RIPPLE, Circuit Judge.
After a jury trial, Michael McClellan was found guilty of one count of harboring an illegal alien, in violation of 8 U.S.C. § 1324(a)(1)(A)(iii); three counts of mail fraud, in violation of 18 U.S.C. § 1341; and one count of engaging in a monetary
Mr. McClellan and his wife, Tina, operated T & M Daycare ("T & M") in Calumet City, Illinois. Nearly all of the families at T & M participated in an Illinois state child-care initiative, which reimbursed daycare centers for care provided to children of eligible families. In order to qualify, the child's parent or guardian had to reside in Illinois, be employed or attend school, and have an income below a specified amount.
Fransis Lopez was hired at T & M in February 2006. At first she had limited contact with Mr. McClellan and Tina. Later, the McClellans promoted Lopez to director; to do so, they had to falsify records to make it appear that she met qualifications dictated by state regulations. Once she became director, she had frequent contact with Mr. McClellan and Tina, both in person and over the phone.
Mr. McClellan and Tina instructed Lopez that, when new families came to the daycare for services, Lopez should falsify applications so that T & M could receive reimbursements from the State. There were also times when the McClellans told Lopez to leave the applications blank so that they could write in the necessary information to obtain reimbursement.
Many of the children who attended T & M also qualified for meals through a state "Healthy Start" program.
Testimony from several mothers established that their application forms for T & M had been altered to contain false information, that T & M had sought reimbursement from the State beyond the time their children attended T & M, or that T & M had sought reimbursement from the State when, in fact, their children never actually had enrolled in the daycare.
In 2008, Mr. McClellan purchased The Paragon restaurant in Schererville, Indiana. Unbeknownst to Mr. McClellan, the Department of Homeland Security ("DHS") had been investigating The Paragon and its former owners, Louis and Chris Gerodemos, based on information that illegal aliens were working there and
In 2008, Mr. McClellan and Tina also signed a purchase agreement for the St. John Road house. When the closing took place, the bulk of the purchase amount was wired from T & M's account. Several members of The Paragon's undocumented kitchen staff lived in the house rent-free. Mr. McClellan paid the utilities for the house and also provided food to these employees.
On July 2, 2009, Bastida recorded a conversation with Mr. McClellan in which he raised the issue of the illegal status of "the guys in the back" of the restaurant.
A subsequent recording on August 12, 2009, captured a meeting between Mr. McClellan and his kitchen staff. Mr. McClellan believed that the employees in the back of the restaurant should be doing a better job because they were receiving free rent, utilities, and food.
On March 24, 2010, law enforcement agents executed a search warrant at The Paragon, the McClellans' residence, and the house on St. John Road. There were eight employees in the restaurant that were working without legal status; four other individuals without legal status were found in the St. John Road house.
A grand jury returned a five-count indictment against Mr. McClellan: Count 1 charged Mr. McClellan with harboring five illegal aliens, in violation of 8 U.S.C. § 1324(a)(1)(A)(iii), based on his employment of those aliens and his providing them with housing at the St. John Road house; Counts 2 through 4 charged Mr. McClellan with mail fraud, in violation of 18 U.S.C. § 1341, based on his submission of fraudulent quarterly employment tax reports from October 2009, January 2010, and April 2010; and Count 5 charged Mr. McClellan and Tina with engaging in a monetary transaction involving criminally derived property, in violation of 18 U.S.C. § 1957, based on the transfer of funds from the T & M account for the purchase of the St. John Road house.
The case was tried before a jury, which was given the following instruction with respect to the elements of Count 1:
Mr. McClellan did not interpose any objection to this instruction. The jury returned a guilty verdict on all five counts, and the court subsequently sentenced Mr. McClellan to a term of fifty-one months on each of the five counts, to be served concurrently. Mr. McClellan timely appealed.
On appeal, Mr. McClellan contends that there was insufficient evidence to convict him on any of the counts of the indictment and that the district court instructed the jury improperly with respect to Count 1. We turn first to the question of the sufficiency of the evidence.
Mr. McClellan first submits that the evidence was insufficient to convict him of any of the counts of the indictment. When a defendant challenges the sufficiency of the evidence, we will reverse only where, viewing the evidence in the light most favorable to the verdict, the record demonstrates that no reasonable jury could have found all the elements of the crime charged beyond a reasonable doubt. See, e.g., United States v. Vaughn, 585 F.3d 1024, 1028 (7th Cir.2009).
With respect to Count 1 of the indictment for harboring under § 1324(a)(1)(A)(iii), Mr. McClellan first submits that "the government did not prove that [he] knew that any one of the listed and alleged illegal aliens in Count One were, in fact, illegal aliens or, with respect to the property at 1747 St. John St., a resident there."
Mr. McClellan also argues that our recent decision in United States v. Costello, 666 F.3d 1040 (7th Cir.2012), clarified "that the keystone of harboring is concealing the alien from detection by Government authorities."
In Costello, the defendant was romantically involved with a man whom she knew to be an illegal alien, and, at some point in their relationship, he moved in with the defendant. The Government posited that the defendant had "harbored" the alien simply because she had provided him housing. We, however, rejected the idea that harboring included "letting your boyfriend live with you." Costello, 666 F.3d at 1043. In striving to define harboring, we observed that "`harboring,' as the word is actually used has a connotation ... of deliberately safeguarding members of a specified group from the authorities, whether through concealment, movement to a safe location, or physical protection." Id. at 1044. We also noted that "[t]he prohibition of concealing, shielding from detection, and harboring ... grew out of the prohibition of smuggling aliens into the United States." Id. at 1045. Harboring, we continued, should be seen as "plug[ging] a possible loophole left open by merely forbidding concealing and shielding from detection." Id. We gave the following example:
Id. (emphasis in original). In short, we explained that, by housing his illegal employees, "[t]he restaurant owner in our example provides an inducement to illegal aliens." Id. at 1046. We then concluded that a defendant is guilty of harboring for purposes of § 1324 by "providing ... a
Here, unlike the defendant in Costello, Mr. McClellan and his employees were not "cohabiting," nor was he simply providing aliens with a place to stay. Instead, Mr. McClellan's situation mirrors that of the restaurant scenario in Costello. The recorded conversations reveal that Mr. McClellan knew that "the guys in the back" did not have legal status, that he instructed them not to punch in in the same manner as other employees, and that he provided them with housing to help compensate them for the otherwise low wages that he was paying them.
According to Mr. McClellan, however, Costello does not merely require a showing that the defendant's actions had the effect of shielding the aliens from detection; instead, he contends that "Costello established that the individual's alien status must be the driving purpose for the provision of shelter such that there also exists the intent by the defendant to help the alien avoid detection by the authorities."
Mr. McClellan's argument mirrors the argument raised by the defendant in another recent § 1324 case, United States v. Campbell, 770 F.3d 556 (7th Cir.2014), cert. denied, ___ U.S. ___, 135 S.Ct. 1724, 191 L.Ed.2d 693 (2015). In Campbell, the defendant had recruited young women, who had overstayed their visas, into his "Family" of prostitutes and provided them with housing. Id. at 561. Following his § 1324 convictions, he appealed and argued that Costello established a requirement that "the individual's alien status must be the driving purpose for the provision of shelter such that there also exists the intent by the defendant to help the alien avoid detection by the authorities." Id. at 569 (internal quotation marks omitted). Campbell maintained that the district court had erred therefore by "failing to instruct the jury regarding this intent element." Id. at 570.
On plain error review, we affirmed Campbell's conviction. We determined that we did not have to resolve the issue of intent because
Id. (footnote omitted).
Although the facts here are not as egregious as those in Campbell, here, as in Campbell, there is evidence that providing the illegal workers with housing and utilities enabled the workers to avoid detection by authorities and enabled Mr. McClellan to continue to employ them at low wages, keep up his profit margins, and lessen his employment tax burdens. This connection, as we pointed out in Costello, is the key to distinguishing § 1324 harboring from simply providing housing to a known
Here, the record supports the jury's conclusion that Mr. McClellan intended to safeguard his employees from the authorities. Like the defendant in Campbell, keeping his employees' legal status "off the radar" was important to the profitable running of his business, The Paragon. Indeed, the contract for the sale of the St. John Road house was negotiated during the same time period as the purchase of The Paragon.
Mr. McClellan next argues that there was insufficient evidence to convict him of mail fraud under 18 U.S.C. § 1341 (Counts 2 through 4) because the Government did not establish that, in submitting the false quarterly employment tax statements, he intended to defraud the State of Indiana.
Mr. McClellan argues that, because the practice of paying illegal workers in cash was established by the former owners of The Paragon, he was merely an unwitting participant in any illegality: "The only connection between [Mr. McClellan's] alleged actions and any loss [to the State] was that he trusted dishonest individuals to operate his business. The record does not establish a fraudulent scheme to defraud anyone of anything."
In his reply, Mr. McClellan maintains that he installed a new computer system that kept track of cash withdrawals from the register, and, therefore, there is no evidence of fraudulent intent to hide those transactions from the State.
Lastly, Mr. McClellan challenges his conviction for money laundering under 18 U.S.C. § 1957. Section 1957 of Title 18 provides that "[w]hoever ... knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished ...." In the indictment, the Government alleged that Mr. McClellan fraudulently had submitted reimbursement forms to the State of Illinois on behalf of T & M, that T & M in fact had been reimbursed for over $200,000 of services that were never provided, and that Mr. McClellan used those funds to purchase the St. John Road house.
Mr. McClellan's sole argument on this count is that there was not sufficient evidence to establish that he intended to defraud the State of Illinois. Instead, he pins the entire fraudulent scheme on Lopez. According to Mr. McClellan, he "delegated the authority of the day-to-day operations of the daycare to Fransis [Lopez]. Fransis was the one who assisted the mothers with filling out the applications and would falsify the attendance and meal records."
Mr. McClellan's arguments, however, ignore Lopez's testimony that she was acting at Mr. McClellan's and Tina's instruction in leaving portions of applications blank and increasing the "Healthy Start" meal tallies. It also ignores Sanchez's testimony that Mr. McClellan would increase the number of meals allegedly consumed by children on the reimbursement claims submitted to the State of Illinois.
Mr. McClellan, at bottom, asks us to ignore Lopez's testimony establishing his fraudulent intent. We will set aside a jury's credibility determination, however, only if the testimony was "exceedingly improbable," meaning that it was "internally inconsistent or implausible on its face." United States v. Johnson, 729 F.3d 710, 715 (7th Cir.2013) (internal quotation marks omitted). Mr. McClellan does not argue that Lopez's testimony falls into either of these categories, and, consequently, we will not disturb the jury's verdict on Count 5.
Mr. McClellan also maintains that it was reversible error for the district court to fail to instruct the jury "that it needed to assess whether [he] provided shelter to the illegal aliens named in the Indictment for the specific purpose of shielding them from government detection."
Generally speaking,
Huff v. Sheahan, 493 F.3d 893, 899 (7th Cir.2007) (citations omitted) (internal quotation marks omitted).
Here, however, Mr. McClellan failed to object at trial to the instruction of which he now complains and, consequently, has forfeited the objection. United States v. Wiley, 475 F.3d 908, 917 (7th Cir.2007). We review forfeited objections to jury instructions
Here, we cannot conclude that the district court committed plain error in instructing the jury. An individual violates 8 U.S.C. § 1324(a)(1)(A)(iii) if he "conceals, harbors or shields from detection ... [an] alien in any place," "knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law." The district court instructed the jury that the Government must prove beyond a reasonable doubt that:
The instruction, therefore, mirrors the statutory language. Moreover, contrary to Mr. McClellan's assertion, the district court did not leave the jury area with respect to the definition of "harbor[]."
Mr. McClellan nevertheless argues that the instructions "failed to properly advise the jury that it needed to assess whether [he] provided shelter to the illegal aliens named in the Indictment for the specific purpose of shielding them from government detection."
In Li, trial counsel had proposed a jury instruction "modeled after one used in the Eleventh Circuit," which did not contain specific intent language, because "there was no controlling case law nor pattern jury instruction for alien-harboring in the Seventh Circuit." 648 F.3d at 528 (emphasis
Id. at 528 (emphasis added). We did note that "there is room to argue that Li's counsel should have requested a specific intent instruction" based on case law from the Ninth Circuit. Id. at 529 (citing United States v. You, 382 F.3d 958, 966 (9th Cir.2004)). Nevertheless, we concluded that, even if it were error for Li's counsel not to ask for a different instruction, Li had not demonstrated that the proposed instruction adversely affected his defense because "the evidence clearly indicated that Li's covert acts were taken with a purposeful attempt to violate the law." Id. at 530.
Nothing in our analysis in Li establishes that a specific intent instruction is required for violations of § 1324(a)(1)(A)(iii), much less that the failure to give such an instruction was plain error. Indeed, we noted on more than one occasion in Li that there was no law from this circuit holding that § 1324 incorporates a specific intent requirement and, relatedly, no circuit law requiring a specific intent instruction. We also observed that counsel's general intent instruction was consistent with the approach of several other circuits. Li, 648 F.3d at 528-29 (citing, among other authorities, United States v. Khanani, 502 F.3d 1281, 1287, 1289 (11th Cir.2007), in which the court concluded that a § 1324(a)(1)(A)(iii) instruction, similar in all material respects to the one given here, "correctly addressed all elements of the offenses"). On plain error review, we cannot grant relief "unless the error is clear under current law." Olano, 507 U.S. at 734, 113 S.Ct. 1770. Because the "operative legal question" — whether § 1324(a)(1)(A)(iii) contains a specific intent requirement — was "unsettled," the district court did not commit plain error. United States v. Gamez, 577 F.3d 394, 400 (2d Cir.2009) (per curiam) (internal quotation marks omitted).
Here, the jury was instructed on the elements of the offense. That instruction required the jury to find beyond a reasonable doubt that the defendant knew the persons whom he was harboring were not lawfully within the United States. The jury was further instructed that "[t]o harbor an alien means to provide a known alien with a secure haven, a refuge, or a place to stay where it is unlikely that the authorities will be seeking him."
The evidence at trial was sufficient to find Mr. McClellan guilty of the charged offenses beyond a reasonable doubt. Additionally, the district court did not commit plain error in instructing the jury on the elements of harboring under 8 U.S.C. § 1324(a)(1)(A)(iii). His convictions therefore are affirmed.
AFFIRMED
Knox simply does not speak to the situation here. In Knox, the defendant pleaded guilty to the crimes charged, and the defendant's argument on appeal was limited to alleged errors in the application of the Sentencing Guidelines. We therefore did not have an occasion to discuss the evidentiary requirements for the underlying crimes. Moreover, even if Knox established such a requirement, here there was ample evidence of Mr. McClellan's involvement in the day-to-day operations of The Paragon.
