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United States v. Bello

United States District Court, Sixth Circuit

May 22, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
PEDRO BELLO, CARIDAD BELLO, and JUAN HERNANDEZ, Defendants.

MEMORANDUM OPINION AND ORDER

JOSEPH H. McKINLEY, Jr., District Judge.

This matter is before the Court on motions in limine filed by Defendant Pedro Bello and the United States. Fully briefed, these matters are ripe for decision.

I. BACKGROUND

Defendants Pedro Bello, Caridad Bello and Juan Hernandez were indicted on October 3, 2012 on five counts. The Superseding Indictment [DN 35], in Count 1, alleges that between April 5, 2007 and December 1, 2009, Defendants conspired to commit wire fraud in violation of 18 U.S.C. §§ 1343 and 1349. The United States contends that the purpose of the conspiracy was a scheme to defraud the Commonwealth of Kentucky of excise tax revenues through the use of a tobacco diversion invoicing scheme. According to the Superseding Indictment, the Defendants created the impression that a tobacco distributor company was purchasing cigarettes from GT Northeast of St. Louis, a non-licensed, out of state company that was operated by Defendants Caridad Bello and Juan Hernandez. In actuality, the tobacco distributor company's cigarette orders were being filled by GT Northeast located in Sellersburg, Indiana, and later Louisville, Kentucky, a Kentucky excise tax licensee, operated by Pedro Bello. Count 1 charges that the scheme permitted Defendant Pedro Bello to avoid paying approximately $2, 000, 000 in Kentucky excise taxes on the purchase of cigarettes valued at approximately $12, 500, 000.

Counts 2 through 5 of the Superseding Indictment charge the Defendants with money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). In connection with the conspiracy to commit wire fraud, the United States alleges that the Defendants conducted four wire transfers of funds from GT Northeast of St. Louis bank accounts to GT Northeast bank accounts.

II. DISCUSSION

A. Motion in Limine to Exclude Fed.R.Evid. 404(b) Evidence [DN 91]

Defendant Pedro Bello filed this motion in anticipation that the government would introduce evidence arising from an investigation that took place in Mississippi. The investigation involved a meeting in a hotel room located in Chicago where Defendant Pedro Bello sold Texas cigarette tax stamps to undercover agents on October 6, 2008; and the sale of Vicaro cigars to an undercover confidential informant in Mississippi that took place in March of 2009. Specifically, Defendant Pedro Bello objects to the playing of a video from the March 2009 incident because Defendant acquired stamps from a source he believed to be legitimate. Defendant Bello argues that these other acts will prejudice him in such a way that any probative value is substantially outweighed.

In response, the United States argues that the sale of cigarette tax stamps and cigars to undercover agents are probative of Bello's specific intent to commit wire fraud under Rule 404(b). The government states that the crime charged requires it to prove Defendant Pedro Bello's specific intent to defraud the Commonwealth of Kentucky of the taxes due. The United States explains that the October 6, 2008 meeting involved Defendant Pedro Bello selling Texas cigarette tax stamps to undercover agents in a scheme to defraud the state of Texas of excise tax. He did this by hoarding a supply of tax stamps, making false reporting sales to the revenue authorities, and then selling the cigarettes at a higher price after a tax increase in the state. As to the March 2009 incident, the government states Bello sold Vicaro cigars that had been hidden in a Mississippi warehouse in order to profit from a federal excise tax increase. These acts, the government argues, occurred in the same time period and involve Bello's specific intent to defraud using methods of false reporting and fake invoicing to avoid the payment of taxes.

Rule 404(b) prohibits evidence of other acts to be introduced to prove action in conformity therewith at a later time. Such evidence, however, may be admissible for other purposes such as "proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident." Fed.R.Evid. 404(b). To be admissible, the "other acts" need not be identical to the crime charged; however, they must "deal with conduct substantially similar and reasonably near in time to the offenses for which the defendant is being tried." United States v. Blankenship , 775 F.2d 735, 739 (6th Cir.1985). The Sixth Circuit has "noted that Rule 404(b) is actually a rule of inclusion rather than exclusion, since only one use is forbidden and several permissible uses of such evidence are identified.'" United States v. Vance , 871 F.2d 572, 575 (6th Cir. 1989) (quoting Blankenship , 775 F.2d at 739).

The Arraignment Orders require the government, upon the request of the Defendant, to give notice of its intention to offer Rule 404(b) evidence within 14 days of trial. (Arraignment Orders [DN 7, 47, 48].) The motion, response and reply were filed prior to the date the government was to provide notice. It is unclear to the Court whether the United States even intends to introduce this evidence at trial. Therefore, the Court finds that this matter is better left for trial and the motion in limine is RESERVED.

B. Motion in Limine to Exclude Fed.R.Evid. 704 Evidence [DN 98]

Defendant Pedro Bello filed this motion in anticipation of the United States attempting to illicit "ultimate issue" testimony that would be inadmissible. He states that he anticipates the United States intends to call employees of the Kentucky Department of Revenue as witnesses, many of which are attorneys.

In response, the United States that it may present evidence that points to an ultimate issue without presenting testimony concerning a legal conclusion in a way that would violate Federal Rule of Evidence Rule 704. The rule states that "[a]n opinion is not objectionable just because it embraces an ultimate issue." Fed.R.Evid. 704(a). The government argues that the Sixth Circuit holds that the "district courts have a wide, but not unlimited, degree of discretion in admitting or excluding evidence that arguably contains a legal conclusion." (United States' Resp. 2 [DN 98] (quoting United States v. Nixon , 694 F.3d 623, 631 (6th Cir. 2012). The government agrees that the testimony can ...


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