U.S. v. Paul, s. 87-2675

• Decision Date: 15 August 1988
• Docket Number: Nos. 87-2675,87-6305,s. 87-2675
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. William E. PAUL, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellant, v. William Edward PAUL, a/k/a Bill Paul, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 308

853 F.2d 308

UNITED STATES of America, Plaintiff-Appellee, v. William E. PAUL, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellant, v. William Edward PAUL, a/k/a Bill Paul, Defendant-Appellee.

Nos. 87-2675, 87-6305.

United States Court of Appeals Fifth Circuit.

Aug. 15, 1988.

Bertrand C. Moser, Houston, Tex. (court appointed), for defendant-appellant.

Walter Herman, Albert Ratliff, Frances H. Stacy, Asst. U.S. Attys., Houston, Tex., for plaintiff-appellee.

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

Before KING, JOHNSON and JOLLY, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

This consolidated appeal involves two separate cases. In case number 87-2675, presided over by Judge Norman Black, the defendant, William E. Paul, was convicted by a jury for conspiracy to commit mail fraud under 18 U.S.C. Secs. 2, 371 and 1341, arising from an insurance fraud scheme. Paul challenges that conviction on grounds of insufficiency of the evidence.

In case number 87-6305, the indictment charged Paul with conspiracy to commit and the commission of interstate theft arising out of the theft of heavy equipment. Judge Lynn Hughes dismissed this indictment because he found that in an unrelated charge in state court, Paul had pled guilty on the erroneous belief that the federal government had agreed not to prosecute him further.

Because Judge Hughes' dismissal was based upon a motion identical to one that Judge Black denied in case number 87-2675, these cases have been consolidated for our review. We hold that because the state plea agreement expressly related only to further state prosecution, and because the federal government did not participate in Paul's plea agreement, as acknowledged by Judge Hughes, Judge Hughes acted without authority when he dismissed the indictment against Paul. We therefore reinstate the indictment and remand. With respect to Judge Black's case, we hold that the evidence was sufficient for the jury to convict Paul, and therefore affirm his conviction.

I

Paul's three indictments, two in federal court and one in state court, were the result of independent investigations by two FBI agents, each operating without knowledge of the other.

A.

In late October 1984, Paul became a suspect in "Operation Camshaft," an investigation into automobile thefts and related insurance fraud in the Houston area, conducted by FBI agent Terrence Donahue. Based wholly upon evidence developed by Donahue in Operation Camshaft, the State of Texas indicted Paul in December 1985, charging him with theft of a trailer and a Chevrolet Blazer. In February 1986, Paul appeared in state court and entered a guilty plea to these charges. As part of a plea bargain, the state recommended ten years probation, dismissal of another theft indictment, and dismissal of some other counts. After the court had conducted its usual colloquy to ensure that the plea was entered knowingly and voluntarily, Paul's attorney, in order to clarify the terms of this agreement, stated:

May I state something into the record? As a further part of the plea bargaining that no further criminal charges will be filed in State Court arising out of the transactions investigated by FBI Agent Terrance Donahue of Defendant Paul in these cases.

FBI agent Donahue was in the state courtroom at the time the plea was entered, but made no statements to the defendant or the court.

B.

We now turn to examine the facts in the case before Judge Black. During the Camshaft investigation, Donahue taped about forty telephone conversations and face-to-face meetings with Paul. While posing as a dealer in stolen property, Donahue met Paul in November 1984. In December 1984, Paul asked Donahue if he was interested in buying a 1982 Ford pickup truck. Donahue asked him what kind of deal it was, and Paul replied, "Well, you know, you get some time with it." Donahue explained in court that this meant it was an insurance fraud. In other words, Donahue would have a few days with the truck before Paul's cohort, Bullard (who died before trial), reported to the insurers that the truck had been stolen. Donahue agreed to buy the truck for $1,500--$1,000 for the seller and $500 for Paul as a finder's fee. On December 23, 1984, Donahue met Paul at a restaurant, where Bullard was sitting with the appellant. (Donahue did not meet Bullard, however.) Donahue and Paul inspected the truck in the parking lot and exchanged the money and keys. On January 1, 1985, Bullard called the police and reported that the truck had been stolen that day from a shopping mall parking lot. Farmers Insurance Company was informed of the theft on January 7, and mailed a statement of facts form to Bullard in order to process the claim. On January 23, the company received the completed statement of facts, signed by Bullard.

When Paul was arrested by federal agents on November 12, 1986, he admitted that he had sold the truck and that he knew Bullard.

Based upon these facts, Paul was indicted in federal district court for conspiracy to commit and commission of mail fraud under 18 U.S.C. Secs. 2, 371 and 1341. The case was assigned to Judge Black. Judge Black considered, and rejected, Paul's claim that he could not be tried in federal court because his plea bargain in state court rendered the federal prosecution a violation of fundamental fairness. A jury convicted Paul of conspiracy to commit mail fraud, but did not reach a verdict on the two substantive mail fraud counts for which Judge Black entered a mistrial. Judge Black sentenced Paul to five years' imprisonment on the first count and ordered him to pay $4,604.98 in restitution and $50 as a special assessment. Paul appealed this decision, arguing that there was insufficient evidence to convict him of conspiracy to commit mail fraud because his acts in the alleged conspiracy were too far removed from the actual mailing, and that he had no knowledge or intent that the mails should be used. Paul then agreed to stay the appeal in order that it be consolidated with an appeal from the second federal case.

C.

We now turn to consider the case before Judge Hughes. Paul's indictment in this case arose from a separate FBI investigation conducted by FBI agent Gary Stegar. Agent Stegar began his investigation in August 1985. It was concerned with the theft of heavy equipment in Texas and Oklahoma. His investigation focused initially on Williamson and Peace (who later became codefendants). When reviewing the telephone records of these defendants, Stegar learned of Paul's involvement, and in October 1985, Stegar included Paul in the investigation. Stegar and Donahue were unaware of each other's investigations, or that both investigations had focused on Paul, until 1987.

In this case, Paul was before Judge Lynn Hughes on an indictment charging him with one count of conspiracy to commit interstate equipment theft, and three substantive counts of transporting stolen equipment (Case backhoes). This case arose entirely from the Stegar investigation that had been completely separate in subject matter and circumstance from Donahue's Camshaft investigation. The prosecution, however, announced its intention to introduce portions of the Donahue/Paul tapes from Camshaft in this trial before Judge Hughes. Paul therefore reasserted his claim that federal prosecution was barred by his state court plea agreement. Although Paul did not testify on this issue before Judge Hughes, the judge reviewed the transcript of the evidentiary hearing before Judge Black and was more sympathethic in his response. He dismissed the case, because he found that the federal prosecution was fundamentally unfair. He said:

The Court concludes that it would be fundamentally unfair to prosecute Mr. Paul under these indictments.

Under the peculiar circumstances of this case, the Court does not find that any employee of the national government deliberately misled anybody or conspired to procure the resulting unfairness, but under the circumstances of the national government, having given its approval to the plea bargain, as was expressed by State prosecution and everybody else in the State Court action and was referred to and in terms of the plea bargain as the FBI not bringing any more cases in State Court, which is obviously not precise legally, if true in its factual essence.

Thus, in regard to whether the state plea agreement precludes further federal prosecutions of Paul, Judge Black's and Judge Hughes' decisions are contradictory. In addition, Paul argues that even assuming that fundamental fairness is not implicated in either case, there was not sufficient evidence in Judge Black's case to tie Paul to the mail fraud. We will turn first, therefore, to Judge Hughes' decision that dismissed the indictment and then examine the proceedings in Judge Black's court.

II

The question we consider is whether Paul's plea agreement in state court precludes the government from prosecuting him for violations of federal law.

It is clear that the federal government did not participate in Paul's plea bargain. No promises or statements were made regarding federal prosecution upon which Paul could have relied by either state or federal officials. The record of motion hearings by Judges Black and Hughes indicate that although agent Donahue conferred with state attorneys about the plea agreement prior to the state court hearing, he did not participate in that agreement or make any representations to state officials concerning federal prosecution. He was present at the state court hearing when Paul pled guilty, but he never met with Paul or his attorney and he did not participate in the proceedings in any way.

Paul's attorney at the state court trial, Randy Martin, testified that despite his own subjective impression that the FBI would decide not to prosecute Paul for the federal violations uncovered in Operation Camshaft, Martin nevertheless advised his client, in...