US v. Schneiderman

• Decision Date: 29 October 1991
• Docket Number: No. 90 Cr. 0656 (RWS).,90 Cr. 0656 (RWS).
• Citation: 777 F. Supp. 258
• Parties: UNITED STATES of America, v. Jerry SCHNEIDERMAN, Jerry Ranallo, Larry Butler and Insertion Advertising Corp., Defendants.
• Court: U.S. District Court — Southern District of New York

777 F. Supp. 258

UNITED STATES of America, v. Jerry SCHNEIDERMAN, Jerry Ranallo, Larry Butler and Insertion Advertising Corp., Defendants.

No. 90 Cr. 0656 (RWS).

United States District Court, S.D. New York.

October 29, 1991.

Otto G. Obermaier U.S. Atty., S.D.N.Y. (Katharine A. Bostick, Asst. U.S. Atty., of counsel), New York City, for U.S.

Richard Ware Levitt, New York City, for defendants Jerry Schneiderman and Insertion Advertising Corp.

Gerald B. Lefcourt, P.C. (Joshua Dratel, of counsel), New York City, for defendant Jerry Ranallo.

Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria (Diarmuid White, of counsel), New York City, for defendant Larry Butler.

OPINION

SWEET, District Judge.

Defendants Jerry Schneiderman ("Schneiderman"), Jerry Ranallo ("Ranallo"), Larry Butler ("Butler") and Insertion Advertising Corp. ("Insertion Advertising") have been charged in a fourteen count indictment with selling and conspiring to sell drug paraphernalia through the services of an interstate conveyance under 21 U.S.C. § 857 and with laundering and conspiring to launder the proceeds of such sales under 18 U.S.C. §§ 1956 and 1957.

The defendants have moved to suppress all evidence seized pursuant to search warrants issued on August 20, 1990, to dismiss the drug paraphernalia charges on grounds that § 857 is unconstitutionally vague, and to dismiss the money laundering charges on grounds that the statute is not violated by their conduct or that it is unconstitutionally vague as applied to their conduct. For the reasons stated below, the motion to suppress is denied. The motion to declare § 857 unconstitutional is granted, and the charges against the defendants are dismissed. The constitutionality of § 1956 and § 1957 is not addressed.

I. The Statute

The statute giving rise to the indictment and the warrants at issue is 21 U.S.C. § 857. It was enacted in 1986 as part of the Anti-Drug Abuse Act of 1986, Pub.L. 99-570, 100 Stat. 3207, in an attempt to stem the flow of drug paraphernalia sales. Hearings Before the Subcomm. on Crime of the House Comm. of the Judiciary on H.R. 1625, 99th Cong., 2d Sess. 16-17 (1986) hereinafter Hearings (statement of Rep. Levine). It was proposed to "help in the effort to end drug abuse by reemphasizing that society continues to oppose any glamorization or acceptance of dangerous drug use." Id. at 18.

Section 857 provides:

(a) Unlawfulness

It is unlawful for any person —

(1) to make use of the services of the Postal Service or other interstate conveyance as part of a scheme to sell drug paraphernalia;

(2) to offer for sale and transportation in interstate or foreign commerce drug paraphernalia;

(3) to import or export drug paraphernalia.

(b) Penalties Anyone convicted of an offense under subsection (a) of this section shall be imprisoned for not more than three years and fined not more than $100,000.

(c) Seizure and forfeiture

Any drug paraphernalia involved in any violation of subsection (a) of this section shall be subject to seizure and forfeiture upon the conviction of a person for such violation. Any such paraphernalia shall be delivered to the Administrator of General Services, General Services Administration, who may order such paraphernalia destroyed or may authorize its use for law enforcement or education purposes by Federal, State, or local authorities.

(d) Definition of "drug paraphernalia"

The term "drug paraphernalia" means any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under the Controlled Substances Act (title II of Public Law 91-513). It includes items primarily intended or designed for use in ingesting, inhaling, or otherwise introducing marijuana, cocaine, hashish, hashish oil, PCP, or amphetamines into the human body, such as —

(1) metal, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured metal bowls;

(2) water pipes;

(3) carburetion tubes and devices;

(4) smoking and carburetion masks;

(5) roach clips: meaning objects used to hold burning material, such as a marihuana cigarette, that has become too small or too short to be held in the hand;

(6) miniature spoons with level capacities of one-tenth cubic centimeter or less;

(7) chamber pipes;

(8) carburetor pipes;

(9) electric pipes;

(10) air-driven pipes;

(11) chillums;

(12) bongs;

(13) ice pipes or chillers;

(14) wired cigarette papers; or

(15) cocaine freebase kits.

(e) Matters considered in determination of what constitutes drug paraphernalia

In determining whether an item constitutes drug paraphernalia, in addition to all other logically relevant factors, the following may be considered:

(1) instructions, oral or written, provided with the item concerning its use;

(2) descriptive materials accompanying the item which explain or depict its use;

(3) national and local advertising concerning its use;

(4) the manner in which the item is displayed for sale;

(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;

(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;

(7) the existence and scope of legitimate uses of the item in the community; and

(8) expert testimony concerning its use.

(f) Exemptions

This section shall not apply to —

(1) any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items; or

(2) any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory.

21 U.S.C. § 857.

The statute was repealed in 1990 and reenacted as 21 U.S.C. § 863. Pub.L. 101-647, § 2401(d), 104 Stat. 4859 (1990). The only difference between the two statutes is in their scope. Section 863(a) drops its predecessor's scheme requirement, compare 21 U.S.C. § 857(a)(1), and applies to all sales of drug paraphernalia, including intrastate transactions. See 21 U.S.C. § 863(a)(1); H.R.Rep. 681, 101st Cong., 2d Sess. (1990), U.S.Code Cong. & Admin.News 1990, p. 6472. The remaining provisions are the same.

II. Prior Proceedings and Factual Background

On August 22, 1990, the Government obtained warrants to search the offices of Insertion Advertising and Central City Restaurant Supply Co. ("Central City") at 132 West 24th Street in Manhattan, to search Schneiderman's premises, and to seize three bank accounts. The warrants were based solely on affidavits supplied by United States Customs Agent Peter Arnone (the "Agent"), and were issued by the Honorable James C. Francis IV (the "Magistrate") and executed that day.

In the affidavits, the Agent swore that, among other things:

(1) He had been a Customs Agent for seven years and had been investigating drug paraphernalia cases for fourteen months.

(2) He had probable cause to believe that Insertion Advertising and Central City were violating drug paraphernalia and money laundering laws.

(3) An investigation showed that Insertion Advertising and Central City were closely intertwined, sharing a common space, phone number, and ownership.

(4) In searches at other locations throughout the United States from January 1987 to the present, documents were found showing involvement by Insertion Advertising in drug paraphernalia sales. (The affidavit summarized several such documents and attached examples.)

(5) All of Insertion Advertising's and Central City's income and moneys in their bank accounts were the fruits of an illegal trade.

(6) Various sums of money were transferred from the companies' accounts to Schneiderman's bank accounts.

(7) Neither Insertion Advertising nor Central City had any legitimate source of income.

Numerous items of alleged drug paraphernalia, as well as business papers, were seized from both premises and from two delivery vehicles parked outside the businesses.

On October 20, 1990, the defendants were named in a fourteen count indictment. The first count charges a conspiracy to violate federal drug paraphernalia and money laundering laws under 18 U.S.C. § 371. The second through sixth counts charge that the defendants used interstate conveyances as part of a scheme to sell drug paraphernalia in violation of 21 U.S.C. § 857(a)(1). The seventh through twelfth counts charge the defendants with selling drug paraphernalia in interstate commerce in violation of 21 U.S.C. § 857(a)(2). Count 13 charges Schneiderman, Ranallo and Insertion Advertising with violating 18 U.S.C. § 1956(a)(1)(A)(i). Count 14 charges Schneiderman and Insertion Advertising with violating 18 U.S.C. § 1957(a).

The present motion was made on March 29, 1991. Oral argument was heard on September 20, and final submissions were received from the defendants on October 11, 1991.

III. The Search Warrants

Defendants challenge the Magistrate's finding of probable cause on several grounds. First, they argue that none of the items listed in the affidavits as drug paraphernalia is per se contraband and that no physical description of any of the items accompanied the affidavits. Second, they attack the Agent's expertise. Third, the defendants point out a number of inconsistencies and falsehoods in the affidavits, namely: that Insertion Advertising and Central City had no other source of income other than that derived from trafficking in drug paraphernalia; that the companies made large sales of drug paraphernalia; that all of Central City's sales consisted of drug paraphernalia; and that water pipes were sold for a drug-related purpose. Fourth, they contend...