Source: https://law.justia.com/cases/federal/appellate-courts/F2/881/229/93999/
Timestamp: 2019-10-20 13:41:51
Document Index: 213896206

Matched Legal Cases: ['§ 2255', '§ 2255', '§ 2255', '§ 1341', '§ 1962', '§ 1961', '§ 1962']

Evan Callanan, Sr. (87-2034), Evan Callanan, Jr. (87-2036),petitioners-appellants, v. United States of America, Respondent-appellee, 881 F.2d 229 (6th Cir. 1989) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1989 › Evan Callanan, Sr. (87-2034), Evan Callanan, Jr. (87-2036),petitioners-appellants, v. United States...
Evan Callanan, Sr. (87-2034), Evan Callanan, Jr. (87-2036),petitioners-appellants, v. United States of America, Respondent-appellee, 881 F.2d 229 (6th Cir. 1989)
US Court of Appeals for the Sixth Circuit - 881 F.2d 229 (6th Cir. 1989) Argued Sept. 23, 1988. Decided July 26, 1989. As Amended on Denial of Rehearing and Rehearing En Banc Oct.5, 1989
Evan Callanan, Sr., a former Michigan state court judge, and his son, Evan Callanan, Jr., an attorney, were convicted in federal court on a number of charges, including mail fraud, brought in connection with a bribery scheme. After the convictions were affirmed by this court, the Supreme Court repudiated the "intangible rights" theory on which the Callanans' mail fraud convictions had been premised. McNally v. United States, 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987). Motions to vacate sentence under 28 U.S.C. § 2255 were denied by the district court, and the Callanans appealed again. We conclude that McNally must be applied retroactively and that the Callanans' mail fraud convictions must be vacated. With the exception of the younger Callanan's RICO and RICO conspiracy convictions, we shall allow the Callanans' other convictions to stand.
A jury found Judge Callanan guilty on the RICO and RICO conspiracy counts and on one mail fraud count; he was acquitted on three other mail fraud counts. Attorney Callanan was convicted on all counts, including perjury. Judge Callanan was sentenced to five years in prison on the mail fraud counts and 10 years on the RICO and RICO conspiracy counts, the sentences to be served concurrently. Attorney Callanan was sentenced to eight years in prison on the RICO and RICO conspiracy counts and five years on each of the other counts. We affirmed the convictions in part, but remanded the case for reconsideration of the Callanans' sentences. United States v. Qauod, 777 F.2d 1105 (6th Cir. 1985), cert. denied, 484 U.S. 832, 106 S. Ct. 1499, 89 L. Ed. 2d 899 (1986). The district court concluded that the sentences were correct, and we affirmed that judgment. United States v. Callanan, 810 F.2d 544 (6th Cir.), cert. denied, --- U.S. ----, 108 S. Ct. 107, 98 L. Ed. 2d 67 (1987).
In McNally v. United States, 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987), a case decided after the Callanans had gone to prison and begun to serve their sentences, the Supreme Court repudiated the intangible rights theory on which the Callanans' mail fraud convictions had been premised. Judge Callanan and his son then filed motions to vacate sentence pursuant to 28 U.S.C. § 2255. The district court denied relief, declining to give McNally retroactive effect. United States v. Callanan, 671 F. Supp. 487 (E.D. Mich. 1987). Both defendants appealed.
Ordinarily, a prisoner seeking vacation of his sentence under 28 U.S.C. § 2255 on a ground not raised at trial must show reasonable cause for failure to raise the issue initially and must show that prejudice will result if the issue is not considered. United States v. Frady, 456 U.S. 152, 167-68, 102 S. Ct. 1584, 1594-95, 71 L. Ed. 2d 816 (1982). The Callanans did not contend at trial that schemes to defraud citizens of their intangible rights lie outside the purview of the mail fraud statute, but we do not believe that their failure to advance such an argument was fatal to their present claim.
Before McNally, it was settled law in this circuit (and in every circuit that had considered the issue) that the mail fraud statute permitted prosecutions based on the intangible rights theory. McNally has been described as "blockbusting," "a total surprise," and "wholly unexpected." United States v. Ochs, 842 F.2d 515, 521 (1st Cir. 1988). The "cause" requirement of Frady should not be applied in a way that would encourage efforts to relitigate well settled points of law, cf. Ingber v. Enzor, 841 F.2d 450, 454 (2d Cir. 1988), and the fact that the point appeared to be settled constituted cause for not raising it. There is a strong argument, moreover, that cause need not be shown at all in these unusual circumstances. See United States v. Shelton, 848 F.2d 1485, 1490 n. 4 (10th Cir. 1988) (en banc) (probable innocence may make showing of cause unnecessary).
The district court's decision that McNally should not be given retroactive effect was based on Allen v. Hardy, 478 U.S. 255, 106 S. Ct. 2878, 92 L. Ed. 2d 199 (1986) (per curiam). That case involved the retroactivity of "a decision announcing a new constitutional rule of criminal procedure." 478 U.S. at 258, 106 S. Ct. at 2880. The case at bar involves not a new rule of criminal procedure, but a new interpretation of the substantive criminal law. In this the present case resembles Davis v. United States, 417 U.S. 333, 94 S. Ct. 2298, 41 L. Ed. 2d 109 (1974), a decision indicating that where the intervening change of law is such that the defendant was punished "for an act that the law does not make criminal," the new rule of law must be applied retroactively in postconviction proceedings. See id. at 346, 94 S. Ct. at 2305; see also United States v. Johnson, 457 U.S. 537, 550, 102 S. Ct. 2579, 2587, 73 L. Ed. 2d 202 (1982) (dictum) ("the Court has recognized full retroactivity as a necessary adjunct to a ruling that a trial court lacked authority to commit or punish a criminal defendant in the first place").1
Subsequent to the district court's decision in this case, we applied McNally retroactively in direct appeals, see United States v. Stack, 853 F.2d 436, 437 (6th Cir. 1988), and in postconviction proceedings on a motion for a writ of error coram nobis. Allen v. United States, 867 F.2d 969 (6th Cir. 1989). Other courts of appeals have concluded uniformly that the rule of McNally must be applied retroactively in postconviction proceedings. See Ingber, 841 F.2d at 455; United States v. Osser, 864 F.2d 1056, 1058 (3d Cir. 1988); United States v. Mandel, 862 F.2d 1067, 1075 (4th Cir. 1988), cert. denied, --- U.S. ----, 109 S. Ct. 3190, 105 L. Ed. 2d 699 (1989); Magnuson v. United States, 861 F.2d 166,167 (7th Cir. 1988); United States v. Mitchell, 867 F.2d 1232, 1233 (9th Cir. 1989); Shelton, 848 F.2d at 1488-90. We agree that McNally must be given retroactive effect in Sec. 2255 proceedings.
The federal mail fraud statute, 18 U.S.C. § 1341, provides in pertinent part:
Although the lower federal courts had interpreted the words "scheme or artifice to defraud" as broad enough to include schemes to defraud the public of "intangible rights" such as the right to good government, McNally read the statute as "limited in scope to the protection of property rights." 483 U.S. at 360, 107 S. Ct. at 2881. Schemes to defraud the public of intangible rights "such as the right to have public officials perform their duties honestly" fall outside the scope of the federal mail fraud statute. Id. at 358, 107 S. Ct. at 2880.
In considering whether the Callanans' mail fraud convictions may stand in light of McNally, the critical question is whether the scheme charged in the indictment may fairly be characterized as a scheme or artifice to defraud the victim or victims of property rights rather than intangible rights. See Allen, 867 F.2d at 971; United States v. Runnels, 877 F.2d 481 (6th Cir. 1989). Each mail fraud count of the Callanans' indictment charged that the defendants
(2) to obtain directly and indirectly, money and other things of value by means of false pretenses and the concealment of material facts." 483 U.S. at 353-54, 107 S. Ct. at 2877-78.
The government's principal authority for such an approach is a decision of this court which has now been vacated. United States v. Runnels, 833 F.2d 1183 (6th Cir. 1987), modified, 842 F.2d 909 (6th Cir. 1988), vacated, 842 F.2d 912 (6th Cir. 1988), on reh'g en banc, 877 F.2d 481 (6th Cir. June 13, 1989). As the en banc court held on rehearing, the agency law theory, whatever its merits,2 cannot be raised by the government for the first time after a defendant has been tried and convicted on an impermissible "intangible rights" theory. Runnels, 877 F.2d at 482; see also United States v. Price, 857 F.2d 234, 236 n. 1 (4th Cir. 1988); United States v. Italiano, 837 F.2d 1480, 1486 (11th Cir. 1988).
The government also cites Carpenter v. United States, 484 U.S. 19, 108 S. Ct. 316, 98 L. Ed. 2d 275 (1987), where a unanimous Supreme Court held that an employee's scheme to deprive his employer of confidential business information was a scheme to defraud the employer of "property" as that term is used in the mail fraud statute. The Court went out of its way, however, to make clear that the employer's proprietary interest in such information was "much more than its contractual right to [the employee's] honest and faithful service, an interest too ethereal in itself to fall within the protection of the mail fraud statute." 484 U.S. at 25, 108 S. Ct. at 320. The scheme charged here--a "scheme to defraud the State of Michigan and its citizens" of the honest services of one of its judges--was a scheme to defraud the public of precisely the sort of "ethereal" interest Carpenter found insufficient.
* Turning to the Callanans' other convictions, we first address their substantive RICO convictions under 18 U.S.C. § 1962(c). That statute makes it
The dispute in this case centers around the "pattern" requirement, which entails "at least two acts of racketeering activity." 18 U.S.C. § 1961(5). "The predicate acts must be 'related' and must 'amount to or pose a threat of continued criminal activity.' " H.J., Inc. v. Northwestern Bell Telephone Co., --- U.S. ----, ----, 109 S. Ct. 2893, 2895, 106 L. Ed. 2d 195 (1989).
A number of courts have held that other verdicts of the same jury may serve the function of a special verdict on the predicate acts, where those other verdicts necessarily required a finding that the RICO defendant had committed the predicate acts. See Brennan v. United States, 867 F.2d 111, 115 (2d Cir.), cert. denied, --- U.S. ----, 109 S. Ct. 1750, 104 L. Ed. 2d 187 (1989); United States v. Lopez, 803 F.2d 969, 976-77 (9th Cir. 1986), cert. denied, 481 U.S. 1030, 107 S. Ct. 1959, 95 L. Ed. 2d 530 (1987); United States v. Pepe, 747 F.2d 632, 667-68 (11th Cir. 1984); United States v. Riccobene, 709 F.2d 214, 229-30 (3d Cir.), cert. denied, 464 U.S. 849, 104 S. Ct. 157, 78 L. Ed. 2d 145 (1983); United States v. Peacock, 654 F.2d 339, 348 (5th Cir. 1981), modified, 686 F.2d 356 (5th Cir. Unit B 1982), cert. denied, 464 U.S. 965, 104 S. Ct. 404, 78 L. Ed. 2d 344 (1983).
We next consider the Callanans' RICO conspiracy convictions under 18 U.S.C. § 1962(d), which prohibits conspiracies to violate Sec. 1962(a), (b), and (c). The essence of the RICO conspiracy count in this case was an agreement to violate Sec. 1962(c) by engaging in a pattern of racketeering activity consisting of seven predicate acts of bribery, four predicate acts of mail fraud, and one predicate act of obstruction of a criminal investigation. Although the indictment alleged the existence of a single conspiracy, the jury could properly convict any defendant of RICO conspiracy upon a finding that he had agreed to join a racketeering enterprise and had agreed to the commission of any two of the various predicate acts charged in the indictment. See United States v. Joseph, 781 F.2d 549, 554 (6th Cir. 1986).
Attorney Callanan contends that his conviction for obstruction of a criminal investigation cannot stand because the jury heard evidence on the mail fraud count that was irrelevant to the obstruction count. He argues that where charges justifying an initial joinder rest on an erroneous construction of law, joinder is void ab initio. United States v. Sutton, 605 F.2d 260, 272 (6th Cir. 1979), vacated in part, United States v. Sutton, 642 F.2d 1001 (6th Cir. 1980) (en banc), cert. denied, 453 U.S. 912, 101 S. Ct. 3144, 69 L. Ed. 2d 995 (1981). The en banc court rejected this argument. Instead, following Schaffer v. United States, 362 U.S. 511, 514-17, 102 L. Ed. 2d 325 (1960), we refused to reverse the defendant's conviction where it was "impossible to hold that this indictment was laid or prosecuted in bad faith or that the District Judge abused his discretion in failing to find prejudice and grant further severance." Sutton, 642 F.2d at 1037. To obtain reversal, a defendant invoking the doctrine of "retroactive misjoinder" must demonstrate "compelling prejudice." United States v. Warner, 690 F.2d 545, 554 (6th Cir. 1982).
Attorney Callanan has not met this burden. As we noted in another reversal of mail fraud convictions in light of McNally, "mail fraud ... constitute(s) conceptually a totally separate type of crime from that of obstructing justice and perjury." United States v. Murphy, 836 F.2d 248, 256 (6th Cir.), cert. denied, --- U.S. ----, 109 S. Ct. 307 (1988). In that case we found "no prejudicial 'spillover' effect requiring a vacation of the convictions for obstructing justice and perjury ..." Id. In the case at bar, similarly, we find no prejudice to Attorney Callanan from the introduction of evidence on the mail fraud counts. The jury was carefully instructed to consider the evidence relevant to the various counts separately and "is presumed capable of sorting out evidence and considering each count and each defendant separately." United States v. Swift, 809 F.2d 320, 323 (6th Cir. 1987).
Attorney Callanan further argues that the reference made to the mail fraud counts in the obstruction count of the indictment was improper and that not setting aside the obstruction conviction would be tantamount to a "constructive amendment" of the indictment without grand jury approval. This argument is not persuasive. Because the crime under investigation is not an essential element of the offense of obstruction of a criminal investigation, see United States v. Lippman, 492 F.2d 314, 317 (6th Cir. 1974), cert. denied, 419 U.S. 1107, 95 S. Ct. 779, 42 L. Ed. 2d 803 (1975), the specific references to the mail fraud statute in the obstruction count were unnecessary and may be stricken as surplusage without running afoul of the grand jury clause of the Fifth Amendment. See United States v. Miller, 471 U.S. 130, 140-45, 105 S. Ct. 1811, 1817-20, 85 L. Ed. 2d 99 (1985).
Attorney Callanan also argues that McNally renders the false testimony given about the scheme immaterial. We disagree. Testimony before a grand jury is material if it "has the natural effect or tendency to impede, influence or dissuade the grand jury from pursuing its investigation." United States v. Richardson, 596 F.2d 157, 165 (6th Cir. 1979) (quoting United States v. Howard, 560 F.2d 281, 284 (7th Cir. 1977)); see also United States v. Adams, 870 F.2d 1140, 1147 (6th Cir. 1989). So long as the grand jury has authority to investigate possible violations of federal law, materially false grand jury testimony is a criminal offense, regardless of whether the grand jury's investigation ultimately leads to a valid indictment for a federal offense. United States v. Sisack, 527 F.2d 917, 920 (9th Cir. 1976); United States v. Jacobs, 543 F.2d 18, 21 (7th Cir. 1976), cert. denied, 431 U.S. 929, 97 S. Ct. 2632, 53 L. Ed. 2d 244 (1977).
The Supreme Court's recent decision in Teague v. Lane, --- U.S. ----, 109 S. Ct. 1060, 103 L. Ed. 2d 334 (1989), addresses only the retroactivity of "new constitutional rules of criminal procedure" and thus does not control our decision here. 109 S. Ct. at 1075
The agency law theory has been sharply criticized by a number of other circuits. See Ochs, 842 F.2d at 526; United States v. Zauber, 857 F.2d 137, 146 (3d Cir. 1988), cert. denied, --- U.S. ----, 109 S. Ct. 1340, 103 L. Ed. 2d 810 (1989); Mandel, 862 F.2d at 1073; United States v. Holzer, 840 F.2d 1343, 1347-48 (7th Cir. 1988); Shelton, 848 F.2d at 1491-92. It bears a strong resemblance to a theory advanced by Justice Stevens in a part of his dissenting opinion in McNally not joined by any other member of the Supreme Court. See McNally, 483 U.S. at 377 n. 10, 107 S. Ct. at 2890 n. 10 (Stevens, J., dissenting)