United States v. Walter Reed
908 F.3d 102
| 5th Cir. | 2018Background
- Walter P. Reed, long-serving District Attorney, and his son Steven Reed were indicted on conspiracy, wire fraud, money laundering, tax, and mail fraud counts based on alleged diversion of DA campaign funds and hospital legal-fee deposits.
- Prosecution's core theory: Walter Reed solicited campaign donations for reelection but used funds for personal expenses, frequently paying Steven at inflated rates (notably the "America Event") and diverting hospital checks to a personal business account.
- Jury convicted both defendants on nearly all counts; Walter Reed sentenced to 48 months, fined $15,000, ordered $605,244.75 restitution, and forfeiture of $609,217.08 (Walter) plus $46,200 jointly and severally (both). Steven received probation.
- On appeal the Reeds raised multiple challenges: vagueness/federalism (reliance on state campaign-finance law; McDonnell), severance requests, evidentiary rulings (expert and hearsay), Confrontation/Bruton issues, sufficiency of evidence, prosecutorial misconduct, and several forfeiture challenges (statute of limitations/Kokesh, Eighth Amendment, and joint-and-several liability post-Honeycutt).
- The Fifth Circuit affirmed convictions and most sentencing orders, vacated and remanded only the $46,200 joint-and-several forfeiture in light of Honeycutt, and rejected McDonnell-based vagueness/federalism claims and other asserted trial errors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prosecution unlawfully relied on state campaign-finance law creating vagueness/federalism problems (McDonnell) | Reed: McDonnell shows that criminalizing conduct tied to state campaign rules is unconstitutionally vague and raises federalism concerns | Government: prosecutions were for federal wire/mail fraud based on donor expectations and mens rea; state law used only to show intent/expectations, not elements | Court: McDonnell inapplicable beyond honest-services/bribery context here; federal fraud statutes validly prosecuted; claim rejected |
| Severance of trials/counts | Steven: joinder with father prejudiced him; Walter: Hospital counts should be severed from campaign/tax counts | Government: joinder appropriate because common scheme and overlapping evidence; limiting instructions sufficient | Court: abuse-of-discretion not shown; joint trials and joined counts properly denied severance |
| Exclusion/limitation of defense expert testimony about Board of Ethics practice | Reed: exclusion prevented proof of good-faith belief about legality of expenditures | Government: expert testimony not relevant to mens rea for federal fraud | Court: district court acted within discretion; exclusion not manifest error; defense could present other state-law-related evidence |
| Admission of Steven Reed’s out-of-court statements and Bruton/Confrontation challenge | Walter: statements to reporter incriminated him and violated Confrontation/Bruton since Steven didn’t testify | Government: statements not facially incriminating as to Walter; admissible for context; limiting instructions given | Court: Bruton inapplicable because statements were not facially inculpatory as to Walter; admission proper and any error harmless |
| Sufficiency of evidence for Steven’s conspiracy, wire fraud, and money laundering convictions | Steven: evidence insufficient as to overt acts and intent (e.g., overpayment for PSA, America Event) | Government: at least one overt act proved; payments and transfers supported intent and laundering allegations | Court: viewing evidence in light most favorable to verdict, sufficient proof existed; convictions affirmed |
| Forfeiture: statute-of-limitations/Kokesh challenge to forfeiture period | Walter: forfeiture should be limited by five-year limitations principle from Kokesh | Government: Kokesh applies to civil forfeiture statute §2462, not to criminal forfeiture under §981/§2461(c); continuous-scheme forfeiture authorized | Court: Kokesh not controlling; district court permissibly forfeited proceeds over the scheme’s duration |
| Forfeiture: Excessive Fines Clause challenge | Walter: forfeiture amount is grossly disproportionate | Government: forfeiture tied to victim losses from long-running scheme | Court: forfeiture not grossly disproportional; Eighth Amendment challenge rejected |
| Joint-and-several forfeiture liability for conspiracy proceeds after Honeycutt | Government conceded joint-and-several award should be vacated post-Honeycutt | Reed: sought vacatur/adjustment | Court: vacated and remanded the $46,200 joint-and-several forfeiture for reallocation between defendants in light of Honeycutt |
Key Cases Cited
- McDonnell v. United States, 136 S. Ct. 2355 (2016) (narrowed scope of "official act" in bribery/honest-services context and highlighted vagueness/federalism concerns)
- United States v. Hoffman, 901 F.3d 523 (5th Cir. 2018) (upheld fraud convictions where government proved misrepresentations and property loss without relying on state-law technicalities)
- Kokesh v. SEC, 137 S. Ct. 1635 (2017) (civil forfeiture under §2462 is subject to five-year limitations; court distinguished its applicability here)
- Honeycutt v. United States, 137 S. Ct. 1626 (2017) (held joint-and-several forfeiture not authorized under certain criminal forfeiture statute, prompting remand of joint liability here)
- Bruton v. United States, 391 U.S. 123 (1968) (limitation on admitting co-defendant extrajudicial confessions against non-declarant co-defendants)
- United States v. Bajakajian, 524 U.S. 321 (1998) (Eighth Amendment excessive fines proportionality principle)