Wake Forest Law Review
10Nov

Search and Stop Are Proper with a Reasonable Suspicion

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by David Darr

On Friday, in United States v. Walker, an unpublished per curium opinion, the Fourth Circuit affirmed the decision of the District of Maryland to deny the defendant’s motion to suppress evidence. The court held that police had a reasonable suspicion to both arrest and search the defendant.

Was Arrest and Search Proper?

The issue in this case was whether the police had a reasonable suspicion to arrest the defendant and a reasonable fear for the officer’s own and others’ safety to search the defendant.

Walker’s Arrest and Search

Early in the morning on January 30, 2011, the police received a call from a 911 dispatcher that a man with a gun was at a Denny’s in Baltimore. An officer who was already in the area responded to the call and upon exiting his vehicle he encountered two men pointing to the defendant, Stephan Sylvester Walker, Jr., and telling the officer that Walker is “the guy with the gun.” The officer ordered Walker to get down on the ground and drew his service weapon, but Walker attempted to hide behind a car. As other officers arrived on the scene, Walker acquiesced and the police found a .45 caliber pistol in Walker’s waistband.

At trial, Walker moved to suppress, arguing that both his arrest and seizure of property were improper. The district court denied this motion, finding both the initial stop and taking of the gun were legal. Subsequently, a jury found Walker guilty of possessing a firearm and ammunition after having been convicted of a felony and he was sentenced to 293 months in prison. Walker appealed the denial of his motion to suppress because he claimed the officers lacked a reasonable suspicion.

Legal Requirements for Arrest and Search

When a motion to suppress is denied, the appellate court views the evidence in the light most favorable to the Government. The Fourth Amendment allows a police officer to stop a person when the officer has a reasonable suspicion based on the facts that criminal activity may be afoot. A reasonable suspicion depends on the totality of the circumstances, including any reasonable inferences. Additionally, an officer may also search a suspect’s person if the officer has a reasonable fear for his own or others’ safety based on a suspicion that the suspect may be armed and dangerous.

The Officer Had a Reasonable Suspicion

The Fourth Circuit, viewing the evidence in the light most favorable to the Government, found that the officer had more than enough evidence to arrest and search Walker. The circumstances surrounding the stop of Walker would create a reasonable suspicion that Walker had a gun. While an anonymous tip alone might not be enough for an officer to stop someone, the 911 call, the witnesses claiming Walker had a gun, and Walker’s evasive behavior all show there was a reasonable suspicion for the stop. Additionally, the totality of the circumstances also show that Walker was armed and potentially dangerous, creating a reasonable fear in the officers to justify the search of Walker’s person.

Fourth Circuit Affirms Decision

For the reasons stated above, the Fourth Circuit affirmed the decision of the District of Maryland.

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22Oct

Fourth Circuit Holds Improper Evidence Was Harmless Error

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By Joshua P. Bussen

 Issues Raised by the Defendant

 Today, in U.S. v. Briley, the Fourth Circuit addressed two issues. First, whether assault is a required element of the “physical contact” provision of 18 U.S.C. § 111; and second, whether Federal Rule of Evidence 404(b) excludes prior “bad act” evidence where the two acts in question only share some similarities.

The Events of January 12, 2012

On January 12, 2012, two plain-clothes Park Police officers were patrolling the Washington Sailing Marina in Alexandria, Virginia. The Marina is a recreational area of the Dangerfield Island National Park where some have taken the “recreational” title to the limit; the Marina is a known hot spot for “sexual encounters.” While on patrol, the officers observed two individuals—one later determined to be the defendant—beginning to partake in the Marina’s reputed “recreational” activity in the front seat of an SUV. The officers called for backup and two officers in police marked tactical attire arrived and approached the vehicle.

Upon reaching the SUV, officers instructed the men to exit the vehicle. The defendant’s recreational companion quickly complied; the defendant would not go so easily. While attempting to remove the defendant from the vehicle, the defendant struck one of the officers in the arm, side, and lower back. The officer sustained various lower back injuries from the incident; his casualties would not be the worst. Another officer began striking the defendant in an attempt to loosen his grip in the SUV. The defendant returned a barrage of kicks to the officer’s abdomen; the kicks would later lead to impairment of the officer’s pancreas and the removal of his gallbladder. Eventually the defendant agreed to exit the vehicle, but again began resisting arrest. The officers eventually forced handcuffs onto the defendant, ending the tussle.

Later, in March, 2012, the defendant was again arrested for committing sexual acts in the same Marina parking area; fortunately for the officers, he did not again resist arrest.

18 U.S.C. § 111 and Fed. R. Evid. 404(b)

Under 18 U.S.C. § 111, whoever “forcibly assaults, resists, opposes, impedes, intimidates, or interferes with any [federal officer] while engaged in or on account of the performance of official duties . . . shall, where the acts in violation of this section constitute only simple assault, be fined under this title or imprisoned not more than one year, or both, and where such acts involve physical contact with the victim of that assault or the intent to commit another felony, be fined under this title or imprisoned not more than 8 years, or both.”

Under Fed. R. Evid. 404(b), “[e]vidence of a crime, wrong, or other act is not admissible to prove a person’s character in order to show that on a particular occasion the person acted in accordance with the character,” however, such evidence “may be admissible for another purpose, such as proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident.”

The Law in This Case

On appeal, the Fourth Circuit held that assault is not an element of the “physical contact” portion of § 111. The court reasoned that requiring assault as an element of the “physical contact” portion of § 111 would: (1) render five of the six words within the statute inoperative; (2) would stray from the congressional intent of protecting federal officers; (3) would leave federal officials without protection for carrying out federal functions; and (4) produce an “absurd result,” allowing individuals to impede, intimidate, and interfere with federal officers so long as they did not commit assault.

Conversely, the court found that the 404(b) evidence came far to close to pure propensity evidence. The March arrest of defendant was similar to the January arrest in that the defendant was found engaging in obscene public acts in the same general area and in the same SUV. However, the defendant did not resist arrest on the March occasion. The court felt that this March incident was not only too dissimilar to the January incident to be “plan” or “intent” evidence, but also unnecessary in a case where multiple officers testified as to the defendant’s actions.

The Fourth Circuit’s Determination

The Fourth Circuit affirmed the holding of the lower court. Despite finding the 404(b) evidence should have been excluded, the overwhelming evidence against the defendant in this case rendered the admission of improper evidence harmless error.

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20Oct

Health Care Fraud Conspiracy Conviction Affirmed

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By Dan Menken

Today in United States v. Garnes, the Fourth Circuit affirmed the conviction of Charlotte Elizabeth Garnes for conspiracy to commit health care fraud, obstruction of an official proceeding, and ten counts of making a false statement relating to a health care benefit program.

Defendant Raises Three Claims Challenging the Conviction and Sentence

First, Defendant claims that the district court abused its discretion by permitting the government to cross-examine her regarding an extramarital affair with her former boss.

Second, Defendant claims that the district court erred by denying her motion for a judgment of acquittal because the evidence presented was insufficient to establish that her convictions for conspiracy to commit health care fraud and for making false statements relating to a health care benefit program were “knowing and willful.”

Finally, Defendant claims that the district court improperly held her responsible for losses caused by her co-conspirator when calculating her sentencing guidelines range.

 Defendant Involved in a Conspiracy to Commit Health Care Fraud

Defendant, along with two unlicensed counselors, entered into an agreement to defraud the North Carolina Medicaid agency. Defendant submitted numerous reimbursement claims in which she falsely represented that she had provided therapeutic services. Many of the claims were facially invalid because claimed therapy sessions exceeded 24 hours in a single day. Additionally, Defendant submitted claims for services rendered in North Carolina when she was in a different state, and she claimed services were provided to patients who testified that they never received services from Defendant.

During cross-examination, the government sought to show that Defendant had been fired from her previous employment for failure to maintain proper records. Defendant responded to this line of questioning by stating that the owner’s significant other had fraudulently used Defendant’s Medicaid number. In response, the government sought to impeach Defendant’s alternative explanation by questioning Defendant regarding her extramarital affair with the owner.

 Claim One: Evidence Impeaching Witness Testimony Allowed on Cross-Examination

Reviewing for an abuse of discretion, the Fourth Circuit held that the district court correctly overruled the objection of Defendant’s counsel because Rule 404(b) does not control evidence offered for impeachment on cross-examination. The evidence in question was probative of Defendant’s character for truthfulness.

 Claim Two: Knowledge and Intent May Be Inferred From Circumstantial Evidence

Reviewing de novo, the Court noted that in order to convict Defendant of conspiracy to commit health care fraud, the government has to show that Defendant “knowingly and willfully executed” a fraudulent health care scheme. The Court further noted that the jury may infer knowledge and intent from circumstantial evidence in conspiracy cases. In this case, there was sufficient evidence regarding Defendant’s reimbursement claims to establish that Defendant had “knowingly and willingly” agreed to participate in a fraudulent health care scheme with her co-conspirators.

Furthermore, in order to convict Defendant of making a false statement relating to a health care benefit program, the government must show that Defendant knowingly and willfully made materially false or fraudulent statements in connection with the delivery of or payment for health care benefits, items, or services. Similarly, on this charge, the Fourth Circuit ruled that there was sufficient evidence from which a jury could find that the false statements made by Defendant were made knowingly and willfully.

Claim Three: Conspirator Responsible for Foreseeable Acts of Co-Conspirators

The Fourth Circuit held that the district court was entitled to include the amount of losses caused by co-conspirators in calculating the sentencing guidelines range. Defendant’s relevant conduct includes all reasonably foreseeable acts in furtherance of the jointly undertaken criminal activity.

 Conviction and Sentence Affirmed

Holding that there was no reversible error committed by the district court regarding the three claims of the Defendant, the Fourth Circuit affirmed Defendant’s conviction and sentence.

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10Oct

Fourth Circuit Affirms that Motions to Suppress Evidence are Time-barred

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by David Darr

Today, in United States v. Moore, the Fourth Circuit affirmed the District of Maryland’s judgment finding the Defendant guilty of drug trafficking, possession of a firearm in furtherance of drug trafficking, and possession of a firearm by a felon. The defendant, Corey A. Moore, appealed his conviction based on the District Court’s denial of his motion to suppress evidence of a police officer’s stop and the District Court’s finding that his possession of a firearm was “in furtherance of a drug trafficking crime.”

On September 25, 2010, an officer observed Moore walking down the street carrying a green bottle. Thinking this bottle might be alcohol, the officer initiated a stop and Moore took off running. The officer and two bystanders observed Moore toss a package in the dumpster. That package contained a half kilogram of cocaine, worth over $10,000. Moore was then arrested. Two days later, there was an attempted break-in at an apartment rented by Moore. Upon discovering Moore resided in the apartment (he had given them a different address when he was arrested), the police obtained a search warrant. In the apartment, the police found 2.8 kilograms of PCP, drug distributing materials with traces of cocaine on them, $45,000 in cash, and two handguns. Moore was charged with possession with intent to distribute cocaine and PCP, possession firearms in the furtherance of drug trafficking, and possession of firearms by a felon. Before closing arguments, the defense moved to suppress all tangible evidence on the grounds that the officer did not have a reasonable suspicion to stop Moore in the first place. The District Court denied the motion on the grounds that the defense had waived the right to suppress evidence by not raising it before the trial as required by the Federal Rules of Civil Procedure. The court then found Moore guilty on all counts and sentenced Moore to 271 months in prison. Moore raised two issues on appeal; the District Court’s denial of his motion to suppress evidence and the District Court’s finding that Moore possessed firearms “in furtherance of drug trafficking.”

Moore first claimed that the District Court did not decide that he waived his right to a motion to suppress evidence, but instead found on the merits of his motion that no Fourth Amendment violation had occurred. Alternatively, Moore claimed that he qualified for a “good cause” exception to the waiver rule because he learned new evidence at the trial. The Federal Rules of Criminal Procedure require parties to raise motions to suppress evidence before trial, unless the court grants relief for a good cause. This rule is not merely procedural and it is an important rule due to fairness considerations. The rule helps parties to know what evidence to base their case on before the trial. The rule also prevents from unnecessary delays in the trial that may inconvenience the jury. The Fourth Circuit ruled that despite that the District Court briefly brought up the merits of Moore’s motion when it decided the issue was waived, the court was very clear that it was deciding that the issue was waived. The Fourth Circuit decided that the District Court waived the motion instead of deciding the issue on its merits. The Fourth Circuit also decided that new information is not sufficient good cause because new information is learned all the time at trial. It does not change that the evidence could have been challenged before the trial. Because the District Court properly and correctly decided the issue was waived and that there was no good cause for the motion coming late, the Fourth Circuit affirmed the District Court’s decision to deny the motion to suppress evidence.

Moore next claimed that the firearms found in his apartment with the drugs were insufficient evidence that the firearms were used in the furtherance of drug trafficking. The Fourth Circuit reviewed this issue on a clearly erroneous standard because the nexus between the firearms and the drug trafficking crime is a factual question. The Fourth Circuit found plenty of evidence in the record supporting a close nexus between the firearms and drugs. The cash and amount of drugs found with the firearms suggested that Moore was dealing the drugs. Further, Moore did not challenge his conviction on the drug trafficking charges. The firearms being beside Moore’s bed was evidence that Moore used the firearms for protection of the drugs. Another factor that the Fourth Circuit considered was that Moore was not allowed to legally own firearms in the first place as a convicted felon. The Fourth Circuit affirmed the District Courts conviction on this count because it was completely reasonable for the court to find the firearms were in the furtherance of drug trafficking. Ultimately, the Fourth Circuit affirmed Moore’s conviction on all counts.

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9Oct

Zero Damages Against WMATA Police Officer Affirmed

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By Evelyn Norton

Today, in Hutcherson v. Lim, the Fourth Circuit affirmed the decision of the United States District Court for the District of Maryland to deny Hutcherson’s motion for a new trial.

In the District Court, Hutcherson sought relief for personal injuries sustained during a routine traffic stop.  Specifically, Hutcherson alleged that Lim, a Washington Metropolitan Area Transit Authority police officer, assaulted Hutcherson while issuing a citation for illegal window tints.

Following a three-day jury trial, the jury found that Hutcherson had proven assault and battery claims against Lim.  Yet, the jury awarded Hutcherson zero dollars in compensatory damages because Hutcherson’s wife failed to prove loss of consortium.  Twenty-nine days later, Hutcherson moved for a new trial pursuant to Rule 59 of the Federal Rules of Civil Procedure.  The District Court denied the motion.

On appeal, Hutcherson alleged that (1) the District Court improperly admitted a medical evaluation into evidence; and (2) the jury’s award of zero damages is inconsistent with its verdict.

First, Hutcherson argued that a final medical evaluation from his physician was inadmissible hearsay.  The medical evaluation expressed uncertainty as to whether Hutcherson’s partial rotator cuff tear occurred during the incident at issue.  However, testimonial evidence was also offered.

In considering the District Court’s actions, the Fourth Circuit stated that it will not “set aside or reverse a judgment on the grounds that evidence was erroneously admitted unless justice so requires or a party’s substantial rights are affected.” Creekmore v. Maryview Hosp., 662 F.3d 686, 693 (4th  Cir. 2011).  The Fourth Circuit concluded that, even assuming that the District Court erred, the evidence was not sufficiently prejudicial to affect the outcome of the case.  As a result, the medical evaluation’s admission did not affect Hutcherson’s substantial rights. Thus, the Fourth Circuit would not set aside the District Court’s judgment on this basis.

Second, Hutcherson argued that the jury’s award of zero damages is inconsistent with its verdict. While the jury found that Hutcherson proved his assault and battery claims, Hutcherson did not object to the damages award until after the jury’s discharge.  As a result, the Fourth Circuit concluded that Hutcherson waived his objection to any alleged inconsistencies.

Thus, the Fourth Circuit affirmed the District Court’s order denying Hutcherson’s motion for a new trial.

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24Sep

Fourth Circuit Confirms—North Carolina Police Can Smell Probable Cause

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By Joshua P. Bussen

Today in United States v. Mitchell, the Fourth Circuit, in a per curiam opinion affirmed the conviction of Sidney Mitchell for unlawful possession of a firearm by a felon. Mitchell entered a conditional plea of guilty in the Middle District of North Carolina, reserving his right to appeal the judgment of the district court. Mitchell contends that the district court erred in denying his motion to suppress evidence of a firearm that was found while police were conducting a search of his vehicle. Mitchell was sentenced to twenty-six months in prison.

In the waning hours of sunlight on November 20, 2012, a North Carolina police officer stopped Mitchell’s car on a suspicion that the tint on the vehicle’s windows was darker than allowed under North Carolina law. While performing a test that would gauge the level of tint on Mitchell’s windows—a process that involves placing a device on the inside of the vehicle—the officer claims he noticed the smell of “burnt marijuana.” Though Mitchell denied smoking marijuana, he consented to a search of his person. After searching Mitchell the officer turned to the vehicle, discovering a small amount of marijuana resin and a gun on the driver’s side floorboard.

In the Middle District of North Carolina Mitchell moved to suppress the firearm due to an improper search and seizure. The district court found that the tint on Mitchell’s windows gave the officer reasonable cause to pull the car over, and the smell of burnt marijuana subsequently warranted probable cause to search the vehicle. On appeal Mitchell did not question the officer’s motivation for detaining the vehicle, but disputed “lawfulness of the subsequent search of the [inside of the] car.”

The Fourth Circuit, relying on United States v. Scheetz, 293 F.3d 175, 184 (4th Cir. 2002), held that the odor of marijuana emanating from a car warranted sufficient probable cause to search the vehicle. Mitchell’s final argument that the officer’s credibility should be questioned fell on deaf ears, the Circuit judges were not willing to disturb the factual findings of the district court because “the district court is so much better situated to evaluate these matters.”

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24Sep

Exonerated Man’s Suit Can Proceed Against Officers and Department

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By Andrew Kilpinen

In a split decision featuring three separate opinions, the 4th Circuit affirmed in part and vacated in part the district courts dismissal in Owens v. Baltimore City State’s Attorneys.

 Owens Challenges Statute of Limitations, Sovereign Immunity, Qualified Immunity, and Failure to State a Claim

The Court reviewed four issues de novo: (1) Is Owens’s claim time barred, (2) is the Baltimore City State’s Attorney’s office an entity capable of suit, (3) are Officers Pelligrini, Dunnigan, and Landsman protected by qualified immunity, and (4) does Owens’s complaint contain sufficient factual content to survive a motion to dismiss on the claim that the BCPD followed a custom, policy, or practice by which local officials violated Owens’s constitutional rights?

 Owens Was Convicted of Rape and Murder

The present controversy grew out of the investigation, trial, and conviction of James Owens for the rape and murder of Colleen Williar on August 2, 1987. The State’s key witness, James Thompson, changed his testimony five times during the investigation and trial. Central to Owens’s appeal was withholding of the multiple variations of Thompson’s testimony from defense counsel.

The jury convicted Owens of burglary and felony murder. In 2006, DNA evidence showed that Owens’s DNA did not match the blood and semen evidence at the crime scene. On June 4, 2007, Owens was granted a new trial. On October 15, 2008 the State’s Attorney entered a nolle prosequi, dropping the charges against him. Owens was subsequently from prison released after twenty years of incarceration.

 Statute of Limitations Began to Run After the Nolle Prosequi and Owens’s Claim is Therefore Not Time Barred

First, the Court held that Owens’s claim is not time barred because the statute of limitations began to run when the State issued the nolle prosequi, not when the State granted Owens’s a new trial. Since § 1983 does not provide a statute of limitations, the Court must look to the common-law tort most analogous to Owens’s claim. Here, the Court identified malicious prosecution as the common-law tort most analogous to Owens’s §1983 claims. Generally, the statute of limitation clock begins to run as soon as the plaintiff knows or has reason to know of his injury. However, sometimes, as is the case in malicious prosecutions, the common law provides a “distinctive rule” for determining the start date of the limitations period. Thus, the Court held that the statute of limitations began to run on Owens’s claim after the nolle prosequi, not at the start of the new trial.

 Baltimore City State’s Attorney’s Office Is Not an Entity Capable of Being Sued

Second, the Court held that the Baltimore City State’s Attorney’s Office is not an entity capable of being sued because the office does not have a legal identity. To be suable, an office or agency must be granted a legal identity through statutory or constitutional authority. Owens argued that the Maryland General Assembly granted such legal identity when it named Title 15 of the Maryland Code of Criminal Procedure “Office of the State’s Attorney.” The Court rejected this argument stating that the title refers to a position held by an individual and not a suable office.

 Officers Are Not Protected by Qualified Immunity

The Court rejected the officer’s defense of qualified immunity. The Court had little difficulty concluding that Owens’s allegations state a plausible § 1983 claim because the information withheld by the officers would have supported his theory that Thompson committed the rape and murder; commenting that at the very least it would have discredited Thompson’s testimony. The Court cites the fact that the officers were seasoned veterans who called the ASA moments after receiving Thompson’s final story to support the conclusion that they withheld the four previous versions intentionally and maliciously. The Court points to precedent in Barbee, Sutton, and Boone in holding that the officers should have known that not disclosing material exculpatory evidence was a violation of Owens’s constitutional rights in 1988.

 Owens’s Complaint Survived Motion to Dismiss

Finally, the Court held that the factual allegations in Owens’s complaint, including reported and unreported cases of officers withholding information from the period of time before and during his trial, contained sufficient factual content to allege that the BCPD maintained a custom, policy, or practice allowing the withholding of material exculpatory evidence. The Court found the allegations that BCPD officers withheld information on multiple occasions could establish a “persistent and widespread” pattern of practice. The Court held that Owens’s complaint survived the BCPD’s 12(b)(6) motion to dismiss.

 4th Circuit Affirmed in Part and Vacated in Part

Owens will have yet another day in court to prove his § 1983 claims against the BCPD, and the individual officers, but not the State Attorney’s Office. The case was remanded to the district court for further proceedings.

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23Sep

Hearsay Was Harmless in Revocation Hearing

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By Caroline Daniel

In an unpublished opinion released today, the Fourth Circuit affirmed Johnny L. Dowdy’s sentence of 14 months imprisonment and 46 months of supervised release following a revocation hearing.  Dowdy appealed his conviction based on the admission of hearsay evidence at the hearing, and in United States v. Johnny L. Dowdy, Jr., the court held that the evidence was likely admissible and, even if its admission was error, it was a harmless one.

Dowdy was originally convicted of multiple drug trafficking offenses.  While on supervised release, he pled guilty to violating various conditions of this release including failing to notify the DMV of his address change, having improper equipment, failing to check-in with his probation officer, failing to notify his probation officer of his address change, leaving the area in which he was permitted to be without permission, and obstructing a police officer.  During this hearing, the district court also found Dowdy guilty of an incident of battery that occurred while he was on supervised release.  The victim of the battery did not appear at the hearing, and the only evidence offered was statements to the police officers.  Dowdy objected to the admission of the evidence based on hearsay.

Quoting United States v. Doswell, the Fourth Circuit explained in its opinion that “supervised release revocation proceedings are informal proceedings in which the rules of evidence, including those pertaining to hearsay, need not be strictly applied.”   The court did note that due process concerns about a defendant’s right to confront a victim remain significant in this informal setting.  These concerns should be balanced against the government’s proffered reason for the victim’s absence.

Here, the court ultimately held that even if the balancing test was not properly applied by the district court, any error was harmless.  Dowdy argued that the district court’s conclusion of his guilt in the battery charge was the “determinative factor underlying [his] revocation sentence,” but the Fourth Circuit pointed to the numerous other determinations that the district court considered in his sentencing.  Ultimately, Dowdy’s violent and lengthy criminal history and his breach of the court’s trust while on supervised release led to his appropriate revocation sentence.   Any alleged evidentiary error was practically irrelevant.

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6Mar

Purpose v. Primary Purpose- 4th Circuit Analyzes Federal Sentencing Guideline §2G2.2

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 By Kim Sokolich

Today, in United States v. Cox, the 4th Circuit rejected the argument that United States Sentencing Guideline §2G2.2, governing possession of material depicting sexual exploitation of a minor, requires some sort of heightened evidence that the possession was for the “primary purpose” of producing a visual depiction of such conduct.

According to the South Carolina, Florance County Sheriff’s office, Harvey Cox had long been molesting his minor niece, M.G. When M.G. was twelve years old, Cox began to sexually abuse her and photograph the events. Cox would give M.G. money and would threaten her not to tell anyone. Authorities obtained forty-six Polaroid sexually explicit photographs of M.G. with Cox.  On the back of each photograph was a date written in Cox’s handwriting, ranging from June 2004 to December 2005.  In 2011, after getting caught faking his own death, Cox pled guilty to a violation of 18 U.S.C. 2251(a) for knowingly possessing material that contained images of child pornography.

In calculating Cox’s Guidelines sentencing range, Cox’s probation officer applied §2G2.2, which is only triggered if “the offense causing a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct.The application of this section would result in a higher adjusted offense. Over Cox’s objection, the district court sentenced Cox to 300 concurrent months in prison. Cox appealed.

On appeal, Cox argues that the district court miscalculated his sentencing guidelines range by applying §2G2.2. Specifically, Cox argues that there was no evidence to support a finding that he acted for the purpose of producing pictures of sexually explicit conduct. Cox argues that the photographs taken were not sufficient evidence under §2G2.2, because he did not intent to produce photographs as a “central component of the sexual encounters.” The 4th Circuit was not impressed by this argument.

The Court first addressed the “purpose” requirement under §2G2.2. Following the standard set by the Ninth Circuit in the 2002 case, U.S. v. Hughes, purpose is to be construed broadly and does not mean primary purpose. “In ordinary usage, doing X ‘for the purpose of’ Y does not imply that Y is the exclusive purpose.” Thus Cox cannot immunize himself by stating that he had another reason to sexually abuse his niece. Therefore, the Court found that the “purpose requirement under the Federal Sentencing Guidelines is satisfied as long as at least one of the defendant’s purposes was to produce the visual depiction of sexually explicit conduct.

With that reasoning, the Court had no trouble concluding that the evidence of the photographs with the handwritten dates on them was enough evidence to support the purpose requirement. Judgement affirmed.

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1Mar

Consumer Redress and the Legal Standard for Individual Liability under the FTCA

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By Karon Fowler

Last week in FTC v. Kristy Ross, the Fourth Circuit ruled on a Federal Trade Commission (“FTC”) suit against Kristy Ross, a leader at Innovative Marketing, Inc. (“IMI”), for running a deceptive internet “scareware” scheme in violation of § 5(a) of the Federal Trade Commission Act (“FTCA”). The “scareware” scheme relies on advertisements that tell consumers that a scan of their computers had been performed and a variety of dangerous files, such as viruses and spyware, had been detected. However, no scans were actually conducted and instead simply “trick[ed] consumers into purchasing computer security software.”

The district court entered summary judgment in favor of the Commission on the issue of whether the advertising was deceptive, but it set a separate trial to determine whether Ross could be held individually liable under the FTCA as a “control person” at the company and to what extent she had authority over and knowledge of IMI’s deceptive acts. The district court concluded that Ross had actual knowledge of the deceptive marketing scheme, or was “at the very least recklessly indifferent or intentionally avoided the truth” about the scheme. It entered judgment against Ross in the amount of $163,167,539.95, and it enjoined her from engaging in similar deceptive marketing practices.

Ross appealed the district court judgment on four bases: (1) the court’s authority to award consumer redress; (2) the legal standard the court applied in finding individual liability under the Federal Trade Commission Act; (3) the court’s prejudicial evidentiary rulings; and finally, (4) the soundness of the district court’s factual findings.

The court’s authority to award consumer redress

Although the FTCA’s test does not expressly authorize the award of consumer redress, the Supreme Court has long held that when Congress invokes the federal district court’s equitable jurisdiction, it provides the court with the power to decide all relevant matters in dispute and to award complete relief. This is true even where the decree includes that which might be conferred by a court of law. The court explains that Supreme Court precedent sets forth the presumption that Congress, by statutorily authorizing the exercise of the district court’s injunctive power, it also acted with awareness of the historic power of equity to provide complete relief. This complete relief may necessarily include consumer redress. Thus, absent some countervailing indication sufficient to rebut the presumption, the court had sufficient statutory power to award “complete relief” under the FTCA, including monetary consumer redress—a form of equitable relief.

The court explained that although Ross made some strong arguments about the structure, history, and purpose of the FTCA, her arguments have been rejected by every other federal appellate court to have considered the issue. Those cases can be found here: F.T.C. v. Bronson Partners LLC, 654 F.3d 359, 365-67 (2d Cir. 2011);F.T.C. v. Amy Travel Service, Inc., 875 F.2d 564, 571 (7th Cir. 1989); F.T.C. v. Security Rare Coin & Buillion Corp., 931 F.2d 1312, 1314-15 (8th Cir. 1991); F.T.C. v. Pantron I Corp., 33 F.3d 1088, 1101-02 (9th Cir. 1994); F.T.C. v. Gem Merchandising Corp., 87 F.3d 466, 468-70 (11th Cir. 1996).

The legal standard applied in finding individual liability under the FTCA

Below, the district court rules that individual liability can be found where the individual (1) participated directly in the deceptive practices or had authority to control them, and (2) had knowledge of the deceptive conduct, which could be satisfied by showing evidence of actual knowledge, reckless indifference to the truth, or an awareness of a high probability of fraud combined with intentionally avoiding the truth (i.e., willful blindness).

Ross attacked this standard and instead asked the court to utilize a different standard found in securities fraud cases that requires an individual to have (1) “authority to control the specific practices alleged to be deceptive,” coupled with a (2) “failure to act within such control authority while aware of apparent fraud.” See, e.g.,Dellastatious v. Williams, 242 F.3d 191, 194 (4th Cir. 2001). The court rejected this proposal because it would make most FTC charges “futile” against individuals responsible for illegal practices by way of their control over “the lifeless entity of a corporation.” In other words, the standard should reflect the fact that individuals are responsible for implementing these deceptive practices and a requirement of actual awareness would thwart the goal of personal accountability.

The Fourth Circuit held that an individual may be liable under the Federal Trade Commission Act (FTCA) if he or she (1) participated directly in the deceptive practicesor had authority to control those practices, and (2) had or should have had knowledge of the deceptive practices. The second prong may be satisfied by showing that the individual had actual knowledge of the deceptive conduct, was recklessly indifferent to its deceptiveness, or had an awareness of a high probability of deceptiveness and intentionally avoided learning the truth.

Moreover, a ruling in Ross’ favor would create a serious circuit split—a result the Fourth Circuit would rather avoid. Every federal appellate court to have heard the issue has adopted the same two-prong test. Those cases can be found here: F.T.C. v. Direct Marketing Concepts, Inc., 624 F.3d 1, 12 (1st Cir. 2010); Amy Travel Service, 875 F.2d at 573-74; F.T.C. v. Publishing Clearing House, Inc., 104 F.3d 1168, 1170 (9th Cir. 1997); F.T.C. v. Freecom Communications, Inc., 401 F.3d 1192, 1207 (10th Cir. 2005); Gem Merchandising Corp., 87 F.3d at 470.

The three evidentiary challenges

(1) Ross argued that the district court improperly precluded her expert from testifying about how “the advertisements linkable to Ms. Ross’s responsibilities were nondeceptive.” Yet, the district court had already decided the deceptiveness issue in favor of the Commission at the summary judgment stage. The only at issue at trial was whether Ross had the required degree of control to hold her individually liable for the company’s practices. Because the individual liability standard does not require a specific link from Ross to particular deceptive advertisements and instead looks at whether she had authority to control the corporate entity’s practices, Ellis’ testimony was immaterial, and thus irrelevant, to the issue reserved for trial. FRE 401.

(2) Ross contended that the district court erred in admitting and relying on a 2004 to 2006 profit and loss statement to calculate the amount of consumer redress. The statement was admitted under FRE 807 (the residual exception to the rule against hearsay), the Fourth Circuit explained that it may affirm the district court on the basis of any independent ground supported by the record. The court thus concluded that the profit and loss statement was admissible under FRE 801(d)(2)(B) as an adoptive admission by Ross. Ross expressly adopted the statement by agreeing with an original co-defendant’s affidavit that provided the statement as an attachment.

(3) Ross finally argued that there was insufficient evidence establishing a predicate for an email between individuals within the company to be admitted for the existence of the conspiracy under FRE 801(d)(2)(E). Ross contended that the admission of the email constituted “bootstrapping” of the existence of the conspiracy to the document’s admissibility. The court disagreed. Based on Fourth Circuit precedent, the proponent for admission of a co-conspirator’s out-of-court statement must demonstrate the existence of the conspiracy by evidence extrinsic to the hearsay exception. Here, however, that requirement was satisfied because Ross produced an affidavit during the corporate litigation in which she stated she was a Vice President and co-founder of IMI, choosing to adopt the affidavits of her co-defendants attesting to the same facts. This evidence, along with the email mentioned in the second evidence issue, provided a sufficient basis upon which the district court could conclude the existence of a conspiracy.

The “authority to control” issue

Ross lastly argued that the district court clearly erred in finding she had “control” of the company, participated in any deceptive acts, and had knowledge of the deceptive advertisements. Because it was a bench trial below, the Fourth Circuit reviewed the court’s factual findings for clear error and its legal conclusions de novo. In an affidavit in the corporate litigation, Ross swore she was a high-level business official with certain duties that provided the district court with sufficient evidence of her authority and control over the nature and quality of the advertisements. Moreover, Ross’ statements to other employees, as memorialized in chat logs between her and other employees, were evidence that she served in a managerial role, directing the design of particular advertisements. Her extensive involvement indicated in the record provided fertile ground for the district court to reasonably infer that Ross was actively and directly participating in the multiple states of the deceptive advertising scheme. As to the “actual knowledge” or “reckless indifferen[ce]” finding, the court explained that Ross acted in a way to suggest she may not have personally believed the advertisements were deceptive, Ross was clearly on notice of the various complaints received by IMI, including that they would cause consumers to automatically download their products.

The Fourth Circuit thus affirmed the district court on all issues.

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26Feb

Brothers Convicted of NC Coin Store Robberies Successfully Appeal (In Part)

Categories: 4th Cir. Blog
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By Alina Buccella

In a case published today by the Fourth Circuit, the court reviewed the appeals of two brothers, Jimmy and Janson Strayhorn, found guilty of armed robbery under the Hobbs Act and for brandishing a firearm in furtherance of a crime. The Hobbs Act requires that the robbery have an effect on interstate commerce. Because the brothers were accused of robbing a P & S Coin, and for conspiring to rob an All American Coins, their robbery and conspirary affected interstate commerce. The brothers were also charged with brandishing a firearm in furtherance of a crime in violation of 18 U.S.C. 924(c)(1). The elements of this offense require a showing that the defendants used or carried a firearm in relation to a crime of violence.

Janson Strayhorn appealed his guilty verdict by arguing that the state had insufficient evidence on which to base his verdict. The Fourth Circuit agreed in regards to his conviction for robbing the P & S Coin, but upheld his conviction for conspiracy to rob the All American Coins. The only basis on which the state had to convict Janson for the P & S robbery was a partial fingerprint on the duct tape used to gag the storeowner. An expert for the state testified that the partial fingerprint could have been placed there up to a year before the robbery. The court said that the “probative value of an accused’s fingerprints upon a readily movable object is highly questionable, unless it can be shown that such prints could have been impressed only during the commission of the crime,” and that it would be insufficient evidence on which to permit a jury to find Janson guilty beyond a reasonable doubt. The court went further and enunciated a rule for future cases relying on a fingerprint on a movable object: “in the absence of evidence regarding when the fingerprints were made, the government must marshal sufficient additional incriminating evidence so as to allow a rational juror to find guild beyond a reasonable doubt.” This burden could be met with sufficiently incriminating circumstantial evidence.

In Janson’s case, there was one piece of evidence that could have been sufficiently incriminating – the fact that he was stopped by police while in possession the Colt Peacemaker that was stolen from P & S Coin during the robbery. While the unexplained possession of a stolen weapon can lead to the conclusion of guilt, the court found that the time between the robbery and Janson’s arrest, two months, was too tenuous to make such an inferential leap. Thus, the court reversed the trial court’s denial of Janson’s motion for summary judgment of acquittal on the P & S Coin robbery conviction.

However, Janson had no such luck in his charge of conspiracy to violate the Hobbs Act or 18 U.S.C. 924(c)(1). There was sufficient evidence on record that showed multiple phone calls between Jimmy and Janson planning to rob the All American Coins and to use the Colt Peacemaker to do so (read: irony). Janson was also stopped by police outside of the All American Coins, in the car described during the phone calls, with the Colt Peacemaker in the backseat. Thus the court upheld these convictions against Janson Strayhorn.

Jimmy Strayhorn was able to successfully appeal the sentence he received for his conviction for brandishing a firearm in furtherance of a crime because the trial court failed to instruct the jury that a finding that Jimmy “brandished,” as opposed to “used” or “carried,” the gun would raise the mandatory minimum sentence of his conviction. This is a new rule coming from the Supreme Court in Alleyne v. United States, 133 S. Ct. 2151 (2013), and was not in effect during Jimmy’s trial. However, because this case came out during Jimmy’s pending appeal, the Fourth Circuit was required to take note of the new rule and apply it to his case. Lucky Jimmy.

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