Opposition Brief — Serrano v. United States

Nos. 93-109 and 93-5403 | “EP 16 1993

In the Supreme Court of the United States o

OCTOBER TERM, 1993

GILBERT R.SERRANO, PETITIONER

Us

UNITED STATES OF AMERICA

EMMITT L. WILSON, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

DREW S. DAYs, III

Solicitor General

JOHN C. KEENEY

Acting Assistant Attorney General

NINA GOODMAN

Attorney

Department of Justice

Washington, D.C. 20530

(202) 514-2217

en ee

"BEST AVAILABLE COPY:

QUESTIONS PRESENTED

1. Whether the district court properly instructed the

jury on the meaning of proof beyond a reasonable doubt.

2. Whether the district court properly instructed the

jury on the intent required for conviction on the fraud

charges against petitioners.

(I)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Cage v. Louisiana, 498 U.S. 39 (1990) ...... eee ‘i

Cheek v. United States, 498 U.S. 192 (1991) ............. 14

Estelle v. McGuire, 112 S. Ct. 475 (1991) .............. ee. 8

Holland v. United States, 348 U.S. 121 (1954) ........0..0.. 5, 6, 7

Liparota v. United States, 471 U.S. 419 (1985) ............... 11

Sullivan v. Louisiana, 113 S. Ct. 2078 (1993) ...............00.. ~

United States v. Adamson, 700 F.2d 953 (5th Cir.), cert.

dee ccpcaucesnedeunansesuce 10

United States v. Barrera-Gonzales, 952 F.2d 1269 (10th

ne bela ESTI SIS) ne Oo 7.8

United States v. Gibson, 726 F.2d 869 (1st Cir.), cert.

denied, 466 U.S. 960 (1984) ............................... weeduaecs 8

United States v. Hunt, 794 F.2d 1095 (5th Cir. 1986) ...... *

United States v. McAnally, 666 F.2d 1116 (7th Cir.

TNE akc ata Dias a dacashuduaanussecbagtgussasdsceniussibecesses 10

United States v. Taylor, No. 92-8112 (D.C. Cir. July 20,

ls opsvanesensens 8.9

United States v. United States Gypsum Co., 438 U.S. 422

a pauusevadetondidexebucss 10, 11

Constitution and statutes:

U.S. Const. Amend. V (Due Process Clause) ................... 6, 7

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Miscellaneous:

Federal Judicial Center, Pattern Criminal Jury Instruct-

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In the Supreme Court of the Giuted States

OCTOBER TERM, 1993

No. 93-109

GILBERT R.SERRANO, PETITIONER

Us

UNITED STATES OF AMERICA

No. 93-5403

EMMITT L. WILSON, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

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

A19)! is not reported, but the judgment is noted at 985

F.2d 575 (Table).

JURISDICTION

The judgment of the court of appeals was entered on

January 27, 1993. A petition for rehearing was denied

on April 27, 1993. Pet. App. B1-B2. The petition for a

1 “Pet. App.” refers to the appendix to the petition in No.

93-109.

(1)

2

writ of certiorari in No. 93-109 was filed on July 19,

1993. The petition for a writ of certiorari in No. 93-

5403 was filed on July 26, 1993. 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 Alaska, petitioners were

fraudulent financial transactions with a federal credit

union.” Petitioner Serrano was sentenced to five

years’ imprisonment and was ordered to pay $422,000

in restitution to the National Credit Union Adminis-

tration (NCUA). Petitioner Wilson was sentenced to

ten years’ imprisonment and was ordered to pay

$850,000 in restitution to the NCUA. The court of

appeals affirmed petitioners’ convictions.’ Pet. App.

A1-A19.

Petitioners were convicted of fraudulently participating

or sharing in credit union funds, in violation of 18 U.S.C. 1006;

misapplying credit union funds, in violation of 18 U.S.C. 657;

overvaluing land or property for the purpose of influencing a

credit union, in violation of 18 U.S.C. 1014; making false entries

in books or reports of a credit union, in violation of 18 U.S.C.

1006; making false statements in connection with a loan, in

violation of 18 U.S.C. 1014; engaging in a fraudulent scheme to

obtain funds of a credit union, in violation of 18 U.S.C. 1344;

and of conspiring to commit those offenses, in violation of 18

U.S.C. 371. Petitioner Wilson was also convicted of issuing

credit union obligations without authorization, in violation of 18

U.S.C. 1006.

The court of appeals stated that it had “some doubt”

concerning the district court’s calculation of the amount of

restitution petitioners were ordered to pay, and it remanded

“those portions of [petitioners’}] sentencings involving the resti

1. Petitioner Wilson was the president of the

Alaska Teamsters Federal Credit Union, and peti-

tioner Serrano was his partner in a real estate devel-

opment venture. The evidence at trial showed that

petitioners fraudulently obtained loans from the

credit union, which they invested in their real estate

partnership. Gov’t C.A. Br. 3-30.

2. At trial, petitioners asked the district court to

instruct the jury on the meaning of proof beyond a

reasonable doubt. Petitioners’ proposed jury instruc-

tion defined “reasonable doubt” as “the kind of doubt

that would make a reasonable person hesitate to act”

and stated that “[p]roof beyond a reasonable doubt

must * * * be proof of such a convincing character

that a reasonable person would not hesitate to rely

and act upon it in the most important of his own

affairs.” C.A. App. 101. The district court declined to

give the requested instruction. Instead, it instructed

the jury that

[a] reasonable doubt is a doubt based upon reason

and common sense, and may arise from a careful

and impartial consideration of all the evidence, or

from lack of evidence. Proof beyond a reasonable

doubt is proof that leaves you firmly convinced

that the defendant is guilty.

If after a careful and impartial consideration

with your fellow jurors of all the evidence, you are

not convinced beyond a reasonable doubt that the

defendant is guilty, it is your duty to find the

defendant not guilty. On the other hand, if after a

tution orders” for “clarification or resentencing.” Pet. App.

A18-A19.

4

‘areful and impartial consideration with your

fellow jurors of all the evidence, you are convinced

beyond a reasonable doubt that the defendant is

guilty, it is your duty to find the defendant guilty.

C.A. App. 105.

The district court also instructed the jury on the

elements of each of the charged offenses. With

respect to the offense of credit union fraud, the court

instructed the jury as follows:

In order for a defendant to be found guilty of

credit union fraud in violation of § 1344 of Title 18

of the United States Code, the government must

prove the following beyond a reasonable doubt:

First, that the defendant knowingly exe-

cuted or attempted to execute a scheme or

artifice to defraud the Alaska Teamsters

Federal Credit Union [of money or prop-

erty] as alleged in the Indictment, or that

the defendant knowingly executed or

attempted to execute a scheme or artifice to

obtain money or property under the custody

or control of the Alaska Teamsters Federal

Credit Union by means of material false

statements or representations;

Second, the defendant did so with intent to

defraud; and

Third, that the Alaska Teamsters Federal

Credit Union was a federally chartered or

insured financial institution.

* 4 * * *

5

For the purposes of this statute the terms

“scheme” and “artifice” are defined to include any

plan, pattern or course of action, including false

and fraudulent pretenses and misrepresentations,

intended to deceive others in order to obtain

something of value such as money from the

institution to be deceived.

A statement or representation is “false” or

“fraudulent” if it relates to a material fact and is

known to be untrue cr is made with reckless

indifference as to its truth or falsity, and is made

or cause[d] to be made with intent to defraud. A

statement or representation may also be “false”

or “fraudulent” when it constitutes a half truth,

or effectively conceals a material fact, with| |

intent to defraud. * * *

To act with “intent to defraud” means to act

knowingly with a specific intent to deceive

someone, ordinarily for the purpose of causing

some financial loss to another or bringing about

some financial gain to oneself.

C.A. App. 153-154.

In a separate instruction, the district court in-

formed the jury that “[t]he good faith of a defendant is

a complete defense to the charges contained in the

[Indictment because good faith on the part of a

defendant is, simply, inconsistent with intent to

defraud” and that “[a]n honest mistake in judgment or

an error in management does not rise to the level of

intent to defraud.” C.A. App. 129.

5. On appeal, petitioners argued, relying on Hol-

land v. United States, 348 U.S. 121, 140 (1954), that

6

the district court’s jury instruction on the meaning

of proof beyond a reasonable doubt was improper

because it failed to include the “hesitate to act”

language approved in Holland. The court of appeals

rejected that claim, observing that the reasonable

doubt instruction the district court gave was “the

standard Ninth Circuit Model Jury Instruction.” Pet.

App. A13-A14.

Petitioners also challenged the district court’s

instructions on the state of mind necessary to

establish fraud. On that issue, the court of appeals

found “no error” in the district court’s instruction

that false or fraudulent statements included state-

ments made with reckless indifference as to their

truth or falsity. Pet. App. Al4.

ARGUMENT

l. Petitioners contend (93-109 Pet. 10-18; 93-5403

Pet. 4-11) that the jury instruction on the meaning of

proof beyond a reasonable doubt violated due process

because it informed the jurors that they must be

“firmly convinced” of petitioners’ guilt in order to

convict them and did not include the “hesitate to act”

language that petitioners had requested. The court of

appeals correctly rejected that claim.

Contrary to petitioners’ argument, neither this

Court nor any court of appeals has held that the Due

Process Clause requires inclusion of the “hesitate to

act” language in a reasonable doubt instruction. In

Holland v. United States, supra, on which petitioners

rely, the challenged jury instruction defined “reason-

able doubt” as “the kind of doubt * * * which you folks

in the more serious and important affairs of your own

lives might be willing to act upon.” 348 U.S. at 140.

The Court stated that “this section of the charge

7

should have been in terms of the kind of doubt that

would make a person hesitate to act, * * * rather than

the kind on which he would be willing to act,” but

nevertheless affirmed the defendants’ convictions,

concluding that “the instruction as given was not of

the type that could mislead the jury into finding no

reasonable doubt when in fact there was some.” hid.

Thus, Holland plainly does not hold that omission of

the “hesitate to act” language in a reasonable doubt

instruction is error. Similarly, although some courts

of appeals have expressed a preference for the

“hesitate to act” formulation, no court has held that

failure to use that language violates the Due Process

Clause. See, e.g., United States v. Ba rrera-Gonzales,

952 F.2d 1269, 1272 (10th Cir. 1992) (noting that court

has “upheld several ‘reasonable doubt’ instructions

Which have strayed from the ‘hesitate to act’

formula”).

Petitioners also rely (93-109 Pet. 11: 93-5403 Pet. 5,

6-7) on Cage v. Louisiana, 498 U.S. 39 (1990) (per

curiam), but that decision does not support their

claim. In Cage, this Court sustained a due process

challenge to a jury instruction Stating that

“reasonable doubt” means “such doubt as would give

rise to a grave uncertainty” and “an actual substan-

tial doubt” precluding “a moral certainty” of guilt.

[d. at 40 (internal quotation marks and emphases

omitted). The Court found it “plain” that “the words

‘substantial’ and ‘grave,’ as they are commonly under-

stood, suggest a higher degree of doubt than is

required for acquittal under the reasonable doubt

standard.” Jd. at 41. Such a suggestion was rein-

forced, the Court explained, by “the reference to

8

‘moral certainty,’ rather than evidentiary certainty.”*

Ibid.

The reasonable doubt instruction given at petition-

ers’ trial did not contain any of the wording con-

demned in Cage. Courts have recognized that, unlike

the jury instruction at issue in Cage, an instruction

such as the one given at petitioners’ trial, which

informs the jurors that they must be “firmly

convinced” of the defendant’s guilt in order to convict

him, does not lower the government’s burden of proof.

See United States v. Taylor, No. 92-3112 (D.C. Cir.

July 20, 1993), slip op. 11 (jury instruction using

“firmly convinced” language does not “suggest a

higher degree of doubt than is required for acquittal

under the reasonable doubt standard”); see also

United States v. Barrera-Gonzales, 952 F.2d at 1273;

United States v. Hunt, 794 F.2d 1095, 1100-1101 (5th

Cir. 1986); United States v. Gibson, 726 F.2d 869, 874

(lst Cir.), cert. denied, 466 U.S. 960 (1984). Cf.

Federal Judicial Center, Pattern Criminal Jury In-

structions 28 (1982) (Instruction 21) (defining “[p|roof

beyond a reasonable doubt” as “proof that leaves you

firmly convinced of the defendant’s guilt”). Thus,

there was no reasonable likelihood that the jury that

convicted petitioners applied the reasonable doubt

instruction in a manner that violated due process.

See Estelle v. McGuire, 112 S. Ct. 475, 482 (1991).

Petitioners’ claim (93-109 Pet. 12-15; 93-5403 Pet. 5,

9-10) that the decision below conflicts with decisions

4 In Sullivan v. Louisiana, 113 S. Ct. 2078 (1993), which

involved a reasonable doubt instruction that was “essentially

identical to the one held unconstitutional” in Cage, the Court

held that a constitutionally deficient reasonable doubt instruc-

tion could not be harmless error. 113 S. Ct. at 2080, 2082-2083.

2

of other circuits is incorrect. Although petitioners

cite cases that have rejected other formulations of the

reasonable doubt standard, they do not point to any

decision holding that use of the “firmly convinced”

language in a reasonable doubt instruction violates

due process. See United States v. Taylor, supra, slip

op. 11 (noting that no circuit has found a reasonable

doubt instruction modeled on the Federal Judicial

Center’s pattern instruction to be reversible error).

Accordingly, this case presents no conflict among the

circuits that warrants review by this Court.

2. Petitioner Serrano also challenges (93-109 Pet.

19-26) the jury instruction defining the elements of

credit union fraud.’ He claims that by equating

knowledge that a statement is false with “reckless

indifference as to its truth or falsity,” the district

court permitted the jury to convict him based merely

on evidence of recklessness, without requiring proof

of fraudulent intent.

Petitioner’s contention is incorrect. The district

court’s instructions clearly advised the jury that

“false” or “fraudulent” Statements, in addition to

being knowingly false or made with reckless disre-

gard as to their truth or falsity, must also be “made

or cause[d] to be made with intent to defraud.” Thus,

the court informed the jurors that in order to convict

petitioners, they must find that petitioners acted

“with a specific intent to deceive someone.” Those

instructions eliminated any risk that the jurors

® Petitioner Wilson does not argue this point separately, but

adopts the arguments made by petitioner Serrano. See 93-5403

Pet. 11.

10

would believe they could find petitioners guilty

without proof of intent to defraud.®

Petitioner misplaces reliance (93-109 Pet. 23-25) on

United States v. Adamson, 700 F.2d 953 (5th Cir.) (ea

banc), cert. denied, 464 U.S. 833 (1983), and United

States v. McAnally, 666 F.2d 1116 (7th Cir. 1981). In

each of those cases, the district court instructed the

jury that proof of the defendant’s “reckless disre-

gard” of the interest of the defrauded bank was

sufficient to establish the requisite intent to defraud.

See 700 F.2d at 965-966; 666 F.2d at 1118. In this case,

in contrast, the district court instructed the jury

that it could find that statements were “false” or

“fraudulent” if they were made with reckless dis-

regard of their truth or falsity and were made with

intent to defraud. C.A. App. 154.’

6 Petitioner Serrano’s argument (93-109 Pet. 25) that the

jury could have convicted him merely for innocently trusting

petitioner Wilson to obtain loans from the credit union is

unavailing in light of the district court’s instruction to the jury

that “good faith on the part of a defendant is * * * inconsistent

with intent to defraud” and that “[a]n honest mistake in judg-

ment or an error in management does not rise to the level of

intent to defraud.” C.A. App. 129.

‘ The decisions of this Court on which petitioner relies (93-

109 Pet. 22-23) are even less helpful to him. Each of those cases

involved a prosecution under a statute not at issue here, and

none of them involved a jury instruction remotely like the one

given in this case. In United States v. United States Gypsum

Co., 438 U.S. 422 (1978), in which the defendants were charged

with engaging in a price-fixing conspiracy in violation of the

federal antitrust laws, the Court held that “a defendant’s state

of mind or intent is an element of a criminal antitrust offense

which must be established by evidence and inferences drawn

therefrom.” Jd. at 435. Accordingly, the Court concluded that

the district court erred in instructing the jury that if the effect

1]

CONCLUSION

The petitions for a writ of certiorari should be

denied.

Respectfully submitted.

DREW S. DAys, III

Solicitor General

JOHN C. KEENEY

Acting Assistant Attorney General

NINA GOODMAN

Attorney

SEPTEMBER 1993

of the defendants’ exchange of pricing information was to raise

or maintain prices, the defendants were “presumed, as a mat-

ter of law, to have intended that result.” Jd. at 430, 446. In

Liparota v. United States, 471 U.S. 419 (1985), the Court held

that the federal food stamp fraud statute, 7 U.S.C. 2024(b)(1),

which makes it unlawful to “knowingly” acquire or possess

food stamps “in any manner not authorized by [the statute] or

the regulations,” requires the government to prove that the

defendant knew that his acquisition or possession of food

stamps was in a manner unauthorized by the statute or regula-

tions, and that the district court erred in failing to instruct the

jury regarding that requirement. 471 U.S. at 433. Finally, in

Cheek v. United States, 498 U.S. 192 (1991), the Court held that

in a criminal tax prosecution the district court erred in

instructing the jury that a defendant’s good faith misunder-

standing of the law negates the statutory willfulness require-

ment only if the misunderstanding is objectively reasonable.

Id. at 20i. In this case, the district court’s good faith instruc-

tion informed the jury without limitation that “[t]he good faith

of a defendant is a complete defense to the charges contained in

the Indictment.” C.A. App. 129.