United States v. David Phillips , 929 F.3d 1120 ( 2019 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 18-50138
Plaintiff-Appellee,
D.C. No.
v. 2:17-cr-00498-
FMO-1
DAVID PHILLIPS, AKA David John
Phillips,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Central District of California
Fernando M. Olguin, District Judge, Presiding
Argued and Submitted June 10, 2019
Pasadena, California
Filed July 11, 2019
Before: Kim McLane Wardlaw, Jay S. Bybee,
and John B. Owens, Circuit Judges.
Opinion by Judge Owens
2 UNITED STATES V. PHILLIPS
SUMMARY *
Criminal Law
In a case in which the defendant was convicted of
conspiracy to use interstate telephone calls in the
commission of a murder-for-hire in violation of 18 U.S.C.
§ 1958, the panel affirmed the district court’s conclusion that
the defendant’s promise to forgive an uncollectible and
legally unenforceable debt satisfies the pecuniary value
requirement of § 1958.
The panel explained that the pecuniary value
requirement does not require the murder-for-hire agreement
to comport with contract rules; the defendant’s promise to
relieve the hit man of a debt for an illegal marijuana venture
gave the hit man an economic benefit, satisfying the
pecuniary value requirement for murder-for-hire.
In a concurrently filed memorandum, the panel
concluded that the district court erred in excluding all
evidence relating to the defendant’s kidney disease, but that
the error was harmless.
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
UNITED STATES V. PHILLIPS 3
COUNSEL
Glen T. Jonas (argued), Jonas & Driscoll LLP, Torrance,
California, for Defendant-Appellant.
Kevin G. Boitmann (argued), Chief of Appeals; Peter G.
Strasser, United States Attorney; United States Attorney’s
Office, New Orleans, Louisiana; for Plaintiff-Appellee.
OPINION
OWENS, Circuit Judge:
David Phillips appeals from his jury conviction for
conspiracy to use interstate telephone calls in the
commission of a murder-for-hire in violation of 18 U.S.C.
§ 1958. We have jurisdiction under 28 U.S.C. § 1291, and
we affirm the district court’s conclusion that Phillips’
promise to forgive an uncollectable debt satisfies the
pecuniary value requirement of § 1958. 1
I. BACKGROUND
Phillips owned NKP Medical, a digital marketing agency
focused on promoting plastic surgeons, cosmetic dentists,
and similar “aesthetic” medical procedures. He hired Steven
Fruchter as a contractor to serve, in effect, as NKP’s Chief
Technology Officer. Phillips and Fruchter initially hit it off,
1
In a concurrently filed memorandum disposition, we conclude that
the district court erred in excluding all evidence relating to Phillips’
kidney disease, but that the error was harmless.
4 UNITED STATES V. PHILLIPS
and they discussed making Fruchter an equal partner in
NKP.
But things went south when their negotiations over the
potential partnership and rights to a software application got
heated. Fruchter left NKP and created Growth Med, a direct
competitor of NKP. The two started accusing each other of
poaching clients, exchanging some aggressive texts along
the way. In one text, Phillips told Fruchter, “Don’t push me,
man, really not worth it.”
Phillips frequently blew off steam at a local bar, where
he befriended David Suiaunoa, the bouncer. Phillips agreed
to loan $30,000 to Suiaunoa to start a marijuana grow house
operation. But Suiaunoa, who had an extensive criminal
history, was a better bouncer than businessman. He
squandered the first $10,000 on personal expenses and the
remaining funds in a scheme to distribute
methamphetamine, but law enforcement intercepted his drug
shipment.
According to Suiaunoa (who pled guilty and cooperated
with the government), when he informed Phillips that he
could not repay the $30,000, Phillips offered to forgive the
loan if Suiaunoa murdered someone. Phillips explained that
this person was antagonizing him and hitting on his wife, so
the person should be “taken care of.” When Suiaunoa asked
if Phillips wanted the person beat up, Phillips clarified that
he wanted him “taken out.” Suiaunoa replied, “I know some
guys that probably could take care of that.”
Suiaunoa then called a friend from his prison days to
discuss the deal. Suiaunoa explained that he had a “hit” job
from a businessman who wanted someone bothering him to
be “taken care of,” and “if I could do, you know, and I
wouldn’t have to”—meaning that Suiaunoa would not have
UNITED STATES V. PHILLIPS 5
to repay the $30,000 loan. The friend said he knew someone
who could handle the job. But the friend did not tell
Suiaunoa that he was working as a confidential informant as
part of a narcotics investigation and was recording the call.
In a series of follow-up discussions, the informant and an
undercover officer told Suiaunoa that they had a contact in
Mexico who could carry out the murder.
Suiaunoa met with Phillips at the NKP office to convey
the “good news” and get information about the target.
Phillips gave him a piece of paper with Fruchter’s photo and
home and work addresses, and they discussed that Phillips
should cover himself by gathering receipts to show he was
elsewhere at the time of the murder.
After Suiaunoa shared the paper with the undercover
officer, agents identified the target as Fruchter and informed
him that Phillips had contracted someone to murder him.
Fruchter understandably panicked and told the agents about
his soured relationship with Phillips. The agents helped
Fruchter stage his death, including creating photos of
Fruchter on the ground, beaten and shot in the head.
Around this time, agents arrested Suiaunoa for
distribution of methamphetamine and interviewed him about
the murder-for-hire. They seized his cell phone, which
continued to receive incoming text messages and a call from
Phillips. Suiaunoa agreed to cooperate and, under the
agents’ instructions, called Phillips to say that he “finally
connected with the right people” and would “handle that
issue this weekend.” Phillips did not question what
Suiaunoa was referring to and agreed to meet him outside
the NKP office the following week.
During the meeting outside the NKP office, which was
audio and video recorded, Suiaunoa told Phillips, “We got
6 UNITED STATES V. PHILLIPS
that done for you,” and handed him a staged photograph of
Fruchter’s dead body. After a brief discussion in which
Suiaunoa described killing Fruchter in vivid detail, Phillips
returned to his office. Agents arrested him shortly thereafter
when he exited the building. In Phillips’ office, agents found
the staged photo of Fruchter shredded in a trash can. The
agents also found paper and electronic evidence showing
that Phillips had gathered information about Fruchter,
including the photo that he had provided to Suiaunoa.
Phillips was indicted with Suiaunoa for conspiring to use
interstate telephone calls to carry out the murder-for-hire of
Fruchter in violation of 18 U.S.C. § 1958. Relevant to this
appeal, Phillips argued that forgiving Suiaunoa’s $30,000
debt for the illegal marijuana venture could not satisfy
§ 1958’s pecuniary value requirement because the debt
repayment was not legally enforceable, and Suiaunoa
received no economic benefit because he had already spent
the money. The district court rejected that argument,
reasoning that “[y]ou would never be able to prosecute
murder for hire cases if every contract had to be in writing,”
and that having a loan forgiven was an economic advantage.
The jury returned a guilty verdict, and the district court
sentenced Phillips to 90 months in prison.
II. STANDARD OF REVIEW
We review de novo whether sufficient evidence supports
a conviction. United States v. Liew, 856 F.3d 585, 596 (9th
Cir. 2017). There is sufficient evidence if, viewing the
evidence in the light most favorable to the prosecution, any
rational trier of fact could have found the essential elements
of the crime beyond a reasonable doubt. Id.; see also
Jackson v. Virginia, 443 U.S. 307, 319 (1979).
UNITED STATES V. PHILLIPS 7
III. DISCUSSION
The federal murder-for-hire statute, 18 U.S.C. § 1958,
provides in relevant part:
Whoever . . . uses or causes another . . . to use
. . . any facility of interstate . . . commerce,
with intent that a murder be committed in
violation of the laws of any State or the
United States as consideration for the receipt
of, or as consideration for a promise or
agreement to pay, anything of pecuniary
value, or who conspires to do so, shall be
fined under this title or imprisoned . . . .
18 U.S.C. § 1958(a) (emphasis added). The statute defines
“anything of pecuniary value” as “anything of value in the
form of money, a negotiable instrument, a commercial
interest, or anything else the primary significance of which
is economic advantage.” Id. § 1958(b)(1).
In United States v. Ritter, we explained that “[t]he intent
to pay someone to commit murder is . . . a critical element of
‘murder-for-hire.’” 989 F.2d 318, 321 (9th Cir. 1993). In
Ritter, the government failed to prove that the defendant,
who was given $70 to build a pipe bomb, was also paid to
commit murder or knew that his co-conspirator agreed to be
paid for murder. Id. at 321–22.
Thus, § 1958’s pecuniary value requirement means that
murder out of revenge or by a jilted lover does not constitute
murder-for-hire. Nor does a defendant’s murder of his
wife’s ex-husband, in expectation that his wife would
receive benefits from the ex-husband’s life insurance, satisfy
the requirement. See United States v. Wicklund, 114 F.3d
151, 153–55 (10th Cir. 1997).
8 UNITED STATES V. PHILLIPS
In United States v. Chong, we “specifically interpreted
the language of § 1958’s pecuniary value requirement,” and
held that “there must be evidence that the hitmen clearly
understood they would receive something of pecuniary value
in exchange for performing the solicited murderous act.”
419 F.3d 1076, 1082 (9th Cir. 2005). In Chong, “the
evidence show[ed] only that [the defendant’s co-
conspirator] volunteered for a dangerous assignment and
wound up getting some walking-around money in the course
of traveling to Boston,” where he then learned about the plan
to kill the victim. Id. at 1083. Because the jury did not have
sufficient evidence that the co-conspirator knew he would
receive any compensation specifically for the murder, we
reversed the defendant’s conviction. Id. at 1083–84.
However, we have not addressed the precise argument
that Phillips raises here. Phillips does not dispute that,
viewing the evidence in the light most favorable to the
prosecution, he and Suiaunoa clearly and specifically agreed
to loan forgiveness in exchange for Fruchter’s murder.
Rather, Phillips argues that an unenforceable debt cannot
satisfy the pecuniary value requirement of § 1958. He points
to the fact that the $30,000 loan was for an illegal venture,
so it could not be legally enforced, and—in any event—
Suiaunoa lacked any assets with which to pay him back.
According to Phillips, this means that forgiving the loan was
of no economic benefit to Suiaunoa, and it had only the non-
pecuniary benefit of preserving Suiaunoa’s “street
credibility.”
Congress did not write § 1958 so narrowly—the
language sweeps in “anything of value” of which “the
primary significance . . . is economic advantage.” 18 U.S.C.
§ 1958(b)(1). This broadly applies to currency, drugs,
weapons, or anything else that has a quantifiable monetary
UNITED STATES V. PHILLIPS 9
value. See United States v. Gibson, 530 F.3d 606, 609–11
(7th Cir. 2008) (concluding that the district court properly
instructed the jury that “not only money, but also drugs,
guns, or involvement in future crimes which would yield
cash profits, can also constitute consideration” under
§ 1958); United States v. Washington, 318 F.3d 845, 854
(8th Cir. 2003) (“Payment of this amount of heroin . . . is
sufficient to meet the requirements of Section 1958(b)
. . . .”). The words “as consideration for” do not strictly
import contract law, but instead require a clear mutual
agreement between the solicitor and hitman of payment in
exchange for murder. See Chong, 419 F.3d at 1081–82.
Therefore, the plain meaning of § 1958 unambiguously
encompasses a quid pro quo understanding involving
something of economic value, as understood by common
sense.
Thus, despite Phillips’ contention, the pecuniary value
requirement does not require the murder-for-hire agreement
to comport with contract rules, as Congress did not aim
§ 1958 only at murderous businessmen. After all, debt
enforcement is the sine qua non of the criminal underworld.
While there may be no honor among thieves, there are
certainly obligations—as Don Corleone, on the day of his
daughter’s wedding, made clear to Amerigo Bonasera. It is
enough that Suiaunoa received money from Phillips and felt
obligated to pay him back. Phillips’ promise to relieve
Suiaunoa of this debt, in return for Fruchter’s murder, gave
Suiaunoa an economic benefit, satisfying the pecuniary
value requirement of murder-for-hire.
In so holding, we join our sister circuits’ understanding
that § 1958 does not require that the promised economic
advantage be enforceable. In United States v. Hernandez,
the Eleventh Circuit concluded that “contract-based rules . . .
10 UNITED STATES V. PHILLIPS
do not fit well in the § 1958 context.” 141 F.3d 1042, 1057
(11th Cir. 1998). The Eleventh Circuit further reasoned that
“[a]n agreement to commit a crime is unenforceable, so it is
ridiculous to speak of enforceable, binding contracts to
commit crimes.” Id. “By specifying the conditions under
which agreements are enforceable, the law of contracts
regularizes and encourages business transactions, which is
the last thing Congress would have wanted to do with
criminal transactions.” Id.
Similarly, the Fifth Circuit in United States v.
McCullough rejected the hitmen-defendants’ argument that
there was no promise to pay because the signed financing
statement from their solicitor was a “scam[]”—that is, it was
uncollectable, rendering the statement itself “utterly
valueless and useless.” 631 F.3d 783, 792 (5th Cir. 2011).
The Fifth Circuit explained that, even if the defendants could
not use the statement to collect funds from a bank directly,
there was sufficient evidence that the document “represented
[the solicitor’s] legitimate promise” to pay the hitmen after
the murder. Id. at 792–93.
The Seventh Circuit also has repeatedly explained that
§ 1958 does not require anything more than a quid pro quo
exchange of something of economic value for murder. See,
e.g., United States v. Caguana, 884 F.3d 681, 688 (7th Cir.
2018) (rejecting the defendant’s argument “that under the
Uniform Commercial Code, any promise he made did not
amount to legally binding consideration”); Gibson, 530 F.3d
at 610 (stating that “the use of the word ‘consideration’ does
not import all of contract law, it should be interpreted in
accordance with its plain meaning, which is ‘in return for’ or
‘in exchange for’” (internal quotation marks and citation
omitted)).
UNITED STATES V. PHILLIPS 11
Accordingly, Phillips’ promise of loan forgiveness
satisfied § 1958’s pecuniary value requirement.
AFFIRMED.