US v. Ginsburg

• Citation: 705 F. Supp. 1310
• Decision Date: 02 February 1989
• Docket Number: No. 82 CR 619.,82 CR 619.
• Parties: UNITED STATES of America, Plaintiff, v. Richard GINSBURG, Defendant.
• Court: U.S. District Court — Northern District of Illinois

705 F. Supp. 1310

UNITED STATES of America, Plaintiff, v. Richard GINSBURG, Defendant.

No. 82 CR 619.

United States District Court, N.D. Illinois, E.D.

January 10, 1989.

Supplemental Opinion January 23, 1989.

Second Supplemental Opinion February 2, 1989.

Jeffrey B. Steinback, Benson, Steinback & Gillespie, Chicago, Ill., for plaintiff.

James R. Fleissner, Asst. U.S. Atty., Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

In early 1984 Richard Ginsburg ("Ginsburg") was convicted of 19 counts of mail fraud under 18 U.S.C. § 1341 ("Section 1341") and one count of racketeering under 18 U.S.C. § 1962(c) ("RICO"), all stemming from Ginsburg's payments to fix cases during the course of his law practice before the Cook County Board of Appeals ("Board"). Ginsburg has joined the spate of defendants prompted by McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987) to seek retroactive relief: He has filed this 28 U.S.C. § 2255 ("Section 2255") habeas corpus petition to obtain an order vacating his convictions. For the reasons stated in this memorandum opinion and order, his petition is granted.

Background

Ginsburg's convictions flow from a scheme, beginning in 1975, in which he and his then law partner Theodore Schmidt made cash payments to Board employees to obtain reductions in real estate tax assessments on properties owned by the law firm's clients. Ginsburg was found guilty on all counts after a joint trial before a jury, and on April 26, 1984 this Court dealt with his sentence in these terms:

1. Imposition of sentence was suspended on all counts, and he was placed on concurrent probation for a five-year period.

2. In addition to his required compliance with all the regular terms and conditions of probation, he was ordered:

(a) to make restitution in the amount of $150,000; and

(b) to perform 1,000 hours of community service.

3. On the RICO count he was ordered to forfeit his $225,000 half interest in the firm's tainted legal fees, with the restitution payments to be credited against that forfeiture.

Ginsburg took an appeal, in which he challenged only the forfeiture order. After an initial reversal in an unpublished opinion, our Court of Appeals ultimately affirmed this Court in an en banc decision (United States v. Ginsburg, 773 F.2d 798 (7th Cir.1985)).

Ginsburg has completed his community service, has paid the full $150,000 in restitution and has begun to pay the balance due on his forfeiture. His probation runs through April 26, 1989.

By now every defendant of any vintage convicted under the so-called "intangible rights" theory of mail fraud¹ is aware that McNally has construed Section 1341 to require that the fraud must have been intended to deprive the victim or victims of money or property. Our Court of Appeals has most recently described its post-McNally efforts in these terms (United States v. Folak, 865 F.2d 110, 113 (7th Cir. Dec. 19, 1988) (emphasis in original, citations omitted except for cases referred to later in this opinion)):

We have expressly held that McNally applies retroactively on collateral attack of a conviction. Magnuson v. United States, 861 F.2d 166, 167-68 (7th Cir. 1988) .... Although we have set aside a number of defendants' mail fraud convictions where they had been indicted for scheming to defraud victims solely of some intangible right, see Magnuson, supra; ... United States v. Holzer, 840 F.2d 1343 (7th Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 2022 100 L.Ed.2d 608 (1988) ("Holzer II"), the presence of some language referring to an intangible rights theory is not always fatal to the indictment. For example, where an indictment alleges multiple schemes, some of which serve to defraud victims of property and others that deprive them of some intangible right, we have treated as surplusage any intangible rights theory of fraud that was "easily separable" from allegations of a scheme to defraud of money or property.... We have also held that where a single set of facts establishes both a scheme to defraud a victim of money or property, as well as a deprivation of some intangible right, McNally does not require setting aside the conviction.... United States v. Wellman, 830 F.2d 1453, 1462-63 (7th Cir.1987). In each of the above cases, we have looked beyond the language used to characterize the scheme in the indictment, to the underlying substance of the indictment, in order that we might determine if it ultimately alleges a scheme involving money or property. Under McNally, an indictment alleges a violation of the mail fraud statute if it charges a defendant with conduct that would normally result in some kind of "concrete economic harm." Wellman, 830 F.2d at 1462.

Ginsburg now says his conviction was improperly obtained under the old "intangible rights" theory rather than in accordance with McNally.

Section 2255 Analysis

Section 2255 allows a federally-convicted prisoner who is "in custody" to attack his conviction collaterally. Ginsburg satisfies the "in custody" requirement because "he is under the legal restraints imposed by probation" (Gill, 673 F.Supp. at 277 and cases cited therein). Government Mem. 2 concedes that.

United States v. Frady, 456 U.S. 152, 167, 102 S.Ct. 1584, 1594, 71 L.Ed.2d 816 (1982) teaches the normal standard of review of a Section 2255 motion "is the `cause and actual prejudice' standard enunciated in Davis v. United States, 411 U.S. 233, 93 S.Ct. 1577, 36 L.Ed.2d 216 (1973), and later confirmed and extended in Francis v. Henderson, 425 U.S. 536, 96 S.Ct. 1708, 48 L.Ed.2d 149 (1976), and Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed. 2d 594 (1977)." Although the post-McNally decisions in our Court of Appeals have not expressly addressed this issue as to pre-McNally "intangible rights" convictions, under Frady, id. 456 U.S. at 168, 102 S.Ct. at 1594 any defendant challenging a conviction on an objection not raised in the district court must show "both `cause' excusing his double procedural default, and `actual prejudice' resulting from the errors of which he complains."

1. Cause

Ginsburg Mem. 1 — 3² says he did object to the indictment's "intangible rights" theory. Ginsburg's motion to dismiss the indictment argued (Government Mem. Ex. A, at 12) (footnotes omitted):

Moreover, the theory must be rejected because it seeks further to expand liability under the mail fraud statute without any evidence of supporting legislative intent. The "intangible rights" theory already is the subject of severe criticism because of its present overly broad application. The present indictment represents but another step in this over-expansion.

Government Mem. 3 says:

The defendant noted the scholarly criticism of the intangible rights doctrine, but did not urge the Court to dismiss the mail fraud counts on this basis.

Whether or not that handling by Ginsburg's able counsel amounts to having preserved the issue before this Court as a procedural matter, Ginsburg Mem. 2 — 6 admits he did not raise the issue on appeal. In Frady terms that is clearly a procedural default requiring Ginsburg to show "cause."

Ginsburg Mem. 2 — 6 to 7 then asserts he satisfies the "cause" requirement as expounded in Reed v. Ross, 468 U.S. 1, 104 S.Ct. 2901, 82 L.Ed.2d 1 (1984). That contention poses a difficult question — one that fortunately need not be resolved for current purposes.

Reed dealt at some length with the relationship between the "cause" requirement and the "novelty" of the constitutional issue that counsel had failed to raise in the underlying proceedings.³ Justice Brennan, writing for the Court, began by noting (468 U.S. at 13, 104 S.Ct. at 2909) (citations omitted):

Because of the broad range of potential reasons for an attorney's failure to comply with a procedural rule, and the virtually limitless array of contexts in which a procedural default can occur, this Court has not given the term "cause" precise content.... Nor do we attempt to do so here. Underlying the concept of cause, however, is at least the dual notion that, absent exceptional circumstances, a defendant is bound by the tactical decisions of competent counsel, ... and that defense counsel may not flout state procedures and then turn around and seek refuge in federal court from the consequences of such conduct.

Next Justice Brennan turned to the contrasting situation in which no intentional strategic decision can be inferred: counsel's failure "to raise a constitutional issue reasonably unknown to him" (id. at 14, 104 S.Ct. at 2909) because of its novelty (id. at 15-16, 104 S.Ct. at 2909-10). That led to the basic principle for which Ross is now recognized (id. at 16, 104 S.Ct. at 2910):

Accordingly, we hold that where a constitutional claim is so novel that its legal basis is not reasonably available to counsel, a defendant has cause for his failure to raise the claim in accordance with applicable state procedures.

Then, drawing upon United States v. Johnson, 457 U.S. 537, 102 S.Ct. 2579, 73 L.Ed.2d 202 (1982), Reed, id. 468 U.S. at 17, 104 S.Ct. at 2910 (citations omitted) fleshed out the concept of "novelty" in terms of "three situations in which a `new' constitutional rule, representing a `clear break from the past,' might emerge from this Court":

First, a decision of this Court may explicitly overrule one of our precedents.... Second, a decision may "overturn a longstanding and widespread practice to which this Court has not spoken, but which a near-unanimous body of lower court authority has expressly approved." ... And, finally, a decision may "disapprove a practice this Court arguably has sanctioned in prior cases." ... By definition, when a case falling into one of the first two categories is given retroactive application, there will almost certainly have been no reasonable basis upon which an attorney previously could have urged a state court to adopt the position that this Court has ultimately adopted.

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