U.S. v. Welliver

• Decision Date: 01 October 1992
• Docket Number: No. 91-3794,91-3794
• Citation: 976 F.2d 1148
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Dennis WELLIVER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1148

976 F.2d 1148

UNITED STATES of America, Plaintiff-Appellee, v. Dennis WELLIVER, Defendant-Appellant.

No. 91-3794.

United States Court of Appeals,

Eighth Circuit.

Submitted May 15, 1992.

Decided Oct. 1, 1992.

Sandra L. Dougherty, Omaha, Neb., argued, for defendant-appellant.

Alan L. Everett, Asst. U.S. Atty., Lincoln, Neb., argued, for plaintiff-appellee.

Before McMILLIAN, JOHN R. GIBSON, and BEAM, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Dennis Welliver was charged with a multi-count indictment in connection with the filing of certain accounting reports with the Federal Crop Insurance Corporation (FCIC). A jury convicted him of two counts of mail fraud, in violation of 18 U.S.C.A. § 1341 (West Supp.1992), two counts of making false statements to the FCIC, in violation of 18 U.S.C.A. § 1014 (West Supp.1992), two counts of theft, in violation of 18 U.S.C. § 641 (1988), and three counts of wire fraud, in violation of 18 U.S.C.A. § 1343 (West Supp.1992). Welliver appeals, claiming that: (1) the district court erroneously allowed illegally obtained evidence; (2) the evidence was insufficient to support his conviction; (3) the district court should not have allowed the jurors to question witnesses; and (4) he was the victim of selective prosecution. We affirm the judgment of the district court. ¹

The FCIC, an agency of the United States Department of Agriculture, provides farmers with multiple peril crop insurance through reinsurance agreements with private insurance companies. The private companies sell and service the crop insurance policies, collect premiums, and settle claims. The FCIC reimburses the companies for their administrative expenses and for losses paid out to farmers. Reimbursements are based on monthly reports the private insurance companies are required to compile, certify as "complete and correct," and send to Crop Hail Insurance Actuarial Association. Crop Hail processes the reports for the FCIC, edits them for accuracy, and notifies the company of any errors. Crop Hail creates a monthly accounting report, and sends it to the company, which in turn sends it to the FCIC to receive payment.

Omaha Indemnity Company and Omaha Property and Casualty Company entered into standard reinsurance agreements with the FCIC. Welliver, the sole proprietor of Omaha All Risk Insurance Services in Lexington, Nebraska, was the managing general agent for these companies, and was responsible for conducting all daily transactions with the insureds and the FCIC. Managing general agents are bound by all the FCIC rules and regulations applicable to the reinsured companies themselves.

Welliver was also the sole proprietor of Nebraska Computer and Financial Services, a company that did the accounting and computer work for Omaha All Risk. Terry Anderson was Welliver's director of computer operations. Evelyn Tuma, a computer programmer for Nebraska Computer and Financial Services, created, maintained, and tested computer programs and assisted with various computer operations and Crop Hail transmissions.

In May 1987, Welliver met with Tuma and Anderson to discuss the delayed entry of Omaha All Risk's 1987 premium information into their computer system, which delayed reporting to the FCIC and held up reimbursement. Welliver asked them to "roll over" 1986 premium information and submit it to Crop Hail as current 1987 information. Welliver asked Anderson to maintain a listing of the rolled over policies. Tuma wrote a program and rolled over the policies as Welliver had instructed.

In March 1988, Welliver again met with Tuma and Anderson and discussed "doubling" approximately $80,000 of losses on Crop Hail reports by changing the "seed code." This could be done by running an existing reported loss that had cleared the Crop Hail edits through the system a second time under a different code to report it as a separate, additional loss. Anderson doubled a loss from a California insurance policy, and Tuma also doubled losses at Welliver's direction, including two from Colorado and California policies in April 1988.

In 1988, Gary Diers, a special agent for the Office of the Inspector General of the United States Department of Agriculture, began investigating Omaha All Risk regarding a matter unrelated to this case. He contacted Evelyn Tuma and met with her on May 26, 1988. Diers showed Tuma his badge and a piece of paper listing the penalties for aiding and abetting. He told her she was not in any trouble, she did not need a lawyer, and he simply wanted to ask her some questions about Omaha All Risk. Tuma eventually told Diers about the rollovers and described certain documents at Omaha All Risk that would constitute evidence of the practice. Diers asked Tuma to retrieve these documents for him, but Tuma had reservations. Diers assured her that as long as the documents were not under "lock and key" and were not "something [she] shouldn't be looking at any way," she had a right to obtain them.

Tuma, still unsure about the propriety of taking the documents out of the office, contacted the local county sheriff, who told her that he thought it was within her rights to take the documents. Tuma went to Omaha All Risk and retrieved a number of documents from Terry Anderson's desk drawer, which both she and Anderson used. Tuma also later gave additional documents to Diers. These documents were used to prepare search warrants for Omaha All Risk's Nebraska and Texas offices, which were executed October 25, 1988.

A grand jury charged Welliver and Paul Buchanan Jr., Omaha All Risk's Texas branch manager, with various counts of mail fraud, wire fraud, false statements, theft, and conspiracy in connection with their dealings with the FCIC. At trial, Welliver moved to suppress the records Tuma turned over to Agent Diers. The district court denied the motion, concluding that Tuma was not an agent of the government and Welliver had no expectation of privacy in the documents. The jury acquitted Buchanan, but could not reach a unanimous verdict against Welliver. The district court dismissed the conspiracy count against Welliver and declared a mistrial on the remaining counts.

At his second trial, Welliver again moved to suppress the documents Tuma had taken, and the district court denied the motion. The jury convicted Welliver on all counts. The district judge sentenced Welliver to three years probation and six months of home confinement. He ordered Welliver to perform 600 hours of community service, pay a fine of $23,174.61, and make restitution in the amount of $7,724.87. Welliver filed this appeal.

I.

Welliver argues that the district court erred in denying his motion to suppress the business records ² Tuma seized and all the testimony concerning the records because the seizures violated his Fourth Amendment rights. One claiming a Fourth Amendment violation must show that: (1) he had a legitimate expectation of privacy, and (2) that expectation was invaded by government action. Smith v. Maryland, 442 U.S. 735, 740, 99 S.Ct. 2577, 61 L.Ed.2d 220 (1979).

We first consider whether Welliver had a legitimate expectation of privacy in the records Tuma seized. This is a two-part inquiry: (1) whether Welliver asserted a subjective expectation of privacy, a question of fact; and (2) whether Welliver's subjective expectation is objectively reasonable, a question of law. United States v. Kiser, 948 F.2d 418, 423 (8th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1666, 118 L.Ed.2d 387 (1992) (relying on Smith, 442 U.S. at 740, 99 S.Ct. at 2580, and California v. Ciraolo, 476 U.S. 207, 211, 106 S.Ct. 1809, 1811, 90 L.Ed.2d 210 (1986)). The Supreme Court first enunciated this test in Katz v. United States, 389 U.S. 347, 351, 353, 88 S.Ct. 507, 511, 512, 19 L.Ed.2d 576 (1967).

Under Katz, the first question involves determining whether the person, by her conduct, has demonstrated an actual expectation of privacy, id. at 361, 88 S.Ct. at 516 (Harlan, J., concurring), or sought to preserve something as private. Id. at 351-52, 88 S.Ct. at 511-12. The second question involves deciding whether the individual's asserted privacy interest is legitimate, i.e., "one that society is willing to recognize as 'reasonable.' " Id. at 361, 88 S.Ct. at 516 (Harlan, J., concurring). In United States v. Hendrickson, 940 F.2d 320 (8th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 610, 116 L.Ed.2d 633 (1991), we stated that "[t]he test for legitimacy is not whether an individual chooses to conceal his or her activity, but instead 'whether the government's intrusion infringes upon the personal and societal values protected by the Fourth Amendment.' " Id. at 322 (quoting Ciraolo, 476 U.S. at 212, 106 S.Ct. at 1812). We concluded that this "ultimate question under Katz 'is a value judgment.' " Id. (citations omitted).

The district court relied on two cases involving employees who have turned their immediate employer's business records over to the government: United States v. Ziperstein, 601 F.2d 281 (7th Cir.1979), cert. denied, 444 U.S. 1031, 100 S.Ct. 701 62 L.Ed.2d 667 (1980), and United States v. Miller, 800 F.2d 129 (7th Cir.1986). In Ziperstein, the defendant owned medical clinics that received Medicare and Medicaid funding and two companies that handled the Medicare and Medicaid billing. 601 F.2d at 284. He argued that the district court erred in failing to suppress certain records he claimed one of his employees, a pharmacist, had "stolen" and turned over to the government. ³ Id. at 288. The Seventh Circuit held that the defendant had no legitimate expectation of privacy in the documents. Id. at 289. The court relied on Marshall v. Barlow's, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978), which states that "[w]hat [employees] observe in their daily functions is undoubtedly beyond the employer's reasonable expectation of privacy." Ziperstein, 601 F.2d at 315. The court in Ziperstein reasoned that pharmaceutical prescriptions...