UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-7204
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
DAVID HUNTER MAUNEY, III,
Defendant - Appellant.
Appeal from the United States District Court for the Middle
District of North Carolina, at Durham. William L. Osteen, District
Judge. (CR-97-251; CA-97-251-1-1)
Argued: March 16, 2005 Decided: April 20, 2005
Before LUTTIG, WILLIAMS, and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: William King Hoyt, Winston-Salem, North Carolina, for
Appellant. Douglas Cannon, Assistant United States Attorney,
OFFICE OF THE UNITED STATES ATTORNEY, Greensboro, North Carolina,
for Appellee. ON BRIEF: Anna Mills Wagoner, United States
Attorney, Robert M. Hamilton, Assistant United States Attorney,
Greensboro, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
David Mauney appeals from the denial of his 28 U.S.C.A. § 2255
(West Supp. 2004) motion, which alleged that his appellate counsel
rendered constitutionally ineffective assistance by failing to
argue that an intervening Supreme Court decision rendered the
indictment and jury instructions in his case defective. Because
Mauney was not prejudiced by the alleged failing of his appellate
counsel, we affirm.
I.
The underlying criminal charges against Mauney arose out of
his employment as the head of cotton and yarn purchasing for Sara
Lee Knit Products, Inc. (Sara Lee). As part of his
responsibilities, Mauney was charged with procuring cotton from
Sara Lee’s vendors at the price most advantageous to Sara Lee.
Unbeknownst to Sara Lee, Mauney received at least $285,759, more
than double his annual salary, from these vendors between October
11, 1992 and August 8, 1994.1
Sara Lee required all of its executives to file annual
disclosure statements to help Sara Lee identify and address
conflicts of interest. On his disclosure form, Mauney represented
1
The evidence presented at sentencing supported the district
court’s finding that Mauney actually received more than $1,000,000
in kickbacks during his tenure as the head of cotton purchasing for
Sara Lee. Nonetheless, the indictment alleged that Mauney received
$285,759 in kickbacks.
2
that he had received no payments in excess of two hundred dollars
from any of Sara Lee’s suppliers, and he disavowed having any
interest in or being affiliated with “any vendor, purchaser or
competitor” of Sara Lee.(J.A. at 75.)
On October 27, 1997, Mauney was indicted for mail fraud in
violation of 18 U.S.C.A. §§ 1341, 1346 (West 2000 & Supp. 2004),
wire fraud in violation of 18 U.S.C.A. §§ 1343, 1346 (West 2000 &
Supp. 2004), money laundering in violation of 18 U.S.C.A. § 1957
(West 2000),2 and conspiracy to commit fraud and money laundering
in violation of 18 U.S.C.A. § 371 (West 2000). The indictment
alleged that Mauney had perpetrated a scheme to defraud Sara Lee of
its money, property and its right to the honest services of Mauney
by virtue of his misrepresentations on Sara Lee’s disclosure form.
The indictment did not allege, however, that Mauney’s
misrepresentations were material.
At his trial, Mauney did not deny that he received large
payments from Sara Lee’s vendors, but testified that the payments
were “consulting fees” for services that he provided to the vendors
on nights and weekends. Mauney argued that the evidence showed
that he had no intent to defraud Sara Lee when he made his false
disclosure statements because the payments he received did not harm
Sara Lee. Instead, Mauney argued, he had always procured cotton at
2
Mauney used several shell corporations and straw men so that
his activities would remain undetected.
3
the lowest possible price and had made millions of dollars in
profits for Sara Lee. In contrast, the Government argued that, as
the indictment alleged, Mauney had forced vendors to pay him
kickbacks as a quid pro quo for the award of cotton contracts.
The district court instructed the jury, in part, as follows:
[A] scheme to defraud includes any scheme to deprive
another of money, property, or of the intangible right to
honest services by means of false or fraudulent
pretenses, representations or promises.
A representation may be false when it constitutes a
half truth, or effectively conceals a material fact,
provided it is made with intent to defraud.
(J.A. at 563.) The jury convicted Mauney on all counts on July 24,
1998. On May 21, 1999, the district court sentenced Mauney to
seventy-eight months of imprisonment. The district court entered
its judgment of conviction on June 10, 1999.
On that same day, the Supreme Court issued its opinion in
Neder v. United States, 527 U.S. 1, 25 (1999), which held that
materiality is an element of the federal crimes of mail, wire and
bank fraud. Id. at 25. Prior to Neder, the Government was not
required to prove materiality as an element of mail and wire fraud
in this circuit. See, e.g., United States v. ReBrook, 58 F.3d 961,
966 (4th Cir. 1995).
Believing that Neder significantly raised his chances of
prevailing on appeal, Mauney notified his attorney of the decision.
Despite this notification, Mauney’s counsel failed to read Neder
before filing his opening brief on appeal. Indeed, Mauney’s
4
counsel did not raise Neder in a written filing with this court
until he filed a motion to file a rehearing petition out of time,
after we had already affirmed Mauney’s conviction and sentence.
Mauney then filed a § 2255 motion, alleging, inter alia, that
his attorney rendered constitutionally ineffective assistance by
failing to argue on appeal that Mauney’s indictment and jury
instructions were defective in light of Neder. After holding an
evidentiary hearing, a magistrate judge recommended that the
district court deny Mauney’s motion. The district court adopted
the magistrate judge’s report and recommendation. We granted
Mauney a certificate of appealability, and we have jurisdiction
under 28 U.S.C.A. § 2253 (West Supp. 2004). When reviewing a
district court’s judgment on a § 2255 motion, we review factual
findings for clear error and legal conclusions de novo. United
States v. Cheek, 94 F.3d 136, 140 (4th Cir. 1996).
II.
To establish a claim for ineffective assistance of counsel, a
defendant must show, first, that his counsel’s performance was
deficient and, second, that the deficiency prejudiced him.
Strickland v. Washington, 466 U.S. 668, 687 (1984). Under
Strickland’s “performance” prong, the defendant must demonstrate
that his counsel’s performance “fell below an objective standard of
reasonableness” determined by comparison to “prevailing
5
professional norms.” Id. at 688. In addition, the defendant must
show under Strickland’s “prejudice” prong that “there is a
reasonable probability that, but for counsel’s unprofessional
errors, the result of the proceeding would have been different.”
Id. at 694. If the defendant conclusively fails to demonstrate
sufficient prejudice from certain acts or omissions, the court need
not decide whether counsel’s performance was, in fact, deficient
under Strickland. See id. at 697.
The only claim Mauney raises in this appeal is that his
appellate counsel was ineffective for failing to argue that his
indictment and jury instructions were defective under Neder. Thus,
Mauney must show that his appellate counsel’s failure to raise
Neder was objectively unreasonable3 and that, but for his counsel’s
deficient performance, there is a reasonable probability that his
appeal would have succeeded. Because Mauney did not object to
either the jury instructions or his indictment in the district
court, Mauney must show that there is a reasonable probability
that, had his attorney made those challenges on appeal, we would
have found reversible plain error.
Under plain error review, which is authorized by Fed.R.Crim.P.
52(b) (West Supp. 2004), federal appellate courts have only “a
3
Because we conclude that Mauney has conclusively failed to
show that he was prejudiced by his counsel’s alleged failing, we
need not decide whether Mauney’s counsel was objectively
unreasonable when he failed to raise Neder on direct appeal. See
Strickland v. Washington, 466 U.S. 668, 694 (1984).
6
limited power to correct errors that were forfeited because [they
were] not timely raised in [the] district court.” United States v.
Olano, 507 U.S. 725, 731 (1993) (citing Fed.R.Crim.P. 52(b)). An
appellate court may not correct an error the defendant failed to
raise in the district court unless there is: “(1) error, (2) that
is plain, and (3) that affects substantial rights.” United States
v. Cotton, 535 U.S. 625, 631 (2002) (internal quotation marks
omitted). “If all three conditions are met, an appellate court may
then exercise its discretion to notice a forfeited error, but only
if (4) the error seriously affects the fairness, integrity, or
public reputation of judicial proceedings.” Id. (internal quotation
marks omitted).
An indictment that fails to charge an element of the offense
of conviction does not seriously affect the fairness, integrity, or
public reputation of judicial proceedings if there is
“overwhelming” and “essentially uncontroverted” evidence of the
missing element. Id. at 633 (quoting Johnson v. United States, 520
U.S. 461, 470 (1997)). Similarly, when the district court fails to
charge the jury on an element of the offense of conviction, we will
not notice the error if the evidence would “permit no other
conclusion” and the defendant’s conviction “was inevitable” under
the correct jury instruction. United States v. Cedelle, 89 F.3d
181, 186 (4th Cir. 1996); see Johnson, 520 U.S. at 470.
7
To determine whether Mauney was prejudiced by his appellate
counsel’s failure, we first must determine whether the challenged
indictment and jury instructions were plainly erroneous. In Neder,
the Supreme Court held that “materiality is an element of the
federal mail fraud, wire fraud, and bank fraud statutes.” 527 U.S.
at 4. Thus, to be guilty of federal mail fraud, wire fraud, or
bank fraud, a defendant must have “misrepresent[ed] or conceal[ed]
[a] material fact.” Id. at 22. A fact is material “if it has a
natural tendency to influence or is capable of influencing” the
intended victim. Id. at 16 (alteration and internal quotation
marks omitted).
In this case, Mauney was alleged to have falsely represented
to Sara Lee that he was not receiving payments from Sara Lee’s
vendors as part of his scheme to defraud Sara Lee. Thus, under
Neder, Mauney could not be found guilty of mail fraud or wire fraud
unless the fact that he was receiving substantial payments from
Sara Lee’s cotton vendors was material. Accordingly, the district
court’s failure to instruct the jury on materiality and the
indictment’s failure to allege materiality were plain errors.4
4
Of course, given the state of the law at the time of Mauney’s
trial, we do not fault the district court or trial counsel for
failing to recognize these errors. Nonetheless, because Neder
issued while Mauney’s case was still pending on direct review, we
would have applied it in Mauney’s case. See Griffith v. Kentucky,
479 U.S. 314 (1987); Johnson v. United States, 520 U.S. 461, 468
(1997) (holding that if “law at the time of trial was settled and
clearly contrary to the law at the time of appeal” a district court
ruling contrary to the law at the time of appeal is a plain error).
8
Nonetheless, if the evidence of the materiality of Mauney’s
misrepresentation was “overwhelming” and “essentially
uncontroverted,” we would not have noticed the plain errors in
Mauney’s indictment and jury instructions on direct appeal, because
the errors would not have “seriously affect[ed] the fairness,
integrity, or public reputation of judicial proceedings.” Cotton,
535 U.S. at 632-33; Cedelle, 89 F.3d at 186. Thus, if it was
absolutely clear from the record that Sara Lee was “capable of
[being] influenc[ed],” Neder, 527 U.S. at 16, by Mauney’s
misrepresentation, we would have affirmed Mauney’s conviction.
Cotton, 535 U.S. at 633; Johnson, 520 U.S. at 470.
We think it beyond serious dispute that a company is capable
of being influenced by knowledge of the fact that its purchasing
agent is receiving large kickbacks from suppliers. In such a
situation, the company would naturally suspect that it would be
getting a lower price absent the kickbacks. Certainly, any
rational employer that discovers that an employee in charge of
purchasing is earning more money from kickbacks than from his
salary will have a “natural tendency” to put someone else in charge
of purchasing and investigate the employee’s conflict of interest.
Given that Mauney admitted to receiving over a quarter of a million
dollars in payments from Sara Lee’s vendors, we conclude that the
evidence of the materiality of his misrepresentation was
“overwhelming” and “essentially uncontroverted.” Cotton, 535 U.S.
9
at 631. Accordingly, we would not have noticed the defect in
Mauney’s indictment had his attorney raised it on direct appeal,
because the defect did not “seriously affect[] the fairness,
integrity, or public reputation of judicial proceedings.” Id. at
632-33. Similarly, we would not have noticed the defect in
Mauney’s jury instructions5 because the evidence would “permit no
other conclusion” than that the kickbacks were material, and
Mauney’s conviction “was inevitable” under proper jury
instructions. Cedelle, 89 F.3d at 186. Accordingly, Mauney was
not prejudiced by his counsel’s failure to challenge the indictment
and jury instructions under Neder on direct appeal, and the
district court properly denied Mauney’s § 2255 motion.
As the kickbacks in this case were undisputedly large, Mauney
could not credibly argue that the payments he received involved
immaterial sums that were incapable of influencing Sara Lee’s
decision to retain him and continue entering into contracts tainted
by his conflicts of interest. Recognizing this weakness in his
5
The Government argues that Mauney’s jury instructions were
not defective because the district court charged the jury that “[a]
representation may be false when it constitutes a half truth, or
effectively conceals a material fact.” (J.A. at 563 (emphasis
added).) Considering the instructions as a whole, however, it is
clear that the jury could have convicted Mauney if it found any of
the following: (1) Mauney had “effectively conceal[ed] a material
fact”; (2) Mauney had made a half-true representation; or (3)
Mauney had made any other “false or fraudulent pretenses,
representations or promises.” (J.A. at 563.) Accordingly,
Mauney’s jury instructions did not require the jury to find that
any false representations related to a material fact, as is
mandated by Neder.
10
position, Mauney instead argues that the absence of a materiality
instruction prejudiced him by allowing the jury to convict him
solely on the basis of his breach of Sara Lee’s conflict-of-
interest policy and without finding that the kickbacks harmed Sara
Lee economically. Because of the absence of a materiality
instruction, Mauney’s argument goes, the jury could expansively
interpret the deprivation of honest services to include any and all
violations of company policy. This argument misinterprets the
change in law wrought by Neder and its application in Mauney’s
case.
Under the district court’s instructions, to convict Mauney of
mail and wire fraud, the jury needed to conclude that Mauney
intentionally devised a scheme to defraud Sara Lee, and that Mauney
used the mails and interstate wires for the purpose of executing
the scheme. The court also instructed the jury that a “scheme to
defraud” was one that sought to “deprive another of money,
property, or of the intangible right to honest services by means of
false or fraudulent pretenses, representations or promises.” (J.A.
at 563.) Thus, the jury’s guilty verdict necessarily included the
following findings: (1) Mauney intentionally devised a scheme; (2)
Mauney’s scheme sought to deprive Sara Lee of money, property, or
of the intangible right to honest services; and (3) the scheme
utilized false or fraudulent pretenses, representations or promises
to accomplish the deprivation. The false representation charged in
11
the indictment was Mauney’s statement that he was not receiving
payments from Sara Lee’s vendors. The only additional finding
necessary under Neder was that the fact Mauney misrepresented, i.e.
his receipt of the kickbacks, was material to the deprivation that
his scheme sought to accomplish.
In other words, the jury found that Mauney intended to deprive
Sara Lee of money, property or honest services. To that end,
Mauney devised a scheme that relied, in part, on his false
representation that he was not receiving payments from Sara Lee’s
vendors. So long as Sara Lee’s decision whether to part with
money, property, or honest services might have been different if
Sara Lee had known that Mauney was receiving kickbacks, the fact
that Mauney misrepresented was material. Thus, Mauney’s assertion
that the jury could have convicted him solely on the basis of his
breach of Sara Lee’s conflict of interest policy does not relate to
the materiality of his misrepresentation, but instead it relates to
what the jury could have found constituted a deprivation as the
object of his scheme. Accordingly, even if Mauney were correct
that the jury could have convicted him based solely on his
violation of Sara Lee’s conflict of interest policy, he is mistaken
that this result obtains from the district court’s failure to
charge materiality.
In essence, Mauney’s prejudice argument is nothing more than
a lamentation that the district court failed to define “honest
12
services” more precisely in its charge to the jury.6 But Neder did
not even discuss the meaning of “honest services” as used in 18
U.S.C.A. § 1346, let alone restrict its meaning in the way Mauney
advocates. Thus, even if counsel had appealed the district court’s
failure to charge the jury that Mauney’s misrepresentation had to
be material under Neder, we would not have had occasion to consider
whether the district court should have defined honest services more
precisely in its jury instructions. Accordingly, the “prejudice”
that Mauney complains of did not result from the deficient
performance he challenges, i.e., his attorney’s failure to appeal
the lack of a materiality instruction under Neder. Because, as we
noted above, knowledge of the fact that Mauney was receiving
kickbacks unquestionably was “capable of influencing” Sara Lee’s
decision to part with its money, property, or intangible right to
honest services, we would have affirmed Mauney’s conviction and
sentence even if Mauney had raised Neder on direct appeal. Because
6
Although Mauney alleged in his 28 U.S.C.A. § 2255 (West Supp.
2004) motion that his attorney was ineffective for failing to
object to the district court’s failure to instruct the jury that an
employee deprives his employer of honest services only when he
“breach[es] a fiduciary duty, and . . . foresaw or reasonably
should have foreseen that his employer might suffer an economic
harm as a result of the breach,” United States v. Vinyard, 266
F.3d 320, 327 (4th Cir. 2001), he has not pursued that claim on
appeal. In his opening brief, the only defective performance
claimed by Mauney is his counsel’s failure to raise Neder on direct
appeal. Accordingly, we do not address whether Mauney’s counsel
performed deficiently by failing to object to or appeal from the
district court’s lack of a precise definition of “honest services,”
or whether Mauney was prejudiced thereby.
13
Mauney was not prejudiced by the alleged failing of his appellate
counsel, we affirm.
III.
Because Mauney’s appeal would have been unsuccessful even if
his attorney had challenged Mauney’s indictment and jury
instructions under Neder, Mauney was not prejudiced by the
deficient performance of which he complains in this appeal.
Accordingly, we affirm the district court’s denial of Mauney’s
§ 2255 motion.
AFFIRMED
14