Tuesday, October 27, 2009

Conspiracy Theories - Issue Preclusion #1

I picked up this relatively new case, United States v. Thyfault, 579 F.3d 748 (7th Cir. 2009), decided August 26, 2009 dealing with issue preclusion from a not guilty verdict. Thyfault may be read or downloaded here. Of course, everyone knows that a defendant found not guilty cannot be retried on the specific charge. But, can the defendant be retried on a related count for which the jury hung? I shall return to that issue is discussing the Rigas case in a later blog. The Rigas case may be read or downloaded here.

In the opening paragraph of Thyfault, Judge Bauer summarizes the facts to set up the issue as follows:
On November 4, 2004, a multi-count superceding indictment charged Michael Thyfault and other individuals with multiple mail fraud and tax evasion offenses. The indictment accused the defendants of being the prime movers in a major scheme to defraud Intercounty Title Company of Illinois ("Inter-county") and related entities. The scheme involved theft and mismanagement of Intercounty's escrow funds over a ten-year period, during which time Intercounty's deficits were covered by thefts from its escrow account. Thyfault was charged with one count of conspiracy to commit mail fraud and four counts of mail fraud. The jury acquitted Thyfault on the conspiracy count, but was unable to reach a verdict on the mail fraud counts. The government then sought to retry Thyfault on the mail fraud counts; Thyfault moved to dismiss the charges on the basis of issue preclusion, arguing that his conspiracy acquittal precluded the government from attempting to prove his intent to defraud, an element of the mail fraud charges. The district court agreed and granted the motion. The government brings this appeal, contending that the district court erred in granting Thyfault's motion because a rational jury could well have found that Thyfault intended to violate the law, but not in agreement with others as charged in the conspiracy. We reverse.
The court reached its conclusion in the following steps:

1. It determined the legal background by reference to its three rules governing issue preclusion:
This court has identified three rules governing the application of issue preclusion in criminal cases: (1) the court should not apply the rules of issue preclusion in a hypertechnical manner, but rather, should examine the pleadings, evidence, charges and other relevant material to determine whether a rational jury could have based its verdict on another issue; (2) issue preclusion only applies when a relevant issue in a subsequent prosecution is an "ultimate issue," meaning an issue that must be proven beyond a reasonable doubt; and (3) the defendant bears the burden of proving that the prior jury necessarily determined the "ultimate issue." Id.
2. The court then looked to the elements of conspiracy and the elements of wire fraud to see whether there was a common element that the jury was the basis for the jury verdict. The problem, of course, is that jury verdicts in criminal cases are single up or down pronouncements -- guilty or not guilty. The jury does not explain which elements of the crime that it found present or absent. The district judge believed that the jury's acquittal on the conspiracy charge was based upon a conclusion that the defendant had no intent to defraud, which is an element of the wire fraud charge, thus precluding that issue. The district judge, of course, had heard the whole proceeding and witnessed the jury's reactions, so he was best situated to infer what the jury's verdict was. But he was not in the jury room, so even the district judge cannot know the basis for the jury verdict.

3. Guided by the analysis in Yeager v. United States, 129 S. Ct. 2360 (2009) to ignore the hung counts, the Seventh Circuit panel took a strict elements of the crime approach and found that the jury could have acquitted on the conspiracy charge by finding that, although the defendant had the intent to defraud, he did not join in any agreement to do so. Under this construction, the jury's verdict of acquittal on the conspiracy charged would not mean that it had found that the defendant had no intent to defraud (the common element). And, since the jury did not state the basis for its acquittal, it must be presumed for issue preclusion purposes that it acquitted on the noncommon element -- the agreement element -- of the conspiracy charge. The Court's reasoning is short and straightforward on the elements test, so I quote it here:
Reviewing the jury's verdict and the evidence at trial, one possibility is that the jury concluded that although a conspiracy to commit mail fraud existed, the government failed to prove that Thyfault acted with intent to further the conspiracy to defraud. This is the determination that the district court reached and the one that Thyfault urges us to affirm.

We agree with the government that other plausible possibilities exist. For instance, it is certainly possible that the jury concluded that the government failed to prove Thyfault had joined the agreement, and as such, did not reach the issue of whether he acted with intent to further its underlying purpose, the scheme to defraud Intercounty. 

Thyfault bears the burden of demonstrating that the acquittals in the first trial necessarily decided in his favor an issue that would ultimately be required to convict him in the second. Salerno, 108 F. 3d at 741. We believe he has failed to do so. To obtain a conviction for mail fraud, the government would have to prove beyond a reasonable doubt Thyfault's intent to defraud; but, we are unpersuaded that this element was decided against the government when Thyfault was acquitted of conspiracy. 

Thyfault argues that the issue of whether he knowingly became a member of the conspiracy is inextricably linked with that of whether he acted with intent to advance its ends because of the manner in which the government presented its evidence at trial. It is true, as Thyfault claims, that the government argued at trial that the same evidence would prove Thyfault's guilt concerning both the conspiracy and mail fraud counts because that evidence would prove that Thyfault knowingly joined the scheme to defraud and did so with the intent to accomplish its objectives. However, the central inquiry here is not whether the government's theory of the case as presented at trial continues to hold water, but whether a rational jury could have based its acquittal on an issue other than the one Thyfault seeks to foreclose from consideration. We believe it could have.

Given the distinction between the crime of conspiracy, which requires an agreement to commit an illegal act, and the crime of engaging in a fraudulent scheme, which does not, the jury could have acquitted Thyfault of the conspiracy for reasons other than a determination in his favor on the element shared in common with the mail fraud charge: an intent to defraud. 

Thus, because nothing about Thyfault's conspiracy acquittal leads to the conclusion that the jury necessarily determined that he did not act with an intent to defraud, issue preclusion does not bar the government from trying Thyfault on the mail fraud charge.

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