U.S. v. Hemmingson

• Decision Date: 30 September 1998
• Docket Number: 97-30598,Nos. 97-30552,s. 97-30552
• Citation: 157 F.3d 347
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John J. HEMMINGSON and Alvarez T. Ferrouillet, Jr., Defendants-Appellants. UNITED STATES of America, Plaintiff-Appellant, v. John J. HEMMINGSON and Alvarez T. Ferrouillet, Jr., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 347

157 F.3d 347

UNITED STATES of America, Plaintiff-Appellee, v. John J. HEMMINGSON and Alvarez T. Ferrouillet, Jr.,

Defendants-Appellants.

UNITED STATES of America, Plaintiff-Appellant, v. John J. HEMMINGSON and Alvarez T. Ferrouillet, Jr.,

Defendants-Appellees.

Nos. 97-30552, 97-30598.

United States Court of Appeals, Fifth Circuit.

Sept. 30, 1998.

Jacob Shaye Frenkel, Alexandria, VA, Charles M. Kagay, San Francisco, CA, Donald C. Smaltz, Wil Frentzen, Joseph P. Guichet, Office of Independent Counsel, Alexandria, VA, for U.S.

Robert Glass, Glass & Reed, New Orleans, LA, for Alvarez T. Ferrouillet, Jr.

Cynthia Eva Hujar Orr, Gerald H. Goldstein, Goldstein, Goldstein & Hilley, San Antonio, TX, William J. Mauzy, Mauzy Law Firm, Minneapolis, MN, for John J. Hemmingson.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before JOLLY, SMITH and BARKSDALE, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

John Hemmingson and Alvarez Ferrouillet, Jr., challenge their convictions of money-laundering; Ferrouillet also challenges his sentence. The government, through the Office of the Independent Counsel, appeals the sentences. We affirm.

I.

The origin of this case lies in the ashes of Henry Espy's failed campaign for Congress. In the spring of 1993, Espy, the Mayor of Clarksdale, Mississippi, and president of the National Conference of Black Mayors ("NCBM"), was a defeated and indebted candidate. He had sought the Mississippi congressional seat vacated by his brother Michael when the latter became Secretary of Agriculture, but he succeeded only in running up a large campaign debt.

Ferrouillet is a New Orleans attorney who had met Henry Espy the previous year and served as chairman of the Espy for Congress campaign. In addition to his lawyerly work, Ferrouillet moonlighted as an insurance broker, managing his own company, Municipal Healthcare Cooperative. He also acted as the NCBM's representative on health care issues and had helped broker deals between municipalities and health insurance companies.

Ferrouillet offered to help Espy pay off his campaign debt and worked with the unsuccessful candidate to obtain a $75,000 loan from a Mississippi bank, then guaranteed the loan on behalf of his law firm, Ferrouillet & Ferrouillet. The campaign proved unable to repay the loan, nor could Ferrouillet come up with the money himself. The loan came due on June 15, but Ferrouillet sought and received an extension to September 30; the deadline was once again pushed back, at his request, to December 31. As the new year dawned and Ferrouillet failed to repay the loan, the bank referred the matter to its attorneys for collection.

In March 1994, Henry Espy held a reception at a private club in Washington, D.C., in hopes of retiring his debt. The event was sparsely attended: Only about twelve potential contributors showed. Present, however, was Hemmingson--the president and CEO of Crop Growers, a holding company for several crop insurance firms. At the time of the fundraiser, Congress had begun considering proposals for crop insurance reform, and Crop Growers had openly acknowledged, in its public disclosure forms, the government's power over this heavily-regulated industry.

That evening, Espy asked Hemmingson and the other attendees to raise $10,000 each; he later sent Hemmingson a thank-you letter "for the immediate and much needed assistance you pledged in helping me retire my congressional campaign debt. Friends who come to the aide [sic ] of friends are never forgotten." The fundraiser proved a failure--it raised only $10,000, and Ferrouillet labeled it an "absolute disaster"--but he was able to secure yet another extension from the bank. Under the new agreement, Ferrouillet would pay off the loan through four monthly post-dated checks beginning in June.

Ferrouillet and Hemmingson met for the first time at Espy's fundraiser. On June 30, they entered into a contract, prepared by Ferrouillet, under which Ferrouillet would act as "Special Corporate Counsel in connection with the development of a comprehensive healthcare plan which [Crop Growers] might co-sponsor, along with [Ferrouillet's business] Municipal Healthcare Cooperative, Inc., for presentation to and implementation within the membership of the National Conference of Black Mayors." Hemmingson then prepared a $20,000 check drawn on a Crop Growers Insurance account and made payable to "Alvarez T. Ferrouillet, Jr., Attorney at Law." He signed the check and mailed it to Ferrouillet in Louisiana.

The contract provided that Ferrouillet would be given the $20,000 as a "retainer" from which he would periodically draw $1,000 as his monthly fee. In exchange, he would help develop Crop Growers's nascent health insurance business by securing NCBM's endorsement. The agreement, which is largely boilerplate and hardly a model of artful drafting, further provided that "[t]he details of our services and the amount of our fees will be provided to you on computer generated statements monthly as our services are rendered.... It is very important to maintain close communications."

At the end of July, Ferrouillet cashed the Crop Growers check at Evergreen Supermarket, a neighborhood grocery store in Louisiana. The store's owner, a personal friend of Ferrouillet's, gave the lawyer $5,000 cash on the spot and, after depositing the check, $15,000 in $100 bills a week later.

Ferrouillet promptly deposited $10,000 in $100 bills into an Espy for Congress bank account that he had opened earlier that year; two days later, he deposited $9,000, again in $100 bills. He then wired $21,000 from the account to the Mississippi bank to be applied against the loan.

In March 1995, FBI agents contacted Ferrouillet. They were investigating the Washington fundraiser and asked the lawyer about the source of his $10,000 deposit. He explained that the money came from individual donors, then provided the agents with a list of forty-six and the amounts each contributed. As the agents began checking the names and realized the list was phony, Ferrouillet's scheme collapsed. ¹

II.

After a jury trial, Hemmingson was convicted of interstate transportation of stolen property (18 U.S.C. § 2314), money-laundering (18 U.S.C. § 1956(a)(1)(B)(i)), and engaging in a monetary transaction with criminally derived property (18 U.S.C. § 1957). He was acquitted of a separate § 1957 count. Ferrouillet was convicted on all counts: interstate transportation of stolen property (18 U.S.C. § 2314), five counts of money-laundering (18 U.S.C. § 1956(a)(1)(B)(i) & (ii)), two counts of engaging in a monetary transaction with criminally derived property (18 U.S.C. § 1957), and two counts of making false statements to a federal agent (18 U.S.C. § 1001). He subsequently pleaded guilty in the Northern District of Mississippi to one count of conspiracy to make false statements and defraud the United States (18 U.S.C. § 371) and five counts of making false statements to a financial institution (18 U.S.C. § 1014). The Mississippi counts were consolidated with the Louisiana counts for sentencing. ²

The presentence report ("PSR") stated that the base offense level of each defendant was 22, resulting in a sentencing range of 41 to 51 months, as each had a criminal history category of 1. The government objected to the PSR, asking the court to increase Ferrouillet's offense level by two levels pursuant to U.S.S.G. § 3B1.3 for abusing a position of public trust and using a special skill (his attorney skill) to commit his crimes. The district court denied the request.

The defendants also objected to the PSR; both requested a downward departure on the ground that their conduct did not fall within the "heartland" of the money-laundering guideline, U.S.S.G. § 2S1.1. The district court agreed, granted the downward departure, and sentenced defendants to one year in a halfway house pursuant to the more lenient fraud guideline, U.S.S.G. § 2F1.1.

III.

This is a consolidation of two appeals. Defendants argue that the evidence was insufficient to support their convictions, that the government's prosecution strategy violated their right to due process, and that the method of jury selection violated federal law and the Constitution. Ferrouillet challenges his sentence, claiming an entitlement to a downward departure on the basis of his "exceptional" history of charitable deeds and community service.

The government contends that the district court erred in granting the defendants a downward departure under the "heartland" theory. The government also says the court erred in refusing to upwardly adjust Ferrouillet's sentence for abusing his position of public trust and for his use of special skills in committing his crimes.

IV.

In determining sufficiency of the evidence, we must decide whether a rational trier of fact could have found that the evidence established guilt beyond a reasonable doubt. United States v. Dupre, 117 F.3d 810, 818 (5th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 857, 139 L.Ed.2d 756 (1998). We view all evidence, and any inferences that may be drawn from it, in the light most favorable to the government. United States v. Sylvester, 143 F.3d 923, 930 (5th Cir.1998). ³

A.

Defendants zero in on Hemmingson's intent and motive in writing the check to Ferrouillet. Their argument runs as follows: If Hemmingson did not intend the funds to reach Espy's campaign, the government's case collapses, because the convictions rest on the government's having proved that Hemmingson intended to defraud Crop Growers when drafting the check. The defendants reason that if Hemmingson acted honestly--and was simply victimized by Ferrouillet--neither defendant, as required under the statutes, trafficked in "criminally derived property" or the "proceeds of unlawful activity," because the $20,000 would not have been taken from Crop Growers through fraud.

The defendants' theory is that Hemmingson wrote the...