United States v. Emanouel Frangos ( 2020 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 19-2482
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UNITED STATES OF AMERICA
v.
EMANOUEL FRANGOS, a/k/a Manny Frangos;
LIBERTY MAINTENANCE, INC.,
Appellants
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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Nos. 2:18-cr-00130-WB-2 and 2:18-cr-00130-WB-4)
District Judge: Honorable Wendy Beetlestone
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Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
April 14, 2020
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Before: CHAGARES, SCIRICA, and ROTH, Circuit Judges.
(Filed: July 20, 2020)
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OPINION ∗
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∗
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
CHAGARES, Circuit Judge.
Emanouel Frangos and his company, Liberty Maintenance, Inc., were prosecuted
for conspiracy to commit wire fraud, wire fraud, and false statements. The jury acquitted
Frangos and Liberty on the substantive wire fraud charges but was unable to reach a
verdict on the remaining counts. After the Government sought to retry Frangos and
Liberty on the conspiracy and false statement counts, Frangos and Liberty moved to
dismiss those charges as precluded under the Double Jeopardy Clause of the United
States Constitution. The District Court denied that motion to dismiss, and we will affirm.
I.
We write for the parties and so recount only the facts necessary to our decision.
The United States Department of Transportation (“USDOT”), pursuant to statute,
requires that at least ten percent of its funds for public construction contracts
be expended with businesses “owned and controlled by socially and economically
disadvantaged individuals.” Appendix (“App.”) 73. State agencies that receive
construction project grant funds from USDOT, such as the Pennsylvania Department of
Transportation (“PennDOT”), administer this “Disadvantaged Business Enterprise . . .
program in accordance with federal guidelines” and have “the authority to certify that
[an] applying company meets the requirements . . . of the program.” App. 72–73.
On April 3, 2018, a federal grand jury indicted Frangos, Liberty, and two other
defendants on one count of conspiracy to commit wire fraud, five counts of wire fraud,
and ten counts of false statements. The indictment charged that Frangos and Liberty had,
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among other things, defrauded and conspired to defraud USDOT and PennDOT by using
a certified disadvantaged business enterprise as a front to secure federally-funded
construction projects under false pretenses. For example, on one of the contracts in
question, the indictment alleged that the certified disadvantaged business enterprise “did
not act as a regular dealer, and did not perform any commercial useful function, but acted
as a mere pass-through or front, to give the appearance that [disadvantaged business
enterprise] requirements had been met.” App. 81.
The jury acquitted Frangos and Liberty on all five counts of wire fraud but could
not reach a verdict for Frangos and Liberty on the conspiracy to commit wire fraud count
or on the ten false statement counts, leading the District Court to declare a mistrial on the
conspiracy and false statement counts. Frangos and Liberty moved to dismiss those
remaining counts as barred by the Double Jeopardy Clause of the United States
Constitution. The District Court denied that motion, and this timely appeal followed.
II. 1
Frangos and Liberty raise two grounds for appeal. First, they contend that the
District Court erred in refusing to dismiss the remaining conspiracy charge and false
statement charges under the Double Jeopardy Clause’s issue preclusion principles.
Second, they assert that because the conspiracy charge must be dismissed on issue
preclusion grounds, the false statement charges also must be dismissed under the
1
The District Court had jurisdiction under 18 U.S.C. § 3231, and we have appellate
jurisdiction under 28 U.S.C. § 1291.
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Government’s theory of liability under Pinkerton v. United States, 328 U.S. 640 (1946).
Because we disagree with the first argument, we need not and do not reach the second.
A.
Frangos’ and Liberty’s principal argument on appeal is that when the jury
acquitted them on the substantive wire fraud counts, the jury must have done so based on
having concluded that Frangos and Liberty lacked specific intent to defraud the
government agencies. But as we explain, we agree with the District Court that the jury
may well have acquitted Frangos and Liberty on another ground. 2
The “Double Jeopardy Clause . . . embodies principles of [issue preclusion] that
can bar the relitigation of an issue actually decided in a defendant’s favor by a valid and
final judgment.” United States v. Rigas, 605 F.3d 194, 217 (3d Cir. 2010) (en banc)
(quotation marks omitted). 3 The Double Jeopardy Clause’s issue preclusion doctrine
“ensures that ‘when an issue of ultimate fact has once been determined by a valid and
final judgment, that issue cannot again be litigated between the same parties in any future
lawsuit.’” Id. (quoting Ashe v. Swenson, 397 U.S. 436, 443 (1970)).
A criminal defendant who seeks to bar the relitigation of a particular issue “bears
the burden of demonstrating that the issue he seeks to foreclose was actually decided in
2
We exercise plenary review over double jeopardy challenges. United States v. Rigas, 605
F.3d 194, 203 n.7 (3d Cir. 2010) (en banc).
3
Although both we and the Supreme Court have at times referred to these principles as
ones of “collateral estoppel,” we use the term “issue preclusion” in this opinion. See
Wilkerson v. Superintendent Fayette SCI, 871 F.3d 221, 232 n.10 (3d Cir. 2017) (noting
that “[a]lthough the parties use the term ‘collateral estoppel’ to describe the question at
issue,” we follow the Supreme Court in using “issue preclusion,” as it is “the more
descriptive term”).
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the first proceeding,” and that burden is a “heavy” one. Id. Moreover, because “it is
usually impossible to determine with any precision upon what basis the jury reached a
verdict in a criminal case, it is a rare situation in which the [issue preclusion] defense will
be available to a defendant.” Id. at 218 (quotation marks omitted).
At the same time, this doctrine “is not to be applied with the hypertechnical and
archaic approach of a 19th century pleading book, but with realism and rationality.”
Ashe, 397 U.S. at 444. Under this approach, we “examine the record of a prior
proceeding, taking into account the pleadings, evidence, charge, and other relevant
matter, and conclude whether a rational jury could have grounded its verdict upon an
issue other than that which the defendant seeks to foreclose from consideration,” with a
view to “all the circumstances of the proceedings.” Id. (quotation marks omitted).
The District Court instructed the jury that in order to convict Frangos and Liberty
on the substantive wire fraud charges, the Government needed to prove three elements for
each wire fraud count: (1) that they “knowingly devised or willfully participated in a
scheme to defraud or to obtain money or property by materially false or fraudulent
pretenses, representations, or promises,” (2) that they “acted with the intent to defraud,”
and (3) “that in advancing, furthering, or carrying out the scheme, [they] transmitted any
writing, signal, or sound by means of a wire, radio, or television communication in
interstate commerce or caused the transmission” of any such communication. App. 500–
01.
Frangos and Liberty contend on appeal that their “sole defense at trial was that
they lacked fraudulent intent because [Frangos] always acted in good faith.” Frangos Br.
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31–32. In other words, they claim that they only contested the second element of the
substantive wire fraud charges, and that therefore, the jury could not have acquitted them
on any other grounds. But our review of the trial record leaves us unpersuaded by that
contention.
Although we review this Double Jeopardy challenge de novo, our examination of
the record confirms the District Court’s conclusion that Frangos’ and Liberty’s defense
did not, in fact, “rely exclusively on Frangos’s assertion of good faith.” 4 United States v.
Kousisis, No. CR 18-130, 2019 WL 4126484, at *7 (E.D. Pa. June 17, 2019). While
good faith was “an important component, their defense also relied on the relative paucity
of evidence inculpating Frangos, and sought to cast doubt on Frangos’s involvement with
any scheme to defraud.” Id. It is true, as Frangos and Liberty argue, that their closing
statement focused primarily on what they characterized as the Government’s failure to
prove good faith. But even though this may have been the focus of Frangos’ closing,
there were evidentiary shortcomings, pointed out to the jury, on the third element of the
substantive wire fraud charges: that the charged wirings were not made in furtherance of
the scheme or that one or more of the charged wirings were not made or caused by
Frangos. Much of the crucial evidence of Frangos’ alleged involvement in the scheme
overlapped in the proof and defense of both of the first two elements of the substantive
wire fraud charges. Frangos cannot, however, carry his heavy burden of proving that the
jury necessarily decided that he was not guilty on the acquitted wire fraud counts because
4
We follow the parties and the District Court in using the terms “good faith” and “lack of
intent to defraud” interchangeably.
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of lack of intent to defraud when there is a clear other basis for that acquittal in a failure
to prove that the wirings were made as a part of the scheme or that Frangos made them or
caused them to be made. Accordingly, the District Court did not err in declining to grant
Frangos’ and Liberty’s motion on this ground.
B.
Frangos and Liberty contend in the alternative that retrial is barred as to the
conspiracy count because the “core” of the conspiracy and wire fraud charges are the
same. As the District Court correctly noted, “retrial on a conspiracy count following
acquittal on a substantive offense does not” in and of itself “offend the Double Jeopardy
Clause, because ‘a substantive crime and a conspiracy to commit that crime are not the
same offence for double jeopardy purposes.’” Kousisis, 2019 WL 4126484, at *7
(quoting United States v. Felix, 503 U.S. 378, 389 (1992)). But Frangos and Liberty
posit that this appeal is controlled by the Supreme Court’s decision in Sealfon v. United
States, in which the Court held that an acquittal on a conspiracy charge barred a later
conviction on a corresponding substantive offense where “[t]he basic facts in each trial
were identical.” 332 U.S. 575, 580 (1948).
Frangos’ and Liberty’s argument is unavailing. While it is true, as Frangos and
Liberty note, that the substantive wire fraud charges incorporate by reference almost all
of the conspiracy charge’s allegations, the conspiracy charge encompasses a greater set of
communications and acts than the four specific communications on which criminal
liability for the substantive wire fraud charges hinged. By the indictment’s own terms,
the scheme to defraud described in the substantive charges is tied directly to those counts’
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specified communications. Moreover, the Government provides a number of examples
of trial evidence germane only to the conspiracy charge, showing a “wide variety of other
acts, statements, and transmissions” that were not offered to prove the substantive wire
fraud charges. Gov. Br. 51. And Frangos and Liberty fail to explain why the specific
trial evidence identified by the Government as relevant only to the conspiracy charge was
also probative of their criminal liability — or lack thereof — on the substantive counts.
Accordingly, we conclude that the “basic facts” in a retrial of the conspiracy charge
would not rely solely on “identical” facts used (unsuccessfully) to prove the substantive
charges in the first trial, and the District Court correctly denied Frangos’ and Liberty’s
motion to dismiss on this ground as well.
III.
For the foregoing reasons, we will affirm the District Court’s order denying the
motion to dismiss.
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