United States v. Wittig

FILED
United States Court of Appeals
Tenth Circuit

August 10, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v.
No. 08-3220
DAVID C. WITTIG and DOUGLAS
T. LAKE,

Defendants-Appellants.

Appeal from the United States District Court
for the District of Kansas
(D.C. No. 5:03-CR-40142-JAR-1)

Maxwell Carr-Howard, Husch Blackwell Sanders LLP, Kansas City, Missouri
(Patrick A. McInerney and Lyndsey J. Conrad with him on the briefs) for
Defendant-Appellant Douglas T. Lake.

Jeffrey D. Morris, Jeremy S. Weis, and Christina Birgensmith, Berkowitz Oliver
Williams Shaw & Eisenbrandt LLP, Kansas City, Missouri; and Paula M.
Junghans, Zuckerman Spaeder, Washington, D.C., for Defendant-Appellant David
C. Wittig.

Richard L. Hathaway, Senior Litigation Counsel, United States Attorney’s Office,
Topeka, Kansas (Marietta Parker, Acting United States Attorney, and Christine E.
Kenney, Assistant United States Attorney, with him on the brief) for Plaintiff-
Appellee.

Before MURPHY, McKAY, and GORSUCH, Circuit Judges.

GORSUCH, Circuit Judge.
 David Wittig and Douglas Lake continue to labor under an indictment for

allegedly looting their former company, Westar Energy, Inc. Their first trial

ended in a hung jury. A second trial yielded convictions, but we reversed those

convictions on appeal. With respect to the substantive counts of wire fraud and

money laundering, we held that the government had failed to produce sufficient

evidence (actually, any evidence) of an essential element. We therefore ordered

the defendants acquitted of those offenses. The government’s error on the

substantive wire fraud counts, we found, also implicated the adequacy of the

instructions given the jury on the remaining charges against the defendants:

circumvention of internal controls and conspiracy. Accordingly, we reversed the

defendants’ convictions on those counts as well, but because the basis of our

reversal had nothing to do with the sufficiency of the evidence, we remanded the

case for a possible retrial.

On remand, the defendants argued that any further trial on the conspiracy

charges should be barred by the Fifth Amendment’s Double Jeopardy Clause;

alternatively, and at the least, they argued that the district court should restrict the

government’s proof at any new trial to avoid double jeopardy problems. The

district court denied the defendants’ requests, and they responded with this

interlocutory appeal. To the extent that the defendants’ appeal seeks to anticipate

and restrict the evidence the government may produce at trial, however, we have

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no jurisdiction to hear their arguments at this stage. In an interlocutory

proceeding, we can only vindicate, as a matter of law, the double jeopardy right

not to be tried for a second time on the same charge; we have no power to issue

orders in limine forbidding the admission of this or that piece of evidence or

testimony in some potential future trial. To the extent that the defendants do seek

dismissal of the conspiracy charges against them, we hold, consistent with our

last ruling and the district court’s judgment, that double jeopardy doesn’t

categorically foreclose a new trial because the conspiracy charges in the

indictment are considerably broader in scope than the wire fraud charges on

which defendants were acquitted. At the same time, we readily acknowledge that

today’s opinion may not represent the last word on double jeopardy in this case.

If, as the defendants predict, the government’s proof of conspiracy at trial is

narrower than its indictment and seeks to rehash only matters on which the

defendants have already been acquitted, more will remain to be said. But all that

depends on a guess about the future, and the future must be left to the future. For

the present, we are obliged to affirm.

I

The facts underlying this prosecution are set out extensively in United

States v. Lake, 472 F.3d 1247 (10th Cir. 2007). For our purposes in this appeal, it

is necessary to rehearse only part of the story.

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 A

Over a decade ago, in 1995, David Wittig left a New York investment bank

to join Kansas’s largest public utility, Westar Energy, Inc., as an executive in

charge of corporate strategy. In that role, he developed a plan to diversify

Westar’s assets by acquiring various unregulated businesses. Westar initially

attempted to acquire ADT, a national home-security company. While the

acquisition ultimately didn’t pan out, Westar still did well, making some $856

million trading in ADT stock. Later, Westar successfully acquired Protection

One, another home-security company, and bought stock in Guardian International,

a security-alarm business. At least initially, this diversification strategy was

hugely successful, adding billions to Westar’s net assets and driving its stock

price up dramatically, as high as $48 per share in 1998. In early 1999, Mr. Wittig

was elected President, CEO, and Chairman of Westar’s Board. Around the same

time, Douglas Lake, also a New York banker, joined the company as Executive

Vice President and Chief Strategic Officer.

Then Westar’s health took a turn for the worse. Westar’s new subsidiary,

Protection One, suffered accounting irregularities and became the subject of an

SEC investigation. Its stock price, along with that of its parent Westar, fell

sharply. In an effort to staunch the bleeding, Westar split off its public utility

from its unregulated businesses and attempted to merge it with another entity (the

“Split-Merge Transaction”). But in 2001, the Kansas Corporation Commission

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blocked the merger and (rather than approving Westar’s pending request for a rate

increase) ordered Westar to cut utility rates by $20 million. As a result, Westar’s

share price plummeted to $9 a share by the end of 2002, around the time Messrs.

Wittig and Lake left the company.

In 2004, the United States Attorney for the District of Kansas obtained a

forty-count indictment against the defendants. The indictment alleges that the

defendants were not just unskilled or unlucky corporate managers, but criminals.

According to the government, Mr. Wittig and Mr. Lake conceived and executed a

wide-ranging scheme to loot Westar for their own benefit. In particular, the

government alleges that the defendants’ real motivation behind the Split-Merge

Transaction was to collect millions in compensation that it says would be owed

them under change-in-control provisions in their contracts had the merger gone

through. Other components of the alleged scheme include profiting from

complicated transactions in shares of Guardian International that resulted in a

$4.2 million loss to Westar, as well as:

acceleration of a $5.37 million signing bonus to Mr. Wittig that was to
have been paid over a 10-year period beginning in 2010; improper
payment of relocation expenses; improper loans from Westar;
acquisition of a split-dollar life-insurance contract at far greater cost to
Westar than the bonus it was ostensibly to replace; and personal use of
Westar aircraft. To accomplish this looting, the defendants misled the
Board of Directors and connived to remove two Board members who
asked challenging questions (the two resigned voluntarily).

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Lake, 472 F.3d at 1252. The indictment charges seven counts of wire fraud, 18

U.S.C. § 1343; seventeen counts of laundering the proceeds of the wire fraud; 18

U.S.C. § 1957, fourteen counts of circumvention of internal controls (by failing to

disclose use of corporate aircraft on internal Westar reports and obstructing

company investigations of aircraft use), 15 U.S.C. §§ 78m(b)(5) & 78ff; and one

count of conspiracy to commit the three substantive offenses of wire fraud, money

laundering, and circumvention, 18 U.S.C. § 371. The fortieth count seeks

forfeiture of all assets acquired through the conspiracy, wire fraud, and money

laundering. 18 U.S.C. § 981(a)(1)(C); 28 U.S.C. § 2461(c); see also Appendix

(Indictment).

The defendants’ first trial on this indictment ended in a hung jury. See

United States v. Wittig, 425 F. Supp.2d 1196, 1204 (D. Kan. 2006). Six months

later, the government retried the defendants. This time, the jury convicted Mr.

Wittig on all counts and Mr. Lake on thirty counts. It also found that some, but

not all, of the assets listed in count 40 should be forfeited. The defendants then

appealed to us, seeking a judgment of acquittal on the substantive offenses (but

not on the conspiracy charge, Lake, 472 F.3d at 1263-64) because, they alleged,

insufficient evidence supported the jury’s verdict.

B

We reversed. With respect to the wire fraud and money laundering

charges, we concluded that the government failed to produce sufficient evidence

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to sustain the convictions. As we explained, the difficulty for the government

was that defrauding one’s employer does not itself violate federal law. Wire

fraud requires the government to establish three elements beyond a reasonable

doubt: “(1) a scheme to defraud; (2) an interstate wire communication; and (3) a

purpose to use the wire communication to execute the scheme.” Lake, 472 F.3d at

1255; United States v. Janusz, 135 F.3d 1319, 1323 (10th Cir. 1998). This last

element the government failed to prove. The only interstate wires charged in the

wire fraud counts of the indictment were four 10-K Annual Reports and three 14A

Proxy Statements submitted by Westar to the Securities and Exchange

Commission during the defendants’ tenure (the “SEC Reports”). The

government’s sole allegation concerning these reports was that the defendants

failed to disclose, as compensation, the value of their personal use of corporate

aircraft.

But under the rule in Parr v. United States, 363 U.S. 370 (1960), mailings

(or, in this case, wires) cannot be for the purpose of executing a fraud when they

are made only in response to an “imperative command of duty imposed by . . .

law,” unless they are also false or fraudulent. Id. at 391; accord Lake, 472 F.3d

at 1256. It was undisputed that the SEC Reports are just that kind of wire:

filings that federal law commands must be sent to the SEC. Lake, 472 F.3d at

1252. And there was no evidence that the SEC Reports were anything other than

truthful. The version of SEC Regulation S-K in force at the time required

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disclosure of an officer’s perquisites, of which personal use of a company jet is

one, only if their collective value exceeds “the lesser of either $50,000 or 10% of

the total of annual salary and bonus reported for the named executive officer.”

Lake, 472 F.3d at 1257; 17 C.F.R. § 2298.402(b)(2)(iii)(C)(1) (1999). In this

case, the relevant number is $50,000. The regulation provides that “[p]erquisites

and other personal benefits shall be valued on the basis of the aggregate

incremental cost to the [corporation] and its subsidiaries.” Lake, 472 F.3d at

1258; 17 C.F.R. § 229.402, Instructions to Item 402(b)(2)(iii)(C). The

government introduced no evidence—none—of the aggregate incremental cost to

Westar created by the defendants’ personal airplane use. Instead, it told the jury

all about the value to the defendants, as measured by the replacement cost of

charting a private jet for each flight on which, for instance, one of the defendants’

spouses accompanied them without a business purpose. Calculated this way, the

value to each defendant was about $1 million. Lake, 472 F.3d at 1253. But this

figure was and remains irrelevant to the charge of wire fraud. No matter how

high the value to the defendants, the SEC Reports cannot have been false unless

the cost to the corporation exceeded $50,000. And because there was no evidence

of that, it was impossible to conclude that the reports contained anything “false,

fraudulent, or even misleading.” Id. at 1260. Accordingly, the government had

not proven that “a purpose of submitting the reports was in any fashion to further

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the alleged fraudulent scheme. The reports (which, for all we can tell, were

correct) were filed because they had to be.” Id.

We therefore reversed the defendants’ convictions for wire fraud for lack of

sufficient evidence. Id. And because it is impossible to be guilty of money

laundering unless the “[allegedly laundered] property is, in fact, derived from

specified unlawful activity,” id. (quoting United States v. Dazey, 403 F.3d 1147,

1163 (10th Cir. 2005)), the failure of the wire fraud counts was also fatal to the

money laundering charges. A reversal for lack of evidence terminates jeopardy,

so retrial on these counts was barred by the Double Jeopardy Clause. Id.; see also

Burks v. United States, 437 U.S. 1, 18 (1978).

We further concluded that the government’s misunderstanding of the nature

of the defendants’ reporting obligations infected the jury’s instructions on the

other two charges: circumvention of internal controls and conspiracy. With

respect to circumvention, the government alleged that the defendants, as part of

an ongoing effort to prevent public reporting of their activities, failed to disclose

their private use of aircraft on Westar’s internal Director & Officer Reports

(“D&O Reports”) and used their authority to forbid an internal audit of company

aircraft use. It was undisputed that the defendants were required to list their

aircraft use on the D&O Reports but did not; the only issue at trial was whether

they possessed the necessary intent to “knowingly circumvent or knowingly fail

to implement a system of internal accounting controls or knowingly falsify [a

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qualifying corporate record].” Lake, 472 F.3d at 1261 (quoting 15 U.S.C.

§ 78m(b)(5)). And this question of intent boiled down to whether the aircraft use

was a material fact. At trial, the government argued that the value to the

defendants of aircraft use was so high that they must have thought it was a

material fact. But that overlooked the very real possibility that, because the

relevant test for SEC reporting is cost to the corporation rather than value to the

officer, the defendants omitted their aircraft use because they knew its cost to

Westar was beneath the SEC’s reporting requirement, and therefore not a material

fact. The jury was never instructed on the cost-to-the-corporation test, making it

impossible to evaluate the defendants’ intent fairly. In order to assess whether

the defendants thought their aircraft use was material, the jury needed to know

whether it actually was material. The same problem obtained with respect to the

conspiracy convictions. We found that “[t]he jury could not accurately evaluate

the conspiracy allegations without being informed regarding what was required to

be in the SEC filings.” Id. at 1263. Finding the jury instructions faulty, but not

that the evidence against them was necessarily insufficient to sustain the

defendants’ convictions, we reversed these counts and remanded them without

prejudice to a new trial. Because no convictions remained by this point to

support the forfeiture count, we reversed it as well and remanded it for a new trial

as well.

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 On remand, the government expressed its intent to pursue a third trial on

the charges that remain: the substantive offenses of circumvention and

conspiracy, the latter of which really encompasses three possible

theories—conspiracy to commit wire fraud, conspiracy to commit money

laundering, and conspiracy to commit circumvention of internal controls. The

government also sought again to pursue forfeiture of assets. The defendants

responded with a motion to dismiss, raising several challenges to the proposed

trial, all based in one way or another on the Double Jeopardy Clause of the Fifth

Amendment. Chiefly, they claimed that double jeopardy’s collateral estoppel

component bars their trial for conspiracy. They also sought to preclude the

government from seeking forfeiture of those assets the previous jury found non-

forfeitable and to restrict the evidence the government may introduce about when

their alleged conspiracy began. In all, the substantive offense of circumvention

was the only charge on which the defendants did not seek dismissal. The district

court denied the defendants’ motion, and this interlocutory appeal followed.

II

A

Our jurisdiction to entertain the defendants’ interlocutory appeal is based

on, and limited by, the collateral order exception to the final judgment rule. We

normally hear appeals only from final judgments terminating proceedings before

the district court. 28 U.S.C. § 1291. But in Cohen v. Beneficial Life Ins. Co., 337

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U.S. 541, 546-47 (1949), the Supreme Court recognized that an otherwise

interlocutory order qualifies as an effectively “final” one when it (1) finally

decides (2) a question collateral to the merits of the underlying proceeding, and

(3) the decision involves an important right that would be “lost, probably

irreparably” if appellate review were deferred to the end of the case.

A motion to dismiss charges in an indictment because of double jeopardy is

such an order. Abney v. United States, 431 U.S. 651, 659-61 (1977). The right at

stake in a double jeopardy claim is independent of the merits of the underlying

charges; it is the right not to be “subjected to the hazards of trial and possible

conviction more than once for an alleged offense.” Green v. United States, 355

U.S. 184, 187 (1957). This right is irretrievably lost if the district court denies a

motion to dismiss and the defendants proceed to trial. Abney, 431 U.S. at 660-61;

United States v. Wood, 950 F.2d 638, 642 (10th Cir. 1991) (per curiam). We

therefore have jurisdiction to hear this appeal to the extent it seeks to vindicate

the double jeopardy right not to be tried.

But that isn’t the end of the matter. Two limits on our interlocutory

jurisdiction also bear on this appeal. First, we are not authorized to review other

grounds for dismissal besides the Double Jeopardy Clause. Abney, 431 U.S. at

662-63 (“[Jurisdiction] do[es] not extend beyond the claim of former jeopardy

and encompass other claims presented to . . . the district court in passing on the

accused’s motion to dismiss.”). In other words, we have no “pendent” appellate

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jurisdiction. Rather, every issue presented on appeal must itself “fall within

Cohen’s collateral-order exception.” Id. at 663.

Second, we are not authorized to award other relief besides dismissal.

While Abney tells us we can review “a pretrial order denying a motion to dismiss

an indictment on double jeopardy grounds,” id. at 662 (emphasis supplied), it

does not confer authority on us to pass on the admissibility of evidence not yet

presented. This principle is of particular relevance to this case because the

defendants’ challenge arises out of the collateral estoppel prong of the Double

Jeopardy Clause. See Ashe v. Swenson, 397 U.S. 436, 445 (1970). Collateral

estoppel precludes relitigation not only of ultimate issues already determined by a

final judgment between the same parties. Id. at 443. The doctrine is also

sometimes deployed in criminal cases to do something other than dismiss an

indictment. Sometimes, a defendant will argue that collateral estoppel requires

suppression of particular pieces of evidence, or the striking of a specific overt act

alleged in an indictment, because introduction of such evidence to prove the

charges will trench on a previous judgment of acquittal. We have, however, no

interlocutory appellate jurisdiction to review the district court’s disposition of the

latter sorts of arguments. Our jurisdiction extends only to vindicate the right not

to be tried at all, not the right to be tried in a particular way.

Put differently, we have no jurisdiction over collateral estoppel arguments

that “would merely restrict proof but not make conviction impossible.” United

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States v. Head, 697 F.2d 1200, 1205 (4th Cir. 1982); see also United States v.

Powell, 632 F.2d 754, 758 (9th Cir. 1980) (no jurisdiction to review motion to

strike overt acts from indictment); United States v. Mock, 604 F.2d 336, 340 (5th

Cir. 1979) (no jurisdiction over motion to suppress evidence). A defendant who

seeks to use collateral estoppel to restrict the proof the government might seek to

use must “stand trial, object to the evidence and then raise the issue on appeal

following conviction.” Santamaria v. Horsley, 133 F.3d 1242, 1250 (9th Cir.

1998) (en banc) (Kozinski, J., concurring).

B

These principles require us to dismiss two of the defendants’ challenges.

First, the defendants claim that collateral estoppel bars the government from

seeking to prove that their conspiracy began in 1995, before the dates of certain

specific acts of wire fraud for which Mr. Lake was acquitted in the last trial. On

its face, this is merely an effort to restrict the government’s proof at trial. Even if

the argument is correct (and we do not pass on its merits), it would not entitle the

defendants to dismissal of any charge.

Second, we must dismiss as well the defendants’ challenge to the forfeiture

count. At the last trial, the jury found that some of the assets the government

wished to seize were not traceable to criminal conduct, and the government did

not appeal. Both parties before us misunderstand the legal consequences of the

government’s failure to appeal that verdict. The defendants argue that double

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jeopardy now bars their retrial for forfeiture of those assets. The government,

remarkably, believes that because we reversed the jury’s other forfeiture findings

(that is, those allowing seizure), all of the jury’s findings are deprived of their

preclusive effect because the district court’s “judgment” was reversed.

Appellee’s Br. at 45.

Neither of these descriptions is correct. Double jeopardy does not apply to

the forfeiture findings because forfeiture is a component of a sentence rather than

an “offense” for which the defendants were tried. Monge v. California, 524 U.S.

721, 730-31 (1998) (sentencing issues do not generally implicate double jeopardy

protection); Libretti v. United States, 516 U.S. 29, 42 (1995) (forfeiture is part of

a sentence). As for the government’s theory that issue preclusion can never apply

when some other party successfully appeals some other issue in the same case, we

have our doubts. See In re Scrivner, 535 F.3d 1258, 1266 (10th Cir. 2008); In re

Albrecht, 233 F.3d 1258, 1261 (10th Cir. 2000) (noting doctrine of direct

estoppel). At a minimum, there remains a colorable question whether the jury’s

findings are now the law of the case because the government failed to appeal

them. See In re Scrivner, 535 F.3d at 1266; Palmer v. Kelly, 17 F.3d 1490, 1495

(D.C. Cir. 1994). But either way, we have no jurisdiction to decide this now.

Neither issue preclusion nor the law of the case doctrine implicates rights

collateral to the merits of the underlying proceeding; rather, they are defenses

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on the merits that should be resolved by the district court in the first instance,

subject to appeal at the end of the case.

The government also asks us to dismiss the defendants’ remaining and

principal argument that they are entitled to dismissal of the conspiracy charges.

The government argues that we lack jurisdiction over this part of the defendants’

appeal because dismissal of the conspiracy charge would still leave the necessity

of a trial on the substantive circumvention counts (which the defendants have not

moved to dismiss). In the government’s view, then, even if this appeal is

successful, it will still fail to vindicate the right not to be tried. Mot. to Dismiss

Appeal at 11-12. This argument is wrong. The Double Jeopardy Clause speaks of

being twice in peril for the same “offense,” not on the same indictment. Its

protections may not be defeated merely by adding additional offenses to the

charges. A defendant may no more be subjected to two trials on a single count

than on an indictment comprising many counts. United States v. Ginyard, 511

F.3d 203, 208 (D.C. Cir. 2008); see also United States v. Tom, 787 F.2d 65, 68

(2d Cir. 1986) (interlocutory appeal available in challenge to single count of

indictment); Head, 697 F.2d at 1206 n.9 (same).

Alternatively, the government suggests that we should dismiss the

defendants’ appeal under our supervisory power, pursuant to which we may

“establish summary procedures and calendars to weed out frivolous claims of

former jeopardy.” Abney, 431 U.S. at 662 n.8. This argument, too, is misplaced.

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The defendants’ principal double jeopardy claim is not frivolous; in the end, it

may even prove correct. As we will explain, all we decide today is that the

argument does not entitle defendants to dismissal at this time. The district court,

or this court in a later appeal, may well uphold the defendants’ double jeopardy

argument when all the facts are in.

Finally, the government also briefly argues that the defendants’ challenge

to the conspiracy charges is foreclosed by our opinion in Lake. Absent certain

exceptional circumstances, we of course adhere to our prior resolution of

particular issues as the law of the case. In re Antrobus, 563 F.3d 1092, 1098

(10th Cir. 2009) (per curiam). But the law of the case doctrine does not apply

unless an issue has been actually decided, “either explicitly or by necessary

implication.” Copart, Inc. v. Administrative Review Bd., 495 F.3d 1197, 1201

(10th Cir. 2007) (quotation marks omitted); see also Quern v. Jordan, 440 U.S.

332, 347 n.18 (1979). The defendants’ current double jeopardy arguments were

not before the Lake panel and thus were not explicitly ruled on. Indeed, the Lake

court expressly declined to consider any double jeopardy challenge to a retrial for

conspiracy. Lake, 472 F.3d at 1263-64. The law of the case does not extend to

issues a previous court declines to decide. See generally 18B Charles Alan

Wright et al., Fed. Prac. & Proc. § 4478 (2d ed. 2002). Neither has the

government sought to suggest that the defendants unduly delayed or waived their

arguments in this appeal by raising questions about the double jeopardy

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implications of their acquittals for the first time on remand. Accordingly, we

proceed to the merits of the defendants’ motion to dismiss.

III

Double jeopardy “protects a man who has been acquitted from having to

‘run the gantlet’ a second time.” Ashe, 397 U.S. at 446 (quoting Green, 335 U.S.

at 190). Included among double jeopardy’s protections is the doctrine of

collateral estoppel. Id. at 445; see also United States v. Oppenheimer, 242 U.S.

85, 88 (1916) (recognizing criminal collateral estoppel). Collateral estoppel is a

principle of finality. It means that “when an issue of ultimate fact has once been

determined by a valid and final judgment, that issue cannot again be litigated

between the same parties in any future lawsuit.” Ashe, 397 U.S. at 443. To apply

the doctrine here, we must ask two questions: First, is the issue the defendants

wish to foreclose from trial the actual basis for their prior acquittal? Second, is

the same issue necessary to the prosecution’s case in this proceeding? See id. at

444-45. If both questions yield affirmative answers, collateral estoppel bars

retrial of the issue. 1

1
The second part of the test will only be met if the fact must be proved
beyond a reasonable doubt in the new trial; if the issue is subject to a lower
standard of proof, the government is not precluded from relitigating it. Dowling
v. United States, 493 U.S. 342, 349 (1990).

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 A

The first step of the analysis is easy to perform in this case. Though

normally the more elusive inquiry of the two—owing to the vagaries of general

jury verdicts—the reason for the defendants’ acquittal on the substantive wire

fraud charges in this case is easily discerned from our opinion in Lake. There, we

explained that the government failed to introduce any evidence that the value of

the defendants’ personal use of Westar aircraft—measured correctly by the

marginal cost imposed on the corporation by such use—exceeded $50,000.

Accordingly, there was no evidence that the SEC Reports were false. Without

that evidence, the government could not establish that the reports were “for the

purpose of executing” a scheme to defraud; instead, they are conclusively

presumed to have been for the purpose of executing the command of our

securities laws that accurate reports be filed.

B

Turning to the second step, we must ask whether this same issue must be

relitigated in order to convict the defendants of the conspiracy charges against

them. In what follows we consider this question with respect to each of the three

species of conspiracy alleged in the indictment: conspiracy to commit wire fraud,

money laundering, and circumvention of internal controls.

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 1

We begin with conspiracy to commit wire fraud. To win a conviction for

this offense, the government has to prove several things. 2 But one thing the

government doesn’t have to do is relitigate the value of the defendants’ airplane

use or anything else about the SEC Reports. While the substantive wire fraud

counts in the indictment were limited to allegations about the defendants’ airplane

use and the wires used to report that use to the SEC, see Appendix at 17 (First

Superseding Indictment counts 16-22), the conspiracy count (count 1) describes a

much wider ranging fraudulent scheme to cheat Westar out of money and its

intangible right to honest services by any number of means. The conspiracy

count contains fully twenty paragraphs alleging overt acts committed by the

defendants in furtherance of the conspiracy; only one of these paragraphs pertains

to the use of corporate aircraft. For example, the indictment alleges that, as part

of their conspiracy, the defendants abused Westar’s relocation reimbursement

program, Appendix at 9, plotted to remove corporate directors that were critical

of them, id. at 10, pushed for the Split Merge-Transaction to enrich themselves

2
In particular, it must show that: “(1) the defendant entered into an
agreement; (2) the agreement involved a violation of the law; (3) one of the
members of the conspiracy committed an overt act; (4) the overt act was in
furtherance of the conspiracy’s object; and (5) the defendant willfully entered the
conspiracy.” United States v. Weidner, 437 F.3d 1023, 1033 (10th Cir. 2006).
Further, “a conspiracy conviction requires ‘at least the degree of criminal intent
necessary for the substantive offense itself.’” Id. (quoting United States v.
Morehead, 959 F.2d 1489, 1500 (10th Cir. 1992)).

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rather than Westar, id. at 14, and “subvert[ed] the Board’s direction to reduce

executive compensation” by collecting pay for serving on the board of Westar’s

subsidiary, Protection One, id. at 11.

Whether the government actually has evidence to support any of these

allegations, or whether any of this conduct was actually unlawful, are matters that

will surely be tested at trial. At this stage, the question before us is limited to

whether, under the indictment as drawn and viewing the matter “with realism and

rationality” rather than “with the hypertechnical and archaic approach of a 19th

century pleading book,” Ashe, 397 U.S. at 444, the government could establish

that defendants engaged in a conspiracy to commit wire fraud without relitigating

the same issue on which they were acquitted in the substantive wire fraud counts.

Because the allegations of a conspiracy to commit wire fraud contained in the

indictment encompass a great deal more putatively unlawful conduct than the

substantive wire fraud counts do, the answer to this question is unavoidably yes.

The defendants point out that the indictment contains no mention of

specific wires used by the conspirators other than those associated with the SEC

Reports and mentioned in the substantive wire fraud counts. But to secure a

conviction even on a substantive wire fraud charge, the Supreme Court has

explained that a defendant need not specifically intend the use of this or that wire;

the requirement is satisfied “[w]here [he] does an act with knowledge that the use

of the [wires] will follow in the ordinary course of business, or where such use

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can reasonably be foreseen, even though not actually intended.” Pereira v.

United States, 347 U.S. 1, 8-9 (1954). Here, of course, the conspiracy count

extends well beyond the airplane issue and associated SEC Reports. To make out

its conspiracy claim, then, the government need only show that, in furtherance of

some aspect of this broader conspiracy, the use of the wires followed in the

ordinary course of business or was reasonably foreseeable. Reliance on the

particular wires associated with the airplane business and SEC Reports and

charged in the substantive wire fraud counts is not necessary. 3

The principal authorities on which the defendants rely—Sealfon v. United

States, 332 U.S. 575 (1948), and United States v. Ohayon, 483 F.3d 1281 (11th

Cir. 2007)—are distinguishable precisely because the conspiracy alleged in those

cases did not cover conduct beyond that alleged in the underlying substantive

counts. While recognizing that a conspiracy count is separate from the

underlying substantive offense (so the mere fact of acquittal on one charge does

3
While Pereira arose in the mail fraud context, interpretations of the mail
fraud statute are, of course, authoritative on questions of wire fraud, Pasquantino
v. United States, 544 U.S. 349, 355 n.2 (2005), and we ourselves have previously
held it sufficient for wire fraud that a defendant “participated in devising the
scheme to defraud in which use of interstate wires foreseeably would follow,”
United States v. Puckett, 692 F.2d 663, 669 (10th Cir. 1982). Further, though
Judge Learned Hand thought otherwise, see United States v. Crimmins, 123 F.2d
271 (2d Cir. 1941), the Supreme Court has explained that the government need
not prove a higher degree of criminal intent respecting a jurisdictional element
(here, use of interstate wires) in order to establish conspiracy than is required for
the underlying substantive offense, United States v. Feola, 420 U.S. 671 (1975);
see also United States v. Reed, 721 F.2d 1059, 1061 (6th Cir. 1983).

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not automatically bar prosecution for the other), United States v. Felix, 503 U.S.

378, 391 (1992); see also United States v. Yearwood, 518 F.3d 220, 227 (4th Cir.

2008), these cases noted that, on their peculiar facts, the alleged conspiracy did

no more than track the substantive underlying fraud, such that any effort to prove

one offense would, as a practical matter, implicate an issue needed to prove the

other.

In Sealfon, the Supreme Court held that acquittal for conspiracy to commit

fraud collaterally estopped the government from pursuing the substantive fraud

itself because, under the operative indictment in that case, “the core of the

prosecutor’s case was in each case the same.” 332 U.S. at 580. The indictment

alleged that Sealfon had conspired with his co-defendant, Greenberg, to defraud

the United States. The only real evidence of Sealfon’s participation in the alleged

conspiracy was a letter Sealfon had written to a government agency containing

some false representations. Id. at 567-77. But the jury acquitted him of

conspiracy, and the Court concluded this was a finding that the letter was not

written and sent “pursuant to an agreement with Greenberg to defraud.” Id. at

580. When the government then turned around and tried Sealfon for substantive

fraud on an aiding and abetting theory, the gist of its case was the same: the

defendant aided and abetted Greenberg by sending the false letter. As the Court

observed, that was just another way of rephrasing the same thing the government

failed to prove the first time; practically speaking, “[Sealfon] could be convicted

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of either offense only on proof that he wrote the letter pursuant to an agreement

with Greenberg. Under the evidence introduced, [Sealfon] could have aided and

abetted Greenberg in no other way.” Id.; see also id. (“[Retrial] was a second

attempt to prove the agreement which at each trial was crucial to the

prosecution’s case and which was necessarily adjudicated in the former trial to be

non-existent.”).

Ohayon is similar. In that case, the defendant was originally charged with

the attempted distribution of drugs. But the jury acquitted him for the reason that

he did not know the bags in his possession contained drugs. Ohayon, 483 F.3d at

1287. The Eleventh Circuit concluded that it would be impossible for the

government to prove that a defendant who didn’t know he was carrying drugs was

nonetheless “aware of the essential nature” of a drug-distribution conspiracy,

which is one of the things the government must prove. Id. at 1291; cf. United

States v. Johnson, 645 F.2d 865, 868 n.2 (10th Cir. 1981) (government must

produce sufficient evidence that defendant is aware of conspiracy’s general

scope).

The point of these cases is that, when the only way the government can

prove one of the elements of a conspiracy offense is to prove the same facts

decided against it in a prior trial on a substantive offense, collateral estoppel bars

the attempt. That circumstance doesn’t pertain here. The conspiracy count in this

case, unlike the conspiracy counts alleged in Sealfon and Ohayon, covers a great

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deal of conduct not captured by the substantive wire fraud counts. To convict the

defendants of the conspiracy to commit wire fraud alleged in this indictment, the

government would never have to make mention to the jury of any of the matters

(airplanes or the Securities and Exchange Commission) that resulted in the

defendants’ acquittal on the substantive wire fraud counts after their earlier trial.

Even if this is so, the defendants suggest that the government lacks

evidence to back up its broader conspiracy allegations. Whatever the indictment

may say, the defendants predict, the government will be forced to rely again on

the SEC Reports and airplane use to secure a conviction; it has nothing to back up

its allegations of a larger wire fraud conspiracy. Certainly the fact that in the last

trial the government relied so heavily on airplanes and SEC Reports to prove its

substantive and conspiracy charges, rather than on the many other transactions

mentioned in the conspiracy count of the indictment, does make one wonder

whether the government really does have any other proof. But at this stage, our

interlocutory appellate jurisdiction limits us to asking whether the crime charged

in the indictment requires proof of the issue conclusively decided in Lake, and

cannot be focused on the admissibility of this or that piece of evidence. Given

the relative breadth of the conspiracy allegations compared with the wire fraud

counts in this case, we cannot say a retrial is legally impossible.

Finally, the defendants argue that, even supposing the indictment’s

conspiracy charges are broader than the substantive wire fraud counts, the

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government should still be barred from proceeding. This argument is based on a

particular reading of a Sixth Circuit case, Saylor v. Cornelius, 845 F.2d 1401 (6th

Cir. 1988). In Saylor, the defendant was charged with one count of murder, but

the indictment contemplated three theories of his liability for the crime: murder

as a principal, as an accomplice, and by conspiracy. Id. at 1402. For whatever

reason, only the conspiracy theory was charged to the jury; the instructions

omitted the other theories, and the prosecution registered no objection. Id. When

the resulting conviction based on conspiracy was reversed for insufficient

evidence, the government then sought to try the defendant again, this time on a

theory of accomplice liability. Id. at 1403. The Sixth Circuit held that this

violated the Double Jeopardy Clause. Id. Jeopardy with respect to the

accomplice liability theory terminated when the jury returned its verdict, even

though it was not instructed on that theory. Otherwise, the court said, “the

prosecution could proceed on several theories of liability through a trial, and,

simply by withholding instructions on any one of them, reserve that theory for

retrial at a later date.” Id. at 1404. But see United States v. Davis, 873 F.2d 900,

904-05 (6th Cir. 1989) (retreating from Saylor); State v. Wright, 127 P.3d 742,

746-47 (Wash. App. 2006) (criticizing Saylor as unpersuasive).

Messrs. Wittig and Lake urge us to adopt Saylor and read it as barring the

government from pursuing them for conspiracy on any other “theory” of the case

besides the one the government pursued at the last trial involving the SEC

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Reports and airplanes. Because this expansive view of Saylor and the Double

Jeopardy Clause is inconsistent with the Supreme Court’s guidance, however, we

cannot oblige them. In Richardson v. United States, 468 U.S. 317 (1984), the

defendant sought, after a mistrial declaration, to preclude his retrial on the basis

that insufficient evidence was presented to show his guilt in the first proceeding.

The Court rejected this argument, explaining that “a trial court’s declaration of a

mistrial following a hung jury is not an event that terminates the original jeopardy

to which petitioner was subjected. . . . Regardless of the sufficiency of the

evidence at petitioner’s first trial, he has no valid double jeopardy claim to

prevent his retrial.” Id. at 326. Put differently, double jeopardy cannot be an

available basis for relief when the original jeopardy has not yet terminated.

In our case, the conspiracy count, reversed for instructional error, was

effectively mistried. As such, jeopardy has not yet terminated and there is no

double jeopardy bar to retrial on the indictment as presented by the grand jury;

questions about the sufficiency of the government’s proof must await the new

trial’s results. Neither can the fact that the government may not have produced

sufficient evidence of a particular theory at the defendants’ earlier mistrial in this

case have any more legal significance than the government’s failure to produce

sufficient evidence of an entire crime did in the mistrial at issue in Richardson.

Until jeopardy terminates, the government is free to pursue any theory of the

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crime available to it under the indictment so long as that theory is not barred for

some other reason (such as collateral estoppel).

Our conclusion parallels the Fifth Circuit holding in United States v.

Miller, 952 F.2d 866 (5th Cir. 1992). Miller involved two defendants whose

convictions for mail fraud were reversed on appeal for instructional error (thus, as

here, effectively mistried). The defendants argued, as here, that double jeopardy

barred the government from retrying them on a new theory of the crime.

Recognizing that Richardson foreclosed this argument, the Fifth Circuit explained

that, because jeopardy had not terminated by virtue of the reversal for

instructional error, it was of no moment that the government had not produced, at

the first trial, sufficient evidence of the mail fraud theory it wished to pursue at a

new trial. “The central concept of Richardson is that there is no double jeopardy

unless the original jeopardy has terminated; and it is abundantly clear that a

reversal for instructional error is no more a termination of jeopardy than a

mistrial where the jury is unable to agree.” Id. at 872 (emphasis supplied).

Having said all this, we recognize that Saylor may still have a persuasive

application, if a more limited one than the defendants suggest. The Eighth Circuit

has suggested that Saylor should apply to bar retrial when the earlier mistrial

“terminates without a determination of guilt or innocence on a charge as a result

of a deliberate, tactical decision by the prosecution.” United States v.

Cavanaugh, 948 F.2d 405, 416 (8th Cir. 1991). Such a reading—requiring some

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deliberate decision on the part of the government—is more consistent with the

Supreme Court’s cases. While mistrials do not normally terminate jeopardy, the

Court has recognized an exception when “governmental conduct . . . is intended

to ‘goad’ the defendant into moving for a mistrial.” Oregon v. Kennedy, 456 U.S.

667, 676 (1982). So while it is inconsistent with Richardson to prohibit the

government from changing its theory of the case just because a case has mistried,

it might be equally consistent with Kennedy to prohibit the government from

intentionally withholding a theory of liability from the jury in order to get a

second chance at proving that theory if things aren’t going so well in round one.

The difficulty for the defendants in this case is that no allegation of prosecutorial

misconduct has been made here, so we need not reach the question. 4

4
The facts of the Eighth Circuit’s Cavanaugh case illustrate why this
understanding of Saylor may be sensible. Cavanaugh involved eleven defendants
charged with a series of mob assaults leading to murder. There were two separate
available theories of the crime: either there was “one continuous criminal act of
assault culminating in murder,” or else “there were two distinct crimes—murder
and a separate felonious assault.” Cavanaugh, 948 F.2d at 412. At trial, the
government exclusively pursued the continuous theory of the crime, and
“abandoned” the other theory. Id. at 413. The advantage to the government of
this approach was that the continuous crime theory was the only way of
establishing most of the defendants’ liability for the murder. Id. at 413. The
disadvantage was that, under the continuous theory, the doctrine of merger might
bar punishing the attackers for both assault and murder. Id. at 412. Consistent
with the government’s theory, the jury returned murder convictions without
passing on assault. Id. at 407. But when the murder convictions were later
reversed for insufficient evidence, the government suddenly switched theories,
and tried to pursue convictions for the “separate” offense of assault. The Eighth
Circuit held that double jeopardy barred retrial because “the government’s
deliberate trial strategy caused the first trial to terminate without the jury passing
(continued...)

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 2

Because the government is able to prove a conspiracy to commit wire fraud

without running afoul of Lake, it follows it can also establish a conspiracy to

commit money laundering. The defendants’ contrary contention depends on a

misunderstanding of the nature of a conspiracy charge. Generally, money

laundering is “[t]he act of transferring illegally obtained money through

legitimate people or accounts so that its original source cannot be traced.”

Black’s Law Dictionary 1027 (7th ed. 2004). When a person is charged with the

substantive offense of money laundering, the government has to show that the

defendant knowingly engaged in a monetary transaction in property that in fact

was derived from certain kinds of unlawful activity. United States v. Massey, 48

F.3d 1560, 1565 (10th Cir. 1995) (quoting 18 U.S.C. § 1957(a)). In other words,

you cannot commit money laundering unless there is actually dirty money in need

of cleaning. The defendants mistakenly believe that this principle applies to

conspiracy charges as well. They contend that, because they were acquitted of

the substantive offense of wire fraud, that means all the money they obtained

from Westar was in fact clean; therefore, they can no more have agreed to launder

it than they could have actually laundered it. Put differently, the defendants say

4
(...continued)
on [the assault] charge.” Id. at 417; see also id. (noting that “[t]he prosecution
could have presented the original jury with the theory it now wishes to
advance.”).

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that a conspiracy to launder money must take the form: “Let us launder this

money.”

This argument is mistaken. Agreeing to obtain illegal proceeds and to

launder those proceeds is a criminal money laundering conspiracy. To convict

Messrs. Wittig and Lake, the government must prove “(1) that there was an

agreement between two or more persons to commit money laundering and (2) that

the defendant joined the agreement knowing its purpose and with the intent to

further the illegal purpose.” United States v. Fuchs, 467 F.3d 889, 906 (5th Cir.

2006); see also Wittig, 568 F. Supp.2d at 1293. In other words, the defendants

committed conspiracy if they agreed as follows: “Let us launder the money we

plan to obtain from our wire fraud scheme.” As we explained in the previous

section, proving a conspiracy to commit wire fraud does not require relitigation of

the SEC Reports and airplane use that formed the basis of the defendants’

substantive wire fraud acquittals, and therefore neither does proving that the

defendants agreed to take the additional step of laundering ill-gotten gains. The

conspiracy to commit money laundering, like the conspiracy to commit wire

fraud, could involve any of the many other transactions mentioned in the

indictment.

Neither does it follow that, just because the defendants may not have

succeeded in either committing wire fraud or money laundering, they did not

conspire to do those things. A conspiracy can fail and still be a crime. Cf.

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United States v. Martinelli, 454 F.3d 1300, 1312 (11th Cir. 2006) (“It is by now

abundantly clear that in a money laundering case (or in a money laundering

conspiracy case), the defendant need not actually commit the alleged specified

unlawful activity.”). The conspiracy to commit money laundering charge is

therefore not barred by the acquittal for wire fraud.

3

Finally, the defendants claim that the conspiracy to commit circumvention

of internal controls charge is also barred by collateral estoppel. This challenge is

somewhat peculiar because, unlike the other two species of conspiracy we have

discussed, the defendants have not been acquitted of the underlying substantive

charge of circumvention and they do not challenge the government’s continued

pursuit of that substantive offense. Additionally, neither the substantive

circumvention charge nor the conspiracy to commit circumvention charge relies

on the falsity of the SEC Reports.

Instead, the central issue on both counts is whether certain internal actions

taken by the defendants at Westar—their conceded failure to disclose their

airplane use on the D&O Reports and their refusal to permit an audit, see

Appendix at 15-16 (detailing specific allegations of circumvention)—were taken,

or agreed to be taken, to circumvent the system of internal controls. And

answering this question about the defendants’ mens rea does not require the

relitigation of decided issues. As we have already noted in Lake, the now-

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established fact that the defendants’ airplane use did not need to be reported to

the SEC—and that the SEC Reports were therefore truthful—may be highly

relevant to the defendants’ mens rea, but it is not dispositive. See Lake, 472 F.3d

at 1262. To be sure, it is imperative that the jury be told both that the “only

relevant purpose of the [D&O Reports] was to prepare SEC filings,” and that the

defendants’ omission of their aircraft use from these forms “apparently did not

cause any errors in the reports to the SEC.” Id. at 1262. But as we noted in Lake,

it is at least possible that the defendants may have been operating under a

mistake: they may have wrongly believed that their airplane use was reportable

to the SEC, and therefore deliberately omitted it from the D&O Reports in order

to keep it hidden. Id. at 1262-63. Or there may be some other reason why the

defendants wished to circumvent internal controls. That will be for the

government to prove at trial. But because the government could prove this

conspiracy without disputing that the SEC Reports were in fact true, we see no

basis for dismissing this charge. The only argument the defendants present for

avoiding this result is the one based on Saylor: that the government is stuck with

the theory of circumvention it advanced in the first trial. See Appellant’s Op. Br.

43-44. For the reasons we gave in Part III.B.1, supra, we reject that argument.

***

We grant the government’s motion to dismiss the defendants’ appeal with

respect to the forfeiture counts, and with respect to the government’s plans to

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introduce evidence that the alleged conspiracy began at a particular time. As for

the rest of the appeal, the government’s motion to dismiss under our supervisory

power is denied, and the judgment of the district court is affirmed.

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