United States v. Ford

1997 WL 33547050 (9th Cir.)

Briefs and Other Related Documents

United States Court of Appeals, Ninth Circuit.

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. Echols Doyle FORD, David Grigonis, Daniel Hong, Robert Ladum, Ronald Van Vliet, and James Weaver, Defendant-Appellants.

Nos. 97-30027, 97-30030, 97-30022, 97-30018, 97-30019, 97-30044.

September 12, 1997.

Appeal from the United States District Court For the District of Oregon, Honorable Ancer L Haggerty, District Court Judge, Trial Court No. CR 94-304-HA

Opening Brief of Appellants

Daniel Feiner, OSB #81221, 715 S.W. Morrison, Suite 504, Portland, OR 97205, (503) 228-2822, Attorney for Defendant-Appellant Ladum

Robert Reid, OSB #81434, 715 S.W. Morrison, Suite 504, Portland, OR 97205, (503) 223-7786, Attorney for Defendant-Appellant Van Vliet

John Ransom, OSB #74265, 1001 S.W. Fifth, Suite 1400, Portland, OR 97204, (503) 228-0487, Attorney for Defendant-Appellant Weaver

Lawrence Matasar, OSB #74209, 1020 S.W. Taylor, Suite 330, Portland, OR 97205, (503) 222-9830, Attorney for Defendant-Appellant Hong

Robert Goffredi, OSB #77187, 330 Pacific Building, 520 S.W. Yamhill Street, Portland, OR 97204, (503) 241-9111, Attorney for Defendant-Appellant Ford

John Storkel, OSB #85087, 1415 Liberty Street S.E., Salem, OR 97302, (503) 371-6642, Attorney for Defendant-Appellant Grigonis

Claire Fay, Assistant United States Attorney, 888 SW Fifth Avenue, Suite 1000, Portland, OR 97204, (503) 727-1000, Attorney for the United States

*i TABLE OF CONTENTS

STATEMENT OF THE CASE ... 1

1. Nature of the Case ... 1

2. Jurisdiction and Timeliness ... 3

3. Bail Status of Appellants ... 5

4. Course of Proceedings ... 5

STATEMENT OF FACTS ... 8

1. An Overview ... 8

(A) The Second-hand Stores ... 8

(B) The Wallowa Lake Lodge ... 10

(D) Money Laundering ... 12

2. Robert Ladum's Additional Statement of Facts ... 13

(A) Obstruction of Justice - Count 19 ... 13

(B) Money Laundering Counts 21-30 ... 16

3. Daniel Hong's Additional Statement of Facts ... 19

4. David Grigonis' Additional Statement of Facts ... 20

LEGAL ARGUMENT ... 20

. Robert Ladum

The District Court Erred When It Denied Robert Ladum's Motion For Judgment Of Acquittal On Count 19, Obstruction Of Justice

(A) Where Issue Raised ... 21

(B) Standard of Review ... 21

The District Court Erred When It Denied Robert Ladum's Rule 29(C) Motion For Judgment Of Acquittal On Counts 21 Through 30.

(A) Where Issue Raised ... 31

(B) Standard of Review ... 31

The District Court Erred When It Denied David Grigonis' Motion To Dismiss Counts 21 - 30 ... 35

*ii The Court Erred When It Enhanced Mr. Ladum's Offense Level On The Tax Offenses For Failing To Accurately Report $10,000 Or More Income From Criminal Activity.

(A) Where Issue Raised ... 36

(B) Standard of Review ... 36

The District Court Erred When It Concluded It Had To Count Robert Ladum's Conviction For Refusing To Submit For Induction In His Criminal History Score.

(A) Where Issue Raised ... 38

(B) Standard of Review ... 39

The District Court Erred When It Imposed A $15,000 Fine, Payable Within 90 Days Upon Robert Ladum Without Regard To His Ability To Pay.

(A) Where issue Raised ... 41

(B) Standard of Review ... 41

. Ronald Van Vliet

The Court Erred In Denying Defendant Van Vliet's Motion To Dismiss Count 16 Of The Indictment, Which Failed To Allege Materiality, Or Facts From Which Materiality Could Be Inferred, Of The False Statement Charged.

(A) Standard of Review ... 44

(B) Argument ... 44

The Court Erred In Denying Defendant Van Vliet's Motion For Judgment Of Acquittal On Count 9.

(A) Argument ... 49

. James Weaver

The Court Erred By Enhancing Mr. Weaver's Sentence By Two Levels.

(A) Standard of Review ... 49

(B) Argument ... 49

*iii The Court Erred By Imposing A $10,000 Fine Payable Within 90 Days Of Sentencing.

(A) Standard of Review ... 52

(B) Argument ... 52

The Court Erred In Denying The Motion For Judgment Of Acquittal On The Sufficiency Of The Evidence On Count 1, Conspiracy.

(1) Standard of Review ... 53

(2) Argument ... 53

. Daniel Hong

The Trial Court Erred In Denying Defendant Hong's Motion To Dismiss Count 10. (Filing A False Return; 26 U.S.C. § 7201(6)).

(A) Where issue raised ... 61

(B) Standard of Review ... 62

The Trial Court Erred In Denying Defendant Hong's Motion To Suppress His Statements.

(A) Where issue raised ... 70

(B) Standard of Review ... 71

. Echols Ford

The Trial Court Erred In Computation Of The Defendant Ford's Offense Level In Its Determination That Mr. Ford's Relevant Conduct Pursuant To Guideline § 1B1.3 Involved The Entire $931,595 Attributed To The Conspiracy Rather Than Excluding From That Relevant Conduct (And Dollar Sum) The Periods Of Time In Which Mr. Ford Withdrew From The Conspiracy.

(1) Standard of Review ... 78

(2) Argument ... 78

The Trial Court Erred In The Computation Of Mr. Ford's Criminal History By Including In That Computation Two Municipal Ordinance Violation Convictions Arising Out Of The Operation Of "Dave's Shop" Because Those Activities Were Part Of The "Instant Offense".

(1) Standard of Review ... 81

(2) Legal Argument ... 82

*iv The Court Erred In Denying Defendant's Motions For Judgment Of Acquittal Pursuant To Federal Rules Of Criminal Procedure 29(A) On The Ground That The Evidence Was Insufficient To Sustain A Conviction, Specifically, That The Evidence Was Insufficient To Establish The Object Of The Conspiracy Specifically Alleged, That Is, That Mr. Ford And The Other Specifically Conspired To Impede The Collection Or The Assessment Of Robert Ladum's Federal Taxes.

(1) Argument ... 85

The Trial Court Erred In Denying Defendant Ford's Motion To Dismiss Counts 11 And 12 ... 88

. David Grigonis

Did The District Court Err When It Denied David Grigonis's Motion To Dismiss Counts 21 Through 30 Based On The Fact That The Proceeds Were Derived From Unlawful Conduct?

(A) Where issue raised ... 88

(B) Standard of Review ... 88

Did The District Court Err When It Denied David Grigonis's Rule 29(C) Motion For Judgment Of Acquittal On Counts 21 Through 30?

(A) Where found ... 95

(B) Standard of Review ... 95

Did The Court Err In Not Granting A Minor Role Adjustment To David Grigonis?

(A) Standard of Review ... 98

(B) Where issue raised ... 98

Did The District Court Err In Allowing David Grigonis's Property To Be Forfeited To The Government?

(A) Where Issue Raised ... 99

(B) Standard of Review ... 100

*v TABLE OF AUTHORITIES

Cases

Alexander v. United States, 509 U.S. 544, 559 (1993) ... 100

Brandow v. United States, 268 F.2d 559, 565 (9th Cir. 1959) ... 45

Bronston v. United States, 409 U.S. 352, 93 S.Ct 595, 34 L.Ed.2d 568 (1973) ... 67

Brown v. Illinois, 422 U.S. 590, 603-04, 95 S.Ct. 2254, 2261-62, 45 L.Ed.2d 416 (1975) ... 73

Collazo v. Estelle, 940 F.2d 411, 421 (9th Cir. 1990) ... 74

Daley v. United States, 282 F. 2d 818, 820 (9th Cir. 1960) ... 54

Davis v. United States, 357 F.2d 438, 440 at n. 2 (5th Cir. 1966) ... 47

Harmelin v. Michigan, 501 U.S. 957, 979 (1991) ... 101

Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct 2781, L.Ed 2d 560 (1979) ... 53, 89, 95

Koon v. United States, 116 S.Ct. 2035; 35 L.Ed. 2d 392 (1996) ... 18

Lott v. United States, 309 F.2d 115, 117-18 (5th Cir. 1962) ... 46

Ortiz v. Van Auken, 887 F.2d 1366, 1370 (9th Cir. 1989) ... 76

Paritem Singh Poonian v. United States, 294 F.2d 74, 75 (9th Cir. 1961) ... 45, 46

Russell v. United States, 369 U.S. 749, 765 (1969) ... 46, 48

Stromberg v. California, 283 U.S. 359, 51 S.Ct. 532 (1931) ... 31

United States v. Aguilar, 21 F.3d 1475 (9th Cir. 1994) ... 21, 24, 25, 26, 27, 30

United States v. Allen, 88 F.3d 765 (9th Cir. 1996) ... 97

United States v. Allen, 88 F.3d 765, 769 (9th Cir. 1996) ... 33, 34, 35

United States v. Barone, 39 F.3d 981 (9th Cir. 1994) ... 53

United States v. Baxter, 492 F. 2d 150, 158 (9th Cir. 1973) ... 54

United States v. Bellucci, 995 F.2d 157 (9th Cir 1993) ... 97

United States v. Bishop, 412 US 346, 93 S.Ct 2008, 36 L.Ed2d 941 (1972) ... 69

United States v. Blackman, 904 F.2d 1250, 1257 (8th Cir. 1990) ... 92

United States v. Blinder, 10 F.3d 1468, 1477 (9th Cir. 1977) ... 62

United States v. Borman, 992 F.2d 124 (7th Cir. 1993) ... 65

United States v. Carrier, 654 F.2d 559, 561 (9th Cir. 1981) ... 47

United States v. Conlon, 628 F.2d 150, 155 (D.C.Cir 1980) ... 46

United States v. Cook, 489 F.2d 286 (9th Cir. 1973) ... 67

United States v. Damon, 676 F.2d 1060 (1982) ... 70

United States v. Davis, 36 F.3d 1424, 1436 (9th Cir. 1994) ... 99

United States v. Delgadillo-Valasquez, 856 F.2d 1292 (9th Cir. 1988) ... 74

United States v. Demers, 13 F.3d 1381, 1384-85 (9th Cir. 1994) ... 99

United States v. Dischner, 974 F.2d 1502, 1518 (9th Cir. 1992) ... 44

United States v. Dota, 481 F.2d 1005 (10th Cir. 1973) ... 96

United States v. Dunn, 564 F. 2d 348, 357 (9th Cir. 1977) ... 54

United States v. Enstam, 622 F2d 857 (5th Cir. 1980) ... 87

United States v. Facchini, 874 F.2d 638, 643 (9th Cir. 1989) ... 47

United States v. Favorito, 5 F.3d 1338 (9th Cir. 1993) ... 41

United States v. Ford, 989 F.2d 347, 350 (9th Cir. 1993) ... 50

United States v. Friedman, 593 F. 2d 109, 115 (9th Cir. 1979) ... 54

United States v. Garcia-Emanuel, 14 F.3d 1469 (10th Cir. 1994) ... 90

United States v. Gaudin, 997 F.2d 1267, 1271-72 (9th Cir. 1993) ... 46

*vi United States v. Gomez, 87 F.3d 1093 (9th Cir. 1996) ... 31, 39

United States v. Grant, 971 F.2d 799 (1st Cir. 1992) ... 93

United States v. Haggard, 41 F.3d 1320, 1329 (9th Cir. 1994) ... 43

United States v. Hahn, 960 F.2d 903, 907 (9th Cir. 1992) ... 100

United States v. Harrel, 877 F.2d 341 (5th Cir. 1989) ... 97

United States v. Hernandez, 730 F.2d 895 (2nd Cir. 1984) ... 23, 24

United States v. Holroyd, 732 F.2d 1122 (2d Cir. 1984) ... 70

United States v. Jackson, 935 F.2d 832 (7th Cir. 1991) ... 93

United States v. Jackson, 935 F.2d 832, 841-42 (7th Cir. 1991) ... 91

United States v. James, 987 F.2d 648 (9th Cir. 1993) ... 97

United States v. Johnson, supra, 933 F.2d at 840) ... 91

United States v. Kearney, 560 F. 2d 1358, 1362 ... 54, 55

United States v. Kenny, 973 F.2d 339 (4th Cir) ... 24

United States v. King, 587 F.2d 956, 963 (9th Cir. 1978) ... 45

United States v. Kow, 58 F.3d 423 (9th Cir. 1995) ... 71, 72, 74, 75

United States v. Kramer, 500 F.2d 1185 (10th Cir. 1974) ... 96

United States v. Kunzman, 54 F.3d 1522 (10th Cir. 1995) ... 32, 33

United States v. Leon, 468 U.S. 897, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984) ... 75

United States v. Lester, 749 F.2d 1288 (9th Cir. 1984 ... 23, 24, 25, 26, 31

United States v. Lester, 749 F.2d 1288 (9th Cir. 1984) ... 23

United States v. Levy, 533 F.2d 969, 972 (5th Cir. 1976) ... 69, 70

United States v. Limitoc, 807 F.2d 792, 794 (9th Cir. 1987) ... 71

United States v. Maloney, 71 F.3d 645 (7th Cir. 1995) ... 24

United States v. Manarite, 44 F.3d 1407, 1411 (9th Cir. 1995) ... 21

United States v. Marashi, 913 F.2d 724, 736 (9th Cir. 1990) ... 67

United States v. Masterpol, 940 F.2d 760 (2nd 1991) ... 24

United States v. Miller, 774 F.2d 883, 885 (8th Cir. 1985) ... 47

United States v. Montoya, 945 F.2d 1068 (9th Cir. 1991) ... 93

United States v. Ogbeuehi, 18 F3d 807 (9th Cir. 1994) ... 78, 81

United States v. Oren, 893 F.2d 1057, 1063 (9th Cir. 1990) ... 47

United States v. Outler, 659 F.2d 1306, 1310-11 (5th Cir. 1981) ... 46

United States v. Peay, 972 F.2d 71 (4th Cir. 1992) ... 33

United States v. Platenburg, 657 F.2d 797, 799 (5th Cir 1981) ... 97

United States v. Real Property Located in El Dorado County, 59 F.3d 974, 982 (9th Cir. 1995) ... 100

United States v. Reynolds, 919 F.2d 435, 437 (7th Cir. 1990) ... 64

United States v. Ricardo D., 912 F.2d 337 (9th Cir. 1990) ... 74

United States v. Rios-Favela, 118 F.3d 653 (9th Cir. 1997) ... 40

United States v. Sainz, 772 F.2d 559 (9th Cir. 1985) ... 67

United States v. Samour, 9, 9F.3d 531, 535 (6th Cir. 1993) ... 91

United States v. Sanders, 928 F.2d 940, 946 (10th Cir.) ... 91

United States v. Sharif, 817 F.2d 1375, 1377 (9th Cir. 1987) ... 89, 95

United States v. Shephard, 21 F.3d 933, 939 (9th Cir. 1994) ... 73, 74, 75, 77

United States v. Shively, 715 F.2d 260 (7th Cir. 1984) ... 97

United States v. Shrestha, 86 F.3d 935, 938 (9th Cir. 1996) ... 39, 49, 52, 98

United States v. Tackett, 113 F.3d 603 (6th Cir. 1997) ... 24

*vii United States v. Talkington, 589 F.2d 415, 416 (9th Cir. 1978) ... 45, 47

United States v. Taylor, 574 F.2d 232 (5th Cir. 1978) ... 70

United States v. Thomas, 586 F.2d 123, 132 (9th Cir. 1978) ... 54

United States v. Valdez, 594 F.2d 725, 729 (9th Cir. 1979) ... 46

United States v. Werber, 787 F.Supp. 353 (S.D.N.Y. 1992) ... 90

United States Webster, 996 F.2d 209, 212 (9th Cir. 1993) ... 99

Walker v. United States, 176 F.2d 796, 798 (9th Cir. 1949) ... 47

Wong Sun v. United States, 371 US 471, 487-88, 83 S.Ct. 407, 417-18, 9 L.Ed.2d 441 (1963) ... 72, 73

Statutes

18 U.S.C § 923 ... 50

18 U.S.C. § 1001 ... 20, 45 94, 99, 100

18 U.S.C. § 1503 ... 21, 22, 25

18 U.S.C. § 1512 ... 22, 23

18 U.S.C. § 1956 ... 16, 31, 32, 95

18 U.S.C. § 1956(a)(1)(B)(i) ... 16, 31, 95

18 U.S.C. § 1956(c)(4) ... 32

18 U.S.C. § 1956(c)(4)(A) ... 32

18 U.S.C. § 1956(c)(4)(B) ... 32

18 U.S.C § 3231 ... 3

18 U.S.C. §3553(b) ... 39

26 U.S.C. § 7206(1) ... 19, 62, 63, 64, 65, 66, 68, 69, 70, 94, 100

28 U.S.C. § 1291 ... 3

USSG § 3B1.2 ... 97

USSG § 1B.1 ... 79

USSG § 2T1.9 ... 79

USSG § 4A1.1(d) ... 82

USSG § 4A1.2 ... 17

USSG §4A1.1 ... 39

USSG §4A1.3 ... 40

USSG §5E1.2 ... 41, 43, 52

USSG §5E1.2(a) ... 41

1. Nature of the Case

This is a direct appeal, jointly submitted by all defendants with the permission of the Court.

. Robert Ladum

Mr. Ladum appeals the denial of his motions for judgment of acquittal on Count 19, Obstruction of Justice (TR 4175, CR 665) [FN1], and Counts 21-30, Money Laundering (CR 731); his conviction after trial by jury on those counts; and his sentence.

FN1. "TR" refers to the transcript of the trial occurring May 29, 1996 through July 17, 1996. "PreTR" refers to the transcript of the pretrial motion hearings occurring on April 14, 1996 through April 5, 1996; "ER" refers to Excerpt of Record. "CR" refers to Clerk's Record.

. Ronald Van Vliet

Mr. Van Vliet filed a Motion To Dismiss Count 16 Of the Indictment on July 14, 1995 (CR 206, ER 104). He replied to the government's response to that motion (CR 221) on August 14, 1995. The Court denied defendant's motion in a written Opinion and Order dated March 12, 1996 (CR 495, ER 112). At the close of the government's case, Mr. Van Vliet moved for a judgment of acquittal on Count 9, by joining with co-defendant Hong's written motion as it would apply to Count 9 (CR 657; TR 4207-08).

*2 . James Weaver

Mr. Weaver appeals the sufficiency of the evidence to sustain his conviction on Count 1, the conspiracy count (TR 4220, 5114). He also appeals a two-level enhancement at sentence and the imposition of a fine (TR 5955-58).

. Daniel Hong

Mr. Hong appeals the denial of his motion to dismiss Count 10 and the denial of his motion to suppress statements.

. Echols Ford

Mr. Ford appeals from the denial of his motion to dismiss Count 1 (conspiracy) and Counts 11 and 12 (filing a false return). Mr. Ford further appeals from the computation of his offense level for sentencing and the computation of his criminal history.

. David Grigonis

David Grigonis filed a motion to dismiss Counts 21 through 30 based on the fact that the proceeds were not derived from unlawful conduct (ER 152). David Grigonis joined Robert Ladum's motion under Rule 29(C) regarding the necessary elements for an offense to have occurred. David Grigonis filed a letter and memorandum in requesting that he be allowed a minor role in this offense (ER 165). *3 David Grigionis filed a supplemental memorandum objecting to the forfeiture of his property in this case (ER 159).

All proceedings were before the Honorable Ancer L. Haggerty, United States District Judge for the District of Oregon.

2. Jurisdiction and Timeliness

The District Court had jurisdiction over these cases pursuant to 18 U.S.C § 3231. The Court of Appeals has jurisdiction to hear these appeal as the judgments of conviction are final decisions of the District Court appealable under 28 U.S.C. § 1291.

. Robert Ladum

Mr. Ladum's motion for judgments of acquittal on Count 19 was made on June 28, 1996 (TR 4175) and dented on July 2, 1996 (TR 4438). Motion for judgment of acquittal on Counts 21-30 was were made on July 23, 1996 (CR 731) and denied on September 11, 1996 (CR 747). Sentence was imposed on December 16, 1996. Judgment (ER 58) was entered on January 7, 1997. Notice of appeal (ER 63) was timely filed on January 8, 1997.

. Ronald Van Vliet

Mr. Van Vliet's motion to dismiss Count 16 was denied in the Court's Opinion and Order of March 12, 1996 (CR 495). His motion for *4 judgment of acquittal on Count 9 was denied June 28, 1996 (TR 4237). Sentence was imposed December 16, 1996 and Judgment was entered December 23, 1996 (ER 98). Notice of appeal was timely filed and entered December 27, 1996 (CR 816, ER 102).

. James Weaver

Mr. Weaver's motion for judgment of acquittal was made at the close of the government's case (TR 4220) and renewed at the close of all the evidence (TR 5114). Sentence was imposed December 16, 1996. Notice of Appeal was timely filed (ER 123).

. Daniel Hong

Mr. Hong's written motion to dismiss and for judgment of acquittal (CR 657) on Count 10 was heard and denied by the court on June 28, 1996 (TR 4237). Mr. Hong's motion to suppress his statements was denied in a pretrial ruling. (TR 102, CR 604, 630). Judgment was entered December 23, 1996 and a timely notice of appeal was filed on December 27, 1996.

. Echols Ford

Mr. Ford joined in the arguments made by counsel for defendant Hong, as relating to the "false return" counts, 26 U.S.C. § 7201, which were Counts 11 and 12 for Mr. Ford (TR 4237-4238).

*5 Mr. Ford moved for a judgment of acquittal pursuant to Rule 29 as to the conspiracy count (TR 3239-3246). The court denied both motions. Mr. Ford joined in post-trial motions under Rule 29 filed by all other defendants regarding Count 1 and the "false return" counts (CR 743). These motions were denied by the court (CR 747).

Mr. Ford filed objections to the Presentence Report guideline computations (CR 774, 776, 781, 785, 786) and objected to the computation orally at sentencing (TR 5888-5893, 5917-5918, 5959-5963).

A timely notice of appeal was filed on December 19, 1996 (CR 809).

3. Bail Status of Appellants

Appellants Ladum, Van Vliet, Weaver, Hong and Grigonis are serving the terms of imprisonment imposed in this case. Mr. Ford remains out of custody for medical reasons.

Mr. Ladum's approximate release date is May, 2005. Mr. Weaver's approximate release date is January, 2000.

4. Course of Proceedings

On September 21, 1994 a 16-Count indictment (CR 1) was returned against all defendants except Mr. Van Vliet. On April 5, 1995 a 33-*6 Count superseding indictment adding Mr. Van Vliet as a defendant was filed (CR 131). On June 6, 1996 a 33-Count second superseding indictment was filed (ER 1, CR 173). Count 1 of the indictment charged all appellants with Conspiracy to Defraud the United States. The remaining allegations were:

Robert Ladum: Aiding and Abetting the Filing of a False Tax Return (Counts 2- 3); Filing a False Tax Return (Count 4); Obstruction of Justice (Count 19); Concealment of Bankruptcy Assets (Count 20); Money Laundering (Counts 21-30); and Criminal Forfeiture (Counts 31-33).

Ronald Van Vliet: Filing a False Tax Return (Count 9); False Statement (Count 16).

James Weaver: False Statement [FN2] (Count 17); Obstruction of Justice (Count 19) [FN3].

FN2. This count was dismissed pretrial.

FN3. The jury returned a not guilty verdict on this count.

Daniel Hong: Filing a False Tax Return (Count 10); False Statement (Count 15) [FN4] .

FN4. This count was dismissed pretrial.

Echols Ford: Filing a False Tax Return (Counts 11-12); Obstruction of Justice (Count 19) [FN5].

FN5. A motion for judgment of acquittal was granted on this count.

*7 David Griaonis: Filing a False Tax Return (Counts 5-8) [FN6]; False Statement (Counts 13-14) [FN7]; Concealment of Bankruptcy Assets (Count 20); Money Laundering (Counts 21-30); and Criminal Forfeiture (Counts 31-33).

FN6. The jury returned not guilty verdicts on these counts.

FN7. Verdicts of not guilty were also returned on these counts.

Hearings on pretrial motions were held between April 2, 1996 and April 5, 1996.

*8 Trial commenced on May 29, 1996. At the conclusion of the government's case on June 28, 1996 defendants made various motions for judgments of acquittal. On July 17, 1996 the jury returned verdicts of guilty on all charges except Counts 5-8 and 13-14 (Mr. Grigonis) and 19 (Mr. Weaver). [FN8] Appellants were sentenced at a joint hearing on December 16, 1996. Prison terms were as follows: Mr. Ladum, 121 months; Mr. Van Vliet, 33 months; Mr. Weaver, 41 months; Mr. Hong, 33 months; Mr. Ford, 41 months; and Mr. Grigonis, 70 months. Additionally Mr. Ladum received a fine of $15,000 and $5,000 in costs; Mr. Van Vliet, $1,000 costs; Mr. Weaver, $10,000 fine; Mr. Hong, $1,000 costs; Mr. Ford, $1,000 costs and Mr. Grigonis, $12,500 fine and $2,500 costs.

FN8. The criminal forfeiture counts (31-33) were tried separately on July 18, 1996. They are not relevant to this appeal.

1. An Overview

(A) The Second-hand Stores

The government's case against appellants focused on the ownership and operation of seven Portland, Oregon second-hand shops. Operators of the stores purchased goods from customers. The sellers were given a defined period of time to purchase the items *9 back. If they did not do so, the merchandise was marketed to the public (TR 635-639). Prosecutors alleged that each of the stores was actually owned by Robert Ladum but that to avoid his federal tax obligations, he persuaded other persons to pose as sole proprietors of the stores. Evidence indicated the "owners" had diverse financial arrangements with Ladum. There was no uniform manner in which they dealt with their own tax obligations. However, neither the owners nor Ladum filed returns reflecting Ladum's purported interest in the businesses.

Van Vliet, Weaver, Hong and Ford were prosecuted as "owners" of the stores.

Ladum was also accused of being the owner of the real estate upon which a number of the stores were located. The government contended that he concealed his interest in the properties by providing the money for Grigonis to purchase. Grigonis filed tax returns treating the real estate as his own. Weaver, a fireman who worked part-time as a real-estate agent, was alleged to have assisted Ladum and Grigonis with the purchases (TR 707).

*10 The Hock Shop, later known as Abe's Shop, was the first of the stores, opening in 1983. It closed in 1992 after it was severely damaged by fire (TR 3555). Dave's Shop also opened in the early 1980's (TR 1118). It closed in 1987, but was soon reopened as Union Cash in a nearby building (TR 1133-1134). Union Cash closed in 1988 (TR 734). The Money Pit opened in the spring of 1987 (TR 1319) and closed in April of 1990.

Three stores were still operating at the time of the trial. They were The Money Man, begun in December 1985, Columbia Cash, opened in March 1986, and Division Cash, started in January 1988.

(B) The Wallowa Lake Lodge

The Wallowa Lake Lodge is a well-known inn located in the town of Joseph, Oregon. It was purchased on contract in 1987 (TR 2317) in the name of Larry Ladum, Robert Ladum's uncle (TR 2382). The government alleged, however, that the actual purchaser was Robert Ladum and that he financed the acquisition with unreported earnings from the second-hand stores. One of the ways Ladum allegedly disguised his acquisition of the lodge was to obtain investments from his associates. The government contended those investments were actually Ladum's funds, tunneled through the third *11 parties. Among the persons who contributed funds to help purchase and renovate the lodge were David Grigonis and Echols Ford.

Substantial renovations to the lodge were required. Payments to contractors were often made in unusual ways, such as exchanges of used merchandise (TR 2267), cash (TR 2314) and deposits of cash and third-party checks to Portland branches of the contractors' banks.

By June 1989 the lodge was in a precarious financial position. Contract payments were in arrears and a substantial sum of money was owed to contractors and suppliers of goods for lodge operations (TR 1990). Larry Ladum, who recognized he was legally responsible for the obligations, wanted "out of the hospitality business (TR 1993)." The lodge was eventually sold to the MEZ Corporation, a business formed by Marc Zwerling, a Portland attorney who was involved in the original purchase negotiations (TR 1994). Robert Ladum's tax returns never reflected any interest in the lodge, its income or its expenses.

On September 30, 1988 Robert Ladum filed a Chapter 7 bankruptcy (TR 2906). He reported that he had no substantial assets *12 (TR 2916), no interests in real property (TR 2915) and no items of value others were holding for him (TR 3071). Attorneys for creditors initiated adversary proceedings. On December 9, 1988, Ladum submitted to a 2004 examination (TR 2989). He denied any interest in the second-hand stores (TR 3027-3029) and said Larry Ladum was the owner of the Wallowa Lake Lodge (TR 2995).

Creditors examined David Grigonis on January 30, 1989 (TR 3073). He denied Ladum provided him with money to purchase the real estate for the second-hand stores (TR 3086-89) or invest in the Wallowa Lake Lodge (TR 3098).

The government alleged that those statements were false and served to conceal Ladum's assets from his creditors and bankruptcy trus ee.

(D) Money Laundering

Robert Ladum eventually obtained a discharge in bankruptcy (TR 3137). After it was granted, the owners of Division Cash, Columbia Cash and The Money Man continued to transact business in buildings that Grigonis held title to. The government contended that their rent payments were derived from store receipts and thus constituted the proceeds of the bankruptcy concealment offenses. *13 According to the government, the deposit of rent payments into Grigonis' bank account constituted a financial transaction and completed the money laundering offenses.

2. Robert Ladum's Additional Statement of Facts

(A) Obstruction of Justice - Count 19

All appellants except Van Vliet were arrested and arraigned on October 25, 1994 (CR 24). Not long thereafter Patrick Mathis, who had worked at Abe's and Division Cash and claimed to have been a straw owner of the Money Man, agreed to cooperate with the government. He was debriefed by IRS Agent Maney on November 20, 1994 and made a lengthy taped statement the next day (TR 3821).

At trial, Mathis recounted how he became involved with the second-hand stores. He said he was recruited to work at Abe's by his friend John Roberts (also known as John Hunter) and hired by Robert Ladum (TR 3547). Ladum subsequently offered him the role of "owner" of The Money Man (TR 3614). Their agreement was that Mathis would receive 30 per cent of the store profits and Ladum 70 per cent (TR 3616).

*14 According to Mathis, he was instructed to pay rent to David Grigonis (TR 3653). Ladum provided him with a sample lease and told him to use it as a model for a lease with Grigonis (TR 3654). Mathis also applied to the Bureau of Alcohol, Tobacco and Firearms (ATF) for a federal firearm license. On it, he indicated he was the sole owner of the store (TR 3638). After he applied, Mathis was contacted and interviewed by ATF agents Cheryl Glenn and Chuck Spaulding (TR 3667). He told them that he purchased the store from Echols Ford with money obtained from friends and relatives (TR 3668). Ladum was upset that Mathis said that to the agents, but later told him that it had become his story and he should stick to it (TR 3669).

Mathis was subpoenaed to appear on August 10, 1994 before a federal grand jury investigating the activities of Ladum and his associates (TR 3776). The subpoena required him to bring a wide assortment of documents and evidence (TR 3777 ER 94). Mathis appeared without the documents and requested counsel (TR 3777). He was then re-subpoenaed for August 17, 1994 (TR 3777). The subpoena he was given for that date did not require that he bring any documents (TR 3780 ER 96). Ladum advised Mathis not to bring *15 any documents (TR 3695). Mathis also said that Ladum told him to lie to the grand jury (TR 3692). [FN9]

FN9. Mathis did not indicate what Ladum told him to lie about (TR 3692).

Mathis testified that Ladum "(b)asically told me to go to Jim Weaver and have him type up a lease" between Mathis and Grigonis for The Money Man store (TR 3698). Weaver composed the lease, but Mathis did not recall whether it was right before or right after he testified at the grand jury (TR 3699). He later testified that he took the lease to the grand jury (TR 3703).

Mathis was also concerned that he had not filed an income tax return for the year that he worked at Abe's Store. He intended to go to the grand jury and indicate that he had been a volunteer (TR 3707). He asked Ladum if there were any records at Abe's which would indicate otherwise. Ladum told him to discuss that with Weaver "to make sure that was alright" (TR 3707). Ladum also told Mathis that all the records from Abe's were destroyed in the fire at the store (TR 3707).

Mathis returned to the grand jury on August 17, 1994 without the documents. He said he was unaware he was supposed to bring *16 them (TR 3781). He was given 72 hours (TR 3696) to deliver them to the United States Attorney's Office (TR 3706).

Mathis was concerned that the items requested would not support his testimony and statement to the ATF agents (TR 3783). He and Roberts devised a scheme by which they would destroy records and falsify replacements that corresponded with his account. Mathis asked Ladum what he thought of the idea and Ladum said, "do it" (TR 3697). Ladum also suggested Mathis remove the paperclips that grouped the records by day and mix them all together (TR 3697-98). Mathis and Roberts destroyed the old records and created new ones (TR 3703, 3783). When they were done, Mathis reported the actions to Ladum. Upon hearing the account, Ladum said "ok," according to Mathis. (TR 3704).

On cross-examination, Mathis acknowledged that Ladum never instructed him to falsify the records or present them to the grand jury (TR 3786).

(B) Money Laundering Counts 21-30

Rent payments from the second-hand store owners were deposited into David Grigonis1 account #173050288 at the United States National Bank of Oregon.

*17 The government offered account records through witness Catherine Johnson, the custodian of records. At no time during her testimony did she indicate that the United States National Bank was a federally insured institution (TR 1498-1508, TR 1770-1772). No other trial witnesses testified to facts that established the bank was an institution engaged in, or the activities of which affected, interstate or foreign commerce. 18 U.S.C. § 1956(a)(1)(B)(i).

After trial, Ladum moved under Rule 29(c) of the Federal Rules of Criminal Procedure for a judgment of acquittal on the money laundering Counts based upon the government's failure to establish federal jurisdiction (CR 99). The government responded by directing the court to Exhibit 11-76 and submitting seven checks contained in that exhibit (ER 87-93). Those checks were either written on out-of-state accounts or transacted by out-of-state, or Canadian, banks.

Following Ladum's conviction, United States Probation Officer Keith Stewart Jr. wrote a draft presentence report. In calculating Ladum's criminal history score, Stewart chose not to count a 1970 conviction for Failing to Submit to Induction. The government objected, arguing that despite the fact President Jimmy Carter had *18 pardoned Ladum, the two-year prison sentence he received should have been be included in calculating his criminal history score.

In the final presentence report (PSR), Stewart adopted the government's position, moving Ladum to Criminal History Category 2 (PSR 27).

The sentencing letter submitted by Ladum's counsel acknowledged that USSG § 4A1.2 Application Note 10 provided that sentences resulting from pardoned convictions were to be included in a defendant's criminal history calculation. He maintained, however, that including the draft conviction resulted in a tally that significantly over-represented the seriousness of Ladum's criminal history. Citing Koon v. United States, 116 S.Ct. 2035; 35 L.Ed. 2d 392 (1996), he urged the court to utilize it's discretion and depart downward, to Criminal History Category 1.

The Court rejected Ladum's request, indicating that it believed it was "required to take (the conviction) into account." (TR 6004). The additional criminal history points resulted in an increase in Ladum's guideline range from 108-135 months to 121-151 months.

(D) Sentencing - Fine

*19 The PSR writer recommended that Ladum pay a fine of $15,000. The Court adopted that recommendation [FN10]. The PSR writer concluded that although Ladum had reported assets of only $700 at his interview with Pretrial Services, trial evidence reflected that he had made significant income between 1983 and 1996, only some of which has been accounted for." (PSR 30).

FN10. The TR mistakenly refers to the fine as $50,000. The PSR and judgment order correctly indicate the amount is $15,000 (ER 61).

Defense counsel objected to the fine in his sentencing letter and at sentencing (TR 6006-6007). The Court received no evidence and made no findings regarding Ladum's ability to pay the fine. It remanded Ladum to custody the following day and ordered the fine due within 90 days (TR 6008).

3. Daniel Hong's Additional Statement of Facts

On April 26, 1990, federal authorities conducted a search of Columbia Cash pursuant to a search warrant. During this search, IRS Agent Lyn Rose gave Miranda warnings to defendant Daniel Hong and then questioned him (PreTR 241, 246, 4/2/96; TR 3408-3412). Mr. Hong's statements amounted to one of the three overt acts alleged against him in the conspiracy count of the indictment. (CR173).

*20 Mr. Hong moved to suppress both the April 26, 1990 search and his statements (CR 377, 378, 433, 443). The motion to suppress statements was denied (TR 102 See also, CR 604, 630, and argument section of this brief, infra). Mr. Hong's statements were the subject of Agent Rose's testimony at trial (TR 3408-3412) and his statements were used by the government in closing argument (TR 5272, 5273, 5583, 5584)

4. David Grigonis' Additional Statement of Facts

. Robert Ladum

*21 The District Court Erred When It Denied Robert Ladum's Motion For Judgment Of Acquittal On Count 19. Obstruction Of Justice

(A) Where Issue Raised

The issue was raised by Rule 29 motion at the conclusion of the Government's case in chief (TR 4175 ) and renewed at the completion of trial (TR 5114 ).

THE COURT: "So at this time the Court's going to deny the defendants' motion for judgment of acquittal as to Count 19 based on my reading of the Aquilar case (TR 4438)"

(B) Standard of Review

The standard of review for a motion for judgment of acquittal is whether the evidence, evaluated in the light most favorable to the government, would have permitted any rational trier of fact to have found the essential elements of the crime beyond a reasonable doubt. United States v. Manarite, 44 F.3d 1407, 1411 (9th Cir. 1995).

Count 19 of the indictment accused Robert Ladum of violating 18U.S.C. §1503 by:

. Telling Patrick Mathis to lie to the grand jury;

*22 . Approving a plan by which Mathis would falsely tell the grand jury he was a volunteer at Abe's;

. Approving a plan for Mathis to tell the grand jury that he purchased The Money Man from Echols Ford and that John Hunter had provided a portion of the funds used.

. Approving and participating in a plan for Mathis and Hunter to create false business records for The Money Man which Mathis would give to the grand jury in response to a subpoena duces tecum (ER 36-37, CR 173).

1. The government did not prove a violation of 18 U.S.C. § 1503 because the statute does not prohibit witness tampering.

18 U.S.C. § 1503 seeks to protect judicial proceedings by prohibiting attempts to influence jurors or officers of the court. [FN11] It also contains an "omnibus clause" that outlaws nonspecific attempts to obstruct justice. [FN12]

FN11. "Whoever corruptly, or by threats or force, or by any threatening letter of communication, endeavors to influence, intimidate, or impede any grand or petit juror, or officer in or of any court of the United States, or officer who may be serving at any examination or other proceeding before any United States commissioner or other committing magistrate, in the discharge of his duty, or injures any such grand or petit juror in his person or property on account of any verdict or indictment assented to by him, or on account of his being or having been such juror, or injures any such officer, commissioner, or other committing magistrate in his persons or property on accounts of the performance of his official duties..."

FN12. It provides that "Whoever...corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes,

or endeavors to influence, obstruct, or impede, the due administration of justice, shall be punished..."

*23 Prior to 1982, attempts to influence witnesses were also specifically prohibited. All references to witnesses were removed from the law, however, as part of the Victim and Witness Protection Act of 1982. An obstruction statute dealing specifically with witnesses, 18 U.S.C. § 1512, [FN13] was passed by Congress as part of the Act.

FN13. The relevant portions of that statute read:

"(b) Whoever knowingly uses intimidation or physical force, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to -

(1) influence, delay, or prevent the testimony of any person in an official proceeding;]

(2) cause or induce any person to -

(A) withhold testimony, or withhold a record, document, or other object, from an official proceeding;

(B) alter, destroy, mutilate, or conceal an object with intent to impair the object's integrity or availability for use in an official proceeding;

produce a record, document..."

Finding legislative intent to remove all witness obstruction cases from 18 U.S.C. § 1503, the Second Circuit held in United States v. Hernandez, 730 F.2d 895 (2nd Cir. 1984) that 18 U.S.C. § 1512 was the sole statute under which to prosecute witness-related charges.

This Court in United States v. Lester, 749 F.2d 1288 (9th Cir. 1984) identified flaw in the rationale of the Hernandez decision. It observed that 18 U.S.C. § 1512, as it stood at that time, did not prohibit non-violent attempts to influence witnesses. Hernandez involved a threat to kill a witness, clearly within the purview of § 1512, *24 Lester, however, involved only non-coercive attempts to influence a witness. Since those acts were not prohibited by § 1512, this Court concluded that Congress must have intended to leave them within the scope of the omnibus clause of § 1503.

In 1988, Congress clarified its intent and responded to the issues raised in Hernandez and Lester by amending § 1512 to cover all types of attempts to influence witnesses. [FN14] The Second Circuit subsequently reaffirmed it's interpretation in United States v. Masterpol, 940 F.2d 760 (2nd 1991). Other circuits, however, have declined to follow the lead of the Second Circuit. United States v. Kennv, 973 F.2d 339 (4th Cir). 1992; United States v. Tackett, 113 F.3d 603 (6th Cir. 1997); United States v. Maloney, 71 F.3d 645 (7th Cir. 1995); United States v. Moody, 977 F.2d 1420 (11th Cir. 1992).

FN14. The italicized language was added: (b) Whoever knowingly uses intimidation or physical force, threatens, or corruptly persuades another person..."

This Court confronted the interplay between sections 1503 and 1512 again in United States v. Aauilar, 21 F.3d 1475 (9th Cir. 1994); aff'd in part, rev'd in part, and remanded, ___ U.S. ___, 115 S.Ct. 2357 (1995) (issue of whether § 1503 continued to cover witness tampering not discussed). Because the allegations against Aguilar involved actions that occurred a few months prior to the amendment *25 of § 1512, this Court observed that the holding of Lester applied and non-coercive tampering was still covered under the omnibus clause of § 1503. Although the Court indicated it was not necessary to revisit the holding in Lester, Aguilar, at 1485 n. 7, it left little doubt that the analysis would be affected by the 1988 amendment. Aguilar, at 1485. The change to § 1512 "eliminated the problem that we discussed in Lester." Id. "Prior to its 1988 amendment, section 1503 extended to persuading a witness to tell a false story (citation omitted); the amendment explicitly shifted the prohibition on such 'corrupt persuasion' of a witness to section 1512." Aguilar, at 1486.

The Lester holding that non-coercive witness tampering remained in § 1503 is akin to medical diagnosis by exclusion; since it was not found in § 1512, the intent of Congress must have been to leave it in § 1503. As this Court recognized in Aguilar, the 1988 amendment clarified the intent of Congress that all witness tampering charges be prosecuted under § 1512. Mr. Ladum was charged under § 1503 with trying to influence Patrick Mathis1 testimony before the grand jury. That offense is only punishable under § 1512. Mr. Ladum's motion for judgement of acquittal on Count 19 should have *26 been granted because the government did not, and could not, have proved a violation of §1503.

2. Even if the omnibus clause of 18 U.S.C. §1503 still prohibits witness tampering, the government failed to sufficiently establish that Mr. Ladum violated the statute.

This Court has looked to the language of the 1988 amendment to § 1512 to determine the type of non-coercive witness-tampering proscribed by §1503 in regard to witnesses under the Lester holding. Aguilar, at 1485. That analysis is relevant if it is determined that non-coercive witness tampering can still be prosecuted under §1503.

"Congress's translation of this requirement as it pertains to witnesses, by its amendment to section 1512, indicates that the conduct must involve a defendant who 'corruptly persuades...or attempts to (persuade)' a witness so as to influence his testimony." Id.

In Aguilar, although the defendant made false statements to FBI agents, there was no evidence that he had tried to influence their testimony in any judicial proceeding. Aguilar, at 1486. The court distinguished acts which would not be within the scope of §1503, *27 such as making false statements to investigators, from those that would, such as "trying to persuade a witness to change his or her testimony through threats, force, bribery, extortion or other means of corrupt persuasion." Id.

It is apparent from Aguilar that the court believed the prohibitions of §1503 required overt attempts to influence testimony, not just inferences that such was the goal or hope of the defendant. A hypothetical example of a §1503 violation offered in the opinion dealt with attempts to influence testimony by offering bribes or threatening agents with the loss of their jobs. Id. Nothing of that nature occurred in this case.

Even in the light most favorable to the government, the evidence at trial was insufficient to permit a rational trier of fact to conclude beyond a reasonable doubt that Robert Ladum had corruptly attempted to persuade Patrick Mathis so as to influence his testimony before the grand jury.

The bulk of the government's allegations, and the proof in support of them, dealt only with Mr. Ladum supposedly approving of plans hatched by Mathis. If the terms "corruptly", "persuade" and *28 "influence" are to be at all meaningful, they must constitute more than just passive assent to the plan of another.

The government alleged only two affirmative obstructive acts by Mr. Ladum, participating in the plan to falsify evidence and telling Mathis to lie.

No testimony was offered that in any manner furthered the allegation that Mr. Ladum had been a participant in the plan to falsify business records or present them to the grand jury. Mathis, in fact, testified to the contrary. He said he was concerned that the records would not correspond with his testimony (TR 3783); that he came up with the plan (TR 3697) and that he and Hunter carried it out (TR 3703, 3783) He specifically indicated that Mr. Ladum never threatened him (TR 3766), instructed him to falsify the records or present them to the grand jury (TR 3786).

The only affirmative action concerning his testimony that Mathis attributed to Ladum was the suggestion that Mathis lie to the grand jury (TR 3692). Mathis provided no additional details about what Ladum supposedly told him to lie about. He never identified any words or acts by Ladum intended to influence him or force him to comply with the suggestion. Mathis1 acts before the grand jury were *29 self-motivated. The mere fact that Mr. Ladum said "OK" when they were presented to him can not constitute a violation of §1503.

3. The government did not prove that there was ever a plan to present false documents to the grand jury in response to a subpoena duces tecum.

Allegation 5 of Count 19 specified that Mr. Ladum "approved and participated in a plan whereby Patrick Mathis and John Hunter would create false documents purporting to be purchase and sales records of THE MONEY MAN, and Mathis would present these documents to the grand jury in response to a subpoena duces tecum."

As detailed in the section above, no evidence was ever presented showing that Mr. Ladum participated in the creation of any false documents or the presentation of them to anyone. Even if his approval of Mathis' plan, however, were found to satisfy the persuasion or influence requirement of §1503, a violation of that statute was not established because the documents were not produced in response to a subpoena duces tecum and there was no showing of intent to present them to the grand jury.

*30 Mathis was initially subpoenaed duces tecum for August 10, 1994 (TR 3776, ER 94). He appeared on that date and requested counsel (TR 3777). He was presented with a new subpoena that required only his personal presence on August 17, 1994 (TR 3780 ER 96). He appeared on that date but did not bring any documents with him (TR 3781). He told the jury he was unsure whether he was supposed to bring the documents (TR 3781). Mathis was then asked to deliver the documents to the United States attorney's office (TR 3706, 3783). It was only after his grand jury appearances that Mathis spoke to Ladum about his plan (TR 3949-3950). The documents, once delivered to the United States Attorney's office, were apparently never taken to the grand jury. It is evident the documents were sought not for purposes of the grand jury but for the IRS investigation of Mr. Ladum and his associates which had been ongoing since 1988.

The provisions of §1503 apply only to attempts to obstruct a pending judicial proceeding. Aguilar, at 1484. Interference with a government agency's investigation is insufficient to constitute a violation of the statute. Id. Mr. Ladum's motion to strike the *31 allegations in Count 19 related to the presentation of the altered records to the grand jury should have been granted.

Since the verdict on Count 19 was a general one, it is impossible to determine whether it was based on the insupportable ground or one of the other allegations. It must therefore be set aside. Lester, at 1292, citing Stromberg v. California, 283 U.S. 359, 51 S.Ct. 532(1931).

The District Court Erred When It Denied Robert Ladum's Rule 29(C) Motion For Judgment Of Acquittal On Counts 21 Through 30.

(A) Where Issue Raised

This issue was raised by a motion under Rule 29(c) after the conclusion of the trial (CR 731). It was denied by order entered on September 11, 1996 (CR 747).

(B) Standard of Review

The standard of review for a challenge to the jurisdictional element in a federal criminal statute is unresolved in the Ninth Circuit. United States v. Gomez, 87 F.3d 1093, 1097 n.3 (9th Cir. 1996). The issue of jurisdiction is a question of law, which is reviewed de novo. Id. The standard for reviewing sufficiency of the evidence to support a jury verdict is whether upon reviewing the evidence in the light most favorable to the prosecution, any rational trier of fact could *32 have found the essential elements of the crime beyond a reasonable doubt. Id.

Counts 21 through 30 charged Mr. Ladum and David Grigonis with money laundering in violation of 18 U.S.C. §1956(a)(1)(B)(i). The charges were based on the deposit in Grigonis1 bank account of rent checks that the government alleged were proceeds of the crime of concealment of bankruptcy assets.

The money laundering statute prohibits conducting financial transactions when the instrument involved represents the proceeds of specified illegal activity and the intent of the transaction is at least in part to disguise the source, ownership or control of the proceeds.

Financial transaction is defined as a transaction which either "in any way or degree affects interstate or foreign commerce" or involves "the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree." 18 U.S.C. §1956(c)(4).

An interstate nexus is essential to confer jurisdiction for prosecutions under 18 U.S.C. §1956. United States v. Kunzman, 54 F.3d 1522 (10th Cir. 1995). It is also an element of the crime of *33 money laundering. 18 U.S.C. §1956(c)(4). Thus the government must prove beyond a reasonable doubt that either the financial transaction affected interstate commerce, 18 U.S.C. §1956(c)(4)(A), or involved the use of a financial institution which is engaged in or whose activities affect interstate commerce, 18 U.S.C. §1956(c)(4)(B).

Proof that the Federal Deposit Insurance Corporation (FDIC) insures a financial institution has been found sufficient to meet the interstate commerce requirement of section 1956. Kunzman, at 1527; United States v. Peay, 972 F.2d 71, 75 (4th Cir. 1992).

This circuit has also ruled that in the absence of direct testimony, bank documents that bear an inscription that an establishment was FDIC-insured at the time of the crime will satisfy the government's burden of proof. United States v. Allen, 88 F.3d 765, 769 (9th Cir. 1996).

At trial, the government produced no testimony that the United States National Bank of Oregon, the bank into which Grigonis deposited the relevant checks, was insured by the FDIC or otherwise involved in interstate or foreign commerce. There was no other evidence that showed the check deposits affected interstate or foreign commerce.

*34 The government responded to Mr. Ladum's Rule 29(c) motion by directing the trial court to six checks drawn from government's exhibit 11-76, a box of records from Mr. Grigonis' United States National Bank account (ER 87). In its written response the government indicated that the checks bore inscriptions which indicated that they had cleared through either out-of-state or Canadian institutions or had been written on out-of-state accounts. The inscriptions, according to the government, established that the bank was involved in interstate or foreign commerce.

The evidence proffered by the government does not justify that conclusion. The language on the bank documents in Allen specified exactly what it was the government sought to prove, that the bank was a member of FDIC. The checks submitted by the government in this case do not satisfy the government's burden of proof in a similarly direct manner. There are no inscriptions that read, "this bank engages in interstate and international commerce." No evidence was offered explaining to the jury how the banking system worked or what the language on the checks meant. Knowledge of the manner in which checks are transacted between banks is not so commonplace that participation in interstate or foreign commerce *35 could have been inferred based only the checks. Absent explanatory testimony, the checks were insufficient to prove federal jurisdiction.

Even if the checks are found to sufficiently establish that the bank was involved in interstate or foreign commerce, they do not establish that such involvement corresponded with the time period of all of the money laundering counts. In Allen, testimony that a credit union was federally insured in 1994 was held not to meet the government's burden of establishing jurisdiction for a 1989 offense. Allen, at 769.

The checks submitted by the government date from June and July of 1989 and April, August and September of 1993. The only corresponding money laundering Counts are 28 through 30. Therefore even if the checks are sufficient to meet the government's jurisdictional obligations, Counts 21 through 27 should have been dismissed.

The District Court Erred When It Denied David Griaonis' Motion To Dismiss Counts 21-30.

Robert Ladum joins in and adopts the argument of David Grigonis set forth below.

The Court Erred When It Enhanced Mr. Ladum's Offense Level On The Tax Offenses For Failing To Accurately Report $10.000 Or More Income From Criminal Activity.

*36 1. Where Issue Raised

This issue was raised in Mr. Ladum's sentencing letter (ER 97-A) and at the sentencing hearing (TR 5908).

THE COURT: "...I believe, per the calculations of Cheryl Glenn and the evidence presented in the case, there is sufficient evidence to make a finding that Mr. Ladum and Mr. Weaver each profited more than $10,000 in a given year." (TR 5921)

2. Standard of Review

This argument raises a question of interpretation of the Guidelines, a question which the Ninth Circuit reviews de novo. United States v. Shrestha, 86 F. 3d 935, 938 (9th Cir. 1996).

3. Argument

Mr. Ladum joins in the argument on this issue submitted by Mr. Weaver.

Additionally, the only crime, if any, committed by Mr. Weaver was a violation of 18 DSC 924(a)(1)(A), making a false statement in a license application. [FN15] That offense generated no income. This Court has held that for this enhancement to apply, the crime committed *37 must have directly produced the illegal income. United States v. Ford, 989 F.2d 347, 350 (9th Cir. 1993). Thus crimes such as tax fraud or tax evasion would not support application of the enhancement since they do not actually generate income. Id. The same situation applies to the false statement offense. It did not generate any income and hence would not support the enhancement.

FN15. "Except as otherwise provided...whoever (A) knowingly makes any false statement or representation with respect to the information required

by this charter to be kept in the records of a person licensed under this chapter or in applying for any license...shall be fined under this title, imprisoned not more than five years, or both."

The trial court apparently accepted the government's position that each sale of a weapon at Abe's was a 922(a)(1) offense of sales of a firearm without a dealer's license. The fact is, however, that Mr. Weaver had a dealer's license. He did not violate 922(a)(1). If the government believed the license was falsely obtained it had a remedy, revocation, under 18 USC 923(e). The enhancement was erroneously applied.

Even if the Court were to accept that a 922(a)(1) offense did occur, the following issues remain:

¶ Unlike the tax loss calculation of 2T1.1, the enhancement speaks of income, not gross income. Thus in determining whether the $10,000 annual amount was involved, the business overhead would have to be calculated and subtracted from any profit. The *38 presentence report merely cited the government's "conservative" estimate of what the guns were sold for. Even accepting that figure, which is much too imprecise to base an enhancement on, there is no showing that after the costs of goods and doing business (including rent, utilities, salaries etc.) are accounted for, more than $10,000 income was realized.

¶ Even if it is accepted that the sale of firearms was illegal and $10,000 income was realized, there is no showing that Mr. Ladum earned that much income from the activity. The enhancement by it's clear language applies only if "the defendant," not the defendants as a group, had the income and failed to report it.

The District Court Erred When It Concluded It Had To Count Robert Ladum's Conviction For Refusinq To Submit For Induction In His Criminal History Score.

(A) Where Issue Raised

The issue was raised in defense counsel's sentencing letter and before the court at sentencing (TR 6004).

*39 THE COURT: "Well, after review of the materials the court - notwithstanding that it's 25 years ago, I think the court is required to take that into account, which would make this a category 2."

MR. FEINER: "Your honor, am I correct in terms of you saying that you feel you have no choice in the matter?"

THE COURT: "It's my understanding, Mr. Feiner." (TR 6004 ER 85)

(B) Standard of Review

A district court's interpretation and application of the Sentencing Guidelines is reviewed de novo. United States v. Shrestha, 86 F.3d 935, 938 (9th Cir. 1996). Review of whether a district court has authority to depart is reviewed de novo. United States v. Cuevas-Gomez, 61 F.3d 749, 750 (9th Cir. 1995).

The criminal history, or horizontal scale, of the sentencing guidelines arrive at a score by allocating points based on sentences received by a defendant for prior offenses. USSG §4A1.1.

The sentencing court must impose a sentence within the designated guideline range unless it finds that there exists "an aggravating or mitigating circumstance of a kind, or to a degree, not *40 adequately taken into consideration by the Sentencing Commission in formulating the guidelines..." 18 U.S.C. §3553(b).

"The commission intends the sentencing courts to treat each guideline as carving out a 'heartland' a set of typical cases embodying the conduct that each guideline describes. When a court finds an atypical case, one to which a particular guideline linguistically applies but where conduct significantly differs from the norm, the court may consider whether a departure is warranted." USSG ch. 1, pt. A, intro. Comment. 4(b).

Where a sentencing court finds that a defendant's prior convictions place him in a criminal history category that over-represents the seriousness of his history, it is authorized to depart downward to a more representative category. United States v. Rios-Favela, 118 F.3d 653 (9th Cir. 1997); USSG §4A1.3.

The trial court's decision not to depart downward to Criminal History Category 1 was based not on the merits of the request but on it's conclusion that the law prevented it from doing so. The court erroneously interpreted the guidelines. The matter should be remanded for determination of whether the downward departure is appropriate for Mr. Ladum.

*41 The District Court Erred When It Imposed A $15.000 Fine. Pavable Within 90 Davs Upon Robert Ladum Without Regard To His Ability To Pay.

(A) Where issue raised

The issue was raised in defense counsel's sentencing letter and before the court at sentencing (TR 6006-6007).

THE COURT: "Defendant will pay a fine in the amount of $50,000 [FN16] within 90 days of sentencing." (TR 6008)

FN16. The $50,000 figure is a reporter's error. All written documents, including the judgment, reflect the correct figure of $15,000 (ER 58, 64).

(B) Standard of Review

The District Court's determination that a defendant has the ability to pay a fine is reviewed for clear error. United States v. Favorito, 5 F.3d 1338 (9th Cir. 1993). A court's interpretation or application of the sentencing guidelines is reviewed de novo. Favorito, at 1340.

USSG §5E1.2(a) provides that the court shall impose a fine in all cases except those where a defendant establishes that he is unable to pay one and unlikely to become able to in the future.

The defendant bears the burden of proving inability to pay. Favorito, at 1339.

*42 A $15,000 fine, payable within 90 days, was imposed upon Robert Ladum. (TR 6006). Mr. Ladum objected to the fine both in his sentencing letter and at the sentencing hearing (TR 6006).

The government did not respond with any evidence of ability to pay. Infact, at a post-trial custody hearing, the government argued that Mr. Ladum was a flight risk, specifically because he had no assets and nothing of value to keep him in the Portland area.

The PSR concluded that a fine was appropriate because although Ladum had reported to Pretrial Services that he had total assets of only $700, "it appears Ladum made significant income between 1983 and 1996, only some of which has been accounted for." The trial record does not support that conclusion. Although there was testimony concerning large amounts of cash being earned from the second hand stores, it was concentrated during the 1980's, prior to Mr. Ladum's involvement in the Wallowa Lake Lodge. There was little, if any, evidence presented during the trial that Mr. Ladum had any significant income following the collapse of the Wallowa Lake Lodge. The conspiracy was identified in the indictment as running until 1996. Trial evidence, however, did not support the conclusion of *43 the PSR writer [FN17] that large sums of money were being accumulated throughout that whole period or his speculation that Mr. Ladum had any of that money at the time of his sentencing.

FN17. Who, it must be noted was neither present at the trial nor had access to the transcripts at the time he wrote his report.

From 1992 until this day, Mr. Ladum has been represented by court-appointed counsel. That fact is a significant indicator of present inability to pay a fine. USSG §5E1.2 (application note 3). More importantly, it also reflects the length of the period of time during which Mr. Ladum was under the intense scrutiny of the United States Attorney's Office, the Internal Revenue Service and the ATF. None of those entities ever directed the court to a single piece of evidence indicating that Mr. Ladum had sufficient assets to pay a fine. The PSR writer's speculation that "it appears" Ladum had assets which were not disclosed was insufficient to overcome the defense showing of present inability to pay a fine.

An indigent defendant may still be ordered to pay a fine if the court finds that he has sufficient earning capacity to pay it in the future. United States v. Haggard, 41 F.3d 1320, 1329 (9th Cir. 1994). It is entirely possible that given Mr. Ladum's lengthy prison sentence that he might be able to pay his fine through participation in the *44 inmate responsibility program. It is apparent, however, from the Judge's order that the fine be paid in full within 90 days of sentencing, that he was not contemplating future payments.

The trial court's imposition of a fine payable within 90 days was in derogation of the evidence and the law. This matter should be remanded for determination of whether Mr. Ladum has the ability to pay a fine in the future. If it is established he does, a reasonable schedule for payment should be formulated. If he doesn't, the fine should be eliminated.

. Ronald Van Vliet

The Court Erred In Denying Defendant Van Vliet's Motion To Dismiss Count 16 Of The Indictment. Which Failed To Allege Materialitv. Or Facts From Which Materialitv Could Be Inferred. Of The False Statement Charged.

(A) Standard of Review:

The sufficiency of an indictment is examined de novo. United States v. Dischner, 974 F.2d 1502, 1518 (9th Cir. 1992).

(B) Argument

Defendant Van Vliet was charged in Count 16 as follows:

"On or about the 27th day of April, 1990, in the District of Oregon, defendant RONALD D. VAN VLIET did *45 willfully and knowingly make and cause to be made false, fictitious and fraudulent statements and representations in a matter within the jurisdiction of a department or agency of the United States by telling IRS Special Agent Michael Maney that he had no partners and had been the sole owner of DIVISION CASH for the two years since January 1988; whereas, as defendant RONALD D. VAN VLIET then and there well knew and believed defendant ROBERT E. LADUM had an ownership interest in DIVISION CASH since it began operating in January 1988."

Prior to trial, defendant Van Vliet moved to dismiss Count 16 of the indictment, for failure to allege the element of materiality of the false statement charged in that Count (CR 206, ER 104). The Court denied that motion in its written opinion of March 12, 1996 (CR 495, ER 112).

Every essential element of an offense must be pleaded in the indictment so as to inform the defendant of the charges he must defend himself against. United States v. King, 587 F.2d 956, 963 (9th Cir. 1978). This requirement is "by no means a mere technicality," but is "of paramount importance to the rights of the accused." Id., at 963. Materiality of the allegedly false statement has long been held to be an element of 18 U.S.C. §1001 under any theory of prosecution, even where the statute does not specifically require it. United States v. Talkinqton, 589 F.2d 415, 416 (9th Cir. 1978); Paritem Singh Poonian v. United States. 294 F.2d 74, 75 (9th Cir. 1961); Brandow v. United States, 268 F.2d 559, 565 (9th Cir. 1959).

*46 In this Circuit, the materiality of the allegedly false statement is an element which must be decided by the jury. United States v. Gaudin, 997 F.2d 1267, 1271-72 (9th Cir. 1993); United States v. Valdez, 594 F.2d 725, 729 (9th Cir. 1979). Without an allegation of materiality, there can be no jury consideration of the issue, United States v. Gaudin, supra at 1272-73, although this Count would never have been considered by the jury had it been properly dismissed prior to trial.

The indictment in this case roughly follows the language of the statute. Pleading in statutory language is sufficient so long as the essential facts of the offense are charged. Russell v. United States, 369 U.S. 749, 765 (1969). When the statute itself omits an essential element of the offense, or includes it only by implication, then pleading the statutory language will not suffice, and the omitted element must be alleged directly and with certainty. United States v. Conlon, 628 F.2d 150, 155 (D.C.Cir 1980): Lott v. United States, 309 F.2d 115. 117-18 (5th Cir. 1962); United States v. Outler, 659 F.2d 1306, 1310-11 (5th Cir. 1981). Under the statute upon which Count 16 is based, in the absence of a specific allegation of materiality, the indictment must at least set forth sufficient facts from which an inference of materiality may be drawn. Paritem Singh Poonian v. United States, supra, at 75; *47 United States v. Oren, 893 F.2d 1057, 1063 (9th Cir. 1990). No such facts are alleged here. Nor can the government rely upon other allegations in the indictment to cure the shortcomings of Count 16, unless it expressly incorporates those allegations into the defective count, which it did not do in this case. Walker v. United States, 176 F.2d 796, 798 (9th Cir. 1949); Davis v. United States, 357 F.2d 438, 440 at n. 2 (5th Cir. 1966)(citing Walker; specificity of pleading can be achieved by incorporation of another count, but this must be expressly done); United States v. Miller, 774 F.2d 883, 885 (8th Cir. 1985)(defective count cannot depend for its validity upon allegations of another count not specifically incorporated).

The test for determining the materiality of a falsification is whether it is 1) one that could affect or influence the exercise of a governmental function; and 2) whether it has a natural tendency to influence or is it capable of influencing agency decision. United States v. Carrier, 654 F.2d 559, 561 (9th Cir. 1981); United States v. Talkinqton, supra, at 416. The statement must be capable of having some non-trivial effect on a federal agency. United States v. Facchini, 874 F.2d 638, 643 (9th Cir. 1989). Here, one cannot infer materiality the facts alleged in Count 16. Count 16 provides no factual basis for *48 inferring that the statement could influence the exercise of any governmental function; the count does not allege the context in which the statement was made, such as whether it was made in an investigatory setting or at a cocktail party; it does not allege whether either 'Van Vliet," "Ladum" or "Division Cash" were taxable entities; it sets forth no facts from which we can infer whether partnership or ownership questions had any nexus to tax issues or other material questions; nor does it set forth facts from which it could be determined whether Ladum's alleged ownership had any impact upon taxation issues or other agency interests.

This defect cannot be cured by post-indictment remedial action by the government or the trial court:

"To allow the prosecutor, or the court, to make a subsequent guess as to what was in the minds of the grand jury at the time they returned the indictment would deprive the defendant of a basic protection which the guaranty of the intervention of a grand jury was designed to secure. For a defendant could then be convicted on the basis of facts not found by, and perhaps not even presented to, the grand jury which indicted him."

Russell v. United States, supra, at 770. In conclusion, Count 16 is defective, and it should never have been submitted to the jury.

The Court erred in denying defendant Van Vliet's motion for judgment of acquittal on Count 9.

*49 (A) Argument

At the close of the government's case, defendant Van Vliet joined defendant Hong's motion to dismiss and for judgment of acquittal, adding:

"We have essentially the same legal issue. I would, of course, refer to the facts of Mr. Van Vliet's case rather than Mr. Hong's case. That would be the only difference in that motion. And that is, of course, Count 9."

(TR 4207). The Court denied the motion (TR 4237).

Defendant Van Vliet joins and incorporates Defendant Hong's argument in its entirety on this legal issue.

. James Weaver

The Court Erred Bv Enhancina Mr. Weaver's Sentence Bv Two Levels.

(A) Standard of Review

This argument raises a question of interpretation of the Guidelines, a question which the Ninth Circuit reviews de novo. United States v. Shrestha, 86 F. 3d 935, 938 (9th Cir. 1996).

(B) Argument

The Government at the time of sentencing produced an affidavit from an Alcohol, Tobacco and Firearms Agent who had seized the firearms register from Abe's shop. Using the register, and other *50 information, the agent computed that there were firearms sales at Abe's shop of $21,117.00 and, if that were extrapolated to a yearly figure, it exceeded $10,000.00 a year (TR 5902). The Government's theory was that the defendant obtained a false federal firearms license and that any purchase and sale of guns under this false license was a crime, a violation of 18 U.S.C § 923. Therefore, at least at Abe's shop, there was a source of $10,000.00 in the year 1990 that came from an illegal activity (TR 5902-03).

The defendant had submitted his objections to the enhancement in his letter to the Court dated December 12, 1996, and at sentencing (TR 5903-16).

USSG, § 2T1.1(b)(1) states in its entirety:

"If the defendant failed to report or to correctly identify the source of income exceeding $10,000.00 in any year from criminal activity, increase by two levels. If the resulting offense level is less than Level 12, increase to Level 12."

Criminal activity is defined as conduct constituting a criminal offense under federal, state, or local law. In United States v. Ford, 989 F. 2d 347, 350 (9th Cir. 1993), the Court discussed alleged criminal offenses which occurred in Canada for which the defendant received a two-level increase:

*51 "The Commentary does not define 'criminal activity1 as 'conduct that would constitute a criminal offense under federal, state, or local law,' but as 'conduct constituting a criminal offense under federal, state, or local law.1 The Guidelines do not speak to hypothetical criminal offenses, but to those the defendant actually committed.''

Id. And defendant did not commit any criminal offense for which he was convicted which realized $10,000.00.

Section 2T1.1(b)(1) assumes the income to be reported is the defendant's, not a co-defendant's. The Government never established that Mr. Weaver received $10,000.00 in income.

As regard to Mr. Weaver, § 2T1.1(b)(1) only came into play because he was convicted of the conspiracy offense which, then, refers one to § 2T1.1. The tax returns that were in question were the tax returns of the defendant Robert E. Ladum. Further, it was the theory of the Government that Robert E. Ladum owned Abe's shop. As such, it was error to impose a two-level enhancement against Mr Weaver since he was not charged with failing to report or to correctly identify the source of income.

The Court Erred By Imposing A $10.000 Fine Payable Within 90 Days Of Sentencing.

*52 (A) Standard of Review

This argument raises a question of interpretation of the Guidelines, a question which is reviewed de novo. United States v. Shrestha, 86 F. 3d 935, 938 (9th Cir. 1996).

(B) Argument

Defendant Weaver was fined in the amount of $10,000.00 and ordered to pay that fine within 90 days of sentencing (TR 5955). Defendant objected and told the Court it was impossible that he could pay the fine in 90 days and further stated that the defendant did not have $10,000.00 (TR 5958). It was error for the Court to impose the fine without determining the ability of the defendant to pay any fine, let alone a fine within 90 days.

USSG § 5E1.2(a) sets forth in its entirety:

"The Court shall impose a fine in all cases, except where the defendant establishes that he is unable to pay and is not likely to become able to pay any fine."

The Court in the instant case made no determination regarding the defendant's ability to pay and whether or not it was likely he would be able to pay any fine in the future.

The presentence report did not recommend any particular fine but stated that the Court should impose an additional fine at least *53 sufficient to pay the costs to the Government of any imprisonment, probation, or supervised release pursuant to Guideline § 5E1.2(i).

Failure of the Court to determine the ability of the defendant is error and requires the matter be remanded.

The Court Erred In Denying The Motion For Judgment Of Acquittal On The Sufficiency Of The Evidence On Count 1. Conspiracy.

(1) Standard of Review

The standard for review is de novo. United States v. Barone, 39 F. 3d 981 (9th Cir. 1994).

(2) Arument

The critical inquiry on review of the sufficiency of the evidence to support a criminal conviction is whether, after "viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential element of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 2789, 61 L Ed. 2d 560 (1979). A conspiracy is established "when there is an agreement to accomplish an illegal objective, coupled with one or more overt acts and furtherance of the illegal purpose and the requisite intent necessary to commit the underlying substantive events." *54United States v. Friedman, 593 F. 2d 109, 115 (9th Cir. 1979). Once the existence of a conspiracy is established, "evidence establishing beyond a reasonable doubt a connection of a defendant with the conspiracy, even though the connection is slight, is sufficient to convict him with knowing participation in the conspiracy." United States v. Dunn, 564 F. 2d 348, 357 (9th Cir. 1977).

To prove participation by defendant Weaver in the over-all conspiracy, however, the prosecution was required to show that Weaver agreed to effectuate the conspiracy's central criminal design. Dalev v. United States, 282 F. 2d 818, 820 (9th Cir. 1960). The central criminal design was to assist Mr. Ladum in defrauding the IRS. The Government must establish that defendant Weaver knew the purpose of the conspiracy and that he knew or had reason to know that others were involved and that his own benefits were probably dependent upon the success of the entire venture. United States v. Thomas, 586 F. 2d 123, 132 (9th Cir. 1978); United States v. Kearney, 560 F. 2d 1358, 1362 (9th Cir. 1977); United States v. Baxter, 492 F. 2d 150, 158 (9th Cir. 1973). Although it need not be shown that an alleged co-conspirator knew all of the purposes of and participants in a conspiracy, the Government is required to prove that *55 he was plotting in concert with others to violate the law. United States v. Kearney, supra, 560 F. 2d at 1362.

The first witness who mentioned James R. Weaver was James Dean Northouse II ("Northouse") (TR 615 - 954). Northouse testified in 1987 he was encouraged by defendant Ladum to find other locations to house second-hand stores (TR 702- 03). If he found any, he could set up a business. He went to a meeting, to which he was paged, at the home of defendant Grigonis (TR 703). When he got there, he saw defendant Grigonis, defendant Ladum and, briefly, defendant Weaver (TR 704). He was told that if he found property which was not for sale, he was to get the address and give it to defendant Weaver (TR 704). Defendant Weaver was a real estate agent (TR 705). He was also the son-in-law of the owner of the property which housed the second-hand store known as Abe's (TR 705).

Importantly, Northouse did not testify to any conversation with occurred which would indicate that defendant Weaver had any knowledge of any plan by Mr. Ladum to operate second-hand stores and hide his income taxes from the IRS. He was told if he found any second-hand locations from which he could run a business, he was to *56 contact defendant Weaver to assist him in the purchase of such property (TR 707-08).

Northouse further testified he attended numerous business meetings (2-3 times) with the managers of the second-hand stores (TR 720). He listed as also in attendance at various times a number of individuals, but none of those individuals was Mr. Weaver (TR 720).

Steve Johnson was an individual who was employed at the Wallowa Lake Lodge (TR 2213). He testified that at some point between September, 1988 and April, 1989 he needed a backhoe with a trencher. Defendant Weaver brought the backhoe with the trencher to the Wallowa Lake Lodge (TR 2229). The lodge was going to have to dig for septic systems and defendant Weaver brought the backhoe with the trencher on a flatbed on his pickup truck (TR 2229). He testified there were other trips by defendant Weaver including one where he was wearing a pager which he stated defendant Ladum convinced him to obtain (TR 2230). He said that there was a coding system which would allow him to know who was calling by use of the pager (TR 2231).

*57 He testified that Mr. Weaver did receive a check for payment for the use of the backhoe with the trencher on a buy or lease understanding (TR 2237). Further, that when he had other visits he was with his children (TR 2238-39). He testified he was not aware whether or not Mr. Weaver was associated with any second-hand business (TR 2241).

Scott Skagaberg testified that defendant Weaver came to the lodge to get the trencher but it was so immobilized he was unable to move it (TR 2348). Mr. Skagaberg called defendant Ladum when Weaver said he wanted payment for his services. Defendant Ladum told him, "If Weaver says he deserves, he deserves it." This occurred in the summer of 1989 (TR 2349). Defendant Weaver said he wanted to sell the trencher to Wallowa Lake Lodge but Mr Skagaberg was not buying (TR 2348).

Edward E. Roskie testified that he had run a second-hand store at 12300 S.E. Division in 1980 (TR 2820). The owner of the building which housed the store was Harry Anderson (TR 2821). He had known Harry Anderson for a number of years and known his son-in-law, defendant Weaver, for approximately 15 years. He was aware *58 that Mr. Weaver was a fireman and also dabbled in real estate. In fact, Mr. Weaver sold a house for him (TR 2821).

He testified that Mr. Weaver owned a second-hand store known as the Money Hawk. Mr. Weaver asked Mr. Roske to join him as a partner (TR 2824). Mr. Roske also testified that Mr Weaver told him he was looking for "places" for Mr. Ladum (TR 2829).

Patrick Mathis testified under a grant of immunity (TR 3546). He testified he had been employed at Abe's during a period of time when Jim Weaver was the owner of record for the store (TR 3547, 3550). He testified defendant Ladum was present there on a daily basis working at the counter, pricing coins and jewelry in his own office (TR 3552). He also observed him count money which he put in the safe (TR 3552). When asked how often defendant Weaver was present, Mr. Mathis stated he was probably there about five times during the one to one and a-half years that he was employed there. He stated that defendant Weaver sat and talked on the phone most of the time when he was present (TR 3555).

When asked who gave directions, he testified they came from defendant Ladum and that defendant Weaver never gave him any directions (TR 3556-57)

There was a fire in October of 1992 which, in essence, destroyed Abe's. Mr. Mathis testified that a truck trailer was set up in the parking lot for the disposal of all of the goods (TR 3585-86). He saw Mr. Weaver during that period of time but Mr. Weaver was principally interested in recovering the insurance for the loss that occurred to the building and its contents. He did not move any of the property that was for sale. Mr. Mathis testified he did not see much of Mr. Weaver after that time (TR 3590).

He also testified he attended meetings with defendant Ladum. At no time did he testify that defendant Weaver was present during any of those meetings (TR 3672).

IRS-CID Special Agent Michael Maney testified he met with defendant Weaver on June 29, 1990 (TR 3978). The meeting had been set up by Mr. Weaver with Multnomah County Deputy Sheriff Hutchison who, in turn, invited Agent Maney. Defendant Weaver told Agent Maney that he started operating Abe's after Northouse left owing back rent to his father-in-law, Mr. Anderson. He filed eviction papers against Northouse. Defendant Weaver said that he paid defendant Ladum to run the shop to make it more profitable as a consultant. He had no ownership interest in the shop. Defendant *60 Ladum ran the store at all times when defendant Weaver was absent (TR 3978-80).

He further testified that defendant Weaver offered Agent Maney the opportunity to come to work at the shop for a couple of weeks so he could see for himself exactly how it was run and who the owners were. He also stated that defendant Weaver told him that he had previously spent time finding real estate for David Grigonis to buy and to use for second-hand stores (TR 3997).

IRS-CID Special Agent Paul Nicholson interviewed defendant Weaver at defendant Weaver's request in December of 1993. He basically told Agent Nicholson the same things that he had told Agent Maney (TR 4001-12). Additionally, he admitted that the tax returns he reviewed of defendant Weaver and his wife all showed they were prepared by a certified public accountant, Liebert & Liebert (TR 4022). He further admitted that the 1990 return showed a report of interest income on behalf of Abe's from a credit union account (TR 4015).

Defendant Weaver reiterated that he had an agreement with defendant Ladum and Ladum was paid $500 a month initially which ultimately became $1,000 a month. Agent Nicholson acknowledged *61 that defendant Weaver provided to the Government a contract between himself and defendant Ladum which was hand-written and which provided the conditions of consulting (TR 4024). Agent Nicholson believed the contract had previously been provided to Agent Maney (TR 4024).

There was no evidence whatsoever that Mr. Weaver at any time was aware that Mr. Ladum sought to hide his income from the Internal Revenue Service. In fact, evidence existed regarding another purpose. Dennis Doherty testified that an attorney, Marc Zwerling, told him that defendant Ladum did not want his name used on any documents because he had a default judgment against him and was concerned that the persons who held the default judgment could obtain a lien and tie up any property which Mr. Ladum had (TR 2375).

. Daniel Hong

The Trial Court Erred In Denying Defendant Hong's Motion To Dismiss Count 10. (Filing A False Return: 26 U.S.C. § 7201(6)).

(A) Where issue raised.

This issue was raised by a written motion to dismiss and motion for judgment of acquittal (CR 657). Following oral argument, the trial court denied the motion:

*62 THE COURT: "Well, the court will deny all defendant's Rule 29 motions with respect to the filing of a filing of Schedule Cs, and I think that's Count 10 as to all defendants. I'm not sure as to the Count numbers. But the court believes that the filing of a Schedule C, in light of the evidence that would support a finding of partnership, would be a material matter." (TR 4237).

(B) Standard of Review

A trial court's denial of a motion to dismiss based on its interpretation of a federal statute is reviewed de novo. United States v. Blinder, 10 F.3d 1468, 1477 (9th Cir. 1977).

26 U.S.C. § 7206(1) provides:

Declaration under penalty of perjury - (Any person who) willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under penalties of perjury, and which he does not believe to be true and correct as to every material matter; (shall be guilty of a felony and upon conviction thereof shall be fined not more than $100,000).

The government alleged in Count 10 of the second superseding indictment:

on or about the tenth day of may, 1989, in the District of Oregon, defendant DANIEL HONG, a resident of Portland, Oregon, did willfully make and subscribe a joint United States Individual Income Tax Return, Form 1040, for *63 the calendar year 1987, which was verified by a written declaration that it was made under the penalties of perjury and was filed with the internal revenue service, which said return he did not believe to be true and correct as to every material matter in that the; return and accompanying schedule C reported that the business COLUMBIA CASH was a sole proprietorship owned bv defendant HONG, and that HONG had received al the net income of the business: whereas he then and there well knew and believed that he. defendant DANIEL HONG, was not the sole proprietor of COLUMBIA CASH and that Robert E. Ladum received income from Columbia Cash. All in violation of 7206(1).

(emphasis added) [FN18]

FN18. Defendant Hong's 1987 tax return, government's exhibit 1-52, is attached hereto as (ER 131)

1. Using the wrong form does not violate § 7206(1)

The government does not allege in its indictment that any specific line on Mr. Hong's 1987 Schedule C or 1040 is incorrect. Rather, the government's theory is that by filing an IRS Form Schedule C, Mr. Hong implied that he was a sole proprietor and that he had received all of the net business income of Columbia Cash. Significantly, Mr. Hong did not state, on either the return or the accompanying Schedule C, that he was a "sole proprietor." Nor did he state that he had received all the net income from the business. *64 Since § 7206(1) is a perjury statute, and literal truth is a defense to perjury, the trial court erred in denying Mr. Hong's motion to dismiss.

In United States v. Reynolds, 919 F.2d 435, 437 (7th Cir. 1990) the defendant filed a form 1040EZ that did not include income that he obtained by embezzling federal funds. The government alleged in its indictment that line 7 of the return was false in that it understated Reynolds' true taxable income. It argued both that Reynolds should have included the illegal income on line 7 or in the alternative that by filing 1040EZ, he implied that he received no other types of reportable income. Reynolds argued that his line 7 was; "literally correct" in that the form called for only income from "wages, salaries and tips," not income from embezzlement. The Court, in an opinion by Judge Easterbrook, held:

The prosecutor's argument that by filing form 1040EZ a taxpayer implicitly represents that he has no additional income has more substance, but this is not the theory of the indictment. It charged specifically that line 7 was false and line 7 is derived arithmetically from other lines. Section 7206(1) is a perjury statute, and literal truth is a defensie to perjury, even if the answer is highly misleading.

id., at 437.

*65 The Seventh Circuit went on to explain that if the form had an "open-ended" line that called for "all § 61 income," then Reynolds would have violated § 7206(1) by failing to include all of his income. But because Form 1040EZ called for a specific type of income, it was not a false statement to include the information that was called for.

In United States v. Borman, 992 F.2d 124 (7th Cir. 1993), the defendants (husband and wife) filed a form 1040A that had a line for wages, salaries, tips, and other types of income that were not relevant. The government alleged that the defendants received income from selling Christmas wreaths that was not reported on the 1040A. The Court characterized the government's theory as: "by filing the 1040A, the defendants implicitly represented that they received no income of a type or amount that would require a different form." This was a theory that was not alleged by the government in Reynolds. The issue in Borman then was whether that theory stated an offense. The Court, relying on Reynolds, held that the government's new theory did not change the outcome:

Thus, under the Reynolds, rationale, the untruth must be found in a statement of some material information called for by :he form itself, and any implication found bv filing a particular form--that the taxpayer nad received no income requiring the use of a different *66 form--is simply not enough. As Ihe Reynolds court put it, "'using the wrong form does not violate S 7206m."

*****

The Form 1040A does not call for a taxpayer to declare that he or she has no income of a type other than that required to be disclosed on the form. * * * A charge that the taxpayer makes an implicit representation when filing the wrong form adds nothing beyond a charge of filing the wrong form.

Id., at 126. (emphasis added).

Furthermore, the Borman court dismissed the government's argument that its ruling would "unduly diminish its ability to protect the integrity of the federal tax system." As it noted in Reynolds, the Court held the government could have charged Borman under § 7201 or § 7203. Furthermore, it could simply add a line; to Form 1040A which inquires of the taxpayer whether or not he has received any income not reported on the return. If the taxpayer falsely reports that he has not, then he could be prosecuted under § 7206(1). Id.

The Borman/Revnolds approach is based on a two-part analysis: "(1) § 7206(1) is a perjury statute and (2) literal truth is a defense to perjury, even if the answer is highly misleading." Reynolds at 437; Borman at 126. While this Circuit has not specifically discussed the Borman/Reynolds approach, it has followed *67 both parts of the two-part analysis. Regarding the first part, in United States v. Marashi, 913 F.2d 724, 736 (9th Cir. 1990), this court held: "(s)ection 7206(1) is a perjury statute." And regarding the second part, this Circuit has followed the basic principle that literal truth is a defense to perjury which was adopted by the United States Supreme Court in Bronston v. United States, 409 U.S. 352, 93 S.Ct 595, 34 LEd.2d 568 (1973). See e.g., United States v. Cook, 489 F.2d 286 (9th Cir. 1973); United States v. Sainz, 772 F.2d 559 (9th Cir. 1985).

As in Reynolds and Borman, Mr. Hong's Schedule C and 1040 are literally correct. Importantly, the first line of the 1987 Schedule C does not ask the taxpayer "Are you a sole proprietor?" or "What is the form of your business?" It merely states: "Name of proprietor." The Government has not alleged and there is no evidence to suggest that Mr. Hong was not at least the "proprietor" at Columbia Cash. [FN19] Even under the government's theory Mr. Hong can at least be called a "proprietor" and the government does not allege that he incorrectly listed his name.

FN19. "Proprietor" has been alternatively defined as: (1) "One who has the legal right or exclusive title to anything. In many instances it is synonymous with owner." (Black's Law Dictionary, 4th Ed. 1968); (2) "An owner." (American Heritage Dictionary (1983)); and (3) "One having an interest (as control, present use, or usufruct) less than absolute and exclusive right." (Webster's Third New International Dictionary (1983)).

*68 Moreover, he did not report, as the government alleges, that "the business Columbia Cash is a sole proprietorship owned by (Mr. Hong)." That may well be the government's implication from filing a Schedule C, but under Borman and Reynolds, "using the wrong form does not violate § 7206(1)." Finally, the last line of Schedule C (line 31) does not say "I, Daniel Hong, received all the net profits of the business" as the government alleges. It merely states "net profit or loss," an amount that is determined arithmetically by adding and subtracting (as was line 7 from the 1040E2 in Reynolds).

Thus, because Mr. Hong's Schedule C is "literally correct" (or at least not false in the way alleged by the government), he cannot be guilty of making a false statement, regardless of the implication raised by his filing a Schedule C.

2. Because Mr. Hong's 1987 Schedule C was not authorized or required by any statute or regulation, 26 U.S.C. §7206(1) does not apply.

One element of § 7206(1) is that the false statement must have been made on a return, statement or other document "which contains or is verified by a written declaration that is made under penalties of perjury * * *." In the instant case, even though Mr. Hong may have subscribed the return (1040) under penalty of perjury, the Schedule C *69 is not authorized by statute or regulation. Therefore, no authorization existed to require Mr. Hong to complete a Schedule C "under penalty of perjury." Accordingly, Congress could not have intended for Schedule C to be included within the gamut of § 7206(1) as a "statement or other document."

As the Fifth Circuit held in United States v. Lew, 533 F.2d 969, 972 (5th Cir. 1976), although § 7206(1) by its terms applies to a "statement or other document," the Court must look to its context within the Internal Revenue Code to determine the actual meaning of those terms. Citing United States v. Bishop, 412 US 346, 93 S.Ct 2008, 36 L.Ed2d 941 (1972). The Lew Court looked to § 6011 of the Code to determine the context of § 7206(1). That section provides:,

When required by regulations prescribed by the Secretary any person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary. Every person required to make a return or statement shall include therein the information required by such forms or regulations.

Because the form filed by Levy (Form 433-AB) was not prescribed by the Secretary or defined by appropriate regulations, it was not a "statement or other document" as contemplated by § 7206(1). *70 Moreover, the Court held, "(d)ue process requires that the taxpayer have notice, by statute or by regulation duly promulgated thereunder, of the uses to which forms may be put before he may prosecuted for a felony in connection therewith." Id., at 975.

Like Form 433-AB in Levy, and unlike Form 1040, See, Treas. Reg. 1.6012- 1 (a)(6), Schedule C is not authorized or required by any statute or regulation. Accordingly, a false statement on such a document cannot form the basis of a § 7206(1) prosecution. [FN20]

FN20. But see, United States v. Taylor, 574 F.2d 232 (5th Cir. 1978) (distinguishing Levy and holding that Schedules E and F were "integral

parts" of Form 1040); United States v. Damon, 676 F.2d 1060 (1982) (Schedule C's were "integral parts" of taxpayer's Form 1040); see, a/so, United States v. Hoirovd, 732 F.2d 1122 (2d Cir. 1984) (rejecting Lew analysis). Counsel could not locate any Ninth Circuit authority addressing the Levy issue.

The Trial Court Erred In Denying Defendant Nona's Motion To Suppress His Statements.

(A) Where issue raised

This issue was raised by written motion and memoranda (CR 377, 378, 433, 443). Following an evidentiary hearing and oral argument, the trial court denied the motion:

THE COURT: "Well, I think it's a very close case. The court's going to deny the respective defendants' motions to suppress the statements. Notwithstanding the fact that the court would have ruled that the warrants were too broad, and, in fact, the government has now conceded that issue, I think the statements are admissible. In each instance the individuals were given Miranda warnings, they knew that anything that was said *71 could be used against them. And that's going to be the ruling of the court." (TR 102, See also, CR 604, 630)

(B) Standard of Review

Motions to suppress are reviewed de novo. United States v. Limitoc, 807 F.2d 792, 794 (9th Cir. 1987).

In pretrial hearings, Mr. Hong moved to suppress evidence seized by federal authorities at his business on April 26, 1990 on the authority of United States v. Kow, 58 F.3d 423 (9th Cir. 1995), which holds that suppression is required where a search warrant is so overbroad on its face that good faith reliance on it would not have been reasonable. During the pretrial hearing, Judge Haggerty indicated his general agreement with the defense claim that the warrant, which contained a description of the items to be seized in its Attachment A, was overbroad:

And I have to honestly admit I sense that I'm getting the feeling that this warrant did not particularly describe the items to be seized.

*****

Mr. Ransom (counsel for Hong's co-defendant James Weaver) is arguing that if the court makes a finding that the warrant did not particularly describe the items to be seized, then the officers are not lawfully in the premises, and, therefore, items in plain view *72 would also be subject to suppression under, I presume, Wong Sun, because it's a direct result of their illegal activity.

That's what I see here. I have not per se found that this search was lawful. I'm sitting here seeing a litany of cases that would suggest that this attachment A, in comparison to the other cases, doesn't seem to really describe to the officers exactly what it is they should seize. *****

"Attachment A is, in my thinking - insufficient."

(PreTR 386-87, 4/3/96).

The government apparently appreciated the controlling nature of the Kow analysis with regard to the 1990 warrant because the government agreed: (1) not to introduce as evidence in its case in chief any items seized pursuant to that warrant (PreTR 363, 4/3/96); (2) to stipulate, "the evidence will be treated as if it had been suppressed" (PreTR 792-793, 4/5/96); and (3) to further stipulate, "the government's position on the 1990 search is that we had a bad warrant, and the warrant was bad because it was overbroad." (PreTR 806, 4/5/96).

Mr. Hong also moved to suppress statements he made to IRS agent Lyn Rose during the execution of the April 26, 1990 search *73 warrant on the grounds that the statement was an illegal fruit of the unconstitutional search. Judge Haggerty denied this motion. [FN21]

FN21. The failure to suppress Hong's statements was significant at trial because the statements were relied upon by the government in its closing argument, TR p. 5272, 5273, 5583, 5584 and because the statements amounted to one of only three overt acts of the conspiracy that the indictment

alleged were committed by the Mr. Hong. CR 173.

Where there has been an illegal act by the police and the defendant claims that the police have obtained challenged evidence "by exploitation of the illegality." Wong Sun v. United States, 371 US 471, 487-88, 83 S.Ct. 407, 417-18, 9 LEd.2d 441 (1963), this court uses a three part test: "First, we consider the proximity of the illegal (act) with the seizure of the evidence. Second, we consider whether there were independent intervening events that led the police to the evidence. Third, we consider the effect of suppression on the exclusionary rule's purpose of deterring police misconduct." United States v. Shephard, 21 F.3d 933, 939 (9th Cir. 1994). The resolution of each of these three issues favors the appellant. [FN22]

FN22. In announcing its decision on this issue just before trial in the instant case, the trial court relied on the fact that the authorities gave Miranda warnings to Mr. Hong before they questioned him. TR, p. 102. However, the giving of Miranda warnings is not dispositive. In Brown v. Illinois, 422 U.S. 590, 603-04, 95 S.Ct. 2254, 2261-62, 45 LEd.2d 416 (1975), the United States Supreme Court held:

The Miranda warnings are an important factor, to be sure, in determining whether the confession is obtained by exploitation of an illegal arrest.

But they are not the only factor to be considered. The temporal proximity of the arrest and the confession, the presence of intervening circumstances, and, particularly, the purpose and flagrancy of the official misconduct are all relevant.... And the burden of showing admissibility rests, of course, on the prosecution, (emphasis added) cited in Coliazo v. Estelle, 940 F.2d 411, 421 (9th Cir. 1990).

Because these three factors are essentially the same as those listed in Shephard. supra, they will not be discussed separately. This circuit has held that Miranda warnings did not purge the taint of illegal police conduct in United States v. Rjcardo P., 912 F.2d 337 (9th Cir. 1990) and in United States v. Delqadillo-Valasquez, 856 F.2d 1292 (9th Cir. 1988).

*74 1. The proximity of the illegal act to the seizure of the evidence.

2. Were there independent intervening events?

In the instant case, the first two parts of the three part are easily resolved. Mr. Hong made the challenged statements at his business, Columbia Cash, while the authorities were executing an unconstitutional search warrant. In her memorandum of interview of IRS Agent Lyn Rose stated: "During the execution of a search warrant at COLUMBIA CASH, I interviewed DANIEL HONG." (emphasis added) [FN23] Thus, the both of the first two factors favor suppression.

FN23. This interview was reviewed by Agent Rose at the pretrial hearing and introduced into evidence as page 0120 of Defense Exhibit 104. TR 241, 246, April 2, 1996.

3. The effect of suppression on the exclusionary rule's purpose of deterring police misconduct.

Although this third factor involves analysis of policy matters and therefore may sometimes be particularly complex, Daniel Hong can easily meet it because his statements came immediately after the execution of a facially overbroad search warrant. In United States v. Kow, 58 F.3d 423 (9th Cir. 1995), this court made a policy *75 determination that police use of a facially overbroad warrant requires suppression, despite government claims of good faith. Because this policy determination is so similar to the policy determination required by the third factor in Shephard, supra, the trial court erred in refusing to suppress Mr. Hong's statements.

The policy decision in Kow was based on United States v. Leon, 468 U.S. 897, 104 S.Ct. 3405, 82 LEd.2d 677 (1984), which focused on the exclusionary rule's objective of deterring police misconduct. In Leon, the United States Supreme Court explained that the constitution does not require suppression of illegally obtained evidence in every case, particularly where the police have taken steps to comply with the Fourth Amendment's warrant requirement. But one of the few situations described in Leon where suppression is required is where, as in Kow and the instant case, "a warrant may be so facially deficient -- i.e., in failing to particularize the place to be searched or the things to be seized -- that the; executing officers cannot reasonably presume it to be valid." 468 U.S. at 923.

The Leon based policy driven principle that the good faith exception to the exclusionary rule is inapplicable where a warrant is deficient on its face was applied by this court in Kow, where this court *76 stated, "We have been 'vigilant in scrutinizing officers' good faith reliance on such illegally overbroad warrants.' Ortiz v. Van Auken, 887 F.2d 1366, 1370 (9th Cir. 1989)." 58 F.3d at 428 (emphasis added). This need to be "vigilant" in scrutini2:ing this particular type of conduct by police led the court to require suppression in Kow, despite the government's claim for a good faith exception.

Because even the government has admitted that the warrant in the instant case is so "bad" that suppression of evidence is appropriate (TR 792-793, 806), the good faith exception is inapplicable. [FN24] The trial court's determination that the good faith *77 exception should not be applied to overbroad warrants like that in the instant case reflects this court's policy determination that the execution of facially overbroad search warrants is such a serious constitutional violation that this court must act firmly to deter such police misconduct. This need to be vigilant in deterring police misconduct with regard to overbroad warrants is essentially the same decision that must be made in analyzing whether to suppress evidence obtained through exploitation of police misconduct under the third factor of Shephard, supra, ("Third, we consider the effect of suppression on the exclusionary rule's purpose of deterring police misconduct." United States v. Shephard, 21 F.3d 933, 939 (9th Cir. 1994)). Therefore, the trial court erred in denying defendant Hong's motion to suppress his statements.

FN24. Mr. Hong is not claiming here, nor did he claim below, that the (jovernment concessions regarding the warrant in themselves required the granting of his motion to suppress statements. Mr. Hong's motion to suppress statements was specifically exempted from the government's concessions. PreTR, p. 806, 4/5/96.

. Echols Ford

The Trial Court Erred In Computation Of The Defendant Ford's Offense Level In Its Determination That Mr. Ford's Relevant Conduct Pursuant To Guideline §1B1.3 Involved The Entire $931.595 Attributed To The Conspiracy Rathor Than Excluding From That Relevant Conduct (And Dollar Sum) The Periods Of Time In Which Mr. Ford Withdrew From The Conspiracy.

*78 (1) Standard of Review

The interpretation and applications of the Federal Sentencing Guidelines is reviewed De Novo United States v. Ogbeuehi, 18 F3d 807(9thCir. 1994).

(2) Arument

In the trial, absolutely no evidence was ever presented as to how Mr. Ford opened "Dave's Shop" in 1993 (whether or not Mr. Ladum was in any way involved in its acquisition) or when and how Mr. Ladum obtained any interest in that property. However, for the purpose of sentencing, the court assumed that Mr. Ladum was involved from the beginning. The government's theory was that Mr. Ford was removed from that store in November of 1986 and replaced by another person because "Dave's Shop" operated at a loss. No evidence was presented concerning Mr. Ford's further involvement (nor was it pleaded in the indictment) in the conspiracy until a one month period in December of 1988 in which Mr. Ford sent fund through his personal account to Larry Ladum in connection with the Wallowa Lake Lodge activity.

*79 The only other period of activity involving Mr. Ford either alleged or proven was the operation of "The Moneyman" from July 1989 until March of 1993.

Mr. Ford objected to the method of computation of loss by the pre-sentence report because it failed to reduce Mr. Ford's responsibility under the relevant conduct provision of USSG § 1B.1 or under the loss computation under USSG § 2T1.9, 2T1.1, or 2T4.1.

The conduct of the other conspirators between November of 1986 and December of 1988 cannot in any wiay be construed as "jointly undertaken" by Mr. Ford nor can it be in any way construed as "reasonably foreseeable". Absolutely no evidence was presented concerning Mr. Ford's knowledge of the operation of other stores, knowledge of the volume of business, etc. (contrary to other defendant's, Mr. Ford was never placed at any of the "yuck" sessions in which any planning or the operations of the conspiracy were discussed).

Additionally, contrary to the operation of some of other stores, absolutely no evidence was ever presented at trial as to how Mr. Ford purchased, priced, other sold items at the "The Moneyman". There was no testimony by any witness regarding any prices Ford paid *80 when he purchased goods as opposed to resale price. There was absolutely no testimony by any buyers as to the prices paid for purchases. There was absolutely no testimony from any employee as to how Mr. Ford bought, sold, priced merchandises. There was no evidence (only sheer conjecture) as to the percentage of any profits split, therefore, any such skim or under-reporting involving Mr. Ford is not capable of being calculated in a manner that could be considered "reasonably accurate". The estimated loss is based upon guess work which was based solely upon divergent testimony from witnesses who had no connection with either "Dave's Shop" or "The Moneyman", but rather the other stores.

Beyond the fact that he was involved in the conspiracy, there was no evidence presented for which the court could justify a decision that the financial activities of Mr. Lad urn (whom the government always characterized as being a secretive person who provided information to co-conspirators on a "need to know" basis) was in anyway reasonably foreseeable by Mr. Ford, given his absence from the conspiracy for substantial lengths of time (CR 809).

Therefore, because of the purely speculative calculation of loss (based upon the absence of any evidence as to the pricing system by *81 Mr. Ford), the affirmative evidence of Mr. Ford's absence from the conspiracy for great lengths of time, and the absence of any evidence as to a basis to believe that Mr. Ford would know the operations of the other stores, Mr. Ford's sentencing should be remanded for recalculation of "relevant conduct" excluding from that total funds between November of 1986 and December 1988, and January of 1989 until July 1989 and all activity after March of 1993. Further, the matter should remanded for specific determination based upon evidence as to what if any tax loss would be either known or reasonably foreseeable by Mr. Ford during the times in which he was a participant in the conspiracy.

(1) Standard of Review

The interpretation and applications of the Federal Sentencing Guidelines are reviewed De Novo United States v. Qgbeuehi, 18 F3d 807 (9th Cir. 1994).

*82 (2) Legal Argument

The court considered two Portland Municipal Ordinance convictions against Mr. Ford in totaling his criminal history. One point each was added to Mr. Ford's criminal history computation based upon the facts of the convictions themselves plus, because Mr. Ford was given probation for these sentences (which the court occurred during the course of the conspiracy) the court determined that the instant offense (the conspiracy) was committed while Mr. Ford was probation, and therefore increased an additional two points pursuant to USSG § 4A1.1(d), resulting in total criminal history points of four, thereby putting Mr. Ford at a Criminal History Category III (PSR pages 24-25).

The calculation resulted in a offense level of 20 and a criminal history four putting Mr. Ford in the 41 to 51 month sentencing range.

Mr. Ford maintains that such a calculation is unlawful "double counting" and he should be considered to have a criminal history of 0 with a Guideline Range of 33 - 41 months.

The criminal history incorrectly uses conduct by Mr. Ford that, according to the government, was part of the conspiracy. The government specifically alleged that Mr. Ladum ordered and *83 instructed the nominees to keep few if any records and to work on a cash only basis (PSR paragraph 16, page 4, notes this was an essential ingredient for the success of the conspiracy).

Based upon the government's theory of the case, Mr. Ford's operation of the second hand stores (including "Dave's Shop") was his role in the conspiracy involving Mr. Ladum's taxes. His conviction for failure to comply with the City Ordinances in 1985 PSR - Paragraph 118 (page 24)- and unlawful sales in October of 1985 - PSR - Paragraph 120 (page 25) were activities related to his running of "Dave's Shop". As those charges arise out of his running of the store(and failing to keep records as ordered by Ladum according to the government), these convictions cannot be used for computing his criminal history because they do not fit the definition of "prior sentence", that is, these sentences were not imposed "for conduct not part of the instant offense" but rather, the conduct was part of the conspiracy.

These charges arose out of his running "Dave's Shop". The government has alleged that was his conspiratorial activity. Therefore, because that conduct was part of the conspiracy, those sentences arising out of his operation of "Dave's Shop" cannot be *84 used to increase his criminal history in this case. See Section 4A1.2(a)(1). Because the original sentences cannot be included because they are not "prior sentences", no points for committing the instant conspiracy while on probation for those cases can be added.

The government's theory of the case and evidence presented throughout the trial was that one of the ways in which the "nominees" would hide Mr. Ladum's interest and "skim" profits was by keeping inadequate, false, or nonexistent records of sales. These charges against Mr. Ford are for exactly that conduct, that is, not complying with City's record keeping requirements.

More specifically, the acts of failing to keep adequate records in the sales which form the basis of these charges is the exact conduct in the operation of the stores which would further the conspiracy by allowing unrecorded or improperly record sales to occur and funds to move. In fact, the evidence presented at trial was that Mr. Ladum supposedly instructed nominees not to keep records. According to the government's theory of the case, that is exactly what Mr. Ford was doing (following Ladum's order) when the city brought these charges against him. Clearly, the City Ordinance Violations are for activities that were part of the conspiracy - not keeping adequate *85 records so as to facilitate the operation of the conspiracy and conceal its operation from authorities. Therefore, these sentences are for conduct which part of the charged offense as part of the conspiracy itself, not merely "relevant conduct". Therefore, inclusions of these events in Mr. Ford's Criminal History is improper "double counting".

Therefore, defendant Mr. Ford objected to the two point increases in PSR - Paragraphs 121 and 122, (page 25) respectively.

Excluding those increases, Mr. Ford should be a Criminal History Category I (correcting paragraph 123 on Page 25). Because Mr. Ford is Criminal History Level I, his range is 33 to 41 months.

The Court Erred In Denying Defendant's Motions For Judgment Of Acquittal Pursuant To Federal Rules Of Criminal Procedure 29(A) On The Ground That The Evidence Was Insufficient To Sustain A Conviction. Specifically. That The Evidence Was Insufficient To Establish The Object Of The Conspiracy Specifically Alleged. That Is. That Mr. Ford And The Other Specifically Conspired To Impede The Collection Or The Assessment Of Robert Ladum's Federal Taxes.

(1) Argument

Defendant Ford specifically joins in any and all arguments made by co-defendants in this regard.

Additionally, Mr. Ford submits the following arguments specific to himself.

*86 Unlike some other defendants or un-indicted co-conspirators, there was no evidence placing Mr. Ford at any of the "yuck sessions" (meetings in which Mr. Ladum and the managers of the stores would meet to discuss strategies for dealing with governmental authorities). There was testimony placing Mr. Ford at a Christmas party at Mr. Ladum's house along with a number other friends, business acquaintances, or employees. There was no evidence as to any conversations including Mr. Ford involving management of any of the businesses. There was a discussion described by a Patrick Mathis (a dinner at the 7-Seas Restaurant) at which Mr. Ladum complained about the bureaucratic problems created by the licensing or filing requirements of the Bureau of Alcohol and Firearms, however there was no evidence that there was any discussion of the concealment of Mr. Ladum's proprietary interest in Mr. Ford's store in order impede the ascertainment, computation, assessment, or collection of the personal income taxes of Robert Ladum.

Mr. Ford maintains that this court's decision in United States v. Krasovich, 819 F2d 253 (9th Cir. 1987) requires the reversal of the trial court's decision denying the Motion for Judgment of Acquittal. Similarly to the defendants in Krasovich, the evidence may arguable *87 support the inference that Mr. Ladum entered into the conspiratorial agreement with Mr. Ford and other defendants in an effort hide money and its source or ultimate destination, however, there was absolutely no evidence to support the conclusion that Mr. Ford in any way knew that the object of the alleged conspiracy was the impeding of the collection or the assessment of income taxes. See, also, United State v. Enstam, 622 F2d 857(5th Cir. 1980).

The record was complete with other motivations for Mr. Ladum to conceal his asset other than the frustration of the government's efforts to collect taxes, such as, the manipulation or avoidance child support assessments, the avoidance of massive civil judgments against him, etc.

The trial court required that the government specifically plead the object of the conspiracy. Having done so, the government was under the obligation to prove the specific mental state and specific object of the conspiracy, that is, the frustration of the government's effort to assess or collect Mr. Ladum's taxes. The government has failed to meet this burden of proof by failing, even in light most favorable to the government, to present any evidence sufficient to prove Mr. Ford's involvement and knowledge of the specific goal of *88 the conspiracy. Therefore, the motion for judgment of acquittal should have been granted and Mr. Ford's conviction and sentence for this count much be reversed and vacated.

The trial court erred in denying defendant Ford's motion to dismiss Counts 11 and 12.

As noted in the statement of the case, Mr. Ford raised and specifically joined in all arguments at the close of the government's case and post trial. Mr. Ford joins and incorporates by reference all arguments made by defendant Hong.

. David Grigonis

Did the District Court err when it denied David Griqonis' motion to Dismiss Counts 21 through 30 based on the fact that the proceeds were derived from unlawful conduct?

(A) Where issue raised

This issue was raised in Defendant Grigonis1 Motion to Dismiss Counts 21-30 (CR 152) and in the proceedings (TR 5709).

(B) Standard of Review

When the evidence is considered in the light most favorable to the government could any rational trier of fact have found the defendant guilty beyond a reasonable doubt on each of the essential elements charged in the indictment. *89Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct 2781, L.Ed 2d 560 (1979); United States v. Sharif, 817 F.2d 1375, 1377 (9th Cir. 1987).

David Grigonis was charged in Counts 21 through 30 with violations of 18 USC Sections 1956(a)(1)(B)(i) and (2).

"Section 1956. Laundering of monetary instruments

(a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the process of specified unlawful activity-

(A)(i) with the intent to promote the carrying on of specified unlawful activity; or

(ii) with the intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or

(B) knowing that the transaction is designed in whole or in part-

(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or

(ii) to avoid a transaction reporting requirement under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction is designed in whole or in part-

(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or

(ii) to avoid a transaction reporting requirement under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.

*90 The elements of this transaction are (1) the defendant conducted a financial transaction that represented the proceeds of bankruptcy fraud transaction; and (2) the defendant knew that the property represented the proceeds of bankruptcy fraud; and (3) the defendant knew that the transaction was designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of the proceeds of bankruptcy fraud. Manual of Model Criminal Jury Instructions for the Ninth Circuit, 1992 Edition, No. 8.33B at 221.

Each of the allegations in Counts 21 through 30 represent that rent checks paid to defendant Grigonis by alleged owners of second hand stores. Assuming, in arguendo, proceeds may be something more than mere cash, see, e.g., United States v. Werber. 787 F.Supp. 353 (S.D.N.Y. 1992), what exactly are the proceeds of the bankruptcy fraud? Proceeds necessarily must derive from the alleged unlawful conduct. See, e.g., United States v. Garcia-Emanuei, 14 F.3d 1469 (10th Cir. 1994)

If defendant Ladum falsely denied his business interests, as alleged, thus depriving his creditors of those interests, whatever it may have been, then his proceeds from the bankruptcy fraud were the retention of those interests.

*91 [T]he purpose of the money laundering statute is to reach commercial transactions intended (at least in part) to disguise the relationship of the item purchased with the person providing the proceeds and that the proceeds used to make the purchase were obtained from illegal activities. United States v. Sanders, 928 F.2d 940, 946 (10th Cir.) "[T]he government must prove not just that the defendant spend ill gotten gains, but that the expenditures were designed to hide the provenance of the funds involved." United States v. Jackson, 935 F.2d 832, 841-42 (7th Cir. 1991). "A central focus of subsection (a)(1)(B)(i) is to criminalize the 'conversion of cash into goods and services as a way of concealing or disguising the wellspring of cash."' United States v. Samour, 9, 9F.3d 531, 535 (6th Cir. 1993) (quoting United States v. Johnson, supra, 933 F.2d at 840).

It is the business entities, therefore, that must have been the "currency" of the transaction, i.e., selling his interests in the entities for cash would constitute an appropriate "financial transaction" as would, perhaps, swapping his interests for other interests.

In other words, the statute does not contemplate derivative transactions, i.e., X always buys Coca-Cola stock with drug proceeds from which stock he receives dividends; the dividends are not proceeds *92 - the stock is. If this were not true, there would be no end to the possible ramifications.

The definition of "financial transaction" supports this view:

Section 1956 (c) (4) provides in relevant part:

(4) the term "financial transaction" means (A) a transaction which in anyway or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments or (iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft, or

(B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree..."

See, e.g., United States v. Blackman, 904 F.2d 1250, 1257 (8th Cir. 1990) (transferring title of defendant's pickup truck found to constitute a "financial transaction").

Essentially the defendant has been charged with proceeds of proceeds. Since the rent is merely a derivative transaction David Grigonis in no way has knowledge that the money is coming from unlawful activity. Further is clear that there is no attempt to conceal these funds. They are handled as legitimate funds which are properly deposited in the bank from property that is owned by David Grigonis.

In response to David Grigonis1 motion to dismiss the government states: "He committed money laundering offenses when he *93 intentionally engaged in financial transactions to promote the carrying on of bankruptcy fraud." (Government's response to Defendant Grigonis Motion to Dismiss Counts 21 through 30) Therein lies one of the reasons that these counts should be dismissed.

Robert Ladum was discharged from bankruptcy on May 11, 1990. The allegations concerning "financial transactions to promote the carrying on of the bankruptcy fraud" commence September 6, 1990 and proceed through August 20, 1994. While the alleged concealment of the bankruptcy fraud may postdate the discharge from bankruptcy, see, e.g. United States v. Grant, 971 F.2d 799 (1st Cir. 1992), one cannot "promote" a crime after its commission. Promote means "to help bring about or further the growth or establishment of Webster's New World Dictionary.

In United States v. Jackson, 935 F.2d 832 (7th Cir. 1991) the Court differentiated between activities necessary to "promoting" illegal activity, i.e., checks written to a beeper service were in violation, but checks for rent or for cash did not promote drug activity.

In United States v. Montoya, 945 F.2d 1068 (9th Cir. 1991), the defendant was given a check to complete a bribery. He deposited it in *94 the bank. On appeal he asserted the offense (bribery) was complete and, therefore, there was no promotion.

The court held:

Montoya could not have made use of the funds without depositing the check. Moreover, depositing the check provided an opportunity for Montoya to carry out the illegal bribery by characterizing the funds as a legitimate honorarium. Id. at 1076

Implicit within this holding, however, is that crimes do have a beginning and an end and, further, one cannot promote something when it is over.

Additionally David Grigonis was determined by the jury to be not guilty of Counts 5 through 8 which charged violations of 26 U.S.C. § 7206(1), Filing a False Tax Return for the Calendar Years 1988 through 1991. Additionally David Grigonis was found not guilty in Counts 13 and 14 which charged a violation of 18 U.S.C. § 1001, Making False Statements. The significance of this determination by the jury is that the jury believed that David Grigonis saved up the money to buy the properties and was their legitimate owner. David Grigonis' purpose in depositing the checks was to pay for the property which he owned. Therefore these checks were legitimate payment for the rental of business space. Therefore the court should have dismissed these charges as to David Grigonis.

*95 Did the District Court err when it denied David Grigonis' Rule 29(C) Motion for Judgment of Acquittal on Counts 21 through 30?

(A) Where found

David Grigonis joined Robert Ladum's Rule 29(C) Motion for Judgement of Acquittal on Counts 21 through 30.

(B) Standard of Review

When the evidence is considered in the light most favorable to the government could any rational trier of fact have found the defendant guilty beyond a reasonable doubt on each of the essential elements charged in the indictment. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct 2781, L.Ed 2d 560 (1979); United States v. Sharif, 817 F.2d1375, 1377 (9th Cir. 1987)

In Counts 21 through 30 David Grigonis and Robert Ladum are charged with money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(1). The charges were based on the deposits in David Grigonis' bank account of rent checks which the government alleged were proceeds of the crime of Concealment of Bankruptcy Assets. In order to establish an interstate nexus which is essential to confer jurisdiction for prosecution under 18 U.S.C. § 1956 the government must prove the FDIC status of the United States National Bank where *96 the relevant checks were deposited. The government's claim regarding the FDIC status of the checks is based on six checks drawn from trial exhibit 11-76 a box of records from David Grigonis' United States National Bank Account. In its written response the government indicates that the checks bore inscriptions which indicated that they had cleared through either out of state or Canadian institutions or had been written on out of state accounts. The inscriptions, according to the government, established that the bank was involved in interstate or foreign commerce. These checks do not prove that U.S. National Bank was a member of FDIC or that U.S. National bank was involved in interstate or foreign commerce.

It must be proven beyond a reasonable doubt that at the time the allegedly criminal behavior took place that U.S. National Bank was insured by the Federal Deposit Insurance Corporation. United States v. Kramer, 500 F.2d 1185 (10th Cir. 1974) The failure by the government to establish the FDIC element of the case constitutes insufficient evidence to send the case to a jury and a reversal of the conviction is necessary. United States v. Dota, 481 F.2d 1005 (10th Cir. 1973)

*97 The government must show that U.S. National Bank was insured by the FDIC at the time the offense was actually committed. United States v. Shively, 715 F.2d 260 (7th Cir. 1984) cert. denied 465 U.S. 1007, 104 S.Ct 1001, 79 Ed.2d 233 (1984); United States v. Platenburg, 657 F.2d 797, 799 (5th Cir 1981); United States v. Harrel, 877 F.2d 341 (5th Cir. 1989) and must prove this element beyond a reasonable doubt.

In United States v. James, 987 F.2d 648 (9th Cir. 1993) this court reversed a conviction because there was an absence of evidence the bank was insured at the time of the crime. In United States v. Bellucci, 995 F.2d 157 (9th Cir 1993) this court held that like any other element of an offense, it must be proven beyond a reasonable doubt that the element of FDIC status is proven beyond a reasonable doubt to sustain a conviction in a criminal case. Also see United States v. Allen, 88 F.3d 765, 769 (9th Cir. 1996)

Since the government has not shown the FDIC status of U.S. National Bank at the time of the offense or that the financial transaction or financial institution affected interstate commerce this conviction should be reversed by this court.

*98 Defendant Grigonis specifically joins in any and all arguments made by co-defendants in this regard.

Did the court err in not granting a minor role adjustment to David Grigonis?

(A) Standard of Review

A district court's interpretation and application of the guidelines is reviewed de novo. United States v. Shrestha, 86 F.3d 935, 938 (9th Cir. 1996)

(B) Where issue raised

The issue was raised in defense counsel's sentencing letter (CR) and addressed by the court at sentencing. (TR 6001)

The court "I also cannot find that Mr. Grigonis would fit the category of a minor role. Therefore I'll not depart downward on that behalf, as well." (TR 6001)

For a defendant to be eligible for a minor participant adjustment, he must be "less culpable than most other participants" USSG § 3B1.2, comment, (n.3) (1994). In this case David Grigonis1 only real connection to the case is that he is the property owner of the buildings. This is his only involvement in the conspiracy. This evidence demonstrates that the conduct was relatively minor compared to that of *99 the other participants. United States Webster, 996 F.2d 209, 212 (9th Cir. 1993); United States v. Demers, 13 F.3d 1381, 1384-85 (9th Cir. 1994).

David Grigonis has shown that he is entitled to a role reduction by a preponderance of the evidence. United States v. Davis, 36 F.3d 1424, 1436 (9th Cir. 1994) David Grigonis was determined by the jury to be not guilty of Counts 5 through 8 which charged violations of 26 USC Section 7206(1), Filing a False Tax Return for the Calendar Years 1988 through 1991. Additionally David Grigonis was found not guilty in Counts 13 and 14 which charged a violation of 18 U.S.C. § 1001, Making False Statements. The significance of this determination was that the jury believed that David Grigonis was the legitimate owner of the properties and that he was honest on his tax returns. This shows far less culpability in this conspiracy than any other defendant. The district court erred in determining that David Grigonis was not entitled to a minor role reduction.

Did the District Court err in allowing David Griqonis' property to be forfeited to the government?

(A) Where Issue Raised

By supplemental memorandum (CR 159) and in the sentencing proceeding (TR 5972).

*100 (B) Standard of Review

The legality of a sentence is reviewed de novo. United States v. Hahn, 960 F.2d 903, 907 (9th Cir. 1992).

The Supreme Court of the United States has held that jn personam criminal forfeitures are a form of monetary punishment, no different for Eighth Amendment purposes from a traditional fine, and therefore, should be analyzed under the Excessive Fines Clause. Alexander v. United States, 509 U.S. 544, 559 (1993). This court has determined that pursuant to the court's excessive fines test, a forfeiture is constitutional if: (1) the property forfeited is an "instrumentality" of the crime committed; and (2) the value of the property is proportional to the culpability of the owner. United States v. Real Property Located in El Dorado County, 59 F.3d 974, 982 (9th Cir. 1995).

David Grigonis was determined by the jury to be not guilty of Counts 5 through 8 which charged violations of 26 U.S.C. § 7206(1), Filing a False Tax Return for the Calendar Years 1988 through 1991. Additionally David Grigonis was found not guilty in Counts 13 and 14 which charged a violation of 18 U.S.C. § 1001, Making False Statements. The significance of this determination by the jury is that *101 the jury believed that David Grigonis saved up the money to buy the properties and was their legitimate owner. David Grigonis' purpose in depositing the checks was to pay for the property which he owned. This finding is important because it indicates that the property was not considered an instrumentality of the crime in this case. The property consists of buildings in which business activity was conducted by renters. It has no nexus to illegal activity. United States v. Real Property Located in El Dorado County, 59 F.3d 974, 982 (9th Cir. 1995)

It is important to be concerned about the forfeiture of the property in this case because the government stands to benefit from the acquisition of this property. Harmelin v. Michigan, 501 U.S. 957, 979 (1991). In this case the forfeiture of this property is unduly harsh on David Grigonis and his family because it represents the loss of his entire life's savings. The down payments on the property were made with David Grigonis' hard-earned savings. To wipe out his life's work and also send him to prison is disproportionate and violative of the Eighth Amendment of the United States Constitution. The use of the property as rented space for second hand stores certainly was not reckless or illegal. The activity of having a second hand store in the *102 community was negligible. Certainly when you compare this to the harm caused by drug trafficking activity which is found nowhere in this case. If you apply the El Dorado test to this case it appears clear that to order forfeiture of the property violates the Eighth Amendment's Excessive Fines Clause.

For the reasons stated above, relief as sought by each of the appellants should be granted and their convictions should be reversed or remanded for re-sentencing as appropriate.

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. Echols Doyle FORD, David Grigonis, Daniel Hong, Robert Ladum, Ronald Van Vliet, and James Weaver, Defendant-Appellants.

1997 WL 33547050