United States v. Lujan

Case: 21-50091 Document: 00516191874 Page: 1 Date Filed: 02/04/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
February 4, 2022
No. 21-50091
Lyle W. Cayce
Clerk
United States of America,
Plaintiff—Appellee,
versus
Zaira Valenzuela Lujan,
Defendant—Appellant.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 7:20-CR-167-2
Before Davis, Willett, and Oldham, Circuit Judges.
W. Eugene Davis, Circuit Judge:
Defendant-appellant Zaira Valenzuela Lujan pleaded guilty to one
count of conspiracy to distribute and to possess with intent to distribute 50
grams or more of methamphetamine. During the investigation into Lujan and
her boyfriend, Orlando Alvarado, police seized, among other things, $10,694.
At sentencing, the district court converted the cash into a quantity of
methamphetamine as part of its calculation of Lujan’s advisory sentencing
range under the United States Sentencing Guidelines.
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No. 21-50091
Lujan argues that the district court erred by using the “wholesale”
rate rather than the “retail” rate when it performed the cash-to-drug
conversion. We hold that the district court erred in its drug quantity
attribution because it implausibly found that Lujan would have used the
entirety of the $10,694 to purchase more methamphetamine. Accordingly,
we VACATE Lujan’s sentence and REMAND for the district court to
reconsider the amount of methamphetamine attributable to Lujan.
I.
In June 2020, investigators with the Ector County Sheriff’s Office
began an investigation after receiving information that Orlando Alvarado was
distributing large quantities of methamphetamine in the area around
Midland-Odessa, Texas. Between June 29 and July 7, 2020, the investigators
conducted three controlled buys with Alvarado, during which a confidential
informant purchased 5.035, 5.494, and 12.076 grams of methamphetamine.
On July 8, 2020 officers performed a traffic stop of Alvarado’s vehicle
which was also occupied by his girlfriend, Lujan. Pursuant to Alvarado’s
consent, the agents searched the vehicle and discovered 28.505 grams of
methamphetamine in Alvarado’s glasses case, a glass pipe, and a firearm. The
officers also discovered a gun, a glass pipe, a digital scale, plastic baggies, 1
gram of methamphetamine, and 0.4 grams of marijuana in Lujan’s purse.
Police arrested Alvarado following the traffic stop, but they released Lujan.
The next day, police executed a search warrant on Alvarado and
Lujan’s hotel room. They seized another firearm, 109.7 grams of
methamphetamine, 24.137 grams of heroin, 22 grams of marijuana, and
$10,694 in U.S. currency.
Police continued their investigation and, about a month later,
conducted a spot-check on Lujan’s residence regarding the sale and
distribution of methamphetamine. They observed Lujan and several other
2
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individuals arrive in a Ford F-150. The group entered the residence, and then
Lujan exited and reentered the F-150. After Lujan drove several blocks in the
dark without headlights, the police stopped Lujan. She consented to a search
of her vehicle, and officers discovered 28.51 grams of methamphetamine and
eight ecstasy pills. Lujan denied that the methamphetamine belonged to her,
but admitted that she had sold approximately three ounces of
methamphetamine since Alvarado’s arrest.
The Government charged Lujan with one count of conspiracy to
distribute and to possess with the intent to distribute 50 grams or more of
methamphetamine. Lujan pleaded guilty to the offense without a plea
agreement.
According to the Presentence Investigation Report (“PSR”), Lujan
was accountable for 1.85 kilograms of methamphetamine. That amount
consisted of three components: (1) 167.715 grams, the total quantity of
methamphetamine seized from Alvarado and Lujan, (2) the three ounces
Lujan admitted to selling after Alvarado’s arrest, and (3) 1,600 grams based
on a cash-to-drug conversion of the $10,694 seized from the couple’s hotel
room. For the third quantity, the district court relied on the information in
the PSR that, according to the case agent, “$10,694 can purchase 1,600
grams of actual methamphetamine.” Based on the drug quantity attribution,
the PSR calculated Lujan’s advisory range under the Sentencing Guidelines
as between 168 and 210 months of imprisonment.
Lujan objected to the PSR’s cash-to-drug conversion on several
grounds, including that the PSR inappropriately used the “wholesale” price
of methamphetamine, rather than “the going price of methamphetamine . . .
to an average user,” i.e., the “retail” price. She argued that, according to
figures from the Addiction Center and the U.S. Justice Department,
methamphetamine costs between $20 and $105.49 per gram. Using these
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figures, Lujan asserted that she should be held accountable for between
353.135 grams and 786.465 grams of methamphetamine. Lujan argued that, if
the district court applied the low-end of those figures, her advisory guideline
range would be between 108-135 months imprisonment.
The district court overruled the objections at sentencing and adopted
the PSR in its entirety, including the complete 1.85-kilogram drug quantity
attribution. The court sentenced Lujan to 168 months of imprisonment, to be
followed by a five-year term of supervised release. Lujan timely appealed.
II.
A.
When a defendant is convicted of a drug offense, his or her base
offense level under the Sentencing Guidelines depends in part on the
quantity and type of drugs involved in the offense. 1 At sentencing, the
Government must prove the drug quantity attributable to a defendant by a
preponderance of the evidence.2
A district court is not limited to considering the drugs seized during
an investigation. Indeed, the commentary to § 2D1.1 of the Sentencing
Guidelines provides, if the “amount seized does not reflect the scale of the
offense, the court shall approximate the quantity of the controlled
substance.”3 To reach this estimate, “the court may consider, for example,
the price generally obtained for the controlled substance, financial or other
records, similar transactions in controlled substances by the defendant, and
1
See United States v. Rhine, 583 F.3d 878, 885 (5th Cir. 2009); U.S. Sent’g
Guidelines Manual § 2D1.1(a)(5), (c) (U.S. Sent’g Comm’n 2021) [hereinafter
U.S.S.G.].
2
United States v. Turner, 319 F.3d 716, 723 (5th Cir. 2003).
3
U.S.S.G. § 2D1.1 cmt. n.5 (emphasis added).
4
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the size or capability of any laboratory involved.” 4 This Court, along with
many of our sister circuits, have recognized that a district court may rely on
cash-to-drug conversions when making guideline calculations.5
To perform a cash-to-drug conversion, the district court must first
determine that an amount of cash is attributable to drug dealing. 6 Next, the
court must determine an appropriate conversion ratio, i.e., the price per unit
of drugs.7 The court then divides the amount of cash (the numerator) by the
conversion ratio (the denominator), resulting in a drug quantity attributable
to the defendant.8
The district court’s drug quantity calculation is a factual
determination reviewed for clear error.9 A factual determination is not clearly
erroneous if it is plausible in light of the record as a whole. 10
B.
4Id.5
See United States v. Johnston, 127 F.3d 380, 403 (5th Cir. 1997); United States v.
Jones, 531 F.3d 163, 175 (2d Cir. 2008); United States v. Keszthelyi, 308 F.3d 557, 576–78
(6th Cir. 2002); United States v. Otis, 127 F.3d 829, 836 (9th Cir. 1997) (per curiam); United
States v. Tokars, 95 F.3d 1520, 1542 (11th Cir. 1996); United States v. Ferguson, 35 F.3d 327,
333 (7th Cir. 1994); United States v. Rios, 22 F.3d 1024, 1026–27 (10th Cir. 1994); United
States v. Watts, 950 F.2d 508, 514 (8th Cir. 1991); United States v. Hicks, 948 F.2d 877, 881–
82 (4th Cir. 1991); United States v. Gerante, 891 F.2d 364, 368–70 (1st Cir. 1989).
6
See United States v. Perez, 785 F. App’x 207, 209 (5th Cir. 2019); United States v.
Jackson, 990 F.2d 251, 254 (6th Cir. 1993) (citing Watts, 950 F.2d at 514). Although Perez
is not “controlling precedent,” it “may be [cited as] persuasive authority.” Ballard v.
Burton, 444 F.3d 391, 401 n.7 (5th Cir. 2006) (citing 5th Cir. R. 47.5.4).
7
See Perez, 785 F. App’x at 209; Jackson, 990 F.2d at 254.
8
See Perez, 785 F. App’x at 209; Jackson, 990 F.2d at 254.
9
United States v. Betancourt, 422 F.3d 240, 246 (5th Cir. 2005)
10
Id.5
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Lujan argues that, in estimating the quantity of methamphetamine
attributable to her, the district court erred by using the “wholesale” price
(the price she could have obtained when purchasing methamphetamine)
rather than the “retail” price (the price she could have obtained when selling
methamphetamine). The Government concedes that the district court
applied the “wholesale” price. However, in the Government’s view, the
district court inferred that the $10,694 was money that Lujan and Alvarado
would use to resupply their drug “stash.” Thus, the Government contends
that the district court appropriately used the “wholesale” price to estimate
the amount of drugs they could buy with the cash in their hotel room.
When converting cash to drug quantities, courts generally estimate
the quantity of drugs a defendant sold. In most cases circuit courts that have
addressed cash-to-drug conversions have taken this approach..11 Under this
approach, the numerator is the cash proceeds from drug sales, and the
denominator is the price the defendant generally obtains when he or she sells
drugs.12 Whether a court considers the “wholesale” or “retail” price of a
drug as the denominator depends on the quantity the defendant ordinarily
deals in.13
11
See United States v. Lucio, 985 F.3d 482, 488 (5th Cir. 2021); Johnston, 127 F.3d
at 403; Jones, 531 F.3d at 176; Kesztheyli, 308 F.3d at 576–78; Otis, 127 F.3d at 836; Tokars,
95 F.3d at 1542; Ferguson, 35 F.3d at 332–34; Rios, 22 F.3d at 1028; Jackson, 990 F.2d at
253; Watts, 950 F.2d at 511-12, 514–15;; Gerante, 891 F.2d at 369. But see Hicks, 948 F.2d at
880–81 & n.1 (applying the wholesale price when defendant admitted to police that seized
cash would be used to purchase cocaine).
12
See, e.g., Lucio, 985 F.3d at 484 (converting $18,368 seized using the defendant’s
“stated price of $6,500”).
13
Compare id. at 484, 488 (affirming the conversion of $18,368 into 2.3 kilograms
of methamphetamine based on a $6,500 per kilogram conversion ratio, which was the
defendant’s stated price, and noting that “the record plausibly supports the inference that
[the defendant] regularly dealt in kilogram quantities of meth”), and Johnston, 127 F.3d at
386, 403 (noting that an undercover agent attempted to buy several kilograms of cocaine
6
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Even though Lujan’s PSR indicates that the $10,694 is “believed to
be from the sales of methamphetamine,” the district court took a different
approach. Specifically, by applying the “wholesale” price of
methamphetamine, rather than the “retail” price, the district court treated
the $10,694 as money that Lujan and Alvarado intended to use for future drug
purchases. In other words, the district court assumed that Lujan and Alvarado
would have used all of their illicit profits, $10,694, to purchase more
methamphetamine.
That assumption is purely speculative here, and we conclude that it is
implausible on the facts presented to the district court.14 Outside of their
illegal drug enterprise, neither Alvarado nor Lujan were employed or had any
other source of income. It is inescapable that some of the proceeds of their
drug business must have been devoted to living expenses such as housing,
from one of the conspirators, applying an $18,000-per-kilogram price for cocaine, and
noting that “there is considerable evidence of cocaine shipments equaling or exceeding five
kilograms”), with Jones, 531 F.3d at 177 (“Because the confidential informant had twice
purchased 3.5 grams of crack cocaine for $120, the district court reasonably found that [the
defendant] would have been able to sell crack for approximately $34 per gram . . . .”), and
Jackson, 990 F.3d at 254 (noting that there was some evidence that the defendants charged
“$25 per ‘rock’” of cocaine).
14
The Government argues that the district court was entitled to make this finding
based on the PSR, and that Lujan failed to submit rebuttal evidence to show that the cash
would have gone to other uses. This argument lacks merit because it is the Government’s
burden, in the first instance, to prove the total drug quantity attributable to Lujan. See
Turner, 319 F.3d at 723. The only evidentiary basis to attribute 1,600 grams to Lujan based
on the $10,694 seized is the statement in the PSR that “$10,694 can purchase 1,600 grams
of actual methamphetamine.” Without evidence showing that Lujan and Alvarado would
purchase 1,600 grams of methamphetamine, this is the sort of “[b]ald conclusionary
statement[]” that lacks a “patina of reliability” despite its inclusion in the PSR. United
States v. Barfield, 941 F.3d 757, 762 (5th Cir. 2019) (quoting United States v. Elwood, 999
F.2d 814, 817–18 (5th Cir. 1993)).
7
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food, and medical needs.15 There is nothing in the PSR, or elsewhere in the
record, that would enable the district court to determine which portion of the
$10,694 would go to repurchase drugs, and which portion would go to other
costs, including living expenses.16 Thus, we conclude that the district court
erred by treating the entire amount of the seized cash as money that Lujan
and Alvarado would have used to purchase more methamphetamine.
In sum, the district court erred when it implausibly found that Lujan
and Alvarado would have used the entire amount of the $10,694 seized to
purchase more methamphetamine. The error was not harmless because it
resulted in an incorrect guideline calculation, and because the Government
does not even attempt to carry its “heavy burden” of showing that the
district court would have imposed the same sentence notwithstanding the
error.17 Accordingly, we VACATE Lujan’s sentence and REMAND for
the district court to reconsider the amount of methamphetamine attributable
to Lujan.
15
The PSR notes that Lujan suffers from high blood pressure, is prescribed
medication, and has medical debt of $766.
16
Cf. Perez, 785 F. App’x at 208–09. In Perez, we rejected the defendant’s
argument that the district court incorrectly considered “the entire amount of cash found
on [the defendant], even legitimate cash, into drugs.” Id. at 208. We held that the record
plausibly supported the conclusion that the cash was proceeds of drug sales because the
defendant had no legitimate source of income. Id. at 209. While that reasoning holds true
when a court tries to determine if cash is “proceeds” from drug sales, it fails when a court
instead asks whether the cash is intended for future purchases.
17
United States v. Richardson, 676 F.3d 491, 511 (5th Cir. 2012) (citing Gall v. United
States, 552 U.S. 36, 51 (2007); United States v. Ibarra-Luna, 628 F.3d 712, 714, 717–18 (5th
Cir. 2010)).
8