Filed: Oct. 20, 2004
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 10-20-2004 USA v. McLaughlin Precedential or Non-Precedential: Precedential Docket No. 00-2550 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "USA v. McLaughlin" (2004). 2004 Decisions. Paper 167. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/167 This decision is brought to you for free and open access by the Opinions of the United S
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 10-20-2004 USA v. McLaughlin Precedential or Non-Precedential: Precedential Docket No. 00-2550 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "USA v. McLaughlin" (2004). 2004 Decisions. Paper 167. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/167 This decision is brought to you for free and open access by the Opinions of the United St..
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Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
10-20-2004
USA v. McLaughlin
Precedential or Non-Precedential: Precedential
Docket No. 00-2550
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"USA v. McLaughlin" (2004). 2004 Decisions. Paper 167.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/167
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PRECEDENTIAL Patrick L. Meehan
United States Attorney
UNITED STATES COURT OF Laurie Magid
APPEALS FOR THE THIRD CIRCUIT Deputy United States Attorney
for Policy and Appeals
Robert A. Zauzmer
Assistant United States Attorney
No. 00-2550 Senior Appellate Counsel
Bea L. Witzleben
Assistant United States Attorney
Kathy A. Stark
UNITED STATES OF AMERICA Philadelphia, PA 19106
v. Attorneys for Appellee
STEVEN McLAUGHLIN,
Appellant OPINION OF THE COURT
SLOVITER, Circuit Judge.
On Appeal from the United States
District Court for the Eastern District of This is an appeal by Steven
Pennsylvania McLaughlin from his conviction and
(D.C. No. 98-cr-00545-1) sentence following a jury trial on a
District Judge: Hon. Jan E. DuBois superceding indictment charging him with
conspiracy in violation of 18 U.S.C. § 371,
multiple counts of stealing and embezzling
Submitted Under Third Circuit LAR union funds in violation of 29 U.S.C. §
34.1(a) October 7, 2004 501(c) and 18 U.S.C. § 2, one count of
failing to disclose material facts in a report
Before: SLOVITER, VAN filed with the Secretary of the Department
ANTWERPEN and COW EN, Circuit of Labor (“DOL”) in violation of 29
Judges U.S.C. §§ 431, 439(b), and perjury in
violation of 18 U.S.C. § 1623.
(Filed: October 20, 2004)
The principal issue presented is
whether the District Court erred by
instructing the jury that materiality was a
Stephen James Binhak question of law, rather than fact, for
Key Biscayne, FL 33149 purposes of 18 U.S.C. § 1623 and 29
U.S.C. § 439(b) and, if so, whether such
Attorney for Appellant
error was harmless.1 by union funds on a charge card issued to
M c L a u g h l i n a n d E M C A L . T he
I. Government argued that these purchases
were for M cLaughlin’s personal benefit
McLaughlin served as President of and hence not authorized under EMCAL’s
the Eastern Montgomery County Area constitution. In addition, the Government
Local No. 2233 (“EMCAL”), an affiliate attempted to prove that McLaughlin had
of the American Postal Worker’s Union embezzled from EMCAL by causing
(“APWU”), from January 1992 until unauthorized payroll checks to be issued in
December 1994. APWU, a national labor his name and by causing EMCAL to
union whose membership consists of overpay him for health insurance, life
various United States Postal Service insurance, and retirement benefits.
employees, has five regional offices, Finally, the Government also sought to
w h i c h a re further divided i n to prove that McLaughlin had filed a report,
approximately 1,300 geographically-based known in labor parlance as an “LM2
sections called “Locals.” EMCAL is the report,” with the DOL in 1993 in which he
Local for postal employees operating in had failed to disclose his receipt of certain
E astern M on tgom ery Co unty, benefits and reimbu rsem ents from
Pennsylvania.2 EMCAL as required by law.
The Go vern men t presented In his defense, McLaughlin testified
evidence of McLaughlin’s expenditures that other individuals affiliated with
for car repairs, local hotel stays, and EMCAL had also used the charge card,
purchases of electronic equipment paid for and introduced as Defense Exhibit 2 the
customer’s carbon copy of a receipt on
1
EMCAL’s charge card for a purchase at a
The District Court had jurisdiction Staples Office Supplies store with a
pursuant to 18 U.S.C. § 3231; this court signature purporting to be that of James
has jurisdiction pursuant to 28 U.S.C. § Ma r te llo, a n E M CA L ex ecuti v e.
1291. McLaughlin testified Martello had used
2 the card and then had given him the
The indictment also charged
receipt.
Nancy Zemo, the former
Secretary/Treasurer of EM CAL, with
On c ross-ex amin ation, th e
conspiracy to steal and embezzle funds
Government produced the merchant’s copy
from the union and multiple counts of
of the receipt, identical except that it bore
stealing and embezzling union funds.
McLaughlin’s signature rather than
She was acquitted of four of the
Martello’s. On cross-exam ination,
substantive counts and convicted of all
McLaughlin conceded that, apart from the
the other charges. Her convictions are
disparate signatures, the two documents
not at issue on this appeal.
2
appeared identical. a reasonable doubt, that the
L M 2 report for 1993
The jury was unable to reach a contained false statements
unanimous verdict, the District Court o r r e p r e se n ta t i o n s o f
declared a mistrial, and the grand jury material facts or []omitted
returned a superceding indictment material facts.
charging the same offenses as the original
indictment with the addition of a perjury I instruct you, as a matter of
count based on McLaughlin’s testimony law, that statements on the
regarding Martello’s use of the charge card 1993 LM2 rep ort o f
at Staples. expenses, including
reimbursed expenses, which
On the retrial, McLaughlin’s must be set forth on
counsel informed the Court that he was Schedule 9 of the report are
unable to locate the Staples receipt material facts under the
previously admitted as Defense Exhibit 2. statute. I instruct you on
The Court informed the parties that it had that as a matter of law. So
made and retained photocopies of all the you need not concern
exhibits, including Defense Exhibit 2, and yourself with the issue of
McLaughlin’s defense counsel stated that materiality.
he would not object to the use of such a
copy at the trial. Supp. App. at 1030. Similarly, with
respect to the 18 U.S.C. § 1623 charge, the
Before instructing the jury, the District Court instructed:
District Court advised the parties it
intended to instruct the jury that the issues The question whether the
of materiality with respect to the perjury alleged false testimony was
and false reporting charges were questions material is a question of law
of law that it had decided in the United for me to decide. It is not a
States’ favor. Defense counsel objected, question of fact for you, the
arguing that materiality was a question of jury, to determine.
fact for the jury. The District Court
overruled this objection. With respect to And I instruct you that the
the charge that McLaughlin had failed to matters as to which it is
disclose a material fact to the DOL, the charged that defendant,
District Court instructed the jury that: Steven McLaughlin made
false statements . . . were
The second element of the material to the proceedings
crime . . . requires that the before the court. Thus, you
Government prove, beyond need not decide the question
3
of materiality. statement”), and thus, under the Fifth and
Sixth Amendments, materiality is a
Supp. App. at 1037. Thereafter, the jury question that must be determined by a jury
convicted McLaughlin on all charged rather than a judge in an 18 U.S.C. § 1001
counts. proceeding. Two years later, relying on its
decision in Gaudin, the Court in Johnson
Following the sentencing hearing, v. United States, 520 U.S. 461 (1997), held
the Court sentenced McLaughlin to serve that materiality is an element of 18 U.S.C.
a total period of incarceration of twenty- § 1623 (“knowingly makes any false
four months. In addition, the District material declaration”), and therefore, it is
Court imposed a total of three years a question for the jury. Based on these
supervised release, restitution in the precedents, we conclude that the District
amount of $18,000, and a special Court’s instruction removing from the jury
assessment of $1,050.3 the issue of materiality in its consideration
of McLaughlin’s violation of 18 U.S.C. §
This appeal followed. 1623 was an error of law.
II. In contrast to 18 U.S.C. § 1623,
neither the Supreme Court nor this court
W e generally review jury has decided whether materiality is an
instructions under the abuse of discretion element of 29 U.S.C. § 439(b). That
standard. Appellate review, however, is statute provides:
plenary when the question is whether a
district court’s instructions misstated the Any person . . . who
law. Walden v. Georgia-Pacific Corp., knowingly fails to disclose a
126 F.3d 506, 513 (3d Cir. 1997). material fact, in any
document [or] report . . .
A. required under . . . this
subchapter shall be fined not
In United States v. Gaudin, 515 more than $10,000 or
U.S. 506 (1995), the Supreme Court of the imprisoned for not more
United States held that “materiality” is an than one year, or both.
element of 18 U.S.C. § 1001 (“makes any
materially false, fictitious, or fraudulent 29 U.S.C. § 439(b) (emphasis added). As
is true respecting 18 U.S.C. § 1623 and 18
U.S.C. § 1001, the statutory text of 29
3 U.S.C. § 439(b) expressly requires that the
McLaughlin has completed his
fact allegedly withheld be “material.”
service of the period of incarceration,
Compare Johnson, 520 U.S. at 465 (“The
and is currently serving his period of
statutory text expressly requires that the
supervised release.
4
false declaration be ‘material.’ Gaudin terms, applies to all errors where a proper
therefore dictates that materiality be objection is made at trial, the Supreme
decided by the jury, not the court.”), with Court has recognized a limited class of
United States v. Wells, 519 U.S. 482, 489- fundamental constitutional errors that
91 (1997) (holding that “materiality” is not “defy analysis by ‘harmless error’
element of 18 U.S.C. § 1014, a statute that standards.” Arizona v. Fulminante, 499
does not contain materiality requirement in U.S. 279, 309 (1991). Errors of that type
text). In other words, the logic of Gaudin are so intrinsically harmful as to require
and Johnson compels a finding that automatic reversal without regard to their
materiality is an element of 29 U.S.C. § effect on the outcome. For all other
439(b). See United States v. W. Indies constitutional errors, the Supreme Court
Transp., Inc.,
127 F.3d 299, 305 (3d Cir. teaches that reviewing courts must apply
1997) (“Failure to submit the issue of Rule 52(a)’s harmless-error analysis and
materiality to the jury was error. . . . That must disregard errors that are harmless
Gaudin involved perjury under 18 U.S.C. “beyond a reasonable doubt.” Chapman v.
§ 1001 rather than 18 U.S.C. § 1546, the California,
386 U.S. 18, 24 (1967).
relevant statute here, is not significant
given the identical character of the In Neder v. United States, 527 U.S.
materiality element in both perjury 1 (1999), the Court, relying on Gaudin,
statutes.”) (emphasis added). held that materiality is an element of the
federal tax fraud, mail fraud, wire fraud,
In sum, “materiality” is an element and bank fraud statutes under which the
of both 29 U.S.C. § 439(b) and 18 U.S.C. appellant had been convicted. Thus, the
§ 1623. Thus, the District Court’s decision Court held that the district court’s jury
to resolve the issue as a matter of law, instructions, which had resolved as a
rather than submitting it to the jury as a matter of law the materiality elements of
question of fact, violated McLaughlin’s those charges, were in error.
rights under the Fifth and Sixth
Amendments. The instructions, therefore, Although the defendant there (as
were in error. here) had lodged a timely objection to the
erroneous instruc tions re gard ing
B. materiality, the Court distinguished the
error at issue – a jury instruction that
Rule 52(a) of the Federal Rules of omitted materiality as an element of the
Criminal Procedure, which governs direct offense – from the constitutional violations
appeals from judgments of conviction in it had previously found were not subject to
the federal system, provides that “[a]ny harmless-error review. See, e.g., Gideon
error, defect, irregularity or variance that v. Wainwright, 372 U.S. 335 (1963);
does not affect substantial rights must be Tumey v. Ohio,
273 U.S. 510 (1927).
disregarded.” Although Rule 52(a), by its Those cases contained a “‘defect affecting
5
the framework within which the trial Turning first to McLaughlin’s
proceeds, rather than simply an error in the conviction under 29 U.S.C. § 439(b), we
trial process itself.’” Neder, 527 U.S. at 8 note that the United States must prove that
(quoting Arizona v. Fulminante, 499 U.S. the defendant submitted a required
279, 310 (1991)). Such errors “‘infect the document or report in which he
entire trial process,’”
Neder, 527 U.S. at 8 “‘knowingly fail[ed] to disclose a material
(quoting Brecht v. Abrahamson, 507 U.S. fact.’” A fact is “material” if it has “‘a
619, 630 (1993)), and “‘necessarily render natural tendency to influence, or [is]
a trial fundamentally unfair.’” Neder, 527 capable of influencing, the decision of the
U.S. at 8 (quoting Rose v. Clark, 478 U.S. decisionmaking body to which it was
570, 577 (1986)). addressed.’”
Gaudin, 515 U.S. at 509
(quoting Kungys v. United States, 485
By contrast, Neder held that an U.S. 759, 770 (1988)). Moreover, the
instruction that omits an element of the issue is whether an omission was capable
offense does not necessarily render a of influencing and not whether the
criminal trial fundamentally unfair or an omission actually exerted any influence on
unreliable vehicle for determining guilt or the factfinder. Thus, an omission can be
innocence. The Neder Court therefore material even if no one actually relied on
held that the harmless error review it. In re Cohn, 54 F.3d 1108, 1114 (3d Cir.
codified at Rule 52(a) applies when a trial 1995).
court erroneously instructs a jury that
materiality is a question of law to be McLaughlin was charged under 29
resolved by the court rather than a question U.S.C. § 439(b) with failing to disclose
of fact to be resolved by the jury. certain items on a required annual public
disclosure report, known as an “LM2
Under the test set forth in Chapman report,” which he had prepared and filed
v. California, 386 U.S. 18 (1967), to on EMCAL’s behalf with the DOL. Such
determine whether a constitutional error is reports are the means by which the DOL,
harmless, a reviewing court must decide union members, and the general public
whether the record shows “beyond a obtain financial information about a
reasonable doubt that the error complained particular union. In an LM2 report, a
of did not contribute to the verdict union must disclose, among other things,
obtained.”
Id. at 24. In other words, an disbursements it has made to its officers –
“otherwise valid conviction should not be including salaries, reimbursed expenses,
set aside if the reviewing court may and direct or indirect payments. Here, the
confidently say, on the whole record, that Government alleged that McLaughlin had
the constitutional error was harmless omitted $11,099.04 on the 1993 LM2
beyond a reasonable doubt.” Delaware v. r e p o r t – $ 6 , 5 4 7 . 6 2 i n a l l eg e d
Van Arsdall,
475 U.S. 673, 681 (1986). reimbursements McLaughlin received
from EMCAL for meals, mileage, parking
6
and tolls, and $4,551.42 in alleged life, other crime at issue).
health, and retirement benefits.
More fundamentally, even if we
McLaughlin notes that the verdict were to conclude that McLaughlin’s 90%
form that was eventually submitted to the figure was correct, there can be no
jury with respect to the 29 U.S.C. § 439(b) conclusion but that th e om itted
count did not subdivide or otherwise break information in the LM2 report was
down the various alleged reimbursements material. McLaughlin argues that the total
and benefits that he had purportedly failed monetary value of the omitted information
to report in the 1993 LM2 report. Rather, was small in comparison with his total
the verdict form simply asked for a salary and EMCAL’s total expenditures
decision of guilty or not guilty. He points for 1993. This however, is irrelevant. As
out that at sentencing the District Court, noted by the United States Court of
for purposes of calculating a loss amount Appeals for the Sixth Circuit:
as to the embezzled funds, gave him
“credit” for several expected pay increases The fact that the misstated
that he had foregone as President by amounts are relatively small
offsetting his foregone salary increases when compared with total
against the extra benefits and remuneration union expenditures is not
McLaughlin had fraudulently received. particularly relevant to the
McLaughlin argues that in light of the issue of materiality. Instead,
District Court’s crediting at sentencing, the relevant inquiry is
this court should find that he had disclosed whether the false
approximately 90% of his earnings and information is of the type
reimbursements, and thus that the jury, t h a t i s c a p a b le o f
properly instructed, may not have found influencing a decision of an
that the omitted informatio n was agency, as opposed to an
“material.” e x a m i n a t io n o f t h e
magnitude of the falsehood.
McLaughlin’s argument is flawed.
First, his 90% calculation is dubious. In Hughes v. United States, 899 F.2d 1495,
arriving at this figure, McLaughlin makes 1499 (6th Cir. 1990); see also United
multiple unwarranted inferences and States v. Norris,
749 F.2d 1116, 1122 (4th
conclusions. Second, it is unclear how the Cir. 1984) (stating, in context of 18 U.S.C.
District Court’s calculation of loss amount § 1001, “it is not the size of the payments
as to the embezzled funds (the subject of but it is the act of making a false statement
one of the crimes) is in any way related to about the payments that is material”).
the monetary value of the reimbursements Certainly, the undisclosed information in
and benefits McLaughlin failed to disclose the LM2 report was capable of influencing
in the 1993 LM2 report (the subject of the the decision of the decisionmaking body to
7
which it was addressed. Gaudin, 515 U.S. testimony respecting Martello and the
at 509. Under 29 U.S.C. § 431(b)(3), receipt, which directly contradicted
McLaughlin was required to disclose all of Martello’s trial testimony that he had been
the reimbursements and benefits he unaware of the existence of the charge
received from EMCAL. His omissions card, was plainly capable of influencing
were therefore material. the jury.
We reach the same conclusion with We also find McLaughlin’s
respect to McLaughlin’s conviction for argument regarding the March 1999
perjury under 18 U.S.C. § 1623, based on mistrial unpersuasive. The fact that the
his testimony during the first trial that March 1999 jury was unable to return a
Martello had used the charge card to make verdict is not germane to the issue of
a legitimate union purchase at Staples. On whether the jury in the second trial would
appeal, McLaughlin argues that his have found materiality if given the
primary defense at that trial to the 29 opportunity to have done so.
U.S.C. § 501(c) charges was that every
expenditure made with the charge card In sum, it is patent that
was a legitimate EMCAL expense. Thus, McLaughlin’s false testimony respecting
he continues, his testimony that other Martello’s use of the charge card had a
union officials used the charge card was natural tendency to influence and was
tangential to his theory of the case. capable of influencing the decision of the
Because this defense revolved around the decisionmaking body to which it was
legitimacy of the charged expenditures, not addressed, Gaudin, 515 U.S. at 509. We
the identity of the charge card’s user, are satisfied that a properly instructed jury
McLaughlin argues that his statements could not have found otherwise. Thus,
regarding Martello’s purported use of the although the District Court incorrectly
charge card were immaterial. He also instructed the jury, we conclude that the
suggests that the jury’s inability to return a record shows “beyond a reasonable doubt
verdict after the M arch trial calls into that th[is] error . . . did not contribute to
question the materiality of his lies. the verdict obtained.”
Chapman, 386 U.S.
at 24.
We do not find McLaughlin’s
arguments convincing. Whether or not III.
union officials other than McLaughlin had
used the charge card was an important McLaughlin also argues that his
issue at the March 1999 trial. Testimony counsel provided ineffective assistance by
suggesting that other individuals had used losing a critical piece of evidence and in
the charge card was capable of raising turn by stipulating to damaging facts
doubts in jurors’ minds as to whether regarding the evidence.
McLaughlin was guilty. McLaughlin’s
8
It is well settled in this court that counsel’s stipulation that the photocopy of
Sixth Amendment ineffective assistance of Defense Exhibit 2 (introduced as
counsel claims under Strickland v. Government’s Exhibit 282 at retrial) and
Washington, 466 U.S. 668 (1984), are the merchant’s copy of a receipt received
generally not entertained on a direct from Staples’ corporate headquarters
appeal. See, e.g., United States v. (Government’s Exhibit 265-A at the
Headley,
923 F.2d 1079, 1083 (3d Cir. retrial) were, in fact, part of the same
1991). This refusal to entertain Strickland multi-page receipt. Where a claim of
claims on direct review stems from the ineffective assistance of counsel is based
reality that “such claims frequently involve on attorney incompetence, the lack of a
questions regarding conduct that occurred fully developed record often precludes a
outside the purview of the district court comprehensive inquiry into the elements
and therefore can be resolved only after a of strategy or tactics that may have entered
factual development at an appropriate into defense counsel’s challenged decision.
hearing.” Gov’t of Virgin Islands v. Zepp, Zepp, 748 F.2d at133.
748 F.2d 125, 133 (3d Cir. 1984) (internal
quotations and citations omitted); see also Neither aspect of McLaughlin’s
United States v. Theodoropoulos, 866 F.2d Strickland claim fits into that narrow class
587, 598 (3d Cir.1989) (“[T]he proper of ineffectiveness claims amenable to
avenue for pursuing such a claim is review on direct appeal. McLaughlin’s
through a collateral proceeding.”). ineffective assistance of counsel claim is
thus premature.
We have, however, recognized a
narrow exception to the rule that a IV.
defendant cannot argue on direct appeal
that counse l’s perfo rman ce fa iled For the reasons set forth, we will
constitutional standards. As we stated in affirm the District Court’s judgment of
Headley, “[W]here the record is sufficient conviction and sentence and dismiss
to allow determination of ineffective without prejudice the appeal to the extent
assistance of counsel, an evidentiary that it claims ineffective assistance of
hearing to develop the facts is not needed.” counsel.
923 F.2d at 1083. This case does not fit
into this narrow exception.
The record must be developed as to
the facts surrounding counsel’s possession
and storage of Defense Exhibit 2, as well
as the cause or causes of its loss.
Similarly, on the record before us, we
cannot determine the reasonableness of
9
