United States v. Steve Hale (4th Cir, 5/17/17): Fences, Addicts, and Stolen Goods, Oh My! The Fourth Circuit Upholds Denial of Willful Blindness Jury Instruction.

This is an important case because of the attention it directs to the willful blindness jury instruction. Steve Hale was convicted of a whole host of violations– transporting stolen property in interstate commerce, knowing the goods to have been stolen, conspiring to do the same, of making false statements on his tax returns, failing to collect and pay employee taxes, and obstructing justice. His main argument on appeal was that the District Court judge erred in giving the jury a willful blindness instruction that informed the jury that he knew the property at issue was stolen. He raised other challenges, but the most interesting other claim (in my humble opinion) relates to the statements the government made to the jury during closing argument.

Essentially this scheme involved a number of drug addicts in and around the Gastonia, North Carolina area who would go into stores and shoplift large amounts of over the counter medications and health and beauty aids.  They operated in groups of 2-4 people. These addicts would then take their bounty and hand them over to a fence. The fence would then remove the stickers and other identifying information that showed that the goods were coming from a particular store. Then these fences would sell the materials to Hale who would then sell these products on the secondary market.

During the course of its investigation, law-enforcement surveillance showed that one particular fence, “Bridges”, regularly delivered stolen merchandise to Hale’s warehouse. Bridges and others delivered their products in plastic garbage bags, plastic storage bins, and boxes. Hale paid cash for the merchandise that was delivered. On October 20, 2010, agents intercepted a FedEx shipment from the warehouse to another person in the Boca Raton, Florida area. In that shipment were items that the officers had marked with an ultraviolet light prior to having a cooperating witness sell the items to Bridges. In short, law enforcement was tracking where some of these materials were being transported. Later, law-enforcement executed a search warrant at Hale’s warehouse and found numerous shelves with merchandise, and a “cleaning station” where there were different products for use to remove stickers, sensors, and glue.

At trial, numerous witnesses testified to their relationships with one another and with Hale. A number of these people met at flea markets, where apparently there is a vibrant trade in moving stolen goods. Who knew? One witness testified that Hale told him that he made $18,000 in a “bad month.” Apparently trafficking in stolen goods can be a very lucrative endeavor.

At the end of the government’s case, Hale made a motion for a judgment of acquittal that the district court denied. Hale’s attorney also objected to the district court’s decision to provide the jury with a willful blindness instruction. After conviction, Hale received a 97 month prison sentence.

On appeal, Hale argued that the District Court judge erred in giving the jury a willful blindness jury instruction. As the Court notes, for a jury to convict Hale of transporting stolen goods in interstate commerce, the government had to prove that Hale knew that the goods he was transporting were stolen.  See 18 U.S.C. §2314.   In order to meet this burden of proof, the government could either show that Hale actually knew the materials were stolen, or by presenting evidence that he had made himself deliberately ignorant of the fact that the goods were stolen.  It is a deeply rooted principle of law that criminal defendants cannot escape the reach of criminal statutes by shielding themselves from clear evidence of critical facts that are so strongly suggested by the circumstances.  Global-Tech Appliances, Inc. v. SEB S.A, 563 U.S.754, 766 (2011); see also United States v. Jinwright, 683 F.3d 471 (4th Cir. 2012).  The application of the willful blindness doctrine has two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists, and (2) the defendant must take deliberate actions to avoid learning of that fact.”  Global-Tech Appliances, 563 U.S. at 769.   Here, the Court found there was ample evidence to support that Hale knew there was a high probability that the goods he was buying and selling were stolen. He testified at trial that based on his prior experience he knew there was a very big risk of people selling over the counter medicine and health and beauty aids at flea markets could be first level fences who had bought the goods at deep discounts from professional shoplifters. And the Court also found that Hale took deliberate actions to avoid confirming the goods were stolen because he was careful never to ask his fence about where she was receiving her items or why so many of her goods were marked with stickers indicating that they belonged on the shelves of local stores. The Court also continued to show that Hale fully knew the goods were stolen, including evidence that he tried to disguise his suppliers’ identities.  In short, the Court found sufficient evidence existed to support the willful blindness jury instruction.

Hale also argued that the willful blindness instruction that the District Court judge gave was inaccurate, but the Fourth Circuit disagreed, finding that, considered as a whole, the jury instruction “accurately and fairly state[d] the controlling law.” United States v. Rahman, 83 F.3d 89, 92 (4th Cir. 1996).

Hale also raised on appeal the argument that the prosecutor engaged in misconduct by presenting a closing argument that focused on how Hale denigrated the community by feeding individuals’ addiction, and by indirectly lining the pockets of drug dealers. He argued that this blatant appeal the passions and prejudices of the jury was improper and deprived him of a fair trial. Unfortunately for Mr. Hale, he did not object to this argument at trial. For that reason, the Fourth Circuit reviewed the claim under the plain error standard. The court rejected the claim and found that in light of the strength of the government’s case, the prosecutor’s remarks did not substantially prejudice Hale’s substantial rights resulting in the deprivation of his right to a fair trial.  That’s too bad, because this argument was clearly improper.

An unfortunate conviction for Hale, but a good primer on the willful blindness jury instruction for others.

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US v. Karen Kimble (4th Cir, filed 5/2/17): Search and Seizure Issue– Agents Empowered to Take Cash If Reasonable Agent Would Have Thought It Covered by the Warrant (and even when the Agents thought it related to crime beyond the scope of the warrant).

This is a really interesting search issue, in my opinion, and confirms that hard cases sometimes make for bad law. I don’t think I agree with this decision, frankly, although it’s easy to see how the Court would not be inclined to suppress the fruits of this search.

Kimble was convicted after a bench trial during which the Government proved that she committed a number of schemes involving tax and visa application fraud, and aggravated identity theft.  Here’s how the series of events unfolded:  In 2007, Kimble participated in an immigration scheme with Tamim Mamah, a native of Ghana.  Mamah earlier attempted to get a green card by way of a fraudulent marriage.  When that didn’t work, Kimble filed, under the former wife’s name, for a divorce from Mamah. Then Kimble submitted a new green card application on Mamah’s behalf, using a marriage certificate listing herself as Mamah’s wife. During that same time frame, she also committed perjury when Mamah’s brother was charged in connection with heroin distribution.  She took the stand in that trial and essentially testified to facts she claimed she witnessed while in Africa. Only, she was not in Africa during that relevant time frame.  Then, Kimble offered herself as a tax preparer. She prepared taxes, but she inflated numbers, gave her clients different returns, and pocketed the difference to the total of $222,000 of skimmed monies. Very naughty behavior.

In July 2011, the Department of Homeland Security obtained a search warrant in connection with its investigation into Kimble’s marriage and immigration fraud and perjury.  In its affidavit, it asserted probable cause to believe her home contained evidence of perjury, marriage and immigration fraud, and false statements.  An attachment to that warrant stated that the search would enable the government to seize “[a]ny and all records and documents relating to the travel of [Defendant] to Ghana in 2006 including but not limited to… documents, correspondence, notes, statements, receipts or other records that reference or indicate fraudulent activity and items evidencing the obtaining, secretly, transferring, concealment and or expenditure illegal proceeds and currency to include cash.”

The agents executed a search warrant on July 29, 2011. At the beginning of the search, the agents asked Kimbel if she had any valuables in the house. She told him that she had some cash in a laundry basket. The agents searched the basket and found $41,000. When the agents asked her about the source of the funds, she told them that the money did not belong to her and that she had received the money from a stranger about a week earlier and that she was holding it for her husband. The officers were aware that her husband had been detained on a narcotics distribution charge, and so they took the money on suspicion that it derived from illegal drug activity.

Several months later Kimbel filed a claim to recover the seized funds. This time she told the officers that the money was proceeds of an insurance claim she filed after her home was damaged in a fire. Based on her changing account of the source of the funds, investigators subpoenaed her bank records in an attempt to confirm the source of the seized funds.  Once they reviewed those records, they found the numerous deposits from the IRS which they later figured out were the inflated refunds from her tax scheme.  In other words, they discovered her tax fraud, about which, until then, they had been unaware.

Kimbel was then indicted. She motioned the Court to suppress all the evidence obtained from the search of her house. Specifically, she argued that the government exceeded the scope of the warrant when it seized money it believed was related to drugs when the warrant itself only pertained to the perjury and immigration charges. Campbell argued that because the cash was improperly seized, any evidence obtained as a result of her efforts to reclaim that money amounted to the fruit of the illegal seizure and therefore was subject to exclusion at trial.

In this appeal, the Court assessed whether the government agents exceeded the scope of the search warrant. The court reviews the district courts legal conclusions regarding the scope of the warrant de novo and a factual findings underlying the conclusions for clear error.  United States v. Phillips, 588 F.3d 218, 223 (4th Cir. 2009).

The Fourth Amendment protects “[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures” and provides that “no Warrants shall issue, but upon probable cause, supported by Oath or  affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”  U.S. Const. amend. IV. The particularity requirement protects against a general, exploratory rummaging in a person’s belongings to the extent that a valid warrant leaves nothing to the discretion of the officers performing the search.  See United States v. Robinson, 275 F.3d 371 (4th Cir. 2001).

Here, Kimbel argued that the seizure of the cash violated the Fourth Amendment because the warrant permitted the agents to seize evidence relating only to her travel to Ghana, the subject of her perjured testimony. In support of this argument, she pointed to the language of Attachment B to the warrant which included the phrase “any and all records and documents relating to the travel of defendant to Ghana and 2006.”   She argued that the money, which the agents initially believed was linked to unrelated drug activity, exceeded the scope of the warrant because it could not have been related to her alleged perjury. The Court disagreed.   According to the Court, the scope of the search conducted pursuant to a warrant is defined objectively by the terms of the warrant in the oven and sought, not by the subjective motivations of an officer.  See United States v. Srivastava, 540 F.3d 277, 287 (4th Cir. 2008) (“In analyzing the constitutionality of a search warrant execution, we must conduct an objective assessment of the executing officers’ actions in light of the facts and circumstances confronting him at the time, rather than make a subjective a valuation of the officers’ actual state of mind at the time the challenged action was taken”).  In upholding the constitutionality of this search and seizure, the Court concluded that a reasonable officer could have found that the $41,000 could have constituted potential evidence of the marriage fraud, false statements, unlawful procurement of citizenship, or perjury charges.  In other words, it didn’t matter that the officers actually intended to exceed the scope of the warrant, so long as a reasonable agent would have thought these additional items were relevant to the search.  Therefore, the seizure did not exceed the scope of the warrant, and the district court correctly denied Kimbel’s motion to suppress.

The Court also addressed a sufficiency of the evidence claim relating to the tax and wire fraud charges.  The Court rejected those arguments as well.  Not a good outcome for Ms. Kimble, nor anyone else challenging the scope of a search warrant.  But here, some artwork from Nanart Agyemang, a Ghanian artist:

 

Cockrow

 

 

 

United States v. Shalhoub (11th Cir., 4/28/17); Fugitive Disenfranchisement Doctrine, and a Bunch of Remedies that the Eleventh Circuit Declines to Apply to Appellant’s Case

I like this case because it implicates a number of legal remedies that one does not ordinarily encounter during the course of things, and legal remedies are fun. Here, Shalhoub is a citizen of Saudi Arabia and lives there now.  Formerly, he was married to an American citizen with whom he had a child.  The specifics are not laid out, but it appears that while he and his child were in Saudi Arabia, a decision was made to stay there in violation of the child custody arrangements made during the course of their divorce.  All this happened roughly 20 years ago and Shalhoub was indicted on one count of international parental kidnapping in violation of 18 USC §1204.

Fast forward and Shalhoub wanted to hire a lawyer to appear for him in the United States and contest the indictment.  He did not want to show up himself.  The district court said, “no way” and Shalhoub appealed arguing that the denial of his right to have a lawyer appear on his behalf while he is a fugitive from justice is an immediately appealable collateral order and, if not, that the 11th Circuit should issue a writ of mandamus to compel a ruling on the motion to dismiss the indictment without requiring him to appear in court.

The fugitive disentitlement doctrine allows a district court to “sanction or enter judgment against parties on the basis of their fugitive status.”  Magluta v. Samples, 162 F.3d 662, 664 (11th Cir. 1998).  Essentially, courts do not like it when people flee from their jurisdiction.  This doctrine discourages flights from justice and protects the dignity of the courts.  Ortega-Rodriguez v. United States, 507 U.S. 234 (1993).  Shalhoub argued that application of this doctrine to his case was error.  The 11th Circuit found that it lacked jurisdiction over this case because a final judgment has not been entered.  The “final judgment rule” prohibits appellate review of a pretrial order in a criminal case “until conviction and imposition of sentence.”  Flanagan v. United States, 465 U.S. 259, 263 (1984).  An exception to the final judgment rule is the “collateral order doctrine” which allows review of an order that (1) conclusively determines the disputed question, (2) resolves an important issue completely separate from the merits of the action, and (3) is effectively unreviewable on appeal from a final judgment.”  Since Shalhoub was neither convicted nor sentenced, the Eleventh Circuit found it did not have jurisdiction.

Shalhoub also argued the Court could decide the case under the doctrine of “marginal finality.” An order that presents a question of “marginal” finality “fundamental to the further conduct of the case” is immediately appealable.  Gillespie v. U.S. Steel Corp., 379 U.S. 148, 152, 154 (1964).  As the Court notes, however, that case was limited to the unique facts of that particular case. The Court once again declined and found that it was inconsistent for a litigant to assert that the Court has appellate jurisdiction under the collateral order doctrine, which requires the issue resolved to be completely separate from the merits, and the marginal finality doctrine which addresses the review of intermediate issues “fundamental to the further conduct of the case.”  See Alt. Fed. Sav. & Loan Ass’n of Ft. Launderdale v. Blythe Eastman Paine Webber, Inc., 890 F.2d 371, 377 (11th Cir. 1989).

And lastly, the Court declined the petition for writ of mandamus, noting that such a “drastic and extraordinary” remedy that they are clearly NOT going to extend to someone who stole his kid and refuses to submit to the jurisdiction of the United States courts.  As the Court noted on a few occasions in this opinion, Shalhoub just needs to come to court and figure out this whole mess.  My guess is that he will continue in his fugitive status.  No love for Shalhoub from the 11th Circuit.  Great lawyering, though.

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United States v. Philip Swaby, 4th Circuit Court of Appeals (filed 4/24/17): Court’s “general” immigration warnings did not cure lawyer’s erroneous advice regarding consequences of guilty plea.

A very important case for lawyers representing defendants facing possible deportation as a consequence of criminal convictions.  The facts here are very similar to those SCOTUS addressed in Padilla v. Kentucky, 559 U.S. 356 (2010).  Counsel was appointed to represent a client who had lawful permanent resident status.  He was married to a citizen and has two daughters who are citizens.  He also has a step-daughter.  He and his wife were indicted for trafficking counterfeit goods.  Recognizing possible immigration consequences, counsel reached out to another attorney, one who specialized in immigration law.  Counsel sent the indictment and what he believed was the applicable statute to the immigration lawyer.  Unfortunately, he inadvertently sent the wrong statute so the immigration lawyer erroneously advised plea counsel that a plea to the crime would not be considered an aggravated felony for immigration purposes under 8 U.S.C. 1101(a)(43)(M)(i).  The plea agreement ultimately entered into by Petitioner and the Government was predicated on their understandings that Swaby would be free from deportation if he secured a sentence for less than 365 days.  The plea agreement itself contained boilerplate warnings about possible immigration consequences.  And, at the plea itself, the district court judge informed Petitioner that his guilty plea could lead to his deportation or removal from the United States.

The short of it is that the Fourth Circuit found that the general warnings by the district court judge did not mitigate the prejudice of plea counsel’s deficient performance.  In United States v. Akinsade, 686 F.3d 248 (4th Cir. 2012), the Court also found that a district court’s general warnings of risk of deportation do not correct counsel’s deficient performance, although a “careful explanation” specifically correcting misadvice may cure any prejudice that misadvice may cause.  Id. at 253-54.

As to the prejudice prong of the Strickland inquiry, the Court notes that a defendant is prejudiced if “there is a reasonable probability that, but for counsel’s errors, [a defendant] would not have pleaded guilty and would have insisted on going to trial.  Hill v. Lockhart, 474 U.S. 52 (1985).  In the context of a guilty plea, the Fourth Circuit recognizes that a defendant is prejudiced if there is a reasonable probability that the defendant would have negotiated a plea agreement that did not affect his immigration status. United States v. Rodriguez-Vega, 797 F.3d 781, 788-89 (9th Cir. 2015); Kovacs v. United States, 744 F.3d 44, 52-53 (2d Cir. 2014).  Under these tests, and assessing Petitioner’s situation, the Court found that Petitioner demonstrated a reasonable likelihood that he would have negotiated for, and the government would have been amenable to, a plea agreement that had no immigration consequences.  Alternatively, Petitioner could have shown prejudice by showing a reasonable likelihood that, absent his counsel’s error, he would have gone to trial instead.  The Court reversed, vacated, and remanded Petitioner’s case for further proceedings consistent with this opinion.  It looks like Petitioner is going to be able to stay in the United States with his wife and children, a very humane result under the facts of this case.  Chief Judge Gregory, Judge Wynn and Judge Thacker on the opinion.

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US v. Kenneth and Kimberly Horner (11th Circuit, filed 4/13/17), Tax Fraud Convictions Affirmed– What NOT to do this Tax Season.

At this time of year, as everyone files tax returns, it’s good to keep in mind the kinds of conduct that is illegal. Do not do the things that the Horners have been convicted of doing unless you would like to do a stint in your local federal pen.

Here, the Horners had a towing and recovery business in an area outside of Atlanta.  They received a fair amount of cash for its services from its clients. Simply, they did not report these cash payments on their taxes, which they had prepared by H&R Block.  Indeed, they did not inform H&R Block of this money at all. Instead, they deposited those monies into their personal accounts. The IRS concluded these monies were diverted receipts from their business. The Horners were indicted for assisting in the preparation of fraudulent corporate tax returns and for filing false individual income tax returns (for the years 2007 and 2008; they were not charged for 2005 and 2006 tax returns).

Pretrial, the Horners sought to exclude certain pieces of evidence, including evidence that they “structured” their deposits to avoid having to file Currency Transaction Reports (CTR’s, which must be filed for cash deposits over $10K). They also argued that evidence relating to their 2005 and 2006 returns was inadmissible. Lastly, they argued that testimony from an IRS agent, relating what the proper tax amounts were had the Horners not engaged in the fraud, was inadmissible.  The Horners also requested a jury instruction on good faith reliance on the advice of accountants (which the district court did give a modified instruction as to reliance on the advice of attorneys but replaced “attorneys” with “accoutants”), and the due diligence obligations of tax preparers generally (which the district court did not give).

On appeal, the Horners raised the following claims:

1) the Government elicited and failed to correct false testimony from the IRS agent regarding the extent of unclaimed deductions, 2) the district court should have given the requested jury instructions on good faith reliance on accountants’ advice and due diligence on the part of tax preparers, 3) the district court should have excluded the testimony on deposit “structuring” as irrelevant and unduly prejudicial; and 4) the district court should have excluded evidence of allegedly fraudulent tax returns from 2005 and 2006 as irrelevant, unduly cumulative, confusing, and prejudicial.

As to the IRS agent’s testimony, the Court found that the Horners failed to show that the agent’s testimony was false (let alone, intentionally false). Typically, a claim of prosecutorial misconduct is viewed de novoUnited States v. McNair, 605 F.3d 1152 (11th Cir. 2010).  Here, since the Horners did not object to this testimony at trial, it is reviewed for plain error.  United States v. Nixon, 918 F.2d 895 (11th Cir. 1990).  The Court did not perceive a problem with the agent’s testimony. The agent, in fact, repeatedly acknowledged the limitations of her analysis during cross-examination. For example, she agreed with defense counsel that her numbers “assumed no business expenses were paid from the personal account” and that “the unreported income would be reduced” to the extent any “business expenses were paid by the Horners.” The Court did not find that a Giglio violation occurred.

As to the jury instruction issue, the Court found that the district court did not abuse its discretion by giving the instruction that it did since it accurately reflected the law. The district court’s charge informed the jury that 1) good faith, including good faith reliance on the advice of professionals, is a complete defense to the charges of the indictment, 2) the Government has the burden to prove intent beyond a reasonable doubt, 3) good faith and intent were issues for the jury to decide; 4) evidence of good faith is inconsistent with the unlawful intent; 5) the defendants must have made a full disclosure of the relevant facts to the accountant for their reliance to have been in good faith; and 6) the defendants must have actually received and relied upon an accountant’s advice.  See United States v. Kottwitz, 614 F.3d 1241 (11th Cir. 2010), opinion withdrawn in part on denial of reh’g, 627 F.3d 1383 (11th Cir. 2010); Eleventh Circuit Pattern Jury Instructions, Special Instruction 18.  As to the jury instruction regarding the due diligence of the tax preparers, the Court found that where the evidence provides no support for a given instruction, it is not error to fail to give it.  See United States v. Hill, 643 F.3d 807 (11th Cir. 2011).

Regarding the Horners’ claims of 1) the alleged structuring of cash deposits and 2) the false tax returns of 2005 and 2006, the Court reviews these evidentiary rulings for an abuse of discretion.  Al-Amin v. Smith, 637 F.3d 1192 (11th Cir. 2011). The Court ruled there was no problem with admitting the evidence of structuring since that evidence was inextricably linked to the tax fraud because the cash deposits were unreported income and the structuring of those deposits potentially demonstrated a conscious effort to avoid the reporting requirements.  Also, the probative value of the evidence clearly outweighed any undue prejudice.  For the same reason, the earlier tax returns were admissible– they were closely related to the tax fraud in these cases, and any unfair prejudice from the evidence did not outweigh its probative value, especially since the Horners vigorously contested the issue of intent at trial.  Alternatively, the Court also found that the admission of this evidence would be– at worst– harmless error.

In short, getting cash from the clients may be a good thing, but you need to make sure that you’re reporting it as income to avoid not only tax penalties, but also a criminal conviction.

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Leonard v. Texas, 580 US__ (2017), Statement of J. Thomas respecting cert denial; Isn’t it Awesome when Liberals and Conservatives Can Come Together for Some Collective Outrage?

This cert denial involves civil forfeiture, the practice of law enforcement’s simply taking the property of suspected criminals and converting that property (or its proceeds) to their own personal use. In this case, it appears that the cert petition raised a due process challenge for the first time in the petition, and without giving the lower court an opportunity to pass on the claim. For that reason, the Court could not take up the case.  But this statement offers, in my opinion, fairly compelling reason to believe the Court may reach out to address this issue when the claim is properly before the Court. Good.  It’s about time.

Ms. Leonard’s son and a friend were stopped for a traffic infraction. Law enforcement conducted a search of the car and found a safe in the trunk. The son and his passenger gave conflicting stories about the content of the safe. Law enforcement obtained a search warrant and found the safe contained $201,100 and a bill of sale for a home in Pennsylvania. The state initiated civil forfeiture proceedings, claiming that the money was “substantially connected to criminal activity.” The Court of Appeals of Texas affirmed the trial court’s finding that the “suspicious circumstances of the stop” and the “contradictory stories” told by the occupants of the car supported, by a preponderance of the evidence, that the money was either the proceeds of a drug sale, or was intended to be used in such a sale. It does not appear that drugs were found in this car, or what the basis for this supposed drug connection was. Ms. Leonard testified at a hearing that the money was not related to drugs, but instead were proceeds from a house she sold in Pennsylvania. The court did not find her testimony sufficient to establish that she was an innocent owner.

So how did we get to a place where this kind of bullshit is even remotely legal?  Justice Thomas explains. Modern forfeiture statutes are designed to punish the owner of property used for criminal purposes. See, e.g., Austin v. United States, 509 U.S. 602, 618-19 (1993). When prosecutors prosecute people, it’s called exercising jurisdiction “in personam,” and it comes with a whole host of constitutional protections. When they seek property, they proceed “in rem” which comes with a much smaller panoply of protections (like no right to a jury trial, or heightened standard of proof). So because of this “distinct legal regime” civil forfeiture has become extensively used throughout the country, and highly profitable. In many places, law enforcement is allowed to keep 100% of the proceeds from these seizures which has led to well-documented abuse. Justice Thomas notes that in Tenaha, Texas, for example, officers were regularly seizing the property of out-of-town drivers and collaborated with the district attorney to coerce them into signing waivers of their property rights. In another case, law enforcement threatened to file unsubstantiated felony charges against a Latino driver and his girlfriend, and place their children in foster care, unless they signed over their property. And:

“In another, they seized a black plant worker’s car and all his property (including cash he planned to use for dental work), jailed him for a night, forced him to sign away his property, and then released him on the side of the road without a phone or money…He was forced to walk to a Wal-Mart, where he borrowed a stranger’s phone to call his mother, who had to rent a car to pick him up.”

Id. at 3.

The United States Supreme Court has justified the use of civil forfeiture by referencing the historical practice that existed at the time of the country’s founding. However, as Justice Thomas notes, the practice of forfeiture was much narrower at that time, generally only applying in cases of customs and piracy. Proceeding in rem in those cases made sense because the parties who were guilty of the crimes lived overseas and were beyond the personal jurisdiction of the United States. The forfeiture laws were also much more narrow in terms of the kinds of property that could be attached, and typically only covered instrumentalities of the crime (such as vessels), and not the proceeds of crimes (which is how these statutes are designed these days). But also, Justice Thomas notes that it’s not clear that, historically, these actions were necessarily civil actions. Some of the early US Supreme Court cases suggest they were criminal actions, which would call for additional procedural protections (again, jury trial, higher standard of proof). See, e.g. Boyd v. United States, 116 U.S. 616, 633-634 (1886) (“We are …clearly of [the] opinion that proceedings instituted for the purpose of declaring the forfeiture of a man’s property by reason of offenses committed by him, though they may be civil in form, are in their nature criminal”).

Given the historical precedence of these kinds of claims, but their continued expansion over the years, it seems highly likely that the Court is prepared to curtail the Government’s power in this context but without doing away with it completely. For those of us who have been watching this phenomenon through the years, it has long appeared like highway robbery.  It looks like perhaps now the Court agrees.

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US v. Diaz (2013 WL 322243) and US v. Hayes, 948 F.Supp.2d 1009 (2013): Two federal district judges disagree with the Federal Sentencing Guidelines policies regarding drug trafficking sentences.

These two important opinions offer thoughtful rebukes to the often draconian sentences imposed in federal court on defendants convicted of drug trafficking offenses.

First, Judge John Gleeson of the Eastern District of New York issued this Memorandum Explaining a Policy Disagreement with the Drug Trafficking Offense Guideline. Judge Gleeson was asked to sentence Ysidro Diaz, who was convicted of attempting to sell a kilogram of heroin to an undercover agent.  Because of the weight and type of drug, he was charged to the mandatory minimum 10-year sentence dictated under the federal sentencing guidelines.  Judge Gleeson has a fundamental policy disagreement with the length of imprisonment recommended by the United States Sentencing Commission’s Guidelines manual because it produces sentencing ranges that are “excessively severe.”  He finds these guidelines to be “deeply and structurally flawed.”

The flaw is simply stated:  the Guidelines ranges for drug trafficking offenses are not based on empirical data, Commission expertise, or the actual culpability of defendants.  If they were, they would be much less severe, and judges would respect them more.  Instead, they are driven by drug type and quantity, which are poor proxies for culpability.

Id. at 1.

The opinion fully fleshes out Judge Gleeson’s argument, but he provides a helpful roadmap at the beginning.  His argument is essentially this:

  • District Judges are authorized to disagree on policy grounds with the Guidelines;
  • I disagree on policy grounds with the Guidelines range for drug trafficking offenses because they are not based on empirical data and national experience;
  • Those ranges are excessively severe because they subject all drug trafficking defendants to the harsh weight-driven regime the ADAA (Anti -Drug Abuse Act of 1986, passed after Len Bias died of a drug overdose) intended only for managers and leaders of drug organizations;
  • Those ranges are not now and have never been “heartland” sentences;
  • The drug trafficking offense guideline has been a major contributor to the dramatic increase in the federal prison population;
  • The Commission should “de-link” the drug trafficking Guidelines range from the ADAA’s weight-driven mandatory minimum sentences and use its resources,
  • knowledge, and expertise to fashion fair sentencing ranges for drug trafficking offenses. In the meantime, it should reduce those ranges by a third;
  • The Commission should make the drug trafficking offense guideline more sensitive to factors directly relevant to culpability, including the defendant’s role in the offense, and less sensitive to drug type and quantity;
  • The Commission’s stated reasons for refusing to de-link the drug trafficking Guidelines ranges from the mandatory minimum sentences are wrong;
  • The Commission should welcome (rather than seek to stifle as it currently does) policy disagreements expressed by sentencing judges;
  • The federal judiciary has repeatedly told the Commission that the drug trafficking Guidelines ranges should be de-linked from the mandatory minimum sentences, and the Commission should stop ignoring that message;
  • Whatever else it does or fails to do, the Commission should at least desist from its current practice of freighting the debate over adherence to the Guidelines with suggestions of racial disparity.

Judge Gleeson found that the fact that drug quantity is a poor proxy for culpability has been evident for two decades. A Department of Justice report in 1994 found that “[r]egardless of the functional role a defendant played in the drug scheme, the drug amounts involved in the offense are similar across the roles.”  Therefore, defendants with very different roles–whether peripheral or central to the drug scheme, were receiving the same sentences.  U.S. DEP’T OF JUSTICE, NAT’L INST. OF JUSTICE, AN ANALSYSIS OF NON-VIOLENT DRUG OFFENDERS WITH MINIMAL CRIMINAL HISTORIES 120 (1994).

Judge Mark Bennett of the Northern District of Iowa cited to Judge Gleeson’s opinion in U.S. Hayes.  In Hayes, Bennett notes his policy disagreement with the guidelines applicable to methamphetamine.  Noting that he has the authority to depart from the Guidelines based on policy disagreement, see e.g. Spears v. United States, 555 U.S. 261, 263-67 (2009) (per curiam), Kimbrough v. United States, 552 U.S. 85, 109-10 (2007), he proceeded to do so in this case.   Judge Bennett shares nearly all of the same concerns voiced by Judge Gleeson, including, most notably, that drug weight is a very poor proxy for criminal culpability. Judge Bennett’s opinion also identifies some interesting, methamphetamine-specific facts.  For example, in 2010, a mandatory minimum sentence applied in 83.1% of all methamphetamine cases, the highest rate of any drug type.  More than 58% of these received some relief from the mandatory minimum at sentencing.  Also no other drug is punished more severely based on purity, a fact that makes little empirical sense when you consider a courier or mule has no idea what the purity of the product may be.  It makes no sense to sentence someone in that role more harshly than one moving around a lesser-pure product.  Judge Bennett’s opinion also cites to a number of other decisions where federal district court judges have announced their policy disagreements with the drug trafficking guidelines, so practitioners should be aware that additional opinions abound. For practitioners representing federal clients on drug charges, these opinions offer thoughtful and important arguments that may benefit your client.

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US v. Donald T. Hill (App. No. 15-4639) (4th Cir., filed 3/30/17): Prolonged Detention of Car Stop; Important Dissent by Judge Davis.

This is an interesting case addressing law enforcement’s prolonging a roadside detention. The short of it is that law enforcement is not particularly obligated to be efficient during a stop as it conducts its duties. Here, law enforcement was patrolling a neighborhood in Richmond, Virginia. They saw a car that slightly exceeded the posted speed limit, and then that car crossed a solid yellow line. They decided to pull the car over.  Time:  6:01. The driver of the car (not Hill) immediately stepped out of the car, but got back in when the officers told him to. One of the officers recognized this guy as someone who hangs out with people connected to robberies. He also recognized Hill, who was the passenger, as someone who had been the victim of a stabbing incident.

Hill was unable to produce identification.  The officer then entered the names of both guys into the National Crime Information Center (NCIC) database. About three minutes passed and the database returned an “alert” notifying the officer that both men had been associated with drug trafficking and were “likely armed.” The officer also realized that the driver had a suspended license. Time:  6:04.  The officer started writing summons for the driver– for reckless driving and suspended license. He also called for a K-9 unit.

The officer then stopped writing the summonses so he could check an additional database, PISTOL (“Police Information System Totally On Line”) which tracks every person who has prior contacts with Richmond police officers.  At the hearing, the officer testified this can be a lengthy process because PISTOL produces a list of all people who have the same name.  In this case, PISTOL produced a list of 8-9 people with the same name as the driver. The officer spent 3-5 minutes reviewing that list. While this officer was checking out PISTOL, the other cop was making small talk (yeah, right) with the driver and Hill.  This officer asked them three times whether they had drugs or firearms in the car.  After the third ask, Hill told him that he had a gun on him. The officer immediately yelled, “gun!” and the other officer assisted in securing Hill and taking his gun. As this was going on, the K-9 unit arrived.  The court found that approximately 20 minutes elapsed between the time of the stop and the moment that the officer yelled “gun!”.

Hill argued on appeal that the officers unlawfully extended the duration and scope of the traffic stop in violation of Hill’s Fourth Amendment rights. Specifically, he challenged one officer’s decision to talk with him and the driver instead of assisting the other officer searching the databases and writing the summonses. He also challenged the decision to request the K-9 unit and to search the PISTOL database.

Hill did not challenge the initial basis for the stop so the Court focused on the question of whether the “manner of execution [of the stop] unreasonably infringe[d]” on Hill’s rights under the Fourth Amendment.  Illinois v. Caballes, 543 U.S. 405, 407 (2005).  If a traffic stop is extended in time beyond the period that the officers are completing tasks related to the traffic infractions, the officers must either obtain consent from the individuals detained or identify reasonable suspicion of criminal activity to support the extension of the stop.  United States v. Williams, 808 F.3d 238, 245-46 (4th Cir. 2015).  The United States Supreme Court has recently clarified that extending a stop, even a de minimis length of time violates the Fourth Amendment. Rodriguez v. United States, 135 S. Ct. 1609 (2015).   In assessing the reasonableness of a stop, the Court will consider “what the police in fact do,” and whether the officers acted reasonably under the totality of the circumstances.  Rodriguez at 1616.

Here’s what cops get to do:

  • An officer may engage in certain safety measures during a traffic stop, but generally must focus on the initial basis for the stop.  United States v. Palmer, 820 F.3d 640, 649 (4th Cir. 2016).  An officer may engage in “ordinary inquiries incident to” the traffic stop, such as inspecting the driver’s license and license to operate the vehicle, has insurance, and whether driver has outstanding warrants.
  • Officers may also engage in other investigative techniques unrelated to the traffic infraction or the safety of the officers, but only so long as that activity does not prolong the roadside detention for the traffic infraction.

The Court quickly found that the officers’ actions in this case did not improperly prolong the detention, but also found that this case does not present a case of officers being intentionally dilatory in their duties.  The Court offers a very important final paragraph:

In sum, the Supreme Court’s decision in Rodriguez does not require courts to second-guess the logistical choices and actions of a police officer that, individually and collectively, were completed diligently within the confines of a lawful traffic stop.  We emphasize, however, that we are not confronted here with an officer’s decision to execute a traffic stop in a deliberately slow or inefficient manner, in order to expand a criminal investigation within the temporal confines of the stop without reasonable suspicion of criminal activity or consent of those detained.  In such a case, an officer’s actions delaying the completion of the stop may compel a different conclusion than the one we reach here.  In the present case, however, we hold that because the evidence shows that the officers acted with reasonable diligence in executing the tasks incident to the traffic stop, and the stop was not impermissibly expanded in scope or time beyond the pursuit of the stop’s mission, the district court did not err in denying Hill’s motion to suppress.

Judge Davis authored an important dissent, noting that Hill was not the driver of this car, he was merely the passenger.  Davis finds the purpose of this stop to be “well known to all of us”– this was a narcotics and firearms investigation, undertaken in the absence of reasonable suspicion that a narcotics or firearms violations were occurring.  As Judge Davis notes:  “the ill-fated “War on Drugs” has a sometimes overlooked and unmentioned casualty:  the Fourth Amendment.”  Davis would have reversed the denial of the motion to suppress pursuant to Rodriguez.

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US v. Keith Arthur Vinson, No. 15-4384 (4th Cir., filed 3/24/17) Misdeeds in the Blue Ridge Mountains

This case involves a woeful tale of real estate hijinks in the beautiful mountains outside of Hendersonville, NC.  Vinson was indicted and convicted for a number of fraudulent activities he engaged in during his attempt to develop an Arnold Palmer golf course and resort area called Seven Falls.  This was all a very swank affair, with a Founder’s Day promotion at the Biltmore Estate and ribbon cutting for the “fabulous golf academy.” Unfortunately, it also contributed to the insolvencies of the Bank of Ashville and Pisgah Community Bank. To read about how NOT to structure loans with banks and others (pro tip:  do not use straw borrowers, parking arrangements, nor should you shut down a co-developer’s access to your joint bank account), read the lengthy exegesis provided by the opinion.  But long story short, there were a number of people who sought to profit from Vinson’s activities, and they all flipped and testified against him.  He, alone, stood trial for these misdeeds and he was convicted and sentenced to 18 years in prison.  This appeal follows. He raised three claims on appeal: 1) the evidence was insufficient to support his conviction, 2) the trial court judge erred by giving a willful blindness instruction to the jury, and 3) his sentence was substantively unreasonable.

Appellate courts review sufficiency claims under a de novo standard.  United States v. Barefoot, 754 F.3d 226 (4th Cir. 2014). Challenging the sufficiency of trial evidence presents a heavy burden for an appellant, as “[r]eversal for insufficient evidence is reserved for the rare case where the prosecution’s failure is clear.”  See United States v. Ashley, 606 F.3d 135, 138 (4th Cir. 2010).  The Court quickly (and thoroughly) dispensed with this argument by pointing out evidence that Vinson knew the criminal objective of the conspiracy and willfully joined the conspiracy with the intent to further its unlawful purpose.  Indeed, he was the primary beneficiary of the conspiracy and received roughly $10 million for his use on the Seven Falls development.  The Court also dispensed with this argument relating to the straw purchaser agreements, noting that that material terms of the loans were not disclosed to the bank. The Court also found ample evidence of Vinson’s participation in these fraudulent schemes as an aider and abettor, and that he improperly converted funds from another for his Seven Falls development.

Vinson also argued the trial court erred by instructing the jury on willful blindness.  Under the willful blindness doctrine, the government may “prove knowledge by establishing that the defendant deliberately shielded himself from clear evidence of critical facts that are strongly suggested by the circumstances.”  United States v. Jinwright, 683 F.3d 471, 478-79 (4th Cir. 2012). A willful blindness instruction is appropriate when the defendant asserts a lack of guilty knowledge but the evidence supports an inference of deliberate ignorance. See United States v. Abbas, 74 F.3d 506 (4th Cir. 1996).   Again, the Court pointed to myriad factors that showed that Vinson knowingly and intentionally engaged in fraudulent activities.  The trial court did not abuse its discretion in giving that jury instruction to the jurors.

Lastly, Vinson argued that his sentence was substantively unreasonable.  In support of this claim, he pointed to the sentences given to his co-conspirators which were significantly lower than his sentence.  Unfortunately, the court did not agree.  “[C]omparing the sentences of defendants who helped the Government to those of defendant who did not…is comparing apples and oranges.”  See United States v. Perez-Pena, 453 F.3d 236, 243 (4th Cir. 2006).  All of these co-conspirators pleaded guilty.  Vinson was the only one who insisted on trial.  The Court found that, in these circumstances, the presumption of reasonableness applied and his sentence should stand.

The Court affirmed both Vinson’s guilt and 18-year sentence.

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United States v. Juan Elias Lara (4th Cir, 3/14/17): Psychotherapist-Patient Priv and 5th Amendment Protections in Interviews with Supervision Agents

This case raises an important issue– the extent to which statements made to a supervisory government agent (like a probation agent, or as in this case, a sex offender treatment program provider) can remain confidential.  Not good news for the more criminal-defense minded among us.

Lara was convicted in Virginia state court for a sex assault.  He was sentenced to 20 years, with 17 years suspended and a term of 20 years of probation (!).  As a term of his supervised probation, he was ordered to attend and successfully complete a Sex Offender Treatment Program and to permit the program to have “unrestricted communication with the probation and parole department” and to “submit to any polygraph.”  Lara signed the form listing these conditions.  He was then released and referred to a sex offender treatment program.  There, he was interviewed by a licensed clinical social worker.  During that interview, he disclosed other sexual assaults he had committed and his involvement in two murders (!!).  He confirmed all this by way of a polygraph he took a few weeks later.  Three months after that, he signed a form called “Sex Offender Program Acknowledgment of Confidentiality Waiver” acknowledging that whatever Lara tells a therapist or group leader is not privileged.  Lara completed his probation without incident . . . until . . .

He moved from Virginia to Texas and failed to notify his probation agent, nor did he register with the Sex Offender and Crimes Against Minors Registry maintained by Virginia.  He was ultimately indicted for violating the Sex Offender Registration and Notification Act (SORNA), 18 U.S.C. 2250.

Lara pleaded guilty and filed a motion to exclude from consideration at sentencing the admissions of other criminal activity he told the clinical social worker.  The district court denied his motion.

Lara raised two claims for the court’s consideration.  First, he argued that the district court erred in concluding that he knowingly and voluntarily waived the psychotherapist-patient privilege because he was “compelled to participate” in the treatment program.  He also argued that the district court’s using of the statements he made to the social worker violated his 5th amendment privilege against self-incrimination.

As for the psychotherapist-patient claim, the Court found that Lara’s waiver was knowing and voluntary.

Probation is “one point…on a continuum of possible punishments” imposed on those convicted of a crime.  Samson v. California, 547 U.S. 843, 848 (2006) (quoting United States v. Knights, 534 U.S. 112, 119 (2001).  Therefore, courts administering probation “may impose reasonable conditions that deprive the offender of some freedoms enjoyed by law-abiding citizens.”  Knight, 534 U.S. at 119.  Essentially the Court found that Lara could have decided just to stay incarcerated if he didn’t like the terms and conditions of probation, so his acquiescence was “voluntary.”  See McKune v. Lile, 536 U.S. 24, 50 (2002) (opinion of O’Connor, J.) (concluding that the defendant had a voluntary choice, and was not compelled to incriminate himself, when required to participate in a sex offender treatment program to avoid transfer from a medium-security to a maximum-security area of a prison).

As for the 5th Amendment claim, the Court was not persuaded by that argument either.  Lara didn’t invoke his 5th Amendment right at the time he gave his statements, and the Court did not find that his conditions of probation fell within the narrow “penalty” exception to the rule:

To invoke the Fifth Amendment privilege against self-incrimination, a defendant “ordinarily must assert the privilege rather than answer if he desires not to incriminate himself.”  Minnesota v. Murphy, 465 U.S. 420, 429 (1984).  One exception to this general rule occurs in “penalty” cases, in which assertion of the privilege results in a penalty that essentially “foreclose[s] a free choice to remain silent.”  Id. at 434 (internal brackets omitted).  As the Supreme Court has explained, in order for conditions of probation to provide a sufficient “penalty” to overcome a defendant’s free choice to remain silent, the threat of revocation must be nearly certain.  In this case, Lara was never threatened with the imposition of a penalty sufficient to overcome his freedom of choice to remain silent.  For this reason, no Fifth Amendment violation.

So, an important case for those clients who have given statements in connection with probation or supervised release.  Those statements are not going to held privileged should your client find himself in trouble in the future.

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