Vennes v. An Unknown Number of Unidentified Agents of U.S., 93-1737

• Decision Date: 16 June 1994
• Docket Number: No. 93-1737,93-1737
• Citation: 26 F.3d 1448
• Parties: -5144 Frank E. VENNES, Jr., Plaintiff-Appellant, v. AN UNKNOWN NUMBER OF UNIDENTIFIED AGENTS OF THE UNITED STATES of America, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1448

26 F.3d 1448

74 A.F.T.R.2d 94-5144

Frank E. VENNES, Jr., Plaintiff-Appellant, v. AN UNKNOWN NUMBER OF UNIDENTIFIED AGENTS OF THE UNITED

STATES of America, Defendants-Appellees.

No. 93-1737.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 17, 1993.

Decided June 16, 1994.

Irvin Nodland, Bismarck, ND, argued, for appellant.

Jonathan A. Wasserman, Washington, DC, argued (Jonathan S. Cohen, appeared on the brief), for appellee.

Before LOKEN, Circuit Judge, HEANEY, Senior Circuit Judge, and HANSEN, Circuit Judge.

LOKEN, Circuit Judge.

After pleading guilty and nolo contendere to money laundering, firearm, and drug offenses and serving a lengthy prison sentence, Frank E. Vennes, Jr., commenced this action against unnamed federal agents seeking damages in excess of $10,000,000 under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). Vennes alleged that the agents had conspired to violate his rights under the Fourth, Fifth, Sixth, and Eighth Amendments by coercing and entrapping him into committing the charged crimes, thereby causing "an illegal indictment" to issue, and by seizing his business through an unlawful Internal Revenue Service ("IRS") jeopardy assessment. The district court ¹ dismissed Vennes's claims against the IRS agents, concluding that his remedies under the Internal Revenue Code preclude this type of Bivens action. The court granted summary judgment in favor of the remaining defendants on the ground that Vennes "has had his day in court, and on that day entered pleas of guilty or nolo contendere to the charges arising in part from the allegedly coerced activity." Vennes appeals. We affirm.

I.

In August 1986, IRS agents investigating suspected money laundering by certain North Dakota car dealers were told that Vennes, a Bismarck pawnshop owner, had made numerous trips to Switzerland and might have experience in transferring funds to a foreign country. An undercover agent, posing as a Chicago investor, contacted Vennes and asked for help in transferring cash abroad. Vennes later admitted that in the next three months he and his codefendants received $370,000 from the undercover agent and transferred it, minus their substantial commissions, to the Bahamas, the Isle of Man, and Switzerland without complying with federal currency transaction reporting laws. In the last transaction, Vennes personally delivered $100,000 to Switzerland, where his associates lost or stole it.

In May 1987, Vennes was charged in three indictments with numerous money laundering, firearm, and drug offenses. Acting on the advice of his attorney, whom he now accuses of ineffective assistance, Vennes entered into a plea agreement under which he pleaded guilty to one count of the money laundering indictment, and also pleaded nolo contendere to one count of illegally selling a firearm in violation of 18 U.S.C. Sec. 922(b)(3) and to an information charging that he used a telephone to facilitate distribution of cocaine in violation of 21 U.S.C. Sec. 843(b).

At the change-of-plea hearing, the district court specifically questioned Vennes and counsel about the unusual nolo contendere pleas. Defense counsel explained that Vennes was "prepared to defend himself on the basis of entrapment [and] outrageous government conduct" but wished to plead no contest because those defenses are "extremely difficult" to prove. The Assistant United States Attorney responded that the government had not insisted on a plea of guilty because Vennes "could make a fair case" that he entered into the illegal firearm and drug transactions in an attempt to recoup $100,000 for the undercover agent, whom Vennes feared was an organized crime figure. The district court accepted these pleas after confirming that they were knowing and voluntary, that Vennes was in fact guilty of the money laundering charge, and that he understood that his nolo pleas would be treated at sentencing as pleas of guilty.

At sentencing, Vennes's attorney stated that the presentence report was complete, fair, and "thoroughly professional." He further stated that he was not "in any way indicating that these government agents acted in an improper fashion," but urged that Vennes be sentenced to only two years in prison because he became "involved in the drugs and the guns" out of fear that he and his family would suffer if he did not recoup the $100,000. After a lengthy hearing, the district court sentenced Vennes to five years in prison, three years for the money laundering offense and one consecutive year for each of the other two offenses.

Vennes did not appeal, but he later sought post-conviction relief under 28 U.S.C. Sec. 2255. His first petition alleged ineffective assistance of counsel because his trial attorney did not seek dismissal of the indictments on the grounds of entrapment and outrageous government conduct. We denied relief, concluding:

Although Vennes now alleges that counsel was ineffective, he has failed to show any prejudice resulting from counsel's alleged deficiencies. In particular, Vennes does not make any showing that he would have been willing to stand trial on any of the multitudinous charges on which he was indicted. We observe that his plea bargain resulted in the dismissal of many of those charges and in a sentence that is far lighter than the maximum sentence for the crimes to which he pled either guilty or no contest.

Vennes v. United States, 871 F.2d 1091 (8th Cir.1988). In a second Sec. 2255 petition, Vennes claimed that the government breached his plea agreement because information he provided while cooperating with federal investigators found its way into his presentence report, which ultimately affected his eligibility for parole. The district court denied this Sec. 2255 petition after an evidentiary hearing, and we affirmed. Vennes v. United States, 915 F.2d 1577 (8th Cir.1990).

Following his release from prison, Vennes commenced this Bivens action, seeking damages from unnamed ² agents for entrapment, outrageous conduct, and willful violation of the tax laws. The government appeared and moved to stay discovery--a motion Vennes did not contest--and to dismiss the complaint on grounds of failure to state a claim and qualified immunity. In response, Vennes alleged that he had personally delivered $100,000 to Switzerland for the undercover agent, where this money was lost or stolen. According to Vennes, the undercover agent then advised that he was not a Chicago investor, but a member of the Chicago underworld, and Vennes must recoup this loss or the Mafia would kill him and his family. Prompted by these threats, Vennes agreed to sell firearms illegally to undercover agents of the Bureau of Alcohol, Tobacco and Firearms, and to sell cocaine to undercover agents of the Drug Enforcement Administration. He claims that, as a result of this outrageous government conduct, he was prosecuted and imprisoned and lost his business, his reputation, and, due to a divorce, his family.

The district court granted summary judgment dismissing the claims against the criminal investigators on the ground that those claims were barred by Vennes's pleas of guilty and nolo contendere in his criminal case. The court dismissed the claims against the IRS agents involved in the tax levy on the ground that such Bivens claims are precluded by the remedies provided in the Internal Revenue Code. We review both aspects of the district court's decision de novo. See Concerned Citizens of Neb. v. United States Nuclear Regulatory Comm'n, 970 F.2d 421, 425 (8th Cir.1992). The government also argued to the district court, and asserts on appeal, that all defendants are entitled to qualified immunity because they did not violate "clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). The district court did not reach this issue, and neither do we.

II.

The unique issue raised by this appeal is whether the district court erred in granting summary judgment dismissing Vennes's claim that the undercover agent's alleged death threats were outrageous government conduct that violated his due process rights. Vennes clearly has no procedural due process claim. In response to the three 1987 indictments, he raised the defenses of entrapment and outrageous conduct and then bargained away those defenses, exchanging guilty and nolo contendere pleas for a relatively light sentence. He never moved to withdraw those pleas and did not appeal his conviction or sentence. His Sec. 2255 petition alleged ineffective assistance of counsel and outrageous government conduct; the district court denied that petition on the merits, and we affirmed.

Vennes instead argues that the agent's outrageous conduct violated his right to substantive due process, and that this claim survived his guilty plea and unsuccessful Sec. 2255 petition. Vennes relies primarily on our decision in Gunderson v. Schlueter, 904 F.2d 407 (8th Cir.1990). In Gunderson, a resort owner acquitted of criminal charges filed a 42 U.S.C. Sec. 1983 due process claim against a state conservation officer who allegedly contrived the criminal case. We affirmed the grant of summary judgment dismissing this claim but observed that, "we may some day be presented with a situation in which the conduct of law enforcement agents is so outrageous that due process principles [are violated]." 904 F.2d at 410, quoting United States v. Russell, 411 U.S. 423, 431-32, 93 S.Ct. 1637, 1642-43, 36 L.Ed.2d 366 (1973). ³ Vennes argues that this is the "some day" foreshadowed in Gunderson --if he can prove that "[a]gents of the federal government threatened to kill Frank Vennes and his family if he refused to engage in criminal conduct, so he did," he will be entitled to damages under Bivens and Gunderson. Like the district court, we disagree. There...