United States v. Shearer, Kenneth ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-2282
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
KENNETH SHEARER,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Indiana, Fort Wayne Division.
No. 01 CR 49—William C. Lee, Judge.
____________
ARGUED DECEMBER 5, 2006—DECIDED MARCH 12, 2007
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Before FLAUM, WOOD, and EVANS, Circuit Judges.
FLAUM, Circuit Judge. On June 20, 2002, a jury con-
victed Kenneth Shearer of dealing in explosive materials
without a license in violation of 18 U.S.C. §§ 842(a)(1) and
844(a)(1) (Count 1); tampering with a marking, label, and
placard required on display fireworks in violation of 49
U.S.C. §§ 5104(b) and 5124 (Count 2); and knowingly
receiving explosive materials in interstate commerce in
violation of 18 U.S.C. §§ 842(a)(3)(A) and 844(a)(1) (Counts
3 and 4). On August 12, 2004, we affirmed his convic-
tion but vacated his original sentence in light of United
States v. Booker, 375 F.3d 508 (7th Cir. 2004). See United
States v. Shearer, 379 F.3d 453, 456-57 (7th Cir. 2004). On
remand, the district court sentenced Shearer to seventy
2 No. 06-2282
months’ imprisonment on Counts 1, 3, and 4, and a
concurrent sixty-month sentence on Count 2. For the
following reasons, the Court affirms Shearer’s sentence.
I. Background
In 1999, the Bureau of Alcohol Tobacco and Firearms
(ATF) arrested Kenneth Shearer for selling display
fireworks without a license at his retail fireworks store,
All-American Professional Fireworks (“All-American”),
which was located in Angola, Indiana. Display fireworks
are more dangerous than regular consumer fireworks
because they contain more than 130 milligrams of flash
powder per tube, meaning that they are susceptible to
mass detonation. As we discussed in our previous ruling,
display fireworks are so dangerous that if there is an
accident in which they are involved, “emergency personnel
must evacuate all persons within a half-mile radius of the
site.” Id. at 454. For that reason, ATF closely regulates
display fireworks, requiring every dealer to obtain a
license, keep thorough records of the amount and type of
display fireworks on his or her premises, and label clearly
each display firework with the notation “1.3G.” ATF also
insists that every transporter of display fireworks swear
under penalty of perjury that he or she is acting on behalf
of a licensed dealer.
ATF’s investigation into Shearer’s illegal fireworks sales
revealed that he recruited at least nine people to assist
him with his crimes. Six All-American employees, two of
them minors, placed false “1.4G” labels on boxes contain-
ing display fireworks; Robert Bombka allowed Shearer to
use his ATF permit to purchase display fireworks from
Wolverine Fireworks in Michigan; Nelson Shearer, the
defendant’s brother, posed as Bombka’s employee and
transported display fireworks from Island Fireworks (also
in Michigan) to All-American; and Charles Stearns allowed
No. 06-2282 3
Shearer to store display fireworks in his rented storage
unit. The investigation also uncovered business records
indicating that Shearer purchased over 12,000 pounds of
display fireworks in June 1999.
On June 20, 2002, a jury convicted Shearer of four
counts of illegal distribution, labeling, and receipt of
commercial fireworks. On November 10, 2003, the district
court held a sentencing hearing. When calculating
Shearer’s applicable guidelines range, the district court
found that the appropriate base offense level was 12. It
then applied a five-level enhancement because the offense
involved more than 1,000 pounds of explosives, U.S.S.G.
§ 2K1.3, a four-level enhancement for Shearer’s role as a
leader/organizer, id. § 3B1.1, a two-level enhancement
for use of a minor, id. § 3B1.4, and a two-level enhance-
ment for obstruction of justice. Id. § 3C1.1. Because
Shearer’s criminal history category was III, the district
court found that the corresponding guidelines range was
70-87 months. The court then sentenced him to eighty and
sixty-month concurrent sentences. On August 12, 2004, we
affirmed Shearer’s conviction but remanded the case for
resentencing in light of United States v. Booker, 375 F.3d
508 (7th Cir. 2004). On remand, the district court sen-
tenced Shearer to seventy and sixty-month concurrent
sentences. He now appeals the district court’s calculation
of his guidelines range and the reasonableness of his
sentence.
II. Analysis
When examining a district court’s sentencing determina-
tion, the Court reviews “factual findings . . . for clear error
and the application of those facts to the Sentencing
Guidelines de novo.” United States v. Haddad, 462 F.3d
783, 793 (7th Cir. 2006).
4 No. 06-2282
A. Enhancement Under U.S.S.G. § 2K1.3
Shearer argues that the district court erroneously
concluded that fireworks are “explosives” under U.S.S.G.
§ 2K1.3. Application Note 1 of § 2K1.3 adopts the defini-
tion of “explosives” found in 18 U.S.C. § 844(j), which says
that explosives are
gunpowders, powders used for blasting, all forms of
high explosives, blasting materials, fuzes (other than
electric circuit breakers), detonators, and other deto-
nating agents, smokeless powders . . . or other ingredi-
ents, in such proportions, quantities, or packing that
ignition by fire, by friction, by concussion, by percus-
sion, or by detonation of the compound, mixture, or
device or any part thereof may cause an explosion.
The district court, citing Dr. John Conkling’s expert
testimony, found that display fireworks are “extremely
volatile devices capable of mass destruction, aside from
their intended use as fireworks.” United States v. Shearer,
302 F. Supp. 2d 884, 892 (N.D. Ind. 2003). It also found
that the fireworks contained “fuses, powders, and other
detonating agents.” Id. In light of Dr. Conkling’s testi-
mony, the district court correctly concluded that fire-
works are explosives for purposes of § 2K1.3.
Shearer next argues that the district court clearly erred
by increasing his sentence five levels for possessing more
than 1,000 pounds of explosives. See U.S.S.G. § 2K1.3(b).
Application Note 5 of § 2K1.3 instructs a district court
how to calculate the weight of explosives under this
enhancement:
For purposes of calculating the weight of explosive
materials under subsection (b)(1), include only the
weight of the actual explosive material and the
weight of packaging material that is necessary for the
use or detonation of the explosives. Exclude the
No. 06-2282 5
weight of any other shipping or packaging materials.
For example, the paper and fuse on a stick of dynamite
would be included; the box that the dynamite was
shipped in would not be included.
The district court found that Shearer possessed over 1,000
pounds of explosives after hearing testimony from Con-
sumer Product Safety Commission Investigator Dennis
Blasius, who stated that he examined the bills of lading
and invoices discovered during an ATF search of Shearer’s
retail store. Blasius testified that those documents re-
vealed that Shearer, in a two-week period in June 1999,
purchased illegal fireworks that weighed 11,000 pounds
after accounting for unnecessary packaging material.
Shearer acknowledged at oral argument that he faced
an uphill battle in attempting to slash Blasius’s calcula-
tion by over 10,000 pounds. Nevertheless, he argues that
the district court ignored the findings of his expert, Dr.
Rebecca Henry, who wrote a letter stating that the fire-
works contained thirty-eight percent pyrotechnic mate-
rial by weight. Dr. Henry’s opinion is unhelpful to Shearer
for at least two reasons. First, thirty-eight percent of
11,000 pounds well-exceeds the 1,000 pound threshold,
and, second, Dr. Henry’s opinion does not account for the
weight of the packaging material that was necessary
for the fireworks’ use or detonation. Shearer makes other
dubious arguments concerning the weight of the explo-
sives, but those arguments also ignore the weight of the
necessary packaging material. As a result, the district
court did not clearly err by enhancing Shearer’s sen-
tence under § 2K1.3.
B. Role in the Offense
Shearer next contends that the government offered
insufficient evidence to support his sentencing enhance-
6 No. 06-2282
ments under Chapter Three, Part B of the Sentencing
Guidelines for his role in the offense. Shearer maintains
that the use of a minor enhancement under § 3B1.4 was
improper because the government offered no evidence
that the minors knew they were aiding a crime. This
argument has no merit. A § 3B1.4 enhancement is proper
regardless of whether the minor knew that he was assist-
ing the defendant perform illegal activity. See United
States v. Anderson, 259 F.3d 853, 864 (7th Cir. 2001).
Shearer also disputes his enhancement under § 3B1.1,
which requires a four-level increase if “the defendant was
an organizer or leader of a criminal activity that involved
five or more participants or was otherwise extensive.” A
“participant” is someone “who gives knowing aid in some
part of the criminal enterprise,” United States v. Hall, 101
F.3d 1174, 1178 (7th Cir. 1996), and criminal activity is
“otherwise extensive” if it involves some combination of
participants and unknowing outsiders totaling more than
five. See United States v. Tai, 41 F.3d 1170, 1174-75 (7th
Cir. 1994) (“If a district court intends to rely solely upon
the involvement of a given number of individuals to
support a determination that criminal activity is ‘other-
wise extensive,’ it must point to some combination of
participants and outsiders equaling a number greater
than five.”); United States v. Miller, 962 F.2d 739, 745 (7th
Cir. 1992). See also U.S.S.G. § 3B1.1 cmt. n.3 (“In assess-
ing whether an organization is ‘otherwise extensive,’ all
persons involved during the course of the entire offense
are to be considered. Thus, a fraud that involved only
three participants but used the unknowing services of
many outsiders could be considered extensive.”).
In this case, the government offered reliable evidence
that Shearer’s scheme involved at least two knowing
participants and more than four outsiders. Robert Bombka
testified that he allowed Shearer to use his ATF license,
even though he knew that it was not transferable. Tyler
No. 06-2282 7
Baughman testified that Shearer told him that he should
re-label boxes with 1.4G labels so that “they could store
them and not worry about getting raided or arrested.”
June 19, 2002 Tr. at 44. He also said that he knew that
fireworks with 1.4G labels were legal, while fireworks
with 1.3G labels were illegal. Additional evidence in-
dicated that at least seven other individuals, perhaps
unknowingly, helped Shearer relabel, purchase, and
store illegal fireworks. Given this evidence, the district
court did not clearly err in finding that the criminal
enterprise was otherwise extensive.
C. Double Counting
Shearer next argues that the district court’s enhance-
ments for use of a minor and acting as a leader or orga-
nizer constituted impermissible double counting, which
occurs when “identical conduct justifies two upward
adjustments under the Guidelines.” United States v. Beith,
407 F.3d 881, 888 (7th Cir. 2005). This Court has made
clear that a district court does not engage in double
counting when it imposes enhancements that involve
overlapping, but not identical, conduct. United States v.
Arnault, 431 F.3d 994, 1000 (7th Cir. 2005).
In Arnoult, the defendant, with the help of others, used
donations to a charity the defendant operated to fund
violence overseas. The district court refused to enhance
the defendant’s sentence for his abuse of a position of
trust, concluding that it would result in impermissible
double counting, given two other enhancements for act-
ing as a leader or organizer and making fraudulent
representations while acting on behalf of a charity. We
reversed the district court’s ruling and said that “the
abuse of trust enhancement could account for behavior
separate from [the defendant’s] fraudulent misrepresenta-
tions while acting on behalf of a charitable activity and
8 No. 06-2282
separate from his role as leader or organizer of a criminal
activity.” Id; see also United States v. Hankton, 432 F.3d
779, 795-96 (7th Cir. 2005) (holding that no double count-
ing occurred when the defendant, a leader of a street
gang, received enhancements for being a leader/organizer
and distributing more than 500 grams of cocaine).
By contrast, in United States v. Kopshever, 6 F.3d 1218,
1224 (7th Cir. 1993), we held that a district court’s
impermissibly double counted when it enhanced a defen-
dant’s sentence because the offense, defrauding elderly
women of their life savings, involved vulnerable victims
and an unusually serious psychological injury. The two
enhancements were premised on the same conduct be-
cause the vulnerability of the victims contributed to the
serious nature of the psychological injury, so that the two
enhancements punished similar harms. Id.
In this case, the district court based Shearer’s enhance-
ments on different conduct. The leader/organizer enhance-
ment would have applied regardless of his co-conspirators’
age, and the use of a minor enhancement would have
applied regardless of whether Shearer’s crime was other-
wise extensive. Additionally, the enhancements punished
very different harms: the § 3B1.1 enhancement punished
the large-scale nature of Shearer’s operation, and the
§ 3B1.4 enhancement punished his involvement of minors
in a criminal enterprise. Consequently, the district court
did not engage in impermissible double counting.
D. Obstruction of Justice
Shearer next argues that the district court erred by
enhancing his sentence under U.S.S.G. § 3C1.1 for provid-
ing false testimony. To establish eligibility for this en-
hancement, the government must prove by a preponder-
ance of the evidence that the defendant’s false testimony
No. 06-2282 9
was “willful and made with the intent to interfere with the
proceeding and affect the outcome.” United States v.
Miller, 159 F.3d 1106, 1112 (7th Cir. 1998); United States
v. Ewing, 129 F.3d 430, 434 (7th Cir. 1997). We review the
district court’s factual finding that Shearer lied for clear
error. See United States v. Gonzalez, 319 F.3d 291, 300
(7th Cir. 2003).
Though at trial Shearer maintained that he did not
purchase fireworks from Island Fireworks, Bombka and
Nelson Shearer testified that they helped him buy fire-
works from that store. Additionally, though Shearer
testified that he did not sell display fireworks in 1999, an
undercover agent bought display fireworks from All-
American during that time, and numerous employees
testified that Shearer tampered with fireworks’ labels to
avoid detection. The contradictory and more credible
testimony of Shearer’s co-conspirators was sufficient to
support the district court’s finding of perjury. See United
States v. Dominguez, 992 F.3d 678, 685 (7th Cir. 1993)
(holding that a district court did not clearly err by impos-
ing an enhancement for obstruction of justice where
the defendant’s testimony contradicted three other wit-
nesses’ testimony). As a result, the district court properly
enhanced Shearer’s sentence for obstruction of justice.1
1
Shearer also argues that the district court erred by denying
him a reduction for acceptance of responsibility, but that
reduction would have been improper given Shearer’s enhance-
ment for obstruction of justice. See U.S.S.G. § 3E1.1 cmt. n.4
(“Conduct resulting in an enhancement under § 3C1.1 (Obstruct-
ing or Impeding the Administration of Justice) ordinarily
indicates that the defendant has not accepted responsibility
for his criminal conduct.”).
10 No. 06-2282
E. Reasonableness
Lastly, Shearer attempts to contest the reasonable-
ness of his sentence, arguing, in conclusory fashion, that
the sentencing factors outlined in 18 U.S.C. § 3553(a) favor
a sentence below the applicable guidelines range. The
Court rejects this argument. The district court laid out
its reasons for Shearer’s sentence in a comprehensive
ruling and noted that a guidelines sentence was appropri-
ate given Shearer’s repeated disrespect for the law (he
has two prior felony convictions, and he lied under oath).
It also noted the dangerous nature of Shearer’s criminal
enterprise and the reprehensibility of involving minors
in such activity. The district court’s sentence was reason-
able.
III. Conclusion
The Court AFFIRMS the district court’s sentence.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—3-12-07