626 F.3d 857 (5th Cir. 2010), 09-20781, United States v. Hoeffner

Docket Nº:09-20781.
Citation:626 F.3d 857
Opinion Judge:PER CURIAM:
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Warren Todd HOEFFNER, also known as Todd Hoeffner, Defendant-Appellant.
Attorney:John Richard Berry (argued), James Lee Turner, Asst. U.S. Attorneys, Houston, TX, for Plaintiff-Appellee. Samuel J. Buffone (argued), Buckley Sandler, L.L.P., Washington, DC, Dane Christian Ball, David Benjamin Gerger, Gerger & Clarke, Chris Flood, Flood & Flood, Houston, TX, Richard Thaddeus Beh...
Judge Panel:Before KING, HIGGINBOTHAM and GARZA, Circuit Judges.
Case Date:November 18, 2010
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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626 F.3d 857 (5th Cir. 2010)

UNITED STATES of America, Plaintiff-Appellee,

v.

Warren Todd HOEFFNER, also known as Todd Hoeffner, Defendant-Appellant.

No. 09-20781.

United States Court of Appeals, Fifth Circuit

November 18, 2010

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[Copyrighted Material Omitted]

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John Richard Berry (argued), James Lee Turner, Asst. U.S. Attorneys, Houston, TX, for Plaintiff-Appellee.

Samuel J. Buffone (argued), Buckley Sandler, L.L.P., Washington, DC, Dane Christian Ball, David Benjamin Gerger, Gerger & Clarke, Chris Flood, Flood & Flood, Houston, TX, Richard Thaddeus Behrens, Haynes & Boone, L.L.P., Dallas, TX, John T. Flood, Flood & Flood, Corpus Christi, TX, Lynne Liberto, Haynes & Boone, LLP, Houston, TX, for Defendant-Appellant.

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

Before KING, HIGGINBOTHAM and GARZA, Circuit Judges.

PER CURIAM:

The defendant appeals from the district court's order denying his motion to dismiss on double jeopardy grounds. The defendant, an attorney, represented clients bringing silicosis claims against insureds of The Hartford Financial Services Group. He was indicted for wire fraud and mail fraud after he made several payments to employees of The Hartford out of the proceeds from settlements with The Hartford. During the course of a six-week trial, the government abandoned an honest services fraud allegation in the indictment, instead focusing on a money and property fraud allegation. The jury failed to reach a verdict, and the district court granted a mistrial. In this interlocutory appeal, we consider whether the government's abandonment of the honest services fraud theory precludes retrial on the money and property fraud theory. For the following reasons, we hold that retrial is not precluded on the money and property fraud theory.

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I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

Warren Todd Hoeffner, an attorney, represented over 900 individuals who brought silicosis and other silica-related claims against manufacturers and sellers of silica-containing products and related protective equipment. Among the insurers of these companies was The Hartford Financial Services Group (" The Hartford" ). Rachel Marie Rossow was a claims supervisor working for one of The Hartford's subsidiaries and was responsible for settling claims and recommending appropriate settlement amounts for claims against The Hartford. John Prestage was a claims handler, and his supervisor was Rossow. Both Rossow and Prestage worked on the silica claims Hoeffner brought against The Hartford's insureds.

In 2002, Hoeffner began contacting the insurers for the silicosis defendants, including The Hartford, and offering to settle his clients' claims. In the following months, Hoeffner successfully settled his clients' claims with most of the defendants and received nearly $56 million in settlement payments, $34 million of which came from The Hartford. Hoeffner received a contingency fee of 40% of the settlement amounts.

During the settlement discussions, Hoeffner met with Rossow and Prestage several times. He funded trips for Rossow and Prestage to Laguna Beach, California, New York City, and Palm Beach, Florida. Also, unbeknownst to The Hartford, Hoeffner paid Rossow approximately $2.6 million and Prestage approximately $760,000 out of the funds that he received from the settlements with The Hartford. Among the payments that Hoeffner made to Rossow and Prestage were several checks drawn from Hoeffner's IOLTA trust account which were mailed to Rossow and Prestage, a wire transfer from Hoeffner's IOLTA trust account to an account owned by Rossow, and a wire transfer to New Country Motors in Hartford, Connecticut for the purchase of two BMW automobiles, one each for Rossow and Prestage.

B. The Indictment

In a superceding indictment dated March 8, 2008,1 Hoeffner, Rossow, and Prestage were charged with one count of conspiracy to commit mail and wire fraud, one count of conspiracy to commit money laundering, two counts of wire fraud, five counts of mail fraud, and six counts of money laundering. 2

The conspiracy to commit wire and mail fraud count alleged that the defendants did " knowingly devise and intend to devise a scheme and artifice to defraud and to obtain money and property by means of false and fraudulent pretenses, representations and promises...." The indictment also alleged the " manner and means" of the conspiracy, alleging " [i]t was part of the conspiracy that" :

17. Defendant Hoeffner would and did make payments to defendants Rossow and Prestage, through bribes and kickbacks, for recommending that subsidiaries of The Hartford pay certain amounts to settle the claims of his clients against The Hartford, its subsidiaries and its Insureds.

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18. Defendants Hoeffner, Rossow and Prestage would and did falsely promise, pretend and represent to subsidiaries of The Hartford ... that the settlement amounts of the claims against The Hartford ... were appropriate amounts to settle the claims and in the best interests of The Hartford ..., well knowing that the defendants intended that some of that money (the " Settlement Funds" ) would instead be funneled by and through Hoeffner to Rossow and Prestage.

19. Defendants would and did cause subsidiaries of The Hartford to pay more than $34,000,000.00 in Settlement Funds, knowing that more than $3,000,000.00 of those funds would be used to pay bribes and kickbacks to Rossow and Prestage.

The indictment then alleged various wires and mailings as part of the execution of the scheme. In each of the substantive wire and mail fraud counts, the indictment alleged, under the heading " The Scheme and Artifice to Defraud,"

the defendants ... did knowingly devise and intend to devise a scheme and artifice to defraud The Hartford and its subsidiaries ... of their right to the honest services of Prestage and Rossow, and to obtain money and property from The Hartford and its subsidiaries ... by means of false and fraudulent pretenses, representations and promises, ... including the concealment of material facts.

The substantive counts each contained a " manner and means" section with allegations identical to those in Paragraphs 17, 18, and 19 of the conspiracy count.

C. The Trial

The district court severed the proceedings against Hoeffner from those against Rossow and Prestage, and Hoeffner was tried before a jury from August 20, 2009 through October 2, 2009. In support of the honest services fraud allegation, the government initially presented evidence that Hoeffner had made payments to Rossow and Prestage from the settlement funds in the form of bribes and kickbacks.3 In support of the money and property fraud allegation, the government presented evidence that The Hartford would not have engaged in settlement discussions with Hoeffner had it known that its employees were going to receive a portion of the settlements.

Hoeffner conceded at trial that he made the payments to Rossow and Prestage, but he offered several theories of defense. He offered evidence that the settlement amounts were fair-i.e., the settlement amounts were not inflated or overvalued, so Hoeffner could not have bribed Rossow and Prestage because he had not received any gain in return. In relation to that theory, Hoeffner presented evidence that Rossow and Prestage were too low in The Hartford hierarchy to exert any influence over the settlement amounts. Hoeffner also testified that he had been extorted into making the payments when Rossow and Prestage threatened to stall the settlement

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approvals indefinitely. 4

As the trial progressed, the government retreated from its theory that Hoeffner committed honest services fraud by paying bribes and kickbacks to Rossow and Prestage. Instead, the government took the position that the mere fact of the concealed payments to employees of The Hartford constituted a scheme to obtain money and property from The Hartford. The government also renounced the honest services fraud allegation during closing argument, asking the jury to focus instead on the money and property fraud allegation in the indictment.

During the jury charge conference, the government informed the district court that it wished to withdraw the honest services fraud theory from the jury's consideration completely.5 As a result, the district court, over the defendant's objection, removed all references to honest services fraud, as well as bribes and kickbacks, from the jury instructions for the substantive fraud counts,6 though the instruction for the conspiracy count still contained a reference to bribes and kickbacks.7

After three days of deliberation, the jury informed the district court that it was unable to reach a unanimous verdict. The district court then granted the defendant's request for a mistrial. Following the mistrial, the government immediately sought to retry the defendant on the same indictment. On October 19, 2009, the defendant filed a motion to dismiss the indictment on double jeopardy grounds. The defendant argued below, as he does here, that the government abandoned the entire indictment when it abandoned the honest services fraud theory at trial. This abandonment, according to the defendant, had the effect of a dismissal and precludes retrial on the money and property fraud theory.

On November 18, 2009, before the district court ruled on the defendant's motion

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to dismiss, the government obtained a second superseding indictment, which contained no reference to the honest services fraud theory or to bribes and kickbacks. On November 19, 2009, the district court denied, without explanation, the defendant's motion to dismiss. The...

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