Opinion ID: 588163
Heading Depth: 2
Heading Rank: 1

Heading: Background Relevant to the First Appeal

Text: 5 In 1987, the Internal Revenue Service's Criminal Investigation Division was conducting an investigation, called Operation Boots, of money-laundering activities throughout the nation. In one facet of the investigation, undercover agent Mike Mullaney (Agent Mullaney) was posing as Mike Martinez, a representative of Colombian drug dealers. Agent Mullaney began to launder money through Charles LeChasney (LeChasney) and others. 6 Swindall, who knew LeChasney from various Republican Party fundraising events, believed him to be a wealthy financial consultant, not the least because LeChasney lived in an historic mansion in an affluent section of Atlanta and appeared to own a fleet of antique and luxury cars. In fact, he was a bankrupt con artist whose fraudulent schemes had left a trail of victims. LeChasney, who was himself under investigation and who was later arrested and convicted, was not cooperating with the government and was unaware that the person he knew as Mike Martinez was in fact undercover agent Mike Mullaney. 7 In mid-1987, Swindall asked LeChasney for financial advice concerning a million-dollar note he held, which matured in four years and was earning eight-percent interest. The note represented part of the proceeds of the sale of commercial real estate in downtown Atlanta. Swindall, who was in need of funds to pay for cost overruns on a home he was having built, wanted to sell the note or use it to obtain a loan, whichever generated the most favorable tax consequences. LeChasney informed Swindall that he knew of investors who might be willing to buy the note, but who would pay only in cash. He explained that the cash was flight capital smuggled from Central American countries by refugees fleeing oppression, and that the investors needed to hide their assets and conceal their identities to protect themselves from the governments of these countries. 8 According to the government, Swindall was aware of two particular money-laundering statutes because of his membership on the House Banking and Judiciary Committees. One statute prohibited laundering funds that are the proceeds of unlawful activities such as selling drugs. 3 The other statute, enacted in response to money launderers who engaged in transactions of less than $10,000 to avoid triggering reporting requirements, prohibited structuring a transaction to cause a financial institution not to file a report that would otherwise be required. 4 Both bills were part of the Anti-Drug Abuse Act of 1986 and each was considered by either the Banking or Judiciary Committee during Swindall's tenure in Congress. 9 In July 1987, LeChasney reported to Agent Mullaney that Swindall wanted to sell a million-dollar note and, according to LeChasney, was interested in selling it offshore to evade taxes. Agent Mullaney reported this information to superiors, who opened a tax-evasion and currency-reporting investigation of Swindall.
10 On August 28, 1987, Swindall, LeChasney, and Agent Mullaney met at the Marriott Hotel in Atlanta. The government secretly videotaped the meeting. Swindall told Agent Mullaney that, because of changes in the tax laws, he was no longer interested in selling the note, but he was interested in obtaining a loan. Agent Mullaney--mentioning nothing about Colombian drug dealers--told Swindall that he represented South American investors who wished to dispose of cash, hide their assets, and conceal their identities. He informed Swindall that any deal would be in cash. 11 Swindall stated that he was interested in a mortgage loan and suggested a scheme whereby LeChasney would form a mortgage company, secretly funded by the agent's investors, that would lend Swindall money. Swindall would sign the million-dollar note over to LeChasney's newly formed corporation, which the agent's investors would eventually purchase. The advantages of this scheme included that (1) Swindall could have use of the money without realizing an immediately taxable gain from sale of the note; (2) the investors could anonymously dispose of their cash; and (3) Swindall could point to LeChasney's corporation as the source of the loan and deny that he had ever made a deal with Agent Mullaney. 12 Although the deal would be made to appear to be a mortgage loan from LeChasney to Swindall, Swindall and the undercover agent negotiated the price of the actual deal--a sale of the note for cash. They discussed a price in the range of $850,000, which was $80,000 higher than the present value of the note. 13 Swindall asked why he could not simply deposit the cash in a bank in one lump sum. Agent Mullaney explained that currency transaction report forms (CTRs or bank forms) would require, inter alia, that Swindall reveal the source of the funds, which would be unacceptable to the agent's investors. It was therefore imperative that the bank forms either not be filed or be filed falsely. LeChasney--who was to receive a large commission from the deal--informed Swindall that it would take him at least three weeks to convert such a large amount of cash into cashier's checks without triggering the currency-reporting requirements. No agreement was reached because, among other reasons, Swindall refused to accept delivery of the cash personally, and neither Swindall nor the undercover agent was willing to assume the risk of loss during the three weeks required to convert the cash into cashier's checks.
14 The government then closed its investigation of Swindall as he had not indicated an intention to evade his taxes. On September 3, however, the government reopened the investigation, this time with regard to money-laundering and transaction-structuring violations, because LeChasney had advised Agent Mullaney that Swindall was now willing to accept the cash personally. LeChasney informed the agent that Swindall was in immediate need of $100,000 because of the cost overruns on his home. Swindall's increasingly pressing need for funds eventually resulted in the inclusion of an advance payment of $150,000 in the proposed deal. 15 During the course of negotiations, Agent Mullaney spoke several times on the telephone with LeChasney and occasionally with Swindall. The agent recorded these conversations. On September 7, Swindall related to the agent his fear that the cash came from drug sales. The agent responded that he had been told the cash was flight capital, but that he could not guarantee the source. He told Swindall that the specter of drugs is there, but that he personally was not involved in selling drugs. The agent also told Swindall that some of the manipulations ... with the cash may well be illegal in and of themselves, especially in light of the reporting requirements for transactions in excess of $10,000. Swindall stated that it was his position that he would be borrowing money from LeChasney and he had no knowledge or interest in how LeChasney obtained his funds. In other words, Swindall was protected because he could deposit checks from LeChasney's corporation and, when depositing them, truthfully state their direct source. As part of the actual deal, however, Swindall agreed to accept delivery of the cash and to tender a secret document acknowledging his assignment of the note to Agent Mullaney. The parties agreed that Swindall would sign this document in the agent's presence. 16 Agent Mullaney testified that up until that point, his ability to inform Swindall that the cash came from illegal sources was hampered by LeChasney's attempts to mislead Swindall about the legality of the deal. While the agent's objective was to investigate whether Swindall was willing to participate in money-laundering transactions, LeChasney was eager, if not desperate, to receive the sizeable commission that would come from the completed deal. The agent testified that he wanted to inform Swindall of the source of the funds at their next face-to-face meeting, with LeChasney present, so that LeChasney could not continue falsely to assure Swindall that the cash was flight capital. Throughout the later negotiations, as Swindall stated that he could not directly participate in a deal involving the proceeds of drug sales, LeChasney continued to assure him that the money was clean, while the undercover agent continued to state, with widely varying degrees of certainty, that drugs were probably involved.
17 On September 13, Swindall and LeChasney met Agent Mullaney at the Greenbriar Resort in White Sulphur Springs, West Virginia, the site of a Congressional golf tournament. Their conversation was secretly recorded by the agent. Discussing the process by which LeChasney would convert the cash into cashier's checks, the agent asked LeChasney whether he intended to stay under the ten thousand dollars, which would circumvent the requirement that CTRs be filed. Swindall added, I assume you are, aren't you, Charles? 18 Swindall asked the agent if the source of the cash was drug money. The agent told Swindall that it was his gut feeling that there are narcotics dollars in there. He told Swindall that the money was not flight capital and that in the past he had laundered cash from such illegal activities as skimming profits from casinos. Swindall assured the agent that anything you tell me is told in total confidence from this point forward. During a discussion of the risk the Congressman was taking, Swindall stated that there's no question in this transaction that I am basically using Charles as my buffer, and where Charles gets his money is his business, his problem. Swindall stated that he was still undecided about the deal and that he wanted to sleep on it. 19
20 On September 18, Agent Mullaney advised LeChasney that he would deliver $150,000 in advance, and the balance directly to Swindall at the time the note was transferred. The agent insisted that he receive a handwritten note from Swindall acknowledging that Swindall had received the $150,000 from the agent himself and not from LeChasney's buffer corporation. 21 Because Agent Mullaney's superiors ordered him to delay delivery of the advance payment, LeChasney, still eager to receive his commission, agreed to advance Swindall the $150,000. In fact, LeChasney did not have $150,000. He was able, however, to present Swindall with a check in that amount drawn from the escrow account of his attorney, Douglas Daum (Daum). LeChasney, with the aid of an accomplice at Dean Witter, falsely represented to Daum that he had enough money in a Dean Witter account to cover the check. LeChasney meanwhile had incorporated the buffer corporation, called the Gulf Coast Mortgage Company. The government introduced evidence that the $150,000 check was part of the larger deal. The defense contended that this was a truly separate loan agreement between LeChasney and Swindall and that LeChasney would be reimbursed by Agent Mullaney only if Swindall and the agent came to an agreement. 22 On Friday, September 25, Swindall received the check at Daum's office. Swindall signed a document evidencing his receipt of the check, but the document acknowledged only LeChasney's corporation, not the undercover agent. Swindall assigned in writing $150,000 of his million-dollar note to LeChasney's corporation as an advance upon a real estate loan upon my residence ... the total amount of the loan to be ... $850,000. Swindall then delivered the check to the builder of his home. 23 Swindall and Agent Mullaney had agreed to meet that weekend for delivery of the cash. On Saturday evening, however, Swindall called the agent to inform him that he was not going forward with the transaction because of the potential liability. They spoke again later in the evening in an unsuccessful attempt to save the deal. Swindall told the agent, The only reason I can't [sign the note acknowledging the cash from the agent] is I would be essentially laundering y'all's money, which I can't do. In other words, if Charles wants to launder y'all's money, fine. But I can't do that. 24 Although Swindall argues that the $150,000 check had nothing to do with the larger transaction, once the deal with Agent Mullaney fell through, (1) Swindall called the builder and told him not to deposit the check; (2) Swindall returned the check to Daum; (3) LeChasney returned Swindall's note; and (4) Daum and LeChasney stopped payment on their respective checks. The IRS closed the investigation against Swindall. LeChasney, however, attempted unsuccessfully during the next few weeks to resuscitate the deal. 25
26 In January 1988, the government indicted and arrested LeChasney for money-laundering. On January 28, after learning of LeChasney's arrest, Swindall contacted the U.S. Attorney's Office in Atlanta and asked to speak with someone regarding his financial dealings with LeChasney. Two IRS agents visited Swindall at his home that night and took a statement. On February 2, 1988, Swindall appeared before a federal grand jury investigating money-laundering activities. The government informed Swindall that he was a subject, not a target, of the investigation. According to the government, Swindall perjured himself before the grand jury to conceal the extent of his involvement in discussions about illegal money-laundering transactions. 27 The grand jury returned a ten-count perjury indictment against Swindall on October 17, 1988. In brief, the indictment charged that Swindall made the following false statements that were material to the grand-jury investigation: he stated that during negotiations with the undercover agent, he had never satisfied himself as to the criminality of the proposed transactions, and that he did not recall being told that LeChasney's conversion of the money would violate federal currency reporting requirements (Count One); he stated that he did not recall discussions about being insulated by LeChasney from the source of the undercover agent's money (Count Two); he stated that he walked away from the deal on September 13, 1987, after the Greenbriar meeting, when in fact he continued negotiating until the end of September (Count Three); he stated that he did not recall being told by the undercover agent that the source of the cash was drug-sale proceeds (Count Five); he stated that every time I talked with Mike [Agent Mullaney], I was insisting that the money be delivered without my being present (Count Six); he stated that the $150,000 check he received from LeChasney had nothing to do with the larger, $850,000 transaction with the undercover agent (Count Seven); he stated that he had given the $150,000 check to his secretary and instructed her not to deposit it, when in fact he had delivered the check to the builder of his home (Count Eight); he stated that he did not recall conversations about avoiding filing bank forms (Count Nine); and finally, he stated that he did not recall being informed by the undercover agent that the agent's investors were engaging in the transaction to wash or launder cash (Count Ten). 28 A first trial--scheduled at Swindall's request for October 1988 to give him a chance to retain his seat in the House by winning acquittal before Election Day--was aborted stemming from charges that Swindall had mailed to potential jurors campaign literature claiming that he had passed a lie detector test concerning the perjury charges. Swindall lost his campaign for reelection and went to trial in May 1989. During the trial, the district court dismissed Count Four of the indictment. A jury found Swindall guilty on all the remaining counts. Swindall filed a timely notice of appeal. 29