US v. Tantchev, Seventh Circuit Court of Appeals, Filed February 21, 2019: Export of Stolen Vehicles, Curious George, and Ostriches

In US v. Tantchev, the Seventh Circuit Court of Appeals affirmed Tantchev’s convictions for the export of stolen vehicles and structuring of financial transactions – making multiple transactions that are less than the $10,000 reporting threshold in order to avoid federal reporting requirements.

His codefendant Chogsam’s conviction for making a false statement to an IRS agent was also affirmed by the Seventh Circuit, but Chogsam was acquitted of all other charges by the jurors at trial.

The government alleged that Tantchev, with his employee Chogsam’s help, was transporting stolen vehicles in shipping containers from Chicago to Mongolia while making false statements about the containers’ contents on Customs and Border Protection paperwork. Tantchev was also accused of making deposits totaling $574,965, all in payments less than $10,000, in less than two months’ time in order to avoid the federal reporting requirements.

What were the issues on appeal for making a false statement to an IRS agent and for export of stolen vehicles and why were the convictions affirmed?

False Statements to an IRS Agent

Chogsam was also charged with export of stolen vehicles, but he was acquitted at trial of all charges except making a false statement to an IRS agent, and he was sentenced to three years’ probation.

As part of their investigation, the IRS discovered that one of the bank accounts used in the questionable transactions was owned by someone named Jianmei Li. When the agent approached Chogsam and asked if Chogsam recognized a photo of Jianmei Li, Chogsam identified her as Jianmei Li, someone he used to work with.

The agent, however, suspected that the woman in the photograph was Burmaa Chogsam, Chogsam’s sister. Although the agent asked Chogsam if he had a sister named Burmaa, he did not ask Chogsam if the woman in the photo was Burmaa…

Chogsam argued on appeal that Burmaa had obtained fake IDs for the name Jianmei Li and that Jianmei Li was Burmaa’s alias in the United States – therefore, he did not make a false statement to the IRS agent.

A statement that is “literally true,” like Chogsam’s statement to the IRS agent that the woman in the photograph was Jianmei Li, cannot support a conviction under § 1001(a)(2), “even if a defendant gives a misleading or nonresponsive answer.”

The Court acknowledges that the IRS agent asked an ambiguous question and that, as shown by the government’s own evidence of the woman’s ID with the name “Jianmei Li” on it, Jianmei Li was an identity for the woman.

Despite this, the Court holds that the jury was entitled to resolve the ambiguity against Chogsom and assume that Chogsom knew that the agent was asking for Burmaa’s actual name and not her alias…

Export of Stolen Vehicles

Tantchev was convicted of:

• Export of stolen vehicles;
• Attempting to export stolen vehicles;
• Submitting false documents to customs officials; and
• Structuring financial transactions to avoid federal reporting requirements.

On appeal, he argued that the Court should not have given an “ostrich instruction” to the jurors, that the jurors should not have been instructed that possession of stolen property creates an inference that the property was stolen, and that improper statements by the prosecutor during cross-examination and closing argument prejudiced his defense.

The “Ostrich Instruction”

Tantchev was accused of export of stolen vehicles and submitting false written statements to US Customs and Border Protection – filling out paperwork that identified the contents of the shipping containers as something other than stolen cars.

Tantchev didn’t dispute that the shipping containers contained stolen cars, but he did dispute that he knew the shipping containers contained stolen cars.

To be convicted of the offenses, the government had to prove not only the export of stolen vehicles accompanied by false statements on the CBP paperwork – they also had to prove knowledge.

Negligence or recklessness is not enough to prove knowledge – avoidance is criminal, but indifference is not.

But if the government proves “willful blindness,” the Court may give an “ostrich instruction” to the jurors. As the Seventh Circuit says in their opinion, every defendant is not required to act like Curious George, but they also cannot act “like fabled ostriches who bury their heads in the sand.”

Tantchev testified that he did not look in the containers because he believed that, if he did not look inside, any liability for damaged contents would fall on the customers and not him. Therefore, he was not present when the containers were loaded, did not look inside them, and relied on information provided by the customers to fill out the CBP paperwork.

The Court found that there were enough “red flags” that the jurors could have found that either:

• Tantchev looked inside the containers, saw the contents did not match the information on the forms, and therefore had actual knowledge of the criminal activity; or
• He purposefully did not look in the containers to avoid confirming that he was a part of the criminal scheme – which would be deliberate avoidance that justifies the ostrich instruction.

Possession of Stolen Property Creates an Inference of Knowledge that It was Stolen

Similar, you cannot be convicted for possessing stolen property unless you know that the property was stolen…

The trial court instructed the jurors that being in possession of stolen property creates an inference that the property was stolen – the Seventh Circuit held that 1) it was up to the jurors to decide whether the circumstances surrounding the incident supported the inference of knowledge, and 2) the jury instruction was proper.

Prosecutor Hijinks in Cross-Examination and Closing Argument

During the prosecutor’s cross-examination of Tantchev, the prosecutor tried to impeach Tantchev with a statement he had made the day before on direct examination. Without getting too far into the weeds, I’ll just say that the Court found that, because the statement in question was subject to two different interpretations, one of which was fair game for impeachment, there was no error.

Closing Argument

During the trial, the prosecutor was prevented from questioning a bank employee about why another bank employee and a branch manager had been fired (the implication was they were fired for assisting Tantchev with the financial structuring).

In closing argument, despite the information having been excluded, the prosecutor told the jurors that the bank employees were fired for “malfeasance.”

The Seventh Circuit found that the prosecutor’s statement to the jurors was improper but that it did not deprive Tantchev of a fair trial – the government also introduced evidence of 100 separate deposits totaling $574,965, within two months’ time, none of which were greater than $10,000, and therefore the prosecutor’s statement during closing argument was not reversible error.

Federal White Collar Defense and Criminal Appellate Lawyer in Columbia, SC

Elizabeth Franklin-Best is a federal criminal defense and federal appellate lawyer in Columbia, SC who defends white-collar criminal cases.

For more information, call us at (803) 331-3421 or send an email to set up a consultation about your case.