United States v. Borrero, s. 13–3430
| Decision Date | 12 November 2014 |
| Docket Number | 13–3516.,13–3468,13–3517,13–3559,Nos. 13–3430,s. 13–3430 |
| Citation | 771 F.3d 973 |
| Parties | UNITED STATES of America, Plaintiff–Appellee, v. Evelyn Rivera BORRERO, et al., Defendants–Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
OPINION TEXT STARTS HERE
David E. Hollar, Office of the United States Attorney, Hammond, IN, for Plaintiff–Appellee.
Harold S. Ansell, III, Indianapolis, IN, for Defendant–Appellant.
Before WOOD, Chief Judge, and EASTERBROOK and WILLIAMS, Circuit Judges.
Indiana's Bureau of Motor Vehicles will not register or transfer title to a car or other motor vehicle unless the buyer furnishes information that includes a Social Security number. 140 Ind. Admin. Code § 6–1–2. For corporations and similar entities, by contrast, Indiana wants a federal employer identification number (EIN). It is possible to obtain an EIN without having a Social Security number. The Internal Revenue Service will issue an employer identification number to anyone who has an individual taxpayer identification number (ITIN), and it will issue an ITIN to anyone who wants one. Persons who cannotobtain Social Security numbers—including not only aliens whose visas do not allow them to work in the United States, but also aliens who lack authority to be in the United States at all—can have an ITIN for the asking and use it for many financial transactions.
Omar Duran Lagunes and four colleagues established a business to help people without Social Security numbers navigate the process of titling vehicles in Indiana and obtaining license plates. For each client, Duran's service used a client's individual taxpayer identification number to obtain an employer identification number, registered a limited liability company named after the client (so John Doe received “John Doe LLC”), and submitted in the LLC's name the required paperwork and fees. The service used clients' real names and addresses. Each client paid about $350, which included the fees remitted to the Bureau of Motor Vehicles. Indiana issued the titles and licenses as requested; the state has never suggested that holding title to a personal vehicle through an LLC violates any rule of state law. Nor has the Internal Revenue Service stated that it is improper to obtain an employer identification number for use by an entity that will own property but not generate income.
But the United States Attorney for the Northern District of Indiana procured an indictment charging Duran and colleagues with two federal crimes. Count One alleges that defendants conspired, in violation of 8 U.S.C. § 1324(a)(1)(A)(v)(I), to violate 8 U.S.C. § 1324(a)(1)(A)(iii) and (iv) by shielding unauthorized aliens from detection and encouraging them to reside in the United States. It also alleges that defendants violated 18 U.S.C. § 2 by aiding and abetting the violation of § 1324(a)(1)(A); this does not add anything, so we do not mention § 2 again. Count Two alleges that defendants conspired to commit mail or wire fraud, in violation of 18 U.S.C. § 1349. All defendants were convicted of both counts and have been sentenced to imprisonment as short as 24 months (Evelyn Rivera Borrero and Yalitza Exclusa–Borrero) and as long as 84 months (Duran).
The charge of fraud could have been a simple one. Indiana taxes the sale of motor vehicles. An application for transfer of title must report the price at which the sale occurred and include the appropriate tax. Duran and the other defendants inserted false prices, such as $100 or $200, into the forms and remitted sales tax less than state law required—or so the indictment charged. Defendants used the means of interstate commerce (including the Internet) to acquire tax identifiers and create LLCs, and Indiana used the mails to send registration papers and license plates, so a financial fraud comes within the scope of the mail-fraud statute. See Schmuck v. United States, 489 U.S. 705, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989).
But at trial the prosecutor did not emphasize Indiana's financial loss. To convict of mail or wire fraud, the jury must find that false statements injured a victim by depriving it of “money or property”. See 18 U.S.C. § 1341. The jury instructions allowed a conviction to rest on a conclusion that defendants caused the state to retitle the vehicles, even if it did not suffer a financial loss. That is possible only if vehicle titles and license plates are “property” from the perspective of Indiana, the scheme's victim. The prosecutor favored this approach so that he could emphasize a second fraud: defendants falsely reported that all applicants had insurance, putting bogus policy numbers in the forms submitted on behalf of clients who lacked insurance while knowing that the state did not check up. False reports of insurance coverage played a role in the state's willingnessto transfer titles and issue license plates but did not cost it anything out of pocket.
The United States' appellate brief concedes that treating titles and licenses as “property” is a legal error. Cleveland v. United States, 531 U.S. 12, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000), holds that state and municipal licenses, and similar documents, are not “property” in the hands of the public agency. This circuit had reached a similar conclusion in Toulabi v. United States, 875 F.2d 122, 125 (7th Cir.1989). Until the case reached this court no one—not the prosecutor, not the judge, and not defense counsel—recognized that the principal theory on which the mail fraud count was indicted, and the jury was instructed, was legally defective. But the defendants' appellate brief relied on Cleveland, and the prosecutor acknowledged the error.
The United States has asked us to affirm the fraud convictions anyway, observing that the record contains evidence from which a jury could have found that the defendants defrauded Indiana out of “money”—the tax it could have collected had the selling prices been reported honestly. Moreover, the prosecutor observes that counsel for three of the five defendants approved the jury instructions. Yet although waiver blocks these three defendants from using the error in the instructions as a reason to reverse (for the other two, plain-error review is available), all five defendants requested a judgment of acquittal under Fed.R.Crim.P. 29. If, as they contend, they have been convicted of acts that the law does not make criminal, they are entitled to that relief notwithstanding the legal errors that contaminated the jury instructions. See Bousley v. United States, 523 U.S. 614, 118 S.Ct. 1604, 140 L.Ed.2d 828 (1998).
Whether they have been so convicted is uncertain. The instructions permitted the jury to convict on the theory that title papers and licenses are “property” from Indiana's perspective, with which the state parted because of false statements about insurance. If that was the jury's sole ground of conviction, then defendants are entitled to acquittal. But the instructions also permitted the jury to convict on the theory that by misstating the selling prices defendants defrauded Indiana out of money that should have been paid as sales tax. If that was the jury's ground of conviction, then the judgments should be affirmed.
Unfortunately, the instructions did not require the jury to choose among theories of culpability. The jury may have relied exclusively on the registration-papers-as-property theory, exclusively on the sales tax theory, or on some mixture of frauds and understandings of “property”. We just don't know. That makes it impossible for us to evaluate the sufficiency of the evidence, because the jury rather than the judge decides which evidence to believe. The jury might have believed the evidence about false statements concerning insurance, leading to a verdict that only the registration-papers-as-property theory could support, and disbelieved the evidence about false statements concerning purchase prices. Or the reverse. Or it could have accepted all of the prosecution's evidence and all legal theories of culpability.
Griffin v. United States, 502 U.S. 46, 112 S.Ct. 466, 116 L.Ed.2d 371 (1991), holds that if the evidence is sufficient to convict on one theory, and insufficient to convict on another, then the conviction should be affirmed. The court must assume that the jury followed its instructions and discounted the theory unsupported by the evidence. But when the instructions allow a jury to convict on two theories, one of which is legally insufficient, then the court must remand for a new trial, because a jury that followed its instructions might have convicted on the invalid ground while disdaining the proper one. See Yates v. United States, 354 U.S. 298, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1957), which like several similar decisions was reaffirmed in Griffin, 502 U.S. at 51–56, 112 S.Ct. 466. Remand is the right outcome here as well. The legal error in the jury instructions prevents the court from knowing what evidence the jury credited, and without that knowledge it is impossible to evaluate the motion for a judgment of acquittal. A properly instructed jury could have convicted the defendants on this record, however, so the Double Jeopardy Clause does not foreclose a new trial, if the prosecutor chooses to press on. Contrast Burks v. United States, 437 U.S. 1, 98 S.Ct. 2141, 57 L.Ed.2d 1 (1978).
As for Count One, which charged defendants with shielding unauthorized aliens and encouraging them to remain in the United States: there are multiple problems, not least of which is that the prosecutor did not prove that defendants knew their clients to be unauthorized aliens or recklessly disregarded that fact. At least four categories of persons could have found defendants' service attractive: (1) aliens who are in the United States “in violation of law” (a qualification in each clause of § 1324(a)(1)(A)), and thus unable to obtain Social Security numbers; (2) aliens who are authorized to be...
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