U.S. v. Watson

• Decision Date: 07 July 1997
• Docket Number: No. 96-10240,96-10240
• Citation: 118 F.3d 1315
• Parties: 97 Cal. Daily Op. Serv. 5337, 97 Daily Journal D.A.R. 8663 UNITED STATES of America, Plaintiff-Appellee, v. Clinton L. WATSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1315

118 F.3d 1315

97 Cal. Daily Op. Serv. 5337, 97 Daily Journal

D.A.R. 8663

UNITED STATES of America, Plaintiff-Appellee, v. Clinton L. WATSON, Defendant-Appellant.

No. 96-10240.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 9, 1997.

Withdrawn from Submission

May 19, 1997.

Resubmitted June 11, 1997.

Decided July 7, 1997.

Sanford Svetcov, Landels Ripley & Diamond, San Francisco, CA, for defendant-appellant.

Parker Singh, Assistant United States Attorney, San Jose, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California; James Ware, District Judge, Presiding. D.C. No. CR-94-20062-JW.

Before: HUG, Chief Judge, and GOODWIN and HAWKINS, Circuit Judges.

HUG, Chief Judge.

In this appeal, we are asked to decide whether cellular telephone cloning was a crime under 18 U.S.C. § 1029 prior to the time that Congress amended that statute in October 1994. This case also concerns whether the district court erred when it allowed the suppressed contents of the defendant's safe to be introduced into evidence. Finally, we must decide whether the district court erred in calculating the defendant's sentence.

I. FACTS AND PRIOR PROCEEDINGS.

Each cellular phone manufactured is assigned an electronic serial number ("ESN"), similar to the vehicle identification number found on every car's dashboard. When a cellular telephone is connected to a service provider, it is also assigned a mobile identification number ("MIN"). The combination of these two numbers identifies the cellular phone user, as it is programmed into a memory chip in the phone to obtain service. When a cellular phone customer dials the number he desires to call, the number dialed, as well as the MIN-ESN combination of the cellular phone from which the call was made, are transmitted to the customer's service provider, where a computer verifies that the MIN transmitted matches the ESN of the phone from which the call was made. Once the numbers are found to match, the cellular phone provider connects the call.

Cellular phone cloning involves the use of electronic scanning and computer programming equipment to erase and reprogram the electronic chip containing a phone's ESN-MIN combination with the account number of another user so that the calls made on the modified phone are charged to the other cellular phone user's account. Cellular phone cloning is often discovered when legitimate customers complain to their carriers about fraudulent calls appearing on their bills.

Such was the case here, as several customers notified the Cellular One company that their cellular phone bills had dramatically increased. Cellular One investigator, Tim Long, looked into the fraudulent use of these account numbers, after which he referred his investigation to the United States Secret Service. Long had ascertained that fraudulent calls made on over fifty different account numbers were going to the home of Clinton L. Watson, the defendant. Secret Service Agent Andrew Dooher found a piece of paper containing alphanumeric codings used to conceal ESNs in a search of Watson's garbage on April 15, 1994. Based on this information, Agent Dooher obtained a search warrant for Watson's home.

Agents searched Watson's home on April 21, 1994. They found ESN scanning and reading equipment, computers, and computer chip reprogramming equipment. They seized 38 cellular phones, approximately 600 stolen ESN-MIN combinations, and records indicating that Watson had produced and sold 1003 cloned cellular phones.

On April 28, 1994, a second warrant was procured and Watson's house was again searched because agents believed that they had accidentally left behind some cellular telephone chips from the first search. They encountered a safe which, while open during the first search, was now locked. The safe was seized. It was, however, later agreed that the safe and its contents would be returned unsearched to Watson. Before this transfer was completed, the safe was somehow opened, and was found to contain $8,400 cash and a $15,000 check.

On September 7, 1994, a grand jury indicted Watson for three violations of 18 U.S.C. § 1029 for the knowing possession, production, use, and trafficking of counterfeit access devices and access device equipment. Before trial, Watson moved to suppress the evidence found in the safe, and the parties stipulated that its contents should be suppressed. The district court found the safe to have been improperly seized and ordered it not to be introduced in the Government's case-in-chief.

Trial commenced September 18, 1995. In his opening statement, Watson's attorney, in an attempt to question the credibility of Government witnesses, mentioned the seized safe and the peculiar manner in which the Secret Service had gained access to its contents. On the following day, the Government questioned Secret Service Agent Dan Schott about the safe, as did defense counsel in cross-examination. No objection was made. Agent Dooher was also asked about the safe during his testimony.

On the final day of trial, defense counsel moved for a mistrial, claiming error in admitting testimony regarding the safe and its contents. The district court denied the motion.

A jury convicted Watson on all three counts on September 25, 1995. On May 28, 1996, Watson was sentenced to 60 months of incarceration and to a 12-month consecutive sentence for violation of his probation relating to a prior fraud conviction. Watson timely appealed.

II. WHETHER CELLULAR PHONE CLONING WAS A CRIMINAL ACTIVITY PRIOR TO THE OCTOBER 1994 AMENDMENT OF 18 U.S.C. § 1029.

Watson argues that he committed no crime. He contends that 18 U.S.C. § 1029 was aimed at credit card and computer fraud, and that Congress did not criminalize the cloning of cellular telephones until it amended 18 U.S.C. § 1029 in October 1994. We disagree. In United States v. Bailey, 41 F.3d 413, 418 (9th Cir.1994), we held that modifying a cellular phone to fraudulently gain access to cellular telephone services violated the pre-October 1994 version of section 1029. Under Bailey, Watson's activities violated the version of section 1029 that is applicable to this case. Moreover, it is clear that Watson was not a good faith actor laboring under the misapprehension that his cellular phone cloning activities were legitimate. United States v. Ragen, 314 U.S. 513, 524, 62 S.Ct. 374, 378-79, 86 L.Ed. 383 (1942); see also United States v. Griffin, 589 F.2d 200, 207 (5th Cir.1979) ("[T]he requirement that statutes give fair notice cannot be used as a shield by one who is already bent on serious wrongdoing."). We will not reverse.

III. WHETHER THE DISTRICT COURT ABUSED ITS DISCRETION WHEN IT ALLOWED THE SUPPRESSED CONTENTS OF WATSON'S SAFE TO BE INTRODUCED INTO EVIDENCE.

The district court found that the safe taken from Watson's home had been improperly seized. It then suppressed the items found therein, and ordered the evidence found in the safe "not to be used in the government's case against Clinton Watson." Watson contends that the district court abused its discretion by allowing the Government to elicit testimony regarding the seized contents of his safe during the Government's case-in-chief. We agree.

The district court allowed the introduction into evidence of the fruits of a constitutionally improper search in the Government's case-in-chief, bolstering the challenged credibility of Government witnesses and providing further substantive evidence against Watson. This was error. Illegally obtained evidence "is inadmissible in the government's direct case, or otherwise, as substantive evidence of guilt." United States v. Havens, 446 U.S. 620, 628, 100 S.Ct. 1912, 1917, 64 L.Ed.2d 559 (1980).

Watson's attorney did not, however, object to the Government's elicitation of testimony regarding the seized safe's contents from Agents Dooher and Schott. Watson, therefore, should be deemed to have waived his objection to the introduction of this evidence, and our review is for plain error. United States v. Hinton, 31 F.3d 817, 824 (9th Cir.1994); Fed.R.Crim.P. 52(a).

Under the test set forth in United States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 1776-77, 123 L.Ed.2d 508 (1993), before we can correct an error not raised at trial such as this, there must be (1) "error," (2) that is "plain," and (3) that "affects substantial rights." Only if these three conditions are met, and we also find that the error "seriously affect[s] the fairness, integrity or public reputation of judicial proceedings," may we then exercise our discretion to correct the error. Id. (quoting United States v. Young, 470 U.S. 1, 15, 105 S.Ct. 1038, 1046, 84 L.Ed.2d 1 (1985)).

It is clear that we cannot notice the error raised by Watson under the exacting requirements of the Olano test. While it is perhaps arguable that the error "affected substantial rights," there is no...