OPINION AND ORDER
This matter comes before the Court on remand from the Eleventh Circuit Court of Appeals. Based upon
Skilling v. United States,
— U.S. -,
I.
On August 27, 2008, defendant Samir Nel Cabrera (defendant or Cabrera) was named in a twelve-count Superceding Indictment (Doc. #24). Counts One, Two, Three, Four, Five, and Six charged wire fraud in violation of 18 U.S.C. §§ 1343, 1346, 1349 and 2, alleging that defendant devised “a scheme and artifice to defraud certain persons and entities ... and to deprive them of the intangible right of honest services, and to obtain monies by means of materially false and fraudulent pretenses, representations, and promises.” (Id. at ¶ 26.) Count Seven charged mail fraud in violation of 18 U.S.C. §§ 1341, 1346, 1349, and 2, incorporating the same scheme to defraud allegations as in the wire fraud counts. Count Eight charged money laundering in violation of 18 U.S.C. §§ 1957 and 2, alleging criminally derived property from wire fraud. Counts Nine, Ten, Eleven, and Twelve charged money laundering in violation of 18 U.S.C. §§ 1957 and 2, alleging criminally derived property from wire fraud and mail fraud. Before the case was submitted to the jury, the government dismissed the mail fraud charge in Count Seven and the mail fraud aspects of the money laundering counts. (Doc. # 120, p. 239.)
There were no material objections to the relevant final jury instructions or verdict form utilized by the Court. (Doc. # 120, pp. 236-46; Doc. # 121, pp. 82-83.) As to the wire fraud counts, the jury was instructed that the scheme to defraud had two objectives, one to defraud another of money and one to defraud another of the intangible right of honest services. (Doc. # 121, p. 160.) The “scheme to defraud” component of the wire fraud elements was defined as “any plan or course of action intended to, one, deceive or cheat a person of ordinary prudence and comprehension out of money by means of false or fraudulent pretenses, representations, or promises; or, two, to deceive or cheat someone of the intangible right to honest services.” (Id. at 161.) The Court further instructed that:
[t]o deprive another of the intangible right of honest services means to violate, or to cause an agent of another person to violate, the agent’s duty to provide honest services to another person or entity. The government must prove that the defendant owed a fiduciary duty to another person or entity, intended to breach the fiduciary duty, and that the defendant foresaw, or reasonably should have foreseen, that the person or entity to whom the defendant owed the fiduciary duty might suffer an economic harm as a result of that breach.
(Id. at 162.) Notably, as it turns out, the Court did not limit this component of the wire fraud counts to acts of bribery or kickbacks. Additionally, the Court instructed the jury that:
Where a statute specifies several alternative objects of a scheme to defraud, the superseding indictment may allege the objectives in the conjunctive; that is, by using the word “and.” However, the applicable statutes in Counts 1 through 6, are worded in the disjunctive; that is, *1264 the objectives of the scheme to defraud are separated by the word “or.” So if you find, beyond a reasonable doubt, that any one object of the scheme to defraud occurred, that is sufficient, so long as you agree unanimously as to the particular object involved.
(Id. at 164.) In explaining the verdict form as to wire fraud, and using Count One as an example, the Court advised the jury:
Remember, earlier in the instructions, I told you that the scheme to defraud was two objects: One is to defraud of money, and one is to defraud of honest services.
You may find the defendant not guilty, of course, or you may find him guilty of scheming to defraud of money, or of scheming to defraud of honest services, or both money and honest services. If it’s both, you check two boxes for guilty. If it’s neither, obviously, you cheek not guilty.
Your verdicts must be unanimous. What that means is, if you find guilty, if six of you think it’s money, and six of you think it’s honest services, that’s not unanimous. It has to be all of you, with regard to any check you make, as to the guilt, or to not guilty.
(Doc. # 121, pp. 172-73.)
As to the money laundering counts, the Court instructed the jury that the fourth element was that “the property was, in fact, derived from wire fraud, as alleged in the superseding indictment; ...” (Id. at 165.) The only options on the verdict form as to the money laundering counts were “Not Guilty” or “Guilty.”
The jury announced an impasse (Doc. # 122, p. 6), and the Court gave the jury the modified Allen 1 charge. (Id. at 7-9.) Three and one-half hours later the jury found defendant guilty of all wire fraud counts based upon a scheme to defraud investors of the intangible right to honest services. (Doc. # 86; Doc. # 122, pp. 9-11.) For example, the Verdict form as to Count One stated:
1. As to Count One, which charges that on or about January 27, 2006, Defendant Samir Nel Cabrera committed wire fraud, we the jury unanimously find Defendant Samir Nel Cabrera,
_ NOT GUILTY
_ GUILTY, scheme to defraud investors of money
_ GUILTY, scheme to defraud investors of the intangible right to honest services
The jury checked only the third option on all six wire fraud counts, leaving the other two options blank. The jury also found defendant guilty of all of the money laundering counts, checking the “GUILTY” option for those counts. (Id.)
The Court polled the individual jurors, and each confirmed the verdicts; the jury was then discharged. (Id. at 9-10.) The Court thereafter advised the defendant that “based upon the jury’s verdicts, the Court would adjudicate you guilty of Count 1, 2, 3, 4, 5, and 6, of a scheme to defraud investors of the intangible right to honest services, and guilty of Count 8, 9, 10, 11 and 12.” (Id. at 13.)
In a Sentencing Memorandum filed pri- or to the sentencing hearing, the government acknowledged that the jury had not convicted defendant of a scheme to de
*1265
fraud investors of money. (Doe. # 134, p. 17.) The government argued, however, that this conduct had been proven by a preponderance of the evidence and was thus relevant conduct under the Sentencing Guidelines.
(Id.)
The government cited a line of cases dealing with the court’s ability to consider acquitted conduct when imposing sentence, including
United States v. Watts,
II.
After defendant was sentenced, the Supreme Court decided
Skilling v. United States,
— U.S.-,
Under Skilling it is now clear that the honest services portion of the jury instructions in Cabrera’s case was incorrect because it did not limit the jury’s consideration to bribes or kickbacks. Thus, the government conceded in the Eleventh Circuit “that the jury instructions given by the district court were erroneous ...” Cabrera, 418 FedAppx. at 896. The government also conceded “that the evidence presented did not involve criminal conduct under 18 U.S.C. § 1346 as interpreted by Skilling. Accordingly, the government concedes in its brief that all counts of conviction should be vacated.” Id.
The parties disputed, however, “whether Cabrera can be retried on the wire fraud and money laundering charges under the theory that he defrauded investors in light of the Fifth Amendment’s prohibition of Double Jeopardy.” Id. The matter was therefore remanded with instructions for “the district court to consider whether granting the government’s request for a new trial on the wire fraud and money laundering charges would violate Cabrera’s Fifth Amendment rights.” Id.
III.
The Double Jeopardy Clause of the Fifth Amendment to the United States Constitution provides in relevant part: “[N]or shall any person be subject for the same offence to be twice put in jeopardy of life or limb.” U.S. Const, amend. V. An acquittal is an absolute bar to a retrial.
*1266
Burks v. United States,
A distinction is made between legal errors in the proceedings and a lack of sufficient evidence to support a conviction. A conviction which is reversed because of legal error during the trial proceedings, such as improper jury instructions, may be retried without violating the Double Jeopardy Clause, but a conviction reversed because of insufficiency of the evidence may not be retried.
Burks,
The government advises that it conceded on appeal that the wire fraud guilty verdicts as to honest services fraud could not stand because the indictment did not charge a scheme to defraud based upon bribes or kickbacks, the evidence at trial did not prove such a scheme, and the jury was not instructed that such proof was necessary. (Doc. #215, pp. 1-2.) While the first and third concession would not have precluded a retrial, 4 the concession of a lack of evidence supporting the honest services theory as confined by Skilling precludes retrial on that theory. 5 Therefore, as it stated during oral argument, the government does not seek to retry Cabrera on the honest services theory of the wire fraud counts.
What the government does seek, however, is to retry Cabrera on the money fraud portion of the wire fraud counts and on the money laundering counts. To do so, the government argues that the jury did not acquit Cabrera on the money wire fraud theory, and therefore he can be retried on that theory as to the wire fraud counts. As to the money laundering counts, the government argues that the jury could have relied on either a valid predicate (money wire fraud) or an invalid one (honest services wire fraud) and therefore retrial is constitutionally permissible. (Doc. #215, p. 2.) The government further argues that at best the verdicts were ambiguous, thereby authorizing retrial without violating the Double Jeopardy Clause.
Cabrera responds that he has already been acquitted of the money wire fraud counts, and cannot be retried on any count without violating the Double Jeopardy Clause.
A. Wire Fraud Counts
“Double jeopardy concerns are not implicated unless there has been some
*1267
jeopardy-terminating event, such as an acquittal.”
Bobo,
The government asserts, however, that there has been no such acquittal in this case as to the money wire fraud theory. The government argues that the jury “failed to specify whether Cabrera was guilty or not guilty on those same counts [wire fraud] of executing a ‘scheme to defraud investors of money,’ ” and “had not decided whether Cabrera was guilty or not guilty of money wire fraud,” and that “the verdicts do not demonstrate that the jury acquitted Cabrera on the money wire fraud charges,” and that the case should be set for trial “for a jury to decide for the first time these unresolved charges.” (Doc. # 215, pp. 1, 2, 6,11.)
The Court finds that the verdicts described above constituted an acquittal of the wire fraud counts based on the money fraud theory. In making this determination, the undersigned has the benefit of not only reviewing the transcripts, but of having participated in the original proceedings. Because defendant has been acquitted of wire fraud based upon the money fraud theory, he may not be retried on any of the wire fraud counts.
Both parties and the Court intended to have verdicts and a verdict form which resolved all theories in all counts. Although the government now argues that the jury necessarily left some work undone in completing the verdict form as it did, the Court disagrees. The verdict form was essentially in the format submitted by the government, which was not simply a local nuance.
See Black v. United States,
— U.S.-,
Had the government intended such a result, such “sandbagging” would not now be rewarded. The Supreme Court has found that sandbagging, i.e., “remaining silent about his objection and belatedly raising the error only if the ease does not conclude in his favor,” may result in the forfeiture of even constitutional rights.
Stern v. Marshall,
— U.S.-,
Not only did everyone intend for the jury verdicts to completely resolve the government’s case against Cabrera, but the verdicts did in fact do so. The verdict form was completed by the jury in the only manner possible where it found Cabrera not guilty of one of the two options for wire fraud. While the government poses *1268 alternative interpretations of the verdict form now, it was remarkably silent as to these interpretations when it mattered — at the time of the trial. The verdict form and instructions were consistent with those proposed by the government, and the government did not object to the final version of either. The government did not suggest after the jury verdict, including before or after the Court’s polling of the jury, that anything had been left undecided by the jury. In its sentencing memorandum, the government relied upon eases upholding the Court’s ability to consider acquitted conduct in its sentencing decision. (See Doc. # 120.) Defendant’s response reflected the clear understanding of all parties as to the impact of the jury verdict: “While it is correct that there were guilty verdicts returned as to counts 1-6, alleging wire-fraud, Mr. Cabrera was acquitted of the underlying allegations that he schemed to defraud investors of money.” (Doc. # 145, p. 10.)
Additionally, even if the jury verdicts were ambiguous, the government has not articulated a legitimate basis as to why it should now reap the benefit of such invited ambiguity. As noted above, the instructions and verdict form were not the subject of government objection. The government never suggested any flaw at a point in time when corrective action could have been taken with the jury. The government proceeded on the expressed belief that defendant had been acquitted of the money fraud theory of wire fraud. If the government had believed the jury verdicts did not resolve the entire case, the government was obligated to re-try those counts within seventy (70) days of what it must have considered an implicit declaration of a mistrial, 18 U.S.C. § 3161(e), or within the original time period less excludable periods, 18 U.S.C. § 3161(h). The government failed, however, to say a word to accomplish such a timely retrial. Rather, the government has simply raised post hoc arguments in an attempt to counter the consequences of Skilling.
The Court concludes that the jury’s verdicts constituted a finding of acquittal as to the money fraud scheme in Counts One through Six. Alternatively, if these verdicts were ambiguous, the error was invited by the government.
United States v. Brannan,
Accordingly, the Court finds that granting the government’s request for a new trial on the wire fraud charges would violate Cabrera’s Fifth Amendment rights.
B. Money Laundering Counts
The money laundering counts, unlike the money wire fraud counts, resulted in verdicts of guilt, albeit in a general verdict format. The government argues that a retrial is not precluded by Double Jeopardy because each guilty verdict could have relied upon either a valid predicate (i.e., money wire fraud) or an invalid predicate (i.e., honest services wire fraud). (Doc. # 215, p. 2.) Under this scenario, the government asserts, a retrial on the money fraud theory is permissible and would not violate Double Jeopardy. (Doc. # 215, p. 11.) Cabrera disagrees, arguing that collateral estoppel principles preclude a retrial. (Doc. # 217, p. 14.)
The jury returned general verdicts as to all money laundering counts, i.e., it found defendant “Guilty” without specifying whether the predicate fraud was money
*1269
wire fraud or honest services wire fraud. It is undisputed that in light of
Skilling
the honest services theory can no longer support the money laundering counts. Since the general verdicts make it impossible to tell which ground the jury selected, the general verdict was vacated pursuant to
Yates. See Yates,
The Court must determine the disposition of the other predicate conduct for money laundering — money wire fraud. As long as the verdict was supportable on one ground, nothing in the Double Jeopardy provision precludes a retrial on that ground.
United States v. Pendergraft,
As the Court found above, however, the jury found Cabrera not guilty of the money fraud theory of the wire fraud counts. Despite these acquittals, the government argues that because there was sufficient evidence to have supported money wire fraud convictions, and the jury has the power to return inconsistent verdicts, a retrial is permissible.
It is well settled that “[i]nconsistency in a verdict is not a sufficient reason for setting it aside” because a jury has the unreviewable power to return of verdict of not guilty for impermissible reasons.
Harris v. Rivera,
While inconsistency would not bar retrial, principles of collateral estoppel may. In
Ashe v. Swenson,
At trial, the government presented evidence that Cabrera intentionally did not disclose the property flips and kicker fees. The government argued that this intentional non-disclosure defrauded the investors of their money and honest services. (See Doc. # 121, p. 99.) Cabrera argued that he did not intend for the investors to lose money and that he relied on others to ensure the disclosures were made. Further, while he admitted he should have been more proactive in telling the investors the challenges the projects faced, he asserted the investors lost money because of the commercial real estate market collapse. (See id. at 129-130.) After initial deliberations, a modified Allen Charge, and another three and one-half hours of deliberation, the jury returned with its verdicts. The Court finds that the jury’s verdicts necessarily determined that Cabrera did not intend to defraud his investors of money, i.e., that he did not intend to cause them financial loss.
The government argues that even if the jury did acquit Cabrera of the money wire fraud, collateral estoppel would not apply because guilt of a substantive offense is not an element of a money laundering offenses. (Doc. # 215, p. 16.) The Court agrees that in general a defendant does not need to be convicted of the predicate unlawful activity in order to be convicted of money laundering.
See United States v. Magluta,
The instant case is distinguishable from Magluta. According to the Superceding Indictment and the evidence and argument presented at trial, the government’s theory was not that Cabrera was laundering someone else’s illegal proceeds, but rather that Cabrera conducted financial transactions involving the proceeds of the non-disclosed kicker fees that he obtained through either money or honest services fraud. (See Doc. # 121, pp. 97-106.) The money fraud theory is the only valid predicate for the money laundering charges, and whether Cabrera intended to defraud the investors of money is an essential element of both the money wire fraud counts and the money laundering counts. Since the Court has found that the jury acquitted Cabrera of the money fraud counts, collateral estoppel precludes the government from relitigating that issue.
Therefore, the Court finds that granting the government’s request for a new trial *1271 on the money laundering charges would violate Cabrera’s Fifth Amendment rights.
Accordingly, it is now
ORDERED:
1. The government’s request for a new trial on the wire fraud and money laundering charges is DENIED because such a retrial would violate Cabrera’s Fifth Amendment rights.
2. The Orders Setting Conditions of Release (Doc. # 199) and Modifying Conditions of Release (Doc. # 209) as to Samir Nel Cabrera are VACATED.
3. The Clerk of Court shall close the file.
Notes
.
Allen v. United States,
. After remand from the Eleventh Circuit, the Court granted defendant's renewed motion for release pending appeal. (Doc. # 196.)
. On remand, the Fifth Circuit found the error harmless, but remanded for re-sentencing.
United States v. Skilling,
.
United States v. Bobo,
.
Bobo,