U.S. v. Nelson

• Decision Date: 21 September 1995
• Docket Number: No. 93-30460,93-30460
• Citation: 66 F.3d 1036
• Parties: 95 Cal. Daily Op. Serv. 7402, 95 Daily Journal D.A.R. 12,687 UNITED STATES of America, Plaintiff-Appellee, v. Kevin Lee NELSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1036

66 F.3d 1036

95 Cal. Daily Op. Serv. 7402, 95 Daily Journal

D.A.R. 12,687

UNITED STATES of America, Plaintiff-Appellee, v. Kevin Lee NELSON, Defendant-Appellant.

No. 93-30460.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 2, 1995.

Decided Sept. 21, 1995.

Peter Goldberger, J.H. Feldman, Jr., Ardmore, PA, for the defendant-appellant.

Seth M. Galanter, United States Department of Justice, Washington, DC, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Montana.

Before: SKOPIL, BOOCHEVER and THOMPSON, Circuit Judges.

BOOCHEVER, Circuit Judge:

Kevin Lee Nelson appeals his conviction for attempting and conspiring to structure a money laundering transaction. Undercover government agents posing as drug dealers came to the car dealership where Nelson worked, proposing to buy a car with cash. Nelson suggested ways to structure the cash purchase of a car to avoid the dealership's requirement under federal law to report cash transactions over $10,000. We reverse Nelson's attempt conviction, but affirm his conviction for conspiracy.

FACTS

In 1992, the Internal Revenue Service ("IRS") learned that two Montana drug dealers had used cash proceeds from drug transactions to purchase cars from Prestige Toyota ("Prestige"), a car dealership in Billings. The IRS also had information that the sales had been structured to avoid the IRS requirement that a retail business file a reporting form whenever it receives more than $10,000 in cash, and that Prestige salesperson William Rahlf was involved in one of the sales.

The IRS began an undercover investigation. IRS Special Agent Pam White and Raymond Malley, an agent of the Montana Criminal Investigation Bureau, set up an appointment with Rahlf and arrived at Prestige on May 29, 1992. Agent White, using the name "Pam Wright," wore a transmitter to record their conversations. Rahlf took Agents White and Malley for a test drive in a Toyota 4-Runner, during which Agent White told Rahlf that she was "in the dope business" and Malley was her supplier. She added that she wanted to buy a car with cash, but did not want a "paper trail:" "I don't want anything in my name at all." Rahlf said "It's not a problem," and volunteered that he had previously sold cars to another drug dealer. Agent White asked him if his superiors would have any problems with the deal, and Rahlf answered "We've done it before, we can do it again." Rahlf added that "[i]t won't be a big deal" to use cash and title the car in another name.

Upon their return to the dealership, Agent White showed Rahlf a bundle of cash, which was in denominations of hundreds and twenties. Rahlf began to complete a "four-square," a form the salesperson fills out with the prospective customer's offer for a car. Rahlf asked Agent White the name and address she wanted to use. Agent White told him she would offer $22,000, asked him to use the name "Joyce Brown" and a post office box, and suggested he explain her situation to his superiors. She declined to sign the four-square form.

Rahlf took the four-square in to Randy Replogle, the assistant general sales manager, and appellant Kevin Nelson. Nelson was a sales manager or "closer," who helped salespersons finalize offers. As a closer, Nelson reported to the general sales manager or "desk," who had the final authority to put the deal together. Replogle was filling in as "desk" that day for Dustin Timmons, Prestige's general sales manager. Rahlf and Replogle discussed the deal, with Nelson present.

Rahlf told Replogle that the customers got their money from the drug business, and that they wanted to buy with cash and leave no paper trail. Replogle said he thought they should not get involved in the deal, and called the owner of Prestige, Ray McLean, at his home. McLean told him not to make the deal, and to get the customers out of the store. Replogle told Nelson to tell the customers to leave.

Rahlf and Nelson returned to Agents White and Malley, and Rahlf introduced Nelson, saying that he was aware of the situation. Nelson told Agents White and Malley that retail sellers must report any cash transaction over $10,000, and that Prestige would have to fill out a form to make such a report. He also told the agents they could use the name "Joyce Brown." Nelson went back in to talk to Replogle, telling the agents that the price was the likely sticking point.

Nelson told Replogle that the customers wanted to use an assumed name, and Replogle called McLean again, who reiterated that he wanted them to ask the customers to leave. Nelson returned to Agents White and Malley, telling them that Prestige would not falsify a name on the reporting form because that would be "fraud to the bank." After discussing whether it would be all right to use a different name if it were a real person, Agent White told Nelson that Joyce Brown was her sister. Nelson then said "The hell with it, let's do it. Let me go grab--grab a paper. Keep that pencil ready on site." Nelson left.

When he returned, Nelson told Agent White that Prestige could not use "Joyce Brown" on the reporting form. He then suggested another way to get around the reporting requirement: if Agent White were to come in with a trade-in to keep the cash price under $10,000, no form would be necessary. He said "I got probably ten good friends in the same situation but when they do it, they always come in and they trade something so they keep it under $10,000 ... so it doesn't have to be reported." He also suggested that Agent White consider buying two vehicles at Prestige for less than $10,000 each, which the dealership later could take back as trade-ins to keep the cash price of the 4-Runner below the reporting threshold. Nelson explained that he had done this "all the time" so that "we don't have the money trail." Nelson added that he was "more than willing" to do this: "All I want to do is cover my butt and cover yours at the same time." Nelson and Rahlf suggested the agents call Prestige the next day, and the agents left.

Later that evening, Rahlf contacted Jim Sinhold, a friend who worked as a salesperson at a Ford dealership, telling him that he had a female customer with "a purse full of money" who wanted to buy a car. Sinhold testified that Rahlf explained that "the deal didn't happen" at Prestige, and that Rahlf would send Agent White over. Although Rahlf testified that he thought he had told Sinhold that the customer was a dope dealer, Sinhold did not remember that, and thought Rahlf was looking for a referral fee for sending the woman over to the Ford dealership.

The next morning, when owner McLean arrived at Prestige, Nelson told him that he made the right decision when he turned down the deal the night before.

Agent White called Rahlf later that same morning. Rahlf told her that he and the agents "blew it" by telling Replogle the whole story, although Nelson was not the problem. Agent White told him the trade-in scheme sounded too complicated. Rahlf then put Prestige's general manager, Dustin Timmons, on the line, and Timmons told Agent White that she would have to get the trade-ins from other dealerships to avoid throwing up a flag. Agent White said the plan was not going to work for her. Rahlf then referred her to Sinhold at the Ford dealership to buy a Ford Explorer. Rahlf also stated "you don't need to tell [Sinhold] anything because I've already told him ... just do whatever it is you got to do and they'll ... make the paper work right."

Two days later, on June 1, 1992, federal agents entered Prestige with a search warrant and seized business records. Nelson and Rahlf were indicted in March 1993. On June 30, 1993, a jury found Rahlf and Nelson guilty of one count of conspiring to conduct or attempt to conduct financial transactions involving property represented to be the proceeds of unlawful controlled substance trafficking, with the intent to avoid a transaction reporting requirement, and one count of conducting or attempting to conduct such a financial transaction, both in violation of 18 U.S.C. Sec. 1956(a)(3)(C). Nelson was sentenced to a ten-month "split sentence" in the pre-release center in Great Falls, Montana, with five months in the custody component and five months in the pre-release component of the center. His two years of supervised release were to start when he began the second of the five-month periods.

I. Sufficiency of the evidence

There was sufficient evidence to support Nelson's conviction if, " 'after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.' " United States v. Harper, 33 F.3d 1143, 1146 (9th Cir.1994), (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979)), cert. denied, --- U.S. ----, 115 S.Ct. 917, 130 L.Ed.2d 798 (1995).

18 U.S.C. Sec. 1956(a)(3)(C) (1992), in effect at the time of Nelson's charged conduct (there have since been some technical amendments), provided that whoever, intending "to avoid a transaction reporting requirement under State or Federal law, conducts or attempts to conduct a financial transaction involving property represented by a law enforcement officer to be the proceeds of specified unlawful activity," commits an offense punishable by fines and/or imprisonment for not more than twenty years. "[T]he term 'conducts' includes initiating, concluding, or participating in initiating, or concluding a transaction...." Id. at Sec. 1956(c)(2). "Specified unlawful activity" includes violations of the narcotics laws. Id. at Sec. 1956(c)(7)(A).

To prove a violation of this section, the Government must prove (1) that the defendant conducted or attempted to conduct a financial transaction, (2) with the intent to avoid a transaction reporting requirement, and (3) that the property involved in the transaction was represented by a law...