United States v. Phelps

733 F.2d 1464, 15 Fed. R. Serv. 1766
CourtCourt of Appeals for the Eleventh Circuit
DecidedJune 7, 1984
DocketNo. 83-5533
StatusPublished
Cited by24 cases

This text of 733 F.2d 1464 (United States v. Phelps) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh 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. Phelps, 733 F.2d 1464, 15 Fed. R. Serv. 1766 (11th Cir. 1984).

Opinion

MARKEY, Chief Judge:

Dan and Sally Phelps (the Phelps) appeal a conviction of conspiracy to commit an offense against or defraud the United States in violation of 18 U.S.C. § 371 (Count I),1 and transporting and causing transportation of women from Denver, Colorado to Florida for immoral purposes, in violation of the .Mann Act 18 U.S.C. §§ 2421 and 2422 (Count VI).2 We affirm.

Background

In October, 1982, acting on information from a confidential informant, Dennis R. [1467]*1467Fagan, Special Agent, United States Customs Service (Fagan), began an undercover operation in the Southern District of Florida. His purpose was to ascertain whether certain individuals had the capacity and willingness to “launder” money. Particularly, the government sought to determine whether certain escort services were being used as a front to move money outside the United States from whence it could be returned for use in legitimate business. The government negotiated to purchase thirteen escort services in West Palm Beach, in the Southern District of Florida. Recorded meetings and telephone calls resulted in identification of the Phelps and the co-defendants.

The first undercover meeting occurred on November 9, 1982, at the law offices of Robert F. Eimers (Eimers) and Craig Patton (Patton). Agents had previously established contact with Dan Phelps, an owner of the escort services under negotiation. Eimers and Patton represented the Phelps as sellers of the escort services. Fagan testified at trial that his purpose at this meeting was to identify individuals engaged in laundering money and to learn whether the escort services were involved in prostitution.

Throughout the taped conversations at the meeting, Eimers and Patton made explicit representations concerning operation of the escort services, their methods of avoiding detection, and means of covering up acts of prostitution, including sham use of independent contracts purporting to insulate the owners, taking of nude photographs of escorts to prevent undercover police infiltration, use of public service licenses and advertising in the yellow pages, and use of telephone devices in dealing with customers. Patton made clear at this meeting that the Phelps wanted to sell the escort services for two hundred fifty thousand dollars, and that the money transfer could be handled with guaranteed anonymity-

A second undercover meeting was held on November 14, 1982, at a hotel restaurant. Present were Fagan, undercover agent Edward Diamond, and Eimers. Fagan sought to establish further that the escort services were involved in prostitution and how money would be laundered from Miami through the Bahamas. The tape of this meeting does not contain the Phelps’ voices, and it was not played at trial. Counsel for Patton was denied use of the tape at trial, but the district court read a summary to the jury.

An audio tape involving the Phelps was made at a meeting at the law offices of Eimers and Patton on November 16, 1982. The discussion during the first part of the meeting centered on explicit operational details of the escort services and Phelps’ demand for ten thousand dollars good faith money before allowing the agents to see the physical layout of the escort services. At one point Dan Phelps boasted about his and Sally’s twenty-five years experience in the business. Sally Phelps explained how absolutely no records were kept and that everything was shredded daily. Dan Phelps stated that he is “... a merchant of time. It’s very beautiful and very nice”. During the latter part of the meeting, the Phelps having left, Eimers and Patton repeated the need for ten thousand dollars good faith money and for creating a structure to begin laundering money.

A fourth meeting, with Dan and Sally Phelps present, was arranged for the evening of November 22, 1982. The agents met first that evening with Eimers and gave him ten thousand dollars in cash. They then met with the Phelps, who, as Fagan testified, showed him documents relating to the escort service. A more detailed meeting, during which agents would actually see the operation, was planned for the next day.

On November 23, 1982, the agents were taken to a boat named “Isis II”. On board, the Phelps showed the agents paperwork on how the escorts were paid and the fee split with the service. Sally Phelps explained how documents were shredded on a shredder in the rear of the boat. An individual named “Leon” was present. He had made a collection from escorts and was carrying a bag.

[1468]*1468The Phelps then took the agents to an escort service location at 3632 North Lake Boulevard in West Palm Beach (Boulevard location). Documents, telephone numbers, and a telephone operator were viewed at that location. At that time, Dan Phelps said Eimers would launder the sale proceeds for him in the Bahamas, and that he knew Eimers would do the same for the agents. Sally Phelps sat next to Dan Phelps when he made that statement.

Arrangements were completed to have the government’s purchase money flown to and laundered in the Bahamas on November 24, 1982. Immediately before departure of the plane, piloted by Charles Flowers (Flowers), government agents arrested Eimers and Flowers. The remaining defendants were then arrested.

The Indictment

The government filed a seven count indictment in the United States District Court for the Southern District of Florida on December 22, 1982. Count I charged the Phelps, Eimers, Patton, Flowers, William Workman and Sherry Workman (Workmans) with conspiracy to commit an offense against or defraud the United States in violation of 18 U.S.C. § 371. The alleged objectives of the conspiracy were: (a) to refrain, while violating 18 U.S.C. § 1952, from filing Customs Form 4790 required in connection with transportation of U.S. currency; (b) to use wire communication and other facilities in interstate commerce to and from the State of Florida for promotion of a business enterprise involving prostitution in violation of Florida law; and (c) to defraud the United States and the Customs Service by impairing and obstructing its lawful governmental function in gathering information on U.S. Customs Form 4790. The trial court struck objective (c).

Count II charged the Phelps, Eimers, Patton, and Flowers with the substantive violation of failure to file U.S. Customs Form 4790 and violation of 18 U.S.C. § 1952, 31 U.S.C. §§ 5316, 5322(b), and 18 U.S.C. § 2.

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Bluebook (online)
733 F.2d 1464, 15 Fed. R. Serv. 1766, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-phelps-ca11-1984.