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United States v. Smith

December 4, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
JOHN L. SMITH, DEFENDANT.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

Following a jury trial in United States v. Smith, No. 03 CR 133 in November of 2004, defendant John L. Smith ("Smith") was found guilty of several charges involving conspiracy and possession of cocaine with intent to distribute, money laundering, tax evasion, and filing false tax returns. He received a sentence of 292 months, with shorter terms on lesser counts to run concurrently. Following a voluntary dismissal of his appeal to the Seventh Circuit, Smith filed a motion to vacate, set aside or correct his sentence under 28 U.S.C. § 2255 (2007), contending that he received ineffective assistance of counsel during his trial because his trial counsel (1) failed to object to the government's case; (2) coerced Smith into not testifying on his own behalf; (3) failed to investigate and call certain defense witnesses; and (4) failed to object to the government's Santiago proffer and Rule 404(b) evidence. I deny Smith's motion.

I.

Smith was indicted in February of 2003 on multiple counts of conspiracy to distribute cocaine (in a conspiracy running from 1995 to 1998), money laundering stemming from his purchase of a luxury automobile, and tax evasion and filing false tax returns for the years 1997, 1998 and 1999. The indictment alleged that while Smith was a sworn police officer with the Chicago Police Department ("CPD"), he stole cocaine from the Evidence and Recovered Property Section ("ERPS") and entered into a conspiracy with a local drug dealer to distribute the cocaine. The indictment further alleged that Smith falsely claimed winnings from gambling in efforts to legitimize his income from the narcotic sales.

The testimony at trial included the following:*fn1 During the time that Smith was a police officer assigned to ERPS, it was discovered that 20 kilograms of cocaine had been stolen from the department. Subsequent investigations and audits by the CPD and FBI revealed that other large quantities of cocaine had also gone missing during the time that Smith worked at ERPS.

The government presented evidence of lax security at ERPS and ways that Smith, who worked alone on weekends, would have had access to large amounts of cocaine, and would have been able to get the drugs out of the facility. Sergeant Dana Starks (currently the acting superintendent of the CPD)) testified that on one occasion he saw Smith with a large black duffle bag at the door of the vault which held the drug exhibits. When Sparks questioned Smith, Smith stated he was using the duffle bag to carry his lunch.

Further evidence was presented that between 1995 and 1998 Smith supplied cocaine to William James a/k/a Fats ("James").*fn2 During this time period, a number of people helped James sell cocaine and "cook" it to produce and sell cocaine base. Several co-conspirators testified and described how Smith supplied James with cocaine. James would announce that he was nearly out or out of cocaine, and would ask everyone to leave the home. A man named "Smitty," identified by several of the co-conspirators at trial as Smith, would arrive, frequently carrying a black bag that appeared full. Smith and James would meet alone, and after Smith left there would be cocaine in the house that the co-conspirators would cook into crack cocaine and bag for resale. Other testimony revealed Smith's participation in the drug conspiracy. A number of co-conspirators testified that James or another co-conspirator told them that Smitty was a police officer who worked in the evidence room, and one co-conspirator testified that James himself told her that he was able to take drugs from ERPS. One co-conspirator testified that she saw zip-lock bags containing powder cocaine inside of Smith's duffel bag, and saw James hand Smith bundles of cash. Four co-conspirators made a positive in-court identification of Smith as "Smitty" and also identified a picture of a blue convertible Ford Mustang as the car that Smith would drive to James's house. The government presented evidence that the same car was registered to Smith and his wife, and that during a search of Smith's home, the police vacuumed the car; testing of the vacuumed material revealed cocaine residue. Testing also revealed cocaine residue in a safe located in Smith's closet. In addition, evidence showed that checks totaling $12,000 that one co-conspirator gave to James with the payee line blank ended up made out to Smith, endorsed by Smith, and deposited into his bank account. One co-conspirator also testified that she heard James and Smith discussing "cooking" cocaine.

The government also presented testimony from Jason Rauner ("Rauner") a government witness who at the time of his testimony was in custody for narcotics convictions, who testified that he sold cocaine with Smith's nephew Terry Smith ("Terry") from 1992 until 1996. His testimony was admitted under Federal Rule of Evidence 404(b). He testified that he met Terry in 1989 or 1990 and purchased cocaine from him until about 1996. He testified that although he had been purchasing smaller amounts of powder cocaine from Terry at first, around late 1994 or 1995 he began purchasing half kilogram and kilogram quantities of cocaine from Terry, and made numerous purchases in this amount. He said that during this time he eventually learned that Terry's supplier was Smith; Rauner became suspicious of cocaine he was receiving from Terry that was in a powder form, which is unusual because cocaine purchased off the street is usually solid. Rauner was suspicious that the cocaine he was purchasing might have been "hit" or "played with," but Terry reassured him that the cocaine was coming from his uncle Smith, a police officer who worked in the evidence room, and that Smith was stealing the cocaine out of the evidence room. Terry told him that the cocaine came back from the testing lab in powder form. Rauner also testified that on one occasion he went to Terry's house to pay Terry, and Smith came over and he saw Terry give Smith the money that he had just given Terry. He also testified that in 1995, when Terry was in jail on a drug charge, he visited Terry and Terry told him that Smith would call him directly about money that Rauner owed Terry. Smith then called Rauner and told him that he needed to collect the money Rauner owed Terry. Smith directed Rauner to deliver the money to a friend of Smith's. Later, Smith called Rauner and told him Rauner had not paid enough, but Rauner never paid him any additional money.

The government also presented "lifestyle" evidence about Smith's spending habits from 1996 to the time of trial. Among other things, Smith purchased a $177,000 Rolls Royce and leased two other high-end cars for himself and his wife. He bought a new home and an apartment complex. A search of his home found furs, high-end electronics, and expensive jewelry. Three women testified that they had relationships with Smith, during which time he bought them gifts, including cars, jewelry, and appliances and took them on trips to Las Vegas where he would give them cash for gambling. One woman testified that on one occasion when she was at Smith's residence she saw a chunk of cocaine in his possession.

Other evidence demonstrated that Smith began gambling heavily around 1996 and claimed large net winnings on his tax returns. Records from casinos were introduced, and included all of Smith's activities while he used casino "players' cards" as he gambled ("tracked play"), as well as W2-G forms, which were generated every time Smith won more than $1,200 playing slot machines. Those records revealed that Smith lost significant amounts of money during his tracked play. The government produced evidence that Smith could not have won the amount of money he claimed on his tax returns during play in which he did not use players' cards ("untracked play"). W2-G forms which had been generated during Smith's untracked play were compared to W2-G forms that had been generated during his tracked play. The comparison showed the percentages of time that Smith engaged in tracked play and the amount of time he engaged in untracked play. An expert in gaming testified that Smith would have had to win hundreds of times in amounts under $1,200 during his untracked play, and that this was statistically impossible. Gaming experts refuted the possibility that Smith could have had a "system" for consistently winning by playing slot machines. They testified that statistically, a gambler would inevitably lose at slots and there was no strategy or theory that someone could utilize to manipulate slot machines. A "net worth" analyst further testified that a review of Smith's assets, liabilities and expenditures during the relevant years shows that Smith's taxable income far exceeded what Smith reported on his tax returns for the years in question.

Smith presented testimony from his brother, who testified that when his and Smith's sister was dying she asked Smith to look after her son Terrence Smith, who was receiving $87,000 in proceeds from an insurance policy and who she was concerned was irresponsible. Smith also presented testimony from his friend, a former police officer and former partner of Smith's for nine years, who testified that he went gambling with Smith approximately 12 to 14 times after 2000. He testified that he saw Smith playing high-value slot machines, and that when Smith went into a casino he would walk through to "see if anyone was being paid off by the employers there, and if no one was being paid off, then he wouldn't gamble." After this testimony the government presented additional testimony from someone who reviewed Smith's bank records, who stated that a check of roughly $87,000 made out to Terence Smith by Continental Assurance Company was deposited into Smith's bank account, and that about three weeks later Smith withdrew $65,000 from the account via a cashier's check and used it to purchase an apartment building. Smith also presented a stipulation that one co-conspirator testified to the grand jury in this case that no one in James's house other than James sold cocaine.

Following this testimony, both sides rested. The government's closing argument summarized much of the evidence above, arguing that it established beyond a reasonable doubt that Smith stole drugs from ERPS, participated in a conspiracy with James and others to possess and sell large amounts of drugs, laundered certain amounts of money from the drug transactions to purchase his Rolls Royce, lied about his gambling winnings to hide his winnings, and filed false tax returns and evaded paying his taxes.

Defendant's counsel's closing argument began by discussing evidence of how ERPS was in disarray, and suggested that any ERPS employee could have stolen from ERPS, that the missing drugs could have been accidentally destroyed or otherwise lost, and that it was very probable that ERPS employees cleaning up spilled drugs could have had trace amounts of those drugs end up on their hands and clothes and then elsewhere in their homes and personal property. She argued that all of the co-conspirators who testified were untrustworthy people who lied to investigators and the grand jury, and who were taking large amounts of drugs during the time period about which they testified. She finally argued that the jury could discount the testimony from the gambling experts about the impossibility of Smith's gambling strategy, contending it was possible Smith did play at certain machines which could lead to winnings in the amounts he claimed.

The jury convicted Smith on eight counts of the indictment. He was sentenced to 292 months for the conspiracy charge, with concurrent sentences of 120 months for money laundering, 60 months as to each of three tax evasion charges, and 36 months as to each of three charges of filing false tax returns. Smith filed a notice of appeal, but voluntarily dismissed the appeal without briefing. Smith's ยง 2255 motion ...


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