UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

Case No. 08-CR-20601

vs. HON. GEORGE CARAM STEEH

JAMES HORN (D-12),

Defendant.

_____________________________/

ORDER DENYING DEFENDANT'S MOTION TO SUPPRESS IN PART AND

SETTING SUPPRESSION HEARING REGARDING ORAL STATEMENTS [DOC. 182]

An Indictment was returned on November 12, 2008 charging 22 defendants in six

counts. The charges include a marijuana conspiracy, conspiracy to launder monetary

instruments, continuing criminal enterprise, mortgage fraud, identity fraud, and

forfeiture. James Horn is charged in Count Two alleging money laundering and Count

Six criminal forfeiture. 

Count Two charges that 11 of the defendants conspired to engage in financial

transactions knowing that funds used in the transactions were proceeds of the drug

distribution alleged in the Indictment. Section 18 USC § 1956(a)(1)(A)(i) makes it an

offense to engage in a financial transaction “with the intent to promote the carrying on of

specified unlawful activity.” Section 18 USC § 1956(a)(1)(B)(I) makes it an offense to

engage in financial transactions “with an intent to conceal or disguise the nature, the

location, the source, the ownership, or the control of the proceeds of specified unlawful

activity.” Section 18 USC § 1956(h) makes it an offense to conspire to money launder.

Horn filed a motion to suppress evidence, contending that (1) there was no

probable cause to believe that he was involved in criminal conduct, and therefore no

support for the initial warrant to search his house, that (2) the second search warrant

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was also void because it was based on the initial warrant, and that (3) the government

used illegally obtaining statements from Horn to assist them in their searches. 

The Fourth Amendment requires that a search or seizure be supported by

probable cause, which is defined as “reasonable grounds for belief, supported by less

than prima facie proof but more than mere suspicion.” United States v. Abboud, 438

F.3d 554, 571 (6th Cir. 2006) (quoting United States v. Padro, 52 F.3d 120, 122-23 (6th

Cir. 1995). An affidavit in support of a search warrant “must contain facts that indicate a

fair probability that evidence of a crime will be located on the premises of the proposed

search.” Abboud, 438 F.3d at 571 (quoting United States v. Frazier, 423 F.3d 526, 531

(6th Cir. 2005). A court reviewing probable cause must look at the “totality of the

circumstances” establishing probable cause, which is a “practical, non-technical

conception that deals with the factual and practical considerations of everyday life.”

Abboud, 438 F.3d at 571 (quoting Frazier, 423 F.3d at 531). The reviewing court should

also give great deference to the magistrate judge’s finding of probable cause. Id.; United

States v. Allen, 211 F.3d 970, 973 (6th Cir. 2000). 

I. Primary Search Warrant

a. Probable Cause

On November 18, 2005, Magistrate Judge Scheer reviewed Drug Enforcement

Administration Task Force Officer (TFO) Chad Allan’s affidavit in support of a search

warrant for 2918 Woodbine, Waterford, Michigan, the residence of James Horn. The

affidavit describes Allan’s background in investigating the financial aspects of drug

trafficking organizations. Allan then describes the investigative background of the case

which focused on Brian Osburn. In Paragraph 6, Allan recounted what he had learned

with respect to Brian Osburn’s financial dealings, his use of nominees or straw buyers

on real estate purchases, and his lack of credit history. 

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Allan alleges at Paragraph 7 that James Horn is “linked” to Brian Osburn

because Horn “is a real estate ‘broker’”. Defendant states that Horn is not and was not

a “real estate broker” at the time of the Application. At oral argument, the government

stated that public data bases revealed that Horn was a real estate broker in Colorado

and Florida. Horn’s attorney disputed this information and explained that Horn is a

mortgage broker in Florida. 

Paragraph 7 further alleges that Horn is connected to three properties associated

with Osburn’s drug trafficking organization, specifically 2850 Woodbine Drive, 63 Ruth,

and 49972 Proctor Road. 

In his Affidavit, Allan alleges that Horn was a neighbor of Osburn, who resided at

2850 Woodbine. Allan was told by his confidential informant that in late fall 2003 or

early winter 2004 Osburn was “elated” over an agreement by which he was to stop

renting 2850 Woodbine and purchase it from the owner. Records showed that in

October 2003, Horn purchased 2850 Woodbine, and then refinanced it in January 2004. 

Allan stated his belief that Horn was a “straw buyer” of the property for Osburn. 

Allan’s affidavit states that he reviewed mortgage records relating to Jason

Osburn and 49972 Proctor Road. An examination of the documents revealed that

“Modern Mortgage Company”, located at 2918 Woodbine, was involved in processing a

mortgage for 49972 Proctor. In addition, Horn’s name appeared in the mortgage

documents. Defendant argues that in the report of investigation dated November 4,

2005, two weeks before the date of his affidavit, the Affiant indicated that Modern

Mortgage Corp. had its registered office at 25900 Greenfield, Ste 206, Oak Park, MI. 

The affidavit next refers to the property at 63 Ruth, Pontiac, Michigan. The

confidential informant told Affiant that the property was owned by Brian Osburn, but

public records showed that 63 Ruth was actually owned by Clarence Kaechele. 

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Kaechele purchased 63 Ruth from Horn in June 2004. Affiant alleges that Kaechele is a

“straw buyer” for Osburn. Defendant argues that the lack of records of a purchase by

Osburn is of no consequence because that would be consistent with a land contract

purchase. 

The affidavit alleges that Osburn received a check from a title company in the

amount of $80,442.80. It is alleged Osburn deposited $48,000 into his own bank

account and the remaining $32,442.80 was deposited in an account held by Horn. 

Finally, the affidavit alleges that surveillance shows Horn spent long periods of

the work day at home. The Affiant avers that this information, along with the mortgage

documents on the Proctor Road property, indicates Horn worked out of his home.

Allan concludes that Horn is a “real estate professional who is providing real

estate-related money laundering services to the drug trafficking organization from his

home-based office.” Defendant Horn argues that Allan’s Affidavit lacks probable cause

to search his residence and constitutes only a “bare bones” affidavit containing

“uncorroborated hunches, suspicions and baseless conclusions.” 

When reviewing probable cause, the Court may only look within the four corners

of the affidavit. United States v. Frazier, 423 F.3d 526, 531 (6th Cir. 2005). The

affidavit in this case connects Horn with three properties that are associated with Brian

Osburn’s drug trafficking operation. Osburn rents 2850 Woodbine from Horn. Horn’s

name appears in the mortgage documents for the Proctor Road property, and Horn’s

home address is listed as the address of the mortgage company involved in the

transaction. It is immaterial that Affiant Allan was aware that Modern Mortgage had a

registered address in Oak Park, Michigan, according to a public records search. The

documents related to the financing of the Proctor Road property include a relevant

reference to Horn, Modern Mortgage, and 2918 Woodbine. Horn sold 63 Ruth to

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Clarence Kaechele, and the confidential informant told Affiant that Osburn owns that

property. There is also evidence that Osburn deposited a large sum of money in Horn’s

bank account. Finally, surveillance revealed that Horn spends long periods of the work

day in his home. If the court disregards the statement that Horn is a real estate broker,

as well as the speculation as to straw buyers, there remains sufficient information in the

affidavit to establish probable cause to believe that evidence of a crime will be located

at 2918 Woodbine. The Court does not find that a suppression hearing is necessary

with regard to the initial search warrant.

b. Franks Hearing

"A defendant who challenges the veracity of statements made in an affidavit that

formed the basis for a warrant has a heavy burden. His allegations must be more than

conclusory. He must point to specific false statements that he claims were made

intentionally or with reckless disregard for the truth. Franks v. Delaware, 438 U.S. 154,

171, 98 S.Ct. 2674, 2684, 57 L.Ed.2d 667 (1978); United States v. Barone, 584 F.2d

118, 121 (6th Cir.1978), cert. denied, 439 U.S. 1115, 99 S.Ct. 1019, 59 L.Ed.2d 73

(1979). He must accompany his allegations with an offer of proof. Moreover, he also

should provide supporting affidavits or explain their absence. Franks, 438 U.S. at 171,

98 S.Ct. at 2684. If he meets these requirements, then the question becomes whether,

absent the challenged statements, there remains sufficient content in the affidavit to

support a finding of probable cause. Id.

If probable cause exists absent the challenged statements, a defendant is

entitled to no more; however, if such cause does not exist absent the challenged

statements, he is entitled to a hearing if he requests one. He must show at the hearing,

by a preponderance of the evidence, that false statements were made either

intentionally or with reckless disregard for the truth and that without these statements

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there is insufficient content in the affidavit to support a finding of probable cause. If he

makes this showing, the evidence should be suppressed. Id. 438 U.S. at 155-56, 98

S.Ct. at 2676." United States v. Bennett, 905 F.2d 931, 934 (6th Cir. 1990). 

The Court has already found that the affidavit supports a finding of probable

cause, without considering the challenged statements. Moreover, defendant’s offer of

proof falls far short of anything supporting intentional or reckless misrepresentations in

the affidavit. A Franks hearing is therefore not necessary in this case. 

c. Documents or Computers

Attachment B to the affidavit is labeled a “Document Search Warrant” and

includes a list of items to be searched and seized. Paragraph A refers to “all paperwork

and records relating to the laundering of drug proceeds or the acquisition of assets.” 

Paragraph B refers to “any business or other records regarding the sale, purchase, or

transfer of real property.” Paragraph C refers to “any document, record, digital or

electronic data or technology which may lead to the identification of others conspiring to

launder the proceeds of the sale of controlled substances.” Paragraph D refers to

“currency and/or other monetary instruments or banking instruments . . .” 

The Affidavit in Support of Search Warrant, at Paragraph 2, subparagraph A,

states:

It is also common for these traffickers to maintain electronic

equipment/devices that are used to facilitate their criminal activities, to

include but not limited to, cellular telephones, blackberry/blueberry

devices, palm pilots, paging devices, personal computers, . . .

Magistrate Judge Scheer reviewed the affidavit, the application and the warrant before

authorizing and issuing the warrant. 

The agents who searched 2918 Woodbine seized a Compaq CPU and a

Diplomat Premier CPU. Defendant Horn argues that the computers are not within the

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scope of the list of things to be seized. The government argues that items not

specifically described in a search warrant may be seized if they are “reasonably related”

to the offense described in the warrant. United States v. Wright, 343 F.3d 849 (6th Cir.

2003). 

The Court finds that the initial search warrant is broad enough to include the

seizure of the computers in that it specifically refers to “electronic data”, and “digital or

electronic data or technology”. Allan’s affidavit further delineated items to be searched

and seized, including “electronic equipment/devices . . . personal computers . . . .” Two

separate search warrants were subsequently obtained for the imaging of the computer

hard drives before they were searched. The Court finds that the initial search warrant

affidavit in this case supports a finding of probable cause to seize Mr. Horn’s computers. 

II. Follow-up Search Warrant

During the execution of the initial search warrant at 2918 Woodbine, a law

enforcement officer opened a kitchen cupboard and saw in plain view a small wooden

box, known to the officer as a “one hit box.” A “one hit box” is used to store marihuana. 

Agents detected an odor coming from the box. Agents also entered the bedroom and

detected an odor of marihuana coming from a bathroom nearby. This information was

contained in an affidavit prepared by Chad Allan, and a search warrant for controlled

substances and weapons was issued by Magistrate Judge Majzoub. 

Looking within the four corners of the affidavit in support of a search warrant for

controlled substances, the Court finds probable cause sufficient to justify the belief that

drugs and drug-related evidence would be found at 2918 Woodbine. 

III. Oral Statements Made by Horn

The agents detained Mr. Horn in handcuffs for many hours while they conducted

their search of his house. Mr. Horn was not read his Miranda rights. Mr. Horn asked to

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contact an attorney but the agents refused. Mr. Horn was questioned by the agents and

they have not provided a report of any statements made by Horn during the search. 

The government has conceded that under the circumstances, statements made by Horn

would be inadmissible in its case-in-chief. 

Defendant argues that the government acknowledges Horn made inculpatory

statements and it is probable the agents used those statements to assist in their search,

or subsequent investigation of the conspiracy. It is unknown what, if any, evidence

followed from the oral statements, and whether such evidence is subject to suppression. 

At oral argument the government stated that it did not know if the Agent Scott Roberts,

who was present during the execution of the search warrant, has rough notes that

include statements made by Mr. Horn.

Although the government’s position is that it does not intend to introduce Horn’s

oral statements obtained during the execution of the search warrant on his home during

its case-in-chief, the Court does not have enough information to make a determination

with regard to the reach of the evidence sought to be suppressed. Accordingly, a

suppression hearing will be set with regard the suppression of evidence derived from

Horn’s oral statements. The government should furnish the rough notes, if any exist,

related to such statements. 

A suppression hearing on the oral statements made by Horn during the execution

of the search warrant of 2918 Woodbine will be held on September 24, 2009 at 11:00

a.m. 

Dated: September 10, 2009

S/George Caram Steeh 

GEORGE CARAM STEEH

UNITED STATES DISTRICT JUDGE

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CERTIFICATE OF SERVICE

Copies of this Order were served upon attorneys of record on

September 10, 2009, by electronic and/or ordinary mail.

S/Josephine Chaffee

Deputy Clerk

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