United States v. Pebworth ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
No. 95-5840
JAMES CULPEPPER PEBWORTH, a/k/a
Snake,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
J. Calvitt Clarke, Jr., Senior District Judge.
(CR-95-61)
Argued: March 7, 1997
Decided: April 29, 1997
Before MURNAGHAN and LUTTIG, Circuit Judges, and
BLACK, Senior United States District Judge for the
District of Maryland, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Luttig wrote the majority opin-
ion, in which Senior Judge Black joined. Judge Murnaghan wrote a
dissenting opinion.
_________________________________________________________________
COUNSEL
ARGUED: Richard William Zahn, Jr., TAYLOR & WALKER, P.C.,
Norfolk, Virginia, for Appellant. Charles Philip Rosenberg, Assistant
United States Attorney, Norfolk, Virginia, for Appellee. ON BRIEF:
Helen F. Fahey, United States Attorney, Robert J. Krask, Assistant
United States Attorney, Norfolk, Virginia, for Appellee.
_________________________________________________________________
OPINION
LUTTIG, Circuit Judge:
Appellant James Culpepper Pebworth, Jr. challenges his conviction
and sentence for conspiracy to make, receive, possess, sell or other-
wise transfer "an implement designed for or particularly suited for
making a counterfeit or forged security with the intent that it be so
used." 18 U.S.C. § 513(b). Because we find neither of Pebworth's
arguments meritorious, we affirm his conviction and sentence.
Pebworth lived in a trailer on property that his employer leased
from the former principals of Oceana Ready Mix, Inc., a corporation
which had been out of business for approximately a decade. When
Pebworth lost his job and had to move, he pilfered Oceana's blank
operating and payroll checks from a shed located on the property. The
checks were to be drawn on an account at the Bank of Virginia Beach,
which had also discontinued operations by the time of Pebworth's
theft. Pebworth took the checks to his new residence and planned
what he described as his "big score." J.A. at 130. He distributed the
checks and false identifications to his accomplices, who negotiated
them at various locations. In return, Pebworth received money from
the accomplices, both directly and indirectly. For example, one of the
accomplices, Perry Douglas Ward, stayed at Pebworth's home and
used proceeds of the check scam to provide Pebworth with groceries
and cash and to pay Pebworth's rent and phone bills. After Pebworth
was eventually incarcerated for state crimes, he told Ward where he
had hidden the remaining checks, and Ward retrieved the checks and
used them in Florida.
Pebworth was convicted of conspiracy to violate 18 U.S.C.
§ 513(b), which makes it unlawful to make, receive, possess, sell, or
otherwise transfer "an implement designed for or particularly suited
for making a counterfeit or forged security with the intent that it be
so used."* Pebworth was sentenced to 27 months imprisonment, three
_________________________________________________________________
*18 U.S.C. § 513(b) provides in full: "Whoever makes, receives, pos-
sesses, sells or otherwise transfers an implement designed for or particu-
2
years of supervised release, $15,150.56 in restitution, and a special
assessment of $50.
Pebworth argues that, because the blank checks he possessed were
in the name of a defunct corporation and drawn on a defunct bank,
the district court erred in denying his motion for judgment of acquit-
tal. Pebworth contends in this regard that the "security" referenced in
§ 513(b), like the "security" referenced in § 513(a), must be the secur-
ity "of a State or political subdivision thereof or of an organization,"
and, consequently, that subsection (b) only prohibits the possession of
an implement designed for or particularly suited for making a security
of a state or political subdivision or of an organization. Because the
term "organization" does not include former corporations, see
§ 513(c)(4) (defining term "organization" as an entity "which operates
in or the activities of which affect interstate or foreign commerce"),
argues Pebworth, his conviction for possessing the"implements" of
blank checks of a defunct corporation cannot stand.
Congress, however, simply did not require in subsection (b) that
the implement, the possession of which is prohibited, be one for mak-
ing a security of any particular kind of entity. The text of section
513(b) does not limit that provision's reach to implements designed
for or particularly suited for making only securities of state or politi-
cal subdivisions or organizations; nor is that provision's reach so lim-
ited indirectly through the statutory definition of"security" in section
513(c)(3).
The dissent believes that section 513(b)'s language"implement
designed for or particularly suited for making a counterfeit or forged
security with the intent that it be so used" is ambiguous as to whether
the defendant must have had the intent to use the implement to make
only securities of a state or political subdivision or of an organization,
or whether an intent to use the implement to make any kind of coun-
terfeit or forged securities is sufficient. The language is not ambigu-
ous in this respect at all. The ambiguity that the dissent identifies
_________________________________________________________________
larly suited for making a counterfeit or forged security with the intent
that it be so used shall be punished by a fine under this title or by impris-
onment for not more than ten years, or both."
3
exists only if one misunderstands the phrase "with the intent that it be
so used" as a reference to section 513(a), which, unambiguously, it is
not. As a matter of grammar, this phrase quite clearly qualifies section
513(b)'s immediately preceding noun phrase "[w]hoever makes,
receives, possesses, sells or otherwise transfers an implement
designed for or particularly suited for making a counterfeit or forged
security," thus confirming that the defendant must have intended only
that the implement be "so used" to make "a counterfeit or forged
security" (the language of section 513(b)), not that he must have
intended that the implement be used to make a counterfeit or forged
security "of a State or political subdivision thereof or of an organiza-
tion" (the language of section 513(a)).
The explanation for the presence of the limitation in subsection (a)
and the absence of any such limitation in subsection (b) is apparent.
While Congress clearly intended to reach in subsection 513(a) the
uttering or possession only of securities of a state or political subdivi-
sion or of an organization, it recognized that many (if not most) coun-
terfeiting and forgery "implements," although they may be used for
making securities of state or political subdivisions or of organizations,
are not designed or particularly suited for making securities of those
or any other particular type entity. Therefore, limiting subsection (b)
to implements designed for or particularly suited for making securi-
ties of particular entities would have left beyond the reach of the pro-
hibition many of the very implements the possession of which it was
the purpose of the statute to prohibit.
This plain meaning of the statute poses no constitutional concern
at all. There is as much of an interstate commerce nexus -- and,
indeed, probably more -- to support congressional regulation of
implements with which any kind of counterfeit or forged security can
be made, as there is a nexus to support Congress' regulation of the
implements for making bombs. No one would contest Congress'
authority under the Commerce Clause to regulate the possession or
use of the latter.
Pebworth also argues that the district court committed clear error
when it refused to reduce his base offense level pursuant to USSG
§ 3B1.2, which provides for a four point decrease if the defendant was
a "minimal participant" and a two point decrease if he was a "minor
4
participant." It is clear, however, that even if Pebworth's financial
gain was less than that of his cohorts, he was anything but a minor
participant in this conspiracy. He was the one who stole the checks
from the shed; he maintained the checks in his possession; he pro-
vided the checks to his confederates; he received proceeds in return;
he bragged that the scheme would be his "big score"; and he informed
Ward of the location of the checks after he was incarcerated so that
Ward could continue in the enterprise. Pebworth, in short, initiated
the whole conspiracy and was instrumental to its success. Therefore,
the district court did not err in considering him more than a minimal
or minor participant.
The judgment of the district court is affirmed.
AFFIRMED
MURNAGHAN, Circuit Judge, dissenting:
I respectfully dissent from the majority's opinion. I disagree with
the majority's affirmation of Pebworth's conviction on the ground
that 18 U.S.C.A. § 513(b) (West Supp. 1997) does not require the
government to prove an interstate commerce nexus. Because I would
hold that § 513(b) does require the government to prove an interstate
commerce nexus, and because the government failed to do so in the
instant case, I would reverse Pebworth's conviction even though what
he did was not commendable. The decision as to what should be pun-
ished is not ours but that of Congress.
I.
Pebworth contends that the district court erred when it denied his
motion for a judgment of acquittal on the ground that § 513(b) does
not require the government to prove an interstate commerce nexus.
We review the district court's interpretation of the statute de novo.
See United States v. Hall, 972 F.2d 67, 69 (4th Cir. 1992).
In order to ascertain Congress's intent, we must first look at the
language of the statute itself. See Stiltner v. Beretta U.S.A. Corp., 74
F.3d 1473, 1482 (4th Cir. 1996) (en banc), cert. denied, 117 S. Ct. 54
5
(1996). If the statutory language is plain and unambiguous, we nor-
mally do not look any further. Id. If the statute's language is ambigu-
ous, however, we turn to the statute's legislative history for
interpretative guidance. Id. In the absence of significant guidance
regarding congressional intent in the legislative history, we then must
employ the traditional rules of statutory interpretation. Id.
Section 513 provides in pertinent part:
(a) Whoever makes, utters or possesses a counterfeited
security of a State or a political subdivision thereof or of an
organization, or whoever makes, utters or possesses a
forged security of a State or political subdivision thereof or
of an organization, with intent to deceive another person,
organization, or government shall be fined under this title or
imprisoned for not more than ten years, or both.
(b) Whoever makes, receives, possesses, sells or other-
wise transfers an implement designed for or particularly
suited for making a counterfeit or forged security with the
intent that it be so used shall be punished by a fine under
this title or by imprisonment for not more than ten years, or
both.
(c) For purposes of this section--
....
(4) the term "organization" means a legal
entity, other than a government, established or
organized for any purpose . . . which operates in
or the activities of which affect interstate or for-
eign commerce.
18 U.S.C.A. § 513 (emphasis added).
The plain language of § 513(a) provides that the government must
prove that the defendant: 1) made, uttered, or possessed; 2) a counter-
feited or forged security; 3) of a state, of a political subdivision, or
6
of an organization that operates in or affects interstate commerce; 4)
with the intent to deceive another person, organization, or govern-
ment. 18 U.S.C.A. § 513(a). In regard to the third element, courts
have held that a check is a security of the account holder and the bank
upon which the check is drawn. See United States v. Chappell, 6 F.3d
1095, 1099 (5th Cir. 1993). Thus, in order to satisfy the third element,
either the account holder or the bank upon which the check is drawn
must operate in or affect interstate commerce. In United States v.
Barone, 71 F.3d 1442, 1445-46 (9th Cir. 1995), the Ninth Circuit held
that the government failed to satisfy the third element because the
account holder was a nonexistent shell company and nonexistent
companies are not "organizations" that engage in interstate commerce.
Thus, Pebworth contends that a jury could not convict him of vio-
lating § 513(a) because the government could not establish the third
element. Oceana, the account holder, was a nonexistent corporation,
and the checks were drawn on accounts at the Bank of Virginia
Beach, a nonexistent bank. The government concedes as much.
However, the indictment charged a conspiracy to violate § 513(b),
not § 513(a). Section 513(b) prohibits the receipt, possession, sale, or
transfer of "implements designed for or particularly suited for making
a counterfeit or forged security with the intent that it be so used . . . ."
18 U.S.C.A. § 513(b). Thus, unlike § 513(a), § 513(b) does not specif-
ically provide that the object counterfeit or forged securities must be
"of an organization" that engages in interstate commerce.
The statutory language of § 513(b) is ambiguous as to whether it
requires an interstate commerce nexus. Section 513(b) prohibits the
possession of an implement particularly suited for making a counter-
feit security "with the intent that it be so used." 18 U.S.C.A. § 513(b).
The quoted language is ambiguous as to whether it refers to the intent
to make all counterfeit securities, regardless of their connection with
interstate commerce, or whether it refers only to the intent to make
counterfeit securities that § 513(a) prohibits, namely, securities of an
organization engaged in interstate commerce. In other words, the "in-
tent that it be so used" language is ambiguous as to whether it refers
to § 513(a) and requires the defendant to have the intent to make a
counterfeit security that § 513(a) prohibits. If it does, then the govern-
7
ment would have to prove an interstate commerce nexus, which it has
not done in the instant case.
Given the ambiguity in the language, we must turn to the statute's
legislative history for interpretative guidance. See Stiltner, 74 F.3d at
1482. Pebworth contends that Congress intended courts to read § 513
as a whole and that the implements that § 513(b) prohibits therefore
must be particularly suited for making the counterfeit securities that
§ 513(a) prohibits. The legislative history does provide some support
for Pebworth's position.
Section 513's legislative history merely repeats the language of
§ 513(a) and § 513(b) in describing the offenses that Congress cre-
ated. See S. Rep. No. 98-225, at 372 (1984), reprinted in 1984
U.S.C.C.A.N. 3182, 3513. Specifically, the legislative history pro-
vides only that § 513(b) "would also penalize the making, receipt,
possession, sale or transfer of an implement designed or particularly
suited for the making of a counterfeit or forged security with the
intent that it be so used." Id. However, the legislative history of § 513
directs the reader to consult an earlier Committee Report on a bill that
did not become law, but which later gave impetus to the enactment
of § 513. Id. That Committee Report provides that Congress only
intended to "cover[ ] implements designed for the making of certain
types of securities purporting to be made or issued by organizations
or by States or local governments." S. Rep. No. 97-307, at 793 (1981)
(emphasis added). As noted, Congress clearly defined"organizations"
as legal entities that operate in or affect interstate commerce. See 18
U.S.C.A. § 513(c)(4). The Committee Report also notes that the pun-
ishment for possession of implements should parallel the punishment
for "counterfeiting and forgery in the belief that the offenses covered
by [§ 513(b)] should be treated at the same level as the conduct relat-
ing to the written instruments which are made from them." S. Rep.
No. 97-307, at 793 (emphasis added). Thus, the earlier Committee
Report suggests that Congress intended § 513(b) to cover only imple-
ments particularly suited for making the written instruments that
§ 513(a) proscribes, namely, securities of an organization that oper-
ates in or affects interstate commerce. However, as the government
points out, Congress did not use that exact language in the actual leg-
islative history of § 513.
8
Even if the legislative history does not provide significant guidance
regarding Congress's intent, the traditional rules of statutory interpre-
tation mandate the conclusion that I reach. See Stiltner, 74 F.3d at
1482. The government notes that the Supreme Court has held that
"``[w]here Congress includes particular language in one section of a
statute but omits it in another section of the same Act, it is generally
presumed that Congress acts intentionally and purposely in the dispa-
rate inclusion or exclusion.'" Brown v. Gardner, 115 S. Ct. 552, 556
(1994) (quoting Russello v. United States, 464 U.S. 16, 23 (1983))
(alteration in original). The government thus contends that since Con-
gress unambiguously included an interstate commerce requirement in
§ 513(a) but not in § 513(b), we should presume that Congress inten-
tionally excluded the requirement from § 513(b).
However, the Supreme Court has also clearly held that courts must
interpret statutes, if possible, to avoid a result that would create seri-
ous constitutional doubts. See, e.g., Crowell v. Benson, 285 U.S. 22,
62 (1932). If we construe § 513(b) the way that the government and
the majority opinion contend that we should, a serious question arises
as to whether § 513(b) could withstand constitutional scrutiny.
The legislative history reveals that Congress passed§ 513 pursuant
to its commerce power. See S. Rep. No. 98-225, at 371, reprinted in
1984 U.S.C.C.A.N., at 3512. The Supreme Court has never suggested
that "``Congress can ignore the requirement that some connection with
interstate commerce must be established as a basis for conviction of
a federal crime where the power of Congress to enact the statute is
derived from the commerce clause.'" United States v. Bass, 434 F.2d
1296, 1300 (2d Cir. 1970) (quoting United States v. Perez, 426 F.2d
1073, 1082-83 (2d Cir. 1970)), aff'd on other grounds, 404 U.S. 336
(1971). Congress presumably included an interstate commerce
requirement in § 513(a) in order to give itself jurisdiction. Although
Congress did not expressly include an interstate commerce require-
ment in § 513(b), we must read such a requirement into the statute in
order to avoid serious constitutional doubts about Congress's power
to enact it.
Moreover, the Supreme Court also has held that courts should con-
strue ambiguous criminal statutes against the government and in favor
of the defendant. See United States v. Bass, 404 U.S. 336, 347-48
9
(1971). See also United States v. Hall, 972 F.2d 67, 69 (4th Cir. 1992)
(noting that "[u]nder the rule of lenity any criminal statute . . . must
be construed in favor of the accused and against the government if it
is ambiguous" (emphasis added)). In the instant case, Congress did
not "``plainly and unmistakably'," Bass , 404 U.S. at 348 (quoting
United States v. Gradwell, 243 U.S. 476, 485 (1917)), make it a fed-
eral crime for an individual to possess implements suited to making
forged securities of any organization, regardless of a nexus with inter-
state commerce. Therefore, we should apply the rule of lenity and
construe § 513(b) in favor of Pebworth.
Thus, in order to establish a violation of § 513(b), the government
must prove as an essential element of the offense that the implement
was designed for or particularly suited for making forged or counter-
feit securities of a state, a political subdivision, or an organization that
operates in or affects interstate or foreign commerce. In the instant
case, the government failed to prove the requisite nexus with inter-
state commerce. Both Oceana and the Bank of Virginia Beach are
nonexistent corporations, and they therefore do not operate in or
affect interstate commerce. See Barone, 71 F.3d at 1445.
II.
In light of § 513(b)'s ambiguity and the serious constitutional
doubts that the majority opinion's interpretation raises, I would hold
that § 513(b) requires the government to prove an interstate com-
merce nexus and that the government failed to do so in the instant
case. Accordingly, I would reverse Pebworth's conviction.* I dissent.
_________________________________________________________________
*Since I would reverse Pebworth's conviction, his appeal of the sen-
tence that the district court imposed would be rendered moot.
10