Court Opinion

ID: 4879853
Source: CourtListenerOpinion
Date Created: 2021-08-28 00:00:34.410187+00
Date Added: 2024-06-11T08:12:43.301273
License: Public Domain

Case: 20-11016     Document: 00515998074         Page: 1       Date Filed: 08/27/2021

           United States Court of Appeals
                for the Fifth Circuit
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
                                                                            August 27, 2021
                                  No. 20-11016                              Lyle W. Cayce
                                                                                 Clerk

   United States of America,

                                                               Plaintiff—Appellee,

                                      versus

   Ernesto Sandoval Martinez,

                                                        Defendant—Appellant.

                  Appeal from the United States District Court
                      for the Northern District of Texas
                           USDC No. 3:19-CR-492-1

   Before Elrod, Southwick, and Costa, Circuit Judges.
   Gregg Costa, Circuit Judge:
          Ernesto Sandoval Martinez pleaded guilty to a drug conspiracy
   charge. He did so after authorities discovered cocaine and other drugs in the
   back of his tobacco shop. Among the items seized were: bags of marijuana,
   jars   containing    marijuana     cigarettes,    edibles      infused      with
   tetrahydrocannabinol (THC), liquid THC cartridges, a plastic bag filled with
   Xanex pills, and “numerous” baggies of cocaine.
          This appeal involves something else the authorities found—$12,424
   in cash. Instead of attributing that cash, at least in part, to Sandoval
Case: 20-11016     Document: 00515998074           Page: 2   Date Filed: 08/27/2021

                                    No. 20-11016

   Martinez’s legitimate tobacco sales or to any of the various other drugs found
   in the shop, the court treated it entirely as proceeds from cocaine
   transactions. That resulted in a higher recommended sentencing range than
   Sandoval Martinez would have otherwise received. He challenges the cash-
   to-cocaine conversion, arguing that it was error to treat the entire sum as
   cocaine proceeds. We agree and vacate the sentence.
                                         I.
          Sandoval Martinez owned E.T.’s Tobacco Shop in Dallas. The shop
   sold more than just tobacco.      After undercover agents conducted five
   controlled buys of cocaine from the shop, authorities obtained a warrant to
   search the premises. Inside, they found drugs, cash, and firearms. They then
   arrested Sandoval Martinez and his coconspirators.
          Although Sandoval Martinez pleaded guilty to a cocaine offense,
   under relevant conduct principles he could be held responsible at sentencing
   for the various types of drugs he was dealing. U.S.S.G. § 1B1.3. When
   different drugs are involved, Sentencing Guidelines tables convert the weight
   of different drugs to a common metric—called “converted drug weight.” See
   U.S.S.G. § 2D1.1 cmt. nn.7 & 8(B). The conversion rate differs depending
   on the type of drug, with marijuana essentially serving as the base. See id. at
   n.8(D). One gram of marijuana thus equates to one gram of converted drug
   weight. Id. One gram of cocaine, however, converts to 200 grams of
   converted drug weight. Id.
          At first, the presentence report (PSR) treated the seized $12,424 as
   marijuana proceeds. After some objections and revisions, it ended up
   treating the cash as cocaine proceeds instead, which resulted in a much
   higher converted drug weight. The probation officer justified this by noting
   that “the main source of the controlled purchases” was cocaine, even though
   those purchases amounted to no more than a few hundred dollars in total.
   The PSR’s final total converted drug weight, including the cash as cocaine

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Case: 20-11016         Document: 00515998074               Page: 3      Date Filed: 08/27/2021

                                           No. 20-11016

   proceeds, was 103.10 kilograms. That amount is just above the 100-kilogram
   threshold for a base offense level of 24.                See U.S.S.G. § 2D1.1(c)(8).
   Attributing all the seized cash to cocaine sales thus made Sandoval
   Martinez’s offense level higher than it otherwise would have been.
           At sentencing, Sandoval Martinez objected to the cash-to-cocaine
   conversion, arguing that the PSR arbitrarily failed to consider other possible
   sources of the money.            Without providing reasons, the district court
   overruled the objection and adopted the PSR. But the court varied below the
   Guidelines range for two reasons: one relating to calculating the weight of the
   THC edibles 1 and another concerning the leadership enhancement because
   of the small scope of the enterprise. With these variances, the court
   calculated Sandoval Martinez’s total offense level to be 20, which when
   combined with his Criminal History Category of I, resulted in a sentencing
   range of 33 to 41 months. 2 The court sentenced him to 37 months in prison
   and three years of supervised release.
                                                II.
           Sandoval Martinez renews his argument that the district court erred
   in treating all the cash found in his shop as proceeds from cocaine sales. The

           1
             Before his sentencing hearing, Sandoval Martinez filed a motion for a downward
   variance arguing that the THC quantity attributed to him should consist only of the amount
   stated on the packaging, instead of the (much higher) weight of the edible gummies and
   their packaging. Because of the significant discrepancy, the government indicated that it
   would not object to a downward variance. This does not affect our analysis, however.
           2
              The court characterized these as variances, rather than actual departures, so it is
   unclear how this resulted in a new Guidelines range. See United States v. Jacobs, 635 F.3d
   778, 782 (5th Cir. 2011) (describing a “departure” as a change in the Guidelines range that
   still results in a sentence “imposed under the framework set out in the Guidelines” and a
   “variance” as “a sentence that is outside the [G]uidelines framework” altogether).
   Indeed, the post-sentencing Statement of Reasons states that the Guidelines range
   accepted by the court is 87 to 108 months, not the reduced variance “range” of 33 to 41
   months.

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   government counters that the conversion was justified because of the agents’
   cocaine purchases and a coconspirator’s admission that the shop sold
   cocaine. We review the district court’s drug quantity calculation—which
   relied exclusively on the PSR—for clear error. United States v. Betancourt,
   422 F.3d 240, 246 (5th Cir. 2005).
          A sentencing court can “extrapolate the quantity [of drugs] from any
   information that has sufficient indicia of reliability to support its probable
   accuracy.” United States v. Gentry, 941 F.3d 767, 788 (5th Cir. 2019) (quoting
   United States v. Dinh, 920 F.3d 307, 313 (5th Cir. 2019)). Generally, PSRs do
   bear “sufficient indicia of reliability” to be considered by the court in making
   factual determinations like drug quantity. United States v. Harris, 702 F.3d
   226, 230 (5th Cir. 2012). But “mere inclusion” in the PSR does not render
   a fact reliable when it otherwise lacks an adequate evidentiary basis. Gentry,
   941 F.3d at 788 (quoting Harris, 702 F.3d at 230 n.2). Sentencing courts
   cannot rely on a PSR’s “speculative inference[s]” and “conclusionary
   statements” when those statements find no support in the record. United
   States v. Rome, 207 F.3d 251, 254, 256 (5th Cir. 2000). A court that does so
   commits clear error. Gentry, 941 F.3d at 788.
          It was clear error to treat all the seized cash as cocaine proceeds.
   There are too many possible alternative sources for the income, including
   lawful proceeds from tobacco sales and proceeds from the sale of marijuana,
   THC, or Xanex, all of which authorities seized from the shop. See United
   States v. Fitzgerald, 89 F.3d 218, 223–24 (5th Cir. 1996) (considering whether
   the defendant had a source of legal income as a factor when determining
   whether seized cash represented proceeds of drug transactions); United
   States v. Harrison, 439 F. App’x 378, 381 (5th Cir. 2011) (unpublished)
   (same). Tax records and monthly revenue reports from the tobacco shop
   support Sandoval Martinez’s argument that at least some of the money likely
   came tobacco sales. Contrast United States v. Lucio, 985 F.3d 482, 488 (2021)

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   (holding it was acceptable for court to treat cash seized during drug bust as
   meth when defendant was unemployed and “undisputedly a meth dealer . . .
   [who] regularly dealt in kilogram quantities . . . easily sufficient to account for
   the amount of cash seized”).
          In addition to the likelihood that some of the cash came from lawful
   tobacco sales, the evidence shows that cocaine was not the only source of
   illegal proceeds. Authorities found meaningful amounts of other drugs in the
   shop, including marijuana and THC. See United States v. Sandridge, 385 F.3d
   1032, 1037–38 (6th Cir. 2004) (holding that sentencing court erred in treating
   cash found in defendant’s car solely as cocaine when evidence showed he
   possessed both cocaine and marijuana). The main reason the PSR cited for
   treating 100% of the money as cocaine proceeds—that all of the controlled
   buys were for cocaine—ignores that the undercover agents asked to buy
   cocaine. The controlled buys thus do not fully reflect the trafficking that
   occurred at the shop.
          We therefore conclude it was clear error to treat all the cash as cocaine
   proceeds.
          The government does not argue the error was harmless. That makes
   sense. An error that impacts the Guidelines range is usually prejudicial even
   when the defense did not identify the error at trial. See Molina-Martinez v.
   United States, 136 S. Ct. 1338, 1345, 1347 (2016). When, as here, defense
   urges correction in the trial court, the government must prove “(1) that the
   district court would have imposed the same sentence had it not made the
   error, and (2) that it would have done so for the same reasons it gave at the
   prior sentencing.” United States v. Ibarra-Luna, 628 F.3d 712, 714 (5th Cir.
   2010); see United States v. Richardson, 676 F.3d 491, 511 (5th Cir. 2012). The
   record does not establish either of those things. Although the district court
   sentenced Sandoval Martinez well below the Guidelines range calculated by
   Probation, it did not indicate that it would have imposed the same sentence

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   even if it erred in treating all the seized cash as drug proceeds. Thus, despite
   the court’s sentencing Sandoval Martinez substantially below the
   prevariance Guidelines, the record does not convince us that the error was
   harmless.
                                        ***
          We VACATE Sandoval Martinez’s sentence and REMAND for
   resentencing.

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