U.S. v. Cervantes-Pacheco

• Decision Date: 05 September 1986
• Docket Number: CERVANTES-PACHEC,No. 84-2687,J,84-2687
• Citation: 800 F.2d 452
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Adalbertoerry Wayne Nelson and William E. Nelson, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 452

800 F.2d 452

UNITED STATES of America, Plaintiff-Appellee, v. Adalberto CERVANTES-PACHECO, Jerry Wayne Nelson and William E. Nelson, Defendants-Appellants.

No. 84-2687.

United States Court of Appeals Fifth Circuit.

Sept. 5, 1986.

Rehearing En Banc Granted Sept. 25, 1986.

Melvyn Kessler, Miami, Fla., for Pacheco and Jerry Wayne Nelson.

Oscar J. Pena, Laredo, Tex., for W. Nelson.

Susan L. Yarbrough, James R. Gough, Asst. U.S. Attys., Henry K. Oncken, U.S. Atty., Houston, Tex., Ann T. Wallace, Atty., Appellate Section, Crim. Div., U.S. Dept. of Justice, Washington, D.C., for U.S.

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

Before GOLDBERG, WILLIAMS and DAVIS, Circuit Judges.

(Opinion July 7, 1986, 5th Cir.1986, 793 F.2d 689)

GOLDBERG, Circuit Judge:

The court substitutes this opinion for its earlier opinion reported at 793 F.2d 689 (5th Cir.1986).

This is a criminal appeal involving the characterization of a conspiracy and a claim that the Government hired and compensated its main witness on an impermissible contingent fee basis. We dispose of the conspiracy issue in summary fashion but conclude that the contingent fee claim is a substantial one. Because of its important implications for the standards that govern criminal investigation procedures, we treat this issue in greater depth and ultimately decide that the contingent fee arrangement employed in this case offends principles of due process.

I. Factual and Procedural Background

In April 1984 Frank Kelly, a/k/a Frank Kennedy, a Government informer who had previously worked on more than thirty-five cases, was contacted by his supervisor, D.E.A. Special Agent Jimmy Bradley, and told to "infiltrate, gather information for intelligence, and report" on William Nelson. Tr. at 297. The activities of Nelson and a number of co-conspirators concluded on or about June 6, 1984. Defendants Nelson and Adalberto Cervantes-Pacheco were arrested, indicted, tried, and convicted of conspiring to possess 200,000 pounds of marijuana with intent to distribute it in violation of 21 U.S.C. Secs. 841(a)(1) and 846, and conspiring to import marijuana in violation of 21 U.S.C. Secs. 952(a), 960(a)(1), and 963. They each received two four-year prison terms to run concurrently; defendant Jerry Wayne Nelson was put on probation. They jointly filed a timely notice of appeal.

Defendants make two points on appeal: (1) The Government proved at most the existence of multiple conspiracies, not the single conspiracy charged in the indictment; all defendants thereby suffered substantial prejudice and their motion for a new trial should therefore have been granted. (2) The testimony of informant Frank Kelly should have been excluded because he had been assigned to make a case against a specific defendant and was paid on a contingent fee basis; Kelly thus had a financial incentive to give damaging testimony, since the amount of his fee was based entirely on the Government's evaluation of his performance in the case, including his testimony.

II. Single vs. Multiple Conspiracies

Appellants' first contention is without merit. The trial court carefully and thoughtfully instructed the jury on the difference between single and multiple conspiracies and left it free to make a well informed decision on the matter. In a full and fair charge to the jury covering more than five pages in the trial transcript, see Tr. at 1550-55, the court dealt with the same issues appellants now raise on appeal and also provided several illustrative examples taken from the trial, see id. at 1552-55. And, in fact, the jury acquitted two of the co-defendants, thereby indicating that it retained its powers of discrimination. We are therefore satisfied that appellants' first issue does not merit further discussion.

III. Was the Informant's Fee "Contingent"?

Appellants' second issue requires a more detailed analysis. After examining the record in this case we conclude that the Government's dealings with informant Kelly did indeed describe an impermissible "contingent fee" arrangement that deprived appellants of their fifth amendment right to due process.

A. Deciphering the Law of Contingent Informant Fees

Our cases on the law of contingent informant fees are based mainly on principles enunciated in Williamson v. United States, 311 F.2d 441 (5th Cir.1962), in which the court reversed a conviction because the Government's informant had been hired under a contingent fee arrangement. ¹ Williamson held that

Without some ... justification or explanation, we cannot sanction a contingent fee agreement to produce evidence against particular named defendants as to crimes not yet committed. Such an arrangement might tend to a "frame up," or to cause an informer to induce or persuade innocent persons to commit crimes which they had no previous intent or purpose to commit. The opportunities for abuse are too obvious to require elaboration.

Id. at 444. (footnote omitted). ²

In Williamson a former convict, Robert Harris Moye, who had previously specialized in bootleg whiskey operations, contacted Government agents and proposed to put some of his hard-earned experience to good use because, as he succinctly put it, "I wanted to make some money, I had been in the penitentiary three years and not a bootlegger helped me one bit in the world and not a one of them paid me a nickel he owed me, or paid my wife." Id. at 442 (Moye deposition). Moye explained his terms of employment as follows:

Q. How were they to pay you? Let me put it that way.

A. How was he to pay?

Q. Yes, sir, how were you to be paid, what was the agreement?

A. I was to be paid $200.00 for Big Boy, $200.00 for James McBride, $100.00 for Hogie, he's Big Boy's half brother.

....

Q. What did you agree to do with Mr. Rainer and Mr. Morris? What did they tell you they wanted you to do?

A. They told me to give them the major violators and told me that they'd pay for them.

Q. For you to go out and catch them, in other words?

A. If I could catch them.

Q. And they agreed to pay you $200.00 as to Jack Williamson?

A. Yes, sir.

Q. You all called him Big Boy, I believe?

A. Yes, sir.

Q. And $100.00 as to his half brother, the Lowrey boy?

A. Yes, sir.

Q. When were they to pay you the money?

A. Wasn't nothing said about when it was to be paid.

....

Q. After you had made this arrangement with Mr. Rainer and with Mr. Morris, was there any kind of a written arrangement or anything on it?

A. No, sir.

Q. Just a verbal understanding with those two gentlemen?

A. Yes, sir.

Id. (Moye deposition).

After the usual surreptitious arrangements, Moye managed to purchase some illicit whiskey from Jack Williamson in the presence of an undercover agent. As the court put it, "Moye made the purchase from Williamson and produced the evidence against both Williamson and Lowrey." Id. at 444-45. (emphasis added).

In a brief concurrence Judge Brown noted that Williamson was not an entrapment case as such. Rather, it was one in which "the means used to 'make' the case are essentially revolting to an ordered society." Id. at 445 (Brown, J., concurring). ³ Judge Brown also emphasized that a contingent fee arrangement need not be explicit in order to warrant condemnation: "the 'contingent fee' for a narcotics addict hardly needs to be spelled out in the terms used to trap this moonshiner. To get the stuff to feed his uncontrollable appetite, he knows that he must produce results or he will no longer be 'hired'...." Id. On this point Judge Brown was joined by Judge Cameron, who acknowledged that

Every such informer knows that his day to day arrangement with the Government will continue only if he delivers the goods.... If the addict succeeds in landing some of the criminals the Government is after, he is well paid and his services will continue. If he does not, he is dropped.

Id. at 446 (Cameron, J., dissenting).

The interpretation of Williamson in later cases has been uneven and its significance has thereby been obscured. In United States v. Garcia, 528 F.2d 580 (5th Cir.1976), this court cited Williamson for the proposition that "we have condemned the use of a contingent fee where it involves the promised payment of a specified sum to convict a specified suspect." Id. at 586 (emphasis added). In United States v. Onori, 535 F.2d 938 (5th Cir.1976), the court stated that in Williamson "we reversed a conviction for possession of illicit liquor because the informer who made the government's case had been promised a specified sum of money for successfully incriminating the indicated defendants." Id. at 942 (emphasis added). In United States v. Lane, 693 F.2d 385 (5th Cir.1982), we provided the following gloss on Williamson: "In Williamson v. United States, this court reversed a conviction in which the informer assisting the Government was paid a contingent fee to implicate certain targeted defendants." Id. at 387 (emphasis added). Similarly, in United States v. Yater, 756 F.2d 1058 (5th Cir.1985), the court noted that "We have limited the Williamson holding ... to cases in which the government directs the informant to implicate government-pretargeted specific defendants." Id. at 1067 (emphasis added).

These somewhat inconsistent cases interpreting Williamson draw attention to a decisive issue: Upon what is an informant's fee impermissibly "contingent"? The following possibilities suggest themselves:

(1) payment after informant's testimony is over;

(2) payment after case is over;

(3) payment dependent on informant's performance;

(4) payment dependent on outcome of case.

These possibilities are listed in the order of increasing "strength" of the contingency. # 4 describes the strongest contingency, and if payment is conditioned upon a conviction as the "outcome," then this sort of arrangement is clearly impermissible under our cases. # 3 describes a somewhat weaker form of contingency; as detailed below, we conclude that this is the...