Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

Anthony Tesvich, a former Home Depot employee, plead guilty in front of Judge Story in Atlanta on Monday to one count of conspiring to defraud Home Depot, and three counts of tax evasion. As part of his plea, Tesvich admitted to taking millions of dollars in secret payoffs from Home Depot vendors and failing to pay taxes on those kickbacks.

The lengthy Criminal Information, available here, alleges that Tesvich conspired with two other Home Depot employees, identified only as co-conspirators A and B, to obtain kickbacks from Home Depot suppliers through various front companies and then paid monies to his Home Depot co-conspirators for the purpose of concealing the receipt of those kickbacks.

Yesterday, July 2, Tesvich forfeited his interest in the following properties.

• $465,999 .69 in proceeds from the consent sale of 90C Carriage Path, S .E ., Smyrna, Cobb County, Georgia;
• 1E255 Mountain View Road, Desert Hot Springs, Riverside County, California, and all buildings and appurtenances thereon;
• Twenty (20) Acres of Vacant Land, Parcel Number 657-270-023-6, Riverside County, California, and all buildings and appurtenances thereon;
• 600 Schillinger Road N., Serrsnes, Mobile County, Alabama, and all buildings and appurtenances thereon;
• 1916 Wildwood Place, Mobile, Mobile County, Alabama, and all buildings and appurtenances thereon; and
• $122,971 .75 in proceeds from the consent sale of Lot 43, Heron Lakes, Phase T, Mobile, Mobile County, Alabama.

Tesvich, who is cooperating with the government will be sentenced on September 2, 2008. Based on the government filings to date, other cases will arise out of Tesvich’s cooperation.

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    The United States Attorney's Office for the Southern District of Georgia has announced the indictment of Alfredo Rasco and Niurka Rasco of Miami, Florida, who operated a clinic called United Therapy in Savannah. The defendants are charged with 34 counts of health care fraud and aggravated identity theft. The indictment alleges that the Rascos, through United Therapy, provided infusion services to patients, but only administered a fraction of the medicines to patients, while billing Medicare for the full amount. The indictment further alleges that the defendants defrauded Medicare of more than $4.6 million between 2005 and 2008.

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I apologize for being away from the blogging world for the past 2 weeks, but the press of business has kept me too busy. There are many noteworthy developments in the blogosphere, but none more important to the criminal practitioner than the Supreme Court's decision yesterday on the landscape of money laundering.

The Supreme Court in United States v. Santos, -- S.Ct. --, 2008 WL 2229212, (available here) affirmed the Seventh Circuit in holding that the term “proceeds” in 18 U.S.C. § 1956 (a)(1) means “profits,” not “receipts.” Efrain Santos was found guilty of running an illegal lottery business in violation of 18 U.S.C. § 1955, and money laundering and conspiracy to commit money laundering in violation of 18 U.S.C. § 1956 (a)(1) and 18 U.S.C. § 1956 (h). He was sentenced to 60 months imprisonment for the illegal gambling charges and 210 months on the money laundering charges. Following affirmance on direct appeal, Santos filed a section 2255 motion to vacate his sentence, ultimately alleging in part, that that his payments to customers and collectors of his illegal operation did not constitute money laundering. United States v. Santos, 342 F.Supp.2d 781 (N.D. Ind. 2004). The district court granted Santos’ 2255 motion finding that Judge Easterbrook’s decision in United States v. Scialabba, 282 F.3d 475 (7^th Cir. 2002), controlled, and that the “proceeds” of an illegal gambling business under 1956 means “net” proceeds, not the ongoing monies used to conduct the illegal business in the first place. That decision was affirmed on appeal. Santos v. United States, 461 F.3d 886 (7^th Circuit 2006), and the government appealed to the Supreme Court.

            Justice Scalia writing for the majority held that “proceeds” under section 1956 means “profits,” not the ongoing “receipts” of the illegal business. Justice Scalia adds “a word concerning the stare decisis effect of JUSTICE STEVENS’ [concurring] opinion.” 2008 WL 2229212, * 10. Because Justice Stevens’ vote was necessary to the Court’s judgment, but since it rested on a narrower ground, the Santos opinion is, accordingly, limited. Therefore, so that there will be no mistake as to the meaning of his opinion, Justice Scalia stakes out the exact contours – “that ‘proceeds’ means ‘profits’ when there is no legislative history to the contrary.” Id.

            So, why is this opinion so important to us – because the government routinely uses money laundering to jack up a defendants’ sentence, if the defendant chooses to go to trial. Look at the effect on Santos – 60 months for gambling, but 210 months for money laundering. This decision  effects many former and current cases. We should be looking through our inventory of cases to see what meritorious 2255 motions lie therein.

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   Georgia State Representative Ron Sailor, Jr., who pled guilty to money laundering charges in the United States District Court for the Northern District of Georgia back in March for attempting to assist drug dealers in laundering hundreds of thousands of dollars worth of drug money, was also involved in suspect real estate deals. As the Atlanta Journal-Constitution reports, records have revealed that Mr. Lee Anderson, Sailor's wife's grandfather, purchased two duplexes in Macon, Georgia, from Sailor in 2005. Sailor  purchased the duplexes for $30,000 and sold them to Anderson 6 months later for $126,000.
   However, Anderson was actually a 101 year-old man who died last week and who lived on an isolated road in Mississippi and never set foot in the State of Georgia. Anderson's wife Ruby has stated that the couple had nothing to do with real estate, and that the signatures on the mortgage documents did not resemble Anderson's handwriting. Documents relating to the properties would be sent to the couple, and Sailor informed the couple that he would take care of it. The properties were eventually foreclosed on and sold.

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   Donna Rene Gamble was an employee of the Georgia Institute of Technology. As a Tech employee, Gamble had access to one or more Procurement Cards, or "P-Cards," which employees could use for official business purchases, but not personal purchases. However, over the course of five years, Gamble purchased more than 3,800 personal items with her P-Cards, totalling more than $316,000. Gamble then concealed her purchases by creating false receipts and making false entries in accounting records. The money spent by Gamble was grant money to Georgia Tech by the National Science Foundation.
   Gamble plead guilty on May 13 in the United States District Court for the Northern District of Georgia to 22 counts of mail fraud and theft from and organization receiving federal funds. She will be sentenced in July.

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In an Opinion (available here) dated March 20, 2008, but released on Monday, May 12, the Eleventh Circuit affirmed the convictions and sentences of Joya Williams, a former Coca Cola employee, and one of her conspirators, Ibrahim Dimson.

After a lengthy factual recitation regarding this case which was prosecuted by the U.S. Attorneys Office in Atlanta and which involved the attempted sale of trade secrets by Williams and others to Pepsi, the Court found no error in the curtailed cross-examination of Williams’ co-conspirator since the cross-examination conducted extensively challenged the co-conspirator’s credibility.

In a more interesting challenge, and one that always seems to get the ear of the appellate courts, the defense contended that the district court improperly instructed the jury on the meaning of reasonable doubt by using an example “which had to do with open-heart surgery the judge had previously undergone.” Although the Eleventh Circuit doesn’t tell us more, the defense contended that the example amounted to unconstitutional burden shifting. When the example was given by the district court, he apparently informed the jury, following objection, to disregard his example, and gave the pattern reasonable doubt charge, which the jury is presumed to follow.

Finally, both Williams and Dimson challenged their sentences contending that the district court placed undue emphasis on one factor, the seriousness of the harm, and less weight on the other 3553 factors. In affirming the above-guideline sentences imposed, the Eleventh Circuit noted that, although U.S. v. Pugh, discussed at an earlier post here, provides that an unjustified reliance on a single 3553 factor might be a “symptom” of an unreasonable sentence, here the trial judge discussed several 3553 factors and the individual weight to be given to any one factor is within the trial judge’s discretion.

Both defendants challenged their sentences, 96 and 60 months respectively, based on the alleged unwarranted disparity with their cooperating co-defendant who received 24 months. The Eleventh Circuit cited the cooperation as a factor that plainly accounted for the different sentence and affirmed.

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In a fascinating case out of the District of Nevada, the Ninth Circuit (opinion available here, 2008 WL 1946744) has affirmed the district court’s dismissal of the indictment against three defendants who were charged in a 64 count indictment with, among other things, wire fraud, securities fraud, and money laundering. The government’s case revolved around what the Ninth Circuit described as a “box job” scheme where a small number of individuals control a corporation’s stock through strawmen officers, directors and shareholders. One of the core allegations was that the defendants allegedly made more than $12 million, which was laundered through the law firm of two of the defendants.

The Motion to Dismiss filed in the district court, available here, outlines a litany of what the district court called “unconscionable” conduct by the government that including Brady and discovery violations as follows: 1) failing to provide the defense with Jencks materials relating to the case agent, 2) failing to disclose the rap sheet and prior convictions of one of the government witnesses, 3) failing to produce notes a witness had provided to the investigating agent, 4) failing to disclose that the investigating agent had countenanced the continued unlawful activity of a cooperating witness, 5) failing to produce documents essential to the “box job” allegation, 6) failing to disclose memoranda that contradicted witness testimony, and 7) producing some 650 pages of documents, including rap sheets, during trial. The motion to dismiss was filed during the third week of trial. In declaring a mistrial, the district court noted that the AUSA in charge of the prosecution had acted “flagrantly, willfully, and in bad faith.” 2008 WL 1946744, *4.

In an excellent discussion of the applicable law dealing with dismissal of an indictment for prosecutorial misconduct and whether that ultimate sanction was required here, the Ninth Circuit, noted that the government even conceded that a mistrial was an appropriate remedy, for the government’s violations of “its constitutionally imposed discovery obligations.” Id., *12.  Both the district court and, apparently, the Ninth Circuit, were concerned that any sanction short of dismissal, would have countenanced the government's unlawful conduct.

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     Bill Smith, Sheriff of Camden County, Georgia, is being investigated by a federal grand jury over his use of convict labor, as well as his use of seized drug monies and assets. Smith allegedly made Camden County inmates work on a private property on Cumberland Island which was slated to be used by the Shepherd Center, a nonprofit organization in Atlanta which treats spinal cord injuries. Smith’s son was paralyzed in 2003 in an automobile accident. The District Attorney for Camden County forwarded investigative materials in the case to the United States Attorney’s Office for the Northern District of Georgia in Atlanta. Several witnesses have been called before the grand jury this year.

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          Several soldiers stationed at Camp Frank D. Merrill in Dahlonega, Georgia, have been indicted in the United States District Court for the Northern District of Georgia. Sandeo Pablo Dyson, an Army Ranger, pled guilty last Thursday in the United States District Court for the Northern District of Georgia to burning down Club Onyx, an adult entertainment establishment on Cheshire Bridge Road in Atlanta. Dyson worked as director for security for Platinum 21, another adult club, which began to experience competition from Onyx for African-American clientele. Platinum 21’s management allegedly formulated a plan to burn down Onyx. He faces 5 years in prison.

            However, federal authorities’ investigation of the matter greatly expanded when Dyson told a confidential information that four other soldiers from Camp Merrill, some of whom, coincidentally, also worked security at Platinum 32, would be willing to rob a Mexican “stash house” for a cut of cocaine. This prompted an undercover Bureau of Alcohol Tobacco and Firearms agent to meet with Army Rangers Carlos Lopez, David Ray White and Randy Spivy, and Army medic Stefan Andre Champagne, and laid out a fictitious plan to hold up drug deals at a house in Atlanta and steal 25 kilograms of cocaine. The soldiers were arrested when they showed up at the house with their weapons, and face pending charges.

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    Georgia banks... and the Crown Royal Company of Norwalk, Connecticut... can breathe a little easier today. That is because Bruce Allen Hughes, the legendary "Crown Royal Bandit," is finally behind bars and has been indicted in the United States District Court for the Northern District of Georgia.
     Hughes, who apparently had a fondness for Canadian whiskey, robbed about 30 banks in Georgia and Tennessee over a decade, taking over $300,000. Hughes' trademark during his crime spree was his use of a purple Crown Royal bag which he ordered bank tellers to place loot in. Hughes, a resident of Madison County, Georgia, apparently reeked of alcohol during his last robbery, of an Athens, Georgia, bank, and complained to customers that banks had foreclosed on his home, tips which were used by FBI agents who arrested Hughes at his home. Hughes is charged in the indictment with conspiracy to commit Hobbs Act robbery, armed bank robbery and use and possession of a firearm during the commission of a felony. He will be arraigned sometime after April 24.
    

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Kevin Felts lived a mundane life as a 60 year-old chemical engineer in Brazoria, Texas. That is, until he managed to convice Nora Aguilar, a former convict with ties to drug smuggling organizations, that he was a fighter pilot returned from Iraq. Aguilar, impressed, bought Felts a small plane and Felts began flying millions of dollars worth of cash for a drug cartel from various points in the United States to the Mexican border. Felts’ exciting new career as a drug smuggler ended, however, in March 2005, at Lee Gilmer Memorial Airport in Gainesville, Georgia, where Felts was apprehended carrying suitcases containing $1.3 million. He was sentenced last Thursday to 17 years imprisonment by Judge William C. O’Kelley of the United States District Court for the Northern District of Georgia.

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I have yet to weigh in on the many fine blogs that have followed the Dickie Scruggs case since the indictment in November of last year (particular kudos are due to David Rossmiller’s exceptional work here), but with Zach Scruggs’ plea to misprision of a felony last week, and, since Mississippi is the land of Faulkner, here is my editorial stream of consciousness:

My first thought on Zach Scruggs’ plea:

This is the way the world ends,
This is the way the world ends,
This is the way the world ends,
Not with a bang, but a whimper.

T.S. Eliot, The Hollow Men

It has been said by one prosecutor that misprision is for girlfriends, but, apparently, that prosecutorial gift extends to sons as well. It is surprising in the extreme that the government allowed Zach to enter a plea to misprision. The sentencing guidelines for misprision are very low, and that plea virtually guarantees that Zach won’t serve much time in prison.

One of the things that has struck me about the defendants’ plea colloquy is that several of them have wanted to weigh in and lessen their culpability (see here, Zach's plea transcript, p.15-16, and here, Dickie's plea transcript and his famous earwig comment, p. 15). Generally, statements by defendants in mitigation are not made until sentencing, and even then that can be a dangerous tact because here the defendants are entering pleas to some of the most serious offenses, bribing a judicial official, and straining at gnats at the plea is not cottoned to by district court judges.

I  was fundamentally surprised at three things in the pretrial motions practice in this case: (1) that more attacks were not raised by defense counsel against the wiretaps (there is an entire body of Title III litigation out there); (2) the shrill, overblown writing style of the defendants’ motions that, (3) was very effectively countered in direct, succinct writing that highlighted the nits at which the defendants were picking and the substantial, and fundamentally wrong conduct the defendants were engaged in.

Finally, I was extremely surprised at Dickie Scruggs’ guilty plea, particularly because the plea agreement, p.10, does not protect him from additional criminal investigations that, plainly, are ongoing.

In that respect, Balducci predicted in one of his conversations with Judge Lackey that he knows where the bodies are buried (Scruggs Indictment, p. 5). My guess, there are other bodies out there, and it will be interesting to see how aggressively the government pursues those case.

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Two Transportation Safety Administration (TSA) employees and a Delta Airlines employee were charged last week in the Northern District of Georgia with conspiring to distribute narcotics and attempting to distribute cocaine and heroin by smuggling the narcotics through Hartsfield-Jackson International Airport (HJIA). In a scheme sure to amuse anyone forced to submit to a random search of their person or baggage by TSA employees, Jon Patton, a TSA employee, allegedly entered into agreements with drug dealers to transport drugs from Atlanta to New York for a transportation fee. Patton allegedly met with drug dealers at HJIA where he would receive a carry-on bag containing narcotics. Patton would then allegedly take the bags through security himself, where they were not challenged by TSA screeners. Patton then allegedly would give the bags to Leslie Adgar, a Delta employee, who would transport the bags to LaGuardia Airport in New York, where she would deliver them. Unfortunately for Patton and Adgar—a “drug dealer” who arranged three trips was a Drug Enforcement Administration (DEA) confidential source. The alleged activities were discovered based upon a lead from the Kings County (New York) District Attorney’s Office.

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