UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 94-20143
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
LARRY F. WEST, THOMAS L. MASSEY AND
RICHARD D. GATTEN, a/k/a DICK GATTEN,
Defendants-Appellants.
Appeals from the United States District Court
for the Southern District of Texas
(June 27, 1995)
Before WISDOM, DUHÉ, and BENAVIDES, Circuit Judges.
WISDOM, Circuit Judge.
The defendants were convicted of various charges based on
their conspiracy to avoid federal excise tax. On appeal, all three
defendants raise various challenges to their convictions and
sentences. Because we find no error, we AFFIRM.
I.
The charges against the defendants arose from their
involvement in a scheme to evade federal fuel excise taxes due on
sales of gasoline. The tax is imposed when gasoline is sold by the
wholesale distributor to any purchaser that does not hold a
Registration for Tax-Free Transaction (IRS form 637). This IRS
form enables distributors to transfer gas between themselves tax-
free.
The defendants, Larry West and Richard Gatten, operated
a fuel distribution company known as Dispetco, which possessed a
valid form 637. Dispetco purchased most of its fuel from Major
Brand Oil (MBO), owned by Thomas Massey, the third defendant, who
also possessed a valid form 637. Massey sold an unusually high
volume of fuel to Dispetco at a very low cost. Because both of
these companies possessed valid forms 637, the transactions between
them were tax-free.
Dispetco then sold fuel to retailers under the names of
other companies, ISO Oil or JA-OC Petroleum, in order to conceal
the fact that Dispetco was the supplier. The invoices reflect that
Dispetco would sell gas tax-free to one of these companies, then
these companies would sell the gas with tax to retailers. In
reality, Dispetco would sell the fuel with tax directly to
retailers. The tax money collected by Dispetco from the retailers
was not paid to the IRS. Dispetco drivers collected money from
retailers for fuel delivered under invoices in the names of JA-OC,
ISO, and others, and brought the cash to the Dispetco office.
Another company, General Distributors, owned by the
defendant Gatten, applied for and was denied an IRS form 637.
After the denial, a false form 637 was presented to Massey's
company, MBO. MBO began selling gas tax-free to General
Distributors immediately, though the authorization date on the
false IRS form 637 did not permit such sales until weeks later.
2
The government contends that this discrepancy, as well as other
deviations from standard business practice, incriminated Massey as
a co-conspirator. In addition, the government presented the
testimony of Hillhouse, a former employee of West, who recounted
statements West made to him that Massey was involved in the
conspiracy and was receiving a portion of the illegal profits.1
Massey testified extensively at trial and offered a plausible
lawful explanation for his association with Dispetco and General
Distributors.
Before trial, Massey sought a preliminary hearing to
determine the existence of a conspiracy. Massey contended that the
out of court statement of a co-conspirator was the only evidence of
his involvement, and that a separate hearing was required. The
district court denied Massey's motion. West pressed a motion to
dismiss based on pre-indictment delay. The district court denied
this motion as well.
At trial, IRS agent Jannett Reiner testified for the
government as a summary witness. Reiner traced all sales to
retailers purporting to be from JA-OC, ISO, and other similar
companies, back to Dispetco by using bills of lading and retailer
invoices. She computed that Dispetco owed the IRS $462,601. West
produced a psychologist who testified that West had a learning
disability which affected his ability to read and write. The
psychologist admitted, however, that West's intellectual ability
was "high average".
1
Record, volume 8 at 164-65.
3
In October 1993, after a nine-day jury trial, the
defendants, Gatten, Massey, and West, were each convicted of one
count of conspiring to defraud the United States by impeding,
impairing, obstructing, and defeating the lawful governmental
functions of the Treasury Department in the ascertainment,
computation, assessment, and collection of federal gasoline excise
taxes, in violation of 18 U.S.C. § 371. West and Gatten were also
convicted of three counts of attempting to evade federal gasoline
excise taxes, in violation of 26 U.S.C. § 7201 and 18 U.S.C. § 2.
The jury acquitted Massey on the substantive counts brought against
him.
II.
A. Defendant Harry West
1. Pre-indictment delay
Harry West was convicted of both conspiracy to defraud
the United States and two counts of attempting to evade federal
gasoline excise tax. On appeal, the defendant alleges that the
district court erred when it failed to dismiss the indictment
against him because of pre-indictment delay. Although West
acknowledges that he was indicted within the five year statute of
limitations period, West argues that the government's delay in
initiating the prosecution against him caused substantial prejudice
to his defense in violation of the Fifth Amendment.
As this Court recently noted in United States v. Crouch,
"although the primary protection against undue delay prior to
arrest, indictment, or information is the appropriate statute of
4
limitations, the Due Process clause of the Fifth Amendment offers
some protection from prejudice to a defendant's case arising from
this delay".2 Thus, a defendant who establishes a violation of Due
Process may be entitled to have the indictment against him
dismissed. The defendant, however, bears the burden of
establishing a violation of due process and, as a threshold matter,
must establish that he suffered actual and substantial prejudice as
a result of the government's delay.3
2
51 F.3d 480, 482 (5th Cir. 1995) (citing United States v.
Marion, 404 U.S. 307 (1971)).
3
Crouch, 51 F.3d at 484; United States v. Ballard, 779
F.2d 287, 293 (5th Cir.), cert. denied, 475 U.S. 1109 (1986). In
Crouch, this Court noted that the second part of the due process
analysis requires balancing the actual prejudice suffered by the
defendant against the government's reason for the delay. Crouch,
51 F.3d at 485. The Crouch decision also surveyed this Court's
previous decisions on the issue of pre-indictment delay and
determined that, unlike what some decisions in this Court have
held, a showing that the government delayed indictment in order to
gain a tactical advantage is not required to establish a violation
of the Fifth Amendment. Id. at 483 (citing United States v.
Townley, 556 F.2d 1312 (5th Cir. 1977) (construing United States v.
Lovasco, 431 U.S. 783 (1977))). Discussing the relevant precedent,
this Court stated:
[s]everal subsequent decisions overlooked
Townley's holding and relied on the dicta from
pre-Lovasco cases for stating that pre-
indictment delay may result in dismissal of an
indictment only when the delay resulted from
an ill-intentioned act by the government. In
accordance with our long-established rule, we
are bound to follow the earliest dispositive
articulation of a rule as the decision of one
"panel may not overrule the decision, right or
wrong, of a prior panel in the absence of en
banc reconsideration or superseding decision
of the Supreme Court." We therefore must
apply the Brand/Townley balancing test as the
binding precedent.
Id. In the instant case, however, we need not look beyond the
threshold question of actual prejudice because the defendant bears
5
In this case, West argues that he suffered actual
prejudice because Bryson, a potential witness and alleged co-
conspirator, was murdered and was, therefore, unavailable to
testify at trial. In addition, West alleges that the memories of
unidentified witnesses faded and various records were lost. The
defendant, however, does not identify specific evidence or
testimony regarding a material fact that became unavailable because
of the pre-indictment delay. Further, the defendant offered no
evidence that Bryson's testimony was "exculpatory in nature and
would have aided the defense".4 Contrary to the defendant's
arguments, "[v]ague assertions of lost witnesses, faded memories,
or misplaced documents are insufficient to establish a due process
violation from pre[-]indictment delay".5 West has failed to meet
his burden of establishing that he suffered actual prejudice
because of the government's delay in pursuing an indictment. We,
therefore, affirm the district court's refusal to grant the
defendant's motion for a dismissal of the indictment.
2. Sentencing
On appeal, West challenges three aspects of his sentence.
First, West argues that his offense level should not have been
increased by four points under U.S.S.G. § 3B1.1(a) for his role in
the offense. Although West concedes that some enhancement was
the burden of establishing that he incurred actual prejudice and
West has failed to do so here.
4
United States v. Beszborn, 21 F.3d 62, 66 (5th Cir.),
cert. denied, 115 S.Ct. 330 (1994).
5
Id. at 67.
6
appropriate, he argues that the evidence supports only a three-
level increase under § 3B1.1(b). Second, West contends that
U.S.S.G. § 3C1.1 should not have been applied to enhance his
offense level by two points for obstruction of justice. Finally,
West alleges that the criminal category assigned to him under
U.S.S.G. §4A1.1(c) based on a previous conviction for possession of
gambling paraphernalia was erroneous.
We review the application of the Sentencing Guidelines de
novo.6 And, we review the district court's findings of fact for
clear error.7 "Due deference is given to the district court's
application of the guidelines to the facts."8 And, "[i]f the
district court's account of the evidence is plausible in light of
the record viewed in its entirety, the court of appeals may not
reverse it even though convinced that, had it been sitting as the
trier of fact, it would have weighed the evidence differently".9
The Pre-sentence Investigation Report (PSI) concluded
that a four-level increase in West's offense level was appropriate
under § 3B1.1(a) because West "was an organizer or leader of a
criminal activity that involved five or more participants or was
otherwise extensive". This conclusion was based on West's
6
United States v. Brown, 7 F.3d 1155, 1159 (5th Cir.
1993).
7
United States v. Sowels, 998 F.2d 249, 251 (5th Cir.
1993), cert denied, 114 S.Ct. 1076 (1994).
8
United States v. Box, 50 F.3d 345, 358 (5th Cir. 1995).
9
United States v. Bermea, 30 F.3d 1539, 1575 (5th Cir.
1994), cert denied, 115 S.Ct. 1113 (1995), 115 S.Ct. 1825 (1995).
7
ownership of Dispetco. As detailed by the PSI, Dispetco would
purchase gas tax-free from MBO based on its valid form 637. The
gas was then sold to retailers with tax included but the tax was
never remitted to the IRS.
West points to his employment as a truck-driver for
Gatten at Gatson Oil, Inc. as well as to the testimony regarding
his illiteracy and argues that he did not occupy a leadership role,
but rather relied on the guidance of others involved, including
Gatten. As detailed in the PSI, however, West was directly
involved in concealing the transactions between Dispetco and the
retailers by the use of fictitious company names and the
preparation of false invoices. The PSI estimates that over 100
retailers were involved in Dispetco's activities. Clearly, the
attempted concealment of these transactions required an established
organization and a staff of truck drivers instructed by West on
which type of invoice to use.
In the light of these facts, we cannot say that the
district court was clearly erroneous when it determined that West
occupied a leadership role and, therefore, a four-level enhancement
was appropriate. We, therefore affirm the district court's
enhancement of West's sentence under § 3B1.1(a).
Next, West argues that there is insufficient evidence to
support the district court's determination that a two-level
increase in West's offense level for obstruction of justice was
warranted. U.S.S.G. § 3C1.1 provides for an enhancement when "the
defendant willfully obstructed . . . the administration of justice
8
during the investigation, prosecution, or sentencing" of the
underlying offense. This enhancement was based on the testimony of
a special agent of the IRS at the post-trial detention hearing, as
well as factual conclusions in the PSI, that West attempted to
intimidate several witnesses and that he may have been involved in
the murder of Bryson.10
West argues on appeal that since there was no direct
testimony regarding his alleged intimidation of witnesses, § 3C1.1
should not have been applied to him. In addition, West argues that
the testimony of Larry Noakes at trial regarding West's alleged
involvement in Bryson's murder was disregarded by the district
court at sentencing and cannot now be used to support the
enhancement for obstruction of justice.
West is correct that at the sentencing hearing, the
district court sustained West's objection to the use of Noakes'
testimony to support the enhancement. The district court decided
that since Noakes was unavailable and the district court had no
opportunity to evaluate his credibility, West's allegation that he
was an inherently unreliable witness would be accepted and Noakes'
testimony would not be considered for sentencing purposes. Even
without Noakes' testimony, however, there was sufficient evidence
to support the enhancement for obstruction of justice under §
3C1.1.
10
The IRS agent's testimony appears in the Record, volume
16 at 27-47.
9
The IRS agent, Susan Wong,11 testified that at least three
government witnesses made allegations that West had threatened or
intimidated them regarding their testimony. Agent Wong testified
that:
Several of the witnesses that testified at
trial had indicated to us, or in fact told us,
and also told the Grand Jury that they were in
fear of their life, they were scared, one of
the witnesses that testified in the trial was
actually scared to come to the courthouse the
day of the trial, the day it started--he--
without an agent accompanying him to the
building, and staying with him at all times.
We had to keep him pretty much out of sight on
a different floor.12
At sentencing, 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".13 This Court has previously determined that for
sentencing purposes, even "uncorroborated hearsay evidence" is
sufficiently reliable.14 In addition, a PSI "generally bears
sufficient indicia of reliability to be considered by the trial
11
Susan Wong is a special agent with the criminal
investigation division of the IRS. Record, volume 16 at 28. Agent
Wong was assigned as the case agent for the investigation of Larry
West and his co-conspirators.
12
Record, volume 16 at 29.
13
U.S.S.G. § 6A1.3; see e.g., United States v. Scott, 48
F.3d 1389, 1395 (5th Cir. 1995); Bermea, 30 F.3d at 1576; United
States v. Smith, 13 F.3d 860, 863 n.5 (5th Cir.), cert. denied, 114
S.Ct. 2151 (1994).
14
United States v. Golden, 17 F.3d 735, 736 (5th Cir.
1994).
10
court as evidence in making the factual determinations required by
the sentencing guidelines".15
In this case, the district court had before it sufficient
competent evidence to indicate that a sentence enhancement for
obstruction of justice was warranted. West's contention that
testimony regarding the statements of others cannot be used to
support the enhancement is not correct. We find no error in the
district court's decision to credit the testimony of Agent Wong and
accept the factual conclusions of the PSI. We, therefore, affirm
the enhancement of West's sentence for obstruction of justice.
Finally, West contends that a prior misdemeanor
conviction for possession of gambling paraphernalia in Texas should
not have been considered in determining his criminal history
category. Under U.S.S.G. § 4A1.2(c), a prior misdemeanor
conviction is considered in determining a defendant's criminal
history category unless it is an exempted offense or similar to one
of the exempted offenses listed in the Sentencing Guidelines.
These excluded offenses, and any similar offenses, are only
considered in determining a defendant's criminal history category
if the sentence was at least one year in prison or thirty days
probation or if the prior offense is similar to the offense for
which the defendant is currently being sentenced.
§ 4A1.2(c)(1) lists "gambling" as one of the excluded
offenses. West argues that possession of gambling paraphernalia is
15
Bermea, 30 F.3d at 1575; see also, United States v.
Valencia, 44 F.3d 269, 274 (5th Cir. 1995).
11
similar to the offense of gambling and, therefore, his prior
offense should be considered an excluded offense. If possession of
gambling paraphernalia is found to be similar to the offense of
gambling, this prior misdemeanor conviction would not be considered
because West's sentence was only three days imprisonment and the
prior offense is not similar to the current offenses of tax
evasion. Thus, the issue is whether the offense of possession of
gambling paraphernalia is similar to the offense of gambling under
U.S.S.G. §4A1.2.
In United States v. Hardeman, this Court set up a "common
sense" approach to determine whether a prior offense is similar to
an exempted offense.16 We determined that "all possible factors of
similarity" should be considered, including:
a comparison of punishments imposed for the
listed and unlisted offenses, the perceived
seriousness of the offense as indicated by the
level of punishment, the elements of the
offense, the level of culpability involved,
and the degree to which the commission of the
offense indicates a likelihood of recurring
criminal conduct.17
We engage in an analysis of these factors while keeping in mind
that § 4A1.2(c) "is designed to take into account the seriousness
of the past offense and the degree to which it suggests the
possibility of future criminality".18
16
933 F.2d 278, 281 (5th Cir. 1991). See e.g., United
States v. Gadison, 8 F.3d 186 (5th Cir. 1993); United States v,
Moore, 997 F.2d 30 (5th Cir.), cert. denied, 114 S.Ct. 647 (1993).
17
Hardeman, 933 F.2d at 281.
18
Id.
12
As noted by the district court, Texas law defines
possession of gambling paraphernalia as a class A misdemeanor with
a possible fine of up to $3000 and a prison term of up to one
year.19 Gambling, on the other hand, is defined as a class C
misdemeanor with the possibility of a fine of up to $500 and no
possibility of imprisonment.20 The elements of gambling require
only that the accused placed a bet while possession of gambling
paraphernalia requires proof of "intent to further gambling".21
Thus, Texas law defines possession of gambling as a more serious
offense with a more serious punishment. Further, the crime of
gambling apparently targets individuals who place illegal bets
while possession of gambling paraphernalia seems to target
individuals who make these illegal activities available to others.
In the light of the more serious punishment and higher
level of culpability required for possession of gambling
paraphernalia, we agree with the district court that West's offense
19
Record, volume 17 at 8-9.
20
Id.
21
The offense of gambling is defined at Texas Penal Code
§47.02, which states that:
a person commits an offense if he makes a bet
on the partial or final result of a game or
contest . . . [or] on the result of any
political nomination, appointment, or election
. . .[or] plays and bets for money . . . at
any game played with cards, dice, balls, or
any other gambling device . . . .
Texas Penal Code §47.06 defines the offense for which West was
convicted and states that: "[a] person commits an offense if, with
the intent to further gambling, the person knowingly owns,
manufactures, transfers commercially, or possesses gambling
paraphernalia".
13
is not similar to gambling under § 4A1.2. Under the Sentencing
Guidelines, West's prior conviction should be included in
determining his criminal history category. We, therefore, reject
West's argument and affirm the district court's inclusion of West's
prior conviction for possession of gambling paraphernalia in
relevant conduct used to determine his sentence.
B. Defendant Richard Gatten
Like West, Richard Gatten was convicted of both
conspiracy to defraud the United States and two counts of
attempting to evade federal gasoline excise tax. On appeal, he
contends that the government's summary witness, Jannett Reiner, was
not qualified to testify as an expert. Also, Gatten argues that
the district court erroneously permitted Reiner to bolster the
testimony of a key prosecution witness, Ray Long, by referring to
and restating certain portions of Long's testimony. In response,
the government argues that Reiner is fully qualified to testify as
an expert witness on matters of accounting and evasion of excise
tax. The government also contends that the purpose of Reiner's
restatement of Long's testimony was to identify the evidence upon
which she based her calculations of tax due, as is appropriate for
a summary witness.
Federal Rule of Evidence 702 provides:
If scientific, technical, or other specialized
knowledge will assist the trier of fact to
understand the evidence or to determine a fact
in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or
education, may testify thereto in the form of
an opinion or otherwise.
14
The district court is given wide discretion to admit or to exclude
expert testimony.22 We review its decision for manifest error.23
"To qualify as an expert, the witness must have specialized
knowledge or training such that his or her testimony will assist
the fact finder in the determination of a fact issue."24
In this case, agent Reiner testified regarding her
training and experience.25 Reiner holds a Bachelor of Science in
accounting.26 At the time of trial, she had served the IRS for
seven years as a revenue agent, during four of which she acted as
an excise tax specialist.27 Agent Reiner received general training
when she started as a revenue agent and participated in additional
training in order to specialize in the area of excise tax.28 In
addition, agent Reiner participates in annual continuing education
in the areas of both general tax and excise tax.29
In the light of agent Reiner's background, we cannot say
that the district court committed manifest error when it admitted
the testimony of agent Reiner as a summary expert. She has
22
London v. Mac Corporation of America, 44 F.3d 316, 318
(5th Cir. 1995); Moore, 997 F.2d at 57.
23
London, 44 F.3d at 318; Moore, 997 F.2d at 57.
24
United States v. Townsend, 31 F.3d 262, 270 (5th Cir.
1994), cert. denied, 115 S.Ct. 773 (1995).
25
Record, volume 11 at 134-35.
26
Id.
27
Id.
28
Id.
29
Id.
15
specialized training and experience which made her adequately
suited to assist the jury in understanding the large amount of
documentary evidence presented by the government and the tax
implications. We, therefore, reject Gatten's argument and affirm
the district court's decision to admit agent Reiner as an expert.
Gatten also argues that agent Reiner should not have been
allowed to restate the testimony of Ray Long because by doing so,
she impermissibly affected the jury's assessment of Long's
credibility. That is, agent Reiner's testimony bolstered and
confirmed Long's damaging testimony against the defendants. The
government, in response, points out that it is the purpose of a
summary witness to reference other evidence in order to identify
the evidence used in determining the amount of taxes evaded.30
This Court addressed an argument similar to the one
pressed here by Gatten in United States v. Moore.31 In Moore, four
defendants convicted on various charges surrounding the preparation
of false tax returns argued that by repeating only damaging
testimony, the expert summary witness of the IRS had "impermissibly
made implicit credibility choices for the jury".32 This Court
30
In addition, the government cites the district judge's
instruction to the jury regarding agent Reiner's role as a summary
witness. In response to an objection by the defense, the judge
stated that: "[t]he jury is going to have to consider its own
recollection of the testimony. This is the agent's assessment of
the testimony for purposes of demonstrating the figures she's
computed." Record, volume 11 at 142.
31
997 F.2d 55 (5th Cir.), cert. denied, 114 S.Ct. 647
(1993).
32
Id. at 59.
16
rejected that argument because the IRS agent merely recited factual
information and made no express comments regarding the credibility
of the witnesses.33 We held that admission of the IRS expert's
testimony, which included a summary of testimony given by other
government witnesses, was not error because the agent properly
referenced other evidence when necessary to explain his analysis of
the case.34
The circumstances are the same in this case. Agent
Reiner referred to Long's testimony while in the process of
explaining how the defendants attempted to conceal the sales
transactions between Dispetco and the retailers.35 The testimony
of Long and others was used by the agent to explain the basis of
her findings and calculation of the taxes owed. She made no
comment regarding Long's credibility. In addition, the judge
reminded the jury that agent Reiner's role was to summarize
evidence in order to explain the tax liability evaded by the
defendants.36 In these circumstances, the district court did not
err in admitting the summary testimony of agent Reiner.
33
Id. (citing United States v. Price, 722 F.2d 88 (5th
Cir. 1983)).
34
Id. The summary expert's testimony is also limited by
Federal Rule of Evidence 704. See, United States v. Townsend, 31
F.3d 262 (5th Cir. 1994), cert. denied, 115 S.Ct. 773 (1995).
35
Record, volume 11 at 140, 142.
36
In response to an objection by the defense, the judge
stated that: "[t]he jury is going to have to consider its own
recollection of the testimony. This is the agent's assessment of
the testimony for purposes of demonstrating the figures she's
computed." Record, volume 11 at 142.
17
C. Defendant Thomas Massey
1. Admission of Specific Instance Testimony
Massey argues on appeal that the district court erred
when it ruled that the government could cross-examine the character
witnesses that Massey intended to call with "have you heard"
questions regarding Massey's indictment on state charges similar to
the federal charges that are the basis of his conviction. Under
Federal Rule of Evidence 405(a), cross-examination of a witness
offering character evidence can include questions regarding
relevant, specific instances of conduct by the defendant. Thus,
"[o]nce a witness has testified concerning a defendant's good
character, it is permissible during cross-examination to attempt to
undermine his credibility by asking him whether he has heard of
prior misconduct of the defendant which is inconsistent with the
witness' direct testimony".37
There are two limits on this type of cross-examination.
First, the government must have a good faith factual basis for the
alleged prior misconduct.38 Second, the incidents must be relevant
to the trial.39 Massey concedes that the government had more than
a good faith factual basis but argues that the state charges are
37
United States v. Wells, 525 F.2d 974 (5th Cir. 1976).
38
Wells, 525 F.2d at 977; see also, United States v.
Luffred, 911 F.2d 1011, 1016 (5th Cir. 1990); United States v.
McCollom, 664 F.2d 56, 58 (5th Cir. 1981), cert. denied, 456 U.S.
934 (1982); United States v. Renfro, 620 F.2d 497, 501-02 (5th
Cir.), cert denied, 449 U.S. 921 (1980).
39
Wells, 525 F.2d at 977; Luffred, 911 F.2d at 1016;
McCollom, 664 F.2d at 58; Renfro, 620 F.2d at 497.
18
not relevant to his veracity, the character trait about which his
character witnesses were to testify. This argument is without
merit. An indictment alleging intentional evasion of state
gasoline taxes is relevant to an inquiry into Massey's capacity for
honesty. The district court was not in error when it stated that
the government would be allowed to cross-examine character
witnesses regarding the pending state charges as is specifically
allowed by Rule 405(a). In addition, the district court's refusal
to hold a separate hearing on this issue was not an abuse of its
discretion in matters of the admission of evidence. We affirm.
2. Admission of Hearsay Evidence under FRE 801(d)(2)(e)
Massey also argues that the admission of the testimony of
the government's witness, Hillhouse, recounting statements made by
West regarding Massey's involvement in the conspiracy without the
benefit of a hearing to determine the existence of the conspiracy,
was an abuse of discretion. Massey concedes that West's out-of-
court statements to Hillhouse are not hearsay under Federal Rule of
Evidence 801(d)(2)(E),40 but argues that he was entitled to a
hearing to determine the existence of the conspiracy under United
States v. Bourjaily.41
40
Federal Rule of Evidence 801(d)(2)(E) provides
A statement is not hearsay if--
(2) the statement is offered against a party
and is (E) a statement by a coconspirator of a
party during the course or in furtherance of
the conspiracy.
41
483 U.S. 171 (1987).
19
In United States v. Fragoso,42 this Court rejected a
similar argument and, in response to the defendant's argument that
Bourjaily required a hearing, stated "[w]e think this argument
erroneously transforms a descriptive portion of the Court's opinion
in Bourjaily into a mandatory procedure. Bourjaily did not purport
to address the procedure for proving the admissibility of a co[-
]conspirator statements."43 Thus, contrary to Massey's argument,
no hearing is required and the district court was free to allow
admission of the testimony before making its determination of
whether the testimony fit within Rule 801(d)(2)(E).44 And, although
the district court did not make specific findings regarding the
existence of the conspiracy, "[i]n denying the defendant's motion
for directed verdict of acquittal at the close of the trial, the
court implicitly found the evidence sufficient to establish a
conspiracy".45 Thus, we affirm.
3. Sufficiency of the Evidence
Finally, Massey argues that the evidence was insufficient
to support his conviction for conspiracy to evade federal excise
taxes. We must determine whether, viewing the evidence in the
light most favorable to the jury's verdict, "a rational jury could
have found the essential elements of the offense beyond a
42
978 F.2d 896 (5th Cir. 1992), cert denied, 113 S.Ct. 1664
(1993).
43
Id. at 900.
44
Id. at 900-01; United States v. Ruiz, 987 F.2d 243, 246
(5th Cir.), cert. denied, 114 S.Ct. 163 (1993).
45
Fragoso, 978 F.2d at 901.
20
reasonable doubt".46 In reviewing the evidence supporting the
conviction:
It is not necessary that the evidence exclude
every rational hypothesis of innocence or be
wholly inconsistent with every conclusion
except guilt, provided a reasonable trier of
fact could find the evidence establishes guilt
beyond a reasonable doubt. We accept all
credibility choices that tend to support the
jury's verdict.47
In this case, the government presented evidence that
Massey sold a high volume of fuel to Dispetco at a very low cost.
In addition, when West purchased Dispetco and began his scheme to
evade federal excise tax, sales from MBO to Dispetco increased
dramatically. As Massey points out, however, all the sales
transactions between MBO and Dispetco or General Distributors were
legal because both Dispetco and General Distributors held a form
637.48 The government also presented the testimony of Hillhouse who
recounted statements by West that Massey was in on the conspiracy
and was receiving a portion of the illegal profits. Massey, in
turn, testified at the trial that he had no knowledge of the
conspiracy and did not knowingly receive any illegal proceeds from
the scheme.
The evidence presented by the government is minimal.
There was, however, direct testimony of Massey's involvement by
46
United States v. Ragan, 24 F.3d 657, 659 (5th Cir. 1994);
United States v. Pofahl, 990 F.2d 1456, 1467 (5th Cir.), cert.
denied, 114 S.Ct. 266, 114 S.Ct. 560 (1993).
47
Pofahl, 990 F.2d at 1467. (citations omitted).
48
Dispetco held a valid form 637 while General Distributors
presented MBO with a forged form 637.
21
Hillhouse, a close associate of West. Massey attempted to rebut
this evidence with his own testimony that he was innocent of any
wrong-doing. The jury had the power to weigh the credibility of
these witnesses. Based on the evidence presented, a reasonable
jury could have found Massey guilty beyond a reasonable doubt. We,
therefore, affirm Massey's conviction.
III.
Since we find no error, we AFFIRM the convictions of all
three defendants and West's sentence.
22
United States v. West
Court: Court of Appeals for the Fifth Circuit
Date filed: 1995-06-28
Citations: 58 F.3d 133
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