United States v. Howard

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 07-4146

UNITED STATES OF AMERICA,

Plaintiff – Appellee,

v.

DAVID L. HOWARD,

Defendant – Appellant.

No. 07-4147

UNITED STATES OF AMERICA,

Plaintiff – Appellee,

v.

NICHOLAS RAGIN,

Defendant – Appellant.

No. 07-4168

UNITED STATES OF AMERICA,

Plaintiff – Appellee,
 v.

TRACY HOWARD,

Defendant – Appellant.

Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte. Robert J. Conrad,
Jr., Chief District Judge. (3:04-cr-00271)

Argued: December 5, 2008 Decided: January 29, 2009

Before TRAXLER and AGEE, Circuit Judges, and Rebecca Beach
SMITH, United States District Judge for the Eastern District of
Virginia, sitting by designation.

Affirmed in part, vacated in part, and remanded in part by
unpublished per curiam opinion.

ARGUED: Ann Loraine Hester, FEDERAL DEFENDERS OF WESTERN NORTH
CAROLINA, INC., Charlotte, North Carolina; Richard A. Culler,
CULLER & CULLER, Charlotte, North Carolina; Sue Genrich Berry,
BOWEN AND BERRY, P.L.L.C., Wilmington, North Carolina, for
Appellants. Amy Elizabeth Ray, OFFICE OF THE UNITED STATES
ATTORNEY, Asheville, North Carolina, for Appellee. ON BRIEF:
Claire J. Rauscher, Executive Director, Matthew R. Segal, Peter
S. Adolf, FEDERAL DEFENDERS OF WESTERN NORTH CAROLINA, INC.,
Charlotte, North Carolina, for Appellant David L. Howard.
Gretchen C. F. Shappert, United States Attorney, Charlotte,
North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit

2
PER CURIAM:

David L. Howard (“David”), Tracy Howard (“Tracy”), and

Nicholas Ragin (“Ragin”) (collectively “the Defendants”) appeal

their convictions and sentences on various charges primarily

related to prostitution and illegal drug sales. (JA 65).

Relevant to this appeal for all the Defendants are convictions

for conspiracy to promote prostitution in violation of 18 U.S.C.

§§ 2422, 2423, 1952 (2008), (JA 66-68), and conspiracy to

possess with intent to distribute more than fifty grams of

cocaine base in violation of 21 U.S.C. § 846. (JA 70). David

and Tracy were also convicted for conspiracy to launder

prostitution proceeds in violation of 18 U.S.C. § 1956. (JA 69).

David contends that he was deprived of his Fifth and Sixth

Amendment rights to present a defense and that he was sentenced

based on an incorrect advisory guideline range. Tracy argues

that the district court erroneously denied his motion to

suppress certain evidence. David and Tracy jointly assert that

the district court gave incorrect jury instructions for the

money laundering count. The Defendants collectively appeal

their sentences, arguing that the district court gave incorrect

jury instructions and that the sentences violate their Fifth and

Sixth Amendment rights. For the following reasons, we affirm

the judgment of the district court in part, vacate in part, and

remand as to David for resentencing.

3
 I. Tracy’s Motion to Suppress

In reviewing a denial of a motion to suppress, this Court

reviews the district court’s factual findings for clear error

and its legal conclusions de novo. United States v. Johnson, 114

F.3d 435, 439 (4th Cir. 1997).

A. Relevant Facts

In September 2004, Vice Detective M.J. Grimsley

(“Grimsley”) received information from David, who was acting as

a confidential informant, that Tracy was selling drugs and

prostituting underage girls. On September 16, 2004, David

informed Grimsley that Tracy had rented a hotel room and was

staying in the room with his girlfriend, Keshia Burris

(“Burris”) who was listed as a guest at the hotel. David also

reported that Tracy and Burris had a fourteen year old girl in

the room. Grimsley was unable to confirm whether the alleged

minor was staying in the room but determined there was an

outstanding warrant for Tracy’s arrest.

Instead of arresting Tracy in the hotel room, detectives

waited until he left the room and drove a few blocks away from

the hotel where they conducted a traffic stop. (JA 129).

During the stop, Grimsley questioned Tracy about his activities

at the hotel, including whether he kept a minor there or had any

instrumentalities of crime in his room. Grimsley asked for

4
Tracy’s consent to search the room and Tracy responded that he

“would consent to [Grimsley’s] searching for a body” but “he did

not want [Grimsley] poking around” because “he had a little

money” in the room. (JA 132). Tracy was then arrested on the

outstanding warrant and taken to the local law enforcement

center for questioning.

Officers then approached Burris at the hotel and asked her

permission to enter and search the hotel room. She consented to

the search and opened the door with her key. Upon entering the

hotel room, officers did not see a minor or any other person,

but drug paraphernalia, including packaging for cocaine, a

scale, a razor blade, and a bag of crack cocaine were in plain

view. Upon searching the room further, officers found more

crack cocaine, money, and a pistol hidden at various places.

Tracy filed a motion to suppress the evidence found in the

hotel room as well as certain statements he made to police in an

interview after his arrest. He contended that the hotel room

search was unlawful because he did not give his consent. The

district court denied the motion.

B. Analysis

Tracy avers that Burris’s consent to a search of the hotel

room was not sufficient to overcome his express refusal to give

consent for a search. In support of his position, Tracy cites

5
the Supreme Court’s holding in Georgia v. Randolph, 547 U.S. 103

(2006), which stated that a “physically present inhabitant’s

express refusal of consent to a police search is dispositive as

to him, regardless of the consent of a fellow occupant.” Id. at

122-23. In that case, the defendant unequivocally refused to

consent to a warrantless police search. Id. at 107. His wife

subsequently gave police permission to search their marital

residence. Id. The Supreme Court held that the search was

unreasonable and invalid as to the husband. Id. at 120.

Tracy argues that Randolph applies here because he only

gave limited consent to a search, that is, to verify the

fourteen year old minor was not in the hotel room. 1

Consequently, Tracy contends the police officers breached the

rule in Randolph, because they conducted a full search which was

beyond the limits of his consent. The Government responds that

Randolph does not apply because Tracy was not physically present

at the hotel when Burris consented to a full search of the room.

1
During the hearing on Tracy’s motion, the district court
made a factual finding that Grimsley’s testimony that Tracy gave
consent to the police officers to search his hotel room for “a
body” was credible. The court did not credit Tracy’s testimony
that he did not consent to even a limited search. This finding
was not clearly erroneous and will not be disturbed by this
Court. United States v. Depew, 932 F.2d 324, 327 (4th Cir.
1991).

6
 It is not necessary for us to reach the Randolph question

because, under the facts of this case, the inevitable discovery

rule applies. “[W]here it appears that evidence ‘inevitably

would have been discovered by lawful means,’ the deterrence

rationale of the exclusionary rule has ‘so little basis’ that

the rule should not be applied.” United States v. Whitehorn, 813

F.2d 646, 650 (4th Cir. 1987) (quoting Nix v. Williams, 467 U.S.

431, 444 (1984)).

The officers who entered Tracy’s hotel room, on the basis

of the limited consent to search the room for a body, discovered

the drug paraphernalia in plain view. Upon observing this

paraphernalia in plain view, officers inevitably would have

arrested Burris and Tracy. Incident to that arrest, officers

would have searched the surrounding area. Police may conduct a

search of the area “immediately adjoining the place of arrest

from which an attack could be immediately launched.” Maryland v.

Buie, 494 U.S. 325, 334 (1990). The district court found that

any items seized that were not in plain view “were readily

accessible by any inhabitant of that room.” (JA 261). Thus,

while conducting a search incident to arrest, officers would

have inevitably discovered the other incriminating evidence

which was not in plain view.

Accordingly, the district court did not err in denying

Tracy’s motion to suppress.

7
 II. David’s Right to Present a Defense

This Court reviews the trial court’s determination of

whether a defendant’s constitutional right to a fair trial has

been violated de novo. See United States v. Ali, 528 F.3d 210,

232 (4th Cir. 2008) (reviewing constitutional claims de novo).

Evidentiary rulings generally are reviewed for abuse of

discretion. United States v. Queen, 132 F.3d 991, 995 (4th Cir.

1997).

A. Relevant Facts

The government informed David’s counsel before trial that

it possessed evidence that he had cooperated with them against

his co-conspirators prior to his arrest. In a taped interview,

David gave the officers information about Tracy’s use of

underage girls, and told officers he was not involved in the

prostitution of underage girls. He gave the officers the names

of the girls Tracy was using and said he would do his best to

help the officers find the runaway girls.

The district court initially refused to allow into evidence

testimony about the information David had provided to police

citing Bruton v. United States, 391 U.S. 123 (1968). Counsel

for David sought to elicit testimony from Officer Decker

(“Decker”) about specific statements David made while acting as

an informant. The district court excluded this testimony based

8
on Bruton, although Decker was permitted to testify generically

that David had provided information about the case and Tracy’s

hotel location. The court explained that, while David could

establish that he acted as an informant, more specific testimony

would not only violate the hearsay rule, but also create a

danger of unfair prejudice and confusion under Federal Rule of

Evidence 403.

David testified in his own defense in an attempt to cure

the Bruton issue. However, the government objected on hearsay

grounds when David sought to testify about specific statements

he had made to the police. The court sustained the objection,

but ruled in the alternative under Rule 403 of the Federal Rules

of Evidence and found that the evidentiary value of the

statements would be de minimis, because David’s motivation for

acting as an informant was suspect. Ten days into trial, David

filed a motion to admit “exculpatory impeachment evidence,” to

call government counsel as a witness, and/or for severance of

his trial from that of the other defendants.

B. Analysis

In Bruton, the Supreme Court held that the confrontation

clause is violated by the introduction of a non-testifying

defendant’s statement that contains incriminating evidence

against the co-defendant. 391 U.S. 124. As there were co-

9
defendants in this case, any testimony by Decker as to the

incriminating statements David made about Tracy’s activities

while he was acting as an informant was barred under Bruton.

Although David eventually did testify in an attempt to

remove the Bruton barrier, the district court held that the

testimony nevertheless remained inadmissible. The district

court determined that, under Federal Rule of Evidence 403, the

statements were unduly prejudicial and potentially confusing to

the jury because they were “only offered to counter one object

of a multi-object conspiracy count which itself is but one of 17

counts against David Howard.” (JA 2703). Furthermore, the

proposed testimony’s probative value would be de minimis, as it

was just as likely that David cooperated with police for reasons

other than his lack of involvement with the conspiracy,

including bad blood between the brothers and in an attempt to

minimize his culpability. We hold the district court did not

abuse its discretion in making these determinations.

Alternatively, David argues that his requests for severance

should have been granted. However, barring special

circumstances, “defendants indicted together should be tried

together for the sake of judicial economy.” United States v.

Rusher, 966 F.2d 868, 877 (4th Cir. 1992). David made his

request for severance after nearly two weeks of trial. The

district court determined that it would be unduly burdensome to

10
force vulnerable witnesses to again go through the trauma of

testifying. Further, the district court found severance of the

defendants at such a late date would impair the efficiency and

fairness of the judicial system. The court did not abuse its

discretion in refusing to sever David’s trial from that of the

other defendants.

III. Jury Instructions and Collins

Because the Defendants did not object to the district

court’s jury instruction, this Court reviews for plain error.

United States v. Hastings, 134 F.3d 235, 239 (4th Cir. 1998).

If plain error is shown the Court may correct the error if it

“seriously affect[s] the fairness, integrity or public

reputation of judicial proceedings.” Id. (quoting United States

v. Olano, 507 U.S. 725, 732 (1993)).

A. Relevant Facts

The Defendants were each charged with and convicted of

conspiring to possess with intent to distribute more than fifty

grams of cocaine base. While instructing the jury on this

count, the court stated in relevant part: “you must then

determine the quantity of cocaine base involved. You will be

provided with a special verdict form that specifically addresses

the drug and the quantity to be considered.” (JA 3702). The

11
relevant portion of the special verdict form for each individual

defendant provided this inquiry for the jury to answer: “if

guilty, was more than 50 grams of a mixture and substance

containing a detectable amount of cocaine base reasonably

foreseeable to [individual defendant]?” (JA 3756, 3761, 3764).

B. Analysis

The Defendants argue that the jury instructions given on

the drug conspiracy count violate this Court’s holding in United

States v. Collins, 415 F.3d 304 (4th Cir. 2005). They contend

the district court erred by not charging the jury with

determining the exact amount of drugs attributable to each

individual defendant, rather than to the conspiracy as a whole.

The issue in Collins was whether “an individual defendant .

. . [should] be sentenced . . . by considering the amount of

narcotics distributed by the entire conspiracy? Or should that

defendant’s sentence be more individualized, subjecting him to

punishment only for distribution of the amount of narcotics

attributable to him?” Id. at 312. This Court held that “the

most reasonable interpretation of the relevant statutory

provisions requires a sentencing court to assess the quantity of

narcotics attributable to each coconspirator.” Id. (quoting

United States v. Irvin, 2 F.3d 72, 77 (4th Cir. 1993)). This

Court held that the district court must instruct the jury to

12
“determine what amount of cocaine base was attributable to

Collins using Pinkerton principles.” 2 Id. at 314. Thus, we must

determine whether the court properly instructed the jury to make

an individualized finding of reasonably foreseeable drug

quantities as to each of the Defendants. See United States v.

Brooks, 524 F.3d 549, 553 n.5 (4th Cir. 2008).

In this case, the court’s bench instructions did not

specifically instruct the jury that it must find the drug

amounts attributable to each individual defendant. However, the

special verdict form, referred to and incorporated by the jury

instructions, did specifically require the jury to find whether

more than fifty grams of the cocaine base was reasonably

foreseeable to each defendant. We believe the Collins

requirement is satisfied in this case by the special verdict

form.

The Ninth Circuit has held that “[v]erdict forms are, in

essence, instructions to the jury.” United States v. Reed, 147

F.3d 1178, 1180 (9th Cir. 1998). The Ninth Circuit was

“unwilling to conclude that the district court committed plain

error in omitting this information from the formal jury

2
“Pinkerton principles” refers to the concept that a member
of a conspiracy is guilty of his own overt acts, as well as acts
by coconspirators that are reasonably foreseeable and a natural
consequence of the unlawful agreement. Pinkerton v. United
States, 328 U.S. 640, 646-48 (1946).

13
instructions” when the information was included in the special

verdict form. United States v. Alghazouli, 517 F.3d 1179, 1189

(9th Cir. 2008). The Second Circuit also concluded that “[t]he

court’s special verdict questions must be read in conjunction

with the judge’s charge to the jury.” Vichare v. AMBAC, Inc.,

106 F.3d 457, 466 (2d Cir. 1996). The First Circuit has stated

that “[w]e examine the court’s instructions to the jury and

wording on the verdict form as a whole to determine whether the

issues were fairly presented to the jury.” Sheek v. Asia Badger,

Inc., 235 F.3d 687, 699 (1st Cir. 2000). As a general

principle, “we must assume that the jury understood and followed

the court’s instructions.” United States v. Udeozor, 515 F.3d

260, 271 (4th Cir. 2008) (quoting United States v. Hedgepeth,

434 F.3d 609, 614 n.4 (3d Cir. 2006) (internal quotations

omitted)). Based on these principles, taking the jury

instructions and the special verdict form as a whole, it is

reasonable to conclude the jury understood that it was to

determine the amounts of cocaine base reasonably foreseeable to

each individual defendant in the conspiracy.

The jury ultimately received the message that drug amounts

must be determined for each individual defendant. Further, the

evidence that the quantity was attributable to each individual

“was overwhelming and essentially uncontroverted,” so the error,

if any existed, would not rise to the level of plain error.

14
United States v. Foster, 507 F.3d 233, 252 (4th Cir. 2007)

(stating “that disturbing [the defendant’s] sentence on the drug

conspiracy count . . . would seriously affect the fairness,

integrity, and public reputation of judicial proceedings”).

Accordingly, we find no error, much less plain error, in the

district court’s jury instructions.

IV. David’s Sentence

This Court reviews sentences for reasonableness, applying

an abuse of discretion standard of review. United States v.

Pauley, 511 F.3d 468, 473 (4th Cir. 2007). The district court’s

factual determinations as to a defendant’s role in an offense

are reviewed under the clearly erroneous standard. United States

v. Hyppolite, 65 F.3d 1151, 1159 (4th Cir. 1995).

A. Relevant Facts

David’s Presentence Investigation Report (“PSR”), as

amended, calculated the base offense level for violating the

money laundering statute by using the drug conspiracy as the

underlying offense from which the laundered funds were derived.

This produced a base offense level of 36, based on 612 grams of

cocaine base. The PSR then added one level for the use of

underage individuals in the commission of the crime, pursuant to

15
§ 2D1.2(a)(2), and two more levels for possession of a firearm,

pursuant to § 2D1.1(b)(1), resulting in a total base offense

level of 39. The PSR then added two more levels because David

was convicted of violating 18 U.S.C. § 1956. Lastly, the PSR

added three levels for David’s aggravating role as a “manager or

supervisor” in the offense pursuant to § 3B1.1, resulting in a

level of 44, which exceeds the maximum offense level of 43.

David’s final criminal history category was category V, which

resulted in a guideline range of life imprisonment.

David objected on Sixth Amendment grounds to any drug

amount attribution beyond the fifty grams found by the jury as

part of its verdict. He also objected to using the drug offense

as the underlying offense on the money laundering charge and to

the “manager or supervisor” enhancement. The district court

rejected both objections and found a quantity of “more than 500

grams but less than 1.5 kilograms” of drugs was attributable to

David. Further, the court found that he was a manager or

supervisor of the money laundering operation within the meaning

of § 3B1.1. The district court determined the PSR calculation

of the life imprisonment guideline range was correct and

sentenced David to life in prison.

David contends that the district court’s calculation of his

offense level was erroneous for two reasons. First, David

argues that the court erred by using the drug conspiracy,

16
instead of the prostitution conspiracy, as the underlying

offense for calculating the money laundering offense level.

David next argues that the court erred by enhancing that offense

level by three levels under the “manager or supervisor”

provision of § 3B1.1.

B. The Underlying Offense to the Money Laundering Charge

To determine the base offense level for a charge of money

laundering, the Guidelines direct courts to use “[t]he offense

level for the underlying offense from which the laundered funds

were derived . . . .” § 2S1.1. Application Note 2(A) provides

“[i}n cases in which . . . there is more than one underlying

offense, the offense level for the underlying offense is to be

determined under the procedures set forth in Application Note 3

of the Commentary to §1B1.5.” § 2S1.1 cmt. 2(A). This

commentary directs the court to use “the most serious such

offense.” § 1B1.5 cmt. 3. In the case at bar, the most serious

offense is the drug charge, not the prostitution charge. David

argues that using the drug charge as the underlying offense was

error because the Government did not prove that any laundered

funds were derived from selling drugs, and that the court

consistently stated that the origin of the laundered funds was

prostitution.

17
 Although the court did refer to the prostitution ring as

the origin of the laundered funds, this does not bar the court

from using the drug conspiracy as the underlying offense for the

laundering charge. Courts are to consider the Guidelines’

language, and the relevant conduct provision, broadly. The

relevant conduct provision, § 1B1.3, is to be construed

liberally, including applicable conduct not charged in the

indictment. See United States v. Asch, 207 F.3d 1238, 1244 (10th

Cir. 2000); United States v. Behr, 93 F.3d 764, 765 (11th Cir.

1996); United States v. Silkowski, 32 F.3d 682, 688 (2d Cir.

1994); United States v. Davern, 970 F.2d 1490, 1494 (6th Cir.

1992). Nonetheless, the drug conspiracy charge was incorporated

by reference at the first paragraph of the indictment. Thus,

David was on notice that the drug conspiracy was applicable

throughout to all criminal conduct charged in the indictment.

Moreover, there is sufficient evidence that the receipts

from the prostitution services and the sale of drugs were

commingled. The record reflects that the drug and prostitution

rings were inextricably linked. Testimony established that

money received from the sale of drugs helped pay rent, bail, and

purchases of clothes, jewelry, and condoms for the prostitutes.

Moreover, the prostitutes were also directly involved in the

sale of drugs. Burris testified that she and another prostitute

would help bag crack for Tracy if he was “in a hurry or he

18
didn’t feel like doing it.” (JA 2823). Burris testified that

she did this at least twice a week. The prostitutes also

delivered the drugs to the buyers. Burris testified that she

would go to Little Mexico to “drop off [crack] for D or go drop

something off to David” about three times a week. (JA 2836-37).

Clearly some of the money David received from selling drugs was

used to purchase additional drugs or in furtherance of the

expenses of the prostitution ring. Because the prostitution and

drug rings were so intertwined and the laundered funds were

derived from both, it was appropriate to use the drug offense as

the base offense in calculating the guideline range on the money

laundering charge.

C. David’s Role as a Manager or Supervisor

David’s offense level was increased by three levels because

the district court determined that he played an aggravating role

as a “manager or supervisor” of the money laundering operation.

Section 3B1.1(b), the guideline provision applied to David,

provides that “[i]f the defendant was a manager or supervisor

(but not an organizer or leader) and the criminal activity

involved five or more participants or was otherwise extensive,

increase by 3 levels.” § 3B1.1(b). Chapter Three adjustments

are “determined based on the offense covered by this guideline

(i.e., the laundering of criminally derived funds) and not on

19
the underlying offense from which the laundered funds were

derived.” § 2S1.1 cmt. 2. David argues that the district

court’s finding that he was a manager or supervisor of the money

laundering scheme was erroneous. We agree.

David contends that he was not sufficiently involved in the

scheme to be characterized as a “manager or supervisor.” While

the Guidelines do not define the term “manager,” this Court has

utilized the dictionary definition: “a person whose work or

profession is the management of a specified thing (as a

business, an institution, or a particular phase or activity

within a business or institution).” United States v. Chambers,

985 F.2d 1263, 1268 (4th Cir. 1993) (quoting Webster’s Third New

International Dictionary 1372 (1986)). The evidence in the

record fails to support a finding that David met this

description as to the money laundering scheme itself.

The district court found that David “created the business,”

(referring to his prostitution business), that his “[c]ell phone

number was used as a number for the business,” and that “he

drove [the prostitutes] to the johns that they were servicing,

collected money from them, [and] split the money with his

mother.” (JA 3992). However, these facts go to David’s

involvement in the prostitution ring, and not to David’s

involvement in the money laundering scheme. There is no

evidence that David had any supervisory role in the money

20
laundering scheme, which was organized and carried out for the

most part by Ila. Thus, the district court’s finding that David

was a manager or supervisor of the money laundering scheme

constituted procedural error rendering David’s sentence

unreasonable under Gall v. United States, 128 S. Ct. 586, 597-98

(2007). See United States v. Diaz-Ibarra, 522 F.3d 343, 347

(4th Cir. 2008) (“An error in the calculation of the applicable

Guidelines range . . . makes a sentence procedurally

unreasonable.”).

The district court’s error in the calculation of the

sentencing range in determining David’s sentence requires that

we vacate the district court’s judgment fixing David’s sentence,

and we remand the case to the district court for resentencing

without the Chapter Three adjustment.

V. Defendants’ Sentences

The Defendants argue that their sentences were imposed

pursuant to a mandatory crack guideline that violated their

Fifth and Sixth Amendment rights. They note that Kimbrough v.

United States, 552 U.S. ___, 128 S. Ct. 558, 169 L.Ed.2d 481

(2007), was decided after the sentencing hearing and that the

approach by the district court in sentencing the Defendants

contravenes Kimbrough. The Supreme Court in Kimbrough held that

a district court may conclude that the Guidelines’ crack

21
cocaine/powder cocaine disparity yields a sentence greater than

necessary. Kimbrough, 128 S. Ct. at 574. This holding

abrogated the precedent in this Circuit under United States v.

Eura, 440 F.3d 625 (4th Cir. 2006), which held that the district

court could not diverge from the advisory sentencing range under

the Guidelines by substituting its own crack cocaine/powder

cocaine ratio.

However, Kimbrough did not hold that the district court

must conclude that any sentences within the Guidelines involving

crack cocaine yields a sentence “greater than necessary.”

Instead, Kimbrough permits a district court to sentence outside

the advisory sentencing range if the court deemed it appropriate

under the circumstances of that case. Here, the district court

clearly was not sentencing based solely on the advisory

sentencing range. The district court specifically stated that a

sentence within the Guideline range in this case was sufficient,

but no greater than necessary, to accomplish the objectives set

forth in § 3553(a). The court remarked

[s]o the sentence imposed, although consistent with
the advisory guideline range, is the sentence the
Court would have imposed if the guidelines never
existed. If the Court had authority to sentence
anywhere within the statutory maximum without respect
to any limitation or guidelines or anything else, this
is the sentence the Court would have imposed . . . And
the Court concludes that that sentence is sufficient
but not greater than necessary to meet the sentencing
objectives of Section 3553(a).

22
(JA 4035) (as to David). As to Ragin, the court stated that

“the sentence of 360 months, though imposed with knowledge of

the severity of the sentence, is sufficient but not greater than

necessary to accomplish the goals of sentencing.” (JA 4116). A

Kimbrough analysis does not affect the Defendants’ sentences,

because the sentencing approach taken by the district court was

not contrary to the ruling in that case. The district court

appropriately determined sentences it felt were “sufficient but

not greater than necessary” and did not err in doing so.

VI. Jury Instructions on the Money Laundering Count

Count Twelve of the indictment charged David and Tracy with

conspiracy to violate the money laundering statute, 18 U.S.C. §

1956(h) (2008). The court instructed the jury (in relevant

part), that “you must find beyond a reasonable doubt . . . that

the funds or property involved in the financial transaction did,

in fact, represent the proceeds of specified unlawful activity,

in this case the proceeds of the use of interstate facilities to

promote prostitution.” (JA 3693-94). The jury was to use the

“ordinary, everyday meaning” for the term “proceeds,” as the the

term was not explicitly defined by the district court in the

jury instructions. Because the Defendants did not object to the

district court’s instruction, this Court reviews for plain

23
error. United States v. Hastings, 134 F.3d 235, 239 (4th Cir.

1998).

David and Tracy posit that the common definition of

“proceeds” could be either “profits” or “receipts.” They argue

that the Supreme Court, in a case decided subsequent to their

opening brief, held that “proceeds” should be defined to mean

“profits” and not “receipts.” Consequently, they contend that

the Government failed to prove that operation of the

prostitution ring resulted in any profits, as opposed to merely

receipts. They contend all of the money earned by the

prostitutes was put back into the business in the form of new

clothes and room and board and therefore they had no profits and

could not be found guilty under Count Twelve as a matter of law.

A plurality of the Court in United States v. Santos, 128 S.

Ct. 2020 (2008), held the term “proceeds” to mean “profits” and

stated that “a criminal who enters into a transaction paying the

expenses of his illegal activity cannot possibly violate the

money-laundering statute, because by definition profits consist

of what remains after expenses are paid.” Id. at 2027. However,

because Santos was a plurality opinion, the holding of the Court

for precedential purposes is the narrowest holding that garnered

five votes. Marks v. United States, 430 U.S. 188, 193 (1977).

Here, Justice Stevens’s concurrence provides the narrowest

holding. Santos, 128 S. Ct. at 2031. Justice Stevens writes

24
that the “profits” definition of “proceeds” is limited to money

laundering cases involving a gambling operation like the one in

that case. He explains that, “[i]n other applications of the

statute not involving such a perverse result [as in this case],

I would presume that the legislative history summarized by

Justice Alito [that “proceeds” means “receipts”] reflects the

intent of the enacting Congress.” Id. at 2034 n. 7. Justice

Stevens thus carves out an exception for gambling operations in

which “proceeds” means “profits,” although the rule is that

“proceeds” means “receipts.”

Because Santos does not establish a binding precedent that

the term “proceeds” means “profits,” except regarding an illegal

gambling charge, we are bound by this Court’s precedent

establishing that “proceeds” means “receipts.” See, e.g.,

United States v. Singh, 518 F.3d 236, 247 (4th Cir. 2005)

(recognizing that funds used by prostitutes to pay the cost of a

hotel room for purpose of prostitution constituted “proceeds”);

United States v. Caplinger, 339 F.3d 226, 233 (4th Cir. 2003)

(holding that the element of use of unlawful proceeds can be

proven by circumstantial evidence that the defendant applied

unlawful proceeds to promote and perpetuate his scheme); United

States v. Stewart, 256 F.3d 231, 250 (4th Cir. 2001) (affirming

a money-laundering conviction where proceeds from the sale of

drugs were used to further the drug operation). Thus, the

25
district court did not err in instructing the jury to use the

common dictionary definition of “proceeds.”

VII.

For the foregoing reasons, the judgment of the district

court is affirmed in all respects except as to David’s sentence.

The judgment as to David’s sentence is vacated and his case

remanded for resentencing.

AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED IN PART

26