Saturday, October 22nd, 2011

Thorn, Again

United States v. Thorn, No. 11-37-cr (2d Cir. October 20, 2011) (Jacobs, Sack, Raggi, CJJ)

This is Joseph Thorn’s third time in the circuit. Thorn ran an upstate asbestos removal company; he performed dangerous, substandard work, and used the money he earned to grow the business. In 2000, a Northern District jury convicted him of money laundering and environmental crimes, and the district court sentenced him to 65 months’ imprisonment. On the government’s appeal, the circuit vacated the sentence – the guidelines were mandatory then – and on remand the district court downwardly departed to 168 months from what it thought was a 235-month guideline minimum. The government appealed and won again. By this time the guidelines were advisory, however, so while the guideline minimum was now up to 292 months, the district court sentenced Thorn to 144 months.

Three years later, Thorn filed a 2255 motion, seeking to vacate his money laundering conviction as legally insufficient under United States v. Santos, 553 U.S. 507 (2008), which held that the term “proceeds” in the money laundering statute means “net profits,” and not “gross receipts.” The district court granted the motion, vacated the money laundering count, and resentenced Thorn to 132 months on the remaining counts.

On this, the government’s third appeal, the circuit reversed, agreeing that the Santos claim was procedurally barred because Thorn did not raise it on direct appeal, and no exception to procedural default applied.

While Thorn’s direct appeal argued that the money laundering conviction was legally insufficient, he challenged only the “intent to promote” element, not the “proceeds” element. And he could not establish cause and prejudice to excuse the default. Thorn argued that the “proceeds” theory was “so novel that its legal basis [was] not reasonably available to counsel” at the time. But the circuit disagreed. The futility test is strict – it asks not whether it would have been difficult to raise an issue but whether the claim was “available at all.” It was. By the time of Thorn’s direct appeal, several attorneys had argued for a narrow construction of the term “proceeds,” and the question was open in the Second Circuit. Even if it is true that the circuit would likely have rejected the claim had Thorn pursued it, he still could not establish cause – a defendant does not establish cause by showing “simply that a claim was unacceptable to that particular court at that particular time.” Accordingly, since Thorn did not establish cause, the circuit skipped the question of prejudice.

Thorn argued alternatively that he was actually innocent, which can also excuse a procedural default. But actual innocence means “factual innocence,” not mere legal insufficiency. Thorn had to demonstrate that “in light of all of the evidence,” it is “more likely than not that no reasonable juror would have convicted him.” Here, even assuming that Santos would have required proof that Thorn laundered only the profits, and not merely the receipts, of his fraudulent asbestos abatement scheme, he could not meet this standard. The trial evidence clearly established that Thorn’s company used money realized from existing abatement jobs to finance new projects, and the realized monies included profits.

With this, the court vacated the amended judgment and 132-month sentence, and ordered the court to reinstate the money laundering conviction and the 144-month sentence it had previously imposed.

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