More than a dozen former federal trial judges are urging the U.S. Supreme Court to hear an appeal by two lawyer-turned-film producers convicted in a tax fraud case that could have broader implications for the criminal and civil justice systems.
The 14 judges, who span the country from Alabama to New York and from New Jersey to California, have filed a supporting brief in the case Hoffman and Arata v. United States, in which Jeffrey Fisher, of counsel at O’Melveny & Myers, represents Peter Hoffman, Michael Arata and Susan Hoffman.
The Hoffmans and Arata were convicted in 2015 by a federal jury in an alleged scheme to get more than $1 million in state tax credits for renovating an old French Quarter mansion into a film production facility. The tax credit law was part of an effort by Louisiana to bring more movie productions into the state. The facility was completed and opened, and some of the tax credits were found to be legitimate. The three defendants had argued that they submitted credit documents in good faith under a tax credit law that some observers, at the time, considered ambiguous and complex.
The trial judge threw out most of the counts against the defendants, but he denied their motion for a judgment of acquittal. He sentenced the three to probation in a dramatic downward departure from sentencing guidelines. He noted he was constrained by precedent in the U.S. Court of Appeals for the Fifth Circuit that rejects the so-called equipoise rule, where a person’s guilt and innocence are equal. The Fifth Circuit reinstated most of the counts and remanded the case for resentencing.
The former judges focused on Fisher’s argument that the equipoise rule should have been applied and if it had, would have resulted in acquittals.
Under the rule, which is followed by a number of federal appeals courts, a trial judge is required to reverse a conviction if the government’s evidence “gives equal or nearly equal circumstantial support to a theory of guilt and a theory of innocence.” The rule has “long applied” in cases turning on circumstantial evidence in the First, Sixth, Seventh, Eighth, Tenth, Eleventh and D.C. circuits, according to Sidley Austin partner Christopher Egleson in Los Angeles, who is representing the former judges at the Supreme Court.
“The Fifth Circuit’s contrary conclusion that there is no reliable method for determining when the evidence is ‘in equipoise,’ is wholly unjustified and could well have implications beyond the Rule 29 [motion for acquittal] context,” Egleson wrote in his amicus brief.
“Evidentiary equipoise,” he said, is the “precise turning point” in a number of contexts, including harmless error review and application of the rule of lenity. The Fifth Circuit’s stance, he said, also suggests that judges “are somehow incapable of determining whether reasonable jurors could find by a preponderance of the evidence that a plaintiff is entitled to a verdict in a civil case, undermining the entire framework of pre-trial summary judgment, as well as of judgment as a matter of law.”
The Hoffmans and Arata also have amicus support from nine criminal law professors, represented by Timothy O’Toole, a partner at Miller & Chevalier, and the National Association of Criminal Defense Lawyers, represented by Williams & Connolly partner Amy Saharia.
The criminal law professors put a familiar argument before the justices: the dangers of expansive federal criminal laws. The justices in recent years have issued a number of decisions limiting prosecutors’ use of broad and vague criminal provisions.
“In a nutshell,” O’Toole wrote, Arata and the Hoffmans were convicted of federal fraud for making statements to state regulators about the requirements of a state law tax scheme “that was so ambiguous that no one knew with any certainty what the requirements of the state law scheme were.” In the defendants’ situation, “the facially expansive federal mail fraud statutes gave no fair warning that they could be applied to these sorts of interactions with regulators,” he said.
The position of the law professors support Fisher’s second argument that the wire and mail fraud convictions should be vacated because of the ambiguous state regulatory scheme and his clients’ reasonable interpretation of it.
“There is no basis to hold that statements made under an ambiguous state regulatory scheme can support a federal fraud conviction while statements under an ambiguous federal scheme cannot,” Fisher argued.
U.S. Solicitor General Noel Francisco has urged the court to deny review. “The evidence here, far from being in or near equipoise, strongly supported petitioners’ convictions,” the Justice Department said.
“The court of appeals correctly recognized that the clarity or ambiguity of Louisiana law is beside the point in this case, because petitioners’ convictions rest on their representations’ inconsistency with the facts, not on the representations’ inconsistency with Louisiana law,” Francisco told the justices.