U.S.S.G. and Sentencing
Issues
Prosecutorial
Misconduct Issues
Miscellaneous
Issues
The Granddaddy of all Sentencing Guidelines cases is back for another test of Judge Lechner's iron will and steel fist - and that's always a losing proposition. The original series of Kikumura cases began back in 1988 with U.S. v. Kikumura, 698 F.Supp. 546 (D.N.J. 1988). The defendant, an alleged member of the Japanese Red Army, was arrested by a New Jersey State Trooper for careless driving. The Trooper spotted seven cylinders of gunpowder and shot in the back seat of the car; and a subsequent search of the car led to the discovery of three homemade bombs and altered passports. Kikumura was charged in a twelve count indictment, principally involving the interstate transportation of explosive devices. Ultimately Kikumura agreed to waive a trial by jury and he entered into a negotiated plea agreement. In that agreement, he stipulated to the transportation of explosives with knowledge and intent that they would be used to damage and destroy property. He refused, however, to stipulate that the explosives were to be used to kill or injure any individuals. The Probation Department prepared a presentence report in which it calculated a sentencing range of 27 to 33 months for all twelve counts for which Kikumura was convicted.
At sentencing, Judge Lechner determined that Kikumura possessed the explosives with intent to cause multiple deaths. In support of that conclusion, he cited Kikumura's participation in a terrorist training camp located in the Bekaa Valley of Lebanon. He placed great weight on other acts of violence committed by other members of the Japanese Red Army and on the testimony of FBI agents who expressed the opinion that Kikumura's intent was to kill innocent people. In the end, he imposed a sentence of 360 months - a mere jump from 3 years to 30 years (see U.S. v. Kikumura, 706 F.Supp. 331 (D.N.J. 1989)). Many courts have called that departure the largest upward departure (both percentage-wise and absolutely) ever recorded under the Guidelines; and Judge Lechner has always been fiercely proud of that prized laurel. After numerous appeals, the Third Circuit ultimately reduced the sentence somewhat, declaring that the proper sentence should have been somewhere between 210 and 262 months. (See, U.S. v. Kikumura, 918 F.2d 1084 (3rd Cir. 1990)). The Court reasoned "[i]t would throw the structure of the guidelines out of kilter to say that a defendant may receive more time on a ‘departure' than he could have received had he been convicted of the crimes leading the judge to depart." (918 F.3d, id. at 1112).
Throughout the long saga of Kikumura's appeals, many important Guidelines' issues emerged; and they became the forerunners of much thought-provoking litigation. Can a sentencing hearing become the tail which wags the dog of the substantive offense? Is due process violated when the bulk of the sentence is based on uncharged crimes which were never presented to a jury? Does there come a point at which due process requires more than proof by a mere preponderance of evidence at sentencing hearings? Can the Government properly get through the "back door" sentencing phase what it chose not to bring through the "front door" charging phase?
Some of those issues were raised either directly or indirectly by Kikumura in his earlier appeals before the Third Circuit; and of course Judge Lechner's view was that virtually all the issues were "identical" to issues previously adjudicated and were therefore now procedurally barred in this 28 U.S.C. § 2255 motion. As to other issues that took on the appearance of being new, Judge Lechner cited numerous of his own prized decisions, as is his wont (e.g., U.S. v. Cannistraro, 734 F.Supp. 1110 (D.N.J. 1990), which he cited on innumerable occasions and on numerous points.) He also took his usual swipe at the Third Circuit for reducing Kikumura's sentence on appeal ("The Third Circuit . . . employed a novel sentencing methodology to determine whether the upward departure was reasonable." (Id., at 572)). And he cited often, with the pride of a copied author, the Supreme Court's decision in U.S. v. Watts, 139 L.Ed.2d 554 (1997) which held that it is proper to use at the sentencing phase of a criminal proceeding evidence of the defendant's conduct in crimes for which she has been acquitted.
Kikumura also raised an issue of newly
discovered evidence on this appeal. That evidence was based on certain
allegations of Dr. Frederick Whitehurst, a Special Supervisory FBI agent
who charged that the very FBI agent who testified at Kikumura's sentencing
hearing about the bombs found in Kikumura's car "testified outside of his
area of expertise and provided false and misleading information at the
First Sentencing Hearing." (Citing "The
FBI Laboratory: An Investigation into Laboratory Practices and Alleged
Misconduct in Explosive-Related and Other Cases", a copy of which
is available in the Miscellaneous
Links/KeyWebsites Section of our Homepage on the Internet.)
Showing obvious concern that one of the cornerstones of his career-launching
decision might be suspect, Judge Lechner quickly dismissed all allegations
of wrong-doing that might affect the credibility of his star witness.
After all, he plaintively cried, that very agent "has been certified as
an expert in explosives and explosive materials in other courts around
the country" and "the allegations are not sufficient to call into doubt
the qualifications of Thurman [the FBI agent]." (Id., at 586).
In fact, the former- prosecutor-now-turned-judge continued "[t]he allegations
of Whitehurst, even if proven, will not change the intent to kill finding
and does not rise to the level of a violation warranting Section 2255 relief."
No surprise; but if one wants to learn much about some of the extreme consequences
of relevant conduct, this decision and its predecessors are must reading.
For the benefit of our subscribers, a
copy of the Motion pursuant to 28 U.S.C. § 2255 filed in this case
by New York Attorney Glenn A. Garber
has been posted on our Briefs
and Motions page.
Speaking of the iron will and steel fist of Judge Lechner, this case indirectly involves another one of his proverbial sentences. Here, one Richard Bertoli was charged with several RICO and obstruction of justice counts which included, as underlying predicate acts, certain fraudulent schemes concerning the issuance of securities by two companies known as Liquidation Control, Inc. and Toxic Waste Containment, Inc. Following a three month trial, Bertoli was found guilty of one count of obstruction of justice under 18 U.S.C. § 1503 and one count of conspiracy to obstruct justice under 18 U.S.C. § 307. Bertoli was acquitted of the remaining counts, including the securities fraud-based RICO charges; but at sentencing Judge Lechner nonetheless found that Bertoli was probably guilty of various violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (15 U.S.C. § 78(b) and 17 C.F.R. § 240.10b5.) On that basis, Judge Lechner sentenced Bertoli to two concurrent terms of 100 months in prison, plus a fine of $7 million, which represented an upward departure by a factor in excess of 50! (See, U.S. v. Bertoli, 854 F.Supp. 975 (D.N.J. 1994)). That sentence was subsequently vacated in part by the Third Circuit at U.S. v. Bertoli, 40 F.3d 1384 (3rd Cir. 1994); and on remand Judge Lechner imposed a new sentence of 78 months imprisonment and reduced the fine to $100,000.
In the meantime, the SEC had commenced civil action against Bertoli seeking a permanent injunction and disgorgement of Bertoli's ill-gotten gains. (See, S.E.C. v. Monarch Funding Corporation, No. 85 Civ. 7072, 1996 WL 348209, at *1 (S.D.N.Y. June 24, 1996)). That civil suit was held in abeyance pending the outcome of Bertoli's criminal proceedings. When the criminal proceedings were completed, the SEC attempted to parlay Judge Lechner's findings into a summary judgment in the civil suit. In short, this is another scary example of how factual findings at a sentencing hearing can have a preclusive effect on unrelated proceedings, here a separate civil litigation.
We have often noted that, as important
as they may be, the Guidelines' provisions for resolving disputed factors
at sentencing hearings (as set forth in U.S.S.G. § 6A1.3(a)) are a
hornet's nest of problems for criminal defendants and create irreconcilable
choices for defense counsel who are usually unwilling to go to the mat
with a judge about issues that do not directly relate to the sentencing.
In this case, that precise issue was so important that both the New
York Council of Defense Lawyers and the New
Jersey Association of Criminal Defense Lawyers filed amicus
briefs, arguing that factual findings at sentencing should never
have a preclusive effect in separate civil litigation. We have also
posted a copy of Brief filed by New York Attorney Richard
Ware Levitt on our Briefs
and Motions page.
As was summarized by the amicus curiae:
"[A] criminal defendant will frequently choose not to challenge prospective
issues prior to or during his or her sentencing hearing for any number
of reasons, e.g., a belief that the issue is irrelevant to the calculation
of his or her Guidelines offense level, a belief that the sentencing court
will adhere to a prosecutorial departure motion or other recommendation,
a belief that the procedural limitations inherent in the hearing
will preclude him or her from prevailing on the issue, a refusal to waive
his or her Fifth Amendment privilege against self-incrimination by testifying
at that hearing, a refusal to risk enhancement of his sentence should the
court disbelieve his or her testimony at that hearing, etc." Unstated,
of course, is the real fear that prolonged arguments will only antagonize
the judge at the most critical phase of the criminal proceedings - a bona
fide consideration when one is before a judge such as the irascible Judge
Lechner.
In the instant case, Judge Sand carefully explained the doctrine of offensive collateral estoppel. Under that doctrine, "a litigant who was not a party to a prior judgment [here the SEC] may nevertheless use that judgement ‘offensively' to prevent a defendant from relitigating issues resolved in the earlier proceeding" (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979)). The Court continued that "the general rule is to disallow the use of offensive collateral estoppel where the plaintiff could easily have joined in the earlier action, or where application of this doctrine would be ‘unfair' to the defendant." (Emphasis added.)
The Court did acknowledge that "the application of offensive collateral estoppel to sentencing findings is a novel issue" - in part because "the procedural protections available at sentencing are often considerably narrower than those available in a plenary civil action. Moreover, because the procedure adopted to resolve factual disputes rests in the ‘sound discretion' of the district court, . . . a defendant may be denied, inter alia, the opportunity to conduct pre-hearing discovery or call witnesses during the sentencing hearing."
In determining that the SEC had the right to assert the doctrine of offensive collateral estoppel, Judge Sand (who has probably never been in Judge Lechner's brusque, military style courtroom) came to the surreal conclusion that "the procedures adopted by Judge Lechner afforded Bertoli ample opportunities to challenge the Government's evidence supporting the Sentencing Findings"; and in light of that the instant case was distinguishable from the numerous cases cited by Bertoli which have held that collateral estoppel is inapplicable because of procedural deficiencies at the first proceeding. Similarly, Judge Sand rejected Bertoli's contention that Judge Lechner's 10b-5 findings were irrelevant to his sentence and not appealable, in large part because Bertoli was given "a full and fair opportunity to dispute, at sentencing, the government's claim that he committed securities fraud violations."
In one sop to Bertoli, Judge Sand did agree that a challenge to the amount of profits attributed to Bertoli by Judge Lechner at the sentencing hearing would have been "fruitless because one particular component of the Sentencing Findings was not strictly necessary to the Defendant's ultimate sentence." Thus, on that limited issue, he declined to apply the doctrine of collateral estoppel.
The message from this case is clear: Defense counsel - be forewarned. Just about any issue raised during a sentencing hearing or in a presentence report can come back to haunt a criminal defendant, with the Bureau of Prisons, with the Probation Office, in subsequent forfeiture proceedings and in separate civil proceedings.
After convictions for a series of drug and racketeering offenses, the defendant raised a number of sentencing issues, one of which is noted here. The defendant was caught in a reverse-sting drug operation in which an undercover agent attempted to sell him large quantities of cocaine and marijuana. The undercover agent first attempted to sell 30 pounds of marijuana to the defendant. However, in the words of the Court, "no price was discussed; no deal was proposed; and no further contact regarding the marijuana was ever made." (Id., at 1323). One month later, the persistent undercover agent proposed that the defendant purchase 7 to 10 kilograms of cocaine at a price of $13,000 per kilo; but the defendant advised the agent he only had $10,000 to spend. The agent declined to sell that small amount of cocaine; and again, in the words of the Court, the undercover agent "had no further conversations or dealings with" the defendant. (Id., at 1324).
Lo and behold, when it came time for sentencing on some other drug purchases to which the defendant pled guilty, the Probation Office recommended that the defendant also be sentenced on the basis of the 30 pounds of marijuana and the 7 to 10 kilos of cocaine. (Talk about sentencing entrapment!) The defendant protested, arguing that Application Note 12 to U.S.S.G. 2D1.1, as amended effective November 1, 1995, permits consideration only of "agreed-upon" quantities of drugs in a reverse sting operation, and that no agreement to purchase the quantities offered was ever reached. That Note states in part that "in reverse sting operations, the agreed-upon quantity of the controlled substance would more accurately reflect the scale of the offense because the amount actually delivered is controlled by the government, not by the defendant." (Emphasis added). The Government countered by pointing to an obscure comment in the Sentencing Commission's commentary at the time Application Note 12 was adopted to support its position that drug quantities "under negotiation" may be considered by the sentencing court.
Judge Potter rejected the Government's position and ruled that the plain language of Note 12 refers only to the use of the "agreed upon" quantities in reverse sting operations. "To also include amount merely ‘under negotiation' would render the ‘agreed upon' language of the amendment meaningless." Thus, although the defendant got hammered on his other appeal's issues, at least his sentence wasn't enhanced on the basis of what the undercover agent tried very hard to sell him.
This series of six Orders bristles with intrigue, coverups and undercurrents of serious Government misconduct. For example, in an ex parte submission to the Magistrate Judge initially involved in this case, the Government conceded that the FBI control agents for one of its undercover agents "had at least tacitly authorized his participation" in illegal gambling activities; and there were other allegations that some of the Government's undercover informants had committed and perhaps formented even more serious crimes with the consent of the Government. These six Orders also depict the lonely efforts of one judge fighting to put some semblance of balance and justice into a system that permits the Government to overlook the criminal activities of snitches so long as they supply it with nutritious fodder.
A large group of defendants were charged in the present Fourth Superseding Indictment with a broad range of crimes during the period from 1969 to 1995 including RICO, extortion, bookmaking and drug crimes. Four of them moved for hearings to determine "whether particular intercepted and recorded conversations that the government proposes to introduce as evidence . . . should be suppressed because the government failed to satisfy its statutory obligations to disclose, or disclose adequately, in its applications for the relevant court orders authorizing electronic surveillance the availability of certain confidential informants and/or pertinent information provided by those informants." (Id, at 343). Three of those same defendants also moved for an order directing the government to disclose whether at least one other co-defendant (a James "Whitey" Bulgar, who had never been arrested) was, during any or all of the period relevant to this case, an informant for the Government. (The fourth of those defendants had already secretly advised the Magistrate Judge that he, too, had served as a confidential informant, so he did not join in the motion. Instead he requested the Magistrate not to disclose his status even to his own counsel.)
Because the motions involved allegations that specified individuals secretly served as informants, Judge Wolf initially sealed all the filings relating to those motions from May 22 to June 28, 1997to protect the concerns of the Government in preserving the confidentially of its sources of information and in protecting the safety of its informants. By then, one of the informants had testified and the Government acknowledged that he was an informant as far back as 1989; so Judge Wolf saw no need to keep the proceedings sealed. He also noted that the media had often reported on a "special relationship" between FBI Agent John Connolly and informant Bulgar, who, the media reported, was promised protection from investigation and prosecution in exchange for information.
Citing the wiretap authorization statute's requirement that the Government make "a full and complete statement as to whether or not other investigative procedures have been tried and failed" (18 U.S.C. § 2518(1)(c)) (emphasis added), Judge Wolf noted a number of problems for the Government's case. For example, he noted that if the facts proved that some of the co-defendants were in fact informants, their co-defendants were likely to contend that their statements could not be admitted under the co-conspirator hearsay exception to Fed.R.Evid. 802(d)(2) because they were not truly co-conspirators. The other defendants could also contend that they were entrapped and otherwise victimized by government misconduct.
The Court also cited and discussed the Supreme Court's seminal case regarding the duty of the Government to identify and produce its informants, namely U.S. v. Roviaro, 353 U.S. 53 (1957); and it noted that the Supreme Court has held that "where the disclosure of the informant's identity, or the contents of his communication, is relevant and helpful to the defense of an accused, or is essential to the fair determination of a cause, the [government's privilege to maintain the confidentiality of its informants] must give way." (Roviaro, 353 U.S. at 60-61).
Ultimately, Judge Wolf ordered a Franks hearing (Franks v. Delaware, 438 U.S. 154 (1978)) to determine whether the Government had violated the statutory mandates of the wire-tap laws; and he directed the Attorney General to inform both the court and the defendants whether any of the co-defendants/alleged informants had served as informants. The Government candidly (if not obnoxiously) advised the Court that it might elect to dismiss the case rather than confirm or deny the existence of a cooperating individual; and it pointedly reminded the Court that sometimes the Department of Justice has simply refused to obey orders directing the disclosure of informants, with the full understanding that it risked being held in civil contempt. (Id., at 346 and 366). In the subsequent proceedings reported in the various decisions cited above, Judge Wolf continued to insist that his Orders be complied with; and the Government continued to equivocate and prevaricate. The outcome of this ongoing saga will be reported further in forthcoming issues of Punch and Jurists. In the meantime, this is another series of decisions well worth reading.
This forfeiture case shows ease by which the Government can seize cash under the so-called "probable cause standards" that prevail in the Alice-in-Wonderland world of the Federal drug forfeiture statutes. (See the Quote of the Week below.)
In this case, Daniel Trujillo was stopped at an airport by some DEA agents who concluded that he matched the chameleon-like standard of a drug courier profile; e.g., he was one of the last persons to deplane; he was traveling from New York to Los Angeles (two "drug source cities") on a one-way ticket; and he was nervous and looked around a lot. When he was searched, the agents found that Trujillo was carrying $129,740 in cash; and the cash was wrapped in fabric softener sheets and plastic wrap. In addition, a "trained narcotics dog alerted the agents to the presence of narcotics on the currency." (Id., at 488). [For the record, it should be noted that some 96% of the currency in circulation contains some traces of illegal drugs (see, United States v. $80,760 in U.S. Currency, 781 F.Supp. 462, 475 n. 32 (N.D.Tex. 1991)) - a fact that the Court never discussed]. Although Trujillo was never charged with any drug crimes, the Government did commence a civil action for forfeiture of the cash under 21 U.S.C. § 881(a)(6).
After the money was seized, the defendant appealed alleging violations of the Fourth and Fifth Amendments. Specifically, he argued that there was not sufficient proof to tie the cash to any illegal drug trafficking; and that shifting of the burden of proof from the Government (which only must establish "probable cause" that the currency was drug related) to the defendant violated the due process - especially since forfeiture actions are quasi-criminal in nature and constitute a form of punishment.
The Court rejected both arguments. It ruled that, based on the totality of the circumstances, the Government had shown sufficient probable cause. Citing a number of cases, it held that an "extremely large amount" of cash was "strong evidence that the money was furnished or intended to be furnished in exchange for drugs" (id., at 490). It also concluded that anyone who wraps money in fabric softener sheets is suspect because it masks the odor of cocaine. Thus, it concluded (again without much discussion) that "the nexus between fabric softener and drug trafficking is recognized to be of great probative value." (Id., at 491). It also rejected claims that the agents had no probable cause to stop the defendant in the first place because of the unimpeachable testimony of the Government's sole witness, a trained DEA agent, that the defendant matched the infamous drug courier profile.
On the second issue, the defendant urged the court to adopt the "conventional civil standard of a preponderance of the evidence" rather than the probable cause standard set forth in 19 U.S.C. § 1615. The Court agreed that there has been a "doctrinal upheaval" in recent Supreme Court jurisprudence dealing with due process rights in forfeiture proceedings; and it also agreed that the forfeiture statutes are considered "criminal" for the purposes of protecting some Fourth and Fifth Amendment rights. However, it stated that "21 U.S.C. § 881 and 19 U.S.C. § 1615 were ‘not criminal enough to prevent Congress from imposing the burden of proof on the claimant'." (Id., at 493) (Emphasis added). Then, citing a list of cases in accord, but without much discussion, it ruled that "the shifting burden of proof applied to forfeitures of drug related currency does not violate the Due Process Clause."
The Court did comment that a claimant need not prove "a legal source for the currency"; but once the Government establishes probable cause, the claimant must then prove, by a preponderance of evidence, that the currency was not related to illegal drug transactions. Here, the claimant merely claimed that the funds came from the sale of some cars the previous day; and the court obviously found that statement not credible. Thus, it concluded that "only where, as here, the claimant offers no evidence of a non-drug related source for the currency can the Government obtain a judgment of forfeiture on its preliminary showing of probable cause." (Id., at 492).
This is an important money laundering case because it deals with the Government's contention that "every check kiting scheme involves conduct that is punishable under the money laundering statutes." (Id., at 579). In this case, the defendant was convicted of bank fraud, misapplication of funds and money laundering. He argued that the conviction for money laundering under 18 U.S.C. 1957 was invalid because money laundering is an offense to be punished separately from an underlying criminal offense; and here no proof was presented of an independent criminal transaction separate from the underlying offenses. He further claimed that for a money laundering conviction to be sustained, the Government must show that a defendant took the added step of engaging in a prohibited transaction with proceeds that were "obtained" from a specific unlawful transaction.
The Eleventh Circuit agreed and vacated the money laundering conviction. Essentially, it concluded that the withdrawal of funds charged as money laundering "was one and the same as the underlying criminal activity of bank fraud and misapplication of funds. We do not accept that money laundering is inherent in bank fraud or misapplication of funds." (Id., at 580).
The Court ruled that after-the-fact minimization is "expressly allowed by 18 U.S.C. § 2518(5)" and that the Government "does not have to show that contemporaneous minimization was impossible." (Id., at 463). Thus it rejected the defendants' motions to suppress the evidence obtained by the wiretap.
In the Wardlaw case, the defendants sought to suppress tape recordings made by a Government informant on the grounds that they had been so severely edited that they were neither properly authenticated nor accurate. The informant had intentionally deleted no fewer than 25 separate sections of the original recordings, selectively re-recorded the conversations on another tape and then intentionally destroyed the original tape. The Magistrate Judge routinely sided with the Government and ruled that the motions to suppress should be denied.
On a motion for reconsideration, Judge Shoob caustically noted that the informant had "questionable motives" and a "known pattern of deception with the Government." He further noted that "because recorded evidence is likely to have a strong impression on a jury and is susceptible to alteration" the evidence of its authenticity and accuracy must be "clear and convincing." He then reversed the Magistrate's decision, concluding that the deliberately distorted tapes were inadmissible for two reasons. "First, the government cannot properly authenticate the recordings under Federal Rule of Evidence 901. Second, under Federal Rule of Evidence 403, the probative value of the edited tape recordings is substantially outweighed by the danger of unfair prejudice to defendants and misleading the jury." (Id., at 1483).
David B. Smith, the former Associate Director of the Department of Justice Asset Forfeiture Office, and who is thus obviously well versed in the Government's ability to seize assets with little proof, has noted that:
"Criminal defense attorneys confronting
their first civil forfeiture case feel like they are in an Alice-in-Wonderland
world where the property owner generally has the burden of proof, the innocence
of the owner is not a defense, rank hearsay is admissible to prove that
the property is 'guilty', and the Government's right to the property vests
at the time it is used illegally rather than at the time of the forfeiture
judgment." Prosecution and Defense of Forfeiture
Cases, by David B. Smith (New York: Matthew Bender & Co.,
Inc. 1988) at 1.02.
Cases in the Federal
Reporter:
This week: 23
Year to date: 2347
Cases in the Federal
Supplement: This
week: 14
Year to date: 1188