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REVISED - August 5, 1999
IN THE UNITED STATES COURT OF APPEALS
UNITED STATES OF AMERICA,
Plaintiff-Appellee-Cross-Appellant,
v.
LARRY S. BANKSTON; MARIA F. GOODSON,
Defendants-Appellants-Cross-Appellees
CARL W. CLEVELAND; FRED H. GOODSON,
Defendants-Appellants.
_________________________________________________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
MARIA F. GOODSON,
Defendant-Appellant.
ALEXANDROS F. GOODSON; TRUCK STOP GAMING LTD.,
Intervenors-Appellants.
_________________________________________________________________
Appeals from the United States District Court
for the Eastern District of Louisiana
_________________________________________________________________
Before KING, Chief Judge, and REAVLEY and BENAVIDES, CircuitJudges.
BENAVIDES, Circuit Judge:
Larry Bankston ("Bankston"), Fred Goodson, Maria
Goodson, and Carl Cleveland ("Cleveland") appeal from their June27, 1997, convictions and October 15, 1997, sentences for variousoffenses related to criminal activity in the Louisiana videopoker industry. Fred Goodson and Cleveland, along with AlexGoodson, Maria Goodson, and Truck Stop Gaming, Inc. ("TSG,Inc."), additionally appeal the district court's judgment offorfeiture of Truck Stop Gaming, Ltd. ("TSG, Ltd.") and TSG, Inc.as part of the RICO enterprise. The Government cross-appeals,challenging the district court's calculation of both Bankston'sand Maria Goodson's sentences. For the reasons set forth below,we affirm the Appellants' convictions and sentences and theforfeiture of TSG, Ltd. and TSG, Inc.
I. Background
Fred Goodson and his family had been in the truck stopbusiness in Slidell, Louisiana for 20 years. In early 1992, theGoodson family formed TSG, Ltd. and its corporate partner, TSG,Inc., in order to participate in the video poker business attheir Slidell truck stop. Fred Goodson and Carl Cleveland's lawfirm, Cleveland, Barrios, Kingsdorf & Casteix ("CBK&C"), loanedGoodson's adult children, Alex and Maria, the start-up capitalfor TSG, Ltd. (1) With the legal assistance of CBK&C, apartnership in commendam was established. Alex and Maria eachowned 49% of TSG, Ltd. as limited partners. (2) TSG, Inc. owned theremaining 2% as general partner. (3) Fred Goodson managed TSG, Ltd.
CBK&C also helped the Goodsons prepare and submit to theLouisiana State Police applications for an owner/operator'sgaming license for TSG, Ltd. The gaming applications requiredpartnerships seeking a license to identify their partners, tosubmit personal financial statements for all partners, and toaffirm that the listed partners were the sole beneficial owners,that no partner had an arrangement to hold his interest as "anagent, nominee or otherwise," or a present intention to transferany interest in the partnership at a future time. The initialapplication submitted on behalf of TSG, Ltd. identified Maria andAlex Goodson as the limited partners and TSG, Inc. as the generalpartner. The application listed no other persons or entities ashaving any ownership interest in TSG, Ltd. The initial licenseapplication did disclose, however, that Fred Goodson and CBK&Chad loaned Maria and Alex all initial capital. That sameapplication also identified Fred Goodson as general manager ofthe business. TSG, Ltd. submitted renewal applications in 1993,1994, and 1995, which also listed no additional ownershipinterests. (4)
In 1994, as a part of an unrelated federal investigation ofalleged corruption involving Louisiana legislators, the F.B.I.obtained court authorization to conduct electronic surveillanceof the office of Louisiana State Senator Larry Bankston. Theauthorization was based on a series of consensually recordedconversations that took place in September and October 1994between Bankston and Robert Miller, a cooperating witness. According to the FBI, the Bankston-Miller conversations indicatedthat Bankston was engaged in a scheme to extort an interest in acasino proposed by the Jena Choctaw tribe, in exchange for hisinfluence in ensuring government approval of the casino.
During the course of its electronic surveillance--limited tothe interception of communications concerning the alleged JenaChoctaw scheme--the FBI recorded a conversation between Bankstonand Fred Goodson. In that conversation, the two men discussed,in detail, Goodson's truck stop business. Neither man mentionedthe Jena Choctaw scheme. Approximately 20 minutes into theirdiscussion, Goodson broached the subject that would form thebasis for the present multi-party, multi-count indictment. Armedwith the recording of Bankston and Goodson's 44-minuteconversation, the FBI obtained court authorization for electronicsurveillance on Goodson's home and businesses.
On October 4, 1996, the Government charged now formerLouisiana State Senators Benjamin "Sixty" Rayburn and LarryBankston; video poker entrepreneur Fred Goodson; his daughter,Maria Goodson; family attorney, Carl Cleveland; and the family'saccountant, Joe Morgan, with a combination of racketeering,racketeering conspiracy, mail fraud, conducting an illegalgambling business, money laundering, tax conspiracy, falsedeclaration under penalty of perjury, aiding and abetting a falsedeclaration under penalty of perjury, and interstatecommunications in aid of racketeering. (5) Most of the chargesagainst the Goodsons, Cleveland, and Joe Morgan related to theestablishment, licensing, and operation of TSG, Ltd. TheGovernment alleged that the defendants had schemed to defraudstate regulators in obtaining video poker licenses for TSG, Ltd.,and to obtain favorable legislation affecting Louisiana's videopoker industry. Specifically, the Government alleged that thedefendants obtained a gaming license for TSG, Ltd. in 1992 andrenewed in 1993, 1994, and 1995, by fraudulently concealing theidentity of the true owners of the company, Fred Goodson and CarlCleveland. (6) According to the Government, Goodson and Clevelandconcealed their ownership in order to avoid the probing inquiryof the State's suitability assessment.
Trial commenced on May 12, 1997, and lasted six weeks. Following more than seven days of deliberation, the jury returneda mixed verdict, finding four of the defendants--Carl Cleveland,Fred Goodson, Maria Goodson, and Larry Bankston--guilty ofcertain counts. (7) The jury acquitted the remaining twodefendants--Senator Rayburn and Joe Morgan--on all counts.
On October 15, 1997, The district court sentenced the four convicted defendants. Both Cleveland and Fred Goodson receivedterms of imprisonment of 121 months. Maria Goodson received asix-month term of imprisonment to be followed by six months ofhome detention. Bankston received a 41-month term ofimprisonment and a fine of $20,000.
The defendants filed timely notices of appeal as to theirconvictions and sentences. On November 14, 1997, the Governmentfiled a notice of cross-appeal relating to the sentences ofBankston and Maria Goodson.
Following Fred Goodson's and Carl Cleveland's convictionsfor RICO and RICO conspiracy, the Government sought forfeitureof, inter alia , their alleged interests in TSG, Ltd. and TSG,Inc. On August 26, 1997, the district court entered a judgmentordering the forfeiture of TSG, Ltd. and TSG, Inc. The districtcourt noted that the jury's verdict and the evidence in thecriminal trial record proved beyond a reasonable doubt thatGoodson and Cleveland had an interest in TSG, Ltd. and TSG, Inc.and that those entities were part of the RICO enterprise. OnOctober 21, 1997, The district court entered the final order offorfeiture.
On October 31, 1997, Alex and Maria Goodson, as recordowners of TSG, Ltd. and TSG, Inc., filed separate petitions ofintervention in the forfeiture proceedings, asserting theirownership interests in the two companies. On February 4, 1998,the district court conducted an evidentiary hearing on theirpetitions, and on April 15, 1998, the district court denied theirclaims. The district court ruled that Fred Goodson and CarlCleveland were the "true owners" of TSG, Ltd. and TSG, Inc. andthat their ownership interests had been properly forfeited to theGovernment. Alex and Maria Goodson and TSG, Inc. appeal fromthat ruling.
II. Discussion
A. Wiretap Evidence
1. Application Omissions
Fred Goodson and Larry Bankston argue that the districtcourt erred in refusing to suppress the evidence obtained fromthe Bankston wiretap. Both appellants additionally argue thatthe district court erred in denying their request for anevidentiary hearing pursuant to Franks v. Delaware , 438 U.S. 154,98 S. Ct. 2674 (1978).
Before trial, Bankston filed a motion to suppress thewiretap evidence. Fred Goodson, Maria Goodson, and CarlCleveland joined the motion. (8) Bankston contended that theNovember 25, 1994, affidavit completed by Agent Jones in supportof the wiretap application contained fatal omissions andmisrepresentations. His motion described an "exculpatory"conversation between Bankston and Miller that had been omittedfrom the wiretap application and claimed that the FBI told Millerto stop recording after that conversation. Bankston assertedthat the false statements and/or omissions were deliberately orrecklessly made. He accompanied his motion with an offer ofproof including affidavits and sworn testimony.
The district court, after hearing arguments by counsel andreviewing submissions, denied Bankston's request for a Franks evidentiary hearing. The court found that Bankston had failed tomake the requisite showing that the affiant, Agent Jones, hadintentionally misled the District Court and tricked the Courtinto issuing the wiretap authorization and that the omissionswere material such that they negated probable cause.
We review de novo the denial of a Franks v. Delaware evidentiary hearing. See United States v. Dickey , 102 F.3d 157,162 (5th Cir. 1996) (reviewing the denial of a Franks hearing inthe context of a search warrant); United States v. Guerra-Marez ,928 F.2d 665, 671 (5th Cir. 1991) (applying the Franks standardand reviewing de novo the decision of the district court tovalidate a wiretap order). In Franks v. Delaware , the SupremeCourt held that a defendant is entitled to an evidentiary hearingto contest the validity of a search warrant if he makes asubstantial preliminary showing that (1) allegations in asupporting affidavit were a deliberate falsehood or made with areckless disregard for the truth and (2) the remaining portion ofthe affidavit is not sufficient to support a finding of probablecause. See Franks , 438 U.S. 154, 171, 98 S. Ct. 2674, 2684(1978). We have explained that "even if the defendant makes ashowing of deliberate falsity or reckless disregard for the truthby law enforcement officers, he is not entitled to a hearing if,when material that is the subject of the alleged falsity orreckless disregard is set to one side, there remains sufficientcontent in the warrant affidavit to support a finding of probablecause." United States v. Privette , 947 F.2d 1259, 1261 (5th Cir.1991) (quoting Franks , 438 U.S. at 171-72, 98 S. Ct. at2684-85)).
We have applied Franks to instances of omission where, ashere, an affidavit falls squarely within the dictates of 18U.S.C. § 2518. United States v. Tomblin , 46 F.3d 1369, 1377 (5thCir. 1995) (noting that "[o]missions or misrepresentations canconstitute improper government behavior"). In such cases ofomitted information, the logic of Privette holds firm: adefendant is not entitled to an evidentiary hearing if a wiretapauthorization would lawfully have issued after correcting thesupporting affidavit by supplying any material omissions. Therefore, in determining whether Fred Goodson and Bankston wereimproperly denied an evidentiary hearing on their motion tosuppress, we need only consider Agent Jones's affidavit--corrected to contain the allegedly exculpatory conversation--anddetermine whether that reconstructed affidavit satisfies thewiretap requirements contained in 18 U.S.C. § 2518.
If the Jones affidavit were revised to include the omittedinformation, the affidavit would describe conversationssuggesting that between September 19 and October 31, 1994, thecooperating witness, Miller, and Bankston had discussed a schemeto exchange Bankston's influence for an ownership interest in theJena Choctaw casino. In particular, the affidavit would revealthat Bankston had met with Jena Choctaw Chief Jackson severaltimes, had agreed to provide the Jena Choctaw tribe with"political cover," and had been telephoned frequently by ChiefJackson. The affidavit would also state that, in a sixthconversation with Miller on October 31, 1994, Bankston haddeclared that he was "fini" and that his present intention was"to stay away from . . . this entire thing." The affidavit wouldadditionally include statements made by Bankston to Miller at theconclusion of that October 31, 1994, conversation expressingBankston's "willing[ness] to proceed" with the project if"something could be worked out to his satisfaction."
a. Probable Cause An application for a wiretap must demonstrate probable causeto believe that the target has committed, is committing, or willcommit a crime, as well as "probable cause for belief thatparticular communications concerning that offense will beobtained through such interception." 18 U.S.C. § 2518(3)(a)-(b). We evaluate probable cause utilizing a totality-of-the-circumstances test. See Dickey , 102 F.3d at 162. In light ofMiller's multiple statements to the FBI that Bankston wasnegotiating a deal in which he would extort an undisclosedinterest in the Jena Choctaw casino, the multiple tapedconversations containing statements that corroborated this tipfrom Miller, and the ambiguity of any exculpatory statements inthe October 31 conversation, we find that the reconstructedaffidavit would establish sufficient probable cause to authorizeelectronic surveillance on November 25. (9)
b. Necessity
Bankston and Goodson also argue that the application failedto meet the dictates of 18 U.S.C. § 2518(3)(c), which requiresthe Government to show and the issuing judge to find that "normalinvestigative procedures have been tried and have failed orreasonably appear to be unlikely to succeed if tried or to be toodangerous." 18 U.S.C. § 2518(3)(c). The Government "need notprove exhaustion of every conceivable option before a wiretaporder may issue." Guerra-Marez , 928 F.2d at 671.
Here, the FBI included in its 21-page wiretap application adetailed account of the investigative techniques it had employedin making its case against Bankston. Agent Jones stated in hisNovember 25, 1994, affidavit that the use of electronicsurveillance was necessary because Bankston had made it clear toMiller that he would not include him in any potentiallyincriminating conversations with third parties. (10)
We have affirmed wiretap orders based upon similaraffidavits. See, e.g. , United States v. Krout , 66 F.3d 1420,1425 (5th Cir. 1995) (explaining that the informants orundercover agents could not infiltrate the conspiracy at highenough levels); United States v. Collins , 972 F.2d 1385, 1412(5th Cir. 1992) (noting that consensual monitoring would beimpossible, as it was unlikely that the informant would bepresent during the illegal activity). Agent Jones's affidavitprovides sufficient information to meet the requirements of§ 2518(3)(c). The omission of the October 31 conversation doesnot impact our finding of "necessity," nor does the fact that theFBI failed to inform the issuing court that Miller had been toldto cease recording his conversations with Bankston. Regardlessof whether Miller continued to record his conversations withBankston, Miller was unlikely to be present during the talksbetween Bankston and his Louisiana contacts. Therefore, a needfor electronic surveillance existed.
2. Minimization
Bankston and Fred Goodson contest the district court'sfactual finding that the FBI properly minimized the interceptionof communications outside the scope of the wiretap order. Inparticular, Bankston and Goodson dispute the interception oftheir December 1994 conversation, which included no mention ofthe Jena Choctaw tribe casino scheme and did not broach thesubject of criminal activity until approximately twenty minutesinto the conversation. We review determinations of thereasonableness of minimization efforts for clear error. See United States v. Wilson , 77 F.3d 105, 112 (5th Cir. 1996).
Section 2518 implements "the constitutional mandate . . .that wiretapping must be conducted with particularity," UnitedStates v. Daly , 535 F.2d 434, 440 (8th Cir. 1976) (citationomitted), by requiring electronic surveillance to "be conductedin such a way as to minimize the interception of communicationsnot otherwise subject to interception." 18 U.S.C. § 2518(5). The Government's efforts to minimize nonrelevant conversationsmust be "objectively reasonable" in light of the circumstancesconfronting the interceptor. Scott v. United States , 436 U.S.128, 136-143, 98 S. Ct. 1717, 1723-27 (1978); see also UnitedStates v. Hyde , 574 F.2d 856, 869 (5th Cir. 1978) (explainingthat the minimization standard applies a test of reasonablenessto the particular facts of each case) (citing Daly , 535 F.2d at441). Neither the Fourth Amendment nor 18 U.S.C. § 2515,however, requires government agents to avoid intercepting allnonrelevant conversations when conducting a wiretapinvestigation. See Scott , 436 U.S. at 137-140, 98 S. Ct. 1723-24.
We consider three factors in deciding the objectivereasonableness of efforts to minimize: (1) the "nature and scopeof the criminal enterprise under investigation;" (2) the"Government's reasonable inferences of the character of aconversation from the parties to it;" and (3) the "extent ofjudicial supervision." Hyde , 574 F.2d at 869. Here, consistentwith our precedent, the district court found that the FBI'sefforts to minimize were reasonable in light of the fact that (1)the criminal investigation involved "a potentially wide-rangingconspiracy in which the coconspirators had not been identified;"(2) Goodson reported to Bankston "specific details of Goodson'struck stop business that one would not normally provide to onewho was not a participant in the endeavor;" and (3) the issuingcourt had determined, based on regularly submitted ten-dayreports, including the results of interceptions, that theGovernment was acting in a proper manner.
Bankston reurges statistical analyses he presented to thedistrict court to question the Government's minimization efforts. Bankston's reliance on statistics is unpersuasive. First, thedistrict court rightly pointed out that Bankston's statistics,even if taken as accurate, showed minimization efforts that werereasonable. Second, the Supreme Court has discouraged the use ofstatistics, explaining that "blind reliance on the percentage ofnonpertinent calls intercepted is not a sure guide to the correctanswer." Scott , 436 U.S. at 140, 98 S. Ct. at 1724.
Goodson argues that the criminal nature of the December 1994conversation could not have been immediately apparent because thesubject of criminal activity was not broached until approximatelytwenty minutes into the conversation and that, by this point,agents should have already ceased monitoring the conversation. Goodson analogizes an agent's monitoring of communicationsconcerning crimes not the subject of a wiretap order to anofficer's seizure of contraband pursuant to the plain viewdoctrine. Goodson cites United States v. Johnson , 539 F.2d 181(D.C. Cir. 1976), in support of his novel plain view analogy. Inparticular, Goodson points to the following language from Johnson : "Like an officer who sees contraband in plain view froma vantage point where he has a right to be, one properlyoverhearing unexpected villainy need not ignore such evidence." See id . at 188. Goodson then attempts to graft onto the Scott objective reasonableness inquiry the plain view doctrine'sprobable cause requirement. He urges us to find that an agent monitoring "windfall" communications must, at the time of themonitoring, have probable cause to believe that the communicationconcerns criminal activity.
Caselaw does not support such a probable cause requirement. We are unaware of any case in which an appellate court employed aprobable cause analysis to determine whether to suppress non-minimized, "other criminal activity" communications. Moreover,requiring probable cause that a windfall communication itselfconcerns criminal activity is inconsistent with the objectivereasonableness inquiry. Adding a probable cause analysis wouldrequire that monitoring agents be more than reasonable in theirefforts to minimize. Goodson's approach would require thatagents be gifted with "prescience" and the ability to "'know inadvance what direction the conversation will take.'" UnitedStates v. Cox , 462 F.2d 1293, 1301 (8th Cir. 1972) (quoting United States v. LaGorga , 336 F.Supp. 190, 196 (W.D. Penn.1971)). Consistent with Scott , we conclude that the districtcourt did not commit clear error in determining that the FBI'sminimization efforts were objectively reasonable.
B. Choice of Counsel
Fred Goodson argues that the district court erred indenying, on grounds of conflict, his motion to associate MichaelFawer as additional counsel. (11) Goodson complains that thedistrict court's ruling constitutes error in light of both hisand Rayburn's knowing waiver of any conflict of interest and thesworn statements averring unawareness of any actual or potentialconflict of interest submitted by Michele Fournet (counsel forGoodson), Michael Fawer, and Arthur Lemann.
We review a district court's finding of a conflict ofinterest for abuse of discretion. See United States v. Sotelo ,97 F.3d 782, 791 (5th Cir. 1996). Although a district court must"recognize a presumption in favor of petitioner's counsel ofchoice," "that presumption may be overcome not only by ademonstration of actual conflict but by a showing of a seriouspotential for conflict." Wheat v. United States , 486 U.S. 153,164, 108 S. Ct. 1692, 1700 (1988). This is true even where adefendant expresses a desire to waive the potential conflict. See Sotelo , 97 F.3d at 791.
The crux of Goodson's argument is that the district court'sveto of his choice of counsel without finding any "specialcircumstances" beyond the fact of multiple representation amountsto a per se rule that multiple representation would never bepermissible. Goodson contends that such a per se rulecontravenes Supreme Court and Fifth Circuit precedent that hasrecognized the advantages of common defenses. Goodsonadditionally argues that the four potential areas of conflictelucidated by the district court exist in every case of multiplerepresentation and that appellate courts have regularly foundthat conflicts do not arise in those contexts. (12)
Goodson's argument is flawed. First, the district court inno way established a per se rule against joint representation. The district court applied the Sixth Amendment and the SupremeCourt's Wheat analysis to the facts developed at the hearingbefore the magistrate judge. On the basis of those facts, Thedistrict court concluded that institutional interests andinterests of the defendant warranted a denial of Goodson's motionto associate Fawer. Second, neither the Supreme Court nor thisCircuit has adopted a "special circumstances" test fordeterminations of conflict in joint representation. Although theSupreme Court's 1980 Cuyler decision does include "specialcircumstances" language, it does so only in discussing when astate court, sua sponte, needs to "initiate inquiries into thepropriety of multiple representation." Cuyler v. Sullivan , 446U.S. 335, 346, 100 S. Ct. 1708, 1717 (1980). Third, the casesupon which Goodson relies to show that joint representation ispermissible despite possible conflicts of interest involve claimsof ineffective assistance of counsel. In those cases, the courtsemployed a retrospective, record-based inquiry in order todetermine whether an attorney was operating under a conflict ofinterest. Their findings of "no conflict" are of limitedusefulness here, where the district court predicated its denialof the motion to associate counsel on a finding of serious potential conflict. Goodson fails to appreciate the distinctionbetween a retrospective inquiry of actual conflict and aprospective inquiry into serious potential conflict.
The evaluation of the facts and circumstances of each caseunder the Wheat standard "must be left primarily to the informedjudgment of the trial court." Wheat , 486 U.S. at 164, 108 S. Ct.at 1700. The district court made specific findings as to fourpotential areas of serious conflict. We find that the districtcourt did not abuse its discretion in denying Goodson's motion toassociate Fawer.
C. Louisiana Video Poker License as "Property"
Maria Goodson and Attorney Cleveland assert that a Louisianavideo poker license is not "property" for purposes of the mailfraud statute, 18 U.S.C. § 1341. Less than two years ago, wereached a contrary conclusion in United States v. Salvatore , 110F.3d 1131 (5th Cir. 1997). Bound by our prior decision, we donot revisit this issue.
D. Fair Notice
Maria Goodson and Cleveland argue that, at the time of theirmail fraud offenses, they did not have fair notice that the actscharged were crimes. They claim that they did not have notice(1) that unissued video poker licenses constituted property underthe mail fraud statute, and (2) that certain information neededto be reported to the Louisiana State Police on the video pokerlicense applications. We find these arguments devoid of merit.
"The test of whether a statute is unconstitutionally vagueso as to deprive fair notice is whether it provides a person ofordinary intelligence a reasonable opportunity to know what isproscribed." United States v. Brewer , 835 F.2d 550, 553 (5thCir. 1987). With regard to the first claim, we note that, at thetime of the charged conduct, a circuit split existed as towhether or not unissued licenses constituted property forpurposes of the mail fraud statute. Although we had not yetruled on the issue, at least two circuits had found that unissuedlicenses are property for mail fraud purposes. Accordingly, weconclude that, assuming each to be of ordinary intelligence,Maria Goodson and Cleveland had reasonable opportunity to knowthat their conduct could be proscribed by the mail fraud statute. Cf. United States v. Brumley , 116 F.3d 728, 732 (5th Cir. 1997)(en banc) ("Constructions of a statute announced by the SupremeCourt or lower courts can give citizens fair warning, even if thecases are not fundamentally similar." (quotation marks omitted)).
We are equally unpersuaded by Maria Goodson and Cleveland'sclaim that they did not have fair notice that the Louisiana StatePolice required disclosure of indefinite and contingent plans toacquire an equity interest in a video poker licensee at someunspecified time in the future, or an ownership or other interestin a licensee of less than five percent. The "Affidavit of FullDisclosure" that accompanied the initial and renewal applicationsexplicitly required that video poker applicants be the "solebeneficial owner of any direct or indirect interest in or to alicensed gaming operation . . . except such as having beenreported in writing to the Louisiana State Police." Theaffidavit required that applicants attest that they had (1) "noagreements or understandings with any other person and no presentintent to hold as agent, nominee, associate, third party orotherwise any direct or indirect interest whatsoever in or to thelicensed gaming operation" and (2) "no agreements orunderstandings with any other person and no present intent totransfer at any future time any interest whatsoever . . . ." Wefind that this language provided a person of ordinaryintelligence adequate notice that ownership interests in anyamount must be disclosed to the Louisiana State Police. Similarly, we find the "agreement or understanding" languagesufficiently broad to include indefinite and contingent plans toacquire equity interests at some unspecified future time. Wetherefore conclude that Maria Goodson and Cleveland had fairnotice.
E. State Law "Ownership" Jury Instructions
Cleveland, Fred Goodson, and Maria Goodson claim that thedistrict court erred in refusing to charge the jury concerningcertain state-law concepts of ownership. The district courtrefused to give the requested instructions because, inter alia ,the state-law concepts did "not go to the guilt or innocence ofthe defendants." We review a district court's refusal to providea requested instruction for abuse of discretion. See UnitedStates v. Pennington , 20 F.3d 593, 599 (5th Cir. 1994). Althoughwe have recognized the importance of instructing on legalconcepts significant to a theory of defense, see, e.g. , UnitedStates v. Cavin , 39 F.3d 1299, 1310 (5th Cir. 1994) (reversing aconviction because the court failed to instruct on state ethicalrules relevant to an attorney's theory of defense), we have neverrequired that a district court instruct a jury on peripheralconcepts that do not directly implicate an essential element ofthe charged offense. Cleveland argues that the ownership instructions weredirectly relevant to both his guilt or innocence and that of Fredand Maria Goodson. According to Cleveland, the critical issue tobe decided by the jury was whether TSG, Ltd.'s licenseapplications contained "fraudulent representations or omissions,"that is, whether in keeping with the Government's theory of thecase, the mailed video poker license applications failed todisclose hidden interests of Fred Goodson and Carl Cleveland inTSG, Ltd., as owners, option holders, or pledge recipients. (13) Cleveland contends that the jury could not fairly decide whoowned TSG, Ltd. without knowing whether Goodson or Cleveland hadenforceable ownership interests under state law.
We disagree. The jury was instructed to find whether thevideo poker license applications were fraudulent in so far asaffidavits submitted by Maria and Alex Goodson failed to mentionany (1) agreements or understandings with any other persons tohold their interests as a nominee, agent or otherwise, and/or(2) agreements or understandings with any other person and apresent intent to transfer at any future time any interestwhatsoever in TSG, Ltd. Whether the "agreements orunderstandings" were enforceable under state law is not relevantto the question of whether Maria and Alex Goodson failed todisclose such arrangements to the Louisiana State Police. Accordingly, we find that the district court did not abuse itsdiscretion in refusing to charge the jury as requested byAppellants. See Pennington , 20 F.3d at 600 (explaining thatreversal is warranted only if the requested instruction (1) was asubstantially correct statement of the law, (2) was notsubstantially covered in the charge as a whole, and (3) concernedan important issue in the trial).
Fred Goodson, Maria Goodson, and Cleveland also challengethe district court's supplemental instruction to the jury. Inparticular, they contend that the district court erred in givinga supplemental instruction that ignored state-law ownershipprinciples and embraced the Government's theory that ownershipcould be determined simply from informal discussions.
After deliberations began, the jury sought clarification ofthree issues: (1) the legal definition of a partnership incommendam , (2) how much control is given up by partners, and (3)who appoints a general manager. In response, the district courtprovided the jury a general description of a partnership incommendam and the authority of the general and limited partners. The court concluded its supplemental instruction by charging thejury, over defense objections: "It is for you to determine basedon all the evidence in the case what the parties' arrangementswere as to control, ownership and management of Truck StopGaming, Ltd."
We find no reversible error.
A trial judge enjoys wide latitude in deciding how torespond to a question from the jury. "When evaluatingthe adequacy of supplemental jury instructions, we askwhether the court's answer was reasonably responsive tothe jury's question and whether the original andsupplemental instructions as a whole allowed the juryto understand the issue presented to it."
United States v. Mann , 161 F.3d 840, 864 (5th Cir. 1998)(footnotes omitted) (quoting United States v. Stevens , 38 F.3d167, 170 (5th Cir. 1994)). In this case, the court'ssupplemental instruction was reasonably responsive to the jury'squestions. Moreover, as mentioned above, satisfaction of statelaw requirements for ownership transfers was not a critical issueto be decided by the jury.
F. Travel Act Jury Instructions
Bankston was convicted on two Travel Act counts, whichincorporated Louisiana's public bribery statute. He argues thathis conviction ought to be reversed because the district courtabused its discretion in failing to submit to the jury proposedcharges on gift, attempted bribery, and circumstantial evidence.
First, Bankston asserts that he was entitled to aninstruction that it is legal for a legislator to receive a gift. Such an instruction, however, was unnecessary given the districtcourt's charge that the Government had to prove beyond areasonable doubt that Bankston, as the receiver of the bribe,acted "with the specific intent to be influenced in hisconduct . . . as a Louisiana senator." Whether Bankston couldlawfully receive a gift was wholly irrelevant to the jury'sinquiry. Because the district court's Travel Act instruction wasclear, detailed, and substantially covered the charge suggestedby Bankston, the court's refusal to instruct on gift does notamount to error.
Second, Bankston, complains that the district court refusedto instruct the jury on the lesser included offense of attemptedbribery under Louisiana law. He argues that, in Louisiana, suchan instruction is not discretionary and that, had the jury foundonly attempted bribery, the elements of the Travel Act chargewould not have been met. In federal prosecutions for violationsof the Travel Act, we have never required that district courtsinstruct on lesser included offenses. Accordingly, we findBankston's argument to be devoid of merit.
Third, Bankston argues that the district court committedreversible error by failing to instruct on Louisiana's"circumstantial evidence rule." Because we have squarelyrejected efforts to graft non-substantive points of state lawinto RICO charges, Bankston's claim fails. See, e.g. , UnitedStates v. Brown , 555 F.2d 407, 418 n.22 (5th Cir. 1977)(explaining that "'the reference to state law in the federalstatute is for the purpose of defining the conduct prohibited'and is not meant to incorporate the state statute of limitationsor procedural rules" (quoting United States v. Revel , 493 F.2d 1,3 (5th Cir. 1974))).
G. Witness Testimony
Cleveland, Fred Goodson, and Maria Goodson claim that theGovernment elicited improper witness testimony from two lawenforcement officials, FBI Special Agent Gross and State PoliceLieutenant Blackwelder. They launch four attacks on Gross andBlackwelder's testimony: (1) that both witnesses testified tolegal conclusions, (2) that both witnesses gave testimony in theform of opinion, (3) that both witnesses testified as to"ultimate issue[s] of fact," and (4) that Gross's testimonyexceeded his limited "summary" capacity. Evidentiary rulingsare reviewed for abuse of discretion. See General Electric Co.v. Joiner , ___ U.S. ___, ___, 118 S. Ct. 512, 517 (1997).
We find that the district court did not abuse its disretionin permitting the challenged testimony. Because neither Grossnor Blackwelder was designated as an expert witness, most of thecaselaw that Cleveland cites for the proposition that a witnesscannot testify in the form of an opinion is inapplicable. Unlikeexpert witnesses, lay persons are allowed more leeway under theFederal Rules in testifying in the form of opinions. See Fed. R.Evid. 701. Lay persons are explicitly allowed to testify in theform of opinion or inference on "ultimate issue[s] to be decidedby the trier of fact." Fed. R. Evid. 704. Additionally,witnesses can testify in more than one capacity. See UnitedStates v. Castillo , 77 F.3d 1480, 1499 (5th Cir. 1996) (notingthat a summary witness could testify in multiple capacities). Accordingly, Special Agent Gross could have testified as a layfact witness as well as a summary witness. Having reviewed bothAgent Gross's and Lieutenant Blackwelder's testimony, we find noreversible error.H. Magazine Article Admission
Fred Goodson, Carl Cleveland, and Bankston challenge thedistrict court's admission of a magazine article titled "Lies,Bribes and Videotape," found in the FBI's search of FredGoodson's office. The district court admitted the article duringredirect examination of FBI Special Agent Gross and instructedthe jury that the article was being admitted not for the truth ofthe matter asserted, but solely on the issue of the state of mindof Fred Goodson, i.e., to contradict his assertions that helacked knowledge and sophistication about politics and the typesof transactions at issue. Evidentiary rulings are accordedconsiderable deference on appeal; "error may not be predicatedupon a ruling which admits or excludes evidence unless asubstantial right of the party is affected." Fed. R. Evid.103(a); see United States v. Brito , 136 F.3d 397, 412 (5th Cir.1998).
Fred Goodson and Cleveland contest the admissibility of thearticle both as to relevance and as to prejudicial effect. Evenwere the article both irrelevant and prejudicial, however, itsadmission did not affect a substantial right of either Goodson,Cleveland, or Bankston. First, the district court did not allowintroduction of the article by the Government until redirectexamination. Second, the district court permitted only "narrowclarifying" references to the article in light of the defense'sintroduction, on cross examination, of other documents etc. thathad been found in the same folder as the "Lies, Bribes and VideoTape" article. Third, the Government's redirect regarding thedisputed article constituted less than four pages of transcript. Fourth, on recross, the defense had the opportunity to questionAgent Gross in detail about the subject matter of the article andelicited from him representations that the investigationdescribed in the article in no way involved "anybody in thisroom."
For these reasons, we find that the admission of the "Lies,Bribes and Video Tape" article did not affect a substantial rightof any appellant.
I . Prosecutor's Closing Remarks
All appellants claim that in his rebuttal argument theprosecutor made improper and inflammatory remarks, inviting thejury to convict the defendants in order to "make a change" and to"start taking back [their] state." Appellants argue that thedistrict court's subsequent instruction failed to cure the taintof the improper closing and that reversal is thereforerequired. (14)
A criminal defendant bears a substantial burden whenattempting to demonstrate that improper prosecutorial commentsconstitute reversible error. "'A criminal conviction is not tobe lightly overturned on the basis of a prosecutor's commentsstanding alone.'" United States v. Lowenberg , 853 F.2d 295, 302(5th Cir. 1988) (quoting United States v. Young , 470 U.S. 1, 11,105 S. Ct. 1038, 1044 (1985)). Improper prosecutorial commentsrequire reversal only if the comments substantially affected thedefendant's right to a fair trial. See United States v. Murrah ,888 F.2d 24, 27 (5th Cir. 1989). In evaluating the extent towhich prosecutorial comments affected a defendant's right to afair trial, three factors are considered: the magnitude of theprejudicial effect of the remarks, the efficacy of any cautionaryinstruction, and the strength of the evidence of the defendant'sguilt. See United States v. Casel , 995 F.2d 1299, 1308 (5th Cir.1993).
Here, the inflammatory remarks, to which defense counselobjected at trial, came at the end of the prosecutor's rebuttalargument. The improper prosecutorial comments responded toimproper arguments made by counsel for Rayburn. Any prejudicialeffect inhering to the Goodsons, Bankston, and/or Cleveland, itseems, would have been substantially less than that attaching toRayburn. Rayburn's acquittal therefore suggests that the jurywas not influenced by the improper comments. (15)
With regard to the efficacy of the district court'sinstruction, the court more than once instructed the jury todisregard the improper arguments. The language the court adoptedwhen instructing the jury for the second time was in partborrowed from the words of Bankston's attorney. We findsufficiently curative both the district court's repeatedinstruction to disregard the improper argument as well as itscaution to the jury that lawyer argument was not evidence.
Finally, as to the strength of the evidence of guilt, ourreview of the trial record in its entirety reveals that theevidence presented by the Government was sufficient to supporteach of the convictions against each of the appellants. Thus, weconclude that the prosecutorial comments did not substantiallyaffect the Goodsons', Cleveland's, or Bankston's respectiverights to a fair trial.
J. Sufficiency of the Evidence
Fred Goodson, Maria Goodson, and Larry Bankston contest thesufficiency of the evidence to support their respectiveconvictions. In evaluating the sufficiency of the evidence onappeal, we consider the evidence in the light most favorable tothe Government, drawing all reasonable inferences in support ofthe jury's verdict. See United States v. Lopez , 74 F.3d 575, 577(5th Cir. 1996). The evidence is sufficient if a rational trierof fact could have found the essential elements of the crimebeyond a reasonable doubt. See Jackson v. Virginia , 443 U.S.307, 319, 99 S. Ct. 2781, 2789, 61 L.Ed.2d 560 (1979); UnitedStates v. Gaytan , 74 F.3d 545, 555 (5th Cir. 1996). The evidenceneed not exclude every reasonable hypothesis of innocence or bewholly inconsistent with every conclusion except that of guilt,and the jury is free to choose among reasonable constructions ofthe evidence. See Lopez , 74 F.3d at 577.
We address the arguments raised by each appellant in turn.
1. Fred Goodson
Fred Goodson argues that the evidence is insufficient tosupport his two-count conviction for mail fraud because it failsto establish that he had the specific intent to commit fraud.
To establish a mail fraud violation under 18 U.S.C. § 1341,the Government must demonstrate (1) a scheme to defraud, (2) theuse of mails to execute that scheme, and (3) the defendant'sspecific intent to commit fraud. See United States v. Tencer ,107 F.3d 1120, 1125 (5th Cir. 1997). "Intent to defraud requiresan intent to (1) deceive, and (2) cause some harm to result fromthe deceit." United States v. Jimenez , 77 F.3d 95, 97 (5th Cir.1996). A defendant has the intent to defraud if he actsknowingly with the specific intent to deceive for the purpose ofcausing pecuniary "loss to another or bringing about somefinancial gain to himself." United States v. Blocker , 104 F.3d720, 732 (5th Cir. 1997).
According to Goodson, the mail fraud charges rested on twopremises: that he and Cleveland were the "true owners" of TruckStop Gaming, and that they hid that fact from regulators in orderto avoid a suitability investigation of their finances. Goodson,on appeal, contests the sufficiency of the evidence only as itrelates to the second premise--Goodson and Cleveland's avoidanceof a suitability investigation.
This second premise, however, does not constitute anessential element of mail fraud. Instead, the desire to avoid asuitability investigation relates merely to motive, representingthe Government's theory as to why Cleveland and Goodson committedthe fraud. Because we have never required the Government toprove nor the jury to find motive beyond a reasonable doubt, FredGoodson's argument fails.
2. Maria Goodson
Maria Goodson challenges the sufficiency of the evidence forher mail fraud conviction. She claims that the Government failedto establish that she knowingly, and with specific intent todefraud, participated in a scheme to hide either (1) the trueownership interests of her father and Carl Cleveland in TSG, Ltd.or (2) the 4.99% ownership interest held by Benny Rayburn, Jr.
Because the jury need only have found Maria Goodson guiltybeyond a reasonable doubt on one of the two potential schemesunderlying her mail fraud conviction, we address only theevidence concerning Maria Goodson's specific intent to concealthe 4.99% ownership interest transferred to Benny Rayburn. TheGovernment presented the jury with a document dated August 1,1994, signed by Maria Goodson in which she agreed to "assign,sell, convey and deliver unto Benjamin B. Rayburn, Jr. a 4.99%interest out of a 100% interest in the Truck Stop Gaming, Ltd.partnership." Evidence showed that the transfer of this interestwas not reported to the State Police in TSG, Ltd.'s 1995 licenserenewal application, even though such minority purchases wererequired to be reported.
Maria Goodson's awareness of the transfer of ownership isindicated by two pieces of evidence. First, she signed theconveyance itself. Second, in a recorded conversation betweenMaria Goodson and family accountant Joe Morgan, she describedBAJ, LLC, the limited liability company to which Rayburnultimately transferred his 4.99% interest, as having become a4.9% partner. Accordingly, we find that the jury had sufficientevidence to convict Maria Goodson for mail fraud.
3. Larry Bankston
Larry Bankston contests the sufficiency of the evidence asto his conviction on two counts of violating the Travel Act, 18U.S.C. § 1952 (1997). The first count involved an interstatetelephone call on June 20, 1995, from Fred Goodson to MeyerRealty to set up what was alleged to have been a bribe in theform of a "sham" rental of Bankston and his wife's Gulf Shorescondominium. The second involved Fred Goodson's use of aninterstate commercial carrier on June 22, 1995, to forward a$1,555.01 check to Meyer Realty as payment for the condominiumrental.
The essential elements for a Travel Act conviction are:
(1) travel or use of the mail or any facility ininterstate or foreign commerce;
(2) with the specific intent to promote, manage,establish, or carry on--or distribute the proceeds of--unlawful activity; and
(3) knowing and willful commission of an act infurtherance of that intent subsequent to the act oftravel or use of the mail or facility of interstate orforeign commerce. See United States v. Logan , 949 F.2d 1372, 1380-81 (5th Cir.1991). Under Louisiana law, an elected official is guilty ofpublic bribery if he accepts anything of apparent present orprospective value with the specific intent to be influenced inhis employment, position, or duty. See La. Rev. Stat. Ann.§ 14:118 (West Supp. 1999).
Bankston attacks the sufficiency of the evidence on threeseparate grounds: (1) insufficient proof that he had therequisite intent to be influenced in his official conduct by thecondominium rental; (2) insufficient proof that the condominiumrental amounted to anything more than a legal gift; and (3)insufficient proof that he committed an overt act in furtheranceof the alleged bribery after the interstate communications atissue.
The evidence at trial does not support Bankston's claim. The evidence showed that in February 1995 Bankston and his wifediscussed establishing an arrangement whereby a proposed "renter"would pay to use their Alabama condominium despite the renter'strue intention not to do so. Records from Meyer Realty showedthat Fred Goodson rented the Bankstons' condominium and paid forthe rental by check. Testimony from FBI agents revealed that theBankston family, not Goodson, used the condominium during therental week in question. Finally, the jury heard manyintercepted conversations between Bankston and others in whichBankston indicated that he would use the power of his office toprotect Goodson's video poker interests during the legislativesession. Based upon this evidence, we affirm Bankston'sconviction on the two Travel Act counts.
K. Sentencing
1. Maria Goodsona. Section 5K2.7 Upward Departure
Maria Goodson complains that the district court improperlyenhanced her offense level six points for a "significantdisruption of governmental function," pursuant to U.S. SentencingGuideline section 5K2.7. (16) She argues that the disruptionidentified by the district court is not the type of "significant"disruption that the Commission contemplated when draftingsection 5K2.7 and that, although the submission to a state agencyof one false application may disrupt the agency's function, itonly does so in an "ordinary" sense. We disagree.
A district court has "wide discretion" in imposing asection 5K2.7 upward departure. United States v. Hatch , 926 F.2d387, 397 (5th Cir. 1991) (explaining that the Fifth Circuit hasrepeatedly granted district courts "wide discretion to decidewhether aggravating factors exist to support an upwarddeparture"). The appropriateness of a departure turns on theimportance of the government function impacted, not the degree ofthe impact. Cf. Hatch , 926 F.2d 387 (affirming a 5K2.7 upwarddeparture based on the defendant, a former Louisiana sheriff,authorizing payments, representing a portion of the sheriffoffice's operating budget, to a purported jail constructionproject consultant); United States v. Garcia , 900 F.2d 45 (5thCir. 1990) (holding that an upward departure was warranted andreasonable where postal inspectors recovered 248 first-classletters from the possession of a defendant postal employee). Here, when Maria Goodson submitted TSG, Ltd.'s false 1995 renewalapplication, failing to disclose any ownership interest held byFred Goodson, Carl Cleveland, or Benny Rayburn, she effectivelyshielded those men from suitability analysis. In doing so, MariaGoodson thwarted Louisiana's video poker regulatory and licensingscheme designed to investigate the honesty and integrity ofprospective license holders. Based upon the importance of thatregulatory scheme, we find that the district court did not abuseits discretion in imposing a section 5K2.7 upward departure.
b. Loss Calculation
The Government, in its cross-appeal, contends that thedistrict court miscalculated Maria Goodson's offense level. Maria Goodson was convicted of one count of mail fraud inconnection with TSG, Ltd.'s 1995 license renewal application. The district court sentenced her in accordance with section 2F1.1of the Sentencing Guidelines. That section specifies a baseoffense level of six for fraud and provides for incrementalincreases in the offense level depending on, inter alia , theamount of loss caused by the fraud. See U.S. SentencingGuidelines Manual § 2F1.1 (1997). In calculating Maria Goodson'soffense level, the court found that the State of Louisiana hadsuffered no "actual or intended monetizable loss . . . by virtueof Ms. Goodson's having fraudulently obtained the license." Accordingly, the district court did not increase Ms. Goodson'sbase offense level for any loss.
The Government asserts that the district court erred infinding that the State of Louisiana suffered no loss and infailing to use defendant's gain as an alternative method ofvaluation. The Government asserts that, in keeping withsection 2F1.1's Application Note 8, Maria Goodson's base offenselevel should have been increased eleven levels based upon TSG,Ltd.'s $1.4 million annual gain. See U.S. Sentencing GuidelinesManual § 2F1.1 App. Note 8 (1997); see also United States v.Smithson , 49 F.3d 138, 144 (5th Cir. 1995) (recognizing thatunder section 2F1.1, Application Note 8, a sentencing court mayutilize the offender's gain as an alternative valuation methodfor assessing the amount of loss when the loss is difficult todetermine).
In its sentencing cross-appeal, the Government urges use ofTSG, Ltd.'s $1.4 million annual revenues as the appropriatevaluation of Maria Goodson's gain, yet throughout trial and allsubsequent forfeiture proceedings, the Government argued thatMaria Goodson, in fact, was not the "true owner" of TSG, Ltd. The verdict of the jury as well as the district court's judgmentof forfeiture confirmed the success of the Government's hiddenownership theory of prosecution. Accordingly, we consider FredGoodson and Carl Cleveland the true owners of TSG, Ltd. and agreethat TSG, Ltd.'s $1.4 million gain could not be attributed toMaria Goodson, a non-owner. Therefore, the district court didnot err in refusing to use TSG, Ltd.'s $1.4 million annualrevenues as an alternative valuation method for loss pursuant tosection 2F1.1.
2. Bankston
a. Eleven-level Enhancement
Bankston challenges as unsupported by the evidence thedistrict court's eleven-level increase in his base offense levelunder section 2C1.1(b)(2)(A). This Court examines a districtcourt's factual findings only for clear error and affords greatdeference to the court's application of the Guidelines to thosefacts. See United States v. Snell , 152 F.3d 345, 346 (5th Cir.1998).
The district court, relying on the Presentence Report("PSR") as well as facts elicited at trial and the forfeitureproceeding, based Bankston's offense level enhancement on itscalculation of the "expected benefit to be received by theindividual paying the bribe," namely Fred Goodson. (17) Thedistrict court found that the benefit to be received by Goodsonin return for the bribe was protection for a two-year period fromlegislation that would otherwise interfere with the continuedoperation of his video poker business. The district court,recognizing that evidence at trial supported a finding thatGoodson held a 50% interest in TSG, Ltd., determined that theexpected benefit to be received by Goodson was one-half theprofits to TSG, Ltd. for a two-year period, or $1.4 million. Wefind the district court's "Reasons for Sentencing of Larry S.Bankston" to be thorough and well-reasoned. Bankston's assertionof error is meritless.
b. Expected Benefit
The Government, on cross-appeal, argues that the districtcourt erroneously reduced the expected benefit to be received forthe bribe to the ownership percentage in TSG, Ltd. of the briber,Fred Goodson. Specifically, the Government contends that thedistrict court erred in limiting "benefit" as used in section2C1.1(b)(2)(A) to "personal benefit," failing to consider theactual benefit sought, the continued unfettered operation of theRICO enterprise. The issue raised by the Government is one offirst impression for this Circuit.
It is well established that sentencing courts are bound by"commentary in the Guidelines Manual that interprets or explainsa guideline . . . unless it violates the Constitution or afederal statute, or is inconsistent with, or [is] a plainlyerroneous reading of, that guideline." See Stinson v. UnitedStates , 508 U.S. 36, 38, 113 S. Ct. 1913, 1915 (1993). TheCommentary to section 2C1.1 states that for deterrent purposes,the punishment should be commensurate with the "gain to the payeror the recipient of the bribe," whichever is higher. Ascontemplated by the Commission, the "gain to the payer" is the"value of the benefit received or to be received." Thus, theexpected benefit to be received as referenced in section 2C1.1 isthe benefit to the payer of the bribe.
Resolution of the Government's cross-appeal, therefore,turns on the identity of the "payer." If Fred Goodson, in hisindividual capacity, bribed Bankston, then the district courtproperly limited "expected benefit" to an amount equivalent toGoodson's personal benefit. If, on the other hand, Fred Goodson,as agent for TSG, Ltd., bribed Bankston, then the Governmentwould be correct that the expected benefit ought to be measuredby the profits to the RICO enterprise.
The issue of the identity of the payer is a question of factbest resolved by the district court. Because the evidencepresented at trial could support either the individual-capacityor RICO-enterprise theory of bribery, we cannot conclude that thedistrict court committed clear error in determining that thepersonal benefit to Goodson was the appropriate valuation of theexpected benefit to be received.
L. RICO Forfeiture
A person who violates RICO must forfeit any interestacquired or maintained in violation of the statute, anyenterprise established or conducted in violation of RICO, and anyproperty constituting or derived from proceeds obtained inviolation of RICO. See 18 U.S.C. § 1963(a). Here, theGovernment sought, and the district court ordered, the forfeitureof both Fred Goodson's and Carl Cleveland's interests in TSG,Ltd., in an amount equal to the proceeds received by TSG, Ltd.between July 1994 and August 1995. Fred Goodson, (18) CarlCleveland, Maria Goodson, Alex Goodson, and TSG, Inc. appeal,albeit on different grounds, the district court's judgment offorfeiture.
With regard to Fred Goodson's and Carl Cleveland's claim, wenote that the district court ordered that the proceeds of TSG,Ltd. be forfeited pursuant to 18 U.S.C. § 1963(a)(1) and (a)(2),as well as (a)(3). Goodson, though, attacks only two of thesethree grounds. He raises no error as to the forfeiture ofproceeds under § 1963(a)(3). Given the identity of proceedsforfeited pursuant to each theory, we affirm the district court'sAugust 1997, forfeiture order.
Maria Goodson, Alex Goodson, and TSG, Inc. argue that thedistrict court erred in failing properly to apply Louisiana lawto the question of ownership of TSG, Ltd. and TSG, Inc. Theyassert that no state law exists that would support the districtcourt's ruling that Fred Goodson and Carl Cleveland were the"true owners" of TSG, Ltd.
Section 1963(l)(6)(A) provides petitioners the opportunityto recoup forfeited property if they can establish by apreponderance of the evidence either (1) that they have a currentlegal right, title, or interest in the property and that theright, title, or interest was vested in them instead of thedefendant at the time of the commission of the RICO offenses; or(2) that they have a current legal right, title, or interest inthe property and that the right, title, or interest was superiorto the right, title, or interest of the defendant at the time ofthe commission of the RICO offenses. See 18 U.S.C.§ 1963(l)(6)(A). We review the district court's findings of factunder the clearly erroneous standard of review and the questionof whether those facts constitute legally proper forfeiture denovo. See United States v. Marmolejo , 89 F.3d 1185, 1197 (5thCir. 1996).
Maria and Alex Goodson assert that they are the recordowners of TSG, Ltd. and its corporate general partner, TSG, Inc. They point to TSG, Ltd.'s Agreement of Partnership, which theyboth signed and which was filed with the Louisiana Secretary ofState, as evidence of their current and superior interest in theforfeited companies. They urge us to find that the districtcourt improperly disregarded their partnership agreement when itconcluded that Fred Goodson and Carl Cleveland were the trueowners of TSG, Ltd.
We agree with the district court's decision not to allow anobviously false partnership agreement to be used to provide thebasis for a claim of interest under § 1963(l)(6)(A). As thedistrict court indicated, the jury's verdict in the instant caseestablished that Fred Goodson, Maria Goodson, and Carl Cleveland perpetrated a fraud on the State of Louisiana. The jurynecessarily found that Fred Goodson and Carl Cleveland were thetrue owners of TSG, Ltd. and that Maria Goodson and her brotherAlex were straw people used in the sham to hide the trueownership of TSG, Ltd.
Testimony at the October 31, 1997 evidentiary hearing todetermine the interests of Alex and Maria Goodson bolsters ourresolve not to allow them to assert ownership in the TSG entitiesbased upon their "sham" partnership agreement. With regard toAlex Goodson, the district court found that his hearing testimonyrevealed that he did not consider himself to have any realinterest in either TSG, Inc. or TSG, Ltd. Alex described hisinvolvement with the companies as someone executing an ownershipdocument as an agent of the company, in the capacity of anominee. His testimony revealed that he had no understanding ofthe "contribution" that was attributed to him in the partnershipagreement for TSG, Ltd. As to Maria Goodson, the court foundthat her testimony likewise "fell short of establishing that sheand her brother . . . were the true owners of the Truck StopGaming entities." In particular, Maria Goodson told the courtat the forfeiture hearing that at the time the companies wereformed and incorporated, she did not associate a company being"in her name" with ownership. Equally problematic was aconversation with Carl Cleveland in which she requested 1% of thenet profits of TSG, Ltd. If she had in fact been the owner ofthe TSG entities, she would not have needed to ask Carl Clevelandfor an interest in a percentage of the companies' profits.
In light of the above evidence, the district court properlydisregarded the "sham" partnership agreement. Consistent withthe detailed analysis provided in the district court's April 1998order, we conclude that Alex Goodson, Maria Goodson, and TSG,Inc. failed to demonstrate by a preponderance of the evidence alegal right, title, or interest in TSG, Ltd. Their appeal of thedistrict court's April 1998 judgment of forfeiture, therefore,fails.
III. Conclusion
Appellants raise an abundance of evidentiary, statutory, andconstitutional challenges, none of which warrant reversal. Forthe reasons stated above, we affirm each Appellant's judgment ofconviction and sentence as well as the judgment of forfeiture.
AFFIRMED.
1. 1 Those loans were secured by promissory notes, payable on demand, with 10% annualinterest.
2. 2 TSG, Ltd.'s Agreement of Partnership was signed by Alex and Maria and filed with theLouisiana Secretary of State.
3. 3 Alex and Maria owned equal shares of TSG, Inc.
4. 4 In August 1994, Maria Goodson executed a "Sale of Partnership Interest and PledgeAgreement," which conveyed to Benny Rayburn, the adult son of co-defendant Benjamin
"Sixty" Rayburn, a 4.99% interest in TSG, Ltd. Rayburn's 4.99% interest was not disclosed inany renewal application.
5. 5 The Government did not indict Fred Goodson's son, AlexGoodson, but subsequently named him an unindicted co-conspirator. Alex Goodson joins the instant action as an intervenor in theforfeiture proceedings. 6 Alex and Maria Goodson were from inception and remain therecord owners of TSG, Ltd. and its corporate general partner,TSG, Inc.
7. 7 Cleveland was convicted on one count of RICO, one count of RICO conspiracy, twocounts of mail fraud (in connection with the 1994 and 1995 TSG, Ltd. gaming license renewalapplications), four counts of money laundering, one count of tax conspiracy, and one count ofaiding and abetting the filing of a false tax return. Like Cleveland, Fred Goodson was convictedof one count of RICO, one count of RICO conspiracy, and two counts of mail fraud (inconnection with the 1994 and 1995 TSG, Ltd. gaming license renewal applications). The juryadditionally convicted Goodson of five counts of money laundering and three counts of the useof interstate communications in aid of state bribery. His daughter, Maria, was found guilty ofone count of mail fraud in connection with TSG, Ltd.'s 1995 license renewal application. Former Senator Bankston was found guilty of two counts of committing and/or aiding andabetting interstate communications in aid of racketeering. 8 On appeal, Maria Goodson and Carl Cleveland cross-incorporate Fred Goodson andBankston's suppression arguments. However, neither Maria nor Cleveland meets our standingrequirements as articulated in United States v. Scasino , 513 F.2d 47 (5th Cir. 1975). Because weconclude that the district court did not err in admitting the wiretap evidence, we need notconsider Cleveland's argument that he has standing despite Scasino .
9. 9 Our finding of probable cause includes a finding that"particular communications" concerning that offense would havebeen "obtained through such interception." See 18 U.S.C.§ 2518(3)(b). The October 31, 1994, conversation between Millerand Bankston in no way undermines probable cause to believe thatBankston would have committed the Jena Choctaw scheme and thatparticular communications concerning the scheme would occureither in Bankston's office or on his phone.
10. 10 In his talks with Miller, Bankston had alluded toconversations that he would be having with his stockholdernominee as well as other people in Louisiana whom he had tosatisfy out of his five-percent hidden ownership interest in theJena Choctaw casino. 11 Michael Fawer represented Goodson's co-defendant, former Louisiana State SenatorRayburn, through the investigative stage of this case. Fawer assisted Rayburn in responding tothree grand jury subpoenas, had discussions with the Government regarding the nature of thecharges being considered against Rayburn, and appeared in court on behalf of Rayburn at theinitial appearance, as well as later to argue motions.
On November 5, 1996, Fawer withdrew as counsel for Rayburn, and Arthur A. Lemann,III replaced Fawer as counsel for Rayburn. On February 24, 1997, Goodson moved the districtcourt to associate Fawer as additional counsel for him.
12. 12 The district court outlined four areas of potential conflict: (1) because a plea byGoodson would be adverse to Rayburn's interests, Fawer would have a conflict in advisingGoodson regarding plea negotiations; (2) evidence could develop at trial that pitted onedefendant's interest against the other's; (3) Goodson's and Rayburn's interests could diverge atsentencing, over issues such as their respective roles in the offense; and (4) because Fawerreceived confidences from Rayburn, Fawer's cross-examination of Rayburn would beproblematic.
13. 13 The district court instructed the jury that an essential element of mail fraud--distinctfrom specific intent--is that a defendant knowingly created a scheme to defraud. Such a scheme,according to the district court's instructions, must involve false or fraudulent representations oromission reasonably calculated to deceive persons of ordinary prudence and comprehension.
14. 14 The district court, both at trial and in its opinion on defendants' motions for new trial,recognized the impropriety of the prosecutor's "make a change" closing. At the conclusion ofthe prosecutor's argument, the court instructed the jury to disregard the prosecutor's improperremarks:
I would like to instruct you again that this case is not about the general conditionsin the state of Louisiana. To the extent that Mr. Manger made reference to that inhis closing argument, you are instructed to disregard the comments about thegeneral condition of Louisiana state government as it relates to education or otherissues. 15 Appellants argue that Rayburn's "sympathy" acquittal is of little significance becausehe was 80 years old at the time of the trial. Rayburn, however, was not the only defendantacquitted of charges. The fact that each appellant was found not guilty on some counts suggeststhat the jury reached its verdict free of the taint of the prosecutor's improper remarks. 16 Section 5K2.7 provides in part:
If the defendant's conduct resulted in a significant disruption of agovernmental function, the court may increase the sentence abovethe authorized guideline range to reflect the nature and extent ofthe disruption and the importance of the governmental functionaffected. Departure from the guidelines ordinarily would not bejustified when the offense of conviction is an offense such asbribery or obstruction of justice; in such cases interference with agovernmental function is inherent in the offense, and unless thecircumstances are unusual the guidelines will reflect theappropriate punishment for such interference.
17. 17 The Guidelines assign punishment at the greatest of threecalculations: (1) the value of the bribe; (2) the value of thebenefit to be received; or (3) if the offense involved paymentfor the purpose of influencing an elected official, an eight-level increase. See U.S. Sentencing Guidelines Manual § 2C1.1(1997).
18. 18 Carl Cleveland incorporates Fred Goodson's forfeiturearguments.