FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA , No. 12-35209
Plaintiff-Appellee,
D.C. No.
v. 3:07-cr-00028-
RRB
MARK J. AVERY ,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the District of Alaska
Ralph R. Beistline, Chief District Judge, Presiding
Argued and Submitted
May 22, 2013—Anchorage, Alaska
Filed June 18, 2013
Before: A. Wallace Tashima, Richard C. Tallman,
and N. Randy Smith, Circuit Judges.
Opinion by Judge Tallman
2 UNITED STATES V . AVERY
SUMMARY*
Habeas Corpus
The panel vacated the district court’s denial of a
28 U.S.C. § 2255 motion to vacate a sentence after petitioner
pled guilty to wire fraud, money laundering, and criminal
forfeiture, and remanded for further proceedings.
After serving almost four years of his sentence, petitioner
sought federal habeas relief, claiming his conviction and
sentence were invalidated by the Supreme Court’s decision in
Skilling v. United States, 130 S. Ct. 2896 (2010), which
narrowed the scope of the honest services fraud theory. The
panel concluded that petitioner pled guilty only to honest
services fraud and cannot be deemed to have been convicted
or sentenced based on a broader charge that was not
incorporated into the plea agreement and not acknowledged
by petitioner as true when he pled guilty. The panel held that,
because the crime to which petitioner pled guilty and for
which he was incarcerated is no longer a criminal offense,
petitioner’s actual innocence overcomes the procedural
default of his claim challenging his conviction.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V . AVERY 3
COUNSEL
Krista Hart (argued), Sacramento, California, for Defendant-
Appellant.
Kyle G. French (argued), Assistant United States Attorney;
Karen Loeffler, United States Attorney, Anchorage, Alaska,
for Plaintiff-Appellee.
OPINION
TALLMAN, Circuit Judge:
Mark Avery, former attorney and trustee of private trusts,
appeals the district court’s denial of his 28 U.S.C. § 2255
federal habeas corpus petition. Avery pled guilty to five
counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and
1346, nine counts of money laundering, in violation of
18 U.S.C. § 1957(a), and one count of criminal forfeiture, in
violation of 18 U.S.C. § 982(a)(1), and was sentenced to 102
months of imprisonment. On habeas review, Avery contends
that his conviction and sentence must be vacated in light of
the Supreme Court’s subsequent decision in Skilling v. United
States, 130 S. Ct. 2896, 2907 (2010), which narrowed the
scope of the honest services fraud theory. We have
jurisdiction pursuant to 28 U.S.C. §§ 1291 and 2253. Based
on the explication of the elements of the fraud offense set
forth in the plea agreement and repeated by the district court
when the plea was taken, we vacate the district court’s
dismissal of Avery’s honest services fraud claim and remand
for further proceedings consistent with this opinion.
4 UNITED STATES V . AVERY
BACKGROUND
Avery served as a trustee for the May Smith Trust, with
assets valued in excess of $100 million, and the May and
Stanley Smith Charitable Trust, with assets exceeding $350
million. On March 6, 2007, Avery was charged by
Information with engaging “in a fraudulent financing scheme
in which he abused his fiduciary obligations and his position
of trust to acquire over $52 million dollars through an
ambiguous loan arrangement which used the May Smith Trust
as collateral.” In furtherance of the fraudulent scheme, Avery
executed margin loans secured by the trust assets and used the
loaned funds “to purchase [a] speculative aircraft venture,” to
“pa[y] personal debts,” and to “purchase . . . personal
assets.”1 After Avery filed personal bankruptcy and his
businesses collapsed, Avery defaulted on the margin loans
and the lender foreclosed on the $52 million of trust collateral
that secured their repayment.
To resolve his criminal charges, Avery entered into a plea
agreement executed under Federal Rule of Criminal
Procedure 11(c)(1)(C). By the terms of the agreement, Avery
waived indictment and pled guilty to five counts of wire
fraud, in violation of 18 U.S.C. §§ 1343 and 1346, nine
counts of money laundering, in violation of 18 U.S.C.
§ 1957(a), and one count of criminal forfeiture, in violation
of 18 U.S.C. § 982(a)(1). On April 17, 2008, the district
1
According to the plea agreement, these personal assets included “jet
aircraft, historic W orld W ar II fighter aircraft, other antique aircraft, and
recreational vehicles.” The personal debts repaid included “paying off
personal mortgages.” Avery also used the funds to “provide free jet
service to [himself], the other trustees of the May Smith Trust and the May
and Stanley Smith Charitable Trust, their friends and families.”
UNITED STATES V . AVERY 5
court sentenced Avery to 102 months of imprisonment and
ordered Avery to pay $52,125,000 in restitution. Because he
waived his appellate rights in the plea proceedings, Avery
filed no direct criminal appeal.
But after serving almost four years of his sentence, on
February 11, 2011, Avery sought habeas relief in the District
of Alaska, claiming his conviction and sentence were
invalidated by the Supreme Court’s decision in Skilling. The
district court denied Avery’s habeas petition, concluding that
Avery had “procedurally defaulted [his] claim by failing to
raise it on direct review” and could not overcome that default
by establishing actual innocence or cause and prejudice.
Avery immediately appealed. On appeal, Avery argues that
the district court erred in concluding that his honest services
fraud challenge was procedurally defaulted. In the
alternative, Avery contends that he can establish actual
innocence or cause and prejudice to overcome any default.
STANDARD OF REVIEW
A district court’s denial of a petition for writ of habeas
corpus is reviewed de novo. Lopez v. Thompson, 202 F.3d
1110, 1116 (9th Cir. 2000) (en banc). On habeas review, a
district court’s findings of fact are reviewed for clear error.
Sanchez v. United States, 50 F.3d 1448, 1452 (9th Cir. 1995).
DISCUSSION
In Skilling, the Supreme Court limited the scope of the
honest services fraud offense under § 1346, holding that the
statute only criminalized fraudulent schemes that involved
bribery or kickbacks. 130 S. Ct. at 2928. In his habeas
petition, Avery contends that his conviction was premised on
6 UNITED STATES V . AVERY
an honest services fraud theory based solely on a conflict of
interest through breach of his fiduciary duties, without any
bribery or kickback allegations. As a result, Avery argues
that he is innocent of the crimes for which he stands
convicted and is entitled to habeas relief.
Avery concedes that he failed to raise his innocence claim
on direct appeal, challenging his conviction for the first time
on collateral review. A defendant “has procedurally
defaulted a claim by failing to raise it on direct review, [and]
the claim may be raised in habeas only if the defendant can
first demonstrate either ‘cause’ and actual ‘prejudice’ or that
he is ‘actually innocent.’” Bousley v. United States, 523 U.S.
614, 622 (1998) (citations omitted). “Actual innocence” is an
equitable remedy that permits a petitioner to obtain collateral
review of a procedurally defaulted claim. Schlup v. Delo,
513 U.S. 298, 327 (1995). To invoke the actual innocence
exception, Avery must show that in light of all of the
evidence, “it is more likely than not that no reasonable juror
would have found [him] guilty beyond a reasonable doubt.”
Id. In this context, “actual innocence means factual
innocence, not mere legal insufficiency.” Bousley, 523 U.S.
at 623 (internal quotation marks omitted).
In evaluating whether Avery is actually innocent of his
offense of conviction, sufficient to overcome a procedural
default, we must first identify the offenses to which Avery
pleaded guilty to committing. Although the government
concedes, in light of Skilling, that Avery is actually innocent
of the honest services fraud offenses charged in the
Information, the government argues that Avery was
nonetheless properly convicted of devising a scheme or
artifice to defraud the May Smith Trust and May Wong Smith
of money or property. The government insists that, in the
UNITED STATES V . AVERY 7
Information, Avery was charged more broadly with violating
not only 18 U.S.C. § 1346, which defines honest services
fraud, but also 18 U.S.C. § 1343, which prohibits all forms of
wire fraud, including money-or-property based wire fraud. In
executing the plea agreement, the government argues that
Avery agreed to plead guilty to five counts of “Wire Fraud,
in violation of [both] § 1343 and § 1346.”
The language contained in the Information and plea
agreement, citing both §§ 1343 and 1346, is not dispositive.
Section 1346, which defines honest services fraud, is not a
standalone criminal offense, but must be charged in
conjunction with 18 U.S.C. §§ 1341 or 1343 as the means or
theory by which the fraud was committed. Section 1346
merely modifies the definition of “scheme or artifice to
defraud” included in §§ 1341 and 1343 to prohibit one
particular manifestation of mail or wire fraud—abuse of a
position of trust which the law recognizes as depriving
another of the intangible right of honest services. See, e.g.,
United States v. Milovanovic, 678 F.3d 713, 722 (9th Cir.
2012); United States v. Rybicki, 354 F.3d 124, 132–45
(2d Cir. 2003) (en banc). As a result, to charge a defendant
with committing honest services fraud, the government is
required to include in the charging document references to
both §§ 1343 (or 1341) and 1346. Contrary to the
government’s contentions, the citation to § 1343 in Avery’s
Information and plea agreement does not demonstrate that
Avery was convicted of both honest services fraud and
money-or-property based wire fraud. To make that
determination, one must look to the actual language to which
Avery agreed in his plea.
The government also argues that the descriptive language
contained in the Information is not limited to allegations of
8 UNITED STATES V . AVERY
honest services fraud but instead can be construed to support
allegations of both honest services fraud and money-or-
property fraud. True enough. Paragraph 15 of the
Information states that Avery “devised or intended to devise
a scheme and artifice to defraud the May Smith Trust and
May Wong Smith of their money, property, and intangible
right to the honest services of a trustee.” Paragraph 26 of the
Information alleges that “Avery, for the purpose of executing
and attempting to execute [a] . . . scheme to defraud the May
Smith Trust and May Wong Smith, and to obtain money and
property by means of depriving them of their intangible right
of honest services, did knowingly transmit . . . electronic mail
communications . . . directing that funds be wired to Avery’s
business accounts.”
But while this language is compelling, it must be read in
conjunction with the actual provisions of the plea agreement,
which specify the elements of the offenses to which Avery
pled guilty to committing and the underlying acts he admitted
to establish his guilt. No portion of the plea agreement
referenced money-or-property based wire fraud. The
language in the plea agreement differs from the broader
language of the Information. Instead, the elements of the
offense set forth in the plea agreement were only sufficient to
establish an honest services fraud violation. In the plea
agreement, the government defined the elements of the crime
of conviction as follows:
First, the defendant made up a scheme or plan
to defraud the May Smith Trust of its right to
his honest services[;] Second, that the
defendant acted with the intent to deprive the
May Smith Trust of its right to honest services
as a trustee; Third[,] the defendant cause[d] a
UNITED STATES V . AVERY 9
wiring(s) to occur in furtherance of the
scheme or plan in interstate commerce.
Additionally, in the plea agreement, the predicate crime
underlying the money laundering charges was defined as
“breach of fiduciary duty and denial of honest services.”
A comprehensive review of the plea agreement, and the
plea colloquy to which Avery swore in open court,
demonstrates that Avery pled guilty only to honest services
fraud. In pleading guilty, Avery did not admit to money-or-
property based wire fraud, and cannot be deemed to have
been convicted or sentenced in response to the broader
charge, despite it being mentioned in the Information. As we
have stated in other contexts, plea agreements are contracts,
and are “premised on the notion that the negotiated guilty
plea represents a bargained-for quid pro quo.” United States
v. Escamilla, 975 F.2d 568, 571 (9th Cir. 1992) (internal
quotation marks omitted). In the present case, the
government only bargained for an honest services fraud
conviction and failed to allege a money-or-property based
wire fraud violation anywhere other than in the charging
document.
While there may be language in the Information that
broadly references money-or-property based fraud, the
government failed to incorporate those specific allegations
into the plea agreement and did not elicit from Avery
anything but a plea of guilty to honest services fraud. In
enforcing a plea agreement, we are bound to construe any
ambiguities or inconsistencies “in favor of the defendant,
ordinarily placing on the government responsibility for any
lack of clarity.” United States v. Franco-Lopez, 312 F.3d
984, 989 (9th Cir. 2002) (internal citations and quotation
10 UNITED STATES V . AVERY
marks omitted). The government cannot seize upon
convenient language contained in the Information to
substantiate a broader charge that was not incorporated into
the plea agreement and not acknowledged by Avery as true in
conjunction with the entry of his guilty plea.
Our conclusion is bolstered by the statements made
during Avery’s plea colloquy. At the change of plea hearing,
in stating the elements of the offense, the court reiterated the
limited elements contained in the plea agreement. These
elements were simply those required to establish an honest
services fraud offense without reference to money-or-
property based fraud.2 Throughout the plea proceedings, the
government pursued an honest services fraud theory of
prosecution. Only after realizing, in light of Skilling, that
Avery stands convicted of an offense that is no longer
criminal did the government fall back on the alternative
money-or-property based wire fraud allegations. The
government cannot unilaterally modify the plea agreement to
incorporate additional legal theories to support the charges
2
The court described the elements of the offense as follows:
First, that you made a scheme or plan to defraud the
May Smith Trust of its rights to— to your honest
services. That’s the first thing they’d have to prove and
they’d have to prove that beyond a reasonable doubt.
Second, they’d have to prove that you acted with the
intent to deprive the May Smith Trust of its right to
honest services. And third, that you caused a wiring or
wirings to occur in furtherance of the scheme or plan.
They’d have to prove each one of those elements
beyond a reasonable doubt with regard to counts one
through five. If they were able to do that, I would tell
a jury they have to find you guilty. If they were unable
to do that, I’d tell a jury they had to find you not guilty.
UNITED STATES V . AVERY 11
six years after the plea agreement was entered. The
government bargained for and obtained an honest services
fraud conviction, and cannot now alter that bargain because
its prosecution theory is no longer legally sound.
The government concedes that Avery is actually innocent
of honest services fraud in light of Skilling, which confined
the reach of the offense to “paradigmatic cases of bribes and
kickbacks.” 130 S. Ct. at 2932–33. Since no evidence
suggests that Avery either engaged in bribery or received
kickbacks, the crime to which Avery pled guilty and for
which he stands incarcerated is no longer a criminal offense.3
“A petitioner is actually innocent when he was convicted for
conduct not prohibited by law.” Alaimalo v. United States,
645 F.3d 1042, 1047 (9th Cir. 2011). Avery has
demonstrated that he is actually innocent of the crime of
honest services fraud, which underlies his conviction.4
3
W e note that while Avery is innocent of honest services fraud, as that
theory has been defined by the Supreme Court in Skilling, Avery’s
conduct may still constitute money-or-property based wire fraud. See,
e.g., United States v. Pelisamen, 641 F.3d 399, 406 (9th Cir. 2011). If this
is the case, under the terms of the plea agreement the government may be
able to reinitiate criminal proceedings against Avery under the broader
money-or-property based wire fraud prosecution theory alleged in the
original Information. If criminal proceedings are reinstituted, we leave it
to the district court on remand to determine whether Avery’s misconduct
could trigger liability under core mail and wire fraud jurisprudence.
4
Under Bousley, a petitioner must also demonstrate actual innocence of
any “more serious charges” that “the Government has forgone . . . in the
course of plea bargaining.” 523 U.S. at 624; see also Jaramillo v. Stewart,
340 F.3d 877, 883 (9th Cir. 2003). Here, the money-or-property wire
fraud allegations in the Information, which the government did not include
in the language of the plea bargain, were in the same counts as the honest
services allegations to which Avery pled guilty and carried the same
statutory penalties. W hether or not the absence of the broader allegations
12 UNITED STATES V . AVERY
Avery’s innocence is sufficient to overcome the barrier to
reviewing his procedurally defaulted habeas claim.
CONCLUSION
Accordingly, we VACATE the district court’s dismissal
of Avery’s honest services fraud claim on grounds of
procedural default and REMAND to the district court for
further proceedings consistent with this opinion.5
was the result of plea negotiations, they are not such “more serious
charges,” and the government does not contend otherwise.
5
Because our certificate of appealability is limited to evaluating whether
Avery’s habeas claim attacking the basis for his honest services fraud
conviction was procedurally defaulted, we leave it to the district court on
remand to determine what consequences might follow issuance of the writ
granting relief under the honest services fraud theory, should the
government elect to continue prosecuting this case rather than dismissing
the Information.