United States v. Ernest Pitt

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 09-4724

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

ERNEST HAROLD PITT,

Defendant - Appellant.

Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. Malcolm J. Howard,
Senior District Judge. (1:08-cr-00325-MJH-1)

Argued: December 9, 2011 Decided: June 1, 2012

Before TRAXLER, Chief Judge, and GREGORY and WYNN, Circuit
Judges.

Vacated and remanded by unpublished opinion. Judge Gregory
wrote the opinion, in which Judge Wynn joined except as to Part
II.B. Judge Wynn wrote a separate opinion concurring in result
only as to Part II.B. Chief Judge Traxler wrote an opinion
concurring in part and dissenting in part.

ARGUED: Christopher R. Clifton, Michael Andrew Grace, Sr.,
GRACE, TISDALE & CLIFTON, P.A., Winston-Salem, North Carolina,
for Appellant. Frank J. Chut, Jr., OFFICE OF THE UNITED STATES
ATTORNEY, Greensboro, North Carolina, for Appellee. ON BRIEF:
Anna Mills Wagoner, United States Attorney, Greensboro, North
Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
GREGORY, Circuit Judge:

In this case, appellant Harold Pitt challenges his

convictions for mail fraud in connection with a real estate sale

on grounds that the district court improperly denied his motion

for judgment of acquittal and that the jury instructions were

improper under Skilling v. United States, 130 S. Ct. 2896

(2010). Finding that that the jury instructions were plainly

erroneous, we vacate his convictions.

I.

Harold Pitt was the chairman of the board of the Housing

Authority of Winston-Salem (“HAWS”), a public body created by

the North Carolina legislature as a municipal corporation.

HAWS’s purpose is to provide public housing for the Winston-

Salem area. The members of the board are appointed by the mayor

of Winston-Salem, and the board then elects its chairman. The

board’s role is very similar to that of a board of directors of

a corporation: each member takes an oath of office administered

by the mayor and is a fiduciary of HAWS. The members also serve

as members of the board of Forsyth Economic Venture (“FEV”), a

non-profit organization that is owned and controlled by HAWS.

North Carolina state law prohibits housing authority

commissioners from acquiring an interest in a housing project or

property planned to be included in any project. N.C. GEN. STAT.

2
§ 157-7. The statute also provides a duty to disclose any

conflict of interest. Id. HAWS receives the majority of its

funding from the U.S. Department of Housing and Urban

Development (“HUD”).

Pitt and his business partner Thomas Trollinger formed a

limited liability partnership known as East Pointe Developers

(“EPD”). EPD purchased a 41-lot subdivision known as Lansing

Ridge and built low-income housing on 18 of those lots, leaving

23 undeveloped. Eventually, EPD sold the undeveloped lots to

another entity, Wolfe Investment (“Wolfe”), for $358,000. Two

hundred forty-nine thousand dollars was borrowed from a trust

fund, secured by a first deed of trust. EPD provided the

remaining $183,000, taking a second deed of trust in that

amount. Wolfe, however, failed to develop Lansing Ridge. Pitt

informed Wolfe that HAWS might be interested in purchasing the

property and advised Wolfe not to sell to anyone else before

HAWS made a decision. Around the same time, the HAWS board met

and Pitt, without disclosing EPD’s interest in Lansing Ridge,

moved to authorize the executive director of HAWS to enter into

negotiations to purchase the property to develop low-income

housing. The board approved the resolution.

A foreclosure proceeding was brought by the trust fund

holding the first deed of trust. Foreclosure on the first deed

would have extinguished the second deed held by EPD. Pitt,

3
Trollinger, and EPD’s attorney, Andrew Hart, met to discuss the

situation. They agreed that Trollinger would purchase Lansing

Ridge at the foreclosure sale and then sell the property to

HAWS. Trollinger, as the only bidder, successfully bid

$285,100. He later assigned his bid to EPD, ostensibly to avoid

capital gains tax. Afterward, EPD borrowed $220,000 from Branch

Bank and Trust (“BB&T”) to pay for the purchase; Pitt and

Trollinger also individually contributed personal funds --

$29,050 and $14,795 respectively.

EPD then sold Lansing Ridge to FEV, the wholly owned

subsidiary of HAWS, for $414,000. At the closing, Trollinger

was given a check for $413,172, made payable to EPD. Pitt took

the check from Trollinger and deposited it in EPD’s account at

BB&T. The proceeds were used to pay off EPD’s loan to purchase

Lansing Ridge; Pitt and Trollinger then distributed the

remainder to themselves, $84,000 to each.

HAWS’s board was not aware of the purchase of Lansing

Ridge, nor did it seek approval from HUD prior to the sale, as

is custom. HAWS did eventually submit an acquisition package to

HUD, but HUD denied the acquisition request on two independent

grounds: the land was not suitable for development, 1 and HUD

1
While the dissent asserts that Lansing Ridge “was not
well-suited for use as an affordable-housing development,” the
evidence is decidedly mixed on that question. One of the
(Continued)
4
discovered that Pitt had a conflict of interest. HUD’s denial

barred the use of federal funds to develop the property. After

Pitt’s conflict of interest was discovered, he resigned as

chairman of the board. As a result of the lack of HUD funding,

HAWS had to use non-federal development fees to retire its debt.

Pitt was indicted on one count of wire fraud, four counts

of financial transactions in a criminally deprived property, and

two counts of mail fraud in violation of 18 U.S.C §§ 1341 &

1346. He was tried on all counts but found guilty only of the

two counts of mail fraud. The jury did not reach a verdict on

the remaining counts.

II.

Pitt challenges his conviction on two grounds. He contends

that the district court improperly denied his Rule 29 motion for

a judgment of acquittal and that the jury instructions were in

error under the Supreme Court’s recent decision in Skilling v.

United States. We address each claim of error in turn.

Government’s own witnesses, Janet DeCreny, testified that apart
from Pitt’s conflict of interest, the property was usable for
Hope VI. J.A. 861. Several Government witnesses testified that
while the land would need work before it was construction-ready,
it could be used for a housing development project. J.A. 208
(testimony of Jeff Corbett); J.A. 831-35 (testimony of David
MacPherson); J.A. 861-70 (testimony of Janet DeCreny).

5
 A.

Pitt first alleges that there was insufficient evidence for

the jury to have convicted him of mail fraud. We disagree.

When an appellate court reviews the denial of a motion for

judgment of acquittal, “the relevant question is whether, after

viewing the evidence in the light most favorable to the

prosecution, any rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt.”

Jackson v. Virginia, 443 U.S. 307, 319 (1979) (citing Johnson v.

Louisiana, 406 U.S. 356, 362 (1972)). There are two elements of

mail fraud: “(1) the existence of a scheme to defraud [money or

property or honest services] 2 and (2) the use of the mails . . .

for the purpose of executing the scheme.” United States v.

Delfino, 510 F.3d 468, 471 (4th Cir. 2007). To establish the

first element, the Government “must prove that the defendants

acted with the specific intent to defraud, which may be inferred

from the totality of the circumstances and need not be proven by

direct evidence.” United States v. Godwin, 272 F.3d 659 (4th

Cir. 2001) (citations omitted). Fraud includes “acts taken to

2
While a defendant may be convicted under an honest
services or pecuniary theory of fraud, here we evaluate the
sufficiency-of-the-evidence claim under a pecuniary theory only:
the Supreme Court’s recent decision in Skilling v. United
States, 130 S. Ct. 2896 (2010), requires proof of a bribery or
kickback scheme to make out a case for honest services fraud,
and there is no indication Pitt engaged in either.

6
conceal, create a false impression, mislead, or otherwise

deceive in order to prevent the other [party] from acquiring

material information.” United States v. Colton, 231 F.3d 890,

898 (4th Cir. 2000) (citing RESTATEMENT (SECOND) OF TORTS § 550

(1977)). “Thus, fraudulent concealment -- without any

misrepresentation or duty to disclose -- can constitute . . .

fraud.” Id. at 899.

Pitt first argues that the evidence was insufficient to

prove that he concealed his conflict of interest. The evidence

at trial, however, was sufficient for a reasonable jury to find

otherwise. Prior to the sale, Pitt told another individual,

Jeff Corbett, that he could not develop the Lansing Ridge

property with federal funds because he had a conflict of

interest. Moreover, North Carolina state law provides that “If

any commissioner or employee of an authority owns or controls an

interest . . . in any property included or planned to be

included in any housing project, he shall immediately disclose

the same in writing to the authority and such disclosure shall

be entered upon the minutes of the authority. N.C. GEN. STAT.

§ 157-7. Pitt, however, failed to comply with this obligation.

Trollinger also testified that he and Pitt agreed that

Trollinger would purchase the property in his own name, rather

than EPD’s, to conceal Pitt’s conflict of interest.

7
 Pitt next argues that there is insufficient evidence he had

the requisite intent. But again, the evidence at trial was

sufficient for a reasonable jury to find he had the intent to

defraud HAWS of a pecuniary interest. When Wolfe was first

contemplating selling off Lansing Ridge, Pitt spoke with Wolfe

and suggested that HAWS might purchase the property; once the

foreclosure action commenced, Pitt and Trollinger agreed that

they would bid at the auction and then re-sell the property to

HAWS, thereby making a substantial profit. Moreover, as

discussed above, Pitt consummated the sale while concealing his

conflict of interest. A reasonable jury could infer from these

facts that Pitt intended to defraud HAWS of the Lansing Ridge

purchase money.

As to the second element of mail fraud, Pitts does not

challenge that he used the U.S. mails in connection with the

land sale as to each of the counts of which he was convicted.

We therefore reject Pitt’s argument that insufficient evidence

was presented at trial to convict him.

B.

Pitt goes on to suggest that the instructions given to the

jury were erroneous under Skilling v. United States, 130 S. Ct.

2896, 2931 (2010), and that he is entitled to a reversal of his

conviction. We agree.

8
 1.

In Skilling, the Supreme Court considered the

constitutionality of 18 U.S.C. § 1346, which defines the term

“scheme or artifice to defraud” to “include a scheme or artifice

to deprive another of the intangible right of honest services.”

18 U.S.C. § 1346 (1988). In Skilling, the Court limited the

reach of § 1346, holding that “honest services fraud” only

covers bribery and kickback schemes. Skilling, 130 S.Ct. at

2931. Because the defendant in that case was convicted by a

general verdict after the jury was instructed on alternative

theories of guilt -- one valid, and one invalid -- the Court

reversed the conviction. Id. at 2934 (citing Yates v. United

States, 354 U.S. 298, 312 (1957) (“[A] verdict [must] be set

aside in cases where the verdict is supportable on one ground,

but not on another, and it is impossible to tell which ground

the jury selected.”).

Skilling is applicable to cases on direct appeal, Griffith

v. Kentucky, 479 U.S. 314, 328 (1987), and the district court

did instruct the jury that it could convict on either a

deprivation-of-property or an honest-services theory of fraud.

When the district court instructed the jury on the honest-

services theory, it did not include, as Skilling now requires,

an instruction limiting application of that theory to bribery or

kickback schemes. Moreover, the Government did not allege that

9
Pitt accepted a side payment. Thus, as the Government concedes,

there was error and, moreover, Pitt “did not commit honest

services fraud.” Skilling, 130 S. Ct. at 2934.

2.

The mere fact that the jury instructions were erroneous,

however, does not end the inquiry. If a defendant fails to

object to an erroneous jury instruction at trial, Rule 52(b)

would apply and this Court would review only for plain error.

FED. R. CRIM. P. 52(b). We note first that Skilling was not

handed down until long after Pitt’s trial -- indeed, both

parties filed their briefs in this Court months before Skilling

was decided. 3 That is, Pitt had no way of knowing at trial that

the proposed jury instructions were in fact contrary to law.

However, the Supreme Court has held that Rule 52(b) applies even

in cases where the relevant rule of law was not established

until after trial. Johnson v. United States, 520 U.S. 465, 464-

66 (1997). We must, therefore, apply plain error here. To

demonstrate plain error, the appellant must show that (1) there

was error, (2) the error was plain, (3) the error affected his

substantial rights, and (4) the error seriously affected the

fairness, integrity, or public reputation of the judicial

3
As a result, we ordered the parties to file supplemental
briefs addressing the Skilling issue.

10
proceedings, or the defendant is actually innocent. United

States v. Cedelle, 89 F.3d 181, 184 (4th Cir. 1996) (citing

United States v. Olano, 507 U.S. 725, 731-37 (1993)). With

respect to Yates errors in particular, this Court has held that

a defendant who fails to preserve his objection to a flawed

instruction “must demonstrate that the erroneous instruction

given resulted in his conviction, not merely that it was

impossible to tell under which [theory] the jury convicted.”

United States v. Robinson, 627 F.3d 941, 954 (4th Cir. 2010).

The first two Olano prongs are clearly satisfied. As the

Government concedes, there was error: the district court

improperly instructed the jury as to the honest services fraud

count. Moreover, this error is plain: Skilling

straightforwardly holds that such jury instructions are

improper. That it was not plain at the time of trial is

immaterial; the Supreme Court held in Johnson that “in a case

. . . where the law at the time of trial was settled and clearly

contrary to the law at the time of appeal[,] it is enough that

an error be ‘plain’ at the time of appellate consideration.”

Johnson, 530 U.S. at 468.

We further find that the error substantially affected

Pitt’s rights. Generally, for an error to affect a defendant’s

substantial rights, it “must have been prejudicial: It must have

affected the outcome of the district court proceedings.” Olano,

11
507 U.S. at 734. The defendant must “show a reasonable

probability that, but for the error,” the outcome would be

different. United States v. Dominguez Benitez, 542 U.S. 74, 76

(2004). Here there is every reason to believe that the outcome

would have been different had the district court properly

instructed the jury. From start to finish, the Government’s

case revolved around honest services fraud. The theory of the

prosecution’s case was that Pitt abused his position as the

chairman of HAWS and deprived the public of his honest services

by failing to disclose that he had a conflict of interest in the

Lansing Ridge sale. In its closing, the Government argued, “The

heart of this case is this idea of public duty. It’s called in

the federal criminal statutes [sic] that the judge is going to

instruct you on honest services, the duty of honest services.”

J.A. 1260. It went on to say that it need not prove Pitt

engaged in pecuniary fraud to get a conviction. E.g., J.A.

1262-63, 1281-82, 1313-14. The deprivation of honest services,

the Government informed the jury, was all it needed to find Pitt

guilty.

If instead, the official or employee acts or makes a
decision based on a personal interest . . . , the
official or employee has violated the duty to provide
honest services to the public even though the public
agency involved may not suffer any loss . . . The
crime is the violation of the duty.

J.A. 1262.

12
 Further, when the district court charged the jury, it spent

a substantial amount of time explaining the now-invalid honest

service theory. E.g., J.A. 1339-40. In contrast, the district

court mentioned only once the still-valid pecuniary fraud

theory. J.A. 1338.

While the Government correctly notes it argued at trial

that Pitt received a monetary benefit from the Lansing Ridge

sale, those allegations were wrapped up in the honest services

theory of the case. The Government argued that, in order to

receive a personal benefit, Pitt defrauded HAWS of its right to

his honest services. E.g., J.A. 1263, 1264, 1267, 1269-70,

1285-86, 1314. The pecuniary interest, in other words, was

offered primarily as a motive to engage in honest-services fraud

rather than as an independent theory of guilt.

We also note the jury’s failure to convict Pitt on the

additional counts on which he was indicted. Pitt was indicted

and tried on several additional charges of wire fraud and money

laundering -- counts that involved financial transactions.

Although these additional counts specifically involved the

transfer of funds, the jury could not reach a verdict. This

contrasts starkly with other cases, cited by our fine colleague

in dissent, in which contemporaneous convictions on additional

and related charges ameliorated the problem of the infirm honest

services charge. For example, in United States v. Jefferson,

13
674 F.3d 332 (4th Cir. 2012), this Court was also confronted

with a Skilling problem in a jury charge, for conspiracy to

commit honest services wire fraud. In that case, however, the

jury also convicted the defendant of two substantive bribery

offenses, and the circumstances surrounding the bribery offenses

and the conspiracy were the same.

Our conclusion is buttressed by the fact that an honest-

services theory and a pecuniary theory of mail fraud have

different elements with respect to intent. As noted above,

there are two elements of mail fraud: “(1) the existence of a

scheme to defraud [money or property or honest services] and (2)

the use of the mails . . . for the purpose of executing the

scheme.” Delfino, 510 F.3d at 468. To establish the first

element, the Government “must prove that the defendants acted

with the specific intent to defraud . . . .” Godwin, 272 F.3d

at 659 (citations omitted). Under an honest-services theory,

the Government need only show the defendant had the intent to

defraud another of the intangible right of honest services.

United States v. Harvey, 532 F.3d 326, 333 (4th Cir. 2008). In

a pecuniary fraud theory, by contrast, the Government must prove

the defendant intended to deprive another of a pecuniary

interest. See United States v. United Med. & Surgical Supply

Corp., 989 F.2d 1390 (4th Cir. 1993). As a result, an honest-

service fraud conviction does not necessitate a pecuniary fraud

14
conviction. Here, the fact that the jury found Pitt intended to

defraud HAWS of its right to his honest services does not compel

the conclusion that he also intended to deprive HAWS of a

pecuniary interest.

Finally, we exercise our discretion to notice the error by

finding that the erroneous jury instructions seriously affected

the fairness, integrity, or public reputation of the judicial

proceedings. In this case, the district court’s instructions to

the jury were clearly erroneous. Had the jury been properly

instructed, the outcome would not merely have been different,

but Pitt likely would have been found not guilty of the charges

brought against him. He instead was branded as a felon and is

forced to endure “the official expression of society’s

condemnation of his conduct.” United States v. Turner, 532

F.Supp. 913, 915 (N.D. Cal. 1982). Moreover, as Skilling makes

clear, any jury instruction that fails to properly limit the

reach of honest services fraud to bribery or kickback schemes

runs afoul of the Due Process Clause, depriving the defendant of

his constitutional rights. See Skilling, 130 S. Ct. at 2927-35.

If the Government remains convinced that Pitt is guilty, it can

choose to retry him pursuant to a proper jury instruction. But

to uphold the conviction in light of the facts presented here

would be nothing less than a “miscarriage of justice.” Cedelle,

89 F.3d at 184.

15
 Having found that the faulty jury instructions constituted

plain error, we are compelled to vacate both of Pitt’s

convictions. The two convictions rely on the same underlying

scheme to defraud -- EPD’s sale of the Lansing Ridge property to

HAWS. The only difference between the two involves what

documents Pitt caused to be sent through the U.S. mails: while

Count Six alleges that it was “closing documents,” Count Seven

asserts it was “loan documents regarding a loan between M&F Bank

and FEV.” Because sending documents through the U.S. mails is

not a federal crime unless it is done in the context of an

underlying fraud, both convictions must be vacated.

III.

While the district court did not err in denying the

Appellant’s Rule 29 motion, we find that the jury instructions

were plainly erroneous. We therefore vacate the Appellant’s

convictions and remand to the district court for further

proceedings.

VACATED AND REMANDED

16
WYNN, Circuit Judge, concurring in result only as to Part II.B.:

Defendant Harold Pitt challenges his convictions for mail

fraud in connection with a real estate sale, arguing that the

jury instructions were improper under Skilling v. United States,

130 S. Ct. 2896 (2010). Because I agree that the instructions

were indeed plainly erroneous, I, too, conclude that Defendant’s

convictions must be vacated.

I.

18 U.S.C. § 1341 prohibits the use of the mail to further

“any scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses,

representations, or promises . . . .” 18 U.S.C. § 1346 defines

“scheme or artifice to defraud” to include “a scheme or artifice

to deprive another of the intangible right of honest services.”

In Skilling, the Supreme Court held that “honest services

fraud” covers only bribery and kickback schemes. Skilling, 130

S. Ct. at 2928, 2931. In so doing, the Supreme Court rejected

the argument that “honest services” should encompass conflict-

of-interest cases involving “undisclosed self-dealing by a

public official or private employee—i.e., the taking of official

action by the employee that furthers his own undisclosed

financial interests while purporting to act in the interests of

those to whom he owes a fiduciary duty.” Id. at 2932 (quotation

17
marks omitted). Because the defendant in Skilling had been

convicted by a general verdict after the jury was instructed on

alternative theories of guilt, one of which was invalid, the

Supreme Court reversed the conviction. Id. at 2934 (citing

Yates v. United States, 354 U.S. 298, 312 (1957) (“[A] verdict

[must] be set aside in cases where the verdict is supportable on

one ground, but not on another, and it is impossible to tell

which ground the jury selected.”)).

Skilling applies to this case. While it postdates

Defendant’s trial, it was decided during the pendency of his

direct appeal and thus before his case was final. See Griffith

v. Kentucky, 479 U.S. 314, 328 (1987) (“[A] new rule for the

conduct of criminal prosecutions is to be applied retroactively

to all cases, state or federal, pending on direct review or not

yet final . . . .”).

Defendant’s indictment did not allege, and the Government

did not present any evidence, that Defendant participated in any

bribery or kickback schemes. Further, the district court

instructed the jury that it could convict Defendant on an honest

services theory of fraud without limiting the application of

that theory to bribery or kickback schemes. In so doing, the

district court erred. See Skilling, 130 S. Ct. at 2928, 2931.

And because the jury returned a general verdict, one cannot

18
easily discern whether the verdict rested on the invalid honest

services theory or on the valid pecuniary fraud theory.

When a jury is instructed on alternative theories of

criminal liability and returns a general verdict of guilty that

might have rested on an invalid theory, it constitutes

constitutional error. See Yates, 354 U.S. at 311-12. While

Defendant’s convictions suffer from such error, “errors of the

Yates variety are subject to harmless-error analysis.”

Skilling, 130 S. Ct. at 2934. Generally, to determine whether a

Yates error is harmless, “the relevant appellate inquiry is

whether the error was harmless beyond a reasonable doubt.”

United States v. Jefferson, 674 F.3d 332, 361 (4th Cir. 2012).

However, Rule 30 of the Federal Rules of Criminal Procedure

mandates that “[a] party who objects to any portion of the

instructions . . . must inform the court of the specific

objection and the grounds for the objection before the jury

retires to deliberate.” Fed. R. Crim. P. 30(d). Rule 30 is

mitigated by Rule 52, which allows this Court to nevertheless

review for plain error. Fed. R. Crim. P. 52(b). Because

Skilling was not handed down until after Defendant’s trial,

Defendant, not surprisingly, failed to object to the now-clearly

erroneous honest services instruction. Nevertheless, the

Supreme Court has held that the plain error standard applies

even in cases where the relevant rule of law was not established

19
until after trial. See Johnson v. United States, 520 U.S. 461,

464-66 (1997). We must, therefore, review this issue through

the plain error lens.

To demonstrate plain error, an appellant must show that (1)

there was error, (2) the error was plain, (3) the error affected

his substantial rights, and (4) the error seriously affected the

fairness, integrity, or public reputation of the judicial

proceedings. Id. at 467 (citing United States v. Olano, 507

U.S. 725, 732 (1993)). And as to Yates errors specifically,

this Court has held that a defendant who failed to preserve his

objection to a flawed instruction “must demonstrate that the

erroneous instruction given resulted in his conviction, not

merely that it was impossible to tell under which [theory] the

jury convicted.” United States v. Robinson, 627 F.3d 941, 954

(4th Cir. 2010) (quotation marks and alterations omitted).

II.

Applying the law to this case, Defendant has met the first

two Olano prongs. The district court improperly instructed the

jury as to honest services fraud. Further, that error is plain:

Skilling makes clear that jury instructions such as those given

here, which allow a jury to convict under an honest services

theory in the absence of bribery or kickbacks, are

constitutionally infirm. Skilling, 130 S. Ct. at 2931. That

20
the error may not have been plain at the time of trial is

irrelevant: “[W]here the law at the time of trial was settled

and clearly contrary to the law at the time of appeal—it is

enough that an error be ‘plain’ at the time of appellate

consideration.” Johnson, 520 U.S. at 468.

Further, the error substantially affected Defendant’s

rights. Generally, for an error to affect a defendant’s

substantial rights, it “must have been prejudicial: It must

have affected the outcome of the district court proceedings.”

Olano, 507 U.S. at 734. Further, because we are limited to

reviewing for plain error, Defendant must show that “the

erroneous instruction given resulted in his conviction . . . .”

Robinson, 627 F.3d at 954 (quotation marks and alterations

omitted).

I believe that the erroneous instruction indeed resulted in

Defendant’s conviction. The Government’s case focused on honest

services fraud, and specifically the theory that Defendant

abused his position as the chairman of HAWS and deprived the

public of his honest services by failing to disclose that he had

a conflict of interest in the Lansing Ridge sale. In its

closing argument, the Government plainly stated that “[t]he

heart of this case is this idea of public duty. It’s called in

the federal criminal statutes that the judge is going to

instruct you on honest services, the duty of honest services.”

21
J.A. 1260. The Government then repeatedly told the jury that

the Government did not need to prove that Defendant engaged in

pecuniary fraud to get a conviction. For example, the

Government told the jury:

Public officials and public employees inherently
owe a duty to the public to act in the public’s best
interest and Judge Howard, when he reads the
instructions, he will say, if instead, the official or
employee acts or makes a decision based on personal
interest such as receiving a personal benefit from an
undisclosed conflict of interest, the official or
employee has violated the duty to provide honest
services to the public even though the public agency
involved may not suffer any monetary loss in the
transaction. The crime is the violation of the duty.

J.A. 1262. This contrasts starkly with Skilling, in which the

Government “mentioned the honest-services theory in relation to

Skilling only once”—in its rebuttal closing argument—and “never

argued that the jury should convict Skilling solely on the

honest-services theory . . . .” United States v. Skilling, 638

F.3d 480, 483 (5th Cir. 2011).

Further, and crucially, when the district court actually

charged the jury here, it spent a substantial amount of time

explaining to the jury the now-invalid honest services theory.

By contrast, the district court barely mentioned the still-valid

pecuniary fraud theory—together with a mention of the now-

invalid honest services theory:

[F]or you to find Mr. Pitt guilty of mail fraud in
count six or seven, you must be convinced that the
government has proved each element beyond a reasonable

22
 doubt: First, that Mr. Pitt knowingly devised or
participated in a scheme to fraudulently deprive the
public and the Housing Authority of Winston-Salem of
money, property, or of the intangible right of honest
service . . . .

J.A. 1338.

Nowhere in its charge did the district court explain or expound

upon, in conjunction with the mail fraud counts, the pecuniary

fraud theory.

Moreover, while Defendant was indicted and tried on

multiple other charges for wire fraud and money laundering, he

was not convicted on a single one. On all of those other

counts, which specifically involved the transfer of funds, the

jury could not reach a verdict. That contrasts starkly with

cases cited by the dissent, in which contemporaneous convictions

on additional and related charges ameliorated the problem of the

infirm honest services charge. For example, in Jefferson, 674

F.3d 332, this Court confronted a Skilling problem in a jury

charge for conspiracy to commit honest services wire fraud. But

because the jury had also convicted the defendant on two bribery

counts, and the circumstances surrounding the bribery offenses

and the conspiracy were the same, the Skilling error was

harmless. Id. at 362.

Similarly, in United States v. Hastings, 134 F.3d 235, 242

(4th Cir. 1998), also a plain error case, this Court emphasized

that “[a] reviewing court must attempt to ascertain what

23
evidence the jury necessarily credited in order to convict the

defendant under the instructions given. If that evidence is

such that the jury must have convicted the defendant on the

legally adequate ground in addition to or instead of the legally

inadequate ground, the conviction may be affirmed.” The Court

then determined that “in making the factual finding necessary to

convict under the erroneous instruction, the jury necessarily

found facts establishing” the elements of the validly instructed

offense. Id. Under such circumstances, this Court held that

the defendant could not establish plain error. Id. See also

United States v. Rodrigues, ___ F.3d ___, 2012 WL 1001349, at *8

(9th Cir. 2012) (“[T]he Court determines that in light of the

jury’s verdict, as affirmed by the Ninth Circuit, it is clear

that the jury had to have found that Petitioner engaged in a

kickback scheme.”); United States v. Coppolla, 671 F.3d 220, 238

n.12 (2d Cir. 2012) (deeming Yates error “harmless under any

conceivable standard” where proof of the invalid theory

“necessarily establishes the facts required to show” the valid

theory).

While the Hastings jury’s conviction necessarily captured

the factual findings needed for a valid conviction, the same

cannot be said in this case. Indeed, the jury was told

repeatedly that it need not find pecuniary fraud to convict

24
Defendant of the mail fraud charges—and nothing indicates that

the jury made any such pecuniary fraud finding.

This case also contrasts starkly with United States v.

Joshua, 648 F.3d 547 (7th Cir. 2011), also cited in the dissent.

In Joshua, “special verdicts unambiguously reveal[ed] that the

jury accepted both of the prosecution’s theories: honest

services fraud, and a conventional fraudulent scheme to obtain

money. The latter form of mail fraud is untouched by Skilling

and remains illegal. Thus, even if honest services fraud is

erased from the picture, the jury would have convicted on the

monetary fraud theory.” Id. at 553 (citation omitted). Here,

by contrast, there were no special verdicts, and nothing

indicates that the jury would have convicted Defendant on a

pecuniary fraud theory.

On the contrary, the jury was repeatedly told that it need

not worry about pecuniary fraud to convict Defendant of mail

fraud. The jury was then barely instructed on pecuniary fraud

as to the mail fraud charges. Instead, it was instructed

extensively on the now-defunct honest services theory and told

that a conflict of interest was enough to convict. The jury

proceeded to convict Defendant of only mail fraud and not of any

of the other charges, all of which involved financial

transactions. And substantial evidence before the jury spoke to

Defendant’s conflict of interest, regardless of whether he

25
defrauded HAWS or anyone else of money or property. For

example, trial testimony made clear that: Defendant, who served

as chairman of the HAWS Board of Commissioners, was a fiduciary

and had an obligation to disclose conflicts of interest and

avoid acquiring an interest in a housing project; Defendant

moved to authorize HAWS to enter into negotiations to purchase

Lansing Ridge without disclosing his interest in that property

or his role in EPD; and Defendant allowed the Lansing Ridge

purchase to occur without informing anyone of his conflict or

even securing HAWS board approval for the purchase or the

related loans. Under all of these circumstances, I conclude

that the third Olano prong is met, that the jury convicted

Defendant on the defunct honest services theory, and that the

related instructional error affected Defendant’s substantial

rights.

Finally, regarding the fourth Olano prong, I believe that

the plainly erroneous jury instructions seriously affected the

fairness and integrity of Defendant’s judicial proceedings.

Indeed, as Skilling indicates, any jury instruction that fails

to properly limit the reach of honest services fraud to bribery

or kickback schemes runs afoul of the Due Process Clause,

depriving a defendant of his constitutional rights. See

Skilling, 130 S. Ct. 2896.

26
 III.

In sum, the district court committed plain (even if, at the

time, understandable) error when it instructed the jury that it

could convict Defendant of mail fraud based on an honest

services theory in the absence of allegations and evidence of

bribes or kickbacks. I therefore agree that Defendant’s mail

fraud convictions must be vacated.

27
TRAXLER, Chief Judge, concurring in part and dissenting in part:

I agree that the evidence was sufficient to support Pitt’s

mail fraud convictions, and I therefore concur in Section II.A

of the majority opinion. I likewise agree that the district

court’s jury instructions, though proper when given, were

improper in light of the Supreme Court’s opinion in Skilling v.

United States, 130 S. Ct. 2896 (2010). I am convinced, however,

that the Skilling error was harmless beyond a reasonable doubt,

and I therefore dissent from the reversal of Pitt’s convictions.

I.

18 U.S.C.A. § 1341 prohibits use of the mails to further

“any scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses,

representations, or promises.” 18 U.S.C.A. § 1346 defines

“scheme or artifice to defraud” to include “a scheme or artifice

to deprive another of the intangible right of honest services.”

In Skilling, the Supreme Court held that, to avoid

constitutional questions of vagueness, honest-services fraud

under § 1346 must be limited to the conduct at the core of the

doctrine as historically applied: “fraudulent schemes to deprive

another of honest services through bribes or kickbacks supplied

by a third party who had not been deceived.” Skilling, 130 S.

Ct. at 2928. In so limiting § 1346, the Court specifically

28
rejected the argument that the honest-services doctrine should

encompass conflict-of-interest cases -- those involving

“undisclosed self-dealing by a public official or private

employee” or “the taking of official action by the employee that

furthers his own undisclosed financial interests while

purporting to act in the interests of those to whom he owes a

fiduciary duty.” Id. at 2932 (internal quotation marks

omitted).

The indictment in this case alleged that Pitt and his co-

defendants devised a scheme to defraud the Housing Authority of

Winston-Salem (“HAWS”) and the public of both the $414,000 in

HAWS funds used to buy Lansing Ridge and Pitt’s honest services.

The honest-services theory, however, should not have been

submitted to the jury because there were no allegations in the

indictment or evidence at trial of bribes or kickbacks. And

because the jury returned a general verdict, we cannot determine

whether the verdict rested on the (now) invalid honest-services

theory or on the (still) valid pecuniary fraud theory.

Constitutional error arises when a jury is instructed on

alternative theories of criminal liability and returns a general

verdict of guilty that might have rested on a theory that was

invalid as matter of law. See Yates v. United States, 354 U.S.

298, 311-12 (1957). While Pitt’s convictions are “flawed” by

29
the Yates error, “errors of the Yates variety are subject to

harmless-error analysis.” Skilling, 130 S. Ct. at 2934.

To determine whether a Yates alternative-theory error is

harmless, “the relevant appellate inquiry is whether the error

was harmless beyond a reasonable doubt.” United States v.

Jefferson, 674 F.3d 332, 361 (4th Cir. 2012). “Accordingly, a

reviewing court is not entitled to reverse a conviction that

could rest on either a valid or invalid legal theory if the

court can conclude ‘beyond a reasonable doubt that a rational

jury would have found the defendant guilty absent the error.’”

Id. (quoting Neder v. United States, 527 U.S. 1, 18 (1999)).

Because Pitt did not argue below that § 1346 was

unconstitutionally vague or object to the mail-fraud

instructions when given, his Skilling claim must be viewed

through the prism of plain-error review, as the majority

concludes. The primary difference between harmless-error review

and plain-error review, of course, is the allocation of the

burden of persuasion. Under harmless-error review, the

government bears the burden of establishing that the error was

not prejudicial; under plain-error review, the defendant bears

the burden establishing that he was prejudiced by the

complained-of error. See United States v. Olano, 507 U.S. 725,

734 (1993).

30
 This court has held that to prevail on a Yates claim under

plain-error review, the defendant “must demonstrate that the

erroneous instruction given resulted in his conviction, not

merely that it was impossible to tell under which [theory] the

jury convicted.” United States v. Robinson, 627 F.3d 941, 954

(4th Cir. 2010) (internal quotation marks and alterations

omitted). Because I believe that Pitt’s claim fails even under

the more generous (to Pitt) standards of harmless-error review,

I will analyze Pitt’s claims under the harmless-error standard

rather than the much stricter plain-error standard set out in

Robinson.

II.

Determining whether a Yates or other instructional error

was harmless requires an examination of the evidence presented

at trial and the district court’s instructions to the jury.

See, e.g., United States v. Hornsby, 666 F.3d 296, 305-06 (4th

Cir. 2011). Accordingly, I will first set out the relevant

facts (in a bit more detail than is contained in the majority

opinion) before explaining why I believe the error was harmless

beyond a reasonable doubt.

A.

Pitt was appointed to the HAWS Board of Commissioners in

1998, and he served as Board chairman during the time period

31
relevant to this appeal. Board commissioners, as fiduciaries,

are obligated to serve the interests of HAWS, and they may not

use their positions to serve their own interests. North

Carolina law specifically prohibits housing authority

commissioners from acquiring an interest in any housing

authority project or property to be included in any such

project, see N.C. Gen. Stat. § 157-7, and it requires any

commissioner who already has an interest in property being

considered for a housing project to immediately disclose his

interest to the authority in writing, see id.

HAWS receives almost all of its funding from the Department

of Housing and Urban Development (“HUD”), and its use of those

funds are governed by “Annual Contribution Contracts” between

HAWS and HUD. The annual contracts -- which were signed by Pitt

during his tenure as chairman -- contain a conflict-of-interest

clause that prohibited HAWS from entering into contracts for

projects in which former or current HAWS Board members had a

direct or indirect interest.

Pitt and co-defendant Thomas Trollinger, through their

limited-liability company known as East Pointe Developers

(“EPD”), owned Lansing Ridge, a 41-lot subdivision in east

Winston-Salem. EPD had built low-income housing on 18 lots,

leaving 23 undeveloped lots. In April 2002, when he was serving

as Chairman of HAWS, Pitt met with Jeff Corbett, owner of Wolfe

32
Investments, to discuss a sale of Lansing Ridge. According to

Corbett, Pitt told him that because of an unexplained (to

Corbett) “relationship” with HAWS, Pitt had a conflict-of-

interest that prevented him from developing the remaining lots

at a profit. J.A. 207. Pitt, however, claimed that he could

provide Corbett with buyers who had been pre-qualified through a

HAWS program, a promise that made Lansing Ridge attractive to

Corbett. Wolfe agreed to buy the 23 undeveloped lots for

$358,000. To finance the purchase, Wolfe borrowed $249,000 from

a trust fund, which held a first-priority deed of trust to

secure the loan. EPD provided seller-financing for the

remaining portion of the purchase price and also made a separate

$75,000 loan, securing both by a second-priority deed of trust

in the amount of $183,000.

Pitt did not refer buyers as promised, and Wolfe was

unsuccessful in developing the Lansing Ridge property. When

Corbett told Pitt that he was having difficulty making the

mortgage payments and needed to sell the property, Pitt told

Corbett not to sell to a third party and that HAWS might be

interested in purchasing Lansing Ridge.

At an October 2002 meeting of the Board, Pitt introduced a

resolution authorizing the executive director to enter into

negotiations to buy the Lansing Ridge lots for development under

HUD’s “Hope VI” housing program. Pitt did not disclose his

33
interest in Lansing Ridge or his role as a partner in EPD at

that meeting, and the Board approved the resolution. The

resolution authorized negotiations only; the property could not

be purchased without further authorization from the Board.

Reid Lawrence, HAWS’ executive director and one of Pitt’s

co-defendants, began negotiating with Corbett for the purchase

of Lansing Ridge. In May 2003, Corbett and HAWS entered into a

contract giving HAWS a 120-day exclusive option to purchase the

Lansing Ridge lots for $414,000. The option contract was not

presented to the Board for approval, nor was the Board otherwise

given an opportunity to consider the proposed purchase.

Before HAWS acted on the option, a foreclosure proceeding

was commenced by the trust fund holding the first deed of trust

on the Lansing Ridge lots. Because foreclosure on the senior

deed of trust would extinguish all junior liens, EPD’s attorney

advised Pitt and Trollinger to bid for the lots at the

foreclosure sale to protect EPD’s $183,000 interest in Lansing

Ridge.

Shortly thereafter, Pitt, Trollinger, and Lawrence agreed

that Trollinger would purchase the Lansing Ridge lots at the

foreclosure sale and that HAWS would then buy the lots from

Trollinger for $414,000. The parties agreed that Trollinger

would buy the property in his own name rather than in EPD’s name

34
so as to conceal Pitt’s interest in the property. Trollinger

understood that HAWS would not bid on the property at the sale.

The foreclosure sale was held on July 30, 2003. Trollinger

and Lawrence were both present at the sale, but Trollinger was

the only bidder at the sale. His successful bid was $285,100 --

$100 over the amount owed on the first deed of trust. To

finance the purchase, EPD obtained a short-term loan of

$220,000, and Pitt and Trollinger individually contributed the

balance of the purchase price.

Trollinger’s $285,100 bid became final on August 12, 2003,

after expiration of the ten-day “upset bid” period. Less than a

week later, HAWS was under contract to buy the property for

$414,000. The foreclosure sale of Lansing Ridge to Trollinger

was finalized on August 27, 2003; the next day, Trollinger sold

Lansing Ridge to Forsyth Economic Venture (“FEV”), a wholly-

owned subsidiary of HAWS. As chairman of the HAWS Board, Pitt

also served as FEV’s president; Lawrence, HAWS’ executive

director, also served as FEV’s vice-president.

Trollinger and Lawrence both attended the closing of the

sale to FEV. Trollinger informed the attorney handling the

closing that he had assigned his foreclosure bid to EPD. 1

1
Trollinger testified that he assigned his winning
foreclosure bid to EPD without Pitt’s knowledge, so as to avoid
capital gains taxes after the resale of the property to HAWS.
(Continued)
35
Although Pitt was an equal partner with Trollinger in EPD,

Trollinger told the closing attorney that he was EPD’s sole

member. The attorney made the necessary changes in the

documents and proceeded to close the sale. She testified,

however, that she would not have continued with the closing if

she had known about Pitt’s interest in the lots. Pitt and

Trollinger used the proceeds from the sale to satisfy the short-

term loan taken out by EPD and then distributed the remainder to

themselves, with each one writing a check to the other for

$84,000.

The funds used to buy Lansing Ridge had been loaned to FEV

by HAWS and were wired, at Lawrence’s direction, from HAWS’

general account to the closing attorney. At the time of the

wire transfer, the general account contained primarily federal

funds. A few months after closing, Pitt obtained a commercial

loan on FEV’s behalf and used the proceeds of that loan to repay

HAWS for the funds advanced at closing. The Board never

authorized the purchase of the Lansing Ridge lots, nor did the

Board authorize the various loan transactions used to structure

the purchase.

Trollinger testified that Pitt was not happy when he learned of
the assignment.

36
 The government’s evidence established that Lansing Ridge

property was not well-suited for use as an affordable-housing

development. Among other things, the property was poorly

graded, and extensive remediation of low-lying, poorly draining

land would be required for some of the lots to be “buildable.”

J.A. 835. As of the time of Pitt’s trial, HAWS had made five

unsuccessful attempts to sell the property.

Pitt’s interest in Lansing Ridge came to light in December

2004, after Lawrence sought HUD approval to use the property in

the Hope VI program. HUD discovered Pitt’s conflict of interest

while reviewing the request, and HUD thereafter refused to waive

the conflict of interest and denied approval for the property.

The effect of HUD’s denial was to preclude HAWS from using any

federal housing funds to develop or maintain Lansing Ridge.

Pitt resigned from the Board in January 2005 after being

questioned about his conflict of interest by a HAWS attorney.

The government charged Pitt, Trollinger, and Lawrence in a

ten-count indictment; Trollinger and Lawrence pleaded guilty,

and Pitt proceeded to trial. The indictment charged Pitt with

one count of wire fraud, four counts of money laundering, and

two counts of mail fraud. The jury found Pitt guilty of the

mail-fraud charges but was unable to reach a verdict on the

other charges.

37
 B.

Both mail-fraud counts (counts six and seven) alleged

pecuniary fraud under § 1341 and honest-services fraud under §

1346, and the district court instructed the jury on the

alternative theories of pecuniary fraud and honest-services

fraud. Although it was error under Skilling to submit the

honest-services theory to the jury, the question is whether “the

jury [would] have still convicted [Pitt] had it not been told

that in addition to the valid money/property fraud allegations,

an allegation of honest services fraud could also be taken into

consideration.” United States v. Segal, 644 F.3d 364, 366 (7th

Cir. 2011), cert. denied, 132 S. Ct. 1739 (2012). My review of

the record convinces me beyond a reasonable doubt that the jury

would have convicted Pitt of pecuniary mail fraud had the

honest-services theory not been submitted to it.

The government’s theory of the case was, in essence, that

Pitt committed honest-services fraud as part of and in

furtherance of his overarching plan to commit pecuniary fraud.

See J.A. 1259-60 (arguing in closing that “Pitt violated his

duty of honest services . . . and personally benefited from his

position as chairman of the board. And that benefit was in the

amount of $84,000 . . . . that the evidence shows went to Mr.

Pitt and not the lower-income people of the city of Winston-

Salem.”); J.A. 1268-69 (“[F]ollow the money from HUD to the

38
Housing Authority to the $413,000 check to [EPD] that Mr.

Trollinger testified he gave to Mr. Pitt to this check which

goes directly to Mr. Pitt’s bank. Follow the money.”). As is

apparent from the allegations in the indictment and the facts

outlined above, the pecuniary fraud and honest-services fraud

charges arose from and were premised on the same underlying set

of facts -- Pitt’s efforts to orchestrate the purchase of

Lansing Ridge by HAWS for his own direct financial benefit. The

government’s evidence of fraud, therefore, was as applicable to

the pecuniary fraud theory as it was to the honest-services

theory. For example, evidence of the plan to have Trollinger,

in his own name, buy Lansing Ridge at the foreclosure and

immediately resell it to HAWS at a pre-determined and

substantially higher price establishes a scheme to defraud under

either theory, and Pitt’s repeated failures to disclose his

interest in Lansing Ridge to the Board and Trollinger’s lies to

the closing attorney about the ownership of EPD are material

misrepresentations or concealments under either theory. 2 And as

2
Although the Court in Skilling held that honest-services
fraud does not encompass undisclosed conflict-of-interest cases,
see 130 S. Ct. at 2932, Skilling does not preclude the
prosecution under § 1341 of a conflict-burdened defendant who
commits pecuniary fraud, nor does it somehow render evidence of
an undisclosed conflict irrelevant or inadmissible in a § 1341
pecuniary fraud case. See, e.g., United States v. Joshua, 648
F.3d 547, 554 (7th Cir. 2011) (finding “nothing objectionable”
(Continued)
39
to specific intent, which “may be inferred from the totality of

the circumstances and need not be proven by direct evidence,”

United States v. Ham, 998 F.2d 1247, 1254 (4th Cir. 1993), the

record is replete with supporting evidence relevant to either

theory, not the least of which is Trollinger’s unequivocal

testimony that the purpose of buying the property in his name

was “[t]o conceal Mr. Pitt’s interest in the property.” J.A.

720. Moreover, the critical evidence supporting the mail-fraud

charges was effectively uncontroverted. Pitt did not testify or

present other evidence directly contradicting the factual

substance of the government’s evidence. Although counsel for

Pitt attempted to show through cross-examination that Pitt did

not conceal his interest in the property and had no intent to

defraud because his involvement with EPD was already known to

the Board, the guilty verdicts show that the jury necessarily

rejected that claim.

Accordingly, I believe that the largely uncontroverted

evidence establishing honest-services fraud likewise established

pecuniary fraud. I see nothing in that evidence, or in the

government’s arguments, or in the court’s instructions, that

could rationally lead to a conviction for honest-services fraud

about the use of the same evidence to support allegations of
monetary fraud and honest-services fraud).

40
but an acquittal on pecuniary fraud. See United States v.

Skilling, 638 F.3d 480, 482 (5th Cir. 2011) (finding Yates error

harmless after remand from Supreme Court and explaining that

relevant inquiry is “whether the record contains evidence that

could rationally lead to an acquittal with respect to the valid

theory of guilt” (internal quotation marks and alterations

omitted)), cert. denied, ___ S. Ct. ___, 80 U.S.L.W. 3358 (U.S.

April 16, 2012); United States v. Black, 625 F.3d 386, 393 (7th

Cir. 2010) (after remand from Supreme Court, finding Yates error

harmless as to one count because “[n]o reasonable jury could

have acquitted the defendants of pecuniary fraud on this count

but convicted them of honest-services fraud”), cert. denied, 131

S. Ct. 2932 (2011). Because the pecuniary fraud and honest-

services fraud claims were so closely related and were premised

on the same set of largely uncontroverted facts, I have no

difficulty concluding that the error in submitting the honest-

services theory to the jury was harmless beyond a reasonable

doubt. See Jefferson, 674 F.3d at 364 (finding Yates error

harmless because the “alternative theories of liability were co-

extensive”).

Judge Gregory, however, seems to believe that the close

relationship between the fraud counsels against a finding of

harmlessness. According to Judge Gregory, the government’s case

was always and only an honest-services-fraud case that focused

41
on Pitt’s failure to disclose his interest in Lansing Ridge

rather than on the money from the sale of the property. Judge

Gregory minimizes the significance of the pecuniary fraud,

asserting that the evidence showing that Pitt personally

profited from the sale was offered “primarily as a motive to

engage in honest-services fraud rather than as an independent

theory of guilt.” Opinion of Judge Gregory, slip op. at 13.

While I agree that money from the sale of Lansing Ridge provided

the motive for Pitt’s fraud, I am puzzled by the view that

Pitt’s obvious pecuniary motive somehow makes it less likely

that the jury would have convicted Pitt of pecuniary fraud.

Judge Gregory does not explain, nor is it apparent to me,

why the interrelatedness of the theories makes the error harmful

rather than harmless. The very formulation of the harmlessness

inquiry -- whether the record contains evidence that could

rationally lead to an acquittal with respect to the valid theory

of guilt -- suggests that a close connection between the valid

and invalid theories would make it more likely, not less likely,

that the error would be harmless, as courts have often

concluded. See, e.g., United States v. Rodrigues, ___ F.3d ___,

2012 WL 1001349 at *8-9 (9th Cir. Mar. 27, 2012) (agreeing with

district court’s analysis that Yates error was harmless because

the same facts establishing the invalid honest-services theory

likewise established that defendant received kickbacks);

42
Jefferson, 674 F.3d at 364 (Yates error harmless because

alternative theories “were co-extensive”); United States v.

Coppolla, 671 F.3d 220, 238 n.12 (2d Cir. 2012) (Yates error

“harmless under any conceivable standard” where proof of the

invalid theory “necessarily establishes the facts required to

show” the valid theory).

I recognize, of course, that there are cases where the

intertwining of the alternate theories might preclude a finding

of harmlessness -- for example, where the jury instructions

jumbled the theories in ways that the jury could not have sorted

out, see United States v. Riley, 621 F.3d 312, 324 (3d Cir.

2010), or where the evidence supporting the invalid legal theory

was strong but the evidence of the valid theory was weaker, see

Black, 625 F.3d at 392 (Yates error not harmless as to one count

where the evidence of pecuniary fraud was “not conclusive” but

the evidence of honest-services fraud was “irrefutable”). In

this case, however, the jury instructions did not mix concepts

of pecuniary and honest-services fraud, and the evidence of

pecuniary fraud was extremely strong. And in my view, it is the

strength of that evidence and its relationship to the honest-

services fraud evidence that makes the Yates error harmless.

At the same time that he finds the error not harmless

because the fraud theories are too related, Judge Gregory also

contends the error was not harmless because the theories are too

43
different. Judge Gregory posits that a conviction for pecuniary

fraud requires proof the defendant specifically intended to

defraud another of a pecuniary interest, while a conviction for

honest-services fraud requires proof of a specific intent to

defraud another of the intangible right to honest services.

Because “an honest-service fraud conviction does not necessitate

a pecuniary fraud conviction,” Opinion of Judge Gregory, slip

op. at 14, the jury’s conclusion that “Pitt intended to defraud

HAWS of its right to his honest services does not compel the

conclusion that he also intended to deprive HAWS of a pecuniary

interest,” id., and the Yates error therefore cannot be

harmless.

I am not entirely sure I understand this analysis.

Alternative theories of guilt are “alternative” because they

differ from each other in some respect. If an alternative-

theory error can be harmless only if the alternate theories have

identical elements proved through identical evidence,

alternative-theory errors would never be harmless.

In any event, as previously discussed, the government’s

evidence established that the whole point of buying Lansing

Ridge at the foreclosure sale was to immediately turn around and

sell it to HAWS at a price high enough to protect Pitt’s

undisclosed financial interest in the property, and it is

irrefutable that Pitt pocketed $84,000 of the HAWS-supplied

44
funds used to buy Lansing Ridge. While the instructions

permitted the jury to convict Pitt of honest-services fraud even

if HAWS did not suffer a loss, the instructions also explained

that a defendant acts with intent to defraud by acting

“knowingly and with the specific intent to deceive someone

ordinarily for the purpose of causing some financial loss to

another or bringing about some financial gain to oneself.” J.A.

1339. The evidence demonstrated beyond question that HAWS in

fact suffered a financial loss by paying an inflated price for

property that is unsuitable for development as low-income

housing and for which federal housing funds cannot be used to

make suitable. In the face of this evidence, any reasonable

jury concluding that Pitt intended to defraud HAWS of his honest

services would also have found that he intended to defraud HAWS

of money.

Judge Gregory and Judge Wynn in their separate opinions

both distinguish the cases (discussed above) where Yates errors

have been found to be harmless in the same manner. They note

that while the jury here could not reach a verdict on the money-

laundering charges, the juries in the above-discussed cases

convicted the defendants of “additional and related charges

[that] ameliorated the problem of the infirm honest services

charge.” Opinion of Judge Gregory, slip op. at 13; Opinion of

Judge Wynn, slip op. at 23. An instructional error, of course,

45
can be found harmless even if the count affected by the error is

the only count of which the defendant was convicted. And while

a jury’s decision to convict a defendant of other charges is

relevant to the harmlessness inquiry, the same cannot be said

about a jury’s inability to reach a verdict. As this court

recently explained when declining to consider hung-jury counts

when determining whether a Skilling error was harmless, “[a]

jury’s ‘failure to reach a verdict cannot -- by negative

implication -- yield a piece of information that helps put

together the trial puzzle.’” United States v. Hornsby, 666 F.3d

296, 305-06 n.4 (4th Cir. 2012) (quoting Yeager v. United

States, 557 U.S. 110 (2009)).

Unlike the pleadings, the jury charge, or the evidence
introduced by the parties, there is no way to decipher
what a hung count represents. . . . A host of reasons
-- sharp disagreement, confusion about the issues,
exhaustion after a long trial, to name but a few --
could work alone or in tandem to cause a jury to hang.
To ascribe meaning to a hung count would presume an
ability to identify which factor was at play in the
jury room. But that is not reasoned analysis; it is
guesswork. Such conjecture about possible reasons for
a jury’s failure to reach a decision should play no
part in assessing the legal consequences of a
unanimous verdict that the jurors did return.

Yeager, 557 U.S. at 121-22 (emphasis added; footnotes omitted).

The harmlessness inquiry here requires us to determine whether a

rational jury would have found Pitt guilty without the improper

honest-services instruction; speculation about the meaning of

46
the jury’s inability to reach a verdict on some counts should

play no part in the analysis, see id. at 122.

III.

As this court recently explained, “a reviewing court is not

entitled to reverse a conviction that could rest on either a

valid or invalid legal theory if the court can conclude beyond a

reasonable doubt that a rational jury would have found the

defendant guilty absent the error.” Jefferson, 674 F.3d at 361

(emphasis added; internal quotation marks omitted). After

reviewing the record, I am convinced beyond a reasonable doubt

that if the erroneous honest-services theory had not been

submitted to the jury, the jury would have convicted Pitt of

pecuniary fraud. Because the Yates error was harmless beyond a

reasonable doubt, I respectfully dissent from the reversal of

Pitt’s convictions.

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