Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 1 of 9 PageID# 131

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1 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 1 of 9 PageID# 131 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA NORFOLK DIVISION UNITED STATES OF AMERICA v. Case No. 2:16cr6 ANTHONY L. BURFOOT DEFENDANT ANTHONY L. BURFOOT S BRIEF IN SUPPORT OF MOTION TO DIMISS COUNT TWO ON THE GROUNDS THAT THE WIRE COMMUNICATION ALLEGED WAS NOT IN FURTHERANCE OF THE SCHEME TO DEFRAUD COMES NOW the defendant, Anthony L. Burfoot, by counsel, and as and for his brief In Support Of Motion To Dismiss Count Two On The Grounds That The Wire Communication Alleged Was Not In Furtherance Of The Scheme To Defraud, respectfully states as follows: INTRODUCTION Count Two of the Indictment seeks to charge the use of an interstate wire communication to further a scheme to defraud the citizens of the City of Norfolk of their right to honest services, in violation of 18 U.S.C. Section This is also known as honest-services wire fraud. The defendant respectfully submits that Count Two fails to charge an offense as a matter of law, on the grounds that the wire communication comprising the alleged violation of law in Count Two (1) on the face of Count Two was factually not in furtherance of the alleged scheme to defraud; and (2) could also legally not be in furtherance of the scheme to defraud because the wire communication was legally compelled, by the Virginia Constitution and state and local law. ARGUMENT A. The wire communication alleged in Count Two on the face of the Count was factually not in furtherance of the alleged scheme to defraud. 1

2 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 2 of 9 PageID# 132 Count Two alleges a wire communication to further a scheme to defraud the citizens of Norfolk of their right to honest services, in pertinent part, as follows: 3. On or about February 14, 2011, for the purposes of executing the aforesaid scheme and artifice, ANTHONY L. BURFOOT transmitted and caused to be transmitted by means of wire communication in interstate commerce certain writings, signs, signals, pictures, and sounds, that is: DE used his sister s credit card to pay delinquent taxes, such payment causing the transmission of a wire communication in interstate commerce. Indictment, Count TWO, Paragraph 3, p. 22 (emphasis added). In United States v. Wynn, 684 F.3d 473, 477 (4 th Cir. 2012), the Court noted that: to convict a person of mail fraud or wire fraud, the government must show that the defendant (1) devised or intended to devise a scheme to defraud and (2) used the mail or wire communications in furtherance of the scheme. (emphasis added). The defendant respectfully submits that the Indictment, on its face, in Count Two, demonstrates that the defendant did not use a wire communication in furtherance of the scheme. Guidance on this issue can be found from the treatment of the analogous mail fraud statute in United States v. Hancock, 512 Fed. Appx. 266, 268 (4 th Cir. 2013)(unpublished). In that case, the Fourth Circuit noted that: In Parr v. United States, the Supreme Court espoused that [t]he federal mail fraud statute does not purport to reach all frauds, but only those limited instances in which the use of the mails is a part of the execution of the fraud. 363 U.S. 370, , 80 S. Ct. 1171, 4 L. Ed. 2d 1277 (1960) (quoting Kann v. United States, 323 U.S. 88, 95, 65 S. Ct. 189 L. Ed. 88 (1944)). Citing Schmuck v. United States, 489 U.S. 705 (1989), however, the Hancock Court did note that a mail (or wire) communication can be a part of the scheme to defraud where: 2

3 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 3 of 9 PageID# 133 the mailings are incidental to an essential part of the scheme. Id. [Schmuck] at 712 (quoting Pereira v. United States, 374 U.S. 1, 8, 74 S. Ct. 358, 98 L. Ed. 435 (1954)). In the instant case, in Count One, the Indictment alleges a conspiracy between the defendant and others, including Dwight Etheridge ( DE ) to commit honest-services wire fraud, as follows: From in or about 2005 through in or about February 2011, in the Eastern District of Virginia, defendant ANTHONY L. BURFOOT knowingly and intentionally conspired with other persons known and unknown to commit wire fraud, that is: having devised and intending to devise a scheme and artifice to defraud the citizens of the City of Norfolk of their right to the honest services of a Norfolk Councilman through bribery, to transmit and cause to be transmitted by means of wire communication in interstate commerce writings, signs, signals, pictures and sounds for the purpose of execution of such scheme and artifice, in violation of Title 18, United States Code, Section Indictment, COUNT ONE, Paragraph 2, p. 20. Count One further specifies that in exchange for the receipt of personal things of value from Dwight Etheridge (and others), as a Councilman, the defendant engaged in official acts on behalf of Tivest (Etheridge s company) by voting to approve ordinances helpful to Tivest and by influencing the Norfolk and Redevelopment and Housing Authority ( NRHA ) on behalf of Tivest. Indictment, COUNT ONE, Paragraphs 4.a.,c., p. 21. Notably, the wire fraud conspiracy does not allege any official acts by the defendant on behalf of Tivest in the defendant s then-concurrent position as a Deputy City Treasurer. The only official acts alleged in support of the wire fraud conspiracy are acts by the defendant as a Councilman. While Count One charges the defendant with conspiracy to commit hones-services wire fraud, Count Two charges the defendant with the substantive commission of that 3

4 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 4 of 9 PageID# 134 offense. Count Two specifically charges that, on February 14, 2011, while defendant was a Deputy City Treasurer (see Indictment, GENERAL ALLEGATIONS, Paragraph 3, p. 2.), the defendant transmitted and caused to be transmitted an interstate wire communication when Dwight Etheridge used his sister s credit card to pay delinquent taxes causing an interstate wire communication. Indictment, COUNT TWO, Paragraph 3, p. 22. Dwight Etheridge s payment of a delinquent tax bill to the City Treasurer s Office where defendant was a Deputy, however, as a matter of fact is not the use of a wire communication in furtherance of the scheme outlined in the Indictment. The Indictment alleges a scheme by the defendant to be bribed by Dwight Etheridge and Tivest in exchange for votes as a City Councilman and for influence with NRHA as a City Councilman, not in exchange for receipt of delinquent tax payments. The Indictment on its face excludes a delinquent tax payment by Dwight Etheridge from the scope of the scheme. The wire communication generated by the credit card payment could not be said as a matter of fact to be incidental to an essential part of the scheme because receipt of delinquent tax payments in exchange for things of value was not even a part of the scheme, much less an essential part of the scheme. B. In the alternative, the use of the wires element is not met as a matter of law because the wire was part of a legally compelled act by both the Constitution of Virginia and state and local law. In addition to factually not being in furtherance of the honest-services Indictment scheme on the face of Count Two, as set forth in the Indictment and urged above, the wire communication in Count Two is also insufficient as a matter of law because the wire was a part of a legally compelled act and for this reason also could not be in furtherance of the scheme. 4

5 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 5 of 9 PageID# 135 In Parr v. United States, supra, 363 U.S. at 391, cited with approval in Hancock, supra, 512 Fed. Appx. at 269, the Supreme Court reversed mail fraud convictions of certain public officials and a private banker involving the theft and misappropriation of public school taxpayer- paid monies after the taxes were assessed by the mails and paid by taxpayers by mail, which mailings were in accordance with mandated state law. The Supreme Court noted the question presented as follows: The crucial question, respecting Counts 1 through 16 of the indictment, then comes down to whether the legally compelled mailings of the lawful or, more properly, what are not charged or shown to have been unlawful letters, tax statements, checks and receipts, complained of in those counts, properly may be said to have been for the purpose of executing a scheme to defraud because those legally compelled to cause and causing those mailings planned to steal an indefinite part of the receipts. Parr, supra, 363 U.S. at 389 (emphasis added). In addressing this question, the Supreme Court again noted the limitations on the mail fraud statute: Thus, as its terms and purpose make clear, "[t]he federal mail fraud statute does not purport to reach all frauds, but only those limited instances in which the use of the mails is a part of the execution of the fraud, leaving all other cases to be dealt with by appropriate state law." Kann v. United States, 323 U.S. 88, 95. Therefore, only if the mailings were "a part of the execution of the fraud," or, as we said in Pereira v. United States, 347 U.S. 1,8, were "incident to an essential part of the scheme," do they fall within the ban of the federal mail fraud statute. Parr, supra, 363 U.S. at The Court found significant that the Government cites no case holding that the mailing of a thing which the law required to be mailed may be regarded as mailed for the purpose of executing a plot or scheme to defraud. Id. at 390 (emphasis added). 5

6 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 6 of 9 PageID# 136 The Court ultimately held as follows: But in the light of the particular circumstances of this case, and especially of the facts (1) that the School Board was legally required to assess and collect taxes, (2) that the indictment did not charge nor the proofs show that the taxes assessed and collected were in excess of the District's needs or that they were "padded" or in any way unlawful, (3) that no such issue was submitted to, nor, hence, determined by, the jury, (4) that the Board was compelled to collect and receipt for the taxes by state law, which, in the circumstances here, compelled it to use and cause (here, principally by permitting) the use of the mails for those purposes, we must conclude that the legally compelled mailings, complained of in the first 16 counts of the indictment, were not shown to have been unlawful "step[s] in a plot," Badders v. United States, supra, 240 U.S. at 394, "part[s] of the execution of the fraud," Kann v. United States, supra, 323 U.S. at 95, "incident to an essential part of the scheme," Pereira v. United States, supra, 347 U.S. at 8, or to have been made "for the purpose of executing such scheme," within the meaning of 1341, for we think it cannot be said that mailings made or caused to be made under the imperative command of duty imposed by state law are criminal under the federal mail fraud statute, even though some of those who are so required to do the mailing for the District plan to steal, when or after received, some indefinite part of its moneys. Id. at 391 (emphasis added). Like the school district in Parr, the Norfolk City Treasurer and his employees are legally required and compelled to collect delinquent taxes, thereby compelling that office to use, inter alia, the mails and/or wires to do so. Like the taxpayers in Parr, supra, Dwight Etheridge was legally required and compelled to pay local taxes to the Norfolk City Treasurer, both individually and in a corporate capacity, thereby again compelling him to use, inter alia, the mails and/or wires. Accordingly, just as the legally compelled use of the mails in the Parr, supra case could not as a matter of law be for the purpose of executing the scheme to defraud, so is the legally compelled wire communication in Count Two as a matter of law not for the purpose of executing the honest-services scheme to defraud either. 6

7 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 7 of 9 PageID# 137 The compelled legal authority for the required payment to and collection by the Norfolk City Treasurer of delinquent taxes by Dwight Etheridge is manifest. First, the general taxation authority is found in the Constitution of Virginia, Article X, Section 1, which states that, All property, except as hereinafter provided shall be taxed. All taxes shall be levied and collected under general laws The Constitution of Virginia further commits to local taxation, such as by the City of Norfolk, certain property, as follows: Real estate, coal and other mineral lands, and tangible personal property are hereby segregated for, and made subject to, local taxation only, and shall be assessed for local taxation in such manner and at such times as the General Assembly may prescribe by general law. Accord Code of Virginia Section ( All taxable real estate and all tangible personal property are hereby segregated and made subject to local taxation only. ). Virginia Code Section mandates that the City Treasurer shall be responsible for the receipt of such locally taxed property, stating, in pertinent part, that: A. Each treasurer shall receive the state revenue and the levies and other amounts payable into the treasury of the political subdivision of the Commonwealth served by the treasurer. Finally, as to delinquent taxes, such as those owed and payable by Dwight Etheridge as identified as the subject of the wire communication in Count Two, Virginia Code Section legally compels the City Treasurer to collect and receive such delinquent taxes, directing, in pertinent part, as follows: The treasurer, after the due date of any tax or other charge collected by such treasurer, shall call upon each person chargeable with such tax or other charge who has not paid the same prior to that time, or upon the agent, if any, of such person resident within the county, city or town for payment thereof; and upon failure or refusal of such person or agent 7

8 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 8 of 9 PageID# 138 (emphasis added). to pay the same he shall proceed to collect by distress or otherwise. Thus, just as the positive law of the State of Texas legally compelled the tax-related mailings in Parr, supra, and thereby excluded them from serving as mailings in furtherance of a fraudulent scheme, so did the positive law of the Commonwealth of Virginia legally compel the delinquent tax payment by Dwight Etheridge to the Norfolk City Treasurer under Count Two and similarly exclude it from serving as a wire communication in furtherance of a scheme to defraud. CONCLUSION For the foregoing reasons, the defendant respectfully submits that the wire communication underlying Count Two as a matter of fact on the face of the Count cannot serve as a wire communication in furtherance of the alleged scheme to defraud. In the alternative, as a matter of law, such legally compelled wire cannot serve as a wire in furtherance of a scheme to defraud as well. Andrew M. Sacks, Esquire, VSB#: Stanley E. Sacks, Esquire, VSB# Attorneys for defendant Anthony L. Burfoot SACKS & SACKS, P.C. Town Point Center 150 Boush Street, Suite 501 Norfolk, VA Telephone: (757) Facsimile: (757) andrewsacks@lawfirmofsacksandsacks.com ANTHONY L. BURFOOT By: /s/ Of counsel CERTIFICATE OF SERVICE 8

9 Case 2:16-cr HCM-DEM Document 36 Filed 03/02/16 Page 9 of 9 PageID# 139 I hereby certify that on this 2 nd day of March, 2016, I will electronically file the foregoing with the Clerk of Court using the CM/ECF system, which will then send a notification of such filing (NEF) to: Melissa E.O Boyle, Esquire Assistant United States Attorney United States Attorney s Office 101 West Main Street, Suite 8000 Norfolk, Virginia Phone: (757) Fax: (757) Melissa.OBoyle@usdoj.gov /s/ Andrew M. Sacks, Esquire Andrew M. Sacks, Esquire, VSB#: Stanley E. Sacks, Esquire, VSB# Attorneys for defendant Anthony L. Burfoot SACKS & SACKS, P.C. Town Point Center 150 Boush Street, Suite 501 Norfolk, VA Telephone: (757) Facsimile: (757) andrewsacks@lawfirmofsacksandsacks.com F:\IC\BURFOOT Anthony\BRIEF.MOT 6.DismissCountTwo docx 9

Case 1:13-cr CMH Document 12 Filed 09/19/13 Page 1 of 9 PageID# 39

Case 1:13-cr CMH Document 12 Filed 09/19/13 Page 1 of 9 PageID# 39 Case 1:13-cr-00366-CMH Document 12 Filed 09/19/13 Page 1 of 9 PageID# 39 fluto** ' FILED IN OPEN COURT IN THE UNITED STATES DISTRICT COURT FOR THE SEP I 9 2013 EASTERN DISTRICT OF VIRGINIA CLERK. US nislrict