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United States v. Hale

United States Court of Appeals, Fourth Circuit

May 15, 2017

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
STEVE HALE, Defendant-Appellant.

          Argued: January 26, 2017

         Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. Max O. Cogburn, Jr., District Judge. (3:13-cr-00280-MOC-DSC-1)

         ARGUED:

          Marvin David Miller, LAW OFFICE OF MARVIN D. MILLER, Alexandria, Virginia, for Appellant.

          Amy Elizabeth Ray, OFFICE OF THE UNITED STATES ATTORNEY, Asheville, North Carolina, for Appellee.

         ON BRIEF:

          Jill Westmoreland Rose, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Charlotte, North Carolina, for Appellee.

          Before WILKINSON, NIEMEYER, and KEENAN Circuit Judges.

         Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Wilkinson and Judge Keenan joined.

          NIEMEYER, Circuit Judge.

         Following a seven-day trial, a jury convicted Steven M. Hale of transporting stolen property in interstate commerce, knowing the goods to have been stolen; of conspiring to do the same; of making false statements in his tax returns; of failing to collect and pay employee taxes; and of obstructing justice. The district court sentenced him to 97 months' imprisonment.

         Challenging his conviction on appeal, Hale contends primarily that the evidence was insufficient to justify the district court's decision to give the jury a willful blindness instruction and otherwise to support the jury's finding that he knew the property at issue was stolen. He also challenges the admission of certain evidence; the content of several jury instructions; the sufficiency of the evidence as to whether an individual who worked for him qualified as an employee, as opposed to an independent contractor; and certain statements that the government made to the jury during closing argument. Finding no reversible error, we affirm.

         I

         A federal grand jury returned a 31-count indictment in 2013 charging Hale with one count of conspiracy from at least 2006 through March 2011 to transport stolen property in interstate commerce, in violation of 18 U.S.C. § 371; twelve counts of transporting stolen property in interstate commerce, and aiding and abetting the same, in violation of 18 U.S.C. §§ 2314 and 2; three counts of making a false statement in his income tax returns, in violation of 26 U.S.C. § 7206(1); fourteen counts of failing to collect, account for, and pay over federal taxes on an employee's wages, in violation of 26 U.S.C. § 7202; and one count of obstruction of justice, in violation of 18 U.S.C. § 1503. At the heart of the charged conduct was the government's allegation that, as part of an organized retail theft scheme, Hale served as "a Second-Level Fence engaged in the purchase and resale of stolen consumer products, goods and merchandise." Specifically, the government alleged that professional shoplifters - or "boosters, " as they were called - had stolen millions of dollars worth of over-the-counter medications and health-and-beauty products from the shelves of retail stores and then sold the goods to first-level fences, who in turn sold the goods to Hale, the sole owner and operator of a warehouse in Denver, North Carolina, doing business as Double D Distributing, LLC. Hale profited, according to the government, by selling the stolen goods to at least one third-level fence.

         The government's investigation began in the fall of 2010, when detectives with the Gastonia, North Carolina Police Department learned that heroin addicts in the area were routinely shoplifting large quantities of goods - particularly over-the-counter medications and health-and-beauty aids - from local stores and selling them to get money to buy heroin on a day-to-day basis. These boosters often operated in teams of two to four individuals and routinely stole $1, 000 to $3, 000 worth of merchandise in a matter of minutes. After some of the boosters identified a woman named Bonnie Bridges as their fence, officers set up surveillance that confirmed that numerous boosters were taking their shoplifted merchandise to Bridges' house on a daily basis. Officers then saw Bridges taking the merchandise to Hale's warehouse, which was a plain white metal building with no identifying signs. Officers conducted further surveillance at the warehouse and eventually set up a pole camera across the street.

         Between October 2010 and March 2011, their surveillance revealed that Bridges, often accompanied by her sister, regularly delivered stolen merchandise to the Double D warehouse. Bridges' two daughters and their husbands also made routine deliveries to the warehouse, as would a man named Darryl Brock. They all delivered their merchandise in plastic garbage bags, plastic storage bins, and boxes, and one officer who participated in the surveillance testified that he never saw anyone else, including any commercial trucks, make deliveries to the warehouse. On numerous occasions between October 2010 and March 2011, Hale was present at the warehouse when these individuals were paid cash for the stolen merchandise they delivered.

         On October 20, 2010, investigating agents intercepted a FedEx shipment from the Double D warehouse to Jeff Telsey at JCA Enterprises in Boca Raton, Florida. In that shipment were items that the officers had marked with an ultraviolet-light pen prior to having a cooperating booster sell the items to Bridges. The shipment also contained merchandise marked with active security sensors and stickers identifying the retail store where the item was intended to be sold and a telephone number for people to call if the item was found elsewhere. This telephone number allowed people to find out if the product was stolen or if it was legitimately in the secondary market.

         Investigating agents executed a search warrant at the Double D warehouse on March 24, 2011, where they found numerous shelves containing labeled boxes of merchandise and a "cleaning station" with different products used to remove stickers, sensors, and glue. Sharon Cooke, who worked at the warehouse, was present at the beginning of the search and agreed to make two recorded telephone calls to Hale, who was in Florida at the time. She told Hale that the IRS "was around asking questions." During one of the calls, Hale responded, "Well, you don't know who we're doing business with, " and then repeated, "You don't know who the business is with, do you?, " even though Cooke did in fact know the identities of both the business' suppliers and customers.

         On the same day that agents searched the Double D warehouse, they also searched Bridges' residence and arrested Bridges. After she was released from jail, she called Hale to accuse him of "throw[ing] us under the bus." Hale responded that he "hadn't done anything"; that Bridges and her family "shouldn't have done him the way that [they] did"; and that "he hoped [they] didn't turn on him." Moreover, the same day that officers searched Hale's warehouse, Hale called Brock, warning him that Bridges had gotten "arrested for a bunch of stolen merchandise"; "that the FBI was at his warehouse"; and that they would "probably be coming after [Brock] next." The next day, Hale advised Brock to "get rid of [his] product" and to take money out of his bank accounts before they were frozen by the police. Consistent with the latter piece of advice, Hale withdrew more than $236, 000 from a joint bank account that he shared with his wife, redepositing the money in a new account in her name only.

         One week after the search, on April 1, 2011, Hale listed his 26-foot boat for sale with a broker in Florida, asking more than $39, 000. At some later point, however, Hale took the boat's title to a close family friend who was an auctioneer and signed the title over to his friend's company. The friend had the boat on his car lot for a few weeks but, at Hale's request, moved it inside a building. Sometime after June 8, 2011, when a court issued a seizure warrant for the boat, Hale told his friend about the warrant and stated, "If anybody asks you any questions, it's your boat." Sometime later, Hale prepared a fraudulent promissory note reflecting that his friend had agreed to pay $18, 000 for the boat, which they backdated to May 9, 2011.

         Trial on the charges commenced in April 2014 and continued before a jury for seven days. In support of its case, the government introduced surveillance videos of activity outside of Hale's warehouse, the testimony from the investigating officers, and the testimony from several of Hale's alleged co-conspirators, including Bridges, Brock, Cooke, and Telsey.

         Bridges testified that she met Hale in 2000 when she was selling over-the-counter medicines and health-and-beauty aids at a flea market after buying them directly from drug-addicted shoplifters. At that time, Hale approached her table and indicated that he might be interested in buying her products, particularly "Tylenol, Advil, [and] stuff like that." Thereafter, Hale gave Bridges a price list for the merchandise he wanted to buy and said he would pay cash for as much of that merchandise as she could deliver. For example, Hale would pay $4 for a 100-count bottle of Aleve, less than one-half the manufacturer's wholesale price of $8.61, and $6 for a 14-count package of Prilosec, substantially less than the wholesale price of $10.01. Hale told Bridges that he would not accept goods that were damaged or within one year of their expiration date. Based on Hale's price list, Bridges told the boosters what goods she wanted and how much she would pay for those goods, usually setting her price so that she made at least one dollar on each item. As to the merchandise that Hale would not accept, Bridges sold it at flea markets, where she also continued to sell other miscellaneous items.

         For the first five or six years that Bridges and Hale did business together, Hale would send someone to pick up the merchandise at Bridges' house. Eventually, however, Hale gave Bridges the address of his warehouse, and Bridges started delivering the stolen merchandise to the warehouse on an almost daily basis. Starting around 2004 or 2005, her daughters and their husbands found their own boosters to buy from in order to make money by reselling stolen merchandise to Hale.

         At times, the drug-addicted shoplifters Bridges bought from would get arrested, and, when Hale or Cooke would ask her why she was not bringing in as much product, she would respond that her "people [were] on vacation." Bridges testified that Hale would not "ask any more questions about that." At no point during the decade that Bridges sold Hale stolen merchandise did Hale ever ask her for proof that the products she was selling to him were not stolen; nor did he ever ask about the retailer stickers, which were on at least 20% of the items that she sold to him.

         Brock testified that he first met Hale in 2000, when his father introduced them. At the time, Brock and his father owned a fireworks store, but Brock was also buying over-the-counter medicine and health-and-beauty aids from drug-addicted boosters and selling the stolen merchandise at flea markets. Brock's father had previously sold stolen merchandise, and he told Brock that Hale "was okay and . . . was buying . . . the health and beauty aid stuff which [Brock] had." Hale subsequently provided Brock with a price sheet and started buying goods from him. In 2002, Brock was arrested after law enforcement officers executed a search warrant on a trailer located behind his fireworks store and recovered counterfeit items and 20 boxes of stolen merchandise. While the charges were pending, Brock asked Hale if "he could help [him] out, " and Hale gave Brock a fraudulent "receipt for 20 banana boxes and a bunch of receipts from a Walmart, " leading police to drop the stolen property charge.

         For several years after his arrest, Brock stopped dealing in stolen merchandise, but he got back into the business after meeting Bridges at a flea market in the spring of 2010. When he approached her booth, he could almost immediately tell, from "being in that business before, " that her products were stolen goods. Brock started buying goods ...


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