Court Opinion

ID: 9957026
Source: CourtListenerOpinion
Date Created: 2024-04-03 15:05:47.23052+00
Date Added: 2024-06-11T08:18:03.264266
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                                FOURTH DISTRICT

                    JANE JEISCHA ALDANA PEREZ,
                     as Personal Representative of the
                  ESTATE OF JHOURDAN HERNANDEZ,
                                Appellant,

                                        v.

              GREGORY TONY, as Sheriff of Broward County,
                             Appellee.

                               No. 4D2023-0377

                                 [April 3, 2024]

   Appeal of nonfinal order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Fabienne Fahnestock, Judge; L.T. Case
No. CACE22014700.

  Eric Rudenberg of Rudenberg & Glasser, P.A., Fort Lauderdale, for
appellant.

  Kristin Mackenzie, Assistant General Counsel, Broward County
Sheriff’s Office, Fort Lauderdale, for appellee.

MAY, J.

   The difference between speculation and probable cause creates the
issue in this appeal. The personal representative of an estate appeals a
non-final order denying the decedent’s motion to suppress and finding
probable cause to support the continued seizure of cash by the Broward
County Sheriff’s Office (“BSO”). 1 She argues the trial court erred in finding
probable cause existed for the seizure and subsequently denying her
motion to suppress on those grounds. We agree and reverse.

    The BSO alleged the decedent was engaged in a workers’ compensation
insurance fraud scheme. On the date of the search and seizure, BSO
officers saw the decedent leaving a check cashing store with what they

1 The seized property’s original claimant died while this appeal was pending.   His
wife, as personal representative of his estate, was substituted.
believed was a backpack full of cash. They stopped the car and seized the
cash.

    The BSO alleged the cash was subject to forfeiture for two reasons:
first, because the decedent used or attempted use the cash as an
instrumentality in a suspected insurance fraud scheme under section
932.701(2)(a)5., Florida Statutes (2022); and second, because the
decedent used the cash in the course of, derived from, or realized through
racketeering activity under section 895.05(2)(a), Florida Statutes (2022).

   •   The Investigation, Stop, and Seizure

   According to the probable cause affidavit for the seizure, the BSO
investigated the decedent between June and September 2022 and
concluded he was operating a workers’ compensation insurance fraud
scheme. The detective who wrote the affidavit alleged he was familiar with
this type of scheme through his “training and experience” as part of the
BSO’s money laundering task force.

    He explained that in a typical scheme, an individual sets up a “shell
company,” which is generally structured as a limited liability company.
Then, the individual obtains a workers’ compensation insurance policy
based on the shell company’s lowly projected payroll expense, thus
securing a correspondingly low premium. The shell company’s owner then
“rents out” its certificate of insurance to uninsured construction
companies. Those companies are then able to secure construction
contracts they would not have been able to lawfully obtain without proof
of valid workers’ compensation insurance.

   The construction company’s customers pay the shell company, as
identified on the certificate of insurance. The shell company’s owner
cashes the checks, which the uninsured construction companies then use
to pay their workers. The shell company’s owner usually cashes the
checks at check cashing stores to avoid the extensive paper trail which
traditional banks create. The shell company’s owner then dissolves the
company and sets up a new one before the insurance company’s annual
audit.

   Here, the decedent incorporated a construction company called JMHA
Global, LLC (“JMHA”) in October 2021. JMHA obtained a workers’
compensation insurance policy in November 2021 based on an expected
annual payroll of $120,000, which required an annual premium of about
$16,000.

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   The insurance company cancelled JMHA’s policy in July 2022, allegedly
because no payroll had been reported. While the policy was in effect from
November 2021 through July 2022, financial records show the decedent
cashed more than $9 million in checks written to JMHA.

   The BSO alleged the decedent used the $9 million for payroll expenses
which JMHA did not report to its insurance company. The BSO estimated
JMHA avoided paying more than $1 million in premiums by failing to
report the additional payroll. Further, the BSO alleged the decedent
incorporated JMHA “for the sole purpose of defrauding [its] contracted
insurance company . . . [and] laundering [his] business-to-business
checks through complicit money service businesses.”

   The BSO staged an enforcement action at a check cashing store on
September 16, 2022. The decedent was witnessed getting out of the
passenger side of a car and entering the store with a flat black Puma
backpack. About 18 minutes later, he exited the store wearing a “more
voluminous” backpack, got back into the passenger side, and the car
pulled away.

    The BSO followed the car and eventually stopped it. The BSO alleged
it had probable cause to believe the occupants of the car were “involved in
a crime” and in possession of currency obtained through an “organized
scheme to defraud.” BSO officers searched the car and seized more than
$170,000 in cash from the decedent’s backpack. However, the BSO never
arrested or charged the decedent or the driver with any crime related to
the investigation.

    The probable cause affidavit for the seizure stated the cash was seized
pursuant to the Florida Contraband Forfeiture Act, sections 932.701–
7062, Florida Statutes (2022) (“the Forfeiture Act”). The BSO specifically
alleged the cash was subject to forfeiture under section 932.701(2)(a)5.
because it “was used or was attempted to be used as an instrumentality
in the commission of, or in aiding or abetting in the commission of,” any
of the following felonies:

      (1) organized fraud, in violation of section 817.034(4)(a)1.,
      Florida Statutes (2022);

      (2) workers’ compensation insurance fraud, or conspiracy to
      commit that fraud, in violation of section 440.105(4)(f)3.,
      Florida Statutes (2022);

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       (3) first-degree grand theft, or conspiracy to commit that
       theft, in violation of section 812.014(2)(a)1., Florida Statutes
       (2022);

       (4) operating an unlicensed money service business, in
       violation of section 560.125(5)(c), Florida Statutes (2022);

       (5) money laundering, in violation of section 896.101(5)(c),
       Florida Statutes (2022); or

       (6) racketeering and/or conspiracy to commit racketeering, in
       violation of section 895.03(1) and/or (4), Florida Statutes
       (2022).

   The BSO alleged the cash was also subject to forfeiture under the
Florida RICO Act, sections 895.01–.06, Florida Statutes (2022) (“the RICO
Act”), because it was “used in the course of, derived from, or realized
through” conduct in violation of the Act. See § 895.05(2)(a), Fla. Stat.
(2022).

   •   The Motion to Suppress and Adversarial Preliminary Hearing

    The decedent moved to suppress the cash as evidence and requested
an adversarial preliminary hearing to determine whether probable cause
existed to support its continued seizure. See generally § 932.703(3)(a),
(3)(c), Fla. Stat. (2022); Golon v. Jenne, 739 So. 2d 659, 661 (Fla. 4th DCA
1999).

    The motion to suppress argued the cash was inadmissible because the
BSO did not have reasonable suspicion or probable cause to justify the
stop of the driver’s car. Further, the BSO lacked evidence of the “core
element” of the alleged workers’ compensation insurance fraud scheme—
i.e., evidence the decedent had misrepresented JMHA’s payroll expenses
to its insurance company.

   The decedent argued cashing a large volume of checks is not illegal and
the BSO had no evidence he used any of the $9 million on unreported
payroll. The decedent suggested the cash could have been used to pay for
JMHA’s equipment, supplies, rent, or subcontractors who carried their
own workers’ compensation insurance.

   The BSO responded the stop was justified under the “automobile
exception” because the officers had probable cause to believe the car

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contained evidence of criminal activity, specifically workers’ compensation
insurance fraud and money laundering.

   The court heard the motion to suppress at the adversarial preliminary
hearing. There, the BSO presented testimony from the detective who led
the investigation and wrote the probable cause affidavit.

   The detective testified he first noticed the decedent when he was
conducting surveillance of another subject at a check cashing store in
June 2022. That day, the detective observed the decedent go into the store
carrying a black backpack that appeared “very light and flat” and then exit
with the backpack that was “obvious[ly]” heavier and “more voluminous.”
The detective saw the decedent go into the check cashing store about thirty
more times between June and July 2022.

   The detective then determined, through law enforcement databases, the
decedent had cashed more than $9 million in checks written to JMHA
between November 2021 and June 2022. He confirmed JMHA had a
workers’ compensation insurance policy with an effective start date in
November 2021 based on an expected payroll of $120,000 and would have
paid more than $1 million in additional premiums if it had reported a
payroll of $9 million. The detective believed the insurance company had
cancelled the policy in July 2022 because JMHA had not reported any
payroll.

   The detective personally believed JMHA was a shell company primarily
because it was registered at a residential address and failed to report any
legitimate payroll. He also testified he had never seen the decedent go to
an actual construction site.

   After JMHA’s insurance policy was cancelled, the detective saw the
decedent going into the check cashing store about forty more times
between July and September 2022. But during that time, the decedent no
longer cashed checks written to JMHA. Instead, the detective believed the
decedent was cashing checks written to two different entities, both of
which the detective believed were “additional shell companies engaged in
the same type of fraud.”

  The detective testified the decedent’s personal banking records
substantiated this belief by showing transfers to and from those entities.
Other records showed the checks written to those entities had been cashed
when the decedent had been at the check cashing store.

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   The detective testified this type of activity is “typical” of a workers’
compensation insurance fraud scheme. He testified that on the day of the
stop, he observed the decedent enter the check cashing store and come
out with a backpack that “appeared hefty.” That was when he decided to
stop the car. He believed the cash in the decedent’s backpack was
“supposed to be for payroll,” based on his experience with workers’
compensation insurance fraud cases.

   On cross-examination, however, the detective admitted he had no
evidence the decedent had “lent out” JMHA’s certificate of insurance. He
admitted he had no specific evidence to show how the decedent had used
the money from cashing the checks. He also admitted the decedent could
have used the cash to make large purchases or pay its subcontractors,
which would not have constituted a payroll expense if the subcontractors
had their own workers’ compensation insurance. And although the
detective testified he had seen the decedent on one occasion leaving the
check cashing store and giving “the bag” to a person in a Jeep, he also
conceded he could not rule out that person was a subcontractor with its
own insurance. 2

    In short, the detective admitted his belief the decedent was involved in
workers’ compensation insurance fraud was based solely on his general
training and experience. His investigation was limited to the decedent’s
“illegal[] cashing [of] checks at a Check Cashing Store,” and the detective
did not have any specific evidence of how the decedent had used the cash.

   •   The Trial Court’s Ruling

   The trial court denied the motion to suppress. The trial court found
the stop of the car was lawful under the automobile exception because the
BSO had probable cause to believe the decedent had committed several
crimes and the car contained evidence of those crimes. The trial court
made no findings regarding probable cause to support the continued
seizure of the cash. The decedent moved for reconsideration, which the
court failed to rule on.

   The decedent, and now his Estate, appeals from the trial court’s order.

2 The detective also relied on the driver’s statements made in an interview

following the stop, but those statements are not relevant to whether probable
cause existed to justify the stop. See Baptiste v. State, 995 So. 2d 285, 293–95
(Fla. 2008) (explaining that an anonymous tip by itself is not enough for an officer
to have probable cause).

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    •   The Appeal

    The decedent raises two arguments on appeal: (1) the trial court erred
in denying his motion to suppress because the BSO lacked probable cause
for the stop; and (2) the trial court erred in finding probable cause to
support the continued seizure because the BSO failed to demonstrate
probable cause the cash was an instrumentality in the commission of a
felony. We agree the trial court erred in denying the motion to suppress
and reverse.

    We apply a mixed standard of review to a trial court’s ruling on a motion
to suppress: the trial court’s findings of fact are entitled to deference, but
its legal conclusions are reviewed de novo. Lowery v. State, 201 So. 3d
791, 793 (Fla. 4th DCA 2016).

    Here, the trial court denied the decedent’s motion to suppress because
it agreed with the BSO that the stop was lawful under the automobile
exception to the warrant requirement. Under the automobile exception,
law enforcement may stop and search a car without a warrant if an officer
has probable cause to believe the car contains evidence of a crime. State
v. Betz, 815 So. 2d 627, 631 (Fla. 2002) (citing Carroll v. United States, 267
U.S. 132, 149 (1925)). This right, however, is not absolute, and if an officer
has probable cause only for the trunk, then that officer can search only
the trunk. See id.; see also United States v. Ross, 456 U.S. 798, 823 (1982)
(“The scope of a warrantless search based on probable cause is no
narrower-and no broader-than the scope of a search authorized by a
warrant supported by probable cause.”).

   Probable cause only exists where “the facts and circumstances within
[the officers’] knowledge and of which they had reasonably trustworthy
information [are] sufficient in themselves to warrant a man of reasonable
caution in the belief that an offense has been or is being committed.” Betz,
815 So. 2d at 631 (quoting Brinegar v. United States, 338 U.S. 160, 175–
76 (1949)).

   Here, the BSO argued, and the trial court ultimately found, BSO
detectives had probable cause to believe the car contained evidence of
workers’ compensation insurance fraud and money laundering. 3

3  The reliance on money laundering may have been misplaced because the
detective who wrote the probable cause affidavit alleged a belief the decedent had
committed only workers’ compensation insurance fraud.

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   The crime of workers’ compensation insurance fraud, as alleged in this
case, requires proof the decedent knowingly assisted, conspired with, or
urged another to knowingly make a false, fraudulent, or misleading
statement, or to knowingly omit, or conceal, material information required
by section 440.381, Florida Statutes (2022), for the purpose of diminishing
JMHA’s workers’ compensation insurance premiums. § 440.105(4)(b)4.,
(b)5., Fla. Stat. (2022).

   The crime of money laundering, as alleged in this case, requires proof
the decedent knowingly conducted or attempted to conduct a financial
transaction involving the proceeds of “specified unlawful activity,” for the
purpose of either (1) concealing or disguising the nature, location, source,
ownership, or control of proceeds, or (2) avoiding a transaction reporting
requirement. § 896.101(3)(a)2.a.–b., Fla. Stat. (2022).

   Thus, both crimes alleged require evidence the decedent knowingly
made a false statement or material omission to JMHA’s insurance
company as to its expected payroll expenses. See § 440.105(4)(b)4., (b)5.,
Fla. Stat. (2022); § 440.381(1), Fla. Stat. (2022); § 896.101(3)(a)2., Fla.
Stat. (2022).

    But these are the only facts which the BSO’s officers knew at the time
of the stop. First, the decedent incorporated JMHA in October 2021 and
registered it at a residential address. Second, JMHA obtained a workers’
compensation insurance policy in November 2021 based on an expected
annual payroll of $120,000. Third, the decedent used a check cashing
store to cash more than $9 million in checks to JMHA between November
2021 and July 2022. Fourth, JMHA’s insurance policy was cancelled in
July 2022 because it never reported any payroll.

   Last, the decedent was repeatedly observed going into a check cashing
store between June and September 2022. Each time, he was seen entering
the store with an empty backpack and leaving with a “more voluminous”
one. He was also seen delivering cash to an unidentified person on at least
one occasion. On the date of the stop, he was seen leaving a check cashing
store with a black backpack that appeared heavy.

    The detective who led the investigation and drafted the probable cause
affidavit testified about Florida’s “typical” workers’ compensation
insurance fraud scheme. He admitted, however, the BSO did not have any
evidence the decedent had allowed anyone else to use JMHA’s certificate
of insurance. He also admitted the BSO did not have any evidence as to
how the decedent had spent the money from JMHA’s cashed checks.

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   The detective testified the money was “supposed to be for payroll,” but
admitted this belief was based solely on his experience with Florida’s
“typical” workers’ compensation insurance fraud scheme, not case-specific
evidence. He also admitted the decedent could have used the money for
any number of things other than payroll.

    The decedent now argues on appeal the stop was unlawful, because
without evidence he had used the money from cashing the checks written
to JMHA for payroll, the BSO lacked probable cause to believe he had made
a false statement or material omission to JMHA’s insurance company
about its expected payroll. See § 440.105(4)(b)4., (b)5., Fla. Stat. (2022);
§ 440.381(1), (2), Fla. Stat. (2022); § 896.101(3)(a)2., Fla. Stat. (2022).

   The decedent also argues the BSO did not have probable cause to
believe the car contained evidence of the alleged crimes.       JMHA’s
insurance policy had been cancelled by the time of the stop, and the
detective testified the decedent was no longer cashing checks written to
JMHA. Thus, there was “no logical way” the car could have contained
evidence of JMHA’s alleged insurance fraud scheme.

    Although the detective testified he had suspected the decedent had
been cashing checks made out to two other shell companies around the
time of the stop, the BSO did not present any evidence of who wrote the
check(s) cashed immediately before the stop was made. Nor did the BSO
allege either of the two additional shell companies had obtained a workers’
compensation insurance policy based on misrepresented payroll expenses.

   We hold the trial court erred in denying the decedent’s motion to
suppress. The BSO’s reliance on the automobile exception to justify the
stop of the car is unavailing as it lacked probable cause to believe the car
contained evidence of workers’ compensation insurance fraud or money
laundering. The BSO did not and cannot point to any specific information
justifying its belief the cash in the decedent’s backpack came from cashing
a check written to any company with a workers’ compensation insurance
policy based on a false statement or material omission as to the company’s
payroll expenses. See § 440.105(4)(b)5., Fla. Stat. (2022); § 440.381(1),
Fla. Stat. (2022); § 896.101(3)(a)2., Fla. Stat. (2022).

   The detective may have had an educated “hunch” based on his training
and experience that the decedent had been engaged in a “typical” workers’
compensation insurance fraud scheme. But his “hunch” or “mere
suspicion” does not equate to probable cause to justify the stop of the car.
See Ray v. State, 40 So. 3d 95, 98 (Fla. 4th DCA 2010) (holding an officer’s

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narcotics sale training does not compensate for a lack of other factors that
would support probable cause).

   Because we conclude the trial court erred in denying the motion to
suppress, we need not address whether the trial court erred in finding
probable cause to support the continued seizure of the cash. On remand,
the trial court shall order the BSO to return the seized cash to the
decedent’s estate.

   Reversed and remanded with instructions.

CIKLIN and FORST, JJ., concur.

                           *         *         *

   Not final until disposition of timely filed motion for rehearing.

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