United States v. Michael Dale

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 09-1759
___________
United States of America, *
*
Appellee, *
*
v. *
*
Michelle Ann Sweeney, *
*
Appellant. *
___________
Appeals from the United States
No. 09-1823 District Court for the
___________ District of Minnesota.
United States of America, *
*
Appellee, *
*
v. *
*
Jon Henry Sweeney, *
*
Appellant. *
___________
Submitted: February 10, 2010
Filed: July 13, 2010
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Before LOKEN, Chief Judge,1 GRUENDER and BENTON, Circuit Judges.
___________
GRUENDER, Circuit Judge.
Jon and Michelle Sweeney owned and operated Micro-Star Technology, a
company that manufactured and sold cable television equipment. A federal grand jury
charged the Sweeneys with manufacturing and distributing cable descramblers
intended for unauthorized interception of cable signals and conspiracy to do so, see
47 U.S.C. § 553; 18 U.S.C. § 371, and currency structuring, see 31 U.S.C. § 5324.
The grand jury also charged Mr. Sweeney with bankruptcy fraud, see 18 U.S.C. § 152.
A jury found the Sweeneys guilty on all the submitted counts, except the jury
acquitted Mr. Sweeney of the bankruptcy fraud charge. The district court 2 sentenced
Mr. Sweeney to 70 months’ imprisonment and a $150,000 fine and Mrs. Sweeney to
42 months’ imprisonment and a $125,000 fine. The Sweeneys now appeal their
convictions and sentences. For the following reasons, we affirm.
I. BACKGROUND
From approximately 1995 to 2001, the Sweeneys owned and operated Micro-
Star Technology. Micro-Star manufactured cable television descramblers and other
cable television equipment, which it then sold to wholesalers and distributors. Cable
television providers encrypt their cable signals, and the descrambler function
contained in some cable boxes reverses that encryption, allowing for a clear picture
1The Honorable James B. Loken stepped down as Chief Judge of the United
States Court of Appeals for the Eighth Circuit at the close of business on March 31,
2010. He has been succeeded by the Honorable William Jay Riley.
2The Honorable Patrick J. Schiltz, United States District Judge for the District
of Minnesota.
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to be viewed.3 Micro-Star manufactured and sold several models of descramblers, and
one of their best-selling models was the ViewMaster 4000. Most of the descramblers
Micro-Star sold were “nonaddressable,” meaning that they would not respond to
signals from a cable provider that restrict the viewer’s access to encrypted programs.
In this way, users of the ViewMaster 4000 and other descramblers could obtain cable
programming without paying for it. Descramblers, whether addressable or not, also
have legitimate uses: they allow users to save descrambler rental fees by informing
their cable provider that they already own a descrambler and asking to be charged
only for programming, and they allow users to display one cable signal on several
different televisions.
Additionally, Micro-Star sold “authorization control devices,” such as the PiO.
These devices can be installed before a cable provider’s descrambler and block the
cable provider’s access control signals. Like a nonaddressable descrambler, they
allow the user to view cable programming without paying for it. The authorization
control devices too have a potentially legitimate function in that they can be used to
block access to certain signals, thereby serving as a parental control device.
The Sweeneys employed several people at Micro-Star to manufacture
descramblers. For instance, Mrs. Sweeney recruited her neighbor, Bonnie Mertes,
who assembled descramblers between 1995 and 2000. Initially, Mrs. Sweeney paid
Mertes in cash. Later, although Mertes was working for Micro-Star, her paychecks
came from Nurses, Inc., a company owned by Mrs. Sweeney’s sister-in-law. Mertes’s
daughters also worked for Micro-Star intermittently, testing the circuit boards that
were used in the descramblers.
3We will refer to cable boxes capable of reversing such encryption as
“descramblers.”
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At trial, the Government first presented evidence relating to the charges of
assisting in the unauthorized interception of cable signals and conspiracy. Mertes
testified about Micro-Star’s operations, including its manufacturing process, its
payroll, and the tasks of various employees. Robert Kramer testified that he earned
between $800 and $1,000 each week repairing defective Micro-Star descramblers. He
also described the technical advice he gave Mr. Sweeney about competitors’
descramblers. Additionally, Daniel Quade and Abe Paquette, who operated Core
Innovation Systems, testified about their weekly purchases of large numbers of
ViewMaster 4000s from Micro-Star and their distribution to other wholesalers and
end-users. Quade testified that he believed most purchasers of the ViewMaster 4000
intended to use the device to steal cable programming. He went on to say that his
customers reported that the ViewMaster 4000 devices were working as intended,
successfully descrambling cable programs.
Michael Muller testified as an expert witness, providing technical information
about descramblers based on his work as a product security specialist and manager at
Motorola. Muller explained that nonaddressable descramblers, such as the
ViewMaster 4000, ignore access restrictions included in a cable provider’s signal and
that authorization control devices, such as the PiOs, remove the access control
instructions that a cable box would otherwise receive. Consequently, both types of
equipment allow their users to view cable television programming without paying for
it. Muller also testified that the only purpose of the nonaddressable function in a
descrambler is to allow for the theft of cable programming.
Several law enforcement officers also testified at trial, including Officer Steve
Miller of the Elk River Police Department, who testified about his involvement in
executing a search warrant at Micro-Star’s facility. While police were executing the
warrant, Mr. Sweeney arrived. The following exchange took place during Officer
Miller’s testimony:
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Q. Did you see him [Mr. Sweeney] or did you have interaction with
him shortly after he arrived at the business?
A. I was in the front and he came in. He identified himself with a
formal Minnesota driver’s license. I asked him if he wanted to
give a statement, read him his Miranda warning. He requested to
call an attorney—
Mr. Sweeney objected and moved for a mistrial, citing Doyle v. Ohio, 426 U.S. 610
(1976). The Government claimed that the disclosure of Mr. Sweeney’s invocation of
his right to counsel was inadvertent. The district court offered a curative instruction,
but the defendants both declined that offer. The district court then denied the motion
for a mistrial.
After presenting its evidence relating to the charges of assisting in the
unauthorized interception of cable signals and conspiracy, the Government turned to
the currency structuring charges. The indictment alleged thirteen counts of currency
structuring. Count 8 alleged that the Sweeneys aided and abetted each other in
illegally structuring the payment for a Chrysler Town and Country minivan. Steven
Carbone, the dealership’s finance manager, testified that he told the Sweeneys that he
was required to file a currency transaction report for any cash transaction over
$10,000. Mr. Sweeney responded, “Then let’s not put $10,000 down.” Mr. Sweeney
gave Carbone $10,000 in cash, and Carbone immediately returned $100 of it to Mr.
Sweeney. Mrs. Sweeney then wrote a check for the balance of $22,263.22. Count 9
alleged that Mr. Sweeney illegally structured another transaction involving a vehicle,
this time the purchase of a Ford Focus. Having already paid a $50 cash deposit, Mr.
Sweeney again paid $9,900 in cash and the balance of $749.75 by check. When the
salesman, Richard Wolfe, commented that this was a large amount of cash, Mr.
Sweeney replied, “Yeah, if you spent $10,000 in cash, you would have to report it to
the IRS.”
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Counts 10 through 20 charged Mrs. Sweeney with illegally structuring
transactions at First National Bank of Elk River. Each count corresponded to a
different $9,900 cash withdrawal or deposit by Mrs. Sweeney between March 11,
2002, and December 1, 2003. The district court dismissed as multiplicitous all but one
of these counts, leaving only Count 15 to be submitted to the jury. Count 15 described
a $9,900 cash withdrawal by Mrs. Sweeney on October 28, 2002. However, the
district court allowed the Government to introduce evidence of the other ten
transactions, described in Counts 10 through 14 and 16 through 20, along with other
cash transactions not specifically identified in the indictment. And several bank
employees testified about an inquiry that Mrs. Sweeney made on March 11, 2002,
regarding currency transaction reporting requirements. In response to Mrs. Sweeney’s
inquiry, bank employees informed her that any cash transaction in excess of $10,000
had to be reported.
The jury found the Sweeneys guilty on the charges of assisting in the
unauthorized interception of cable signals and conspiracy to do so. Mr. Sweeney was
acquitted on the bankruptcy fraud count. The jury further found Mr. Sweeney guilty
of illegally structuring currency transactions related to both vehicle purchases. Mrs.
Sweeney was also found guilty of illegally structuring the purchase of the minivan and
structuring a currency transaction at the First National Bank of Elk River. The district
court denied the Sweeneys’ motions for judgment of acquittal and for a new trial.
At sentencing, the parties agreed and the district court concluded that section
2B5.3 of the United States Sentencing Guidelines applied to the Sweeneys’
convictions for assisting in the unauthorized interception of cable signals and
conspiracy. Section 2B5.3 provides for a base offense level of 8 and for an
enhancement based on the amount of loss, termed the “infringement amount.” The
arguments at sentencing focused primarily on the proper method for calculating the
infringement amount. The district court found that $6,435,602, the gross revenues of
Micro-Star, was a reasonable estimate of the infringement amount. The district court
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also credited an alternative infringement amount of $62,531,621, based on
calculations by FBI Special Agent Dean Chappell and Brian Richert, a director of
financial planning and analysis for Comcast, a large cable television provider. Opting
for the lower figure, the district court increased the defendants’ base offense levels by
18 levels, the enhancement corresponding to an infringement amount between $2.5
million and $7 million.
After making other rulings and adjustments that Mr. Sweeney does not
challenge on appeal, the district court arrived at an advisory sentencing guidelines
range for Mr. Sweeney of 97 to 121 months. After considering the factors set out in
18 U.S.C. § 3553(a), the court varied downward and sentenced Mr. Sweeney to 70
months’ imprisonment and a $150,000 fine.
In calculating Mrs. Sweeney’s guidelines range, the district court applied a two-
level increase under section 2B5.3(b)(3) for manufacturing infringing items. The
court denied Mrs. Sweeney’s request for a 4-level reduction under section 3B1.2 for
having a minimal role in the offense but granted a 2-level reduction for her minor role.
Finally, Mrs. Sweeney argued that her base offense level for the currency structuring
offenses should be reduced to 6 under the safe harbor provision of section 2S1.3(b)(3)
because the funds involved in the currency structuring offenses were not the proceeds
of illegal activity and she did not act with reckless disregard as to the source of the
funds. In contrast, the Government argued that Mrs. Sweeney’s offense level should
be increased by 2 levels under section 2S1.3(b)(1)(A) because Mrs. Sweeney knew
that the funds were from the sale of descramblers intended to be used for the
unauthorized interception of cable programming. The district court held that it did not
have sufficient evidence regarding the source of the funds and, therefore, denied both
Mrs. Sweeney’s requested reduction and the Government’s requested enhancement.
Arriving at a total offense level of 26 and a criminal history category of I, the district
court found Mrs. Sweeney’s advisory guidelines range to be 63 to 78 months. The
court again varied downward after considering the § 3553(a) factors and sentenced
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Mrs. Sweeney to 42 months’ imprisonment and a $125,000 fine. The Sweeneys now
appeal.
II. DISCUSSION
The Sweeneys each raise several issues on appeal. Both Mr. and Mrs. Sweeney
argue that there was insufficient evidence to convict them of assisting in the
unauthorized interception of cable signals and conspiracy to do so. They also
challenge the sufficiency of the evidence on Count 8, structuring the payment for the
minivan. Likewise, Mr. Sweeney challenges the sufficiency of the evidence related
to Count 9, structuring the payment for the Ford Focus. Mrs. Sweeney challenges the
sufficiency of the evidence to support her conviction on Count 15, structuring a
transaction at First National Bank of Elk River. Mr. Sweeney also argues that the
Government violated Doyle v. Ohio, 426 U.S. 610 (1976), in its questioning of Officer
Miller. With respect to sentencing, both defendants challenge the district court’s
calculation of the infringement amount under U.S.S.G. § 2B5.3. In addition, Mrs.
Sweeney challenges the 2-level increase for manufacturing infringing items, the denial
of a 4-level reduction for having a minimal role in the offense, and the denial of a
reduction under the safe harbor provision of section 2S1.3. We address each argument
in turn.
A. Sufficiency of the evidence — Assisting in unauthorized interception
The Sweeneys challenge the sufficiency of the evidence to support their
convictions for violating 47 U.S.C. § 553(a)(1). Section 553 prohibits “assist[ing] in
intercepting or receiving any communications service offered over a cable system,
unless specifically authorized to do so by a cable operator or as may otherwise be
specifically authorized by law.” The statute goes on to define “assist[ing] in
intercepting or receiving” to include “the manufacture or distribution of equipment
intended by the manufacturer or distributor (as the case may be) for unauthorized
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reception of any communications service offered over a cable system.” Id.
§ 553(a)(2). “We review[] the sufficiency of the evidence de novo, viewing the
evidence in the light most favorable to the verdict. Reversal of a conviction is proper
only if no reasonable jury could have found the defendant guilty beyond a reasonable
doubt.” United States v. Pliego, 578 F.3d 938, 941 (8th Cir. 2009) (quoting United
States v. Kent, 531 F.3d 642, 651-52 (8th Cir. 2008)), cert. denied, 558 U.S. ---, 130
S. Ct. 1109 (2010).
The Sweeneys do not dispute that the products Micro-Star manufactured and
sold could be used to intercept cable signals illegally. They point out, however, that
Congress has not made the manufacture or distribution of such products illegal per se.
Rather, the statute only criminalizes the manufacture or distribution of equipment that
the manufacturer or distributor intends to be used for the unauthorized interception of
cable service. The Sweeneys claim that the Government presented insufficient
evidence of such an intent on their part, pointing to the alternative, legal uses of
descramblers and authorization control devices.
Because “[d]irect evidence of a defendant’s mental state frequently is
unavailable, . . . the jury is entitled to scrutinize and make reasonable inferences from
[the] defendant’s conduct and from all facts surrounding the incident in question.”
United States v. Peters, 462 F.3d 953, 957 (8th Cir. 2006) (internal citation and
quotations omitted). Here, the Government presented sufficient evidence to allow a
reasonable jury to find that the Sweeneys intended the descramblers and authorization
control devices Micro-Star manufactured and sold to be used to steal cable
programming. Muller, the Government’s cable industry expert, testified that he was
aware of no purpose for the nonaddressable feature of the descramblers that Micro-
Star produced and sold other than facilitating the theft of cable programming. See
also Cont’l Cablevision, Inc. v. Poll, 124 F.3d 1044, 1047 (9th Cir. 1997) (finding that
nonaddressable nature of cable boxes was evidence of intent); Intermedia Partners Se.
Gen. P’ship v. QB Distribs., LLC, 999 F. Supp. 1274, 1280 (D. Minn. 1998) (“The
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Court finds persuasive the uncontroverted testimony . . . that the non-addressable
decoding devices manufactured and sold by defendants have no legitimate purpose.”).
Similarly, Quade, one of the owners of Core Innovation Systems, testified that he
knew the descramblers he purchased from Micro-Star and resold would eventually be
used to intercept cable programming illegally. Micro-Star employee Mertes testified
about using a descrambler in her home that Mr. Sweeney personally sold to her to
receive premium programming without paying for it, just as Muller and Quade
described. Finally, news articles found in the Sweeneys’ home detailed other criminal
and civil prosecutions against people similarly engaged in manufacturing and
distributing descramblers. See United States v. Mills, 987 F.2d 1311, 1314 (8th Cir.
1993) (noting that newspaper articles of schemes similar to the defendant’s were
relevant to the defendant’s intent); United States v. Ellis, 326 F.3d 550, 555 (4th Cir.
2003) (considering articles as evidence of knowledge and intent). Together, the
Government’s evidence was sufficient to allow a reasonable jury to conclude beyond
a reasonable doubt that the Sweeneys intended that the descramblers and authorization
control devices Micro-Star manufactured and sold be used for the unauthorized
interception of cable signals and that the Sweeneys therefore violated 47 U.S.C. § 553.
See also Comcast of Ill. X v. Multi-Vision Elecs., Inc. 491 F.3d 938, 945 (8th Cir.
2007) (rejecting, in a civil case, an argument that the potential legitimate uses of a
descrambler showed a lack of intent).
B. Sufficiency of the evidence — Conspiracy
The Sweeneys also challenge the sufficiency of the evidence supporting their
convictions on the conspiracy count. “To prove conspiracy under [18 U.S.C.] § 371,
the Government must show beyond a reasonable doubt that the [defendants]
knowingly ‘entered into an agreement or reached an understanding to commit a
crime,’ and that at least one of the [defendants] ‘overtly acted in furtherance of the
agreement.’” United States v. Farrell, 563 F.3d 364, 376 (8th Cir. 2009) (quoting
United States v. Bertling, 510 F.3d 804, 808 (8th Cir. 2007)). Using a special verdict
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form, the jury found that Mr. Sweeney conspired with Quade, Paquette, Kramer, and
Mrs. Sweeney and that Mrs. Sweeney conspired with Mr. Sweeney. As before, we
examine this issue de novo, viewing the evidence in the light most favorable to the
verdict, and we will not reverse if any reasonable jury could have found the
defendants guilty. Pliego, 578 F.3d at 941.
The Sweeneys argue that there was no conspiratorial agreement, so there was
no conspiracy, or at least no conspiracy they agreed to join. See United States v.
Lopez-Arce, 267 F.3d 775, 781 (8th Cir. 2001) (“The essence of the crime of
conspiracy is the ‘agreement to commit an unlawful act.’” (quoting Iannelli v. United
States, 420 U.S. 770, 777 (1975))). Mr. Sweeney contends that his relationship with
Kramer, Quade, and Paquette was merely a buyer-seller relationship, not a conspiracy.
See United States v. Pizano, 421 F.3d 707, 719 (8th Cir. 2005) (“Mere proof of a
buyer-seller agreement without any prior or contemporaneous understanding does not
support a conspiracy conviction because there is no common illegal purpose: ‘In such
circumstances, the buyer’s purpose is to buy; the seller’s purpose is to sell.’” (quoting
United States v. Prieskorn, 658 F.2d 631, 634 (8th Cir. 1981))). However, Mr.
Sweeney offers little argument about whether the evidence showed an agreement with
Mrs. Sweeney. Mrs. Sweeney contends that her involvement in Micro-Star’s
operations was simply too limited to show a conspiratorial agreement with Mr.
Sweeney.
There is ample evidence to support the jury’s finding that the Sweeneys formed
an agreement with each other and therefore to support their convictions. “A formal
agreement is not required to create a conspiracy, and the existence of a conspiracy can
be proved by direct or circumstantial evidence.” United States v. Williams, 534 F.3d
980, 985 (8th Cir. 2008). Jon and Michelle Sweeney jointly operated Micro-Star;
indeed the company was originally named J&M Fulfillment. Mr. Sweeney’s deep
involvement in Micro-Star is undisputed. While Mrs. Sweeney points to evidence,
such as her family commitments, suggesting that she had very limited opportunity to
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participate in Micro-Star’s operations, the testimony of Mertes and others undermines
her claims. “In reviewing the sufficiency of the evidence, ‘we must not weigh the
evidence or assess the credibility of witnesses.’” United States v. Littlewind, 595 F.3d
876, 882 (8th Cir. 2010) (quoting United States v. Raplinger, 555 F.3d 687, 693 (8th
Cir.), cert. denied, 557 U.S. ---, 129 S. Ct. 2814 (2009)). Mertes testified that Mrs.
Sweeney recruited her to work at Micro-Star. Several witnesses testified that Mrs.
Sweeney spent time assembling descramblers, preparing them for shipping, and
preparing billing. At times, Mrs. Sweeney paid Micro-Star employees. Thus, while
Mrs. Sweeney can point to other testimony that could support a finding that she
played a somewhat limited role in the manufacturing and distributing of descramblers,
there is sufficient evidence for a jury to conclude that she and Mr. Sweeney entered
a conspiratorial agreement with the illegal purpose of assisting in the unauthorized
interception of cable signals. We therefore affirm the Sweeneys’ conspiracy
convictions.4
4As a result, we need not reach the question of whether there was sufficient
evidence of an agreement between Mr. Sweeney and Quade, Paquette, or Kramer. See
United States v. Daychild, 357 F.3d 1082, 1098 n.25 (9th Cir. 2004); United States v.
Tarpley, 945 F.2d 806, 810 (5th Cir. 1991). We note, however, the “evidence of a
prolonged and actively pursued course of sales coupled with the seller’s knowledge
of and a shared stake in the buyer’s illegal venture” between Micro-Star and Kramer’s
repair business, as well as Quade and Paquette’s company, Core Innovation Systems.
See United States v. Gee, 226 F.3d 885, 894 (7th Cir. 2000) (internal quotation marks
omitted). Mr. Sweeney told customers to send defective descramblers directly to
Kramer, whom he prepaid for much of the repair work. Kramer also had access to Mr.
Sweeney’s UPS account. Quade and Paquette purchased descramblers from Micro-
Star on a weekly basis from 2000 to 2002, and Micro-Star was their only supplier of
ViewMaster 4000s. Quade and Paquette eventually stopped even examining the
products that Micro-Star sold them, simply placing new shipping labels on the boxes
and shipping them to other distributors and end-users.
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C. Sufficiency of the evidence — Currency structuring
The Sweeneys next challenge their convictions on Counts 8, 9, and 15, the
currency structuring charges. Although our standard of review again requires us to
view the evidence in the light most favorable to the verdict, Pliego, 578 F.3d at 941,
the relevant facts are virtually undisputed, so we will focus on the pertinent legal
principles.
Generally speaking, domestic financial institutions are required to file reports
on certain transactions that exceed a threshold amount designated by the Secretary of
the Treasury. 31 U.S.C. § 5313(a). The relevant Treasury regulations set this
threshold at $10,000. See 31 C.F.R. § 103.22(b)(1). There is no dispute that cash
withdrawals from bank accounts and cash purchases at car dealerships exceeding the
$10,000 threshold are both typically subject to the reporting requirement. See id.
§ 103.22(a), (b)(1), (d)(5)(viii).
Federal law prohibits persons from “structuring” cash transactions to evade this
reporting requirement. See 31 U.S.C. § 5324(c)(3). Specifically, § 5324(c)(3)
provides that “[n]o person shall, for the purpose of evading the reporting requirements
of section 5313(a) . . . structure or assist in structuring, or attempt to structure or assist
in structuring, any transaction with one or more domestic financial institutions.” In
turn, the Treasury regulations interpreting § 5324 define what it means to “structure
a transaction” as follows:
[A] person structures a transaction if that person . . . conducts or attempts
to conduct one or more transactions in currency, in any amount, at one
or more financial institutions, on one or more days, in any manner, for
the purpose of evading the reporting requirements under section 103.22
of this part. “In any manner” includes, but is not limited to, the breaking
down of a single sum of currency exceeding $10,000 into smaller sums,
including sums at or below $10,000, or the conduct of a transaction, or
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series of currency transactions, including transactions at or below
$10,000. The transaction or transactions need not exceed the $10,000
reporting threshold at any single financial institution on any single day
in order to constitute structuring within the meaning of this definition.
31 C.F.R. § 103.11(gg). The regulations define the term “transaction” to include
“purchase[s]” and “withdrawal[s],” among other things. Id. § 103.11(ii). We find that
the Treasury regulations accurately describe the offense of structuring a transaction
in violation of § 5324(c)(3). Accord United States v. Van Allen, 524 F.3d 814, 819-21
(7th Cir. 2008); United States v. MacPherson, 424 F.3d 183, 188 (2d Cir. 2005). 5
There is no real dispute about the elements of the alleged offense. As the
district court instructed the jury,
The crime of currency structuring, as charged in Counts Eight,
Nine, and Fifteen . . . , has three elements, which are:
One, the defendant conducted or attempted to conduct a financial
transaction that involved a domestic financial institution;
Two, at the time the defendant conducted or attempted to conduct
the financial transaction, the defendant knew of the domestic
financial institution’s obligation to report currency transactions in
excess of $10,000; and
Three, the defendant purposefully structured the transaction with
the intent to evade that reporting requirement.
Accord Van Allen, 524 F.3d at 820; MacPherson, 424 F.3d at 189.
5
The jury instruction describing the elements of currency structuring, as charged
in Counts 8, 9, and 15, tracked the language that we have quoted from 31 C.F.R. §
103.11(gg). On appeal, the Sweeneys do not argue that the Treasury regulations
impermissibly construe § 5324; nor do they argue that the regulations are invalid for
any other reason.
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The Sweeneys do not argue that the evidence was insufficient to establish either
their knowledge of the reporting requirement or their intent to evade that requirement.
A review of the evidence presented at trial leaves no doubt that the Sweeneys knew
about the reporting requirement and intended to evade it. The question, the Sweeneys
insist, is whether their acts amounted to “structuring a transaction.”
The Sweeneys make two principal arguments in this vein. The first argument,
pressed exclusively by Mrs. Sweeney, is that neither the purchase of the minivan
(Count 8) nor her cash withdrawal from the First National Bank of Elk River on
October 28, 2002 (Count 15), qualifies as a “transaction” under § 5324(c)(3). Each
of those events, she asserts, merely involved “a single transfer of currency.” And,
according to Mrs. Sweeney, a “transfer” in an amount less than the $10,000 reporting
threshold cannot be illegally structured. We are not persuaded.
Initially, we note that Mrs. Sweeney’s argument about the meaning of the term
“transaction” under § 5324(c)(3) amounts to a succession of ipse dixits. This entire
subsection of Mrs. Sweeney’s brief is conclusory and noticeably lacking in relevant
legal authority. In any event, the key premise of her argument—that a purchase or
withdrawal in an amount less than $10,000 is not a “transaction” and therefore cannot
be structured—is decisively refuted by the Treasury regulations. Specifically, the
term “transaction” is defined in 31 C.F.R. § 103.11(ii) to include “purchase[s]” and
“withdrawal[s].” Moreover, 31 C.F.R. § 103.11(gg) provides that “a person structures
a transaction [e.g., a purchase or withdrawal] if that person . . . conducts or attempts
to conduct one or more transactions [e.g., purchases or withdrawals] in currency, in
any amount, . . . in any manner, for the purpose of evading the reporting
requirements.” (Emphasis added.) See also id. (“The transaction or transactions need
not exceed the $10,000 reporting threshold at any single financial institution on any
single day in order to constitute structuring within the meaning of this definition.”
(emphasis added)). We therefore reject the notion that neither the purchase of the
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minivan nor the October 28 withdrawal qualifies as a “transaction” under
§ 5324(c)(3). On the contrary, both of those events are transactions, and the evidence
shows that in both instances, Mrs. Sweeney acted with the intent to evade the
reporting requirement.6
The Sweeneys’ second argument starts from the premise that the only way to
commit the offense of structuring a transaction is to “break up a single cash
transaction that was above the [$10,000] reporting threshold into two or more separate
transactions.” See Ratzlaf v. United States, 510 U.S. 135, 136 (1994) (stating in
dictum that “[i]t is illegal to ‘structure’ transactions—i.e., to break up a single
transaction above the reporting threshold into two or more separate transactions—for
the purpose of evading a financial institution’s reporting requirement”). The
Sweeneys assert that the evidence on Counts 8, 9, and 15 failed to show that they
broke up a single cash transaction that exceeded the $10,000 reporting threshold into
two or more separate transactions. It follows, we are told, that the evidence was
insufficient to prove that Mr. or Mrs. Sweeney committed the offense of structuring
a transaction. Again, we are not persuaded.
6Along similar lines, the Sweeneys assert that because the relevant transactions
were in amounts less than $10,000, “there simply was no reporting requirement” to
evade. This assertion seems to suggest that, as far as the Sweeneys were concerned,
the reporting requirement set out in 31 U.S.C. § 5313(a) and the corresponding
Treasury regulations did not exist and therefore could not be evaded. To be sure, the
reporting requirement is triggered only when the $10,000 threshold is met. But that
does not mean the existence of the reporting requirement depends on how much
money changes hands in a given transaction. The reporting requirement is a generally
applicable law—it is on the books for all persons, at all times. Criminal liability under
31 U.S.C. § 5324 is not conditioned on whether the reporting requirement is actually
triggered. Instead, § 5324 prohibits persons from conducting transactions with the
intent to evade the reporting requirement, regardless of whether a plan to evade the
reporting requirement succeeds (by staying below the $10,000 threshold) or fails (by
exceeding the $10,000 threshold). See § 103.11(gg).
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The central flaw in the Sweeneys’ second argument is its starting premise,
which confuses a sufficient condition for a necessary condition. While breaking up
a single cash transaction that exceeds the $10,000 reporting threshold into two or more
separate transactions is one way of committing the offense of structuring a transaction,
it is not the only way. Recall once more that the Treasury regulations provide that “a
person structures a transaction if that person . . . conducts or attempts to conduct one
or more transactions in currency, in any amount, . . . in any manner, for the purpose
of evading the reporting requirements.” § 103.11(gg) (emphasis added). The
regulations explain that “‘[i]n any manner’ includes, but is not limited to, the breaking
down of a single sum of currency exceeding $10,000 into smaller sums . . . or the
conduct of a transaction, or series of currency transactions, including transactions
at or below $10,000.” Id. (emphasis added). In our view, the regulations accurately
describe the various ways that a person may commit the offense of currency
structuring in violation of § 5324(c)(3). See United States v. Hovind, 305 Fed. App’x
615, 621 (11th Cir. 2008) (per curiam) (“By its plain language, the statute prohibits
transactions of less than $10,000 that are intended to evade reporting requirements.”
(citing United States v. Phipps, 81 F.3d 1056, 1060-61 (11th Cir. 1996))). The
Sweeneys would have us adopt a much narrower interpretation of the statute, but we
see no sound basis for doing so.
Any residual doubt about the Sweeneys’ second argument is dispelled by the
Seventh Circuit’s decision in United States v. Van Allen, 524 F.3d 814 (7th Cir. 2008),
which we find persuasive. There, the defendant, relying on the Seventh Circuit’s
ruling in United States v. Davenport, 929 F.2d 1169 (7th Cir. 1991), made a nearly
identical argument to the one the Sweeneys make here. In particular, the defendant
argued “that the only method of proving structuring is to demonstrate that a defendant
held a unitary cash hoard over $10,000 and then broke it up . . . in[to] amounts under
$10,000.” Van Allen, 524 F.3d at 820. The court recounted that in Davenport it had
“upheld a conviction for structuring where the defendant made ten cash deposits, each
under $10,000” and had “observed that the intent of the statute was to prevent
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individuals from evading the reporting requirement ‘by breaking their cash hoard into
enough separate deposits to avoid activating the requirement.’” Id. at 820-21 (quoting
Davenport, 929 F.2d at 1173). The court in Van Allen made clear, however, that it
never held that breaking up a cash hoard “was the only method of proving
structuring.” Id. at 821. In fact, the court noted, Davenport “further defined
‘structuring’ as ‘altering the form of a transaction in order to avoid activating
the . . . duty to file a currency transaction report.’” Id. (quoting Davenport, 929 F.2d
at 1173). This alternative definition of structuring, the court explained, “meshes well
with that in the Treasury regulation,” id. (citing § 103.11(gg)), which, of course,
describes more than one way of structuring a transaction, see § 103.11(gg).
We hold that the evidence, viewed in the light most favorable to the verdict,
was sufficient to support the Sweeneys’ convictions on Counts 8, 9, and 15. As to
Counts 8 and 9, the evidence showed that both Mr. and Mrs. Sweeney knew about the
$10,000 reporting threshold and conducted the vehicle purchases in a manner
designed to evade the reporting requirement. See § 103.11(gg); see also Van Allen,
524 F.3d at 821 (noting that the court had previously “defined ‘structuring’ as
‘altering the form of a transaction in order to avoid activating the . . . duty to file a
currency transaction report’” (quoting Davenport, 929 F.2d at 1173)). As to Count
15, the evidence showed that Mrs. Sweeney knew about the $10,000 reporting
threshold and conducted a series of cash withdrawals—including the withdrawal of
$9,900 on October 28, 2002—in a manner designed to evade the reporting
requirement. See 31 C.F.R. § 103.11(gg); see also Van Allen, 524 F.3d at 820 (finding
that the defendant engaged in illegal structuring by conducting a series of deposits and
withdrawals, and explaining that “[t]he sheer volume of the transactions almost
compels the conclusion reached by the jury”).7 Because the evidence was sufficient
7To be clear, the evidence of the withdrawal on October 28, 2002, was itself
sufficient to support Mrs. Sweeney’s conviction on Count 15. As the Treasury
regulations explain, “[A] person structures a transaction if that person . . . conducts or
attempts to conduct one or more transactions in currency, in any amount, . . . in any
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on each count to prove that the Sweeneys conducted “one or more transactions in
currency, in any amount, . . . in any manner, for the purpose of evading the
[applicable] reporting requirement[],” § 103.11(gg), we affirm their convictions on the
currency structuring charges.
D. Doyle v. Ohio
Mr. Sweeney argues that the district court erred in failing to declare a mistrial
after Officer Miller testified that Mr. Sweeney invoked his right to counsel when
Officer Miller began to question him. In Doyle v. Ohio, 426 U.S. 610 (1976), the
Supreme Court held that “the use for impeachment purposes of [a defendant’s]
silence, at the time of arrest and after receiving Miranda warnings, violate[s] the Due
Process Clause of the Fourteenth Amendment,” id. at 619. This rule also applies to
a defendant’s invocation of his right to an attorney. Wainwright v. Greenfield, 474
U.S. 284, 295 n.13 (1986). The district court held that any potential Doyle violation
was harmless beyond a reasonable doubt. “We review claims of constitutional error
de novo.” United States v. Washington, 318 F.3d 845, 854 (8th Cir. 2003).
The Government argues that no Doyle violation occurred because the
Government did not deliberately elicit testimony regarding Mr. Sweeney’s invocation
of his right to counsel. We need not reach the question whether an inadvertent
disclosure under these circumstances violates Doyle if we find that any potential
Doyle violation was harmless beyond a reasonable doubt. See United States v. Martin,
391 F.3d 949, 955 (8th Cir. 2005).
manner, for the purpose of evading the reporting requirements under section 103.22
of this part.” § 103.11(gg) (emphasis added). Conducting a transaction “in any
manner,” includes “conduct[ing] . . . a transaction . . . at or below $10,000.” Id.
(emphasis added); see also Hovind, 305 Fed. App’x at 620 (“A cash transaction does
not have to equal or exceed $10,000 to constitute a structuring offense . . . .”).
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“When analyzing whether Doyle violations are harmless beyond a reasonable
doubt, this court examines (1) whether the government made repeated Doyle
violations, (2) whether any curative effort was made by the trial court, (3) whether the
defendant’s exculpatory evidence is transparently frivolous, and (4) whether the other
evidence of the defendant’s guilt is otherwise overwhelming.” United States v. Gentry,
555 F.3d 659, 663-64 (8th Cir. 2009) (quoting Fields v. Leapley, 30 F.3d 986, 991
(8th Cir. 1994)). Here, it is undisputed that there was only a single alleged Doyle
violation. It is also undisputed that the district court offered to give a curative
instruction to the jury, which the defendants declined. The Government concedes that
the exculpatory evidence that the Sweeneys presented was not transparently frivolous.
Finally, as described earlier, the Government otherwise presented overwhelming
evidence of Mr. Sweeney’s guilt. On balance, while the third factor counsels in favor
of finding the violation was not harmless, we are convinced based on the other factors
that this potential Doyle violation was harmless beyond a reasonable doubt.
Therefore, the district court did not err in denying the motion for a mistrial.
E. Sentencing Issues
The Sweeneys appeal the district court’s enhancement of their advisory
sentencing guidelines ranges based on the court’s determination of the “infringement
amount,” see U.S.S.G. § 2B5.3.8 Generally, “[t]he infringement amount is the retail
value of the infringed item, multiplied by the number of infringing items.” U.S.S.G.
§ 2B5.3 cmt. n.2(A). The district court found that “it is not possible to determine the
number of infringing items (in this case, the descramblers) or the number or value of
8At the outset, we reiterate that the parties agreed at sentencing that the district
court should apply section 2B5.3. Accordingly, we assume for present purposes that
the district court correctly found that “U.S.S.G. § 2B5.3, ‘Criminal Infringement of
Copyright or Trademark,’ is the appropriate Guideline for determining the sentencing
range applicable to the Sweeneys’ convictions of conspiracy and unauthorized
interception of cable service.”
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the infringed items (in this case, the stolen cable transmissions).” The court therefore
made a reasonable estimate of the infringement amount, using Micro-Star’s gross
revenues, $6,435,602, as a starting point. See U.S.S.G. § 2B5.3 cmt. n.2(E) (“In a
case in which the court cannot determine the number of infringing items, the court
need only make a reasonable estimate of the infringement amount using any relevant
information, including financial records.”). Based on that estimate, the court
increased the defendants’ offense levels by 18 levels, the enhancement corresponding
to an infringement amount between $2.5 million and $7 million. See U.S.S.G.
§§ 2B5.3(b)(1)(B), 2B1.1(b)(1). “In reviewing a sentence for procedural error, we
review the district court’s factual findings for clear error and its application of the
guidelines de novo.” United States v. Barker, 556 F.3d 682, 689 (8th Cir. 2009).
The Sweeneys contend that because the Government did not prove that any of
the descramblers were actually used to intercept cable signals illegally, there were no
infringed items and the correct infringement amount was therefore $0. This borders
on sophistry. It should go without saying that we must here start from the premise
that the Sweeneys intended the descramblers they manufactured and sold to be used
for the unauthorized interception of cable signals; after all, the jury found them guilty
of violating 47 U.S.C. § 553(a)(2). Records seized from Micro-Star showed that the
Sweeneys sold 178,260 descramblers between 1999 and 2001. (Micro-Star’s sales in
the years 1996, 1997, and 1998 could not be determined.) It is perfectly reasonable
to infer that the majority of these descramblers were in fact used to steal cable
programming. Thus, while the exact number and value of stolen cable transmissions
are unknown, the infringement amount was undoubtedly greater than $0.
Contrary to the Sweeneys’ contention, the district court properly resorted to the
methodology set out in Application Note (2)(E), which provides that in these
circumstances “the court need only make a reasonable estimate of the infringement
amount using any relevant information, including financial records.” (Emphasis
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added.) The dispositive question is whether the district court clearly erred in finding
that the infringement amount exceeded $2.5 million. The answer is “no.”
As the district court observed,
[T]he infringement amount must have exceeded Micro-Star’s gross
revenues. Micro-Star did not sell descramblers to end users; rather, it
sold them to people like Quade and Paquette, who resold them to other
wholesalers, to retailers, and to end users. Needless to say, the
wholesalers who bought descramblers from Micro-Star marked up the
price, and that price would continue to be marked up until the
descramblers reached the hands of consumers. Thus, the total amount
that consumers paid to “retailers” for Micro-Star descramblers would
greatly exceed the total amount of Micro-Star’s gross revenues.
At the same time, the total amount that consumers paid for Micro-
Star descramblers would be substantially less than the amount of cable
programming stolen by those consumers. No consumer would pay, say,
$250 for a descrambler unless that consumer planned to steal at least
$250 in programming. Indeed, given the legal risks involved, it is
unlikely that a consumer would pay $250 for a descrambler unless he
planned to steal a lot more than $250 in programming. Thus, the amount
of cable programming stolen by consumers would have far exceeded the
amount that consumers paid to retailers for Micro-Star descramblers, and
the amount that consumers paid to retailers for Micro-Star descramblers
would have far exceeded Micro-Star’s gross revenues of $6,435,602.
The district court’s reasoning is sound. Because the infringement amount was almost
certainly greater than $6 million, the district court obviously did not clearly err in
finding that the infringement amount was no less than $2.5 million.
The results of an alternative calculation confirm that the court’s principal
estimate of the infringement amount is reasonable. As we mentioned above, the
Government’s expert, Brian Richert, estimated the average lost revenue to cable
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companies per subscriber from the use of a descrambler for each of the years 1996
through 2001. Special Agent Dean Chappell took the figures for 1999, 2000, and
2001 and multiplied them by the number of descramblers that Micro-Star sold in those
years, which yielded an estimated infringement amount of $62,531,621. Even this
much larger estimate is extremely conservative, for it assumes that each descrambler
would be used only for one year, and it excludes the losses that Micro-Star caused
between 1996 and 1998. This alternative calculation of the infringement
amount—which, as the district court noted, “is nearly ten times the amount of Micro-
Star’s gross revenue and approximately twenty-five times the amount necessary to
trigger an 18-point increase in the Sweeneys’ base offense level”—reinforces our
conclusion that the district court did not clearly err in finding that the infringement
amount exceeded $2.5 million. Accordingly, we hold that the district court properly
increased the Sweeneys’ offense levels by 18 levels.
Mrs. Sweeney appeals the district court’s application of a two-level
enhancement for manufacturing infringing items. Section 2B5.3(b)(3) directs a
sentencing court to increase a defendant’s base offense level by 2 levels “if the offense
involved the manufacture . . . of infringing items.” The relevant application note
defines “infringing item” as “the item that violates the copyright or trademark laws.”
U.S.S.G. § 2B5.3 cmt. n.1. The district court found that the descramblers are
infringing items and concluded that Mrs. Sweeney’s involvement in manufacturing
descramblers made her eligible for the enhancement. Mrs. Sweeney asserts that
because descramblers do not themselves violate copyright or trademark laws—at least
not in the same way that a “fake Gucci handbag” violates such laws—descramblers
cannot be infringing items. Since the descramblers Micro-Star manufactured are not
infringing items, the argument runs, Mrs. Sweeney was ineligible for the
enhancement. We disagree.
As we noted above, applying section 2B5.3 to the offense of assisting in the
unauthorized interception of cable signals requires reasoning by analogy. While the
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application notes do not mention the crime the Sweeneys committed, the notes do
offer guidance concerning a close analogue; namely, the illegal interception of a
satellite transmission in violation of 18 U.S.C. § 2511. See U.S.S.G. § 2B5.3 cmt.
n.2(A)(iv). The relevant note provides that in cases involving the illegal interception
of a satellite transmission, “the ‘infringed item’ is the satellite transmission rather than
the intercepting device.” Id. Since the same satellite transmission cannot also be the
infringing item (i.e., the item that violates the copyright or trademark laws), it stands
to reason that the infringing item in this instance is the intercepting device. Thus, two
of our sister circuits have found (albeit in unpublished decisions) that satellite access
cards that have been modified to permit the unauthorized interception of satellite
programming are infringing items. United States v. Brereton, 196 Fed. App’x 688,
693 (10th Cir. 2006); United States v. Mason, 38 Fed. App’x 458, 459-60 (9th Cir.
2002) (memorandum opinion). In turn, those courts held that modifying satellite
access cards to permit the unauthorized interception of satellite programs qualifies as
“the manufacture . . . of infringing items” under section 2B5.3(b)(3). Brereton, 196
Fed. App’x at 693; Mason, 38 Fed. App’x at 459-60.
Interpreting the Guidelines “with a nod towards common sense,” see Brereton,
196 Fed. App’x at 693, we think the principles that govern cases involving the illegal
interception of a satellite transmission apply with equal force in cases involving the
unauthorized interception of cable signals. Cable signals, in this context, are
analogous to satellite transmissions, so cable signals are the infringed items. And
descramblers are analogous to modified satellite access cards (and other types of
“intercepting devices”), so descramblers are the infringing items. The evidence
showed that Mrs. Sweeney participated in manufacturing descramblers, which means,
ipso facto, that she participated in manufacturing infringing items. Accordingly, we
hold that the district court correctly applied the two-level enhancement under
section 2B5.3(b)(3) for manufacturing infringing items.
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Next, Mrs. Sweeney appeals the district court’s decision not to reduce her base
offense level for being a minimal participant in the conspiracy and in the assisting in
unauthorized interception of cable signals. The Sentencing Guidelines direct that “[i]f
the defendant was a minimal participant in any criminal activity,” the defendant’s
adjusted offense level should be decreased by four levels. U.S.S.G. § 3B1.2(a). If,
however, the defendant’s participation was more than minimal but still only minor,
then a two-level reduction is appropriate. U.S.S.G. § 3B1.2(b). “The defendant bears
the burden of proving a reduction applies.” United States v. Carasa-Vargas, 420 F.3d
733, 737 (8th Cir. 2005). The district court found that Mrs. Sweeney was a minor
participant and reduced her base offense level by two levels. We review for clear
error a district court’s finding as to a defendant’s role in the offense under
section 3B1.2. United States v. Carpenter, 487 F.3d 623, 625 (8th Cir. 2007).
We have held that a defendant “cannot be considered a minimal participant
[where she] had ‘knowledge of the scope and structure of the conspiracy and observed
the activities of others in the conspiracy.’” United States v. Whiting, 522 F.3d 845,
851 (8th Cir. 2008) (quoting United States v. Denton, 434 F.3d 1104, 1115 (8th Cir.
2006)). Mrs. Sweeney was involved in the hiring of employees for Micro-Star and at
times trained and paid these employees. She also operated the descrambler
manufacturing equipment. Kramer testified that Mrs. Sweeney was present on at least
one occasion when Kramer was instructing Mr. Sweeney about circuit boards for
descramblers. “A defendant’s eligibility for a reduction for role in the offense is
determined by comparing the defendant’s acts to the acts of the other conspirators.”
United States v. Boksan, 293 F.3d 1056, 1058 (8th Cir. 2002). While Mrs. Sweeney
was not involved in Micro-Star’s operations to the extent that Mr. Sweeney was, she
performed many of the same tasks—operating equipment, shipping and billing, and
hiring and paying employees—that Mr. Sweeney performed. Given Mrs. Sweeney’s
familiarity with and involvement in Micro-Star’s operations, we find no clear error in
the district court’s conclusion that Mrs. Sweeney was a minor, but not a minimal,
participant in the offense.
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Mrs. Sweeney also sought a reduction in her base offense level under the safe
harbor provision in U.S.S.G. § 2S1.3(b)(3). This section applies to currency
structuring offenses when several conditions are met—including that “the funds were
the proceeds of lawful activity,” § 2S1.3(b)(3)(C). If the criteria for section
2S1.3(b)(3) are met, the defendant’s base offense level should be reduced to 6. The
Government argued instead that a 2-level increase was appropriate under section
2S1.3(b)(1) because Mrs. Sweeney “knew or believed the funds were proceeds of
unlawful activity, or were intended to promote unlawful activity.” The district court
rejected both arguments, holding that there was insufficient evidence about the source
of the funds involved in the currency structuring offenses to determine whether the
funds were the proceeds of lawful or unlawful activity.
As before, “[t]he defendant bears the burden of proving a reduction applies.”
Carasa-Vargas, 420 F.3d at 737; United States v. Keleta, 552 F.3d 861, 866 (D.C.
Cir.), cert. denied, 558 U.S. ---, 130 S. Ct. 139 (2009). The district court did not
clearly err in concluding that there was insufficient evidence regarding the source of
the funds used in the currency structuring offenses to support either an enhancement
or a reduction. Mrs. Sweeney has provided no evidence to show any legitimate source
for the funds involved. Given her failure to satisfy her evidentiary burden, the district
court did not clearly err in denying the requested reduction.
III. CONCLUSION
For the foregoing reasons, we affirm the Sweeneys’ convictions and sentences.
______________________________
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