Nos. 96-7768 & 96-7967

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

PATRICIA M. WHITEHEAD, PETITIONER

v.

UNITED STATES OF AMERICA

WILLIAM W. PRETTY, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

WALTER DELLINGER
Acting Solicitor General

JOHN C. KEENEY
Acting Assistant Attorney General

JOSEPH C. WYDERKO
Attorney

Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

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QUESTIONS PRESENTED
  
    1. Whether petitioner  Whitehead, as Deputy State Treasurer of
the State of Oklahoma, was "an agent of an organization, State,
local, or Indian tribal government, or any agency thereof" that
received benefits in excess of $10,000 under a federal program
within the meaning of 18 U.S.C. 666.
    2.  Whether the evidence at trial was sufficient to sustain
petitioners `  convictions for conspiracy to commit bribery, in
violation of 18 U.S.C. 371.
    3.  Whether the financial transactions that formed the basis
for petitioner Whitehead's convictions for money laundering under
18 U.S.C. 1956(a) (1) (A) and (B) were temporally distinct from the
underlying bribery offenses.

(I)

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IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

No. 96-7768

PATRICIA M. WHITEHEAD, PETITIONER

v.

UNITED STATES OF AMERICA

No. 96-7967

WILLIAM W. PRETTY, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

    The opinion of the court of appeals  (Pet. App. 1-25) is
reported at 98 F.3d 1213. 1_/

___________________(footnotes)    
                                                           
    1_/ "Pet. App." refers to the appendix to the petition in No.
96-7768.

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JURISDICTION

    The judgment of the court of appeals was entered on October 4,
1996.  A petition for rehearing was denied on November 22, 1996.
The petition for a writ of certiorari in No. 96-7768 was filed on
February 5, 1997, and the petition in No. 96-7967 was filed on
February 19, 1997.  The jurisdiction of this Court is invoked under
28 U.S.C. 1254(1).

STATEMENT

    Following a jury trial in the United States District Court for
the Western District of Oklahoma, petitioners were convicted of
conspiracy to engage in a bribery scheme (Count 1) , in violation of
18 U.S.C. 371; and on three counts of money laundering (Counts 24-
26), in violation of 18 U.S.C. 1956(a) (l).  Petitioner Whitehead
was also convicted on 12 counts of accepting bribes (Counts 3, 5,
7-12,  15 & 17-19),  in violation of 18 U.S.C.  666(a) (1). In
addition, petitioner Pretty was convicted on two counts of paying
bribes (Counts 2 & 4), in violation of 18 U.S.C. 666(a) (2) ; and
four counts of engaging in monetary transactions in property
derived from an unlawful activity (Counts 20, 22, 28 & 29), in
violation of 18 U.S.C. 1957(a).  Petitioner Whitehead was sentenced
to 108 months' imprisonment and three years of supervised release,
and was  ordered to forfeit $220,000.  Petitioner Pretty was
sentenced to 97 months' imprisonment and three years' supervised
release, and was ordered to forfeit $473,471.50.
    1. The evidence at trial showed that petitioners and co-
defendant Patrick Kuhse engaged in a scheme to take advantage of

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petitioner Whitehead's position in the Office of the Oklahoma State
Treasurer by arranging various securities transactions and sharing
the commissions earned on those transactions.  In January 1991,
petitioner Whitehead was appointed Deputy State Treasurer and
"chief trader" for the State of Oklahoma by Claudette Henry, who
had been elected Oklahoma State Treasurer in November 1990. In
that position, petitioner Whitehead was in charge of investing the
State's funds that were not needed for current expenditures in low-
risk securities pursuant to investment policies established by
Henry.  Those policies required each transaction to be the result
of a competitive bidding process among approved brokers;  each
approved  broker to have an in-state  representative;  and no
brokerage firm to receive more than 25 percent of  the Treasurer's
business within any quarter.  Pet. App. 2-3; Gov't C.A. Br. 3-5.

  After the time that Henry had been elected and had asked
petitioner Whitehead to become Deputy State Treasurer, Whitehead
called co-defendant Kuhse to arrange for Planner's Independent
Management (PIM), a brokerage firm headquartered in San Diego
California, to do business with the Oklahoma State Treasurer.  In
1990, Whitehead had worked at PIM selling securities and insurance
and Kuhse had been her supervisor.  To qualify as a broker with the
State, PIM needed an in-state representative.  Petitioner Pretty,
an Oklahoma resident, had met Kuhse in 1989.  Pretty was also a
former business associate of Whitehead.  In 1990 they had formed a
corporation, the Professional Business Education Association
( PBEA ) ,  through which they had conducted seminars to train

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insurance agents.  After Whitehead knew that she would become
Deputy State Treasurer, she assisted Pretty in his attempt to
obtain a license to sell securities and to become affiliated with
PIM.  Pretty, however, failed the licensing test.  In January 1991,
Kuhse registered as PIM's representative.  He listed PBEA's
Oklahoma address as the address of PIM's local representative on
the forms submitted to the Treasurer's office, even though Pretty
served merely as a conduit to Kuhse.  Pet. App. 2-4; Gov't C.A. Br.
3-5.
    In March 1991, PIM began conducting trades for the Oklahoma
State Treasurer's office using Mabon-Nugent, a New York brokerage
firm, as its clearing firm.  When the Treasurer's office called PIM
to purchase a security, PIM would call Mabon-Nugent for a quote and
relay the information to the Treasurer's office.  Mabon-Nugent
collected a clearing fee for executing each transaction.  Mabon -
Nugent would then pay PIM a markup, which was the difference
between what the Treasurer's office paid for the security and what
the security cost Mabon-Nugent.  Kuhse received in commissions
approximately  90 percent of the markups paid to PIM.  Between March
1991 and July 1993, Kuhse received 96 percent of his income, which
amounted to more than $3.5 million, from commissions on trades for
the Treasurer's office.  Pet. App. 3-4; Gov't C.A. Br. 5-7, 12.
    In June 1991,  petitioners and Kuhse met at a resort in
Arizona.   Shortly  thereafter,  the level of trading by the
Treasurer's office through PIM increased considerably, and Kuhse's
commissions increased dramatically.  When Kuhse received a commis-

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sion check for $50,000 in July 1991, he wrote a check to petitioner
Pretty for $29,250.  Pretty, in turn, wrote a check for $8,000 to
petitioner Whitehead.  In addition, Pretty wrote a $5,000 check to
Milton Pearson, who had demanded that Whitehead and Pretty pay back
an earlier investment of $50,000 in PBEA.  Using funds obtained
from Kuhse, Pretty continued to make monthly $5,000 payments to
Pearson until his investment in PBEA was repaid in May 1992.
Between March 1991 and July 1993, Pretty received 94 percent of his
income, which amounted to more than $1 million, from Kuhse.  Pet.
App . 4-5; Gov't C.A. Br. 6-7.
    In January 1992, petitioners and Kuhse met again at the resort
in Arizona.  Shortly thereafter, Kuhse opened a new account, with
Pretty as the co-holder, at North County Bank in San Diego.  Kuhse
initially deposited $25,000 in the account.  In July and October
1992, Kuhse made three additional deposits of $9,350, $14,366 and
$27,500.  Between January and October 1992, petitioner Whitehead
withdrew $42,900 from the account by making daily $300 withdrawals
at ATM locations in Oklahoma City.  Gov't C.A. Br. 9-10, 12, 13.
    On March 25, 1992, Whitehead and her husband contracted to
purchase a new house.  Less than a week later, on March 31, 1992,
Whitehead and her husband sold their old house to Pretty and his
wife.  Pretty wrote a check for $23,340 to Liberty Mortgage and a
check for $33,158 to Whitehead to buy the house.  He also wrote a
third check for $18,502 to pay off another mortgage.  One week
later, Kuhse wrote a check for $75,000 to Pretty.  Pet. App. 5, 13;
Gov't C.A. Br. 10-11.

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    On April 1, 1992, Kuhse established the Westwood Trust and
designated Pretty as the beneficiary.  Two weeks later, on April
14, Whitehead requested a loan and first mortgage on her new house
from the trustee of the Westwood Trust, Basey and Oppenheimer.  The
request was approved one week later.  On April 29, 1992, Kuhse
deposited a check for $100,000 in the Westwood Trust bank account
and obtained a cashier's check for $97,948 payable to the closing
company on Whitehead's loan.  The next day, on April 30, Kuhse
created the Spartan Land Trust to hold the mortgage on Whitehead's
new house,  with Basey and Oppenheimer as the trustee and the
Westwood Trust as the beneficiary.  The closing for Whitehead's new
house occurred that same day.  Pet. App. 5, 13; Gov't C.A. Br. 11.
    The following day, on May 1, 1992, Whitehead requested a loan
and second mortgage on her new house from Basey and Oppenheimer.
The request was approved one week later.  On May 16, a check for
$45,000 was written on the Westwood Trust account.  On May 29,
Kuhse deposited a $45,000 check in the Westwood Trust account, and
Whitehead deposited her check into her account three days later on
June 1, 1992.  Pretty had directed Basey and Oppenheimer to approve
both mortgages.  Pet. App. 5, 13; Gov't C.A. Br. 12.
    In 1991 and 1992, the State of Oklahoma received more than
$10,000 annually in assistance from federal agencies for federal
programs that were administered by state agencies.  The federal
funds were  deposited into a general account in the Treasurer's
office from  "which they were withdrawn at the state agencies'

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discretion.  Pet. App. 10-11; 96-7768 Pet. 10-11; 96-7967 Pet. 8;
Gov't C.A. Br. 22-23.
    2. The court of appeals affirmed petitioners' convictions.
Pet. App. 1-25.  It rejected petitioners' claim's that the evidence
at trial was insufficient to sustain their convictions.  Id. at 6-
9.  The court found that "the sufficiency question * * * turns in
large part on whether it was reasonable for the jury to believe
that Whitehead, Pretty, and Kuhse entered into the alleged scheme."
Id. at 6.  It observed that "[t]he government ha[d] no direct
evidence  to prove that [petitioners] plotted to defraud the
Treasurer, but it argue[d] [to the jury] that the circumstantial
evidence was enough to show that the superficially legal trans-
actions that occurred among the three acquaintances constituted an
illegal kickback scheme."   Id. at 7.  The court further observed
that petitioners  "focused on the apparent legality of their
transactions, asking the jury to accept * * * [that] [a]ll the
money that flowed back to Whitehead could be traced to previous
debts and arms'-length real estate transactions. "  Id. at 8.  The
court noted that " [t]he jury believed the government's version of
the story" and held that "there was more than sufficient evidence   I
to support this conclusion. "  Ibid   "Having found sufficient
evidence to support the finding that the scheme existed,   " the court
had "no trouble finding that the evidence supports the conspiracy
charge."  Id. at 9.  The court rejected petitioner Whitehead's
claim that the evidence failed to show that she was a participant
in the conspiracy "because pretty and Kuhse could not have had a

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scheme without Whitehead's willful participation Pretty and
Kuhse would not have funneled money to Whitehead if Whitehead had
not been involved in the scheme."   Ibid.
    The court of appeals also rejected petitioners' claims that
their bribery convictions under 18 U.S.C. 666 were invalid because
the government failed to prove that the Treasurer's office annually
received  and benefited  from  more  than $10,000 in federal
assistance.  Pet. App .  9-11.  The court explained that "[i]f
Whitehead was an agent of the state,  rather than only of the
Treasurer, then  666 applies to her even if the Treasurer did not
benefit from the federal funds, because the state itself received
more than $10,000 in federal funds." Id.  at 11.  "Because
Whitehead was in charge of investing the state's funds, not merely
the Treasurer's funds, "  the court found that "she was indeed an
agent of the state. "  Ibid
    The court of appeals likewise rejected petitioner Whitehead's
argument that her money laundering convictions under 18 U.S.C.
1956(a) (1) were invalid because the real estate transactions under-
lying Counts 25 and 26 were themselves kickbacks rather than
conduct that followed in time the criminal activity.  Pet. App. 13-
17.  The court "[did] not read [its prior] cases as holding that
laundering can occur only after the underlying crime is complete *
* * *."  Id. at 15.  The court concluded:  "A direct payment from
Kuhse to Whitehead would have violated  666 without constituting
money laundering.  The effort to disguise the source of the money
was an additional act that is separately punishable under 

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1956(a) (1) (B) (i), notwithstanding the simultaneity of the two
crimes."   Id. at 15-16.  Alternatively, the court concluded that
"the money laundering `followed in time' the underlying crime."
Ibid.  It noted that " [t]he laundering transactions relevant to
Counts 25 and 26 began to unfold in March 1992."  Ibid  "At that
time," the court pointed out, "Whitehead had already completed the
conduct charged in counts 3, 5, 7 and 8, all in violation of 666. "  Ibid.

ARGUMENT

    1.  Petitioners contend (96-7768 Pet. 12-19; 96-7967 Pet. 11-
14) that their bribery scheme did not fall within the reach of 18
U.S.C. 666 because the office of the Oklahoma State Treasurer did
not receive federal assistance exceeding $10,000 in a year-  That
contention is without merit.
    Section 666 applies to the payment of bribes to, as well as
the acceptance of bribes by, an agent of an organization, govern-
ment, or agency that receives more than $10,000 per year in federal
assistance.   Section 666(a) (1)  prohibits  "an  agent of an
organization, or of a State, local, or Indian tribal government, or
any agency thereof" from engaging in various acts of embezzlement,
theft, or bribery.  Section 666(a) (2) prohibits any person from
offering or paying bribes to any person "with intent to influence
or reward an agent of an organization or of a State, local, or
Indian tribal government, or any agency thereof * * *."  Both sets
of prohibitions under Section 666(a) apply only "if the circum-
stance described in subsection  (b) of this section exists."

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Section 666(b) provides that  "[t]he circumstance referred to in
subsection (a) of this section is that the organization,
government, or agency receives, in any one year period, benefits in
excess of $10,000 under a Federal program involving a grant,
contract, subsidy, loan, guarantee, insurance, or other form of
Federal assistance."  Thus,  Section 666 requires only that the
government or agency on whose behalf the agent is authorized to act
receive $10,000 in federal funding, regardless of where and how the
money is spent.  See United States v. Westmoreland, 841 F.2d 572,
576-577 (5th Cir.), cert. denied, 488 U.S. 820 (1988).
    In this case,  it was undisputed that in 1991 and 1992 the
State of Oklahoma received more than $10,000 in federal funds,
which were deposited into the State's general account to be
withdrawn at the state agencies' discretion  2_/  It was likewise
undisputed in this case that petitioner Whitehead, as the Deputy
State Treasurer and Chief Trader in the Treasurer's office, had
authority to invest the State's funds that were not needed for
current expenditures.  As the court of appeals noted, Section
666(d) (1) broadly defines the term "agent" to include "a person
authorized to act on behalf of another person or a government * *
*."  Pet. App. 11.  The court of appeals, therefore, correctly
concluded that petitioner Whitehead was not only an agent of the
Treasurer's office but also an agent of the State  "[b]ecause

___________________(footnotes)    

    2_/ Petitioners did not argue in this case that the State of
Oklahoma as an entity distinct from its agencies did not receive
more than $10,000 per year in federal funding.  Rather, petitioners
merely argued that the Treasurer's office as a state agency did not
receive more than $10,000 per year in federal funding.

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Whitehead was in charge of investing the state's funds, not merely
the Treasurer's funds * * *. "  Ibid  Consequently,  petitioners'
bribery scheme fell within the reach of Section 666(a).
    Contrary to petitioners' claims, the decision of the court of
appeals in this case does not conflict with the decision of any
other court of appeals.  In United States v. Peery, 977 F.2d 1230
(8th Cir. 1992), cert. denied, 507 U.S. 946 (1993), the defendant
was charged with theft from a five-state compact commission that
was authorized by a federal statute for the purpose of siting,
constructing,  and operating a disposal facility for low-level
radioactive waste.  Under the federal statute, 25 percent of such
facilities' surcharges were paid to the Department of Energy, which
distributed the money to the compact commissions when they had
achieved certain goals.  Id. at 1231.  The Eighth Circuit held in
Peery that the compact commission' s "receipt of  the rebate
constituted `Federal assistance'  as part of a `Federal program'"
within the meaning of Section 666.  Id. at 1233. 3_/
    In United States v. Wyncoop, 11 F.3d 119 (9th Cir. 1993), the
defendant was charged with embezzling money from a college, which
received no federal funds directly but admitted students who
received federally guaranteed student loans.  The Ninth Circuit
concluded in Wyncoop that the indirect benefit to the college from
increased enrollment of students receiving federally guaranteed
private loans was not a "benefit[] in excess of $10,000 under a

___________________(footnotes)

    3_/   Notwithstanding  the language from Peery quoted by
petitioner (96-7768 Pet. 14), the result in Peery does not conflict
in any way with the decision by the court below.

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Federal program" within the meaning of Section 666(b).  Id. at 121.
The decision in Wyncoop is thus inapposite here, in light of the
uncontested evidence that Oklahoma received more than $10,000 per
year in federal funds and the court's finding that petitioner
Whitehead was an "agent" of the State.
    The other cases upon which petitioners appear to rely simply
confirm that Section 666(a) does not require that the federal funds
be traced to the "business, transaction, or series of transactions'
in connection with which the defendant pays or accepts a bribe.
See United States v. Coyne, 4 F.3d 100, 108-109 (2d Cir. 1993) ,
cert. denied, 510 U.S. 1095 (1994); United States v. Little, 889
F.2d 1367,  1369 (5th Cir.), cert. denied, 495 U.S. 933 (1990);
United States v. Simas, 937 F.2d 459, 463 (9th Cir. 1991); cf.
United States v. Valentine, 63 F.3d 459, 464 (6th Cir. 1995) (no   I
requirement that theft of money under Section 666(a) be traced to
federal funds).  Accordingly, petitioners' claim merits no further
review.
    In Salinas v. United States, No. 96-738 (cert. granted Feb.
24, 1997), one of the questions presented is whether, under Section
666,  the transaction of  the federal-fund recipient  that was
influenced by the bribe must have involved or affected federal
funds.  The question in Salinas differs from the question raised by
the petitioners here:  whether an employee of a sub-governmental
unit of a State is subject to prosecution under Section 666 for
receiving bribes to influence official action of the sub-governmen-
tal unit,  when the State,  but not the subgovernmental unit,

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receives more than $10,000 in a year of federal program funds.
Petitioners do not claim that bribery is exempt from prosecution
under Section 666 absent a showing of an effect on federal funds;
rather, they argue that the federal aid must flow directly to the
governmental unit that employed the particular agent.  As the court
of appeals explained, on the facts of this case petitioners claim
is  not  squarely presented,  because petitioner Whitehead had
authority to invest the State's money and was thus an agent of the
State.  Accordingly, the Court need not hold this case pending the
decision in Salinas.
    2.  Petitioners next contend (96-7768 Pet. 24-25; 96-7967 Pet.
14-16) that the evidence at trial was insufficient to sustain their
convictions for conspiracy to commit bribery.  For the most part,
petitioners merely renew their claims that the money that flowed to
petitioner Whitehead through petitioner Pretty and Kuhse can be
traced to previous lawful debts and arms-length transactions among
the parties.  As the court of appeals pointed out, however, "[t]he
jury believed the government's version of the story" rather than
petitioners' version. Pet. App. 8. Moreover, this Court has made
clear that circumstantial evidence "is intrinsically no different
from testimonial evidence."  Holland v. United States, 348 U.S.
121, 140 (1954).  The court of appeals correctly concluded that the
evidence, viewed in the light most favorable to the government, was
sufficient to allow a rational jury to have found the essential
elements of the offenses beyond a reasonable doubt.  See Jackson v.
Virginia, 443 U.S. 307, 319 (1979) ; Glassier v. United states, 315

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U.S. 60, 80 (1942).  Petitioners' fact-bound claims to the contrary
do not warrant this Court's review.
    3.  Petitioner Whitehead separately contends (96-7768 Pet. 19-
24) that her money laundering convictions were invalid because the
real estate transactions underlying Counts 24, 25, and 26 were
themselves bribes.  That contention is without merit.
    Petitioner Whitehead's contention rests on the flawed premise
(Pet. 23) that the financial transactions that formed the basis for
the money laundering counts were not temporally distinct from the
bribes themselves because the transactions charged in Counts 24,
25,  and 26 were alleged as overt acts in furtherance of the
conspiracy to commit bribery alleged Count 1 of the indictment.
The transactions alleged in Counts 24, 25 and 26, however, were not
separately charged as bribery offenses under Section 666(a) in the
indictment.  Moreover, the money laundering offense under 18 U.S.C.
1956(a) (1) (A) charged in Count 24 was based on a financial trans-
action involving "the proceeds of a specified unlawful activity,
that is, commissions received from trades conducted with the State
of Oklahoma, after" paying bribes to Whitehead, with the intent to
promote the carrying on of  the specified unlawful activity.
Indictment  109.  Similarly, the money laundering offenses under
18 U.S.C. 1956(a) (1) (B) (i) charged in Counts 25 and 26 were based
on financial transactions involving "the proceeds of a specified
unlawful activity, that is, commissions received from trades
conducted with the State of Oklahoma, after" paying bribes to
Whitehead, knowing that the financial transaction was designed to

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conceal and disguise the source,  ownership, and control of the
proceeds.  Indictment  120, 127.  Thus , the government's theory
behind the money laundering counts was not that those funds
constituted bribes to Whitehead.  Rather, those transaction were
attempts by Kuhse to launder his ill-gotten commissions that he had
obtained because of previous bribes paid to Whitehead.
Consequently, there is no merit to petitioner Whitehead's claim
that the money laundering did not follow in time the underlying
bribery offenses.
    Petitioner Whitehead does not contend that the court of
appeals' decision in this case conflicts with the decision of any
other court of appeals.  Rather, she merely argues (Pet. 21) that
the decision conflicts with the decisions of the same court of
appeals in United States v. Kennedy, 64 F.3d 1465 (10th Cir. 1995);
United States v. Johnson, 971 F.2d 562 (lOth Cir. 1992); and United
States v. Edgmon, 952 F.2d 1206 (l0th Cir. 1991), cert. denied, 505
U.S. 1223 (1992).  The court of appeals, however, "[did] not read
[its earlier] cases as holding that laundering can occur only after
the underlying crime is complete * * *."  Pet. App. 15.  In any
event, a conflict between cases within the same circuit is a matter
for the court of appeals, rather than this Court, to resolve.  See
Wisniewski v. United States , 353 U.S. 901, 902 (1957) (per curiam).
Accordingly, petitioner's claim warrants no further review by this
Court.

CONCLUSION

    The petitions for a writ of certiorari should be denied.

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Respectfully submitted.

WALTER DELLINGER
Acting Solicitor General

JOHN C. KEENEY
Acting Assistant Attorney General

JOSEPH C. WYDERKO
Attorney

MAY 1997