Monday, January 31, 2011

Court Affirms 9-Year Sentence for Conspiracy to Defraud US of Taxes

US v. Thorson: Thorson, an attorney, was involved in a complex scheme to take advantage of a charitable giving tax loophole involving cemetery plots. Over three years, the scheme netted almost $10 million in fraudulent tax deductions. Thorson came up with the legal mechanics of the scheme. For his income from the scheme, Thorson concealed his funds as loans and thus did not report it on tax returns. Then, when the IRS came to audit the partnership running the scheme, Thorson created false documents to thwart the investigation. As a result of all this, Thorson was convicted of conspiring to defraud the United States of tax income. At sentencing, Thorson was hit with enhancements for a leadership role in the offense and obstruction of justice, among others. He was sentenced to 108 months in prison.

On appeal, Thorson challenged both the procedural and substantive grounds, all of which the Fourth Circuit rejected. Procedurally, Thorson first challenged the imposition of the leadership enhancement, arguing that the evidence did not support characterizing his role in that way. The court disagreed, noting that his role was "especially significant" because of the deployment of his legal skills, that he was "critical to the recruitment of investors," and that he supervised and directed much of the paperwork needed to complete the scheme. Second, Thorson challenged the obstruction of justice enhancement, based on false documents provided to the grand jury. Thorson argued that this conduct was part of the offense of conviction and, at any rate, already covered by another enhancement for sophisticated concealment. The court disagreed, holding that the obstructive conduct continued into the criminal investigation and the enhancement was not duplicative. Finally, Thorson argued that his sentence was substantively unreasonable when compared to those received by his codefendants and others similarly situated. The court disagreed, holding that the sentence was reasonable in light of the totality of the circumstances.

Judge Gregory dissented, arguing that the imposition of the two Guideline enhancements was error. He argued that the district court "took Thorson's conduct as a personal affront" and "Thorson's occupation weighed heavily on the court's mind." Regardless, the "majority today endorses" that approach "and punishes Thorson on no evidentiary basis."

No Leadership Enhancement In Drug Conspiracy

US v. Slade: Slade pleaded guilty to conspiracy to distribute cocaine and crack. His role in the conspiracy:
According to the PSR, which the district court adopted, Slade was a 'mid[-] to upper-level' member of the drug conspiracy who sold or delivered cocaine and cocaine base both to his own clientele and to other members of the conspiracy, who, in turn, sold the drugs to their clientele. Certain coconspirators also sold cocaine and cocaine base 'for' Slade on various occasions. The PSR reveals further that an unindicted co-conspirator drove Slade to various locations to deliver cocaine base to his clients.
At sentencing, the district court applied a three-level enhancement (among others) for Slade's leadership role in the offense. Slade was sentenced to 365 months in prison, the top of the advisory Guideline range.

On appeal, Slade argued that he should not have been subject to an enhancement for a leadership role because there was no evidence that he actually managed or supervised anyone. The Fourth Circuit agreed, holding that the facts set forth above "do not justify imposition of an enhancement for a management or supervisory role." There was no evidence that Slade "actively exercised some authority over other participants" in the conspiracy. Although reviewing for plain error, the court found the error plain, prejudicial, and worthy of notice on appeal. Therefore, the court vacated Slade's sentence (briefly turning away two other Guideline challenges) and remanded for resentencing.

Skipping Departure for Variance Analysis Not Procedrually Unreasonable

US v. Diosdado-Star: Diosdado-Star was deported in 2002 because he entered the country illegally. He was back within a month, using an alias that matched that of a Border Patrol agent who was under investigation for misconduct. The investigation led to Diosdado-Star, who was discovered to be posing as a Border Patrol agent to others seeking to remain in the country illegally. In the process, Diosdado-Star made about $177,000. When his home was searched, he admitted being a citizen of Mexico, the illegally reentering the US, and to impersonating an agent. As a result, Diosdado-Star was convicted of illegal reentry and possessing a counterfeit resident alien card. Although his advisory Guideline range was only four to 10 months, the district court varied and imposed a sentence of 84 months in prison.

Diosdado-Star appealed his sentence, which the Fourth Circuit affirmed. He first argued that the sentence was procedurally unreasonable, because the district court failed to consider a Guideline departure before imposing a variance sentence. The court disagreed, holding that (the method of deviation from the Guidelines range - whether by a departure or by varying - is irrelevant so long as at least one rationale is justified and reasonable." However, in a footnote, the court "offer[ed] no comment on the observation of several other circuit courts of appeal that the departure provisions of the Guidelines are obsolete." Diosdado-Star also argued that the sentence was substantively unreasonable. The court disagreed, holding that the district court's variance "while substantial, [] does not constitute an abuse of discretion based on the totality of the circumstances."

Monday, January 24, 2011

"Stipulation" Entered Without Defendant's Consent Not Harmless Error

US v. Williams: Williams was charged with conspiring to possess with intent heroin. The heroin at issue was seized when it came into the country at the Louisville airport in a package. Per the Government's theory, Williams was the end recipient of the package and he would distribute the contents. Williams went to trial. At the trial, the Government presented a stipulation regarding the substance in the package - that it was approximately 98 grams of heroin. Williams refused to sign the stipulation. However, Williams's attorney suggested that she would do so, if the court would allow it. She signed the stipulation, which was read to the jury. During deliberations, the jury asked what amount of drugs was necessary to delineate personal use from distribution. The court referred them to "common sense" and provided them with a copy of the stipulation. The jury convicted Williams.

On appeal, Williams argued that the use of a stipulation without his consent violated hi Sixth Amendment right to confrontation. The Government agreed that it was an abuse of discretion for the district court to allow the stipulation. However, it argued that the error was harmless. The Fourth Circuit first agreed with the parties that Williams's Sixth Amendment rights were violated. It then proceeded to analyze the evidence in the case and concluded that the error was not harmless. The court noted that the stipulation went beyond merely identifying the substance at issue as heroin - it "essentially established an element of the crime" and was used by the jury in determining whether Williams had an intent to distribute the heroin. Thus, the court vacated Williams's conviction and remanded the case to the district court.

District Judge Dever concurred with the majority on the Sixth Amendment violation, but dissented from the conclusion that the error was not harmless. He argued, after a lengthy recitation of the trial facts, that the stipulation had much less of an impact on the ultimate outcome and therefore its admission was harmless.

Court Affirms Multiple Searches In Wake of Shooting

US v. Allen: Allen was shot and wounded (in a shooting that left another wounded and two more dead) in front of his store in Baltimore. An officer responding to the scene followed a trail of blood into the store, to a file cabinet, which he opened. Inside was a pistol. Three search warrants were then executed: the first at the store (recovering the pistol and collecting DNA), the second to procure Allen's DNA, and the third at Allen's home. The searches showed that Allen's DNA was on the pistol found at the store and that ammunition had been recovered at Allen's home. Allen was charged with being a felon in possession of a firearm and ammunition.

Allen moved to suppress the evidence found as a result of all three searches and also requested a Franks hearing based on discrepancies between the affidavits for the first and second warrants. The district court denied the motions. As to the first and second warrants, the district court found that , although the pistol was not in plain view when first seen, it would have inevitably been discovered during a proper search of the crime scene. As to the third warrant, the court concluded that the warrant contained sufficient evidence to demonstrate probable cause that evidence related to the shooting would be found at Allen's home. Allen pleaded guilty to being a felon in possession of ammunition and preserved his right to appeal the denial of his motions to suppress.

On appeal, Allen made three arguments, all of which the Fourth Circuit rejected. First, he argued that he should have been granted a Franks hearing due to the discrepancies between the first two warrant applications, mostly based on whether the pistol was in plain view (first) or not (second). The court concluded that, even without that information, both warrants were based on sufficient evidence to provide probable cause. Second, Allen argued that the first officer to enter the store did so outside any legitimate Fourth Amendment exception. The court concluded that, even if that entry was improper, there was sufficient evidence aside from what was initially discovered in the store to support probable cause. Finally, renewed his argument that the third warrant lacked probable cause to support a search of his home. The court disagreed.

Court Affirms Tax Evasion Conviction

US v. Cole: Cole was a real estate agent who partnered with three others to purchase commercial real estate. Cole negotiated the purchase price with the sellers and misrepresented the final amount of the sale price to his partners. The difference in the price paid and the seller's actual price demanded was absorbed by Cole, to the tune of $2 million. He also engineered a similar purchase involving a $1 million note financing one of the properties. Those funds Cole appeared to treat as sale commissions, in multiple venues. In 2005, Cole filed tax returns for 2001, 2002, and 2003 - the years during which he acquired these funds - but did not report any taxable income. He argued that the real estate money came from "assignment fees," rather than commissions, which subjected them to favorable tax treatment as capital gains. The nearly $100,000 he received from the sale of the note was omitted altogether - Cole "missed it" due to a bookkeeping error. Cole was charged and convicted of multiple counts of tax evasion and filing false tax returns.

On appeal, Cole made several arguments attacking his convictions, none of which was successful. First, the Fourth Circuit rejected his argument that the evidence was insufficient to convict him because the charges against him required "willfulness," but the commission/assignment fee distinction was "uncertain as a matter of tax law" and therefore he could not act willfully. In doing so the court declined Cole's invitation to hold that, as a matter of law, when an expert accountant testifies (without objection) to the confused nature of the tax law at issue, willfulness cannot exist as a matter of law. Second, the court concluded that, although it was error for the district court to allow introduction of evidence that Cole had lied previously on ATF forms related to firearms purchases, that error was harmless. Nor was there any error in allowing into evidence Cole's lavish spending during the time in question, as it went to his motive. Finally, the court rejected Cole's argument that the district court should have granted a continuance during trial (prior to Cole's cross-examination) due to Cole being "disoriented or incapable of focusing."

Involuntary Manslaughter Not "Crime of Violence"

US v. Peterson: Peterson was convicted on multiple drug and gun counts. He was sentenced as a career offender, a status based partly on his 2001 conviction in North Carolina for involuntary manslaughter, arising from "an incident in which Peterson accidentally shot his close friend . . . while the two were playing with what they believed (mistakenly) was an unloaded pistol." Peterson objected to the career offender classification, arguing that the involuntary manslaughter conviction was not a "crime of violence" as defined by the Guidelines. The district court disagreed and sentenced him to 420 months in prison.

On appeal, the Fourth Circuit agreed with Peterson and vacated his sentence. The court first concluded that generic "manslaughter" - which is specifically included in the definition of crime of violence - requires either that the defendant acted "recklessly" or "intentionally if under the influence of extreme mental or emotional disturbance." The North Carolina offense of involuntary manslaughter did not fit within that definition because it's required mental state - "thoughtless disregard" - is a lesser requirement than recklessness, as defined by the Model Penal Code. Peterson's conviction, therefore, was not explicitly included in the definition of crime of violence. The court then turned to the issue of whether his conviction was one that "presents a serious potential risk of physical injury to another" under the crime of violence definition's "otherwise" clause, concluding that it was not because the North Carolina statute covered negligent and unintentional conduct.

Nature of Prior Conviction Determination Requires Only Preponderance

US v. Washington: Washington was convicted of being a felon in possession of a firearm. At sentencing, the issue was whether he qualified for an enhanced sentenced under the ACCA. For his third qualifying predicate offense, the Government identified a 1999 Maryland conviction for the "generic" offense " of "possession of a controlled dangerous substance with intent to distribute." Although the maximum sentence for the offense is based on the type of drug involved, drug type is not an element of the offense. The district court concluded that Washington's prior conviction was an ACCA predicate because it involved cocaine and therefore carried a 20-year maximum sentence (rather than the 5-year max applicable to lesser drugs).

Washington appealed, arguing that the district court erred by making its determination based on a preponderance of the evidence, rather than beyond a reasonable doubt. Relying on Shepard, he argued that the Supreme Court's references to "conclusive" records and "certainty" implies a higher standard for making determinations about the nature of prior convictions than a simple preponderance. The Fourth Circuit disagreed, holding that a preponderance standard was appropriate and that Shepard did not suggest otherwise. Shepard was about the types of documents a district court could use when evaluating the nature of a prior conviction, not the standard of proof applied during that analysis. The court then went on to reject Washington's argument that the Government had not met its burden in his case, even under a preponderance standard.

Failure to Disclose Non-Witness Grand Jury Testimony Requires New Trial

US v. King: King was convicted of drug and firearm offenses arising from two separate incidents in North Carolina. In the first, officers surveiled a car that a tipster said was going to be used to transport heroin. Officers followed the car to a laundromat where the two men in the car went inside. They returned shortly thereafter, along with King, who put a green gym bag in the car. The car was stopped and the bag searched. It contained "100 dosage units of heroin." King, and the other two men, was arrested. A search of King's home uncovered more heroin, other drug paraphernalia, and a firearm. King admitted ownership of the heroin and the firearm. He was charged and released on bail. Eight months later, a man named Bilal, who shared an apartment with King, told officers that King kidnapped and assaulted him. Officers executed a search warrant at the apartment, recovering drugs and a firearm from a bedroom, in which they also found documentation with King's address. King denied doing anything to Bilal and also denied ownership of any of the items found in the apartment.

King was charged with six counts - two sets of three for each incident: possession with intent to distribute, being a felon in possession of a firearm, and possession of a firearm during a drug trafficking offense. Prior to trial, King moved to have the Government disclose information related to Bilal's cooperation with them, including his grand jury testimony. The district court denied the request without reviewing the testimony. At trial, King testified in line with his statements to police - accepting ownership of the items related to the first incident, but denying ownership of those in the second incident - but added that the firearms were not related to any drug activity. The jury convicted him on four counts, all three from the first incident and being a felon in possession from the second. The district court sentenced him to 408 months in prison (enhanced, in part, based on the alleged kidnapping of Bilal).

King raised several challenges to his convictions on appeal. With regards to the three convictions related to the first incident, the Fourth Circuit rejected his arguments and upheld those convictions. Specifically, the court held that the drug and firearm-in-connection-with-a-trafficking offenses were duplicitous, that the firearm count failed to charge him with an offense, and that the evidence on each count was insufficient to convict him. However, with regards to the felon in possession conviction from the second incident, the court did find error that required reversal of that conviction. Specifically, the court held that the district court erred by failing to order the Government to turn over Bilal's grand jury testimony, even though he did not testify at trial, because his relationship with King was relevant to King's defense. The court noted that King had consistently denied that any of the items found during the second search belonged to him.