United States v. Nguyen ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,  No. 07-30197
Plaintiff-Appellee, D.C. No.
v.  CR-05-00270-05-
TUYET THI-BACH NGUYEN, RSL
Defendant-Appellant.
 OPINION
Appeal from the United States District Court
for the Western District of Washington
Robert S. Lasnik, District Judge, Presiding
Argued and Submitted
December 8, 2008—Seattle, Washington
Filed May 15, 2009
Before: Robert R. Beezer, Ronald M. Gould, and
Consuelo M. Callahan, Circuit Judges.
Opinion by Judge Gould;
Partial Concurrence and Partial Dissent by Judge Callahan
5867
UNITED STATES v. NGUYEN 5869
COUNSEL
Sheryl Gordon McCloud, Law Offices of Sheryl Gordon
McCloud, Seattle, Washington, for appellant Tuyet Thi-Bach
Nguyen.
5870 UNITED STATES v. NGUYEN
Jeffrey C. Sullivan and Susan Loitz, U.S. Attorney’s Office,
Seattle, Washington, for appellee United States of America.
OPINION
GOULD, Circuit Judge:
Tuyet Nguyen (“Nguyen”) appeals her jury conviction and
sentence for conspiracy to transport stolen property in inter-
state commerce in violation of 18 U.S.C. § 2314, for two
counts of the transportation of stolen property in interstate
commerce in violation of 18 U.S.C. § 2314, for three counts
of the introduction of misbranded medical devices into inter-
state commerce in violation of 18 U.S.C. § 352(a), and for
conspiracy to commit money laundering in violation of 18
U.S.C. § 1956. We have jurisdiction under 28 U.S.C. § 1291.
We affirm in part and reverse in part, and we remand for
retrial and resentencing.
I
On July 13, 2005, a grand jury returned an indictment
against Nguyen, her husband Phu Nguyen, their company
Columbia Medical Systems, Inc. (“CMS”), and Sess Merke
(“Merke”). The indictment alleged that Tuyet and Phu
Nguyen conspired with Merke, Robert Davies (“Davies”), and
others to steal and transport medical equipment from their for-
mer employer, ATL Philips Medical Systems (“Philips”). The
indictment alleged that Nguyen had conspired to sell stolen
ultrasound probes.1 The indictment alleged that the Nguyens
resold these stolen probes through their company, CMS, after
the probes were given new fake serial numbers. Merke and
Davies withdrew from the conspiracy in 2000, but the govern-
ment alleged that the conspiracy continued until 2003.
1
An ultrasound probe is the part of the ultrasound machine that comes
in contact with the patient’s body.
UNITED STATES v. NGUYEN 5871
Davies, an unindicted co-conspirator, testified under a grant
of immunity that Phu Nguyen, Appellant’s husband, asked
him to steal probes and sell them to CMS. With the help of
Davies, the conspiracy worked its fraud as follows: Davies
would tell Philips that a customer had a broken probe that
needed replacement, even though the probe was working.
Philips would send the new probe to the customer, expecting
that the customer would ship the broken probe back. Davies
would give Phu Nguyen the customer’s old but still function-
ing probe, and Phu would transfer the functioning probe’s
serial numbers onto one of the defective probes in the CMS
stockroom. Then, Davies would send the defective probe to
Philips. So, at Philips’s expense, Phu Nguyen and his com-
pany, CMS, would end up with functioning probes that were
in effect stolen by fraud, and CMS would have given up only
defective probes.
The fraudulent conspiracy was also furthered by the decep-
tion of others. Co-conspirator Merke stole Philips’s inventory
from its stockrooms. At trial, Evalyn Thomas (“Thomas”), a
Philips data entry clerk who worked for Merke, testified that
Merke removed finished probes from the “Finished Goods”
inventory without adequate explanation several times.
Thomas explained that usually when an employee took mate-
rial from the Finished Goods stockroom, they would fill out
a Material Transfer Form. That form tracked where the mate-
rial went. Thomas testified that it was unusual for someone in
Merke’s position to be dealing directly with customers, and it
was also odd that Merke personally pulled the stock and com-
pleted the entire form himself. According to Thomas, when
the Material Transfer Form stated the employee was crediting
the taken material to their “wash account,” the new material
was being taken to replace some old, defective material.
Therefore, a Material Transfer Form that took six parts from
Finished Goods out of the stockroom and credited the “wash
account” should also show the same number of parts going
into the “Defective Material” stockroom. Thomas testified
that this full accounting of material did not occur on several
5872 UNITED STATES v. NGUYEN
of Merke’s Material Transfer Forms. Instead, many parts “dis-
appeared,” including forty-six ultrasound probes.
Another Philips employee, Dave Westrich (“Westrich”),
testified that Nguyen asked him to load some of Philips’s pro-
prietary software onto a hard drive for her. Westrich refused
and told Nguyen not to call him again. The government con-
tended that Nguyen must have obtained the software another
way because Don Davis, a CMS customer, testified that in
June 2001, Nguyen approached him with the suggestion that
she would give him access to Philip’s software if he agreed
to guarantee a certain level of business with CMS.
The prosecution introduced CMS business records to show
that CMS sold more probes than it purchased for 1999
through 2003. FDA Agent Borden also explained that many
Philips probes tied to CMS had false serial numbers. The
police seized several probes with false serial numbers when
executing a search warrant in December 2003. The testimony
tied other probes with false serial numbers to CMS based on
its invoices.
The prosecution also presented witnesses who said that
having accurate serial numbers on ultrasound probes is impor-
tant for FDA compliance, as well as for Philips’s inventory
management. In a contract with CMS, one company included
clauses emphasizing that CMS would only sell the company
ultrasound components with original serial numbers. Also, a
customer testified that he would return a product and refuse
to pay for it if he discovered that it did not bear the original
serial number.
The government alleged that the Nguyens paid for these
stolen probes with cash to hide their origin. FDA Agent
Mahoney testified that the Nguyens had made out several
checks to cash with the notation “purchase probes Merke” and
“purchase probes.” These checks were drawn from CMS
accounts, and Nguyen signed and negotiated several checks.
UNITED STATES v. NGUYEN 5873
The jury heard evidence of Nguyen’s statement in which
she claimed that she and her husband did not buy any items
from Merke, and that Merke had never delivered probes to
her. Agent Borden also testified about statements that Merke
had made during Merke’s interrogation. The government elic-
ited information about that statement on direct examination,
and Merke’s counsel elicited still more on cross-examination.
Agent Borden testified that Merke had stated that he had sold
stolen medical equipment to the Nguyens, and that he had
received money from the Nguyens, though he refused to esti-
mate how much money.
During closing arguments, Nguyen argued that the evi-
dence did not establish whether she knew the probes were
stolen or that the serial numbers had been changed.
On April 5, 2006, the jury found Nguyen guilty of conspir-
acy to transport stolen property in interstate commerce. The
jury convicted her of transportation of stolen property for the
shipment of probes on July 25, 2000, and August 15, 2000,
but acquitted her of those charges for the shipments occurring
on August 10, 2000, and April 3, 2002. The jury found her
guilty of introducing misbranded medical devices into inter-
state commerce for the shipments of probes occurring on July
25, 2000, August 10, 2000, and August 15, 2000, but acquit-
ted her of those charges pertaining to shipments on June 18,
2001, April 3, 2002, and December 3, 2002. The jury acquit-
ted Nguyen of all five counts of holding for sale misbranded
medical devices. Finally, the jury convicted her of conspiracy
to commit money laundering.
The district court sentenced Nguyen to 48 months incarcer-
ation.
II
A.
We review claims of a violation of the Confrontation
Clause de novo. United States v. Nielsen, 371 F.3d 574, 581
(9th Cir. 2004).
5874 UNITED STATES v. NGUYEN
The parties dispute whether Nguyen preserved this claim of
error. Before trial, Nguyen made several motions in limine
and objected to the use of a statement Merke made to Agent
Borden, alleging that its admission would violate the Con-
frontation Clause. Nguyen objected to the admission of any
portion of Merke’s statement that alluded to her both in the
motion in limine and again at trial. The government argues
that Nguyen should have objected to Merke’s use of his own
statement when Merke’s counsel sent notice to all parties that
Merke would admit his statements. Nguyen argues that she
did not object because she understood Merke’s alert to mean
that Merke would testify, curing any Confrontation Clause
problem. Instead, Merke’s counsel elicited the statements for
which Nguyen had a continuing objection. After opening
statements at trial, the district court clarified that Nguyen did
not need to make further objection on this issue and that the
issue was preserved.2
We have held that “ ‘where the substance of an objection
has been thoroughly explored and the trial court’s ruling was
explicit and definitive, the issue is preserved for appeal.’ ”
United States v. Varela-Rivera, 279 F.3d 1174, 1177 (9th Cir.
2002) (quoting United States v. Palmer, 3 F.3d 300, 304 (9th
Cir. 1993). As we have explained, Nguyen brought the Con-
frontation Clause issue to the district court’s attention twice,
and the district court made a definitive ruling and then said
she did not need to object further to preserve the issue.
Accordingly, if there is Confrontation Clause error, we must
apply harmless error review. Nielsen, 371 F.3d at 581.
2
The district court stated that Nguyen “[did not] have to object to pre-
serve [the issue].”
The government also argues that we should apply plain error because
Nguyen did not move to sever Merke’s trial from her own. The key ques-
tion, however, is whether the issue was “brought to the court’s attention.”
Fed. R. Crim. Pro. 52(b) (plain error standard). Nguyen objected before
and during trial, bringing her Confrontation Clause claim to the attention
of both the district court and the government. A motion to sever was not
necessary to avoid the plain error standard.
UNITED STATES v. NGUYEN 5875
B
We turn to the issue of whether the Confrontation Clause
was offended by introduction of the statement made by Merke
as related by Agent Borden in her testimony. Agent Borden
testified that while at first Merke had said that he received
nothing more than lunch money, “he said a lot more things”
including that he actually had received other money from the
Nguyens, including money “that he had taken as a result of
selling equipment to them,” but he would not specify the
amount. She also testified that “equipment” included probes.
The government had previously offered to redact the portion
of Merke’s statement where he referenced accepting money
from the Nguyens for stolen equipment to avoid any Confron-
tation Clause related errors, but Merke’s counsel elicited the
testimony anyway.
[1] Our Confrontation Clause analysis does not change
because a co-defendant, as opposed to the prosecutor, elicited
the hearsay statement. The Confrontation Clause gives the
accused the right “to be confronted with witnesses against
him.” U.S. Const. amend. VI; Crawford v. Washington, 541
U.S. 36, 43 (2004). The fact that Nguyen’s co-counsel elicited
the hearsay has no bearing on her right to confront her accus-
ers. See also United States v. Mayfield, 189 F.3d 895, 901 (9th
Cir. 1999) (finding reversible error where a co-defendant’s
counsel elicited hearsay statements in violation of the Con-
frontation Clause).
[2] Only hearsay statements that are testimonial implicate
the Confrontation Clause. Crawford, 541 U.S. at 68. While
the Court in Crawford did not comprehensively define testi-
monial statements, it stated that statements to a police officer
during interrogations qualified. Id. at 52. Merke made his
statement during Agent Borden’s interrogation, and we con-
clude that it was testimonial.
[3] This testimonial statement was hearsay. The govern-
ment argues that Merke’s statement that he had sold the
5876 UNITED STATES v. NGUYEN
Nguyens scrap metal was admitted to show consciousness of
guilt. The testimony, however, was broader and Agent Borden
testified that Merke had sold the Nguyens medical equipment.
This statement does not show Merke’s consciousness of guilt,
nor is the statement “obviously false.” See, e.g., United States
v. Trala, 386 F.3d 536, 544-45 (3rd Cir. 2004) (holding in a
case where the government sought to prove bank robbery,
conflicting hearsay statements by a co-defendant regarding
the origin of the money were admitted to show consciousness
of guilt and were “obviously false”). Merke’s statement in
which he said that he had received some money from the
Nguyens but denied receiving half a million dollars was also
not “obviously false.” See id. The government even acknowl-
edged that this statement raised potential Confrontation
Clause problems and offered to redact it.
The government argues that Merke’s statement was not
inculpatory. But this is not controlling on the existence of
error. Crawford does not require that a statement inculpate a
defendant to trigger error under the Confrontation Clause.
Simply, Confrontation Clause error occurs at admission of a
testimonial statement without an opportunity to cross-
examine. Crawford, 541 U.S. at 68-69. If the statement is not
inculpatory, that might be probative of the harmlessness of an
error, but not of the existence of a Confrontation Clause error.
[4] Because Merke’s statement was testimonial and admit-
ted for its truth, we hold its admission at Nguyen’s trial was
error.
C
[5] The prosecution bears the burden of proving the error
was harmless beyond a reasonable doubt. United States v. Gil-
lam, 167 F.3d 1273, 1277 (9th Cir. 1999) (“Once we find a
[Confrontation Clause] error, the prosecution has the burden
of showing that the error was harmless beyond a reasonable
doubt.”); see also Chapman v. California, 386 U.S. 18, 24
UNITED STATES v. NGUYEN 5877
(1967). “An assessment of harmlessness cannot include con-
sideration of whether the witness’ testimony would have been
unchanged, or the jury’s assessment unaltered, had there been
confrontation; such an inquiry would obviously involve pure
speculation, and harmlessness must therefore be determined
on the basis of the remaining evidence.” Coy v. Iowa, 487
U.S. 1012, 1021-22 (1988). “Whether an error is harmless
depends on a variety of factors, including whether the testi-
mony was cumulative, the presence or absence of corroborat-
ing or contradicting the testimony on material points, the
extent of cross-examination, and of course, the overall
strength of the prosecution’s case.” Mayfield, 189 F.3d at 906(citation and internal quotations omitted).
The government argues that the error in admitting the hear-
say statement was harmless.3 It contends that the evidence
established that Merke had stolen probes from Philips, that
both Nguyens had signed checks to Merke, some of which
had “purchase probes Merke” on the memo line, that CMS
had sold more probes than it had bought, that Phu Nguyen had
solicited Davies to steal probes for CMS, that Tuyet Nguyen
had solicited Westrich to steal Philips software for CMS, and
that Tuyet Nguyen falsely denied doing any business with
Merke. The statement that Merke received money from the
Nguyens in exchange for medical equipment was the most
persuasive evidence that tied Tuyet Nguyen to the stolen
probes, and the only testimony that showed her knowledge
that the probes were stolen.
3
The government also argues that the limiting instruction that these
statements could only be used against Merke cured any error. In Bruton,
the Court held that a case of the admission of a confession that implicates
a co-defendant and where the co-defendant cannot cross examine the con-
fessor was a situation “in which the risk that the jury will not, or cannot,
follow instructions is so great . . . that the practical and human limitations
of the jury system cannot be ignored.” Bruton v. United States, 391 U.S.
123, 135 (1968). Therefore, we do not rely on the limiting instruction to
cure the error.
5878 UNITED STATES v. NGUYEN
[6] We cannot say that the government carried its burden
of establishing this error was harmless beyond a reasonable
doubt. Specifically, the hearsay testimony supported the gov-
ernment’s case that Nguyen knew that the probes were stolen.
Her knowledge was an element of her convictions for the
transportation of stolen property and, therefore, necessary to
her conspiracy convictions. Nguyen’s closing argument to the
jury centered on her contention that she did not know the
probes were stolen. While the jury could have concluded that
she knew the probes were stolen absent the hearsay testimony,
the government has not proven that the jury would have so
concluded beyond a reasonable doubt. We reverse and
remand Nguyen’s convictions for conspiracy to transport
stolen property, conspiracy to commit money laundering, and
the transportation of stolen property because Nguyen was not
able to cross-examine Merke about his statement. This Con-
frontation Clause error does not affect her convictions for
introducing a misbranded medical device into interstate com-
merce.4
III
A.
We next address the conviction for felony misbranding of
medical devices. The problem before us here is that the jury
instruction that defined felony misbranding of medical
devices did not include a materiality element. Nguyen did not
4
Merke’s statements do not affect the jury’s verdict that Nguyen intro-
duced misbranded medical devices into interstate commerce. For the jury
to find that Nguyen committed this crime, it must find: that Nguyen (1)
introduced (2) a medical device that is (3) materially adulterated or mis-
branded, and (4) that she acted with intent to defraud or mislead. 21
U.S.C. § 331(a); see also United States v. Watkins, 278 F.3d 961, 964 (9th
Cir. 2002). Nguyen did not need to know the probes had been stolen to
commit this crime, only that their serial numbers had been altered. The
hearsay statements do not discuss the probes’ serial numbers.
UNITED STATES v. NGUYEN 5879
object to the instruction and argues that we should apply plain
error review.
The government to the contrary argues waiver and relies
upon the invited error doctrine, which in an appropriate case
allows us to decline to review instructions where a defendant
invited the error and relinquished a known right. See United
States v. Perez, 116 F.3d 840, 845 (9th Cir. 1997). As the
court in Perez stated, “[f]orfeited rights are reviewable for
plain error, while waived rights are not.” Id. (citation omit-
ted). Waiver occurs where a defendant “considered the con-
trolling law, or omitted element, and, in spite of being aware
of the applicable law, proposed or accepted a flawed instruc-
tion.” Id.Nguyen proposed another instruction, Instruction 30, and
the government contends that this instruction shows that she
knew that materiality was an element of felony misbranding.
Instruction 30, however, only states that any omission must be
material, it does not say that an affirmative statement need be
material. Therefore, it is not clear that Nguyen considered the
controlling law and accepted the flawed instruction. We con-
clude that the waiver argument should be rejected and instead
we accept Nguyen’s argument that we should review the jury
instruction on felony misbranding of medical devices for plain
error.
B
To prevail on plain error review, Nguyen must show (1)
that the proceedings below involved error, (2) that the error
is plain, and (3) that the error affected the substantial rights
of the aggrieved party. See United States v. Olano, 507 U.S.
725, 732-35 (1993). In addition, a defendant must also show
that the error “ ‘seriously affect[s] the fairness, integrity or
public reputation of judicial proceedings’ before we will exer-
cise our discretion pursuant to Rule 52(b) to correct the plain
error.” United States v. Alferahin, 433 F.3d 1148, 1154 (9th
5880 UNITED STATES v. NGUYEN
Cir. 2006) (en banc) (citing Olano, 507 U.S. at 736); see also
United States v. Hai Waknine, 543 F.3d 546, 551 (2008).
[7] Materiality indisputably is an element of felony mis-
branding of medical devices. United States v. Watkins, 278
F.3d 961, 969 (9th Cir. 2002). It is thus somewhat surprising
that the government’s proposed instructions did not include
this element. The government concedes that Instruction 22 did
not include that element but argues that this omission was
cured by Instruction 30. That instruction stated:
If any article is alleged to be misbranded because the
labeling or advertising is misleading, then in deter-
mining whether the labeling or advertising is mis-
leading there shall be taken into account (among
other things) not only representations made or sug-
gested by statement, word, design, device, or any
combination thereof, but also the extent to which the
labeling or advertising fails to reveal facts material
in the light of such representations or material with
respect to consequences which may result from the
use of the article to which the labeling or advertising
relates under the conditions of use prescribed in the
labeling or advertising thereof or under such condi-
tions of use as are customary or usual.
This instruction does not cure the lack of materiality element.
It states that the article could be misbranded because of a mis-
statement or a failure to state something that is material.
Therefore, we hold the government’s argument is unavailing
and that there was error. The instructions did not include the
materiality element, this was an error and it is as simple as
that.
C
It remains to be determined whether this error requires
relief under the plain error standard. We believe that the first
UNITED STATES v. NGUYEN 5881
element of that standard is met. An error is plain when it is
“clear” or “obvious” under the law. Olano, 507 U.S. at 734.
We have held that “a district court’s error is plain when its
jury instructions fail to incorporate an element that has been
clearly established by Ninth Circuit precedent.” Alferahin,
433 F.3d at 1157 (citation omitted). We hold that disregard of
the materiality element for felony misbranding of medical
devices is a plain error.
[8] We turn next to the third element of the plain error stan-
dard, whether substantial rights are affected, and it is here that
Nguyen’s appeal falters. “[T]he omission of an element from
jury instructions does not always ‘affect’ a defendant’s sub-
stantial rights.” Id. (citing United States v. Neder, 527 U.S. 1,
15 (1999)). Nguyen’s closing statement to the jury did not
argue that the changed serial numbers were immaterial—it
focused on the point that the numbers may have been changed
by someone else and that Nguyen may have not known about
it. Moreover, the government presented plenty of evidence to
support a finding of materiality. Two customers testified that
they would not buy ultrasound probes without original serial
numbers. One of CMS’s customers included a clause in its
contract stating that all probes would have original serial
numbers. The testimony also demonstrated that the probes’
original serial numbers were critical for FDA compliance and
in the event of a recall. Thus, there was overwhelming evi-
dence of the materiality of the altered serial numbers and very
little evidence that these changes were unimportant.5
5
Nguyen argues that there was conflicting and slim evidence regarding
serial numbers’ materiality. She states that there has never been a recall
of ultrasound probes and that some evidence demonstrated that serial num-
bers were not unique to individual probes. She argues that serial numbers
were for inventory control above anything else. But it is a sufficient
answer that a recall could have occurred, and the serial numbers, whether
unique or not, would have aided customers in identifying whether their
probes were recalled.
5882 UNITED STATES v. NGUYEN
[9] Because of the strong evidence on materiality and
because Nguyen did not contest materiality of altered serial
numbers in her presentations to the jury, we hold that this
error did not affect Nguyen’s substantial rights.
IV
[10] For the forgoing reasons, we conclude that Nguyen’s
Confrontation Clause rights were violated and we REVERSE
her convictions for conspiracy to transport stolen property, the
transportation of stolen property, and conspiracy to commit
money laundering. Her remaining convictions for felony mis-
branding of medical devices are AFFIRMED. We REMAND
for retrial, if the government wishes to pursue the charges that
we reverse, and for resentencing.
REVERSED IN PART, AFFIRMED IN PART, and
REMANDED.
CALLAHAN, Circuit Judge, concurring in part and dissent-
ing in part:
I agree with the majority that Tuyet Nguyen (“Nguyen”)
adequately preserved in the district court her claim that the
admission of the statement by Sess Merke to Agent Borden
violated the Confrontation Clause. I also agree that the admis-
sion of Merke’s statement offended the Confrontation Clause.
I disagree, however, with the majority’s conclusion that this
error was not harmless beyond a reasonable doubt. For this
reason, I dissent in part from the majority’s opinion and
would affirm Nguyen’s convictions for conspiracy to trans-
port stolen property, conspiracy to commit money laundering,
and transportation of stolen property.1
1
I agree with the majority’s conclusion that Nguyen’s conviction for fel-
ony misbranding of medical devices should not be disturbed. Maj. Op.
5878-82.
UNITED STATES v. NGUYEN 5883
I.
Confrontation Clause errors are subject to harmless error
review. United States v. Schoneberg, 396 F.3d 1036, 1044
(9th Cir. 2005). “[A]n otherwise valid conviction should not
be set aside if the reviewing court may confidently say, on the
whole record, that the constitutional error was harmless
beyond a reasonable doubt.” Delaware v. Van Arsdall, 475
U.S. 673, 681 (1986). To assess the harmlessness of an error,
we inquire “whether, assuming that the damaging potential of
the cross-examination were fully realized,” we “might none-
theless say that the error was harmless beyond a reasonable
doubt.” Id. at 684. Harmlessness is determined on the basis of
the remaining evidence, Coy v. Iowa, 487 U.S. 1012, 1022
(1988), and we consider a number of factors including “the
importance of the witness’ testimony in the prosecution’s
case, whether the testimony was cumulative, the presence or
absence of evidence corroborating or contradicting the testi-
mony of the witness on material points, the extent of cross-
examination otherwise permitted, and, of course, the overall
strength of the prosecution’s case.” Van Arsdall, 475 U.S. at
684.
The majority initially asserts that “the most persuasive evi-
dence that tied Tuyet Nguyen to the stolen probes, and the
only testimony that showed her knowledge that the probes
were stolen” was Merke’s statement, as related by Agent Bor-
den, that Merke received money from the Nguyens in
exchange for medical equipment.2 Maj. Op. at 5877. The
2
The panel majority and I have a difference of opinion regarding the
persuasiveness of the evidence in the record. Although the majority finds
Merke’s hearsay statement to be the most persuasive evidence in the
record, other evidence in the record, including significant circumstantial
evidence, establishes the harmlessness of the Confrontation Clause error.
The government is not required to prove knowledge by direct evidence,
and may rely on circumstantial evidence. See United States v. Santos, 128
S. Ct. 2020, 2029 (2008) (plurality) (stating that knowledge “must almost
5884 UNITED STATES v. NGUYEN
majority’s subsequent discussion is more nuanced and deter-
mines that, absent the hearsay testimony, the government has
not proven that the jury would have concluded beyond a rea-
sonable doubt that Nguyen knew the probes were stolen.3 Id.
at 5878.
I respectfully disagree. Based on all of the remaining evi-
dence in the record, I conclude that any reasonable jury would
have connected Nguyen to the stolen probes and determined
that Nguyen knew the probes were stolen, even without
Merke’s hearsay statement. The record demonstrates that
Merke stole the probes, sold and transferred them to Nguyen
and her company, Columbia Medical Systems, Inc. (“CMS”),
and that Nguyen then sold the probes in interstate commerce.
Evidence in the record indicates that Merke stole functional
probes from Philips and sold them to CMS and Nguyen. Doc-
umentary evidence and the testimony of Evalyn Thomas, a
Philips data entry clerk, establish that equipment, including
forty-six ultrasound probes, “disappeared” and could not be
accounted for while Merke was in charge of Philips’s Defec-
tive Materials storeroom and Finished Goods storeroom. See
Maj. Op. at 5871-72. Also, documentary evidence in the form
always” be proven by circumstantial evidence); Desert Palace, Inc. v.
Costa, 539 U.S. 90, 100 (2003) (“[W]e have never questioned the suffi-
ciency of circumstantial evidence in support of a criminal conviction, even
though proof beyond a reasonable doubt is required.”); United States v.
Wright, 215 F.3d 1020, 1028 (9th Cir. 2000) (stating that the government
need not prove defendant’s knowledge of the objective of a conspiracy
with direct evidence, and that inferences based on circumstantial evidence
would sustain the conspiracy conviction); cf. United States v. Santos, 527
F.3d 1003, 1009 (9th Cir. 2008) (“The government is not required to pro-
duce direct evidence of the defendant’s intent; rather, it may provide cir-
cumstantial evidence from which the district court can draw reasonable
inferences.”).
3
An element of the crime of interstate transportation of stolen goods
under 18 U.S.C. § 2314 is knowledge of the stolen nature of the trans-
ported goods.
UNITED STATES v. NGUYEN 5885
of shipping-related documents indicates that Merke repeatedly
shipped packages to CMS and/or Tuyet Nguyen. The record
contains numerous shipping invoices, logs, and waybills that
connect Merke to Nguyen and CMS.
Furthermore, the government presented evidence of CMS’s
practice of using checks made payable to “Cash” to purchase
probes and other ultrasound equipment, and testimony that
this was an unusual practice in the industry given that it sig-
naled potential illegal conduct. Of these checks payable to
“Cash” on CMS’s account, 112 of them, totaling roughly
$512,000, include a notation “Purchase probes (Merke)” or
some similar descriptor. Tuyet Nguyen signed forty-nine of
these 112 checks.4 This evidence overwhelmingly links
Nguyen to the probes, and to Merke. The evidence of the
checks payable to “Cash” and referencing both probes and
Merke also directly contradicts Nguyen’s statement during a
police interview that she had never purchased or taken deliv-
ery of any items, including probes, from Merke.
The government also produced evidence that CMS sold
many more ultrasound probes than it recorded as purchased.
For example, a comparison of CMS’s purchase and sales
reports for specific, relevant equipment models indicates that
for the year 1999, CMS purchased nine items and sold sixty
items. For the year 2000, there were seven purchases and
eighty-three sales. In 2001, there were four purchases and
forty sales. In 2002, CMS purchased thirty-three items and
sold fifty-four items. In 2003, there were no purchases, yet
fifty-eight sales.5
4
Altogether, the record contains evidence of over one million dollars
worth of checks payable to “Cash” and cashier’s checks, all of which were
drawn on CMS’s accounts and bore some notation related to the purchase
of equipment.
5
The illegality of the operation is supported by the testimony of FDA
Agent Borden that, based on a comparison of physical evidence obtained
during the execution of a search warrant and documentary evidence from
CMS, many Philips probes tied to CMS had false serial numbers.
5886 UNITED STATES v. NGUYEN
In addition, the government produced evidence of the
Nguyens’ other attempts to facilitate their criminal scheme.
First, as the majority notes, Phu Nguyen, Tuyet Nguyen’s
husband and business partner in CMS, solicited Robert
Davies, a Philips employee, to steal ultrasound probes for
CMS. See Maj. Op. at 5870-71. Second, Tuyet Nguyen solic-
ited Dave Westrich, her former colleague from Philips, to
steal Philips’s proprietary software for her or CMS’s use.
Based on the entire record, I conclude that the Confronta-
tion Clause error was harmless beyond a reasonable doubt. As
the Supreme Court recognized in Santos, knowledge “must
almost always” be proven by circumstantial evidence. 128
S. Ct. at 2029. It is unlikely that the government would have
ever been able to get Nguyen to confess outright that she
knew the probes were stolen. But such a confession was not
required to convict Nguyen. The jury could, and I believe
would, draw inferences from the evidence presented to estab-
lish the connection between Nguyen and the probes, and to
establish Nguyen’s knowledge of the stolen nature of the
probes that CMS had acquired and sold. Accordingly, I would
find that the Confrontation Clause error here was harmless
beyond a reasonable doubt.
II.
Because I would affirm the jury’s verdict in its entirety, I
proceed to address Nguyen’s remaining substantive chal-
lenges on appeal.6 These challenges to her money laundering
conspiracy conviction, which she did not raise in the district
court, are subject to plain error review. “Under plain-error
review, reversal is permitted only when there is (1) error that
6
The majority opinion does not address these remaining issues, which
relate to Nguyen’s conviction for conspiracy to launder money, because
its reversal on the Confrontation Clause issue obviates the need to do so.
Nonetheless, as the issues have been briefed and argued, an evaluation of
their merits may assist the district court should the matter be retried.
UNITED STATES v. NGUYEN 5887
is (2) plain, (3) affects substantial rights, and (4) seriously
affects the fairness, integrity, or public reputation of judicial
proceedings.” United States v. Cruz, 554 F.3d 840, 845 (9th
Cir. 2009) (citations and internal quotations omitted). “An
error is plain if it is ‘contrary to the law at the time of appeal
. . . .’ ” United States v. Mejia, 559 F.3d 1113, 1115 (9th Cir.
2009) (quoting Johnson v. United States, 520 U.S. 461, 468
(1997)). To be plain, the error must be “clear-cut” or “obvi-
ous.” See United States v. Zalapa, 509 F.3d 1060, 1064 (9th
Cir. 2007).)
A.
On appeal, Nguyen contends that the district court improp-
erly instructed the jury with respect to the charge of conspir-
acy to launder money in violation of 18 U.S.C.
§§ 1956(a)(1)(A), 1956(a)(1)(B), and 1956(h). She argues that
although the district court’s instruction containing the ele-
ments of the money laundering conspiracy offense, Instruc-
tion 20, correctly stated that it is a specific intent crime, the
district court committed reversible error by providing a subse-
quent instruction regarding knowledge, Instruction 25.
Instruction 25 allegedly “eviscerated” the specific intent ele-
ment stated in Instruction 20. Instruction 20 states, in relevant
part, that the government must prove that:
(2) the defendant knew that the property repre-
sented the proceeds of interstate transportation of
stolen property; and
(3) the defendant knew the transaction was
designed in whole or in part to conceal or disguise
the nature, source, ownership, or control of the pro-
ceeds of interstate transportation of stolen medical
devices, or the defendant acted with the intent to pro-
mote the carrying on of interstate transportation of
stolen medical devices . . . .
5888 UNITED STATES v. NGUYEN
Instruction 25, however, states: “An act is done knowingly if
the defendant is aware of the act and does not act through
ignorance, mistake, or accident. You may consider evidence
of the defendant’s words, acts, or omissions, along with all
the other evidence, in deciding whether the defendant acted
knowingly.” Thus, Nguyen asserts that Instruction 25 negated
the specific intent requirement by allowing the jury to deter-
mine that she acted “knowingly” through “ignorance, mistake
or accident.”
Nguyen’s claim of error is based on our decision in United
States v. Stein, where we held that a jury instruction on gen-
eral knowledge that followed a correct money laundering
instruction rendered the instructions, as a whole, erroneous
because they effectively omitted an element of the offense.
See 37 F.3d 1407, 1410 (9th. Cir. 1994). However, unlike
Instruction 25 in this case, the general knowledge instruction
in Stein contained a second sentence, which rendered the Stein
instructions problematic. There, the general knowledge
instruction stated that “an act is done knowingly if the defen-
dant is aware of the act and doesn’t act through ignorance,
mistake or accident. The Government is not required to prove
that the defendant knew his act or omissions were unlawful.”
Id. at 1410 (emphasis added). The second sentence was the
basis of the Stein court’s conclusion that the jury could have
convicted Stein without finding he knew the predicate acts
were unlawful. Id. Because Instruction 25 does not contain
the language that provided the taint in Stein, there was no
error. Moreover, even if there was some error, it was not plain
error; any possible error was not “so clear-cut, so obvious, a
competent district judge should be able to avoid it without
benefit of objection.” Zalapa, 509 F.3d at 1064 (citation and
quotation marks omitted). Accordingly, I would find no
instructional error.
UNITED STATES v. NGUYEN 5889
B.
Nguyen belatedly challenges the sufficiency of evidence
supporting her conviction for conspiracy to launder money,
relying on the United States Supreme Court’s recent decision
in United States v. Santos, 128 S. Ct. 2020 (2008) (plurality).7
Although the panel majority does not reach this issue, I con-
clude that the error alleged by Nguyen was not plain error.
In Santos, the Court considered “whether the term ‘pro-
ceeds’ used in the federal money-laundering statute, 18
U.S.C. § 1956(a)(1), means ‘receipts’ or ‘profits.’ ” 128 S. Ct.
at 2022. Santos involved the operation of a criminal lottery,
and Santos was convicted of money laundering based on his
payments of money to lottery winners and employees. See id.
at 2022-23. Four Justices found that the term “proceeds” was
ambiguous and, applying the rule of lenity, concluded that the
term “proceeds” in 18 U.S.C. § 1956(a)(1) universally means
“profits,” and not “gross receipts.” See id. at 2023-25. Under
the plurality’s view, “to establish the proceeds element under
the ‘profits’ interpretation, the prosecution needs to show . . .
that a single instance of specified unlawful activity was profit-
able and gave rise to the money involved in a charged transac-
tion.” Id. at 2029.
However, Justice Stevens, whose separate concurrence pro-
vided the fifth vote in Santos, took the narrower view that
Congress could have intended the term “proceeds” to have
different meanings in different contexts and, as a result, “pro-
ceeds” might mean “profits” in the illegal lottery context, but
might not have that meaning in the context of another predi-
7
Nguyen waited until November 24, 2008, just prior to oral argument,
to raise this argument. Although the Supreme Court decided Santos on
June 2, 2008, Nguyen did not raise the Santos issue in her reply brief,
which was filed on August 5, 2008. Nonetheless, no authority appears to
preclude consideration of this issue in light of the intervening decision by
the Supreme Court.
5890 UNITED STATES v. NGUYEN
cate crime. Id. at 2031-32 (Stevens, J., concurring) (“[T]his
Court need not pick a single definition of ‘proceeds’ applica-
ble to every unlawful activity, no matter how incongruous
some applications may be.”). Thus, Justice Stevens, agreeing
with the analysis of four dissenting Justices, stated that “the
legislative history of § 1956 makes it clear that Congress
intended the term ‘proceeds’ to include gross revenues from
the sale of contraband and the operation of organized crime
syndicates involving such sales.” Id. at 2032; see also id. at
2035 & n.1 (Alito, J., dissenting). Although Justice Stevens
and the plurality contest the stare decisis effect of his opinion,
the plurality recognizes that Justice Stevens’s narrower con-
currence limits the Court’s holding. Compare id. at 2031, with
id. at 2034 n.7.
Based on the plurality’s opinion in Santos, Nguyen argues
that the record does not support her conviction for conspiracy
to launder money because it does not contain evidence dem-
onstrating that she used profits to further or conceal the con-
spiracy.
Two aspects of the Santos decision indicate that any
alleged error in this case is not so clear-cut or obvious as to
render it “plain error.” First, the multiple opinions in Santos
do not conclusively define “proceeds.” Justice Stevens’s con-
curring opinion suggests that “proceeds” does not mean “prof-
its” in the context of the sale of contraband and the operation
of a criminal organization, which is at issue here. Moreover,
his view is consistent with the views of four dissenting Jus-
tices. Thus, the district court’s definition of “proceeds,” if
error, cannot be considered plain error. See United States v.
Fernandez, 559 F.3d 303, 316 (5th Cir. 2009) (“While Justice
Stevens and the plurality disagreed over the precise preceden-
tial effect of his statement, the uncertainty renders any error
here not ‘plain.’ ”); accord United States v. Brown, 553 F.3d
768, 785 (5th Cir. 2008); see also Ninth Circuit Model Jury
Instruction 8.120 Financial Transaction to Promote Unlawful
Activity, Comment (Mar. 2009) (“Whether the instruction
UNITED STATES v. NGUYEN 5891
must now be modified in all or some other cases to define
‘proceeds’ to mean ‘profits’ pursuant to Santos is unclear.”).
Second, neither the Santos plurality or Justice Stevens’s
concurring opinion addressed the quantum of evidence
required to support a conviction for the charge of conspiracy
to launder money, which is at issue here, as opposed to a con-
viction for money laundering. See Santos, 128 S. Ct. at 2023
n.1. The plurality specifically stated that it was not addressing
the possibility that the convictions for conspiracy to launder
money at issue there would stand in light of its holding
regarding the meaning of “proceeds.” Id.Accordingly, despite the Supreme Court’s opinion in San-
tos, the definition of proceeds under which Nguyen was con-
victed, if erroneous, was not plain error.
***
Based on the foregoing, I respectfully dissent in part. I
would find that the violation of the Confrontation Clause was
harmless error, and that Nguyen’s conviction for conspiracy
to launder money did not involve plain error. Nguyen’s con-
victions should be affirmed in their entirety.