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United States v. Smith

United States Court of Appeals, Seventh Circuit

October 24, 2014

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
KERRY L. SMITH, Defendant-Appellant

Argued February 19, 2014.

Page 629

Appeal from the United States District Court for the Southern District of Illinois. No. 4:07-cr-40038-jpg-1 -- J. Phil Gilbert, Judge.

For United States of America, Plaintiff - Appellee: Amanda A. Robertson, Attorney, Office of The United States Attorney, Benton, IL.

For Kerry L. Smith, Defendant - Appellant: Heather L. Winslow, Attorney, Chicago, IL.

Before POSNER, RIPPLE and KANNE, Circuit Judges.

OPINION

Page 630

Ripple, Circuit Judge.

Kerry L. Smith was indicted for conspiring to distribute marijuana, in violation of

Page 631

21 U.S.C. § § 841 and 846, purchasing a vehicle with currency derived from an unlawful activity, in violation of 18 U.S.C. § 1957; concealing information with the intent to defraud the Social Security Administration, in violation of 42 U.S.C. § 1383(a)(3); [1] and making false statements on applications for food stamps, in violation of 18 U.S.C. § 1001(a)(2). He signed a proffer agreement and later pleaded guilty to each of those charges. After a sentencing and forfeiture hearing, the district court imposed a forfeiture order that included the forfeiture of eight parcels of real property owned by Mr. Smith. The Government claimed these parcels were proceeds from his illegal activities.

Mr. Smith timely appealed the district court's forfeiture ruling; he contended that, in determining that the properties were subject to forfeiture, the district court had relied improperly on statements that he had made during proffer discussions. We now affirm the district court's judgment. The district court did not err in admitting testimony about Mr. Smith's proffer statements. Furthermore, its determination that the eight properties were subject to forfeiture as proceeds of his drug trafficking was supported by a preponderance of the evidence. In the alternative, the properties are clearly subject to forfeiture as substitute assets.

I

BACKGROUND

A.

Before pleading guilty to the crimes charged in the indictment, Mr. Smith participated in two proffer interviews on May 21 and July 2, 2007. Prior to the beginning of those interviews, he signed a proffer letter. His counsel also signed the letter. The proffer letter set forth the limits on how the Government could use any information that Mr. Smith provided in the proffer interviews. The letter first stated that " no statements or information provided by [Mr. Smith] ... will be used against [him] in any criminal case during the government's case in chief." [2] It explicitly noted, " That is, however, the only limitation on the use the government may make of [Mr. Smith's] statements." [3]

The remainder of the letter discussed various situations in which the Government could use Mr. Smith's proffer statements. It specifically informed Mr. Smith and his counsel that the Government could make derivative use of any information revealed during the proffer sessions:

[T]he government may make derivative use of any information revealed during the proffer. The government may pursue any investigative leads suggested by ... information received ... . Thus, should [Mr. Smith] proceed to trial, the government will not have to prove that the evidence it would introduce at trial is not derived from any statements made by or other information received from [Mr. Smith] during the ... proffer[.][4]

The proffer letter also stated that information he provided could be used against him at trial if he took a position inconsistent with his proffer statements:

[I]f ... [Mr. Smith] were to testify contrary to the substance of his proffer

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statement, or through any manner whatsoever, either personally or through an attorney or other representative, ... present a position inconsistent with the information provided in his proffer statement, the government may use either as evidence in chief, or rebuttal evidence, any statements made or other information provided by [him]. This provision is necessary to assure that no court or jury is misled by receiving information or implications materially different from that provided by [Mr. Smith]. In addition, we want to emphasize that the above-mentioned examples are not totally inclusive of the uses the government may make of ... [the] proffer or discussion.[5]

The letter further provided that Mr. Smith's proffer statements could be presented to the district court during sentencing:

[T]he government has agreed that no ... information provided by [Mr. Smith] during the ... discussion will be used against [him] in any criminal case during the government's case in chief. The government will, however, be free to provide any such information to any United States District Court in the event [he] either pleads guilty or is found guilty... .
[N]o self-incriminating information ... will be used to enhance the Offense Level against [Mr. Smith] except as provided in [Section 1B1.8 of the Sentencing Guidelines]. The government may, however, use any ... information provided by [him] to rebut evidence or arguments at sentencing materially different from any statements made or other information provided by [him] during the ... discussion.[6]

The proffer letter did not recite Federal Rule of Criminal Procedure 11(f) (" Rule 11" ), which states that " [t]he admissibility or inadmissibility of ... a plea discussion[] and any related statement is governed by Federal Rule of Evidence 410" (" Rule 410" ).[7]

During the first proffer session, Mr. Smith admitted that he had trafficked in marijuana and described the quantities and amounts of money typically involved in his transactions. During the second proffer session, Mr. Smith admitted that he had used proceeds from his drug trafficking to purchase real estate and vehicles. Specifically, Mr. Smith told the Government that he had used drug proceeds to purchase real property at 317 Birch Lane, 309 S. Crestview, 605 E. Snider and 1808 W. Freeman in Carbondale, Illinois. He also admitted that his purchases of real

Page 633

property at 501 E. Snider and 1005 E. Cindy in Carbondale, Illinois, were tied indirectly to drug proceeds because those properties were financed in part from sales or loans from property that had been purchased with drug proceeds.

After the proffer sessions, Mr. Smith moved for a substitution of counsel. He wanted to replace his attorney, John Rogers, with new counsel, Beau Brindley. The district court permitted Rogers to withdraw, but denied the request from Mr. Brindley to substitute as Mr. Smith's counsel and to continue an impending trial date. The district court then appointed replacement counsel for Mr. Smith because of his indigence. He subsequently pleaded guilty to all of the charges in the superseding indictment, and the district court entered a judgment of conviction against him.

We overturned that conviction because, by denying the motion to substitute Mr. Brindley and to continue the trial date, the district court had denied Mr. Smith his Sixth Amendment right to choose his counsel. United States v. Smith, 618 F.3d 657, 665-67 (7th Cir. 2010). We remanded with instructions to allow Mr. Smith to withdraw his initial guilty plea. Mr. Smith then retained Mr. Brindley as his counsel and withdrew his earlier plea.

Under the guidance of his preferred counsel, Mr. Brindley, Mr. Smith later entered a new guilty plea to all of the charges in the Government's superseding indictment. He contested, however, Count Six of that indictment, which sought forfeiture of property that the Government alleged was tainted by Mr. Smith's criminal activity. Specifically, in Count Six, the Government charged that " any and all property constituting or derived from any proceeds [Mr. Smith] obtained directly or indirectly as a result of" his crimes was subject to forfeiture; [8] it also specified eight parcels of real property that Mr. Smith owned in Carbondale, Illinois, as subject to forfeiture.[9] Those properties included five properties that Mr. Smith had mentioned during the proffer sessions (317 Birch Lane, 309 S. Crestview, 1808 W. Freeman, 501 E. Snider and 1005 E. Cindy), as well as three other properties that he had not mentioned (111 S. Dixon, 403 N. University and 313 Crestview Lane).

At the forfeiture and sentencing hearing, the parties stipulated that Mr. Smith was responsible for the sale of 399 kilograms of marijuana, sold at $900 per pound. They also agreed that Mr. Smith had two other sources of income during the relevant time: disability income from Social Security and rental income from real estate properties that he owned. The Government ...


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