United States v. Peterson, George

In the

United States Court of Appeals

For the Seventh Circuit

Nos. 99-3967 & 99-4159

United States of America,

Plaintiff-Appellee,

v.

George Peterson and Pedro Sandoval,

Defendants-Appellants.

Appeals from the United States District Court

for the Northern District of Indiana, Hammond Division.

Nos. 98-CR-193 & 98-CR-167--Rudy Lozano, Judge.

Argued September 19, 2000--Decided January 4, 2001

Before Bauer, Manion, and Kanne, Circuit Judges.

Bauer, Circuit Judge. Pedro Sandoval and George

Peterson directly appeal their convictions for

robbery and attempted robbery affecting

interstate commerce and carrying a firearm during

the commission of these crimes. We reverse these

convictions.

BACKGROUND

Members of the Latin Kings gang learned that

James Estep, a man in his mid-sixties, sold

marijuana from his Hammond, Indiana home. In

January 1997, armed with this information and

weapons, Pedro Sandoval, George Peterson, and

four others, all gang members, robbed Estep in

his home. The robbers successfully carried away

thirty pounds of bricked marijuana, about $18,000

cash, and three guns. Estep, an avid gun

collector, housed well over thirty guns in a gun

case he built. Worried about the discovery of his

drug business, Estep did not report the robbery

to the police. He did, however, report that two

guns had been stolen from his van.

The gang members divided the booty among them.

Basking in their first success, Peterson,

Sandoval, and another gang member returned to

Estep’s in February. This time they were thwarted

by Estep’s daughter, Katherine Bohlke, who met

them at the door with a gun. Peterson fired his

gun, hitting Bohlke in the shoulder. As the gang

members fled, Peterson tripped, causing his gun

to discharge again. The bullet pierced a

neighbor’s wall, killing Steven Bodoki, a visitor

to that home. This time Estep could not avoid the

police. In fact, the FBI soon got involved

because the Hammond police needed high-tech

recording equipment in order to surveil the gang

members. Soon thereafter, the federal government

obtained arrest warrants for the gang members.

Sandoval and Peterson were indicted for the

following violations under 18 U.S.C sec. 1951 and

18 U.S.C. sec. 924(c): Count 1--robbery of an

enterprise affecting interstate commerce, January

1997; Count 2--carrying a firearm during the

commission of this crime, January 1997; Count 3--

attempted robbery of an enterprise affecting

interstate commerce, February 1997; and Count 4--

carrying a firearm during the commission of this

crime, February 1997. The jury found Sandoval

guilty on Counts 1, 3, and 4, and Peterson guilty

on Counts 1 and 3. The judge sentenced Peterson

to forty-five years, and Sandoval to forty years.

DISCUSSION

Defendants attack their conviction on two

fronts. First, they posit that a recent Supreme

Court decision requires the government to prove

beyond a reasonable doubt that these robberies

had a substantial effect on interstate commerce,

rather than merely a de minimis effect. Second,

they contend that even if the de minimis standard

remains, the evidence presented to the jury was

insufficient to meet that standard.

I. Hobbs Act Jurisdictional Element

To uphold the tenets of federalism, in order to

prosecute an individual under the Hobbs Act, the

federal government bears the onus of proving that

the accused’s conduct affected interstate

commerce. This proof differentiates Hobbs Act

violations from common law robbery. How strong an

affect on interstate commerce the Constitution

demands is a question raised by defendants. The

Hobbs Act provides, in part:

Whoever in any way or degree obstructs, delays,

or affects commerce or the movement of any

article or commodity in commerce, by robbery or

extortion or attempts or conspires so to do, or

commits or threatens physical violence to any

person or property in furtherance of a plan or

purpose to do anything in violation of this

section shall be fined under this title or

imprisoned not more than twenty years, or both.

18 U.S.C. sec. 1951(a). Thus, two elements must

be proven: robbery and an effect on interstate

commerce. The Supreme Court has interpreted the

statutory language of "in any way or degree" as

"manifesting a purpose to use all the

constitutional power Congress has to punish

interference with interstate commerce by

extortion, robbery or physical violence." Stirone

v. United States, 361 U.S. 212, 215 (1960). We

have long held that the government need only show

some actual, even if de minimis, effect, or,

where there is no actual effect, a realistic

probability of an effect, on interstate commerce

to bring robbery within its prosecutorial reach.

See United States v. Bailey, 227 F.3d 792, 797

(7th Cir. 2000).

In this case, the defendants surmise that

United States v. Morrison, 529 U.S. 598, 120

S.Ct. 1740, 146 L.Ed.2d 658 (2000) mandates a

higher showing. Specifically, they argue that a

substantial affect on interstate commerce must be

demonstrated, and that the use of the "depletion

of assets" theory is precluded because robbery is

not an economic activity. We start by noting that

after the Court’s opinion in United States v.

Lopez, 514 U.S. 549 (1995), we construed the

Hobbs Act as still requiring only a showing of a

de minimis effect. See United States v. Stillo,

57 F.3d 553, 558 n.2 (7th Cir. 1995) (extortion

case) ("Nor did the Lopez decision undermine this

Court’s precedents that minimal potential effect

on commerce is all that need be proven to support

a conviction."). Whether this recent case changes

the standard is a new question of law, which we

review de novo.

The Court in Morrison struck down 42 U.S.C.

sec. 13981, which created a federal civil remedy

for victims of gender-motivated violence. The

Court likened sec. 13981 to the Gun-Free School

Zones Act of 1990, struck down in Lopez, because

there was no jurisdictional element establishing

that "the federal cause of action is in pursuance

of Congress’ power to regulate interstate

commerce." 120 S.Ct. at 1751. The statute was

found to exceed Congress’ power because

"[g]ender-motivated crimes of violence are not,

in any sense of the phrase, economic activity."

Id. The Court said that generally the aggregation

principle has only been applied when the

regulated activity was commercial in nature. See

id. at 1750. Accordingly, the Court rejected the

"argument that Congress may regulate nonecomonic,

violent criminal conduct based solely on that

conduct’s aggregate effect on interstate

commerce." Id. at 1754.

Defendants argue that like gender-motivated

violence in Morrison, robbery is not an economic

activity, and thus aggregation cannot be

employed. Defendants quote Lopez, 514 U.S. at

558, which states that "where a general

regulatory statute bears a substantial relation

to commerce, the de minimis character of

individual instances arising under that statute

is of no consequence," to argue that local

robbery ought not be a federal crime. We rejected

a similar argument in United States v. Wilson.

See 73 F.3d 675, 684 (7th Cir. 1995) ("There is

no authority for the proposition that Congress’s

power extends only to regulation of commercial

entities. . . . [C]ourts have upheld numerous

statutes which regulate private conduct that

affects commercial entities or commercial

activity."). We do not view the Hobbs Act as

impermissibly regulating local conduct, that is,

it does not regulate robbery for the sake of

regulating robbery. Further, the Hobbs Act does

not suggest that robbery is an economic activity;

rather, the Hobbs Act regulates interference with

economic activity by robbery. In other words, it

does not federalize all robberies because all

robberies per se affect interstate commerce;

rather, it applies only to robberies with the

proven effect. Unlike the Hobbs Act, the Morrison

statute regulated gender-motivated violence

wherever it occurred, not just violence directed

at interstate commerce. Thus, aggregation is

appropriate because what is aggregated is the

depletion of the interstate entity’s assets by

robbery, and not the act of robbery alone.

As our brethren in the Tenth Circuit have

recently reasoned in United States v. Malone, we

do not believe Morrison undermines our prior

holdings that a showing of a de minimis effect is

constitutionally satisfactory. See 222 F.3d 1286,

1294-95 (10th Cir. 2000). Therefore, we uphold

the de minimis standard because, in the

aggregate, robbery of an interstate business has

a substantial affect on commerce.

II. Sufficiency of Evidence

Our next inquiry is whether sufficient evidence

was presented for the jury to find defendants

guilty beyond a reasonable doubt. We lend great

credence to a jury’s verdict. Thus, a conviction

will be overturned based on insufficient evidence

only if the record reveals no evidence from which

the rational jury could have found the defendants

guilty beyond a reasonable doubt. See Bailey, 227

F.3d at 797. At trial, the government bore the

burden of proving that the robbery affected

interstate commerce. Our review of the trial

transcript reveals that the government’s proof

was insufficient to satisfy the de minimis impact

standard.

In its opening statement, the government told

the jury:

[T]here’s an element that we are required to

prove, not just that the crime occurred, but that

there’s a federal nexus or a federal involvement.

And that, you will see from the instructions, is

that interstate commerce was affected.

You will be hearing testimony from experts that

this marijuana that was taken, and attempted to

be taken, was grown outside of the State of

Indiana. The weapons that were taken in the first

robbery and attempted to be taken in the second,

were manufactured outside of the State of

Indiana. And, of course, United States currency,

as I think most of you know, is not printed in

the State of Indiana, but outside. Therefore, all

three items that were taken in the first robbery

and attempted to be taken in the second, had

crossed state lines to be here in the State of

Indiana.

Tr. at 202. During its case, the government

presented three expert witnesses to help

establish this jurisdictional theory.

The government called James Crane, a Special

Agent with the United States Secret Service, as

an expert in investigations involving United

States currency. He testified, in part:

Q. Sir, are you familiar with the production of

the United States currency?

A. Yes, I am.

Q. And where is the United States currency

actually produced?

A. U.S. currency is produced in two places in the

United States, one in Washington, D.C. at the

Bureau of Engraving and Printing, and there’s

also another Bureau of Engraving and Printing in

Fort Worth, Texas.

* * *

Q. Sir, with regards to United States currency

which is found in the [S]tate of Indiana, what

are any possible places of origin for that United

States currency?

A. To be produced?

Q. Correct.

A. Nowhere in Indiana.

Tr. at 876, 878-79.

Seemingly, the purpose of Crane’s testimony was

to establish that the money taken and attempted

to be taken by defendants from Estep was printed

out-of-state, and thus was at one time in

interstate commerce. To endorse this sort of

showing would require an overly expansive

interpretation of the Hobbs Act. As the Eleventh

Circuit intimated, "[w]e acknowledge that cash

may ’travel’ in interstate commerce but . . . .

[w]e do not rest our decision on this weak reed."

United States v. Paredes, 139 F.3d 840, 844 n.3

(11th Cir. 1998). This is because, practically

speaking, under the government’s theory, all

robberies committed outside of Texas could be

classified as federal crimes (as all robberies

committed in Washington, D.C. are already so). In

its brief, the government rightly "concedes that

the out-of-state origin of the currency alone is

insufficient to satisfy the commerce element of

the Hobbs Act." We agree and hold that this

testimony was inappropriate to establish the

interstate commerce element under the Hobbs Act.

Another government witness was Eric Siweck, a

DEA Special Agent and an expert in the

enforcement of federal drug laws. Siweck, on

direct examination, testified in part:

Q. If you were to recover brick marijuana, based

on your investigations in Indiana, based on your

training and experience, would the origin be from

Indiana?

A. Normally, no. It would be from an area, you

know, that could grow on a regular basis, would

be my experience.

Q. And some of these areas are?

A. South America, Mexico, Southern States. They do

grow in Texas, Arizona, Nevada, places that have

a lot more growing days than we do here.

* * *

Q. Sir, have you had an opportunity prior to this

trial today to speak with Mr. Estep . . .

regarding some marijuana?

A. Yes, I have.

Q. And [was he] able to describe certain size of

brick marijuana?

A. Yes, [he] did.

Q. And based on those conversations, your opinion

would still be the same that marijuana of that

size, which is brick, would be from another

state?

A. Yes, in the content and the quality of the

marijuana described, to me it’s for cultivation,

it’s done by a grower for distribution. And the

way it was described to me, it does not sound

like it’s Indiana grown.

Tr. at 886-87. On cross examination, Siweck

testified:

Q. Mr. Siweck, you’re saying it’s still possible

that the marijuana described by Louis Young and

Mr. Estep could have been cultivated in Indiana?

A. It is possible, yes, sir.

Tr. at 887. On redirect, he responded:

Q. So when defense counsel asks you about a

possibility, you indicate highly unlikely?

A. It is possible, highly unlikely, . . . but it

is possible.

Tr. at 890. Estep, who had been given immunity by

the government, had previously testified that he

had sold marijuana from his home for about two

years and was planning to sell the marijuana

taken by defendants in January. Thus, the jury

could rationally find that Estep operated a drug

business and that its assets were depleted by the

robberies. The question is whether the evidence

could allow the jury to find that Estep’s drug

business was interstate in nature.

Traditionally, the government meets the de

minimis standard under the "depletion of assets"

theory. The government presents evidence that a

business is either actively engaged in interstate

commerce or customarily purchases items in

interstate commerce, and had its assets depleted

by the robbery, thereby curtailing the business’

potential as a purchaser of such goods. See

United States v. Elders, 569 F.2d 1020, 1025 (7th

Cir. 1978). And, typically in Hobbs Act cases an

owner or manager of the business establishment

takes the stand to testify that the business

robbed either served out-of-state customers or

bought inventory manufactured out-of-state. See,

e.g., United States v. Rodriguez, 218 F.3d 1243,

1245 (11th Cir. 2000) (desk clerk testified that

motel robbed served out-of-state guests); United

States v. Guerra, 164 F.3d 1358, 1359, 1361 (11th

Cir. 1999) (owner and manager testified that gas

station robbed sold fuel from out-of-state);

United States v. Smith, 182 F.3d 452, 456 (6th

Cir. 1999) (government provided evidence that

stores robbed sold beer, wine, and tobacco

originating out-of-state); United States v.

Hebert, 131 F.3d 514, 523-24 (5th Cir. 1997)

(managers and owners testified that restaurants

and liquor stores robbed bought products from

out-of-state); United States v. Brown, 959 F.2d

63, 68 (6th Cir. 1992) (distributor testified

that it provided bar robbed with beer and food

manufactured out-of-state).

Contrary to the above cited examples, the Hobbs

Act does not require that the commerce affected

be legal commerce. However, since Estep’s illegal

drug business was not a conventional commercial

entity, it was especially important that the

government prove the interstate nature of the

business. The government needed to show the jury

that Estep’s marijuana source originated from

out-of-state or that he sold drugs to out-of-

state customers. For example, in United States v.

Thomas, we upheld a Hobbs Act conviction for

obstructing interstate commerce when a drug

seller robbed a drug buyer of money that would

have been used to buy his cocaine. See 159 F.3d

296, 297 (7th Cir. 1998). The government offered

evidence that cocaine originated in South

America, and thus traveled through interstate

commerce. See id. at 298. Likewise, in Bailey, we

upheld a Hobbs Act conviction for attempted

robbery. The defendant had targeted a drug

supplier whom was suspected to possess on his

person either cash from a cocaine sale or actual

cocaine. See 227 F.3d at 798. The government

called an expert to testify that cocaine is

produced in South America, and therefore, it must

enter Illinois via interstate commerce. See id.

Thus, the cocaine dealer’s assets were depleted

because he had less means available to purchase

more cocaine through interstate commerce. See id.

In this case, the government failed to adduce

this benchmark form of proof, or any other

satisfactory form. Siweck’s testimony offered the

jury qualified inferences-- namely that Estep

housed cultivated marijuana, not "ditch weed,"

that cultivated marijuana "normally" comes from

outside of Indiana, and that even though it was

"possible" for the marijuana to be Indiana grown,

it was "highly unlikely." Evidence on this

element was not elicited from any other witness,

including Estep, the witness with the most

knowledge as to this matter. While cultivated

marijuana may not "normally" be grown in Indiana,

it is possible. See, e.g, United States v. Myers,

46 F.3d 668, 668-69 (7th Cir. 1995) (indoor

marijuana growing operation found in Indiana).

Based on this, we find that the inferences

offered by Siweck were too attenuated to

establish that Estep ran an interstate business.

To render a guilty verdict, the jury must hear

sufficient evidence to avoid resorting to

excessively strained inferences or guesswork. The

evidence of the source of the marijuana was based

on strained inferences. In both Thomas and

Bailey, the government garnered sufficient proof

that the cocaine’s source was South America. We

are not saying that it is not possible that

Estep’s drug business was interstate in nature,

we are saying that the government failed to

adequately prove the possibility.

The government postures that it need not

specifically show that the drugs were grown

outside Indiana because "drug dealing is an

economic activity that affects interstate

commerce." (Citing United States v. Westbrook,

125 F.3d 996, 1009 (7th Cir. 1997) (quoting

United States v. Rogers, 89 F.3d 1326, 1338 (7th

Cir. 1996))). However, the government is

conflating its burden of proof under two distinct

statutory schemes--the Controlled Substances Act

("CSA"), 21 U.S.C. sec.sec. 801 et seq. and the

Hobbs Act, 18 U.S.C. sec. 1951. The statute at

issue in Westbrook is part of the CSA, also

enacted pursuant to Congress’ Commerce Clause

power. However, in enacting the CSA, Congress

made specific findings and declarations codified

in 21 U.S.C. sec. 801. These findings

demonstrated that intrastate narcotic activity

substantially affects interstate commerce. Based

on these findings, when the government prosecutes

a defendant under the CSA, it need not show that

the conduct in the individual case affects

interstate commerce. The Hobbs Act was not

predicated on such findings; rather, the Hobbs

Act requires individualized proof that the

robbery charged affected interstate commerce.

Therefore, it cannot be assumed that Estep’s drug

business was interstate in nature.

We find this case puzzling, particularly because

of the government’s trial theory. Lopez crafted

three categories that Congress may regulate under

its Commerce Clause power: (1) the use of the

channels of interstate commerce; (2) the

instrumentalities of interstate commerce, or

persons or things in interstate commerce; and (3)

activities that substantially affect interstate

commerce. See 514 U.S. at 558-59. In its brief,

the government spells out these categories and

surmises that "the Hobbs Act as applied in this

case served to protect ’persons or things in

interstate commerce.’" The government then

concludes that the "Hobbs Act conviction in this

case [may be] sustained under the third as well

as the second category of permissible Commerce

Clause legislation described in Lopez." The

defendants’ counter that since this theory was

not presented to the jury, it cannot sustain the

convictions. Specifically, the defendants’ brief

states, "But the government, not thinking of the

case as a Lopez category-two case, paid no

attention at trial to its burden under that

theory." Both parties misunderstand the import of

the three Lopez categories. These categories are

not suggested methods of proof; rather, they

signal areas within Congress’ power to regulate.

It appears that the government was attempting

to prove that this Hobbs Act case fits into Lopez

category two. Perhaps the government confused the

Hobbs Act with statutes such as 18 U.S.C. sec.

2119, the federal carjacking statute, which

states, in part: "Whoever, with the intent to

cause death or serious bodily harm[,] takes a

motor vehicle that has been transported, shipped

or received in interstate commerce . . . ." Under

this statutory language, we have found it

sufficient to show that the stolen car had at

some time traveled in interstate commerce. See

United States v. Taylor, 226 F.3d 593, 600 (7th

Cir. 2000) (finding it sufficient that government

proved that car was made in Kansas and stolen in

Indiana); see also United States v. Bell, 70 F.3d

495, 498 (7th Cir. 1995) (finding it sufficient

under 18 U.S.C. sec. 922(g)(1) to prove that

firearm had at some point traveled in interstate

commerce). Such statutes are enacted pursuant to

Congress’ Commerce Clause power under Lopez

category two.

The Hobbs Act, however, falls within Lopez

category three. The very language dictates that

the government must show an effect on interstate

commerce. Yet, the government argued to the jury

that since the items taken-- the money, drugs,

and guns--had crossed state lines at some point,

interstate commerce was affected. But, the

language of the Hobbs Act, as distinct from the

federal carjacking statute, does not envision

this type of showing. The government’s proof

should have focused on the nature of the business

robbed and how the robbery affected its operation

in interstate commerce; that is to say, that

Estep sold drugs from an out-of-state source and

that the robbery of the money and drugs depleted

the assets of his business. On appeal, the

government attempts to convert the case into one

where the government proved that the robberies

substantially affected interstate commerce

because defendants robbed an interstate

enterprise. Fatal to the government’s appeal is

that this theory was not presented to the jury,

and thus, cannot support its verdict.

Finally, Jeffrey Emmons, a Special Agent with

the United States Treasury Department, the Bureau

of Alcohol, Tobacco and Firearms, an investigator

of federal firearms violations, was called to

testify as to the interstate nexus of the stolen

firearms. Emmons testified that the guns taken

and used in the robbery were not made in Indiana.

The testimony concluded:

Q. Sir, the five weapons we have discussed today,

you’ve indicated that none of those weapons were

manufactured in Indiana, is that correct?

A. That’s correct.

Q. So, in fact, if those weapons were recovered in

Indiana, they did cross state lines?

A. That’s correct.

Tr. at 682. The government abandons this approach

on appeal. Instead, it argues that the guns were

part of Estep’s drug business because guns are

necessarily part of the drug trade. No evidence

was presented to this effect; actually the

evidence was to the contrary. Estep testified

that the guns were his personal property, and

that the guns were "home when they c[a]me to my

house." Tr. at 844. According to the record,

Estep was a gun collector, separate and apart

from his drug business, and he was not a gun

seller. Estep even testified that he had never

used drug money to purchase guns. The

government’s argument here is baseless, the

evidence did not show that the guns were part of

Estep’s business, and it did not show that

Estep’s business was interstate.

In light of our analysis as to the money and

drugs, we decline to further address the

sufficiency of the gun proof because "[w]hen a

verdict may have rested on any of several

grounds, one of which was improper, the

conviction cannot be upheld." United States v.

Feldman, 711 F.2d 758, 764 (7th Cir. 1983)

(citing Stromberg v. California, 283 U.S. 359,

368 (1931); United States v. Baranski, 484 F.2d

556, 560-61 (7th Cir. 1973)); see Feela v.

Israel, 727 F.2d 151, 154-55 (7th Cir. 1984). The

fact that the jury might have solely relied on

Crane’s testimony regarding the money is of

concern. Crane’s only purpose in testifying was

to show that the money was not printed in

Indiana. His testimony was clear and unqualified,

and thus provided an easy avenue for the jury to

find that the interstate commerce element was

satisfied. Also, the evidence as to the source of

Estep’s marijuana was insufficient to satisfy the

interstate commerce element. Since the verdict

was general, the jury may well have rested its

decision that the robberies affected interstate

commerce on the drug or money evidence, both

improper grounds.

CONCLUSION

We conclude that the Supreme Court’s decision

in Morrison did not alter the showing required to

satisfy the jurisdictional element of the Hobbs

Act. Since evidence beyond a reasonable doubt as

to any impact on interstate commerce is lacking

to sustain the Hobbs Act convictions, we hereby

REVERSE defendants’ convictions.