### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 13

- 2368

U NITED S TATES OF A MERICA , Plaintiff

- Appellee

,

v.

H AITHAM M OHAMED , Defendant

- Appellant

.

____________________ Appeal from the United States District Court for the Southern District of Indiana

, Indianapolis Division.
No. 1:12

- CR

- 00097

- SEB

- MJD

— Sarah Evans Barker

, Judge

.

____________________

A RGUED A PRIL 15, 2014

— D ECIDED J ULY 22
, 2014

____________________

Before R IPPLE and W ILLIAMS , Circuit Judges

, and S T

. E VE , Dis trict Judge

. *

S T

. E VE , District Judge

. On March 26, 2013, a jury convic ted H a i tham Mohamed of one count of knowingly transpor ting and possessing contraband cigarettes in violation of
18 U.S.C. § 2342(a). Mr. Mohamed appeals his conviction,

* The Honorable Amy J. St. Eve, District Judge for the United States Di strict C ourt, Northern District of Illinois, sitting by designation.2 No. 13

- 2368

claiming that th e district court erred in denying his motions for judgment of acquittal pursuant to Federal Rule of Crim inal Procedure 29. For the reasons set forth in the following opinion, we agree and reverse the district court’s decision

. BACKGROUND
On the evening of June 6, 2012, Officer Christopher Helmer, a patrolman with the Speedway Police Department, pulled over Mr. Mohamed for running a red light in Spee dway, Indiana near Indianapolis. Upon searching Mr. M ohamed’s van, 1 Officer Helmer found 1,170 packs of Ne wpor t

- brand cigarettes (total ing 23,400 cigarettes) not bear ing Indiana tax stamps. A federal grand jury indicted Mr. M ohamed with one count of knowingly transporting and po ssessing contraband cigarettes in violation of section 2342(a) of the Contraband Cigare tte Trafficking Act (“CCTA”), which makes it unlawful for “ any person knowingly to ship, transport, receive, possess, sell, distribute, or purchase co ntraband cigarettes. ” S ee 18 U.S.C. § 2342(a). The CCTA d efines “contraband cigarettes” with reference to state law:
“[C] ontraband cigarettes” means a quantity in excess of 10,000 cigarettes, which bear no evidence of the payment of applicable State or l o cal cigarette taxes in the State or locality where such cigarettes are found, if the State or local govern ment requires a stamp, i mpression, or other indication to be placed on packages or other containers of cigarettes to evidence pa y ment of cigarette taxes, and which are in the possession of any person other than [certain exceptions].

1 Mr. Mohamed does not challenge the constitutionality of the search.No. 13

- 2368 3

18 U.S.C. § 2341(2). Mr . Mohamed pleaded not guilty to the offense, and the case proceeded to trial.
The governmen t called two witnesses at trial, Special Agent Daniel Neie of the Bureau of Alcohol, Tobacco, Fir earms, and Explosives (“ATF”) and Officer Helmer of the Speedway Pol ice Department. Special Agent Neie explained to the jury how cigarette traffickers typically operate. 2 Di sparities in state cigarette tax rates, which range from $0.17 per pack in Missouri to $4.35 per pack in New York, allow cigarette traffickers to profi t by buying cigarettes in low

- tax states and reselling them in high

- tax states without p aying the latter state’s taxes. As a result of the tax disparity, the cigarette traffick er can sell the cigarettes be low the market price while still earning a prof it; t he greater the tax dispari ty , the greater the trafficker’s potential prof its. The state in

w hich the cigarette trafficker sells the cigarettes , meanwhile, loses out on the tax revenue it would have recei ved from a legal sale

. Special Agent Neie testified that because retailers often limit the amount of cigarettes a customer can buy at one time to ensure that they will have sufficient inventory for other cus tomers, traffickers often must travel from retai ler to retailer until they accumulate the total numbe r of cig arettes they want. Special Agent Neie further testified based on his training and experience that Marlboro s and Newport s are the most frequently trafficked brands of cigarettes.

2 See generally U.S. D EP ’ T OF J USTICE , O FFICE OF THE I NSPECTOR G ENERAL , I

2009

- 005, T HE B UREAU OF A LCOHOL , T OBACCO , F IREARMS AND E XPLOSIVES ’ E FFORTS TO P REVENT THE D IVERSION OF T OBACCO i

- ii (2009), available at http://www.justice.gov/oig/reports/ATF/e0905.pdf ( last visited July 22

, 2014).4 No. 13

- 2368

With respect to Mr. Mohamed in particular , Special Agent Neie testifi ed that the cigarette tax rate in Kentucky, where Mr. Mohamed had bought the cigarettes at issue, is $0.60 per pack, whereas the cigarette tax rate in Indiana, where the cigarettes were found, is $0.995 per pack. Thus, if Mr. Mohamed sold all 1,170 packs i n his possession in Ind iana, he stood to make a profit of up to $462.15. Special Agent Neie acknowledged that many states

— including New York ($4.35 per pack) and Washington ($3.25 per pack)

— ha d higher cigarette taxes than Indiana

, and Mr. Mohamed would hav e increased his potential profit by selling the cig arettes at issue in those states rather t han Indiana. Finally, Special Agent Neie confirmed that none of the cartons of cigarettes found in Mr . Mohamed’s van was missing cig arettes; all 23,400 cigarettes w ere accounted for and remained in their original packs.
Next, Officer Helmer testified about his June 6, 2012 tra ffic stop involving Mr. Mohamed. Officer Helmer testified that he pulled over Mr. Mohamed for running a red light at approximately 6:57 p.m. Mr . Mohamed, who lives in India napolis, informed Officer Helmer that he was returning home after visiting friends in Ken tucky. When Officer Helmer searched Mr. Mohamed’s va n, he found 117 cartons (with

ten pa cks per carton) of Newport cigarettes bearing Ke nt ucky tax stamps. None of the ciga rette packs had Ind i ana tax stamps evidencing the payment of Indiana’s cigarette

tax. Officer Helmer also found in Mr. Mohamed’s van r eceipts showing purchases of Newport cigarettes from se v eral Kentucky gas stations earlie r that day and a black trash bag containing over $15,000 in cash. When Officer Helmer asked Mr. Mohamed how much he makes selling cigarettes, Mr. Mohamed answered “not much.”No. 13

- 2368 5

The parties stipulated at trial that Mr. Mohamed did not fall within one of the e xceptions contained in the CCTA’s definit ion of “contraband cigarettes.” See 18 U.S.C. § 2341(2)(A)

- (D). Specifically, the parties stipulated that the State of I ndiana and the United States did not have any re cords indicating that, as of June 6, 2012, Mr. Mohamed held a permit as a manufacturer of tobacco products, an export warehouse proprietor, or a person operating a customs bonded warehouse; nor did they have records indicating that Mr. Mohamed ever served as an officer, employee, or other agent of the State of Indiana or the United States. The parties also stipulated that the State of Indiana had no re cords indicating that Mr. Mohamed was engaged in business as a common carrier or was licensed or otherwise authorized to account for and pay Indiana cigar ette taxes as of June 6,
2012. At the close of the government’s evidence, Mr. M ohamed’s counsel moved for a judgment of acquittal under Federal Rule of Criminal Procedure 29. The district court d enied the Rule 29 motion, finding that the government had

pr esented sufficient evidence to allow a reasonable jury to conclude that Mr. Mohamed was guilty as charged. Mr. M ohamed elected not to call any witnesses or present any ev idence in his defense, as is his right

. During closing arguments, defense counsel adm itted that Mr. Mohamed had mor e than 10,000 cigarettes not bearing Indiana tax stamps in his possession but argued that the government failed to prove that Indiana law required the cigarettes to bear Indiana tax stamps in order to make the cigarettes “cont raband” under the CCTA. (R. 25 at 9

- 14.) D efense counsel asserted that the government presented no e v-6 No. 13

- 2368

idence that the cigarettes had been “sold, used, consumed, handled, or distribute d” within Indiana

, and, therefore, the government failed to prove that Ind iana’s cigarette tax a pplied to the cigarettes at the time of seizure. ( Id. at 10

– 13.) Moreover, defense counsel asserted, it made no economic sense for Mr. Mohamed to sell the cigarettes in Indiana, where he stood to gain only $462.15, minus the cost of g as, travel

, and food. ( Id. at 13.) On rebuttal, the government co ntended that it had proven everything necessary to co n vict Mr. Mohamed of the offense:

When Mr. Mohamed was arrested in Indiana, he sta ted in Indiana that he didn’t make much money bu ying the se cigarettes. When he was arrested in Ind i ana, he had a bag full of cash in his car, in Indiana. And he had twice the legal limit of cigarettes from out of

state. You can look at these facts and you can infer that everything that needs to be proven for th is o ffense to be complete has, in fact, been proven, and that when Officer Helmer pulled Haitham M o hamed over, Haitham Mohamed was already committing the crime of knowingly transporting or possessing those cigarettes, and I ask you to find him guilty.
( Id. at 16.)
Following closing arguments, t he district cou rt instructed the jury on what constitutes “contraband cig arettes” under the CCTA and on the application of Indiana’s cigarette tax laws

. The jury instruction on the definition of “contraband cigarettes ” mirrored the CCTA’s definition of the term. See 18 U.S.C. § 2341(2). The instruction regarding the applicabi lity of Indiana’s cigarette tax stated as follows:No. 13

- 2368 7

Indiana law requires a stamp to be placed on packa ges or other containers of cigarettes to prov e that a pplicable taxes have been paid. Indiana’s cigarette ta xes are levied on all cigarettes sold, used, consumed, handled, or di s tributed within the State of Indiana.
With respect to this law, the following definitions a pply:

• to “sell” means the transf er of property for a price;

• to “use” means to bring or put into service or action;

• to “consume” means to possess for use or to use a cigarette or cigarettes for the purpose of smoking;

• to “handle” means to engage in selling, buying, or distributing; and

• t o “distribute” means to divide among several
or many. (Jury Instruction No. 10.) 3
The jury appears to have struggled in applying these i nstructions. During deliberations, the jury submitted three questions to the district court. First, the jury asked whet her “more than 10,000 cigarettes being transported into Indiana from another state without paying [Indiana’s cigarette] tax [is] enough to be called contraband?” Second, the jury asked, “Is the question at hand just that [Mr. Mohamed] had 10,000+ [cigarett es] and crossed state lines, or do we need to

3 Neither party objected to these instructions at trial or argue s on ap peal that the instru ctions were erroneous.8 No. 13

- 2368

consider intent of what he planned to do with them once he crossed the state line? Sell, distribute, etc.?” Third, the jury asked, “In the definition of ‘handled,’ is ‘buying’ applicable even if [the cigarettes ] are bought in Kentucky? Can we see the entire copy of title 18 U.S. Code Section 2342(a)[?]” The district court judge responded to the jury’s questions in wri ting, informing the jurors that she could not provide the i nformation they had requested. The ju dge instructed the j urors to review the jury instructions and the evidence at trial and discuss the issues they had raised with the court in their continued deliberations.
The jury ultimately found Mr. Mohamed guilty of kno wingly transporting or possessin g contraband cigarettes in v iolation of the CCTA. After the jury rendered its verdict, d efense counsel renewed Mr. Mohamed’s Rule 29 motion for judgment of acquittal, which th e district court again denied

. STANDARD OF REVIEW

We review de novo the district court’s denial of Mr. M ohamed’s Rule 29 motion for acquittal. See United States v. F oley, 740 F.3d 1079, 1082 (7th Cir. 2014); United States v. Sei dling, 737 F.3d 1155, 1159 (7th Cir. 2013). Under Rule 29, “[a]fter the government closes its evidence or af ter the close of all the evidence, the court on the defendant’s motion must enter a judgment of acquittal of any offense for which the evidence is insuffic ient to sustain a conviction.” Fed. R. Crim. P. 29(a). “In considering challenges to the sufficiency of the evidence, we view the evidence in the light most f avorable to the prosecution, and then ask whether any ratio nal trier of fact could have found the essential elements of a crime beyond a reasonable doubt.” Foley, 740 F.3d at 1082

– 83 (internal quotat ion marks omitted) (quoting United States v.No. 13

- 2368 9

Boender, 649 F.3d 650, 654 (7th Cir. 2011)). “[W]e ‘defer to the credibility determination of the jury[] and overturn a verdict only when the record contains no evidence, regardless of how it is weighed, from wh ich the jury could find guilt b eyond a reasonable doubt.’” United States v. Torres

- Chavez, 744 F.3d 988, 993 (7th Cir. 2014) (second alteration in orig i nal) (quoting United States v. Blassingame, 197 F.3d 271, 284 (7th Cir. 1999)).

ANALYSIS

I. The Contrab and Cigarette Trafficking Act
Congress enacted the CCTA to enable federal enforc ement agencies to assist states in curtailing interstate cigarette trafficking, which drains billions of dollars in tax revenues from state and local governments each year and often serves as a source of illicit financing for organized crime and terro rist organizations

. See S. R EP

. 95

- 962 at 3

– 9 (1978)

, reprinted in 1978 U.S.C.C.A.N. 5518; H.R. C ONF

. R EP

. 95

- 1778 at 7

– 9 (1978), reprinted in U.S.C.C.A.N. 5535. Under the CCTA, it is unlawful for any person knowingly to ship, transport, r eceive, possess, sell, distribute, or purchase “contraband cig arettes.” S ee 18 U.S.C. § 2342(a). T he CCTA defines “contr aband cigarettes” as a quantity in excess of 10,000 cigarettes, which bear

no evidence of the payment of applicable State or l ocal cigarette taxes in the State or locality where such cigarettes are found, if the State or local government requires a stamp, impression, or other indication to be placed on packages or other containers o f cigarettes to

e v idence payment of cigarette taxes, and which are in10 No. 13

- 2368

the possession of any person other than [certain e xceptions].
18 U.S.C. § 2341(2). Accordingly, to convict Mr. Mohamed of cigarette trafficking, the government needed to prove b eyond a r easonable doubt that (1) Mr. Mohamed knowingly ship ped , transport ed , receive d , possess ed, sold , distribute d

, or purchase d (2) more than 10,000 cigarettes (3) not bearing Indiana cigarette tax stamps (4) under circumstances in which Indiana law required the cigarettes to bear such stamps, and (5) Mr. Mohamed is not an excepted person u nder 18 U.S.C. § 2341(2)(A)

- (D). See 18 U.S.C. §§ 2341

- 42; see also City of New York v. Chavez, 944 F. Supp. 2d 260, 264 (S.D.N.Y. 2013).
Mr. Mohamed does not challenge the su fficiency of the evidence with respect to the first, second, third, and fifth e lements of the offense. The only issue before us is whether the government presented sufficient evidence to allow a r ational trier of fact to find beyond a reasonable doubt that I ndiana law required the cigarettes discovered in Mr. M ohamed’s van to bear Indiana cigarette tax stamps. To resolve this issue, we turn to Indiana state law.

II. Indiana’s Cigarette Tax Act
In construing Indiana’s Cigarette Tax Act, we must inte rpret th e statute as we think the Indiana Supreme Court would interpret it. See Laborers Local 236, AFL

- CIO v. Walker, 749 F.3d 628, 634 (7th Cir. 2014) (citing Brownsburg Area P atrons Affecting Change v. Baldwin, 137 F.3d 503, 507 (7th Cir. 1998) ). “In Indiana, t he lodestar of statutory interpretation is legislative intent, and the plain language of the statute is the ‘best evidence of

... [that] intent

. ’” Estate of Moreland v. Die t-No. 13

- 2368 11

er, 576 F.3d 691, 695 (7th Cir. 2009) (alterations in original) (quoting Cubel v. Cubel, 876 N.E.2d 1117, 1120 (Ind. 2007)); see also Indiana Dep’t of Revenue v. United Parcel Serv., Inc., 969 N.E.2d 596, 600 (Ind. 2012); Indiana Dep’t of State Revenue, I nheritance Tax Div. v. Estate of Parker, 924 N.E.2d 230, 233 (Ind. Tax Ct. 2010). Unless a statute indicates othe rwise, we must give the words in the statute their plain and ordinary mea ning, and we must examine the statute as a whole, “avoiding both excessive reliance on strict literal meaning and selective reading of individual words. ” Estate of Moreland, 576 F.3d at 695 (quoting Cubel, 876 N.E.2d at 1120); see also Scherr v. Ma rriott Int’l, Inc., 703 F.3d 1069, 1077 (7th Cir. 2013). When the language of a stat ute is clear , we must enforce the statute as written, and we “ha[ve] no powe r to construe the statute for the purpose of limiting or extending its operation.” See E s tate of Parker, 924 N.E.2d at 233 (quoting In re Estate of Wilson, 822 N.E.2d 292, 295 (Ind. Tax Ct. 2005)); see also Scherr, 703 F.3d at 1077 (“When the language of a statute is plain, we enforce it according to its terms.”).
Indiana’s Cigarette Tax Act levies a tax on “all cigarettes sold, used, consumed, handled, or distributed” within the

state. See Ind. Code § 6

- 7

- 1

- 1. For purposes of the Cigarette Tax Act, “consu me” means to possess for use or use cig arettes for the purpose of smoking, see Ind. Code § 6

- 7

- 1

- 8; “handle” means “to trade in: engage in the buying, selling, or distributing of (a commodity),” Indiana Eby

- Brown Co. v. Indiana Dep’t of State Revenue, 648 N.E.2d 401, 404 (Ind. Tax Ct. 1995) (quoting Webster’s Third New Int’l Dictionary 1027 (1981)); and “distribute” means “to divide among several or many.” Id. (quoting Webster’s Third New Int’l Dictionary at 660). All packag es of cigarettes subject to India na’s cigarette12 No. 13

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tax must bear Indiana tax stamp s evidencing payment of the

tax. See Ind. Code § 6

- 7

- 1

- 14. Mr. Mohamed argues that under the plain language of the Cigarette Tax Act, the cigarettes at issue were not subject to Indiana’s cigarette tax because , at the time of his arrest, the cigarettes had not yet been sold, used, consumed, ha ndled, or distributed within Indiana

. His argument raises two questions regarding Indiana’s cigarette taxation scheme: ( 1) when Indiana’s cigare tte tax becomes due; and (2 ) whether Indiana’s cigarette tax applies to cigarettes possessed in I ndiana but bought and intended for sale out side the state.

A. The Timing of Indiana’s Cigarette Tax
Mr. Mohamed argues that Indiana’s cigarette tax does not apply until dis posal of the cigarettes

. We disagree. Ind iana technically imposes its cigarette tax on the retail pu rchaser or ultimate consumer “upon the sale, exchange, ba rtering, furnishing, giving away, or otherwise disposing of cigarettes within the state of Indiana.” See Ind. Co de § 6

- 7

- 1

- 12. The State, however, pre

- collects the tax for co nve n ience and facility from “the person who first sells, uses,

co n sumes, handles, o r distributes the cigarettes.” See id. § 6

- 7

- 1

- 1. The Cigarette Tax Act requires cigarette distrib utors and ret ai l ers, 4 which act as agents of the State in collec t-

4 Under the Cigarette Tax Act, “distributor” includes
every person who sells, barters, exchanges, or distributes cig arettes in the state of Indiana to retail dealers for the purpose of resale, or who purchases cigarettes directly fr om a manufacturer of cigarettes, or who purchases for resale cigarettes directly from a manufacturer of cigarettes, or from a wholesaler, jobber, or di stributor outside of the state of Indiana who is not a distributorNo. 13

- 2368 13

ing the cig a rette tax, see id. § 6

- 7

- 1

- 17(a), to prepay the tax and affix the required amount of tax stamps “upon receipt” of any u n stamped cigarettes subject to the tax. See id. § 6

- 7

- 1

- 18. Di s tributors and retailers can then pass along the

tax to retail purchaser s or ultimate consumer s by adding the tax to the price of the cigarettes. 5 See id. § 6

- 7

- 1

- 1. Accordin gly, u n der the plain language of the Cigarette Tax Act, read fairly and as a whole, if Indian a’s cigarette tax applies at all,
it a p plies upon receipt of the cigarettes, even though the State techn i cally d oes not levy the tax until disposal. See id. § 6

- 7

- 1

- 18.
This construction is consistent with the Cigarette Tax Act’s “intent and purpose” to pr e

- collect the cigarette tax from the person who first sells, uses, consumes, handles, or distributes the cigarettes. See id. § 6

- 7

- 1

- 1. It is also co n sistent with the Indiana Tax Court’s interpretation of the Cigarette
Tax Act and , as the Tax Court recogni zed, the State’s interest

hol d ing a registration certificate iss ued under [the Cigarette Tax Act].

Id. § 6

- 7

- 1

- 6. “Retailer” means “every person, other than a distributor, who purchases, sells, offers for sale, or distributes cigarettes, to consu mers or to any person for any purpose other than resale, irrespective o f quantity or amount, or the number of sales.” Id. § 6

- 7

- 1

- 7. If Mr. M ohamed intended to sell the cigarettes in his possession in Indiana, he would qualify as e i ther a distributer or retailer under the Cigarette Tax Act.

5 Although the Cigarette Tax Act does not specify when pe rsons other than distributors and retailers must pay the cigarette tax, this is not su rprising given that Indiana requires all cigarettes sold within the state to be sold through cigarette distributors or retailers. See id. § 24

- 3

- 6

- 11(a)

- (f)

.14 No. 13

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in protecting it self from revenue losses due to cigarette tra fficking:
To hold that the [cigarette] tax is due only when cig arettes are “sold, bartered, exchanged, etc.” defeats the purpose for the distributor to pay the tax and affix stamps upon receipt

— the purpose being that because cigarettes are a major source of revenue for Indiana, the state has an interest in protecting the cigarettes from “bootleggers” who seek to bypass the conve ntional methods of cigarette distribution a nd, cons equently, payment of the tax.
The most effective way for the state to protect its cig arette revenue is to impose upon distributors the duty to pay the tax on all cigarettes at the earliest possible point, which the statute defines as receipt. This met hod nearly guarantees that the tax is always co l lec t ed

... . Had the legislature intended that the tax be paid

o n ly on those cigarettes that are sold, the legisl a ture would not have mandated that distributors affix the stamps upon receipt as evidence the tax has been paid.
Indiana Eby

- Brown Co., 648 N.E.2d at 405 (footnote omitted ; emphasis in original). W e therefore reject Mr. Mohamed’s argument that Indiana’s cigarette tax does not apply until the cigarettes are sold, used, consumed, handled, or dist ri buted as contrary to Indi ana law. We instead find that Ind iana’s cigarette tax applies upon receipt of cigarettes subject to the tax

. B. The Scope of Indiana’s Cigarette Tax
Next, we consider the scope of Indiana’s cigarette tax. On its face, the Ci garette Tax Act applies only to cigarettes sold,No. 13

- 2368 15

used, consumed, handled, or distributed within Indiana

. See Ind. Code § 6

- 7

- 1

- 1 (“It is the intent and purpose of this chapter to levy a tax on all cigarettes sold, used, consumed, handled or distributed wit hin this state

... .” (emphasis ad ded)); id. § 6

- 7

- 1

- 12(a) (imposing Indiana’s cigarette tax only “upon the sale, exchange, bartering, furnishing, giving away, or otherwise disposing of cigarettes within the state of Ind iana ” (emphasis added)). The Cigar ette Tax Act does not tax cigarettes possessed in Indiana merely for the purpose of i nterstate commerce; nor does it require cigarettes passing through the state in interstate commerce to bear Indiana tax stamps. See id. § 6

- 7

- 1

- 18 (“Any distributor engage d in inte rstate business[] shall be permitted to set aside such part of his stock as may be necessary for the conduct of such inte rstate business without affixing the stamps req uired by this chapter .”); see also 45 Ind. Admin. Code § 8.1

- 1

- 28 (“Distrib utor s need not aff ix tax stamps to the individual packages of cigarettes that are sold an d shipped outside the State.”); Ind iana Eby

- Brown Co., 648 N.E.2d at 404 n.3 (“Eby

- Brown need

not

... stamp cigarettes that are to be shipped in interstate commerce.”). Because Indiana does not tax all cigarettes possessed within the state, the government needed to pro ve more than Mr. Mohamed’s possession of unstamped cigarettes in Ind iana to convict him of vio lating the CCTA. Rather, the go vernment need ed to prove that Mr. Mohamed possessed the cigarettes for the purpose of selling, using, consuming, ha ndling, or distributing them within Indiana in order to esta blish that they were subject to Indiana’s cigarette tax. See Ind. Code §§ 6

- 7

- 1

- 1, 6

- 7

- 1

- 12(a); 18 U.S.C. § 234 1(2).16 No. 13

- 2368

T he government argues that “[t]he larger context of Ind iana’s cigarette taxation statutes” establishes that the cig arettes found in Mr. Mohamed’s van were subject to Indiana’s cigarette tax at the time of his arrest. ( See Appellee Br. at 9

- 11.) The g overnment cites two provisions of the Cigarette Tax Act in support of this argument. First, under Indiana Code section 6

- 7

- 1

- 19.5, all persons transporting unstamped cigarettes over Indiana highways, except licensed distrib utors, common carriers, and state or federal employees pe rforming their official duties, must carry invoices or delivery tickets stating the quantity and brand of the cigarettes and the names and addresses of the seller, purchaser, and the person ultimately liable for the state’s cigarett e tax. See Ind. Code § 6

- 7

- 1

- 19.5. Transporting unstamped cigarettes in I ndiana without proper documentation constitutes a misd emeanor under Indiana law. See id. § 6

- 7

- 1

- 23. Second, under Indiana Code section 6

- 7

- 1

- 24, the possession of more than 1,500 cig arettes in packages not bearing Indiana tax stamps by any person other than a distributor, common carrier, or state or federal employee constitutes “ prima facie evidence that the cigarettes are possessed for the purpose of sale.” Id. § 6

- 7

- 1

- 24(d).

Mr. Mo hamed acknowledges on appeal that he was transporting the cigarettes at issue over Indiana highways without proper documentation in violation of Indiana Code
section 6

- 7

- 1

- 19.5, and, as a result, the State could have charged him with a misdemeanor. ( See Ap pellee Reply Br. at 3.) He argues, however, that this misde meanor violation does not amount to a violation of the CCTA. Additionally, Mr. Mohamed argues that even if his possession of more than 1,500 cigarettes without Indiana tax stamps creates a presumpt ion that he possessed the cigarettes for the purposeNo. 13

- 2368 17

of sale, the presumption “stands only until it is destroyed by the facts.” ( Id. at 4. ) According to Mr. Mohamed, the ev idence at trial and the governme nt’s position during senten cing

— i.e., that the distr ict court should calculate the amount of loss using New Y ork’s cigarette tax rate, rather than Ind iana’s tax rate

— demonstrate that Mr. Mohamed intended to sell the cigarettes out side Indiana, thus destroying any pr esumption that he intend ed to sell them wi thin the state

. ( Id. )
The strongest support for the government’s position is United States v. Boggs, 775 F.2d 582 (4th Cir. 1985)

. In Boggs, federal agents arrested the defendant in West Virginia carr ying over 60,000 ciga rettes not bear ing West Virginia t ax stamps. The parties stipulated that the defendant had pu rchased the cigarettes in North Carolina and was transporting them through West Virginia to resell them in Michigan. A fter a bench trial based on stipulated facts, the district court found the defe ndant guilty of trafficking and conspiring to traffic contraband cigarettes in violation of the CCTA. See id.
at 583. On appeal, the defendant argued that because he had purchased the cigarettes outside the state and intended to sell them outside the stat e, West Virginia’s cigarette tax did not apply, and, thus, the cigarettes did not qualify as contr aband under the CCTA even though they lacked West Virgi nia tax stamps

. The Fourth Circuit disagre ed. A majority of the panel determined that West Virginia’s t ax statutes gave the State authority to apply its cigarette tax to “people such as [the defendant] unless the cigarettes they possess are being legitimately transported in commerce, in which event exce ption is made.” See id. at 584.18 No. 13

- 2368

The majority relied on two provisions of West Virginia’s tax statutes in drawing this conclusion. First, the court found that the defendant’s possession of more than twenty packa ges of cigarettes not bearing West Virginia tax stamps created a presumption under West Virginia law that the d e fendant possessed the cigarettes “for the purpose of evading the payment of taxes imposed or due thereon.” See id. (quo t ing W. Va. Code § 11

- 17

- 19(b)(6)). Second, the court dete r mined that the defendant’s intent to sell the cigarettes in Michig an rather than West Virginia did not rebut the pr e sumption that he possessed the cigarettes for the purpose of evading West Virginia’s cigarette tax because the defendant had not co mplied with the State’s requirements regarding the transport ation of unstam ped cigarettes. See id. at 585 (quoting W. Va. Code § 11

- 17

- 20). Like Indiana, West Virginia requires pe rsons transporting unstamped cigarettes across the state to have in their possession invoices or deli v ery tickets bearing certain information about the buyer and seller of the cig arettes. See W. Va. Code § 11

- 1 7

- 20. The d e fendant stipulated at trial that he did not have the required invoices or delivery tickets for the cigarettes in his possession. See Boggs, 775 F.2d
at 585. As a result, the majority hel d that West Virginia “would have been perfectly justified in imposing upon [the defendant] its excise tax on account of his failure to comply with this rather simple and unburde n some requirement of West Virginia law or to subject [the d e fendant] to crimina l penalties for his failure to comply therewith.” Id.

In United States v. Skozcen, 405 F.3d 537 (7th Cir. 2005), we faced a situation analogous to the one addressed in Boggs. The defendant in Skozcen was arrested in Illinois with 325,000 packs of unstampe d cigarettes in his possession. Id.
at 541. The defendant argued that because the cigarettesNo. 13

- 2368 19

“ were to be sold out of the state and never within Illinois,” they were not subject to Illinois’s cigarette tax

, and, ther efore, the cigarettes were not required t o bear Illinois tax stamps

. See id. at 547. We ultimate ly did not need to decide
wh ether the defendant’s intent ion to sell the cigarettes ou tside Illinois foreclosed his conviction under the CCTA, ho wever, because we found t hat the cigarettes at issue had b eco me subject to Illinois’s cigarette tax even before they came into the defendant’s possession. See id.

Illinois subjects all cigarettes sold or otherwise disposed of within the state to its cigarette tax and re quires those cig arettes to bear stamps evid encing payment of the tax. See 35 ILCS 130/2

- 3

. Because t he defendant in Skozcen had pu rchased the cigarettes at issue in Illinois, the cigarettes had be co me subject to Illinois’s cigarette tax at the time of that purchase (at the latest)

. See Skozcen, 405 F.3d at 547. Accor dingly, t he unstamped cigarettes were “contraband” under the CCTA regardless of what the de fendant did with the ci garettes after purchasing them

. See id. Under these circu mstances, we held that the defendant’s intention to sell the cigar ettes outside Illinois was irrelevant to his conviction under the CCTA

. Id. We did no t address , however, whether a defendant’s inten tion to sell cigarettes out side the state in which the cigarettes were found would be rele vant where, as here, the ciga rette s were not already subject to the state’s cigarette tax. Because the CCTA incor porates state law in d efining contraband cigarettes, the resolution of this iss ue ne cessarily rests on the applicable state’s laws

. We are not persuaded that Mr. Mohamed’s viola tion of Indiana’s requirements for transporting unstamped cig arettes over Indiana highways alone is sufficient to support20 No. 13

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his convic ti on for violation of the CCTA. As an initial ma t ter, unlike in Boggs
, the government cannot rely on the evide ntiary presump tion created by state law here. Under I n diana Code section 6

- 7

- 1

- 24(d),
[t]he possession of more than [1,500] cigarettes in packages not bearing Indiana tax stamps by any pe rson other than a distributor, a common carrier, or an employee of the state or fed eral government perfor ming his official duties in the enforcement of this cha pter constitutes prima facie evidence that the cigarettes are possessed for the purpose of sale.
Ind. Code § 6

- 7

- 1

- 24(d). Read fairly, this provision creates a presumption that a person (apart from the three listed exce ptions) possessing more than 1,500 cigarettes not bearing I ndi ana tax stamps has the cigarettes available and intended for sale within the state. 6 The jury instructions, however, made no mention of the presumption, and the government never argued at trial that it applied. Had the government a ctually relied on the presumption at trial, Mr. Mohamed may have elected to present evidence rebutting the pr e sumption, rather than rest his defense without presenting affirmativ e evidence. Thus, unlike in Boggs , the government cannot use the presumption to its advantage on appeal.
Without the benefit of the presumption, the government has not presented sufficient evidence to allow a reasonable trier of fact to determine that Mr. Mohamed intended to sell, distribute, or otherwise dispose of the cigarettes within Ind iana. Although Mr. Mohamed acknowledges on appeal that

6 Mr. Mohamed does not challenge whether this state

- law presum p tion applies in federal court, so we will assume that it does.No. 13

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he violated Indiana’s requirements for transporting u nstamped cigarettes across the state, t he CCTA does not make every violation of a state’s cigarette taxation laws a federal
crime. See 18 U.S.C. § 2341(2); see also United States v. Wilbur, 674 F.3d 1160, 117 3

– 7 4 (9th Cir. 2012) (“The CCTA, however, does not make cigarettes ‘contraband’ under federal law simply beca use they are contraband under state law.”). O n ly cigarettes that “bear no evidence of the payment of applic able State or local cigarette taxes in the State or locality where such ci garettes are found” qualify as con traband cig a rettes under the CCTA

. See 18 U.S.C. § 2341(2); Wilbur, 674 F.3d at
1174. If Congress had intended to make all cigarettes tran sported in violation of state law “contraband,” it could have done so. Congress, however, chose to limit the defin i tion of “contraband cigarettes” to cigarette s that fail to bear ev idence of applicable state or local cigarette taxes, and we must enforce the statute according to its plain terms. See Sebelius v. Cloer,

--- U.S.

--- , 133 S. Ct. 1886, 1896, 185 L. Ed. 2d 1003 (2013) (“[W]hen [a] statute’s language is plain, the sole function of the courts

— at least where the disposition required by the text is not absurd

— is to enforce it according
to its terms

. ” (internal quotation marks and citation omi tted)). Accordingly, under the CCTA’s plain language, “[i]f ther e are no ‘applicable State or local cigarette taxes,’ cig arettes are not contraband, regardless of whether they were transported in violation of state law.” Wilbur, 674 F.3d at
1173

– 74.

The l egislative history of the CCTA provides further support for this interpretation of its terms

. As the legislative history establishes, Congress intended the CCTA to suppl ement, but not supplant, states’ enforcement of their own ci garette tax statutes. See S. R EP

. 95

- 962 at 3

- 9. In enacting the22 No. 13

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CCTA, Congress sought to h elp states avoid large

- scale re venue losses and prosecute major cigarette traffickers while ensuring that the primary efforts to stop cigarette smuggling remained with the states. See i d. at 9. With the s e goal s in
mi nd, it makes sense that Congress would f ocus federal e fforts under the CCTA on prosecuting offenders who skirt applicable state and local ciga rette taxes while leaving e nforcement of other aspects of state s’ ciga rette taxation schemes to the states themselves

. We, therefore, find that Mr. Mohame d’s violation of I ndiana’s requirements regarding the transportation of u nstamped cigarettes alone can not serve as the basis for his
conviction. This, however, does not end our inquiry. We

must first determine w hether the government presented su fficient ev idence at trial to prove that Mr. Mohamed po ssessed the cigarettes at issue for the purpose of selling, u sing, consuming, handling, or distributing them wit hin Ind iana

— not just that he failed to comply with Indiana’s r equirements for transporti ng unstamped cigarettes across the

state

. As explained above, the government did not rely on the presumption under Indiana Code section 6

- 7

- 1

- 24(d) at trial. We must therefore decide whether, absent the presumption, the jury could have reasonably inf erred from the evi dence at trial that Mr. Mohamed possessed the cigarettes at issue for sale, use, consumption, handling, or distribution in Indiana. See United States v. Jones, 713 F.3d 336, 340 (7th Cir. 2013) (“A Rule 29 motion calls on the court to distinguish between r e asonable inferences and speculation.”). The government’s e vidence at trial was sufficient to give rise to an inference that Mr. Mohamed was trafficking cigarettes when Office rNo. 13

- 2368 23

Helmer pulle d him over

. Mr. Mohamed had in his posse ssion over 23,000 Newport c igarettes purchased from various gas stations in Kentucky, a low

- tax state, along with a trash bag containing over $15,000 in ca sh

. Special Agent Neie test ified that cigarette traffickers typically travel from retailer to retailer purchasing cigarettes

— lik e Mr. Mo hamed ha d

— because of restrictions retailers place on the amount of cig arettes a cus tomer can purchase at one time. Special Agent Neie also testi fied that Newport s are one of the two most frequently trafficked brands of cigarettes

. F urthermore, when Officer Helmer asked Mr. Mohamed how much mo ney he makes selling cigarettes, Mr. Mohamed answered “not much

, ” effectively admitting t hat he does in fact sell cig arettes for profit

. This evidence is more than sufficient to show that Mr. Mohamed was engaged in cigarette traffic king and that he intended to sell the cigarettes at issue in a state with higher cigarette taxes than Kentucky.
The government’s evidence at trial, however, was not sufficient to show that Mr. Mohamed intended to sell the cigarettes in Indiana

. Thirty

- eight states had higher cigarette taxes than Kentucky in 2012, and, as Special Agent Neie te stified, Mr. Mohamed could have made a profit selling the cigarettes in any one of those states. The government pr esented no evidence that Mr. Moha med had taken any steps to sell, distribute, or otherwise dispose of the cigarettes in Indiana, and although Mr. Mohamed admitted to Officer Helmer that he sells cigarettes, he gave no indic ation of where he sells them. The government’s evidence and arg ume nts at trial simply did not focus on whether Mr. M ohamed intend ed to sell the cigarettes in Indiana, and the j ury’s questions to the district court understandably reflected their confusion over this issue. Significantly, during senten c-24 No. 13

- 2368

ing, the government t ook the position that Mr. M o hamed intended to sell the cigarettes in New York, where he stood to make substantially more profit than selling them in Ind iana due to New York’s $4.35 per pack tax rate.

We do not believe that Mr. Mohamed’s possession of ci gar ettes in Indiana under these circumstances is sufficient to support a finding, beyond a reasonable doubt, that Mr. M ohamed intended to sell, distribute, or otherwise dispose of the cigarettes in Indiana. See United States. v. Katz, 582 F.3d 749, 752 (7th C ir. 2009) (“A jury cannot speculate its way out of reasonable doubt.”); see also United States v. Griffin, 684 F.3d 6 91, 698 (7th Cir. 2012) (evidence that the defendant had easy access to firearms and could have possessed them in a matter of seconds was n ot sufficient to prove that he inten ded to exercise control over them); Pias kowski v. Bett

, 256 F.3d 687, 692

– 93 (7th Cir. 2001) (evidence that the defendant was present at the site of a murder and later referred to “shit g oing down” was insufficient to pr ove that he participated in the murder directly or as a conspirator); United States v. Ha rris, 942 F.2d 1125, 1129

– 30 (7th Cir. 1991) (reversing the d efendant’s conviction where the evidence was “as consistent with an inference of innocence as one of guilt ”). Without e vidence that Mr. Mohamed intended to sell or otherwise di spose of the cigarettes in Indiana, the government failed to prove beyond a reasonable doubt that Indiana law required the cigarettes to bear Indiana tax stamps. Mr. Mohamed’s
conviction , therefore, cannot stand. 7

7 This does not mean that Mr. Mohamed’s conduct necessarily must go unpunished. As Mr. Mohamed has acknowledged, the State could have charged him with a misdemeanor for violating Indiana’s requirements for transporting unstamped cigarettes. See Ind. Code § 6

- 7

- 1

- 19.5. TheNo. 13

- 2368 25

CONCLUSION
For the foregoing reasons, we REVERSE the decision of the district court and REMAND with instructions to enter a judgment of acquittal.

CCTA, moreover, contains recordkeeping and reporting requirements that apply to the shipment, sale, or distribution of more than 10,000 cig arettes in a single transaction, see 18 U.S.C. § 2343, and violations of those requir e ments also may result in criminal liability. See 18 U.S.C. § 2344(b). We make no comment on whether the government’s evide nce at trial would have been sufficient to convict Mr. Mohamed under Indiana state law or under other provisions of the CCTA. We hold only that the ev idence at trial was not sufficient to support a conviction for violation of 18 U.S.C. § 2342(a).