U.S. v. Investment Enterprises, Inc., s. 91-7134

• Decision Date: 15 December 1993
• Docket Number: 91-7266,Nos. 91-7134,s. 91-7134
• Citation: 10 F.3d 263
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. INVESTMENT ENTERPRISES, INC., d/b/a Great Western Litho & Bindery, Donald P. Browning, California Publishers Liquidating Corporation, Michael Warner, Video Team, Inc. and Susan C. Colvin, Defendants-Appellants. UNITED STATES of America, Plaintiff-Appellant, v. CALIFORNIA PUBLISHERS LIQUIDATING CORP., Video Team, Inc., Donald P. Browning, and Michael Warner, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 263

10 F.3d 263

UNITED STATES of America, Plaintiff-Appellee, v. INVESTMENT ENTERPRISES, INC., d/b/a Great Western Litho &

Bindery, Donald P. Browning, California Publishers

Liquidating Corporation, Michael Warner, Video Team, Inc.

and Susan C. Colvin, Defendants-Appellants.

UNITED STATES of America, Plaintiff-Appellant, v. CALIFORNIA PUBLISHERS LIQUIDATING CORP., Video Team, Inc., Donald P. Browning, and Michael Warner,

Defendants-Appellees.

Nos. 91-7134, 91-7266.

United States Court of Appeals Fifth Circuit.

Dec. 15, 1993.

Rehearing and Suggestion for

Rehearing En Banc Denied

Feb. 16, 1994.

John Weston, Clyde F. Dewitt, Weston & Sarno, Beverly Hills, CA, for Investment Enterprises, Inc.

Anthony Michael Glassman, Stephen J. Rawson, Glassman & Browning, Inc., Beverly Hills, CA, for Browning & California Pub. & Colvin & Video Team.

Paul J. Cambria, Jr., Mary Good, Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria, Buffalo, NY, for Michael Warner.

Richard H. Stephens, U.S. Atty., Dallas, TX, Janis Kockritz, Trial Atty., Dept. of Justice, Crim. Div., Washington, DC, for appellees.

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

Before JONES and DeMOSS, Circuit Judges and BARBOUR ^*, District Judge.

EDITH H. JONES, Circuit Judge:

This obscenity case arose from an undercover sting operation jointly managed by police in Dallas and the Los Angeles office of The defendants appeal their convictions on a multitude of grounds. Having reviewed all of the appellants' arguments, we discuss in detail only the sufficiency of the evidence challenges raised by Warner and Great Western and Warner's argument that the district court erred in giving the jury a deliberate ignorance instruction. The remainder of the discussion focuses on issues posed by the government's appeal of the denial of its forfeiture motion. Review of all the issues leads us to affirm the defendants' convictions, but it is necessary to remand to the district court for it to reconsider forfeiture consistent with the proper construction of Sec. 1467(a)(3).

                the Federal Bureau of Investigation. 1  The operation culminated in a jury's finding defendants California Publishers Liquidating Corporation ("CPLC"), Donald P. Browning, Susan Colvin, Video Team, Investment Enterprises, Inc.  (d/b/a Great Western Litho & Bindery) ("Great Western"), and Michael Warner guilty of two counts of interstate transportation of obscene materials in violation of 18 U.S.C. Sec. 1462 (1988) and aiding and abetting the commission of the Sec. 1462 offense and one count of conspiring to violate Sec. 1462.  After the jury returned its guilty verdicts and pursuant to the forfeiture provision of 18 U.S.C. Sec. 1467(a)(3) (1988), the government sought forfeiture of substantial assets of the defendants, but the district court exercised its discretion under Sec. 1467(a)(3) and refused to order any forfeiture
                

I. OBSCENITY CONVICTIONS

A. Sufficiency of the Evidence

Defendant/appellants Michael Warner and Great Western argue that the evidence was insufficient to establish that they conspired to ship obscenity in interstate commerce and that they aided and abetted the shipment of obscenity in interstate commerce. ² This court reviews sufficiency of the evidence challenges to determine whether a reasonable jury could find that the evidence establishes guilt beyond a reasonable doubt. See United States v. Salazar, 958 F.2d 1285, 1291 (5th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 185, 121 L.Ed.2d 129 (1992). In evaluating such challenges, we review the evidence--and all the inferences reasonably drawn from it--in the light most favorable to the verdict. See id. at 1290-91. Under these established standards, defendants' claims are meritless.

As an initial matter, we note that this review of evidentiary sufficiency as to both the conspiracy and the substantive obscenity convictions contemplates that corporations cannot in and of themselves possess a mental state. However, a corporation is criminally liable for the unlawful acts of its agents, provided that the conduct is within the scope of the agent's authority, whether actual or apparent. See United States v. Bi-Co Pavers, Inc., 741 F.2d 730, 737 (5th Cir.1984). Thus, while Great Western cannot possess the requisite intent to conspire or aid and abet, Michael Warren--its president and undisputedly authorized agent at all times--can. His unlawful acts are the basis for Great Western's criminal liability.

As to the merits of defendants' challenge, a reasonable jury could find that Warner and Great Western conspired with the other defendants--CPLC, Video Team, Colvin, and Browning--to transport obscene videos in interstate commerce. The district court correctly instructed the jury that for a defendant to be guilty of conspiracy, the government must prove (1) that there was an agreement by two or more persons to violate the law; (2) that the defendant knew of and voluntarily joined the conspiracy; and (3) Warner is the president and part owner of Great Western, an entity devoted largely to the production of sexually explicit box covers and other materials for sexually explicit video tapes. Great Western regularly manufactured box covers and printed advertisements for co-defendant Video Team, a wholly owned subsidiary of CPLC dedicated to the distribution of sexually explicit video tapes. More specifically, Great Western manufactured the box covers for "Interracial Anal 1", "Anal Sluts Volume 2", and "Kinky Vision"--three of the four tapes charged as obscene in the two substantive counts. ³ Furthermore, Warner always examined the finished printing jobs of the sexually explicit box covers. But the evidence linking Great Western and Warner with the conspiracy hardly stops here.

that overt acts were committed to further the conspirators' purpose. The appellants' only challenge to sufficiency concerns the second of the district court's requirements; Warner argues that he had no knowledge of the unlawful purpose of the conspiracy and had no intent to further it. However, the evidence undercuts Warner's position.

In addition to having an intimate knowledge of the sexually explicit nature of his own printing business, a singularly unsurprising conclusion, Warner is well acquainted with CPLC and its wholly owned subsidiary, Video Team. In fact, CPLC and Video Team are not just important clients, they are the Warner family business. Warner's father founded the predecessor corporation to CPLC, and Warner worked there before going over to Great Western. Warner's brother-in-law, Donald Browning, is the president and part owner of CPLC. Vicki Browning, Warner's sister and Donald's wife, is an employee of Great Western. The two families socialize frequently, and Donald Browning met with Warner everyday at his Great Western office across the street from CPLC and Video Team. ⁴

Not unexpectedly, Warner--a CPLC board member--has a significant financial stake in the fortunes of CPLC and its subsidiary Video Team. He earned $75,000 a year from CPLC distributions via a family trust and his interest upon dissolution of the trust would approximate 20% of CPLC and its various holdings. Further, Warner owns a substantial interest in the real property and building housing CPLC and Video Team.

Viewed cumulatively, the evidence is sufficient to prove that Warner, and Great Western through him, knew of the unlawful purpose of the conspiracy to ship the obscene videos interstate and that he joined it with the intent to further its purpose. ⁵

With regard to the aiding and abetting counts, this court has observed that typically the same evidence will support both a conspiracy and an aiding and abetting conviction. See Salazar, 958 F.2d at 1292 (citation omitted). Thus, as to the two substantive obscenity offense counts, the same evidence that proved Warner and Great Western conspired to violate Sec. 1462 is sufficient to support their conviction for aiding and abetting the Sec. 1462 violation. See id.

B. Deliberate Ignorance Instruction

Near the conclusion of the instructions to the jury, the district court provided the following deliberate ignorance instruction:

You may find that a [d]efendant had knowledge of a fact if you find that the [d]efendant deliberately closed his or her eyes to what would otherwise have been obvious to her. While knowledge on the part of the [d]efendant cannot be established merely by demonstrating that the [d]efendant was negligent, careless or foolish, knowledge can be inferred if the [d]efendant deliberately blinded himself or herself to the existence of a fact. ⁶

The court's deliberate ignorance instruction was not limited in its application to the substantive counts charged; the instruction applied to the conspiracy count as well.

Warner makes two arguments in urging error on the part of the trial court in giving this instruction. First, with regard to the two substantive counts, each charging Warner with aiding and abetting the commission of the Sec. 1462 offense, Warner argues that the evidence was not sufficient to support the deliberate ignorance instruction. ⁷ Second, as to the conspiracy count, Warner urges that the use of a deliberate ignorance instruction is never appropriate in a conspiracy prosecution. Both of appellants' arguments are unconvincing.

The standard of review applied to a defendant's claim that a jury instruction was inappropriate is "whether the court's charge, as a whole, is a correct statement of the law and whether it clearly instructs jurors as to the principles of law applicable to the factual issues confronting them." United States v. August, 835 F.2d 76, 77 (5th Cir.1987). The district court "may not instruct the jury on a charge that is not supported by evidence." United States v. Ortega, 859 F.2d 327, 330 (5th Cir.1988), cert. denied, 489 U.S. 1027, 109 S.Ct. 1157, 103 L.Ed.2d 216 (1989). Further, in determining whether the evidence...