United States v. James Wallis

FILED
NOT FOR PUBLICATION
NOV 06 2015
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 09-10472

Plaintiff - Appellee, D.C. No. 2:07-cr-00145-KJD-
PAL-3
v.

JAMES MILTON WALLIS, MEMORANDUM*

Defendant - Appellant.

UNITED STATES OF AMERICA, No. 09-10502

Plaintiff - Appellee, D.C. No. 2:07-cr-00145-KJD-
PAL-8
v.

CHARLES EDWARD GENSEMER,

Defendant - Appellant.

UNITED STATES OF AMERICA, No. 09-10503

Plaintiff - Appellee, D.C. No. 2:07-cr-00145-KJD-
PAL-14
v.

*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
ROBERT ALLEN YOUNG,

Defendant - Appellant.

UNITED STATES OF AMERICA, No. 10-10000

Plaintiff - Appellee, D.C. No. 2:07-cr-00145-KJD-
PAL-7
v.

KENNETH RUSSELL KRUM,

Defendant - Appellant.

UNITED STATES OF AMERICA, No. 10-10125

Plaintiff - Appellee, D.C. No. 2:07-cr-00145-KJD-
PAL-10
v.

MICHAEL WAYNE YOST,

Defendant - Appellant.

Appeal from the United States District Court
for the District of Nevada
Kent J. Dawson, Senior District Judge, Presiding

Argued and Submitted October 19, 2015
San Francisco, California

2
Before: SILVERMAN and CHRISTEN, Circuit Judges and DUFFY,** District
Judge.

This is a RICO and drug conspiracy case. The government charged James

Wallis, Charles Gensemer, Robert Young, Kenneth Krum, Michael Yost, and eight

others with conspiracy to engage in a racketeer influenced corrupt organization

(RICO), violent crimes in aid of racketeering, drug conspiracy, and illegal

possession of firearms. The indictment followed from a multi-year investigation

into activities of the Aryan Warriors (AW), a gang that operated in Nevada state

prisons. On appeal, defendants claim the district court committed several errors

during the trial and at sentencing that warrant reversal of their convictions or

reduction of their sentences. We have jurisdiction under 28 U.S.C. § 1291. With

one exception, we affirm.1

1. The jury instructions accurately stated the law on RICO conspiracy.

Unlike common law conspiracy, which requires that a participant specifically

intend the object of the conspiracy be accomplished, RICO conspiracy requires

only “that two or more people agreed to commit a[t least two] crime[s] covered by

**
The Honorable Kevin Thomas Duffy, District Judge for the U.S.
District Court for the Southern District of New York, sitting by designation.
1
The parties are familiar with the facts, so we do not recount them at
length here.

3
the [RICO] . . . statute (that a conspiracy existed) and that the defendant knowingly

and willfully participated in the agreement (that he was a member of the

conspiracy).” Smith v. United States, 133 S. Ct. 714, 719 (2013); see also United

States v. Christensen, 801 F.3d 970, 986 (9th Cir. 2015) (“[A] RICO conspiracy

under § 1962(d) requires only that the defendant was aware of the essential nature

and scope of the enterprise and intended to participate in it.” (internal citation

omitted)). For this reason, the district judge did not err when it declined to instruct

the jury on specific intent. See United States v. Blinder, 10 F.3d 1468, 1477 (9th

Cir. 1993) (reaching the same conclusion on similar facts).

2. We affirm the district court’s denial of Yost’s motion for an evidentiary

hearing pursuant to Lafler v. Cooper. See 132 S. Ct. 1376, 1384 (2012) (the right

to effective assistance of counsel applies at the plea negotiations stage). We agree

with Yost that the district court erred when it found “[w]hether under the sentence

already imposed or under the proffered plea agreement, Yost will receive ten years

custody,” and dismissed Yost’s ineffective assistance of counsel (IAC) claim under

Lafler’s prejudice prong. Id. at 1384–85. In fact, Yost’s sentence is four years

longer than that which the government offered; this four-year difference could be

grounds for a finding of prejudice under Lafler. See id. at 1385. However,

consistent with long-standing circuit preference, we decline to entertain Yost’s

4
IAC claim on direct appeal. United States v. Jeronimo, 398 F.3d 1149, 1155 (9th

Cir. 2005) (“[A]s a general rule, we do not review challenges to the effectiveness

of defense counsel on direct appeal.”), overruled on other grounds by United States

v. Castillo, 496 F.3d 947, 957 (9th Cir. 2007) (en banc). Although there are

exceptions to this general rule, none of those exceptions apply here. United States

v. Rahman, 642 F.3d 1257, 1259–60 (9th Cir. 2011) (courts may entertain IAC

claims on direct appeal if, for example, the “record on appeal is sufficiently

developed to permit determination of the issue”). Yost’s claim is better presented

in a 28 U.S.C. § 2255 proceeding in which the district court can properly develop

the record. See 28 U.S.C. § 2255(b) (discussing § 2255’s hearing requirement).

Yost’s co-defendants’ Lafler claim is likewise premature on direct appeal,

but nothing in this disposition prevents them from raising the issue on collateral

review. See id.

3. We affirm the district court’s dismissal of defendants’ motion for a new

trial pursuant to Brady v. Maryland, 373 U.S. 83 (1963). Withheld evidence about

witness Michael Alvarez’s work as a confidential informant with the Nevada

Department of Corrections would have been cumulative of testimony elicited

during direct and cross-examination, and was therefore not “material” under Brady.

See United States v. Rodriguez, 766 F.3d 970, 989 (9th Cir. 2014).

5
 4. The district court did not abuse its discretion when it denied defendants’

Federal Rule of Criminal Procedure 33 motion for a new trial based on newly

discovered evidence. See United States v. King, 735 F.3d 1098, 1108 (9th Cir.

2013) (discussing standard of review). Allegations that Officer Yant “[was] a

serial liar known for falsifying affidavits for search warrants” and “Agent Reubart

[had] an addiction to prescription pain medication” do not require a new trial

because such allegations would have been useful merely to impeach these

witnesses. See United States v. Hinkson, 585 F.3d 1247, 1264 (9th Cir. 2009) (en

banc); United States v. Harrington, 410 F.3d 598, 601 (9th Cir. 2005) (absent

extreme circumstances not present here, new evidence that would be merely

impeaching does not create grounds for a new trial). Defendants’ motion for a new

trial based on the allegedly fraudulent “Neff Letter” likewise fails: the government

disclosed the Neff Letter during discovery, and defendants had time to interview

Neff before trial. Thus, “the failure to discover the evidence sooner [was] the

result of a lack of diligence on [defendants’] part.” Harrington, 410 F.3d at 601.2

Finally, because the district court properly concluded that defendants’ showing did

not create grounds for a new trial, the court did not abuse its discretion when it

2
Defendants’ motion to supplement the record with evidence of Reubart’s
drug convictions and an affidavit from John Neff is GRANTED. See ECF No. 65.

6
denied defendants’ Rule 33 motion without an evidentiary hearing. See United

States v. Lopez, 762 F.3d 852, 866–67 (9th Cir. 2014).

5. The district court did not err when it admitted dozens of out of court

communications as “statements of a coconspirator” under Federal Rule of

Evidence 801(d)(2)(E). After reviewing the trial transcript, we are satisfied that

each statement admitted by the district court under Rule 801(d)(2)(E) “was made

by the party’s coconspirator during and in furtherance of the conspiracy.” Fed. R.

Evid. 801(d)(2)(E); see also United States v. Bowman, 215 F.3d 951, 960–61 (9th

Cir. 2000). If the district court did err when admitting any of the individual

statements, that error was harmless in light of the overwhelming evidence against

defendants. See United States v. Garza, 980 F.2d 546, 553 (9th Cir. 1992) (Rule

801(d)(2)(E) error subject to harmlessness analysis).

6. Sufficient evidence supports Krum’s drug conspiracy conviction. See 21

U.S.C. §§ 846, 841(a)(1), 841(b)(1)(A)(viii). From the evidence presented at trial,

a rational juror could conclude the following: Krum knew AW members were

producing methamphetamine outside the prison; those individuals were selling

drugs to support gang activities; as a lieutenant in the AW, Krum benefitted from

this support while incarcerated; and, after his release, Krum agreed to participate

and did participate in this drug manufacturing and distribution operation. This is

7
sufficient to support Krum’s drug conspiracy conviction. See United States v.

Moe, 781 F.3d 1120, 1124 (9th Cir. 2015) (elements of a drug conspiracy include

“(1) an agreement to accomplish an illegal objective, and (2) the intent to commit

the underlying offense” (internal citation omitted)); Jackson v. Virginia, 443 U.S.

307, 319 (1979).

7. Finally, with one exception, the district court did not err when it

calculated defendants’ U.S. Sentencing Guidelines ranges. United States v.

Treadwell, 593 F.3d 990, 999 (9th Cir. 2010) (“Failure to calculate correctly the

Guidelines range . . . constitutes reversible error. . . .”).

(a) Wallis.3 The district court did not abuse its discretion when it

elected to run Wallis’s federal sentence partially consecutive to his undischarged

state sentence. See United States v. Shouse, 755 F.3d 1104, 1108 (9th Cir. 2014);

see also 18 U.S.C. § 3584(a) (“[I]f a term of imprisonment is imposed on a

defendant who is already subject to an undischarged term of imprisonment, the

terms may run concurrently or consecutively. . . .” (emphasis added)). The

sentencing judge explained the factors that influenced his decision to run the

3
We GRANT Wallis’s motion to supplement the record with evidence of his
prior Nevada conviction. See ECF No. 65.

8
federal sentence partially concurrent to the state sentence, and his explanation was

sufficient under our sentencing law.

(b) Gensemer. Although the district court likely erred by designating

Gensemer a career offender based on a prior Nevada burglary conviction, United

States v. Edwards, 734 F.3d 850, 853–54 (9th Cir. 2013), that error was harmless

because it did not increase Gensemer’s Guidelines range. See U.S. Sentencing

Guidelines Manual § 4B1.1(b) & sentencing table (U.S. Sentencing Comm’n

2007).4 Nor did the district court err by failing to resolve a factual dispute before

sentencing.

Finally, under any standard of review,5 the district court did not err when it

applied the following enhancements to Gensemer: U.S. Sentencing Guidelines

Manual § 2D1.1(b)(3) (distribution of a controlled substance in a prison) (increase

by two levels); and U.S. Sentencing Guidelines Manual § 2D1.1(b)(10)(C)(ii) (risk

of harm to the environment) (increase by three levels). Substantial record evidence

shows that Gensemer participated in a drug distribution program one object of

4
All citations are to the 2007 version of the Guidelines.
5
“There is an intracircuit split as to whether the standard of review for
application of the Guidelines to the facts is de novo or abuse of discretion.” United
States v. Tanke, 743 F.3d 1296, 1306 (9th Cir. 2014). Because the standard of
review does not alter the outcome of this appeal, we do not undertake to resolve
that conflict here.

9
which was to smuggle drugs into Nevada prisons. Also, the methamphetamine lab

that Gensemer ran for at least four years—and in which police found precursor

chemicals that would yield more than 850 grams of methamphetamine—was

located in a residential neighborhood. U.S. Sentencing Guidelines Manual

§ 2D1.1(b)(10)(C)(ii) & cmt. n.20 (discussing factors to consider for imposition of

this enhancement).

(c) Krum. Krum’s claim that the Sixth Amendment prohibited the

district court from increasing Krum’s Guidelines Range based on a drug amount

larger than that found by the jury is foreclosed by circuit precedent. United States

v. Mercado, 474 F.3d 654, 657 (9th Cir. 2007) (“[T]he district court could

constitutionally consider the acquitted conduct” so long as that conduct is

established by a preponderance of the evidence). And record evidence supports the

district court’s decision to hold Krum responsible for 200–350 grams of

methamphetamine. The jury found Krum “Guilty of Drug Conspiracy as charged

in Count Ten of the Superseding Indictment,” and sufficient evidence supports this

conviction. Krum’s roommate, Kory Crossman, sold between 200 and 350 grams

of methamphetamine to a government informant as part of this drug conspiracy.

Krum lived with Kory Crossman at the Pacific Terrace house where officers seized

evidence of the drug conspiracy, and trial testimony established that Krum and

10
Crossman worked together to facilitate the AW’s street program. This evidence is

sufficient to support the district court’s express finding that the “amount of

methamphetamine that was the subject of the conspiracy was reasonably

foreseeable” to Krum. See United States v. Reyes, 772 F.3d 1152, 1157 (9th Cir.

2014) (a sentencing court properly attributes to defendant the acts of his

coconspirators as long as it finds those acts were: (1) reasonably foreseeable to

defendant, and (2) done “in furtherance of the jointly undertaken criminal

activity”); see also United States v. Kilby, 443 F.3d 1135, 1142 (9th Cir. 2006)

(coming to the same conclusion on similar facts).

The district court did not err when it imposed the following enhancements

on Krum: U.S. Sentencing Guidelines Manual § 2D1.1(b)(10)(C)(ii) (risk of harm

to the environment) (increase by three levels); and U.S. Sentencing Guidelines

Manual § 2D1.1(b)(1) (firearms enhancement) (increase by two levels). Krum

worked with Gensemer to facilitate the AW street program, and witnesses saw him

at a residential methamphetamine lab where officers seized dangerous precursors

to methamphetamine. Trial witnesses also identified Krum as a methamphetamine

cook associated with the AW: “And how [did you know] . . . that Kenny Krum

was cooking methamphetamine?” A: “From his own mouth.” Krum was observed

participating in the cooking process at least one time at the Helm Street house.

11
Based on this evidence, the district court did not err in finding that ongoing drug

production at a methamphetamine lab in a residential Las Vegas community was

foreseeable to Krum and done in furtherance of the drug conspiracy. See U.S.

Sentencing Guidelines Manual § 1B1.3(a)(1)(B). Also, Government witness

Michael Calabrese testified that Krum sold him a .357 pistol when the two were

“cookin’ and . . . usin’ meth” together. This testimony establishes that Krum

possessed a gun, and it does not suggest the weapon was unconnected to the

offense. See U.S. Sentencing Guidelines Manual § 2D1.1(b)(1) cmt. n.3 (noting

that this “adjustment should be applied if the weapon was present, unless it is

clearly improbable that the weapon was connected with the offense”).

Nevertheless, the district court did err when it increased Krum’s offense

level by two points after finding Krum to be “an organizer, leader, manager, or

supervisor in any criminal activity.” See U.S. Sentencing Guidelines Manual

§ 3B1.1 (aggravating role enhancement). Because the record does not support the

conclusion that Krum had “some degree of control or organizational authority over

others,” United States v. Bonilla–Guizar, 729 F.3d 1179, 1186 (9th Cir. 2013)

(internal citation omitted), imposition of this enhancement was improper. In light

of this error, we vacate Krum’s sentence and remand for resentencing.

12
 (d) Yost. Yost’s claim that the district court violated his Sixth

Amendment rights when it used acquitted conduct to increase his Guidelines range

is foreclosed by circuit precedent. Mercado, 474 F.3d at 657.

Yost joins Gensemer in objecting to the district court’s imposition of the

“harm to the environment” enhancement, but Yost does not explain how the

district court erred when it applied this enhancement to him. Thus, for the reasons

outlined above relating to Gensemer, we affirm the district court’s application of

§ 2D1.1(b)(10)(C)(ii) to Yost.

(e) Young. The district court did not err when it used Young’s

Nevada battery-by-a-prisoner-in-lawful-custody conviction, Nev. Rev. Stat.

§ 200.481, as a predicate to impose the “career offender” provision in the

Guidelines. See U.S. Sentencing Guidelines Manual § 4B1.1 (defining “career

offender”). The record makes clear that the conduct underlying Young’s RICO

conviction was his extortion of Michael Alvarez, not his battery of Scott Irvin.

Thus, there is no risk that the district court “double counted” Young’s battery-by-a-

prisoner conviction by relying on it to apply the § 4B1.1 enhancement.

Finally, the district court did not abuse its discretion when it declined to

reduce Young’s sentence under U.S. Sentencing Guidelines Manual § 3E1.1(a)

13
(acceptance of responsibility). Young neither pleaded guilty nor “clearly

demonstrate[d] acceptance of responsibility” at sentencing. See id.

In sum, we AFFIRM each defendants’ convictions; AFFIRM each

defendants’ sentence with the exception of Krum’s; and VACATE and REMAND

Krum’s sentence for resentencing.

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