U.S. v. Doerr
| Decision Date | 03 October 1989 |
| Docket Number | 88-1567 and 88-1578,88-1447,Nos. 88-1383,88-1529,s. 88-1383 |
| Citation | 886 F.2d 944 |
| Parties | 28 Fed. R. Evid. Serv. 1197 UNITED STATES of America, Plaintiff-Appellee, v. Dale J. DOERR, John Paul Doerr, Josephine Christofalos, Christa D. Pixley, and Archie J. Pixley, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Nathan A. Fishbach, Asst. U.S. Atty., John E. Fryatt, U.S. Atty., Milwaukee, Wis., for U.S.
Bernard S. Stein, Robert N. Meyeroff, Milwaukee, Wis., for defendant-appellant Dale J. Doerr.
Dennis P. Coffey, Coffey, Coffey & Geraghty, Milwaukee, Wis., for defendant-appellant John P. Doerr.
Janice A. Rhodes, Kravit, Waisbren & Debruin, Milwaukee, Wis., for defendant-appellant Josephine Christofalos.
David E. Lowe, Hachey & Lowe, Milwaukee, Wis., for defendant-appellant Christa Pixley.
Clifford R. Steele, Cunningham, Lyons, Steele & Cramer, Milwaukee, Wis., for defendant-appellant Archie Pixley.
Before COFFEY, RIPPLE, and MANION, Circuit Judges.
In April 1987, a grand jury returned a two-count indictment against the five appellants in this case. The first count charged each of the five appellants with conspiring to travel in and use the facilities of interstate commerce to promote, carry on, and distribute the proceeds of unlawful activities involving prostitution. See 18 U.S.C. Sec. 371; 18 U.S.C. Sec. 1952(a)(1) & (3). 1 The second count charged two of the appellants, John Paul Doerr and Josephine Christofalos, with conspiring to defraud the United States by obstructing the lawful functions of the Internal Revenue Service (IRS). See 18 U.S.C. Sec. 371. 2 After a lengthy jury trial, each of the appellants was found guilty of the offense charged in Count One, and John Paul Doerr and Ms. Christofalos were found guilty of the offense alleged in Count Two. All five appellants now challenge their convictions. Their appeals raise a number of different issues for our consideration. We affirm the convictions of all the appellants.
The prostitution activities underlying the offense alleged in Count One of the indictment were concentrated in three businesses that were part of an entity known as Worldwide Enterprises, Incorporated: the WW I Club, located in Kenosha County, Wisconsin; the Relaxation Health Systems massage parlor located next to the WW I Club in Kenosha County; and the WW II Club, located in Lake County, Illinois. The clubs were nude dancing establishments that served no food or alcoholic beverages. The testimony at trial revealed that the prostitution activities at the clubs were conducted pursuant to the following general procedure. A customer entering the club would be required to pay a cover charge. He would then be directed to a table and joined by a "dancer." After being seated, a waitress would approach the customer and ask him if he would like to purchase a drink (water or a soft drink) for himself and the dancer. Once the customer had purchased a drink, the waitress would return and ask the customer if he would like to go to a private area with the dancer. If the customer agreed and purchased a bottle of soda or water, at a cost of forty to fifty dollars, he would be taken to a "terrace," consisting of a number of booths, in the rear of the club. The customer would then be asked to buy additional bottles, and, once sufficient bottles had been purchased, the dancer would engage in sexual acts with the customer.
At the massage parlor, the customer would pay a flat fee for thirty minutes in a private room with a masseuse. The masseuse would then negotiate a "tip" with the customer. The amount of the tip would determine the degree of sexual contact that the masseuse had with the customer. At both the clubs and the massage parlor, customers could pay in cash or by credit card.
Josephine Christofalos assumed control of these businesses when her husband, George Christofalos, died in March 1979. At that time, one of the nightclub waitresses described to Ms. Christofalos the prostitution activities taking place on the premises. During the summer of 1979, Ms. Christofalos retained John Paul Doerr to assist her in managing the enterprise. He moved into a house next to the Kenosha club and massage parlor and maintained close contact with the operations (for example, an intercom system was installed between his house and the club and massage parlor).
The other defendants each played lesser roles in the illegal enterprises. Archie Pixley participated in the management of the Kenosha club and massage parlor, and, when some of the massage parlor masseuses were arrested, Mr. Pixley posted their bail. Mr. Pixley's wife, Christa, was a waitress at the Kenosha club. Dale Doerr participated in the management of the massage parlor. Dale lived in Kenosha with his father, John Paul Doerr, during two different periods: from September 1979 to September 1980 (his junior year in high school) and from September 1981 until May 11, 1982. During the spring of 1982, both Dale and his father left Kenosha and moved to California. While in Kenosha, Dale worked at the businesses managed by his father. He was identified at trial as the massage parlor's assistant manager. In this capacity, he provided instructions on the treatment of customers, on proper work attire, and on scheduling. He also encouraged the massage parlor's masseuses to earn greater revenues by increasing their sexual favors. He sometimes received the massage parlor's receipts at the end of the evening, and, in January 1982, he became involved in the massage parlor's bookkeeping activities. Dale also assisted his father in the operation of RH Credit Systems, a company that processed credit card transactions for the Kenosha club and massage parlor.
Count Two of the indictment is based on a money-laundering scheme engineered by John Paul Doerr and Josephine Christofalos. Much of the evidence of this scheme was discovered during an FBI undercover operation in which the FBI operated a credit card processing business known as the National Credit Service (NCS). 3 Credit card receipts from the nightclubs and massage parlor were forwarded to NCS. NCS then provided payment for the receipts to Ms. Christofalos. At her direction, NCS left the payee line on many of these payment checks blank. Ms. Christofalos deposited most of these checks into various bank accounts, many of which had little connection with the clubs and massage parlor. In addition, eleven of these checks were provided to Mr. Doerr, who, as part of the money-laundering scheme, deposited them in the bank account of a church that he had formed, the Holy Temple of Christ the Redeemer and Early Day Saints Church. 4 The checks were reported to the IRS on the church's tax return as contributions that were exempt from taxation. The government contends that, in this way, Ms. Christofalos and Mr. Doerr avoided reporting significant portions of their businesses' substantial revenues to the IRS and impeded the IRS from accurately computing their income.
A number of issues are raised by all five appellants jointly, while the individual appellants each raise several other issues. We shall first address those issues raised jointly and then turn to the contentions of individual appellants.
The coconspirator exception to the hearsay rule, Fed.R.Evid. 801(d)(2)(E), provides that a statement is not hearsay if it is "offered against a party and is ... a statement by a coconspirator of a party [made] during the course and in furtherance of the conspiracy." The appellants maintain that two out-of-court statements admitted at trial failed to satisfy the "in furtherance" requirement of the coconspirator exception. In the first challenged statement, Robert Meyer, a frequent customer at the Kenosha club, testified about a conversation between himself and Mr. Pixley in which the two discussed a red curtain at one of the clubs. Meyer testified that Mr. Pixley "mentioned that when he was hired back there that Josephine had a curtain put up in the terrace or the patio area, how ridiculous it was, it was asking for problems with the police." Tr. at 720. In the second challenged statement, John Patrick Doerr, Dale Doerr's half brother, testified that, in a conversation with his brother, Dale had laughed at him and said "I can't believe--I don't believe--I can't believe you don't know what's going on, or you didn't know what's going on." Tr. at 999. While conceding that these two statements may have been admissible against their declarants, Mr. Pixley and Dale Doerr, 5 the appellants maintain that they should not have been admitted against the nondeclarant appellants because the statements were not made "in furtherance" of the conspiracy. Thus, they contend, Rule 801(d)(2)(E) was not satisfied. 6
We recently emphasized that the "in furtherance" requirement of Rule 801(d)(2)(E) is a limitation on the admissibility of coconspirators' statements that is meant to be taken seriously. See Garlington v. O'Leary, 879 F.2d 277, 283 (7th Cir.1989). As we explained in Garlington, a coconspirator's statement satisfies the "in furtherance" requirement "when the statement is 'part of the information flow between conspirators intended to help each perform his role.' " Id. (quoting United States v. Van Daal Wyk, 840 F.2d 494, 499 (7th Cir.1988)). We further explained that statements "in furtherance" of a conspiracy can take many forms, including statements made to recruit potential coconspirators, statements seeking to control damage to an ongoing conspiracy, statements made to keep coconspirators advised as to the progress of the conspiracy, and statements made in an attempt to conceal the criminal objectives of the conspiracy. Id. Narrative declarations, mere "idle chatter," and superfluous casual conversations, however, are not statements "in...
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