U.S. v. Sprouse
| Decision Date | 10 June 2011 |
| Docket Number | CRIMINAL CASE NO. 3:07cr211-2 |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | UNITED STATES OF AMERICA, v. VICTORIA L. SPROUSE. |
THIS MATTER is before the Court on the Defendant Sprouse's Response to Order Concerning Skilling v. United States [Doc. 365] which the Court has construed as a motion for a new trial.1
On November 16, 2007, the Defendant was charged by Superseding Bill of Indictment with conspiracy to commit mail, wire and bank fraud; mail fraud; conspiracy to money launder; promoting money laundering; money laundering; perjury; and obstruction of justice, in violation of 18 U.S.C. §§1349, 1341, 1956(h), 1956(a)(1)(A)(i), 1956(a)(3)(A), 1957, 1503, and1623(a), respectively. This indictment was superseded on three occasions, with the final and Fourth Superseding Bill of Indictment being filed on November 6, 2008. [Doc. 117]. In that indictment, the Defendant faced two charges of conspiracy to defraud the United States, in violation of 18 U.S.C. §371 (Counts 1 and 35); three charges of mail fraud, in violation of 18 U.S.C. §§1341 and 2 (Counts 2 through 4); nine charges of bank fraud in violation of 18 U.S.C. §1344 (Counts 5 through 12, Count 37); two charges of conspiracy to money launder, in violation of 18 U.S.C. §1956(h) (Counts 24 and 38); one charge of promoting money laundering, in violation of 18 U.S.C. §1956(a)(1)(A)(i) (Count 25); one charge of money laundering, in violation of 18 U.S.C. §1957 (Count 27); four charges of perjury, in violation of 18 U.S.C. §1623 (Counts 28 through 31); three charges of obstruction of justice, in violation of 18 U.S.C. §§1512 and 1519 (Counts 32 through 34); and one charge of conspiracy to commit mail, wire and bank fraud and making false statements to banks, in violation of 18 U.S.C. §1349 (Count 36). [Doc. 117]. Each count of this indictment which charged a scheme or artifice to defraud included language accusing the Defendant of involvement with a scheme or artifice "to defraud financial institutions and others of money and their intangible right to honest services." [Doc. 117, at 8-9; 19; 20; 36-37; 42-43] (emphasis added).
The counts charging perjury and obstruction of justice were severed and were subsequently dismissed without prejudice. [Doc. 163; Doc. 259]. After eight days of trial, the jury returned a verdict on April 1, 2009 finding the Defendant guilty of every count submitted to the jury except one.2 [Doc. 236].
On May 19, 2009, Anderson & Turpening filed a notice of appearance as new counsel for the Defendant. [Doc. 253]. The Defendant's court-appointed counsel who represented her at trial were allowed to withdraw. [Doc. 256].
The initial draft of the Defendant's presentence report was filed in April 2010. [Doc. 311]. Both the Government and defense counsel filed objections to the report. [Doc. 315; Doc. 317; Doc. 319]. The revised presentence report was filed on May 21, 2010. [Doc. 323].
On June 24, 2010, the United States Supreme Court ruled that 18 U.S.C. §1346, which proscribes fraudulent deprivations of the intangible right of honest services, is confined to only bribery and kickback schemes and does not encompass undisclosed self-dealing by a public official or private employee that furthers her own financial interests while purporting to act in the interests of those to whom a fiduciary duty is owed. Skilling v. United States,___ U.S. ___, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). On August 5, 2010, the Court ordered the parties to address the impact, if any, of the Supreme Court's ruling. [Doc. 362]. The parties filed their responses on August 10 and August 16, 2010. [Docs. 363, 365]. The Court construed the Defendant's response as a motion for a new trial, and a hearing was conducted on August 26, 2010. The Defendant's sentencing hearing has been postponed pending a ruling on this motion.
Fed. R. Crim. P. 33, Advisory Committee Notes (2005 Amendment).3 Rule 45 states in pertinent part that "the court on its own may extend time ... after thetime expires if the party failed to act because of excusable neglect." Fed. R. Crim. P. 45(b)(1)(B).
Thus, the issue is whether the Defendant's delay in seeking a new trial was the result of excusable neglect. The standard for determining the existence of excusable neglect is set out in Pioneer Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993), which has been applied to criminal cases by the decision in Stutson v. United States, 516 U.S. 193, 116 S.Ct. 600, 133 L.Ed.2d 571 (1996). See United States v. Turner, 2010 WL 6267790 (N.D.W.Va. 2010) ().
The Supreme Court in Pioneer articulated a non-exclusive list of factors a district court should consider when determining whether excusable neglect has been established. Pioneer, 507 U.S. at 395. Those factors include: 1) the reason for the delay, including whether it was within the reasonable control of the moving party; 2) the danger of prejudice to the non-moving party; 3) the length of the delay and its impact on judicial proceedings; and 4) whether the movant acted in good faith. Id. In determining whether a moving party has established excusable neglect, the Supreme Court noted that the"determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission." Id.
The ordinary meaning of "neglect" is "to give little attention or respect" to a matter, or, closer to the point for [this] purpose[ ], "to leave undone or unattended to esp[ecially] through carelessness." The word therefore encompasses both simple, faultless omissions to act and, more commonly, omissions caused by carelessness .... Hence, by empowering the courts to accept late filings "where the failure to act was the result of excusable neglect," Congress plainly contemplated that the courts would be permitted, where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control.
Id. at 388 ().
The first area of inquiry is the reason for the delay. In this respect, the facts of this case are not ordinary. The Defendant's motion arose from the Court's directive that the parties address the Supreme Court's decision in Skilling, the latter stages of which coincided with the prosecution and trial in this case. Therefore, the timeline of Skilling becomes pertinent to the reasons for the delay in the filing of the present motion.
On January 6, 2009, the United States Court of Appeals for the Fifth Circuit in United States v. Skilling held that a jury may convict a defendant of conspiracy to commit honest services wire fraud based on his use of fraudulent means to achieve his company's goal of certain earnings projections. 554 F.3d 529 (5th Cir. 2009). The defendant in Skilling petitionedthe Supreme Court for a writ of certiorari on May 11, 2009. Skilling, 2009 WL 1339243. On October 13, 2009, the United States Supreme Court granted certiorari to hear Skilling's case. Skilling, 130 S.Ct. 393, 175 L.Ed.2d 267 (2009). On June 24, 2010, the Supreme Court reversed the Fifth Circuit and determined that the scope of honest services fraud was substantially more limited than had been previously applied. 130 S.Ct. 2896.
Defendant Sprouse was convicted by jury verdict on April 1, 2009. At that time, there was no basis on which to move for a new trial as the Supreme Court had not yet even granted certiorari in Skilling. "Without the benefit of the Supreme Court's opinion . . . any argument based on Skilling [and the issues therein] would have been purely speculative." United States v. Maricle, 2010 WL 3927570 (E.D. Ky. 2010). It was not until over a year later - but before the entry of final judgment in this case - that the Supreme Court decided Skilling and substantially limited the honest services fraud statute. The Supreme Court's decision in Skilling therefore was an "intervening circumstance[ ] beyond the party's control." Pioneer, 507 U.S. at 388. A "significant intervening change in the law is a valid reason for delay in filing [a] postverdict motion...." Maricle, supra.; accord United States v. Munoz, 605 F.3d 359, 371 (6th Cir. 2010), cert. denied 131 S.Ct. 1813, 79 USLW 3344 (2011). This factor, therefore, weighs heavily in favor of the Defendant.
The next factor requires the Court to consider the potential prejudice to the Government in allowing the untimely motion. Notably, the Government has not asserted any opposition to the Defendant's motion based on this factor. Considering all the circumstances, the Court does not find that any undue prejudice would result to the Government. The fact that the Government may be required to prepare and present its case a second time would be equally true had the motion been timely filed. Munoz, 605 F.3d at 371-72. Moreover, the prosecutors in this case were likely acutely aware of the progress of the Skilling case and its potential impact...
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