August 31, 2012

The 2012 ABA 100

Last year, the friendly folks at the ABA Law Journal decided that this was one of the best 100 law-related blogs out there in 2011. I'm grateful and mildly worried about their judgment.

You, on the other hand, are here reading this blog. Which makes me think that you might like it.

If that's true, then first, thanks very much.

Second, I'd be grateful if you wouldn't mind mentioning it to the ABA Law Journal as they try to figure out which blogs are rocking it in 2012. You can do so here.

And, yes, it's presumptuous to do this so soon after summer vacation. Apologies.

August 29, 2012

The Government Convicts A Man In A Drug Conspiracy Case Without Evidence He Was Involved In A Drug Conspiracy And The DC Circuit Reverses


It's very fashionable these days for United States Attorney's Offices to bring large indictments charging many people with involvement in a drug conspiracy.

They almost always get convictions.

381260_conspiracy.jpgYet in the case of United States v. Gaskins, the D.C. Circuit - in an opinion written by a former federal prosecutor - ruled that the United States Attorney's Office indicted, and a jury convicted, a man for being a part of a drug conspiracy when no reasonable juror could have found that he was involved.

The government's case was pretty standard for a large drug conspiracy. They indicted 21 people, including Mr. Gaskins. The government had wiretaps. The government executed search warrants.

After the indictment, lots of people flipped and testified for the government. Many of them were working down from a mandatory life charge.

Again, in a drug case, this is pretty much par for the course.

Yet none of this evidence tied poor Mr. Gaskins to the conspiracy he was indicted for belonging to.

Here's how the D.C. Circuit described the government's best evidence based on a cooperator:

Briggs . . . testified that he was motivated to get his pending criminal cases resolved and to get out of jail. In January 2004, he entered into a plea agreement pursuant to which he was released to help the government obtain information regarding several suspects, including Gaskins. As a condition of release, he had to report to the FBI on a daily basis. Briggs testified that he had multiple contacts and conversations with Gaskins after he was released. Although he said that Gaskins helped him fill out job and housing applications, Briggs said that none of their interactions involved the subject of narcotics.

That Gaskins - helping a man get housing and a job. Still, not exactly Stringer Bell.

The government executed a search warrant at Mr. Gaskins' mother's house. As the D.C. Circuit said:

In addition, the government searched the apartment in southeast Washington where Gaskins lived with his mother. That search yielded neither drugs, nor records, nor any other evidence linking Gaskins to the conspiracy. Nor did it (or any other search) yield evidence that Gaskins had expensive jewelry, clothes, cars, or homes -- as searches did uncover with respect to other conspirators. The government's only evidence was that Gaskins lived in his mother's modest apartment.

And of the wiretaps:

FBI Special Agent John Bevington testified that the government conducted four months of wiretaps, from February 17 to June 26, 2004, during which it intercepted more than 14,000 calls. Recordings of many calls were played to the jury. Bevington and Detective Hall testified that two signature traits of a narcotics conspiracy are using coded language and asking conspirators to go to a land line, both of which could be discerned in several of the recorded calls. None of the calls by other alleged conspirators mentioned drugs or drug transactions in connection with Gaskins, whether in clear or in coded language. No call in which Gaskins participated mentioned drugs or drug transactions at all, in code or otherwise, and he was never asked to go to a land line.

See - that land line thing from Pulp Fiction is real.

The jury, nonetheless found him guilty.

Actually, to be more specific, the jury eventually found Mr. Gaskins guilty. The narcotics conspiracy he was alleged to be involved in had four separate objectives. The jury first found that he was guilty of the conspiracy, but that the government hadn't proven that he was seeking any of the objectives of the conspiracy. The district court, rightly puzzled by this, sent the jury back to resolve the conflict (over Mr. Gaskins' objection). The jury, then, returned a guilty verdict, determining that Mr. Gaskins was involved in the drug conspiracy.

Because the D.C. Circuit resolved Mr. Gaskins case based on the sufficiency of the evidence, and not based on the trial court's handling of the odd verdict form, the court of appeals did not resolve the question of what the court should have done with the odd jury determination.

Mr. Gaskins was ultimately sentenced to 22 years. The D.C. Circuit ordered him released and the judgment of conviction vacated after oral argument.

Think about that. Your government sought 22 years for a guy who wasn't on a wire, who no snitch said was involved, and who - when they searched his house - had no evidence of drugs there.

August 28, 2012

A Speakeasy Robbery Leads To An Important Witness Tampering Opinion

Glorious Shaver, Andrew White, and Jermel Lewis knew of a speakeasy in North Philadelphia.

A woman named Jeanette Ketchmore would buy bottles of booze and sell drinks from then for four or five dollars in her home. Some of those bottles of booze crossed state lines before making it to Ms. Ketchmore's house.

1254218_glass_of_whiskey.jpgShe was not licensed by the state or local government to provide these drinks.

Messrs. Shaver, White, and Lewis were not content to drink at Ms. Ketchmore's home. Instead, they decided to rob it at 5:30 in the morning on November 8, 2005.

They were caught and prosecuted in state court. After a year in state court, the federal government decided to prosecute - to protect the interests of those bottles of alcohol that crossed state lines.

The three men were indicted in federal court in Philadelphia for Hobbs Act Robbery.

They were convicted, and, in United States v. Shavers, the Third Circuit affirmed their Hobbs Act robbery convictions (if you're interested in the commerce clause and the Hobbs Act, there is a lengthy discussion that may be interesting. Though, SPOILER ALERT, the defendants lose).

But that's not all - there were also witness-tampering charges against Messrs. Shaver and White that resulted in an interesting and important opinion from the Third Circuit.

Messrs. Shaver and White made a number of calls from a jail while they had been charged in state court trying to encourage witnesses to the speakeasy robbery to have a different memory.

They were charged with violating 18 U.S.C. § 1512(b)(2)(1), which says that it's a crime to:

use[] intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to-- (1) influence, delay, or prevent the testimony of any person in an official proceeding . . .

The trouble is, official proceeding is later defined by section 1515(a)(1)(A) as a federal proceeding.

Does a state court proceeding count as an official proceeding for the purposes of the witness tampering statute?

The Third Circuit says no, relying on Arthur Anderson LLP v. United States:

In Arthur Anderson LLP v. United States, the United States Supreme Court reviewed convictions under § 1512(b)(2)(A) and (B). 544 U.S. 696, 698 (2005). The Court held that to satisfy the "official proceeding" requirement under those subsections, the Government must show a "nexus" between the defendant's conduct and a particular proceeding. Id. at 707- 08. To meet that nexus requirement, the Government must prove that the defendant "ha[d] in contemplation [a] particular official proceeding" when he or she attempted to interfere with evidence or a witness. Id. at 708. The proceeding need not have been pending or about to be instituted, but it must have been foreseeable. Id. at 707-08.

The government argued that the Supreme Court sotto vocce narrowed Arthur Anderson in Fowler v. United States. There, a bank robber shot a police officer after a bank robbery.

Mr. Fowler was charged under section 1512(a)(1)(C), which applies to people who kill someone - or try to - to avoid prosecution.

The Supreme Court held that for a prosecution under 1512(a)(1)(C) the government only had to show a reasonable likelihood that the person killed would have communicated with law enforcement that could have made it to federal law enforcement.

This is, of course, a different standard than the defendant-specific foreseeability requirement in Arthur Anderson.

Yet, the Supreme Court in Fowler never cites Arthur Anderson.

In light of that silence in Fowler, and the different ends of a prosecution under 1512(a) and one under 1512(b) - namely that the first involves someone dying and not the second - the Third Circuit held that Arthur Anderson and Fowler are simply different doctrinal boxes.

The Third Circuit concludes:

This . . . leads us to the logical conclusion that there are at least two lines of jurisprudence developing separately under the VWPA: one for the investigation-related provisions, such as § 1512(b)(3) and (a)(1)(C), and one for the "official proceeding" provisions, such as § 1512(b)(1) and (b)(2). See Ronda, 455 F.3d at 1288 (observing that the link to a federal proceeding in the investigation-related provisions is less stringent than the "official proceeding" requirement in § 1512(b)(1) and (2)). Hence, we hold that a successful prosecution under § 1512(b)(1) requires proof, beyond a reasonable doubt, that the defendant contemplated a particular, foreseeable proceeding, and that the contemplated proceeding constituted an "official proceeding," as defined by § 1515(a)(1)(A).

Messrs. Shavers and White were charged under § 1512(b)(1) - which requires proof of a particular foreseeable federal proceeding. Because their efforts to tamper with witnesses were efforts to tamper with a state court proceeding, the Third Circuit concluded that the conviction for trying to tamper with the federal case must fail.

As the court of appeals noted:

It is clear from the transcript of the telephone calls that Shavers's and White's efforts were directed at preventing potential witnesses of the speakeasy robbery from testifying at their upcoming hearing in Pennsylvania state court. There is no evidence that they contemplated any other proceeding.

The convictions for witness tampering were vacated.

August 22, 2012

The Fourth Circuit Reverses A Life Sentence Based On A Death From A Bank Robbery Gone Bad

It's exceptionally rare for the Fourth Circuit to reverse a life sentence for someone who caused another person to die in the course of a botched bank robbery. And when the panel that heard the appeal has both Judges Wilkinson, and Niemeyer - whoa nelly - that's one whopper of a government error.

1097248_guard_with_machine_gun.jpgA Bank Robbery Gone Bad

September 28, 2008 did not turn out the way Larry Whitfield had planned.

His hope was to start the day with a bank robbery. He went to a credit union in North Carolina with a friend, a .357 magnum, and an assault rifle.

As he walked into the credit union's vestibule, a metal detector in the vestibule locked the inner doors of the credit union. Thwarted, Mr. Whitfield shook the doors of the financial institution.

They did not yield.

Mr. Whitfield and his companion sped away.

A Chase Gone Bad

Mr. Whitfield and his companion separated. Eventually, as the police pursued, he broke into the home of an elderly couple - Herman and Mary Parnell.

Ms. Parnell was home. Mr. Parnell was not.

Mr. Whitfield called a friend to come get him. Ms. Parnell was very upset - panicked and breathing oddly - to have Mr. Whitfield in his house.

Mr. Whitfield's friend later testified that Mr. Whitfield told Ms. Parnell at one point - "[M]a'am, just calm down. I'm probably more scared than you are, and I'm actually just trying to leave."

Ms. Parnell said she was short of breath and Mr. Whitfield tried to give her a glass of water and aspirin. His friend suggested that he call and ambulance. He didn't.

Ms. Parnell died of a heart attack.

Mr. Whitfield fled out the back door, and was caught by the police and arrested.

Mr. Whitfield Is Indicted

Mr. Whitfield was charged in federal court with attempted bank robbery, an number of weapons counts, and violating 18 U.S.C. § 2113(e).

Section 2113(e) is a strange one. Here's what it says:

Whoever, in committing [bank robbery or attempted bank robbery], or in avoiding or attempting to avoid apprehension for the commission of such offense, or in freeing himself or attempting to free himself from arrest or confinement for such offense, kills any person, or forces any person to accompany him without the consent of such person, shall be imprisoned not less than ten years, or if death results shall be punished by death or life imprisonment.

As the Fourth Circuit explained in Mr. Whitfield's case, United States v. Whitfield,

[Section] 2113(e) encompasses three alternative offenses pertinent to this case -- penalizing a defendant who, in evading apprehension for an attempted bank robbery: (1) "kills any person" (the "killing offense"); or (2) "forces any person to accompany him without the consent of such person" (the "forced accompaniment offense"); or (3) "forces any person to accompany him without the consent of such person" and "death results" (the "death results offense").

Oddly, Mr. Whitfield's indictment did not charge him with each of these offenses - or even the third one. Instead, his indictment said,

LARRY WHITFIELD did knowingly enter and attempt to enter Fort Financial Credit Union . . . with intent to commit therein a felony affecting that credit union, in violation of 18 U.S.C. § 2113(a), . . . as set forth in COUNT ONE of this Indictment; and in avoiding or attempting to avoid apprehension for said offense, forced M.P. to accompany him without her consent, and killed M.P.

He was charged with violating the first and second offenses set out in section 2113(e), but not the third (the one that kind of obviously looks like it applies).

The Case Goes To The Jury

Mr. Whitfield's case went to trial.

Mr. Whitfield's counsel noted the error in how the indictment was written and how it did not include the third element. The district court was unmoved.

At the end of trial, the jury was instructed that there are two ways of violating section 2113(e) and,

[w]ith respect to the second way of violating this statute, if you find that the defendant forced Mary Parnell to accompany him, you must also decide whether that forced accompaniment resulted in Mary Parnell's death.

The jury found Mr. Whitfield guilty of forcing Mary Parnell to accompany him, and also found that Mr. Whitfield's forced accompaniment caused Mary Parnell's death.

At sentencing, the district court determined that Mr. Whitfield was subject to a mandatory life term for his conviction on the forcible accompaniment charge.

Mr. Whitfield was sentenced to life on the forcible accompaniment when death results charge - indeed, the judgment described the offense as "[f]orced accompaniment while attempting to avoid apprehension for an attempted bank robbery resulting in death."

He was sentenced to an additional 300 months on a number of other charges arising out of his attempted bank robbery and flight.

The Fourth Circuit Vacates Mr. Whitfield's Conviction

He appealed.

The Fourth Circuit held that the three offenses in set out in section 2113(e) are indeed three separate offenses:

[W]e are content to adhere to the Supreme Court's nomenclature and describe § 2113(e) as creating "separate offenses by the specification of distinct elements." See Jones, 526 U.S. at 252.15 More specifically, the killing offense requires proof that a defendant "kill[ed] any person." The forced accompaniment offense necessitates proof that a defendant "force[d a] person to accompany him without the consent of such person." And the death results offense -- although entailing the lesser-included forced accompaniment offense -- requires further proof that "death result[ed]."

Because Mr. Whitfield wasn't indicted for violating the separate "death results" charge, even though he was later convicted for it - and sentenced to life for it - his conviction and sentence violated his right to be indicted by a grand jury.

As the Fourth Circuit put it,

[B]y instructing on the uncharged death results offense, the district court constructively amended Count Four to broaden the possible bases for conviction beyond those presented to the grand jury. When such a constructive amendment is found, the error is fatal and reversible per se.

Though, Mr. Whitfield was convicted for a violation of section 2113(e) other than on the "death results" language.

And he'll be resentenced for that on remand.

The range is between 10 years and life.

August 21, 2012

A Sad Bank Robber Attracts A Lower Sentence With Honey Than He Would Have With Vinegar

James Wooten was on hard times.

As he later told the police, he was just sick of living in his car and running out of money.

He went into a bank. As the Sixth Circuit in United States v. Wooten, tells it:

[B]ank teller Buddy Mason recalled the circumstances of the September 23 robbery. According to Mason, the robbery began after Wooten walked "casually" into the bank and approached the teller row. Wooten, who was fifty-six years old at the time, wore ordinary clothing and appeared to Mason to be a routine customer. After entering, Wooten strolled over and placed one hand on the counter. According to Mason, Wooten was "not looking around or fidgeting or looking at anything" and his demeanor was "nonchalant." After motioning for Mason to lean in closer, Wooten "kind of whispered and said, I am going to rob you." Mason at first thought Wooten was "joking around." Indeed, Mason recalled that he was "not taking [the robbery] very seriously because [Wooten] was just so nonthreatening." With prompting from Mason, Wooten repeated the statement "I am going to rob you," and Mason again questioned the sincerity of Wooten's request. At that point, Wooten "kind of got a serious look in his face" and said, "I have a gun, I want your money."

1342748_bank.jpgBank Robberies are common enough that banks give their tellers training on how to respond if they get robbed. After Mr. Mason heard from Mr. Wooten that he had a gun, Mr. Mason turned and picked up a stack of bills.

Mr. Wooten took the money and walked out of the bank.

He was caught by the police a few blocks later - that's when he said he robbed a bank because he didn't want to live in his car. He didn't have a gun with him.

At Mr. Wooten's sentencing hearing, the teller - Mr. Mason - said that:

Wooten "was not acting like he was going to hurt me or anybody in the bank." In fact, even though Wooten had told Mason that he had a gun, Mason said he "never felt threatened at all."

Mr. Wooten pled guilty. At sentencing, the fight was whether Mr. Wooten should be subject to a "threat of death" enhancement.

If a person commits a robbery and threatens to kill someone, that's seen as worse under the sentencing guidelines and the person gets an increase under section 2B3.1(b)(2)(F).

The district court applied the enhancement, finding that a reasonable person meeting the meek 50 year old Mr. Wooten, who was reluctantly robbing a bank to escape living in his car, would have to fear for his life.

The Sixth Circuit disagreed.

while the statement "I have a gun" certainly can be enough to support the threat-of-death enhancement--and in the majority of cases it is--the statement is not necessarily enough, especially when contextual circumstances undermine the otherwise threatening nature of the declaration.

This is hopeful for Mr. Wooten - saying that you have a gun does not always mean that you are saying you're going to use it. Sometimes you have to say you have a gun just to get someone to treat your situation like a robbery and give you the money that they're trained to hand over.

Although unusual, one can envision circumstances in which the nature of a robbery makes it objectively unreasonable for a victim of ordinary intelligence to believe that the robber, even if claiming to have a gun, has any intent or ability to carry out a violent act. An offender who walks into a bank waving a banana or what is plainly a toy gun, for instance, would not instill a fear of death in a reasonable person, even if the offender emphatically announced his possession of a gun. Cf. Jennings, 439 F.3d at 611 (surmising "that there could be circumstances that would sufficiently dilute the phrase 'I have a gun' so that it would not qualify as a death threat," such as where "a bank robber claimed to have a gun but brandished what was quite obviously a toy"); Gibson, 155 F.3d at 847 (stating that "I have a gun," constitutes a threat of death unless "unusual mitigating circumstances accompanying this statement could deprive the words of their ordinary and expected meaning" (internal quotation marks omitted)). Because such circumstances would fall short of instilling a fear of death in a reasonable victim of the offense, the threat-of-death enhancement would not be warranted.

The Sixth Circuit reversed and remanded - Mr. Wooten didn't threaten to kill anyone.

August 20, 2012

The Fourth Circuit Agrees That Restitution Is Hard For Child Pornography Victims, Even If The Person Accused Of the Child Pornography Offense Is Chatty

Albert Burgess made some bad decisions.

First, he downloaded a mass of child pornography. The folks at Immigrations and Customs Enforcement (or "ICE") were able to find him through the payment information he supplied to the child porn purveyor.

ICE asked for and received a warrant to search his house. While his house was being searched he agreed to be questioned.

1378633_man_with_a_megaphone_1.jpgHe told law enforcement that he was the only person who used his home computer. That was probably also a mistake.

They found child pornography on his computer - and on CDs in his house.

He was arrested. While he was waiting to be checked into jail, a female law enforcement agent asked if she could keep talking to him. He said yes.

This was also a mistake. I don't know why it seems there are a lot of female agents working child porn cases, but folks accused of these crimes seem to be really willing to talk to them. There's something going on there - law enforcement is being smart in a way not dissimilar to Hooters.

Here's how the Fourth Circuit describes Mr. Burgess's statements:

Burgess, looking down at a copy of the arrest warrant, stated, "You've got me." He admitted to viewing child pornography between two and three times per week, and also informed Redden that he knew of significant child pornography trafficking operations in Russia and the Philippine Islands (the Philippines).

Ok, so far this is relatively typical for a child pornography case. Then things go a little off the rails. Mr. Burgess is released before trial.

The Perils Of Do-It-Yourself 5K1.1

While he's on pretrial release,

On March 7, 2008, Burgess placed a telephone call to [law enforcement] stating, "Well, I've got to help myself. I've got to talk to somebody." Burgess met with the federal agents at his home three days later, signed a statement waiving his Miranda rights, and provided details regarding his pornography sources in Russia and the Philippines. It was Burgess' understanding that the federal authorities would use the information and email addresses he had provided to assist in the investigation of these internet pornography sources. Burgess was under the impression that he was bargaining with the federal agents, and later testified to this effect, stating: "You know, you've got to give [the government] something before they can give you something. You can't sit there, you know, and extract something from them." Burgess also confessed to the federal agents that he viewed child pornography for five hours per day while masturbating, and that he did so to prevent himself from actually committing offenses on a child.

I agree that Mr. Burgess needed to talk to someone. I just think that he probably needed to talk to a lawyer, and not a federal law enforcement agent.

In exchange for his efforts to "help" Mr. Burgess was sentenced to 292 months in prison and a lifetime of supervised release.

The Fourth Circuit Rejects Easy Restitution For Child Porn Victims

The district court in North Carolina also sentenced him to pay restitution to a known victim of child pornography - Vicky.

In United States v. Burgess, the Fourth Circuit joined a number of other circuits to reject this request for restitution for victims of child pornography.

It did so in a way similar to how other courts have approached it - the district court has to make findings of how the defendant in this case caused the harm complained about by the child pornography victim. It's not per se impossible, it's just going to be massively difficult to accomplish.

So, on remand,

The primary difficulty that will face the district court on remand will be the determination, if the court finds that proximate causation has been established, of the quantum of loss attributable to Burgess for his participation in Vicky's exploitation. Vicky is entitled to the "full amount" of restitution for such loss, and we leave the calculation of such an amount to the district court in the first instance. While the district court is not required to justify any award with absolute precision, the amount of the award must have a sufficient factual predicate. Vicky's loss is an aggregation of the acts of the person who committed and filmed her assault, those who distributed and redistributed her images, and those who possessed those images. The culpability of any one defendant regarding Vicky's loss is dependent at least in part on the role that defendant played with respect to her exploitation.

Fair enough - in this line of cases that's kind of the baseline in light of what the First, Second, Third, Fifth, Ninth, Eleventh, and D.C. Circuit's have already held. But wait, there's more . . .

Every Downloading Of Child Pornography Is Separate For Federal Criminal Restitution

But then the Fourth Circuit goes further notes that joint and several liability does not apply for child pornography restitution awards - at least in cases involving possession and receipt.

We also observe that the tort concept of joint and several liability is not applicable in this context. In situations such as Vicky's, individuals viewing her video recordings inflict injuries at different times and in different locations. Therefore, those individuals cannot have proximately caused a victim the same injury. As the court observed in Monzel, "so long as the requirement of proximate cause applies, as it does here, a defendant can be jointly and severally liable only for injuries that meet that requirement." Monzel, 641 F.3d at 539 (citing Restatement (Second) of Torts § 879 cmt. b (1979) for the proposition that individual instances of exploitation are separate injurious results).

This is going to create an odd kind of restitution award if a district court is ever able to find that a child pornography possessor has proximately caused harm to someone in Vicky's situation.

How would you approach that at a hearing? The images depicting Vicky were downloaded, let's say, 100,000 times. Is the quantum of harm from each download the same? Do you just divide? Does it matter if one person says he looked at the images every day and others looked weekly? Do you want to count views or downloads?

How desperately are district court judges going to find a way to avoid thinking too much about any of this?

You Can't Assume Yourself Into Immunity

And, to answer the lingering question from Mr. Burgess's statements were entitled to any kind of immunity because he was trying to cooperate with law enforcement to get his sentence reduced, the Fourth Circuit said no.

Mr. Burgess argued that because he was trying to provide substantial assistance to help catch child pornographers in the Philippines and Russia, his statements couldn't be used against him.

Sometimes, a lawyer can negotiate that deal for a client - which is why Mr. Burgess probably should have used a lawyer to negotiate his immunity deal.

As the Fourth Circuit explained,

A defendant's alleged agreement to cooperate with law enforcement authorities in exchange for transactional immunity is governed by traditional principles of contract law, and therefore an agreement of this nature may be express or implied. United States v. McHan, 101 F.3d 1027, 1034 (4th Cir. 1996). Irrespective whether the alleged agreement is express or implied, the defendant must establish that a meeting of the minds occurred such that the government agreed to refrain from prosecuting the defendant in return for his cooperation. Id. (holding that the same standard applies with respect to equitable immunity).

In this case, Burgess can identify no action or statement on the part of the government sufficient to establish a meeting of the minds regarding immunity for his statements. Burgess was informed of his Miranda rights before every exchange with the authorities, and at no time did a law enforcement agent make any statement or representation concerning immunity. Additionally, the agents' conduct cannot be viewed objectively as impliedly offering immunity to Burgess or as accepting such an offer from him. Additionally, the agents' conduct cannot be viewed objectively as impliedly offering immunity to Burgess or as accepting such an offer from him. Indeed, Burgess' own testimony at trial demonstrated his mistaken belief that, despite repeated Miranda warnings, he expected to receive a benefit from providing information to the authorities. Such a mistaken belief, however, cannot serve as the foundation for an immunity claim.

It's a dark side to the rise of DIY culture. There's nothing wrong with DIY painting or bicycle repair. Perhaps it's less helpful to have do it yourself negotiations with federal criminal authorities.

Related Links:

August 20, 2012

A Note To Our Readers

Gentle readers,

I hope this finds you well. I wanted to raise two things with you.

First, as you'll likely have noticed, I haven't been too active here since June (in the sense that I haven't been active here at all). I gave myself a bit of a summer vacation that lasted longer than I'd originally planned.

1288990_beachin_it_1.jpgI wrote a few things for Above the Law on the Supreme Court (here are links to my coverage of the Fair Sentencing Act, Williams v. Illinois, and the Stolen Valor Act). I also represented some folks as a part of my day job (for some reason, much of my summer was spent representing people in white collar investigations instead of indicted cases - I'm not sure why).

I hope you were able to find another place to find high-quality, yet light and jaunty descriptions of federal criminal appeals these past few weeks.

Alas, from the blog's perspective, I consider my summer vacation to be over.

Second, many an astute reader has reached out to let me know that, ahem, I've missed a few cases. It's true. Since, perhaps, the early spring I've fallen short of writing about every reported decision where a defendant wins (even before my summer break). Too many people have their cases remanded for a completely uninteresting (to anyone else) problem with a supervised release condition, or a guidelines issue that should have been completely obvious, or because Booker requires every defendant in a criminal case to receive probation (that last one is something I heard in a jail the other day - it may not be the law (though soon it won't matter because any minute now Congress will approve the 65% good time credit law)).

So, to be clear, I've been curating which cases I write about for a while. And I'm likely to continue. I suppose you may not care - if you're reading this blog for comprehensiveness you're on a quixotic errand from the jump - but it is a minor adjustment to what I've been saying I'm offering.

Going forward I'm likely to skip some of the cases I used to spend serious time with - like those Special Assessment wins.

And, as always, if you have comments, please leave them or feel free to email me.

Thanks for reading!

Matt

August 19, 2012

For Federal Fraud Sentencing Purposes, If You've Defrauded One Wal-Mart, It's The Same As Having Defrauded Them All

I'd like to think that Cedrick Stubblefield has Occupy Wall Street sympathies.

Regardless, the Sixth Circuit's opinion in United States v. Stubblefield shows why - if you're going to commit fraud and be prosecuted in federal court - it's better to defraud several Wal-Marts than to hit a bunch of mom and pop stores.

1379920_mom-_and-_pop_store.jpgDon't Keep Your Drugs Near Evidence of Your Fraud

Mr. Stubblefield was being driven in a rental car near Cleveland, Ohio. The car was pulled over for speeding.

The officer's backup had a drug detection dog. The dog detected drugs in the rental car.

While searching the car, the police happened upon an envelope containing: 10 false driver's licenses with either Mr. Stubblefield's photo or the photo of another gentleman in the car; 20 Chase bank checks payable to the names on the fake Texas licenses; and maps and driving directions to Wal-Mart stores in the greater Dayton and Columbus Ohio areas.

Later, the police searched a bit more diligently in their station and found another, similar envelope containing more fake licenses, checks, and maps of Wal-Marts in greater Cleveland.

Hello Cleveland, indeed.

How Many Wal-Marts Are There?

Mr. Stubblefield was charged with intent to commit aggravated identity theft and possessing five or more identification documents with an intent to commit identity theft.

The government wanted him to accept a sentencing guidelines enhancement for having between 10 and 50 victims of his crime under U.S.S.G. § 2B1.1(b)(2). The government's theory was that these checks were bound for a number of Wal-Mart stores, and that each store was a separate victim.

Mr. Stubblefield pled guilty, preserving his ability to resist the victim enhancement.

The district court agreed with the government that each Wal-Mart is a separate victim for the fraud guidelines. The Sixth Circuit, however, agreed with Mr. Stubblefield.

The question is whether the Wal-Mart corporation is the victim - in which case there is one victim - or whether each individual store is a separate entity capable of separate victimization.

Section 2B1.1(b)(2)
says that:

(Apply the greatest) If the offense- (A) (i) involved 10 or more victims; or (ii) was committed through mass-marketing, increase by 2 levels; (B) involved 50 or more victims, increase by 4 levels; or (C) involved 250 or more victims, increase by 6 levels.

This, of course, punts on what counts as a "victim". Helpfully, Application Note 1 to the fraud guideline clears that up:

Application Note 1 to § 2B1.1 defines victim thus: "any person who sustained any part of the actual loss determined under subsection (b)(1) . . . . 'Person' includes individuals, corporations, companies, associations, firms, partnerships, societies, and joint stock companies."

So, "victims" for the "number of victim enhancement, includes only the entities who suffered an actual loss - not a guidelines loss.

This is a departure from how a lot of the fraud guidelines works. If you try to defraud someone and are prosecuted in federal court, normally the guidelines looked at what you tried to do, not just what you succeeded in doing. But the § 2B1.1(b)(2) number of victims enhancement is a little more restrictive.

Under this understanding, the Sixth Circuit found that Wal-Mart suffers the whole loss:

The evidence adduced at sentencing in the present case establishes that although the individual Wal-Mart stores take an initial, temporary loss, the Wal-Mart corporation ultimately bears the loss from Stubblefield's crimes. Probation Officer Allen Gold, the only person to testify at sentencing who had spoken to representatives of Wal-Mart, testified that the corporation "do[es] reimburse each store, but each store will first take the loss." The PSR that Gold prepared similarly states that "[u]limately, due to accounting practices of the Wal-Mart Corporation and the corporate guarantee to individual stores that payroll checks will be covered, the Corporation reimburses the individual stores for their losses." Because the evidence does not suggest that the reimbursement hinges on any conditions, the stores' loss is necessarily temporary, which is another way of saying that reimbursement is automatic.3 Moreover, the judgment requires Stubblefield to pay his restitution to the corporation rather than the individual stores. These facts support the conclusion that only the corporation suffers an actual loss--i.e., the "pecuniary harm that resulted from the offense," U.S.S.G. § 2B1.1 cmt. n.3(A)(i) (emphasis added). So the only victim is the corporation, and the district court erred in applying an enhancement based on the number of stores affected.

Happily for Mr. Stubblefield, ripping off a string of Wal-Marts is a lot easier on the guidelines than ripping off a string of non-chain stores.

So - if you want to be community-minded (and commit fraud) - shop local, defraud global.

Related Links:

June 13, 2012

The Tenth Circuit Offers A Recent History Of Fake Drug Checkpoints And The Fourth Amendment

No one likes a liar.

Well, almost no one. Chief Judge Kozinski seems to like liars, at least some of the time.

But, generally, lying leaves a bad taste in our societal mouth. This is true even when the police do the lying.

1377780_highway_in_the_sky.jpgDriving Through Rural Kansas

Dennis Neff was driving through rural Kansas on the interstate around noon in late July. He passed signs that warned of a drug checkpoint ahead in Spanish and English. The signs warned that drug dogs were in use.

Instead of continuing to the checkpoint, Mr. Neff pulled off at the next exit onto Spring Creek Road.

Spring Creek Road is "a rural, gravel road speckled with residences but no businesses."

It may go without saying that Mr. Neff was not from around those parts.

The Police Lied

As it happens, there was no drug checkpoint. That would have taken time, resources, and money.

Instead, the police were watching who pulled off onto Spring Creek Road to avoid the drug checkpoint, especially cars that didn't seem to be from the area.

A trooper in a marked police car followed Mr. Neff's car after it turned off onto Spring Creek Road. Mr. Neff passed a driveway, then turned into a second driveway.

As he started to back his car out of the second drive way to turn around, back in the direction of the interstate, he saw the trooper.

The trooper said later that Mr. Neff looked startled to see him.

Mr. Neff tried to drive back toward the interstate, but the trooper ordered him to stop. The trooper approached Mr. Neff's car, pulled him out and gave him a pat down search. He found nothing.

Mr. Neff, pretty close to immediately after the pat down, told the trooper that he was carrying a crack pipe.

In a search of the car a few minutes later, they trooper found seven kilogram-sized bags of cocaine in the car.

The District Court Proceedings

Mr. Neff was charged with conspiracy to possess with intent to distribute cocaine and possession with intent to distribute cocaine.

He filed a motion to suppress, challenging his stop. At the hearing, the trooper explained why he thought he had reasonable articulable suspicion to stop Mr. Neff:

The reason I stopped him is they got off the interstate after seeing the drug check lane ahead signs, it was a Shawnee County car went into a rural Wabaunsee County area, pulling into a driveway where I don't think the vehicle belonged, the surprised look that the driver gave me, the short time that they stayed there, the surprised look that he gave me. I thought something is very suspicious about this that I didn't really care for or didn't like. Therefore, I stepped out of the vehicle when he pulled out. That's when I stopped them.

The district court thought that was good enough and denied the motion. Mr. Neff convicted and sentenced to five years in prison.

The Appeal to the Tenth Circuit

In United States v. Neff, the Tenth Circuit reversed.

The standard is well-known, but here's how the 10th Circuit explained it,

This case presents the familiar question of what level of proof is required to establish reasonable, articulable suspicion of criminal activity. As a general matter, "police can stop and briefly detain a person for investigative purposes if the officer has a reasonable suspicion supported by articulable facts that criminal activity 'may be afoot,' even if the officer lacks probable cause." United States v. Sokolow, 490 U.S. 1, 7 (1989) (quoting Terry, 392 U.S. at 30). In reviewing an investigatory stop for reasonable suspicion, we must consider "the 'totality of the circumstances' of each case to see whether the detaining officer has a 'particularized and objective basis' for suspecting legal wrongdoing." United States v. Arvizu, 534 U.S. 266, 273 (2002) (quoting United States v. Cortez, 449 U.S. 411, 417-18 (1981)). While certain facts, taken in isolation, may be "quite consistent with innocent travel," these facts may, in the aggregate, add up to reasonable suspicion.

Of course, an actual drug checkpoint is unconstitutional - according to the Supreme Court in City of Indianapolis v. Edmond.

But the "ruse" drug check point is a clever twist - maybe that's ok!

As the Tenth Circuit explained, fake drug checkpoints v.1.0 worked like this:

In the wake of Edmond's rebuke of suspicionless drug checkpoints, some lawenforcement organizations began the practice of setting up ruse drug checkpoints. In what may be understood as the first generation of post-Edmond drug checkpoints, police would set up "drug checkpoint ahead" signs on the highway but then operate a full-scale checkpoint at the next (likely rural) off-ramp. The theory behind this alteration was that the police would have an element of individualized suspicion for every vehicle that took that ramp because there were few "legitimate" reasons for using an exit in an isolated area.

The Eighth Circuit said these are generally not ok - here's how the Tenth Circuit summarized the Eighth Circuit's opinion:

The court recognized that while the modified program differed from the practice in Edmond, the same constitutional problems persisted. While some drivers may have taken the exit to avoid police conduct, that did not "create individualized reasonable suspicion of illegal activity as to every one of them." Id. "Indeed, as the government's evidence indicated, while some drivers may have wanted to avoid being caught for drug trafficking, many more took the exit for wholly innocent reasons--such as wanting to avoid the inconvenience and delay of being stopped or because it was part of their intended route."

Mr. Neff was caught in version 2.0 of the fake drug checkpoint - one has to love the way law enforcement innovates. Version 2.0 is some signs in front of a rural road that no one would want to turn off on (perhaps including those who lived along it).

This turned out not to be ok.

The Tenth Circuit, agreeing with the Eighth Circuit, noted that

a driver's decision to use a rural highway exit after seeing drug checkpoint signs may serve as a valid, and indeed persuasive, factor in an officer's reasonable suspicion analysis. (listing as one valid factor that "the defendants took an exit which was the first exit after a narcotics check lane sign, and an exit that was seldom used"). But standing alone, it is insufficient to justify even a brief investigatory detention of a vehicle.

There wasn't anything else present that tipped things over the edge into reasonable articulable suspicion for the court of appeals. Indeed,

The connection between the checkpoint signs and Neff's decision to use the nearby Spring Creek Road exit was tenuous. There was no testimony that Neff suddenly swerved to make the exit, changed lanes abruptly, or otherwise drove erratically in response to the signs.

As to Mr. Neff's decision to turn around in a driveway:

Neff's decision to turn around in a driveway is plausibly evasive. The government suggests turning around in the driveway was part of Neff's pattern of evasive conduct, but without some evidence Neff was even aware of the trooper's presence, his turning around in the driveway provides minimal support to justify the stop. In contrast, the defendant in Carpenter realized he was being followed, made a U-turn, and pulled to the side of the road and stopped. Similarly, Neff's "startled look" adds little of value to the equation. Exhibiting surprise at the sudden appearance of an officer on a rural road is hardly comparable to . . . "nervous, evasive behavior."

So, the Tenth Circuit concluded that the stop was not permissible.

These facts, when taken together, do not fairly suggest that Neff was attempting to evade police. To be sure, an officer is "entitled to make an assessment of the situation in light of his specialized training and familiarity with the customs of the area's inhabitants." But even considering the totality of the circumstances, Neff's conduct conformed to the patterns of everyday travel.

Because he shouldn't have been stopped in the first place, Mr. Neff's conviction was vacated, and he is free to go.

According to the BOP webpage, he was released from custody on Monday.

June 12, 2012

The Tenth Circuit Holds That A Federal Sentencing Expert Was Correct That His Own Federal Sentence Was Wrong


Howard Kieffer really liked federal sentencing practice.

He co-counseled in cases in federal district court and some federal circuit courts. He gave presentations on how people who are facing a sentencing hearing can prepare, and he helped people who were going to the Bureau of Prisons position things so that they could make an easier transition.

Mr. Kieffer even ran a website and a listserve for people who were interested in sentencing and the Bureau of Prisons - lots of lawyers contributed.

Sadly, though, as the 10th Circuit, in United States v. Kieffer, noted:

All the while, [Mr. Kieffer] had a secret. He is not and never has been an attorney. He never went to law school, never sat for a bar exam, and never received a license to practice law.

68920_law_education_series_5.jpgGail Shifman

In 2006, at a conference for the National Association of Criminal Defense Lawyers, Mr. Kieffer met Gail Shifman - a criminal defense lawyer in San Francisco. One can imagine that they discussed lawyer stuff - cases and clients and how to work in a broken system.

At some point, though, Ms. Shifman learned that Mr. Kieffer was not a lawyer. She emailed him.

It was a pointed email. Ms. Shifman wrote:

if it is correct that you are not a licensed attorney, then you've directly lied to me on more than one occasion.

Mr. Kieffer's response may not have been as direct. Among other things he wrote:

In short, I am "licensed"--if that is the operative term (and I am not sure that it is) in no state, but I have been admitted (for various purposes) or specially appeared in accord with local rules) in certain (federal) jurisdictions.

I went to Antioch Law School--and graduated.

Somehow, Ms. Shifman was not satisfied with this response. She contacted the FBI.

As the 10th Circuit noted, "this was not the first time the FBI received a complaint about [Mr. Kieffer's] legal escapades."

Colorado

As it happened, Mr. Kieffer came to enter his appearance on behalf of a person charged with a crime in the United States District Court in Colorado. He appeared on the person's behalf at a competency hearing. The person was convicted.

Mr. Kieffer was paid $65,750 for this representation.

He was charged with wire fraud. Mr. Kieffer was convicted in a federal district court in Colorado.

Interestingly, this was also not Mr. Kieffer's first federal conviction.

North Dakota

Flash back to before Mr. Kieffer was convicted in Colorado.

Shortly after his Colorado client's trial, the District of North Dakota had issued a show cause order challenging some of the statements he made in an application for admission to that court.

Mr. Kieffer hired counsel to represent him with the North Dakota order. He admitted that he wasn't a member of any state bar, and that he didn't graduate from Antioch College of Law.

He was convicted in federal court in North Dakota of making a materially false application to the court and sentenced to 51 months.

Back to Colorado

He was then suspended from practicing law in the District of Colorado (which is a little funny when you think about it, since he wasn't a lawyer).

Then came his Colorado conviction and, later, sentencing.

Was North Dakota Any Different?

At sentencing, the court decided that this conduct was separate from his North Dakota conduct. This did not work into Mr. Kieffer's favor. Indeed, it looks like a pretty good approach if the court wanted to make things worse for Mr. Kieffer.

Treating the North Dakota sentence as separate did two things - each of which was challenged on appeal.

First, it meant that his North Dakota conviction counted as a prior conviction for criminal history purposes. Mr. Kieffer pointed out that the government's position was that he had engaged in a continuing scheme - his prior conviction was a part of that scheme.

The government agreed that this was error. The 10th Circuit did too.

More fundamentally, though, was whether Mr. Kieffer's sentence on this offense would run concurrent or consecutive to his North Dakota conviction.

To quote the 10th Circuit:

[Mr. Kieffer] rightly claims that in addition to its erroneous criminal history calculation, the district court erred in manipulating the calculation of his offense level so it could ignore U.S.S.G. § 5G1.3(b) and ostensibly impose a within guideline range sentence on him while running that sentence consecutive to the sentence he received in the District of North Dakota.

Section 5G1.3(b)'s "central aim" is to "ensure no defendant is punished twice for the same crime." Here, the district court counted Mr. Kieffer's related prior conviction as unrelated just to evade § 5G1.3(b). The 10th Circuit said that was incorrect.

Because the district court misapplied section 5G1.3, and miscalculated Mr. Kieffer's criminal history category by, in both cases, treating his North Dakota offense as unrelated, the case was remanded for resentencing.

It's good to see that Mr. Kieffer was vindicated in two ways - he won his appeal, and he showed that he is an expert at federal sentencing law after all.

June 7, 2012

Sometimes You Can Challenge An Agency Action In A Criminal Case, Says The Ninth Circuit

Ours is a large and complicated government. Much of it isn't run by statutes or cases, but by regulations.

Violating a regulation can be a crime - depending on the regulation.

Regulations are strange animals. They can be challenged under the Administrative Procedures Act. If you don't like what an agency does, the APA gives you a mechanism to complain about it to a judge.

1389337_mount_hood.jpgWhat happens if you're prosecuted for violating a regulation that can be enforced with a criminal penalty, and you think the regulation is no good? Can you complain about it in your criminal case?

The Ninth Circuit answered that, in United States v. Blacklund, with a resounding maybe.

Mr. Blacklund's Choice of Residence

Mr. Blacklund and his wife lived on a mine in a national forest. [FN1]

It was in the Umpqua National Forest in Oregon.

If you want to live on a mine in a national forest, you have to get the permission of the United States Forest Service.

The Forest Service will only give you permission to build a place to live on your mining site in a national forest if it's necessary to the mining operations to have a year-round residence in the forest.

As to the Blacklund's residence, the Forest Service determined that "year round occupation of the permanent camp trailer with the added room, roof, porch and fire wood storage area, is excessive even during the mining season."

The Blacklunds took exception to this decision, and things went back and forth with the Forest Service. Eventually, the Blacklunds appealed to the final level of administrative appeal within the Forest Service.

For those with an admin law background, they "exhausted their administrative remedies."

They did not then go to federal court to challenge the agency's determination.

Criminal Charges Are Brought

The U.S. Attorney's Office in Oregon then brought a misdemeanor criminal information against Mr. Blacklunds for violating 16 U.S.C. § 551 and 36 C.F.R. § 261.10(b).

Mr. Blacklund indicated that he intended to challenge the agency's action, as he would if he brought a suit against them through the APA. Mr. Blacklund wanted to assert that challenge as an affirmative defense.

The district court shut him down, preventing him from making such an affirmative defense.

He entered a guilty plea that preserved his ability to challenge the district court's decision.

The Administrative Procedures Act, Criminal Charges, And the Ninth Circuit

The Ninth Circuit reversed his conviction. It held that a person charged with a crime based on an agency action is able to challenge the agency's decision as an affirmative defense under certain circumstances.

The Ninth Circuit noted that there is a six-year statute of limitations for bringing a suit in federal court to challenge an agency action.

So, anytime during that six-year period, if the person exhausted their administrative remedies by previously challenging things with the agency, the person could bring a lawsuit to challenge the agency's action.

As the Ninth Circuit held,

We therefore hold that the APA affords a person in Blacklund's position at least two options for obtaining judicial review of the disputed agency action. He may file suit in federal district court under the APA, or he may challenge the agency's decision in a subsequent criminal proceeding. In either case, he must act within the six-year time limit.

Because a district court's erroneous decision to preclude a defense requires reversal unless the error is harmless, the conviction was vacated and the case was sent back.

What Happens Next?

One thing I don't understand from this is how the agency's action is challenged in the trial.

Normally, the legality of an agency's action is a question that a judge resolves. Normally, affirmative defenses are resolved by the jury.

Does the jury have to make the determination of whether the Forest Service's action complied with, say, the authorizing statute? Are they to be given jury instructions in Chevron deference?

[FN1] - There are mines in national forests? Huh?

June 6, 2012

I'm Also Writing At Above The Law

Faithful readers,

I hope this finds you well.

1038827_u_s__supreme_court_1.jpgI know you come here for the very best in myopic and cheeky descriptions of federal criminal appeals. Thank you for your readership.

I wanted to let you know that I'm also writing a column over at Above the Law about the Supreme Court - and not just about federal criminal stuff. I wrote last week about how dull I find bankruptcy lawyers.

If you'd like to see what I'm writing over there, please feel free to do so at this link.

It's a different audience over at Above the Law - an audience made of people that has never had to explain that while, yes, technically, the judge could give you probation in light of Booker, it doesn't mean that the judge is going to vary 13 years downward to do it.

The Above the Law readers are people who don't know what Corrlinks is.

They're people who have never walked out of a courthouse carrying a garbage bag containing their client's wallet, belt, and keys after a surprisingly bad hearing to review conditions of pretrial release.

But I'm sure they're fine people nonetheless. Except for the people who write stuff in the comments - I assume they're deeply unhappy third-year associates drowning in law school debt, document review, and Dewar's.

In any event, I wanted to let you know, gentle readers, that you're my people too. And posts will continue to be posted here with about the same frequency that they have been.

Thanks very much for reading. Hope you're well,

Matt

June 5, 2012

The Fourth Circuit Holds That Money Laundering Only Applies To The Profits Of A Crime, Not The Expenses

William Cloud believed in the American dream of home ownership. He worked to make buying a home easy for people in his community.

He wanted to make buying a house easy, even if it would be the second or third house that a person would own.

1389529_house.jpgTo make sure the houses he was helping people buy were up to snuff, he'd buy them first and do some work on them. He'd then sell them - or, using the government's language - he'd "flip" them to the people he was helping to become real estate investors.

He made money on each sale, because, of course, a man has to eat. And he didn't disclose these payments to himself because it didn't want to cloud his good works with the ugly taint of money.

Also, he knew that people could buy more houses if their credit was good. So, he'd work with people to purchase a number of houses quickly, so that they only had to use the one credit report for the series of mortgages. That way, the first house wouldn't show up on the credit report for the second or third house.

Unfortunately, like so many of us in this modern life, Mr. Cloud spread himself too thin. He was available to help folks get into the houses, but wasn't able to make the time to help his neighbors pay their mortgages.

Many of the homes were foreclosed on.

The government, immune to the pull of Mr. Cloud's good works, indicted him for mortgage fraud and money laundering.

Mortgage fraud, because Mr. Cloud told a number of people to make false statements on mortgage applications and also, uh, helped them make those false statements.

Money laundering because Mr. Cloud paid a number of people to help him with this home ownership vision - he paid people to find others to buy houses and facilitate real estate closings.

A jury convicted Mr. Cloud.

In United States v. Cloud, the Fourth Circuit reversed his money laundering conviction.

Money laundering is, generally, when a person take the profits from a crime and cleans them up by transferring the money.

However, the money has be profits from a crime. As the Supreme Court explained in United States v. Santos [FN1]:

Few crimes are entirely free of cost, and costs are not always paid in advance. Anyone who pays for the costs of a crime with its proceeds--for example, the felon who uses the stolen money to pay for the rented getaway car--would violate the money laundering statute. And any wealth-acquiring crime with multiple participants would become money laundering when the initial recipient of the wealth gives his confederates their shares. Generally speaking, any specified unlawful activity, an episode of which includes transactions which are not elements of the offense and in which a participant passes receipts on to someone else, would merge with money laundering.

And, of course, if money laundering merges with the underlying crime a person can't be convicted of both offenses without violating double jeopardy.

So - if a person is prosecuted for a substantive offense, that person can't be charged with money laundering for transferring expenses associated with that offense.

Or, as the Fourth Circuit explained,

Cloud's money laundering convictions are based on payments to recruiters, buyers, and other coconspirators for the role each person played in the mortgage fraud scheme. Cloud's mortgage fraud depended on the help of others, and their help, in turn, depended on payments from Cloud. Such payments are no different than "the felon who uses the stolen money to pay for the rented getaway car" or "the initial recipient of the wealth" in "any wealth-acquiring crime with multiple participants . . . [who] gives his confederates their shares." Santos, 553 U.S. at 516 (plurality opinion). Because Cloud's money laundering convictions on Counts 28-33 were based on paying the "essential expenses" of his underlying fraud, we find a merger problem.

Mr. Cloud's money laundering convictions were then vacated.

The Fourth Circuit also reversed an order that Mr. Cloud had to pay the costs of his court-appointed attorney's time.

The case was sent back for resentencing.

[FN1] - Strictly speaking this was just Justice Scalia writing for a plurality. But it's really good language.

See also:

Paying For Drugs Is Not Money Laundering

May 28, 2012

The Sixth Circuit Says That If You Plead Guilty To An Indictment You Don't Plead Guilty To All The Extra Bad Stuff The Government Put In The Indictment


Michael Louchart sold some guns. They were stolen and he knew it.

The feds caught up to him and charged him with conspiracy to steal firearms and with receiving and selling stolen firearms, each of which violated 18 U.S.C. § 922. In the indictment, the government said that Mr. Louchart was involved in the theft of more than 75 firearms.

It's not a coincidence that if a person steals more than 75 firearms they are then eligible for a sentencing enhancement under the sentencing guidelines.

Mr. Louchart didn't like his chances at trial. He entered a plea of guilty to the indictment, without a plea agreement.

1329263_pistol.jpgAt his plea hearing, the district court asked him what he did that made him guilty. Mr. Louchart said:

Well, a couple guys I know of brought me some guns, 13 revolvers and three long guns, and I sold them. And I knew they were stolen.

No one asked M. Louchart how many guns were stolen.

The presentence report assessed an increase in Mr. Louchart's proposed sentencing guidelines range, saying that he pled guilty to an indictment that said his crime involved more than 75 guns.

Mr. Louchart objected - he said he didn't say anything about any 75 guns.

The government put on no evidence of the number of guns, but relied on the fact that Mr. Louchart pled guilty to the indictment and the indictment said there were more than 75 guns.

The district court agreed, and applied the enhancement based on Mr. Louchart having participated in a conspiracy to steal guns with more than 75 guns.

Mr. Louchart appealed to the Sixth Circuit and, in United States v. Louchart, the Sixth Circuit reversed.

While, of course, the government can put on evidence to support a sentencing enhancement, and if it proves that the enhancement applies by a preponderance of the evidence, then an enhancement that a person being sentenced didn't admit to would apply. So admitting the facts supporting an enhancement under the sentencing guidelines isn't required to jack up a person's sentence.

As the court of appeals said,

To the extent that Louchart argues that he can be held accountable at sentencing only for the 17 guns that he admits possessing and selling, the law does not support such a limit. A district court may enhance a sentence based on relevant conduct so long as its factual findings are supported by a preponderance of the evidence and the sentence imposed does not exceed the statutory maximum.

But that's a separate issue.

The question, really, is whether Mr. Louchart admitted the number of guns in the indictment when he admitted that he was guilty of the offense charged there.

And the answer to that question is no.

As the Sixth Circuit explained,

Louchart's guilty plea, however, should not have been treated as an admission of the quantity of firearms stated in the indictment. The quantity of firearms involved was not an element of the offense, and the quantity of firearms alleged in the indictment was not admitted by Louchart at the plea hearing or in a plea agreement. Admission of facts from a guilty plea is limited to elements of the crime charged or those explicitly admitted to by the defendant. The Supreme Court for instance has carefully stated the scope of a guilty plea admission: "a guilty plea is an admission of all the elements of a formal criminal charge." McCarthy v. United Sates, 394 U.S. 459, 466 (1969) (emphasis added). The Supreme Court has also described guilty pleas as "comprehend[ing] all of the factual and legal elements necessary to sustain a binding, final judgment of guilt and a lawful sentence." United States v. Broce, 488 U.S. 563, 569 (1989) (emphasis added). This limited language strongly suggests that a guilty plea does not constitute an admission of facts included in an indictment when those facts were not necessary to sustain a conviction. It follows that these facts cannot be used to increase a defendant's sentence without the district court's first determining that the facts are supported by a preponderance of the evidence.

And, for those who practice outside of the Sixth Circuit, there's a nice survey of cases from around the federal appellate courts on this question.

Because Mr. Louchart didn't admit the number of guns, just that he met the elements, his case was remanded for resentencing.

May 24, 2012

The Eighth Circuit Reverses A Conviction Because The Government Didn't Show That Bank of America Mortgage Is FDIC Insured


Like many Americans, Meggan Alexander wanted to participate in the dream of home ownership. Like many Americans, Ms. Alexander had lost her job.

Unlike many Americans, Meggan Alexander signed documents at a real estate closing that said she was employed when she wasn't.

1117134_contract_2.jpgThe government can be a stickler for proper paperwork. Because she signed these documents saying that she was employed when she wasn't, she was indicted for making a false statement with the intent to influence an FDIC-insured entity.

Fortunately for Ms. Alexander, the government is not always a stickler for its own paperwork, as the Eighth Circuit's opinion in United States v. Alexander shows.

One of the things the government has to prove in order to convict someone of lying in connection with a loan from an FDIC-insured institution is that the institution that was lied to is FDIC-insured.

This requirement isn't trivial - without it there is no federal jurisdiction for the crime. It's not dissimilar to this earlier jurisdictional case arising out of the great state of Iowa.

At trial, the government and Ms. Alexander stipulated that Bank of America is FDIC-insured.

The loan documents, however, showed that the lender was Bank of America N.A.

So, as the Eighth Circuit explained it,

in order to satisfy the jurisdictional element for purposes of section 1014, the government could demonstrate either (1) that Bank of America, N.A. was FDIC insured, or (2) that Bank of America was Bank of America N.A.'s alter ego so that Bank of America's FDIC-insured status was implicated in the case.

The government didn't meet the first requirement:

Alexander is correct that there is no evidence in the record to show that--absent a connection to Bank of America--Bank of America, N.A. or Bank of America Mortgage were independently FDIC insured. The only evidence of FDIC insurance was the stipulation signed by Alexander, which failed to include any mention of Bank of America, N.A. or Bank of America Mortgage.

This is presumably because the government thought it had a sufficient stipulation; it didn't think that anyone would argue that Bank of America is a different entity than Bank of America N.A. or Bank of America Mortgage.

The court of appeals describes the government's argument on the second point this way:

our review turns to whether there was sufficient evidence to prove that Bank of America, N.A. and Bank of America Mortgage were alter egos of Bank of America so that Bank of America's FDIC-insured status extended to them. This is familiar territory for the government, as it rested on this "same entity" theory at trial. During their testimony, bank employees and other witnesses involved in the loan process used the terms "Bank of America," "Bank of America, N.A.," and "Bank of America Mortgage" interchangeably. Likewise, although the loan application and several other documents in evidence refer to "Bank of America, N.A." as the lender, other documents, including one of Alexander's hardship letters, occasionally reference "Bank of America" as the lender. The government insists that all three "Bank of America" titles "refer to the same entity and that was the entity to which defendant made her false statements." The government asks that the FDIC-insurance stipulation be read broadly to encompass all three "Bank of America" entities.

The Eighth Circuit, though, wasn't persuaded:

the evidence presented in the instant case does not show how the three different entities are structured or how funds were disbursed. No evidence was offered to show that the mortgage financed by Bank of America, N.A. was actually financed by funds from Bank of America. The witnesses called by the government were low-level employees, none of whom were shown to be qualified to testify about the corporate structure of the different entities. The fact that employees used the terms "Bank of America," "Bank of America, N.A.," and "Bank of America Mortgage" interchangeably in their testimony and on internal correspondence does not establish that the entities are one and the same.

And, with that, Ms. Alexander's conviction for making false statements to the Bank of America N.A. was reversed because there wasn't evidence that Bank of America N.A. or Bank of America Mortgage were FDIC-insured.

Sadly, Ms. Alexander was convicted on another count involving HUD insurance for the mortgage and there's no question that HUD is a federal program.

But at least she gets to be resentenced without the FDIC count.