United States v. Scott E. Hildebrand ( 1998 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 97-3021
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United States of America, *
*
Plaintiff - Appellee, *
*
v. *
*
Scott E. Hildebrand, *
*
Defendant - Appellant. *
___________ Appeals from the United States
District Court for the
No. 97-3023 Northern District of Iowa.
No. 97-3278
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United States of America, *
*
Plaintiff - Appellee/Cross- *
Appellant, *
*
v. *
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Joan M. Webb, *
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Defendant - Appellant/Cross- *
Appellee. *
___________
No. 97-3024
No. 97-3277
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United States of America, *
*
Plaintiff - Appellee/Cross- *
Appellant, *
*
v. *
*
Larry A. Webb, *
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Defendant - Appellant/Cross- *
Appellee. *
___________
No. 97-3026
No. 97-3280
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United States of America, *
*
Plaintiff - Appellee/Cross- *
Appellant, *
*
v. *
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David I. Gardemann, *
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Defendant - Appellant, Cross- *
Appellee. *
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___________
No. 97-3031
No. 97-3279
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United States of America, *
*
Plaintiff - Appellee/Cross- *
Appellant, *
*
v. *
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Joseph A. Mentlick, Jr., *
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Defendant - Appellant/Cross- *
Appellee. *
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No. 97-3033
No. 97-3281
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United States of America, *
*
Plaintiff - Appellee/Cross- *
Appellant, *
*
v. *
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Kenneth Lee Kraklio, *
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Defendant - Appellant/Cross- *
Appellee. *
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___________
No. 97-3276
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United States of America, *
*
Plaintiff - Appellant, *
*
v. *
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Allen K. Zurcher, *
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Defendant - Appellee. *
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Submitted: February 12, 1998
Filed: July 28, 1998
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Before McMILLIAN and LOKEN, Circuit Judges, and BOGUE,* District Judge.
___________
LOKEN, Circuit Judge.
Scott Hildebrand, Joan Webb, Larry Webb, David Gardemann, Joseph Mentlick,
Kenneth Kraklio, and Allen Zurcher were convicted of mail fraud, conspiracy to
commit mail fraud, and conspiracy to launder money for their roles in an organization
known as “We The People” that offered to file claims in a purported federal class
action lawsuit for a fee of $300. Gardemann, Kraklio, and the Webbs appeal their
convictions; Mentlick appeals his conviction and sentence; and Hildebrand appeals his
*
The HONORABLE ANDREW W. BOGUE, United States District Judge for
the District of South Dakota, sitting by designation.
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sentence. The government appeals the sentences imposed on the Webbs, Gardemann,
Mentlick, Kraklio, and Zurcher. We affirm.
I. Background and Sufficiency of the Evidence Issues.
Defendants’ scheme grew out of a lawsuit filed in the United States District
Court for the District of Colorado in which two families filed a pro se class action
complaint alleging unlawful foreclosure of their farms in state court. We will refer to
this lawsuit as the Baskerville case. Plaintiffs moved for appointment of Hildebrand
as receiver for various Farm Credit Services affiliates, the Farmers Home
Administration, and the National Banking Association. In early June 1993, Hildebrand
filed a document declaring himself receiver and videotaped himself on the steps of the
federal courthouse reading a press release announcing that the Federal Land Bank and
its affiliates, the Farmers Home Administration, the National Banking Association, and
the City of Fort Collins and County of Larimer, Colorado, had been placed in
receivership by the Baskerville court. Hildebrand then organized “We The People.”
Through printed literature, videotaped presentations, and public meetings held in at
least forty States, We The People represented that anyone who had ever borrowed
money from a Federal Reserve Bank System entity, paid taxes or attorney’s fees, been
divorced, or had a death in the family was entitled to a substantial damage award in the
Baskerville case. The catch was that claimants needed to pay We The People $300 to
cover the administrative costs of filing claims. The group permitted impoverished
claimants to file without paying the $300 fee on the condition that it receive twenty
percent of any damage recovery. These were called “80/20” claims. We The People
warned that claims would be paid on a first-come, first-serve basis; that no new claims
could be filed once pay-outs began; and that citizens who did not file a claim would
face criminal prosecution.
Defendants had varying roles in We The People. Hildebrand was the leader and
promoter. His home in Greene, Iowa was the organization’s headquarters. Mentlick
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was Hildebrand’s right-hand man who proclaimed himself a receiver and appeared
regularly with Hildebrand on promotional videos and at promotional meetings.
Gardemann entered claims information into computers, was actively involved in
promotional meetings, and had signature authority on three bank accounts used to
deposit claims money. Kraklio and the Webbs were claims writers who solicited claims
and collected administrative fees. Kraklio submitted at least six hundred claims to
Hildebrand. The Webbs supervised forty claims writers operating in seven States.
Claims writers were generally paid $50 per paid claim. Zurcher was the group’s
bookkeeper, a job he described as “overseeing the claims administration activity.”
The government identified 6,832 claims filed with We The People claims writers
between Spring 1993 and October 1994. About two-thirds were fully paid claims,
evidence that the group collected at least $1.3 million in administrative fees. No claims
were submitted to the Baskerville court, which denied class certification and the motion
to appoint receivers in June 1993 and dismissed the case with prejudice in November
1993. See Baskerville v. Federal Land Bank, 25 F.3d 1055 (10th Cir. 1994).
Defendants were indicted in September 1995. At trial, the central issue was
whether each defendant participated in the scheme with intent to defraud. Without
disputing their roles in the scheme, defendants argued they did not know the truth about
the Baskerville case, did not profit from their activities, and participated because of
strongly held political views. They emphasized the 80/20 claims, the organization’s
meticulous records, and the steps taken to ensure that claims forms were properly filled
out. Two defendants were acquitted at the close of the government’s case. A mistrial
was declared as to Scott Hildebrand when his attorney became ill; he was tried
separately and found guilty of all charges in June 1997. The remaining defendants were
found guilty of all charges at the end of the first trial in December 1996.
On appeal, Mentlick, Kraklio, and the Webbs argue the evidence was insufficient
to support their convictions. We view the evidence in the light most favorable to the
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verdict, giving the government the benefit of all reasonable inferences and reversing
only if no reasonable jury could have found every element of the offense beyond a
reasonable doubt. See United States v. Berndt, 86 F.3d 803, 809 (8th Cir. 1996).
A. Mail Fraud. These defendants argue the evidence does not support an
inference of criminal intent to commit, or to conspire to commit mail fraud. We
disagree. To sustain a conviction for mail fraud under 18 U.S.C. § 1341, the evidence
must establish that a defendant knowingly participated in a plan or scheme to defraud
in which it was reasonably foreseeable the mails would be used. To prove a conspiracy
to commit mail fraud under 18 U.S.C. § 371, the evidence must establish that a
defendant intentionally joined a conspiracy to commit mail fraud, knowing the purpose
of the conspiracy. See United States v. Earles, 955 F.2d 1175, 1177-78 (8th Cir. 1992).
The victims paid $300 to an organization that had no intent to file claims on their
behalf. Thus, overall the scheme was manifestly fraudulent. As to these defendants,
there was substantial evidence that they had access to newspaper articles, Baskerville
court documents, a state court injunction, and explicit warnings from state authorities
which alerted them, or should have alerted them, to the essentially fraudulent nature of
the scheme. Accordingly, a jury could reasonably infer that Mentlick, Kraklio, Joan
Webb, and Larry Webb carried out promotional activities, claims filing, and the
collection of $300 fees after acquiring the requisite criminal intent. “One who
knowingly participates in an ongoing mail fraud devised by another is guilty of mail
fraud.” Earles, 955 F.2d at 1177.
The Webbs and Kraklio complain that they directly participated in only a few of
the forty-one substantive mail fraud counts. But each participant in a scheme to defraud
is responsible for his partners’ use of the mails in furtherance of that scheme. See
Pinkerton v. United States, 328 U.S. 640, 647 (1946); United States v. Nance, 502 F.2d
615, 619 (8th Cir. 1974), cert. denied, 420 U.S. 926 (1975). These defendants also
argue that many of the substantive counts involved innocent transactions, and that the
counts based upon 80/20 claims involved mailings that did not defraud anyone.
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However, there was evidence that a number of the 80/20 claims were later converted to
paid claims, and further evidence that the 80/20 claims procedure was necessary to the
scheme because We The People warned that anyone who did not file a claim could be
prosecuted. Facially innocent mailings intended to further a scheme to defraud violate
§ 1341. See Schmuck v. United States, 489 U.S. 705, 715 (1989); United States v.
Pemberton, 121 F.3d 1157, 1170-71 (8th Cir. 1997), cert. denied, 118 S. Ct. 1046
(1998).
B. Money Laundering. Mentlick, Kraklio, and the Webbs argue the government
failed to prove they conspired to launder money in violation of 18 U.S.C. § 1956(h). To
prove a conspiracy to launder money, the government must establish that a defendant
knowingly joined a conspiracy to launder money and an overt act in furtherance of that
conspiracy. See United States v. Conley, 37 F.3d 970, 976-77 (3d Cir. 1994). In Count
43, the government charged a conspiracy to violate two distinct money laundering
statutes, 18 U.S.C. §§ 1956(a)(1)(A)(i) and 1956(a)(1)(B)(i). Each requires proof that
defendants engaged in financial transactions with the knowing use of the proceeds of
illegal activities such as mail fraud. The final element of subsection (a)(1)(A)(i) requires
proof of “intent to promote the carrying on” of unlawful activity such as mail fraud. We
will refer to this as “reinvestment” money laundering. Subsection (a)(1)(B)(i) requires
proof of intent “to conceal or disguise” the illegal proceeds, which we will refer to as
“concealment” money laundering. See United States v. Nattier, 127 F.3d 655, 658-59
(8th Cir. 1997), cert. denied, 118 S. Ct. 1398 (1998). Here, the district court charged
that the jury must find a conspiracy to commit both types of money laundering, and the
jury did so. But the statute requires the government to prove reinvestment money
laundering or concealment money laundering. In these circumstances, we need only
examine whether the evidence was sufficient to convict of one type or the other. See
United States v. Jackson, 935 F.2d 832, 842 (7th Cir. 1991). Because reinvestment
money laundering carries a higher base offense level for sentencing purposes, see
U.S.S.G. § 2S1.1(a), and because that was the base offense level used in sentencing
these defendants, we must examine whether the
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evidence was sufficient to convict them of conspiring to commit reinvestment money
laundering.
The government located seven bank accounts operated by We The People. Over
$1,100,000 was deposited into these accounts and almost $500,000 was withdrawn in
cash. The deposits were primarily money orders in amounts around $300, and a number
came from claimants processed by Kraklio and the Webbs. Although the government
could not track the cash withdrawals, it introduced checks written on these accounts to
pay for office supplies, secretarial services, and office staff wages. Checks written to
Larry and Joan Webb, Kraklio, and Mentlick reimbursed claims writers for promotional
expenses and paid claims writer commissions on fees collected from the fraud victims.
From this evidence, the jury could reasonably find that these defendants knowingly
participated in a conspiracy to deposit fraud proceeds into bank accounts and then to
expend those proceeds to promote the on-going scheme to defraud. That is sufficient to
convict them of conspiracy to commit reinvestment money laundering. See United
States v. Cruz, 993 F.2d 164, 167 (8th Cir. 1993).
II. Value of Funds Laundered for Sentencing Purposes.
When conspirators are convicted of fraud that includes money laundering, the
Guideline provision imposing the more severe money laundering penalties, U.S.S.G. §
2S1.1, must be applied at sentencing. See United States v. Morris, 18 F.3d 562, 569
(8th Cir. 1994). That Guideline increases the base offense level depending on the value
of the illegal proceeds that were laundered. See § 2S1.1(b)(2). Here, the probation
officer recommended, and the district court agreed, that the value determinations should
be based upon the jury’s money laundering forfeiture verdicts against each defendant.1
The government appeals these determinations, arguing that they significantly
1
The forfeiture verdicts against these defendants ranged from $45,000 for Joan
Webb to $500,000 for Allen Zurcher.
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understated the value of money laundered by all defendants except Hildebrand. This is
a complex and difficult sentencing issue.
The government proposes a relatively simple answer -- (1) fix the amount of the
loss for fraud sentencing purposes, see U.S.S.G. § 2F1.1(b)(1), as the full $300 fee
collected from each victim because the conspirators never intended to file claims; (2)
group the fraud and money laundering counts under U.S.S.G. § 3D1.2(d); (3) with the
offenses grouped, determine the value of money laundered for purposes of § 2S1.1(b)(2)
as equal to the amount of the fraud loss; (4) conclude that all claim fees collected by We
The People were reasonably foreseeable relevant conduct for each defendant, see
U.S.S.G. § 1B1.3; and therefore (5) base each defendant’s money laundering sentence
on the total amount of claim fees the government proved the conspiracy collected,
namely, $1,352,736. We reject this contention because points (3) and (4) are unsound
as a matter of law.
Fraud sentences are based on the amount of loss to victims. Money laundering
sentences are based on the value of the money laundered. While both measures address
the relative scope of the illegal activity, they do not measure the same types of harm.
And because the base offense levels for money laundering are much higher than the base
offense level for fraud, compare § 2S1.1(a), with § 2F1.1(a), it is wrong to assume that
the Sentencing Commission intended to equate the amount of fraud loss with the value
of money laundered for every fraudulent scheme that includes some form of money
laundering (as most every fraud scheme does). Therefore, we agree with decisions
holding that fraud and money laundering counts are not so closely related as to permit
loss and value grouping under § 3D1.2(d). See United States v. Taylor, 984 F.2d 298,
303 (9th Cir. 1993); United States v. Johnson, 971 F.2d 562, 575-76 (10th Cir. 1992).2
2
Of course, if a sentencing court finds that all fraud proceeds were laundered,
then the amount of fraud loss and the value of money laundered will be the same for
sentencing purposes. That was the situation in United States v. Mullens, 65 F.3d 1560,
1564-65 (11th Cir. 1995), cert. denied, 517 U.S. 1112 (1996), and United States v.
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Rather than simply equating fraud loss with value of money laundered, as the
government urges, a sentencing court must separately determine the value of laundered
proceeds attributable to each conspirator. There are two factors that complicate this
task. First is the need to distinguish between different types of money laundering.
Reinvestment money laundering offenses punish the plowing back of illegal proceeds
into the unlawful scheme. Concealment money laundering offenses punish measures
used to keep illegal proceeds from being detected. The former are punished more
severely with an initial base offense level of 23, rather than 20, because reinvested
proceeds generate further criminal activity. See U.S.S.G. § 2S1.1, comment. (backg’d).
Just as the two offenses punish different types of conduct, the value of the money
laundered must be measured differently. For example, when an elaborate fraud scheme
includes a money laundering concealment device, it is likely that all proceeds have been
concealed and will therefore count in the § 2S1.1(b)(2) value determination. But it is
less likely that all illegal proceeds have been reinvested in an illegal enterprise because
some may have been withdrawn, for example, for the conspirators’ personal living
expenses. Thus, when the government starts with the higher base offense level for
reinvestment money laundering, it may encounter greater problems in proving the value
of the illegal proceeds that were laundered.
The second complicating factor is to determine what was reasonably foreseeable
relevant conduct for each money laundering conspirator. A relatively peripheral
conspirator may know more about the fraud scheme than he or she knows about the
reinvestment money laundering offense. Because fraud and money laundering may not
be grouped for purposes of § 2S1.1(b)(2), the government must prove reasonable
foreseeability specifically as to the money laundering. This can raise intriguing
questions; for example, when Hildebrand paid Larry Webb his claim writer’s
Rose, 20 F.3d 367, 372 (9th Cir. 1994), cases on which the government relies.
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commissions, were those payments a reinvestment of illegal proceeds as to Hildebrand
but a personal withdrawal as to Webb?
In this case, the government came to sentencing with a global approach to this
issue that we reject. Not surprisingly, therefore, the government did not place in the
sentencing record the kind of detailed evidence on the value-of-money-laundered issue
that would support its contention that each defendant should be assessed the value of all
fraud proceeds under § 2S1.1(b)(2). The district court recognized it was not bound by
the jury’s criminal forfeiture verdicts and concluded they were a reasonable estimation
of the value of money laundered attributable to each conspirator. The government has
failed to persuade us that the resulting findings were clearly erroneous.
III. Jury Instruction Issues.
A. Deliberate Ignorance Instruction. Mentlick, Gardemann, Kraklio, and the
Webbs argue the district court erred in giving a deliberate ignorance or willful blindness
instruction consistent with Eighth Circuit Model Criminal Jury Instruction 7.04:
You may find that a defendant acted knowingly if you find beyond a
reasonable doubt that the defendant was aware of a high probability that
materially false representations were being made about the Baskerville case
or the claims process, but deliberately avoided learning the truth. The
element of knowledge may be inferred if a defendant deliberately closed his
or her eyes to what would otherwise have been obvious to him or her.
A deliberate ignorance instruction is appropriate when the defendant asserts a lack of
guilty knowledge, but the evidence supports an inference of deliberate ignorance. United
States v. Gruenberg, 989 F.2d 971, 974 (8th Cir.), cert. denied, 510 U.S. 873 (1993).
In deciding whether this instruction was warranted, we view the evidence in the light
most favorable to the government and reverse if the district court abused “its
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wide discretion to formulate jury instructions.” United States v. Cunningham, 83 F.3d
218, 221 (8th Cir. 1996).
Iowa Assistant Attorney General Steven Reno testified that in September 1993 his
office obtained an order from the Wayne County District Court enjoining collection of
the $300 claim fees. Hildebrand, Zurcher, Kraklio, and the Webbs were personally
served with copies of that order. In December 1993, Reno attended a promotional
meeting and told Kraklio and the Webbs they were misrepresenting the status of the
Baskerville case and defrauding claimants. In January 1994, Reno attended another
promotional meeting and told Gardemann and others the claims process was a scam.
Gardemann bragged at a videotaped claims meeting in 1994 that “I’ve been called a
scam artist in pretty nearly every state I’ve been in.” An October 1994 search of
Gardemann’s storage unit revealed a notice from the Colorado Attorney General’s Office
disclosing the history of the Baskerville case and a copy of the Tenth Circuit’s decision
affirming its dismissal. A search of the Webbs’ residence revealed a June 1993
Baskerville transcript confirming the case had been dismissed, documents from the
proceedings in Wayne County, and newspaper clippings, including one titled “Judge
Halts Alleged Farm Scam.” Kraklio had documents from the Baskerville case and
newspaper clippings, including one entitled “Attorney General Warns Fairfielders Not
to Fall for Scam.” Searches of Mentlick’s home and office uncovered copies of the
Baskerville docket sheets stating the case had been dismissed; newspaper clippings with
headlines such as “Organization’s Claims Hogwash,” “I’ve Got This Bridge to Sell,” and
“Class Action Really a Scam, State Says”; and a notice from the Wisconsin Department
of Justice stating, “There is absolutely no basis to these claims. They are outrageous
misrepresentations being made to take money from unsuspecting citizens.”
To be guilty of deliberate ignorance, “the defendant must have been presented
with facts that put him on notice that criminal activity is probably afoot, and then the
defendant must have failed to investigate those facts, thereby deliberately declining to
verify or discover the criminal activity.” United States v. Barnhart, 979 F.2d 647, 652
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(8th Cir. 1992). Newspaper articles and contacts from state investigators alleging fraud
are classic warning signs. See United States v. Camuti, 78 F.3d 738, 744 (1st Cir.
1996). Ignoring a state court restraining order and repeated accusations of fraud are far
stronger evidence of deliberate ignorance or actual intent to defraud. Here, a reasonable
jury could infer defendants knew they were engaged in fraud activities that were
probably criminal and deliberately failed to investigate. The district court did not abuse
its discretion in giving the deliberate ignorance instruction.
B. Freedom of Speech Instruction. Mentlick, Gardemann, and Kraklio argue the
district court erred in refusing their proposed instruction that advised the jury of the First
Amendment freedom of expression and instructed that, if the jurors found “the intent of
a defendant or the tendency of his or her words was not to produce a lawless act, one
likely to occur, you must find the defendant not guilty.” These defendants argue that
refusing this instruction denied them the defense that their actions were motivated by a
political objective, namely, to overhaul the monetary system. However, they were
charged with mail fraud and money laundering, not anti-government speech. Their
speech was challenged only to the extent that they fraudulently solicited claims.
“[W]here speech becomes an integral part of the crime, a First Amendment defense is
foreclosed even if the prosecution rests on words alone.” United States v. Freeman, 761
F.2d 549, 552 (9th Cir. 1985), cert. denied, 476 U.S. 1120 (1986); see United States v.
Holecek, 739 F.2d 331, 335 (8th Cir. 1984), cert. denied, 469 U.S. 1218 (1985).
IV. Alleged Prosecutorial Misconduct.
At trial, the government called Geraldine Sandein, who had performed secretarial
work for defendants Gardemann and Zurcher. The following exchange took place during
her direct examination:
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Q: Did you bill Mr. Zurcher for the work that was done in connection with
these items?
A: Yes.
Q: Do you still have those bills?
A: No, I do not.
Q: Where are they?
A: I don’t know the answer to that. My office has been broken into several
times, and those are no longer in my office.
Defendants objected and moved for a mistrial because the jury might infer they had
committed the burglary to conceal their crimes. After speaking to counsel and the
witness outside the presence of the jury, the court denied the motion but cautioned the
jury, “There is not a shred of evidence that any of these Defendants had anything to do
with any break-ins, and you cannot infer that.” The court subsequently denied post-
verdict motions for judgments of acquittal or a new trial on this ground. Defendants
again raise the issue on appeal.
To warrant reversal, “the prosecutor’s remarks or conduct must in fact have been
improper, and (2) such remarks or conduct must have prejudicially affected the
defendant’s substantial rights so as to deprive the defendant of a fair trial.” United
States v. Guerra, 113 F.3d 809, 815 (8th Cir. 1997), quoting United States v. Stands,
105 F.3d 1565, 1577 (8th Cir. 1997), cert. denied, 118 S. Ct. 120 (1997). The district
court ruled that the prosecutor’s conduct was improper because he intentionally elicited
Ms. Sandein’s testimony, he knew the jury might draw the prejudicial inference, he
failed to seek the court’s permission in advance, and therefore he “acted in bad faith in
eliciting this testimony.” We disagree. The prosecutor violated no order in limine in
eliciting this testimony. It was relevant to explain why the invoices in question were
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not offered as trial exhibits. Even if the prosecutor believed the court might exclude this
testimony as unduly prejudicial, it was not improper to ask the question during the course
of the trial, when its relevancy and any offsetting prejudice could best be weighed, rather
than to ask the court’s permission in advance (though this tactic may of course risk a
mistrial, depending upon the severity of the possible prejudice).
In addition to concluding that the prosecutor was not guilty of improper
questioning, we agree with the district court that denial of a mistrial over this brief
episode, accompanied as it was by a cautionary instruction that if anything was overly
critical of the prosecution, did not deprive defendants of a fair trial.3
V. Other Issues Raised by Defendants.
A. Acceptance of Responsibility. Mentlick argues the district court erred in
denying his request for a two-level reduction for acceptance of responsibility. This
adjustment “is not intended to apply to a defendant who puts the government to its
burden of proof at trial by denying the essential factual elements of guilt, is convicted,
and only then admits guilt and expresses remorse,” except in rare circumstances such as
“where a defendant goes to trial to assert and preserve issues that do not relate to factual
guilt.” U.S.S.G. § 3E1.1, comment. (n.2). Mentlick contends that his assertion of a First
Amendment defense is such a rare circumstance. We disagree. His defense was that he
lacked the requisite criminal intent, a denial of factual guilt. Moreover, the record does
not reflect that Mentlick has ever accepted responsibility for his offenses.
3
Defendants also argue they are entitled to a new trial because the prosecutor
was overly solicitous and flirtatious with the jury, coached witnesses, intentionally
attempted to introduce exhibits without proper foundation, and made improper closing
and rebuttal arguments. After careful review of the record for plain error, we conclude
these post-verdict contentions are without merit.
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B. Upward Departure. Prior to sentencing, the government requested an upward
departure based on Hildebrand’s violation of a state court injunction and his
misrepresentation that he was appointed a federal court receiver. See U.S.S.G. § 2F1.1,
comment. (n.1). At the close of the sentencing hearing, the district court imposed a two-
level upward departure for those reasons, and it sentenced Hildebrand at the top of his
adjusted sentencing range of 151 to 188 months, explaining:
I actually was not going to do an upward departure until I heard your
allocution, and if you had come into this court with some kernel of remorse
for having ruined people’s lives, I wouldn’t have departed upward, but all
I heard is the same nonsense that I heard on the videotapes, and you bought
yourself with your allocution an upward departure and you bought yourself
a sentence at the high end of the Guideline range.
Hildebrand argues the district court interfered with his right to allocution by considering
it in departing upward and in sentencing him at the top of the guideline range.
In selecting a point within the appropriate guideline range, or in deciding whether
a departure is warranted, the sentencing court is entitled to “consider, without limitation,
any information concerning the background, character and conduct of the defendant,
unless otherwise prohibited by law.” U.S.S.G. § 1B1.4. The purpose of the right to
allocution is to give the defendant “the opportunity to present to the court his plea in
mitigation.” See Green v. United States, 365 U.S. 301, 304 (1961). It does not violate
this right if the district court considers defendant’s attitude, demeanor, and outrageous
protestations of innocence in exercising its sentencing discretion. See United States v.
Li, 115 F.3d 125, 134-35 (2nd Cir. 1997); United States v. Clemmons, 48 F.3d 1020,
1025-26 (7th Cir. 1995), overruled on other grounds by United States v. Allender, 62
F.3d 909 (7th Cir. 1995).
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Hildebrand further argues he was not given advance notice that his allocution
might serve as a basis for an upward departure, as Burns v. United States, 501 U.S. 129,
135 (1991), requires. At the start of the sentencing hearing, the district court gave notice
it would consider an upward departure on the grounds urged by the government, and it
expressly imposed the departure for those reasons. We do not read Burns as precluding
the court from taking into account what was said at the sentencing hearing in making its
final decision whether to depart.
C. Miscellaneous Issues. Mentlick contends the Northern District of Iowa jury-
selection plan violated his constitutional right to a fair trial because his jury pool was
selected from voter registration lists. This contention is foreclosed by cases such as
United States v. Einfeldt, 138 F.3d 373, 379 (8th Cir.), petition for cert. filed, No.
97-9435 (June 8, 1998).
Defendants’ remaining arguments were briefed pursuant to Anders v. California,
386 U.S. 738 (1967). Mentlick argues (1) United States courts have no jurisdiction
because they are illegally sitting in admiralty; (2) the government failed to turn over
evidence seized in violation of a Colorado court order; and (3) the district court and the
jury violated their oaths to support the Constitution. Gardemann argues the claims
process was not fraudulent as a matter of law. Larry and Joan Webb argue (1) the trial
court lacked jurisdiction; (2) the government withheld evidence; (3) government
witnesses committed perjury; and (4) defendants’ conduct was not criminal because they
were duty-bound to disclose government fraud. We have considered these arguments
and conclude they are without merit.
VI. The Government’s Other Sentencing Issues.
A. Minor Participant Role Reduction. The government argues the district court
erred in granting two-level reductions to Joan Webb, Larry Webb, and Zurcher for their
minor roles in the criminal offense. See U.S.S.G. § 3B1.2(b). “The propriety of a
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downward adjustment is determined by comparing the acts of each participant in relation
to the relevant conduct for which the participant is held accountable and by measuring
each participant’s individual acts and relative culpability against the elements of the
offense.” United States v. Belitz, 1998 WL 145916 *3 (8th Cir. 1998). The Webbs
were not directly involved with the conspiracy’s banking operations, and their claims
writing activities were significantly less extensive than the other prosecuted claims
writer, Kraklio. Zurcher was extensively involved in the group’s banking affairs, but his
efforts were largely ministerial, and he received very little compensation for his work.
We conclude the district court’s minor participant findings were not clearly erroneous.
See United States v. Tran, 122 F.3d 670, 674 (8th Cir. 1997) (standard of review).
C. Downward Departure under U.S.S.G. § 5H1.1. Zurcher’s guidelines
sentencing range was fifty-one to sixty-three months. The district court departed
downward and imposed a sentence of five years probation, with six months served in a
community correctional facility followed by eighteen months of home confinement. The
court invoked U.S.S.G. § 5H1.1, which provides that age, while not ordinarily relevant
in determining whether to depart, “may be a reason to impose a sentence below the
applicable guideline range when the defendant is elderly and infirm and where a form of
punishment such as home confinement might be equally efficient as and less costly than
incarceration.” The government argues the district court abused its discretion because
it only made conclusory findings that Zurcher’s age and infirmity were present to an
exceptional degree, and that home confinement would be equally efficient and less costly
than incarceration.
Because age is a discouraged factor, departure is permissible “only if the factor
is present to an exceptional degree or in some other way makes the case different from
the ordinary case where the factor is present.” Koon v. United States, 116 S. Ct. 2035,
2045 (1996). The district court specifically found that the seventy-year-old Zurcher has
life-threatening health conditions. Although the government argues none of these
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conditions show infirmity to an exceptional degree, “[d]istrict courts have an institutional
advantage over appellate courts in making these sorts of determinations, especially as
they see so many more Guidelines cases than appellate courts do.” Koon, 116 S. Ct. at
2047. The government introduced no evidence showing that home confinement would
not cost less than incarceration, and its expert testified that the Bureau of Prisons could
manage Zurcher’s conditions but admitted this would only be possible at certain facilities
and would entail accommodations. Although this issue is close because we doubtless
would have granted no downward departure or a far less generous departure, we
conclude the district court did not abuse its departure discretion under Koon.
The judgments of the district court are affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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