# Petition for Writ of Certiorari — Haun v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1997
- **Citation:** 519 U.S. 1059

## Text

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
CRMDUCIUEP YOUN, iiicasuinssnusecssadbinccccsnsikieiasssbumemee ge eS | j
| ONSET SGM LIAS ALU LM oT AS il
TAROT I isis ee iii
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
i coissipivdsianseenlinidieietieninaenensiteiseaeabaeldseeiciiscate tance Nae at ts 5
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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|
|
|

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

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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

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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

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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).

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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).

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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;

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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

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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:

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1858%3A1. Public record. Not legal advice.