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United States v. Schleining

United States District Court, N.D. Illinois, Eastern Division

April 6, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
KRISTY SCHLEINING, Defendant.

MEMORANDUM OPINION AND ORDER

ELAINE E. BUCKLO, District Judge.

Kristy Schleining ("Defendant") has been charged with four counts of wire fraud for allegedly misappropriating funds that her family's trucking business, a U.S. Postal Service ("USPS") contractor, was legally required to contribute to an employee health insurance plan.

Defendant has moved to suppress evidence seized from the business and her residence in April 2009 on the grounds that USPS agents exceeded the scope of the business search warrant and failed to establish probable cause to seize healthcare records from her home. Alternatively, Defendant requests a hearing under Franks v. Delaware, 438 U.S. 154 (1978), to determine whether the underlying warrant applications contained material misstatements or omissions that show a reckless disregard for the truth.

The Government counters that USPS had consent to conduct both searches and obtained warrants simply as a precautionary measure. In the alternative, the Government defends the manner in which USPS agents obtained and executed the warrants and opposes a Franks hearing.

I deny Defendant's motion to suppress and her request for a Franks hearing for the reasons stated below.

I.

The following facts are undisputed unless noted otherwise. In 2006, Defendant became the president of J.N. Moser Enterprises, Inc. (henceforth, "Moser"), a trucking company with offices in Aurora and Montgomery, Illinois that went out of business on February 1, 2009. Defendant's widowed mother, Dorothy Moser, owned the business. Defendant's husband, Don Schleining ("Don"), was Moser's vice president; her son, Josh Schleining ("Josh"), was Moser's transportation manager; and her daughter-in-law, Tammi Schleining ("Tammi"), was Moser's human resources manager.

Moser signed twenty-seven contracts with the USPS between 2003 and 2008 to transport mail between various locations in the Midwest. As a condition of being a USPS contractor, Moser was required to participate in USPS's fuel management program. Under this program, USPS issued "Voyager" credit cards to Moser to purchase a specified amount of fuel to perform each contract. USPS retained the right to examine and audit Moser's records relating to fuel and other costs it allegedly incurred in performing each contract. Between 2005 and 2007, Defendant personally signed eleven contracts with a provision allowing USPS to examine and audit Moser's cost-related records.

In January or February 2009, around the time Moser went out of business, the USPS Office of Inspector General ("OIG") received a complaint from Robert Saxton ("Saxton"), who oversaw mail hauling contracts for the Great Lakes region. Saxton reported that his office recently terminated eight of Moser's contracts because of poor performance. According to Saxton, Moser owed USPS approximately $705, 000 for fuel expenses that exceeded the contract allowances. A former Moser employee also reported to Saxton that the company had used Voyager cards for fuel expenses unrelated to the USPS contracts.

Based on Saxton's complaint, OIG started investigating Moser's use of the Voyager cards. In connection with this investigation, OIG interviewed the following witnesses on March 25, 2009:

(1) Susan Alsip ("Alsip"), a former Moser dispatcher who said that the company used Voyager cards for non-USPS contracts and for personal vehicles based on the assumption that Moser could simply reimburse USPS for any amounts exceeding the contract allowances. S ee Def.'s Ex. I.
(2) Samantha Pilgrim ("Pilgrim"), Alsip's sister and a former Moser employee who was responsible for making sure that the company's fuel purchases matched the contractual allowances. See Def.'s Ex. G. Pilgrim added that every Moser vehicle, including trucks used for non-USPS contracts and personal vehicles, had a Voyager card. Id. at 2.
(3) James Bailey ("Bailey"), a former Moser driver who stated that his dispatcher, Gary "Skip" Block, instructed him to use a Voyager card while performing a non-USPS contract. See Def.'s Ex. H. Bailey also said that every vehicle in Moser's fleet had a Voyager card assigned to it. Id. at 2.
(4) Edwin Cardona ("Cardona"), a former Moser driver who provided little information about the company's use of Voyager cards, but complained that Moser had removed money from the ...

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