Skip to comments.REESE TRIAL – The Search Warrant and Money Laundering Conspiracy Charges (NM ATF)
Posted on 07/31/2012 7:32:38 AM PDT by marktwain
[Note: often the prosecutors have not been asking witnesses to spell their names, and the exact names of witnesses are not clear to the public. That is the case with this agent. He is called Frye in this update, however, his real name could be something phonetically similar. Some of the charges against the Reeses include two counts of Money Laundering Conspiracy.]
Special Agent Joshua Frye (phonetic), testified he was been with HSI since 2004. He is currently assigned in El Paso in asset forfeiture from criminal cases involving money laundering, and other criminal activity.
S/A Pride has a Bachelor of Arts in Psychology and has had training in his current capacity with ICE in Asset Forfeiture, Advanced Money Laundering and other financial courses.
He became involved in the New Deal case approximately 3 weeks before the search and seizure search warrants were served. His role was to coordinate the search at the New Deal address. When asked if there was one location, he said no.
S/A Frye explained to the jury the search warrant was a signed order from a judge that allowed them to search for evidence of a crime. S/A Frye reviewed a series of photographs that were taken during the search warrant and described what they were looking at.
S/A Frye explained the Reese property is located on approximately 86 acres. He indicated the execution of the search warrant took 5 days and was executed in multiple stages. Initially tactical teams, local police and fire and multiple agencies were involved in order to make sure the area was secure when the teams went thru each location to process inventory for seizure. There were over 100 agents involved in the operation. His role was to coordinate and oversee the agents and see items being taken from the property. He stated the special precautions of using tactical teams and so many agents is standard procedure to ensure there are no boobie traps that could hurt law enforcement in a high risk search warrant, such as a firearms dealer or drug case.
While looking at one photo, S/A Frye explained that the agents used a cutting instrument to open a hatch/trap door that was located in the New Deal office which lead to an underground tunnel. The cutting instrument actually caught some of the items in the tunnel on fire, which they had to put out. This in turn damaged some of the evidence.
S/A Frye testified there were guns, ammo, coins, currency and documents in boxes in the tunnel, and described the tunnel as being in a poor state. S/A Frye also at times called the tunnel the bunker. He described a number of items seized including receipts, a day planner, tax returns, business records, some 700+ weapons and other items.
Under cross, Defense attorney Gorence keyed in on his educational background in psychology and asked him if he knew the power of perjorative terms. S/A Frye stated he did not. Gorence informed S/A Frye that he looked up the definition of tunnel, which is a way to hide things, or an underground passage linking one place to another place, and S/A Frye agreed that was a fair definition, however he refused to retract his use of the word tunnel to describe the area under the store as being a misleading description. He stated it isnt misleading.
Gorence asked him if it was part of his plan to use over 100 agents at New Deal when he knew they were already in custody at ATF in Las Cruces, and that Rick had voluntarily given ATF all of his keys to the houses and the store so they could open everything. Gorence questioned why they decided to use a torch to cut open the door near a large quantity of ammunition which is very dangerous, and why didnt they choose to use Ricks voluntary cooperation to open the hatch door, instead of destroying his property.
S/A Frye answered they didnt destroy all of his property when asked why they refused Ricks voluntary cooperation.
S/A Frye admitted that records, ammo and weapons were store in the underground buried tank.
S/A Frye also admitted he knew the ATF required temperatures for storage of ammunition are in a cool dry place.
He admitted he knew the 86 acre property is located about 10 miles from town and that ATF requires FFL dealers to make sure weapons and ammunition are stored safely.
Did he know that the underground taken was used in part to store items safely? He did.
When asked if they found any contraband anywhere on the property, such as narcotics, or stolen item, he testified there were none.
Mr. Gorence then went on to question S/A Frye about his background training as a financial analyst. S/A Frye admitted he has no training in an accounting background. He testified he did have training as a financial analyst. When asked to explain the extent of his education as a financial analyst, S/A Frye informed he had two weeks training in the ICE Asset Forfeiture, attended a 3-4 day conference in Asset Forfeiture, and was a speaker at that conference. He attended a 1 week course in Treasury Dept. Forfeiture after Seizure class, he attended a Multiple drug financial investigation course, which he admitted doesnt apply to this case, although the case started as a drug investigation [against the cooperating defendant Jose Roman].)
S/A Frye clarified there is no evidence that the Reeses are involved in drug trafficking or supporting drug traffickers.
Mr. Gorence continued searching for the source of S/A Fryes substantial education he has in financial matters. S/A replied that he was a speaker for at a 1 week seminar for HSI for 1 week.
Mr. Gorence stated that he understood that with S/A Fryes training he has examined records from criminal activity. Gorence asked him isnt it true that every one of Penny Torres transactions, and the undercover purchases at New Deal were not treated any differently than any other transaction, and Frye agreed. On asking what was the basis for the indictment, S/A Frye hesitated and then stated there were differences, that in a normal sale the actual purchaser signs the 4473 form, and in this case a straw purchaser was used.
Going back to the financial side, S/A Frye was asked if he was familiar with the phrase Badges of Fraud used on the International Exam of Forensic Examination. Frye was not familiar with the term. Under questioning, Frye agreed that a second set of books, attempts to destroy business records, and altered business records would be indicative of fraud, and testified that none of these three elements applied in the New Deal case. However, Frye did state the serial number of the last weapon purchased by Penny Torres had an error in the A&D (Acquisition & Disposition) log book. Frye also testified the financial records were not altered or destroyed.
[Note: somewhere earlier in either trial or earlier proceedings it was learned that the serial number had a couple of numbers accidentally transposed. And New Deal still passed the extensive audit even with that error.]
With respect to New Deals general ledger, Fyre could not tell if all of the cash sales and undercover purchases were recorded, even though he has had those records for the past 11 months. It turned out under questioning that S/A Fry didnt even look at New Deals financial ledgers to determine if money laundering occurred. He admitted that New Deal has had the same bank account for some ten years and they havent switched banks.
He admitted the government turned over the New Deal records to a private (non-government) firm to do document analysis and financial analysis and that the private firm prepared a report. When asked if S/A had the report with him, he didnt reply.
Defense Attorney Gorence stated that the analysis part of this was new to him.
[Note: this may suggest that this report was not turned over to the defense as Discovery, as is required under the law. This isn't the first time this has come up in this case.]
Under a series of questions, S/A Frye then changed his story to he doesnt know if there is a report, and eventually admitted there was nothing incriminating found in the financial investigation.
Defense Attorney Hall cross-examined S/A Frye further. S/A Frye acknowledged there are two different addresses at the Reese property.
[This is important because it relates to the address on the search warrant. While the issue about the search warrant address was not brought out in trial, Rick Reese's mother, Marj Stewart a retired attorney, told members of the Tea Party, that not only was the gun shop being searched, but also the door was open to the Reese residence and that was being searched. Marge said that she had copies of the search warrant and it was just for the shop. http://www.lunatpp.org/2011/09/]
S/A Frye stated the government didnt haul off all of the Reeses property during the search warrant. Attorney Hall asked him if they just seized everything of value. S/A agreed. Under questioning, he claimed he was not aware that grandmothers pearls were seized. He admitted that seven vehicles were seized, but only four were listed on the seizure reports, and that after being confronted [with more items seized than on the property seizure list], the government had to return those three vehicles. Frye admitted the government lost Terris cell phone, which had years of business contacts stored in the phone.
Defense Attorney Boyles took over the questioning of S/A Frye. S/A Frye testified the tactical team entered first, and waited until they knew the Reeses had been arrested in Las Cruces, and all the keys were provided voluntarily by Rick Reese. There were over 100 law enforcement officers on scene, with the tactical team in nearly full riot gear, along with air support (helicopter). The only two people on the property were the elderly caretakers, who were handcuffed and taken off the property. On August 30, they searched all three buildings on the property.
S/A Frye testified again he had no knowledge of any holes knocked in walls. He claims he has no knowledge of clothes being ripped out of closets and trashed in the center of the room, and claims he has no knowledge of the entire property being ransacked. And he admitted that even though they had the keys to the property, they chose to cut the place open with a torch which resulted in damaging some of the business records of the business. The business records, located right next to ammunition, were damaged because they caught on fire with the torch and had to put out with halodon and water from the sprinkler system. S/A Frye admitted all this occurred because they skipped using the keys that had been provided to them.
S/A Frye admitted that as a result of the seizure the ATF will get a portion of the value of everything seized from New Deal and the Reeses upon conviction.
S/A Frye admitted that he personally stands to get a bonus based on the quantity of the value of items seized.
S/A Frye admitted that agents get bonuses on big cases.
S/A Frye admitted that he has received bonuses in the past.
S/A Frye admitted that DHS HSI has a financial incentive to seize the assets of people arrested, but claimed it is not a large incentive. He claimed it is not a large incentive because the 1200-1300 weapons seized will have to be destroyed, and that storing the property seized costs the government a lot of money.
S/A Frye stated that Reeses were engaged in stockpiling, videos/DVDs, books, bicycles, food, and multiple vehicles.
S/A Frye claimed they did not seize the actual real estate, and again claimed they didnt ransack the place Absolutely not. However, under further questioning, he admitted his agency had put a Notice of Lis Pendens on the property [basically a notice that the government intends to proceed with filing a suit to take the property] however, claimed the government could not prevent the Reeses from selling the property prior to that action.
[Note: In the indictment on page 22 under E. Forfeiture of Property, 2. "Upon conviction... SHALL forfeit any and all property, real or personal, ...... If any of the property described above..... under section b. "has been transferred or sold to, or deposited with, a third party"................ the United States of America shall be entitled to forfeiture of substitute property." S/A Frye already testified the government has seized everything of value they own, so what substitute property would they be able to provide if they sold the property?]
The prosecutor objected to a question on whether all financial records were accurate, claiming that S/A Frye is not an expert. The question was rephrased and S/A Frye testified that there was a large discrepancy in unreported income.
[ Note: earlier he had testified that there was nothing incriminating found in the financial investigation. See above]
I’ve been trying to copy your posts into my daily Afire! ping list, but don’t have the time to cope with your flood of posts. I’m going to ignore these. Just too many and my time is limited.
Thanks for your efforts. I just found this source of information on the Reese trial. It is now up to date. There will likely be only one or two posts per day on the subject in the future.
A hundred cops all chopping at the bit to get their cut of the take. Man what a corrupt bunch of SOB’s we have in government today. We live in a police state that’s not to different than pre-WWII Germany. Thugs with guns is all they are now.