United States v. Nicholson , 176 F. App'x 386 ( 2006 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-4794
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
MARSHALL NICHOLSON, SR.,
Defendant - Appellant.
------------------------
UNITED STATES BANK NATIONAL ASSOCIATION,
Movant.
No. 04-4941
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
MARSHALL NICHOLSON, JR., a/k/a King,
Defendant - Appellant.
-------------------------
UNITED STATES BANK NATIONAL ASSOCIATION,
Movant.
No. 04-4980
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
ROBERT EDWARD TURNER,
Defendant - Appellant.
No. 05-4004
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
GLADYS PAYNE NICHOLSON, a/k/a Gladys Marie
Nicholson,
Defendant - Appellant.
Appeals from the United States District Court for the District of
Maryland, at Greenbelt. Alexander Williams, Jr., District Judge.
(CR-03-268-AW)
Argued: February 3, 2006 Decided: April 18, 2006
Before WILKINSON, LUTTIG, and MICHAEL, Circuit Judges.
2
Affirmed by unpublished per curiam opinion. Judge Michael wrote an
opinion concurring in part and concurring in the judgment.
ARGUED: Hughie Duvall Hunt, II, KEMET & HUNT, P.L.L.C., College
Park, Maryland, for Appellants. Chan Park, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Greenbelt,
Maryland, for Appellee. ON BRIEF: Thomas J. Saunders, Baltimore,
Maryland, for Appellant Marshall Nicholson, Sr.; Michael S.
Blumenthal, Landover, Maryland, C. William Michaels, Baltimore,
Maryland, for Appellant Marshall Nicholson, Jr.; Allen H. Orenberg,
North Bethesda, Maryland, for Appellant Robert Edward Turner. Rod
J. Rosenstein, United States Attorney, Deborah Johnston, Assistant
United States Attorney, Patrick M. Pericak, Special Assistant
United States Attorney, Greenbelt, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
3
PER CURIAM:
Defendants in this case appeal their convictions and sentences
arising out of a large operation to distribute drugs in Prince
George’s County, Maryland. We conclude that their claims lack
merit, and affirm the judgment on all accounts.
I.
Defendants are Marshall Nicholson, Jr. (Nicholson, Jr.), his
father, Marshall Nicholson, Sr. (Nicholson, Sr.), his mother,
Gladys Payne Nicholson (Ms. Nicholson), and an associate, Robert
Edward Turner. A grand jury indicted defendants on fourteen
counts, all of which stemmed from an investigation of a large-scale
drug distribution ring in Prince George’s County, Maryland. A jury
trial was held beginning on February 24, 2004, and it continued
over twenty-four days.
The government introduced extensive evidence at trial, and we
merely summarize it here. The evidence demonstrated that
Nicholson, Jr. had distributed a large amount of drugs since the
1980s, often from the home of his parents at 7533 Allendale Drive,
Palmer Park, Maryland (the Palmer Park home). The evidence
consisted of, inter alia, witness testimony, statements obtained
from wiretaps, and physical evidence recovered in numerous
searches. We will review each in turn.
4
Several witnesses testified as to Nicholson, Jr.’s drug-
related activities. Kenneth Pickens, for example, regularly
obtained a half-ounce to an ounce of crack from Nicholson, Jr.
every week beginning in 1997, for about six months to a year. Some
of these transactions took place at the Palmer Park home. As late
as January 2003, cooperating with law enforcement, Pickens bought
62 grams of crack from Nicholson, Jr. at the Palmer Park home.
Patricia Tucker testified that she purchased 3.5 grams of
crack from Nicholson, Jr. about once a week between 1996 and 2000,
often at the Palmer Park home. She and Alan Sarvis also testified
that they traveled to Los Angeles with Nicholson, Jr. to purchase
eight kilograms of powder cocaine in July 2001. Tucker took four
kilograms of cocaine in her suitcase, and returned to the Palmer
Park home, where the cocaine was unpacked. Sarvis and another
individual hid the other four kilograms on their bodies and
returned to Maryland on July 29, 2001. Law enforcement officers
intercepted them at the Baltimore-Washington International Airport,
and they were arrested.
Jermaine Woodbury testified that he obtained 31 grams of crack
from Nicholson, Jr. in March or April 2000. He further noted that
in March 2001, he had Nicholson, Jr. convert 125 grams of powder
cocaine into crack. A few days later, he also arranged a
transaction in which Nicholson, Jr. bought six kilograms of cocaine
5
from another individual. Woodbury further testified that on July
17, 2002, he purchased 62 grams of crack from Nicholson, Jr.
Stephen Brown testified that he and Nicholson, Jr. often
collaborated in buying cocaine. Brown facilitated a purchase in
1999 in which Nicholson, Jr. obtained a kilogram of cocaine.
Additionally, between September 2002 and June 2003, they bought
approximately 25 kilograms of cocaine from a source in California.
Nicholson, Jr. would convert the powder cocaine into crack and they
would then sell it. Finally, Weldon Barnett testified that he
often obtained up to a half-kilogram of crack from Nicholson, Jr.
at the Palmer Park home beginning in 1998. Several of these
witnesses testified that Nicholson, Sr. and Ms. Nicholson were in
the home when they obtained drugs from Nicholson, Jr.
Ernest Cox, a longtime associate of Nicholson, Sr., testified
that during a visit with Nicholson, Sr. in March 2003, Nicholson,
Sr. asked him if he knew anyone who sold cocaine. Cox asked how
much Nicholson, Sr. needed, and he responded that he would have to
ask his son. Cox later located a potential source, and Nicholson,
Sr. stayed in contact with Cox to help his son arrange the purchase
of between five and ten kilograms of cocaine. Nicholson, Jr.
eventually traveled to Texas and Mexico to discuss the sale of this
cocaine, but the transaction fell through.
In addition to the multiple witnesses who testified, the
government also introduced at trial numerous tape-recorded
6
conversations occurring between March and June 2003 that it had
obtained through the use of wiretaps. Law enforcement officers had
placed wiretaps on various phones, including several cell phones
used by Nicholson, Jr. and the phone at the Palmer Park home.
These wiretaps revealed that Nicholson, Jr. would call Nicholson,
Sr. to discuss who had come by the home and who had left messages
for him. According to law enforcement officers, father and son
talked in code about drug distribution.
Physical evidence was also recovered as a result of several
searches conducted on June 12, 2003, which marked the end of the
investigation. After obtaining search warrants, law enforcement
officers searched several homes. At the Palmer Park home, officers
recovered a handgun, ammunition, and $85,339 in cash. They also
searched defendant Turner’s residence, and found a handgun hidden
in a sofa in the basement. Officers located Nicholson, Jr.’s Dodge
pickup truck, and searched and seized it as well. Among other
contraband, they found an RF detector, which detects body wires.
Finally, the government presented evidence to show that Ms.
Nicholson had engaged in money laundering when she bought a home
with her son’s money. On September 9, 1999, Ms. Nicholson closed
a deal with Raymond Procopio Builders to purchase a home located at
3220 Dunbratton Court, Waldorf, Maryland (the Waldorf home). From
the financial records, it appears that the price of the home was
about $500,000, and that the down payment was approximately
7
$23,000. Nicholson, Jr. was present at the closing. He later told
associates that he in fact had purchased the home, that he had put
down $100,000 on it, and that he had his mother place the home in
her name. When the builder was later called to make repairs on the
home, he noted that Nicholson, Jr. was the only person present that
he knew.
Detective Dennis Hallinger of the Prince George’s County
Police Department questioned Ms. Nicholson about her son and the
Waldorf home during the search of her own home conducted on June
12, 2003. She said that she did not know what Nicholson, Jr. did
for a living and that she owned no other property other than the
Palmer Park home. She refused to acknowledge that she had placed
the Waldorf home in her name, but did indicate she had done so for
her daughter-in-law’s home. Ms. Nicholson had for several years
deducted mortgage interest she allegedly paid on the Waldorf home
from her taxable income on her tax returns.
The jury returned its verdict on April 2, 2004. It acquitted
defendants on some counts, but convicted each defendant on at least
one. Nicholson, Jr. was convicted of numerous counts. First, the
jury convicted him of conspiracy to distribute, inter alia, five
kilograms of cocaine and fifty grams of crack from 1999 to June 12,
2003, in violation of 21 U.S.C. § 846 (2000). He was also
convicted of possessing with intent to distribute five kilograms of
cocaine on July 29, 2001, and of possessing with intent to
8
distribute fifty grams of cocaine base on July 17, 2002 and January
22, 2003, all in violation of 21 U.S.C. § 841. Finally, he was
convicted of using a communication facility to further a drug
conspiracy, in violation of 21 U.S.C. § 843(b), and of a money
laundering conspiracy, in violation of 18 U.S.C. § 1956(h) (2000).
He was sentenced to a mandatory minimum of life imprisonment based
on the drug convictions. See 21 U.S.C. § 841(b)(1)(A).
The jury also convicted Nicholson, Sr. of conspiracy to
distribute drugs, and of using a communication facility to further
that conspiracy. See 21 U.S.C. §§ 843(b), 846. In addition, it
convicted him of making available his family home to store and
distribute drugs, in violation of 21 U.S.C. § 856(a)(2). He was
sentenced to 135 months in prison. The jury convicted Ms.
Nicholson of money laundering for her role in the purchase of the
Waldorf home, in violation of 18 U.S.C. § 1956(a)(1)(B)(I). The
district court sentenced her to twelve months and a day. Finally,
the jury convicted Turner of being a felon in possession of a
firearm, in violation of 18 U.S.C. § 922(g)(1). He was sentenced
to 70 months.
II.
Defendants initially contend that various pieces of evidence
should have been suppressed at trial, because they were obtained in
9
violation of either statutory or constitutional provisions. We
find no merit in these arguments.
A.
Nicholson, Sr. argues that the government failed to satisfy
the statutory “exhaustion” requirement for obtaining wiretaps. See
18 U.S.C. § 2518(1)(c), (3)(c). “Prior to granting an order
authorizing a wiretap, the issuing judge must find, in addition to
probable cause, that ‘normal investigative procedures have been
tried and have failed or reasonably appear to be unlikely to
succeed if tried or to be too dangerous.’” United States v.
Oriakhi, 57 F.3d 1290, 1298 (4th Cir. 1995) (quoting 18 U.S.C.
§ 2518(3)(c)). The government’s burden in making this showing “is
not great,” and we owe “considerable deference to the district
court’s determination that exhaustion has been shown.” Id.(internal quotation marks omitted).
The government’s affidavits in support of the wiretaps were
drafted in some detail, and satisfied its burden under 18 U.S.C.
§ 2518. The affidavits illustrated that law enforcement officers
had utilized several traditional methods of investigation prior to
requesting the wiretaps. The officers had, for example, examined
telephone records, employed several confidential informants and an
undercover officer, and engaged in trash searches and physical
surveillance. Yet through all these investigative techniques, the
10
officers were not able to uncover the full scope of the drug
conspiracy. The affidavits detailed the limitations of each
investigative technique attempted thus far. As a result, the
affiant claimed wiretaps were necessary. The issuing judge agreed,
and we affirm.
B.
Nicholson, Sr. also asserts that the search of his Palmer Park
home on June 12, 2003 violated the Fourth Amendment, because the
search warrant was improperly based on information obtained from
unlawful wiretaps. But this argument is foreclosed by our
conclusion that the wiretaps were proper. And even disregarding
the evidence obtained through wiretaps, the affidavit in support of
the search warrant still presented overwhelming evidence that drug
distribution was taking place at the home. See United States v.
Wright, 991 F.2d 1182, 1186 (4th Cir. 1993) (“The inclusion of
tainted evidence does not invalidate a search warrant if enough
untainted evidence supports it.”). Confidential informants had,
for example, repeatedly visited the Palmer Park home to purchase
drugs from Nicholson, Jr. There is thus no basis to suppress the
evidence gathered from the search.
11
C.
Nicholson, Jr. contends that the contraband recovered from his
Dodge pickup -- including the RF detector -- should have been
suppressed, because the police did not have a warrant to search the
truck. We disagree. A warrant is not required to search an
automobile if it “is readily mobile and probable cause exists to
believe it contains contraband.” United States v. Brookins, 345
F.3d 231, 238 (4th Cir. 2003) (internal quotation marks omitted);
see also Maryland v. Dyson, 527 U.S. 465, 466-67 (1999) (per
curiam) (noting that there is “no separate exigency requirement”).
These conditions are met here. Nicholson, Jr.’s truck was mobile,
and officers had repeatedly witnessed him taking the truck to meet
with other coconspirators before they seized it. The contraband
obtained from the truck was, therefore, properly admitted at trial.
D.
Ms. Nicholson alleges that the statements she made to
Detective Hallinger during the search of her Palmer Park home on
June 12, 2003 should have been suppressed because she was not given
Miranda warnings. Her contention is mistaken. A defendant’s Fifth
Amendment Miranda right “relates only to custodial interrogation.”
McNeil v. Wisconsin, 501 U.S. 171, 178 (1991). “A person is ‘in
custody’ for purposes of Miranda either if the person has been
arrested or if his freedom of action has been curtailed to a degree
12
associated with arrest.” United States v. Sullivan, 138 F.3d 126,
130 (4th Cir. 1998). Whether someone is in custody is an objective
determination based on the totality of the circumstances and on
“how a reasonable man would have understood the suspect’s position
at the time.” United States v. Parker, 262 F.3d 415, 419 (4th Cir.
2001).
In this case, Ms. Nicholson was not restrained to a degree
associated with arrest. Detective Hallinger expressly stated to
her that she was not under arrest and that she was not being
charged with a crime. She was questioned in her home, and was not
handcuffed. Indeed, she was allowed to go outside to smoke a
cigarette during the questioning. Based on all these
circumstances, we cannot conclude that Ms. Nicholson was in custody
when Hallinger spoke with her, and Miranda warnings were thus not
required. See Parker, 262 F.3d at 419 (defendant not in custody
when she was told she was not under arrest, was questioned in her
home, was not handcuffed or otherwise restrained, and was never
told she was not free to leave). The district court, therefore,
properly admitted her statements.
III.
Ms. Nicholson also alleges that the district court erred in
not severing her trial from that of the other defendants. We
review a district court’s decision to deny a motion to sever for
13
abuse of discretion. United States v. Rivera, 412 F.3d 562, 571
(4th Cir. 2005). “Generally, individuals indicted together should
be tried together.” Id. (internal quotation marks omitted). To
prove a district court abused its discretion, therefore, a
defendant must show prejudice resulted from the refusal. See id.A district court’s cautionary instruction can help alleviate
potential prejudice, see United States v. Johnson, 219 F.3d 349,
357 (4th Cir. 2000), and “[c]onvictions should be sustained if it
may be inferred from the verdicts that the jury meticulously sifted
the evidence,” Rivera, 412 F.3d at 571 (internal quotation marks
omitted).
In the instant case, the district court instructed the jury
that the case against each defendant must be based on the evidence
against that defendant, and that the jury’s verdict as to one
defendant did not control as to the guilt or innocence of another
defendant. It is clear, moreover, that the jury carefully sifted
the evidence, as it convicted Ms. Nicholson on one count, but
acquitted her on two others on which one or more co-defendants were
convicted. It, for example, acquitted her on the count of making
available her Palmer Park home for drug distribution, but convicted
her husband. We, therefore, find no basis to conclude that the
district court abused its discretion here.
14
IV.
Ms. Nicholson next challenges the district court’s jury
instructions. We review a district court’s decision whether or not
to give a jury instruction for abuse of discretion. See United
States v. Abbas, 74 F.3d 506, 513 (4th Cir. 1996). We conclude
that the district court did not abuse its discretion in its jury
instructions.
A.
Ms. Nicholson first suggests that the district court gave an
inappropriate “willful blindness” jury instruction regarding the
money laundering charge for her involvement in the purchase of the
Waldorf home. The district court instructed the jury that:
You may infer that a defendant acted knowingly from
circumstantial evidence or from proof that a defendant
deliberately closed his eyes to what would otherwise have
been obvious to him.
Stated another way, a defendant’s knowledge of a
fact may be inferred from willful blindness to the
existence of that fact. Willful blindness exists when a
defendant whose suspicion has been aroused deliberately
fails to make further inquiries. If you find that a
defendant had a strong suspicion that someone withheld
important facts, yet shut his eyes for fear of what he
would learn, you may conclude that he acted knowingly.
It also instructed the jury, in addition, that a person cannot act
knowingly “because of ignorance, mistake, accident or
carelessness.” As relevant here, to convict Ms. Nicholson of money
laundering under 18 U.S.C. § 1956(a)(1)(B)(I), the government had
to show that she had knowledge: “(1) that the funds involved in the
15
transaction were the proceeds of illegal activity; and (2) that the
transaction was designed to conceal the nature of the proceeds.”
United States v. Campbell, 977 F.2d 854, 857 (4th Cir. 1992).
Although we have indicated that a willful blindness
instruction should be given sparingly, see United States v. Ruhe,
191 F.3d 376, 385 (4th Cir. 1999), we have repeatedly upheld the
use of such an instruction. See United States v. Guay, 108 F.3d
545, 551 (4th Cir. 1997); United States v. Withers, 100 F.3d 1142,
1145 (4th Cir. 1996). And we have done so specifically in the
money laundering context. See United States v. Collins, 372 F.3d
629, 634 (4th Cir. 2004) (citing Campbell, 977 F.2d at 857-59).
The “instruction is appropriate when the defendant asserts a lack
of guilty knowledge but the evidence supports an inference of
deliberate ignorance.” Guay, 108 F.3d at 551 (internal quotation
marks omitted). In determining whether the instruction was proper,
“we consider the evidence and any reasonable inferences in the
light most favorable to the government.” United States v.
Whittington, 26 F.3d 456, 463 n.6 (4th Cir. 1994).
In this case, Ms. Nicholson’s defense to the money laundering
charge was that she lacked the requisite knowledge. We find that
the evidence was sufficient to support an inference of deliberate
ignorance. A large portion of Nicholson, Jr.’s drug transactions,
which dated back to the 1980s, took place in Ms. Nicholson’s Palmer
Park home. Testimony also showed that she was sometimes in the
16
house when individuals came to engage in drug transactions. And
law enforcement officers had conducted a search of her Palmer Park
home in 1995 pursuant to a valid search warrant in which crack,
PCP, marijuana, and a scale all were found. In addition, she told
Detective Hallinger that she did not even know whether her son was
employed. Yet Nicholson, Jr. was able to make a large payment on
the Waldorf home, and had expensive cars and jewelry. Ms.
Nicholson also failed to mention the fact that she had signed the
papers for the Waldorf home when Detective Hallinger questioned her
about it. She withheld this information even though she had
benefited from the transaction, which allowed her to deduct the
mortgage interest from her taxable income for several years.
Although there may have been some evidence to the contrary,
there was sufficient evidence from which the jury could reasonably
infer that Ms. Nicholson was, to say the least, deliberately
ignorant of the illegal nature of her son’s assets. The jury could
likewise infer that there would be little reason -- other than to
obfuscate the source of the funding -- for her to act as the
nominal purchaser of the Waldorf home. Although the seller of the
Waldorf home may have been aware that Nicholson, Jr. was behind the
purchase, evidence supports the conclusion that Ms. Nicholson’s
role was to keep this information from government authorities, and
that she was deliberately ignorant of this fact.
17
The district court, moreover, gave an instruction that
knowledge cannot be based on mistake or accident. This instruction
goes a long way to reducing the risk that the jury might find
knowledge based only on Ms. Nicholson’s negligent failure to
discover that drug money was the source of the home purchase. See
Withers, 100 F.3d at 1145. For these reasons, the district court
did not abuse its discretion in giving the willful blindness
instruction.
B.
Ms. Nicholson also contends that the district court improperly
failed to advise the jury that good faith was “an absolute defense”
to the money laundering charge. Her argument is mistaken. The
district court did not have to give this good faith instruction,
because it properly informed the jury on the knowledge requirements
of the money laundering offense. See United States v. Fowler, 932
F.2d 306, 317 (4th Cir. 1991) (refusing to require separate good
faith instruction if instruction on specific intent is adequate).
V.
Ms. Nicholson next asserts that the district court abused its
discretion in refusing to grant her a new trial, because the
government’s evidence at trial was much broader than the money
laundering charge in the indictment. Specifically, she contends
18
that the government improperly introduced evidence that she
committed mortgage and tax fraud. We cannot agree. It is true
that the Fifth Amendment grand jury trial right is violated when a
defendant is convicted of an offense that was beyond the charges in
an indictment. See United States v. Randall, 171 F.3d 195, 203
(4th Cir. 1999). But in this case the evidence that Ms. Nicholson
might have lied on her loan application for the Waldorf home, and
that she took mortgage interest deductions in her tax returns from
this home was used to prove the knowledge element of the money
laundering count, which was clearly charged in the indictment. The
district court, therefore, did not abuse its discretion in refusing
to grant a new trial.
VI.
All four defendants further claim that the district court
erred in not granting their motions for judgment of acquittal,
because their convictions were not supported by sufficient
evidence. “A defendant challenging the sufficiency of the evidence
to support a conviction must overcome a heavy burden.” United
States v. Hamlin, 319 F.3d 666, 672 (4th Cir. 2003) (internal
quotation marks omitted). “[V]iewing the evidence and the
reasonable inferences to be drawn therefrom in the light most
favorable to the Government,” we must sustain the conviction if
“the evidence adduced at trial could support any rational
19
determination of guilty beyond a reasonable doubt.” United States
v. Burgos, 94 F.3d 849, 863 (4th Cir. 1996) (en banc) (internal
quotation marks omitted). We have reviewed each of the defendants’
claims with care, and find there to be sufficient evidence to
support all the convictions.
VII.
Lastly, Nicholson, Jr. claims that sentencing him under the
mandatory Sentencing Guidelines violated United States v. Booker,
125 S. Ct. 738 (2005). His argument is misplaced, because his life
term was based not on the Guidelines but instead on a statutory
mandatory minimum. See 21 U.S.C. § 841(b)(1)(A). “Booker did
nothing to alter the rule that judges cannot depart below a
statutorily provided minimum sentence.” United States v. Robinson,
404 F.3d 850, 862 (4th Cir. 2005). While one of the prerequisites
for the mandatory minimum was a finding that Nicholson, Jr. had
committed two prior drug felonies, Booker does not preclude proper
judicial determination of prior convictions. See United States v.
Cheek, 415 F.3d 349, 352-53 (4th Cir. 2005). The district court
thus did not err in applying the mandatory minimum sentence in
§ 841(b)(1)(A).
20
VIII.
For the foregoing reasons, the convictions and sentences of
all defendants are
AFFIRMED.
21
MICHAEL, Circuit Judge, concurring in part and concurring in the
judgment:
Spending money is legal. Laundering money by concealing
is not. The line between these two categories of commercial
transactions is sometimes blurry. That line can become even
blurrier in a money laundering prosecution when the government
obtains the (rarely used) willful blindness instruction. A jury
following the instruction may infer from circumstantial evidence
the defendant’s deliberate ignorance of the transaction’s criminal
aspect, which in turn allows the jury to infer guilty knowledge.
The potentially slippery combination of the willful blindness
instruction and a concealment money laundering charge cannot be
permitted to eviscerate the defendant’s right to be convicted only
upon proof beyond a reasonable doubt. Thus, when the government
considers requesting a willful blindness instruction, it (and the
district court if the request is made) must be especially careful
in examining the evidence that might support such an instruction.
While I believe that the government fell demonstrably
short here in its duty to examine, I ultimately conclude that the
record provided the bare minimum for allowing the willful blindness
instruction in the concealment money laundering prosecution of
Gladys Payne Nicholson. I emphasize, however, that the evidence
supporting the instruction was far weaker than the government would
have us believe. For these reasons, I am unable to join part IV.A
22
of the court’s opinion, although I concur in the judgment as to
that part. I otherwise concur.
I.
According to the trial evidence, defendant Ms. Nicholson
resided at a modest home in Palmer Park, Maryland, with her
husband, defendant Marshall Nicholson Sr. Their son, defendant
Marshall Nicholson Jr., often engaged in drug sales at the family
home, and Nicholson Sr. facilitated or even conducted some of these
sales. In 1995 Ms. Nicholson posted bond for her son after he was
arrested on state drug charges; the authorities later recovered
receipts from that bond transaction in a search of the home. Ms.
Nicholson was never a party to any drug sales, and there was no
evidence that she ever witnessed such sales.
The concealment money laundering count against Ms.
Nicholson stems from her role in the purchase of a house at 3220
Dunbratton Court in Waldorf, Maryland. Nicholson Jr. eventually
lived in the house. The transaction closed on September 9, 1999.
Although the house had a price tag of $500,000 as reported on the
mortgage documents, the seller, Raymond F. Procopio Builders, Inc.,
actually accepted a lower price. At closing Ms. Nicholson paid
$23,669. A lender, Equicredit Corporation of Maryland, paid
$340,726, and it was Ms. Nicholson who borrowed this money from
Equicredit by signing appropriate loan documents. The builder
23
retained a deposit of $25,000. It appears that the cash sum of
$7,905 was used at the closing. The origin of this cash is not
clear; the seller’s representative, Raymond F. Procopio, testified
that no cash changed hands at closing. Nicholson Jr. later told an
associate that he put down $100,000 toward the purchase of the
house.
Ms. Nicholson, who worked for the U.S. Department of
Health and Human Services, earned as much as $62,000 a year in
wages until her retirement in 2000; thereafter her income was about
$45,000 a year. (Nicholson Sr., who was wheelchair bound, had
negligible income other than social security.) Ms. Nicholson’s
ordinary income after taxes was thus not enough to pay the monthly
mortgage installments on the Dunbratton Court house. Nicholson Jr.
must have paid the mortgage, but his only apparent source of
legitimate income was a car washing and detailing service that he
operated.
On June 12, 2003, while law enforcement executed a search
warrant at the family home, Prince George’s County Police Detective
Dennis Hallinger asked Ms. Nicholson several questions about her
ownership of property. Asked whether she had her name on any
property other than her home, Ms. Nicholson indicated that she was
record owner of the house in which her daughter-in-law Cheryl
Nicholson resided, but that Cheryl paid the mortgage on that house.
Hallinger testified that he then asked Ms. Nicholson, “Do you own
24
any other property that you just put in your name for someone else
like you did for Cheryl?.” She said she did not.
II.
A.
Count Twelve of the indictment (the sole count upon which
the jury convicted Ms. Nicholson) charged that Ms. Nicholson
violated the concealment money laundering statute, 18 U.S.C.
§ 1956(a)(1)(B)(I), when she bought the Dunbratton Court house. To
obtain a conviction under § 1956(a)(1)(B)(I) the government must
prove that
(1) the defendant conducted or attempted to conduct a
financial transaction having at least a de minimis effect
on interstate commerce . . .; (2) the property that was
the subject of the transaction involved the proceeds of
specified unlawful activity; (3) the defendant knew that
the property involved represented the proceeds of some
form of unlawful activity; and (4) the defendant knew
that the transaction was designed in whole or part, to
conceal or disguise the nature, the location, the source,
the ownership, or the control of the proceeds of the
unlawful activity.
United States v. Wilkinson, 137 F.3d 214, 221 (4th Cir. 1998)
(citation omitted). The first two elements are undisputed here but
the second two are; each disputed element requires a knowing
mindset. The elements thus require that Ms. Nicholson knew (1)
that buying the house involved proceeds from Nicholson Jr.’s drug
distribution, and (2) that buying the house was a transaction that
25
at least partially was designed to conceal or disguise those
proceeds.
“[W]hen the defendant asserts a lack of guilty knowledge
but the evidence supports an inference of deliberate ignorance,”
the court may instruct the jury on willful blindness. United
States v. Ruhe, 191 F.3d 376, 384 (4th Cir. 1999). The instruction
allows the defendant’s deliberate ignorance of a fact to be treated
as knowledge of that fact, and the government may establish
deliberate ignorance by offering circumstantial evidence. “The
record need not contain direct evidence . . . that the defendant
deliberately avoided knowledge of wrongdoing; all that is necessary
is evidence from which the jury could infer deliberate avoidance of
knowledge.” United States v. Whittington, 26 F.3d 456, 463 (4th
Cir. 1994). In evaluating the propriety of the willful blindness
instruction, “we consider the evidence and any reasonable
inferences in the light most favorable to the government.” Id. at
463 n.6.
We have cautioned district courts, however, that “the
deliberate blindness instruction is only proper in rare
circumstances.” Ruhe, 191 F.3d at 385. And although the majority
correctly notes, ante at [16], that we have allowed juries in money
laundering cases to receive the willful blindness instruction,
United States v. Collins, 372 F.3d 629, 634 (4th Cir. 2004), United
States v. Campbell, 977 F.2d 854, 858-59 (4th Cir. 1992), careful
26
examination shows that those cases are not easily squared with this
one.
B.
In Collins one of the defendants helped finance
burglaries and regularly served as a “fence” who bought stolen
goods with cash and checks; the other assisted with the burglaries
and received part of his share of the ill-gotten gains through
seemingly legitimate payments on his credit card debt. Collins,
372 F.3d at 631-32. The defendants thus played important, direct
roles in the illegal activity that generated the profits they then
helped to conceal. By contrast Ms. Nicholson was neither a direct
participant in nor a direct observer of any drug sale. She also
did not derive any direct profit from any such sale.
The defendant in Campbell was a licensed realtor who,
after spending a good deal of time with the buyer (a drug dealer),
relayed to the sellers the buyer’s proposal to pay $60,000 in cash
under the table and lower the contract price accordingly.
Campbell, 977 F.2d at 855-56. By contrast Ms. Nicholson, a long-
time federal government employee, was not in the business of buying
and selling real estate. As a result, although the government
stressed that there were numerous irregularities in the documents
Ms. Nicholson signed when she bought the Dunbratton Court house,
and that the reported sales price of the house exceeded the price
27
actually paid, this evidence is of little force. Ms. Nicholson,
who was not a realtor by trade, may well have been unaware of the
significance of these irregularities. In addition, while Campbell
involved a huge cash payment that should have by itself been a red
flag for the realtor that something was amiss, less than $8,000 in
cash was tendered at the closing in which Ms. Nicholson
participated. This amount was not so large that it should have
aroused Ms. Nicholson’s suspicions as to the source of that cash.
Finally, the defendant in Campbell did not challenge the
propriety of the willful blindness instruction. See Campbell, 977
F.2d at 857 (“Neither party disputes the adequacy of these
instructions on willful blindness or their applicability to this
case.”) (emphasis added). That obviously limits Campbell’s value
as a precedent because Ms. Nicholson disputes the use of the
instruction in her case.
III.
Other circuits have recognized that fact-intensive
inquiry is particularly important in concealment money laundering
cases, such as this one, which are quite different from the
traditional example of money laundering. “In [money laundering’s]
classic form, the money launderer folds ill-gotten funds into the
receipts of a legitimate business, such as a restaurant or a
concert ticket service (two common destinations). The variations,
28
however, are endless, and it can be difficult to categorize
transactions that deviate from the paradigm.” United States v.
Esterman, 324 F.3d 565, 570 (7th Cir. 2003). It is essential for
us, “even if difficult at times, to ensure that the money
laundering statute not turn into a ‘money spending statute.’” Id.
at 573 (quoting United States v. Sanders, 929 F.2d 1466, 1472 (10th
Cir. 1991). Where, as here, the willful blindness instruction is
applied to the concealment money laundering statute’s requirement
that there be knowledge with respect to two distinct elements of
the crime, our evaluation of the asserted basis for the instruction
must be especially thorough and exacting.
A.
This evaluation reveals that a good deal of evidence the
government points to as supporting the money laundering count is
less pertinent to the critical mental state issues than the
government asserts. I begin with the evidence concerning drug
deals that occurred years after Ms. Nicholson bought the Dunbratton
Court house. This evidence is of negligible value in drawing
inferences about Ms. Nicholson’s awareness of any illegal activity
by Nicholson Jr. before she bought the house. For example, the
government emphasizes the conversation recorded in January 2003
between witness Kenneth Pickens and Nicholson Jr. at Ms.
Nicholson’s home. Ms. Nicholson was present in the room when
29
Pickens and Nicholson Jr. were talking; the conversation led to a
drug deal that day between the men. Nevertheless, this evidence
has little logical relevance to Ms. Nicholson’s knowledge of her
son’s drug dealing when she bought the Dunbratton Court house in
1999, because a criminal conviction requires a defendant to have
the requisite guilty mind at the same instant the defendant is
performing the bad act prohibited by statute. “[I]t is a basic
premise of Anglo-American criminal law that the physical conduct
and the state of mind must concur.” United States v. McDougald,
990 F.2d 259, 263 (6th Cir. 1993) (quoting W. Lafave & A. Scott,
Criminal Law § 3.11, at 268 (2d ed. 1986)). Even if Ms. Nicholson
realized in January 2003 that Nicholson Jr. was selling drugs and
that he arranged to have her buy the house in her name to conceal
his drug profits by making mortgage payments with them, she would
not have been guilty of concealment money laundering because she
would not have possessed the required mindset when she bought the
house in September 1999.
In addition, witness testimony that Nicholson Jr. sold
drugs out of the parental home “since the early 1980s,” Appellee’s
Br. at 52, does nothing to establish Ms. Nicholson’s deliberate
ignorance of those drug sales absent some other evidence that Ms.
Nicholson could have perceived the transactions as they were taking
place. Since she worked during the day, she simply may not have
been home when the drug sales occurred. That her husband and son
30
were drug dealers and that she lived in proximity to them cannot be
enough to rationally impute knowledge of the dealing or even
deliberate ignorance of the dealing to her. “[M]ere association
with those implicated in an unlawful undertaking is not enough to
prove knowing involvement.” McDougald, 990 F.2d at 262 (quoting
United States v. Nusraty, 867 F.2d 759, 764 (2d Cir. 1989)).
Finally, the government exaggerates the import of Ms.
Nicholson’s answers to Detective Hallinger’s questions on June 12,
2003. Ms. Nicholson never told the detective, for example, that
the house was held in Nicholson Jr.’s name rather than her name, or
that she paid the mortgage even though Nicholson Jr. apparently
did. We distinguish such affirmative exculpatory
misrepresentations from denials of guilt. “While general denials
of guilt later contradicted are not considered exculpatory
statements, any other exculpatory statement which is contradicted
by evidence at trial” permits the jury to infer consciousness of
guilt from the demonstrably false alibi. United States v.
McDougald, 650 F.2d 532, 533 (4th Cir. 1981) (per curiam). Ms.
Nicholson’s answers are properly classified as denials of guilt,
not as false exculpatory statements. In addition, since the
government’s theory of the concealment money laundering count is
essentially that Nicholson Jr. used Ms. Nicholson as a straw buyer
for the house, Ms. Nicholson would only have advanced the
transaction’s concealment purpose by holding herself out as the
31
true owner of the house. By tending to deny such ownership, Ms.
Nicholson reduced her effectiveness as a straw buyer. Thus, Ms.
Nicholson’s responses to the detective do not rationally support
the government’s theory.
B.
I now turn to the evidence that rationally supports an
inference that Ms. Nicholson deliberately ignored (1) the source of
the money Nicholson Jr. contributed to the house purchase, and (2)
the design of the purchase as a concealing transaction. As to the
first element, Ms. Nicholson posted bond for her son when state
police arrested him on drug charges in 1995. The jury could
logically conclude that she knew of his drug dealing in 1995, and
that when participating in the house deal in 1999 she deliberately
ignored the illegal source of her son’s money (which he needed to
pay off the $340,726 loan taken out to pay for the house).
As to the second element, the government’s evidence
established a significant discrepancy between Ms. Nicholson’s
annual income as reported on her tax return in 1998 (in particular,
$58,238 in wages plus $3,065 deferred into her retirement fund) on
the one hand, and the amount of money ($340,726) borrowed from
Equicredit to buy the house in 1999 on the other hand. The jury
was entitled to conclude from this discrepancy (and from the bond
posting in 1995) that Ms. Nicholson knew in 1999 that she could not
32
have afforded to buy the house herself and that her son could not
have afforded the house either -- unless he paid with illicit funds
that he wanted to conceal.
The only legal income Nicholson Jr. had was from a car
detailing business, and the jury could have relied on common sense
in concluding that the business simply would not have generated the
amount of money Nicholson Jr. needed each month to pay off the
mortgage. Conversely, if the discrepancy between any legitimate
income source and the value of the house had been very small, it
would have been far more likely that Ms. Nicholson was simply
negligent -- but not deliberately ignorant -- of the transaction’s
concealment aspect. The bond posting and the income-mortgage
discrepancy are not strong pieces of evidence, but we must view
them in the light most favorable to the government. Whittington,
26 F.3d at 463 n.6. In that light there was enough evidence that
Ms. Nicholson was deliberately ignorant to allow the jury to
receive the willful blindness instruction. Accordingly, the
majority is correct in denying Ms. Nicholson a new trial and
affirming her conviction.
IV.
This case is unusual in that it involves a concealment
money laundering prosecution not of Nicholson Jr., the principal,
but of Ms. Nicholson, the third party nominee in the Dunbratton
33
Court house purchase. The willful blindness instruction allowed
the jury to infer her guilty knowledge as to two distinct elements
of the concealment money laundering statute. The basis for the
instruction was ultimately adequate, but I have explained why it
was not nearly as substantial as the government’s brief indicates.
I trust that the government will take care in the future to make a
thorough and exacting inquiry before it requests a willful
blindness instruction in any case, especially a money laundering
case. Any failure to do that would disrespect our warning that the
instruction “is only proper in rare circumstances.” Ruhe, 191 F.3d
at 385.
34