PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

No. 95-5840

JAMES CULPEPPER PEBWORTH, a/k/a

Snake,

Defendant-Appellant.

Appeal from the United States District Court

for the Eastern District of Virginia, at Norfolk.

J. Calvitt Clarke, Jr., Senior District Judge.

(CR-95-61)

Argued: March 7, 1997

Decided: April 29, 1997

Before MURNAGHAN and LUTTIG, Circuit Judges, and

BLACK, Senior United States District Judge for the

District of Maryland, sitting by designation.

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Affirmed by published opinion. Judge Luttig wrote the majority opinion, in which Senior Judge Black joined. Judge Murnaghan wrote a

dissenting opinion.

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COUNSEL

ARGUED: Richard William Zahn, Jr., TAYLOR & WALKER, P.C.,

Norfolk, Virginia, for Appellant. Charles Philip Rosenberg, Assistant

United States Attorney, Norfolk, Virginia, for Appellee. ON BRIEF:
Helen F. Fahey, United States Attorney, Robert J. Krask, Assistant

United States Attorney, Norfolk, Virginia, for Appellee.

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OPINION

LUTTIG, Circuit Judge:

Appellant James Culpepper Pebworth, Jr. challenges his conviction

and sentence for conspiracy to make, receive, possess, sell or otherwise transfer "an implement designed for or particularly suited for

making a counterfeit or forged security with the intent that it be so

used." 18 U.S.C. § 513(b). Because we find neither of Pebworth's

arguments meritorious, we affirm his conviction and sentence.

Pebworth lived in a trailer on property that his employer leased

from the former principals of Oceana Ready Mix, Inc., a corporation

which had been out of business for approximately a decade. When

Pebworth lost his job and had to move, he pilfered Oceana's blank

operating and payroll checks from a shed located on the property. The

checks were to be drawn on an account at the Bank of Virginia Beach,

which had also discontinued operations by the time of Pebworth's

theft. Pebworth took the checks to his new residence and planned

what he described as his "big score." J.A. at 130. He distributed the

checks and false identifications to his accomplices, who negotiated

them at various locations. In return, Pebworth received money from

the accomplices, both directly and indirectly. For example, one of the

accomplices, Perry Douglas Ward, stayed at Pebworth's home and

used proceeds of the check scam to provide Pebworth with groceries

and cash and to pay Pebworth's rent and phone bills. After Pebworth

was eventually incarcerated for state crimes, he told Ward where he

had hidden the remaining checks, and Ward retrieved the checks and

used them in Florida.

Pebworth was convicted of conspiracy to violate 18 U.S.C.

§ 513(b), which makes it unlawful to make, receive, possess, sell, or

otherwise transfer "an implement designed for or particularly suited

for making a counterfeit or forged security with the intent that it be

so used."* Pebworth was sentenced to 27 months imprisonment, three

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*18 U.S.C. § 513(b) provides in full: "Whoever makes, receives, possesses, sells or otherwise transfers an implement designed for or particu-

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years of supervised release, $15,150.56 in restitution, and a special

assessment of $50.

Pebworth argues that, because the blank checks he possessed were

in the name of a defunct corporation and drawn on a defunct bank,

the district court erred in denying his motion for judgment of acquittal. Pebworth contends in this regard that the "security" referenced in

§ 513(b), like the "security" referenced in § 513(a), must be the security "of a State or political subdivision thereof or of an organization,"

and, consequently, that subsection (b) only prohibits the possession of

an implement designed for or particularly suited for making a security

of a state or political subdivision or of an organization. Because the

term "organization" does not include former corporations, see

§ 513(c)(4) (defining term "organization" as an entity "which operates

in or the activities of which affect interstate or foreign commerce"),

argues Pebworth, his conviction for possessing the"implements" of

blank checks of a defunct corporation cannot stand.

Congress, however, simply did not require in subsection (b) that

the implement, the possession of which is prohibited, be one for making a security of any particular kind of entity. The text of section

513(b) does not limit that provision's reach to implements designed

for or particularly suited for making only securities of state or political subdivisions or organizations; nor is that provision's reach so limited indirectly through the statutory definition of"security" in section

513(c)(3).

The dissent believes that section 513(b)'s language"implement

designed for or particularly suited for making a counterfeit or forged

security with the intent that it be so used" is ambiguous as to whether

the defendant must have had the intent to use the implement to make

only securities of a state or political subdivision or of an organization,

or whether an intent to use the implement to make any kind of counterfeit or forged securities is sufficient. The language is not ambiguous in this respect at all. The ambiguity that the dissent identifies

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larly suited for making a counterfeit or forged security with the intent

that it be so used shall be punished by a fine under this title or by imprisonment for not more than ten years, or both."

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exists only if one misunderstands the phrase "with the intent that it be

so used" as a reference to section 513(a), which, unambiguously, it is

not. As a matter of grammar, this phrase quite clearly qualifies section

513(b)'s immediately preceding noun phrase "[w]hoever makes,

receives, possesses, sells or otherwise transfers an implement

designed for or particularly suited for making a counterfeit or forged

security," thus confirming that the defendant must have intended only

that the implement be "so used" to make "a counterfeit or forged

security" (the language of section 513(b)), not that he must have

intended that the implement be used to make a counterfeit or forged

security "of a State or political subdivision thereof or of an organization" (the language of section 513(a)).

The explanation for the presence of the limitation in subsection (a)

and the absence of any such limitation in subsection (b) is apparent.

While Congress clearly intended to reach in subsection 513(a) the

uttering or possession only of securities of a state or political subdivision or of an organization, it recognized that many (if not most) counterfeiting and forgery "implements," although they may be used for

making securities of state or political subdivisions or of organizations,

are not designed or particularly suited for making securities of those

or any other particular type entity. Therefore, limiting subsection (b)

to implements designed for or particularly suited for making securities of particular entities would have left beyond the reach of the prohibition many of the very implements the possession of which it was

the purpose of the statute to prohibit.

This plain meaning of the statute poses no constitutional concern

at all. There is as much of an interstate commerce nexus -- and,

indeed, probably more -- to support congressional regulation of

implements with which any kind of counterfeit or forged security can

be made, as there is a nexus to support Congress' regulation of the

implements for making bombs. No one would contest Congress'

authority under the Commerce Clause to regulate the possession or

use of the latter.

Pebworth also argues that the district court committed clear error

when it refused to reduce his base offense level pursuant to USSG

§ 3B1.2, which provides for a four point decrease if the defendant was

a "minimal participant" and a two point decrease if he was a "minor

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participant." It is clear, however, that even if Pebworth's financial

gain was less than that of his cohorts, he was anything but a minor

participant in this conspiracy. He was the one who stole the checks

from the shed; he maintained the checks in his possession; he provided the checks to his confederates; he received proceeds in return;

he bragged that the scheme would be his "big score"; and he informed

Ward of the location of the checks after he was incarcerated so that

Ward could continue in the enterprise. Pebworth, in short, initiated

the whole conspiracy and was instrumental to its success. Therefore,

the district court did not err in considering him more than a minimal

or minor participant.

The judgment of the district court is affirmed.

AFFIRMED

MURNAGHAN, Circuit Judge, dissenting:

I respectfully dissent from the majority's opinion. I disagree with

the majority's affirmation of Pebworth's conviction on the ground

that 18 U.S.C.A. § 513(b) (West Supp. 1997) does not require the

government to prove an interstate commerce nexus. Because I would

hold that § 513(b) does require the government to prove an interstate

commerce nexus, and because the government failed to do so in the

instant case, I would reverse Pebworth's conviction even though what

he did was not commendable. The decision as to what should be punished is not ours but that of Congress.

I.

Pebworth contends that the district court erred when it denied his

motion for a judgment of acquittal on the ground that § 513(b) does

not require the government to prove an interstate commerce nexus.

We review the district court's interpretation of the statute de novo.

See United States v. Hall, 972 F.2d 67, 69 (4th Cir. 1992).

In order to ascertain Congress's intent, we must first look at the

language of the statute itself. See Stiltner v. Beretta U.S.A. Corp., 74

F.3d 1473, 1482 (4th Cir. 1996) (en banc), cert. denied, 117 S.Ct. 54

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(1996). If the statutory language is plain and unambiguous, we normally do not look any further. Id. If the statute's language is ambiguous, however, we turn to the statute's legislative history for

interpretative guidance. Id. In the absence of significant guidance

regarding congressional intent in the legislative history, we then must

employ the traditional rules of statutory interpretation. Id.

Section 513 provides in pertinent part:

(a) Whoever makes, utters or possesses a counterfeited

security of a State or a political subdivision thereof or of an

organization, or whoever makes, utters or possesses a

forged security of a State or political subdivision thereof or

of an organization, with intent to deceive another person,

organization, or government shall be fined under this title or

imprisoned for not more than ten years, or both.

 (b) Whoever makes, receives, possesses, sells or otherwise transfers an implement designed for or particularly

suited for making a counterfeit or forged security with the

intent that it be so used shall be punished by a fine under

this title or by imprisonment for not more than ten years, or

both.

 (c) For purposes of this section--

 . . . .

 (4) the term "organization" means a legal

entity, other than a government, established or

organized for any purpose . . . which operates in

or the activities of which affect interstate or foreign commerce.

18 U.S.C.A. § 513 (emphasis added).

The plain language of § 513(a) provides that the government must

prove that the defendant: 1) made, uttered, or possessed; 2) a counterfeited or forged security; 3) of a state, of a political subdivision, or

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of an organization that operates in or affects interstate commerce; 4)

with the intent to deceive another person, organization, or government. 18 U.S.C.A. § 513(a). In regard to the third element, courts

have held that a check is a security of the account holder and the bank

upon which the check is drawn. See United States v. Chappell, 6 F.3d

1095, 1099 (5th Cir. 1993). Thus, in order to satisfy the third element,

either the account holder or the bank upon which the check is drawn

must operate in or affect interstate commerce. In United States v.

Barone, 71 F.3d 1442, 1445-46 (9th Cir. 1995), the Ninth Circuit held

that the government failed to satisfy the third element because the

account holder was a nonexistent shell company and nonexistent

companies are not "organizations" that engage in interstate commerce.

Thus, Pebworth contends that a jury could not convict him of violating § 513(a) because the government could not establish the third

element. Oceana, the account holder, was a nonexistent corporation,

and the checks were drawn on accounts at the Bank of Virginia

Beach, a nonexistent bank. The government concedes as much.

However, the indictment charged a conspiracy to violate § 513(b),

not § 513(a). Section 513(b) prohibits the receipt, possession, sale, or

transfer of "implements designed for or particularly suited for making

a counterfeit or forged security with the intent that it be so used . . . ."

18 U.S.C.A. § 513(b). Thus, unlike § 513(a), § 513(b) does not specifically provide that the object counterfeit or forged securities must be

"of an organization" that engages in interstate commerce.

The statutory language of § 513(b) is ambiguous as to whether it

requires an interstate commerce nexus. Section 513(b) prohibits the

possession of an implement particularly suited for making a counterfeit security "with the intent that it be so used." 18 U.S.C.A. § 513(b).

The quoted language is ambiguous as to whether it refers to the intent

to make all counterfeit securities, regardless of their connection with

interstate commerce, or whether it refers only to the intent to make

counterfeit securities that § 513(a) prohibits, namely, securities of an

organization engaged in interstate commerce. In other words, the "intent that it be so used" language is ambiguous as to whether it refers

to § 513(a) and requires the defendant to have the intent to make a

counterfeit security that § 513(a) prohibits. If it does, then the govern-

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ment would have to prove an interstate commerce nexus, which it has

not done in the instant case.

Given the ambiguity in the language, we must turn to the statute's

legislative history for interpretative guidance. See Stiltner, 74 F.3d at

1482. Pebworth contends that Congress intended courts to read § 513

as a whole and that the implements that § 513(b) prohibits therefore

must be particularly suited for making the counterfeit securities that

§ 513(a) prohibits. The legislative history does provide some support

for Pebworth's position.

Section 513's legislative history merely repeats the language of

§ 513(a) and § 513(b) in describing the offenses that Congress created. See S. Rep. No. 98-225, at 372 (1984), reprinted in 1984

U.S.C.C.A.N. 3182, 3513. Specifically, the legislative history provides only that § 513(b) "would also penalize the making, receipt,

possession, sale or transfer of an implement designed or particularly

suited for the making of a counterfeit or forged security with the

intent that it be so used." Id. However, the legislative history of § 513

directs the reader to consult an earlier Committee Report on a bill that

did not become law, but which later gave impetus to the enactment

of § 513. Id. That Committee Report provides that Congress only

intended to "cover[ ] implements designed for the making of certain

types of securities purporting to be made or issued by organizations

or by States or local governments." S. Rep. No. 97-307, at 793 (1981)

(emphasis added). As noted, Congress clearly defined"organizations"

as legal entities that operate in or affect interstate commerce. See 18

U.S.C.A. § 513(c)(4). The Committee Report also notes that the punishment for possession of implements should parallel the punishment

for "counterfeiting and forgery in the belief that the offenses covered

by [§ 513(b)] should be treated at the same level as the conduct relating to the written instruments which are made from them." S. Rep.

No. 97-307, at 793 (emphasis added). Thus, the earlier Committee

Report suggests that Congress intended § 513(b) to cover only implements particularly suited for making the written instruments that

§ 513(a) proscribes, namely, securities of an organization that operates in or affects interstate commerce. However, as the government

points out, Congress did not use that exact language in the actual legislative history of § 513.

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Even if the legislative history does not provide significant guidance

regarding Congress's intent, the traditional rules of statutory interpretation mandate the conclusion that I reach. See Stiltner, 74 F.3d at

1482. The government notes that the Supreme Court has held that

"`[w]here 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.'" Brown v. Gardner, 115 S.Ct. 552, 556

(1994) (quoting Russello v. United States, 464 U.S. 16, 23 (1983))

(alteration in original). The government thus contends that since Congress unambiguously included an interstate commerce requirement in

§ 513(a) but not in § 513(b), we should presume that Congress intentionally excluded the requirement from § 513(b).

However, the Supreme Court has also clearly held that courts must

interpret statutes, if possible, to avoid a result that would create serious constitutional doubts. See, e.g., Crowell v. Benson, 285 U.S. 22,

62 (1932). If we construe § 513(b) the way that the government and

the majority opinion contend that we should, a serious question arises

as to whether § 513(b) could withstand constitutional scrutiny.

The legislative history reveals that Congress passed§ 513 pursuant

to its commerce power. See S. Rep. No. 98-225, at 371, reprinted in

1984 U.S.C.C.A.N., at 3512. The Supreme Court has never suggested

that "`Congress can ignore the requirement that some connection with

interstate commerce must be established as a basis for conviction of

a federal crime where the power of Congress to enact the statute is

derived from the commerce clause.'" United States v. Bass, 434 F.2d

1296, 1300 (2d Cir. 1970) (quoting United States v. Perez, 426 F.2d

1073, 1082-83 (2d Cir. 1970)), aff'd on other grounds, 404 U.S. 336

(1971). Congress presumably included an interstate commerce

requirement in § 513(a) in order to give itself jurisdiction. Although

Congress did not expressly include an interstate commerce requirement in § 513(b), we must read such a requirement into the statute in

order to avoid serious constitutional doubts about Congress's power

to enact it.

Moreover, the Supreme Court also has held that courts should construe ambiguous criminal statutes against the government and in favor

of the defendant. See United States v. Bass, 404 U.S. 336, 347-48

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(1971). See also United States v. Hall, 972 F.2d 67, 69 (4th Cir. 1992)

(noting that "[u]nder the rule of lenity any criminal statute . . . must

be construed in favor of the accused and against the government if it

is ambiguous" (emphasis added)). In the instant case, Congress did

not "`plainly and unmistakably'," Bass , 404 U.S. at 348 (quoting

United States v. Gradwell, 243 U.S. 476, 485 (1917)), make it a federal crime for an individual to possess implements suited to making

forged securities of any organization, regardless of a nexus with interstate commerce. Therefore, we should apply the rule of lenity and

construe § 513(b) in favor of Pebworth.

Thus, in order to establish a violation of § 513(b), the government

must prove as an essential element of the offense that the implement

was designed for or particularly suited for making forged or counterfeit securities of a state, a political subdivision, or an organization that

operates in or affects interstate or foreign commerce. In the instant

case, the government failed to prove the requisite nexus with interstate commerce. Both Oceana and the Bank of Virginia Beach are

nonexistent corporations, and they therefore do not operate in or

affect interstate commerce. See Barone, 71 F.3d at 1445.

II.

In light of § 513(b)'s ambiguity and the serious constitutional

doubts that the majority opinion's interpretation raises, I would hold

that § 513(b) requires the government to prove an interstate commerce nexus and that the government failed to do so in the instant

case. Accordingly, I would reverse Pebworth's conviction.* I dissent.

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*Since I would reverse Pebworth's conviction, his appeal of the sentence that the district court imposed would be rendered moot.

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