U.S. v. Sanders, 91-8030

• Decision Date: 11 September 1991
• Docket Number: No. 91-8030,91-8030
• Citation: 942 F.2d 894
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Charles Earl SANDERS, Defendant-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 894

942 F.2d 894

UNITED STATES of America, Plaintiff-Appellee, v. Charles Earl SANDERS, Defendant-Appellant.

No. 91-8030

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Sept. 11, 1991.

Charles McDonald, Waco, Tex., for defendant-appellant.

LeRoy Morgan Jahn, Asst. U.S. Atty., San Antonio, Tex., John A. Phinizy, Asst. U.S. Atty., Waco, Tex. and Ronald F. Ederer, U.S. Atty., San Antonio, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Texas.

Before GARWOOD, HIGGINBOTHAM and BARKSDALE, Circuit Judges.

GARWOOD, Circuit Judge:

Defendant-appellant Charles Earl Sanders (Sanders) was convicted, pursuant to his guilty plea, of structuring transactions for the purpose of evading reporting requirements, in violation of 31 U.S.C. §§ 5324(3) and 5322(a). At sentencing, applying sections 2S1.3(a)(1)(A) and 2S1.3(b)(1) of the United States Sentencing Guidelines (USSG), the district court found Sanders to have known or believed the funds involved in the offense to be criminally derived property, accordingly increased his base offense level by 5 levels, and sentenced him to 37-months' imprisonment, a $6,000 fine, and 3 years of supervised release. Sanders challenges the district court's findings that he knew the funds involved were criminally derived property and its subsequent application of USSG § 2S1.3(b)(1) to increase his base offense level by five levels. We reject Sanders' arguments and affirm the sentence imposed by the district court.

Facts and Proceedings Below

In 1986, acting on information that Sanders' son, Lee Earl Sanders (Lee), was heavily involved in the Waco drug scene, the Waco Police Department initiated an investigation of the Sanders family. Their investigation revealed that Sanders, who was a sanitation worker for the City of Waco with an annual salary of $17,000, had, over a period of months, engaged in several transactions involving very large amounts of cash.

On June 20, 1988, Sanders purchased a new Cadillac that was selected by and delivered to his son Lee. Sanders made a cash down payment of $20,000 on the $33,821 purchase price, of which $4,700 was in $100 dollar bills and the remaining $15,300 was in denominations smaller than $100. The balance was financed for 48 months with payments of $473.63 a month. Because Lee had no verifiable legitimate source of income, investigators hypothesized that the Cadillac was purchased in Sanders' name to conceal the fact that Lee had large amounts of unexplained cash. Six months later, Sanders and his wife, using two separate cashier checks of $20,000 each, purchased a house and two acres of land in Waco. Investigation revealed that the house was apparently purchased for Lee, supposedly with proceeds of an insurance settlement. In January 1989, Sanders leased a building in Waco for $500 a month and established the "Shake It Club." Local authorities believed that the club was a front for narcotics trafficking and money laundering activities.

In April 1988, Sanders and his wife opened a savings account with a cash deposit of $5,000 at American Bank East in Waco. Through the end of 1988, there were total cash deposits of $32,569.36 and total check deposits of $1,153.33. Cash withdrawals for this period totalled $3,953.33, while only one check withdrawal was made, namely the $20,000 which was part of the cash payment on the house. Investigators examined one deposit of $15,000 made on November 16, 1988 in detail; they found that $6,100 of the deposit was in $100 dollar bills, while the remainder was in smaller denominations. No deposits were made in 1989, and $10,519.26 was withdrawn. The account was closed in September 1989.

Sanders simultaneously maintained a second account at Southwest Savings in Waco. During 1988, $27,656 in cash and $5,532 in checks were deposited to this account. On November 15, 1990, Sanders' wife made a $20,000 cash deposit to this second account, all in denominations smaller than $100.

On February 2, 1990, a series of simultaneous search warrants were executed at six locations in the Waco area, including Sanders' residence, his son's residence, and the "Shake It Club." Approximately $7,488 in cash was seized from Sanders, $2,100 from his son, and jewelry valued at $39,650 from both residences. Documents, described by investigators as drug ledgers reflecting a large-scale cocaine distribution network and transaction amounts in the tens of thousands of dollars, were found at the Shake It Club.

Investigators were unable to verify the source of much of Sanders' money. Between mid-1987 and mid-1989, Sanders had made expenditures of approximately $128,000, excluding living expenses, which were about $17,500 (apart from taxes). During this period, Sanders was employed as a refuse truck driver with the City of Waco, earning approximately $17,000 a year. Sanders told the probation officer that he obtained the additional money from legitimate sources, including the sale of aluminum cans, gambling, money found in the wall of a residence belonging to a deceased uncle, unreported income from the Shake It Club, and an accumulation over a lifetime of gainful employment. As to none of these matters, however, were any specifics whatever mentioned. ¹

During investigation by the Internal Revenue Service (IRS), Sanders has admitted to being aware of requirements that banks report large deposits of currency to the federal government. He further admits that he split the cash and deposited it in two different banks on different dates to avoid these reporting requirements. He stated that he believed that the amounts had to be over $20,000 to be reported and that he did not want the federal government to know that he had $35,000 in cash.

Sanders was originally charged, along with his son and codefendant Lee, in a six-count indictment. Counts one through four alleged laundering of money instruments in violation of 18 U.S.C. § 1956(a)(1)(A)(i) and (B)(i); count five related to Lee only; count six provided for criminal forfeiture of real and personal property involved in the offenses. A superseding information charged the appellant with structuring transactions for the purpose of evading reporting requirements in violation of 31 U.S.C. §§ 5324(3) and 5322(a). Pursuant to a plea agreement, Sanders entered a guilty plea to the single count superseding information, and the government agreed to dismiss the original indictment as to the appellant at the time of sentencing.

The Presentence Report (PSR) established the base offense level at 13, and recommended adding 5 levels under § 2S1.3(b)(1) because Sanders knew or believed the funds involved in the offense were criminally derived property. Sanders' attorney objected to the entire section of the PSR describing the offense conduct, claiming that Sanders was not specifically involved with and had no knowledge of his son's alleged criminal activities, and denying that Sanders received any money from his son, or knew that any money involved in the offense was the product of illegal activities. ²

At the sentencing hearing, Sanders' attorney argued against the recommended five-level increase in the offense level. In support of its position, the government called a special agent with the IRS. He testified, among other things, that over the two year period Sanders had expended some $128,000 for items other than ordinary living expenses, and that investigation revealed no legitimate source of funds other than Sanders' employment with the city of Waco. He also testified that an informant of established reliability he had known for three years advised him that Sanders had turned his narcotics business over to his son Lee. No objection was made to any of this testimony. Sanders presented no evidence. The district court specifically excluded from consideration testimony from Lee's trial, but accepted the factual determinations and recommendation of the PSR to increase the base level by five levels and not to reduce the level on the basis of acceptance of responsibility. The court ultimately imposed a sentence of 37 months' imprisonment, a $6,000 fine, and 3 years of supervised release. Sanders timely filed a notice of appeal.

On appeal, Sanders challenges the district court's findings and application of USSG § 2S1.3(b)(1) on essentially one ground. Sanders contends that there is no evidence that he received any criminally derived property or that he knew that the property he did receive was criminally derived, and therefore the district court erred in applying USSG 2S1.3(b)(1).

Discussion

We begin by noting that we review application of the USSG fully for errors of law. See United States v. Morales-Vasquez, 919 F.2d 258, 263 (5th Cir.1990). Factual findings regarding sentencing factors, however, are entitled to considerable deference and will be reversed only if they are clearly erroneous. See id.; United States v. Franco-Torres, 869 F.2d 797, 800 (5th Cir.1989). A factual finding is not clearly erroneous as long as it is plausible in light of the record read as a whole. See United States v. Alfaro, 919 F.2d 962, 964 (5th Cir.1990); United States v. Fields, 906 F.2d 139, 142 (5th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 200, 112 L.Ed.2d 162 (1990). The district court's determinations at sentencing are made under the preponderance of the evidence standard. See United States v. Casto, 889 F.2d 562, 569-70 (5th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 1164, 107 L.Ed.2d 1067 (1990). "Sentences imposed as a result of incorrect application of...