U.S. v. Cuellar, 95-50118

• Decision Date: 17 September 1996
• Docket Number: No. 95-50118,95-50118
• Parties: , 96 Cal. Daily Op. Serv. 6946, 96 Daily Journal D.A.R. 11,358 UNITED STATES of America, Plaintiff-Appellee, v. Sabulon Cardenas CUELLAR, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1179

96 F.3d 1179

65 USLW 2213, 96 Cal. Daily Op. Serv. 6946,

96 Daily Journal D.A.R. 11,358

UNITED STATES of America, Plaintiff-Appellee, v. Sabulon Cardenas CUELLAR, Defendant-Appellant.

No. 95-50118.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 7, 1996.

Decided Sept. 17, 1996.

Joseph F. Walsh, Los Angeles, California, for defendant-appellant.

Duane R. Lyons, Assistant United States Attorney, Los Angeles, California, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California, James M. Ideman, District Judge, Presiding. D.C. No. CR-94-00588-JMI.

Before: POOLE, WIGGINS, and RYMER, Circuit Judges.

RYMER, Circuit Judge:

This appeal requires us to decide whether a contract to pay an undercover informant a percentage of funds laundered through organizations he penetrated is outrageous government conduct.

Sabulon Cardenas Cuellar was convicted on charges of distribution of 200 kilograms of cocaine and possession of one kilogram of cocaine with intent to distribute in violation of 21 U.S.C. § 841(a)(1). He complains of a number of errors, but principally contends that his due process rights were violated based upon the government's paying an informant a percentage of money seized in undercover operations, and making additional payments depend on the outcome of trial. We hold that a contingent fee arrangement is not by itself outrageous government conduct, and that in the circumstances of this case the district court did not err in finding that additional payments were not dependent on the outcome of Cuellar's trial. As there was no other reversible error, and we have jurisdiction over this timely appeal, 28 U.S.C. § 1291, we affirm. ¹

I

"Operation Costa Del Oro" was a complex money-laundering investigation by the United States Customs Service (USCS) and a number of municipal law enforcement agencies across the country. As part of the investigation, the USCS entered into a Personal Assistance Agreement with Carlos Garavito, a confidential informant, in August 1993. The USCS agreed to process "purchase of information/purchase of evidence" (POI/POE) payments for Garavito's participation in the investigation, "predicated on the Source's participation in the investigation and the results of any subsequent criminal or civil proceedings." In return, Garavito agreed to forfeit his right to apply for an award under 19 U.S.C. § 1619 ² in specific cases where POI/POE was paid. Garavito was also entitled under the agreement to a brokerage fee of 0.7% of the funds laundered by Costa Del Oro during the investigation. The commission was to be paid solely out of Costa Del Oro receipts, not out of funds appropriated to the USCS by Congress, and was capped at $10,000 per month.

From August 1993 through January 1994, Garavito entered into a series of money laundering contracts with a Colombian money broker, Fernando Barrera-Saavedra, which called for him to pick up large sums of money from narcotics traffickers in Detroit, Chicago, New York, Houston and Los Angeles. Undercover agents, acting as Garavito's representatives, picked up the currency, deposited it into an account controlled by the government, and then wire transferred it to a bank chosen by Barrera-Saavedra. This activity resulted in numerous seizures of cash, more than $7 million in all.

During the Costa Del Oro investigation Garavito received $50,000 in brokerage fees, reflecting his percentage of the laundered funds, and $130,000 in recognition of the time spent and risk undertaken, the amount of cash seized by the government, and the number of organizations identified and infiltrated. His supervising agent's requests for payments had to be approved by senior USCS officials in Washington. On April 3, 1995, after the investigation was closed, Garavito received an additional $400,000 for his cooperation.

Meanwhile, as a result of Garavito's contracts with Barrera-Saavedra, between September and December 1993 undercover agents picked up some $3.2 million from the Detroit branch of the organization run by "Aldo." Aldo wanted to get Garavito involved in transporting cocaine from Los Angeles; under the direction of Customs agents, Garavito spoke to Aldo's boss, "Negro," about transporting a large quantity of cocaine to New York. Eventually Aldo gave Garavito the pager number of "Carlos," who turned out to be Cuellar, and on January 12, 1994, they arranged for the exchange of 200 kilograms of cocaine. The transaction was surveilled. Cuellar's fingerprints and palm prints were recovered from seven of the boxes that contained the cocaine, and he was later connected with a phone number for "Saulo" listed in the address book of Victor Neris, who owned the van that was used for delivering the 200 kilograms.

Then on April 25, 1994, Cuellar was stopped at Los Angeles International Airport en route to New York. He had checked his suitcase with the skycap, and proceeded to the gate. His suitcase had a combination lock as well as a padlock and its identification tag was not filled out. A sheriff's deputy (with no knowledge of the Garavito investigation) approached Cuellar, walked alongside him, told Cuellar she wanted to ask him some questions, and told him that he was not under arrest and was free to go. The deputy asked Cuellar for identification; he handed her his temporary driver's license, and, when asked his address, could not recall it. The deputy then asked Cuellar for his ticket; he handed her a one-way ticket to New York in the name of Oscar Gomez. She returned the driver's license and ticket and asked for permission to search Cuellar's luggage. Cuellar handed her a key, and one kilogram of cocaine was discovered.

Cuellar was indicted on July 22, 1994. He moved to dismiss the indictment for outrageous government conduct, to sever the count for possession of the kilogram of cocaine that was found in his luggage from the distribution count for the 200 kilograms, and to suppress the evidence discovered in the search of his suitcase. The district court denied each motion, but indicated that its denial of the motion to dismiss for outrageous government conduct was without prejudice, subject to renewal as facts developed at trial.

Cuellar's trial began October 25, 1994. On November 17, 1994, the jury returned guilty verdicts on both counts. He filed this timely appeal.

II

Cuellar argues that the district court erred in denying his motion to dismiss the indictment for outrageous government conduct because Garavito was paid a "contingent fee" that was dependent upon the amount of drugs involved and upon whether Cuellar was convicted. He points out that the Fifth Circuit held that an informant paid a contingent fee is not a competent witness and that a conviction based on such testimony must be reversed, Williamson v. United States, 311 F.2d 441 (5th Cir.1962), even though Williamson was overruled in United States v. Cervantes-Pacheco, 826 F.2d 310 (5th Cir.1987), cert. denied, 484 U.S. 1026, 108 S.Ct. 749, 98 L.Ed.2d 762 (1988), and that we have stressed the danger to the criminal justice system that exists with the use of paid informants. See United States v. Bernal-Obeso, 989 F.2d 331 (9th Cir.1993). Cuellar submits that when the government gives a confidential informant the authority to develop a crime and his monetary reward depends on getting people convicted and on the magnitude of the drug or money laundering transaction, the informant has too great an incentive to fabricate evidence and distort the truth.

The government counters that that isn't what happened in this case. It emphasizes that no indictment has ever been dismissed on the footing that a contingent fee arrangement alone constitutes outrageous government conduct; that to dismiss an indictment on that ground requires government conduct that is "so grossly shocking and so outrageous as to violate the universal sense of justice," United States v. Allen, 955 F.2d 630, 631 (9th Cir.1992) (internal quotation omitted); that the Supreme Court has never upheld dismissal of an indictment premised on outrageous government conduct, and that we have done so only once--when the government basically created and ran the entire illegal operation; and that nothing in this case suggests that Garavito created Cuellar's criminal activity, fabricated evidence, or did anything other than infiltrate an existing organization by providing needed money laundering services.

A

We review the district court's decision not to dismiss the indictment on due process grounds based on the government's outrageous conduct de novo. United States v. Garza-Juarez, 992 F.2d 896, 903 (9th Cir.1993), cert. denied, 510 U.S. 1058, 114 S.Ct. 724, 126 L.Ed.2d 688 (1994). However, we view the evidence in the light most favorable to the government, and we accept the district court's findings unless clearly erroneous. United States v. Emmert, 829 F.2d 805, 810-11 (9th Cir.1987).

B

There is no question that this informant got paid a ton of money. But that isn't the question we have to decide. "The government's conduct may warrant a dismissal of the indictment if that conduct is so excessive, flagrant, scandalous, intolerable and offensive as to violate due process." Garza-Juarez, 992 F.2d at 904. We cannot say that it was.

We have previously recognized that "few would engage in a dangerous enterprise of this nature without assurance of substantial remuneration." United States v. Reynoso-Ulloa, 548 F.2d 1329, 1338 n. 19 (9th Cir.1977) (government's use of contingent fee arrangement whereby informant was paid a specific amount for each pound of heroin seized and for each "body" involved did not amount to entrapment per se), cert. denied, 436 U.S. 926, 98 S.Ct. 2820, 56 L.Ed.2d 769 (1978). Congress has done the same thing, providing for compensation based on a percentage of successful forfeitures. 19 U.S.C. § 1619. Although the total compensation Garavito...