Court Opinion

ID: 2961066
Source: CourtListenerOpinion
Date Created: 2015-09-18 21:01:04.01336+00
Date Added: 2024-06-11T15:26:39.043155
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                            FOR THE NINTH CIRCUIT
                                                                            SEP 18 2015
UNITED STATES OF AMERICA,                        No. 13-50161           MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

              Plaintiff - Appellee,              D.C. No. 2:12-cr-00179-GAF-1

 v.
                                                 MEMORANDUM*
JOHNNY STEWART,

              Defendant - Appellant.

UNITED STATES OF AMERICA,                        No. 13-50377

              Plaintiff - Appellee,              D.C. No. 2:12-cr-00179-GAF-3

 v.

CLAYTON STEWART, aka Douglas
Blackburn, etc.,

              Defendant - Appellant.

                    Appeal from the United States District Court
                       for the Central District of California
                     Gary A. Feess, District Judge, Presiding

                     Argued and Submitted September 1, 2015
                              Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                                                            Page 2 of 9

Before: GRABER, RAWLINSON, and WATFORD, Circuit Judges.

      Johnny Stewart raises a number of arguments on appeal challenging his

convictions and his sentence, while Clayton Stewart raises several arguments

challenging his sentence. We will address Johnny Stewart’s arguments first,

before turning to the one argument that Clayton Stewart raises that relates to his

sentence alone. We will then address the remaining arguments that are raised

jointly with respect to both defendants’ sentences.

      1.     Johnny Stewart’s Arguments

      a. The district court did not abuse its discretion in denying Johnny Stewart’s

request for substitute counsel. The district court’s inquiry into the attorney-client

conflict was more than adequate. The court allowed Stewart “to express freely his

concerns,” United States v. Castro, 972 F.2d 1107, 1110 (9th Cir. 1992), overruled

on other grounds by United States v. Jimenez Recio, 537 U.S. 270 (2003), and the

court’s questions were “targeted toward understanding the crux of the

disagreement,” United States v. Mendez-Sanchez, 563 F.3d 935, 943 (9th Cir.

2009). Those inquiries revealed that counsel had not abandoned Stewart or

otherwise left him without trained legal representation. Cf. United States v. Reyes-

Bosque, 596 F.3d 1017, 1034 (9th Cir. 2010); United States v. Adelzo-Gonzalez,
                                                                          Page 3 of 9
268 F.3d 772, 777–80 (9th Cir. 2001). The decision not to appoint substitute

counsel thus did not render involuntary Stewart’s subsequent waiver of his right to

counsel.

      b. The government introduced sufficient evidence to support Stewart’s

convictions for aggravated identity theft. See United States v. Nevils, 598 F.3d
1158, 1163–65 (9th Cir. 2010) (en banc). Most significantly, Stewart possessed a

thumb drive that contained detailed credit reports for individuals with good credit,

each of whom was proved to be a real person. The jury heard no evidence

suggesting that good credit histories can be developed through the use of purely

synthetic identities. In addition, the thumb drive contained completed tax

documents for one of the victims of the scheme. Given the record in this case, a

reasonable jury could find that Stewart knew that “the means of identification at

issue belonged to another person.” Flores-Figueroa v. United States, 556 U.S.
646, 657 (2009).

      c. We reject Stewart’s challenge to the validity of his convictions for money

laundering. The activity charged in counts 19 and 21 of the indictment plainly

meets the elements required to prove money laundering under 18 U.S.C. § 1956(a).

Stewart transferred fraudulently obtained funds—the “proceeds” of bank

fraud—from a checking account belonging to one of his sham businesses into a
                                                                            Page 4 of 9
different sham business’s account after the first one was frozen. That activity was

separate and distinct from the underlying fraud by which Stewart acquired the

credit in the first place. See United States v. Lomow, 266 F.3d 1013, 1018 (9th Cir.

2001), superseded by statute on other grounds as recognized in United States v.

McEnry, 659 F.3d 893, 899 n.8 (9th Cir. 2011).

      We need not decide whether the activity charged in counts 18 and 20 of the

indictment also satisfied the elements of the money laundering statute. Even if the

district court should have dismissed counts 18 and 20 and entered convictions on

only two counts of money laundering instead of four, that would not have made

any difference in calculating Stewart’s Sentencing Guidelines range. See U.S.S.G.

§§ 2S1.1, 3D1.2(c), 3D1.3(a). Thus, no remand for resentencing would have been

necessary. See United States v. Baker, 10 F.3d 1374, 1421 (9th Cir. 1993),

overruled on other grounds by United States v. Nordby, 225 F.3d 1053, 1059 (9th

Cir. 2000).

      d. The district court did not abuse its discretion in imposing a two-level

enhancement for obstruction of justice under U.S.S.G. § 3C1.1. On direct

examination—in response to questions from his brother—Clayton Stewart testified

that he did not know that the identifying information belonged to real people and

that it was preferable to use the identity of an “artificial person” because it was
                                                                            Page 5 of 9
“less hassle.” Johnny Stewart also elicited testimony that Clayton Stewart had

never spoken to Postal Inspector Shen, who had investigated the Stewarts’ scheme.

The evidence at trial supports the conclusion that these statements were false. See

United States v. Garcia, 135 F.3d 667, 671 (9th Cir. 1998). Inspector Shen

testified that he had spoken to Clayton Stewart “face to face . . . on numerous

occasions,” including as part of the investigation into this case. With respect to the

identifying information, as noted above, Stewart possessed a thumb drive that

contained credit and address histories of the victims, including full credit reports of

real people. The trial record also showed that a bank representative told Clayton

Stewart (who was posing as victim A.S. at the time) that bank records showed A.S.

had been an American Express cardholder since 1993.

      These false statements were material. Knowledge that the identifying

information belonged to real people was a necessary element for the aggravated

identity theft charges, Flores-Figueroa, 556 U.S. at 657, and Clayton Stewart’s

denials that he spoke to Inspector Shen contradicted the testimony of the agent who

identified his voice and testified more generally about the investigation into the

scheme. The enhancement was therefore well supported.

      That the district court did not make specific, on-the-record findings of

materiality or willfulness does not compel a contrary conclusion. Although “it is
                                                                            Page 6 of 9
preferable for a district court to address each element of the alleged perjury in a

separate and clear finding,” United States v. Cordova Barajas, 360 F.3d 1037,

1043 (9th Cir. 2004) (quoting United States v. Dunnigan, 507 U.S. 87, 95 (1993)),

“[s]uch express findings . . . are not required,” id. And here, the district court did

“make[] a finding of an obstruction of, or impediment to, justice that encompasses

all of the factual predicates for a finding of perjury.” Id. (quoting Dunnigan, 507

U.S. at 95).

      e. Given that the record supports the district court’s finding that Johnny

Stewart suborned at least some perjurious testimony by his brother, the district

court did not err in refusing to decrease Stewart’s offense level for acceptance of

responsibility. See U.S.S.G. § 3E1.1 cmt. n.4.

      f. The district court did not abuse its discretion in imposing a two-level

enhancement for possession of device-making equipment. The record supports the

finding that Johnny Stewart—who had fraudulent credit cards issued in his

name—had at least constructive possession over premises at which agents seized

not only passport-sized photographs of Stewart and materials for making driver’s

licenses, but also a card-cutting machine, which is clearly “designed or primarily

used for making an access device.” 18 U.S.C. § 1029(e)(6); see also id.

§ 1029(e)(1).
                                                                             Page 7 of 9
       g. The restitution order requires Stewart to pay more than he gained by the

fraud. The government concedes that the correct restitution amount is

$404,284.80. We vacate the restitution order and remand for the limited purpose

of allowing the district court to correct this error.

       2.     Clayton Stewart’s Arguments

       The district court did not plainly err in allowing Clayton Stewart to testify at

his brother’s trial outside the presence of counsel. See Fed. R. Crim. P. 52(b). No

precedent of this court or the Supreme Court makes it “clear” or “obvious,” United

States v. Olano, 507 U.S. 725, 734 (1993), that testifying at his brother’s trial

constituted a critical stage of Clayton Stewart’s prosecution. Thus, Stewart cannot

satisfy the first prong of the plain error test, which must be met even if the district

court’s failure to obtain a knowing and intelligent waiver of Stewart’s right to

counsel would otherwise amount to structural error. See United States v.

Yamashiro, 788 F.3d 1231, 1234–36 (9th Cir. 2015).

       3.     Joint Arguments

       a. The district court did not plainly err in imposing the sophisticated means

enhancement under U.S.S.G. § 2B1.1(b)(10)(C) in tandem with the

§ 2S1.1(b)(2)(B) enhancement for money laundering. The Sentencing Guidelines

“expressly forbid[]” double-counting “where it is not intended.” United States v.
                                                                          Page 8 of 9
Rosas, 615 F.3d 1058, 1065 (9th Cir. 2010) (quoting United States v. Reese, 2 F.3d
870, 894 (9th Cir. 1993)). The Guidelines do not expressly forbid applying these

two enhancements together.

      b. The district court did not abuse its discretion in imposing a two-level

enhancement for aggravating role under U.S.S.G. § 3B1.1(c). The Stewarts

applied for the credit cards they used to make fraudulent charges; they made

telephone calls to banks posing as their victims; and they opened sham businesses

to launder their ill-gotten gains. The record also supports the conclusion that the

Stewarts directed the activities of Dexter Hardy, whose ID was found at the office

of one of the brothers’ sham businesses and who was paid in cash for carrying out

less central tasks. A “factual basis” thus exists for characterizing both Johnny

Stewart and Clayton Stewart as organizers or leaders under § 3B1.1. United States

v. Avila, 95 F.3d 887, 890 (9th Cir. 1996); see United States v. Ingham, 486 F.3d
1068, 1074–75 (9th Cir. 2007).

      c. The district court did not abuse its discretion in imposing a two-level

enhancement for the number of victims. The Sentencing Guidelines call for a two-

level increase “[i]f the offense” of conviction “involved 10 or more victims.”

U.S.S.G. § 2B1.1(b)(2)(A). Nothing in the Guidelines precludes a district court
                                                                        Page 9 of 9
from aggregating institutional victims and victims who are natural persons. See id.

cmt. nn.1, 4.

      AFFIRMED IN PART, VACATED IN PART, and REMANDED IN

PART.