Opposition Brief — Allibhai v. United States

a rT ee

Supreme Court, U. S$

: FILED

No. 91-751 DEC 3 1 1997

| OFFICE OF THE Cicad

Iu the Supreme Court of the Unite

OCTOBER TERM, 1991

SULTAN ALLIBHAI and YASMIN ALLIBHAI,

PETITIONERS

Uv.

UNITED STATES OF AMERICA

ON PETITION FORA WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

KENNETH W. STARR

Solicitor General

ROBERT S. MUELLER, III

Assistant Attorney General

MERVYN HAMBURG

Attorney

Department of Justice

Washington, D.C. 20530

(202) 514-3746

QUESTION PRESENTED

1. Whether the Due Process Clause requires that

the government have reasonable suspicion that a per-

son has engaged or will engage in criminal activity

before the government may initiate a criminal inves-

tigation of that person.

2. Whether the government initiated the investi-

gation of petitioners because of their religion.

(I)

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TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

Employment Division Dep’t of Human Resources

¥v. Smith, 404 U.S. 872 (1990) ..............................

Hampton v. United States, 425 U.S. 484 (1976) ..

United States v. Chin, 934 F.2d 393 (2d Cir.

TE GP RI

United States v. Driscoll, 852 F.2d 84 (3d Cir.

1988) SS ea

SUISSE EE hls

United States v. Jacobson, 916 F.2d 467 (8th Cir.

1990), cert. granted, 111 S. Ct. 1618 (1991)...

United States v. Jannotti, 673 F.2d 578 (3d Cir.),

cert. denied, 457 U.S. 1106 (1982) .............0000.....

United States v. Jenrette, 744 F.2d 817 (D.C. Cir.

1984), cert. denied, 471 U.S. 1099 (1985) _......

United States v. Luttrell, 923 F.2d 764 (9th Cir.

i Os corppianmbanasnaneene

Neen ccinnedesuonanccs

United States v. Myers, 635 F.2d 932 (2d Cir.),

cert. denied, 449 U.S. 956 (1980) _......... feewercet

United States v. Osborne, 935 F.2d 32 (4th Cir.

LM Ne UE

United States v. Payner, 447 U.S. 727 (1980) _......

United States v. Russell, 411 U.S. 423 (1973) _.......

United States v. Thoma, 726 F.2d 1191 (7th Cir.),

cert. denied, 467 U.S. 1228 (1984) —....0000002

Wayte v. United States, 470 U.S. 598 (1985) _......

(IIT)

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Iu the Supreme Court of the United States

OCTOBER TERM, 1991

No. 91-751

- SULTAN ALLIBHAI and YASMIN ALLIBHAI,

PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES

IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals, Pet. App.

1-17, is reported at 939 F.2d 244.

JURISDICTION

The judgmen* of the court of appeals was entered

on August 6, 1991. The petition for a writ of cer-

tiorari was filed on November 4, 1991. The jurisdic-

tion of this Court is invoked under 28 U.S.C.

1254(1).

STATEMENT

Following a jury trial in the United States District

Court for the Northern District of Texas, petitioner

Sultan Allibhai was convicted on 22 counts charging

(1)

2

conspiracy, money laundering, failing to file Internal

Revenue Service currency transaction reports, travel

in interstate commerce with intent to carry on un-

lawful activities, and wire fraud, in violation of 18

U.S.C. 371, 1348, 1956(a)(2)(A) and (a) (8), and

31 U.S.C. 53138(a). Yasmin Allibhai, Sultan’s wife,

was convicted on three counts charging conspiracy,

failing to file IRS currency transaction reports, and

failing to file a customs report when exporting more

than $10,000, in violation of 18 U.S.C. 371, 31 U.S.C.

5313(a), and 31 U.S.C. 5316. Sultan Allibhai was

sentenced to concurrent terms of imprisonment total-

ing 1836 months. Yasmin Allibhai was sentenced to

concurrent terms totaling 30 months’ imprisonment.

The district court imposed a three-year period of

supervised release as to each petitioner. The court

of appeals affirmed.

1. a. In May 1987, British customs officials noti-

fied the United States Customs Service that for a

number of years Nizamudin Allibhai (who is not

related to petitioners) had been transferring about

$1,000,000 per month illegally from the Dallas-Fort

Worth area to London, England. The British au-

thorities also reported that they were_ investigating

petitioner Sultan Allibhai and one of his businesses.

Gov't C.A. Br. 3.

In June 1987, Nizamudin Allibhai arrived in Lon-

don with $928,000 in cash. British customs officers

informed American authorities of the serial numbers

of some of the bills, and the Internal Revenue Service

determined that all of the bills had been issued by a

bank near the Dallas airport. IRS agents discovered

that Nizamudin Allibhai had no account at that bank,

but that petitioners were signatories on several cor-

porate accounts with that bank. That information

led the IRS to begin an investigation of petitioners.

Gov’t C.A. Br. 3-4.

3

b. In March 1988, IRS agents recruited Bahadu-

rali Hassam to assist them in detecting money laun-

derers in the Dallas area. The agents recited a list

of names to Hassam and asked whether he recog-

nized any of them. Hassam recognized some of the

names, including Sultan Allibhai. Hassam told the

agents that he knew of no wrongdoing by Sultan

Allibhai. Hassam added that he and Sultan Allibhai

were members of the Ismaili Muslim religious faith,

and that it was not uncommon for a co-religionist

who had a retail business to talk openly during social

events or following religious ceremonies about skim-

ming money. Hassam agreed to pretend to be a

money launderer in search of an outlet to launder

funds consigned to him. He aiso consented to contact

Sultan and others on the list of suspects. Gov’t C.A.

Br. 4-5.

On April 2, Hassam attended a wedding in Dallas;

petitioners also were wedding guests. After the wed-

ding, petitioners met Hassam in his hotel room where

they renewed acquaintances and discussed various

subjects, including money laundering. Hassam told

Sultan Allibhai that he was looking for people who

knew how to launder money. Sultan replied, “Why

ask about the other people. This is my business. I

have been doing it from Africa. You know me, we

go back a long way.” Sultan offered to charge a fee

of only 2% percent for laundering money although

the prevailing rate was twice that amount. Gov’t

C.A. Br. 5-6. Thereafter, Hassam provided petition-

ers with government funds, which petitioners laun-

dered. Gov’t C.A. Br. 6-11.’

1 The first transaction was in the amount of $50,000- Peti-

tioner Sultan Allibhai took the money to a brokerage house in

Brussels, Belgium. He turned the money over to his contact,

4

The government subsequently decided to phase out

Hassam and to substitute an undercover agent to

act as the provider of the money to be laundered.

On June 7, Hassam introduced petitioner Sultan

Allibhai to undercover agent Ralph Jacoby. Sultan

told Agent Jacoby that he had an experienced money

laundering operation and that the money would be

returned within seven working days. Agent Jacoby

transferred $200,000 to Sultan, together with a

$5,000 fee. Sultan demanded a 4 percent fee in the

future. In mid-June, the money was delivered to the

Brussels brokerage house by Sultan’s associate. By

June 23, the money had been returned by wire trans-

fer to the Florida undercover bank account. Gov’t

C.A. Br. 11-138.

On seven more occasions between late June and

September 1988, Agent Jacoby furnished petitioner

Sultan Allibhai with amounts ranging from $95,000

who arranged for a wire transfer of the funds from the

brokerage house’s account in a Swiss bank to an undercover

account at a bank in Florida. The $50,000 was received by

the undercover account on April 27. Gov’t C.A. Br. 7-9.

On May 25, Hassam delivered $100,000 in government funds

to petitioner Yasmin Allibhai. He also furnished the number

of an undercover account in California, to which the laundered

money was to be sent. Three days later Yasmin took the

money to the brokerage house in Brussels. At the time of her

departure from the United States she did not disclose to the

customs officers, as required by law, that she was in posses-

sion of more than $10,000. Gov’t C.A. Br. 9-10.

On June 6, Hassam notified petitioner Sultan Allibhai that

the bank in California had not confirmed the receipt of

$100,000. Sultan replied that the same laundering system

had been employed and that he believed the receipt of a con-

firmation from the bank to be imminent. The brokerage house

in Brussels transferred the $100,000 by wire to the California

bank that day. Gov’t C.A. Br. 10-11.

5

to $211,000 for laundering. On each occasion Sultan

arranged for the money to be transferred to an under-

cover bank account either by way of th brokerage

house in Brussels or with the aid of an associate at

the Toronto Currency Exchange. After a hiatus, the

laundering activity resumed in May 1989. Sultan re-

ceived $100,000 and a fee that had risen to 7 percent.

That money was successfully laundered through the

brokerage house in Brussels. On June 19, Sultan met

with Agent Jacoby, expecting to receive more than

$1,000,000. Instead, Sultan was arrested. Gov’t C.A.

Br. 13-22.

2. The court of appeals affirmed. Pet. App. 1-17.

The court rejected petitioners’ claim that the Consti-

tution requires that the government have reasonable

suspicion that a person has committed or will commit

a crime before the government may investigate that

person, Jd. at 4-7. The court also rejected petition-

ers’ claim that they were investigated because they

are Ismaili Muslims. The court ruled that because

the First Amendment Free Exercise Clause does not

except Ismaili Muslims from neutral, generally ap-

plicable criminal laws, the fact that an investigation

incidentally targets members of a specific religious

group does not violate the First Amendment. /d. at 8.

6

ARGUMENT

1. Petitioners maintain that their convictions must

be set aside because the government had no reason to

suspect that they had been or would be involved in

criminal activity before the government conducted an

undercover investigation of them. Pet. 6-9. Contrary

to petitioners’ claim, no such reasonable suspicion is

required, and the government’s investigation was

wholly proper.

a. There is no conflict among the circuits on the

question whether the government must have reason-

able suspicion that a person has committed or will

commit an offense before the government may com-

mence an investigation of that person. Every court

of appeals to consider the issue, including the Fifth

Circuit in this case, has rejected the contention that

the Constitution imposes such a reasonable suspicion

requirement. United States v. Osborne, 935 F.2d 32,

35-36 (4th Cir. 1991); United States v. Chin, 934

F.2d 393 (2d Cir. 1991); United States v. Luttrell,

923 F.2d 764 (9th Cir. 1991) (en banc); United

States v. Jacobson, 916 F.2d 467, 469 (8th Cir. 1990)

(en banc), cert. granted on other grounds, 111 S. Ct.

1618 (1991) (No. 90-1124) ;° United States v. Mil-

ler, 891 F.2d 1265, 1269 (7th Cir. 1989); United

States v. Driscoll, 852 F.2d 84, 87 (3d Cir. 1988) ;

2 The Court limited its grant of certiorari in Jacobson to

the question whether petitioner was entrapped as a matter of

law. Nevertheless, petitioner and amici in Jacobson discussed

the reasonable suspicion question presented by the certiorari

petition in this case. We also addressed that question after

pointing out that it was not properly before the Court. Be-

cause the Court did not grant review in Jacobson to decide

the reasonable suspicion question, this Court need not hold

the petition in this case pending the Court’s decision in

Jacobson.

7

United States v. Jenrette, 744 F.2d 817, 824 & n.13

(D.C. Cir. 1984), cert. denied, 471 U.S. 1099 (1985) ;

United States v. Gamble, 737 F.2d 8538, 860 (10th

Cir. 1984); United States v. Thoma, 726 F.2d 1191,

1198 (7th Cir.), cert. denied, 467 U.S. 1228 (1984) ;

United States v. Jannotti, 673 F.2d 578, 609 (3d

Cir.) (en banc), cert. denied, 457 U.S. 1106 (1982) ;

United States v. Myers, 635 F.2d 932, 940-941 (2d

Cir.), cert. denied, 449 U.S. 956 (1980).

b. There is no merit to petitioner’s claim. In

United States v. Russell, 411 U.S. 4238, 481-432

(1973), this Court noted that ‘we may some day be

presented with a situation in which the conduct of law

enforcement agents is so outrageous that due process

principles would absolutely bar the government from in-

voking judicial processes to obtain a conviction.” The

Court in Russell held, however, that no such due proc-

ess violation was shown in that case. In fact, this

Court has never found an investigative technique to

be so offensive as to violate due process and to pro-

hibit the government from prosecuting the defendant,

in spite of several invitations to do so. See Hampton

v. United States, 425 U.S. 484 (1976) ; United States

v. Payner, 447 U.S. 727, 737 n.9 (1980). In any

event, simply initiating an investigation without any

prior suspicion of wrongdoing has never been held

to violate due process. Because an individual “has

no constitutional right to be free of investigation,”’

United States v. Jacobson, 916 F.2d at 469, when

“the conduct of the investigation itself does not offend

due process, the mere fact that the investigation may

have been commenced without probable cause does not

bar the conviction of those who rise to its bait,”

United States v. Driscoll, 852 F.2d at 87.

ce. Even if this Court were to adopt the rule that

a suspicionless investigation violates due process, pe-

8

titioners would not benefit from such a rule. Before

petitioners became the subjects of the undercover in-

vestigation, the government had reasonable suspicion

that they would become involved in money laundering.

In mid-1987, the government received information

from British customs officials that the British govern-

ment was investigating a Sultan Allibhai and one of

his corporations for money laundering, and that an

investigation of Nizamudin Allibhai’s money launder-

ing activities resulted in the discovery that money he

had spirited away to Great Britain had been obtained

from a bank in which he did not have an account, but

in which petitioners and their corporations did. That

information warranted a suspicion that petitioners

may have been involved in Nizamudin Allibhai’s mis-

conduct.

2. Section 5316 of Title 31 requires that a bearer

of funds report that he is carrying more than $10,000

when departing this country. That statute is pre-

cisely the type of neutral, generally applicable law

that can be applied to the members of a religious or-

ganization without violating the First Amendment.

See Employment Division Dep’t of Human Resources

v. Smith, 494 U.S. 872 (1990). Petitioners do not

argue to the contrary. Instead, they claim that they

were made the subject of this investigation because

they are Ismaili Muslims. Pet. 9-14. Based on that

conclusory allegation, petitioners challenge the right

of the government to investigate ethnic or religious

groups without reasonable suspicion, and they urge

the Court to adopt a rule barring such investigations

on First Amendment grounds.

The short answer to petitioners’ argument is that

the record does not support their premise. To estab-

lish a claim of discriminatory law enforcement, peti-

9

tioners have the burden of establishing that the gov-

ernment’s investigation had both a discriminatory

effect and a discriminatory purpose. See Wayte v.

United States, 470 U.S. 598, 608-610 (1985). Peti-

tioners have failed to carry that burden. There is no

doubt that petitioners, Nizamudin Allibhai, and Has-

sam all were members of the Ismaili Muslim sect. It

also may be true, as petitioners assert, Pet. 3-4 n.1,

that members of that sect must tithe to the Aga Khan

and that tithes are sent abroad to places where the

Aga Khan can gain access to the funds. But that is

beside the point. Nothing in the record shows that

the government initiated this investigation to stifle

the flow of properly recorded funds to the Aga Khan,

instead of for the legitimate purpose of determining

whether petitioners were laundering money, what-

ever its ultimate destination might be. And there was

no evidence that any of the money transfers in which

petitioners engaged related to their alleged religious

obligations. Under these circumstances, petitioners

have not stated a valid First Amendment claim.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor General

ROBERT S. MUELLER, III

Assistant Attorney General

MERVYN HAMBURG

Attorney

DECEMBER 1991

*% U. S. GOVERNMENT PRINTING OFFICE; 1991 312324 45227