U.S. v. Del Valle

• Decision Date: 10 January 1979
• Docket Number: No. 77-5279,77-5279
• Parties: 3 Fed. R. Evid. Serv. 1114 UNITED STATES of America, Plaintiff-Appellee, v. Adela Nancy DEL VALLE, Morry S. Fox, James A. Davis, II and Irving Curtis, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 699

587 F.2d 699

3 Fed. R. Evid. Serv. 1114

UNITED STATES of America, Plaintiff-Appellee, v. Adela Nancy DEL VALLE, Morry S. Fox, James A. Davis, II and Irving Curtis, Defendants-Appellants.

No. 77-5279.

United States Court of Appeals, Fifth Circuit.

Jan. 10, 1979.

E. David Rosen, Miami, Fla., for Del Valle and Fox.

Angus M. Stephens, Jr., Coral Gables, Fla., for Davis and Curtis.

Jack V. Eskenazi, U. S. Atty., Marsha L. Lyons, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.

Appeals from the United States District Court For the Southern District of Florida.

Before BROWN, Chief Judge, AINSWORTH and VANCE, Circuit Judges.

VANCE, Circuit Judge:

Appellants Adela Nancy Del Valle, Morry S. Fox, James A. Davis, II and Irving Curtis, together with Mary M. Hamilton, William H. "Shorty" Holton and Joe L. Moore, were indicted on August 27, 1976 on 105 counts. Counts 1 through 104 charged the defendants with using the mails in furtherance of a scheme to defraud various insurance carriers, accident victims and the Florida Bar Association, in violation of 18 U.S.C. § 1341. ¹ Count 105 charged them with conspiracy to commit these substantive offenses in violation of 18 U.S.C. § 371. ² A jury found each appellant guilty of all 105 counts. ³

James Davis was an attorney whose practice consisted primarily of personal injury cases. He employed Mary Hamilton, as his secretary, Joe Moore, as office manager, and Irving Curtis and Shorty Holton, as "runners." Morry Fox was a practicing physician. He owned the Westchester Hospital in addition to his private clinic where Nancy Del Valle was his secretary.

The scheme which brought about the indictment of appellants involved the submission of fraudulent medical bills to insurance companies. Through the efforts of his "runners," Curtis, Holton and others, Davis procured accident victims as his clients and sent them to Fox for their medical treatment. Fox automatically hospitalized the victims in Westchester just long enough to reach the $1,000 threshold required by the Florida no-fault law ⁴ and then provided inflated, and in some cases, false, medical bills which Davis submitted to the insurance carriers. The proceeds from the insurance company drafts provided the revenue to the conspiracy, which according to one witness was over one million dollars a year. Del Valle, Moore and Hamilton were intimately involved in the day-to-day operation of the conspiracy.

I.

Appellants' first contention is that the trial court erred in denying their motions to suppress certain files and records seized in searches of the offices of Davis and Fox on April 13, 1976. Appellants attack the sufficiency of the affidavit on which the issuance of a search warrant was based. It is appellants' claim that the affidavit did not contain sufficient facts to establish that appellants' premises were being utilized to commit a federal crime and that without such a showing the affidavit was insufficient and the motion to suppress should have been granted. Appellants point to this court's statement of the applicable rule in United States v. Brouillette, 478 F.2d 1171, 1176 (5th Cir. 1973) where we stated:

The standard rule is that in determining whether probable cause exists for issuance of a search warrant it is not necessary to determine whether or not the offense has actually been committed but it is necessary to determine whether the affiant has reasonable grounds, at the time of making the affidavit and the issuance of the warrant, for believing that "the offense charged" was being or had been committed.

Brouillette cites another case which is supportive of appellants' position:

In United States v. Birrell, 242 F.Supp. 191 (S.D.N.Y.1965), federal agents sought and obtained a search warrant for certain property on the basis of an affidavit quite similar to the one here in question. The affidavit merely recited that the agent had reason to believe that certain records were being concealed at the premises to be searched, which records "have been used in committing a violation of Title 18, United States Code, Section 1341." The section involved is the basic mail fraud section. The court held the warrant plainly insufficient on its face because there was not a single fact stated in the affidavit tending to show that defendant Birrell used the mails in a scheme to defraud. Use of the mails was, of course, a necessary element in determining that there existed probable cause that fraud by mail had been committed.

United States v. Brouillette, supra at 1177. In reliance on this authority appellants claim that, here also, the information in the affidavit was insufficient to show use of the mails in furtherance of a scheme to defraud. We agree that without a sufficient inclusion of that essential element of the offense under 18 U.S.C. § 1341 the affidavit would not meet the requirements of Brouillette. We disagree, however, that the affidavit before us was insufficient under this standard.

The affidavit for search warrants was based on an investigation of eighty-six insurance claims. It factually described appellants' entire scheme at length and in detail. The affiants, both of whom were experienced in insurance fraud cases, stated that in their experience "demands against insurance companies and payment drafts by insurance companies are usually handled through the mail." The affidavit also showed that inspected claim files of insurance companies contained correspondence and bills from Davis, Fox and Westchester Hospital reflecting the senders' Miami, Florida addresses. United States v. Ventresca, 380 U.S. 102, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965) holds that an affidavit for a search warrant must show sufficient facts to establish probable cause when interpreted in a common-sense and realistic fashion. These statements, when interpreted in a common-sense manner, are sufficient to establish probable cause. It is common knowledge that insurance companies routinely transact business through the mails. A common-sense interpretation of the term "correspondence" and of the facts set out in the affidavit, in light of normal business practice and the experience of the affiants, would indicate use of the mails. A magistrate's determination of probable cause is conclusive in the absence of arbitrariness. Bastida v. Henderson, 487 F.2d 860 (5th Cir. 1973). We think that the affidavit in this case meets the standard set out in both Ventresca and Brouillette and that the magistrate's conclusion that probable cause had been established was not arbitrary.

II.

The government introduced testimony that in an attempt to conceal the conspiracy Davis paid money to, coached and otherwise improperly attempted to influence witnesses who were to testify before the grand jury in May, 1976. Other appellants contend that evidence of Davis' statements and acts was inadmissible as to them because they were not made and done during the course of nor in furtherance of the conspiracy, as required by Fed.R.Evid. 801(d)(2) (E). ⁵ In addition, they advance related arguments that it was plain error for the trial court not to give a limiting instruction to the jury and that the court erred in denying their motions for severance. Fox advances an additional contention that as to him, the testimony was inadmissible because there was no independent proof connecting him with the conspiracy. That additional contention will be dealt with separately in the following section.

Under Rule 801(d)(2)(E) of the Federal Rules of Evidence a statement made by a coconspirator during the course and in furtherance of a conspiracy is not hearsay is offered against another party to the conspiracy. The admissibility of such statements is dependent on the government's proving the existence of the conspiracy and the involvement with the conspiracy of the party against whom the statement is offered. ⁶

Appellants' claim of error goes to the ultimate question of admissibility, in connection with which they rely on Krulewitch v. United States, 336 U.S. 440, 69 S.Ct. 716, 93 L.Ed. 790 (1949); Lutwak v. United States, 344 U.S. 604, 73 S.Ct. 481, 97 L.Ed. 593 (1953); and Grunewald v. United States, 353 U.S. 391, 77 S.Ct. 963, 1 L.Ed.2d 931 (1957). In Krulewitch the Supreme Court made clear that to be admissible, hearsay statements of coconspirators (as they were called ⁷), must be made in furtherance of the conspiracy charged and the conspiracy must be an ongoing conspiracy when the statement is made. It rejected the government's contention that an implied conspiracy to conceal survives the main conspiracy and that statements made in furtherance of such continuing implied conspiracy are admissible.

Lutwak reaffirmed the Krulewitch rule and in so doing made the following statement which supports appellants' view of the law:

Relevant declarations or admissions of a conspirator made in the absence of the coconspirator, and not in furtherance of the conspiracy, may be admissible in a trial for conspiracy as against the declarant to prove the Declarant's participation therein. The court must be careful at the time of the admission and by its instructions to make it clear that the evidence is limited as against the declarant only. Therefore, when the trial court admits against all of the conspirators a relevant declaration of one of the conspirators after the conspiracy has ended, without limiting it to the declarant, it violates the rule laid down in Krulewitch. Such declaration is inadmissible as to all but the declarant.

Lutwak v. United States, supra at 344 U.S. 618, 73 S.Ct. 489.

Grunewald presented a variation involving the same underlying principle but in connection with a statute of limitations question. The government contended that a continuing agreement to conceal could extend the duration of a conspiracy for statute of limitations purposes. The court rejected the contention on the authority of Krulewitch and Lutwak. Clarification of the rule as it...