U.S. v. Marcello

• Decision Date: 23 June 1989
• Docket Number: 88-3177,Nos. 88-3138,s. 88-3138
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Carlos MARCELLO, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Charles E. ROEMER, II, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1147

876 F.2d 1147

UNITED STATES of America, Plaintiff-Appellee, v. Carlos MARCELLO, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Charles E. ROEMER, II, Defendant-Appellant.

Nos. 88-3138, 88-3177.

United States Court of Appeals Fifth Circuit.

June 23, 1989.

Arthur A. Lemann, III, Lemann, O'Hara & Miles, New Orleans, La., for Carlos Marcello.

Robert J. Boitmann, Albert J. Winters, Jr., Asst. U.S. Attys., New Orleans, La., for U.S. in No. 88-3138.

John R. Martzell, New Orleans, La., for Charles E. Roemer, II.

Robert J. Boitmann, Albert J. Winters, Jr., Asst. U.S. Attys., John Volz, U.S. Atty., New Orleans, La., for U.S. in No. 88-3177.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before POLITZ, GARWOOD and SMITH, Circuit Judges.

POLITZ, Circuit Judge:

Convicted of conspiring to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Sec. 1962(d) (1976), Carlos Marcello and Charles E. Roemer, II petition for relief under 28 U.S.C. Sec. 2255 and by writ of error coram nobis, ¹ respectively, contending that their convictions should be vacated in light of the Supreme Court's decision in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). In these consolidated cases the district court denied relief to both petitioners. Concluding that both are entitled to the relief sought, we reverse the district court and vacate the challenged convictions.

Background

Viewing the evidence in the light most favorable to the government, see Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942), the following facts set the stage for these proceedings. In 1979, the Federal Bureau of Investigation structured an undercover sting operation designed to investigate the bribing of public officials in connection with the placement of public employee insurance contracts. The Bureau staffed a fictitious insurance agency with two undercover agents and Joseph Hauser, a convicted insurance salesman. Their mission was to make contact with Hauser's former associates in furtherance of the investigation of corrupt activities.

Hauser was instructed to renew an acquaintanceship with Marcello and to seek his assistance in the acquisition of the state's insurance business. Hauser had met Marcello in 1976 while purchasing a Louisiana insurance company. In conformity with these instructions Hauser met with Marcello who agreed to help Hauser obtain state insurance business. The payment of bribes to state and local officials was involved. The plan called for splitting the commissions paid on the insurance premiums between Marcello and Hauser and his undercover FBI associates.

Marcello introduced Hauser and the undercover agents to Roemer who was then the Commissioner of Administration for the State of Louisiana--a position second only to the Governor of Louisiana in power, influence, and prestige. Roemer agreed to use his influence to secure placement through Hauser of some of the state employee insurance business. In return, Roemer was to receive $25,000 in advance and a share of future insurance premium commissions.

In June 1980 a federal grand jury indicted Marcello, Roemer, and three others for conspiracy to violate the RICO Act, 18 U.S.C. Sec. 1962(d), and for a substantive RICO violation, 18 U.S.C. Sec. 1962(c). The pattern of racketeering activity alleged in the indictment included as predicate offenses: (1) state bribery, (2) violation of the interstate travel statute, (3) mail fraud, and (4) wire fraud. In addition, Roemer and Marcello were charged with wire fraud, 18 U.S.C. Sec. 1343, and mail fraud, 18 U.S.C. Sec. 1341, and Marcello was charged with an interstate travel violation, 18 U.S.C. Sec. 1952. After an 18-week trial the jury returned a general verdict convicting Roemer and Marcello on the RICO conspiracy count, but acquitting them on all substantive counts. Roemer was sentenced to three years imprisonment, subsequently reduced to two years, and Marcello was sentenced to seven years imprisonment. Roemer served his sentence and was released; Marcello remains in prison. The sentences were affirmed on appeal, 703 F.2d 805 (5th Cir.), cert. denied, 464 U.S. 935, 104 S.Ct. 341, 78 L.Ed.2d 309 (1983).

Following the decision of the Supreme Court in McNally v. United States, Marcello and Roemer moved for post-conviction relief. The district court denied relief and these appeals followed.

Analysis

In McNally the Court held that a scheme to defraud citizens of their intangible right to honest and impartial government did not constitute a violation of the mail fraud statute. In recent years the mail fraud and wire fraud statutes have received expansive interpretation and application by several district and circuit courts. A principal emergence was the "intangible rights doctrine," a concept premised on the theory that the citizenry has a right to honest and impartial governance. ² This concept was frequently the footing in cases involving the corruption of public officials. McNally laid the intangible rights doctrine to rest, holding that the mail fraud statute is "limited in scope to the protection of property rights." 483 U.S. at 360, 107 S.Ct. at 2881, 97 L.Ed.2d at 302.

In McNally, a public official and a private citizen were convicted of mail fraud for their involvement in a scheme wherein the public official used his influence to channel state insurance business to an agency which then shared the commissions generated with designated agencies, including one in which the defendants had an undisclosed interest. The indictment charged a scheme designed to deprive the citizens of honest government and property or money. ³

Having concluded that the mail fraud statute did not protect the intangible right of citizens to honest government, the McNally Court observed that the jury had not been required to find that McNally had defrauded the Commonwealth of Kentucky of any money or property. The instructions did not charge that a lower premium or better insurance would have been acquired, but for the scheme, or that the Commonwealth was deprived of control over how its money was spent. The Supreme Court concluded that the McNally jury, having been charged with the intangible rights doctrine, was permitted to return "a conviction for conduct not within the reach of Sec. 1341," 483 U.S. at 361, 107 S.Ct. at 2882, 97 L.Ed.2d at 303, and it reversed McNally's conviction.

As a result of the Court's decision in McNally, a significant number of pre-McNally criminal convictions have been challenged on the ground that they were based on the now-discredited intangible rights doctrine. In those cases in which the indictment, the proof presented at trial, and the "instructions to the jury could not assure that money or property interests were implicated, [verdicts] have been overturned on McNally's authority." United States v. Asher, 854 F.2d 1483, 1490 (3d Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 836, 102 L.Ed.2d 969 (1989); United States v. Ochs, 842 F.2d 515 (1st Cir.1988); United States v. Covino, 837 F.2d 65 (2d Cir.1988); United States v. Zauber, 857 F.2d 137 (3d Cir.1988), cert. denied sub nom, Scotto v. United States, --- U.S. ----, 109 S.Ct. 1340, 103 L.Ed.2d 810 (1989); United States v. Mandel, 862 F.2d 1067 (4th Cir.1988); United States v. Huls, 841 F.2d 109 (5th Cir.1988); United States v. Herron, 825 F.2d 50 (5th Cir.1987); United States v. Baldinger, 838 F.2d 176 (6th Cir.1988); United States v. Holzer, 840 F.2d 1343 (7th Cir.1988); United States v. Slay, 858 F.2d 1310 (8th Cir.1988); United States v. Dadanian, 856 F.2d 1391 (9th Cir.1988); United States v. Shelton, 848 F.2d 1485 (10th Cir.1988); United States v. Italiano, 837 F.2d 1480 (11th Cir.1988).

Marcello and Roemer maintain that McNally compels the vacating of their convictions because the indictment, proof at trial, and jury instructions do not assure that their convictions were based on a scheme involving money or other property interest. Our review of the record impels the conclusion that the intangible rights theory was the sole basis on which the jury could have convicted the defendants.

The facts in McNally and those at bar are essentially identical. Both involve a scheme where a public official used his influence to cause placement of state insurance contracts and receives, or is to receive, a portion of the premium commissions. In McNally the indictment charged both an intangible rights deprivation and a property or money deprivation. The facts before us present an even stronger case for the application of the McNally holding because the indictment contains no property interest allegation whatever. Rather, it charges that the defendants

did devise and intend to devise a scheme and artifice to defraud the citizens of Jefferson Parish, the City of New Orleans, and the State of Louisiana, of their right to the honest and faithful services of their elected and appointed officials.

The indictment also charged Roemer with a scheme

to defraud the citizens of the State of Louisiana of the right to the conscientious, loyal, faithful, disinterested, unbiased services, actions, and performances of official duties of defendant Charles E. Roemer, II, in his official capacity as Commissioner of Administration for the State of Louisiana, free from bribery, kickbacks, corruption, partiality, bias, dishonesty, deceit, official misconduct, and fraud.

In the case at bar, the jury was not instructed that in order to convict it had to find that the public suffered a money or other property loss or that the state was deprived of control over how its money was spent. Nor was there any allegation that in the absence of the scheme, the state would have paid a lower premium or secured better insurance. Indeed, it appears from the record that one of the principal inducements for placing the insurance contracts with Hauser was the...