United States v. Jody Smith, Sr.

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 09-4756

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

JODY ALTON SMITH, SR.,

Defendant - Appellant.

Appeal from the United States District Court for the Western
District of Virginia, at Roanoke. James C. Turk, Senior
District Judge. (7:07-cr-00079-jct-1)

Argued: September 23, 2011 Decided: December 1, 2011

Before AGEE and WYNN, Circuit Judges, and HAMILTON, Senior
Circuit Judge.

Affirmed by unpublished per curiam opinion.

ARGUED: Gilbert Kenneth Davis, GILBERT K. DAVIS & ASSOCIATES,
LLC, Fairfax, Virginia, for Appellant. Thomas Ernest Booth,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellee. ON BRIEF: Timothy J. Heaphy, United States Attorney,
Sharon Burnham, Assistant United States Attorney, OFFICE OF THE
UNITED STATES ATTORNEY, Roanoke, Virginia; Lanny A. Breuer,
Assistant Attorney General, Greg D. Andres, Acting Deputy
Assistant Attorney General, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.

2
PER CURIAM:

Jody Alton Smith, Sr. (Smith) was convicted of numerous

charges arising from his illegal liquor operation and his

fraudulent receipt of Social Security Administration (SSA)

funds. He was sentenced to forty-eight months’ imprisonment.

On appeal, three issues are presented: (1) whether the district

court erred in denying Smith’s motion to suppress; (2) whether

there is sufficient evidence in the record to support Smith’s

conviction for the fraudulent receipt of SSA funds; and (3)

whether the district court erred in calculating the tax loss for

purposes of sentencing. We affirm.

I

In this part of the opinion, we first set forth the legal

landscape and facts concerning Smith’s illegal liquor operation,

followed by the legal landscape and facts concerning his

fraudulent receipt of SSA funds. We then set forth the relevant

procedural history.

A

1

Any person can engage in the business of producing

distilled spirits by obtaining a permit from the Alcohol & Trade

Tax & Trade Bureau (TTB). 27 U.S.C. § 203(b). A person in the

business of distilling spirits is required to, among other

3
things, register the still or distilling apparatus, 26 U.S.C.

§ 5179, provide a bond covering the operation of the still or

distilling apparatus, id. § 5173, and pay the requisite taxes,

id. 5001(a)(1). Failure to register the still, post the

appropriate bond, or pay the requisite taxes can result in fines

and criminal penalties, id. § 5601.

The federal government imposes a tax on distilled spirits

either produced in or imported into the United States. Id.

§ 5001(a)(1). The tax is $13.50 on each “proof gallon” of

distilled spirits produced in or imported into the United

States. Id. A proof gallon of distilled spirits is a gallon

which contains at least one half of its volume in ethyl alcohol.

Id. § 5002(a)(10). The tax attaches as soon as the distilled

spirits are produced. Id. § 5001(b). The distiller is

responsible for paying the tax, id. § 5005(a), which is payable

to the TTB, id. § 5061. The taxes owed must be paid at the time

the distilled spirits are removed from the bonded premises, id.

§§ 5006(a)(1) & 5007. 1

2

Smith, with the help of several others, ran an illegal

liquor operation on an eight acre piece of property (the Halifax

1
The Commonwealth of Virginia imposes its own tax on
distilled spirits. The tax equals 20% of the sales price. Va.
Code Ann. § 4.1-234(B).

4
Property or the Property) in Halifax County, Virginia. The

Property had three structures on it: a single-wide trailer; a

barn converted into a storage shed; and a building, which housed

a still. The Property also had four video surveillance cameras

which were used to monitor the Property.

In the summer of 2005, federal and state law enforcement

agents began to investigate Smith’s operation after receiving

information from confidential informants. Eventually, the

investigation centered on the Halifax Property. Land records

showed that Dale Shrock sold the property to Danny Davis on

January 17, 2003 for $20,000.00. Davis put 10% down, and Shrock

financed the remainder through a deed of trust and a promissory

note. In March 2004, Davis applied for building permits and

other services on the land, giving the business address and

phone number of a business owned by Smith called Smith’s Auto

Sales. With the assistance of Patricia Waldron, an employee of

Smith’s Auto Sales, Davis requested and received a $112.50

refund “for renewal of septic system” from the Halifax County

Health Department. (J.A. 460). The refund was sent to the

business address of Smith’s Auto Sales.

On April 19, 2004, an electrical service account for the

Halifax Property was established in the name of Rhonda Hall.

The account was transferred to Margaret Smith, Smith’s

companion, on September 28, 2004. From April 2004 to December

5
2004, electrical use at the Property was “minimal.” (J.A. 773).

In December 2004, electrical use at the Property almost tripled.

Electrical use stayed “consistently high” through May 2006.

(J.A. 773). In January 2006, electrical use was more than eight

times the use in November 2004.

In March 2005, Margaret Smith purchased the Halifax

Property from Davis. According to Margaret Smith’s accountant,

Cynthia Hudgins, the purchase price was $11,568.00, which was

the remaining balance on the promissory note.

In early 2006, law enforcement agents drove by the Halifax

Property one evening and heard sounds consistent with liquor

production. The law enforcement agents did not enter the

Property because they saw video surveillance cameras there. As

a result, on March 3, 2006, the agents installed a surveillance

video recorder on land next to the Halifax Property to record

the persons and vehicles arriving and leaving the Property.

From March 3, 2006 to April 18, 2006, the surveillance video

recorded Smith and several others arriving and leaving the

Halifax Property. On April 18, 2006, the law enforcement agents

discovered that their surveillance video recorder was missing.

On May 12, 2006, a search warrant was executed at the

Halifax Property. In the building, the law enforcement agents

found a partially dismantled still, four 1,200 gallon still

pots, approximately 119 empty 100-pound bags of sugar, six full

6
100-pound bags of sugar, some bags of barley, numerous bags of

yeast, and other things used in the distillery process,

including liquor jugs, jug caps, fueling oil, an oil heater,

cooling boxes, proofing barrels, and a sump pump.

On May 18, 2006, a search warrant was executed at Smith’s

residence. Numerous items consistent with illegal liquor

trafficking were found, including liquor jugs, jug caps,

hydrometers, a thermometer, and $70,000.00 in United States

currency. The law enforcement agents also found a set of keys

that fit the locks at the Halifax Property, including the

building on the Property. In Smith’s wallet, the law

enforcement agents found a business card for “CKS Packaging” in

Graham, North Carolina, and a handwritten note stating “NEPCO,

Northern Plastic Corporation, 1902 New Butler Road, New Castle,

Pennsylvania.” (J.A. 918). The handwritten note also states

“Cap style: 38mm tamper-evident caps.” (J.A. 918). The law

enforcement agents found a time-lapse video recorder, and they

also found camera mounting equipment that had the same serial

numbers as the video surveillance cameras found at the Halifax

Property. 2 In a trailer located on land owned by Smith that was

2
Greg Thomas, an employee of State Electronics in
Collinsville, Virginia sold Smith the time-lapse video recorder,
the four video surveillance cameras, and the camera mounting
equipment in January 2005. The receipt for the sale indicates
(Continued)
7
adjacent to his residence, the law enforcement agents found

large plastic containers similar to the proofing barrels

recovered on the Halifax Property.

Also on May 18, 2006, a search warrant was executed at

Smith’s Auto Sales. During the search, Margaret Smith was

interviewed by Bart McEntire, an ATF agent. During the

interview, Margaret Smith stated that she agreed to take over

Davis’ payments on the promissory note because he “wanted to get

out from under the loan” he had on the Halifax Property. (J.A.

516). According to Margaret Smith, she rented the property as a

hunt club to “Mr. Jones.” (J.A. 516). Margaret Smith had “no

information on Mr. Jones whatsoever,” except that “about every

three months,” she would meet him and collect $1,200.00 in rent.

(J.A. 516). Out of the rent received, Margaret Smith paid the

monthly electric bill and the property taxes on the Property. 3

At trial, the government built its case around the

testimony of numerous witnesses, including Smith’s codefendant,

Jarman Johnson, who testified on behalf of the government. The

government’s evidence established that, from November 2005 to

these items were sold to the “Rock Creek Hunting Club.” (J.A.
595).
3
According to Waldron, on one occasion, Smith paid the
property taxes for the Halifax Property.

8
April 2006, under a variety of names (including “May’s,” “May’s

Deli,” and “May’s Diner,” (J.A. 1395)), Smith purchased in

twenty-two transactions a total of 124,100 pounds of sugar for

$58,402.00 from William R. Hill & Company in Richmond, Virginia.

The evidence further established that, from mid-2005 to April

2006, John Taylor purchased liquor from Smith on approximately

ten occasions, buying fifty to sixty cases of liquor each time.

Smith initially charged Taylor $80.00 per case, but increased

the price to $90.00 to $95.00 per case when gas prices started

to rise.

Johnson, who was a driver and still hand for Smith,

testified that he purchased sugar from William R. Hill &

Company, signing receipts in the name of “James Jones.” (J.A.

632). In February 2006, accompanied by Johnson, Smith drove a

tractor trailer to CKS Packaging in Haw River, North Carolina

and purchased 12,000 liquor jugs. 4 On April 4, 2006, Smith,

4
According to Debbie Evans, a sales associate with CKS
Packaging, the phone order for the liquor jugs was placed by a
“Mr. Jones.” (J.A. 582). During the phone order, “Crossroads
Dairy” was the name of the billing address given by Mr. Jones.
(J.A. 581). At the time of pickup, no sales tax identification
number was provided to CKS Packaging. Evans allowed the sale to
proceed because a fax number for Crossroads Dairy was provided
and she received assurances that a sales tax identification
number would be sent by fax. Evans never received a sales tax
identification number for the sale.

9
accompanied by Johnson, purchased a sump pump for the still at a

Lowe’s in Rocky Mount, North Carolina.

At the still, Johnson worked with Smith and others. To

make a batch of liquor, Johnson would put eleven 100-pound bags

of sugar in each of four still pots, which yielded twenty-five

to thirty cases of liquor per pot. Each case consisted of six

liquor jugs. Afterwards, Johnson would load the liquor jugs

into distribution trucks.

B

1

The SSA issues disability insurance payments to certain

qualifying disabled persons. In order to qualify for disability

insurance benefits, a person must establish that he suffers from

a disability, which is defined as the “inability to engage in

any substantial gainful activity by reason of any medically

determinable physical or mental impairment which can be expected

to result in death or which has lasted or can be expected to

last for a continuous period of not less than twelve months.”

42 U.S.C. § 423(d)(1)(A). If disability benefits are awarded,

the SSA must periodically conduct continuing disability reviews.

20 C.F.R. § 404.1594.

A recipient of disability insurance benefits who returns to

work first enters a “trial work period.” Id. § 404.1592(a). A

trial work period is a period to give the recipient the

10
opportunity to test his ability to work for up to nine months

within a consecutive sixty-month period without fear of losing

his benefits. Id. The nine-month period need not be

consecutive, id., and the trial work performed by the recipient

may be legal or illegal, id. § 404.1592(b). For a self-employed

worker, work will be considered trial work if the self-employed

worker works more than eighty hours a month or his net monthly

earnings pass a certain threshold. Id. § 404.1592(b)(2)(ii).

However, all recipients of disability insurance benefits must

notify the SSA if his condition improves, he returns to work, or

he increases the amount of his work. Id. § 404.1588.

2

In 1999, Smith contacted the SSA to apply for disability

insurance benefits. Richard Lowery, a claims representative

with the SSA, talked to Smith by phone and explained the

application process to him. Lowery expressly told Smith that he

had to be sufficiently disabled such that he could not work, and

that if he returned to work, that would affect the amount of his

payments. Thereafter, Lowery sent a disability insurance

benefits application form to Smith.

Smith submitted a written application for disability

insurance benefits to the SSA based on his claim that he could

not work due to his disabilities. Smith’s application contained

11
a specific provision that he had to notify the SSA if his

condition improved or he returned to work. Smith stated that

his disabilities had caused him to surrender his car business to

his daughter in 1998. In 2001, the SSA approved Smith’s

application and awarded him $27,391.75.

In 2003, the SSA sent Smith a form entitled “Report of

Continuing Disability” to determine whether Smith remained

eligible for disability insurance payments. (J.A. 735). Smith

completed and signed the form, and returned it to the SSA. On

the form, Smith checked a box indicating that he had not worked.

He also stated that he was still disabled due to shoulder, back,

and leg problems. Smith explained that he was doing less due to

pain and that he did very little walking or moving around.

In September 2003, by letter, the SSA notified Smith that

he would receive disability insurance payments in the future.

The letter also stated that a recipient of SSA payments had to

notify the SSA if his condition improved or he returned to work.

In August 2006, Antonio Watkins, a claims representative

with the SSA, received an anonymous report that Smith was self-

employed. Watkins sent a letter to Smith and, after receiving

no reply, tried to call Smith several times. Finally, Watkins

reached Smith by telephone and was informed that Smith was not

working and that his back problems had gotten worse. Referring

to Watkins’ letter, Smith reiterated that he had not worked

12
since he had become disabled. Based on Smith’s replies, the SSA

continued to send disability insurance payments to Smith.

Watkins testified that, even if Smith had been entitled to

collect disability insurance payments while working in a trial

work period, Smith was overpaid by more than $10,000.00 because

a trial work period is limited to nine months, but Smith worked

for more than nine months, and his actual income would have

caused a substantial reduction in his disability insurance

payments.

C

On March 13, 2008, a federal grand jury sitting in the

Western District of Virginia charged Smith and six others in a

thirty-two count superseding indictment. Smith was charged in

thirty-one of the thirty-two counts. In Count One, Smith was

charged with conspiracy to produce untaxed liquor, 18 U.S.C.

§ 371 (Count One). In Counts Two through Eight, he was charged

with interstate travel or communication to promote trafficking

in untaxed liquor, id. § 1952(a)(3). In Count Nine, he was

charged with possession of an unregistered still, 26 U.S.C.

§ 5601(a)(1), and, in Count Ten, failure to post bond, id.

§ 5601(a)(4). In Count Eleven, Smith was charged with unlawful

production of distilled spirits, id. § 5601(a)(8), and, in Count

Twelve, he was charged with fraudulent receipt of government

(SSA) funds, 18 U.S.C. § 641. Smith was charged with conspiracy

13
to commit money laundering in Count Thirteen, id. § 1956(h),

and, in Counts Fourteen through Twenty-Eight, he was charged

with money laundering, id. § 1956(a)(1)(A)(i). In Count Twenty-

Nine, Smith was charged with perjury, id. § 1623, and, in Count

Thirty-One, he was charged with obstruction of justice, id.

§ 1503(a). Count Thirty-Two charged Smith with witness

tampering, id. § 1532(c)(2). The indictment also contained a

forfeiture allegation.

Prior to trial, Smith pleaded guilty to the obstruction of

justice count (Count Thirty-One), and the district court

dismissed, on the government’s motion, the witness tampering

count (Count Thirty-Two). At the conclusion of the trial, Smith

was convicted of the remaining counts pending against him.

Prior to sentencing, the district court granted Smith’s motion

for judgment of acquittal on the counts related to money

laundering (Counts Thirteen to Twenty-Eight). At sentencing,

the district court sentenced Smith to forty-eight months’

imprisonment. This timely appeal followed.

II

Smith first argues that the district court erred when it

denied his motion to suppress based on violations of the Fourth

Amendment. The Fourth Amendment guarantees “[t]he right of the

people to be secure in their persons, houses, papers, and

14
effects, against unreasonable searches and seizures.” U.S.

Const. amend. IV. “[T]he underlying command of the Fourth

Amendment is always that searches and seizures be reasonable.”

Wilson v. Arkansas, 514 U.S. 927, 931 (1995) (citation and

internal quotation marks omitted). In resolving whether a

search or seizure violates the Fourth Amendment, we review the

district court’s factual findings for clear error and its legal

conclusions de novo. United States v. Perkins, 363 F.3d 317,

320 (4th Cir. 2004).

The facts concerning Smith’s Fourth Amendment argument are

not in dispute. On March 1, 2006, Senior Special Agent Jay

Calhoun of the Virginia Department of Alcohol and Beverage

Control entered a piece of land in Pittsylvania County owned by

Smith. He entered the land, which was located approximately

fifty miles from the Halifax Property, without a warrant. Upon

entry, he saw an unhitched tractor trailer that Agent Calhoun

believed belonged to Smith. The tractor trailer was “a good

distance from any structure, hundreds of yards from any

structure.” (J.A. 318). The tractor trailer had a new

inspection sticker decal with an expiration date of February

2007. The tractor trailer was locked and closed, but there was

an open gap in the rubber stripping at the right-hand corner of

the tractor trailer. From outside the tractor trailer, Agent

Calhoun pointed a flashlight in the open gap, enabling him to

15
see that there were liquor jugs inside the tractor trailer. His

ability to observe the liquor jugs at that time apparently was

impaired because pallets of liquor jugs were flush with the

tractor trailer’s door, limiting his field of vision.

During the night of March 9, 2006, Agent Calhoun went back

to the tractor trailer, again without a warrant. This time,

there were wooden pallets outside the tractor trailer. Because

the door opening was no longer blocked, Agent Calhoun was able

to more fully observe the inside of the tractor trailer. He

stuck a two-foot “carpenter’s scope” through the crack in the

rubber stripping of the tractor trailer and saw some liquor jugs

inside, but they appeared to have been restacked since his March

1 visit. (J.A. 364).

In the district court, Smith raised Fourth Amendment

arguments concerning both the March 1 and March 9, 2006 entries

onto his land in Pittsylvania County, as well as the March 9

search of the tractor trailer. The district court rejected

these arguments. Of relevance here, the district court first

held that Agent Calhoun’s warrantless entries onto Smith’s land

did not implicate the Fourth Amendment because Smith’s land was

an “open field.” Second, the district court held that Agent

Calhoun’s view of the interior of the tractor trailer with a

flashlight on March 1 was not a Fourth Amendment search because

Agent Calhoun did not physically enter the locked tractor

16
trailer. Third, the district court held that Agent Calhoun’s

insertion of the carpenter’s scope into the tractor trailer on

March 9 was a search, but it was justified under the “automobile

exception” to the Fourth Amendment’s warrant requirement because

the tractor trailer was a vehicle and Agent Calhoun had probable

cause to believe that it contained evidence of illegal liquor

trafficking. Fourth, the district court characterized any

impact on Smith’s Fourth Amendment rights as a result of Agent

Calhoun’s actions as de minimis. On this final point, the

district court emphasized that the government had begun its

video surveillance of the Halifax Property before March 9 and

that the evidence seen on March 9 inside the tractor trailer was

cumulative to the evidence found at the Property on May 12,

2006.

On appeal, Smith first takes issue with the district

court’s ruling that the Pittsylvania County land constituted an

“open field.” In Hester v. United States, 265 U.S. 57 (1924),

the Supreme Court held that the Fourth Amendment does not extend

to open fields. Id. at 59. The Court’s holding in Hester was

clarified in Oliver v. United States, 466 U.S. 170 (1984). In

Oliver, the Court held that “an individual may not legitimately

demand privacy for activities conducted out of doors in fields,

except in the area immediately surrounding the home [the

curtilage].” Id. at 178. The Court further noted that an open

17
field “need be neither ‘open’ nor a ‘field’ as those terms are

used in common speech. For example . . . a thickly wooded area

nonetheless may be an open field as that term is used in

construing the Fourth Amendment.” Id. at 180 n.11.

In United States v. Dunn, 480 U.S. 294 (1987), the Supreme

Court stated that the critical component of the open

fields/curtilage inquiry is “whether the area harbors the

intimate activity associated with the sanctity of a man’s home

and the privacies of life.” Id. at 300 (citation and internal

quotation marks omitted). The Court in Dunn went on to list

four factors that should be considered in this analysis: “the

proximity of the area claimed to be curtilage to the home,

whether the area is included within an enclosure surrounding the

home, the nature of the uses to which the area is put, and the

steps taken by the resident to protect the area from observation

by people passing by.” Id. at 301.

Applying these factors, it is clear that the district court

did not err when it concluded that the land in Pittsylvania

County was an open field. There is no evidence that the land

was near the curtilage of a home or that there were any domestic

uses for the land. In addition, there is no indication in the

record that Smith took meaningful steps to prevent this land

from being observed. The land must be characterized as an open

field and, therefore, Smith cannot challenge either Agent

18
Calhoun’s March 1 or March 9, 2006 entry onto his land in

Pittsylvania County.

Smith also argues that Agent Calhoun’s shining of the

flashlight into the open gap in the rubber stripping of the

tractor trailer on March 1, 2006 constituted an illegal search. 5

With regard to this argument, we find no Fourth Amendment

violation.

Police officers do not conduct a search under the Fourth

Amendment when, stationed in a place where they have a right to

be, they observe objects in plain view, or use a flashlight to

illuminate the area where the object is located. See id. at 305

(“Here, the officers’ use of the beam of a flashlight, directed

through the essentially open front of respondent’s barn, did not

transform their observations into an unreasonable search within

the meaning of the Fourth Amendment.”); Texas v. Brown, 460 U.S.

730, 739-40 (1983) (“It is likewise beyond dispute that Maples’

action in shining his flashlight to illuminate the interior of

Brown’s car trenched upon no right secured to the latter by the

Fourth Amendment.”). Thus, Agent Calhoun did not search the

5
The government does not contend that Smith had no
reasonable expectation of privacy in the tractor trailer.
However, we agree with the district court that Smith had such an
expectation of privacy in the tractor trailer. Cf. United
States v. Wright, 991 F.2d 1182, 1186 (4th Cir. 1993) (holding
that defendant had reasonable expectation of privacy in a barn
in an open field).

19
tractor trailer when, standing outside of it, he pointed his

flashlight in the open gap in the rubber stripping of the

tractor trailer, which exposed the liquor jugs inside the

tractor trailer.

Smith’s challenge to Agent Calhoun’s use of the carpenter’s

scope on March 9, 2006 is equally without merit. Initially, we

note that the government concedes that Agent Calhoun’s use of

the carpenter’s scope constituted a warrantless search. See New

York v. Class, 475 U.S. 106, 114-15 (1986) (noting that a search

of an automobile occurs when a police officer physically enters

the automobile).

An established exception to the warrant requirement is the

“automobile exception.” United States v. Kelly, 592 F.3d 586,

589 (4th Cir.), cert. denied, 130 S. Ct. 3374 (2010). Under

this exception, a police officer may search a vehicle without a

warrant if “probable cause exists to believe it contains

contraband” and the vehicle is “readily mobile.” Pennsylvania

v. Labron, 518 U.S. 938, 940 (1996). If both conditions are

met, the police officer may conduct a warrantless search “that

is as thorough as a magistrate could authorize in a warrant.”

United States v. Ross, 456 U.S. 798, 800 (1982). Furthermore,

such a search may cover all areas of the vehicle, including any

of its “secret compartments.” United States v. Bullock, 94 F.3d

896, 899 (4th Cir. 1996).

20
 In California v. Carney, 471 U.S. 386 (1985), the Supreme

Court held that the police did not need a warrant in order to

enter a motor home parked in a public place where probable cause

to search was present. Id. at 393-94. The motor home was

capable of functioning as a home; it was stationary; and the

shades were drawn, including one across the front window. Id.

at 388. Indeed, the Court observed that the motor home

“possessed some, if not many of the attributes of a home.” Id.

at 393. Nevertheless, the Court held that it is “clear that the

vehicle falls clearly within the scope” of the automobile

exception to the warrant requirement. Id. The Court relied on

“two requirements for application of the [automobile]

exception.” Id. at 394. The first is “the ready mobility of

the vehicle,” and the second is its “presence . . . in a setting

that objectively indicates that the vehicle is being used for

transportation.” Id. Even though the motor home in Carney was

parked and not being used for transportation at the moment, it

satisfied the second test presumably because it was not located

in a place “regularly used for residential purposes—temporary or

otherwise.” Id. at 392. The Court held that “the vehicle was

so situated that an objective observer would conclude that it

was being used not as a residence, but as a vehicle.” Id. at

393.

21
 Following Carney, courts have applied that case to travel

trailers, see United States v. Ervin, 907 F.2d 1534, 1537 (5th

Cir. 1990) (upholding warrantless search of travel trailer under

the automobile exception), and tractor trailers, see United

States v. Navas, 597 F.3d 492, 498-500 (2d Cir.) (upholding

warrantless search of tractor trailer under the automobile

exception even though cab was not attached to tractor trailer),

cert. denied, 131 S. Ct. 320 (2010).

In Navas, in a thorough opinion, the Second Circuit held

that the automobile exception applied to a tractor trailer

unhitched from its cab, even when the defendants were already

placed under arrest at the time of the search. Id. at 501. The

court reiterated that “a vehicle’s inherent mobility—not the

probability that it might actually be set in motion—is the

foundation of the [automobile exception’s] mobility rationale.”

Id. at 498. Thus, “the mobility rationale . . . does not turn

on case-by-case determinations by agents in the field regarding

either the probability that a vehicle could be mobilized or the

speed with which movement could be achieved.” Id.

In this case, the automobile exception applies to the

tractor trailer on the land in Pittsylvania County. The tractor

trailer clearly was inherently mobile, and counsel for Smith

conceded at oral argument that the tractor trailer could be

moved by simply attaching a cab to the tractor trailer.

22
Moreover, the recent unloading activity at the tractor trailer

suggested that it might be moved when all of the liquor jugs

were unloaded. In short, embracing Smith’s position here would

contravene the sound reasoning of both Carney and Navas.

The remaining question is whether Agent Calhoun had

probable cause to conduct the search on March 9, 2006. Probable

cause exists “where the known facts and circumstances are

sufficient to warrant a [person] of reasonable prudence in the

belief that contraband or evidence of a crime will be found.”

Ornelas v. United States, 517 U.S. 690, 696 (1996). Probable

cause is a “commonsense conception that deals with the factual

and practical considerations of everyday life.” Kelly, 592 F.3d

at 592 (citation and internal quotation marks omitted). In

assessing whether probable cause exists, courts must “examine

the facts from the standpoint of an objectively reasonable

police officer, giving due weight to inferences drawn from those

facts by local law enforcement officers.” Id. (citation,

internal quotation marks, and ellipsis omitted).

At the time Agent Calhoun inserted the carpenter’s scope

into the tractor trailer, he had probable cause to believe that

evidence of illegal liquor trafficking was in the tractor

trailer. Agent Calhoun knew that liquor jugs are commonly used

to transport illegal liquor; he had seen multiple liquor jugs

inside the tractor trailer on March 1; he heard evidence of

23
illegal liquor manufacturing at the Halifax Property before

March 9; and he believed that individuals had unloaded some

liquor jugs from the tractor trailer between March 1 and March 9

because the liquor jugs had been reconfigured inside the tractor

trailer, and there were loading pallets outside the tractor

trailer on March 9. Such facts would lead a reasonably prudent

person to believe that “contraband or evidence of a crime

[would] be found.” Ornelas, 517 U.S. at 696.

In sum, we hold the district court did not err when it

rejected Smith’s Fourth Amendment arguments. 6

III

Next, Smith challenges the sufficiency of the evidence

supporting his conviction for fraudulent receipt of SSA funds

under 18 U.S.C. § 641. We review challenges to the sufficiency

of the evidence de novo. United States v. Kelly, 510 F.3d 433,

440 (4th Cir. 2007). “A defendant challenging the sufficiency

of the evidence to support his conviction bears a heavy burden.”

United States v. Beidler, 110 F.3d 1064, 1067 (4th Cir. 1997)

(citation and internal quotation marks omitted). We will uphold

a jury’s verdict “if, viewing the evidence in the light most

6
In light of this holding, we need not address the district
court’s conclusion that any impact on Smith’s Fourth Amendment
rights as a result of Agent Calhoun’s actions was de minimis.

24
favorable to the government, it is supported by substantial

evidence.” United States v. Reid, 523 F.3d 310, 317 (4th Cir.

2008). Substantial evidence is present if “a reasonable finder

of fact could accept [the evidence] as adequate and sufficient

to support a conclusion of a defendant’s guilt beyond a

reasonable doubt.” United States v. Burgos, 94 F.3d 849, 862

(4th Cir. 1996) (en banc). “[W]e do not weigh the evidence or

assess the credibility of witnesses, but assume that the jury

resolved any discrepancies in favor of the government.” Kelly,

510 F.3d at 440.

To be convicted under § 641, the government must prove

beyond a reasonable doubt that: (1) the money described in the

indictment belonged to the United States or an agency thereof;

(2) the defendant stole, fraudulently received, or converted the

money to his own use; and (3) the defendant did so knowingly

with intent to deprive the government of the money. United

States v. McRee, 7 F.3d 976, 980 (11th Cir. 1993). With respect

to the intent element, the defendant must know that his taking

of property is an unlawful conversion. Morissette v. United

States, 342 U.S. 246, 270–71 (1952). “[K]nowing conversion

requires more than knowledge that defendant was taking the

property into his possession. He must have had knowledge of the

facts, though not necessarily the law, that made the taking a

conversion.” Id.

25
 At trial, the government firmly established that Smith

violated § 641 because he worked while collecting SSA disability

insurance payments based on his fraudulent claim that he could

not work because he was disabled. Smith was informed, and

therefore knew, that he was supposed to notify the SSA if his

condition improved or he returned to work. Not only did Smith

fail to notify the SSA that he was working at his illegal liquor

business, but he also falsely told Watkins that he was not

working. Such evidence is sufficient to support his conviction. 7

IV

Finally, Smith challenges his sentence. We review a

sentence imposed by the district court under the deferential

abuse-of-discretion standard, regardless of whether the sentence

imposed is inside, just outside, or significantly outside the

7
Smith argues that there is insufficient evidence to prove
that he performed trial work beyond the trial work permitted
under 20 C.F.R. § 404.1592(a), and, thus, his § 641 conviction
cannot stand. We reject this argument because it is premised on
a view of the facts that the jury obviously rejected; that is,
that Smith only was involved in the illegal liquor operation for
a nine-month period. Moreover, Watkins testified that, even if
Smith was given the benefit of a trial work period, he still was
overpaid more than $10,000.00. Finally, Smith fails to cite any
authority, and we could find none, suggesting that a recipient
of disability insurance benefits is not required to notify the
SSA under 20 C.F.R. § 404.1588 during a trial work period if his
condition improves, he returns to work, or he increases the
amount of his work.

26
Guidelines range. United States v. Evans, 526 F.3d 155, 161

(4th Cir. 2008); see also Gall v. United States, 552 U.S. 38, 41

(2007). The first step in this review requires us to inspect

the record for procedural reasonableness by ensuring that the

district court committed no significant procedural errors, such

as failing to calculate or improperly calculating the Guidelines

range, failing to consider the 18 U.S.C. § 3553(a) factors, or

failing to adequately explain the sentence. United States v.

Boulware, 604 F.3d 832, 837–38 (4th Cir. 2010). The second step

requires us to consider the substantive reasonableness of the

sentence imposed, taking into account the totality of the

circumstances. Gall, 552 U.S. at 51.

On April 14, 2009, at the government’s urging, the district

court held a sentencing hearing to determine the tax loss. Such

determination was critical because the tax loss would establish

Smith’s base offense level under § 2T2.1 of the United States

Sentencing Guidelines (USSG). Robert Kehoe, an investigator

with the TTB, was the only witness who testified at the hearing.

Investigator Kehoe prepared three tax loss estimates: (1)

$217,795.50; (2) $320,045.85; and (3) $555,984.00. The tax loss

estimates were based in part on the trial evidence, Investigator

27
Kehoe’s professional experience, and an “Alcohol Yield Formula”

(AYF). 8 (J.A. 1385).

Investigator Kehoe’s maximum loss estimate assumed that the

still on the Halifax Property functioned at full capacity from

November 2004 to May 2006, and relied on Johnson’s trial

testimony that the still used 4,400 pounds of sugar for each

weekly run. Application of the AYF yielded 41,184 proof gallons

of distilled spirits and a tax liability of $555,984.00.

Investigator Kehoe’s middle loss estimate was based on the

conclusion that Smith obtained an “undocumented quantity” of

sugar from “other sources” during a “middle period” of the

still’s operation. (J.A. 1388). Investigator Kehoe reasoned

that the significant reductions in Smith’s sugar purchases

during this middle period, when compared to other evidence that

the still was operating in high gear during this same period,

only could be explained by concluding that Smith was obtaining

sugar from another sources. Investigator Kehoe’s application of

the AYF to the middle loss estimate yielded 182,362 pounds of

sugar, 23,707.10 proof gallons of distilled spirits, and

$320,045.85 of tax loss.

8
The AYF is a formula used for determining the alcohol
yield of sugar used in illegal liquor operations. The “average
yield is 13 proof gallons of alcohol per each 100 pounds of
sugar.” (J.A. 1385). Smith does not challenge the
reasonableness of the AYF.

28
 Investigator Kehoe’s minimum loss estimate was based on the

documented sugar purchases between November 2004 and May 2006

from William R. Hill & Company. Application of the AYF to the

known 124,100 pounds of sugar purchased yielded 16,133 proof

gallons of distilled spirits and a tax loss of $217,795.50.

Following the hearing, the district court accepted

Investigator Kehoe’s minimum tax loss estimate of $217,795.50

because it was based on the sugar purchase records admitted at

trial and utilized a reliable methodology to determine the tax

loss. The district court also concluded that the AYF was

reasonable given the lack of records of the actual distilled

spirits produced. The district court rejected Investigator

Kehoe’s maximum estimate because it was unrealistic to assume

that the still was always operating at maximum capacity, and

rejected Investigator Kehoe’s middle estimate because it was not

based on documented sugar purchases.

Consistent with the district court’s ruling on the tax loss

issue, a Presentence Investigation Report (PSR) was prepared by

a United States Probation Officer. Because the tax loss was

more than $200,000.00 and no more than $400,000.00, Smith’s base

offense level was 18, USSG § 2T4.1(G). His base offense level

was increased four levels for his leadership role in the

offense, id. § 3B1.1(a), and two levels for perjury, id.

§ 3C1.1. Smith’s total offense level of 24, coupled with a

29
Criminal History Category of I, produced a sentencing range of

51 to 63 months’ imprisonment.

At sentencing, the district court adopted the PSR’s

findings and recommendations. Prior to imposing sentence, the

district court heard from counsel, as well as from Smith,

concerning the appropriate sentence. After considering the

advisory sentencing range, as well as the factors set forth in

18 U.S.C. § 3553(a), the district court sentenced Smith to

forty-eight months’ imprisonment due to his age and physical

condition.

Smith’s challenge to the district court’s tax loss

calculation is premised on the argument that it was procedurally

unreasonable for the district court to base its calculation on

the documented purchases of sugar from William R. Hill &

Company. Smith posits that there was no evidence that Smith

purchased any sugar from the company. Consequently, the tax

loss calculation should have been based on the known liquor

purchases made by Taylor—approximately 3,000 gallons of liquor.

USSG § 2T2.1 provides that the tax loss is the amount of

taxes that the taxpayer “failed to pay or attempted not to pay.”

USSG § 2T2.1(a). The base offense level for USSG § 2T2.1 is

calculated by reference to the Tax Table in USSG § 2T4.1. USSG

§ 2T2.1(a). Under the Guidelines, the tax loss is “determined

by the same rules applicable in determining any other sentencing

30
factor.” USSG § 2T1.1, comment. (n.1). “In some instances,

such as when indirect methods of proof are used, the amount of

the tax loss may be uncertain; the guidelines contemplate that

the court will simply make a reasonable estimate based on the

available facts.” Id.; see also id. § 6A1.3(a) (noting that the

district court “may consider relevant information without regard

to its admissibility under the rules of evidence applicable at

trial, provided that the information has sufficient indicia of

reliability to support its probable accuracy”). In general, the

district court’s calculation concerning loss is a factual

finding reviewed for clear error. United States v. Loayza, 107

F.3d 257, 265 (4th Cir. 1997).

The district court’s finding that the tax loss was

$217,795.50 is not clearly erroneous. The district court

reasonably relied on the records of sugar purchases and the AYF

to determine the amount of untaxed liquor produced by the still

because detailed records of Smith’s actual production amounts

were unavailable. Moreover, the district court was at liberty

to reject Smith’s contention that the still did not produce

illegal liquor prior to November 2005 by crediting the

circumstantial evidence demonstrating that Smith actively

participated in the conspiracy during the time alleged and went

to great lengths to mask his participation in the conspiracy and

his relationship to the Halifax Property. The district court

31
took the most conservative view of the evidence in accepting

Investigator Kehoe’s lowest tax loss estimate, and we cannot

take issue with this prudent approach in calculating the tax

loss.

V

For the reasons stated herein, the judgment of the district

court is affirmed.

AFFIRMED

32