Latest Seventh Circuit and Supreme Court Criminal Legal News

In United States v. Ghaddar, ___ F.3d ___ (7^th Cir. 2012; No. 11-3074), the Seventh Circuit a 2-level sentencing enhancement in a mail and tax fraud case for using "sophisticated means" in committing these crimes pursuant to U.S.S.G. § 2B1.1(b)(10). The defendant owned a number of tobacco stores at which nearly half of the sales were in cash. The defendant directed his employees to separate cash receipts from the check and credit card receipts. He then used the cash to pay his employees and suppliers without reporting the cash as income to the IRS. Additionally, he channeled large sums of the cash to his homeland in Lebanon. He accomplished this overseas transfer by carrying currency or cashier’s checks with him when he traveled, wiring money from noncorporate accounts he controlled at stateside banks, and shifting money into the accounts of relatives and associates, who then wired it to his Lebanese accounts. In addition, on at least three occasions, Ghaddar directed his accountant to make multiple deposits of currency in amounts around $9,000 and then transfer lump sums to an account in the Channel Islands (British Crown Dependencies off the French Coast of Normandy). The account was under Ghaddar’s control but not in his name. The district court based the enhancement on these activities, but the defendant argued on appeal that his actions were commonplace compared to other cases where the enhancement was applied. Although the court found his argument unpersuasive, it did note that his contention that a rudimentary "cash skimming" operation is not ordinarily sophisticated. By itself, skimming currency receipts and using that money to pay employees and suppliers is not a particularly elaborate form of tax evasion. Some degree of concealment "is inherent in criminal tax fraud," and situations where a shop owner simply empties the cash register and hides the day’s receipts under his bed "must be distinguished from efforts over and above that concealment to prevent detection." For that reason, the adjustment for sophisticated means is warranted only when the conduct shows a greater level of planning or concealment than a typical fraud of its kind. That being said, although the skimming may not have been elaborate, the enhancement still applies when his actions are viewed as a whole. The efforts to transfer money to overseas accounts and the use of accounts held by other people, in combination with his other activities, demonstrated that the enhancement was warranted.

In United States v. Hosseini, ___ F.3d ___ (7^th Cir. 2012; No. 08-1879), the Court of Appeals considered several issues arising out of a multi-count RICO trial, stemming from the defendants’ operation of automobile dealerships. The defendants operated three automobile dealerships in Chicago, and from 1995 to 2005, sold many luxury cars to Chicago area drug dealers. More than half their sales during this period were to drug traffickers, who preferred to deal with Hosseini and Obaei because they were willing to accept large cash payments in small bills with no questions asked. They also falsified sales contracts and liens, ignored federal tax-reporting requirements, and arranged their bank deposits to avoid triggering federal bank-reporting requirements. Based on this activity and more, Hosseini and Obaei were charged in a massive 100-count indictment alleging RICO conspiracy, money laundering, mail fraud, illegal transaction structuring, bank fraud, and aiding and abetting a drug conspiracy. The defendants’ primary argument on appeal was that to be convicted of money laundering, the "proceeds" of their underlying crime meant net profit, not gross receipts. Because they contended that the government did not prove that the auto sales in question involved the net profit of the underlying drug trafficking, the evidence was insufficient. Because the issue was raised for the first time on appeal, however, the court reviewed only for plain error. The Court noted that for the type of money laundering alleged in this case, i.e., concealment, no clear answer on the net profits versus gross receipts question existed in prior precedents. Although the Seventh Circuit in Santos and Scialabba, defined proceeds as net profits, those cases involved "promotional" money laundering. The Supreme Court decision in Santos failed to have a majority decision. The Seventh Circuit had considered the meaning of proceeds in a concealment case but, United States v. Aslan, 644 F.3d 526 (7^th Cir. 2011), because the issue was considered for plain error, the court only concluded that the defendant could not meet the plain error test. The court came to the same conclusion in this case, finding that the state of the law precluded a finding of plain error, and declining to settle the underlying question of how to define proceeds in a concealment case. The court also noted that Congress has since amended the statute to clearly define proceeds in this context as gross receipts. After rejecting the defendants’ other issues, the court affirmed the convictions.

In United States v. Alcala, ___ F.3d ___ (7^th Cir. 2012; No. 11-2412), the Seventh Circuit decided as a matter of first impression whether a defendant’s waiver of his appellate rights applies to a motion to withdraw a plea. In the court below, the defendant entered into a plea agreement wherein he waived his right to appeal his conviction and sentence. Thereafter, before sentencing, he moved to withdraw his plea. The district court denied that motion and the defendant appealed. The government argued that the appeal waiver in the agreement precluded the appeal from the denial of the motion to withdraw the plea. Considering the question for the first time, the Seventh Circuit noted that the Sixth Circuit recently in United States v. Toth, 668 F.3d 374 (6^th Cir. 2012), joined every circuit to consider the question and held that such a waiver, if valid, precludes a defendant’s right to appeal a denial of his motion to withdraw his plea. The Seventh Circuit joined the other circuits, finding that appealing a denial of a motion to withdraw a plea is an attempt to contest a conviction on appeal, which therefore falls within the scope of a waiver of the right to appeal one’s conviction. The court then found that the waiver was valid and entered into knowingly. Accordingly, the court enforced the waiver and dismissed the appeal.

In United States v. Schiro, ___ F.3d ___ (7^th Cir. 2012; No. 09-1265), the Seventh Circuit affirmed the convictions of the defendants in the Chicago Outfit "Family Secrets" trial, over the dissent of Judge Wood. The defendants were charged with a RICO conspiracy related to their operation of the Chicago "Outfit." Two of the defendants had previously been convicted of a RICO conspiracy related to the conduct of the affairs of the Carlisi Street Crew. The primary question presented in the appeal was whether the RICO conspiracy conviction in this case was the same conspiracy as that for which the defendants were previously convicted, thereby violating the Double Jeopardy Clause. The defendants argued that their agreement to facilitate the criminal activities of their street crews (the first prosecution) and their agreement to facilitate the criminal activities of the Outfit itself (the second prosecution) are one and the same because the street crews are components of the Outfit. The court concluded that depending on what an individual does, there can be two different enterprises that he is assisting rather than one even though they are affiliated, provided that either they are indeed different or the patterns of racketeering activity are different. As an example, the court used an example of an employee working at Ford motor company. A worker at Ford Motor Company’s River Rouge Complex is an employee of Ford Motor Company. His agreement to work on the River Rouge assembly line contributes both to the plant’s output and to the output of the company as a whole, of which River Rouge’s output is simply a part. If Ford produced sawed-off shotguns rather than automobiles, the worker could be prosecuted for conspiring with employees of Ford or employees at the River Rouge plant to produce an illegal weapon, but he could not be prosecuted for two separate conspiracies, because the members and the objectives and the activities of the two conspiracies (conspiracy with employees of Ford, conspiracy with employees at River Rouge) would be identical. But if after producing sawed-off shotguns in the River Rouge plant an employee who had worked there is promoted into the Ford executive suite in Detroit as a regional manager and while there prepares financial reports designed to conceal from the government Ford’s income from the production of illegal weaponry at River Rouge and other Ford plants, he has joined a separate though overlapping conspiracy. Reasoning by analogy, the court found that the Outfit and its subsidiary street crews are different though overlapping enterprises pursuing different though overlapping patterns of racketeering. Here, the defendants were convicted in their capacity as Outfit members; some of the acts alleged in the indictment, such as murders and the formation of groups for special tasks for the organization, were unique to functions of the Outfit, rather than street crews. Thus, no double jeopardy violation occurred. Judge Wood dissented, concluding that the current prosecution entirely subsumed the prior prosecution, violating the Double Jeopardy Clause.  Appellate Division Chief Johanna Christiansen of our office represented Frank Calabrese, Sr. on appeal. 

In United States v. Konczak, ___ F.3d ___ (7^th Cir. 2012; No. 11-2969), the Seventh Circuit reminded defense counsel of their duty to consult with the defendant regarding his desire to challenge the validity of a guilty plea prior to filing an Anders brief. Appellate counsel filed an Anders brief, and considered therein whether the defendant could challenge the adequacy of the plea colloquy or the voluntariness of his guilty plea. The Court of Appeals noted that in United States v. Knox, 287 F.3d 667 (7^th Cir. 2002), it held that counsel "should not present (or even explore in an Anders submission) a Rule 11 argument unless they know after consulting their clients, and providing advice about the risks, that the defendant really wants to withdraw the guilty plea." Noting that some of the court’s nonprecedential orders might be read to indicate that the burden rests on the client to alert counsel about his desire to withdraw the plea, the court clarified that Knox does not place that burden on the defendant. Rather, Knox instructs counsel both to consult with the client and provide advice about the risks and benefits of any proposed course of action. Only if, after counsel has taken that step, the defendant confirms that he is not interested in withdrawing the plea, may counsel refrain from exploring possible arguments related to Rule 11. In the present case, the court could not tell whether appellate counsel followed the process outlined in Knox. Upon it’s own review of the record, however, the court concluded that any challenge to the plea would be frivolous, as well as any other arguments, and therefore dismissed the appeal.

PRACTICE NOTE: In cases where we have consulted with the client and he or she has indicated a desire not to withdraw the plea, we typically include the following language in the brief, which the court has found sufficient to address holding in Knox: "An unconditional guilty plea generally waives all non-jurisdictional defects in the proceedings. United States v. Markling, 7 F.3d 1309, 1312 (7th Cir. 1993). ________ entered into an unconditional plea in the present case, and the only potential issue would therefore be whether that plea was enforceable as knowing and voluntary. However, in United States v. Knox, this Court noted that where a defendant does not move to withdraw a guilty plea in the district court, counsel need not address the voluntariness of the plea in an Anders brief if, after consultation with the defendant and advisement of any risks associated with the withdrawal of the plea, the defendant indicates that she does not wish to challenge her plea on appeal. United States v. Knox, 287 F.3d 667, 671 (7th Cir. 2002). Following this court’s direction, counsel consulted ________ as to whether __ wished to seek a withdrawal of ___ guilty plea. _________ indicated to counsel that ___ did not wish to do so. Therefore, whether _________’s guilty plea was knowing and voluntary is not a potential issue for appeal or consideration in an Anders brief."

In United States v. Bahena-Navarro, ___ F.3d ___ (7^th Cir. 2012; No. 1-1348), the Seventh Circuit held that the district court did not err in refusing to accept the defendant’s guilty plea where the defendant was unwilling to knowingly and voluntarily waiver certain trial rights. The defendant was charged with illegal re-entry and sought to enter a guilty plea. However, during the Rule 11 colloquy, the defendant repeatedly expressed confusion or an unwillingness to waiver certain trial rights. After several recesses and attempts to obtain a waiver from the defendant, the court finally rejected the defendant’s efforts to enter a guilty plea and set the matter for trial. On the day of trial, the district court gave the defendant another opportunity to plead guilty, but the same problems with the colloquy persisted. Accordingly, the defendant went to trial and was convicted. On appeal, the defendant argued that because he provided a factual basis for his plea, the district court erred in refusing to accept it. However, the Court of Appeals held that while admitted to a factual basis to support a plea is necessary before a guilty plea is accepted, it is not sufficient. The defendant must also knowingly waive his trial rights, which the defendant clearly did not do in this case. After concluding that the district judge made adequate inquiries into the defendant’s refusal to waiver his trial rights, as well as providing a sufficient rationale for the rejection of the plea, the Court of Appeals affirmed the defendant’s conviction.

On April 17, 2012, the Seventh Circuit decided United States v. Fleming, ___ F.3d ___ (7^th Cir. 2012; No. 11-1404), holding that the defendant could not appeal an issue arising from a re-sentencing hearing after the grant of a 2255 petition without first seeking a certificate of appealability. After the defendant’s conviction for drug offenses was affirmed on direct appeal, the defendant filed a 2255 petition alleging he received ineffective assistance of counsel. Among other things, he argued that his counsel failed to challenge the government’s late notice of sentencing enhancement (which resulted in a mandatory life sentence) and that counsel should have challenged his possession conviction because none of the controlled buys individually involved 50 or more grams of crack cocaine, as charged in the indictment. The district court held a hearing and concluded that the defendant was entitled to re-sentencing in light of the failure to challenge the late notice of enhancement. The district court, however, denied the defendant’s challenge to the aggregation of the drug transactions to reach the 50 grams as charged in the indictment. The court then re-sentenced the defendant, and he appealed the denial of his aggregation issue. On appeal, the government asserted that the Court of Appeals lacked jurisdiction to consider that issue because the defendant did not have a certificate of appealability that would have permitted an appeal of the district court’s partial denial of his 2255 petition. The Court of Appeals noted that insofar as he is now appealing from the new sentence imposed after the partial grant of the 2255 petition, he is essentially brining a direct appeal for which he needs no certificate of appealability. However, the question was whether he needed a certificate of appealability for his challenge to the aggregation ruling, which was part of the case that was rejected in his 2255 proceeding. Commenting that it had never addressed this issue before, the court found that every circuit to have considered the issue have unanimously held that a certificate of appealability is needed for the part of the case that challenges the denial of collateral relief. The Seventh Circuit joined these other circuits. The Court of Appeals also refused to issue a certificate of appealability, finding that the petitioner could not demonstrate counsel’s strategic choices on the issue in question deviated from prevailing professional norms. Have resolved this issue, the Court then went on to consider the direct appeal of the defendant’s new sentence, this portion of the appeal not requiring a certificate of appealability. Here, the defendant argued that the district court incorrectly calculated the drug quantity in the case, an issue which the Court of Appeal rejected.

On Friday the 13th, the United States Sentencing Commission voted to promulgate amendments on a wide variety of subjects.  These amendments will become effective November 1, 2012, provided Congress does not reject them.  Prior to them becoming effective, you can, of course, use the pending amendments as a basis for 3553(a) arguments.  Read a summary of the amendments HERE.

On Thursday, the Seventh Circuit issued an amended opinion in United States v. Raupp, ___ F.3d ___ (7th Cir. 2012; No. 11-2215), considering the question of whether a Indiana's conspiracy to commit robbery is a "crime of violence" under the Guidelines. Robbery in Indiana is both a "crime of violence" under the Guidelines and a "violent felony" under the ACCA. Application note 1 to section 4B1.2 of the Guidelines states that an inchoate offense such as conspiracy is a "crime of violence when the underlying crime is one. The defendant, however, asked the court to ignore the application note in light of Begay and its progeny. Specifically, a conspiracy is an agreement--an exchange of words--and there is nothing violent or aggressive about an agreement necessarily. Moreover, although the Supreme Court in James v. United States, 550 U.S. 192 (2007), held that attempted burglary was a violent felony under the ACCA, the defendant argued that an attempt often involves a substantial step toward commission of a crime--a step that could be violent or aggressive--and, consequently, attempts should be treated differently than conspiracy. The Court of Appeals noted that Begay and its progeny were interpreting the ACCA statute and not the Guidelines. Although the ACCA and the Guidelines are interpreted the same when they both use the same language, the Guidelines contain some language that is not in the ACCA. If the Sentencing Commission wants to have a list of qualifying offenses that differs from the ones in the statute, it is entitled to do so. Moreover, application notes are treated as authoritative unless the notes conflict with the text to which they apply. Looking only to the text of 4B1.2(a) and the application note (and ignoring Begay which does not interpret the Guidelines), the Court concluded that there was no conflict between the application note and the Guideline text. Accordingly, the Court of Appeals held that a conspiracy to commit an underlying offense can be a "crime of violence" under the Guidelines if the substantive offense is a crime of violence. Judge Wood dissented.

The Seventh Circuit Thursday also decided United States v. Mount, ___ F.3d ___ (7th Cir. 2012; No. 11-2616). In this case, the defendant "disappeared" for three months while awaiting trial. After being captured, he eventually pleaded guilty. The defendant received two points for acceptance of responsibility, and the government moved that the defendant receive the additional 1-level reduction because the defendant provided the government with timely notice of his intention to plead guilty. Relying on the defendant's flight, the district court refused to give the defendant the additional level off. The defendant argued on appeal that once the government makes the motion, the district court is required to give the one-level off, and the Court of Appeals agreed. After looking at some precedents which did not directly address the issue, the Court of Appeals concluded that the language of the Guideline was clear; it was clearly mandatory for the court to give the 1-level reduction if the government makes the motion. This decision directly conflicts with the view of the Fifth Circuit in United States v. Williamson, 598 F.3d 227 (7th Cir. 2010). Of course, once the district court correctly computes the guideline sentence, it still retains the discretion to vary from the guidelines, which might include an upward variance to account for the escape while awaiting trial.  Andy McGowan, of our office, litigated this appeal.

Finally, on Tuesday, the Seventh Circuit affirmed the sentences of two defendants in United States v. Cerna, ___ F.3d ___ (7th Cir. 2012; No. 10-2533). The Court rejected several routine sentencing arguments, including that that the district court erred in its finding that one defendant held a managerial role; that a defendant's sentence was unconstitutionally disparate from the sentences of his co-defendants; and that the court misapplied the § 3553(a) factors.

In United States v. Bradley, ___ F.3d ___ (7th Cir. 2012; No. 11-1773), the Seventh Circuit remanded a sentence for traveling in interstate commerce to engage in sex with a minor, where the sentence imposed was 169 months above the top of the Guideline range, and the judge failed to adequately justify the magnitude of the variance. The Court previously remanded the case where the same sentence was imposed because the judge based the sentence on presumed prior acts of the defendant and made unsupported assumptions about recidivism. The case was reassigned to a different judge on remand pursuant to Circuit Rule 36, but the new judge resentenced the defendant to the same 240 months, 169 months above the range of 57 to 71 months. The court did so notwithstanding even the government's recommendation of a sentence of 71 months. The Court of Appeals first noted that the district court voiced no disagreement with the policies underlying the guideline which determined the range and, accordingly, no such disagreement could have been the basis of the variance. Instead, the Court found that the district court's primary reason for the variance was purportedly the nature and circumstances of the defendant's offense. However, the factors cited by the district court were all inherent in every violation of the offense and could not support the magnitude of the variance in this case. Accordingly, the Court vacated the sentence and ordered that Circuit Rule 36 again apply on remand. 

In United States v. Burgard, ___ F.3d ___ (7^th Cir. 2012; No. 11-1863), the Seventh Circuit held that a seizure of a cell phone based upon probable cause that it contained child pornography was not unreasonable where the investigating officer waited six days to obtain a search warrant for the contents of the phone. Although a delay between seizure and obtaining a search warrant to search a cell phone can be unreasonable if too long, the court found it significant that the seizure was based upon probably cause, rather than reasonable suspicion, as well as the fact that the investigating officer had not been neglectful in precipitating the delay, but was rather attempting to follow up on other investigative matters in the case before seeking the search warrant. Although the district court had also upheld the search as reasonable under the Leon good faith exception, the Court of Appeals held that the Leon exception did not apply here. When an officer waits an unreasonably long time to obtain a search warrant, in violation of the Fourth Amendment, he cannot seek to have evidence admitted simply by pointing to that late-obtained warrant. If this were all that was needed, evidence would never be suppressed following these types of violations because, by definition, the police would always have a warrant before they searched. The court noted, however, that it was not categorically ruling out the possibility of a Leon argument in every case of this type. There may be a situation in which the unreasonableness of a delay is a very close call, and an officer could not be charged with knowledge that the delay violated the law. All the court is holding here is that the good-faith exception is not automatically available as soon as a warrant materializes.

On April 2, 2012, the Supreme Court granted cert in Moncrieffe v. Holder, No. 11-702, a case out of the 5th Circuit, to address this issue: "Whether a conviction under a provision of state law that encompasses but is not limited to the distribution of a small amount of marijuana without remuneration constitutes an aggravated felony, notwithstanding that the record of conviction does not establish that the alien was convicted of conduct that would constitute a federal felony."

A divided Court (5-4) also decided the same day that certain routine jail strip searches are constitutionally permissible. See Florence v. Board of Freeholders, No. 10-945. The opinion is available here: http://www.supremecourt.gov/opinions/11pdf/10-945.pdf

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Last modified: 05/01/12