Case o’ The Week: J/x Jinx - Luong and "interstate commerce" proof, Hobbs Act robberies

Ninth denies Perry Mason surprise.

 

 

United States v. Luong, 2020 WL 4033847 (9th Cir. July 17, 2020), decision available here.

 

Players: Decision by visiting District Judge Smith, joined by Judges Rawlinson and Bybee.

  Hard fought appeal by former ND Cal AFPD Ned Smock, and ND Cal AFPDs John Paul Reichmuth and Robin Packel.

 

Facts: It was effectively conceded at the Hobbs Act trial that Luong had robbed a man at gun point. Id. at *1. Luong, who lived in the Bay Area, had lured the Bay Area victim to a BART station through a car ad placed on a Bay Area Craigslist post. Id. Craigslist is a local internet service, although it does link to sales of similar items in adjacent states. Id. 

  The defense only contested the interstate commerce element at trial: the jury hung on the Hobbs Act and 924(c) counts. Id. Luong was convicted at retrial.

 

Issue(s): Was there sufficient evidence of interstate commerce to satisfy the Hobbs Act jurisdictional requirement?

 

Held: “Even if we view Craigslist as facilitating only local transactions, the interstate-commerce jurisdictional nexus is still met here. The Supreme Court’s opinion in Taylor v. United States, 136 S. Ct. 2074 (2016), guides our analysis. In Taylor, the Supreme Court concluded that, because Congress has the authority to regulate the national marijuana market, including the purely intrastate production, possession, and sale of marijuana, based on its aggregate effect on interstate commerce, so too may Congress regulate intrastate marijuana theft under the Hobbs Act. Id. at 2077. While the Court in Taylor limited its holding ‘to cases in which the defendant targets drug dealers for the purpose of stealing drugs or drug proceeds[,]’ and declined to ‘resolve what the Government must prove to establish Hobbs Act robbery where some other type of business or victim is targeted[,]’ id. at 2082, the logic employed in Taylor readily applies to the facts of this case. Therefore, the Hobbs Act’s interstate-commerce element is satisfied in cases like this one, where the government demonstrates that a person used a commercial website to advertise a commercial transaction in order to facilitate a robbery.” Id. at *5. 

 

Of Note: Luong only contested the jurisdictional element at trial, and objected to evidence related to that element. Id. at *13. The district court nonetheless denied acceptance of responsibility at sentencing! In a silver lining to this dark cloud of a case, the Ninth reverses and remands for a resentencing. Defense counsel, explains the Ninth, cannot be expected to sit on their hands and tolerate government surprise witnesses “a la Perry Mason.” Id. at *14. 

    Luong is the rare acknowledgement that “acceptance of responsibility” should not be used as a hammer to punish defendants for going to trial on jurisdictional elements: a welcome addition to the law on that guideline. 

 

How to Use: On appeal, Luong forcibly argued that the Hobbs Act statute has a different and more-demanding interstate commerce requirement than other criminal statutes, that are satisfied by mere “use” of interstate commerce. Id. at *6. 

  The Ninth dodges this issue, holding that Luong’s use of Craigslist was sufficient to satisfy the Hobbs Act requirement, even if it is more stringent. Id.  

  This section of the decision is worth a very close read for Hobbs Act cases: even visiting DJ Smith concedes in Luong that there are cases where a robber’s use of the internet would be so minimal as to fall short of the jurisdictional requirement.

                                               

For Further Reading: COVID-19 now rages through Santa Rita Jail. The huge facility houses almost all federal pretrial inmates in the Northern District of California. The jail now has over 100 inmates who have recently tested positive, and over 40 deputy sheriffs. See article here. At least forty of these COVID-positive inmates are feds: a disproportionately high figure, considering the relative population of federal inmates in the jail. 

  Although county inmate populations have been voluntarily reduced in the jail, the federal population has again risen to pre-pandemic high levels. 

  This new crisis cries out for the U.S. Attorney’s Office to reduce the numbers of federal inmates. Time for a NorCal Bail Summit.

 

 

Image of Perry Mason from https://www.townandcountrymag.com/leisure/arts-and-culture/a32947129/how-perry-mason-hbo-tv-different-from-original/

 

Steven Kalar, Federal Public Defender, N.D. Cal. Website at www.ndcalfpd.org

 

 

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Case o' The Week: Needing Neo in the Ninth - Costanzo, bitcoin, and interstate commerce

  Morpheus versus the Agents, again.

  (Spoiler alert: not a happy ending, this time).

United States v. Costanzo, 956 F.3d 1088 (9th Cir. Apr. 17, 2020), decision available here.

Players: Decision by Judge Hawkins, joined by Judges Owens and Bennett. Hard-fought appeal by D. Arizona AFPD Dan Kaplan.  

Facts: Costanzo’s (a.k.a. “Morpheus Titania”) enthusiastic bitcoin sales drew the Feds’ attention. Id. at 1089. Over five meetings, undercover agents used cash to purchase over $100k in bitcoin. Id. at 1090. Agents explained the cash came from drug sales. Id. 

  Costanzo was charged with, among other things, money laundering and went to trial. Id. at 1091. At trial, the government presented evidence about the “verification process,” as bitcoin was transferred from Costanzo to the agents. Id. One such verification took place in Germany. Id. 

  The Court denied Costazno’s motion for acquittal, and he was convicted. Id.

Issue(s): “Appellant contends that the transfer did not have the requisite effect on interstate commerce, an element of each of the charged offenses.” Id. at 1089. (footnote omitted). 

  “Costanzo [argues] that the government failed to prove that the transactions affected interstate commerce in any way.” Id. at 1091.

Held: “Because we conclude that the transfer in question, which involved the use of an Internet or cellular network connected Personal Computer Device (PCD) to transfer bitcoin (together with the digital code necessary to unlock the bitcoin) to the digital wallet of another Internet or cellular network connected PCD, had the necessary effect on interstate commerce, we affirm.” Id. (footnote omitted). “Here, the government presented evidence regarding Costanzo's business; his use of global platforms; and the transfer of bitcoin through a digital wallet, which by its nature invokes a wide and international network. Costanzo advertised his business through localbitcoins.com—a website based outside of the United States. He encouraged the undercover agents to download applications from the Apple Store or other similar platforms to facilitate their communications and transactions. He then utilized those applications to engage in encrypted communications with the agents to arrange the transfers. Then, in each transaction, Costanzo and the agent used those applications on their smartphones to transfer bitcoin from one digital wallet to another. Each transaction was complete only after it was verified on the blockchain. Viewing all of this evidence in the light most favorable to the government, we are satisfied that the evidence is sufficient for some trier of fact to find the ‘minimal’ interstate commerce nexus required under § 1956.” Id. at 1092-93.

Of Note: Constanzo’s co-D, Peter Steinmetz, was less blasé about the illegal origins of the cash. Like Constanzo, Steinmetz was charged with money laundering using bitcoin. Transcripts later revealed, however, that Steinmetz refused to sell bitcoin to an agent posing as a Russian heroin buyer. Steinmetz became “a poster child for heavy-handed bitcoin enforcement.” See article here. 

  New currencies: old law-enforcement problems.

How to Use: What is the standard of review, for the sufficiency of evidence for an interstate commerce element? Judge Hawkins uses de novo review, and asked whether “any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Id. at 1091-92 (emphasis in original). The government, however, argued that the proper standard of review was, “manifest injustice.” Id. at 1092 & n.3. The panel avoids the issue by explaining the result would be the same under either standard. Id.

  Beware, however, of the government’s more-onerous theory of review for future interstate commerce challenges.

                                   

For Further Reading: The federal Terminal Island and Lompoc facilities are now the subjects of new civil suits, brought by medically-vulnerable inmates facing the COVID-19 pandemic.

For a must-read brace of terrifying Complaints, by Bird Marella and the SoCal ACLU, see here.

Image of Morpheus and Agent Smith from https://scottmanning.com/content/smith-interrogates-morpheus-transcript/

Image of Lompoc from https://www.sfchronicle.com/news/article/574-inmates-test-positive-for-coronavirus-at-15255843.php

Image of Terminal Island from https://www.latimes.com/california/story/2020-04-29/coronavirus-terminal-island-prison-inmates-outbreak

Steven Kalar, Federal Public Defender, N.D. Cal. Website available at www.ndcalfpd.org

Case o' The Week: Jurisdiction challenge bombs in Ninth - Garcia and post-Morrison Commerce Clause j/x

 Does a little apartment building in sleepy Fairfield, California sufficiently affect interstate commerce sufficiently to trigger federal jurisdiction?

  Yep – by per se rule.

United States v. Garcia, 2014 WL 4637169 (9th Cir. Sept. 18, 2014), decision available here.

Players: Decision by Judge Rawlinson, joined by Judges Tallman and D.J. Garbis.  

Facts: Jantina Reed testified at trial that defendant Daniel Garcia acted unusually when she, her boyfriend, and two children lived in Garcia’s house – he ran around naked and stood outside her door, breathing heavily. Id. She and her family moved away, to an apartment building in Fairfield CA. Id. at *1, *4. Reed testified that Garcia had, during one fight, thrown items on her car and threatened, “tick, tick, boom, I’m going to blow this up to pieces.” Id. 

  One night, Reed heard an explosion and discovered that her borrowed SUV was on fire. Id. at *2. Cops found the remains of a pipe bomb under the SUV and damage to the apartment; a later search revealed a similar pipe bomb in Garcia’s residence. Id. at *2-*3. The SUV was built in Wisconsin; the building that suffered damage advertised rentals online and had tenants from out-of-state. 

  Garcia’s Rule 29 motion was denied, the jury returned a guilty verdict, and he was sentenced to thirty-five years in prison. Id. at *5.

Daniel Garcia

Issue(s): “Garcia contends that the government failed to present sufficient evidence to satisfy the Commerce Clause jurisdictional requirement of 18 USC § 844(i), because the government failed to demonstrate that Garcia’s criminal conduct affected interstate commerce.” Id. at *1. “Relying on [Lopez] and [Morrison], Garcia asserts that damage to the apartment complex did not satisfy the Commerce Clause jurisdictional element of 18 USC § 844(i) because there was insufficient evidence that any damage to the apartment building substantially affected interstate commerce.” Id. at *5.

Held: “We disagree, and conclude that the Commerce Clause jurisdictional element for a conviction pursuant to 18 USC §  844(i) was satisfied as discussed in Russell v. United States, 471 U.S. 858 . . . (1985) and United States v. Gomez, 87 F.3d 1093 (9th Cir. 1996).” Id. at *5.

Of Note: This jurisdictional challenge to the apartment building being in “interstate commerce” was squarely foreclosed by the Supreme Court’s decision in Russell and the Ninth’s decision in Gomez. Id. at *5. In the present case, Garcia’s pitch was that the Supreme’s 2013 decision in Morrison undermined that authority: under new jurisdiction law, there was insufficient evidence of impact on interstate commerce to support the conviction. Id. at *6. 

  The Ninth doesn’t bite. 

  Unlike the statute in Morrison, the Section 844(i) statute has an internal interstate jurisdictional requirement. Id. at *7. The Ninth also rejects Garcia’s argument that the “aggregate effect” approach no longer satisfies the Commerce Clause requirement. Relying on a Second Circuit decision, Judge Rawlinson concludes that Russell’s “part of an economic chain” approach survives until expressly rejected by the Supreme Court (something not done in Morrison). Id. at *7. 

  The punch line is a per se rule that damage to a rental apartment building satisfies the jurisdictional provisions of 18 USC § 844(i). Id. at *8.

How to Use: What about the SUV? In an intriguing footnote, Judge Rawlinson muses that “there is a serious question as to whether the government presented sufficient evidence that the Chevrolet Tahoe SUV was used in interstate commerce.” Id. at *8 & n. 4. (Note that the apartment building was just dinged by some shrapnel from the explosion, id. at *2 – had the SUV been parked a bit further away when it was blown up, federal jurisdiction may not have existed in this case.) In a Section 844(i) case involving only a vehicle, Garcia leaves open the hope of another Morrison jurisdictional challenge.

Hon. District Judge Lawrence Karlton

                                               

For Further Reading: Garcia got the mandatory minimum of 35 years. The 31-year old prosecutor wanted more time for the 31-year old Garcia– prompting District Judge Karlton to ask if the AUSA was serious. “I want to tell you,” Judge Karlton chided the AUSA, “that the most important asset the U.S. Attorney’s Office has with the court is its belief in good sense.” For a fascinating account of this sentencing hearing, see “Fairfield pipe bomber receives 35-year federal prison sentence,” available here.

Image of the Fairfield sign from http://www.californiasecuritypro.com/Portals/137046/images/ADT%20Fairfield%20CA%20Home%20Security%20Company.jpg

Image of Daniel Garcia from http://www.dailyrepublic.com/featured-stories/suspected-fairfield-bomb-wielder-pleads-not-guilty-in-solano-court/

Image of the Honorable District Judge Karlton from http://www.caed.uscourts.gov/caednew/index.cfm/judges/all-judges/5007/

Steven Kalar, Federal Public Defender, N.D. Cal. Website at www.ndcalfpd.org

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Case o' The Week: Ninth Dulls Jx Hook, No Mens Rea for Child Porn Interstate Commerce - Sheldon

Hon. Judge Richard Clifton

Another ding further dulls the point of the jurisdictional hook, in a decision on the interstate commerce element for the receipt of child porn. United States v. Sheldon, 2013 WL 5273101 (9th Cir. Sept. 19, 2013) decision available here.

Players: Decision by Judge Clifton, joined by Judges Hawkins and McKeown. Hard-fought appeal by Montana AFPD David Ness.

Facts: Sheldon lived with members of his family in Montana. Id. at *1. He was told to move out after he inappropriately touched a minor child. Id. “Shortly thereafter, the minor child’s video recorder was found to contain several videos of children naked, showering,” and other sexually-related conduct. Id. He was charged with sexual exploitation of a child, and knowingly receiving child pornography. Id. At trial, two female minor children testified that Sheldon showed them pornography on the internet and asked them to video themselves without clothing. Id. The defendant was convicted and sentenced to 480 months. Id.

Issue(s): Sheldon’s “primary argument . . . is that under 18 U.S.C. § 2251(a), the Government was required to prove that he knew the materials used to produce the child pornography had traveled in interstate commerce.” Id.

Held: “We agree with the other circuit courts that have previously considered this issue. Both the Fifth and Eleventh Circuits have held that § 2251(a) does not require knowledge as to the interstate nature of the crime. . . . We conclude that this interpretation of the statute is correct. To satisfy the jurisdictional element of § 2251(a) in this case, then, the Government was only required to prove beyond a reasonable doubt that the child pornography was produced with materials that had traveled in interstate commerce. The Government elicited testimony at trial that the recorder used to produce the videos in Montana was manufactured in China. This evidence was sufficient to satisfy the jurisdictional element of § 2251(a) under the correct interpretation of the statute.” Id. at *2-*3.  

Of Note: The tough task of defending child porn cases got even tougher this week, with this decision in Sheldon and with a decision on electronic searches, United States v. Schesso, 2013 WL 5227071 (9th Cir. Sept. 18, 2013). In Schesso, Judge McKeown explores the intersection between the Ninth’s decisions in Comprehensive Drug Testing (en banc) (“CDT III”) and Cotterman (en banc). Recall that in CDT III Chief Judge Kozinski urged excellent Fourth Amendment search protocols, but those protocols were, sadly, only advisory. In Schesso, Judge McKeown finds the failure to comply with the CDT III protocols aren’t fatal to the search that revealed child porn. Id. at *8. While a disappointing outcome, Schesso is a well-written opinion that grapples with the new frontier of electronic searches – it is worth a close read.

How to Use: Like the interstate commerce element in Section 922(g)(1) cases (felon in possession), or the FDIC insurance requirement in bank robbery trials, 18 U.S.C. § 2113(a), the jurisdictional “hook” in child porn prosecutions has been methodically dulled by years of appellate decisions. See, e.g., United States v. McCalla, 545 F.3d 750, 756 (9th Cir. 2008) (rejecting Commerce Clause challenge to intrastate production of child pornography even where there is no evidence that it was created for commercial purposes). Even a dull hook, however, can sometimes land a fish. It is easy for an AUSA to overlook proof of an obvious element – and the failure to prove a jurisdictional element is fatal to the conviction. See United States v. James, 987 F.2d 648, 651 (9th Cir. 1993) (reversing bank robbery conviction from the ND Cal when the government forgot to introduce a stipulation of FDIC insurance, and observing “The defense has no obligation to remind the government of its obligation to prove each element of a crime.”)

                                               

For Further Reading: A new American Bar Association resolution opposes plea or sentencing agreements that waive a defendant’s post-conviction claims of IAC, prosecutorial misconduct or destruction of evidence. See resolution description here. 

    This follows recent Florida Bar Ethical Opinion 12-1, which finds an unwaivable conflict of interest when defense counsel advises a client about these plea waivers. See Ethical opinion here. 

   The A.B.A. has written to AG Holder urging that these waivers be removed from agreements. See ABA Letter here. 

    Time for a close look at these broad waiver provisions in the “stock” ND Cal plea agreements.

Image of the Honorable Richard Clifton from https://www.law.hawaii.edu/sites/www.law.hawaii.edu/files/people/17376/Clifton_Richard.jpg

Hook image from http://killzoneauthors.blogspot.com/2012/04/hook-your-book.html#.Uj8EIj_Yhhk

Steven Kalar, Federal Public Defender ND Cal. Website at www.ndcalfpd.org

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