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United States v. Delgrosso

United States Court of Appeals, Eighth Circuit

March 30, 2017

United States of America Plaintiff- Appellee
v.
Philip Delgrosso, also known as Phillip Delgrosso Defendant-Appellant United States of America Plaintiff- Appellee
v.
Jeffrey Cain Defendant-Appellant

          Submitted: February 9, 2017

         Appeals from United States District Court for the Western District of Missouri - Springfield

          Before SMITH, Chief Judge, [1] GRUENDER, and BENTON, Circuit Judges.

          GRUENDER, Circuit Judge.

         A jury found Philip Delgrosso and Jeffrey Cain guilty of conspiracy to distribute methamphetamine, money laundering, and conspiracy to commit money laundering. Delgrosso also was found guilty of failing to file Internal Revenue Service ("IRS") Form 8300. On appeal, Delgrosso argues that the district court[2] erred by (1) denying his motion for a new trial based on newly discovered evidence; (2) denying his motion for a new trial based on government misconduct; (3) instructing the jury on "willful blindness"; (4) denying his motion for a judgment of acquittal after the verdict; and (5) denying safety-valve relief at sentencing. Cain joins in Delgrosso's first and third points on appeal. For the reasons discussed below, we affirm.

         I. Background

         Delgrosso and Cain operated an automobile dealership called Missouri Auto Group. In 2013, they became acquainted with Jerry Wright. Wright approached the two men with a proposed business arrangement: he would provide funds for them to purchase automobiles at dealer auctions, they would sell those automobiles on the Missouri Auto Group lot, and the three men would split the profits. According to Delgrosso, Wright admitted to them that he had a criminal past but claimed that he acquired his money through legitimate means such as scrapping metal, selling other cars, and saving money from working in prison.

         In reality, Wright acquired the money by operating a drug trafficking organization ("DTO"). Associates of the DTO would purchase methamphetamine in Phoenix, Arizona and transport the methamphetamine back to Missouri for distribution. Wright continued to operate this DTO during his acquaintance with Delgrosso and Cain.

         Delgrosso and Cain accepted Wright's offer, and they also hired him to work part-time at Missouri Auto Group as an independent contractor detailing cars. Over the next few months, Wright passed over $150, 000 through Missouri Auto Group by providing cash to Delgrosso and Cain to purchase vehicles. For example, on one occasion, Cain purchased a vehicle in the name of Missouri Auto Group with more than $13, 000 in cash provided by Wright. On other occasions, Delgrosso brought cash provided by Wright to Regions Bank to purchase cashier's checks in the name of Missouri Auto Group. Delgrosso then used these checks to purchase vehicles at 166 Auto Auction.

         Eventually, following an investigation by Drug Enforcement Agency task force officer Brian Walsh and other law enforcement officers, the DTO was uncovered and its members arrested. As a result, thirteen of the DTO members, including Wright, pled guilty to methamphetamine and money laundering offenses. Delgrosso and Cain were charged with conspiracy to distribute methamphetamine, money laundering, and conspiracy to commit money laundering. Delgrosso also was charged with failure to file IRS Form 8300. Delgrosso and Cain proceeded to trial.

          Previously, in response to an IRS subpoena to Missouri Auto Group, Delgrosso wrote an eleven-page letter detailing his relationship with Wright, stating that Wright had purchased multiple vehicles through Missouri Auto Group with funds that Delgrosso insisted were from legitimate sources. At trial, Delgrosso testified consistent with his letter. He denied any knowledge that Wright was involved with drug sales. He also insisted that he had questioned Wright about the source of the money before accepting his offer. However, Delgrosso admitted he never conducted a background check, confirmed Wright's ownership of the vehicles he claimed to own, or checked with any references or with Wright's probation officer. Cain declined to testify.

         Wright invoked the Fifth Amendment and refused to testify at the trial of Delgrosso and Cain. However, other members of the DTO testified about their knowledge of the two men. They testified that Cain smoked and snorted methamphetamine with other members of the DTO. According to one member, Robert Cantrell, Cain requested that DTO members remove from the Missouri Auto Group lot a vehicle with five pounds of methamphetamine concealed in it because someone was coming to visit the lot. Cantrell also testified that Wright gave methamphetamine to him while Cain sat at the desk in front of them and that, on another occasion, Wright gave methamphetamine to someone else while in the same room as Delgrosso. Another member, Perry Adams, testified that Delgrosso called Wright "convict" and often admonished Wright about avoiding the appearance of unexplained wealth. The Government also introduced Delgrosso's past criminal convictions showing that he had previously attempted to launder money by converting illicit funds into a cashier's check.

         At the end of the trial, the district court gave the jury a "willful blindness" instruction, stating that the jury may find Delgrosso and Cain acted "knowingly" if it found beyond a reasonable doubt that they "believed there was a high probability that the financial and monetary transactions [they engaged in with Wright] involved funds derived from criminal activity and that they took deliberate actions to avoid learning of that fact." Neither defendant objected to this instruction. The jury found Delgrosso and Cain guilty on all counts. Delgrosso moved for a judgment of acquittal after the verdict, which was denied.

         After the trial, Wright wrote an affidavit from prison claiming that he misled Delgrosso and Cain and that he believed they had no knowledge of the drug conspiracy. Prior to sentencing, Delgrosso and Cain filed motions for a new trial based on this newly discovered evidence and also based on government misconduct. The district court denied these motions.

         At sentencing, Delgrosso argued that he met all of the requirements for safety-valve relief, including the full disclosure requirement. The district court disagreed, stating that Delgrosso's testimony "most certainly was not forthright and most certainly was not designed to come clean." Hence, the district court overruled Delgrosso's objection and sentenced both Delgrosso and Cain to 120 months' imprisonment, the statutory minimum for the ...


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