United States v. Howard , 309 F. App'x 760 ( 2009 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-4146
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
DAVID L. HOWARD,
Defendant – Appellant.
No. 07-4147
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
NICHOLAS RAGIN,
Defendant – Appellant.
No. 07-4168
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
TRACY HOWARD,
Defendant – Appellant.
Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte. Robert J. Conrad,
Jr., Chief District Judge. (3:04-cr-00271)
Argued: December 5, 2008 Decided: January 29, 2009
Before TRAXLER and AGEE, Circuit Judges, and Rebecca Beach
SMITH, United States District Judge for the Eastern District of
Virginia, sitting by designation.
Affirmed in part, vacated in part, and remanded in part by
unpublished per curiam opinion.
ARGUED: Ann Loraine Hester, FEDERAL DEFENDERS OF WESTERN NORTH
CAROLINA, INC., Charlotte, North Carolina; Richard A. Culler,
CULLER & CULLER, Charlotte, North Carolina; Sue Genrich Berry,
BOWEN AND BERRY, P.L.L.C., Wilmington, North Carolina, for
Appellants. Amy Elizabeth Ray, OFFICE OF THE UNITED STATES
ATTORNEY, Asheville, North Carolina, for Appellee. ON BRIEF:
Claire J. Rauscher, Executive Director, Matthew R. Segal, Peter
S. Adolf, FEDERAL DEFENDERS OF WESTERN NORTH CAROLINA, INC.,
Charlotte, North Carolina, for Appellant David L. Howard.
Gretchen C. F. Shappert, United States Attorney, Charlotte,
North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit
2
PER CURIAM:
David L. Howard (“David”), Tracy Howard (“Tracy”), and
Nicholas Ragin (“Ragin”) (collectively “the Defendants”) appeal
their convictions and sentences on various charges primarily
related to prostitution and illegal drug sales. (JA 65).
Relevant to this appeal for all the Defendants are convictions
for conspiracy to promote prostitution in violation of 18 U.S.C.
§§ 2422, 2423, 1952 (2008), (JA 66-68), and conspiracy to
possess with intent to distribute more than fifty grams of
cocaine base in violation of 21 U.S.C. § 846. (JA 70). David
and Tracy were also convicted for conspiracy to launder
prostitution proceeds in violation of 18 U.S.C. § 1956. (JA 69).
David contends that he was deprived of his Fifth and Sixth
Amendment rights to present a defense and that he was sentenced
based on an incorrect advisory guideline range. Tracy argues
that the district court erroneously denied his motion to
suppress certain evidence. David and Tracy jointly assert that
the district court gave incorrect jury instructions for the
money laundering count. The Defendants collectively appeal
their sentences, arguing that the district court gave incorrect
jury instructions and that the sentences violate their Fifth and
Sixth Amendment rights. For the following reasons, we affirm
the judgment of the district court in part, vacate in part, and
remand as to David for resentencing.
3
I. Tracy’s Motion to Suppress
In reviewing a denial of a motion to suppress, this Court
reviews the district court’s factual findings for clear error
and its legal conclusions de novo. United States v. Johnson, 114
F.3d 435, 439 (4th Cir. 1997).
A. Relevant Facts
In September 2004, Vice Detective M.J. Grimsley
(“Grimsley”) received information from David, who was acting as
a confidential informant, that Tracy was selling drugs and
prostituting underage girls. On September 16, 2004, David
informed Grimsley that Tracy had rented a hotel room and was
staying in the room with his girlfriend, Keshia Burris
(“Burris”) who was listed as a guest at the hotel. David also
reported that Tracy and Burris had a fourteen year old girl in
the room. Grimsley was unable to confirm whether the alleged
minor was staying in the room but determined there was an
outstanding warrant for Tracy’s arrest.
Instead of arresting Tracy in the hotel room, detectives
waited until he left the room and drove a few blocks away from
the hotel where they conducted a traffic stop. (JA 129).
During the stop, Grimsley questioned Tracy about his activities
at the hotel, including whether he kept a minor there or had any
instrumentalities of crime in his room. Grimsley asked for
4
Tracy’s consent to search the room and Tracy responded that he
“would consent to [Grimsley’s] searching for a body” but “he did
not want [Grimsley] poking around” because “he had a little
money” in the room. (JA 132). Tracy was then arrested on the
outstanding warrant and taken to the local law enforcement
center for questioning.
Officers then approached Burris at the hotel and asked her
permission to enter and search the hotel room. She consented to
the search and opened the door with her key. Upon entering the
hotel room, officers did not see a minor or any other person,
but drug paraphernalia, including packaging for cocaine, a
scale, a razor blade, and a bag of crack cocaine were in plain
view. Upon searching the room further, officers found more
crack cocaine, money, and a pistol hidden at various places.
Tracy filed a motion to suppress the evidence found in the
hotel room as well as certain statements he made to police in an
interview after his arrest. He contended that the hotel room
search was unlawful because he did not give his consent. The
district court denied the motion.
B. Analysis
Tracy avers that Burris’s consent to a search of the hotel
room was not sufficient to overcome his express refusal to give
consent for a search. In support of his position, Tracy cites
5
the Supreme Court’s holding in Georgia v. Randolph, 547 U.S. 103(2006), which stated that a “physically present inhabitant’s
express refusal of consent to a police search is dispositive as
to him, regardless of the consent of a fellow occupant.” Id. at
122-23. In that case, the defendant unequivocally refused to
consent to a warrantless police search. Id. at 107. His wife
subsequently gave police permission to search their marital
residence. Id. The Supreme Court held that the search was
unreasonable and invalid as to the husband. Id. at 120.
Tracy argues that Randolph applies here because he only
gave limited consent to a search, that is, to verify the
fourteen year old minor was not in the hotel room. 1
Consequently, Tracy contends the police officers breached the
rule in Randolph, because they conducted a full search which was
beyond the limits of his consent. The Government responds that
Randolph does not apply because Tracy was not physically present
at the hotel when Burris consented to a full search of the room.
1
During the hearing on Tracy’s motion, the district court
made a factual finding that Grimsley’s testimony that Tracy gave
consent to the police officers to search his hotel room for “a
body” was credible. The court did not credit Tracy’s testimony
that he did not consent to even a limited search. This finding
was not clearly erroneous and will not be disturbed by this
Court. United States v. Depew, 932 F.2d 324, 327 (4th Cir.
1991).
6
It is not necessary for us to reach the Randolph question
because, under the facts of this case, the inevitable discovery
rule applies. “[W]here it appears that evidence ‘inevitably
would have been discovered by lawful means,’ the deterrence
rationale of the exclusionary rule has ‘so little basis’ that
the rule should not be applied.” United States v. Whitehorn, 813
F.2d 646, 650 (4th Cir. 1987) (quoting Nix v. Williams, 467 U.S.
431, 444 (1984)).
The officers who entered Tracy’s hotel room, on the basis
of the limited consent to search the room for a body, discovered
the drug paraphernalia in plain view. Upon observing this
paraphernalia in plain view, officers inevitably would have
arrested Burris and Tracy. Incident to that arrest, officers
would have searched the surrounding area. Police may conduct a
search of the area “immediately adjoining the place of arrest
from which an attack could be immediately launched.” Maryland v.
Buie, 494 U.S. 325, 334 (1990). The district court found that
any items seized that were not in plain view “were readily
accessible by any inhabitant of that room.” (JA 261). Thus,
while conducting a search incident to arrest, officers would
have inevitably discovered the other incriminating evidence
which was not in plain view.
Accordingly, the district court did not err in denying
Tracy’s motion to suppress.
7
II. David’s Right to Present a Defense
This Court reviews the trial court’s determination of
whether a defendant’s constitutional right to a fair trial has
been violated de novo. See United States v. Ali, 528 F.3d 210,
232 (4th Cir. 2008) (reviewing constitutional claims de novo).
Evidentiary rulings generally are reviewed for abuse of
discretion. United States v. Queen, 132 F.3d 991, 995 (4th Cir.
1997).
A. Relevant Facts
The government informed David’s counsel before trial that
it possessed evidence that he had cooperated with them against
his co-conspirators prior to his arrest. In a taped interview,
David gave the officers information about Tracy’s use of
underage girls, and told officers he was not involved in the
prostitution of underage girls. He gave the officers the names
of the girls Tracy was using and said he would do his best to
help the officers find the runaway girls.
The district court initially refused to allow into evidence
testimony about the information David had provided to police
citing Bruton v. United States, 391 U.S. 123 (1968). Counsel
for David sought to elicit testimony from Officer Decker
(“Decker”) about specific statements David made while acting as
an informant. The district court excluded this testimony based
8
on Bruton, although Decker was permitted to testify generically
that David had provided information about the case and Tracy’s
hotel location. The court explained that, while David could
establish that he acted as an informant, more specific testimony
would not only violate the hearsay rule, but also create a
danger of unfair prejudice and confusion under Federal Rule of
Evidence 403.
David testified in his own defense in an attempt to cure
the Bruton issue. However, the government objected on hearsay
grounds when David sought to testify about specific statements
he had made to the police. The court sustained the objection,
but ruled in the alternative under Rule 403 of the Federal Rules
of Evidence and found that the evidentiary value of the
statements would be de minimis, because David’s motivation for
acting as an informant was suspect. Ten days into trial, David
filed a motion to admit “exculpatory impeachment evidence,” to
call government counsel as a witness, and/or for severance of
his trial from that of the other defendants.
B. Analysis
In Bruton, the Supreme Court held that the confrontation
clause is violated by the introduction of a non-testifying
defendant’s statement that contains incriminating evidence
against the co-defendant. 391 U.S. 124. As there were co-
9
defendants in this case, any testimony by Decker as to the
incriminating statements David made about Tracy’s activities
while he was acting as an informant was barred under Bruton.
Although David eventually did testify in an attempt to
remove the Bruton barrier, the district court held that the
testimony nevertheless remained inadmissible. The district
court determined that, under Federal Rule of Evidence 403, the
statements were unduly prejudicial and potentially confusing to
the jury because they were “only offered to counter one object
of a multi-object conspiracy count which itself is but one of 17
counts against David Howard.” (JA 2703). Furthermore, the
proposed testimony’s probative value would be de minimis, as it
was just as likely that David cooperated with police for reasons
other than his lack of involvement with the conspiracy,
including bad blood between the brothers and in an attempt to
minimize his culpability. We hold the district court did not
abuse its discretion in making these determinations.
Alternatively, David argues that his requests for severance
should have been granted. However, barring special
circumstances, “defendants indicted together should be tried
together for the sake of judicial economy.” United States v.
Rusher, 966 F.2d 868, 877 (4th Cir. 1992). David made his
request for severance after nearly two weeks of trial. The
district court determined that it would be unduly burdensome to
10
force vulnerable witnesses to again go through the trauma of
testifying. Further, the district court found severance of the
defendants at such a late date would impair the efficiency and
fairness of the judicial system. The court did not abuse its
discretion in refusing to sever David’s trial from that of the
other defendants.
III. Jury Instructions and Collins
Because the Defendants did not object to the district
court’s jury instruction, this Court reviews for plain error.
United States v. Hastings, 134 F.3d 235, 239 (4th Cir. 1998).
If plain error is shown the Court may correct the error if it
“seriously affect[s] the fairness, integrity or public
reputation of judicial proceedings.” Id. (quoting United States
v. Olano, 507 U.S. 725, 732 (1993)).
A. Relevant Facts
The Defendants were each charged with and convicted of
conspiring to possess with intent to distribute more than fifty
grams of cocaine base. While instructing the jury on this
count, the court stated in relevant part: “you must then
determine the quantity of cocaine base involved. You will be
provided with a special verdict form that specifically addresses
the drug and the quantity to be considered.” (JA 3702). The
11
relevant portion of the special verdict form for each individual
defendant provided this inquiry for the jury to answer: “if
guilty, was more than 50 grams of a mixture and substance
containing a detectable amount of cocaine base reasonably
foreseeable to [individual defendant]?” (JA 3756, 3761, 3764).
B. Analysis
The Defendants argue that the jury instructions given on
the drug conspiracy count violate this Court’s holding in United
States v. Collins, 415 F.3d 304 (4th Cir. 2005). They contend
the district court erred by not charging the jury with
determining the exact amount of drugs attributable to each
individual defendant, rather than to the conspiracy as a whole.
The issue in Collins was whether “an individual defendant .
. . [should] be sentenced . . . by considering the amount of
narcotics distributed by the entire conspiracy? Or should that
defendant’s sentence be more individualized, subjecting him to
punishment only for distribution of the amount of narcotics
attributable to him?” Id. at 312. This Court held that “the
most reasonable interpretation of the relevant statutory
provisions requires a sentencing court to assess the quantity of
narcotics attributable to each coconspirator.” Id. (quoting
United States v. Irvin, 2 F.3d 72, 77 (4th Cir. 1993)). This
Court held that the district court must instruct the jury to
12
“determine what amount of cocaine base was attributable to
Collins using Pinkerton principles.” 2 Id. at 314. Thus, we must
determine whether the court properly instructed the jury to make
an individualized finding of reasonably foreseeable drug
quantities as to each of the Defendants. See United States v.
Brooks, 524 F.3d 549, 553 n.5 (4th Cir. 2008).
In this case, the court’s bench instructions did not
specifically instruct the jury that it must find the drug
amounts attributable to each individual defendant. However, the
special verdict form, referred to and incorporated by the jury
instructions, did specifically require the jury to find whether
more than fifty grams of the cocaine base was reasonably
foreseeable to each defendant. We believe the Collins
requirement is satisfied in this case by the special verdict
form.
The Ninth Circuit has held that “[v]erdict forms are, in
essence, instructions to the jury.” United States v. Reed, 147
F.3d 1178, 1180 (9th Cir. 1998). The Ninth Circuit was
“unwilling to conclude that the district court committed plain
error in omitting this information from the formal jury
2
“Pinkerton principles” refers to the concept that a member
of a conspiracy is guilty of his own overt acts, as well as acts
by coconspirators that are reasonably foreseeable and a natural
consequence of the unlawful agreement. Pinkerton v. United
States, 328 U.S. 640, 646-48 (1946).
13
instructions” when the information was included in the special
verdict form. United States v. Alghazouli, 517 F.3d 1179, 1189
(9th Cir. 2008). The Second Circuit also concluded that “[t]he
court’s special verdict questions must be read in conjunction
with the judge’s charge to the jury.” Vichare v. AMBAC, Inc.,
106 F.3d 457, 466 (2d Cir. 1996). The First Circuit has stated
that “[w]e examine the court’s instructions to the jury and
wording on the verdict form as a whole to determine whether the
issues were fairly presented to the jury.” Sheek v. Asia Badger,
Inc., 235 F.3d 687, 699 (1st Cir. 2000). As a general
principle, “we must assume that the jury understood and followed
the court’s instructions.” United States v. Udeozor, 515 F.3d
260, 271 (4th Cir. 2008) (quoting United States v. Hedgepeth,
434 F.3d 609, 614 n.4 (3d Cir. 2006) (internal quotations
omitted)). Based on these principles, taking the jury
instructions and the special verdict form as a whole, it is
reasonable to conclude the jury understood that it was to
determine the amounts of cocaine base reasonably foreseeable to
each individual defendant in the conspiracy.
The jury ultimately received the message that drug amounts
must be determined for each individual defendant. Further, the
evidence that the quantity was attributable to each individual
“was overwhelming and essentially uncontroverted,” so the error,
if any existed, would not rise to the level of plain error.
14
United States v. Foster, 507 F.3d 233, 252 (4th Cir. 2007)
(stating “that disturbing [the defendant’s] sentence on the drug
conspiracy count . . . would seriously affect the fairness,
integrity, and public reputation of judicial proceedings”).
Accordingly, we find no error, much less plain error, in the
district court’s jury instructions.
IV. David’s Sentence
This Court reviews sentences for reasonableness, applying
an abuse of discretion standard of review. United States v.
Pauley, 511 F.3d 468, 473 (4th Cir. 2007). The district court’s
factual determinations as to a defendant’s role in an offense
are reviewed under the clearly erroneous standard. United States
v. Hyppolite, 65 F.3d 1151, 1159 (4th Cir. 1995).
A. Relevant Facts
David’s Presentence Investigation Report (“PSR”), as
amended, calculated the base offense level for violating the
money laundering statute by using the drug conspiracy as the
underlying offense from which the laundered funds were derived.
This produced a base offense level of 36, based on 612 grams of
cocaine base. The PSR then added one level for the use of
underage individuals in the commission of the crime, pursuant to
15
§ 2D1.2(a)(2), and two more levels for possession of a firearm,
pursuant to § 2D1.1(b)(1), resulting in a total base offense
level of 39. The PSR then added two more levels because David
was convicted of violating 18 U.S.C. § 1956. Lastly, the PSR
added three levels for David’s aggravating role as a “manager or
supervisor” in the offense pursuant to § 3B1.1, resulting in a
level of 44, which exceeds the maximum offense level of 43.
David’s final criminal history category was category V, which
resulted in a guideline range of life imprisonment.
David objected on Sixth Amendment grounds to any drug
amount attribution beyond the fifty grams found by the jury as
part of its verdict. He also objected to using the drug offense
as the underlying offense on the money laundering charge and to
the “manager or supervisor” enhancement. The district court
rejected both objections and found a quantity of “more than 500
grams but less than 1.5 kilograms” of drugs was attributable to
David. Further, the court found that he was a manager or
supervisor of the money laundering operation within the meaning
of § 3B1.1. The district court determined the PSR calculation
of the life imprisonment guideline range was correct and
sentenced David to life in prison.
David contends that the district court’s calculation of his
offense level was erroneous for two reasons. First, David
argues that the court erred by using the drug conspiracy,
16
instead of the prostitution conspiracy, as the underlying
offense for calculating the money laundering offense level.
David next argues that the court erred by enhancing that offense
level by three levels under the “manager or supervisor”
provision of § 3B1.1.
B. The Underlying Offense to the Money Laundering Charge
To determine the base offense level for a charge of money
laundering, the Guidelines direct courts to use “[t]he offense
level for the underlying offense from which the laundered funds
were derived . . . .” § 2S1.1. Application Note 2(A) provides
“[i}n cases in which . . . there is more than one underlying
offense, the offense level for the underlying offense is to be
determined under the procedures set forth in Application Note 3
of the Commentary to §1B1.5.” § 2S1.1 cmt. 2(A). This
commentary directs the court to use “the most serious such
offense.” § 1B1.5 cmt. 3. In the case at bar, the most serious
offense is the drug charge, not the prostitution charge. David
argues that using the drug charge as the underlying offense was
error because the Government did not prove that any laundered
funds were derived from selling drugs, and that the court
consistently stated that the origin of the laundered funds was
prostitution.
17
Although the court did refer to the prostitution ring as
the origin of the laundered funds, this does not bar the court
from using the drug conspiracy as the underlying offense for the
laundering charge. Courts are to consider the Guidelines’
language, and the relevant conduct provision, broadly. The
relevant conduct provision, § 1B1.3, is to be construed
liberally, including applicable conduct not charged in the
indictment. See United States v. Asch, 207 F.3d 1238, 1244 (10th
Cir. 2000); United States v. Behr, 93 F.3d 764, 765 (11th Cir.
1996); United States v. Silkowski, 32 F.3d 682, 688 (2d Cir.
1994); United States v. Davern, 970 F.2d 1490, 1494 (6th Cir.
1992). Nonetheless, the drug conspiracy charge was incorporated
by reference at the first paragraph of the indictment. Thus,
David was on notice that the drug conspiracy was applicable
throughout to all criminal conduct charged in the indictment.
Moreover, there is sufficient evidence that the receipts
from the prostitution services and the sale of drugs were
commingled. The record reflects that the drug and prostitution
rings were inextricably linked. Testimony established that
money received from the sale of drugs helped pay rent, bail, and
purchases of clothes, jewelry, and condoms for the prostitutes.
Moreover, the prostitutes were also directly involved in the
sale of drugs. Burris testified that she and another prostitute
would help bag crack for Tracy if he was “in a hurry or he
18
didn’t feel like doing it.” (JA 2823). Burris testified that
she did this at least twice a week. The prostitutes also
delivered the drugs to the buyers. Burris testified that she
would go to Little Mexico to “drop off [crack] for D or go drop
something off to David” about three times a week. (JA 2836-37).
Clearly some of the money David received from selling drugs was
used to purchase additional drugs or in furtherance of the
expenses of the prostitution ring. Because the prostitution and
drug rings were so intertwined and the laundered funds were
derived from both, it was appropriate to use the drug offense as
the base offense in calculating the guideline range on the money
laundering charge.
C. David’s Role as a Manager or Supervisor
David’s offense level was increased by three levels because
the district court determined that he played an aggravating role
as a “manager or supervisor” of the money laundering operation.
Section 3B1.1(b), the guideline provision applied to David,
provides that “[i]f the defendant was a manager or supervisor
(but not an organizer or leader) and the criminal activity
involved five or more participants or was otherwise extensive,
increase by 3 levels.” § 3B1.1(b). Chapter Three adjustments
are “determined based on the offense covered by this guideline
(i.e., the laundering of criminally derived funds) and not on
19
the underlying offense from which the laundered funds were
derived.” § 2S1.1 cmt. 2. David argues that the district
court’s finding that he was a manager or supervisor of the money
laundering scheme was erroneous. We agree.
David contends that he was not sufficiently involved in the
scheme to be characterized as a “manager or supervisor.” While
the Guidelines do not define the term “manager,” this Court has
utilized the dictionary definition: “a person whose work or
profession is the management of a specified thing (as a
business, an institution, or a particular phase or activity
within a business or institution).” United States v. Chambers,
985 F.2d 1263, 1268 (4th Cir. 1993) (quoting Webster’s Third New
International Dictionary 1372 (1986)). The evidence in the
record fails to support a finding that David met this
description as to the money laundering scheme itself.
The district court found that David “created the business,”
(referring to his prostitution business), that his “[c]ell phone
number was used as a number for the business,” and that “he
drove [the prostitutes] to the johns that they were servicing,
collected money from them, [and] split the money with his
mother.” (JA 3992). However, these facts go to David’s
involvement in the prostitution ring, and not to David’s
involvement in the money laundering scheme. There is no
evidence that David had any supervisory role in the money
20
laundering scheme, which was organized and carried out for the
most part by Ila. Thus, the district court’s finding that David
was a manager or supervisor of the money laundering scheme
constituted procedural error rendering David’s sentence
unreasonable under Gall v. United States, 128 S. Ct. 586, 597-98
(2007). See United States v. Diaz-Ibarra, 522 F.3d 343, 347
(4th Cir. 2008) (“An error in the calculation of the applicable
Guidelines range . . . makes a sentence procedurally
unreasonable.”).
The district court’s error in the calculation of the
sentencing range in determining David’s sentence requires that
we vacate the district court’s judgment fixing David’s sentence,
and we remand the case to the district court for resentencing
without the Chapter Three adjustment.
V. Defendants’ Sentences
The Defendants argue that their sentences were imposed
pursuant to a mandatory crack guideline that violated their
Fifth and Sixth Amendment rights. They note that Kimbrough v.
United States, 552 U.S. ___, 128 S. Ct. 558, 169 L.Ed.2d 481(2007), was decided after the sentencing hearing and that the
approach by the district court in sentencing the Defendants
contravenes Kimbrough. The Supreme Court in Kimbrough held that
a district court may conclude that the Guidelines’ crack
21
cocaine/powder cocaine disparity yields a sentence greater than
necessary. Kimbrough, 128 S. Ct. at 574. This holding
abrogated the precedent in this Circuit under United States v.
Eura, 440 F.3d 625 (4th Cir. 2006), which held that the district
court could not diverge from the advisory sentencing range under
the Guidelines by substituting its own crack cocaine/powder
cocaine ratio.
However, Kimbrough did not hold that the district court
must conclude that any sentences within the Guidelines involving
crack cocaine yields a sentence “greater than necessary.”
Instead, Kimbrough permits a district court to sentence outside
the advisory sentencing range if the court deemed it appropriate
under the circumstances of that case. Here, the district court
clearly was not sentencing based solely on the advisory
sentencing range. The district court specifically stated that a
sentence within the Guideline range in this case was sufficient,
but no greater than necessary, to accomplish the objectives set
forth in § 3553(a). The court remarked
[s]o the sentence imposed, although consistent with
the advisory guideline range, is the sentence the
Court would have imposed if the guidelines never
existed. If the Court had authority to sentence
anywhere within the statutory maximum without respect
to any limitation or guidelines or anything else, this
is the sentence the Court would have imposed . . . And
the Court concludes that that sentence is sufficient
but not greater than necessary to meet the sentencing
objectives of Section 3553(a).
22
(JA 4035) (as to David). As to Ragin, the court stated that
“the sentence of 360 months, though imposed with knowledge of
the severity of the sentence, is sufficient but not greater than
necessary to accomplish the goals of sentencing.” (JA 4116). A
Kimbrough analysis does not affect the Defendants’ sentences,
because the sentencing approach taken by the district court was
not contrary to the ruling in that case. The district court
appropriately determined sentences it felt were “sufficient but
not greater than necessary” and did not err in doing so.
VI. Jury Instructions on the Money Laundering Count
Count Twelve of the indictment charged David and Tracy with
conspiracy to violate the money laundering statute, 18 U.S.C. §
1956(h) (2008). The court instructed the jury (in relevant
part), that “you must find beyond a reasonable doubt . . . that
the funds or property involved in the financial transaction did,
in fact, represent the proceeds of specified unlawful activity,
in this case the proceeds of the use of interstate facilities to
promote prostitution.” (JA 3693-94). The jury was to use the
“ordinary, everyday meaning” for the term “proceeds,” as the the
term was not explicitly defined by the district court in the
jury instructions. Because the Defendants did not object to the
district court’s instruction, this Court reviews for plain
23
error. United States v. Hastings, 134 F.3d 235, 239 (4th Cir.
1998).
David and Tracy posit that the common definition of
“proceeds” could be either “profits” or “receipts.” They argue
that the Supreme Court, in a case decided subsequent to their
opening brief, held that “proceeds” should be defined to mean
“profits” and not “receipts.” Consequently, they contend that
the Government failed to prove that operation of the
prostitution ring resulted in any profits, as opposed to merely
receipts. They contend all of the money earned by the
prostitutes was put back into the business in the form of new
clothes and room and board and therefore they had no profits and
could not be found guilty under Count Twelve as a matter of law.
A plurality of the Court in United States v. Santos, 128 S.
Ct. 2020 (2008), held the term “proceeds” to mean “profits” and
stated that “a criminal who enters into a transaction paying the
expenses of his illegal activity cannot possibly violate the
money-laundering statute, because by definition profits consist
of what remains after expenses are paid.” Id. at 2027. However,
because Santos was a plurality opinion, the holding of the Court
for precedential purposes is the narrowest holding that garnered
five votes. Marks v. United States, 430 U.S. 188, 193 (1977).
Here, Justice Stevens’s concurrence provides the narrowest
holding. Santos, 128 S. Ct. at 2031. Justice Stevens writes
24
that the “profits” definition of “proceeds” is limited to money
laundering cases involving a gambling operation like the one in
that case. He explains that, “[i]n other applications of the
statute not involving such a perverse result [as in this case],
I would presume that the legislative history summarized by
Justice Alito [that “proceeds” means “receipts”] reflects the
intent of the enacting Congress.” Id. at 2034 n. 7. Justice
Stevens thus carves out an exception for gambling operations in
which “proceeds” means “profits,” although the rule is that
“proceeds” means “receipts.”
Because Santos does not establish a binding precedent that
the term “proceeds” means “profits,” except regarding an illegal
gambling charge, we are bound by this Court’s precedent
establishing that “proceeds” means “receipts.” See, e.g.,
United States v. Singh, 518 F.3d 236, 247 (4th Cir. 2005)
(recognizing that funds used by prostitutes to pay the cost of a
hotel room for purpose of prostitution constituted “proceeds”);
United States v. Caplinger, 339 F.3d 226, 233 (4th Cir. 2003)
(holding that the element of use of unlawful proceeds can be
proven by circumstantial evidence that the defendant applied
unlawful proceeds to promote and perpetuate his scheme); United
States v. Stewart, 256 F.3d 231, 250 (4th Cir. 2001) (affirming
a money-laundering conviction where proceeds from the sale of
drugs were used to further the drug operation). Thus, the
25
district court did not err in instructing the jury to use the
common dictionary definition of “proceeds.”
VII.
For the foregoing reasons, the judgment of the district
court is affirmed in all respects except as to David’s sentence.
The judgment as to David’s sentence is vacated and his case
remanded for resentencing.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED IN PART
26