United States v. Fountain

Decision Date10 July 2015
Docket Number13–3478.,13–3025,Nos. 13–3023,s. 13–3023
Citation792 F.3d 310
PartiesUNITED STATES of America v. Patricia FOUNTAIN, Appellant in 13–3023, Calvin Johnson, Jr., Appellant in 13–3025, and Larry Ishmael, Appellant in 13–3478.
CourtU.S. Court of Appeals — Third Circuit

Joseph J. Khan (Argued), Office of United States Attorney, Philadelphia, PA, for Appellee United States of America.

Richard Coughlin Julie A. McGrain (Argued), Office of Federal Public Defender, Camden, NJ, for Appellant Patricia Fountain.

Lawrence J. Bozzelli (Argued), Philadelphia, PA, for Appellant Calvin Johnson, Jr.

Daniel I. Siegel (Argued), Office of Federal Public Defender, Wilmington, DE, for Appellant Larry Ishmael.

Before: FUENTES, FISHER, and KRAUSE, Circuit Judges.

OPINION OF THE COURT

KRAUSE, Circuit Judge.

This is a consolidated criminal appeal, arising out of a large tax fraud conspiracy, that presents us with an opportunity to clarify the mental states required of the payor and payee to uphold a conviction for Hobbs Act extortion under color of official right. For the reasons set forth below, we will affirm.1

I. Background

Between 2007 and 2012, Appellant Patricia Fountain, an IRS employee, helped orchestrate several schemes to fraudulently obtain cash refunds from the IRS. Those schemes involved filing false tax returns that claimed refunds pursuant to the Telephone Excise Tax Refund (“TETR”), the First Time Home Buyer Credit (“FTHBC”), or the American Opportunity Tax Credit (“AOTC”). Fountain employed her knowledge of the IRS's fraud detection procedures to avoid suspicion, including that TETR claims below $1,500 would not be flagged for review. Over time, Fountain and her significant other, Appellant Larry Ishmael, enlisted various people, including Appellant Calvin Johnson, Jr., to recruit claimants who would provide their personal information in exchange for a portion of a cash refund. During the same period, Johnson became involved in an additional conspiracy with some of his family members and other acquaintances that involved submitting fraudulent FTHBC and AOTC claims.

After a two-week trial, a jury convicted Fountain, Ishmael, and Johnson on multiple counts of conspiracy and filing false claims to the IRS in violation of 18 U.S.C. §§ 286 and 287. Fountain was also convicted on one count of Hobbs Act Extortion and two counts of making or presenting false tax returns, violations of 18 U.S.C. § 1951(a) and 26 U.S.C. § 7206, respectively. Additionally, Johnson was convicted of filing false claims to the IRS while on pretrial release in violation of 18 U.S.C. §§ 287 and 3147(1).

Fountain moved for a judgment of acquittal after trial on the Hobbs Act charge, which the District Court denied. Following evidentiary hearings on the dollar amounts involved in the Defendants' schemes, the District Court sentenced Fountain to 228 months' imprisonment and a three-year term of supervised release, and ordered her to pay restitution of $1,740,221.40. The District Court sentenced Ishmael to 144 months' imprisonment and a three-year term of supervised release, and ordered him to pay restitution of $1,751,809.40. Finally, the District Court sentenced Johnson to 216 months' imprisonment and a three-year term of supervised release, and ordered him to pay restitution of $1,248,392.40. Each of these sentences fell within the applicable Guidelines ranges after the District Judge imposed various enhancements.

II. Discussion
A. Fountain's Hobbs Act Conviction

Fountain contends that the evidence at trial was insufficient to support a conviction for extortion under color of official right. While sufficiency of the evidence is a question of law subject to plenary review, [w]e review ‘the evidence in the light most favorable to the Government,’ afford ‘deference to a jury's findings,’ and draw ‘all reasonable inferences in favor of the jury verdict.’ United States v. Moyer, 674 F.3d 192, 206 (3d Cir.2012) (quoting United States v. Riley, 621 F.3d 312, 329 (3d Cir.2010) ). We will overturn the verdict “only when the record contains no evidence, regardless of how it is weighted, from which the jury could find guilt beyond a reasonable doubt.” Id. (quoting Riley, 621 F.3d at 329 ) (internal quotation marks omitted).

The extortion count against Fountain alleged that she obtained and attempted to obtain money from Deborah Alexander under color of official right as an IRS employee. As the Government demonstrated at trial, Alexander was a client at Natashia Witherspoon's hair salon. Witherspoon, who was also Fountain's hairstylist, recruited Alexander and other clients to provide personal information so that Fountain could file fraudulent tax returns in their names. Witherspoon had Alexander fill out blank IRS forms with her personal information and then gave those forms to Fountain for her to file. Alexander never dealt directly with Fountain, but she knew Fountain worked for the IRS. Sometime after her tax return was filed, Witherspoon told her that she had to pay Fountain a $400 fee. Alexander testified that she became suspicious, but paid the fee anyway. Witherspoon testified that she told some people that Fountain would “red flag” them if they did not pay her fee, but did not say whether she conveyed that information to Alexander in particular. Likewise, Alexander did not recall Witherspoon mentioning any consequences for failing to make the payment.

We hold that the evidence adduced at trial was sufficient to support Fountain's Hobbs Act conviction. Because we have articulated the appropriate standard for an official right extortion conviction in varying ways in past cases, we take this opportunity to synthesize our case law and explain how we come to this result.

1. Elements of Hobbs Act Extortion Under Color of Official Right

The federal statute penalizing extortion, 18 U.S.C. § 1951, a codification of the 1946 Hobbs Act, provides that:

Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.

18 U.S.C. § 1951(a). Extortion is defined as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.” Id. § 1951(b)(2). As we explained in United States v. Manzo, 636 F.3d 56 (3d Cir.2011) :

Congress sought to proscribe coercive activity through enactment of the Hobbs Act. Under the terms of the Hobbs Act, a person can only commit extortion in one of two ways: (1) through threatened force, violence or fear or (2) under color of official right. See 18 U.S.C. § 1951(b)(2). Both of these types of extortion are inherently coercive.

Id. at 65.

Whereas in a case of extortion by force, violence, or fear, the acts or threats supply the coercion, “when proceeding under a ‘color of official right’ theory, the ‘misuse of public office is said to supply the element of coercion.’ Id. (quoting United States v. Hathaway, 534 F.2d 386, 393 (1st Cir.1976) ); see also Evans v. United States, 504 U.S. 255, 266, 112 S.Ct. 1881, 119 L.Ed.2d 57 (1992) (adopting the majority rule that “the coercive element” of Hobbs Act extortion under color of official right “is provided by the public office itself”). In other words, the importance of a defendant's public office or official act to a Hobbs Act charge is its coercive effect on the payor. Accordingly, after reviewing the legislative history and evaluating competing constructions of the statute, the Supreme Court held in Evans that to prove a conviction for extortion under color of official right, “the Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts.” 504 U.S. at 268, 112 S.Ct. 1881.

We interpreted Evans in United States v. Antico, 275 F.3d 245 (3d Cir.2001), and explained that “no ‘official act’ ... need be proved to convict under the Hobbs Act.” Id. at 257. Rather, we focus on (1) the motivation of the payor, that is, whether a payment was made in return for official acts,” and (2) whether the defendant knew the payor's motivation. Id. (emphasis added) (quoting Evans, 504 U.S. at 268, 112 S.Ct. 1881 ) (internal quotation marks omitted). As such, in Antico, we approved a district court's instruction that the jury had to decide “whether the giver gave the payments ... because he believed the defendant would use his office for acts not properly related to his official duty. Id. at 259 (underline added). Similarly, in United States v. Urban, 404 F.3d 754 (3d Cir.2005), we upheld a Hobbs Act conviction where the government adduced substantial evidence that (1) the payors made payments to the defendants knowing they were “public officials exercising governmental authority”; (2) the payors “made payments in order to assure advantageous exercise of that government authority”; and (3) the defendants “knew that the [payors'] payments were made for an improper purpose, i.e., the influencing of their governmental authority.” Id. at 769.

In other decisions, however, we have expressly identified another consideration in our official right extortion inquiry: whether the payor's belief was reasonable. This line of cases began with our en banc decision in United States v. Mazzei, 521 F.2d 639 (3d Cir.1975) (en banc). There, the defendant, a state senator, received payments in exchange for helping a corporation obtain a lease from a state executive agency. Id. at 641. The defendant argued that he could not have been acting under color of official right because he “had no official power” in that area, and he “never pretended to have any official power.” Id. at 643. We...

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