U.S. v. Ebersole

• Decision Date: 14 June 2005
• Docket Number: No. 03-4847.,03-4847.
• Citation: 411 F.3d 517
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Russell Lee EBERSOLE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

411 F.3d 517

UNITED STATES of America, Plaintiff-Appellee, v. Russell Lee EBERSOLE, Defendant-Appellant.

No. 03-4847.

United States Court of Appeals, Fourth Circuit.

Argued October 29, 2004.

Decided June 14, 2005.

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ARGUED:

Gregory Edward Stambaugh, Manassas, Virginia, for Appellant. Thomas Higgins McQuillan, Assistant United States Attorney, Office of the United States Attorney, Alexandria, Virginia, for Appellee.

ON BRIEF:

Paul J. McNulty, United States Attorney, Robert C. Erickson, Assistant United States Attorney, Alexandria, Virginia, for Appellee.

Before WILKINSON, MICHAEL, and KING, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge KING wrote the opinion, in which Judge WILKINSON joined. Judge MICHAEL wrote a separate opinion concurring in part and dissenting in part.

OPINION

KING, Circuit Judge.

Russell Lee Ebersole appeals his convictions and sentence on twenty-five counts of wire fraud, in violation of 18 U.S.C. § 1343, and two counts of presenting false claims to the government, in contravention of 18 U.S.C. § 287. The district court sentenced Ebersole to seventy-eight months of imprisonment. Ebersole maintains, among various appellate contentions, that venue was defective in the Eastern District of Virginia, and that the court erroneously enhanced his sentence under the Sentencing Guidelines. As explained below, we affirm Ebersole's convictions on all counts. However, we vacate his sentence, which was imposed in violation of the Sixth Amendment and otherwise improperly enhanced for abuse of a position of trust, and we remand for resentencing in light of United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), and its progeny.

I.

Ebersole was the president and director of a business called Detector Dogs Against Drugs and Explosives, Inc. ("Detector Dogs"), a privately held Maryland corporation. Detector Dogs trained dogs and their human handlers to find drugs and explosives, and then offered the services of the canine teams to customers. Ebersole operated Detector Dogs alongside a pet boarding and training facility in Frederick County, Virginia, in the Western District of Virginia, as well as from his home in Hagerstown, Maryland.

In the aftermath of the September 11, 2001 terrorist attacks, federal agencies urgently sought the services of qualified explosive ordnance detection canine teams (sometimes referred to as "EOD canine teams" or "bomb-sniffing canine teams") for the protection of their employees and the public. Among those agencies were the Department of State (the "State Department"), through its primary contractor, Intercon Security Services, Inc. ("Intercon"), for the State Department's Harry S Truman Building in Washington, D.C.; the Board of Governors of the Federal Reserve System (the "BOG-FED"), also for buildings in Washington; and the Internal Revenue Service (the "IRS"), through its primary contractor, Worldwide Security Services, Inc. ("Worldwide"), for the IRS service center in Fresno, California. Ebersole sought to persuade those agencies to retain Detector Dogs's services based on a series of material misrepresentations that he made in written proposals and in fabricated examination, certification, and training curriculum documents. The dogs on the Detector Dogs canine teams actually were poorly trained, and their human handlers lacked adequate knowledge and experience, all in contravention of government standards and requirements.¹ Detector Dogs initiated its services for the State Department on September 24, 2001. Eventually doubting the competence of the Detector Dogs canine teams, the State Department arranged to have an odor recognition proficiency test administered to six of the dogs assigned to protect the Harry S Truman Building. The test had been developed earlier by the Bureau of Alcohol, Tobacco and Firearms (the "BATF") to determine by a standardized method whether a dog could successfully detect the odor of explosives. The test was given on April 22, 2002, at the BATF Canine Enforcement Training Academy in Front Royal, Virginia, to the dogs on the State Department job, all of which failed the test (with their Detector Dogs handlers participating). Immediately thereafter, Intercon terminated its subcontract with Detector Dogs for the provision of EOD canine teams to the State Department.

Detector Dogs was paid more than $212,000 for services it rendered to the State Department during the period of the Intercon subcontract. Detector Dogs had submitted its invoices to Intercon in the District of Columbia. Intercon then reviewed and approved those invoices for payment, paid Detector Dogs by check, and submitted Intercon invoices (with the Detector Dogs invoices attached) to a State Department office in Washington, D.C. Consistent with State Department procedures, the Washington office initially approved the Intercon invoices, and then forwarded them for final payment authorization to a State Department office in Rosslyn, Arlington County, Virginia, in the Eastern District of Virginia. Upon final approval of the Intercon invoices, the State Department's Rosslyn office communicated by wire with a Treasury Department office in Kansas City, Missouri, which paid Intercon.

Detector Dogs began providing services at BOG-FED buildings in Washington, D.C., on October 9, 2001. In a covert on-site test performed on April 4, 2002, three of the Detector Dogs dogs failed to detect the presence of fifty pounds of trenchrite 5 dynamite, fifty pounds of TNT, and fifteen pounds of the plastic explosive C-4 contained in three separate unmarked vehicles that were allowed to enter a BOG-FED parking garage. Based on those test results, the BOG-FED cancelled its contract with Detector Dogs on April 30, 2002.

The BOG-FED paid Detector Dogs approximately $392,000 for its services. Once the BOG-FED had decided to pay a particular Detector Dogs invoice, relevant data was entered into a computerized accounting system in Washington and then transmitted to the Federal Reserve Bank in Richmond, Virginia, in the Eastern District of Virginia, where the BOG-FED maintained an account. The amount of the Detector Dogs invoice was thereafter: (1) debited from the BOG-FED account at the Federal Reserve Bank; (2) credited to the Bank of America's reserve account, also at the Federal Reserve Bank; and (3) credited by the Bank of America from its reserve account to an account held by Detector Dogs at a Bank of America branch office in Frederick, Maryland.

As for the services provided by Detector Dogs to the IRS, Worldwide informed Detector Dogs that its bomb-sniffing canine teams would be subjected to on-site operational testing at the inception of the job. The Detector Dogs teams began work at the IRS Fresno service center in early 2002, and they subsequently failed tests involving odor detection of hidden explosives on March 19, 25, and 26, and April 29, 2002. On May 16, 2002, Worldwide terminated its subcontract with Detector Dogs for the IRS-Fresno work. Detector Dogs received approximately $92,000 for its services to the IRS. Worldwide had paid Detector Dogs by wire transfer from its bank in Chicago, Illinois, to the reserve account that Detector Dogs's bank, the Bank of America, maintained at the Federal Reserve Bank of Richmond. Those payments then were credited by the Bank of America to Detector Dogs's account at the bank's Frederick, Maryland branch office.

Ebersole also pursued a contract for Detector Dogs to provide bomb-sniffing canine teams to the Federal Emergency Management Agency ("FEMA") for its disaster field office in New York City. On September 27, 2001, Ebersole dispatched a dog-and-handler team to New York City for FEMA; however, the team returned to Maryland the next day without performing any work. FEMA had agreed to reimburse Detector Dogs for travel expenses. Although the handler submitted expenses to Ebersole of $1,100 for the overnight trip, Ebersole submitted an invoice to FEMA in the sum of $11,514.

As instructed by FEMA, Ebersole sent that invoice to a post office box in Berryville, Clarke County, Virginia, in the Western District of Virginia. In the normal course of business, a FEMA employee retrieved mail sent to that post office box, including the Detector Dogs invoice, and transported it to a central mail processing facility located in neighboring Loudoun County, Virginia, in the Eastern District of Virginia. The invoice then was routed to the appropriate person in FEMA's Disaster Finance Division, at an office in Berryville. The central mail processing facility and the Disaster Finance Division office are located within FEMA's sprawling facilities on Mount Weather, which straddles Clarke and Loudoun counties. The Detector Dogs invoice was eventually forwarded from Mount Weather to a FEMA contracting officer in New York. FEMA subsequently remitted payment to Detector Dogs in the requested sum of $11,514.

In all, the federal agencies paid Ebersole more than $708,000 for bomb-sniffing canine team services. On the basis of these activities and the payments made to Ebersole, and as explained below, the Government instigated and prosecuted the underlying proceedings.

II.

A.

A grand jury in the Eastern District of Virginia returned an indictment against Ebersole on March 13, 2003, charging him with twenty-six counts of wire fraud and two counts of presenting false claims to the government.² The indictment generally alleged that Ebersole had devised a scheme to obtain money from the federal agencies by inducing them — by means of false and fraudulent pretenses, representations, and promises — to use Detector Dogs's services.

The wire fraud and false claims statutes do not include explicit venue provisions. To support venue on the wire fraud charges in the Eastern District of Virginia, the prosecution relied on the following wire communications ...