United States v. Schalk, Steven A. ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-2142
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
STEVEN SCHALK,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Central District of Illinois.
No. 05 CR 30026—Jeanne E. Scott, Judge.
____________
ARGUED OCTOBER 31, 2007—DECIDED FEBRUARY 12, 2008
____________
Before EASTERBROOK, Chief Judge, and BAUER and
WILLIAMS, Circuit Judges.
BAUER, Circuit Judge. Defendant-Appellant Steven
Schalk brings this appeal, challenging various eviden-
tiary rulings made during his jury trial in the district
court. In particular, Schalk argues that the district court
erred by allowing the government to introduce hearsay
to bolster its cooperating witnesses’ testimony, and that
the evidence presented failed to prove that Schalk con-
spired to distribute more than five kilograms of cocaine,
such that no reasonable jury could find Schalk guilty of
that crime. We AFFIRM in toto.
2 No. 06-2142
I. Background
Schalk was a drug dealer in the Chicagoland area. He
regularly sold large quantities of marijuana and cocaine
to Joshua Sowers, who in turn, sold smaller but still
substantial quantities of cocaine to Michael Meneghetti.
Sowers and Meneghetti lived in the Springfield, Illinois
area.
In a typical transaction, Meneghetti paid Sowers $900
per ounce of cocaine, and Meneghetti would keep the
profits made by his resale. However, when Meneghetti
ran into financial difficulties, Sowers agreed to sell the
cocaine to him for $780 per ounce, which was “at cost”
according to Sowers. At times, Sowers “fronted” the
cocaine to Meneghetti and Meneghetti paid Sowers later.
Meneghetti knew Sowers’s drug supplier was a man
named Steve (who turned out to be the defendant, Steven
Schalk), whom Meneghetti had met on three separate
occasions.1 During two of the meetings with Schalk,
Meneghetti witnessed Sowers give Schalk bags of money
and Schalk give Sowers significant amounts of cocaine.
Meneghetti never had any direct agreement with Schalk
to sell or distribute cocaine.
In January 2005, Meneghetti was arrested for delivery
of cocaine. In an effort to “help himself,” Meneghetti
contacted an agent with the Drug Enforcement Agency
(“DEA”), Tom Bonnett. Agent Bonnett provided Meneghetti
with a device that enabled him to record telephone con-
versations with Sowers, from whom he claimed to have
1
In June 2004, Meneghetti also drove with Sowers to Schalk’s
mother’s house in Lake Villa, Illinois, where Sowers went into
the house with a bag containing at least $10,000 and came out
with an encyclopedia-sized brick of cocaine. Schalk was not
present for the actual exchange.
No. 06-2142 3
been purchasing about two or three ounces of cocaine
each week for about eight months.
Meneghetti began taping phone conversations with
Sowers immediately. The first taped conversation took
place on January 21, 2005, and included references to
Sowers’s plan to meet with an unnamed man, and con-
cerns that the unnamed man might tell Sowers to meet
him halfway. In another call later that day, Sowers said
that the man was on his way and would be there by noon,
but that he was not answering his phone, since the man
did not want “to talk on his phones like that anyway.”
Meneghetti said that he had “people waiting,” to which
Sowers responded, “Trust me, dog. I’m trying to get this
to you as fast as [I] can so you can get this debt paid off.”
A few days later, Monday, January 24, 2005, Meneghetti
taped more conversations. After he avoided Sowers for
two days, Meneghetti was told by Sowers that his unavail-
ability created a “hell of an inconvenience for [him]” and
caused him to get his “ass chewed.” When Meneghetti
said that he could deliver $1,000 to Sowers that day and
more on Friday, Sowers asked, “You got anybody with,
anybody wanting some right now with money up front?” In
a subsequent call that day, Sowers again told Meneghetti
that he “got [his] ass chewed ‘cause of [him],” to which
Meneghetti replied, “Steve was pissed?” Sowers’s re-
sponse was unintelligible.
Later that same day, Meneghetti recorded a conversa-
tion that took place in Sowers’s bedroom. During that
conversation, Sowers confirmed that “Steve” was going
out of town, and that he had to “meet [Steve] tomorrow
with whatever [he] can get.” Meneghetti asked Sowers
if he was going to “be out” the whole time Steve was gone,
to which Sowers replied, “I’ll have some for you. Oh yeah,
that’s why I’m meeting him Wednesday.”
4 No. 06-2142
On Wednesday, January 26, 2005, Sowers drove to a
restaurant where he met Schalk. In the parking lot,
Sowers gave Schalk $9,000 and Schalk gave Sowers
eleven ounces of cocaine. After that meeting, police
followed Sowers until he exited the highway, where they
arrested him and found the cocaine in the center console of
his car. He consented to a search of his house, where DEA
agents found an ounce of cocaine, twenty-three pounds of
marijuana, and two notebooks in which Sowers recorded
his drug transactions.
After his arrest, Sowers entered into an agreement
with the government, promising to assist law enforce-
ment in the investigation and prosecution of Steve Schalk
with an expectation of leniency for himself later. Sowers
told police that he began dealing drugs with Schalk
sometime in 2003. He said that initially Schalk just
gave him marijuana to sell, but after a couple of
months, Schalk also started fronting him cocaine after
Sowers told him that he “could sell it.” As Schalk found
out, Sowers proved to be truthful, and the two reached an
agreement that Schalk would front Sowers drugs, and
Sowers would pay for the drugs after he sold them. Sowers
estimated that he received approximately twenty to
thirty pounds of marijuana at a price of $1,600 per pound,
and nine to eighteen ounces of cocaine at $780 per ounce,
every two weeks between August 2003 and his January 26,
2005 arrest.2 According to Sowers, he and Schalk kept
track of these transactions using ledger books, which they
regularly updated to reflect only Sowers’s outstanding
debts. At the time of his arrest, Sowers said he owed
Schalk $140,000.
2
Sowers said there was a single one-month gap during which
he did not receive any drugs from Schalk.
No. 06-2142 5
Like Meneghetti, Sowers allowed police to record his
conversations with Schalk. On February 9, 2005, Sowers
recorded a meeting with Schalk at a Normal, Illinois
restaurant. The two men discussed Sowers’s debt to
Schalk. During that discussion, Sowers referred to their
“books” and said he owed “one hundred and fifty grand,” to
which Schalk responded, “Yeah, it’s up there. . . . That’s
about where I’m at.” At that meeting, Sowers gave
Schalk $3,000 (which the DEA had provided) and told
him that he could deliver another $15,000 or $20,000 in a
couple of days. The two men agreed to meet again in a few
days, and Schalk said “[T]he main thing is . . . you just
gotta get this money. . . . [W]rite down how much you’re
short, you know what I’m saying? Go through . . . your
books and see what people you know. . . .”
Sowers and Schalk met again on February 11, 2005 at
a restaurant in Coal City, Illinois. At that meeting,
Sowers wore a hidden recorder and brought with him
fifteen stacks of bills, packaged to look like $15,000.
During the meeting, Schalk said “You wanna take the ride
up; I got some put away.” Sowers said he was not “gonna
drive” (apparently to Chicago) for “three or four ounces.”
Sowers told Schalk he should have brought his book
with him, and Schalk replied that his “notepad” had
“three sheets” that “showed what the numbers are.” Schalk
also said “When I come down Sunday, I’ll rip paper;
I’ll [write] exactly what it is. . . . Get that number; yeah,
erase everything but that.” Sowers and Schalk then left
the restaurant and Sowers reached into his truck for the
$15,000 for Schalk, and DEA agents arrested them both.
After Schalk’s arrest, DEA agents executed a search
warrant at Schalk’s mother’s house. The agents found a
combination safe in a bedroom closet that contained the
$3,000 that Sowers had given Schalk two days prior and
a notebook that contained account ledgers. The agents
compared the figures in Schalk’s notebook with Sowers’s
6 No. 06-2142
notebook, and noticed that a three-page ledger labeled “Jo”
had many similar (if not identical) entries. The number
“99385” appeared at the beginning of the “Jo” ledger in
Schalk’s notebook and Sowers’s notebook. Both ledgers
contained, in the same order, seven identical entries, each
of which were evenly divisible by 780: the price that Schalk
charged Sowers per ounce of cocaine.
Both notebooks also contained ten identical subtrac-
tions in virtually the same order, which corresponded to
payments made to Schalk by Sowers. The last addition
and subtraction to Schalk’s notebook read “8580” and
“3000,” respectively, which reflected the price of eleven
ounces (11 x 780 = 8580) of cocaine sold to Sowers on
January 26, 2005 and Sowers’s payment of $3,000 to
Schalk on February 9, 2005. In total, both notebooks
reflected transactions for approximately ninety pounds of
marijuana and 4.65 kilograms of cocaine sold by Schalk
to Sowers during the period covered by the notebooks.
A grand jury indicted Schalk on one count of conspiracy
to distribute marijuana and five or more kilograms
of cocaine, in violation of 21 U.S.C. §§ 841(b)(1)(A) and 846.
Schalk pleaded not guilty and exercised his right to a jury
trial.
In pre-trial motions, Schalk moved in limine to exclude
from evidence both sets of recorded conversations, as
well as Sowers’s drug ledgers.3 Schalk sought to exclude
the recordings on hearsay grounds. The government
responded that Meneghetti’s statements were admissible
for the context of Sowers’s statements, and Sowers’s
statements were admissible because he was a co-conspira-
tor with Schalk. As for the conversations between Sowers
3
Those motions did not seek to exclude Schalk’s own statements
from the recorded conversations.
No. 06-2142 7
and Schalk, the government argued that Sowers’s state-
ments on those tapes were admissible for context only.
Schalk also moved in limine to exclude Sowers’s drug
ledgers, arguing that they were irrelevant and unfairly
prejudicial. The government stated that it could establish
at trial through the requisite foundation that the ledgers
were admissible under the “business records” exception
to hearsay. The district court denied all of Schalk’s mo-
tions, and the case proceeded to trial.
At trial, the government called ten witnesses, includ-
ing Meneghetti and Sowers. During the government’s case-
in-chief, the district court admitted, over Schalk’s con-
tinuing objection, the audio recordings of Meneghetti’s
conversations with Sowers and Sowers’s conversations
with Schalk. The government also presented for identifica-
tion the two notebooks found at Sowers’s house, but the
government did not move to admit them into evidence.
During Schalk’s cross-examination of DEA Agent Bonnett,
the government and Schalk jointly moved to admit the
notebooks into evidence, and the court admitted them. The
government also moved to admit the notebook found in
the safe at Schalk’s mother’s house; Schalk’s counsel
stated on the record that he did not object to the ad-
mission of the three pages of Schalk’s notebook which
reflected his transactions with Sowers, and the court
admitted into evidence that notebook as well.4
The jury found Schalk guilty as charged. The jury
also found by special verdict that Schalk conspired to
distribute at least five kilograms of cocaine. On April 19,
4
Schalk’s attorney stated that he agreed to the notebook’s
entry into evidence, but subject to the limitation that the jury
only see the three pages of the notebook that reflected transac-
tions with Sowers, and not any other customers uninvolved in
the charged conspiracy.
8 No. 06-2142
2006, the district court imposed a sentence of 240 months’
imprisonment, followed by ten years’ supervised release.
Schalk timely appealed.
II. Discussion
On appeal, Schalk argues that the district court erred
by allowing the government to introduce unreliable and
unfairly prejudicial hearsay to bolster Meneghetti and
Sowers’s testimony against Schalk by (1) admitting the
recorded conversations between Meneghetti and Sowers,
and Sowers and Schalk; and (2) admitting Sowers’s drug
ledgers. Schalk’s brief is unclear as to which ledgers he
feels were improperly admitted into evidence. Because
Schalk did not move in limine to prevent the admission of
Schalk’s own drug ledger, and because he affirmatively
stated at trial that he had no objection to its admission,
any potential argument regarding Schalk’s drug ledger
is waived. See United States v. Redditt, 381 F.3d 597,
602 (7th Cir. 2004) (when attorney affirmatively states
that he does not object to the admission of evidence, he
has waived any right to appellate review of such admis-
sion); United States v. Pittman, 319 F.3d 1010, 1012 (7th
Cir. 2003) (same).
We review the district court’s evidentiary rulings
regarding alleged hearsay for abuse of discretion. United
States v. Robbins, 197 F.3d 829, 837 (7th Cir. 1999). We
shall not overturn erroneous evidentiary rulings if the
error is harmless. United States v. Prude, 489 F.3d 873,
877 (7th Cir. 2007); United States v. Chavis, 429 F.3d 662,
667 (7th Cir. 2005).
A. The Taped Conversations
Schalk first challenges the district court’s admission of
the taped conversations between Meneghetti and Sowers
No. 06-2142 9
and between Sowers and Schalk. Schalk contends that
in both sets of audio recordings, one of the participants
in the conversation was no longer a co-conspirator (having
become a government informant), and therefore the
conversations were not had “in the course and in further-
ance of the conspiracy.” Schalk also claims that the
statements made by the co-conspirator during those
recorded conversations amounted to nothing more than
“idle chatter,” which did not seek to further the con-
spiracy, as required for admission. Schalk also contends
that any useful information elicited from these recordings
was stated by the informant and is inadmissible.
In order for a statement made by a member of a conspir-
acy to be admissible against other members of the conspir-
acy under Rule 801(d)(2)(E), the government must prove by
a preponderance of the evidence that (1) a conspiracy
existed; (2) the defendant and the declarant were mem-
bers of the conspiracy; and (3) the statement was
made during the course and in furtherance of the conspir-
acy. United States v. Powers, 75 F.3d 335, 339 (7th Cir.
1996) (citing United States v. Stephenson, 53 F.3d 836,
842 (7th Cir. 1995)). A government informant’s statements
are not admissible under Rule 801(d)(2)(E) because he
cannot be a conspirator; however, they are admissible if
they provide context or were adopted by the conspirator
during the course of the conversation. United States v.
Woods, 301 F.3d 556, 561 (7th Cir. 2002); United States v.
Gajo, 290 F.3d 922, 930-31 (7th Cir. 2002).
1. Conversations Between Meneghetti and
Sowers
As noted above, Schalk argues that the statements
recorded during Meneghetti and Sowers’s conversations
were not in furtherance of the conspiracy. We disagree.
During those conversations, Meneghetti and Sowers
10 No. 06-2142
discussed Sowers’s plans to meet with an unnamed man,
the possibility of having to meet that man halfway, and
Sowers’s intentions to get the cocaine to Meneghetti as
quickly as possible so that Meneghetti could pay off his
debt to Sowers. During the January 24, 2005 conversa-
tions, Sowers asked if Meneghetti had anyone that
wanted to buy the cocaine right now with money up front,
and how much money Meneghetti could get to Sowers
that week. They also talked about Schalk leaving town
and Sowers’s plans to meet him to stock up while he was
gone. These statements are not “idle chatter,” but are
discussions about supply, demand, transportation, and
finances directly related to and in furtherance of the drug
conspiracy. See, e.g., United States v. Powers, 75 F.3d
335, 339 (7th Cir. 1996) (discussions about directions to
pick up drugs or money to pay for drugs were necessary
for the actual conspiracy to distribute drugs, and thus
were “in furtherance of the conspiracy”); United States v.
Stephenson, 53 F.3d 836, 845 (7th Cir. 1995) (statements
made to keep others informed of or confident in the alleged
conspiracy “further the conspiracy”).
Schalk also argues that he and Meneghetti never had
an agreement to distribute cocaine. This argument is
irrelevant because Meneghetti’s statements were not
admitted as those of a co-conspirator under Rule
801(d)(2)(E). Meneghetti’s statements, as a government
informant during these conversations, were not ad-
missible for their truth, but were admissible for the
context they provided for Sowers’s statements.
Meneghetti’s statements were thus properly admitted.
Next, Schalk appears to argue that Sowers’s state-
ments to Meneghetti are inadmissible hearsay because
“Sowers became an informant shortly after Meneghetti
recorded him.” This argument is not only frivolous, but
in fact acknowledges that Sowers was still a party to the
drug distribution conspiracy at the time of his conversa-
No. 06-2142 11
tions with Meneghetti, as further evidenced by Schalk’s
distribution of eleven ounces of cocaine to Sowers two
days after the last conversation taped by Meneghetti.
The district court did not abuse its discretion in admitting
the recorded conversations between Meneghetti and
Sowers.
2. Conversations Between Sowers and Schalk
Schalk presents the same arguments as above in his
contention that the taped conversations between Sowers
and Schalk were improperly admitted. During those
conversations, Schalk sought to further the conspiracy
in several ways: (1) Sowers paid Schalk for drugs he had
already received; (2) they discussed debts owed by
Sowers for drugs fronted by Schalk; (3) they discussed
traveling “up” because Schalk had “some put away,” to
which Sowers declined to make the trip for such a small
quantity of drugs; and (4) they explicitly discussed the
three-page contents of the drug ledger kept by Schalk and
the need for accuracy of those numbers. These were
all discussions to keep the drug trafficking operation
afloat. The district court did not abuse its discretion by
allowing the recorded conversations between Sowers and
Schalk into evidence.
B. Sowers’s Drug Ledgers
Schalk argues that the district court erred by admitting
Sowers’s notebooks containing his drug ledgers into
evidence; he asserts that the ledgers are inadmissible
hearsay and are not admissible under any hearsay excep-
tion. This is a different objection than was raised in his
motion in limine, where Schalk argued that the ledgers
were irrelevant and unfairly prejudicial.
12 No. 06-2142
A definitive, unconditional ruling in limine preserves
an issue for appellate review, without the need for later
objection. Wilson v. Williams, 182 F.3d 562, 563 (7th Cir.
1999) (en banc). A litigant who loses an evidentiary
ruling and then offers the evidence himself does not
waive the established objection for purposes of appeal.
Id. at 567 (overruling United States v. York, 933 F.2d
1343 (7th Cir. 1991), to the extent it holds that an objec-
tion at trial is invariably required to preserve argu-
ments for appeal that were fully presented to the district
court before trial). However, Rule 103(a)(1) of the Federal
Rules of Evidence requires litigants to state a specific
ground for an objection to evidence, and “[g]rounds not
presented cannot be raised later, else both judge and
adversary are sandbagged (and preventable errors occur).”
Id. In other words, “[t]he specific ground for reversal of
an evidentiary ruling on appeal must also be the same as
that [previously] raised.” United States v. Swan, 486 F.3d
260, 264 (7th Cir. 2007) (quoting United States v. Wynn,
845 F.2d 1439, 1442 (7th Cir. 1988)). If no objection was
made that would put the district court (and the other
party) on notice of the objecting party’s concern, then the
standard of review is for plain error. See Swan, 486 F.3d
at 264; Wynn, 845 F.2d at 1442.
Although the parties appear to agree that the standard
of review for this evidentiary ruling is abuse of discretion,
they are both mistaken. In his motion in limine, Schalk
objected to the admission of Sowers’s drug ledgers
as irrelevant and more prejudicial than probative. The
district court definitively denied Schalk’s motion without
any notice or consideration of Schalk’s now-present
hearsay concern. At trial, Schalk himself moved the
ledgers into evidence. While this did not affect his
appeal, his new grounds for objection to the ledgers does.
Because Schalk now challenges the district court’s eviden-
tiary ruling on completely new grounds, we review this
No. 06-2142 13
challenge for plain error only. On appeal, Schalk makes
no argument that the district court improperly found
the ledgers to be relevant and probative, therefore we
need not review that determination.
Under plain error review, an error must be “clear or
obvious” and “affect substantial rights” in order to war-
rant reversing the district court’s decision to admit the
evidence. Swan, 486 F.3d at 264; United States v. Sumner,
265 F.3d 532, 539 (7th Cir. 2001). This Court will not
correct any error unless it “seriously affect[s] the fair-
ness, integrity, or public reputation of the judicial pro-
ceedings.” Swan, 486 F.3d at 264 (quoting United States
v. Kibler, 279 F.3d 511, 514 (7th Cir. 2002)).
To determine if plain error existed, we must decipher
if the evidence should have been excluded, and if the
failure to exclude such evidence seriously affected the
outcome of the case. Neither seems to be the case here.
Documents that can be considered “tools of the drug trade”
constitute statements made during the course and in
furtherance of the conspiracy. United States v. Thornton,
197 F.3d 241, 251 (7th Cir. 1999); see United States v.
Nava-Salazar, 30 F.3d 788, 798 (7th Cir. 1994); United
States v. De Gudino, 722 F.2d 1351, 1356 (7th Cir. 1983).
Sowers’s drug ledgers constitute admissions by a co-
conspirator of Schalk. The ledgers were made and kept
by Sowers while he and Schalk were still engaged in the
conspiracy. Therefore, the ledgers were admissible. Even
if Sowers’s ledgers had been excluded from evidence, the
remaining evidence, including the recorded conversations
and Meneghetti and Sowers’s testimony at trial, was
enough to establish beyond a reasonable doubt that
Schalk was involved in a conspiracy to distribute cocaine.
We therefore find no plain error.
14 No. 06-2142
C. Jury Finding that Schalk Conspired to Distrib-
ute At Least Five Kilograms of Cocaine
Schalk’s last argument asserts that the evidence pre-
sented at trial was insufficient to prove that Schalk
conspired to distribute at least five kilograms of cocaine, as
required to be guilty of violating 21 U.S.C. § 841(b)(1)(A).
Schalk asserts that the drug ledgers accounted for only
4.65 kilograms of cocaine distributed to Sowers, and the
evidence was insufficient to warrant a finding of more than
that. As Judge Evans stated: “Prevailing on a sufficiency
of the evidence challenge is as unlikely as hearing the song
of a warbler on a central Chicago street in February, with
or without the aid of a bionic ear.” Thornton, 197 F.3d at
253. This Court will reverse a jury’s finding on an essential
element of a crime only if no rational trier of fact could
have reached the same conclusion beyond a reasonable
doubt. United States v. Curtis, 324 F.3d 501, 505 (7th Cir.
2003). In making that determination, the Court must view
the evidence in the light most favorable to the government.
United States v. Grier, 866 F.2d 908, 922 (7th Cir. 1989).
The jury heard a variety of evidence at trial. Sowers
testified that Schalk delivered cocaine to him once every
two weeks, except for a one month gap, from August 2003
until Sowers’s arrest on January 26, 2005. That calcula-
tion yields approximately thirty-six two-week periods
that Schalk provided Sowers with cocaine. Sowers also
testified that he received between nine and eighteen
ounces of cocaine each time, with the exception of re-
ceiving two ounces once and twenty-two ounces once.
That calculation ((34 x 9) + 2 + 22) brings us to a total of
330 ounces of cocaine from Schalk to Sowers. Using the
customary conversion factor of 35.27 ounces per kilogram,
this evidence showed that Schalk distributed more than
nine kilograms of cocaine to Sowers. The jury additionally
had the drug ledgers to consider. As Sowers testified, he
and Schalk only maintained numbers in those notebooks
No. 06-2142 15
for the outstanding debts remaining from their trans-
actions, meaning they destroyed the records of drug
transactions for which no debt was still owed. Based on
all of this evidence, the jury reasonably concluded that
Schalk conspired to distribute five or more kilograms of
cocaine.
III. Conclusion
For the reasons stated herein, we AFFIRM the convic-
tion and sentencing of Schalk.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—2-12-08