U.S. v. Brumley

• Decision Date: 18 June 1997
• Docket Number: No. 94-40560,94-40560
• Citation: 116 F.3d 728
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Michael Bryant BRUMLEY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 728

116 F.3d 728

UNITED STATES of America, Plaintiff-Appellee, v. Michael Bryant BRUMLEY, Defendant-Appellant.

No. 94-40560.

United States Court of Appeals Fifth Circuit.

June 18, 1997.

Rehearing Denied July 23, 1997.

Traci Lynne Kenner, Assistant U.S. Attorney, Lon Stuart Platt, Tyler, TX, Mervyn J. Hamburg, U.S. Department of Justice, Criminal Division, Washington, DC, Carol Kay Johnson, Assistant U.S. Attorney, Sherman, TX, for Plaintiff-Appellee.

George Michael Jamail, Bernsen, Jamail & Goodson, Beaumont, TX, for Defendant-Appellant.

Appeal from the United States District Court for the Eastern District of Texas.

Before POLITZ, Chief Judge, and KING, GARWOOD, JOLLY, HIGGINBOTHAM, DAVIS, JONES, SMITH, DUHE, WIENER, BARKSDALE, EMILIO M. GARZA, DeMOSS, BENAVIDES, STEWART, PARKER and DENNIS, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Michael Bryant Brumley was convicted in a bench trial of conspiring to defraud the citizens of the State of Texas of honest services by use of interstate wire communications and the United States mail in violation of 18 U.S.C. § 371, three counts of wire fraud in violation of 18 U.S.C. § 1343, three counts of money laundering in violation of 18 U.S.C. § 1956, and two counts of making a false statement to a financial institution in violation of 18 U.S.C. § 1014. Brumley does not appeal his conviction on the last two counts of defrauding a financial institution, and they are not before us.

As we will explain, Brumley's primary contention is that the government has misused federal criminal statutes to prosecute a state employee for ethical lapses. Along the way to review by the en banc court the issues on appeal have narrowed to four. First, Brumley urges that neither the plain language of § 1346 nor its legislative history expands the types of victims protected by the statute to include a state employer. Second, he insists that an ethical lapse, or at worst a state misdemeanor, is not a deprivation of honest services. Third, he argues that the Commerce Clause does not support § 1346. Finally, he contends that the money laundering statute does not reach his conduct. Brumley also challenged the statute and the indictment on vagueness grounds in the district court, but he did not pursue these contentions on appeal.

We reject each of these contentions and affirm the convictions. In doing so we reject the argument that Congress failed in its 1988 effort to expand the statute to cover the deprivation of honest services which the McNally and Carpenter decisions found were outside the statute's reach. See Carpenter v. United States, 484 U.S. 19, 25, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987); McNally v. United States, 483 U.S. 350, 359-60, 107 S.Ct. 2875, 2881-82, 97 L.Ed.2d 292 (1987). This argument has gathered strength from the Supreme Court's recent Commerce Clause decisions, but we ultimately conclude that it cannot escape the plain language of § 1346.

I

A panel of this court first reversed the convictions for wire and mail fraud, as well as money laundering and conspiracy. United States v. Brumley, 59 F.3d 517 (5th Cir.1995), withdrawn, 79 F.3d 1430 (5th Cir.1996). The panel reversed for lack of evidence that Brumley could foresee the interstate character of the wire transmission relied upon by the government. After withdrawing this opinion, the panel, with one judge dissenting, held that the term "another" as used in 18 U.S.C. § 1346 does not reach citizens of a state or political subdivision who have been deprived of the honest services of their public officials. United States v. Brumley, 79 F.3d 1430, 1441-42 (5th Cir.1996). We granted the government's petition for rehearing en banc on July 17, 1996. United States v. Brumley, 91 F.3d 676 (5th Cir.1996).

II

Texas' workers' compensation law was long administered by the Texas Industrial Accident Board. Under this regime the Board dealt with three groups: claimants, their lawyers, and insurance carriers insuring the employers. Brumley worked for the Board and resided in Beaumont, Texas. In 1990 the Texas legislature changed the process for resolving workers' compensation claims. The Board became the Texas Workers' Compensation Commission, and Brumley was promoted to Regional Associate Director of Brumley never seemed to be able to live within his income. As early as 1982, he began to solicit loans from lawyers representing claimants and their assistance in obtaining loans from lending institutions. In 1985 and 1986, while he was conducting prehearing conferences in cases in Lufkin, Texas, he charged and never repaid several hundred dollars to the account of a claimant's counsel at the local country club. By 1988 Brumley had borrowed money from at least eight lawyers and struck up a relationship with John M. Cely, a Lufkin attorney with a substantial workers' compensation practice. Cely and persons employed by his law firm made frequent appearances before Brumley in prehearing conferences. They began a process whereby Cely would cause wire transfers to be made from the Western Union office in Lufkin to Brumley at various locations in Texas. These wire transfers were accomplished electronically through a Western Union facility located outside of Texas. From 1987 to May of 1992, Cely made some seventy wire transfers to Brumley totaling approximately $86,730. In all, Brumley "borrowed" some $112,156 from eleven lawyers, including Cely. None of this sum was ever repaid.

                the new commission and moved to the new commission's Houston office.  Brumley's duties included the handling of claims arising under the old law and, according to the indictment, responsibility for "identifying attorneys and insurance carriers who failed to follow TWCC or IAB rules and regulations."   Brumley's work gave him knowledge of the conduct of lawyers, the identity of unrepresented claimants, and the details of the process itself
                

The indictment charged a scheme to defraud "the citizens of the State of Texas, including the members of the Texas Industrial Accident Board ..., an agency of the State of Texas, from receiving the intangible right to honest services."

III

Brumley contends that Congress did not intend to reach schemes to deprive an entity of state government of the intangible right of honest services in its 1988 enactment of § 1346. That statute provides:

For the purposes of this Chapter, the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services.

Reading § 1346 with § 1343 we have the following prohibition:

Whoever, having devised or intending to devise any [scheme or artifice to deprive another of the intangible right of honest services], ... transmits or causes to be transmitted by means of [interstate wires] for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than five years, or both.

Brumley's present argument, taking a cue from the second panel opinion, takes two related cuts at the application of the statute to his conduct. First, he contends that "another" has the same meaning as the term "whoever" for purposes of the fraud chapter of the criminal code, specifically Chapter 63 of Title 18. And "another" cannot include his state employer or the citizens of the State of Texas. Second, invoking federalism, Brumley contends that Congress failed to state its purpose with the clarity demanded for federal incursions into state matters, at least those traveling on the commerce power.

We are persuaded that a governmental entity qualifies as "another" within the meaning of § 1346, and that "honest services" can include "honest and impartial government." The panel opinion notes that Section 1 of Title I of the U.S.Code provides that " 'person' and 'whoever' include corporations, companies, associations, firms, partnerships, and societies, and joint stock companies, as well as individuals." 79 F.3d at 1435. It "note[s] that among the meanings of the word 'whoever' in Section 1, Title I, there is nothing that could even remotely be interpreted or construed to mean 'a state,' 'a political subdivision of a state,' 'a government,' 'a governmental agency,' or 'the citizens of a state as a body politic.' " Id.

Brumley is himself an "individual," and we think he must qualify as a "whoever" within the meaning of the statute, in which case he Moreover, Section 1 of Title I provides that "person" and "whoever" include the listed terms. We read this to mean that "person" and "whoever" include the listed terms without deciding whether other non-mentioned entities may qualify as a "person" or a "whoever." Otherwise, Congress would have said something other than "include," such as "person" and "whoever" mean the listed terms (or consist of, or perhaps include only ). In this criminal statute, "another" defines the range of victims while "whoever" defines the perpetrator; we do not think it makes sense to define the victims by reference to the definition of the perpetrator. See United States v. Castro, 89 F.3d 1443, 1456 (11th Cir.1996) (concluding that the plain language and legislative history of § 1346 do not limit its application to governmental victims of fraud), cert. denied, --- U.S. ----, 117 S.Ct. 965, 136 L.Ed.2d 850 (1997).

can be prosecuted for depriving "another" of his intangible right of honest services. This case does not involve a prosecution of a state, state subdivision, government, or agency. Rather, it is a prosecution of an individual who abused his position as an employee of a state commission. That the mail fraud statute reaches Brumley's conduct is consistent with the proposition that the statute does not allow prosecution of a state or state agency.

IV

Brumley argues that even if "another" does not modify "whoever," it does not include "citizens as the body politic." The exact thrust of this contention is uncertain, given the fact that the defendant is not a political entity...