United States v. Jim Clay

Citations: 37 F.3d 338; 1994 U.S. App. LEXIS 27843; 1994 WL 543231Docket: 93-3699, 93-3840

Court: Court of Appeals for the Seventh Circuit; October 6, 1994; Federal Appellate Court

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Jim Clay was convicted after a bench trial for a substantive drug charge and conspiracy related to his regular purchases of cocaine from supplier Hamdi Ayyash. Clay financed these transactions on credit and paid Ayyash from his cocaine resale profits. He appeals, contesting (1) the sufficiency of evidence for the conspiracy conviction, arguing it represented only a buyer-seller relationship, (2) the district court's findings at sentencing regarding the amount of drugs attributed to him, claiming the estimates were inflated and raising general challenges to the Sentencing Guidelines, and (3) the decision not to adjust his offense level downward for acceptance of responsibility, asserting his trial aimed to challenge the conspiracy theory rather than deny his culpability. The appellate court affirmed all aspects of the conviction and sentencing.

Additionally, two notices of appeal were filed by Clay, one on November 2 and another on November 12, following the district court's sentencing on October 28 and entry of judgment on November 5. The November 2 notice was deemed timely, but confusion arose after the district court issued a stay on the sentence on November 3 to reconsider the acceptance of responsibility. The court later vacated its October 28 order on November 10 without altering the sentence. Clay's second appeal notice on November 12 was unnecessary, as the district court’s earlier stay was interpreted as a contemplation of correcting a sentence under Rule 35(c) rather than an actual stay of execution. The appellate court clarified that the seven-day period for correcting a sentence begins from the date of judgment entry, not the oral pronouncement of the sentence.

A posttrial motion can be resolved more than 10 days prior to sentencing, allowing the district court to deny its own 35(c) motion on November 9 without violating procedural rules. Appellate Rule 4(b) clarifies that a motion under Fed. R. Crim. P. 35(c) does not impact the validity of a notice of appeal filed before the motion's resolution, applicable to both party and court motions. The 1993 advisory committee note supports that actions under Rule 35(c) do not invalidate a prior notice of appeal, ensuring the appellate process remains unaffected by the correction window established by Rule 35(c). Although the revised Rule 4(b) became effective after the relevant dates in this case, the previous version of the rule did not contradict this interpretation. Accordingly, Clay's initial notice of appeal effectively secured review of his conviction and sentence, rendering his second notice superfluous and leading to the dismissal of the related appeal, No. 93-3840.

On the merits, Clay challenges his conspiracy conviction, asserting that his relationship with supplier Ayyash was merely a standard buyer-seller transaction. A conspiracy requires more than a basic agreement to exchange value for narcotics; it necessitates an additional understanding regarding the distribution of the drugs. The Supreme Court case Direct Sales Co. v. United States illustrates this, where a drug manufacturer continued selling large quantities of morphine to a physician despite warnings, leading to a conspiracy conviction upheld by the Court.

Knowledge of supplying inputs to another's illicit business alone is insufficient for establishing conspiracy. However, when such knowledge is coupled with intent to support or cooperate in the illicit endeavor—particularly if that endeavor is vital for marketing the seller's goods—this can indicate a tacit agreement. An ongoing business relationship may suggest a mutual understanding regarding the distribution of goods, allowing a trier of fact to infer cooperation. Prolonged transactions, where the seller is aware of and benefits from the buyer's illegal activities, can sustain a conspiracy finding. 

A single cash sale does not typically imply future cooperation, as the parties have no ongoing interest after the transaction. Conversely, a continuous sales relationship creates shared interests, as both parties rely on each other's market access. Factors such as the duration of the relationship, payment methods, transaction standardization, and mutual trust contribute to the inference of a conspiracy, although no single factor is decisive. Evidence suggesting a deeper interdependence beyond mere exchanges can lead to the conclusion that the association evolved into a cooperative venture.

In examining Clay's interactions with Ayyash, their dealings demonstrate sufficient interdependence to support a conspiracy finding. After an initial purchase in 1988, Clay temporarily ceased transactions due to product dissatisfaction. However, upon Ayyash's return to better quality cocaine by late 1989, Clay resumed regular purchases, marking the alleged crystallization of the conspiracy.

Ayyash and Clay engaged in a series of cocaine transactions over a year, initially exchanging smaller amounts and increasing to one kilogram by early 1990. Clay purchased cocaine on credit, reselling it to customers to fund his payments. Prices fluctuated based on market conditions, and Ayyash maintained a handwritten record of their transactions. Each kilogram of cocaine cost about $20,000, leading to a substantial debt for Clay, which accumulated to tens of thousands of dollars monthly. The district court determined that it was clear Clay's ability to repay Ayyash was contingent on his reselling the drugs, inferring a mutual agreement on this point. Both parties were experienced in the drug trade, and their ongoing communication and transaction patterns indicated a tacit understanding of resale to fund repayment. Clay's arguments against this inference, suggesting alternative sources of income, were deemed speculative and insufficient to counter the strong evidence of an ongoing relationship and financial obligation. The volume of cocaine purchased and the lack of evidence supporting his claims about additional income reinforced the court's conclusions regarding the conspiracy.

The conclusion that a buyer and seller understand that resale funds purchases is valid, as is the inference of conspiracy based on the nature of the relationship between Clay and his cocaine supplier. Clay argues that the district court erred in denying him a two-point adjustment for acceptance of responsibility under Guideline Sec. 3E1.1, claiming his trial was aimed at testing the conspiracy theory's applicability rather than denying guilt. He asserts that his admission of guilt and contrition at sentencing warrant the adjustment. However, the guidelines indicate that such an adjustment is not intended for defendants who contest essential guilt elements at trial, and Clay failed to demonstrate pre-trial acceptance of responsibility. The court noted that he only admitted the minimum necessary and attempted to minimize his liability, which does not support granting the adjustment. Additionally, Clay contests the attribution of twenty-two kilograms of cocaine to him for sentencing, which is based on the total amount purchased from his supplier, as agreed by all parties.

The court calculated a total of twenty-two kilograms of cocaine attributed to Clay by starting with two half-kilogram purchases from 1988 and 1989, then adding one kilogram for each month from January 1990 to September 1991. This method was deemed a conservative approach in response to Ayyash's testimony that he sold cocaine to Clay at intervals of two weeks to one month, typically in amounts of one to two kilograms. The court found Ayyash's account more credible than Clay's, which suggested a total of just under five kilograms. The preserved entries from Ayyash's notebook supported his testimony, and the court did not believe the notebook had been tampered with. Clay's attempts to discredit Ayyash, citing inconsistencies and alleged ledger unreliability, were found unconvincing, lacking substantial support and being overly speculative. The court emphasized that Ayyash's testimony did not exhibit significant internal inconsistencies that would undermine its reliability. Clay's alternative calculation, suggesting lower purchase amounts to avoid a mandatory minimum, was seen as less credible compared to evidence of his interest in full-kilogram transactions. The district court's credibility assessment of the witnesses was upheld as plausible and grounded in the evidence, with no clear error found in estimating drug quantities. Clay's challenges regarding the burden of proof and the Sentencing Commission's authority were previously rejected and waived. The judgment was affirmed. Additionally, it was noted that a timely Rule 35(c) motion affects the finality of the judgment for appeal purposes until resolved.