Petition for Writ of Certiorari — Arditti v. United States

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92-382 Bupreme Cour, U.S

FILED

No. AUG 3 1 1992

OFFICE OF THE CLERK

In The —

Supreme Court of the United States

October Term, 1992

VICTOR ARDITTI,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

PETITION FOR WRIT OF CERTIORARI

BERNARD J. PANetTA, II

Mary STILLINGER

Attorneys for Petitioner

CABALLERO, PANETTA & ORTEGA

521 Texas Avenue

El Paso, Texas 79901

(915) 544-0042

COCKLE LAW BRIEF PRINTING CO, em) 225-6964

OR CALL COLLECT (402) 342-283

QUESTION PRESENTED

Whether Mr. Arditti’s conviction must be reversed

based on this Court’s recent decision in Jacobson v. United

States, __ ~ U.S. __, 112 S.Ct. 1535 (1992), because the

Government failed to present any evidence of his predis-

position to commit an offense prior to the contact and

inducements of the government agent.

TABLE OF CONTENTS

Page

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TABLE OF AUT IOCPEE IRR so ccc ceasicccccctnccssane iii

CITATIONS TO OPINIONS BELOW................ 1

STATEMENT OF JURISDICTION. ...........0cceees 2

STATEMENT OF THE CASE... .cccsccssnescvecnne 2

REASONS WHY THE WRIT SHOULD BE GRANTED

no 0545040 4000444 600.005 000 We eee elena 12

1. Mr. Arditti’s conviction must be reversed based

on this Court’s recent decision in Jacobson v.

United States, because the Government failed to

present any evidence of his predisposition to

commit an offense prior to the contact and

inducements of the government agent........ 12

A. The lower court’s opinion is in conflict

with the this Court’s decision in Jacobson,

because willing, active, and even eager

participation, after extensive inducement is

no longer determinative, or even proba-

tive, OF DUOGISDORMION 6500. sce ses ccsieres 18

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APOUIIOEN «oo. 5. <ccucaxsecaeneune eee App. 1

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TABLE OF AUTHORITIES

Page

CAsEs

Jacobson v. United States, __ U.S. __, 112 S.Ct.

Ne ak ts ka dence ans skate seas passim

Sherman v. United States, 356 U.S. 369 (1958) ........ 20

Sorrells v. United States, 287 U.S. 435 (1932) ......... 20

United States v. Johnson, 872 F.2d 612 (5th Cir. 1989) .18, 21

United States v. Nations, 764 F.2d 1073 (5th Cir.

TEE LU S5 as dae nou 5 5404640005 0006 00cevece 21

United States v. Russell, 411 U.S. 423 (1973).......... 20

United States v. Whoie, 925 F.2d 1481 (D.C. Cir.

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In The

Supreme Court of the United States

October Term, 1992

VICTOR ARDITTI,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fith Circuit

PETITION FOR WRIT OF CERTIORARI

Victor Arditti, the Petitioner, by and through his

attorneys of record, hereby petitions this Court to grant

this Petition for Writ of Certiorari to the United States

Court of Appeals for the Fifth Circuit.

CITATIONS TO OPINIONS BELOW

The opinion of the district court in denying judgment

of acquittal in United States v. Victor Arditti,! No. EP-89-

CR-399, entered on September 20, 1990, is reproduced

1 There were three individuals named in the indictment:

Victor Arditti, Guillermo Avila and Gabriel Yanez.

herein at App. 40. The opinion of the United States Court

of Appeals for the Fifth Circuit in United States v. Arditti,?

No. 90-8646 (reported at 955 F.2d 331 (5th Cir. 1992)),

eritered on February 27, 1992, is reproduced herein at

App. 1. The denial of rehearing entered by that court on

June 2, 1992, is reproduced herein at App. 39.

STATEMENT OF JURISDICTION

Mr. Arditti seeks review of the judgment of the

United States Court of Appeals entered on February 27,

1992. That court denied rehearing on June 2, 1992. This

petition is timely filed within ninety days of the denial of

the petition for rehearing. Mr. Arditti seeks review by this

Court pursuant to the jurisdiction granted by 28 U.S.C.

§ 1254(1).

STATEMENT OF THE CASE

Introduction

When the United States Court of Appeals for the

Fifth Circuit entered its opinion below, this Court had not

issued the opinion in Jacobson v. United States, ___ U.S.__, |

112 S.Ct. 1535 (1992). The opinion in Jacobson was issued |

while rehearing was pending in the lower court, but that

court declined to rehear this case.

2? The two appellants were Victor Arditti and Guillermo

Avila.

Victor Arditti is a fifty-eight-year-old attorney and

lifelong resident of El Paso, Texas. Prior to the indictment

herein, he had an unblemished reputation in the commu-

nity. He had no criminal record, nor was there any suspi-

cion that he had ever engaged in criminal activity.

Mr. Arditti was the victim of a government sting

operation, set forth in more detail below. After his initial

declination of the undercover agent’s proposals, Mr.

Arditti was subjected to more frequent and intense pres-

sure than was the defendant in Jacobson, with less appar-

ent incentive on the Government’s part. Most

significantly, the Government introduced no evidence of

predisposition prior to the contact and inducements of

the government agent.

Procedural History

Victor Arditti was charged with Gabriel Yafiez and

Guillermo Avila in Count One of the indictment with

conspiracy to fail to file certain currency transaction

reports and to launder monetary instruments in violation

of 18 U.S.C. §§ 371 and 1956(a)(3), and 31 U.S.C. §§ 5313

and 5316. He was also charged with five substantive

money laundering offenses (Counts Twelve, Fourteen,

Fifteen, Sixteen and Eighteen), in violation of 18 U.S.C.

§ 1956(a)(3).

At trial, Mr. Arditti asserted an entrapment defense,

and the jury was so instructed. The jury returned a ver-

dict of guilty as to all counts. Thereafter, a post-trial

motion for judgment of acquittal was denied, and Mr.

Arditti was sentenced to eighteen months imprisonment.

Mr. Arditti’s conviction was affirmed by the United States

Court of Appeals for the Fifth Circuit, and rehearing was

denied. This petition followed.

Statement of Facts

With one exception,? the meetings and phone calls

with the undercover agent were tape recorded. Therefore

the substance of the contacts between the parties are for

the most part undisputed. Although the facts have been

abbreviated, the relevant ones are still lengthy. An in

depth examination here is necessary, however, because

without the reproduction of the detail, the Government’s

conduct would be almost unbelievable.

An undercover Internal Revenue Service Special

Agent named Gary Gallman began this investigation in

May of 1988. Agent Gallman approached Gabriel Yafiez,

who was suspected by the Government of money laun-

dering. The two of them engaged in some currency trans-

fers that could be construed as money laundering. In the

course of those transactions, Yafiez failed to file the cur-

rency transaction reports that were required of him.

In September of 1988, when Agent Gallman asked for

an introduction to an attorney, Yafiez introduced him to

Victor Arditti. Yafiez testified that he understood Gallman

to be requesting an introduction to a criminal defense

lawyer (XIII R. 647).4 Gallman testified that he asked to

meet someone to help him with his business in El Paso

3 This rather important exception, the March 30, 1989,

meeting, is discussed infra at 9.

4 The reference is to the record in the court below, which is

not presently before this Court.

i .

(App. 3), but he also testified that it was clear to him that

Yafiez wanted him to use Arditti for criminal defense

matters only (XII R. 451).

Prior to this initial meeting, the Government had no

evidence that Victor Arditti had ever been involved in

criminal activity or was likely to ever be involved in any

criminal activity in the future. At a pretrial hearing, when

defense counsel inquired whether the Government had

any information that Arditti had engaged in money laun-

dering related activities in the past, the attorney for the

Government responded, “No. Absolutely not.” (IV R. 3).

The undercover agent, in his testimony at trial, confirmed

that the Government had no indication that Mr. Arditti

was involved in any criminal activity (XII R. 424).5

The bulk of the meetings with the undercover agent

were tape recorded, so there is little dispute about what

was said by whom. When Mr. Arditti first met with the

undercover agent, he made it very clear that he could not

commit a crime. Mr. Arditti believed he had been asked,

as a criminal defense attorney, to meet with the under-

cover agent. The following exchange indicates that Mr.

Arditti was interested in doing only legal work for Agent

Gallman (using the name Adams):

Adams: One of the reasons that I’m here

today is because I have never

° Mr. Arditti’s clean record was further substantiated by the

character evidence he presented: a local attorney, an agent with

the Drug Enforcement Administration, a Federal probation offi-

cer and a bishop all testified that they had known Mr. Arditti for

many years and that he was a good, honest and law-abiding

maa (XII R. 660-719).

eer er ee

stepped foot in a courtroom and |

hope to hell I never do step foot in

a courtroom. But I hope .. . That’s

one of the reasons that maybe you

can help me and be there if some-

thing does go wrong.

Arditti: If something happens to you, all

you have to do is pick up the

phone and call me. I cannot tell

you how to avoid the government.

| cannot tell you how to practice

what you’re doing, because then |

would giving you advice contrary

to the canons of ethics. I can’t tell

you to go ahead and launder your

money here, or tell you to go do

this over here, I can’t tell you,

“Buy it from so-and-so, and then

move it to somebody else,”

because I would then be a part of

what you are, and therefore, there

would be a total conflict and be a

violation of my ethics. Now, what-

ever you do, you do. You get

caught, I’ll represent you. Some-

thing happens to you somewhere

in some federal court, | don’t care

where it is, if it’s in Miami...

Adams: You'll come.

Arditti: I will come.

Government’s Exhibit (GE) 29A, at 7-8.

In that meeting, Mr. Arditti reiterated his unwilling-

ness to break the law, telling Agent Gallman, “I can’t

advise you how to launder your money or anything. . . . ”

Id. at 10. When the agent suggested that he was interested

in hiring Arditti in the future, if and when he got into

criminal trouble, Mr. Arditti said he would represent him

in that event, but again added, “But if these funds are

illegal funds, I can’t tell you what to do with them.” Id at

12.

Later the agent again turned the discussions toward

financial transactions, asking Mr. Arditti if he could help

him make investments. Id. at 13. Mr. Arditti responded,

“There’s nothing wrong with making a legal transaction

whatsoever.” Id. In response to the agent’s stated concern

about his fee, Mr. Arditti added:

You come down here and you want to buy a

house, we'll charge you what we charge every-

body else. We don’t add one nickel more than

anybody else in town, Well, why should we?”

Id. at 21.

When the agent expressed his unwillingness to

finance a real estate purchase through a bank, Mr. Arditti

suggested buying real estate financed by the owner. Id. at

23-25.

Mr. Arditti certainly did not jump at the chance to

commit an offense at the first meeting on September 21st.

Neither did he display a predisposition to commit an

offense. The most incriminating evidence produced at

this meeting was Mr. Arditti’s comment about how to buy

a house without using a bank. At trial, the Government

suggested that this was evidence of predisposition.

Agent Gallman testified that he brought up the pur-

chase of real estate because he was trying to find out:

~~ for our knowledge what his role was, what type

ef advice he would give - if he’d be willing to

advise me and help me structure a purchase of

property knowing that the funds were illegal.

VIII R. 183. Gallman testified that Mr. Arditti clearly

understood what the problem with banks was (VIII R.

184).

However, an unbiased review of the actual conversa-

tion leads to a different conclusion. When the agent asked

if substantial investments in the area would cause prob-

lems for him, Mr. Arditti responded, “Why should it?”

GE 29A at 22. The clearest contradiction of Agent Gall-

man’s testimony on direct is the following exchange on

the tape:

Adams: We don’t get loans at the banks.

You understand that, don’t you?

Arditti: Well, no. . .

Id. at 23.

On cross-examination, Agent Gallman had to admit

that Mr. Arditti’s owner financing suggestion did not

appear to be a money laundering scheme (XII R. 443-44).

In fact, Gallman was not sure what to make of Arditti’s

behavior, because Arditti said he could not launder

money, but could advise on legal investments (XII R. 442).

The meeting ended without any agreement that Arditti

would see Gallman again.

Yafiez, however, continued to do business with Gall-

man. On two occasions, in October and November of that

year, Gallman asked Yafiez to involve Arditti in their

illegal activity. Both times Yafiez told Agent Gallman that

Arditti would not be interested in the suggested activi,

(Government’s Exhibit 33A at 57; Government’s Exhibit

41A at 25, 38).

In March of 1989, some six months after the initial

meeting, Gallman, for no apparent reason, asked Yafiez to

invite Arditti to lunch (App. 7). At this meeting, Arditti

agreed to look at some paperwork for a real estate pur-

chase for Agent Gallman. There were some general dis-

cussion concerning the fact that large amounts of cash

raised suspicions.

This meeting ended with the only crucial dispute in

the facts. Agent Gallman testified that he told Mr. Arditti

at this meeting that his money was “coke money,” and

that Arditti did not raise any objections. App. 7. This part

of the conversation was not taped and was not made part

of a memorandum of the conversation prepared by the

agent after the meeting. App. 7. Mr. Gabriel Yafiez, who

was present at the meeting, testified that no such state-

ment was made (XIII R. 678). In any event, no illegal

agreements were discussed or entered into at this meet-

ing.

In May 1989, Gallman requested that Yariez arrange

another meeting with Arditti. At this meeting, Gallman

told Mr. Arditti that his money was “coke money.” He

also asked Arditti to set up a trust account so that he can

put money in, and then wire it to Oklahoma, where he

would invest it in oil. Arditti did not seem interested in

helping Gallman, and Yafiez suggested other ways of

effectuating the money laundering. Agent Gallman

appeared to lose his temper with Arditti and Yafiez and

said in a raised voice:

You don’t understand. I’m going to say it one

more time. An attorney has to do this. Not you.

Not me. An attorney.

Government’s Exhibit 69B at 69. Arditti left this

meeting saying that he will look into the type of account

suggested by Gallman.

Two and one half months after it was suggested by

the government agent, Mr. Arditti opened the trust

account, assisted by Mr. Yafiez. To push Mr. Arditti to the

point of agreeing to open the account, the Government

hounded him mercilessly.

During the month of May, Gallman contacted Mr.

Yanez seventeen times (XI R. 309-13). During this time he

showed impatience, and complained about Mr. Arditti

“dragging his feet.” (XI R. 266-67). In a telephone conver-

sation on May 9th, Gallman expressed to Yafiez a great

deal of aggravation over Arditti’s nonaction. Yafiez told

Gallman that he thought Arditti was scared to open the

escrow account. Gallman asked, “What the hell is he

scared of?” Government’s Exhibit 70D at 2. Gallman

urged Yafiez to put pressure on Arditti to complete the

assignment. Id. at 3.

Mr. Yafiez met with Gallman again on May 10, 1989

(XI R. 259; Government’s Exhibit 71A). Gallman

expressed irritation over the fact that Arditti has not

opened the bank account yet (XI R. 310; Government’s

Exhibit 71A at 11, 19).

On May 15th, when Gallman asked about Arditti’s

progress, Yafiez explained that he had contacted Arditti

“every single day, and he finds an excuse.” Government's

Exhibit 73A at 1. Again Gallman tells Yafiez to get Arditti

“off the ball.” Id. at 2.

Two days later, when Gallman called to check on the

status of his account, Yafiez suggested to Gallman that he

employ another attorney to do the work for him. Govern-

ment Exhibit 73A >t 1. Yafiez told Gallman that “] have

the impression he [Arditti] doesn’t want to do it.” Id.

Gallman, of course, did not follow Yafez’ suggestion, but

instead told him to “keep trying to get ahold of him.” Id.

Gallman contacted Yafiez three times on May 30th to

inquire about Arditti. Government’s Exhibit 73C. Yanez

explained that he had been to Arditti’s office every day.

Id. at 1.

By the end of May, Gallman acted increasingly irate

at Arditti’s procrastination. At a meeting on May 31,

1989, Gallman asked Yaftez, “What’s the damned deal

with Vic?” (XI R. 315; Government’s Exhibit 74A at 3).

Yafiez assured him that he would see that everything was

taken care of. Gallman told Yaftez to “get to Victor some-

how or another... . ” (XI R. 318).

During the month of June, Gallman contacted Yanez

thirteen times (XI R. 345-46; App. 9 n.2). On June 6th,

Gallman told Yafiez: “Well damn, Gabriel. We need to get

this thing goin’ pal.” Government’s Exhibit 80B at 1. On

June 16th, Gallman told Yafez: “Get, get it [the money]

up to Oklahoma. They’re about to wring my neck up

there.” (For not having the money there.) Government's

Exhibit 80G at 1. On June 29th, Gallman called Yarfiez.

Gallman asked Yanez:

What’s the deal with Victor? Do | need to talk to

him? Or, or does he want, I mean, just tell him

to get the thing done.

Id. at 3.

For Yafiez’ part, he was trying to get Mr. Arditti to

act. Between May 1, 1989, and July 14, 1989, Mr. Arditti’s

office was contacted by Yafiez thirty-four times, and by

Gallman three times® (XIII R. 708-14).

Finally, on July 14, 1989, Mr. Arditti, assisted by

Yafiez, opened the trust account at the bank. Thereafter,

several transactions were made in and out of the account

which make up the money laundering counts of the

indictment.

REASONS WHY THE WRIT SHOULD BE GRANTED

1. MR. ARDITTI’S CONVICTION MUST BE

REVERSED BASED ON THIS COURT’S RECENT

DECISION IN JACOBSON V. UNITED STATES,

BECAUSE THE GOVERNMENT FAILED TO PRE-

SENT ANY EVIDENCE OF HIS PREDISPOSITION

TO COMMIT AN OFFENSE PRIOR TO THE CON-

TACT AND INDUCEMENTS OF THE GOVERN-

MENT AGENT.

On April 6, 1992, this Court issued an opinion that

requires the reversal of Mr. Arditti’s conviction. In

6 These are records of contacts with the office, not actual

contacts with the person. In fact, Agent Gallman never spoke to

Arditti between May 2nd and July 14th (XIII R. 547).

iia nti

Jacobson v. United States, _ U.S.___, 112 S.Ct. 1535 (1992),

the Court held that there was entrapment as a matter of

law where the Government did not have evidence that a

defendant was predisposed to commit an offense prior to

being approached by government agents. In the present

case, there was no evidence of Mr. Arditti’s predisposi-

tion prior to the undercover agent’s involvement. There-

fore, Mr. Arditti was entrapped as a matter of law, and his

conviction must be reversed and rendered.

In Jacobson, the Court held:

Where the Government has induced an individ-

ual to break the law and the defense of entrap-

ment is at issue, as it was in this case, the

Prosecution must prove beyond a reasonable

doubt that the defendant was disposed to com-

mit the criminal act prior to first being

approached by Government agents.

(Id. at 1540, emphasis added (citing United States v.

Whoie, 288 U.S.App.D.C 261, 263-264, 925 F.2d 1481,

1483-1484 (1991)).

In Jacobson, the defendant was charged with receiving

child pornography through the mails. Jacobson had come

to the Government's attention because he was on the

mailing list of a business that sold pornography. There

was evidence that he had purchased two magazines in

the past that contained pictures of nude boys. At the

time, the receipt of these two magazines did not violate

the law, although three months later the child pornogra-

phy statutes were amended. Id. at 1538.

Based on this information, the Government made

Jacobson a target of an undercover investigation. In the

course of the undercover investigation, Jacobson

answered two surveys indicating that he was interested

in preteen sex. After several other undercover contacts

through the mail, Jacobson finally ordered a magazine

containing child pornography. He was arrested over two

years after he became the target of the government sting

operation. Id.

The Court reviewed the evidence of predisposition

and determined that the Government had no evidence

that Jacobson had ever intentionally possessed or been

exposed to child pornography prior to the Government’s

undercover operation. The Postal Service had not

checked his mail to see if he was receiving any such

materials, and when Jacobson’s house was searched noth-

ing other than what the Government had sent was found

at his house. The Court found that although Jacobson had

become predisposed to commit the offense by the time he

did so, “the Government did not prove that this predis-

position was independent and not the product of the

attention that tne Government had directed at petitioner

since January 1985.” Id. at 1541.

Applying the Court’s analysis to the present facts,

the same conclusion is inevitable - that no reasonable

jury could have found that the Government carried its

burden of proving that Mr. Arditti was predisposed to

commit the offense prior to his contact with the Govern-

ment agent.

The Jacobson Court divided the evidence of predis-

position into two categories: evidence developed prior to

the first undercover contact with Jacobson, and that

developed during the course of the investigation. The

pre-investigation evidence was the receipt of the two

magazines containing pictures of nude boys. In the pre-

sent case, there was no pre-investigation evidence.

With respect to the evidence gathered during the

investigation, the Jacobson Court found that:

Petitioner’s responses to the many communica-

tions prior to the ultimate criminal act were at

most indicative of certain personal inclinations,

including a predisposition to view photographs

of preteen sex and a willingness to promote a

given agenda by supporting lobbying organiza-

tions. Even so, petitioner’s responses hardly

support an inference that he would commit the

crime of receiving child pornography through

the mails.

Id. at 1542.

The Court is very clear in its decision that evidence

of predisposition must be evidence of a predisposition tc

commit a definite illegal act. Behavior that is suspicious

or that could even be illegal under certain circumstances

will not suffice to carry the Government’s burden.

In the present case, there was no evidence of predis-

position: on Mr. Arditti’s part to commit an illegal act.

Nor was there the degree of Suspicious behavior that

existed in Jacobson.

The lower court, in its opinion, sets forth what it

considers to be incriminating evidence from the first

meeting — that Arditti: (1) reassured the agent about the

attorney/client privilege (2) said he had represented drug

dealers in the past; (3) suggested that the agent have a

“war chest” for legal fees; (4) mentioned financing a

house without using a bank; and (5) assured the agent

that he would keep his fee payments confidential. App.

3-4. However, under Jacobson, none of Mr. Arditti’s com-

ments are any evidence of a predisposition to commit an

offense, particularly in light of Mr. Arditti’s stated refusal

at that same meeting to engage in illegal conduct.

Consequently, Mr. Arditti’s behavior, although sus-

picious through Government eyes, is no evidence of pre-

disposition. The Government established a predisposition

to perform legal services for a person with a questionable

and possibly criminal background. But as the Jacobson

Court found, “evidence that merely indicates a generic

inclination to act within a broad range, not al! of which is

criminal, is of little probative value in establishing predis-

position.” Jacobson at 1541.

The inference that Mr. Arditti was interested in com-

mitting a crime was certainly weaker than that in Jacob-

son, where the defendant initially indicated an interest in

preteen sex. Not only did Mr. Arditti not indicate a will-

ingness to actually break the law, neither did he indicate

an interest in an activity which, if performed, would be

illegal. At most, he indicated an interest in performing

legal services, with legal funds, for the undercover agent.

Mr. Yafiez twice, in October and November 1988, told

the agent that Mr. Arditti would not be interested in his

suggestions of illegal activity. Despite these discourage-

ments, the Government decided some six months after

the first meeting with Mr. Arditti, to contact him a second

time. At this meeting Mr. Arditti discussed avoiding the

suspicions that would be raised by making large cash

transactions. App. 7. Again, Mr. Arditti does not indicate

any willingness to commit any illegal acts for the under-

cover agent. Under the Court’s holding in Jacobson, Mr.

Arditti’s comments, especially since they were drawn out

by the undercover agent, cannot be considered evidence

of predisposition to commit an offense. Just as Jacobson’s

“ready response” to the solicitations was not evidence of

predisposition, neither can Mr. Arditti’s conversations

with the undercover agent be considered evidence of

predisposition to commit an offense. On the contrary, the

agent used those conversations to attempt to create a pre-

disposition in Mr. Arditti.

From the time that the agent first suggested an illegal

act to Mr. Arditti (May 2nd) to the time Mr. Arditti

performed that act (July 14th), Mr. Arditti was subjected

to almost constant harassment. Most of those contacts

were made by Yafiez, acting at the direction of the under-

cover agent. However, the tape recorded conversations

between Yafiez and the agent indicate that Yafiez clearly

told the agent that he thought Mr. Arditti did not want to

open the bank account for him. Rather than backing off,

the undercover agent stepped up the pressure on Yanez,

specifically instructing him to prod Mr. Arditti into

action. When Yariez reported his failure to the agent, he is

repeatedly instructed to keep trying to “get to Victor

[Arditti].”

A. THE LOWER COURT'S OPINION IS IN CON-

FLICT WITH THE THIS COURT’S DECISION

IN JACOBSON, BECAUSE WILLING, ACTIVE,

AND EVEN EAGER PARTICIPATION, AFTER

EXTENSIVE INDUCEMENT, IS NO LONGER

DETERMINATIVE, OR EVEN PROBATIVE, OF

PREDISPOSITION.

The United States Court of Appeals for the Fifth

Circuit issued its opinion below prior to this Court’s

opinion in Jacobson, and refused rehearing after the issu-

ance of Jacobson. The court relied on Fifth Circuit prece-

dent that held that enthusiastic participation, regardless

of prior Government contacts and inducements, was evi-

dence of predisposition. App. 7 (citing United States v.

Johnson, 872 F.2d 612, 621 (5th Cir. 1989)). Because this

Court’s opinion in Jacobson is contrary to this portion of

the holding of Johnson, the result in the present case is

contrary to the law of the Supreme Court. Accordingly,

this Court should reverse Mr. Arditti’s conviction, or in

the alternative, vacate the judgment of the lower court

with instructions for that court to rehear the case in light

of this Court’s holding in Jacobson.

In affirming Mr. Arditti’s conviction against a chal-

lenge of entrapment as a matter of law, the lower court

relied on what it described as Mr. Arditti’s “eager, active”

participation. App. 27. The district court, in denying his

motion for judgment of acquittal, also relied on what

could be viewed as Mr. Arditti’s “willing and active”

participation. App. 42-43. The Government did not offer,

and thus neither court could find, any evidence of predis-

position other than Mr. Arditti’s ultimate participation in

the offense. Because Mr. Arditti committed the offense

only after substantial pressure over an extended period of

time, his level of participation or his degree of enthusi-

asm is irrelevant to the issue of predisposition under the

Court’s holding in Jacobson.

It is not disputed that Mr. Arditti did not commit an

offense until he opened a bank account on July 14th, over

nine months after his first meeting with the undercover

agent, and after two and a half months of intense pres-

sure from the agent. App. 8-9 n.2. As in Jacobson, there is

no question that Mr. Arditti was induced to commit the

offense. Jacobson at 1540 n.2. The issue is simply whether

the Government carried its burden of proving a predis-

position on the part of Mr. Arditti.

The Court in Jacobson discussed the pressure to which

the defendant in that case was subjected. Id. at 1542.

However, as the dissent pointed out, solicitations in the

mail “could easily be ignored or thrown away.” Id. at

1545. Not so with Agent Gallman’s solicitations. The

agent pushed himself on Mr. Arditti face to face. He

cajoled Mr. Arditti with feigned friendliness, and when

that didn’t work, raised his voice and became aggressive

to pressure him. The agent had Yafiez personally contact

Mr. Arditti at his law office nearly every day for over two

months. Mr. Arditti could not simply ignore Agent Gall-

man.

The Court in Jacobson rejected the Government's posi-

tion that “the evidence it developed during the course of

the investigation was probative because it indicated peti-

tioner’s state of mind prior to the commencement of the

Government's investigation.” Id. at 1541 n.2. The Court

emphasized prior law that the defendant’s conduct, once

under the influence of the Government’s contacts, is not

probative of predisposition.

Under the holding in Jacobson, a person who jumps at

the opportunity to commit an offense is not entrapped;

not because his prompt response is evidence of predis-

position, but rather because he was not induced to commit

the offense. Where a person promptly avails himself of a

criminal opportunity, it is unlikely his defense will even

warrant an entrapment instruction. Id. at 1541. In Jacob-

son, the defendant was induced by the Government to

commit the offense. Jacobson at 1540 n.2. Once induce-

ment is shown, the Court held, the inquiry is whether the

defendant was otherwise predisposed, independent of

that inducement to commit the offense. Id. at 1540. There-

fore, a defendant’s conduct during the commission of the

offense is relevant, but it is only relevant to the issue of

inducement, not to the issue of predisposition.

There is no question that Mr. Arditti was induced by

the Government to commit the offenses charged, and the

Government has never argued otherwise. Thus, Mr.

Arditti’s burden having been met, the only question is

whether the Government produced evidence of predis-

position independent of the inducement to commit the

offense. As discussed above, the Government offered no

such evidence of predisposition.

The dissent in Jacobson contends that the Court is

changing the law of entrapment. Id. at 1545. The majority,

however, maintains that it is keeping with the precedent

of Sorrells v. United States, 287 U.S. 435 (1932), Sherman v.

United States, 356 U.S. 369 (1958), and United States v.

Russell, 411 U.S. 423 (1973). Id. Whether Jacobson has

See a eee ee

changed Supreme Court precedent or not, it clearly over-

turns the precedent of the Fifth Circuit Court of Appeals

as set forth in United States v. Johnson, 872 F.2d 612 (5th

Cir. 1989) and United States v. Nations, 764 F.2d 1073 (5th

Cir. 1985). The “eager, active” participation in an offense

is no longer sufficient evidence of predisposition to com-

mit that offense, as it was under prior Fifth Circuit law. In

any event that “eager, active” participation cannot be

considered independent of the contact and inducements

of the Government, as it was by the lower court.

CONCLUSION

The Court’s decision in Jacobson requires a reversal of

Mr. Arditti’s conviction. The lower court’s analysis of the

evidence of predisposition was based on the Fifth Circuit

law prior to Jacobson. Under the Court's holding in Jacob-

son, the Government did not carry its burden of present-

ing evidence of Mr. Arditti’s predisposition because

willing, active, and even eager participation, after exten-

sive inducement, is no longer determinative, or even pro-

bative, of predisposition. Mr. Arditti is at least entitled to

have his case reviewed under the correct standard of law

as set forth in Jacobson.

For all of the foregoing reasons, Mr. Arditti’s convic-

tion should be reversed by this Court. In the alternative,

the judgment of the court below should be vacated with

instructions for that court to rehear the case in light of

this Court’s holding in Jacobson.

Respectfully submitted,

BERNARD J. Panetta, II

Mary STILLINGER

Attorneys for Petitioner

CABALLERO, PANETTA & ORTEGA

521 Texas Avenue

El Paso, Texas 79901

(915) 544-0042

August 1992

App. 1

UNITED STATES of America,

Plaintiff-Appellee,

Victor ARDITTI, Defendant-Appellant.

UNITED STATES of America,

Plaintiff-Appellee,

Guillermo AVILA, Defendant-Appellant.

Nos. 90-8646, 90-8721.

United States Court of Appeals,

Fifth Circuit.

Feb. 27, 1992.

Securities broker and attorney were convicted in sep-

arate trials in the United States District Court for the

Western District of Texas, Harry Lee Hudspeth, J., of

conspiracy to launder monetary instruments and of the

substantive offense. Defendants appealed and appeals

were consolidated. The Court of Appeals, Jerry E. Smith,

Circuit Judge, held that: (1) broker’s conduct violated

money laundeting statute; (2) instructions were adequate

in both trials; (3) defendants were not entrapped; (4)

Government did not engage in outrageous conduct; and

(5) district court did not abuse its discretion in quashing

attorney’s subpoena.

Affirmed.

Goldberg, Circuit Judge, filed specially concurring

opinion.

Appeal from the United States District Court for the

Western District of Texas.

App. 2

Before GOLDBERG, SMITH, and DUHE, Circuit

Judges.

JERRY E. SMITH, Circuit Judge:

Guillermo Avila and Victor Arditti were convicted of

conspiracy to launder monetary instruments and of the

substantive offense. Avila argues that his conduct did not

violate the federal monetary instrument laundering stat-

ute, that the jury instructions at his trial were inadequate,

and that the government entrapped him and engaged in

outrageous conduct in the court of its undercover opera-

tion. Arditti also challenges the jury instructions and

charges entrapment and outrageous conduct, and he

claims that in quashing a trial subpoena the district court

deprived him of due process. We affirm.

These appeals arise from an Internal Revenue Service

(“IRS”) undercover investigation of money-laundering.

The defendants were tried separately, but their cases

were consolidated on appeal. Because each defendant

challenges the conduct of the IRS investigation, we pre-

sent the facts of the two cases together. We then discuss

Avila’s argument that his conduct did not violate the

statute, each defendant’s challenges to the jury instruc-

tions, the issues of entrapment and outrageous govern-

ment conduct as they apply to each, and the quashing of

Arditti’s subpoena.

II.

In 1988, IRS Special Agent Gary Gallman began

investigating money laundering in El] Paso, Texas, vsing

App. 3

the assumed name of “Gary W. Adams” and portraying

himself as a cocaine dealer. Gallman started with infor-

mation that Gabriel Yanez, who owned a money exchange

business, laundered money by handling it to disguise its

source. Gallman’s goal was to discover Yanez’s methods

and cohorts.

Gallman first contacted Yanez in May 1988, explain-

ing that he wanted Yanez to help him move large

amounts of cash offshore, then bring the money back into

the United States in usable form, intimating that he and

his associates were involved in illegal activity. Gallman

and Yanez invented the name “Ricardo Guerra-Battle”

and established a Mexican bank accounts in that name.

Yanez twice funneled $100,000 cash through Mexico,

arranged for the money to be wire-transferred to Gall-

man’s bank in Dallas, then collected a fee from Gallman.

Yanez next arranged for Gallman to open a Cayman

Islands account in the “Adams” and “Guerra” names,

using a letter of introduction from an El Paso attorney to

a Cayman Islands attorney. Gallman later asked Yanez to

put him in touch with someone who could help him with

business in El Paso. In September, Yanez introduced Gall-

man to Arditti, an El Paso criminal defense lawyer.

During the introductory meeting in September 1988,

Gallman told Arditti that he must trust Arditti before he

could reveal the nature of his business and explained that

Yanez was helping him “get [his money] out and get it

back” so that he could use it. Arditti reassured Gallman

by mentioning the attorney-client privilege, his previous

work with clients involved in drugs, and his distrustful

nature.

App. 4

Arditti told Gallman that since he was “into that kind

of business,” he should fund a war chest in preparation

for the day he would need money to get out of jail on

bond and hire a lawyer. Gallman explained that he

couldn’t spend any of the money “the way it is right now

and that he had “to get it out and get it back.” Although

Arditti told Gallman that he could not advise him on how

to launder any illegal funds, Arditti advised Gallman on

structuring transactions to purchase real estate in El Paso

without arousing suspicion and assured Gallman that the

government would not discover any payments made by

Gallman to Arditti.

In October, Yanez channeled another $100,000 of Gal-

Iman’s cash to Gallman’s Dallas account after tinkering

with the Cayman Islands arrangements. In the meeting

discussing the transfer, Gallman told Yanez directly that

“he and his group were in the ‘coke business’ and his

part was to handle the money they derived from the

sales.” Yanez and Gallman seemed to agree that they

should follow Arditti’s advice in investing in real estate

and stocks by using Mexican cashier’s checks, using the

“Guerra” false name, and making purchases in the name

of the British Virgin Islands corporation they had opened

to facilitate the offshore Cayman Islands account. Gall-

man asked Yanez to recommend stock or brokerage

houses that the corporation could use to invest in the

stock market.

In November,! Yanez told Gallman about his friend

Avila, a securities broker in San Antonio for the firm of

1 The district court instructed the jury that it could not

consider any acts prior to November 18, 1988, the effective date

App. 5

Prudential-Bache Securities (“Pru-Bache”) who wouldn’t

insist on meeting Gallman “or anything like that.” Yanez

explained that he frequently referred business to Avila

and that the two had a fee-sharing arrangement. When

Gallman asked what Yanez had told Avila about him.

Yanez said that he portrayed Gallman as a Mexican min-

ing client seeking investments. When Gallman further

questioned Yanez about Avila, Yanez said that “he has a

lot of clients from Mexico in the same business you are,

and he never asks questions.” During this discussion,

Gallman signed the brokerage forms provided by Yanez

as “Guerra.”

Yanez introduced Gallman and Avila in January 1989

at a hotel in San Antonio. Although Gallman used his

undercover name, “Adams,” he signed the client agree-

ment and certificate of foreign status (W-8) as “Guerra.”

The W-8 eliminates brokerage house reporting require-

ments as to the accounts of foreign nationals and, thus,

effectively would have prevented the government from

knowing that Ricardo Guerra or Gary Adams was trans-

acting business with Pru-Bache. Gallman told Avila that

Gallman was both “Adams” and “Guerra” and that this

was “untaxed money” from the Mexican mining opera-

tion. Additionally, according to the government, Avila

knew that Gallman was not a Mexican citizen, yet told

Gallman that he would “take whatever you tell me” when

asked whether he felt comfortable about the Mexican

mining investor story. Further, Avila told Gallman that

of 18 U.S.C. § 1956(a)(3), relating to the charge of conspiracy to

violate the statute.

App. 6

because client “confidentiality is a must,” he staggered

client appointments and entertained at home.

The three arranged for investment funds to come

from Gallman through Yanez to Avila. Avila repeated that

under law and Pru-Bache policy he could not take cash

and that investments of under $10,000 did not need to be

reported to the government. In February, Gallman exe-

cuted new, backdated documents to change the brokerage

account to the name of the British Virgin Islands corpora-

tion at Avila’s request. As with the first forms, Gallman

signed the forms in blank, and Avila completed them.

A few days later in February, Gallman and Avila met

again. Gallman plainly told Avila, “I am in the coke

business. That’s what I do. Now, you will not ever be

involved in that part of it.” Although Gallman offered

Avila the opportunity to back away from the deals

because of the source of the funds, Avila responded that

Yanez had told him that, as long as Gallman provided the

investment funds in check form, there was “[n]o problem

as to where that money comes f[rom] or how it was

made,” because the corporation, not “Adams,” was

Avila’s client. Avila asked Gallman whether he was a law

enforcement officer, which Gallman denied.

Gallman purported to have recently collected

$15,000, which, the government asserts, Avila admittedly

understood were the proceeds from a cocaine deal. Avila,

however, maintains that Gallman did not tell Avila that

he wanted to violate the law or that he did not want to

report the cash. Avila stresses that he told Gallman that

he did not want to do anything illegal and that Gallman

App. 7

confirmed that the corporation was “legal” and that Gall-

man was going to deposit “clean money.”

After Avila repeated that he could not handle cash,

he directed Gallman to obtain cashier’s checks in the

name of the corporation and told him how to do so. After

Gallman obtained the checks, he met Avila outside

Avila’s office and gave him two cashier’s checks totaling

$15,000, payable to Pru-Bache in care of Avila. Avila

deposited the funds in the corporation’s account. In

March, Gallman delivered to Avila a $40,000 cashier’s

check, which Avila also deposited.

At Gallman’s request, Yanez invited Arditti to meet

them for lunch in March 1989. Arditti discussed methods

to avoid suspicion and the tracing of money, including

not using cash. Gallman offered Arditti the chance to

“walk away from the deal” if Arditti had a “problem with

the money or what I do.” According to Gallman’s testi-

mony, when Arditti responded that he had not asked

what kind of business Gallman did, Gallman then clari-

fied, “You understand this is coke money,” to which

Arditti replied, “You don’t see me going anywhere, do

you?” Arditti disputes Gallman’s testimony as to this

portion of their conversation and notes that the govern-

ment failed to tape-record this exchange, nor did Gallman

record it in his memorandum concerning the meeting.

In May, Gallman met with Yanez and Arditti. Gall-

man put aside the idea of real estate investments in El

Paso and told Yanez and Arditti about an opportunity to

invest $200,000 in an Oklahoma oil deal. Gallman

revealed that “this money we’re doing right now is part

of a ten-kilo deal that . . . I’m getting paid off for

App. 8

. . now,” and stressed protecting his identity in the oil

deal. Arditti outlined a complex arrangement for prevent-

ing governmental access to Gallman’s name through the

royalty payment mechanism, perhaps setting up a foreign

corporation or, as Gallman suggested, a trust in a foreign

bank to receive and invest Gallman’s money. Gallman

repeated that “this is coke money” and wanted to know

whether he could count on Arditti not to talk if “I end

up... getting busted.”

Arditti assured Gallman that he would not divulge

anything but again warned Gallman against spending

large lumps of cash. Arditti agreed to draft documents

memorializing the “loan” of money from the corporation

to Gallman, which would explain the source of Gallman’s

money, and to check on establishing an escrow account to

receive Galllman’s money and invest it in the Oklahoma

deal.

The next week, Yanez told Gallman that the fake loan

documents and the escrow account would be delayed

because Arditti was being audited by the IRS. Arditti told

Yanez he was worried about “being framed” by Gallman.

When Yanez passed this information to Gallman and

offered to contact another lawyer, Gallman insisted on

using Arditti.

At the end of May, Gallman delivered $50,000, which

Yanez funneled to Gallman’s Dallas account. At this time,

Yanez attributed Arditti’s delay to procrastination but

noted that Arditti was “convinced” about how to proceed

with the bank in setting up the escrow account. Gallman

repeatedly telephoned Yanez over the next few weeks

because Gallman wanted Arditti to complete the deal.

aii ai

App. 9

Yanez continued to insist that Arditti would participate

but wanted to take care in structuring the deal.?

The first infusion of funds to Oklahoma occurred

through Yanez’s own bank account at the end of June, not

through the escrow account as envisioned by Gallman.

Gallman asked for Yanez’s help in getting the money to

Oklahoma using the escrow account procedure. In mid-

July, Gallman met in El Paso with Yanez and Arditti, who

explained that they had agreed to the method used in the

first transfer because the bank had set up some hurdles in

establishing the escrow account. Departing from the

escrow account idea, Arditti offered to set up a trust

whose funds Arditti would manage, which would also

conceal Gallman’s identity. The three formulated an elab-

orate plan to invest money from the corporate brokerage

account into the Oklahoma oil deal and completed the

arrangements for the fraudulent loan.

With Yanez’s participation, Arditti opened a bank

account in the name “V.R. Arditti Trust Account Number

3” several days later. No trust documents were prepared

for the account, and Arditti alone had signature authority

and the code to validate wire transfers. When Arditti

received a check from the corporate brokerage account

? To buttress his claims of entrapment and outrageous gov-

ernment conduct, Arditti has pointed out several facts regard-

ing the contacts between Yanez and Arditti after the May

transaction, specifically: (1) Yanez told Gallman that he con-

tacted Arditti or visited his office every day; (2) Arditti seemed

so reluctant to do Gallman’s work that Yanez suggested hiring

another lawyer to complete Gallman’s work; and (3) Gallman

contacted Yanez three times on May 30 and 13 times in June to

ask about Arditti.

App. 10

for $50,000 on August 2, he deposited it in the trust

account and told the bank to wire $49,000 to the oil deal

bank account in Oklahoma.

In mid-August, Arditti gave Gallman a bill for his

services. Gallman found the amount “pretty stout,” so

Arditti adjusted it downward but asked Gallman not to

pay him in cash because that would appear suspicious.

The three then devised a more efficient plan for future

transactions, focusing on the need to shield Gallman by

using the “Guerra” name and procuring the funds for

deposit in the trust account at a Mexican bank in the form

of a cashier’s check.

As planned, Arditti received a $50,000 check the next

day from a Mexican money exchanger and transferred the

money to the oil deal account. On August 29, Arditti,

following the same procedure, deposited another $50,000

in the trust account and wired it to Oklahoma.

III.

A grand jury charged Arditti with conspiring with

Yanez and Avila in violation of 18 U.S.C. § 371 to (1)

avoid filing currency transaction reports in violation of 31

U.S.C. § 5313(a); (2) avoid filing currency or monetary

instrument reports in violation of id. § 5316; and (3)

launder a monetary instrument in violation of 18 U.S.C.

§ 1956 (count one). Additionally, the indictment charged

Arditti with violating section 1956(a)(3) (counts twelve,

fifteen, and eighteen) and violating id. § 2 by aiding and

abetting Yanez in violating section 1956(a)(3) (counts

fourteen and sixteen). The jury convicted Arditti on all

counts.

App. 11

The indictment charged Avila with conspiring with

Arditti and Yanez in violation of section 371 to commit

the three offenses outlined above (count one). Addi-

tionally, the indictment charged Avila with violating sec-

tion 1956(a)(3) (counts seven and eight). The district court

granted Avila’s motion to sever his case for trial.

The court granted Avila’s motion for judgment of

acquittal on the allegations in count one that Avila con-

spired to violate sections 5315(a) and 5316. The jury,

however, convicted Avila on the remaining allegation in

count one and on counts seven and eight.

IV.

Avila challenges his substantive and conspiracy con-

victions on the ground that his conduct did not violate a

criminal statute. Section 1956(a)(3), entitled “Laundering

of Monetary Instruments,” makes it unlawful for a per-

son, with the intent

(A) to promote the carrying on of specified

unlawful activity;

(B) to conceal or disguise the nature, loca-

tion, source, ownership, or control of property

believed to be the proceeds of specified unlaw-

ful activity; or

requirement under State or Federal law,

[to] conduct[] or attempt[] to conduct a

financial transaction involving property

represented by a law enforcement officer to

App. 12

be the proceeds of specified unlawful activ-

ity, or property used to conduct or facilitate

specified unlawful activity. .. .

18 U.S.C. § 1956(a)(3) (West Supp.1988).3 Section

1956(c)(4) defines “financial transaction” as

(A) a transaction (i) involving the movement

of funds by wire or other means or (ii) involving

one or more monetary instruments, which in

any way or degree affects interstate or foreign

commerce, or (B) a transaction involving the use

of a financial institution which is engaged in, or

the activities of which affect, interstate or for-

eign commerce in any way or degree.

Section 1956(c)(5) defines “monetary instruments” as fol-

lows:

The term “monetary instruments” means (i) coin

or currency ... , travelers’ checks, personal

checks, bank checks, and money orders, or (ii)

investment securities or negotiable instruments,

in bearer form or otherwise in such form that

title thereto passes upon delivery.

Avila urges reversal of his conviction under section

1956(a)(3) because the plain terms of the statute do not

criminalize accepting cashier’s checks in non-bearer

form. Avila argues, as he did in a motion for acquittal,

that a cashier’s check is not a “bank check” under the

relevant definition of “monetary instrument.” Avila

3 All references herein are to the 1988 version of § 1956.

Congress subsequently amended the statute, but altered only

one of the provisions relevant here, § 1956(c)(5) (clarifying, not

enacting substantive changes to, definition of “monetary instru-

ments”).

App. 13

asserts that Congress did not intend to cover cashier's

checks not in bearer form, as evidenced by a federal

statute and multiple federal regulations that plainly

acknowledge the distinction between a “bank check,” i.e.,

a check drawn by a bank on its account in another bank,

and a “cashier’s check,” i.e., a check drawn by a bank on

itself and accepted upon issuance. See e.g., Bruno v. Collec-

tive Fed. Sav. & Loan Ass'n, 147 N.J.Super. 115, 370 A.2d

874, 877 n. 2 (1977).

The government agrees with Avila’s characterization

of the cashier’s checks as non-bearer instruments and

accepts Avila’s distinctions between cashier’s checks and

bank checks. Pointing to the legislative history of section

1956, however, the government argues tnat Congress

indeed intended the definition of the term “monetary

instruments” to include cashier’s checks. “Monetary

instruments are a subset of the term ‘property’ as used in

section (a), a term that is intended to be construed liber-

ally to encompass any form of tangible or intangible

assets.” S.Rep. No. 433, 99th Cong., 2d Sess. 13 (1986).

Avila responds that the legislative history contex-

tually refers to cashier’s checks “in such form that title

thereto passes upon delivery,” not to all cashier’s checks.

Id. Moreover, Avila asserts that Congress’s intent is irrele-

vant when a statute, like this one, is not capable of two

rational readings. Cf. McNally v. United States, 483 U.S.

350, 360, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987)

(“before one can be punished, it must be shown that his

case is plainly within the statute”) (citation omitted).

Despite the facts that Congress did not include cash-

ier’s checks in the statutory definition of monetary

App. 14

instruments and that we must construe criminal statutes

strictly, see United States v. Daniel, 813 F.2d 661, 663 (5th

Cir. 1987), Avila’s challenge to his substantive convictions

must fail. Simply, the plain language of section 1956 does

not require that the suspect have used a “monetary

instrument” in his offense. A financial transaction for the

purposes of the statute is “[1] a transaction involving the

movement of funds by wire or other means or [2]

involving . . . monetary instruments . . . or [3] involving

the use of a financial institution which is engaged in, or

the activities of which affect, interstate or foreign com-

merce in any way or degree” (emphasis added). The

substantive charges of his indictment, counts seven and

eight, do not accuse Avila of laundering a “monetary

instrument” as defined in section 1956(c)(5). Rather,

count seven states that he conducted “a financial transac-

tion involving property to wit: $15,000 in cashier’s

checks, represented by a law enforcement officer to be the

proceeds of [specified] . . . unlawful activity, in violation

of Title 18, United States Code, Section 1956(a)(3).” Count

eight is similar, except that it specifies $40,000 as the sum

in question and does not mention cashier’s checks.

The acts alleged in these counts plainly fall within

the language of section 1956(c)(4)(A)(i): They were trans-

actions “involving the movement of funds by wire or

other means.” The issue of whether cashier’s checks are

monetary instruments thus is irrelevant to the substantive

counts; the checks unquestionably were “property” and

“funds [moved] by wire or other means” under the stat-

ute.

Although we have not previously interpreted the

money laundering statute in this way, the plain language

App. 15

dictates such a holding, and this court has found that the

statute encompasses a wide range of conduct. See, ¢.g.,

United States v. Gallo, 927 F.2d 815, 822 (5th Cir. 1991)

(transporting money in the trunk of a car was a financial

transaction in that it was a “movement of funds by wire

or other means . . . which in any way or degree affects

interstate of [sic] foreign commerce” (ellipses in origi-

nal)).

We similarly uphold Avila’s conspiracy conviction.

The first count-of the indictment charged that Yanez,

Arditti, and Avila “willfully, knowingly and unlawfully

conspired, combined, confederated and agreed together,

and with each other, and with others to the Grand Jury

unknown, . . . to launder a monetary instrument, in

violation of Title 18, U.S.C. § 1956. Arditti does not raise

the issue on appeal, but Avila appears to argue that this

count of the indictment charges a crime that the govern-

ment did not prove. Simply, Avila asserts that he did not

conspire to launder a “monetary instrument” under the

language of the statute. If there was conspiracy, Avila

argues, it was to launder cashier’s checks, which are not

monetary instruments as statutorily defined.

As with the substantive counts, this court need not

consider whether cashier’s checks qualify as monetary

instruments. Although cashier’s checks were the means

through which the conspirators were to launder the

funds, the objective of the conspiracy was to launder the

cash that “Adams” claimed to have obtained through his

drug wholesaling activities. Cash, of course, is “coin or

currency of the United States” and thus is a monetary

instrument. Because Gallman represented to Avila that he

wanted to launder cash, and Avila advised him how to

App. 16

convert the cash into cashier’s checks without having to

present his identification, so the Pru-Bache could accept

the money, we reject Avila’s argument that no monetary

instruments were involved.

Avila further argues that his behavior was not illegal

because the government agent did not represent to him

that the funds he participated in laundering were the

proceeds of criminal activity. Section 1956(a)(3), in estab-

lishing the basis for money laundering “sting” opera-

tions, requires that the government agent represent that

the property involved in the transaction is the “proceeds

of specified unlawful activity, or property used to con-

duct or facilitate specified unlawful activity.” The statute

further defines the term “represented” as “any represen-

tation made by a law enforcement officer or by another

person at the direction of, or with the approval of, a

Federal official authorized to investigate or prosecute

violations of this section.” 18 U.S.C. § 1956(a)(3).

Avila argues that “[s]trict construction . . . requires

that the officer make an affirmative representation to the

defendant,” not merely a suggestion, or just enough

information to create an inference. Nor can the govern-

ment agent’s perception of the “representation” substi-

tute for satisfaction of the element. Because Gallman did

not plainly tell Avila that the $15,000 and $40,000 cash-

ier’s checks were proceeds from cocaine sales, Avila

urges reversal of the convictions.

We find Avila’s arguments unconvincing. The record

shows that “Adams” told Avila that he was in the cocaine

App. 17

business and that the initial $15,000 was the proceeds of a

collection. Because “Adams” represented his business as

drug wholesaling, then never represented his relationship

with Avila as one involving funds not derived from that

illicit industry, the jury could have viewed the later

$40,000 as ostensible drug-related funds, believe that

Gallman portrays and Avila viewed them as such, and

thus convict Avila of money laundering.

To hold that a government agent must recite the

alleged illegal source of each set of property at the time

he attempts to transfer it in a “sting” operation would

make enforcement of the statute extremely and unneces-

sarily difficult; “legitimate criminals,” whom undercover

agents must imitate, undoubtedly would not make such

recitations before each transaction. In this case, it is

enough that sufficient evidence was presented that the

jury could have found beyond a reasonable doubt that

“Adams” represented, and Avila understood, that the

funds they were laundering were the proceeds of the

specified illegal activities.

VI.

Avila and Arditti challenge the district court’s jury

instructions at their respective trials. We find their argu-

ment to be without merit.

A district court possesses broad discretion in framing

the instructions to the jury; we will not reverse unless the

instructions taken as a whole do not “correctly reflect the

issues and law.” United States v. Casto, 889 F.2d 562, 566

(Sth Cir. 1989), cert. denied, 493 U.S. 1092, 110 S.Ct. 1164,

107 L.Ed.2d 1067 (1990) (citation omitted). This court will

App. 18

reverse for abuse of discretion a district court’s refusal to

issue a jury instruction only if the requested instruction

“(1) is substantively correct; (2) was not substantially

covered in the charge actually delivered to the jury; and

(3) concerns an important point in the trial so that failure

to give it seriously impairs the defendant’s ability to

effectively present a given defense.” United States v.

Chambers, 922 F.2d 228, 241 (5th Cir. 1991) (citation omit-

ted).

The district court defined the offense of conspiracy

(count one) in relevant part as follows, essentially track-

ing the Fifth Circuit Pattern Jury Instructions § 2.21 at 89

(West 1990):

You must be convinced that the government has

proved each of the following beyond a reason-

able doubt . . . Second: That the defendant knew

the purpose of the agreement and joined in it

with the intent to further the illegal purpose. . . .

So, if the defendant . . . knowingly and willfully

joins in that unlawful plan on one occasion, that

is sufficient to convict him for conspiracy.

The court defined the substantive offense under section

1956, charged in counts seven and eight, in relevant part

as follows, tracking the language of the statute: “You

must be convinced that the government has proved each

of the following beyond a reasonable doubt . . . Second:

That the defendant acted with the intent to pro-

mote .. . or conceal and disguise... . ”

Avila requested that the jury be instructed that “will

fully” means that the act was committed voluntarily and

purposely, with the specific intent to do something the

law forbids; that is to say, with bad purpose either to

pe |

App. 19

disobey or disregard the law”; and that “[t]o establish

specific intent the government must prove that the defen-

dant knowingly did an act which the law forbids, pur-

posely intending to violate the law.” On appeal Avila

argues that the district court’s refusal to issue the instruc-

tion he requested constituted reversible error, arguing

that “willfulness” is a substantive element of a section

371 conspiracy and that “specific intent” is a substantive

element of section 1956(a)(3) money laundering.

First, we find that the conspiracy instruction, as a

whole, adequately addressed the burden the government

had to bear. The requested instruction as to “willfully”

was not necessary. The meaning of “willfully” varies

depending upon the context. See United States v. Bishop,

412 U.S. 346, 356-61, 93 S.Ct. 2008, 2015-18, 36 L.Ed.2d 941

(1973). The Supreme Court has recognized that in com-

mon usage the word “willful” is considered synonymous

with such words as “voluntary,” “deliberate,” and “inten-

tional” and that in law the word generally refers to

conduct that is not merely negligent. McLaughlin v. Rich-

land Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 1681, 100

L.Ed.2d 115 (1988).

“Willfulness” appears in neither the section 371 defi-

nition of conspiracy nor the section 1956 monetary-instru-

ment laundering statute, and, as defined in Avila’s

requested instruction, it is not an element of the conspir-

acy offense, which requires the state of mind necessary

for the substantive crime. See, e.g., United States v. Har-

relson, 754 F.2d 1153, 1172 (5th Cir.), cert. denied, 474 U.S.

908, 106 S.Ct. 277, 88 L.Ed.2d 241 (1985). The definition of

willfulness Avila requested is an exception to the tradi-

tional rule and is a statutory element of special treatment

Row a a ¥ hie a Se pos

App. 20

of criminal tax offenses. United States v. Cheek, ___ U.S. ___,

__, 111 S.Ct. 604, 607, 112 L.Ed.2d 617 (1991).

The district court’s conspiracy instruction required

the jury .o find (1) that there was an agreement between

two or more persons; (2) that Avila joined the agreement

knowing its purpose and with the intent to further the

illegal purpose; and (3) that an overt act was committed.

Further, the court instructed, “If the defendant knows

about a plan, knows that it is an unlawful plan, and

knowingly and willfully joins in the unlawful plan-

... that is sufficient to convict him for conspiracy.” These

instructions cover the necessary elements of the conspir-

acy offense, including the requisite mental state. They

thus differ from the charges we reject in United States v.

Burroughs, 876 F.2d 366, 369 (Sth Cir. 1989), which did not

require that the defendant have joined the agreement

“knowing its purpose and with the intent to further the

illegal purpose,” and United States v. Kerley, 643 F.2d 299,

302 (5th Cir. Unit B Apr. 1981), in which we reversed a

criminal conviction for failing to instruct on the element

of willfulness where such willfulness was actually a “crit-

ical element” of the offense.4 We thus conclude that the

requested instruction on willfulness was not substantially

correct, and to the extent that it did accurately reflect the

4 See also Fifth Circuit Pattern Jury Instructions § 2.21, at 91

(West 1990) (proposed conspiracy instruction “adequately

addresses the requirement of a specific intent to violate the law”

if no “special state of mind,” e.g., premeditation, required by

substantive offense); id. § 1.36 at 52 (“we have attempted to

define clearly what state of mind is required, i.e., what the

defendant must know and intend to be guilty of the particular

crime charged”).

App. 21

law, it was included in the adequate instruction that the

district court gave.

Second, we find that to the extent Avila’s requested

instruction of specific intent was correct, it too was

included in the district court’s instructions. The court

told the members of the jury that they could not find

Avila guilty unless they found that he conducted or

attempted to conduct a financial transaction involving

property represented by a law enforcement officer to be

proceeds of the sale of illegal drugs and that he acted

with the intent to promote the carrying on of the speci-

fied unlawful activity (meaning the drug dealing) or “to

conceal and disguise the nature, location, source, owner-

ship and control” of such property. The instruction paral-

lels the wording of section 1956(a)(3) and includes all the

elements of intent that Congress deemed necessary for

the offense, as is apparent in the language of the statute.

If Congress wanted to require any higher mens rea

requirement, it would have enacted one. See United States

v. Baker, 807 F.2d 427, 428 (5th Cir.1986).

VII.

Avila next argues that the district court erred in not

instructing the jury as to his ignorance of the law. In

United States v. Davis, 583 F.2d 190, 194 (5th Cir.1978), we

held that “the trial court, when instructing that specific

intent is required, may not instruct that ignorance of the

law is no excuse, because ignorance of the law goes to the

heart of the defendant’s denial of specific intent.”

In 1989 this court ordered a new trial for defendants

who had been convicted on conspiring to commit tax

App. 22

fraud under section 371 and of willfully aiding or assist-

ing fraud in violation of 26 U.S.C. § 7206(2) because “the

district court did not instruct the jury that they should, or

could, consider the defendants’ ignorance of the law.”

United States v. Buford, 889 F.2d 1406, 1409 (5th Cir.1989).

Rather, the district court had instructed the jury that “the

presumption is that every person knows what the law

forbids.” Id. The Buford court, however, interpreted the

term “willfully” for purposes of the statute criminalizing

preparation of fraudulent tax returns to mean a “volun-

tary intentional violation of a known legal duty” and

viewed the absence of a corresponding “ignorance of the

law” instruction as “inconsistent with the element of

specific intent.” Id. (citation omitted; emphasis added).

Avila asks us to apply Buford to the case at hand, but

the reasoning in that case and the others Avila cites does

not support such an extension. Avila urges us to hold that

the district court erred because it failed to instruct the

jury that it could consider Avila’s ignorance of the law,

despite the critical distinction that its instructions, and

the applicable statute, did not require the government to

prove that Avila intentionally violated a known legal

duty, nor, for that matter, did the court issue an instruc-

tion that the jury should presume that Avila knew what

the law was.

As we discussed above, such a concept of “willful-

ness” is not an element of the offenses with which Avila

was charged. Because the instruction Avila requested is

not a “substantially correct” statement of the law in this

context, we affirm the refusal to include it.

| aa

App. 23

Additionally, to the extent the requested instruction

might accurately reflect the law, it was included in the

instructions the district court issued. The conspiracy

instruction told the jury that it could convict Avila only if

it found that he joined the plan knowing that it was

unlawful, and the substantive offense instructions pro-

vided that the defendant must have had represented to

him that the funds were proceeds from specified unlaw-

ful activities and that he must have participated with the

intent to further those activities or to conceal the funds.

Lastly, we note that the entrapment instruction allowed

the jury to consider whether the government agent

impermissibly coaxed Avila into breaking the law, either

through convincing him that his acts would be lawful or

otherwise.

VIII.

Arditti challenges the district court’s entrapment

instructions. The instructions paralleled Fifth Circuit Pat-

tern Jury Instructions § 1.28 at 40 (West 1990), and in

relevant part provided that

if the evidence in the case should leave you with

a reasonable doubt whether the defendants had

the previous intent or purpose to commit an

offense of the character charged apart from the

inducement or persuasion of some officer or

agent of the government, then it is your duty to

find him not guilty. . ... The burden is on the

government to prove beyond a reasonable doubt

that the defendants were not entrapped.

Arditti requested that the district court include a

sentence immediately after its instruction on the elements

App. 24

of monetary instrument laundering to explain the link

between the elements and entrapment: “Even if you find

that the government has proved each element of this

offense beyond a reasonable doubt, you must acquit the

defendant if you find that he was entrapped.” First,

Arditti asserts that the charge as a whole confused the

jury; he relies upon jurors’ affidavits to show that they

did not understand the entrapment instruction and, thus,

could not consider the defense. Second, Arditti claims

that because, after the defendant makes a prima facie

showing of entrapment, the burden shifts to the govern-

ment to prove that the defendant was predisposed to

commit the offense, see United States v. Johnson, 872 F.2d

612, 620 (5th Cir.1989), predisposition becomes an ele-

ment of the offense. Arditti argues that the government’s

burden becomes heavier when the court directly instructs

the jury to consider entrapment as to each count of the

indictment. United States v. Allibhai, 939 F.2d 244, 252 (5th

Cir.1991), petition for cert. denied, Vak > Rae el

967, __. L.Ed.2d ____ (1991).

We find that the jury instruction on entrapment was

adequate. We first note that the affidavits of juror confu-

sion are not relevant for our decision, as whether a jury

misunderstands its instructions is not to be re-examined

after the verdict. Robles v. Exxon Corp., 862 F.2d 1201, 1206

(Sth Cir.) cert. denied, 490 U.S. 1051, 109 S.Ct. 1967, 104

L.Ed.2d 434 (1989). Second, Arditti may satisfy the first

part of the three-part test outlined above, for the

requested instruction was substantially correct, but

Arditti cannot satisfy the second element, as the instruc-

tion was substantially given in the charge actually deliv-

ered to the jury.

App. 25

Aithough the district court would not have erred in

issuing the requested instructions, Arditti was not enti-

tled to them. In Allibhai we did say that including an

entrapment instruction after each count increases the bur-

den the government must bear, but in context the state-

ment merely meant that the defendants could not claim

prejudice because the jury was instructed to consider the

entrapment defense separately as to each count. 939 F.2d

at 252. Allibhai does not mean that the defendant is enti-

tled to such a placement of the instruction. The instruc-

tion the court gave the jury thus accurately reflected

Arditti’s rights and the government’s burdens under the

law.

IX.

Avila and Arditti moved to dismiss their respective

indictments prior to trial and timely moved for judgment

of acquittal based upon entrapment and outrageous con-

duct, motions that the district court denied. The entrap-

ment defense involves examination of two factors: (1)

government inducement; and (2) the defendant’s predis-

position, before contact with government agents, to com-

mit the crime charged. |

Entrapment as a matter of law is established only

where a reasonable jury could not find that the govern-

ment discharged its burden of proving the defendant was

predisposed to commit the charged crime. United States v.

Nations, 764 F.2d 1073, 1077, 1079 (5th Cir.1985). Once a

defendant makes a prima facie showing of entrapment by

App. 26

presenting “some evidence that government conduct cre-

ated a substantial risk that an offense would be commit-

ted by a person other than one ready to commit it,” the

burden shifts to the government to prove beyond a rea-

sonable doubt that the defendant was predisposed to

commit the crime and, thus, we not entrapped. United

States v. Johnson, 872 F.2d 612, 621 (5th Cir.1989) (citing

Mathews v. United States, 485 U.S. 58, 65-66, 108 S.Ct. 883,

888, 99 L.Ed.2d 54 (1988)). “[T]his Court must look to the

evidence to determine whether, viewing reasonable infer-

ences and credibility choices in the light most favorable

to the Government, a reasonable jury could find, beyond

a reasonable doubt, that the defendant was predisposed

to commit the offense.” Id. “On appeal from a conviction

wherein the jury has rejected the entrapment defense, the

standard of review is the same as that which applies to

the sufficiency of the evidence.” Id. (citing United States v.

Duvall, 846 F.2d 966, 974 (Sth Cir.1988)).

Arditti argues that the government “offered no evi-

dence of predisposition” prior to Arditti’s involvement in

the offense, disputing the district court’s focus upon

Arditti’s “willing and active particpa[tion] in the scheme”

as evidence of his predisposition toward the crime. Look-

ing at the evidence in the light most favorable to the

government, though, a reasonable jury could have found

beyond a reasonable doubt that Arditti was predisposed

to money laundering and thus was not entrapped.

As in Nations, 764 F.2d at 1077, there was “no over-

whelming evidence of serious resistance” by Arditti.

App. 27

According to the agent’s testimony, after Gallman told

Arditti that the source of the money involved in the

proposed real estate investment was “coke money,” but

that if Arditti did not want to be involved in such a deal

he could just walk away, Arditti replied, “You don’t see

me going anywhere.” Although Arditti did not initially

seek out the government agent, “an opportunity was

provided and [Arditti] jumped in with both feet,” helping

Gallman formulate plans to launder the “drug” money

and advising him on ways to avoid arousing govern-

mental suspicion. Johnson, 872 F.2d at 621 (enthusiasm

evidenced predisposition, even though government initi-

ated illegal scheme). A jury could view Gallman’s testi-

mony and the tape recordings and video recordings of

Arditti as proof that Arditti was an “ ‘eager, active partic-

ipant’” in money laundering. Duvall, 846 F.2d at 974

(quoting Nations, 764 F.2d at 1077).

Avila similarly argues that the government's evi-

dence of predisposition falls short. Our response is the

same: Despite Gallman’s initiation of contact with Avila

and Gallman’s provision of the opportunity to launder

drug funds, Yanez’s testimony that he told Gallman that

Avila “has a lot of clients from Mexico in the same busi-

ness you are,” Avila’s complete lack of resistance, and

Avila’s energetic participation in the plan to launder

“drug” money show that a reasonable jury could have

found that he was predisposed to engage in money laun-

dering. The entrapment defense in this case, “as in most

cases, was not resolvable by the court as a matter of law.”

Nations, 764 F.2d at 1077.

App. 28

Both appellants also charge that their convictions

should be overturned because the government investiga-

tion constituted outrageous conduct. We traced the evolu-

tion of the “outrageous conduct” defense in United States

v. Allibhai, 939 F.2d 244, 248 (Sth Cir.1991), petition for cert.

denied, U.S. __, 112 S.Ct. 967, ___ L.Ed.2d ___ (1991).

We recalled that a plurality of the Supreme Court, dis-

cussing the entrapment defense, noted in 1973 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 govern-

ment from . . . obtain[{ing] a conviction.” United States v.

Russell, 411 U.S. 423, 431, 93 S.Ct. 1637, 1642, 36 L.Ed.2d

366 (1973). Although many have asserted the defense,

“due process violation will be found only in the rarest

and most outrageous circumstances.” United States v.

Duvall, 846 F.2d 966, 973 (Sth Cir.1988) (citation omitted).

A defendant must prove not only “government over-

involvement in the charged crime,” but also that he has

not been an “active participant in the criminal activity

which gave rise to his arrest.” Nations, 764 F.2d at 1077. In

finding no due process violation, the Allibhai panel

observed “[a] litany of cases in which more extreme

government behavior was upheld by courts.” Allibhai, 939

F.2d at 248 (citations omitted); see Duvall, 846 F.2d at 975.

A review of Arditti’s and Avila’s arguments on this issue

leads to the same conclusion. See Allibhai, 939 F.2d at 249

(rejecting defendants’ argument that the “government's

conduct in approaching [defendant] with the money-

laundering scheme was egregious enough to constitute a

due process violation.”).

App. 29

Arditti maintains that the government engaged in

outrageous behavior by targeting him without a reason-

able suspicion of predisposition to launder monetary

instruments. We already have rejected a similar argu-

ment, however. This court applies the prohibition against

governmental targeting of defendants in an investigation

“only where the government employs a contingent fee

informant and directs him to implicate specific individ-

uals.” United States v. Nissen, 928 F.2d 690, 693 (5th

Cir.1991) (citation omitted). In any event, Arditti has pro-

duced no evidence that he was the target of the IRS

investigation. He was brought in to the money launder-

ing plot by his co-conspirator, Yanez.

Arditti also argues that the government’s overin-

volvement in the offense and the pressure its agents

exerted on him constituted outrageous conduct. This

argument also fails, as the quantum of governmental

activity did not exceed levels previously condoned by

this and other courts, see, e.g., United States v. Tobias, 662

F.2d 381 (5th Cir. Unit B Nov. 1981), cert. denied, 457 U.S.

1108, 102 S.Ct. 2908, 73 L.Ed.2d 1317 (1982), and Arditti

actively participated in the criminal activity by formulat-

ing and carrying out investment plans for the “drug”

money.°®

5 See Allibhai, 939 F.2d at 248-249 (discussing cases); accord

United States v. Yater, 756 F.2d 1058, 1067 n. 12 (Sth Cir.) cert.

denied, 474 U.S. 901, 106 S.Ct. 225, 88 L.Ed.2d 226 (1985) (dis-

cussing outrageousness of government’s conduct in manufac-

turing drugs “without only meager assistance from the

defendant’s in United States v. Twigg, 588 F.2d 373 (3d Cir.1978)).

App. 30

Avila asserts that the government’s conduct was out-

rageous because Gallman initiated all contacts and meet-

ings with Avila and, further, misrepresented the legality

of Avila’s participation and the business of the corpora-

tion. Avila seemingly confuses the predisposition element

of establishing the entrapment defense with the necessary

proof of outrageous conduct. Avila actively participated

in the money laundering, and he has far less of an argu-

ment for government overinvolvement than does Arditti.

Arditti further invokes a Ninth Amendment argu-

ment that “a person’s liberty, or right to be left alone, is

violated when the government persists in attempts to

engage the individual in criminal conduct after he has

declined to become involved.” He suggests that we adopt

a bright-line rule that once a subject of investigation

states that he does not wish to participate in illegal activ-

ity, government agents must leave him alone. Cf. Minnick

v. Mississippi, __ U.S. __, 111 S.Ct. 486, 112 L.Ed.2d 489

(1990) (once suspect requests a lawyer, police must stop

interrogation and cannot resume it unless suspect initi-

ates discussion and waives rights).

Nothing in the case law, the statutes, or the constitu-

tion requires such a rule, however. In Allibhai we rejected

the claim that the right to be left alone forbids the gov-

ernment from targeting an individual in an investigation

without a preexisting reasonable suspicion that the sub-

ject has been involved in wrong-doing. 939 F.2d at 249 &

n. 3 (citing Olmstead v. United States, 277 U.S. 438, 478, 48

App. 31

S.Ct. 564, 572, 72 L.Ed. 944 (1928) (Brandeis, J., dissent-

ing)). We then stated that where governmental excess

ensnares a nonpredisposed individual, the entrapment

defense should be sufficient to protect him. As discussed

above, Arditti was not entrapped as a matter of law, and

the government’s behavior here does not rise to the level

of outrageous conduct.

Both before and at trial, Arditti subpoenaed IRS doc-

uments including those showing the “nature, goals and

targets of its operation,” asserting their relevance to his

lack of predisposition for his entrapment and outrageous-

conduct defenses. Arditti maintains that he needed the

information to complete his defense and to summon all

minimally reliable evidence in that regard, as guaranteed

by the Due Process Clause of the Fifth Amendment and

the Compulsory Process Clause of the Sixth Amendment.

Following the Government’s statement that the internal

memoranda and documents g~ -.rated by an agency are

privileged and thus not sut,. ¢ to discovery, the district

court granted the government’s motion to quash the trial

subpoena because the subpoena constituted a discovery

request, bordering on a fishing expedition. Arditti asserts

that because the district court neither held a hearing on

the motion to quash nor availed itself of the opportunity

offered by the government to view the documents in

camera, his rights were violated, and he requests a hear-

ing wherein the government will be required to show that

its privilege as to the documents should overcome his

right to present evidence in his defense. .

ee ee

App. 32

We review a grant of a motion to quash a subpoena

for abuse of discretion. Cf. United States v. Reeves, 892 F.2d

1223, 1226 (5th Cir.1990) (upholding district court’s

refusal of pretrial request to inspect government files

under Fed. R.Crim.P. 16(a)). We find that the district court

did not abuse its discretion in quashing the subpoena.

Rule 16(a)(1) precludes “the discovery or inspection

of reports, memoranda, or other internal government

documents made by the attorney for the government or

other government agents in connection with the investi-

gation or prosecution of the case....” Arditti essentially

argues that the “subpoena at issue is a trial subpoena,”

covered by Fed.R.Crim.P. 17, which rule 16 does not

govern because it only applies to “discovery of evidence

prior to trial.” Certainly Arditti could not gain discovery

to the subpoenaed material under rule 16. Moreover, he

does not establish that even the potentially longer reach

of rule 17(c) stretches to those materials.

Our analysis of this issue begins with Bowman Dairy

Co. v. United States, 341 U.S. 214, 71 S.Ct. 675, 95 L.Ed. 879 -

(1951), which discusses the zelationship between rule 16

and rule 17(c). There, the Court upheld an antitrust

defendant’s subpoena directing the government to pro-

duce documents, books, and objects it had obtained dur-

ing the course of its investigation, even though such

materials were not discoverable under rule 16. The dis-

trict court held that the defendant might be able to obtain

some such materials under rule 17(c), “as long as they are

evidentiary.” Id. at 219, 71 S.Ct. at 678. Although rule 17

extends to materials not subject to rule 16 discovery, it is

not intended to provide an additional means of discovery.

Id. at 220, 71 S.Ct. at 679. Every subpoena must be a

App. 33

“good faith effort . . . to obtain evidence,” and the district

court may ensure that rule 17(c) is used only to that end

through the court’s power to quash or modify subpoenas.

Id. at 219-20, 71 S.Ct. at 678-79.

The Court enunciated the burden a party must bear

to gain access to materials under rule 17 in United States v.

Nixon, 418 U.S. 683, 697-702, 94 S.Ct. 3090, 3102-05, 41

L.Ed.2d 1039 (1974). On appeal, Arditti must satisfy three

requirements. He must show that (1) the subpoenaed

document is relevant, (2) it is admissible, and (3) it has

been requested with adequate specificity. Id. at 700, 94

S.Ct. at 3103. These specificity and relevance elements

require more than the title of a document and conjecture

as to its contents. In Nixon, the Watergate special prosecu-

tor was permitted to obtain audio tapes that the president

was trying to retain, because he had shown that “there

was sufficient likelihood that each of the tapes con-

tain{ed] conversations relevant to the offenses charged in

the indictment.” Id. He met this burden by offering sworn

testimony of participants in the recorded conversations,

or by giving reasons that permitted a rational inference of

relevance, as well as by making a sufficient preliminary

showing of admissibility.

We conclude that Arditti did not meet his burden

under rule 17 and Nixon. In quashing the subpoena, the

district court found that “I think it’s not only discovery,

but borders on a fishing expedition.” This finding is

supported by Arditti’s argument before us: “The govern-

ment’s purpose, method and means of targeting and then

pursuing Mr. Arditti are relevant to both the entrapment

and the due process defenses. To ascertain these particulars,

Arditti sought the documents that would set forth the

App. 34

objectives of the undercover operation and the intended

targets of that operation.” (Emphasis added.)

Arditti thus has failed to establish with sufficient

specificity the evidentiary nature of the requested mate-

rials. He has demonstrated why he wants to look into the

material, but he has not set forth what the subpoena’s

materials contain, forcing the court to speculate as to the

specific nature of their contents and its relevance.

Accordingly, it appears that Arditti was attempting to use

the subpoena to gain knowledge that he could not obtain

under rule 16(a)(1), as much as to obtain evidence, i.e.,

that he was trying “to use the subpoena duces tecum as a

discovery device, which it is not.” United States v. Nixon,

777 F.2d 958, 969 (5th Cir.1985). In this context, the dis-

trict court did not abuse its discretion in quashing the

subpoena.

AFFIRMED.

GOLDBERG, Circuit Judge, specially concurring:

When one door closes, fortune will usually open

another.®

The Rule 16 door closes, so a criminal defendant

attempts to pry open, the Rule 17(c) portal. The district

court, as keeper of the Rule 17(c) gate, hears the chanting

of the “open sesame!”7 incantation -— “let me obtain the

evidence” — but cannot unlock the entry, for the recitation

6 Fernando de Rojas, La Celestina act XV.

7 The Arabian Nights (A Thousand and One Nights) — The

History of Ali Baba (Galland trans.); cf. William Shakespeare,

Macbeth act IV, sc. i (“Open, locks, Whoever knocks.”).

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App. 35

fails to satisfy the demanding requirements of Rule 17(c).

I concur in the majority opinion and write merely to

elucidate the distinction that I see between Rules 16 and

17(c) and to explain the district court’s duties, as I see

them, in evaluating a Rule 17(c) subpoena duces tecum. See

Majority Op. at 345-46.

The issue is whether Arditti satisfied the require-

ments of Federal Rule of Criminal Procedure 17(c),

“which governs the issuance of subpoenas duces tecum in

federal criminal proceedings.” United States v. Nixon, 418

U.S. 683, 94 S.Ct. 3090, 3102, 41 L.Ed.2d 1039 (1974). Rule

17(c) provides that “[a] subpoena may also command the

person to whom it is directed to produce the books,

papers, documents or other objects designated therein.”

Fed.R.Crim.P. 17(c).

Certainly a Rule 17(c) subpoena duces tecum is not a

discovery device. Nixon, 94 S.Ct. at 3103 (citing Bowman

Dairy Co. v. United States, 341 U.S. 214, 71 S.Ct. 675, 679,

95 L.Ed. 879 (1951)). Rule 17(c) is not intended “to pro-

vide an additional means of discovery beyond that pro-

vided in Rule 16.” United States v. Vanegas, 112 F.R.D. 235,

238 (D.N.J.1986) (citations omitted); see United States v.

Nixon, 777 F.2d 958, 968-69 (5th Cir.1985); United States v.

Marcello, 423 F.2d 993, 1006 (5th Cir.), cert. denied, 398 U.S.

959, 90 S.Ct. 2172, 26 L.Ed.2d 543 (1970). This is because a

“Rule 17(c) subpoena reaches only evidentiary materials”

- not all discoverable materials. United States v.

Cuthbertson, 651 F.2d 189, 195 (3rd Cir.) (citing Bowman

Dairy, 71 S.Ct. at 679) (emphasis added), cert. denied, 454

U.S. 1056, 102 S.Ct. 604, 70 L.Ed.2d 594 (1981).

App. 36

However, “[a]Jny document or other materials, admis-

sible as evidence . . . is subject to subpoena” under Rule

17(c). Bowman Dairy, 71 S.Ct. at 679. Rule 16, which

severely restricts discovery in criminal cases, does not

define the outer limits of materials available under a 17(c)

subpoena, nor how wide the Rule 17(c) door will open.

Indeed, documents and materials possessed by the gov-

ernment but not discoverable under Rule 16 can be

reached by a Rule 17(c) subpoena - so long as the docu-

ments and materials are evidentiary. Cf. id. at 678.

The rule allows “[t]he court on motion made

promptly [to] quash or modify the subpoena if compli-

ance would be unreasonable or oppressive.”

Fed.R.Crim.P. 17(c); see also Nixon, 94 S.Ct. at 3103. The

district court thus wields “its power to rule on motions to

quash or modify” to control the opening of the Rule 17(c)

gate. Bowman Dairy, 71 S.Ct. at 678. Under the Rule 17(c)

standard, then, the district court must determine whether

the subpoena constitutes a “good-faith effort . . . to obtain

evidence.” Id., cited in United States v. Noriega, 764 F.Supp.

1480, 1493 (S.D.Fla. 1991). A party does not have to use

all materials subpoenaed under 17(c) in evidence to sat-

isfy this test. Id. Rule 17(c) merely requires that the mov-

ing party make a good faith effort to obtain evidence -

instead of embarking on “a fishing expedition to see what

might turn up.” Id. 71 S.Ct. at 678, 679 (holding sub-

poena’s “catch-all provision . . . not intended to produce

evidentiary materials”); see In re Martin Marietta Corp.,

856 F.2d 619, 622 (4th Cir.1988), cert. denied, 490 U.S. 1011,

109 S.Ct. 1655, 104. L.Ed.2d 169 (1989).

To this end, a party demanding materials must unfas-

ten three locks to free the 17(c) door. The rule requires not

Pw Sa Oe ep ee

App. 37

only that the materials be relevant and admissible, but

also that the demand must be sufficiently specific as to

the documents requested. Nixon, 94 S.Ct. at 3103 (setting

out the showing necessary to require production prior to

trial under 17(c)).® We entrust these decisions to the dis-

cretion of the trial court “since the necessity for the

subpoena most often turns upon a determination of fac-

tual issues.” Id. 94 S.Ct. at 3104. \

In the ordinary case, I would expect the district court

to review the material in camera to determine whether the

specificity, relevancy and evidentiary nature of the mate-

rial warrants its production.’ This case is the rare exception:

8 See United States v. Komisaruk, 885 F.2d 490, 495 (9th

Cir.1989) (“A court is justified in quashing a subpoena duces

tecum if production would be immaterial, unreasonable,

oppressive and irrelevant.”); Martin Marietta, 856 F.2d at 621

(“Enforcement of a Rule 17(c) subpoena is governed by the

standards established in United States v. Nixon.”); Cuthbertson,

651 F.2d at 197 (“we emphasized that the material sought by the

rule 17(c) subpoena must be evidentiary and relevant”) (Sietz,

C.J., concurring) (citations omitted); Vanegas, 112 F.R.D. at 239

(“relevant evidentiary materials subject to subpoena under Rule

17(c)”).

9 See, e.g., Nixon, 94 S.Ct. at 3103 (concluding that a “suffi-

cient likelihood” existed that the content of the tapes were

“relevant” and “admissible”); United States v. Fowler, 932 F.2d

306, 311-12 (4th Cir.1991) (affirming district court’s denial of

application for subpoenas because district court properly deter-

mined that information sought was irrelevant and had no evi-

dentiary value); Martin Marietta, 856 F.2d at 622 (upholding

district court’s order compelling production of materials under

17(c) because district court properly determined that subpoena

satisfied Nixon requirements after in camera production of docu-

ments, but remanding for in camera review as to claims of work-

product privilege); United States v. LaRouche Campaign, 841 F.2d

App. 38

the district court did not avail itself of the opportunity to

review the material in camera before deciding to grant the

motion to quash the subpoena. Rather, the court deter-

mined, without in camera review, that Arditti sought to

travel the forbidden path - he wanted to embark on a

“fishing expedition, to see what might turn up” on the

other side of the Rule 17(c) gate. If Arditti had displayed

the three Nixon keys — that is, made a threshold showing

that the demand was specific and the material relevant

admissible — then the district court would have abused its

discretion by not peering through the keyhole and

reviewing the material in camera. But Arditti did not

brandish the keys labelied “specificity,” “relevancy” and

“admissibility.” The court properly denied entry because

fortune alone will not open the Rule 17(c) door.

1176, 1180 (1st Cir.1988) (affirming district court’s order requir-

ing production of documents for in camera review because

threshold showing of “admissibility, relevancy, and specificity”

meant the subpoena was not “unreasonable or oppressive”

under 17(c)); Nixon, 777 F.2d at 969 (affirming district court’s

refusal to order production of government files under 17(c)

because in camera inspection revealed that materials were not

relevant); Cuthbertson, 651 F.2d at 195 (reversing order releasing

materials because district court did not use its in camera review

to “evaluat[e] the material against the evidentiary requirement

of rule 17(c)”); United States v. Poindexter, 732 F.Supp. 135, 138,

141 (D.D.C.1990) (ordering disclosure of certain documents

after briefing by the parties and in camera review to determine

relevancy under 17(c)); Vanegas, 112 F.R.D. at 239 (granting

motion to compel production of handwriting exemplars prior to

trial under 17(c) based on determination of relevancy and

admissibility).

a SETA Searels ek Noe wah cn

App. 39

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 90-8646

UNITED STATES OF AMERICA,

Plaintiff-Appellee

versus

VICTOR R. ARDITTI,

Defendant-Appellant.

Appeal from the United States District Court for the

Western District of Texas

ON PETITION FOR REHEARING

June 2, 1992)

Before GOLDBERG, SMITH and DUHE, Circuit Judges

PER CURIAM:

IT IS ORDERED that the petition for rehearing filed

in the above entitled and numbered cause be and the

same is hereby DENIED.

ENTERED FOR THE COURT:

/s/ J Smith

United States Circuit Judge

App. 40

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TEXAS

UNITED STATES OF AMERICA §

“ § No.

§ EP-89-CR-399-H

VICTOR R. ARDITTI §

ORDER REGARDING DEFENDANT’S MOTION FOR A

JUDGMENT OF ACQUITTAL

(Filed Sept. 20, 1990)

On this day came on to be considered the motion of

Victor R. Arditti, one of the Defendants in the above-

styled and numbered cause, for a post-verdict judgment

of acquittal pursuant to Rule 29(c), Federal Rules of Crim-

inal Procedure. The jury returned a verdict of guilty as to

the first, twelfth, fourteenth, fifteenth, sixteenth, and

eighteenth counts of the indictment in this case. In the

first count, Defendant Arditti was charged with conspir-

ing with co-Defendants Gabriel I. Yanez and Guillermo

Avila to fail to file currency transaction reports required

by law and to launder monetary instruments. The other

counts charged the substantive offense of “money laun-

dering” in violation of 18 U.S.C. § 1956(a)(3). In his

motion for a judgment of acquittal, Defendant Arditti

contends that his rights to due process of law were vio-

lated by outrageous conduct on the part of the Govern-

ment and that he was a victim of entrapment as a matter

of law. The Defendant contends that the Court should

reconsider its previous denial of his motion for acquittal

and grant a judgment of acquittal after the jury verdict.

Language in some cases indicates that “outrageous

government conduct” during a criminal investigation

App. 41

may bar prosecution of a defendant require the dismissal

of his indictment. United States v. Nations, 764 F.2d 1073,

1076 (5th Cir. 1985); United States v. Yater, 756 F.2d 1058,

1064-66 (5th Cir. 1985). Only the “rarest and most outra-

geous circumstances” will lead the court to find the kind

of due process violation that will justify dismissal of the

case against the defendant. United States v. Nations,

supra at 1077; United States v. Yater, supra at 1065-66.

Furthermore, this defense requires proof of government

overinvolvement in the crime charged as well as proof of

the defendant’s mere passive connection to criminal

activity orchestrated and implemented by the govern-

ment. United States v. Nations, supra; United States v.

Yater, surpa.

In the instant case, Defendant Arditti complains that

the Government chose him as a target of its investigation

without possessing sufficient information to indicate that

he was predisposed to commit the kind of offense being

investigated. This argument is foreclosed by the decision

of the Fifth Circuit in United States v. Duvall, 846 F.2d

966 (5th Cir. 1988). In its opinion, the Court stated the

following at page 974:

Here, the defendants complain merely that King

targeted them without sufficient evidence that

they were predisposed to commit the crimes

being investigated and that he was a persistent

and persuasive Salesman. We have prohibited

the government from targeting defendants in an

investigation only where the government

employs a contingent fee informant and directs

him to implicate specific individuals.

App. 42

In the instant case, Defendant Arditti was not “targeted”

by any confidential informant. On the contrary, Gabriel

Yanez, one of his co-Defendants, brought Arditti into the

transaction and introduced him to the Government’s

undercover agent. Therefore, the “outrageous govern-

ment conduct” defense, as it has been defined and limited

by the Fifth Circuit, cannot apply to this Defendant's

case. ;

In the alternative, Defendant Arditti contends that he

was a victim of entrapment as a matter of law. If a

defendant properly raises the defense of entrapment, as

Arditti did in the trial of this case, the government has

the burden of proving beyond a reasonable doubt that he

was predisposed to commit the crime charged in the

indictment. United States v. Duvall, supra at 974; United

States v. Nations, supra at 1077; United States v. Henry,

749 F.2d 203, 207 n. 5 (5th Cir. 1984) (en banc). In review-

ing the sufficiency of the evidence concerning the defen-

_dant’s predisposition, the court must view the evidence

in the light most favorable to the government. United

States v. Duvall, supra at 974; United States v. Rubio,

834 F.2d 442, 451 (5th Cir. 1987). The court is not autho-

rized to find entrapment as a matter of law unless it

concludes that no reasonable jury could have found that

the defendant was predisposed to commit the offense.

United States v. Duvall, supra; United States v. Rubio,

supra at 450. In the instant case, a reasonable jury could

have found from all the evidence that the Defendant was

predisposed to commit the offenses charged. The jury

could have viewed the testimony of the Government's

undercover agent and especially the videotape recordings

of Arditti’s conversations with the undercover agent as

App. 43

showing him to be a willing and active participant in the

scheme. United States v. Duvall, supra; United States v.

Nations, supra at 1077.

It is therefore ORDERED that the motion of Defen-

dant Victor R. Arditti for a judgment of acquittal in the

above-styled and numbered cause be, and it is hereby,

DENIED.

. SIGNED AND ENTERED this 19th day of September,

1990.

/s/ Harry Lee Hudspeth

HARRY LEE HUDSPETH

UNITED STATES

DISTRICT JUDGE

sd Leelee PR nthe ae 3

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.