Monday, November 13, 2017

Fifth Circuit on Bruton Confrontation Clause Issue and Deliberate Ignorance / Willful Blindness Issue (11/13/17)

In United States v. Gibson, ___ F.3d ___, 2017 U.S. App. LEXIS 22261 (5th Cir. 2017), here, a nontax case, the Court hit some themes that I have discussed before in tax cases.  In this regard, as readers know, tax crimes are merely one subset of white collar crimes.  See e.g., Geraldine Szott Moohr, Tax Evasion as White Collar Fraud, 9 Hous. Bus. & Tax Law J. 207 (2009), here.  That is why experienced white collar crimes lawyers can try criminal tax cases, even learning a little tax law along the way.  And, it works vice-versa as well.

The opinion starts off with a good summary of the issues presented (footnote omitted, but it is not Shakespeare):
"The trouble with conspiracies is that they rot internally." According to the government's cooperating witnesses, the appellants—Earnest Gibson, III (Gibson III) and his son, Earnest Gibson, IV (Gibson IV)—participated in three: one to defraud Medicare, another to pay unlawful kickbacks, and a third to launder money. A jury convicted the Gibsons for each, plus several substantive kickback counts. On appeal, the Gibsons advance sufficiency challenges and assert that the health care fraud and money laundering conspiracies merged. For his part, Gibson III argues that the district court infringed his constitutional rights by limiting one of his cross-examinations and by admitting a co-conspirator's confession, in violation of the Bruton doctrine. He also faults the trial court for giving the jury "deliberate ignorance" instructions on charges requiring specific intent. In turn, Gibson IV posits that the district court imposed too much restitution. Both appellants also invoke the cumulative error doctrine, claiming that the trial court's alleged mistakes infected the verdict. We find no reversible error and thus affirm.
The Bruton Holding:

The Bruton holding is complete, so I just cut and paste:
The Bruton doctrine addresses the thorny Sixth Amendment problem where one defendant confesses out of court and incriminates a co-defendant without testifying at their joint trial. In its landmark opinion, the Bruton Court reversed a defendant's postal robbery conviction, see 18 U.S.C. § 2114, on Confrontation Clause grounds where his non-testifying co-defendant had made "powerfully incriminating" statements against the defendant in a pretrial confession, 391 U.S. at 135-36. At trial, a postal inspector testified that the declarant twice confessed—once to say that both the declarant and the defendant committed the robbery, and again to admit to having an "an accomplice he would not name[.]" Id. at 124. Though the trial judge instructed the jury to consider the confessions against only the declarant, the Supreme Court reversed the conviction because there was a "substantial risk that the jury, despite instructions to the contrary, looked to the incriminating extrajudicial statements in determining petitioner's guilt[.]" Id. at 126.
Nearly twenty years later the Supreme Court clarified. Bruton, the Court wrote, was a "narrow exception," one that did not preclude a trial court from admitting a confession that (1) had been redacted, (2) "was not incriminating on its face," and (3) "became [incriminating] only when linked with evidence introduced later at trial (the defendant's own testimony)." Richardson v. Marsh, 481 U.S. 200, 207-08, 107 S. Ct. 1702, 95 L. Ed. 2d 176 (1987). Eleven years passed before the Supreme Court again refined its Bruton rule. This time, in another redacted-confession case, the Court noted that "Richardson must depend in significant part upon the kind of, not the simple fact of, inference." Gray v. Maryland, 523 U.S. 185, 196, 118 S. Ct. 1151, 140 L. Ed. 2d 294 (1998). Gray held that a redacted confession was "facially incriminat[ing]" and offended Bruton if it included "statements that, despite redaction, obviously refer directly to someone, often obviously the defendant, and which involve inferences that a jury ordinarily could make immediately, even were the confession the very first item introduced at trial." Id. In finding a Bruton violation in Gray's trial, the Supreme Court also emphasized that the redacted confession had a "blank prominent on its face[.]" Id. 
The Gibsons' case is closer to Richardson than it is to Gray or Bruton. At trial, the government called an FBI agent who testified that the Bureau twice interviewed the Gibsons' co-defendant, a patient recruiter and file auditor. According to the FBI agent, the co-defendant admitted that Riverside paid personal care homeowners to bring patients to Riverside, and that the co-defendant herself received checks from Riverside for patients who attended the hospital's PHPs. Those statements do not include a facial or "obvious" reference to Gibson III, Gray, 523 U.S. at 196, nor are they "powerfully incriminating," Bruton, 391 U.S. at 135. They do not mention Gibson III at all; the confession identifies instead the Riverside Hospital system as a whole. The jury would still need to make several inferential leaps to conclude that Gibson III, as opposed to a host of other hospital workers, was behind the kickbacks. The testimony therefore did not run afoul of Bruton
Our recent opinion in United States v. Nanda, 867 F.3d 522 (5th Cir. 2017) confirms our conclusion. There, like here, multiple defendants faced fraud conspiracy charges.12 Id. at 526. There, like here, the defendants owned and operated an entity that made false representations to federal programs. Id. at 525-26. There, like here, one defendant confessed by accusing the entity of wrongdoing, without identifying specific individuals. Id. at 526-27. And there, like here, the non-confessing defendant argued that Bruton applied because "the reference to [the entity] was in effect a direct allusion to [the co-defendant] personally." Id. at 527. We rebuffed that argument in Nanda because the confessor's reference to the entity—there, a company called "Dibon"—did not "directly allude" to the objecting defendant, even if "the Government repeatedly stressed that [the co-defendants] were the central figures in Dibon's operation." Id. Rather, we found that "there were a number of other Dibon employees involved" in the unlawful scheme, so the confession "could have referred to any of them." Id. at 527-28. One need only substitute "Dibon" with "Riverside" to see how Nanda's logic and holding obtain here.
   n12 The crime at issue in Nanda was visa fraud in violation of 18 U.S.C. §§ 371 and 1546(a). See 867 F.3d at 526. 
Presented with nearly identical facts with those in Nanda, we follow that case's lead. There was no Bruton violation here.
The Deliberate Ignorance Instruction

Again I cut and paste, but do have some comments at the end:
"A deliberate ignorance instruction informs the jury that 'it may consider evidence of the defendant's charade of ignorance as circumstantial proof of guilty knowledge.'" United States v. Brown, 871 F.3d 352, 355 (5th Cir. 2017) (quoting United States v. Nguyen, 493 F.3d 613, 618 (5th Cir. 2007)). Before turning to the merits, we must reemphasize that deliberate ignorance instructions should "rarely be given." Id. 356 (quoting United States v. Kuhrt, 788 F.3d 403, 417 (5th Cir. 2015)). But in some cases it is appropriate. This is one such case. 
Gibson III's first salvo is that the evidence did not justify the jury instruction. "[A] deliberate indifference instruction is warranted when a defendant claims a lack of guilty knowledge and the proof at trial supports an inference of deliberate indifference." United States v. Brooks, 681 F.3d 678, 701 (5th Cir. 2012) (quotation marks omitted). Thus, "the evidence at trial must raise two inferences: (1) the defendant was subjectively aware of high probability of the existence of illegal conduct, and (2) the defendant purposely contrived to avoid learning of the illegal conduct." Id.; see also Brown, 871 F.3d at 355-56. 
This case meets both prongs. At trial, Gibson III maintained he lacked guilty knowledge on all counts. See Brown, 871 F.3d at 356 ("A deliberate ignorance instruction is intended for this situation in which Brown knew it was highly likely that something illegal was afoot, but tried looking the other way while reaping the benefits of the likely criminal activity."). And ample evidence showed that Gibson III was subjectively aware of high probability of illegal conduct and that he purposely contrived to avoid learning details of the illegal conduct. Consider Gibson III's PHP visits that would have revealed obvious Medicare violations, or his statements that he did not "want to know" how his son and recruiters were getting patients, or the compliance memos and audits crossing his desk. Gibson III's factual attack falters because there was plenty of evidence from which to infer that Gibson III was deliberately ignorant. n13
   n13 But even assuming, arguendo, the district court erred, the error was harmless. The same evidence of Gibson III's subjective awareness of a high risk of illegal conduct supports a reasonable inference that Gibson III actually knew of that conduct. See United States v. Wofford, 560 F.3d 341, 354 (5th Cir. 2009) ("The evidence supporting the inference that Wofford was subjectively aware that his conduct was unauthorized and illegal also supports the inference that he had actual knowledge."); United States v. Lara-Velasquez, 919 F.2d 946, 952 (5th Cir. 1990) ("[T]he same evidence that will raise an inference that the defendant had actual knowledge of the illegal conduct ordinarily will also raise the inference that the defendant was subjectively aware of a high probability of the existence of illegal conduct.").
We are similarly unconvinced by Gibson III's next two arguments—that the instruction lowered the government's burden and constructively amended the indictment. The former is a nonstarter. United States v. Vasquez, 677 F.3d 685, 696 (5th Cir. 2012) ("The deliberate ignorance instruction does not lessen the government's burden to show, beyond a reasonable doubt, that the knowledge elements of the crimes have been satisfied." (quotation marks omitted)). n14 As is the latter. The jury charge did not tinker with the indictment because the district court tracked almost verbatim the Fifth Circuit Pattern Instruction, which we have affirmed time and again as a correct statement of the law. Brooks, 681 F.3d at 702-03; see also Global-Tech Appliances v. SEB S.A., 563 U.S. 754, 769-70, 131 S. Ct. 2060, 179 L. Ed. 2d 1167 (2011); United States v. Hunter, 628 F. App'x 904, 906-07 (5th Cir. 2015) (per curiam). Equally telling is our repeated endorsement of deliberate ignorance instructions in fraud and conspiracy cases just like this one. See, e.g., Brown, 871 F.3d at 355-56; Sanjar, 853 F.3d at 207; Hunter, 628 F. App'x at 906-07. This sensible approach squares with our conception of deliberate ignorance instructions as informing a jury "that it may consider evidence of the defendant's charade of ignorance as circumstantial proof of guilty knowledge." Brown, 871 F.3d at 355 (quotation marks omitted). n15 Thus, the trial court did not err.
   n14 Gibson III also attacks the Pinkerton instruction, but offers no authority to explain how that instruction lowered the government's burden of proof. This argument is therefore forfeited. See United States v. Scroggins, 599 F.3d 433, 446-47 (5th Cir. 2010).
   Nevertheless, the argument would also fail on the merits. Charitably construed, Gibson III's brief can be read to argue that Pinkerton is inappropriate where the counts of conviction "incorporate[] a specific intent requirement far more stringent than mere foreseeability." United States v. Gonzales, 841 F.3d 339, 351 (5th Cir. 2016) (quotation marks omitted). That argument ignores our caselaw. See id. at 352-53 (affirming a murder conviction based on Pinkerton liability). We have consistently upheld convictions for conspiracy and specific-intent crimes (like Gibson III's) where the jury heard both Pinkerton and deliberate ignorance instructions. See, e.g., Sanjar, 853 F.3d at 208-09; Barson, 845 F.3d at 165.
   n15 In challenging the deliberate ignorance instruction, Gibson III relies primarily on this circuit's decision in United States v. Chen, 913 F.2d 183 (5th Cir. 1990). There, we found a deliberate ignorance instruction improper for a charge of "knowingly maintaining a place . . . for the purpose of distributing and using a controlled substance" in violation of 21 U.S.C. § 856(a)(1). Chen, 913 F.2d at 186 (quotation marks and alterations omitted). Although at first blush Chen seems to lend Gibson III support, Chen itself eschewed a blanket rule and apparently limited its holding to 21 U.S.C. § 856(a)(1). See 913 F.2d at 192 n.11 (rejecting the "argument that th[e deliberate ignorance] instruction should be limited to offenses which only proscribe knowing conduct"). And we have since confirmed that Chen is limited to § 856(a)(1). E.g., United States v. Scott, 159 F.3d 916, 923-24 & n.6 (5th Cir. 1998).
   Gibson III also relies on United States v. Kuhrt, a 2015 wire fraud and conspiracy case where this court quoted Chen in dicta. See 788 F.3d at 417 ("Undoubtedly, the deliberate ignorance instruction is 'inappropriate for an offense which requires a specific purpose by the defendant.'" (quoting Chen, 913 F.2d at 190)). But Kuhrt's holding did not offer Chen a strong lifeline. The Kuhrt court found there was only "arguabl[e] error" in giving a deliberate ignorance instruction where "[t]he government constructed its case on the premise that Appellants were criminally liable based upon their actual knowledge of the fraud and their efforts to further the fraud." Id. But then the opinion held that "[e]ven assuming arguendo that this was error," id., the "testimony that Appellants were actual participants in the illegal activity" rendered the potential error "harmless," id. at 418. Kuhrt, then, was far from a full-throated endorsement of Chen and did not extend that case beyond the § 856(a)(1) context. 
And even if it did, the evidence of Gibson III's actual knowledge rendered any error harmless. Kuhrt, 788 F.3d at 417 ("[T]he giving of the [deliberate ignorance] instruction is harmless where there is substantial evidence of actual knowledge."). In short, although the deliberate ignorance instruction should be infrequent, the district court spotted a proper case for it.
JAT Notes:

1.  I have railed often about the notion that the deliberate ignorance concept as a substitute for the knowledge element imposed by the statute defining the crime.  A fact finders finding of deliberate ignorance is not a substitute for the knowledge evidence but simply circumstantial evidence considered with all other evidence that the defendant had the requisite knowledge of the crime.  That is what the Court says in the opening quote paragraph.

2.  It does strike me as odd that a court would conclude that, because the evidence in its view, were substantial and, to it, persuasive, an erroneous deliberate ignorance instruction is harmless error.  It is the jury's job, not the court's (whether trial or appellate) to determine guilt on the basis of proper instructions.  In this case, the jury did not determine the statutorily required mens rea if the instruction was improperly given.

3.  I remind readers that the deliberate ignorance concept is stated in various formulations -- willful blindness, deliberate ignorance, conscious avoidance, etc.  I generally use willful blindness.

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