Opinion ID: 866086
Heading Depth: 3
Heading Rank: 2

Heading: sufficiency of the evidence

Text: In addition to her challenges to Count 1 and Count 9, Zhao also argues that Counts 8 and 10 should be vacated because the evidence was insufficient, as a matter of law, to prove that she engaged in § 2320 criminal counterfeiting. We agree with Zhao as to Count 10, but not Count 8. A defendant challenging the sufficiency of the evidence faces a heavy burden. United States v. Foster, 507 F.3d 233, 245 (4th Cir. 2007). In a sufficiency of the evidence chal10 While we have determined that the acts charged to Zhao under Count 9, and to both Zhao and Cone under the material alteration portion of Count 1, are not criminal acts under § 2320, nothing in our opinion should be construed to affect their prosecution under any other state or federal statute which may apply to these acts. UNITED STATES v. CONE 23 lenge, we view the evidence on appeal in the light most favorable to the government in determining whether any rational trier of fact could find the essential elements of the crime beyond a reasonable doubt. United States v. Collins, 412 F.3d 515, 519 (4th Cir. 2005). We review both direct and circumstantial evidence, and accord the government all reasonable inferences from the facts shown to those sought to be established. United States v. Harvey, 532 F.3d 326, 333 (4th Cir. 2008). We do not review the credibility of the witnesses and assume that the jury resolved all contradictions in the testimony in favor of the government. United States v. Kelly, 510 F.3d 433, 440 (4th Cir. 2007). We will uphold the jury’s verdict if substantial evidence supports it and will reverse only in those rare cases of clear failure by the prosecution. Foster, 507 F.3d at 244–45. With respect to the products at issue in Count 8, four routers seized by CBP in 2010, prosecution expert and Cisco engineer Michael Heidecker opined that the MAC addresses found on the routers matched physically different products manufactured by Cisco. (See J.A. 1052-54.) Furthermore, Heidecker opined that the labels applied to the routers were nongenuine. Thus, Heidecker was able to conclude that the routers at issue were not manufactured by or for Cisco and could not be genuinely marked. While Zhao’s expert reached a different conclusion, this conflicting evidence was for a jury to weigh. The jury had ample evidence on which to conclude that Zhao was guilty as charged in Count 8. On Count 10, however, the Government did not carry its burden to show that Zhao engaged in the criminal counterfeiting of marks. Count 10 charges that JDC sold counterfeit Cisco transceivers to Vology, a reseller of network equipment. The government alleges that these transceivers were not made by or for Cisco, but identifies only two pieces of evidence in support of this claim. First, the government points to testimony from Craig Grant, a Vology manager, who testified that, upon receipt of the 24 UNITED STATES v. CONE transceivers, he was able to tell from his experience that the packaging was not genuine. Congress, however, has chosen to bar the government from bringing a criminal cause of action . . . for the repackaging of genuine goods or services not intended to deceive or confuse. 18 U.S.C. § 2320(g). Evidence of repackaging, therefore, is not enough standing alone to prove the goods within that packaging bear a counterfeit mark. The government must come forth with some other evidence that the mark on the actual good is spurious. To that end, the government’s second piece of evidence for Count 10 is that law enforcement seized additional versions of the transceivers at issue in Count 10 from Zhao’s residence, which Heidecker opined were not made by or for Cisco. However, the Vology transceivers were not introduced at trial, having been returned to JDC and resold. Whatever marks the additional versions of the transceivers may (or may not) have borne does not prove the status of the marks on the long gone Vology transceivers. No evidence at trial established what marks were on the Vology transceivers; a burden which fell to the government to bear. Heidecker opined only that the packaging of the transceivers found at Zhao’s home was inauthentic. (J.A. 1024.) He gave no testimony about the marks on the Vology transceivers. Since the repackaging evidence cannot, under the plain terms of § 2320(g), sustain a conviction under the statute for a counterfeit mark on the goods in the package, and as the government adduced no evidence on the marks on the Vology transceivers, the government failed to prove a violation of § 2320 for the acts charged in Count 10. The evidence was insufficient as a matter of law to sustain Zhao’s conviction. Accordingly, while we find that the government adduced sufficient competent evidence to sustain Zhao’s conviction UNITED STATES v. CONE 25 under Count 8, we find that the government did not do so with respect to Count 10, and vacate that count of conviction.
Cone individually challenges his conviction for conspiracy to import misdeclared goods (Count 1) by arguing that the evidence was insufficient and the district court accordingly erred in denying his Rule 29 motion for judgment of acquittal. We review the district court’s denial of a Rule 29 motion de novo. Lam, 677 F.3d at 198. The legal standard for a sufficiency of the evidence claim is set forth above at p. 22. In Count 1, the government alleged Cone participated in a conspiracy to violate 18 U.S.C. § 545, which criminalizes fraudulently or knowingly import[ing] or bring[ing] into the United States, any merchandise contrary to law. Id. Cone was alleged to have conspired to import goods without taking reasonable care to ensure that the goods were properly declared, in violation of 19 U.S.C. § 1484(a). To establish a conspiracy under § 371, the Govern- ment must prove (1) an agreement between two or more people to commit a crime, and (2) an overt act in furtherance of the conspiracy. United States v. Ellis, 121 F.3d 908, 922 (4th Cir. 1997). The existence of a tacit or mutual understanding between conspirators is sufficient evidence of a conspiratorial agreement. Id. (internal quotation marks omitted). Proof of the agreement may be established by cir- cumstantial evidence. Burgos, 94 F.3d at 857. It is no defense to a conspiracy charge that one’s role in the conspiracy is minor. See United States v. Laughman, 618 F.2d 1067, 1076 (4th Cir. 1980) (Once the existence of a conspiracy is established, evidence establishing beyond a reasonable doubt a connection of a defendant with the conspiracy, even though the connection is slight, is sufficient to convict him with 26 UNITED STATES v. CONE knowing participation in the conspiracy. (internal quotation marks omitted)). United States v. Kingrea, 573 F.3d 186, 195 (4th Cir. 2009). With the standards of review in mind, we have little difficulty concluding that the government adduced sufficient evidence from which the jury could properly convict Cone under Count 1. Cone was unquestionably an active participant in the scheme to sell counterfeit, mislabeled, or undeclared Cisco products. The evidence adduced at trial showed that Cone confessed to law enforcement that he was a member of that conspiracy. He acknowledged in his confession that he was aware that Han Tong employees were misdeclaring goods to avoid detection by CBP. Furthermore, when he became estranged from Zhao, he sent e-mails to her demanding his share of proceeds from the conspiracy. This is not a case, as Cone suggests, where an innocent spouse is implicated solely by his marriage to a conspirator. See United States v. Dozie, 27 F.3d 95, 98 (4th Cir. 1994) (vacating conspiracy conviction against co-defendant’s spouse who was never tied to the conspiracy by any of the other persons involved). Rather, the record contains ample evidence from which the jury could have properly concluded that Cone was an active participant in the conspiracy. We accordingly see no merit to Cone’s contention that there was insufficient evidence to support his conviction on Count 1.
Zhao further contends her convictions for money laundering must be vacated on the basis that the government’s incorrect material alteration theory may have formed the basis for her money laundering convictions.11 We agree. 11 Zhao was also charged with a third count of money laundering, Count 26, on which she was acquitted by the jury. UNITED STATES v. CONE 27 Zhao was convicted of two counts (Count 27 and 28) of concealment money laundering. See 18 U.S.C. § 1956(a)(2)(B)(i); (a)(1)(B)(i). She was also convicted of Count 29, engaging in a monetary transaction with criminally derived proceeds in violation of 18 U.S.C. § 1957(a) (collectively the money laundering convictions). To obtain a conviction under § 1956(a)(1)(B)(i) (Count 28), the government had the burden to prove four elements: (1) an actual or attempted financial transaction; (2) involving the proceeds of a specified unlawful activity; (3) knowledge that the transaction involves the proceeds of some unlawful activity; and (4) knowledge that the transaction was designed in whole or in part to conceal the nature, location, source, ownership, or control of the proceeds of a specified unlawful activity. United States v. Richardson, 658 F.3d 333, 337-38 (3d Cir. 2011) (internal quotation marks, brackets, and ellipsis omitted) (emphasis added). The elements of a violation of § 1956(a)(2)(B)(i), as charged in Count 27, are similar, with the additional requirement that the government prove an international transaction involving the proceeds of unlawful activity. See Cuellar v. United States, 553 U.S. 550, 553 (2008). Finally, as to Count 29, § 1957(a) similarly requires the government to allege (and prove) a transaction involving funds derived from a specified unlawful activity. See United States v. Cherry, 330 F.3d 658, 668 (4th Cir. 2003). In this case, the district court instructed the jury properly as to each offense, observing that, to sustain a conviction under Counts 27, 28, and 29, the government must prove beyond a reasonable doubt that Zhao engaged in monetary transactions that, inter alia, involved funds derived from the offense of trafficking in counterfeit goods or labels. (See J.A. 2430-37.) 28 UNITED STATES v. CONE As the Supreme Court has explained, Jurors are not generally equipped to determine whether a particular theory of conviction submitted to them is contrary to law-whether, for example, the action in question . . . fails to come within the statutory definition of the crime. When, therefore, jurors have been left the option of relying upon a legally inadequate theory, there is no reason to think that their own intelligence and expertise will save them from that error. Griffin v. United States, 502 U.S. 46, 59 (1991). Accordingly, a verdict [is required] to be set aside in cases where the verdict is supportable on one ground, but not another, and it is impossible to tell which ground the jury selected. Yates v. United States, 354 U.S. 298, 312 (1957). But see United States v. Hastings, 134 F.3d 235, 242 (4th Cir. 1998) (If [the] evidence is such that the jury must have convicted the defendant on the legally adequate ground in addition to or instead of the legally inadequate ground, the conviction may be affirmed.). While it is no doubt correct that the government adduced ample evidence tending to show that Zhao committed pure counterfeiting, neither the indictment, nor the evidence adduced at trial allow us to conclude that the jury necessarily convicted Zhao of money laundering based on the government’s pure counterfeiting theory. Agent Hilario testified, in support of Count 27, that JDC and Han Tong engaged in a series of wire transfers in June, 2010, designed to conceal the funds’ source. The source of these funds was derived largely, if not entirely, from sales, by JDC, of goods purchased from Han Tong. The evidence of these sales, introduced in the form of Zhao’s ledgers, simply does not allow us to determine whether the sales were of pure counterfeits, or of materially altered goods, which, as UNITED STATES v. CONE 29 discussed supra, do not constitute counterfeit marks for the purposes of § 2320. The government’s evidence in support of Count 28 consisted solely of testimony from ICE agent Raymond Orzel, a certified fraud examiner. Orzel testified that Zhao purchased a home in 2005 with funds derived from JDC, Han Tong, and related entities. (J.A. 1520-21.) In 2008, Zhao sold the home to an individual named Dan Lou, (an indicted co-conspirator) who rented the home out. However, the government also put forth evidence that the funds Lou used to purchase the home were drawn from Zhao’s accounts, and that rent checks made out to Lou were deposited in accounts controlled by Zhao. Once again, the funds at issue were derived from JDC sales of Han Tong goods. We cannot say with any certainty that the jury only considered sales of pure counterfeits when convicting Zhao of Count 28. In support of Count 29, the government adduced evidence that Zhao directed that two $50,000 checks be drawn from JDC accounts to Marcie Wu, an affiliate of Han Tong. The checks represented, in large part, the proceeds of the sales of certain Cisco switches from JDC to Network Hardware Resale (NHR). (See J.A. 1964-66.) These switches were obtained from Han Tong, and the evidence adduced at trial demonstrated that the switches were manufactured by or for Cisco, and then later altered by Zhao. Because this conduct is not criminal counterfeiting, the jury’s verdict of conviction on Count 29 rests on an unsound legal basis. Thus, the money laundering convictions must be vacated. Count 29 appears to clearly rest on an improper legal basis, and because we cannot say with certainty whether Zhao’s convictions on Counts 27 and 28 are based on pure counterfeiting, those convictions must be vacated as well.
Our distinguished colleague in dissent concurs in the foregoing analysis concerning the material alteration theory, but 30 UNITED STATES v. CONE suggests that Zhao’s conviction on Count 8, a substantive counterfeit charge, should also be vacated. We respect the views of the dissent but do not agree. The general thesis of the dissent is that, having held that the government’s material alteration theory of counterfeiting is without legal basis, we should have vacated Count 8 owing to improper closing argument by the government. However, at oral argument, when asked by the panel what specific counts of the indictment would be affected by our rejection of the material alteration theory, counsel for Zhao responded that such a holding would most clearly affect substantive Count 9 and Count 1 (conspiracy). Audio Recording of Oral Argument at 1:30. Counsel, of course, could have argued that vacatur of Count 8 was appropriate as well, but chose to focus entirely on Counts 9 and 1. This is not surprising, as the record is conclusively clear that at no point in the district court or this court, did Zhao raise a claim of error under the material alteration theory as to Count 8. This concept arises sua sponte for the first time in the dissent. The representations of Zhao’s counsel to the panel at oral argument were entirely consistent with the arguments set forth in her briefs before this Court and the district court. Indeed, although Zhao contends that Count 8 should be vacated, her argument rests entirely on a sufficiency of the evidence basis, which we rejected in section II(A)(ii), above. (See Opening Br. of Appellant at 36-38). The dissent acknowledges as much, but argues that because the government argued a legally incorrect theory to the jury in closing argument, deference to the jury’s verdict is not warranted. To reach this result, the dissent analyzes the government’s remarks under United States v. Lighty, 616 F.3d 321, 361 (4th Cir. 2010). Again, a construct appearing for the first time now, sua sponte, and which, under our precedent, has long since been waived by Zhao. UNITED STATES v. CONE 31 Zhao never made the argument that is the lynchpin of the dissenting opinion: that the prosecutor’s closing comments, in and of themselves, constitute reversible error. See Post at 53 (A prosecutor’s comments constitute reversible error if . . . .). Zhao’s briefs on appeal are utterly devoid of any reference to the Lighty factors because Zhao does not make a standalone challenge to the government’s statements in closing argument. Rather, to the extent that Zhao discusses the prosecutor’s closing arguments at all, it is for purposes of the harmless error analysis under Count 1 only. Zhao’s failure to raise this independent assignment of error, either in brief or at oral argument, regarding the government’s comments to the jury is fatal to the position advocated by the dissent. See United States v. Strieper, 666 F.3d 288, 293 n.4 (Floyd, J.) (citing Edwards v. City of Goldsboro, 178 F.3d 231, 241 n.6) (4th Cir. 1999)) (This argument does not appear in [Appellant’s] brief, and as such, it is waived.). Granting relief on a basis not advanced by Zhao (and arguably disclaimed at oral argument) is plainly improper for all the reasons the rule of waiver is in force. The government has not had any opportunity to respond to the claim of error advanced by the dissent, nor was it ever placed before the district court for consideration.12 See Cavallo v. Star Enterprise, 100 F.3d 1150, 1152 n.2 (4th Cir. 1995) (The [Appellants’] omission of the issue from their initial brief denied [Appellee] an opportunity to respond, so considering it now would be unfair to the appellee and would risk an improvident or ill-advised opinion on the legal issues raised.) (quoting Hunt v. Nuth, 57 F.3d 1327, 1338) (4th Cir. 1995) (internal quotation marks omitted)). 12 Because the government never had the opportunity to address an appellate challenge to its closing arguments, the dissent’s assertion that the government has waived waiver is misplaced and a conclusion of pure speculation. Had Zhao raised an independent challenge to the government’s closing remarks, the government could have asserted the waiver bar in response, but was never put on notice to do so. 32 UNITED STATES v. CONE Additionally, we do not consider the issue of the prosecutor’s comments on appeal as they were not preserved by Zhao in the district court. We have long held that the failure to object to a prosecutor’s statements made during closing arguments constitutes a waiver of that claim of error. See United States v. Sawyer, 347 F.2d 372, 374 (4th Cir. 1965) ([I]f defense counsel does not object during the course of the Government’s closing argument he may be said to have waived the point.). The mere fact that Zhao challenged, as a general matter, the material alteration theory presented by the government is insufficient to preserve the claim of error formulated by the dissent. This is so because, as explained above, the dissent’s theory is based on a stand alone prosecutorial misstatement claim. Indeed, the dissent acknowledges that the theory presented by the prosecution during closing statements was even broader than the material alteration theory advanced in the government’s’ proposed jury instruction. Post, at 45. Accordingly, Zhao’s pre-trial challenge to the government’s proposed jury instructions would not preserve a claim of error as to the prosecutor’s unchallenged remarks in closing. It is for that reason that the dissent’s reliance on Lacy v. CSX Transportation, Inc., 520 S.E.2d 418 (W. Va. 1999), is unavailing. In that case, as the dissent observes, the court found that an unsuccessful motion in limine was sufficient to preserve a challenge to later closing remarks by the opposing party so long as the argument fell within the scope of the court’s earlier ruling on the motion. Id. at 427. In this case, though, as the dissent acknowledges, Zhao succeeded in her motion in limine. It makes sense, therefore, that if the prosecutor’s closing remarks ran afoul of the district court’s prior ruling, Zhao should have timely objected to alert and afford the court an opportunity to correct any error.13 13 Moreover, contrary to the dissent’s suggestion, at 47, Zhao never argues in her post-verdict motion for acquittal that the government’s UNITED STATES v. CONE 33 The dissent does correctly observe that Zhao’s brief on appeal mentions the government’s closing arguments. But even a superficial reading of the briefs demonstrates that, far from raising an independent challenge to the prosecutorial statements, Zhao was merely describing what the prosecutor said, or, in one case, noting that any error in the government’s theory of prosecution was non-harmless. See Appellants’ Br. at 39-40. The dissenting opinion goes several steps farther, raising, for the first time, a stand alone challenge to the prosecutorial remarks. For those reasons, the cases cited by the dissent in favor of