United States v. Avery
| Decision Date | 18 June 2013 |
| Docket Number | No. 12-35209,D.C. No. 3:07-cr-00028-RRB,12-35209 |
| Parties | UNITED STATES OF AMERICA, Plaintiff-Appellee, v. MARK J. AVERY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
FOR PUBLICATION
OPINIONAppeal from the United States District Court
for the District of Alaska
and N. Randy Smith, Circuit Judges.
Opinion by Judge Tallman
SUMMARY*
Habeas Corpus
The panel vacated the district court's denial of a 28 U.S.C. § 2255 motion to vacate a sentence after petitioner pled guilty to wire fraud, money laundering, and criminal forfeiture, and remanded for further proceedings.
After serving almost four years of his sentence, petitioner sought federal habeas relief, claiming his conviction and sentence were invalidated by the Supreme Court's decision in Skilling v. United States, 130 S. Ct. 2896 (2010), which narrowed the scope of the honest services fraud theory. The panel concluded that petitioner pled guilty only to honest services fraud and cannot be deemed to have been convicted or sentenced based on a broader charge that was not incorporated into the plea agreement and not acknowledged by petitioner as true when he pled guilty. The panel held that, because the crime to which petitioner pled guilty and for which he was incarcerated is no longer a criminal offense, petitioner's actual innocence overcomes the procedural default of his claim challenging his conviction.
Krista Hart (argued), Sacramento, California, for Defendant-Appellant.
Kyle G. French (argued), Assistant United States Attorney; Karen Loeffler, United States Attorney, Anchorage, Alaska, for Plaintiff-Appellee.
Mark Avery, former attorney and trustee of private trusts, appeals the district court's denial of his 28 U.S.C. § 2255 federal habeas corpus petition. Avery pled guilty to five counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346, nine counts of money laundering, in violation of 18 U.S.C. § 1957(a), and one count of criminal forfeiture, in violation of 18 U.S.C. § 982(a)(1), and was sentenced to 102 months of imprisonment. On habeas review, Avery contends that his conviction and sentence must be vacated in light of the Supreme Court's subsequent decision in Skilling v. United States, 130 S. Ct. 2896, 2907 (2010), which narrowed the scope of the honest services fraud theory. We have jurisdiction pursuant to 28 U.S.C. §§ 1291 and 2253. Based on the explication of the elements of the fraud offense set forth in the plea agreement and repeated by the district court when the plea was taken, we vacate the district court's dismissal of Avery's honest services fraud claim and remand for further proceedings consistent with this opinion.
Avery served as a trustee for the May Smith Trust, with assets valued in excess of $100 million, and the May and Stanley Smith Charitable Trust, with assets exceeding $350 million. On March 6, 2007, Avery was charged by Information with engaging "in a fraudulent financing scheme in which he abused his fiduciary obligations and his position of trust to acquire over $52 million dollars through an ambiguous loan arrangement which used the May Smith Trust as collateral." In furtherance of the fraudulent scheme, Avery executed margin loans secured by the trust assets and used the loaned funds "to purchase [a] speculative aircraft venture," to "pa[y] personal debts," and to "purchase . . . personal assets."1 After Avery filed personal bankruptcy and his businesses collapsed, Avery defaulted on the margin loans and the lender foreclosed on the $52 million of trust collateral that secured their repayment.
To resolve his criminal charges, Avery entered into a plea agreement executed under Federal Rule of Criminal Procedure 11(c)(1)(C). By the terms of the agreement, Avery waived indictment and pled guilty to five counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346, nine counts of money laundering, in violation of 18 U.S.C. § 1957(a), and one count of criminal forfeiture, in violation of 18 U.S.C. § 982(a)(1). On April 17, 2008, the districtcourt sentenced Avery to 102 months of imprisonment and ordered Avery to pay $52,125,000 in restitution. Because he waived his appellate rights in the plea proceedings, Avery filed no direct criminal appeal.
But after serving almost four years of his sentence, on February 11, 2011, Avery sought habeas relief in the District of Alaska, claiming his conviction and sentence were invalidated by the Supreme Court's decision in Skilling. The district court denied Avery's habeas petition, concluding that Avery had "procedurally defaulted [his] claim by failing to raise it on direct review" and could not overcome that default by establishing actual innocence or cause and prejudice. Avery immediately appealed. On appeal, Avery argues that the district court erred in concluding that his honest services fraud challenge was procedurally defaulted. In the alternative, Avery contends that he can establish actual innocence or cause and prejudice to overcome any default.
A district court's denial of a petition for writ of habeas corpus is reviewed de novo. Lopez v. Thompson, 202 F.3d 1110, 1116 (9th Cir. 2000) (en banc). On habeas review, a district court's findings of fact are reviewed for clear error. Sanchez v. United States, 50 F.3d 1448, 1452 (9th Cir. 1995).
In Skilling, the Supreme Court limited the scope of the honest services fraud offense under § 1346, holding that the statute only criminalized fraudulent schemes that involved bribery or kickbacks. 130 S. Ct. at 2928. In his habeas petition, Avery contends that his conviction was premised onan honest services fraud theory based solely on a conflict of interest through breach of his fiduciary duties, without any bribery or kickback allegations. As a result, Avery argues that he is innocent of the crimes for which he stands convicted and is entitled to habeas relief.
Avery concedes that he failed to raise his innocence claim on direct appeal, challenging his conviction for the first time on collateral review. A defendant "has procedurally defaulted a claim by failing to raise it on direct review, [and] the claim may be raised in habeas only if the defendant can first demonstrate either 'cause' and actual 'prejudice' or that he is 'actually innocent.'" Bousley v. United States, 523 U.S. 614, 622 (1998) (citations omitted). "Actual innocence" is an equitable remedy that permits a petitioner to obtain collateral review of a procedurally defaulted claim. Schlup v. Delo, 513 U.S. 298, 327 (1995). To invoke the actual innocence exception, Avery must show that in light of all of the evidence, "it is more likely than not that no reasonable juror would have found [him] guilty beyond a reasonable doubt." Id. In this context, "actual innocence means factual innocence, not mere legal insufficiency." Bousley, 523 U.S. at 623 (internal quotation marks omitted).
In evaluating whether Avery is actually innocent of his offense of conviction, sufficient to overcome a procedural default, we must first identify the offenses to which Avery pleaded guilty to committing. Although the government concedes, in light of Skilling, that Avery is actually innocent of the honest services fraud offenses charged in the Information, the government argues that Avery was nonetheless properly convicted of devising a scheme or artifice to defraud the May Smith Trust and May Wong Smith of money or property. The government insists that, in theInformation, Avery was charged more broadly with violating not only 18 U.S.C. § 1346, which defines honest services fraud, but also 18 U.S.C. § 1343, which prohibits all forms of wire fraud, including money-or-property based wire fraud. In executing the plea agreement, the government argues that Avery agreed to plead guilty to five counts of "Wire Fraud, in violation of [both] § 1343 and § 1346."
The language contained in the Information and plea agreement, citing both §§ 1343 and 1346, is not dispositive. Section 1346, which defines honest services fraud, is not a standalone criminal offense, but must be charged in conjunction with 18 U.S.C. §§ 1341 or 1343 as the means or theory by which the fraud was committed. Section 1346 merely modifies the definition of "scheme or artifice to defraud" included in §§ 1341 and 1343 to prohibit one particular manifestation of mail or wire fraud—abuse of a position of trust which the law recognizes as depriving another of the intangible right of honest services. See, e.g., United States v. Milovanovic, 678 F.3d 713, 722 (9th Cir. 2012); United States v. Rybicki, 354 F.3d 124, 132-45 (2d Cir. 2003) (en banc). As a result, to charge a defendant with committing honest services fraud, the government is required to include in the charging document references to both §§ 1343 (or 1341) and 1346. Contrary to the government's contentions, the citation to § 1343 in Avery's Information and plea agreement does not demonstrate that Avery was convicted of both honest services fraud and money-or-property based wire fraud. To make that determination, one must look to the actual language to which Avery agreed in his plea.
The government also argues that the descriptive language contained in the Information is not limited to allegations ofhonest services fraud but instead can be construed to support allegations of both honest services fraud and money-or-property fraud. True enough. Paragraph 15 of the Information states that Avery "devised or intended to devise a scheme and artifice to defraud the May Smith Trust and May Wong Smith of their money, property, and intangible right to the honest services of a trustee." Paragraph 26 of the Information alleges that "Avery, for the purpose of executing and attempting to execute [a] . . . scheme to defraud the May Smith Trust and May...
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