Notice of Appeal
A quarterly newsletter reviewing Third Circuit opinions impacting white collar defense lawyers 

Spring 2021

Precedential Opinions of Note

Government Must Prove Falsity Under Any Objectively Reasonable Standard

United States v. Harra (January 12, 2021), No. 19-1105
Unanimous decision: Krause (writing), Phipps, and Greenberg


A bank failed to report certain overdue loans, although three regulators — the Securities and Exchange Commission, Federal Reserve, and Office of Thrift Supervision — purportedly required the disclosure. After the failure, the Government charged executives of the bank for securities fraud and making false statements to regulators, alleging the bank falsely reported the loans. On appeal, Defendants argued that the regulators’ reporting requirements were ambiguous as each regulator had described its reporting requirement slightly differently than the other.


The Court reversed Defendants’ false-statement convictions and entered judgments of acquittal. The Court determined that, when such reporting requirements are ambiguous, the Government must prove falsity under each objectively reasonable interpretation of the reporting requirement. Alternatively, the Government must prove that its interpretation is the only objectively reasonable one.

Key Quote

“Applying these fair warning principles here, we hold that where falsity turns on how an agency has communicated its reporting requirements to the entities it regulates and those communications are ambiguous, fair warning demands that the Government prove a defendant's statement false under each objectively reasonable interpretation of the relevant requirements…. If a regulator fails to give fair warning, it may still succeed in a false statement prosecution — but only if it proves either that its interpretation is the only reasonable one or that the defendant's statement is false under each reasonable interpretation.” (Slip Op. at 20-21.)


Court Bans Safe-Injection Site

United States v. Safehouse (January 12, 2021), No. 20-1422
Majority decision: Bibas (writing) and Ambro
Dissent: Roth
Dissent (en banc review): McKee


Safehouse sought to open the country’s first safe-injection drug site. The operation would allow drug users to inject themselves in a “consumption room,” while providing drug treatment, counseling, and other social and medical services. The Government sought declaratory judgment that the injection site violated the Anti-Drug Abuse Act of 1986, 21 U.S.C. § 856(a)(2). The district court rejected the Government’s motion, holding that someone only violates § 856(a)(2) when he intends (or has the purpose) for others to use illegal drugs; Safehouse escaped liability, according to the district court, because it did not mean to facilitate drug use at its injection site.


The Court reversed the judgment for Safehouse and held the injection site satisfied the requirements of the Anti-Drug Abuse Act. The Court determined that Safehouse need only know and intend that its site be open for visitors who themselves desire to use drugs. In other words, Safehouse need not intend its visitors to use drugs to be held liable under the statute. The Court also held that, in any event, Safehouse itself had the requisite purpose for its visitors to use drugs.

Key Quote

“In sum, all that paragraph (a)(2) requires is that the third party, not the defendant, have the purpose of drug activity. Still, the defendant must have a mental state: he must knowingly and willingly let others use his property for drug activity. ... The question is whether the visitors’ use of the consumption room will satisfy the third phrase: (a)(2)’s purpose requirement. It will.” (Slip Op. at 26.)


Judge Roth dissented and determined that the requisite mens rea for a defendant to violate § 856(a)(2) should not depend on another party’s purpose to use drugs.

Key Quote

“At oral argument, the government conceded that section 856(a) is poorly written. Indeed, it is nearly incomprehensible. Rather than construe this ambiguous statute narrowly, however, the Majority opts for broad criminal liability, arguing that an organization violates the statute if it makes its property available to a third party, knowing that the third party has ‘the purpose of unlawfully manufacturing, storing, distributing, or using a controlled substance.’ I disagree with such a construction of the statute. I know of no statute, other that section 856(a)(2), in which the ‘purpose’ of an unnamed third party would be the factor that determines the mens rea necessary for a defendant to violate the statute.” (Roth dissent at 3-4.)


Judge McKee dissented on the Court’s denial of en banc review.

Key Quote

“[B]y denying the Petition for Rehearing that has been filed, we declare that the issue is not sufficiently important for the entire court to consider en banc. Hopefully, legislation will clarify the meaning of 21 U.S.C. § 856(a)(2), but until that day comes, we owe it to these parties and to communities within our jurisdiction to adjudicate this matter en banc.” (McKee dissent at 4.)


Court Lacks Jurisdiction to Hear Indictment-Defect Challenge

United States v. Alexander (January 15, 2021), No. 19-3423
Unanimous decision: Chagares (writing), Smith, and Matey


A grand jury indicted Defendant after she schemed to file false tax returns, using stolen identities, to receive unlawful tax refunds. A grand juror, who had participated in deliberations, was an alleged victim of the scheme. After the Government learned of this defect, it filed a superseding indictment returned by a different grand jury and disclosed the issue to the defendants and the district court. The district court denied motions to dismiss, assuming that the defect in the original grand jury was not harmless. However, the court determined a valid superseding indictment cured the alleged defect.


The Court dismissed the appeal for lack of jurisdiction. The Court rejected the argument that the collateral order doctrine — an exception to the final judgment rule that allows interlocutory review by a federal appellate court — conferred jurisdiction in this case. First, the Court determined a potential grand jury defect is an issue “enmeshed in the merits” of the case. Second, the defect was not sufficiently fundamental to render the indictment no longer an indictment.

Key Quote

“Any surviving claims of grand jury error can be reviewed following trial …. The interlocutory order challenged by Alexander does not ‘resolve an important issue completely separate from the merits’ and is not ‘effectively unreviewable on appeal from a final judgment.’ … It is thus not eligible for immediate appellate review under the collateral order doctrine.” (Slip Op. at 14.)


Court Invalidates Forfeiture Order, Favoring Third Party 

United States v. Lucas (January 20, 2021), No. 19-3427
Unanimous decision: Hardiman (writing), Chagares, and Matey


A financial advisor illegally acquired a New Jersey farm in order to obtain state funding for easements to preserve farmland. The Government sought forfeiture of the farm because Defendant’s crimes facilitated his acquisition of the farm. A third party filed a petition to protect against forfeiture of the property, claiming it had owned the farm prior to Defendant’s offenses. The district court entered judgment in favor of the Government.


The Court reversed because the third party had an interest in the property superior to the Government’s interest.

Key Quote

“The Government must turn square corners when it exercises its power to confiscate private property. Under the plain text of 21 U.S.C. § 853(n)(6)(A), Diamond Developers held valid title to Burke Farm years before the Government obtained an interest because of Andrew Lucas’s crimes. For that reason, we will reverse the District Court’s summary judgment against Diamond Developers.” (Slip Op. at 11.)


Court’s Failure to Address Complaints about Counsel Did Not Constitute Structural Error

United States v. Senke (January 25, 2021), No. 19-1287
Majority decision: Fuentes (writing) and Bibas
Partial concurrence/dissent: McKee


A jury convicted Defendant of attempted sex offenses with a minor. Throughout the course of his criminal proceedings, the district court failed to address Defendant’s complaints about his counsel. Further, the district court prohibited the use of a computer and the Internet as conditions of Defendant’s supervised release.


The Court affirmed in part and reversed in part. First, the Court found the failure to address Defendant’s complaints about counsel was an abuse of discretion. However, the Court viewed Defendant’s complaints as a claim of ineffective counsel, not one related to Defendant’s right to substitute counsel. Accordingly, the Court declined to review the error for prejudice on direct appeal. Second, with the Government’s agreement, the Court determined the imposition of a ban on Internet- and computer-use, as conditions of supervised release, contravened clear precedent.

Key Quotes

“Here, Senke’s claim does not fall into one of the established categories of structural error. He has not asserted that he was deprived of his right to counsel of choice. Indeed, he cannot, because the right to choose one’s own counsel does not extend to defendants who require appointed counsel. And he has not claimed that he was somehow deprived of his right to knowingly and intelligently represent himself. Nor has Senke claimed that Comerford had any conflict of interest, or that he was so ‘embroiled in irreconcilable conflict[.]’ Despite his earlier misgivings with counsel, Senke proceeded to trial with the assistance of Comerford. He therefore cannot also claim that he was denied the right to any counsel at all.” (Slip Op. at 21-22.)

“[T]he goal of restricting internet and computer use for defendants like Senke must be to keep them from preying on children. For the reasons explained in [United States v.] Holena, [906 F.3d 288 (3d Cir. 2018),] there is no such tailoring here. Conditions 11-15, as currently written, prevent Senke from participating in all sorts of activities, while doing nothing to further public safety.” (Slip Op. at 30.)

Partial dissent

Judge McKee dissented and determined that Defendant’s claim must be interpreted as an allegation of a right to substitute counsel, not effective assistance of counsel. Thus, the proper analysis should be whether a structural error occurred, not whether Defendant can demonstrate prejudice. (Judge McKee dissent at 5-6.)


Failure to Group Production and Distribution Counts Constituted Plain Error

United States v. Aguirre-Miron (February 23, 2021), No. 19-3134
Unanimous decision: Porter (writing), Ambro, and Roth


Defendant pled guilty to multiple child-pornography crimes, including three counts of production, one count of receipt, and one count of possession, in violation of 18 U.S.C. §§ 2251 & 2252. At sentencing, the district court grouped the receipt and possession counts, but not the production counts. Further, the district court failed to group the production counts with the receipt and possession counts.


The Court vacated the sentence. The Court determined that the district court’s failure to group the production counts with the receipt and possession counts, under the applicable Sentencing Guideline, constituted plain error.

Key Quote

“[T]he District Court sentenced Aguirre-Miron under an incorrect sentencing Guidelines range. A citizen might bear a ‘diminished view of the judicial process and its integrity if courts refused to correct’ this kind of plain error. And ‘correcting sentencing errors is far less burdensome than a retrial, or other jury proceedings,’ and does not demand ‘such a high degree of caution.’… Because the District Court’s plain error does not upset a jury’s verdict, affects only sentencing, and can be fixed on remand without taxing the District Court, we will exercise our discretion to cure the plain error.” (Slip Op. at 10) (internal citations omitted).


Court Requires Heightened Willfulness Standard

United States v. Smukler (March 19, 2021), No. 19-2151
Unanimous decision: Matey (writing), Jordan, and Roth


The Government accused Kenneth Smukler of facilitating bribes to political candidates. At trial, on charges for making false statements to a federal agency and related election law offenses, Defendant sought a heightened “willfulness” jury instruction. The heightened instruction would require specific knowledge of the statutory offense charged and intent to violate that specific, known law. The district court instead instructed the jury that a defendant acts willfully only if he acts with purpose to disobey or disregard the law.


The Court affirmed the convictions on the substantive election-law offenses but vacated Defendant’s convictions on two charges related to Defendant’s alleged scheme to falsify and conceal facts from the Federal Election Commission. The Court held that the FEC codes were highly technical and complex, and thus prosecutions under 18 U.S.C. §§ 2(b) and 1001, in the election law context, warrant a heightened willfulness standard.

Key Quote

“‘[A] more particularized [willfulness] showing is required.’ . . . Then, ‘the jury must find that the defendant was aware of the specific provision of the [statute] that he was charged with violating.’ In Bryan [v. United States, 524 U.S. 184 (1998)], the Supreme Court explained that prosecutions ‘involv[ing] highly technical statutes that presented the danger of ensnaring individuals engaged in apparently innocent conduct,’ justified a ‘carve out ... exception to the traditional rule that ignorance of the law is no excuse[.]’” (Slip Op. at 17) (other internal citations omitted).


Non-Precedential Opinions of Note

United States v. Davis (January 5, 2021), No. 19-1604

Defendant engaged in a quid pro quo scheme with the former Sheriff of Philadelphia. In exchange for lucrative business, Defendant supported the Sheriff’s political career. The Court affirmed the conspiracy and honest-services-wire-fraud convictions. It determined that the evidence showed Defendant had bribed the Sheriff in return for an explicit promise — evidenced by the millions in business Defendant obtained. The Court also affirmed Defendant’s sentence, noting the “threshold” for proving causation under the bribery Guideline “is low,” and the Government need not prove the exact amount of business funneled to Defendant.


United States v. Rojas (January 11, 2021), No. 19-2056

A jury convicted defendant, a licensed horse trainer, for dispensing prescription drugs to her horses before they raced. The district court permitted evidence that, on prior occasions, Defendant’s horses had tested positive for prohibited substances. The Court affirmed the hearsay ruling and further held the evidence was non-testimonial. The Court also affirmed defendant’s sentence for felony misbranding because the evidence supported an intent to defraud.


United States v. Bullock (January 29, 2021), No. 19-3927

The Court vacated Defendant’s conviction and found reasonable suspicion did not warrant a Terry stop. The Court determined the district court erred when it assumed the at-issue tip was reliable, solely because a “trusted” probation officer relayed the tip to the arresting officer. Rather, the district court must have assessed the reliability of the original source of the tip.


United States v. Ramon de Leon-Pineda (February 11, 2021), No. 19-1459

Defendant pled guilty to drug offenses. While in custody, Defendant assaulted another inmate. The Court, joining its sister circuit courts, held that Defendant’s violent conduct justified denial of the sentencing reduction for acceptance of responsibility under U.S.S.G. § 3E1.1.


Rad v. United States (February 19, 2021), No. 19-3694

The Court held that a man, convicted of a pump-and-dump hacking scheme, was not prejudiced when prosecutors failed to turn over a cooperating co-conspirator’s testimony in a related trial.


United States v. Kelliher (March 9, 2021), No. 19-3301

In a wire fraud case, involving fraudulent sales of high-end boats, the Court affirmed the use of a sentencing enhancement for harm to ten or more victims.


United States v. Counterman (March 10, 2021), No. 19-2975

The district court imposed an enhanced sentence, after Defendant pled guilty to possession with intent to distribute, based on Defendant’s prior convictions. But the plain text of 21 U.S.C. § 851, applicable to Defendant’s guilty plea, requires the Government to file an information with the court, stating the prior convictions that will be relied upon, prior to the entry of a plea of guilty. Because the Government failed to file such notice, the Court vacated Defendant’s sentence.


In Re: Processed Egg Products Antitrust Litigation (March 15, 2021), No. 20-1045

The Court affirmed the district court’s jury instruction regarding the elements of an antitrust conspiracy. First, the instructions reflected both the law and the facts of the case. Second, any “murkiness” around the challenged instruction was clarified by the instructions in their entirety. The Court also reiterated that, in this case, the Rule of Reason, not the per se standard under Sherman Act Section 1, governed: elements of the alleged conspiracy possessed pro-competitive traits.


United States v. Lall (March 23, 2021), No. 19-3290

The Court rejected Defendant’s claims under the Speedy Trial Act because he failed to bring such challenges through a pre-trial motion.

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