Vol. 6, No. 17 As Published in the Advance Sheets on April 26, 1999
Highlights of this Issue:
Leading Item:
Miscellaneous Issues:
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We note for the record that the new Federal ethics statute, known as The 1998 Citizens Protection Act (28 U.S.C. § 530B) went into effect on April 19, 1999, despite strenuous opposition from the Department of Justice and some members of Congress (who are still seeking to repeal § 530B). That law requires Federal prosecutors to comply with state laws and rules, as well as local Federal court rules, that govern lawyer conduct in the states where the prosecutors engage in their duties. The DOJ has issued interim regulations interpreting and implementing that statute and, as can be expected, they reflect a very narrow construction of § 530B: they do not, for example, apply to investigative agents even if they are lawyers. Those regulations can be found at 28 CFR §§ 77.1-77.5 and they have been posted on our Web site Bulletin Board.
Proposed Amendments to the Federal Rules of Criminal Procedure
The Supreme Court has announced the adoption of several changes to the Federal Rules of Criminal Procedure, which will take effect on December 1, 1999, unless Congress directs otherwise. The most significant of these changes relates to the scope of the matters that can be agreed upon in a plea agreement by making it clear that a plea agreement may include an agreement as to a sentencing range, sentencing guideline, sentencing factor, or policy statement. The language of the proposed changes to Rule 11(e) is as follows:
(e) PLEA AGREEMENT PROCEDURE.
(1) In General. The attorney for the government and the attorney for the defendant--or the defendant when acting pro se--may agree [engage in discussion with a view toward reaching an agreement] that, upon the defendant's entering of a plea of guilty or nolo contendere to a charged offense, or to a lesser or related offense, the attorney for the government will: [do any of the following]:
(A) move to dismiss [for dismissal of] other charges; or
(B) recommend, [make a recommendation,] or agree not to oppose the defendant's request, for a particular sentence, or sentencing range, or that a particular provision of the Sentencing Guidelines, or policy statement, or sentencing factor is or is not applicable to the case. Any such [with the understanding that such] recommendation or request is not [shall not be] binding on [upon] the court; or
(C) agree that a specific sentence or sentencing range is the appropriate disposition of the case, or that a particular provision of the Sentencing Guidelines, or policy statement, or sentencing factor is or is not applicable to the case. Such a plea agreement is binding on the court once it is accepted by the court.
The court shall not participate in any [such] discussions between the parties concerning any such plea agreement."
[Note: New material is underlined and in bold; matter to be omitted is in brackets and italicized. The balance of the proposed amendments and the full text of the accompanying Committee Report have been posted on our Web site Bulletin Board on the Internet at www.fedcrimlaw.com.]
We feel that this amendment is significant because it may help direct the courts' attention away from relying on the false umbrella of the statutory sentencing ceilings to relying on the same Guidelines provisions that the Probation Office will address when it prepares its presentence report - a report that is usually routinely adopted by the sentencing courts. The proposed changes are also intended to distinguish clearly between (e)(1)(B) plea agreements - which are not binding on the court - and (e)(1)(C) agreements - which are binding.
Rule 11(c) would also be amended by adding a new subclause (6) to Rule 11(c) (Advice to Defendant) which requires the district court to determine that the defendant understands the "terms of any provision in a plea agreement waiving the right to appeal or to collaterally attack the sentence" - a change that may help clarify whether the defendant retains any appeal rights on constitutional issues or appeals based on sentences outside the Guideline ranges specified in the plea agreement.
United States v. Velastegui, 1999 WL 262282 (S.D.N.Y 3/30/99) (Judge Scheindlin)
As this case shows, sometimes it is worth the effort to seek to dismiss at least parts of an indictment before a trial ever starts. In this case, an individual and a corporate defendant were charged with two counts of illegal money transmitting in violation of 18 U.S.C. § 1960 and one count of money structuring in violation of 31 U.S.C. § 5324(a). The defendants argued that they did not transmit money illegally within the meaning of § 1960. They also contended that the criminal sanctions imposed by the federal statute apply only when the illegal transmitting constitutes money. Neither defendant was charged with money laundering.
Section 1960(a) provides criminal penalties for whomever conducts or manages or manages a business "knowing that the business is an illegal money transmitting business." An illegal money transmitting business is defined as "a money transmitting business which affects interstate or foreign commerce to any degree" and "is intentionally operated without an appropriate money transmitting license in a State where such operation is punishable by a misdemeanor or felony under State law." (18 U.S.C. § 1960(b)).
New York law makes the operation of an unlicensed money transmitting business a crime, but it also exempts from the licensing requirements those who act as an agent of a licensed principal - as the defendants in this case did. Because of that, Judge Scheinlin concluded that the defendants did not engage in an unlicensed money transmitting business within the meaning of the New York banking law.
The Government, however, countered that still other provisions of the law only permit the principal to transmit the funds to the payers, whereas here the defendants, acting as agents, often transmitted the funds in question directly to the payers. It claimed that not only did such transfers violate the terms of the agency agreement, it also amounted to the commission of a misdemeanor under that separate statute. The defendants argued that, under any reasonable interpretation of § 1960, the direct transmission of funds could not have amounted to operating a money transmitting business without an appropriate license.
Judge Schindlein agreed. Citing the rule of lenity and the constitutional requirement that criminal statutes provide fair notice, she held that § 1960 "fails to make reasonably clear that operating an otherwise ‘licensed' money transmitting business in violation of other sections of the state banking laws, subjects the offender to federal criminal penalties. Accordingly, the portion of the indictment charging the defendants with violating 18 U.S.C. § 1960 contravenes the constitutional fair notice requirement and must be dismissed."
We are pleased to announce that, through the courtesy of Attorney Raymond J. Aab of New York, we have posted on our Internet site two of the briefs that were filed in this case. The first brief deals with the issues described above; and the second brief deals with an issue that is still pending before the Court - namely a motion to vacate a restraining order on the defendants' bank accounts that the Government obtained in this action on the grounds that the assets seized were substitute assets that cannot lawfully be seized prior to a conviction.
Schledwitz v. United States, 169 F.3d 1003 (6th Cir. 1999) (Judge Jones)
In this case, a divided panel from the Sixth Circuit reversed a mail fraud conviction because the prosecution had intentionally misled both the defense and the district court by presenting its key witness and a "neutral and disinterested" expert, when in fact he had been actively and intimately involved in the investigation against the defendant since at least 1985. The majority concluded that the failure to disclose that information not only offended the Due Process Clause, it violated the letter and spirit of Brady v. Maryland, 373 U.S 83 (1963). (For more on the Brady ruling, see the Quote of the Week below).
The appellant Schledwitz had several strikes against him. First, he was a high-profile lawyer from Memphis, with long-time connections to Jake Butcher, the head of a banking empire in Tennessee and Kentucky that collapsed in 1983. Butcher pled guilty to bank fraud in 1984 and was sentenced to 20 years in prison. Second, Schledwitz twice beat the Government in its earlier attempts to convict him for bank fraud and conspiracy arising out of the collapse of Butcher's bank. In 1990, he was tried, along with several others including a Congressman, on a 19 count indictment. The first trial ended in a mistrial after the jury announced it was hopelessly deadlocked. The second trial resulted in an acquittal on all counts.
To atone for those losses, the Government indicted Schledwitz alone on eight counts of mail fraud in 1992. Finally, adding insult to injury, the district court promptly dismissed five of those counts which related to his acquittal. The Government, however, got its revenge when Schledwitz was convicted of the remaining three counts; and he was sentenced to six months in a halfway house.
The Government's chief witness (and its only expert witness) at trial was one Jay Horne, a retired FBI investigator who allegedly was brought out of retirement and paid the measly sum of $20 per hour to assist the Government in reviewing financial records and tracing the flow of funds. In fact, during his many year involvement with the case, the same "neutral" expert witness interviewed the key witnesses in the case against Schledwitz and was instrumental in all phases of the development of the Government's case.
The Sixth Circuit observed that; "Had the defense team known that Horne had investigated Schledwitz for years, it certainly would have sought to elicit that fact on cross examination. Such impeachment would have dissipated the false impression that Horne was not a garden-variety neutral expert, but rather an active investigator involved in the case." (Id., at 1015). It therefore concluded that it had no confidence in the outcome of the trial. "[G]iven the district court's own conclusion that there was ‘no question' that the jury would have viewed Horne differently had it known that he had been an active investigator against Schledwitz, we are thus of the opinion that a ‘reasonable probability' exists that the result of Schledwitz's trial would have been different." (Id., at 1017).
United States v. Winters, Docket No. 98-60181 (5th Cir. 4/23/99) (Judge Stewart)
In this case a divided panel from the Fifth Circuit held that only rarely will a Federal District Court be justified in granting a convicted law enforcement officer a downward departure on the basis of the officer's special vulnerability to abuse while in prison. While the Court recognized that the Supreme Court's landmark decision in Koon v. U.S., 518 U.S. 81 (1996) approved a downward departure for similar reasons for the law enforcement officers involved in the "extraordinary notoriety of the Rodney King beating," the majority wrote that "Koon was an extreme case and no facts remotely similar to it are present here."
This case involved the continuation of the appeal of a prison guard from the Mississippi State Penitentiary who was convicted of a number of Federal crimes arising out of a savage, sadistic and unprovoked beating of a prisoner who had escaped - a beating that severed the prisoner's artery and caused several permanent injuries. The guard was convicted of deprivation of a person's civil rights under color of law, in violation of 18 U.S.C. § 242 and of using a firearm during and in relation to that crime, in violation of 18 U.S.C. § 924(c), because he beat the prisoner with his gun. In the first appeal, reported at 105 F.3d 200 (see P&J, 3/3/97), the Fifth Circuit rejected the district court's (Judge Senter) award of a significant downward departure on the grounds that the guard's acts constituted "aberrant behavior" which justified the departure. It reasoned that the guard had attempted to cover up his deeds by attempting to coerce other witnesses into altering their testimony; and thus concluded that such a "cover-up" denied the availability of an aberrant behavior departure.
On remand, the district court again tried desperately to give the guard a lenient sentence: it notified the parties that it had decided to grant a different departure. Citing the guards' "unblemished 15 year record as a law enforcement officer", the court listed two grounds as the basis for its new departure: namely, the "Correctional Officer's High Susceptibility to Abuse in Prison" and the "Mandatory and Consecutive 5-year Term of Imprisonment" on the gun charge, which it felt would result in an "excessive term of imprisonment." The Government again appealed - this time asking that the case be reassigned to another judge.
Once again, the Fifth Circuit reversed (although it denied, as "inappropriate", reassignment of the case to a different judge.) It held that "Koon does not create a general rule that a defendant's status as a police officer can justify a downward departure" and that "to allow a departure on the basis that Winters is a law enforcement officer would thwart the purpose and intent of the guidelines." In fact, the Court continued, the defendant's "status as a corrections officer necessarily meant that the criminal conduct - which took place in his capacity as a corrections officer - constituted an abuse of a public position. The guidelines specifically state that crimes involving the abuse of public trust may be considered aggravating - not mitigating - factors [and that the Sentencing Commission] ‘considered criminal acts committed by government agents to require a firmer response in order to prevent them'."
Addressing the district court's determination that the imposition of a mandatory minimum sentence would be "too harsh", the Fifth Circuit held: "The mere fact that Winters faced a sixty-month minimum sentence on the gun charge cannot by itself justify a departure from the guidelines. Thus, the district court's departure was allowable only if unusual circumstances remove this case from the heartland of cases contemplated by the guidelines. . . . [However], the district court offered no facts which differentiate this case from any other case in which a law enforcement officer uses excessive force or obstructs justice. Instead, the district court found this case extraordinary primarily because of Winters' personal characteristics. Personal traits such as those relied upon by the district court are not proper bases for departures from the guidelines." For all those reasons, the Court concluded that Judge Senter had abused his discretion and once again remanded the case for resentencing.
In a lengthy dissent, Judge Barksdale chided the majority for not granting the district court "substantial deference" - an argument which the majority said was nothing more than "the proverbial red herring."
QUOTE OF THE WEEK - A reminder of the Supreme Court's reasons for adopting its rule that the Government has an affirmative duty, under the Due Process Clause, to disclose to the defense all exculpatory materials in its possession.
"The principle of [due process] is not punishment of society for misdeeds of a prosecutor but avoidance of an unfair trial to the accused. Society wins not only when the guilty are convicted but when criminal trials are fair; our system of the administration of justice suffers when any accused is treated unfairly. An inscription on the walls of the Department of Justice states the proposition candidly for the federal domain: ‘The United States wins its point whenever justice is done its citizens in the courts.' A prosecution that withholds evidence on demand of an accused, which, if made available, would tend to exculpate him or reduce the penalty helps shape a trial that bears heavily on the defendant. That casts the prosecutor in the role of an architect of a proceeding that does not comport with the standards of justice, even though . . . his action is not ‘the result of guile'." (Brady v. Maryland, 373 U.S. 83, 87-88 (1963).
Scorecard of published criminal cases reviewed by our staff this year:
Cases in the Federal Reporter:
This week: 34 Year to
date: 636
Cases in the Federal Supplement:
This week: 23 Year to
date: 366
Copyright © 1999 Punch and Jurists, Ltd.