Callanan v. U.S., s. 87-2034

Citation881 F.2d 229
Decision Date05 October 1989
Docket NumberNos. 87-2034,87-2036,s. 87-2034
PartiesEvan CALLANAN, Sr. (87-2034), Evan Callanan, Jr. (87-2036), Petitioners-Appellants, v. UNITED STATES of America, Respondent-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Harold Gurewitz (argued), Detroit, Mich., for Evan Callanan, Jr.

Nicholas Smith (argued), Southfield, Mich., for Evan Callanan, Sr.

Joseph Papelian, Asst. U.S. Atty., Sheldon N. Light (argued), Detroit, Mich., for U.S.

Before MARTIN and NELSON, Circuit Judges, and EDWARDS, Senior Circuit Judge.

DAVID A. NELSON, Circuit Judge.

Evan Callanan, Sr., a former Michigan state court judge, and his son, Evan Callanan, Jr., an attorney, were convicted in federal court on a number of charges, including mail fraud, brought in connection with a bribery scheme. After the convictions were affirmed by this court, the Supreme Court repudiated the "intangible rights" theory on which the Callanans' mail fraud convictions had been premised. McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). Motions to vacate sentence under 28 U.S.C. Sec. 2255 were denied by the district court, and the Callanans appealed again. We conclude that McNally must be applied retroactively and that the Callanans' mail fraud convictions must be vacated. With the exception of the younger Callanan's RICO and RICO conspiracy convictions, we shall allow the Callanans' other convictions to stand.

I

Evan Callanan, Sr. was a trial judge in Michigan's Eighteenth Judicial District Court in Westland, Michigan. His attorney son practiced law in Westland. With the aid of an informant and undercover FBI agents wearing body recorders, extensive evidence was collected concerning the participation of the Callanans in a scheme to fix several of Judge Callanan's cases for bribes ranging from $100 to $6000.

In March of 1983 a superseding indictment was returned against the Callanans and two others, Sam Qauod and Richard Debs, charging mail fraud, substantive RICO violations, and RICO conspiracy. Attorney Callanan was also charged with obstruction of a criminal investigation, and he was indicted separately for perjury.

A jury found Judge Callanan guilty on the RICO and RICO conspiracy counts and on one mail fraud count; he was acquitted on three other mail fraud counts. Attorney Callanan was convicted on all counts, including perjury. Judge Callanan was sentenced to five years in prison on the mail fraud counts and 10 years on the RICO and RICO conspiracy counts, the sentences to be served concurrently. Attorney Callanan was sentenced to eight years in prison on the RICO and RICO conspiracy counts and five years on each of the other counts. We affirmed the convictions in part, but remanded the case for reconsideration of the Callanans' sentences. United States v. Qauod, 777 F.2d 1105 (6th Cir.1985), cert. denied, 484 U.S. 832, 106 S.Ct. 1499, 89 L.Ed.2d 899 (1986). The district court concluded that the sentences were correct, and we affirmed that judgment. United States v. Callanan, 810 F.2d 544 (6th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 107, 98 L.Ed.2d 67 (1987).

In McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), a case decided after the Callanans had gone to prison and begun to serve their sentences, the Supreme Court repudiated the intangible rights theory on which the Callanans' mail fraud convictions had been premised. Judge Callanan and his son then filed motions to vacate sentence pursuant to 28 U.S.C. Sec. 2255. The district court denied relief, declining to give McNally retroactive effect. United States v. Callanan, 671 F.Supp. 487 (E.D.Mich.1987). Both defendants appealed.

II

Ordinarily, a prisoner seeking vacation of his sentence under 28 U.S.C. Sec. 2255 on a ground not raised at trial must show reasonable cause for failure to raise the issue initially and must show that prejudice will result if the issue is not considered. United States v. Frady, 456 U.S. 152, 167-68, 102 S.Ct. 1584, 1594-95, 71 L.Ed.2d 816 (1982). The Callanans did not contend at trial that schemes to defraud citizens of their intangible rights lie outside the purview of the mail fraud statute, but we do not believe that their failure to advance such an argument was fatal to their present claim.

Before McNally, it was settled law in this circuit (and in every circuit that had considered the issue) that the mail fraud statute permitted prosecutions based on the intangible rights theory. McNally has been described as "blockbusting," "a total surprise," and "wholly unexpected." United States v. Ochs, 842 F.2d 515, 521 (1st Cir.1988). The "cause" requirement of Frady should not be applied in a way that would encourage efforts to relitigate well settled points of law, cf. Ingber v. Enzor, 841 F.2d 450, 454 (2d Cir.1988), and the fact that the point appeared to be settled constituted cause for not raising it. There is a strong argument, moreover, that cause need not be shown at all in these unusual circumstances. See United States v. Shelton, 848 F.2d 1485, 1490 n. 4 (10th Cir.1988) (en banc) (probable innocence may make showing of cause unnecessary).

The prejudice requirement boils down to a question of whether the Callanans could properly have been convicted anyway under the interpretation of the mail fraud statute articulated in McNally. We shall come to that question presently.

III

The district court's decision that McNally should not be given retroactive effect was based on Allen v. Hardy, 478 U.S. 255, 106 S.Ct. 2878, 92 L.Ed.2d 199 (1986) (per curiam). That case involved the retroactivity of "a decision announcing a new constitutional rule of criminal procedure." 478 U.S. at 258, 106 S.Ct. at 2880. The case at bar involves not a new rule of criminal procedure, but a new interpretation of the substantive criminal law. In this the present case resembles Davis v. United States, 417 U.S. 333, 94 S.Ct. 2298, 41 L.Ed.2d 109 (1974), a decision indicating that where the intervening change of law is such that the defendant was punished "for an act that the law does not make criminal," the new rule of law must be applied retroactively in postconviction proceedings. See id. at 346, 94 S.Ct. at 2305; see also United States v. Johnson, 457 U.S. 537, 550, 102 S.Ct. 2579, 2587, 73 L.Ed.2d 202 (1982) (dictum) ("the Court has recognized full retroactivity as a necessary adjunct to a ruling that a trial court lacked authority to commit or punish a criminal defendant in the first place"). 1

Subsequent to the district court's decision in this case, we applied McNally retroactively in direct appeals, see United States v. Stack, 853 F.2d 436, 437 (6th Cir.1988), and in postconviction proceedings on a motion for a writ of error coram nobis. Allen v. United States, 867 F.2d 969 (6th Cir.1989). Other courts of appeals have concluded uniformly that the rule of McNally must be applied retroactively in postconviction proceedings. See Ingber, 841 F.2d at 455; United States v. Osser, 864 F.2d 1056, 1058 (3d Cir.1988); United States v. Mandel, 862 F.2d 1067, 1075 (4th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 3190, 105 L.Ed.2d 699 (1989); Magnuson v. United States, 861 F.2d 166,167 (7th Cir.1988); United States v. Mitchell, 867 F.2d 1232, 1233 (9th Cir.1989); Shelton, 848 F.2d at 1488-90. We agree that McNally must be given retroactive effect in Sec. 2255 proceedings.

IV

The federal mail fraud statute, 18 U.S.C. Sec. 1341, provides in pertinent part:

"Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, ... for the purpose of executing such scheme or artifice or attempting so to do [uses the mails or causes them to be used], shall be fined not more than $1,000 or imprisoned not more than five years, or both."

Although the lower federal courts had interpreted the words "scheme or artifice to defraud" as broad enough to include schemes to defraud the public of "intangible rights" such as the right to good government, McNally read the statute as "limited in scope to the protection of property rights." 483 U.S. at 360, 107 S.Ct. at 2881. Schemes to defraud the public of intangible rights "such as the right to have public officials perform their duties honestly" fall outside the scope of the federal mail fraud statute. Id. at 358, 107 S.Ct. at 2880.

In considering whether the Callanans' mail fraud convictions may stand in light of McNally, the critical question is whether the scheme charged in the indictment may fairly be characterized as a scheme or artifice to defraud the victim or victims of property rights rather than intangible rights. See Allen, 867 F.2d at 971; United States v. Runnels, 877 F.2d 481 (6th Cir.1989). Each mail fraud count of the Callanans' indictment charged that the defendants

"devised and intended to devise a scheme and artifice to defraud the State of Michigan and its citizens of their right to the conscientious, legal, faithful, disinterested, and honest services, performance, and judgment of the defendant EVAN H. CALLANAN, SR. in his official capacity as Judge of the 18th Judicial District Court and as a Judge of the Third Judicial Circuit Court (Wayne County) at Building A, Eloise Complex, free from corruption, partiality, bias, dishonesty, and official misconduct in accordance with the laws of the State of Michigan.

... It was part of such scheme and artifice to defraud that Defendants ... entered with one another into a corrupt relationship in which each of them would and did act with intent illegally to benefit, directly and indirectly, and through the use of fraud and deception, themselves...."

The language of the indictment is strikingly similar to language the Supreme Court found inadequate in McNally, where the Supreme...

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