UNITED STATES of America, Plaintiff-Appellee, v. Haitham MOHAMED, Defendant-Appellant.
No. 13-2368.
United States Court of Appeals, Seventh Circuit.
Decided July 22, 2014.
Argued April 15, 2014.
Having persuaded us to stick with the text of
To the extent policy matters, we don‘t get Bormes‘s argument. The concern underlying
As we have said, however, arguments pro and con about wise policy are irrelevant. The statute as written applies to receipts “printed ... at the point of the sale or transaction.” The email receipt that Bormes received meets neither requirement. So although the United States has waived its immunity against damages actions of this kind, it did not violate the statute and prevails on the merits.
AFFIRMED
Sara J. Varner, Indiana Federal Community Defenders, Inc., Indianapolis, IN, for Defendant-Appellant.
Before RIPPLE and WILLIAMS, Circuit Judges, and ST. EVE, District Judge.*
ST. EVE, District Judge.
On March 26, 2013, a jury convicted Haitham Mohamed of one count of knowingly transporting and possessing contraband cigarettes in violation of
BACKGROUND
On the evening of June 6, 2012, Officer Christopher Helmer, a patrolman with the Speedway Police Department, pulled over Mr. Mohamed for running a red light in Speedway, Indiana near Indianapolis. Upon searching Mr. Mohamed‘s van,1 Officer Helmer found 1,170 packs of Newportbrand cigarettes (totaling 23,400 cigarettes) not bearing Indiana tax stamps. A federal grand jury indicted Mr. Mohamed with one count of knowingly transporting and possessing contraband cigarettes in violation of
“[C]ontraband cigarettes” means a quantity in excess of 10,000 cigarettes, which bear no evidence of the payment of applicable State or local cigarette taxes in the State or locality where such cigarettes are found, if the State or local government requires a stamp, impression, or other indication to be placed on packages or other containers of cigarettes to evidence payment of cigarette taxes, and which are in the possession of any person other than [certain exceptions].
The government called two witnesses at trial, Special Agent Daniel Neie of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF“) and Officer Helmer of the Speedway Police Department. Special Agent Neie explained to the jury how cigarette traffickers typically operate.2 Disparities in state cigarette tax rates, which range from $0.17 per pack in Missouri to $4.35 per pack in New York, allow cigarette traffickers to profit by buying ciga-
With respect to Mr. Mohamed in particular, Special Agent Neie testified that the cigarette tax rate in Kentucky, where Mr. Mohamed had bought the cigarettes at issue, is $0.60 per pack, whereas the cigarette tax rate in Indiana, where the cigarettes were found, is $0.995 per pack. Thus, if Mr. Mohamed sold all 1,170 packs in his possession in Indiana, he stood to make a profit of up to $462.15. Special Agent Neie acknowledged that many states—including New York ($4.35 per pack) and Washington ($3.25 per pack)—had higher cigarette taxes than Indiana, and Mr. Mohamed would have increased his potential profit by selling the cigarettes at issue in those states rather than Indiana. Finally, Special Agent Neie confirmed that none of the cartons of cigarettes found in Mr. Mohamed‘s van was missing cigarettes; all 23,400 cigarettes were accounted for and remained in their original packs.
Next, Officer Helmer testified about his June 6, 2012 traffic stop involving Mr. Mohamed. Officer Helmer testified that he pulled over Mr. Mohamed for running a red light at approximately 6:57 p.m. Mr. Mohamed, who lives in Indianapolis, informed Officer Helmer that he was returning home after visiting friends in Kentucky. When Officer Helmer searched Mr. Mohamed‘s van, he found 117 cartons (with ten packs per carton) of Newport cigarettes bearing Kentucky tax stamps. None of the cigarette packs had Indiana tax stamps evidencing the payment of Indiana‘s cigarette tax. Officer Helmer also found in Mr. Mohamed‘s van receipts showing purchases of Newport cigarettes from several Kentucky gas stations earlier that day and a black trash bag containing over $15,000 in cash. When Officer Helmer asked Mr. Mohamed how much he makes selling cigarettes, Mr. Mohamed answered “not much.”
The parties stipulated at trial that Mr. Mohamed did not fall within one of the exceptions contained in the CCTA‘s definition of “contraband cigarettes.” See
During closing arguments, defense counsel admitted that Mr. Mohamed had more than 10,000 cigarettes not bearing Indiana tax stamps in his possession but argued that the government failed to prove that Indiana law required the cigarettes to bear Indiana tax stamps in order to make the cigarettes “contraband” under the CCTA. (R. 25 at 9–14.) Defense counsel asserted that the government presented no evidence that the cigarettes had been “sold, used, consumed, handled, or distributed” within Indiana, and, therefore, the government failed to prove that Indiana‘s cigarette tax applied to the cigarettes at the time of seizure. (Id. at 10–13.) Moreover, defense counsel asserted, it made no economic sense for Mr. Mohamed to sell the cigarettes in Indiana, where he stood to gain only $462.15, minus the cost of gas, travel, and food. (Id. at 13.) On rebuttal, the government contended that it had proven everything necessary to convict Mr. Mohamed of the offense:
When Mr. Mohamed was arrested in Indiana, he stated in Indiana that he didn‘t make much money buying these cigarettes. When he was arrested in Indiana, he had a bag full of cash in his car, in Indiana. And he had twice the legal limit of cigarettes from out of state. You can look at these facts and you can infer that everything that needs to be proven for this offense to be complete has, in fact, been proven, and that when Officer Helmer pulled Haitham Mohamed over, Haitham Mohamed was already committing the crime of knowingly transporting or possessing those cigarettes, and I ask you to find him guilty.
(Id. at 16.)
Following closing arguments, the district court instructed the jury on what constitutes “contraband cigarettes” under the CCTA and on the application of Indiana‘s cigarette tax laws. The jury instruction on the definition of “contraband cigarettes” mirrored the CCTA‘s definition of the term. See
Indiana law requires a stamp to be placed on packages or other containers of cigarettes to prove that applicable taxes have been paid. Indiana‘s cigarette taxes are levied on all cigarettes sold, used, consumed, handled, or distributed within the State of Indiana. With respect to this law, the following definitions apply:
- to “sell” means the transfer of property for a price;
- to “use” means to bring or put into service or action;
- to “consume” means to possess for use or to use a cigarette or cigarettes for the purpose of smoking;
- to “handle” means to engage in selling, buying, or distributing; and
- to “distribute” means to divide among several or many.
(Jury Instruction No. 10.)3
The jury appears to have struggled in applying these instructions. During delib-
The jury ultimately found Mr. Mohamed guilty of knowingly transporting or possessing contraband cigarettes in violation of the CCTA. After the jury rendered its verdict, defense counsel renewed Mr. Mohamed‘s Rule 29 motion for judgment of acquittal, which the district court again denied.
STANDARD OF REVIEW
We review de novo the district court‘s denial of Mr. Mohamed‘s Rule 29 motion for acquittal. See United States v. Foley, 740 F.3d 1079, 1082 (7th Cir.2014); United States v. Seidling, 737 F.3d 1155, 1159 (7th Cir.2013). Under Rule 29, “[a]fter the government closes its evidence or after the close of all the evidence, the court on the defendant‘s motion must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction.”
ANALYSIS
I. The Contraband Cigarette Trafficking Act
Congress enacted the CCTA to enable federal enforcement agencies to assist states in curtailing interstate cigarette trafficking, which drains billions of dollars in tax revenues from state and local governments each year and often serves as a source of illicit financing for organized crime and terrorist organizations. See S. REP. 95-962 at 3-9 (1978), reprinted in 1978 U.S.C.C.A.N. 5518, 5518-24; H.R. CONF. REP. 95-1778 at 7-9 (1978), reprinted in 1978 U.S.C.C.A.N. 5535, 5535-37. Under the CCTA, it is unlawful for any person knowingly to ship, transport, receive, possess, sell, distribute, or purchase “contraband cigarettes.” See
a quantity in excess of 10,000 cigarettes, which bear no evidence of the payment of applicable State or local cigarette taxes in the State or locality where such cigarettes are found, if the State or local government requires a stamp, impres-
sion, or other indication to be placed on packages or other containers of cigarettes to evidence payment of cigarette taxes, and which are in the possession of any person other than [certain exceptions].
Mr. Mohamed does not challenge the sufficiency of the evidence with respect to the first, second, third, and fifth elements of the offense. The only issue before us is whether the government presented sufficient evidence to allow a rational trier of fact to find beyond a reasonable doubt that Indiana law required the cigarettes discovered in Mr. Mohamed‘s van to bear Indiana cigarette tax stamps. To resolve this issue, we turn to Indiana state law.
II. Indiana‘s Cigarette Tax Act
In construing Indiana‘s Cigarette Tax Act, we must interpret the statute as we think the Indiana Supreme Court would interpret it. See Laborers Local 236, AFL-CIO v. Walker, 749 F.3d 628, 634 (7th Cir.2014) (citing Brownsburg Area Patrons Affecting Change v. Baldwin, 137 F.3d 503, 507 (7th Cir.1998)). “In Indiana, the lodestar of statutory interpretation is legislative intent, and the plain language of the statute is the ‘best evidence of ... [that] intent.‘” Estate of Moreland v. Dieter, 576 F.3d 691, 695 (7th Cir.2009) (alterations in original) (quoting Cubel v. Cubel, 876 N.E.2d 1117, 1120 (Ind. 2007)); see also Indiana Dep‘t of Revenue v. United Parcel Serv., Inc., 969 N.E.2d 596, 600 (Ind.2012); Indiana Dep‘t of State Revenue, Inheritance Tax Div. v. Estate of Parker, 924 N.E.2d 230, 233 (Ind. Tax Ct.2010). Unless a statute indicates otherwise, we must give the words in the statute their plain and ordinary meaning, and we must examine the statute as a whole, “avoiding both excessive reliance on strict literal meaning and selective reading of individual words.” Estate of Moreland, 576 F.3d at 695 (quoting Cubel, 876 N.E.2d at 1120); see also Scherr v. Marriott Int‘l, Inc., 703 F.3d 1069, 1077 (7th Cir.2013). When the language of a statute is clear, we must enforce the statute as written, and we “ha[ve] no power to construe the statute for the purpose of limiting or extending its operation.” See Estate of Parker, 924 N.E.2d at 233 (quoting In re Estate of Wilson, 822 N.E.2d 292, 295 (Ind. Tax Ct.2005)); see also Scherr, 703 F.3d at 1077 (“When the language of a statute is plain, we enforce it according to its terms.“).
Indiana‘s Cigarette Tax Act levies a tax on “all cigarettes sold, used, consumed, handled, or distributed” within the state. See
Mr. Mohamed argues that under the plain language of the Cigarette Tax Act, the cigarettes at issue were not subject to Indiana‘s cigarette tax because, at the time of his arrest, the cigarettes had not yet been sold, used, consumed, handled, or distributed within Indiana. His argument raises two questions regarding Indiana‘s cigarette taxation scheme: (1) when Indiana‘s cigarette tax becomes due; and (2) whether Indiana‘s cigarette tax applies to cigarettes possessed in Indiana but bought and intended for sale outside the state.
A. The Timing of Indiana‘s Cigarette Tax
Mr. Mohamed argues that Indiana‘s cigarette tax does not apply until disposal of the cigarettes. We disagree. Indiana technically imposes its cigarette tax on the retail purchaser or ultimate consumer “upon the sale, exchange, bartering, furnishing, giving away, or otherwise disposing of cigarettes within the state of Indiana.” See
This construction is consistent with the Cigarette Tax Act‘s “intent and purpose” to pre-collect the cigarette tax from the person who first sells, uses, consumes, handles, or distributes the cigarettes. See id.
To hold that the [cigarette] tax is due only when cigarettes are “sold, bartered, exchanged, etc.” defeats the purpose for the distributor to pay the tax and affix
stamps upon receipt—the purpose being that because cigarettes are a major source of revenue for Indiana, the state has an interest in protecting the cigarettes from “bootleggers” who seek to bypass the conventional methods of cigarette distribution and, consequently, payment of the tax. The most effective way for the state to protect its cigarette revenue is to impose upon distributors the duty to pay the tax on all cigarettes at the earliest possible point, which the statute defines as receipt. This method nearly guarantees that the tax is always collected.... Had the legislature intended that the tax be paid only on those cigarettes that are sold, the legislature would not have mandated that distributors affix the stamps upon receipt as evidence the tax has been paid.
Indiana Eby-Brown Co., 648 N.E.2d at 405 (footnote omitted; emphasis in original). We therefore reject Mr. Mohamed‘s argument that Indiana‘s cigarette tax does not apply until the cigarettes are sold, used, consumed, handled, or distributed as contrary to Indiana law. We instead find that Indiana‘s cigarette tax applies upon receipt of cigarettes subject to the tax.
B. The Scope of Indiana‘s Cigarette Tax
Next, we consider the scope of Indiana‘s cigarette tax. On its face, the Cigarette Tax Act applies only to cigarettes sold, used, consumed, handled, or distributed within Indiana. See
Because Indiana does not tax all cigarettes possessed within the state, the government needed to prove more than Mr. Mohamed‘s possession of unstamped cigarettes in Indiana to convict him of violating the CCTA. Rather, the government needed to prove that Mr. Mohamed possessed the cigarettes for the purpose of selling, using, consuming, handling, or distributing them within Indiana in order to establish that they were subject to Indiana‘s cigarette tax. See
The government argues that “[t]he larger context of Indiana‘s cigarette taxation statutes” establishes that the cigarettes found in Mr. Mohamed‘s van were subject to Indiana‘s cigarette tax at the time of his arrest. (See Appellee Br. at 9–11.) The government cites two provisions of the Cigarette Tax Act in support of this argument. First, under Indiana Code section
Mr. Mohamed acknowledges on appeal that he was transporting the cigarettes at issue over Indiana highways without proper documentation in violation of Indiana Code section
The strongest support for the government‘s position is United States v. Boggs, 775 F.2d 582 (4th Cir.1985). In Boggs, federal agents arrested the defendant in West Virginia carrying over 60,000 cigarettes not bearing West Virginia tax stamps. The parties stipulated that the defendant had purchased the cigarettes in North Carolina and was transporting them through West Virginia to resell them in Michigan. After a bench trial based on stipulated facts, the district court found the defendant guilty of trafficking and conspiring to traffic contraband cigarettes in violation of the CCTA. See id. at 583.
On appeal, the defendant argued that because he had purchased the cigarettes outside the state and intended to sell them outside the state, West Virginia‘s cigarette tax did not apply, and, thus, the cigarettes did not qualify as contraband under the CCTA even though they lacked West Virginia tax stamps. The Fourth Circuit disagreed. A majority of the panel determined that West Virginia‘s tax statutes gave the State authority to apply its cigarette tax to “people such as [the defendant] unless the cigarettes they possess are being legitimately transported in commerce, in which event exception is made.” See id. at 584.
The majority relied on two provisions of West Virginia‘s tax statutes in drawing this conclusion. First, the court found that the defendant‘s possession of more than twenty packages of cigarettes not bearing West Virginia tax stamps created a presumption under West Virginia law that the defendant possessed the cigarettes “for the purpose of evading the payment of taxes imposed or due thereon.” See id. (quoting W. Va.Code § 11-17-19(b)(6)). Second, the court determined that the defendant‘s intent to sell the cigarettes in Michigan rather than West Virginia did not rebut the presumption that he possessed the cigarettes for the purpose of evading West Virginia‘s cigarette tax because the defendant had not complied with
In United States v. Skoczen, 405 F.3d 537 (7th Cir.2005), we faced a situation analogous to the one addressed in Boggs. The defendant in Skoczen was arrested in Illinois with 325,000 packs of unstamped cigarettes in his possession. Id. at 541. The defendant argued that because the cigarettes “were to be sold out of the state and never within Illinois,” they were not subject to Illinois‘s cigarette tax, and, therefore, the cigarettes were not required to bear Illinois tax stamps. See id. at 547. We ultimately did not need to decide whether the defendant‘s intention to sell the cigarettes outside Illinois foreclosed his conviction under the CCTA, however, because we found that the cigarettes at issue had become subject to Illinois‘s cigarette tax even before they came into the defendant‘s possession. See id.
Illinois subjects all cigarettes sold or otherwise disposed of within the state to its cigarette tax and requires those cigarettes to bear stamps evidencing payment of the tax. See 35 ILCS 130/2-3. Because the defendant in Skoczen had purchased the cigarettes at issue in Illinois, the cigarettes had become subject to Illinois‘s cigarette tax at the time of that purchase (at the latest). See Skoczen, 405 F.3d at 547. Accordingly, the unstamped cigarettes were “contraband” under the CCTA regardless of what the defendant did with the cigarettes after purchasing them. See id. Under these circumstances, we held that the defendant‘s intention to sell the cigarettes outside Illinois was irrelevant to his conviction under the CCTA. Id. We did not address, however, whether a defendant‘s intention to sell cigarettes outside the state in which the cigarettes were found would be relevant where, as here, the cigarettes were not already subject to the state‘s cigarette tax. Because the CCTA incorporates state law in defining contraband cigarettes, the resolution of this issue necessarily rests on the applicable state‘s laws.
We are not persuaded that Mr. Mohamed‘s violation of Indiana‘s requirements for transporting unstamped cigarettes over Indiana highways alone is sufficient to support his conviction for violation of the CCTA. As an initial matter, unlike in Boggs, the government cannot rely on the evidentiary presumption created by state law here. Under Indiana Code section
[t]he possession of more than [1,500] cigarettes in packages not bearing Indiana tax stamps by any person other than a distributor, a common carrier, or an employee of the state or federal government performing his official duties in the enforcement of this chapter constitutes prima facie evidence that the cigarettes are possessed for the purpose of sale.
Without the benefit of the presumption, the government has not presented sufficient evidence to allow a reasonable trier of fact to determine that Mr. Mohamed intended to sell, distribute, or otherwise dispose of the cigarettes within Indiana. Although Mr. Mohamed acknowledges on appeal that he violated Indiana‘s requirements for transporting unstamped cigarettes across the state, the CCTA does not make every violation of a state‘s cigarette taxation laws a federal crime. See
The legislative history of the CCTA provides further support for this interpretation of its terms. As the legislative history establishes, Congress intended the CCTA to supplement, but not supplant, states’ enforcement of their own cigarette tax statutes. See S. REP. 95-962 at 3-9. In enacting the CCTA, Congress sought to help states avoid large-scale revenue losses and prosecute major cigarette traffickers while ensuring that the primary efforts to stop cigarette smuggling remained with the states. See id. at 9. With these goals in mind, it makes sense that Congress would focus federal efforts under the CCTA on prosecuting offenders who skirt applicable state and local cigarette taxes while leaving enforcement of other aspects of states’ cigarette taxation schemes to the states themselves.
We, therefore, find that Mr. Mohamed‘s violation of Indiana‘s requirements regarding the transportation of unstamped cigarettes alone cannot serve as the basis for his conviction. This, however, does not end our inquiry. We must first determine whether the government presented suffi-
As explained above, the government did not rely on the presumption under
The government‘s evidence at trial, however, was not sufficient to show that Mr. Mohamed intended to sell the cigarettes in Indiana. Thirty-eight states had higher cigarette taxes than Kentucky in 2012, and, as Special Agent Neie testified, Mr. Mohamed could have made a profit selling the cigarettes in any one of those states. The government presented no evidence that Mr. Mohamed had taken any steps to sell, distribute, or otherwise dispose of the cigarettes in Indiana, and although Mr. Mohamed admitted to Officer Helmer that he sells cigarettes, he gave no indication of where he sells them. The government‘s evidence and arguments at trial simply did not focus on whether Mr. Mohamed intended to sell the cigarettes in Indiana, and the jury‘s questions to the district court understandably reflected their confusion over this issue. Significantly, during sentencing, the government took the position that Mr. Mohamed intended to sell the cigarettes in New York, where he stood to make substantially more profit than selling them in Indiana due to New York‘s $4.35 per pack tax rate.
We do not believe that Mr. Mohamed‘s possession of cigarettes in Indiana under these circumstances is sufficient to support a finding, beyond a reasonable doubt, that Mr. Mohamed intended to sell, distribute, or otherwise dispose of the cigarettes in Indiana. See United States v. Katz, 582 F.3d 749, 752 (7th Cir.2009) (“A jury cannot speculate its way out of reasonable doubt.“); see also United States v. Griffin, 684 F.3d 691, 698 (7th Cir.2012) (evidence that the defendant had easy access to firearms and could have possessed them in a matter of seconds was not sufficient to prove that he intended to exercise control over them); Piaskowski v. Bett, 256 F.3d 687, 692-93 (7th Cir.2001) (evidence that the defendant was present at the site of a murder and later referred to “shit going down” was insufficient to prove that he participated in the murder directly or as a
CONCLUSION
For the foregoing reasons, we REVERSE the decision of the district court and REMAND with instructions to enter a judgment of acquittal.