United States v. Steve Hale (4th Cir, 5/17/17): Fences, Addicts, and Stolen Goods, Oh My! The Fourth Circuit Upholds Denial of Willful Blindness Jury Instruction.

This is an important case because of the attention it directs to the willful blindness jury instruction. Steve Hale was convicted of a whole host of violations– transporting stolen property in interstate commerce, knowing the goods to have been stolen, conspiring to do the same, of making false statements on his tax returns, failing to collect and pay employee taxes, and obstructing justice. His main argument on appeal was that the District Court judge erred in giving the jury a willful blindness instruction that informed the jury that he knew the property at issue was stolen. He raised other challenges, but the most interesting other claim (in my humble opinion) relates to the statements the government made to the jury during closing argument.

Essentially this scheme involved a number of drug addicts in and around the Gastonia, North Carolina area who would go into stores and shoplift large amounts of over the counter medications and health and beauty aids.  They operated in groups of 2-4 people. These addicts would then take their bounty and hand them over to a fence. The fence would then remove the stickers and other identifying information that showed that the goods were coming from a particular store. Then these fences would sell the materials to Hale who would then sell these products on the secondary market.

During the course of its investigation, law-enforcement surveillance showed that one particular fence, “Bridges”, regularly delivered stolen merchandise to Hale’s warehouse. Bridges and others delivered their products in plastic garbage bags, plastic storage bins, and boxes. Hale paid cash for the merchandise that was delivered. On October 20, 2010, agents intercepted a FedEx shipment from the warehouse to another person in the Boca Raton, Florida area. In that shipment were items that the officers had marked with an ultraviolet light prior to having a cooperating witness sell the items to Bridges. In short, law enforcement was tracking where some of these materials were being transported. Later, law-enforcement executed a search warrant at Hale’s warehouse and found numerous shelves with merchandise, and a “cleaning station” where there were different products for use to remove stickers, sensors, and glue.

At trial, numerous witnesses testified to their relationships with one another and with Hale. A number of these people met at flea markets, where apparently there is a vibrant trade in moving stolen goods. Who knew? One witness testified that Hale told him that he made $18,000 in a “bad month.” Apparently trafficking in stolen goods can be a very lucrative endeavor.

At the end of the government’s case, Hale made a motion for a judgment of acquittal that the district court denied. Hale’s attorney also objected to the district court’s decision to provide the jury with a willful blindness instruction. After conviction, Hale received a 97 month prison sentence.

On appeal, Hale argued that the District Court judge erred in giving the jury a willful blindness jury instruction. As the Court notes, for a jury to convict Hale of transporting stolen goods in interstate commerce, the government had to prove that Hale knew that the goods he was transporting were stolen.  See 18 U.S.C. §2314.   In order to meet this burden of proof, the government could either show that Hale actually knew the materials were stolen, or by presenting evidence that he had made himself deliberately ignorant of the fact that the goods were stolen.  It is a deeply rooted principle of law that criminal defendants cannot escape the reach of criminal statutes by shielding themselves from clear evidence of critical facts that are so strongly suggested by the circumstances.  Global-Tech Appliances, Inc. v. SEB S.A, 563 U.S.754, 766 (2011); see also United States v. Jinwright, 683 F.3d 471 (4th Cir. 2012).  The application of the willful blindness doctrine has two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists, and (2) the defendant must take deliberate actions to avoid learning of that fact.”  Global-Tech Appliances, 563 U.S. at 769.   Here, the Court found there was ample evidence to support that Hale knew there was a high probability that the goods he was buying and selling were stolen. He testified at trial that based on his prior experience he knew there was a very big risk of people selling over the counter medicine and health and beauty aids at flea markets could be first level fences who had bought the goods at deep discounts from professional shoplifters. And the Court also found that Hale took deliberate actions to avoid confirming the goods were stolen because he was careful never to ask his fence about where she was receiving her items or why so many of her goods were marked with stickers indicating that they belonged on the shelves of local stores. The Court also continued to show that Hale fully knew the goods were stolen, including evidence that he tried to disguise his suppliers’ identities.  In short, the Court found sufficient evidence existed to support the willful blindness jury instruction.

Hale also argued that the willful blindness instruction that the District Court judge gave was inaccurate, but the Fourth Circuit disagreed, finding that, considered as a whole, the jury instruction “accurately and fairly state[d] the controlling law.” United States v. Rahman, 83 F.3d 89, 92 (4th Cir. 1996).

Hale also raised on appeal the argument that the prosecutor engaged in misconduct by presenting a closing argument that focused on how Hale denigrated the community by feeding individuals’ addiction, and by indirectly lining the pockets of drug dealers. He argued that this blatant appeal the passions and prejudices of the jury was improper and deprived him of a fair trial. Unfortunately for Mr. Hale, he did not object to this argument at trial. For that reason, the Fourth Circuit reviewed the claim under the plain error standard. The court rejected the claim and found that in light of the strength of the government’s case, the prosecutor’s remarks did not substantially prejudice Hale’s substantial rights resulting in the deprivation of his right to a fair trial.  That’s too bad, because this argument was clearly improper.

An unfortunate conviction for Hale, but a good primer on the willful blindness jury instruction for others.