U.S. v. Sax, s. 93-3063

• Decision Date: 06 January 1995
• Docket Number: Nos. 93-3063,93-3288,s. 93-3063
• Citation: 39 F.3d 1380
• Parties: UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Martin A. "Marty" SAX, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1380

39 F.3d 1380

UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Martin A. "Marty" SAX, Defendant-Appellant, Cross-Appellee.

Nos. 93-3063, 93-3288.

United States Court of Appeals Seventh Circuit.

Argued June 8, 1994.

Decided Nov. 7, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied Jan. 6, 1995.

Bradley W. Murphy, Asst. U.S. Atty., Rodger Heaton, Office of U.S. Atty., Peoria, IL, for U.S. in No. 93-3063.

K. Tate Chambers, Asst. U.S. Atty., Rodger Heaton, Bradley W. Murphy, Asst. U.S. Atty., Peoria, IL, for U.S. in No. 93-3288.

Allan A. Ackerman (argued), Chicago, IL, Thomas A. Durkin (argued), Durkin, Morgan, Roberts, Barnett & Bley, Michigan City, IN, for Martin A. Sax.

Before ALARCON, ^* RIPPLE and MANION, Circuit Judges.

MANION, Circuit Judge.

An undercover drug investigation named "Operation Adobe" targeted the distribution of large quantities of marijuana coming out of Tucson, Arizona for delivery and distribution into the Quad Cities areas of Illinois. As a result of the investigation, defendant Marty Sax was indicted along with several others. Following a jury trial, Sax was convicted of one count of conspiracy to distribute marijuana, in violation of 21 U.S.C. Secs. 846 and 841, and two counts of money laundering, in violation of 18 U.S.C. Sec. 1956(a)(1)(B)(i). The district court sentenced Sax to 210 months in prison. Sax appeals his convictions; the government, in a cross-appeal, challenges the district court's refusal to apply a four-level upward adjustment under U.S.S.G. Sec. 3B1.1(a) for Sax's role in the offense, as well as its refusal to give Sax a two-level upward adjustment under U.S.S.G. Sec. 3C1.1 for obstruction of justice. We affirm Sax's convictions and remand to the district court for resentencing.

I. Background

In the early 1980's Marty Sax started a large-scale marijuana distribution ring that was based out of Tucson, Arizona and reached into Illinois. In September of 1982, Sax recruited Michael Cutkomp to distribute Sax's marijuana in the Quad Cities area ¹ of Illinois. Soon thereafter, Cutkomp began receiving from Sax one-pound shipments of marijuana in the mail. Cutkomp would break these shipments into smaller amounts which he in turn would parcel out to his own distributors, including Dan Burkhead, Anthony Carmack and later, Dan's brother, Scot Burkhead, and Danny Brown. Cutkomp would front the marijuana to his distributors, who would repay him out their resales. Cutkomp would then use these proceeds to purchase more marijuana from Sax.

The methods of delivery changed as Cutkomp began purchasing larger quantities of marijuana. At the outset, Cutkomp would fly to Arizona, taking with him several empty suitcases. Once he arrived, he would call Sax who would meet Cutkomp at his hotel, take his suitcases and return them filled with marijuana; Cutkomp, with the marijuana-filled suitcases, would then fly back to Illinois where the shipment was broken down and parceled out to Cutkomp's distributors. By late 1983, Cutkomp started purchasing Sax's marijuana in one-hundred-pound increments. To accommodate these larger shipments, Sax recruited several drivers, including William Wainwright and Tom O'Donnell, to drive the marijuana from Arizona to Illinois. They would drive to a house owned by Sax named the "Cactus Ranch," located on the east side of Tucson, in which large quantities of marijuana were stored. Once there, the drivers would load up the vehicles with marijuana and drive to Illinois where the shipment would be delivered pursuant to Cutkomp's instructions.

In 1985 Cutkomp and his wife Karin (who was also involved in her husband's marijuana business) moved to Tucson. From there the Cutkomps continued distributing marijuana into Illinois using various drivers, including Cutkomp himself, his mother-in-law, Rosina Jech, and Danny Brown's brother, William Brown. Once the shipments arrived in Illinois they would be delivered to Danny Brown and then to Scot Burkhead. At other times, only part of the shipment would be delivered to Brown and Burkhead; the rest would be driven to Chicago where it was delivered to Joe Cullinane, who, according to Burkhead's testimony, was another one of Cutkomp's distributors.

Meanwhile, Sax had been mentioning to several people that he no longer wanted to be personally involved in the distribution side of the marijuana business. To that end, sometime in late 1984 or early 1985, Sax recruited Ted Eichorn to begin filling orders for Sax's distributors. The record shows that sometime in 1985, Sax sold his distribution business to Ted Eichorn. The price was $50,000, which was to be paid out of Eichorn's future sales. Until Eichorn paid off the balance, Sax retained the right to take back his business.

Eichorn managed things fairly well at first. He filled Cutkomp's orders just as Sax had done. He also filled orders from Joe Cullinane, who, in addition to selling for Cutkomp, had been placing his own orders with Sax. Eichorn even managed to expand Sax's existing operations. Wainwright, one of Sax's drivers, started placing his own orders with Eichorn. At Wainwright's suggestion, Eichorn fronted marijuana to Wainwright's friend, John Heller, who would distribute marijuana in Illinois. For getting Heller started, Eichorn agreed to pay Wainwright a kickback of Heller's sales.

Eichorn, however, was a heroin addict, and soon became an unreliable supplier. He would frequently refuse to answer his customers' pager calls. At other times, he would simply engage in bizarre behavior which demonstrated his unreliability. Sax's former customers expressed their frustrations to Sax. In late 1985, Cutkomp and Cullinane met with Sax in a Tucson hotel to complain about Eichorn. Following a heated discussion with Cutkomp and Cullinane, Sax apparently got Eichorn back in line, for the record indicates that Eichorn resumed supplying Cutkomp and Cullinane with marijuana. It was not long, however, before Eichorn's distribution process fell into disarray. So in late 1986, Cutkomp and Cullinane, fed up with Eichorn's antics, stopped purchasing marijuana from Eichorn and began purchasing their marijuana from Jeff Curtis, another marijuana distributor living in Tucson. ²

This was not the end of Sax's involvement with his distributors, however. Even before he turned things over to Eichorn, Sax, who was also a realtor, had been involved in setting up real estate investments into which his distributors could deposit their drug proceeds. For instance, in 1985, Sax introduced Eichorn to Joel Abrams, a Tucson realtor, so that Eichorn could purchase 10 acres of real estate. Abrams, who at the time was unaware of Sax's and Eichorn's drug activities, thought it unusual when Eichorn reached into his attache case and pulled out $10,000 in cash as his down payment. Later, Sax began soliciting his distributors to invest money in various limited partnerships that Sax and Abrams had formed to purchase real estate in and around Tucson. In December of 1985, Sax and Abrams set up Corona Northwest Associates I ("CNA I"), a real estate limited partnership in which Sax and Abrams were the general partners. Sax provided nearly half of the limited partners in CNA I through soliciting investments from his various distributors, most notably Cutkomp and Wainwright. In December of 1985, Wainwright subscribed to two shares in CNA I; at that time, he informed Sax and Abrams that he was purchasing one of these shares for Eichorn. Also in December of 1985, Cutkomp subscribed to one share in CNA I, to be put in the name of his mother, Margaret Cutkomp. Cutkomp and Wainwright (on behalf of himself and Eichorn) continued making their annual limited partnership payments to CNA I, frequently in cash. In March or April of 1987, Sax and Abrams set up another real estate limited partnership, Corona Marana IV ("CM IV"), in which they were both general partners. Abrams needed investors so he turned to Sax who, in turn, solicited money from his former courier Tom O'Donnell. O'Donnell agreed and subscribed to one share. He would send his annual payments (many times in cash) to Sax who would then personally deliver them to Abrams. Finally, in the summer of 1987, Sax and Abrams set up another limited partnership, Corona Pinal Partners V ("CPP V"). Again, Sax provided several investors, including O'Donnell and John Heller. ³

In 1988 the authorities began closing in on the distribution ring. In October of 1988, Illinois authorities executed a search at Scot Burkhead's home where they found marijuana and evidence that pointed to the Cutkomps. In February of 1989, the Cutkomps (who had moved back to Illinois in May of 1988), fled Illinois with nearly $300,000 in cash and headed for Mexico. On their way out of the country, the Cutkomps stopped off in Tucson and informed Sax of the Illinois investigation. They also, through a third party, gave Sax $4,125 in cash as their annual contribution to CNA I. Sax, in turn, handed this cash over to Abrams on or about February 17, 1989. Abrams' wife, Cheryl, who did the bookkeeping for the limited partnerships, deposited Cutkomp's cash into CNA I on or about April 28, 1989.

On April 20, 1989, Captain Richard Fisher of the Rock Island, Illinois Sheriff's Department, along with Special Agent Moore of the Internal Revenue Service (both of whom were involved in Operation Adobe) came to Tucson to question Sax about his involvement in the Quad Cities marijuana distribution ring. During that interview, the agents informed Sax that they had information linking him to Cutkomp. Sax denied being involved in Cutkomp's drug activities. He also denied receiving drug monies and investing them in any of the limited partnerships. Sax told Fisher and Agent Moore that although Cutkomp was listed as a limited partner in CNA I, the money received was actually that of Cutkomp's mother. Fisher and Agent Moore then served a subpoena on Sax requiring him to bring any...