Source: https://law.justia.com/cases/federal/appellate-courts/F3/184/566/536873/
Timestamp: 2019-08-23 17:38:34
Document Index: 539156333

Matched Legal Cases: ['§ 1955', '§ 1957', '§ 7206', '§ 1955', '§ 1957', '§ 1956', '§ 1957', '§ 6103', '§ 1957', '§ 1956', '§ 1956', '§ 5', '§ 3553']

United States of America, Plaintiff-appellee, v. Donald G. Ford (97-6097/6270); Sandra Hutchins Ford (97-6271), Defendants-appellants, 184 F.3d 566 (6th Cir. 1999) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1999 › United States of America, Plaintiff-appellee, v. Donald G. Ford (97-6097/6270); Sandra Hutchins Ford...
United States of America, Plaintiff-appellee, v. Donald G. Ford (97-6097/6270); Sandra Hutchins Ford (97-6271), Defendants-appellants, 184 F.3d 566 (6th Cir. 1999)
US Court of Appeals for the Sixth Circuit - 184 F.3d 566 (6th Cir. 1999)
Argued: October 29, 1998Decided and Filed: July 23, 1999Rehearing and Suggestion for Rehearing En Banc Denied Oct. 8, 1999
Appeal from the United States District Court for the Western District of Kentucky at Louisville. Nos. 93-00081; 93-00082--Charles R. Simpson, III, Chief District Judge. [Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted] [Copyrighted Material Omitted]
Don Ford and his wife, Sandra Hutchins Ford,1 appeal their convictions for operation of an illegal gambling business, 18 U.S.C. § 1955 (1994), and money laundering, 18 U.S.C. §§ 1957 (1994) (both defendants) and 1956(a) (1) (B) (1994) (Ford only). Ford also appeals his conviction under 26 U.S.C. § 7206(1) (1994) for filing a false income tax return. Both raise numerous claims of error in denying various motions and in sentencing. Ford and Hutchins raise Fourth Amendment issues concerning the search of Ford's bingo hall and another building. They also contend that the district court erroneously determined that there were no permissible bases for departure from the Guidelines sentencing range. We reverse Ford's tax conviction because it is based on evidence that was seized in violation of his Fourth Amendment rights. We affirm Ford's and Hutchins's gambling and money laundering convictions, but remand Ford's case forresentencing in light of the reversal of his tax conviction.
After police executed a search warrant on the Arcade Bingo Plaza and the RVA Hall across the street, Ford and Hutchins were indicted on two counts of operating a gambling business in violation of state law, 18 U.S.C. § 1955. Ford was also indicted on twenty-eight counts of engaging in monetary transactions in criminally derived property for transactions involving gambling proceeds, 18 U.S.C. § 1957; three counts of engaging in transactions undertaken to disguise the nature, location, source, ownership or control of criminally derived money, 18 U.S.C. § 1956(a) (1) (B) (i) and (ii); and one forfeiture count. Hutchins was indicted on two counts of engaging in monetary transactions with criminally derived proceeds, 18 U.S.C. § 1957, and one forfeiture count. (Offenses under both section 1956 and section 1957 are referred to as "money laundering" offenses.)
We have recently upheld a warrant containing a paragraph identical to the broadest language in the warrant before us ("Books, records, receipts, bank statements and records, money drafts, letters of credit, money orders and cashier's checks, money wrappers, passbooks, bank checks, automatic teller machine receipts, Western Union receipts, safety deposit box keys, and other items evidencing the obtaining, secreting, transfer, and/or concealment of assets and the obtaining, secreting, transfer, concealment and/or expenditure of money"). In United States v. Ables, 167 F.3d 1021 (6th Cir.), cert. denied, ____U.S. ____, 119 S. Ct. 2378, __L. Ed. 2d __ (June 21, 1999), another Louisville bingo hall search case, we held that the language quoted above did not authorize a general search. Id. at 1033-34. Notably, there was no suggestion in Ables that the warrant was used to seize documents thatcould not have pertained to bingo proceeds.
However, in this case, the quoted language authorized a broader search than was reasonable given the facts in the affidavit supporting the warrant. The affidavit stated that the first of Ford's RVA posts was incorporated in December 1991, and there was no indication in the affidavit of criminal activity before that date. The affidavit described an investigation beginning on April 24, 1992. It also reported an interview with Clay Ballinger, who said he had operated the bingo himself but had "sold the Arcade Plaza Bingo back to Mr. Ford in 1991." However, the police seized promissory notes, deeds, and related papers dated between 1984 and 1988, which had no relation to the bingo operation. In Blakeney a warrant authorizing a search for "jewelry" was overbroad because the agent applying for the search warrant had available an inventory of the specific items of jewelry that had been stolen. 942 F.2d at 1027. Failure to limit broad descriptive terms by relevant dates, when such dates are available to the police, will render a warrant overbroad. United States v. Cardwell, 680 F.2d 75, 78 (9th Cir. 1982); United States v. Abrams, 615 F.2d 541, 545 (1st Cir. 1980) ("A time frame should also have been incorporated into the warrant."); In re Application of Lafayette Academy, 610 F.2d 1, 6 (1st Cir. 1979). We have held as much in an unpublished case. United States v. Nagalingam, No. 97-6433, 1998 WL 739822, at *3 (6th Cir. Oct. 6, 1998); see also United States v. Sissler, No. 91-2113, 1992 WL 126974, at *6-7 (6th Cir. June 10, 1992), cert. denied, 506 U.S. 1079 (1993).
The government argues that even if the warrant was overbroad, the documents relating to the Huber's, Inc. deal would inevitably have been discovered in the course of the IRS's pending civil investigation of Ford's 1988 tax return. Under the inevitable discovery doctrine, illegally seized evidence may be admitted despite the exclusionary rule if the government can prove that it would have obtained the evidence from lawful sources even if the illegal seizure never happened. United States v. Kennedy, 61 F.3d 494, 499 (6th Cir. 1995), cert. denied, 517 U.S. 1119 (1996). The government can prove this either by showing that "an independent, untainted investigation . . . inevitably would have uncovered the same evidence or [by showing] other compelling facts establishing that the disputed evidence inevitably would have been discovered." Id. Application of this doctrine necessarily requires some speculation about what would have happened if events had unfolded differently than they did. United States v. Leake, 95 F.3d 409, 412 (6th Cir. 1996). However, we must keep speculation at a minimum by focusing on "demonstrated historical facts capable of ready verification or impeachment." Id. (quoting Nix v. Williams, 467 U.S. 431, 444-45 n.5 (1984)). The government can satisfy its burden by showing that routine procedures that police would have used regardless of the illegal search would have resulted in the discovery of the disputed evidence. Kennedy, 61 F.3d at 500. However, if the defendant shows that the police were not in fact following those routine procedures in the particular case, the government's evidence about what police would have done must bow to contrary evidence about what they actually did. For instance, in Leake, 95 F.3d at 418 n.17 and 418 n.19, the government argued that police would inevitably have acted on certain leads. However, the evidence showed that the police did not in fact take action on those leads in a "reasonably timely manner," 95 F.3d at 418 n.17, and therefore the court held that the government had not carried its burden of proving inevitable discovery.
In this case, before the illegal search took place, the IRS had issued a notice of deficiency to Ford for the 1988 tax year, based on his claimed net operating loss carryforward from 1986. Ford petitioned the United States Tax Court for relief on November 2, 1992, contending that the IRS had incorrectly disallowed the net operating loss carryforward. On December 28, 1992, the IRS filed an answer conceding the case: " [R]eview of taxpayer's records, not available to respondent's agent at the time notice was issued, has persuaded respondent that petitioners' 1988 return was substantially correct as filed."
We therefore hold that the documents seized from 2902 South Seventh Street Road pertaining to the Huber's deal, the sale of the Huber's note to the accountant and the accountant's reassignment of the note to Ford must be suppressed because they were seized in violation of Ford's Fourth Amendment rights3 . Ford's tax conviction must be reversed.
Ford and Hutchins contend that the district court should have suppressed the evidence seized in the August 28-29 search in the gambling case as well as the tax case. They argue that since the warrant was overbroad, all the evidence seized under it should be suppressed. To the contrary, the remedy for an overbroad warrant is to sever the overbroad portions of the warrant from those portions that are sufficiently particular. United States v. Blakeney, 942 F.2d 1001, 1027 (6th Cir.), cert. denied, 502 U.S. 1008 (1991). The portions of the warrant limited to fruits and evidence of gambling are sufficiently particular; even though those portions do not contain a time limitation, their subject-matter limitation (fruits and evidence of gambling) fulfills the same function as a time limitation would have done, by limiting the warrant to evidence of the crimes described in the affidavit4 . The portions of the warrant limited to fruits and evidence of bingo can be severed from the part of the warrant which is not so limited. Therefore, seizure of the documents pertaining to the gambling and the closely related money laundering charges was permissible.
Ford argues that the district court in the tax case did not afford him his full rights to disclosure of jurors' tax audit information under the former 26 U.S.C. § 6103(h) (5) (1994)5 . The district court ordered release of the venire list twelve days before trial so that Ford could request audit histories under the former section 6103(h) (5); Ford contends that this was not sufficiently in advance of trial to preserve his rights. To the contrary, the record shows that there was plenty of time for the IRS to supply the required information, which was made available four days after the release of the venire list and twelve days before jury selection. Under United States v. Spine, 945 F.2d 143, 148 (6th Cir. 1991), a defendant was entitled to have the venire information disclosed in time to "permit the IRS to conduct a search of its records for potential jurors' tax histories." The time allowed in this case was sufficient for that purpose.
Ford also contends that the district court erred in limiting the IRS's disclosure obligation to the last six years' audit history. The district court supplemented the IRS information with a full voir dire on the subject of audit histories, and this satisfied Ford's rights under section 6103(h) (5). See Spine, 945 F.2d at 148.
Ford and Hutchins were convicted under 18 U.S.C. § 1957 and Ford was also convicted of one count under 18 U.S.C. § 1956(a) (1) (B) (i). Section 1956(a) (1) (B) forbids knowingly conducting a "financial transaction" with the proceeds of specified unlawful activities knowing that the transaction is designed to conceal or disguise the nature, location, source, ownership, or control of such proceeds. "Financial transaction" is defined to include any transactions involving "the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree." Section 1956(c) (4) (B). Section 1957 forbids certain "monetary transactions" in criminally derived property. Under section 1957(f) (1) "monetary transaction" includes any "financial transaction under section 1956(c) (4) (B)" (except those transactions necessary to preserve a person's Sixth Amendment right to representation). Thus, both section 1956 and section 1957 contain interstate commerce elements, which can be satisfied by use of a bank whose activities affect interstate commerce.
Ford and Hutchins argue that proof of a transaction with a federally insured bank does not satisfy the government's burdenof proving a transaction with a bank whose activities affected interstate commerce, citing United States v. Lopez, 514 U.S. 549 (1995). In United States v. Owens, 159 F.3d 221, 226 (6th Cir. 1998), pet'n for cert. filed, 67 U.S.L.W. 3749 (May 20, 1999) (No. 98-1912), we rejected a challenge to section 1956 under Lopez. We held that section 1956 regulated the instrumentalities of interstate commerce, and therefore was a permissible exercise of Congress's power to regulate interstate commerce. Id. We specifically remarked that "the use of federally insured banks and/or the transport of monies across state borders to facilitate the money laundering create a sufficient nexus to commerce to allow application of § 1956." We have recently reiterated that Lopez did not raise the standard for proving the interstate commerce nexus in section 1956 and 1957 prosecutions. United States v. Ables, 167 F.3d 1021, 1030 (6th Cir.), cert. denied, ____ U.S. ____, 119 S. Ct. 2378, __L. Ed. 2d __ (June 21, 1999).
Here, the district court's conclusion that transactions in gambling proceeds are not per se outside the heartland is a question of law reviewable on appeal. However, the court's determination that Ford was not simply trying to comply with state law when he engaged in the transactions at issue is a refusal to depart based on the exercise of discretion, not reviewable on appeal. Although the court did not make separate findings as to Hutchins on the compelled-by-state-law argument, the record gives us no reason to think the court misunderstood its discretion to depart on the issue. The court's determination that the magnitude of Ford's and Hutchins's transactions did not warrantdeparture was apparently an exercise of discretion since the court did not reject the relevance of magnitude to departure, but merely determined that the magnitude in this particular case did not take the offenses out of the heartland of section 2S1.27 . Therefore, the court's rejection of magnitude as a basis for departure in this case is not reviewable.
If a factor is already taken into account in the guidelines, the court "should depart only if the factor is present to an exceptional degree or in some other way makes the case different from the ordinary case where the factor is present." Koon, 518 U.S. at 96. Accord, U.S.S.G. § 5K2.0 (Policy Statement) (" [T]he court may depart from the guidelines, even though the reason for departure is taken into consideration in determining the guideline range (e.g., as a specific offense characteristic or other adjustment), if the court determines that, in light of unusual circumstances, the weightattached to that factor under the guidelines is inadequate or excessive.")
Id. at 11. However, Congress disapproved the revision, and section 2S1.2 remains in place substantially unaltered. Id. at 2. In determining whether a circumstance was adequately taken into consideration by the Sentencing Commission, 18 U.S.C. § 3553(b) limits our consideration to the guidelines themselves, the official commentary and the policy statements; we therefore may not base our decision on the Commission's proposed amendment. See United States v. Morelli, 169 F.3d 798, 809 n.13 (3d Cir. 1999) (" [P]roposed amendments to the Sentencing Guidelines do not provide independent legal authority for a downward departure."), cert. Denied, 67 U.S.L.W. 3758 (June 7, 1999).
The former section 6103(h) (5) was repealed by The Taxpayer Relief Act of 1997, 111 Stat. 788, 1038. However, the Act states that the repeal is effective as to cases commenced after August 5, 1997, 111 Stat. 1038, whereas this case was begun in 1993.
The question of magnitude could have been a legal issue if the district court had made its decision on the basis that the threshold amount of $10,000 is listed in section 1957 and the background commentary to section 2S1.2, and that the Sentencing Guidelines had therefore already taken magnitude into account. Cf. United States v. Bifield, 42 F. Supp. 2d 477, 485 n.4 (M.D. Pa. 1999) (money laundering guidelines take into account monetary amount). The district court did not take this tack