In the
United States Court of Appeals
For the Seventh Circuit

No. 01-2227

SAMY A. MANKARIOUS and THOMAS K. MURPHY,

Petitioners-Appellants,

v.

UNITED STATES OF AMERICA,

Respondent-Appellee.

Appeal from the United States District Court
for the Eastern District of Wisconsin.
Nos. 99-C-1450 & 95-Cr-96--Rudolph T. Randa, Judge.

Argued January 7, 2002--Decided March 11, 2002



  Before MANION, ROVNER, and EVANS, Circuit
Judges.

  EVANS, Circuit Judge. Over 3 years ago,
on direct appeal, we affirmed the
convictions of Samy Mankarious and Thomas
Murphy on charges of money laundering,
wire fraud, and filing false tax returns.
See United States v. Mankarious, 151 F.3d
694 (7th Cir. 1998). They now make a
return visit to us, this time challenging
the denial of their motion for collateral
relief under 28 U.S.C. sec. 2255. We
assume familiarity with the facts and
only repeat what we think is necessary to
resolve the present appeal.

  Mankarious and Murphy’s first argument
is that they are entitled to reversal or
a new trial because the district court
did not instruct the jury on
"materiality" with regard to the wire
fraud charges on which they were
convicted. They base this argument on
Neder v. United States, 527 U.S. 1, 4
(1999), where the Supreme Court held that
materiality is an element of the federal
mail, wire, and bank fraud statutes and
that the issue must be submitted to the
jury./1 In denying the present sec.
2255 motion, the district court
recognized that Neder requires that the
issue of materiality be considered by the
jury but concluded that the failure to do
so in this case was harmless under
Jenkins v. Nelson, 157 F.3d 485, 496 (7th
Cir. 1998).

  Neder was decided in 1999, after
Mankarious and Murphy’s direct appeal was
resolved, and this presents a huge
problem for them under Teague v. Lane,
489 U.S. 288 (1989). Teague holds that,
unless it falls within an exception, a
new constitutional rule of criminal
procedure is not applicable to cases that
are final when the new rule is announced.
See Teague, 489 U.S. at 310. The Teague
rule is important, for it serves the
interest of finality, a goal that would
be frustrated if older cases like this
one could be resuscitated every time a
new decision is announced that calls into
question modes of operation accepted in
the past as appropriate procedure. For
this reason, since Teague, "few
constitutional arguments apply
retroactively on collateral attack."
United States v. Smith, 241 F.3d 546, 549
(7th Cir. 2001).

  There are two exceptions under Teague,
and they apply to (1) new rules that
place certain kinds of primary, private
individual conduct beyond the power of
the criminal law-making authority to
proscribe, and (2) rules that define
procedures implicit in the concept of
ordered liberty. See id. at 311.

  To get around Teague, Mankarious and
Murphy argue/2 that Neder’s holding
that materiality is an element of fraud
offenses announced a change in
substantive law, not a new rule of
criminal procedure. But we held before
Neder that materiality was an element of
wire fraud in United States v. Coffman,
94 F.3d 330, 335 (7th Cir. 1996).
Therefore, the only change Neder
precipitated in our circuit was requiring
that a separate instruction on
materiality be given to juries. This is a
change in procedure, not in substantive
law. For this reason, and because Neder
does not fall within an exception to the
Teague rule, Neder is not available to
Mankarious and Murphy on this collateral
review.

  But is snuffing out Mankarious and
Murphy’s claim on Teague grounds cricket?
That’s a fair question. We answer it with
a resounding yes, for even if Teague did
not bar application of Neder to their
sec. 2255 motion, Mankarious and Murphy
are still barred from raising their lack
of a materiality instruction argument for
the first time on collateral review. An
issue not raised on direct appeal is
barred from collateral review absent a
showing of both good cause for and actual
prejudice resulting from the failure to
raise it. See Prewitt v. United States,
83 F.3d 812, 816 (7th Cir. 1996).

  Mankarious and Murphy argue that they
can demonstrate cause because the law in
this circuit prior to Neder rejected the
requirement of a materiality instruction.
But the fact that an argument was
unacceptable at a particular time does
not constitute cause for failing to raise
it. See Bousley v. United States, 523
U.S. 614, 623 (1998). The possibility of
a separate materiality instruction in
fraud cases was not a new issue when this
case went to trial. The defendants in
Coffman, decided 2 years before
Mankarious and Murphy’s direct appeal,
argued (although unsuccessfully) that the
lack of a materiality instruction
required reversal of their wire fraud
convictions. See Coffman, 94 F.3d at 335.
Additionally, we noted in Coffman that
the Ninth Circuit addressed the subject
of a separate materiality instruction in
mail fraud cases in 1981, 15 years before
Mankarious and Murphy’s trial. See
Coffman, 94 F.3d at 335 (citing United
States v. Halbert, 640 F.2d 1000, 1007-08
(9th Cir. 1981)).

  Even assuming, as the district court
did, that Mankarious and Murphy
demonstrated cause for their failure to
raise the materiality instruction issue
on direct appeal, they cannot demonstrate
prejudice. Prejudice exists where an
error has a substantial and injurious
effect or influence in determining a
jury’s verdict. See Jenkins, 157 F.3d at
496. On collateral review, we reverse
only if we are in grave doubt as to the
harmlessness of the error. See id. at
494.

  Here, the government presented
substantial evidence that Mankarious   and
Murphy orchestrated and participated   in
the wire fraud schemes. For example,   one
of the government’s witnesses was Ed
Brown, partial owner of UPEC &
Associates. Brown testified that
Mankarious outlined a plan for Brown   to
bilk money out of Delta, the aluminum
smelting company that Mankarious and
Murphy partially owned. (The remaining 41
percent of Delta was owned by WITECH, a
venture capital operation run by
Wisconsin Energy Corp., Wisconsin’s
largest utility.) Brown shared a cut of
the proceeds of this scheme with
Mankarious and Murphy. Under the scheme,
UPEC performed work at Delta, with Brown
submitting false invoices for each job.
Mankarious and Murphy then cut checks to
cover these invoices, sometimes making
the checks out to fictitious payees.
Brown endorsed the checks and returned
them to Mankarious, who cashed them at a
tavern. This scheme was only the first in
a series of schemes that Mankarious,
Murphy, and Brown cooked up together.
Therefore, substantial evidence of
Mankarious and Murphy’s participation in
the fraud scheme existed so that the
absence of a separate materiality
instruction could not have had a
substantial and injurious effect in
determining the jury’s verdict.

  Mankarious and Murphy also argue that
the lack of a materiality instruction
requires reversal under Apprendi v. New
Jersey, 530 U.S. 466 (2000). Apprendi
held that, other than a prior conviction,
any fact that increases the penalty for a
crime beyond its statutory maximum must
be submitted to the jury and proved
beyond a reasonable doubt. See id. at
490. We have noted on more than one
occasion that when the defendant is
sentenced to a term of imprisonment
within the statutory maximum, Apprendi is
beside the point. See United States v.
Williams, 238 F.3d 871, 877 (7th Cir.
2001); Talbott v. Indiana, 226 F.3d 866,
869 (7th Cir. 2000). Here, Mankarious and
Murphy were sentenced to 60 months on the
wire fraud convictions, which coincides
exactly with the maximum authorized term
of imprisonment for the offenses. See 18
U.S.C. sec. 1343.

  Mankarious and Murphy next argue that
they are entitled to a hearing to explore
whether any government witnesses received
improper inducements for their trial tes
timony. In support of this argument, they
rely on United States v. Condon, 170 F.3d
687, 689 (7th Cir. 1999), where we held
that 18 U.S.C. sec. 201(c)(2) does not
bar testimony from a witness who was
promised immunity because such a promise
is not a "thing of value" within the
meaning of the statute. Mankarious and
Murphy argue that Condon expanded the
definition of "thing of value" because it
noted that "cancellation of a private
debt could be a ’thing of value’ in the
statutory sense . . . ." Id. at 689. This
language did not expand the definition of
"thing of value." In addition to being
dicta, the quoted language states a
principle that was as obvious at the time
of Mankarious and Murphy’s trial as it is
now. Mankarious and Murphy had ample
opportunity to cross-examine the
government’s witnesses at trial (and did
so with experienced counsel) about what
sort of inducements they may have
received to testify and whether these
inducements were lawful. Therefore, they
are not entitled to a hearing.

  Finally, Mankarious and Murphy argue
that they have new evidence which
entitles them to a new trial. The
evidence is described in an affidavit
from Norm Lo Presto, an indicted
coconspirator. After they filed their
sec. 2255 motion, Mankarious and Murphy
learned that Lo Presto had resolved his
case and was willing to execute an
affidavit outlining his knowledge of the
activities of Roger Green. Green ran a
Ponzi scheme through Metal Brokers
International (MBI), which Mankarious and
Murphy discovered when Delta began
selling metal through MBI. When they dis
covered the scheme, Green offered to pay
them off, but Mankarious instead
suggested that they pursue "business
opportunities" together. Green testified
against Mankarious and Murphy, alleging
the existence of an accounts receivable
scheme. Mankarious and Murphy argue that
Lo Presto’s affidavit demonstrates that
this scheme did not exist.

  The parties disagree on the proper
mechanism for presenting this claim of
newly discovered evidence. The government
argues that Mankarious and Murphy were
required to bring the claim under Rule 33
of the Federal Rules of Criminal
Procedure. Mankarious and Murphy argue
that they can press the claim as part of
their motion under sec. 2255.

  Under Federal Rule of Criminal Procedure
33, a district court may grant a new
trial on the basis of newly discovered
evidence within 3 years of the verdict or
finding of guilt. Here, the 3-year limit
expired 3 months before Mankarious and
Murphy filed their sec. 2255 motion, and
defendants, as we know, may not use sec.
2255 to circumvent Rule 33’s time limit.
See Guinan v. United States, 6 F.3d 468,
470 (7th Cir. 1993).

  But because a section of sec. 2255--
enacted as part of the Antiterrorism and
Effective Death Penalty Act (AEDPA)-- in
some very limited cases allows a
defendant to file a second or successive
motion based on newly discovered evidence
demonstrating actual innocence,
Mankarious and Murphy say they may bring
their claim as part of their present
motion./3 But to be raised here, the
claim must still meet certain
requirements outlined in the opening
paragraph of sec. 2255. The petitioner
must allege either that the challenged
sentence was imposed in violation of the
Constitution or laws of the United
States, that the court was without
jurisdiction to impose the sentence, that
the sentence was in excess of the maximum
authorized by law, or that the sentence
is otherwise subject to collateral
attack.

  Mankarious and Murphy do not allege that
the district court was without
jurisdiction to impose their sentence,
nor that the sentence was in excess of
the authorized maximum. They do make a
passing reference to due process and
suggest that sec. 2255 makes newly
discovered evidence a basis for which a
sentence is "otherwise subject to
collateral attack." But a conviction does
not violate the Constitution nor become
otherwise subject to collateral attack
merely because newly discovered evidence
may be helpful to a defendant. See United
States v. Evans, 224 F.3d 670, 674 (7th
Cir. 2000). Thus, Mankarious and Murphy’s
claim of newly discovered evidence,
untimely under Rule 33, does not meet the
requirements of sec. 2255 and may not,
therefore, be considered.

AFFIRMED.

FOOTNOTES

/1 The trial judge in Neder had told the jury that
the issue of materiality "is not a question for
the jury to decide."
/2 Mankarious and Murphy also argue that the govern-
ment waived reliance on Teague by not raising it
in the district court. We reject that contention.
See Singleton v. Wulff, 428 U.S. 106, 121 (1976).

/3 Even generously construed, Lo Presto’s new tune
does not sing a song of actual innocence.
