U.S. v. Pankhurst, 96-20563

• Decision Date: 21 July 1997
• Docket Number: No. 96-20563,96-20563
• Citation: 118 F.3d 345
• Parties: UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant, v. Joseph PANKHURST, Defendant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 345

118 F.3d 345

UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant, v. Joseph PANKHURST, Defendant-Appellant-Cross-Appellee.

No. 96-20563.

United States Court of Appeals, Fifth Circuit.

July 21, 1997.

Rehearing Denied Aug. 20, 1997.

Richard C. Smith, Paula Camille Offenhauser, Alice Ann Burns, Assistant U.S. Attorneys, Houston, TX, for United States of America.

Jack B. Zimmermann, Terri Raye Zimmermann Jacobs, Zimmermann & Lavine, Houston, TX, for Joseph Pankhurst.

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

Before SMITH, BARKSDALE and BENAVIDES, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

The principal issue at hand is whether, prior to a sua sponte downward departure, the district court must give FED. R.CRIM. P. 32 pre-sentencing notice to the Government. Joseph Pankhurst appeals his conviction under 18 U.S.C. § 201(b)(1)(A) for "corruptly giv[ing] ... [$10,000] to [a] public official ... with ... intent ... to influence [an] official act"; he challenges both the jury instruction describing the "official act" ("acceptance of an offer by [Pankhurst] to purchase a loan being sold ... by the Resolution Trust Corporation") and the sufficiency of the evidence, especially concerning his corrupt intent. The Government cross-appeals from the downward departure, in part because it was not given notice. We AFFIRM the conviction, but VACATE and REMAND for resentencing.

I.

Pankhurst and his wife owned Atlas Oil Company. In early 1992, Pankhurst, through Atlas Oil, acquired Jetera Fuels Terminaling Corporation for only $2,500. But, Jetera was burdened with a $5.6 million debt on two loans from TexasBanc Savings (TBS), with monthly payments of approximately $60,000 and with Jetera's property as security. TBS had failed prior to Atlas Oil's acquisition of Jetera; the TBS loans were managed by the Resolution Trust Corporation (RTC), which, inter alia, had the power to foreclose on Jetera's property in event of default.

In mid-1992, although Jetera was not in default on either loan and was profitable, Pankhurst, as chairman of Jetera, requested that the RTC consolidate the loans and reduce the principal to $1.75 million. The RTC responded that the loans had been grouped with others for sale, and that their terms could not be negotiated then. Later that year, Jetera defaulted on the loans.

In response to the default, the RTC advised Pankhurst that it would order an appraisal and environmental assessment of Jetera. Pankhurst, again on behalf of Jetera, again requested loan consolidation and reduction.

In June 1993, Pankhurst, now on behalf of Atlas Oil Company, offered to the RTC to purchase for $500,000 either the Jetera property or the Jetera loans. In response, Ronnie Hooks, a contract employee for the RTC who was acting as senior asset manager for TBS, met with Pankhurst at the RTC's offices in Houston, Texas.

Hooks advised Pankhurst at the meeting that the RTC had received competing offers for the property securing the loans; that Jetera's appraised value was approximately $800,000; that the RTC was receiving approximately 70% of the appraised value for similar properties; and that, therefore, if Pankhurst increased his offer from $500,000 to $560,000, it might be accepted. Pankhurst increased his offer accordingly. And, later in the discussions, Pankhurst placed a stack of cash on the table. At this meeting, Hooks informed Pankhurst that he did not have the authority to accept Pankhurst's $560,000 offer to the RTC; in addition, he neither accepted nor rejected Pankhurst's offer of cash.

Concerning the cash placed on the table, Pankhurst testified that he had asked if an attorney would be necessary, and whether Hooks knew anyone willing to act as a consultant during the negotiations with the RTC; that he stated to Hooks that he had seen advertisements about former RTC employees offering to work as consultants; that he opened his briefcase in order to show Hooks such an advertisement, stating that he had seen about "ten of these"; and that some cash also happened to be in the briefcase, because he was about to make a deposit and, therefore, a deposit slip was bound to the top of the cash. On the other hand, Hooks testified that he understood the "ten of these" comment to be a reference to ten similar piles of cash.

Hooks reported Pankhurst's actions concerning the cash to the RTC. An investigation ensued, with Hooks assisting the FBI. In recorded telephone conversations, Hooks and Pankhurst discussed different documents Pankhurst would have to submit to the RTC, and the amount of Hooks' "consulting fee", which they set at $10,000.

During these recorded conversations, Hooks told Pankhurst that he did not want to meet at obvious places. They met at a hotel; Pankhurst then took Hooks to Pankhurst's car.

At the car, Hooks, wearing a recording device, stated that he had more work to do to get Pankhurst the deal he wanted from the RTC; that he had been afraid when Pankhurst first approached him about the deal in the RTC offices; and that, within a few days, he could obtain acceptance of Pankhurst's offer to the RTC.

At that point, Pankhurst said that he would pay Hooks half of the $10,000 then and the other half when his offer to the RTC was accepted. He handed Hooks a binder labeled "corporate records"; the binder contained cash. Pankhurst gave Hooks part of the cash and said he would keep the rest in the trunk of his automobile.

Hooks delivered to the FBI the binder received from Pankhurst. It contained $5,000 in cash.

At Hooks' request, the two men met two days later at the same hotel. Again, Hooks was wearing a recording device and they met in Pankhurst's car. Pankhurst handed Hooks a letter offering $560,000, a settlement document, and a $2,000 earnest money check. In turn, Hooks gave Pankhurst a letter accepting the offer, and explained that Atlas Oil would be the purchaser and that the transaction would probably close by the end of the month. When Hooks asked about job opportunities, Pankhurst suggested that Hooks work for him. Pankhurst also gave Hooks the second $5,000 in a brown manila envelope, telling him to "put this in your briefcase".

Pankhurst was arrested at the subsequent, videotaped meeting he was instructed to attend to close the transaction. He was convicted by a jury of bribery of a public official, a violation of 18 U.S.C. § 201(b)(1)(A). Pankhurst's motions, during and after trial, for judgment of acquittal were denied, as was his motion for new trial.

At sentencing, consistent with the recommendation in the Presentence Report, the Government urged a guidelines sentencing range of 51 to 63 months. Instead, the district court, without having given Rule 32 pre-sentencing notice of a possible downward departure, ruled that the guidelines did not apply adequately to Pankhurst's offense and ordered a downward departure. Because of the resulting low offense level, and the fact that Pankhurst was a first offender, probation was a sentencing option. Pankhurst was placed on probation for one year (with home confinement) and fined $50,000. The sentence was stayed pending appeal.

II.

Pankhurst challenges the description for the "official act" used in the jury charge and claims there was insufficient evidence for conviction, in part because of a claimed failure to prove corrupt intent. The Government challenges the downward departure, contending in part that it made a sufficient objection at sentencing about not being given notice of a possible departure.

A.

Pankhurst's one count indictment contained two possible grounds for conviction. He was charged with violating subparts (A) and (B) of 18 U.S.C. § 201(b)(1), which proscribes:

[d]irectly or indirectly, corruptly giv[ing], offer[ing] or promis[ing] anything of value to any public official ... with intent ...

(A) to influence any official act; or

(B) to influence such public official ... to commit or aid in committing ... any fraud ... on the United States....

18 U.S.C. § 201(b)(1). But, the court did not submit subpart (B) (fraud) to the jury as a possible basis for conviction. Accordingly, the only possible basis for conviction was an intent "to influence an official act" (subpart (A)), not an intent to effect a fraud on the United States (subpart (B)).

Accordingly, the court instructed the jury that it could return a guilty verdict only if it found, beyond a reasonable doubt, both that Pankhurst "directly or indirectly gave, offered or promised $10,000 to Ronald Hooks, a public official"; and that Pankhurst "did so corruptly [defined for the jury as 'done intentionally with an unlawful purpose'], with intent to influence an official act by a public official". The "official act" was defined as the act described in the indictment; therefore, the pertinent portion of the indictment was included then in the charge:

Pankhurst, did directly and indirectly corruptly give, offer, and promise ... $10,000 ... to a public official, namely Ronald Hooks[,] ... with the intent to influence an official act and to influence a public official, namely Ronald Hooks, to commit and aid in committing a fraud upon the United States. That is the acceptance of an offer by the defendant to purchase a loan being sold to the public by the Resolution Trust Corporation. ¹

The court's proposed charge had not contained a definition or description of the "official act" in issue. At the earlier charge conference, in his objections to that proposed charge, Pankhurst's counsel had contended, in a very general way, that the court should add such a definition or description. But, other than referring to the language in the indictment, Pankhurst's counsel did not offer a definition. And, when the court stated that the description in the indictment would constitute the definition for the "official act", Pankhurst's counsel did not object to the inclusion of the fraud language also contained there. Resta...