United States v. Baxter

• Decision Date: 23 October 2014
• Docket Number: No. 12–3074.,12–3074.
• Citation: 761 F.3d 17
• Parties: UNITED STATES of America, Appellee v. James Odell BAXTER, II, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

761 F.3d 17

UNITED STATES of America, Appellee

v.James Odell BAXTER, II, Appellant.

No. 12–3074.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 9, 2014.

Decided Aug. 8, 2014.

Rehearing En Banc Denied Oct. 23, 2014.

Appeal from the United States District Court for the District of Columbia (No. 1:03–cr–00516–1).

Cheryl J. Sturm argued the cause and filed the briefs for appellant.

Peter S. Smith, Assistant U.S. Attorney argued the cause for appellee. With him on the brief were Ronald C. Machen Jr., U.S. Attorney, and Elizabeth Trosman and Sherri Berthrong, Assistant U.S. Attorneys. Suzanne G. Curt, Assistant U.S. Attorney, entered an appearance.

Before: GARLAND, Chief Judge, SRINIVASAN, Circuit Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge GARLAND.

GARLAND, Chief Judge:

James O. Baxter, II was convicted on multiple counts of defrauding the Washington Teachers Union. We have previously described the charges against him as arising from “a seven-year orgy of greed,” during which he and others “stole millions of dollars” from the union. United States v. Hemphill, 514 F.3d 1350, 1353 (D.C.Cir.2008). Baxter now appeals the district court's denial of his motion to vacate his convictions pursuant to 28 U.S.C. § 2255. Although we grant Baxter's motion for a certificate of appealability to consider two of his three challenges, we conclude that he is not entitled to relief and therefore affirm the judgment of the district court.

I

The following description of the facts is taken from the trial record and from this court's decision on direct review of Baxter's convictions, Hemphill, 514 F.3d at 1353–54, 1361–63.

In 1994, the Washington Teachers Union (WTU) elected new leadership, including Barbara Bullock as president, Esther Hankerson as vice president, and James O. Baxter, II as treasurer. In 1996, Bullock hired Gwendolyn Hemphill as her executive assistant and WTU office manager. At all relevant times, Baxter was the WTU's treasurer. As treasurer, one of his duties included countersigning checks (also signed by either Bullock or Hankerson) for the WTU account. Bullock, Baxter, and Hemphill, with the help of other coconspirators,defrauded the WTU of millions of dollars between 1995 and 2002. See Hemphill, 514 F.3d at 1353–54.

The fraud was effectuated in several ways. One involved WTU American Express cards, issued to Bullock, Hankerson, and Baxter, which the conspirators used to charge thousands of dollars in personal expenses. Hemphill, 514 F.3d at 1353–54. Bullock's spending was particularly extravagant. It totaled more than $1.2 million and included custom-made clothing, silverware, crystal, and a piano. J.A. 604, 607–17, 917–19 (Bullock Test.).¹ Some of the credit card bills were paid directly with WTU checks signed by Bullock and Baxter. Id. at 612–14, 650.

In addition, Hemphill wrote and Baxter signed WTU checks to Bullock's driver, Leroy Holmes, for amounts far in excess of Holmes' salary. Holmes then cashed the checks, giving some money to Hemphill and depositing other money in Bullock's personal account. Hemphill, 514 F.3d at 1354. Similarly, Hemphill wrote and Baxter signed checks to a shell corporation, Expressions Unlimited, that Hemphill's son-in-law, Michael Martin, and his friend, Errol Alderman, created. See Hemphill, 514 F.3d at 1363; J.A. 1347–49, 1364–68 (Martin Test.). Martin deposited some of the checks in Expressions Unlimited's account and cashed others. Thereafter, he and Alderman wrote checks to Bullock on Expressions' account, which they deposited in her personal account along with the money from the checks they had cashed. J.A. 1354–55, 1367–70 (Martin Test.). Bullock then wrote checks on her personal account to pay some of the American Express bills. J.A. 668–69 (Bullock Test.). Apparently she did so to make it seem that she was paying for personal expenditures out of her personal account, when in fact the money Bullock used came from the union.

Baxter personally benefitted from the fraud. He wrote several checks to himself on the WTU general account, which he designated as “pension” payments during a period of time when no other employee was receiving pension payments because there was no money in the WTU pension fund. Hemphill, 514 F.3d at 1362–63; J.A. 693–95, 724–28 (Bullock Test.). He also used union funds and the WTU credit cards to make personal purchases, including $19,660 for Washington Wizards basketball tickets for his and his coconspirators' personal use, and $5,000 in art for his home. Hemphill, 514 F.3d at 1362–63.

The government also presented evidence of Baxter's involvement in concealing the crimes. He signed numerous fraudulent checks to himself, Bullock, Hemphill, Holmes, and Expressions Unlimited. Id. at 1363. In addition, he signed a fraudulent LM–2 (an annual financial report made by the WTU to the Internal Revenue Service) that did not include money paid to Hemphill or Holmes, even though notes recovered from his house recorded those payments. Id. at 1362. In Baxter's files, the government recovered drafts of fraudulent financial reports that his coconspirators had faxed to him. Hemphill, 514 F.3d at 1362. One of those drafts contained handwritten notes showing how to falsely allocate the debits—arising from the conspirators' personal American Express charges—to other budget categories. Id. Over half a million dollars in such charges were reclassified to the “employee benefit expense” and “travel and meeting expense” categories on those fraudulent financial documents. See Jury Trial Tr. 5490, United States v. Baxter, No. 03–CR–516 (D.D.C. Aug. 10, 2005).

By early 2002, the fraud had so depleted the union's funds that it could not pay membership fees it owed to its parent organization, the American Federation of Teachers (AFT). The coconspirators then devised a scheme to make up the shortfall. Hemphill, 514 F.3d at 1354. Under a collective bargaining agreement that the WTU had reached with the District of Columbia Public Schools, the WTU's member teachers were entitled to a pay raise. As a result, each teacher owed a supplemental lump sum dues payment to the WTU. J.A. 773–74 (Bullock Test.). Properly calculated, that dues payment was not enough to make up the shortfall, so the conspirators simply changed that amount. Instead of deducting $16.09 in union dues from each teacher's paycheck, Baxter proposed deducting $160.09 and, if discovered, passing it off as a clerical error. Hemphill, 514 F.3d at 1354, 1362. Teachers who noticed the discrepancy alerted the AFT, which then contacted federal authorities. Hemphill, 514 F.3d at 1354.

After the government was alerted to the situation, the FBI recovered evidence from Baxter's home computer that showed the extent of his involvement in the dues scheme, as well as in a potential further cover-up. The WTU had sent a letter to the District of Columbia Office of Pay and Retirement, instructing the Office to deduct the $160.09 from the teachers' paychecks. An FBI computer specialist found a copy of the letter with the $160.09 figure in Baxter's email outbox. That letter was last printed on April 17, 2002. But the FBI specialist found that the letter had been saved again on September 23, 2002—after the investigation began—in Baxter's “My Documents” file. This time, the letter used the $16.09 amount. See Jury Trial Tr. 3 83 6–50, United States v. Baxter, No. 03–CR–516 (D.D.C. July 14, 2005).

A grand jury indicted Baxter, Hemphill, and James A. Goosby (the WTU's accountant) on November 20, 2003. Bullock, Holmes, Martin, and Alderman all pled guilty and testified for the government. Baxter was charged in 23 counts, including conspiracy to commit fraud and other offenses, wire fraud, mail fraud, making false statements, embezzlement from a labor union, theft, money laundering, and conspiracy to commit money laundering. J.A. 219–59. The trial against the three defendants lasted twelve weeks. The jury acquitted Goosby, but convicted Baxter and Hemphill on all counts. Hemphill, 514 F.3d at 1354. On June 5, 2006, Baxter was sentenced to 120 months' imprisonment. Id.

Baxter and Hemphill appealed, and on February 8, 2008, this court affirmed the district court's judgment as to both defendants on all counts. Id. at 1353. The Supreme Court denied Baxter's petition for certiorari on November 10, 2008, Baxter v. United States, 555 U.S. 1020, 129 S.Ct. 590, 172 L.Ed.2d 445 (2008), and denied his petition for reconsideration on January 12, 2009, Baxter v. United States, 555 U.S. 1130, 129 S.Ct. 985, 173 L.Ed.2d 170 (2009).

On January 11, 2010, Baxter filed a motion to vacate his sentence pursuant to 28 U.S.C. § 2255.² The district judge denied Baxter's motion for § 2255 relief on August 28, 2012, based on “the parties' briefs,” “the entire record,” and the knowledge the judge acquired from “[h]aving presided over petitioner's trial and sentencing.” J.A. 480–81. On November 9, 2012, Baxter applied for a certificate of appealability, which the judge denied on January 10, 2013. J.A. 485.

Thereafter, Baxter filed a notice of appeal from the denial of his § 2255 motion and moved for a certificate of appealability from this court. In challenging his conviction, Baxter raises three principal claims. First, he argues that the government violated its obligations under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), when it failed to turn over evidence that Bullock suffered from bipolar disorder. Second, he argues that his conviction for conspiracy to commit fraud and other offenses must be vacated because it was based on an honest-services fraud theory that is invalid under Skilling v. United States, 561 U.S. 358, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). Finally, he argues that his conviction for money laundering and conspiracy to commit money laundering is invalid under this court's decision in United States v. Adefehinti, 510 F.3d 319 (D.C.Cir.2007). We...