Opinion
CRIMINAL ACTION NO. 02-321, SECTION "L" (2)
April 30, 2003
ORDER REASONS
Before the Court are the following motions: (1) Motion of defendant Curtis Coney for Relief Under Rule 12 of the Federal Rules of Criminal Procedure; (2) Motion of defendants Curtis and Barbara Coney for Relief from Misjoinder and/or Prejudicial Joinder; and (3) Motion of Defendants Curtis and Barbara Coney to Dismiss, or, Alternatively, to Suppress Evidence. On April 24, 2003. the parties presented testimony regarding the reasonableness of the execution of the search warrant for the defendant's offices and the issue of entrapment as a matter of law. As to the other issues, the Court heard the oral arguments of the parties. For the following reasons, the Court DENIES the Motion of Curtis Coney and the Motions of both defendants.
I. FACTS
Defendant Curtis Coney is a personal injury attorney in New Orleans, Louisiana. According to the facts alleged in the indictment, Coney used paid "runners" to solicit clients. These runners were paid $500 cash for each client solicited. To obtain the cash necessary to pay the runners, Coney's employees frequently cashed checks at local banks. The indictment alleges that Coney instructed his employees never to cash checks in any single amount greater than $10,000 because that would trigger the banks' reporting requirements to the IRS under 31 U.S.C. § 5313 and 31 C.F.R. § 103.22.
31 U.S.C. § 5324(a)(3) and (d) make it a crime to structure transactions in such a way as to avoid the reporting requirements. Count 1 of the indictment charges Curtis Coney with conspiracy to violate section 5324 from 1997 through 2001. Counts 2 through 11 charge Curtis Coney with ten separate violations of section 5324 from 1997 through 2001. Each count identifies a two-day period wherein individual checks were cashed in amounts less than $10,000. Count 12 of the indictment charges Curtis Coney and his wife, Barbara Coney, with obstruction of justice for attempting to influence the grand jury testimony of one of Curtis Coney's former employees.
Section 5324(a)(3) provides in pertinent part that "[nlo person shall, for the purpose of evading the reporting requirements of section 5313(a) . . . structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions." Id.
Section 5324(d)(1) provides that violators of this section shall be fined and/or imprisoned for not more than five years. Subsection (d)(2) doubles the fine and/or imprisonment for violations greater than $100,000 in a 12-month period.
In preparation for trial, the defendants have filed various evidentiary motions. The first, pertaining only to Curtis Coney, seeks various forms of relief under Rule 12 of the Federal Rules of Criminal Procedure. The second motion, made on behalf of both defendants, seeks relief from misjoinder of Count 12 with the other counts or severance of the trials of Curtis and Barbara Coney. The final motion seeks to dismiss Count 12 of the indictment or suppress evidence relating to that charge; specifically, the motion attacks the constitutionality of the recording of the conversation between the former employee and the Coneys and contends that the government's conduct amounts to entrapment as a matter of law. On April 24, 2003, the Court heard the oral arguments of the parties as well as the testimony of witnesses related to the search of Coney's office and the recorded conversation between the Coneys and their employee. The Court took the matter under submission and now issues its ruling.
II. MOTION OF CURITS CONEY FOR RELIEF UNDER RULE 12
This motion challenges the indictment on several grounds, each of which is discussed separately.
A. Jurisdiction
The defendant argues that these charges violate the Commerce Clause because the government is seeking to regulate a state activity, the use of runners, lacking a substantial effect on interstate commerce. The government responds that the charges seek to regulate illegal structuring of financial transactions, not state activities, and that it is not required to show a substantial effect on interstate commerce because the statute itself regulates interstate commerce.
In United States v. Threadgill, 172 F.3d 357 (5th Cir. 1999), the court considered whether the structuring and anti-gambling statutes as applied to the facts of that case required the government to prove a substantial effect on interstate commerce under the Commerce Clause. The Court held:
Whether a defendant's conduct has a "substantial effect on interstate commerce" is a question that only becomes relevant when the statute at issue, or the facts of the case, cast doubt on Congress' ability to use the Commerce Clause to regulate the charged conduct. In this case neither circumstance is present. Unlike the Gun Free Zones Act in Lopez, the gambling and unlawful structuring statutes regulate purely commercial activities. Also, the facts of this case indicate that the defendants actually engaged in significant interstate activity in furtherance of their gambling operation. Accordingly, we reject the defendants' claim that the gambling and structuring counts are invalid under Lopez for not alleging a "substantial effect on interstate commerce."
Id. at 372-73.
See United States v. Lopez, 514 U.S. 549 (1995) (holding the Gun Free Zones Act unconstitutional because the act of possessing a gun in a school zone did not have a substantial effect on interstate commerce).
See United States v. Lopez, 514 U.S. 549 (1995) (holding the Gun Free Zones Act unconstitutional because the act of possessing a gun in a school zone did not have a substantial effect on interstate commerce).
The defendant seizes on that part of the above-quoted passage concerning the facts of the case. However, the Fifth Circuit made clear in Threadgill that for a defendant to successfully invoke the substantial effects test both the facts of the case and the statute itself must cast doubt on Congress' ability to regulate interstate commerce; if only one of the casts such doubt, the substantial effects test is not applicable, and the statute is constitutional. In this case, the structuring statute, as the Threadgill court noted, regulates "purely commercial activity." Therefore, no such showing of a substantial effect on interstate commerce is necessary, and the defendant's argument on this point is without merit.
B. Federalism
Curtis Coney next argues that the application of the structuring statute to his case exceeds the powers of the federal government because it seeks to regulate purely local activity; thus, Coney argues, the indictment violates principles of federalism. Coney asserts that the purpose of the structuring statute was to deter money laundering and hide the source of criminal funds, not to regulate activities within a state's police powers. Coney argues that the federal government is overreaching in this instance contrary to the Supreme Court's warnings. The government counters that Coney is attempting to add an element of criminal wrongdoing to the structuring statute that is not required under the terms of the statute.
Coney relies on two excerpts of Supreme Court cases to support his argument. The first case is Ratzlaf v. United States, 510 U.S. 135 (1994), which held that the structuring statute's provision that the violation be "willful" required the government to prove that the defendant knew that the structuring was illegal; simply knowing that the bank's reporting requirement existed was not sufficient to support a conviction. Id. at 138. In Ratzlaf the Court considered a situation in which a small business owner, aware of the reporting requirements, only dealt in cash amounts less than $10,000. See id. at 144-45. The Court noted that this person had no improper motives to structure these payments and could not be found guilty of a crime. Id. Coney contends that this passage of the Ratzlaf opinion indicates that the structuring statute should only apply to situations where someone was involved in a large-scale criminal enterprise. However, he takes the passage out of context. The Court in Ratzlaf was considering the intent element necessary to obtain a conviction under the structuring statutes. In fact, the Court concludes that section of the opinion by noting that if Congress intended for violators to be punished simply for knowingly evading the reporting requirement, then Congress should have provided the necessary instruction. Congress heeded the Court's advice, and the statute now permits intent to evade the reporting requirements, irrespective of what the money is being used for.
After Ratzlaf, Congress enacted 31 U.S.C. § 5324 to provide that the government need only show an intent to evade currency reporting, not knowledge that structuring was illegal. See Threadgill, 172 F.2d at 371 n. 10.
The second case Coney relies on is Cleveland v. United States, 531 U.S. 12 (2000), wherein the Court found that the term property as defined by the mail fraud statute did not include state riverboat gambling licenses that had not been issued. Id. at 26-27. The Court noted that "[a]bsent clear statement by Congress, we will not read the mail fraud statute to place under federal superintendence a vast array of conduct traditionally policed by the States." Id. at 27. Coney contends that this concern applies to his case because the government is trying to legislate an attorney's use of runners. However, that is not the case. The government is trying to regulate structuring, whether designed to pay runners or any other activity. In Cleveland, the Court's concern was expanding the definition of the term "property" in the statute; that is not at issue in this case. Accordingly, the defendant's arguments on this point lack merit.
C. Void-for-Vagueness
Coney's next argument is that the structuring statute is void because the statute's definition of structuring does not sufficiently notify an individual of what is considered criminal conduct. Defendant further asserts that the statute is too complicated to provide adequate notice because it requires reference to several sections of the Code of Federal Regulations to understand how structuring is defined. The government responds that no court has found the structuring statute vague, despite its wording.
A statute is void-for-vagueness where the statute fails to "define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement." United Stats v. Gray, 96 F.3d 769, 776 (5th Cir. 1996). Coney relies on the Fifth Circuit's statements in United States v. Pipkin, 114 F.3d 528 (5th Cir. 1997), that "much of the public's ignorance regarding the illegality of structuring must be laid at the feet of the government." Id. at 531. However, as the government correctly notes, the court in Pipkin was concerned with the element of scienter, not vagueness. Furthermore, other courts have held that the structuring statue is not unconstitutionally vague. See, e.g., United States v. Jackson, 983 F.2d 757 (7th Cir. 1993); United States v. Davenport, 929 F.2d 1169 (7th Cir. 1991); United States v. Maroun, 739 F. Supp. 684 (D. Mass. 1990).
Coney, however, argues in response to this argument that the statute was made more vague when the standard of "willfulness" was eliminated from the anti-structuring statute. It is true that the cases cited above occurred before the amendment to the statute that eliminated the willfulness provision, and the Court's research has discovered no cases considering the vagueness issue in light of the 1994 amendments. However, the fact that the willfulness requirement no longer exists should have no effect on the statute. The government is still required to prove that the individual structured the transaction for the purpose of avoiding the reporting requirements. Thus, some degree of knowledge is still required as an element of the crime. The defendant's arguments on this issue are without merit.
D. Due Process
In its third argument, the government argues that the indictment violates due process because it charges Coney with "willfully" participating in the conspiracy and in committing the structuring offenses alleged throughout the indictment. As noted above, the 1994 amendments to the statute eliminated the requirement of proving willfulness. Coney argues that the counts should be dismissed because the grand jury did not properly understand the elements of the offense if the government included this term in the indictment.
The government counters that this language is mere surplusage and is not required to be proved because the indictment alleges sufficient facts to support its charges. In United States v. Hughes, 766 F.2d 875 (5th Cir. 1985), the court found that where an indictment contains language that is not one of the elements of the charged offense it is "mere surplusage" and may be stricken from the indictment on motion of the defendant, but the indictment itself is not flawed. Id. at 879. Finally, in United States v. Greene, 497 F.2d 1068 (7th Cir. 1974), the Seventh Circuit noted that the use of the term "willful" in an indictment was mere surplusage where that was not a required element of the crime. Id. at 1086. Thus, the defendant's argument on this point must also fail.
See Rule 7(d) of the Rules of Criminal Procedure.
E. Multiplicity
Coney contends that counts 2 through 11 are multiplicitous because each count was part of an overall transaction. Rather than ten counts, the defendant argues that Coney should have been charged with one substantive count of violating the structuring statute over a five-year period. The government insists that it has complied with the case law on section 5324 because it did not charge single deposits but rather ten separate transaction incidents where, over a two-day period, cash withdrawals were made that exceeded $10,000.
In cases where the same statutory offense is charged in separate counts, the Supreme Court has held that courts must look to determine whether Congress meant for them to constitute separate "units of prosecution." Bell v. United States, 349 U.S. 81, 82-83 (1955). Where congressional intent is unclear, "the ambiguity should be resolved in favor of lenity." Id. at 83. Furthermore, "doubt will be resolved against turning a single transaction into multiple offenses." Id. at 84. In most cases where courts have found structuring counts to be multiplicitous, the indictment has charged separate counts for each deposit or transaction that was made, rather than group them together. See, e.g., United States v. Davenport, 929 F.2d 1169, 1171 (7th Cir. 1991) (holding that ten counts listing individual deposits were multiplicitous and should be dismissed); United States v. Nall, 949 F.2d 301, 308 (10th Cir. 1991) (holding that three counts for three separate deposits were multiplicitous). In Davenport, the Seventh Circuit held that the statute does not regulate the making of deposits, but the structuring of the transactions. Davenport, 929 F.2d at 1171. This flows from the definition of structuring offered by the Supreme Court in Ratzlaf "to break up a single transaction above the reporting threshold into two or more separate transactions." Ratzlaf 510 U.S. at 136. Davenport held that structuring required at least two transactions to support a charge for the offense.
Although cases like Davenport and Nall are distinguishable from the instant case, at least two courts have used their rationale to find an indictment multiplicitous in more similar circumstances. In United States v. Handakas, 286 F.3d 92 (2d Cir. 2002), the defendant was charged in one count with structuring payments greater than $100,000 for a twelve-month period from May 1996 to May 1997. A second count in the indictment charged the same offense from a period covering May 1997 to May 1998. The government insisted that these were separate counts because they each charged structuring offenses within a 12-month period. However, the Second Circuit concluded that "no provision of the statute indicates that a single course of structuring can be segmented based on 12-month intervals (or any other intervals of time) or by the amount of funds in any interval." Id. at 98. The government further argued that the court should look to the source of the funds and contended that each check was from a different source; however, the court also rejected this argument finding that individual deposits could not be charged as separate counts. Id. (citing Nall, 949 F.2d at 308). Accordingly, the court of appeals remanded the case to the district court to determine whether the second conviction should be vacated. Id. at 99.
Before hearing oral arguments on the issue of multiplicity, the Court instructed the parties to discuss United States v. Kushner, 2003 WL 1868645 (D. Mass. Apr. 10, 2003), the second case involving multiplicity and the structuring statues. The defendants in Kushner were charged with 100 counts of structuring financial transactions in violation of section 5324. Each indictment alleged a different day on which the defendants made multiple withdrawals of cash in amounts less than $10,000 to avoid the reporting requirements. Defendants moved to dismiss the counts as multiplicitous arguing that each count was simply part of an overall scheme of structuring that should be charged in one count. The district court relied on Handakas and concluded that the 100 counts were multiplicitous because the statute did not specify intervals of time within which a structuring violation could occur. Id., at *3.
The Kushner court rejected the government's attempt to distinguish Handakas finding that splitting the transactions into separate days was "precisely analogous to the arbitrary time-based units proscribed by Handakas." Id. The Kuushner court further held that it was "no more compelling to argue that the amount the Defendants were structuring at any given time spanned two days, two weeks, or two months than to argue that they were structuring daily transactions." Id. The court did, however, point out to the government that it could satisfy the requirements of Haudakas and avoid a multiplicitous indictment if the government could identify the source of funds. Id., at *4. Otherwise, it would have to amend the indictment to allege the entire structuring scheme as one count. Id. Considering this, the court granted the defendant's motion to dismiss but gave the government leave to file an amended indictment.
The defendant argues that his case is analogous to Kushner and that this Court should follow the Kushner court's reasoning and consolidate Counts 2 through 11. The government responds that in the present case the court should focus on Coney's use of the funds and find that each cash transaction represents a separate payment to a runner. The Court agrees with the government. In most structuring cases like Kushner and Handankas, the government's focus is on the source of the funds. In Coney's case, however, the focus is not on the source of funds but on its use. Further, it is important to note that the Kushner court did not hold that consolidation was the sole remedy; rather, it stated that the government would be permitted to amend the indictment to identify the proper source of the funds. In this case, the government has set forth its theory that each of the ten counts was a separate transaction involving payments to runners. In this case, each time cash was withdrawn from the bank, it constituted an individual payment to a runner for cases referred. Thus, the government has shown that the indictment alleges individual and distinct units of prosecution. The Court, therefore, holds that the indictment is not multiplicitous.
F. General Warrant
Coney attacks the search warrant for his law office, complaining that the warrants permitted the seizure of client files and work product. Coney further complains that the warrant was too broad, The government responds that the affidavits included with the warrant listed the items to be seized with sufficient specificity and were appropriately limited in scope as they did not seek documents dated before January, 1997. The government also argues that this court should give deference to the magistrate's decision to sign the warrant.
In Illinois v. Gates, 462 U.S. 213 (1983), the Supreme Court held that in reviewing a magistrate's determination of probable cause, the magistrate's decisions should be given "great deference." Id. at 236. Furthermore, the Fifth Circuit has recognized that a warrant is valid where "the items to be seized were as precisely identified as the nature of the activity permitted." United States v. Morisse, 660 F.2d 132, 136 (5th Cir. 1981).
The defendant relies on the Third Circuit's decision in Klitzman, Klitzman Gallagher v. Krut, 744 F.2d 955 (3d Cir. 1984), which considered the legality of a search warrant for a law firm. The court in that case struck the warrant as being overbroad and noted that a court should "scrutinize carefully the particularity and breadth of the warrant authorizing the search." Id. at 960. The government had seized files relating to the entirety of the law practice without any regard for particular documents sought in connection with the case. In the instant case, however, the search warrant affidavits sought information limited only to the time frame after January, 1997. It further sought information concerning "payments made to individuals in connection with the referral of clients" and records pertaining to business arrangements and investigative work performed by people associated with the law firm. The warrants were more narrowly tailored than the warrants in Klitzman and should be upheld.
G. Subterfuge
Coney next argues that the government used its search for records of structuring as a ruse to uncover evidence of payments made to runners. Defendant contends that the government had evidence of structuring, and did not need to search the records to obtain anything more. Defendant asserts that the federal government simply obtained the warrant for the purpose of permitting the state government to obtain evidence of payments to runners. The government insists that it was looking for evidence of structuring specifically ledgers it believed Coney had that listed the structured checks. Furthermore, the government points out that Coney had refused to comply with a grand jury subpoena and had ordered the destruction of certain evidence. Thus, the government contends, a decision was made to obtain a search warrant to seize the property in a more efficient manner.
In this case, defendant has not alleged that any law enforcement officials from the state obtained any information or has not shown that the state and federal governments were acting in concert together. Furthermore, the cases upon which the defendant relies, United States v. Sanchez, 509 F.2d 886 (6th Cir. 1975) and United States v. Hare, 589 F.2d 1291 (6th Cir. 1979), are distinguishable from the instant case because in Sanchez and Hare the issue was whether police agencies who tagged along with, others conducting a search were entitled to rely on the information seized at that location. There is no evidence of such conduct in this case, and this part of the motion is denied.
H. Unreasonable Seizure
Coney argues that the search of his office was unreasonable in violation of his Fourth Amendment rights, which guarantees against "unreasonable searches and seizures." U.S. CONST. amend. W. The defendant must prove the unreasonableness of the search by a preponderance of the evidence. United States v. Runyan, 275 F.3d 449, 456 (5th Cir. 2001). Before discussing the merits of the motion, the Court briefly considers the testimony of the witnesses regarding the events surrounding the execution of the warrant.
The search warrant was executed at the Coney office beginning at approximately 10:00 a.m. on April 25, 2002. Curtis Coney was not in the office at that time. Only four female employees were in the office. The witnesses all testified that approximately ten to twelve federal agents entered the office and announced that they were executing a search warrant. These agents were part of a "clean team" because an attorney's office was being searched. The "clean team" had not otherwise been involved in the Coney investigation but were sent to this location to pre-screen the material so that the investigative agents would not see any confidential matters or attorney work product. The investigative agents were provided only with that information the clean team determined to be non-privileged.
Upon entering the law offices, the agents asked the employees to stand and raise their arms to make sure no weapons were present. The employees were then taken to a common waiting room where they remained under the supervision of other agents. Although the employees testified that they were never advised of a right to counsel, they did not suggest that they were threatened or intimidated in any way. All four employees also testified that the telephone continued to ring for more than an hour before it was switched to the firm's answering service. On two occasions during the course of the search, the agents questioned the employees individually regarding various matters. Testimony also revealed that one client who was in the office at the time the search began was also questioned. A second client arrived during the course of the search and entered the office. Upon entering the office, the agents asked him if he had any weapons. Conflicting testimony indicated that during this questioning the client either voluntarily raised his shirt to show that he did not have any weapons or was asked to raise his shirt by the agents. In any event, the client left shortly thereafter.
Furthermore, the defendant's attorney arrived at the office during the search but was not permitted to enter the office. He was kept in the hall, while the agents refused to let him speak to the firm's employees. However, none of the employees testified that they asked to see an attorney, including the defendant's attorney after learning of his presence in the hall. Furthermore, none of the employees testified that they were represented by Coney's lawyer. During the search, the agents seized a number of large boxes of files and information, and copied any computer files onto disks. Despite the seizure of the files, no testimony was presented that, except for the date of the search, the business of the firm was interrupted or impaired to any extent because of the seizure of files. In fact, one witness testified that if a file was needed, the office simply had to contact the agents, which would make the file available.
Based on this evidence, the Court is unable to conclude that the agents' actions were unreasonable. They had every right to determine whether anyone in the office had any type of weapons or dangerous items. There was evidence that there was a gun in the office usually kept either in Coney's desk or in the safe where it was found during the search. Furthermore, there is no indication that the employees were intimated or coerced into making statements. Also, none of them have claimed to be represented by defendant's counsel or deprived of their right to an attorney. Therefore, the Court finds that the search was reasonable and that the defendant's motion is denied on this point.
I. Storage Unit Warrant
At the same time as the search warrant was executed on the defendant's office, another warrant was executed on a storage unit belonging to the defendant on Carrollton Avenue. The affidavit stated that a confidential and reliable source had told the agents that Coney had client and business files in unit 318 at the storage facility. The affidavit sought to search the unit for any of Coney's records. When the agents executed the warrant at unit 318 they found that it did not belong to Coney; however, they discovered that unit 821, rather than 318 belonged to Coney. The agents returned to Magistrate Moore amended their earlier affidavits to note the errors in the storage unit. In the amendment, they recited to the magistrate that an error had been made and the purpose of the amendment was to correct this error. Coney contends that the agents lacked probable cause for the second search because the information used to perfect that search was based on the execution of the erroneous first warrant. Thus, the defendant argues, any evidence should be excluded under the "fruit of the poisonous tree doctrine."
The government asserts that the magistrate was fully aware of the circumstances surrounding the second warrant for the correct storage unit, and that his decision finding probable cause should be given deference. Furthermore, the government asserts that, assuming Coney is asking for a Franks hearing, the defendant cannot show that the mistaken storage unit number was intentionally or recklessly false. Thus, the search warrant should be upheld.
In Franks v. Deleware, 438 U.S. 154 (1978), the Supreme Court held that a defendant is entitled to a hearing when he challenges the veracity of statements made in the securing of a search warrant that are essential to probable cause. Id. at 155. The Fifth Circuit has held that under Franks a defendant must show that the false statements were made "knowingly and intentionally, or with reckless disregard for the truth" and that the "affidavit's remaining content is insufficient to establish probable cause." United States v. Gladney, 48 F.3d 309, 313 (5th Cir. 1995).
In this case, Coney is not able to show that the incorrect statements were made knowingly or intentionally or with reckless disregard for the truth. At best, the only error was in the number for Coney's storage unit. The magistrate was fully aware of this error when he signed the amended warrant. Moreover, the other information provided by the informant had proven accurate and correct. The magistrate considered all this when he signed the second warrant, and, under Gates, his decision should be given proper deference.
III. MOTION OF CURTIS AND BARBARA CONEY FOR RELIEF FROM MISJOINDER AND/OR PREJUDICIAL JOINDER
Defendants Curtis and Barbara Coney move to dismiss as improperly joined Count 12 of the indictment (the obstruction of justice charge) or at the least to sever Barbara Coney's trial on this count. Barbara Coney seeks relief under Rules 8(b) and 14 of the Federal Rules of Criminal Procedure. She asserts that the obstruction of justice charge in count 12 is not part of the same action as the other 11 counts and is improperly joined. Further, Barbara Coney argues that she will be prejudiced by the admission of evidence against her husband in Counts 1 through 11 and that no limiting instructions could protest her; thus, she seeks severance under Rule 14.
The government contends that the claims are related because the obstruction of justice offense was done to conceal evidence of Curtis Coney's money structuring. Further, the government asserts that no prejudice exists because Barbara Coney was aware of her husband's activities and that the trial court can sufficiently protect her rights with careful limiting instructions.
Rule 8(b) of the Federal Rules of Criminal Procedure applies to the joinder of defendants and provides that joinder of defendants in the same indictment is proper if "they are alleged to have participated in the same act or transaction or in the same series of acts or transactions, constituting an offense or offenses." FED R. CR. P. 8(b). In considering the propriety of joinder under this rule the court must accept the allegations of the indictment as true. United States v. Harrelson, 754 F.2d 1153, 1176 (5th Cir. 1985). The court must examine the "`relatedness of the facts underlying each offense. . . . [W]hen the facts underlying each offense are so closely connected that proof of such facts is necessary to establish each offense, joinder of defendants and offenses is proper.'" Id. at 1176-77 (citations omitted).
In Harrelson, one of the defendants was charged with a single count obstruction of justice in part of an indictment charging others with conspiracy and murder of a federal judge. The Fifth Circuit affirmed the defendant's joinder rejecting her argument that joinder was improper only because she was named in just one count of the indictment. Id. at 1177. The court found sufficient facts to show that the defendant was involved in the actions surrounding the judge's murder, including purchasing the murder weapon, and providing a courier to collect the money for the murder. Id.
Defendants rely upon the district court's opinion in United States v. Pineau, 2002 WL 31780153 (E.D. La. Dec. 10, 2002), to establish the impropriety of Barbara Coney's joinder in this indictment. In Pineau, one of the defendants, Jean Pineau, was charged along with various other co-defendants with 1 count of conspiracy to commit mail fraud, 33 counts of mail fraud, one count of conspiracy to launder funds, and one count of conspiracy to impede the IRS in collection of taxes. In addition to all this, Pineau and his wife, Ann, were charged with two counts of personal income tax evasion. These were the only counts in which Ann Pineau's name appeared. She promptly moved to sever her trial on these two charges alleging prejudice would result. The court held that Ann Pineau was not properly joined under Rule 8 because the income tax evasion was not involved in the overall scheme of transactions which her husband had been charged with. Id., at *2.
In this case, the indictment properly shows that the Coneys attempted to influence the testimony of one of Curtis Coney's employee's before the grand jury investigating Curtis Coney in this case. This shows a sufficient link between Barbara Coney and the actions alleged in Counts 1 through 11. Although her actions were not as significant as the defendant in Harrelson, neither are Barbara Coney's actions so remote as the Ann Pineau's actions. Barbara Coney's actions are all part of the same act or transactions; the Coneys are alleged to have obstructed the investigation of the very facts that led to the basis for Counts One through Eleven of the indictment. Furthermore, proof of the structuring will necessarily be needed to establish the basis for the grand jury's investigation to provide a foundation for the obstruction of justice charge. Unlike Pineau, the facts of the indictment show that Barbara Coney had some involvement in the charges against her husband. With her husband, she sought to obstruct the investigation of those charges. Joinder as to Barbara Coney under Rule 8(b) is proper.
Turning to the defendant's second argument, Rule 14(a) provides that a co-defendant's trial may be severed where "consolidation for trial appears to prejudice a defendant . . . [, and] the court may order separate trials of counts, sever the defendants' trials, or provide any other relief that justice requires." FED R. CR. P. 14(a). The general rule is that "persons who are indicted together should be tried together." Harrelson, 754 F.2d at 1174. "If defendants have been properly joined, the district court should grant a severance only if there is a serious risk that a joint trial would compromise a specific trial right of one of the defendants or prevent the jury from making a reliable determination of guilt or innocence. Any prejudice created by a joint trial can generally be cured through careful jury instructions." United States v. Bermea, 30 F.3d 1539, 1572 (5th Cir. 1994). The decision whether there is a risk of prejudice and any remedy the district court fashions is within the court's "sound discretion." Zafiro v. United States, 506 U.S. 534, 541 (1993).
In this case, it can hardly be argued that Barbara Coney's involvement in the underlying charges is not apparent from the indictment. Even though she was not charged with the structuring counts, the indictment infers that she was at least familiar with her husband's actions and she took active steps to conceal and obstruct the investigation of those activities. Thus, defendant's reliance on Pineau must fail.
The defendants also rely on United States v. Emond, 935 F.2d 1511 (5th Cir. 1991). In this case, Edward Emond, was named as a defendant in all 46 counts of an indictment; most of the counts charged him with racketeering, mail fraud, violations of the Hobbs Act, and obstruction of justice. Furthermore, he and his wife were charged with 5 counts of tax evasion, and these were the only counts where the wife's name appeared. The wife moved for severance of her trial from the other charges against her husband, and the district court denied the motion. The defendant appealed to the Seventh Circuit, which affirmed.
The court found that the district court had not abused its discretion, but had certainly stretched its limits. Id. at 1516-17. The court noted that no evidence was presented to show that the wife had any involvement with the husband's activities, but the court nonetheless concluded that there was no evidence of any jury confusion. Specifically, the court noted the small number of co-defendants she was tried with, and the "discrete nature" of the evidence offered against her, which was presented in three consecutive days. Id. at 1517. The court further concluded that the jury showed an ability to compartmentalize the evidence when it convicted the husband on some, but not all, counts.
Since the Seventh Circuit actually affirmed the denial of severance, this case does not help Barbara Coney's situation. This case demonstrates the wide discretion a district judge has in ruling on a motion for severance. In this case, there are only two defendants. Furthermore, as noted above, it is clear that Barbara Coney had some involvement or awareness of her husband's activities. Furthermore, evidence of the grand jury's investigation and the structuring transactions will be relevant to Barbara Coney's case to provide proper foundation for the obstruction charges. Finally, this Court can limit any potential prejudice with proper limiting instructions. This motion is DENIED.
IV. DEFENDANTS' MOTION TO DISMISS OR, ALTERNATIVELY, TO SUPPRESS EVIDENCE
This motion relates to the evidence supporting count 12 of the indictment, the obstruction of justice charges against Curtis and Barbara Coney. The testimony presented at the hearing in this matter revealed the following facts. In the early morning hours of April 17, 2002, Internal Revenue Special Agent Denise Scanlon ("Scanlon") and Federal Bureau of Investigation Special Agent James Hurley ("Hurley") went to the residence of Kathy Martino ("Martino"), an employee and friend of the defendants. The agents were invited into Martino's house where they talked with her about the business of Curtis Coney's law firm. The visit lasted approximately thirty minutes. At the end of the meeting, the agents and Martino agreed that a formal interview would take place the next morning at the Martino residence. Martino also agreed to cooperate with the government's investigation of Curtis Coney.
On the morning of April 18, 2002, the agents again returned to the Martino house where they formally interviewed Kathy Martino. The agents told Martino that she would be subpoenaed to appear before the grand jury; however, the agents did not reveal that they planned to subpoena Martino that very day at her office. Special Agent Scanlon testified that a tactical decision was made to serve the subpoenas at the Coney law office rather than at a residence because the agents wanted to see if Curtis Coney would attempt to influence any of his employees that were subpoenaed to appear before the grand jury. At the conclusion of the interview, the agents instructed Martino not to contact Curtis Coney and to call them if she heard from Coney.
After the agents left her house, Martino went to work at Coney's office. At approximately 10:00 a.m. the agents arrived at the office and asked to see Martino. Some discrepancy exists as to where the service occurred. The agents testified they were in an outer office, but Martino testified that she brought them into her office. In any event, the agents served the subpoena and explained when she would be required to testify. After the agents left the office, Martino told the other employees in the office about the service of the subpoena. Neither Curtis Coney nor his wife were in the office at this time.
The testimony again is disputed as to what happened next. Martino testified that shortly after she was served with the subpoena, Curtis Coney telephoned the office and asked to speak with her. Coney asked Martino to come to his house to discuss the subpoena with him. Barbara Coney testified, however, that, on the morning of April 18, she was awakened by a phone call from Kathy Martino who was upset and distraught about the subpoena. Barbara Coney testified that she tried to calm Martino down and let her speak to Curtis Coney. After that call ended, Barbara Coney said that she told her husband to call Martino back and have her come to the house so they could discuss the subpoena. Kathy Martino denied making any calls to Curtis Coney's house on that date. Further, all of the other employees in the law firm testified that they did not inform Curtis Coney that a subpoena had just been served on Martino.
Kathy Martino then immediately left the office and proceeded in the direction of the Coney house. While on the way, she telephoned Special Agent Scanlon and informed her of the conversation she had with Curtis Coney. Scanlon asked Martino to meet her at a coffee shop in Metairie so they could discuss the next course of action. Scanlon and Hurley met with Martino and asked her to use a device to record the conversation with Coney. Martino agreed to do so, and Hurley gave her the recorder. Martino and Scanlon denied that Martino was instructed as to what to say to Curtis Coney. Martino then proceeded to the Coney house where she met with Barbara and Curtis Coney. Following the meeting, Martino returned to the coffee shop and gave the federal agents the recording device.
The defendants contend that this conversation amounted to entrapment as a matter of law. They ask the Court to dismiss the indictment and/or to suppress the recorded conversation. In addition to arguing entrapment as a matter of law, the defendants also argue that the tape is inadmissible because the government did not have a warrant to make the recording.
The government asserts that the defendants have failed to show entrapment as a matter of law because Martino was not coached on what she would or should say. Rather, they assert that this issue may properly be raised as an affirmative defense and determined by the jury.
In United States v. Wise, 221 F.3d 140 (5th Cir. 2000), the Fifth Circuit defined entrapment as an "affirmative defense with two related elements: government inducement of the crime and a lack of predisposition on the part of the defendant to engage in the criminal conduct." Id. at 154. The Eighth Circuit recognized entrapment as a matter of law in United States v. Quinn, 543 F.2d 640 (8th Cir. 1976), which held:
[G]overnmental participation may be so outrageous or fundamentally unfair as to deprive the defendant of due process of law or to move the courts in the exercise of their supervisory jurisdiction over administration of justice to hold that the defendant was "entrapped" as a matter of law. . . . A claim of entrapment on the basis of outrageous government involvement does not present any question for a jury to decide but solely a question of law for the court.Id. at 648.
The Fifth Circuit recognized this defense in United States v. Stanley, 765 F.2d 1224 (5th Cir. 1985), but cautioned that it should "only be invoked in the rarest and most outrageous circumstances." Id. at 1231. In this case, the defendants have not shown any evidence of outrageous conduct. After reviewing the transcript of the conversation, this Court is unable to conclude that Kathy Martino's comments to Curtis and Barbara Coney were so outrageous as to warrant a finding of entrapment as a matter of law. At best, there is a discrepancy as to who called whom first. This is a question of credibility, which is not appropriate for this Court to resolve; rather, the issues of deciding factual and credibility disputes are solely within the province of the jury, and the Court will not usurp the jury's role in deciding these issues. Finally, the lack of any warrant is of no moment because such is not required where a defendant willingly invites an undercover agent into his or her home. See Lewis v. United States, 385 U.S. 206, 210-11 (finding that the government did not need a warrant to send an undercover agent into a home when the defendant willingly invited the agent to enter). Thus, the motion to suppress is DENIED.
V. CONCLUSION
For the foregoing reasons, the Court finds that Curtis Coney is not entitled to the relief sought under Rule 12 of the Federal Rules of Criminal Procedure. Accordingly, IT IS ORDERED that the Motion for Relief be DENIED. The Court further finds that the joinder of Count 12 to the other counts of the indictment was proper and that joint trials of Curtis and Barbara Coney is proper as well. Therefore, IT IS FURTHER ORDERED, the Motion for Relief from Misjoinder and/or Prejudicial Joinder is DENIED. Finally, the Court finds that the defendants have not met their burden of showing entrapment as a matter of law. As such, IT IS FURTHER ORDERED that the Motion to Dismiss, or, Alternatively, to Suppress Evidence is DENIED.