IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 95-10430
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
BRUCE HENRY HUMPHREY
and FAY CAROLYN HUMPHREY
Defendants-Appellants.
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Appeals from the United States District Court for the
Northern District of Texas
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January 13, 1997
Before KING, JOLLY, and DENNIS, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
Bruce Henry Humphrey and Fay Carolyn Humphrey operated a loan
brokerage service that was essentially a scam. They appeal from a
jury verdict finding them guilty of seven counts of mail fraud and
three counts of wire fraud. They also challenge their sentences.
After reviewing the record, studying the briefs, and considering
the arguments made to this court, we affirm the convictions and the
sentences.
The primary issue we address is the validity of the search
warrant authorizing the search of the defendants’ home. We hold
that an “all records” warrant for the search of a residence is
valid in the specific circumstances of this case where the
residence was the primary place of business for the defendants,
where the fraud was pervasive, where there was a significant
overlap in the business and personal lives of the defendants, where
the defendants maintained no known bank accounts, and where the
warrant was limited to financial records.
I
For over two years, the Humphreys successfully ran a scheme
designed to bilk capital-needy individuals seeking loans. The
Humphreys called their organization H & H Consultants--later
changed to Secure Investments--and advertised as a loan brokerage
service.
Although the specific dealings of the Humphreys with the
victims of their scam varied somewhat, the general pattern of
behavior in all of the transactions was the same. Loan applicants
would submit applications to H & H Consultants and would then be
notified by letter that the company was "pleased to inform you that
a commercial lender has approved your project for funding."
Applicants, however, were informed that they had to make a deposit,
usually $4250, to the Humphreys before a letter of approval could
be sent from the lender. Many potential investors inquired whether
this deposit was the only payment that would be required before
receiving the loan and were assured that no more up-front money
would be necessary. Upon payment of the deposit, the applicant
would receive a letter from a financial institution that
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conditioned any loan upon payment of a substantial amount of up-
front money, generally between $7500 and $15,000. Since this was
contrary to the arrangement with the Humphreys, most applicants
sought to have their deposit refunded and were refused. Other
applicants paid the fee requested by the financial institution and
still never received financing.
Throughout the scheme, the Humphreys maintained no known bank
accounts, choosing instead to use check cashing services to obtain
cash from the deposits. The money collected through the scheme is
unaccounted for, and the Humphreys now claim destitution.
The Humphreys were charged, in a ten-count indictment, with
mail fraud in violation of 18 U.S.C. § 1341 and wire fraud in
violation of 18 U.S.C. § 1343 in the execution of a scheme and
artifice to defraud. The jury returned a guilty verdict on all ten
counts and the Humphreys were each sentenced to forty-one months
imprisonment per count, to run concurrently, and to three-year
terms of supervised release. Both Bruce Henry Humphrey and
Fay Carolyn Humphrey timely filed notices of appeal.
II
On appeal, the Humphreys assert six points of error. After
considering each point of error individually, we conclude that the
proceedings contain no reversible error.
A
The Humphreys argue that the district court erred by failing
to suppress evidence found during a search of their residence,
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because the search warrant was overbroad and failed to describe
sufficiently the property to be seized. Prior to trial, the
Humphreys filed motions to suppress evidence found in the search of
their residence. The district court denied the motions, finding
that the affidavit of the FBI agent established probable cause to
believe that the Humphreys were running a fraudulent business, that
the FBI had information that the Humphreys were using their
business address only sporadically, that the affidavit provided
probable cause to believe that the documents of the type listed in
an attachment would be found at the Humphreys' residence, and that
the description of the types of property to be seized was
sufficient under the circumstances. We review the trial court's
findings of fact related to the denial of a motion to suppress for
clear error, United States v. Harrison, 918 F.2d 469, 472 (5th Cir.
1990); however, we review conclusions of law related to the
sufficiency of the warrant de novo. United States v. Richardson,
943 F.2d 547, 549 (5th Cir. 1991); see also United States v. Rabe,
848 F.2d 994, 997 (9th Cir. 1988).
The warrant authorizing the search of the Humphreys' residence
included a list of four generic categories of property, all related
to financial records, to be seized.1 The search warrant was
1
The search warrant authorized the seizure of:
1. Books, records, receipts, notes, ledgers
and other documents relating to financial
transactions and relationships with financial
institutions.
2. Ledger paper, column paper, check
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supported by a three-page affidavit from an FBI agent engaged in
the investigation of the Humphreys. The affidavit establishes that
at least a portion of the Humphreys' home was furnished with office
equipment, that the Humphreys rarely utilized their rented office
space other than as a mailing address and as a telephone message
center, that there had been numerous complaints concerning the
"services" provided by the Humphreys, that the Humphreys had cashed
a large number of cashier's checks, that Fay Carolyn Humphrey had
informed police, in connection with an unrelated theft complaint,
that cash had been taken from the mattress in the Humphreys'
bedroom and that she and her husband operated a business from their
registers, checks, U.S. currency, deposit
slips, receipts, bank statements, cashier's
checks, association checks, check order forms,
new account information forms, wire transfers
and receipts, signature cards, correspondence,
and all other documents relating to banking,
banking transactions, and transactions at
savings and loan institutions, and in
particular all documents relating to the
purchasing, cashing, transferring and
depositing of cashier's checks.
3. Credit cards, debit cards, and all
statements, receipts, applications, letters,
notices, and other documents which relate to
the use of credit cards or debit cards.
4. Computer storage devices containing
records, documents, and other information
described above in paragraphs 1 thru 3, and
related equipment and materials for adequately
retrieving and reviewing the information,
including central processing units, printers,
monitors, floppy discs and instruction manuals
which could be used to store information
regarding customer files and banking
information.
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home. The question before us is whether the affidavit supports the
broad language of the search warrant authorizing the search of the
Humphreys' home. We conclude that it does.
We have previously held that a warrant may satisfy the
requirements of the Fourth Amendment even though it describes the
objects to be seized only in generic terms. See Williams v. Kunze,
806 F.2d 594, 598 (5th Cir. 1986), see also United States v.
Webster, 734 F.2d 1048, 1055 (5th Cir.), cert. denied, 469 U.S.
1073 (1984) (holding that in situations which make detailed
particularity impossible then "generic language suffices if it
particularizes the types of items to be seized"). In Kunze, we
upheld an "all records" search of a business "[w]here probable
cause exist[ed] to believe that an entire business was merely a
scheme to defraud, or that all the records of a business are likely
to constitute evidence." Id. Thus, the warrant in this case would
be valid had it authorized a search of a business rather than a
home, because, undoubtedly, the affidavit supports the conclusion
that the entire business operated by the Humphreys was merely a
scheme to defraud. The warrant, however, authorized the search of
the Humphreys' home, and we must decide whether, and when, the
reasoning of Kunze should be extended to cover searches of private
residences.
The First Circuit addressed the identical issue in United
States v. Falon, 959 F.2d 1143 (1st Cir. 1992). There the court
held that the "all records" doctrine must be applied with caution
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when an allegedly fraudulent business was operated out of a
residence. Id. at 1148. The court stated that "it would require
extraordinary proof to demonstrate that an individual's entire life
is consumed by fraud and that all records found in the home were
subject to seizure," and that absent such a showing, the "broad
categories of items that may be seized pursuant to an 'all records'
search of a home must be sufficiently linked to the alleged
criminal activity so as to distinguish them from innocent personal
materials." Id. We agree with the First Circuit that the Fourth
Amendment requires much closer scrutiny of an all records search of
a residence; however, we conclude that, in the present case, the
search warrant was valid in the light of the pervasive nature of
the fraud, the considerable overlap of the Humphreys' business and
personal lives, and the limitation of the warrant to records
pertaining to financial transactions. The district court,
therefore, did not err in refusing to suppress the evidence gained
through the search.2
B
Next, the Humphreys assert that the trial court committed
reversible error by excluding testimony from their former lawyer
concerning a civil action filed by the Humphreys against James
2
Our holding today should not be read as a broad authorization
for the issuance of all records searches of homes. We caution law
enforcement agencies to draft warrants carefully to ensure the
mandates of the Fourth Amendment are satisfied and note that it is
only in extreme cases, such as the one before us today, that we
will uphold warrants of this type.
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Dunn, which resulted in an award of commissions to the Humphreys as
a result of their loan-finding efforts.
The trial court's decision concerning the admissibility of
evidence is reviewed on appeal for abuse of discretion. Jon-T
Chems., Inc. v. Freeport Chem. Co., 704 F.2d 1412, 1417 (5th Cir.
1983). Additionally, even if an abuse of discretion occurred, we
must consider whether the error was harmless or whether the error
requires reversal because, when viewed in the light of the entire
record, it affected the substantial rights of the defendants.
United States v. Skipper, 74 F.3d 608, 612 (5th Cir. 1996).
The evidence regarding the prior successful action for
commissions was properly excluded because the testimony of the
lawyer was not the best evidence of the judgment. See Fed. R.
Evid. 1002; see also Morgan v. Dun & Bradstreet, Inc., 421 F.2d
1241, 1243 (5th Cir. 1970) (pre-rules of evidence case holding that
testimony concerning contents of court documents "was properly
excluded as not the best evidence"). The Humphreys offered no
documentary proof of the judgment and, therefore, the exclusion of
the testimony was not erroneous.
However, even if we were convinced that the exclusion was
error, the error was harmless. The Humphreys offered the evidence
to establish their good faith and their lack of criminal intent in
the operation of their business. There was other evidence on this
issue, including testimony from a satisfied borrower, testimony
from an individual who, on occasion, provided funding to persons
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working through the Humphreys and testimony regarding efforts to
cooperate with the Better Business Bureau and to collect
commissions. It cannot be said, therefore, that the exclusion of
the testimony regarding a single prior civil action harmed the
Humphreys, as the jury was presented with other evidence on the
same issues of good faith and lack of criminal intent.
The exclusion of the evidence regarding the prior civil action
against James Dunn does not rise to the level of reversible error.
C
Fay Carolyn Humphrey argues that the evidence was insufficient
to convict her on five of the counts on which she was convicted.
This court will not reverse a guilty verdict unless, after viewing
the evidence, and all reasonable inferences drawn from the
evidence, in the light most favorable to the government, the court
concludes that no rational jury could have found the essential
elements of the offense beyond a reasonable doubt. United States
v. Duncan, 919 F.2d 981, 990 (5th Cir. 1990), cert. denied, 500
U.S. 926 (1991).
Fay Carolyn Humphrey's argument on appeal is that, with
respect to five of the counts, she cannot be convicted because the
victims of those counts testified that they dealt only with
Bruce Henry Humphrey and because there was no jury instruction on
aiding and abetting. In order to obtain a conviction under 18
U.S.C. § 1341, the government must show that the defendant "devised
a scheme to defraud and . . . for the purposes of executing the
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scheme, "knowingly cause[d] [an article] to be delivered by mail."
United States v. Blankenship, 746 F.2d 233, 240 (5th Cir. 1984)
(alterations in original). A defendant "'causes' an article to be
delivered by mail if he acts with the knowledge that the use of the
mail will follow in the ordinary course or if use of the mail is
reasonably foreseeable." Id. There is no requirement of direct
contact with the victims in the offense of mail fraud, and, thus,
Fay Carolyn Humphrey's argument fails.3
D
The Humphreys also appeal the refusal of the trial judge to
issue two requested jury instructions. We review the decision of
a trial judge to refuse to give an instruction for abuse of
discretion. United States v. Thomas, 12 F.3d 1350, 1365 (5th
Cir.), cert. denied, 114 S.Ct. 1861 (1994). The Humphreys
requested that the jury receive an instruction explicitly stating
that they were under no obligation to call any witnesses on their
behalf and another instruction specifically relating to the
credibility to be given to the testimony of law enforcement
officials who appeared as witnesses. The trial judge refused both
instructions. The jury was instructed, however, that the defendant
3
Two of the counts that Fay Carolyn Humphrey appeals on this
basis charge her with wire fraud in violation of 18 U.S.C. § 1343.
The same analysis used with respect to the mail fraud charges
applies to the convictions for wire fraud. See United States v.
Snyder, 505 F.2d 595, 600-01 (5th Cir. 1974), cert. denied, 420
U.S. 993 (1975) (indicating that no direct participation in use of
"wires" is required, only that use was foreseeable consequence of
appellant's acts).
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had no duty to "produce any evidence at all" and also was
instructed that they were to determine the credibility of all
witnesses and, in that context, should consider whether the
"witness [had] any relationship with either the government or the
defense." The jury was properly instructed, and the instructions
offered by the Humphreys were merely slight variations on the
instructions actually given. The trial judge did not abuse his
discretion in refusing the requested instructions.
III
A
The Humphreys also appeal from the sentences imposed by the
district court. They first argue that the sentence was based upon
an incorrect calculation of loss. The calculation of amount of
loss is a factual finding and will be disturbed on appeal only if
clear error is found. United States v. Wimbish, 980 F.2d 312, 313
(5th Cir. 1992), cert. denied, 508 U.S. 919 (1993). In order to
satisfy this clear error test all that is necessary is that the
finding be "plausible in light of the record as a whole." Id. The
sentencing court "need not determine the loss with precision," as
long as its estimate is "reasonable . . . given the available
information." U.S.S.G. § 2F1.1, Application Note 8.
The presentence reports prepared on each of the Humphreys
recommended a twelve-level upward adjustment based upon a
calculated loss of $1.8 million. See U.S.S.G. § 2F1.1(b)(1)(M).
The loss was calculated based upon a journal found at the
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Humphreys’ home, which contained a list of names, dates and
numbers--largely matching the amount required by the Humphreys to
be deposited by loan applicants. The district judge adopted the
recommendations of the presentence reports and sentenced the
Humphreys based on the $1.8 million loss figure. The Humphreys
contend that the journal was unreliable, that it contained
legitimate transactions that the government failed to investigate,
noting that at least one person--of the over 600 included in the
book--obtained financing through their services, and that the
government failed to prove that all of the transactions in the book
were related to a common scheme or plan as required by the
sentencing guidelines. This showing by the Humphreys does not
satisfy the standard for clear error. Their arguments do not
demonstrate that the conclusion of the district court was the
result of a misapplication of the sentencing guidelines, because
the journal, when viewed in the light of the evidence presented in
the entire trial, contains sufficient indicia of reliability to
serve as the basis for application of the sentencing guidelines.
B
The Humphreys also contend that their sentences should be
reversed and the case remanded for resentencing because the trial
judge impermissibly considered their socioeconomic status--their
inability to make restitution--in determining the length of their
sentences. The Humphreys failed to object on this basis below and,
thus, our court reviews for plain error. To demonstrate plain
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error, the Humphreys must show: (1) that there is an error, (2)
that it is clear or obvious, and (3) that it affects their
substantial rights. See Fed. R. Crim. P. 52(b).
Trial judges are expressly prohibited from considering a
defendant's socioeconomic status in the context of sentencing. See
28 U.S.C. § 994(d); U.S.S.G. § 5H1.10. The district court judge
who sentenced the Humphreys stated,
But because you took these hundreds and thousands and
millions of dollars from these people and are not going
to pay any of that back, I think a sentence at the top of
the guideline range is appropriate in this case for the
kind of money that you have taken.
Even if these remarks are construed to mean that the judge
considered the ability of the Humphreys to make restitution in
calculating their sentences, it would not amount to plain error.
It is not clear, however, that any error occurred. The judge seems
to focus on the amount of money taken in the scam and mentions
restitution in noting the real loss to the victims. In any event,
it certainly cannot be said that the error was clear or obvious,
because the sentences handed down were within the guidelines, and
because, when interpreted in the light most favorable to the
defendants, the meaning of the trial judge's remark is only
imprecise.
The Humphreys fail to make the requisite showing of plain
error, and, therefore, this point of appeal does not require
remanding the case for resentencing.
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IV
We find no merit in any of the points of error advanced by the
Humphreys; therefore, the judgment of the district court is
A F F I R M E D.
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