Strict Liability Enhancement for Possessing a Stolen Firearm Survives Havis, Rehaif

The sentencing guideline for unlawful possession of a firearm increases the offense level if the firearm was stolen. This enhancement applies on a strict liability basis; it does not require any mens rea. The Sixth Circuit had previously approved holding defendants strictly liable for possessing stolen firearms, noting the commentary to the guidelines states that the enhancement applies regardless of whether the defendant knew or had reason to know the firearm was stolen.

However, in light of recent case law, Anthony Palos argued for a mens rea requirement. First, the defendant relied on the Sixth Circuit’s en banc opinion in United States v. Havis, 927 F.3d 382 (6th Cir. 2019). In Havis, the Court held that the commentary to the guidelines improperly added attempt crimes to the list of controlled substance offenses. Applying Havis, the defendant argued that the commentary improperly expanded § 2K2.1(b)(4) by stating that there is no mens rea requirement.

The Sixth Circuit rejected this argument. Instead, the Court held that the text of the enhancement—through its silence on mens rea—bore the strict liability interpretation contained in the commentary. Because other parts of § 2K2.1 impose mens rea requirements, the fact that the stolen firearm enhancement fails to do so supports a strict liability interpretation.

The defendant also relied on Rehaif v. United States, 139 S. Ct. 2191 (2019). In Rehaif, the Supreme Court established a mens rea requirement for convictions under 18 U.S.C. § 922(g), despite the statute's lack of an express mens rea element. The Rehaif Court relied on a “presumption of scienter” to apply the requirement. Mr. Palos argued that the same presumption of scienter should apply to create a mens rea requirement for § 2K2.1(b)(4).

However, the Sixth Circuit rejected this argument. The Court held that the guidelines are “fundamentally distinct” from statutes when it comes to mens rea. Namely, statutes define the boundaries of lawful conduct, while the guidelines punish defendants for the consequences of their unlawful acts.

In a different part of the opinion, the Court once again held that an offer to sell does not qualify as a controlled substance offense. Mr. Palos had a previous conviction under Ohio Revised Code § 2925.03(A)(1), which criminalizes “sell[ing] or offer[ing] to sell a controlled substance.” Following United States v. Cavazos, 950 F.3d 329 (6th Cir. 2020) and United States v. Alston, ___ F.3d ___, 2020 WL 5755465 (6th Cir. Sept. 28, 2020), the Court held that an offer to sell a controlled substance qualifies as an attempt crime. Accordingly, after Havis, an offer to sell cannot qualify as a controlled substance offense under the guidelines.

Full opinion available here.

Admission of Defendant’s Racist Rant Violates Rules 403, 404

Does after-hours racism reflect poor business judgement? That question is the crux of the Sixth Circuit’s recent decision in United States v. Hazelwood. The government charged multiple employees at a large gas company with conspiracy to commit wire fraud. The fraud centered around rebates which the employees promised, but then failed to deliver. Many employees pleaded guilty, but Mark Hazelwood—the company’s president—took the case to trial.

Hazelwood’s main defense was that he did not know about the fraud that his subordinates committed. However, defense counsel also elicited some testimony about Hazelwood’s business acumen. One witness testified that Hazelwood was an excellent president who had great relationships with customers. Counsel cross-examined another witness about whether it would have been logical for Hazelwood to participate in the fraud. Counsel established that because the fraud was such a small part of the company’s sales, it was “incredibly stupid and dumb from a business standpoint” to risk bringing down the company by committing fraud. 

The government then sought to introduce a recording of Hazelwood making extremely racist comments and using slurs. A cooperating witness had worn a wire to the company’s retreat. The witness had recorded an earlier session where executives discussed the fraud scheme. However, Hazelwood had not been present at that session. After the business meetings had ended, the employees watched a football game while drinking and “spewing profanities about African Americans and women.” Hazelwood arrived and participated prominently in this racism.

The government argued that this recording was appropriate rebuttal to Hazelwood’s character evidence for good business judgement. Hazelwood objected, arguing that he had not introduced character evidence, that the recording was not related to good business judgement, and that the danger of unfair prejudice outweighed any probative value.

The district court agreed with the government. It ruled that the defense had elicited testimony that Hazelwood was too good a businessman to risk the fraud. And the racist recording supported the argument that Hazelwood was not too good a businessman to engage in conduct that would put the company at serious risk if it were discovered. 

On appeal, a divided panel reversed the decision. The majority held that Hazelwood’s racism was not relevant to the elements of the crime or to Hazelwood’s argument that he was a good businessman. The Court cited Henry Ford, “a rabid anti-Semite” who nevertheless had great business acumen. Hazelwood’s despicable comments—made at a private after hours gathering—did not reflect on his business judgement.

Additionally, the district court violated Rule 405 in two ways. The court had allowed the government to present extrinsic evidence of alleged character evidence, and the evidence was of specific instances of conduct rather than testimony about reputation.

The racist recording was also improper propensity evidence. The government was “using another act (racist and misogynist language), to prove that Hazelwood had a character trait (recklessness), such that on a particular occasion he acted in accordance with that character trait (by committing fraud).”

Finally, the danger of unfair prejudice substantially outweighed any probative value. The recording was so offensive that it posed an extreme risk of unfair prejudice; “Hazelwood and his companions ma[d]e absurdly offensive remarks about African Americans and women and laugh[ed] along to a wrenchingly racist and misogynistic tune.” Accordingly, the Sixth Circuit reversed and remanded.

The dissent would have affirmed the district court. The dissent argued that the recording was relevant. If Hazelwood was willing to use such offensive language with his subordinates, even after hours, it made it less probable that he was a good businessman. And whether Hazelwood was a good businessman was relevant as to whether he would have risked participating in the fraud.

Full opinion available here.


Giving Officers a Tour of Your Marijuana Grow Operation Constitutes Consent to Search

 In United States v. Blomquist, the Sixth Circuit held a search of the defendant's property that included an expansive marijuana grow operation did not violate the Fourth Amendment where the defendant voluntarily led them on a detailed tour of the grounds and discussed his operation with them at length. Officers arrived on Mr. Blomquist's father's property with a search warrant for the premises. They placed Mr. Blomquist in cuffs and Mirandized him. He agreed to talk, at which point he was uncuffed. He explained he was running a legal growing operation and took officers on a tour of his plants in a chicken coop and greenhouse, as well as a storage facility, answering all of their questions along the way.

Unfortunately, his operation was not legal. This was true for a variety of reasons including that the operation was too large to comply with Michigan law, Mr. Blomquist had a prior felony conviction that prohibited him from owning such an operation, and he admitted to police that he sold his product to a drug dealer (not a legitimate dispensary). At the trial level, Mr. Blomquist argued that officers exceeded the scope of the search warrant based on the expansive search conducted. However, the trial court found that Mr. Blomquist voluntarily consented to the search.

On appeal, Mr. Blomquist argued that the chicken coop and greenhouse were outside the scope of the search warrant, rendering the search illegal. The Sixth Circuit applied a two-factor evaluation of whether there was consent to a more expansive search: 1) whether an individual's actions adequately demonstrated consent, and 2) whether other factors contaminated that consent. As to the first factor, the Sixth Circuit held Mr. Blomquist's actions supported consent where he cooperated, volunteered information, and led officers around the property as they followed. As the Sixth Circuit characterized it, "Not only did Blomquist consent to the search, he practically directed it."

As to the second factor, the Sixth Circuit looked to the totality of the circumstances to assess whether other factors negatively impacted consent. While Mr. Blomquist argued that the officers' search warrant and his initial detention tainted his "consent," the Sixth Circuit pointed to his Miranda advisement, his cooperation from the moment officers arrived, and the lack of any evidence of duress or coercion as support that the consent was valid.