Federal Criminal Lawyer Blog

A few hours ago the Atlanta-based United States Court of Appeals for the Eleventh Circuit reversed a former county attorney's mail fraud and money laundering convictions based on a "material variance" between the allegations in the indictment and the proof at trial. The money laundering charges were based on the underlying fraud case, so these convictions also were reversed. A second set of fraud convictions were affirmed, but because the sentence was based on both sets of fraud charges, the court sent the matter back for a new sentencing hearing. The case is United States v. Lander.

Mr. Lander was the County Attorney of Dixie County, Florida. He also was trying to develop a vitamin company. The Court affirmed the fraud conviction that arose from the scheme involving the vitamin company.

Other fraud and money laundering charges emanated from a different set of facts. Some real estate investors wanted to develop property in the county and approached Lander for assistance. The developers put up about $850,000 as assurance that the project would go forward. Lander deposited these funds into his law firm's trust account, but used a large chunk of these funds for purposes not related to the real estate development.

The indictment alleged that Mr. Lander engaged in a scheme to defraud by falsely telling the developers that the county required the $850,000 as a performance bond. However, at trial the developers did not recall hearing Landers say this. The government then shifted gears mid-trial, arguing that the scheme to defraud involved Lander falsely telling the developers that he would help them through the regulatory process, when instead he used some of the funds for other purposes.

The Eleventh Circuit noted that a defendant has the right to defend against the specific allegations in an indictment, and when the prosecution changes theories mid-stream this can result in what we lawyers call a "material variance." If the defendant was surprised and disadvantaged by this change in theory, the variance is deemed to be "prejudicial." Here, the Court noted that Landers walked into trial planning on defending against a claim that he falsely told the developers one thing, but by the time the prosecutor made the closing argument the government had shifted to a different theory. This prejudicial material variance thus doomed the fraud charges, the money laundering crimes that came out of this supposed scheme, and the sentence that was predicated in part of the reversed charges.

Often in our business, being innocent and acquitted of a crime is not enough to remedy the harms caused by a criminal prosecution. These harms are often emotional, professional, and financial. The federal government has taken inadequate steps to alleviate the burdens that these innocent people must bear.

In 1997 Congress passed the Hyde Amendment.* This law says that when an innocent person wins against criminal charges in federal court, the defendant can sometimes get his legal bills reimbursed by the government. This is important because defending against a federal criminal case is very expensive. Lawyers who do this kind of work are often the finest in their field, and they charge fees that recognize their superior skills. The Hyde Amendment provides for the innocent person to be reimbursed only if the prosecution’s position was “frivolous” or the prosecutors acted in “bad faith.”

The recent case of J. Mark Shelnutt is a perfect example of how even the innocent must pay massive legal bills. Mr. Shelnutt is a criminal defense lawyer. Federal prosecutors love going after lawyers who do such work, and they tried to make a massive federal criminal case against Mr. Shelnutt based on the word of some drug-dealing folks whom Shelnutt had represented in the past. The federal judge threw out some of the charges and the jury acquitted Mr. Shelnutt on the remaining counts against him.

After trial, Mr. Shelnutt wanted the government to pay him back for the legal fees he had to pay to defend his case. While the judge was sympathetic, he would not order the government to do so. A Daily Report article about the judge’s ruling is here.

Mr. Shelnutt’s situation shows how dangerous it is when federal prosecutors decide to focus on someone and bring criminal charges. The truly innocent defendant suffers the toll of years of stress, heartache and damage to their professional reputation. Such an innocent man or woman also is saddled with huge legal bills, and the innocent defendant rarely gets this money back, even under the Hyde Amendment.

Our previous post on Mr. Shelnutt's money laundering case is here.

*The 1997 Hyde Amendment is unrelated to the 1976 Hyde Amendment that has recently been in the news regarding the health care debate.