Court Opinion

ID: 155465
Source: CourtListenerOpinion
Date Created: 2010-08-14 04:17:09+00
Date Added: 2024-06-11T15:01:09.189107
License: Public Domain

F I L E D
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                                        PUBLISH
                                                                               OCT 22 1997
                       UNITED STATES COURT OF APPEALS
                                                                           PATRICK FISHER
                                                                                    Clerk
                                   TENTH CIRCUIT

 UNITED STATES OF AMERICA,

        Plaintiff-Appellee,
 vs.                                                         No. 97-6014

 CHARLEY HARGUS,

        Defendant-Appellant.

             APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE WESTERN DISTRICT OF OKLAHOMA
                          (D.C. No. CR 95-102-T)

Chris Eulberg, Eulberg & Brink, Oklahoma City, Oklahoma, for Defendant-Appellant.

Ross N. Lillard, III, Assistant United States Attorney (Patrick M. Ryan, United States
Attorney, with him on the brief), Oklahoma City, Oklahoma, for Plaintiff-Appellee.

Before BALDOCK, KELLY, and BRISCOE, Circuit Judges.

KELLY, Circuit Judge.

       Defendant-Appellant Charley Hargus appeals from his jury conviction on twenty-

three counts of conspiracy, 18 U.S.C. § 371, mail fraud, 18 U.S.C. § 1341, and money

laundering, 18 U.S.C. § 1956(a)(1)(B)(I). The district court sentenced Mr. Hargus to
seventy-eight months in prison, a term of supervised release, and ordered him to pay

restitution. On appeal Mr. Hargus argues that the trial court erred (1) in denying his

motion to suppress evidence obtained from the search of his home; (2) in allowing

testimony of a sting operation after the government lost material and exculpatory

evidence; and (3) in computing his base sentence and assessing enhancements. Our

jurisdiction arises under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a)(2), and we affirm.

                                        Background

       On the evening of August 26, 1991, an investigator from the Oklahoma District

Attorney’s office arrived at Mr. Hargus’s oil reclaiming yard. Larry Johnson, a truck

driver arrested earlier that day for embezzling oil, also arrived at the yard with a tanker

truck containing stolen oil. Cooperating with local authorities in a sting, Mr. Johnson had

called Mr. Hargus at home earlier in the day to arrange the sale of the stolen oil. The

investigator was introduced to Mr. Hargus as the owner of a fictitious company selling

the oil. The conversation between the three men was recorded via a body transmitter

worn by Mr. Johnson. The investigator gave Mr. Hargus a false load ticket. A load ticket

shows ownership of oil, and under Oklahoma law must accompany every truck load of oil

in transportation. Mr. Hargus gave the investigator an unsigned check.

       Four days later the investigator obtained a warrant to search Mr. Hargus’s home

and business. The searches lasted approximately five hours and resulted in the seizure of

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many records, including two file cabinets and items not specified in the warrant.

       Approximately four years later Mr. Hargus was arrested after a grand jury indicted

him on the present charges of conspiracy, mail fraud, and money laundering. The

evidence at trial indicated that Mr. Hargus organized a scheme to steal oil from a tank

battery located at the Borque oil lease, belonging to Star Production, Inc. A pumper at the

lease, Ronney Dice, diverted the oil and stored it for pickup in the Borque tank. Mr.

Johnson picked up the oil, and, with load tickets stating it was “tank bottoms” from the

Karla 2, a dry well Mr. Hargus owned, trucked the good oil either to the JADCO or SUN

oil companies, or to Hargus Reclaimers, where it would be picked up later by JADCO or

SUN. JADCO and SUN bought the oil at market price and were unaware it was stolen.

Mr. Hargus had falsely reported to the Oklahoma Corporation Commission that the Karla

2 was a producing well.

       The mail fraud counts were based on the checks Mr. Hargus received through the

mails from SUN and JADCO in payment for the oil. The money laundering counts were

predicated on Hargus’s depositing those checks in his bank, and in some cases writing

checks to co-conspirator Ronney Dice. The conspiracy count involved Mr. Hargus, Mr.

Dice, and Mr. Johnson.

       The sentencing court calculated the loss at $582,918.64, enhancing Mr. Hargus’s

sentence accordingly under USSG § 2F1.1. The district court also enhanced Mr.

Hargus’s sentence for his aggravating role as a leader or organizer, USSG § 3B1.1(a), for

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more than minimal planning, USSG § 2F1.1(b)(2)(A), and for obstruction of justice,

USSG § 3C1.1.

                                        Discussion

                                       I. The Search

       Mr. Hargus contends that the search of his home violated the Fourth Amendment

on four grounds. First, he argues that the affidavit in support of the search warrant

contained false and misleading statements. Second, he argues no probable cause existed

to search his home for the items listed in the warrant. Third, he challenges the

particularity of the warrant. Fourth, he argues that the officers executed the search in

flagrant violation of the terms of the warrant. When reviewing a district court’s denial of

a motion to suppress, we accept its factual findings unless clearly erroneous and view the

evidence in the light most favorable to the government. See United States v. Villa-

Chaparro, 115 F.3d 797, 800-01 (10th Cir. 1997), petition for cert. filed, (U.S. Sept. 10,

1997) (No. 97-5973). The credibility of witnesses at the suppression hearing and the

weight to be given to the evidence, along with all reasonable inferences from it, are

matters for the trial court. See id. at 801. The ultimate determination of reasonableness

under the Fourth Amendment, however, is a question of law which we review de novo,

considering the totality of the circumstances. See id.

                                              4
                               A. The Warrant Application

       Mr. Hargus argues that the affidavit on which the search warrant was issued

contained false and misleading statements and omissions. He contends the affiant failed

to tell the issuing magistrate that he had no reason to believe the conspiracy involved

anyone other than Hargus, Johnson, and Dice; that he had no reason to believe Mr.

Hargus was involved in any illegal activity dealing with gas, salt water and other fluid

transfers, or that gas gauge books were located either at Mr. Hargus’s business or home.

In addition Mr. Hargus argues that the affiant had no reason to believe that certain

specified items, such as certificates of deposit, were evidence of criminal activity; and he

challenges the veracity of various details in the affidavit. We need not reach these issues

because the affidavit contains adequate facts to establish probable cause without

considering the allegedly false statements and material omissions. The affidavit recited

the sting operation in which Mr. Hargus bought stolen oil at his reclaiming yard; it

described the conspiracy between Hargus, Johnson, and Dice; and it described oil transfer

reports and daily time sheets provided to the affiant by Mr. Johnson and his employer,

indicating that the trafficking in stolen oil had been going on for at least three months. In

our view these facts alone established probable cause for the warrant. See Franks v.

Delaware, 438 U.S. 154, 155-56 (1978) (even if a court finds that some information is

false, suppression is required only if the false or misleading information is necessary to a

finding of probable cause); United States v. Myers, 106 F.3d 936, 940 (10th Cir.)

                                              5
(declining to address alleged falsehoods because even without them the warrant

established probable cause), cert. denied, 117 S. Ct. 2446 (1997).

         Mr. Hargus also contends that the affidavit did not provide probable cause to

believe the specified items could be found in his house, and consequently the warrant to

search his house violated the Fourth Amendment. A nexus between the objects to be

seized and the place to be searched for them is established when the circumstances set out

in the affidavit would warrant a person of reasonable caution to believe that the articles

sought would be found at the place to be searched. See United States v. $149, 442.43 in

U.S. Currency, 965 F.2d 868, 874 (10th. Cir. 1992); United States v. Rahn, 511 F.2d 290,

293 (10th Cir. 1975). There need not be direct evidence or personal knowledge that the

items sought are located at the place to be searched, and we have recognized that courts

often rely on the opinion of police officers as to where contraband may be kept. See

$149, 442.43 in U.S. Currency, 965 F.2d at 874. Here the investigator’s affidavit

indicated that Mr. Hargus was reached at his home when the stolen oil buy was arranged.

This fact, together with the nature of the small business Mr. Hargus operated and the

ongoing conspiracy described in the affidavit, made it reasonable for the issuing judge to

conclude that the records described in the affidavit would be found at Mr. Hargus’s

house.

                                              6
                                       B. The Warrant

       Mr. Hargus next argues that the search warrant did not describe with sufficient

particularity the things to be seized, in violation of the Fourth Amendment. We review de

novo whether the warrant was overbroad or insufficiently particular under the Fourth

Amendment. See Davis v. Gracey, 111 F.3d 1472, 1478 (10th Cir. 1997). “[A] warrant’s

description of things to be seized is sufficiently particular if it allows the searcher to

reasonably ascertain and identify the things authorized to be seized.” United States v.

Finnigin, 113 F.3d 1182, 1187 (10th Cir. 1997) (omitting quotations and citations).

Further, the warrant must leave nothing to the officer’s discretion as to what is to be

seized, so that the officer is prevented from generally rummaging through a person’s

belongings. See Lawmaster v. Ward, No. 96-5028, 1997 WL 577708, at *5 (10th Cir.

Sept. 18, 1997).

        The warrant described the following particular things to be seized:

       1. oil and gas gauge books;
       2. telephone records, bills, and invoices;
       3. business records, receipts, invoices, accounts payable, and other records
       regarding oil and gas, salt water and other fluid transfers of the business
       known as Hargus Reclaimers;
       4. check books and check stubs;
       5. checking account records of all accounts of Charley Hargus and Hargus
               Reclaimers;
       6. oil transfer reports;
       7. certificates of deposit;
       8. bank deposit statements of savings and other accounts;
       9. income tax records;

       10. any and all records relating to the business of Hargus Reclaimers and records

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              pertaining to the purchase and sale of oil, oil by-products, salt water and
              other fluids by Charles Hargus.
       Aplt. Supp. App. at 7.

Although Mr. Hargus contends this constitutes a general warrant we are satisfied that it is

sufficiently limited and specific, in view of the nature of this extended conspiracy and

other crimes for which he was being investigated, to “allow the executing officers to

distinguish between items that may and may not be seized.” Finnigin, 113 F.3d at 1187

(quoting United States v. Leary, 846 F.2d 592, 602 (10th Cir. 1988)). “Even a warrant

that describes the items to be seized in broad or generic terms may be valid when the

description is as specific as the circumstances and the nature of the activity under

investigation permit.” Davis, 111 F.3d at 1478 (internal quotations omitted).

                                C. Execution of the Warrant

       Mr. Hargus argues that the officers conducting the search of his home grossly

exceeded the scope of the warrant, rummaged in an exploratory way through his

belongings, and took things not specified in the warrant. He argues this requires

suppression of all the results of the search.

       The officers’ conduct in executing a search warrant is governed by the Fourth

Amendment’s mandate of reasonableness from the moment they step into the house until

the moment they leave. See Lawmaster, 1997 WL 577708, at *6. If evidence is illegally

seized, the general rule is that “only the improperly seized evidence, not all of the

                                                8
evidence, must be suppressed, unless there was a flagrant disregard for the terms of the

warrant.” United States v. $149, 442.43 in U.S. Currency, 965 F.2d 868, 875 (10th Cir.

1992) (internal quotations omitted). Thus a search is not invalidated merely because

some things are seized that are not stated in the warrant. This is particularly true when

the non-specified items are not admitted into evidence against the defendant. See United

States v. Henson, 848 F.2d 1374, 1383 (6th Cir. 1988). However “[w]hen officers grossly

exceed the scope of a search warrant in seizing property, the particularity requirement is

undermined and an otherwise valid warrant is transformed into a general warrant,” which

may require suppression of all evidence seized pursuant to it. United States v. Foster, 100
F.3d 846, 849-50 (10th Cir. 1996) (quoting United States v. Medlin, 842 F.2d 1194, 1199

(10th Cir. 1988) (Medlin II)).

       The officers began their search at Hargus Reclaimers, and after approximately one

hour they drove to Mr. Hargus’s home. Within fifteen minutes the search had centered in

the den, where a desk, two file cabinets, and a safe were located. According to the

testimony, only minimal records were seized from other parts of the house; the locus of

the Hargus Oil records was in the den, where the remainder of the search took place.

After confirming that oil records were present in every drawer of the file cabinets

(sometimes intermingled with other records), the officers decided that on-site sorting

would be impractical and unduly time-consuming. See Aplt. Supp. App. at 24-25. The

officers seized both file cabinets with all their contents, and informed Mr. Hargus’s son,

                                             9
Curtis, that he could obtain any unrelated papers from the district attorney upon request.

       Among the items seized beyond the scope of the warrant were unopened mail,

office supplies, an answering machine, camera, birthday cards, tape measure, right-of-

way papers, horse and cattle papers, and life insurance policies. See Aplt. Brief at 14.

       Although we are given pause by the wholesale seizure of file cabinets and

miscellaneous papers and property not specified in the search warrant, the officers’

conduct did not grossly exceed the scope of the warrant. Their conduct was motivated by

the impracticability of on-site sorting and the time constraints of executing a daytime

search warrant. The officers were authorized to seize ten broad categories of records, and

those records were present in every drawer of both file cabinets. No item not specified in

the warrant was admitted against Mr. Hargus at trial. Under these circumstances the

officers did not grossly exceed the warrant in concluding they did not need to examine at

the site every piece of paper in both cabinets. See Henson, 848 F.2d at 1383-84; $149,

442.43 in U.S. Currency, 965 F.2d at 875-76; United States v. Shilling, 826 F.2d 1365,

1369-70 (4th Cir. 1987), overruled on other grounds by United States v. Starkes, 32 F.3d
100, 101 (4th Cir. 1994); United States v. Schandl, 947 F.2d 462, 465-66 (11th Cir.

1991); United States v. Tamura, 694 F.2d 591, 597 (9th Cir. 1982); Marvin v. United

States, 732 F.2d 669, 674 (8th Cir. 1984).

                             II. Admission of Sting Evidence

                                             10
       The government appears to have lost or destroyed both the load ticket and the

check exchanged between the investigator and Mr. Hargus in the course of the sting

operation. Mr. Hargus claims that both items were exculpatory. As a sanction, he argues

that the trial court should have excluded evidence of the sting altogether. Because Mr.

Hargus has not alleged bad faith on the part of the government he must prove that the lost

evidence had “apparent” exculpatory value in order to invoke the sanction. United States

v. Bohl, 25 F.3d 904, 910 (10th Cir. 1994) (citing California v. Trombetta, 467 U.S. 479

(1984)). The district court found that the load ticket and unsigned check were at best

potentially useful. We review this finding of fact for clear error. Id. at 909.

       Mr. Hargus’s argument that the documents were exculpatory is essentially that the

load ticket looked regular and Mr. Hargus relied on it in concluding the sale was legal; in

addition he argues that the unsigned check he gave to the investigator would have lent

credibility to his testimony.

       There is ample evidence in the record, however, to support the trial judge’s

finding. The recorded conversation between Hargus, Johnson, and the investigator

supports the view that Mr. Hargus knew the oil was stolen and the load ticket was fake.

See Aplee. Br. Add., Gov’t Exh. 36, at 5-9. On this record the trial judge’s finding that

the documents were at best potentially useful is not clearly erroneous.

                                      III. Sentencing

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       Mr. Hargus challenges his sentence on six grounds: (1) the mail fraud and money

laundering counts should have been grouped under USSG § 3D1.2, resulting in a lower

base offense level; (2) the district court incorrectly computed the amount of loss, resulting

in a higher enhancement than warranted; (3) retroactive application of USSG § 3B1.1

constituted ex post facto punishment; (4) the district court erred in finding Mr. Hargus a

leader or organizer as to the money laundering counts; (5) the district court improperly

considered uncharged conduct in increasing the base offense level of the money

laundering counts; and (6) the court erred in finding that Mr. Hargus obstructed justice.

       We review the district court’s legal interpretation of the guidelines de novo, see

United States v. Kunzman, 54 F.3d 1522, 1531 (10th Cir. 1995), as we do the ex post

facto challenge. See United States v. Hampshire, 95 F.3d 999, 1005 (10th Cir. 1996),

cert. denied, 117 S. Ct. 753 (1997). We review the sentencing court’s findings of fact for

clear error, giving due deference to the district court’s application of the guidelines to the

facts. See United States v. Farnsworth, 92 F.3d 1001, 1009 (10th Cir.) (citing United

States v. Gomez-Arrellano, 5 F.3d 464, 465 (10th Cir. 1993)), cert. denied, 117 S. Ct. 596

(1996).

       Mr. Hargus argues that USSG § 3D1.2 required the grouping of his mail fraud and

money laundering counts. That section provides: “All counts involving substantially the

same harm shall be grouped together into a single Group.” USSG § 3D1.2. Mr. Hargus

relies in particular on subsection (d), under which offenses covered by a list of guidelines,

                                              12
including the guidelines for both fraud and money laundering, “are to be grouped.”

USSG § 3D1.2(d). While we might be inclined to agree with him were this a case of first

impression, not one but two of our recent precedents have interpreted this guideline as it

applies to the grouping of money laundering and fraud counts. In United States v.

Johnson, 971 F.2d 562, 575-76 (10th Cir. 1992) and United States v. Kunzman, 54 F.3d
1522, 1530-31 (10th Cir. 1995) we held that because money laundering and fraud involve

different harms and different victims, they may not be grouped under USSG § 3D1.2(d).

It is well established in this circuit that one panel of the court may not overrule another.

See In re Smith, 10 F.3d 723, 724 (10th Cir. 1993).

       Mr. Hargus argues that the amount of loss should have been calculated at

$419,871.29, rather than at the district court’s finding of $582,918.64, resulting in a

difference of one offense level. See USSG § 2F1.1. The district court’s calculation,

which need only be supported by a preponderance of the evidence, was based on SUN

and JADCO records of Karla 2 oil bought from Hargus. Ample evidence connects these

records to the stolen Borque oil Mr. Hargus brokered. See II R. 31-33, 37-38, 42-45; III

R. 309-14; 323-24. The sentencing court’s calculation of loss was therefore not clearly

erroneous.

       The sentencing court considered as “relevant conduct” activity that occurred

before the November 1, 1990 amendment to USSG § 3B1.1. That amendment made clear

that a sentencing court was to determine a defendant’s role not only from the offense of

                                              13
conviction but from all relevant conduct. The Ex Post Facto Clause1 prohibits application

of the amendment to conduct that occurred solely before its effective date. Mr. Hargus,

however, was convicted of a conspiracy spanning January 1989 to August 28, 1991, a

period of time that stretches well past the effective date of the amendment. Further, he

concedes that four counts (18, 21, 22, and 23) occurred after the November 1, 1990

amendment. See Aplt. Brief at 28. Because part of the conduct for which Mr. Hargus

was convicted occurred after the amendment there is no ex post facto violation. See

United States v. Stanberry, 963 F.2d 1323, 1327 (10th Cir. 1992); United States v. Smith,

46 F.3d 1223, 1239 (1st Cir.), cert. denied, 116 S. Ct. 176 (1995).

       Mr. Hargus argues that the sentencing court should not have found he was a leader

or organizer as to the money laundering counts because he was the only participant in the

laundering. The court assessed a two-level enhancement, under USSG § 3B1.1(c), based

on this finding. Five counts of money laundering (Counts 19-23) involved Mr. Hargus

writing checks to Ronney Dice. At Mr. Hargus’s instruction, Mr. Dice picked up the

checks at Mr. Hargus’s home and normally cashed them. See II R. 102-03. In view of

this evidence it was not clear error for the sentencing court to find that more than one

person was involved in the money laundering and that Mr. Hargus was a leader or

organizer.

       Mr. Hargus contends that the district court improperly applied a two-level

       "No . . . ex post facto Law shall be passed.” U.S. Constitution. art. I, § 9, cl. 3.
       1

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enhancement for money laundering under USSG § 2S1.1(b)(2)(C). He argues that

because he was charged and convicted of laundering only $34,500.00, it was error for the

court to enhance his sentence under § 2S1.1(b)(2)(C), which requires at least $100,000

for any enhancement. Mr. Hargus has failed to address § 1B1.3, under which the

sentencing court may consider all relevant conduct whether or not charged. In the record

Mr. Dice identified 107 checks as his share of the illicit proceeds, see II R. 109-113,

amounting to $272,098.90. See IV R. 380-83. The district court did not err in applying a

two-level enhancement under § 2S1.1(b)(2)(C). See Kunzman, 54 F.3d at 1531-32 (citing

Johnson, 971 F.2d at 576 n.10).

       Finally, Mr. Hargus claims the district court erred in assessing a two-level

enhancement for obstruction of justice under USSG § 3C1.1. The district court

specifically did not adopt the Presentence Report’s recommendation that the enhancement

was warranted partly by a threat made to Ronney Dice. The district court found that the

enhancement was justified solely on the basis of Mr. Hargus’s perjurious testimony at

trial. The court properly analyzed the elements of perjury as (1) false testimony under

oath, (2) concerning a material matter, (3) with willful intent to provide false testimony,

rather than as a result of confusion, mistake, or faulty memory. See United States v.

Dunnigan, 507 U.S. 87, 94-95 (1993); United States v. Smith, 81 F.3d 915, 918 (10th Cir.

1996). The district court identified five specific instances of perjury by Mr. Hargus at

trial, finding each to be willful and material. After reviewing the court’s findings we are

                                             15
satisfied there was no clear error.

       AFFIRMED.

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