Petition for Writ of Certiorari — William B. Hungerford, Jr., Petitioner v. United States

No. ___________

IN THE

Supreme Court of the United States

WILLIAM B. HUNGERFORD, JR.,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

CLAUDE J. KELLY

FEDERAL PUBLIC DEFENDER

EASTERN DISTRICT OF LOUISIANA

CELIA C. RHOADS

COUNSEL OF RECORD

500 POYDRAS STREET, SUITE 318

HALE BOGGS FEDERAL BUILDING

NEW ORLEANS, LOUISIANA 70130

(504) 589-7930

CELIA_RHOADS@FD.ORG

COUNSEL FOR PETITIONER

QUESTION PRESENTED

In recent years, this Court and commentators alike have expressed increasing

alarm over the unbridled deference afforded to agency bureaucrats’ interpretations

of statutes and their own internal regulations and the harms imposed by that

deference in the civil enforcement context. However, this Court has yet to address the

serious dangers associated with this deference in the criminal context. Specifically,

federal prosecutors routinely call agency officials to opine on the meaning of complex

regulatory schemes in the course of criminal prosecutions, using that testimony as

the foundation for the most serious deprivation of liberty—a criminal conviction.

Courts have been slow to recognize the potential harm of this brand of testimony, as

illustrated by this case.

Thus, the question presented is whether the Fifth Circuit erred in its

affirmance of Petitioner William Hungerford’s conviction by failing to properly

account for the devastating harm of improper testimony delivered by an agency

bureaucrat called by the prosecution solely to opine on the meaning and application

of the complex regulatory scheme governing the EB-5 investment program.

ii

RELATED PROCEEDINGS

The following proceedings are directly related to this case:



United States v. Hungerford et al, No. 2:18-cr-00112, U.S. District Court

for the Eastern District of Louisiana. Judgment entered June 22, 2021.



United States v. William B. Hungerford, Jr., No. 21-30359, U.S. Court of

Appeals for the Fifth Circuit. Judgment entered November 27, 2023 (1a19a).

iii

TABLE OF CONTENTS

Question Presented........................................................................................................ ii

Related Proceedings...................................................................................................... iii

Table of Authorities ....................................................................................................... v

Judgment at Issue ......................................................................................................... 1

Jurisdiction .................................................................................................................... 1

Statement of the Case and Proceedings ....................................................................... 2

Reasons for Granting the Petition .............................................................................. 17

I.

In the civil context, this Court and commentators have

increasingly recognized the danger of blind deference to agency

interpretations of statutes and regulations. ......................................... 17

II.

This Court appears not to have addressed this issue in the context

of criminal prosecutions, where the dangers of blind deference to

agency bureaucrats is heightened. ........................................................ 20

III.

The Fifth Circuit severely underappreciated the serious harm of

the improper agency testimony in this case. ......................................... 23

Conclusion .................................................................................................................... 25

Appendix

iv

TABLE OF AUTHORITIES

Cases

Auer v. Robbins, 519 U.S. 452 (1997). ................................................. 18, 19, 20, 21, 22

Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)

................................................................................................................ 17, 18, 20, 21

Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156 (2012). .......................... 22

Decker v. Nw. Envtl. Def. Ctr., 133 S. Ct. 1326 (2013) ............................................... 19

Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016) .................................... 18

Michigan v. E.P.A., 576 U.S. 743 (2015) ..................................................................... 17

Perez v. Mortg. Bankers Ass’n, 575 U.S. 92 (2015) ..................................................... 19

Talk Am., Inc. v. Mich. Bell Tel. Co., 131 S. Ct. 2254 (2011) ..................................... 20

United States v. Chanu, 40 F.4th 528 (7th Cir. 2022) .................................................. 9

United States v. Chikere, 751 F. App’x 456 (5th Cir. 2018) ....................................... 21

United States v. Conn, 297 F.3d 548 (7th Cir. 2002) .................................................. 11

United States v. El-Mezain, 664 F.3d 467 (5th Cir. 2011) ......................................... 21

United States v. Griffin, 324 F.3d 330 (5th Cir. 2003) ............................................... 21

United States v. Johnson, 619 F.3d 469 (5th Cir. 2010)). .......................................... 16

United States v. Riddle, 103 F.3d 423 (5th Cir. 1997) ............................................... 21

United States v. Rothenberg, 328 F. App'x 897, 902 (5th Cir. 2009) ......................... 21

United States v. Yanez Sosa, 513 F.3d 194 (5th Cir. 2008) ........................................ 11

Statutes

28 U.S.C. § 1254 ............................................................................................................. 1

8 U.S.C. § 1153 ........................................................................................................... 2, 3

Other Authorities

8 C.F.R. § 204.6 .......................................................................................................... 2, 3

Charles J. Cooper, The Flaws of Chevron Deference, 21 Tex. Rev. L. & Pol’y 307

(2016)........................................................................................................................ 17

Christopher J. Walker, Attacking Auer and Chevron Deference: A Literature Review,

16 Geo. J.L. & Pub. Pol’y 103 (2018) ....................................................................... 20

Douglas H. Ginsburg & Steven Menashi, Our Illiberal Administrative Law, 10 NYU

J.L. & Liberty 475 (2016) ........................................................................................ 17

Fed. R. Crim. P. 16........................................................................................... 11, 12, 23

Fed. R. Evid. 701 .............................................................................................. 10, 11, 23

Philip Hamburger, Chevron Bias, 84 Geo. Wash. L. Rev. 1187 (2016) ..................... 20

v

IN THE

Supreme Court of the United States

WILLIAM B. HUNGERFORD, JR.,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals for the Fifth Circuit

PETITION FOR WRIT OF CERTIORARI

Petitioner William Hungerford respectfully asks this Court to review the

decision of the U.S. Court of Appeals for the Fifth Circuit.

JUDGMENT AT ISSUE

The Fifth Circuit issued its judgment affirming Mr. Hungerford’s convictions

on November 27, 2023. The Fifth Circuit’s decision is attached in the Appendix.

JURISDICTION

The Fifth Circuit issued its decision November 27, 2023. App’x at 1a. The

deadline for filing a Petition in this case fell on a Sunday, and the petition thus was

filed the first non-holiday weekday thereafter. Thus, this petition is timely. This

Court has jurisdiction under 28 U.S.C. § 1254(1).

1

STATEMENT OF THE CASE AND PROCEEDINGS

A. The EB-5 Visa Program.

Central to the case is the highly controversial EB-5 visa program, which

purports to provide a path to permanent residency for wealthy foreign nationals who

invest substantial capital in new or existing American businesses. Administered by

the U.S. Citizenship and Immigration Services (USCIS), the program was intended

to stimulate the U.S. economy by attracting foreign investment and generating job

growth. See, e.g., 8 U.S.C. § 1153(b)(5); 8 C.F.R. § 204.6. An exceptionally complex

web of agency rules and regulations—contained in both the Code of Federal

Regulations and extensive agency guidance promulgated by USCIS itself—govern the

EB-5 visa program.1

To gain permanent residency status under EB-5 rules in place during the

period at issue in this case, immigrant investors were required to invest at least

$1 million of capital in a qualified business (“commercial enterprise”) for at least two

years and, at the completion of that period, demonstrate that the investment created

at least ten jobs for American workers. USCIS permits a reduced investment

($500,000 at the time at issue here) if the foreign national’s capital is aimed at

economic growth in so-called “targeted employment areas”—geographic zones in

rural areas or areas with high unemployment that have been deemed in greater need

See, e.g., id.; USCIS, Policy Manual, vol. 6, pt. G, https://www.uscis.gov/policymanual/volume-6-part-g.

1

2

of economic investment. See 8 U.S.C. § 1153(b)(5)(B)(ii), (C); 8 C.F.R. § 204.6(e). To

qualify, that lower capital amount must be invested in an entity that is “principally

doing business” in the designated targeted employment area within the meaning of

USCIS regulations. Under those regulations, an entity need not necessarily be

exclusively physically located there. Instead, USCIS guidance explains that “a new

commercial enterprise is ‘principally doing business’ in the location where it

regularly, systematically, and continuously provides goods or services that support

job creation.”2 A complex set of factors are considered in making that determination,

described in USCIS guidance interpreting its own regulations.3

In 1992, Congress expanded the EB-5 program through establishment of the

“Regional Center Program.” That program allows investors to pool their money into

USCIS-approved entities called “regional centers,” which are “involved with the

promotion of economic growth” of a specified region, “including increased export sales,

improved regional productivity, job creation, and increased domestic capital

investment.” 8 C.F.R. § 204.6(e), (m)(1). Rather than invest directly in a single

business, regional centers allow foreign nationals to invest in larger-scale projects or

a diverse set of projects. Id. Rather than administering regional centers themselves,

most jurisdictions contract with private companies to operate their regional centers

from afar. Before a regional center can begin operating, it must be approved by USCIS

2 USCIS, Policy Manual, vol. 6, pt. G, https://www.uscis.gov/policy-manual/volume-6-part-g.

3 Id.

3

through submission of a “Form I-924,” laying out how the regional center will be

structured and how it will promote growth in that area. 8 C.F.R. § 204.6(m)(3)(i)–(v).

The requirement that a foreign investor create ten American jobs becomes

substantially more complicated in the regional center context, where investor money

is comingled and distributed to numerous so-called “job-creating entities,” i.e.,

portfolio projects. In that context, jobs need not be “directly” created by the business

receiving capital, meaning, the investor need not show that his or her investment

directly led to the hiring of ten American workers. Instead, when capital is pooled

through a regional center and then disbursed to eligible entities, USCIS uses complex

economic modeling that inputs capital contributed and the industry receiving funds

to produce an estimate of likely job growth associated with the investment. That

system credits both “direct jobs” (i.e., employees hired directly by the business

receiving funds in the first instance), as well as “indirect jobs” created in the broader

market by the investment.4 And, although investor capital must initially go to

businesses “principally doing business” in the designated area, USCIS regulations do

not require all job growth occur within the relevant area or that all future

expenditures occur there.

In other words, there is no requirement that the job-creating entities receiving

capital spend that money exclusively in the targeted geographic region, i.e., hire all

of its workers, purchase all of its materials, or retain all of its services there. There

4 USCIS, Policy Manual, vol. 6, pt. G, https://www.uscis.gov/policy-manual/volume-6-part-g.

4

also is no prohibition against self-dealing in the regional center program context,

meaning, there is no prohibition against the administrators of regional centers

investing capital into companies they own.

B. Factual Background.

This case arose from the management of the New Orleans regional center,

which was operated for years by Petitioner William Hungerford—a Maryland

businessman—and his business partner Timothy Milbrath—a retired Air Force

colonel.5 Neither had any prior criminal record or other history of fraudulent

behavior. Uncontroverted evidence at trail established that USCIS officials under the

President George W. Bush administration approached the men to ask them to

resurrect the defunct New Orleans regional center, which long had been inactive.

Also uncontroverted at trial, the men (neither of which had any prior experience with

the EB-5 program or immigration law generally) worked closely with USCIS officials

to develop the precise structure used for the New Orleans regional center, including

its fee structure and venture capital fund model. As referenced in documents

submitted by the prosecution at trial and described extensively in testimony, Col.

Milbrath and Mr. Hungerford met with high-ranking USCIS officials on numerous

occasions from the regional center’s infancy onward, to discuss how to administer and

structure it. It was also uncontroverted that USCIS repeatedly reviewed and

5 Sadly, Col. Milbrath passed away in Bureau of Prisons custody while the appeal in this case

was pending.

5

approved the fund’s structure and the various types of expenses paid to the two

partners who ran and managed it. And USCIS also approved the Fund’s proposed

economic multiplier formula to be used for calculating the number of jobs indirectly

created by each foreign national’s investment—a calculation needed to successfully

obtain permanent residency in exchange for their capital contributions.

A business plan approved by USCIS listed a number of potential projects

already identified as possible job-creating entities for the Fund’s portfolio,

anticipating that a total of $31.5 million dollars could eventually be raised for Fund

investments through EB-5 capital. Central to this case was one of those listed jobcreating entities, “Bay-Nola-Management” or BNM, which was described to USCIS

and potential investors as providing “marketing, financial management, due

diligence and business analysis, and economic forecasting and analysis.” The

defendant’s owned BNM and testified that they created it with the input of USCIS as

a means of providing various necessary services to the investment fund and its

portfolio projects. USCIS was aware, the defendants testified, that they would be paid

through BNM for the various management services they provided to the Fund and

that doing so would be permissible because BNM itself would qualify as a job-creating

entity. The thinking was that, although BNM’s primary office was located in

Maryland rather than New Orlans, the services it would provide would be in New

Orleans. No one at trial disputed that the defendants ultimately received sizable

compensation through BNM over the years-long operation of the Fund. The dispute

instead was whether doing so was permissible under USCIS rules.

6

For years, foreign investment in the New Orleans regional center—and its

program structure—was approved again and again by USCIS. However, in 2010,

after 31 approvals, USCIS suddenly stopped approving pending applications for

investment, leaving $7.5 million of expected capital in limbo and unavailable to the

Fund. In 2012, USCIS began denying investors’ applications for permanent residency

on the ground that the Regional Center’s portfolio projects had not satisfied USCIS’s

job-creation requirements. Specifically, a dispute arose over whether BNM qualified

as a job-creating entity principally doing business in New Orleans such that it could

receive investor capital and help satisfy job-creating requirements.

By that time, the presidential administration had turned over and USCIS

leadership had changed. Alejandro Mayorkas had taken over as the agency’s new

director, and the USCIS officials who had worked closely with the defendants and

approved the structure of New Orleans regional center were no longer at the agency.

Broader disputes began to swirl around USCIS’s shifting views on the meaning and

requirements of its own regulations. Relevant here, USCIS changed its interpretation

of various regional center program rules, most notably, about how to calculate

requisite job creation and where that job creation must occur. This led to hostilities

between Congress and the agency, as evidenced by correspondence referenced and

admitted at trial in which members of Congress expressed their dismay over USCIS’s

position on the location of jobs indirectly created by regional center investments.6

6 See, e.g., USCIS Dir. Alejandro N. Mayorkas, Letter to Sen. Patrick Leahy (Dec. 3, 2010)

7

In the case of the New Orleans regional center, all 31 applications for

permanent residency were ultimately denied based on the job-creation dispute. That

led a number of the foreign investors to file a lawsuit against the Fund in 2012, which

the parities ultimately settled.

It was not until May 25, 2018—six years after the civil suit was filed—that

federal prosecutors sought a criminal indictment, largely mirroring the claims made

in the civil suit. Specifically, prosecutors charged three broad, ongoing conspiracies

in lieu of charging substantive counts for the wired EB-5 funds:

Count 1: Conspiracy to commit mail and wire fraud through a scheme to

defraud immigrant investors of their capital, in violation of 18 U.S.C. §§ 1341

and 1343;

Count 2: Conspiracy to commit immigration fraud by “mak[ing] or caus[ing]

to be made material false statements under oath and penalty of perjury” on an

immigration applications or other document, in violation of 18 U.S.C. § 371 and

1546(a).

Count 3: Conspiracy to launder the ill-gotten proceeds of the unlawful activity

in alleged in Counts 1 and 2 using the structure of the various New Orleans

Regional Center-related entities.

Six of the indictments 56 overt acts listed in support of those conspiracies were also

charged as substantive wire fraud counts.

The prosecution’s theory of guilt as to all nine counts rested on its claim that

the defendants knowingly developed a fraudulent EB-5 investment fund with the

specific intent to defraud investors of their committed capital investment. Central to

(referencing the dispute and clarifying USCIS’s position), available https://www.aila.org/ailafiles/7DCCEB85-E122-43FC-AB76-1CEE84175145/10122135.pdf?169759062.

8

that these was the prosecution’s claim that the defendants misrepresented that they

would follow EB-5 program rules, but then brazenly violated those rules by

channeling investor funds to a company they owned that could not receive investor

capital by virtue of its location. That theory of intent necessarily relied on highly

controverted views of what USCIS rules, regulations, and guidance do and do not

permit.7

According to the prosecution at trial and again on appeal before the Fifth

Circuit, USCIS rules required that any entity receiving investor funds had to “operate

in New Orleans,” that every penny of fund capital was required to be “used for

rebuilding New Orleans after Hurricane Katrina,” and that no portion of fund capital

could go to “Hungerford and Milbrath and their employees in Maryland.” And the

prosecution argued that the men improperly received payments from investor funds,

including payments for expenses and services related to their management of the

venture capital fund and the fund’s various investment projects. According to the

prosecution, that compensation violated EB-5 rules, because (under the government’s

view) “every penny” of investor capital had to “go to” New Orleans and could not be

“touched” by the Fund’s administrators. Those alleged rules violations, the

prosecution urged the jury, clearly evidenced the men’s intent to defraud foreign

national investors of their devoted capital and betrayed the Fund’s true purpose of

A wire fraud conviction requires proof beyond a reasonable doubt that the defendant,

employing false or material representations, intentionally devised a “scheme to defraud” others of their

money or property for financial gain—i.e., purposefully and intentionally concocted “[a]n artful plot or

plan . . . to deceive others.” United States v. Chanu, 40 F.4th 528, 540 (7th Cir. 2022).

7

9

funneling investment dollars to Mr. Hungerford and Col. Milbrath in Maryland,

rather than use the funds for approved purposes. Everyone knows the EB-5 program

rules, the prosecution claimed, and the defendants’ conduct clearly violated those

rules, so they must have had intent to defraud.

The defense, by contrast, urged that the men developed and administered the

program in good faith, relying on extensive consultation with and input from USCIS

agency officials who first approached them to run the beleaguered New Orlans

regional center. The defense argued that the two business partners did ultimately get

paid from investor money for the various services they provided to the fund as did

their company, but that compensation structure did not, contrary to the prosecution’s

claims, violate any USCIS regulations and in fact complied with USCIS’s

interpretations and guidance at the time. Thus, the case came down to knowledge

and intent, with those central elements resting on the meaning and application of

highly technical USCIS rules and regulations, as well as the two defendant’s

understanding of them. And the various changes to and UCIS’s evolving

interpretations of its own regulations and congressional mandates were the center of

that controversy.

Despite the prosecution presenting a case that relied on the meaning of

complex immigration regulations, the government did not call a single expert witness

under Federal Rule of Evidence 702 and instead called only lay witnesses (also known

as fact witnesses) under Rule 701. Importantly, Rule 701 prohibits lay witnesses from

“expressing opinions that require[] specialized knowledge.” Fed. R. Evid. 701 (“If a

10

witness is not testifying as an expert, testimony in the form of an opinion is limited

to one that is . . . not based on scientific, technical, or other specialized knowledge[.]”).

Instead, if “any part of a witness’s opinion that rests on scientific, technical, or

specialized knowledge must be determined by reference to Rule 702,” then the rule

governing experts, and “not Rule 701,” the rule governing fact witnesses, applies.

United States v. Yanez Sosa, 513 F.3d 194, 200 (5th Cir. 2008).

That critical evidentiary protection was added in 2000 to crack down on the

improper use of lay witnesses at trial. As the Advisory Committee explained at the

time:

Rule 701 has been amended to eliminate the risk that the reliability

requirements set forth in Rule 702 will be evaded through the simple

expedient of proffering an expert in lay witness clothing. Under the

amendment, a witness’ testimony must be scrutinized under the rules

regulating expert opinion to the extent that the witness is providing

testimony based on scientific, technical, or other specialized knowledge

within the scope of Rule 702. By channeling testimony that is actually

expert testimony to Rule 702, the amendment also ensures that a party

will not evade the expert witness disclosure requirements set forth in

Fed. R. Civ. P. 26 and Fed. R. Crim. P. 16 by simply calling an expert

witness in the guise of a layperson.

Fed. R. Evid. 701, Advisory Committee Note (2000); see also United States v. Conn,

297 F.3d 548, 553 (7th Cir. 2002) (“Before the 2000 amendment to Rule 701, some

courts had become more lenient in the admission of lay opinion on subjects

appropriate for expert testimony. The amendment was designed to make clear that

courts must scrutinize witness testimony to ensure that all testimony based on

scientific, technical or other specialized knowledge is subjected to the reliability

standard of Rule 702.”).

11

The importance of the distinction between lay and expert witnesses cannot be

understated. Indeed, although expert witnesses are given more leeway to provide

opinion testimony than lay witnesses, the admission of such testimony is strictly

guarded. Under the Rules of Evidence, the offering party must make specific

showings to establish the reliability, permissibility, and relevance of the proffered

testimony. See Fed. R. Evid. 702. And, under the Federal Rules of Criminal

Procedure, the offering party must make specific disclosures about the nature of the

expert and testimony to provide fair notice and opportunity for the other party to

counter that testimony if appropriate. See Fed. R. Crim. P. 16(a)(1)(G).

In this case, the prosecution not only failed to give notice to the defense of any

expert testimony, but also did not call a single USCIS official who was involved with

or had any first-hand knowledge of the various events surrounding the New Orleans

regional center. In fact, the prosecution declined to call any USCIS official who was

even employed by the agency during the period at issue in this case. Instead, the

prosecution called Jan Lyons—a “senior economic advisor for the Immigrant Investor

Program” at USCIS, who began working at the EB-5 program in 2012, i.e., well after

the change in administration and subsequent implementation of controversial

interpretive changes.

Mr. Lyons had no personal involvement in or firsthand knowledge of any of the

events related to the New Orleans regional center. Instead, the prosecution asked

him to educate the jury, in great detail, about the complex web of USCIS rules and

regulations governing the EB-5 program (according to his view of the law) and the

12

agency’s procedures for carrying out that regulatory framework. In lieu of firsthand

exposure to the events of the case, Mr. Lyons instead reviewed various case-related

documents in preparation for his testimony, and, at prosecution prompting, opined

extensively on their meaning and their permissibility under his interpretation of

USCIS rules. And, for hours, he described in detail what he claimed to be numerous,

indisputable EB-5 program requirements.

In doing so, Mr. Lyons essentially opined on the impropriety of the defendant’s

conduct and, by extension, their guilt. For example, Mr. Lyons: explained the Code of

Federal Regulations governing the EB-5 program and his interpretation of those

laws; expounded at great length on the application of the Code of Federal Regulations

provisions and USCIS’s internal views of those regulation to the facts of the case (of

which he had no firsthand knowledge); stated legal tests and how the agency

interprets and applies those tests; applied his interpretation of the law to the

appellants’ specific conduct and informed the jury how the law required them to act;

and applied his interpretations of the law to thinly veiled hypotheticals, clearly

intended to signal judgment that the appellants’ specific conduct was unlawful.

Central to that testimony were Mr. Lyons’s views on where investor funds may

be spent and what it means for a business to be “principally doing business in a

location,” as illustrated by this exchnage:

Q: How do you figure out if a project if principally doing business in a

regional center area?

A: Well, the first thing we do is we look at the address to make sure that

there’s an address within that job-creating area, and that shows us that

they’re principally doing business there. . . .

13

Q: Just a post office box, does that count as ‘principally doing business’?

A: No.

Mr. Lyons even went so far as to call his views of the law “sacrosanct,” as illustrated

in the following exchange about management fees—a central dispute in the case:

Q. [C]an any of my $500,000 be spent managing the fund, like a

management fee?

A. No. All of the $500,000 -- and this is really essential -- every penny of

that has to go for job creation. No exceptions. . . . That $500,000 is, if you

will pardon the expression, sacrosanct. That’s for job creation only. The

fees that they were going to charge here could only come from profits. . . .

Throughout trial, the prosecution also asked various other lay witnesses (such

as foreign investors and their attorneys) to describe for the jury their understanding

of highly technical and specific USCIS program rules and requirements. However,

that testimony was a drop in the bucket compared to the five-hour musings of

bureaucrat Jan Lyons, who provided by far the most extensive and damning

testimony and whose testimony served as the prosecution’s central focus. Indeed, that

testimony served as the central foundation of the prosecution’s theory of guilt,

namely, of Col. Milbrath and Mr. Hungerford’s “complete disregard” of well-known

USCIS requirements as relayed by Mr. Lyons. That knowing disregard of

“sacrosanct” rules, the prosecution urged, was what transformed the case from a mere

“regulatory dispute” into “fraud in violation of our federal criminal laws.” The

prosecution’s cross-examination of the defendants, who testified on their own

behalves, also relied heavily on Mr. Lyons’s testimony about what USCIS rules did

and did not allow.

14

And those themes continued in the prosecution’s closing arguments.

Unsurprisingly, Mr. Lyons’s testimony—and calls to USCIS’s authority in general—

were the prosecution’s immediate and central focus . Additionally, in lieu of testimony

from an actual USCIS official who was involved in the case, the prosecution created

a fictional bureaucratic “hero” who ferreted out the defendants’ alleged fraud, telling

the jury:

Let me be clear, there’s a hero somewhere in that bureaucracy who just

decided to do their job. That man or woman is unknown right now, but

they kept asking questions: ‘Where did the money go? Show us the

money.’ That's it. . . . Someone at the U.S. Federal Government did their

job. Your taxpayer money at work. And as a result, this case has

happened.

The prosecution concluded: “They messed with the wrong agency, an agency with

someone actually out there [who] gives a care about what they do who discovered this.

. . . They messed with the wrong agency; they messed with the wrong investors; and

they messed with the wrong city.”

The jury convicted both defendants on all counts.

C. Appellate Proceedings Below.

On appeal, Mr. Hungerford argued that Mr. Lyons testimony was clearly

improper under the Federal Rules of Evidence—an error that was unfortunately not

preserved but was facially devastating. Stunningly, on appeal, the government

argued that Mr. Lyon’s testimony was perfectly acceptable under Rule 701, governing

lay witnesses, as it was simply akin to a fact witness who works for a particular type

of business providing insight into the business’s policies, practices, and procedures

15

and was not based on any particularly specialized or technical knowledge beyond

what a layman might know.

In an opinion issued following oral argument, the Fifth Circuit affirmed.

United States v. Hungerford, No. 21-30359, 2023 WL 8179273, at *6 (5th Cir. Nov.

27, 2023). Despite the government’s denials, the court did not disagree that Mr. Lyons

testimony was improper lay witness testimony under Rules 701 and 702. Instead, the

court simply brushed off its importance, nothing that, because a handful of other lay

witnesses (none of whom were actual agency officials) had expressed similar views in

passing (and in far less detail), Mr. Lyons’ testimony was without any harm. Id.

16

REASONS FOR GRANTING THE PETITION

I.

In the civil context, this Court and commentators have

increasingly recognized the danger of blind deference to agency

interpretations of statutes and regulations.

Nearly forty years ago, this Court indicated in Chevron v. Natural Resources

Defense Council that courts should defer to an agency’s reasonable interpretation of

an ambiguous statute. Chevron U.S.A. Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837 (1984). Chevron—and its legacy of increasing deference to agency

bureaucrats on what the law means—“has long been persuasively criticized as

unconstitutional, both for violating Article III’s vesting of all judicial powers in the

judiciary and for violating due process.”8 Thus, this Court is rightly in the process of

revisiting Chevron and its legacy, having already heard arguments in Loper Bright

Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce earlier this

year.

Indeed, the result of Chevron has been “[t]he exponential growth of the Code

of Federal Regulations and overregulation by unaccountable agencies.” Pet. for. Writ

of Cert., Loper Bright Enterprises, Inc., v. Raimondo, 022 WL 19770137, at *15 (Nov.

10, 2022). And “[i]t is no accident that the Code of Federal Regulation has burgeoned

during the Chevron era.” Id. at *31. As the Petitioner in Loper Bright urged:

8 Brief of the CATO Institute and Liberty Justice Center as Amicus Curiae in support of

Petitioners, Loper Bright Enterprises, Inc., v. Raimondo, 143 S. Ct. 2429 (2022) (citing Michigan v.

E.P.A., 576 U.S. 743, 761 (2015) (Thomas, J., concurring); Charles J. Cooper, The Flaws of Chevron

Deference, 21 Tex. Rev. L. & Pol’y 307, 310-11 (2016); Douglas H. Ginsburg & Steven Menashi, Our

Illiberal Administrative Law, 10 NYU J.L. & Liberty 475, 507 (2016); Philip Hamburger, Chevron

Bias, 84 Geo. Wash. L. Rev. 1187, 1211 (2016)).

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In a liberty-loving Republic, one would expect the rule to be that, when

there is doubt about whether the executive has authority over the

governed, the tie would go to the citizenry. But Chevron quite literally

erects the opposite rule for breaking not only ties, but anything that can

be fairly deemed ambiguous. The difficulties for the citizenry take more

subtle forms as well. It is perhaps a tolerable fiction that the citizenry

can master the various provisions of the United States Code. But

‘[u]nder Chevron the people aren’t just charged with awareness of and

the duty to conform their conduct to the fairest reading of the law that

a detached magistrate can muster. Instead, they are charged with an

awareness of Chevron; required to guess whether the statute will be

declared ‘ambiguous’ (courts often disagree on what qualifies); and

required to guess (again) whether an agency’s interpretation will be

deemed ‘reasonable.’”

Id. (citing Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1152 (10th Cir. 2016) (Gorsuch,

J., concurring)).

While the Chevron doctrine requires courts to defer to an agency’s reasonable

interpretation of an ambiguous statute, the related Auer doctrine applies to review of

an agency’s interpretation of its own ambiguous regulation.9 That doctrine too has

been the subject to immense criticism and rightfully so. In fact, critics have warned

that this brand of deference poses more dangers than Chevron’s doctrine in the

context of statutory interpretation. As Justice Thomas has observed, the

Administrative Procedure Act, in theory, “guards against excesses in rulemaking by

requiring notice and comment,” because “[b]efore an agency makes a rule, it normally

must notify the public of the proposal, invite them to comment on its shortcomings,

consider and respond to their arguments, and explain its final decision in a statement

9 Auer v. Robbins, 519 U.S. 452, 461 (1997).

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of the rule's basis and purpose.” Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 109 (2015)

(Thomas, J., concurring). However, the Act “exempts interpretive rules from these

requirements.” Id. Thus, the Act anticipates that:

An agency may use interpretive rules to advise the public by explaining

its interpretation of the law. But an agency may not use interpretive

rules to bind the public by making law, because it remains the

responsibility of the court to decide whether the law means what the

agency says it means.

Id.

Increasingly unbridled deference to agency bureaucrats as to their own

interpretive guidance has led courts to hold that “agencies may authoritatively

resolve ambiguities in regulations.” Id. at 110 (emphasis in original) (citing Auer, 519

U.S. at 461). The dangerous result of that deference: “Agencies may now use these

rules not just to advise the public, but also to bind them.” Id. “After all, if an

interpretive rule gets deference, the people are bound to obey it on pain of sanction,

no less surely than they are bound to obey substantive rules, which are accorded

similar deference. Interpretive rules that command deference do have the force of

law.” Id.

Even Justice Scalia, who authored Auer, ultimately sided with its critics,

lamenting, “[f]or decades, and for no good reason, we have been giving agencies the

authority to say what their rules mean.” Decker v. Nw. Envtl. Def. Ctr., 133 S. Ct.

1326, 1339 (2013) (Scalia, J., concurring in part and dissenting in part). Justice Scalia

rightly warned: “[D]eferring to an agency’s interpretation of its own rule encourages

the agency to enact vague rules which give it the power, in future adjudications, to

do what it pleases. This frustrates the notice and predictability purposes of

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rulemaking, and promotes arbitrary government.” Talk Am., Inc. v. Mich. Bell Tel.

Co., 131 S. Ct. 2254, 2266 (2011) (Scalia, J., concurring) (citations omitted).

Ultimately, as scholars have observed, both Chevron and Auer deference

“imbue[] the federal judiciary with institutional bias in favor of the most powerful

parties (the federal bureaucracy), which violates parties’ due process rights when

their life, liberty, or property is at issue.” Christopher J. Walker, Attacking Auer and

Chevron Deference: A Literature Review, 16 Geo. J.L. & Pub. Pol’y 103, 112 (2018)

(citing Philip Hamburger, Chevron Bias, 84 Geo. Wash. L. Rev. 1187, 1189 (2016)).

II.

This Court appears not to have addressed this issue in the context

of criminal prosecutions, where the dangers of blind deference to

agency bureaucrats is heightened.

This Court, litigants, and critics have focused in recent years on increasingly

blind deference to agency interpretations of their own regulations (and that

deference’s attendant harms) in the civil enforcement context. But this Court appears

not to have examined the harm of courts permitting criminal prosecutors to call

agency bureaucrats as witnesses in order to opine on the meaning of their own

regulations before juries. Guidance on how to analyze that common brand of

testimony is needed.

Indeed, federal prosecutors routinely call agency bureaucrats as witnesses,

asking them, as the prosecutors did in this case, to “educate” jurors on what complex

regulatory statutes and provisions mean—and what that meaning says about a

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particular defendant’s guilt.10 And the dangers of that practice are far worse in the

criminal context—not only because the stakes are higher for the defendants involved,

but also because of the lack of protective safeguards enjoyed in the civil-enforcement

sphere.

Most fundamentally, Chevron and Auer still mandate at least some level of

judicial oversight to ensure the reliability and soundness of the offered agency

opinion. Specifically, for an agency’s interpretations to have force, the law or

regulation at issue must have some degree of ambiguity and, more critically, the

judiciary is required to ensure that the interpretation offered is reasonable. That job

in the criminal context, as this case illustrates, is passed on to the lay jury, which is

ill equipped to ensure that agencies are correctly and fairly interpreting and applying

complex regulatory schemes. Moreover, in the criminal context, a convenient position

may simply be found with a single agency official, rather than the agency as a whole.

Indeed, in this case the prosecution was given license to simply select an agency

official of its choice to parrot the prosecution’s selected meaning of highly

controversial regulations whose meaning may fluctuate both over time and by agency

official.

10 See, e.g., United States v. Riddle, 103 F.3d 423, 428 (5th Cir. 1997); United States v. El-

Mezain, 664 F.3d 467, 512 (5th Cir. 2011); United States v. Griffin, 324 F.3d 330, 347 (5th Cir. 2003);

United States v. Rothenberg, 328 F. App'x 897, 902 (5th Cir. 2009); United States v. Chikere, 751 F.

App’x 456, 460 (5th Cir. 2018).

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The civil context provides another crucial backstop: this Court has limited Auer

deference in a manner that, at least in theory, prevents punishment of entities for

conduct that occurred prior to an agency’s changed interpretation of its own rule. For

example, in Christopher v. SmithKline Beecham Corp., the Court held that Auer

deference does not apply to an agency’s “interpretation of ambiguous regulations

[that would] impose potentially massive liability on [the regulated entity] for conduct

that occurred well before that interpretation was announced.” 132 S. Ct. 2156, 2167

(2012). The Christopher Court rejected application of Auer deference to agency

officials in that circumstance, as it “would result in precisely the kind of ‘unfair

surprise’ against which our cases have long warned” and “[t]o defer to the agency’s

interpretation in this circumstance would seriously undermine the principle that

agencies should provide regulated parties ‘fair warning of the conduct [a regulation]

prohibits or requires.’” Id. No such check exists in the criminal context, despite the

significantly more dire due-process concerns.

Finally, separation of powers concerns in the criminal context are heightened.

The prosecuting executive is permitted to cherry pick its own internal administrative

agent to put forward a view of the law that is convenient to the prosecution’s position.

This case illustrates that concern, with the prosecution affirmatively declining to call

a bureaucrat from the previous administration and instead calling a bureaucrat to

serve as a mouthpiece for the agency’s revised (and the prosecution’s favored)

interpretive positions.

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III.

The Fifth Circuit severely underappreciated the serious harm of

the improper agency testimony in this case.

Even with the protections of Rule 702 governing the use and disclosure of

expert witnesses, the above-discussed dangers should be cause for alarm in the

criminal context. In this case though, the prosecution successfully evaded even those

protections. By improperly failing to disclose its USCIS official as an expert—and

instead smuggling in his opinions under the guise of Rule 701 lay witness testimony—

the prosecution not only exposed the jury to extensive bureaucratic opining on the

guilt of the defendants but did so without fair notice to the defense and necessary

warnings to the jury. Pre-trial, the prosecution was never required to demonstrates

to the trial judge, for example, that: (a) Mr. Lyons’s scientific, technical, or other

specialized knowledge would help the trier of fact to understand the evidence or to

determine a fact in issue; (b) that his testimony was based on sufficient facts or data;

(c) that his testimony was the product of reliable principles and methods; and (d) that

his opinion reflected a reliable application of the principles and methods to the facts

of the case. See Fed. R. Evid. 701. The prosecution also improperly evaded the detailed

disclosure requirements imposed under Rule 16 of the Federal Rules of Criminal

Procedure, intended to insure the defense has adequate notice of an expert’s opinions

so that it may be prepared to counter those opinions if appropriate. See Fed. R. Crim.

P. 16(a)(1)(G).

Nor can the impact of the improper testimony by agency officials on juries be

underestimated, as illustrated by this case. Indeed, the “lay” agency official in this

case was on the stand for five hours for direct examination alone. Mr. Lyons was the

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only USCIS official to testify, and the only witness able to speak, in the eyes of the

jury at least, authoritatively and on behalf of his agency on issues like the laws

governing the EB-5 program, how the agency carries out and interprets those laws,

its views on various types of conduct, what is and is not permissible based on those

views, and, ultimately, whether the law permitted the appellants to do what they did.

Indeed, he served as USCIS’s spokesperson on the matter, opining on the law and the

propriety of the appellants’ conduct on behalf of the agency for hours on end.

And the prosecution (recognizing the value of Mr. Lyons’s bureaucratic

musings) repeatedly weaponized his testimony to its benefit throughout this case. For

example, the prosecutor drew upon Mr. Lyons’ improper testimony to aggressively

cross examine the appellants and drive home to the jury that they could not possibly

have understood the regulations in the way they did and believed their actions were

proper. And Lyons’s improper testimony was the immediate and central focus of the

prosecution’s closing arguments, which repeatedly relied on his claims about USCIS

regulations and summarized his view of the law with specific citation to him in

particular—reminding the jury that he was “a senior economic advisor for USCIS”

and transparently resting its allegation of a scheme to defraud on the fact that the

appellants’ broke the “simple” rules explained and applied by Lyons. In fact, the

prosecution went so far as to claim that anything Lyons “didn’t say” that the

appellants could do was unlawful. In its rebuttal argument, the prosecution even held

USCIS, as an agency, up as the hero of its story for enforcing its clear, sacrosanct

rules—assuring the jury that the appellants “messed with the wrong agency.” And,

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tellingly, on appeal, the government continued to rely heavily on Mr. Lyons’s 195

pages of testimony throughout its brief.

In other words, the Fifth Circuit wholly failed to recognize the dangers of this

form of testimony in the criminal context both in general and in this case in

particular. And that makes this case an ideal vehicle to address this important issue.

This testimony was deeply harmful to the integrity of these criminal proceedings and,

contrary to the Fifth Circuit’s findings, fully outcome determinative.

CONCLUSION

Petitioner William Hungerford respectfully asks this Court to grant certiorari

on the question presented.

Respectfully submitted,

CLAUDE J. KELLY

FEDERAL PUBLIC DEFENDER

EASTERN DISTRICT OF LOUISIANA

/s/Celia C. Rhoads

CELIA C. RHOADS

ASSISTANT FEDERAL PUBLIC DEFENDER

Counsel of Record

500 Poydras Street, Suite 318

Hale Boggs Federal Building

New Orleans, Louisiana 70130

(504) 589-7930

celia_rhoads@fd.org

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