United States v. Jody Smith, Sr. , 456 F. App'x 200 ( 2011 )


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  •                                UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    No. 09-4756
    UNITED STATES OF AMERICA,
    Plaintiff - Appellee,
    v.
    JODY ALTON SMITH, SR.,
    Defendant - Appellant.
    Appeal from the United States District Court for the Western
    District of Virginia, at Roanoke.     James C. Turk, Senior
    District Judge. (7:07-cr-00079-jct-1)
    Argued:   September 23, 2011             Decided:     December 1, 2011
    Before AGEE and    WYNN,    Circuit   Judges,   and   HAMILTON,   Senior
    Circuit Judge.
    Affirmed by unpublished per curiam opinion.
    ARGUED: Gilbert Kenneth Davis, GILBERT K. DAVIS & ASSOCIATES,
    LLC, Fairfax, Virginia, for Appellant.     Thomas Ernest Booth,
    UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
    Appellee. ON BRIEF: Timothy J. Heaphy, United States Attorney,
    Sharon Burnham, Assistant United States Attorney, OFFICE OF THE
    UNITED STATES ATTORNEY, Roanoke, Virginia; Lanny A. Breuer,
    Assistant Attorney General, Greg D. Andres, Acting Deputy
    Assistant Attorney General, UNITED STATES DEPARTMENT OF JUSTICE,
    Washington, D.C., for Appellee.
    Unpublished opinions are not binding precedent in this circuit.
    2
    PER CURIAM:
    Jody Alton Smith, Sr. (Smith) was convicted of numerous
    charges    arising        from    his    illegal       liquor       operation        and   his
    fraudulent        receipt    of     Social       Security         Administration        (SSA)
    funds.     He was sentenced to forty-eight months’ imprisonment.
    On appeal, three issues are presented: (1) whether the district
    court erred in denying Smith’s motion to suppress; (2) whether
    there is sufficient evidence in the record to support Smith’s
    conviction    for     the    fraudulent       receipt        of    SSA    funds;     and   (3)
    whether the district court erred in calculating the tax loss for
    purposes of sentencing.             We affirm.
    I
    In this part of the opinion, we first set forth the legal
    landscape and facts concerning Smith’s illegal liquor operation,
    followed     by     the     legal    landscape         and    facts       concerning       his
    fraudulent receipt of SSA funds.                  We then set forth the relevant
    procedural history.
    A
    1
    Any     person       can     engage     in    the       business          of   producing
    distilled spirits by obtaining a permit from the Alcohol & Trade
    Tax & Trade Bureau (TTB).               
    27 U.S.C. § 203
    (b).               A person in the
    business   of      distilling       spirits       is   required          to,    among   other
    3
    things, register the still or distilling apparatus, 
    26 U.S.C. § 5179
    , provide a bond covering the operation of the still or
    distilling apparatus, 
    id.
     § 5173, and pay the requisite taxes,
    id.    5001(a)(1).         Failure      to    register        the    still,    post     the
    appropriate bond, or pay the requisite taxes can result in fines
    and criminal penalties, id. § 5601.
    The federal government imposes a tax on distilled spirits
    either produced in or imported into the United States.                                  Id.
    § 5001(a)(1).        The    tax   is     $13.50        on   each    “proof    gallon”    of
    distilled       spirits    produced      in       or   imported       into    the    United
    States.     Id.     A proof gallon of distilled spirits is a gallon
    which contains at least one half of its volume in ethyl alcohol.
    Id. § 5002(a)(10).          The tax attaches as soon as the distilled
    spirits     are    produced.           Id.    § 5001(b).            The   distiller      is
    responsible for paying the tax, id. § 5005(a), which is payable
    to the TTB, id. § 5061.           The taxes owed must be paid at the time
    the distilled spirits are removed from the bonded premises, id.
    §§    5006(a)(1) & 5007. 1
    2
    Smith,     with    the   help    of    several       others,    ran    an    illegal
    liquor operation on an eight acre piece of property (the Halifax
    1
    The Commonwealth of Virginia imposes its own tax on
    distilled spirits. The tax equals 20% of the sales price. 
    Va. Code Ann. § 4.1-234
    (B).
    4
    Property or       the    Property)      in    Halifax     County,    Virginia.       The
    Property had three structures on it: a single-wide trailer; a
    barn converted into a storage shed; and a building, which housed
    a still.     The Property also had four video surveillance cameras
    which were used to monitor the Property.
    In the summer of 2005, federal and state law enforcement
    agents began to investigate Smith’s operation after receiving
    information       from       confidential        informants.        Eventually,      the
    investigation centered on the Halifax Property.                           Land records
    showed that Dale Shrock sold the property to Danny Davis on
    January 17, 2003 for $20,000.00.                  Davis put 10% down, and Shrock
    financed the remainder through a deed of trust and a promissory
    note.     In March 2004, Davis applied for building permits and
    other    services       on   the   land,     giving     the    business    address   and
    phone number of a business owned by Smith called Smith’s Auto
    Sales.     With the assistance of Patricia Waldron, an employee of
    Smith’s    Auto     Sales,      Davis   requested        and    received    a   $112.50
    refund “for renewal of septic system” from the Halifax County
    Health Department.             (J.A. 460).            The refund was sent to the
    business address of Smith’s Auto Sales.
    On April 19, 2004, an electrical service account for the
    Halifax Property was established in the name of Rhonda Hall.
    The     account     was       transferred        to     Margaret    Smith,      Smith’s
    companion, on September 28, 2004.                     From April 2004 to December
    5
    2004, electrical use at the Property was “minimal.”                            (J.A. 773).
    In December 2004, electrical use at the Property almost tripled.
    Electrical        use    stayed    “consistently          high”    through      May    2006.
    (J.A. 773).        In January 2006, electrical use was more than eight
    times the use in November 2004.
    In    March        2005,     Margaret       Smith    purchased         the    Halifax
    Property from Davis.              According to Margaret Smith’s accountant,
    Cynthia Hudgins, the purchase price was $11,568.00, which was
    the remaining balance on the promissory note.
    In early 2006, law enforcement agents drove by the Halifax
    Property one evening and heard sounds consistent with liquor
    production.         The     law    enforcement       agents       did    not    enter      the
    Property because they saw video surveillance cameras there.                                As
    a result, on March 3, 2006, the agents installed a surveillance
    video recorder on land next to the Halifax Property to record
    the   persons      and    vehicles      arriving     and     leaving      the      Property.
    From March 3, 2006 to April 18, 2006, the surveillance video
    recorded     Smith       and     several    others     arriving        and   leaving       the
    Halifax Property.          On April 18, 2006, the law enforcement agents
    discovered that their surveillance video recorder was missing.
    On    May    12,    2006,     a   search     warrant       was    executed      at   the
    Halifax Property.              In the building, the law enforcement agents
    found   a   partially          dismantled     still,      four    1,200      gallon    still
    pots, approximately 119 empty 100-pound bags of sugar, six full
    6
    100-pound bags of sugar, some bags of barley, numerous bags of
    yeast,       and      other        things    used     in    the    distillery        process,
    including liquor jugs, jug caps, fueling oil, an oil heater,
    cooling boxes, proofing barrels, and a sump pump.
    On May 18, 2006, a search warrant was executed at Smith’s
    residence.             Numerous       items     consistent        with     illegal     liquor
    trafficking           were    found,        including       liquor    jugs,     jug    caps,
    hydrometers,           a    thermometer,       and    $70,000.00      in    United    States
    currency.          The law enforcement agents also found a set of keys
    that       fit   the       locks    at   the   Halifax       Property,      including    the
    building         on    the     Property.             In    Smith’s    wallet,    the      law
    enforcement agents found a business card for “CKS Packaging” in
    Graham, North Carolina, and a handwritten note stating “NEPCO,
    Northern Plastic Corporation, 1902 New Butler Road, New Castle,
    Pennsylvania.”              (J.A. 918).        The handwritten note also states
    “Cap style: 38mm tamper-evident caps.”                            (J.A. 918).        The law
    enforcement agents found a time-lapse video recorder, and they
    also found camera mounting equipment that had the same serial
    numbers as the video surveillance cameras found at the Halifax
    Property. 2        In a trailer located on land owned by Smith that was
    2
    Greg Thomas, an employee of State Electronics in
    Collinsville, Virginia sold Smith the time-lapse video recorder,
    the four video surveillance cameras, and the camera mounting
    equipment in January 2005.   The receipt for the sale indicates
    (Continued)
    7
    adjacent    to    his    residence,    the   law    enforcement         agents     found
    large     plastic       containers    similar      to    the     proofing     barrels
    recovered on the Halifax Property.
    Also on May 18, 2006, a search warrant was executed at
    Smith’s    Auto     Sales.      During   the      search,      Margaret    Smith     was
    interviewed       by    Bart   McEntire,     an    ATF      agent.        During     the
    interview, Margaret Smith stated that she agreed to take over
    Davis’ payments on the promissory note because he “wanted to get
    out from under the loan” he had on the Halifax Property.                           (J.A.
    516).     According to Margaret Smith, she rented the property as a
    hunt club to “Mr. Jones.”             (J.A. 516).        Margaret Smith had “no
    information on Mr. Jones whatsoever,” except that “about every
    three months,” she would meet him and collect $1,200.00 in rent.
    (J.A. 516).       Out of the rent received, Margaret Smith paid the
    monthly electric bill and the property taxes on the Property. 3
    At     trial,      the    government      built     its     case     around     the
    testimony of numerous witnesses, including Smith’s codefendant,
    Jarman Johnson, who testified on behalf of the government.                           The
    government’s evidence established that, from November 2005 to
    these items were sold to the “Rock Creek Hunting Club.”                            (J.A.
    595).
    3
    According to Waldron, on one occasion, Smith paid the
    property taxes for the Halifax Property.
    8
    April 2006, under a variety of names (including “May’s,” “May’s
    Deli,”   and    “May’s     Diner,”    (J.A.   1395)),   Smith      purchased     in
    twenty-two transactions a total of 124,100 pounds of sugar for
    $58,402.00 from William R. Hill & Company in Richmond, Virginia.
    The evidence further established that, from mid-2005 to April
    2006, John Taylor purchased liquor from Smith on approximately
    ten occasions, buying fifty to sixty cases of liquor each time.
    Smith initially charged Taylor $80.00 per case, but increased
    the price to $90.00 to $95.00 per case when gas prices started
    to rise.
    Johnson,      who      was   a   driver   and   still   hand    for   Smith,
    testified      that   he    purchased    sugar   from   William     R.    Hill    &
    Company, signing receipts in the name of “James Jones.”                    (J.A.
    632).    In February 2006, accompanied by Johnson, Smith drove a
    tractor trailer to CKS Packaging in Haw River, North Carolina
    and purchased 12,000 liquor jugs. 4              On April 4, 2006, Smith,
    4
    According to Debbie Evans, a sales associate with CKS
    Packaging, the phone order for the liquor jugs was placed by a
    “Mr. Jones.”   (J.A. 582).   During the phone order, “Crossroads
    Dairy” was the name of the billing address given by Mr. Jones.
    (J.A. 581). At the time of pickup, no sales tax identification
    number was provided to CKS Packaging. Evans allowed the sale to
    proceed because a fax number for Crossroads Dairy was provided
    and she received assurances that a sales tax identification
    number would be sent by fax.    Evans never received a sales tax
    identification number for the sale.
    9
    accompanied by Johnson, purchased a sump pump for the still at a
    Lowe’s in Rocky Mount, North Carolina.
    At the still, Johnson worked with Smith and others.                           To
    make a batch of liquor, Johnson would put eleven 100-pound bags
    of sugar in each of four still pots, which yielded twenty-five
    to thirty cases of liquor per pot.                   Each case consisted of six
    liquor jugs.          Afterwards, Johnson would load the liquor jugs
    into distribution trucks.
    B
    1
    The   SSA    issues    disability        insurance     payments      to   certain
    qualifying disabled persons.               In order to qualify for disability
    insurance benefits, a person must establish that he suffers from
    a disability, which is defined as the “inability to engage in
    any   substantial       gainful        activity    by   reason    of   any    medically
    determinable physical or mental impairment which can be expected
    to result in death or which has lasted or can be expected to
    last for a continuous period of not less than twelve months.”
    
    42 U.S.C. § 423
    (d)(1)(A).                If disability benefits are awarded,
    the SSA must periodically conduct continuing disability reviews.
    
    20 C.F.R. § 404.1594
    .
    A recipient of disability insurance benefits who returns to
    work first enters a “trial work period.”                     
    Id.
     § 404.1592(a).         A
    trial    work       period    is   a    period     to   give     the   recipient     the
    10
    opportunity to test his ability to work for up to nine months
    within a consecutive sixty-month period without fear of losing
    his    benefits.           Id.         The    nine-month        period    need    not   be
    consecutive, id., and the trial work performed by the recipient
    may be legal or illegal, id. § 404.1592(b).                       For a self-employed
    worker, work will be considered trial work if the self-employed
    worker works more than eighty hours a month or his net monthly
    earnings     pass     a    certain       threshold.       Id.   § 404.1592(b)(2)(ii).
    However, all recipients of disability insurance benefits must
    notify the SSA if his condition improves, he returns to work, or
    he increases the amount of his work.                    Id. § 404.1588.
    2
    In 1999, Smith contacted the SSA to apply for disability
    insurance      benefits.           Richard     Lowery,     a    claims    representative
    with   the     SSA,       talked    to    Smith    by     phone   and     explained     the
    application process to him.                  Lowery expressly told Smith that he
    had to be sufficiently disabled such that he could not work, and
    that if he returned to work, that would affect the amount of his
    payments.        Thereafter,           Lowery      sent    a    disability       insurance
    benefits application form to Smith.
    Smith    submitted          a     written    application          for   disability
    insurance benefits to the SSA based on his claim that he could
    not work due to his disabilities.                  Smith’s application contained
    11
    a    specific    provision     that    he     had   to   notify      the    SSA    if   his
    condition improved or he returned to work.                        Smith stated that
    his disabilities had caused him to surrender his car business to
    his    daughter    in   1998.         In    2001,   the    SSA       approved     Smith’s
    application and awarded him $27,391.75.
    In 2003, the SSA sent Smith a form entitled “Report of
    Continuing       Disability”     to        determine     whether      Smith       remained
    eligible for disability insurance payments.                      (J.A. 735).        Smith
    completed and signed the form, and returned it to the SSA.                              On
    the form, Smith checked a box indicating that he had not worked.
    He also stated that he was still disabled due to shoulder, back,
    and leg problems.       Smith explained that he was doing less due to
    pain and that he did very little walking or moving around.
    In September 2003, by letter, the SSA notified Smith that
    he would receive disability insurance payments in the future.
    The letter also stated that a recipient of SSA payments had to
    notify the SSA if his condition improved or he returned to work.
    In August 2006, Antonio Watkins, a claims representative
    with the SSA, received an anonymous report that Smith was self-
    employed.       Watkins sent a letter to Smith and, after receiving
    no reply, tried to call Smith several times.                         Finally, Watkins
    reached Smith by telephone and was informed that Smith was not
    working and that his back problems had gotten worse.                          Referring
    to    Watkins’    letter,    Smith     reiterated        that   he    had   not    worked
    12
    since he had become disabled.         Based on Smith’s replies, the SSA
    continued to send disability insurance payments to Smith.
    Watkins testified that, even if Smith had been entitled to
    collect disability insurance payments while working in a trial
    work period, Smith was overpaid by more than $10,000.00 because
    a trial work period is limited to nine months, but Smith worked
    for more than nine months, and his actual income would have
    caused    a   substantial    reduction         in   his    disability   insurance
    payments.
    C
    On March 13, 2008, a federal grand jury sitting in the
    Western District of Virginia charged Smith and six others in a
    thirty-two count superseding indictment.                  Smith was charged in
    thirty-one of the thirty-two counts.                 In Count One, Smith was
    charged with conspiracy to produce untaxed liquor, 
    18 U.S.C. § 371
     (Count One).      In Counts Two through Eight, he was charged
    with interstate travel or communication to promote trafficking
    in untaxed liquor, 
    id.
     § 1952(a)(3).                  In Count Nine, he was
    charged   with   possession    of    an       unregistered    still,    
    26 U.S.C. § 5601
    (a)(1),    and,   in   Count    Ten,       failure    to   post   bond,   
    id.
    § 5601(a)(4).     In Count Eleven, Smith was charged with unlawful
    production of distilled spirits, id. § 5601(a)(8), and, in Count
    Twelve, he was charged with fraudulent receipt of government
    (SSA) funds, 
    18 U.S.C. § 641
    .         Smith was charged with conspiracy
    13
    to commit money laundering in Count Thirteen, 
    id.
     § 1956(h),
    and, in Counts Fourteen through Twenty-Eight, he was charged
    with money laundering, id. § 1956(a)(1)(A)(i).                       In Count Twenty-
    Nine, Smith was charged with perjury, id. § 1623, and, in Count
    Thirty-One,     he    was     charged    with     obstruction        of   justice,        id.
    § 1503(a).           Count     Thirty-Two        charged       Smith      with        witness
    tampering, id. § 1532(c)(2).                  The indictment also contained a
    forfeiture allegation.
    Prior to trial, Smith pleaded guilty to the obstruction of
    justice    count      (Count       Thirty-One),         and    the     district        court
    dismissed,     on    the     government’s       motion,       the   witness      tampering
    count (Count Thirty-Two).              At the conclusion of the trial, Smith
    was   convicted      of     the   remaining      counts       pending     against       him.
    Prior to sentencing, the district court granted Smith’s motion
    for   judgment       of    acquittal     on     the     counts      related      to    money
    laundering (Counts Thirteen to Twenty-Eight).                           At sentencing,
    the   district       court     sentenced        Smith    to     forty-eight           months’
    imprisonment.        This timely appeal followed.
    II
    Smith first argues that the district court erred when it
    denied his motion to suppress based on violations of the Fourth
    Amendment.     The Fourth Amendment guarantees “[t]he right of the
    people    to   be    secure       in   their    persons,       houses,     papers,       and
    14
    effects,       against      unreasonable       searches       and    seizures.”         U.S.
    Const.    amend.      IV.      “[T]he    underlying          command     of   the   Fourth
    Amendment is always that searches and seizures be reasonable.”
    Wilson    v.    Arkansas,      
    514 U.S. 927
    ,    931     (1995)    (citation       and
    internal       quotation      marks    omitted).         In    resolving        whether    a
    search or seizure violates the Fourth Amendment, we review the
    district court’s factual findings for clear error and its legal
    conclusions de novo.            United States v. Perkins, 
    363 F.3d 317
    ,
    320 (4th Cir. 2004).
    The facts concerning Smith’s Fourth Amendment argument are
    not in dispute.             On March 1, 2006, Senior Special Agent Jay
    Calhoun    of    the     Virginia      Department       of     Alcohol    and    Beverage
    Control entered a piece of land in Pittsylvania County owned by
    Smith.     He entered the land, which was located approximately
    fifty miles from the Halifax Property, without a warrant.                               Upon
    entry, he saw an unhitched tractor trailer that Agent Calhoun
    believed belonged to Smith.                   The tractor trailer was “a good
    distance       from    any     structure,          hundreds     of    yards     from     any
    structure.”           (J.A.    318).       The       tractor    trailer       had   a    new
    inspection sticker decal with an expiration date of February
    2007.     The tractor trailer was locked and closed, but there was
    an open gap in the rubber stripping at the right-hand corner of
    the tractor trailer.             From outside the tractor trailer, Agent
    Calhoun pointed a flashlight in the open gap, enabling him to
    15
    see that there were liquor jugs inside the tractor trailer.                         His
    ability to observe the liquor jugs at that time apparently was
    impaired       because   pallets     of     liquor   jugs    were   flush    with   the
    tractor trailer’s door, limiting his field of vision.
    During the night of March 9, 2006, Agent Calhoun went back
    to the tractor trailer, again without a warrant.                         This time,
    there were wooden pallets outside the tractor trailer.                        Because
    the door opening was no longer blocked, Agent Calhoun was able
    to more fully observe the inside of the tractor trailer.                             He
    stuck a two-foot “carpenter’s scope” through the crack in the
    rubber stripping of the tractor trailer and saw some liquor jugs
    inside, but they appeared to have been restacked since his March
    1 visit.       (J.A. 364).
    In     the     district       court,    Smith     raised   Fourth      Amendment
    arguments concerning both the March 1 and March 9, 2006 entries
    onto his land in Pittsylvania County, as well as the March 9
    search    of    the   tractor      trailer.      The   district     court    rejected
    these arguments.            Of relevance here, the district court first
    held that Agent Calhoun’s warrantless entries onto Smith’s land
    did not implicate the Fourth Amendment because Smith’s land was
    an “open field.”            Second, the district court held that Agent
    Calhoun’s view of the interior of the tractor trailer with a
    flashlight on March 1 was not a Fourth Amendment search because
    Agent     Calhoun     did    not    physically       enter    the   locked    tractor
    16
    trailer.        Third, the district court held that Agent Calhoun’s
    insertion of the carpenter’s scope into the tractor trailer on
    March 9 was a search, but it was justified under the “automobile
    exception” to the Fourth Amendment’s warrant requirement because
    the tractor trailer was a vehicle and Agent Calhoun had probable
    cause to believe that it contained evidence of illegal liquor
    trafficking.           Fourth,     the     district     court       characterized         any
    impact on Smith’s Fourth Amendment rights as a result of Agent
    Calhoun’s       actions    as     de   minimis.        On   this    final       point,    the
    district    court      emphasized        that    the   government         had    begun    its
    video surveillance of the Halifax Property before March 9 and
    that the evidence seen on March 9 inside the tractor trailer was
    cumulative to the evidence found at the Property on May 12,
    2006.
    On    appeal,        Smith    first    takes      issue       with    the    district
    court’s ruling that the Pittsylvania County land constituted an
    “open field.”          In Hester v. United States, 
    265 U.S. 57
     (1924),
    the Supreme Court held that the Fourth Amendment does not extend
    to open fields.           
    Id. at 59
    .       The Court’s holding in Hester was
    clarified in Oliver v. United States, 
    466 U.S. 170
     (1984).                                In
    Oliver, the Court held that “an individual may not legitimately
    demand privacy for activities conducted out of doors in fields,
    except     in    the    area      immediately      surrounding        the       home     [the
    curtilage].”       
    Id. at 178
    .          The Court further noted that an open
    17
    field “need be neither ‘open’ nor a ‘field’ as those terms are
    used in common speech.              For example . . . a thickly wooded area
    nonetheless       may    be    an    open    field   as    that   term        is    used   in
    construing the Fourth Amendment.”                 
    Id.
     at 180 n.11.
    In United States v. Dunn, 
    480 U.S. 294
     (1987), the Supreme
    Court     stated        that    the     critical       component         of        the   open
    fields/curtilage         inquiry       is    “whether     the     area        harbors      the
    intimate activity associated with the sanctity of a man’s home
    and the privacies of life.”                  
    Id. at 300
     (citation and internal
    quotation marks omitted).               The Court in Dunn went on to list
    four factors that should be considered in this analysis: “the
    proximity    of    the    area      claimed    to    be   curtilage      to     the      home,
    whether the area is included within an enclosure surrounding the
    home, the nature of the uses to which the area is put, and the
    steps taken by the resident to protect the area from observation
    by people passing by.”              
    Id. at 301
    .
    Applying these factors, it is clear that the district court
    did not err when it concluded that the land in Pittsylvania
    County was an open field.               There is no evidence that the land
    was near the curtilage of a home or that there were any domestic
    uses for the land.             In addition, there is no indication in the
    record that Smith took meaningful steps to prevent this land
    from being observed.            The land must be characterized as an open
    field     and,    therefore,         Smith    cannot      challenge       either         Agent
    18
    Calhoun’s      March     1   or   March    9,   2006   entry     onto   his    land    in
    Pittsylvania County.
    Smith    also     argues     that   Agent     Calhoun’s     shining      of    the
    flashlight into the open gap in the rubber stripping of the
    tractor trailer on March 1, 2006 constituted an illegal search. 5
    With       regard   to   this     argument,     we   find   no    Fourth      Amendment
    violation.
    Police officers do not conduct a search under the Fourth
    Amendment when, stationed in a place where they have a right to
    be, they observe objects in plain view, or use a flashlight to
    illuminate the area where the object is located.                    See 
    id. at 305
    (“Here, the officers’ use of the beam of a flashlight, directed
    through the essentially open front of respondent’s barn, did not
    transform their observations into an unreasonable search within
    the meaning of the Fourth Amendment.”); Texas v. Brown, 
    460 U.S. 730
    , 739-40 (1983) (“It is likewise beyond dispute that Maples’
    action in shining his flashlight to illuminate the interior of
    Brown’s car trenched upon no right secured to the latter by the
    Fourth Amendment.”).              Thus, Agent Calhoun did not search the
    5
    The government does not contend that Smith had no
    reasonable expectation of privacy in the tractor trailer.
    However, we agree with the district court that Smith had such an
    expectation of privacy in the tractor trailer.       Cf. United
    States v. Wright, 
    991 F.2d 1182
    , 1186 (4th Cir. 1993) (holding
    that defendant had reasonable expectation of privacy in a barn
    in an open field).
    19
    tractor trailer when, standing outside of it, he pointed his
    flashlight     in   the    open    gap    in   the   rubber    stripping    of   the
    tractor   trailer,        which    exposed     the   liquor    jugs    inside    the
    tractor trailer.
    Smith’s challenge to Agent Calhoun’s use of the carpenter’s
    scope on March 9, 2006 is equally without merit.                     Initially, we
    note that the government concedes that Agent Calhoun’s use of
    the carpenter’s scope constituted a warrantless search.                    See New
    York v. Class, 
    475 U.S. 106
    , 114-15 (1986) (noting that a search
    of an automobile occurs when a police officer physically enters
    the automobile).
    An established exception to the warrant requirement is the
    “automobile exception.”            United States v. Kelly, 
    592 F.3d 586
    ,
    589 (4th Cir.), cert. denied, 
    130 S. Ct. 3374
     (2010).                           Under
    this exception, a police officer may search a vehicle without a
    warrant   if    “probable         cause   exists     to    believe    it   contains
    contraband” and the vehicle is “readily mobile.”                      Pennsylvania
    v. Labron, 
    518 U.S. 938
    , 940 (1996).                      If both conditions are
    met, the police officer may conduct a warrantless search “that
    is as thorough as a magistrate could authorize in a warrant.”
    United States v. Ross, 
    456 U.S. 798
    , 800 (1982).                      Furthermore,
    such a search may cover all areas of the vehicle, including any
    of its “secret compartments.”             United States v. Bullock, 
    94 F.3d 896
    , 899 (4th Cir. 1996).
    20
    In California v. Carney, 
    471 U.S. 386
     (1985), the Supreme
    Court held that the police did not need a warrant in order to
    enter a motor home parked in a public place where probable cause
    to search was present.             
    Id. at 393-94
    .           The motor home was
    capable of functioning as a home; it was stationary; and the
    shades were drawn, including one across the front window.                       
    Id. at 388
    .      Indeed,   the       Court    observed    that     the   motor   home
    “possessed some, if not many of the attributes of a home.”                      
    Id. at 393
    .     Nevertheless, the Court held that it is “clear that the
    vehicle     falls   clearly       within    the   scope”    of   the    automobile
    exception to the warrant requirement.               
    Id.
         The Court relied on
    “two    requirements        for      application       of    the       [automobile]
    exception.”     
    Id. at 394
    .          The first is “the ready mobility of
    the vehicle,” and the second is its “presence . . . in a setting
    that objectively indicates that the vehicle is being used for
    transportation.”      
    Id.
         Even though the motor home in Carney was
    parked and not being used for transportation at the moment, it
    satisfied the second test presumably because it was not located
    in a place “regularly used for residential purposes—temporary or
    otherwise.”     
    Id. at 392
    .         The Court held that “the vehicle was
    so situated that an objective observer would conclude that it
    was being used not as a residence, but as a vehicle.”                       
    Id. at 393
    .
    21
    Following Carney, courts have applied that case to travel
    trailers, see United States v. Ervin, 
    907 F.2d 1534
    , 1537 (5th
    Cir. 1990) (upholding warrantless search of travel trailer under
    the    automobile        exception),           and       tractor    trailers,            see    United
    States      v.    Navas,       
    597 F.3d 492
    ,       498-500    (2d      Cir.)       (upholding
    warrantless           search      of    tractor          trailer    under          the    automobile
    exception even though cab was not attached to tractor trailer),
    cert. denied, 
    131 S. Ct. 320
                        (2010).
    In Navas, in a thorough opinion, the Second Circuit held
    that    the       automobile         exception        applied       to    a    tractor         trailer
    unhitched from its cab, even when the defendants were already
    placed under arrest at the time of the search.                                 
    Id. at 501
    .          The
    court    reiterated          that      “a     vehicle’s        inherent       mobility—not          the
    probability           that   it      might     actually        be   set       in    motion—is       the
    foundation of the [automobile exception’s] mobility rationale.”
    
    Id. at 498
    .            Thus, “the mobility rationale . . . does not turn
    on case-by-case determinations by agents in the field regarding
    either the probability that a vehicle could be mobilized or the
    speed with which movement could be achieved.”                              
    Id.
    In    this      case,      the       automobile         exception       applies         to   the
    tractor trailer on the land in Pittsylvania County.                                      The tractor
    trailer clearly was inherently mobile, and counsel for Smith
    conceded         at   oral     argument       that       the   tractor        trailer      could     be
    moved       by    simply       attaching        a        cab   to   the       tractor       trailer.
    22
    Moreover, the recent unloading activity at the tractor trailer
    suggested that it might be moved when all of the liquor jugs
    were unloaded.            In short, embracing Smith’s position here would
    contravene the sound reasoning of both Carney and Navas.
    The       remaining       question     is    whether        Agent     Calhoun    had
    probable cause to conduct the search on March 9, 2006.                             Probable
    cause       exists    “where      the   known      facts     and    circumstances       are
    sufficient to warrant a [person] of reasonable prudence in the
    belief that contraband or evidence of a crime will be found.”
    Ornelas v. United States, 
    517 U.S. 690
    , 696 (1996).                                Probable
    cause is a “commonsense conception that deals with the factual
    and practical considerations of everyday life.”                        Kelly, 
    592 F.3d at 592
        (citation      and    internal     quotation      marks       omitted).     In
    assessing whether probable cause exists, courts must “examine
    the    facts      from    the     standpoint       of   an   objectively       reasonable
    police officer, giving due weight to inferences drawn from those
    facts       by    local    law    enforcement       officers.”          
    Id.
        (citation,
    internal quotation marks, and ellipsis omitted).
    At the time Agent Calhoun inserted the carpenter’s scope
    into the tractor trailer, he had probable cause to believe that
    evidence         of   illegal     liquor    trafficking        was     in    the    tractor
    trailer.         Agent Calhoun knew that liquor jugs are commonly used
    to transport illegal liquor; he had seen multiple liquor jugs
    inside the tractor trailer on March 1; he heard evidence of
    23
    illegal       liquor    manufacturing      at    the   Halifax   Property         before
    March    9;    and     he   believed    that    individuals    had    unloaded     some
    liquor jugs from the tractor trailer between March 1 and March 9
    because the liquor jugs had been reconfigured inside the tractor
    trailer,      and    there    were     loading   pallets     outside    the    tractor
    trailer on March 9.            Such facts would lead a reasonably prudent
    person    to    believe       that    “contraband      or   evidence    of    a    crime
    [would] be found.”           Ornelas, 
    517 U.S. at 696
    .
    In sum, we hold the district court did not err when it
    rejected Smith’s Fourth Amendment arguments. 6
    III
    Next,      Smith       challenges    the    sufficiency     of    the    evidence
    supporting his conviction for fraudulent receipt of SSA funds
    under 
    18 U.S.C. § 641
    .               We review challenges to the sufficiency
    of the evidence de novo.               United States v. Kelly, 
    510 F.3d 433
    ,
    440 (4th Cir. 2007).            “A defendant challenging the sufficiency
    of the evidence to support his conviction bears a heavy burden.”
    United States v. Beidler, 
    110 F.3d 1064
    , 1067 (4th Cir. 1997)
    (citation and internal quotation marks omitted).                      We will uphold
    a jury’s verdict “if, viewing the evidence in the light most
    6
    In light of this holding, we need not address the district
    court’s conclusion that any impact on Smith’s Fourth Amendment
    rights as a result of Agent Calhoun’s actions was de minimis.
    24
    favorable       to       the   government,     it   is    supported    by     substantial
    evidence.”       United States v. Reid, 
    523 F.3d 310
    , 317 (4th Cir.
    2008).     Substantial evidence is present if “a reasonable finder
    of fact could accept [the evidence] as adequate and sufficient
    to   support         a    conclusion      of    a   defendant’s       guilt    beyond     a
    reasonable doubt.”               United States v. Burgos, 
    94 F.3d 849
    , 862
    (4th Cir. 1996) (en banc).                 “[W]e do not weigh the evidence or
    assess the credibility of witnesses, but assume that the jury
    resolved any discrepancies in favor of the government.”                              Kelly,
    
    510 F.3d at 440
    .
    To    be    convicted        under    §   641,      the   government     must   prove
    beyond a reasonable doubt that: (1) the money described in the
    indictment belonged to the United States or an agency thereof;
    (2) the defendant stole, fraudulently received, or converted the
    money to his own use; and (3) the defendant did so knowingly
    with intent to deprive the government of the money.                                  United
    States v. McRee, 
    7 F.3d 976
    , 980 (11th Cir. 1993).                          With respect
    to the intent element, the defendant must know that his taking
    of property is an unlawful conversion.                          Morissette v. United
    States,    
    342 U.S. 246
    ,   270–71    (1952).        “[K]nowing     conversion
    requires    more          than   knowledge      that     defendant    was     taking    the
    property into his possession.                  He must have had knowledge of the
    facts, though not necessarily the law, that made the taking a
    conversion.”         
    Id.
    25
    At     trial,    the      government   firmly     established          that   Smith
    violated § 641 because he worked while collecting SSA disability
    insurance payments based on his fraudulent claim that he could
    not   work    because      he    was   disabled.      Smith     was   informed,        and
    therefore knew, that he was supposed to notify the SSA if his
    condition improved or he returned to work.                    Not only did Smith
    fail to notify the SSA that he was working at his illegal liquor
    business,     but     he   also    falsely   told     Watkins    that    he     was    not
    working.      Such evidence is sufficient to support his conviction. 7
    IV
    Finally,        Smith     challenges      his   sentence.         We    review    a
    sentence imposed by the district court under the deferential
    abuse-of-discretion standard, regardless of whether the sentence
    imposed is inside, just outside, or significantly outside the
    7
    Smith argues that there is insufficient evidence to prove
    that he performed trial work beyond the trial work permitted
    under 
    20 C.F.R. § 404.1592
    (a), and, thus, his § 641 conviction
    cannot stand. We reject this argument because it is premised on
    a view of the facts that the jury obviously rejected; that is,
    that Smith only was involved in the illegal liquor operation for
    a nine-month period. Moreover, Watkins testified that, even if
    Smith was given the benefit of a trial work period, he still was
    overpaid more than $10,000.00. Finally, Smith fails to cite any
    authority, and we could find none, suggesting that a recipient
    of disability insurance benefits is not required to notify the
    SSA under 
    20 C.F.R. § 404.1588
     during a trial work period if his
    condition improves, he returns to work, or he increases the
    amount of his work.
    26
    Guidelines range.       United States v. Evans, 
    526 F.3d 155
    , 161
    (4th Cir. 2008); see also Gall v. United States, 
    552 U.S. 38
    , 41
    (2007).    The first step in this review requires us to inspect
    the record for procedural reasonableness by ensuring that the
    district court committed no significant procedural errors, such
    as failing to calculate or improperly calculating the Guidelines
    range, failing to consider the 
    18 U.S.C. § 3553
    (a) factors, or
    failing to adequately explain the sentence.                  United States v.
    Boulware, 
    604 F.3d 832
    , 837–38 (4th Cir. 2010).               The second step
    requires us to consider the substantive reasonableness of the
    sentence     imposed,   taking   into     account    the     totality   of    the
    circumstances.     Gall, 
    552 U.S. at 51
    .
    On April 14, 2009, at the government’s urging, the district
    court held a sentencing hearing to determine the tax loss.                   Such
    determination was critical because the tax loss would establish
    Smith’s base offense level under § 2T2.1 of the United States
    Sentencing    Guidelines   (USSG).        Robert    Kehoe,    an   investigator
    with the TTB, was the only witness who testified at the hearing.
    Investigator Kehoe prepared three tax loss estimates: (1)
    $217,795.50; (2) $320,045.85; and (3) $555,984.00.                 The tax loss
    estimates were based in part on the trial evidence, Investigator
    27
    Kehoe’s professional experience, and an “Alcohol Yield Formula”
    (AYF). 8     (J.A. 1385).
    Investigator Kehoe’s maximum loss estimate assumed that the
    still on the Halifax Property functioned at full capacity from
    November         2004    to   May     2006,    and        relied   on   Johnson’s      trial
    testimony that the still used 4,400 pounds of sugar for each
    weekly run.         Application of the AYF yielded 41,184 proof gallons
    of distilled spirits and a tax liability of $555,984.00.
    Investigator Kehoe’s middle loss estimate was based on the
    conclusion        that    Smith     obtained        an    “undocumented     quantity”     of
    sugar      from    “other     sources”        during      a   “middle     period”   of   the
    still’s operation.             (J.A. 1388).               Investigator Kehoe reasoned
    that       the    significant       reductions           in   Smith’s   sugar   purchases
    during this middle period, when compared to other evidence that
    the still was operating in high gear during this same period,
    only could be explained by concluding that Smith was obtaining
    sugar from another sources.               Investigator Kehoe’s application of
    the AYF to the middle loss estimate yielded 182,362 pounds of
    sugar,       23,707.10        proof    gallons           of   distilled     spirits,     and
    $320,045.85 of tax loss.
    8
    The AYF is a formula used for determining the alcohol
    yield of sugar used in illegal liquor operations. The “average
    yield is 13 proof gallons of alcohol per each 100 pounds of
    sugar.”     (J.A.   1385).    Smith  does  not   challenge the
    reasonableness of the AYF.
    28
    Investigator Kehoe’s minimum loss estimate was based on the
    documented sugar purchases between November 2004 and May 2006
    from William R. Hill & Company.               Application of the AYF to the
    known 124,100 pounds of sugar purchased yielded 16,133 proof
    gallons of distilled spirits and a tax loss of $217,795.50.
    Following        the   hearing,       the     district     court      accepted
    Investigator Kehoe’s minimum tax loss estimate of $217,795.50
    because it was based on the sugar purchase records admitted at
    trial and utilized a reliable methodology to determine the tax
    loss.      The    district    court    also    concluded      that   the    AYF   was
    reasonable given the lack of records of the actual distilled
    spirits    produced.         The   district       court   rejected   Investigator
    Kehoe’s maximum estimate because it was unrealistic to assume
    that the still was always operating at maximum capacity, and
    rejected Investigator Kehoe’s middle estimate because it was not
    based on documented sugar purchases.
    Consistent with the district court’s ruling on the tax loss
    issue, a Presentence Investigation Report (PSR) was prepared by
    a United States Probation Officer.                  Because the tax loss was
    more than $200,000.00 and no more than $400,000.00, Smith’s base
    offense level was 18, USSG § 2T4.1(G).                    His base offense level
    was   increased     four     levels    for    his    leadership      role    in   the
    offense,    id.    §    3B1.1(a),     and    two    levels     for   perjury,     id.
    § 3C1.1.     Smith’s total offense level of 24, coupled with a
    29
    Criminal History Category of I, produced a sentencing range of
    51 to 63 months’ imprisonment.
    At   sentencing,        the     district          court     adopted       the     PSR’s
    findings and recommendations.                    Prior to imposing sentence, the
    district       court   heard    from       counsel,       as     well     as   from     Smith,
    concerning      the    appropriate         sentence.           After     considering          the
    advisory sentencing range, as well as the factors set forth in
    
    18 U.S.C. § 3553
    (a),      the       district       court     sentenced          Smith   to
    forty-eight months’ imprisonment due to his age and physical
    condition.
    Smith’s     challenge         to        the     district        court’s    tax     loss
    calculation is premised on the argument that it was procedurally
    unreasonable for the district court to base its calculation on
    the    documented      purchases          of    sugar     from     William       R.    Hill    &
    Company.        Smith posits that there was no evidence that Smith
    purchased any sugar from the company.                           Consequently, the tax
    loss   calculation      should       have       been    based     on    the    known    liquor
    purchases made by Taylor—approximately 3,000 gallons of liquor.
    USSG § 2T2.1 provides that the tax loss is the amount of
    taxes that the taxpayer “failed to pay or attempted not to pay.”
    USSG § 2T2.1(a).         The base offense level for USSG § 2T2.1 is
    calculated by reference to the Tax Table in USSG § 2T4.1.                                 USSG
    § 2T2.1(a).       Under the Guidelines, the tax loss is “determined
    by the same rules applicable in determining any other sentencing
    30
    factor.”      USSG § 2T1.1, comment. (n.1).               “In some instances,
    such as when indirect methods of proof are used, the amount of
    the tax loss may be uncertain; the guidelines contemplate that
    the court will simply make a reasonable estimate based on the
    available facts.”        Id.; see also id. § 6A1.3(a) (noting that the
    district court “may consider relevant information without regard
    to its admissibility under the rules of evidence applicable at
    trial, provided that the information has sufficient indicia of
    reliability to support its probable accuracy”).                   In general, the
    district      court’s    calculation      concerning      loss     is    a     factual
    finding reviewed for clear error.               United States v. Loayza, 
    107 F.3d 257
    , 265 (4th Cir. 1997).
    The     district     court’s     finding    that    the     tax     loss    was
    $217,795.50     is   not    clearly     erroneous.        The     district       court
    reasonably relied on the records of sugar purchases and the AYF
    to determine the amount of untaxed liquor produced by the still
    because detailed records of Smith’s actual production amounts
    were unavailable.         Moreover, the district court was at liberty
    to   reject    Smith’s    contention     that    the   still     did    not   produce
    illegal     liquor      prior   to     November    2005    by     crediting       the
    circumstantial       evidence        demonstrating     that      Smith        actively
    participated in the conspiracy during the time alleged and went
    to great lengths to mask his participation in the conspiracy and
    his relationship to the Halifax Property.                  The district court
    31
    took the most conservative view of the evidence in accepting
    Investigator Kehoe’s lowest tax loss estimate, and we cannot
    take issue with this prudent approach in calculating the tax
    loss.
    V
    For the reasons stated herein, the judgment of the district
    court is affirmed.
    AFFIRMED
    32