IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 99-10996
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UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
RONALD W. HUGHES, SR.,
Defendant-Appellee.
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Appeal from the United States District Court for the
Northern District of Texas, Dallas
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October 30, 2000
Before JOLLY, HIGGINBOTHAM, and EMILIO M. GARZA, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
The government appeals the district court’s grant of a motion
under 28 U.S.C. § 2255, which vacated the conviction of Ronald
Hughes, Sr. Initially, the magistrate judge heard the evidence and
recommended that the motion be granted, concluding that Hughes was
entitled to a new trial because the government had suppressed
materially exculpatory information in violation of Brady v.
Maryland, 373 U.S. 83, 83 S.Ct. 1194 (1963). After an evidentiary
hearing, the district court adopted the magistrate judge’s report,
and released Hughes from custody.
Because we find that the evidence that the government failed
to turn over to the defense was not material, we reverse the
district court and reinstate the conviction and sentence.
I
A
Ronald Hughes, Sr., an experienced businessman, was convicted
on several counts of an indictment charging conspiracy and money
laundering. In summary, Hughes accepted large sums of cash from a
Betty Allen as a loan to expand his funeral home business. Harry
Pierce, a friend and former employee of Hughes, introduced Hughes
and Allen when Allen mentioned she had money to invest.
Purportedly, Allen told Hughes that the money was hers, a bequest
from a rich deceased oilman–-Joe Brown--which had been given to her
because she had been his mistress. Joe Brown was a real person,
and it is apparently true that Brown distrusted banks, and kept his
money in cash.
Hughes received the first $1 million loan, mostly in small
bills, on June 27, 1989. Hughes was acquitted of money laundering
for this transaction. On July 1, 1989, Hughes signed a promissory
note for the cash, and, on his lawyer’s advice, received an
affidavit from Allen that the money was “clean.” Named as payees
on the note were Allen and a Robert Chambers. Allen insisted on
including Chambers, who she allegedly claimed was another Brown
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beneficiary and shared ownership of the money. In fact, as Allen
told Pierce initially, the money belonged solely to Chambers.
Chambers earned the money in $1 million increments for each ton of
cocaine he helped to smuggle into the United States and had given
it to Allen for safekeeping. Apparently, the loan was wholly
Allen’s idea, which Chambers only discovered after the fact.
On July 20, 1989, Pierce called Hughes and told him that Betty
Allen had phoned from Arizona and had asked Pierce to meet her in
Scottsdale and fly back with her to Dallas. Because Pierce was
unable to accompany her, he asked Hughes to go in his place. The
next day, Hughes flew to Phoenix on a chartered jet, for which he
paid a fee of over $4000. Hughes met Allen, who had spent the
night at Chambers’s girlfriend’s house, and together they drove to
a storage facility to retrieve another $2 million. When they
arrived at the mini-warehouse, Allen opened a storage room that
contained a safe holding a large sum of currency in small bills.
As Hughes testified at trial, Allen told him that Chambers had put
the money in the safe. He also testified that it “crossed his
mind” that the money was “possibly drug money.” Upon return from
Phoenix, Hughes put the cash in the trunk of his car and delivered
the money, pursuant to Allen’s instruction, to Pierce’s apartment.
Hughes was convicted of money laundering for this transaction.
3
Hughes received another $1.9 million around August 1, 1989.
The money that formed the basis of this second loan was loaded into
trunks and bags and flown into the Dallas airport on Allen’s
airplane. Hughes met Allen, Pierce and Allen’s daughter at the
airport and took the money, again, all of it in cash. Hughes paid
Pierce $50,000 for flying to Alpine, Texas, to help pick up the
money. Hughes was also convicted of money laundering for this
transaction.
On August 8, 1989, Chambers came to Dallas to meet with
Hughes. Although the contents of the meeting are contested, it is
undisputed that Chambers indicated that the money was his, that he
told Hughes that he had once worked for a man named Pablo Acosta,
that he had inherited Acosta’s turf, and that Acosta was like a
godfather to him. Hughes told Chambers that he had checked
Chambers out through a long-time friend at the FBI.
Beginning in July 1989, Hughes and his family members and
employees made 199 deposits in amounts less than $10,000 in bank
accounts at eleven different banks throughout Dallas and the
surrounding area to avoid filing Currency Transaction Reports.
Hughes instructed the company’s comptroller to characterize the
money as loans from Hughes to the company. The loans were repaid
within a day or two in the form of checks from the business to
Hughes. When the company’s comptroller inquired about the infusion
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of cash, Hughes lied to her, saying that he had gotten a loan from
a bank.
Hughes’s defense at trial was that he did not know the money
was drug proceeds. Instead, he testified that he believed Allen’s
story about her rich benefactor. He also said that his structured
deposits were a means to avoid an IRS audit, not other law
enforcement authorities. Chambers was the government’s primary
witness at trial. On the witness stand, Chambers testified in
effect that Hughes most likely knew that the money was not from Joe
Brown and that he, Chambers, had concocted the Joe Brown story
after all of the transactions were completed.
The jury acquitted Hughes of all structuring charges and of
the money laundering count that charged his receipt of the first $1
million. He was convicted of conspiracy and of money laundering
for the transaction related to the Phoenix trip, the transaction in
early August, and for buying property and a certificate of deposit
with the funds in September and November, respectively.
There are two Brady statements at issue. The first, which
relates to Chambers’s testimony for the government, is the FBI
interview given by Agent Charles Holmes, an IRS agent investigating
the Hughes matter, which was taken by FBI Agent Stephen Largent,
investigating a related matter. (This is referred to as the 302
interview). The portion of that interview at issue is as follows:
5
Holmes stated that Glenn Chambers was busted with one ton
of cocaine and pled guilty to the charges agreeing to
cooperate. Chambers has told Holmes that the Hughes
family knew that the money they received was drug money
about six weeks after receiving the money. He stated
that Betty Allen knew from day one that the money was
drug money, but that all evidence supports the fact that
Betty Allen initially told Ronald Hughes, Sr. that the
money came from her former lover, Joe Brown.
Hughes claims this statement contradicts Chambers’s trial testimony
that he, Chambers, fabricated the Joe Brown story after Allen gave
Hughes the money.
The second Brady statement was an oral comment made by Holmes
to Customs Agent Dan Dobbs, in which Dobbs related that Holmes
stated that he had an undefined problem with the Hughes family and
would do all that he could to “get” them.
B
After we affirmed his conviction on direct appeal in an
unpublished opinion, Hughes filed his § 2255 petition alleging the
aforementioned Brady violations. The matter was referred to a
magistrate judge for development. The magistrate judge held a one-
day evidentiary hearing. In a written opinion, she recommended
that the § 2255 petition be granted. She concluded that Holmes’s
302 statement was material under Brady, principally because it
undercut Robert Chambers’s trial testimony that he was the source
of the “it was Joe Brown’s money” story, and that he had not
concocted that cover until after Hughes had accepted the money from
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Allen. She also considered whether Hughes would have been
convicted based on other circumstantial evidence of knowledge, but
found that the Brady violation sufficiently undermined confidence
in the jury verdict to vacate the conviction. The magistrate judge
also found that the prosecution’s failure to disclose Holmes’s
statement about a Hughes family vendetta was a Brady violation
because, taken together with the 302 statement, it called into
doubt the credibility of his investigation.
The district court, over Hughes’s objection, held its own
evidentiary hearing after receiving the magistrate judge’s
recommendation. Without stating its reasons in writing, the
district court affirmed the magistrate judge’s recommendation and
vacated Hughes’s sentence.
II
We review Brady claims de novo. See Felder v. Johnson, 180
F.3d 206, 212 (5th Cir. 1999); United States v. Green, 46 F.3d 461,
464 (5th Cir. 1995). Factual findings are reviewed for clear
error. See United States v. Placente, 81 F.3d 555 (5th Cir. 1996).
We start with the premise that the prosecution has a duty to
turn over impeachment evidence favorable to an accused when “there
is a reasonable probability that, had the evidence been disclosed
to the defense, the result of the proceeding would have been
different.” United States v. Bagley, 473 U.S. 667, 682, 105 S.Ct.
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3375, 3383 (1985). There are three components to a Brady
violation. First, the evidence must be favorable to the accused,
a standard that includes impeachment evidence. Second, the State
must have suppressed the evidence. Third, the defendant must have
been prejudiced. Strickler v. Greene, 527 U.S. 263, 281-82, 119
S.Ct. 1936, 1948 (1999). It is this final component--the
materiality component--that is most at issue in this appeal.
The materiality inquiry turns on the question of whether “the
favorable evidence could reasonably be taken to put the whole case
in such a different light as to undermine confidence in the
verdict.” Kyles v. Whitley, 514 U.S. 419, 435, 115 S.Ct. 1555,
1566 (1995). The defendant has the burden to establish a
reasonable probability that the evidence would have changed the
result. Strickler, 527 U.S. at 291. When there is more than one
Brady violation, we must consider the cumulative effect of the
suppressed evidence. Kyles, 514 U.S. at 421-22; United States v.
Freeman, 164 F.3d 243, 248 (5th Cir. 1999). Because we find that
Hughes did not establish a reasonable probability that the evidence
would have produced a different result, we do not need to consider
whether Hughes established the other Brady components.
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III
A
We turn now to the materiality of the statement from the FBI
302 interview summary of Holmes. Money laundering under 18 U.S.C.
§§ 1956 and 1957 requires a showing that the defendant knew at the
time of the transaction in question that it involved the proceeds
of an unlawful activity.
Hughes argues that Chambers’s testimony was the only support
for the conclusion that Hughes knew of the illegal nature of the
money. Hughes, as we have mentioned, testified that at the time he
accepted the money for which he was convicted, he believed Allen’s
story that it was a gift to her and Chambers from Joe Brown.
Chambers, however, testified on the witness stand that he concocted
the Joe Brown story after Hughes had received the three cash
transfers, and that there was “no doubt” in his mind that Hughes
knew the money was illegal. Thus, because Holmes’s statement in
the 302 FBI interview might have impeached Chambers as to when
Hughes learned that the money was illicit, the magistrate judge
concluded that the statement was material for the purpose of Brady.
The question of materiality, however, is, as we have noted,
whether “the favorable evidence could reasonably be taken to put
the whole case in such a different light as to undermine confidence
in the verdict.” Kyles, 514 U.S. at 434. Thus, we need to
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consider whether this potentially impeaching evidence would have
created a “reasonable possibility” of a different result.
It is important to note that two of the money laundering
transactions for which Chambers was convicted, one in September and
one in November of 1989, fall outside the scope of the 302
interview statement. The statement specifically acknowledges that
Chambers claimed that the Hughes family knew the money they
received was drug money about six weeks after receiving the money.
Hughes was convicted of money laundering for two transactions that
occurred after the six-week point. Thus, for the transactions in
September and November, the statement supports the government’s
position that Hughes was aware of the illegal nature of the money
at the time of the transaction.1 For these two transactions, it is
1
Neither the government nor the magistrate judge remarked on
the fact that the statement would have had no effect on Hughes’s
convictions for money laundering in the September and November
transactions. The magistrate judge noted that a key issue at trial
for both the money laundering and conspiracy counts was whether
Hughes knew at the time of the three money transfers that the money
was derived from drug trafficking. This was relevant to the money
laundering charges in September and November because if Hughes knew
that the money was derived from illicit sources in July, he clearly
knew that the money was derived from illicit sources in September
and November. Evidence that tends to corroborate the claim that
Hughes knew that the money was derived from illicit sources in
August (six weeks after the first transaction), however, aids the
government in showing that Hughes knew in September and November
that the money was derived from illegal sources.
Hughes was sentenced on September 20, 1995, to a term of 60
months for the conspiracy conviction, a term of 165 months each for
the two money laundering convictions that occurred before the
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obvious that disclosure of the statement would not have led to a
different result. The question concerning the statement’s
materiality therefore only pertains to the money laundering
convictions for the July and August 1989 transactions.
The statement itself is somewhat ambiguous. The government
argues that the sentence, “Chambers has told Holmes that the Hughes
family knew that the money they received was drug money about six
weeks after receiving the money,” does not specifically contradict
the theory that Hughes, Sr. knew that the money was illegal prior
to the six week point. The government contends that the next
sentence, “[h]e stated that Betty Allen knew from day one that the
money was drug money, but that all evidence supports the fact that
Betty Allen initially told Ronald Hughes, Sr., that the money came
from her former lover, Joe Brown,” was really about what Holmes
believed, not what Chambers believed. Although these contentions
are debatable, they demonstrate that the jury would have had to
August 8 meeting with Chambers, and a term of 120 months for each
of the two money laundering transactions in September and November.
The sentences are running concurrently. Thus, even if the Brady
statement had proved to be material for the transactions in July
and August of 1989, Hughes should not have been released, because
the statement was clearly not material to the money laundering
convictions for the transactions in September and November. At
most, the statement would have allowed the magistrate judge and
the district court to vacate the 165-month sentences. It would not
have allowed the magistrate judge and the district court to vacate
the 120-month sentences.
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grapple with the meaning of the statements before determining
whether they impeached Chambers’s testimony.
Chambers seems to have been an important government witness,
but his credibility did not go untested. He was impeached at trial
on various grounds. He admitted that he had lied on multiple
occasions, including under oath, that he was testifying to have his
sentence reduced, and that he had used drugs in the past. Three
other witnesses--Hughes’s lawyer, his accountant, and a government
witness--all testified that Hughes told them the Joe Brown story
before Chambers claimed to have made it up. Furthermore, the jury
acquitted Hughes of money laundering charges for the first $1
million transaction. This acquittal indicates that the jury did
not find Chambers’s testimony that he had made up the Joe Brown
story after Hughes had received the money credible enough to infer
that Hughes knew that the money he received initially was from
illicit sources.
Not only is it unclear that the statement would have had a
significant effect on the impeachment of Chambers, Chambers’s
statement was not the only evidence concerning Hughes’s state of
mind at the time he received the money. A significant amount of
circumstantial evidence clearly indicated that Hughes must have
been aware that the money came from illegal sources. The jury
convicted Hughes of money laundering for transactions that occurred
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after Hughes had signed the promissory note that included the name
Robert Chambers, after Hughes began lying to his employees about
the source of the money, after he began making the 199 different
deposits under $10,000, and after his bizarre trip to Phoenix with
Betty Allen. Hughes even admitted at trial that during the trip to
Phoenix it “crossed his mind” that the money was “possibly drug
money.” Furthermore, the jury was at liberty to apply its common
sense and find that any business man with Hughes’s background would
have known that a “loan” under these circumstances was fraught
with illegal probabilities. The jury could easily have determined
that Hughes’s criminal intent was exemplified by his surreptitious
conduct and his continued participation in this highly irregular,
if not outlandish, plot.
Chambers testified at trial that he had “no doubt” that Hughes
knew the money was illegal. As defense counsel pointed out at
trial, however, Chambers did not know what Betty Allen told Hughes
about the money at the time she gave it to him. When discussing
his first meeting with Hughes, Chambers testified that although he
did not say that he smuggled drugs, “I doubt very seriously that
you could have had a doubt about that money.” This testimony
suggests that Chambers’s opinion about Hughes’s knowledge came from
the circumstances surrounding the transfer and handling of the
money. Given the fact that Chambers was aware that Hughes accepted
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millions of dollars in small bills from Allen in bags, and
retrieved cash from storage facilities, this opinion is not
surprising.
The ambiguity of the statement, the impeachment of Chambers
that occurred at trial and the other evidence demonstrating
Hughes’s knowledge beyond a reasonable doubt convince us that the
302 interview that the government failed to turn over to Hughes
was not material for the purpose of Brady. Evaluating Chamber’s
testimony and the other evidence in context, we simply cannot
conclude that the undisclosed evidence puts the “whole case in such
a different light as to undermine confidence in the verdict.”
Kyles, 514 U.S. at 435. Or stated in a different way, based on the
record of Hughes’s criminal trial, we have complete confidence in
the jury verdict of guilty even when considered in the light of
this Brady statement.
B
The other Brady statement at issue concerns potential bias by
the IRS agent investigating the matter, the same Charles Holmes to
whom we have earlier alluded. The statement at issue was made by
Customs Agent Dan Dobbs during the course of an investigation of an
FBI agent who may have acted improperly because of his friendship
with the Hughes family. The statement is as follows:
Agent Holmes told U.S. Customs Special Agent Daniel Dobbs
that he, Agent Holmes, had a problem with Ronald Hughes,
14
Jr. either during high school or college, that Holmes
would do everything he could to harass and annoy the
Hughes family, and that Holmes would get members of the
Hughes family.
The magistrate judge found that although Holmes’s 302 statement
merited vacating the conviction standing alone, Dobbs’s statement
buttressed that conclusion. Although the magistrate judge found
that Holmes’s allegations of previous problems with the Hughes
family were probably untrue, she still found them exculpatory and
found that they called into question the integrity of the
government’s investigation.
This statement, however, even in conjunction with the 302
interview, does not create a reasonable probability that ”had the
evidence been disclosed to the defense, the result of the
proceeding would have been different.” Kyles, 514 U.S. at 435.
The magistrate judge noted that, as it related to Hughes’s
conviction, this statement was not important evidence. Although
the magistrate judge eventually found that Dobbs maintained
throughout questioning that Holmes had made such a statement, Dobbs
admittedly waffled--and waffled--as to whether Holmes had actually
made the reported statement.
Even if the statement did prove that Holmes was biased against
Hughes, Holmes was not a government witness, and every fact leading
to Hughes’s conviction occurred before Holmes undertook his
investigation. There is no evidence that Holmes “framed” Hughes or
15
improperly influenced any of the witnesses. In fact, it is not
clear how evidence of his bias could have influenced the result at
trial. In short, this dubious evidence of potential bias adds
nothing to Hughes’s defense. Because Hughes has not shown that
this statement, even in conjunction with Holmes’s 302 interview,
would have undermined confidence in the trial, Dobbs’s statement is
not material for the purpose of Brady.
IV
Because we find that the statements the government failed to
turn over to Hughes were not material under Brady, either
separately or cumulatively, we REVERSE the district court’s grant
of relief under 28 U.S.C. § 2255, VACATE its judgment and reinstate
the conviction and sentence. The case is REMANDED to the district
court for further proceedings not inconsistent with this opinion.
REVERSED, VACATED, and REMANDED.
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United States v. Hughes
Court: Court of Appeals for the Fifth Circuit
Date filed: 2000-10-30
Citations: 230 F.3d 815
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