US v. Callanan

• Citation: 671 F. Supp. 487
• Decision Date: 09 October 1987
• Docket Number: No. 83-60101-DT.,83-60101-DT.
• Parties: UNITED STATES of America, Plaintiff, v. Evan CALLANAN, Sr., Evan Callanan, Jr., and Sam Qaoud, Defendant.
• Court: United States District Courts. 6th Circuit. United States District Court (Western District Michigan)

671 F. Supp. 487

UNITED STATES of America, Plaintiff, v. Evan CALLANAN, Sr., Evan Callanan, Jr., and Sam Qaoud, Defendant.

No. 83-60101-DT.

United States District Court, E.D. Michigan, S.D.

October 9, 1987.

Sheldon N. Light, Detroit, Mich., for plaintiff.

Nicholas Smith, Southfield, Mich., for defendant Evan H. Callanan, Sr.

Harold Gurewitz, Detroit, Mich., for defendants Evan H. Callanan, Jr. and Sam Qaoud.

OPINION

GILMORE, District Judge.

Defendants Evan Callanan, Sr., Evan Callanan, Jr., and Sam Qaoud bring this action under 28 U.S.C. § 2255 to vacate their convictions in this case. They base their collateral attacks on McNally v. United States, ___ U.S. ___, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), which they claim invalidates the mail fraud theory upon which they were charged and convicted, and requires that their convictions be vacated.

All of these defendants were convicted in 1983 in this court of conspiracy to violate RICO (Count I), and substantive violations of RICO (Count II). Callanan, Jr. was convicted of three counts of mail fraud (Counts IV-VI), and Callanan, Sr. was convicted of one count of mail fraud (Count VI). In addition, Callanan, Jr. was convicted of obstructing a criminal investigation (Count VII), and, in a separate indictment, joined for trial with the other charges, Callanan, Jr. was convicted of making false declarations before a grand jury.

Callanan, Sr. received concurrent sentences of ten (10) years each on the RICO charges and five (5) years on the mail fraud charge. Callanan Jr. received concurrent sentences of eight (8) years each on the RICO charges and five (5) years on the other counts. Qaoud received concurrent sentences of three (3) years on the RICO charges. Their convictions were affirmed by the Court of Appeals in United States v. Qaoud, 777 F.2d 1105 (6th Cir. 1985), cert. denied, ___ U.S. ___, 106 S.Ct. 1499, 89 L.Ed.2d 899 (1986). There was a limited remand from the Court of Appeals for this Court to reconsider whether concurrent RICO sentences (conspiracy and substantive RICO) should be vacated in light of Ball v. United States, 470 U.S. 856, 105 S.Ct. 1668, 84 L.Ed.2d 740 (1985). This court determined the conspiracy and substantive RICO charges required different proofs, and Ball did not require the sentences in question to be vacated. The Sixth Circuit affirmed in United States v. Callanan, 810 F.2d 544 (6th Cir.1987). A petition for certiorari was filed on April 13, 1987.¹

All defendants base their collateral attack on McNally. In that case, the Court reversed defendants' convictions for mail fraud under § 1341, which had been based upon jury instructions that allowed the jury to convict based upon a scheme to defraud the citizens in the Commonwealth of Kentucky of their intangible right to have the Commonwealth's affairs conducted honestly. After analyzing the mail fraud statute and its sparse legislative history, and after noting that the jury had not been required to find that Kentucky had been defrauded of money or property (or control over the spending of money), the Court held that "the jury instruction on the substantive mail fraud count permitted a conviction for conduct not within the reach of § 1341." ___ U.S. at ___, 107 S.Ct. at 2882, 97 L.Ed.2d at 303.

The Court held that the language and legislative history of 18 U.S.C. § 1341 demonstrated that it is limited in scope to the protection of money or property rights, and does not extend to the intangible right of citizenry to good government.

McNally announced a new interpretation of the mail fraud statute that is clearly at variance with all previous circuit court decisions concerning the intangible rights theory of mail fraud. The federal mail fraud statute, 18 U.S.C. § 1341, prohibits the use of the mails to execute "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." Prior to McNally, every United States Circuit Court of Appeals that discussed the issue uniformly interpreted "any scheme or artifice to defraud" to include a scheme to defraud citizens of their intangible rights to honest and impartial government.²

It is the contention of defendants that they were convicted under an erroneous interpretation of § 1341. They claim there is no difference in the jury instructions in this case and McNally because the jury was expressly instructed that the mail fraud statute protected the public's right to honest and impartial government, and that the jury need not find actual tangible property loss. The basic question for decision by this court is whether McNally is to be applied retroactively because, if it is not, there is no basis for the § 2255 petitions of defendants.

Defendants rely upon Davis v. United States, 417 U.S. 333, 94 S.Ct. 2298, 41 L.Ed.2d 109 (1974), as supporting retroactivity of McNally. In Davis, petitioner, after being declared a delinquent, was ordered to report for induction pursuant to Selective Service regulations, which permitted the ordering of a declared delinquent to report for induction even though he had not been found acceptable for military service. When he failed to report, he was prosecuted and convicted. He appealed, and the case was remanded in light of a then recent Supreme Court case, Gutknecht v. United States, 396 U.S. 295, 90 S.Ct. 506, 24 L.Ed.2d 532 (1970), which held that Selective Service regulations that accelerated the induction of delinquent registrants by shifting them to first priority in the order of call were punitive in nature, and were without legislative sanction.

The district court in Davis concluded that Gutknecht did not affect the conviction, and the Court of Appeals affirmed. While petitioners' petition for certiorari was pending, the Court of Appeals decided United States v. Fox, 454 F.2d 593 (9th Cir.1971), wherein, in light of Gutknecht, the Ninth Circuit reversed a conviction on facts almost identical to those in Davis. The Supreme Court subsequently denied certiorari.

After beginning his sentence, petitioner brought a proceeding under 28 U.S.C. § 2255, asserting that the Fox decision effected a change in the law of the Ninth Circuit, and that its holding required his conviction be set aside. The district court denied relief, and the Ninth Circuit affirmed.

On certiorari, the Supreme Court reversed and remanded. First, the Court held that the Ninth Circuit erred in holding that "the law of the case," as determined in the earlier appeal from the petitioner's conviction, precluded him from securing relief under § 2255 on the basis of an intervening change in the law. The Court noted their opinion in Sanders v. United States, 373 U.S. 1, 83 S.Ct. 1068, 10 L.Ed.2d 148 (1963), where the Court held, inter alia, "that even though the legal issue raised in a § 2255 motion was `determined against the applicant on the merits of a prior application,' `the applicant may nevertheless be entitled to a new hearing upon showing an intervening change in law.'" Davis, 417 U.S. at 342, 94 S.Ct. at 2303 (quoting Sanders, 373 U.S. at 17, 83 S.Ct. at 1078). "The same rule applies when the prior determination was made on direct appeal from the applicant's conviction, instead of in an earlier § 2255 proceeding, `if the new law has been made ... since the trial and appeal.'" Id. (quoting Kaufman v. United States, 394 U.S. 217, 230, 89 S.Ct. 1068, 1076, 22 L.Ed.2d 227 (1969)).

The Court further stated:

This is not to say, however, that every asserted error of law can be raised on a § 2255 motion. ... We suggested that the appropriate inquiry was whether the claimed error of law was a "fundamental defect which inherently results in a complete miscarriage of justice," and whether "it ... presents exceptional circumstances where the need for the remedy afforded by the writ of habeas corpus is apparent."

. . . . .

In this case, the petitioner's contention is that the decision in Gutknecht v. United States, as interpreted and applied by the Court of Appeals for the Ninth Circuit in the Fox case after his conviction was affirmed, establishes that his induction order was invalid under the Selective Service Act and that he could not be lawfully convicted for failure to comply with that order. If this contention is well taken, then Davis' conviction and punishment are for an act the law does not make criminal. There can be no room for doubt that such a circumstance "inherently results in a complete miscarriage of justice" and "presents exceptional circumstances."

Id. 417 U.S. at 346-47, 94 S.Ct. at 2305-06 (emphasis added).

Basically, it is defendants' contention that, similar to Davis, they were convicted for an act that simply was not a crime, and never has been, and that, therefore, there was a complete miscarriage of justice. This case can be distinguished from Davis, however. In Davis, defendant had been convicted of an act that simply was not a crime because of a complete change in the law. Therefore, the Court in Davis felt there had been a complete miscarriage of justice. Such is not the case here. Not only was there evidence that the defendant Callanan, Sr. had committed intangible acts of mail fraud, as had the other defendants, there was evidence of direct pecuniary benefits to all three of the defendants. Therefore, the jury could have based its decision upon the finding of direct pecuniary benefit, which still serves as a basis for a mail fraud conviction, even though the intangible rights theory was among those used by the Government.³

Furthermore, on the RICO counts, there was evidence of several acts of bribery on the part of all three parties that could serve as a basis for the two predicate offenses required in RICO.

Davis simply is not controlling on this case because the underpinning of Davis is the fact that the act was no longer a crime. The underpinnings of this case show that there were many other acts, both in the RICO counts and in...