United States v. Richard Meade , 677 F. App'x 959 ( 2017 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 17a0072n.06
Nos. 15-5723/5852
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT FILED
Jan 26, 2017
UNITED STATES OF AMERICA, )
DEBORAH S. HUNT, Clerk
)
Plaintiff-Appellee, )
)
v. )
ON APPEAL FROM THE UNITED
)
STATES DISTRICT COURT FOR THE
RICHARD MEADE and MARK JUSTICE, )
EASTERN DISTRICT OF KENTUCKY
)
Defendants-Appellants. )
)
)
BEFORE: DAUGHTREY, CLAY, and COOK, Circuit Judges.
MARTHA CRAIG DAUGHTREY, Circuit Judge. The convictions in this case arose
from the disguise and resale of stolen motorcycles. A jury found the defendants, Richard Meade
and Mark Justice, guilty of conspiracy to commit money laundering, in violation of 18 U.S.C.
§ 1956(h); concealing the proceeds of unlawful activity, in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i); and possessing vehicle parts with altered vehicle identification numbers
(VINs), in violation of 18 U.S.C. § 2321. The defendants appeal, alleging principally that the
indictment was invalid and that the district court made various errors in the admission and
exclusion of evidence and in the jury instructions. We find no reversible error and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In 2011, federal prosecutors charged the defendants and eight others with conspiring to
commit money laundering. They also charged Meade and Justice with “concealment money
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laundering” and with receiving vehicle parts with altered VINs. The basic facts of the money-
laundering conspiracy are as follows: Greg Chapman and Jason Chapman stole motorcycles
from South Dakota, South Carolina, and Florida, and transported them to Kentucky. These men
and various co-conspirators then worked to hide the fact that the motorcycles were stolen by
finding ways to conceal the VINs and other identifying information. In order to do this, the
Chapmans and their crew would remove the VINs or replace the parts of the motorcycles that
contained identifying information with new or salvaged parts. The purpose of replacing all of
the parts that included identifying information was so the motorcycles could be retitled and
resold.
The Chapmans sold motorcycles to Hertz Car Sales, run by defendant Meade. Meade
then resold and transferred title on these motorcycles. The Chapmans also sold motorcycles to
Midland Motors. Defendant Justice did not own Midland Motors, but the owners of Midland
Motors stored motorcycles on Justice’s property, Justice was involved in approving the sales of
motorcycles, and Justice left envelopes of cash at Midland Motors to pay the Chapmans for the
motorcycles they delivered.
During its investigation, the government relied on several types of information to identify
the stolen motorcycles. If the VIN was not apparent, the investigators looked for confidential
markings located on the motorcycles. This confidential information included “secondary
numbers” and “paint codes.” A secondary number is a unique number located on an undisclosed
part of the motorcycle, for the purpose of identifying the motorcycle in situations, as here, where
the original VIN is no longer intact. A paint code is a different number or marking, which can be
used to identify the date that the motorcycle was manufactured. Harley Davidson maintains a
database with information for all of the motorcycles it manufactures, and once the investigators
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found secondary numbers or paint codes, they used that database to identify the original VIN.
From there, the investigators searched to see if police reports had been filed for a motorcycle
with that VIN.
Prior to trial, seven of the co-conspirators entered guilty pleas to various charges, but
these two defendants (and one other co-conspirator, George Ferguson) went to trial. A central
issue leading up to the trial was whether or not information regarding the secondary numbers and
paint codes, referred to throughout the record as “confidential manufacturer identification
information,” had to be disclosed to the defendants. Based on a case summary prepared by one
of the government experts, Detective Riley, the defendants moved for supplemental discovery of
this information, which the government resisted. The district court granted the defendants’
discovery request, afterwards explaining that the court understood that Riley’s case summary
“defin[ed] the information sought” by the defendants in their discovery request, a
characterization to which the defendants did not object. One category of information that the
court directed the government to produce was “the files and records of Harley-Davidson.” As
explained by the district court, “instead of all the ‘files and records’ of the manufacturers that
might somehow relate to the confidential vehicle identification . . . only those that fell within the
Court’s specific definition as tied to the Riley Affidavit were required to be produced.”
At the close of the proof at trial, the jury found both defendants guilty of the money-
laundering conspiracy (Count 1), Meade guilty of two counts of concealment money laundering
(Counts 3 and 7), and Justice guilty of one count of concealment money laundering (Count 5).
Each defendant was also found guilty of one count of possessing or receiving vehicle parts with
an altered VIN. Meade was sentenced to 24 months in prison, and Justice was sentenced to
18 months.
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DISCUSSION
Sufficiency of the Indictment
We review the sufficiency of an indictment de novo. United States v. Olive, 804 F.3d
747, 752 (6th Cir. 2015). An indictment “must set out all of the elements of the charge[d]
offense” and “must be sufficiently specific to enable the defendant to plead double jeopardy in a
subsequent proceeding, if charged with the same crime based on the same facts.” United States
v. Douglas, 398 F.3d 407, 413 (6th Cir. 2005) (citation omitted) However, if a defendant does
not challenge the indictment until after his or her conviction, which is the case here, the
indictment must be “construed liberally in favor of its sufficiency,” Olive, 804 F.3d at 752
(citation omitted), and “unless the defendant can show prejudice, a conviction will not be
reversed where the indictment is challenged only after conviction unless the indictment cannot
within reason be construed to charge a crime.” United States v. Gatewood, 173 F.3d 983, 986
(6th Cir. 1999) (quoting United States v. Hart, 640 F.2d 856, 857-58 (6th Cir. 1981)).
Specified Unlawful Activity
The defendants argue that the substantive money laundering counts in the indictment
were insufficient because the government did not allege that the properties involved in the
financial transactions were the proceeds of a “specified unlawful activity.” To be guilty of
concealment money laundering, a defendant must have conducted a financial transaction
involving proceeds of a specified unlawful activity. 18 U.S.C. § 1956(a)(1)(B)(i). Specified
unlawful activity includes “any act or activity constituting an offense listed in [18 U.S.C.]
section 1961(1).” 18 U.S.C. § 1956(c)(7)(A). Therefore, in order to prove that the property
involved in a financial transaction constituted proceeds of a specified unlawful activity, the
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government must allege and prove that the property was the proceeds of one of the predicate
offenses listed in § 1961(1).
The indictment clearly stated that the property involved in the financial transaction “was
the proceeds of a specified unlawful activity, that is, the interstate shipment of stolen vehicles.”
This language refers to the criminal offense of transporting stolen vehicles under 18 U.S.C.
§ 2312, which is a qualifying predicate offenses under § 1961(1). The defendants argue,
however, that § 2312 criminalizes only the interstate transportation of vehicles that are known to
be stolen, and because the indictment alleges that the specified unlawful activity was “the
interstate shipment of stolen vehicles,” it fails to allege a specified unlawful activity.
Although not stated explicitly in the briefing, the defendants seem to imply that the
government was required to allege each element of the predicate offense in order to allege
sufficiently each element of § 1956(a)(1)(B)(i); however, they cite no authority for this
proposition, and our precedent indicates that the failure to allege all elements of a predicate
offense does not undermine the sufficiency of the indictment, as long as the indictment properly
gives the defendant notice of the charges and enough information to protect against double
jeopardy. See, e.g. United States v. Kuehne, 547 F.3d 667, 696 (6th Cir. 2008) (finding that an
indictment need not specify the predicate drug-trafficking offense when charging a defendant
with using a firearm during the commission of a drug-trafficking offense under 18 U.S.C.
§ 924(c)(1)); United States v. Paulino, 935 F.2d 739, 750 (6th Cir. 1991) (“Moreover, although
Count III does not list specific predicate acts, it states the time frame in which the acts occurred,
which would satisfy any double jeopardy concerns.”).
The indictment not only alleged each element of the offense intended to be charged—
concealment money laundering—but also protected the defendants against double jeopardy by
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informing them of the timeframe during which the criminal acts were alleged to have taken place
and identifying the criminal act underlying the claim as the interstate transport of stolen
motorcycles. The indictment can be read to allege a crime, especially when liberally construed,
and because the defendants have not specified how the failure to allege each element of the
predicate offense caused them prejudice, reversal is not warranted.
In their reply brief, the defendants also argue that the indictment further failed to state an
offense because the defendants did not participate in the specified unlawful activity listed in the
indictment. However, “[a]n argument raised for the first time in a reply brief will not be
considered by this Court.” Overstreet v. Lexington-Fayette Urban Cty. Gov’t, 305 F.3d 566, 578
(6th Cir. 2002). Additionally, this argument is completely without merit based on the clear
language of the statute. Although 18 U.S.C. § 1956(a)(1)(B)(i) does rely on the occurrence of a
predicate offense, the charged party need not have been responsible or involved in the offense –
they simply had to conduct a financial transaction “knowing that the property involved in [the]
financial transaction represents the proceeds of some form of unlawful activity.” 18 U.S.C.
§ 1956(a)(1) (emphasis added).
Proceeds of the Specified Unlawful Activity
Next, the defendants take issue with the specific type of proceeds identified by the
indictment. As explained above, one element of the crime of concealment money laundering is
that the financial transaction at issue involved the proceeds of a specified unlawful activity. The
indictment specified that, in this case, the proceeds were stolen motorcycles, which the
defendants now argue are not the type of “proceeds” referred to in § 1956(a).
The defendants are wide of the mark in making this argument. They are “not so much
contending that the indictment fails to state an offense, but rather that [they] could not be guilty
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under the statute” because motorcycles are not proceeds. United States v. Anderson, 605 F.3d
404, 412 (6th Cir. 2010). The defendants were free to make this argument at trial, but the
government was also free to charge in the indictment that motorcycles do constitute proceeds for
purposes of the statute, and then to prove this point at trial. “The indictment need only set forth
elements that, if proven, constitute a violation of the relevant statute.” Id. In addition, the
defendants’ arguments as to why motorcycles cannot be proceeds under § 1956 are without
merit. They contend, for example, that “proceeds” refers only to monetary instruments or funds,
and that personal property, such as motorcycles, are not proceeds. The defendants do not cite
case law supporting this proposition, and although the majority of money-laundering cases do
involve proceeds such as cash or monetary instruments, the defendants’ interpretation is at odds
with the clear language of the statute.
First, whereas § 1956(a)(1) criminalizes certain transactions involving “proceeds of
specified unlawful activity,” § 1956(a)(2) criminalizes transactions specifically involving
“monetary instrument or funds.” 18 U.S.C. § 1956(a)(1)-(2). “Where Congress includes
particular language in one section of a statute but omits it in another section of the same Act, it is
generally presumed that Congress acts intentionally and purposely in the disparate inclusion or
exclusion.” Russello v. United States, 464 U.S. 16, 23 (1983) (citation and brackets omitted).
Second, § 1956(b) provides that anyone who conducts a transaction described in § 1956(a) could
be liable to the United States for a civil penalty equal to “the value of the property, funds, or
monetary instruments involved in the transaction,” which indicates that § 1956(a) was intended
to criminalize not only transactions involving funds and monetary instruments but also other
types of proceeds. 18 U.S.C. § 1956(b)(1)(A). Third, Congress defined the term “financial
transactions” as transactions that (1) involve the movement of funds by wire or other means;
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(2) involve one or more monetary instruments, or (3) involve the transfer of title to any real
property, vehicle, vessel, or aircraft. 18 U.S.C. § 1956(c)(4). If the term “proceeds” in § 1956(a)
was meant to refer only to monetary instruments or funds, the third type of financial transaction
defined in the statute would be superfluous. The best interpretation of this statute is that
“proceeds,” as used in § 1956(a), is not limited to monetary instruments and funds, but includes
all property obtained through unlawful activity.
Alternately, the defendants argue that after the Supreme Court’s decision in United States
v. Santos, 553 U.S. 507 (2008), “proceeds” is to be defined as the profits from the specified
unlawful activity. This argument reflects a misunderstanding of our application of Santos in this
circuit.
We have interpreted Santos to hold that “proceeds” means “profits” only when “the
§ 1956 predicate offense creates a merger problem that leads to a radical increase in the statutory
maximum sentence and only when nothing in the legislative history suggests that Congress
intended such an increase.” United States v. Kratt, 579 F.3d 558, 562 (6th Cir. 2009).
A “merger problem” occurs when nearly every violation of the predicate offense would also be a
violation of the money-laundering statute. Olive, 804 F.3d at 756-757. Using the situation in
Santos as an example, “if ‘proceeds’ meant ‘receipts,’ nearly every violation of the illegal-lottery
statute would also be a violation of the money-laundering statute, because paying a winning
bettor is a transaction involving receipts that the defendant intends to promote the carrying on of
the lottery.” Id.
When determining whether “proceeds” should be defined as “profits,” we engage in a
three part inquiry: (1) is there a merger problem? (2) does this problem lead to a radical increase
in the statutory maximum sentence? and (3) does the legislative history fail to show that
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Congress intended the increase? Jamieson v. United States, 692 F.3d 435, 440 (6th Cir. 2012).
“Proceeds” is defined to mean “profits” only when all three questions can be answered
affirmatively. Id. The predicate offense in this case, 18 U.S.C. § 2312, criminalizes
“transport[ing] in interstate or foreign commerce a motor vehicle, vessel, or aircraft, knowing the
same to have been stolen.” Unlike the illegal-lottery statute, defining “proceeds” as gross
receipts rather than profits would not result in a merger between § 2312 and the money-
laundering statute. An individual can transport stolen motorcycles across state lines without ever
engaging in money laundering—this result is true regardless of how “proceeds” is defined.
Because there is no merger issue in this case, the district court was not required to interpret
“proceeds” to mean “profits.”
Conspiracy Count
The defendants argue that Count One of the indictment, which charges the defendants
with conspiracy to commit money laundering under § 1956(h), is insufficient because it
“misstat[es] and selectively incorporate[s] elements from two different statutes, neither of which
would have applied on their own.” Count One alleges that the defendants:
[C]onspire[d] together and with others to knowingly conduct and engage in financial
transactions in criminally derived property, affecting interstate and foreign
commerce, which, as known by the defendants, involved the proceeds of a specified
unlawful activity, that is, interstate shipment of stolen vehicles, knowing the
transaction was designed in whole and in part to conceal and disguise the nature,
location, source, ownership, and control of the proceeds of said specified unlawful
activity, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), all in violation of 18 U.S.C.
§ 1956(h).
The defendants’ argument centers on one phrase included in the indictment: “criminally derived
property.” This phrase is present in § 1957, not § 1956, but the government included it—
admittedly, in error—when describing the money laundering provision that the defendants
allegedly violated. The defendants argue that by including this phrase, the government failed to
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allege that the defendants agreed to commit the crime of money laundering; instead, they say, the
government hybridized § 1956 and § 1957 and alleged that the defendants agreed to commit a
“non-existent offense.”
The defendants appear to believe, mistakenly, that an indictment charging § 1956(h) must
not only allege that the defendants agreed to violate the money-laundering statute but must also
allege each element of the specific money-laundering crime at issue. This position is unfounded,
as “[i]t is well settled that in an indictment for conspiring to commit an offense—in which the
conspiracy is the gist of the crime—it is not necessary to allege with technical precision all the
elements essential to the commission of the offense which is the object of the conspiracy.”
United States v. Reynolds, 762 F.2d 489, 494 (6th Cir.1985) (citing Wong Tai v. United States,
273 U.S. 77, 81 (1927). The indictment must allege that two or more people agreed to commit
some form of money laundering, but the precise elements of the specific money-laundering
crime are not required.
Moreover, in this case the government does allege each element of the specific money-
laundering crime at issue. The crime of concealment money laundering under § 1956(a)(1)(B)(i)
has three elements: (1) that the defendant conducted a financial transaction that involved the
proceeds of a specified unlawful activity, (2) that the defendant knew the property involved was
proceeds of unlawful activity, and (3) that the defendant knew that the transaction was designed
in whole or in part to conceal or disguise the nature, location, source, ownership, or control of
the proceeds of specified unlawful activity. 18 U.S.C. § 1956(a)(1)(B)(i). The indictment
alleges that the defendants conspired to “conduct and engage in financial transactions in
criminally derived property, affecting interstate and foreign commerce, which, as known by the
defendants, involved the proceeds of a specified unlawful activity,” satisfying each of the first
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two elements, and that the defendants knew that “the transaction was designed in whole and in
part to conceal and disguise the nature, location, source, ownership, and control of the proceeds
of said specified unlawful activity,” satisfying the third element. The indictment can be
construed to charge a crime, as it alleges not only the elements of the conspiracy offense, but
also the underlying money-laundering crime.
To succeed in this claim, the defendants must therefore show that inclusion of the phrase
“criminally derived property” in the indictment somehow prejudiced them. The government
argues that this phrase may be ignored as surplusage, but of course not all surplus language is
harmless and non-prejudicial. See Payne v. Janasz, 711 F.2d 1305, 1312 (6th Cir. 1983). “[A]n
analysis of surplus words in an indictment is necessarily a nebulous task which requires us to
speculate as to the effect of semantic irregularities on the trial process.” Id.
Here, the indictment alleged that the defendants knew that the property at issue
constituted the “proceeds of a specified unlawful activity” and also that the defendants knew that
the property was “criminally derived property,” defined by 18 U.S.C. § 1957 as “any property
constituting, or derived from, proceeds obtained from a criminal offense.” 18 U.S.C.
§ 1957(f)(2). The defendants do not explain why alleging that the defendants knew the property
was the proceeds of specified unlawful activity, as well as criminally derived property, was
prejudicial. Based on the definition of the terms, the “proceeds of specified unlawful activity”
likely qualify as “criminally derived property” in the majority of cases. This phrase was not
included in the jury instructions, and because the phrase “did not change the nature of the offense
charged or obscure the other language of the indictment,” the government correctly asserts that it
can be ignored as surplusage. Payne, 711 F.2d at 1313.
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Jurisdiction of District Court
The defendants argue that because the indictment was insufficient, the district court did
not have jurisdiction over these claims. But, as explained above, their arguments about why the
indictment was insufficient are without merit. In addition, defects in an indictment do not
deprive a court of jurisdiction to adjudicate a case. United States v. Cotton, 535 U.S. 625, 630-
31 (2002).
Admission of Police Reports
Next, the defendants contend that the district court violated their rights under the
Confrontation Clause of the Sixth Amendment to the United States Constitution by admitting
police reports into evidence. Generally, we review the district court’s evidentiary rulings for
abuse of discretion, but challenges made under the Confrontation Clause are reviewed de novo.
United States v. Warman, 578 F.3d 320, 345 (6th Cir. 2009). “The Confrontation Clause bars the
admission of testimonial statements of a witness who did not appear at trial unless he was
unavailable to testify, and the defendant had had a prior opportunity for cross-examination.” Id.
at 345-46 (internal quotation marks and citation omitted). To trigger a violation of the
Confrontation Clause, an admitted statement must be testimonial in nature and must be hearsay,
defined as “a statement, other than one made by the declarant while testifying at the trial or
hearing, offered in evidence to prove the truth of the matter asserted.” United States v. Gibbs,
506 F.3d 479, 486 (6th Cir. 2007) (citing Fed. R. Evid. 801(c)). The government introduced
police reports into evidence at trial that memorialized statements by the original owners of the
motorcycles who reported their motorcycles stolen. The defendants argue that those statements
were testimonial hearsay evidence and, therefore, that their admission was a violation of the
Confrontation Clause.
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A statement is testimonial if “a reasonable person would anticipate that his or her
statement would later be used against the accused in investigating and prosecuting the crime.”
Warman, 578 F.3d at 346 (internal quotation marks and citation omitted). Under this standard,
the police reports at issue are undoubtedly testimonial, and the reports could not be offered by
the government to “prove the truth of the matter asserted”—or, in other words, to prove that the
bikes were in fact stolen—absent an opportunity for the defendants to cross-examine the
individual who prepared the reports. However, the admission of a testimonial statement “does
not necessarily trigger a violation of the Confrontation Clause.” Gibbs, 506 F.3d at 486. “In
some circumstances, out of court statements offered for the limited purpose of explaining why a
government investigation was undertaken have been determined not to be hearsay.” Id. (citing
United States v. Martin, 897 F.2d 1368, 1371 (6th Cir. 1990)). “[E]vidence that is provided
merely by way of background or is offered only to explain how certain events came to pass or
why the officers took the actions they did, is not offered for the truth of the matter asserted.”
Warman, 578 F.3d at 346 (internal quotation marks and citation omitted). Hence, statements
offered to “establish[] a foundation for the evidence,” rather than as proof that the crime was
committed, do not violate the Confrontation Clause. United States v. Davis, 577 F.3d 660, 667
(6th Cir. 2009).
In this case, the police reports were offered to support Detective Riley’s testimony, by
which he explained that he and his team identified potentially stolen motorcycles based on
suspicious title and registration documents. To determine the origin of the motorcycles, Riley
would run a search using data from the National Crime Information Center and, if he got “a hit,”
he would call the police agency that filed the police report and request a copy of it. Using the
information on the report, Riley could locate the individual who reported the bike stolen and
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determine whether the bike found in Kentucky matched the description of the lost bike. When
admitted for this purpose, the police reports were not introduced as proof that the motorcycles
were stolen; rather, as the government explained, the reports were offered to “corroborate the
officer’s investigation . . . and reconstruct his investigative chain.” Thus, the district court did
not err in allowing the police reports into evidence for the purpose of detailing the investigation
of the stolen motorcycles.
Admission of Expert Testimony
The defendants argue that the district court erred in allowing three government witnesses
to testify as experts. “We apply the abuse-of-discretion standard in reviewing a district court’s
decision regarding the admissibility of expert testimony.” Best v. Lowe's Home Ctrs., Inc.,
563 F.3d 171, 176 (6th Cir. 2009). “A district court abuses its discretion if it bases its ruling on
an erroneous view of the law or a clearly erroneous assessment of the evidence.” Id. (citing
Brown v. Raymond Corp., 432 F.3d 640, 647 (6th Cir. 2005)).
After a three-day Daubert hearing,1 the district court issued an order qualifying three
government witnesses as experts on “the techniques utilized to complicate and obscure
motorcycle and motorcycle part identification” and “the methods used to uncover their true
identity.” The defendants argue that this qualification was in error because the methodology
employed by the witnesses in identifying motorcycles relied on confidential manufacturer
information that had not been disclosed to the district court or the defendants. Thus, the
defendants argue, the district court was not able to analyze thoroughly the reliability of the
methodology, and the defendants themselves were unable to call other expert witnesses to
dispute the reliability of the methodology at issue.
1
In Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579 (1993), the Supreme Court held that the Federal Rules of
Evidence require the trial court judge to ensure that an expert’s testimony is both reliable and relevant before it may
be admitted.
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In its order qualifying the three witnesses as experts, the district court summarized the
lengthy qualifications of each expert and found that under the Daubert standard, their
methodology was both reliable and relevant. The district court also touched on the defendants’
concern regarding the confidential manufacturer identification information, stating that access to
the confidential information at this point was not a “true cause for concern.” The order
explained that the reliability of the defendants’ methodology was not based solely on their
knowledge of confidential information, but rather on their years of experience in vehicle
identification and, further, that the confidentiality of the secondary numbers bolstered their
ability to identify motorcycles reliably. United States v. Chapman, No. 11-51-GFVT, 2012 WL
6020105 (E.D. Ky. Dec. 3, 2012)
A trial court must have latitude in deciding whether an expert’s testimony is reliable and
in how to test that reliability. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152, (1999).
In this case, the district court spent three days listening to the qualifications of each expert,
learning about their experience in the field, and hearing them defend their methodologies for
vehicle identification. At the beginning of the first day of the hearing, the defendants and their
co-defendants raised the issue of the confidential manufacturer information to the district judge,
who agreed to consider those concerns when determining the reliability of the evidence.
Based on all of the information supplied, which included lengthy discussion of vehicle
identification techniques that did not rely on any confidential information, as well as testimony
about the general role of the confidential manufacturer information in vehicle identification, the
district court found the testimony to be admissible as expert testimony. Moreover, the district
court reminded the defendants that they were permitted to cross-examine the government’s
experts and to present their own experts at trial. Despite the defendants’ challenges, there is no
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evidence that the district court abused its discretion in qualifying the three government witnesses
as experts.
Relatedly, the defendants argue that at trial one of the government’s experts, Detective
Riley, exceeded the scope of his expertise. They contend that despite the district court’s finding
that Riley was a “non-scientific” expert, he offered scientific testimony about “the quality of the
sheet metal upon which he conducted an acid test to attempt to locate an obscured VIN on
Motorcycle 43.” But because the defendants failed to object to this testimony during trial,
review on appeal is for plain error only. See Fed. R. Evid. 103(a); Fed. R. Crim. P. 52(b).
To obtain relief under the deferential plain-error standard of review, “the party
challenging the evidentiary ruling must show that (1) there was an error that (2) was plain,
(3) affected a substantial right, and (4) seriously affected the fairness, integrity, or public
reputation of the judicial proceedings.” United States v. Nixon, 694 F.3d 623, 628 (6th Cir.
2012). Here, the district court qualified Riley to testify on “techniques utilized to complicate and
obscure motorcycle and motorcycle part identification,” which is exactly what Riley was doing
in describing the sheet metal. Riley did not attempt to explain the chemical composition of the
metal or the acid; he simply recounted his observations of a test used to identify vehicles.
This testimony thus falls within the scope of expertise acknowledged by the district court, and no
plain error resulted.
The defendants also challenge the admission of testimony regarding the confidential
manufacturer identification information on constitutional grounds. Because this specific
information was not disclosed to them, the defendants argue that this evidentiary decision
violated their right to confrontation under the Sixth Amendment. The defendants argue that by
not requiring the government experts to testify about the location of the confidential markings on
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each motorcycle, the district court effectively prevented the defendants from confronting the
witnesses against them.
“The applicable standard of review for an evidentiary ruling of the district court where
the evidentiary issues relate to a claimed violation of the Sixth Amendment is the de novo
standard.” United States v. Adams, 722 F.3d 788, 829 (6th Cir. 2013) (citation omitted).
The government experts declined to identify the exact location of the secondary numbers, and
the defendants argue that this refusal prevented them from establishing “that those charged
should not be held accountable for their involvement with stolen motorcycles because they could
not be expected to identify confidential markings confirming that the bike was stolen,” and from
disputing “the accuracy of law enforcement’s conclusions that a particular bike or component
was stolen.” It is not clear why the defendants believe they were prevented from making these
arguments. The government experts provided substantial testimony related to these numbers,
such as which parts of the motorcycles contained the identifiers and which did not and how the
confidential identifiers were used to identify particular motorcycles. The defendants were free to
find holes in the experts’ testimony, undermine their credibility, and establish doubt in the minds
of the jurors. Moreover, as conceded at oral argument, the defense in this case was not that the
motorcycles were not stolen, but that the defendants did not know that they were stolen. As a
result, it is unclear what additional arguments the defendants would have made had they known
the exact location of the numbers on the motorcycles. Because the defendants did have the
opportunity to confront effectively the government witnesses who testified against them, the
district court did not err in allowing the witnesses to testify about the confidential numbers.
Disclosure of Manuals
The defendants next argue that the government’s failure to disclose confidential
manufacturer identification information violated the defendants’ right to due process, citing both
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Rule 16(a)(1)(E) of the Federal Rules of Criminal Procedure, as well as Brady v. Maryland, 373
U.S. 83 (1963). We review a district court’s rulings on Rule 16(a)(1)(E) issues for abuse of
discretion. United States v. Tarwater, 308 F.3d 494, 515 (6th Cir. 2002). “We review de novo
the issue of whether evidence withheld by the prosecution constitutes Brady material.” Id.
As explained above, prior to trial, the defendants moved for supplemental discovery of
certain confidential information related to the government’s methodology for identifying the
stolen motorcycles. The district court granted the motion, explained that the defendants were
seeking “confidential manufacturer identification information,” and defined the scope of what
the court understood the defendants to be requesting. Critically, the district court determined that
the defendants sought information that was used by investigators to identify the stolen
motorcycles at issue in this case. The defendants did not object to the district court’s
characterization of their request.
During the Daubert hearing, Simet, a Harley Davidson employee and expert witness for
the government, detailed his expertise in vehicle identification and mentioned that he had
published a manual of vehicle identification techniques and trained various law enforcement
agencies on the information included in these manuals. The district court determined that these
manuals were not subject to the supplemental discovery order after finding that they had not
been relied on during the investigation at issue. The defendants now contend that the district
court erred by not requiring the government to provide these manuals to the defendants.
Brady Violation
The defendants do not argue that the manuals contain exculpatory information that the
government willfully or inadvertently withheld from them; rather, they insist that failure to gain
access to these manuals prevented them from finding an expert who potentially could identify
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exculpatory information related to the methodology employed by the government in identifying
the motorcycles.
In Brady v. Maryland, the United States Supreme Court held that “the suppression by the
prosecution of evidence favorable to an accused upon request violates due process where the
evidence is material either to guilt or to punishment, irrespective of the good faith or bad faith of
the prosecution.” 373 U.S. at 87. “A Brady violation includes three elements: (1) the evidence
must be favorable to the accused, either because it is exculpatory, or because it is impeaching;
(2) the evidence must have been suppressed by the State, either willfully or inadvertently; and
(3) prejudice must have ensued.” Doan v. Carter, 548 F.3d 449, 459 (6th Cir. 2008) (internal
quotation marks and citation omitted). At this point, the defendants have not identified any
exculpatory evidence that was withheld, either willfully or inadvertently. Consequently, no
Brady violation has occurred.
Federal Rule of Criminal Procedure 16
The defendants also argue that Rule 16(a)(1)(E) of the Federal Rules of Criminal
Procedure required the government to disclose the manuals. The rule states:
Upon a defendant’ s request, the government must permit the defendant to inspect
and to copy or photograph books, papers, documents, data, photographs, tangible
objects, buildings or places, or copies or portions of any of these items, if the item
is within the government’s possession, custody, or control and: (i) the item is
material to preparing the defense; (ii) the government intends to use the item in its
case-in-chief at trial; or (iii) the item was obtained from or belongs to the
defendant.
Fed. R. Crim. P. 16(a)(1)(E).
Based on the language of this rule, at first glance it does seem that the manuals—which
contain general information about how law enforcement goes about identifying stolen
motorcycles—arguably could be useful in preparing a defense. However, the rule clearly
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provides that the defendants must request this information from the government, and because the
government had not relied on the manuals during the investigation, the district court
appropriately determined that the manuals were beyond the scope of the discovery order.
The defendants do not argue that the district court’s summary of the information
requested in their supplemental discovery motions was incorrect or overly narrow. Instead, the
defendants argue that the manuals indeed did fall within the information that the district court
ordered the government to disclose and that the court’s contrary finding was erroneous “because
it incorrectly distinguished between the materials in Harley Davidson’s possession and the
manuals testified to by government experts as containing the same information.” However, the
district court found that the “materials in Harley Davidson’s possession” subject to the discovery
order were limited to the information in the company’s database, and there is no support for the
defendants’ conclusory statement that the manuals were discoverable because they were “copies”
of the identification information stored in the database. The minimal amount of testimony
related to the manuals indicates that that they contained general vehicle identification
information meant to assist law enforcement with vehicle recovery, not specific identification
information for each manufactured Harley Davidson motorcycle.
The district court did not abuse its discretion in defining the scope of the defendants’
motion for supplemental discovery or in finding that the manuals were not included within the
scope of that request. This allegation of error is thus without merit.
Exclusion of Witness Testimony
Defendant Meade alone contends that the district court abused its discretion in excluding
the testimony of co-conspirator Jason Chapman, who had already pleaded guilty to conspiracy to
commit money laundering. Outside the presence of the jury, counsel for the defense asked
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Chapman if Meade knew that the motorcycles at issue were stolen, and Chapman responded,
“No, he did not.” The government then attempted to ask Chapman several follow-up questions,
such as how many motorcycles Chapman stole, where he brought the stolen motorcycles, and
whether he faked or forged documents in titling the motorcycles that he took to the defendants.
Chapman invoked his Fifth Amendment right against self-incrimination and declined to answer
each of the questions asked by the government. Based on Chapman’s refusal to respond to any
of the government’s questions, the district court excluded his testimony from the trial.
A district court’s decision to exclude evidence is reviewed for abuse of discretion.
United States v. Baldwin, 418 F.3d 575, 579 (6th Cir. 2005). Under that standard, we will
reverse an evidentiary ruling only if we are firmly convinced of a mistake that affects substantial
rights and amounts to more than harmless error, such as a district court reliance on incorrect
findings of fact or improperly applied the law. See id. In deciding whether to exclude
Mr. Chapman’s testimony, the district court relied heavily on an unpublished opinion from this
court, United States v. Coleman, 453 F. App’x 640 (6th Cir. 2011). In Coleman, we held that it
was not an abuse of discretion for a district court to exclude testimony from a prospective
witness for the defense when the witness invoked her Fifth Amendment right against self-
incrimination during the prosecution’s cross-examination. Id. at 644. We explained that “one of
the legitimate demands of the adversary system is the right of cross-examination” and found that
the district court was within its discretion to exclude witness testimony because “its admission
would unduly prejudice the prosecution.” Id. The district court read from the Coleman decision,
explained that “the government has to be able to test that assertion and the credibility of the
witness with regard to that particular statement,” and concluded that it would not “allow the
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defense to call Mr. Chapman who is going to refuse to answer any questions posed on cross-
examination.”
Although Chapman’s testimony is undeniably relevant to the issue at hand, Rule 403 of
the Federal Rules of Evidence allows the district court to exclude relevant evidence if its
probative value is substantially outweighed by a danger of unfair prejudice or of misleading the
jury. See Fed. R. Evid. 403. Although the probative value of Chapman’s statement is potentially
strong, the admission of this kind of statement without any cross-examination to help the jury
determine the strength of the statement and the credibility of the witness has a great risk of
misleading the jury and unfairly prejudicing the prosecution. “Broad discretion is given to
district courts in determinations of admissibility based on considerations of relevance and
prejudice, and those decisions will not be lightly overruled.” United States v. Dixon, 413 F.3d
540, 544 (6th Cir. 2005) (internal quotation marks and citation omitted). We find no abuse of
discretion in the district court's ruling on this matter.
Sufficiency of Evidence for Count 5
A heading in the defendants’ brief states that a “lack of federal jurisdiction barred Mr.
Justice’s prosecution for counts 1 and 5 and Mr. Meade’s in counts 1, 3, 7, and 8,” but the body
of the argument discusses only the perceived jurisdictional problem for Count 5 against Justice.2
The text contains no reference to the other counts, no explanation of why jurisdiction did not
exist as to the other counts, and no argument as to the sufficiency of the evidence for those
counts. “[I]ssues adverted to in a perfunctory matter, unaccompanied by some effort at
2
Although the argument concerning Count 5 applied only to the charge against Justice, the analysis of the claim
actually appeared only in the appellate brief filed by Meade and is not mentioned in Justice’s brief. However, the
latter brief does include a statement that Justice “joins” in Meade’s brief and “adopts the arguments presented” in
that brief.
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developed argumentation, are deemed waived.” United States v. Layne, 192 F.3d 556, 566 (6th
Cir. 1999)) (citing McPherson v. Kelsey, 125 F.3d 989, 995-996 (6th Cir. 1997)).
As to Count 5 against Justice, the defendants argue that the district court should have
dismissed the charge for lack of jurisdiction because the government did not prove that the
financial transaction at issue had an effect on interstate commerce, as required by the statute.
However, we have specifically explained that an interstate commerce element, although often
referred to as a “jurisdictional element,” is “not jurisdictional in a sense that it deprives the
district court of subject matter jurisdiction.” United States v. Turner, 272 F.3d 380, 390 (6th Cir.
2001) (finding that the failure to prove nexus between the crime and interstate commerce did not
strip the federal court’s jurisdiction); see also United States v. Rayborn, 312 F.3d 229, 231 (6th
Cir. 2002). The defendants’ interstate-commerce argument is better characterized as an
argument against the sufficiency of the evidence, and we review it as such.
To preserve properly a sufficiency-of-the-evidence issue for appeal, “the defense must
make a motion for a judgment of acquittal at the end of the prosecution’s case-in-chief and at the
close of evidence.” United States v. Sease, 659 F.3d 519, 522 (6th Cir. 2011) (internal quotation
marks and citation omitted). The defendants properly moved for judgment of acquittal as to
Count 5. Specificity is not required, but “where the defendant makes a Rule 29 motion on
specific grounds, all grounds not specified in the motion are waived.” United States v. Chance,
306 F.3d 356, 369 (6th Cir. 2002). The defendants’ motions for judgment of acquittal raised
sufficiency-of-evidence concerns and specified certain elements that had not been sufficiently
proven, but they made no argument about the interstate commerce element.
The standard of review for a properly preserved challenge to the sufficiency of the
evidence is “whether, after viewing the evidence in the light most favorable to the prosecution,
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any rational trier of fact could have found the essential elements of the crime.” Kuehne,
547 F.3d at 696 (internal quotation marks and citation omitted). If the challenge was not
properly preserved, as here, the challenge “is reviewed under a manifest miscarriage of justice
standard.” Id. Under either standard, the defendants’ argument fails.
The defendants argue that Justice’s convictions were based on the title transfer of a
motorcycle, identified as Motorcycle #43 throughout the trial, and that the government failed to
prove that the transaction involving that motorcycle had any effect on interstate commerce.
However, as the government points out, Count 5 was actually based on Motorcycle #19, a 1997
Harley Davidson black and grey Heritage Softail, not Motorcycle #43. The government
presented sufficient evidence to support a finding that the titling transaction of Motorcycle 19
had at least a de minimus effect on interstate commerce: the bike was stolen in Florida,
transported to Kentucky, reassembled with parts from a company in California, and retitled in
Kentucky. Given this proof, there is no manifest miscarriage of justice, and the evidence is
sufficient for a rational trier of fact to have found that the transaction affected interstate
commerce. The sufficiency-of-the-evidence challenge is thus without merit.
Propriety of Jury Instructions
The defendants argue that the district court made three errors when instructing the jury by
failing to include a good-faith instruction, by included a deliberate-indifference instruction, and
by incorrectly defining the term “proceeds.” To preserve a challenge to a jury instruction, a
party “must inform the court of the specific objection and the grounds for the objection”; absent
plain error, the failure to make such an objection precludes appellate review. Fed. R. Crim. P.
30(d). Of the errors alleged here, only the first was properly preserved.
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The defendants waived their challenge to the deliberate-indifference instruction by
inducing the error of which they now complain. They specifically proposed that pattern jury
instruction 2.09, the deliberate-indifference instruction, be included in the jury instructions.
“According to the invited error doctrine, when a party has himself provoked the court to commit
an error, that party may not complain of the error on appeal unless that error would result in
manifest injustice.” United States v. Demmler, 655 F.3d 451, 458 (6th Cir. 2011) (applying the
invited-error doctrine to a challenged jury instruction). Because instructing the jury on deliberate
indifference did not result in “manifest injustice,” we decline to review the challenge to the
deliberate-indifference instruction.
Because the defendants failed to object to the definition of “proceeds” at trial, we may
review the claim on appeal for plain error only. The defendants appear to argue that the
definition of “proceeds” was incorrect because it did not consider the Santos decision, under
which “proceeds” are at times defined as profits. But, as we explained above, Santos is
inapplicable in this case, and there is no error, plain or otherwise, in the definition of “proceeds”
used in the jury instructions.
The defendants did preserve their challenge to the denial of a good-faith jury instruction,
which we review for an abuse of discretion. United States v. Theunick, 651 F.3d 578, 589 (6th
Cir. 2011). We may reverse the denial of a good-faith instruction “only if the proposed
instruction is (1) a correct statement of the law, (2) not substantially covered by the charge
actually delivered to the jury, and (3) concerns a point so important in the trial that the failure to
give it substantially impairs the defendant’s defense.” United States v. Volkman, 797 F.3d 377,
385 (6th Cir. 2015), cert. denied, 136 S. Ct. 348 (2015) (internal quotation marks and citation
omitted). Generally, a good-faith instruction is appropriate when fraud or other specific-intent
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crimes are being charged, because a finding of good faith is incompatible with a required finding
of bad faith. See United States v. Wall, 130 F.3d 739, 746 (6th Cir. 1997) (“Since mail fraud is a
specific intent crime . . . , good faith is a complete defense to that crime.”)
Here, however, the defendants are not charged with a specific-intent crime. They are
charged with conducting a financial transaction, knowing that the property involved in the
transaction was the proceeds of unlawful activity, and knowing that the transaction was designed
to conceal or disguise that property. The defendants do not offer any authority for why a good-
faith defense is appropriate in this situation. Further, because the jury instructions adequately
informed the jury of the mens rea element actually at issue, an additional instruction on good
faith was unnecessary and likely would have resulted confusion if it had been given. Because
the defendants have failed to demonstrate that a good faith instruction was appropriate in this
case, and because the instruction was substantially covered by the charge given to the jury, the
district court did not err in declining to give a good-faith instruction to the jury.
Juror Bias
During the trial, the district judge notified counsel that one of the jurors had mentioned
feeling uncomfortable due to being “stared down” by Justice and that this statement had been
“kind of confirmed by other jurors.” Additionally, more than one juror reported to a court
security officer that they felt uncomfortable walking to their cars at night because the defendants
parked their cars near where the jurors parked. However, no juror reported any attempted or
actual communication or physical contact or intimated that his or her impartiality was
compromised. Nevertheless, the defendants moved for a mistrial. The district court denied the
motion and issued a memorandum explaining why the situation did not merit a mistrial or even a
Remmer hearing. On appeal, the defendants argue that the district court erred by “not conducting
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a Remmer hearing or permitting any additional investigation or presentation of evidence . . . on
the issue of juror bias.”
In Remmer v. United States, the Supreme Court explained that “[i]n a criminal case, any
private communication, contact, or tampering directly or indirectly, with a juror during a trial
about the matter pending before the jury is, for obvious reasons, deemed presumptively
prejudicial,” and that if such contact or tampering is suspected, the trial court should “determine
the circumstances, the impact thereof upon the juror, and whether or not it was prejudicial, in a
hearing with all interested parties permitted to participate.” 347 U.S. 227, 230-231 (1954).
However, “not all communications with jurors warrant a hearing for a determination of potential
bias” and trial courts are generally required to conduct Remmer hearings “only in cases involving
claims of intentional improper contacts or contacts that had an obvious potential for improperly
influencing the jury.” United States v. Frost, 125 F.3d 346, 377 (6th Cir. 1997) (internal
quotation marks and citation omitted). We review the district court’s decision not to hold a
hearing for abuse of discretion. See id.
In explaining why a hearing was not necessary in this case, the district court first
addressed the parking lot concerns. The district court found that no intentional contact had
occurred and that “jurors’ understandable preference for not seeing a defendant outside of court
does not mean that when that preference goes unrealized, unfair influence follows. This sort of
de minimis unintentional contact is well below the threshold at which a court should hold a
hearing.” In regard to the jurors’ comments about being “stared down,” the district court cited
United States v. Owens, in which we held that a juror’s perception that a defendant was staring at
her did not constitute extraneous influence. 426 F.3d 800, 805 (6th Cir. 2005). In Owens, we
noted that “[w]hen a defendant stares at a juror during the course of his trial . . . he has
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introduced no outside contact with, nor special information about, a party or witness.” Id. We
noted that “[t]o hold otherwise . . . is to create incentives for a defendant to make his or her jury
uncomfortable.” Id. Based on these considerations, the district court decided that the
circumstances presented in this matter did not warrant a Remmer hearing. Nothing in the district
court’s analysis constitutes an abuse of discretion.
Restitution
Defendant Justice challenges the district court’s order that he provide restitution to the
victims of the crimes. Under the Mandatory Victims Restitution Act (MVRA), restitution must
be made for offenses against property in which an identifiable victim has suffered a pecuniary
loss. 18 U.S.C. § 3663A(c)(1)(a). The MVRA defines “victim” as “a person directly and
proximately harmed as the result of the commission of an offense for which restitution may be
ordered,” 18 U.S.C. § 3663A(a)(2), and “the legislative history of the MVRA makes clear that
Congress did not intend to make defendants liable for losses they did not proximately cause.”
United States v. Church, 731 F.3d 530, 538 (6th Cir. 2013). Justice was convicted of money
laundering and engaging in a conspiracy to money launder, and the government determined that
these offenses were a direct and proximate cause of the harm resulting from the theft and
laundering of 11 motorcycles. Based on the harm associated with these crimes, the government
calculated that Justice owed $219,850.39 in restitution. Justice argues that this restitution
amount is erroneous because only one of the 11 stolen motorcycles could be connected to his
actions. We review the amount of a restitution award for abuse of discretion. United States v.
Boring, 557 F.3d 707, 713 (6th Cir. 2009).
Justice contends that “[he] was involved with the titling of only one bike, Motorcycle
43,” implying that he could be the “direct and proximate cause” of the harm caused to the
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victims only if he was personally responsible for improperly titling the stolen motorcycles.
The district court found, however, that the government appropriately attributed each of the
11 motorcycles to Justice. First, the district court concluded that Justice was clearly a direct and
proximate cause of the harm to the owner of Motorcycle 19, based on the fact that his connection
to the reassembly and falsified purchase order for Motorcycle 19 had been extensively litigated
at trial. Moreover, the remaining nine motorcycles were properly attributed to Justice because
Midland Motors had titled those motorcycles, and Justice was connected to Midland Motors.
Even though Justice argued that his connection was too tenuous to support liability, the district
court found “unmistakable evidence of Justice’s direct involvement in the sale of the stolen bikes
through Midland Motors” based on the following facts: Midland Motors was located in a garage
on Justice’s property, Justice attended a trade show as a representative of Midland Motors, and
Justice was present when people bought motorcycles from Midland Motors. The district court
found that Justice’s testimony denying any connection to Midland Motors was “implausible” and
“patently contradicted.” Based on these findings, the district court acted within its discretion
when it found that Justice, through his participation in Midland Motors, was a direct and
proximate cause of the harm resulting from stolen motorcycles that were titled and resold by
Midland Motors.
In imposing sentence upon Justice, the district court did not address specifically the
ramifications of Justice’s conspiracy conviction. Nevertheless, the government correctly points
out that not only can Justice be held responsible for harm that he directly and proximately
caused, but he also can be held responsible for harm that resulted from the money-laundering
conspiracy. “[U]nder the MVRA, if someone is convicted of a conspiracy, the court can order
restitution for damage resulting from any conduct that was part of the conspiracy and not just
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from specific conduct that met the overt act requirement of the conspiracy conviction.” United
States v. Elson, 577 F.3d 713, 723 (6th Cir. 2009) (internal quotation marks and citation
omitted); see also United States v. Bogart, 576 F.3d 565, 576 (6th Cir. 2009).
For the first time on appeal, Justice challenges the government’s plan to convert
forfeiture funds to restitution in a process called “remission.” This argument is based on
comments made by the government at the restitution hearing, in reference to the fact that many
defendants entered plea deals for forfeiture amounts greater than the amount of restitution they
were later calculated to owe. As the government explains, remission is inapplicable to Justice
because, unlike the defendants who entered plea deals, he is not subject to a forfeiture money
judgment. Therefore, this argument is without merit.
CONCLUSION
For the reasons set out above, we AFFIRM the judgment of the district court.
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