MARK B. DEBUSK, PETITIONER V. UNITED STATES OF AMERICA No. 89-6028 In The Supreme Court Of The United States October Term, 1989 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Sixth Circuit Brief For The United States In Opposition OPINIONS BELOW The opinion of the court of appeals (Pet. App. 7a-22a) is reported at 880 F.2d 878. The opinion of the district court (Pet. App. 1a-5a) is unreported. JURISDICTION The judgment of the court of appeals was entered on July 26, 1989. A petition for rehearing was denied on September 12, 1989. Pet. App. 23a. The petition for a writ of certiorari was filed on November 9, 1989. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether the doctrine of collateral estoppel bars the government from retrying petitioner on various counts of a multi-count indictment after the jury failed to reach a verdict on those counts but acquitted on other counts. STATEMENT Petitioner and his co-defendant, William K. Frazier, were tried on a 52-count indictment alleging bank-related offenses. The jury returned not guilty verdicts on 19 of the counts, and failed to reach verdicts on the remaining 33 counts. Petitioner seeks further review of a decision holding that the doctrine of collateral estoppel does not bar a retrial on 32 of those counts. 1. From March 1979 until his resignation on November 10, 1982, Frazier was the president of Citizens Fidelity Bank in Bristol, Tennessee. Petitioner, who was Frazier's son-in-law, owned and operated a retail jewelry store that maintained an account at the bank. In 1982, petitioner began operating a wholesale jewelry business that also maintained an account at Citizens Fidelity Bank. Unindicted co-conspirators Randall Sargent and Sanford Nelson were employees, respectively, of the jewelry store and the wholesale jewelry business. Pet. App. 8a; Gov't C.A. Br. 5-7. In January 1982, petitioner began writing checks that created and increased an overdraft on the retail jewelry store account. On Frazier's instructions, Citizens Fidelity Bank honored the checks. By July 23, 1982, the jewelry store account was overdrawn by $156,665. Pet. App. 8a; Gov't C.A. Br. 7-8. On July 23, 1982, the jewelry store received a $138,500 loan from Citizens Fidelity Bank, which was used to cover a portion of the overdraft. To secure the loan, petitioner signed a note pledging the jewelry store's inventory, fixtures, and accounts receivable as collateral. The same day, on July 23, 1982, Frazier, as president of the bank, assigned the jewelry store's note to another bank with himself as guarantor. The other bank, in turn, issued a cashier's check for $138,500 to Citizens Fidelity Bank. Contrary to normal bank procedures, neither the $138,500 loan nor the assignment of the note was recorded in the books of Citizens Fidelity Bank. Consequently, the records of Citizens Fidelity Bank did not reflect that its funds were used to cover the overdraft in the jewelry store's account. Pet. App. 8a; Gov't C.A. Br. 10-11. Also on July 23, 1982, Nelson obtained a loan from Citizens Fidelity Bank for $24,500 -- and signed a promissory note for that amount -- after being told by Frazier that he would not be responsible for repayment of the loan. The loan proceeds were not delivered to Nelson, but were instead applied to the jewelry store's overdraft. Similarly, in October 1982, Frazier used the proceeds of a $23,000 loan from Citizens Fidelity Bank to Sargent to cover a separate overdraft in the wholesale jewelry business's account. Pet. App. 8a; Gov't C.A. Br. 9-10, 12-14. 2. A grand jury sitting in the Eastern District of Tennessee returned a 52-count indictment charging petitioner and Frazier with offenses arising out of these events. After a trial, the jury acquitted petitioner and Frazier on 19 counts but was unable to reach a verdict on the other 33 counts. Count 1 of the indictment alleged that petitioner and Frazier, along with unindicted co-conspirators Nelson and Sargent, conspired to misapply funds of the bank and to make false entries in its records. The jury acquitted petitioner and Frazier on that count. Pet. App. 9a. Counts 2 through 47 charged that Frazier, aided and abetted by petitioner, misapplied bank funds by knowingly directing bank employees to pay 46 checks that increased the total overdraft on petitioner's retail jewelry store account. The jury acquitted petitioner and Frazier on Counts 2 through 18, which concerned checks paid between March 27 and May 10, 1982, and was unable to reach verdicts on Counts 19 through 47, which concerned checks paid between May 11 and July 20, 1982. Pet. App. 9a, 17a. Counts 48 and 49 were based on the purported loan of $24,500 to Nelson on July 23, 1982. Count 48 charged that Frazier, aided and abetted by petitioner, misapplied bank funds when he made the loan to Nelson but used the loan proceeds to cover and conceal the overdraft on petitioner's retail jewelry store account. Count 49 charged that Frazier, aided and abetted by petitioner, caused a false entry to be made in the bank's records concerning the same $24,500 loan. The jury acquitted petitioner and Frazier on Count 48, but was unable to reach a verdict on Count 49. Pet. App. 9a-10a. Count 50 was based on the $138,500 loan to petitioner's retail jewelry store on July 23, 1982. It charged that Frazier, aided and abetted by petitioner, misapplied bank funds by making the loan without the approval or knowledge of the bank's board of directors and by using the loan proceeds to cover and conceal the overdraft on the jewelry store's account. The jury was unable to reach a verdict on Count 50. Pet. App. 10a. /1/ The court dismissed the counts on which the jury had returned not guilty verdicts and declared a mistrial as to the remaining 33 counts. Petitioner and Frazier moved to dismiss the remaining counts, arguing that the doctrine of collateral estoppel barred a second trial. The district court granted the motion as to five counts and denied it as to 28 counts. Pet. App. 1a-5a. 3. The court of appeals reversed the dismissal of four of the five counts, upheld the refusal to dismiss the other 28 unresolved counts, and remanded the case for trial. Pet. App. 7a-22a. At the outset, the court of appeals rejected the government's contention, based on United States v. Powell, 469 U.S. 57 (1984), that collateral estoppel can not bar a retrial when, in a single trial, a jury has acquitted on some counts of a multi-count indictment but is unable to reach verdicts on other counts. Pet. App. 12a-15a. The court then applied principles of collateral estoppel outlined in Ashe v. Swenson, 397 U.S. 436 (1970), to the particular facts of this case to determine whether a retrial was foreclosed on any of the unresolved counts. The court of appeals determined that the jury's acquittal on the conspiracy charge in Count 1 did not collaterally estop the government from retrying petitioner and Frazier on any of the unresolved counts. Because "(t)he jury's verdict on count 1 could rationally have been based on a finding that the defendants and co-conspirators did not agree to a scheme to misapply the bank's funds and falsify its records," the court explained, "the jury could have acquitted without ever considering whether Frazier and (petitioner) committed the acts charged in the remaining counts, whether listed as overt acts or not." Pet. App. 15a-16a. The court also found that the jury's acquittals on Counts 2 through 18, which charged misapplication of bank funds arising from checks increasing the overdraft on the jewelry store's account, did not bar both defendants' retrial on the remaining counts. Pet. App. 16a-18a. The court noted that the checks involved in the counts on which the jury had acquitted were paid during a time period different from those in Counts 19 through 47. Given disputes in the evidence, the court explained, "any possible jury finding on the issue of criminal intent in causing the payment of the checks between March 27 and May 10 is not conclusive on the issue of criminal intent when causing payment of checks after that date." Id. at 18a. The court also determined that the transactions involved in Counts 49-52 were "entirely different from those underlying" Counts 2 through 18. Ibid. For similar reasons, the court concluded that the acquittal on Count 48 did not collaterally estop the government from retrying petitioner and Frazier on Counts 19 through 47 and Counts 50 through 52. Pet. App. 18a-19a. Because Count 48 involved a transaction (the July 23 loan to Nelson) that was distinct from the transactions involved in the remaining counts, the court held, a second jury could consider those counts without hearing any of the evidence introduced at the first trial with respect to Count 48. Ibid. /2/ The court of appeals rejected petitioner's contention that his acquittal on the conspiracy count (Count 1) foreclosed a subsequent trial on charges of aiding and abetting Frazier's alleged violations. Pet. App. 20a-21a. Because "(t)here is no requirement that there be an agreement in order to convict of aiding and abetting," the court explained, "there is a difference between a conspiratorial agreement and the 'community of unlawful intent' required between an aider and abettor and a principal." Id. at 20a. Accordingly, the court concluded that "even if the jury did acquit on count 1 because it found no agreement between Frazier and (petitioner), that finding would not preclude a further prosecution of (petitioner) on the remaining counts." Id. at 21a. Finally, the court of appeals rejected petitioner's contention that the acquittals on Counts 2 through 18 and Count 48 foreclosed a finding that Frazier had the intent to defraud required for a conviction on the unresolved counts and that the absence of such intent foreclosed petitioner's retrial as well. Pet. App. 21a-22a. First, relying on Standefer v. United States, 447 U.S. 10 (1980), the court noted that petitioner could not benefit from a finding by the jury that Frazier lacked the specific intent to defraud the bank since "(i)f (petitioner) performed an act that contributed to a misapplication of bank funds, with the specific intent to defraud, it makes no difference whether or not the principal who actually caused the misapplication of funds shared the criminal intent." Pet. App. 21a. Second, the court emphasized that even if the jury found that Frazier lacked the specific intent to defraud the bank with respect to the substantive counts on which the jury acquitted, "(n)one of the counts to be retried is factually congruent with counts 2 through 18 and 48" and "(a)ll of the remaining counts apply to discrete transactions that are separate and distinct from those covered by counts 2 through 18 and 48." Id. at 21a-22a. ARGUMENT 1. Petitioner renews his contention (Pet. 8-10) that the jury's acquittal on the conspiracy charged in Count 1 estops the government from retrying him on substantive counts in which he is charged as an aider and abettor. As the court of appeals held, however, the acquittal on Count 1 was not necessarily based on a finding that would foreclose convictions on any of the counts remaining for retrial. In Ashe v. Swenson, supra, this Court held that a defendant's acquittal on charges of robbing one member of a poker game, Knight, estopped the State from trying him on a charge of robbing another member of the same game, Roberts. The Court explained (397 U.S. at 445): (T)he record is utterly devoid of any indication that the first jury could rationally have found that an armed robbery had not occurred, or that Knight had not been a victim of that robbery. The single rationally conceivable issue before the jury was whether the petitioner had been one of the robbers. And the jury by its verdict found that he had not. (Collateral estoppel), therefore, would make a second prosecution for the robbery of Roberts wholly impermissible. In assessing a claim of collateral estoppel, Ashe requires a court "to '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.'" Id. at 444. The court of appeals adhered to those principles in this case. After quoting from Ashe (Pet. App. 15a), the panel held that the acquittal on the conspiracy count could have rested on "a finding that (petitioner, Frazier, and the unindicted co-conspirators) did not agree to a scheme to misapply the bank's funds and falsify its records" (ibid.). Thus, the court reasoned, the jury "could have acquitted without ever considering whether Frazier and (petitioner) committed the acts charged in the remaining counts, whether listed as overt acts or not." Id. at 16a. Contrary to petitioner's contention, it was also entirely consistent with the principles of Ashe for the court to conclude that petitioner's acquittal on a charge of conspiracy would not foreclose a second trial on charges that he aided and abetted violations committed by Frazier. As the court of appeals pointed out, "(t)here is no requirement that there be an agreement in order to convict of aiding and abetting" because "there is a difference between a conspiratorial agreement and the 'community of unlawful intent' required between an aider and abettor and a principal." Pet. App. 20a. Indeed, in Pereira v. United States, 347 U.S. 1, 11 (1954), this Court explained: Aiding, abetting and counseling are not terms which presuppose the existence of an agreement. Those terms have a broader application, making the defendant a principal when he consciously shares in a criminal act, regardless of the existence of a conspiracy. Accord United States v. Fesler, 781 F.2d 384, 390 (5th Cir.), cert. denied, 476 U.S. 1118 (1986); United States v. McCullah, 745 F.2d 350, 355 (6th Cir. 1984). This Court's decision in Sealfon v. United States, 332 U.S. 575 (1948), does not suggest that an acquittal on a charge of conspiracy invariably forecloses a conviction for aiding and abetting. See United States v. Jackson, 778 F.2d 933, 940-941 (2d Cir. 1985), cert. denied, 479 U.S. 910 (1986). Rather, on "the particular facts (there) involved," 332 U.S. at 576, the Court concluded in Sealfon that the defendant could be convicted of conspiring with or aiding and abetting another individual "only on proof that he wrote" a letter "pursuant to an agreement with" that individual, id. at 580. Consistent with the evidence introduced in that case, the Court continued, the defendant "could have aided and abetted (the principal) in no other way." Ibid. This prosecution is not similarly constrained. There is evidence in this case that would support a finding that petitioner willfully associated himself with violations with which Frazier is charged, whether or not the two reached the type of agreement required for a conspiracy. /3/ With respect to the counts on which it permitted a retrial, therefore, the court of appeals faithfully applied Ashe's analysis to this case. Petitioner's contention that the court misapplied the doctrine of collateral estoppel to the particular facts here presents no question warranting further review. 2. Even if petitioner were correct in his contention that facts on which his acquittals were based will necessarily be relitigated in the retrial, there would be an alternative basis for upholding the judgment. Notwithstanding the court of appeals' decision to the contrary (Pet. App. 11a-15a), when a jury has acquitted a defendant on certain counts but has failed to reach a verdict on other counts resting on the same disputed factual issue, there is no basis for concluding that the jury has actually and necessarily resolved that issue in the defendant's favor. In that situation, it is evident that "the same jury reached inconsistent results." United States v. Powell, 469 U.S. at 68. It is impossible logically to reconcile a finding that the government failed to prove an element of the acquitted offenses with the contrary determinations of at least some jurors that the same element may have been present with respect to other counts. And once it is clear that a single jury has not been consistent in its factual determinations, "established principles of collateral estoppel -- which are predicated on the assumption that the jury acted rationally and found certain facts in reaching its verdict -- are no longer useful." Ibid. /4/ In such a situation, the defendant has no right to argue that the verdicts of acquittal were the "one(s) the jury 'really meant.'" Ibid. See Standefer v. United States, 447 U.S. at 23 n.17 (inconsistency in jury verdicts "is reason, in itself, for not giving preclusive effect to the acquittals"). /5/ Indeed, because the government is denied access to procedural devices that are designed to protect against irrational jury verdicts, it is particularly inappropriate to estop the government on the basis of an acquittal that is inconsistent with the jury's disposition of other counts. "Under contemporary principles of collateral estoppel," the unavailability to the government of remedies for irrational jury verdicts "strongly militates against giving an acquittal preclusive effect." Standefer v. United States, 447 U.S. at 23. A defendant who wins a partial victory in the jury room should not, through the doctrine of collateral estoppel, be exonerated of offenses of which the jury has refused to acquit him. See United States v. Citron, 853 F.2d 1055, 1058 (2d Cir. 1988); United States v. Bennett, 836 F.2d 1314, 1317 (11th Cir.), cert. denied, 108 S. Ct. 2847 (1988); Hoffer v. Morrow, 797 F.2d 348, 352 (7th Cir. 1986); United States v. Price, 750 F.2d 363, 366 (5th Cir.), cert. denied, 473 U.S. 904 (1985). Thus, even if petitioner were correct in his argument that the jury's acquittal on Count 1 was based on facts essential to convictions on the counts that remain, the doctrine of collateral estoppel should not be applied to bar a retrial. CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General EDWARD S.G. DENNIS, JR. Assistant Attorney General JOSEPH C. WYDERKO Attorney JANUARY 1990 /1/ Petitioner was not charged in counts 51 and 52, which were based on the purported $23,000 loan to Sargent on October 1, 1982. /2/ The court concluded, however, that the jury's acquittal on Count 48 precluded a retrial on Count 49 because "(a) jury could not conclude that the defendants wilfully caused false entries to be made with respect to (the $24,500 loan to Nelson) without also finding that the defendants wilfully and knowingly misapplied bank funds by using the loan proceeds in the manner described in count 48." Pet. App. 19a. /3/ There is also no merit in petitioner's claim (Pet. 8-9) that the decision of the court of appeals conflicts with United States v. Austin, 529 F.2d 559 (6th Cir. 1976). Austin held that the "same evidence" test of the Double Jeopardy Clause barred separate penalties for convictions of conspiracy and related substantive offenses "(s)ince proof of the substantive offenses * * * also proved every essential element of the conspiracy." Id. at 564. That holding is of doubtful validity even within the Sixth Circuit. See United States v. McCullah, 745 F.2d at 355-356. In any event, the court of appeals distinguished Austin from this case (Pet. App. 20a-21a), and petitioner's claim of an intra-circuit conflict does not raise a question calling for this Court's review. Wisniewski v. United States, 353 U.S. 901, 902 (1957). /4/ The court of appeals sought to distinguish Powell on the ground that the inconsistency in that case consisted of a conviction on some counts that conflicted with an acquittal on others. In the court's view, whereas a verdict of the type involved in Powell "clearly would be inconsistent," "(n)o such inconsistency is necessarily present * * * when a jury acquits on some charges and fails to agree on others." Pet. App. 14a. The count whose dismissal the court affirmed demonstrates the flaw in this suggestion. Here, the court found that the acquittal on Count 48, which charged misapplication of bank funds in connection with the $24,500 loan to Nelson, was necessarily based on a determination that the proof was insufficient to establish that the defendants had the intent to defraud the bank. On that basis, the court held that the government was estopped from retrying them on Count 49, which required the same showing of intent with respect to the same transaction for the offense of making false entries in the bank's records. If the court is correct in its conclusion that both counts turned on the same issue of intent, no rational jury could acquit on Count 48 and fail to acquit on Count 49. Thus, there is irreconcilable inconsistency in the verdict, and "it is unclear whose ox has been gored." United States v. Powell, 469 U.S. at 65. The reasoning of Powell, we submit, should be controlling. To be sure, when a jury acquits on some counts and fails to reach a verdict on others in the same trial, there need not be inconsistency in the jury's action. However, in that instance, the acquittals can not necessarily determine any fact at issue on the unresolved counts. In short, there are only two logical possibilities in a case like this one -- and in both situations a second trial ought to be permitted. Either the acquitted and unresolved counts do not turn on the same issue, in which case the acquittals provide no basis for an estoppel on the different issues raised by the unresolved counts, or the acquitted and unresolved counts do depend on the same issue of fact, in which case they are irreconcilably inconsistent and the reasoning of Powell should permit a trial on the unresolved counts. /5/ In Ohio v. Johnson, 467 U.S. 493, 500 n.9 (1984), this Court also noted that "where the State has made no effort to prosecute the charges seriatim, the considerations of double jeopardy protection implicit in the application of collateral estoppel are inapplicable." The present case, like Ohio v. Johnson, is one in which the government has made no effort to prosecute the charges seriatim. Rather, the government has been forced to try some of the charges separately only because they were not resolved when all of the charges were pursued together. It follows from Ohio v. Johnson that the principles of collateral estoppel are inapplicable here. See also United States v. Ashley Transfer & Storage Co., 858 F.2d 221, 227 (4th Cir. 1988), cert. denied, 109 S. Ct. 1932 (1989).