Petition for Writ of Certiorari — Haun v. United States

Supreme Gout, US.

FiIiLe&D

96 839 OCT 17 199%

HW ioe OF THE CLERK

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1996

REKEEEKREKEREEEEKEEKEEREKEKKEKE

J.T. HAUN,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

KEKE

On Petition For Writ Of Certiorari

To The United States Court Of Appeals For The Sixth Circuit

REET EEREEEEEREREKEEREEEEEEEREEEEEEKREEEEEEEEKER

PETITION FOR WRIT OF CERTIORARI

KEKE EEEEKEKEEEEEEEEEKEEEEEEREREEEKEKKEKKKKKKKKE

Gerald H. Summers

(counsel of record)

SUMMERS, MCCREA & WYATT, P.C.

500 Lindsay Street

Chattanooga, TN 37402-1490

(423) 265-2385

Attorneys for the Petitioner

QUESTIONS PRESENTED

|. WHETHER THE EXTENSION OF 18 U.S.C. §

1956(a)(1)(A)(i) TO PUNISH CRIMINAL BEHAVIOR NOT

INVOLVING DRUGS OR ORGANIZED CRIME CONTRAVENES THE

CONGRESSIONAL INTENT BEHIND THE MONEY LAUNDERING

STATUTE?

ll. WHETHER 18 U.S.C. § 1956(a)(1)(A)(i) IS

UNCONSTITUTIONALLY VAGUE BY FAILING TO DEFINE WHAT

IS MEANT BY THE WORD “PROCEEDS”?

TAB F NT

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| ONSET SGM LIAS ALU LM oT AS il

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8 ELIT AOA LNG LTO ONE OR ee MOE te Fee veal |

PRC iss cccsissiesssiritiehinssascitacitiianiitecdtaimsicdadtccteas cele Gaines iii

COPIICIII NN FRI aa cescsinsiitessstininceiipibeccesletsid cys dati iv

CORTON FRU iia ia iii i iv

CORP i 1

SHOMROITIO OF ATCT iiss i a 1 |

Constitutional and Statutory Provisions Involved.............--ss-.s-+- 1 |

TITS CT IG suississscssiciicinkecnininaag seein cl eae 2

PUTS FOF GHATAI UNG WI avcnccrcerincosenericstsrecitiguasnniniiaiasineaminsicesins 3

scussansilletaiacuaedeivsdtbinisodndcieebisial oiapecebnsiiaousasiiiacmubicicaicatdea bates 3

Tisivincehnesadshinbaninswaiatisdnopsinniiinsuodateiiaaicsidisieeia ta aiiianiaaes a, toe Chal 4

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CPTI cccincecsenisiesiaiebiuisteitidiiianimmaiibagia ie esa eat, Saas 5

Designation of Appendix Contents...........cccsccscssecssesessesseereesseceeses 6

A. U.S. v. Haun, 90 F.3d 1096 (6th Cir. 1996).......... A-1

B. argument excerpt from the Brief of the

Defendant/ Appellant (as presented

by the petitioner to the U.S. Court of

Appeals for the Sixth Circuit )...........sccsscssseseeee B-1

li

TAB AUTHORITIE

Cases:

Kolender v. Lawson, 461 U.S. 352, 357, 103

S.Ct. 1855, 1858, 75 L.Ed.3d 903 (1983).......cccceeeeseee 5

U.S. v. Daccarett, 6 F.3d 37, 43 (3rd Cir. 1993)......cceeeseeees 3

U.S. v. Dimeck, 24 F.3d 1239 (10th Cir. 1994)... eeeceseeceeeees 4

U.S. v. Edgmon, 952 F.2d 1206 (10th Cir. 1991)... ceeeseseseeee 5

U.S. v. Hamilton, 931 F.2d 1046 (Sth Cir. 1991)... eeeceeeeees 4

U.S. v. Haun, 90 F.3d 1096 (6th Cir. 1996)... ccecceccececcecescesees 1

U.S. v. Heaps, 39 F.3d 479 (4th Cir. 1994)... cececccessescesesceee 5

U.S. v. Jackson, 935 F.2d 832 (7th Cir. 1991)... .cceccsceeceseeeees 5

U.S. v. Samour, 9 F.3d 531 (6th Cir. 1993)... eee eeceeeeeeeeees 4

U.S. v. Skinner, 946 F.2d 176 (2nd Cir. 1991)......cccccccceseceeeseees 4

U.S. v. Werber, 787 F.Supp. 353, 358 (S.D.N.Y. 1992)............. 5

Statutes:

A SE NTRE W cidivtissntabasstiiostevinccdcactianinupcababinsiadbbaabiastbitite as 2

Lg EET SE a ee ae ae i CE EN 2

ESS ea an dee Ree eae eS 3,4,5

Pee ee eS FA enicctesnescseceseesicccsesecannensnensiests 1,2,04

2 ESSAY SESE I ete ae neta eee 3

Be RE Biaiiischaiecsiciciiasocaics cic saab Sbbaiinidsstinialssuak-donessbbuidshiiiondeet 3,4

Fe INT hia aiiicdesiidiccqrs unibiainbbiedeseldeschticsdisantaiablvhsibdbinanaicn 2

Aa a lik ira sindbis siicdulsdushniethainnmibimebbanadanecisoncat 1

Money Laundering Control Act of 1986

(codified at 18 U.S.C. §§ 1956-1957).........ccsscescessseseeees 3

iif

Constitutional Provisions:

Fifth Amendment to the U.S. Constitution..........sccsseserseereees 1,2

Fourteenth Amendment to the U.S. Constitution

GENET AIY.......esssseresscesenseessersensssserssesssnsnensrsensansasensnssacsessenenasoes 5

SECTION 1 ...cccccccovececeseovececescosecoveceseocsneneossnsescsovessaesessoosoosonseene 1

Other Authorities:

132 Cong. Rec. 18,486-18,487 (1 GG) vvvcccrcccccscecvessencccvovensseenecors 3

President’s Commission on Organized Crime,

“The Cash Connection: Organized Crime,

Financial Institutions, and Money

Laundering” 4-8 (1984).....ssserssssssnsscnsseseesensesnensnsnsensneees 3

American Criminal Law Review, “The Money

Laundering Control Act of 1986:

Creating A New Federal offense Or

Merely Affording Federal Prosecutors

An Alternative Means Of Punishing

Specified Unlawful Activity?”, by Jimmy

Gurule’ , Vol. 32, Pp. 823-B54.....ssecerseesssrsnusreneseennessensenenenes 3

|

OPINIONS BELOW

District court Judge R. Allan Edgar entered a judgment

in the United States District Court for the Eastern District of

Tennessee (District Court File No. 95) against the petitioner

on June 26, 1995, but did not render a formal opinion, official

or otherwise. The opinion of the United States Court of

Appeals for the Sixth Circuit is reported at U.S. v. Haun, 90

F.3d 1096 (6th Cir. 1996).

STATEMENT OF JURISDICTION

The judgment of the U.S. Court of Appeals for the

Sixth Circuit was entered on July 19, 1996. The jurisdiction of

this honorable court is invoked pursuant to 28 U.S.C. § 1254.

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

The Fifth Amendment to the U.S. Constitution in

relevant part states “No person shall be ... deprived of life,

liberty, or property, without due process of law; ...”

Section 1 of the Fourteenth Amendment to the U.S.

Constitution in relevant part says that:

... No state shall make or enforce any law which

shall abridge the privileges of immunities of citizens of

the United States; nor shall any state deprive any

person of life, liberty, or property, without due process

of law; nor deny to any person within its jurisdiction

the equal protection of the laws.

Finally, 18 U.S.C. § 1956(a)(1)(A)(i) provides:

1

(a)(1) Whoever, knowing that the property

involved in a financial transaction represents the

proceeds of some form of unlawful activity, conducts

or attempts to conduct such a financial transaction

which in fact involves the proceeds of specified

unlawful activity - (A)(i) with the intent to promote the

carrying on of specified unlawful activity;

STATEMENT OF THE CASE

The defendant/petitioner, J.T. Haun, (referred to in this

petition as the “petitioner”) was convicted by a jury in the

U.S. District Court for the Eastern District of Tennessee (case

No. 1:94-CR-00052) on five counts of mail fraud in violation of

18 U.S.C. § 1341, one count of conspiracy to commit mail

fraud in violation of 18 U.S.C. § 371, and five counts of

money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i).

Consequently, the district court had subject matter

jurisdiction in this case by virtue of 18 U.S.C. § 3231, which

provides that “[t]he district courts of the United States shall

have original jurisdiction, exclusive of the courts of the States,

of all offenses against the laws of the United States.” The

petitioner appealed his convictions to the United States Court

of Appeals for the Sixth Circuit (case No. 95-5974), which

affirmed the petitioner’s convictions in all respects.

The gist of the conduct surrounding the petitioner’s

convictions revolved around the petitioner’s car dealership,

and the fact that the petitioner was found to have sold

certain automobiles while disguising that the automobiles had

been reassembled with parts that were older than would

otherwise be expected by the appearance of the automobile.

Regardiess of how much more descriptive or detailed the

2

facts may be presented, for purposes of this petition the

most important point is the fact that none of the allegations

against the petitioner, and none of the offenses for which the

petitioner was convicted, had anything to do with drugs or

organized crime.

REASONS FOR GRANTING THE WRIT

|. THE EXTENSION OF 18 U.S.C. § 1956(a)(1)(A)(i) TO

PUNISH CRIMINAL BEHAVIOR NOT INVOLVING DRUGS OR

ORGANIZED CRIME CONTRAVENES THE CONGRESSIONAL

INTENT BEHIND THE MONEY LAUNDERING STATUTE.

In an effort to combat international drug trafficking

and traditional organized crime, Congress passed the Money

Laundering Control Act of 1986 (codified at 18 U.S.C. §§

1956-1957). See, 132 Cong. Rec. 18,486-18,487 (1986)

(statements of Senators Thurmond and Hatch); President’s

Commission on Organized Crime, “The Cash Connection:

Organized Crime, Financial Institutions, and Money Laundering”

4-8 (1984); U.S. v. Daccarett, 6 F.3d 37, 43 (3rd Cir. 1993);

see, also, American Criminal Law Review, “The Money

Laundering Control Act of 1986: Creating A New Federal

offense Or Merely Affording Federal Prosecutors An

Alternative Means Of Punishing Specified Unlawful Activity?”,

by Jimmy Gurule’, Vol. 32, p. 823-854 (providing further

details and insight into the legislative history of 18 U.S.C. §

1956). While mail fraud is listed as a “specified unlawful

activity” under 18 U.S.C. 1961(1), which in turn is made

applicable to 18 U.S.C. § 1956 through the language of 18

U.S.C. § 1956(c)(7), implicit within the definition of “specified

unlawful activity” under 18 U.S.C. § 1956(c)(7) is the

understanding that the offenses referred to in 18 U.S.C.

3

1961(1) must be related to drugs or organized crime in

order to be applicable in 18 U.S.C. § 1956. Through creative

thinking and application by the U.S. Attorney’s office, 18

U.S.C. § 1956 has been expanded and applied to punish

criminal behavior that are not related to drugs or organized

crime, even though Congress did not intend such behavior to

be covered by the money laundering statute. The majority of

cases reflect the money laundering statute’s intended

application to drugs and organized crime, although their

results are often conflicting. See, e.g., U.S. v. Hamilton, 931

F.2d 1046 (Sth Cir. 1991); U.S. v. Samour, 9 F.3d 531 (6th

Cir. 1993); U.S. v. Skinner, 946 F.2d 176 (2nd Cir. 1991); and

U.S. v. Dimeck, 24 F.3d 1239 (10th Cir. 1994). However, in a

few cases, like the petitioner’s case, the government has

sought to extend 18 U.S.C. § 1956 to cover behavior not

involving drugs or organized crime.

Since the money laundering allegations against the

petitioner did not involve activities related to drugs or

organized crime, allowing the petitioner’s conviction under 18

U.S.C. § 1956 to stand would effectively contravene the

Congressional intent behind this statute. By reversing the

petitioner’s conviction as contrary to Congressional intent,

this honorable court would force the government to limit

prosecution under 18 U.S.C. § 1956 to its proper and

intended context.

ll. 18 U.S.C. § 1956(a)(1)(A)(i) IS

UNCONSTITUTIONALLY VAGUE BY FAILING TO DEFINE WHAT

IS MEANT BY THE WORD “PROCEEDS”.

One reason the government was able to creatively

prosecute the petitioner for money laundering, even though

no drugs or organized crime were involved in the alleged

activities, is because 18 U.S.C. § 1956 neglects to define the

word “proceeds”. This lack of a definition for the word

4

“proceeds” effectively allows for such creative thinking on the

part of the government and thereby encourages the

arbitrary and discriminatory enforcement of 18 U.S.C. §

1956. This shortcoming in the statute runs afoul of the

requirement that penal statutes contain sufficient

definiteness, see generally Kolender v. Lawson, 461 U.S. 352,

357, 103 S.Ct. 1855, 1858, 75 L.Ed.3d 903 (1 983) (citations

omitted), and consequently renders the statute

unconstitutionally void for vagueness under the Fifth and

Fourteenth Amendments to the U.S. Constitution. 1S y

Werber, 787 F.Supp. 353, 358 (S.D.N.Y. 1992).

lil. Both of the issues cited above have not been

resolved by the U.S. Supreme Court despite numerous cases

from lower federal courts construing the meaning and

Congressional intent behind 18 U.S.C. § 1956. See, e.g., U.S.

v. Edgmon, 952 F.2d 1206 (10th Cir. 1991); U.S. v. Heaps, 39

F.3d 479 (4th Cir. 1994); and U.S. v. Jackson, 935 F.2d 832

(7th Cir. 1991). Defining the permissible scope of coverage

of 18 U.S.C. § 1956 would settle an important, and as-yet

unsettled question of federal law. For additional reference,

the petitioner’s arguments are set forth more fully as Issues

A and B in the attached “Brief of the Defendant/Appellant”,

which the petitioner submitted to the U.S. Court of Appeals

for the Sixth Circuit.

CONCLUSION

Based on the joregoing, this petition for a writ of

certiorari should be granted.

Respectfully submitted,

SUMMERS, MCCREA & WYATT, P.C.

» wal)

Gerald H. Summers

TN BPR #534

500 Lindsay Street

Chattanooga, TN 37402-1490

(423) 265-2385

Attorneys for the Petitioner

DESIGNATI APPENDIX NT

A. U.S. v. Haun, 90 F.3d 1096 (6th Cir. 1996)

B. argument excerpt from the Brief of the Defendant/

Appellant (as presented by the petitioner to the U.S. Court of

Appeals for the Sixth Circuit)

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 24

ELECTRONIC CITATION: 1996 FED App. 0221P (6th Cir.)

File Name: 962a0221p.06

No. 95-5974

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

| UNITED STATES OF AMERICA,

Plainsiff-Appellee,

v. s On APPEAL from the

United States District

J.T. Haun, Court for the Eastern

Defendant-Appellant. District of Tennessee

Decided and Filed July 19, 1996

| Before. KENNEDY and NORRIS, Circuit Judges;

MATIA, "District Judge.

KENNEDY, Circuit Judge. Defendant J.T. Haun

appeals his convictions for mail fraud, to

commit mail fraud, and money laundering. Defendant

challenges his money laundering convictions arguing that

(Mate Bahl a

“The Honorable Paul R. Matia, United States District Judge for the

Northern District of Ohio, sitting by designation.

1

A-l

2 United States v. Haun No. 95-5974

there was insufficient evidence to support his convictions

and that the money laundering statute 1s unconstitutionally

void for vagueness. He also argues that the District Court

improperly admitted certain deposition testimony. Finally,

with — to his sentence, defendant challenges the

District Court’s calculation of his offense level. For the

following reasons, we AFFIRM.

I. Facts

In late 1989, defendant, the operator of Auto World, a

Tennessee car dealership, began purchasing automobiles

moe cor consien Coprices ut soctions specializing

rc u rices at auctions

* wrecked and theft-recovered vehicles. pcos 4

ted the cars’ bodies from their chassis and replaced

the old bodies with new ones. Once rebuilt, the cars

looked like new and the odometers reflected low mi ’

These cars were titled in Ohio and the "self-assembled"

notation on the title’s “previous owner” line indicated that

the cars had been rebuilt. During 1989 and 1990,

Germadnik sold a number of rebuilt Caprices to Auto

World. Germadnik told defendant how the Caprices were

constructed and provided defendant with true information

regarding the chassis’ years and mileages.

Defendant and his salesmen Stanford Sharp and Ray

Lewis subsequently sold these cars without disclosing to

bu that they were reassembled and that the chassis had

mileages far in excess of the body mileages that were

reflected on the odometers. Buyers typically paid Auto

World a fee to obtain a Tennessee title for them. The

Tennessee titles, however, did not bear the “self-

assembled” notation so buyers could not learn from the

titles that these cars had been rebuilt.

When one buyer wanted to obtain a Tennessee title on

his own, defendant instructed Greg Goins, a car buyer for

Auto World, to obtain an Ohio title that did not have the

"self-assembled" disclosure. Goins then asked Gary

Burkeen, a used car wholesaler doing business as Eighty-

Eight Fleet, Inc., to "flip" that title for him. To satis

A-2

Eee ee EEN

No. 95-5974 United States v. Haun 3

that request, Goins supplied Burkeen with paperwork that

showed that ownership Mf that vehicle war neepaes from

Auto World to Eighty-Eight Fleet, Inc. Al h that

transfer never occurred, the new Ohio title ref] "Auto

World" rather than "self-assembled" as the previous owner.

A jury found defendant guilty on five counts of money

taunderiap under 18 USCS 1956, five counts of mail

fraud in violation of 18 U.S.C. § 1341, and one count of

conspiracy to commit mail fraud in violation of 18 U.S.C.

§ 371.

Ii. Discussion

A. Money Laundering Convictions

1. Sufficiency of the Evidence

Defendant challenges the sufficiency of the evidence to

— his laundering convictions under 18 U.S.C.

§ 1956 (a)(1)(A)(i) on two bases. He contends that (1) the

money laundering statute does not apply in the context of

criminal offenses that do not involve narcotics; and (2) the

trial evidence did not establish the elements of money

laundering. We address each argument in turn.

a. Money Laundering Statute’s Application to

Nondrug-Related Offenses

Defendant's first ment is that the federal

laundering statute which he was convicted, 1

U.S.C. § 1956(a)(1)(A), was intended to reach money

laundering of proceeds of narcotics transactions, not

nondrug-related transactions. Because defendant'’s activities

did not involve narcotics, he argues that his convictions

under that statute were improper. The District Court

rejected defendant's argument based on the clear language

Sharp and Ray Lewis were also indicted, charged, and tried for

mai] fraud. While Sharp was convicted of conspiracy to commit mail

ant ane cout of malt Gud, Ray Lewis wus enquined.

1

fraud

4 United States v. Haun No. 95-5974

of the statute. Reviewing the District Court’s decision

concerning the question mbes by ion de novo,

Nixon v. Kent County, 76 F.3d 1381, 1386 (6th Cir. 1996)

(en banc), we too find defendant’s argument to be without

merit.

Section 1956(a) provides in relevant part:

(a)(1) Whoever, knowing that the property involved

in a financial transaction represents the proceeds of

some form of unlawful activity, conducts or attem

to conduct such a financial transaction which in

involves the proceeds of specified unlawful activity -

(A)(i) with the intent to promote the carrying on

of specified unlawful activity

shall be sentenced to a fine of not more than $500,000

or twice the value of the property involved in the

transaction, whichever is greater, or imprisonment for

not more than twenty years, or both.

ity . :

1961(1) of this title.” 18 U.S.C. § 1956(c)(7). Included

among the offenses listed in § 1961(1) is mail fraud in

violation of 18 U.S.C. § 1341, the statute under which

language of the statute unambiguously makes mail ‘

whether or not related to drug transactions

unlawful activity.

i

i

A-4

No. 95-5974 United States v. Haun 5

In that the statute is unambiguous, only a showing of

yg et ee

scope 0 statute

justify ggg bo geen | of the statute, as defendant

Suggests, to ial transactions involving proceeds of

narcotics trafficking. See Garcia v. United States, 469

U.S. 70, 75 (1984). In surveying the legislative history of

§ 1956, we find no intent on the part of Congress to limit

its scope to only offenses involving drugs. Nor has

defendant identified any legislative history that evidences

Congress’ intent to exclude -related activity from

the statute’s — In fact, legislative hi

reflects that although § 1956 was considered necessary to

combat illegal narcotics conspiracies, it was also designed

woe gondarypposthe me yose Bagge ty ge ane gh oy

broad range of criminal activity. See 132 ConG. REC.

S9938-05, S9985-87 (1986); HousE CoMM. ON BANKING,

HOUSING, AND URBAN AFFAIRS, COMPREHENSIVE MONEY

LAUNDERING PREVENTION ACT, H.R. REP. No. 746, 99th

yo 2d Sess. 16 (1986); see also 136 CONG. REC.

C1990)” $9505 (1990); 136 Conc. REC. E3684-02, E3685

Because the plain language of the money laundering

Statute confirms the oe vel that nondrug-related

criminal activity may form the basis of a money laundering

conviction and nothing in the statute's legislative history

reflects Congress’ intent to exclude nondrug-related

offenses from the statute’s scope, we reject defendant’s

challenge to the statute’s application to his conduct.

b. Sufficiency of the Evidence

Next, defendant maintains that the evidence did not

support his money laundering convictions under 18 U.S.C.

§ 1956(a)(1)(A)(1). The standard for a challenge to the

sufficiency of the evidence is whether, taking 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. United States v. Martin,

920 F.2d 345, 348 (6th Cir. 1990) (citing Jackson v.

A-5

6 United States v. Haun No. 95-5974

Virginia, 443 U.S. 307, 319 (1979)), cert. denied, 500

U.S. 926 (1991).

Defendant contends that because the record does not

evidence his efforts to disguise the connection between the

car trading transactions and the = fraud activity, the

record does not support his money laundering convictions.

The defendant, however, was convicted under 18 U.S.C.

§ 1956(a)(1)(A)(i), not 18 U.S.C. § 1956 (a)(1)(B). While

a conviction under § 1956(a)(1)(B) may require proof of

concealment or disguise, that evidence is not necessary for

a conviction under § 1956(a)(1)(A). See 18 U.S.C.

§§ 1956(a)(1)(A), (B); United States v. Jackson, 935 F.2d

832, 842 (7th Cir. 1991) (concluding that a conviction

under § 1956 requires proof of either intent to promote a

continuing criminal en-:. rise or a design to conceal the

source of the funds).

Instead, to prove 2 defendant guilty of violating

§ 1956(a)(1)(A)(i), the government must prove that the

defendant: (1) conducted a financial transaction that

involved the proceeds of unlawful activity; (2) knew the

property involved was proceeds of unlawful Tr and

(3) intended to promote that unlawful activity. 18 U.S.C.

§ 1956(a)(1)(A)(i).

The government has clearly adduced sufficient evidence

from which a rational jury could hold defendant criminally

liable. The record evidence established that defendant's

applications for titles misrepresented the vehicles as new,

low mileage vehicles. Defendant used the titles to deceive

buyers and sell the vehicles at a price that reflected their

description as low mileage vehicles instead of vehicles with

higher mileages and received checks ting proceeds

of this fraudulent activity. Given defendant's leadership

role in the scheme, the jury could have rationally inferred

that defendant knew that these checks were proceeds of that

fraudulent activity. Finally, the evidence demonstrated that

by cashing checks or depositing them into Auto World's

bank account defendant intended to promote not his

prior unlawful activity, but also his ongoing and

A-6

No. 95-5974 United States v. Haun 7

unlawful activity. See United States v. Manarite, 44 F.3d

1407, 1416 (9th Cir.) (finding that since a chip-skimming

scheme could not benefit its participan ts unless the chips

were cashed, a rational jury could conclude that the chips

were cashed with the intent to promote the mming

scheme), cert. denied, 115 S. Ct. 2610 (1995); United

States v. Cavalier, 17 F.3d 90, 93 (Sth Cir. 1994)

(concluding that the transfer of a check furthered

defendant's scheme to defraud, and, enehene, promoted

the mail fraud); United States v. Paramo, 998 F.2d 1212,

1218 (3d Cir. 1993) (holding that a rational jury could have

concluded that cashing embezzled IRS was intended

o the antecedent frauds), cert. denied, 114 S. Ct.

6 (1994). Accordingly, we conclude that the

government's falluse to offer pscot of sa effort on on the

of the defendant to disguise or conceal the nature the

funds is not fatal to defendant’s money “on

convictions and het the record evidence

defendant's money laundering convictions.

2. Constitutional Challenge to 18 U.S.C. § 1956

Defendant's next argument is that § 1956's failure to

define “proceeds” renders that statute in violation of

his due process rights under the Fifth and Fourteenth

Amendments. " ‘[T]he void-for-vagueness doctrine

per riety et Lemar wie: medi igh yen cb

t definiteness that ordinary people can understand

what conduct is prohibited and in a manner that does not

encourage arbitrary and discriminatory enforcement.’ “

Posters 'N’ Things, Lid. v. United States, 114 S. Ct. 1747,

1754 (1994) (quoting Kolender v. Lawson, 461 U.S. 352,

357 (1983)). i caudate dak as ied in this case, the

term proceeds is not unconstituti y vague.

When the common meaning of a word ides both

adequate notice of the conduct prohibited and standards for

enforcement, a statute's failure to define a term will not

render the statute unconstitutionally void for vagueness.

See United States v. Kaylor, 877 F.2d 658, 661 (8th Cir.),

cen. denied, 493 U.S. 871 (1989). "Proceeds" is a

A-7

8 United States v. Haun No. 95-5974

commonly understood word in the English language. It

includes “what is produced by or derived from something

(as a sale, investment, , business) by way of total

revenue.” WEBSTER’S THIRD INTERNATIONAL DICTIONARY

1807 (1971). Because the term “proceeds” has a

commonly accepted meaning, an ordinary person would be

able to recognize whether the conduct in question is

criminal. See United States v. Jackson, 983 F.2d 757, 765

(7th Cir. 1993) (finding that the use of the word

“proceeds” in the context of the money laundering statute

is not ambiguous).

Further, despite defendant's suggestion, there is no doubt

that the checks he received the sales of the

automobiles fall within the common of

i “ PR cone aoa Re

in presents no of arbitrary or

deci ocemen, ee a

provides adequate notice o uct

Se ee eee eee

not subject Statute to arbitrary or discriminatory

enforcement, we conclude that § 1956 is not

unconstitutionally vague as applied to defendant’s conduct.

B. Admission of Deposition Testimony

Defendant also challenges the District Court’s admission

of transcripts containing ition testimony that he

allegedly gave in civil actions ght by the victims of his

re era age nyo wcrigu’ authamichy, fading Gat they

challenge to the transcripts’ authentici

to be official transcripts recorded in in ivi

os by established court reporter firsis » and thus,

were legitimate transcripts. Claiming that the government

ee ee oe oe 2S ee

transcripts which were uncertified and not signed,

defendant argues that the District Court improperly

admitted that evidence.

After the government introduced portions of these

transcripts, however, the defendant himself introduced

portions of those transcripts other than those offered by the

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|

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No. 95-5974 United States v. Haun 7

zg .

defendant’s i t use of his own deposition

testimony oma d te transcripts’ authenticity, thereby

removing any uncertainty regarding their admissibility on

that ground. As such, the defendant’s use of his own

deposition testimony ratified the authenticity of the

transcripts. This use was a waiver of his objection.”

Defendant also objects to the admission of his Statements

contained in the deposition transcripts on the basis that they

are inadmissible hearsay. We find that since these

1. Loss Estimate

Objecting to the District Court’s calculation of his base

Offense level, defendant Suggests that the District Court

activity. Because this calculation of loss was

inconsequential to the District Court’s determination of an

appropriate sentence, we find it unnecessary to address the

merits of defendant’s argument.

Adopting the presentence report, the District Court first

separated the mail fraud counts into one group of offenses

*We express no opinion as to whether » party's use of another's

statement can ratify the authenticity of that evidence when that party

previously objected to its authenticity. A-9

10 United States v. Haun No. 95-5974

and the money counts into another pursuant to

USSG § 43DL2(6). Of ease levels foreach group were

calculated pursuant to USSG § 3D1.3 in part on

the loss to the victims, which the District Court found to be

$17,518, the adjusted offense level for defendant

fraud was nineteen. high pete A le Be

money laundering , which was arrived at by adding

tho bane offense faved of -three, a four point increase

for defendant's leadership in a scheme with at least

ie

adjusted offense level for these money laundering counts

was unaffected by the District Court’s calculation of the

loss to the victims. See USSG § 2S1.1(b)(2).

Used 30 Brig tae tte level dictates the

ense

en a USSG § 3D1.3(b). Here, the higher

offense level was associated with the money laundering

counts, not the mail fraud counts. Therefore, the offense

the money laundering counts, it is for us to

determine whether the District Court's calculati calculation of loss

was erroneous.

2. Leadership Role in a Scheme with at Least Five

Participants

Defendant also contends that the District Court's

cnn ee Be aligned gp sm

activi ving at participants was c

porn such that the four point enhancement to his base

offense level for the money laundering counts under USSG

§ 3Bl.1(a) was also clearly erroneous. The District

Court’s finding that enhancement was warranted under

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No. 95-5974 Unized States v. Haun 11

USSG § 3B1.1(a) is subject to review for clear error. See

United States v. Ward, 68 F.3d 146, 151 (6th Cir. 1995),

cert. denied, 116 S. Ct. 1028 (1996).

Under the Sentencing Guidelines, the base offense level

is increased by four points “[i]f the defendant was an

Organizer or leader of a crimi activity that involved five

or more participants.” USSG § 3B1.1(a). The finding that

an individual was a participant in the criminal activity must

be supported by a preponderance of the evidence. - Ward,

Court increased defendant's money laundering offense level

by four points. Defendant challenges the District Court’s

findings that Ray Lewis, David Lewis, and Greg Goins

were responsible for the criminal activity.

With respect to Ray Lewis, defendant argues that the

District ye iS precluded from finding ee ee inally

responsible since was acquitted. ment,

however, is without merit. Application note 1 of USSG

§ 3B1.1 Tens participant” in criminal] activity is

a “person who is criminally responsible for the commission

of the offense, but need not have been convicted."

Therefore, Ray Lewis’ acquittal does not preclude the

District Court from finding that the preponderance of the

evidence established that he was a participant in defendant’s

criminal scheme. While the elements of a crime must be

proved beyond a reasonable doubt for a conviction, the

facts supporting a sentence enhancement need be

by only a preponderance of the evidence. Thus, 0 dadion

of facts supporting a sentence enhancement is not

inconsistent with an acquittal. Because Ra iS testified

that he knew that the cars were reassembled and a victim

of defendant's criminal scheme testified that Ray Lewis

sold her a car without revealing its rebuilt Status, we find

A-l11

12 United States v. Haun No. 95-5974

no error in the District Court's finding that Ray Lewis was

a participant in defendant's criminal activity.

never criminally charged he could not have been a

pueaser. Again, to be a participant in criminal activity

ror Purposes of this sentencing guideline, the individual

not have been convicted, regardless of whether he was

charged. See USSG § 3B1.1, comment. (n.1). Although

at trial David Lewis denied his role in the criminal scheme,

another victim of defendant’s criminal scheme testified that

David Lewis sold him a car without disclosing that it had

been reassembled. Given David Lewis’ criminal history of

odometer tampering and mail fraud, the District Court did

not clearly err when it credited the testimony of the victim

and found that David Lewis was a participant in this

criminal scheme.

Finally, defendant contests the District Court’s finding

that Greg Goins was also criminally ible for the

commission of defendant's offenses. Defendant bases his

argument on the absence of Goins’ testimony. However,

based on Burkeen’s testimony regarding Goins’ request that

a a title, the District oe te eee

ins was a criminally responsible participant in

defendant’s illegal scheme.

Because the preponderance of the evidence indicated that

defendant was the organizer or leader of criminal activity

that involved five or more participants, including Ray

Lewis, David Lewis, and Goins, we conclude that the

District Court did not err when it increased defendant's

offense level by four points.

Il. Conclusion

For the reasons stated, we AFFIRM the decision of the

A-12

Me eatin

IN THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA .

Plaintiff/Appellee, .

’ No. 95-5974

vs. *

o

J.T. HAUN +

Defendant/Appellant. ° .

On Appeal from the United States District Court

for the Eastern District of Tennessee at Chattanooga

District Court No. 1:94-CR-00052; R. Allan Edgar, Judge

BRIEF OF THE DEFENDANT/APPELLANT

ORAL ARGUMENT REQUESTED

JERRY H. SUMMERS

SUMMERS, MCCREA & WYATT, P.C.

500 Lindsay Street

Chattanooga, TN 37402-1490

423/265-2385

Attorney for the Defendant/Appellant

B-1

ARGUMENT

A.

WAS THE EVIDENCE INSUFFICIENT TO SUPPORT

FINDINGS THAT APPELLANT WAS GUILTY OF VIOLATING

18 U.S.C. § 1956 (MONEY LAUNDERING) BECAUSE THE USE

OF SAID STATUTE IN A NON-DRUG CASE VIOLATES THE

ORIGINAL CONGRESSIONAL INTENT IN ENACTING SAID

LAW?

18 U.S.C. § 1956(a)(1)(A) is the Promotion Provision of the

Federal Money Laundering Statute. It provides as follows:

(a)1 Whoever, knowing that the property involved in a

financial transaction represents the proceeds of some

form of unlawful activity, conducts, or attempts to

conduct such a financial transaction which in fact

involves the proceeds of specified unlawful activity, . .

(A)(1) with the intent to promote the carrying on of

specified unlawful activity.

The legal and legislative history of 18 U.S.C. § 1956 as

outlined in 132 Cong. Re. 18, 486 - 18, 487 (1986) (statements of

Senators Thurmond and Hutch); President’s Commission on

Organized Crime, The Cash Connection, Organized Crime Financial

Institutions and Money Laundering 4-8 (1984) [hereinafter the Cash

Connection]; United States v. Daccarett, 6 F.3d 37 (2nd Cir. 1993);

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Public Law No. 99-570, 100 Stat. 3207 (1986) (codified at 18 U.S.C.

§§ 1956-1957 (1988); Car! P. Florez and Bernadette Boyce,

‘Laundering Drug Money, F.B.I. Law Enforcement Bulletin, April

1990, at 22-23; Lawrence Note, Let the Seller Beware: Money

Laundering, Merchants and 18 U.S.C. §§ 1956-1957, (33 B.L. Rev.

841) (1992); House Committee on Banking, Housing and Urban

Affairs, Comprehensive Money Laundering Prevention Act, H.R.

Rep. No. 746, 99th Cong., 2nd Sess. 16 (1986), United States v.

Garcia - Emmanuel, 14 F.3d 1469 (11th Cir. 1994); Drug Money

Laundering Hearing Before the Senate Commission on Banking,

Housing and Urban Affairs, 99th Cong., Ist Sess. 7(1985);

International Narcotics and Control Act of 1992, Pub. L. No. 102-

583, 106 Stat. 4914 (1992) (codified at 31 U.S.C. §§ 321, 5311-5314,

5316-5322 (1988 & Supp. V, 1993); 31 U.S.C. § 5324

clearly indicates that Congress fully intended to enact laws to combat

the crime of money laundering which has been characterized as “the

lifeblood of international narcotics, trafficking and traditional

organized crime”.

Federal prosecutors, through creative adaptation, have

expanded the use of said statutes well beyond the congressional

legislative intent and initial purpose to fight the narcotics trade to try

and create 18 U.S.C. §§ 1956 and 1957 violations in any scheme

where money is involved.

The scheme alleged in counts 8-12 of the Superseding

Indictment alleges Money Laundering violations between the dates

December 22, 1989 and June 2, 1990.

In the Conspiracy count (Count I) of the indictment, it is

alleged that the conspiracy dates are between December 1, 1989 and

September 27, 1991, yet there are not listed any overt acts, schemes

to defraud or mailings alleged on the 1991 date. (R.16).

The original indictment which was replaced by the

superseding indictment alleges a mailing on September 27, 1991 of

an application for title for a 1989 Chevrolet Caprice (R ). A

review of the transcript of the trial indicates that the only mention of

a September 1991 date is in the testimony of Robert Hixson, who

states that he took the 1989 Caprice that he purchased from Auto

B-4

World to Family Buick in Dalton, Georgia and traded it for a 1991

Buick (Vol. I, pp. 119-120).

The Racketeer Influence and Corrupt Organizations Act

contained in 18 U.S.C. § 1961 was amended in the Act on October

27, 1986 in paragraph (1)(B) to insert section 1956 (relating to the

laundering of monetary instruments).

The RICO statute was likewise enacted to fight organized

crime.

The Fourth Circuit in a case involving the wire transfer of

money as payment for drugs received on consignment held that this

did not promote unlawful activity within the meaning of

18 U.S.C. § 1956(a)(1)(A)(i); United States v. Heaps, 39 F.3d 479

(4th Cir. 1994). Likewise, the Sixth Circuit in United States v.

Samour, 9 F.3d 531 (6th Cir. 1993) overturned a money laundering

violation and ruled that the mere transportation of narcotic proceeds

does not violate 18 U.S.C. § 1956(a)(1)(A)(i).

It is respectfully submitted that Congress’ interest in passing

the money laundering statute was to punish narcotics dealers and

B-5

investors in organized crime. The United States Supreme Court has

often stated that when two rational readings of a criminal statute, one

harsher than the other, the court is to choose the harsher only when

Congress has spoken in clear and definite language. United States v.

Bass, 404 U.S. 336, 347, 92 S.Ct. 515, 522, 30 L.Ed.2d 488 (1971);

United States v. Universal C.LT. Credit Corp,, 344 U.S. 218, 221-

222, 73 S.Ct. 227, 229-230, 97 L.Ed.260 (1952); see also Rewis v.

United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 1060, 28 L.Ed.493

(1971).

At the sentencing hearing held in appellant’s case, present

counsel raised this issue. (Vol. V, pp. 4-16).

Contra authority to appellant’s position is found in United

States v. Taylor, 984 F.2d 298 (4th Cir. 1993) which states that 18

U.S.C. 1961(1) is incorporated by referencr into 1956(c)(7)(A) and

the use of said statute is not specifically limited to those situations .

which rise to the level of RICO.

The Government’s action in charging appellant with violating

18 U.S.C. § 1956 is further misapplied because no drug proceeds are

involved. The federal courts have consistently held that even where

drugs are involved, neither the exchange of money for drugs, nor the

transportation of the proceeds of drug sales by itself, contributes a

violation of said section. United States . Skinner, 946 F.2d 176

(2nd Cir. 1991); United States v. Hamilton, 935 F.2d 1046 (Sth Cir.

1991).

In another case actually involving the wire transfer of money

as payment for drugs received on consignment did not promote

unlawful activity within the meaning of 18 U.S.C. § 1956(a)(1)(A)(i).

United States v. Heaps, 39 F.3d 479 (4th Cir. 1994). Likewise, the

Sixth Circuit in United States v. Samour, 9 F.3d 531 (6th Cir. 1993)

overturned a money laundering violation and ruled that the mere

transportation of narcotics proceeds does not violate 18 U.S.C. §

1956(a)(1)(A)(i). See also United States v. McDougald, 990 F.2d

259 (6th Cir. 1993).

It is respectfully submitted that the evidence is insufficient to

convict the appellant for two reasons: the use of the money

laundering statute for a non-drug funds case is misapplied; and

the facts of the appellant’s cuse are insufficient to satisfy the

necessary elements of the offense, particularly the absence of efforts

to disguise the connection between the car trading transactions and

the alleged illegal activity. United States v, Sanders, 929 F.2d 1466

(10th Cir. 1991), and United States v, Garcia-Emanuel, 14 F.3d 1469

(10th Cir. 1994),

ae

IS 18 U.S.C. § 1956(C) UNCONSTITUTIONALLY VOID

FOR VAGUENESS IN VIOLATION OF THE FIRST AND

FOURTEENTH AMENDMENTS OF THE UNITED STATES

CONSTITUTION BECAUSE IT FAILS TO DEFINE

“PROCEEDS”?

Section 1956 prohibits conducting transactions that involve

the “proceeds of specified unlawful activity.” The statute does not

define “proceeds” and thus invites a wide range of interpretation.

Can “proceeds” be something other than money?

In Section 1937, Congress prohibited certain transactions

involving “criminally derived property” rather than “proceeds”. Yet,

“criminally derived property” is broadly defined in terms

of proceeds: “any property constituting, or derived from, proceeds

obtained from a criminal offense.” 18 U.S.C. § 1957 (f)(2)(1988 &

Supp. V. 1993).

If the two statutes are read together, the phrase “derived

from” in section 1956 may have a limited meaning.

The accepted definition of “proceeds” has been held to

include more than just money. In United States v. Weber, 787

F.Supp. 353 (S.D.N.Y. 1992), the court adopted the following

common law understanding of “proceeds” stated in Phelps v. Harris,

101 U.S. 370 (1879):

The expression “to dispose of” is very broad, and

signifies more than “to sell.” Selling is but one mode of disposing of

property. It is argued, however, that the subsequent direction to

invest the proceeds indicates that a sale was meant. But this does not

necessarily follow. Proceeds are not necessarily money. This is also

a word of great generality. Taking the words in their ordinary sense,

a general power to dispose of land or real estate and to take in return

therefore such proceeds as one thinks best, will include the power of

disposing of them in exchange for other lands. It would be a disposal

of the lands parted with; and the lands received would be the

proceeds.

In Weber, supra, the court concluded that the words, as used

in § 1956(a)(1), can include property other than money or cash

equivalents, even if that property has not been purchased with the

B-9

money derived from unlawful activity.

In response to constitutional challenges, several courts have

held that neglecting to define “proceeds” does not render § 1956 void

for vagueness. United States v. McLamb, 985 F.2d 1284, 1291 (4th

Cir. 1993); United States v. Kaufmann, 985 F.2d 884, 896 (7th Cir.

1993); United States v. Gleave, 786 F.Supp. 258, 270 (W.D.N.Y.

1992); and United States v. Mainieri, 691 F.Supp. 1394, 1397 (S.D.

Fla. 1988). This last decision is particularly significant because the

term “proceeds” is defined in the context of the money laundering

statute to hold that individuals who engage in financial transactions

concealing the narcotics (emphasis added) source of the money are

clearly put on notice by the unambiguous wording of § 1956.

It is this distinguishing aspect that the appellant asks the court

to consider in determining whether this lack of defining “proceeds”

violates the void for vagueness test set forth in Kolender v. Lawson,

461 U.S. 352, 357 (1983), which states:

“The void for vagueness doctrine requires that a penal

statute define the criminal offense with sufficient

definiteness that ordinary people can understand what

B-10

conduct is prohibited and in a manner that does

not encourage arbitrary and discriminatory

enforcement.”

c.

WAS THE TRIAL COURT’S RULING THAT PRIOR

UNSWORN DEPOSITIONS OF EXAMINATION OF THE

APPELLANT IN CIVIL ACTIONS INVOLVING SOME OF THE

CARS IN QUESTION COULD BE READ BY AN F.B.I. AGENT

UNDER RULE 803(2A) OF THE FEDERAL RULES OF

EVIDENCE PREJUDICIAL, OR ABUSE OF DISCRETION AND

CLEARLY ERRONEOUS?

Over the objection of the appellant, F.B.I. Special Agent Scott

Barker was allowed to read excerpts of copies of unsworn and

uncertified depositions of the appellant in civil actions in the Circuit

Court of Bradley County, Tennessee. The court reporter who

transcribed the depositions was not called to certify the documents’

authenticity. (Vol. II, pp. 292-305) (Exhibits 10-12).

Rule 803 of the Federal Rules of Evidence states:

The following are not excluded by the hearsay rule,

even though the declarant is available as a witness:

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(24) Other Exceptions. - A statement not specifically

covered by any of the foregoing exceptions but having

equivalent circumstantial guarantees of trustworthiness, if the

court determines that (A) the statement is offered as evidence

of a material fact; (B) the statement is more probative on the

point for which it is offered than any other evidence which

the proponent can procure through reasonable efforts; and (C)

the general purpose of these rules and the interests of justice

will best be served by admission of the statement into

evidence. However, a statement may not be admitted under

this exception unless the proponent of it makes known to the

adverse party sufficiently in advance of the trial or hearing to

provide the adverse party with a fair opportunity to prepare to

meet it, the proponent’s intention to offer the statement and

the particulars of it, including the name and address of the

declarant.

The residual hearsay exceptions were expected to be used

very rarely and only in exceptional circumstances. This Rule was not

intended to establish a broad license for trial judges to admit hearsay

statements that do not fall within one of the other exceptions

contained in Rule 803.

The trial judge obviously overlooked the requirements of

Rule 901, F.R.E., pertaining to the requirement of authentication or

identification:

(a) General Provisions. - The requirement of

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authentication or identification as a condition precedent to

admissibility is satisfied by evidence sufficient to support a finding

that the matter in question is what its proponent claims.

(b) Illustrations. - By way of illustration ony, and not by

way of limitation, the following are examples of authentication or

identification conforming with the requirements of this rule.

(1) Testimony of Witness with Knowledge. - Testimony

that a matter is what it is claimed to be.

(2) | Nonexpert Opinion on Handwriting. - Nonexpert

opinion as to the genuineness of handwriting, based upon

familiarity not acquired for purposes of the litigation.

(3) | Comparison by Trier or Expert Witness. - Comparison

by the trier of fact or by expert witnesses with specimens

which have been authenticated.

(4) Distinctive Characteristics and the Like. - Appearance,

contents, substance, internal patterns, or other distinctive

characteristics, taken in conjunction with circumstances.

(5) Voice identification. - Identification of a voice,

whether heard firsthand or through mechanical or electronic

transmission or recording, by opinion based upon hearing the

voice at any time, under circumstances connecting it with the

alleged speaker.

(6) Telephone Conversations. - Telephone conversations,

by evidence that a call was made to the number assigned at

the time by the telephone company to a particular person or

business, if (A) in the case of a person, circumstances,

including self-identification, show the person answering to

be the one called, or (B) in the case of a business, the

call was made to a place of business and the conversation

related to business reasonably transacted over the

telephone.

(7) Public Records or Reports. - Evidence that a writing

authorized by law to be recorded or filed and in fact recorded

or filed in a public office, or a purported public record, report,

statement, or data compilation, in any form, is from the public

B-13

office where items of this nature are kept.

(8) Ancient Documents or Data Compilation. - Evidence

that a document or data compilation, in any form, (A) is in

such condition as to create no suspicion concerning its

authenticity, (B) was in a place where it, if authentic, would

likely be, and (C) has been in existence 20 years or more

at the time it is offered.

(9) Process or System. - Evidence describing a process

or system used to produce a result and showing that the

process or system produces an accurate result.

(10) Methods Provided by Statute or Rule. - Any method

of authentication or identification provided by Act of

Congress or by other rules prescribed by the Supreme Court

pursuant to statutory authority.

None of these authentication requirements were satistied by

the action of the trial judge. The significance of this testimony is

highlighted by the fact that the Government introduced the

appellant’s deposition testimony as its last testimony in its case in

The burden of proof for authentication of documents is that

slight circumstantial evidence may suffice to authenticate an exhibit.

What is required is a foundation upon which the finder of fact can

draw the influence that the evidence is what it is claimed to be by the

proponent. United States v, Elkins, 885 F.2d 775 (11th Cir. 1989).

B-14

Appellate review is confined to determining whether the trial

judge abused his discretion in determining that a prima facie case has

been made to support the exhibits’ authenticity. Alexander Dawson,

Inc. v. NLRB, 586 F.2d 1300 (9th Cir. 1978).

The trial judge clearly did not authenticate the unsigned,

unsworn depositions by a non-certifying FBI agent who was not

present when they were taken to bring their admissibility into

evidence under Rule 803 (24). |

This prejudicial evidence should have been excluded and

forms the basis for reversible error.

D.

WAS THE TRIAL JUDGE’S RULING THAT THE

APPELLANT’S SENTENCE UNDER THE FEDERAL

SENTENCING GUIDELINES SECTION 2F1.1(B)(1) BE

INCREASED BECAUSE THE ANNUAL LOSS WAS OVER TEN

THOUSAND DOLLARS ($10,000.00) CLEARLY ERRONEOUS?

The appellant objected to a three point increase in

determining the loss because it allegedly involved over $10,000.00

pursuant to Sentencing Guideline section 2F1.1(b)(1)(D) (Vol. V,

Judgment Proceedings, pp. 16-28).

B-15

The trial judge used the Galves Auto Price List as the

standard for determining the loss to the victims to come up with the

$17,000.00 figure. The basis for his reasoning was that he had used

this guide in a previous odometer case in his court.

However, the appellant’s case is entirely different from an

odometer case. As indicated by the testimony of Government

witness, Ronald Germadnik, the price of a vehicle is driven by the

body, and not by the frame or chassis. (Vol. 1, pp. 43-44).

The alleged scheme in this case is entirely different from an

odometer case and to use the Gaives standard injects speculation as

to the amount of loss.

Footnote 8 to 2F 1.1 allows that the loss not be determined

with precision. However, an appropriate and non-speculative method

must be used to at least get over the threshold question of a proper

way to try and calculate said loss. This was not done in the

appellant’s case.

It is likewise significant that there is no Government proof in

the record to refute the expert testimony of Mr. Germadnik.

B-16

The reliance on Comment 7(a) of 2F1.1 by the court is

likewise incorrect. Under the facts of appellant’s case the actual loss

to the victims by their own testimony is substantially less than that

claimed by the prosecution and probation officer and affirmed by the

trial court.

Although some of the victims stated that they would not have

bought the car if they had known it had a chassis and motor with high

miles on them, none of them specifically claimed a loss with a value.

In fact, some of them showed by their testimony that they sustained

very little loss:

A. Joe Kelly (Vol. I, pp. 52-78)

1. Bought car for $13,250.00

2 Sold car for $11,000.00

3. Put 16,000 miles on car

B. James Burger (Vol. I, pp. 79-95)

l. Bought car from Joe Kelly for $11,000.00

2. Still had car

a Put 52,000 miles on car

= Robert Hixson (Vol. I, pp. 97-121)

. Bought car for $10,995.00

r Traded for ‘91 Oldsmobile - got $8,000.00 on

trade in

3. Kept car from December ‘89 - September ‘91;

B-17

says he was a little worse off

D. Arlen Moore (Vol. II, pp. 133-151)

a Bought car for $11,500.00

2. Still has car - 4 years

a Put 50,000 miles on car

E. Wallace Cross (Vol. II, pp. 152-180)

l. Bought car for $10,995.00

y A Car driven for 2 years without major repairs

F. Terry Robertson (Vol. II, pp. 191-209)

1. Bought car for $11,900.00

2. Got trade in of $6,500.00

3. Put 62,000 miles on car in 4 years

There appears to be no reported decisions on this type of

alleged loss in value. In United States v. Whitlow, 979 F.2d 1008

(Sth Cir. 1992), the district courts use of the National Automobile

Dealers Association (NADA) guide that stated the reduction of value

for high mileage should not exceed 40% of a car’s value. However,

there is not taken into consideration any corresponding increase in

the value of the vehicle because it had a new body, seats and interior.

In United States v. Alborz, 818 F.Supp. 1306 (N.D. Cal.

1993), another odometer case, the defendants, in addition to rolling

back the odometers, also performed legitimate detailing and

B-18

rehabilitation work which improved the value of the cars.

The government argued that the loss calculation should

subtract the defendant’s purchase prices from the ultimate resale

prices.

Obviously the district court in appellant’s case did not use

any legitimate method which was based on a proper method of

calculation of loss and this portion of the sentence should be

remanded for further review.

E.

WAS THE TRIAL JUDGE’S RULING THAT THE

APPELLANT’S SENTENCE UNDER THE FEDERAL

SENTENCING GUIDELINE SECTION 3B1.1(A) BE INCREASED

BECAUSE HE WAS A LEADER AND ORGANIZER OF FIVE OR

MORE PARTICIPANTS CLEARLY ERRONEOUS?

At the sentencing hearing, the appellant objected to the

additional points assessed against him under Guidelines Section

3B1.1(a) for being the leader of a group with five (5) participants.

(Vol. V, pp. 31-37).

The court held that these were six (6) individuals engaged in

criminal activity: J. T. Haun, Stanford Sharp, Ray Lewis, David

B-19

Lewis, Greg Goins and Gary Burkeen.

Of course, Ray Lewis was acquitted and his son was never

‘charged with any offense. The fact that his father was acquitted on

the vehicle pertaining to which he gave testimony likewise is

significant. No testimony is in the record from Greg Goins, and,

once again, to include him in the group would be speculation as to

his involvement and intent.

The appellant at the hearing cited the court the 6th Circuit

cases of United States v. Austin, 984 F.2d 705 (6th Cir. 1993) and

United States v. Moreno, 933 F.2d 362 (6th Cir. 1991), where the

Government did not prove that the appellant’s employees were

criminally responsible that 3B1.1(a) was inapplicable.

The appellant respectfully contends that the trial court was

clearly erroneous in finding there were five (5) participants in the

involved scheme.

CONCLUSION

For all the foregoing reasons, the appellant respectfully asks

for the following review:

B-20

4 Reverse and dismiss his money laundering

convictions under 18 U.S.C. § 1956;

2. Grant him a new trial on the conspiracy and mail fraud

convictions under 18 U.S.C. § 2 and 1341;

3. Alternatively, the appellant asks that his case be

remanded for resentencing in accordance with the sentencing

guidelines after reducing the sentence levels because of the clearly

erroneous calculations of value of loss pursuant to 2F1.1 and number

of participants pursuant to § 3B1.1(a).

Respectfully submitted:

SUMMERS, MCCREA & WYATT, P.C.

By:/S/ Jerry H. Summers

Jerry H. Summers, TN. BPR# 534

500 Lindsay Street

Chattanooga, TN 37402

423/265-2385

Attorneys for defendant/appellant