United States v. Perry G. Blocker

704(a). VII, § work environment under Title holding majority’s is based on the mis- interpretation judge-made

taken two

terms were never intended for the use colleagues

my make of them. is There noth-

ing to indicate that this court intended to scope protection against

narrow the retal-

iatory 704(a) § discrimination afforded adopted term, it

when the shorthand “ad- action,” employment analy-

verse to assist its

sis retaliation claims. Nor is correct to

conclude, majority have, as the must that the

Page authority court had the and the inten-

tion, by judge-minted term, its “ultimate em- decision,”

ployment drastically narrow the

meaning §§ of discrimination under

717, effectively abolishing altogether discriminatory

cause action based on a

work environment. Unfortunately, the ma-

jority has interpretation allowed its mistaken judge-made rules lead it to an to.

incorrect conclusion as meaning

Title VII. I majority’s

Because believe that the deci- contrary statutory

sion the clear lan-

guage, Supreme decisions, Court and all

prior jurisprudence, and that it will drasti- 704(a)’s

cally protection weaken against

retaliation for those participate who in the

enforcement of immunizing Title VII em-

ployers who use hostile environment discrim- vengefully them,

ination against I must re-

spectfully dissent. America,

UNITED STATES of

Plaintiff-Appellee,

Perry BLOCKER, G. Defendant-

Appellant.

No. 95-60286. Appeals, States Court of

Fifth Circuit.

Jan.

tion, part part and reverse affirm grounds. on other AND BACKGROUND PROCEDURAL HISTORY Blocker, Defendant-appellant Perry G. Accountant, managing Public Certified DeMiller, Denny, partner of the and Word White, codefendant, accounting firm. Dan companies owned or controlled number finance and insurance fields. One collectively group companies those Group. referred to. as the Andrew Jackson group This included Andrew Jackson Life (AJL), Company Andrew Insurance Jackson Company, Insurance Andrew Jack- General Casualty Company, and An- son Insurance Corporation. also drew Jackson White companies other in the owned number of insurance fields. Blocker’s ac- finance and counting firm conducted the annual audit Group work for the Andrew Jackson and years companies. After several of affiliated White, Blocker providing financial advice to person charge running became the Group. Andrew Jackson Attorney, May, Assistant U.S. Victoria Jr., Morgan Dowdy, Office of the Unit- 1990, Mississippi John Insur- Sometime MS, Jackson, Attorney, (MID) Peter ed States Department ance informed Blocker Barrett, Attorney, Assistant U.S. Hickman problem with the and White there was Office, Biloxi, MS, plain- for Attorney’s among companies U.S. affiliation the White-owned appellee. interdependent their investments. Sub- tiff — pur- Blocker sequently, in December of Powell, Rutherford, Barry H. Kenneth A by signing a note. chased AJL from White Jackson, Alston, Slyke, Rutherford & Van' Meanwhile, Thomas was a contract Gober Colette, MS, M. Colette & Mark John John MID contracted with employee of MID. Jackson, MS, Associates, ap- for defendant — to conduct triennial examinations Gober pellant. ability and condition of domestic the financial §Ann. 83- companies. Miss.Code

insurance (1972). During of his exami- the course 1-25 Mississippi insurance com- nations of various records, what he panies’ Gober discovered GARWOOD,HIGGINBOTHAM Gober Before to be criminal violations. believed BENAVIDES, Judges. superiors Circuit at MID and was as- informed his responsible that he would not be held sured PER CURIAM: reports. Never- any problems with his for theless, any charges himself from protect Perry appeals his convictions G. Blocker began to record later wrongdoing, Gober mail fraud for the offenses of and sentences in- with various surreptitiously conversations argues, among oth- and bank fraud. MID. dividuals by a Mis- things, that a search conducted er 1990,- examining examiner, he con- In fall of while sissippi insurance whom company, unrelated insurance acting as an the United records of an tends company was Government, that the appeared Fourth to Gober violated the States in- stealing policyholders. its Gober disagree this conten- Amendment. We report eluded this information in his surplus portfolio. cause of its low and bond superiors his MID voiced concern to his at MID. thereafter notified Blocker that an ex- August He later amination was scheduled learned the Federal Trade of 1991. (FTC) might investigating Commission assigned Gober was to conduct the trienni- the matter and became worried that the alle- al examination of AJL. No one at AJL or gations wrongdoing would be deleted from MID knew of Gober’s preexisting coopera- report. relationship tive with the United States Gov- ernment. began recording Gober Blocker’s Gober discussed his concerns with Jim meeting at a conversations between AJL of- Martin, attorney arranged a local who prior ficials MID officers com- meeting meeting, with FTC officials. At that mencement of the actual examination of advised the FTC officials of his con- AJL. response, they cerns. him told that he responsibility notify had a the United findings, Based on Gober’s and with Gob- Attorney’s States office. assistance, Agent prepared er’s Breedlove affidavit to obtain a warrant to search the subsequently met with Assistant records of AJL and its affiliates. The search Attorney United States James Tucker secured, February warrant was and on September request, At Tucker’s executed, the search warrant was re- Agent Glen Breedlove was also at the meet- sulting in the seizure of voluminous records ing. The three discussed Gober’s work as a from AJL and its affiliates. MID, certified financial examiner for his con- 9, 1993, grand jury On June a clusions that companies certain violat- returned were law, an charging indictment ing response and Blocker and White MID’s to his con- aiding abetting with and each other in shortly agreed clusions. Gober thereafter following offenses: 18 counts of mail fraud furnish the FBI with evidence of crimi- (defrauding policyholders, investors, activity part nal on Mississippi of the shareholders, regulatory agencies and of the insurers or MID that he during encountered Group Andrew Jackson of Insurance Com- the course of his work. panies in 1341); § violation of 18 U.S.C. and Beginning September 1990, in Gober 2 counts of bank (submitting fraud fi- false periodically Agent met Breedlove and nancial federally statements to insured fi- prosecutors. meetings, federal At those nancial institutions in violation of 18 U.S.C. provided any Gober evidence he encountered 1014). charged The indictment that during his examinations that indicated crimi- Blocker and White aided and abetted each activity. nal subsequently requested Gober defrauding other in policyholders, inves- compensation time, paid and the FBI tors, shareholders, regulatory agencies Gober at the same paid rate he was for his Group Andrew Jackson of Insurance contract work for MID. (owned Companies: by Blocker); AJL An- Additionally, provided the FBI Gober with drew Jackson General Company; Insurance a device for the recording clandestine of con- Casualty Andrew Jackson Insurance that versations he had with officials of both Company. specifically, More the indictment companies. MID and the insurance Gober charged that engaged Blocker and White recorded all conversations because the FBI deceptive practices to continue to in- receive sought selectively to avoid the accusation of premiums surance and investments at a recording conversations. Blocker’s name they time when companies knew that had been added to the monitoring FBI’s list impaired. involved were insolvent or partner while he still a accounting Blocker filed a suppress motion to firm, prior purchase to his of AJL. evidence found during Gober his examina- 1991, In March of the National Association tion pursuant and the evidence seized (NAIC) of Insurance court, Commissioners sent out warrant. The district conducting after an report annual indicating the MID hearing, that denied the motion in a memoran- priority” AJL was a “first company opinion, that dum rejecting Blocker’s contentions regulator needed immediate attention be- agent Gober his examination anwas legally. v. it has obtained Walter that the Mis- Government and the Federal States, 649, 656, 2395, 447 U.S. 100 S.Ct. the adminis- that authorized sissippi statute (1980). 2401, question Fourth violated the 65 L.Ed.2d 410 examination trative trial, jury whether, in view of the circumstances of the After two-week Amendment. mail 18 counts of guilty case, on the private party Blocker acted as an instru found fraud.1 The of bank 2 counts fraud and when he ment or to 97 months court sentenced Coolidge district conducted the search. v. New in the ordered restitution imprisonment 443, 487, 2022, Hampshire, 403 U.S. 91 S.Ct. $5,708,051. (1971).3 amount of 2049, 29 L.Ed.2d 564 ANALYSIS Court, determination, To make such a this TO SUP- OF MOTION I. DENIAL years, applied the articulat in recent has test PRESS v. ed the Ninth Circuit United States the district Blocker contends (1) (9th Cir.1982): Miller, 652, 688 F.2d suppress denying his motion court erred acquiesced the Government whether knew prior to the the evidence obtained (2) conduct; intrusive and whether the and all the the search warrant execution private party law enforce intended assist to the warrant. He pursuant evidence seized ment efforts or to further his own ends. agent or acting as an argues Jenkins, 460; 46 F.3d at United States v. when Gober of the Government instrument (5th Pierce, Cir.1990); 893 F.2d in his resulted gathered the evidence that Bazan, v. United States of a appeal from the denial prosecution. “On (5th Cir.1986), denied, cert. we review suppress motion to (1987). 95 L.Ed.2d 816 clearly er findings under the court’s factual cases, each of those we assumed law its conclusions of roneous standard adequate formul Circuit’s test was Ninth Johnson, 16 F.3d de novo.” United States ation.4 Cir.1994). has treated This Court below, considering district court after whether a court’s determination the district surrounding and circumstances all the facts acting agent an for the Govern person is as relationship with the MID audit and Gober’s v. finding. States as a factual ment office, Attorney’s (5th Cir.1995).2 the FBI and United States Jenkins, 447, 460 46 F.3d suppress, concluding the motion to denied private, that if a It is well settled that: search, a or sei party wrongfully conducts of “... of the records Gober’s examination property the person or zure of another’s legitimate ex- Life was a Andrew Jackson Amendment is not violated Fourth authority on behalf of ercise of his deprive does not private misconduct such company’s financial MID to discern the right to use evidence that charged AJL’s nor Blocker's Fourth Amend- three that neither had also counts 1. The indictment agree rights laundering were violated. Because we- money of 18 U.S.C. ment of violation however, conclusion, 1957(a); acquitted jury Blocker we need not consider with this money laundering standing counts. on the three issue. if, cases, finding clearly "al is erroneous Court had indicated 2. A factual 4.Prior to those this o it, support though acquiescence "[p]rEknowledge [of evidence t re there is viewing by private party left with government] court on the entire evidence is a a make a search conviction that a mistake by government.” the definite and firm v. United States search Cir.1975). City Bes been committed.” Anderson Clegg, has ordin Acc N.C., which, City, gly, "[a]ny semer Fourth for Amend (1985) (citation reasons, 84 L.Ed.2d been excluded had ment would have omitted). would, government pro gathered se been course, gathered by the to be excluded if party.” We ex only nominally private Id. argued in the district court 3. The Government that, excluded to plained evidence would be standing challenge the lacked that Blocker using knowingly the Government from deter district and seizure of AJL's records. The search prohibited party private do that which it is standing opined issue that resolution of the court doing. unnecessary, given its ultimate conclusion not, examination, condition and was as Blocker con- the normal course of noth- tends, pretext to search for evidence of more, ing nothing different”; nothing less and activity_ per- criminal court is [T]he that Gober was never directed the FBI or deliberately suaded that did not use Attorney’s United States office as to procedure the administrative examination “what to or do” “what to look for or what pretext conducting for a criminal in- as a find,” they hoped to and the vestigation. persuaded The court is Attorney’s United States office “never even purpose at Andrew Gober’s Jackson Life told investigation might Gober what their was not to for search evidence of criminal concern, they might or what be interested activity, agent an either as of the state in.” None of findings clearly these is errone- government government. or the federal ous. Rather, purpose perform was to a fi- nancial examination of Andrew Jackson appeal, challenges On capacity Life in his as an examiner for arguably implicit court’s conclusion that Gob- MID, precisely and that what he did. er was agent, correctly not Government During examination, the course of that he asserting that the evidence establishes that disclosed information and evidence to the the FBI acquiesced knew and in Gober’s But purpose FBI. that was not the for his audit of AJL’s records and that in- presence premises, on the or the reason tended to assist the FBI in its law enforce- court, therefore, for his examination. The argues ment efforts. Blocker also that Gob- rejects defendant’s contention that Gober cooperation er’s with the FBI was intended position used his as pretext examiner as a pecuniary further his own interests conducting a warrantless search for compensation virtue of the he received from (Footnotes omitted). activity.” criminal Bazan, the FBI. See 807 F.2d at 1203. We determination, making this the court need not decide whether acting Gober was as alia, upon, relied inter uncontroverted evi- agent an of the Federal Government because dence that Gober’s examination of AJL was assuming, arguendo, even that Gober was pursuant part to and a regular MID’s of MID acting but was also AJL; triennial examination of that Gober FBI, on behalf of the we believe that no way “conducted his examinations the same Fourth Amendment relationship after he commenced his violation with the occurred as before”; FBI as he had that he inspection “received his Gober’s did not upon any intrude assignments he, from the MID and neither expectation reasonable privacy that AJL nor the FBI or Attorney’s United States might Blocker have had AJL’s records. in directing office had control him any to particular company, including Andrew Jack- It is settled law that the Fourth Life”; “though son Gober received com- applies Amendment not to searches and FBI, pensation from the it is clear that the homes, private seizures of but also to compensation was for away his time from searches and seizures of premis commercial family, work and from his and not for his Barlow’s, Inc., es. 307, Marshall v. 436 U.S. ‘services’ or for the provided.” information he 311-13, 1816, 1820, 98 S.Ct. 56 L.Ed.2d 305 The district court also found that Gober’s (1978); Seattle, City 541, See v. 387 U.S. of MID examination of AJL would have been no 1737, 1741, 87 S.Ct. 18 L.Ed.2d 943 different “whatsoever” had he not been in- (1967). circumstances, Under certain howev volved the FBI and the United States er, warrantless searches on prop commercial office; Attorney’s that in his examination of erty may be reasonable within meaning the AJL beyond Gober never “went that which of the Fourth Amendment. See New York v. necessary for an administrative examina- Burger, 700-03, 107 482 U.S. S.Ct. tion of Andrew Jackson Life’s financial condi- 2643-44, (1987). 96 L.Ed.2d 601 tion”; Specifically, that the FBI and the United States Supreme the Attorney’s recognized Court has excep office instructed Gober “to con- duct his tion to the always requirement examination as he warrant had” and for searches “to do precisely “closely” which he would do in of “pervasively” regulated or indus-

727 Fourth Amendment Blocker’s and AJL’s criteria are met: tries,5 three provided disagree. gov- rights. We “First, must be a ‘substantial’ there regula- informs the interest ernment Gober, FBI, the nor the United Neither inspec- to which the tory pursuant scheme Attorney’s office had a hand MID’s States made_ Second, warrantless tion is and, as decision to audit AJL ‘necessary to further inspections must found, court Gober would have audited AJL Finally, ‘the ... regulatory scheme.’ [the] time, in same the same manner and to program, in terms inspection of statute’s and, applica- regularity of its certainty regardless of whether the same extent . constitutionally ad- tion, a provid[e] [must] assigned he to FBI was involved Once was ” Id. at for a warrant.’ equate substitute audit, decid MID to conduct AJL (citations 702-03, omit- at 2644 107 S.Ct. ed, own, report FBI on his to ted) of insurance fraud discovered dur undisputed that did not It is ing Pláinly, this was not a situa his audit. records; inspect AJL’s a to warrant “trumped-up” phony FBI tion where the a however, pursuant to conducted his audit was covertly audit examine AJL’s insurance scheme under Miss. administrative state Tweel, records. United States Cf. (1972).6 does § Ann. 83-1-25 Code (5th Cir.1977) (explaining F.2d Mississippi appeal that the stat argue not on random, was not some unfortu defendant set forth requirements ute fails to meet audit, in victim of a routine IRS but nate Instead, complains that be Burger.7 he hand-picked Department of stead was not the audit of AJL conducted cause Gober target investigation). of a criminal Justice as MID, agent of capacity as an but only in his her, Gober was a bona MID Rat fide FBI, inspection Gober’s also on behalf auditor who conducted an actual MID audit law beyond scope of his otherwise went Mississippi in accordance with the AJL regulato Mississippi authority under the ful regulatory scheme.8 amount to an invasion ry so as to scheme court, course, argue to the district in his requirement, of is that 7. Blocker did 5. The threshold industry regulation inspection governmental suppress, motion to that Gober’s "pervasive.” Burg- question must be "close” requirement violated the warrant AJL's records 702-703, er, S.Ct. at 2644. For 482 U.S. at Mississip- because the the Fourth Amendment pervasive regulation if “the purpose, a this constitutionally sufficient to pi statute was not sufficiently comprehensive regulatory presence is for a search warrant. The serve as substitute commercial, owner of [the] and defined that the concluding, rejected argument, this district court prop- help aware that his property but be cannot pursuant employed scheme the MID that “the inspections erty subject periodic under- will be did, fact, ‘advise [Blocker] to the statute purposes.” n. specific Id. at 705 taken for being pursuant the law made [was] the search (quoting Donovan v. at 2645 n. 16 scope, properly defined and it lim- ha[d] 2534, 2539, 594, 600, Dewey, S.Ct. ” (Citations [Gober].' it[ed] the discretion (1981)). L.Ed.2d 262 omitted). challenge appeal, On Blocker does Burger. constitutionality 83-1-25, of the statute under Gob- at the time of 6. Miss Code Ann. AJL, provided, in relevant examination of er's part: before, went to the instead 8. That Gober careful- of Insurance shall "The Commissioner after, conducting with- his audit is a distinction compa- ly domestic the affairs of each examine Gober, analysis. with- in our If out a difference ability ny and condition as as to its financial FBI, any prior had formed contact with the out (3) years. He shall also once in three often as any evidence of insur- to turn over the intention company of such when- make an examination or state in his to federal ance fraud found audit so, prudent upon the it (5) to do or ever he deems certainly have to prosecutors one would —and stockholders, request of five or more likely would have assume that an auditor creditors, persons pecu- policyholders, or other that inten- failure to disclose intention —Gober's therein_ niarily Such examina- interested would not render to AJL or Blocker tion commissioner, by by or made tion shall be of AJL's or Blocker’s Fourth audit a violation representatives, and such com- his accredited long rights, his intentions did so as Amendment charges pay proper incurred panies in shall any way manner in interfere with the examination, including expense such of, conducted, scope his audit. which he or representa- his accredited commissioner or tive. ...” 728 scope of Gober’s MID audit of AJL proper crimes the course of an otherwise way by any altered his relation

was not in inspection administrative does not render FBI. Gober went onto ship with the AJL’s illegal search or the administrative by any unaccompanied or premises state fed suspect”). Although scheme Blocker or AJL agents, inspected AJL’s records in eral and arguably expecta- would have a reasonable completely any consistent with manner rou privacy premises tion of as to items on AJL’s tine MID audit. Gober did not use the audit by audit, which are not covered an MID no general “conduct a search for incrimina expectation privacy such of exists as to items States, ting materials.” Lewis United 385 audit, by covered the instant which is all that 206, 211, 424, 427, U.S. 17 L.Ed.2d is in by issue here. Gober was authorized (1966). Instead, inspection 312 his was “lim statute and Blocker to search rec- AJL’s purposes contemplated by ited to the for, alia, ords inter evidence of insurance [consenting] suspect.” United States v. exactly fraud—-which is what he did. Nei- (9th Bosse, 113, 115 Cir.1990). F.2d 898 reasonably ther Blocker nor AJL could ex- Furthermore, Gober’s audit of AJL would pect that Gober would'withhold such evi- place, been made at the same time dence from the authorities. exactly extent, same and in manner and cases, Citing a handful of Blocker contends acting had not been also for the FBI. implicitly government agent that a explicitly may The FBI did not or influ- not conduct a ence the course or form of Gober’s misrepresenting examina- search the nature or contrary, repeatedly tion. On the the FBI scope governmental authority through always told Gober to conduct his audit as he fraud, deceit, See, trickery. or e.g., United had, emphasizing precise- “that he was to do Bosse, (9th States v. 898 F.2d 115 Cir. ly that which he would do in the normal 1990); Securities, SEC v. ESM Government examination, more, nothing course of Cir.1981); Inc., (5th 645 F.2d ite Un less, .nothing nothing different.” At no Tweel, d States v. time FBI direct Gober did the on what to do Cir.1977). gov Blocker’s reliance on these inspecting or what to look for while AJL’s cases, agent “deception” however, ernment Crucially, Gober’s audit records. was an ac- misplaced. tual,-regular audit and MID Gober looked in Bosse, (Bosse) the defendant was a place no thing, and at no document or firearms dealer nothing, application who had an discovered that he would not have pending buy for a state looked or at or discovered license to had he had no sell guns. contact with FBI.9 part machine As appli- the license process, Dunlrin, cation from the Unquestionably, neither AJL nor Blocker Department Justice, California inspected expectation reasonable privacy Bosse’s home and surrounding premises vis-a-vis Gober’s examination of AJL’s rec- with Bosse’s consent. Accompanying Dun- Jenkins, 456; ords. See 46 F.3d at see also Rusin, kin Alcohol, a federal Tobacco Burger, 700-17, at U.S. at S.Ct. (ATF) agent, and Firearms who did not (persons engage 2643-51 pervasively who identify himself to agent. Bosse as an ATF regulated industries have a diminished ex- The Ninth Circuit held that Dunkin pectation made “a privacy). Blocker, AJL and as misrepresentation” deliberate president, pur- of Rusin’s its knew that it and he were sub- pose ject and status to Mississippi’s Bosse. Id. at regulatory insurance 115. The district court scheme and that evidence of concluded that insurance fraud observations may Rusin discovered an MID audit of have been AJL could the basis for the sub- police sequent turned over to the prosecutorial home, search warrant for Bosse’s Burger, authorities. accordingly granted U.S. 107 and Bosse’s motion for (“The S.Ct. at discovery of evidence of new trial. might Gober, 9. We well have reached a agent different falsely claiming conclu- an FBI to be an if, example, sion for there was evidence that inspector purported MID had conducted a "MID Gober had differently conducted his audit due to audit” of AJL. if, relationship with the FBI or instead of The Ninth Circuit vacated the district Tweel. To discover whether his client was and remanded. It that the court’s order held in investigation, involved a criminal Tweel’s , findings district court’s were “inconclusive agent accountant asked the IRS whether a respect ... the effect of Rusin’s “special agent” was in involved the investiga entry illegal and search on” the tion, “decision to to which agent replied the IRS seek the warrant.” Id. at 116. It further Believing there was not. that the IRS stated that Bosse’s Fourth Amendment conducting only audit, a routine civil Tweel rights would have been violated if informa- voluntarily presented his tax records to the gathered by during tion inspection Rusin agent. turn, IRS agent, The mi created was used to obtain search warrant. copies crofilm of the records and handed or not Rusin’s “search” Whether disclosed them court, over to the DOJ. The Tweel matters which Dunkin’s did not is not clear determining agent’s that the deception IRS opinion. opined from the court that “a amounted to a Fourth violation, Amendment government agent [may gain not] access to recognized although agent the IRS records which would otherwise be unavail- duty no affirmative to warn Tweel that the by invoking private to him able individu- investigation might result criminal government, only betray al’s trust in his charges, agent could not intentionally (quoting that trust.” 898 F.2d at 115 ESM 299-300; mislead Tweel. 550 F.2d at see Securities, Inc., 645 F.2d at Securities, also ESM Government 316). at 315. bar, In the case at did not use his case, In only this has Blocker failed to gain status as a MID auditor to access demonstrate that either he or AJL was ever right inspect. records he had no On intentionally knowingly or misled about the contrary, every right Gober had to exam- purpose audit,11 of Gober’s he has failed to records, Mississippi ine AJL’s as law re- show that either he or AJL was misled at all. quired open Blocker to AJL’s files to Gober relevant, At all were, times Blocker and AJL Further, stay in order to in business. impression under the that Gober was con- Bosse, agent ATF allegedly who was re- ducting regular triennial MID audit —which sponsible warrant, for the was not authorized precisely doing what Gober was and did. end, inspection. to conduct a state To that deception There was no misrepresentation or agent Bosse could have excluded the ATF to Blocker or AJL as to scope purpose shop Here, from his had he wanted. neither of the audit. In genuine Tweel there was no nor prevented AJL Blocker could have civil audit of represented; the kind MID, audit they expressly even if were audit was a criminal specially audit ordered informed MID that if the audit uncovered particular taxpayer, falsely this rep- activity, evidence of criminal the auditor resented as a routine civil audit. See id. at report would it to the authorities.10 (“what agent] [IRS Miller did not dis- reasons, For similar sup- Tweel does not close was that this audit was not a routine Tweel, port argument. Blocker’s the Or- civil taxpayer may audit to which ganized Racketeering subjected Crime and Section of from time to time. This audit was (DOJ) Department specifically of Justice specific request Orga- conducted requested the Internal Revenue Service Racketeering nized Crime and Section of the (IRS) Justice”). to conduct an audit Department Here, of defendant Gober’s au- important 10. The Bosse court by "materially also found misrepresent[ing] fact trust the nature agent accompanied inspec- that the ATF the state inquiry.” (quoting 550 F.2d at 299 agent purpose assisting tion "not for the in the Prudden, (5th Cir.), States v. 424 F.2d 1021 cert. licensing inspection, state but rather to further denied, 27 L.Ed.2d 62 investigation possible [his own] into federal fire- (1970); Caldwell, see also United States v. Here, arms violations.” Id. at 115. the limited (5th Cir.1987) (requiring F.2d a de purpose inspection of Gober’s was to conduct a convincing fendant to "show clear and evi state insurance audit. agents misrep dence that the IRS made material inquiry”) resentations about the nature requires 11. Tweel defendants to bear the burden (emphasis original). showing public’s that an IRS abused the 730 (1) defraud, or artifice to audit, was a scheme it there and would have an MID dit was (3) fraud, (2) commit and specific intent to at the Gober same of AJL

been conducted purpose executing the mails for use of the in purpose, the same time, the same United States v. extent, the scheme to defraud. if the FBI the same manner and (5th Cir.), cert. Shively, F.2d 813-14 The did not involvement. had no had denied, S.Ct. anything done or or audit bring about (1991). regard third In L.Ed.2d 979 therein; pure MID. all that was discovered element, stipulated at trial that all above, at no length discussed As in mail fraud named the documents authority scope of his point exceeded (1-18) through the United counts were sent statute, as he examined Mississippi under States mail. inspection that his state records those only that he those would allowed and powers forth, Blocker and White previously As set in- FBI not been had have examined abetting charged aiding and each were sum, conclude that Gober’s we volved. defrauding policyholders, inves other not violate AJL’s records did audit of AJL’s shareholders, tors, regulatory agencies the Fourth Amend- rights Blocker’s under or Group of Insurance of the Andrew Jackson right to make its triennial had a (owned ment. MID Blocker); An Companies: AJL Gober, AJL, through it did so audit Company; Insurance Jackson drew General legitimate unquestionably its who Casualty Insurance and Andrew Jackson for, looked looked purpose; for that charged that Company. The indictment ap- at, only that which was and discovered deceptive engaged in Blocker and White audit and he propriate for his MID practices' to to receive insurance continue anyway in the have course would and should at a time when premiums and investments been no FBI had there of his MID audit or im companies were insolvent involved nor Blocker’s AJL’s involvement. Neither recognized has that a paired. This Court privacy in- were expectations reasonable when he makes a defendant commits fraud discover- audit vaded Gober’s what.was not. company appear when solvent Thus, thereof. in the course Adams, ed Hydrocarbons, Inc. v. Howell correctly Blocker’s motion to denied Cir.1990). court (5th 183, 192 F.2d suppress. specifically, More the Government’s theory information OF THE EVI- was that the false

II. SUFFICIENCY brochures that were various letters and DENCE money helped bring from the mailed argues that the evi Blocker next investors, who would not policyholders to sustain convictions dence is insufficient they known the money have sent the fraud. and bank We review for mail fraud of the Andrew precarious financial situation sufficiency of the challenges to the evidence Further, Group. the Government’s Jackson a rational trier of whether fact to determine mailing quarterly finan theory was that the Government found could have informa cial statements that false contained elements of the offense proved the essential action, regulatory avoid tion was an effort to doubt. charged beyond a reasonable thereby companies to continue allowing the Jimenez, Cir. States policy collecting premium from the income 1996). admitted at the trial theAll evidence argues that the Govern holders. Blocker light favorable most must be viewed evidence to present did not sufficient ment verdict, credibility accepting all choices jury to find that AJL was reasonable allow a sup that tend and reasonable inferences insolvent. port the verdict. Id. overwhelming introduced A. MAIL FRAUD. showing Blocker and White shifted assets structured transactions of the mail fraud prove To violation appear to among companies to make AJL statute, the Government 18 U.S.C. when, fact, surplus capital AJL doubt that prove beyond a reasonable must in financial such hazardous condition voiced its regarding concern the affiliation placed priority” it on the “first list to problem. MID Even purchase after Blocker’s light AJL, examined. Viewed in the most favor- accounting compa- entries for the verdict, the able to the evidence showed that AJL) (including nies remained at the same engaged Blocker and White were in a physical location, companies and the were scheme that involved the diversions of mil- essentially treated as if opera- there was one premiums lions of dollars in and income from Indeed, tion. operation Blocker ran companies high the insurance to two risk instituting a management system cash companies. forty Approximately million dol- he “one-company described as a concept.” Capital lars were diverted to Southern Hold- direction, At Blocker’s pay- March (SCH), venture, ings a telecommunications ment of policyholders’ the insurance claims Belwood, manufacturing and a furniture com- delayed were because of a cash crunch. Lou pany bought bankruptcy. that was out of Pearce, secretary-treasurer at Guardian companies These two received funds from Trust, described the financial situation as companies through the insurance other follows: companies White-owned such as Guardian “I specifically don’t know which checks Trust, depository institution that held the held, were but I know we withheld some companies monies of the three insurance cheeks at Mr. Blocker’s direction. I would exchange promises pay. for tell him what pay. we had to Each morn- all Most the funds held Guardian Trust ing I go would to his go office and we’d originated from company deposits. insurance over day, the needs for the requests Acceptance Guardian Trust then invested in made, that had been and we would dis- Corporation. deposits In return for the to, burse depending what we had on what investments, Acceptance Corporation gave we had in urgent the bank and how those open-ended Guardian Trust an note receiv- needs were.” Acceptance Corporation able. in turn loaned money Corporation to Andrew Jackson Pearce further testified that the “three exchange promissory Ultimately, for a note. companies insurance and some other various Corporation Andrew money Jackson loaned companies, money all go their would into to Belwood and SCH. Belwood and SCH what we call orCl demand accounts.” “All repaid any never of the debts with their own money from the companies insurance money. companies Those two had to service went into Guardian Company. They Trust by borrowing their money debts more turn money disbursed the out as it was need- payments make interest that came due. ed to example, whomever.” For SCH would request particular amounts of cash or ven- Although AJL’s records reflected that capital, ture approve and Blocker would money in demand accounts with Guard- Dining disbursements. October Trust, ian the evidence established' that cash following disbursements cash were made support journal monies did not entries. $110,000 7; $90,000 to SCH: on October on Blissett, Jimmy MID, the chief examiner $70,000 11; 14; $709,000 October on October testified that Blocker admitted to him that 21; $208,000 25; on October on October and AJL’s demand account at Guardian Trust $405,000on October 28. liquidated. could not be That demand ac- supposed count was liquid be AJL’s most Newman, Richard analyst a securities at investment. NAIC, the Securities Valuation Office at the The Government also introduced over- testified that his 1991 evaluation “determined whelming evidence that companies holdings that the of [Belwood SCH] were their investments interdependent. severely were impaired As and that as a result of this forth, previously set impairment MID informed way through it worked its Blocker and problem holding company White that there was a entire structure all among with the affiliation companies impacted White-owned these all.” In them companies interdependent words, and their invest- companies other “these didn’t have purchased ments. Blocker any equity.” AJL after MID holdings that its its investment results January

Further, the end of its bonds grade and Blocker, investment search, were when prior to the accept- and found NAIC were rated the status of financial regarding the questioned One letter departments. various with” able “it’s over companies, responded the invest- guarantee” on the “100% promised options. of out that he was and admitted provided as follows: Another letter ment.12 arguments to Thus, the despite Blocker’s in are primar- million dollars assets 130 to “Our evidence contrary, was sufficient there a Mississippi companies with in ily invested insurance the other that AJL and believe profitability.” There long record of track as a impaired or insolvent companies were showing rep- these that ample evidence pre- was of the insurance the diversion result misleading. and We false resentations were and to Belwood. miums SCH to clearly is sufficient hold that the mailings on the the convictions based sustain argues that the Blocker next policyholders. to the prove that he intended failed to Government requires an “Intent to defraud to defraud. 15-17) (2-4, 7-12, regard to counts In the (2) (1) deceive, cause and some to intent mailing of the on the conviction based Jimenez, from the deceit.” harm to result state to the various quarterly statements omitted). (citation A defendant at 97 F.3d Smith, an a who was CPA regulators, Wanda knowingly if he acts intent to defraud has the AJL, pre- that testified she accountant for for specific to deceive intent with quarterly She pared statements. to another causing pecuniary “loss purpose of in of dollars that millions further testified gain to financial him bringing about some on the performing as that were listed assets that self.” Id. Blocker because contends actually per- were not quarterly statements insolvency, there can proof no was there ie., Addi- forming, generating income. not insolvency. proof that he knew be no provide that tionally, the did statements because, as stated contention fails Blocker’s ($50,000 $200,000 quarter) each dividend above, proof that the com is sufficient there to Blocker. The evidence had been declared Moreover, Blocker’s panies were insolvent. to sustain Blocker’s convictions is sufficient companies as knowledge of these extensive regulators. defrauding state for day-to-day his over accountant and control an provided a sufficient basis operations in 13 and convictions counts To sustain the juror could infer his in which a reasonable annuity mailing of the con- on the based to defraud. tent Moulds, the and to James tracts John Burris Moulds argues that Burris and Government mail for fraud counts of convictions in on ad- contracts reliance purchased those following: mailing advertis- on based are However, in December vertisements and brochures to in the form of letters ing argued in the court below Government investors; annuity con- policyholders anything not “have those two counts did that shareholder; tracts; report annual to in that occurred De- do with the mailout agencies of vari- quarterly statements Further, in to the dis- response cember.” regulating the in- responsible ous states regarding the inquiry trict court’s Govern- industry. surance counts, theory case on those ment’s mails responded that 1, 5, the bro- regard In to counts annuity at contracts to deliver the things, were used among other provided, chures not have been should a time when strengths Blocker company’s greatest was one of the advertising Bethany get the "tell nothing Blocker John argues had to do with 12. Blocker he advertising program up.” that he had He also testified campaign and no cranked the knowledge signature meetings present the letters because on was argu- computer-generated. This the letters advertising campaign con- was discussed (cid:127) Gough, no John who will afford him relief. compa- ment insurance attempting to revive the text of and director of several been an officer reject testi- jury free Blocker’s nies. The companies, that he testified heard White-owned event, seeking our prove business.13 recent tions for bank fraud. To a violation of Krenning, opinion United States statute, the bank fraud 18 U.S.C. Cir.1996) (5th controlling F.3d 1257 prove beyond Government must a reasonable There, respect 13 and 14. to counts under “(1) doubt that the defendant: made a ‘false circumstances, we affirmed a mail similar (2) report’ statement or did so ‘for the “[wjithout reasoning fraud conviction purpose of influencing any way the action insureds, mailings ... these the De federally of a insured engaged institution ... not fendants would have been able to lending activity.” McDow, United States v. selling policies, worthless continue insurance Cir.1994) (quoting object the of their financial scheme.” Id. at Bowman, 1192, States v. 783 F.2d therefore that We concluded there (5th Cir.1986)). jury was sufficient evidence to allow the mailings find that the were in furtherance of charged Blocker was aiding the defendants’ scheme to defraud. Like and abetting White in wise, bar, the two counts of annuity in at bank the ease the contracts necessary directly uphold and fraud. were related to the To a aiding conviction for and procurement of additional funds with which abetting under 18 U.S.C. the Govern to continue the fraudulent scheme. We must prove ment must that the defendant associat conclude that the evidence was sufficient to venture, ed with a criminal purposefully par mailings show that of the in contracts were ticipated in activity, the criminal sought and furtherance of Blocker’s scheme defraud. by his actions to make the venture success Polk, ful. United States v. hand, 56 F.3d

On the other we find the evi (5th Cir.1995) (citations omitted). dence insufficient to count sustain A defen mailing is based on the of the 1990 annual dant associates with criminal the venture if (White’s report Allenburger of AJL to Susan he shares in the criminal princi intent sister) husband, and her Allenburger. David Jaramillo, pal. United States v. conviction, support To that the Government — (5th Cir.), denied, —, cert. U.S. argues report that “painted the 1990 annual (1995). 131 L.Ed.2d 1013 A rosy picture companies in which participates defendant activity the criminal Allenburger though had an interest” even if he has acted in some affirmative manner Government, Blocker it knew was false. The designed pres to aid the venture. Id. Mere however, specify does not the false informa ence and association are insufficient to sus tion report, contained in the and we have tain a aiding abetting. conviction for and been unable to determine from the record Jaramillo, 42 F.3d at 923. specific what evidence was false or fraudu lent. theory We find the Government’s too charged Count 19 of the indictment tenuous to sustain the conviction based on aiding abetting Blocker with White mailing report. of AJL’s 1990annual We submitting personal White’s financial state therefore must conclude that the evidence is ment that contained false information to the insufficient to the fraud sustain conviction Bank of purpose the South for the of obtain mailing based on the of the 1990 annual $100,000 ing a report. loan December 1991. provided White’s financial statement that he B. BANK FRAUD $15,629,264in owned stock in Guardian Trust Company argues Corporation. Blocker also and Andrew Jackson that the evi dence is prove trial, however, insufficient to his two testimony convic- The indicated mony knowledge signature that ultimately goes he had no of his quarterly back to the state- being used. They quarterly ments. mailed out statements that allowed them to continue to remain in following 13. The Government also made the ar- things annuity business to do like the contract. gument to the district court: theory prosecution just is not dealing “It’s the rest of the scheme with mis- mailing. December 6th It’s lot of other representing -misrepresenting the true value— mailings.” companies the financial condition of the trial, han- lender who two At commercial equity those the stockholders’ that only represen- dled loan testified that negative number.”14 “awas corporations mortgage regarding the Belwood made tation person- that the loan was argues Blocker introduced it current. Blocker was that was and that he cannot be Dan White al loan for indicating by. that written Belwood cheeks in the for the information responsible

held mortgage payments. current on its intro- The Government statement. financial argues therefore that Blocker that demon- following evidence duced the were payments did not establish aided and abetted White Blocker strated journal' re- entries. The Government against the Bank of committing, fraud presented to documents sponds “[t]he applica- the loan Blocker submitted South. not include how worthless the banks did South, Bank president tion to the claimed to were. Assets were listed assets requested the loan ex- Ralph Olier. they were paid in a current manner when problem “they” had a cash flow plaining not, sup- and SCH loans were the Belwood help. Belwood short-term needed some borrowing no only by ported additional of that loan. Olier proceeds received real cash.” required guar- to was Blocker that testified indicates that review the Our record partic- “a of Blocker the loan because antee was mortgage paid payments the Belwood Dan flow from J. White part of the ipant or Although it mortgage that was current. the Connerly [manager Mr. to and Mr. Blocker the mon- that Belwood had borrow is true to Moreover, the evidence Belwood].” mortgage payments, we are ey to make the jury to infer that Blocker the sufficient for having hold to borrow prepared not to that misrepresentation con- was aware that money representation renders the the that he statement15 and in White’s tained According- mortgage was false. ie., the current venture, the criminal to further intended on count ly, reverse Blocker’s conviction we purpose for making statement the a false decision make the 20. influencing bank’s to circumstances, we do not those

loan. Under JURY INSTRUCTION and abet- III. that Blocker aided to find hesitate committing bank fraud. The ted White argues that the district court uphold to Blocker’s con- sufficient failing to and submit erred instruct 19. viction on count “materiality” on counts 19 and issue of fraud counts. Because we reversed the bank charged 20 of the indictment Count 20, we need conviction on count Blocker’s aiding abetting White Blocker with only regard to count 19. this claim reach Bank to First falsely representing National trial, prece- time of Circuit’s loan be At the this “mortgage that Vicksburg materiality that under 18 dent dictated [AJL] and Guardian tween Belwood legal to history 1014 was a determination current with of U.S.C. paid Trust was court, notwithstand- be timely payments, when truth made regular and materiality ing recognized also that shown bank were that we payments and fact journal of a statement was an element of made to false only bookkeeping entries status, required which the Government of non-default offense appearance create an Williams, knew, 12 entries, prove. v. F.3d well United States ás the Defendants (5th Cir.1994); States payments.” actual cash unsupported were Cir.1987). Thompson, 811 F.2d mortgage as collater Blocker used Belwood’s $2,000,000 that the dis- precedent, In accordance with loan AJL. al to secure a representation value value exists is argues statement when no that financial 14. Blocker provides the investments are listed at its fraudulent. than the value.” rather "actual "book” value beyond at trial demonstrated The evidence examination, Indeed, Blocker admit- 15. on cross that the value of invest- White’s reasonable doubt "something fi- [White’s he knew about ted that figure falsely diminished that this ments was so statement].” nancial only represented holdings be as- could attempt and deceive. The serted to mislead in an jury things, trict court instructed Blocker’s White’s financial statement when it whether the false approved “need consider state apparently loan. There was no statement, ment was a material false even argument before the district court that the language though ... is used in the statement, false, financial if was not offered question That is not a indictment. for the $100,- influence Bank of the South to loan jury Subsequently, Supreme to decide.” It hardly suggested could that a materiality, Court held that an element of financial statement of the borrower would offense, jury must be submitted to the not be material to the decision to loan such a beyond be found a reasonable doubt. United large money. Indeed, sum of Blocker does — Gaudin, U.S. —, States v. argue not now that the financial statement (1995). 132 L.Ed.2d material, was not only that the issue should have been submitted jury. Both argue Blocker and the Government plain that this claim should be reviewed for light -In presented record previously error. We have reviewed unob appeal, us in this say we cannot jected plain to Gaudin-error claims for error. fairness, Gaudin error affected the integrity, Upton, United States v. 685-86 public reputation proceedings. these (5th Cir.1996); Jobe, United States v. circumstances, Under these we will not exer (5th Cir.1996). F.3d 1046 We therefore will cise our discretion to correct the error in plain review the claim for error. Blocker’s Upton, conviction. 91 F.3d at 686. 52(b), Under Fed.R.Crim.P. this may Court correct forfeited errors when IV. SENTENCING ISSUES (1) appellant following shows the factors: (2) error, obvious, there is an that is clear or A. CALCULATION OF AMOUNT OF (3) rights. that affects his substantial LOSS Calverley, United States v. 87 F.3d challenges Blocker the district court’s esti- (en Cir.1994) banc) 162-64 (citing United mate of the amount of loss caused the Olano, 725, 730-37, States v. offense conduct. He contends that he was 1770, 1776-79, (1993)), S.Ct. 123 L.Ed.2d 508 charged with rendering AJL insolvent — denied, U.S. —, cert. rather, charged but he was with operating (1995). 131 L.Ed.2d 145 If these factors are already AJL after it was insolvent in such a established, the decision to correct the for way that would allow AJL to continue to error is feited within the sound discretion of premiums collect policyholders. the He court, the and the court will not exercise that argues that “the correct calculation for the discretion seriously unless the error affects amount of loss would be whatever increased fairness, integrity, the public reputation of loss, any, if was caused the continued judicial Olano, proceedings. 507 U.S. at operation beyond of point [AJL] the it should 734-36, 113 at S.Ct. 1778. As this Court did have been regulators.” closed down state Upton, supra, in the instant ease we will words, In other “this would be the amount of assume that the first three factors the actual loss at the time was closed down less Olano test have been satisfied. amount of loss that would have occurred As previously, set forth count 19 is regulators if at the time the state would have upon based the false statement in Dan closed down in the [AJL] absence of [his] White’s financial statement. “A false state alleged scheme to defraud.” ment is material if capable it is shown to be challenges influencing Blocker néither the loss decision of the institution to $39,000,000 Williams, which it was estimate of nor made.” Olier, Ralph Instead, president 456. courtís use of “actual” loss. of Bank of the he ar South, gues responsible only part testified that Bank of the that he is South re quested White’s Although current financial statement loss. he lists certain monies that to obtain the “most accurate information on he asserts should have been subtracted from $39,000,000 Mr. White.” Olier further figure, testified that he does not offer on, Bank of among the South relied precise other calculation or the amount of loss to 2Fl.l(b)(6)(A), pro- § pursuant to four offense to his conduct. be attributed if defen- court, informed the such an enhancement counsel vides for a defense district position substantially jeopardized is “overall that his district court dant’s offense way you can what determine is no of a financial institu- safety there soundness today.” counsel Defense number is actual guideline is argues that this tion.17 position we that our “[i]t’s further stated ease the Government’s inapplicable because number. not an accurate don’t know—That’s that theory that he knew posited on the was it is.” don’t know what We statutorily impaired and insolvent AJL was counsel, He it over therefore the when he took hearing arguments of After insolvent, already if argues follows. AJL found as that court in order regulatory action forestall scheme to court that the loss appears clear to the “It dollars,16 caused operations could not have so that 20 million to continue in excess of is against examining the defendant. insolvency. is resolved After commen- issue its financial lants unavoidable. mation. lants] ticability F.3d dant’s duct is impossible petent CPA ing that oftentimes the The court Similarly, in United States only the approximately 39 argued that the amount of is study, and reached argument, opining court will is the will perhaps best demonstrated trouble They of the course the cause because the 740-741 part adopt that.” This approximate asserted has determine; make a before for which their (5th Cir.1995), Court given his attention million urged they some finding that the loss rejected the conclusion precise number amount; and the (footnote added). but concealed of the loss was dollars, realiz- by “[t]he Stedman, bank was offense loss should [the very by their imprac- defen- appel- appel- infor- com- con- it, tially tary to Blocker’s a financial an offense vestment; institution institution tially refund insureds; as to be dy ations; “if, comment, (n.15). jeopardized as a commentary reduced § argument. fully or was institution: consequence shall be deemed 2F1.1, of the above.” U.S.S.G. forced to in order to continue active [3] was unable [4] was became any deposit, payment, or placed in benefits to we §to so safety and soundness insolvent; are merge with another depleted 2F1.1 substantial unpersuaded by to have substan- on demand offense, pensioners or explains ^[2] of its assets substan- jeopar- ^[1] 2F1.1, oper- in- figure for the inability sentencing hearing, offer a reasonable the district to At “Realistically, no explained that loss.” We that: court found thing precisely; and can assess such one of question no Mr. Blocker’s “There is under- sentencing to refuse to ask courts we in the ultimate fense behavior resulted to afford the Herculean tasks or take such subsequent need of AJL and downfall to officers who of the doubt bank benefit .and place in to rehabilitation company wrongful Id. in conduct.” engage It is clear investi finally liquidation. from Likewise, inability to light of Blocker’s only that not AJL gative information and the evi- precise amount of loss offer on but was also unable insolvent rendered finding support the district court’s dence to in fully any deposit or to refund demand . loss, we find no error. depleted of as also so vestment and was merge with another to be forced to sets as OF B. JEOPARDIZING SOUNDNESS institution.” FINANCIAL INSTITUTION 2F1.1(b)(6)(A) facts, § is Clearly, those under Blocker contends that shown Blocker has not increasing by applicable.. Because his level court erred offense 2F1.1(b)(6)(A) provides "[i]f the of loss for was in excess Section 16. If the amount fraud safety substantially jeopardized and $40,000,000, $20,000,000, offense but less than increase institution ... of a financial soundness the same. the offense level remains increase in resulting level is by offense four levels. If (R). 2Fl.l(b)(l)(Q) § to level 24." level 24 increase less than erroneous, findings clearly supports that these are findings, the court’s Blocker has not claim fails. shown that the district court abused his dis- imposing partial cretion in restitution.

C. RESTITUTION Blocker contends that he lacks the future V. CONCLUSION ability pay restitution in the amount of foregoing reasons, For the we REVERSE $5,708,051 by as ordered the district court. Blocker’s convictions on count 18 and 20 and argues He that the district “court made no AFFIRM the convictions on counts 1-17 and findings present ability as to [his] or future 19 and AFFIRM Blocker’s sentence.18 pay this amount.” BENAVIDES, Judge, Circuit concurring

A district court’s imposing order part dissenting part: restitution is reviewed for abuse of discre Gelais, tion. United States v. St. 952 F.2d I dissent majority’s decision (5th 90, Cir.), to affirm the district court’s denial of Block- (1992). 121 L.Ed.2d 358 We held that a suppress. er’s motion to indigency defendant’s not a bar to the My view this case can be summarized as ordering district court restitution. United (1) agent FBI; follows: Gober was an of the (5th Ryan, States v. 874 F.2d (2) records; (3) Gober searched AJL’s Cir.1989). Under 18 U.S.C. a district FBI needs a warrant exception or an court shall consider the amount of loss sus (4) requirement search; warrant there by consequence tained the victims as a of the was no warrant exception and no was avail- offense, the financial resources of the defen able to FBI because implied Blocker’s dant, earning ability the financial needs and consent to search under the Mississippi ad- defendant, any dependent ministrative scheme did encompass an specific defendant. The court need not make agent finding desirous of criminal activi- however, findings, if provides the record an ty. result, As a the Fourth Amendment was adequate support basis to the restitution or violated, and the error was not harmless. Gelais, der. St. 952 F.2d at 97. Blocker contends that acting Gober was as During sentencing hearing, the of the FBI gathered when Gober expressly district court stated that it had the evidence that prosecution. resulted in his victims, considered the loss sustained As set majority, forth to make such a Blocker’s financial resources as listed in the determination, Court, past this in the few presentence report, and Blocker’s financial years, has adequacy assumed the of a test needs. The court then concluded that Block formulated the Ninth Circuit ability pay er did not have the a fine and Miller, States v. Cir. full restitution. The court therefore did not 1982): (1) whether the Government knew of impose imposed partial a fine but restitution acquiesced conduct; or intrusive and .the $5,708,051. in the amount of (2) private party whether the intended to provides adequate The record an for basis assist law enforcement efforts or to further the district presen- court’s decision. The his E.g., own ends. United States v. Jen report provides kins, (5th tenee Cir.1995). that Blocker has a 46 F.3d Prior degree in accounting dependents. test, and no applying to the Miller this Court had Additionally, report provided opined that “[p]reknowledge Block- that acquies personal er “stated on the financial government] state- [of cence make a search that, conceivably, work, ment if he is private party able to government.” a search jail, go and does not to approx- he could earn Clegg, States imately $100,000 Cir.1975). annually Thus, which, for “[a]ny these services.” evidence Because reasons, the district court considered fac- Fourth Amendment would have tors set forth in the statute and the record gathered by been excluded had it been 18. All the sentences were guideline concurrent and noth- and 20 affected the sentences or the ing indicates that the ranges convictions on counts 18 on the other counts. from his course, away from work and would, to for his time pro se

government or for the family, not for his “services” by the nominal- gathered if excluded explained that provided. Id. ly private party.” We information he to deter would be excluded the evidence that Gober court’s conclusion The district using private knowingly Government agent largely on the an is based was not prohibited from it is party to do that what not direct- finding actions were that Gober’s doing. Id. Simply by the FBI. be- influenced ed or bar, did the district court In the case at as he conducted the examination cause he any other case law or not cite the above question at always had does not answer the regarding whether authority in its discussion (1) inquiry The relevant whether issue.1 FBI. The district an Gober was acquiesced of or knew however, following opine, that the court did (2) conduct; pri- whether the intrusive conclusion important to its facts were most to assist law enforcement party vate intended agent: that Gober was not ends. or to further his own efforts was to con- counseled that he Gober was factor, the evidence regard In to the first had; always he his examination as duct that, to ex- hearing prior established at the is, emphasized that he was AJL, contacted amining the records of Gober do in the precisely that which he would do any examination, agreed provide nothing the Government and normal course of more, activity nothing nothing different. he discovered. less and evidence of criminal credibly Thus, the fact And testified that the Government knew it is clear i.e., relationship conduct, with the did the examina- the intrusive about or course of his examination influence the In- company’s records. tion of the insurance He of his examination. affect the form deed, court found that “Gober way the same conducted his examinations if he were agreed Government] [with relationship with commenced his after he to be again what he believed encounter In FBI as he had before. Gober’s by Mississippi evidence of criminal conduct words, have been his examination “would MID, in- he would furnish such insurers or had he not been no different whatsoever” such, FBI.” As the Govern- formation Indeed, FBI. there is no involved with the acquiesced in the intrusive knew of and ment beyond that proof that ever went conduct. necessary for an administrative in- question is whether Gober next fi- of Andrew Jackson Life’s examination or to to assist enforcement efforts tended law Agent nancial condition. Gober regard In to this further his own ends. convincingly quite Breedlove also testified factor, findings made the district court the FBI or the United that no one with conclusion. The dis- support would either Attorney’s office ever directed Gob- States beginning of that “from the trict court found They him never told er as to what to do. [Agent relation- Gober’s] their Breedlove and they hoped to for or what what to look providing ship, Gober was desirous fact, they never even told Gober find. activity of criminal FBI with concern, might investigation what their might during the course of which he uncover they might in. Fur- what be interested and, fact, that is what he his examinations ther, re- it is uncontroverted that Gober finding unquestionably This agreed to do.” assignments from the MID and ceived his assist law that Gober intended to indicates he, FBI or United neither nor the States However, the district enforcement efforts. Attorney’s any in direct- office had control purpose at also found that “Gober’s court any particular company, includ- ing him to Life was not to search Andrew Jackson Finally, though ing Andrew Jackson Life. activity, either as an of criminal from the compensation Gober received FBI, government or the federal agent of the state compensation clear that the actions, he of the FBI. 1. If the had directed Gober's FBI acting agent undoubtedly as an would have been

739 Instead, government. purpose alleged Ms to agent. the Government In that case, in Ms perform private party may a financial examination AJL per- had a MID, capacity an examiner for and that is sonal as reason to conduct the search in addi- Curiously, precisely any what he did.” the court tion may to desire he have had to assist (and to) agreed found that Gober desired to law enforcement officers. 807 F.2d at 1204. provide the FBI with evidence of crimi- We determined that it was unnecessary to activity during nal discovered the examina- private party’s ascertain the “true” motive purpose tion but that Ms was not to search for entering the ranch because “an infor- activity.2 for evidence of criminal personal mant’s motive to conduct a search is not at all inconsistent with an intention to aid suppression After a careful review of the police investigation.” explained Id. We hearing, it is clear that both intended Gober that when the Government does not offer to assist law enforcement and further Ms “any form compensation for [the infor- regarding own interests. Gober testified efforts, personal mant’s] motives in fact are repeatedly try get [the how he “would to likely to be mixed with help the desire to agents] to make comments or offer di- conclusion, authorities.” In tMs Court held Indeed, rection.” he became frustrated after that when the Government has not offered agents requested refused to offer him the compensation, form of has not imtiated gMdance. Additionally, candidly Gober ad- searching, the idea of specific and lacked that, conducting at mitted the time he was knowledge that the informant intended to affiliates, the examination of and its AJL search, the informant has not acted as a although did not he know whether the Gov- agent. case, Government Id. In the instant ernment later would him as a hire contract although the Government did not imtiate the employee, hoping hap- he “was that” would idea that search,4 Gober would conduct the pen.3 Though part of Gober’s motivation specific Government had knowledge reporting alleged activity criminal was to search, Gober would conduct the and the any allegations wrong- sMeld himself from compensated Gober for his time. 723, maj. doing, op. see at Ms actions went beyond light far In that. of Gober’s testimo- compensation Our cases indicate that is an ny, apparent it is most that he intended to important consideration in determining help investigation. the FBI m their private party whether the agent became Bazan, 1200, In United States v. 807 F.2d of the Government. See United States v. (5th denied, Cir.1986), Ramirez, 1338, 1342 1203 cert. Cir.), 481 U.S. cert. 1038, 1976, (1987), denied, 1072, 107 S.Ct. 95 L.Ed.2d 816 (1987); Bazan, this Court encountered a somewhat similar L.Ed.2d 877 807 F.2d at 1204. involving scenario part bar, mixed motives on case this factor is rather footnote, sought clarify 2. analysis In a the district court explaining relevancy to of those finding, opining agree this that Gober did not company's collapse.” to an documents insurance agreed only "look for” evidence but $78,280 that he Ultimately, received Gober for the ser- provide would continue to information discover- Attorney vices he rendered to the United States during might suggest ed his examinations that 6,May October 1994. At the activity. criminal suppression hearing, time of the Gober still was providing Attorney services to United States longer employed by 3. Gober was no MID after per $30 at the rate of hour. Februaiy the search warrant was executed on Indeed, days three after the search war- 4.The fact that the Government did not initiate executed, began working rant was as a preclude the contact with Gober does not employee Subsequent contract for the FBI. acting determination that Gober was date, as an $35,000 paid the FBI total of of the United States documents, "[I]t Government. is ‘imma analyze "to review documents as it government originated terial’ whether accounting.” relates to insurance At the end of FBI, joined Gober, idea for a search or it while it was in according his contract with the he Knoll, progress. United States v. Attorney’s F.3d "met the U.S. with office and offered (2nd Cir.), denied, — U.S. —, previously services to cert. [he] them to— (1994) (citing relevancy Lustig S.Ct. FBI looked at documents to determine 130 L.Ed.2d 490 forth, to, States, going they and so and I was if needed me, Attorney’s (1949) (plurality)). assist the U.S. office in continued L.Ed. 1819 me for they All did was reimburse work. court found in that troublesome being at compensation exactly I missed not received what “though Gober that compensa- services, FBI, guess, that the the it is clear I is It the work. from was— away from work and time for his tion was improper term. not for his ‘services’ or family, and his from hour, an paid The FBI Gober $37.50 Neverthe- provided.” he information for the paid his he was for precisely is the rate that received less, undisputed Gober it is Although the dis- for MID. contract work Government. The from the compensation paid for that was trict court found Gober govern- in Bazan that “the language broad family away from and from his any time work informant form the not offered has ment (and services), could be was no rea- his efforts” read not for his there for compensation compensation any pay form that to mean for the United Government to son States not) suffi- (whether would be or Gober, for services employee hour to a contract $37.50 the a factor in favor of weigh as cient to MID, information and services but for the acting as an party the was that conclusion provided the that he Government. Gober event, light of the evidence In agent.5 undoubtedly compensated for his ser- was persuaded hearing, I am the adduced at provided. he and for the information vices not com- finding Gober was court’s the sum, clearly informa- the demonstrates or for the his services pensated for clearly erroneous. is to assist law enforce provided he that Gober intended tion ment, spent compensated for his time was that Gober re- established The evidence evidence, and providing the with Government FBI for his $4,8916 the time ceived acquiesced of and the Government knew 7, 1992, the date the February spent prior to fact, certainly search.7 In most testi- executed. Gober warrant was search by providing him a encouraged with Gober “services,” money for this was fied surreptitious recording of con device for the explained “time.” Gober for his rather but he had with Blocker. And versations follows: as satisfy the Gov recorded all conversations February amounts that I Prior to regarding allegations of ernment’s concerns improper anis think “services” received —I recording. The should selective to miss time from work as If I had term. permitted to stand or blink then- “not be grew was investigation more —there eyes accept benefit” of Gober’s activ If I of me. was time needed and more Mekjian, United States v. ities. of time spend great deal with asked Cir.1975) 1320, 1328 (explaining that the way them, say, can I “The I would because the evidence was admissible Govern my family away from it and not be do [sic] cooperated encouraged had not or with ment day for me to take a half time is the whole search). conducting private individual day one off.” If my take off from work precedent this and the Based on Circuit’s because, so, you paid as said I I wasn’t did employed the Ninth Circuit factors earlier, if I took on contract. So I was Miller,81 acting as off, day’s conclude that Gober was I miss a half day would half Indeed, course, Gober had may pay, 7. court found that for exam- district the Government 5. Of traveling expenses relationship ple, preexisting cooperative incurred a witness's compensation testify, and, would not be a Government, and such previously, as set forth determining person was an in- whether factor knowledge that Government had actual agent of the Government. searching furnishing evi- records and AJL’s FBI. dence to the paid that Gober was court 6. The district stated During hearing, Agent approximately $4100. initially that Gober had test or our earli- estimated I note that the Miller Breedlove 8. whether prior February used, paid $4100 his time Clegg,supra, been precedent, I come to the er looking receipts, the FBI howev- After acting Gober was as an same conclusion that er, testimony Agent Breedlove corrected agent of the Government. $4,891. figure Gober also stated that the $4,800 approximately testified that he received period. from FBI for time

741 agent premises, Barlow’s, of Inc., an the Government.9 cial Marshall v. 436 307, 1816, U.S. 98 S.Ct. 56 L.Ed.2d 305 hand, majority opines other On the (1978), I believe that Gober must either have not [w]e “that need decide whether Gober a warrant to exception search AJL or an to acting agent an of the was as Federal Gov- the warrant requirement apply. must It is assuming, arguendo, ernment because even undisputed that Gober did not have war- only agent that was not an of MID Gober but Instead, rant. searching pursuant he was to FBI, acting of was also on behalf we an exception established to the warrant re- believe that no Fourth Amendment violation quirement for inspections. administrative inspection as Gober’s not in- occurred did By engaging in a business that is heavily expectation trude upon reasonable regulated, “in effect consent[ed]” to privacy might that AJL or Blocker have inspection administrative reg- under this Maj. op. in AJL’s records.” at 726-27.10 ulatory 313, scheme. Id. at 98 S.Ct. at 1821. Although majority expressly states that The section of supplied the scheme that Gob- it does not determine whether was er provided authorization to search perti- in FBI, acting agent agrees an it as of the “that “[tjhe part nent Commissioner of Insur- the evidence establishes that the FBI knew carefully ance shall examine the’ affairs of acquiesced of and in Gober’s audit of AJL’s each domestic company as to its financial records and that Gober intended to assist the ability and condition as often as in once three Maj. its law enforcement efforts.” (3) years.... Such examination shall be That, course, op. at 726. satisfies commissioner, made or his accred- Miller applying test this Court has been representatives, ited companies and such person to determine whether has acted as pay shall proper charges incurred such agent an of the Government. examination_” Miss.Code Ann. 83-1- Having added).11 acting determined that (emphasis Gober was 25 Clearly, the statute FBI, agent recognizing as an of the authorizes the commissioner or his ac- applies the Fourth Amendment to representative commer- credited to search AJL.12 It Although admittedly appellant an majority has difficult 12.The Burger, cites New York v. 482 showing 691, clearly 2636, burden of that the district court U.S. (1987), 107 S.Ct. 96 L.Ed.2d 601 erred, Jenkins, not that, it is insurmountable. See proposition for the in certain circum- (holding at stances, F.3d that the district clear- court warrantless searches of commercial ly finding private party erred that the property may be reasonable under the Fourth acting Government). agent an of the as pres- Amendment. Those circumstances are not Burger specif- ent here inasmuch as the statute in ically police majority opines 10. The authorized officers to conduct that the an district court’s administrative that Gober search. Id. at 694 n. conclusion was not a Government S.Ct. agent "arguably implicit.” Maj. op. Burger, at 2639 n. 1. Unlike in at 726. I Blocker could do not read agent’s the district court's not have "in conclusion that effect" consented to an FBI agent Gober was not an premises. of the Federal Govern- search of his Mississip- business If the implicit. ment pi The acknowl- provided, statute had so then Blocker would edges its brief that the district court found that challenge opportunity had the the statute agent the FBI. district Burger Supreme as in Barlow’s. As recognized court “primary that Blocker's conten- explained, regulatory Court "the statute must operated ... cooperation tion is that Gober warrant; perform the two basic functions of a it with, FBI, effectively agent using as an must premis- advise the of the owner commercial authority as a financial examiner for MID being pursuant es that the search is made to the pretext gain entry premises as a [AJL] properly scope, law and has a defined and it and access to the financial documents of that inspecting must limit the discretion offi- added). company_” (emphasis The district Burger, cers.” 482 U.S. at S.Ct. subsequently court "persuaded stated that it was function, perform 2644. "To this first the statute purpose at [AJL] Gober's was not to search ‘sufficiently comprehensive must be and defined activity, for evidence of criminal either as an property that the owner of commercial cannot government govern- the state help federal properly but be aware that his will be sub- added). event, (emphasis ment." assum- ject periodic inspections specific undertaken for ing conclusion, implicit anwas I would find it purposes'." (quoting Dewey, Id. Donovan v. clearly erroneous. (1981)) U.S. 69 L.Ed.2d 262 addition, added). (emphasis “In it notifies the challenge validity 11. Blocker does not [business as to who is authorized to owner] con- Mississippi inspection." Burger, administrative scheme. duct an 482 U.S. at Bosse, The Ninth Circuit F.2d at 115. FBI to do so. agent an not authorize does con- agent’s ATF exception explained to that the silence no offers other

The Government FBI justifying representation an that his requirement a deliberate stituted the warrant declared California agent’s purpose search. that misrepresentation of deliberate agent and a consented to Gober’s Although Blocker Thus, the furtive purpose. ATF’s his true representative of the as an accredited search illegal. home was entry into the defendant’s commissioner, (impliedly he did not consent otherwise) FBI as an to Gober’s search government agent is explains that a Bosse any breaking new this as agent. I do not see to records “gain to access permitted Simply Amendment. ground for the Fourth to otherwise be unavailable which would scope implied put, exceeded Gober invoking private individual’s him express language of under the consent betray that government, only to in his trust FBI to by allowing agent an of the statute (quoting v. at 115 SEC trust.” course, majori- Of as the search the records. Securities, Inc., 645 F.2d ESM Government that found emphasizes, the district court ty Cir.1981)). exactly Yet is would have physical search AJL Gober’s FBI in the case at bar. happened what an if not been no different Gober had been Blocker’s rec Agent gained access to analysis ignores, FBI. This agent of the solely an himself as by representing ords however, findings that court’s Tweel, agent MID. United States Cf. beginning desirous of Gober was (5th Cir.1977), (holding that F.2d 297 of crim- FBI with providing the when an Amendment is violated the Fourth an activity into and that Gober entered inal obtains, consent officer administrative FBI to over agreement with the turn evi by falsely representing that the search during information that he encountered such used in a civil will be dence obtained words, In other his examination. FBI should not be able investigation). The wore two hats. onto investigation a criminal piggyback Bosse, 898 F.2d 113 In States v. accom in order to an administrative search (9th Cir.1990), Ninth addressed Circuit be able to plish it otherwise would not what claim. analogous Fourth Amendment an accomplish. application There, the defendant an complicated by the fact appears This case in auto- to deal pending for a state license statutory had the au- person that the who guns, agent an matic machine per- thority records and the to search AJL’s inspected Department of Justice California acting agent of the FBI as an son who was li- premises as part the defendant’s perceive that to one and the same. I were to the defen- censing process. Unbeknownst For all without difference. be distinction dant, accompanied the Cali- person who brought an purposes, Gober intents and was an agent during the state search fornia him to AJL agent the FBI with search (ATF) Alcohol, Tobacco, agent. and Firearms brought just inspector covertly as state regarding the only representation made The me, the agent him in Bosse. To an ATF agent ex- agent was the state ATF when agents and the fact the two were one A agent ATF with me.” plained that the “is opposed separate as to two person same later warrant was obtained search individuals, anything, makes the search if agent’s ATF apparently ATF based on the persons if in that at least two more intrusive during that Ninth observations search. search, arrive conduct a one would entry opined ruse when 'the “[a] Circuit per- two warning that there could be some person seeking suspect is informed that the purposes agencies or dual different sons from entry government agent but is misin- is a might inkling One have some agent purpose for search. as to the formed scope consent exceeded justified by that the of one’s entry consent.” seeks cannot be Thus, added). perform its tivity. the statute failed to (emphasis the case at 2648 bar, notifying the own- as a warrant business Blocker that function the statute did not inform searching inspector's specific agent and the agent the FBI er who FBI would search or that finding purpose. criminal ac- was desirous of evidence of opportunity respond through proper funneled and thus have the administrative channels, accordingly. fall would within the adminis- exception.13 trative search But that is not acting I insofar as Gober was believe that happened. what The administrative search the rule when as an he broke he exception does not allow the FBI to send one gained entry guise state author under agents of its own with someone who has the objective by ity contemplated but had an not authority to conduct an gaining entry, administrative Blocker. After the Govern search, effectively which is what agent’s happened ment actions must limited to “the occupant.” only very purposes contemplated by the here. The search illegal I consider is States, is v. United the one that by was conducted Gober as a Lew 211, (1966). 424, 427, 17 L.Ed.2d 312 agent, federal the fruits of which were used presume I not think would that Blocker to convict Blocker —that of being course (who contemplated had that Gober identified purpose intended of agent. the FBI MID) only agent himself as an had an I believe controlling precedent agreement any incriminating to turn over does not allow the United States Government pursuant preexist evidence to the FBI to a exploit Mississippi statutory authority ing, cooperative relationship. The bottom vested in a financial examiner search the permitted line is that Gober was to search premises until the examiner has acquired based on Blocker’s consent under the admin sufficient statute, evidence to secure a search war- istrative not authorize a does Here, rant. by my opinion, knowingly search the FBI. In Government used paid any way, shape, employee did not consent in or form a contract of MID to do having agent place prohibited an search his of what it was doing, searching circumstances, business. Under these Block without a majori- warrant.14 Pursuant to the expectation privacy er had a reasonable in ty opinion, may the Government now effec- corporate records vis-a-vis rela Gober’s tively circumvent the Fourth Amendment tionship with the Federal Government. repeatedly dispatching an administrative agent, compensated one it had majority heavily relies on the fact that equipped device, recording with a to search Gober, agent, as an MID was authorized to Indeed, without a nothing warrant. is there conduct the search and did not exceed the majority opinion in the preclude that would scope authority. of his state That is true. initiating the FBI from My contact analysis not touch with another does the search in governmental regard agent or authority. inspec- to his state That administrative who (or authority legal tion was has properly and the information to search whomever what- ever) passed on to happens MID. If MID had target furnished to be the of a criminal the information to the FBI investigation.15 after it had been light finding In agree. of the district court’s ference. I cannot If Gober had waited to agreed examination, “Gober [with Government] that if he contact the FBI until after the then again were to encounter what he believed to be the Government could have known not or ac- by Mississippi evidence of criminal conduct in- thus, quiesced definition, in the search and MID, surers or he would furnish such informa- agent Gober would not have been an of the FBI,” testimony tion to the and Gober’s that he course, Government. Of if Gober was not an secretly recorded conversations he had with MID Government, agent of the the Fourth Amendment officials, may speculate one whether would MID. view, my hinges was not violated. this case passed any incriminating information on to acting agent on whether Gober was as an of the added). such, (emphasis the FBI. As the Gov- FBI, agent FBI. Because if he was an acquiesced ernment not in Gober’s search of scope implied then he exceeded the of Blocker's investigation Blocker but also in an itself. MID Mississippi consent under administrative scheme. notes, maj. majority op. 14. As the at 727 n. is clear that if Gober had contact (either 15.Who initiated with the FBI but the contact the Federal nevertheless searched with the turning person conducting incriminating intention of over evi- or FBI, search) simply determining dence to the there would be no violation of a consideration in majority person the Fourth Amendment. The thus whether the rea- acted as an Bazan, Here, sons . that whether Gober went to the FBI before Government. 807 F.2d at 1204 searching majority after is a distinction without a dif- declares that it is immaterial wheth-

—3

Therefore, concluding that Gober was BROWN, Jr., Ashley that Blocker John agent of the Government Petitioner-Appellant, expectation privacy had a reasonable Gober’s rela- corporate records vis-a-vis Government, I tionship with the Federal Warden, CAIN, Louisiana State Burl the search conducted hold that would Louisiana, Penitentiary, Angola, agent of the United States Gov- Gober as an Respondent-Appellee, rights under the violated Blocker’s ernment Fourth Amendment. Attorney Ieyoub, for the General Richard however, analysis. That, not end the does Louisiana, Additional State may harm error be deemed

A constitutional Respondent . beneficiary er if of a constitutional less beyond doubt that proves ror a reasonable 95-30870. No. not contribute to complained of did

the error Appeals, Court of United States California, Chapman v. the verdict. Fifth Circuit. 828, 17 L.Ed.2d 705 U.S. (1967). stated, below As the court Jan. information

“undisputed that without Gober, no there would have been

provided February

probable cause for issuance Further, re the warrant 1992 warrant.” corporate records

sulted in the seizure to secure Blocker’s convic

that were used Clearly, that should have

tions. the evidence to the verdict. suppressed

been contributed therefore was

The admission of the evidence ob harmless. Because the evidence he was from Blocker’s search after

tained excluded, I

compensated should have been court’s denial of reverse the district

would suppress motion to and remand

Blocker’s court to determine to allow the district

case challenge standing to

whether Blocker had search, never ad an issued raised but district court.

dressed exception the administrative person actually search under was an Gov- er the authority requirement person warrant ernment because the

Case Details

Case Name: United States v. Perry G. Blocker

Court Name: Court of Appeals for the Fifth Circuit

Date Published: Jan 16, 1997

Citation: 104 F.3d 720

Docket Number: 95-60286

Court Abbreviation: 5th Cir.