Opposition Brief — Anderson v. United States

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Supreme Court, U.S.

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JUN 9 188

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No. 87-1499

JOSEPH F. SPANIO!

Jn the Supreme Court of the Gnited States

OCTOBER TERM, 1987

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W. STERLING ANDERSON AND RONALD CLEMENT BISHOP,

PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

CHARLES FRIED

Solicitor General

EDWARD S.G. DENNIS, JR.

Acting Assistant Attorney General

SARA CRISCITELLI

Altorney

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QUESTIONS PRESENTED

1. Whether the court of appeals correctly concluded

that petitioners’ general objection to any conscious

avoidance instruction did not consiltute an adequate ob

jection to the specific wording of the instruction that was

actually given.

2. Whether the language used in the conscious

avoidance instruction constituted plain error

Cases — Continued: Page

United States v. Manriquez Arbizo, 833 F.2d 244 (10th

Ca NE cae ok cee Load ee ences eke aeaaee 4

United States v. Marbury, 732 F.2d 390 (Sth Cir. 1984) . .. 6

United States v. Markowski, 772 F.2d 358 (7th Cir. 1985),

cert. denied, 475 U.S. 1018 (1986) ................ 6

United States v. Morales, 577 F.2d 769 (2d Cir. 1978) .... 10

United States v. Reed, 790 F.2d 208 (2d Cir.), cert. denied,

Be Eis ME CUE bcdc ck cd eestcuesgsiectehwences 12

United States v. Valle-Valdez, 554 F.2d 911 (9th Cir.

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United States v. Young, 470 U.S. 1 (1985)... 2.22222... y

Statutes and rules:

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Jn the Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-1499

W. STERLING ANDERSON AND RONALD CLEMENT BISHOP,

PETITIONERS

Vi

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. Al-A4)

is unreported.

JURISDICTION

The judgment of the court of appeals (Pet. App. AS5)

was entered on September 15, 1987. A petition for rehear-

ing was denied on January 6, 1988 (Pet. App. A6-A7). The

petition for a writ of certiorari was filed on March 7, 1988

(a Monday). The jurisdiction of this Court is invoked

under 28 U.S.C. 1254(1).

STATEMENT

Following a jury trial in the United States District Court

for the District of South Carolina, petitioners were con-

victed of conspiracy to commit wire fraud and to submit

(1)_

2

false statements to federally insured financial institutions,

in violation of 18 U.S.C. 371. Petitioner Anderson was

also convicted on ten counts of wire fraud, in violation of

18 U.S.C. 1343, and one count of submitting a false state-

ment to a federally insured financial institution, in viola-

tion of 18 U.S.C. 1014.' Petitioner Bishop was convicted

on six counts of submitting false statements to a federally

insured financial institution. Anderson was sentenced to

concurrent terms of five years’ imprisonment on the con-

spiracy count and on four of the wire fraud counts, to be

followed by concurrent terms of two years’ imprisonment

on the remaining counts. Bishop was sentenced to concur-

rent terms of two years’ imprisonment on each count. The

court of appeals affirmed (Pet. App. Al-A4).

1. The evidence at trial is not in dispute (see Pet. 3-8).

Briefly, it showed that Anderson was the owner and presi-

dent of A & M Mobile Homes in Spartanburg, South

Carolina. Bishop, Anderson’s brother-in-law, worked in A

& M’s office. In early 1982 a mobile home manufacturer

offered A & M kickbacks on a group of 100 or more

trailers. The manufacturer provided A & M with invoices

for the trailers that exceeded the dealer's actual price by

$1,000 to $2,000 on each mobile home. A & M submitted

the inflated invoices to financial institutions that provided

“floor financing” for the mobile homes.? In that way, the

company financed the homes for more than it paid the

manufacturer for them. C.A. App. 49-62, 90-91, 373-374,

1006, 1184. Based on the inflated invoices, A & M received

' Petitioner Anderson was acquitted on five false statement and

tour wire fraud counts.

> “Floor financing” allows the dealer to pay for and keep vehicles in

stock pending sale without tying up the dealer's finances. The dealer

pays interest on the money and repays the loan when the mobile home

is sold.

an excess of approximately $136,000 in floor financing

over the amount that it paid for the mobile homes (/d. at

57, 318, 1183-1184).

Many of the mobile homes were old models or were in

poor shape and thus difficult to sell. Identifying plates on

some of the homes were fraudulently altered io indicate

that they were newer models. C.A. App. 49-51, 56,

158-162, 502, 1005-1006, 1203-1204. Anderson knew of

those alterations (id. at 159-160, 303, 501-502, 1203-1204).

To handle the increased inventory, Anderson hired several

additional salesmen and encouraged them to do whatever

was necessary to sell the mobile homes, including giving

false information to lending institutions so that prospec-

tive purchasers could obtain financing (id. at 70, 105-106,

305-307, 479-483, 810-811, 1012, 1193). For customers

who could not otherwise obtain a loan, A & M salesmen

created fictitious credit references and employment,

withheld information about bad credit histery, inflated

the buyers’ incomes, and inflated the down payments that

they made. A & M also created fictitious bank deposit slips

to document the inflated down payments. /d. at 110-111,

116-117, 121-123, 135, 145-147, 151-153, 156, 483,

§89-641, 819-832, 842, 1011-1018, 1023, 1092, 1137-1139,

1185-1186, 1295-1296, 1336-1337.

Two lending officials from different financial institu-

tions testified that they informed Anderson that A & M

salesmen were falsifying credit documents. Anderson told

the officials that he did not allow that and would put a

stop to it. C.A. App. 404-412, 446-447. Contrary to his

protestations, however, the evidence established that

Anderson was aware of and encouraged the fraudulent

loan applications (id. at 117-118, 122, 135, 137, 142-143,

145, 165-166, 308, 488-490, 570-571, 599, 605, 613-619,

633-634, 640, 737, 769-771, 803-804, 814-815, 817-818,

4

843, 853, 858, 860, 995, 998, 1012, 1014-1015, 1093,

1133-1134, 1187, 1193, 1212, 1300, 1321). Bishop actively

assisted in the preparation of fraudulent documents (id. at

148-149, 151-153, 298, 300-301, 495, 503, 507, 595-597,

830, 832, 845, 856, 1018, 1095, 1142, 1328, 1599-1620).

2. At trial, petitioners did not dispute that fraudulent

loan applications were filed with the lending institutions.

They contended, however, that they did not know that the

information contained in the applications was false.

Anderson testified that he did not know of or participate

in the fraudulent activities (e.g., C.A. App. 1734-1738,

1753, 1756, 1764, 1825-1831). He claimed that his invoive-

ment in political activities and in an unrelated criminal in-

vestigation and prosecution distracted him from his ex-

panding business responsibilities at A & M (id. at

1715-1717, 1739-1741, 1750-1754). Bishop, who did not

testify at trial, suggested through his cross-examination of

Anderson that he was not in a position to verify the infor-

mation that he passed along in the course of his clerical

and bookkeeping duties (id. at 1833-1852).

In light of petitioners’ defense that they did not have ac-

tual knowledge that false information was being filed with

the lending institutions, as well as evidence that Anderson

told some salesmen that he did not want to know about

their illegal activities (C.A. App. 490, 1321-1322), the

government requested a jury instruction on conscious

avoidance of the truth. Anderson objected to the court’s

giving any conscious avoidance instruction, however

phrased, on the ground that such an instruction would

“negate[] the element of intent” (id. at 2161, 2162). Bishop

objected, without further amplification, that “the

language as written in this proposed instruction negates

the intent necessary to constitute a violation of these par-

ticular statutes” (id. at 2174). The court responded: “Let’s

see how it comes out in the charge. If you're not satisfied,

you're free to take exception to it” (id. at 2175). The court

then instructed the jury (id. at 2374; see also Pet. App.

A2-A3) as follows:

Guilty knowledge cannot be established by

demonsirating mere negligence or even foolishness on

the part of a defendant. However, it 1s not necessary

that the government or prosecution prove to a cer-

tainty that the defendant knew that fraudulent

statements concerning loan applications were being

submitted to various financial institutions. The ele-

ment of knowledge may be satisfied by proof that the

defendant acted with deliberate disregard of whether

fraudulent loan applications were being prepared and

submitted and with conscious purpose to avoid learn-

ing the truth, unless he actually believed that the

statements in the applications were true.

Following the jury charge, petitioners again objected to

the fact that the court gave a conscious avoidance instruc-

tion, but they did not take issue with any specific language

used in the instruction or suggest a more acceptable for-

mulation (C.A. App. 2397-2399).

3. On appeal, petitioners dropped their objection to

the fact that the trial court gave a conscious avoidance

charge (see Appellants’ C.A. Br. 17). Instead they con-

tended that the instruction the court gave was fatally

flawed in two respects. First, they claimed that the instruc-

tion did not require the jury to find a “high probability”

that petitioners were actually aware of the existence of a

scheme to submit false financial statements to the lending

institutions. Second, they argued that the instruction

diluted the reasonable doubt standard and shifted the

burden of proof to petitioners. The court of appeals found

that petitioners’ specific objections to the wording of the

6

instruction were not made to the district court and that

petitioners accordingly waived those challenges. The court

explained that it was “here presented with a classic case

where the failure to object with sufficient precision denied

the district court the opportunity to correct the charge”

(Pet. App. A4). After examining the charge given by the

trial court, the court of appeals concluded that “there was

no plain error which would require reversal even in the

absence of a proper objection by the defendants” (id. at

A3-A4).

ARGUMENT

1. Petitioners contend (Pet. 39-41, 45-55) that the

court of appeals erred when it applied the plain error

standard to review their chailenge to the conscious

avoidance charge. They claim that their general objection

to the conscious avoidance charge was sufficient to apprise

the trial court of their reservations concerning the wording

of the instruction that was actually given. All the courts of

appeals agree, however, that a general objection to the

fact that an instruction is to be given does not preserve a

challenge to the particular wording of the charge. See,

e.g., United States v. Glenn, 828 F.2d 855, 862 (Ist Cir.

1987); United States-v. Lanza, 790 F.2d 1015, 1021 (2d

Cir.), cert. denied, 479 U.S. 861 (1986); United States v.

Cardinal, 782 F.2d 34, 36 (6th Cir.), cert. denied, 476 U.S.

1161 (1986); United States v. Markowski, 772 F.2d 358,

363 (7th Cir. 1985), cert. denied, 475 U.S. 1018 (1986);

United States v. Marbury, 732 F.2d 390, 403-404 (Sth Cir.

1984); United States \. Glick, 710 F.2d 639, 643 (10th Cir.

1983), cert. denied, 465 U.S. 1005 (1984). There is

therefore no conflict among the circuits on the question

whether petitioners’ objections were sufficient to preserve

their challenge to the content of the conscious avoidance

Le ae ae

charge. In any event, the factbound question of whether

petitioners’ general objections were sufficient to preserve

their present complaints does not warrant review by this

Court.

Rule 30, Fed. R. Crim. P., states that “[n]o party may

assign as error any portion of the charge * * * unless he

objects thereto before the jury retires to consider its ver-

dict, stating distinctly the matter to which he objects and

the grounds of his objection.” Petitioners’ objections dur-

ing the trial can only be viewed as objections to the court’s

giving any conscious avoidance charge at all (see C.A.

App. 2161-2162, 2174, 2397, 2398-2399). On appeal,

however, petitioners did not dispute that a conscious

avoidance charge was proper in the circumstances of this

case. See Appellants’ C.A. Br. 17 (emphasis in original)

(“The issue presented in this appeal is not the use per se of

the conscious avoidance instruction, but rather the ap-

propriate form of that instruction.”). Yet while petitioners

sought to challenge the “form” of the instruction on ap-

peal, they made no objection on that. ground at trial. Nor

did they offer any curative language of their own such as

they now propose.

As the court of appeals recognized (Pet. App. A4), peti-

tioners’ “failure to object with sufficient precision denied

the district judge the opportunity to correct the charge.”

Under these circumstances, petitioners’ present objections

to the charge were not preserved at trial and the court of

appeals therefore properly reviewed the challenged in-

struction only for plain error. See Fed. R. Crim. P. 52(b).?

* Petitioners complain (Pet. 44) that the court of appeals did “an

enormous disservice to the judicial system as well as these individual

petitioners” by failing to pass first upon the propriety of the instruc-

tion given by the trial court before applying the plain error doctrine in

affirming petitioners’ convictions. Despite petitioners’ unsupported

2. Petitioners contend that the conscious avoidance

charge given by the trial court was “so seriously defective”

(Pet. 55) that it “undermined the fundamental fairness of

petitioners’ trial” (Pet. 56). As they did in the court of ap-

peals, petitioners argue that the content of the instruction

was defective in two respects. First, the instruction did not

contain language requiring the jury to find that “the

defendant was aware of a high probability of the fact in

issue unless he believed that it did not exist” (Pet. 26). Sec-

ond, the instruction did not “require[] the jury to find

beyond a reasonable doubt that the defendant acted with a

conscious purpose to avoid the truth” and thus “could lead

to confusion as to the government’s burden of proof” (Pet.

28). In addition, petitioners contend (Pet. 35-39) that the

conscious avoidance instruction was erroneously applied

to the conspiracy count as well as to the substantive

counts. None of these complaints, however, rises to the

level of plain error.

a. Petitioners contend (Pet. 15-23) that the courts of

appeals are in disarray on the appropriate wording of a

conscious avoidance instruction. In particular, petitioners

note that the Second and Ninth Circuits have held that

such an instruction should include language requiring that

the defendant be aware of the “high probability” that the

fact at issue is true. See United States v. Aulet, 618 F.2d

182, 191 (2d Cir. 1980); United States v. Valle- Valdez, 554

F.2d 911, 914 (9th Cir. 1977); United States v. Jewell, 532

F.2d 697, 704 n.21 (9th Cir.) (en banc), cert. denied, 426

U.S. 951 (1976). Other circuits have not required such

language, see, e.g., United States v. Deveau, 734 F.2d

claim (Pet. 43) that it is “only logical” to proceed in this order,

however, there is no requirement that the court of appeals do so.

Because it is clear that the charge given did not amount to plain error,

a discussion of the merits of the charge would have been dictum that

would not necessarily have bound the court of appeals in future cases.

Y.

1023 (Sth Cir. 1984), cert. denied, 469 U.S. 1158 (1985),

although some have recommended it, see United States v.

Manriquez Arbizo, 833 F.2d 244, 250 (10th Cir. 1987).

While there is some disagreement among the circuits as to

the precise verbal formula to be used in a proper conscious

avoidance charge, that issue is not presented in this case

since petitioners never objected to the charge on that

ground.

There is no circuit conflict on the question actually

presented, which is whether the absence of the language

petitioners now propose constitutes plain error. Even in

those circuits that have required “conscious avoidance” in-

Structions to contain language regarding the defendant’s

awareness of the “high probability” that the fact in dispute

was true, the courts have held that the failure to use that

language does not constitute plain error. See, e.g., United

States v. Eaglin, 571 F.2d 1069, 1074-1075 (9th Cir. 1977),

cert. denied, 435 U.S. 906 (1978); United States v. Jewell,

532 F.2d at 704 n.21; United States v. Dozier, 522 F.2d

224, 228 (2d Cir.), cert. denied, 423 U.S. 1021 (1975). See

also United States v. Glick, 710 F.2d 639, 643-644 (10th

Cir. 1983), cert. denied, 465 U.S. 1005 (1984); United

States v. Cincotta, 689 F.2d 238, 243-244 (Ist Cir.), cert.

denied, 459 U.S. 991 (1982). Nor do petitioners suggest

any reason why the absence of such language — which was

in any event implicit in the requirement that the jury find

that “the defendant acted with deliberate disregard of

whether fraudulent loan applications were being prepared

and submitted” (Pet. App. A3 (emphasis added))—

“undermined the fairness of the trial and contributed to a

miscarriage of justice.” United States v. Young, 470 U.S.

1, 17 n.14 (1985).4

* Although the charge in this case did not contain the “high prob-

ability” language on which petitioners focus their present complaint, it

was carefully balanced in other respects. It emphasized at the outset

10

b. Contrary to petitioners’ contention, the conscious

avoidance instruction given by the trial court did not shift

the burden of proof to petitioners or dilute the require-

ment of proof beyond a reasonable doubt. See United

States v. MacKenzie, 777 F.2d 811, 818-819 (2d Cir. 1985),

cert. denied, 476 U.S. 1169 (1986); United States v. Ciam-

paglia, 628 F.2d 632, 642 (1st Cir.), cert. denied, 449 U.S.

956 (1980). The district court extensively and repeatedly

instructed the jury on the government’s obligation to

prove each element of each offense beyond a reasonable

doubt (C.A. App. 2337-2338, 2343, 2347, 2359, 2360,

2361, 2363, 2364, 2367, 2368, 2370, 2371, 2373,

2376-2377, 2379, 2383, 2386, 2403). The court also

repeatedly made clear that the burden of proof rested en-

tirely with the government (/d. at 2338, 2361, 2365-2368,

2370, 2373, 2379, 2386, 2402-2404).

Viewing the court’s instructions as a whole, see Cupp v.

Naughten, 414 U.S. 141, i47 (1973), there is no possibility

that the jury could have failed to understand that the pros-

ecution bore the burden of proving petitioners’ guilt as to

each element of every offense beyond a reasonable doubt.

Indeed, immediately before giving the conscious

avoidance charge, the district court reminded the jury that

“there are four essential elements which the prosecution

that negligence or toolishness was not sufficient to establish

knowledge; it required that the proof of conscious avoidance show

“deliberate disregard” and “conscious purpose to avoid learning the

truth;” and it added that even in such cases, petitioners could not be

convicted if the jury found that they actually believed that the

statements in the loan applications were true. In these respects, the

charge given in this case was significantly more balanced and

favorable to petitioners than the charge that the Second Circuit

criticized in United States \. Morales, 577 F.2d 769, 774-775 & n.4

(1978).

1]

must prove beyond a reasonable doubt in order to

establish the offense prohibited by Section 1014” (C.A.

App. 2373). After setting forth the elements, including the

requirement that the false statement be made knowingly

and intentionally (id. at 2373-2374), and after explaining

that materiality is a question of law not to be considered

by the jury (/d. at 2374), the court gave its instruction on

conscious avoidance (/bid.). In light of the context, it is

unrealistic for petitioners to speculate (Pet. 29) that “[t]he

trial judge’s failure to include the reasonable doubt

language” within his three-sentence charge on conscious

avoidance “could have caused the jury to assume that with

respect to conscious avoidance, the government’s burden

is somehow different and perhaps less.”

c. Petitioners mistakenly contend (Pet. 35-39) that the

district court gave the conscious avoidance instruction in

connection with the conspiracy count as well as the

substantive counts. In fact, the district court carefully

separated its instructions on the conspiracy count and the

substantive counts. After concluding the conspiracy

charge the court stated: “[T]hat finishes my charge as to

the conspiracy count. * * * Does anyone feel you would

like to take a break at this time? I’m going to have to

charge you about the essential elements of the substantive

counts of the indictment” (C.A. App. 2368). The court

then continued, “I’m leaving my charge on the conspiracy

count and will now talk about what we call substantive

counts” (id. at 2369).

The conscious avoidance instruction was then given in

connection with the substantive counts, immediately after

the court outlined the elements of 18 U.S.C. 1014 (C.A.

App. 2373), and immediately before an aiding and abet-

ting instruction related to the substantive counts (/d. at

12

_

2374). Shortly thereafter, in the context of a Pinkerton

charge (see Pinkerton v. United States, 328 U.S. 640

(1946)), the court again made clear that it was discussing

only the substantive counts and that its instructions on

conspiracy had been concluded (C.A. App. 2376-2377,

2382).

Even if the court had made the conscious avoidance in-

struction applicable to the conspiracy count, however,

that would not be error, since the degree of knowledge re-

quired for the fact at issue is the same for conspiracy as for

the underlying substantive offense. See, e.g., United

States v. Ditommaso, 817 F.2d 201, 218-219 (2d Cir.

1987); United States v. Kehm, 799 F.2d 354, 362 (7th Cir.

1986); United States v. Reed, 790 F.2d 208, 211 (2d Cir.),

cert. denied, 479 U.S. 954 (1986); United States v. Lanza,

790 F.2d at 1022-1023; United States v. Knight, 705 F.2d

432, 434 (11th Cir. 1983). In any event, it would certainly

not be plain error, which is the applicable standard of

review in light of petitioners’ failure to object to the in-

struction on that ground.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

CHARLES FRIED

Solicitor General

EDWARD S.G. DENNIS, JR

dconung Assistant Attorney Geseral

SARA CRISCITELLI

{ifornes

JUNE 1988