Tuesday, February 24, 2009

Money Laundering and Relevant Conduct

In US v. Blackmon, No. 07-4237 (2/23/09), the 3rd Circuit addressed the interplay between the money laundering guideline, USSG 2S1.1(a), and relevant conduct, USSG 1B1.3. The Circuit accurately warned that the discussion of these issues is "abstruse."

The Circuit held (1) that the district court correctly applied the guidelines for "direct money laundering" under USSG 2S1.1(a)(1) because defendant was accountable for the underlying offense of drug distribution; and (2) that the district court properly counted as relevant conduct for the money laundering guidelines the cocaine conspiracy that defendant was involved in.

Blackmon pleaded guilty to conspiracy to distribute over 5 kilos of cocaine, and to money laundering. The conspiracy involved Blackmon shipping Fed Ex packages of cocaine from California to conspirators in Philadelphia, in exchange for packages of cash that the coconspirators sent back to Blackmon. The FBI arrested the coconspirators, who began cooperating. FBI then set up a sting in which one of the coconspirators sent $15,000 to Blackmon as payment for a shipment of 1 kilo of cocaine. This constituted money laundering because the coconspirator stated that the money itself was the proceeds of drug trafficking. The FBI arrested Blackmon after seeing him pick up the money.

The Circuit ruled that Blackmon was engaged in "direct money laundering" under USSG 2S1.1(a)(1) because he committed the underlying offense of drug trafficking by agreeing to send the coconspirator cocaine.

The Circuit next ruled that in calculating the guidelines range for the money laundering, the district court correctly included as relevant conduct all of the drug trafficking from the conspiracy count. The Court rejected the defense argument that the money laundering offense level should be based only on the 1 kilo of cocaine to be sent in exchange for the $15,000. The Court reasoned that the more than 150 kilos from the cocaine conspiracy should be included as relevant conduct for the money laundering because it was relevant conduct for the drug distribution that was the underlying crime.

Monday, February 23, 2009

Conviction Reversed for Erroneous Hearsay Admission; Court Holds Miranda Issue for Another Day

Held: Out-of-court statement by confidential informant that defendant was the person who sold him the drugs in question, made 50 minutes after event, was not admissible as a present sense impression under Rule 803(1) because it was not sufficiently contemporaneous and was made only after questioning by DEA agents.

After reversing a crack conviction but then vacating its decision on the government’s petition for rehearing, the original panel reversed again in a new opinion filed February 18 in United States v. Green, No. 06-2468, available here: http://www.ca3.uscourts.gov/opinarch/062468p1.pdf. Unfortunately, the new decision comes down without the Court’s previous finding of reversible Miranda error in what the government had called a "widely-used" interrogation tactic of presenting evidence to a suspect before reading the warnings. Instead, it relies exclusively on the erroneous admission of an informant’s prior out-of-court statement under the present sense impression exception to the hearsay rule.

The extended history of the case nonetheless underscores that counsel should be sure to challenge under Missouri v. Seibert, 542 U.S. 600 (2004), the admission of any post-Miranda statement that may have resulted from authorities’ confrontation of the defendant with evidence before administering the warnings. Given indications in the new Green decision that the court was troubled the issue had been waived, it is critical that these challenges not await appeal.

Artega Green was convicted of selling more than 50 grams of crack cocaine and sentenced to 151 months in prison. The government sought to have a confidential informant testify that Mr. Green was the individual with whom the informant appeared on a grainy video of the transaction. In a "rather dramatic turn of events," however, the informant said the video showed someone else entirely. Through a DEA agent, the government subsequently admitted as substantive evidence the informant’s prior statement identifying Mr. Green as the person who sold him drugs in the transaction charged in the indictment.

The court held the prior statement’s admission to be reversible error. The opinion reminds that the exception for "present sense impressions" requires "substantial contemporaneity of event and statement" so that "there is no time for deliberate fabrication" on the part of the declarant. This could not be said of the informant’s statement, the erroneous admission of which had likewise been identified in the court’s original opinion as an alternative ground for reversal.

The prosecution also admitted Mr. Green’s own statements before and after receiving Miranda warnings. Before the warnings, an agent sat Mr. Green in an interrogation room, advised him to say nothing, and played the video for him to watch. "The plan," the agent testified, "was not to Mirandize Artega Green until he saw the video." Otherwise, "it’s quite possible he would have said, I want to speak to my lawyer right away."

From the agent’s perspective, the plan worked. He described Mr. Green’s reaction in what might be mistaken for a clinical diagnosis: his "eyes kind of widened. He looked surprised. And the next statement was, can he see it again.… At the conclusion of the [second playing], the defendant kind of lowered his head, took like a sigh, a deep breath." He and another agent then read Mr. Green his rights and attempted to elicit a confession. When he stayed mum, they put him in a holding cell for more than an hour and then returned with an AUSA. After further prodding, Mr. Green stated that he had sold crack "only once, and gestured toward the video."

The panel’s original decision scrutinized the DEA’s "question first, Mirandize later" tactic and found it constitutionally wanting. Under Missouri v. Seibert and United States v. Naranjo, 426 F.3d 221 (3d Cir. 2005), the "threshold inquiry … is whether the timing of the Miranda warning was the product of a deliberate law enforcement tactic to withhold the requisite warnings at the commencement of questioning." If so, then "postwarning statements that are related to the substance of prewarning statements must be excluded unless curative measures are taken before the postwarning statement is made." The decision concluded in strong language that neither Mr. Green’s pre- nor post-Miranda statements should have been admitted. The "record in this case is unambiguous that the initial violation of Miranda was not merely hapless or inadvertent, but rather was ‘an intentional withholding that was part of a larger, nefarious plot’ to prevent Defendant from invoking his rights so as to gain his confession.… This dangerous practice is precisely the type of systematic circumvention of Miranda that the Supreme Court sought to root out in Seibert, and we must thus decline to countenance these highly irregular procedures here."

In its petition for rehearing and rehearing en banc, the United States argued that the decision established "a holding that is of considerable importance to law enforcement" because it "would invalidate the police practice of truthfully advising a suspect of the evidence against him after arrest, but before Miranda warnings are given." Separately, the government urged that the court was not free to reach the issue at all because Mr. Green had not specifically moved to suppress the post-Miranda statement under Seibert. Relying on the court of appeals’ decision in United States v. Rose, 538 F.3d 175 (3d Cir. 2008), the government argued that the failure to raise the issue via suppression motion waived its review on appeal even under a plain error standard.

In its new opinion, the court excised the Miranda/Seibert discussion. In a footnote, it explained that "the Government arguably violated Green’s rights under the Fifth Amendment and the Miranda doctrine," but that the hearsay error meant it "need not reach such constitutional issues at the present time." The court also took note of the government’s waiver argument but likewise stated that the alternative holding foreclosed any need to address the government’s contention "that Federal Rule of Criminal Procedure 12(e) and this Court’s recent ruling in United States v. Rose … prevent us from conducting a plain error review of these Miranda-related issues."

The panel’s excision of its earlier Miranda discussion despite apparently continuing concerns about the DEA’s tactics is a clear message that counsel should be on the lookout for Seibert claims and careful to raise them expressly by suppression motion.

Friday, February 13, 2009

Sentencing on Possession of Classified Documents

In United States v. Aquino, 2009 WL 279274 (Feb. 6, 2009), the defendant received and retained documents containing classified information government information pertaining to the current regime in the Phillipines, United States military strategy and training methods, and ongoing criminal investigations. Aquino pled to a single count under 18 U.S.C. § 793(e), which prohibits the willful transmission, communication, or retention of documents relating to the national defense of the United States by an unauthorized possessor. At the hearing Aquino admitted to retaining the documents and knowing the documents were classified and could be used to injure the United States or aid a foreign government.

At sentencing, the parties disagreed over which of the relevant guideline sections, § 2M3.2 (which carries a higher base offense level and covers statutes that proscribe diverse forms of obtaining and transmitting national defense information and carries a mens rea requirement that must have intent or reason to believe the information would injure the United States or be used to the advantage of a foreign government) or § 2M3.3 (with a lower offense level and applies to a range of statutes that proscribe various offenses involving the transmission or communication of national defense information and the disclosure or receipt of classified information) applied.

The district court applied §2M3.2, based mostly on the mens rea requirement. The Third Circuit reversed, holding that the applicable guideline section was §2M3.3, despite defendant's admission that he knew the documents could be used to injure the United States or to the advantage of a foreign nation. The Court found that the §2M3.2 mens rea requirement applied only to intangible information (as opposed to the tangible documents here) and required transmission rather than retaining of the information. Thus, §2M3.3 applied.

Habeas Corpus - Claims Relating Back/Ineffective Assistance

In Hodge v. United States, 2009 WL 235674 (Feb. 3, 2009), the Circuit held that defendant's ineffective assistance claim in his untimely supplemental memorandum and his right-to-appeal claim in his original habeas motion were tied to a common core of operative facts. Thus, the ineffective assistance claim relates back to his timely habeas motion, where both claims concerned erroneous advice provided by defendant's counsel regarding filing deadline for appeal. Failure to file notice of appeal was ineffective assistance.

Wednesday, February 11, 2009

Court Distinguishes Chapter Two and Chapter Three “Victims” under the Guidelines

In United States v. Kennedy, 2009 WL 250105 (Feb. 4, 2009), defendant worked for a non-profit corporation that received government benefit payments, held them in trust, and made disbursements for expenses for elderly persons unable to manage their own financial affairs. Kennedy was convicted of writing checks, mostly payable to cash, from the accounts of 34 beneficiaries. The non-profit and its insurer fully replenished the accounts from which money was taken. At sentencing, the court applied a two-point enhancement for ten or more victims (§ 2B1.1(b)(2)(a)) and a two-point enhancement for vulnerable victims (§ 3A1.1(b)(1)). On appeal, Kennedy challenged the enhancements.

The Third Circuit agreed that the § 2B1.1(b)(2)(a) enhancement, based on the number of victims, did not apply. The Court held that the account holders from whose accounts the defendant stole funds were not “victims” within the meaning of that enhancement where the account holders were completely reimbursed by defendant's employer and the employer's insurer before they even knew funds were missing from their accounts. Thus, they suffered no pecuniary harm, a prerequisite for being a “victim” under § 2B1.1.

The Court did uphold the vulnerable victim enhancement under § 3A1.1(b)(1), based on the same thirty-four account holders. Distinguishing “offense conduct”based chapter two enhancements from “relevant conduct” based chapter three enhancements, the Court reasoned that it was the account holders’ incapacity to manage their own financial affairs which was the reason for defendant’s management and access to their accounts– establishing the required nexus between the victim’s vulnerability and the crime’s ultimate success.

Friday, February 06, 2009

Puerto Rican Felony Conviction Qualifies as Predicate Offense under 18 U.S.C. §922(g)(1)

In United States v. Laboy-Torres, No. 08-1220, the defendant challenged his conviction for making a false statement to a licensed firearms dealer under 18 U.S.C. §922(a)(6), arguing that his previous conviction in Puerto Rico was not a domestic conviction under 18 U.S.C. §922(g)(1).

The defendant moved to dismiss the indictment, claiming that the government failed to adequately allege the materiality element of 18 U.S.C. §922(a)(6). Citing Small v. United States, 544 U.S. 385 (2005), the defendant argued that his Puerto Rican conviction was “foreign” and not “domestic,” and therefore it could not serve as a qualifying predicate offense under 18 U.S.C. §922(g)(1). According to the defendant, the existence of his Puerto Rican conviction was not material to the lawfulness of the sale because the foreign conviction did not make it illegal for him to purchase a firearm under 18 U.S.C. §922(g)(1). The trial court denied the defendant’s motion, ruling that his Puerto Rican conviction was domestic. The defendant pled guilty on the condition that he could appeal the trial court’s denial of his dismissal motion.

Retired Supreme Court Justice Sandra Day O’Connor, sitting by designation, wrote the opinion for the Court. Justice O’Connor determined that Small was inapplicable to the case because, unlike the Japanese conviction at issue in Small, the defendant’s Puerto Rican conviction was in fact “domestic.” In Small, the Supreme Court recognized a presumption that Congress intends its statutes to prohibit only domestic, not foreign, conduct. Consequently, Congress must also intend only domestic criminal acts to serve as predicate offenses for its statutes.

Justice O’Connor recognized that, as the Commonwealth of Puerto Rico was in essence a “State,” federal laws applied to Puerto Rican conduct. Therefore, based upon the presumption discussed in Small, the defendant’s Puerto Rican conviction was in fact domestic and therefore could serve as a qualifying predicate offense under 18 U.S.C. § 922(g)(1). As a result, Justice O’Connor affirmed the defendant’s conviction.

Thursday, February 05, 2009

Fourth Amendment Requires Initial Determination of "Seizure"

In United States v. Crandell, No. 07-4004 (Jan. 29, 2009), police responded to an anonymous tip regarding a Black male with blond-tipped dreadlocks in the area carrying a handgun in his waistband. The officers apparently recognized the tip as a description of the defendant. As the officers arrived in the area, they observed the defendant walking in their direction. The officers approached the defendant and conducted a pat down search of his person.

The trial court suppressed the gun as fruit of an illegal seizure under the Fourth Amendment. The court ruled that the anonymous tip was insufficient to support a reasonable suspicion to justify the stop. The trial court apparently assumed that police had seized the defendant when they initiated the pat down search. The government appealed, arguing that the defendant had not been seized pursuant to Fourth Amendment jurisprudence.

The Court reiterated that before the trial court could address the sufficiency of the anonymous tip to support the requisite reasonable suspicion for an investigatory stop, it first had to determine whether the encounter between the defendant and police implicated Fourth Amendment, i.e., whether the defendant had been seized.

The Third Circuit then provided a detailed discussion of the three forms of citizen-police interaction recognized by the Supreme Court, each of which requires a different level of scrutiny under the Fourth Amendment. At one end of the spectrum is a consensual encounter, where the officer merely requests information. The citizen may choose to engage in the encounter or terminate it. This consensual encounter involves the least amount of intrusion upon an individual’s Fourth Amendment rights, and therefore does not require the officer to develop a level of suspicion before he stops the individual. At the other end of the spectrum is a full arrest, for which police must have probable cause. Between the consensual encounter and the full arrest is the investigatory stop, which is more intrusive upon an individual’s Fourth Amendment rights than a consensual encounter, but less intrusive than a full arrest. To justify an investigatory stop, police must have a reasonable, articulable suspicion that the individual has engaged in criminal activity.

The Court also elucidated the meaning of "seizure" under the Fourth Amendment, clarifying that a seizure occurs when a citizen is restrained by police either by physical force or a show of authority.

The Court vacated the lower court’s ruling and remanded the case to allow the lower court to determine, based upon the facts and circumstances surrounding the encounter, whether the defendant initially had been subjected to a seizure or a consensual encounter.