U.S. v. Unimex, Inc., 91-50230

• Decision Date: 15 April 1993
• Docket Number: No. 91-50230,91-50230
• Citation: 991 F.2d 546
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. UNIMEX, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 546

991 F.2d 546

UNITED STATES of America, Plaintiff-Appellee, v. UNIMEX, INC., Defendant-Appellant.

No. 91-50230.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Sept. 15, 1992.

Decided April 15, 1993.

Stanley I. Greenberg, and Abby Besser Klein, Los Angeles, CA, for defendant-appellant.

Nancy B. Spiegel, Asst. U.S. Atty., Los Angeles, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California.

Before: WIGGINS, KOZINSKI and KLEINFELD, Circuit Judges.

KLEINFELD, Circuit Judge:

Unimex, Inc. is a corporation convicted of conspiring to launder drug money and to fail to file currency transaction reports in violation of 18 U.S.C. § 371, and of willfully failing to file currency transaction reports in violation of 31 U.S.C. §§ 5313, 5322(b). We have affirmed, in a separate unpublished disposition, the conviction of Unimex's president, Raul Velasquez, on related charges. We reverse the corporation's conviction, because it was denied due process of law under the Fifth Amendment and its right to counsel under the Sixth Amendment. Unimex was effectively prohibited from defending itself.

Unimex was not represented by counsel in its trial. ¹ All of its assets had been seized prior to trial. Based upon affidavits and such additional evidence as it might present at a hearing showing that much or all of its assets were untainted by crime, Unimex sought return of $100,000 of the $2,000,000 seized, to retain counsel. The motion was denied without an evidentiary hearing. Without money, Unimex could not retain counsel. Counsel could not be appointed for it under the Criminal Justice Act, because it is a corporation. Counsel could not ethically represent Unimex on contingent fee. Unimex could not lawfully have some lay director or shareholder defend it in court. There was nothing Unimex could do to defend itself.

Unimex may have been nothing but a front for laundering drug money, and its criminal penalties entirely just. The corporation as such is an abstraction which, since it could not be imprisoned, has no personal liberty interest at stake. But Unimex may have other shareholders who have put honest money into it, and other officers and employees who thought they were running it as an honest business, and the corporation and other people dependent on it may be innocent victims of Velasquez's crimes. Because Unimex was denied the opportunity to defend itself, no participant in the trial had an unalloyed interest in showing that this was true. The practical effect of a combination of laws and rules was to prohibit Unimex from defending itself, so the proceeding was unfair, and the verdict unreliable, as to Unimex.

I. Facts.

The government called the vice president of Unimex as its first witness, to explain Unimex's business. Unimex was in the business of buying and selling foreign currency and operating a travel agency. It had three branches, with roughly 20 employees for all three, where customers could change Mexican and American money, wire money to their families in Mexico, and buy airplane tickets. The business kept books and receipts, paid withholding taxes on its employees, and appeared to be a legitimate business providing financial services largely to people in the United States with family ties in Mexico. The business was losing money, so it was for sale, but the vice president testified that he had no idea Unimex was a front for money laundering.

This case arises out of an IRS sting operation. IRS agents posing as drug dealers met with Velasquez at Unimex's main office and asked him to launder drug money. He told them that he would, by putting the money through Unimex and using it to cash checks, but he needed to postpone the money laundering because he had just bought some check cashing businesses and state banking officials were scrutinizing his books. He told the agents that he would have to fill out a currency transaction report if the transaction went through Unimex, and that he knew they did not want to do that. Velasquez offered to take the cash to Tijuana and exchange it for a cashier's check at a Mexican bank.

Velasquez told the IRS undercover agents to deliver the cash to the branch manager at a Unimex office down the street. He said there would be no record of the transaction in Unimex's books because the transaction was not going to "go through the business of Unimex." One of the agents delivered $48,000 in cash to the manager at the Unimex branch, and she assured him that the transaction would not produce a paper trail. The next day, Velasquez delivered a $48,000 cashier's check to the undercover agent. Similar money laundering transactions occurred subsequently.

Velasquez suggested to the undercover agents that his associates in Mexico would be interested in selling Unimex for one million dollars. Velasquez said that his associates had laundered $40 million through Unimex. He showed the undercover agents two sets of books for Unimex, one with legitimate transactions, and one showing hundreds of thousands of dollars of money laundering daily.

Velasquez also asked if the agents could furnish 25 kilograms of cocaine. They agreed to do so. When Velasquez said he had the money ready, he showed the agents a large amount of cash in Unimex's safe, and the agents showed Velasquez the cocaine in the trunk of a car in the Unimex parking lot. The undercover agents handed Velasquez and his associate 15 kilograms each, and then arrested them. A search of the two safes in the Unimex vault later that day revealed approximately $1,105,000 in cash, contained in bags, a cereal box and a VCR box.

Immediately after Velasquez's arrest, all the assets of Unimex were seized pursuant to a warrant. Velasquez and Unimex were both indicted for conspiracy and other crimes relating to money laundering. The indictment also included a count charging that all of Unimex's property was subject to forfeiture under 18 U.S.C. § 982(a)(1). The government filed a parallel civil action against Unimex for forfeiture of all its property under 18 U.S.C. § 981 and 21 U.S.C. § 881 for substantially the same conduct.

After the jury retired, the government dismissed the criminal forfeiture count, so that is not before us on this appeal. Unimex was convicted of the crimes with which it was charged, and fined $2 million. The judgment recited that the amount of the fine was the amount seized and subject to the pending civil forfeiture proceeding, and the fine was suspended "unless and until the seized funds are returned to the defendant. In such event, the $2 million fine is to be paid immediately." In other words, if the government won a civil forfeiture of the money seized, the only criminal sanction would be $1,000 in special assessments and the conviction itself. If the government lost the forfeiture case, then it would get the money anyway as a fine. Its victory in the criminal case eliminated the government's risk if it were to lose the forfeiture case.

II. Analysis.

Unimex claims a violation of its Sixth Amendment right to counsel. We review de novo. United States v. Bohn, 890 F.2d 1079, 1080 (9th Cir.1989).

Counsel is essential for a corporation at a trial, because it cannot appear pro se. A criminal defendant must be present at trial, except for specified exceptions. Fed.R.Crim.P. 43(a). Among the exceptions to physical presence is that "[a] corporation may appear by counsel for all purposes." Fed.R.Crim.P. 43(c)(1). Velasquez was present on his own behalf, not as an officer of Unimex. No one purported to appear on behalf of Unimex. No one could, except an attorney admitted to practice in the Central District of California. The Central District has a local rule, similar to that in most courts and jurisdictions, providing that "[a] corporation ... may not appear in any action or proceeding pro se." C.D.Cal., Loc.R. 2.9.1. "It has been the law for the better part of two centuries ... that a corporation may appear in the federal courts only through licensed counsel." Rowland v. California Men's Colony, --- U.S. ----, ----, 113 S.Ct. 716, 717, 121 L.Ed.2d 656 (1993).

Unimex argues and the government concedes that a corporation has a Sixth Amendment right to be represented by counsel. See American Airways Charters, Inc. v. Regan, 746 F.2d 865, 873 (D.C.Cir.1984); United States v. Rad-O-Lite of Philadelphia, Inc., 612 F.2d 740, 743 (3rd Cir.1979). The government correctly argues that a defendant has no right to use the government's money to retain counsel of its choice, and forfeitable money belongs to the government. Caplin & Drysdale v. United States, 491 U.S. 617, 109 S.Ct. 2646, 105 L.Ed.2d 528 (1989).

Caplin & Drysdale by its rationale suggests two exceptions to the general rule that a forfeiture does not impair the constitutional right to counsel. First, it says that "those who do not have the means to hire their own lawyers have no cognizable complaint so long as they are adequately represented by attorneys appointed by the courts." Id. at 624, 109 S.Ct. at 2651. That statement suggests that those who lack the means to hire counsel may have a cognizable complaint if they are not provided with court appointed counsel. The district court did not appoint counsel for Unimex.

Although Unimex has not argued that it was entitled to appointed counsel, we must consider whether it was, because the availability of appointed counsel would render doubtful the claim of interference with the right to counsel on account of the pretrial seizures. See Caplin & Drysdale, 491 U.S. 617, 109 S.Ct. 2646 (1989); United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989). The Criminal Justice Act provides for appointment of counsel for an indigent "person," but does not say whether a corporation is a "person" for purposes of appointment of counsel. 18 U.S.C. § 3006A(a). The word "person" in a federal statute includes corporations "unless the...