United States v. Vernon O. Holland and James Davis Drane Mauldin, JR., 956 F.2d 990, 10th Cir. (1992)

956 F.
2d 990
UNITED STATES of America, Plaintiff-Appellee,

v.
Vernon O. HOLLAND and James Davis Drane Mauldin, Jr.,
Defendants-Appellants.
No. 91-5111.
United States Court of Appeals,

Tenth Circuit.
Feb. 13, 1992.
Kenneth P. Snoke, Asst. U.S. Atty. (Tony M. Graham, U.S. Atty., with
him on the briefs), Tulsa, Okl., for plaintiff-appellee.
William A. Cohan, Cohan & Greene, Encinitas, Cal. (Lowell H. Becraft,
Jr., Huntsville, Ala., and James D. Williams, Tulsa, Okl., with him on the
briefs) for defendants-appellants.
Before HOLLOWAY, MOORE and BRORBY, Circuit Judges.
JOHN P. MOORE, Circuit Judge.
This interlocutory appeal asks whether Grady v. Corbin, 495 U.S. 508, 110
S.Ct. 2084, 109 L.Ed.2d 548 (1990), bars a second prosecution for certain
violations of the Internal Revenue Code after defendants' first trial on similar
charges ended in a mistrial. Vernon O. Holland and James Davis Drane
Mauldin, Jr., hinge their double jeopardy claim to the government's dismissal,
with prejudice, of a charge of conspiracy to defraud under 18 U.S.C. 371
shortly before retrial. Defendants then contended jeopardy necessarily tainted
the remaining substantive counts previously charged as overt acts and
prohibited their separate reprosecution. Holding Grady was distinguishable, the
district court denied defendants' motions to dismiss but held Abney v. United
States, 431 U.S. 651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977), permitted this
appeal. Because defendants' double jeopardy claim lacks the necessary
predicate of termination of original jeopardy on the substantive counts,
Richardson v. United States, 468 U.S. 317, 104 S.Ct. 3081, 82 L.Ed.2d 242
(1984), we affirm.
I.
2
In February 1990, a federal grand jury charged defendants with conspiracy to

defraud the United States Government under 18 U.S.C. 371. Count I alleged
defendants conspired to impede and impair the lawful function of the IRS in
ascertaining, computing, assessing, and collecting personal income taxes from
defendants. To this end, defendants allegedly established and operated a
"warehouse bank" in Tulsa, Oklahoma, called the National Currency Exchange,
which later became the Freeman Education Association. Through this vehicle,
defendants allegedly handled cash transactions designed to evade IRS reporting
requirements. Allegedly, an interest-bearing account in the Cayman Islands,
British West Indies, was a repository for the concealed funds in the domestic
operations. In the first indictment (Holland I), Count I included a description of
the means of accomplishing the conspiracy and set forth twenty overt acts
evidencing the existence of the conspiracy. Count II charged defendant
Mauldin with sending the IRS a letter stating defendant Holland received no
wages, salary, or other income from the Freeman Education Association, a
statement he knew was false in violation of 18 U.S.C. 1001.1 Count III
charged defendant Holland with knowingly and willfully failing to report
income on IRS Form 1040 and/or on a Report of Foreign Bank and Financial
Accounts Treasury Form 90-22.1, his financial interest in or signature authority
over a foreign bank account held in the name of the Freeman Education
Association in violation of 31 U.S.C. 5314 and 5322(b) and 31 C.F.R.
103.24. Count IV charged defendant Holland with knowingly and willfully
failing to report income on Income Tax Form 1040 and/or on a Report of
Foreign Bank and Financial Accounts Treasury Form 90-22 in violation of 31
U.S.C. 5314 and 5322(b) and 31 C.F.R. 103.24. Count V charged
defendant Holland with willful failure to disclose his financial interest in or
signature authority over a foreign bank account in violation of 31 U.S.C.
5314 and 5322(b). Counts III, IV, and V were also alleged to have been
committed while violating 18 U.S.C. 371.
After a three-week trial, the jury was unable to reach a verdict on any of the
five counts. The district court stated it granted the mistrial because of "
'manifest necessity' " and because a mistrial was "the only means by which the
'ends of public justice' could be fulfilled," citing United States v. Perez, 9
Wheat. 579, 6 L.Ed. 165 (1824). The court stated it would set the matter for
retrial unless the government did not plan to retry the case.2
Subsequently, the government filed a superseding indictment (Holland II) on

October 4, 1990. Holland II essentially mirrored Holland I upon which
defendants had already been tried. One week before defendants' retrial was
scheduled to begin, the government moved to dismiss Count I, 371

conspiracy, representing it acted "in the interest of justice" under Fed.R.Crim.P.
48(a). Defendants did not contest the government's motion provided Count I
was dismissed with prejudice. The government readily agreed to this
disposition. Count I thus eliminated,3 defendants moved to dismiss the
indictment on the ground the Double Jeopardy Clause of the Fifth Amendment
barred reprosecution of charges explicitly incorporated in Count I.
II.
5
Before the district court, defendants contended each remaining count only
narrowed the focus on an alleged act, for example, failure to report income,
"but the greater includes the lesser, and the greater is alleged as an overt act in
furtherance of the conspiracy, namely that he failed to file a 1040 at all so we're
talking about the same conduct." R. IX, 10. Under Grady, defendants urged, the
same conduct the government dismissed with prejudice would then be used to
reprosecute them on the remaining charges. This argument is elaborated on
appeal with reference to the jury instructions given in the first trial4 and
reliance on post-Grady cases, United States v. Felix, 926 F.2d 1522 (10th Cir.),
cert. granted, --- U.S. ----, 112 S.Ct. 47, 116 L.Ed.2d 25 (1991); United States v.
Calderone, 917 F.2d 717 (2d Cir.1990); and United States v. Gambino, 920
F.2d 1108 (2d Cir.1990), cert. denied, --- U.S. ----, 112 S.Ct. 54, 116 L.Ed.2d
31 (1991).
The government distinguishes Grady as a single transaction, successive

prosecution case while this case is a "continuing prosecution." Relying on
Richardson v. United States, 468 U.S. 317, 104 S.Ct. 3081, 82 L.Ed.2d 242 the
government insists because jeopardy never attached after the first mistrial and
the dismissal with prejudice does not amount to an adjudication on the merits,
the continuing prosecution of defendants is not barred by double jeopardy.
III.
7
The Supreme Court furnishes our starting point in holding "the failure of the
jury to reach a verdict is not an event which terminates jeopardy." Id. at 325,
104 S.Ct. at 3086. The Court reasoned:
8 Government, like the defendant, is entitled to resolution of the case by verdict

The
from the jury, and jeopardy does not terminate when the jury is discharged because
it is unable to agree. Regardless of the sufficiency of the evidence at petitioner's first
trial, he has no valid double jeopardy claim to prevent his retrial.
Id.
10
Therefore, the government could properly reindict and retry defendants on the
same charges without offending principles of double jeopardy because the
required event, such as an acquittal, did not occur to terminate the original
jeopardy on the counts remaining for retrial. Reindictment, in the
circumstances of this case, is equivalent to retrial under the original indictment.
11
Nevertheless, although defendants do not contest the government's right to

retrial, they urge the dismissal with prejudice of one of those charges in the
superseding indictment sets up the double jeopardy bar that taints the entire
second prosecution. To reach this result, defendants rely on the "conduct test"
articulated in Grady, quoting, "to establish an essential element of an offense
charged in that [subsequent] prosecution, the government will prove conduct
that constitutes an offense for which the defendant has already been
prosecuted." Grady, 495 U.S. 508, 510, 110 S.Ct. 2084, 2087, 109 L.Ed.2d 548.
12
Not only is this contention supported by a false assumption about the effect of
the dismissal with prejudice in this case, but also it overlooks a fundamental
principle of conspiracy jurisprudence. First, we have no record other than the
government's representations at oral argument about its reasons for dismissing
Count I.5 In fact, the district court did not inquire before granting the Rule 48(a)
motion about "the prosecutor's reasons for dismissing the indictment and the
factual basis for the prosecutor's decision." United States v. Strayer, 846 F.2d
1262, 1265 (10th Cir.1988) (citing United States v. Derr, 726 F.2d 617, 619
(10th Cir.1984)). By agreeing to dismiss Count I with prejudice, the
government inadvertently achieved the remedial purposes of Rule 48(a).
However, to construe this result as the equivalent of an acquittal or an
adjudication on the merits of all counts simply because Count I incorporated
the other four counts as overt acts or means or methods is not the necessary
consequence of the dismissal. Nevertheless, we hold jeopardy attaches to the
dismissal with prejudice of Count I. Derr, 726 F.2d at 619.
13
This conclusion, however, does not mandate dismissal of the remaining counts
in the superseding indictment. Although defendants were already "prosecuted"
for the substantive charges reflected in the superseding indictment, those counts
were never resolved for jeopardy purposes because the court declared a
mistrial. Nor are these counts inextricably bound to the conspiracy charge.
14
"A conspiracy is a partnership in crime," Pinkerton v. United States, 328 U.S.

640, 644, 66 S.Ct. 1180, 1182, 90 L.Ed. 1489 (1946), with "ingredients, as well
as implications, distinct from the completion of the unlawful project." Id.

(citations omitted). It is the agreement, separate and apart from the overt act
itself, which comprises the crime. "It has been long and consistently recognized
by the Court that the commission of the substantive offense and a conspiracy to
commit it are separate and distinct offenses." Id.6 Pinkerton recognized certain
limited exceptions to this principle. For example, when the agreement of two
actors is necessary to the completion of the substantive crime, "there is no
ingredient in the conspiracy which is not present in the completed crime." Id.
However, none of the substantive crimes remaining in the superseding
indictment fit these exceptions.
15
Consequently, prosecution of the substantive crimes charged in the superseding

indictment does not offend the third concern in double jeopardy analysis.
16 Double Jeopardy Clause] protects against a second prosecution for the same
'[The
offense after acquittal. It protects against a second prosecution for the same offense
after conviction. And it protects against multiple punishments for the same offense.'
17
Grady, 110 S.Ct. at 2090, quoting North Carolina v. Pearce, 395 U.S. 711, 717,
89 S.Ct. 2072, 2076, 23 L.Ed.2d 656 (1969). Because the superseding
indictment in this case does not amount to a successive prosecution, and
defendants can be separately charged for the remaining offenses, this case falls
outside of Grady's domain. Defendants' double jeopardy claim is therefore
unfounded, and we AFFIRM the district court's denial of the motion.
18 U.S.C. 1001 states:

Whoever, in any matter within the jurisdiction of any department or agency of
the United States knowingly and willfully falsifies, conceals or covers up by
any trick, scheme, or device a material fact, or makes any false, fictitious or
fraudulent statements or representations, or makes or uses any false writing or
document knowing the same to contain any false, fictitious or fraudulent
statement or entry, shall be fined not more than $10,000 or imprisoned not more
than five years, or both.
Defense counsel objected to the declaration of a mistrial arguing the court

should have granted defendants' motion for a directed verdict instead. R. VIII, 4
The court also granted the government's motion to amend Holland II to delete
references in Counts II, IV, and V to 18 U.S.C. 371 as well as correcting the
reference in Holland II from 31 U.S.C. 5322(b) to 31 U.S.C. 5322(a) in
Counts III, IV, and V

4
For example, defendants cite the jury instruction on " 'Conspiracy'--Defined,"

which states in part:
It is not necessary for the prosecution to prove that all the means or methods set
forth in the indictment were agreed upon to carry out the conspiracy, or that all
such means, methods, or overt acts were actually used or put into operation. It
is, however, necessary that the evidence establish to the satisfaction of the jury
that one or more of the means or methods described in the indictment was
agreed upon to be used in an effort to effect or accomplish some object or
purpose of the conspiracy as charged in the indictment.
(defendants' emphasis added). Appellants' Appendix at 69.
The government represented at oral argument the conspiracy count was

dismissed to cut down on the length of the scheduled trial and the amount of
evidence it intended to introduce
Pinkerton, in fact, affirmed the vicarious liability of one coconspirator for the
substantive acts committed by his brother

United States v. Vernon O. Holland and James Davis Drane Mauldin, JR., 956 F.2d 990, 10th Cir. (1992)

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United States v. Vernon O. Holland and James Davis Drane Mauldin, JR., 956 F.2d 990, 10th Cir. (1992)

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956 F.

UNITED STATES of America, Plaintiff-Appellee,

United States Court of Appeals,

In February 1990, a federal grand jury charged defendants with conspiracy to

Subsequently, the government filed a superseding indictment (Holland II) on

scheduled to begin, the government moved to dismiss Count I, 371

The government distinguishes Grady as a single transaction, successive

8 Government, like the defendant, is entitled to resolution of the case by verdict

Nevertheless, although defendants do not contest the government's right to

"A conspiracy is a partnership in crime," Pinkerton v. United States, 328 U.S.

as implications, distinct from the completion of the unlawful project." Id.

Consequently, prosecution of the substantive crimes charged in the superseding

18 U.S.C. 1001 states:

Defense counsel objected to the declaration of a mistrial arguing the court

Counts III, IV, and V

For example, defendants cite the jury instruction on " 'Conspiracy'--Defined,"

The government represented at oral argument the conspiracy count was

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