Court Opinion

ID: 9491113
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:03:59.545592+00
Date Added: 2024-06-11T17:54:30.837847
License: Public Domain

TASHIMA, Circuit Judge,
dissenting, in part:
I concur in most of the majority opinion; however, I respectfully dissent from Part VIII. I believe that the district court erred in *1350imposing a two-level increase in Weaver and Ladum’s base offense levels for failure to report income exceeding $10,000 from criminal activity, pursuant to U.S.S.G. § 2Tl.l(b)(l) (formerly § 2T1.3(b)(l)). In my view, the government failed to prove by a preponderance of the evidence that the income was derived from “criminal activity.”
The Sentencing Guidelines provide for a two-level increase in the base offense level, if the “defendant failed to report or correctly identify the source of income exceeding $10,-000 in any year from criminal activity____” U.S.S.G. § 2Tl.l(b)(l). “Criminal activity” is defined as “any conduct constituting a criminal offense under federal, state, local, or foreign law.” U.S.S.G. § 2T1.1 application note 3. In this case, the relationship between the “criminal activity” and the income-generation is too attenuated to support the enhancement. Under our Circuit law, an enhancement is permissible only if the “criminal activity” directly results in the production of income.
Here, Weaver made several false statements on his federal firearms license application, in violation of 18 U.S.C. § 924(a)(1)(A).1 The majority holds that the unreported profits from each firearm sale was the “fruit” of criminal activity, because without the license, each sale would have violated 18 U.S.C. § 922(a)(1)(A). However, as we held in United States v. Ford, 989 F.2d 347 (9th Cir.1993), an enhancement is appropriate only for conduct that actually constitutes a criminal offense. Id. at 350 (“The Commentary does not define ‘criminal activity1 as ‘conduct that would constitute a criminal offense ...,’ but as ‘conduct constituting a criminal offense ____’”) (emphasis in the original). And it is that criminal activity which must directly generate the income for the enhancement to apply. See id. A false statement on a federal firearms license application, like tax fraud or tax evasion, see id., does not generate any income. The actual firearms sales, pursuant to the license, did generate income, but that was not income from “criminal activity” because Weaver held a facially valid license.
Dealing in firearms is illegal, unless by a “licensed dealer,” 18 U.S.C. § 922(a)(1)(A), and a “licensed dealer” is “any dealer who is licensed under the provisions of this chapter.” 18 U.S.C. § 921(a)(ll). Where an applicant has made a false statement on his license application, he may face criminal charges under 18 U.S.C. § 924(a)(1); he may also have his license revoked, pursuant to 18 U.S.C. § 923(e), after notice and a hearing.2 Weaver’s dealer’s license may have been voidable due to the false statement, but it was not void. As the majority concedes, Weaver had “a facially valid firearms license.” Therefore, the firearms sales did not constitute “criminal activity.” Cf. United States v. Caldwell, 49 F.3d 251, 252 (6th Cir.1995) (“we do not equate an improper transaction with an unlicensed transaction”).
The majority’s attempt to distinguish Ford, on the basis that the tax fraud involved there did not generate any income and the false license application here “enabled” Weaver to sell guns generating income, is unconvincing. Since the majority treats the gun sales income as illegal, i.e., “criminal activity,” that activity could hardly have been “enabled” by Weaver’s license-who needs a license to carry on illegal or criminal activity? Thus, this analysis necessarily treats the license as void, which contradicts the majority’s own recognition that the license is facially valid. Moreover, the § 2Tl.l(b) enhancement is not imposed for activity which “enables” one to engage in criminal activity, but for engaging in criminal activity, i.e., for “conduct constituting a criminal offense.”
Under Ford, 989 F.2d 347, neither Weaver nor Ladum should have received the § 2T1.1(b) two-level enhancement for the false statements on Weaver’s firearms license application. Because I would vacate *1351Weaver and Ladum’s sentences and remand for resentencing without the § 2T1.1(b) enhancement, I respectfully dissent from Part VIII.

. 18 U.S.C. § 924(a)(1)(A) makes it a crime to "knowingly makes any false statement or representation with respect to the information required by this chapter ... in applying for any license....”

. 18 U.S.C. § 923(e) states: "The Secretary may, after notice and opportunity for hearing, revoke any license issued under this section if the holder of such license has willfully violated any provision of this chapter or any rule or regulation prescribed by the Secretary under this chapter.”