Aliens vs. Predator

United States v. Archer, No. 10-4684-cr (2d Cir. September 20, 2011) (Newman, Calabresi, Hall, CJJ)

Thomas Archer, a solo-practitioner immigration lawyer in Queens, ran a visa fraud mill. His specialty was the I-687, an amnesty program that permitted certain aliens who were here illegally in the 1980's to adjust their status and receive a visa. In 2004 and 2005, Archer filed nearly 240 I-687 applications; the DHS denied them all.

Convicted of visa fraud and conspiracy to commit visa fraud, his appeal concerned both trial issues - centered around his claim that he did know know that his assistants were filing forms with false information - and sentencing issues. The circuit affirmed Archer’s conviction, but remanded for resentencing and recalculation of the restitution.

The Trial Issues

At trial, an immigration agent who had reviewed 175 I-687 applications that Archer’s office filed, testified that almost all of them had certain suspicious factual allegations in common. That said, however, only three clients actually testified about the preparation of their fraudulent I-687's, and the government entered only four applications into evidence. The aliens' stories had much in common: their I-687 applications contained information that they knew was false; Archer or his staff gave them supporting affidavits for others to sign that were already filled in, and; Archer’s office told them to abandon the application process once they had received temporary work permits, but before their interview.

Archer’s principal trial defense was that he was unaware of the fraudulent actions of his staff. To this end, he requested two jury instructions. First he sought a “Philips” instruction that “the fact that a defendant is a solo practitioner, without more, is an insufficient basis from which to infer his guilt because, even though he is the only lawyer in the office, he may not be aware of everything his staff is doing.” He also sought a “Maniego” instruction that “attorneys are not held to a higher duty to investigate than non-lawyers and have no special obligation to verify independently information give to them by clients.” The district court rejected these requests and instead gave a fairly generic “knowingly” charge that simply told the jurors to consider whether Archer knew that the visa applications contained false statements but nevertheless presented them.

The circuit affirmed. Although it agreed that both the Philips and the Maniego instructions contain legally sound principles, here the instruction that the court gave was accurate and “left no room for the jury to convict Archer if it believed that he merely ran an office from which fraudulent documents were filed.”

The Sentencing Issues

The circuit found fault with the district court’s findings on two sentencing enhancements and its restitution order.

First, based solely on the agent’s statistical review of the 175 I-687 applications, the court enhanced Archer’s guideline range by nine-levels for creating 100 or more fraudulent documents, even though only the government admitted only four applications at trial. The circuit found that this statistical review failed the Shonubi “specific evidence” test. The principal problem was that the government “presented no evidence that the four applications proven false at trial were ... a representative slice of the 175 applications” that the agent reviewed because the government did not “randomly select[]” them; they were the applications associated with particular witnesses that the government chose to call and, most likely, “the most egregious cases.”

In addition, even though there was a suspicious statistical similarity among the applications reviewed, there was no “baseline” - evidence of what the national pool of I-687's, most of them likely filed by honest lawyers, actually looked like. Finally, the government did not explain why the similarities among Archer’s I-687 applications were “in themselves incriminating.” The only facts at issue were dates of entry and of travel and those facts were not “so peculiar” or “obvious” “that no further explanation is needed.”

The second sentencing error concerned the obstruction of justice enhancement. The district court imposed it because Archer texted a former employee, Singh, asking him whether he was going to be a government witness. When Archer concluded that the answer was “yes,” he texted Singh again, this time calling him a “Pussy.” According to the PSR, Singh felt “very threatened” by those messages.

Here, there was no direct and obvious threat; Archer’s statements to Singh were ambiguous. Where this occurs, the circuit usually defers to the district court’s findings on the speaker’s meaning and intent, but here the district court made none. And a “reasonable reading” of the messages would not support a finding of intent sufficient to support the enhancement. To the circuit, the “most obvious” reading of the texts was that Archer wished to know whether Singh would testify against him, and was displeased to learn that he would. Thus, even though Archer called Singh an “unpleasant name” and Singh was, subjectively, “afraid,” it was error to impose the obstruction enhancement.

The district court also erred in imposing restitution to 234 of Archer’s former clients - the total was more than $300,000 - because there was insufficient evidence that all of the clients were “victims” under the MVRA. The clients were only “victims” if Archer’s conspiracy to commit visa fraud caused their losses. This turns not so much on whether the aliens had “clean hands” but on whether their losses arose from the visa fraud or from an uncharged consumer fraud - Archer’s effort to cheat them of their money. After all, a person can commit visa fraud without accepting any money from the applicants.

If Archer’s clients though they were buying his honest legal services, then they may well have been victims of the visa fraud conspiracy. But, if they knew they were buying the “cover that his law practice gave to their false visa applications” then the visa fraud was not the proximate cause of their loss. There are some cases where it will be clear that no reasonable person would have given the defendant money if he had known of his plan. In those cases, a generalized description of the fraud is enough to support restitution. But, where it is “plausible that some individuals would have paid the defendant even if they had been informed of his fraudulent plan, then the government must proffer some individualized evidence to meet its burden of showing that each alleged ‘victim’ was actually a victim.”

This case is in that latter category. At least some of the aliens clearly knew that their visa applications contained falsehoods, but went along with the process anyway. In addition, filing a “false but plausible I-687 application was anything but a sure loser.” While the application was pending, the alien obtained a temporary work permit, and there was always the possibility, however, small the applicant would receive a visa. Given the resulting lack of certainty as to which clients were victims, the court remanded for recalculation of the restitution order.

Procedures on Remand

This decision has a particularly interesting discussion of the procedures that the district court is to undertake on remand. For sentencing issues, the “consensus” among the other circuits is “where the government knew of its obligation to present evidence and failed to do so, it may not enter new evidence on remand” unless the “government’s burden was unclear,” the “trial court prohibited discussion of the issue,” or the “evidence was, for a good reason, unavailable.”

The circuit “join[ed] that consensus” - sort of - but it still punted. It did not resolve the issue other than to remand for resentencing with instructions that the district court “consider in the first instance whether the justifications ... for allowing the government to present new evidence on remand exist in this case.” If the court allows no new evidence, it should recalculate Archer’s sentencing range without the 100-or-more-documents and obstruction enhancements. It if chooses to consider new evidence it should recalculate the range based on its findings with respect to that evidence and impose a sentence based on this and, of course, all of the other § 3553(a) factors.

For the restitution problem, there is yet another twist to the remand. To satisfy its burden, the government will have to show that each fee-paying client “did not know of the fraud and would not have paid a fee had” he known. Since the government has to “prove two negatives,” “some refinement in the proper allocation” of the evidentiary burdens is necessary.

Ordinarily, according go the circuit, “where the prosecution’s burden of proof would require it to prove a negative and the facts at issue are more readily ascertainable by the defendant,” the defendant assumes a burden of producing “at least a triable issue as to the fact at issue,” after which the prosecution assumes the burden of persuasion. That is the “appropriate” allocation of burdens here. Archer is “more likely than the government to ascertain whether a client knew of the fraud or would have paid a fee even if the client had known of the fraud,” since this knowledge would have come from Archer himself or someone in the firms.

Since the district court did not follow this program in the first instance, on remand, the court will have to reconsider which of Archer’s clients is entitled to restitution. The court will also have to consider whether to allow new evidence, as discussed above. But on the restitution question, the lack of clarity on the parties’ respective burdens “would seem to favor allowing additional evidence on the issue.” Even if there is no new evidence, however, the parties are “free to make new arguments based on the evidence already in the record.”

Comment

Mr. Archer now faces something of a dilemma. On remand, each client that he alleges knew what was going on - and hence is not a “victim” for restitution purposes - will add one at least more admittedly fraudulent document to the potential offense level enhancement. Will he stop at ninety-nine to keep his offense level lower, and make restitution to the others? Or will he go all the way, and claim that none of his clients were "victims?" In other words, which will he choose - money or freedom?

Beating Disorder

United States v. Wells, No. 10-1266-cr (2d Cir. April 28, 2011) (Kearse, Sack, Katzmann, CJJ)

The defendants here, Wells and Rhodes, both former prison guards, were convicted of covering up the beating of a prisoner at the Queen Private Correctional Facility (“QPCF”). The episode began when the prisoner commented on the appearance of a female guard in Wells’ presence. Wells beat the prisoner, and the beating was witnessed by Rhodes and three other guards. The QPCF immediately began an internal investigation, and the witnesses, at Wells’ urging, filed false reports. Later, Wells and Rhodes were interviewed by an agent of the Office of the Inspector General and lied to her about what happened.

After a jury trial, Wells was convicted of five offenses relating to obstruction of justice, witness tampering and the making of a false statement. Rhodes was convicted of obstruction of justice and making a false statement.

On appeal, they challenged their convictions for obstruction of justice under 18 U.S.C. § 1519, which requires proof of conduct “intended to obstruct the investigation or proper administration of a matter within the jurisdiction of a federal agency.” The circuit affirmed.

The defendants first claimed that the government failed to prove a sufficient “nexus” between their conduct and an official proceeding, as required under some obstruction statutes. But § 1519 makes clear that no such nexus need be proven. All the statute requires is proof of an “intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States.”

The court also rejected the argument that the statute did not apply because the defendants were employed by the private company that operated the QPCF. The QPCF was under contract with the U.S. Marshals Service, an agency within the Department of Justice, to house federal prisoners. And the DOJ has jurisdiction and authority to investigate allegations against correction officers at both publicly and privately run prisons.

Finally, the court rejected the claim that there was no evidence that the defendants knew that their statements would be submitted to the DOJ. Knowledge of a pending federal investigation or proceeding is not an element of the offense.

Cash and Quarry

United States v. Byors, No. 08-4811-cr (2d Cir. October 29, 2009) (Cabranes, Livingston, CJJ, Korman, DJ)

Defendant, while ostensibly raising money for a Vermont marble quarry, made material misrepresentations to his investors. He also converted substantial amounts of their money to pay for his personal expenses, including vacation homes, cars and horses. He pled guilty to multiple fraud and money laundering offenses and was sentenced to 135 months’ imprisonment. On appeal, he raised two unsuccessful challenges to his Guidelines calculations.

He first argued that the district court should have deducted from the loss calculation - about $9 million - the “legitimate business expenditures” that went into his efforts to “capitalize” the quarry business. The circuit disagreed. Under the “plain language” of Application Note 3(E) to the fraud guideline, the loss amount is only offset by any “value” that the victims receive, and not by legitimate expenditures. Byors' expenditures conferred nothing of value and no benefit to his victims. He rendered no “services” to them and did not deliver any return on their “investment.” Even accepting his claim that he used the money for the purposes he promised his victims, there was no error here. Byors' victims were left with nothing of value when the fraud was uncovered.

Byor, who tampered with a witness during the investigation into his fraud, also raised an issue about the interaction between the general obstruction of justice guideline, § 3C1.1, and the specific provision dealing with obstruction in the money laundering Guideline, § 2S1.1, comment. n.2(C). These two provisions seemingly conflict in cases where the defendant has obstructed a predicate offense, but not the subsequent money laundering offense itself.

The money laundering guideline provides that the application of § 3C1.1 “shall be determined based on the [laundering of criminally derived funds] ... and not on the underlying offense from which the laundered funds were derived.” Byors argued that under this provision the Chapter 3 adjustment could only apply if the obstruction related to the money laundering offense, and not the underlying fraud. The circuit disagreed. The Chapter 3 obstruction enhancement covers the offense of conviction, “any relevant conduct,” or “a closely related offense.” The fraud that underlay the money laundering offense, during which Byors obstructed justice, was either relevant conduct or “closely related” to the money laundering offense.

The court refused to conclude that an application note to a separate offense conduct guideline “creates an exception” to § 3C1.1, since that would be contrary to its practice of seeking to “harmonize” commentary with the Guidelines.

Going Down!

United States v. Perez, No. 08-4131-cr (2d Cir. August 3, 2009) (Newman, Pooler, Parker, CJJ)

Here, the circuit concluded that an internal BOP investigation into corrections officers’ use of force against an inmate constituted an “official proceeding” within the meaning of 18 U.S.C. § 1512. The court rejected the defendants’ sufficiency challenge and affirmed their convictions.

The case arose from the beating of an inmate by a CO in an elevator at the MDC. Two other CO’s watched the beating, although one of them finally put a stop to it, and all three were convicted of violating 18 U.S.C. § 1512(c) by making false statements in the paperwork that they were required to fill out by the BOP’s administrative procedures - various “use-of-force” memoranda.

The BOP investigates every use of force by a staff member. That investigation begins with the use-of-force paperwork, which is reviewed by an After-Action Review Committee that comprises the Warden and three other officials. This Committee must determine whether BOP policy was adhered to, and complete a report that includes its findings and a decision whether the incident requires further investigation. A use-of-force incident can be referred to the DOJ’s Inspector General, the BOP’s Internal Affairs bureau, or the FBI.

The statute at issue makes it a crime to “corruptly obstruct ... an official proceeding,” which is defined, to the extent pertinent here, as “a proceeding before a Federal Government agency which is authorized by law.” 18 U.S.C. § 1515(a)(1)(C). At issue here was whether a BOP use-of-force investigation was an “official proceeding,” since such an investigation involves neither live witnesses nor sworn testimony.

The circuit, after considering three different precedent lines that might help interpret the term, decided not to follow any of them. It ducked the broader question of “[w]hether or not agency investigations in general can satisfy the official proceeding element of subsection 1512(c)(1),” and held that, here, the “particular procedures required by the BOP” in use-of-force situations “suffice to support a conviction.” The court’s focus was on the degree of formality required. The BOP Program Statement that governs use-of-force investigations “contemplates more than a preliminary investigation; it sets forth a detailed process of review and decision-making.” Accordingly, the court held, “[b]ecause the review panel must ‘determine’ if there has been a violation of BOP policy, must make ‘findings,’ and may ‘decide’ to refer the matter to senior departmental authorities, its work is sufficiently formal to satisfy the ‘official proceeding’ element of subsection 1512(c)(1).”

The defendants also challenged - on appeal only, no objection was registered at trial - the district court’s jury charge, which was arguably overbroad, since it included all “investigations as well as other administrative functions” of a government agency in the definition of “official proceeding.” But the circuit found no plain error.

How Not To Seek A Change Of Counsel

United States v. Salim, No. 04-2643-cr (2d Cir. December 2, 2008) (Newman, Walker, Sotomayor, CJJ)

With the help of a cellmate, defendant Salim, while awaiting trial for the bombing of the United States embassies in Kenya and Tanzania, abducted an MCC guard and stabbed him in the eye with a sharpened comb, nearly killing him. He pled guilty to conspiracy and attempted murder of a federal official. Although Salim had originally claimed that this was a botched escape attempt, at the Fatico hearing, his story changed. He testified that he abandoned the escape plan as unworkable; rather his goal was to take the guard’s keys, unlock the attorney-client visiting room, and attack his attorneys so that they would withdraw from the case. Salim had indeed, on several occasions, unsuccessfully sought a substitution of counsel from the district court.

The district court credited Salim’s story; it held that the assault was not an escape plan, but rather was a plan to force a change of counsel. In calculating Salim’s sentence, the court imposed a 3-level official victim enhancement, a 2-level obstruction of justice enhancement, and a 3-level restraint enhancement. It declined to impose the terrorism enhancement of U.S.S.G. § 3A1.4, however. Both sides appealed, and the court affirmed as to Salim’s claims, but reversed on the terrorism enhancement.

The Terrorism Enhancement

Guideline section 3A1.4 provides for a dramatic enhancement if the “offense is a felony that involved, or was intended to promote, a Federal crime of terrorism.” The guideline adopts the definition of “Federal crime of terrorism” contained in 18 U.S.C. § 2332(g)(5): a crime that “is calculated to influence or affect the conduct of government by intimidation or coercion, or to retaliate against government conduct” and that is a violation of certain enumerated statutes, including the one to which Salim pled guilty.

The district court concluded that the attack on the guard was “in furtherance of his intent to affect or influence [the district court’s] decision about substitution of counsel, and was in retaliation for judicial conduct denying [his] applications for substitution of counsel.” It refused to impose the enhancement, however, because it also held that the enhancement only applied to “conduct transcending national boundaries,” which did not occur here.

The circuit reversed. The district court distilled this extra requirement from 18 U.S.C. § 2332b(f), which gives the attorney general “primary investigative responsibility” for all “Federal crimes of terrorism” ... “[i]n addition to any other investigative authority with respect to violations of this title.” The lower court concluded that this section would be meaningless unless “Federal crime of terrorism” referred only to crimes involving transnational conduct because other sections of title 18 already give the attorney general “broad authority to investigate” intra-national crimes. Thus, the “addition[al]” authority referred to in § 2332b(f) must refer to transnational crimes.

The circuit disagreed, since no transnational conduct requirement is contained in § 2332(g)(5), the definition selected by the Sentencing Commission. Moreover, the district court’s construction of § 2332b(f) was itself erroneous. That section does not give the attorney general additional investigative “authority” for Federal crimes of terrorism, it gives him “primary investigatory responsibility” for them. And “[w]hatever” that phrase means, it is “plainly distinct” from “investigative authority” because “it envisions an authority expressly superior to that possessed by another actor.” It is “not meaningless” to give an officer “primary investigative responsibility over a certain category of crimes, even if he has pre-existing authority to investigate the same crimes.”

Salim also argued that the enhancement should not apply because the rulings of a judge do not constitute “government conduct” under § 2332(g)(5). The court found this claim “patently meritless.” A federal judge is a “government official,” and thus the “conduct of government” includes judicial rulings.

The Obstruction Enhancement

The district court found that Salim lied at the Fatico hearing about his motive for the attack when he testified that his intent was merely to force his attorneys to resign and not to influence the district court’s determination about whether to grant a substitution of counsel.

An obstruction enhancement based on this finding was proper. Salim’s main argument on appeal was that his motive for attempting to attack his attorneys was immaterial, because he pled guilty only to attacking the guard. But this relied on an “impermissibly narrow notion of materiality.” The issue under consideration was whether the terrorism enhancement applied, which in turn required the court to consider the purpose of the attack. For the obstruction enhancement, a statement is material if it “would tend to influence or affect the issue under determination.” Since motivation is clearly a factor in the terrorism enhancement, Salim’s statements were material.

They were also false. The district court did not clearly err in concluding Salim’s testimony that he believed that a change of counsel could be effectuated unilaterally by his counsel was a lie. Finally, the district court made adequate findings as to every element of the enhancement, including intent.

Official Victim

Salim challenged this enhancement on the ground that there was no evidence that the attack was motivated by the guard’s “official status.” But Salim clearly knew of the guard’s status, and testified that he was trying to obtain a key that the guard possessed only as a result of his official status. This satisfied the enhancement.

Restraint

Salim claimed that, since he did not restrain the guard until after he had been disabled by the stabbing, the restraint enhancement should not apply. The circuit disagreed: “Handcuffing a victim and locking him in a cell after a potentially lethal attack prevents a victim from seeking aid and thereby adds to the underlying offense of attempted murder.”