Opinion
Criminal No. 03-315 (1, 3, 5-11) ADM/AJB.
March 11, 2005
William H. Koch, Esq., Assistant United States Attorney, Minneapolis, MN, appeared for and on behalf of Plaintiff.
Katherine M. Menendez, Esq., Assistant Federal Public Defender, Minneapolis, MN, appeared for and on behalf of Defendant Kenneth George Kraft.
Robert D. Richman, Esq., Margulies Richman, PLC, Minneapolis, MN, appeared for and on behalf of Defendant Nancy Lee Kraft.
Robert W. Owens, Jr., Esq., Olive Taber Owens, Bloomington, MN, appeared for and on behalf of Defendant Robert Emil Baudy.
Timothy D. Webb, Esq., and Douglas H.R. Olson, Esq., Rider Bennett LLP, Minneapolis, MN, appeared for and on behalf of Defendant Merle Multhauf.
Timothy R. Anderson, Esq., Law Office of Timothy R. Anderson, Minneapolis, MN, appeared for and on behalf of Defendant Craig Perry.
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
This matter is before the undersigned United States District Judge on multiple objections by the United States of America ("Government") [Docket No. 320], Kenneth George Kraft [Docket No. 325], Nancy Lee Kraft [Docket No. 317], Robert Emil Baudy ("Baudy") [Docket No. 322], Merle Multhauf ("Multhauf") [Docket No. 335], and Craig Perry ("Perry") [Docket No. 327] to Magistrate Judge Arthur J. Boylan's Second Report and Recommendation of February 18, 2005 ("RR II") [Docket No. 316]. On March 7, 2005, oral argument was heard on the parties' respective objections. At that time, the Court ruled orally to adopt the RR II in its entirety and noted that this written Order would follow. The procedural and factual background, described in the RR II, is incorporated by reference for review of the present Objections.
II. DISCUSSION
A. Standard of Review
In reviewing an RR, the district court "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1)(C); see also D. Minn. LR 72.1(c)(2). A district judge "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." Id.
B. Lacey Trafficking Counts
The Government objects to the RR II's recommendation that Counts 22-46 of the Superseding Indictment, alleging felony counts of sale of wildlife as proscribed by 16 U.S.C. § 3373(d)(1)(B) of the Lacey Act, should be dismissed. Under 16 U.S.C. 3373(d)(1)(B), it is a felony if a person:
violates any provision of this Act . . . by knowingly engaging in conduct that involves the sale or purchase of, the offer of sale or purchase of, or the intent to sell or purchase, fish or wildlife or plants with a market value in excess of $350 knowing that the fish or wildlife or plants were taken, possessed, transported, or sold in violation of, or in a manner unlawful under, any underlying law, treaty or regulation.
Counts 22-46 apply to Defendants Troy Hyde, Kenneth Kraft, Nancy Kraft, Hans Lueck, James Rienow, Merle Multhauf, Craig Perry, and Marcus Cook.
The Government contends it has pled the two steps necessary to allege a felony Lacey Act violation. With the exception of Counts 28, 37, 38 and 46, the Government alleges the wildlife was sold in interstate commerce in violation of the Endangered Species Act ("ESA") (Step One underlying offense) and then transported in interstate or foreign commerce in violation of § 3372(a)(1) of the Lacey Act (Step Two overlying offense). In support of its position, the Government argues that the conduct prohibited by § 3372(a)(1) may effectively be substituted for the "violates any provision of this Act" language in § 3373(d)(1)(B). See Gov't's Resp. to Second RR of the Magistrate Judge at 5 [Docket No. 320]. One of the acts prohibited by § 3372(a)(1) is transportation of any wildlife possessed in violation of any law, treaty or regulation of the United States.
Section 3372(a)(1) provides, in relevant part, that it is unlawful for any person:
to import, export, transport, sell, receive, acquire, or purchase any fish or wildlife or plant taken, possessed, transported, or sold in violation of any law, treaty, or regulation of the United States or in violation of any Indian tribal law.
The Government, however, misreads 16 U.S.C. § 3373(d)(1)(B). Regardless of whether conduct prohibited by § 3372(a)(1) may be substituted for the "violates any provision of this Act" language in § 3373(d)(1)(B), the statute clearly states liability only attaches if a person "violates any provision of this Act . . .by knowingly engaging in conduct that involves the sale or purchase of, the offer of sale or purchase of, or the intent to sell or purchase, fish or wildlife or plants with a market value in excess of $350. . . ." (emphasis added). As a result, under the plain text of the statute, only conduct involving "the sale or purchase of, the offer of sale or purchase of, or the intent to sell or purchase," constitutes an overlying violation. Under § 3373(d)(1)(B), only a subset of the conduct prohibited by § 3372(a)(1) gives rise to felony liability. See United States v. Romano, 137 F.3d 677, 677-79 (1st Cir. 1998). This interpretation is supported by the absence of such language in § 3373(d)(2), the Act's misdemeanor provision, and by express inclusion of "transport" as conduct satisfying the predicate part of § 3373(d)(1)(B)'s test.
The Government contends that the agreement for the sale and delivery of endangered or threatened wildlife species in violation of federal law was the predicate act, and the actual acquisition and transportation of the animal constitutes the second element of the Lacey Act violation. However, the Government is unable to cite any controlling authority that the second step must be construed in a fashion broad enough to encompass transportation. As the Ninth Circuit held, "[t]ransportation of wildlife could never be the sole overlying conduct for a felony under this provision." United States v. Fejes, 232 F.3d 696, 702 n. 6 (9th Cir. 2000). In United States v. Carpenter, the Ninth Circuit rejected an interpretation similar to the one proposed by the Government in the present matter. 933 F.2d 748 (9th Cir. 1991). The Government argued that by illegally shooting birds that were feeding on his farm-raised goldfish, Carpenter had "taken" birds in violation of the Migratory Bird Treaty Act and "acquired" the birds in violation of the Lacey Act. Id. at 750. The Ninth Circuit held a violation of the Lacey Act requires two discrete, sequential steps and the Government's interpretation impermissibly "collapse[d] the two steps required by the statute into a single step. . . ." Id. at 750-51. Otherwise, the court noted, the Lacey Act would simply duplicate the Migratory Bird Treaty Act.Id. at 751. Similarly, the Government's interpretation of the Lacey Act's felony provision in the current matter would merely duplicate the misdemeanor prohibitions of the Endangered Species Act.
In support of its position, the Government relies primarily onUnited States v. Senchenko, 133 F.3d 153 (9th Cir.), cert. denied, 525 U.S. 872 (1998). However, Senchenko is distinguishable from the present case. In Senchenko, the defendant, who had placed multiple snares in a national forest to trap and take bears in violation of federal law (Step One underlying offense), was convicted of a felony Lacey Act violation for transporting the taken bears (Step Two overlying offense). Although no sale or purchase of the bears was proven, the Ninth Circuit found the number of bear snares, the number of bear parts in Senchenko's car and home, the recovery from Senchenko's home of equipment for making many more snares, and the possession of bear gall bladders in a quantity too large for personal use, provided sufficient circumstantial evidence of an intent to engage in commercial activity. Therefore, the transport of wildlife was "conduct that involves . . . the intent to sell" wildlife as prohibited by § 3373(d)(1)(B). Id. at 1157. In the instant case, the Government did not allege activity from which a jury could infer commercial intent in a subsequent transaction. The Government only alleges the transport, the overlying violation, is related to the prior sale of the wildlife, the underlying violation.
Finally, the Government contends Counts 28, 37, 38 and 46 are distinguishable from the other Lacey Act counts because they allege the wildlife was transported in violation of the ESA (Step One underlying offense) and then sold and purchased in violation of the Lacey Act (Step Two overlying offense). As an initial matter, the Superseding Indictment articulates no such distinction between Counts 28, 37, 38 and 46. The Government also rejected a request for a Bill of Particulars. As a result, it is impossible to differentiate from the Superseding Indictment the order in which the transportation and the sale or purchase occurred. In addition, the Court finds that any transportation was a component part and condition precedent to the subsequent sale. See Fejes, 232 F.3d at 701 (holding as a matter of law that a sale for purposes of 16 U.S.C. § 3373(d)(1)(B) includes both the agreement to receive consideration for services and the actual provision of such services). As a result, the Government has not pled the two distinct steps necessary to allege a Lacey Act Trafficking claim.
For the aforementioned reasons, the Court adopts the RR II's recommendation that Counts 22-46 be dismissed for failure to state a claim under the Lacey Act.
C. Suppression of Kenneth Kraft's Telephone Conversation
Kenneth Kraft objects to the RR II's recommendation that the Sixth Amendment does not require suppression of a tape of an orchestrated telephone conversation between Kraft and Robert Sawmiller ("Sawmiller"). The conversation arose out of an investigation concerning Kraft's alleged improper sale of a grizzly bear to Sawmiller and related false statements. At the time of the conversation, Kraft had been indicted for the improper sale of a tiger and a related false statement. Through his lawyer, Kraft entered into plea negotiations with the Government. He was told that he could not resolve the charges pending against him without also pleading to the improper sale of a grizzly bear and that the Government intended to file a superseding indictment containing these additional counts should plea negotiations fail. Although Kraft was not yet charged with the improper sale of a grizzly bear or the related statements at the time of his conversation with Sawmiller, he argues his Sixth Amendment right to counsel attached when the Government made the grizzly bear counts a condition of any plea agreement.
It is well established that the Sixth Amendment is offense specific. Texas v. Cobb, 532 U.S. 162, 167 (2001), quoting McNeil v. Wisconsin, 501 U.S. 171, 175 (1991); see also United States v. Johnson, 352 F.3d 339, 343 (8th Cir. 2003). "It cannot be invoked once for all future prosecutions, for it does not attach until a prosecution is commenced, that is, at or after the initiation of adversary judicial criminal proceedings — whether by way of formal charge, preliminary hearing, indictment, information or arraignment."Cobb, 532 F.3d at 167-68 (citations and internal quotation marks omitted). The Supreme Court has expressly rejected the idea that Sixth Amendment rights apply in the pre-indictment context:
Our conclusion that the right to counsel attaches at the initiation of adversary judicial criminal proceedings is far from mere formalism. It is only at that time that the government has committed itself to prosecute, and only then that the adverse positions of government and defendant have solidified. It is then that a defendant finds himself faced with the prosecutorial forces of organized society, and immersed in the intricasies of substantive and procedural law.United States v. Gouveia, 467 U.S. 180, 189 (1984) (internal quotations omitted).
It is undisputed that Kraft was not indicted on counts concerning the improper sale of the grizzly bear and related false statements at the time agents recorded his conversation with Sawmiller. Therefore, Kraft's Sixth Amendment rights are only implicated if the contact was directly related to the pending charges against Kraft. The Supreme Court has noted, "where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not." Blockburger v. United States, 284 U.S. 299, 304 (1932);see also Johnson, 352 F.3d at 343-44 (adopting theBlockburger test). As previously noted, the contact arose out of an investigation of an improper sale of a grizzly bear, rather than the tiger. Furthermore, the elements of the respective offenses are not the same and the offenses are separately punishable. As a result, Kraft's Sixth Amendment rights had not attached at the time of his conversation with Sawmiller and suppression of the statement is unwarranted.
D. Severance of Defendants
Defendants Nancy Kraft, Baudy, Multhauf and Perry object to the RR II's recommendation that severance of Defendants is not required in this matter. They variously claim severance is warranted on grounds of "misjoinder, jury confusion and inability to compartmentalize evidence, admissibility of evidence otherwise inadmissible and inadmissibility of evidence otherwise admissible, and unfair prejudice resulting from joint trial for all defendants." RR II at 14. Nancy Kraft also asserts prejudice arising out of her marital relationship with Kenneth Kraft. Defendants argue this prejudice cannot be cured by jury instructions or evidentiary redactions.
As the RR II correctly notes, Rule 8(b) of the Federal Rules of Criminal Procedure permits two or more defendants to be charged in the same indictment if they are alleged to have participated in the same transactions or series of incidents constituting an offense or offenses. "There is a preference in the federal system for joint trials of defendants who are indicted together." Zafiro v. United States, 506 U.S. 534, 537 (1993). Furthermore, persons charged with a conspiracy should generally be tried together and it will rarely be improper for co-conspirators to be tried together. United States v. Kindle, 925 F.2d 272, 277 (8th Cir. 1991); United States v. Stepheson, 924 F.2d 753, 761 (8th Cir. 1991), cert. denied 502 U.S. 813 (1991). However, Rule 14(a) of the Federal Rules of Criminal Procedure provides: "[i]f the joinder of offenses or defendants in an indictment . . . appears to prejudice a defendant or the government, the court may order separate trials of counts, sever the defendants' trials, or provide any other relief that justice requires." A defendant "can demonstrate real prejudice to his right to a fair trial by showing (a) his defense is irreconcilable with that of his co-defendant or (b) the jury will be unable to compartmentalize the evidence as it relates to the separate defendants." United States v. Michelson, 378 F.3d 810, 818 (8th Cir. 2004) (citations omitted). Determining the risk of prejudice and any remedy that may be necessary is a task left to the sound discretion of the trial court. See Fed.R.Crim.P. 14; see also Zafiro, 506 U.S. at 541.
Nancy Kraft and Kenneth Kraft are charged with conspiring with each other to unlawfully sell and transport wildlife and falsifying records and statements in violation of federal law. The Krafts, and other individuals, are also charged with violations stemming from numerous separate acts of false labeling and unlawful trafficking under the Lacey Act. This Court agrees with Judge Boylan's finding that nothing in the present record indicates that "defendants Kenneth or Nancy Kraft will be unfairly prejudiced by joinder with each other or with additional defendants in this case, particularly to the extent necessary to overcome the preference for joinder of defendants in conspiracy cases." RR II at 15. Severance should be granted under Rule 14 "only if there is a serious risk that a joint trial would compromise a specific trial right of one of the defendants, or prevent the jury from making a reliable judgment about guilt or innocence." Zafiro, 506 U.S. at 539. There is no particular reason why the jury will be unable to differentiate and appropriately apply evidence relating to Kenneth Kraft from evidence relating to Nancy Kraft. As a result, Nancy Kraft's Objections are denied.
Defendants Baudy, Multhauf and Perry each face charges stemming from single and separate animal transactions. Multhauf and Perry's respective transactions involved Kenneth Kraft while Baudy's involved both Kenneth and Nancy Kraft. Baudy, Multhauf and Perry contend the jury may be unable to compartmentalize the evidence relating to each of them from the numerous charges and evidence relating to the Krafts. This Court, however, agrees with the RR II's conclusion that "the transactions involving these co-defendants are quite discreet, and the underlying evidence relating to those transactions is likely easily distinguishable from evidence relating to other counts." RR II at 16. The Eighth Circuit recently noted that "[s]everance is not required merely because evidence that is admissible only against some defendants may be damaging to others." Michelson, 378 F.3d at 818. Likewise, there is no requirement in a joint trial that "the quantum of evidence of each defendant's culpability be equal."United States v. Flores, 362 F.3d 1030, 1042 (8th Cir. 2004) (citations omitted). When faced with multiple defendants charged in several discreet transactions, "the risk of prejudice posed by joint trials is best cured by careful and thoughtful jury instructions." Michelson, 378 F.3d at 818 (citations omitted). With the assistance of carefully crafted jury instructions, the jury should be capable of isolating and properly applying the evidence relating to each defendant.
Although the Court recognizes a joint trial will require those Defendants charged with illegalities stemming from discrete transactions to be present for the entire proceeding, this result alone does not warrant severance. Defendants are properly joined because the Superseding Indictment alleges the co-defendants aided and abetted Kenneth Kraft and/or Nancy Kraft. The fact that co-defendants are not alleged to be part of the broader conspiracy does not overcome the federal system's strong preference for joint trials of defendants who are named in a common indictment of properly joined offenses.
Further, the ability of the jury to compartmentalize the evidence relating to each Defendant has been enhanced by the dismissal of Counts 22-46 and the severance for trial of Counts 48 and 49. The trial of the remaining portion of the Superseding Indictment is a more manageable task.
E. False Labeling Counts
Kenneth Kraft, Nancy Kraft, Multhauf, Baudy and Perry each object to the RR II's finding that dismissal of the Lacey Act False Labeling counts is not required. This group of counts alleges Defendants falsely labeled APHIS Forms 7020 ("Form 7020"), used to maintain statutorily required information on the acquisition, disposition or transport of animals. See 9 C.F.R. § 2.75(b)(2). A person completing the document may check one of three boxes to specify whether the disposition was by (1) sale, (2) exchange or transfer, or (3) donation. In the transactions involving Multhauf and Perry (Counts 9 and 10), the "donation" box was checked. In the transaction involving Baudy (Count 18), none of the three boxes was checked but "permanent breeding loan" was handwritten onto the form. In the transactions involving Kenneth Kraft and Nancy Kraft (Counts 20 and 21), the "exchange or transfer" box was checked. In all cases, the government contends the transactions were in fact sales. Defendants argue these counts should be dismissed because: (1) neither the form itself nor the applicable regulations define the terms "sale", "exchange or transfer" or "donation" and the substantial overlap between these terms creates ambiguity that cannot support a criminal prosecution; (2) the applicable regulations do not require Form 7020 to be completed; and (3) those forms that characterized the dispositions as exchanges or transfers or as a "permanent breeding loan" were literally true and do not constitute a false record as a matter of law.
The relevant counts are Count 9 (Multhauf), Count 10 (Perry), Count 18 (Baudy), Count 20 and Count 21 (Kenneth Kraft and Nancy Kraft).
A "phrase is ambiguous as a matter of law when it 'is not a phrase with a meaning about which men of ordinary intellect could agree, nor one which could be used with mutual understanding by a questioner and answerer unless it were defined at the time it were sought and offered as testimony.'" United States v. Manapat, 928 F.2d 1097, 1100 (11th Cir. 1991) (quoting United States v. Lattimore, 127 F.Supp. 405 (D.D.C.), aff'd by an equally divided court, 232 F.2d 334 (D.C. Cir. 1955)). Whether a term is ambiguous must be ascertained in the context in which the "questions" and "answers" were made, "as well as other extrinsic evidence relevant to [the respondent's] understanding of the Form." United States v. Culliton, 328 F.3d 1074, 1079 (9th Cir. 2003), cert. denied, 124 S.Ct. 1087 (2004); see also United States v. Williams, 552 F.2d 226, 229 (8th Cir. 1977). Given that Defendants had previously correctly completed 7020 Forms and the terms must be interpreted according to their commonly understood meaning, the Court does not find that it was "entirely unreasonable to expect that the defendant understood" the terms in question. United States v. Ryan, 828 F.2d 1010, 1015 (3d Cir. 1987) (citation omitted), abrogated on other grounds by United States v. Wells, 519 U.S. 482 n. 3 (1997). Furthermore, a claim that a matter considered in its proper context is "arguably ambiguous" involves an attack on the sufficiency of the evidence.United States v. Farmer, 137 F.3d 1265, 1269 (10th Cir. 1998). In such a situation, "the meaning and truthfulness of a declarant's answer is for the jury to decide." United States v. Robbins, 997 F.2d 390, 395 (8th Cir.), cert. denied, 510 U.S. 948 (1993); see also Manapat, 928 F.2d at 1099 ("when a question of law is 'arguably ambiguous,' 'the defendant's understanding of the question is a matter for the jury to decide.'") (citations omitted).
Similarly, Defendants' claims that their responses to the 7020 Form were literally true must be evaluated with an understanding of the context in which the alleged false statements were made.Id., at 395. Determining whether Defendants' responses were literally true when made raises a factual question to be resolved by the jury. See United States v. Lighte, 782 F.2d 367, 372-73 (2d Cir. 1986).
Finally, Defendants argument that these counts should be dismissed because completion of Form 7020 is not required by law is rejected. By statute, certain information must be maintained concerning the acquisition, disposition or transport of animals. 9 C.F.R. § 2.75(b)(2). Form 7020 is one permissible means of recording this information. Id. Although Defendants were under no legal obligation to employ Form 7020, having chosen to use the form, it was their responsibility to complete it accurately.
As the RR II correctly states, "the form transaction-type designations by the defendants relate directly to the intent of the parties to the transactions with respect to animal acquisition and disposition record keeping." RR II at 21. The meaning and veracity of Defendants' representations is a jury issue rather than a matter of law. As a result, Defendants' Objections must be denied.
III. CONCLUSION
Based upon the foregoing, and all the files, records, and proceedings herein, IT IS HEREBY ORDERED that:1. Judge Boylan's RR II [Docket No. 316] is ADOPTED in its entirety;
2. Defendant Kenneth Kraft's Motion to Suppress Statements for Violations of the Sixth Amendment [Docket No. 210] is DENIED;
3. Defendant Kenneth Kraft's Motion to Suppress Statements and Admissions [Docket No. 211] is DENIED;
4. Defendant Kenneth Kraft's Motion to Redact Indictment and Strike Surplusage [Docket No. 212] is GRANTED IN PART AND DENIED IN PART as stated in the RR II;
5. Defendant Kenneth Kraft's Motion to Dismiss Counts 20 and 21 [Docket No. 213] is DENIED;
6. Defendant Robert Baudy's Motion to Dismiss Count 18 of the Superseding Indictment [Docket No. 202] is DENIED;
7. Defendant Robert Baudy's Motion for Severance of Defendants [No. 203] is DENIED;
8. Defendant Merle Multhauf's Motion to Suppress Statements [Docket No. 229] is DENIED;
9. Defendant Merle Multhauf's Motion to Dismiss Indictment or Strike Prejudicial Surplusage [Docket No. 234] is GRANTED. That portion entitled Sentencing Allegations contained on pages 29 through 37 should be deleted from the Superseding Indictment;
10. Defendant Merle Multhauf's Motion for Severance [Docket No. 242] is DENIED.
11. Defendant Merle Multhauf's Motion to Dismiss Indictment [Docket No. 244] is GRANTED as to Count 35 and DENIED as to Count 9;
12. Defendant Craig Perry's Motion to Dismiss Count 10 [Docket No. 254] is DENIED;
13. Defendant Craig Perry's Motion to Dismiss Count 36 [Docket No. 255] is GRANTED;
14. Defendant Craig Perry's Motion for Severance [Docket No. 259] is DENIED;
15. Defendant Nancy Kraft's Motion for Severance of Defendants [Docket No. 181] is DENIED, except as otherwise recommended with respect to Counts 48 and 49;
16. Defendant Nancy Kraft's Motion for Relief from Prejudicial Misjoinder [Docket No. 182] is GRANTED IN PART AND DENIED IN PART. Counts 48 and 49 shall be severed for separate trial;
17. Defendant Nancy Kraft's Motion to Strike Prejudicial Surplusage from Superseding Indictment [Docket No. 183] is GRANTED IN PART AND DENIED IN PART as stated in the RR II;
18. Defendant Nancy Kraft's Motion to Suppress Statements, Admissions and Answers [Docket No. 184] is DENIED as stated in the RR II;
19. Defendant Nancy Kraft's Motion to Suppress Evidence Obtained as a Result of Search and Seizure [Docket No. 186] is DENIED as stated in the RR II;
20. Defendant Nancy Kraft's Motion to Dismiss Lacey Act Trafficking Counts 22-46 [Docket No. 187] is GRANTED;
21. Defendant Nancy Kraft's Motion to Dismiss Count 18 [Docket No. 188] as it pertains to her is GRANTED;
22. Defendant Nancy Kraft's Motion to Dismiss Count 21 [Docket No. 189] is DENIED;
23. Defendant Nancy Kraft's Objection to the RR II [Docket No. 317] is DENIED;
24. Defendant Kenneth Kraft's Objection to the RR II [Docket No. 325] is DENIED;
25. Defendant Robert Baudy's Objection to the RR II [Docket No. 322] is DENIED;
26. Defendant Craig Perry's Objection to the RR II [Docket No. 327] is DENIED;
27. Defendant Merle Multhauf's Objection to the RR II [Docket No. 335] is DENIED;
28. The Government's Objection to the RR II [Docket No. 320] is DENIED.