U.S. v. Hughes

• Decision Date: 30 October 2000
• Docket Number: No. 99-10996,99-10996
• Citation: 230 F.3d 815
• Parties: (5th Cir. 2000) UNITED STATES OF AMERICA, Plaintiff-Appellant, v. RONALD W. HUGHES, SR., Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 815

230 F.3d 815 (5th Cir. 2000)

UNITED STATES OF AMERICA, Plaintiff-Appellant, v. RONALD W. HUGHES, SR., Defendant-Appellee.

No. 99-10996

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

October 30, 2000

Appeal from the United States District Court for the Northern District of Texas, Dallas

Before JOLLY, HIGGINBOTHAM, and EMILIO M. GARZA, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The government appeals the district court's grant of a motion under 28 U.S.C. § 2255, which vacated the conviction of Ronald Hughes, Sr. Initially, the magistrate judge heard the evidence and recommended that the motion be granted, concluding that Hughes was entitled to a new trial because the government had suppressed materially exculpatory information in violation of Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194 (1963). After an evidentiary hearing, the district court adopted the magistrate judge's report, and released Hughes from custody.

Because we find that the evidence that the government failed to turn over to the defense was not material, we reverse the district court and reinstate the conviction and sentence.

I

A

Ronald Hughes, Sr., an experienced businessman, was convicted on several counts of an indictment charging conspiracy and money laundering. In summary, Hughes accepted large sums of cash from a Betty Allen as a loan to expand his funeral home business. Harry Pierce, a friend and former employee of Hughes, introduced Hughes and Allen when Allen mentioned she had money to invest. Purportedly, Allen told Hughes that the money was hers, a bequest from a rich deceased oilman -Joe Brown--which had been given to her because she had been his mistress. Joe Brown was a real person, and it is apparently true that Brown distrusted banks, and kept his money in cash.

Hughes received the first $1 million loan, mostly in small bills, on June 27, 1989. Hughes was acquitted of money laundering for this transaction. On July 1, 1989, Hughes signed a promissory note for the cash, and, on his lawyer's advice, received an affidavit from Allen that the money was "clean." Named as payees on the note were Allen and a Robert Chambers. Allen insisted on including Chambers, who she allegedly claimed was another Brown beneficiary and shared ownership of the money. In fact, as Allen told Pierce initially, the money belonged solely to Chambers. Chambers earned the money in $1 million increments for each ton of cocaine he helped to smuggle into the United States and had given it to Allen for safekeeping. Apparently, the loan was wholly Allen's idea, which Chambers only discovered after the fact.

On July 20, 1989, Pierce called Hughes and told him that Betty Allen had phoned from Arizona and had asked Pierce to meet her in Scottsdale and fly back with her to Dallas. Because Pierce was unable to accompany her, he asked Hughes to go in his place. The next day, Hughes flew to Phoenix on a chartered jet, for which he paid a fee of over $4000. Hughes met Allen, who had spent the night at Chambers's girlfriend's house, and together they drove to a storage facility to retrieve another $2 million. When they arrived at the mini-warehouse, Allen opened a storage room that contained a safe holding a large sum of currency in small bills. As Hughes testified at trial, Allen told him that Chambers had put the money in the safe. He also testified that it "crossed his mind" that the money was "possibly drug money." Upon return from Phoenix, Hughes put the cash in the trunk of his car and delivered the money, pursuant to Allen's instruction, to Pierce's apartment. Hughes was convicted of money laundering for this transaction.

Hughes received another $1.9 million around August 1, 1989. The money that formed the basis of this second loan was loaded into trunks and bags and flown into the Dallas airport on Allen's airplane. Hughes met Allen, Pierce and Allen's daughter at the airport and took the money, again, all of it in cash. Hughes paid Pierce $50,000for flying to Alpine, Texas, to help pick up the money. Hughes was also convicted of money laundering for this transaction.

On August 8, 1989, Chambers came to Dallas to meet with Hughes. Although the contents of the meeting are contested, it is undisputed that Chambers indicated that the money was his, that he told Hughes that he had once worked for a man named Pablo Acosta, that he had inherited Acosta's turf, and that Acosta was like a godfather to him. Hughes told Chambers that he had checked Chambers out through a long-time friend at the FBI.

Beginning in July 1989, Hughes and his family members and employees made 199 deposits in amounts less than $10,000 in bank accounts at eleven different banks throughout Dallas and the surrounding area to avoid filing Currency Transaction Reports. Hughes instructed the company's comptroller to characterize the money as loans from Hughes to the company. The loans were repaid within a day or two in the form of checks from the business to Hughes. When the company's comptroller inquired about the infusion of cash, Hughes lied to her, saying that he had gotten a loan from a bank.

Hughes's defense at trial was that he did not know the money was drug proceeds. Instead, he testified that he believed Allen's story about her rich benefactor. He also said that his structured deposits were a means to avoid an IRS audit, not other law enforcement authorities. Chambers was the government's primary witness at trial. On the witness stand, Chambers testified in effect that Hughes most likely knew that the money was not from Joe Brown and that he, Chambers, had concocted the Joe Brown story after all of the transactions were completed.

The jury acquitted Hughes of all structuring charges and of the money laundering count that charged his receipt of the first $1 million. He was convicted of conspiracy and of money laundering for the transaction related to the Phoenix trip, the transaction in early August, and for buying property and a certificate of deposit with the funds in September and November, respectively.

There are two Brady statements at issue. The first, which relates to Chambers's testimony for the government, is the FBI interview given by Agent Charles Holmes, an IRS agent investigating the Hughes matter, which was taken by FBI Agent Stephen Largent, investigating a related matter. (This is referred to as the 302 interview). The portion of that interview at issue is as follows:

Holmes stated that Glenn Chambers was busted with one ton of cocaine and pled guilty to the charges agreeing to cooperate. Chambers has told Holmes that the Hughes family knew that the money they received was drug money about six weeks after receiving the money. He stated that Betty Allen knew from day one that the money was drug money, but that all evidence supports the fact that Betty Allen initially told Ronald Hughes, Sr. that the money came from her former lover, Joe Brown.

Hughes claims this statement contradicts Chambers's trial testimony that he, Chambers, fabricated the Joe Brown story after Allen gave Hughes the money.

The second Brady statement was an oral comment made by Holmes to Customs Agent Dan Dobbs, in which Dobbs related that Holmes stated that he had an undefined problem with the Hughes family and would do all that he could to "get" them.

B

After we affirmed his conviction on direct appeal in an unpublished opinion, Hughes filed his § 2255 petition alleging the aforementioned Brady violations. The matter was referred to a magistrate judge for development. The magistrate judge held a one-day evidentiary hearing. In a written opinion, she recommended that the § 2255 petition be granted. She concluded that Holmes's 302 statement was material under Brady, principally because it undercut Robert Chambers's trial testimony that he was the source of the "it was Joe Brown's money" story, and that he had not concocted that cover until after Hughes had accepted the money from Allen. She also considered whether Hughes would have been convicted based on other circumstantial evidence of knowledge, but found that the Brady violation sufficiently undermined confidence in the jury verdict to vacate the conviction. The magistrate judge also found that the prosecution's failure to disclose Holmes's statement about a Hughes family vendetta was a Brady violation because, taken together with the 302 statement, it called into doubt the credibility of his investigation.

The district court, over Hughes's objection, held its own evidentiary hearing after receiving the magistrate judge's recommendation. Without stating its reasons in writing, the district court affirmed the magistrate judge's recommendation and vacated Hughes's sentence.

II

We review Brady claims de novo. See Felder v. Johnson, 180 F.3d 206, 212 (5th Cir. 1999); United States v. Green, 46 F.3d 461, 464 (5th Cir. 1995). Factual findings are reviewed for clear error. See United States v. Placente, 81 F.3d 555 (5th Cir. 1996).

We start with the premise that the prosecution has a duty to turn over impeachment evidence favorable to an accused when "there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different." United States v. Bagley, 473 U.S. 667, 682, 105 S.Ct. 3375, 3383 (1985). There are three components to a Brady violation. First, the evidence must be favorable to the accused, a standard that includes impeachment evidence. Second, the State must have suppressed the evidence. Third, the defendant must have been prejudiced. Strickler v. Greene, 527 U.S. 263, 281-82, 119 S.Ct. 1936, 1948 (1999). It is this final component--the materiality component--that is most at issue in this appeal.

The materiality inquiry turns on the question of whether "the favorable evidence could reasonably be taken to put the whole case in such a different light as to undermine confidence in the verdict." Kyles v. Whitley, 514 U.S. 419, 435, ...