Court Opinion

ID: 2750680
Source: CourtListenerOpinion
Date Created: 2014-11-12 23:00:56.664905+00
Date Added: 2024-06-11T10:17:38.731454
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________

Nos. 13-3430, 13-3468, 13-3516, 13-3517 & 13-3559
UNITED STATES OF AMERICA,
                                                    Plaintiff-Appellee,

                                  v.

EVELYN RIVERA BORRERO, et al.,
                                              Defendants-Appellants.
                     ____________________

         Appeals from the United States District Court for the
          Northern District of Indiana, South Bend Division.
              No. 3:12cr067 — Jon E. DeGuilio, Judge.
                     ____________________

   ARGUED OCTOBER 27, 2014 — DECIDED OCTOBER 27, 2014
           OPINION ISSUED NOVEMBER 12, 2014
                ____________________

  Before WOOD, Chief Judge, and EASTERBROOK and
WILLIAMS, Circuit Judges.
    EASTERBROOK, Circuit Judge. Indiana’s Bureau of Motor
Vehicles will not register or transfer title to a car or other mo-
tor vehicle unless the buyer furnishes information that in-
cludes a Social Security number. 140 Ind. Admin. Code §6-1-
2. For corporations and similar entities, by contrast, Indiana
2                                            Nos. 13-3430 et al.

wants a federal employer identification number (EIN). It is
possible to obtain an EIN without having a Social Security
number. The Internal Revenue Service will issue an employ-
er identification number to anyone who has an individual
taxpayer identification number (ITIN), and it will issue an
ITIN to anyone who wants one. Persons who cannot obtain
Social Security numbers—including not only aliens whose
visas do not allow them to work in the United States, but al-
so aliens who lack authority to be in the United States at
all—can have an ITIN for the asking and use it for many fi-
nancial transactions.
    Omar Duran Lagunes and four colleagues established a
business to help people without Social Security numbers
navigate the process of titling vehicles in Indiana and obtain-
ing license plates. For each client, Duran’s service used a cli-
ent’s individual taxpayer identification number to obtain an
employer identification number, registered a limited liability
company named after the client (so John Doe received “John
Doe LLC”), and submitted in the LLC’s name the required
paperwork and fees. The service used clients’ real names and
addresses. Each client paid about $350, which included the
fees remitted to the Bureau of Motor Vehicles. Indiana issued
the titles and licenses as requested; the state has never sug-
gested that holding title to a personal vehicle through an
LLC violates any rule of state law. Nor has the Internal Rev-
enue Service stated that it is improper to obtain an employer
identification number for use by an entity that will own
property but not generate income.
    But the United States Attorney for the Northern District
of Indiana procured an indictment charging Duran and col-
leagues with two federal crimes. Count One alleges that de-
Nos. 13-3430 et al.                                            3

fendants     conspired,     in     violation   of    8    U.S.C.
§1324(a)(1)(A)(v)(I), to violate 8 U.S.C. §1324(a)(1)(A)(iii) and
(iv) by shielding unauthorized aliens from detection and en-
couraging them to reside in the United States. It also alleges
that defendants violated 18 U.S.C. §2 by aiding and abetting
the violation of §1324(a)(1)(A); this does not add anything,
so we do not mention §2 again. Count Two alleges that de-
fendants conspired to commit mail or wire fraud, in viola-
tion of 18 U.S.C. §1349. All defendants were convicted of
both counts and have been sentenced to imprisonment as
short as 24 months (Evelyn Rivera Borrero and Yalitza Ex-
clusa-Borrero) and as long as 84 months (Duran).
    The charge of fraud could have been a simple one. Indi-
ana taxes the sale of motor vehicles. An application for trans-
fer of title must report the price at which the sale occurred
and include the appropriate tax. Duran and the other de-
fendants inserted false prices, such as $100 or $200, into the
forms and remitted sales tax less than state law required—or
so the indictment charged. Defendants used the means of
interstate commerce (including the Internet) to acquire tax
identifiers and create LLCs, and Indiana used the mails to
send registration papers and license plates, so a financial
fraud comes within the scope of the mail-fraud statute. See
Schmuck v. United States, 489 U.S. 705 (1989).
    But at trial the prosecutor did not emphasize Indiana’s fi-
nancial loss. To convict of mail or wire fraud, the jury must
find that false statements injured a victim by depriving it of
“money or property”. See 18 U.S.C. §1341. The jury instruc-
tions allowed a conviction to rest on a conclusion that de-
fendants caused the state to retitle the vehicles, even if it did
not suffer a financial loss. That is possible only if vehicle ti-
4                                             Nos. 13-3430 et al.

tles and license plates are “property” from the perspective of
Indiana, the scheme’s victim. The prosecutor favored this
approach so that he could emphasize a second fraud: de-
fendants falsely reported that all applicants had insurance,
putting bogus policy numbers in the forms submitted on be-
half of clients who lacked insurance while knowing that the
state did not check up. False reports of insurance coverage
played a role in the state’s willingness to transfer titles and
issue license plates but did not cost it anything out of pocket.
     The United States’ appellate brief concedes that treating
titles and licenses as “property” is a legal error. Cleveland v.
United States, 531 U.S. 12 (2000), holds that state and munici-
pal licenses, and similar documents, are not “property” in
the hands of the public agency. This circuit had reached a
similar conclusion in Toulabi v. United States, 875 F.2d 122, 125
(7th Cir. 1989). Until the case reached this court no one—not
the prosecutor, not the judge, and not defense counsel—
recognized that the principal theory on which the mail fraud
count was indicted, and the jury was instructed, was legally
defective. But the defendants’ appellate brief relied on Cleve-
land, and the prosecutor acknowledged the error.
    The United States has asked us to affirm the fraud con-
victions anyway, observing that the record contains evidence
from which a jury could have found that the defendants de-
frauded Indiana out of “money”—the tax it could have col-
lected had the selling prices been reported honestly. Moreo-
ver, the prosecutor observes that counsel for three of the five
defendants approved the jury instructions. Yet although
waiver blocks these three defendants from using the error in
the instructions as a reason to reverse (for the other two,
plain-error review is available), all five defendants requested
Nos. 13-3430 et al.                                          5

a judgment of acquittal under Fed. R. Crim. P. 29. If, as they
contend, they have been convicted of acts that the law does
not make criminal, they are entitled to that relief notwith-
standing the legal errors that contaminated the jury instruc-
tions. See Bousley v. United States, 523 U.S. 614 (1998).
     Whether they have been so convicted is uncertain. The
instructions permitted the jury to convict on the theory that
title papers and licenses are “property” from Indiana’s per-
spective, with which the state parted because of false state-
ments about insurance. If that was the jury’s sole ground of
conviction, then defendants are entitled to acquittal. But the
instructions also permitted the jury to convict on the theory
that by misstating the selling prices defendants defrauded
Indiana out of money that should have been paid as sales
tax. If that was the jury’s ground of conviction, then the
judgments should be affirmed.
    Unfortunately, the instructions did not require the jury to
choose among theories of culpability. The jury may have re-
lied exclusively on the registration-papers-as-property theo-
ry, exclusively on the sales tax theory, or on some mixture of
frauds and understandings of “property”. We just don’t
know. That makes it impossible for us to evaluate the suffi-
ciency of the evidence, because the jury rather than the judge
decides which evidence to believe. The jury might have be-
lieved the evidence about false statements concerning insur-
ance, leading to a verdict that only the registration-papers-
as-property theory could support, and disbelieved the evi-
dence about false statements concerning purchase prices. Or
the reverse. Or it could have accepted all of the prosecution’s
evidence and all legal theories of culpability.
6                                              Nos. 13-3430 et al.

    Griffin v. United States, 502 U.S. 46 (1991), holds that if the
evidence is sufficient to convict on one theory, and insuffi-
cient to convict on another, then the conviction should be
affirmed. The court must assume that the jury followed its
instructions and discounted the theory unsupported by the
evidence. But when the instructions allow a jury to convict
on two theories, one of which is legally insufficient, then the
court must remand for a new trial, because a jury that fol-
lowed its instructions might have convicted on the invalid
ground while disdaining the proper one. See Yates v. United
States, 354 U.S. 298 (1957), which like several similar deci-
sions was reaffirmed in Griffin, 502 U.S. at 51–56. Remand is
the right outcome here as well. The legal error in the jury in-
structions prevents the court from knowing what evidence
the jury credited, and without that knowledge it is impossi-
ble to evaluate the motion for a judgment of acquittal. A
properly instructed jury could have convicted the defend-
ants on this record, however, so the Double Jeopardy Clause
does not foreclose a new trial, if the prosecutor chooses to
press on. Contrast Burks v. United States, 437 U.S. 1 (1978).
    As for Count One, which charged defendants with
shielding unauthorized aliens and encouraging them to re-
main in the United States: there are multiple problems, not
least of which is that the prosecutor did not prove that de-
fendants knew their clients to be unauthorized aliens or
recklessly disregarded that fact. At least four categories of
persons could have found defendants’ service attractive: (1)
aliens who are in the United States “in violation of law” (a
qualification in each clause of §1324(a)(1)(A)), and thus una-
ble to obtain Social Security numbers; (2) aliens who are au-
thorized to be in the United States but not authorized to
work (many kinds of visa do not authorize employment)
Nos. 13-3430 et al.                                          7

and thus unable to obtain Social Security numbers; (3) per-
sons who have Social Security numbers but do not want to
reveal them to state officials, either because they are con-
cerned about privacy or because they object on principle to
all use of Social Security numbers; (4) persons who want to
carry on a trade or business through an LLC and own a car
as part of that business (many lawyers and other profession-
als do business as LLCs or P.C.s). Category 1 can be further
divided into (a) aliens the United States does not know
about; (b) aliens the United States knows about and is trying
to remove; and (c) aliens the United States knows about and
has decided, as an exercise of prosecutorial discretion or the
parole power, not to remove.
    Assisting persons in categories 2, 3, and 4 does not vio-
late §1324(a)(1)(A) on anyone’s understanding. Only catego-
ry 1(a) could be covered by §1324(a)(1)(A)(iii), which makes
it a crime to “shield from detection” an alien who is in the
United States “in violation of law”. Categories 1(b) and 1(c)
cannot be shielded from detection because, by hypothesis,
the United States knows about them. And only categories
1(a) and 1(b) are unambiguously                 covered by
§1324(a)(1)(A)(iv), which makes it a crime to “encourage …
an alien to … reside in the United States” when residence is
“in violation of law”. The application of clause (iv) to aliens
in category 1(c) is problematic; the United States’ brief does
not address that subject.
    The United States contends that defendants either knew
or recklessly disregarded (the two mental states specified by
§1324(a)(1)(A)) the fact that their clients were aliens not au-
thorized to live in the United States. But having neglected to
prove that the defendants’ clients were aliens, the prosecutor
8                                              Nos. 13-3430 et al.

did not supply an adequate basis for the jury to infer that
they recklessly disregarded the risk that their clients were in
the United States “in violation of law”. Defendants’ advertis-
ing in Spanish-language publications, and the use of Spanish
in their own operations, does not allow an inference that
they knew, or were reckless about, the unlawful presence of
their clients in the United States. Many persons who read or
speak Spanish are citizens of this nation; some Spanish-
speaking aliens are in categories 1(c) or 2. The record does
not offer a basis for estimating what portion of defendants’
clientele was in categories 1(a) and 1(b).
    Let us assume that the defendants were recklessly indif-
ferent to the likelihood that some of their clients were aliens
in the United States “in violation of law”. Conviction under
clause (iii) still would be impossible, because defendants did
not attempt to “shield from detection” any of their clients.
Quite the contrary, they provided state officials with their
clients’ real names and addresses. If as the prosecutor insists
only an unauthorized alien would want to title a car through
an LLC, then defendants were providing state officials with
a list of aliens who should be removed, and the state had on-
ly to turn it over to federal officials (or federal officials could
have asked for it). Putting the names and addresses of aliens
into official files does not shield anyone from detection—nor
does it conceal or harbor unauthorized aliens, the other two
ways to violate clause (iii).
    This leaves clause (iv), which we now quote in full. It
says that any person who “encourages or induces an alien to
come to, enter, or reside in the United States, knowing or in
reckless disregard of the fact that such coming to, entry, or
residence is or will be in violation of law” commits a felony.
Nos. 13-3430 et al.                                            9

The prosecutor did not charge defendants with encouraging
or inducing anyone to come to or enter the United States; the
prosecution relies entirely on a contention that the defend-
ants’ service encouraged or induced aliens to “reside in” the
United States by making it easier for them to own cars. Of
course it wasn’t defendants who offered the means for per-
sons without Social Security numbers to own cars; Indiana
did that. All defendants did was roll into one service a series
of steps that anyone could have performed independently.
    If making it easier to own a car by packaging multiple
public services into a bundle is enough to induce or encour-
age an alien to “reside” in the United States, and thus violate
§1324(a)(1)(A)(iv), what else qualifies? An alien goes to the
corner store and tells the proprietor that he lacks a visa but
needs bread or meat; the proprietor sells him food. An alien
goes to a medical clinic and tells the physician that he lacks a
visa but needs help for high blood pressure; the doctor treats
him. Has the grocer or doctor violated §1324(a)(1)(A)(iv)?
Without food or medical care, the alien must leave the Unit-
ed States; selling food or medical care is much more potent in
facilitating residence than bundling a set of services that
help someone put a car’s title in the name of an LLC. Yet at
oral argument counsel for the United States denied that the
grocer or doctor would violate §1324(a)(1)(A)(iv).
     If the defendants’ bundles violate federal law, what of the
titling service that Indiana offers? What, indeed, of drivers’
licenses and vehicle titles that some states, including Illinois,
provide to self-declared unauthorized aliens? These states
believe that, given their inability to remove aliens (only the
national government can do that), it is best to provide doc-
uments so that drivers can be identified when they violate
10                                            Nos. 13-3430 et al.

traffic laws or are involved in accidents, and so that manda-
tory-insurance requirements can be enforced. Has every leg-
islator who voted for such a law, the governor who signed it,
and every public employee who processes an unauthorized
alien’s request for a driver’s license committed a federal fel-
ony? How about a desk clerk at the Chicago Transit Authori-
ty who sells a transit card, allowing an alien to use the bus
and subway system (which like a car can facilitate holding a
job that the alien cannot lawfully perform)? How about the
dealer who sells an alien a car?
    The list of goods and services that will help an unauthor-
ized alien continue to reside in the United States is long. If
defendants have violated §1324(a)(1)(A)(iv), presumably all
of these other persons have done so as well. Yet the Supreme
Court held in Plyler v. Doe, 457 U.S. 202 (1982), that states are
required to provide some public services, including educa-
tion, to unauthorized aliens. If public bodies do not violate
§1324(a)(1)(A)(iv) by providing services to unauthorized al-
iens, however, why would it be a felony for a private busi-
ness to combine several governmental offerings into one
package?
    At oral argument counsel for the United States denied
that any of these illustrations (sales of food, provision of
drivers’ licenses to declared unauthorized aliens, and so on)
violates federal law, but he could not draw a defensible line
between defendants’ conduct and these illustrations. He ob-
served, for example, that none of the illustrations entails use
of an LLC. So what? Section 1324(a)(1)(A)(iv) does not make
the use of LLCs essential to a violation. Nor does the statute
declare it to be a federal felony to use LLCs that lack a busi-
ness, as opposed to personal, objective (another proposed
Nos. 13-3430 et al.                                             11

distinction). None of the prosecutor’s stopping points has
anything to do with the text of §1324(a)(1)(A)(iv).
   These convictions can be sustained only if the provision
of any sufficiently valuable service—food, medicine, trans-
portation—to an unauthorized alien is a felony because it
helps the alien “reside” in the United States. That would take
the statute beyond a sensible understanding; the Rule of
Lenity, if nothing else, would forbid it.
    Consider the one thing most likely to induce an unauthor-
ized alien to reside in the United States: employment. It is
unlawful to employ an alien whose visa does not authorize
work. 8 U.S.C. §1324a. But the penalties for violating this
statute are fines, §1324a(e), and imprisonment capped at six
months, §1324a(f). What sense could it make to set six
months as the maximum punishment for employing an un-
authorized alien, while allowing imprisonment for five years
under §1324(a)(1)(B)(ii) for someone who makes it just a lit-
tle easier for the same alien to get clear title to the car used to
drive to work? It is far better to read §1324(a)(1)(A)(iv) as in-
applicable to the provision of goods and services that are at-
tractive to unauthorized aliens, legally residing aliens, and
citizens alike.
    The convictions on Count One are reversed, and the con-
victions on Count Two are vacated. We remand for entry of a
judgment of acquittal on Count One. The United States At-
torney must decide whether to reprosecute Count Two on a
charge shorn of any allegation that title papers and licenses
are “property” from Indiana’s perspective. Pending the new
trial (if one occurs), all defendants are entitled to be released
on bail. Some of them may already have served more time
than would be appropriate following a conviction on Count
12                                       Nos. 13-3430 et al.

Two alone. (That is why we entered a judgment of reversal
on the day this case was argued, while telling the parties
than an opinion would follow.)