MARTIN BLITSTEIN, PETITIONER V. UNITED STATES OF AMERICA No. 90-6125 In The Supreme Court Of The United States October Term, 1990 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Eleventh Circuit Brief For The United States In Opposition OPINION BELOW The summary affirmance of the court of appeals (Pet. App. A) is unreported, but the judgment is noted at 911 F.2d 1142 (Table). JURISDICTION The judgment of the court of appeals was entered on June 7, 1990. A petition for rehearing, with suggestion for rehearing en banc, was denied on July 31, 1990 (Pet. App. B). The petition for a writ of certiorari was filed on October 29, 1990. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether the trial court's instruction on withdrawal from a conspiracy placed the burden of persuasion as to that defense on petitioner. STATEMENT On December 13, 1988, following a jury trial in the Southern District of Florida, petitioner was convicted on one count of conspiracy to defraud the United States by impeding, impairing, obstructing and defeating the lawful governmental functions of the Internal Revenue Service (IRS), in violation of 18 U.S.C. 371, and one count of filing a false return, in violation of 26 U.S.C. 7206(1). On March 10, 1989, petitioner was sentenced to concurrent prison terms of five years on the conspiracy count and three years on the tax fraud count. 1. The evidence at trial established the facts concerning petitioner's conspiracy. /1/ a. During 1977, petitioner agreed with co-defendant Lee A. Pecora and unindicted co-conspirator Tony Hall to launder money obtained through dealing in drugs. Petitioner had a discussion with Pecora and co-defendant Judith Wellburn, who lived with Pecora, about Pecora's investing in some condominiums that petitioner would be buying in Vail, Colorado. It was agreed that Pecora and Wellburn would provide cash for down payments and would be partners with petitioner in units purchased. As petitioner was aware, the cash would come from sales of cocaine. Although Pecora and Wellburn were to have a 50% interest in the units purchased and petitioner was to have the same interest, it was agreed that the names of Pecora and Wellburn would not appear on any documentation. Instead, the units would be titled in petitioner's name, and he would claim any tax deductions arising from the ownership and operation of the units; as Wellburn testified, she and Pecora "couldn't be showing any income that Lee (Pecora) was making." Gov't C.A. Br. 3-4. Pursuant to this agreement, during 1977 and 1978, Pecora made payments to petitioner whenever petitioner asked for money to buy an available condominium unit. The payments in 1977 totalled about $100,000. Pecora never received any receipts from petitioner, and there was no written agreement concerning the investments. The units petitioner purchased, which were in a building called "Scorpio," were titled in the names of petitioner and his wife. Gov't C.A. Br. 4-5. b. Using funds supplied by Pecora, petitioner also purchased a residence in Vail for Pecora and Wellburn. Petitioner and his wife were shown as the purchasers on the deed to the property. After the purchase, petitioner and his wife executed a deed conveying the property to Pecora and Wellburn. Although that deed was executed on December 16, 1977, it was not recorded until June 19, 1979. Wellburn testified that the deed was not recorded right away because "(w)e didn't have any place to show where the money came from." Pecora and Wellburn ultimately filed the deed to protect their interest in the property, because petitioner and his wife were going through divorce proceedings. Gov't C.A. Br. 5. c. Petitioner also helped Pecora make a concealed purchase of a bar in Vail. Around the end of November 1977, petitioner told Pecora and Wellburn about the bar, called the Beer Cellar. Pecora provided petitioner cash for the down payment on the bar and for the closing costs of the purchase. The bar was purchased in the name of a corporation called Vail Mine Shaft, whose nominal principals were petitioner, an attorney who practiced law with petitioner in Vail, and Wellburn. Neither petitioner nor the other attorney put any money into the acquisition of the bar. Following the acquisition, the bar was renovated with money supplied by Pecora. Pecora would give cash to petitioner, who in turn would pay the persons doing the renovation work. Gov't C.A. Br. 5. In the latter part of 1978, Wellburn and petitioner entered into a sham transaction in which Wellburn purported to buy petitioner's stock in the corporation that owned the bar. Wellburn told co-defendant Paul Myers, who was associated with petitioner in various business ventures, including the Vail condominium transactions, that petitioner had gotten into financial trouble and that she was therefore afraid that the bar would be unable to get a liquor license if petitioner appeared to be an owner. Upon a request by Wellburn, Myers obtained petitioner's endorsement on a check drawn by Wellburn in the amount of $22,500 and petitioner's signature on an agreement for the sale of his stock, and returned the check and agreement to Wellburn. The check was never negotiated at any bank, and no cash actually changed hands. The check and the agreement were photocopied, and the photocopies were presented to the Colorado liquor board to show that petitioner was no longer a principal in the bar. When Myers asked petitioner about the transaction, petitioner admitted that he had not invested any money in the bar, but had simply run money supplied by Pecora and Wellburn through a law office account. Gov't C.A. Br. 6. /2/ d. In the fall of 1976, Tony Hall had several conversations with petitioner concerning investing in condominiums. Hall told petitioner he had money from marijuana sales to invest and that he wanted to show some type of income. As a result, Hall invested in the Vail condominiums. In 1977, Hall brought between $40,000 and $70,000 in cash to a closing on a condominium. Petitioner falsely told Myers that the money represented a loan from Hall. Title to a unit that was later specifically designated as Hall's (unit 203) was in the names of petitioner and his wife; Hall's name did not appear on any documents of title. Gov't C.A. Br. 7. In December 1977, petitioner undertook to provide Hall some security for his "loan" by executing a trade name affidavit showing Hall as a partner in a partnership called Scorpio 203 partners. At trial, Myers explained that, in Colorado, trade name affidavits were recorded to meet a requirement that the names of partners in a partnership holding title to property be set out someplace. But unit 203 was not transferred to a partnership. Gov't C.A. Br. 7-8. e. During May or June 1978, the secret investors in the Vail condominium units, who had no documentation showing their interests in the units, became concerned because petitioner was having marital problems and drug use problems. Accordingly, petitioner, Pecora, Hall, Myers, another individual, and possibly Wellburn attended a meeting in July 1978. As a result of the meeting, at petitioner's instruction, Myers prepared partnership agreements and trade name affidavits for partnerships to which apartments were purportedly conveyed by petitioner and his wife. These documents showed Wellburn, Pecora, petitioner, and his wife as members of the partnerships. The trade name affidavits naming the secret investors were not recorded, however. Myers testified that petitioner told him, "you'll keep them, not recorded, they're just window dressing, anyway." Trade name affidavits showing petitioner, his wife, and Myers as partners were recorded. Gov't C.A. Br. 8. In February 1980, petitioner sold Hall's unit to David Zinn for $94,900. /3/ Petitioner and a friend then delivered $83,000 in cash to Hall in Houston, Texas. Hall, using a false name, signed a receipt provided by petitioner. It falsely indicated that the money had been received from a Panamanian corporation. Gov't C.A. Br. 8-9. As a result of the conspiracy, gains of over $306,000 on Vail condominium transactions were not reported to the IRS. Gov't C.A. Br. 9. 2. Petitioner, who represented himself at trial, did not testify. His primary theory of defense was that his prosecution and conviction on the conspiracy count were barred by the statute of limitations. Petitioner's position was that he withdrew before 1980, more than six years before his indictment and therefore beyond the applicable statute of limitations. Gov't C.A. Br. 17. The court's instructions on the withdrawal defense included the following statement (Pet. App. C2): "For a defendant to be deemed to have withdrawn, there must be evidence showing withdrawal by some affirmative action." Petitioner did not object to this statement. 3. On appeal, petitioner contended, inter alia, that the trial court's instruction on withdrawal from a conspiracy improperly shifted the burden of persuasion on that issue to him. The court of appeals summarily affirmed. Pet. App. A. ARGUMENT Petitioner contends (Pet. 6-10) that the trial court's instruction on withdrawal from a conspiracy unconstitutionally relieved the government of the burden of disproving petitioner's claimed withdrawal from the charged conspiracy. Petitioner further contends (id. at 10-12) that, if certain decisions of this Court on which he relies /4/ do not firmly establish the proper charge to the jury on the defense of withdrawal from a conspiracy, this Court should grant review to settle the issue. Petitioner's claim of error lacks merit. It is well established that, if a co-conspirator withdraws from a conspiracy, the statute of limitations begins to run as to him at the time of his withdrawal. Hyde v. United States, 225 U.S. 347, 369 (1912). Thus, withdrawal is a defense to a charge of conspiracy to defraud the United States by impeding and impairing the IRS if the withdrawal takes place more than six years before the return of the indictment. /5/ The district court so instructed the jury. Pet. App. C1-C3. Petitioner nevertheless challenges the following statement included in the instruction (Pet. App. C2): "For a defendant to be deemed to have withdrawn, there must be evidence showing withdrawal by some affirmative action." Petitioner's claim does not warrant review. First, petitioner did not object to the instruction at trial. In light of this failure to object, appellate review is appropriate only if there was plain error (Fed. R. Crim. P. 30, 52(b)) -- a burden petitioner does not and cannot meet. /6/ Second, petitioner misconstrues the jury instructions. The challenged statement did not remove the burden of persuasion regarding withdrawal from the government. It did not say that petitioner had to prove anything. It merely indicated that there had to be evidence of withdrawal. Thus, the only burden on petitioner was the unquestionably proper burden of going forward with evidence. See United States v. Read, 658 F.2d 1225, 1236 (7th Cir. 1981) (holding that burden of going forward, but not burden of persuasion, may be imposed on defendant). Furthermore, in another part of its charge, the court also instructed the jury that defendant "has no burden to prove anything." R30-1791. The court also instructed that, as to both crimes charged in the indictment, "the Government must prove beyond a reasonable doubt that the offense was committed during the period provided for by the Statute of Limitations * * *." Pet. App. C1. The court pointed out that "the defense of withdrawal from the conspiracy * * * again presents the issue of the Statute of Limitations." Id. at C1-C2. Thus, taken in their entirety, as they must be, Cupp v. Naughten, 414 U.S. 141, 146-147 (1973), the instructions did not relieve the government of the burden of disproving petitioner's withdrawal defense. Accordingly, petitioner's claim of error was properly rejected by the court of appeals, and there is no need in this case to resolve the question whether the burden of persuasion as to withdrawal from a conspiracy properly rests with the government or the defense. /7/ CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General SHIRLEY D. PETERSON Assistant Attorney General ROBERT E. LINDSAY ALAN HECHTKOPF Attorneys JANUARY 1991 /1/ Petitioner does not challange his false return conviction. The gist of that count was that petitioner, a Florida attorney engaged in the practice of criminal law, failed to report legal fees totalling $234,735 paid by clients in drug cases. Petitioner received fees in a variety of ways and forms, including cash and cocaine. Gov't C.A. Br. 9-15. /2/ Petitioner also schemed to create the illusion that a portion of Pecora's drug trafficking income was legitimate. Wellburn and Pecora provided cash to Songbird, Inc., a corporation through which petitioner and Myers managed the Vail condominiums and which employed Wellburn. The money was then paid back to them characterized as salaries. Gov't C.A. Br. 6-7. /3/ The structure of the transaction was designed to evade a condominium association right of first refusal applicable to any proposed sale of a unit to a person who did not already own a unit in the condominium. Gov't C.A. Br. 8-9 n.3. /4/ Hyde v. United States, 225 U.S. 347 (1912); In re Winship, 397 U.S. 358 (1970); Mullaney v. Wilbur, 421 U.S. 684 (1975). /5/ 26 U.S.C. 6531(1) provides a six-year limitation period for revenue offenses "involving the defrauding or attempting to defraud the United States or any agency thereof, whether by conspiracy or not, and in any manner." /6/ In the court of appeals, petitioner attempted to escape the consequences of his failure to object by asserting that an objection would have been futile under Eleventh Circuit precedent. Pet. C.A. Br. 31 n.7. Petitioner's attempted justification is plainly insufficient to overcome the contemporaneous objection rule. Indeed, in contrast to that justification, petitioner now relies on an Eleventh Circuit precedent, decided well before his trial, in support of his claim. See Pet. 8, 11-12 (relying on United States v. Finestone, 816 F.2d 583, cert. denied, 484 U.S. 948 (1987)). /7/ Because the jury instructions did not impose the burden of persuasion on petitioner, petitioner's claim (Pet. 7-8) of a conflict with United States v. Read, supra, and United States v. West, 877 F.2d 281 (4th Cir.), cert, denied, 110 S. Ct. 377 (1989) is incorrect. Indeed, petitioner maintains that the court of appeals has previously "lined up with Read (without citing it)" (Pet. 12; see also id. at 8), but claims that the summary affirmance in this case conflicts with that prior court of appeals decision (ibid.). Even if petitioner were correct in his characterization of the jury instructions in this case (which he is not), his claim of an intra-circuit conflict would not provide a basis for this Court's review. Wisniewski v. United States, 353 U.S. 901, 902 (1957). Petitioner is also incorrect in his characterization (Pet. 9) of the facts concerning the evidence of withdrawal. The evidence extensively established petitioner's failure to withdraw from, and continuing participation in, the conspiracy. Gov't C.A. Br. 31-40.