United States v. Orrin Shaid, Jr.

JERRE S. WILLIAMS, Circuit Judge,

with whom POLITZ, Circuit Judge, joins dissenting:

The intricacies of the opinion for the Court in this case tend to conceal that the *237 case is relatively straightforward, controlled step by step by established law. The most unusual part of the majority opinion is the conclusion that the established law in decisions of the United States Supreme Court is not to be applied because the Court has not had the occasion to follow the law very often. I dissent.

The direct legal reasoning which controls this case can be readily stated:

1. Petitioner Shaid clearly has an established criminal record for engaging in offenses which can be summarized as bank fraud and misappropriation of funds. His first group of convictions was in 1973. His other convictions for bank fraud under a wholly different set of circumstances occurred in 1982. Due to the earlier convictions, Shaid received an enhanced sentence for the 1982 convictions.

2. In 1983 our Court determined that we had been in error in applying 18 U.S.C. § 656 regarding misapplication of bank funds. We had held properly that a conviction would lie with proof of a knowing participation in a deceptive or fraudulent transaction. But we also had held in error that the statute was violated when there was proof only of a "reckless disregard” of the interests of the bank. The clear holding was that mens rea was required, an intentional deceptive or fraudulent act. United States v. Adamson, 700 F.2d 953 (5th Cir.) (Unit B En Banc), cert. denied, 464 U.S. 833 , 104 S.Ct. 116 , 78 L.Ed.2d 116 (1983).

3. It is the established law that when a conviction is based upon conduct which no longer constitutes a crime, such a conviction no longer stands even though it occurred before the law recognized that the conduct was not a crime. United States v. Addonizio, 442 U.S. 178, 187 , 99 S.Ct. 2235, 2241 , 60 L.Ed.2d 805 (1979) (not to set aside a conviction in such circumstances would be a “complete miscarriage of justice”).

4. The clearly established general rule is that on a § 2255 motion, a convicted defendant raising trial errors where no contemporaneous objection was made must meet the requirement of a showing of cause as to why the objection was not made at trial and also the defendant must show actual prejudice resulting from the errors of which there is complaint. United States v. Frady, 456 U.S. 152, 167-68 , 102 S.Ct. 1584, 1594 , 71 L.Ed.2d 816 (1982). Shaid made no specific contemporaneous objection. There is a recognized exception to this general principle, however, which the Court itself in the Frady case recognized. The Court said that it was distinguishing the case in which the accused brought before the district court affirmative evidence indicating that he had been convicted wrongly of a crime of which he was innocent. Frady, 456 U.S. at 171 , 102 S.Ct. at 1596 . This is Shaid’s situation. He did contend at trial and also before the district court in the § 2255 proceeding that he did not intend to commit a crime with respect to certain of the charges under § 656 because he did not have the requisite intent to misapply the bank’s funds.

5.The exception to the requirement of meeting the cause and prejudice standard continues to be well established. In Murray v. Carrier, 477 U.S. 478, 496, 106 S.Ct. 2639, 2649 , 91 L.Ed.2d 397 (1986), the Court said: “[Wjhere a constitutional violation has probably resulted in the conviction of one who is actually innocent, a federal ha-beas court may grant the writ even in the absence of a showing of cause for procedural default.” It should be noted that this case is four years after the Frady case. Further, this statement from Carrier was quoted again by the Supreme Court in Dugger v. Adams, 489 U.S. 401 , 412 n. 6, 109 S.Ct. 1211, 1217 , 103 L.Ed.2d 435 (1989).

So it is that under this straight line of reasoning, using the law as established by the United States Supreme Court, Shaid did not need to meet a cause and prejudice standard because his conviction for a crime that does not exist was used to enhance his punishment for later offenses.

The remedy is narrow, as the panel opinion ordered. The case should be remanded to the district court to evaluate what counts in the 1973 conviction were counts under which Shaid was improperly convicted for engaging in non-criminal conduct. *238 Shaid did not contest on mens rea grounds all nineteen counts of misapplication of funds of which he was found guilty. Thus, the district court must review the record to determine which counts raised a legitimate concern as to whether Shaid had the requisite knowledge and intent to violate § 656. The court will need to make findings as to which of Shaid’s § 656 convictions in 1973 rest only on evidence of a reckless disregard for the interests of the bank.

This is the legal scenario of Shaid’s case. But the opinion of the Court sets out to create an intricate and multifaceted obstacle course to deny Shaid his proper protection under the Constitution and laws of the United States.

To begin the analysis of the obstacle course it is proper to point out that no specific objection to the charge in question was made. The attorney requested a jury charge limiting the offense to an intention to misappropriate funds, and made a general objection that that charge was not made to the jury. But there is no specific objection to the critical charge. Also the opinion for the Court concedes, as it must, that the charge did improperly define the offense since it included as culpable a reckless disregard for the bank’s interests by equating a reckless disregard with the requisite requirement of intent under § 656.

The United States Government in defending against this § 2255 motion did not move, after the decision of the panel following this straightforward line of reasoning, for either a rehearing or a rehearing en banc. The government seemingly conceded the correctness of the result, or, at least, that it was not profitable to undertake a rehearing. But the Court took it upon itself to assume en banc jurisdiction and hold otherwise. Of course, this Court under its responsibilities to the law had the right to do that without an objection from the government. But it is perhaps a gentle irony that while we recognize a powerful effect of the failure to object to the instruction, we do not find any significance in the lack of governmental objection to the panel holding.

The Court treats the controlling instruction defining a non-crime as a crime as merely an erroneous instruction which invokes the cause and prejudice standard of the Frady case and denies the exception for the out and out conviction for non-crimes. The Court relies upon the facts of Frady to conclude that it is the same kind of case as Shaid’s case. In that case the instructions incorrectly equated intent with malice in a homicide case and also inferred from the use of a weapon the existence of malice. The critical difference in the facts of that case was pointed out by the Court itself in Frady in the passage in which it recognizes the exception. The Court said:

[W]e emphasize that this would be a different case had Frady brought before the district court affirmative evidence indicating that he had been convicted wrongly of a crime of which he was innocent. But Frady, it must be remembered, did not assert at trial that he ... beat Thomas Bennett to death without malice. Instead, he claimed he had nothing whatever to do with the crime.

(Frady, 456 U.S. at 171 , 102 S.Ct. at 1596 .) In other words, Frady claimed alibi. Obviously, under those circumstances the claim was simply the claim of an erroneous instruction which increased the level of the crime. It had nothing to do with a claim that there had been no crime. In contrast, in Shaid’s case the issue is whether a crime at all had been committed. Shaid properly asserted that it had not. Shaid’s case precisely fits the definition of the quotation from Frady : “Affirmative evidence indicating that he had been convicted wrongly of a crime of which he was innocent.” Frady, 456 U.S. at 171 , 102 S.Ct. at 1596 (emphasis added).

In Murray v. Carrier, as quoted earlier, the Court confirmed in 1986 the recognition of the exception of innocence from any Frady analysis. 477 U.S. at 496 , 106 S.Ct. at 2649 . Again, the facts of Carrier itself and of the Engle case, quoted extensively in the majority opinion because of reference to it in Carrier, did not involve criminal convictions for a non-crime. In Carrier, there was a procedural default on discovery. In Engle, the issue was an errone *239 ous instruction concerning burden of proof. It should be emphasized again that neither one of these involved the alternative of a conviction of a non-crime as defined by the court in its instructions to the jury. In both of those instances, the issue was a procedural error.

In Dugger v. Adams, 489 U.S. 401 , 109 S.Ct. 1211 , 103 L.Ed.2d 435 (1989), the Supreme Court again confirmed the principle of protecting actual innocence. Id. 489 U.S. at 1217 , 109 S.Ct. at 1217 n. 6. Again in Dugger , the issue was not innocence but was simply the issue of instruction to the jury as to its role in assessing capital punishment in a murder case.

The opinion for the Court asserts that "[t]he Supreme Court, however, has not yet found an appropriate case for the application of this exception,.... ” The simple truth is that the cases which did not apply the exception are cases that do not involve criminal conviction for a non-crime.

Contrary to the statement in the opinion of the Court, we do have clear and strong authority from the Supreme Court in actual conviction in non-crime eases. This authority does not require showing of cause and prejudice. The Supreme Court in McNally v. United States, 483 U.S. 350 , 107 S.Ct. 2875 , 97 L.Ed.2d 292 (1987), granted relief on appeal to defendants convicted under an erroneous theory of mail and wire fraud. McNally was then followed by collateral attack cases under § 2255 in which such convictions were set aside without requiring a showing of cause or prejudice. E.g., United States v. Bruno, 903 F.2d 393, 394 (5th Cir.1990); Callanan v. United States, 881 F.2d 229, 231 (6th Cir.1989). McNally and the other cases, precisely on point, stand firm and unassailed.

Yet, the opinion for the Court undertakes to distinguish McNally and the cases following it by stating that they involved a “broad invalidation of an entire substantive theory of conduct constituting mail fraud.” In contrast, says the Court, Adamson “merely clarified the precise level of intent required for conviction under § 656.” The distinction attempted has no justification stated in McNally nor its progeny. In McNally and in Shaid, one of two parts of the definition of the crime was held to be invalid. The other part remained valid.

It is to these extreme and unwarranted characterizations that I dissent most strongly. In both cases an accused was convicted of a crime which does not exist. To call Adamson “a mere clarification of the precise level of intent” moves far afield from the legal reality of the Adamson case and those that follow. It is like calling a hurricane merely a fresh breeze. It is a classic rationalization. Requirement of intent to commit an offense, mens rea, is one of the most stringent requirements in the law. To characterize that requirement as involving only a “clarification of the precise level of intent required” when the statute does not cover conduct based upon reckless disregard for the interests of the person allegedly wronged has an Alice in Wonderland quality which this Court should not accept.

I remind the Court that this case is not an instance of allowing a criminal to go free. It is a narrow decision only to inquire as to what extent conviction for non-crimes resulted in the enhancement of sentence. The most that is required is a resen-tencing to avoid augmentation of a criminal sentence by conduct which was not criminal. This ease was not worthy of rehearing or an en banc hearing, as the government itself recognized in its failure to file motions to accomplish rehearing. Instead, this Court took upon itself to establish by a tortured logic contrary to the stated law of the Supreme Court that a criminal conviction for a non-crime is to be treated as no more than an instance of a procedural error by erroneous instruction to a jury. I must dissent from this debasement and abandonment of a principle about as fundamental as can be found in our Constitution.

A person cannot be held accountable criminally when he or she has not committed a crime. The Supreme Court has established the law that a Court cannot escape the enforcement of this constitutional right by finding a procedural default in failure to object. I find it chilling, indeed, that this Court refuses to accept the established law *240 and instead mounts a many faceted undertaking to avoid applying the established principle of law, and most surprisingly by a large majority of the Court. We may not feel sympathy at all for convicted criminals. But the moment we stop protecting critical constitutional rights of those charged with crime and punished for crime, we put at risk every citizen in the United States.