The Government seeks a two-point enhancement under § 3C1.1 of
the Guidelines, based on its claim that Giles committed perjury
at trial when he testified that he was not aware prior to his
arrival in New York that the money which Malina intended to
deliver to him was drug-related. Such an enhancement is not
warranted under these circumstances, as Giles did not deny that
he was informed of the source of the money after he had arrived
in New York, and the jury might well have believed his
testimony that he was unaware of this information before
arriving and convicted him anyway. Thus there is insufficient
support for the conclusion that this testimony constituted
perjury or obstruction of justice.
Giles seeks a downward departure from the Guidelines based
on his claims of entrapment and outrageous government conduct.
In order to determine whether a departure is appropriate, it
is necessary to consider in detail the events leading up to
the offense. While many of these details have been supplied by
Giles, neither the evidence at trial nor the Government has
In 1990, shortly after Giles and his partner had set up
their brokerage firm, they began to deal with a person named
Steve Dobson ("Dobson"). Eventually, they invested over
$30,000 in a series of projects which Dobson claimed to be
organizing, and after Dobson disappeared with the money, Giles
and his partner were forced to repay their clients out of
their own pockets. As a result, Giles was forced to mortgage
his home and he ended up on Government Income Support, the
equivalent of welfare. After several months, Giles
reestablished contact with Dobson, now located in Texas, who
claimed that others in his company had been responsible for
the loss of Giles' firm's money. Eventually, Dobson put Giles
in contact with Malina.
Unknown to Giles, Malina had been arrested and convicted of
money laundering late in 1990, and had been released pending
sentencing, currently scheduled for late 1991, for the
purposes of cooperating with the Government. Knowing of Giles'
situation, Malina contacted him and, after several suggestions
of money-making schemes that went nowhere, offered him
$100,000 to invest on behalf of Malina's associates if Giles
would come to New York to collect it. According to Giles, he
elicited confirmation from Malina prior to making the trip
that the money was "clean and clear," i.e., that there would be
no legal impediment to Giles' handling and investment of the
money. Giles claims that only after he had journeyed to New
York did he learn that the money was the product of cocaine
trafficking, at which point he elected to turn the money over
to Customs and to turn Malina in.
The jury's verdict convicting Giles despite his entrapment
defense reflects a finding that Giles was predisposed to
commit the crime notwithstanding the Government agents'
assistance to him, thus entrapment cannot be used to justify
departure in the sentencing.
However, because of how it evolved, this case is indeed an
unusual one. There is no evidence which indicates that Giles
had any prior history of money laundering, and the fact that
he was on welfare strongly suggests that he was not. Not only
was he in extreme financial circumstances — he was unable even
to afford the plane fare to New York, and was forced to rely on
a client to pay his travel expenses — he had been placed there
by Dobson, who had represented himself as an associate of
Malina's. While economic hardship alone is not sufficient to
justify a departure, § 5K2.12, the circumstances here seem to
go beyond mere economic pressure.
Moreover, while the use of informants and cooperating
defendants is an essential tool of law enforcement in this day
and age, the vice in permitting Malina, a convicted felon, to
use his prior personal relationship and knowledge of Giles'
difficulties to involve a previously innocent individual in a
criminal scheme and thereby obtain a reduction in his own
sentence at virtually no risk to himself is an appropriate
sentencing consideration even though it does
not rise to the level of a defense to the crime.
Therefore a downward departure from the sentence specified
by the Guidelines is warranted, because the unique
circumstances presented by this case involve mitigating
factors "not adequately taken into consideration by the
Sentencing Commission in formulating the guidelines."
18 U.S.C. § 3553(b). Specifically, the factors not considered
relate to the manner in which Giles was set up for this crime
by the Government's agent Malina. As a recent article notes,
"[n]othing in the guidelines or their legislative history
suggests that the Sentencing Commission considered the sting
problem." Pilchen, The Underside of Undercover Operations,
Legal Times, July 15, 1991, at 39; cf. United States v.
Osborne, 935 F.2d 32, 35 n. 3 (4th Cir. 1991) (acknowledging
district court's authority to depart downward in case of
outrageous government conduct not amounting to entrapment).
Consequently, the court will depart from the Guidelines and
reduce Giles's sentence to eighteen months in prison.
Supervised Release and Fine
The Guidelines also call for a term of supervised release of
between two and three years. Ordinarily, the Guidelines would
require imposition of a fine in an amount above $17,500.
However, § 5E1.2(f) of the Guidelines provides for reduction of
the fine here because the Presentence Report indicates that
Giles possesses minimal financial resources.
Giles will be sentenced to a prison term of eighteen months,
to be followed by a two year term of supervised release,
together with the mandatory special assessment of $50.
This sentence is subject to further hearing on July 16,
It is so ordered.
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