286 F.3d 92 (2nd Cir. 2002), 00-1751, U.S. v. Handakas

Docket Nº:00-1751
Citation:286 F.3d 92
Party Name:U.S. v. Handakas
Case Date:March 22, 2002
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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286 F.3d 92 (2nd Cir. 2002)

UNITED STATES of America, Appellee,

v.

Vassilios K. HANDAKAS, Defendant-Appellant.

No. 00-1751.

United States Court of Appeals, Second Circuit

March 22, 2002

Argued Nov. 1, 2001.

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Lisa Fleischman, Assistant United States Attorney, Brooklyn, NY (Alan Vinegrad, United States Attorney for the Eastern District of New York; Susan Corkery, Richard Weber, Assistant United States Attorneys, on the brief. Barbara D. Underwood, Chief Assistant United States Attorney; David C. James, Assistant United States Attorney, on the supplemental brief), for Appellee.

James B. Lebow, Bournazos & Matarangas, New York, NY, for Defendant-Appellant.

Before: FEINBERG, JACOBS, CABRANES, Circuit Judges.

Judge FEINBERG dissents in part by separate opinion.

JACOBS, Circuit Judge.

Vassilios K. Handakas appeals from the judgment of conviction and sentence entered in the United States District Court for the Eastern District of New York (Weinstein, J.), following his conviction by a jury of (inter alia) conspiracy to commit mail fraud by depriving the New York City School Construction Authority ("SCA") of its "intangible right of honest services," conspiracy to launder the proceeds of the mail fraud, and the structuring of financial transactions to evade currency reporting laws.

The mail fraud conspiracy count arises out of work done for the SCA by a Handakas-owned construction company and the violation of [1] the "prevailing rate of wage" contract provision required by New York's "Little Davis-Bacon Act," and [2] other certification and reporting requirements in the construction contracts. The government's deprivation of "honest services" theory was all that was left of the mail fraud charge after a special jury verdict absolved Handakas of the alternative theory that Handakas conspired to defraud the SCA of its "money or property."

On appeal, Handakas maintains: [1] that the two structuring counts are multiplicitous, because the indictment charged that Handakas engaged in structuring over two consecutive 12-month periods, without alleging that he engaged in two separate structuring schemes; [2] that the "honest services" provision of the mail fraud statute is inapplicable to the conduct charged; [3] that (alternatively) there is insufficient evidence of intent to commit mail fraud; and [4] that the money laundering conviction, which is based entirely on the laundering of funds derived from the unlawful activity of mail fraud, must fall for the same reasons. Additionally, Handakas argues in a pro se brief and in a supplemental brief by counsel that his mail fraud conviction cannot stand because the "honest services" provision of the mail fraud statute is unconstitutionally vague, and that we must reverse the money laundering conviction as well, which is wholly premised on the mail fraud. 1

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We hold: [1] that the structuring counts are multiplicitous because they do not allege separate structuring schemes, and [2] that the "honest services" provision of the mail fraud statute is void for vagueness as applied to Handakas. Accordingly, we reverse the conviction on the mail fraud conspiracy count, as well as the money laundering conspiracy count dependent thereon, and one of the counts of structuring; the sentence is vacated, and the case is remanded to the district court for resentencing on the remaining structuring count and the other counts undisturbed on this appeal.

I

On appeal, we consider the facts in the light most favorable to the government. See Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979).

Handakas, in his capacity as president and sole shareholder of Astro Waterproofing Restoration Company ("Astro"), submitted a number of successful general contracting bids to the SCA, a public benefit corporation that oversees construction projects performed on New York City schools. The mail fraud conviction arises out of his wilful breach of certain contractual obligations undertaken by Astro.

In awarding its contracts, the SCA follows state law mandating that, inter alia: [1] the SCA award all contracts to the lowest qualified bidder, see N.Y. Pub. Auth. Law § 1734 (McKinney 2001); and [2] the successful bidder pay project workers "prevailing rate of wages," and submit certified payroll records that so certify as a condition of receiving payment. N.Y. Lab. Law § 220, et seq. (McKinney 2000); see also N.Y. Const. art. 1 § 17. Under § 220, "[a]ny person or corporation that wilfully pays ... less than [the] stipulated wage scale ... shall be guilty of a misdemeanor and ... shall be punished for such first offense by a fine of five hundred dollars or by imprisonment for not more than thirty days...." N.Y. Lab. Law § 220 (McKinney 2000).

In the course of the projects, Handakas submitted certified payroll records that reflected compliance with the prevailing rate of wage requirement. Handakas, in fact, paid his workers substantially less than half the prevailing rate of wage.

Additionally, there was evidence that Handakas left certain workers's names off the payroll and fraudulently substituted other names, that he manipulated the record of the number of hours worked, and that the SCA paid Handakas based upon his false submissions. It is, however, doubtful that the government is entitled to the benefit of findings and inferences based on this evidence, which bears upon possible financial harm to the SCA. Although the government argued to the jury that the SCA suffered financial loss, i.e., that the SCA was deprived of money or property as well as "honest services," the jury found by special verdict that Handakas was guilty of mail fraud only on the ground that he deprived the SCA of its "intangible right of honest services"--and not on the ground that the SCA was deprived of money or property.

In league with two subcontractors, Handakas funneled large transfers (disguised as subcontractor payments) to himself for personal expenses and to family members in Greece. Handakas formed a series of shell corporations that received such phony payments from Astro and wired the

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money back to Handakas, directly or indirectly, in the United States or Greece.

On May 14, 1998, Handakas was arrested at an airport, en route to Greece, carrying $102,000 without having made the currency disclosure report required by law. The arrest triggered further investigations, and eventually the indictment. Handakas was convicted on all counts of the indictment: one count of conspiracy to commit mail fraud by depriving another of "the intangible right of honest services" (in violation of 18 U.S.C. §§ 371, 1341, 1346); one count of conspiracy to launder money (in violation of 18 U.S.C. §§ 1956(h), 3551, et seq.); two counts of illegally structuring financial transactions to evade reporting requirements (in violation of 31 U.S.C. §§ 5324(a)(3), (c)(2)); one count of failure to file a currency report (in violation of 31 U.S.C. §§ 5316(c)(1)(A), 5322(a)); one count of making a materially false representation (in violation of 18 U.S.C. § 1001(a)(2)); and one count of conspiracy to defraud the United States (in violation of 18 U.S.C. §§ 371, 3551, et seq.).

Handakas was sentenced to a prison term of 70 months, and was ordered to pay a $500,000 fine, $638,350.27 in restitution, and a $700 special assessment.

II

The multiplicity challenge to the structuring counts is raised for the first time on appeal. Generally, we review challenges "not brought to the attention of the [district] court" for plain error. Fed.R.Crim.P. 52(b); see also United States v. Thomas, 274 F.3d 655, 660 (2d Cir. 2001). However, "there is a strong argument that if the alleged multiplicity is clear from the indictment the failure to raise this objection prior to trial constitutes a waiver." United States v. Chacko, No. 96-519, 1997 WL 481862, at *4 (S.D.N.Y. Aug.21, 1997); see also Fed.R.Crim.P. 12(b)(2) (requiring that "[d]efenses and objections based on defects in the indictment or information" be raised prior to trial). 2 But we will apply plain error review, because the parties agree that plain error is the standard and did not brief the question of whether the alleged multiplicity was apparent on the face of the indictment.

To demonstrate plain error, Handakas must show: "(1) error, (2) that is plain, and (3) that affect[s] substantial rights." Johnson v. United States, 520 U.S. 461, 466-67, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997) (quoting United States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993)) (internal quotation marks omitted, alteration in original). "If all three conditions are met, an appellate court may then exercise its discretion to notice a forfeited error, but only if (4) the error seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings." Id. at 467, 117 S.Ct. 1544 (quoting Olano, 507 U.S. at 732, 113 S.Ct. 1770) (internal quotation marks omitted, alteration in original).

An indictment is multiplicitous when it "charges in separate counts two or more crimes, when in law and fact, only one crime has been committed." Chacko, 1997 WL 481862, at *4 (quoting United States v. Holmes, 44 F.3d 1150, 1153-54 (2d Cir. 1995)); see also Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 76 L.Ed. 306 (1932) ("The applicable rule is that, where the same act or transaction constitutes a violation of two distinct

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statutory provisions, the test to be applied to determine whether there are two offenses or only one is whether each provision requires proof of an additional fact which the other does not."). When the same statutory offense is...

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