Petition for Writ of Certiorari — First Options of Chicago, Inc. v. Kaplan

()

\ Sup: na Co

‘ ’ irt,

FlLeD

94 58.0 sep 29 me

OFF ics

UF THE CLERK

IN THE

Supreme Court of the Anited States

October Term, 1994

aaa Dinniesion

MICHAEL KOEHLER,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

STANLEY NEUSTADTER

Attorney for Petitioner

342 Madison Avenue

Suite 1002

New York, NY 10173

(212) 348-6469

DICK BAILEY SERVICE (212) 08-7066 (718) 447-5358 (516) 222-2470 (914) 682-0848 Fax: (718) 273-8031

1-800-564-4918

st

QUESTIONS PRESENTED

Whether the applicability of the four-level "in-the-business"

enhancement, which doubles the base-level for trafficking

in stolen property, ought to depend upon the frequency,

regularity, and duration of a defendant's illicit transactions

or, instead, upon the single factor of whether the defendant

purchased from the thief, rather than stole himself, the

property he had trafficked?

Whether, under its responsibility to supervise the proper

administration of the Criminal Justice Act, where the

district court learns that assigned counsel has just been

arrested for a felony cocaine offense and requires in-patient

treatment, it bears a sua sponte obligation to conduct an on-

the-record inquiry (a) to determine the continued fitness of

assigned counsel and (b) to assure that an indigent

defendant is aware of the implications of his assigned

counsel's arrest upon the ability to defend?

ii

TABLE OF CONTENTS

Pages

Questions Prusented ..............ccccccccsccccsscecceessccersescesssseseneres i

Table of Authorities ...............:cccccccscssreccessrecesssseessssseesones ii

Opinion Below ..........-sccsssssesssesssereresensecsensenseeenenssenenenenenenes 1

PRI cececctcsers sicesesexeensecseveseccemencevencsesunqnarssseensescaseccotes 1

Statement Of the Case. ..............cccccsscscrsssserccessesessssssessseees 2

REASONS FOR GRANTING THE WRIT:

I. THERE IS CONFLICT IN THE CIRCUITS OVER

THE PROPER ANALYSIS TO BE USED TO

DETERMINE THE APPLICABILITY OF SENTENCE

GUIDELINES’ FOUR-LEVEL "IN THE BUSINESS"

ENHANCEMENT [U.S.S.G. §2B1.2(B)4(A)] FOR

STOLEN PROPERTY OFFENSES .......ssssssssssssssssssessssssse 4

Il. THE COURT OF APPEALS HAS TRIVIALIZED THE

SUPERVISORY OBLIGATION OF THE DISTRICT

COURTS TO ADMINISTER THE CRIMINAL JUSTICE

ACT TO ENSURE THE PROTECTION OF SIXTH

AMENDMENT VALUEG............:ccsscssseseesesenseeseenenenecersenee 7

Eo euisnesiieieppbamrnebennvedsenstemnncuneeesenteet 13

Opinion of the United States Court of Appeals for the

Girth Circuit ..........ccceccsccssecscccccccccscccsccsoseccssesesescesescocscssccsne la

Order of theUnited States Court of Appeals Denying

Rehearing ..........cscesesescssscsssscsssenssesesssscnsnssscnserenesenseenenes 10a

iii

TABLE OF AUTHORITIES

Pages

Frazier v. Heebe,

482 U.S. 641 (1987).....cececssecrsseeeersesseersnsnenensensnserensenenens 13

McDowell v. United States,

484 U.S. 980 (1987).....cecececesererseesresesesensseneeseneeneenansenens 13

Rosic v. Thistledown Racing Club, Inc.,

615 F.2d 736 (6 Cir. 1980)........:escecceseereeeenereeses: isanatelon 10

United States v. Braslawsky,

913 F.2d 466 (7 Cir.1990).........sscssssesereseenerererseseesneneneneenens 5

United States v. Connor,

950 F.2d 1267 (7 Cir.1991).......:cecessssssseresesersenensessesnsnenens 5

United States v. Esquivel,

919 F.2d 957 (5 Cir.1990).......sssecesssssseresenenersensesnsnensenenenes 5

United States v. King,

21 F.3d 1302 (3 Cir.1994).......ssssssssssserererenensnerensnesssnenesenes 5

United States v. Phipps,

29 F.3d 54 (2 Cir.1994)....cccscccssssseesseesensnenenenenenesnsnsncsnenenens 2

United States v. St. Cyr,

977 F.2d 698 (1 Cir.1992)......sscscscsrsrsererenseessensssnnsrsnserenenes 5

United States v. Warshawsky,

20 F.3d 204 (6 Cir.1994)........-scscesssesereresenerenenesenesnsncnnenenens 4

United States v. Welch,

19 F.3d 192 (5 Cir.1994)........sssssssssrseseserenenenensssnsnensnensnsnes 5

iV

Pages

United States v. White,

457 F.2d 1225 (6 Cir.1971).........s.ssccssceccerceescsrscessesersecsseees 8

Statutes & Rules

18 U.S.C. $300GA (1988) ..........cccccsccssscccscccscsesceserseeeee 9,12

U.S. Sentence Guidelines §2B.12(b)(4)(A) ......-.:cesceereeeeees 4

Miscellaneous Authority

1993 Sourcebook of Criminal Justice Statistics

(Dept. Justice: 1994) ........cecscssssseseeteseesseeerereeeees 6

een mein

In The

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1994

MICHAEL KOEHLER,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Petitioner respectfully prays that a writ of certiorari

issue to review the judgment and opinion of the United

States Court of Appeals for the Sixth Circuit, entered in the

above-titied proceeding on May 25, 1994, which affirmed

petitioner's judgment of conviction; a petition for rehearing

was denied on July 1, 1994.

OPINION BELOW

The opinion of the Court of Appeals for the Sixth

Circuit is reported at 24 F.3d 867, and is reprinted in the

Appendix hereto, beginning at p. la, post. The order

denying rehearing in reprinted in the Appendix at p. 10a,

post.

JURISDICTION

Petitioner was indicted, tried and convicted in the

United States District Court for the Eastern District of

Michigan of one count of conspiracy to transport stolen

auto parts [18 U.S.C. §§371, 2314]; one count of

knowingly using a counterfeit mark while trafficking in

auto parts [18 U.S.C. §2320]; and one count of trafficking

in counterfeit labels and containers [18 U.S.C. §2320].

Petitioner's appeal resulted in an affirmance on May 25,

1994, and a petition for rehearing was denied on July 1,

1994.

The jurisdiction of this Court to review the

judgment is invoked pursuant to 28 U.S.C. §1254(1). This

petition is filed within the time permitted by Rule 13.1 of

this Court.

STATEMENT OF THE CASE

In the late 1980's, an FBI agent began an undercover

sting operation in Michigan designed to thwart the trade of

counterfeit and stolen Big-Three automotive parts. In

March of 1989, the agent came upon an advertisement flyer

which listed, amongst the forty lots for sale, a small

quantity of axles at a price which caught the agent's

attention.

The flyer had originated with the petitioner, a dealer

in surplus auto parts of all sorts for many years, and who

had no prior criminal record of any kind. The agent,

pretending to be in the same business, phoned Koehier at

his work place, which was located in a suburb of New York

City, and developed a relationship with him. Though the

two men met only twice (once by accident at a trade fair),

the agent recorded more than 120 phone calls with

petitioner, most-which he had initiated, beginning in March

of 1989 and ending in January of 1991 with petitioner's

arrest.

Of these tapes, the government played about 40 to

the jury. A number of these conversations recorded

discussions of the routine matters of surplus parts business--

what items were available, their quality and condition, their

packaging and shipment, their cost, and which parts dealers

——— LlLDLlUmUmwm

were trustworthy or not.

Out of all the talk, the agent and Koehler

consummated only four transactions with one another. In

April of 1989, Koehler sold the agent $3850 worth of axles,

allegedly stolen; in May of 1989, the agent sold Koehler a

$21,000 load of allegedly stolen spark plugs [they had in

fact been provided to the FBI by General Motors]; in

February of 1990, the agent sold Koehler 89 reconditioned

air conditioner compressors, with counterfeit labels affixed,

for $2,670. And in April of 1990, after months of pestering

by the agent and procrastination by Koehler, Koehler

supplied the agent--at no charge--boxes and counterfeit GM

labels.

At trial, the key evidence came from snippets of the

tapes, and from several witnesses, including the agent, who

testified about the pricing, packaging, and distribution

practices of legitimate auto parts which, whe.. compared to

the four transactions charged against petitioner, tended to

show that he knew he was engaging in illicit trafficking.

The defense was in the hands of counsel assigned

pursuant to the Criminal Justice Act. Through petitioner's

testimony and through other witnesses in the surplus parts

business, it attempted to show that (a) the axles were not

stolen, but had been acquired through legitimate channels;

(b) the prices of the transactions were within the range of

legitimately traded parts; (c) the transcripts used by the

government were in fact ambiguous as to petitioner's

knowledge of anything illicit about the merchandise’ he

bought from or sold to the agent; and (d) that as to the

counterfeit labels petitioner finally sent to the agent,

petitioner had been entrapped by the agent.

Petitioner was convicted as charged, and was

sentenced under the guidelines to a term of 24 months, plus

a special assessment fee of $150.00. He has been free on

personal recognizance bond since his arrest.

——————

REASONS FOR GRANTING THE WRIT

I. THERE IS CONFLICT IN THE CIRCUITS OVER

THE PROPER ANALYSIS TO BE USED TO

DETERMINE THE APPLICABILITY OF SENTENCE

GUIDELINES' FOUR-LEVEL "IN THE BUSINESS"

ENHANCEMENT [U.S.S.G. §2B1.2(B)4(A)] FOR

STOLEN PROPERTY OFFENSES

Petitioner's sentence was raised four levels under the

Guidelines' "in the business" enhancement [U.S.S.G.

§2b1.2(B)4(a)] for stolen property offenses. The

government proved only two stolen property offenses,* but

the court of appeals, relying on its previous ruling in United

States v. Warshawsky [20 F.3d 204 (6 Cir.1994)], upheld

the enhancement on the ground that appellant acted as a

"fence" in the two proven transactions, thereby "encouraged

others to steal", and thus warranted the enhancement

[United States v. Koehler, at A8]}.

There is sharp disagreement in the courts of appeal

over the proper analysis to be used for determining the

applicability of the "in-the-business" enhancement. Two

circuits employ a nuanced multi-factored analysis whose

core emphasizes the frequency, regularity, and

* The “in the business" enhancement applies only to stolen

property offenses, not to counterfeit-related offenses. The

Government adduced evidence of only two stolen. property

transactions at trial, both occurring within a 10-week span. While

a number of the taped conversations between petitioner and the

agent revealed that petitioner was aware of the various dishonest

schemes practiced by others in the surplus parts business, the

government adduced no evidence show that petitioner himself

engaged in stolen property transactions beyond the two

transactions proved at trial.

’

|

7

:

7

i

sophistication of stolen property dealings to determine

whether the operation was businesslike. United States v. St.

Cyr, 977 F.2d 698, 703 (1 Cir.1992); United States v. King,

21 F.3d 1302 (3 Cir.1994). Similarly, two additional

circuits have interpreted an analogous "in the business"

guideline [§2T1.4(b)(3) for preparing false and fraudulent

tax returns] to require, at the minimum, a "regularity" of

illegal conduct. United States v. Phipps, 29 F.3d 54 (2

Cir.1994); United States v. Welch, 19 F.3d 192, 195-196 (5

Cir.1994).

By contrast, two circuits, including the Sixth, have

seized upon only a single factor - whether the defendant

himself stole the property he later sold - to determine the

applicability of the enhancement. According to this view,

the defendant who purchased the property he sold warrants

the enhancement, but the defendant who stole the property

he sold does not. Warshawsky, supra, 20 F.3d at 214 et

seq.; United States v. Esquivel, 919 F.2d 957, 959 (5

Cir:1990).

The Seventh Circuit is in something of a sniibti.

Originally, it employed the test subsequently adopted by

the Sixth Circuit in Warshawsky [United States v.

Braslawsky, 913 F.2d 466, 468 (7 Cir.1990)], but more

recently has emphasized the regularity and frequency of

stolen property transactions [United States v. Connor, 950

F.2d 1267, 1275 (7 Cir.1991).

The Warshawsky/Esquivel distinction between the

stolen property seller who has purchased the stolen property

and the seller who had stolen it himself is purportedly

explained by the idea that the former's purchase encourages

others to commit crimes (e.g. larceny), while the latter does

not. But in terms of "encouraging others to commit crimes",

there is no meaningful distinction between the two. “The

seller who has stolen the property in the first instance

encourages others to buy stolen property, that’ is,

encourages ‘fencing’, itself a crime. And, in terms of over-

6

all blameworthiness, the seller-thief has actually committed

two rather distinct crimes (the original theft and the sale of

the stolen property), whereas the fence has committed but

one. Stealing and fencing are thus arbitrary and infinitely

repeating points on the continuum of larceny, and to base

the applicability of the enhancement on such a distinction,

while it is concededly simple, seems almost whimsical.

In the final analysis, rather than seize upon a single

apparently arbitrary factor [how the seller obtained the

property], the most sensible way to apply the "in the

business" enhance sent is to follow the First and Third

Circuits’ multi-facetted approach, and search for indices of

regular criminal activity that show businesslike conduct of

an ongoing stolen property operation, as opposed to the

occasional opportunistic venture. Only the former merits

the 4-level enhancement, which, because it doubles the

base-offense level, must be reserved for the exceptional, not

the routine, case, lest the enhancement displace the base

level as the touchstone of stolen property sentences.

This issue is no abstraction. The most recently

available data show that between 1989 and 1992 about

2100 people have been sentenced in district courts’ for

stolen property offenses under the guidelines [1993

Sourcebook of Criminal Justice Statistics, Table 5.22 (Dept.

of Justice: 1994)], at a steady rate averaging around 500

annually. Supreme Court resolution of lower court conflict

over the "in the business" enhancement will have impact far

beyond petitioner's case.

Il. THE COURT OF APPEALS HAS TRIVIALIZED

THE SUPERVISORY OBLIGATION OF THE

DISTRICT COURTS TO ADMINISTER THE

CRIMINAL JUSTICE ACT TO ENSURE THE

PROTECTION OF SIXTH AMENDMENT VALUES

Petitioner was indicted on July 30, 1992, and filed a

financial affidavit in connection with a request that counsel

be assigned under the Criminal Justice Act. On August 27,

1992, Stevens J. Jacobs, Esq. was assigned to represent

him. There followed a series of adjournments while plea

negotiations were explored.

Matters took a jarring turn when, on November 20,

1992, Mr. Jacobs was arrested by state authorities in Bay

City, and charged with possession of cocaine. Although all

participants were apparently informed of this shocking

development a few days later, the district judge [Clevland,

J.] conducted no inquiry whatever either of the attorney or

of petitioner, and simply granted an extended adjournment

until after the new year so that the attorney could enter an

in-patient addiction treatment program. Petitioner's case

was reassigned out of Bay City, where the attorney had

been arrested, to a new judge [Zatcoff, J.] in the Detroit

courthouse.

A month later the attorney induced petitioner to'sign

a statement averring that he was aware of his attorney's

felony cocaine arrest, and that he "requested" that: the

attorney not withdraw from the case. This statement was

not revealed to any judge until after the verdict. The

circumstances surrounding its making were never explored.

At no time did any judge in this case ever discuss

with petitioner the implications of Jacobs's arrest: whether

Jacobs, facing felony charges himself, would have the time

or concentration to properly defend appellant, and whether

appellant might want a different lawyer to represent him,

one who was not himself tainted or distracted by serious

license-threatening drug charges.

The Sixth Circuit ruled that there is no sua sponte

obligation for a trial judge to conduct such an inquiry [APP.

p. 6].

Official on-the-record judicial intercession at this

critical juncture was required, and for several reasons. To

begin with, petitioner did not choose Jacobs in the first

instance. Indeed, an indigent defendant eligible for assigned

counsel, unlike one who has retained counsel of his own

choosing, has no prerogative to choose which attorney on

the assigned counsel panel shall represent him. This choice

is entirely in the hands of the judiciary [United States v.

White, 541 F.2d 1225 (6 Cir.1971)], and by necessary

implication an indigent defendant has no unilateral power

to discharge his attorney either.

Second, an attorney's arrest on serious drug charges

is no minor event, either to himself or to those he

represents. A defense attorney, suddenly thrust into the

uncharacteristic role of a defendant, knows better than

anyone what is at stake: substantial time diverted from

practice to prepare to meet the charges; payment of legal

fees for his own defense; possible loss of current, and

future, clients, who might well feel distrustful of or

embarrassed by being represented by an attorney himself

charged with crime; potential professional disciplinary

proceedings, with consequential sanctions, including

suspension or revocation of his license; and loss of long-

term income-earning potential.

But while the arrested attorney-defendant

immediately understands the current and possible future

implications of his own arrest, even the most sophisticated

of his lay clients, their attentions wholly absorbed by their

own pending charges, do not.. The special implications that

an arrest of an attorney might have to the attorney and to

his clients are beyond the ken or experience of criminal

defendants, and are especially remote from the thinking of a

(aie ASR EY eo Sec CANE MR RS eA

rt in te tal aN hk Figs

2 hiienautiote ds jae

defendant who, like Koehler, had no prior criminal

experience himself, and whose livelihood---the simple

buying and selling of auto parts---does not include regular

contact with attorneys.

Since the client is unlikely to sense or understand

the possible implications of his attorney's arrest, and how

that arrest might affect the attorney's ability to single-

mindedly defend him, someone must undertake the

responsibility to explain these matters fully and candidly to

him, to make sure that he understands them, and to offer

him a chance to be heard on the matter in a way that counts.

The attorney himself is hardly in a position to do so.

For one thing, faced with the possible loss of the client (and

thus of payment under the Criminal Justice Act [18 U.S.C.

§3006A]), it is contrary to the attorney's immediate ©

pecuniary interest to give a particularly complete and

impartial rendition of the implications of his own arrest.

With his own criminal charges pending, moreover, the

attorney's sensitivity to self-incrimination provides a further

disincentive to candid discussion with his client. There is

also the understandable inclination to minimize the

seriousness of the arrest, its probable disposition and

consequences, and the amount of time that he would be

diverting to answer the charge, a minimization that an

inexperienced lay client, wholly dependent upon his

attorney for advice, would be overly vulnerable to.

Moreover, it is unlikely that the inexperienced lay client

would have the insight to pose appropriate and germane

questions to the attorney.

The only functionary in a position to treat with the

problem in a fair and complete fashion is a judge, whose

non-partisan role well suits him to be the one to pose

germane questions to the attorney, to explain matters fully

and impartially to the client-defendant, and to be sure that

10

the client understands what his options might be.**

Having the judge intercede on the record at this

juncture serves other values as well. The judiciary is the

gate-keeper of the assigned counsel system. It is the

judiciary that decides whether to assign counsel at all, and,

having assigned counsel (the client having no say in

precisely who is assigned), is obliged to keep its fingers

gently on the pulse of the representation. That is not to say

that the judge could or should second-guess every jot and

tittle of an assigned attorney's mid-trial strategic choices;

nor is it to suggest that the judge should automatically

prohibit an arrested attorney from continuing the

representation.

It is only to say that when something as threatening

to the undiluted and undistracted fulfillment of an

assignment as an arrest is brought to its attention, the

judiciary must take steps to ensure both that the attorney

previously assigned is, in fact, able to continue to render the

**A modest inquiry of the attorney might well have

revealed some troubling matters above and beyond the attorney's

recent arrest that would have been germane on the issue of his

fitness to continue, and upon petitioner's willingness to proceed

with him. Michigan court records show that the attorney. had

been admonished by Michigan's attorney disciplinary group for

failure to be adequately prepared for a criminal trial. His client in

that case later sued him for malpractice. [Bay City, Michigan

Circuit Court Docket #89-3251, Huizar v. Jacobs]. Another

former client in a criminal matter had also filed a malpractice suit

against him [Bay City Docket #92-3138-B NM, Janasik v.

Jacobs]. Both cases were in active phases of litigation before and

during petitioner's. trial. The official records. of the Michigan

courts were judicially noticeable in the Sixth Circuit. Rosic v.

Thistledown Racing Club, Inc., 615 F.2d 736, 737 (6 Cir.1980).

‘initiaic cettcat:

11

appropriate level of service, and that the client has a full

and complete grasp of the implications of what has

happened to his assigned attorney, and how, if at all, that

might impact upon his ability to defend.***

Where counsel is retained---chosen by the

defendant---these matters might well be left to the

resolution of the attorney and his client, lest the judge seem

to be intruding on a professional relationship based upon

mutual choice and agreement.

But both the dynamics of an assigned counse]/client

relationship and its very origins are distinctly different, and

***The record of counsel's performance on this case

suggests that his mind was indeed elsewhere, as he offered only a

pantomime of defense advocacy, and showed little effort to resist

the government's desire to imprison his client, He made no pre-

trial motions, not even a routine motion for a bill of particulars.

He made no effort to redact the tape recordings, many of which

made reference to the shady dealings of others, and which the

government was able to use to forge a birds-of-a-feather

argument; nor did he seek limiting conclusions regarding the

allegedly counterfeit labels, when the agent was not qualified to

state such conclusions. He sponsored two defense witnesses, who

actually contradicted the defense and whose testimony was easily

refuted by documentary evidence already at his disposal; these

witnesses proved more valuable to the government than to the

defense. He failed to seek a routine conspiracy instruction that

might have availed his client. The only instruction he sought was

an entrapment charge for Count III; this, however, was an

afterthought, as entrapment was not mentioned in his opening,

and did not reveal itself until the defense case was well

underway, long after the entrapper (the agent) had already

concluded his testimony. Counsel went through the motions of a

defense, albeit without making many of them.

|

i

12

require a judge to explore--in detail, personally, and on the

record---whether that relationship remains a viable one after

he learns that a lawyer, assigned by his court to represent a

defendant in his court, has been arrested for a felony.

Though this is an issue of apparent first impression

and thus has not generated any conflict among the circuit

courts of appeal, it is an issue that raises important

questions about (a) the district court's Sixth Amendment

responsibility to assure that indigent defendants are

assigned counsel fit for the task of representation, and (b)

the proper administration of the Criminal Justice Act [18

U.S.C. §3006A(b): "Counsel furnishing representation

under the plan shall be selected from a panel of attorneys

designated or approved by the coutt...].

Either as matter of Sixth Amendment law or as a

matter of exercising its supervisory powers over a vital

facet of the administration of criminal trial justice, this

Court ought to act on the concern that a federal trial judge,

who knows that an attorney he has assigned has been

arrested and is about to enter a drug cocaine treatment

program, would allow that attorney to continue his

representation without so much as asking the attorney a

single question about his fitness to continue, or ensuring

that the defendant has a full awareness not simply of the

fact of the lawyer's arrest, but of the implications that arrest

invariably has upon the attorney's ability to shoulder the

burden of a singleminded defense effort.

An indigent defendant is wholly at the mercy of the

district court to provide counsel fit for the task. An attorney

whose drug habit is so out of control that he subjects

himself to arrest and who needs a formal drug program to

wean him away from his cocaine compulsion (as was the

case here), cannot be allowed to continue his representation

as though nothing has happened. Whatever may be the

proper judicial response when a retained attorney's drug

problems come to the court's attention, a different

13

obligation arises when the attorney is assigned, as the

Congress, through 18 U.S.C. 3006A, has designated the

district court to fill a gate-keeper role in selecting attorneys

for indigent defendants.

In Frazier v. Heebe, 482 U.S. 641 (1987), this Court

exercised its supervisory power to nullify a district court

rule which unreasonably restricted the ability of attorneys

to appear in that court. Here, petitioner would be asking this

Court to exercise its supervisory power to announce a

prophylactic rule requiring trial judges to be more

restrictive in dealing with attorneys apparently unfit - by

dint of very recent compulsive cocaine use known to the

court - to continue with their assigned representation of

indigent defendants. And, a case raising a comparable issue

to the one at bar - whether a district court is obliged to

conduct a searching inquiry of a defendant who wishes to

proceed pro se - garnered two votes for certiorari a few

years ago. McDowell v. United States, 484 U.S. 980 (1987)

[White and Brennan, JJ., dissenting].

CONCLUSION

FOR THE ABOVE STATED REASONS, THIS COURT

IS RESPECTFULLY REQUESTED TO ISSUE A WRIT

OF CERTIORARI

Respectfully submitted

STANLEY NEUSTADTER

Attorney for Petitioner

342 Madison Avenue

Suite #1002

New York, NY 10173

(212) 348-6469

26 September 1994

la

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 24

ELECTRONIC CITATION: 1994 FED App. 0169P (6th Cir.)

File Name: 94a0169p.06

No. 93-2062

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Appellee,

v. ON APPEAL from the

P United States District

MICHAEL KOEHLER, Court for the Eastern

Appellant. District of Michigan

Decided and Filed May 25, 1994

Before: BOGGS and SILER, Circuit Judges; and

TIMBERS, Senior Circuit Judge .

TIMBERS, Senior Circuit Judge. Appellant Koehler

appeals from a conviction entered after a jury trial in the

Eastern District of Michigan, Lawrence P. Zatkoff, District

Judge. He was convicted on three counts of engaging in

* Honorable William H. Timbers, Senior United States Circuit Judge

for the Second Circuit, sitting by designation.

2a

transactions involving stolen and counterfeit automobile

parts.

On appeal, Koehler contends that the court erred in

failing to conduct a pre-trial inquiry into the drug arrest of

his assigned attorney; that the evidence was insufficient to

warrant his conviction on Count Three; and that the court

erroneously enhanced his sentence.

We affirm.

I.

We summarize only those facts and prior proceedings

believed necessary to an understanding of the issues raised

on appeal.

This case arises from an undercover F.B.I. sting

investigation into trafficking in stolen and counterfeit

automobile parts. Undercover F.B.I. Agent Ronald

Watson set up a business in Freeland, Michigan, in which

he posed as a wholesale automobile parts broker. Between

March 15, 1989 and April 2, 1990, Koehler and Watson

engaged in numerous telephone conversations, secretly

taped by Watson, in which Koehler indicated that he

operated a sophisticated ongoing business dealing in stolen

and counterfeit automobile parts. He conducted four such

transactions with Watson.

Specifically, on April 3, 1989, Koehler sold Watson .

$3,380 worth of stolen axles; on May 15, 1989, Watson

sold Koehler a $21,000 load of stolen spark plugs; on

February 9, 1990, Watson sold Koehler 89 counterfeit air

conditioner compressors for $2,670; and on April 2, 1990,

Koehler gave Watson 107 counterfeit labels and 100

counterfeit containers. Koehler did not receive financial

payment for the counterfeit labels and containers. Instead,

the record establishes that Koehler provided the labels and

containers in exchange for Watson providing him with a

continuing supply of counterfeit air conditioner

compressors.

3a

In July 1992, Koehler was charged in a three-count

indictment. Count One charged him with conspiring

pemrini to transport in interstate commerce stolen

automobile parts with a value of $5,000 or more, knowing

that they had been stolen, in violation of 18 U.S.C.

§§ 371, 2314 (1988), and knowingly using a counterfeit

mark in intentionally oe in automobile a. labels,

and containers, in violation of 18 U.S.C. § 2320 (1988).

Count Two charged him with knowingly using a counterfeit

mark in intentionally trafficking or attempting to traffic in

approximately 89 air conditioner compressors, in violation

of 18 U.S.C. § 2320. Count Three charged him with

knowingly using a counterfeit mark in intentionally

trafficking or attempting to traffic in approximately 107

re and 100 containers, in violation of 18 U.S.C.

§ 2320. :

On November 20, 1992, prior to trial, Koehler’s

assigned attorney was arrested by state authorities for

possession of cocaine. On November 23, 1992, the

attorney’s drug arrest was placed on the record before

Judge Cleland, the district court judge to whom the case

Originally was assigned. The attorney stated that he had

discussed his drug problem with Koehler and that Koehler

had not wanted the attorney to bring the matter to the

court’s attention. Judge Cleland granted a continuance so

that Koehler’s attorney could complete discovery and

participate in an in-patient treatment program.

On December 23, 1992, Koehler signed a disclosure

statement declaring that he was aware of the charge against

his attorney and that he wished to continue to be

represented by him. On January 5, 1993, the case was

transferred to Judge Zatkoff who presided over the trial.

On February 18, 1993, Koehler was convicted on all three

counts after a jury trial.

Koehler subsequently retained new counsel. On April

26, 1993, Koehler filed a motion for a new trial pursuant

to Fed. R. Crim. P. 33. He contended that he had

received ineffective assistance of counsel at trial because

his trial attorney had been arrested on drug charges at the

time of the trial. On May 12, 1993, the court held a

hearing and announced an oral ruling denying the motion.

The court stated that it had observed Koehler’s attorney

during the trial and that the attorney’s performance had not

been deficient.

On July 22, 1993, Koehler filed a renewed motion for a

new trial. He raised four arguments that were not raised

in his April 26, 1993 motion and that are not raised on this

appeal.

On July 29, 1993, the court entered an order and opinion

denying the renewed motion and held a sentencing hearing.

Based on its finding that Koehler was “in the business" of

dealing in stolen property, the court enhanced Koehler’s

sentence four levels pursuant to U.S.S.G. § 2B1.2(b)(4)(A)

(1992). He was sentenced to 24-month terms of

imprisonment on each count to be served concurrently, plus

a 2-year term of supervised release, plus a $150 special

assessment. This appeal followed.

II.

(A) COURT’S DUTY TO CONDUCT A PRE-TRIAL

INQUIRY

Koehler contends that the court should have conducted a

pre-trial inquiry into whether his assigned attorney was fit

to conduct a competent defense and whether Koehler

wished to continue being represented by an attorney who

had been arrested on drug charges. He contends that the

court’s failure to conduct such an inquiry resulted in his

receiving ineffective assistance of counsel at trial.

(1) Timeliness of Koehler’s Motion for a New Trial

Koehler did not assert this contention until his April 26,

1993 motion for a new trial. Unless a motion for a new

trial is based on newly discovered evidence, it must be:

filed within seven days of the verdict or within such further

time as the court may fix during that seven-day period.

Sa

Fed. R. Crim. P. 33. If the motion is untimely, the court

lacks jurisdiction to consider it on the merits. United

States v. Smith, 331 U.S. 469, 475-76 (1947).

Koehler’s April 26, 1993 motion for a new trial was filed

more than two months after the February 18, 1993 jury

verdict -- well past the Rule 33 seven-day limit. During

that seven-day period, the court did not grant Koehler an

extension of time in which to file his motion.

Furthermore, Koehler’s motion was not based on newly

discovered evidence. Prior to trial, he signed a disclosure

statement in which he acknowledged that he was aware of

the felony charge against his attorney and stated that he

wished to continue with that attorney. The facts supporting

Koehler’s claim were within his knowledge at the time of

trial. United States v. Seago, 930 F.2d 482, 488-89

(6 Cir. 1991).

We hold that, since Koehler’s motion for a new trial was

untimely, the court lacked jurisdiction to consider it on the

merits.

(2) Merits of Koehler’s Claim

Koehler contends that the court had a duty to conduct a

pre-trial inquiry sua sponie, which arose at the time the

attorney’s drug arrest was brought to its attention, rather

than by any subsequent formal motion, objection, or

request. According to Koehler, he was not required to file

a Rule 33 motion to preserve his claim for appellate

review. Even if we were to accept such contention (which

we do not), we would reject his claim that the court had a

duty to conduct such a pre-trial inquiry on the facts of this

case.

Prior to trial, Koehler clearly was aware of his attorney’s

arrest. He had agreed to continue being represented by

that attorney. On November 23, 1992, the attorney stated

on the record before Judge Cleland that he had discussed

his drug. problem with Koehler who did not want him to

bring the matter to the court’s attention. On December 23,

1992, Koehler signed a disclosure statement that he was

6a

aware of the charge against the attorney and wished to

continue to be represented by that attorney. Although the

record does not indicate that this disclosure statement was

brought to the attention of the court, it confirms the

accuracy of the attorney’s November 23, 1992

representations to Judge Cleland.

Koehler contends that he agreed to continue to be

represented by the attorney only because he was concerned

that he could not get a continuance that would allow a new

attorney sufficient time to prepare his defense. The record

does not support this contention. At the same hearing at

which Koehler’s attorney: informed the court of his drug

arrest, the court granted a continuance so that the attorney

could complete discovery and participate in an in-patient

treatment program.

Furthermore, prior to trial, there was no indication that

the attorney’s drug arrest would create a conflict of interest

between Koehler and the attorney. There was no nexus

between Koehler’s criminal charges and those of his

attorney. Koehler and his attorney were not being

prosecuted by the same office. Thus, there was no

indication that the attorney would breach his duty of loyalty

to Koehler. Taylor v. United States, 985 F.2d 844, 846

(6 Cir. 1993). Judge Zatkoff, who presided over Koehler’s

trial, specifically found at the May 12, 1993 hearing on the

new trial motion that Koehler’s attorney had conducted a

competent defense. This finding indicates that the

attorney’s drug arrest did not result in a conflict of interest

or in Koehler’s receiving ineffective assistance of counsel.

Koehler nevertheless contends that we should impose

retroactively a per se rule requiring reversal of his

conviction because the court did not conduct a pre-trial

inquiry into his attorney’s fitness or into the sincerity of

Koehler’s desire to continue being represented by the

attorney. We reject his contention.

We hold that, on the facts of this case, the court did not

have a duty to conduct such a pre-trial inquiry.

Ta

(B) SUFFICIENCY OF THE EVIDENCE AS TO COUNT

THREE

Koehler also contends that insufficient evidence supports

his conviction on Count Three which charged that he

knowingly used a counterfeit mark in intentionall

trafficking or attempting to traffic in approximately 10

labels and 100 containers, in violation of 18 U.S.C.

§ 2320. Section 2320(d)(2) defines “traffic” as to

"transport, transfer, or otherwise dispose of, to another, as

consideration for anything of value”. Koehler contends

that, since Agent Watson never paid for the counterfeit

labels and containers, the evidence did not prove that

Koehler received “anything of value" and Koehler cannot

be guilty under Count Three.

In reviewing a jury’s verdict under a sufficiency of the

evidence standard, we must determine “whether, after

viewing the evidence in the light most favorable to the

prosecution, any rational trier of fact could have found the

essential elements of the crime beyond a reasonable doubt".

Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis

in original).

The government did not assert that Koehler received

financial payment. Instead, it asserted that Koehler

provided the counterfeit labels and containers in exchange

for Watson providing him with a continuing supply of

counterfeit air conditioner compressors. Such “good will"

can be considered a thing of value in the form of an

intangible asset. Newark Morning Ledger Co. v. United

States, 113 S. Ct. 1670, 1675-76 (1993).

Viewing the evidence in the light most favorable to the

prosecution, Jackson v. Virginia, supra, 443 U.S. at 319,

we believe that a rational trier of fact could have found

beyond a reasonable doubt that Koehler supplied the

counterfeit labels and containers in exchange for Watson’s

R see will" and that such “good will” constituted a thing

of value.

We hold that sufficient evidence supported the jury’s

verdict as to Count Three.

(C) SENTENCING ENHANCEMENT

Koehler also contends that the court erred in enhancing

his sentence pursuant to U.S.S.G. § 2B1 .2(b)(4)(A) (1992).

The Guidelines provide that, if the offense was committed

by “a person in the business of receiving and selling stolen

rey [an] increase by 4 levels" would be 6 ENT

.S.S.G. § 2B1.2(b)(4)(A) (current version at U. S§.G.

§ 2B1.1(b)(5)(B) (1993)). Koehler contends that this

enhancement provision does not apply to him, since he

allegedly was a legitimate businessman who, in his 24

years in the auto parts business, had engaged in only two

transactions involving stolen property.

We recently held that, in deciding whether enhancement

is warranted, the sentencing court must determine "(1) if

stolen property was bought and sold, and (2) if the stolen

property transactions encouraged others to commit property

crimes". United States v. Warshawsky, Nos. 93-

1345/1346/1473, slip op. at 22 (6 Cir. March 29, 1994).

We believed that the enhancement was warranted, since the

Warshawsky brothers’ seven stolen property transactions

encouraged others to commit property crimes. Id.

We explained there that the enhancement applies to a

"fence" -- that is, a person who receives stolen property --

and not to a person who sells property that he himself has

stolen because a fence encourages others to steal. Jd. at

21. We reasoned that "[{t]he Sentencing Commission has

decided that fences deserve longer sentences than mere

thieves because a sentence based solely on ‘the amount of

(stolen) property’ recovered by the police ‘is likely to

underrepresent the scope of their criminality and the extent

to which [the defendant] encourage(s] or facilitate[s] other

crimes’." Jd. at 20 (quoting U.S.S.G. § 2B1.2, comment.

(backg’d)).

As in Warshawsky, the record in this case establishes that

Koehler both bought and sold stolen automobile parts that

9a

he did not steal himself. Although the prosecution proved

only two stolen property transactions, the court found that

Koehler’s criminal activity was "not a one time thing, or a

sporadic thing" but rather “was a part, at least a part of

{Koehler’s] business". This factual finding is supported b

Koehler’s many taped conversations with Watson in which

Koehler indicated that he operated a sophisticated ongoing

business dealing in stolen automobile parts. As in

Warshawsky, such activity encouraged theft by others.

We hold that the court’s four-level enhancement of

Koehler’s sentence pursuant to § 2B1.2(b)(4)(A) was

proper.

III.

To summarize:

Koehler’s motion for a new trial was untimely. On the

facts of this case, the court did not have a duty to conduct

a pre-trial inquiry into the attorney’s fitness or into

Koehler’s desire to continue to be represented by him. The

evidence was sufficient to support Koehler’s conviction on

Count Three. The court did not err in enhancing his

sentence.

Affirmed.

10a

Case No: 93-2062

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

ORDER

UNITED STATES OF AMERICA,

Plaintiff-Appellee

w.

MICHAEL KOEHLER,

Defendant-A ppellant

BEFORE: JUDGES BOGGS, SILER AND TIMBERS

Upon consideration of the petition for rehearing filed

by the defendant,

It is ORDERED that the petition for rehearing be,

and it hereby is, DENIED.

ENTERED BY ORDER OF THE COURT

Leonard Green, Clerk