Court Opinion

ID: 4359904
Source: CourtListenerOpinion
Date Created: 2019-01-17 21:00:12.796054+00
Date Added: 2024-06-11T11:48:54.365877
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 18-1358

                    UNITED STATES OF AMERICA,

                            Appellee,

                                v.

                      JUAN BRAVO-FERNÁNDEZ,

                      Defendant, Appellant.
                       ____________________

No. 18-1370

                    UNITED STATES OF AMERICA,

                            Appellee,

                                v.

                    HÉCTOR MARTÍNEZ-MALDONADO,

                      Defendant, Appellant.

          APPEALS FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

         [Hon. Francisco A. Besosa, U.S. District Judge]

                              Before

                       Howard, Chief Judge,
              Torruella and Kayatta, Circuit Judges.

     Martin G. Weinberg, with whom Kimberly Homan, were on brief,
for appellant Bravo-Fernández.
     Abbe David Lowell, with whom Christopher D. Man and Winston
& Strawn LLP were on brief, for appellant Martínez-Maldonado.
     Vijay Shanker, U.S. Department of Justice, Criminal Division,
Appellate Section, with whom Brian A. Benczkowski, Assistant
Attorney General, Matthew S. Miner, Deputy Assistant Attorney
General, Peter M. Koski, Public Integrity Section, and Gwendolyn
Amelia Stamper, Public Integrity Section, were on brief, for
appellee.

                        January 17, 2019

                               -2-
          TORRUELLA, Circuit Judge.             Because everything old is new

again, 1 Defendants   Juan   Bravo-Fernández           ("Bravo")     and    Héctor

Martínez-Maldonado ("Martínez") come before us for a third time.

See United States v. Bravo-Fernández, 790 F.3d 41 (1st Cir. 2015);

United States v. Fernández, 722 F.3d 1 (1st Cir. 2013).                    In this

appeal, they seek to overturn their 2017 convictions for federal

program bribery under 18 U.S.C. § 666, arguing primarily that

evidence stipulated to early in the proceedings was insufficient

to convict.

          Among the elements of § 666, the government was required

to establish that the entity Martínez represented as an agent, in

this case the Commonwealth of Puerto Rico, received at least

$10,000 in federal "benefits" within the meaning of that statute.

The government did not meet this burden.                Accordingly, we must

reverse defendants' convictions for federal program bribery.

                                     I.

          The   pertinent    facts    and        procedural     background     are

examined in detail in Bravo-Fernández, 790 F.3d at 43-45, and

Fernández, 722 F.3d at 6-8, for which we only sketch a high-level

overview of that account here.

1   Peter Allen, Everything Old            Is    New   Again,   in   Continental
American (A&M Records 1974).

                                     -3-
             This case traces its origin to 2010, when Bravo and

Martínez were charged with federal program bribery in violation of

§ 666, among other things.       The charges stemmed from payments that

Bravo made in 2005 involving a trip to Las Vegas to which he

invited Martínez, then a Puerto Rico senator.            According to the

government, Bravo used the trip to bribe Martínez in exchange for

his support of pending legislation that would have favored Bravo's

business, Ranger American, a local security company.

             Bravo and Martínez were first tried and found guilty of

federal program bribery in 2011, an outcome which they successfully

challenged before this court.        See Fernández, 722 F.3d at 6, 39.

In that initial appeal, we ruled that § 666 only criminalizes

bribery, not gratuities, and that the evidence presented at trial,

together with the jury instructions, could have led the jury to

improperly convict on either a "bribery" or "gratuity" theory.

Id. 16-17, 23-26.       Because it was insufficiently clear to discern

which theory the jury relied on to reach its verdict, we vacated

defendants' convictions on the § 666 counts and remanded for

potential re-prosecution.       Id. at 26-28, 39.

             On remand, Bravo and Martínez moved for judgment of

acquittal,    arguing    that   double   jeopardy   barred   their   renewed

prosecution.     Bravo-Fernández, 790 F.3d at 43, 49.         The district

court rejected this contention, after which defendants sought

                                    -4-
refuge before our court once again.           Id. at 43.     This time,

however, defendants' appeal was unsuccessful and we affirmed the

district court's decision on the double jeopardy issue.              Id.

Defendants' further appellate endeavor before the Supreme Court

reached a similar result.     See Bravo-Fernández v. United States,

137 S. Ct. 352 (2016).

          Bravo and Martínez faced their second trial in May 2017,

and once again a jury found them guilty of federal program bribery

under § 666.    Those proceedings devolved into the instant appeal,

the latest stage in this case's arduous journey.

                                 II.

          We are able to reduce the several questions that have

been raised before us2 to the only one that merits our decisional

attention and mandates the outcome of this appeal: Whether the

government     introduced   evidence   at    trial   to    satisfy   the

jurisdictional element under 18 U.S.C. § 666(b) that the government

entity involved received "benefits in excess of $10,000 under a

Federal program." (emphasis added).         Where, as here, defendants

have preserved a sufficiency challenge, we review de novo a

2  Defendants also challenge, among other things, the sufficiency
of the evidence other than that presented to satisfy the
jurisdictional element, the propriety of the jury instructions,
some of the district court's evidentiary rulings, and their
sentences. Our decision on the sufficiency issue makes it
unnecessary to reach the merits of such challenges.

                                 -5-
district court's denial of their motion for judgment of acquittal.

United States v. Acevedo-Hernández, 898 F.3d 150, 161 (1st Cir.

2018).

            To maintain a conviction for federal program bribery,

the government must prove beyond a reasonable doubt that the party

receiving the bribe was an agent of an entity that "receives, in

any one year period, benefits in excess of $10,000 under a Federal

program involving a grant, contract, subsidy, loan, guarantee,

insurance, or other form of Federal assistance."                       18 U.S.C.

§ 666(b).       This   requirement     is   often        referred   to    as   the

"jurisdictional element" of § 666.             See, e.g., United States v.

McLean, 802 F.3d 1228, 1240 (11th Cir. 2015).              And not all federal

funds constitute "benefits" under the statute.                  See Fischer v.

United States, 529 U.S. 667, 681 (2000) ("Any receipt of federal

funds can, at some level of generality, be characterized as a

benefit.    The statute does not employ this broad, almost limitless

use of the term."); see also United States v. Dubón-Otero, 292
F.3d 1, 7 n.7 (1st Cir. 2002) (acknowledging that there exists

"compensation    of    the   type   excluded    by   §    666   (c)"     including

salaries, wages and expenses paid in the usual course of business).

In Fischer, the Supreme Court explained that only federal monies

that     "promote[]    well-being,"    such     as   those      which      provide

individuals with "financial help in time of sickness, old age, or

                                      -6-
unemployment," may qualify as "benefits."                Fischer, 529 U.S. at

677   (citing    Webster's      Third   New   International     Dictionary      204

(1971)).     Critically, "[t]o determine whether an organization

participating in a federal assistance program receives 'benefits,'

an examination must be undertaken of the program's structure,

operation, and purpose."             Id. at 681.     The government has the

burden of producing adequate evidence for this examination to

occur.

           In resolving if the § 666(b) jurisdictional element was

satisfied, we find it instructive to begin by comparing the

evidence that the government offered on this key element during

the 2011 trial with that it presented in the 2017 proceedings

leading to this appeal.

           At defendants' first trial, the government introduced

evidence     specifically       tailored      to   establishing      the    §    666

jurisdictional       requirement.       An    employee   of    the   Puerto     Rico

Treasury Department testified for the government that "the Senate

of Puerto Rico childcare program (known as the Food Program for

the Care of Children and Adults) receive[d] funding from the

Government      of   the    United   States."      United     States   v.   Bravo-

Fernández, 828 F. Supp. 2d 441, 455 (D.P.R. 2011), rev'd in part,

vacated in part sub nom. United States v. Fernández, 722 F.3d 1

(1st Cir. 2013).           The witness further averred, with the support

                                        -7-
of documentation also admitted into evidence, that the Puerto Rico

Senate annually received around $20,000 in federal funds for the

childcare program during the relevant period.                 Id. at 456.     This

provided the basis for the district court to conclude in its

resolution of the Rule 29 motion for judgment of acquittal that

"[t]he federal assistance received by the Senate of Puerto Rico

for [its] childcare program clearly qualifies as a 'benefit'

provided under a federal program" for purposes of § 666(b).                   Id.

              In contrast, the record of the second trial is barren of

evidence showing disbursement of federal "benefits" to the Senate

of Puerto Rico or even to the Commonwealth as a whole.                      All we

have is a stipulation the parties accorded prior to trial providing

that "in fiscal year 2005[,] the Commonwealth of Puerto Rico

received more than $10,000 in federal funding.                Specifically, from

October 1, 2004, to September 30, 2005, the Commonwealth of Puerto

Rico received over $4.7 billion in federal funds." (emphasis added)

Later,   on    the   first   day   of   trial   during    a    conference    about

preliminary jury instructions, the district judge asked counsel

whether this stipulation allowed him to inform jurors that the

§ 666 jurisdictional element had been met.               Counsel for defendant

Martínez responded that the court should not instruct so because

"the . . . law . . . doesn't equate funds with benefits, and the

statute says benefits. . . . We have stipulated to the amount of

                                        -8-
money,   but   not    that      [the   jurisdictional]     element     has    been

satisfied."    Incredibly, this clear warning of things to come went

unattended and the government proceeded to present its case in

chief without introducing any evidence to cover this gaping hole

in its case.

           Following the close of the government's case, defendants

made a Rule 29 motion for a verdict of acquittal in which they

specifically argued that the government failed to establish the

existence of $10,000 in benefits under a federal program.                     The

district   court     denied     this   motion    without   explanation.         In

charging the jury, the district court stated that § 666 only

required jurors to find that the Commonwealth received federal

"funds of more than $10,000."            No instruction was given on what

constitutes a benefit, and the word "benefits" does not appear

even once throughout the instructions.                 Counsel for defendant

Martínez   objected        to   the    instruction's    language,      but    that

objection was summarily overruled by the district court.

           Given     the    foregoing,     and   in   keeping   with    our    own

precedent and that of the Supreme Court, we can only conclude that

the government failed to meet its burden of establishing that the

entity Martínez represented as an agent received the amount of

benefits required under § 666(b).             The government's arguments to

the contrary are futile.

                                        -9-
            First, the government directs us to a paragraph in our

2013 opinion in Fernández, which examined defendants' 2011 trial

and noted that:

       [D]uring 2005 -- the year of the charged conduct -- the
       Commonwealth received over $4.7 billion in federal
       funds. Because Martínez . . . [is an] agent[] of the
       Commonwealth, the evidence was sufficient to show that
       [he is an] agent[] of a "government . . . [that]
       receives, in any one year period, benefits in excess
       of $10,000 under a Federal program."
722 F.3d at 9 (quoting 18 U.S.C. § 666(b)).               This statement that

the jurisdictional element was satisfied in defendants' first

trial, the government purports, should also control here because

of   the   law   of   the    case   doctrine,   which    "bars   a   party   from

resurrecting issues that either were, or could have been, decided

on an earlier appeal."         United States v. Matthews, 643 F.3d 9, 12-

13 (1st Cir. 2011) (citation omitted).                  But our statement in

Fernández is not dispositive as it was neither essential to our

holding there nor could the issue now before us have been decided

in that initial appeal.         Contrary to what the government contends,

defendants did not argue about the funds-benefits distinction in

their first appeal.         See Brief for Appellant Bravo at 25-27, United

States v. Fernández, 722 F.3d 1 (1st Cir. 2013)(No. 12-1289); Brief

for Appellant Martínez at 25-28, United States v. Fernández, 722
F.3d 1 (1st Cir. 2013)(No. 12-1290).             And they had no reason to

do so because, as explained above, the government introduced

                                       -10-
specific evidence at that first trial to establish the existence

of the requisite amount of federal benefits.           The issue before us

in   that   case   was   whether    Martínez     was   an   "agent"   of    the

Commonwealth, not whether "benefits" as used in the statute were

received.     Thus, the statement from Fernández the government

relies on is nothing but dicta that "lack[s] any binding or

preclusive effect."      Sexual Minorities Uganda v. Lively, 899 F.3d
24, 29 (1st Cir. 2018).

            Second, the government contends that both the Supreme

Court in Fischer and our decision in Dubón-Otero, 292 F.3d at 4,

command an inquiry into the nature of federal funds to determine

if they are benefits under § 666 only when the payments are

disbursed "indirectly" to the receiving entity.             This argument is

also without merit.      In fact, the one reference we made in Dubón-

Otero to the distinction between entities that receive payments

directly from the federal government and those that do not was

that "[i]t makes no difference [whether an agency] received this

money indirectly.    It is now well established that benefits under

§ 666 are not limited solely to primary target recipients or

beneficiaries." 292 F.3d at 9 (citing United States v. Fischer,

168 F.3d 1273, 1278 (11th Cir. 1999) ("[T]he plain language of

§ 666(b) does not distinguish between an organization . . . that

receives    'benefits'   directly    under   a   federal    program   and   an

                                    -11-
organization . . . that receives 'benefits' as an assignee under

a federal program.")).       Indisputably, this language affords no

credit to the government's theory.         Moreover, the reach of Fischer

is not limited to only those cases involving indirect receipt of

federal monies.     To the contrary, the Supreme Court's reasoning

in Fischer, particularly its concern for the proper federal balance

in this type of case, is by its very nature generally applicable.

See Fischer, 529 U.S. at 681.

          In a final attempt to save a sinking ship, the government

asserts that the stipulation specifying the amount of federal funds

received by the Commonwealth was sufficient to satisfy the § 666

jurisdictional element.      The government takes the position that a

"jury, exercising common sense and relying on general knowledge,

can   reasonably     infer   that    the    federal   funds   constituted

'benefits.'"    It is tempting to agree with the government here.

As judges who hear cases arising out of federal benefit programs

and who are familiar with how such programs are funded, we are

certain that there are federal benefit programs that provide far

more than $10,000 to the Commonwealth and its instrumentalities.

The question remains, however, whether those programs are funded

by the $4.7 billion in federal funds that go directly to the

Commonwealth.      Perhaps the federal benefit programs enjoyed in

Puerto Rico are financed through other federal monies, leaving the

                                    -12-
$4.7 billion to be spent on infrastructure, salaries, and other

expenditures that may or may not constitute "benefits" under

Fischer?     In any event, we see nothing in the record that tells

us whether any juror would certainly know the answer to these

questions, nor did the government secure a stipulation supplying

such answers.

             It is unclear, too, where we would stop if we accept the

government's invitation to rely on jurors' knowledge of federal

funding to fill gaps in the government's proof.                Suppose the

government puts in no evidence about any federal funds at all.

Could jurors simply fill-in the gap based on their "common sense"

and "general knowledge" that large amounts of federal funds are

sent to the Commonwealth government each year?

             Under    the   government's   approach,   the   jurisdictional

element in many federal criminal cases could be satisfied by

similar reliance on jurors' extra-record knowledge.           For example,

one could claim that any juror would know that all banks are

engaged in, or at least affect, interstate commerce, or that a

bank is likely FDIC insured.        Yet, the failure to offer any actual

proof   of    these    relatively   obvious   jurisdictional    facts   has

repeatedly proved fatal to criminal prosecutions.               See United

States v. Leslie, 103 F.3d 1093, 1102-3 (2d Cir. 1997) (reversing

conviction because government "did not provide even the slenderest

                                    -13-
of     threads"   upon     which      to     hang   the   interstate    commerce

jurisdictional element); United States v. Sliker, 751 F.2d 477,

484 (2d Cir. 1984) (affirming conviction based on oral testimony

of FDIC-insured status, but warning the government of failure to

"ask the simple question that would avoid the need for judicial

consideration of what should be a non-problem"); see also United

States v. Davis, 726 F.3d 357, 366-7 (2d Cir. 2013) (holding that

the government had failed to meet its burden by assuming that a

federal installation on federal land automatically came within

federal jurisdiction, but affirming after taking judicial notice

of the fact at the government's behest).

              We have considered the Third Circuit's recent decision

in United States v. Willis, 844 F.3d 155 (3d Cir. 2016), in which

the government relied on proof that the Government of the Virgin

Islands received $150 million in federal funds.               The Willis court

took a different route than that urged by the government in this

case.     Rather than relying on juror common sense, the court in

Willis held that federal funds paid to a territorial government

were a benefit to that government because they "significantly

supported the government." Id. at 168.              We do not see, though, how

that type of financial support to a local government equates to a

"benefit" of the type required by Fischer.                As in this case, it

does    not   appear     that   any    federal      program   was   specifically

                                           -14-
identified in Willis, prohibiting the ability to determine, under

Fischer's "benefits" analysis, whether the funds received by the

Government of the Virgin Islands were used for such promotion of

well-being.

            Despite its insistence that the Fischer analysis need

only be applied if it is "difficult" to determine whether the

federal payments were benefits, the government seems blind to the

fact that without reference to a specific federal program it is

not only difficult but impossible to make such a determination.

Again,   the    stipulation    entered     between        the    parties     made   no

reference to "benefits" or, for that matter, to any federal

program.        The   stipulation   also    did     not    provide        information

regarding the intended or actual use of any portion of the $4.7

billion in federal funds.       It only provided that the "Commonwealth

of Puerto Rico received over $4.7 billion in federal funds" during

the relevant time period.           Concluding that such a stipulation

sufficed to satisfy the jurisdictional element would counter the

plain language of § 666(b) requiring proof that the government

entity involved received "benefits in excess of $10,000 under a

Federal program."         It would also contravene the government's

burden     to   put   forth   evidence      about    the        federal     program's

"structure, operation, and purpose" in order to make ascertainable

whether an entity received "benefits" under § 666(b).                        Fischer,

                                     -15-
529 U.S. at 681.     Most of our sister circuits to have addressed

this issue agree.3   To hold otherwise and conclude that any receipt

of federal funds is enough to satisfy the jurisdictional element

would transmute § 666 into the general bribery statute that the

Fischer court warned against and "upset[] the proper federal

balance."   Id.

                                III.

            For the reasons explained above, we conclude that the

government failed to establish an essential element of the crime

it charged defendants with.     We need not go further and hereby

reverse Bravo's and Martínez's § 666 convictions.     We direct the

district court to enter a judgment of acquittal on both charges.

3  See, e.g., United States v. Paixao, 885 F.3d 1203, 1206 (9th
Cir. 2018) ("[N]ot all payments under federal programs qualify as
'benefits' . . . . [T]he inquiry turns on the attributes of the
federal program[.]") (citation omitted); United States v. Pinson,
860 F.3d 152, 166 (4th Cir. 2017) ("Because any receipt of federal
funds could 'at some level of generality' be characterized as a
benefit, . . . the Court provided guidelines to distinguish between
covered federal payments ('benefits') and non-covered payments.");
United States v. McLean, 802 F.3d 1228, 1237 (11th Cir. 2015)
("[T]he government must prove beyond a reasonable doubt that the
individual worked for an entit[y] which receive[d] . . . funds
. . . in connection with programs defined by a sufficiently
comprehensive structure, operation, and purpose to merit
characterization of the funds as benefits under § 666(b)."
(citation and internal quotation marks omitted)); United States v.
Zyskind, 118 F.3d 113, 115 (2d. Cir. 1997) ("[T]here must exist a
specific statutory scheme authorizing the Federal assistance in
order to promote or achieve certain policy objectives.") (quoting
S. Rep. No. 98-225, at 370 (1983)).

                                -16-