United States v. West

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 94-20143

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

LARRY F. WEST, THOMAS L. MASSEY AND

RICHARD D. GATTEN, a/k/a DICK GATTEN,

Defendants-Appellants.

Appeals from the United States District Court

for the Southern District of Texas

(June 27, 1995)

Before WISDOM, DUHÉ, and BENAVIDES, Circuit Judges.

WISDOM, Circuit Judge.

The defendants were convicted of various charges based on

their conspiracy to avoid federal excise tax. On appeal, all three

defendants raise various challenges to their convictions and

sentences. Because we find no error, we AFFIRM.

I.

The charges against the defendants arose from their

involvement in a scheme to evade federal fuel excise taxes due on

sales of gasoline. The tax is imposed when gasoline is sold by the

wholesale distributor to any purchaser that does not hold a

Registration for Tax-Free Transaction (IRS form 637). This IRS

form enables distributors to transfer gas between themselves tax-

free.

The defendants, Larry West and Richard Gatten, operated

a fuel distribution company known as Dispetco, which possessed a

valid form 637. Dispetco purchased most of its fuel from Major

Brand Oil (MBO), owned by Thomas Massey, the third defendant, who

also possessed a valid form 637. Massey sold an unusually high

volume of fuel to Dispetco at a very low cost. Because both of

these companies possessed valid forms 637, the transactions between

them were tax-free.

Dispetco then sold fuel to retailers under the names of

other companies, ISO Oil or JA-OC Petroleum, in order to conceal

the fact that Dispetco was the supplier. The invoices reflect that

Dispetco would sell gas tax-free to one of these companies, then

these companies would sell the gas with tax to retailers. In

reality, Dispetco would sell the fuel with tax directly to

retailers. The tax money collected by Dispetco from the retailers

was not paid to the IRS. Dispetco drivers collected money from

retailers for fuel delivered under invoices in the names of JA-OC,

ISO, and others, and brought the cash to the Dispetco office.

Another company, General Distributors, owned by the

defendant Gatten, applied for and was denied an IRS form 637.

After the denial, a false form 637 was presented to Massey's

company, MBO. MBO began selling gas tax-free to General

Distributors immediately, though the authorization date on the

false IRS form 637 did not permit such sales until weeks later.

2

The government contends that this discrepancy, as well as other

deviations from standard business practice, incriminated Massey as

a co-conspirator. In addition, the government presented the

testimony of Hillhouse, a former employee of West, who recounted

statements West made to him that Massey was involved in the

conspiracy and was receiving a portion of the illegal profits.1

Massey testified extensively at trial and offered a plausible

lawful explanation for his association with Dispetco and General

Distributors.

Before trial, Massey sought a preliminary hearing to

determine the existence of a conspiracy. Massey contended that the

out of court statement of a co-conspirator was the only evidence of

his involvement, and that a separate hearing was required. The

district court denied Massey's motion. West pressed a motion to

dismiss based on pre-indictment delay. The district court denied

this motion as well.

At trial, IRS agent Jannett Reiner testified for the

government as a summary witness. Reiner traced all sales to

retailers purporting to be from JA-OC, ISO, and other similar

companies, back to Dispetco by using bills of lading and retailer

invoices. She computed that Dispetco owed the IRS $462,601. West

produced a psychologist who testified that West had a learning

disability which affected his ability to read and write. The

psychologist admitted, however, that West's intellectual ability

was "high average".

1

Record, volume 8 at 164-65.

3

In October 1993, after a nine-day jury trial, the

defendants, Gatten, Massey, and West, were each convicted of one

count of conspiring to defraud the United States by impeding,

impairing, obstructing, and defeating the lawful governmental

functions of the Treasury Department in the ascertainment,

computation, assessment, and collection of federal gasoline excise

taxes, in violation of 18 U.S.C. § 371. West and Gatten were also

convicted of three counts of attempting to evade federal gasoline

excise taxes, in violation of 26 U.S.C. § 7201 and 18 U.S.C. § 2.

The jury acquitted Massey on the substantive counts brought against

him.

II.

A. Defendant Harry West

1. Pre-indictment delay

Harry West was convicted of both conspiracy to defraud

the United States and two counts of attempting to evade federal

gasoline excise tax. On appeal, the defendant alleges that the

district court erred when it failed to dismiss the indictment

against him because of pre-indictment delay. Although West

acknowledges that he was indicted within the five year statute of

limitations period, West argues that the government's delay in

initiating the prosecution against him caused substantial prejudice

to his defense in violation of the Fifth Amendment.

As this Court recently noted in United States v. Crouch,

"although the primary protection against undue delay prior to

arrest, indictment, or information is the appropriate statute of

4

limitations, the Due Process clause of the Fifth Amendment offers

some protection from prejudice to a defendant's case arising from

this delay".2 Thus, a defendant who establishes a violation of Due

Process may be entitled to have the indictment against him

dismissed. The defendant, however, bears the burden of

establishing a violation of due process and, as a threshold matter,

must establish that he suffered actual and substantial prejudice as

a result of the government's delay.3

2

51 F.3d 480, 482 (5th Cir. 1995) (citing United States v.

Marion, 404 U.S. 307 (1971)).

3

Crouch, 51 F.3d at 484; United States v. Ballard, 779

F.2d 287, 293 (5th Cir.), cert. denied, 475 U.S. 1109 (1986). In

Crouch, this Court noted that the second part of the due process

analysis requires balancing the actual prejudice suffered by the

defendant against the government's reason for the delay. Crouch,

51 F.3d at 485. The Crouch decision also surveyed this Court's

previous decisions on the issue of pre-indictment delay and

determined that, unlike what some decisions in this Court have

held, a showing that the government delayed indictment in order to

gain a tactical advantage is not required to establish a violation

of the Fifth Amendment. Id. at 483 (citing United States v.

Townley, 556 F.2d 1312 (5th Cir. 1977) (construing United States v.

Lovasco, 431 U.S. 783 (1977))). Discussing the relevant precedent,

this Court stated:

[s]everal subsequent decisions overlooked

Townley's holding and relied on the dicta from

pre-Lovasco cases for stating that pre-

indictment delay may result in dismissal of an

indictment only when the delay resulted from

an ill-intentioned act by the government. In

accordance with our long-established rule, we

are bound to follow the earliest dispositive

articulation of a rule as the decision of one

"panel may not overrule the decision, right or

wrong, of a prior panel in the absence of en

banc reconsideration or superseding decision

of the Supreme Court." We therefore must

apply the Brand/Townley balancing test as the

binding precedent.

Id. In the instant case, however, we need not look beyond the

threshold question of actual prejudice because the defendant bears

5

In this case, West argues that he suffered actual

prejudice because Bryson, a potential witness and alleged co-

conspirator, was murdered and was, therefore, unavailable to

testify at trial. In addition, West alleges that the memories of

unidentified witnesses faded and various records were lost. The

defendant, however, does not identify specific evidence or

testimony regarding a material fact that became unavailable because

of the pre-indictment delay. Further, the defendant offered no

evidence that Bryson's testimony was "exculpatory in nature and

would have aided the defense".4 Contrary to the defendant's

arguments, "[v]ague assertions of lost witnesses, faded memories,

or misplaced documents are insufficient to establish a due process

violation from pre[-]indictment delay".5 West has failed to meet

his burden of establishing that he suffered actual prejudice

because of the government's delay in pursuing an indictment. We,

therefore, affirm the district court's refusal to grant the

defendant's motion for a dismissal of the indictment.

2. Sentencing

On appeal, West challenges three aspects of his sentence.

First, West argues that his offense level should not have been

increased by four points under U.S.S.G. § 3B1.1(a) for his role in

the offense. Although West concedes that some enhancement was

the burden of establishing that he incurred actual prejudice and

West has failed to do so here.

4

United States v. Beszborn, 21 F.3d 62, 66 (5th Cir.),

cert. denied, 115 S.Ct. 330 (1994).

5

Id. at 67.

6

appropriate, he argues that the evidence supports only a three-

level increase under § 3B1.1(b). Second, West contends that

U.S.S.G. § 3C1.1 should not have been applied to enhance his

offense level by two points for obstruction of justice. Finally,

West alleges that the criminal category assigned to him under

U.S.S.G. §4A1.1(c) based on a previous conviction for possession of

gambling paraphernalia was erroneous.

We review the application of the Sentencing Guidelines de

novo.6 And, we review the district court's findings of fact for

clear error.7 "Due deference is given to the district court's

application of the guidelines to the facts."8 And, "[i]f the

district court's account of the evidence is plausible in light of

the record viewed in its entirety, the court of appeals may not

reverse it even though convinced that, had it been sitting as the

trier of fact, it would have weighed the evidence differently".9

The Pre-sentence Investigation Report (PSI) concluded

that a four-level increase in West's offense level was appropriate

under § 3B1.1(a) because West "was an organizer or leader of a

criminal activity that involved five or more participants or was

otherwise extensive". This conclusion was based on West's

6

United States v. Brown, 7 F.3d 1155, 1159 (5th Cir.

1993).

7

United States v. Sowels, 998 F.2d 249, 251 (5th Cir.

1993), cert denied, 114 S.Ct. 1076 (1994).

8

United States v. Box, 50 F.3d 345, 358 (5th Cir. 1995).

9

United States v. Bermea, 30 F.3d 1539, 1575 (5th Cir.

1994), cert denied, 115 S.Ct. 1113 (1995), 115 S.Ct. 1825 (1995).

7

ownership of Dispetco. As detailed by the PSI, Dispetco would

purchase gas tax-free from MBO based on its valid form 637. The

gas was then sold to retailers with tax included but the tax was

never remitted to the IRS.

West points to his employment as a truck-driver for

Gatten at Gatson Oil, Inc. as well as to the testimony regarding

his illiteracy and argues that he did not occupy a leadership role,

but rather relied on the guidance of others involved, including

Gatten. As detailed in the PSI, however, West was directly

involved in concealing the transactions between Dispetco and the

retailers by the use of fictitious company names and the

preparation of false invoices. The PSI estimates that over 100

retailers were involved in Dispetco's activities. Clearly, the

attempted concealment of these transactions required an established

organization and a staff of truck drivers instructed by West on

which type of invoice to use.

In the light of these facts, we cannot say that the

district court was clearly erroneous when it determined that West

occupied a leadership role and, therefore, a four-level enhancement

was appropriate. We, therefore affirm the district court's

enhancement of West's sentence under § 3B1.1(a).

Next, West argues that there is insufficient evidence to

support the district court's determination that a two-level

increase in West's offense level for obstruction of justice was

warranted. U.S.S.G. § 3C1.1 provides for an enhancement when "the

defendant willfully obstructed . . . the administration of justice

8

during the investigation, prosecution, or sentencing" of the

underlying offense. This enhancement was based on the testimony of

a special agent of the IRS at the post-trial detention hearing, as

well as factual conclusions in the PSI, that West attempted to

intimidate several witnesses and that he may have been involved in

the murder of Bryson.10

West argues on appeal that since there was no direct

testimony regarding his alleged intimidation of witnesses, § 3C1.1

should not have been applied to him. In addition, West argues that

the testimony of Larry Noakes at trial regarding West's alleged

involvement in Bryson's murder was disregarded by the district

court at sentencing and cannot now be used to support the

enhancement for obstruction of justice.

West is correct that at the sentencing hearing, the

district court sustained West's objection to the use of Noakes'

testimony to support the enhancement. The district court decided

that since Noakes was unavailable and the district court had no

opportunity to evaluate his credibility, West's allegation that he

was an inherently unreliable witness would be accepted and Noakes'

testimony would not be considered for sentencing purposes. Even

without Noakes' testimony, however, there was sufficient evidence

to support the enhancement for obstruction of justice under §

3C1.1.

10

The IRS agent's testimony appears in the Record, volume

16 at 27-47.

9

The IRS agent, Susan Wong,11 testified that at least three

government witnesses made allegations that West had threatened or

intimidated them regarding their testimony. Agent Wong testified

that:

Several of the witnesses that testified at

trial had indicated to us, or in fact told us,

and also told the Grand Jury that they were in

fear of their life, they were scared, one of

the witnesses that testified in the trial was

actually scared to come to the courthouse the

day of the trial, the day it started--he--

without an agent accompanying him to the

building, and staying with him at all times.

We had to keep him pretty much out of sight on

a different floor.12

At sentencing, the district court "may consider relevant

information without regard to its admissibility under the rules of

evidence applicable at trial, provided that the information has

sufficient indicia of reliability to support its probable

accuracy".13 This Court has previously determined that for

sentencing purposes, even "uncorroborated hearsay evidence" is

sufficiently reliable.14 In addition, a PSI "generally bears

sufficient indicia of reliability to be considered by the trial

11

Susan Wong is a special agent with the criminal

investigation division of the IRS. Record, volume 16 at 28. Agent

Wong was assigned as the case agent for the investigation of Larry

West and his co-conspirators.

12

Record, volume 16 at 29.

13

U.S.S.G. § 6A1.3; see e.g., United States v. Scott, 48

F.3d 1389, 1395 (5th Cir. 1995); Bermea, 30 F.3d at 1576; United

States v. Smith, 13 F.3d 860, 863 n.5 (5th Cir.), cert. denied, 114

S.Ct. 2151 (1994).

14

United States v. Golden, 17 F.3d 735, 736 (5th Cir.

1994).

10

court as evidence in making the factual determinations required by

the sentencing guidelines".15

In this case, the district court had before it sufficient

competent evidence to indicate that a sentence enhancement for

obstruction of justice was warranted. West's contention that

testimony regarding the statements of others cannot be used to

support the enhancement is not correct. We find no error in the

district court's decision to credit the testimony of Agent Wong and

accept the factual conclusions of the PSI. We, therefore, affirm

the enhancement of West's sentence for obstruction of justice.

Finally, West contends that a prior misdemeanor

conviction for possession of gambling paraphernalia in Texas should

not have been considered in determining his criminal history

category. Under U.S.S.G. § 4A1.2(c), a prior misdemeanor

conviction is considered in determining a defendant's criminal

history category unless it is an exempted offense or similar to one

of the exempted offenses listed in the Sentencing Guidelines.

These excluded offenses, and any similar offenses, are only

considered in determining a defendant's criminal history category

if the sentence was at least one year in prison or thirty days

probation or if the prior offense is similar to the offense for

which the defendant is currently being sentenced.

§ 4A1.2(c)(1) lists "gambling" as one of the excluded

offenses. West argues that possession of gambling paraphernalia is

15

Bermea, 30 F.3d at 1575; see also, United States v.

Valencia, 44 F.3d 269, 274 (5th Cir. 1995).

11

similar to the offense of gambling and, therefore, his prior

offense should be considered an excluded offense. If possession of

gambling paraphernalia is found to be similar to the offense of

gambling, this prior misdemeanor conviction would not be considered

because West's sentence was only three days imprisonment and the

prior offense is not similar to the current offenses of tax

evasion. Thus, the issue is whether the offense of possession of

gambling paraphernalia is similar to the offense of gambling under

U.S.S.G. §4A1.2.

In United States v. Hardeman, this Court set up a "common

sense" approach to determine whether a prior offense is similar to

an exempted offense.16 We determined that "all possible factors of

similarity" should be considered, including:

a comparison of punishments imposed for the

listed and unlisted offenses, the perceived

seriousness of the offense as indicated by the

level of punishment, the elements of the

offense, the level of culpability involved,

and the degree to which the commission of the

offense indicates a likelihood of recurring

criminal conduct.17

We engage in an analysis of these factors while keeping in mind

that § 4A1.2(c) "is designed to take into account the seriousness

of the past offense and the degree to which it suggests the

possibility of future criminality".18

16

933 F.2d 278, 281 (5th Cir. 1991). See e.g., United

States v. Gadison, 8 F.3d 186 (5th Cir. 1993); United States v,

Moore, 997 F.2d 30 (5th Cir.), cert. denied, 114 S.Ct. 647 (1993).

17

Hardeman, 933 F.2d at 281.

18

Id.

12

As noted by the district court, Texas law defines

possession of gambling paraphernalia as a class A misdemeanor with

a possible fine of up to $3000 and a prison term of up to one

year.19 Gambling, on the other hand, is defined as a class C

misdemeanor with the possibility of a fine of up to $500 and no

possibility of imprisonment.20 The elements of gambling require

only that the accused placed a bet while possession of gambling

paraphernalia requires proof of "intent to further gambling".21

Thus, Texas law defines possession of gambling as a more serious

offense with a more serious punishment. Further, the crime of

gambling apparently targets individuals who place illegal bets

while possession of gambling paraphernalia seems to target

individuals who make these illegal activities available to others.

In the light of the more serious punishment and higher

level of culpability required for possession of gambling

paraphernalia, we agree with the district court that West's offense

19

Record, volume 17 at 8-9.

20

Id.

21

The offense of gambling is defined at Texas Penal Code

§47.02, which states that:

a person commits an offense if he makes a bet

on the partial or final result of a game or

contest . . . [or] on the result of any

political nomination, appointment, or election

. . .[or] plays and bets for money . . . at

any game played with cards, dice, balls, or

any other gambling device . . . .

Texas Penal Code §47.06 defines the offense for which West was

convicted and states that: "[a] person commits an offense if, with

the intent to further gambling, the person knowingly owns,

manufactures, transfers commercially, or possesses gambling

paraphernalia".

13

is not similar to gambling under § 4A1.2. Under the Sentencing

Guidelines, West's prior conviction should be included in

determining his criminal history category. We, therefore, reject

West's argument and affirm the district court's inclusion of West's

prior conviction for possession of gambling paraphernalia in

relevant conduct used to determine his sentence.

B. Defendant Richard Gatten

Like West, Richard Gatten was convicted of both

conspiracy to defraud the United States and two counts of

attempting to evade federal gasoline excise tax. On appeal, he

contends that the government's summary witness, Jannett Reiner, was

not qualified to testify as an expert. Also, Gatten argues that

the district court erroneously permitted Reiner to bolster the

testimony of a key prosecution witness, Ray Long, by referring to

and restating certain portions of Long's testimony. In response,

the government argues that Reiner is fully qualified to testify as

an expert witness on matters of accounting and evasion of excise

tax. The government also contends that the purpose of Reiner's

restatement of Long's testimony was to identify the evidence upon

which she based her calculations of tax due, as is appropriate for

a summary witness.

Federal Rule of Evidence 702 provides:

If scientific, technical, or other specialized

knowledge will assist the trier of fact to

understand the evidence or to determine a fact

in issue, a witness qualified as an expert by

knowledge, skill, experience, training, or

education, may testify thereto in the form of

an opinion or otherwise.

14

The district court is given wide discretion to admit or to exclude

expert testimony.22 We review its decision for manifest error.23

"To qualify as an expert, the witness must have specialized

knowledge or training such that his or her testimony will assist

the fact finder in the determination of a fact issue."24

In this case, agent Reiner testified regarding her

training and experience.25 Reiner holds a Bachelor of Science in

accounting.26 At the time of trial, she had served the IRS for

seven years as a revenue agent, during four of which she acted as

an excise tax specialist.27 Agent Reiner received general training

when she started as a revenue agent and participated in additional

training in order to specialize in the area of excise tax.28 In

addition, agent Reiner participates in annual continuing education

in the areas of both general tax and excise tax.29

In the light of agent Reiner's background, we cannot say

that the district court committed manifest error when it admitted

the testimony of agent Reiner as a summary expert. She has

22

London v. Mac Corporation of America, 44 F.3d 316, 318

(5th Cir. 1995); Moore, 997 F.2d at 57.

23

London, 44 F.3d at 318; Moore, 997 F.2d at 57.

24

United States v. Townsend, 31 F.3d 262, 270 (5th Cir.

1994), cert. denied, 115 S.Ct. 773 (1995).

25

Record, volume 11 at 134-35.

26

Id.

27

Id.

28

Id.

29

Id.

15

specialized training and experience which made her adequately

suited to assist the jury in understanding the large amount of

documentary evidence presented by the government and the tax

implications. We, therefore, reject Gatten's argument and affirm

the district court's decision to admit agent Reiner as an expert.

Gatten also argues that agent Reiner should not have been

allowed to restate the testimony of Ray Long because by doing so,

she impermissibly affected the jury's assessment of Long's

credibility. That is, agent Reiner's testimony bolstered and

confirmed Long's damaging testimony against the defendants. The

government, in response, points out that it is the purpose of a

summary witness to reference other evidence in order to identify

the evidence used in determining the amount of taxes evaded.30

This Court addressed an argument similar to the one

pressed here by Gatten in United States v. Moore.31 In Moore, four

defendants convicted on various charges surrounding the preparation

of false tax returns argued that by repeating only damaging

testimony, the expert summary witness of the IRS had "impermissibly

made implicit credibility choices for the jury".32 This Court

30

In addition, the government cites the district judge's

instruction to the jury regarding agent Reiner's role as a summary

witness. In response to an objection by the defense, the judge

stated that: "[t]he jury is going to have to consider its own

recollection of the testimony. This is the agent's assessment of

the testimony for purposes of demonstrating the figures she's

computed." Record, volume 11 at 142.

31

997 F.2d 55 (5th Cir.), cert. denied, 114 S.Ct. 647

(1993).

32

Id. at 59.

16

rejected that argument because the IRS agent merely recited factual

information and made no express comments regarding the credibility

of the witnesses.33 We held that admission of the IRS expert's

testimony, which included a summary of testimony given by other

government witnesses, was not error because the agent properly

referenced other evidence when necessary to explain his analysis of

the case.34

The circumstances are the same in this case. Agent

Reiner referred to Long's testimony while in the process of

explaining how the defendants attempted to conceal the sales

transactions between Dispetco and the retailers.35 The testimony

of Long and others was used by the agent to explain the basis of

her findings and calculation of the taxes owed. She made no

comment regarding Long's credibility. In addition, the judge

reminded the jury that agent Reiner's role was to summarize

evidence in order to explain the tax liability evaded by the

defendants.36 In these circumstances, the district court did not

err in admitting the summary testimony of agent Reiner.

33

Id. (citing United States v. Price, 722 F.2d 88 (5th

Cir. 1983)).

34

Id. The summary expert's testimony is also limited by

Federal Rule of Evidence 704. See, United States v. Townsend, 31

F.3d 262 (5th Cir. 1994), cert. denied, 115 S.Ct. 773 (1995).

35

Record, volume 11 at 140, 142.

36

In response to an objection by the defense, the judge

stated that: "[t]he jury is going to have to consider its own

recollection of the testimony. This is the agent's assessment of

the testimony for purposes of demonstrating the figures she's

computed." Record, volume 11 at 142.

17

C. Defendant Thomas Massey

1. Admission of Specific Instance Testimony

Massey argues on appeal that the district court erred

when it ruled that the government could cross-examine the character

witnesses that Massey intended to call with "have you heard"

questions regarding Massey's indictment on state charges similar to

the federal charges that are the basis of his conviction. Under

Federal Rule of Evidence 405(a), cross-examination of a witness

offering character evidence can include questions regarding

relevant, specific instances of conduct by the defendant. Thus,

"[o]nce a witness has testified concerning a defendant's good

character, it is permissible during cross-examination to attempt to

undermine his credibility by asking him whether he has heard of

prior misconduct of the defendant which is inconsistent with the

witness' direct testimony".37

There are two limits on this type of cross-examination.

First, the government must have a good faith factual basis for the

alleged prior misconduct.38 Second, the incidents must be relevant

to the trial.39 Massey concedes that the government had more than

a good faith factual basis but argues that the state charges are

37

United States v. Wells, 525 F.2d 974 (5th Cir. 1976).

38

Wells, 525 F.2d at 977; see also, United States v.

Luffred, 911 F.2d 1011, 1016 (5th Cir. 1990); United States v.

McCollom, 664 F.2d 56, 58 (5th Cir. 1981), cert. denied, 456 U.S.

934 (1982); United States v. Renfro, 620 F.2d 497, 501-02 (5th

Cir.), cert denied, 449 U.S. 921 (1980).

39

Wells, 525 F.2d at 977; Luffred, 911 F.2d at 1016;

McCollom, 664 F.2d at 58; Renfro, 620 F.2d at 497.

18

not relevant to his veracity, the character trait about which his

character witnesses were to testify. This argument is without

merit. An indictment alleging intentional evasion of state

gasoline taxes is relevant to an inquiry into Massey's capacity for

honesty. The district court was not in error when it stated that

the government would be allowed to cross-examine character

witnesses regarding the pending state charges as is specifically

allowed by Rule 405(a). In addition, the district court's refusal

to hold a separate hearing on this issue was not an abuse of its

discretion in matters of the admission of evidence. We affirm.

2. Admission of Hearsay Evidence under FRE 801(d)(2)(e)

Massey also argues that the admission of the testimony of

the government's witness, Hillhouse, recounting statements made by

West regarding Massey's involvement in the conspiracy without the

benefit of a hearing to determine the existence of the conspiracy,

was an abuse of discretion. Massey concedes that West's out-of-

court statements to Hillhouse are not hearsay under Federal Rule of

Evidence 801(d)(2)(E),40 but argues that he was entitled to a

hearing to determine the existence of the conspiracy under United

States v. Bourjaily.41

40

Federal Rule of Evidence 801(d)(2)(E) provides

A statement is not hearsay if--

(2) the statement is offered against a party

and is (E) a statement by a coconspirator of a

party during the course or in furtherance of

the conspiracy.

41

483 U.S. 171 (1987).

19

In United States v. Fragoso,42 this Court rejected a

similar argument and, in response to the defendant's argument that

Bourjaily required a hearing, stated "[w]e think this argument

erroneously transforms a descriptive portion of the Court's opinion

in Bourjaily into a mandatory procedure. Bourjaily did not purport

to address the procedure for proving the admissibility of a co[-

]conspirator statements."43 Thus, contrary to Massey's argument,

no hearing is required and the district court was free to allow

admission of the testimony before making its determination of

whether the testimony fit within Rule 801(d)(2)(E).44 And, although

the district court did not make specific findings regarding the

existence of the conspiracy, "[i]n denying the defendant's motion

for directed verdict of acquittal at the close of the trial, the

court implicitly found the evidence sufficient to establish a

conspiracy".45 Thus, we affirm.

3. Sufficiency of the Evidence

Finally, Massey argues that the evidence was insufficient

to support his conviction for conspiracy to evade federal excise

taxes. We must determine whether, viewing the evidence in the

light most favorable to the jury's verdict, "a rational jury could

have found the essential elements of the offense beyond a

42

978 F.2d 896 (5th Cir. 1992), cert denied, 113 S.Ct. 1664

(1993).

43

Id. at 900.

44

Id. at 900-01; United States v. Ruiz, 987 F.2d 243, 246

(5th Cir.), cert. denied, 114 S.Ct. 163 (1993).

45

Fragoso, 978 F.2d at 901.

20

reasonable doubt".46 In reviewing the evidence supporting the

conviction:

It is not necessary that the evidence exclude

every rational hypothesis of innocence or be

wholly inconsistent with every conclusion

except guilt, provided a reasonable trier of

fact could find the evidence establishes guilt

beyond a reasonable doubt. We accept all

credibility choices that tend to support the

jury's verdict.47

In this case, the government presented evidence that

Massey sold a high volume of fuel to Dispetco at a very low cost.

In addition, when West purchased Dispetco and began his scheme to

evade federal excise tax, sales from MBO to Dispetco increased

dramatically. As Massey points out, however, all the sales

transactions between MBO and Dispetco or General Distributors were

legal because both Dispetco and General Distributors held a form

637.48 The government also presented the testimony of Hillhouse who

recounted statements by West that Massey was in on the conspiracy

and was receiving a portion of the illegal profits. Massey, in

turn, testified at the trial that he had no knowledge of the

conspiracy and did not knowingly receive any illegal proceeds from

the scheme.

The evidence presented by the government is minimal.

There was, however, direct testimony of Massey's involvement by

46

United States v. Ragan, 24 F.3d 657, 659 (5th Cir. 1994);

United States v. Pofahl, 990 F.2d 1456, 1467 (5th Cir.), cert.

denied, 114 S.Ct. 266, 114 S.Ct. 560 (1993).

47

Pofahl, 990 F.2d at 1467. (citations omitted).

48

Dispetco held a valid form 637 while General Distributors

presented MBO with a forged form 637.

21

Hillhouse, a close associate of West. Massey attempted to rebut

this evidence with his own testimony that he was innocent of any

wrong-doing. The jury had the power to weigh the credibility of

these witnesses. Based on the evidence presented, a reasonable

jury could have found Massey guilty beyond a reasonable doubt. We,

therefore, affirm Massey's conviction.

III.

Since we find no error, we AFFIRM the convictions of all

three defendants and West's sentence.

22