In The Courts

First Circuit Interprets Elements of Obstruction of Justice Under 18 U.S.C ' 1505

In United States v. Callipari, 2004 WL 1088746 (1st Cir. May 17, 2004), Defendant Callipari appealed his conviction for his role in a scheme to engage in unauthorized option trades by making use of a closed account at Fidelity Investments. Callipari was convicted by a jury for conspiracy to commit wire fraud, wire fraud, and obstruction of an SEC proceeding.

Among the issues raised on appeal was whether the district court's instruction on obstruction of justice under 18 U.S.C. ' 1505 adequately conveyed that the government must prove an obstructive “nexus” between the defendant's actions and the proceeding. The defendant argued that the district court should have instructed the jury expressly that to be found to “corruptly … ndeavor” to obstruct the “proper administration of the law” under 18 U.S.C. ' 1505, the defendant's conduct must have had “the natural and probable effect” of obstructing the SEC investigation, citing a phrase used in United States v. Aguilar, 515 U.S. 593, 600 (1995) (interpreting the word “corruptly” under 18 U.S.C. ' 1503). The district court's jury instructions had defined the word “endeavor” in part as “includ[ing] conduct which is aimed at influencing, intimidating or impeding the proceedings,” but did not include Aguilar's “natural and probable effect” language.

The court of appeals first questioned whether the defendant had adequately objected to the district court's decision not to include the “natural and probable effect” language, noting that the defendant had not specifically objected to the district's court decision not to include those particular words. However, the panel determined that even if the defendant had preserved the error, any error was harmless. The court of appeals reasoned that the instruction taken as a whole adequately resolved the Supreme Court's basic concern that to be found guilty of obstruction “the [defendant's] act must have a relationship in time, causation, or logic with the proceedings.” Aguilar, 515 U.S. at 599. The court did not conclusively resolve whether a clear “nexus” must be shown in all circumstances, or whether any such “nexus” should be better communicated to the jury as part of the definition of the word “endeavor” or the word “corruptly.”

Tenth Circuit Interprets Exception Under Mandatory Victims Restitution Act

In United States v. Barton, 2004 WL 945117 (10th Cir. May 4, 2004), the court considered 1) whether the district court had erred in declining to order that the defendant pay restitution under the Mandatory Victims Restitution Act (MVRA) after her guilty plea for starting a wild fire that did significant damage to U.S. property; and 2) whether the restitution sought by the government included a proper measure of damages. The MVRA requires that district courts order restitution for certain categories of offenses including offenses against property, as was at issue in Barton. 18 U.S.C. ' 3663. Under the statute, exceptions for restitution orders required by the MVRA exist where a) the number of identifiable victims is so large as to make restitution impracticable; or b) when “determining complex issues of fact related to the … amount of the victim's losses” would unduly complicate or prolong the sentencing process. 18 U.S.C. ' 3663A(c)(3)(A), (B).

In Barton, the probation sentencing report recommended that the district court impose restitution in the amount of approximately $14 million as sought by the government. The defendant did not object to the request for restitution. However, the district court reasoned during the sentencing proceeding that the process of assigning value to a forest was so complex and speculative that the case was uniquely suited to the complexity exception from the MVRA under 18 U.S.C. ' 3663A(c)(3)(B).

The court of appeals reversed the district court's application of the complexity exception and remanded with instructions to order restitution as requested by the government. The panel explained that when the PSR recommends restitution under the MVRA for an “actual recoverable loss” incurred by a victim, and the defendant does not object, no further fact-finding is required. Furthermore, the court of appeals was plainly concerned by statements made by the district court on the record regarding the defendant's inability to pay the large amount of restitution sought by the government, and noted that when the MVRA applies, the court must order restitution regardless of the defendant's economic circumstances.

The court of appeals also approved the government's proposed loss calculation of $14.7 million, which was derived from the Forest Service's estimate of how much it would cost to re-vegetate the forest and prevent erosion in the aftermath of the fire. The court of appeals explained that while the MVRA will not support an award of consequential damages, a restitution order under the MVRA can include “the costs of cleanup or repair of the damaged property.” In a concurrence, one member of the panel expressed doubt about whether such a measure would be appropriate under the language of the MVRA in the absence of an agreement by the defendant.

First Circuit Interprets Elements of Obstruction of Justice Under 18 U.S.C ' 1505

In United States v. Callipari, 2004 WL 1088746 (1st Cir. May 17, 2004), Defendant Callipari appealed his conviction for his role in a scheme to engage in unauthorized option trades by making use of a closed account at Fidelity Investments. Callipari was convicted by a jury for conspiracy to commit wire fraud, wire fraud, and obstruction of an SEC proceeding.

Among the issues raised on appeal was whether the district court's instruction on obstruction of justice under 18 U.S.C. ' 1505 adequately conveyed that the government must prove an obstructive “nexus” between the defendant's actions and the proceeding. The defendant argued that the district court should have instructed the jury expressly that to be found to “corruptly … ndeavor” to obstruct the “proper administration of the law” under 18 U.S.C. ' 1505, the defendant's conduct must have had “the natural and probable effect” of obstructing the SEC investigation, citing a phrase used in United States v. Aguilar , 515 U.S. 593, 600 (1995) (interpreting the word “corruptly” under 18 U.S.C. ' 1503). The district court's jury instructions had defined the word “endeavor” in part as “includ[ing] conduct which is aimed at influencing, intimidating or impeding the proceedings,” but did not include Aguilar's “natural and probable effect” language.

The court of appeals first questioned whether the defendant had adequately objected to the district court's decision not to include the “natural and probable effect” language, noting that the defendant had not specifically objected to the district's court decision not to include those particular words. However, the panel determined that even if the defendant had preserved the error, any error was harmless. The court of appeals reasoned that the instruction taken as a whole adequately resolved the Supreme Court's basic concern that to be found guilty of obstruction “the [defendant's] act must have a relationship in time, causation, or logic with the proceedings.” Aguilar, 515 U.S. at 599. The court did not conclusively resolve whether a clear “nexus” must be shown in all circumstances, or whether any such “nexus” should be better communicated to the jury as part of the definition of the word “endeavor” or the word “corruptly.”

Tenth Circuit Interprets Exception Under Mandatory Victims Restitution Act

In United States v. Barton, 2004 WL 945117 (10th Cir. May 4, 2004), the court considered 1) whether the district court had erred in declining to order that the defendant pay restitution under the Mandatory Victims Restitution Act (MVRA) after her guilty plea for starting a wild fire that did significant damage to U.S. property; and 2) whether the restitution sought by the government included a proper measure of damages. The MVRA requires that district courts order restitution for certain categories of offenses including offenses against property, as was at issue in Barton. 18 U.S.C. ' 3663. Under the statute, exceptions for restitution orders required by the MVRA exist where a) the number of identifiable victims is so large as to make restitution impracticable; or b) when “determining complex issues of fact related to the … amount of the victim's losses” would unduly complicate or prolong the sentencing process. 18 U.S.C. ' 3663A(c)(3)(A), (B).

In Barton, the probation sentencing report recommended that the district court impose restitution in the amount of approximately $14 million as sought by the government. The defendant did not object to the request for restitution. However, the district court reasoned during the sentencing proceeding that the process of assigning value to a forest was so complex and speculative that the case was uniquely suited to the complexity exception from the MVRA under 18 U.S.C. ' 3663A(c)(3)(B).

The court of appeals reversed the district court's application of the complexity exception and remanded with instructions to order restitution as requested by the government. The panel explained that when the PSR recommends restitution under the MVRA for an “actual recoverable loss” incurred by a victim, and the defendant does not object, no further fact-finding is required. Furthermore, the court of appeals was plainly concerned by statements made by the district court on the record regarding the defendant's inability to pay the large amount of restitution sought by the government, and noted that when the MVRA applies, the court must order restitution regardless of the defendant's economic circumstances.

The court of appeals also approved the government's proposed loss calculation of $14.7 million, which was derived from the Forest Service's estimate of how much it would cost to re-vegetate the forest and prevent erosion in the aftermath of the fire. The court of appeals explained that while the MVRA will not support an award of consequential damages, a restitution order under the MVRA can include “the costs of cleanup or repair of the damaged property.” In a concurrence, one member of the panel expressed doubt about whether such a measure would be appropriate under the language of the MVRA in the absence of an agreement by the defendant.