must demonstrate (1) a scheme to defraud, (2) the
use of mails to execute that scheme, and (3) the defendant's
specific intent to commit fraud. See United States v. Tencer,
107 F.3d 1120, 1125 (5th Cir. 1997). "Intent to defraud requires
an intent to (1) deceive, and (2) cause some harm to result from
the deceit." United States v. Jimenez, 77 F.3d 95, 97 (5th Cir.
1996). A defendant has the intent to defraud if he acts
knowingly with the specific intent to deceive for the purpose of
causing pecuniary "loss to another or bringing about some
financial gain to himself." United States v. Blocker, 104 F.3d
720, 732 (5th Cir. 1997).
According to Goodson, the mail fraud charges rested on two
premises: that he and Cleveland were the “true owners” of Truck
Stop Gaming, and that they hid that fact from regulators in order
to avoid a suitability investigation of their finances. Goodson,
on appeal, contests the sufficiency of the evidence only as it
relates to the second premise--Goodson and Cleveland’s avoidance
of a suitability investigation.
This second premise, however, does not constitute an
essential element of mail fraud. Instead, the desire to avoid a
suitability investigation relates merely to motive, representing
the Government’s theory as to why Cleveland and Goodson committed
32
the fraud. Because we have never required the Government to
prove nor the jury to find motive beyond a reasonable doubt, Fred
Goodson’s argument fails.
2. Maria Goodson
Maria Goodson challenges the sufficiency of the evidence for
her mail fraud conviction. She claims that the Government failed
to establish that she knowingly, and with specific intent to
defraud, participated in a scheme to hide either (1) the true
ownership interests of her father and Carl Cleveland in TSG, Ltd.
or (2) the 4.99% ownership interest held by Benny Rayburn, Jr.
Because the jury need only have found Maria Goodson guilty
beyond a reasonable doubt on one of the two potential schemes
underlying her mail fraud conviction, we address only the
evidence concerning Maria Goodson’s specific intent to conceal
the 4.99% ownership interest transferred to Benny Rayburn. The
Government presented the jury with a document dated August 1,
1994, signed by Maria Goodson in which she agreed to “assign,
sell, convey and deliver unto Benjamin B. Rayburn, Jr. a 4.99%
interest out of a 100% interest in the Truck Stop Gaming, Ltd.
partnership.” Evidence showed that the transfer of this interest
was not reported to the State Police in TSG, Ltd.’s 1995 license
renewal application, even though such minority purchases were
required to be reported.
Maria Goodson’s awareness of the transfer of ownership is
indicated by two pieces of evidence. First, she signed the
conveyance itself. Second, in a recorded conversation between
33
Maria Goodson and family accountant Joe Morgan, she described
BAJ, LLC, the limited liability company to which Rayburn
ultimately transferred his 4.99% interest, as having become a
4.9% partner. Accordingly, we find that the jury had sufficient
evidence to convict Maria Goodson for mail fraud.
3. Larry Bankston
Larry Bankston contests the sufficiency of the evidence as
to his conviction on two counts of violating the Travel Act, 18
U.S.C. § 1952 (1997). The first count involved an interstate
telephone call on June 20, 1995, from Fred Goodson to Meyer
Realty to set up what was alleged to have been a bribe in the
form of a “sham” rental of Bankston and his wife’s Gulf Shores
condominium. The second involved Fred Goodson’s use of an
interstate commercial carrier on June 22, 1995, to forward a
$1,555.01 check to Meyer Realty as payment for the condominium
rental.
The essential elements for a Travel Act conviction are:
(1) travel or use of the mail or any facility in
interstate or foreign commerce;
(2) with the specific intent to promote, manage,
establish, or carry on--or distribute the proceeds of--
unlawful activity; and
(3) knowing and willful commission of an act in
furtherance of that intent subsequent to the act of
travel or use of the mail or facility of interstate or
foreign commerce.
34
See United States v. Logan, 949 F.2d 1372, 1380-81 (5th Cir.
1991). Under Louisiana law, an elected official is guilty of
public bribery if he accepts anything of apparent present or
prospective value with the specific intent to be influenced in
his employment, position, or duty. See La. Rev. Stat. Ann.
§ 14:118 (West Supp. 1999).
Bankston attacks the sufficiency of the evidence on three
separate grounds: (1) insufficient proof that he had the
requisite intent to be influenced in his official conduct by the
condominium rental; (2) insufficient proof that the condominium
rental amounted to anything more than a legal gift; and (3)
insufficient proof that he committed an overt act in furtherance
of the alleged bribery after the interstate communications at
issue.
The evidence at trial does not support Bankston’s claim.
The evidence showed that in February 1995 Bankston and his wife
discussed establishing an arrangement whereby a proposed “renter”
would pay to use their Alabama condominium despite the renter’s
true intention not to do so. Records from Meyer Realty showed
that Fred Goodson rented the Bankstons’ condominium and paid for
the rental by check. Testimony from FBI agents revealed that the
Bankston family, not Goodson, used the condominium during the
rental week in question. Finally, the jury heard many
intercepted conversations between Bankston and others in which
Bankston indicated that he would use the power of his office to
protect Goodson’s video poker interests during the legislative
35
session. Based upon this evidence, we affirm Bankston’s
conviction on the two Travel Act counts.
K. Sentencing
1. Maria Goodson
a. Section 5K2.7 Upward Departure
Maria Goodson complains that the district court improperly
enhanced her offense level six points for a “significant
disruption of governmental function,” pursuant to U.S. Sentencing
Guideline section 5K2.7.16 She argues that the disruption
identified by the district court is not the type of “significant”
disruption that the Commission contemplated when drafting
section 5K2.7 and that, although the submission to a state agency
of one false application may disrupt the agency’s function, it
only does so in an “ordinary” sense. We disagree.
A district court has “wide discretion” in imposing a
section 5K2.7 upward departure. United States v. Hatch, 926 F.2d
387, 397 (5th Cir. 1991) (explaining that the Fifth Circuit has
repeatedly granted district courts “wide discretion to decide
whether aggravating factors exist to support an upward
16
Section 5K2.7 provides in part:
If the defendant's conduct resulted in a significant disruption of a
governmental function, the court may increase the sentence above
the authorized guideline range to reflect the nature and extent of the
disruption and the importance of the governmental function
affected. Departure from the guidelines ordinarily would not be
justified when the offense of conviction is an offense such as bribery
or obstruction of justice; in such cases interference with a
governmental function is inherent in the offense, and unless the
circumstances are unusual the guidelines will reflect the appropriate
punishment for such interference.
36
departure”). The appropriateness of a departure turns on the
importance of the government function impacted, not the degree of
the impact. Cf. Hatch, 926 F.2d 387 (affirming a 5K2.7 upward
departure based on the defendant, a former Louisiana sheriff,
authorizing payments, representing a portion of the sheriff
office’s operating budget, to a purported jail construction
project consultant); United States v. Garcia, 900 F.2d 45 (5th
Cir. 1990) (holding that an upward departure was warranted and
reasonable where postal inspectors recovered 248 first-class
letters from the possession of a defendant postal employee).
Here, when Maria Goodson submitted TSG, Ltd.’s false 1995 renewal
application, failing to disclose any ownership interest held by
Fred Goodson, Carl Cleveland, or Benny Rayburn, she effectively
shielded those men from suitability analysis. In doing so, Maria
Goodson thwarted Louisiana’s video poker regulatory and licensing
scheme designed to investigate the honesty and integrity of
prospective license holders. Based upon the importance of that
regulatory scheme, we find that the district court did not abuse
its discretion in imposing a section 5K2.7 upward departure.
b. Loss Calculation
The Government, in its cross-appeal, contends that the
district court miscalculated Maria Goodson’s offense level.
Maria Goodson was convicted of one count of mail fraud in
connection with TSG, Ltd.’s 1995 license renewal application.
The district court sentenced her in accordance with section 2F1.1
of the Sentencing Guidelines. That section specifies a base
37
offense level of six for fraud and provides for incremental
increases in the offense level depending on, inter alia, the
amount of loss caused by the fraud. See U.S. Sentencing
Guidelines Manual § 2F1.1 (1997). In calculating Maria Goodson’s
offense level, the court found that the State of Louisiana had
suffered no “actual or intended monetizable loss . . . by virtue
of Ms. Goodson’s having fraudulently obtained the license.”
Accordingly, the district court did not increase Ms. Goodson’s
base offense level for any loss.
The Government asserts that the district court erred in
finding that the State of Louisiana suffered no loss and in
failing to use defendant’s gain as an alternative method of
valuation. The Government asserts that, in keeping with
section 2F1.1's Application Note 8, Maria Goodson’s base offense
level should have been increased eleven levels based upon TSG,
Ltd.’s $1.4 million annual gain. See U.S. Sentencing Guidelines
Manual § 2F1.1 App. Note 8 (1997); see also United States v.
Smithson, 49 F.3d 138, 144 (5th Cir. 1995) (recognizing that
under section 2F1.1, Application Note 8, a sentencing court may
utilize the offender’s gain as an alternative valuation method
for assessing the amount of loss when the loss is difficult to
determine).
In its sentencing cross-appeal, the Government urges use of
TSG, Ltd.’s $1.4 million annual revenues as the appropriate
valuation of Maria Goodson’s gain, yet throughout trial and all
subsequent forfeiture proceedings, the Government argued that
38
Maria Goodson, in fact, was not the “true owner” of TSG, Ltd.
The verdict of the jury as well as the district court’s judgment
of forfeiture confirmed the success of the Government’s hidden
ownership theory of prosecution. Accordingly, we consider Fred
Goodson and Carl Cleveland the true owners of TSG, Ltd. and agree
that TSG, Ltd.’s $1.4 million gain could not be attributed to
Maria Goodson, a non-owner. Therefore, the district court did
not err in refusing to use TSG, Ltd.’s $1.4 million annual
revenues as an alternative valuation method for loss pursuant to
section 2F1.1.
2. Bankston
a. Eleven-level Enhancement
Bankston challenges as unsupported by the evidence the
district court’s eleven-level increase in his base offense level
under section 2C1.1(b)(2)(A). This Court examines a district
court's factual findings only for clear error and affords great
deference to the court's application of the Guidelines to those
facts. See United States v. Snell, 152 F.3d 345, 346 (5th Cir.
1998).
The district court, relying on the Presentence Report
(“PSR”) as well as facts elicited at trial and the forfeiture
proceeding, based Bankston’s offense level enhancement on its
calculation of the “expected benefit to be received by the
individual paying the bribe,” namely Fred Goodson.17 The
17
The Guidelines assign punishment at the greatest of three
calculations: (1) the value of the bribe; (2) the value of the
benefit to be received; or (3) if the offense involved payment
39
district court found that the benefit to be received by Goodson
in return for the bribe was protection for a two-year period from
legislation that would otherwise interfere with the continued
operation of his video poker business. The district court,
recognizing that evidence at trial supported a finding that
Goodson held a 50% interest in TSG, Ltd., determined that the
expected benefit to be received by Goodson was one-half the
profits to TSG, Ltd. for a two-year period, or $1.4 million. We
find the district court’s “Reasons for Sentencing of Larry S.
Bankston” to be thorough and well-reasoned. Bankston’s assertion
of error is meritless.
b. Expected Benefit
The Government, on cross-appeal, argues that the district
court erroneously reduced the expected benefit to be received for
the bribe to the ownership percentage in TSG, Ltd. of the briber,
Fred Goodson. Specifically, the Government contends that the
district court erred in limiting “benefit” as used in section
2C1.1(b)(2)(A) to “personal benefit,” failing to consider the
actual benefit sought, the continued unfettered operation of the
RICO enterprise. The issue raised by the Government is one of
first impression for this Circuit.
It is well established that sentencing courts are bound by
“commentary in the Guidelines Manual that interprets or explains
a guideline . . . unless it violates the Constitution or a
for the purpose of influencing an elected official, an eight-
level increase. See U.S. Sentencing Guidelines Manual § 2C1.1
(1997).
40
federal statute, or is inconsistent with, or [is] a plainly
erroneous reading of, that guideline.” See Stinson v. United
States, 508 U.S. 36, 38, 113 S. Ct. 1913, 1915 (1993). The
Commentary to section 2C1.1 states that for deterrent purposes,
the punishment should be commensurate with the “gain to the payer
or the recipient of the bribe,” whichever is higher. As
contemplated by the Commission, the “gain to the payer” is the
“value of the benefit received or to be received.” Thus, the
expected benefit to be received as referenced in section 2C1.1 is
the benefit to the payer of the bribe.
Resolution of the Government’s cross-appeal, therefore,
turns on the identity of the “payer.” If Fred Goodson, in his
individual capacity, bribed Bankston, then the district court
properly limited “expected benefit” to an amount equivalent to
Goodson’s personal benefit. If, on the other hand, Fred Goodson,
as agent for TSG, Ltd., bribed Bankston, then the Government
would be correct that the expected benefit ought to be measured
by the profits to the RICO enterprise.
The issue of the identity of the payer is a question of fact
best resolved by the district court. Because the evidence
presented at trial could support either the individual-capacity
or RICO-enterprise theory of bribery, we cannot conclude that the
district court committed clear error in determining that the
personal benefit to Goodson was the appropriate valuation of the
expected benefit to be received.
L. RICO Forfeiture
41
A person who violates RICO must forfeit any interest
acquired or maintained in violation of the statute, any
enterprise established or conducted in violation of RICO, and any
property constituting or derived from proceeds obtained in
violation of RICO. See 18 U.S.C. § 1963(a). Here, the
Government sought, and the district court ordered, the forfeiture
of both Fred Goodson’s and Carl Cleveland’s interests in TSG,
Ltd., in an amount equal to the proceeds received by TSG, Ltd.
between July 1994 and August 1995. Fred Goodson,18 Carl
Cleveland, Maria Goodson, Alex Goodson, and TSG, Inc. appeal,
albeit on different grounds, the district court’s judgment of
forfeiture.
With regard to Fred Goodson’s and Carl Cleveland’s claim, we
note that the district court ordered that the proceeds of TSG,
Ltd. be forfeited pursuant to 18 U.S.C. § 1963(a)(1) and (a)(2),
as well as (a)(3). Goodson, though, attacks only two of these
three grounds. He raises no error as to the forfeiture of
proceeds under § 1963(a)(3). Given the identity of proceeds
forfeited pursuant to each theory, we affirm the district court’s
August 1997, forfeiture order.
Maria Goodson, Alex Goodson, and TSG, Inc. argue that the
district court erred in failing properly to apply Louisiana law
to the question of ownership of TSG, Ltd. and TSG, Inc. They
assert that no state law exists that would support the district
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Carl Cleveland incorporates Fred Goodson’s forfeiture
arguments.
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court’s ruling that Fred Goodson and Carl Cleveland were the
“true owners” of TSG, Ltd.
Section 1963(l)(6)(A) provides petitioners the opportunity
to recoup forfeited property if they can establish by a
preponderance of the evidence either (1) that they have a current
legal right, title, or interest in the property and that the
right, title, or interest was vested in them instead of the
defendant at the time of the commission of the RICO offenses; or
(2) that they have a current legal right, title, or interest in
the property and that the right, title, or interest was superior
to the right, title, or interest of the defendant at the time of
the commission of the RICO offenses. See 18 U.S.C.
§ 1963(l)(6)(A). We review the district court's findings of fact
under the clearly erroneous standard of review and the question
of whether those facts constitute legally proper forfeiture de
novo. See United States v. Marmolejo, 89 F.3d 1185, 1197 (5th
Cir. 1996).
Maria and Alex Goodson assert that they are the record
owners of TSG, Ltd. and its corporate general partner, TSG, Inc.
They point to TSG, Ltd.’s Agreement of Partnership, which they
both signed and which was filed with the Louisiana Secretary of
State, as evidence of their current and superior interest in the
forfeited companies. They urge us to find that the district
court improperly disregarded their partnership agreement when it
concluded that Fred Goodson and Carl Cleveland were the true
owners of TSG, Ltd.
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We agree with the district court’s decision not to allow an
obviously false partnership agreement to be used to provide the
basis for a claim of interest under § 1963(l)(6)(A). As the
district court indicated, the jury’s verdict in the instant case
established that Fred Goodson, Maria Goodson, and Carl Cleveland
perpetrated a fraud on the State of Louisiana. The jury
necessarily found that Fred Goodson and Carl Cleveland were the
true owners of TSG, Ltd. and that Maria Goodson and her brother
Alex were straw people used in the sham to hide the true
ownership of TSG, Ltd.
Testimony at the October 31, 1997 evidentiary hearing to
determine the interests of Alex and Maria Goodson bolsters our
resolve not to allow them to assert ownership in the TSG entities
based upon their “sham” partnership agreement. With regard to
Alex Goodson, the district court found that his hearing testimony
revealed that he did not consider himself to have any real
interest in either TSG, Inc. or TSG, Ltd. Alex described his
involvement with the companies as someone executing an ownership
document as an agent of the company, in the capacity of a
nominee. His testimony revealed that he had no understanding of
the “contribution” that was attributed to him in the partnership
agreement for TSG, Ltd. As to Maria Goodson, the court found
that her testimony likewise “fell short of establishing that she
and her brother . . . were the true owners of the Truck Stop
Gaming entities.” In particular, Maria Goodson told the court
at the forfeiture hearing that at the time the companies were
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formed and incorporated, she did not associate a company being
“in her name” with ownership. Equally problematic was a
conversation with Carl Cleveland in which she requested 1% of the
net profits of TSG, Ltd. If she had in fact been the owner of
the TSG entities, she would not have needed to ask Carl Cleveland
for an interest in a percentage of the companies’ profits.
In light of the above evidence, the district court properly
disregarded the “sham” partnership agreement. Consistent with
the detailed analysis provided in the district court’s April 1998
order, we conclude that Alex Goodson, Maria Goodson, and TSG,
Inc. failed to demonstrate by a preponderance of the evidence a
legal right, title, or interest in TSG, Ltd. Their appeal of the
district court’s April 1998 judgment of forfeiture, therefore,
fails.
III. CONCLUSION
Appellants raise an abundance of evidentiary, statutory, and
constitutional challenges, none of which warrant reversal. For
the reasons stated above, we affirm each Appellant’s judgment of
conviction and sentence as well as the judgment of forfeiture.
AFFIRMED.
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