United States v. Michael McClellan
2015 U.S. App. LEXIS 12582
| 7th Cir. | 2015Background
- McClellan and his wife operated T&M Day-care in Illinois; they falsified records to obtain state reimbursements.
- Francis Lopez was hired as director; she altered applications and records under direction of McClellan and Tina.
- Sanchez testified that meals and attendance were manipulated for Healthy Start reimbursements; discrepancies existed in meal records.
- In 2008, McClellan purchased The Paragon restaurant in Indiana; DHS investigation into illegal aliens working there overlapped with the Paragon.
- Bastida recorded conversations showing McClellan knew some employees were illegal and discussed housing them; keeping them in housing allegedly to shield them from detection.
- In 2010–2011, law enforcement executed search warrants; eight employees worked without legal status at The Paragon; four more were found at the St. John Road residence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for Count 1 harboring | McClellan knew aliens were illegal and housed them at St. John Road. | Evidence cannot prove knowledge of illegality or intent to harbor. | Evidence supports harboring beyond a reasonable doubt. |
| Sufficiency of evidence for Counts 2–4 mail fraud | Cash payrolls and misreported wages show fraudulent scheme aided by housing/records. | Unwitting involvement or lack of intent to defraud state; prior owners’ conduct | Evidence shows intent to defraud; mail fraud convictions affirmed. |
| Sufficiency of evidence for Count 5 money laundering | Fraudulent reimbursement funds used to purchase property; Lopez’s and Sanchez’s testimony support intent to defraud. | Lopez acted on McClellan’s directives; cannot attribute all fraud to him. | Evidence supports intent to launder crime proceeds; conviction affirmed. |
| Whether jury instruction on harboring required specific intent | Court’s instruction adequately conveyed harboring elements; Costello guidance supports. | Li requires a specific intent instruction or plain error when missing. | No plain error; instruction adequate and not misleading. |
Key Cases Cited
- United States v. Costello, 666 F.3d 1040 (7th Cir. 2012) (harboring requires deliberate safeguarding; intent can be shown by actions to conceal or shield)
- United States v. Campbell, 770 F.3d 556 (7th Cir. 2014) (evidence can show harboring intent; plain-error review of instruction affirmed despite lack of explicit intent instruction)
- Li v. United States, 648 F.3d 524 (7th Cir. 2011) (no automatic requirement of specific-intent harboring instruction; general intent instruction may suffice)
- United States v. Giovenco, 773 F.3d 866 (7th Cir. 2014) (three elements of mail fraud; intent to defraud shown by willful deceit for financial gain)
- Huff v. Sheahan, 493 F.3d 893 (7th Cir. 2007) (standard for reviewing jury instructions de novo; plain error review framework)
- United States v. Olano, 507 U.S. 725 (Supreme Court 1993) (plain-error framework for reviewing forfeited errors)