U.S. v. Ellis, 95-

• Decision Date: 21 September 1998
• Docket Number: No. 95-,97-1369,Nos. 97-1368,95-,s. 97-1368
• Citation: 156 F.3d 493
• Parties: UNITED STATES of America v. Carl D. ELLIS, Appellant (D.C.Crim.cr-00435-4). UNITED STATES of America v. Ester L. CARTER Ester Carter, Appellant (D.C.Crim.cr-00435-5).
• Court: U.S. Court of Appeals — Third Circuit

Page 493

156 F.3d 493

UNITED STATES of America v. Carl D. ELLIS, Appellant (D.C.Crim.No. 95-cr-00435-4).

UNITED STATES of America v. Ester L. CARTER Ester Carter, Appellant (D.C.Crim.No. 95-cr-00435-5).

Nos. 97-1368, 97-1369.

United States Court of Appeals Third Circuit.

Argued March 19, 1998.

Decided Sept. 21, 1998.

Timothy P. Booker (argued), Philadelphia, PA, for Carl D. Ellis.

Mark S. Greenberg (argued), Stephen Robert LaCheen and Associates, Philadelphia, PA, for Ester Carter.

Michael R. Stiles, United States Attorney, Walter S. Batty, Jr., Assistant United States Attorney Chief of Appeals, Maureen Barden (argued) Assistant United States Attorney William B. Petersen, Assistant United States Attorney, Philadelphia, PA, for United States of America.

Before: BECKER, Chief Judge, RENDELL and HEANEY ^* Circuit Judges.

OPINION OF THE COURT

BECKER, Chief Judge.

Ester Carter appeals from a judgment of the district court convicting him of one count of conspiracy to launder drug trafficking proceeds in violation of 18 U.S.C. § 1956(h) and two counts of money laundering in violation of 18 U.S.C. § 1956(a)(3)(b). ¹ Carter's conviction was one of several that arose out of a government undercover operation in which Special Agent Louis Oubre of the Internal Revenue Service posed as a drug dealer named "Louis Richard." The background facts are set forth at length in our opinion in United States v. Nolan-Cooper, 155 F.3d 221 (3d Cir.1998) and in the district court's opinion denying Carter's Rule 29 motion. See United States v. Carter, 966 F.Supp. 336 (E.D.Pa.1997).

The principal issue on the present appeal is whether the district court committed prejudicial error when it admitted two statements by Angela Nolan-Cooper, who was Carter's attorney and was also an alleged coconspirator, pursuant to Fed.R.Evid. 801(d)(2)(E). In addition, Carter challenges the district court's failure to charge the jury with his proposed money laundering instruction, and the limits the court placed upon his cross-examination of Agent Oubre. Because all of these challenges are without merit, we will affirm. ²

I. The Coconspirator Statements

Carter first argues that the district court erred in allowing the government to introduce two statements made by Nolan-Cooper that were contained in tape recorded conversations she had with Agent Oubre on February 7 and 9, 1994. The challenged statements were made by Nolan-Cooper during her initial two meetings with Agent Oubre. At these meetings Oubre explained that he was a drug dealer and needed assistance in making it appear that his drug proceeds came from a legitimate source.

In the first challenged statement, Nolan-Cooper explained to Oubre how he could launder the drug proceeds by investing in a recording studio run by one of her "clients" (Carter does not dispute that he was the person about whom Nolan-Cooper was speaking):

I have someone who's in a very similar situation with you ... that ... has a recording studio.... In South Jersey....

I'll be very honest with you. He has been in it and he's lost money.... He's lost money because he was involved with somebody he shouldn't have been involved with.... But even in losing the money ... it's helped him to legitimize everything else.... So he hasn't had any problems. And he's another person that I'm back and forth. I do the same thing with him.... So I mean, that's the one thing that's already established here, if you wanted to become an investor in something like that....

[App. 244-45].

In the second recorded conversation, Nolan-Cooper again discussed with Oubre the possibility of investing in Carter's recording studio:

[T]he gentleman who's still involved ... in this business now, ... he started out, he bought some bars ... and he put the poker machines ... and he has made millions and millions of dollars on those poker machines ... in his bars. And he doesn't show for it, if you saw him ... and, I mean, he's an older man. He's just in his sixties .... he drives around in a 1971 Chevy Impala.... He wears old clo[thes] ... you would never think ... but he was very smart true old man.

[App. 248-49]

It is not seriously disputed that, prior to the events leading to the present indictment, a money laundering operation had been established involving at least Nolan-Cooper and Carter, whereby Carter's recording studio was used to launder the proceeds of illegal gambling (videopoker) activities. ³ The evidence also established that the recording studio was later used as a false address in order to legitimize a sham corporation set up by Nolan-Cooper to launder Agent Oubre's purported drug proceeds, and that, to this end, Carter and Oubre both signed a backdated lease, and Carter accepted "rent" payment totaling several thousand dollars. The office space was never used by Oubre.

Fed.R.Evid. 801(d)(2)(E) excepts from the definition of hearsay "a statement by a coconspirator of a party during the course and in furtherance of the conspiracy." In order for an out-of-court statement to be admissible pursuant to Rule 801(d)(2)(E), the district court must find by a preponderance of the evidence that: (1) a conspiracy existed; (2) the declarant and the party against whom the statement is offered were members of the conspiracy; (3) the statement was made in the course of the conspiracy; and (4) the statement was made in furtherance of the conspiracy. See United States v. McGlory, 968 F.2d 309, 333-34 (3d Cir.1992). Where the district court finds that a conspiracy existed, we review the district court's findings as to these elements for clear error. See United States v. Cruz, 910 F.2d 1072, 1081 n. 11 (3d Cir.1990).

While the district court offered alternative bases for its decision to admit the challenged statements, and the ultimate basis for its decision is not entirely clear, we find the core of the court's reasoning to be contained in findings of fact made at the conclusion of the government's case. There, in accordance with the requirements set forth in McGlory, the district court, in essence, found that the statements were admissible since they were made during the course and in furtherance of a conspiracy that existed in February 1994 among Nolan-Cooper, Carter, and others to launder the proceeds of illegal transactions. See Carter, 966 F.Supp. at 347. We conclude, based on our review of the record, that these findings are not clearly erroneous and thus that the statements were properly admitted.

We pause, however, to consider the effect of a different view of the evidence urged upon us by Carter. According to Carter, when Nolan-Cooper made these statements in February 1994, there was at best a conspiracy in place solely to launder video poker money. He claims that in February 1994 he had not yet authorized Nolan-Cooper to extend the conspiracy to launder the proceeds of illegal drug activity, and that he did not give this authorization until his first conversation with Agent Oubre on March 11, 1994. Thus, in Carter's view, there were two different conspiracies--one the charged conspiracy to launder drug proceeds, and the other a conspiracy to launder video poker proceeds. Based on this view, he contends that it was clearly erroneous for the district court to have admitted these statements because they were made in the course of and in furtherance of a conspiracy that was not charged in his indictment. While we agree with Carter that, for analytic purposes, the continuum of events might be viewed as containing two conspiracies, adopting such a view would not change the result.

The law is well settled that out-of-court statements may be admissible under Rule 801(d)(2)(E) even if the defendant is not formally charged with any conspiracy in the indictment. See United States v. Trowery, 542 F.2d 623, 626 (3d Cir.1976); United States v. Godinez, 110 F.3d 448, 454 (7th Cir.1997); United States v. Rivera, 68 F.3d 5, 7 (1st Cir.1995). Thus, so long as the requirements set forth in McGlory are satisfied (as they are here), Nolan-Cooper's statements to Oubre are non-hearsay regardless of whether they were made in a conspiracy separate from that charged. See United States v. Arce, 997 F.2d 1123, 1128 (5th Cir.1993) ("[t]he conspiracy that forms the basis for admitting coconspirators' statements need not be the same conspiracy for which the defendant is indicted"). ⁴ Of course, not all nonhearsay is admissible in court--only that which is relevant--and thus the introduction of statements from an uncharged conspiracy might be precluded by application of Article IV of the Federal Rules of Evidence. Cf. In re Japanese Electronic Products Antitrust Litigation, 723 F.2d 238, 263 (3d Cir.1983) ("Rule 402 affords adequate protection against admission of statements in furtherance of joint undertakings that are remote and unrelated to the conspiracy relied upon as a basis for liability."), rev'd on other grounds sub nom., Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

In this vein, some courts require that in order for a coconspirator statement to be admitted, the conspiracy during which the statements were made must be "factually intertwined" with the offenses being tried. See United States v. Stratton, 779 F.2d 820, 829 (2d Cir.1985); United States v. Kendall, 665 F.2d 126, 131 (7th Cir.1981). In our view, this salutary additional requirement is essentially a restatement of ordinary relevancy principles. Since the challenged statements are relevant to the crimes charged, we hold that they were properly admitted even if Carter's characterization of the evidence is correct. ⁵

II. Cross-Examination of Agent Oubre

The second error raised on this appeal concerns the cross-examination of Agent Oubre. Oubre was called to the stand solely for the purpose of authenticating various tape recordings of conversations he had with Nolan-Cooper and other alleged co-conspirators. After the government's direct...