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United States v. Anderson

United States District Court, S.D. Georgia, Savannah Division

November 30, 2017



         Michael Brian Anderson, charged with perpetrating a fraud upon an agency of the United States, has filed a motion seeking to suppress evidence seized pursuant to five search and seizure warrants issued by this Court. Doc. 29. Anderson has endeavored to show that the warrant affidavit[1] contained “multiple material falsehoods and omissions, ” thus entitling him to an evidentiary hearing under Franks v. Delaware, 438 U.S. 154 (1978). Id. at 2. He further contends that there was no probable cause to support the issuance of one of the October 2014 warrants, that all of the warrants were overbroad in their descriptions of the items to be seized, and that the December 2014 warrant was the tainted fruit of the earlier unconstitutional searches (and, alternatively, was unsupported by probable cause). Id. In separate motions, he challenges the indictment's timeliness, doc. 34, as well as its sufficiency. Doc. 35.

         I. Background

         On October 29, 2014, Scott McCormack, a special agent of Homeland Security Investigations (a branch of the U.S. Department of Homeland Security) applied for warrants to search a residence and a business located in Chatham County, Georgia, and to seize two investment accounts at a brokerage firm in Savannah. The 37-page affidavit accompanying the warrant applications asserted that the property sought to be searched contained evidence that Anderson had made false statements to U.S. Customs and Border Protection (“Customs” or “CBP”), used the United States Mail to facilitate a scheme to defraud that federal agency of some $700, 000, and engaged in money laundering transactions with the ill-gotten proceeds. Doc. 29-1 (Affidavit in support of search and seizure warrant applications) (hereinafter “Aff.”). The affidavit further represented that the two investment accounts contained proceeds traceable to those crimes. Id. After finding probable cause, the Court issued all four warrants and, some two months later, issued a fifth warrant authorizing the seizure of yet another investment account.

         The warrant affidavit alleged that Anderson, a local shrimper who ran his small business (“Shrimpy's”) out of his personal residence, had fraudulently applied for some $24, 184, 352 under a government program designed to compensate domestic producers of shrimp injured by the unfair business practices of foreign competitors, who had “dumped” frozen shrimp into the United States at below cost. The Continued Dumping and Subsidy Offset Act of 2000 (“CDSOA”), also called the Byrd Amendment, was a short-lived congressional act[2] that directed Customs to distribute the anti-dumping duties collected from the offending foreign countries to those “affected domestic producers” who certified that they had incurred certain “qualifying expenditures.” The list of domestic producers who had applied for, and been deemed potentially eligible to receive, a portion of the annual distribution of the assessed duties was published in the Federal Register.

         Anderson, whose name appeared in the Federal Register, was one of many thousands of individuals or businesses who submitted a CDSOA claim by completing an official CBP Form 7401 that listed his qualifying expenditures. Each form, which Anderson signed and submitted by mail, contained this certification: “The information contained in this certification is true and accurate to the best of my knowledge and belief, under penalty of law, of the claimant and the claimant has records to support the qualifying expenditures being claimed.” Aff. at 7, ¶ 7 (emphasis added). Each form that Anderson submitted also listed 303 Labre Road as the mailing address for his business, Shrimpy's. Id. at 6, ¶ 4. The investigating agents determined that this address was the residence of Anderson and his wife. Id.

         The claim forms that Anderson submitted listed his expenditures for various standard-form items, including “Manufacturing Facilities, ” “Equipment, ” and “Acquisition of Raw Materials.” Aff. at 7-14, ¶¶ 9, 11, 16, 19, 23, 27, 33, 35. While Anderson's initial claim in July 2005 reported expenditures in the amount of $218, 881, id. at 8, ¶ 9, his asserted expenditures continued to rise over the years until in July 2010 he made a claim for $24, 184, 352. Id. at 12, ¶ 27. He submitted claims for the same $24 million amount in the three succeeding years. Id. at 13, ¶¶ 31, 33; 14, ¶ 35.

         In July 2013, Customs requested that Anderson produce supporting documentation for his claimed expenditures. Id. at 14, ¶ 36. When Anderson supplied a “shoebox” containing various receipts, Customs notified him that these receipts were inadequate and requested additional documentation. Id. Anderson responded that he was unable to recover receipts for his operating expenses but could furnish receipts for his acquisition of raw materials that would account for $18 million of his $24 million in expenditures. He then produced printed invoices reflecting his purchase of shrimp in 2005 and 2006 from R&R Seafood on Tybee Island, Georgia. Aff. at 14, ¶ 38. The invoices, each essentially identical except for the date of issue, reflect that Anderson repeatedly purchased 100, 000 pounds of shrimp from R&R Seafood, paying between $6.10 to $6.30 per pound. Id. at 14-15, ¶ 38.

         During the course of their investigation of Anderson, federal agents learned that R&R Seafood had operated its business on Tybee Island from approximately 1995 until the business closed a few months before Robbie Robertson's death in either December 2006 (as reported in ¶ 40 of the affidavit) or December 2005 (as reported in ¶ 42).[3] This small seafood business was operated by Robbie Robertson, who caught shrimp from local waters using his boat the ROHO, and his common law wife, Lisa Carter, who sold the shrimp that Robertson caught. Aff. at 15, ¶ 41. During her interview in November 2013, Carter told the investigators that R&R Seafood supplied shrimp to only two businesses, a restaurant and a grocery store located on Tybee Island, and that it sold the rest of its product to walk-in retail customers. Aff. at 16, ¶ 43. She further indicated that Robertson's daily shrimp haul did not exceed 300 to 500 pounds and that the most shrimp that she could recall selling in one day was around 100 pounds. Id. She stated that R&R Seafood never provided printed receipts to any of its customers, but instead handwrote receipts on a “carbon receipt book” to those customers who requested such documentation. Id. When shown a copy of one of the receipts which Anderson had provided to Customs, reflecting a purchase of 100, 000 pounds of shrimp for $610, 000, Carter stated that this was not a receipt ever issued by R&R Seafood and that the business had never sold that amount of shrimp to any customer on a single occasion. Aff. at 16, ¶ 44.

         The agents also spoke with a statistician for the Georgia Department of Natural Resources (DNR) who maintained a database of all shrimp catches reported to DNR by Georgia commercial fishermen. Aff. at 16-17, ¶ 45. The DNR records reflected that Robertson landed 24, 834 pounds of shrimp for the year 2005. Id. at 17, ¶ 46 (also noting that DNR had no catch totals for the ROHO for 2006 or 2007). Further, the statistician revealed that the entire Chatham County shrimping fleet reported only 1, 058, 844 pounds for 2005, 1, 003, 075 for 2006, and 657, 646 pounds for 2007. Id. at 17, ¶ 47. Anderson, on the other hand, claimed to have purchased 2, 200, 000 pounds of shrimp in 2005 and 1, 700, 000 pounds in 2006. Aff. at 17-18, ¶ 48.

         Based on their examination of certain bank records (more about that later), the agents determined that some of the CDSOA duties distributed to Anderson were deposited into his SunTrust bank accounts and then transferred to two investment accounts at Edward Jones in 2013. Aff. at 18-19, ¶¶ 50, 52; id. at 20, ¶ 56 (noting that Anderson deposited “at least $457, 679.04 of CBP funds into his accounts and co-mingled his personal and business transactions.”).

         II. Franks Issue

         An affidavit presented in support of a search warrant carries “a presumption of validity, ” Franks, 438 U.S. at 171, and any defendant who seeks to offer evidence impeaching the affidavit's factual assertions must meet an “onerous” burden. United States v. Daoud, 755 F.3d 479, 488 (7th Cir. 2014); United States v. Clenney, 631 F.3d 658, 663 (4th Cir. 2011) (Franks imposes a “rigorous” standard). Under Franks, the defendant is required to make “a substantial preliminary showing that a false statement knowingly or intentionally, or with reckless disregard for the truth, was included by the affiant in the warrant affidavit” and demonstrate that the allegedly false statement is necessary to the finding of probable cause. Franks, 438 U.S. at 155-56. Mere “conclusory” allegations of deliberate falsehood or recklessness will not suffice. Id. at 171. Rather, the defendant must make “an offer of proof, ” supported by affidavits or other reliable witness statements, establishing the deliberate falsity or recklessness[4] of the affiant's own statements (not those of some witness or informant who misled the agent), or satisfactorily explain the absence of such evidence. Id. at 171. Because the Franks “substantiality requirement is not lightly met, ” United States v. Arbolaez, 450 F.3d 1283, 1294 (11th Cir. 2006), defendants contesting the truthfulness of a warrant affidavit receive a hearing only “infrequently.” Daoud, 755 F.3d at 488.

         A. The Alleged Falsehoods

         Anderson points to four “demonstrably false statements and omissions”[5] in the warrant affidavit that were made either deliberately or with reckless disregard for the truth. Doc. 29 at 9. Each of the alleged falsehoods, he contends, was essential to the finding of probable cause. Id. The Court must determine whether these claims are sufficiently “substantial” to warrant an evidentiary hearing. Franks, 438 U.S. at 151.

         1. The statement that Anderson sought payment of his “expenditures for foreign shrimp”

         Under the CDSOA, only “affected domestic producers” of a designated product (here, shrimp) were entitled to file an application seeking to share in the anti-dumping duties collected and distributed by Customs. Anderson claims that despite his status as such a qualifying domestic producer, doc. 29 at 10, the affidavit falsely portrayed him as seeking to recover his “expenditures for foreign imported shrimp into the United States.” Aff. at 7, ¶ 6 (emphasis added). This statement, Anderson reasons, was designed to give the false impression that he was not an “affected domestic producer” of shrimp and therefore had no right to claim any share of the anti-dumping duties collected by Customs.

         No fair interpretation of the warrant affidavit as a whole would lead any careful reader of that document to such a conclusion. Other than this one sentence -- which, despite the government's quibbling, is clearly inaccurate[6] -- nothing else in the affidavit even remotely suggests that Anderson was not a domestic producer of shrimp, or that he bought and sold foreign shrimp. The affidavit, in fact, is quite to the contrary. The first sentence of the affidavit's “Probable Cause” section describes Anderson as a “shrimper” who owned “Shrimpy's, a small shrimp supplier in Savannah, Georgia.” Aff. at 5, ¶ 1. Two paragraphs later the affidavit informs the reader that “Shrimpy's is in the business of catching and selling shrimp.” Id. at 6, ¶ 3. When agents conducted surveillance at Anderson's business address (which turned out to be his residence), id. at ¶ 4, they observed “several boats” and a walk-in freezer, the very trappings of a shrimper. Aff. Attachment A-1, ¶ 1. So, rather than describing Anderson as some sort of broker who purchased foreign shrimp for resale in the Savannah market, the affidavit gave the reader the clear impression that Anderson was a small-time local shrimper who earned his living by selling shrimp that he caught and stored himself, using his own equipment. Certainly, there is no hint in the affidavit that Anderson had any foreign supply sources or that he ever acquired any shrimp from importers who brought them to this country.

         Except for the one prepositional phrase that Anderson has highlighted, the affidavit gives the clear impression that Anderson was a domestic producer of shrimp. It is true, as Anderson points out, that the affidavit never states affirmatively that he was an “affected domestic producer” within the meaning of the CDSOA. Doc. 45 (reply to Government's response) at 3.[7] But given the strong showing that Anderson had falsified invoices to support his claim of $24 million in expenditures in a two-year period (a considerable sum indeed for a small local shrimper), as well as the absence of any other evidence from Anderson as to exactly what his true expenditures were, it is by no means remarkable that the Government investigators withheld judgment about Anderson's status as an “affected” domestic producer with true “qualifying” expenditures until he produced legitimate evidence of such.

         The structure of the affidavit as a whole belies the argument that the agent was trying to persuade the Court that Anderson traded only in foreign shrimp and, therefore, was not a domestic producer of shrimp to any degree. Rather, the affidavit, read fairly, suggests that Anderson was greatly exaggerating the scope of his domestic shrimp production (and his attendant expenses for that production), not falsely claiming to be a local shrimper when he was no such thing. So, while Anderson has found an inaccurate (false) statement in the affidavit, he has not met his significant threshold burden of establishing that this statement was deliberately false, or made with reckless disregard for the truth.[8]Anderson gets no Franks hearing on this claim, therefore.

         2. The statement that Robbie Robertson died in 2005

         Anderson asserts that the affidavit is fatally flawed because it erroneously “informs the Court several times that [Robbie] Robertson died in 2005 and that R&R [Seafood] closed around the same time, ” thus leaving the Court to infer that the R&R invoices Anderson submitted to Customs reflecting a 2006 date of issuance were clearly “a sham” (for presumably dead men and closed businesses do not issue invoices). Contrary to Anderson's brief, the affidavit does not “inform” the Court either that Robertson died in 2005 or that his business closed that year. Rather, the affidavit reports what Aletha Carter, Robertson's business partner and common law wife, “said” to the agents during her November 2013 interview about the date of Robertson's death and the business closure. Anderson has made no claim, much less an offer of proof, that Ms. Carter did not make such statements.

         Moreover, in the paragraph immediately preceding those cited by Anderson, the affidavit states that, according to R&R Seafood's landlord, the business closed in July 2006 due to Robertson's illness and that he passed away in “December 2006.” Aff. at 15. Thus, the witnesses gave conflicting accounts of when Robertson died and the business closed. The affidavit makes no attempt to resolve that conflict and therefore does not, as Anderson suggests, give the reader the false impression that Robertson died before the dates listed on the 2006 (phony) invoices.[9]

         The preponderant theme of the affidavit is that all of the invoices which Anderson presented to Customs were fake (because R&R Seafood never generated such invoices in the first place and never dealt in the volume of shrimp claimed on those invoices), not that some of the invoices were “a sham” because they were issued after the 2005 date of death mentioned by Ms. Carter during her interview. Anderson has manufactured a falsehood where there is none. Certainly, he has not made a “substantial” showing that in leaving the witness conflict about ...

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