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The Eleventh Circuit Court of Appeals upheld the convictions of a Florida retail store owner and his accountant (defendants) who employed illegal aliens in violation of the Immigration Reform and Control Act of 1986 (IRCA). (United States of America v Khanani, 10thCir, 90 EPD ¶42,984)
After a 2002 ICE raid, a federal grand jury indicted the defendants on 71 counts of offenses relating to the store owner's employment of illegal aliens and related failure to pay state and federal taxes, including the felony offense (8 USC §1324(a)) of encouragement and harboring. The government also sought the forfeiture of any assets the defendants obtained through their crimes. At trial, the store owner's primary defense was that he "merely employed" illegal aliens, which at most, constituted a misdemeanor under a separate and uncharged provision of IRCA (8 USC §1324a). A jury disagreed, finding that the defendants "knowingly" and "willfully" employed illegal aliens. The store owner was sentenced to 70 months in prison and the accountant was sentenced to 48 months. The defendants' appealed, arguing that the district court erred in refusing to give their proposed instruction that "mere employment" of illegal aliens could not support a conviction for harboring, encouraging or inducing aliens to reside in the US illegally.
The Eleventh Circuit found no reversible error in the district court's refusal to instruct the jury on the defendants' "mere employment" defense. The circuit court found the district court's failure to instruct the jury on the requested instruction "did not seriously impair the defendants' ability to conduct their defense." If the defendants had merely employed illegal aliens they would not have committed the elements of the felony because an element of the charge lodged against them was "knowingly" employing, encouraging or inducing illegal aliens to reside in the United States. The circuit court also affirmed the defendants' convictions related to their failure to pay state and federal taxes by submitting fraudulent tax forms.
On cross appeal, the Eleventh Circuit affirmed the district court's decision acquitting the defendants of money laundering. While the government claimed the tax and cost savings from hiring the illegal aliens constituted "proceeds" the defendants then deposited into the accounts of shell companies for the purposes of concealing their unlawfully derived income, the circuit court upheld the district court's decision that the "'profits or revenue indirectly derived from labor or from the failure to remit taxes'" could not constitute "'proceeds of a specified unlawful activity.'" The government's theory of tax and cost savings "'did not give rise to 'proceeds' capable of being laundered in a financial transaction," wrote the circuit court.
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