U.S. v. Horton

• Decision Date: 28 May 1981
• Docket Number: Nos. 79-5444,79-5477,s. 79-5444
• Citation: 646 F.2d 181
• Parties: 8 Fed. R. Evid. Serv. 604 UNITED STATES of America, Plaintiff-Appellee, v. Raymond K. HORTON and Billie Sol Estes, Defendants-Appellants. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 181

646 F.2d 181

8 Fed. R. Evid. Serv. 604

UNITED STATES of America, Plaintiff-Appellee, v. Raymond K. HORTON and Billie Sol Estes, Defendants-Appellants.

Nos. 79-5444, 79-5477.

United States Court of Appeals, Fifth Circuit.

Unit A

May 28, 1981.

Rehearing Denied Aug. 7, 1981.

G. Brockett Irwin, Longview, Tex., for Estes.

David L. Botsford, Emmett Colvin, Dallas, Tex., for Horton.

Kenneth J. Mighell, U. S. Atty., Fort Worth, Tex., Shirley Baccus-Lobel, Asst. U. S. Atty., Dallas, Tex., for United States.

Appeals from the United States District Court for the Northern District of Texas.

Before RUBIN and GARZA, Circuit Judges, and SUTTLE ^*, District Judge.

GARZA, Circuit Judge.

In the early 1960's Billie Sol Estes was convicted of tax fraud and served a number of years in prison. One of the conditions of his parole from prison was that he would not engage in any promotional activities. Estes still has a federal tax liability which numbers in the tens of millions of dollars.

In the present case, Estes was convicted of one count of creating a scheme and artifice to defraud and to obtain money by means of false pretenses in violation of 18 U.S.C. § 1341. He was sentenced to five years on this conviction. At the same time, Estes and the appellant Raymond K. Horton were convicted of conspiracy to defraud the United States by concealing assets from the Department of the Treasury in violation of 18 U.S.C. §§ 371 and 2. Estes was sentenced to a term of five years to run consecutively to the sentence in the case mentioned above. Horton was sentenced to three years confinement and a fine of $10,000. On the same day as sentencing, Estes was taken into custody on a warrant for violation of his parole.

The basis of the first conviction involved a transaction engineered largely by Estes to purchase an electronics company with other people's money. The appellant Horton was not involved in any way in this case. The purchase plan in itself would have been no grounds for criminal action except that Estes and a woman named Sue Goolsby, who later pled guilty, apparently forged one of the investor's signatures on financial statements, guarantees and lease agreements. In addition to that, Estes persuaded another investor to contribute a sizable amount of money in a petroleum company, after which the funds were diverted to infuse the electronics company with much needed cash. This same investor later made a loan to this electronics firm. He never received any return whatsoever on his investment.

In the concealment of assets case, in which Horton and Estes were convicted of conspiracy, the government alleged that Horton and Estes had been involved in ventures which funneled money to Estes without the knowledge of the Internal Revenue Service. The government contended that Estes was concealing these funds to prevent the IRS from obtaining a portion of the income to offset the huge tax liability of Estes. Horton was a successful businessman who had made his money in oil but was attempting to branch out into other areas of business. At the time of his difficulties with Estes and the government, Horton was, at least on paper, a multimillionaire.

Upon Estes' release from prison in 1971, Horton discussed working with Estes on business transactions and later hired Estes to help work out deals solely for Horton's benefit. Horton paid Estes a salary of about $700 a month. Horton entered certain business arrangements in which Estes had assisted him, and Horton desired to give Estes a percentage of any profit at some later date when such an arrangement would be legal for Estes. Horton also entered an agreement with Estes' brother, Dr. John Estes, in which the latter would receive upon Horton's death, one-half of that amount of Horton's estate which exceeded three million dollars. John Estes then placed this right in a trust for the benefit of Billie Sol Estes' children. The evidence clearly shows that such an arrangement standing alone was completely legal, although Horton's attorney believed it did not amount to good business sense.

In 1974 and 1975, Horton purchased a chemical cleaning manufacturing business. This firm was to assemble high pressure chemical cleaners that would clean oil field equipment. While involved in this business, Horton directed that certain monies from the sale of the cleaners, which incidently were non-existent, be given to Billie Sol Estes in hundred dollar denominations. The man delivering this money to Estes, Frank Fuell, was told by Horton that Estes would then convey the money to a man named Barrett as a sales commission. Fuell repeatedly asked for Barrett's social security number for tax and accounting purposes, but Horton never gave it to him. Barrett testified for the government during which he stated that he did receive partial payment on his commission, but that it had been paid by check.

In 1977, the government decided to investigate Estes' financial statements, which Estes contended were very minimal. Government agents, acting as potential investors with shady, mafia-like connections, contacted Estes to discuss certain business deals. The government agents recorded their conversations with Estes, both personally and by telephone. A number of these tapes or parts thereof were introduced into evidence at the trial. In these tapes, Estes told the government agents that he had ownership rights in Horton's business, that he knew how to handle Horton and that he in effect controlled Horton. Estes also told the agents that his actual worth was very high but that his money was kept in the name of someone else since he was not allowed to have it in his name. Estes also promised to obtain a contract from Horton in which Horton would pledge fifty one percent of his company, of which Estes claimed he owned one-half. In this transaction, Estes had told the government agents not to talk to Horton about the deal and that Estes could take care of it. When the agents subsequently called Horton, however, Horton told them that Estes could sign no contract and that nothing could be worked out until Horton agreed. The contract was eventually signed by Horton placing the collateral in the name of a nominee.

Both appellants now raise a number of grounds of error. Horton contends that the evidence was insufficient to convict him of conspiracy, that the trial court erred in failing to make a determination as to the admissability of statements made by Estes, that the trial court erred in its jury charge and that the trial court's failure to order a severance was error. Estes claims on appeal that his case should have been dismissed either for prosecutorial vindictiveness, violation of the Speedy Trial Act or for refusing to enforce a plea bargain agreement. Estes also contends that he was denied a fair trial since one of the jurors was allegedly prejudiced by the media and that the court erred in amending his sentence outside of his presence and without a hearing.

Horton and Estes were convicted of conspiracy to defraud the United States pursuant to 18 U.S.C. § 371. ¹ Specifically, the two were accused of impeding the Department of the Treasury from collecting back taxes by means of the concealment of assets. Only Horton challenges the sufficiency of the evidence. The evidence is insufficient when a reasonably minded jury must necessarily entertain a reasonable doubt as to the defendant's guilt under the evidence. United States v. Ocanas, 628 F.2d 353, 360 (5th Cir. 1980).

In order to find that Horton was a member of the conspiracy, the government must have shown beyond a reasonable doubt, if only by circumstantial evidence, that a conspiracy existed, that Horton knew of it and that he intended to associate himself with the objectives of the conspiracy. United States v. Caicedo-Asprilla, 632 F.2d 1161, 1166 (5th Cir. 1980). In the instant case, there can be no doubt that Estes' conversations with the agents, which are preserved on tape, comprise evidence that Horton knew that Estes possessed large amounts of cash and even owned half of one of Horton's companies.

However, standing alone, all the damaging evidence of Estes' conversations are inadmissible. Before Estes' statements could ever be considered by a court, the government must show by a preponderance of the evidence, independent of those conversations, that a conspiracy existed, that Estes and Horton were members of that conspiracy and that the statements were made during the course of and in furtherance of the conspiracy. United States v. Ocanas, 628 F.2d at 359; United States v. James, 590 F.2d 575, 581 (5th Cir. 1979) (en banc), cert. denied, 442 U.S. 917, 99 S.Ct. 2836, 61 L.Ed.2d 283 (1979). See also United States v. Ricks, 639 F.2d 1305 (5th Cir. 1981).

In the present case, the government barely met this threshold requirement. In its appellate brief, the government devotes one page out of twenty four pages of argument to the issue of the sufficiency of the evidence in a trial whose transcript exceeds four thousand pages. The government's main thrust seems to be that the two individuals were involved in a "quite intimate business relationship," implying that Horton must have known of any illegalities committed by Estes. ² That factor alone is too weak to convict a man of conspiracy to defraud the United States. Mere association with someone involved in a criminal enterprise is insufficient to prove participation in a conspiracy. United States v. Gutierrez, 559 F.2d 1278, 1280 (5th Cir. 1977). Horton's agreement with Dr. John Estes to leave part of his estate to the latter is hardly evidence of a conspiracy to defraud the government. Horton's desire to give Estes a share of the profits at some undetermined future time is hardly evidence of a conspiracy to defraud the government. Horton's possible involvement in selling allegedly nonexistent chemical cleaners to private individuals is hardly evidence of a conspiracy to defraud the government.

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