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United States v. Fattah

United States Court of Appeals, Third Circuit

June 2, 2017

UNITED STATES OF AMERICA
v.
CHAKA FATTAH, JR., Appellant

          Argued March 7, 2017

         On Appeal from the United States District Court for the Eastern District of Pennsylvania District Court No. 2-14-cr-00409-001 District Judge: The Honorable Harvey Bartle, III

          Eric L. Gibson [ARGUED] Paul L. Gray Office of United States Attorney 615 Chestnut Street Suite 1250 Philadelphia, PA 19106 Counsel for Appellee.

          Chaka Fattah, Jr. [ARGUED] Philadelphia FDC 700 Arch Street P.O. Box 562 Philadelphia, PA 19105 Pro Se Appellant.

          Ellen C. Brotman [1] [ARGUED] Suite F200 150 North Radnor Chester Road Radnor, PA 19087 Counsel for Court Appointed Amicus Curiae.

          Before: SMITH, Chief Judge, HARDIMAN, and KRAUSE, Circuit Judges

          OPINION

          SMITH, Chief Judge.

         On February 29, 2012, law enforcement officers executed sealed search warrants at the home and office of defendant Chaka Fattah, Jr. The search occurred more than two years before Fattah was indicted, but members of the press had somehow learned about the investigation; several reporters waited at Fattah's home to report the story. How did they find out? At Fattah's trial, an FBI agent admitted that he had, over the course of several months, disclosed confidential information to a reporter in exchange for information pertinent to the investigation.

         Fattah argues that the FBI agent's conduct violated the Sixth Amendment because the pre-indictment press caused him to lose his job, which in turn rendered him unable to retain the counsel of his choice. Fattah also argues that the agent's conduct violated his Fifth Amendment right to due process. We conclude that neither argument prevails. As the Government concedes, the agent's conduct was wrongful. We are unable, however, to conclude that Fattah is entitled to relief.

         Fattah also raises a number of additional claims regarding the sufficiency of the indictment, constructive amendment of the indictment, improper joinder of counts, and the particularity of the search warrants. We reject those arguments as well. Accordingly, we will affirm the judgment of the District Court.

         I

         On July 29, 2014, more than two years after the searches and media coverage described above, a grand jury returned an indictment charging defendant Chaka Fattah, Jr. with twenty-three counts: one count of bank fraud, in violation of 18 U.S.C. § 1344; eight counts of making false statements to obtain loans, in violation of 18 U.S.C. § 1014; one count of making false statements to settle a loan, in violation of 18 U.S.C. § 1014; three counts of making false statements concerning loans insured by the Small Business Administration, in violation of 18 U.S.C. § 1001; four counts of filing false federal income tax returns, in violation of 26 U.S.C. § 7206; one count of failing to pay federal income tax, in violation of 26 U.S.C. § 7203; one count of theft from a program receiving federal funds, in violation of 18 U.S.C. § 666(a)(1)(A); four counts of wire fraud, in violation of 18 U.S.C. § 1343; and aiding and abetting, in violation of 18 U.S.C. § 2. A grand jury returned a Superseding Indictment with minor amendments on March 3, 2015.

         The charges fall into three basic categories.

         The first set of charges relate to Fattah's fraudulently obtaining and failing to repay lines of credit. In applying for lines of credit, Fattah represented to various banks that his company, 259 Strategies, LLC, would use the money for business purposes when in fact Fattah intended to use the money for personal expenses like gambling debts, clothing, jewelry, a BMW, and liquor. Fattah also failed to disclose his outstanding debts and misrepresented facts about his company's operational status and financials. Fattah recruited his roommate, Matthew Amato, to make similar misrepresentations to obtain additional lines of credit. The Superseding Indictment also charges Fattah with making false statements to avoid repaying some of the banks.

         Second, the Superseding Indictment charged Fattah with tax evasion. Specifically, Fattah failed to report certain income from his other businesses, including income from his sham concierge service, American Royalty. For example, Fattah accepted $10, 000 from an eighteen-year-old after promising that American Royalty would obtain an American Express black card for the teenager. Fattah never did so; instead, he kept the money and failed to report it as income.

         And third, the Superseding Indictment charged Fattah with defrauding the Philadelphia School District ("PSD"). Fattah's company, 259 Strategies, contracted with Delaware Valley High School ("DVHS"), a for-profit educational provider. Fattah thereafter became DVHS's Chief Operating Officer. DVHS, in turn, signed a $2.1 million contract with the PSD to run the "Southwest" school for troubled students. Through his position at DVHS, Fattah submitted fraudulent budgets to the PSD that requested funding for nonexistent jobs and unperformed services. All told, the PSD overpaid $940, 000 over a two-year period, and Fattah personally pocketed part of that sum.

         Fattah declined representation from the Federal Community Defender Office for the Eastern District of Pennsylvania and has proceeded throughout this litigation pro se. Before trial began, Fattah filed a motion to dismiss the indictment. Among other accusations, Fattah alleged that the Government had leaked confidential information about the investigation to the press. Fattah argued, inter alia, that the Government's conduct violated his Fifth and Sixth Amendment rights. The District Court denied the motion, concluding that there was no evidence of a leak.

         Trial commenced on October 15, 2015. On October 27, the FBI agent in charge of the investigation testified that he did in fact leak confidential information to a reporter in exchange for background information about the PSD. The agent explained that he had revealed the existence of sealed search warrants, provided the time and location of the search, discussed the content of undercover recordings, and gave specific information about Fattah's business dealings, including the amount of money he had been paid through his work.

         After the agent's testimony, Fattah (through standby counsel) moved for a hearing to determine whether the Government violated grand jury secrecy or its obligations under Brady v. Maryland, 373 U.S. 83 (1963). The District Court denied the motion.[2]

         On November 5, 2015, a jury found Fattah guilty on all counts except one (Count 17, filing a false income tax return for the year 2009). On February 2, 2016, the District Court sentenced Fattah to serve sixty months' imprisonment and five years' supervised release, and to pay $1, 172, 157 in restitution plus a special assessment fee of $2, 125. Fattah timely appealed. By Order dated January 23, 2017, the Court appointed Ellen C. Brotman as Amicus Curiae on behalf of Fattah.

         II[3]

         We begin with Fattah's claims that the FBI agent's conduct violated Fattah's Sixth Amendment right to the counsel of his choice and violated his Fifth Amendment right to due process. We reject both arguments.

         A

         Before reaching the merits of the Fifth and Sixth Amendment issues, we must first address the issue of waiver.[4] We will not enforce waiver against either party.

         "[I]t is well settled that arguments asserted for the first time on appeal are deemed to be waived and consequently are not susceptible to review in this Court absent exceptional circumstances." United States v. Rose, 538 F.3d 175, 179 (3d Cir. 2008) (quoting United States v. Lockett, 406 F.3d 207, 212 (3d Cir. 2005)). When reviewing a district court's ruling on a pretrial motion, including a motion alleging "a defect in instituting the prosecution, " Fed. R. Crim. P. 12(b)(3)(A), we will not consider any unpreserved arguments absent "good cause, " Fed. R. Crim. P. 12(c)(3); see United States v. Joseph, 730 F.3d 336 (3d Cir. 2013); Rose, 538 F.3d at 182. This rule applies to criminal defendants and to the Government alike. See, e.g., United States v. Tracey, 597 F.3d 140, 149 (3d Cir. 2010) ("[T]he Government waived this argument by failing to raise it before the District Court.").

         This case reaches us in an unusual posture. Fattah properly raised both his Fifth and Sixth Amendment claims in a pretrial motion. But at that time, the Government did not know about the leaks. It defended against Fattah's pretrial motion by arguing that the presence of reporters was insufficient evidence to justify an evidentiary hearing. The District Court agreed. But at trial, the agent's testimony confirmed Fattah's suspicion. With the assistance of standby counsel, Fattah filed a new motion for a hearing. But the new motion did not reraise the Fifth and Sixth Amendment issues. As a result, neither the Government nor the District Court substantively addressed those arguments.

         Although the Government does not explicitly argue waiver, it still complains that Fattah relies on "arguments that were not presented to the district court at the appropriate time and were never addressed by the district court." Resp. to Amicus Br. 15. We nevertheless decline to enforce waiver against Fattah because "requiring a defendant to re-raise the issue[s] . . . would be an exercise in wasteful formality." United States v. Sanders, 485 F.3d 654, 657 (D.C. Cir. 2007). And given the late-breaking revelation of the agent's conduct, combined with Fattah's failure to reraise the arguments, we conclude that any waiver by the Government is excusable for good cause.

         We proceed, then, to the merits.

          B

         Fattah's Sixth Amendment claim is premised on a novel theory and a long causal chain. The theory is that, even where the government's misconduct was undisputedly not directed towards attorneys' fees or intended to interfere with the defendant's right to counsel, a defendant may establish a Sixth Amendment violation by proving that the misconduct reduced his pre-indictment income and thereby impaired his ability post-indictment to hire the counsel of his choice. As for the causal chain, Fattah asserts that the FBI agent spoke to a reporter, which caused the publication of news stories about Fattah, which in turn caused DVHS to terminate Fattah's employment. According to Fattah, the unrealized income from that employment-allegedly $432, 000 (plus bonus)-was necessary for him to afford counsel of his choice. Even if we were to accept Fattah's far-reaching theory, we decline to remand for an evidentiary hearing because Fattah's claim to unrealized income is contradicted by his own undisputed statements and actions.

         1

         The Sixth Amendment to the United States Constitution provides, "In all criminal prosecutions, the accused shall enjoy the right . . . to have the Assistance of Counsel for his defence." U.S. Const. amend. VI. The Sixth Amendment guarantees not only the right to effective assistance of counsel, see, e.g., Buck v. Davis, 137 S.Ct. 759, 775 (2017), but also the "fair opportunity to secure counsel of [one's] own choice, " Powell v. Alabama, 287 U.S. 45, 53 (1932). "The right to select counsel of one's choice . . . has been regarded as the root meaning of the constitutional guarantee." United States v. Gonzalez-Lopez, 548 U.S. 140, 147-48 (2006). The Sixth Amendment protects the "fundamental" right "to be represented by an otherwise qualified attorney whom that defendant can afford to hire." Luis v. United States, 136 S.Ct. 1083, 1089 (2016) (plurality opinion) (citation omitted).

         To argue that the deprivation of income constitutes a Sixth Amendment violation, Fattah principally relies on United States v. Stein, 541 F.3d 130 (2d Cir. 2008). In Stein, the accounting firm KPMG and several of its employees were under federal investigation for allegedly creating tax shelters for their clients. At the time, the Department of Justice had a stated policy of considering whether a corporation "appears to be protecting its culpable employees" when deciding whether to bring criminal charges against the corporation. Id. at 136. In a meeting with KPMG's counsel, the prosecutors stated that they would take this policy "into account" regarding KPMG's decision to pay its ...


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