Bateman v. U.S., 88-1820

• Decision Date: 24 May 1989
• Docket Number: No. 88-1820,88-1820
• Parties: Barry L. BATEMAN, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1304

875 F.2d 1304

Barry L. BATEMAN, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 88-1820.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 16, 1989.

Decided May 24, 1989.

Nelson P. Skinner, Law Offices of Acevedo & Leal, San Antonio, Tex., for petitioner-appellant.

Laura J. Jones, Asst. U.S. Atty., East St. Louis, Ill., for respondent-appellee.

Before CUMMINGS and FLAUM, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

PER CURIAM.

Barry L. Bateman filed this motion pursuant to 28 U.S.C. Sec. 2255, seeking relief from his convictions for conspiracy to commit mail fraud, mail fraud and interstate transportation of stolen property in violation of 18 U.S.C. Secs. 371, 1341, 2314. Bateman argues that his conviction should be set aside in light of McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). The district court disagreed and dismissed Bateman's motion to vacate. We affirm.

I. Facts and Proceedings Below

Bateman, along with co-defendant Edward Massey, was indicted on May 20, 1983, for defrauding his employer, Southern Illinois University. The indictment alleged that Bateman and Massey, employed by the University respectively as the Executive Director of Computing Affairs and the Assistant Director of Computing Affairs, formed a series of shell corporations unbeknown to the University in order to buy computer equipment. They then utilized their positions at the University to cause the University to purchase or lease computer equipment from their corporations at greatly inflated prices by essentially rigging the bidding process for which they had considerable responsibility.

Bateman was charged in three counts. Count One charged him with conspiring to commit mail fraud, alleging that his scheme intended to deprive the University of his good and honest services as an employee, in typical pre-McNally fashion. The other two counts against Bateman related to the first and alleged mail fraud (mailing a certain University contract to a bank) and interstate transportation of stolen property (three checks obtained by fraud). Bateman pleaded guilty to all three counts on June 13, 1983, and was sentenced on September 28, 1983. ¹ He did not file a direct appeal.

On January 5, 1988, Bateman filed the present motion to vacate judgment pursuant to 28 U.S.C. Sec. 2255, predicated on the Supreme Court's decision in McNally. He argues that the court which entered his conviction did not have subject matter jurisdiction because the property interest underlying the fraudulent activity alleged in the indictment to which he pleaded guilty was intangible in nature, namely, his good and honest services as an employee, which the Supreme Court has determined is not the type of property interest protected by the federal mail fraud statute. He apparently also contends that his conspiracy to commit mail fraud and the interstate transportation of stolen property convictions are dependent upon the mail fraud conviction and cannot stand.

II. Analysis

A. Impact of McNally on Mail Fraud

In McNally, the Supreme Court construed Section 1341 of the Criminal Code, the federal mail fraud statute, as requiring that the fraud with which a defendant has been charged must have been intended to deprive the victim of money or tangible property. For a conviction to be sustained, the defendant must be shown to have intended to deprive the victim of something other than so-called "intangible" rights. ² And this Court has held that McNally applies retroactively to a collateral attack on a conviction. Magnuson v. United States, 861 F.2d 166 (7th Cir.1988).

While an indictment which is premised exclusively upon an intangible rights theory of fraud dictates reversal under McNally (e.g., Magnuson v. United States, 861 F.2d 166 (7th Cir.1988); United States v. Holzer, 840 F.2d 1343 (7th Cir.1988), certiorari denied, --- U.S. ----, 108 S.Ct. 2022, 100 L.Ed.2d 608) (1988), the mere inclusion of intangible rights language in an indictment will not mandate relief from conviction. Rather, the presence of some language referring to an intangible rights theory will not be fatal to an indictment in which multiple claims are alleged and the intangible rights language is limited in its application, or when the intangible rights language is easily separable from allegations of a scheme to defraud someone of tangible property. Even when a single set of facts establishes both a scheme to defraud a victim of tangible property as well as a deprivation of some intangible right, McNally does not require setting aside the conviction. United States v. Wellman, 830 F.2d 1453, 1462-1463 (7th Cir.1987). A court will look beyond the mere form of the indictment to its substance to determine whether it fairly alleges a scheme involving tangible property. Under McNally, an indictment alleges a violation of the federal mail fraud statute if it charges a defendant with conduct that would ordinarily result in some kind of concrete economic harm to the victim. Wellman, 830 F.2d at 1462.

Bateman now argues that because the indictment alleged a "scheme and artifice to defraud ... [his employer] ... of [his] good and honest services as [an employee]," McNally requires that his conviction be vacated. Section 2255 affords relief on only certain enumerated grounds to a prisoner collaterally attacking his sentence, and despite his protestations to the contrary, Bateman's challenge is not of a constitutional or jurisdictional nature, ³ and the question of guilt or innocence is not cognizable on a Section 2255 motion. United States v. Angelos, 763 F.2d 859, 861 (7th Cir.1985). But relief will be afforded to a prisoner who is able to show, as Bateman now claims, that he was convicted of a federal crime and sentenced thereon based upon conduct which under no possible view amounts to a violation of federal law, under the Section 2255 rubric permitting motions to vacate sentences "otherwise open to collateral attack." Ibid.

After pleading guilty, Bateman failed to appeal; consequently, this is the first time Bateman has made a McNally argument. An issue not preserved by direct appeal generally is not freely cognizable on collateral attack. A judgment entered on a plea of guilty is an appealable order, albeit the grounds for appeal are considerably more limited than if the defendant had contested the charges at trial. Angelos, 763 F.2d at 860; see also Williams v. United States, 805 F.2d 1301, 1306 (7th Cir.1986), certiorari denied, 481 U.S. 1039, 107 S.Ct. 1978, 95 L.Ed.2d 818 (1987) ("we reject the notion that when a defendant pleads guilty his first appeal, for all practical purposes, is a section 2255 proceeding"). As a consequence, this Section 2255 motion, a collateral attack based on an issue not previously challenged, is properly reviewed under the cause and prejudice standard of United States v. Frady, 456 U.S. 152, 102 S.Ct. 1584, 71 L.Ed.2d 816 (1982); see Williams, 805 F.2d at 1306; Angelos, 763 F.2d at 861. ⁴

B. Cause

In Reed v. Ross, 468 U.S. 1, 104 S.Ct. 2901, 82 L.Ed.2d 1, (1984), the Supreme Court, while acknowledging that no precise definition had ever been articulated for "cause"--and expressly refusing to do so--offered contrasting prototypical instances which underlay the principles behind the cause requirement. A defendant is typically bound by his competent counsel's decision to forego a trial objection or direct appeal, and cannot, after that strategy has proved unsuccessful, later pursue the issue on collateral review. To review a collateral claim following a procedural default, which resulted from an intentional decision of counsel advancing the interests of his client, would subvert many of the policies underlying contemporaneous objection rules and procedural default. 468 U.S. at 13-14, 104 S.Ct. at 2909.

Standing in contrast to an intentional procedural default is the situation in which after conviction an intervening change in the law is announced. 468 U.S. at 13-14, 104 S.Ct. at 2909, citing, among other Circuit cases, this Court's decision in Norris v. United States, 687 F.2d 899, 903 (7th Cir.1982). The failure of defendant's counsel to raise a claim for which there was no reasonable basis at the time is rightly a ground for good cause excusing procedural default. ⁵ Drawing on United States v. Johnson, 457 U.S. 537, 102 S.Ct. 2579, 73 L.Ed.2d 202 (1982), the Court identified three instances in which a new rule, having retroactive effect, might be such a "clear break with the past" to justify cause for an earlier default by counsel. First, the Supreme Court may explicitly overrule a precedent of its own. Second, a decision may overturn a longstanding and widespread practice on which the Court had not yet spoken, but which was routinely applied by a nearly unanimous body of lower courts. Third, the Court could disapprove a practice which had arguably been sanctioned by the Court in the past. "By definition, when the case falling into one of the first two categories is given retroactive application, there will almost certainly have been no reasonable basis upon which an attorney previously could have urged a ... court to adopt the position that [the Supreme] Court has ultimately adopted." 468 U.S. at 17, 104 S.Ct. at 2911.

The claim before us represents a scenario from the second category as explained in Reed. Prior to McNally, nearly every court to have considered the matter of intangible rights as it relates to mail fraud validated the theory. See McNally, 107 S.Ct. at 2883-2885 and n. 3 and n. 5 (Stevens, J., dissenting). Indeed, the doctrine had its origins in this very Court. See, e.g., United States v. Isaacs, 493 F.2d 1124, 1149-1150 (7th Cir.1974), certiorari denied, 417 U.S. 976, 94 S.Ct. 3184, 41 L.Ed.2d 1146 (1974). Consequently, the decision in McNally has been "variously described as 'blockbusting,' as 'a total surprise' and as 'a total explication of the law of...