1 IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

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No. 94-40195 and No. 94-40196

Summary Calendar

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UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

WARREN N. MOORE and THOMAS L. ARNOLD,

Defendants-Appellants.

___________________________________________________________________

Appeals from the United States District Court

for the Western District of Louisiana

___________________________________________________________________ (October 24, 1994)

Before, SMITH, EMILIO M. GARZA, and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

Warren N. Moore (Moore), and Thomas L. Arnold (Arnold) pleaded

guilty to one count of mail fraud in violation of 18 U.S.C. § 1341.

Moore and Arnold moved to withdraw their guilty plea, which the

district judge denied. The district judge also denied Moore and

Arnold's motion for reconsideration of the plea-withdrawal motion.

Each defendant received a five year term of probation and a $50,000

fine. The defendants raise identical arguments in this

consolidated appeal, challenging their convictions and fines. We

affirm the convictions, vacate the sentences, and rem and for

resentencing.2 FACTS

On September 29, 1992, the defendants pleaded guilty to Count

12 of a fourteen count bill of information, pursuant to a written

plea agreement with the government. A written factual basis for

the plea was filed into the record. It provided in pertinent part:

In 1986, defendants, d/b/a A Associates, Inc.,

purchase d a tract of land in Caddo Parish, Louisiana,

from Phillip and Daniel Henderson and developed it into

a mobile home subdivision named Colworth Place.

Defendants gave a first mortgage on the property to the

Hendersons, but failed to tell mobile home lot purchasers

Donald and Shei la Rogers of the outstanding first

mortgage.

In September 1990, mobile home lot purchasers Donald

and Sheila Roge rs, without notice of the outstanding

first mortgage, sent their $132.02 mortgage payment by

U.S. mail to defendants at P. O. Box 8431, Shre veport,

Louisiana.

Defendants intended to have the Rogers believe that

whe n the mortgage was paid to defendants, the Rogers

owned the property outright, i.e. , the Rogers were

unaware that their mobile home lot was still encumbered

by the first mortgage to the Hendersons.

The pleadings and exhibits filed by the parties concerning the

motion to withdraw the guilty pleas fleshed out the facts and

circ u mstances surrounding the mail fraud charges. Defendants

characterize Colworth Place as a low-income housing development,

where purchasers could move in with a $500.00 down payment. The

Rogers, as well as the other purchasers, were not represented

during the purchase of the property or at closing. Defendants

provided a warranty deed to the Rogers at closin g which made no

mention of an outstanding mortgage on the property. The Rogers

signed the document at closing, but defendants did not. When the

Rogers received their certified copy of that warranty deed from the3

Caddo Parish clerk, language regarding the outstanding mortgage had

been added to the deed, without the know ledge or consent of the

purchasers.

The Credit Sale Deed that memorialized the mortgage from

defendants to the Hendersons was recorded in the public records of

Caddo Parish, which would have allowed purchasers to discover the

mortgage had they searched the public record before purchasing the

property. Further, there is no evidence that defendants

affirmatively misrepresented to the Rogers that they held title to

the property free of mortgages.

The defendants later traded the Rogers' note, along with the

notes of approximately nine other mobile home lot owners, to the

president of a bank. That individual pledged the notes to secure

his own indebtedness to the bank, and when the bank failed the lot

purchasers' notes we re obtained by the FDIC. The note to the

Hendersons was not kept current during this time, and foreclosure

procedures were initiated against the lot purchasers.

DO THE FACTS CONSTITUTE A FEDERAL OFFENSE?

Appellants' first point of error alleges that the district

court erred in denying their motions to withdraw their guilty pleas

because there was no factual basis to support a conviction for mail

fraud. A district court may permit a defendant to withdraw a

guilty plea at any time prior to sentencing upon a showing of a

"fair and just" reason. F E D

. R. C RIM

. P. 32(d). However, Rule 32

does not provide an abso lute right to withdraw a plea. The

defendant has the burden of proving that withdrawal is justified,4

and we will reverse the district court's determination on ly upon

concluding that it has abused its discretion. U nited States v.

Daniel , 866 F.2d 749 (5th Cir. 1989).

A district court must consider several factors in ruling on a

motion to withdraw a plea:

(1) whether the defendant has asserted his innocence; (2)

whether withdrawal would prejudice the Government; (3)

whether the defendant delayed in filing the motion, and

if so, the reason for the delay; (4) whether withdrawal

would substantially inconvenience the court; (5) whether

close assistance of counsel was available to the

defendant; (6) whether the plea was knowing and

voluntary; and (7) whether withdrawal would waste

judicial resources.

United States v. Hurtado

, 846 F.2d 995, 997 (5th Cir. 1988).

Defendants claim only that the Government's proof did not establish

the mens rea required for convict ion of the charged offense,

asserting innocence under the first factor. Because this claim

fails and no other factors are addressed by the appellants, we find

no merit in this point of error.

The federal mail fraud statute under which appellants were

charged, 18 U.S.C. § 1341, requires proof of a knowing and willful

s cheme or artifice to defraud another of property or money and a

subsequent ma iling to execute the purpose of the scheme.

Appellants allege that there was a complete lack of evidence to

establish the mental element, the essence of which is fraud and

deceit. The record does not bear out the defendants' position.

Both defendants signed the written factual basis filed with the

court and testified at the plea hearing that they had read it and

agreed that it accurately reflected what had occurred. The factual5

basis states that the d efendants "intended to have the Rogers

believe that when the mortgage was paid to the defendants, the

Rogers owned the property outright, i.e., the Rogers were unaware

that their mobile home lot was still encumbered by the first

mortgage to the Hendersons."

In a related argument, Moore and Arnold assert that they had

no duty to disclose the existence of a prior mortgage under

Louisiana law. Because the first mortgage was recorded in the

public records of Caddo Parish, and the d efendants did not

affirmatively misrepresent its existence, defendants contend that

the Rogers had constructive knowledge of the mortgage, citing

Thomas v. Lewis , 475 So. 2d 52 (La. App. 2nd Cir. 1985).

Theref ore, they reason, their conduct could not constitute mail

fraud under federal law. They contend that the information failed

to allege a criminal offense and that the factual basis to which

they admitted likewise established no crime.

"The federal mail fraud statute prohibits use of postal

services in the furtherance of fraudulent schemes, whether or not

prohibited by state law." United States v. Foshee , 606 F.2d 111,

113 (5th Cir. 1979). Defendants contention that they had no duty

under Louisiana law to disclose the first mortgage to the Rogers is

therefore irrelevant to the quest ion before this Court. The

evidence before the court at the plea hearing established that

defendants intended to deceive the Rogers concerning the existence

of the mortgage, and thereby to induce them to buy real estate they

might not otherwise have purchased.6

We therefore hold that the district court d id not abuse its

discretion in denying defendants' motion to withdraw their guilty

pleas.

WAIVER OF INDICTMENT

Moore and Arnold contend that the district judge did not

personally advise them of their rights before accepting their

waiver of indictment and that the record does not demonstrate that

they waived indictment in open court. They assert that their

waivers of indictment are therefore invalid.

An offense which may be punished by imprisonment for a

t erm exceeding one year or at hard labor may be

prosecuted by information if the defendant, after having

been advised of the nature of the charge and of the

rights of the defendant, waives in open court prosecution

by indictment.

F ED

. R. C RIM

. P. 7(b). Mail fraud, the offense to which Moore and

Arnold plea ded guilty, carries a maximum five-year term of

imprisonment. 18 U.S.C. § 1341. Their waiver of indictment is

therefore governed by Rule 7(b).

Unless there is a valid waiver, the lack of an indictment

in a federal felony case is a defect going to the

jurisdiction of the court. Rule 7(b) provides the waiver

must be made in open court after the defendant has been

advised of the nature of the charge and his rights. The

court must be satisfied the waiver wa s knowingly,

understandingly, and voluntari l y made. A waiver of

indictment, being merely a waiver of a finding of

probable cause by a gran d jury, is of relatively less

consequence as compared with a waiver of trial, and thus

does not call for all of the protections surrounding

entry of guilty pleas.

United States v. Montgomery

, 628 F.2d 414, 416 (5th Cir. 1980)

(internal quotations and citations omitted). The Fifth Circuit has

n ever prescribed a particular procedure that must be followed to7

comply with Rule 7(b) requirements.

The record indicates that when court opened on September 29,

1992 for plea hearing some documents were being signed. The

prosecutor then tendered to the court the original signed waiver of

indictmen t, along with the affidavit of understanding of maximum

penalty and constitutional rights.

The court inquired of t he parties, "No objection to the

filings?"

Defendants' counsel responded, "No objection."

Defendants raise no complaints about the form or content of

their written waivers of indictment. The question before us is

whether or not the procedure followed by the district court

complied with the requirement that waiver be made in open court

after the defendants are informed of the nature of the charge and

their rights. We hold that it did. Although the record is

ambiguous concerning whether the defendants signed the waiv e r

before or after court began, the document was filed in open court,

and the court specifically asked if the defendants had any

objection to the filing, which they did not. Further, the document

itself recites that the indictment was waived in open court on

September 29, 1992. Defendants' acquiescence in the filing of

their signed waiver amounted to a waiver of indictment in open

court. Rule 7(b) requires that the defendants be informed of the

nature of the charge and their rights, but does not impose on the

court an obligation to do anything. A defendant's waiver of

indictment must of course be knowing and voluntary. But there is8

no reason why the requisite advice cannot come from defense

counsel, as it did in this case. See United States v. Liboro , 10

F.3d 861 (D.C.Cir. 1993). The affidavit of understanding of

maximum penalty and constitutional ri ghts along with the written

factual basis, signed by Moore and Arnold and filed with the court,

establish that the appellants were informed of the nature of the

charge and their rights in accordance with Rule 7(b).

CONFLICT-FREE COUNSEL

Moore and Arnold were represented by the same attorney. At

the beginning of the plea hearing the court inquired whether the

situation amounted to a conflict of interest. The prosecutor

responded that the question had been discussed with the defendants

and the defense counsel and that there was no conflict. The court

addressed the defendants, explaining that it is possible that their

attorney could have a conflict of interest, and advised the

defendants that they were entitled to waive t heir right to

conflict-free counsel if they chose. Both defendants told the

judge that they wanted to waive that right. Defendants now contend

that the trial judge's explanation and inquiry was not sufficient

to establish that they knowingly, intelligently and voluntarily

waived their right to conflict-free counsel.

We review the district court's acceptance of defendants'

waiver of conflict-free counsel for simple error. U nited States v.

Snyder , 707 F.2d 139, 144 (5th Cir. 1983).

Under the Sixth Amendment, the right to counsel includes the

right to conflict-free counsel. W ood v. Georgia

, 450 U.S. 261,9

271, 101 S.Ct. 1097, 11 03, 67 L.Ed.2d 220 (1981). A conflict

exists when defense counsel places himself in a position conducive

to divided loyalties. U nited States v. Carpenter

, 769 F.2d 258,

263 (5th Cir. 1985).

U nited States v. Garc ia , 517 F.2d 272, 278 (5th Cir. 1975),

sets out instructions for district courts to follow in determining

whether a defendant has knowingly, intelligently, and voluntarily

waived his right to a conflict free attorney:

[W]e instruct the district co urt to follow a procedure

akin to that promulgated in F. R. C RIM

. P. 11 whereby the

defendant's voluntariness and knowledge of the

consequences of a guilty plea will be manifest on the

face of the record. As in Rule 11 procedures, the

district court should address each defendant personally

and forthrightly advise him of the potential dangers of

representation by counsel with a conflict o f interest.

The defendant must be at liberty to question the district

court as to the nature and consequences of his legal

representation. Most significantly, the court should

seek to elicit a narrative response from each defendant

that he has been advised of his r ight to effective

representation, tha t he understands the details of his

attorney's possible conflict of interest and the

potential perils of such a co nflict, that he has

discuss ed the matter with his attorney or if he wishes

with outside counsel, and that he voluntarily waives his

Sixth Amendment protections...Mere assent in response to

a series of questions from the bench may in some

circumstances constitute an adequate waiver, but the

court should nonetheless endeavor to have each defendant

personally articulate in detail his intent to forego this

significant constitutional protection. (Internal

citations omitted.)

The Garcia hearing at issue was cursory, falling short of the

ideal of elic iting a narrative response from each defendant.

However, the record clearly establishes that both Moore and Arnold

waived their right to a conflict-free attorney, after being

adequately informed of the dangers encountered when two10

codefendants are represented by the same attorney. The court did

not err in ac cepting the defendants' waiver of conflict-free

attorneys.

UPWARD DEPARTURE

The district court departed upward from the guideline

sentencing range in imposing a $50,000.00 fine on each defendant.

Defendants contend that the court erred in failing to give the

defendants reasonable notice of the grounds for upward departure,

and thereby deprived them of the opportunity to comment on the

departure prior to sentencing. We agree.

F E D

. R. C RIM

. P. 32(a)(1) provides that the parties be given "an

opportunity to comment upon the probation officer's determination

and on other matters relating to the appropriate sentence." The

Supreme Court has held that Rule 32 requires that the district

court give the parties reasonable notice that it is contemplating

an upward departure, which notice must specifically identify the

grounds for the departure. Burns v. United States , 501 U.S. 129,

111 S.Ct. 2182, 2187, 115 L.Ed.2d 123 (1991).

The district court, in pronouncing the sentence, stated that

the basis for upward departure on the fine was that the defendants

preyed on the weak and uneducated as part of their offense. This

basis had not been mentioned previously in the record. The court

stated earlier in the hearing, "As you recall, Mr. Keene, I gave

you and your clients notice on November 30 that I was considering

an upward departure from the guideline fine range so I would like

you to at this time also discuss in addition to what you already11

told me your comment on the departure upwards." The notice

referred to by the court is not memorialized in the record, so that

i t is impossible to tell if the proposed basis for departure was

included in that notice. We hold that the district court erred by

failing to give the defendants reasonable notice of the basis for

its upward departure on the fines.

CONCLUSION

Therefore, we AFFIRM the convictions, VACATE the sentences and

REMAND the cases for resentencing.