U.S. v. Ashe

• Decision Date: 08 February 1995
• Docket Number: Nos. 94-5087,94-5364,s. 94-5087
• Citation: 47 F.3d 770
• Parties: UNITED STATES Of America, Plaintiff-Appellee, v. Dennis Richard ASHE (94-5087); David Daughtrey (94-5364), Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 770

47 F.3d 770

UNITED STATES Of America, Plaintiff-Appellee, v. Dennis Richard ASHE (94-5087); David Daughtrey (94-5364),

Defendants-Appellants.

Nos. 94-5087, 94-5364.

United States Court of Appeals, Sixth Circuit.

Decided Feb. 8, 1995.

Rehearing and Suggestion for Rehearing En Banc

Denied March 27, 1995.

John P. MacCoon, Asst. U.S. Atty. (argued and briefed), Office of the U.S. Atty., Chattanooga, TN, for U.S.

Leroy Phillips, Jr. (briefed), Mike Caputo (argued), Phillips & Caputo, Chattanooga, TN, for Dennis Richard Ashe.

R. Dee Hobbs (argued and briefed), Chattanooga, TN, for David Daughtrey.

Before: KRUPANSKY, GUY, and NORRIS, Circuit Judges.

KRUPANSKY, Circuit Judge.

In case number 94-5364, defendant-appellant David Daughtrey ("Daughtrey") seeks appellate review of the judgment of conviction and sentence entered against him by the district court subsequent to his guilty plea to a charge of trafficking in altered cellular telephones capable of impermissibly accessing cellular telephone services without charge in alleged violation of 18 U.S.C. Sec. 1029. In case number 94-5087, defendant-appellant Dennis Richard Ashe ("Ashe") appealed his jury conviction on charges of producing and possessing similar devices. Both appeals challenge this court, in the first instance, to determine if the possession, distribution, sale, and use of mobile cellular telephones which have been converted, by the insertion of a "tumbling" microchip that counterfeits electronic codes that access the transmitting facilities operated by commercial cellular telephone companies, in a manner that circumvents the carrier's service monitoring procedures thereby permitting the user to avoid charges resulting from the illicit invasion of the cellular telephone company's property ("free riding"), constitutes a violation of 18 U.S.C. Sec. 1029. In the second instance, this court must determine, in Daughtrey's appeal, the propriety of the sentence imposed by the trial court.

In the instant cases, sometime prior to April of 1992, Daughtrey, a resident of Los Angeles, California, became the target of a United States Secret Service investigation of an alleged illegal cellular telephone scam. The evidence disclosed that Daughtrey had distributed approximately 500 "Mitsubishi 800" mobile cellular telephones throughout the nation, each of which had been modified as hereinabove described.

After enlisting the assistance of a Daughtrey confederate (John Brady of Salt Lake City, Utah), Special Agent Bruce Ward on April 8, 1992 arranged the purchase of a "tumbling" cellular device from Daughtrey. On April 10, 1992, Daughtrey and an accomplice (Jesus Rizo) were arrested at Daughtrey's residence after he displayed several converted mobile cellular telephones to Ward. Daughtrey agreed to cooperate with the authorities, admitting that he mailed approximately 500 modified "tumbling" cellular telephones to various destinations around the country (including Chattanooga, Tennessee). He provided a list of his subscribers. ¹

On September 13, 1993, acting pro se, Daughtrey waived indictment and pleaded guilty to a one-count bill of information in the United States District Court for the Eastern District of Tennessee which alleged the following:

The United States Attorney charges that on or about June 14, 1991, in the Eastern District of Tennessee, the defendant, DAVID DAUGHTREY, knowingly and with intent to defraud, trafficked in device-making equipment, as defined in 18 U.S.C. Sec. 1029(e)(6), i.e., an altered cellular telephone capable of generating codes used to obtain cellular telephone service without authorization and without payment for the service, such conduct having an effect on interstate commerce; all in violation of 18 U.S.C. Sec. 1029(a)(4).

On January 17, 1994, in reliance upon United States v. Brady, 13 F.3d 334 (10th Cir.1993), Daughtrey moved pro se for a judgment of acquittal, asserting that his conduct did not violate 18 U.S.C. Sec. 1029, ² which relief the district court denied. On February 28, 1994, the government agreed to amend Daughtrey's written plea agreement "to provide that the defendant retains the right to appeal the statutory construction question involving 18 U.S.C. Sec. 1029." Daughtrey noticed a timely appeal from the judgment subsequently entered against him.

Following Daughtrey's arrest, Ashe, a resident of Chattanooga, Tennessee, became enmeshed in the ongoing Secret Service investigation. Ashe reproduced the Daughtrey tumbling chip from a purchased converted mobile cellular telephone. Subsequently, he produced additional copies for sale, one of which he transferred to Shane Hendrix, who was acting in undercover cooperation with treasury agent Robert T. Pettway, on May 25, 1993. The authorities arrested Ashe immediately following the transaction.

On June 8, 1993, a grand jury in the Eastern District of Tennessee returned a one-count indictment against Ashe which recited:

The Grand Jury charges that on or about May 25, 1993, in the Eastern District of Tennessee, the defendant, DENNIS RICHARD ASHE, knowingly and with intent to defraud, did produce and possess device-making equipment, as defined in 18 U.S.C. Sec. 1029(e)(6), i.e., an altered cellular telephone capable of generating codes used to obtain cellular telephone service without authorization and without payment for the service, such conduct having an effect on interstate commerce; all in violation of 18 U.S.C. Sec. 1029(a)(4).

On September 15, 1993, Ashe, represented by counsel, also petitioned for dismissal of the indictment, arguing that the charged conduct did not violate section 1029. The district court denied the requested relief. Following conviction by a jury, Ashe timely noticed an appeal from the district court judgment entered against him.

A brief summary of the operational mechanics of a cellular telephone network is a helpful point of departure for arriving at a resolution of the issues joined in these consolidated appeals. Cellular telephone service is available from commercially owned and operated communication networks that utilize individual cellular telephone units which have wireless radio transmission capabilities, operating among a series of geographic cells. Each geographic cell is served by a radio transmission tower and antenna, and as the cellular telephone user moves from one cell to another, the telephone call is automatically relayed from one transmission tower to the other, thus maintaining consistent signal quality. United States v. Brady, 13 F.3d 334 (10th Cir.1993).

Another feature provided by cellular carriers permits a cellular telephone customer to "roam," placing calls from a foreign geographic cell, that is a geographic cell owned and operated by a carrier with whom the customer has no subscription account, i.e. a foreign carrier. ³ This permits a caller to place a local or long distance call from anywhere in the United States while outside the geographical area serviced by his/her home carrier with whom he has a subscription contract. When a "roamer" ⁴ places a call from a foreign geographical service area the cellular telephone automatically transmits the caller's assigned MIN and ESN. ⁵ By design, the MIN transmitted by a "tumbling" cellular telephone will identify an ostensible home carrier ⁶ located outside of the geographical region from which the user placed the illegitimate call; accordingly, all calls made on the "tumbling" cellular telephone are treated as "roamer" calls by the servicing carrier.

In processing a "roamer" call, a foreign carrier immediately recognizes the MIN as belonging to another existing carrier. To provide effective customer service, "roamer" calls are, by internetwork agreement, practice, and procedure, immediately transmitted by a foreign carrier before validation of the identifying MIN/ESN combination has been completed by a central data bank clearing house located in San Angelo, Texas. Because the clearing house is incapable of instant validation, a time lag occurs while its computers seek to match the automatically transmitted identifying MIN/ESN with an existing home carrier-subscriber combination recorded in its data bank of national internetwork listings. In the absence of a valid match all subsequent calls using the same MIN/ESN combination will be rejected. Although service charges resulting from unmatched MIN/ESN combinations are listed together with all pertinent information related to the call in the foreign carrier's billing computer, the illicit "roaming" customer cannot be identified; consequently the charges cannot be collected from any individual. The illicit "roaming" caller may use the same combination of counterfeit MIN/ESN numbers until it is invalidated, at which time the user merely "re-tumbles" the numbers by entering a new, randomly selected combination into the key board of the cellular telephone, and may continue to "free ride" indefinitely. ⁷

In resolving the charged error of the district court in the instant case, this court finds the Brady interpretation of a 18 U.S.C. Sec. 1029(e)(2) violation ⁸ to be misconceived and concludes that the invasion of an identifiable customer's account is not a necessary element of proof to support a conviction under the statute here in issue. To prevail, the government need only prove by the appropriate weight of the evidence that the defendant possessed, produced, trafficked, had control over, or had custody of an instrument or device (or device-making equipment) that permits a theft of services. Because preexisting agreements and practices within the inter-telephone carrier network require a MIN-identified home carrier to reimburse a foreign carrier for the air time incurred by either a valid subscriber or an illicit "roamer" identified by a transmitted MIN and ESN combination that actuated access to the inter-cellular telephone network, a fraudulently identified ostensible home carrier ultimately assumes the...