Bruсe C. BEREANO, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
No. 12-6417.
United States Court of Appeals, Fourth Circuit.
Argued: Dec. 5, 2012. Decided: Feb. 8, 2013.
Before MOTZ, KING, and DIAZ, Circuit Judges.
706 F.3d 568
III.
In sum, we conclude that the defendants were not “customers” of Morgan Keegan under Rule 12200 and, therefore, were not entitled to initiate arbitration proceedings under the mandatory arbitration provision contained in that Rule. Accordingly, we affirm the district court‘s judgment permanently enjoining the defendants from pursuing their FINRA arbitration claim against Morgan Keegan.
AFFIRMED
ance on a letter issued by the Director of FINRA in a separate FINRA proceeding. That document is not relevant to the present case and is not entitled to any deference by this Court.
ARGUED: Timothy Francis Maloney, Joseph, Greenwald & Laake, PA, Greenbelt, Maryland, for Appellant. Leo Joseph Wise, Office of the United States Attorney, Baltimore, Maryland, for Appellee. ON BRIEF: Matthew M. Bryant, Joseph, Greenwald & Laake, PA, Greenbelt, Maryland, for Appellant. Rod J. Rosenstein, United States Attorney, Baltimore, Maryland, for Appellee.
OPINION
KING, Circuit Judge:
Bruce C. Bereano appeals from the district cоurt‘s denial of his petition for a writ of coram nobis. The petition, filed pursuant to the All Writs Act,
Bereano‘s coram nobis petition was denied on February 28, 2012, when the district court concluded that no relief could be granted even though Bereano‘s honest services fraud scheme did not involve bribery or kickbacks. See Bereano v. United States, No. 1:11-cv-00961, 2012 WL 683545 (D.Md. Feb. 28, 2012) (the “Opinion“).1 That was so, the court reasoned, because Bereano had also executed a fraud scheme involving money and property, implicating the pecuniary fraud theory of mail fraud, which was not affected by the Skilling decision. See United States v. Black, 625 F.3d 386, 387 (7th Cir.2010) (deeming pecuniary fraud theory of mail fraud to be unaffected by Supreme Court‘s decision in Skilling). Although the Gov
I.
A.
On May 26, 1994, the grand jury in the District of Maryland returned an indictment against Bereano, then a Maryland lawyer and lobbyist, charging him with eight counts of mail fraud, in violation of
(a) defraud his lobbying clients of money and property by means of false and fraudulent pretenses, representations and promises, by submitting to his lobbying clients bills which included false statements of expenses incurred [the “pecuniary fraud theory“]; and
(b) defraud his lobbying clients of their right to the loyal, faithful, honest, and unbiased service and performance of the duties of the defendant in his capacity as agent of said lobbying clients, free frоm willful omission, deceit, dishonesty, misconduct, fraud, self-dealing and conflict of interest [the “honest services fraud theory“].
J.A. 20.3
Paragraphs 8 through 18 of Count One (the balance of that portion of the indictment captioned “The Scheme and Artifice to Defraud“) further described the scheme in some detail. Therein, the grand jury alleged that, during the relevant period, Bereano requested that employees of his Annapolis law firm, Bereano & Resnick, make contributions to various political candidates. Those contributions were reimbursed through law firm checks, often designated with false notations to conceal their true purposes. In addition, Bereano caused firm checks to be issued to certain of the firm‘s employees, ostensibly for office expenses. Those checks were then cashed and the proceeds delivered to Bereano. Bereano distributed such proceeds to various members of his family, who used the money for contributions to his political action committee (the “Bereano PAC“). Finally, Bereano falsely billed his firm‘s lobbying clients for such expense items as “legislative entertainment,” thereby recovering the political contributions into the firm‘s coffers by disguising their true nature.
The scheme and artifice to defraud, described as aforesaid in Count One, was realleged by the grand jury in each of Counts Two through Eight. Thus, all eight counts relied on the same fraud scheme, and the charges were identical in all respects save one. That is, the final paragraph of each count, commonly char
- Counts One and Two alleged that, for the purpose of executing and attempting to execute the scheme and artifice to defraud, a law firm bill was caused to be delivered by mail to, and a check thereafter received by the firm from, a client called Phillips Publishing;
- Counts Three and Four alleged that, for the purpose of executing and attempting to execute the scheme and artifice to defraud, a law firm bill was caused to be delivered by mail to, and a check thereafter recеived by the firm from, a client called Dental Benefit Providers;
- Counts Five and Six alleged that, for the purpose of executing and attempting to execute the scheme and artifice to defraud, a law firm bill was caused to be delivered by mail to, and a check thereafter received by the firm from, a client called Medical Mutual Liability Insurance Society of Maryland (“Medical Mutual“); and
- Counts Seven and Eight alleged that, for the purpose of executing and attempting to execute the scheme and artifice to defraud, a law firm bill was caused to be delivered by mail to, and a check thereafter received by the firm from, a client called Maryland Saltwater Sportsfisherman‘s Association (“MSSA“).
During pretrial proceedings in the district court, Bereano sought dismissal of the indictment, contending, inter alia, that the “intangible right of honest services” provision of
B.
During Bereano‘s trial, which was conducted in Baltimore over a three-week period in November of 1994, the prosecution presented evidence from approximately twenty-six witnesses, including law firm employees and clients, members of Bereano‘s family, and Maryland pоliticians.5 Charlotte Verkouw, a former assistant to Sandra O‘Hearn, the firm‘s bookkeeper, explained that O‘Hearn had directed her, at Bereano‘s behest, to contribute $250 to a political campaign. That contribution was reimbursed to Verkouw by a firm check containing the false notation “reimbursement for computer paper.” Verkouw was
At O‘Hearn‘s behest, paralegal Pam Young endorsed law firm checks issued in her name and returned them to O‘Hearn. It was Young‘s understanding that the checks would be cashed and their proceeds delivered to Bereano. Christine Satterfield, who held various positions in the firm, made several political contributions for Bereano and O‘Hearn. Satterfield was reimbursed with firm checks that falsely reflected they were reimbursements for, inter alia, a typewriter and miscellaneous expenses. Hazel Hall, O‘Hearn‘s mother, was directed by her daughter to make at least one political contribution that the firm reimbursed.
Bereаno‘s parents each received $2500 in cash from their son, which they contributed to the Bereano PAC. Bereano‘s ex-wife made contributions to the Bereano PAC on behalf of herself and her daughter, and Bereano reimbursed her in cash for those contributions. Donna Robey Spencer, a former legislative assistant for Bereano, managed the Bereano PAC. Spencer made a contribution to a Maryland politician at the direction of O‘Hearn, and was reimbursed with a law firm check containing the false notation “Reimbursement for office supplies.” When a State Senator called with questions about Spencer‘s contribution, she informed other mеmbers of the firm‘s staff, including Bereano and O‘Hearn, and refused to make any further contributions.
As a result of the Senator‘s inquiry to Spencer, O‘Hearn destroyed most of the law firm‘s billing records for the period from May through September of 1990. O‘Hearn did so, in part, because she had “written many more [political contribution] checks than the other girls in the office,” all of which had been reimbursed by the firm. J.A. 1126. In addition to such contributions, and in order to provide Bereano with cash that he had requested, O‘Hearn wrote and cashed firm checks totalling about $2500. O‘Hearn, who was responsible for generating the firm‘s bills to its lobbying clients, asserted that there was no established firm practice of falsely billing lobbying clients for political contributions. Before the grand jury, however, she had confirmed that Bereano had his lobbying clients billed for prorated portions of such contributions, falsely characterized on the bills as “legislative expenses.” When the prosecutors used O‘Hearn‘s grand jury transcript to impeach her testimony, she disavowed any recollection thereof and offered no explanation for the inconsistencies.
Of particular relevance, two of the law firm‘s check stubs for August 14, 1990, had not been destroyed. Those check stubs identified two firm checks to O‘Hearn for $300 each. The two checks were reimbursements for political contributions that O‘Hearn made at Bereano‘s request, but the check stubs falsely reflected that they were reimbursements for a printer and a filing cabinet. The Memo Line on each stub included the notation “110,” the firm‘s billing category for “legislative entertainment,” as well as the phrase “per BCB,” Bereano‘s initials.
One of the $300 check stubs identified two lobbying clients, Phillips Publishing and Dental Benefit Providers, and specified their law firm account numbers. Half of the $300 referenced on that stub
The two $300 reimbursement checks paid to O‘Hearn on August 14, 1990, along with the four law firm bills, each dated September 1, 1990, were used to recoup $600 to the firm for its political contributions. Those false bills gave rise to the eight mailings that underlie the charging paragraphs of the indictment. That is:
- Count One related to the September 1, 1990 firm bill mailed to Phillips Publishing;
- Count Two related to the check mailed to the firm by Phillips Publishing in payment of its bill;
- Count Three related to the September 1, 1990 firm bill mailed to Dental Benefit Providers;
- Count Four related to the check mailed to the firm by Dental Benefit Providers in payment of its bill;
- Count Five related to the September 1, 1990 firm bill mailed to Medical Mutual;
- Count Six related to the check mailed to the firm by Medical Mutual in payment of its bill;
- Count Seven related to the September 1, 1990 firm bill mailed to MSSA; and
- Count Eight related to the MSSA check to the firm in payment of its bill.
Finally, representatives of the four lobbying clients (Phillips Publishing, Dental Benefit Providers, Medical Mutual, and MSSA) confirmed that they had retained Bereano as their lobbyist. They also acknowledged that the reimbursements billed to their employers by the law firm for “legislative entertainment” had been paid. Bereano, however, was never authorized to bill the lobbying clients for any political contributions made by the firm or its employees.
The prosecution concluded its case against Bereano on November 22, 1994. The district court thereafter denied Bereano‘s motion for judgment of acquittal, save on Count Eight. On that charge, the court deemed the evidence insufficient to support a finding that MSSA had used the mail in paying its bill.6
On November 23, 1994, Bereano rested without presenting any evidence in defense of the charges. After a short break for Thanksgiving, the trial moved toward its conclusion with closing arguments and the district court‘s instructions on, inter alia, the elements of mail fraud. Consistent with the law as it then existed, the court advised the jury (pursuant to
On November 30, 1994, the jury found Bereano guilty on all eight Counts. In so doing, the jury returned a “general verdict” on each count, that is, it checked the line on the verdict form reflecting that Bereano was, in each instance, “Guilty.” J.A. 1929-30. Neither the instructions nor the verdict form requested a specification of whether Bereano was convicted under the pecuniary fraud theory, the honest services fraud theory, or both. On April 21, 1995, the trial court imposed sentence, which was stayed during the pendency of an appeal.7
C.
On appeal to this Court, Bereano maintained, inter alia, that “application of
not only circumstances where an agent defrauds his principal by stealing money from the principal, but also where an agent defrauds his principal of his “honest and faithful services” when he breaches his fiduciary duty and conceals material information from his principal, coupled with the necessary intent and use of the mails and wires.
Id. at *4-6.
Our decision also rejected Bereano‘s other appellate contentions, but agreed with the prosecution that the district court had erred at sentencing. See Bereano, 1998 WL 553445, at *17. Accordingly, we vacated Bereano‘s sentence and remanded for resentencing. Id. Bereano was ultimately resentenced and fined. Bereano has long since served his sentence and paid his fine.
II.
A.
As the district court recognized, Bereano was convicted of seven mail fraud offenses and prosecuted under both the pecuniary fraud theory and the honest services fraud theory. Section 1346 of Title 18 wаs enacted by Congress in 1988 in response to the Supreme Court‘s 1987 decision in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). Prior to McNally, the courts had interpreted the mail fraud statute,
During its October 2009 Term, the Supreme Court rendered its decision in Skilling v. United States, 561 U.S. 358, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). In Skilling, an appeal by a former Enron executive, the Court circumscribed the prosecution‘s use of
B.
In reliance on Skilling and its companion decision in Black v. United States, 561 U.S. 465, 130 S.Ct. 2963, 177 L.Ed.2d 695 (2010), Bereano initiated this proceeding in the district court on April 12, 2011, seeking coram nobis relief to vacate his mail fraud convictions and secure repayment of his fine. In response, the Government conceded that, because there were no allegations of bribery or kickbacks in the indictment, the jury instructions in Bereano‘s trial regarding the honest services fraud theory unconstitutionally authorized the jury to convict Bereano under that repudiated theory, in contravention of Skilling. The Government contended, however, that Bereano could not have been convicted of the mail fraud charges without the jury also concluding that he was guilty under the pecuniary fraud theory, that is, that he had used the mail to defraud four of his lobbying clients of their money and property.
By its Opinion of February 28, 2012, the district court agreed with the Government, denying coram nobis relief and concluding that the Skilling error — though constitutional in nature — was harmless beyond a reasonable doubt. See Opinion. In reaching that conclusion, the Opinion observed that “[t]he core of the Government‘s case was the fraudulent billing scheme, which is primarily about money.” Id. at __. Bereano has timely noticed this appeal, and we possess jurisdiction pursuant to
III.
On appeal from a district court‘s denial of a petition for a writ of coram nobis, we review factual findings for clear error, questions of law de novo, and “the district court‘s ultimate decision to deny the writ for abuse of discretion.” United States v. Akinsade, 686 F.3d 248, 251-52 (4th Cir.2012) (quoting Santos-Sanchez v. United States, 548 F.3d 327, 330 (5th Cir.2008), abrogated on other grounds by Padilla v. Kentucky, 559 U.S. 356, 130 S.Ct. 1473, 176 L.Ed.2d 284 (2010)). We generally review de novo any mixed questions of law and fact. United States v. Nicholson, 611 F.3d 191, 205 (4th Cir.2010).
IV.
A.
The аuthority of a federal court to issue a writ of coram nobis derives from the All Writs Act, codified at
B.
1.
In order for a district court to reach an ultimate decision on coram nobis relief, a petitioner is obliged to satisfy four essential prerequisites. First, a more usual remedy (such as habeas corpus) must be unavailable; second, there must be a valid basis for the petitioner having not earlier attacked his convictions; third, the consequences flowing to the petitioner from his convictions must be sufficiently adverse to satisfy Article III‘s case or controversy requirement; and, finally, the error that is shown must be “of the most fundamental character.” United States v. Akinsade, 686 F.3d 248, 252 (4th Cir.2012).
The Government does not contest the proposition that Bereano has satisfied the first three of the foregoing prerequisites for coram nobis relief. First, having served his sentence and paid his fine, the usual postconviction remedy of habeas corpus is not available. Second, Bereano‘s reason for not launching an earlier attack on his convictions is a valid one, in that the Supreme Court only recently rendered the primary decision on which he relies, Skilling v. United States, 561 U.S. 358, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010).9 Third, Bereano is yet burdened with multiple felony convictions for which he has suffered substantial adverse consequences, e.g., being disbarred from the practice of law. Those consequences are sufficient to satisfy the case or сontroversy requirement of Article III. See United States v. Mandel, 862 F.2d 1067 (4th Cir.1988) (affirming award of coram nobis relief on basis of McNally).
2.
We thus turn to a more robust analysis of the fourth prerequisite for coram nobis relief — whether the Skilling error conceded by the Government is “of the most fundamental character.” That terminology derives from a Supreme Court decision of long standing, where the Court emphasized that an error “of the most fundamental character” is one that has “rendered the proceeding itself irregular and invalid.” United States v. Mayer, 235 U.S. 55, 69, 35 S.Ct. 16, 59 L.Ed. 129 (1914). More recently, the Court explained the circumscribed use of coram nobis when it directed that “judgment finality is not to be
In this proceeding, the Government concedes that a constitutional error occurred in Bereano‘s trial when the district court erroneously instructed the jury that it could convict Bereano on the honest services fraud theory. Thus, we must determine whether that instructional error was so serious as to be, in terms of the fourth prerequisite of coram nobis, an error “of the most fundamental character.”
In answering this inquiry, we will initially examine whether the Skilling error would have entitled Bereano to relief by way of a direct appeal. We utilize that analysis because an appellant who would not be entitled to relief on direct appeаl could never be entitled to the extraordinary writ of coram nobis. See Mandel, 862 F.2d at 1074 (assessing availability of relief on direct appeal before examining propriety of coram nobis relief); see also Akinsade, 686 F.3d at 252-53 (examining merits of constitutional claim in order to determine whether error is “of the most fundamental character“).10
Pursuant to the Supreme Court‘s decision in Yates v. United States, 354 U.S. 298, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1957), when a general verdict of guilty rests on two alternative theories of prosecution, one valid and the other invalid, the verdict should be set aside if it is “impossible to tell which ground the jury selected.” 354 U.S. at 312, 77 S.Ct. 1064. As we later recognized in United States v. Hastings, however, an alternative-theory error is nevertheless subject to harmless error review. See 134 F.3d at 241-42 (4th Cir.1998). In Hastings, Judge Wilkins assumed that an erroneous instruction conсerning an element of the charged offense was constitutional error. Our decision explained that, in such circumstances, the reviewing court must attempt to ascertain what evidence the jury necessarily credited in order to
Later, in Neder v. United States, 527 U.S. 1, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999), the Supreme Court reached the same result, recognizing that a failure to properly instruct on an element of the offense is a constitutional error subject to harmlessness review. See 527 U.S. at 4, 119 S.Ct. 1827 (citing Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967)). The Skilling dеcision endorsed the harmless error precedent, further emphasizing that, although “constitutional error occurs when a jury is instructed on alternative theories of guilt and returns a general verdict that may rest on a legally invalid theory,” that determination “does not necessarily require reversal.” 130 S.Ct. at 2934 (citing Yates, 354 U.S. 298, 77 S.Ct. 1064). Indeed, after the Court remanded Skilling and its companion case, Black v. United States, 561 U.S. 465, 130 S.Ct. 2963, 177 L.Ed.2d 695 (2010), to the Fifth and Seventh Circuits, those courts applied harmless error review to identified Skilling errors. See United States v. Skilling, 638 F.3d 480, 481-82 (5th Cir.2011) (applying Neder harmless error review to Skilling error); United States v. Black, 625 F.3d 386, 388 (7th Cir.2010) (same).
In its Opinion, the district court correctly recognized the applicability of Neder‘s harmless error standard in Bereano‘s coram nobis proceeding, and then ruled against him. See Opinion __. Less than a month thereafter, our decision in United States v. Jefferson ratified the Neder harmless error standard as the law of this Circuit with respect to Skilling error. See 674 F.3d 332, 361 (4th Cir.2012). In Jefferson, wе explained that an appellate court is obliged to deny relief on direct appeal if it concludes “beyond a reasonable doubt that a rational jury would have found the defendant guilty absent the error.” Id. at 360 (quoting Neder, 527 U.S. at 18, 119 S.Ct. 1827). We spelled out the applicable harmless error test as follows:
[I]f the evidence that the jury necessarily credited in order to convict the defendant under the instructions given ... is such that the jury must have convicted the defendant on the legally adequate ground in addition to or instead of the legally inadequate ground, the conviction may be affirmed.
Id. at 361 (internal quotation marks omitted).
In concluding that the Government had satisfied its burden of establishing harmlessness beyond a reasonablе doubt, the district court correctly recognized that “[t]he core of the Government‘s case was the fraudulent billing scheme, which is primarily about money.” Opinion __.11 The
[I]t would be inconsistent for the jury to convict Bereano of honest services fraud but find him innocent of pecuniary fraud. A conviction based on honest services fraud necessarily acknowledges that the jury accepts as true the scheme the Government has alleged, that Bereano knowingly took advantage of his client[s‘] trust by sending them false bills. In accepting that this scheme took place, the jury also necessarily accepted that Bereano knowingly obtained his clients’ money by false pretenses, a finding that equates to a conviction for pecuniary fraud.
Id. at ___ (emphasis added). The court‘s characterization is consistent with our decision rejecting Bereano‘s direct appeal fifteen years ago, where we explained that “[s]ending a false bill to a third party through the mails with the necessary criminal intent is a classic violation of the mail fraud statute.” Bereano, 1998 WL 553445, at *4.
Our independent application of the harmless error standard in these circumstances confirms the district court‘s determination that, at Bereano‘s trial, the proseсution presented overwhelming evidence that he had schemed to commit pecuniary fraud. Not only was the evidence of pecuniary fraud more than sufficient, it was necessarily accepted by the jury, as reflected in the verdict. Put succinctly, the jury could not have found Bereano guilty of mail fraud under either the honest services fraud theory or the pecuniary fraud theory without concluding that the alleged mailings — false bills mailed to lobbying clients and the clients’ payments mailed in satisfaction thereof — were an integral part of the fraud scheme. In other words, no reasonable jury could have acquitted Bereano of pecuniary fraud for falsely billing his сlients, but convicted him of honest services fraud for the same false billing scheme. See Black, 625 F.3d at 393 (“No reasonable jury could have acquitted the defendants of pecuniary fraud on this count but convicted them of honest-services fraud.“).
Because Bereano would not be entitled to relief on direct appeal under Skilling, the fourth prerequisite for coram nobis relief — identification of “an error of the most fundamental character” — is not satisfied. Accordingly, an award of the “extraordinary” remedy of coram nobis relief is unwarranted.
V.
Pursuant to the foregoing, the judgment of the district court is affirmed.
AFFIRMED
UNITED STATES of America, Plaintiff-Appellee, v. Ryan HOLNESS, Defendant-Appellant.
No. 11-4631.
United States Court of Appeals, Fourth Circuit.
Argued: Oct. 4, 2012. Decided: Feb. 11, 2013.