Eleventh Circuit Court of Appeals - Published Opinions

Tuesday, October 02, 2007

Khanani: "Proceeds" are not proceeds of the labor

In U.S. v. Khanani, No. 05-11689 (Oct. 2, 2007), the Court affirmed the judgments of defendants convicted of encouraging unauthorized aliens to reside in the United States, and of harboring these aliens. The Court also affirmed the district court’s entry of a judgment of acquittal on the money laundering counts. The case arose out of the defendant’s employment of illegal aliens in their jeans retail stores.
The Court found no error in the district court’s refusal to instruct the jury that "mere employment" of illegal aliens would not suffice to establish guilt of harboring illegal aliens. The Court found that the instructions that were given were already adequate to describe the offense, and that no further instruction was required.
The Court also rejected the argument that the search of the computers at the defendants businesses violated the Fourth Amendment. The Court noted that while the search warrant affidavit did not indicate that computer-generated forms were involved, a "common sense" interpretation of the affidavit gave rise to this inference.
The Court also found no abuse of discretion in denying a motion for a mistrial based on a juror’s statement that a person resembling the defendant had "locked eyes" with her and felt a "presence of danger." The Court noted that the district court investigated the matter and found no prejudice to the defendant.
The Court held that it was not error to admit, on the government’s cross-examination, a co-defendant’s testimony that the defendant's involvement in the offense "would not surprise him" . The Court noted that this question was relevant in light of the co-defendant’s direct testimony, and was not given for the truth of the matter but for impeachment purposes. Further, counsel had not sought an instruction limiting the statement to being admissible for impeachment purposes, in accordance with FRE 105, and thus waived this issue.
Finally, the Court, ruling against the government’s appeal, rejected the argument that, for purposes of determining whether "proceeds" of specified unlawful activity were laundered, the cost savings to the defendants from using illegal aliens in their retail jean sales could be considered "proceeds." The Court stated that it is "decidedly unnatural to say that the moneys one has received from the sale of a good are, not the ‘proceeds’ from the sale of a good, but ‘proceeds’ of the labor used to produce the goods."