U.S. v. Hare, 94-1812

• Decision Date: 05 April 1995
• Docket Number: No. 94-1812,94-1812
• Parties: 41 Fed. R. Evid. Serv. 1009 UNITED STATES of America, Plaintiff-Appellee, v. Kevin M. HARE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 447

49 F.3d 447

41 Fed. R. Evid. Serv. 1009

UNITED STATES of America, Plaintiff-Appellee, v. Kevin M. HARE, Defendant-Appellant.

No. 94-1812.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 14, 1994.

Decided March 7, 1995.

Rehearing Denied April 5, 1995.

Martin Warhurst, Kansas City, MO, argued, for appellant.

Daniel Stewart, Asst. U.S. Atty., argued, for appellee.

Before FAGG, WOLLMAN, and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

Kevin M. Hare was convicted by a jury of four counts of wire fraud, in violation of 18 U.S.C. Sec. 1343, and three counts of money laundering, in violation of 18 U.S.C. Sec. 1957. The district court ¹ sentenced Hare to a 46-month term of imprisonment and a fine of $5,250. In this direct appeal, Hare challenges the district court's denial of his motion to suppress statements that he alleges were made in the course of plea negotiations, the denial of his motion to dismiss the money laundering counts, the assessment of a two-level increase at sentencing for a specific offense characteristic, and the assessment of a two-level increase at sentencing for obstruction of justice. We affirm.

I.

In the early 1990s, Kevin M. Hare, a Kansas City attorney in private practice, and his long-time acquaintance Raymond Sermon became involved in a scheme to defraud Ferrell T. Riley, the owner of an insurance company. Riley had been unable to obtain a license to operate his insurance company in Missouri due to his questionable business practices, and Hare and Sermon led Riley to believe that they could obtain a license for him if he paid bribe money to certain Missouri officials, namely a senator and the state insurance commissioner. Hare recruited long-time friend Robert Weller to play the role of the insurance commissioner. During a telephone conversation with Riley, Weller (feigning to be the Missouri Insurance Commissioner and using a script prepared by the defendant Hare) instructed Riley to send payments to accounts that Hare and Sermon had opened in their own names at two banks.

A series of banking and wire transactions followed from May through August 1991 as Riley succumbed to the scheme. Riley transferred money in amounts totalling $300,000 from his insurance company's accounts into the accounts opened by Hare and Sermon, which Hare and Sermon then converted for their own use. These transactions formed the basis of the indictment against Hare.

The scheme began to unravel when a bank employee reported to the Internal Revenue Service (IRS) a suspicious transaction involving Hare and Sermon. The IRS in turn notified the Federal Bureau of Investigation (FBI), and after investigating the matter, they discovered the scheme to defraud Riley. On October 14, 1992, an FBI agent and an IRS agent went to Hare's law office and showed him the evidence that they had gathered against him through their investigation. Hare said that he had been expecting them and showed them a written confession that he had already been preparing. Hare chose to accompany the agents to the United States Attorney's office for an interview with them and the Assistant United States Attorney (AUSA). During that interview, Hare admitted with remorse and without condition that he had participated in the scheme to defraud Riley.

After this interview, Hare continued to cooperate with the authorities in their ongoing investigation, with the exception of a period from October 27, 1992, through late November, when Hare submitted to inpatient treatment for his alcohol addiction. Hare's cooperation included making consensually monitored telephone calls, and he continued preparing his written statement detailing the scheme, complete with corroborating documents and records attached.

On December 15, 1992, now represented by an Assistant Federal Public Defender, Hare and his attorney met with the AUSA to discuss a possible plea bargain. Hare was presented with two options. He could plead guilty to two lesser counts and continue cooperating in exchange for the government's promise to make a U.S.S.G. Sec. 5K1.1 motion at the time of sentencing for a downward departure for substantial assistance. If Hare chose not to cooperate, the government would charge more counts and would not make a motion for downward departure. Hare chose to continue cooperating. The AUSA offered a formal plea agreement at that time, but Hare's attorney said that a written agreement was not necessary. After December 15 and in conformity with the oral plea agreement, Hare continued to cooperate until December 29, 1992. On that date, Hare was apprehended attempting to flee to Canada.

Because Hare terminated his cooperation under the plea agreement, he was subsequently charged by a grand jury indictment with six counts of wire fraud, in violation of 18 U.S.C. Sec. 1343, three counts of money laundering, in violation of 18 U.S.C. Sec. 1957, and criminal forfeiture, pursuant to 18 U.S.C. Sec. 982. The district court denied Hare's motion to suppress which was based upon Federal Rule of Criminal Procedure 11 and Federal Rule of Evidence 410 and denied Hare's motion to dismiss the money laundering counts. A jury subsequently convicted Hare of four counts of wire fraud and all three counts of money laundering.

At sentencing, the district court adjusted Hare's base offense level upward two levels for Hare's knowledge that the funds were the proceeds of wire fraud. The district court also applied a two-level upward adjustment for obstruction of justice. The district court sentenced Hare to 46 months of imprisonment and fined him $5,250. Hare appeals.

II.

Hare challenges the district court's denial of two pretrial motions: (1) a motion to suppress statements that Hare contends were made in the course of plea discussions, and (2) a motion to dismiss the money laundering counts. First, Hare contends that the district court erred in denying his motion to suppress all statements that he made while cooperating with law enforcement agents from October 14, 1992, through December 29, 1992. Hare argues that these statements were made in the course of plea negotiations and their use at trial therefore violated Rule 11 of the Federal Rules of Criminal Procedure ² and Rule 410 of the Federal Rules of Evidence. ³

We review for clear error a district court's decision to deny a motion to suppress. See United States v. Lloyd, 43 F.3d 1183, 1186 (8th Cir.1994); United States v. Jorgensen, 871 F.2d 725, 728 (8th Cir.1989). "Therefore, we must affirm unless the decision of the district court is unsupported by substantial evidence, based on an erroneous interpretation of applicable law, or, in light of the entire record, we are left with a firm and definite conviction that a mistake has been made." Jorgensen, 871 F.2d at 728. The magistrate judge's ⁴ report and recommendation in this case concluded that the statements at issue were not made in the course of plea negotiations and therefore were not subject to exclusion as statements made in the course of plea discussions. We agree.

"Federal Rule of Evidence 410 and Federal Rule of Criminal Procedure 11(e)(6) provide that statements made in the course of plea discussions between a criminal defendant and a prosecutor are inadmissible against the defendant." United States v. Mezzanatto, --- U.S. ----, ----, 115 S.Ct. 797, 799, 130 L.Ed.2d 697 (1995). "By [their] plain language, the rule[s] exclude[ ] only those statements which are made 'in the course of plea discussions.' " Lloyd, 43 F.3d at 1186 (quoting Fed.R.Crim.P. 11(e)(6)(D)). Statements voluntarily offered either before any plea negotiation has begun or after a plea agreement has been reached cannot be considered statements made "in the course of plea discussions" within the meaning of the exclusionary rules. See id. ("once a plea agreement has been reached, statements made thereafter are not entitled to [exclusion]"); United States v. White, 617 F.2d 1131, 1134 (5th Cir.1980) (statements made as mere " 'cooperation' negotiations" were not subject to exclusion as plea discussions). To determine whether an accused's statements were made "in the course of plea discussions" within the meaning of Rule 11(e)(6)(D) and Rule 410, we must look to the specific facts of each case and examine "the totality of the surrounding circumstances." Lloyd, 43 F.3d at 1186 (citing United States v. Grant, 622 F.2d 308, 312 (8th Cir.1980)).

In this case, Hare sought to suppress statements made on October 14, 1992, when he met with the agents and the AUSA. Hare admitted to the agents that he was expecting them, and he showed them the written confession that he had begun drafting. The agents were not authorized to engage in plea discussions and did not do so. Hare consented to meet the AUSA later the same day. The AUSA testified at the suppression hearing that Hare was very remorseful. The AUSA acknowledged that he and Hare had discussed the Sentencing Guidelines somewhat, but said they had done so only in general terms and not for the purpose of negotiating a plea. At Hare's inquiry, the AUSA informed him that the Guidelines would call for definite jail time, absent cooperation due to the amount of money involved. Specifically, the AUSA "told him that a 5K motion would reduce his exposure under the guidelines" but further testified that they "did not discuss [the] specifics of where the guidelines came out." (Hearing Tr., Apr. 27, 1993, at 90.) The AUSA did not discuss specific charges with Hare and did not offer any plea bargain.

The circumstances surrounding the October 14 interviews indicate to us that Hare was anxious to cooperate yet naturally concerned about the consequences of his wrongdoing. Hare was an attorney familiar with the Guidelines and aware that the offenses with which he could be charged were serious. His statements were offered unconditionally in an effort to cooperate. Perhaps Hare was hopeful of improving his situation and eventually gaining a motion...