Opinion ID: 782300
Heading Depth: 2
Heading Rank: 3

Heading: sufficiency of the evidence

Text: 28 Fassnacht and Malanga next contend that the district court should have granted their motion for a judgment of acquittal because, they argue, the evidence presented at trial was insufficient to sustain their convictions for obstruction of justice. We review the denial of a motion for a judgment of acquittal de novo. United States v. Hach, 162 F.3d 937, 942 (7th Cir.1998). In reviewing the district court's decision, we take the evidentiary basis for the jury's verdict in the light most favorable to the government ... and will uphold the conviction if ` any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.' United States v. Granados, 142 F.3d 1016, 1019 (7th Cir.1998) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979)). We will overturn the jury's verdict only if the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt. Id. (citations omitted). Proving that no such evidence exists presents a nearly insurmountable hurdle to the defendant. Hach, 162 F.3d at 942 (quotation omitted). 29 To prove an obstruction of justice charge under § 1503, the government must show, beyond a reasonable doubt, that there was a pending judicial proceeding, that the defendant was aware of that proceeding, and that the defendant corruptly intended to impede the administration of that judicial proceeding. United States v. Maloney, 71 F.3d 645, 656 (7th Cir.1995). Fassnacht and Malanga claim that the evidence presented at trial, aimed primarily at proving a scheme of tax evasion, was insufficient to support a guilty verdict on the obstruction of justice charge. Our examination of the record, however, convinces us that there was sufficient evidence to sustain the jury's verdict. 30 The dispute in this case essentially comes down to the question of the intended object of Fassnacht's and Malanga's obstructive efforts. The defendants argue that the government offered evidence which showed that, while they were aware of the grand jury proceeding, they only acted with an intent to mislead the IRS investigation. The government contends that there was sufficient evidence from which the jury could have concluded that the grand jury investigation was an object of the defendants' efforts. We agree with the government. 31 This Court has previously held that conviction under § 1503's corruptly endeavors language requires, as an element of the offense, the specific intent to impede, obstruct, or interfere with a judicial proceeding. See United States v. Bucey, 876 F.2d 1297, 1314 (7th Cir.1989); see also United States v. Schwarz, 283 F.3d 76, 107 (2d Cir.2002). In United States v. Aguilar, the Supreme Court explained that to prove specific intent, the government must demonstrate some kind of nexus between the action taken by the accused and the judicial proceeding: the act must have a relationship in time, causation, or logic with the judicial proceedings.... In other words, the endeavor must have the `natural and probable effect' of interfering with the due administration of justice. 515 U.S. 593, 599, 115 S.Ct. 2357, 132 L.Ed.2d 520 (1995) (citations omitted). 32 On the other hand, if the defendant lacks knowledge that his actions are likely to affect the judicial proceeding, he lacks the requisite intent to obstruct. Id. The Second Circuit phrased the intent element this way: the conduct offered to evince that intent must be conduct that is directed at the court or grand jury and that, in the defendant's mind, has the `natural and probable effect' of obstructing or interfering with that entity. Schwarz, 283 F.3d at 109 (citing Aguilar, 515 U.S. at 599, 115 S.Ct. 2357). Mere knowledge of a judicial proceeding is not enough to support a conviction under § 1503. See id. at 107 ([K]nowledge of an existing grand jury investigation or the foreseeability of such an investigation, by itself, is not enough to sustain a conviction under § 1503.). 33 A grand jury investigation constitutes the due administration of justice for purposes of § 1503, but an IRS investigation, standing alone, does not. See Aguilar, 515 U.S. at 599, 115 S.Ct. 2357; United States v. Ryan, 455 F.2d 728, 733 (9th Cir.1971) ([A]n investigation by the Internal Revenue Service or by any other governmental agency would not constitute a judicial proceeding.). The Supreme Court emphasized this distinction in Aguilar: [t]he action taken by the accused must be with an intent to influence judicial or grand jury proceedings; it is not enough that there be an intent to influence some ancillary proceeding, such as an investigation independent of the court's or grand jury's authority. 515 U.S. at 599, 115 S.Ct. 2357. 34 Given this distinction, the Supreme Court warned that it did not believe that uttering false statements to an investigating agent ... who might or might not testify before a grand jury is sufficient to make out a violation of the catchall provision of § 1503. Id. at 600, 115 S.Ct. 2357. Under Aguilar, therefore, there is a significant difference between an accused who provides a false statement to an investigator with the knowledge that the evidence will be provided to the grand jury (or an accused who provides false evidence directly to the grand jury), and an accused who simply makes false statements to an investigative agent. See id. at 601, 115 S.Ct. 2357. If an accused makes a false statement to an investigating agent without the knowledge that the agent will forward that information to the grand jury, it is far more speculative whether the false statement will have the natural and probable effect of obstructing justice. Id. Such speculation is insufficient to support a conviction under § 1503. 35 Further complicating the distinction between judicial proceedings and investigative efforts, we have held that an investigation by a government agency undertaken in direct support of a grand jury investigation constitutes the due administration of justice. For example, in United States v. Furkin, the defendant failed to report income from certain gambling machines on his federal tax returns and was convicted of conspiracy to defraud the IRS; he was also convicted of obstruction of justice under § 1503 for his efforts to impede the criminal investigation into his tax evasion. 119 F.3d 1276, 1278-79 (7th Cir.1997). In challenging his conviction under § 1503, Furkin argued that the evidence against him indicated, at most, an intent to impede the IRS investigation, but not the grand jury investigation. Id. at 1282. We disagreed, noting that the evidence demonstrated that Furkin was also aware that the IRS was integrally involved in the grand jury investigation.... The IRS investigation was not some `ancillary proceeding' unrelated to the grand jury investigation. Indeed, the IRS investigation and the grand jury investigation were one and the same, and the evidence established that Furkin understood this fact. Id. at 1282-83 (emphasis added); see also Aguilar, 515 U.S. at 600, 115 S.Ct. 2357 (noting that obstruction of an investigation by FBI agents may constitute a violation of § 1503 if the agents acted as the arm of the grand jury). 36 Like the situation in Furkin, there was sufficient evidence presented in this case for the jury to have rationally concluded that Fassnacht and Malanga were aware of the grand jury investigation into their tax returns and that they understood that the IRS agents were integrally involved in that grand jury investigation or, at the least, that the IRS agents would provide to the grand jury the information they garnered from the defendants. 37 The government presented evidence that in January 1996, Fassnacht, Malanga, and Newell began to concoct a cover story to obscure any wrongdoing with regard to their handling of the $1.35 million incentive fee, after realizing that terminating Dancisak presented the risk that she might go to the authorities with information about LPM's finances. Newell testified that Fassnacht suggested a scenario in which LPM, Inc. would say that it had entered into an agreement with Burke, for the payment to Burke of a finder's fee with respect to the investment work done for ADIA. (Tr. at 197-200.) The three individuals met several times in early 1996 to review false documents prepared by Fassnacht or Newell and to refine the details of their cover story. 38 There was evidence offered by the government that while the efforts to create a cover story began before the commencement of the grand jury investigation, once Fassnacht and Malanga became aware of the grand jury investigative efforts, they continued to rely on that cover story, making false statements to investigating agents and preparing false documents to back up their story. 39 First, there was sufficient evidence for the jury to have concluded that Fassnacht and Malanga were aware that a federal grand jury, and not just the IRS, was investigating their tax affairs. Special Agent Lawrence Egan testified that he served Fassnacht with a subpoena from the grand jury on April 1, 1996. (Tr. at 763.) On April 2, Fassnacht was recorded in a telephone conversation with Newell discussing the documents requested in the subpoena I received. (Tape Tr. 4/2/96 11:15 AM at 2.) Malanga was tape-recorded in an April 3 call with Newell discussing Fassnacht's postponed grand jury testimony. (Tape Tr. 4/3/96 5:30 PM at 5 & 13.) And when Newell was asked on direct examination whether the grand jury was mentioned during his April 23 meeting in Newark with Malanga and Fassnacht, Newell testified: I believe it was. (Tr. at 287.) 40 There was also extensive evidence offered recounting Fassnacht's and Malanga's efforts to refine and maintain their cover story. For example, in an April 2 recorded telephone call between Newell and Fassnacht, Newell asked if Fassnacht was sticking with the finder's fee cover story: Just, just so we don't uhh contradict each other or are you sticking one fee, the finder's fee. Fassnacht replied, Yep, yep. (Tape Tr. 4/2/96 11:45 AM at 5.) Later in the April 2 Newell-Fassnacht phone call, Newell asked Fassnacht if he want[ed] me to stick to the story, the finder's fee contract (inaudible) is in fact a valid contract. Fassnacht replied, [A] verbal contract is fine. I provided you with draft basically of alternatives to use. (Tape Tr. 4/2/96 11:45 AM at 7.) 41 On April 13, Malanga was recorded in a telephone call with Newell, in which Newell said that it would be nice to, you know, to know whether he's [Fassnacht] still proposing we stick with it, the Burke cover story. Malanga replied, Well, I think that's the story.... (Tape Tr. 4/13/96 5:20 PM at 8.) In a tape recorded telephone conversation between Newell and Malanga following an April 15 dinner meeting, Newell expressed concern with Fassnacht's statement that Burke would set up just whatever cover story you guys want. All, all he asks is twenty percent. Malanga replied, Well he said ten percent really. (Tape Tr. 4/15/96 11:00 PM at 4.) In an April 18th call, Malanga asked Newell about his meeting with accountants earlier that day. Newell told Malanga twice that he stuck to the story and that the accountants asked to see any documents corroborating the story, [l]ike the finder's fee agreement and any, any backup to, like invoices and stuff. Malanga's reply: Ha, ha, tis a tangled web we weave. (Tape Tr. 4/18/96 9:08 PM at 4.) 42 The government also presented evidence that Fassnacht and Malanga participated in the creation of false documents to support their cover story. At the end of an April 18 call with Malanga, Newell suggested that they put our, our case together, get whatever documentation uhh John [Fassnacht] or Ed [Burke] or whoever can get us and see how the story fits together. Malanga agreed: All right. (Tape Tr. 4/18/96 9:08 PM at 6.) On April 19, Newell and Fassnacht had a telephone conversation in which Fassnacht assured Newell that he would get documentation to back up the finder's fee story. When Newell tells Fassnacht that I've been sticking to our story, Fassnacht replies: Good. (Tape Tr. 4/19/96 8:03 AM at 2.) 43 Newell testified at trial that at the April 23 meeting he had with Fassnacht and Malanga, held at the Admiral's Club at Newark Airport, Fassnacht produced documents that had been prepared which evidenced a loan agreement between LPM, Limited, and Dr. Malanga, and that would be the rationale for the $400,000 payment in February [for Malanga's house]. Newell testified that Malanga signed the note and gave it back to Fassnacht. (Tr. at 274.) 44 Newell also testified that at the April 23 meeting, Fassnacht instructed him to think through a script ... which would in some logical fashion provide a story that would explain how Ed Burke introduced us to ADIA. Newell prepared such a chronology and later delivered it to Fassnacht. (Tr. at 276-77, 295.) Some time later, when IRS agents executed a warrant authorizing the search of Fassnacht's belongs at JFK Airport prior to Fassnacht boarding a flight to Bermuda, the agents found the chronology prepared by Newell among Fassnacht's belongings; Fassnacht had promised to deliver the chronology/script to Burke. (Tr. at 820-21.) 45 Taking this evidence in the light most favorable to the government, as we must when reviewing the denial of a motion for judgment of acquittal, we believe that a jury could have rationally concluded that Fassnacht and Malanga intended that their conduct would have the natural and probable effect of impeding the investigation by the grand jury. 46 The evidence offered at trial-including Newell's testimony, the tape-recorded conversations, and other documentary evidence — indicated that after Fassnacht and Malanga became aware that a federal grand jury was involved in the investigation of their tax returns, they continued to stick with the finder's fee cover story, repeatedly making false statements to the IRS Criminal Investigation Division agents and creating fictitious documents to back up their false statements. References to the grand jury interspersed among the defendants' conversations in which they continued to refine their cover story provide a rational basis on which the jury could have concluded that the defendants were more than merely aware of the grand jury investigation, but that the grand jury was in fact an object of their obstructive efforts. In addition, even if it believed that the defendants' obstructive efforts were primarily aimed at the IRS agents, the jury was entitled to make the rational inference that Fassnacht and Malanga understood that the IRS agents were acting as the arm of the grand jury, and that impeding the agents' efforts necessarily meant obstructing the grand jury. See Aguilar, 515 U.S. at 600, 115 S.Ct. 2357. 47 To the extent that Fassnacht and Malanga argue that the evidence was insufficient because Newell's testimony at trial was tainted because it was given under a grant of immunity, or because the recorded conversations were unreliable because Newell was in a position in these calls to direct the conversation in order to advantage himself with the Government, those arguments go to the weight the jury should have given the evidence, something we are precluded from reviewing. We simply note that the evidence presented at trial does in fact provide a basis for the jury's verdict. A rational jury could have found the requisite nexus between the statements and actions of the defendants and the grand jury's work — one could certainly posit a relationship in time, causation, or logic with the judicial proceedings. Aguilar, 515 U.S. at 599, 115 S.Ct. 2357. 48 In sum, we believe that it was rational for the jury to have concluded that in the defendant[s'] mind[s], their adherence to the fictitious explanation for the diversion of the incentive fee to the offshore account would have the `natural and probable effect' of obstructing or interfering with the grand jury. Schwarz, 283 F.3d at 109 (citing Aguilar, 515 U.S. at 599, 115 S.Ct. 2357). We therefore reject the defendants' contention that there was insufficient evidence presented at trial for a rational jury to have reached guilty verdicts on the § 1503 charges. The district court's decision to deny the defendants' motion for a judgment of acquittal was correct.