United States v. Shotts , 145 F.3d 1289 ( 1998 )

United States Court of Appeals,
Eleventh Circuit.
No. 96-6634.
UNITED STATES of America, Plaintiff-Appellee,
v.
Jesse Woodrow SHOTTS, Defendant-Appellant.
July 10, 1998.
Appeal from the United States District Court for the Northern District of Alabama. (No. CR-95-PT-
310-S), Robert B. Propst, Judge.
Before BLACK, Circuit Judge, and HILL and HENDERSON, Senior Circuit Judges.
HILL, Senior Circuit Judge:
Jessee W. Shotts appeals his convictions and sentences on various counts of mail fraud and
obstruction of justice. For the following reasons, we affirm in part and reverse in part.
I.
Jessee W. Shotts is a criminal defense attorney in Birmingham, Alabama. In the 1980's, he
also ran a bail bond business called J & J Bonding Co. In 1990, the Alabama Supreme Court
promulgated a rule that prohibited attorneys from having an interest in a bail bond business. Shotts
closed J & J Bonding Co., and a new corporation called JC Bail Bonds, Inc. ("JC") was formed.
Shotts' wife, Jerri Grant, was the sole shareholder. Subsequently, she transferred her shares to
Donald Long, who later transferred his shares to David Pettus. At no time did Shotts own any stock
in JC.
Shotts directed his secretary, Kandy Kennedy, to mail applications and money to various
municipalities to obtain licenses for the business. These applications named Long as the owner of
the business. Shotts also directed Kennedy to prepare the annual certification, which stated that
Long was the owner of the company and that no lawyer had any interest in the company.
The new firm began to operate in the fall of 1990. On three occasions, Shotts took Long to
Judge Jack Montgomery's house. Montgomery was a state district court judge in Birmingham. On
each occasion, Shotts would go into Judge Montgomery's house alone and return with bonds signed
by Montgomery, but otherwise blank. Shotts referred to these pre-approved bonds as "Jack" bonds.
They were used as appearance bonds by JC, but without showing JC as the surety. If the defendant
did not appear in court as required, JC had no liability on the bond.
In 1992, the Federal Bureau of Investigation (FBI) began an investigation into allegations
of corruption on the part of Judge Montgomery and obtained a wire tap of his home phone. In late
1992, the FBI intercepted a phone call from Shotts to Judge Montgomery in which Shotts asked him
to sign a bond for a prisoner in another county. When Montgomery responded that he didn't know
if he could sign the bond because he had no jurisdiction in that county, Shotts said he "had 5,000
reasons to try." Montgomery then told Shotts to come to his house.
That evening, the FBI executed a search warrant on Judge Montgomery's house. They found
$31,000 in the house. The next day, Montgomery resigned from office.1
After the search of Montgomery's house, Shotts was called to testify before a grand jury
investigating Montgomery. He was asked whether he owned JC Bail Bonds, Inc. He answered that
he did not. He was also asked whether he had any interest in or was associated with a bail bond
business, but he invoked his Fifth Amendment privilege and refused to answer.
1
Montgomery was subsequently indicted and pled guilty, but was killed by a gunshot before
he was sentenced. This case, however, concerns only allegations of mail fraud, perjury and
obstruction of justice.
2
In November of 1995, Shotts was indicted and charged with conspiracy to commit mail fraud
in violation of 18 U.S.C. § 371 (Count 1) and fifteen counts of substantive mail fraud, in violation
of 18 U.S.C. § 1341 (Counts 2-16). The indictment also charged five counts of bribery (of
Montgomery) in violation of 18 U.S.C. § 666 (Counts 17-21), and six counts of obstruction of
justice—one charging that Shotts made false statements to the grand jury in violation of 18 U.S.C.
§ 1623 (Count 26) and the remainder based upon witness tampering (Counts 22, 23, 24, 25 and 27),
in violation of 18 U.S.C. § 1512. On February 23, 1996, a jury convicted Shotts on Counts 1-16,
conspiracy to commit mail fraud and mail fraud, and three of the obstruction of justice counts.2
Shotts appeals each of his convictions. He challenges the legal sufficiency of the mail fraud
counts and the constitutionality of the obstruction of justice counts. He also contends that the
evidence was insufficient to convict him on any of the obstruction of justice counts. Finally, he
asserts errors in his sentences.
II.
Shotts claims that Counts 1-17 must be reversed because the allegations of mail fraud are
insufficient as a matter of law. The mail fraud statute prohibits the use of the mails in furtherance
of "a scheme to defraud, or for obtaining money or property by means of false or fraudulent
pretenses, representations, or promises." 18 U.S.C. § 1341. In McNally v. United States, 483 U.S.
350, 360, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), the Supreme Court rejected the government's
argument that the statute protects intangible rights, and held that the government must allege and
prove that the victim was deprived of money or property. Shortly thereafter, the Court further
2
The court dismissed Counts 23 and 27 upon the government's motion, and Count 25 upon
motion for acquittal. The jury acquitted Shotts of Counts 17-21.
3
explained that the statute extends to intangible property, but reiterated that Section 1341 is "limited
in scope to the protection of property rights." Carpenter v. United States, 484 U.S. 19, 26-27, 108
S.Ct. 316, 98 L.Ed.2d 275 (1987) (citing McNally, 483 U.S. at 360, 107 S.Ct. 2875).
Shotts was charged in Count 1 with conspiracy to commit mail fraud. The indictment alleges
that "[i]t was a part of the conspiracy that the defendant and his co-conspirators would ... cause to
be delivered by mail ... business licenses, license renewal notices, [and] payments for licenses...."
Counts 2-17 allege substantive violations of mail fraud and charge that "[i]t was a part of the scheme
that the business and the defendant's nominees and agents would then obtain and renew licenses
from various municipalities to do business as professional bondsmen." All of the substantive mail
fraud counts allege either the mailing of a bail bond license renewal notice with a check or the
receipt back in the mail of the license itself.
The government's theory was that these business licenses were property as contemplated by
McNally and Carpenter. During the trial, the government argued that the business licenses were
property. The government requested and the court instructed the jury that "[a] business license may
be considered property." Therefore, Shotts' convictions for mail fraud and conspiracy to commit
mail fraud may be affirmed only if the licenses he obtained were "property" under Section 1341.3
3
The government argues that, because the indictment also alleges that part of the scheme was
to obtain money, Shotts' conviction may stand even if these licenses are not property under
Section 1341, relying on United States v. Range, 94 F.3d 614 (11th Cir.1996). Even if Range
were applicable, we could affirm Shotts' conviction only if we were able to determine with
"absolute certainty" that the jury found that one of the purposes of the scheme was to obtain
money. Id. at 620 (quoting United States v. Miller, 84 F.3d 1244, 1257 (10th Cir.1996)). The
government concedes, however, that in this case there is a "problem" in determining what the
jury found because its verdict was a general one. The government argues that this problem is
overcome because "it is evident from a reading of the indictment that the main purpose of the
scheme was to obtain money." (emphasis added). No authority is cited for the proposition that,
if the "main" purpose of a scheme is to obtain money, we can be assured the jury found the
4
We review de novo a challenge to the legal sufficiency of the indictment. United States v. Shenberg,
89 F.3d 1461, 1478 (11th Cir.1996).
This is an issue of first impression in this circuit and one on which the other circuits are
divided. The majority of the circuits have held that a business license is not property and cannot
support a Section 1341 mail fraud conviction. See e.g., United States v. Schwartz, 924 F.2d 410 (2d
Cir.1991) (export license); United States v. Granberry, 908 F.2d 278 (8th Cir.1990) (school bus
driver permits); Toulabi v. United States, 875 F.2d 122 (7th Cir.1989) (taxi operator license);
United States v. Kato, 878 F.2d 267 (9th Cir.1989) (private pilot license); United States v. Murphy,
836 F.2d 248 (6th Cir.1988) (license to conduct bingo game). Most of these courts have reasoned
that a business license represents nothing more than an "expression of the government's regulatory
imprimatur." Schwartz, 924 F.2d at 418. For example, the Second Circuit held that "[t]he
government's power to regulate does not a fortiori endow it with a property interest in the license."
Id. at 417.4 On the other hand, some circuits have held that a business license is sufficient property
to support a mail fraud conviction. United States v. Salvatore, 110 F.3d 1131,1140 (5th Cir.1997)
(video poker license); United States v. Bucuvalas, 970 F.2d 937 (1st Cir.1992) (liquor license);
United States v. Martinez, 905 F.2d 709 (3d Cir.1990) (medical license).
defendant guilty of seeking to accomplish it. Nor do we think there is any such authority. A
general verdict which may rest upon an insufficient legal theory must be reversed. Griffin v.
United States, 502 U.S. 46, 57, 112 S.Ct. 466, 116 L.Ed.2d 371 (1991); United States v.
Martinez, 14 F.3d 543, 553 (11th Cir.1994).
4
Many of these courts imply that a license may be some form of property in the hands of the
licensee if the license may not be revoked without due process of law. See, e.g., Murphy, 836
F.2d at 253; Granberry, 908 F.2d at 279; Kato, 878 F.2d at 269; Ferrara, 701 F.Supp. at 41.
5
This division among the circuits is not surprising since neither McNally nor Carpenter define
the "property" protected by the mail fraud statute. Both merely teach that the term is "to be
interpreted broadly," McNally, 483 U.S. at 356, 107 S.Ct. 2875, but not so broadly as to include
"intangible rights." Carpenter, 484 U.S. at 25, 108 S.Ct. 316.
In Carpenter, however, the Supreme Court relied upon two of its prior opinions to hold that
confidential business information is property. Id. at 26, 108 S.Ct. 316 (citing Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1001-1004, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984) and Dirks v.
S.E.C., 463 U.S. 646, 653 n. 10, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983)). Both of these opinions
relied exclusively upon state law to define property. In Monsanto, the Court noted the "basic axiom
that "[p]roperty interests ... are not created by the Constitution. Rather, they are created and their
dimensions are defined by existing rules or understandings that stem from an independent source
such as state law.' " 467 U.S. at 1001, 104 S.Ct. 2862 (quoting Webb's Fabulous Pharmacies, Inc.
v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358 (1980) (quoting Board of Regents v. Roth,
408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972))).
Three years later, in considering whether a cable television franchise is Section 1341
property, the Seventh Circuit held that, under Carpenter, it must look for the answer in state law.
Borre v. United States, 940 F.2d 215, 219 (7th Cir.1991) ("It is logical, therefore, for this court to
look to state law in determining whether a cable television franchise constitutes "property' for
purposes of the mail fraud statute"). The First Circuit agrees. Bucuvalas, 970 F.2d at 944 (noting
the Supreme Court's "consistent resort to state common law and statutory law defining "property'
"). Two of the three circuits which have since held business licenses to be property have located that
definition in state law. Salvatore, 110 F.3d at 1139 (Louisiana's interest in video poker license
6
defined by its Video Poker Law); Bucuvalas, 970 F.2d at 944 (liquor license is property under both
Massachusetts statutory and common law).5 We too have implied in dicta that state law defines
property for Section 1341 purposes. United States v. Italiano, 894 F.2d 1280, 1285 n. 6 (11th
Cir.1990) ("franchises are considered property both generally and under Florida law").
Resort to state law has, not surprisingly, led to directly conflicting results. For example, in
the Third Circuit under Martinez, fraud in connection with a mailed application for a medical license
is a federal crime. In the First Circuit, on the other hand, such a prosecution apparently would be
dismissed for failure to state an offense. United States v. Ferrara, 701 F.Supp. 39 (E.D.N.Y.) (mail
fraud prosecution dismissed because state has no property interest in medical license), aff'd without
opinion, 868 F.2d 1268 (1988). Similarly, one commits mail fraud in the Fifth Circuit if false
statements are made in connection with a mailed application for a gambling license, Salvatore, but
not in the Ninth Circuit. United States v. Dadanian, 856 F.2d 1391 (9th Cir.1988) (scheme to obtain
gambling license did not affect government's interest as a property holder). Fraud in a liquor license
application sustains a mail fraud conviction in the First Circuit, Bucuvalas, but apparently not in the
Eleventh Circuit. Arrington v. Dickerson, 915 F.Supp. 1503, 1509 (M.D.Ala.1995) (liquor license
not property of any sort in Alabama).
These inconsistencies are the result of differences in state-created property interests. What
one state regards as property may not be so recognized in another.6
5
The only other circuit to hold a license to be property located that interest in federal
decisional law. Martinez, 905 F.2d at 714-15 (medical license).
6
For this reason, conflicting definitions of mail fraud among the various circuits may well be
aggravated by conflicting definitions of mail fraud within a circuit. Whether mail fraud is
committed in Texas for the mailing of a fraudulent application for a video poker license (if they
had video poker) would seem to depend upon whether Texas law creates a property interest in
7
Furthermore, the split in the circuits on this issue is due not only to differences in state law,
but to differences in the licenses under review. "A state's property interest in its licenses derives at
least in part from the character of the licenses themselves." Salvatore, 110 F.3d at 1141. A
particular license may signify nothing more than an intent to regulate, while another type of license
may signify the state's intent to participate in that industry. Id. ("video poker licenses are different
than other types of licenses"). A license to drive a taxi, see Toulabi, 875 F.2d at 124, may not be
a property interest in any state; a medical license may be considered property in most states.
Martinez, 905 F.2d at 715 (Pennsylvania); Medical Ass'n of State of Alabama v. Shoemake, 656
So.2d 863, 867 (Ala.Civ.App.1995); Lowe v. Scott, 959 F.2d 323, 334 (1st Cir.1992) (Rhode
Island); Mishler v. Nevada State Bd. of Medical Examiners, 896 F.2d 408, 409 (9th Cir.1990)
(Nevada); Watts v. Burkhart, 854 F.2d 839, 842 (6th Cir.1988) (Tennessee); Keney v. Derbyshire,
718 F.2d 352 (10th Cir.1983) (New Mexico).
As state law appears to control the definition of property under Section 1341, what
constitutes mail fraud apparently is susceptible to fifty different interpretations.7 What constitutes
that license. That question is not answered by Salvatore which rests upon Louisiana law.
7
One final reason for the differences among the circuits is that many of the circuits are not
looking at state law to determine whether the charged offense constitutes a deprivation of
property. These circuits have looked to federal law for that answer. Dadanian, 856 F.2d at 1392
(Ninth Circuit citing McNally and Carpenter to hold gambling license not property ); Murphy,
836 F.2d at 253 (Sixth Circuit citing McNally to hold bingo license not property);Granberry, 908
F.2d at 280 (Eighth Circuit citing Murphy to hold school bus operator permit not property);
Kato, 878 F.2d at 269 (Ninth citing Murphy and itself in Dadanian in holding pilot's license not
property); Schwartz, 924 F.2d at 417 (Second Circuit citing Kato, Murphy, Granberry and itself
in a prior case not involving a license, United States v. Evans, 844 F.2d 36 (2d Cir.1988), to hold
arms export license not property); and Ferrara, 701 F.Supp. at 42 (citing Evans and Murphyto
hold medical license not property). It is interesting to note that all of the circuits which rely on
federal decisional law conclude that there is no property in a business license; but the three
circuits which do find a property right in a license, Bucuvalas (1st Cir.), Salvatore (5th Cir.), and
8
mail fraud in Alabama may be insufficient to convict in Florida. Whether or not one finds such a
result surprising, it is, apparently, the law.8 Therefore, we look to Alabama law to determine
whether a municipal bail bond license is government property in Alabama.
Shotts maintains that a business license is not property in Alabama. It is true that the
Supreme Court of Alabama has held that a license to operate a bar or a package store is not property.
Ott v. Everett, 420 So.2d 258, 261 (Ala.1982); Ott v. Moody, 283 Ala. 288, 216 So.2d 177(Ala.1968); O'Bar v. Town of Rainbow City, 269 Ala. 247, 112 So.2d 790 (Ala.1959) ("There is no
contract, vested right or property in a license as against the power of a state or municipality to
revoke it in a proper case.") In Alabama, "[a] license to engage in the sale of intoxicants is merely
a privilege with no element of property right or vested interest of any kind." Broughton v. Alabama
Alcoholic Beverage Control Bd., 348 So.2d 1059, 1060 (Ala.Civ.App.1977) (citing Moody ). A
federal court in Alabama has recognized that Alabama law creates no protected property interest in
a liquor license. Arrington v. Dickerson, 915 F.Supp. 1503, 1509 (M.D.Ala.1995) (citing Broughton
).
Neither does Alabama recognize any property interest in a salvage operator's business
license. Spradlin v. Spradlin, 601 So.2d 76, 77 (Ala.1992). The Spradlin court reiterated that
Martinez (3d Cir.) rely on interpretations of specific state laws.
8
Defining a federal crime by reference to state law is an unusual feature of the mail fraud
statute. Even though the crime in all circuits is use of the mail to obtain property by fraud, one
who embarks upon fraud would do well to consult state law to find out if he is obtaining
property. If so, it is a federal crime. If the fraud is carefully practiced in a state which defines
the thing obtained as not being property, one may escape federal prosecution. We note,
however, that "the requirement that statutes give fair notice cannot be used as a shield by one
who is already bent on serious wrongdoing." United States v. Griffin, 589 F.2d 200, 207 (5th
Cir.1979).
9
Alabama recognizes no property interest in any business license as against the right of the state to
revoke it. Id.9
The government does not dispute that Alabama law controls the definition of property under
Section 1341. Neither does the government appear to disagree that under Alabama law, no one has
a property interest in these bail bond licenses prior to their issuance.10 The government, however,
makes the very intriguing argument that "[a]t the moment the licenses were typed they became
property within the meaning of the mail fraud statute." Because the "municipalities still controlled
them" at that point, the licenses were government property11 and obtaining them by fraud supports
Shotts' mail fraud convictions.
The government finds support for its position in several cases which hold that even though
an unissued license is not property, it may be property upon issuance. See, e.g., Murphy, 836 F.2d
at 253; Granberry, 908 F.2d at 279; Kato, 878 F.2d at 269; Ferrara, 701 F.Supp. at 41. The
government's contention appears to be that issuance of a bail bond license occurs at the moment it
is typed.
9
On the other hand, Alabama does recognize a property interest in a professional license.
Medical Ass'n of Alabama v. Shoemake, 656 So.2d 863, 867 (Ala.Civ.App.1995) (medical
license); Averi v. Alabama State Bd. of Podiatry, 567 So.2d 343, 344 (Ala.Civ.App.1990)
(medical license); Huckaby v. Alabama State Bar, 631 So.2d 855, 857 (Ala.1993) (law license).
The right to practice these professions in Alabama is "constitutionally protected as a valuable
property right" which cannot be deprived without due process of law. Huckaby, 631 So.2d at
857. The government apparently concedes that these licenses are not analogous to the bail bond
licenses at issue in this case as it does not even cite them, much less argue that they control.
10
The government states, "[t]hus, even under Alabama law, licenses are indeed some form of
property, at least once they are issued."
11
Apparently the government subscribes to the theory that possession in ninetenths of the law.
10
While this is certainly a creative approach, we are not persuaded by it. First of all, none of
these cases holds that even an issued license is Section 1341 property. These courts have merely
noted that whatever an issued business license might be to the licensee, it is definitely not the
property of the state,12 either before or after issuance. Therefore, even if a license becomes property
upon being typed, it would not be the state's property. Under these cases, it merely "might" become
the property of the licensee.
Furthermore, those courts which distinguish between an issued and unissued license have
premised this distinction upon the due process rights which may inure to the licensee upon issuance
of the license. Toulabi, 875 F.2d at 125 ("license may be property from the driver's perspective, in
the sense that he may not be compelled to surrender the entitlement except on proof of
wrongdoing"); Kato, 878 F.2d at 269 ("licenses, while "property' of the recipient once issued, are
not property of the government either before or after they are issued"); Murphy, 836 F.2d at 253-54
("the bingo license may well be "property' once issued ... but certainly an unissued certificate of
registration is not property of the State of Tennessee and once issued, it is not the property of the
State of Tennessee."). The Supreme Court also recognizes this form of "property" in a license.
Mackey v. Montrym, 443 U.S. 1, 10 n. 7, 99 S.Ct. 2612, 61 L.Ed.2d 321 (1979) (driver's license);
Dixon v. Love, 431 U.S. 105, 97 S.Ct. 1723, 52 L.Ed.2d 172 (1977) (driver's license); Barry v.
Barchi, 443 U.S. 55, 64 n. 11, 99 S.Ct. 2642, 61 L.Ed.2d 365 (1979) (license to train horses).13
12
We are aware that these are municipal licenses, but will ignore the distinction between the
state and its subdivisions for the purposes of this discussion since we believe it irrelevant to the
issue of whether the business licenses are the property of the government.
13
The Fifth Circuit has expressed its impatience with the "esoteric" distinction between issued
and unissued licenses. Salvatore, 110 F.3d at 1140. We do not agree, however, that the courts
making this distinction "provide no justification whatsoever for making the distinction." Id. We
11
This recognition of a form of property in a license stems from the modern theory that
property is a "bundle of rights."14 See United States v. Frost, 125 F.3d 346, 367 (6th Cir.1997).
These rights, however, may exist only in a particular set of hands. The right of due process prior
to revocation of a license, for example, exists only in the hands of the licensee. If this is property,
it is not the state's property.
These cases, therefore, do not support the government's theory that Alabama has a property
interest in a bail bond license.15 Even if such a license might be considered the licensee's property,
from the government's perspective the license is "a promise not to interfere rather than a sliver of
property." Toulabi, 875 F.2d at 125.
also do not agree that the distinction is based upon the idea that a license has "great value in the
hands of the licensee but an unissued license has negligible value in the hands of the
government." Id. at 1140. The distinction seems quite clearly to be based upon the difference in
the rights which attach to the license in the hands of the licensee.
14
See Charles A. Reich, 73 Yale L.J. 733 (1964). On the other hand, some courts have
understood McNally to direct them to the esoterica of ancient property law to divine whether a
particular item is some form of property. See e.g., Bucuvalas, 970 F.2d at 945 (license is a
property right analogous to fee simple determinable with a possibility of reverter); Turoff, 701
F.Supp. at 987(discussing whether a license might be an easement in gross). In fact, the Fifth
Circuit, in holding a video poker license to be property in the face of specific statutory language
to the contrary ("Any license issued or renewed under the provisions of this Chapter is not
property ..." ), did so because "when determining whether something is "property' for purposes of
the federal mail fraud statute, it is appropriate to look not only to state statutes but also to
"traditional property law.' " 110 F.3d at 1142.
15
The only other cases cited by the government in support of its position are Bucuvalas,
Martinez and United States v. Turoff, 701 F.Supp. 981 (E.D.N.Y.1988). Turoff is inapposite
because the New York City taxicab medallions held to be property were "tangible personal
property" which had a substantial market value. 701 F.Supp. at 987. The court in Turoff
specifically noted that "[a] mere license, on the other hand, is nothing more than a personal,
revocable privilege." Id. at 988. Bucuvalas and Martinez are inapposite because neither
interprets Alabama law, much less the status of a bail bond license in Alabama.
12
The government has offered no other theory of how these licenses might be considered the
property of Alabama.16 We conclude that, under Alabama law, a municipal license to operate a bail
bonds business is not government property, either before or after being typed. We hold, therefore,
that neither the mailing of a fraudulent application for such a license nor the receipt in the mail of
the license constitutes the federal crime of mail fraud under 18 U.S.C. § 1341. We reverse Shotts'
mail fraud convictions because the jury may have convicted upon that legally insufficient theory.17
III.
Shotts was convicted in Count 26 of making a false material declaration before the grand jury
("perjury") in violation of 18 U.S.C. § 1623 by stating that he did not "own" a bail bonds business.
He argues that this conviction must be reversed because this testimony was "literally true." We
review this question of law de novo. Shenberg, 89 F.3d at 1478.
Before the grand jury, Shotts was advised he was a target, and asked the following questions:
Q: Do you own a bail bonds business?
A: No, sir.
Q: Have you been associated in some fashion with a bail bonds business?
A: I would at this time invoke my right of self-incrimination, Your Honor.
Q: All right.
A: I have a client that is a bail bonds company.
16
Nor has the government called to our attention any Alabama statute which creates these
licenses so that we might review it to see what interest the state might have in them. Cf. Ward v.
United States, 845 F.2d 1459, 1462 (7th Cir.1988) (Illinois statute creates a security interest in a
bail bond which might be sufficient to support a mail fraud prosecution).
17
See Note 3 supra.
13
Q: Well, have you in the past either been an officer in or had an interest in a bail bonds
company, any time prior to today?
A: I would respectfully decline to answer the question on the ground it might tend to
incriminate me.
Shotts contends that the question regarding his "ownership" of the bail bonds business was
"fundamentally ambiguous" and that, even so, his answer was "literally true." If so, Shotts'
conviction for perjury is due to be reversed.
The Supreme Court has held that a perjury conviction under 18 U.S.C. § 1621 cannot be
based upon a statement, however misleading or incomplete, that is the "literal truth." Bronston v.
United States, 409 U.S. 352, 360, 93 S.Ct. 595, 34 L.Ed.2d 568 (1973). An answer to a question
may be non-responsive, or may be subject to conflicting interpretations, or may even be false by
implication. Nevertheless, if the answer is literally true, it is not perjury. Id. at 362.
Bronston has been extended to Section 1623, under which Shotts was convicted. United
States v. Abrams, 568 F.2d 411, 421 (5th Cir.1978). In Abrams, the defendant was convicted of
violating Section 1623 based upon her testimony before the grand jury in response to questions
about what she "would do" rather than what she had actually done. Her answers to the poorly
phrased questions were literally true. The Fifth Circuit reversed her conviction.18
Many other courts have reversed convictions based upon "literally true" answers. United
States v. Boone, 951 F.2d 1526, 1536 (9th Cir.1991); United States v. Lighte, 782 F.2d 367, 372 (2d
Cir.1986); United States v. Eddy, 737 F.2d 564, 567 (6th Cir.1984); United States v. Niemiec, 611
F.2d 1207, 1210 (7th Cir.1980); United States v. Tonelli, 577 F.2d 194, 198 n. 3 (3d Cir.1978);
18
We are, of course, bound by this holding. Bonner v. City of Prichard, 661 F.2d 1206, 1209
(11th Cir.1981) (en banc).
14
United States v. Paolicelli, 505 F.2d 971, 973 (4th Cir.1974). For example, in Eddy, the Sixth
Circuit reversed a Section 1623 conviction where the defendant denied submitting an "official"
college transcript and diploma to a government agency. The denial was "literally true" because the
defendant had submitted falsified, not official, documents. 737 F.2d at 567-69. In Boone, the
defendant denied going through certain company files and taking out documents. His conviction
was reversed because the denial was literally true since the discarded documents were kept in
different files. 951 F.2d at 1536. Finally, in Tonelli, the government qualified its question by
defining a particular term. The defendant's answer to the question so defined was literally true, and
the prosecutor made no further reference to any "other concepts" that he might have intended to be
included within the question. In reversing the perjury conviction, the Third Circuit observed that
"[T]he defendant could be said to have evaded the broad "other concepts' which the prosecutor
wished to probe. A charge of perjury, however, is not a substitute for careful questioning on the part
of the prosecutor...." 577 F.2d at 198.
Shotts maintains that his answer, like those above, was literally true. Under Alabama law,
a corporation is "owned" by its shareholders. See American Cast Iron Pipe Co. v. Commerce &
Industry In. Co., 481 So.2d 892, 896 (Ala.1985) ("In Alabama, the shareholders are the equitable
owners of corporate assets, including real property."); Williams v. North Alabama Exp., 263 Ala.
581, 83 So.2d 330, 333 (1955) ("stockholders owing all the shares of stock of a corporation are the
equitable owners of its assets"). See generally H. Henn & J. Alexander, Laws of Corporations at
491 (Practicing Law Institute, 1991) ("shareholders "own' the corporation ...").
15
It is undisputed that Shotts never owned any of the shares of stock of the JC Bail Bonds
business. His answer to the question whether he "owned" the company was literally true as a matter
of both Alabama and general law.19
Furthermore, Shotts was not asked whether he had "nominees" own the bail bond business
for him. When asked whether he was "associated with" or had "an interest in" a bail bonds
company, he invoked his Fifth Amendment privilege not to answer. These responses indicate that
Shotts was unwilling to perjure himself regarding his association with JC Bail Bonds, and permit
an inference that his willingness to answer the "ownership" question was because he knew that under
the law he was not the "owner" of the corporation.20 See United States v. Marchisio, 344 F.2d 653,
661 (2d Cir.1965) (we may consider extrinsic evidence that demonstrates how a declarant
interpreted a question).
The government's argument is that Shotts ignores the "context" of his testimony. He was,
"in fact," the owner even if he didn't own the stock. He had told others he "owned" the business.
When asked before the grand jury if he owned a bail bond business, "he knew ... what was meant
by the question." No authority is cited.
19
Ordinarily, absent a finding of fundamental ambiguity, a reviewing court's role is quite
limited. Where, however, the defendant's answer is literally true, we need not decide whether
the question itself was so fundamentally ambiguous it could not sustain a perjury conviction.
Nevertheless, we note that if the government is correct that, in some sense, Shotts "owned" the
bail bond business, then the question was fundamentally ambiguous. The government may not
send people to prison for failing to correctly guess the government's meaning. See Lighte, 782
F.2d at 374.
20
Indeed, had "ownership" of the business led to acquittal instead of conviction, and Shotts
had testified that he was the owner of the business, the government might still have charged him
with lying to the grand jury.
16
A perjury conviction must rest on the utterance by the accused of a false statement; it may
not stand on a particular interpretation that the questioner places upon an answer. Lighte, 782 F.2d
at 374 (citing Bronston, 409 U.S. at 360, 93 S.Ct. 595). The government cannot require Shotts to
interpret its question in a way that is contrary to the law of Alabama, and he may not be convicted
of perjury if he does not. Bronston expressly places on the questioner the burden of pinning the
witness down to the specific object of the inquiry. Id. As then Chief Justice Burger wrote, "Precise
questioning is imperative as a predicate for the offense of perjury." 409 U.S. at 362, 93 S.Ct. 595.
"If a witness evades, it is the lawyer's responsibility to recognize the evasion and to bring the witness
back to the mark, to flush out the whole truth with the tools of adversary examination." Id. Any
"special problems arising from the literally true but unresponsive answer are to be remedied through
the "questioner's acuity' and not by a federal perjury prosecution." Bronston, 409 U.S. at 362, 93
S.Ct. 595.
Furthermore, the prosecutor's purpose must be to obtain the truth. Perjury, of course,
thwarts that proper purpose. It must not be the prosecutor's purpose, however, to obtain perjury,
thus avoiding more precise questions which might rectify the apparent perjury.
Under these circumstances, we reverse Shotts' conviction for making a false statement to the
grand jury. Even if Shotts' answer was evasive, nonresponsive, intentionally misleading and
arguably false, it was literally true and cannot support a conviction under Section 1623.
IV.
Shotts appeals his conviction on Count 24 of the indictment which charges that he violated
18 U.S.C. § 1512(b)(3). This section makes it a crime to:
knowingly use[ ] intimidation or physical force, threaten [ ], or corruptly persuade [ ] another
person, or attempt to do so ... with intent to ... hinder, delay or prevent the communication
17
to a law enforcement officer ... of information relating to the commission or possible
commission of a Federal offense....
The indictment alleges that Shotts committed the offense by "corruptly persudad[ing] and
attempt[ing] to corruptly persuade an employee of his law office to not tell anything to law
enforcement agents investigating Jack Montgomery's activities." Shotts asserts that his conviction
on this count must be reversed because the "corruptly persuade" language of Section 1512(b) is
unconstitutionally vague and overbroad, and also because the government did not prove the charged
crime.
The constitutional claim is one of first impression in this circuit, and we review it de novo.
United States v. Paradies, 98 F.3d 1266, 1282 (11th Cir.1996). In reviewing the sufficiency of the
evidence, we construe it in the light most favorable to the government, United States v. Tapia, 59
F.3d 1137 (11th Cir.1995), resolving all questions of reasonable inference and credibility in the
government's favor. United States v. Lyons, 53 F.3d 1198 (11th Cir.1995).
Shotts' constitutional attack on Section 1512(b) relies on United States v. Poindexter, 951
F.2d 369, 378 (D.C.Cir.1991). Poindexter had been President Reagan's National Security Advisor.
He was accused of lying during the course of a congressional investigation of the Iran-Contra affair
and charged under 18 U.S.C. § 1505 which prohibits the making of a false statement to the
Congress. The District of Columbia Circuit reversed his conviction, holding that the term
"corruptly" as used in Section 1505 was unconstitutionally vague as applied to Poindexter's actions.
The court reasoned that the term was so imprecise that "men of common intelligence must
necessarily guess at its meaning and differ on its application." Id. at 378.
Shotts urges us to extend the Poindexter view of Section 1505's "corruptly" to Section
1512(b). We have recently declined a similar invitation. United States v. Brenson, 104 F.3d 126718
(11th Cir.1997). In Brenson, the defendant urged us to extend Poindexter to 18 U.S.C. § 1503(a),
the omnibus clause of the federal obstruction-of-justice statute, which makes it a crime to
"corruptly" endeavor to obstruct the due administration of justice. We refused, holding that Section
1505 and 1503 are too materially different for the construction of one to guide the construction of
the other, and that Poindexter is limited to the specific illegal conduct charged in that case.21 Id. at
1280.
We again decline to extend Poindexter to another section of the obstruction-of-justice
statutes. We continue to believe that Poindexter must be read narrowly, and not as a broad
indictment of the use of "corruptly" in the various obstruction-of-justice statutes.22
On the contrary, we agree with the Second Circuit that "corrupt" as used in Section of
1512(b) is neither unconstitutionally overbroad or vague. United States v. Thompson, 76 F.3d 442(2d Cir.1996). In Thompson, the Second Circuit rejected the argument, also advanced here by
Shotts, that Section 1512(b) criminalizes persuasion and is, therefore, an impermissible regulation
of protected speech. The court noted that Section 1512(b) does not prohibit all persuasion, but only
that which is "corrupt." By targeting only such persuasion as is "corrupt," Section 1512(b) clearly
limits only constitutionally unprotected speech, and is not, therefore, overbroad. Id. at 452.
21
The challenge in Brenson was to Section 1503(a) as applied in that case. The Fifth Circuit,
in binding precedent, had already upheld the use of "corruptly" in Section 1503 against a facial
attack. United States v. Howard, 569 F.2d 1331, 1337 n. 9 (5th Cir.1978).
22
In fact, the District of Columbia Circuit itself has avoided extending its interpretation of
Section 1505 to Section 1512(b). United States v. Morrison, 98 F.3d 619, 629 (D.C.Cir.1996).
In upholding Morrison's conviction against the claim that the "corrupt" language in Section
1512(b) is unconstitutionally vague, the court held, instead, that the evidence against him was
sufficient to establish that he had persuaded another to violate a legal duty, which, even under
Poindexter, satisfies the "corrupt"element of these statutes. Id.19
Thompson also rejected Shotts' argument that Section 1512(b) is unconstitutionally vague.
The Second Circuit noted that the same language in Section 1503(a), the omnibus
obstruction-of-justice provision, has long been upheld as meaning with an "improper purpose." See
e.g., United States v. Cintolo, 818 F.2d 980, 990-91 (1st Cir.1987); United States v. Rasheed, 663
F.2d 843, 852 (9th Cir.1981); United States v. Fasolino, 586 F.2d 939, 941 (2d Cir.1978); Martin
v. United States, 166 F.2d 76, 79 (4th Cir.1948). So defined, "corrupt" is a scienter requirement
which provides adequate notice of what conduct is proscribed. Id. (citing Village of Hoffman
Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 499, 102 S.Ct. 1186, 71 L.Ed.2d 362(1982)). Section 1512(b), concluded the Second Circuit, is not unconstitutionally vague because it
forbids only persuasion with an improper purpose.
We are aware that a majority of a panel of the Third Circuit has declined to follow
Thompson. United States v. Farrell, 126 F.3d 484 (3d Cir.1997). The majority viewed the
application of Section 1503's definition of "corrupt" to Section 1512(b) to be inappropriate because
"corruptly" provides the only intent element of Section 1503, while Section 1512 contains explicit
intent elements in addition to the term "corruptly." Id. at 489-90. "Thus, because the "improper
purposes' that justify the application of § 1512(b) are already expressly described in the statute,
construing "corruptly' to mean merely "for an improper purpose' (including those described in the
statute) renders the term surplusage, a result that we have been admonished to avoid." Id. (citing
Ratzlaf v. United States, 510 U.S. 135, 141, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994)). The majority
concluded that "more culpability is required [to violate Section 1512(b) ] than that involved in the
act of attempting to discourage disclosure in order to hinder an investigation." Id. at 489.
20
This conclusion drew a strong dissent, however, which noted that both the legislative history
of Section 1512 and prior decisions support the Second Circuit's contrary position in Thompson. Id.
at 492 (Campbell, J. dissenting). Section 1512's "corrupt persuasion" language was added by
Congress in 1988.23 Senator Biden, one of the drafters of the 1988 Amendments, stated at the time
that the intention was "merely to include in section 1512 the same protection of witnesses from
noncoercive influence that was (and is) found in section 1503." Id. The "motivated by an improper
purpose" definition of "corrupt" in Section 1512(b), then, is correctly informed by Section 1503's
long-standing interpretation.
Furthermore, the scienter role played by "corruptly" is not redundant, according to the
dissent, because "not all actions taken with the intent to hinder or obstruct justice necessarily violate
§ 1503 or § 1512." Id. at 493. For example, Section 1512 does not prohibit constitutionally
protected speech, even if such conduct has the effect of hindering an investigation. Id. (citing
Thompson, 76 F.3d at 452).
We believe that the Second Circuit and the dissent in Farrell have the better reasoned
position on this issue. It is reasonable to attribute to the "corruptly persuade" language in Section
1512(b), the same well-established meaning already attributed by the courts to the comparable
language in Section 1503(a), i.e., motivated by an improper purpose. We are unwilling to follow
the Third Circuit's lead in imposing a requirement for an additional level of culpability on Section
1512(b) in the absence of any indication that Congress so intended and in the face of persuasive
evidence that it did not.
23
The amendment appeared in the Anti-Drug Abuse Act of 1988, Pub.L. No. 100-690, 102
Stat. 4181.
21
By prohibiting only that persuasion which has an improper purpose, Section 1512(b) does
not impermissibly limit protected speech, and provides adequate notice that such persuasion is
proscribed. Therefore, we hold that the term "corruptly" as used in 18 U.S.C. § 1512(b) is neither
unconstitutionally broad nor vague.24
Having upheld Section 1512 against Shotts' constitutional attack, we turn now to Shotts'
contention that the government did not present sufficient evidence that he corruptly persuaded his
secretary, Kandy Kennedy, not to talk to law enforcement agents investigating Montgomery. The
evidence offered by the government in support of this charge was the following testimony by
Kennedy:
Q: Were there any conversations in the office about the FBI after Mr. Montgomery's house
was searched?
A: Yes.
Q: Was Mr. Shotts present?
A: Yes
Q: Did he say anything about the FBI to you?
A: I asked him about it. I asked him.
Q: What did he say?
A: He said just not say anything and I wasn't going to be bothered.
24
We have also upheld the use of the term "corruptly" in 18 U.S.C. § 7212(a) against a
vagueness attack. United States v. Popkin, 943 F.2d 1535 (11th Cir.1991). In Popkin, we
reached the conclusion that "corruptly" is used for the purpose of " "forbidding those acts done
with the intent to secure an unlawful benefit either for oneself or for another.' " Id. at 1540(quoting United States v. Reeves, 752 F.2d 995 (5th Cir.1985)). Thus defined, we held the term
"gives clear notice of the breadth of activities that are proscribed." Id.22
Shotts asserts that this testimony proves only that Kennedy asked Shotts about talking to the
FBI and that he observed that if she did not talk to the FBI, she would not be bothered. He maintains
that the testimony is insufficient to prove that he threatened or intimidated her, offered her any
inducement, or persuaded her in any way not to talk to the FBI.
The government argues that Shotts' use of the term "bother" could have included the
possibility of Kennedy's being prosecuted and jailed for her involvement with the bail bond
business. In this context, the government contends that Shotts' comment was an attempt to frighten
Kennedy into not talking to the FBI.
The jury was correctly charged that they must find that Shotts acted "knowingly and
dishonestly with the specific intent to subvert or undermine the integrity or truth-seeking ability of
an investigation by a federal law enforcement officer." The jury heard Kennedy's testimony. While
not overwhelming, the jury could reasonably have inferred from this testimony that Shotts was
attempting with an improper motive to persuade Kennedy not to talk to the FBI. There was sufficient
evidence from which the jury has determined the facts. Therefore, we affirm Shotts' conviction on
this count.
V.
Shotts was convicted in Count 22 of instructing his employee, Larry Eddy, to destroy "Jack
bonds" in violation of 18 U.S.C. § 1512(b)(2). This section makes is a crime to "corruptly persuade"
someone to destroy evidence with the intent to impair its availability for use in an official
proceeding.
23
Shotts has two complaints about his conviction on this count.25 First, he asserts that there
was insufficient evidence that the bonds were actually destroyed, and second, that the indictment
is deficient because it did not allege the official proceeding in which the destroyed evidence was to
be used.
Larry Eddy did not testify at trial. The evidence on this count was in the testimony of Kandy
Kennedy. She testified that after Montgomery's house was searched, the following took place:
Q: What if anything did he say about what had happened.
A: Nothing. We just took the Jack Bonds out of my desk drawer and they were taken away
and destroyed.
Q: Who is "we?"
A: I took them out. I either handed them to Jesse or Larry Eddy but Larry Eddy was
instructed to destroy them.
Q: Who instructed Larry Eddy to destroy the Jack bonds?
A: Jesse Shotts.
The government offered no further proof that the bonds were actually destroyed. The jury
was instructed that it must find that Shotts corruptly persuaded and caused Eddy to destroy the
bonds. Shotts contends that the jury was required to find that Eddy actually destroyed the bonds,
and that Kennedy's testimony was insufficient to establish this fact. We review these contentions
de novo. United States v. Waymer, 55 F.3d 564, 570 (11th Cir.1995).
Neither party has cited any authority to us regarding whether the statute requires that the
evidence actually be destroyed. Even assuming that the statute requires such an event to occur,
25
We have dealt with Shotts' constitutional challenge to this conviction based upon the alleged
vagueness of Section 1512(b)'s "corruptly persuade" language. See Section IV. above.
24
however, Kennedy's testimony is sufficient proof that it did. Kennedy's testimony was that she took
the bonds out of her desk drawer, she handed them to "Jesse" or to Eddy, Shotts instructed Eddy to
destroy them, and they were "taken away and destroyed." The jury was instructed that they must
find that Shotts intended to cause a person to destroy the bonds. Kennedy's testimony can
reasonably support that inference. The jury must have drawn this inference because they convicted
Shotts on this count. We find no merit to this claim.
Neither are we persuaded that this count is legally insufficient for failure to identify the
official proceeding at which the evidence would have been presented. See United States v. Murphy,
762 F.2d 1151, 1153 (1st Cir.1985) (failure to identify in any way the official proceeding did not
sufficiently apprize defendants of charges). Count 22 realleges the Introduction to the indictment.
Paragraphs five through seven of the Introduction describe the FBI's investigation and the federal
grand jury proceedings before which Jack Montgomery and Shotts were called to testify. Such
allegations meet the requirements of Murphy.
VI.
Shotts' convictions were divided into two groups by the Presentence Report and subsequently
by the district court at sentencing. The first group contained the convictions on the mail fraud
counts and the perjury count. These sentences must be set aside because we have reversed Shotts'
convictions on these counts.
The second group contained Shotts' convictions on Counts 24 and 26, the obstruction of
justice counts, which we affirm. Shotts' final argument on appeal is that his sentence on these counts
was incorrectly calculated under the Sentencing Table. An incorrect calculation under the
Sentencing Table is reviewed as an incorrect application of the Sentencing Guidelines. Williams
25
v. United States, 503 U.S. 193, 201, 112 S.Ct. 1112, 117 L.Ed.2d 341 (1992). This court reviews
de novo the district court's interpretation and application of the guidelines. United States v. Zapata,
139 F.3d 1355, 1357 (11th Cir.1998).
The obstruction of justice counts had an adjusted offense level of 14. With a criminal
history category I, the guideline range for an offense level of 14 is 15-21 months. The district court
imposed a sixty-month sentence on these counts, to run concurrently with the sixty-month sentence
imposed on the separately grouped mail fraud counts.26 Shotts contends that this sentence was
erroneous as a matter of law and must be vacated.27
The government argues that because Shotts was convicted on multiple counts, the district
court looked to and correctly sentenced under Sentencing Guideline Section § 5G1.2. The
government concedes, however that "If these were the only two crimes on which the defendant was
convicted, his argument may have some merit." Because we have reversed Shotts' mail fraud and
perjury convictions, he stands now convicted of only these two obstruction of justice counts.
Accordingly, we shall vacate his sentence on these two counts and remand for re-sentencing on
them.
VII.
Counts 1 through 17 of the indictment are insufficient as a matter of law because they allege
that Shotts deprived Alabama of its property in the form of a bail bond license and under Alabama
law, such license is not property. Count 26 must be reversed because Shotts' alleged false statement
26
The district court rejected any upward departure that might explain the sentence.
27
Although Shotts did not raise this objection at sentencing, we consider it because an
incorrect application of the Sentencing Guidelines is plain error. Williams v. United States, 503
U.S. 193, 201, 112 S.Ct. 1112, 117 L.Ed.2d 341 (1992).
26
to the grand jury was literally true and cannot form the basis for a perjury conviction. Counts 22 and
24 are neither legally nor constitutionally deficient, and the proof on these counts was sufficient to
sustain Shotts' convictions on them.
Accordingly, the convictions on Counts 1 through 17, and 26 are REVERSED and the
sentences on these counts are VACATED. The convictions on Counts 22 and 24 are AFFIRMED,
but the sentences on these two counts are VACATED and the case is REMANDED.
27