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United States v. Stanford

United States District Court, W.D. Louisiana, Lafayette Division

December 11, 2014

UNITED STATES OF AMERICA
v.
DANIEL J. STANFORD

MEMORANDUM RULING

ELIZABETH ERNY FOOTE, District Judge.

On August 29, 2014, following a ten day jury trial, the Defendant, Daniel J. Stanford, was convicted of Counts 1, 2, 3, 4, 5, 10, 11, and 13 of the Superseding Indictment filed against him. [Record Documents 57 and 859]. He was acquitted on Counts 6, 7, 8, 9, and 12. [Record Document 859]. Now before this Court is a Motion for New Trial filed by the Defendant, who represented himself at trial, that alleges numerous deficiencies by the Court and in the Government's prosecution of the case. [Record Document 878]. Under Federal Rule of Criminal Procedure 33, a court is permitted to vacate any judgment, upon a defendant's motion, and grant a new trial "if the interest of justice so requires." Fed. R. Crim. P. 33(a). It is the movant's burden to show that a new trial is warranted. United States v. Soto-Silva, 129 F.3d 340, 343 (5th Cir. 1997).

After due consideration of the Defendant's claims, the Court finds that justice does not require vacating the jury's verdict and granting a new trial. Thus, for the reasons addressed individually below, the Defendant's Motion for New Trial is hereby DENIED. [Record Document 878]. Furthermore, because the record in this case is complete and the Defendant's claims can be resolved without the need for additional evidence, the Defendant's request for an evidentiary hearing is also hereby DENIED.

I. The Defendant's Claims that the Government Failed To Prove Beyond a Reasonable Doubt the Conspiracy and Money Laundering Charges

Under Rule 33 of the Federal Rules of Criminal Procedure, district courts considering whether to grant a motion for new trial may "weigh the evidence and may assess the credibility of the witnesses." United States v. Robertson, 110 F.3d 1113, 1117 (5th Cir. 1997) (citing Tibbs v. Florida, 457 U.S. 31, 37-38 (1982)). Although the discretion of a district court is broad, it is not unlimited: "The court may not reweigh the evidence and set aside the verdict simply because it feels some other result would be more reasonable. The evidence must preponderate heavily against the verdict, such that it would be a miscarriage of justice to let the verdict stand." Id. at 1118 (citations omitted); see also United States v. Wright, 634 F.3d 770, 775 (5th Cir. 2011). Granting a new trial is an extreme measure, and "it is not the role of the judge to sit as a thirteenth member of the jury." United States v. O'Keefe, 128 F.3d 885, 898 (5th Cir. 1997). Even though district courts are vested with the ability to grant a new trial when the interests of justice require it, "this power should be exercised infrequently by district courts, unless warranted by exceptional' circumstances." United States v. Tarango, 396 F.3d 666, 672 (5th Cir. 2005) (citing United States v. Scroggins, 379 F.3d 233, 239 (5th Cir. 2004)).

A. Count 1: Conspiracy To Distribute or Possess with Intent To Distribute a Controlled Substance Analogue

In support of his claim on Count 1, the Defendant focuses on what he views as the "incongruent and oxymoronic positions" the Government adopted, despite evidence presented at trial to the contrary. Record Document 878, p. 11. The Defendant claims that his limited involvement with his co-defendants is not enough to support the jury's verdict and that the Government's theory of the case is without evidentiary support or merit. In particular, he states that there is no evidence to support the Government's assertions that he was responsible for any increase in consumer demand for Mr. Miyagi or that he was able to convince the other co-defendants to sell Mr. Miyagi in Louisiana, even though they regarded it as a "no sell state." Id. Instead, the Defendant counters that these co-defendants decided to sell Mr. Miyagi in Louisiana, despite their concerns about its legality, based on the representations of co-defendants Richard Buswell ("Buswell") and Barry Domingue, who claimed to have agreements with state law enforcement agencies protecting them from prosecution. Id., at pp. 8-9. Moreover, the Defendant claims that any evidence of communication between him and co-defendant Daniel Francis ("Francis") failed to establish a conspiracy to distribute Mr. Miyagi and AM-2201, because there were no references in this communication to concerns over legality, law enforcement protection or agreements, or training of Curious Goods employees on how to deal with law enforcement. Id., at pp. 12-13. According to the Defendant, it was only after the raids on the Curious Goods stores on December 8, 2011, that e-mails between the Defendant and Francis began to discuss the legality of AM-2201. Id.

The Defendant's recitation of the facts presented at trial omits much of the evidence the Government presented to the jury. As the Government explains, there was evidence that showed the Defendant was a member of the conspiracy as early as late-July or August 2011 for purposes of distributing Mr. Miyagi. Record Document 892, pp. 3-4. This evidence included testimony concerning checks the Defendant received from Curious Goods and Pinnacle Products for dues to the Retail Compliance Association ("RCA"), meetings with co-defendants to assuage their concerns that Louisiana was a "no sell state, " e-mail correspondence regarding the RCA, and the Defendant's alleged agreement with state law enforcement agencies. Id., at pp. 4-5; Gov. Ex. 217; Gov. Ex. 369, p. 25. Additionally, refuting the contention made by the Defendant, the Government states that the evidence showed that Curious Goods' purchasing of Mr. Miyagi from Pinnacle Products increased dramatically after August 2011, when the Defendant allegedly joined the conspiracy. Id., at p. 5.[1]

Here, in assessing all the evidence and testimony, the Court cannot find that it would be a miscarriage of justice to allow the jury's verdict to stand. See Tibbs, 457 U.S. at 37-38; Robertson, 110 F.3d at 1117. Given the evidence submitted, the jury's determination that the Defendant was involved in a conspiracy to purchase, possess, and distribute Mr. Miyagi and AM-2201 is not misplaced, and the evidence does not "preponderate heavily against the verdict." Robertson, 110 F.3d at 1118. The testimony concerning the Defendant's participation, along with his correspondence with these codefendants, established clear evidentiary support that the Defendant was involved with a conspiracy to distribute Mr. Miyagi. The evidence provided by the Government also demonstrates when the Defendant became a part of this conspiracy and the extent to which he coordinated with other co-defendants to promote Mr. Miyagi's distribution. Rather than finding the Government's arguments "incongruent and oxymoronic, " the jury found the Government's presentation was cogent and the vast amount of evidence and testimony demonstrated the Defendant's guilt beyond a reasonable doubt as to Count 1. As a result, the Court finds that this claim is without merit.

B. Count 2: Conspiracy To Introduce or Cause To Be Introduced Misbranded Drugs into Interstate Commerce

According to the Defendant, the evidence presented as to Count 2 only showed that the other co-defendants knowingly and intentionally mislabeled Mr. Miyagi in an illegal manner and that these co-defendants exclusively controlled the packaging and labeling of the product. Record Document 878, p. 13. The Defendant submits that there was no evidence to support his conviction on Count 2. He specifically argues that there was a lack of evidence that he "was ever involved with labeling or... entered into any type of agreement to cause the Mr. Miyagi product to be mislabeled." Id., at p. 14.[2]

In opposition, the Government makes two arguments. First, while there is a difference between misbranding a product and introducing a misbranded product into interstate commerce, the elements for Count 2 only require the knowing introduction of that product into interstate commerce. The Government presented evidence that the Defendant was aware of the branding requirements for Mr. Miyagi and the potential liability associated with a product that was for "human consumption." Record Document 892, at pp. 7-8; Gov. Ex. 332A. Testimony from Brady Becker established the Defendant's participation in a conference call on this issue, and the Government further argues that the Defendant's knowledge that Mr. Miyagi potpourri was mislabeled was also evidenced at trial by his concern over selling Mr. Miyagi cookies and whether the Mr. Miyagi brand could then be associated with being for "human consumption, " undermining the potpourri's labeling. See id.; Record Document 925 (Trial Transcript pp. 1689, 1704); Gov. Ex. 332A, pp. 25-27. So long as the Defendant knew Mr. Miyagi was a misbranded drug when it was introduced into interstate commerce, the Government concludes it did not have to establish the Defendant mislabeled Mr. Miyagi himself to be culpable. Id. Second, because Count 2 is a conspiracy charge, the Defendant's actions which caused the misbranded product to be introduced into interstate commerce are sufficient for criminal liability. Id., p. 6. By applying the basic tenets of conspiracy law, the Government contends that the Defendant joined an unlawful conspiracy and that his actions were responsible for the introduction of Mr. Miyagi into interstate commerce, including his actions and assertions with regard to the RCA and possible agreements with state law enforcement agencies. Id., at p. 10.

Considering the evidence presented at trial, the Court cannot find that the jury's verdict represents a miscarriage of justice. It is improper for this Court to "reweigh the evidence and set aside the verdict" because another result could be "more reasonable." Robertson, 110 F.3d at 1118. Though the evidence does not demonstrate that the Defendant engaged in the misbranding of Mr. Miyagi himself, such evidence is not required. It is reasonable for the jury to have concluded that the Defendant's actions either directly or indirectly, by means of his participation in an unlawful conspiracy, caused the introduction of a misbranded product into interstate commerce. See id. The Defendant has failed to establish that a miscarriage of justice will result if the jury's verdict is permitted to stand as to Count 2. See United States v. Fuchs, 467 F.3d 889, 910 (5th Cir. 2006). For these reasons, the Court finds this basis for a new trial is without merit.

C. Count 3: Money Laundering Conspiracy

As to Count 3, the Defendant claims that the Government failed to prove beyond a reasonable doubt that he knew the proceeds in the financial transactions at issue involved revenue from the distribution of a controlled substance analogue and that he "intended to promote the carrying on of the specified unlawful activity." Record Document 878, p. 17. The Defendant also asserts that the Government was required, yet failed, to prove what percentage of Curious Goods' revenue was derived from the sale of Mr. Miyagi. Id., at pp. 17-18. Specifically, the Defendant contends that the Government failed to present any evidence that five checks he received from other codefendants from July 2011 to December 2011 were ever cashed or deposited with the knowledge that the money was revenue from illegal activity or that it was accepted to promote such illegal activity. Id., at pp. 19-21. While evidence and testimony presented by the Government showed that certain checks were for "legal services" and "RCA dues, " the Defendant questions the evidentiary basis of this charge if he "did not perform any RCA work." Id., at p. 21.

The Government counters that the Defendant, in fact, promoted the sale of Mr. Miyagi, which he knew contained AM-2201, and was aware that the money he received was derived from the revenue generated by those sales. Record Document 892, p. 11. The RCA, according to the Government, was a conduit to pay both the Defendant and Francis the proceeds from Mr. Miyagi's distribution. Id. As the Government points out, co-defendants Boyd Barrow ("Barrow") and Joshua Espinoza ("Espinoza") both testified that "RCA dues" were paid by Curious Goods and that the Curious Goods franchisees were told that "they would have to pay the RCA based upon a percentage of their sales, the vast majority of which were [from] Mr. Miyagi." Id.

In assessing both the witnesses and the evidence, the Court finds that the co-defendants provided credible testimony and that the evidence does not "preponderate heavily against the verdict" in such a way that it would be a miscarriage of justice to let the verdict remain. Robertson, 110 F.3d at 1118. The jury's conclusion that the Defendant was knowingly receiving money principally derived from the sale and distribution of Mr. Miyagi is not without merit, especially considering the witnesses' testimony, the instruction given to the Curious Goods franchisees, and four checks being drafted to the Defendant with "RCA dues" in the memo line. Gov. Ex. 369. The Court also notes that of the five checks the Defendant referenced in his brief, two were for "legal fees, " and the jury acquitted the Defendant on the money laundering counts relating to other checks that he received for "legal fees."[3] However, a new trial on this count is not warranted merely by referencing these two checks alone, as the Government at trial presented numerous other checks that the Defendant received that were not for legal fees or services. Consequently, the jury's decision as to whether the Defendant took part in a conspiracy to launder the proceeds from Mr. Miyagi fails to rise to the level of an exceptional circumstance that permits this Court to set aside the jury's verdict. See Tarango, 396 F.3d at 672. Consequently, the Court finds this claim is without merit.

D. Counts 4, 5, 10, 11, and 13: Money Laundering

In his Motion for New Trial, the Defendant alleges that the evidence failed to prove beyond a reasonable doubt that he engaged in money laundering by knowingly receiving proceeds from an unlawful activity and then knowingly engaging in transactions with those proceeds through a financial institution. Record Document 878, p. 2. However, the Defendant has failed to assert a clear argument and offers no evidence to support this allegation. The Defendant simply claims that the Government did not prove what percentage of Curious Goods' proceeds were derived from selling Mr. Miyagi and "should not be allowed to argue and assert that every penny of income by Curious Goods" came from that product. Id., at p. 18.

The Government contends that witness testimony and bank records presented at trial firmly establish that the proceeds from the sale of Mr. Miyagi were being received by the Defendant, who was then, in turn, conducting monetary transactions with those proceeds in excess of $10, 000. Record Document 892, pp. 11-13. In terms of testimony, the Government explains that both Barrow and Espinoza stated that they paid their "RCA dues" using money derived from Mr. Miyagi. Id., at p. 11. The Government also uses invoices and bank records to demonstrate that the vast majority of the gross revenue generated by Curious Goods during the conspiracy was from the sale of Mr. Miyagi. According to the Government's calculation, "[w]hen $1, 536, 484.13, the amount paid by Curious Goods to Pinnacle Products, is multiplied by the Curious Goods' markup rate, expected gross sales revenue is $5, 121, 613.77 a difference of only $14, 501.59 greater than that actually generated." Id., at pp. 12-13; Gov. Ex. 14, 144, 369.[4] Because Curious Goods did not have a meaningful income stream other than Mr. Miyagi, the Government argues its calculation demonstrates that a significant amount of the revenue the stores generated is attributable to the sale of Mr. Miyagi, and these illicit proceeds were then received by the Defendant. Id.

Like the Defendant's previous claims, the evidence presented at trial does not indicate that the jury's determination was a miscarriage of justice or an exceptional circumstance such that this Court could set aside the verdict on these counts. Tarango, 396 F.3d at 672; Robertson, 110 F.3d at 1117. Given the testimony and evidence presented on Curious Goods' proceeds and the "RCA dues" received by the Defendant, the conclusion that the Defendant knew he was receiving the proceeds from the illicit sale of Mr. Miyagi is well supported. Furthermore, while the Government's revenue calculation is not definitive, it provides convincing support that a vast majority of Curious Goods' proceeds were derived from Mr. Miyagi's profitability as well. Thus, this claim is without merit.

II. The Defendant's Allegations that the Government Failed To Provide Summaries of Interviews It Conducted with ...


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