HEROEL HERNANDEZ, PETITIONER V. UNITED STATES OF AMERICA No. 89-6848 In The Supreme Court Of The United States October Term, 1989 On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit Brief For The United States In Opposition OPINION BELOW The opinion of the court of appeals (Pet. App. 1a-6a) is unreported. JURISDICTION The judgment of the court of appeals was entered on December 6, 1989. The petition for a writ of certiorari was filed on March 5, 1990. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether, in this narcotics money laundering prosecution, the district court properly admitted into evidence, under Fed. R. Evid. 404(b), testimony about a previous incident in which petitioner gave misleading statements to federal authorities about concealed cash. STATEMENT After a jury trial in the United States District Court for the Central District of California, petitioner was convicted on one count of conspiracy to possess and distribute a controlled substance, in violation of 21 U.S.C. 846, and two counts of money laundering, in violation of 18 U.S.C. 1956(a)(1)(B)(i) and (ii). He was sentenced to a term of seven years' imprisonment, to be followed by a term of five years' probation, and fined $5,000. 1. The evidence at trial showed that petitioner engaged in two currency transactions, each involving approximately $250,000 cash, within a two-hour period on November 5, 1986. /1/ At about 2:00 p.m., petitioner arrived at a warehouse in Vernon, California, outside of Los Angeles. Petitioner met Rudy Ariano, a representative of a New York area narcotics money laundering organization, and Brent Robbins, an undercover FBI agent. Petitioner asked Robbins if he was with the FBI; Robbins jokingly said yes and Ariano assured petitioner that Robbins was "okay." Gov't C.A. Br. 4. Petitioner then retrieved from his car a cardboard box containing approximately $250,000 cash. While the money was being counted, petitioner and Ariano discussed the use of beepers and mobile phones. Petitioner remarked that using mobile phones was dangerous, since the signal can be intercepted. Petitioner told Ariano that he used mobile phones only for his "legal business" and never for his "illegal businesses." Id. at 5; see id. at 3-5. Petitioner left the warehouse for about two hours, and returned later that afternoon with another cardboard box containing approximately $250,000 cash. Petitioner had alerted Ariano of his arrival by using a beeper. During this delivery, petitioner talked about the importance of "camouflaging" his activities. Gov't C.A. Br. 5. Petitioner also stated that he would rather launder money than deal in narcotics, since the former activity is less likely to result in serving a prison sentence. Ibid. /2/ Over petitioner's objection, the government presented testimony about a previous incident in which petitioner gave misleading statements to federal authorities about concealed cash. The district court admitted that testimony into evidence under Fed. R. Evid. 404(b), /3/ as tending to show petitioner's knowledge and intent regarding the charged money laundering scheme. DEA Agent Chris Verdugo testified that on April 24, 1986 (some six months before petitioner's warehouse deliveries), he had stopped petitioner and his wife at Los Angeles International Airport; petitioner's wife was about to board a flight to Florida. Petitioner's wife denied that she was carrying narcotics or large amounts of currency. Petitioner stated that his wife was carrying certain computer documents inside envelopes. The agent later searched those envelopes and discovered $159,000 cash taped inside magazines. Gov't C.A. Br. 6-7. /4/ The district court instructed the jury that it could "consider such evidence, not to prove (petitioner) did the acts charged here, but only to prove (his) state of mind; that is, that (petitioner) acted with the necessary intent and not through accident or mistake." Tr. 815. At trial, petitioner did not dispute either delivering the cash or making the incriminating statements. /5/ In his defense, petitioner testified that someone dropped off the cash at his home while he was out. That individual, according to petitioner, called him the next day and instructed him to deliver the cash to the warehouse. Petitioner complied -- and tried to "play() the role of money launderer" -- in order to "absolve himself and family of any responsibility attached to holding (the money)." Pet. 4. 2. The court of appeals affirmed. Pet. App. 1a-6a. In the court of appeals, petitioner contended (Pet. C.A. Br. 18-23) that the district court had abused its discretion in admitting evidence regarding the airport incident under Fed. R. Evid. 404(b). The court of appeals rejected that claim, finding "no error" in the district court's ruling. Pet. App. 2a. The court of appeals concluded that (t)here was sufficient evidence from which a jury could find that (petitioner) had committed the cited acts; the attempted evasion of the currency reporting laws was not remote in time or dissimilar from the warehouse transaction; and evidence from the airport stop was relevant to prove the knowledge and intent elements of the charged offenses, independent of any aspersions it may have cast upon (petitioner's) character. Id. at 2a-3a (citing United States v. Miller, 874 F.2d 1255, 1268 (9th Cir. 1989)). Moreover, the court of appeals found "no abuse of discretion in the district court's determination under Fed. R. Evid. 403 that the probative value of the evidence was not substantially outweighed by any potential prejudice to (petitioner)." Pet. App. 3a. /6/ ARGUMENT 1. Petitioner renews his contention (Pet. 6-12) that the district court abused its discretion in admitting evidence regarding the airport incident under Fed. R. Evid. 404(b). Courts have long recognized that, under Rule 404(b), similar act evidence "which tends to undermine a defendant's innocent explanation for his act will be admitted." 2 J. Weinstein & M. Berger, Weinstein's Evidence Paragraph 404(12), at 404-84 (1989); see, e.g., United States v. Shannon, 836 F.2d 1125, 1129 (8th Cir.) (evidence of defendant's other large currency transactions admissible under Rule 404(b) to show the defendant's intent in prosecution for failure to file currency transactions reports), cert. denied, 486 U.S. 1058 (1988); United States v. Crachy, 800 F.2d 83, 87 (6th Cir. 1986) (evidence of defendant's previous acts of hiding counterfeit money admissible under Rule 404(b) to show defendant's intent in prosecution for illegal possession and delivery of counterfeit money). Indeed, as this Court has pointed out, such "(e)xtrinsic act evidence may be critical * * * especially when (the) issue involves the actor's state of ind and the only means of ascertaining that mental state is by drawing inferences from conduct." Huddleston v. United States, 485 U.S. 681, 685 (1988). In this case, the evidence admitted under Rule 404(b) showed that petitioner accompanied his wife to an airport and misled federal authorities about the $159,000 cash his wife secretly carried onto the plane. That evidence was plainly relevant -- and admissible under Rule 404(b) -- to show whether petitioner was acting with the requisite intent some six months later when he transported $500,000 cash to a Los Angeles warehouse. In other words, that evidence was probative of a disputed issue at trial -- petitioner's intent, since the "jury (could) reasonably conclude" (Huddleston, 485 U.S. at 689) from that circumstantial evidence that petitioner's previous attempt to mislead federal authorities regarding an unreported currency transaction undercut whatever innocent explanation he offered for his later conduct. Even assuming the evidence was otherwise admissible under Rule 404(b), petitioner contends that the district court "never undertook the requisite balancing between the probative value and prejudicial effect (of that evidence)." Pet. 11. That claim is belied by the record, which showed that the district court excluded certain evidence regarding the airport incident as unduly prejudicial, namely, evidence that one of the envelopes containing cash that petitioner's wife carried was addressed to a convicted narcotics trafficker. See Gov't C.A. Br. 21 & n.10. In any event, the court of appeals, upon a review of the record, expressly upheld "the district court's determination under Fed. R. Evid. 403 that the probative value of the evidence was not substantially outweighed by any potential prejudice to (petitioner)." Pet. App. 3a. 2. Petitioner also suggests (Pet. 9-10) that the court of appeals' decision conflicts with United States v. Colon, 880 F.2d 650 (2d Cir. 1989). There, the court of appeals acknowledged that evidence of the defendant's previous heroin sales may have been admissible under Rule 404(b) to show his intent in pointing out another individual to an undercover officer after that officer had asked about buying heroin. See 880 F.2d at 656-658. Nonetheless, the Second Circuit held that such evidence should have been excluded as irrelevant because the defendant's intent was not a contested issue at trial, i.e., the defendant denied having committed the alleged criminal acts. See id. at 658-662. Here, by contrast, petitioner's intent was plainly at issue since his defense focussed on an otherwise innocent explanation for his transporting the cash. Accordingly, the decision below is consistent with Colon. /7/ CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. KENNETH W. STARR Solicitor General EDWARD S.G. DENNIS, JR. Assistant Attorney General SEAN CONNELLY Attorney MAY 1990 /1/ The evidence, which petitioner does not dispute here, is summarized in the government's brief filed in the court of appeals. See Gov't C.A. Br. 3-9. /2/ As arranged with the New York organization, the $500,000 (less various commissions) was wire transferred through a New York bank to a Panamanian bank, where it was held for the benefit of an organization belonging to the Medellin cocaine cartel. Gov't C.A. Br. 6. /3/ Rule 404(b) provides: Evidence of other crimes, wrongs, or acts is not admissible to prove the character of the person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. /4/ The government filed a civil forfeiture action against the seized cash. Petitioner and the government eventually settled the case. Under the settlement, the government retained approximately $90,000; petitioner received the balance. No criminal charges were filed as a result of the seizure. See Gov't C.A. Br. 7 n.4; Pet. 7 n.2. /5/ Petitioner's concession was not surprising given the FBI's videotape surveillance of what occurred at the warehouse. See Gov't C.A. Br. 4. /6/ The court of appeals also rejected petitioner's claims that the district court had erroneously instructed the jury, Pet. App. 3a-4a, that the district court had improperly excluded petitioner's proffered testimony about his fear, id. at 4a, that the government's rebuttal testimony was improper, id. at 4a-5a, and that certain discovery rulings prejudiced the defense, id. at 5a. Petitioner has not sought further review of those claims. /7/ The courts of appeals have divided over whether a defendant may effectively preclude the admission of Rule 404(b) evidence by not contesting the issue of intent, i.e., by denying having committed the alleged criminal acts. Compare United States v. McKoy, 771 F.2d 1207, 1214 (9th Cir. 1985) with United States v. Burkett, 821 F.2d 1306, 1309 (8th Cir. 1987). This case, however, is not an appropriate vehicle for resolving that question because "even those circuits that follow (the Second Circuit's) approach uniformly require that the defendant affirmatively take intent out of the case, generally by stipulation or concession." United States v. Manner, 887 F.2d 317, 322 n.2 (D.C. Cir. 1989) (citing cases), cert. denied, 110 S. Ct. 879 (1990). Here, petitioner did no such thing. To the contrary, petitioner's intent was the principal disputed issue at trial. See p. 4 and note 5, supra. Petitioner also suggests in passing (Pet. 10-11) that the decision below conflicts with United States v. Brown, 880 F.2d 1012 (9th Cir. 1989). In that murder prosecution, the court of appeals held that evidence of the defendant's previous shooting and assault of other victims was not admissible under Rule 404(b), because such evidence was not relevant to any disputed issue. 880 F.2d at 1014-1016. Here, by contrast, the evidence about the previous airport incident was plainly relevant to the disputed issue of petitioner's intent in transporting substantial amounts of cash to the warehouse. Accordingly, the decision below is consistent with Brown.