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A money-laundering conviction reversed for insufficient evidence plus the D.C. Circuit agrees that individualized jury determinations of drug quantity in conspiracy prosecutions are necessary to trigger mandatory minimum sentences – United States v. Calvin Stoddard, et al, __ F.3d _ (D.C. Circuit, No. 15-3060 (June 15, 2018).

Every May and June the black-robed folks down at 3rd and Constitution like to shake off DeeCee’s early summertime torpor by reversing some matters and announcing some new legal principles. This was Circuit Judges Griffith, Srinivasan and Wilkins’ turn.

Back in 2012, the Government began investigating a notorious drug dealer, Jermaine Washington, who had recently been released from prison. After employing traditional surveillance techniques, the Government successfully applied for two wiretaps on Washington’s cell phone. The evidence presented at appellants’ trial consisted largely of recorded conversations and Washington’s interpreting language in his conversations with the three defendants. A jury convicted Stoddard and Woodruff under 21 U.S.C. §§ 841(a)(1), 841(b)(1), and 846 for conspiracy to distribute and possess with intent to distribute heroin. It acquitted Jerome Cobble, Washington’s cousin, of those charges but convicted him on a separate charge of conspiracy to launder money in violation of 18 U.S.C. § 1956(h).

In an opinion authored by Circuit Judge Wilkins, the panel concluded that Cobble’s conviction of money laundering conspiracy was based on insufficient evidence. It overruled his colleagues’ merits-based appeals with one exception. It stated that for a defendant to be sentenced based on a mandatory minimum triggered by a certain quantity of drugs, a jury must find the drug quantity attributable to the defendant on an individualized basis, not just the drug quantity attributable to the conspiracy as a whole. And based on the intervening decision in Beckles v. United States, 137 S. Ct. 886 (2017), the panel instructed the district court on remand to re-examine the career-offender enhancement meted out to Woodruff. (Slip Op. at 1-2).

At the outset, the panel gave short shrift to appellants’ claim that the statutory “necessity” requirements for the wiretaps hadn’t been met. (Slip Op. at 11-14) (citing, inter alia, United States v. Glover, 681 F.3d 411, 420 (D.C. Cir. 2012)).

Moving on, Cobble contended that there was insufficient evidence to sustain his money-laundering conspiracy conviction and that the District Court had erred in denying his motion for acquittal. Cobble had been charged with violating both prongs of 18 U.S.C. § 1956(a)(1) – so-called “promotional money laundering” under subsection (A) and with “concealment money laundering “under subsection (B). The Government’s trial strategy focused on the concealment theory. Cobble maintained that while the underlying financial transaction (here, cousin Jermaine’s drug dealing) had yielded ill-gotten gains, there no evidence that Jerome Cobble had attempted to “hide the provenance of the funds involved,” as necessary to sustain a conviction under decisions such as United States v. Law, 528 F.3d 888, 895 (D.C. Cir. 2008), and United States v. Adefehinti, 510 F.3d 319, 322-23 (D.C. Cir. 2007).  (Slip Op. at 14-16).

The Court of Appeals agreed that Cobble’s conviction couldn’t be upheld under a concealment theory of § 1956(a)(1)(B)(i). No evidence showed that the transactions for which he was convicted were designed to conceal the source of the funds. Moreover, Cobble’s innocent explanation for engaging in the transaction – helping his cousin purchase a car for personal use – was never challenged by the Government through the presentation of evidence. (Slip Op. at 17-18). Although the Government baldly argued that sufficient evidence was presented to sustain Cobble’s conviction, Circuit Judge Wilkins’ opinion scotched that notion. There was no evidence that the transaction was designed to conceal the source of the funds, let alone that Cobble knew of any such design. “Cobble and Washington openly went to the dealership and purchased the car together, both sitting in the finance department as they made arrangements for Cobble to purchase the Lexus in his name and for Washington to take possession of the vehicle. And after the purchase, Washington took possession of the Lexus, keeping it at his house until it was stolen shortly thereafter. Nothing about the transaction to purchase the Lexus SUV shows any indicia of a design to conceal the ‘nature, the location, the source, the ownership, or the control” of the proceeds used to purchase the Lexus.’” (Slip Op. at 18-19).

And for good measure, the court rejected the Government’s claim that the evidence presented could sustain Cobble’s conviction under the Statute’s promotion prong. “The Government had to prove beyond a reasonable doubt that Cobble intended to promote Washington’s drug dealing in order to sustain a conviction under § 1956(a)(1)(A)(i).” (Slip Op. at 19 (citing and quoting United States v. Trejo, 610 F.3d 308, 314 (5th Cir. 2010)). Here, as Appellants pointed out, “‘the Government introduced no evidence that Cobble ever aided Washington, held drugs or money for him, accompanied Washington to any drug transactions, or was aware of exactly how his cousin distributed drugs, including whether Washington used a car in any drug activities.’” (Slip Op. at 19) (quoting Appellant’s Reply Brief).

Furthermore, the panel noted that Cobble had offered an innocent explanation for his actions: he helped his cousin buy the SUV because Jermaine needed a car but had bad credit and no driver’s license. (Slip Op. at 19). “The need for evidence that excludes such an innocent explanation is especially important . . .  because of the fine line between laundering laundering and merely spending illicit funds.” (Slip Op. at 19-20) (citing Law, 528 F.3d at 896). Crucially, Washington himself had testified that Cobble had nothing to do with his heroin-dealing operation, and “the Government proffered no evidence at trial to overcome its own witness’s testimony that there was an innocent explanation for Cobble’s assistance in purchasing the Lexus SUV.” (Slip Op. at 20) (emphasis original).

The Government didn’t give fail to give the proverbial Old College Try. It insisted at oral argument that “there was a ‘mountain of evidence’ showing that Cobble’s knowledge about the drug-conspiracy was so extensive that it could demonstrate to the jury Cobble’s intent.” The panel scoffed at that claim.  “None of that evidence suffices to demonstrate that Cobble even knew about the heroin-trafficking operation, much less that he intended to promote Washington’s heroin dealing.” (Slip Op. at 20) (emphasis original).

Having disposed of Cobble’ appeal, the panel then reviewed Woodruff and Stoddard’s claim that there was insufficient proof beyond a reasonable doubt that the two men had “‘knowingly entered into a conspiracy with the specific intent to further the objective of distributing narcotics.’” (Slip Op. at 21) (quoting United States v. Gaskins, 690 F.3d 569, 582 (D.C. Cir. 2012)). That argument didn’t fly, as they say, because “despite Washington’s unreliability on the stand, the recorded conversations between Washington and Woodruff and Washington and Stoddard are not as ambiguous as Appellants suggest.” And so their merits-based theory foundered – the Circuit “Court does not revisit the jury’s determination to credit a witness.” (Slip Op. at 22-23) (citing United States v. Jenkins, 928 F.2d 1175, 1178 (D.C. Cir. 1991)).

Next the panel rebuffed Woodward’s argument that the District Court had abused its discretion by ruling that if Woodruff were to testify that the Government would be allowed to impeach him based on his conviction for armed robbery in 1984.Since Woodruff didn’t testify his argument was foreclosed. In Luce v. United States, 469 U.S. 38, 43 (1984), the Supreme Court held that “‘to raise and preserve for review the claim of improper impeachment with a prior conviction, a defendant must testify.’” (Slip Op. at 24).

Woodruff and Stoddard were more successful in claiming that the District Court improperly sentenced each of them to the mandatory minimum for entering a conspiracy to distribute 100 grams or more of heroin, even though the jury did not make individualized findings as to the amount of heroin attributable to each of them.

The Court of Appeals began its analysis by stating that there is an inter-circuit split on whether an individualized jury finding as to the quantity of drugs attributable to (i.e., foreseeable by) an individual defendant is required to trigger a mandatory minimum, or if it is sufficient that the jury merely find that the entire conspiracy led to distribution of the mandatory-minimum-triggering quantity. In United States v. Law, supra, the D.C. Circuit had suggested “a preference for the former approach,” one that would require the jury to find that each defendant entered the conspiracy to distribute with the understanding that the 100-gram quantity was reasonably foreseeable, or within the scope of the conspiracy that defendant joined. The panel made that individualized approach the law of the Circuit and vacated Woodruff and Stoddard’s sentences. (Slip Op. at 25-26).

Applying a de novo standard of review (United States v. Cook, 594 F.3d 883, 886 (D.C. Cir. 2010)), the panel looked first to Supreme Court cases such as Apprendi v. New Jersey, 530 U.S. 466, 490 (2000), which recognized that a jury must determine the facts “‘that increase the prescribed range of penalties to which a criminal defendant is exposed,’”and Alleyne v. United States, 570 U.S. 99, 108 (2013), which held that a jury must determine those “‘[f]acts that increase the mandatory minimum sentence . . . .’” The panel also observed that in Burrage v. United States, 134 S. Ct. 881 (2014), the Supreme Court held that before imposing the statutory mandatory minimum triggered under when death results from a distributed drug – that a jury find the fact of resultant death that triggers the mandatory minimum.  The D.C. Circuit found that “[t]hese principles apply just the same to the fact of a mandatory-minimum drug quantity.” (Slip Op. at 26-27).

The more difficult question was whether an individualized finding as to each defendant was necessary. The panel recognized that an inter-Circuit split existed but that “all circuits to explicitly address the issue in Alleyne’s wake have adopted or followed the individualized approach” and that five circuits that initially adopted the conspiracy-wide approach have recently questioned whether that approach remains correct. (Slip Op. at 27-29). The panel chose to adopt the individualized approach, for “[i]t is a core principle of conspiratorial liability that a co-conspirator may be held liable for acts committed by co-conspirators during the course of the conspiracy only when those acts are “in furtherance of the conspiracy” and “reasonably foresee[able]” to the defendant.” (Slip Op. at 29) (citing Pinkerton v. United States, 328 U.S. 640, 647-48 (1946); and United States v. McGill, 815 F.3d 846, 917 (D.C. Cir. 2016)). That principle, Judge Wilkins wrote also underlay Law, a case in which the conviction only was upheld because the case had arisen in the context of plain error review and the evidence of the requisite drug quantity was “‘overwhelming.’” (Slip Op. at 30 & n.4) (citing Law, 528 F.3d at 906).

Before leaving the issue, the panel observed an irony in the Government’s endorsement of the conspiracy-wide approach, which it characterized as appearing to be “a one-case wonder” since the Government could not refer to any other cases in this Circuit in which it is advancing the conspiracy-wide approach. (Slip Op. at 31-32). Because the evidence of quantity of heroin involved in the conspiracy that was reasonably foreseeable to Woodruff and Stoddard was “far from overwhelming,” the panel ordered that they be re-sentenced based on the crime for which the jury had found each one of them individually liable: a conspiracy to distribute an indeterminate quantity of heroin. (Slip Op. at 32).

Finally, the Court of Appeals instructed the District Judge on remand to assess whether Woodruff’s 1984 armed robbery conviction could serve as a valid predicate offense for a career-offender enhancement. The panel recognized that it had discretion to decide this as a legal issue but chose to defer the matter for the time being. (Slip Op. at 33-34) (citing Beckles, 137 S. Ct. 886).

Edward Sussman obtained a highly credible victory for Cobble. Stoddard and Woodruff were represented ably by Jason M. Wilcox (who argued the cause for all appellants), William Burgess and William L. Welch, III.

  • Steve Leckar, [sleckar@kalbianhagerty.com], of counsel to Kalbian Hagerty LLP, enjoys following and occasionally arguing in the D.C. Circuit.