Court Opinion

ID: 32174
Source: CourtListenerOpinion
Date Created: 2010-04-25 18:50:39+00
Date Added: 2024-06-11T16:47:26.465988
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
                                                              August 6, 2003

               IN THE UNITED STATES COURT OF APPEALS     Charles R. Fulbruge III
                                                                 Clerk
                       FOR THE FIFTH CIRCUIT

                       _____________________

                            No. 02-51062
                       _____________________

     CHARLES SIMPSON CHRISTOPHER

                                    Petitioner - Appellant

          v.

     R D MILES, WARDEN, FEDERAL CORRECTION INSTITUTE BASTROP

                                    Respondent - Appellee

_________________________________________________________________

           Appeal from the United States District Court
                 for the Western District of Texas
_________________________________________________________________

Before KING, Chief Judge, and DAVIS and BENAVIDES, Circuit
Judges.

KING, Chief Judge:

     Petitioner-Appellant Charles Simpson Christopher appeals the

decision of the district court denying his request for relief

pursuant to 28 U.S.C. § 2241 from his conviction for eleven

counts of wire fraud and ten counts of interstate transportation

of stolen goods.   Because we conclude that Christopher’s claim

fails to satisfy the 28 U.S.C. § 2255 savings clause, we vacate
the district court’s judgment and remand with orders to dismiss

Christopher’s petition for lack of jurisdiction.

I.   FACTS AND PROCEDURAL BACKGROUND

     In 1988, Christopher served, for a period of about eighty

days, as the vice president of Resolute Holdings Company

(“Resolute”).    During Christopher’s tenure, Resolute applied to

three different state regulatory agencies for approval of its

proposed acquisition of two insurance companies, Diamond Benefits

of Arizona (“Diamond”) and American Universal of Rhode Island

(“American”).    At the time, George Reeder was the president and

majority stockholder of Resolute.

     In seeking these regulatory approvals, Christopher and

Reeder made certain assurances to the state regulators, including

an assurance that Resolute would not use the assets of acquired

companies to pay for the purchases and an assurance that the

collateral Resolute tendered would be clear of any pre-existing

liens.    Resolute acquired Diamond and American in the summer of

1988.    However, contrary to the given assurances, Resolute used

the assets of Diamond and American to pay the purchase price and

to clear liens on real estate (owned by Reeder) that had been

used as collateral by Resolute.   After Resolute acquired American

and Diamond, Christopher and Reeder looted the companies’ assets,

converting millions of dollars for their own purposes.

Christopher was fired from Resolute in September of 1988.   In

1993, both American and Diamond went into receivership.

                                  2
     In 1993, Christopher and Reeder were indicted with multiple

counts of wire fraud in violation of 18 U.S.C. § 1343 and

interstate transportation of stolen goods in violation of 18

U.S.C. § 2314.   Both statutes prohibit schemes to obtain “money

or property by means of false or fraudulent pretense.”   18 U.S.C.

§ 1343 (2000); id. § 2314.   The indictment alleges Christopher

and Reeder had acquired both the regulatory approvals and money

by means of fraud and false representations.

     After a 1995 jury trial, Christopher was convicted in the

District Court for the District of Rhode Island with eleven

counts of wire fraud and ten counts of interstate transportation

of stolen goods.   The court sentenced Christopher to a term of

imprisonment of 121 months, three years of supervised release,

and restitution to American and Diamond in the total amount of

$26,700,000.

     Christopher moved for a new trial on the grounds that his

convictions were invalid because he had not defrauded anyone out

of a recognizable property interest.   The district court denied

the motion, finding that the regulatory approvals that Resolute

had obtained qualified as property interests within the meaning

of the statutes.   Christopher appealed this finding, and the

First Circuit affirmed.   United States v. Christopher, 142 F.3d
46 (1st Cir. 1998).

     Christopher then filed a timely petition to vacate his

sentence pursuant to 28 U.S.C. § 2255 in the Rhode Island

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district court.   His § 2255 petition did not assert that

regulatory approval was not a property interest; at the time,

First Circuit precedent foreclosed such an argument.    United

States v. Bucuvalas, 970 F.2d 937, 945 (1st Cir. 1992) (holding

that alcoholic beverage and entertainment licenses constituted

“property” within the meaning of the mail fraud statutes).     After

Christopher filed his § 2255 petition, the Supreme Court, in

United States v. Cleveland, 531 U.S. 12 (2000), held that a

government’s interest in licensing an activity was not a property

interest for purposes of conviction under the mail fraud

statutes.   Id. at 15 (“We conclude that permits or licenses of

this order do not qualify as ‘property’ within § 1341's compass.

It does not suffice, we clarify, that the object of the fraud may

become property in the recipient’s hands; for purposes of the

mail fraud statute, the thing obtained must be property in the

hands of the victim.”).

     Christopher then filed a motion to amend his § 2255 petition

to include a claim based on Cleveland.    The district court held

that Christopher’s Cleveland claim was untimely and that, even

assuming Cleveland stated a new rule of constitutional law, the

case did not apply retroactively.    Christopher v. United States,

146 F. Supp. 2d 146, 151 (D.R.I. 2001).    Christopher did not

thereafter continue to pursue relief on these grounds under

§ 2255.

                                 4
      In November 2001, Christopher filed a petition for habeas

relief pursuant to 28 U.S.C. § 2241 in the District Court for the

Western District of Texas (where he is incarcerated), rearguing

his Cleveland claim.   The magistrate judge assigned to the case

found that § 2241 relief was available to Christopher because he

had satisfied the § 2255 “savings clause” test.   However, the

magistrate also found that Christopher’s conviction was valid

notwithstanding Cleveland because both the grand jury indictment

and the trial jury instruction described the scheme as a

fraudulent attempt to obtain money, not a fraudulent attempt to

obtain the regulatory licenses that Cleveland had invalidated as

a grounds for conviction under the mail fraud statutes.    The

district court adopted the magistrate’s position and issued a

final judgment denying relief.

      Christopher now appeals to this court, raising the Cleveland

issue once again.

II.   CHRISTOPHER’S § 2241 CLAIM BASED ON CLEVELAND

      Christopher brought an initial § 2255 petition in the

district court in which he was convicted; this petition did not

raise the Cleveland issue.   When he attempted to bring a second

§ 2255 petition to address the applicability of this intervening

Supreme Court decision to his own case, the district court denied

the petition as failing to meet the stringent statutory standards

for filing a second or successive petition.   See 28 U.S.C. § 2255

(2000):

                                 5
      A second or successive motion must be certified as
      provided in section 2244 by a panel of the appropriate
      court of appeals to contain —

           (1)    newly discovered evidence that, if proven and
                  viewed in light of the evidence as a whole,
                  would be sufficient to establish by clear and
                  convincing   evidence  that   no   reasonable
                  factfinder would have found the movant guilty
                  of the offense; or

           (2)    a new rule of constitutional law, made
                  retroactive to cases on collateral review by
                  the Supreme Court, that was previously
                  unavailable.

Id.   Because Cleveland did not state a retroactively applicable

new rule of constitutional law, the district court rejected

Christopher’s successive § 2255 petition.

      Christopher now attempts to raise the Cleveland issue by

means of a § 2241 petition.1    While § 2241 is more typically used

to challenge the execution of a prisoner’s sentence, a federal

prisoner may bring a petition under § 2241 to challenge the

legality of his conviction or sentence if he can satisfy the

mandates of the “savings clause” of § 2255.     Reyes-Requena v.

United States, 243 F.3d 893, 900-01 (5th Cir. 2001).

      Under § 2241, we review the district court’s findings of

fact for clear error and conclusions of law de novo.     Wesson, 305
F.3d at 346.     Section 2255 states:

      1
        Because Christopher is petitioning under § 2241, he is
not required to obtain a certificate of appealability in order to
proceed on appeal. Wesson v. United States Penitentiary
Beaumont, Tx., 305 F.3d 343, 346 (5th Cir. 2002).

                                   6
       An application for a writ of habeas corpus in behalf of
       a prisoner who is authorized to apply for relief by
       motion pursuant to this section, shall not be entertained
       if it appears that the applicant has failed to apply for
       relief, by motion, to the court which sentenced him, or
       that such court denied him relief, unless it also appears
       that the remedy by motion is inadequate or ineffective to
       test the legality of his detention.

28 U.S.C. § 2255 (2000) (emphasis added).     The burden falls on

the petitioner to demonstrate that the § 2255 remedy is

inadequate or ineffective.    Reyes-Requena, 243 F.3d at 901.      We

have, however, recognized that the savings clause represents only

a “limited exception” and that the petitioner’s burden in

demonstrating the inadequacy of the § 2255 remedy is a stringent

one.    Id. at 901-02.

       A petitioner seeking relief under the § 2255 savings clause

must demonstrate three things: (1) his claim is based on a

retroactively applicable Supreme Court decision; (2) the Supreme

Court decision establishes that he was “actually innocent” of the

charges against him because the decision decriminalized the

conduct for which he was convicted; and (3) his claim would have

been foreclosed by existing circuit precedent had he raised it at

trial, on direct appeal, or in his original § 2255 petition. Id.

at 904; see also Jeffers v. Chandler, 245 F.3d 827, 830 (5th Cir.

2001).    “[T]he core idea is that the petitioner may have been

imprisoned for conduct that was not prohibited by law.”     Reyes-

Requena, 243 F.3d at 903.

                                  7
     We can assume arguendo that Christopher is able to satisfy

the first and third requirements, because he fails to demonstrate

that the intervening Supreme Court decision, Cleveland, renders

him actually innocent of the charges for which he was convicted.

The magistrate judge and the district court found that

Christopher satisfied this prong merely by “claiming that he has

been imprisoned for non-criminal conduct,” noting that we

concluded that the petitioner in Reyes-Requena satisfied the

actual innocence prong of the savings clause test by claiming

that he was imprisoned for conduct that had later been

decriminalized.   However, this conclusion misreads the Reyes-

Requena test.

     The petition in Reyes-Requena was convicted pursuant to 18

U.S.C. § 924(c)(1) of the “use” of a firearm during a drug-

trafficking offense, even though the facts of the case

demonstrated only that he had been found in possession of the

firearms.   Reyes-Requena, 243 F.3d at 904 n.29.   When an

intervening Supreme Court decision clarified that a conviction

for “use” under § 924(c)(1) required the “active employment” of

the firearm, Bailey v. United States, 516 U.S. 137, 145 (1959),

Reyes-Requena (who had already filed an unsuccessful § 2255

petition) brought a successive § 2255 petition based on this new

decision.   We held that Bailey did not meet the requirements for

a second or successive § 2255 petition but that, treating the

petitioner’s request as a § 2241 petition, his claim fell within

                                 8
the scope of the § 2255 savings clause.   Reyes-Requena, 243 F.3d

at 900-01.

     We stated that the petitioner satisfied the actual innocence

prong by claiming that he had been imprisoned for non-criminal

conduct.   However, important to this conclusion was the

government’s concession that, under Bailey, Reyes-Requena’s

conviction for use of a firearm could not stand; there was no

evidence in the record that Reyes-Requena had actually used the

weapon during the commission of the drug-trafficking offense.

Id. at 904 & n.29.   Thus, the petitioner’s claim that he was

actually innocent along with the government’s concession that the

facts would not support conviction under the new interpretation

of the law allowed the petitioner to satisfy the actual innocence

prong.   See also Jeffers, 253 F.3d at 831 (“‘Actual innocence’

for the purposes of our savings clause test could only be shown

if Jeffers could prove that based on a retroactively applicable

Supreme Court decision, he was convicted for conduct that did not

constitute a crime.”) (emphasis added).

     We must examine the merits of the petitioner’s claim to

determine whether the intervening Supreme Court decision has

rendered him actually innocent of the charges upon which he was

convicted.   Christopher was, as noted, convicted on eleven counts

of wire fraud under § 1343 and ten counts of interstate

transportation of stolen goods under § 2314.   Christopher argues

that the Cleveland decision invalidates his conviction because he

                                 9
was convicted on the grounds that he deprived state regulators of

their property interest in issuing regulatory approvals.

However, an examination of the indictment and the jury charge

reveals that Christopher’s crimes went far beyond the fraudulent

procurement of regulatory approvals.

     While the indictment does charge Christopher with defrauding

the state regulators, the indictment also contains multiple

allegations that Christopher and Reeder misappropriated money

from the insurance companies and their policyholders.   For

example, Paragraph 34 charges that:

     The DEFENDANTS defrauded American Universal, Canadian
     Universal [another insurance company], Diamond Benefits,
     and their policyholders and the holders and beneficiaries
     of the annuity contracts by false and fraudulent
     pretenses,   representations,    and  promises   and   by
     converting, taking by fraud, and misappropriating to
     their own use and benefit moneys belonging to American
     Universal and Diamond Benefits.

Similarly, other paragraphs of the indictment charge the

defendants with transferring approximately $18 million owed to

Diamond into the defendants’ bank account (¶ 36) and using

approximately $29 million in monies taken from American and

Diamond for personal benefits, to pay off liens on personal real

estate, and other purposes “unrelated to the business” of

American and Diamond (¶ 37).   The indictment nowhere defines

“property” under the wire fraud statute to include state

regulatory approval.   Thus, even assuming that the taking of the

regulatory approvals no longer satisfies the statutory definition

                                10
of “property”, the indictment contained sufficient charges for

which Christopher could have been convicted “for obtaining money

or property by means of false or fraudulent pretenses.”   Unlike

the defendant in Cleveland who was charged under the wire fraud

statutes solely with the fraudulent acquisition of regulatory

licenses, Christopher was charged with fraud both in acquiring

the licenses and in looting the insurance companies of their

assets.

     In addition, the jury charge did not instruct the jury that

regulatory approval constituted a property interest within the

meaning of the statute.   In fact, the jury charge makes only two

references at all to the regulatory licenses:

     The Defendant denies these allegations and has pleaded
     not guilty claiming that there was no scheme to defraud.
     That he made full disclosure to all the regulatory
     agencies.

          . . .

     You have heard evidence about various insurance
     regulatory orders.     The violation of an insurance
     regulatory order is not itself a crime. However, you may
     consider all evidence or lack of evidence of such a
     violation in determining whether the Defendant committed
     the offenses charge[d] in the indictment.

When informing the jury of the nature of the charges brought

against Christopher under § 1343, the district court

characterized them as follows:

     In Count One the Government contends that beginning in or
     about November of 1987 and continuing to in or about
     September 1988 in the District of Rhode Island and
     elsewhere the Defendant knowingly, willfully and
     unlawfully devised a scheme to obtain money by false

                                 11
     pretenses . . . in violation of Title 18 United States
     Code Section 1343.

     Counts Two through Eleven also allege that beginning in
     or about November of 1987 and continuing to in or about
     September 1988 in the District of Rhode Island and
     elsewhere the Defendant knowingly, willfully and
     unlawfully devised a scheme to obtain money by false
     pretenses . . . all in violation of Title 18 United
     States Code Section 1343.

Thus, as the magistrate judge correctly noted, the jury charge

refers to Christopher’s acts as a scheme to obtain money, not

property.

     Further, the court did not instruct the jury that they must

find that Christopher defrauded the regulatory bodies in order to

convict him on the wire fraud counts.   The court explained the

statutory language of § 1343 to the jury by telling them that, in

order for the jury to find Christopher guilty, the government

must have proven:

     [t]hat the Defendant knowingly devised or knowingly
     participated in a scheme or artifice to defraud; and
     second, that the Defendant did so with the specific
     intent to defraud and, third, in furtherance of the
     scheme or artifice to defraud the Defendant knowingly
     transmitted or caused to be transmitted in interstate
     commerce a wire transfer or money.

Therefore, even in light of Cleveland, the jury charge in this

case did not instruct the jury on a legally deficient theory of

liability.

     Christopher argues that, because the jury returned only a

general verdict on the counts, there is no way to know whether

they based their guilty verdict upon a finding that the

                               12
defendants defrauded the insurance companies out of money or that

the defendants defrauded the state regulators out of their (now

defunct) property interests in the regulatory approvals.     We

dealt with a similar situation in United States v. Saks, 964 F.2d
1514 (5th Cir. 1992).    In that case, the defendants were

convicted of bank fraud under 18 U.S.C. § 1344, and the district

court explained in the jury charge that § 1344 could include a

scheme or artifice to defraud others out of either “something of

value such as money” or of the “intangible right to honest

services.”     Id. at 1520.   When the Supreme Court later held that

the mail fraud statutes did not cover intangible rights, United

States v. McNally, 483 U.S. 350 (1987), the defendants argued

that their convictions had to be vacated because the jury

received a legally deficient charge.

     We found any error in the jury charge to be harmless,

concluding that “the ‘bottom line’ of the scheme or artifice had

the inevitable result of effecting monetary or property losses.”

Id. at 1521.    In other words, the erroneous instruction was

harmless beyond a reasonable doubt because, “given the factual

circumstances of the case, the jury could not have found the

defendant guilty without making the proper factual finding as to

that element” of the crime.      Id. (quotation omitted).

     Applying the same analysis to this case, we conclude that

Christopher’s challenge under § 2241 fails.     For one thing,

unlike in Saks, the jury charge here did not contain a legally

                                   13
deficient instruction on the law.      Additionally, even if the jury

were to have found that Christopher’s scheme started with

defrauding regulators out of regulatory approvals, the indictment

alleged and the evidence at trial demonstrated that the “bottom

line” of the scheme was to defraud the insurance companies of

their assets.     The fraudulent acquisition of regulatory approvals

was merely incidental to the broader purpose of the scheme –

defrauding the insurance companies and their policyholders out of

millions of dollars.

     Because this action unquestionably violates the wire fraud

statute, Christopher has failed to prove that he was actually

innocent of the crimes with which he was charged and convicted.

Accordingly, Christopher is not entitled to use the savings

clause of § 2255 to challenge his underlying conviction by

petitioning under § 2241.    He has failed to demonstrate that

§ 2255 was inadequate or ineffective to test the legality of his

detention.

III. CONCLUSION

     We VACATE the judgment of the district court and REMAND with

instructions to DISMISS Christopher’s § 2241 petition for lack of

jurisdiction.

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