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United States v. Slade

United States District Court, Ninth Circuit

June 5, 2013

United States of America, Plaintiff,
Duane Hamblin Slade; et al., Defendants.


LAWRENCE O. ANDERSON, Magistrate Judge.

I. Background

On December 2, 2009, a Phoenix federal grand jury returned a 40-count indictment against Defendant Duane Hamblin Slade ("Defendant") and four others, charging him with Conspiracy (Count 1), Mail Fraud (Counts 2-5), Wire Fraud (Counts 6-18), and Transactional Money Laundering (Counts 19-40). (Doc. 1) Defendant was arrested on December 10, 2009 in Austin, Texas, and released that same day on conditions by a magistrate judge in the Western District of Texas. (Docs. 35, 44) As instructed, Defendant appeared with retained counsel before Phoenix Magistrate Judge David K. Duncan on January 6, 2010, for his initial appearance and arraignment, entered pleas of not guilty to all charges, and was released on essentially the same conditions imposed in the Western District of Texas.[1] (Doc. 47) Defendant has been under courtesy supervision by U.S. Pretrial Services Officer Stacie Salinas in the Western District of Texas. Over the next two and one-half years or so, there were no petitions filed seeking the revocation of Defendant's pretrial release, no reported violations of his pretrial release conditions prior to trial, and no failures to appear at a court proceeding in which Defendant's physical appearance was required.[2]

In 2009, Defendant moved from Mesa, Arizona to Austin, Texas. The 2009 Pretrial Services ("PTS") Report indicates Defendant, age 41, is a U.S. citizen and has family, including his father, residing in Arizona. (Doc. 32) According to Defendant, at the time of his 2009 arrest in this case, he was employed by his father, Corwin Slade, as Operations Manager for Red Mountain Oil & Gas Co., in Mesa. ( Id. ) Defendant has been married to Jennifer Slade since 1993, is the father of six children, has no history of alcohol or illicit drug use, and has no prior convictions or arrests of any kind. ( Id. )

In the first trial, jury selection began on December 11, 2012, before Chief Judge Roslyn O. Silver, but visiting District Judge Jack Zouhary presided over the trial itself. The trial began on January 2, 2013. On January 29, 2013, a mistrial was declared as the jury was unable to reach a unanimous verdict following 17 days of trial. (Docs. 1021, 1083) Notably, near the beginning of trial, the District Court of Arizona's assigned PTS officer provided the parties and Judge Zouhary with a confidential, sealed status report, indicating Defendant "has done well during his term of Pretrial Services supervision... has reported as directed, and no violations have been noted." (Doc. 1036) "A record check conducted by Pretrial Services on December 28, 2012, was negative for any new arrests or warrants sustained by the defendant." ( Id. ) At that time, Pretrial Services "recommended the defendant be allowed to remain released under the previously imposed conditions." ( Id. ) After the mistrial was declared, the Western District of Texas' PTS officer resumed the courtesy supervision of Defendant pending the second trial. Jury selection for the second trial is currently scheduled to begin on June 6, 2013. (Doc. 1117)

On April 2, 2013, barely two months after the mistrial, a federal grand jury sitting in Phoenix returned a sealed, 47-count indictment against Defendant, the sole defendant, in CR-13-460-PHX-DGC (MHB), alleging probable cause exists for the crimes of Wire Fraud (Counts 1-39), Transactional Money Laundering (Counts 40-45), and Aggravated Identity Theft (Counts 46-47). (Doc. 1 in CR-13-460-PHX-DGC (MHB)) All of the crimes in this indictment are alleged to have been committed in 2008, well before Defendant was released on conditions on December 10, 2009 in the above-captioned case. Different CJA counsel was appointed to represent Defendant in this case at his May 10, 2013 initial appearance and arraignment in Phoenix.[3]

II. The Petition

On April 23, 2013, less than three months after the mistrial was declared in this case, the Government filed a 16-page Ex Parte Petition to Revoke [Defendant's Pretrial] Release Pending Trial ("the Petition"), alleging Defendant violated his pretrial release conditions by committing various crimes before and after he was released on conditions on December 10, 2009.[4] (Doc. 1211) Upon filing the Petition, the Government requested an arrest warrant, rather than a summons. Defendant was arrested on Tuesday, April 30, 2013, in Austin, Texas and detained. (Doc. 1237) Three days later, Defendant waived an identity hearing, reserved his right to a detention hearing in Phoenix, and remained temporarily detained pending a pretrial revocation hearing on the Petition, pursuant to 18 U.S.C. ยง 3148. (Doc. 1237-1 at 1)

Simply stated, the Petition claims Defendant defrauded a "vulnerable" 59 year-old woman, who "has been battling mental issues for most of her life, " regarding pest control services and home repairs performed in September 2011 at her newly-purchased but older residence located in Lakeway, Texas. (Doc. 1211 at 4-5) The Petition alleged Defendant started a residential pest extermination business in Austin, Texas, based out of his home, called Eco Pest & Maintenance, Inc. ("Eco Pest Control"). ( Id. ) The Government contends the alleged victim, Jackie Green ("JG"), "was solicited by [Defendant's[5] pest control business"[6] in late August 2011, and, "within a short period of time, [Defendant] defrauded JG in several different ways" and only stopped when JG's 19-year old daughter, Guiia Hosmer, reported Defendant's conduct to the Lakeway Police Department on September 29, 2011. ( Id. at 5; see a partial police report, Exhibit ("Exh.") 17 at 5) On October 13, 2011, one of JG's caregivers, Kathryn Fender, told Defendant he was no longer welcome at JG's residence and he needed to leave when he stopped by JG's residence purportedly to check up on JG. (Exh. 17 at 6)

According to the Government, JG suffers from Alzheimer's disease, who in August and September, 2011, lived by herself, but was frequently visited by a caregiver and relatives. (Doc. 1211 at 5) JG is the beneficiary of a trust established by JG's parents and held at Lubbock National Bank and controlled by her sister, Gail Fargason, as trustee. Once a month, $10, 000 is distributed from the trust account at Lubbock National Bank to JG's Wells Fargo account. ( Id. )

Generally, the Petition alleges Defendant committed four types of criminal acts on JG, the alleged victim: 1) charging for services that were never performed; 2) double charging for the same services; 3) unauthorized charging on JG's American Express card; and 4) taking advantage of a vulnerable victim for financial gain in return for essentially doing nothing for her. Specific examples of the Government's claims are: 1) Defendant convinced JG to pay him $487.00, in advance, for a year's worth of Eco Pest Control pest service, see Exh. A[7] to the Petition, but, despite being paid up for the year, Defendant separately billed JG on September 17, 2011 for an additional $1, 623.75 for pest control services, see hearing Exh. 6; and 2) Defendant "fooled JG into signing a Limited Scope Service Agreement, ' which paid [Defendant] a weekly fee for doing nothing, or the equivalent[, ]" see hearing Exh. 8, which authorized payments to Defendant of "$5, 000 per week for the first two weeks, and $2500 per week thereafter, to act as a liaison' between JG and the actual workers doing maintenance around JG's home." (Doc. 1211 at 5) "This weekly payment was in addition to the cost of actually doing the repair or maintenance work on the home." ( Id. at 6) "Within the Slade-created contract, [Defendant] limited his responsibility by having no authority over the workers hired, the work performed, the quality of the work performed, or the payment for any work." ( Id. ) The Government described the terms of the Limited Scope Service Agreement as "ridiculous" and only a mentally incompetent person would agree to such a one-sided contract. (Day 5, Tr. at 69) It is undisputed Defendant obtained a check, No. 1106, dated and cashed on September 8, 2011, made payable to cash for $5, 000 and drawn on JG's checking account with Wells Fargo Bank, see hearing Exhs. 9; 33 at 3, and another check, No. 1114, dated and cashed on September 30, 2011, made payable to "Dwayne [sic] Slade"[8] in the amount of $2, 500.00 drawn on the same bank account, see hearing Exhs. 16; 33 at 8.

On May 13, 2013, the day before the pretrial revocation hearing began, Defendant filed an 18-page Response to the Petition, denying, inter alia, Defendant "solicited" JG for the work performed at her residence, denying the numerous allegations of criminal conduct, and denying the Government's claim Defendant was aware JG was bipolar and suffering from Alzheimer's disease. He claims "[h]e had no reason to know that she had mental issues when they entered into a business relationship." (Doc. 1246 at 3-4) Defendant contends the Government has "misrepresented and/or exaggerated the facts associated with the Ms. Green matter... [and] almost solely relies on the statements of Ms. Green's daughter, Guiia Hosmer, a person who was not involved in the parties' business relationship and has little to no evidence to support her accusations[.]"[9] ( Id. at 2) He points out he voluntarily participated in the Lakeway Police Department's investigation, submitted to a police interview, and gave the police his job file for JG's home. ( Id. at 3)

Defendant characterizes the Limited Scope Service Agreement ("Service Agreement"), see hearing Exh. 8, as a contract similar to one between a property owner and a general contractor. "General contractors get paid for coordinating the subcontractors and ensuring that the work contracted for gets done on time." ( Id. at 9) Regardless of how the Government labels the Service Agreement, he notes the Lakeway Police Department's report closing its 2012 investigation into Defendant's conduct vis a vis JG "as unfounded" because "it [is not] against the law to overcharge someone." ( Id. at 3; hearing Exh. 17 at 5) According to this Lakeway Police report, Officer Mike Pribble informed JG's daughter, Ms. Hosmer, "[t]here was nothing we could do because there wasn't an offense."[10]

The two-page Service Agreement indicates it was between Jackie Green and Duane Slade, not Eco Pest Control, and is dated September 8, 2011. ( See hearing Exh. 8) Omitting the itemized agreed-upon work to be performed at JG's residence and the clauses addressing communications, mediation, and future work, the Service Agreement provides:

It is agreed that Duane Slade (Duane) will assist Jackie Green (Jackie) in finishing certain jobs as outlined below for a fee. Duane agrees to set up and manage on a day to day basis the work described in paragraph A of this agreement. Jackie agrees to pay Duane each week a management fee as described in paragraph B of this agreement. Duane is not responsible for the quality of work and does not warranty or guarantee any of the workmanship personally. Duane agrees to manage the workers that Jackie hires. Duane will not be responsible to make any decisions concerning the workers hired, the jobs to be completed, or the order in which they are done. Duane will simply follow and carry out the directions from Jackie. Duane agrees to act as a liaison between Jackie and any workers that are performing the actual labor on Jackie's residence. Though Duane may add input, Jackie will have the final say and responsibility on any work to be done. This agreement shall last a minimum of three weeks, but may be extended if both parties agree.
* * * * * *
B. Payment/Fees
Jackie agrees to pay anyone that she hires and approves the work for, directly as agreed to with each person performing the work. Duane will not be responsible in any way for the payment on any of these jobs or other jobs performed under this agreement. Duane will manage all of these jobs for a fee of $5000.00 the first week, $5, 000.00 the second week, and $2500 each week there after until the work is completed. This is considered a management fee and will be paid each Thursday beginning September 8, 2011. This fee does not guarantee the quality of any work performed. This fee is paid to assist Jackie in work that she has requested to be done at her property. Duane agrees to do his very best to ensure that all work is completed in a timely manner and that all work is done as agreed upon. Duane does not guarantee any of the work and it is understood by Jackie and Duane that this is a best efforts agreement. If any of the work is not completed for any reason Duane will not be held responsible in any way. Duane will do his best to ensure that all work is completed as agreed upon and that Jackie's interests are protected throughout this agreement period. If at anytime Jackie fails to pay the agreed upon amounts to the workers or to Duane, this agreement is considered breached and Duane has the right at his discretion to terminate this agreement.
* * * * * *

( Id. ) (emphasis added) Though the copy of the Service Agreement received in evidence at the hearing does not bear the signature of either Defendant or JG, and contains the handwritten note, "Customer has signed copies, " Special Agent Armstrong ...

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