United States v. Stokes , 829 F.3d 47 ( 2016 )

United States Court of Appeals
For the First Circuit
No. 15-1602
UNITED STATES OF AMERICA,
Appellee,
v.
DARREN STOKES,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Torruella, Lynch, and Barron,
Circuit Judges.
James B. Krasnoo, with whom Krasnoo, Klehm & Falkner LLP was
on brief, for appellant.
Mark J. Balthazard, Assistant United States Attorney, with
whom Carmen M. Ortiz, United States Attorney, and Doreen M. Rachal,
Assistant United States Attorney, were on brief, for appellee.
July 13, 2016
TORRUELLA, Circuit Judge. From 2008 to 2012, defendant-
appellant Darren Stokes sent fraudulent invoices to thousands of
businesses. Each invoice appeared to be sent by a legitimate
trade association and directed the business to send membership
dues to one of three addresses in Massachusetts where, unbeknownst
to the business, Stokes received mail. Postal inspectors
intercepted mailings to these addresses. After criminal charges
were leveled against Stokes in the United States District Court
for the District of Massachusetts, he moved to suppress the
mailings as the product of an unreasonable search under the Fourth
Amendment. The district court denied the motion to suppress, and
Stokes pled guilty to 8 counts of wire fraud under 18 U.S.C. § 1343and 7 counts of mail fraud under 18 U.S.C. § 1341. During the
sentencing, the district court determined that Stokes's scheme had
an intended loss between $400,000 and $1,000,000 and 250 or more
victims, findings that increased his sentencing range under the
United States Sentencing Guidelines, and sentenced Stokes to 48
months' imprisonment. Stokes reserved the right to appeal the
district court's denial of his motion to suppress and its
sentencing determination; he appeals those decisions here. We
affirm.
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I.
"Because this appeal follows a guilty plea, we draw the
relevant facts from the change-of-plea colloquy, the unchallenged
portions of the presentence investigation report (PSI Report), and
the transcript of the disposition hearing." United States v.
Mateo-Espejo, 426 F.3d 508, 509 (1st Cir. 2005). Where necessary,
we supplement the facts with materials submitted to the district
court for purposes of the motion to suppress. See United States
v. Pacheco, 489 F.3d 40, 42 (1st Cir. 2007).
From 2008 to 2012, Stokes sent fraudulent invoices to
businesses. The invoices purported to be from legitimate trade
associations, including the American Dental Association (the
"ADA"), the National Association of Manufacturers (the "NAM"), the
American Trucking Association (the "ATA"), and the American
Hospital Association (the "AHA"). Each invoice requested that the
recipient send annual membership dues to the trade association at
a Massachusetts address where Stokes received mail. Stokes was
listed as neither a recipient nor a sender on any of these
mailings.
Stokes identified target businesses by purchasing lists
of business fax numbers and then hiring a company, Profax, to send
invoices to those numbers. For example, in January 2012, Stokes
used Profax to send invoices purporting to come from the ADA and
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requesting $575 in membership dues to more than 13,000 dental
offices. That same month, Stokes had Profax send invoices bearing
the NAM1 acronym and requesting $575 in membership dues to 1,100
manufacturing businesses. He cashed the checks using United Check
Cashing, a business where customers could cash checks instantly
without needing to establish a bank account.
From 2008 onward, Stokes received cease and desist
letters from various trade associations and faced two civil
actions, as well as an administrative complaint from the United
States Postal Inspection Service, for his involvement in this
scheme. In 2012, postal inspectors seized 443 envelopes addressed
to the ADA that were mailed to a P.O. Box in Brockton,
Massachusetts, in response to Stokes's fraudulent invoices. The
PSI assumed that each of these envelopes contained a check for
$575. Postal inspectors withheld from delivery 32 envelopes
assumed to contain checks for $575 addressed to the NAM at a
Willard Street address in Quincy, Massachusetts, 10 envelopes
assumed to contain checks for $585 addressed to the Automotive
Parts Remanufacturers Association (the "APRA") at a Blaine Street
address in Brockton, and 14 envelopes assumed to contain checks
1 Despite containing the NAM acronym, the invoices used the name
"National Manufacturers Association," as opposed to the National
Association of Manufacturers.
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for $685 addressed to the ATA at the same Blaine Street address.
At oral argument, the Government explained that it had sought the
consent of the senders to open 7 of these items and that those 7
opened envelopes2 formed the basis of mail fraud counts. Although
postal inspectors seized 8 envelopes personally addressed to
Stokes at his P.O. Box, the Government avows that they were never
opened.
Stokes was charged with 8 counts of wire fraud under 18
U.S.C. § 1343, based on calls that Stokes made to Profax in January
and February 2012, and 7 counts of mail fraud under 18 U.S.C.
§ 1341. He sought to suppress the seized mail before the district
court. The district court denied the motion in a written
memorandum and order, explaining that "no mail addressed to Stokes
personally ha[d] ever been opened" and that he lacked "standing to
challenge the seizure of letters addressed to someone else
altogether." Stokes pled guilty, reserving the right to appeal
the suppression issue.
At the sentencing hearing, the district court adopted
the probation office's recommendation for a base offense level of
2 The 7 opened items included: 3 envelopes addressed to the ADA
containing checks for $575; an envelope addressed to the NAM
containing a check for $575; 2 envelopes addressed to the APRA
containing checks for $585; and an envelope addressed to the ATA
containing a check for $685.
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7, with a 14-level increase for an intended loss between $400,000
and $1,000,000,3 a 6-level increase for 250 or more victims, and a
2-level decrease for acceptance of responsibility. With a total
offense level of 25 and a Criminal History Category of III, Stokes
had a sentencing range of 70 to 87 months' imprisonment. Stokes
received a below-guidelines sentence of 48 months' imprisonment
and 3 years' supervised release.4
Stokes now appeals the denial of his motion to suppress
and the district court's loss calculation.
II.
A. Unreasonable Search and Seizure
For suppression issues, "we review a district court's
factual findings for clear error," with "[t]he ultimate conclusion
as to whether there is a Fourth Amendment violation" subject to de
novo review. United States v. Weidul, 325 F.3d 50, 51 (1st Cir.
2003).
Stokes argues that the search and seizure of his mail
constituted a violation of the Fourth Amendment as his mail was
3 Originally, the PSI recommended a 20-level increase based on an
intended loss between $7,000,000 and $20,000,000. After receiving
objections from both the Government and Stokes, the Probation
Office revised this figure.
4 Stokes was also ordered to pay a special assessment of $1,500
and restitution of $1,170.
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opened without a warrant and in violation of postal regulations,
statutes, and a court order in a related civil case.5 The district
court did not reach these issues as Stokes failed to make a
threshold showing that he has a reasonable expectation of privacy
in the searched mail. We too find that Stokes's inability to
5 In January 2012, the ADA filed a civil suit in the United States
District Court for the District of Massachusetts seeking a
preliminary injunction against Stokes. Following a hearing, the
district court granted the ADA's proposed preliminary injunction,
which authorized the United States Postal Service (the "USPS") to
seize and withhold documents addressed to Stokes's P.O. Box. The
proposed order provided that the USPS "shall attempt to obtain
permission from the senders to open and provide to Plaintiff's
counsel, for inspection and copying, the seized documents."
Before entering the order, however, the district court crossed out
this language. Stokes contends that the district court's actions
indicate that it was forbidding the USPS from opening mail, even
with the sender's consent. While we need not decide this issue,
we agree with the Government that the more plausible reading is
that the district court was not requiring the USPS to contact the
sender or provide the ADA's counsel with copies of the seized
documents. Had the district court wanted to forbid the USPS from
contacting the sender, it could have simply added "not" to the
sentence.
Stokes also alleges violations of 39 C.F.R. § 233.1(b), which
imposes limitations on postal inspectors' investigative powers,
and 39 U.S.C. § 404(c), which provides that the USPS may open mail
only "under authority of a search warrant authorized by law, or by
an officer or employee of the Postal Service for the sole purpose
of determining an address at which the letter can be delivered, or
pursuant to the authorization of the addressee." The Government
contends that the USPS is authorized to investigate these matters
and open mail with the sender's consent under 39 U.S.C. § 3003(a)
and section 274.21 of the USPS Administrative Support Manual.
Because we find that Stokes lacks standing to challenge the
searches here, we do not address this dispute.
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demonstrate a reasonable expectation of privacy in the items
searched and seized is fatal to his claim.6
The Fourth Amendment protects "[t]he right of the people
to be secure in their persons, houses, papers, and effects, against
unreasonable searches and seizures." U.S. Const. amend. IV. The
"capacity to claim the protection of the Fourth Amendment depends
. . . upon whether the person who claims the protection of the
Amendment has a legitimate expectation of privacy." Rakas v.
Illinois, 439 U.S. 128, 143 (1978). Under what is known as the
"standing" doctrine,7 the defendant carries the burden of making a
threshold showing that he has "a reasonable expectation of privacy
in the area searched and in relation to the items seized." United
States v. Aguirre, 839 F.2d 854, 856 (1st Cir. 1988). Only then
can he "challenge the admissibility of evidence on fourth amendment
grounds." United States v. Gómez, 770 F.2d 251, 253 (1st Cir.
6 In its order, the district court noted that Stokes "[sought] to
suppress evidence (the contents of unopened mail) that the
government has committed not to offer at trial." At oral argument,
the Government acknowledged that it had intended to offer all mail
addressed to trade associations, unopened and opened, should
Stokes have proceeded to trial.
7 "While the Supreme Court noted that this threshold analysis is
'more properly placed within the purview of substantive Fourth
Amendment law than within that of standing,' Minnesota v. Carter,
525 U.S. 83, 88 (1998), courts continue to refer to it as an issue
of 'standing.'" United States v. Lipscomb, 539 F.3d 32, 36 (1st
Cir. 2008) (citations omitted).
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1985). "This burden must be carried at the time of the pretrial
hearing and on the record compiled at that hearing." Aguirre, 839
F.2d at 856.
Here, there are three general categories of claims
regarding the searches and seizures: the search of the Brockton
P.O. Box; the seizure of envelopes from the Brockton P.O. Box as
well as those withheld from delivery at the Willard Street and
Blaine Street addresses; and the 8 envelopes addressed directly to
Stokes. We evaluate each category in turn.
1. The Search of the P.O. Box
Stokes asserts that the search of his P.O. Box was
unreasonable under the Fourth Amendment. This court has yet to
decide whether a defendant can hold a reasonable expectation of
privacy in a rented mailbox in circumstances like those here. See
United States v. Burnette, 375 F.3d 10, 17 (1st Cir. 2004), vacated
on other grounds, 543 U.S. 1181 (2005). Nevertheless, we
explained that
the reasonableness of [the defendant's] asserted
expectation of privacy may depend upon facts such as
the layout of the mailroom and mailboxes, the
[commercial mail receiving agency's ("CMRA")]
procedures for mail delivery and storage, and the
agreement between the CMRAs and their clients as to
access by CMRA managers and third parties to mail
inside the mailboxes.
Id. Stokes provided no information as to any of these factors
before the district court or in his briefs to us. Stokes suggests
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that his having a key to the P.O. Box creates a reasonable
expectation of privacy as it demonstrates his exclusive access to
the box. At oral argument, however, he conceded that he did not
have any information about the accessibility of the box to post
office workers or any other details as to the layout of the
mailroom. Nor has he "offered [a] legitimate explanation or
excuse for his failure to present evidence" on this front. Gómez,
770 F.2d at 253. Accordingly, Stokes has failed to carry his
burden of proving that he has a legitimate expectation of privacy
in the Brockton P.O. Box.
2. The Seizure of Letters Not Addressed to Stokes
Next, Stokes asserts a privacy interest in the seizure
of mail addressed to his P.O. Box, the Willard Street address, and
the Blaine Street address. "Letters and other sealed packages are
in the general class of effects in which the public at large has
a legitimate expectation of privacy . . . ." United States v.
Jacobsen, 466 U.S. 109, 114 (1984); accord Ex Parte Jackson, 96
U.S. 727, 733 (1877). Yet a defendant "has no reasonable
expectation of privacy in the outside of mail that is sorted or
stored" in a public area. Burnette, 375 F.3d at 16-17. Further,
many of the federal courts of appeals have been reluctant to find
that a defendant holds a reasonable expectation of privacy in mail
where he is listed as neither the sender nor the recipient, at
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least absent some showing by the defendant of a connection, and
here Stokes has shown none. See United States v. Smith, 39 F.3d
1143, 1145 (11th Cir. 1994) (holding no legitimate expectation of
privacy where the defendant "was neither the sender nor the
addressee of the letter"); United States v. Koenig, 856 F.2d 843,
846 (7th Cir. 1988) ("Because Graf was neither the sender nor the
addressee of the package and thus has no privacy right in it, he
therefore has no standing to make [a suppression] request.");
United States v. Osunegbu, 822 F.2d 472, 480 n.23 (5th Cir. 1987)
(finding that defendants "have no standing to challenge the actions
of the postal inspectors" where the seized mail "was addressed to
and intended for someone other than the" defendants); United States
v. Givens, 733 F.2d 339, 342 (4th Cir. 1984) (per curiam) (finding
that "defendants' status as intended recipient of the cocaine
conferred upon them no legitimate expectation of privacy in the
contents of a package addressed to another"); see also United
States v. Lewis, 738 F.2d 916, 919-20 & n.2 (8th Cir. 1984)
(assuming, without deciding, that the opening of a bill addressed
to someone other than the defendant "cannot be said to have
infringed his reasonable privacy expectations" (emphasis in the
original)).
We need not decide whether a defendant ever could have
a reasonable privacy interest in mail where he is not listed as
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addressee or addressor.8 Stokes's affidavit, submitted in support
of his motion to suppress, asserts that the "USPS had no right to
seize, open and view my mail coming to me" at the P.O. Box, Blaine
Street address, and Willard Street address. As an initial matter,
we query to what extent a blanket assertion that Stokes has a
privacy interest in "my mail coming to me" includes mail containing
no indication that it is associated with him. Even then, Stokes's
barebones assertion does not touch on any of the factors that we
have listed as relevant to the standing inquiry, including
ownership, possession and/or control; historical use
of the property searched or the thing seized; ability
to regulate access; the totality of the surrounding
circumstances; the existence or nonexistence of a
subjective anticipation of privacy; and the
objective reasonableness of such an expectancy under
the facts of a given case.
Aguirre, 839 F.2d at 856-57.
Stokes argues that he has Fourth Amendment standing by
virtue of some of the envelopes bearing his "personal addresses"
8 Lower courts in this circuit have recognized a privacy interest
in mail not addressed to or sent by the defendant where the
defendant carefully entrusted the mail to an intended recipient in
a bailment agreement, see United States v. Bates, 100 F. Supp. 3d
77, 84 (D. Mass. 2015), and where the defendant asserted that the
mail and its contents were intended for him as his property, see
United States v. Allen, 741 F. Supp. 15, 16-18 (D. Me. 1990).
Stokes does not argue that those scenarios are applicable here,
and we do not address the question of whether a defendant in these
situations could assert a reasonable expectation of privacy in the
searched mail.
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of Willard Street and Blaine Street. 9 Stokes provides little
support for his contention that an address alone can create a
reasonable expectation of privacy in a parcel. Even if we were
to accept this argument, he offers minimal information as to the
nature of these addresses. A review of the record reveals that
the Willard Street address corresponds to a mail-handling service
and the Blaine Street address to a property purchased by Stokes in
2006. We do not know whether anyone else had access to these
locations, what the nature of the delivery receptacle was, or any
other information that could shed light on the reasonableness of
his privacy interest. See id. at 857 ("The most intimate of
documents, if left strewn about the most public of places, would
surely not be shielded."). Without more, Stokes cannot shoulder
his burden of demonstrating that he has a reasonable expectation
of privacy in envelopes where he is not listed as an addressor or
an addressee.
3. The Seizure of Letters Addressed to Stokes
The Government acknowledges that it seized 8 pieces of
mail addressed to Stokes, but it asserts that it has never opened
this mail and did not intend to offer it as evidence at trial.
9 The mail addressed to these locations was seized before arrival.
Accordingly, Stokes does not assert that there was an
unconstitutional search of either property.
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The lower court credited this account. Stokes, to the contrary,
asserts that the Government opened his mail and that phone records
he received from Sprint in January 2012 and February 2012 were
used in the investigation. We review this factual finding for
clear error. United States v. Ryan, 731 F.3d 66, 68 (1st Cir.
2013).
To support its contention that the mail was never opened,
the Government submitted an affidavit detailing where the mail is
being held and photocopies of the 8 seized envelopes. In the
images, none of the envelopes appear to be opened or otherwise
tampered with. Stokes asserts that "itemized portions of [the
Sprint] bills are missing," but fails to identify any evidentiary
support for this contention, instead citing portions of the record
that contain photocopied images of the sealed envelopes. He
identifies no other materials to bolster his contention that the
mail was opened. And in any event, the district court also
credited the Government's representation that it was not going to
offer the evidence at trial. Ultimately, Stokes's conclusory
allegations are insufficient to overcome the district court's
determination. We conclude that the district court did not
clearly err in declining to credit Stokes's unsupported
assertions. Cf. Aguirre, 839 F.2d at 857 & n.4.
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B. Loss Calculation
Section 2B1.1 of the United States Sentencing Guidelines
provides for an increase in the offense level for losses exceeding
$6,500 for basic economic offenses. USSG § 2B1.1(b)(1). The
Guidelines define loss as the greater of "actual loss," which is
"the reasonably foreseeable pecuniary harm that resulted from the
offense," or "intended loss," which is "the pecuniary harm that
the defendant purposely sought to inflict." Id. § 2B1.1 cmt.
n.3(A)(i)-(ii). The district court must determine loss by a
preponderance of the evidence. United States v. Sharapka, 526
F.3d 58, 61 (1st Cir. 2008). "We review the sentencing court's
interpretation of the sentencing guidelines de novo and its
determination of facts for clear error." United States v.
González-Vélez, 587 F.3d 494, 503 (1st Cir. 2009). The district
court "need only make a reasonable estimate of the loss," and the
Guidelines encourage reviewing courts to give deference to the
district court's determination in light of its "unique position to
assess the evidence and estimate the loss based upon that
evidence." USSG § 2B1.1 cmt. n.3(C).
In its sentencing memorandum and during the sentencing
hearing, the Government identified three general categories of
evidence to supports its loss estimate of $400,000 to $1,000,000:
(1) records from United Check Cashing from September 2009 to
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February 2012 indicating that Stokes cashed at least $204,935 worth
of checks; (2) the seized envelopes, which included 443 envelopes
addressed to the ADA presumably containing checks of $575, 32
envelopes addressed to the NAM presumably containing checks of
$575, 10 envelopes addressed to the APRA presumably containing
checks of $585, and 14 envelopes addressed to the ATA presumably
containing checks of $685, for a total of $288,565; and (3)
documents showing that Stokes purchased lists containing more than
400,000 fax numbers from 2008 to 2012 and sent more than 15,000
invoices in early 2012.
Stokes disputes the reliability of these materials.10
He notes inconsistencies in the United Check Cashing documents and
identifies several checks listed therein that do not appear to be
included in the fraud scheme, including 21 checks in varying
amounts from the same maker. Stokes also disputes that all of the
unopened envelopes contained checks, noting that several envelopes
have return addresses from Stokes's sister, the New York Office of
the Attorney General, and the Better Business Bureau. Presumably,
10 As a threshold matter, the Government contends that Stokes
waived this argument by conceding that the loss determination was
correct at the sentencing. Conversely, Stokes contends that
comments from the district court led him to believe that he risked
withdrawal of his plea if he did not agree with the Government's
recommendation. Because the Government easily prevails on the
merits, we do not reach this issue.
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these senders would not be submitting membership dues to join trade
organizations.
The Government acknowledged that the documents were not
"entirely reliable," but emphasized that the information was
generally consistent with Stokes's scheme. For example, many of
the cashed checks noted in the United Cash Checking documents
corresponded to the membership dues amounts in the invoices that
Stokes sent businesses, and some checks were visible through the
windows of the unopened envelopes. More importantly, as both the
Government and the district court observed during the sentencing
hearing, one need not accept that each document offered by the
Government corresponded to Stokes's scheme to arrive at the loss
determination employed here. Even if half of the approximately
500 envelopes sent to Stokes's three addresses did not contain
checks, they still support a finding of 250 victims and a loss of
nearly $150,000. Moreover, the seized envelopes account for only
a single year in Stokes's 5-year scheme. The $150,000 figure also
does not include the cashed checks and the thousands of sent
invoices for which Stokes had yet to receive checks. Given the
breadth and duration of Stokes's operation, the district court did
not clearly err in its loss determination.
III.
For the reasons stated herein, we affirm.
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