Federal criminal conspiracy.(Twenty-First Annual Survey of White Collar Crime)

 
  I. INTRODUCTION 
 II. ELEMENTS OF THE OFFENSE 
     A. Agreement 
     B. Illegal Goal 
     C. Knowledge, Intent, and Participation 
     D. Overt Act 
III. DEFENSES 
     A. Statute of Limitations 
     B. Variance 
     C. Multiplicitous Indictment 
     D. Withdrawal 
     E. Other Defenses 
 IV. Co-CONSPIRATOR HEARSAY RULE 
     A. Evidentiary Issues 
     B. Sixth Amendment Issues 
  V. ENFORCEMENT 
     A. Vicarious Liability 
     B. Joinder and Severance 
     C. Acquittal of Other Co-Conspirators 
 VI. SENTENCING 

I. INTRODUCTION

Under 18 U.S.C. [section] 371 (the "Act") it is a crime to conspire to commit any offense against the United States or to defraud the United States. (1) A conspiracy is distinct from the substantive crime contemplated by the conspiracy (2) and is charged as a separate offense. (3) Acquittal on a conspiracy charge does not bar prosecution based on the substantive offense. (4) Likewise, acquittal of the substantive offense does not necessarily bar conviction on the conspiracy count (5) unless the government's theory of illegal conspiracy depends upon the defendant's knowledge of and assistance with the substantive count. (6)

The Supreme Court described the gravity of the conspiracy offense:

 
   [f]or two or more to ... combine together to commit ... a breach of 
   the criminal laws is an offense of the gravest character, sometimes 
   quite outweighing, in injury to the public, the mere commission of 
   the contemplated crime. It involves deliberate plotting to subvert 
   the laws, educating and preparing the conspirators for further and 
   habitual criminal practices. And it is characterized by secrecy, 
   rendering it difficult of detection, requiring more time for its 
   discovery, and adding to the importance of punishing it when 
   discovered. (7) 

In addition to [section] 371, specific provisions in numerous federal statutes also proscribe conspiracy. (8) These provisions attach to the particular substantive offenses specified in the statute in which they appear. Section 371, on the other hand, applies generally to any conspiracy where the goal is to "commit any offense against the United States, or to defraud the United States" (9) and criminalizes any agreement to violate a civil or criminal federal law. (10) However, if conspiracy to violate a civil law is to result in a conspiracy conviction, it must inflict actual damage onto the civil plaintiff, a requirement that does not exist for conspiracies to violate criminal laws. (11)

Conspiracy, the prosecutor's "darling," (12) is one of the most commonly charged federal crimes. (13) The offense of conspiracy is construed broadly by courts and, consequently, is applied by prosecutors to a variety of situations. (14) "[I]t is clear that a conspiracy charge gives the prosecution certain unique advantages and that one who must defend against such a charge bears a particularly heavy burden." (15)

Nonetheless, the essential features of a conspiracy--secrecy and concealment (16)--make conspiracies difficult to prosecute, especially if the conspiracy is successful. Consequently, the law lessens the government's burden of proving the essential elements by requiring only a showing of the "essential nature of the plan and [the conspirators'] connections with it" to ensure that conspirators do not "go free by their very ingenuity." (17)

Section II of this article outlines the basic elements of a conspiracy offense under [section] 371. Section III sets forth the defenses available to challenge charges brought under the statute. Section IV presents the evidentiary and constitutional guidelines governing admissibility of co-conspirator hearsay testimony at trials involving conspiracy charges. Section V surveys various procedural and substantive rules regarding enforcement of the statute. Finally, section VI discusses sentencing for a conspiracy conviction.

II. ELEMENTS OF THE OFFENSE

Criminal conspiracy has four elements, each of which the prosecution must prove beyond a reasonable doubt. (18) A conspiracy exists where there is: (i) an agreement between at least two parties (ii) to achieve an illegal goal (iii) where the parties possess knowledge of the conspiracy and with actual participation in the conspiracy and (iv) where at least one conspirator committed an overt act in furtherance of the conspiracy. (19)

A. Agreement

The first element and the "essence" of a conspiracy "is an agreement to commit an unlawful act." (20) The agreement must be between two or more persons, (21) including married spouses, (22) agreeing to work together toward a common goal. (23) However, it is not necessary for the government to prove a formal agreement. (24) The existence of a conspiratorial agreement may be demonstrated through circumstantial evidence (25) or may be inferred from the defendants' actions, (26) including by prior participation in criminal activities, (27) but when the government seeks to establish a conspiracy by inference, it must prove each aspect of the alleged conspiracy. (28) Knowledge of, and participation in, a conspiracy satisfies the agreement prong in the absence of an express agreement. (29) However, "a defendant's mere presence at the scene of a criminal act or association with conspirators does not constitute intentional participation in the conspiracy, even if the defendant has knowledge of the conspiracy." (30)

The bilateral conspiracy requirement of [section] 371 requires at least two nongovernmental actors. (31) An agreement between two actors, one of whom is a government agent, cannot support a conspiracy conviction. (32) However, a government agent can serve as a link between a true conspirator and a defendant if the conspiracy involves criminal actors who know that multiple conspirators beyond the government agent are involved. (33)

In addition, the Wharton's Rule (34) doctrine states that an agreement by two persons to commit a particular crime cannot be prosecuted as a conspiracy if the commission of the crime itself requires the participation of two persons. (35) If, however, the number of actual conspirators exceeds the number required to commit the substantive offense, the government may charge the conspiracy separately. (36) However, where "the immediate consequences of the crime rest on ... society at large," rather than the parties themselves, a conspiracy conviction will not be barred by Wharton's rule. (37)

Corporations, their officers, agents, or employees can conspire with one another in violation of [section] 371. (38) The intra-corporate conspiracy doctrine generally does not apply to criminal cases under [section] 371 because it would prohibit holding a corporation acting on its own liable under conspiracy charges by allowing the corporation to hide behind its corporate veil. (39) In the antitrust context, however, the "intra-corporate conspiracy doctrine" expressly provides that a parent corporation and its wholly-owned subsidiary are not legally capable of conspiring with each other in violation of [section] 1 of the Sherman Act because there is a complete unity of interest between the two entities. (40)

B. Illegal Goal

The second element of a federal conspiracy is the presence of an illegal goal. (41) Specifically, the government must establish that the aim of the conspiracy was to defraud or hinder a lawful federal government objective (the "defraud clause") (42) or to violate a federal law (the "offense clause"). (43)

The language of [section] 371's "defraud" clause is "not confined to fraud as that term has been defined in the common law." (44) Section 371 broadened the definition of fraud under conspiracy. (45) Under [section] 371, fraud reaches "any conspiracy for the purpose of impairing, obstructing, or defeating the lawful function of any department of [the] government." (46) Virtually any method used to defraud the United States will suffice for the purposes of the statute. (47)

The language in Hammerschmidt v. United States (48) requires that the means to defraud be dishonest. (49) However, in cases both prior and subsequent to Hammerschmidt, the Supreme Court has upheld conspiracy convictions that did not specifically charge dishonest or deceptive means in the indictment. (50) Some circuits have affirmed convictions on conspiracy counts absent allegations of fraud or dishonesty, (51) while other circuits require such a showing. (52)

The "offense" clause of [section] 371 is not limited to offenses committed against the United States or its agents; it applies to any conspiracy that does or is intended to violate federal law. (53) The object of the conspiracy must be the violation of a specific federal statute in order to fall within the offense clause. (54) Concert of action is sufficient to prove this element, and thus it is not necessary that the conspirators intend for the conspiracy to violate federal law or know that the conspiracy will violate federal law. (55) In cases where the offense and defraud clauses overlap, an indictment must charge a violation of either the offense or defraud clause. (56) However, a defendant charged with a violation of the offense clause may also be charged under the broader defraud clause, as long as the indictment provides sufficient notice of the charges. (57)

C. Knowledge, Intent, and Participation

The third element is that the defendant knew of the conspiratorial agreement and voluntarily participated in it. (58) The defendant's knowing participation in the conspiracy can also be inferred from circumstantial evidence. (59) The government need not prove the defendant knew all the details (60) or objectives (61) of the conspiracy, or that the defendant knew the identity of all the participants in the conspiracy. (62) Acts committed by the defendant that furthered the objectives of the conspiracy are often sufficient to demonstrate that the defendant was a knowing participant. (63)

Alternatively, once the government proves the existence of a conspiracy and the defendant's intent to further it, evidence of only a "slight connection" between the defendant and the conspiracy is required to show that the defendant was a knowing member of the conspiracy. (64) However, several circuits, recognizing the due process limitations on convicting a defendant for acts of co-conspirators where the defendant had only a slight connection to the conspiracy, have based culpability on the foreseeability of co-conspirator's actions. (65) Deliberate avoidance of knowledge does not preclude a finding of intent with respect to the conspiracy. (66)

D. Overt Act

The fourth element of a federal conspiracy charge is the performance of an overt act in furtherance of the conspiracy. (67) The purpose of the overt act requirement is to demonstrate that the conspiracy was operative, rather than a mere scheme in the minds of the actors. (68) The overt act need not be unlawful, (69) nor need it be the substantive offense charged in the indictment. (70) Furthermore, the defendant need not personally have committed the overt act but may be held liable for the acts of a co-conspirator. (71) Certain types of conspiracies, however, do not require such an overt act. (72)

The Pinkerton (73) rule sets out a theory of vicarious liability whereby the reasonably foreseeable overt acts of one co-conspirator committed in furtherance of the conspiracy are attributable to the other conspirators. (74) The circuits generally find a defendant liable for acts committed by his co-conspirators both prior to and during the defendant's participation. (75) However, a defendant cannot be held criminally liable for substantive offenses committed by others involved in the conspiracy before he joined (76) or after he withdrew from the conspiracy. (77)

III. DEFENSES

Defendants can challenge conspiracy charges by claiming a failure to prove the specific elements of the offense (78) or by contesting the charge on more general grounds. The general grounds upon which a defense to a conspiracy charge can be based include: (i) statute of limitations; (ii) variance; (iii) multiplicitous indictment; and (iv) withdrawal. Part E addresses a number of other defenses.

A. Statute of Limitations

As no provision of [section] 371 provides an express statute of limitations for conspiracy charges, the general five-year limitation for non-capital offenses applies. (79) The five-year limitation period also applies to the conspiracy provisions of other federal statutes, unless they expressly provide otherwise. (80) A conspiracy ends when the central criminal purpose of the conspiracy has been attained. (81) Conversely, a conspiracy does not automatically terminate simply because the government has intervened to frustrate the conspiracy's object, where the conspirators are unaware of that fact and do not abandon or withdraw from the conspiracy. (82) The statute of limitations runs from the date of the last overt act committed in furtherance of the conspiracy. (83) Continued concealment of prior acts in furtherance of the conspiracy after the objective has been attained does not constitute a separate conspiracy. (84) However, if acts of concealment are carried out to further the purpose of the main conspiracy, the conspiracy can be viewed as a continuing operation. (85) Continued concealment of prior acts in furtherance of the conspiracy after the objective has been satisfied will also not satisfy the requirements of the co-conspirator hearsay exception under Federal Rule of Evidence 801. (86)

B. Variance

"Variance" refers to a situation in which the conspiracy proved at trial differs from the conspiracy charged in the indictment. (87) "Constructive amendment" and "variance" are related defenses but are not necessarily identical in all jurisdictions. (88) Variance is a violation of the Sixth Amendment requirement that a criminal defendant be given adequate notice of the charges against him, (89) At trial, the jury determines whether there is a variance between the number of conspiracies charged in the indictment and the number proven at trial. (90) Unless the change is a matter of form rather than substance, an indictment may not be amended to correct the variance, except by resubmission to the grand jury, (91) though several circuits have held that variance may be cured by a jury instruction informing the jury that if it finds multiple conspiracies, evidence of one conspiracy cannot be used in considering another conspiracy. (92) However, this is a difficult argument on which to succeed on appeal because courts will only reverse a conviction for variance if the variance is material and the defendant's substantial rights (93) were prejudiced. (94)

C. Multiplicitous Indictment

A multiplicitous indictment arises when a single conspiracy is charged as more than one count. (95) Such a defect violates the Double Jeopardy Clause of the Fifth Amendment (96) because it charges a defendant multiple times for what is substantively one crime. (97)

D. Withdrawal

To effectively withdraw from a conspiracy, a conspirator must do more than merely cease participation; the conspirator must commit "[a]ffirmative acts inconsistent with the object of the conspiracy and [communicate them] in a manner reasonably calculated to reach co-conspirators." (98) To prevent any overt act in furtherance of the conspiracy from being attributed to a withdrawn co-conspirator, he must unequivocally withdraw. (99) The statute of limitations begins to run from the time of the withdrawal. (100) Most circuits place the burden of proof, or at least the burden of production, on the defendant to show actual withdrawal. (101)

There are two main difficulties with this burden allocation: First, there is the constitutional objection that allocating the burden of proof to the defendant is tantamount to making the defendant disprove an element of the offense, specifically that there was an agreement. (102) Second, placement of the burden on the defendant will often compel the defendant either to take the witness stand, presumably in violation of the Fifth Amendment, or forego the defense of withdrawal altogether. (103)

E. Other Defenses

There are several other defenses to a charge of federal criminal conspiracy. Incompetence (104) and coercion or duress (105) are potentially successful affirmative defenses, but require unique factual circumstances. A claim that an indictment is insufficient because it does not contain all elements of the offense charged may succeed (106) because the Fifth Amendment guarantee against prosecution without presentment to or indictment by a grand jury may be violated if the indictment is not specific enough to apprise the defendant of the charges he must defend against at trial "because the defendant cannot be assured that he is being tried on the evidence presented to the grand jury." (107)

A defense of the conspiracy's failure to achieve its illegal goal generally fails. (108) Also ineffective is a claim of factual impossibility, (109) which is distinct from a defense of legal impossibility, (110) The legal impossibility defense is built into [section] 371 and is far more likely to succeed. (111) The entrapment defense is also only rarely successful. (112)

IV. CO-CONSPIRATOR HEARSAY RULE

Conspiracy trials often include testimony by co-conspirators to assure a conviction because co-conspirators often are the best witnesses to the conspiracy. (113) For this reason, this section briefly discusses the co-conspirator exception to the hearsay rule. (114) Part A addresses evidentiary issues, and Part B reviews Sixth Amendment concerns.

A. Evidentiary Issues

Under Rule 801(d)(2)(E) of the Federal Rules of Evidence ("Rule 801"), a "statement is not hearsay if ... [t]he statement is offered against a party and is ... a statement by a co-conspirator of a party during the course and in furtherance of the conspiracy." (115)

To determine the admissibility of a co-conspirator's statement, a court may look at the content of the statement itself, but must also consider independent evidence. (116) Nine circuits have held that some evidence in addition to the hearsay statements is required. (117) Courts should examine "the circumstances surrounding the statement, such as the identity of the speaker, the context in which the statement was made, or evidence corroborating the content of the statement." (118)

Before a court allows admission of a hearsay statement by a co-conspirator, the government must prove three elements by a preponderance (119) of the evidence: (i) the existence of a conspiracy; (120) (ii) the declarant's and defendant's participation in it; (121) and (iii) that the hearsay statement was made during the course of and in furtherance of the conspiracy. (122) Any statement by a co-conspirator that promotes the main objectives of the conspiracy is considered to be in furtherance of the conspiracy. (123) Once this determination has been made, any witness can recount the statement, regardless of whether or not the statement was originally made to a member of the charged conspiracy. (124)

The Supreme Court has not designated an order of proof for trial courts to follow in determining whether the standard has been met. (125) Some circuits have held that the trial court may admit a co-conspirator's statement before receiving the government's proof of the elements required to establish a conspiracy under Rule 801. (126) Indeed, these circuits have held that a separate hearing outside the presence of the jury is not necessary; if the government fails to meet its burden of proof during its presentation of the case, an instruction to the jury to disregard the statement is sufficient to negate any prejudice to the defendant that may have occurred. (127)

Out-of-court statements by co-conspirators may be admissible under Rule 801(d) even if the defendant is not formally charged with conspiracy in the indictment. (128) However, when conspiracy is not charged, judges are more likely to admit a co-conspirator's statement if the conspiracy is closely related or "factually intertwined" with the crime for which the defendant is charged. (129)

Statements made by co-conspirators prior to the time the defendant joined the conspiracy may be admissible against the defendant (130) because the defendant "[takes] the conspiracy as he [finds] it." (131) The statement of a co-conspirator made to an undercover agent before an arrest is also considered to be in furtherance of the conspiracy, (132) but an admission or confession made after an arrest is not. (133) This rule is based upon an assumption that an arrest serves as a withdrawal from the conspiracy and ends the individual's participation in it. (134) Additionally, courts have held that casual comments and narratives are not in furtherance of the conspiracy and therefore, not admissible. (135) Finally, statements regarding past conduct are not in furtherance of the conspiracy. (136)

B. Sixth Amendment Issues

The Confrontation Clause of the Sixth Amendment guarantees criminal defendants the right to confront witnesses at trial. (137) The Court recently overruled the application of the Ohio v. Roberts two-pronged test to determine the admissibility of hearsay testimony, finding the framework for the reliability test so unpredictable that it failed to provide any meaningful protection from core confrontation violations. (138) This does not affect the admissibility of co-conspirator hearsay statements, however, since the Supreme Court had previously abolished the test with respect to determinations of admissibility of co-conspirator hearsay statements, holding that the Confrontation Clause requires neither proof of the unavailability of the declarant…