U.S. v. Hall, 03-2425.

Citation434 F.3d 42
Decision Date12 January 2006
Docket NumberNo. 03-2425.,03-2425.
PartiesUNITED STATES of America, Appellee, v. Kevin R. HALL, Defendant, Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Edward S. MacColl, with whom Thompson, Bull, Furey, Bass & MacColl, LLC, P.A. was on brief, for appellant.

Margaret D. McGaughey, Appellate Chief, with whom Paula D. Silsby, United States Attorney, was on brief, for appellee.

Before BOUDIN, Chief Judge, CAMPBELL, Senior Circuit Judge, and HOWARD, Circuit Judge.

HOWARD, Circuit Judge.

A federal grand jury in Maine returned an indictment against Kevin Hall charging him with one count of conspiring to distribute marijuana, 21 U.S.C. §§ 841(a)(1) & 846; 163 counts of money laundering, 18 U.S.C. § 1956(a)(1)(B)(i), for his use of the conspiracy proceeds; and four counts of tax evasion, 26 U.S.C. § 7201, for failing to pay income tax on the drug-related income. The government also brought two forfeiture counts to obtain assets related to Hall's illegal conduct, 21 U.S.C. § 853; 18 U.S.C. § 982. After a ten-day jury trial, Hall was convicted on all counts. He was sentenced to 151 months of imprisonment on the conspiracy and money laundering convictions, to be served concurrently with 60 months of imprisonment on each of the tax evasion convictions. He also was ordered to forfeit his illegally obtained assets. On appeal, Hall claims that there was insufficient evidence of a drug conspiracy or money laundering and alleges a host of trial and sentencing errors.

SUFFICIENCY OF THE EVIDENCE CLAIMS

We review Hall's sufficiency of the evidence claims de novo, see United States v. Cruzado-Laureano, 404 F.3d 470, 480 (1st Cir.2005), and apply the following standard:

We must determine whether the evidence, taken in the light most favorable to the government—a perspective that requires us to draw every reasonable inference and resolve credibility conflicts in a manner consistent with the verdict—would permit a rational trier of fact to find each element of the crime charged beyond a reasonable doubt. The government can meet this burden by either direct or circumstantial evidence, or by any combination of the two. Moreover, the government need not disprove every hypothesis consistent with the defendant's innocence; rather, it is enough that a rational jury could look objectively at the proof and supportably conclude beyond a reasonable doubt that the defendant's guilt has been established.

United States v. Patel, 370 F.3d 108, 111 (1st Cir.2004).

A. Drug Conspiracy

Hall contends that there was insufficient evidence of his participation in a drug trafficking conspiracy because the government established only that he purchased marijuana from another individual and resold it. According to Hall, proof of a buyer/seller relationship is not sufficient to establish a drug conspiracy.

This contention does not warrant extended discussion. It is enough to say that Hall understates the strength of the government's evidence. There was proof that from 1995 to 1999 Hall bought large amounts of marijuana from an individual named John Redihan. Redihan testified that he was aware that Hall's purpose was to resell the drugs for profit and that, on occasion, he assisted Hall in these efforts. See United States v. Berrios, 132 F.3d 834, 841-42 (1st Cir.1998) (concluding that there was sufficient proof of a distribution conspiracy where seller knew that buyer was purchasing drugs for the purpose of selling it to others and intended to facilitate the resales). Moreover, Hall enlisted several other individuals to help him in the storage, preparation, and selling of the drugs. For example, an individual named William Lee sold marijuana for Hall, and a married couple, George and Brenda Elliot, assisted Hall by letting him store drugs in their home, helping him weigh the drugs, picking up marijuana deliveries from Redihan, and participating in Hall's debt collection efforts. This evidence sufficiently established Hall's participation in a conspiracy to distribute marijuana.

B. Money Laundering

The government charged Hall with 163 counts of concealment money laundering under 18 U.S.C. § 1956(a)(1)(B)(i) for his use of the drug conspiracy proceeds. To sustain a conviction under § 1956(a)(1)(B)(i), the government must prove: (1) that Hall knowingly conducted a financial transaction, (2) that he knew that the transaction involved funds that were proceeds of some form of unlawful activity, (3) that the funds were proceeds of a specified unlawful activity, and (4) that Hall engaged in the financial transaction knowing that it was designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds of such unlawful activity. See United States v. Cornier-Ortiz, 361 F.3d 29, 37 (1st Cir.2004). Hall's sufficiency claims relate primarily to the government's proof on the "conceal or disguise" element. He asserts that all of the financial transactions were conducted above board and were thus not meant to conceal or disguise anything. In essence, Hall's argument is that the government proved only that he spent or invested drug money and that this evidence is inadequate to sustain a conviction under § 1956(a)(1)(B)(i).

It is true that the money laundering statute does not criminalize the mere spending or investing of illegally obtained assets. See United States v. Corchado-Peralta, 318 F.3d 255, 259 (1st Cir.2003). Instead, at least one purpose for the expenditure must be to conceal or disguise the assets. See id. Proof of this element may be based on direct evidence, such as the defendant's own statements; or circumstantial evidence, like the use of a third-party to disguise the transaction; or unusual secrecy in making the transaction. See Cruzado-Laureano, 404 F.3d at 483.

In this case the government charged a series of financial transactions as separate counts. See United States v. Marshall, 248 F.3d 525, 540 (6th Cir.2001). We must therefore examine the government's proof on each count to determine its sufficiency. See United States v. Shepard, 396 F.3d 1116, 1121 (10th Cir.2005). The 163 counts essentially involve loans to friends and colleagues and related transactions, purchases of cars and other vehicles, expenditures to renovate property, and establishing a construction business.

1. Loans and Related Transactions
i. Cosby/Brown Loans (Counts 2-97)

In 1995, Hall offered to loan $30,000 to Danny Cosby and his girlfriend, Susan Brown, to buy a parcel of land. Cosby and Brown accepted Hall's offer and, after executing a mortgage to secure the loan, Hall gave them the loan proceeds in cash. In 1996, Cosby and Brown borrowed another $25,000, which Hall also paid out in cash. Over the next several years, Hall negotiated 96 repayment checks from Cosby and Brown, including a $33,000 check to pay off the remainder of the loans.

When Cosby and Brown asked Hall where he got the money for the loans, he told them that he got most of it from an inheritance from his father. But there was evidence that Hall's father had intentionally omitted him from his will and that Hall did not receive anything from his father's estate. There also was testimony that, in regard to a loan to another person, Hall stated that the reason he wanted to loan money was to "get some of his money more legal."

The government charged each negotiation of a loan repayment check as a separate money laundering count. Hall claims that there "was nothing suspicious about the loan" repayments because he made no attempt to conceal his identity when dealing with Cosby and Brown in making the loans or negotiating the repayments. This argument misconstrues the purpose of § 1956(a)(1)(B)(i). The statute criminalizes conduct designed to conceal or disguise the source of the drug proceeds even if the defendant does not conceal his own identity in the process. See, e.g., United States v. Norman, 143 F.3d 375, 377-78 (8th Cir.1998); United States v. Starke, 62 F.3d 1374, 1384 (11th Cir.1995); United States v. Kinzler, 55 F.3d 70, 73 (2d Cir.1995); United States v. Lovett, 964 F.2d 1029, 1034 n. 3 (10th Cir.1992).

While Hall arranged the loans himself and negotiated the checks in his own name, there was evidence that one purpose for the loans was to disguise the illegal origin of the loan funds. Hall admitted as much when he claimed to another individual that he wanted to loan money to "get some of his money more legal." Hall made this comment regarding a different loan, but the jury could infer that the same motivation applied to other similar loans which Hall made while running his marijuana trafficking operation. Additionally, Hall intentionally misled the borrowers about the source of the proceeds by telling them that he obtained the money from a family inheritance. Such a misstatement is probative of concealment. See United States v. Tekle, 329 F.3d 1108, 1114 (9th Cir.2003) (affirming money laundering conviction based on evidence that defendant lied about the origin of funds that he used to purchase a home); United States v. Wilson, 77 F.3d 105, 109 (5th Cir.1996) (affirming money laundering conviction where defendant said that money was from an inheritance to "cover" for the cash purchase). This evidence is sufficient to sustain the convictions.

ii. Moving Funds to an E*Trade Account (Count 98)

As mentioned above, Cosby and Brown provided Hall with a $33,000 check to pay off their debt. After receiving the check, Hall placed these funds in his bank account for a few days before moving them to an E*Trade investment account. The government charged the moving of the funds as money laundering. Hall claims that "there was absolutely nothing about the transaction that suggested concealment or an intent to conceal."

We agree that there is nothing about the...

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