U.S. v. Perholtz, s. 86-3032

• Decision Date: 19 October 1987
• Docket Number: Nos. 86-3032,s. 86-3032
• Citation: 836 F.2d 554,266 U.S.App. D.C. 390
• Parties: UNITED STATES of America v. Ronald J. PERHOLTZ, Appellant. UNITED STATES of America v. Franklin W. JACKSON, Appellant. UNITED STATES of America v. Gregory W. FLETCHER, Appellant. to 86-3034. . Order
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 554

836 F.2d 554

266 U.S.App.D.C. 390

UNITED STATES of America v. Ronald J. PERHOLTZ, Appellant.

UNITED STATES of America v. Franklin W. JACKSON, Appellant.

UNITED STATES of America v. Gregory W. FLETCHER, Appellant.

Nos. 86-3032 to 86-3034.

United States Court of Appeals District of Columbia Circuit.

Order Oct. 19, 1987.

Opinion Jan. 8, 1988.

Steven Schaars, Springfield, Va., with whom Leigh Manasevit, Washington, D.C., was on the motion, for appellant Ronald J. Perholtz.

Whitney Debevoise, appointed by this Court, with whom Mark A. Kass, Washington, D.C., was on the motion, for appellant Franklin W. Jackson.

William L. Gardner, Washington, D.C., appointed by this Court, was on the motion, for appellant Gregory W. Fletcher.

Katherine A. Worthington, Asst. U.S. Atty., with whom Brian M. Murtagh, Joseph B. Valder, Michael W. Farrell, Asst. U.S. Attys., and Joseph E. diGenova, U.S. Atty., Washington, D.C., were on the motion, for U.S.

Before BORK and BUCKLEY, Circuit Judges, and EDWARD D. RE ^*, Chief Judge, United States Court of International Trade.

PER CURIAM:

Appellants, Perholtz, Jackson and Fletcher, moved for release pending appeal pursuant to 18 U.S.C. Sec. 3143(b) (Supp. III 1985) and Fed.R.App.P. 9(b). After considering appellants' arguments, we denied their motions by order filed October 19, 1987. This opinion states our rationale.

Section 3143(b), which was enacted by the Bail Reform Act of 1984, Pub.L. No. 98-473, Sec. 203(a), 98 Stat. 1976, 1981, provides that "a person who has been found guilty of an offense and sentenced to a term of imprisonment, and who has filed an appeal" shall be detained unless the court finds "that the person is not likely to flee or pose a danger to the safety of any other person or the community if released" and "that the appeal is not for purpose of delay and raises a substantial question of law or fact likely to result in reversal." 18 U.S.C. Sec. 3143(b). In this case, the parties agree that the defendants are not likely to flee and do not pose a danger, and that the appeal is not for the purpose of delay. The point of disagreement on this motion is whether defendants' appeal, in light of McNally v. United States, --- U.S. ----, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), which was decided after oral argument in this case, "raises a substantial question of law or fact likely to result in reversal." 18 U.S.C. Sec. 3143(b). That provision has not been interpreted in a published opinion of this court. Because we conclude that the application of McNally to this case does not "raise a substantial question" likely to result in reversal of all counts for which appellants received prison terms, we deny appellants' motions.

I.

In the present case, we must determine whether appellants' appeal "raises a substantial question of law or fact likely to result in reversal." 18 U.S.C. Sec. 3143(b). We forego a detailed discussion of the provision's legislative history and possible constructions because our sister circuits have paved the way for us and we need do little more than signal our agreement. All of the circuits that have construed the provision (the Fourth Circuit is the only other circuit that has not construed it) agree that the provision requires a two-part inquiry: (1) Does the appeal raise a substantial question? (2) If so, would the resolution of that question in the defendant's favor be likely to lead to reversal? See, e.g., United States v. Bayko, 774 F.2d 516, 522-23 (1st Cir.1985); United States v. Handy, 761 F.2d 1279, 1280-81 (9th Cir.1985); United States v. Giancola, 754 F.2d 898, 900 (11th Cir.1985), cert. denied, --- U.S. ----, 107 S.Ct. 669, 93 L.Ed.2d 721 (1986); United States v. Miller, 753 F.2d 19, 23 (3d Cir.1985). Only the question of substantiality is at issue in this motion because if McNally does raise a substantial question as to the validity of appellants' convictions, and if that question is resolved in appellants' favor, then, of course, those convictions must be reversed.

Two differing standards for determining substantiality have been adopted in the various circuits. Under one standard a substantial question is one that is "fairly debatable," "fairly doubtful," or "one of more substance than would be necessary to a finding that it was not frivolous." ¹ Under the other standard a substantial question is "a 'close' question or one that very well could be decided the other way." ² We adopt the latter, more demanding standard, because it appears better to accord with the expressed congressional intent to increase the required showing on the part of the defendant. The law has shifted from a presumption of release to a presumption of valid conviction. See S.Rep. No. 225, 98th Cong., 1st Sess. 27 (1983), reprinted in 1984 U.S.Code Cong. & Admin.News 3182, 3210.

Thus, we must decide whether the validity of defendants' convictions after McNally is a close question or one that very well could be decided the other way.

II.

Only a brief description of the appellants' convictions and the underlying "schemes to defraud" will be presented here. A more complete description of the case will be found in the forthcoming opinion of this court on the merits of the appeal. Appellants' convictions arise from their activities relating to the development of a computerized payroll system, the Automated Time and Attendance Procedures project ("ATAP"), for the United States Postal Service, and the development of a data communications system for the Small Business Administration ("SBA"). Appellants Perholtz and Jackson were convicted on one RICO count ³ based on one predicate act of bribery, thirty-four predicate acts of mail fraud relating to the ATAP project and one predicate act of mail fraud relating to the SBA system. Appellants Perholtz and Jackson were also convicted on three counts of mail fraud relating to the ATAP project. Appellants Perholtz, Jackson and Fletcher were convicted on ten counts of mail fraud relating to the SBA system.

Perholtz was sentenced to a ten-year prison term on the RICO count. He was sentenced to five-year terms on each of the three ATAP related mail fraud counts--the sentence on each of those three counts to run concurrently with the other two and concurrently with the ten-year sentence on the RICO count. He was sentenced to five-year terms on each of the ten SBA related mail fraud counts--each of those ten sentences to run concurrently with each other, concurrently with the ten-year RICO term and consecutive to the five-year sentences imposed on the ATAP related mail fraud counts.

Jackson was sentenced to a seven-year prison term on the RICO count. He was sentenced to two-year terms on each of the three ATAP related mail fraud counts--the sentences on each of those three counts to run concurrently with the other two and concurrently with the seven-year sentence on the RICO count. He was sentenced to five-year terms on each of the ten SBA related mail fraud counts--each of those sentences to run concurrently with each other, concurrently with the seven-year RICO term and consecutive to the two-year sentences imposed on the ATAP related mail fraud counts.

Fletcher was sentenced to concurrent four-year prison terms on each of the ten SBA related mail fraud counts.

Appellants appealed their convictions. Their cases were consolidated and argued before this court on May 15, 1987. The Supreme Court decided McNally v. United States, --- U.S. ----, 107 S.Ct. 2875, 97 L.Ed.2d 292 on June 24, 1987, and the parties submitted supplemental briefs on the possible relevance of McNally to this case. On July 15, 1987, appellants applied to the district court for release pending appeal pursuant to 18 U.S.C. Sec. 3143(b) (Supp. III 1985) and Fed.R.App.P. 9(b). The district court, "unable to conclude that McNally ha[d] any significant effect on the merits of the jury's decision," refused release by order dated July 30, 1987. Appellants then moved for release in this court.

Appellants contend that their mail fraud convictions must be reversed because, like the defendants in McNally, they were convicted for conduct not within the reach of the mail fraud statute, 18 U.S.C. Sec. 1341 (1982). If all of the mail fraud convictions were to be reversed, then the RICO convictions, which are based on only one predicate act other than acts of mail fraud would also have to be reversed. ⁴ If we determine, however, that McNally raises no substantial question as to the validity of the SBA related mail fraud convictions, then we need not determine whether a substantial question is raised as to the validity of the ATAP related convictions on this motion. All three appellants received prison terms on SBA related mail fraud counts, and they cannot be released unless the appeal raises a substantial question likely to result in reversal of all counts on which imprisonment is imposed. See, e.g., United States v. Bilanzich, 771 F.2d 292, 298 & n. 6 (7th Cir.1985). Because we find that McNally does not raise a substantial question with respect to the SBA related convictions we do not reach appellants' other convictions on this motion.

III.

McNally v. United States, --- U.S. ----, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), brought an end to the "intangible rights" theory of mail fraud prosecution by holding that the mail fraud statute, 18 U.S.C. Sec. 1341, is "limited in scope to the protection of property rights." McNally, 107 S.Ct. at 2881. The intangible rights theory had been used by prosecutors to win mail fraud convictions where defendants, who could be characterized as fiduciaries, were found to have deprived their beneficiaries of the honest and faithful services due them. This theory was often used against persons involved in political corruption that could not otherwise be reached by federal prosecutors. The typical case against a public official would charge the official with having deprived the citizenry of the benefit of his faithful and honest...