United States v. Mohammad S. Mohammad, Also Known as Sean Saleh, and Asad Saleh

53 F.3d 1426, 1995 U.S. App. LEXIS 9652
CourtCourt of Appeals for the Seventh Circuit
DecidedApril 27, 1995
Docket93-2837, 93-2969
StatusPublished
Cited by74 cases

This text of 53 F.3d 1426 (United States v. Mohammad S. Mohammad, Also Known as Sean Saleh, and Asad Saleh) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Mohammad S. Mohammad, Also Known as Sean Saleh, and Asad Saleh, 53 F.3d 1426, 1995 U.S. App. LEXIS 9652 (7th Cir. 1995).

Opinion

RIPPLE, Circuit Judge.

Following a four-week trial, a jury convicted defendants Mohammad S. Mohammad and Asad Saleh of conspiracy and multiple counts of bankruptcy fraud, mail fraud, wire fraud and Currency Transaction Reporting Act violations pursuant to 18 U.S.C. §§ 371, 152, 1341, 1343, and 31 U.S.C. § 5322. On October 25,1993, the district court sentenced Mr. Mohammad to 92 months of imprisonment; it also imposed a fine of $9,600 and restitution of $3.2 million. The court sentenced Mr. Saleh to 40 months of imprisonment and ordered payment of $3.2 million in restitution. On appeal both defendants submit that the district court’s bias prevented them from receiving a fair trial. Mr. Mohammad also challenges the trial court’s denial of his severance motion and the enhancement of his sentence under the United States Sentencing Guidelines (“U.S.S.G.”). For the reasons that follow, we affirm the defendants’ convictions. Because the district court improperly delegated the manner of the payment of restitution to the probation officer, however, we must vacate the order of restitution of each defendant and remand the case to the district court for the entry of an order that conforms to our precedent.

I

BACKGROUND

Following the investigation of the activities of Discount Merchandise, Inc. (“DMI”) and its principals by the Federal Bureau of Investigation, the United States brought a twenty-six count superseding criminal indictment against Mr. Mohammad, Mr. Saleh and others (primarily members of their family). *1430 The charges alleged that the defendants were involved in a “bust-out” scheme to defraud DMI’s trade creditors. 1 According to the indictment, Mr. Mohammad and other family members conspired to defraud DMI creditors. The scheme involved (1) ordering on credit large quantities of goods and services worth more than $3.1 million, for which the defendants did not intend to pay; (2) selling those goods for less than their cost; (3) diverting approximately $1.7 million of the proceeds from the sale of those goods to bank accounts held by various family members, and eventually out of the United States to Jordan; and (4) concealing the diversion. In the remaining twenty-five counts, the indictment alleged the fraudulent activities by which the defendants carried out their scheme. After considering the testimony and evidence presented in the four-week trial of this case, the jury found Mr. Mohammad and Mr. Saleh guilty of conspiracy to commit bankruptcy, mail, and wire fraud as well as currency reporting violations.

The evidence of record establishes that, in December 1988, Mr. Mohammad and various relatives established DMI, a company that sold non-perishable consumer goods on a wholesale basis. 2 Mr. Mohammad’s brother, Anwar Saleh, was president and sole officer of the business; his nephew, defendant Asad Saleh, ran the warehouse when Mr. Mohammad was unavailable. For several years, DMI operated as a legitimate company in Chicago. It rented an office in April 1989, opened bank accounts, and began ordering goods from manufacturers and reselling them at wholesale prices. It also paid the suppliers, thereby establishing good credit references. When DMI began buying larger quantities of goods, it leased a warehouse in June 1990 to store them. Mr. Mohammad directed the management of the warehouse, and his nephew Asad Saleh was in charge of it when Mohammad was away. During the period from January through April 1991, DMI filled the warehouse by ordering approximately $3.2 million in goods and services on credit from 132 suppliers. When the warehouse was full, Mr. Mohammad leased storage lockers and controlled access to them. By the end of May 1991, however, the warehouse and office were empty and abandoned.

The “bust-out phase” took place between February and April 1991. The defendants sold the goods they had bought on credit as quickly as possible and often for less than they had paid. To conceal the diversion of the proceeds, they asked their customers to pay in cash or in checks payable either to *1431 themselves or to cash. They rented trucks to deliver the sold goods to DMI customers, but never paid the lease amounts. Between February and August 1991, the defendants diverted the approximately $1.7 million in proceeds to their own accounts in eight financial institutions. They also structured the cash deposits in amounts under $10,000 to evade reporting requirements. According to the government’s evidence, Mr. Mohammad actually diverted and structured over $601,-000, often with deposits made by his wife Mariam Saleh. Asad Saleh diverted and structured over $487,000. More than $538,-000 went into accounts shared by the two defendants. The accounts were opened just before the bust-out began and closed when the bust-out scheme was completed. From April through August 1991 Mr. Mohammad, Asad Saleh and others then converted the fraud proceeds: They obtained cashier’s checks totalling about $1,259,922 and deposited them in Jordanian bank accounts. Some of the proceeds were “laundered” in Jordan and then transported back to the United States, where they were deposited into other bank accounts maintained by Mohammad.

During this period the defendants also worked to persuade creditors of DMI not to take legal action against DMI. Anwar Saleh mailed letters to the creditors, promising to pay them soon but explaining that DMI had a cash flow problem because it had not collected its receivables. On July 19, 1991, nevertheless, DMI’s creditors commenced an involuntary case under Chapter 7 against DMI, and on August 14, 1991 an order for relief was entered. Yet, despite the automatic stay requirement, the defendants continued to divert and to conceal proceeds fraudulently derived from the business. On August 2, 1991, a trustee was placed in control of DMI; he seized about $300,000 in fraudulent proceeds, but the remaining funds and assets were gone.

II

ISSUES

A. Severance

Mr. Mohammad’s request that the trial court sever his trial from that of his wife Mariam Saleh was denied. 3 He submits to this court that, because their defenses were mutually antagonistic and her testimony at their joint trial was unduly prejudicial to him, the district court abused its discretion in refusing to grant severance.

1.

Federal Rule of Criminal Procedure 14 gives trial courts the discretionary authority to grant a severance of defendants “[i]f it appears that a defendant ... is prejudiced by a joinder ... for trial together.” We review a district court’s denial of a defendant’s motion to sever for an abuse of that court’s sound discretion. Zafiro v.

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Bluebook (online)
53 F.3d 1426, 1995 U.S. App. LEXIS 9652, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-mohammad-s-mohammad-also-known-as-sean-saleh-and-asad-ca7-1995.