Opinion ID: 3026413
Heading Depth: 3
Heading Rank: 3

Heading: Holck’s and Umbrell’s Conspiracy Convictions

Text: Holck and Umbrell argue that their convictions for conspiracy to commit honest services fraud must be vacated because there was a prejudicial variance between the charge in the indictment and the proof presented at trial.18 They claim that 17 Because we have rejected Holck and Umbrell’s arguments that the failure to disclose theory was legally invalid, see part III.B.3., supra, we need not consider whether the District Court correctly concluded that the government presented insufficient evidence to convict on the failure-to-disclose theory. As we discussed above, because the evidence was “sufficient to convict on another alternative theory that was charged to the jury in the same count, [we will] assume that the jury convicted on the factually sufficient theory and [will] let the jury verdict stand.” Syme, 276 F.3d at 144. 18 Our jurisprudence distinguishes between challenges to the sufficiency of the evidence, in which the appellant claims that the government failed to prove an essential element of conspiracy, and variance claims, in which the appellant argues that the government proved multiple conspiracies instead of the one charged in the indictment. For instance, in United States v. Kenny, 462 F.2d 1205 (3d Cir. 1972), we explained, before commencing our variance analysis, that it was “not a case where there was no evidence of the existence of a conspiracy”; rather, the government allegedly “proved several separate unrelated conspiracies under each conspiracy count.” Id. at 1216. Similarly, in United States v. Perez, 280 F.3d 318 (3d Cir. 2002), we considered both sufficiency 45 while the indictment alleged a single conspiracy involving Holck, Umbrell, White, Kemp, Hawkins, and Knight, the evidence adduced at trial proved, if anything, that Holck and Umbrell, Knight, and Hawkins each joined a separate conspiracy with White and Kemp. “A conviction must be vacated when (1) there is a variance between the indictment and the proof presented at trial and (2) the variance prejudices a substantial right of the defendant.” United States v. Kelly, 892 F.2d 255, 258 (3d Cir. 1989). As we discuss below, we agree with Holck and Umbrell that there was a variance; however, we will nevertheless affirm their convictions because they have failed to demonstrate prejudice.
There is a variance if the indictment charges a single conspiracy while the evidence presented at trial proves only the existence of multiple conspiracies. Id. We must determine “whether there was sufficient evidence from which the jury could have concluded that the government proved the single of the evidence and variance challenges to the same conspiracy conviction. Id. at 342. The sufficiency of the evidence analysis concerned whether the defendants possessed the “requisite knowledge of the illegal objective of the scheme to distribute methamphetamine such that they could form an intent or agreement to join the conspiracy.” Id. at 343. One defendant claimed that he was caught with a drug distributor only by chance and was not involved with drugs, while the other claimed that he had a common buyer-seller relationship with the distributor and was not involved in a conspiracy to distribute. Id. This can be contrasted to the variance argument, where the defendants argued that while they may have been involved in a conspiracy to distribute drugs in New York, they were not part of the same conspiracy as men who dealt drugs in New Jersey. Id. at 347. Because Holck and Umbrell concede that the government presented sufficient evidence that they were involved in a conspiracy with some, but not all, of their co-defendants, we interpret their claim as alleging a prejudicial variance, rather than as a pure sufficiency of the evidence challenge. 46 conspiracy alleged in the indictment.” Id. Thus, we evaluate whether the record, when viewed in the light most favorable to the government, contains substantial evidence that Holck and Umbrell were part of a single conspiracy that also included Kemp, White, Hawkins, and Knight. In order to determine whether a group of individuals engaged in a single conspiracy or multiple conspiracies, we evaluate three factors. We consider: (1) “whether there was a common goal among the conspirators”; (2) “whether the agreement contemplated bringing to pass a continuous result that will not continue without the continuous cooperation of the conspirators”; and (3) “the extent to which the participants overlap in the various dealings.” Id. at 259 (internal quotation marks omitted). Here, the government has failed to satisfy the first Kelly factor. The crux of Holck and Umbrell’s argument is that the government charged a hub-and-spokes conspiracy but failed to prove the existence of a rim connecting the spokes. That is, they claim that Kemp and White were the hub, and entered into separate agreements with three unconnected spokes – Holck and Umbrell, Knight, and Hawkins. This argument is predicated on the seminal case Kotteakos v. United States, 328 U.S. 750 (1946). Kotteakos involved an indictment that charged 32 individuals with conspiracy to obtain loans under a Fair Housing Act program by making false applications; Simon Brown was at the center of the alleged conspiracy, helping a disparate group of individuals obtain these loans. Id. at 752-53. The Supreme Court held that the facts presented failed to prove a single conspiracy: Except for Brown, the common figure, no conspirator was interested in whether any loan except his own went through. And none aided in any way, by agreement or otherwise, in procuring another’s loan. The conspiracies therefore were distinct and disconnected, not parts of a larger general scheme, both in the phase of agreement with Brown and also in the absence of any aid given to others as well as in specific object and result. There 47 was no drawing of all together in a single, over-all, comprehensive plan. Blumenthal v. United States, 332 U.S. 539, 558 (1947) (discussing Kotteakos). In Blumenthal, the Court found a single conspiracy where the defendants were all involved in a scheme to acquire whiskey and resell it above authorized prices. Distinguishing these facts from Kotteakos, the Court noted that all the conspirators “knew of and joined in the overriding scheme” and “sought a common end” to sell the whiskey, so that “the several agreements were essential and integral steps.” Id. at 559. The contrast between Kotteakos and Blumenthal helps us to determine whether an impermissible variance has occurred. As this Court has noted, the Government may not charge “multiple unrelated conspiracies,” but it can charge a “master conspiracy [with] more than one subsidiary scheme.” United States v. Kenny, 462 F.2d 1205, 1216 (3d Cir. 1972); see also United States v. Chandler, 388 F.3d 796, 811 (11th Cir. 2004) (stating that “although each of these alleged spoke conspiracies had the same goal, there was no evidence that this was a common goal”). Here, Holck and Umbrell argue that they could not have joined the same conspiracy as Knight and Hawkins, because they neither knew about Knight’s and Hawkins’s activities nor were dependent on those activities. The government, on the other hand, argues that it proved both knowledge and interdependence. First, we agree with Holck and Umbrell that the government failed to present evidence that they either knew or should have known about Knight’s and Hawkins’s activities. While the government claims that Holck and Umbrell acted “with knowledge that White was serving interests in addition to theirs,” it presents no factual support for this assertion. Nor is this the type of conspiracy that must have had other members; it would have been perfectly reasonable for Holck and Umbrell to have believed that they were doing business with only Kemp and White. Cf. Chandler, 388 F.3d at 811 n.21 (“In a drug conspiracy, in which the object of the conspiracy is clearly illegal and there are various clandestine functions to perform, the 48 conspirators can be charged with knowledge that others are performing these different functions. In this case, however, such knowledge may not be imputed to defendants since each of their redemptions was complete unto itself.” (citation omitted)). This may be contrasted with Blumenthal, where three salesmen were convicted of conspiring to sell whiskey at above-ceiling prices in violation of the Emergency Price Control Act. 332 U.S. at 541. The Court held that while “each salesman aided in selling only his part,” id. at 559, they could nevertheless form part of a single conspiracy, because they “knew or must have known that others unknown to them were sharing in so large a project,” id. at 558. Here, there was no such evidence that Holck and Umbrell should have known that the conspiracy involved parts beyond White and Kemp. Accordingly, given the absence of any evidence to the contrary, we agree with Holck and Umbrell that the government failed to prove that they were aware of the existence of the other spokes. Second, we agree with Holck and Umbrell that their activities and those of the other spokes were neither interdependent nor mutually supportive. In evaluating interdependence, we consider how helpful one individual’s contribution is to another’s goals. See United States v. Macchia, 35 F.3d 662, 671 (2d Cir. 1994) (describing inquiry as “the extent to which the success or failure of one conspiracy is independent of a corresponding success or failure by the other”). We reiterate that interdependence serves as “evidence of an agreement,” Perez, 280 F.3d at 346; that is, it helps establish whether the alleged coconspirators are “all committed to the same set of objectives in a single conspiracy,” Smith, 82 F.3d at 1271. Chain-shaped conspiracies present the classic examples of interdependence. For instance, in Perez, 280 F.3d at 347, we concluded that two drug sellers and a drug smuggler were interdependent, even though there was a middleman between them, because “[the dealers] depended on a scheme involving [the smuggler and the middleman] and the shipment from the Philippines to possess and distribute the illegal drug.” See also United States v. Portela, 167 F.3d 687, 697 (1st Cir. 1999) (explaining that “a single conspiracy [exists] if the continued 49 health of the trafficking and distribution network necessarily depends on the continued efforts of multiple suppliers”); United States v. Evans, 970 F.2d 663, 670 (10th Cir. 1992) (“Interdependence is present when each alleged coconspirator . . . depend[s] on the operation of each link in the chain to achieve the common goal.” (alterations in original) (internal quotation marks omitted)).19 We also concluded that there was a single conspiracy in United States v. Kenny, 462 F.2d 1205 (3d Cir. 1972), a nondrug case. Kenny involved a large-scale scheme that required contractors to pay kickbacks to government officials in order to procure government contracts. Id. at 1217. While the scheme 19 In the typical chain conspiracy, the actions of each coconspirator benefit the overall conspiracy. It is for this reason that the “chain conspiracy” cases relied on by the Government are of limited relevance to our discussion. The paradigmatic example in which the chain metaphor provides guidance is the drug conspiracy, where the conspirators often “share a common goal, such as the possession and distribution of narcotics for profit.” See United States v. Tarantino, 846 F.2d 1384, 1393 (D.C. Cir. 1988); United States v. Russell, 134 F.3d 171, 182 (3d Cir. 1998) (stating that “the common goal of this conspiracy was to make money selling cocaine”); Quintero, 38 F.3d at 1337 (“The prosecution must . . . demonstrate that a defendant, charging variance, knew that he was part of a larger drug operation.”); United States v. Barr, 963 F.2d 641, 650 (3d Cir. 1992); Salmon, 944 F.2d at 1117 (conspiracy to sell cocaine for profit or another benefit); Padilla, 982 F.2d at 115 (stating that “there was a common goal to obtain and sell cocaine for profit and knowledge attributable to [the defendant] of a larger network”); United States v. Kelly, 892 F.2d 255 (3d Cir. 1989) (conspiracy to possess and manufacture methamphetamine); id. at 258 (describing the Government’s theory as the “classic chain conspiracy”). We do not wish to imply that every individual involved with a drug conspiracy is necessarily a member of that one conspiracy. “[E]ven if we determine that a chain conspiracy exists, we may still conclude that certain actions were outside the chain and formed a separate conspiracy.” Tarantino, 846 F.2d at 1393. 50 involved a diverse group of individuals, the evidence showed “a determined group who repeatedly cooperated closely to achieve the common purpose of self-enrichment by extracting kickbacks.” Id. Moreover, “[t]he key to success of all their depravities was their common control over the administration of city and county government.” Id.; see also United States v. Greenidge, --- F.3d ----, 2007 WL 205076 (3d Cir. 2007) (finding single conspiracy where depositors of stolen and altered checks “did not represent independent customers, but were an integral part of this [pyramidal] ‘corporate’ structure”). On the other hand, in Smith, we concluded that there was no interdependence between two kickback schemes because “[t]he co-conspirators in each state derived no benefit, financial or otherwise, from Smith’s activities in the other state, nor was the success of the conspiracy in one state contingent on the success of the conspiracy in the other.” 82 F.3d at 1271. Similarly, in United States v. Camiel, 689 F.2d 31 (3d Cir. 1982), we found that the government had failed to prove a common, unified scheme between the officials of both houses of the Pennsylvania General Assembly in offering “no-show” patronage positions, because while each body did offer such positions, “there was a dearth of evidence presented that could link the relevant activities of the two legislative bodies.” Id. at 37; see also Chandler, 388 F.3d at 811-12 (“In this case, there was no such interdependence of the spokes. The combined efforts of the spokes were not required to insure the success of the venture. No spoke depended upon, was aided by, or had any interest in the success of the others. Each spoke acted independently and was an end unto itself. The actions of one spoke did not facilitate the endeavors of other coconspirators or the venture as a whole.” (footnote omitted)). Based on these principles, we conclude that there was an insufficient degree of interdependence between Knight and Holck and Umbrell. While White and Kemp steered business to Knight’s company RPC, this did not benefit Holck and Umbrell; it only benefitted Knight (and perhaps White). Nor did this arrangement cement White’s hold on Kemp; if anything, it indebted White to Kemp, which again was of no use to Holck and Umbrell. Thus, it is difficult to conceive of how Knight’s 51 activities and those of Holck and Umbrell were interdependent or mutually supportive. Hawkins’s case is somewhat closer, because it is at least arguable that Hawkins’s assistance to White in tendering bribes to Kemp inadvertently benefitted Holck and Umbrell by increasing White’s power over Kemp. Nevertheless, we conclude that this degree of interdependency is too attenuated and incidental to establish that Holck and Umbrell and Hawkins joined the same conspiracy. The evidence here, as in Kotteakos and Smith, demonstrates that Holck and Umbrell’s transactions were able to proceed without any reliance on Hawkins, and vice versa. Holck and Umbrell, through cultivating a relationship with White and providing loans to Kemp, induced Kemp to grant them favorable treatment. Hawkins also sought favors from Kemp, and worked with White to coax those favors. Neither of these sets of transactions was contingent upon the other. Accordingly, we conclude that Holck and Umbrell and Hawkins were not interdependent. The government’s other arguments lack merit. For instance, the government claims that the conspirators overlapped because “White and Kemp, the core conspirators, dealt with every one of the coconspirators, including Holck and Umbrell, both individually and together.” However, this could be said for any hub-and-spokes style conspiracy; Kotteakos and its progeny make clear that there must be overlap among the spokes, not just between the hub and the various spokes. Further, it is of no moment that the hub of this conspiracy involved two individuals instead of one. Smith recognized that the inquiry must focus not on the number of individuals who make up the hub, but on the character of the agreements between the spokes. See 82 F.3d at 1272. Thus, we conclude that appellants are correct that there was a variance between the conduct charged and proved.
We will only vacate Holck’s and Umbrell’s convictions, however, if they can show that the variance prejudiced their substantial rights. See United States v. Padilla, 982 F.2d 110, 115 (3d Cir. 1992) (stating “assuming arguendo that Padilla has 52 demonstrated a variance, he must also show prejudice to a substantial right”); Perez, 280 F.3d at 345 (same). The rule against variances serves at least three purposes. These purposes also illustrate why this rule contains a prejudice requirement. First, “the rule protects the right of each defendant ‘not to be tried en masse for the conglomeration of distinct and separate offenses committed by others.’” United States v. Schurr, 775 F.2d 549, 553 (3d Cir. 1985) (quoting Kotteakos, 328 U.S. at 775). The idea here is that the jury should not be permitted to transfer “‘guilt from one alleged co-schemer to another.’” Perez, 280 F.3d at 346 (quoting United States v. Barr, 963 F.2d 641, 648 (3d Cir. 1992)). Closely related to guilt transference is the possibility of evidence spillover. United States v. Trainor, 477 F.3d 24, 36 n.21 (1st Cir. 2007) (stating that “the spillover concern is addressed to whether incriminating evidence against co-defendants who were involved in separate conspiracies affected the jury’s consideration of the evidence against the defendant”). Second, the rule ensures that a defendant has adequate notice of the charges being brought against him. Perez, 280 F.3d at 345. Third, the rule “rests on a principle akin to double jeopardy, for the rule helps to minimize the danger that the defendant may be prosecuted a second time for the same offense.” Schurr, 775 F.2d at 554 (internal quotation marks omitted). The third purpose is not at issue in this case, and the “notice” purpose has not been violated because Holck and Umbrell were aware from the indictment as to their role in the conspiracy, even if this conspiracy had been solely between them and the White/Kemp hub. There is no reasonable argument that Holck and Umbrell were not aware of the nature of the charges brought against them. Here, Holck and Umbrell have failed to show that the variance prejudiced their substantial rights. They argue that they were prejudiced because a great deal of evidence concerning “seamy explicit . . . quid pro quo trades” between White and Kemp were introduced against them. According to Holck and Umbrell, “these damning conversations had nothing to do with [them].” However, as the government notes, this evidence was admissible against Holck and Umbrell because, as they concede, they joined a conspiracy with White and Kemp. See, e.g., United States v. Kushner, 305 F.3d 194, 198 (3d Cir. 2002) 53 (explaining that “[u]nder the law of conspiracy, a defendant is liable for his own and his co-conspirators’ acts for as long as the conspiracy continues”). This conspiracy involved White’s bribing Kemp in order to control his decision-making and direct city business to favored companies – including Commerce. Thus, evidence concerning White and Kemp’s relationship was relevant to Holck and Umbrell to explain White’s power over Kemp, which worked in Holck and Umbrell’s favor. Accordingly, Holck and Umbrell’s argument on this point lacks merit. Further, as the government explains, it rigorously segmented its proofs and “never suggested in any way that any piece of evidence related to Hawkins and Knight was relevant to establish Holck and Umbrell’s participation in the conspiracy.” This Court has specifically found, in a discussion of variance, no prejudice because, inter alia, “the presentation against the defendants here proceeded seriatim.” Padilla, 982 F.2d at 116. We explained that the presentation of evidence in this manner minimized the risk of evidence spillover from the separate defendants. Id.; see also Perez, 280 F.3d at 347; Greenidge, 2007 WL 2050764. The same rationale applies here. Also militating against a finding of prejudice is Kotteakos’s explanation that the danger of prejudice increases along with the number of conspiracies and individuals that make up the wrongly charged single conspiracy. As the Court stated, “[o]bviously the burden of defense to a defendant, connected with one or a few of so many distinct transactions, is vastly different not only in preparation for trial, but also in looking out for and securing safeguard against evidence affecting other defendants.” Id. at 766-67. The Court distinguished the conspiracy in that case, which involved eight different conspiracies encompassing between 13 and 32 individuals and did prejudice the defendant, from the case of Berger v. United States, 295 U.S. 78 (1935), where two conspiracies involving four individuals were proved and did not prejudice the defendant. Id. at 766. This case is more similar to Berger, as there were five alleged conspirators that make up three distinct conspiracies. Thus, there is little danger that prejudice inevitably occurred based on the sheer number of defendants and 54 conspiracies. Accordingly, while Holck and Umbrell have shown that there was a variance between the charge in the indictment and the evidence adduced at trial, they have failed to demonstrate that they were prejudiced by the variance.