United States v. Roy Hudspeth ( 2008 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 07-1632
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
Roy James Hudspeth, *
*
Appellant. *
___________
Submitted: December 12, 2007
Filed: May 19, 2008
___________
Before RILEY, COLLOTON, and BENTON, Circuit Judges.
___________
BENTON, Circuit Judge.
A jury convicted Roy James Hudspeth of conspiracy to distribute
pseudoephedrine in violation of 21 U.S.C. §§ 841(c)(2) and 846, conspiracy to launder
money in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and 1956(h), and two counts of
money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i). Hudspeth argues the
district court1 erred in denying his motions to suppress and motions for judgment of
acquittal, and in providing four jury instructions. Having jurisdiction under 28 U.S.C.
§ 1291, this court affirms.
1
The Honorable Dean Whipple, United States District Judge for the Western
District of Missouri.
I.
This court states the facts in a light most favorable to the jury’s verdict. See
United States v. Birdine, 515 F.3d 842, 844 (8th Cir. 2008).
Hudspeth was vice-president and chief managing officer of Handi-Rak, Inc., in
Brookline, Missouri. In 1997, on behalf of Handi-Rak, Hudspeth applied for a List
I chemical license with the Drug Enforcement Administration (DEA). As part of the
registration, two DEA agents met with him to discuss recordkeeping, the dangers of
diversion of pseudoephedrine and ephedrine products,2 and the importance of knowing
the customer base. The DEA agents also told Hudspeth that he was responsible for
making sure that Handi-Rak complied with the law. Hudspeth acknowledged these
obligations, volunteering that the sale of pseudoephedrine and ephedrine products
would be less than one percent of his sales. Handi-Rak subsequently received a List
I chemical license.
Hudspeth met with the DEA again in April 2002. The DEA inspected Handi-
Rak for compliance with the regulations on the distribution of List I chemicals. The
DEA agent was particularly concerned with the fact that: (1) Hudspeth knew of only
four pseudoephedrine or ephedrine products although Handi-Rak sold more than 180
products with at least one as an ingredient; (2) Hudspeth estimated that the sale of
these products represented about 30 or 40 percent of Handi-Rak’s business; (3)
Hudspeth set a 48-box limit per week per product, but customers repeatedly received
more than this self-imposed limit; and (4) salesmen submitted handwritten invoices
with no information about which customers bought the boxes of these products and
2
The DEA agent testified, she told Hudspeth, “Diversion of these products is
having knowledge or reasonable cause to believe that they’re being diverted to
manufacture methamphetamine. It can be based upon suspicious orders by the
customers. It can be based upon quantity of sales. It can be based upon just general
customer base.”
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how much they bought. The DEA agent expressed her concerns to Hudspeth. She
also provided him with a “Red Notice,” warning that pseudoephedrine and ephedrine
products were being seized at meth laboratories, that suspicious orders should be
immediately reported to the local DEA office, and that any person distributing or
possessing these products with knowledge or reasonable belief that they will be used
to manufacture a controlled substance is in violation of 21 U.S.C. § 841(d)(2). The
DEA agent also gave Hudspeth a “Chemical Handler’s Manual.” The manual
included the “Suspicious Task Force Form,” listing things to look for to stop
diversion. The list includes: “Customers who push to buy more than your sales
limits,” “Customers who repeatedly buy your sales limit at the shortest interval you
set,” “Customers who resell to nontraditional outlets of regulated over-the-counter
products,” “Customers who buy only the largest size available,” and “Customers that
don’t sell other pharmaceutical products or appear to sell those other products in token
amounts.” Examples of nontraditional outlets are “hair salons, head shops, [and] drug
paraphernalia stores . . . .”
Search warrants were executed at Handi-Rak on May 22, 2002, and July 24,
2002, as part of a criminal investigation by the Combined Ozarks Multi-Jurisdictional
Enforcement Team. At the May search, officers discovered numerous handwritten
invoices in Hudspeth’s desk, which listed large amounts of pseudoephedrine products,
some in excess of 144 boxes, being checked out to salesmen with no other information
provided. The officers questioned Hudspeth about the invoices. He stated that
“pseudoephedrine was a popular product and that the salesmen would check out extra
pseudoephedrine and carry it on the truck with them in case they came along
somebody that they wanted to sell it to.” The officers also talked to Hudspeth about
their suspicions that one of Handi-Rak’s customers diverted pseudoephedrine to meth
manufacturers. Hudspeth replied that “it really wasn’t his responsibility.”
In the July search, officers inventoried all the pseudoephedrine and ephedrine
products at Handi-Rak. Again, officers questioned Hudspeth about Handi-Rak’s
business practices and suspicions about specific customers diverting the product to
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meth manufacturers. Hudspeth answered that “he really didn’t know what the
business practices of his customers were, that it really wasn’t his responsibility on
whether or not they were using or misusing the product or how they were using the
product.” With regard to specific stores, he claimed that “that wasn’t his
responsibility.” The officers asked why his customers would want to purchase such
large amounts of pseudoephedrine. Hudspeth replied that “he didn’t know that they
were making the drug . . . methamphetamine.” Officers also asked why Hudspeth was
not turning in his customers who were purchasing large amounts of pseudoephedrine.
He responded that “if he turned in every customer that he thought was misusing the
pseudoephedrine product, that he wouldn’t have any customers left.”
After these events, Handi-Rak continued to sell large amounts of
pseudoephedrine and ephedrine products to customers until November 2003.
Mike Williams, a salesman, testified that he delivered large amounts of
pseudoephedrine and ephedrine products to The Castle. The Castle was a “head shop”
in southwest Missouri, which primarily sold drug paraphernalia. Williams delivered
once or twice a week the maximum amount of pseudoephedrine and ephedrine
products. However, Williams was concerned about the store because it was a head
shop; he believed the store was diverting the products to manufacture meth. Williams
said that he talked pretty often with Hudspeth about his concerns, but Hudspeth said,
“Not to worry,” and “Go ahead and sell it.” Williams stopped delivering to The Castle
in June 2002 after the store asked for iodine, which is also used to manufacture meth.
Williams also said that after the second search warrant was executed, another
salesman told Hudspeth about a store that wanted to buy 48 boxes of
pseudoephedrine. Hudspeth told the salesman, “I didn’t hear that,” and “Don’t talk
about that.”
Troy Kelly, a salesman, delivered large amounts of pseudoephedrine to the
C&M Country Corner, a little mom-and-pop store in southern Missouri. He testified
Hudspeth told him how to get around the 48-box limit by making hand tickets, or
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written invoices. Kelly would take extra product with him and sell it to customers
who wanted more boxes or did not order any. He would write out an invoice for the
sale and then turn it in with the regular invoices. Kelly also testified that he talked to
Hudspeth about selling extra pseudoephedrine to C&M. Hudspeth told him, “With
them we sell everything we can sell to them,” and “Pills are profit.” C&M’s owner
told Kelly that she thought customers were buying the pseudoephedrine to
manufacture meth. Kelly told Hudspeth, who responded: “what she does with it after
the fact is her business, not ours.” Kelly continued to sell pseudoephedrine to C&M.
Michael Higgins, a salesman, delivered large amounts of ephedrine products to
two Quick Stop convenience stores in the Kansas City area. He delivered weekly the
maximum amount of ephedrine products. Higgins, though, testified that there was no
limit on the amount he could deliver until September 2002. Higgins also stated that
he developed suspicions about the Quick Stop stores because they were selling a lot
more ephedrine than any other store he delivered to. However, Higgins did not
discuss his concerns with Hudspeth.
Handi-Rak’s bookkeeper testified she was concerned with the handwritten
invoices, which were primarily for pseudoephedrine products. She expressed her
concerns with Hudspeth, but he would tell her not to worry about it. Another Handi-
Rak employee also testified that she told Hudspeth about the salesmen checking out
more pseudoephedrine than the 48-box limit. Hudspeth said he would take care of it.
All employees indicated that pseudoephedrine and ephedrine products were Handi-
Rak’s biggest sellers and that the 48-box limit was repeatedly ignored.
An expert testified that a convenience store would be expected to sale $19.76
per month of pseudoephedrine, according to national averages. A non-convenience
store, such as a head shop, would not be expected to sell any pseudoephedrine. In
comparison, Handi-Rak’s average monthly sales of pseudoephedrine to The Castle
were $957.05, to C&M were $700.48, and to the Quick Stops were $581.19. Several
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other stores that Handi-Rak serviced also purchased similar amounts of
pseudoephedrine products.
Multiple police officers testified about their investigation of Handi-Rak.
Several undercover officers purchased large amounts of pseudoephedrine from The
Castle. The officers matched the lot numbers of these boxes to lot numbers sent to
Handi-Rak from Cumberland Swan, a distributor of health and beauty products,
including pseudoephedrine and ephedrine products. A representative from
Cumberland Swan testified that at that time its only customer in Missouri was Handi-
Rak (although it had two customers in Arkansas).
Officers also testified about their investigation of the Pit Stop and Norm’s
Grocery Store, both serviced by Handi-Rak. Officers searched the property of the
manager of the Pit Stop, finding pseudoephedrine tablets in an abandoned refrigerator.
The lot numbers on those boxes matched the lot numbers of pseudoephedrine shipped
to Handi-Rak from Cumberland Swan. Officers also seized boxes of pseudoephedrine
from Norm’s Grocery Store, after a clerk contacted the state patrol about suspicious
deliveries of pseudoephedrine. The lot numbers on those boxes also matched the lot
numbers shipped to Handi-Rak from Cumberland Swan.
The first trial ended in a mistrial; the jury was unable to reach an unanimous
verdict. Before the second trial, Hudspeth moved to suppress the search warrants.
The district court denied the motion as untimely and alternatively found sufficient
probable cause for the warrants. The jury convicted Hudspeth of conspiracy to
distribute pseudoephedrine, conspiracy to money launder, and two counts of money
laundering. He was sentenced to concurrent terms of 240 months on each count of
conviction.
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II.
In reviewing the district court’s denial of a motion to suppress, this court
reviews findings of fact for clear error and legal conclusions de novo. United States
v. Grant, 490 F.3d 627, 631 (8th Cir. 2007), cert. denied, 76 U.S.L.W. 3510 (U.S.
Mar. 24, 2008) (No. 07-8356). Specifically, this court reviews de novo the district
court’s determination of probable cause and application of the Leon exception. Id.;
see generally United States v. Leon, 468 U.S. 897 (1984).
“If an affidavit in support of a search warrant sets forth sufficient facts to lead
a prudent person to believe that there is a fair probability that contraband or evidence
of a crime will be found in a particular place, probable cause to issue the warrant has
been established.” Grant, 490 F.3d at 631, citing Illinois v. Gates, 462 U.S. 213, 238
(1983) (internal quotation marks omitted). “Whether probable cause to issue a search
warrant has been established is determined by considering the totality of the
circumstances, and resolution of the question by an issuing judge should be paid great
deference by reviewing courts.” Grant, 490 F.3d at 632. “Where there is no
evidentiary hearing before the magistrate judge, the probable cause determination
must be based upon ‘only that information which is found within the four corners of
the affidavit.’” United States v. Olvey, 437 F.3d 804, 807 (8th Cir. 2006). The
affidavit for a search warrant should be examined using a common sense approach,
and not a hypertechnical one. Grant, 490 F.3d at 632.
The May search warrant was a Missouri state warrant. The attached affidavit
indicated:
• Pseudoephedrine is a main precursor used to manufacture meth, and is
commonly purchased in the form of over-the-counter cold and sinus
medicines.
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• A business, store, or distributor of pseudoephedrine-based cold tablets
is required to keep records and limited by Missouri Statute to the sale of
three boxes of pseudoephedrine-based cold medications to any person.
• Undercover officers made several large purchases of pseudoephedrine
at The Castle in March and April 2002. The Castle sold officers more
than the legal state limit of 66 tablets per purchase.
• While there to purchase, officers overheard a conversation between
Williams, a Handi-Rak salesman, and the owner. Williams informed the
owner that Aleve was going to be releasing a 120-milligram
pseudoephedrine-based cold tablet, that the DEA was investigating
Handi-Rak, and that he needed to buy some chemicals to clean his
system, “since he was afraid that with law enforcement at the warehouse
he might be asked to take a drug test.”
• A burglary occurred at Handi-Rak on March 19, 2002, with 77,760
pseudoephedrine-based cold tablets stolen, along with 530 packages of
lithium batteries. Officers believed a Handi-Rak employee was involved
in the burglary because nothing else was taken, doorways inside the
business were not forced, and the suspects apparently knew the exact
location of the pseudoephedrine.
• Officers received records from Cumberland Swan Company with the lot
numbers of every box of pseudoephedrine-based cold tablets purchased
from The Castle. The records indicated that the lot numbers
corresponded with boxes shipped to Handi-Rak.
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• Louie Burton,3 a sales manager of Handi-Rak, has been selling
pseudoephedrine-based cold tablets to various businesses without sales
receipts or paperwork in order to conceal the large amounts of
pseudoephedrine cold tablets sold by Handi-Rak.
The July search warrant was a federal search warrant. The attached affidavit
indicated:
• A description of head shops and regional distributors. Specifically, it
noted that regional distributors may willfully ignore the excessive sale
of precursors at head shops, or may actively encourage the sale of the
precursors because of the profitability of sales, and that regional
distributors are required by the DEA to keep records and maintain books
relating to the transportation, ordering, and/or distribution of precursors.
• A reiteration of the facts from the May search warrant.
• A description of the evidence seized from the May search warrant,
including the discovery of several handwritten invoices in Hudspeth’s
desk, showing numerous boxes of pseudoephedrine with a date and a
salesman’s name, but no customer information.
• A description of interviews with Bunch, Kelly, and Williams, salesmen
for Handi-Rak. Each salesman admitted selling more than the 48-box
limit to customers by filling out handwritten receipts, which were given
3
The May affidavit says Burton, but later evidence and the July affidavit
demonstrate his surname is Bunch. A minor clerical error does not invalidate the
search warrant. See United States v. Thomas, 263 F.3d 805, 808-09 (8th Cir. 2001);
United States v. Carlson, 697 F.2d 231, 238 (8th Cir. 1983) (ruling an unintentional
mistake on the part of an officer applying for a search warrant in and of itself will not
render a warrant invalid).
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to Hudspeth and kept at the Handi-Rak warehouse. Kelly further stated
most of the salesmen conducted business in this manner at Handi-Rak
and that Hudspeth allowed it. Williams also declared that he thought the
stores that obtained large amounts of pseudoephedrine were probably
selling it to customers who use it to manufacture meth.
• A description of an interview with the owner of C&M Country Store.
She explained that she bought the 48-box limit of pseudoephedrine from
Handi-Rak via the computer-generated receipts and bought extra
pseudoephedrine from Handi-Rak via the handwritten receipts. She
confessed to selling large amounts of pseudoephedrine to customers who
she knew were using it to manufacture meth.
• A description of several undercover purchases of pseudoephedrine at
stores serviced by Handi-Rak.
Hudspeth asserts there was no probable cause to issue the May and July search
warrants. He also claims the affidavit attached to the July search warrant was based
on evidence obtained illegally in the May search, requiring that the July search
warrant be evaluated without consideration of the May evidence.
Looking only within the four corners of the affidavits and using a common
sense approach, there was probable cause for the May and July search warrants.
Probable cause requires only a showing of fair probability, not hard certainties. See
Gates, 462 U.S. at 231. Here, the affidavits demonstrate a fair probability of finding
evidence of a crime at Handi-Rak and its warehouse. Thus, the search warrants are
valid. See United States v. Caswell, 436 F.3d 894, 897 (8th Cir. 2006) (search warrant
is valid under the Fourth Amendment if it establishes probable cause). Moreover,
because the May search was legal, the July search warrant properly referenced
evidence obtained from that search.
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However, even if there was no probable cause to issue the search warrants, the
Leon good-faith exception applies here. “Under the Leon good-faith exception,
disputed evidence will be admitted if it was objectively reasonable for the officer
executing a search warrant to have relied in good faith on the judge’s determination
that there was probable cause to issue the warrant.” Grant, 490 F.3d at 632. “In
assessing whether the officer relied in good faith on the validity of a warrant, we
consider the totality of the circumstances, including any information known to the
officer but not included in the affidavit, and we confine our inquiry to the objectively
ascertainable question whether a reasonably well trained officer would have known
that the search was illegal despite the [issuing judge’s] authorization.” Id. (internal
quotation marks and citations omitted). Here, based on the affidavits, a reasonably
well-trained officer would not have known that the search was illegal despite the
issuing judges’ authorization.
The district court did not err in denying the motions to suppress.
III.
This court reviews de novo the denial of a motion for judgment of acquittal,
viewing the evidence most favorably to the verdict. United States v. Santoyo-Torres,
518 F.3d 620, 623 (8th Cir. 2008). This court will reverse a conviction only if no
reasonable jury could have found the defendant guilty beyond a reasonable doubt. Id.;
see also United States v. Reddest, 512 F.3d 1067, 1069-70 (8th Cir. 2008) (there is
“no meaningful distinction between the de novo standard used to review the
sufficiency of the evidence to support a guilty verdict and the de novo standard used
to review the district court’s ruling on a defendant’s motion for judgment of
acquittal”).
Hudspeth insists there was insufficient evidence to convict for conspiracy to
distribute pseudoephedrine, conspiracy to commit money laundering, and money
laundering. Specifically, Hudspeth asserts there was no evidence of an agreement or
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any understanding between the conspirators, and no evidence that the financial
transactions were conducted with the intent or knowledge to promote a specified
unlawful activity.
To convict for conspiracy, the government must prove beyond a reasonable
doubt: (1) an agreement among two or more people to achieve an illegal purpose, (2)
Hudspeth’s knowledge of the agreement; and (3) that Hudspeth knowingly joined and
participated in the agreement. See United States v. Whirlwind Soldier, 499 F.3d 862,
869 (8th Cir. 2007), cert. denied, 128 S. Ct. 1286 (2008). “The agreement may be in
the form of a tacit understanding rather than a formal, explicit agreement.” Id.
Under 21 U.S.C. § 841(c), the government must prove Hudspeth possessed or
distributed pseudoephedrine “knowing, or having reasonable cause to believe, that .
. . [it] will be used to manufacture a controlled substance.” 21 U.S.C. § 841(c). It is
insufficient to show an inadvertent sale of pseudoephedrine to an illegal drug
manufacturer. See United States v. Brown, 461 F.3d 1062, 1069 (8th Cir. 2006).
Under 18 U.S.C. § 1956(a)(1)(A)(i), the government must prove that Hudspeth
“engaged in financial transactions with the knowing use of the proceeds of illegal
activities and with the intent to promote the carrying on of unlawful activity.” United
States v. Parker, 364 F.3d 934, 948 (8th Cir. 2004) (internal quotation marks
omitted).
Here, there was sufficient evidence to convict for conspiracy to distribute
pseudoephedrine. As this court noted in United States v. Bewig, 354 F.3d 731 (8th
Cir. 2003), in discussing the sufficiency of the evidence for a conspiracy charge:
We believe a reasonable jury could have concluded that Mr.
Bewig entered into a conspiratorial agreement with parties known and
unknown to distribute pseudoephedrine for the purposes of making
illegal narcotics. . . .
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First, it is of consequence to us that pseudoephedrine has limited
legal uses. . . . Pseudoephedrine is an over-the-counter decongestant.
Unlike sugar, if you do not have a cold, a headache, or sinus problems
there are remarkably few things you can do with pseudoephedrine except
make illegal narcotics. Sales of such a limited product to routine
customers, and in bulk, suggest that Mr. Bewig was acting merely as the
“legitimate” front to an organized drug scheme.
Second, Mr. Bewig knew that pseudoephedrine was used to make
methamphetamine. . . .
Third, Mr. Bewig’s distributor informed him that he was ordering
pseudoephedrine at a disproportionately high rate. Thus, unlike single
transactions for staple goods, or goods susceptible to multiple legal uses,
Mr. Bewig’s disproportionately high sales of pseudoephedrine suggest
agreement in the illegal endeavor. . . . He knowingly made the supplying
of a necessary ingredient to illegal drug production a continuing part of
his business; he became part of the venture.
Fourth, the nature of the sales transactions suggests an illegal goal.
Mr. Bewig had in the past sold pseudoephedrine in case amounts. While
he nominally had a three-unit limit, pseudoephedrine was continually
sold in larger than three-unit amounts, or to the same patron over a
period of a day in multiple three-unit sales. . . .While there was some
dispute as to Mr. Bewig’s knowledge of these transactions, a reasonable
jury could have imputed the knowledge to him, as he was solely
responsible for reordering the pseudoephedrine once the station’s supply
was exhausted.
In short, we cannot say as a matter of law that there was
insufficient evidence to support the conviction. A reasonable jury could
have concluded that Mr. Bewig not only sold pseudoephedrine with the
knowledge that it would be made into methamphetamine but agreed to
become part of that illegal end.
Bewig, 354 F.3d at 736-37. Similarly, here, Hudspeth was distributing
pseudoephedrine, he knew it could be used in the manufacture of meth, the DEA agent
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informed him that she was concerned about the amount of pseudoephedrine he was
selling in relation to Handi-Rak’s other products, he repeatedly sold more than the 48-
box limit to customers, and he was responsible for reordering the pseudoephedrine.
Moreover, Hudspeth also advised his salesmen how to make it look like they were not
exceeding the 48-box limit. See Brown, 461 F.3d at 1069-70. This is sufficient
evidence to show a conspiracy to distribute pseudoephedrine illegally.
Despite this evidence, Hudspeth insists there was no agreement because the
salesmen testified there was no agreement. A conspiracy conviction, however, does
not require evidence of an explicit agreement. See Whirlwind Soldier, 499 F.3d at
869. A tacit understanding is sufficient to convict. See id. Here, the evidence is more
than enough to demonstrate an understanding among Hudspeth and the salesmen. See
Bewig 354 F.3d at 736-37; Brown, 461 F.3d at 1070.
There was also sufficient evidence to convict for conspiracy to commit money
laundering and two counts of money laundering. Count 35 charges Hudspeth with
conspiracy to commit money laundering with Mike Williams, a Handi-Rak salesman
and coconspirator, listing checks to Handi-Rak from The Castle, and to Cumberland
Swan from Handi-Rak, as overt acts of the conspiracy. Counts 37 and 38 charge that
Hudspeth directed two checks to be sent to Cumberland Swan, representing the
commingled proceeds from the sale of pseudoephedrine: (1) check 22262, dated
February 5, 2001, drawn on Handi-Rak’s account at Metropolitan National Bank, in
the amount of $12,889.36, for pseudoephedrine orders in invoice 361005; and (2)
check 23257, dated February 1, 2002, drawn on Handi-Rak’s account at UMB Bank,
in the amount of $12,210.69, in part for pseudoephedrine in invoices 463825, 463826,
and 464043.
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For the conspiracy conviction, Hudspeth argues there was no agreement with
Williams, stating Williams serviced The Castle on his own without prior approval
from Hudspeth, Williams stopped delivering to The Castle, again without prior
approval of Hudspeth, and Williams testified there was no agreement with Hudspeth.
However, as noted, a conspiracy conviction does not require evidence of an explicit,
formal agreement. Whirlwind Soldier, 499 F.3d at 869. A tacit understanding is
enough to convict. See id. Williams testified he talked to Hudspeth about his
concerns of delivering large amounts of pseudoephedrine to The Castle because it was
a head shop. Hudspeth never told him to stop delivering to The Castle. Williams said
that he would turn in his paperwork and checks to the bookkeeper or Hudspeth. He
testified to several occasions where he delivered more than the 48-box limit to The
Castle. Williams further stated that he mostly sold only pseudoephedrine to The
Castle. Other evidence showed Hudspeth was the one responsible for complying with
the law, managing the salesmen, and ordering and paying for the pseudoephedrine.
This is sufficient evidence to show that Hudspeth and Williams had a tacit
understanding to commit money laundering.
For the substantive convictions, Hudspeth claims the checks to Cumberland
Swan represent nothing other than the corporate act of Handi-Rak paying its supplier.
He also asserts the government presented no evidence that he directed the payments
himself. Contrary to these assertions, evidence at trial demonstrated that Handi-Rak
used one account to deposit payments received from customers, pay overhead
expenses and payroll, and pay invoices. The bookkeeper testified Hudspeth signed
every check and would sometimes handle the paperwork and checks received from the
salesmen. Hudspeth also was responsible for reordering pseudoephedrine. According
to other evidence, Hudspeth had knowledge that customers were diverting the
pseudoephedrine to persons who manufactured meth. This is sufficient evidence to
show that Hudspeth knowingly reinvested the illegal proceeds into Handi-Rak with
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the intent to carry on an illegal scheme – distributing pseudoephedrine to persons
involved in manufacturing meth.4 See Parker, 364 F.3d at 950.
The district court did not err in denying the motions for judgment of acquittal.
IV.
During deliberations, the jury asked the district court, “What is the Court’s
definition of money laundering in this case?” After conferring with the parties, the
court responded, “There are many different ways to commit money laundering. You
should use Instruction 25, 28 and 29 to determine if money laundering occurred in this
case.” Hudspeth insists the court erred because the instructions did not provide a
definition of money laundering, the evidence in the case suggested only one way to
commit money laundering, and the court’s response did not answer the jury’s
question.
“‘A trial court’s response to a jury’s request for supplemental instruction is a
matter within the sound discretion of the trial court,’ which we review for abuse of
discretion.” United States v. Abdul-Aziz, 486 F.3d 471, 476 (8th Cir. 2007), quoting
United States v. Beckman, 222 F.3d 512, 521 (8th Cir. 2000). The “‘trial court must
take great care to insure that any supplemental instructions are accurate, clear, neutral,
and non-prejudicial,’ answering ‘with concrete accuracy, and within the specific limits
4
Hudspeth contends the check dated February 5, 2001, does not represent the
proceeds from unlawful activity because Williams did not start servicing The Castle
until June 2001, and Kelly did not start servicing C&M until October 2001. However,
the illegal scheme started before June and October 2001. Evidence demonstrated that
on October 18, 2000, and December 21, 2000, Handi-Rak sold large amounts of
pseudoephedrine to two different customers. A reasonable juror could have reasoned
that the proceeds of these sales were deposited into Handi-Rak’s account, commingled
with other assets, and used to purchase (in part) more pseudoephedrine with the
February 5 check. This is sufficient. See Santoyo-Torres, 518 F.3d at 623.
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of the question presented.’” United States v. Levine, 477 F.3d 596, 604 (8th Cir.),
cert. denied, 127 S. Ct. 3023 (2007), quoting United States v. Morrison, 332 F.3d
530, 532 (8th Cir. 2003). “This court has recognized that, in responding to a jury’s
request for supplemental instruction, it may be proper at times to simply refer the jury
back to the original instructions.” Abdul-Aziz, 486 F.3d at 476.
As discussed, to convict for money laundering under 18 U.S.C. §
1956(a)(1)(A)(i), the government must prove that Hudspeth “engaged in financial
transactions with the knowing use of the proceeds of illegal activities and with the
intent to promote the carrying on of unlawful activity.” United States v. Parker, 364
F.3d 934, 948 (8th Cir. 2004) (internal quotation marks omitted). The government
must also demonstrate the financial transactions affected interstate or foreign
commerce. 18 U.S.C. § 1956(c)(4).
Instruction 25 addresses conspiracy to commit money laundering and refers the
jury to earlier instructions, defining the elements of committing an illegal financial
transaction. Instructions 28 and 29 relate to the two substantive counts of money
laundering. Specifically, Instruction 28 explains that the crime of conducting an
illegal financial transaction has four essential elements:
One, on or about February 5, 2001, the defendant, Roy James
Hudspeth, signed check number #22262, drawn on account #100204056,
Handi-Rak Drug Services, Inc. at Metropolitan National Bank, said
check paid in the amount of $12,889.36, on February 14, 2001, to
Cumberland Swan-Dept. #78141, in part for pseudoephedrine orders in
invoice #361005, said amount representing commingled assets from the
illegal sale of pseudoephedrine to Handi-Rak customers;
Two, the defendant conducted the financial transaction with
$12,889.36 in United States currency that involved the proceeds of the
unlawful distribution of pseudoephedrine;
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Three, at the time the defendant conducted the financial
transaction, the defendant knew the $12,889.36 in United States currency
represented the proceeds of some form of unlawful activity; and
Four, the defendant conducted the financial transaction with the
intent to promote the carrying on of the unlawful distribution of
pseudoephedrine.
Instruction 29 provides similarly as to the transaction on February 1, 2002, check
#23257, in the amount of $12,210.69, paid to Cumberland Swan-Dept. in part for
pseudoephedrine. Instruction 29 also provides “which in any way or degree affected
interstate or foreign commerce.”
Here, the court’s response to the jury question was proper. Although evidence
in the case only presented one form of money laundering, the statute itself provides
multiple ways to commit money laundering. See 18 U.S.C. § 1956(a). Further, the
court referred the jury back to the instructions, which describe the specific way that
money laundering was charged in the case. Here, that was proper. See Abdul-Aziz,
486 F.3d at 476.
The district court did not abuse its discretion.
V.
Hudspeth also claims that Instructions 23 and 28 do not adequately instruct the
jury on the issue of interstate commerce. Hudspeth did not object to the jury
instructions; they are reviewed for plain error. See United States v. Refert, 519 F.3d
752, 756 (8th Cir. 2008). “Plain error only exists if (1) there was an error, (2) the
error was plain, (3) the error affected [Hudspeth’s] substantial rights, and (4) a failure
to grant relief would seriously affect the fairness, integrity, or public reputation of
judicial proceedings.” Id.
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Instruction 28, quoted above, properly lists the essential elements of the crime
of money laundering. Although the instruction does not expressly mention that the
financial transaction had to affect interstate or foreign commerce, element one requires
the jury to find an effect on interstate commerce – that a signed check from
Metropolitan National Bank was paid to Cumberland Swan in part for
pseudoephedrine. Evidence at trial demonstrated that Metropolitan National Bank is
in Missouri and that the check to Cumberland Swan was mailed to Michigan.
Cumberland Swan’s headquarters are in Tennessee. This is sufficient to require a
finding of an effect on interstate commerce.
Instruction 23, similarly, requires a finding of an effect on interstate commerce.
It lists the same two checks as in Instructions 28 and 29, which were paid from Handi-
Rak’s bank in Missouri to Cumberland Swan, a Tennessee corporation. It also lists
a check signed by Melissa Deputy of The Castle, in the amount of $249.60, from an
account at the Peoples Bank of the Ozarks. The check was payable to Handi-Rak for
the purchase of pseudoephedrine. By the evidence, the Peoples Bank of the Ozarks
is insured by the Federal Deposit Insurance Corporation. This is sufficient to show
an effect on interstate commerce. See United States v. Parker, 364 F.3d 934, 951 (8th
Cir. 2004) (exhibit showing bank is insured by Federal Deposit Insurance Corporation
is enough to show an effect on interstate commerce).
There is no plain error. The instructions fairly and adequately submitted the
issues to the jury. See United States v. Hayes, 518 F.3d 989, 994 (8th Cir. 2008).
VI.
The judgment of the district court is affirmed.
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