20 F.3d 204 (6th Cir. 1994), 93-1345, United States v. Warshawsky
|Docket Nº:||Leroy WARSHAWSKY (93-1345); Ira Warshawsky (93-1346); and|
|Citation:||20 F.3d 204|
|Party Name:||UNITED STATES of America, Plaintiff-Appellee, v.|
|Case Date:||March 29, 1994|
|Court:||United States Courts of Appeals, Court of Appeals for the Sixth Circuit|
Argued Jan. 18, 1994.
Rehearing and Suggestion for Rehearing En Banc
Denied June 23, 1994.
[Copyrighted Material Omitted]
Kathleen Moro Nesi, Asst. U.S. Atty., Detroit, MI (argued and briefed), Michael Hluchaniuk, Asst. U.S. Atty., Bay City, MI, for U.S.
Barry S. Pechter (briefed), Michael D. Ettinger (argued), Ettinger & Pechter, Oak Lawn, IL, for Leroy Warshawsky.
Dennis A. Berkson and Henry B. Samuels, Chicago, IL (argued and briefed), for Ira Warshawsky.
Patrick A. Tuite, Arnstein & Lehr (argued), Patrick A. Tuite, Brent D. Stratton (briefed), Chicago, IL, for Ted Warshawsky.
Before: GUY and SILER [*], Circuit Judges; and ENGEL, Senior Circuit Judge.
ENGEL, Senior Circuit Judge.
The Warshawsky brothers, Leroy, Ira, and Ted, appeal their convictions and sentences for conspiring to transport stolen auto parts, in violation of 18 U.S.C. Sec. 2314. 1 All three brothers contend on appeal that their conspiracy convictions cannot be sustained since most of the "stolen" property they purchased was not actually stolen. The Warshawskys also challenge the sufficiency of the evidence, the jury instructions, and the sentencing calculation. We find no error in the trial itself, but nevertheless we conclude that an error in applying the sentencing guidelines requires that we VACATE and REMAND for resentencing.
Leroy, Ira, and Ted Warshawsky jointly operate M & A Automotive, an auto parts business in Chicago, Illinois. Their prosecution resulted from an undercover investigation into the distribution of stolen auto parts conducted by the Federal Bureau of Investigation from November, 1988, to January, 1991. In furtherance of this investigation, FBI Special Agent Ronald Watson posed as the owner of R.W. Expediters, an auto parts brokerage in Freeland, Michigan. During the course of the investigation, Agent Watson engaged in over one hundred stolen parts transactions, five of which involved the Warshawskys. Agent Watson taped nearly every phone conversation he had pursuant to the investigation, 50 of which involved one or more of the Warshawskys.
In November of 1988, Agent Watson began purchasing stolen auto parts from a thief named Steven LaFay. The parts Watson bought from LaFay were brand new General Motors ("GM") parts in original packaging, which had been stolen from a Lansing, Michigan, plant. LaFay testified at the Warshawskys' trial that all of the auto parts he sold were obtained by bribing guards at this Lansing plant "hundreds of times."
In addition to selling parts to Watson, LaFay also testified that he shipped stolen parts to the Warshawskys twice in 1990. LaFay explained that after negotiating the sales with Leroy, he would drive the parts from Lansing to Chicago, where Ted would unload the truck, and Ira would pay for the stolen parts. LaFay urged Ira to pay in cash, but Ira insisted on paying by check and getting a receipt. LaFay refused to put his name on the invoices he gave to Ira, and he persuaded Ira not to write the checks in
LaFay's name. LaFay told Ira that he could cash the checks even if they were payable to fictitious persons. LaFay also told Ira that he did not want to pay any taxes on the proceeds from the sale.
Back in Michigan, LaFay unwittingly continued to deal with Agent Watson. On one visit to R.W. Expediters, LaFay noticed a number of air filters in the warehouse. Perhaps out of some sense of professional courtesy, LaFay suggested to Watson that he knew "a guy who'll buy" the filters. Acting on LaFay's advice, Watson made initial contact with Leroy Warshawsky by phone on August 15, 1990. After introducing himself as LaFay's friend, Watson offered to sell the filters to Leroy, but no immediate sale was consummated. Watson also spoke to Ted Warshawsky, and suggested that they might do business in the future, even if the Warshawskys were not interested in purchasing the air filters. Watson explained that he had "some contacts here in the plants" and that he could get parts "at a pretty good deal." Watson suggested that some of his parts "pretty much need[ed]" to be exported out of the United States to get those parts "the hell outta here." Watson testified at trial that auto parts brokers understand that parts "for export" are stolen parts. The transcripts of Watson's 50 recorded phone calls with the Warshawskys reveal over and over again that the Warshawskys understood the need to export Watson's parts.
On September 13, 1990, Watson phoned the Warshawskys again to see if they had decided to purchase the air filters. Watson reiterated that it was "probably best if" his parts were exported out of the United States. During the same conversation, Leroy asked Watson about the possibility of acquiring parts "for return," which is a specialized segment of the auto parts trade. The trade in "returns" defrauds a GM program which permits authorized dealers to return up to four percent of a year's purchases for a full refund. This generous return policy is designed to encourage dealers to stock an ample inventory of parts. It also deters financially-strapped dealers from dumping excess parts at unusually low prices. In the return market, brokers acquire new GM parts from people like LaFay or Watson and sell them to authorized dealers, who then return the parts to GM for a full refund. The trade in returns allows dealers to acquire new parts at a steep discount, and those parts are deceptively presented to GM as leftovers from the dealer's annual purchases. Sale of parts for return is not criminal per se, but the stolen parts market provides a prime source of discounted inventory enabling dealers to manipulate the return program. The transcripts of Watson's phone calls reveal that the Warshawskys repeatedly sought to acquire parts for return.
During their September 13, 1990, conversation, Watson warned Leroy about the need to avoid attracting attention to their activities:
WATSON: Well, the, the problem with a lot of this stuff as you well know, if you have been dealing with our friend (LaFay), is that, eh, somebody needs to be real discreet with it, because, eh ...
LEROY: That's right, we know, I know that.
WATSON: Because it, eh, could, it could end (laughs), end up getting somebody in a lot of trouble, but ...
LEROY: I know.
WATSON: ... but, eh, an, and that's one of the reasons I try and stay away a little bit from him (LaFay), too, 'cause some of the stuff he gets there is just no way a guy can dump that kind of stuff on the market without ringing bells.
LEROY: See, that's the problem....
The next day, Leroy called Watson to confirm their first transaction. Watson again warned Leroy that "we gotta be careful about where [the parts] go" because "they're hotter than hell." Leroy quickly reassured Watson that "the guys we go to, they don't, they don't talk."
Agent Watson shipped parts to the Warshawskys on five occasions. The first shipment, consisting of 6,240 oil filters, took place on September 26, 1990. When Watson called to confirm the shipment, he asked Ted if Leroy had explained the "need to be a little discreet" about the transaction. Ted reassured Watson that "everything" was discreet,
and agreed that the "less people know the better."
On October 3, 1990, Watson shipped 62,088 spark plugs to M & A Automotive. On October 25, 1990, Watson shipped 5,100 air filters to M & A. On November 27, 1990, Watson shipped 32,760 "hotter than hell" spark plugs and approximately 960 oil filters to M & A, with an express warning that they "gotta be handled discreetly." Finally, on December 27, 1990, Watson shipped 145 air conditioning compressors, 400 air filters, and 40 Corvette wheels to M & A. Watson described the parts in this fifth and final shipment as "hotter than a two dollar pistol" because they were "right out of the plant" and "right off a production line."
The Warshawsky brothers were jointly indicted on August 15, 1991. Count One of the indictment charged all three brothers with conspiring to transport stolen auto parts. Counts Two and Three of the indictment charged Leroy and Ira with transporting stolen parts on October 25, 1990, and December 27, 1990. At the conclusion of their trial, the jury found the Warshawskys guilty on all counts.
In response to the defendants' post-trial motion, the district court set aside the verdict against Leroy and Ira on Counts Two and Three of the indictment, which accused them of purchasing stolen property from Watson on two specific dates. United States v. Warshawsky, 818 F.Supp. 181 (E.D.Mich.1993). The district court relied upon United States v. Monasterski, 567 F.2d 677 (6th Cir.1977), where this circuit ruled that one does not commit the federal crime of receiving stolen property unless the property at issue was in fact stolen. Id. at 679. The parts Agent Watson shipped to the Warshawskys were either donated by GM for use in the investigation, or recovered from other thieves and used in the sting with GM's permission. As a result, the parts Watson shipped to the Warshawskys on October 25 and December 27, 1990, were not actually "stolen," as charged in the indictment. The district court refused to set aside the conspiracy convictions, concluding that the rule of Monasterski did not preclude a conviction for conspiracy to receive stolen parts, even if the parts were not in fact stolen. As a result of the conspiracy conviction, Leroy and Ira were each sentenced to 36 months in prison, and Ted was...
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