U.S. v. Hays

• Decision Date: 29 March 1990
• Docket Number: 89-5157,Nos. 89-5029,s. 89-5029
• Parties: UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Ricky Allen HAYS, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 515

899 F.2d 515

UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Ricky Allen HAYS, Defendant-Appellant, Cross-Appellee.

Nos. 89-5029, 89-5157.

United States Court of Appeals, Sixth Circuit.

Argued Sept. 26, 1989.

Decided March 29, 1990.

Joseph M. Whittle, U.S. Atty., Terry Cushing, Alexander T. Taft, Jr., Asst. U.S. Atty. (argued), Office of the U.S. Atty., Louisville, Ky., for U.S.

Vicki L. Carmichael (argued), Carmichael & Skaggs, Louisville, Ky., for Ricky Allen Hays.

Before MERRITT, Chief Judge; RYAN, Circuit Judge; and BROWN, Senior Circuit Judge.

BAILEY BROWN, Senior Circuit Judge.

The defendant, Hays, appeals his conviction for conspiracy to possess cocaine and marijuana with intent to distribute (count 1), and possession of marijuana with intent to distribute (count 2). He also appeals the fine imposed. The government appeals his sentence. Because we find that there was ample evidence from which a rational trier of fact could infer guilt, we affirm the conviction. We further affirm the fine. But because we find that the district court improperly relied on certain factors to reduce the sentence of the defendant, a career drug offender, we reverse the sentence and remand.

I

In May 1988, Detective Gary Epperson, a Louisville police officer working undercover, was investigating Steve Gordon, a suspected drug dealer. On two different dates, Gordon sold cocaine to a police informant while Epperson watched; both times the defendant Hays drove Gordon to the site, dropped him off, and waited for him at a nearby gas station. The informant told police that the driver of the car, Hays, supplied the cocaine, and described the car Hays was driving. After one of these sales, Hays and Gordon drove together to Hays' apartment.

The police got a warrant to search Hays, his apartment, and his car. They arrested Hays and Gordon that night as they left the apartment. In Hays' pocket police found a small set of scales, of the kind used to weigh drugs.

Inside the apartment, where Hays lived alone, police found seven pounds of marijuana, a triple beam scale, a smaller set of scales, drug paraphernalia, detailed records of Hays' drug trade, and $12,789 in cash. The marijuana had been packaged in small plastic bags in quantities ranging from one half ounce to one and one half ounces; some was loose but some had been compressed into bricks, which is the form in which it is shipped. More than $11,000 in large denominations was found in a black bag and still more money, about $1,700 wrapped with rubber bands, was found laying on a desk. At the time of his arrest, Hays worked part-time as a painter and repairman, earning $6 an hour.

Police found no cocaine, although they did find paraphernalia usually associated with the cocaine trade, including a milk jug filled with the corners of plastic sandwich bags. The cocaine sold to the police informant had come in a corner cut off a plastic bag and tied in a knot.

The records, kept on loose sheets of paper, were found strewn around the apartment. Their careful notations give an account of Hays' daily drug trade, including the coded names of his customers, the quantities he sold, and the amounts he was owed. For example, frequent notations of the number eight enclosed in a circle stood for an "eightball," street language for an eighth of an ounce of cocaine. Similar references to pounds, ounces, grams, and the word "scored" are also apparent. Another notation mentions $96,200 in a box, although police found neither the money nor the box. From this ledger, Det. Epperson, a very experienced drug investigator, estimated that Hays sold as much as $12,000 worth of drugs per day.

Hays was convicted of conspiracy to possess cocaine and marijuana with intent to distribute under 21 U.S.C. Sec. 846, as well as possession of marijuana with intent to distribute, under 21 U.S.C. Sec. 841(a)(1). He had a long criminal record, but relevant here are two recent prior convictions for drug trafficking. Because of these prior convictions, Hays was classified as a career offender under the Sentencing Guidelines, and under the guidelines would have been sentenced to between 360 months and life imprisonment.

The district court, however, did not impose this sentence. Exercising discretion it believed it had, the court found that the small amount of drugs in Hays' apartment, and the fact that, though he had been a recurrent drug dealer he had not been a violent one, were "mitigating circumstances ... [which] could not adequately have been taken into consideration by the Sentencing Commission...." It sentenced Hays to 240 months for conspiracy and 120 months for possession, the sentences to be served concurrently; five years of supervised release; and a $500,000 fine. The sentences were to run concurrently with recent convictions in state and federal court for trafficking.

Hays challenges the sufficiency of the evidence used to convict him of conspiracy, as well as the size of his fine, and the government challenges the district court's departure from the guidelines. ¹

II

We are convinced there was ample evidence to support Hays' conviction for conspiracy.

Police twice watched Hays drive Gordon to sell cocaine to a police informant and then, on at least one of those occasions, return together to Hays' apartment. A search of that apartment proved these were more than isolated sales; police found marijuana which had been shipped in bulk, thousands of dollars in cash, and equipment used to process, measure, and package cocaine. See also United States v. Bourjaily, 781 F.2d 539, 545 (6th Cir.1986), aff'd, 483 U.S. 171, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987) (large amount of cocaine found in defendant's car created inference of a conspiracy).

The facts in United States v. Resnick, 745 F.2d 1179 (8th Cir.1984) are quite similar to those in this case. There, an undercover policeman bought drugs from a man who bought them from the defendant. The man told police that he had bought cocaine from the defendant, and police saw the defendant drive to and from the place where the sales were made. The court held that this was sufficient evidence to uphold a conviction under 21 U.S.C. Sec. 846, adding, "It is not necessary that the evidence preclude other reasonable possibilities." Id. at 1185.

Most damning of all to Hays were the records, which reveal a busy and lucrative trade with dozens of buyers, netting as much as $12,000 a day. From these ledgers, which were kept with a bookkeeper's precision, Det. Epperson deduced that Hays had sold four pounds of cocaine and 250 pounds of marijuana in the six months prior to his arrest. Hays admits he was an addict, but these records show he was a businessman as well, a middleman who bought drugs in bulk and sold them for resale. See also United States v. Grunsfeld, 558 F.2d 1231, 1235 (6th Cir.1977) cert. denied, 434 U.S. 1016, 98 S.Ct. 733, 54 L.Ed.2d 761 (1978) ("[W]here there is additional evidence beyond mere purchase and sale, from which knowledge of the conspiracy may be inferred, courts have upheld conspiracy convictions.").

Courts have been chary of inferring drug conspiracies from nothing more than scraps of paper which the government called records, particularly when those records were disorganized, or found outside the defendant's possession, see United States v. Brown, 584 F.2d 252 (8th Cir.1978), cert. denied, 440 U.S. 910, 99 S.Ct. 1220, 59 L.Ed.2d 458 (1979), or formed the whole of the government's evidence. See United States v. Ordonez, 737 F.2d 793 (9th Cir.1984). The government's case against Hays is more comprehensive than that. The scale of this operation, as revealed in the records, supported by the amount of drugs and paraphernalia found in the apartment, and confirmed by the fact that Hays drove Gordon to the site of two cocaine sales, persuades us that a rational trier of fact could have found beyond a reasonable doubt that Hays conspired with Gordon and others to sell cocaine and marijuana. See Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979).

III

We also reject Hays' appeal that the district court misapplied the Sentencing Guidelines by assessing a fine he could not pay. A defendant convicted under 21 U.S.C. Sec. 841 could be fined up to $4.5 million; Hays was fined $500,000.

Section 5E1.2(d)(2) of the guidelines provides that, in determining the amount of a fine, a court must consider the defendant's ability to pay it "in light of his earning capacity and financial resources." The application notes for that section state that the court may consider any undisclosed income or assets of the defendant, or unexplained expenditures which are not consistent with his reported income.

The district court determined that Hays had unexplained assets, and so could afford to pay a large fine. It based this determination on the large amount of cash seized in Hays' apartment and the even larger amounts referred to in Hays' ledgers. A reference to $96,200 in a box was particularly emphasized. Although police have not found this money, the court believed that it did exist, and dismissed Hays' protestations of poverty as "totally incredible."

The alleged misapplication of the guidelines in this case raises a question of fact, and we accord great deference to the district court's findings. We cannot weigh the credibility of trial witnesses, including the testimony of Det. Epperson in explaining Hays' account records. Given the scale of Hays' operations, we cannot say that the district court's conclusion that he could pay a half million dollar fine was clearly erroneous. ²

IV

The government presents a more difficult question for our review. It argues that the district court improperly departed from the guidelines because the factors it relied on to reduce Hays' sentence are not mitigating circumstances under the guidelines. We agree, and remand the case for resentencing.

Hays had been convicted...