United States v. Wright

• Decision Date: 07 February 2012
• Docket Number: 09–3731,Nos. 09–3467,09–3965.,s. 09–3467
• Citation: 665 F.3d 560
• Parties: UNITED STATES of America v. Christopher G. WRIGHT, Appellant (No. 09–3467)Ravinder S. Chawla, Appellant (No. 09–3731)Andrew Teitelman. Appellant (No. 09–3965).
• Court: U.S. Court of Appeals — Third Circuit

665 F.3d 560

UNITED STATES of America

v.Christopher G. WRIGHT, Appellant (No. 09–3467)Ravinder S. Chawla, Appellant (No. 09–3731)Andrew Teitelman. Appellant (No. 09–3965).

Nos. 09–3467

09–3731

09–3965.

United States Court of Appeals, Third Circuit.

Argued Sept. 21, 2011.Opinion filed: Jan. 4, 2012.As Amended Feb. 7, 2012.

Lisa A. Mathewson, Esquire (Argued), Philadelphia, PA, for Appellant Christopher G. Wright.

Peter Goldberger, Esquire (Argued), Ardmore, PA, for Appellant Ravinder S. Chawla.

Ellen C. Brotman, Esquire (Argued), Montgomery, McCracken, Walker & Rhoads, Philadelphia, PA, for Appellant Andrew Teitelman.William A. DeStefano, Esquire, Terri A. Pawelski, Esquire, Buchanan Ingersoll & Rooney PC, Philadelphia, PA, for Appellants Ravinder S. Chawla & Andrew Teitelman.Zane David Memeger, Esquire, United States Attorney, Robert A. Zauzmer, Esquire, Assistant U.S. Attorney, Jennifer Arbittier Williams, Esquire (Argued), Assistant U.S. Attorney, Michael J. Bresnick, Esquire, Office of United States Attorney, Philadelphia, PA, for Appellee.Before: AMBRO, CHAGARES, and VANASKIE, Circuit Judges.

OPINION OF THE COURT

AMBRO, Circuit Judge.

A jury convicted appellants Christopher G. Wright, Ravinder (“Ravi”) S. Chawla, and Andrew Teitelman (“Appellants”) of honest services fraud in violation of, inter alia,

18 U.S.C. § 1346, mail fraud (referred to below as “traditional” fraud) in violation of, inter alia, 18 U.S.C. § 1341, and conspiracy to commit these offenses in violation of 18 U.S.C. § 371. After sentencing, the Supreme Court's decision in Skilling v. United States, ––– U.S. ––––, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010), affected the law of honest services fraud. Among other arguments on appeal, Appellants challenge the sufficiency of the evidence and assert that Skilling undermines their convictions. We agree that Skilling requires a new trial on Appellants' honest services fraud convictions and that prejudicial spillover tainted their traditional fraud convictions. We thus vacate and remand.I. Background

From 2005 through 2007, Wright was Chief of Staff to Philadelphia City Councilman John “Jack” Kelly.¹ Wright was also a realtor. Chawla owned the real estate firm World Acquisition Partners (“World Acquisition”), and Teitelman, an attorney, did most of the firm's legal work. Teitelman was not a World Acquisition employee, but his offices were in its office suite, and most of his work came from World Acquisition. Chawla and Teitelman befriended Wright when Wright had an office in the same building.

This case concerns a series of gifts that Chawla, Teitelman, or both gave Wright and a simultaneous series of official acts that Wright took on behalf of World Acquisition. Wright received a free stint in an apartment, free legal services, and was promised commissions on World Acquisition deals. At the same time, Wright shepherded a bill that Chawla favored through Kelly's office, arranged meetings about a World Acquisition development, and communicated with City of Philadelphia offices for World Acquisition.

More specifically, Wright received three main benefits. First, he lived at least part-time in an apartment (with a free parking space) for 14 months without paying rent. World Acquisition had contracted to buy a building at 2000 Delancey Street in Philadelphia, then sold its right to buy the building to another purchaser. Meanwhile, Wright was in divorce proceedings and struggled with alcohol abuse. Teitelman, concerned for Wright, helped him move into one of the building's vacant units. The parties contest the extent to which Chawla knew about this arrangement. The new purchaser's agent soon discovered Wright, who left the apartment months later after the new purchaser sought to evict him.

Second, Wright received free legal help from Teitelman and his associate. When the Delancey Street building's new owner attempted to evict Wright, Teitelman defended him. Teitelman also took over negotiations with the lawyer for Wright's wife when Wright could no longer afford his previous divorce lawyer. Finally, Teitelman defended Wright in a bank foreclosure against Wright's marital home. For all that work, Teitelman billed Wright but $350, and did so only after Teitelman learned that the FBI was investigating their relationship. As with the apartment, the parties contest Chawla's involvement.

Third, Wright was promised commissions in his capacity as a realtor. He occasionally “brought deals” to World Acquisition in the same manner that any realtor could, but none of those deals succeeded, so Wright never earned anything. On one occasion, World Acquisition granted Wright and his partner the exclusive right to approach a buyer for a $100 million property. Had Wright succeeded in making the sale, he would have earned a commission of $6 million, but that deal also fell through. Chawla offered Wright “liaison work” as well,² but Wright declined that offer.

While he was receiving those benefits, Wright took three sets of actions as Councilman Kelly's Chief of Staff that tended to benefit World Acquisition. First, Wright helped Kelly propose and pass a “mechanical parking” ordinance. Philadelphia law required developers planning to install mechanical parking to get a zoning variance, a time-consuming process. At Teitelman's behest, Wright set up a meeting at which Chawla and his partner suggested that Kelly change that law. Kelly, who usually took a pro-development stance, agreed. Chawla and Teitelman prodded Wright to make the bill a priority, and Kelly soon after introduced the bill. The City Council passed it by a vote of 15–0.

Second, Wright helped Chawla oppose an ordinance that would cripple a planned World Acquisition project. Chawla envisioned a large development called “River City” south and west of Philadelphia's Logan Square, where low-rise residences predominate. When the neighborhood association protested, Wright arranged a meeting between Chawla and association leaders. Afterward, Wright wrote Chawla and Teitelman advising that his “role as Jack's Chief of Staff” should be to focus City staff on River City's benefits. Nonetheless, in the face of continued opposition, the City Council passed a building-height restriction that thwarted the River City plans. Kelly joined the 15–0 vote.

Third, Wright worked with other City offices on World Acquisition's behalf. When the Parking Authority was selling a certain property, Wright forwarded public information about its “request for proposal” process to Chawla and Teitelman. Wright also arranged a walkthrough of the property. He obtained public information for World Acquisition from Philadelphia Gas Works through a high-level official rather than through the main call center. Finally, Wright worked with the City's Department of Licenses and Inspections on a certification that the River City property was not encumbered with zoning violations. City Council staff often did so for their constituents, though this certification was unusually complicated.

In 2008, a federal grand jury returned a fourteen-count indictment against Chawla, Teitelman, Wright, and Chawla's brother Hardeep. The indictment charged honest services fraud, traditional fraud, conspiracy to commit both kinds of fraud, and bribery in connection with a federally funded program. After a four-week jury trial, including five days of deliberations, the jury convicted Chawla, Teitelman, and Wright on three counts: (1) conspiracy to commit honest services and traditional fraud (Count One); (2) honest services fraud for the apartment arrangement (Count Ten); and (3) traditional fraud for the apartment arrangement (Count Twelve). The jury further convicted Chawla alone on one honest services count for offering Wright liaison work (Count Three). It acquitted on the other ten counts and acquitted Hardeep Chawla of all counts.

The District Court sentenced Wright to 48 months' imprisonment, Chawla to 30 months, and Teitelman to 24 months, followed in each case by two years of supervised release. It also imposed fines and special assessments on each person. After sentencing, they filed timely appeals to our Court. The District Court had jurisdiction under 18 U.S.C. § 3231, and we have jurisdiction under 28 U.S.C. § 1291.

Appellants challenge their convictions on the grounds that: (1) the evidence was insufficient to convict them on any count; (2) the jury instructions on honest services fraud constitute error after the Supreme Court's intervening decision in Skilling; (3) if the honest services fraud convictions are vacated for any reason, the traditional fraud convictions must be as well due to “prejudicial spillover;” (4) the Government constructively amended the indictment; (5) the District Court allowed inadmissible evidence; and (6) it improperly calculated Appellants' Guidelines sentencing ranges.

We stayed the briefing schedule pending the Supreme Court's decision in Skilling. After that decision, all defendants were released on bail without the Government's objection.

II. DiscussionA. Honest Services Fraud: Sufficiency of the Evidence

“Honest services fraud” has proven hard to define. We recently reviewed its history at length, see United States v. Riley, 621 F.3d 312, 326–27 (3d Cir.2010), so a shorter treatment is sufficient here. The District Court instructed the jury that it could convict for honest services fraud under either a “conflict of interest” theory (whereby it is fraud for a public servant not to disclose a conflict of interest resulting in personal gain) or a “bribery” theory (whereby it is fraud for a public servant to accept benefits in exchange for taking an official action). At the time, this instruction properly stated our law. See United States v. Panarella, 277 F.3d 678, 690 (3d Cir.2002). However, the Supreme Court later construed “honest services fraud” to exclude the conflict-of-interest theory, holding that this interpretation of the statute would render it...