United States v. Steve Hale , 857 F.3d 158 ( 2017 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-4642
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
STEVE HALE,
Defendant – Appellant.
Appeal from the United States District Court for the Western District of North Carolina, at
Charlotte. Max O. Cogburn, Jr., District Judge. (3:13-cr-00280-MOC-DSC-1)
Argued: January 26, 2017 Decided: May 15, 2017
Before WILKINSON, NIEMEYER, and KEENAN Circuit Judges.
Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge
Wilkinson and Judge Keenan joined.
ARGUED: Marvin David Miller, LAW OFFICE OF MARVIN D. MILLER, Alexandria,
Virginia, for Appellant. Amy Elizabeth Ray, OFFICE OF THE UNITED STATES
ATTORNEY, Asheville, North Carolina, for Appellee. ON BRIEF: Jill Westmoreland
Rose, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY,
Charlotte, North Carolina, for Appellee.
NIEMEYER, Circuit Judge:
Following a seven-day trial, a jury convicted Steven M. Hale of transporting stolen
property in interstate commerce, knowing the goods to have been stolen; of conspiring to
do the same; of making false statements in his tax returns; of failing to collect and pay
employee taxes; and of obstructing justice. The district court sentenced him to 97 months’
imprisonment.
Challenging his conviction on appeal, Hale contends primarily that the evidence
was insufficient to justify the district court’s decision to give the jury a willful blindness
instruction and otherwise to support the jury’s finding that he knew the property at issue
was stolen. He also challenges the admission of certain evidence; the content of several
jury instructions; the sufficiency of the evidence as to whether an individual who worked
for him qualified as an employee, as opposed to an independent contractor; and certain
statements that the government made to the jury during closing argument. Finding no
reversible error, we affirm.
I
A federal grand jury returned a 31-count indictment in 2013 charging Hale with one
count of conspiracy from at least 2006 through March 2011 to transport stolen property in
interstate commerce, in violation of 18 U.S.C. § 371; twelve counts of transporting stolen
property in interstate commerce, and aiding and abetting the same, in violation of 18 U.S.C.
§§ 2314 and 2; three counts of making a false statement in his income tax returns, in
violation of 26 U.S.C. § 7206(1); fourteen counts of failing to collect, account for, and pay
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over federal taxes on an employee’s wages, in violation of 26 U.S.C. § 7202; and one count
of obstruction of justice, in violation of 18 U.S.C. § 1503. At the heart of the charged
conduct was the government’s allegation that, as part of an organized retail theft scheme,
Hale served as “a Second-Level Fence engaged in the purchase and resale of stolen
consumer products, goods and merchandise.” Specifically, the government alleged that
professional shoplifters — or “boosters,” as they were called — had stolen millions of
dollars worth of over-the-counter medications and health-and-beauty products from the
shelves of retail stores and then sold the goods to first-level fences, who in turn sold the
goods to Hale, the sole owner and operator of a warehouse in Denver, North Carolina,
doing business as Double D Distributing, LLC. Hale profited, according to the
government, by selling the stolen goods to at least one third-level fence.
The government’s investigation began in the fall of 2010, when detectives with the
Gastonia, North Carolina Police Department learned that heroin addicts in the area were
routinely shoplifting large quantities of goods — particularly over-the-counter medications
and health-and-beauty aids — from local stores and selling them to get money to buy heroin
on a day-to-day basis. These boosters often operated in teams of two to four individuals
and routinely stole $1,000 to $3,000 worth of merchandise in a matter of minutes. After
some of the boosters identified a woman named Bonnie Bridges as their fence, officers set
up surveillance that confirmed that numerous boosters were taking their shoplifted
merchandise to Bridges’ house on a daily basis. Officers then saw Bridges taking the
merchandise to Hale’s warehouse, which was a plain white metal building with no
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identifying signs. Officers conducted further surveillance at the warehouse and eventually
set up a pole camera across the street.
Between October 2010 and March 2011, their surveillance revealed that Bridges,
often accompanied by her sister, regularly delivered stolen merchandise to the Double D
warehouse. Bridges’ two daughters and their husbands also made routine deliveries to the
warehouse, as would a man named Darryl Brock. They all delivered their merchandise in
plastic garbage bags, plastic storage bins, and boxes, and one officer who participated in
the surveillance testified that he never saw anyone else, including any commercial trucks,
make deliveries to the warehouse. On numerous occasions between October 2010 and
March 2011, Hale was present at the warehouse when these individuals were paid cash for
the stolen merchandise they delivered.
On October 20, 2010, investigating agents intercepted a FedEx shipment from the
Double D warehouse to Jeff Telsey at JCA Enterprises in Boca Raton, Florida. In that
shipment were items that the officers had marked with an ultraviolet-light pen prior to
having a cooperating booster sell the items to Bridges. The shipment also contained
merchandise marked with active security sensors and stickers identifying the retail store
where the item was intended to be sold and a telephone number for people to call if the
item was found elsewhere. This telephone number allowed people to find out if the product
was stolen or if it was legitimately in the secondary market.
Investigating agents executed a search warrant at the Double D warehouse on March
24, 2011, where they found numerous shelves containing labeled boxes of merchandise
and a “cleaning station” with different products used to remove stickers, sensors, and glue.
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Sharon Cooke, who worked at the warehouse, was present at the beginning of the search
and agreed to make two recorded telephone calls to Hale, who was in Florida at the time.
She told Hale that the IRS “was around asking questions.” During one of the calls, Hale
responded, “Well, you don’t know who we’re doing business with,” and then repeated,
“You don’t know who the business is with, do you?,” even though Cooke did in fact know
the identities of both the business’ suppliers and customers.
On the same day that agents searched the Double D warehouse, they also searched
Bridges’ residence and arrested Bridges. After she was released from jail, she called Hale
to accuse him of “throw[ing] us under the bus.” Hale responded that he “hadn’t done
anything”; that Bridges and her family “shouldn’t have done him the way that [they] did”;
and that “he hoped [they] didn’t turn on him.” Moreover, the same day that officers
searched Hale’s warehouse, Hale called Brock, warning him that Bridges had gotten
“arrested for a bunch of stolen merchandise”; “that the FBI was at his warehouse”; and that
they would “probably be coming after [Brock] next.” The next day, Hale advised Brock
to “get rid of [his] product” and to take money out of his bank accounts before they were
frozen by the police. Consistent with the latter piece of advice, Hale withdrew more than
$236,000 from a joint bank account that he shared with his wife, redepositing the money
in a new account in her name only.
One week after the search, on April 1, 2011, Hale listed his 26-foot boat for sale
with a broker in Florida, asking more than $39,000. At some later point, however, Hale
took the boat’s title to a close family friend who was an auctioneer and signed the title over
to his friend’s company. The friend had the boat on his car lot for a few weeks but, at
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Hale’s request, moved it inside a building. Sometime after June 8, 2011, when a court
issued a seizure warrant for the boat, Hale told his friend about the warrant and stated, “If
anybody asks you any questions, it’s your boat.” Sometime later, Hale prepared a
fraudulent promissory note reflecting that his friend had agreed to pay $18,000 for the boat,
which they backdated to May 9, 2011.
Trial on the charges commenced in April 2014 and continued before a jury for seven
days. In support of its case, the government introduced surveillance videos of activity
outside of Hale’s warehouse, the testimony from the investigating officers, and the
testimony from several of Hale’s alleged co-conspirators, including Bridges, Brock,
Cooke, and Telsey.
Bridges testified that she met Hale in 2000 when she was selling over-the-counter
medicines and health-and-beauty aids at a flea market after buying them directly from drug-
addicted shoplifters. At that time, Hale approached her table and indicated that he might
be interested in buying her products, particularly “Tylenol, Advil, [and] stuff like that.”
Thereafter, Hale gave Bridges a price list for the merchandise he wanted to buy and said
he would pay cash for as much of that merchandise as she could deliver. For example,
Hale would pay $4 for a 100-count bottle of Aleve, less than one-half the manufacturer’s
wholesale price of $8.61, and $6 for a 14-count package of Prilosec, substantially less than
the wholesale price of $10.01. Hale told Bridges that he would not accept goods that were
damaged or within one year of their expiration date. Based on Hale’s price list, Bridges
told the boosters what goods she wanted and how much she would pay for those goods,
usually setting her price so that she made at least one dollar on each item. As to the
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merchandise that Hale would not accept, Bridges sold it at flea markets, where she also
continued to sell other miscellaneous items.
For the first five or six years that Bridges and Hale did business together, Hale would
send someone to pick up the merchandise at Bridges’ house. Eventually, however, Hale
gave Bridges the address of his warehouse, and Bridges started delivering the stolen
merchandise to the warehouse on an almost daily basis. Starting around 2004 or 2005, her
daughters and their husbands found their own boosters to buy from in order to make money
by reselling stolen merchandise to Hale.
At times, the drug-addicted shoplifters Bridges bought from would get arrested, and,
when Hale or Cooke would ask her why she was not bringing in as much product, she
would respond that her “people [were] on vacation.” Bridges testified that Hale would not
“ask any more questions about that.” At no point during the decade that Bridges sold Hale
stolen merchandise did Hale ever ask her for proof that the products she was selling to him
were not stolen; nor did he ever ask about the retailer stickers, which were on at least 20%
of the items that she sold to him.
Brock testified that he first met Hale in 2000, when his father introduced them. At
the time, Brock and his father owned a fireworks store, but Brock was also buying over-
the-counter medicine and health-and-beauty aids from drug-addicted boosters and selling
the stolen merchandise at flea markets. Brock’s father had previously sold stolen
merchandise, and he told Brock that Hale “was okay and . . . was buying . . . the health and
beauty aid stuff which [Brock] had.” Hale subsequently provided Brock with a price sheet
and started buying goods from him. In 2002, Brock was arrested after law enforcement
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officers executed a search warrant on a trailer located behind his fireworks store and
recovered counterfeit items and 20 boxes of stolen merchandise. While the charges were
pending, Brock asked Hale if “he could help [him] out,” and Hale gave Brock a fraudulent
“receipt for 20 banana boxes and a bunch of receipts from a Walmart,” leading police to
drop the stolen property charge.
For several years after his arrest, Brock stopped dealing in stolen merchandise, but
he got back into the business after meeting Bridges at a flea market in the spring of 2010.
When he approached her booth, he could almost immediately tell, from “being in that
business before,” that her products were stolen goods. Brock started buying goods from
Bridges regularly and eventually started selling some of those goods to Hale.
In late 2010, Hale and Brock had conversations about going into business together,
with the idea that Brock would operate a warehouse in South Carolina. During these
conversations, Hale told Brock that he made $18,000 in “a bad month” and that he was
getting about 90% of his merchandise from Bridges and the members of her family. Hale
advised Brock that he should always pay his suppliers in cash because he would “have to
report it if [he] put it on the books,” and he also told Brock to “make sure that [he] [got]
everybody on tape saying that they don’t deal in stolen merchandise,” even giving Brock a
voice recording pen device to be used for that purpose. He also gave Brock a device that
could be used to detect if someone was wearing a wire.
Cooke testified that she first started working for Hale in 2001 when her sister-in-
law, who was already working for him, needed help. Cooke and her sister-in-law worked
together on a full-time basis until her sister-in-law left in 2006, and, from that point
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forward, Cooke essentially ran the warehouse’s daily operations, although Hale had an
office there and was present about one-half the time. Bridges and the other suppliers called
Cooke about an hour before they arrived at the warehouse with an estimate of how many
items they were bringing, so that Bridges could go to the bank and withdraw cash from
Hale’s business account. Cooke then received the merchandise as it was delivered and paid
the suppliers cash for it, often in the thousands of dollars. Cooke maintained a financial
ledger of the transactions — on which Hale also made entries — that identified the
suppliers, at first by codenames (such as “FW” for “fireworks,” the codename for Brock,
and “BG” for “Bonnie Gastonia,” the codename for Bridges, who lived in Gastonia, North
Carolina) and later by symbols (such as a star for one of Bridges’ daughters and an asterisk
for the other). After the suppliers left, Cooke — sometimes assisted by one of her family
members — unpacked the merchandise, checked it for damage and shelf life, “cleaned” it
of any retailer’s stickers or sensors, and sorted it. Once the merchandise was cleaned and
categorized, Cooke repackaged it and sent Hale a list of the inventory that was ready to
ship. After Hale negotiated a deal with one of his purchasers, Cooke put the boxes of
cleaned merchandise on pallets for shipping and prepared bills of lading.
Initially, Hale paid Cooke $500 in cash every two weeks for her work, but he
eventually increased her pay to $20 in cash for every box of goods that she processed.
Cooke withdrew cash from Hale’s bank account to pay herself and also to buy all of the
warehouse’s supplies. While Cooke decided what hours to work, she nonetheless worked
full time and exclusively for Hale for approximately a decade. With respect to Cooke’s
work, Hale reported having paid around $50,000 to “Sharon’s Packaging” for each tax year
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from 2006 through 2008, but he never issued Cooke either a W-2 or a 1099 tax form, nor
did he withhold any of her income for taxes.
Jeff Telsey, who had been the owner and operator of JCA Enterprises, testified that
he regularly bought stolen goods from Hale in order to resell them to retailers. When a
shipment arrived from Hale, his operation inspected each item for damage, expiration
dates, and stickers identifying the store where the item was supposed to be sold. He was
concerned about such stickers — which he sometimes found on items in Hale’s shipments
— because any retailer receiving such products “would know that this was obviously stolen
property.” Telsey never called the phone numbers printed on the stickers because he
already “knew [he] was dealing in stolen property.” Telsey testified that he liked doing
business with Hale because Hale sent him large quantities of the types of items that were
the easiest for him to resell and Hale’s prices were generally 10-15% lower than Telsey’s
other suppliers. When Telsey spoke with any of his suppliers, including Hale, they never
used the word “stolen,” but Telsey “took it for granted that everybody knew — had to know
it was stolen” and that anyone with “half a brain in their head . . . would know it was
stolen.” Hale stopped selling to Telsey at some point in 2010, telling Cooke that Telsey
was being investigated for dealing in counterfeit razor blades and indicating that, as a
result, they would “probably be investigated for [dealing in] stolen product[s].”
Representatives from Bayer Health Care and Procter & Gamble — companies that
manufactured some of the products at issue — testified that there was no legitimate way to
buy their company’s products for prices as low as the ones Hale charged. Similarly, the
manager of CVS’s organized retail crime unit testified that there was no lawful way for
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“loose goods with different expiration dates from different stores with stickers on them” to
come into the market.
After the government rested its case, Hale made a motion for a judgment of acquittal
on all counts, and the district court denied the motion. Hale then presented testimony from
several witnesses — some of whom testified about the existence of a legitimate secondary
market in over-the-counter medicines and health-and-beauty aids. He then took the stand
to testify in his own defense.
Immediately prior to that point, Hale’s counsel requested that the court preclude the
government from asking Hale about a prosecution that was brought against Hale and more
than ten other defendants for conspiring during the period from 1992 to 1994 to transport
or receive stolen goods — namely, over-the-counter drugs and health-and-beauty aids. On
appeal of the convictions in that case, this court overturned most of the convictions,
including Hale’s, on the ground that the evidence did not support that the defendants had
been willfully blind to the fact that they were dealing in stolen property. See United States
v. Ebert, 178 F.3d 1287, 1999 WL 261590, at *1 (4th Cir. May 3, 1999) (unpublished table
decision). The government agreed not to ask Hale about these previous charges and the
previous trial, but it argued that it should be able to cross-examine him about his business
dealings at that time with Don Thomas, the first-level fence at the heart of that case. The
court agreed, instructing the government to avoid referencing the fact that Hale was
previously charged but ruling that “if he gained knowledge at that time and then . . . used
that to be willfully blind in an effort to pull this off, then . . . that needs to come out.”
Hale’s counsel agreed that such a question was “fair game.”
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Hale testified that he became involved in the secondary market business in 1992,
when he bought $20,000 worth of merchandise at flea markets and gradually started
identifying buyers. He stated that his business model involved dealing in “depressed
product,” meaning product that is “not in factory boxes” and does not “look factory new,”
and that he had “bought [product] from every known source that you can buy from.” He
testified that in his ten years of dealing with Bonnie Bridges, he had never heard “one word
. . . spoken about her being a fence,” adding that “nobody can run a booster operation ten
years and deal with crackheads” without getting caught; that Bridges was “probably the
[most] trusted buyer [he] had”; and that he “never ever thought she was selling stolen
goods.” He later added that he checked her criminal background and also verified that she
was at flea markets when she said she was going to be.
On cross examination, Hale acknowledged that before he met Bridges, he had been
involved in the secondary market; that one of the people from whom he had bought over-
the-counter medicines and health-and-beauty aides was Don Thomas; and that he later
learned that Thomas had been getting his goods from boosters and fences. He
acknowledged that when he got back in the business in 2001, he knew that the presence of
stolen property in the market was “a great risk.” He also admitted that he had previously
done business “with independent fences,” but denied walking out of the room “whenever
boosters would show up at those fences’ places.” In an attempt to refresh Hale’s
recollection, the government asked Hale to read silently from a document that was not
identified for the jury but that was a copy of this court’s unpublished opinion in Ebert.
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After reading the passage, Hale maintained that somebody had falsely said that he had
purposefully left the room when boosters were present.
At the conclusion of all the evidence, Hale renewed his motion for a judgment of
acquittal, and the district court again denied the motion.
In its closing argument, the government referred to evidence indicating that the
boosters who stole merchandise and sold it to Bridges were drug addicts, and it repeatedly
emphasized, without objection, that most of the money that Hale paid Bridges ultimately
went to the local drug dealers who were supplying the boosters with heroin and cocaine.
Before the district court instructed the jury, Hale objected to the court’s decision to
provide the jury with a willful blindness instruction. Hale’s counsel allowed, however, that
if the court was going to give such an instruction, “we don’t have any problem with the
proposed instruction of the court.”
The jury found Hale guilty on all counts on April 22, 2014, and the district court
sentenced Hale to 97 months’ imprisonment. From the judgment entered against him dated
October 13, 2015, as amended February 16, 2016, Hale filed this appeal.
II
For his main argument on appeal, Hale contends that the evidence was insufficient
to support the district court’s decision to provide the jury with a willful blindness
instruction and otherwise to support the jury’s finding that he knew the property was stolen.
Hale also challenges the form of the willful blindness instruction that the court gave.
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A
We begin with Hale’s contention that the district court abused its discretion by
instructing the jury on willful blindness in light of the evidence presented.
For a jury to convict Hale of transporting stolen goods in interstate commerce and
conspiring to do so, the government was required to prove that Hale knew that the goods
he was transporting were stolen. See 18 U.S.C. § 2314. While the government could, of
course, meet its burden by proving that Hale actually knew the goods were stolen, it could
also satisfy the knowledge element by presenting sufficient evidence that Hale had made
himself deliberately ignorant of the fact that the goods were stolen, which evidence would
justify the court’s instructing the jury on “willful blindness.” The first question before us,
therefore, is whether the government presented sufficient evidence of Hale’s deliberate
ignorance to justify the district court’s willful blindness instruction.
The principle that willful blindness will satisfy a knowledge element in criminal law
is premised on the idea that defendants should not be permitted to “escape the reach” of
criminal statutes that require proof that a defendant acted knowingly or willfully “by
deliberately shielding themselves from clear evidence of critical facts that are strongly
suggested by the circumstances.” Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754,
766 (2011); see also United States v. Jinwright, 683 F.3d 471, 478 (4th Cir. 2012) (“To
allow the most clever, inventive, and sophisticated wrongdoers to hide behind a constant
and conscious purpose of avoiding knowledge of criminal misconduct would be an
injustice in its own right”). But, to ensure that the willful blindness doctrine retains “an
appropriately limited scope that surpasses recklessness and negligence,” its application has
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“two basic requirements: (1) the defendant must subjectively believe that there is a high
probability that a fact exists and (2) the defendant must take deliberate actions to avoid
learning of that fact.” Global-Tech Appliances, 563 U.S. at 769.
To be sure, “requests for willful blindness instructions should be handled with
caution,” Jinwright, 683 F.3d at 478, because of the risk that the instruction could mislead
a jury into believing that it could convict the defendant for his mere negligence or
recklessness with respect to a key fact making his conduct illegal, see United States v.
Lighty, 616 F.3d 321, 378 (4th Cir. 2010). Nonetheless, it is appropriate to instruct the jury
on willful blindness “when the defendant claims lack of guilty knowledge in the face of
evidence supporting an inference of deliberate ignorance.” Id. at 377–78; see also United
States v. Ali, 735 F.3d 176, 187–88 (4th Cir. 2013).
In the record before us, there was ample evidence (both direct and circumstantial)
from which to find first that Hale “subjectively believe[d] that there [was] a high
probability” that the goods he was buying and selling were stolen. Global-Tech
Appliances, 563 U.S. at 769. In his testimony at trial, he acknowledged that he knew from
prior experience that there was a “very big risk” that people selling over-the-counter
medicine and health-and-beauty aides at flea markets could be first-level fences who had
bought the goods at deep discounts from professional shoplifters. The jury could also have
found that Hale must have thought that it was highly likely that the only way that Bridges
could be supplying him with trash bags and plastic storage bins full of assorted loose goods
at prices well below wholesale on an almost daily basis was for her to be running a large-
scale booster operation. Hale’s subjective awareness was also indicated by the evidence
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of his conduct in the aftermath of the search of his warehouse, when he attempted to coach
Cooke into denying that she knew with whom he was doing business; told Bridges not to
“turn on him”; and warned Brock to “get rid of [his] product” because the police would
likely come after him next.
The record also contains ample evidence from which to find that Hale took
deliberate actions to avoid confirming that the goods were in fact stolen. For example, the
government showed that Hale was careful never to ask Bridges about who “her people”
were or why so many of her goods were marked with stickers indicating that they belonged
on the shelves of local stores. Instead, he had such stickers removed. Despite knowing
from his earlier dealings of the “very big risk” that individuals selling these types of goods
could be fences, he elected not to require his suppliers to ever provide receipts or other
documentation showing that they were obtaining their goods through legitimate channels,
and he structured his operation in a manner that minimized his direct contact with them.
In light of this and other evidence, we conclude that the district court did not abuse
its discretion by providing the jury with a willful blindness instruction. See United States
v. Ruhe, 191 F.3d 376, 384–85 (4th Cir. 1999) (holding that the district court did not abuse
its discretion by giving a willful blindness instruction where the record included evidence
that the defendant, charged with transporting stolen airplane parts, accepted the parts
“without the normal documentation” and ignored that many of the parts were marked with
red tags from the manufacturer indicating that they were “to be scrapped”).
In addition to the evidence showing willful blindness to satisfy the knowledge
element of the offense, the government also presented evidence that Hale actually knew
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the goods in question were stolen. For example, the government presented (1) testimony
from Telsey that it was obvious that the merchandise he was purchasing from Hale was
stolen; (2) evidence that Hale tried to disguise his suppliers’ identities by instructing Cooke
to use codenames and symbols in the company’s financial ledger; and (3) testimony from
Brock that when he and Hale were contemplating forming a partnership, Hale gave him a
device to detect if someone was wearing a wire, as well as a voice recording pen devise
that he could use to “get everybody on tape saying that they don’t deal in stolen
merchandise.”
Whether by evidence of willful blindness or by evidence of actual knowledge, the
government offered sufficient evidence from which the jury could find beyond a reasonable
doubt that Hale knew that the goods in which he was dealing were stolen.
B
Hale also challenges the content of the willful blindness instruction that the district
court gave, focusing in particular on a single sentence of the instruction in which the district
court stated, “Willful blindness would only satisfy the knowledge element of these offenses
if you, the jury, find the evidence supports an inference that the defendant was subjectively
aware of the high probability that the goods he was buying were stolen goods, but
purposefully avoided learning the facts pointing to the fact he was buying stolen goods.”
(Emphasis added for the challenged portions). Hale contends that by “fail[ing] to define
‘subjectively,’” the instruction allowed “the jury to conclude that ‘subjective belief’ could
be proved based on facts that the defendant or a reasonable person should have known,
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without consideration of facts actually known by the defendant.” He also asserts that the
instruction’s “facts pointing to the fact” language impermissibly allowed the jury to find
the knowledge element based upon “a circumstantial chain of events.”
As a threshold matter, the government asserts that Hale waived any challenge to the
content of the district court’s willful blindness instruction, noting that after the district court
provided the parties with a copy of the instruction, Hale’s counsel approved of its form. In
response, Hale asserts:
Hale did not waive [an] objection to the content of the willful blindness
instruction provided by the district court. He specifically objected to any
willful blindness instruction at all. At most, when pressed by the court,
Hale’s counsel indicated that although he objected to the instruction
proffered, if one has to be given then it was “not a bad one.” He did not
request or consent to any particular language in a willful blindness
instruction.
The record, however, does not support Hale’s position. After the court gave counsel a copy
of the instruction that it intended to give to the jury, the following dialogue took place:
Counsel for Hale: Your Honor, I can tell the Court, aside – obviously, our
position is that we will object to the willful blindness instruction as we stated;
but if the court is going to give one, we don’t have any problem with the
proposed instruction of the court.
The Court: Okay.
AUSA: The government has no objection, Your Honor. It accurately states
the law.
The Court: Then that’s the one – then I will give that instruction.
(Emphasis added). Again, a day later during the trial, Hale’s counsel reaffirmed his
position:
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The Court: The [instructions] to look at are the willful blindness one which
I am going to give and I think we’ve already covered that one yesterday. The
defense objects to any willful blindness; but if we had to give one, they don’t
think this one is a bad one. Is that right, Mr. Tin?
Counsel for Hale: That’s our position Your Honor.
When counsel states affirmatively to the court that he has no problem with the form of the
proposed instruction, he waives any objection he has to the form. Had Hale objected to
the instruction’s language when the district court specifically asked for his views, the court
could have amended the instruction. But with the express reassurance that Hale had no
problem as to the form, the court gave the instruction to the jury, reserving only Hale’s
objection to the fact that it was given at all. It is therefore clear that Hale waived any
objection to the form of the willful blindness instruction.
Nonetheless, were we to consider Hale’s newly asserted objection, we would readily
conclude that the district court did not err in giving the form of willful blindness instruction
that it gave to the jury. Indeed, much of the comprehensive instruction consisted of direct
quotes from the Supreme Court’s synthesis of the willful blindness doctrine in Global-Tech
Appliances and our subsequent decision in Jinwright, where we upheld a willful blindness
instruction as consistent with Global-Tech Appliances. See Jinwright, 683 F.3d at 479–80.
We find no merit to Hale’s complaint that the district court failed to define the word
“subjectively,” as the word is one of ordinary English and the context of its use clearly
signaled to the jury that it was required to focus on whether Hale himself believed that the
goods were likely stolen property. Moreover, the single “facts pointing to the fact” phrase,
while not the most artful, did not render the instruction erroneous, especially when taken
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as a whole. The district court repeatedly “emphasize[d] that the government must prove
more than the defendant was reckless or negligent,” taking care to correctly explain those
terms. And it concluded its instruction by using key language from Global-Tech
Appliances to explain that “[t]o find beyond a reasonable doubt the defendant was willfully
blind, you first have to find the defendant subjectively believed there was a high probability
that he was buying stolen goods and, two, that the defendant took deliberate actions to
avoid learning the goods he was buying were stolen.” Thus, even had Hale not waived his
objection to the form of the instruction, we would conclude that the district court’s willful
blindness instruction, considered as a whole, “accurately and fairly state[d] the controlling
law.” United States v. Rahman, 83 F.3d 89, 92 (4th Cir. 1996).
III
Hale raises several other challenges, each of which merits only a brief discussion.
A
Hale challenges the district court’s admission of three categories of evidence, none
of which he objected to at trial. Because he failed to object, our review is limited to plain
error. See Fed. R. Crim. P. 52(b).
First, Hale contends that “evidence that Bridges’ boosters were drug addicted was
not relevant” and, in any event, was more prejudicial than probative. He maintains that
evidence regarding the boosters’ “drug problems was an appeal to the emotions of the
jurors,” meant to “generate anger and bad feelings in the jurors against” him.
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We conclude, however, that the district court did not err in admitting this evidence.
That the boosters were desperate to feed very expensive drug habits was critical to
explaining why there was a network of people willing to shoplift thousands of dollars’
worth of merchandise and sell it quickly for very cheap prices. The boosters’ drug addition
was thus at the heart of how this retail theft scheme was able to function, and the district
court did not abuse its discretion — let alone commit plain error — by admitting this type
of evidence.
Second, Hale argues that the evidence relating to his prior acquittal for conspiracy
to deal in stolen goods “was not relevant, was more prejudicial than probative[,] and was
prohibited bad character evidence.” He argues, “Whether Thomas or others previously
sold stolen goods to Hale did not make any more or less probable the question of whether
he knew Bridges, who had no connection whatsoever to them, also sold stolen goods to
him.” In addition, he complains that “the government used a bound Federal Court of
Appeals reporter volume,” thus showing the jury that there was “a case book with a case
of the defendant in it.” At bottom, according to Hale, “The entire line of questioning served
only to inform the jury, impermissibly, that Hale had a prior case involving fences” and
was therefore “propensity evidence” that should have been excluded under Federal Rule of
Evidence 404(b).
Hale not only failed to object to this evidence when it was presented at trial, he
expressly agreed that “we don’t have a problem with” the government asking Hale on
cross-examination whether, before he met Bridges, he had learned that one of his previous
suppliers had been buying stolen goods from heroin addicts. Accordingly, we conclude
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that he waived his objection. Moreover, contrary to his claims, there was no “bound
Federal Court of Appeals reporter volume,” as the Ebert decision was unpublished and not
even reported in the Federal Appendix. Nothing in the government’s questions or in its act
of handing Hale a printed copy of the opinion to refresh his recollection informed the jury
that there had previously been a case against Hale involving fences.
Third and finally, Hale challenges the admission of Brock’s testimony that he
understood from his father that Hale dealt in stolen goods, arguing that this evidence
constituted hearsay and prohibited bad character evidence. But the only out-of-court
statement admitted was Brock’s testimony that he first learned of Hale when his father told
him that Hale “was okay and . . . was buying HBA, which is the health and beauty aid stuff
which I had.” Brock added that he understood his father’s statement to mean “[t]hat you
could deal with him as far as on that level” — i.e., the stolen-merchandise level — and that
he generally trusted Hale because his father “was the intro.” The out-of-court statement
by Brock’s father that Hale was “okay” was thus properly admitted not for the truth of the
matter asserted but to show why Brock thought he could sell stolen goods to Hale.
Accordingly, there is simply no basis for Hale to argue that the district court was required,
sua sponte, to exclude this brief explanation by Brock as to his own state of mind.
B
Hale also challenges the form of two other instructions given to the jury, although
he did not object to them at trial. Our review of these challenges, therefore, is again limited
to plain error.
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Hale contends first that the district court committed reversible error by instructing
the jury to give special scrutiny to Hale’s testimony, arguing that he was “prejudiced by
the court’s directive to scrutinize his testimony beyond other interested witnesses because
the court implied [his] testimony was false.” But, as the government notes, the district
court’s instruction below did no more than equate Hale with any other interested witness.
Specifically, the court instructed the jury first that “[i]f you find a witness is interested in
your verdict, it is your duty to scrutinize his or her testimony closely. But after you have
done so, and if you find he or she is telling the truth in whole or in part, you will give that
testimony the same weight you would of a disinterested witness.” It then explained further:
The defendant Steve Hale took the witness stand and testified on his own
behalf. Defendants are interested witnesses. You will scrutinize his evidence
in the light of his interest that he has in the case. If after scrutinizing the
testimony, you find he has told the truth, you should give his testimony the
same weight as the other witnesses in the case.
Contrary to Hale’s argument, the district court did not “impl[y] [that] Hale’s testimony was
inherently unbelievable” but simply noted that defendants who testify on their own behalf,
like Hale, are interested witnesses whose testimony should be scrutinized like any other
interested witness. This instruction did not constitute plain error.
Hale also contends that the district court erred in instructing the jury on conspiracy
law. We conclude, however, that the court accurately instructed the jury that, “once a
conspiracy is established, even a slight connection between the defendant and the
conspiracy could be sufficient to include him in the plan.” See United States v. Strickland,
245 F.3d 368, 385 (4th Cir. 2001) (“Once a conspiracy has been proved, the evidence need
only establish a slight connection between any given defendant and the conspiracy to
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support conviction”). Hale nonetheless contends that because the district court “did not
also tell the jury that the ‘slight connection’ had to be proved beyond a reasonable doubt,”
the “jury could have easily believed that the connection element for the conspiracy charged
could be proved through just slight evidence of a connection.” This argument, however,
overlooks the fact that the district court repeatedly made clear throughout its instructions
that the government had to prove each element beyond a reasonable doubt.
We find no error in the district court’s giving these instructions.
C
Hale next contends that the government failed to present sufficient evidence to allow
the jury to find beyond a reasonable doubt that Cooke was his employee, as opposed to an
independent contractor, as necessary for his convictions on 14 counts of failing to collect
and pay over employee taxes, in violation of 26 U.S.C. § 7202. Hale focuses in particular
on evidence (1) that Cooke testified that she was ‘self-employed’; (2) that she had “sole
discretion over when and how long she worked”; (3) that Hale paid Cooke by the box; and
(4) that Cooke exercised considerable discretion, including whether to hire additional
assistants. While the jury might have been able to find from this evidence that Cooke was
an independent contractor, Hale overlooks the ample evidence supporting the jury’s finding
that she was an employee for purposes of the tax reporting requirements. This additional
evidence showed that Cooke worked exclusively and full time at Hale’s warehouse for
approximately a decade using equipment that Hale supplied and following Hale’s
directions to complete tasks that were essential to the operation of his business. With such
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evidence, we have no difficulty concluding that the jury’s finding that Cooke qualified as
an employee of Hale’s business was supported by substantial evidence.
D
Finally, Hale contends that the prosecutor engaged in misconduct during his closing
argument, denying Hale his right to a fair trial. Specifically, he contends that the
government’s closing argument “focused on how Hale denigrated the community by
feeding individuals’ addiction,” indirectly lining the pockets of area drug dealers “while
living an opulent lifestyle elsewhere.” Hale argues that this “blatant appeal to passions and
prejudices was improper” and “deprive[d] him of a fair trial.”
Again, because Hale did not object to the argument at trial, our review is limited by
the plain error standard, and we readily conclude that the district court did not plainly err
by failing, sua sponte, to issue a curative instruction or to declare a mistrial upon hearing
the government’s closing argument. The prosecutor’s statements that Hale reaped profits
by engaging in conduct that had the effect of fueling illicit drug trafficking was an accurate
summary of the evidence, not prosecutorial misconduct. And, in any event, in light of the
strength of the government’s case, the remarks certainly did not so prejudice Hale’s
substantial rights that he was denied a fair trial.
* * *
Accordingly, we affirm the judgment of the district court.
AFFIRMED
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