United States v. Stanford, No. 15–30127.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtJERRY E. SMITH, Circuit Judge
Citation823 F.3d 814
Docket NumberNo. 15–30127.
Decision Date18 May 2016
PartiesUNITED STATES of America, Plaintiff–Appellee, v. Daniel James STANFORD, Defendant–Appellant.

823 F.3d 814

UNITED STATES of America, Plaintiff–Appellee
v.
Daniel James STANFORD, Defendant–Appellant.

No. 15–30127.

United States Court of Appeals, Fifth Circuit.

May 18, 2016.


823 F.3d 822

Camille Ann Domingue, Asst. U.S. Atty. (argued), U.S. Attorney's Office, Robert Chase Abendroth, Alexander Coker Van Hook, Esq., Asst. U.S. Atty., Lafayette, LA, for Plaintiff–Appellee.

Robin Elise Schulberg, Attorney (argued), Covington, LA, Daniel James Stanford, Stanford Law Office, Lafayette, LA, for Defendant–Appellant.

Appeal from the United States District Court for the Western District of Louisiana.

Before DAVIS, SMITH, and HIGGINSON, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Daniel Stanford, one of the defendants in a series of cases involving a synthetic-marihuana distribution ring, appeals, on numerous grounds, his conviction and sentence on charges of conspiracy to distribute and to possess with intent to distribute a controlled substance analogue (“CSA”) (in violation of 21 U.S.C. §§ 846, 841(b)(1)(C), 813, and 802(32)(A) ); conspiracy to introduce and cause to be introduced misbranded drugs into interstate commerce (in violation of 18 U.S.C. § 371 and 21 U.S.C. §§ 331, 333(a)(2), and 352(a), (b), and (f) ); conspiracy to engage in money laundering (in violation of 18 U.S.C. § 1956(h) ); and money laundering (in violation of 18 U.S.C. § 1957 ). Based on the intervening decision in McFadden v. United States, ––– U.S. ––––, 135 S.Ct. 2298, 192 L.Ed.2d 260 (2015), announced after this trial, we reverse the conviction of conspiracy to distribute a CSA because the district court's error, in ruling that the government was not required to prove that Stanford knew the synthetic marihuana compound distributed by the conspirators was a CSA, was not harmless, despite the decision to send the issue to the jury via a special interrogatory. We affirm the conviction and sentence on all other counts and remand for proceedings as needed.

I.

In 2011, Richard Buswell, the owner of a chain of smoke shops in the Lafayette, Louisiana, area, became involved with a group of persons selling and producing synthetic marihuana, a lab-created product designed to mimic organic marihuana. Manufacturers hoped to skirt drug laws because, at least initially, lawmakers and law enforcement officials were not well informed regarding synthetic cannabinoids, and the chemicals used to create the products had not yet been universally banned.

Originally, many makers of synthetic marihuana used a chemical known as JWH–018, but as public awareness grew, the federal government announced a ban on JWH–018, forcing producers to switch to a chemical known as AM–2201. Structurally, JWH–018 is similar to AM–2201, except that AM–2201 replaces a hydrogen atom in JWH–018 with a fluorine atom.

823 F.3d 823

Both JWH–018 and AM–2201 are naphthoylindoles that activate the cannabinoid receptors in the human body, producing a “high.”

Buswell met with Thomas Malone, Drew Green, and Boyd Barrow in March 2011 seeking to stock a synthetic cannabinoid in Buswell's smoke stores, Curious Goods. Malone and Green owned a Georgia-based company called NutraGenomics that had formulated a line of synthetic marihuana they called “Mr. Miyagi.” Barrow owned Pinnacle Products (“Pinnacle”), a company that distributed Mr. Miyagi to retailers in a number of states. Over time, Pinnacle also began manufacturing Mr. Migayi for NutraGenomics with Joshua Espinoza, a Pinnacle salesman, personally mixing batches. In an effort to skirt the law, Mr. Miyagi was sold as “potpourri,” and its label stated that it was “not for human consumption.” As of March 2011, Pinnacle used only AM–2201 to make Mr. Miyagi.

Shortly thereafter, Mr. Miyagi arrived in Curious Goods' stores in Lafayette. In July 2011, a Louisiana law went into effect that banned naphthoylindoles. Although Barrow and others were initially concerned, Buswell assured Barrow that there would be no problem selling Mr. Miyagi in Louisiana. To help provide those assurances, Buswell brought in Barry Domingue, a local attorney who served as the corporate attorney for Curious Goods.

That summer, Barrow traveled to Lafayette and met with Buswell and Domingue, who told him that they had talked with law enforcement regarding Mr. Miyagi, and there would be no issues. Further, Barrow testified that about a week after his trip to Lafayette, Buswell called and told him that he had hired a “constitutional lawyer,” Stanford, “who would lead our fight into ... challenging the feds and challenging states with the ultimate goal of regulation.”

Stanford had first become connected with Buswell by serving as his defense counsel in a securities-fraud prosecution. After Buswell's call, Barrow flew to Lafayette to meet with Stanford and Buswell. Buswell instructed him to tell Stanford “everything about the business,” and Barrow complied, describing Mr. Miyagi, how it was manufactured, and how it was labeled (specifically the “not for human consumption” warning). Stanford even opened and smelled a package of Mr. Miyagi. Barrow claimed that the meeting lasted one-and-a-half to two hours.

Barrow testified that at some point after that meeting, he received a call from Buswell saying that Stanford was onboard—they had “the big stick.” Buswell also claimed that Stanford had secured an agreement with the Louisiana attorney general that Mr. Miyagi was the only “potpourri” that could be “sold in the state” and that Buswell had a letter to that effect from the attorney general's office.

The first physically documented interaction Stanford had with the drug scheme occurred on August 22, 2011, when he received an email from Daniel Francis. Francis, who had a personal penchant for cannabinoids, had formed—at the suggestion of Malone and Green—a political action committee for the synthetic marihuana industry—the Coalition for Cognitive Liberty—to lobby and recommend manufacturing guidelines. Similarly, working with manufacturers such as NutraGenomics, Francis formed the Retail Compliance Association (“RCA”), incorporated under California law, to keep retailers abreast of the latest regulatory developments and to track legislation affecting cannabinoids.

Francis's email was entitled “RCA membership related documents” and contained nothing but attachments related to the RCA, including documents describing the

823 F.3d 824

organization, guidelines for how to display synthetic marihuana products, and advice on interactions with police. Francis claimed the email was a follow-up to an introductory phone call he had with Stanford, although Stanford contends that his phone records show no evidence of such a call. On August 26, Francis sent a follow-up email asking whether Stanford had “received the documents.” Francis also mentioned a possible misunderstanding “on the call” and provided clarification that the RCA was “available as a plaintiff.” The same day, Stanford replied that he “did receive the documents” and was “currently reviewing” them and would contact Francis “sometime next week.”

Espinoza testified that he went to Lafayette in August (“either the second or third week”) and met with Buswell, Domingue, Barrow, and Stanford at a restaurant. Domingue was introduced as “Curious Goods' attorney,” Stanford as Buswell's “corporate attorney.” Domingue told Espinoza, who still had concerns about the legality of Mr. Miyagi in Louisiana, that they had gotten the product “approved by the AG ... the District Attorney ... all the local authorities.” Stanford and Domingue were sitting on either side of Buswell, yet Stanford said nothing in regard to Domingue's statement about approval from the authorities.

Francis testified that he traveled to Lafayette in September.1 He gave a presentation at a meeting at Buswell's house, where he went through his “standard spiel” for attorneys, covering “the cannabinoid receptor, why these products work, why they're on the market, why they're being sold,” as well as the “Analogue Act.” Present were Barrow, Buswell, Espinoza, Stanford, and Domingue; nevertheless, other witnesses testified that “Stanford showed up later” and “came in at the end of the meeting.”

Francis described the meeting “as a dynamic conversation,” not just a solo presentation. He covered “the exact chemical that was being used in this, which was AM–2201” and its relation to the DEA ban. Francis claimed he “tried to represent it in a way that was legal.” He also stated that they “didn't feel threatened by the Analogue Act,” because they “didn't think the science [presumably, demonstrating the similarity of AM–2201 to JWH–018] existed at the time.” Nevertheless, Francis talked about how AM–2201 and JWH–028 were “visually similar.” Francis testified that he told Stanford specifically about the industry's shift from JWH–018 to AM–2201. The group “handled,” “displayed,” and “opened” a package of Mr. Miyagi at the meeting. Barrow and Buswell suggested forming a Louisiana branch of the RCA.

Barrow testified that at some time in October, he and Espinoza traveled to Lafayette with the primary purpose of getting Buswell, Domingue, and Stanford to show them the purported letter from the attorney general. After Buswell declined to talk about the letter over dinner, Barrow showed up at Stanford's law office and demanded to see it. Stanford confessed that there was no letter but insisted he had “a gentleman's handshake agreement” with the attorney general allowing them to sell Mr. Miyagi in the state.

On October 27, Domingue forwarded Stanford an email that purported to have, as attachments, lab reports on Mr. Miyagi, although the reports were not actually attached.

823 F.3d 825

Domingue specifically noted the presence of AM–2201. On November 2, Francis emailed Stanford several documents for a meeting that day, including a budget and business plan for the RCA. On November 3, at Barrow's request, Stanford emailed a reporter a response to a story about a teenage boy who had died after smoking synthetic...

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53 practice notes
  • Floyd v. Vannoy, No. 17-30421
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 6, 2018
    ..., Brady , 373 U.S. at 87, 83 S.Ct. 1194. Favorable evidence includes any exculpatory or impeachment evidence. United States v. Stanford , 823 F.3d 814, 841 (5th Cir. 2016) (quoting United States v. Barraza , 655 F.3d 375, 380 (5th Cir. 2011) ).The State contends the fingerprint-comparison r......
  • United States v. Gibson, No. 15-20323
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 7, 2017
    ...to promote the carrying on of specified unlawful activity[.]" § 1956(a)(1)(A)(i) (emphasis added); see also United States v. Stanford , 823 F.3d 814, 849 (5th Cir. 2016). Like a health care fraud conspiracy, this crime needs no overt act. 875 F.3d 190 Whitfield v. United States , 543 U.S. 2......
  • MONEY LAUNDERING
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • July 1, 2021
    ...employee who accepts the cash if the employee knows that the money represents the proceeds of crime.”). 55. See United States v. Stanford, 823 F.3d 814, 849 (5th Cir. 2016) (“[I]n the context of a suff‌iciency challenge to a money-laundering conspiracy . . . direct evidence is unnecessary; ......
  • United States v. Bolton, No. 17-60502
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • October 26, 2018
    ...of the witnesses on the jury or observed the demeanor of the witnesses ourselves, as has the trial judge." United States v. Stanford , 823 F.3d 814, 838 (5th Cir. 2016). Questions of law are reviewed de novo. United States v. Anderson , 755 F.3d 782, 800 (5th Cir. 2014). When there are mixe......
  • Request a trial to view additional results
52 cases
  • Floyd v. Vannoy, No. 17-30421
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 6, 2018
    ..., Brady , 373 U.S. at 87, 83 S.Ct. 1194. Favorable evidence includes any exculpatory or impeachment evidence. United States v. Stanford , 823 F.3d 814, 841 (5th Cir. 2016) (quoting United States v. Barraza , 655 F.3d 375, 380 (5th Cir. 2011) ).The State contends the fingerprint-comparison r......
  • United States v. Gibson, No. 15-20323
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 7, 2017
    ...to promote the carrying on of specified unlawful activity[.]" § 1956(a)(1)(A)(i) (emphasis added); see also United States v. Stanford , 823 F.3d 814, 849 (5th Cir. 2016). Like a health care fraud conspiracy, this crime needs no overt act. 875 F.3d 190 Whitfield v. United States , 543 U.S. 2......
  • United States v. Bolton, No. 17-60502
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • October 26, 2018
    ...of the witnesses on the jury or observed the demeanor of the witnesses ourselves, as has the trial judge." United States v. Stanford , 823 F.3d 814, 838 (5th Cir. 2016). Questions of law are reviewed de novo. United States v. Anderson , 755 F.3d 782, 800 (5th Cir. 2014). When there are mixe......
  • United States v. Thomley, CRIMINAL CASE NO. 2:18-CR-18-KS-MTP
    • United States
    • United States District Courts. 5th Circuit. Southern District of Mississippi
    • December 10, 2018
    ...knew involved the proceeds of unlawful activity, (3) with the intent to promote or further unlawful activity." United States v. Stanford, 823 F.3d 814, 849 (5th Cir. 2016) (quoting United States v. Brown, 553 F.3d 768, 782 (5th Cir. 2008)). The concealment prong requires proof that "the dir......
  • Request a trial to view additional results
1 books & journal articles
  • MONEY LAUNDERING
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • July 1, 2021
    ...employee who accepts the cash if the employee knows that the money represents the proceeds of crime.”). 55. See United States v. Stanford, 823 F.3d 814, 849 (5th Cir. 2016) (“[I]n the context of a suff‌iciency challenge to a money-laundering conspiracy . . . direct evidence is unnecessary; ......

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