Friday, August 30, 2013

Bank Fraud Conviction Reversed Because Insufficient Proof American Express Is “Financial Institution”

United States v. Davis, No. 12-20443 (Aug. 19, 2013) (Elrod, Higginson, Martinez)

Begrudgingly, the panel held that the government "did not offer evidence sufficient for any reasonable jury to find beyond a reasonable doubt that American Express Company was a depository institution holding company." The testimony at trial regarding American Express Company being a financial institution as described in the statute was scant and did not fully support a financial institution theory. The panel reversed the district court’s denial of Davis’s motion for a judgment of acquittal and remanded, noting that the decision compels dismissal of the bank-fraud counts on remand.

The lesson: every element is essential and must be proved in the context of the trial. (It does not matter if other courts have found that American Express Company is a financial institution.) "Reversal may be required even though the government might have discharged its burden of proof with relative ease."


Thursday, August 29, 2013

Evidence Suppressed from Wiretap: Court Lacked Territorial Jurisdiction and Agents Failed to Follow Minimization Protocols

United States v. North, No. 11-60763 (Aug. 26, 2013) (Stewart, DeMoss, Graves) (per curiam)

In the days of Edward Snowden and SOD parallel construction, it is somewhat comforting to see the Fifth Circuit limit the Government’s wiretap reach. North, who was indicted for conspiring to distribute more than fifty grams of cocaine, appealed the district court’s denial of his motion to suppress evidence obtained from the interception of his cellular phone. The panel reversed the district court’s denial based on two grounds.

First, the panel found that the Southern District of Mississippi court that issued the wiretap did not have "the authority to permit interception of cell phone calls form Texas at a listening post in Louisiana." The panel interpreted Title III of the Omnibus Crime Control and Safe Streets Act of 1968 to "mean that, except in the case of a mobile interception device, a district court cannot authorize interception of cell phone calls when neither the phone nor the listening post is present within the court’s territorial jurisdiction." In this case, however, the district court explicitly authorized the wiretap "‘in any other jurisdiction within the United States" without requiring that the listening post remain in the Southern District of Mississippi. The panel concluded that a cell phone was not "a mobile interception device" and that the Government had not provided any proof that the interception device was mobile; so, the exception to territorial jurisdiction did not apply here. Since the order of authorization for the interception was insufficient on its face and "the territorial jurisdiction limitation serves important substantive interests and implicates core concerns of the statute," the interception must be suppressed.

Note: In reaching this conclusion, the panel disagrees with the Seventh Circuit, which held that "a mobile interception device" means a cell phone or other mobile communication device that is being intercepted (not the device doing the interception), and with the Eleventh Circuit, which held that the territorial jurisdiction limitation was not a core concern of Title III that merited suppression.

Second, the panel agrees with North that the agents failed to follow minimization protocols during the interception of a phone call between North and a female friend who was not under investigation. The minimization instructions authorized spot monitoring for not more than two minutes and continued monitoring only when the conversation related to the alleged crimes under investigation. North called his friend shortly after a traffic stop for speeding. They spoke for over an hour, and the agents listened for several minutes before "‘dropping out’ for less than one minute at a time before resuming their near continuous listening." North and his friend did not speak about any criminal matters until the very end of the conversation.
Under these circumstances, it was not objectively reasonable for agents to listen in for nearly one hour to a conversation that did not turn to criminal matters until the last few minutes. As such, the evidence obtained from the May 16, 2009 interception of North’s cell phone must be suppressed.

The panel rejected North’s arguments that the wiretap applications for his cell phone and another phone contained material misrepresentations and omissions and were merely boilerplate applications lacking sufficient specificity.

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Tuesday, August 20, 2013

Being Detained at Gunpoint, Handcuffed and Placed in Police Car Is Not a Full Arrest if Reasonable Suspicion Armed and Dangerous

United States v. Abdo, No. 12-50836 (Aug. 19, 2013) (Reavley, Elrod, Graves)

Being detained at gunpoint, forced to the ground, and then placed in a police car in handcuffs for fifteen minutes is not a full arrest—at least not when you’re suspected of planning a terrorist attack at Fort Hood. The panel decided this was simply an investigatory stop and that, since the officers had reasonable suspicion to believe that Abdo was armed and dangerous, the officers simply used force commensurate with the risk to officer and public safety. Accordingly, the panel affirmed the district court’s denial of his suppression motion.

Abdo also argued that one of his convictions for possession of a firearm in furtherance of a crime of violence must be vacated since 18 U.S.C. § 924(c)(1) does not permit multiple convictions for a single use of a firearm based on multiple predicate offenses. The panel agreed with this statement of law but disagreed with its application to these facts—on plain error review—since Abdo possessed the firearm for the purpose of shooting soldiers (in furtherance of the offense of attempted murder) and also possessed a firearm on the previous day when he purchased items for the explosive device (in furtherance of attempted use of a weapon of mass destruction). Thus, he separately used or possessed firearms in conjunction with distinct offenses.

Finally, Abdo argued that he was denied his right to present a defense because the district court denied his request for funds for an expert witness. The panel found that Abdo waived this argument, however, by not articulating the argument in his appellate brief and that the issue would fail on its merits because the expert’s testimony would not have materially assisted the defense. The testimony would have been that the device Abdo was capable of making would not have caused much damage. The panel concluded that since Abdo was charged with an attempt offense, evidence was sufficient that an explosive device could have been constructed, regardless of its destructive force.

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Monday, August 19, 2013

Court Not Required to Apply Section 3553(a) Factors when Modifying Sentence Pursuant to Rule 35(b) Motion

United States v. Lightfoot, No. 11-11232 (July 29, 2013) (DeMoss, Owen, Haynes)

Lightfoot appealed the district court’s judgment that reduced his original sentence from 310 months to 286 months pursuant to Federal Rule of Criminal Procedure 35(b) after he provided substantial assistance to the Government. He argued that the court mistakenly believed that it did not have the authority to consider the 18 U.S.C. § 3553(a) sentencing factors when modifying his sentence, or alternatively that the court believed it could consider those factors and erred by not doing so.

First, the panel determined that it has jurisdiction to determine whether the sentence was imposed in violation of law. The panel then analyzed 18 U.S.C. §§ 3553 and 3582 to determine whether the district court was required to consider the § 3553(a) factors in ruling on a Rule 35(b) request to reduce the sentence. The panel concluded that a court may consider § 3553(a) factors in ruling on a Rule 35(b) motion, but it does not have to.

Section "3553(a) factors must be applied when imposing a sentence but when modifying a sentence that has already been imposed, their application is only required in statutorily enumerated circumstances." Subsection (c) of 3582 specifies when § 3553(a) factors must be considered in modifying a sentence but does not mention those factors for modification under Rule 35. Consequently, application of § 3553(a) factors when modifying a sentence pursuant to Rule 35(b) motion is permitted but not required.


Tuesday, August 13, 2013

No Notice Required in Revocation Hearing for Court to Rely on Behavior Not Alleged

United States v. Warren, No. 12-20203 (July 22, 2013) (Stewart, Barksdale, Higginson)

Warren appealed his twenty-four-month sentence for violating his conditions of release. His guideline range was eight to fourteen months of imprisonment for the two listed violations of testing positive for marijuana and failing to participate in drug treatment counseling sessions. During the revocation hearing, the court raised the concern that eleven of nineteen of Warren’s urine samples had returned with an invalid result. The court determined that Warren was uncooperative and was "gaming the system." Warren objected to the court’s reliance on the invalid urine samples without pre-hearing notice and to the sentence being outside the guideline range.

The panel could not find any authority resolving "whether pre-hearing notice is required for all facts on which the district court may rely at revocation sentencing" and concludes that no notice is required. 
We hold that the district court was not required, by Federal Rule of Criminal Procedure 32.1 or the Due Process Clause, to provide Warren with pre-sentencing notice of all points raised in the revocation sentencing colloquy . . . .

While it is procedural error to sentence on erroneous facts, "the burden is on the defendant ‘to demonstrate that the district court relied on materially untrue information.’" Warren never argued that the court incorrectly concluded that eleven urine samples yielded invalid results. Therefore, the panel finds no procedural error in his revocation sentence. The panel also finds that his sentence was not substantively unreasonable.


Monday, August 12, 2013

Sequestration Silver Lining? Holder Refines Charging Policy for Mandatory Minimums

Attorney General Eric Holder issued a memo today to U.S. Attorneys refining the charging policy for mandatory minimum cases in recognition that "[w]e must ensure that our most severe mandatory minimum penalties are reserved for serious, high-level, or violent drug traffickers"; "[l]ong sentences for low-level, non-violent drug offenses do not promote public safety, deterrence, and rehabilitation"; and "rising prison costs have resulted in reduced spending on criminal justice initiatives . . . ."
While prosecutors must still evaluate whether a defendant is eligible for any statutory mandatory minimum statute or enhancement, prosecutors should decline to charge the quantity necessary to trigger a mandatory minimum sentence if the defendant meets the following criteria:
1) conduct does not involve violence, possession of a weapon, trafficking of drugs to or with minors, or the death or serious bodily injury of any person;

2) not organizer, leader, manager or supervisor of others;

3) no significant ties to large-scale drug trafficking organizations, gangs, or cartels; and

4) no significant criminal history (defined as normally meaning three or more criminal history points)

The memo states that, if the prosecutor does not have enough information regarding whether defendant meets these criteria, the prosecutor can file charges involving mandatory minimum statutes. Later, to avoid the mandatory minimum, the prosecutor could ask the grand jury to supersede the indictment, the defendant could plead guilty to a lesser included offense, or the defendant could waive indictment and plead guilty to a superseding information.

This policy, though, won’t change the quantity that will be the base of the Sentencing Guidelines calculation.

The memo also applies similar criteria to deciding whether to file an information pursuant to 21 U.S.C. § 851 for a recidivist enhancement.

In an NPR interview, Holder commented that he thinks "there are too many people in jail for too long, and for not necessarily good reasons." He also supports legislative efforts to change mandatory minimum laws, and the Senate Judiciary Committee will hold a hearing on mandatory minimum laws next month.


Plain Error to Order Restitution for Loss Associated with Acquitted Counts

United States v. Mason, No. 10-10743 (July 2, 2013) (Jolly, Davis, Prado)

The heading seems to make basic sense, right? If someone is acquitted of some counts but found guilty of other counts, then the restitution amount should only be based on the loss associated with the guilty counts.

Instead, the district court ordered mandatory restitution that included $74,619.12 of loss attributed to the conspiracy count of which the defendant, Andrews, was acquitted. Andrews did not object, so the panel reviewed for plain error. Under United States v. Inman, 411 F.3d 591 (5th Cir. 2005), the Mandatory Victims Reauthorization Act makes a defendant "only responsible for paying restitution for the conduct underlying the offense for which he was convicted." According to United States v. Sharma, 703 F.3d 318 (5th Cir. 2012), a restitution award cannot compensate a victim for losses "caused by conduct that falls outside the temporal scope of the acts of conviction." Thus, the panel concludes that the district court plainly erred by including loss related to an offense of which Andrews was acquitted. This affected his substantial rights because the variance was over $70,000 and because the failure to correct the error would constitute manifest injustice.

The other defendants in this case raised a variety of issues that the panel did not address because they did not find any merit to those arguments.

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Friday, August 09, 2013

Consent Was Limited to Luggage; Prolonged and More Extensive Search Violated Fourth Amendment

United States v. Cotton, No. 12-40563 (July 2, 2013) (Wiener, Dennis, Owen)

According to the audio recording of the traffic stop, the officer asked if Cotton if he could search his car. Cotton’s response is unintelligible. The officer then asked, "Is it okay if I search it?" Cotton responded, "Search my luggage." "Okay. Is it okay if I search everything in the car?" Cotton responded, "My luggage, yeah." The officer proceeded to search the trunk and the passenger cabin for forty minutes before prying back the driver’s-side rear door after noticing loose screws and tool markings on the door’s panel. Cotton made incriminating statements after being arrested for the drugs in the door panel.

The district court denied Cotton’s motion to suppress the drugs and his statements, but the panel vacated his conviction and reversed. The panel found that Cotton limited his consent to the luggage and that the video showed that the officer had already located and searched the luggage before expanding the search and later examining the driver’s-side rear door. By that point, the officer did not have authority to keep searching, and Cotton’s failure to object to the extended search was irrelevant since the officer could not have reasonably interpreted Cotton’s consent to apply to the whole vehicle. The panel found that both the drugs and the statements must be suppressed.

If only all suppression cases actually had audio and video of the search instead of playing the officer-said, defendant-said game that we so often lose.

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Thursday, August 08, 2013

Email Promise by Prosecutor Not Part of Plea Agreement, So No Breach

United States v. Long, No. 11-20726 (July 2, 2013) (Stewart, Smith, Wiener)

Double-check, no, triple-check those plea agreements to make sure any negotiated terms are documented therein. If the plea agreement has a merger clause, which most do, then any outside communications with the prosecutor will not be incorporated into the plea agreement.

Here, Long appealed his sentence, arguing the Government breached its plea agreement with him by supporting the leader/organizer sentencing enhancement recommended in the presentence investigation report ("PSR"). The prosecutor indicated to Long’s attorney via email that he would not argue for a role enhancement, but the plea agreement did not mention a role enhancement and contained a merger clause that the written plea agreement constitutes the complete plea agreement. Before accepting Long’s plea, the district court even asked Long if there were any other promises or assurances not documented in the plea agreement, and he responded no.

The panel affirmed that the email was not part of the plea agreement, that Long did not rely on the email exchange in pleading guilty, and that, even if he had, such a reliance would have been unreasonable in light of the plea agreement’s merger clause. The panel affirmed the sentence, which was based on the district court’s ruling that the Government did not breach the plea agreement.

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Entire Weight of Mixture with 3.2% Cocaine Purity Used for Conviction and Sentence

United States v. Villarreal, no. 12-40589 (July 19, 2013) (Owen, Haynes, Lemelle) (per curiam)

The total weight of a group of bundles weighing 5.9 kilograms with a cocaine purity of 3.2% can be used for a conviction and also to calculate a defendant’s sentence. Applying Chapman v. United States, 500 U.S. 453 (1991), the panel determined that this bundle contained a detectable amount of cocaine, a conclusion supported by chemist testimony that the sample "‘appeared to be in a state that could be ingested by a drug consumer.’" The district court did not count, however, the other 2.5-kilogram group of bundles that only had a cocaine purity of 0.41%, calling that bundle "junk." The panel affirmed the conviction and sentence.


Wednesday, August 07, 2013

Admission of Gang Membership Harmful Error

United States v. Hamilton, No. 12-20250 (July 11, 2013) (Stewart, Higginbotham, Jones)

Hamilton was on trial for unlawful possession of a firearm as a convicted felon. The evidence of possession was circumstantial: an agent saw him move his arm outside of his parked car and later found a gun under the tire of an SUV next to where Hamilton parked. When he was stopped for a traffic violation, a record check revealed that he was affiliated with the Black Disciples gang ("BD"), and Hamilton admitted to an agent that he "was" a BD.

The court permitted testimony regarding Hamilton’s gang membership over his objection. An agent testified that Hamilton had been affiliated with the BD since 1998, that Hamilton stated that he "was" a BD, and that the agent had never known a gang member who really left a gang. The agent proceeded to testify that he had made numerous arrests of gang members who possessed guns. The case then went to the jury without a limiting instruction, and the jury convicted Hamilton.
The panel determined that the agent’s gang-related testimony was extrinsic and that it did not pass the Beechum test, which allows extrinsic evidence to be admitted that (1) is relevant to an issue other than the defendant’s character, and (2) has a probative value not substantially outweighed by its undue prejudice. 
Because the evidence of guilt was sparse, and the prejudice that comes with gang membership may be great, ‘there is a reasonable possibility that the improperly admitted evidence contributed to [Hamilton’s] conviction.’ United States v. Williams, 957 F.2d 1238, 1242 (5th Cir. 1992) (internal citation marks omitted).

The panel reversed and remanded. It noted, however, that testimony related solely to the record check and to Hamilton’s comment was intrinsic to the offense - as part of the on-scene investigation - and not subject to Beechum. The agents testimony went far beyond that int rinsic evidence, however.

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Tuesday, August 06, 2013

New Jersey Third Degree Aggravated Assault Not a § 2L1.2 Crime of Violence

United States v. Martinez-Flores, No. 11-41375 (June 19, 2013) (Stewart, Benavides, Higginson) (per curiam)

The difference between New Jersey Third Degree Assault, N.J. Stat. Ann. § 2C:12-1b(7), and aggravated assault under the Model Penal Code is the injury. The New Jersey statute only requires "significant bodily injury," something that does not arise to serious bodily injury and could include an eye injury only lasting a few days. In contrast, the MPC requires "serious bodily injury," defining that as "bodily injury which creates a substantial risk of death or causing serious, permanent disfigurement, or protracted loss or impairment of the function of any bodily member or organ." The panel determined that the New Jersey statute was broader than the MPC definition of aggravated assault because the New Jersey statute included injuries that did not meet the MPC definition of "serious bodily injury." Thus, the conviction was not categorically a crime of violence under § 2L1.2, and the panel vacated the judgment and remanded for sentencing.

Other things to note:

The Fifth Circuit previously held, in a published decision, that it was not plain error for the district court to determine that New Jersey Third Degree Assault was a crime of violence under § 2L1.2. United States v. Ramirez, 557 F.3d 200 (5th Cir. 2009). Nevertheless, Martinez-Flores’ attorney objected to the sentencing enhancement and won on de novo review before the Fifth Circuit. So, be sure to distinguish between plain error and de novo review decisions when deciding whether an issue is foreclosed by precedent.

Also, the panel stated in a footnote that the new plain-meaning approach announced in United States v. Rodriguez, 711 F.3d 541 (5th Cir. 2013) (en banc), does not apply to determining whether an aggravated assault conviction is an enumerated offense. To support this proposition, the panel cites footnote 17 of the Rodriguez opinion. While that footnote states that precedent regarding "aggravated assault" remains intact, the premise is that offense categories defined at common law remain intact. Whether or not aggravated assault is an offense defined at common law may be a trickier question than the Fifth Circuit opinions have led us to believe thus far, so feel free to keep that line of argument open as well.

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Federal Agents Cover Up Program Used to Investigate Americans

Just because you're a conspiracy theorist doesn't mean the Government's not making up fake investigation trials to conceal the real sources of tips.  Check out this Reuters article:
Exclusive: U.S. directs agents to cover up program used to investigate Americans
A secretive U.S. Drug Enforcement Administration unit is funneling information from intelligence intercepts, wiretaps, informants and a massive database of telephone records to authorities across the nation to help them launch criminal investigations of Americans.
Although these cases rarely involve national security issues, documents reviewed by Reuters show that law enforcement agents have been directed to conceal how such investigations truly begin - not only from defense lawyers but also sometimes from prosecutors and judges.
The undated documents show that federal agents are trained to "recreate" the investigative trail to effectively cover up where the information originated, a practice that some experts say violates a defendant's Constitutional right to a fair trial. If defendants don't know how an investigation began, they cannot know to ask to review potential sources of exculpatory evidence - information that could reveal entrapment, mistakes or biased witnesses.
The article goes on to say that the "unit of the DEA that distributes the information is called the Special Operations Division, or SOD" and it partners with two dozen partner agencies, "including the FBI, CIA, NSA, Internal Revenue Service and the Department of Homeland Security. It was created in 1994 to combat Latin American drug cartels and has grown from several dozen employees to several hundred."

Here's one example of how a SOD tip would be concealed:
"You'd be told only, ‘Be at a certain truck stop at a certain time and look for a certain vehicle.' And so we'd alert the state police to find an excuse to stop that vehicle, and then have a drug dog search it," the agent said.  . . . After an arrest was made, agents then pretended that their investigation began with the traffic stop, not with the SOD tip, the former agent said. The training document reviewed by Reuters refers to this process as "parallel construction."
Sound familiar?

As a practical matter, law enforcement agents said they usually don't worry that SOD's involvement will be exposed in court. That's because most drug-trafficking defendants plead guilty before trial and therefore never request to see the evidence against them. If cases did go to trial, current and former agents said, charges were sometimes dropped to avoid the risk of exposing SOD involvement.

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