In United States v. Galecki, --- F.4th ---, No. 20-10288 (9th Cir. 2023), the Court affirmed Benjamin Galecki’s and Charles Burton Ritchie’s drug-trafficking and money-laundering convictions in connection with their distribution of “spice,” a synthetic cannabinoid product; reversed their mail and wire fraud convictions; and remanded for further proceedings. The opinion is long and covers a host of issues.
First, the defendants argued that all of their convictions should be set aside on the ground that the district court erred in refusing to suppress evidence seized during or as a result of a raid at Zencense’s Nevada warehouse. The Court held that because the warehouse was leased by the company and not by the defendants personally, they failed to establish that they have Fourth Amendment standing to challenge the search and that the district court therefore properly denied their motions to suppress.
Next, considering the record as a whole, the Court concluded that a rational jury could find beyond a reasonable doubt that the defendants had the scienter required for an Analogue Act case.
The Court also rejected the defendants' challenge to the deliberate indifference instruction given at trial, and also rejected the defendants' as-applied vagueness challenge to the statutory definition of a “controlled substance analogue” in the Analogue Act.
The Court found no error in district court’s failure to compel the Government to grant use immunity to two potential defense witnesses who would have testified as to the defendants’ scienter concerning whether XLR-11 was covered by the Analogue Act. The Court held that defendants failed to make the requisite showing of a direct contradiction in testimony that resulted in a fundamentally unfair distortion of the fact-finding process.
Rejecting the defendants’ contention that the evidence was insufficient to support their convictions for operating a continuing criminal enterprise in violation of the CSA, the Court held that the evidence was sufficient to permit a rational jury to conclude that the defendants acted “in concert” with five or more persons.
Turning to the mail and wire fraud convictions, the Court held that "[w]hile [a] misrepresentation may be material without inducing any actual reliance,” —as in the case of a false statement to an undercover law enforcement officer who is secretly aware of the defendant’s fraudulent scheme—there can be no materially false statement when both the listener and the hearer know and intend that the words being used have the same distinctive meaning." Thus, the defendants were entitled to judgment of acquittal on these counts, because the Government presented no evidence that the specific alleged misrepresentations were materially false to anyone who bought Zencense’s products.
Finally, the Court addressed whether the jury’s general verdict on the money laundering offenses—which did not specify on which predicate offenses it relied—may stand. The Court held that any error under Yates v. United States, 354 U.S. 298 (1957), in allowing the money laundering convictions to be based on the mail and wire fraud conduct, rather than on the CSA offenses, was harmless beyond a reasonable doubt.
