Opposition Brief — Bustamante v. United States

OCT 10 1998

No. 95-60

ss rer

In the Supreme Court of the Gnited States

OCTOBER TERM, 1995

I 1 4 wep ‘7; ) YIDADI

ial | Ee i a ii ie ( )} OF Ki LIOKARI

ED STATES COURT OF APPEAI

THE FIFTH CIRC!

BRIEF FOR THE UNITED STATES IN OPPOSITION

QUESTIONS PRESENTED

1. Whether the evidence showed that petitioner

received an illegal gratuity, with knowledge of the

donors’ illicit purpose for providing the gratuity.

2. Whether the gratuity statute, 18 U.S.C.

201(c)(1)(B), and its statutory antecedent, 18 U.S.C.

201(g) (1982), require proof of a quid pro quo.

TABLE OF CONTENTS

Page

IMIG BODO ciccsesccccccccecsscscrscescccscccessncccesessesesesenessosecssoescess

so cs scape bunsebantoonnsedansepiarepedaninendes

I ies senuanboashonseeateopensuenedbaveseceuanqenrnes 2

Argument...... ne ee on Sa panbeineneeeniennend 6

nes ideccsncnnpowace CADE RR Os RAE Ne ee EE RO OT 12

TABLE OF AUTHORITIES

Cases:

Jackson v. Virginia, 443 U.S. 307 (1979) ............... an y)

McCormick v. United States, 500 U.S. 257 (1991). 9-10

Standefer v. United States, 447 U.S. 10 (1980) ............ 1]

United States v. Brewster:

I aps pnneanicqusacewedpeuves 6

Be Oe CEPA, Gy BPE) cvcccccncsccessscensecens sibaakuules 1]

United States v. Evans, 572 F.2d 455 (5th Cir.), cert.

denied, 439 U.S. 870 (1978) ........ RA oe eee =e 5.8.9

United States v. Johnson, 621 F.2d 1073 (10th Cir.

I ta oo scpdcbbadsadoesosbhgusaceWerrendnqensreascseses ae 1]

Inited States v. Mendenhall, 446 U.S. 544 (1980) ..... Y

United States v. Muldoon, 931 F.2d 282 (4th Cir.

INI dnd tse cea dachauabnenpactiones a ad ecapeneie 11

United States v. Niederberger, 580 F.2d 63 3d Cir.

ie es cobsehigannaiecenes re 11. 12

United States v. Standefer, 610 F.2d 1076 (3d Cir.

re Pace eee) aakuabacdbabasingenedianieas 11. 12

United States v. Strand, 574 F.2d 993 (9th Cir. 197%) 1]

Statutes:

Racketeer Influenced and Corrupt Organizations Act,

18 U.S.C. 1961 et seq.:

Bee Re Mias BORD cccnvdannucvesecnnescscvesccsessevseseusencenssosereevees 2

sd ssc aspebsansavtnentensweunttedavesancnceses re 2

a i cauiiuebbuandecsduensenonnds Bene y 1]

18 U.S.C. 201(c)(1)(B) ......... Fe LIRR RO SLT OE 7 eRe ; 2, 6, 10

(IIT)

Statutes—Continued: Page

BG TBA; BORE) CIGD ceciccceccesseccsccessccscscnsesonssesacssaccessanses 11, 12

Oe I acer en 2.6, 10, 11, 12

In the Supreme Court of the Giuted States

OCTOBER TERM, 1995

No. 95-60

ALBERT G. BUSTAMANTE, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. 1-33)

is reported at 45 F.3d 933.

JURISDICTION

The judgment of the court of appeals was entered on

February 13, 1995. A petition for rehearing was

denied on April 5, 1995. Pet. App. 34-35. The petition

for a writ of certiorari was filed on July 5, 1995 (the

day following a legal holiday). The jurisdiction of this

Court is invoked under 28 U.S.C. 1254 1).

(1)

STATEMENT

After a jury trial in the United States District

Court for the Western District of Texas, petitioner

was convicted of conducting the affairs of an enter-

prise through a pattern of racketeering activity, in

violation of the Racketeer Influenced and Corrupt

Organizations Act (RICO), 18 U.S.C. 1962(c), and of

accepting an illegal gratuity, in violation of 18 U.S.C.

201(g) (1982) and its successor, 18 U.S.C. 201(¢)(1)(B)..'

He was sentenced to 42 months’ imprisonment, to be

followed by two years’ supervised release, and ordered

to pay a $55,000 fine. The court of appeals affirmed.

Pet. App. 1-33.

1. The evidence at trial showed that petitioner, a

Member of Congress from 1984 to 1992, received an

illegal gratuity in the form of a no-risk investment in

a Texas corporation that was seeking a license to

operate a television station. Pet. App. 2, 10-13.°

After petitioner won the primary election in 1984,

he was unopposed in the general election, so his seat

in the House of Representatives was virtually as-

sured. Pet. App. 10. In the interim between the pri-

mary and the general election, petitioner was invited

by two friends, Oliver S. Heard and R. Lawrence

Macon, to participate in a new company, San Antonio

1 Petitioner was acquitted of RICO conspiracy (18 U.S.C.

1962(d)), and of seven other counts of receiving unlawful

gratuities. Pet. App. 2.

* Petitioner’s violation of the gratuity statute constituted

one of the two predicate acts that formed the basis for his RICO

conviction. Petitioner no longer contests the lower courts’

findings respecting the other predicate act—acceptance of a

$35,000 bribe in exchange for his attempt to influence the

award of a military food services contract. See Pet. App. 4-10.

(

Video Corporation (SAVC), which had been formed to

compete for a Federal Communications Commission

(FCC) license for a new television broadcasting

station. /bid. Petitioner was expected to make an

initial contribution of $15,000, which would entitle

him to 16% of the company’s non-voting stock. Jd. at

ll. If SAVC wen the FCC license, petitioner would

have been expected to make a further payment of

$650,000, as his share of the station’s start-up cost.

Ibid. Heard and Macon intended, however, that SAVC

would borrow the money needed for start-up, using

the FCC license as collateral, and then lend the funds

to those investors (like petitioner) who did not have

the capital to make their secondary contributions.

Ibid.

Petitioner, however, lacked even the $15,000 needed

to make his initial capital contribution. Pet. App. 11.

In April 1985, he therefore applied for a loan from

Groos Bank in San Antonio, Texas. /bid. According

to bank documents, Heard served as guarantor for the

loan, which was issued as the result of his specific

request. /bid. Three days earlier, the bank had made

petitioner another $20,000 loan, also procured as a

result of Heard’s specific request and financial guar-

anty. Id. at 11-12.’

Petitioner failed to make the loan installment

payments that were due in 1986, 1987, and 1988, but

Groos Bank nonetheless allowed him to renew the

loan in April 1988, in reliance on Heard’s original

guaranty. Pet. App. 12. At that time, petitioner took

3’ In May 1985, in the course of hearings respecting the

FCC’s licensing determination, petitioner testified that he had

obtained a loan to make his initial stock purchase, but denied

that Heard had guaranteed the loan. Pet. App. 12.

out another loan to cover the interest that had

accrued on the original loan. /bid. The new loan was

also covered by the Heard guaranty. J/bid. In July

1988, petitioner consolidated the two SAVC-related

loans into a single $20,140.69 obligation, which was

also backed by Heard’s guaranty. Jbid. Petitioner

made only two of the scheduled monthly payments on

the consolidated loan. /bid.

SAVC was not ultimately awarded the FCC

license, but it received, in October 1988, a $175,000

settlement from the successful licensee. Pet. App. 12.

On October 27, just three days after SAVC received

that payment, Heard issued to petitioner a check for

$19,467.53, the exact amount then outstanding on

petitioner’s bank loan. /d. at 12-138. SAVC’s other

investors did not receive similar treatment. Instead,

they were notified that the money received in

settlement would be applied first to pay off SAVC’s

outstanding bills, and that any remaining capital

would be distributed pro rata. Jd. at 13.*

2. Petitioner argued on appeal that the evidence

failed to prove (i) that he knew of Heard’s loan guar-

anty or (ii) that the Groos Bank loan was in fact risk-

free. The court of appeals rejected those contentions,

explaining that petitioner “was not merely accused of

accepting these particular guarantees and promises,

but of allowing Macon and Heard to shoulder the

responsibility for his SAVC investments from start

in 1984 to finish in 1988.” Pet. App. 14. The prose-

cution was not, therefore, required to prove that the

Groos Bank loan was risk-free; rather, “[t]he govern-

4 The record does not disclose whether the other share-

holders received any of the settlement proceeds. Pet. App. 13.

ment was required to prove what it alleged—a risk-

free investment carry.” /d. at 15. Viewing the

indictment in that light, the court concluded that

there was ample evidence from which the jury could

have found that petitioner knew that Heard and Ma-

con provided him with a risk-free investment in

SAVC. Ibid. It found particularly notable petition-

er’s receipt from SAVC of the precise amount of

money that he needed to repay his bank loan (an

amount that exceeded his actual investment), at a

time when SAVC was not repaying its other

investors. [bid.

The court also rejected petitioner’s suggestion

(Pet. C.A. Br. 16 n.10) that conviction for receipt of a

gratuity requires proof that the gratuity was given in

exchange for an official act. Pet. App. 13, 16. It ex-

plained: “Generally, no proof of a quid pro quo is

required; it is sufficient for the government to show

that the defendant was given the gratuity simply

because he held public office.” Jd. at 13 (citing United

States v. Evans, 572 F.2d 455, 479 (5th Cir.), cert.

denied, 439 U.S. 870 (1978)). Noting (Pet. App. 16) that

petitioner brought no broadcasting experience to

SAVC; that petitioner’s Hispanic ethnicity was not

the basis for SAVC’s claim to a minority preference;

and that petitioner “certainly added no financial

strength to the venture,” and considering (ibid.) that

Heard’s firm called on petitioner to assist it in his

official capacity,’ the court concluded that “the jury

° In May 1985, Heard, whose firm specialized in collecting

delinquent taxes for local governments, sought petitioner’s

assistance in obtaining a multi-million dollar contract from the

City of San Antonio. Petitioner lobbied for Heard with the city

council, and Heard’s firm obtained the contract. Gov’t C.A.

was entitled to find that Heard and Macon sustained

[petitioner] because he was a member of the United

States Congress.” Jd. at 16.°

ARGUMENT

1. Petitioner argues (Pet. 12-22) that the court of

appeals erroneously held that the federal gratuity

statute does not require proof that the recipient of a

gratuity knew that he received the gratuity because

of his official position. We agree with petitioner that

the statute requires such a showing. As this Court

indicated with respect to 18 U.S.C. 201(g) (1982) (the

predecessor to 18 U.S.C. 201(c)(1)(B)), the govern-

ment has the burden of demonstrating the recipient’s

“knowledge of the alleged briber’s illicit reasons for

paying the money.” United States v. Brewster, 408

U.S. 501, 527 (1972).’ The court of appeals in this case

did not hold to the contrary.

Br. 12, 16. In April 1989, less than six months after SAVC

issued the check to petitioner that allowed him to pay off his

loans, Heard’s firm obtained petitioner’s assistance in an effort

to amend a federal statute that exempted federal banking

agencies and credit unions from local property taxes. Jc’. at 19.

6 The court of appeals also rejected numerous other

challenges to petitioner’s conviction, and petitioner has not

renewed those challenges here.

7 Section 201(c)(1)(B) subjects to criminal liability any

“public official, former public official, or person selected to be a

public official, [who,] otherwise than as provided by law for the

proper discharge of official duty, directly or indirectly

demands, seeks, receives, accepts, or agrees to receive or

accept anything of value personally for or because of any

official act performed or to be performed by such official or

person.” 18 U.S.C. 201(c)(1)(B). Its statutory precursor, 18

U.S.C. 201(g) (1982), was substantively identical.

The district court correctly instructed the jury

that, to convict, it must find that petitioner

“demanded, sought, received, accepted, * * * or

+ * * [agreed] to accept something of value

personally,” that he “did so, for, and because of an

official act performed and to be performed by the

defendant,” and that he “sought or accepted the thing

of value, knowingly and purposely, and not through

misunderstanding, inadvertence or some other inno-

cent reason.” 16 R. 44-45. The court further stated

that the jury should acquit if it were to find that

“(tlhe gratuities * * * were accepted in payment of

professional services or as a matter of friendship or

for social purposes only.” /d. at 45. Petitioner did not

contend on appeal that the instructions failed to

require proof of scienter. Nor did he challenge the

sufficiency of the evidence of his state of mind with

respect to Heard’s and Macon’s reasons for providing

him a no-risk investment.” Rather, as_ noted,

petitioner argued only (1) that the bank loan was not

risk free, (2) that he had no knowledge of Heard’s

guaranty, and (3) that the gratuity statute requires

proof of a quid pro quo. The court of appeals thus had

no reason to (and did not) address the adequacy of the

government’s proof of petitioner’s knowledge respect-

ing Heard’s and Macon’s motivations.

Petitioner relies, for his contrary characterization

of the decision below, on a passage in which the court

concluded that “it is sufficient for the government to

show that the defendant was given the gratuity

* Petitioner raised his challenge to the sufficiency of the

evidence for the first time in his petition for rehearing, but did

not challenge the jury instructions regarding scienter.

simply because he held public office.” Viewed in

context, that statement was merely a rejection of

petitioner’s claim that the government was required

to prove a quid pro quo:

To find a public official guilty of accepting an

illegal gratuity, a jury must find that the “official

accepted, because of his position, a thing of value

‘otherwise than as provided by law for the proper

discharge of official duty.’” Generally, no proof of

a quid pro quo is required; it is sufficient for the

government to show that the defendant was given

the gratuity simply because he held public office.

In addition, the jury need not find that the official

accepted the gratuity with the intent to be

influenced. The jury must only conclude that the

evidence establishes beyond a reasonable doubt

that the official accepted unauthorized compen-

sation.

Pet. App. 13 (citations omitted). Because the issue

was not raised by petitioner, the court did not purport

to address the distinct question whether proof is re-

quired of the recipient’s knowledge respecting the

donor’s intent.

To the extent that the decision below is interpreted

to say anything about that issue, the court’s reliance

on its prior decision in United States v. Evans, supra,

is instructive. In Evans, the court of appeals recog-

nized that the government must prove that the defen-

dant “accepted, because of his [official] position, a

thing of value ‘otherwise than as provided by law for

the proper discharge of official duty.’” 572 F.2d at

480. It concluded, on the facts of that case, that “[t]he

jury was well justified in concluding that Evans

accepted the money and favors with knowledge that

the payments were made because of his official

position.” Jd. at 482. The court in this case did not

call into question that analysis.

2. Petitioner’s challenge to the sufficiency of the

evidence supporting his knowledge that he had been

afforded a risk-free investment because of his official

position is not properly raised for the first time in a

petition for certiorari. See United States v. Menden-

hall, 446 U.S. 544, 551 n.5 (1980). But even if the

issue were fairly presented, it does not warrant this

Court’s review, because the evidence was sufficient to

permit a rational trier of fact to find the elements of

the offense beyond a reasonable doubt. Jackson v.

Virginia, 443 U.S. 307, 319 (1979).

The evidence demonstrated that Heard and Macon

provided petitioner with a risk-free investment from

1984-1988; that petitioner was invited to invest after

his seat in Congress was assured; that petitioner

brought no _ broadcasting experience, financial

strength, or other unique attributes to the venture;

and that, during the pendency of the investment,

Heard’s firm called on petitioner to assist them in his

official capacity. The court of appeals found that

evidence sufficient to demonstrate that “Heard and

Macon sustained [petitioner] throughout his SAVC

investment because he was a member of the United

States Congress.” Pet. App. 16. The evidence equally

supports the inference that petitioner knew why he

was receiving the no-risk investment.

3. Petitioner argues (Pet. 22-27) that the govern-

ment is required to prove a quid pro quo under the

gratuity statute, at least where (as here) the defen-

dant is an elected official. He relies, for that prop-

osition, on McCormick v. United States, 500 U.S. 257

10

(1991). Petitioner acknowledges (Pet. 27) that

McCormick involved a prosection for extortion under

the Hobbs Act, and that its holding “was expressly

limited to an elected official’s conduct vis-a-vis

campaign contributions.” He contends (Pet. 27),

however, that the Court’s reasoning in McCormick

supports adoption of a quid pro quo requirement for

prosecutions of elected officials, outside of the

context of campaign contributions, under the federal

gratuity statute.

The holding in McCormick reflected the Court’s

perception that Congress did not intend to subject to

criminal liability a legislator who “actis] for the

benefit of constituents or support(s] legislation fur-

thering the interests of some * * * constituents,

shortly before or after campaign contributions are

solicited and received from those beneficiaries.”

McCormick, 500 U.S. at 272. “To hold otherwise,” the

Court explained, “would open up to prosecution not

only conduct that has long been thought to be well

within the law but also conduct that in a very real

sense is unavoidable so long as election campaigns are

financed by private contributions or expenditures.”

Ibid. Although the Court did not hold that Congress

lacked the power to enact such a criminal statute, it

concluded that judicial recognition “would require

statutory language more explicit than the Hobbs Act

contains.” Id. at 272-273.

The Court’s concern with disrupting the nation’s

system of private campaign finance is not implicated

in cases, like this, in which the elected official has

been provided a purely personal benefit. Moreover,

the text of Section 201(c)(1)(B) does not support the

imposition of a quid pro quo requirement. The

1]

statute (like its predecessor, Section 201(g)) subjects

to criminal liability any public official who “receives

* * * anything of value personally for or because of

any official act performed or to be performed by such

official.” The absence of any quid pro quo element in

that text is demonstrated by contrast with the text of

the general bribery statute, 18 U.S.C. 201(b)(2),

which subjects a public official to prosecution if he

“corruptly demands, seeks, receives, accepts, or

agrees to receive or accept anything of value

personally * * * in return for * * * being

influenced in the performance of any official act”

(emphasis added). The latter provision, which carries

a greater penalty, evidences Congress’s ability—

when it so desires—to require, as an element of an

illegal receipt crime, proof of the recipient’s

agreement to perform an official act.

The courts of appeals that have decided the issue

have uniformly held that, unlike the bribery statute,

the gratuity statute contains no quid pro quo require-

ment. See United States v. Brewster, 506 F.2d 62, 72

(D.C. Cir. 1974); United States v. Niederberger, 580

F.2d 63, 68-69 (8d Cir. 1978); United States v.

Muldoon, 931 F.2d 282, 287 (4th Cir. 1991); United

States v. Strand, 574 F.2d 993, 995 & n.2 (9th Cir.

1978); United States v. Johnson, 621 F.2d 1073, 1076

(10th Cir. 1980). In Standefer v. United States, 447

U.S. 10, 14 n.8 (1980), this Court indicated its agree-

ment with that interpretation, specifically approving

jury instructions that did not require a finding of a

quid pro quo to convict a donor of providing an

unlawful gratuity, in violation of 18 U.S.C. 201(f)

(1982). The court of appeals had noted, in that case,

that the text of Section 201(f) mirrored that of

12

Section 201(g), and, having previously rejected the

argument that Section 201(g) required proof of a quid

pro quo, the court refused to read such a requirement

into Section 201(f). See United States v. Standefer,

610 F.2d 1076, 1080 & n.8 (3d Cir. 1979) (“All that was

required in order to convict Standefer was that the

jury conclude that the gifts were given by him for or

because of Niederberger’s official position, and not

solely for reasons of friendship or social purposes.”).

See also Niederberger, 580 F.2d at 68 n.10 (citing

cases involving prosecutions under Section 201(f)).

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

DREW S. DAYS, III

Solicitor General

JOHN C. KEENEY

Acting Assistant Attorney General

LOUIS M. FISCHER

Attorney

OCTOBER 1995