Opinion ID: 699628
Heading Depth: 2
Heading Rank: 5

Heading: upward adjustment for drug-related income

Text: 17 The district court adjusted Karterman's base offense level upward two levels under U.S.S.G. Sec. 2T1.3(b)(1) (Nov.1992). 1 The enhancement was based on the court's determination that Karterman made more than $10,000 in unreported income from narcotics trafficking. The district court's interpretation of a Sentencing Guidelines section is reviewed de novo. United States v. Ford, 989 F.2d 347, 349 (9th Cir.1993). The factual findings on which the lower court based the enhancement are reviewed for clear error. Id. 18 Karterman argues that the enhancement was inappropriate on the facts of his case. 2 Section 2T1.3 permits a two-level enhancement if unreported income of over $10,000 comes from criminal activity. Drug trafficking, upon which the district court based the section 2T1.3 enhancement, clearly constitutes criminal activity. The difficulty in this case is that Karterman was not convicted of any drug trafficking offenses. He also was acquitted on counts that charged him with a conspiracy to distribute drugs and a specific instance of drug distribution. We therefore first consider whether a defendant must be convicted of the criminal activity upon which the section 2T1.3 enhancement is based. 19
20 In United States v. Ford, this court expressly left open the question whether conduct that does not lead to a conviction may constitute criminal activity for purposes of section 2T1.3. 989 F.2d at 350. We now hold that a conviction is not a necessary prerequisite to a criminal activity enhancement under that section (which has since been incorporated into U.S.S.G. Sec. 2T1.1). 21 A sentencing court generally may consider facts that were not proven or even introduced at trial, as long as the government establishes those facts by a preponderance of evidence. See United States v. Restrepo, 946 F.2d 654, 656-57 (9th Cir.1991) (en banc) (Restrepo II ), cert. denied, 503 U.S. 961, 112 S.Ct. 1564, 118 L.Ed.2d 211 (1992); U.S.S.G. Sec. 6A1.3 commentary. Thus, this court has allowed sentencing enhancements based on conduct that did not result in conviction, United States v. Duran, 15 F.3d 131, 133 (9th Cir.1994) (per curiam) (allowing sentencing adjustment, for sentence under U.S.S.G. Sec. 3B1.3, based on charge on which jury had failed to reach a verdict); United States v. Fine, 975 F.2d 596, 602-03 (9th Cir.1992) (en banc) (allowing sentencing court to consider, when determining loss under U.S.S.G. Sec. 2F1.1, counts that had been dismissed pursuant to a plea agreement), and on conduct with which the defendant was not even charged, United States v. Restrepo, 903 F.2d 648, 653 (9th Cir.1990) (Restrepo I ) (permitting enhancement to a sentence under U.S.S.G. Sec. 2D1.1 based on quantities of drugs charged only against codefendant), withdrawn in part, Restrepo II, 946 F.2d 654 (9th Cir.1991), cert. denied, 503 U.S. 961, 112 S.Ct. 1564, 118 L.Ed.2d 211 (1992). 22 We see no reason not to follow these cases when considering enhancements under section 2T1.3. The language of that section supports our holding. Criminal activity in section 2T1.3 is defined in the commentary as any conduct constituting a criminal offense under federal, state, or local law. The definition makes no mention of the necessity of a conviction. We will not read into the section a requirement that so easily could have been written into it. 23
24 Although we hold that a conviction is not required for a section 2T1.3 enhancement, Karterman's sentence enhancement clearly may not be based on conduct of which he has been acquitted, or on facts necessarily rejected by [the jury's] acquittal. See United States v. Pinkney, 15 F.3d 825, 829 (9th Cir.1994); United States v. Brady, 928 F.2d 844, 851-52 (9th Cir.1991). 25 On count 4, Karterman was acquitted of conspiring to distribute cocaine from a date unknown, but no later than January, 1987 and continuing until July 12, 1988. On count 5, he was acquitted of distributing cocaine to Roxanne Martin on or about June 8, 1988. Karterman argues that these acquittals mean that the jury necessarily rejected his involvement in any drug distribution. As his counsel clarified at oral argument, Karterman asks us to hold that a jury's acquittal on a conspiracy charge means that the jury necessarily rejected the substantive conduct underlying the charge during the life of the conspiracy. In Karterman's case, this would mean that the jury necessarily rejected all evidence of Karterman's drug distribution activities because Karterman was acquitted on a conspiracy charge with an unspecified beginning date. 26 Karterman is arguing for a much broader definition of necessarily rejected facts than the definition established by prior cases. In Pinkney, for example, we vacated a sentence where the lower court had enhanced Pinkney's sentence based on his possession of a firearm, even though the jury had acquitted Pinkney of armed robbery and had convicted him only of robbery. 15 F.3d at 826, 828-29. Similarly, in Brady, we reversed where the lower court had increased Brady's sentence based on his intent to kill his victims, even though the jury had acquitted Brady of murder (which required proof of his intent) and had convicted him of voluntary manslaughter (which did not). 928 F.2d at 850-52. 27 In those prior cases, the jury's acquittal on one charge, and conviction on the lesser included charge, allowed us to conclude with certainty that the jury had necessarily rejected the additional element upon which the sentencing judge later enhanced the defendant's sentence. Here, by contrast, we cannot tell what facts or evidence the jury rejected when it acquitted Karterman on counts 4 and 5. The jury could have reached its verdicts (convicting on the false tax return counts and acquitting on the drug conspiracy count) for a variety of reasons. For example, the jury might have accepted all the evidence of Karterman's drug distribution activity but acquitted him of conspiracy because it rejected the evidence that Karterman had an agreement with another. See United States v. Garza, 980 F.2d 546, 552 (9th Cir.1992) (one element of conspiracy is an agreement to accomplish an illegal objective). Or, the jury might have believed that a conspiracy to distribute drugs existed prior to 1987 but acquitted Karterman because the government did not show that the conspiracy continued into the time frame charged (January 1987 to July 12, 1988). These various possibilities demonstrate that the jury did not necessarily reject Karterman's involvement in the substantive conduct underlying the conspiracy charge--i.e., drug trafficking. 28 Thus, Karterman's case does not fit within the narrow definition of necessarily rejected facts established by Brady and subsequent cases. For the following reasons, we decline Karterman's invitation to read Brady's necessarily rejected language more broadly. First, that language was written narrowly, precluding consideration only of necessarily rejected facts, 928 F.2d at 851, not facts that were possibly rejected or even probably rejected. 29 Second, a narrow interpretation is most consistent with the policy goals of the Guidelines, as described by the Brady court. In Brady, we acknowledged that the Guidelines generally permit a sentencing judge to consider evidence of conduct that was not proven beyond a reasonable doubt at trial. 928 F.2d at 851 (citing U.S.S.G. Sec. 1B1.3(a)). This court has explained elsewhere that allowing consideration, for sentencing purposes, of conduct that was not charged or was not proven at trial is consistent with the Guidelines' overall sentencing scheme and purpose. See, e.g., Restrepo I, 903 F.2d at 653 (allowing sentencing court to add amounts of drugs involved in counts for which defendant was not charged reflects the balance struck by the Sentencing Commission between a 'real offense' sentencing system--one that takes into account the defendant's real conduct, rather than simply the conduct for which he or she is charged--and a 'charge offense' system, under which only the conduct of which the defendant is charged may be taken into account at sentencing). 30 We recognized in Brady, however, that if we interpreted the Guidelines to mean that sentencing courts could consider, without restriction, any facts not proven at trial, we would undermine the Guidelines in a different way, because we would allow judges to circumvent the Guidelines' sentencing grid. That is why, in that case, we refused to allow a sentencing court to sentence defendants for offenses or based on facts that the jury had already rejected: 31 The Guidelines recognize that voluntary manslaughter is to be punished less severely than murder by setting a lower base offense level for voluntary manslaughter than for murder. A sentencing court should not be allowed to circumvent this statutory directive by making a finding of fact--under any standard of proof--that the jury has necessarily rejected by its judgment of acquittal [on the murder charge]. 32 928 F.2d at 851. Thus, we recognized in Brady that under certain circumstances, we would have to impinge upon the Guidelines' general policy of allowing a sentencing court the discretion to consider conduct not proven at trial, in order to protect a second policy of the Guidelines, i.e., ensuring adherence to a uniform sentencing framework. 33 In this case, however, we are not presented with the same clear conflict between two of the Guidelines' policies. Where, as here, the jury's verdict does not clearly indicate its rejection of the facts underlying the sentencing judge's enhancement, the enhancement is not a circumvention of the Guidelines' sentencing grid. Accordingly, the Guidelines' policy of generally allowing sentencing judges to consider evidence not charged or proven at trial is implicated more strongly than the policy of ensuring adherence to the sentencing grid, and the former policy should prevail. Interpreting Brady's necessarily rejected language narrowly ensures that sentencing judges generally retain the discretion, as authorized by the Guidelines, to consider conduct not proven at trial, except in those situations where the exercise of such discretion would circumvent the Guidelines. 34
35 Even though the district court was not precluded from considering evidence of Karterman's drug-related activity, the sentencing enhancement based thereon is only permissible if the facts justifying the enhancement were proven by a preponderance of evidence. Restrepo II, 946 F.2d at 661. We conclude that a preponderance of evidence supports the district court's conclusion that over $10,000 of Karterman's unreported income for 1985 and 1986 came from drug trafficking. 36 There was ample evidence that Karterman engaged in fairly large-scale trafficking that could have generated over $10,000 income in a year. Lefner testified that during the early 1980s, Karterman was dealing multiple pounds of cocaine per month and was also supplying hashish. Vork testified that she purchased cocaine from Karterman as many as 48 times during 1985 and 1986. Karterman testified that he wasn't making very much money in the ... real estate business, yet he lived an expensive life style and had numerous, unexplained cash deposits into his bank accounts in 1985 and 1986. Such evidence of a disparity between income and life style permits an inference of drug trafficking activity. See United States v. Hoyland, 914 F.2d 1125, 1130-31 (9th Cir.1990). 3 Further, Karterman could not legitimately explain much of the unreported income. Cf. Duran, 15 F.3d at 134 (affirming sentence adjustment for abuse of trust based on defendant's purchase of cashier's checks far in excess of defendant's salary where defendant presented no evidence that the money came from a legitimate source). 37 In sum, we hold that the two-level enhancement was proper. The district court permissibly found, by a preponderance of evidence, that over $10,000 of unreported income in each year came from criminal activity.