Thursday, June 26, 2008
Hoffecker and a co-defendant set up an investment company located in the Bahamas purportedly to sell commodities. The opinion details the elaborate telemarketing investment scam.
The Government employed Jack Field, Hoffecker’s one-time lawyer and friend, as an informant. Hoffecker argued this was so outrageous that it violated Due Process.
The opinion explains at length that the two had been out of contact for 3 years. When they met again, Field clearly and repeatedly stated he would not act as lawyer in this new deal and that he no longer practiced law. There was no retainer, and no legal fees were charged. During the course of the investigation, the Government, which was aware of the potential attorney-client relationship problem, instructed Field to advise Hoffecker clearly and repeatedly that he was not serving as legal counsel. Investigators ensured that Field’s prior legal work would not be implicated by not inquiring about any previous privileged communications between Field and Hoffecker and by instructing Field not to divulge any such communications. Further, the Government employed a "taint team" to review all of the recorded conversations between Field and Hoffecker.
The Court rejected the Due Process claim, noting "Surely there is a delicious irony in the circumstance that . . . the Government conned the con man. . . . To call the evidence supporting Hoffecker’s claim "thin" would be generous as "microscopic" would be the more appropriate word.
The Court next reached the statute of limitations issue, which it viewed as the most potentially precedentially significant matter. Although the Court deemed the statute of limitations issue waived because the defendant failed to raise it in the lower court, it alternatively rejected it on its merits.
The statute of limitations requires that indictments for mail fraud and for conspiracy to commit mail and wire fraud must be "found" within five years of the commission of the offenses. "An indictment is found when it is returned by a grand jury and filed." The statute begins to run for mail fraud when a defendant "places, deposits, causes to be deposited, takes, or receives mail, or knowingly causes mail to be delivered, as part of the execution of a scheme to defraud," and for conspiracy when the conspirators commit the last overt act in furtherance of the conspiracy.
In play here was another statute - 18 U.S.C. § 3292 - which provides, a district court before which a grand jury is impaneled shall suspend the running of the statute of limitations upon application of the government "filed before return of an indictment, indicating that evidence of an offense is in a foreign country," "if the court finds by a preponderance of the evidence that an official request has been made for such evidence and that it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country. . . ."
Because the Government applied to suspend the statute of limitations before it received all of the evidence from the Bahamas, the Third Circuit ruled that it would not dismiss on statute of limitations grounds even if Hoffecker had preserved the issue for appeal. The Court also observes that it is irrelevant whether the Government receives any additional materials after it makes its request.
Additionally, appellant argued that the Government’s suspension application was improper because it was filed after the statute of limitations already had expired. The Court deemed this issue waived because it was not raised in the opening brief. A 28(J) letter is not sufficient to preserve an issue for appellate review when the issue was not included in the opening brief.
Hoffecker also maintained (1) Count One’s conspiracy charge was untimely because the indictment was found more than five years after the final overt act of the conspiracy and (2) the ex parte nature of the Government’s § 3292 tolling application was improper.
The Government maintained these claims were waived because, although Hoffecker raised them before the District Court by motion in the first trial and also raised them in his opening brief on appeal, he did not renew them in the District Court before the second trial.
The Court rejected this waiver argument, distinguishing a motion to dismiss indictment on statute of limitations grounds from a motion to dismiss based on evidentiary grounds. Requiring Hoffecker to reraise those issues before the retrial would have been "an exercise in wasteful formality."
Next, the Court rejected Hoffecker’s contention that the Government’s section 3292 suspension application was improper because the proceeding before the grand jury judge who granted the suspension order was ex parte. First, the statute itself does not provide that the party whose statute of limitation is being suspended is entitled to notice or a hearing. To interpret section 3292 to require notice or a hearing for a defendant "would be to ignore the traditionally
non-adversarial and secret nature of grand jury investigations." Further, to impose a notice requirement would undermine the confidentiality of a grand jury’s inquiry and give a potential defendant the opportunity to flee or destroy evidence.
After addressing the remaining eight issues, the court affirmed the judgment.
This was a government appeal from a pretrial order dismissing from the indictment various counts and allegations based on international money laundering.
The relevant statute requires businesses to file monthly reporting of gross receipts and to pay a 4% tax on those receipts. The mails were used for filing and payments.
The defendants here would collect the daily sales receipts, count the cash, and deposit, report and pay taxes only on a portion of the cash. From 1996 to 2001, tens of millions of dollars in cash was withheld in this manner.
The District Court found that the unpaid taxes cannot be considered "proceeds" of mail fraud because such tax savings (1) represented a percentage of unreported gross receipts that had been procured through lawful activity (the day to day business of the Supermarket) and, thus, could not be categorized as "proceeds" from an unlawful activity; and (2) were merely retained, rather than obtained.
After noting that the federal money laundering statute does not define "proceeds", the Third Circuit held "simply because funds are originally procured through lawful activity does not mean that one cannot thereafter convert those same funds into the "proceeds" of an unlawful activity." Following Supreme Court precedent and its own prior decision, the Court held "that unpaid taxes, which are unlawfully disguised and retained by means of the filing of false tax returns through the U.S. mail, constitute ‘proceeds’ of mail fraud for purposes of supporting a charge of federal money laundering."
The Court also considered whether "use of the mails" was "in furtherance of the scheme." Here, "[t]he use of the mail to file fraudulent tax returns and fail to pay all taxes owed was not only incident to an essential part of the scheme, but also was clearly an essential part of the scheme because such mailings were the defendants’ way of concealing the scheme itself by making the fraudulently reported gross receipts seem legitimate."
Monday, June 16, 2008
(1) Courts must continue to calculate a defendant's Guidelines sentence precisely as they would have before United States v. Booker, 543 U.S. 220 (2005).
(2) In doing so, they must formally rule on the motions of both parties and state on the record whether they are granting a departure and how that departure affects the Guidelines calculation, and take into account the Circuit's pre-Booker case law, which continues to have advisory force; and
(3) Finally, courts are required to exercise their discretion by considering the relevant 18 U.S.C. § 3553(a) factors in setting the sentence they impose regardless whether it varies from the sentence calculated under the Guidelines.
Facts & Procedural History: Detectives found Gunter in a motel with 72.5 grams of crack and a loaded firearm. Gunter was indicted for conspiracy to distribute in excess of 50 grams of crack (in violation of 21 U.S.C. § 846), possession with intent to distribute in excess of 50 grams of crack (in violation of 21 U.S.C. § 841(a)(1)), possession of crack with the intent to distribute within 1,000 feet of a school (in violation of 21 U.S.C. § 860(a)), carrying a firearm during and in relation to a drug trafficking crime (in violation of 18 U.S.C. § 924(c)), and possession of a firearm by a convicted felon (in violation of 18 U.S.C. § 922(g)(1)). A jury convicted Gunter on all counts.
Gunter asked the District Court to sentence him below his Guidelines range on several grounds, including the “disparity” created by the longer sentences recommended for offenses involving crack cocaine. The District Court refused to do so, stating that it could not “second guess Congress' ... intent.” The Third Circuit reversed and remanded for resentencing.
On remand, and pursuant to the Third Circuit’s precedential opinion in United States v. Gunter, 462 F.3d 237 (3d Cir. 2006), the District Court held a second sentencing hearing. The court adopted the Guidelines range from the first sentencing hearing, which included a range of 235 to 293 months' imprisonment for the drug offenses, plus a consecutive 60 months' imprisonment for the 18 U.S.C. § 924(c) offense. This led to a total Guidelines range of 295 to 353 months' imprisonment.
The District Court imposed a below-Guidelines sentence of 283 months' imprisonment. Gunter appealed, arguing that although the District Court recognized correctly that it could not establish a new crack-to-powder ratio for purposes of calculating the Guidelines range under Step 1, the District Court incorrectly concluded that it could not disagree with the Guidelines at Step 3 solely on policy grounds.
Court's Analysis: Pursuant to United States v. Booker, 543 U.S. 220 (2005), and United States v. Cooper, 437 F.3d 324 (3d Cir. 2006), the Third Circuit reviewed Gunter’s sentence for reasonableness. The Court cited United States v. Gall, 128 S.Ct. 586 (2007) and its recent sentencing jurisprudence, which held that the district courts' sentencing decisions are to be reviewed under a deferential abuse of discretion standard. The Court noted the continuing vitality of its decision in United States v. Cooper, 437 F.3d 324 (3d Cir. 2006), which should be read in light of Gall, and the district court's broad sentencing discretion.
Turning to its prior Gunter decision (462 F.3d 237), the Court stated that Gall reemphasized the post-Booker sentencing structure set forth in the Court's precedent. After reviewing the entire sentencing transcript, the Court determined that the District Court "was cognizant of and acted consistent with the caselaw of this Circuit and recent rulings of the Supreme Court pertaining to the crack-to-powder ratio."
The Court explained:
The Court noted that Ricks was followed by the Supreme Court's decision in Kimbrough v. United States, 128 S.Ct. 558 (2007), which stated that it would not be an abuse of discretion for district courts to conclude when sentencing a particular defendant that the crack/powder disparity yields a sentence greater than necessary to achieve § 3553(a)'s purposes. Stating that Kimbrough's language was consistent with the Court's own statements in Ricks and Gunter: the Court stated:
Once Steps 1 and 2 of the sentencing process are completed, Gunter allows district courts to consider the crack-to-powder ratio along with the 3553(a) factors at Step 3 when sentencing defendants, noting that “the District Court erred under Booker in treating the crack/powder cocaine sentencing differential ... as mandatory.” Gunter, 462 F.3d at 248-49. Nevertheless, Gunter prohibits categorical rejection of the 100:1 ratio. Id. at 249 (“[W]e do not suggest (or even hint) that the Court categorically reject the 100:1 ratio and substitute its own, as this is verboten.”). On the surface, these two principles appear to conflict somewhat.
This Court used its decision in United States v. Ricks, 494 F.3d 394 (3d Cir. 2007), to clear up any confusion in the Gunter holding . . . [D]istrict courts should first calculate the correct Guidelines range and rule on any departure motions. . . . This obviously means that a correct Guidelines sentence must be made using the applicable Guidelines crack-to-powder ratio. Failure to properly calculate the Guidelines is a procedural error that requires remand unless the error is harmless. Ricks further explained that at Step 3, the district court cannot categorically disagree with the crack-to-powder sentencing disparity; rather, the district court may consider the disparity, but only in reference to individual, case-specific factors under 18 U.S.C. §
3553(a). The Court stated: ‘In short, a district court may, at step three, view the sentencing disparity as too vast. However, it must do so as applied to the particular defendant that appears before the court.’
Simply put, a district court may not employ a “rubber stamp” approach that categorically rejects the crack/powder disparity without an individualized assessment of the § 3553(a) factors and the facts of a particular case. Such an approach would be tantamount to the district court setting its own crack/powder ratio, which Gunter and Ricks forbid. Nevertheless, even in an ordinary case, the district court may determine that the crack/powder ratio yields a sentence that is greater than necessary after giving proper consideration to the § 3553(a) factors and the circumstances of the particular case. The district court would then be free to disagree with the policy underlying the crack/powder ratio as applied to that particular defendant and make an appropriate downward variance in its sentence. The difference between what a court may do and may not do goes beyond mere words. There must be meaningful consideration of the § 3553(a) factors and the particular circumstances of the case before a
variance is made.
The Third Circuit concluded that the District Court carefully considered all of the relevant § 3553(a) factors and made a variance below the Guidelines range, noting in particular Appellant's “efforts at reducing the chances of recidivism and increasing the chances for successful supervised release.” The below-Guidelines variance further illustrates the District Court's understanding of the advisory nature of the Guidelines. Because the District Court complied with the controlling case law of this Circuit and the Supreme Court, the Court affirmed the overall length of the District Court's sentence.
The Court, however, vacated Gunter's sentence on Count 5, because the District Court's concurrent sentence of 223 months on Count 5, which charged a violation of 18 U.S.C. § 922(g), exceeded the statutory maximum of 10 years. On remand, the District Court must reduce Gunter's sentence to no more than 120 months. This change does not affect the overall sentence of 283 months.
Monday, June 09, 2008
Third Circuit clarifies appellate procedure and substantive sentencing rules (including an issue of first impression) in favor of defendants
On appeal, the Third Circuit vacated the District Court’s judgment and remanded for re-sentencing. Although the Court, in a 2-1 decision, found that the trial evidence was sufficient to uphold Miller’s conviction for receiving pornography, the Court unanimously accepted Miller’s argument that the Double Jeopardy Clause barred convictions for both receiving and possessing the same images (Miller did not challenge the possession conviction), and thus the District Court’s entry of guilty verdicts on both counts was plain error . Further, the Court ruled that the trial record did not support a finding of perjury, and therefore the two-level obstruction of justice enhancement was improper.
Addressing first Miller’s sufficiency-of-the-evidence argument, the Court, as a threshold matter, rejected the Government’s argument that Miller waived a sufficiency-of-the-evidence claim on appeal because he did not raise the issue during trial via a motion under Fed. R. Crim. P. 29(a), but rather, filed a timely post-trial motion for acquittal under Rule 29(c). The Court held that the language of Rule 29(c) makes clear that a court of appeals has authority "to exercise plenary review over a claim raised in a [timely] Rule 29(c) motion without regard to whether the claim was earlier raised in a Rule 29(a) motion."
The Court then turned to Miller’s argument that while there may have been sufficient evidence to support a conviction for possessing child pornography, that evidence was insufficient to support a conviction for receiving, and to conclude otherwise, Miller argued, would "extinguish the distinction between the offense of knowing receipt and the offense of knowing possession." The Court agreed that a conviction for receiving child pornography "must be supported by a greater quantum of evidence than that minimally required to prove guilt of possessing child pornography," noting that "a person may come to knowingly possess a computer file without ever knowingly receiving it" and thus "while a person who ‘knowingly receives’ child pornography will necessarily ‘knowingly possess’ child pornography, the obverse is not the case." But having concluded that Miller raised a "colorable" sufficiency-of-the -evidence issue for appeal on the receiving count, the Court concluded that "considering all of the evidence in its totality," even though "there certainly is evidence that Miller did not receive the images knowingly a reasonable juror could look to contrary evidence and conclude otherwise."
The Court next addressed Miller’s argument – not raised in the District Court, and thus reviewed for plain error – that the District Court’s entry of separate convictions for receiving and possessing child pornography violated the Double Jeopardy Clause because § 2252A(a)(5)(B) punishes a lesser included offense of that punished by § 2252A(a)(2). Though observing that this issue was one of first impression in this Circuit, the Court stated that the law was clear as a general matter that possession of a contraband item is a lesser-included offense of receipt of the item, citing Ball v. United States, 470 U.S. 856 (1985). Ruling that Ball controlled, the Court held that § 2252A(a)(5)(B) is a lesser included offense of § 2252A(a)(2), and that entry of separate convictions for the same offense contravenes the Double Jeopardy Clause – and that such error met the standards for plain error review.
In so ruling, the Court rejected the Government’s argument that § 2252A(a)(2) and § 2252A(a)(5)(B) punish separate offenses because § 2252A(d) provides an affirmative offense to a defendant who possessed less than three images of child pornography and either promptly took reasonable steps to destroy them or reported the matter to law enforcement. The Government argued that this potentially available affirmative defense constitutes an additional "element" of § 2252A(a)(5)(B) for double jeopardy purposes. The Court held, however, that the possibility that a defendant could assert an affirmative defense under § 2252A(a)(5)(B) was "immaterial to whether the two offenses are the same under the same-elements test" of Blockburger v. United States, 284 U.S. 299, 304 (1932). Under the same-elements test, affirmative defenses are not to be considered in comparing the charged offenses – the elements to be considered are only "those that must necessarily be proved to establish the commission of a charged offense."
Finally, the Court addressed Miller’s argument that the District Court erred in finding that he committed perjury during trial in his testimony about the nature of his adult pornography collection. Miller argued that the District Court erroneously concluded that he gave willfully false testimony on a material matter when he testified at trial – in response to the question "[d]id you have [adult] sadomasochistic pictures?" — "[n]ot that I’m aware of, no."
As an initial matter, the Court found that there was no basis to find – as a sentencing enhancement for perjury would require – that Miller was both aware that he possessed the asserted "sadomasochistic" images, and that he considered those particular images to be "sadomasochistic." The Court rejected the District Court’s inference that Miller was aware that he possessed those adult images simply because they were found on the same zip disk containing the images of child pornography, which the jury found that he knowingly possessed. The Court held that the jury’s verdict of knowing possession of some illegal images on the zip disk was "not, of itself, sufficient to support a finding that Miller willfully gave false testimony . . . . the perjury of the defendant must . . . be clearly established, and supported by evidence other than the jury’s having disbelieved him."
Further, the Court found that Miller’s response could not be found to be willfully false because the Government’s question was insufficiently precise, in two respects. First, the Government did not lay a proper foundation for the question "Did you have sadomasochistic pictures?" The Government was referring to five specific image files, but never established at trial– through Miller, any other witness, or a proffer of the images themselves – that Miller knew what images the Government was referring to. The Court reasoned that "[w]ithout such a foundation, there is no basis for concluding that Miller was aware of which assertedly ‘sadomasochistic pictures’ the prosecutor might have had in mind."
Second, the Court found that even if Miller had been aware that he possessed those particular five images, the Government’s questioning failed to establish that Miller’s testimony was willfully false when he denied possession of "sadomasochistic" pictures. The Court found that because the Government did not clarify that Miller understood the meaning of the term "sadomasochistic" – which the Court found to be "both contested and context-dependent" – the Government provided no basis for the Court to conclude that Miller was aware that he possessed pictures that he believed to be "sadomasochistic."
Finally, the Court held that the District Court erred in finding that Miller’s allegedly false testimony concerned a matter that was "material." The District Court found that testimony about images of adult sadomasochism were material to Miller’s offense because possession of such images "may well reflect interests in more deviant sexual practices." The Court of Appeals rejected that conclusion, holding – in line with decisions in the Second and Fifth Circuits – that "a defendant’s interest in unusual adult pornography is irrelevant to whether he is guilty of a child pornography count."
Circuit Judge Rendell filed a separate opinion concurring in part and dissenting in part. Judge Rendell agreed with the majority that knowing possession of child pornography is a lesser-included offense of knowing receipt, and that the perjury enhancement was improperly applied.
But Judge Rendell disagreed with the majority on the sufficiency-of-evidence issue, concluding that the trial evidence was insufficient to support a verdict that Miller knowingly received 11 images of child pornography included in computer files that totaled more than 1200 images. Judge Rendell noted that the record included "no non-speculative evidence that would tend to show, let alone prove beyond a reasonable doubt, that Miller received the 11 images . . . knowing that they were child pornography." Judge Rendell reasoned that "[g]iven the amazing capabilities of technology to trace and find, backtrack and connect, so as to prove the source and path of computer-generated and -transmitted data, the sheer inability of the Government to posit a non-speculative explanation as to how these images came to be [in Miller’s possession], let alone prove they were "knowingly received" by Miller is, to me, striking."
Customs and Border Protection Officer's Haboring Conviction Reversed While Bribery Conviction Upheld
On appeal, Ozcelik challenged the sufficiency of the evidence on both counts of conviction. While the Court of Appeals upheld the bribery conviction, it found, as a matter of first impression, that merely counseling an alien to maintain a low profile and live at a different address did not constitute "shielding, harboring, and concealing" within the meaning of § 1324(a)(1)(A)(iii) which states, in part: "Any person who . . . knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law, conceals, harbors, or shields from detection, or attempts to conceal, harbor, or shield from detection, such alien in any place, including any building or any means of transportation . . . shall be punished . . . ."
The Court of Appeals summarized the precise conduct that gave rise to the conviction was as follows: During their March 24 meeting, Ozcelik stated to Tuncer, "You are not going to get involved in anything for 3-5 months in order to keep your status. Go to your work and come back home in silence, cook your food, do that only." Ozcelik continued, "The most important thing is for you to not get involved in anything here, to not get involved in any activity." App. at 989. In a similar vein, Ozcelik said to Tuncer, "That’s why I’m telling you to stay away from everything for 4-5 months. Stay away from everything. Are you going to your job? Go, then come back home." Ozcelik also commented that "it is a good thing that you’ve changed your address. I mean your legal address is different. You are living with a friend here. Disappear, don’t tell anyone what address you’re staying at." Later, he said, "Stay away. Stay away from everything for 5-6 months. . . . Especially the address thing is very important." Ozcelik stated, "[A]s I said before stay low key for 5-6 months, because you do not have any rights." In a later recorded telephone conversation, Ozcelik said to Tuncer, "I told you, don’t do anything, I mean don’t go left and right a lot."
Summarizing appellate authority on the issue, the Court recognized that activity short of sheltering an alien violates the statute. For example, in United States v. Rubio-Gonzalez, 674 F.2d 1076 (5th Cir. 1982), the Fifth Circuit upheld a conviction where the defendant warned aliens at a work site of the presence of an INS agent conducting an investigation. While the Court in Ozcelik agreed "that the terms ‘shielding,’ ‘harboring,’ and ‘concealing’ under § 1324 encompass conduct ‘tending to substantially facilitate an alien’s remaining in the United States illegally’ and to prevent Government authorities from detecting the alien’s unlawful presence, Ozcelik’s counsel did not. The Court concluded: "we view Ozcelik’s comments as general advice to, in effect, keep a low profile and not do anything illegal. Ozcelik suggested that Tuncer stay out of trouble. Telling an illegal alien to stay out of trouble does not tend substantially to facilitate the alien remaining in the country; rather, it simply states an obvious proposition that anyone would know or could easily ascertain from almost any source." Accordingly, the § 1324 conviction was reversed.
Ozcelik also challenged the sufficiency of the evidence on his bribery conviction under 18 U.S.C. § 201(b)(2) which prohibits a public official from seeking or accepting anything of value in exchange for "(A) being influenced in the performance of any official act; (B) being influenced to commit or aid in committing, or to collude in, or allow, any fraud, or make opportunity for the commission of any fraud, on the United States; or (C) being induced to do or omit to do any act in violation of the official duty of such official or person." The elements of the offense are that: "(1) defendant must be a public official, (2) who directly or indirectly demanded, sought, received, accepted, or agreed to receive or accept anything of value personally or for any other person or entity, and (3) did so specifically for one of the three corrupt purposes set forth in subsections (A) through (C)." The Court determined that there was no dispute that Ozcelik was a public official and that he took money from Tuncer, the issues were whether he took the money with corrupt intent and whether there was sufficient evidence that Ozcelik had taken "official action" as a result of the bribe. The Court of Appeals framed the issue as whether Ozcelik aided and abetted other unnamed INS officials to alter Tuncer’s records. The Government conceded that the only evidence that Ozcelik had done so were his own statements to Tuncer that he had friends in the INS who would alter Tuncer’s records. Recognizing that the crime of bribery is committed when the official agrees to perform the act, and that completion of the act is not necessary, the Court found that the crime had been completed when Ozcelik’s friend at INS had agreed to alter Tuncer’s status. Passing on the sufficiency of the evidence, the Court concluded; "Indeed, the only evidence the Government produced at trial that the unnamed friend at INS existed was Ozcelik’s own statements to that effect. But we are not permitted to assess credibility. And as such, we cannot say as a matter of law that no reasonable juror could accept the Government’s theory premised upon Ozcelik’s own statements." Accordingly, the bribery conviction was affirmed.