Court Opinion

ID: 9491520
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:16:21.879893+00
Date Added: 2024-06-11T17:54:47.552588
License: Public Domain

KISER, Senior District Judge,
concurring in part and dissenting in part:
I concur with Sections I, II and III of the majority opinion. I disagree with the majority, however, on the aiding and abetting issue presented in Section TV of its opinion.
In Section IV, the majority upholds the district court’s jury instructions on counts two through thirteen of the indictment. First, the majority decides that Schoop, an independent contractor, was indirectly employed by the International Organization of Masters, Mates, and Pilots (the Union) for the purposes of 29 U.S.C.A. § 501(c). Thus, the majority concludes that Schoop could embezzle, steal, abstract, or convert funds from the Union under § 501(c). Then, the majority finds that Seidman could be guilty of aiding and abetting Schoop under 18 U.S.C.A. § 2(a).
I disagree with the majority on two points. First, whether or not Congress intended for § 501(c) to apply to independent contractors is unclear. Where a criminal statute is ambiguous, the rule of lenity prevents an expansive reading of the statute. Applying the rule of lenity, I conclude that Schoop was not employed by the Union under § 501(c). Therefore, Schoop was not legally capable of embezzling, stealing, abstracting, or converting funds under § 501(c). Second, the district court only instructed the jury that it could convict Seidman of aiding and abetting Schoop’s embezzlement. Schoop lacked the necessary fiduciary relationship with the Union to be convicted of the underlying embezzlement, however. Thus, irrespective of whether or not § 501(e) extends to independent contractors, I find that Seidman could not have been convicted of aiding and abetting Schoop under § 2(a).
I.
Section 501(c) of Title 29 provides that:
Any person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use, or the use of another, any of the moneys, funds, securities, property, or other assets of a labor organization of which he is an officer, or by which he is employed, directly or indirectly, shall be fined not more than $10,000 or imprisoned for not more than five years, or both.
Section 2(a) of Title 18 extends criminal liability to anyone who “aids, abets, counsels, commands, induces or procures” the commission of “an offense against the United States.” The interaction of these two statutes means that Seidman could have been convicted of aiding and abetting under § 2(a), if Schoop could have been convicted as a principal under § 501(c). United States *559v. Coleman, 940 F.Supp. 15, 17-18 (D.D.C.1996); United States v. Capanegro, 576 F.2d 973, 980 (2d Cir.) (Friendly, J. dissenting), cert. denied, 439 U.S. 928, 99 S.Ct. 312, 58 L.Ed.2d 320 (1978). Schoop could have been convicted as a principal under § 501(c) if he embezzled, stole, or unlawfully and willfully abstracted or converted the funds at -issue from a labor organization “by which he is employed.”
A.
First, I find that Schoop was not employed by the Union. “As a criminal statute, § 501(c) must be strictly construed.” United States v. Hart, 417 F.Supp. 1314, 1321 (S.D.Iowa 1976) (citing United States v. Wiltberger, 18 U.S. (5 Wheat.) 76, 95, 5 L.Ed. 37 (1820) (“The rule that penal laws are to be construed strictly, is perhaps not much less old than construction itself. It is founded on the tenderness of the law for the rights of individuals; and on the plain principle, that the power of punishment is vested in the legislative, not in the judicial department.”)). See also United States v. Belt, 574 F.2d 1234, 1237-38 (5th Cir.1978) (“We have interpreted § 501(c) as a remedial statute creating a new federal crime to be given its broadest construction to reach the ills it was designed to counteract. Thus the duty imposed by the statute may be more stringent than that imposed by the common law if necessary to fulfill the statutory purpose. Nevertheless, because the statute is a criminal one, we must be wary of a too-broad construction that goes, beyond congressional intent or power.”) (citations omitted).
The doctrine that a criminal statute should be construed strictly is known as the rule of lenity. “The rule of lenity is premised on two ideas: first, a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed; second, legislatures and not courts should define criminal activity.” Babbitt v. Sweet Home Chapter of Communities for a Great Oregon, 515 U.S. 687, 704 n. 18, 115 S.Ct. 2407, 132 L.Ed.2d 597 (1995) (citations and internal quotations omitted); see also United States v. Lanier, 520 U.S. 259, -, 117 S.Ct. 1219, 1225, 137 L.Ed.2d 432 (1997) (“the canon of strict construction of criminal statutes, or rule of lenity, ensures fair warning by so resolving ambiguity in a criminal statute as to apply it only to conduct clearly covered”) (citations omitted); Hughey v. United States, 495 U.S. 411, 422, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990) (lenity principles “demand resolution of ambiguities in criminal statutes in favor of the defendant”) (citation omitted); Crandon v. United States, 494 U.S. 152, 160, 110 S.Ct. 997, 108 L.Ed.2d 132 (1990) (“Because construction of a criminal statute must be guided by the need for fair warning, it is rare that legislative history or statutory policies will support a construction of a statute broader than that clearly warranted by the text.”). Under the rule of lenity, a court “will not interpret a federal criminal statute so as to increase the penalty that it places on an individual when such an interpretation can be based on no more than a guess as to what Congress intended.” Ladner v. United States, 358 U.S. 169, 178, 79 S.Ct. 209, 3 L.Ed.2d 199 (1958).
It is unclear what Congress intended when it used the phrase “by which he is employed.” The use of such language could have been a deliberate attempt to avoid the use of the term “employee,” as the majorities in this case and Capanegro have concluded. See Capanegro, 576 F.2d at 978-79.1 Alternatively, the use of the phrase merely could have been a “draftsman’s choice.” Id. at 981 (Friendly, J., dissenting). I am inclined to agree with Judge Friendly that this was a *560choice of form and not substance.2 I do not need to reach this ultimate conclusion, however. I am satisfied that, at a minimum, the statute is ambiguous and any construction of the statute should be governed by the rule of lenity.
Absent a clear indication by Congress that it intended § 501(c) to reach non-employees, I am bound by the rule of lenity to restrict the reach of the statute to employees. First, I find that the majority’s interpretation of § 501(c) does not provide fair warning to independent contractors that they are subject to federal criminal liability under § 501(c). Second, and most importantly, whether or not to extend criminal liability for a violation of § 501(c) to independent contractors is the exclusive province of the legislative branch, not the judiciary. Since Congress has not chosen to explicitly extend liability to independent contractors, it is not our place to do so now.
Accordingly, I find that the rule of lenity precludes the majority’s interpretation of § 501.3 Applying the rule of lenity, I conclude that Schoop could not have been employed by the Union under § 501(c). Since Schoop could not be have been employed by the Union, he was not subject to criminal liability under § 501(c). Consequently, Seid-man could not be guilty of aiding and abetting Schoop. Therefore, the district court erroneously instructed the jury that it could convict Seidman of aiding and abetting under § 2(a).
B.
Assuming that Schoop was employed by the Union, I conclude that the district court’s instructions only permitted the jury to convict Seidman of aiding and abetting Schoop’s embezzlement, an underlying crime which Schoop could not have committed.
*561The lower court instructed the jury that “[cjounts two through thirteen of the indictment, these are not the conspiracy counts but the substantive counts, also charge Mr. Seid-man with aiding and abetting the embezzlement of funds of the [Union].” J.A. at 1015. The lower court then went on to instruct the jury that “under the facts of this case this aiding and abetting concept concerns the theory that it was Mr. Schoop who committed the embezzlements in Counts 2 through 13 inclusive, but that Mr. Seidman aided and abetted Mr. Schoop in doing it_ As you can see, the first requirement is that you find that another person, Mr. Schoop, has committed the crime charged, the embezzlement alleged in the substantive count. Obviously, no one can be convicted of aiding and abetting the criminal acts of another if no crime was committed by the other person in the first place so, therefore, if Mr. Schoop did not commit the embezzlements charged in 2 through 13 then Mr. Seidman could not be convicted of aiding and abetting Mr. Schoop.” J.A. at 1016.
The Fourth Circuit discussed embezzlement under § 501(e) in United States v. Stockton, 788 F.2d 210 (4th Cir.), cert. denied, 479 U.S. 840, 107 S.Ct. 147, 93 L.Ed.2d 89 (1986):
Although § 501(c) reaches other theft offenses as well, it is clear that embezzlement is the statute’s primary' concern. The section is captioned “embezzlement of assets,” and its legislative history refers to it as a provision designed to impose a federal punishment for embezzlement....
Looking first to the language of § 501(c), we note that Congress chose to use the term “embezzle,” a term which already acquired a generally accepted legal meaning in court decisions interpreting state statutes.4 ...
Nothing in the legislative history of § 501(e) contradicts the conclusion that Congress meant to adopt the traditional concept of embezzlement....
The central element of the traditional concept of embezzlement is the conversion of property belonging to another. Conversion involves an act of control or dominion over the property that seriously interferes with the owner’s rights....
The crime of embezzlement builds on the concept of conversion, but adds two further elements. First, the embezzled property must have been in the lawful possession of the defendant at the time of its appropriation. Second, embezzlement requires knowledge that the appropriation is contrary to the wishes of the owner of the property. In less formal language, the defendant must have taken another person’s property or caused it to be taken, knowing that the other person would not have wanted that to be done....
To sum up, then, the traditional concept of embezzlement comprises (1) a conversion — or, in other words, an unauthorized appropriation — of property belonging to another, where (2) the property is lawfully in the defendant’s possession (though for a limited purpose) at the time of the appropriation, and (3) the defendant acts with knowledge that his appropriation of the property is unauthorized, or at least without a good-faith belief that it has been authorized.
Id. at 215-17 (internal quotation, citations and footnotes omitted).
To be subject to conviction for embezzlement under § 501(c), Schoop must have come into possession of the property at issue by way of a fiduciary relationship with the Union. Id. at 215 n. 4; see also Colella v. United States, 360 F.2d 792, 799 (1st Cir.) (“Embezzlement ... carries with it the concept of a breach of a fiduciary relationship.”), cert. denied, 385 U.S. 829, 87 S.Ct. 65, 17 L.Ed.2d 65 (1966). In this case, there clearly was no such position of trust between Schoop and the Union.5
Despite the embezzlement instructions and the lack of a fiduciary relationship between Schoop and the Union, the majority *562would uphold Seidman’s aiding and abetting convictions. The majority concludes that the district court’s instructions would have permitted a jury to find that Schoop stole or converted funds from the Union and that Seidman aided and abetted in that crime.
Assuming that Schoop was employed by the Union under § 501(c), I agree with the majority that the facts would support a conclusion that Schoop stole or converted funds from the Union. However, the lower court did not so instruct the jury. In its aiding and abetting instruction, the district court never mentioned stealing, abstracting or converting, yet it referenced embezzlement on several occasions. J.A. at 1015-16 (quoted above); J.A. at 1018 (“Now if you look back or think back to Count One, conspiracy, and the other counts, embezzlement, you will see in each of them there are three concepts that are very important ... knowingly, willfully,intentionally.”); J.A. at 1020 (“It is important to bear in mind that this is a criminal embezzlement case_”); J.A. at 1021 (discussing how negligence cannot be basis for conviction of embezzlement). The majority concludes that the lower court used “embezzlement” as an abbreviation for describing all of the conduct prohibited by § 501(c).6 Indeed, following the defendant’s objections, the lower court intimated that the instruction covered embezzlement and conversion. J.A. at 1033. No matter what the lower court’s subjective intent, it still only instructed the jury that it could convict Seidman of aiding and abetting Schoop’s embezzlement. It never instructed the jury that they could convict Seidman of aiding and abetting Schoop’s conversion.7
Without more clear instruction from the bench, I conclude that the jury only could have convicted Seidman of aiding and abetting Schoop’s embezzlement from the Union. Because, as has been admitted, the requisite fiduciary relationship did not exist, Schoop could not have been convicted of the underlying embezzlement. Where a conviction on the underlying crime is not possible, there also can be no conviction for aiding and abetting that alleged underlying crime. See United States v. Blackwood, 735 F.2d 142 (4th Cir.1984) (defendant’s conviction for aiding and abetting overturned where court gave incorrect legal standard for determining guilt of principal).
In summation, I find that Schoop could not have been convicted of embezzling from the Union. I also find that the lower court did not instruct the jury that it could convict Seidman of aiding and abetting on a theory that Schoop stole or converted funds from the Union. Therefore, irrespective of whether or not Schoop was employed by the union, I conclude that the district court erroneously instructed the jury that it could convict Seid-man of aiding and abetting under § 2(a).
C.
As pointed out by the majority, where the district court instructs the jury as to two alternative theories of guilt, and one is an incorrect statement of the law, it must be clear that the jury convicted upon the correct legal theory or the guilty verdict must be overturned. See Yates v. United States, 354 *563U.S. 298, 312, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1957) (“[W]e think the proper rule to be applied is that which requires a verdict to be set aside in cases where the verdict is supportable on one ground, but not on another, and it is impossible to tell which ground the jury selected.”), overruled on other grounds by Burks v. United States, 437 U.S. 1, 98 S.Ct. 2141, 57 L.Ed.2d 1 (1978); Griffin v. United States, 502 U.S. 46, 49-60, 112 S.Ct. 466, 116 L.Ed.2d 371 (1991) (discussing and applying Yates). Here, the lower court instructed the jury that Seidman could be convicted on either one of two different theories: (1) embezzlement, abstraction or conversion under 29 U.S.C.A. § 501(e) or (2) aiding and abetting Sehoop’s embezzlement under 18 U.S.C.A. § 2(a). As discussed above, the latter theory of guilt was an incorrect statement of the law. Therefore, unless it can be ascertained that the jury convicted Seidman under the former theory, the convictions as to counts two through thirteen must be reversed.
In this ease, the district court provided the jury with a general verdict form which did not clarify whether the convictions on counts two through thirteen were based upon a finding of principal liability under § 501(c) or aiding and abetting liability under § 2(a).8 Thus, it is unclear whether the jury’s verdict was based upon the valid or invalid alternative. Accordingly, under Yates, the guilty verdicts as to counts two through thirteen must be overturned.
II.
While I believe that the jury likely would have convicted Seidman as a principal under § 501(c), I cannot turn a blind eye to the error in this case. As a reviewing court, it is our task to strictly interpret criminal statutes and to check abuse of the criminal process. In this case, the government requested and the court gave an instruction which erroneously allowed the jury to convict Seidman of aiding and abetting Schoop’s § 501(c) embezzlement. A conviction possibly based upon a legally erroneous instruction cannot stand. Accordingly, I would reverse the convictions as to counts two through thirteen.9

. In Capanegro, the majority stated "the statute, in our view, clearly provides that [an independent contractor] is unambiguously within its coverage.” 576 F.2d at 980. I do not understand how the Capanegro majority could claim that § 501(c) "unambiguously” supported its conclusion, when a jurist as learned as Judge Friendly dissented on that very issue. Indeed, if it were entirely unambiguous, the Supreme Court would not have stated that § "501(c) ... establishes criminal penalties for embezzlement or theft by a union officer or employee." Guidry v. Sheet Metal Workers National Pension Fund, 493 U.S. 365, 374 n. 15, 110 S.Ct. 680, 107 L.Ed.2d 782 (1990) (emphasis added). The Supreme Court was addressing a different issue and even to call this statement dictum would be a stretch, but the statement of the unanimous Court undermines a claim that the statute is unambiguous.

. I tend to agree with Judge Friendly for four reasons. First, as Judge Friendly pointed out, Congress entertained versions of the Labor-Management Reporting and Disclosure Act that more clearly would have extended criminal liability beyond employees. Yet, it did not enact such a statute. Capanegro, 576 F.2d at 981 n. 1 (Friendly, J., dissenting).
Second, as the majority pointed out, the definition of "employee” in 29 U.S.C.A. § 152(3) explicitly excludes independent contractors.
Third, Congress has demonstrated that where it wants to extend criminal liability beyond employees in the labor-management context, it knows how to do so. See 18 U.S.C.A. § 664 (liability extended to "[a]ny person” rather than "[a]ny person ... by which he is employed”).
Fourth, Congress did not need to extend criminal liability under § 501(c) to independent contractors in order to accomplish its objectives. As the Second Circuit stated in United States v. Robinson, "[tjhere is no question but that the legislative history of the statute reveals that the Congress was principally concerned with the looting of union treasuries by union leaders for their personal profit.” 512 F.2d 491, 493-94 (2d Cir.) (citing Congressional debate) (emphasis added), cert. denied sub nom. Villegas v. United States, 423 U.S. 853, 96 S.Ct. 100, 46 L.Ed.2d 78 (1975); see also United States v. Silverman, 430 F.2d 106, 113 (2d Cir.) ("It was the plain intention of Congress to hold officers and employees strictly responsible as fiduciaries for the union funds entrusted to them ....”) (citation omitted) (Moore, J. dissenting), modified on other grounds, 439 F.2d 1198 (1970), and cert. denied, 402 U.S. 953, 91 S.Ct. 1619, 29 L.Ed.2d 123 (1971). Where the government requests and district court applies the correct legal standard, the interaction of 29 U.S.C.A. § 501(c) and 18 U.S.C.A. §§ 2(a) and (b) provide adequate protection for union property from union officials and employees.

. As stated earlier, the majority concludes that Schoop was indirectly employed by the Union. Thus, the majority assumes that "directly or indirectly,” as used in § 501(c), modifies “by which he is employed.” The precedent I found on this issue, however, implies that "directly or indirectly" actually modifies "embezzles, steals, or unlawfully and willfully abstracts or converts.” See Robinson, 512 F.2d at 494 ("It is understandable that this kind of obvious abuse by union officials was the principal concern of congressional leaders in the hearings and debates which preceded the enactment of the statute in question. However, it is evident from the clear and unambiguous language employed by the statute that the behavior condemned is not limited to the embezzlement or conversion of union funds. The statutory language condemns the embezzlement or conversion not only of moneys, funds and securities, but also of 'property, or other assets of a labor organization ... directly or indirectly. ...' ”); Silverman, 430 F.2d at 113 (purpose of § 501(c) “should not be subverted by the use of indirect methods”) (Moore, J. dissenting) (citation omitted); Capanegro, 576 F.2d at 977 n. 3 (discussing Robinson). I do not opine as to which phrase "directly or indirectly” modifies. I simply note these cases as evidence that this less than artfully drafted statute is ambiguous.

. Embezzlement is a statutory crime which did not exist at common law.... A defendant who obtained possession of property lawfully, in a fiduciary capacity, before converting it could not be convicted at common law. Embezzlement statutes were enacted to remedy the common law's deficiency.

. The majority agrees with this point in footnote 15 of its opinion.

. In support of its conclusion, the majority notes that the lower court discussed embezzling, stealing and converting when it instructed the jury on Seidman's principal liability under § 501(c). See J.A. at 1008. The lower court instructed the jury that it could convict Seidman as a principal if it found that he had "embezzled, stole, abstracted or converted” finds from the Union. J.A. at 1009-10. The lower court then instructed the jury that "[ejmbezzlement is the voluntary and intentional taking or conversion to one’s use of the money or property of another after that money to property lawfully came into the possession of the person taking it by virtue of some office, employment, or position of trust.” J.A. at 1011. The court also instructed as to the definitions of abstraction and conversion. J.A. at 1011. The court then provided a hypothetical to differentiate between the concepts of embezzlement and robbery. J.A. at 1012. After providing the jury with definitions as to all of the possibilities for convicting Seidman as a principal, the district court then limited its instructions regarding the underlying offense for aiding and abetting to embezzlement. Such limitation by the lower court may have been unintentional. Nonetheless, it effectively informed the jury that it could only convict Seidman of aiding and abetting if it first concluded that Schoop embezzled from the Union.

. "Congress recognized that there was a difference between embezzlement and conversion by including both in the statute.” United States v. Harmon, 339 F.2d 354, 357 (6th Cir.1964), cert. denied, 380 U.S. 944, 85 S.Ct. 1025, 13 L.Ed.2d 963 (1965).

. At footnote 14 of its opinion, the majority states its belief that Seidman could have been convicted as a principal under 18 U.S.C.A. § 2(b). I believe the facts of this case would have supported such a conviction. The court’s instructions do not support such a conviction, however. The court below instructed only as to aiding and abetting under § 2(a). It did not instruct the jury regarding punishment as a principal under § 2(b). J.A. 1015-1018. As with the lower court’s failure to instruct on conversion in its aiding and abetting charge, I cannot agree that a person can be convicted on a theory which was never presented to the jury.

. Appellant argues that the error with respect to counts two through thirteen tainted the entire proceeding and requires reversal of the conspiracy conviction as well. I disagree. The lower court clearly instructed the jury that the conspiracy charge in count one was separate and distinct from the charges in counts two through thirteen. See J.A. at 995. I conclude, therefore, that the conspiracy instruction and aiding and abetting instruction "were not so intertwined that it was highly probable that [Seidman] was prejudiced on the [conspiracy] count[ ] by the erroneous instruction on the [aiding and abetting] counts.” United States v. Walker, 677 F.2d 1014, 1016 n. 2 (4th Cir.1982) (citation omitted). Here, the evidence of the conspiracy and the evidence of each of the various object offenses which could have formed the basis of the conspiracy conviction was simply overwhelming.