UNITED STATES OF AMERICA, Plaintiff-Appellee, v. DANIEL STEWART, Defendant-Appellant.
No. 16-4105
United States Court of Appeals For the Seventh Circuit
ARGUED MARCH 30, 2018 — DECIDED SEPTEMBER 5, 2018
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division.
No. 1:15-cr-00024-WTL-DKL-1 — William T. Lawrence, Judge.
Before EASTERBROOK and ROVNER, Circuit Judges, and GILBERT,
ROVNER, Circuit Judge. Daniel Stewart was convicted of drug trafficking, firearms offenses, and money laundering, primarily based on evidence gathered as a result of a traffic stop and a subsequent confession. We affirm the district court‘s denial of Stewart‘s motion to suppress the traffic stop evidence and the confession, and we reject Stewart‘s additional claims on appeal.
*I.
On January 20, 2015, Detectives Jeff Sequin and Ryan VanOeveren were surveilling the home of Daniel Stewart. Stewart
Over a period of several months, officers surveilled Colon‘s furniture store. During that time, they twice observed Stewart visit the store, once on October 23, 2014, and once on December 16, 2014. On each occasion, Stewart stayed only a short time and made no purchase. Through further investigation, the officers identified Stewart and learned that he lived in the apartment complex pointed out by Lizarraga. Stewart had a criminal record that included felony drug offenses. In early January 2015, believing that Stewart was the customer identified by Lizarraga, they began to surveil Stewart in an attempt to connect him to Colon‘s drug trafficking.
In the early evening of January 20, 2015, Detectives VanOeveren and Sequin followed Stewart‘s white Volkswagen from his apartment complex to a Shell gas station. After Stewart pulled up to a pump, another man exited a grey car that was parked at the station, and walked over to the passenger side of Stewart‘s car. The man got into Stewart‘s car and closed the door. A few minutes later, the man exited Stewart‘s car and immediately left the station in the grey car. Stewart then got out of his Volkswagen and pumped gas. Although they could not see through Stewart‘s tinted windows from their vantage point some eighty yards away, based on their many years of experience investigating drug crimes, VanOeveren and Sequin believed that they had just witnessed a drug sale at the gas station.
They decided to watch Stewart‘s car for traffic violations and to attempt a traffic stop. Because they were in plain clothes and unmarked cars, they called Detective Brady Ball to the scene in his squad car. Detective Ball specialized in drug interdiction stops, and he traveled with Josie, a dog who had been trained to detect the scent of illegal drugs. Detective Ball testified that he arrived in the area in time to see Stewart fail to stop at a red light when he made a right turn, the same violation observed by the other detectives.1 Detective Ball activated his lights and Stewart pulled over in the parking lot of a Speedway gas station.
Detective Ball recorded the audio of his encounter with Stewart and so the trial court had a detailed, time-indexed account of everything that was said during the stop.2 At the suppression hearing, Detective
Moments after returning to the squad car, Ball radioed a request for backup. He explained that he was on an interdiction stop and wanted to run his dog around the car. He requested that officers arrive as quickly as possible. It appears from the audio recording that Ball continued to work on the traffic violation as he waited for a response to his request for backup, but an estimate of the time attributed to calling for backup would be at most seventy-five seconds.3
As he waited for backup to arrive, Detective Ball continued the process of checking the license and registration, running a check for outstanding warrants, and beginning to write the ticket. Approximately thirteen minutes into the stop, while Detective Ball was still completing tasks related to writing the ticket, the backup officers arrived. For approximately forty-five seconds, Detective Ball spoke to the backup officers, explaining to one officer how to complete the electronic ticket-writing process (which was apparently new), and asking the other officer to keep a watch over Stewart. Ball then removed Josie from his car and walked her around Stewart‘s car. On her second pass around the Volkswagen, Josie alerted to the driver‘s side door. The entire process of Josie exiting the squad car, sniffing, and then alerting took one minute and forty-five seconds. The backup officer was still working on the ticket when Josie alerted. Detective Ball offered further advice on completing the ticket, and then approached Stewart.
Detective Ball approached Stewart again and said, “That‘s a lot of drugs, bud. You want to talk to a detective?” Stewart appeared to shake his head to indicate “no.” Ball clarified, “You do not want to talk to a detective? Well, you understand I gotta have one come out.” Stewart replied, “Can you put me in the car? It‘s kind of cold out.”4 Ball said, “Yes, they‘re going to talk to you regardless so you‘ll get in the car at that point. I have a dog in my car.” Ball then radioed for narcotics officers to come to the scene. We will discuss that call and the subsequent interchange between Ball and Stewart more completely below when we address Stewart‘s motion to suppress his confession. Eventually Stewart was placed in the car of the narcotics officers when they arrived on the scene.
VanOeveren and Sequin were the officers who arrived to transport Stewart. VanOeveren reminded Stewart of his Miranda rights and asked if Stewart wanted to talk about the gun, narcotics and cash found in his car. Stewart first tried to talk the detectives into releasing him for a short period, promising to meet them later to assist them in their investigation. The officers declined and gave Stewart two options: come with the detectives to the police station to discuss his situation or go straight to the Marion County Jail. Stewart opted to go to the police station with the detectives. Once there, officers brought Stewart into an interview room and Detective Ryan Clark gave Stewart his Miranda rights. Stewart indicated that he understood his rights and he signed a written waiver of those rights. He then made incriminating statements that were video-recorded. In the meantime, officers obtained a search warrant for his residence. The affidavit supporting the warrant detailed the cash, drugs and gun found in the car. The search of Stewart‘s home yielded an additional 1650 grams of cocaine; 1005 grams of methamphetamine; 1500 grams
Stewart was charged in a six-count indictment with possession with intent to distribute controlled substances, in violation of
II.
On appeal, Stewart contends that the evidence gained through the traffic stop should have been suppressed because Detective Ball unconstitutionally prolonged the stop in order to conduct the dog sniff procedure. Stewart also asserts that the prolonged detention due to the sniff was not otherwise supported by reasonable suspicion. Any evidence obtained after the search of his car, he argues, should be suppressed as the fruit of the poisonous tree. Stewart maintains that the incriminating statements he made following his arrest should also have been suppressed because investigators violated his invocation of his right to remain silent. He also submits that the district court erred in admitting substantial amounts of prejudicial and irrelevant evidence of prior bad acts. And finally, he asserts that the government failed to present sufficient evidence in support of the money laundering convictions, rendering them infirm as a matter of law. He seeks to have the convictions on every count vacated and the case remanded for further proceedings. But he also contends that his convictions for money laundering should be reversed outright. Because some of these objections were preserved and others were not, we will address the standard of review as we turn to each issue.
A.
Josie conducted her life-altering sniff of Stewart‘s car on January 20, 2015. The next day, the Supreme Court heard argument in Rodriguez v. United States, 135 S. Ct. 1609 (2015). The Court decided Rodriguez on April 21, 2015, some three months before Stewart filed his motion to suppress and five and a half months before the district court held the suppression hearing. In Rodriguez, the Supreme Court considered “whether police routinely may extend an otherwise-completed traffic stop, absent reasonable suspicion, in order to conduct a dog sniff.” 135 S. Ct. at 1614. The Court concluded that a traffic stop may become unlawful if it is prolonged beyond the time reasonably necessary to complete the traffic-related
On appeal, Stewart first argues that Detective Ball unreasonably lengthened the stop in order to conduct the dog sniff. Such a delay was unconstitutional under Rodriguez, he continues, and no reasonable suspicion supported lengthening the stop in order to conduct the sniff. Moreover, Stewart contends that the government failed to argue below that the evidence obtained from the stop was admissible under any exception to the exclusionary rule, and so the government forfeited any such claim on appeal. See United States v. Leo, 792 F.3d 742, 748–49 (7th Cir. 2015). In considering a district court‘s denial of a motion to suppress, we usually review findings of fact for clear error and questions of law de novo. United States v. Borostowski, 775 F.3d 851, 863 (7th Cir. 2014). However, the government asserts that Stewart did not preserve the issue that he raises on appeal because he failed to make a timely and specific objection in the district court. Because Stewart forfeited the issue, the government argues, we should review the district court‘s decision for plain error only. See United States v. Olano, 507 U.S. 725, 731 (1993); United States v. Hamad, 809 F.3d 898, 904 (7th Cir. 2016);
In his Motion to Suppress Evidence, Stewart challenged only whether Josie‘s sniff of the car provided probable cause to conduct a search. Specifically, Stewart complained that (1) Josie is not a reliable dog; (2) Josie was subjected to handler error; and (3) the drugs were planted in
Enclosed please find a case entitled Rodriguez v. United States, No. 13-9972. Argued January 21, 2015-Decided April 21, 2015 in the Supreme Court of the United States.
Please give consideration to this decision in reviewing Mr. Stewart‘s Motion to Suppress Evidence.
R. 69.
In denying the Motion to Suppress, the district court rejected any argument that Josie was unreliable or that handler error contributed to her alert, claims which Stewart has now abandoned on appeal.6 The court also briefly addressed what it characterized as Stewart‘s challenge to the reasonableness of the length of time he was detained for the traffic stop. Citing Rodriguez, the court noted that police officers may not extend an otherwise-completed traffic stop, absent reasonable suspicion, in order to conduct a dog sniff. After a brief discussion of governing law, the district court concluded that Ball did not unconstitutionally prolong the stop:
Approximately fifteen minutes elapsed between the time Ball pulled Stewart over and Josie‘s alert. ... During that fifteen-minute period, Ball was actively engaged in conducting the traffic stop. When other officers arrived, Ball directed one officer to continue writing the ticket while Ball had Josie conduct an open air sniff. Thus, Ball did not prolong or extend the traffic stop beyond the time necessary to effectuate its purpose. Once Josie alerted, the encounter moved beyond that of a mere traffic stop, as probable cause to search the vehicle was established.
R. 70, at 6 (footnotes omitted).
Stewart is correct, in a sense, that the district court addressed the merits of the issue of whether the sniff prolonged the stop. The court, as we have just seen, found that Detective Ball did not, as a matter of fact, prolong the stop beyond the time necessary to effectuate the traffic purpose of the stop when he conducted the
Although Stewart has correctly identified the key question under Rodriguez, prior to the appeal, Stewart never raised an objection that would have alerted the government to the need to make a record on this very point. In seeking to use evidence obtained without a warrant, the government bore the burden of proving by a preponderance of the evidence at the suppression hearing that an exception to the warrant requirement applied. United States v. Basinski, 226 F.3d 829, 833 (7th Cir. 2000). At that hearing, the government presented evidence relevant to Stewart‘s stated objections. That is, the government provided evidence that Josie is a well-trained and reliable dog with a proven track record of detecting the odor of illegal drugs. The government also presented evidence that Detective Ball was a highly trained handler and that no handler error was involved in this search. Finally, the government presented evidence that Detective Ball found the drugs in the trunk during the search, negating the contention that the drugs were planted in the truck after the fact.
The government had no reason to ask Detective Ball why he took the time to call for backup, and so the record is silent on whether he summoned backup both for officer safety and in order to conduct the sniff. He testified that safety was on his mind when he asked backup officers to watch Stewart after Josie alerted because he knew from his fellow officers that there were “some pretty serious allegations” of drug dealing by Stewart. Because Stewart failed to object specifically to the time taken for calling for backup, the court had no occasion to rule on whether the seventy-five seconds used for that task should be attributed to the dog sniff or to some other proper purpose of the traffic stop such as officer safety. From the record that was developed, the government (had it been alerted to this objection) could have made a non-trivial argument that the call for backup was related as much to officer safety as to conducting the dog sniff. Detective Ball knew he was being asked to stop a felon suspected of selling drugs moments earlier. As the stop properly progressed, Ball saw that Stewart was unusually nervous, and learned that the bulge in Stewart‘s pocket was a notably large amount of currency, lending credence to the charge of recent drug dealing. Ball had to twice direct Stewart to sit on the bumper of his car while Ball worked on the ticket. And as soon as the two backup officers arrived, Ball asked one officer to watch Stewart, which would seem to indicate that he was concerned for his safety even before conducting the sniff. But the
Nor did Stewart alert the court or the government to his ultimate claim that “[t]he resulting stop was longer than if Ball had simply written Stewart a traffic citation,” the salient question under Rodriguez. And so the government had no reason or opportunity to ask Detective Ball if he could have finished writing the ticket himself in less time than it took to conduct the sniff. Again, by listening to the time-indexed audio, we know that Detective Ball took approximately forty-five seconds to hand off the ticket to the backup officer (who was not fully familiar with the new electronic system), and roughly ninety seconds to run Josie around the car. The officer working on the ticket was not finished writing it when Josie alerted. That suggests that some additional amount of time was needed for any officer to complete the ticket. We are left with more questions than answers. Was the backup officer diligently working on the ticket while Detective Ball ran the dog around the car? Could Detective Ball have completed the ticket in less time than it took to call for backup, hand off the ticket and run the dog? Was any of that time attributable to tasks permissibly related to the mission of the traffic stop? And if so, could Detective Ball have completed the ticket more quickly than the time attributed solely to the dog sniff?8
The reason we have no answers to these questions is that Stewart failed to raise this specific objection in a timely manner, when the government could have developed the record and the court could have ruled on the issue with full knowledge of the circumstances. From the moment the stop began to the moment Josie alerted, fewer than sixteen minutes had elapsed, not an unreasonable amount of time in the abstract for a ticket for running a red light. We know from the audio recording that the vast majority of that time was spent diligently completing tasks related solely to the mission of the stop. Any uncertainty about the remaining few minutes can be attributed only to the defendant‘s failure to raise this objection in a timely manner. Rodriguez had been on the books for months, and so the defendant had every opportunity to raise the issue before the suppression hearing. We will therefore treat the issue as forfeited and review for plain error.
In order to reverse for plain error, we must find (1) error (2) that is plain, and (3) that affects the defendant‘s substantial rights. Olano, 507 U.S. at 732; Hamad, 809 F.3d at 904. An error is plain if it is clear or obvious. Olano, 507 U.S. at 734; Hamad, 809 F.3d at 904. And an error affects the defendant‘s substantial rights when it is prejudicial, that is, when it has affected the outcome of the district court proceedings. Olano, 507 U.S. at 734. Finally, “Rule 52(b) leaves the decision to correct the forfeited error within the sound discretion of the court of appeals, and the court should not exercise that discretion unless the error ‘seriously affect[s] the fairness, integrity or public reputation of judicial proceedings.‘” Olano, 507 U.S. at 732 (quoting United States v. Young, 470 U.S. 1, 15 (1985)).
To state the standard is to demonstrate that Stewart cannot meet it here. He challenges the district court‘s factual finding that the sniff did not lengthen the stop. The court determined that Ball was actively engaged in conducting the traffic stop before handing off the ticket, and that another officer continued that mission while Ball ran Josie around the Volkswagen. In other words, the sniff was conducted contemporaneously with the traffic mission of the stop. Based on the evidence that the district court had before it, there is no reason to conclude that this finding was in error. Nothing in the record calls the court‘s finding into question, and to the extent that we simply do not know whether every moment was spent in traffic-related tasks, the fault for those omissions lies with Stewart.
The district court did not address whether any lengthening of the stop to conduct the dog sniff was otherwise supported by reasonable suspicion or probable cause. See R. 70, at 9 n.10 (declining to decide whether Ball independently had probable cause to search). Because we have concluded that there was no plain error in the court‘s finding that the stop was not unconstitutionally lengthened, we need not address whether Detective Ball possessed reasonable suspicion that would have allowed lengthening the stop in any case. Nonetheless, for the sake of completeness we note that, at the time Detective Ball decided to conduct the sniff, he knew that Stewart was a felon and a drug trafficker who was being investigated for additional trafficking and an association with Colon. He knew that, moments earlier, his fellow officers witnessed Stewart engaged in an encounter that, in their extensive experience, they believed to be a drug sale. He knew that Stewart was unusually nervous when stopped for running a red light. And he knew that Stewart admitted to having $700 in cash in his pocket. It would be difficult to say that this information would not supply reasonable suspicion to support a delay of a few minutes to conduct a dog sniff. In short, the court did not err, much less plainly err, when it denied Stewart‘s motion to suppress the evidence found in the Volkswagen.
Stewart also contends that all evidence obtained as a result of the traffic stop should have been excluded as the fruit of the poisonous tree. See Utah v. Strieff, 136 S. Ct. 2056, 2061 (2016) (the exclusionary rule encompasses both the primary evidence obtained as a direct result of an illegal search or seizure and evidence later discovered and found to be derivative of an illegality, the so-called fruit of the poisonous tree). Obviously, if the original search was not unlawful, there is no basis to exclude evidence derived from the original search. The contraband found in the car formed the basis of a request for a warrant to search Stewart‘s home. Because there is no basis to exclude the evidence found in the car, there is no basis to exclude the evidence found in the home. Stewart also asserts that his confession was obtained as a result of the unlawful search of the car. Again, because there is no reason to exclude
the evidence found in the car, that search cannot provide a foundation for excluding Stewart‘s confession.
B.
We turn to Stewart‘s contention that the court erred when it refused to suppress his confession on the separate ground that it was obtained when the officers ignored his invocation of his right to remain silent and continued to question him. Stewart preserved this argument and
Stewart asserts that he unambiguously invoked his right to remain silent by shaking his head “no” in response to a question from Detective Ball regarding whether he wanted to talk to a detective. The district court found that “Stewart never affirmatively and unequivocally invoked his right to remain silent.” R. 70, at 10. The court noted that Stewart appeared to shake his head, and that when Ball twice tried to clarify the meaning of that gesture, Stewart responded by twice asking to be placed in a car because it was cold outside.
Such responses were not an unambiguous invocation of Stewart‘s right to remain silent such that officers were precluded from further questioning him. Stewart did not tell Ball that he no longer wished to answer Ball‘s questions. Nor did he explicitly state that he did not want to speak with detectives. As such, Stewart‘s argument on this ground must fail.
R. 70, at 10.
We begin with the context of that incident. Wysinger, 683 F.3d at 793-94 (in determining whether a suspect clearly invoked his or her right to counsel, we consider the circumstances in which the statement was made as well as the words employed); United States v. Hampton, 675 F.3d 720, 727 (7th Cir. 2012) (objective inquiry into whether suspect invoked right to counsel includes review of not only the words the suspect used but also the circumstances in which the statement was made). See also Berghuis, 560 U.S. at 381-82 (the standards which apply in determining whether a person has unambiguously invoked the right to counsel also apply in determining whether a person has invoked the right to remain silent). As soon as Detective Ball found a gun in the Volkswagen, he placed Stewart under arrest and read him his Miranda rights. He then began asking Stewart about the gun. Stewart freely answered these questions, telling Ball that his “girl” left the gun in the car, denying that his fingerprints or DNA would be found on the gun, and then changing his story to indicate that he had fired it at a gun range and that his prints might be on it. Detective Ball then searched the rest of the car and found the bag in the trunk that contained drugs and cash. Ball approached Stewart again and said, “That‘s a lot of drugs, bud. You want to talk to a detective?” Stewart appeared to shake his head to indicate “no.” Ball clarified, “You do not want to talk to a detective? Well, you understand I gotta have one come
He‘s going to need to talk to a narcotics detective at some point. I don‘t know if he‘s going to talk but maybe if we sit him in a car and explain the seriousness of it, he‘ll talk to somebody but I‘ve explained to him that, regardless, when we find the stuff, we have to have a detective. ... I don‘t mean to waste your time but he doesn‘t seem like he wants to talk out in the open. Maybe if we sit him in a car, he‘ll want to talk. He originally said he didn‘t. He‘s been Mirandized and everything. But you know our protocols on the street. We have to call for a detective regardless.
Supplemental Appendix, audio disc at 28:25-29:26.
Detective Ball then returned to Stewart and said, “A detective is going to talk to you. If you want to talk to him, it‘s up to you. I have a protocol to follow. You understand that? I wear this uniform. I may have a drug dog. I can do all this stuff but we have to follow our procedures, okay?” Stewart responded, “Can I sit in somebody‘s car? It‘s cold out here.” Ball again told him that he had a dog in his squad car. The narcotics detectives then arrived and Stewart was placed in their car. Those officers delivered Miranda warnings again, and Stewart freely spoke to them as he tried to convince them to release him. He gave a video-recorded statement after being taken to the police station where he was given his Miranda warnings yet again and then signed a written waiver before making the video-recorded statement.
Stewart relies on the head nod as the unambiguous invocation of his right to remain silent. He argues that it is clear from the audio recording that Detective Ball understood that nod to mean that he did not wish to speak to the officer. Stewart contends that Ball was not asking for clarification when he said, after the head nod, “You do not want to talk to a detective.” To Stewart, there is a period on the end of that sentence. The government contends that it is a question mark. The district court found that it was a question, a request for clarification. After listening to the recording, we can find no clear error in that conclusion. Detective Ball also indicated to other officers that he was not sure if Stewart would talk, that he appeared not to want to talk out in the open but that he might be willing to speak with officers if they sat him in a car. In context, none of Detective Ball‘s ensuing comments convince us that the district court clearly erred.
But in any case, Detective Ball‘s subjective beliefs do not govern the outcome here. The inquiry into whether a person has actually invoked the right to remain silent is an objective one. Davis, 512 U.S. at 458-59; Wysinger, 683 F.3d at 793. When a person “appears” to nod in the negative and then refuses to clarify the meaning of that gesture, there is no clear error in concluding that the nod was not an unambiguous invocation of the right to remain silent. This is especially true in the circumstances here. Stewart freely spoke to Ball after Miranda warnings and before the head nod. He refused to clarify the meaning of the nod and asked to sit in a car because of the cold. An ambiguous or equivocal reference that causes a reasonable officer to understand only that the suspect “might be invoking the right” to remain silent is not enough to require the cessation of questioning. Davis, 512 U.S. at 459. A reasonable officer would have understood Stewart‘s apparent nod to mean that he might be invoking his right to remain silent, and such an officer would not be required to cease questioning if the suspect refused to clarify.
C.
Stewart also contends that his convictions for money laundering must be reversed because the evidence was insufficient as a matter of law. “Ordinarily, we review a challenge to the sufficiency of the evidence to determine only whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt, viewing the evidence in the light most favorable to the government.” United States v. Webster, 775 F.3d 897, 904-05 (7th Cir. 2015). But Stewart failed to raise this objection in the district court and so we review this forfeited claim only for plain error.9
Counts V and VI of the indictment charged Stewart with laundering of monetary instruments in violation of
Stewart never ran any legitimate business under the Eleete name. He had no legitimate source of income,12 and the government was able to demonstrate at trial that most of the money that flowed through the Eleete accounts came from the sale of illegal drugs. Stewart purchased the Volkswagen he was driving at the time of his arrest with a check from the Eleete account. On the memo line, he noted that the check was for a “company car,” and the car was in fact registered to the company. He also used the Eleete account debit card to make purchases at retail establishments. For example, the government introduced evidence that Stewart spent approximately $7400 at Saks Fifth Avenue, including a single purchase of $1200, all using the Eleete Image debit card rather than large amounts of cash that might have raised suspicion.
Money entered and left the Eleete accounts in unusual ways. For example, Stewart gave $10,000 in cash to a friend, purportedly to enable the friend to buy a car on Stewart‘s behalf. The friend never purchased a car, however, and instead returned the money to Stewart by writing three checks to Eleete Image, including at least one check from the friend‘s business account. Stewart also deposited into the Eleete accounts third party checks totaling more than $66,000 in a three-year period. These checks, made out to others and endorsed over to Stewart, outwardly appeared to be paychecks.
At trial, the government argued that Eleete Image was a “front company,” “a scam and a sham.” R. 202, at 645-46. The government contended that Stewart created Eleete Image and tried to make it look like a legitimate company in order to have a place to deal with the cash he earned from drug sales. Possessing and using large amounts of cash, the government argued, would potentially draw scrutiny, but using a business account and a business debit card helped prevent suspicion that the funds were illegitimate. When seeking a bank loan in 2014, for example, Stewart noted on the application that he had been “employed” by Eleete Image for five years and had an income of $6700 per month.
In closing arguments, the government went through the elements of money laundering one by one, associating evidence
Why does making cash deposits into the Eleete Image bank account—why does it meet that last element? Well, as we‘ve discussed, what is the whole point of this Eleete Image bank account? The whole point is not to conduct any legitimate business. He had more than two years to do that or to make something of a start of it.
The point was he is a drug trafficker. That is what he does for a living. That is what he‘s done for a living for years, and he needs to find a way to spend and use his money in a way that‘s not going to raise eyebrows.
So, concealing or disguising the nature or source of that cash, well, once the cash—we do that financial transaction, put that somewhat small amount, couple thousand dollars—once we put that—run it through into the business account, now we‘re not just walking around with several thousand dollars in our pockets. It‘s a business account. It looks like business-related money. It can be spent like business-related money through the Eleete Image cards.
Then, of course, it also goes to the ownership or control, the attempt to hide the ownership or control. It‘s not Daniel Stewart walking around. It is Eleete Image who now has the money.
We know it is difficult—certainly the detectives did it; but it is somewhat difficult to make that leap from Eleete Image at Dowitch Lane, which we know is associated with Rosemarie Brown, to Daniel Stewart at 4523 Eagle Creek Parkway; but that was the point.
R. 202, at 656-57.
Stewart now claims that this evidence was insufficient as a matter of law to prove money laundering. Citing Esterman, Stewart contends that the government was required to prove that the charged transactions were specifically designed to hide the provenance of the funds involved. The government failed to do so here, he argues, because he did nothing more than deposit money into accounts that he opened, accounts that could be traced easily back to him. He asserts that the facts of his case are remarkably similar to the facts in Esterman, where this court reversed a conviction for money laundering on the same forfeited insufficiency-of-the-evidence claim that he raises here. He notes that his name is on the incorporation papers for Eleete, and that he is the signatory on the Eleete bank accounts. Having made no attempt to hide behind the Eleete account, the facts cannot support a finding of concealment under Esterman, he argues. So we turn to Esterman.
In that case, Gary Esterman opened a bank account at Edens Bank in Skokie, Illinois, with a Russian business partner in order to facilitate the financing for a project that the two were planning in Russia. The business partner returned to Russia and money began flowing into the Edens Bank account. Almost as quickly, Esterman began withdrawing money from the account and transferring it to his G.E. International Account at Michigan Avenue National Bank. Contrary to his agreement with his Russian business partner, Esterman engaged in at least thirty-three separate transactions including wire transfers and withdrawals to remove the money
Assessing these facts, we noted that we have struggled “to define precisely what amount of concealment must occur before mere use of ill-gotten gains becomes money laundering prohibited by subpart (B)(i) of the statute.” 324 F.3d at 570. Two principles emerged from the cases:
First, we have tried to maintain some separation between the initial transaction from which illegal proceeds were derived and further transactions designed to conceal the source of those proceeds. ... Second, we have stressed that the mere transfer and spending of funds is not enough to sweep conduct within the money laundering statute; instead, subsequent transactions must be specifically designed to hide the provenance of the funds involved.
Esterman, 324 F.3d at 570 (internal citations and quotation marks omitted). To restate the first principle, “money laundering criminalizes a transaction in proceeds, not the transaction that creates the proceeds.” United States v. Mankarious, 151 F.3d 694, 705 (7th Cir. 1998). The government‘s proof in Esterman failed because the defendant made no effort to disguise or conceal either his withdrawals from Edens Bank or the destination of the funds. He simply made deposits into other bank accounts that were correctly identified as his and then spent the money in retail transactions. We rejected the government‘s argument that, because the Russian business partner was unaware of the existence of the G.E. account, Esterman‘s use of that account established an intent to conceal:
But this is just another way of describing Esterman‘s initial fraudulent scheme, whereby he took the money away from [the Russian business partner]. Most fraud victims probably assume that their money has either been spent or placed in an account of some sort, even if they do not know the specific destination of the funds. If that were enough to show money laundering at the same time, there would be no distinction left between money laundering and the underlying fraud, and individuals who perpetrate simple fraud by transferring ill-gotten funds into a personal account would always be triable as money launderers.
The proceeds at issue in Esterman were generated by fraud. That is, fraud was the “specified unlawful activity” mentioned in
In Stewart‘s case, the proceeds were created by the specified unlawful activity of drug trafficking. In transactions that are readily identifiable as separate from the original crime, Stewart took the cash generated from that drug trafficking and engaged in a series of steps designed to conceal or disguise that money as business proceeds rather than drug money. With those same steps, he sought to distance himself from personal ownership of the funds. He incorporated a business using a false address and then took several steps to make the business appear legitimate. He obtained an Employer Identification Number from the IRS and created a website. He opened a bank account in the
In short, this was not an Esterman-style scheme, where the defendant did little more than take money, store it and spend it. Esterman required “concrete evidence of intent to disguise or conceal transactions, whether that evidence comes directly from statements by the defendant that indicate an intent to conceal, or from circumstantial evidence like unusual secrecy surrounding transactions, careful structuring of transactions to avoid attention, folding or otherwise depositing illegal profits into the bank account or receipts of a legitimate business, use of third parties to conceal the real owner, or engaging in unusual financial moves culminating in a transaction.” 324 F.3d at 573. Stewart‘s machinations surrounding the Eleete bank account supply the necessary circumstantial evidence. Under the usual standard for a sufficiency of the evidence claim, we can easily conclude that a rational jury could have found the essential element of concealment (the only element challenged) beyond a reasonable doubt, viewing the evidence in the light most favorable to the government. Webster, 775 F.3d at 904-05; Aslan, 644 F.3d at 540. Under the even more stringent standard of plain error, this is not a close case, and the money laundering convictions must be affirmed.
III.
Finally, we note that Stewart raised a number of challenges to the admission of evidence that he characterizes as prejudicial and irrelevant “bad acts” evidence. Stewart asks us to review the admission of most of that evidence for plain error and some of it for abuse of discretion, depending on whether he preserved the particular objection in the district court. The government asserts both that the evidence was properly admitted and that, in any event, if there was error, it was harmless. We agree that any error in admitting the challenged evidence was harmless. “The test for harmless error is whether, in the mind of the average juror, the prosecution‘s case would have been significantly less persuasive had the improper evidence been excluded.” United States v. Curtis, 781 F.3d 904, 911 (7th Cir. 2015). The evidence against Stewart was overwhelming. United States v. Gonzalez, 863 F.3d 576, 588-89 (7th Cir. 2017) (evidentiary error found harmless where there was overwhelming admissible evidence of guilt). The admissible evidence included kilogram quantities of drugs, five firearms, and nearly half a million dollars in cash. The prosecution‘s case would have been no less persuasive had the challenged evidence been excluded.
AFFIRMED