The Ecstasy and the Ecstasy

United States v. Ogando, No. 05-0236-cr (2d Cir. October 20, 2008) (Kearse, Calabresi, Sack, CJJ)

Francisco Ogando, a licensed livery cab driver, was convicted of participating in an ecstasy importation and distribution conspiracy. On appeal, the circuit held that the evidence was insufficient.

Background

Angel Gomez, a drug courier, was arrested at Kennedy Airport with ecstasy that he had imported from Belgium, and agreed to cooperate. He told the agents that he was supposed to call “Frank” - defendant Ogando - on arrival. He did so, and Ogando said he was right near the airport. Ogando found Gomez and brought him to his car. They did not discuss drugs, money or where they would be going, and were arrested before they got into Ogando’s car.

Ogando was found to have a cellphone - Gomez had been given that number by his handlers - a business card that mentioned Brussels and noted what Gomez would be wearing, and other papers with the names and telephone numbers of other conspirators, some of whom Ogando was related to. In a post-arrest statement, Ogando told the agents that he was at the airport because a friend named Alex - another co-conspirator - had asked him to pick up someone at the airport. He falsely declared that he did not know Alex’ last name, and also said that he did not know any of the other conspirators and did not know why their names and numbers were found in his car.

Other evidence showed that Ogando had been in the Philadelphia area when one of the conspirators was arrested there, and that after that arrest, Ogando made several calls to others associated with the scheme.

The Circuit’s Ruling

The court began by noting that, to prove conspiracy or aiding and abetting, the government must show more than “evidence of a general cognizance of criminal activity, suspicious circumstances, or mere association with others engaged in criminal activity.” All of the counts of which Ogando was convicted required a showing of specific intent - that he “consciously assisted the commission of the specific crime in some active way.”

Where the alleged conspirator is a driver, there must be more evidence than a co-conspirator’s testimony that he was to meet the driver at the airport and the driver’s actual presence there. Simply “waiting for someone qt an airport, even under ... suspicious circumstances ... is not by itself an act from which knowing guilty involvement can be reasonably inferred.” Here, the court held, that was all, in essence, the government proved.

Nothing about Ogando’s presence was in any way out of the ordinary for a livery cab driver meeting a passenger at the airport. And his personal relationship with some of the conspirators simply explained why they hired him as a driver, rather than someone else. It did not show that he “knew the nature of the conspirators’ business.” Thus, this evidence was probative of the co-conspirators’ state of mind, but not Ogando’s. Moreover, the evidence that Ogando was in Philadelphia when another participant was arrested indicated that Ogando was there to pick him up, but still did not prove that he knew the nature of the conspiracy. It simply showed that “Ogando was a livery cab driver regularly used by members of this conspiracy.”

Finally, Ogando’s false exculpatory statements on arrest could not fill the void. Although circumstantial evidence of a consciousness of guilt, “falsehoods told by a defendant in the hope of extricating himself from suspicious circumstances are insufficient proof on which to convict where other evidence of guilt is weak and the evidence before the court is as hospitable to an interpretation consistent with the defendant’s innocence as it is to the government’s theory of guilt.”

Comment

This is a great victory for Ogando. Sadly, he had completed his 30-month sentence by the time he won his appeal. Indeed, this case seems to have taken an unusually long time to get to this point - the conduct occurred in 2002, the appeal has a 2005 docket number, but was not heard until 2008. The opinion contains no explanation for the delay.

Buyer's Remorse

United States v. Hawkins, No. 07-3018-cr (2d Cir. October 16, 2008) (Straub, Raggi, CJJ, Sessions, DJ)

Alex Luna sold drugs in Danbury, Connecticut, from 2002 to 2005. Warren Hawkins was convicted, after a jury trial, of one count of conspiring with Luna to distribute less than 500 grams of cocaine and less than five grams of crack. After the verdict, the district court granted Hawkins’ Rule 29 motion, finding that, although Hawkins bought drugs from Luna with intent to resell them, there was insufficient evidence to establish that Hawkins participated in Luna’s conspiracy. On the government's appeal, the circuit reversed.

Background

In February 2005, Hawkins spoke with a another Luna co-conspirator about purchasing five grams of cocaine. They discussed price, quality, and how Hawkins would raise the money, but the sale did not take place. A few days later, Hawkins spoke with Luna and said that some of his co-workers were looking for drugs; they agreed on a quantity, 3.5 grams, and the sale was completed. Five days later, Hawkins purchased 7 more grams from Luna. Six days after that, Hawkins called Luna and asked him to sell him 3.5 grams on credit. Hawkins said he would sell the drugs to the customer and immediately repay the debt. This sale did not take place.

One co-conspirator testified that Hawkins was an addict who bought drugs, but was neither a drug dealer nor a member of the Luna organization. This witness characterized Hawkins as a “go-between.”

The Circuit’s Decision

The court began its analysis with a discussion of the “buyer-seller rule,” under which a mere buyer-seller relationship “is insufficient to establish a conspiracy” because there is no agreement to “advance any joint interest.” However, while the existence of buyer-seller relationship alone does not establish a conspiracy, if there is additional evidence showing an agreement to join together and accomplish an objective beyond the sale transaction, the evidence can support a finding that the parties participated in a conspiracy. Some of the factors that should be considered on this question are the length of the parties’ affiliation, the level of mutual trust, standardized dealings, sales on credit, and the quantities involved. However, even evidence that a buyer intends to resell the product instead of personally consuming it does not necessarily establish that the buyer has joined the seller’s distribution conspiracy, because more is required than “mere knowledge of the purpose of the conspiracy.”

Here, however, it was clear that (1) the Luna conspiracy existed, (2) Hawkins knew about it, (3) purchased drugs from it, (4) intended to resell at least some of the drugs, and (5) Luna knew this. The court found that these last two factors constituted sufficient evidence that Hawkins participated in Luna’s conspiracy by entering into a distribution agreement with Luna himself that “afforded Hawkins a source of cocaine and Luna another outlet - albeit small - for his contraband.” Moreover, the evidence supported an inference that Hawkins was “not freelancing;” but rather that he “agreed to engage in this conduct with Luna on an ongoing basis” and that “Hawkins and Luna trusted each other to work together as supplier and street-level dealer.”

Hawkins purchased drugs, or sought to, from Luna on several occasions within a short time. He brought potential customers to Luna’s attention, made arrangements with Luna to obtain cocaine for resale, and used the cellphone number that Luna had given him. There was also a level of mutual trust - Hawkins indicated that he preferred Luna over other local dealers and Luna agreed, at least in principle, to extend credit to Hawkins. This conduct established sufficiently that Hawkins was more than a mere “go-between.”

Slight Change

United States v. Huezo, No. 07-0033-cr (2d Cir. October 14, 2008) (Newman, Walker, Sotomayor, CJJ)

Defendant Huezo was convicted, after a jury trial, of money laundering and money laundering conspiracy. The district court granted his post-verdict Rule 29 motion, and the government appealed. A divided appellate panel reversed. It also, however, unanimously wrought an important change in conspiracy law: an elimination of the so-called "slight evidence" rule.

Background

On November 5, 2004, two of Huezo’s co-conspirators drove from Connecticut to New York in a Jeep registered to Heuzo to discuss delivering $1 million to an undercover agent, who was posing as a money launderer. Three days later, Huezo drove one of them back to New York, opened the trunk from the driver’s seat, and the agent recovered a bag containing half of the money. It was packaged in bundles, as is typical for money laundering transactions. The two men returned to a house Connecticut, picked up the third co-conspirator, and went out to dinner.

Two days later, Huezo left the house carrying a small back bag that he put in the Jeep. He then left the Jeep and watched as one of his associates put a black suitcase in the back. They drove to New York, but en route, they were pulled over for speeding. The Jeep was registered in Huezo’s name at the address in Connecticut, although the registration was not yet on file, which suggested that it was newly registered. The car was impounded and, during an inventory search, officers discovered $500,000 in the black suitcase and $6000 in Huezo’s own bag.

Further investigation revealed that the three men had traveled from California to Connecticut a few days before the deliveries.

The Majority’s View

Huezo was convicted of “transaction” money laundering, under which the government was required to prove that he knew that “the purpose or intended aim of the transaction was to conceal or disguise a specified attribute of the funds.” This same intent must be proven for aiding-and-abetting and conspiracy. Here, the majority held that there was sufficient evidence for a rational jury to conclude that Huezo had the requisite criminal knowledge and intent.

First, the court noted that there was ample evidence that the money involved in the two deliveries constituted the proceeds of criminal activity - drug trafficking, specifically - and that those deliveries were transactions designed to conceal the nature of the money.

It also concluded that there was sufficient evidence to connect Huezo to the conspiracy and establish both that he knew the conspiracy’s goals and shared his co-conspirator’s specific intent. The evidence here “went well beyond mere presence or association.”

First, while there was no direct evidence that Huezo “saw or knew what was in any of the bags,” there was sufficient circumstantial evidence. His “special treatment” of the small bag was evidence that the $6000 “constituted payment” for his efforts, and the $6000 was packaged in the same way as the rest of the laundered funds. Moreover, Huezo resided in the same house as the co-conspirators, which was also where the money was kept. From this, a jury could “reasonably infer that Huezo had the requisite knowledge and specific intent” to commit money laundering.

In addition, jurors relying “on their common sense and experience in drawing inferences” could reasonably conclude that “the principals in the conspiracy would not have trusted an outsider (with no knowledge of their criminal purpose) to transport $1 million in laundered funds,” to be present when the funds were delivered, and to share their house for several days.

Finally, the court viewed the evidence of the three conspirators' joint travel as further supporting a finding of guilt. It led to a “reasonable inference that the three men traveled from California to Connecticut and met for the express purpose of facilitating the money laundering conspiracy,” and thus that Huezo participated in it by design and not simply by happenstance.”

The Dissent

Judge Sotomayor dissented. In her view there was insufficient evidence that Huezo had either the requisite knowledge or the specific intent to launder. Rather, the evidence only “weakly” supported a view that Huezo “may have known” that the suitcases contained money and that the money was the proceeds of criminal activity, but there was not enough evidence that he knew the purpose of the transactions; that is, that the money was to be laundered.

The “Slight Evidence” Rule

There was one thing, however, that united all three judges, and indeed, the entire court, since the opinion was circulated to all of its judges: a rejection of formulation - invoked by the government here - that, once a conspiracy has been established,” the evidence necessary to link a defendant to it “need not be overwhelming,” or need only be “slight.” This opinion conclusively holds that these “formulations do not accurately describe the government’s burden of proof in conspiracy cases, and the use of [them] should be discontinued.”

Indeed, in his concurrence, Judge Newman, does a terrific job of debunking this language, tracing it back to its origins in a 1930 Fifth Circuit case, where it appeared “without any citation,” then noting that the Fifth Circuit itself found the use of the “slight evidence” formulation in a jury charge to be structural error - that is, one for which no harmless error analysis is required - in 1977.

Medicareless

United States v. Wexler, No. 06-1571-cr (2d Cir. April 3, 2008) (Miner, Raggi, CJJ, Rakoff, DJ)

David Wexler was a Manhattan dermatologist who ran a prescription mill. He would prescribe painkillers to patients whom he did not examine or treat, often with the understanding that either the prescriptions or the medications would be sold to others. The prescription mill was also the fuel for an ongoing Medicare fraud in which he would, for these same patients, bill the government for multiple procedures that he did not perform. Wexler was convicted after a jury trial of narcotics and fraud counts and was sentenced principally to 20 years’ imprisonment. On appeal, the majority of a divided panel reversed his conviction on the most serious drug count, concluding that the evidence was insufficient, and remanded the case for resentencing.

Wexler had a patient named Barry Abler, for whom he wrote numerous prescriptions for painkillers: Dilaudid, Percocet, Vicodin and Soma. Abler also introduced others to Wexler for the same purpose, and Wexler wrote them prescriptions for many of the same drugs although, according to the trial testimony, not Dilaudid. On May 19, 2001, Wexler gave Abler a prescription for Dilaudid, and Abler died nine days later of an overdose.

Count One of the indictment charged Wexler with conspiracy to distribute Dilaudid, Percocet, Vicodin and Xanax, and conspiracy to distribute Dilaudid resulting in death. Count Nine charged him with a substantive count of distributing Dilaudid resulting in death. The jury convicted him of both; with respect to Count One, it found that the conspiracy resulted in Abler’s death; with respect to Count Nine, it concluded that the distribution did not result in Abler’s death. As a result of the conviction on Count One, however, Wexler was subject to, and received, a twenty-year mandatory minimum sentence.

On appeal, the majority held that the evidence supporting the conviction of conspiracy to distribute Dilaudid causing death under Count One was legally insufficient, because there was no evidence that Wexler conspired with Abler to distribute that particular drug. Under the so-called “buyer-seller” rule, an “agreement that one member of a conspiracy supply another with a drug . . . does not comprise an agreement to distribute that drug.” The trial evidence established that Abler was the only one of the relevant patients to receive prescriptions for Dilaudid; moreover, there was no proof that “Abler agreed to, or did, distribute Dilaudid” to anyone else. Indeed, the quantities of Dilaudid that Wexler prescribed to him were consistent with personal use. Thus, Abler and Wexler were “mere buyer-and-seller” - by prescription, of course - with respect to Dilaudid. While Wexler’s illegal sale of the drug to Abler was a substantive crime, that sale agreement itself was not a conspiracy to distribute because it had “no separate criminal object.”

The court rejected the government’s theory that Abler and Wexler’s “multi-year, multi-member conspiracy” to distribute many different drugs was itself sufficient evidence. Calling this a “broad brush approach,” the majority noted that the specific charge in the indictment was to distribute “Dilaudid,” not a “variety of drugs,” causing death. “The only evidence that could bring Abler and Wexler out of the realm of buyer and seller with respect to Dilaudid was evidence suggesting an intent to redistribute Dilaudid itself.” Here, there was no such evidence.

The majority ended with bit of good old-fashioned Apprendi reasoning, noting the sentencing disparities in the drug statutes, which depend on the type of drugs involved. Where “the type of drug is a critical determinant of the length of a defendant’s sentence, the Government should be required to prove what it alleges.”

Judge Raggi, in dissent, criticized every aspect of the majority’s decision, which she deemed an “unwarranted extension of the buyer-seller rule.” To her, the evidence showed that Abler and Wexler were more than “mere” buyer and seller. She also disagreed with the majority’s insistence that the pleadings in this case required specific evidence of an agreement to distribute Dilaudid, and with its conclusion that there was insufficient evidence of a conspiratorial intent to redistribute that particular drug.