Case o' The Week: Ninth Unmoved by The Miller's Tale - Wire Fraud Jury Instructions

Prosecutorial misconduct puts fraud conviction on “Thin Ice.”

The "Thin Ice" Band, with Victim-Company Owner Russ Lesser, AUSA Greg Lesser, and James Miller

 United States v. Miller, 2020 WL 1317275 (9th Cir. Mar. 20, 2020), decision available here.

Players: Decision by DJ Rakoff, joined by Judges Watford and Bennett.  

Facts: James Miller took money without authorization by writing himself checks from the business for which he worked. Id. at *2. The business was owned by Russ Lesser.

   Russ Lesser’s son, AUSA Greg Lesser, owned a stake of the company. AUSA Greg Lesser called his friend in the FBI, who connected him to FBI Special Agent Joseph Swanson. Id. at *3 & n.2. “Shortly after,” Agent Swanson informed AUSA Lesser that the feds were investigating the case. Id.

  Miller was charged with wire fraud and filing false tax returns. Id. at *2. At trial, his defense was that he had always intended to (and eventually did) repay back the full amount he took from the company. Id. at *3. He requested a jury instruction that required proof that he had the intent to both deceive and cheat the company. That instruction was denied, and it was instead given in the disjunctive. Id.

  Miller was convicted.

Issue(s): “[W]hether the jury charge misstated the law by instructing that wire fraud under 18 U.S.C. § 1343 requires the intent to ‘deceive or cheat’ rather than the intent to ‘deceive and cheat.’” Id. at *1 (emphasis in original).

Held: “We conclude that the charge was erroneous. Several other circuit courts have long held that the crime of wire fraud requires the specific intent to utilize deception to deprive the victim of money or property, i.e., to cheat the victim, and we now align the law of the Ninth Circuit with that of the other circuits and with recent Supreme Court precedent. Nevertheless, we find that the erroneous instruction was harmless in this case.” Id.

Of Note: Miller also involves a jaw-dropping example of prosecutorial misconduct. As noted above, the son of the owner of the victim company was CD Cal AUSA Greg Lesser. Id. at *3. (AUSA Lesser owned a stake in his dad’s company). Id. AUSA Lesser called friends at the FBI to report Miller at the outset of the case, and Lesser remained involved in the investigation. Id. When AUSA Lesser’s supervisors learned of this involvement (three weeks into the investigation!), the CD Cal USAO conflicted out. The San Diego USAO prosecuted the case. Id.

  AUSA Lesser still, however, continued contact with FBI Special Agent Joseph Swanson, who was investigating the case. Id.

  The District Court denied Miller’s motion to dismiss for prosecutorial misconduct, and the Ninth – while finding that the improper conduct was “clear” – nonetheless upheld the district court. Id. at *7-*8.

  A disappointing holding, in a case involving shocking conduct by a self-interested federal prosecutor.

How to Use: The Ninth’s holding on the conjunctive fraud instruction is a welcome change, that brings the Circuit in line with other circuits and SCOTUS. Id. at *4-*6. 

  Before embracing a defense based on that instruction, however, read Miller carefully. Even with a conjunctive instruction, “Intent to repay . . . is not a defense to wire fraud.” Id. at *6. The “loan” defense to fraud, rejected by the Ninth in Treadwell, still doesn’t work – despite the new fraud instruction required by Miller. *6 & n.10

                                               

For Further Reading: The hottest NorCal hearing next week is an innocuous-looking civil proceeding before the Honorable Magistrate Judge Nathanael Cousins: Babu et al v. Ahern. See court calendar here. 

The Honorable Magistrate Judge Nathanael Cousins

  In Babu, civil rights plaintiffs representing inmates at Santa Rita Jail are hunting for the jail’s mysterious 80-page COVID-19 manual. This is a rumored document that the USAO and ND Cal Court have apparently been given, and that AUSAs expressly rely upon while fighting pretrial release, but that has still not been provided to any defense counsel. 

  Notably, last week a Santa Rita Jail nurse tested positive for COVID-19, see Mercury News Article here. As a result, two SRJ units with federal prisoners are now on quarantine.

  Three hundred and fourteen state and county defendants have now been released from Santa Rita Jail to respond to the COVID-19 risk. See article here. 

  In marked contrast, with the exception of former Presidents, federal pretrial inmates are not being released in NorCal in response to COVID-19.

  What fate awaits our desperate federal clients in Santa Rita Jail, if widespread release doesn’t happen soon? For a thoroughly terrifying description of the scenarios ahead for state prisons and jails, see David Montgomery, ‘Prisons are Bacteria Factories’; Elderly Most at Risk, available here. 

Image of the band, “Thin Ice” from https://easyreadernews.com/miller-indictment-divided-manhattan-beach/

Image of the Honorable Magistrate Judge Nathanael Cousins from https://www.law.com/therecorder/almID/1202719524838/Uber-Unlikely-to-Dodge-Discrimination-Suit/

Image of inmate shackled to hospital bed from https://www.pewtrusts.org/en/research-and-analysis/reports/2018/07/19/state-prisons-and-the-delivery-of-hospital-care

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfd.org

Coping o' The Week: "The New Normal"

The essay below is from guest blogger Federal Defender Eric Vos, District of Puerto Rico.

 Like all residents of Puerto Rico, in 2017 Eric and the staff of his office were all devastated when the island was slammed by Hurricane Maria. Like all Puertorriqueños, they have spent the last three years bravely picking up the pieces of their lives.

  Eric shared his unique insights on life after disaster with the nation’s Defenders last week. His musings about the “new normal” give hope, in a week when hope is in short supply. 

  With Eric’s permission I am sharing a lightly-edited version of his email to the Defenders, below.

--oOo--

  I suspect many of us and our co-workers are in shock and likely depressed. “This is depressing” is a passive statement and suggests possibly avoiding something. I would simply say, “I am depressed.” 

  If post-Maria taught us anything it was that the “new normal” is close at hand. In the immediate hours/days after the crisis landed none of us were sure if we should scream, shit or wind our watch. “Everyone has a plan until they get punched in the mouth.” As has been true during the COVID-19 crisis, the emails were torrential. Delete, delete, delete, delete. Too many voices, too much difference, no firm ground, confusion and no government to help. “People are going to die.” Nothing seemed the same and all I/we wanted was sense of normality. 

  Depression is most debilitating when you feel there will be no letting up of the pain, confusion and disarray anytime soon.

  Thank goodness our staff learned, soon after the passing of Maria, that the “new normal” will soon emerge.  Our collective, soon-to-emerge “new normal” will not be as nice, convenient or as easy as it was a month ago. But it will heal you.

  I humbly share this lesson with you: the “new normal” will indeed emerge. Despite its hardships, it will be predictable and easier to navigate. I know that my immediate depression was lifted and displaced by a sense of purpose and a better understanding of the “new normal” after Maria passed. We didn’t have water, cell, electricity, healthcare, police: you name it. And there was no end in sight. Seven days later, we were in the groove and understood what had to be done, what could be done, and had a sense of what the morning and end of the day would likely look like. It wasn’t a holiday, but it was predictable and manageable – kinda. For many of us, these conditions lasted 4 months and yet, the new normal was manageable.

  I share this with you because knowing a “new normal” will emerge, soon, brings me solace and a deepened sense of hope. I hope it will help those of you in need.

  Last, my biggest mistake, huge, was that I allowed my sense of dedication towards our clients and co-workers to let me ignore taking care of myself. I quickly became exhausted, depressed (even more) poorly fed, etc. PTSD was suffered by the entire island, no one was spared, and I only increased my issues by not taking care of myself. In retrospect, I now understand there was no good reason to ignore myself. What saved me in many respects were you, my Defender brothers and sisters, and my loving staff. To the extent you are allowed to move around, do it. Take a break for an hour, unplug, walk around (the dog if you can), and stop reading about the issues. Make a sandwich, read a book, return to life. 

  We folks in the criminal defense bar are fighters, through and through -- we will quickly charge the ramparts and will keep slugging away for our clients as long as we are able. Please take care of yourselves, in all respects, as you save your co-workers and our clients from unnecessary pain and suffering. I have never been prouder to say that I am one of you. 

Image of Puerto Rican flag from https://www.backstoryradio.org/shows/after-hurricane-maria/

Eric Vos, Federal Defender, District of Puerto Rico. 

Posted by Steven Kalar, Federal Public Defender, Northern District of California. 

Website at www.ndcalfpd.org

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Coronavirus of the Week: COVID-19

  COVID-19 has kicked the Case o' The Week off of the soapbox.

  First, stop reading this memo and read this now: Tomas Pueyo, Coronavirus: Why You Must Act Now - Politicians, Community Leaders and Business Leaders: What Should You Do and When?, available here. 

  When you're done, forward that article link to those you know and love.

   Mr. Pueyo, unfortunately, is spot-on. The Office of the Federal Public Defender, Northern District of California, is therefore in a hard shut-down, as of this morning and until further notice. There are over 80 employees of the NorCal FPD: fewer than six will be in its three offices today. By Thursday, I hope to reduce that number to three for the entire district. 

  Every possible FPD employee has been sent home, full stop. 

  We are telecommuting until May.

   Federal courts across the country are similarly suspending operations. See collection of General Orders here. CJA Liaison Representative Mary McNamara and I have recommended that the Northern District of California suspend all possible court operations until May 1. We anticipate guidance from the District Court on its COVID-19 response this week.

   Yesterday evening the ND Cal FPD filed fifty motions to continue its cases until after May 1. Where necessary, we agreed to exclusion of Speedy Trial Act time (our client’s consent for a STA exclusion is not legally required, FYI). Today we are filing many, many, more continuance motions. All defense counsel should be doing the same, for every case where the client is not immediately and negatively impacted (for example, time-served sentencings).

   Although all of our clients are vulnerable, incarcerated clients are uniquely so. Prisons and jails are reeling from this pandemic. All BOP (federal) prisons and pretrial facilities have been shut down for visiting. See here. California Prisons have now stopped visits. See here. A Public Defender in Santa Clara County has tested positive: her in-custody clients are being quarantined. See here. Experts correctly worry that the jails and prisons are radically exacerbating the dangers of infection and exposure. See here. 

  Here in NorCal, cramming incarcerated federal inmates into small vans to schlep them all the way to federal court from Santa Rita jail, and then concentrating them in small staging cells and Marshal lock-ups in the federal courthouses, is the antithesis of social distancing. It is social concentration, and it creates conditions that will quickly accelerate the virus’ transmission. The Court understands this danger: efforts to address are well underway.

  We defense attorneys are extraordinarily dangerous to our clients. We are COVID-19 transmission vectors: we expose our incarcerated clients to the virus, that we scrape up from our dangerous urban environments. Do you care about your client? For god’s sake, do not shake their hand. I have prohibited all jail contact visits by all employees of the ND Cal FPD. I have also asked the District Court to rig microphones to permit social distancing at the podium, for the (hopefully rare) cases that are still appearing in court.     We cannot help our clients if we are sick. As the flight attendants advise, put on your own oxygen mask first, then turn to help others. Once cases are continued past May 1, once your telecommuting system is set up, then focus on fighting to protect our clients from this pandemic. For inspiration, start with the compelling piece by Oregon Federal Public Defender Lisa Hay, available here.  

   FPD Ms. Hay is right. We need to -

• Move for the immediate release of particularly vulnerable clients from pretrial custody, and for release of all pretrial clients who pose no danger to the community. 
• Delay self-surrender dates into dangerous BOP facilities, until the risk of infection has been reduced and we have flattened the treatment curve. 
• Advocate for the BOP to advance release dates into community correction facilities (and when halfway houses start rejecting new folks soon, to electronic monitoring). And  . . .
• Ask our United States Attorneys to exercise their charging discretion in this time of national crisis. We ask them to avoid charging anything but the most-violent, reactive crimes until we can all flatten the treatment curve for this pandemic. 

CJA Liaison Attorney Mary McNamara and I have promised our Court that the NorCal defense bar will not exploit this crisis for strategic gain -- our clients’ health and safety is just too important for our typical legal shenanigans. We invite our USAO opponents to similarly lower their shields and meet us halfway: bringing new defendants into federal court during this time of crisis endangers our clients, and everyone in the court system.

If this week isn’t stressful, radically disruptive, and damned inconvenient, you ain’t doing it right. Be a hero to your clients: keep them away from you, out of those transport vans, away from holding cells, and far, far away from open courtrooms.

Be safe, hug your kids (and then wash your hands!)

Image of inmate in medical unit with prison guards from https://www.ocregister.com/2011/07/14/top-paid-state-worker-was-prison-doctor-777423-2/

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfpd.org

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Case o' The Week: An Element-ary Outcome - Allen and Actual Innocence Exception to Habeas bars

News flash: if an element is missing, the defendant is “actually innocent.”

 

The Hon. Judge William Fletcher

  (Oh, that crazy Ninth).

Allen v. Ives, 2020 WL 878523 (9th Cir. Feb. 24, 2020), decision available here.

Players: Thoughtful decision by Judge W. Fletcher, joined by Judge Christen. Dissent by Judge Callahan. 

  Admirable win for D. Oregon AFPD Elizabeth Daily.  

Facts: In the 90’s Allen pleaded guilty to gun and drug charges. He was sentenced to 322 months (!?!) as a Career Offender under the mandatory guidelines. Id. at *2. In 2017, he filed a § 2241 claim. Id. He argued that Mathis and Decamps were retroactive, and that his marijuana sales predicate no longer counted. Id. He thus argued that he was “innocent of being a Career Offender.” Id.

  The court rejected the petition for lack of jurisdiction, finding that career offender errors were “purely legal” and had “nothing to do with factual innocence.” Id.

Issue(s): “[  ] Allen appeals the district court’s dismissal of his 28 U.S.C. § 2241 habeas corpus petition for lack of jurisdiction. Allen contends that he is ‘actually innocent’ of his sentence as a career offender; that the remedy provided by 28 U.S.C. § 2255 is ‘inadequate or ineffective’ to test his claim of actual innocence; and that the district court may therefore entertain his § 2241 petition.” Id. at *1. “The government conceded at oral argument that if a petitioner is actually innocent of a predicate crime for career offender status in the sense that he did not commit the state law crime of which he was convicted, Bousley applies. In that event, the petitioner would have a claim of actual innocence cognizable under § 2241 . . . . The question before us, then, is not whether a petitioner who did not commit a predicate crime of which he was convicted may challenge his career offender status under § 2241. The government has conceded that he may do so. Rather, it is the closely related question whether a petitioner who committed a crime that is not a predicate crime may challenge his career offender status under § 2241.” Id. at *4.

Held: “We conclude that Allen’s claim of actual innocence is cognizable under § 2241. We therefore reverse the district court’s dismissal for lack of jurisdiction and remand.” Id. at *1. “In Marrero, we left open the question whether a petitioner may ever be actually innocent of a noncapital sentence for the purpose of qualifying for the escape hatch. . . . We now reach that question and hold that Allen has made a claim of actual innocence that permits jurisdiction over his § 2241 petition. If Allen prevails on the merits of his claim that his . . . marijuana conviction was not a predicate conviction for career offender status under the Guidelines, the factual predicate for his mandatory sentencing enhancement did not exist. That is, he is actually innocent of the enhancement. In that case, it is beyond dispute that he is not, and was not, a career offender.” Id. at *4.

Of Note: Nice win, but not a surprising result. This decision of first impression in the Ninth hews closely to the lead of the – drum roll please – that zany Fourth Circuit! Id. at *5. 

  As Judge Fletcher correctly explains, it is hard to imagine a different outcome for a mandatory Guideline case, after SCOTUS’s decision in Alleyne (holding that a fact that increases a mandatory minimum sentence is an ‘element’ of the offense.”) Id. at *4.

How to Use: Another nice holding? “We take the opportunity to clarify that Mathis and Descamps apply retroactively when a court reviews a criminal judgment in the course of addressing a § 2241 petition or a first § 2255 motion.” Id. at *6. 

  Tuck that welcome nugget away, for use on another habeas day.

                                               

For Further Reading: Since Tuesday of last week, the Federal custodial facility at FDC SeaTac has been locked down for visiting, on coronavirus fears. See summary here. 

   The WD Wa District Court is now effectively closed. See order here. 

  The Ninth has cancelled all en banc arguments in S.F. next week. See notice here. 

  An FBI employee of the S.F. field division just tested positive for COVID-19. See article here. 

   San Francisco Mayor Breed just issued “aggressive” recommendations to reduce the spread of COVID-19 – including cancelling the St. Patrick’s Day parade. See News Release here. 

   Today it was announced that Oakland will be the port receiving the Grand Princess cruise ship, carrying over 3,500 passengers and cruise members, twenty-one of whom are positive for COVID-19. See article here. 

  Senator Kamela Harris is very interested in how the Feds are dealing (or not dealing) with  COVID-19 in the jail and prison populations. See Senator Harris Letter here. 

  So, when will COVID-19 hit Santa Rita Jail, and impact the ND Cal District Court? 

   For a sobering piece on the custodial “petri dish” in which our NorCal clients are detained, see a SacBee article here.  

Image of the Honorable Judge William Fletcher from https://cgc.law.stanford.edu/clc-spotlight/clc-1-201806-interview-1-jordan-corrente-beck/

Image of Florida Rep. Matt Gaetz in gas mask from https://www.clickorlando.com/news/2020/03/05/florida-congressman-wears-gas-mask-during-coronavirus-vote/ 

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfpd.org

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