United States v. Sabulon Cardenas Cuellar

96 F.3d 1179, 96 Daily Journal DAR 11358, 96 Cal. Daily Op. Serv. 6946, 1996 U.S. App. LEXIS 24319, 65 U.S.L.W. 2213

Opinions

RYMER, Circuit Judge:

This appeal requires us to decide whether a contract to pay an undercover informant a percentage of funds laundered through organizations he penetrated is outrageous government conduct.

Sabulon Cardenas Cuellar was convicted on charges of distribution of 200 kilograms of cocaine and possession of one kilogram of cocaine with intent to distribute in violation of 21 U.S.C. § 841(a)(1). He complains of a number of errors, but principally contends that his due process rights were violated based upon the government’s paying an informant a percentage of money seized in undercover operations, and making additional payments depend on the outcome of trial. We hold that a contingent fee arrangement is not by itself outrageous government conduct, and that in the circumstances of this ease the district court did not err in finding that additional payments were not dependent on the outcome of Cuellar’s trial. As there was no other reversible error, and we have jurisdiction over this timely appeal, 28 U.S.C. § 1291, we affirm.¹

I

“Operation Costa Del Oro” was a complex money-laundering investigation by the United States Customs Service (USCS) and a number of municipal law enforcement agencies across the country. As part of the investigation, the USCS entered into a Personal Assistance Agreement with Carlos Garavito, a confidential informant, in August 1993. The USCS agreed to process “purchase of information/purchase of evi-denee” (POI/POE) payments for Garavito’s participation in the investigation, “predicated on the Source’s participation in the investigation and the results of any subsequent criminal or civil proceedings.” In return, Garavito agreed to forfeit his right to apply for an award under 19 U.S.C. § 1619² in specific cases where POI/POE was paid. Garavito was also entitled under the agreement to a brokerage fee of 0.7% of the funds laundered by Costa Del Oro during the investigation. The commission was to be paid solely out of Costa Del Oro receipts, not out of funds appropriated to the USCS by Congress, and was capped at $10,000 per month.

From August 1993 through January 1994, Garavito entered into a series of money laundering contracts with a Colombian money broker, Fernando Barrera-Saavedra, which called for him to pick up large sums of money from narcotics traffickers in Detroit, Chicago, New York, Houston and Los Ange-les. Undercover agents, acting as Garavito’s representatives, picked up the currency, deposited it into an account controlled by the government, and then wire transferred it to a bank chosen by Barrera-Saavedra. This activity resulted in numerous seizures of cash, more than $7 million in all.

During the Costa Del Oro investigation Garavito received $50,000 in brokerage fees, reflecting his percentage of the laundered funds, and $130,000 in recognition of the time spent and risk undertaken, the amount of cash seized by the government, and the number of organizations identified and infiltrated. His supervising agent’s requests for payments had to be approved by senior USCS officials in Washington. On April 3, 1995, after the investigation was closed, Garavito received an additional $400,000 for his cooperation.

Meanwhile, as a result of Garavito’s contracts with Barrera-Saavedra, between September and December 1993 undercover agents picked up some $3.2 million from the Detroit branch of the organization run by “Aldo.” Aldo wanted to get Garavito involved in transporting cocaine from Los Au-geles; under the direction of Customs agents, Garavito spoke to Ado’s boss, “Negro,” about transporting a large quantity of cocaine to New York. Eventually Ado gave Garavito the pager number of “Carlos,” who turned out to be Cuellar, and on January 12, 1994, they arranged for the exchange of 200 kilograms of cocaine. The transaction was surveilled. Cuellar’s fingerprints and palm prints were recovered from seven of the boxes that contained the cocaine, and he was later connected with a phone number for “Saulo” listed in the address book of Victor Neris, who owned the van that was used for delivering the 200 kilograms.

Then on April 25, 1994, Cuellar was stopped at Los Angeles International Airport en route to New York. He had checked his suitcase with the skycap, and proceeded to the gate. His suitcase had a combination lock as well as a padlock and its identification tag was not filled out. A sheriffs deputy (with no knowledge of the Garavito investigation) approached Cuellar, walked alongside him, told Cuellar she wanted to ask him some questions, and told him that he was not under arrest and was free to go. The deputy asked Cuellar for identification; he handed her his temporary driver’s license, and, when asked his address, could not recall it. The deputy then asked Cuellar for his ticket; he handed her a one-way ticket to New York in the name of Oscar Gomez. She returned the driver’s license and ticket and asked for permission to search Cuellar’s luggage. Cuellar handed her' a key, and one kilogram of cocaine was discovered.

Cuellar was indicted on July 22, 1994. He moved to dismiss the indictment for outrageous government conduct, to sever the count for possession of the kilogram of cocaine that was found in his luggage from the distribution count for the 200 kilograms, and to suppress the evidence discovered in the search of his suitcase. The district court denied each motion, but indicated that its denial of the motion to dismiss for outrageous government conduct was without prejudice, subject to renewal as facts developed at trial.

Cuellar’s trial began October 25,1994. On November 17, 1994, the jury returned guilty verdicts on both counts. He filed this timely appeal.

II

Cuellar argues that the district court erred in denying his motion to dismiss the indictment for outrageous government conduct because Garavito was paid a “contingent fee” that was dependent upon the amount of drugs involved and upon whether Cuellar was convicted. He points out that the Fifth Circuit held that an informant paid a contingent fee is not a competent witness and that a conviction based on such testimony must be reversed, Williamson v. United States, 311 F.2d 441 (5th Cir.1962), even though Williamson was overruled in United States v. Cervantes-Pacheco, 826 F.2d 310 (5th Cir.1987), cert. denied, 484 U.S. 1026, 108 S.Ct. 749, 98 L.Ed.2d 762 (1988), and that we have stressed the danger to the criminal justice system that exists with the use of paid informants. See United States v. Bernal-Obeso, 989 F.2d 331 (9th Cir.1993). Cuellar submits that when the government gives a confidential informant the authority to develop a crime and his monetary reward depends on getting people convicted and on the magnitude of the drug or money laundering transaction, the informant has too great an incentive to fabricate evidence and distort the truth.

The government counters that that isn’t what happened in this case. It emphasizes that no indictment has ever been dismissed on the footing that a contingent fee arrangement alone constitutes outrageous government conduct; that to dismiss an indictment on that ground requires government conduct that is “so grossly shocking and so outrageous as to violate the universal sense of justice,” United States v. Allen, 955 F.2d 630, 631 (9th Cir.1992) (internal quotation omitted); that the Supreme Court has never upheld dismissal of an indictment premised on outrageous government conduct, and that we have done so only once — when the government basically created and ran the entire illegal operation; and that nothing in this case suggests that Garavito created Cuellar’s criminal activity, fabricated evidence, or did anything other than infiltrate an existing organization by providing needed money laundering services.

A

We review the district court’s decision not to dismiss the indictment on due process grounds based on the government’s outrageous conduct de novo. United States v. Garza-Juarez, 992 F.2d 896, 903 (9th Cir.1993), cert. denied, 510 U.S. 1058, 114 S.Ct. 724, 126 L.Ed.2d 688 (1994). However, we view the evidence in the light most favorable to the government, and we accept the district court’s findings unless clearly erroneous. United States v. Emmert, 829 F.2d 805, 810-11 (9th Cir.1987).

B

There is no question that this informant got paid a ton of money. But that isn’t the question we have to decide. “The government’s conduct may warrant a dismissal of the indictment if that conduct is so excessive, flagrant, scandalous, intolerable and offensive as to violate due process.” Garza-Juarez, 992 F.2d at 904. We cannot say that it was.

We have previously recognized that “few would engage in a dangerous enterprise of this nature without assurance of substantial remuneration.” United States v. Reynoso-Ulloa, 548 F.2d 1329, 1338 n. 19 (9th Cir.1977) (government’s use of contingent fee arrangement whereby informant was paid a specific amount for each pound of heroin seized and for each “body” involved did not amount to entrapment per se), cert. denied, 436 U.S. 926, 98 S.Ct. 2820, 56 L.Ed.2d 769 (1978). Congress has done the same thing, providing for compensation based on a percentage of successful forfeitures. 19 U.S.C. § 1619. Although the total compensation Garavito received was undeniably substantial, it was on account of the entire Costa Del Oro operation — not just that part which involved Cuellar. Costa Del Oro spanned a number of months and many cities, netting millions of dollars and many prosecutions. Nothing in the record suggests that in this context, Ga-ravito’s compensation was so excessive as to be outrageous. In any event, by virtue of his contractual waiver of § 1619, Garavito’s total compensation was less than what would otherwise have been available to him by statute. Compensating Garavito a substantial sum was, therefore, not outrageous government conduct infringing Cuellar’s rights to due process.

Nor were Cuellar’s due process rights violated by the contingency aspects of Garavito’s fee arrangement. Cuellar faults both components: that Garavito was paid a percentage of funds laundered through Cos-ta Del Oro, and that his POI/POE payments for participation in the investigation were “predicated on the Source’s participation in the investigation and the results of any subsequent criminal or civil proceedings.” At bottom, however, both are vulnerable only because they provide an incentive to the informant to entrap, or to lie.

We, and other courts as well, have consistently held that the government is not precluded from using informants before or during trial simply because an informant may have a motive to falsify testimony or to entrap innocent persons. Indeed, the Supreme Court dealt with the issue in Hoffa v. United States, 385 U.S. 293, 87 S.Ct. 408, 17 L.Ed.2d 374 (1966), and resolved it against Cuellar’s position here. While the Chief Justice in dissent would have foreclosed prosecution based on what he thought was a particularly unsavory use of an informant, the majority held that regardless of the fact that Hoffa’s informant may have had more of a motive to lie than most,

it does not follow that his testimony was untrue, nor does it follow that his testimony was constitutionally inadmissible. The established safeguards of the Anglo-American legal system leave the veracity of a witness to be tested by cross-examination, and the credibility of his testimony to be determined by a properly instructed jury. At the trial of this case, [the informant] was subjected to rigorous cross-examination, and the extent and nature of his dealings with federal and state authorities were insistently explored. The trial judge instructed the jury, both specifically and generally, with regard to assessing [the informant’s] credibility. The Constitution does not require us to upset the jury’s verdict.

Id. at 311-12, 87 S.Ct. at 418-19 (footnotes omitted). See also Reynoso-Ulloa, 548 F.2d at 1339 (declining to adopt per se entrapment rule); United States v. Cervantes-Pacheco, 826 F.2d 310 (5th Cir.1987) (declining to adopt per se exclusionary rule), cert. denied, 484 U.S. 1026, 108 S.Ct. 749, 98 L.Ed.2d 762 (1988); United States v. Dailey, 759 F.2d 192, 199-200 (1st Cir.1985) (same); United States v. Jones, 575 F.2d 81, 86 (6th Cir.1978) (same); United States v. Hodge, 594 F.2d 1163, 1165 (7th Cir.1979) (same). Likewise in Cuellar’s case, all the traditional safeguards were in place. The jury knew that Garavito had been paid $180,000 before trial, and that his supervising agent had requested a bonus to be paid after trial. Cuellar doesn’t complain that the jury was inadequately cautioned or instructed. And the extent to which it mattered that Garavito may have had an incentive to prolong and expand the undercover operation because of his fee arrangement could be measured by the jury against the evidence of Cuellar’s guilt.

Cuellar was not involved in the money laundering activities on which Garavito received a percentage of the action. He came into the picture only because Aldo wanted Garavito to transport some cocaine from Los Angeles and gave the informant the pager number of a man identified as “Carlos” to call; their contacts were limited, and only over the telephone; and the operation in which both played a part lasted only a few days. Garavito had nothing at all to do with the cocaine that Cuellar was caught transporting at the airport. There was, in short, nothing remotely outrageous about his pretrial relationship with Cuellar. Cf. Greene v. United States, 454 F.2d 783 (9th Cir.1971) (government’s creating and maintaining the criminal activity and prodding defendants to engage in it barred prosecution on due process grounds); see also United States v. Dota, 33 F.3d 1179, 1185 (9th Cir.1994) (even if government’s conduct were outrageous, there is no due process violation if it is not outrageous with respect to the particular defendant), cert. denied, - U.S. -, 115 S.Ct. 1432, 131 L.Ed.2d 313 (1995).

Nor does the fact that the informant’s total compensation wasn’t settled until after Cuel-lar’s trial offend due process. While the agreement could be interpreted as making Garavito’s POI/POE payments depend on whether convictions were obtained, the agent who negotiated the agreement and put in the requests for payments to the informant explained that arrests, indictments, seizures, forfeitures, identification of organizations, and shutting down avenues of import were “results” that merited payment, as well as convictions. Nothing in the record ties Ga-ravito’s $400,000 bonus to the result of Cuel-lar’s trial, as distinguished from other results obtained by virtue of Garavito’s overall efforts in Costa Del Oro. There is no evidence that Garavito knew how much had been requested, or what he would be likely to receive. Cf. United States v. McQuin, 612 F.2d 1193 (9th Cir.) (no outrageous government conduct where FBI guaranteed informant payment only if there was an arrest and informant testified), cert. denied, 445 U.S. 955, 100 S.Ct. 1608, 63 L.Ed.2d 791 (1980). In any event, there was extensive cross-examination on the point, and we find no constitutional error.

Accordingly, we hold that paying an informant based on a percentage of laundered funds and on results obtained in an extensive undercover operation did not constitute outrageous government conduct in violation of Cuellar’s rights to due process.

AFFIRMED.

1

. We treat only the issue of outrageous government conduct in this opinion, considering Cuel-lar’s remaining points in a memorandum disposition.

2

. Section 1619 provides that any non-govemment employee who furnishes information concerning any violation of the customs laws that leads to a forfeiture of property may be awarded an amount not to exceed 25 percent of the net amount recovered, up to $250,000 per case.