Firearm Enhancements and Double Counting

           In United States v. Hitch, --- F.4th --- (6th Cir. 2023), the defendant, James Hitch, pleaded guilty to the theft of multiple firearms from a federally licensed firearms dealer (18 U.S.C. § 922(u)) and being a felon in possession of a firearm (§ 922(g)(1)). The parties agreed to an enhancement under U.S.S.G. § 2K2.1(b)(6)(B)) because Mr. Hitch possessed a firearm in connection with another felony but they reserved the right to argue for or against an enhancement under § 2K2.1(b)(4)(A)) for the number of stolen firearms.

          The PSR recommended grouping the counts together and that the district court apply the § 2K2.1(b)(6)(B) and the § 2K2.1(b)(4)(A) enhancements. The possession count had the higher offense level and thus determined the base offense level under § 2K2.1(a)(6)(A). The district court overruled Mr. Hitch’s objection that application of the two enhancements amounted to double counting.  

          The Sixth Circuit affirmed. Mr. Hitch argued on appeal that double counting occurred because the enhancements were based on the same conduct. The court, however, concluded that the § 2K2.1(b)(4)(A) enhancement punished Mr. Hitch for possession of the stolen guns while the § 2K2.1(b)(6)(B) enhancement punished him for stealing the guns. The court found no error because two sentencing enhancements can be imposed for the same conduct if they punish “distinct aspects” of the conduct. Slip Op. at 3.

          Mr. Hitch also argued that he not only pleaded guilty to the possession count (§ 922(g)(1)) but also to the theft count (§ 922(u)). The Sixth Circuit considered this to be “a second double-counting argument which relied “on the false premise that the § 922(u) count increased the base offense level in the first instance and through the § 922(u) conduct-related enhancements.” Slip Op. at 4. (Emphasis original). The court recognized that there “are instances in which multiple counts do increase a defendant’s offense level, and those instances could arguably result in double counting if enhancements were applied based on the same behavior.” Id. But here, as a result of grouping, the offense level was based on the possession count. The base offense level was not increased because of the § 922(u) conviction, i.e., “there was no multiple-count adjustment” and no double counting.


Two rare Fourth Amendment reversals in one day

Police Search

It's rare for a federal appellate court to reverse a district court's denial of a motion to suppress evidence—the evidence must be viewed in the light most favorable to the government. But on Friday, the Sixth Circuit reversed suppression denials twice.

First, in a published decision, United States v. Loines, the Sixth Circuit found that police officers violated the Fourth Amendment when searching a vehicle. Officers suspected Mekhel Rivers of distributing drugs and obtained a search warrant for his house. While executing the warrant, officers saw Rivers's suspected vehicle parked on the street nearby. A detective walked up to the passenger side of the car and, through a tinted window, allegedly saw a cigar wrapper, "a folded piece of paper," and a small plastic bag that the officer claimed was "a bag of dope."

The defendant, Aaron Loines, was in the residence being searched. He told officers the keys to the vehicle outside were his. The vehicle was towed and searched without a warrant, revealing drugs. The government defended the search on grounds of the "plain view doctrine" and the "automobile exception" to the Fourth Amendment.

The Sixth Circuit concluded that officers had no valid reason to search the vehicle. In rejecting the plain view argument, the court concluded that, even though the officer claimed to have seen a bag of dope, objective evidence from photographs and body cameras did not substantiate his claim. The court stated: "Simple statements from the officers contending that they saw 'a bag of narcotics' in the car are not enough to establish that an object was in plain view when the screenshots that the government presented contradict the officers’ statements." Further, the court decided that, even assuming the officer could actually inside the car through the tinted windows, what he sawcigar wrappers, folded paper, and a plastic bag—were not intrinsically incriminating.

The court then quickly dispatched with the government's automobile-exception argument. For that exception to apply, the officers needed to have probable cause to believe the vehicle contained evidence of a crime, and the officers' evidence here came only from their purported plain-view observations, which the court had already rejected as a basis for the search. The Sixth Circuit thus vacated Mr. Loines's conviction and remanded.

The second decision, unpublished, United States v. Grant, reaffirmed the Sixth Circuit's precedent that officers cannot search a house just because a suspected drug dealer rents it and visits it frequently. The case involved a search warrant that stated that Marlon Grant had visited a particular residence numerous times, for short periods of time, and that he rented it. The affidavit also stated that a confidential informant had conducted a controlled buy from Grant, though it did not say that it happened at the residence.

In finding the warrant failed to establish probable cause, the Sixth Circuit emphasized that the affidavit never alleged Grant dealt drugs from the address, or that he entered the building just before or after the controlled buy. The court also rejected later warrants as fruit of the poisonous tree.

A Narrower Test for "Serious Drug Felony" After Intervening Supreme Court Precedent

Three separate opinions in United States v. Fields wrestled with whether a prior Sixth Circuit decision bound the Court in light of intervening Supreme Court precedent. Ultimately, the Court concluded that the Supreme Court's decision was on point, and a new, narrower test applies regarding whether a prior conviction is a "serious drug felony" that supports a higher mandatory sentence under 21 U.S.C. § 841.

A jury convicted Fields of possessing 500 grams or more of methamphetamine with intent to distribute it. The district court found that Fields had two prior serious drug felonies based on two prior Kentucky offenses--one for possessing a methamphetamine “precursor” with intent to manufacture, the other for trafficking in methamphetamine. Because he had two prior serious drug felonies, 21 U.S.C. § 841(b)(1)(A)(viii) mandated a minimum 25-year sentence.

On appeal, Fields argued that possessing a methamphetamine precursor was not a serious drug felony because it did not "necessarily entail" manufacturing (or any other conduct described in 18 U.S.C. § 924(e)(2)(A)(ii)'s serious-drug-felony definition). Fields acknowledged that the Court had decided in United States v. Eason that a similar Tennessee offense was a serious drug felony because it was "related to or connected with" the conduct in listed in section 924(e)(2)(A)(ii). But he argued that a more recent Supreme Court decision, Shular v. United States, required the Court to use the narrower "necessarily entails" test.

The Court agreed. In Judge White's opinion for the Court, she noted that the Eason Court's decision followed the majority rule at the time, but every circuit to examine the issue after Shular had adopted the narrower "necessarily entails" test. Agreeing with those decisions and finding Shular directly on point, the panel held that Shular effectively overruled Eason. Applying the "necessarily entails" test, the Court concluded that possessing a meth precursor with intent to manufacture was not a "serious drug felony.

Concurring, Judge Murphy reasoned that Shular at least permitted the panel to reexamine Eason. With that door open, Judge Murphy concluded that Shular's narrower definition better fit the statute's text, context, and structure.

Dissenting, Judge Rogers concluded that the Shular Court's "necessarily entails" definition was dictum, and the panel was still bound by Eason. Judge Rogers reasoned that the Court's holding focused on whether the statute required courts to compare a prior offense's elements against a generic offense or against the listed conduct, not on the issue decided in Eason: how closely those elements must match the conduct.

Based on the majority's decision in Fields, the narrower, "necessarily entails" test applies going forward to determine what constitutes a serious drug felony.  

The Federal Kidnapping Statute's Intrastate Reach

In United States v. Windham, the Sixth Circuit decided an issue of first impression: whether using a cell phone and a car inside a single state satisfies the federal kidnapping statute's requirement that an offender "use[] the mail or any means, facility, or instrumentality of interstate or foreign commerce in committing or in furtherance of the commission of the offense." 18 U.S.C. § 1201(a)(1).

Windham pleaded guilty to kidnapping under 18 U.S.C. § 1201(a)(1). As part of his plea agreement, he admitted that he used a cell phone and a motor vehicle in furtherance of the offense.

On appeal, Windham argued that the factual basis for his plea was insufficient to satisfy section 1201(a)(1)'s interstate-commerce requirements. The Sixth Circuit rejected his argument. Examining prior case law, the Court noted that "a statute that speaks in terms of an instrumentality in interstate commerce rather than an instrumentality of interstate commerce is intended to apply to interstate activities only." "Conversely," the Court reasoned, "statutes that refer to instrumentalities of interstate commerce apply to intrastate activities." Because Windham's cell phone and motor vehicle were instrumentalities of interstate commerce even if he used them entirely within a single state, using them satisfied the statute's jurisdictional requirements.

Do cops "distribute" drugs by "planting" them?

Chief Judge Sutton issued an interesting concurrance today, in his own majority opinion in United States v. Michael Wallace, to "acknowledge some uncertainty" about whether "planting drugs counts as distributing them." 

The case involved the conviction of Michael Wallace, a former Kentucky constable, who received nearly 12 years in federal prison for conspiring to violate people's civil rights and for possessing meth with intent to distribute it. The drug crime was the primary focus on appeal because it came with higher sentencing penalties. 

Wallace didn't plan to sell drugs. Instead, prosecutors charged Wallace with a pattern of planting meth to drum up fake criminal charges. Nonetheless, the Sixth Circuit upheld Wallace's convictions, finding sufficient evidence that he distributed drugs by unlawfully planting them on citizens.

In his concurrence from his own opinion, Chief Judge Sutton expounded on the "distribute" versus "plant" question. He observed that the court didn't need to address the issue because Wallace did not challenge this interpretation of the statute, which is supported by United States v. Cortes-Caban, 691 F.3d 1 (1st Cir. 2012), and United States v. Figueroa, 729 F.3d 267 (3d Cir. 2013)

But Judge Sutton emphasized reasons to push back on this interpretation, based on statutory context and ambiguity in the term "transfer." He emphasized that the drugs laws are intended to target detrimental effects of drugs on health and general welfare, and that "drugs can do little harm without a recipient." So, he reasoned, "speaking of temporarily 'transferring' drugs by planting them seems as strange as 'using' a cane by hanging it in the hall." 

Judge Sutton added that the "statutory distinction between distribution and simple possession also lends support to a more limited reading of 'transfer,' one that requires an intended conveyance between two parties." He reasoned as follows:
Addicts invariably move their drugs between the moment of purchase and the moment of consumption. Yet few would say that a drug user is engaged in a distribution when he 'moves' drugs from his right pocket to his left or returns home with drugs after a purchase. If merely 'disposing of' drugs counts as a distribution, moreover, that would convert a possession crime into a distribution crime when a defendant flushes drugs down a toilet or throws them into a lake while fleeing the police. 
Planting drugs would still be a civil-rights-violation crime, but the sentencing guidelines for those crimes is generally lower than for drug crimes. Judge Sutton ended with a call for a "careful examination" of this issue "if the government opts to seek further convictions under this broad interpretation of the drug distribution laws."

Also of note: The Sixth Circuit upheld an enhancement for using firearms in connection with his drug crime. Wallace argued that he possessed guns for his work in law enforcement. But the court recognized that "it would be strange for us to say, as we frequently do, that guns facilitate run-of-the-mine crimes by traditional drug distributors yet for us to be unwilling to follow the same logic when the shoe is on the other foot—when guns are used to facilitate atypical crimes by law enforcement officers bent on planting drugs on unsuspecting citizens."

Divided opinion upholds cell phone search


In a divided opinion, the Sixth Circuit upheld an illegal warrant search of two cell phones based on the Leon good faith exception.

Officers arrested Fharis Smith and seized his two cell phones. They received a search warrant for the cell phones based on an affidavit that included the following information: a known source who requested anonymity, and several anonymous sources, stated that Mr. Smith and another man were involved in a shooting; someone at the shooting may have sustained a gun-shot wound and the other named man was found with a wound; Mr. Smith was arrested in possession of a firearm; and in the officer’s experience, people often plan and undertake criminal activity using their cell phones.

Mr. Smith argued that the affidavit lacked probable cause because it did not contain sufficient corroboration for the known-but-unnamed and anonymous informants’ statements, and that it did not provide a nexus between his cell phones and the shooting.

The lead opinion, authored by Judge Guy, strongly suggested that the affidavit provided sufficient corroboration and nexus but ultimately declined to decide whether the warrant had probable cause. Instead, the opinion concluded that either way, the search qualified for the good faith exception because there was no binding precedent dictating that the warrant violated the Fourth Amendment.

Judges Clay and Moore each wrote separately. They agreed that the affidavit did not provide probable cause, making that the majority holding. Judge Clay found that the affidavit failed to show the veracity of the tipster’s statements because it did not note their past reliability, their personal knowledge, or show officer’s corroboration. As for the nexus, Judge Clay wrote that it was clearly lacking: simply alleging that people regularly use phones in the planning and commission of crime was insufficient. United States v. Bass was distinguishable, the concurrence wrote, because its affidavit specifically alleged that the defendant used cell phones to communicate with co-defendants. Judge Clay would have found that the Leon good faith exception did not save the warrant.

Judge Moore joined in the portions of Judge Clay’s opinion regarding the illegality of the warrant, but ultimately agreed with Judge Guy that the Leon good faith exception applied.

In Federal Sentencing, Sometimes a Dismissed Charge Is Still a Conviction

It's a familiar issue for federal criminal practitioners that relevant conduct under the sentencing guidelines can include conduct beyond the offense of conviction, including uncharged conduct and even acquitted conduct. But the decision in United States v. Nedelcu highlights a quirk that goes one surprising step further--under the federal sentencing guidelines, even enhancements that depend on a "conviction" do not require a conviction.

A federal grand jury indicted Liviu-Sorin Nedelcu on one count of conspiracy to commit RICO under 18 U.S.C. § 1962(d), one count of conspiracy to commit wire fraud under 18 U.S.C. § 1349, and one count of conspiracy to commit money laundering under 18 U.S.C. § 1956(h). He entered into a plea agreement that called for him to plead guilty to the RICO conspiracy charge, and the government agreed to move to dismiss the other charges. As part of the factual basis for his appeal, he admitted to facts that established the elements of all three charges.

The presentence report's guidelines calculation included two two-level enhancements that applied only "[i]f the defendant was convicted under 18 U.S.C. § 1956." See U.S. Sentencing Guidelines Manual § 2S1.1(b). Nedelcu objected--after all, he pleaded guilty only to RICO conspiracy, and the government agreed to dismiss the other charges, including the charge under section 1956. He was convicted only under 18 U.S.C.§ 1962(d), not 18 U.S.C. § 1956. Surely this was a winning objection.

Not so fast. Under Guidelines § 1B1.2(c), "a plea agreement . . . containing a stipulation that specifically establishes the commission of additional offense(s) shall be treated as if the defendant had been convicted of additional count(s) charging those offenses." Because the factual basis of Nedelcu's plea agreement satisfied the elements of money laundering under 18 U.S.C. § 195, he was "convicted" of money laundering for purposes of the sentencing guidelines. Thus the two two-level enhancements applied, increasing Nedelcu's guidelines range from 51-63 months to 78-97 months in prison. The district court sentenced him to 82 months, and the Sixth Circuit affirmed.

Through his plea agreement, Nedelcu avoided a conviction for money laundering. But he still ended up with a "conviction" for money laundering when it mattered most--at sentencing. 

Court Upjolds Conviction and Sentences in Complex Bitcoin RICO and Money Laundering Case

 Perhaps we should not trust all the ads we see on the internet. A Romanian organization known as the Alexandria Online Auction Fraud Network ("AOAF Network") used fraudulent online advertisements on websites such as eBay, Amazon, Craigslist, and others, to lure unwitting purchasers in the United States to "purchase" high value items that did not exist. To launder its ill-gotten gains, the AOAF Network utilized individuals in the United States, such as Dimitrious Brown, to launder the money by converting the payments into Bitcoin currency, which they then transferred to Romania. Foreign Bitcoin exchange businesses, including RG Coins, a company based in Bulgaria and operated by Rossen Iossifov, subsequently transferred the Bitcoin balances to cash on behalf of the AOAF Network members. The purchasers never received the items they believed they purchased.

A federal grand jury subsequently indicted 20 defendants involved in the scheme, including Brown and Iossifov. The Government charged Brown with one count of conspiring to engage in racketeering in violation of RICO. Brown ultimately pleaded guilty, and the District Court sentenced him to 78 months imprisonment. 

The Government similarly charged Iossifov in engaging in a RICO conspiracy. Iossifov, who assisted the conspiracy from Bulgaria, was eventually arrested and extradited to the United States. In addition, it charged him with one count of conspiring to commit money laundering in violation of 18 U.S.C. § 1956(h). A jury subsequently convicted Iossifov on both counts. 

Iossifov challenged his conviction, and both Iossifov and Brown challenged their sentences on appeal. The Sixth Circuit eventually consolidated their appeals, and, in a published opinion, affirmed Iossifov's conviction and the sentences for both defendants.

On appeal, Iossifov challenged the District Court's order denying the motion to dismiss the superseding indictment for improper venue, impermissible extraterritorial application of 18 U.S.C. § 1962(d) and 18 U.S.C. § 1956(h), and a violation of due process. The Court rejected Iossifov's venue challenge, holding the Government produced substantial evidence demonstrating that acts in furtherance of the RICO conspiracy occurred in the Eastern District of Kentucky.

The Court next addressed Iossifov's argument the District Court lacked the jurisdiction to hold him responsible for the RICO and money laundering conspiracies. It held that since at least part of the AOAF Network's conspiratorial conduct occurred in the United States, the District Court could exercise jurisdiction over Iossifov.

The Court also rejected Iossifov's argument that the money laundering statute did not apply to Bitcoin transactions because it is "not currency." Citing decisions from other federal jurisdictions, the Court held that Bitcoin can constitute a "monetary instrument" or "funds" under the money laundering statute.

Iossifov also argued the District Court violated his due process rights by exercising jurisdiction over him. The Court disagreed with this argument as well. Holding 18 U.S.C. § 1956 demonstrated Congress' intent that it apply extraterritorially, and that the District Court correctly found a nexus between Iossifov and the United States, the Court held the District Court did not error in dismissing his motion to dismiss.

The Court next addressed Iossifov's challenge to the sufficiency of the evidence against him. Iossifov argued the Government failed to prove he knew the Bitcoin he exchanged came from fraudulent activities. The Court disagreed, finding the Government offered sufficient evidence to convict him on both counts.

Iossifov also raised several evidentiary objections on appeal, none of which convinced the Court. First, he argued the District Court erroneously admitted certain statements under the co-conspirator exception to the hearsay rule because the declarant did not make them in furtherance of the conspiracy. The Court disagreed, holding that the declarant's statements were more than just "casual conversation," and that he made them to further the conspiracy's objectives.

Iossifov also asserted the District Court erred in admitting evidence he participated in a separate internet fraud network, asserting it was improper "other act" evidence under FRE 404(a). Again, the Court disagreed. Citing FRE 404(b)(2), the Court held the District Court correctly found it was evidence proving Iossifov's knowledge of the conspiracy at issue and that any prejudice from the evidence did not substantially outweigh its probative value under FRE 403.

After his trial, Iossifov moved for a new trial based on evidence one of the witnesses in his case made misrepresentations in preparation for his sentencing hearing. The Court affirmed the denial of this motion, holding that, in the end, regardless of how it may have undermined the witnesses's credibility, it would not have resulted in an acquittal.

Iossifov also raised two sentencing objections. First, he argued the District Court erred by imposing a two-level enhancement for obstruction of justice based on his testimony during his trial. He also objected to the District Court's calculation of the amount of laundered funds, which resulted in an 18-level enhancement, rather than a 16-level enhancement, under the Guidelines. 

The Court rejected both arguments. It found the District Court properly found that Iossifov lied during his testimony when he testified his company did not have a specific email account linked to emails with the AOAF Network co-conspirators. In addition, it held the District Court properly calculated the amount of money laundered by relying upon relevant conduct and the Secret Service's calculation of the funds involved in various transactions.

Turning to Brown's appeal, the Court considered the two objections he raised to his sentence. First, Brown asserted the District Court erred in imposing a two-level enhancement for obstruction of justice for sending false tax filings to the presiding judge, lead prosecutor, and the Clerk of the Court, claiming they owed him millions of dollars, arguing such conduct did not meet the requirements of U.S.S.G. § 3C1.1. The Court rejected this argument, noting the list of conduct governed by U.S.S.G. § 3C1.1 is not exhaustive, and that the District Court did not have to find that his conduct affected the proceedings in any way.

With respect to Brown's amount of loss argument under U.S.S.G. § 2B1.1(b)(1)(I), the Court held the District Court properly calculated the amount of loss. Rejecting Brown's assertion he was only responsible for the proceeds he laundered ($664,000), it held the District Court properly attributed $2.74 million laundered by him and his co-defendants in the United States into its loss calculation.