Monthly Archives

May 2016

Former Baggage Handlers Indicted on Federal Drug Charges for Using Credentials to Bring Cocaine Past Security

By | The Blanch Blog LA | No Comments

3 individuals were arrested on federal charges of conspiracy for intent to distribute cocaine under 21 US 846, 841 a (1). Jet Blue flight attendant Marsha Gay Reynolds was caught with approximately 70 lb of cocaine during a secondary TSA random check at LAX airport. She tried to run up the escalator with her shoes off after they attempted to escort her to a secure area for further screening. She attempted to call someone on her cellphone while speaking in a foreign language as soon as she was informed that she was randomly chosen for a secondary TSA screening.

Also involved in this scheme are Adrian Ponce and Alberto Preciado Gutierrez. Ponce admitted to driving Gutierrez to the airport, whereby as part of a scheme involving illegal drug transport, they would pay a third party courier (a ticketed flight passenger) approximately $ 1500.00, and split the remaining money for transport of samples of approximately 1 kilo of cocaine. In December 2015, Gutierrez was caught with this amount in the terminal bathroom attempting to make an exchange with a third party courier. After being read their Miranda rights, they both provided statements revealing the scheme of transporting coke using commercial airlines. It is not uncommon for Transnational Criminal Organizations (TCO’s) to use air travel to smuggle drugs by paying off airport or airline personnel with access to sensitive areas of the airport and aircraft. Surveillance revealed the extent of these operations, with Preciado caught on video carrying a backpack containing goods in secure areas of the airport at times after his shift was done. The scheme was intended to provide a sample to customers, and if they were satisfied, the plan was to provide more drugs via hidden compartments of a bobtail truck.

Interesting to note, Ms. Marsha Reynolds is brought under separate complaint charges than Mr. Preciado. This may be a government strategy whereby there are cooperating witnesses and informants that may have impacted the decision to try the cases separately. In a multiple defendant case, it is possible that the co-defendants may be charged in the same formal charging documents thereby they would have a joint trial. In other cases, it may even be better for a defendant if other defendants are charged separately and proceed to trial in separate matters. This is called a motion to sever the trial, sometimes filed by defense attorneys.

Although Ms. Marsha Reynolds was arrested in April of 2015, it appears that the federal government had been investigating this type of scheme using the airport and airport employees since at least December 2015. Agents in charge of investigation are usually highly trained and have experience and certification through International and National narcotics interdiction, as well as professional experience in the commercial aviation industry. Transnational Criminal Organizations are constantly evolving to use different methods to transport and distribute drugs across the country.

Some defenses may include factual basis such as various degrees of participation in a conspiracy and various degrees of intent to distribute. This may be typically called a mistake of fact defense or factual impossibility. The difference is that it may be argued that a defendant made a mistake and therefore did not have the appropriate intent to commit the crime charged, whereas mistake of law defenses may include situations where the crime itself was impossible to carry out, even if the accused had the requisite intent.

US government seized more than $20 million in largest commercial fraud scheme ever in West Coast

By | The Blanch Blog LA | No Comments

A massive shipment of apparel from Hong Kong was seized for being illegally imported into the US.  Commercial smuggling has greatly impacted US importation revenues and enforcement efforts have increased to try to stop undermining the US economy. The scheme involved false documents to customs that were fabricated to avoid import duties and quotas. Estimated losses in revenue are in excess of $600 million.

The documents claimed that the goods were being sold to companies in Mexico. In fact, they were to be distributed to customers in the United States. An owner of a Los Angeles based trucking company was federally charged in connection with this case and pled guilty in 2008. There are four other defendants that remain at large for making false customs declarations and smuggling.

US Title 18 Section 545 prohibits smuggling of goods that should have been declared at customs. It also penalizes conduct for fabricating documents in connection with bringing in the smuggled goods.  The specific intent element of the crime is “knowingly” or fraudulently. It must be proven that the defendant knew the object was intended for export contrary to the laws of the United States.

Although the maximum term of imprisonment on this count may be 10 years, there may be additional sentencing enhancements based on the type, value and amount of the goods and fines typically range in the millions. Furthermore, the products can be permanently seized and confiscated by the government.

Collaboration among enforcement agencies such as ICE (Immigration and Customs Enforcement), Customs and Border Patrol, Homeland Security Investigations, and the US Coast Guard have led to zealous enforcement. In this particular case, these agencies seized over $20.5 million in assets. Some of the seizures included 100,000 square foot warehouses in Commerce and other businesses in Los Angeles and Texas.

There is an entire asset forfeiture branch of ICE that is dedicated to finding assets that are the proceeds of the smuggling or were used to facilitate breaking the federal smuggling laws. Their primary goal is to deter criminals from profiting from the property used in connection with the crime.  Once seized, the property is equitably shared with other local branches of government and internationally to facilitate law enforcement cooperation.

There has been noted asset forfeiture abuse and defense attorneys at the Blanch Law Firm are committed to fighting inequitable or illegal asset forfeiture actions. The government can seize a person’s property without notice or hearing by moving ex parte by merely showing probable cause that the property was involved in a crime. The property itself does not have to be illegal, it could be the proceeds of a crime or somehow facilitates the crime. The property may even end up in the hands of someone not even alleged to be connected to the criminal activity.  How broad is this reading of what constitutes the instruments or proceeds of a crime?

The government’s ability to extract fines is limited by the Excessive Fine Clause. In certain instances, an excessive fine or forfeiture violates the 8th Amendment. Indeed the forfeiture must be proportionate to the gravity of the offense. See United States v. Bajakajian, 524 U.S. 321 (1998) (failure to declare currency in excess of $10,000 did not justify forfeiture of $357,000 in cash that an international passenger was caught by Customs with when departing the US).

In fact, since that case there have been subcommittees established for oversight of federal asset forfeiture which can be administrative, civil or criminal. Limitations set by the federal government and arguments made by attorneys can help regulate and ensure that property seizures remain equitable and not excessive or illegal under the laws.

Seven California Residents Charged with Operating Boiler Room Mortgage Loan Modification Scheme

By | The Blanch Blog LA | No Comments

Seven defendants arrested in California for allegedly falsely promising to provide home mortgage loan modification services in exchange for upfront fees ranging from $2,500 to $4,300. The indictment alleges that these individuals operated under a number of false aliases and under the names of at least 30 different California- based companies targeting individuals who had a rough time repaying their home mortgage loans. The boiler room scheme involved cold calling and impacted Connecticut residents and across the US. The alleged victims of this scheme were instructed to mail their checks to addresses set up in states other than California. One of the defendants already pled guilty to conspiracy to commit wire fraud. Each of the named defendants is facing a maximum term of 20 years per count with certain sentencing enhancements if convicted.

The mortgage loan modification scheme involved false misrepresentations of the following: home owners were already preapproved for loan modifications on amazing terms and that these terms had already been negotiated with the homeowners’ lenders. The alleged victims were also told they qualified to receive assistance from government mortgage relief programs (when in fact many of them did not) and that they would receive a full refund in they were not able to obtain a favorable mortgage loan modification.

The individuals indicted are also facing sentencing enhancements for participating in “telemarketing” fraud and what is known as “vulnerable victim enhancement.” Under USSG Section 3A1.1 (b),  a sentencing enhancement increase of 2 levels is mandated if the defendant knew or should have known that a victim of the offense was a “vulnerable victim”.

What is a vulnerable victim? It’s a person who is “unusually vulnerable” due to age, physical or mental condition, or is otherwise particularly susceptible to criminal conduct.”

Defenses in these types of enhancement may explore whether there was in fact a connection between the victim’s vulnerability and the crime’s ultimate success. The burden of proof on the government is that they must prove that the defendant knew or should have known that a victim of the offense was vulnerable, but not necessarily in every case must the defendant know of the vulnerabilities.

It is important to note that the government cannot just presume vulnerabilities among broad classes of victims. This is incorrect and disfavored as a basis for the enhancement. Typically it must be shown that the victims’ vulnerability was known from the outset, or learned of in the course of the conduct deemed to be fraud.  An offender must have prior knowledge of his victims’ vulnerabilities.

Other enhancements faced by defendants could be for responsibility as a manager/ supervisor, or for mass marketing, or where the loss exceeded $1,500,000.

The government seeks to protect “vulnerable victims” such as senior citizens or as in this case those alleged over the age of 55, because they are most likely to own their own home, they consist of a generation that tends to be more polite or trusting and they are less likely to report fraud. Moreover, it may take this segment of the population more time to discover the fraud and when they do, they make poor witnesses because of deficiencies in memory.

Multiple Defendant Indictment in Tunnel and Drug Seizure, San Diego , CA

By | The Blanch Blog LA | No Comments

Multiple Defendant Indictment in Tunnel and Drug Seizure, San Diego , CA

It may not be common knowledge that using a tunnel for illegal drug trafficking is a separate federal crime in and of itself. The crime carries with it a maximum sentence of 20 years under 18 US Code Section 555.

–          6 Defendants indicted in connection with building, financing and maintaining a 415 yard tunnel across the border to facilitate drug trafficking.

–           Defendants were using a tunnel that led from El Sarape Restaurant in Mexicali to a  2 bedroom house in Calexico, CA.Agents discovered a hole in the floor covered with tile to conceal the shaft underground.

– The tunnel is located about 300 yards north of the international border

In addition to charges for conspiracy to distribute over 1000 kilograms of marijuana (mandatory minimum of 10 years in federal prison), the crime involving the use of an international tunnel carries a maximum sentence of 20 years in prison

–          Defendants are also charged with maintaining and using the restaurant and 2 bedroom house as drug related premises. These charges also carry a maximum penalty of 20 years in prison.

–          Conspiracy is a specific intent crime. All the Defendants must be found to have been in agreement with respect to criminal conduct.

–          In practice, an indictment may name individuals that may not have actually physically handled or possessed drugs.

–          To succeed in a jury trial conviction, the prosecutor must prove the extent of the agreement among the named defendants and the understanding among them. This relates to the specific element of intent in the crime of conspiracy.

–          Only 5 of the defendants are charged with using a narcotics tunnel

–          The charges allow for punishment for “recklessly disregarding the use of a tunnel.” That means there had to be some level of knowledge or awareness that a tunnel was being used for this illicit purpose and that these individuals recklessly disregarded that information (or turned a blind eye).

–   Affirmative defenses can also include that they had insufficient involvement and knowledge about the tunnel and how it was used to be deemed “recklessly disregarding” any fact.

–   The question may turn on whether a reasonable person in that position would have known or should have known that a tunnel was used in illegal activity such as moving drugs across the border between this “restaurant” and the 2 bedroom house and whether these individuals knew that these premises were being used as a “front”.

–          Evidence of more than 1 ton of marijuana was recovered. A defense strategy may be employed to attack the conspiracy allegations which may undermine the determination that all Defendants should be charged with the entire amount of drugs recovered.

–          Affirmative defenses in conspiracy drug charges can be that the Defendants did not have the same agreement, understanding, or knowledge about the illegal conduct or drug trafficking.

–          Tunnels have been used to traffic humans and drugs. With strong implications for border security, the government has tightened its enforcement and prosecution of these crimes.

–          Only one defendant is alleged to be responsible for the conspiracy to construct and finance this international tunnel. It will be interesting to see how the complaint may be amended and what parties may be added as defendants as the investigation progresses and other defendants may choose to cooperate with the government in hopes of a favorable plea bargain.