Opinion ID: 187186
Heading Depth: 1
Heading Rank: 2

Heading: William Farrell

Text: Farrell advances several challenges to his convictions and sentences. First, he claims the evidence was insufficient to support his conviction for conspiring to launder money. We agree and therefore reverse that conviction. Second, he argues the district court erred in admitting evidence that he had failed to file federal income tax returns. Even if that was an error, it was either harmless or moot, depending upon which conviction is at issue. Third, Farrell argues the district court erred in permitting the use of two particular binder tabs accompanying the transcripts of the recorded conversations played at trial. We find no such error. Fourth, Farrell contends his sentences were unreasonably harsh. This contention lacks merit. Finally, Farrell joins both of Fletcher's challenges to the Government's expert opinion testimony, which, as discussed in Part IV, we reject.
At trial, the Government argued and the jury found Farrell had agreed with Fletcher to launder the proceeds of their narcotics activities by using those proceeds to pay the mortgage on the Rosedale building, which was owned by Karlene Thomas. Farrell contends the evidence was not sufficient to support the jury's verdict. We review the sufficiency of the evidence de novo, considering it in the light most favorable to the government, to determine whether any rational trier of fact could have found [the defendant] guilty beyond a reasonable doubt of all the required elements of the crime. Valdes v. United States, 475 F.3d 1319, 1322 (D.C.Cir.2007) (en banc). The federal money-laundering statute proscribes the conversion of cash into goods and services as a way of concealing or disguising the [illegal] wellspring of the cash. United States v. Wynn, 61 F.3d 921, 924 (D.C.Cir.1995) (quotation marks omitted). [2] We have emphasized that 18 U.S.C. § 1956 prohibits the laundering of money, not merely the spending of money obtained illegally. Thus, the Government must prove that [the subject transaction was] motivated by a desire to conceal or disguise the source or the ownership of the money. Id. (citation omitted); see also United States v. Hall, 434 F.3d 42, 50 (1st Cir.2006) (the money laundering statute does not criminalize the mere spending or investing of illegally obtained assets). Accordingly, it is generally the case that [i]f transactions are engaged in for present personal benefit, and not to create the appearance of legitimate wealth, they do not violate the money laundering statute. United States v. Majors, 196 F.3d 1206, 1213 (11th Cir. 1999) (quotation marks omitted); cf. Cuellar v. United States, ___ U.S. ___, 128 S.Ct. 1994, ___ L.Ed.2d ___ (2008) (holding § 1956(a)(2)(B)(i), which prohibits transportation designed to conceal certain attributes of illegally obtained funds, does not require proof that defendant attempted to create appearance of legitimate wealth, but recognizing such attempt may signal violation of money laundering statute and indeed is manner in which classic money laundering occurs). The statute also punishes as a principal anyone who conspires to launder money. § 1956(h). Farrell argues the evidence was insufficient to show the mortgage payments were designed to conceal the source of the funds rather than to profit[] from the excess rental income or[ to] maintain[] the premises to further drug trafficking. To be sure, the Government's evidence need not exclude every reasonable hypothesis of innocence or be wholly inconsistent with every conclusion except that of guilt. United States v. Lam Kwong-Wah, 924 F.2d 298, 302 (D.C.Cir.1991) (quotation marks omitted). But when faced with an innocent explanation sufficiently supported by the evidence to create a reasonable doubt about the defendant's guilt, the Government's burden is to present evidence sufficient to dispel that doubt. The need for evidence that excludes such an innocent explanation is especially important in relation to a charge of money laundering because of the fine line between laundering and merely spending illicit funds. Both of Farrell's innocent explanations create a reasonable doubt about his guilt such that no reasonable jury could conclude that Farrell's purpose in paying the mortgage on the Rosedale building was to conceal the source of illegally obtained funds. First, the evidence showed that Farrell profited from the excess rental income derived from the building. The monthly mortgage payment on the Rosedale building was about $600. The monthly rent for each apartment in the Rosedale building, which Farrell collected when he was paying the mortgage, was typically $400 or $450. Although all the apartments were not always rented, it is easy to see that Farrell's rental income exceeded his mortgage payments, making his decision to take over the mortgage a profitable one. Second, the evidence showed Farrell maintained the Rosedale building to further his drug trafficking, for which maintaining he was in fact convicted on Count 3. As detailed below, Farrell's paying the mortgage and collecting the rent were integral to the control he exerted over the Rosedale building. In sum, there was ample evidence to show Farrell paid the mortgage to gain present benefits, not to create the appearance of legitimate wealth. At trial, the Government presented and now points to three pieces of evidence intended to show Farrell paid the mortgage in order to conceal the source of his funds. We find the Government's evidence insufficient to its taskit neither makes for a strong affirmative case nor tends to exclude Farrell's innocent explanations. First, the Government notes Farrell paid the mortgage in Karlene Thomas's name rather than in his own. Farrell did this sometimes by purchasing a money order in Thomas's name and then making the money order payable to the mortgagee, and sometimes by giving the money to Thomas to make the payment. The Government cites two decisions in which a court of appeals upheld the conviction of a person who had laundered money by making a payment in another's name. Those cases, however, involved circumstances that tended to exclude the possibility that the defendant was merely spending the illicit funds. In neither case was there any plausible legitimate reason for using another's name. In both cases the pseudonymous purchase provided the defendant no benefit other than a way to convert the illegally obtained funds; that is, the purchase merely created the appearance of legitimate wealth. Indeed, in one case the defendant admitted he was trying to launder the money. See Wynn, 61 F.3d at 925-26 (one defendant obtains and uses cashier's checks in other defendant's name to buy luxury vehicle and soon thereafter to pay difference between trade-in value of that vehicle and price of another); Hall, 434 F.3d at 52-53 (defendant bought truck with money order in sister's name and told acquaintance account from which funds came was fictitious `inheritance account' in which the money `was cleaned'). No such circumstance is present in this case. There was a simple, benign reason for paying the mortgage in Thomas's name: Thomas was the mortgagor, making it easier for Farrell to pay the mortgage in her name than to make clear to the mortgage company that payments in his name were to be applied to her mortgage. And, as discussed above, making the mortgage payments provided Farrell with legitimate benefits, namely, rental income and a base for his drug operation. Therefore, under the circumstances Farrell's decision to pay the mortgage in Thomas's name does not reasonably suggest a purpose to conceal the source of the funds. Cf. United States v. Sanders, 928 F.2d 940, 946 (10th Cir.1991) (insufficient evidence of purpose to conceal where defendant purchased cars in daughter's name but defendant was present at these purchases[, was] readily identified by the respective salespersons involved, and conspicuously used the cars). Second, the Government points to Farrell's alleged belief that, by paying the mortgage from 1993 to 2001, he acquired a property interest in the building. The Government does not, however, explain how this alleged belief shows a design to conceal the source of the funds. We find this alleged belief has little or no probative value because it does not distinguish mere spending from laundering; legitimate spending to pay for real estate ordinarily comes with the expectation of acquiring a property interest. Third, the Government emphasizes that Farrell refuse[d] to deal with government entities regarding the Rosedale building, such as paying sanitation bills or helping with tax filings, and [refused] to provide Thomas with money to handle such bills. [3] Left again to grope for the significance of this allegation, we find none. For starters, this allegation relates not to the use (and thus possible cleansing) of the illicit funds but rather to the funds' non-use, the significance of which is at best unclear. Moreover, Farrell's refusal to pay sanitation and tax-preparation bills may have reflected nothing more than his desire to avoid diminishing the profit from his investment in the Rosedale building. If Thomas was willing to pay these bills even while Farrell was collecting the rent, then Farrell had no incentive to pay them. Or Farrell may have avoided paying the bills because he did not want his name associated with a building he knew was used for drug activities. In sum, no reasonable jury could conclude that Farrell's purpose in paying the mortgage on the Rosedale building was to conceal the source of illegally obtained funds. We therefore vacate Farrell's conviction on Count 2 for conspiring to launder money. [4]
Farrell contends the district court erred in admitting into evidence certified statements by the IRS that he had not filed income tax returns for the years 1998 through 2002. The district court admitted these statements not to prove Farrell was guilty of tax evasion but rather to rebut Farrell's contention that he had legitimate income and not illegitimate income from drug trafficking. Under Federal Rule of Evidence 404(b), evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith, but it may be admissible for another purpose. Because the introduction of such evidence runs the risk the jury will convict the defendant simply for being a bad person, the district court must be alert to whether the probative value of the evidence is substantially outweighed by the danger of unfair prejudice, in which case the court must exclude it. FED.R.EVID. 403. We accord substantial deference to the district court's rulings on these issues. United States v. Lawson, 410 F.3d 735, 741 (D.C.Cir.2005); see also Henderson v. George Wash. Univ., 449 F.3d 127, 133 (D.C.Cir.2006) (the appellate court is extremely wary of second-guessing the legitimate balancing of interests undertaken by the trial judge pursuant to Rule 403). Farrell contends admitting the IRS records violated both Rule 404(b) and Rule 403. He argues the IRS records were inadmissible under Rule 404(b) because they were probative of nothing more than that [he] just was a tax deadbeat and he was a bad citizen. Farrell argues the evidence was inadmissible under Rule 403 because whatever probative value it might have had was substantially outweighed by the danger of unfair prejudice, specifically the risk that the evidence would unfairly suggest he was the type of dishonest person who would deal drugs near a church or launder money. As Farrell points out, the district court did not give a limiting instruction as to the purpose for which the IRS records were admitted. We need not decide whether the district court erred, as Farrell claims. To the extent the purported errors relate to Farrell's conviction on Count 2 for money laundering, they are moot because we reverse that conviction on a different ground, supra. To the extent they relate to Farrell's drug-related convictions on Counts 1, 3, and 13-15, they were harmless. An error is harmless and thus to be disregarded if it does not affect substantial rights. FED.R.CRIM.P. 52(a); see 28 U.S.C. § 2111. In determining whether an error is harmless, the court measures the harm in terms of whether the error had substantial and injurious effect or influence in determining the jury's verdict, not merely whether the record evidence [would be] sufficient absent the error to warrant a verdict of guilt. Consequently, an evidentiary error is harmless if... the case is not close.... Ashcraft & Gerel v. Coady, 244 F.3d 948, 953 (D.C.Cir.2001) (quotation marks and citation omitted). Of course, the Government bears the burden of proving an error is `harmless.' United States v. Perry, 479 F.3d 885, 891 (D.C.Cir.2007). In this case, none of the drug charges was close; the Government presented overwhelming evidence of Farrell's guilt on each drug-related count, to wit: Count 1: The Government was required to prove Farrell agreed knowingly or intentionally... to ... distribute ... or possess with intent to ... distribute five kilograms or more of powder cocaine, 50 grams or more of crack cocaine (i.e., cocaine base), or 100 grams or more of heroin. See 21 U.S.C. §§ 841(a)(1), (b)(1)(A)(ii)-(iii), (b)(1)(B)(i) & 846. We detailed in Part I some of the evidence in support of this charge: Farrell and Fletcher coordinated their dealings with a drug source, their sales of powder cocaine to Thomas Jackson, and their sale of heroin to Harry Jackson; Farrell and Law jointly sold powder cocaine to Mason; and Law told Mason that Farrell was his source for the powder cocaine and heroin he was selling to Mason. The evidence in support of the other drug counts, which we consider presently, also shows Farrell's participation in the conspiracy. Count 3: The Government was required to prove Farrell knowingly open[ed], lease[d], rent[ed], use[d], or maintain[ed] the Rosedale building for the purpose of manufacturing, distributing, or using powder cocaine, crack cocaine, or heroin. See 21 U.S.C. § 856(a). As detailed in Part I, both apartment # 3, which was rented by Farrell's co-conspirator Law, and apartment #4, which was evidently not rented, contained drugs and drug paraphernalia. Apartment # 4 also contained links to Farrell, as well as to Fletcher and Law, specifically, Farrell's and Fletcher's business cards and a coffee grinder matching a piece of a coffee grinder in Law's apartment. And although Karlene Thomas was the Rosedale building's owner of record, Farrell had effective control. Not only was he collecting the rent from the tenants and paying the mortgage, he was also doing the leasing and he excluded Thomas by changing the locks on the building. Count 13: Much of the evidence that establishes Farrell's guilt under Counts 1 and 3 also proves he knowingly or intentionally possessed with intent to distribute the 15 grams of crack cocaine found in apartment # 4 of the Rosedale building or at least aided and abetted that possession, for which he would be liable as a principal. See 21 U.S.C. § 841(a)(1), (b)(1)(B)(iii); 18 U.S.C. § 2. Count 14: The Government was required to prove Farrell knowingly or intentionally distributed powder cocaine. See 21 U.S.C. § 841(a)(1), (b)(1)(C). On November 25, 2003, Mason, who was cooperating with FBI agents, met Law outside Law's aunt's house, where he gave Law $3,500 in marked bills for 125 grams of powder cocaine. Law did not, however, give Mason the cocaine at that time; rather, they agreed Law would give Mason the drugs later that day at the Shiloh Baptist Church. Farrell entered the church some 20 to 30 minutes after Law had done. Five to ten minutes later, Farrell and Law exited the church together and got into Farrell's van. After Mason arrived, Law left Farrell's van carrying a brown paper bag containing powder cocaine, which he gave to Mason in Mason's car. That night, a Metropolitan Police officer conducting a traffic stop of Farrell seized $3,411, of which $3,030 was in marked bills the FBI had provided to Mason earlier that day for the controlled purchase from Law. Count 15: As with Count 14, the Government was required to prove Farrell knowingly or intentionally distributed powder cocaine to Valentine-Bey. On November 26, 2003, at the direction of FBI agents, Valentine-Bey bought 250 grams of powder cocaine from Farrell outside the Shiloh Baptist Church. Farrell argues the admission of the IRS records showing he had failed to file tax returns for several years was nonetheless prejudicial because the records bolstered the credibility of the cooperating witnesses whose testimony was the core of the government's proof of the narcotics conspiracy. Farrell's theory appears to be that, insofar as the cooperating witnesses testified about Farrell's drug activities, their testimony was bolstered by the inference Farrell fears the jury drew from the IRS records, namely, that Farrell was dishonest and therefore the type of person who would deal drugs as charged. Farrell advances no reason, however, to doubt the credibility of the cooperating witnesses upon whose testimony the Government built its case against him, and so his objection founders; an error that bolsters the credibility of a witness is harmless unless that witness's testimony is otherwise[ ]suspect. United States v. Cunningham, 145 F.3d 1385, 1394 (D.C.Cir. 1998); see also United States v. Lampkin, 159 F.3d 607, 613 (D.C.Cir.1998) (error not harmless where witness's credibility was very much in doubt throughout the trial). Farrell's co-defendant Law, however, has questioned the credibility of one of those witnesses, namely, Mason. As described above, Mason testified about his transactions with Law and about Law's relationship with Farrell. Attempting to undermine Mason's credibility, Law argues that Mason made many vague and contradictory statements concerning the quantity of drugs he allegedly bought from Mr. Law; that there was evidence contradicting Mason's testimony about where the transactions between Mason and Law occurred; and that Mason's testimony was motivated by his plea bargain, under which he would gain leniency from prosecutors for his own actions. The connection between Mason's testimony and any general inference of Farrell's bad character that the jury might have drawn from the IRS records is so attenuated that the IRS records could not have bolstered Mason's credibility, let alone affected the jury's decision with respect to Farrell. We conclude the admission of the IRS records was, if erroneous, harmless with respect to the drug-related charges.
At trial, the Government played recordings of numerous phone calls between Farrell and others. To assist the jury in following those recordings, the Government provided tabbed binders of transcripts of the recordings. The Government contended ten of those recorded conversations were between Farrell and drug sources in New York, which in turn showed he had a leadership role in the conspiracy. Although the transcripts of those ten conversations were labeled as being between Farrell and an Unknown Male, the Government placed seven of them behind a tab labeled Farrell & N.Y. Source #1 and the other three behind a tab labeled Farrell & N.Y. Source # 2. Farrell disputed the Government's contention that he was speaking with drug sources in those conversations; the participants had not identified themselves in the recordings, and no witness at trial identified the people with whom Farrell was speaking. The jury nonetheless agreed with the Government, which resulted in the enhancement of Farrell's sentences by virtue of his leadership role in the conspiracy. See U.S.S.G. § 3B1.1(a). Farrell contends the district court, pursuant to Federal Rule of Evidence 403, should have refused to let the Government use the tabs because their usefulness was substantially outweighed by unfair prejudice. A more neutral label, such as `Farrell & Unknown Male,' he argues, would have just as effectively assisted the jury in turning to the appropriate section within the binder. We hold the district court did not abuse its discretion. The principal risk of indiscriminately permitting the use of transcripts by jurors is that ... the jurors may ... transform the transcript into independent evidence of the recorded statements. United States v. Holton, 116 F.3d 1536, 1540 (D.C.Cir.1997). A district court, however, has discretion to permit the use of a transcript for the limited purpose of being used as a jury aid [to] help prevent jury confusion and wasted time as a tape is being played, provided the court uses procedures ... to ensure that the jury does not rely on one party's version of the transcript instead of the tape recording. Id. at 1541-43 (quotation marks omitted); see also United States v. Slade, 627 F.2d 293, 302-04 (D.C.Cir.1980). In Holton, we prescribed certain precautionary procedures, including instructing the jurors the tape recording constitutes evidence of the recorded conversations and the transcript is an interpretation of the tape, they should disregard anything in the transcript that they do not hear on the recording itself, and if only one party submits a transcript, then the jury must be informed that the transcript is only one party's version. 116 F.3d at 1542-43. Depending upon the circumstances, we pointed out, additional procedures may be necessary. See id. at 1543. It is undisputed that the district court gave the requisite Holton instructions. Farrell claims the instructions were nonetheless inadequate because they addressed only the transcripts. The tabs, Farrell says, were not part of the transcript, but were extraneous to the transcript. In order to agree with Farrell, we would have to conclude the district court was required to find that, in the absence of an instruction specifically addressing the tabs, the jury would believe it could consider the tabs as evidence. In light of the instructions the district court gave, we conclude the district court need not have attributed such a peculiar belief to the jury. First, the tabs were obviously part of the Government's presentation and organization of the transcripts. More important, the clear import of the district court's instructions was that only the tapes were to be considered as evidence of the recorded conversations. When the binders were first presented to the jury, the court explained: The evidence in this case is what you hear on the tape recordings, not what is printed on these transcript pages. These transcript pages have been prepared and provided to you solely for whatever assistance they may be to you in identifying the speaker[s] who are speaking or the words that are spoken. Similarly, after the close of the evidence, the district court instructed the jury: Transcripts of these tape recorded conversations have been shown to you solely for your convenience ... in identifying the speakers as the[] recordings were being played.... What you hear on the tape[s] themselves is evidence in the case. Although it might have been prudent for the district court to expand the Holton instructions expressly to reach the binders and tabs, we will not require district courts to presume the jury lacks common sense. We therefore reject Farrell's challenge to the use of the binder tabs.
Farrell was sentenced to concurrent terms of 324 months imprisonment for each offense relating to a quantity of drugs, namely, Counts 1 and 13-15. He contends these sentences were unreasonable because the district court failed to take into account the increasing[ly] prevalent view that sentences based upon the crack cocaine Sentencing Guidelines were improperly harsh when compared to those issued for involvement with powder cocaine. [W]e ... review any sentence, whether within the [Sentencing] Guidelines range or not, to ensure that it is reasonable in light of the sentencing factors that Congress specified in 18 U.S.C. § 3553(a). United States v. Dorcely, 454 F.3d 366, 374 (D.C.Cir.2006) (quotation marks omitted). [5] A sentence within a properly calculated Guidelines range is entitled to a rebuttable presumption of reasonableness. Dorcely, 454 F.3d at 376; see Rita v. United States, ___ U.S. ___, 127 S.Ct. 2456, 2462, 168 L.Ed.2d 203 (2007). We reject Farrell's contention because, contrary to his assertion, the district court, when considering the factors enumerated in § 3553(a), clearly took account of the Guidelines' disparate treatment of sentences for crack and for powder cocaine offenses. Indeed, the district court calculated the sentencing range as though Farrell's offenses involved powder rather than crack cocaine. The resulting sentencing range was 262-327 months imprisonment, rather than 360 months to life imprisonment. After noting that Farrell's crimes were not victimless, that he was quite along in age, and that his health was declining, the district court settled upon concurrent sentences of 324 months imprisonment for each of Counts 1 and 13-15, which was well below the Guidelines range for crack cocaine, but within (albeit near the high end of) the Guidelines range when crack cocaine is treated as powder cocaine. Thus the district court accounted for the relative harshness of sentences for crack cocaine offenses under the Guidelines; indeed, the court eliminated the disparity altogether. Though Farrell's arguments for re-sentencing focus almost exclusively upon the Guidelines' disparate treatment of crack and of powder cocaine offenses, he throws the court a curveball at the end of his brief. In May 2007, the Commission amended the Guidelines to lower by two the base offense level for certain crack cocaine offenses, which would reduce but not eliminate the disparity. See Sentencing Guidelines for United States Courts, 72 Fed.Reg. 28,558, 28,571-73 (2007); Nat'l Fed. Defender Sentencing Res. Counsel, Applying the Crack Amendments 101 (Nov. 1, 2007), available at http://www. fd.org/pdf_lib/crack.pdf. [6] Farrell asserts these amendments are indicative of a shift away from the draconian penalties for those involved with cocaine, be it of a powder or crack variety.  (Emphasis added.) But it does not follow from this recent effort to reduce the disparity between the sentences for crack and for powder cocaine offenses that the Commission is troubled by the sentences for powder cocaine offenses. Obviously, one can eliminate the disparity without altering the sentences for powder cocaine offenses, as the district court did here. Finding Farrell's arguments without merit, we conclude his below-Guidelines sentences were reasonable.