U.S. v. Orlando
| Decision Date | 25 February 2002 |
| Docket Number | No. 00-6409.,No. 00-6312.,00-6409.,00-6312. |
| Citation | 281 F.3d 586 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Lawrence ORLANDO, Sr. (00-6312) and Tera M. Daniels (00-6409), Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Jimmie Lynn Ramsaur (argued and briefed), Asst. U.S. Atty., Nashville, TN, for United States.
Jerry Scott (argued and briefed), Scott & Kea, Murfreesboro, TN, for Lawrence Orlando, Sr.
Charles R. Ray (argued and briefed), Ray & Frensley, Nashville, TN, for Tera M. Daniels.
Before: MARTIN, Chief Circuit Judge; GILMAN, Circuit Judge; EDMUNDS, District Judge.*
Lawrence Orlando, Sr. and Tera Daniels were convicted by a jury of conspiring to use the mail and interstate commerce facilities to aid in the operation of a prostitution business, in violation of 18 U.S.C. § 371, and conspiring to commit money laundering, in violation of 18 U.S.C. § 1956(h). In addition, Daniels was convicted of committing the substantive criminal acts that were the unlawful goals of the conspiracy, in violation of 18 U.S.C. §§ 2, 1952, 1956, and 1957. The district court sentenced Orlando to 63 months in prison followed by 2 years of supervised release, and it sentenced Daniels to 210 months in prison followed by 2 years of supervised release. Orlando and Daniels now appeal, challenging their convictions and sentences on various grounds. For the reasons set forth below, we AFFIRM the defendants' convictions and Daniels's sentence, but VACATE the sentence of Orlando and REMAND for resentencing.
This case concerns the defendants' involvement with "Dawn's Whirlpool and Massage" (Dawn's), a business that Daniels opened in October of 1989. The superseding indictment, issued ten years later, alleges that Daniels, Orlando, and several others used Dawn's as a front for prostitution. Customers paid for sexual acts and services with credit cards, personal checks, or cash, but the payments were made to Tera Enterprises, Inc., a corporation that Daniels had created, rather than to Dawn's.
More than two years prior to the commencement of an investigation into Daniels's illegal activities in November of 1995, Daniels was interviewed by several agents from the Internal Revenue Service's Criminal Investigation Division (CID), including James Bolton and Morris Elam. As a result of the information that she provided during these interviews, Daniels was subpoenaed to appear before a federal grand jury that was investigating the activities of Charles Hendricks. Hendricks was the target of a criminal investigation for money laundering of prostitution proceeds, tax fraud, and conspiracy.
Daniels's grand jury testimony, which occurred on August 11, 1993, was consistent with the information that she had given in her interviews with the CID agents. Specifically, Daniels admitted that she owned Dawn's, that acts of prostitution occurred there, that Dawn's accepted credit cards as payment for prostitution, and that she gave Hendricks the credit card slips to launder through a business that he owned. (Daniels ended her association with Hendricks in January of 1992, after which she began laundering funds through Tera Enterprises, Inc.) Troy Hester, the Assistant U.S. Attorney (AUSA) who was conducting the grand jury proceeding, informed Daniels that the federal government had no interest in prosecuting her for any of her previous illegal activities, but told her that he could not make any promises about what might happen to her in the future if she continued to engage in these activities.
The government's investigation of Dawn's did not commence until over two years later, when CID Agent Ken Runkle conducted an interview with Dr. Richard Feldman on November 14, 1995. Dr. Feldman had hired private investigators to examine the activities that occurred at Dawn's after several of Dawn's employees brought charges against him before the state medical board. At this meeting, Dr. Feldman told Runkle that Daniels owned Dawn's, that she was operating the business as a front for prostitution, and that she was not reporting all of the illicit proceeds from the business to the IRS. Following his conversation with Dr. Feldman, Runkle began an investigation of Daniels's activities.
Runkle consulted a variety of sources — including business records, the Nashville Metropolitan Police Department, other CID agents, and the records of IRS interviews with Daniels — in the initial stages of his investigation. In addition, Runkle and CID Agent Bolton met with AUSA Hester to inform him of the preliminary stages of the investigation and to determine whether the U.S. Attorney's Office would be interested in pursuing charges against Daniels based upon Dr. Feldman's allegations. Hester expressed an interest in the case, and the criminal prosecution chief for the U.S. Attorney's Office agreed to open a file. Bolton provided all of his files concerning Daniels, including the grand jury transcript, to Runkle following their meeting with Hester.
As the investigation of Daniels's alleged money laundering and income tax violations continued, Runkle sought and obtained access to Daniels's tax information from the IRS's Civil Division. Runkle completed a "related statute request or determination," which he then submitted to the chief of the CID, so that he could gain access to the IRS computer bank and determine whether a civil audit was being performed on Daniels. Once he learned that a civil audit was open, Runkle contacted the agents conducting the audit to obtain Daniels's tax files and instructed them to cease the civil audit process.
On March 1, 1996, Runkle prepared an affidavit in support of a search warrant, which was issued that same day by a magistrate judge. The place to be searched was the residence of Joan Gould, Daniels's mother and the bookkeeper for Dawn's. A search was conducted on March 5, 1996.
Orlando's connection with Dawn's began when he met Daniels in 1995. They were involved in a tumultuous long-term romantic relationship, with about 20 separations between 1995 and 1999. From the beginning of his relationship with Daniels, Orlando knew that Dawn's was a front for prostitution, because Daniels referred to it as a "gentleman's club." On several occasions during their relationship, moreover, Orlando urged Daniels to get rid of Dawn's.
Orlando had no role in the business operations of Dawn's. In fact, if Orlando happened to interrupt a meeting concerning Dawn's, the managers would cease any discussions of business matters. Furthermore, Orlando's name did not appear on the applications for any of the business licenses that Daniels submitted to local authorities. Orlando did, however, comply with Daniels's request and sign a license for a business named "Above it All Whirlpool and Spa" in 1996 or 1997. That business lasted for about six months before it was dissolved.
Orlando's son, his son's wife, and his son's mother-in-law worked at Dawn's for brief periods in the spring of 1996. In May of 1996, moreover, Orlando visited Dawn's frequently while he was installing antique doors as a present to Daniels. During 1997 and 1998, Orlando retrieved sealed envelopes from Dawn's about two dozen times and took them to Daniels's house, using a truck that Daniels owned. Orlando also served as the cashier of Dawn's for 25 days between August and November of 1999. In this capacity, Orlando collected the daily receipts, but he did not discuss Dawn's operation with anyone and was not paid for his services.
A federal grand jury issued an indictment on November 5, 1998 against Daniels and four of her employees. On November 10, 1999, a superseding indictment was issued that added Orlando and five more individuals. All of the defendants except Daniels and Orlando pled guilty.
Prior to trial, Daniels filed motions to suppress the evidence obtained at Gould's residence and to dismiss the indictment. Daniels's motions were based upon her contention that the search warrant and indictment were invalid because the government obtained them in violation of her Fifth Amendment rights. According to Daniels, the government used the testimony that she gave in the 1993 grand jury proceeding — which she argued was immunized — to prepare the affidavit necessary to establish probable cause to conduct the search and to obtain the indictment. She also argued that the evidence unveiled as a result of the search should be suppressed because CID Agent Runkle obtained the IRS Civil Division's files in violation of the IRS's internal procedures and federal law.
The district court denied Daniels's motions after conducting a multi-day evidentiary hearing pursuant to the procedures set forth in Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972). Following the hearing, the court concluded that even if Daniels had been granted immunity in 1993, the government had established an independent basis for the allegations contained in the search warrant and the indictment. The district court also concluded that Runkle did not violate federal law by gaining access to Daniels's tax files from the IRS Civil Division, because he obtained the records as part of an investigation into allegations of criminal activity concerning tax administration. As a result, Runkle did not need an ex parte order from a federal district court judge or a magistrate judge in order to view Daniels's records.
The trial in the present case commenced on May 1, 2000, with the jury returning its verdict on May 17, 2000. Daniels was found guilty on all 35 counts against her. Orlando, in contrast, was found guilty on 2 counts of conspiracy charges, but was acquitted on all of the substantive counts.
On May 18, 2000, one of the jurors, Kimberly Wade, contacted Orlando and informed him...
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