Error to Admit Testimony of Former Attorney Regarding Circumstances of Plea Agreement, and Bribery Loss Overly Speculative

United States v. Nelson, No. 12-30101 (Oct. 14, 2013) (Jones, Dennis, Higginson)

Nelson, the former mayor of a Louisiana town, appealed his corruption-related offenses.  The panel affirmed the conviction but vacated his sentence and remanded for resentencing.

Before deciding to go to trial, Nelson entered into a plea agreement with stipulated facts and a waiver that allowed the Government to use the factual stipulation against him if he failed to plead guilty.  After signing the plea agreement, Nelson switched attorneys and decided not to plead guilty.  At trial, the district court allowed the factual stipulation to be admitted as evidence and allowed Nelson’s former attorney to testify as to the circumstances of signing the plea agreement.  The Government argued that the former attorney’s testimony was necessary for them to show that the plea agreement was entered into knowingly and voluntarily.  Talk about prejudicial, right?

The panel affirmed the admission of the factual stipulation because Nelson “validly waived the exclusionary provisions of the plea-statement rules” (Federal Rule of Evidence 410).  The panel thought the former attorney’s testimony that Nelson understood and agreed with the plea agreement and only signed it after a lengthy discussion with his attorney, however, went too far and was protected by the attorney-client privilege.  The error was harmless, though, because it was cumulative of the factual stipulation.  The panel glosses over the fact that the factual stipulation was introduced into evidence through the former attorney, reasoning that it would have gone before the jury whether or not the former attorney testified.

The panel also affirmed the district court’s refusal to instruct the jury on the entrapment defense since Nelson did not present prima facie evidence that he lacked predisposition to the offense.  Specifically, Nelson did not present “a plausible innocent explanation for accepting the money and other gifts offered to him” by a person who was not an FBI undercover agent.  Also, the district court did not err by allowing hearsay as a co-conspirator statement because the witness and Nelson were at least co-conspirators in that they engaged in a common scheme to recruit a certain business (Cifer) to their towns, even if that joint venture was not necessarily unlawful.

With regard to the sentencing loss calculation, the district court calculated the bribery amount at $6,382,000.  The panel found that the district court erroneously valued the loss related to a letter Nelson wrote to the EPA to assist Cifer in obtaining a grant and a letter he wrote to private investors expressing his support of Cifer.  The district court calculated the loss as $4 million and $2 million, respectively.  The panel disagreed with the methodology of calculating the loss to be the total possible value of the grants based on Nelson’s written support of Cifer to receive those grants.  “A defendant’s false statement in seeking government benefits is insufficient to render him accountable for all benefits received or intended to be received.”  The panel also pointed out that “a defendant should not be held accountable for the total amount of [government] benefits obtained, when some portion of that benefit would have been obtained absent the fraudulent conduct,” and that “the expectation of receiving a ‘substantial’ amount of money is insufficiently specific to base a calculation of intended loss.”  The panel remanded to the district court to determine the bribery amount related to those two letters but suggests that, if the amount of loss cannot reasonably be determined, that it may be more appropriate to use “the gain that resulted from the offense” in accordance with the § 2B1.1 commentary—e.g., the amount Nelson received for writing the EPA letter: $10,000.   The panel found that the district court had sufficient evidence, however, to value Nelson’s expected benefit from the kickback scheme at $250,000.

Psychotherapist-Patient Privilege Only Applies to Communications Made with Reasonable Expectation of Confidentiality

United States v. Auster, No. 07-30084 (5th Cir. Feb. 11, 2008) (Higginbotham, Davis, Smith)

Auster is a retired New Orleans police officer. He had been underoing therapy for paranoia, anger, and depression for a number of years. Workers' comp covered the treatment, and an outfit named CCMSI managed his benefit claim.

Over the years, Auster had made threats to various individuals during his therapy sessions. His therapists conveyed those threats to their targets, pursuant to a state-law "duty to warn." Auster knew this, because his therapists told him they were doing that.

Much of Auster's anger stemmed from CCMSI's management of his workers' comp benefits. At one point, CCMSI told Auster that it would stop paying a portion of his benefits. In a later therapy session, Auster apparently responded by threatening "violent retribution" against various people, including CCMSI employees. Auster's therapist relayed the threat to Keith Smith, a CCMSI employee who handled Auster's claim, and warned that Auster had "stockpiles of weapons and supplies to provide the basis for his actions."

Smith went to the authorities, and Auster was arrested. The feds indicted him on a Hobbes Act charge of attempting to extort the property of CCMSI by threatening force and violence via his psychotherapist if his benefits were reduced. Auster moved to dismiss the indictment. Although the court refused to do so, it nevertheless suppressed the communications relayed to CCMSI, citing the psychotherapist-patient privilege.

The Government appealed, and the court of appeals reversed. It held that under the Supreme Court's decision in Jaffe v. Redmond, the privilege only applies to communications made with a reasonable expectation of privacy. Auster lacked that expectation, so the court held, because his therapists repeatedly told him that they would relay his violent threats to the potential victims. Thus, "[b]ecause Auster’s non-confidential statement cannot, as a matter of law, be privileged," the court reversed the suppression order.

As the court acknowledged, there is a circuit split on this issue. The Sixth and Ninth Circuits have held that statements made in psychotherapy sessions may be privileged even in the absence of a reasonable expectation of privacy, for a variety of policy and prudential reasons. Auster found those justifications unpersuasive, and considered Jaffe controlling in any event.

The Tenth Circuit, by contrast, has recognized a "dangerous patient" exception to the privilege. Auster accords with that result, but declined to decide "whether there is a dangerous-patient or crime-fraud exception to the psychotherapist-patient privilege" because of the way it resolved the question.