Court Opinion

ID: 2981031
Source: CourtListenerOpinion
Date Created: 2015-09-22 19:19:45.276191+00
Date Added: 2024-06-11T11:44:23.462750
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 12a0408n.06

                                            No. 11-1305

                           UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                                                                        FILED
UNITED STATES OF AMERICA,                       )                                  Apr 13, 2012
                                                )                            LEONARD GREEN, Clerk
        Plaintiff-Appellee,                     )
                                                )
v.                                              )    ON APPEAL FROM THE UNITED
                                                )    STATES DISTRICT COURT FOR THE
JOSEPH GRAY,                                    )    WESTERN DISTRICT OF MICHIGAN
                                                )
        Defendant-Appellant.                    )
                                                )    OPINION

        BEFORE: GUY and DONALD, Circuit Judges; O’MEARA, District Judge.*

        DONALD, Circuit Judge.          On January 13, 2010, a grand jury indicted Defendant-

Appellant Joseph Gray (“Gray”) on one count of unlicensed firearms dealing, in violation of 18

U.S.C. § 922(a)(1)(A), (a)(1)(D) (Count I), and one count of sale or transfer of a firearm to a

prohibited person, in violation of 18 U.S.C. § 922(d)(1), (a)(2) (Count II). After a four-day trial, a

jury found Gray guilty as to Count I but not guilty as to Count II. The district court sentenced Gray

to twenty-seven months imprisonment followed by two years of supervised release. Gray timely

filed a notice of appeal, arguing that the evidence did not support his conviction and that his sentence

was unreasonable. For the following reasons, we AFFIRM.1

       *
       The Honorable John C. O’Meara, United States District Judge for the Eastern District of
Michigan, sitting by designation.
       1
         Gray has filed two pro se “motions” on the appellate docket. These documents appear to
assert claims for fraud on the court and ineffective assistance of counsel. Those issues are not before
No. 11-1305
United States v. Gray

                                      I. Factual Background

       Joseph Gray is an army veteran who has a long history with guns. A lifelong hunter, Gray

began handling guns before adulthood. He uses guns to teach Michigan hunter safety courses, and

over the years he has collected upwards of 150 guns.

       Gray and his wife, Paula Gray, owned and operated 101 Outdoors, a flea market-like business

in Lawton, Michigan, where a variety of items, including hunting equipment, guns, and ammo were

sold by a number of different vendors.2 Gray himself used 101 Outdoors to sell firearms. From

February 27, 1992, until February 28, 1998, Gray possessed a federal firearms license (“FFL”),

which is necessary to sell firearms for business purposes, but he allowed the FFL to lapse. At the

time of his arrest, Gray did not have a current FFL.

       In 2008, a deputy with the VanBuren County Sheriff’s Department contacted the Bureau of

Alcohol, Tobacco, Firearms, and Explosives (“the ATF”) regarding firearms being sold at 101

Outdoors. On October 14, 2008, a citizen provided the ATF with a brochure advertising that 101

Outdoors sold boats, fishing gear, live bait, hunting apparel and equipment, guns and ammunition,

and archery supplies.

this court on direct appeal and are more appropriate for a separate civil or habeas action. We do not
consider that information at this time.
       2
      During the course of the ATF investigation, 101 Outdoors moved to a new location in
downtown Lawton.

                                                -2-
No. 11-1305
United States v. Gray

       On October 16, 2008, Brian Luettke, an undercover ATF agent, went to 101 Outdoors to

purchase a firearm. Outside 101 Outdoors, Luettke saw a sign advertising that the store carried

firearms and ammunition. (D.E. #103 at 111:11-22.) He noticed twelve guns on display, some of

which had price tags on them. (Id. at 112:13-113:19.) After speaking with Gray about the price of

some untagged guns, Luettke purchased a Remington 12-gauge shotgun for $400. (Id. at 115:2-12.)

Gray wrote this purchase in a receipt book and directed Luettke to sign it. (Id. at 119:16-121:6.)

When Luettke asked Gray about buying a handgun, Gray informed him that he should just let him

know what kind he was looking for because Gray got them all the time. (Id. at 122:17-13.) Also,

during a later telephone conversation, Gray told Luettke that when he moved into the new 101

Outdoors in downtown Lawton he hoped to have over two thousand guns for sale. (Id. at 124:4-11.)

       On October 23, 2008, Jeffrey Kitchen, another undercover ATF agent, visited 101 Outdoors

to purchase a handgun. When Kitchen arrived at 101 Outdoors he noticed an unsupervised tent near

the road under which about fifteen to twenty long guns were displayed on tables. (Id. at 152:16-19.)

He then went inside the store and noticed several more long guns and a few handguns. (Id. at

154:16-155:7.) When Kitchen said he wanted to purchase a handgun, he was directed to Gray. (Id.

at 153:20-154:7.) Kitchen selected and purchased a Bersa .380 handgun for $250. (Id. at 158:2-5.)

Gray mentioned to Kitchen that he had purchased it for $200 (Id. at 156:19-20), and the receipt book

noted that Gray obtained the gun on September 17, 2008 (Id. at 248:4-249:10; App’x 1 at 16).3

       3
        Ken Krauter testified that in September 2008 he traded the Bersa .380 with Gray for a Model
1300 12-gauge shotgun for deer hunting. (D.E. #104 at 452:5-455:1.) Krauter also testified that
firearms were displayed at 101 Outdoors for sale, purchase, and trade and that Gray would sell guns

                                                -3-
No. 11-1305
United States v. Gray

       On November 6, 2008, James Walsh, a third undercover ATF agent, visited 101 Outdoors.

Upon entering the store he noticed a gun rack with several rifles and shotguns, some of which had

price tags on them. (Id. at 167:15-168:3.) Walsh noticed Gray discussing a firearm and its price

with customers in the store. (Id. at 168:4-20.) When Gray was finished with the customers, Walsh

asked him the price of a camouflage, pump-action shotgun. (Id. at 169:16-170:6.) Walsh purchased

this gun for $225. (Id. at 171:2-5.) As Walsh was leaving the store, Gray told him that he would be

having an auction on November 8, 2008, at which he would be selling rifles, shotguns, and some

handguns. (Id. at 172:5-16.)

       On July 23, 2009, the ATF investigation used a convicted felon as a confidential informant

(“the CI”) to purchase firearms from the new 101 Outdoors location while wearing a recording

device. (Id. at 188:19-25; 188:25-189:3; 191:5-21.) The CI was led by a store clerk to the gun

section in the rear of the store. (Id. at 195:11-24.) The CI decided to purchase two guns and

negotiated the price with Gray. (Id. at 196:5-15.) The CI paid $100 and $125 for the guns. (Id. at

199:1-13.) When talking with the store clerk, the CI mentioned that he did not think that he could

buy a rifle. (Id. at 200:8-17.) Gray was approximately fifteen to twenty feet behind the CI when he

made this statement. (Id. at 201:11-13.) This conversation was the basis for Count II.

       The Government also presented testimony from persons who had sold guns to and/or

purchased guns from 101 Outdoors. Matthew McLemore testified that in July of 2008 he went to

on consignment for others. (Id. at 455:12-456:23.)

                                               -4-
No. 11-1305
United States v. Gray

101 Outdoors because he had two guns that he wanted to get rid of and wanted to see what he could

get for them. (D.E. #104 at 418:8-11.) McLemore sold a Remington Model 870 Express 12-gauge

shotgun to Gray for $150 and consigned with Gray a Remington Model 597 .22-caliber rifle for

which he ultimately received $210. (Id. at 419:3-6; 421:1-422:1.) When McLemore returned to 101

Outdoors a few months later, Gray told him that he had sold the shotgun, although he did not say for

how much. (Id. at 423:15-424:8.) Other witnesses testified that they purchased the shotgun for $225

in August 2008 (id. at 429:9; 430:1-5) and the .22 for $210 in September 2008 (id. at 437:13;

438:11-17; App’x at 21). The receipts from Gray’s book indicated that the serial numbers of these

guns matched those that McLemore sold to Gray. (Compare App’x at 10, rec. 807226 with App’x

at 12, rec. 807233; and App’x at 10, rec. 807227 with App’x at 21, rec. 807269.)

       David Staggs testified that in October 2008 he went to 101 Outdoors to sell some guns after

seeing a sign advertising that the store bought, sold, and traded guns and ammo. (Id. at 472:19-

473:7.) Staggs told Gray he had some guns for sale and asked whether Gray was interested in them.

(Id. at 476:23-25.) He sold three guns to Gray—a Taurus .357 for $200 (id. at 478:1-11), a

Remington 1100 for $200 (id. at 478:14-17; 479:2-4), and a Remington Western Field .30-06 for

$200 (id. at 478:18-20; 479:2-4). The .30-06 was placed on hold for thirty days in case Staggs

wanted to purchase it back, which he did not do. (Id. at 479:7-17.) On October 3, 2008, the same

day Staggs sold the three guns to Gray, Thomas Scholz purchased the Taurus .357 from Gray for

$300. (Id. at 444:20-445:2.)

                                               -5-
No. 11-1305
United States v. Gray

       On July 31, 2009, ATF agents executed a search warrant on the downtown location of 101

Outdoors. (Id. at 224.) Inside they discovered and seized twenty-three firearms, including several

with price tags on them, in a section of the store that had gun racks and a sign advertising guns and

ammo. (Id. at 228:14-22; 235:6-14; 236:16-17; 247:2-5.) The ATF agents also seized the receipt

book and found thirty-two recorded transactions related to guns, but they did not find records of the

sales to Walsh or the CI. (Id. at 247:7-248:3.) Karen Rivard, an ATF Task Force Officer, testified

that she asked Gray about the receipt book, to which he responded that it “was his way of

bookkeeping for business.” (Id. at 246:23-247:1.)

       When Rivard was talking with Gray, she asked him why he had not obtained a FFL before

selling guns. (Id. at 254:2-5.) He explained that he had previously had one (id. at 254:21-255:1) but

that before getting another one he wanted to have $1-2 million in liability insurance and money to

start up the business (id. at 254:7-11).

       At the conclusion of the Government’s case-in-chief, Gray moved for judgment of acquittal

pursuant to Rule 29. (Id. at 525:20-22.) The district court denied this motion as well as a renewed

motion for acquittal brought after the close of all the proof. The jury returned a verdict of guilty as

to Count I and not guilty as to Count II.

       The district court held Gray’s sentencing hearing on February 28, 2011. In a presentencing

memorandum, Gray objected to his scoring under the Guidelines and requested a sentence that did

not include incarceration. Relevant to this appeal, the district court overruled Gray’s objection that

                                                 -6-
No. 11-1305
United States v. Gray

he should not receive an obstruction of justice enhancement for a threatening comment he made to

a witness after the execution of the search warrant. The district court ultimately sentenced Gray to

twenty-seven months imprisonment, which was at the bottom of his Guidelines range, to be followed

by a two-year term of supervised release. Gray timely filed a notice of appeal as to his conviction

and sentence on Count I.

                                            II. Analysis

                                  A. Sufficiency of the Evidence

       Gray first argues that the district court erred in denying his motion for judgment of acquittal.

We review de novo the denial of a motion for acquittal and view the evidence in “a light most

favorable to the prosecution, giving the prosecution the benefit of all reasonable inferences from the

testimony.” United States v. McAuliffe, 490 F.3d 526, 537 (6th Cir. 2007), cert. denied, 552 U.S. 976

(2007). The relevant question in assessing a sufficiency-of-the-evidence challenge is whether any

rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.

Id. We do not weigh the evidence, consider witness credibility, or substitute our judgment for that

of the jury. United States v. Graham, 622 F.3d 445, 448 (6th Cir. 2010) (citing United States v. M/G

Transp. Servs., Inc., 173 F.3d 584, 588-89 (6th Cir. 1999)). The sufficiency-of-the-evidence burden

borne by the defendant is a heavy one. Id. at 449.

       The relevant statute in this case, 18 U.S.C. § 922(a)(1)(A), prohibits anyone who is not “a

licensed importer, licensed manufacturer, or licensed dealer” from “engag[ing] in the business of

                                                 -7-
No. 11-1305
United States v. Gray

importing, manufacturing, or dealing in firearms.” As applied to a dealer in firearms, “engaging in

the business” means that the individual “devotes time, attention, and labor to dealing in firearms as

a regular course of trade or business with the principal objective of livelihood and profit through the

repetitive purchase and resale of firearms.” 18 U.S.C. § 921(a)(21)(C). Section 922(a)(1)(A) does

not apply to a person who occasionally sells, exchanges, or purchases firearms to enhance a personal

collection or as a hobby, “or who sells all or part of his personal collection of firearms.” Id. “The

term ‘with the principal objective of livelihood and profit’ means that the intent underlying the sale

or disposition of firearms is predominantly one of obtaining livelihood and pecuniary gain, as

opposed to other intents.” 18 U.S.C. § 921 (a)(22). However, “a defendant need not deal in firearms

as his primary business for conviction.” United States v. Manthey, 92 F. App’x 291, 297 (6th Cir.

2004).

         Gray does not contest that he purchased and sold firearms. Instead, he argues that his actions

were part of selling and adding to his personal collection of firearms and that he did not have the

principal objectives of profit and livelihood. The Government, however, submitted sufficient

evidence for the jury to conclude that Gray was buying and selling guns for livelihood and profit

rather than simply changing the composition of his personal collection.

         We have previously held that evidence was sufficient to support a conviction under

§ 922(a)(1)(A) where it showed (1) that the defendant frequented flea markets and gun shows where

he displayed and sold guns; (2) that the defendant offered to sell guns to confidential informants on

multiple occasions and actually sold them three different guns on two different occasions; (3) and

                                                 -8-
No. 11-1305
United States v. Gray

that the defendant bought and sold guns for profit. See United States v. Orum, 106 F. App’x 972,

974 (6th Cir. 2004). Gray’s circumstances are similar to those in Orum. He used 101 Outdoors to

display and sell guns. Signs and flyers for 101 Outdoors advertised that the store dealt in firearms

and ammunition. 101 Outdoors displayed guns—some of which had price tags—in a set-aside area

and on at least one occasion on unsupervised folding tables near the road.

       The evidence presented also established that Gray sold firearms to ATF agents, a confidential

informant, and other individuals. He told one agent that he could get any handgun the agent wanted.

Gray purchased and traded guns from people that brought them to 101 Outdoors, and he resold some

of his new purchases or trades shortly after he acquired them, usually at a profit. Gray kept records

of some of his transactions, and he moved his firearm selling operation with 101 Outdoors into its

new location in downtown Lawton.

       Although Gray argues that the Government only proved that two guns were sold shortly after

Gray purchased them, the statute does not establish a minimum threshold for the number of guns

sold. That Gray sold only two or three with a short turnaround was enough evidence for the jury to

conclude that he had a profit motive in his gun sales. While cases Gray cites did involve

significantly more gun sales than this case, see United States v. Kish , 424 F. App’x 398 (6th Cir.

2011) (finding sufficient evidence for conviction where nearly 500 guns were seized some of which

had been sold or traded to the defendants and were seized with price tags on them); United States

v. Dettra, 238 F. App’x 424 (6th Cir. 2000) (finding sufficient evidence for conviction where ninety-

                                                -9-
No. 11-1305
United States v. Gray

five guns were seized, of which eighty-two were marked with price tags), they do not foreclose the

possibility of conviction on a smaller number of guns.

        Gray also claims that there was no proof that he committed the offense willfully. To be

convicted under § 922(a)(1)(A), the defendant “must also have known that his conduct was

unlawful.” Manthey, 92 F. App’x at 296-97 (6th Cir. 2004) (citing Bryan v. United States, 524 U.S.

184, 196 (1998)). Gray notes that the open and obvious manner in which he operated out of 101

Outdoors suggests that he was not a willful violator. He also claims that ATF never warned him that

his activities may be illegal.

        The Government presented evidence from which the jury could conclude that Gray knew his

conduct was unlawful. There was testimony that Gray had previously held a FFL. Thus, he was

aware that a FFL is required to sell guns for profit and livelihood; it follows that he was likely aware

that to do so without a FFL was unlawful. See Orum, 106 F. App’x at 974. Gray was also

considering obtaining another FFL, and a blank form was discovered on his kitchen table. Further,

Rivard testified that Gray told her that he knew about the FFL requirement. This was sufficient

evidence for the jury to find that Gray’s actions were a willful violation of the statute. That Gray

operated his business openly was a fact for the jury to consider in determining whether Gray knew

his conduct was unlawful; it is not dispositive of the issue. Also, there is no requirement that a

defendant be warned that his conduct is unlawful.

                                                 - 10 -
No. 11-1305
United States v. Gray

       Finding sufficient evidence for the jury to find Gray guilty as to Count I, we affirm Gray’s

conviction for selling firearms without a license.

                               B. Reasonableness of the Sentence

       As to his sentence, Gray first argues that the district court should not have applied a two-level

enhancement for obstruction of justice pursuant to USSG § 3C1.1. “We review a district court’s

factual findings concerning a sentence enhancement under the Guidelines for clear error, United

States v. Benson, 591 F.3d 491, 504 (6th Cir. 2010), and the application of these facts to the

Guidelines de novo, see id.” Kish, 424 F. App’x at 408. Section 3C1.1 applies when the obstructive

conduct relates to “(i) the defendant’s offense of conviction and any relevant conduct; or (ii) a

closely related offense.” This adjustment applies to conduct such as “threatening, intimidating, or

otherwise unlawfully influencing a . . . witness . . . directly or indirectly.” USSG § 3C1.1, n.4. The

district court applied the enhancement because after officers executed the search warrant, Gray told

witness Jesse Hall that if he did not do what Gray wanted it would be the worst mistake of his life.

Hall testified that he found the comment threatening.

       First, Gray claims that Hall’s testimony about the threat was not credible because he testified

in connection with Count II, the charge of selling a gun to a felon, of which the jury acquitted Gray.

Thus, Gray argues that Hall’s testimony could not support the application of the enhancement to

Gray. However, the district court concluded that Hall was credible and that Gray’s comment was

a threat justifying the enhancement. (D.E. #107 at 20:9-19; 21:12-18.) The district court also

                                                - 11 -
No. 11-1305
United States v. Gray

explained that Gray’s acquittal as to Count II does not lessen Hall’s credibility because the jury could

have concluded that Gray did not know that the confidential informant was a convicted felon. (Id.

at 21:5-11.)

        Second, Gray argues that Hall’s testimony was not related to Count I. Because Hall’s

testimony concerned the selling of firearms to a felon, which was the subject of Count II, Gray

contends, the enhancement could not apply because the threat was not related to the conviction on

Count I. The district court rejected this argument, pointing out that Hall’s testimony also pertained

to an instance where guns were sold by Gray from 101 Outdoors, which would be relevant to Count

I. (Id. at 22:9-16.) Accordingly, the district court concluded that Gray’s threat did relate to Count

1, thus making the enhancement applicable.

        The record contained sufficient evidence for the district court to conclude by a preponderance

of the evidence that Hall was credible, that Gray’s comment was a threat, and that Hall’s testimony

related to Count 1. The district court did not commit clear error in making the factual determinations

on which it based the enhancement. Therefore, Gray was subject to the two-level enhancement for

obstruction of justice, pursuant to USSG § 3C1.1, and the district court did not err in applying it.

        Gray’s second argument concerning his sentence is that it is substantively unreasonable

because the district court only considered his mitigation arguments under the Guidelines and not

under the 18 U.S.C. § 3553(a) factors. We review the reasonableness of a sentence for abuse of

discretion. United States v. Skipper, 552 F.3d 489, 493 (6th Cir. 2009). “A sentence is substantively

                                                 - 12 -
No. 11-1305
United States v. Gray

unreasonable if the sentencing court arbitrarily selected the sentence, based the sentence on

impermissible factors, failed to consider pertinent § 3553(a) factors, or gave an unreasonable amount

of weight to any pertinent factor.” United States v. Cunningham, — F.3d —, 2012 WL 593110, at

*8 (6th Cir. 2012) (citing United States v. Collington, 461 F.3d 805, 808 (6th Cir. 2006)). Sentences

within the Guideline range are given a rebuttable presumption of substantive reasonableness. United

States v. Bolds, 511 F.3d 568, 581 (6th Cir. 2007). We give due deference to a district court’s

conclusion that the imposed sentence was warranted under the § 3553(a) factors; that we would have

imposed a different sentence is not a justifiable reason to reverse the district court. Id.

        The district court calculated Gray’s Guideline range as 27 to 33 months and sentenced him

to a bottom-of-the-Guideline range sentence of 27 months. Because that sentence was within the

Guideline range, it is presumed reasonable. Gray’s argument that the district court did not consider

his mitigation arguments in the § 3553(a) context does not overcome this presumption.

        Gray’s sentence was not substantively unreasonable. The district court addressed each of the

mitigating factors Gray raised. It determined that Gray’s alleged health issues, both mental and

physical, did not warrant a sentence below the Guideline range. (Doc. #107 at 43:8-44:3.) It

concluded the same with respect to Gray’s military service (Id. at 44:4-10), his civic activities (Id.

at 44:11-17), the financial hardship a prison sentence would impose on his family (Id. at 44:18-

45:19), and his lack of criminal history (Id. at 46:5-8). Instead, the district court reasoned that the

§ 3553(a) factors, particularly general deterrence, warranted a sentence within the Guideline range.

(Id. at 47:9-48:5; 49:4-8.) The district court did take the mitigating factors of Gray’s military service

                                                 - 13 -
No. 11-1305
United States v. Gray

and health into consideration when determining that a sentence at the low end of the Guidelines

range was warranted. (Id. at 49:9-19.)

       The district court repeatedly stated that Gray’s mitigating factors did not warrant a

“departure,” suggesting a downward variance pursuant to the Guidelines rather than a variance based

on its own sentencing discretion. However, later statements from Gray’s counsel and the district

court make clear that the court’s rejection of Gray’s mitigating factors applied to its consideration

of the § 3553(a) factors as well.

       THE COURT: [Gray’s counsel], any legal objections to the sentence imposed?
       [GRAY’S COUNSEL]: Other than the ones already placed on the record, your
       Honor, and just for clarification, many of the arguments that I raised in my brief,
       including the financial damage to his family, his mental and physical health, and his
       military service, were meant to be primarily in defining him as a person of special
       characteristics as a variance more so than as a departure, but I understand that the
       Court analyzed it both as a departure and as a variance, and I just want the record to
       be clear that I was requesting it specifically as a 3553 factor.
       THE COURT: All right. Well, Thank you. And I hope my comments – I certainly
       meant to – Are you satisfied that I’ve addressed it on both grounds?
       [GRAY’S COUNSEL]: Yes, your Honor.
       THE COURT: All right. Thank you. Are you satisfied that I’ve addressed all of your
       arguments on the record?
       [GRAY’S COUNSEL]: Yes, your Honor.

(Id. at 51:19-52:15.) Because the district court adequately considered Gray’s mitigating factors

under § 3553(a), based its sentence on the § 3553(a) factors, and did not choose the sentence

                                               - 14 -
No. 11-1305
United States v. Gray

arbitrarily, we conclude that it did not impose a substantively unreasonable sentence. Gray’s

sentence is therefore affirmed.

                                         III. Conclusion

       Finding sufficient evidence for the jury to find Gray guilty as to Count I and finding that the

district court did not abuse its discretion in sentencing Gray, we AFFIRM.

                                               - 15 -