Opinion ID: 1278099
Heading Depth: 2
Heading Rank: 1

Heading: Buyer-Seller Exception

Text: Appellants contend that the evidence was insufficient to show that they had joined a conspiracy to distribute crack cocaine. They argue that their transactions were nothing more than purchases, which, under the so-called buyer-seller exception developed in this Circuit's case law, do not suffice to prove a conspiracy for the transfer of illegal drugs. Their argument overstates the scope of the exception. The essence of conspiracy is agreement among two or more persons to join in a concerted effort to accomplish an illegal purpose. United States v. Bayer, 331 U.S. 532, 542, 67 S.Ct. 1394, 91 L.Ed. 1654 (1947). To prove a conspiracy, the evidence must show that two or more persons agreed to participate in a joint venture intended to commit an unlawful act. United States v. Desimone, 119 F.3d 217, 223 (2d Cir.1997). To be a member of a conspiracy one must, under Judge Learned Hand's classic formulation, in some sense promote [the illegal] venture himself, make it his own, have a stake in its outcome. United States v. Falcone, 109 F.2d 579, 581 (2d Cir.1940) (L. Hand, J.), aff'd 311 U.S. 205, 61 S.Ct. 204, 85 L.Ed. 128 (1940); see also United States v. Beech-Nut Corp., 871 F.2d 1181, 1191 (2d Cir.1989) ([A] defendant may be deemed to have agreed to join a conspiracy if there is something more, some indication that the defendant knew of and intended to further the illegal ventures, that he somehow encouraged the illegal use of goods or had a stake in such use. (internal quotation marks omitted)); United States v. Borelli, 336 F.2d 376, 385 (2d Cir.1964). Accordingly, unless at least two persons have a shared purpose or stake in the promotion of an illegal objective, there is no conspiracy. As a literal matter, when a buyer purchases illegal drugs from a seller, two persons have agreed to a concerted effort to achieve the unlawful transfer of the drugs from the seller to the buyer. According to the customary definition, that would constitute a conspiracy with the alleged objective of a transfer of drugs. Our case law, however, has carved out a narrow exception to the general conspiracy rule for such transactions. See, e.g., United States v. Hawkins, 547 F.3d 66, 71-72 (2d Cir.2008) (citing several cases from our Circuit to the effect that a simple drug transaction is not sufficient, by itself, to support a conspiracy conviction); United States v. Gore, 154 F.3d 34, 40 (2d Cir. 1998) (observing that [w]ithout more, the mere buyer-seller relationship ... is insufficient to establish a conspiracy). Under this rule, notwithstanding that a seller and a buyer agree together that they will cooperate to accomplish an illegal transfer of drugs, the objective to transfer the drugs from the seller to the buyer cannot serve as the basis for a charge of conspiracy to transfer drugs. This exception from the customary standards of conspiracy preserves important priorities and distinctions of the federal narcotics laws, which would otherwise be obliterated. The federal scheme of prohibition of controlled substances distinguishes importantly between, on the one hand, distribution of a controlled substance, which is heavily punished, and, on the other, possession or acquisition of a controlled substance, which is punished far less severely, if at all. Compare 21 U.S.C. § 841 (listing punishments for the distribution of controlled substances) with id. § 844 (listing punishments for simple possession of controlled substances). (No doubt, considerations underlying this distinction include a policy judgment that persons who acquire or possess illegal drugs for their own consumption because they are addicted are less reprehensible and should not be punished with the severity directed against those who distribute drugs, as well as the perception that distribution of drugs has a substantial and detrimental effect on the health and general welfare of the American people. Id. § 801(2).) At the same time, inchoate offenses, such as conspiracy and attempt are generally punished in the same manner and with the same severity as the completed offense. See id. § 846 (Any person who attempts or conspires to commit an offense defined in this subchapter shall be subject to the same penalties as those prescribed for the offense.). Therefore, if an addicted purchaser, who acquired drugs for his own use and without intent to distribute it to others, were deemed to have joined in a conspiracy with his seller for the illegal transfer of the drugs from the seller to himself, the purchaser would be guilty of substantially the same crime, and liable for the same punishment, as the seller. The policy to distinguish between transfer of an illegal drug and the acquisition or possession of the drug would be frustrated. The buyer-seller exception thus protects a buyer or transferee from the severe liabilities intended only for transferors. In more abstract theoretical terms, it is also observed that, as a purchase or transfer necessarily involves the cooperation of both the transferor and the transferee, but for the exception, all transfers would be punishable as conspiracies to transfer, and the separate prohibition of transfers would be redundant and superfluous. It is sometimes said that the buyer's agreement to buy from the seller and the seller's agreement to sell to the buyer cannot be the conspiracy to distribute, for it has no separate criminal object. United States v. Wexler, 522 F.3d 194, 208 (2d Cir.2008) (internal alterations omitted). [3] While providing that the unlawful transfer from seller to buyer cannot serve as the basis for a charge that the seller and buyer conspired with one another to make the illegal transfer from seller to buyer, the rule does not protect either the seller or buyer from a charge they conspired together to transfer drugs if the evidence supports a finding that they shared a conspiratorial purpose to advance other transfers, whether by the seller or by the buyer. See Wexler, 522 F.3d at 211 (Raggi, J., concurring in part and dissenting in part) (noting that we have limited the application of the buyer-seller rule to circumstances where the indictment charges or the proof shows no more than a sale transaction (internal quotations and citations omitted)). Thus, if the evidence supports a finding that the purchaser not only purchased drugs, but in doing so also in some sense promote[d] the [seller's drug distribution] venture and intended to further it, as described in Falcone, 109 F.2d at 581, and Beech-Nut, 871 F.2d at 1191, the seller and buyer may be found to be in a conspiratorial agreement to further the seller's other sales. And if the evidence supports a finding that the seller shared with the buyer an interest in furthering resale by the buyer, the seller and buyer may be found to be in a conspiratorial agreement to further the buyer's resales. With regard to a seller's conspiratorial liability for resales by the buyer, it is often said that mere awareness on the part of the seller that the buyer intends to resell the drugs is not sufficient to show that the seller and the buyer share a conspiratorial intent to further the buyer's resale. See Hawkins, 547 F.3d at 73-74. This is because the seller cannot be considered to have joined a conspiracy with the buyer to advance the buyer's resale unless the seller has somehow encouraged the venture or has a stake in it  an interest in bringing about its success. See Falcone, 109 F.2d at 581. The transferor's mere knowledge of the transferee's intent to retransfer to others, without anything more, would not show that the transferor had a stake or interest in the further transfer of the drugs. Under some circumstances, a seller of drugs may have no interest whatever in whether the buyer uses the drugs himself or resells. Consider, for example, a case in which the original possessor of the drugs holds them for his own use. A friend asks this person to let him have some of his drugs. The possessor agrees, and they effectuate a transfer, either as a gift or at the price the original possessor paid for the drugs. The original owner has become a transferor, his friend a transferee. Under this scenario, however, the transferor has transferred without profit motivation and without intending that the transferee sell or give them to anyone else. So far as the evidence shows, the transferor is indifferent to whether the transferee intends to use the drugs himself, share them with friends, or resell them. On such facts, even assuming the transferee has told the transferor that he intends to sell or give the drugs to a third person, the two are not guilty of conspiracy because the transferor is genuinely indifferent to the possibility of retransfer. There is no shared intention between the transferor and the transferee that further transfers occur. Referring to Judge Hand's terminology in Falcone, the transferor in this scenario is not in any sense promot[ing] further distribution, or mak[ing] it his own; he has no stake in any further transfers by the transferee. See also Hawkins, 547 F.3d at 74 (It is axiomatic that more is required [to establish liability for conspiracy] than mere knowledge.). On the other hand, if we consider a hypothetical seller who is running a profit-motivated business of selling drugs in wholesale amounts, this seller may well realize that his buyers' ability to buy and pay for substantial amounts of drugs, and hence, his profit, will depend on the buyers' ability to resell. The business of selling wholesale quantities depends on the ability of the customers to resell. A seller in such circumstances may well share with the buyer an intention that the buyer succeed in reselling and may be seen as having a stake in the buyer's resale. In such case, the liability of buyer and seller for having conspired together to transfer drugs would depend not on the seller's mere knowledge of the buyer's intent to retransfer, but on a further showing of the seller's interest, shared with the buyer, in the success of the buyer's resale. In the recent case of United States v. Hawkins , No. 3:05cr58(SRU), 2007 WL 1732767 (D.Conn. June 15, 2007), the district court failed to appreciate how limited is the application of the buyer-seller exception. See Hawkins, 547 F.3d 66. In that case, the defendant Hawkins was charged with conspiring with members of Alex Luna's drug distribution organization for the possession of cocaine and cocaine base with intent to distribute. The evidence showed that on several occasions Hawkins called members of the Luna organization to negotiate a purchase of one or two eight-balls. Id. at 69. Evidence was received to the effect that an eight ball (3.5 grams) is an amount sufficiently large that it is suitable to be broken down into several 0.3 gram bags for resale (while it is also small enough that it might also be bought for personal use). Id. at 68. Luna gave Hawkins his cell phone number to be used for drug buys. Id. at 69. Hawkins told Luna he was dissatisfied with other competing sellers and preferred working with Luna. In one of Hawkins's calls, he told Luna that the eightball he was buying was, at least in part, for two kids from work. One of them had been calling Hawkins because he wanted to get high. Id. On another occasion, Hawkins called Luna and said that he needed an eightball for a customer who was waiting for [Hawkins] right now. Id. Hawkins explained to Luna that while he had no money to pay for the drugs, the customer had $100, so that, if Luna gave Hawkins the drugs on credit, Hawkins could return with the money immediately after receiving payment from his customer. Luna agreed to give Hawkins the eightball on credit, and told Hawkins to go meet Luna's associates at a housing project to get the drugs. The transaction, however, was not consummated. Id. at 69-70. The jury, which had been instructed that the mere existence of a buyer-seller [relationship] is insufficient, found the defendant guilty. Id. at 70. The district court, however, set aside the conviction, concluding that the evidence was insufficient to support the conspiracy charge. It concluded that there had been no adequate showing of a conspiracy between Luna and Hawkins for Hawkins to possess with shared intent to further distribute. Hawkins, 2007 WL 1732767, at -9. We reversed and reinstated the conviction. After reviewing numerous opinions in this Circuit discussing the buyer-seller rule to the effect that a purchase and sale do not constitute a conspiracy unless there is additional evidence showing an agreement to join together to accomplish an objective beyond the sale transaction, Hawkins, 547 F.3d at 72, and acknowledging that the seller's knowledge of the buyer's intent to resell is, without more, not sufficient, we went on to point out various aspects of the evidence which supported a conclusion that the relationship between Luna and Hawkins was not merely that of seller and buyer but that they shared the illegal objective of furthering drug transfers other than the transfer between them. Our opinion pointed to evidence that Hawkins did more than merely purchase from Luna's drug selling conspiracy. He agreed to further the objectives of the Luna conspiracy, id. at 76, effectively seeking to associate himself with the Luna distribution conspiracy in order to secure for himself repeated access to it as a source of drugs and to expand the scope of Luna's distribution venture by repeatedly contacting Luna's organization when he identified potential new customers and establishing a relationship of mutual trust with Luna. We pointed also to evidence that Luna, the seller, joined and associated himself with Hawkins's objective of further distribution of the drugs Luna had sold to Hawkins. As an example, Luna indicated his willingness to supply Hawkins with cocaine on credit. In so doing, Luna exhibited trust in Hawkins and a stake in his redistribution. Id. We observed, [t]he jury could reasonably infer that Luna would have simply rejected Hawkins's proposal [to purchase on credit] out of hand had he not ... cared about [Hawkins's] redistribution. Id. For these reasons the evidence was sufficient to show that the defendant Hawkins and the seller Luna shared a conspiratorial intention to advance sales other than the sales from Luna to Hawkins. The present case has much in common with Hawkins. In both cases, the evidence established the existence, prior to the appellants' entry on the scene, of a drug-selling organization. The appellants in both cases made purchases of drugs from that preexisting organization, with intention, known to the sellers, to resell the purchased drugs. The appellants claimed the protection of the buyer-seller exception rule. In both cases, however, there was evidence from which the fact finder could infer (a) that the sellers shared with the buyers an interest and a stake in the buyers' intention to resell the drugs, and (b) that the buyers shared with their sellers an intention to be a continuing part of, and to further, the sellers' drug selling operation. The evidence was sufficient in each case to show that the sellers and buyers had joined in a cooperative venture, in which both buyers and sellers had a stake in additional transfers of drugs beyond the transfers from the original seller to the original buyer. To explain how the evidence in this case showed a conspiratorial relationship joining the appellants Minott, Fuller, and Baker with the selling organization, it is useful to refer to prior opinions of our court which have described in geometric terms characteristic patterns of drug distribution conspiracies between sellers and buyers. One conventional pattern is sometimes described as a spoke or wheel conspiracy, another as a chain. [4] Both patterns are present here. The spoke or wheel analogy is used to describe a core seller, or selling group, the hub, which sells to numerous customers, some of whom may become the spokes. In part for reasons discussed above in our discussion of the buyer-seller rule, a single purchase of drugs, without more, would in many instances not make the purchaser a member of a conspiracy. However, the more a purchaser associated himself with the selling core of the wheel conspiracy  the more, for example, that he came to depend on the hub selling group as a stable, dependable source of supply  the more basis there would be to find that the purchaser had a stake in the drug selling venture of his suppliers, and accordingly the more basis there would be to find that such a purchaser had become a member of the selling conspiracy with a stake in the sellers' other sales. Furthermore, assisting the selling group in identifying and distributing to other regular customers tends to show such a stake in the venture. [5] The chain metaphor refers to a pattern of drug distribution in which one sells to another, who then sells to a third, etc. See, e.g., Borelli, 336 F.2d at 382-84 (discussing the features of a chain conspiracy). One who establishes a continuing business of selling drugs in large, wholesale quantities knows that the success of his selling business depends on the ability of his customers to resell to others, who in turn will resell to still others, until the product ultimately is sold to retail consumers. The more the wholesale seller hopes, in the interest of the success and profitability of his own business, to have a purchaser of wholesale quantities as a regular, repeat customer, the more the seller has an interest and a stake in that purchaser's ability to resell successfully, and consequently the more basis there may be for finding that the seller's supplying of drugs to the buyer to enable the buyer to resell to others may be a conspiracy between the seller and the buyer to bring about those resales. Both the chain and the spoke analogies support the sufficiency of the evidence in this case, notwithstanding the buyer-seller exception, to show that each of the appellants was in a conspiracy with the selling group to distribute crack cocaine. All three appellants purchased with such frequency and in such quantity from the selling group to support a finding that each of them depended on it as a source of supply and thus had a stake in the group's success in selling to others so as to assure its continued availability as a source. Minott and Fuller joined into the drug distribution efforts of the selling group in other ways, as well. Minott brought the selling group additional personnel, introducing his roommate Ramsey who then was recruited to handle one of the drug-order phone lines. Minott himself subsequently made deliveries for the selling group at Ramsey's request. Minott also introduced one of his intermediaries, Pops, to the selling group as a customer (although he appears to have regretted this decision when Pops began to make purchases from Dizzy without Minott's knowledge). Fuller assisted the drug distribution effort by selling crack in small quantities at the Taylor Avenue house since the selling group did not sell crack in quantities smaller than an eightball. [6] At the same time, the selling group had a meaningful stake in the success of the resale efforts of their regular, wholesale customers, Minott, Fuller, and Baker, so that they could continue to be customers. Cf. Direct Sales Co. v. United States, 319 U.S. 703, 711, 63 S.Ct. 1265, 87 L.Ed. 1674 (1943) ([F]acts, such as quantity sales, high pressure sales methods, abnormal increases in the size of the buyer's purchases, etc., which would be wholly innocuous or not more than ground for suspicion in relation to unrestricted goods, may furnish conclusive evidence, in respect to restricted articles, that the seller knows the buyer has an illegal object and enterprise.); Borelli, 336 F.2d at 384 (A seller of narcotics in bulk surely knows that the purchasers will undertake to resell the goods over an uncertain period of time, and the circumstances may also warrant the inference that a supplier or a purchaser indicated a willingness to repeat.). The selling group's interest in Fuller's sales was demonstrated further by the fact that they provided him with drugs on credit, relying on his ability to resell to secure payment to themselves. See Hawkins, 547 F.3d at 76. In short, with regard to all three appellants, there was ample evidence that they joined in the selling group's spoke conspiracy, having an interest and a stake in its success in maintaining itself as a reliable source of drugs for them by continuing to sell profitably to others. And, because appellants were shown to purchase crack in wholesale quantities, there was ample evidence from which the jury could find that the selling group joined in a conspiracy with each of them, having a stake and interest in the success of their resales of the drugs they purchased so that they could continue to be profitable customers of the selling group. The evidence supported a jury finding of a conspiracy between each of the appellants and the selling group for drug distributions other than the sales to the appellants. The buyer-seller exception is not an obstacle to a finding that the appellants conspired with the selling group to distribute crack cocaine, as charged.