Court Opinion

ID: 3000218
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:02:29.179375+00
Date Added: 2024-06-11T09:35:46.485504
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

Nos. 05-2573 & 05-2589
UNITED STATES OF AMERICA,
                                                   Plaintiff-Appellee,
                                  v.

HAYFA KHTHER AL-SHAHIN AND
RIYADH L. AL-SHAHIN,
                                             Defendants-Appellants.
                          ____________
            Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
                No. 03 CR 567—John F. Grady, Judge.
                          ____________
   ARGUED SEPTEMBER 8, 2006—DECIDED JANUARY 25, 2007
                          ____________

 Before EASTERBROOK, Chief Judge, and CUDAHY and
MANION, Circuit Judges.
  MANION, Circuit Judge. A jury convicted Riyadh Al-
Shahin and his wife Hayfa Al-Shahin of mail fraud stem-
ming from their involvement in a scheme to collect money
from an insurance company for a fraudulent automobile
accident. The Al-Shahins appeal, claiming that the dis-
trict court erred in admitting certain testimony at trial, in
refusing to give two jury instructions, and in failing to
conduct an evidentiary hearing regarding extrajudicial
juror communications. They also contest an enhancement
2                                   Nos. 05-2573 & 05-2589

to their sentences for the amount of loss. We affirm their
convictions and sentences.

                             I.
  To combat staged accidents and automobile insurance
fraud, the Federal Bureau of Investigation initiated an
undercover operation known as “Soft Tissue.” The name
derives from soft tissue injuries, which are musculoskeletal
injuries that do not necessarily present objective symp-
toms for diagnosis, unlike bruising or broken bones.
Since the symptoms consist primarily of a subjective
component (such as complaints of pain) they are easier
to fake, and hence favored when making fraudulent claims.
Operation Soft Tissue investigated fraudulent car ac-
cidents in which conspirators staged accidents and then
profited by making claims for damage to the cars and
inflated medical bills for individuals, including some
individuals who may not have even been in the cars dur-
ing the collision.
   In conducting the investigation, the FBI established a
law office for agent James Whitmer, a licensed Illinois
attorney. With permission from the Attorney Registration
and Disciplinary Commission, an agency of the Illinois
Supreme Court, Whitmer posed as attorney “James Kent,”
whose mission was to find and represent clients in set-
tling fraudulent accident claims with various insurance
companies. Assisting the investigation and posing as the
office manager was cooperating witness David Youhanna.
Youhanna had participated in staging accidents for al-
most a decade and, after a hiatus from his involvement,
agreed to cooperate with the government in the investiga-
tion. To ensure that the claims processed through the
Nos. 05-2573 & 05-2589                                        3

office were fraudulent, agent Whitmer never advertised,
relying instead on Youhanna’s recruitment of fraudulent
cases and word-of-mouth. Whitmer also insisted on see-
ing the insurance policy for the at-fault vehicle before the
accident occurred for further evidence that the accident
was staged.
  The incidents surrounding the particular accident at
issue began on July 7, 1997, when two organizers of
staged accidents (known as “chasers,” since they orig-
inally chased ambulances to hospitals to recruit claims),
Karnick Karamian and Raul Mejia, brought agent Whit-
mer an American Family Insurance policy belonging to
Robert David and proposed to stage an accident on the
policy. Those chasers, however, were displaced by a
different chaser, Tidy Oshana, who arranged an accident
on Robert’s policy.
  The accident occurred in the late night hours of July 13,
1997 or the early morning hours of July 14, 1997, which
was a Sunday to Monday. Notably, the majority of
staged accidents occur at this time of the week, because
there are fewer potential witnesses and because it is
easier to coordinate the participants in the scheme. In
this particular accident, Robert, with his father Michael
David as a passenger, allegedly missed a stop sign and
collided with a vehicle driven by Mrs. Al-Shahin with her
husband and daughter as passengers. There were no
witnesses to the accident. The Al-Shahins went to the
hospital, where they made a police report. Robert, ac-
companied by his father, made a similar police report at
a police station that night.
  Michael, Robert’s father, later testified at trial that he had
been involved in a number of staged accidents. Since he
had participated as an at-fault driver in previous staged
4                                   Nos. 05-2573 & 05-2589

accidents, this accident had to be staged in his son’s name
to avoid raising suspicions with the insurance companies.
Michael testified that on the night of the accident, he
actually drove his son’s car to a restaurant where he gave
the keys to Oshana, who in turn gave them to an unknown
party. After an hour, the car returned to the restaurant
with damage to the front, consistent with a collision from
running a stop sign. Robert, the purported driver, also
testified at trial that he was never involved in a collision
on the night of the accident. Instead, Robert recalled his
father returning home that night with the damaged car.
His father directed Robert to make a police report and
accompanied him to the police station where Robert recited
details provided by his father, including the fact that
Robert drove the car, missed a stop sign, and collided
with the Al-Shahins.
  A few days after the accident, Youhanna, the office
manager, encountered Tidy Oshana at a medical center
where Youhanna had gone to investigate doctors willing
to cooperate with fraudulent claims. Oshana stated that
he had a case with three individuals, a husband, a wife,
and a daughter, that he would be willing to refer to
Youhanna and Whitmer. The family wanted money “up-
front” and the insurance involved was a policy from
American Family. A few days later, Oshana and another
chaser, Johnson Bavella, accompanied the Al-Shahins
and their daughter to Whitmer’s office, the same office
where Whitmer had approved, prior to the accident,
Robert David’s American Family insurance policy on
which the Al-Shahins now sought to make a claim. The Al-
Shahins then met with Youhanna, signed attorney-client
agreements, released their medical records, and executed
promissory notes for an advance from the attorney.
Nos. 05-2573 & 05-2589                                     5

Whitmer issued checks to the Al-Shahins, providing them
with money up-front for their claims.
  Whitmer then pursued settlement of their claims. He
obtained their medical records from the emergency room
and the clinic where the Al-Shahins received therapy. The
Al-Shahins received therapy approximately three or four
times each. The Al-Shahins, however, following instruc-
tions, signed in on a blank clinic form twenty-one times
each. The medical center then billed for substantially
more therapy than they each received, but Whitmer
negotiated with the center to pay only half of the charges.
Whitmer then mailed a demand letter to the insurance
company on behalf of the Al-Shahins. The insurance
company subsequently mailed settlement checks to
Whitmer for the Al-Shahins on June 4, 1998. The checks
for personal injuries totaled $17,250. The Al-Shahins
signed releases, which Whitmer then mailed back to the
insurance company on their behalf on June 16, 1998. A
grand jury indicted both Hayfa and Riyadh Al-Shahin
for two counts of mail fraud for the mailing of the settle-
ment checks and the releases. 18 U.S.C. §§ 1341-42.
  The Al-Shahins pleaded not guilty and, at trial, argued
that they were involved in a real accident and that their
part of the collision was not staged. Instead, they
claimed to have been at the wrong intersection at the
wrong time. The jury found otherwise and convicted each
on both counts. The day after the verdict, an Assistant
United States Attorney who was not involved in the
case heard from a fellow commuter, a non-juror, that the
jury was having a difficult time reaching a verdict. (A juror
who was a mutual acquaintance of the commuter and the
AUSA had apparently relayed this information.) After trial,
the government managed to identify the trial on which the
6                                   Nos. 05-2573 & 05-2589

juror was empaneled and the particular juror, and dis-
closed this information. The district judge concluded that
there was no need for an evidentiary hearing based on
the comments because they were “innocuous.”
  The judge then sentenced Mr. Al-Shahin to twelve
months of imprisonment and Mrs. Al-Shahin to five
months of imprisonment and five months of home con-
finement, and imposed joint and several liability with the
Davids (who had pleaded guilty) for restitution of $23,9641
to the insurance company. The Al-Shahins appeal their
convictions and sentences. In particular, they argue that
Whitmer’s testimony should have been excluded based
on their attorney-client privilege, and that the district
court should have instructed the jury on the advice-of-
counsel and entrapment defenses. The Al-Shahins also
argue that the district court abused its discretion in deny-
ing a hearing regarding an extrajudicial juror communi-
cation. Finally, the Al-Shahins challenge the imposition
of a sentencing enhancement for the amount of loss.
We address each of these arguments in turn.

                             II.
 We begin by considering the admissibility of agent
Whitmer’s testimony. The Al-Shahins filed a motion in

1
  This amount is the sum of the Al-Shahins’ personal injury
settlements ($17,250), the settlement for damage to their car
($3,696), and the settlement the Davids (the occupants of the
other vehicle in the accident) obtained from the insurance
company ($10,000), less the amount that had already been
returned to the insurance company through the attorney fee
charged by Whitmer.
Nos. 05-2573 & 05-2589                                     7

limine to bar his testimony based on the attorney-
client privilege. The parties do not contest that this situa-
tion falls within the ambit of the privilege, unless an
exception applies. See Fed. R. Evid. 501; United States v.
Evans, 113 F.3d 1457, 1461 (7th Cir. 1997). The govern-
ment argues that the crime/fraud exception applies,
rendering Whitmer’s testimony admissible. Under this
exception, the “privilege is [ ] forfeited if the attorney is
assisting his client to commit a crime or a fraud.” Mattenson
v. Baxter Healthcare Corp., 438 F.3d 763, 769 (7th Cir. 2006)
(citation omitted). The district court agreed with the
government that the crime/fraud exception to the privi-
lege applied and admitted the testimony. We review
the district court’s decision to apply the crime/fraud
exception for abuse of discretion. United States v. Davis,
1 F.3d 606, 609 (7th Cir. 1993).
   In order for the crime/fraud exception “[t]o drive the
privilege away, there must be ‘something to give colour
to the charge;’ there must be ‘prima facie evidence that
it has some foundation in fact.’ ” Clark v. United States,
289 U.S. 1, 15 (1933) (quoting O’Rourke v. Darbishire, [1920]
A.C. 581, 604 (P.C.)); see also Davis, 1 F.3d at 609; In re
Feldberg, 862 F.2d 622, 625 (7th Cir. 1988). If such evidence
of a crime or fraud exists, then “the seal of secrecy is
broken” and the privilege is inapplicable. Clark, 289 U.S. at
15 (citations omitted). In this circuit, the standard for
prima facie evidence “is not whether the evidence sup-
ports a verdict but whether it calls for inquiry.” In re
Feldberg, 862 F.2d at 626. In other words, “[a]ll that is
needed is something to give color to the charge” that the
Al-Shahins engaged in a fraudulent scheme to obtain
money for a staged accident from an insurance company,
culminating in mail fraud. Davis, 1 F.3d at 610 (internal
quotation omitted).
8                                    Nos. 05-2573 & 05-2589

   In this case, undercover agent Whitmer saw the at-fault
driver’s insurance policy before the accident occurred
and, after the accident, the Al-Shahins sought his represen-
tation to make claims on that policy. The accident occurred
on a Sunday to Monday night, the most common time for
staged accidents, and the Al-Shahins suffered only soft
tissue injuries, which is typical in staged-accident schemes.
The purported driver and passenger of the other vehicle
involved in the collision admitted that the accident was
staged and testified at trial. Additionally, the Al-Shahins’
friend, Oshana, who brought them to Whitmer’s office,
worked as a chaser involved in staging fraudulent acci-
dents. Finally, the Al-Shahins signed in twenty-one times
each at the medical center, notably using different colored
pens every few lines, even though they received therapy
only a few times each. These facts and others provided
the district court with sufficient circumstantial evidence
that the Al-Shahins were engaged in fraudulent conduct.
This established a prima facie case: “[w]hether pale or
rich or vivid, there is indubitably color here.” Id. This
evidence “drive[s] the privilege away” and, therefore, the
district court did not abuse its discretion in admitting
Whitmer’s testimony. Clark, 289 U.S. at 15.
  We next address the district court’s denial of jury in-
structions on the advice-of-counsel and entrapment
defenses. We review a district court’s “decision not to
instruct on a theory of defense de novo.” United States v.
Irorere, 228 F.3d 816, 825 (7th Cir. 2000) (citation omitted).
The Al-Shahins rely in their brief on this court’s state-
ment that a defendant “in a criminal case is entitled to
have the jury consider any theory of defense which is
supported by the law and which has some foundation in
the evidence, however tenuous.” United States v. Briscoe,
Nos. 05-2573 & 05-2589                                       9

896 F.2d 1476, 1512 (7th Cir. 1990) (internal quotation and
citations omitted). Defendants, however, do not cite the
next sentence of Briscoe, which reads: “However, the
defendant is not necessarily entitled to have his or her
particular instruction presented to the jury . . . ; rather the
defendant is only entitled to have his or her theory of
defense presented to the jury.” Id. (internal quotation and
citations omitted). An instruction on a defendant’s theory
of defense may only be given to the jury if
    the defendant proposes a correct statement of the law;
    the defendant’s theory is supported by the evidence;
    the defendant’s theory of defense is not part of the
    charge; and the failure to include an instruction on the
    defendant’s theory of defense in the jury charge
    would deny the defendant a fair trial.
Id. (internal quotation and citation omitted).
  With respect to the advice-of-counsel defense, this theory
was not supported by the evidence. The advice-of-counsel
defense requires a defendant to establish the following
elements:
    (1) before taking action, (2) he in good faith sought the
    advice of an attorney whom he considered competent,
    (3) for the purpose of securing advice on the lawfulness
    of his possible future conduct, (4) and made a full and
    accurate report to his attorney of all material facts
    which the defendant knew, (5) and acted strictly in
    accordance with the advice of his attorney who had
    been given a full report.
United States v. Cheek, 3 F.3d 1057, 1061 (7th Cir. 1993)
(internal quotation and citation omitted). In this case, the
Al-Shahins did not receive advice from or even contact
Whitmer prior to the accident, although they did solicit
10                                    Nos. 05-2573 & 05-2589

his representation prior to making claims with the insur-
ance company. Even with regard to making claims after
the accident, however, there is no indication that the Al-
Shahins solicited advice regarding the legality of making
claims on a fraudulent accident; rather, the theory at trial
was that their portion of the accident was not staged. This
is not a situation in which the Al-Shahins relied on the
advice of an attorney and proceeded with their con-
duct. Instead, the Al-Shahins sought representation to
further their scheme and facilitate recovery from the
insurance. There is simply insufficient evidence to support
an advice-of-counsel instruction. Since the advice-of-
counsel defense is inapplicable under these circum-
stances, the district court correctly refused to tender a
jury instruction on this defense.
  Regarding the entrapment defense, the evidence simi-
larly does not support this theory. To obtain an instruc-
tion on the entrapment defense, “a defendant must ‘[pro-
duce] sufficient evidence upon which a rational jury
could have inferred that he was entrapped into com-
mitting the crimes charged.’ ” United States v. Haddad, 462
F.3d 783, 789-90 (7th Cir. 2006) (quoting United States v.
Santiago-Godinez, 12 F.3d 722, 727 (7th Cir. 1993)). Sufficient
evidence requires “evidence for each of the two prongs of
entrapment: government inducement of the crime and a
lack of predisposition on the part of the defendant to
engage in the crime.” Id. at 790 (citing Mathews v. United
States, 485 U.S. 58, 63 (1988)). If “there is sufficient evi-
dence that the defendant was predisposed to commit the
crime, however, the entrapment defense is properly
rejected without a[n] inquiry into government induce-
ment.” Santiago-Godinez, 12 F.3d at 728 (citations omitted).
We note that the Al-Shahins’ theory at trial was that the
Nos. 05-2573 & 05-2589                                      11

accident was not staged. This theory is inconsistent with
an entrapment defense, which essentially admits com-
mission of the crime, but claims that the government
induced the illegal conduct. Regardless, we find that the
Al-Shahins were predisposed to committing the crime.
  Predisposition “focuses on determining ‘whether the
defendant was an “unwary innocent” or instead, an
“unwary criminal” who readily availed himself of the
opportunity to perpetrate the crime.’ ” Id. (citing United
States v. Casanova, 970 F.2d 371, 375 (7th Cir. 1992) (quoting
Mathews, 485 U.S. at 63)). In assessing predisposition, this
court considers factors including:
    (1) the defendant’s character or reputation; (2) whether
    the government initially suggested the criminal activ-
    ity; (3) whether the defendant engaged in the criminal
    activity for profit; (4) whether the defendant evidenced
    a reluctance to commit the offense that was overcome
    by government persuasion; and (5) the nature of the
    inducement or persuasion by the government.
United States v. Blassingame, 197 F.3d 271, 281 (7th Cir. 1999)
(citations omitted).
  In this case, although the Al-Shahins do not appear to
have previously participated in fraudulent accidents, there
is sufficient evidence to indicate that they were predis-
posed to commit this action. The Al-Shahins performed
several acts indicating their predisposition to commit
fraud before they had contact with agent Whitmer or
cooperating witness Youhanna. Specifically, after the
accident occurred, the Al-Shahins sought medical attention
at the hospital and the clinic, and they arrived at the
purported law office ready to file a claim. Although
Youhanna had met with Oshana previously, neither
12                                  Nos. 05-2573 & 05-2589

Youhanna nor Whitmer directly contacted or induced the
Al-Shahins to participate in the accident or to seek com-
pensation from the insurance company. Instead, the Al-
Shahins affirmatively sought assistance in filing their
claims with the insurance company. They also sought
and accepted up-front, advanced payments from the
attorney. There is no evidence that the Al-Shahins lacked
predisposition to engage in fraudulent conduct when
they arrived at the purported law office. Although the
evidence of their involvement was circumstantial, they
were not “unwary innocent[s].” Santiago-Godinez, 12 F.3d
at 728 (citing Casanova, 970 F.2d at 375 (quoting Mathews,
485 U.S. at 63)). The jury found that the Al-Shahins partici-
pated in a staged accident, but there is no evidence that
this accident was organized by the government. Whitmer,
a government agent, mailed the documents that gave rise
to the mail fraud charges, but he did so in the course of
representing the Al-Shahins to recover money from the
insurance company. His mailing of the documents was
in accordance with the representation the Al-Shahins
sought and to which they agreed without reluctance or a
need for persuasion. The Al-Shahins did not lack predispo-
sition to commit the crime. Therefore, we need not address
government inducement and conclude that the district
court properly refused to instruct the jury on the entrap-
ment defense. Santiago-Godinez, 12 F.3d at 728.
  The next issue is whether a hearing was required regard-
ing an alleged improper extrajudicial juror communica-
tion. The Supreme Court has determined that extrajudicial
communication with a juror may be presumed to be
prejudicial and a defendant may be entitled to a hearing on
the communication. United States v. Remmer, 347 U.S. 227,
229 (1954). “The presumption is not conclusive, but the
Nos. 05-2573 & 05-2589                                       13

burden rests heavily upon the Government to establish,
after notice to and hearing of the defendant, that such
contact with the juror was harmless to the defendant.” Id.
(citations omitted). In cases that involve “an innocuous
comment,” however, “no Remmer hearing is necessary.”
Whitehead v. Cowan, 263 F.3d 708, 724-25 (7th Cir. 2001)
(citing United States v. Thibodeaux, 758 F.2d 199, 202 (7th Cir.
1985) (affirming the district court’s denial of an evidentiary
hearing when “a juror simply overheard an ambiguous
and otherwise innocuous comment”)). “A district judge
has substantial discretion in handling extrajudicial juror
communications.” Thibodeaux, 758 F.2d at 202 (citations
omitted). We therefore review the judge’s determination
not to hold an evidentiary hearing regarding extrajudicial
juror communications for an abuse of discretion. In this
case, the district court judge denied an evidentiary hear-
ing, concluding based on the government’s submission
that “no improper conduct occurred and that there was
no prejudice to either of the defendants from the incidents
described in the Government’s disclosure.” The district
court judge further concluded that the comments were
“innocuous,” citing Whitehead, 263 F.3d at 724-25.
  We were initially curious at the district court judge’s
finding that “no improper conduct occurred,” since jurors
are routinely instructed not to speak about deliberations
or communicate about the trial, and since a juror’s com-
munication would then constitute the improper conduct
of violating an instruction. In this case, however, a re-
view of the record indicates that the district court judge
did not instruct the jury that they should not speak about
the trial proceedings with anyone. From the record, it
appears that at recesses and at the end of each trial day, the
jury was excused without caution or admonition about
14                                   Nos. 05-2573 & 05-2589

their communications and was only told when to return.
Cf. 1A Kevin F. O’Malley, Jay E. Grenig & Hon. William C.
Lee, Federal Jury Practice and Instructions §11.01-02 (5th ed.
2000) (suggesting that at each recess the jury be instructed
that “[d]uring this recess and all other recesses, you must
not discuss this case with anyone. This includes your
family, other jurors, and anyone involved in the trial. If
anyone attempts in any way to talk to you about this trial
during a recess it is your obligation to tell me immedi-
ately.”). The parties did not request a cautionary instruc-
tion at trial. We find this omission unusual. Normally it
is preferable to instruct the jury routinely about their
communications, but without such instruction, there was
nothing for the juror to violate. The district court was
therefore correct in concluding that “no improper conduct
occurred,” insofar as no court instruction was violated.
Furthermore, the disclosure provided by the government
indicates that the comments were innocuous. There is no
indication of jury tampering, bribery, any attempt to
influence the jury, or any other improper conduct. See
Whitehead, 263 F.3d at 726 (“mere speculation concerning
prejudice to the defendant is not sufficient to warrant
reversal” (citation omitted)). Accordingly, the district
court did not abuse its discretion in denying a hearing to
address this matter further.
  Finally, we reach the Al-Shahins’ challenge to the calcu-
lation of their sentencing guideline ranges, specifically to
the enhancement for the amount of loss. A district
court’s finding on the amount of loss in calculating the
sentencing guideline range is reviewed for clear error.
United States v. Dillard, 43 F.3d 299, 309 (7th Cir. 1994). In
appealing a district court’s loss calculation, the defen-
dant must show that the district court’s calculation “was
Nos. 05-2573 & 05-2589                                    15

not only inaccurate but outside the realm of permissible
computations.” United States v. Lopez, 222 F.3d 428, 437 (7th
Cir. 2000) (internal quotations and citation omitted).
   In this case, the district court imposed a six-point en-
hancement for an amount of loss ranging from “more than
$30,000” to $70,000. U.S. Sentencing Guideline Manual
§ 2B1.1(b)(1)(D) (2003). An application note for this sec-
tion clarifies that “loss is the greater of actual loss or
intended loss.” Id. § 2B1.1, app. note 3(A). “Intended loss”
is further defined as including “intended pecuniary harm
that would have been impossible or unlikely to occur (e.g.
as in . . . an insurance fraud in which the claim exceeded
the insured value).” Id. at app. note 3(A)(ii). The district
court calculated the amount of intended loss by using
the claims Whitmer submitted in a demand letter to the
insurance company on behalf of the Al-Shahins. The
demand was for $52,414, which was three times the
amount of actual medical costs. The Al-Shahins argue
that Whitmer formulated the demand without their
specific knowledge, although they learned of the demand
amount later. They ultimately settled for less than their
demand, receiving $20,946 from the insurance company
for both their injuries and car damage. There is no evi-
dence, however, that they repudiated the demand amount.
In fact, Whitmer testified that the Al-Shahins “wanted
more money” than they received, and had expected to
receive three times the amount of their medical bills.
Because the intended loss figure the district court ap-
plied was rationally based on the claims submitted, and
the Al-Shahins tacitly approved this request, it is within
“the realm of permissible computations.” Lopez, 222 F.3d
at 437. Consequently, the district court did not clearly err
in calculating the loss.
16                                 Nos. 05-2573 & 05-2589

                           III.
   Because we conclude that the district court did not
abuse its discretion in admitting the testimony of
Whitmer, properly denied jury instructions on the advice-
of-counsel and entrapment defenses, and did not abuse
its discretion in refusing to conduct a hearing on extra-
judicial communications or in calculating the amount of
loss, we AFFIRM the convictions and sentences of both
Hayfa and Riyadh Al-Shahin.

A true Copy:
       Teste:

                        _____________________________
                         Clerk of the United States Court of
                           Appeals for the Seventh Circuit

                  USCA-02-C-0072—1-25-07