UNITED STATES of America, Plaintiff-Appellee, v. Kenneth M. BAKER, DefendantAppellant.

UNITED STATES of America, Plaintiff-Appellee, v.

Ralph HALE, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellant, v. Kenneth BAKER; Ralph Hale, Defendants-Appellees.

Nos. 94-30125, 94-30138 and 94-30144. United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 5, 1995. Decided Aug. 21, 1995.

As Amended on Denial of Rehearing and Rejection of Suggestions for Rehearing En Bane Oct. 6, 1995.*

Douglas Anderson, Missoula, MT, for defendant-appellant-cross-appellee B aker.

Douglas D. Sulkosky, Tacoma, WA, for defendant-appellant-cross-appellee Hale.

Chris A. McLean, Asst. U.S. Atty., Helena, MT, for plaintiff-appellee-cross-appellant U.S.

Ronald B. MacDonald, Datsopoulos, MacDonald & Lind, Missoula, MT, for amicus curiae Feist.

Keith R. Strong, Great Falls, MT, for amicus curiae Dorothy Clinkenbeard.

Michael J. Sherwood, Missoula, MT, for amicus curiae Larry Clinkenbeard.

Appeals from the United States District Court for the District of Montana.

Before: WRIGHT, FERGUSON and THOMPSON, Circuit Judges.

DAVID R. THOMPSON, Circuit Judge: Appellants Kenneth M. Baker and Ralph Hale (defendants) were convicted in federal district court of one count each of conspiring to traffic in contraband cigarettes, in violation of 18 U.S.C. § 2342 and 18 U.S.C. § 371; two counts each of trafficking in contraband cigarettes, in violation of 18 U.S.C. § 2342(a); one count each of conspiring to commit racketeering activity, in violation of 18 U.S.C. § 1962(d); one count each of committing racketeering activity, in violation of 18 U.S.C. § 1962(c); and 671 and 218 counts, respectively, of money laundering, in violation of 18 U.S.C. § 1956(a)(l)(A)(i).

The defendants appeal their convictions and sentences. They contend that: (1) the Contraband Cigarette Trafficking Act (CCTA), 18 U.S.C. § 2341 et seq., is not applicable to Indian traders; (2) even if the CCTA is applicable, the Act does not prohibit the activities for which they were prosecuted; (3) Washington's cigarette tax scheme'on which their CCTA violation was predicated' is invalid as applied to Indians because it (a) impermissibly intrudes upon rights of Indian sovereignty, (b) is preempted by the Indian Trader Statutes and (c) violates the Equal Protection Clause; (4) the government failed to prove the mens rea element required for conviction of violating the CCTA, conspiring to traffic in contraband cigarettes, and conspiring to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(d); (5) they were impermissibly prosecuted for multiplicitous conspiracy counts; (6) there was insufficient evidence to convict them of the charged crimes; (7) the tolling provision of the Speedy Trial Act, 18 U.S.C. § 3161(h), which the district court applied in this case, violates the Sixth Amendment speedy trial guarantee; (8) the district court improperly informed the jury of the potential for appeal; (9) the district court improperly denied their requests for a "good faith" instruction and related request for

subpoenas; (10) the district court improperly ment with refused to give proposed jury instructions; (11) the district court wrongfully denied Hale's motion for arrest of judgment and a new trial; and (12) the government engaged in sentencing manipulation.

The government cross-appeals, challenging the defendants' sentences. It argues the district court erred in calculating the defendants' base offense levels under the Sentencing Guidelines.

We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm the defendants' convictions and sentences in their entirety.

FACTUAL BACKGROUND

On October 22, 1992, a grand jury returned a 2,836-count indictment charging 23 alleged coconspirators, among them the defendants Baker and Hale, with forming an enterprise for the purpose of smuggling contraband cigarettes from the State of Montana to the State of Washington, and with committing the substantive offenses of trafficking in contraband cigarettes and laundering the proceeds of contraband cigarette sales.

The indictment was based on the following facts: Stan Feist is the owner of Feist and Watson Enterprises, Inc., d/b/a Sheehan-Majestic, a Montana corporation engaged in the wholesale distribution of cigarettes, candy and specialty foods. Dorothy Clinkenbeard is an enrolled member of the Confederated Salish and Kootenai Indian Tribes, and she holds a wholesaler's license issued by that tribe. Together with her husband Larry Clinkenbeard, Dorothy co-owns the Busted Ass Ranch in Arlee, Montana. Dorothy also owns various other businesses located on the Flathead Indian Reservation in Montana, one of which is Joe's Smoke Ring'a gas station, casino and convenience store.

The State of Montana permits wholesalers to sell tax exempt, unstamped cigarettes in unlimited quantities to Indians living on Indian reservations located within the state. In the early 1980s, Feist entered into an agreethe Clinkenbeards to be thensupplier of unstamped cigarettes.

Pursuant to the arrangement between Feist and the Clinkenbeards, Sheehan Majestic, beginning in mid-1982 and continuing until November 24, 1991, sold unstamped cigarettes to Joe's Smoke Ring in Montana.

The unstamped cigarettes obtained from Sheehan Majestic were then transferred from Joe's Smoke Ring to the Busted Ass Ranch in Montana. From the Busted Ass Ranch, the cigarettes were transported by employees of the Clinkenbeards to various prearranged locations in Idaho. There, representatives of various retail smokeshops, all located on Indian reservations in Washington, took possession of the cigarettes and transported them to their Washington destinations.

Washington law provides that all cigarette packages possessed in that state must bear applicable stamps as proof of tax payment. Wash.Rev.Code § 82.24.030. Although Indians are permitted to buy unstamped, taxexempt cigarettes on Indian reservations located within the State of Washington, all deliveries of unstamped cigarettes to Indian reservations in Washington must be preapproved by the state's Department of Revenue. Wash.Amin.Code § 458.20.192. Unapproved cigarettes are considered contraband. Wash.Admin.Code § 458.20.192. None of the parties involved in the transactions relevant to this case obtained preapproval for bringing any unstamped cigarettes into the State of Washington.

Defendant Baker is an enrolled member of the Shoalwater Indian Tribe. He manages a retail smokeshop, The Shoppe, on the Puyallup Indian Reservation near Tacoma, Washington. Defendant Hale manages a smokeshop known as the Indian Trading Post, which is also located on the Puyallup reservation. Although Hale is not a Native-American, the owner of the Indian Trading Post, Jody Satiacum, is an enrolled member of the Puyallup Tribe and her business is licensed by that tribe.^{Footnote 1} From the mid-1980s until

November 1991, Baker and Hale regularly bought unstamped cigarettes from the Clinkenbeards and transported the cigarettes, without obtaining preapproval, into the State of Washington.

Baker and Hale were indicted along with Feist, the Clinkenbeards and the other alleged coconspirators. The indictment charged various counts of trafficking in contraband cigarettes, RICO violations, conspiracy to violate RICO, conspiracy to traffic in contraband cigarettes, and money laundering. Some of the coconspirators were granted changes of venue and their cases were severed.^{Footnote 2} Feist and the Clinkenbeards pleaded guilty to one count of conspiracy to violate RICO.^{Footnote 3} Charges against other coconspirators were dismissed pursuant to the plea agreements. Baker and Hale went to trial and were convicted on all counts. This appeal followed.

DISCUSSION

1. Applicability of the CCTA to Indian Tribal Members The defendants first contend that the CCTA does not apply to Indians. Because all the charges against the defendants depend on a predicate violation of the CCTA, their convictions must be reversed on all counts if in fact Indians are exempt from the provisions of the Act.

Whether a federal statute applies to Indians is a question of law which we review de novo. Confederated Tribes of Warm Springs Reservation v. Kurtz,  691 F.2d 878, 880 (9th Cir.1982), cert, denied, 460 U.S. 1040, 103 S.Ct. 1433, 75 L.Ed.2d 792 (1983).

The CCTA makes it "unlawful for any person knowingly to ship, transport, receive, possess, sell, distribute, or purchase contraband cigarettes." 18 U.S.C. § 2342. For purposes of the Act, contraband cigarettes are defined as "a quantity in excess of 60,000 cigarettes, which bear no evidence of payment of applicable State cigarette taxes in the State where such cigarettes are found." 18 U.S.C. § 2341(2). The Act excludes from this definition cigarettes which are in the possession of certain specifically identified categories of individuals. ^{Footnote 4}

Indians are not among the specifically exempted categories. Nonetheless, the defendants argue Congress did not intend the provisions of the Act to apply to Indians. ^{Footnote 5}

We reject this argument.

Federal laws of general applicability are presumed to apply with equal force to Indians. United, States v. Farris,  624 F.2d 890, 893 (9th Cir.1980), cert, denied sub nom, Baker v. United States, 449 U.S. 1111, 101 S.Ct. 919, 920, 66 L.Ed.2d 839 (1981). See also United States Dep't of Labor v. OSHRC,  935 F.2d 182, 184 (9th Cir.1991) (quoting FPC v. Tuscarora Indian Nation, 362 U.S.

99, 116, 80 S.Ct.

543, 553, 4 L.Ed.2d 584 (I960)). There are only three exceptions to this general principle: A federal statute of general applicability that is silent on the issue of applicability to Indian tribes will not apply to them if: (1) the law touches "exclusive rights of selfgovernance in purely intramural matters;" (2) the application of the law to the tribe would "abrogate rights guaranteed by Indian treaties;" or (3) there is proof "by legislative history or some other means that Congress intended [the law] not to apply to Indians on their reservations." Donovan v. Coeur d'Alene Tribal Farm,  751 F.2d 1113, 1115 (9th Cir.1985) (quoting United States v. Farris, 624 F.2d at 893).

The defendants do not contend the CCTA touches exclusive rights of tribal self-governance. They argue, however, that the treaty rights exception applies to the CCTA. They point out that the only restriction on the Puyallup Tribe's trading activities imposed by the Medicine Creek Treaty of 1854 appears in Article 12 of the Treaty, which provides: "The said tribes and bands finally agree not to trade at Vancouver's Island, or elsewhere out of the dominions of the United States." Medicine Creek Treaty, 10 Stat. 1132 (1854). The defendants argue the parties to the Treaty intended no other restrictions on Indian trade.

Even assuming the defendants are correct about the expectations of the signers of the Medicine Creek Treaty, ^{Footnote 6} the CCTA is not an impermissible restriction on a trading right guaranteed by the Treaty. In Dillon v. United States,  792 F.2d 849, 853 (9th Cir. 1986), cert, denied sub nom. Cross v. United States, 480 U.S. 930, 107 S.Ct. 1565, 94 L.Ed.2d 757 (1987), we held that imposition of a federal income tax on Indian smokeshop income did not violate Article 12 of the Medicine Creek Treaty. We reasoned the tax was "not a burden on a treaty-protected right, but upon the income earned through the exercise of that right." Id. Similarly, the CCTA does not restrict trading in cigarettes; it makes it a crime to fail to pay applicable state taxes on cigarettes subject to tax.

The defendants and amici curiae argue at length that the legislative history of the CCTA evinces Congress' intent to exempt Indians from the scope of the Act. In support of this contention, they argue language in both the Senate and House Conference Reports indicates that the CCTA was intended to assist the states in curbing the largescale smuggling of contraband cigarettes by organized crime groups, not the untaxed cigarette trafficking conducted by Indian traders.

The legislative history of the CCTA does indicate Congress was primarily concerned with large-scale cigarette bootlegging and the involvement of organized crime. See S.Rep. No. 962, 95th Cong., 2d Sess. 1, 9, reprinted in 1978 U.S.Code and CongAdmin.News 5518, 5523 ("The interstate aspect of the problem lends itself to a joint FederalState interdiction effort which is focused upon the major violators and the organized crime groups."). Congress chose to deal with this concern by defining "contraband cigarettes" as "a quantity in excess of 60,000." See S.Rep. No. 962 at 16 (explaining the rationale for the 60,000 figure). It could have, but did not, specifically exempt Indians from the provisions of the Act. See also United States v. Roselli,  432 F.2d 879, 88586 (9th Cir.1970) (finding that, although by enacting 18 U.S.C. § 1952 Congress primarily intended to strike at organized crime, it did not restrict the statute's prohibitions to members of organized crime groups; rather, it stated the limitation in general terms applicable to organized crime, but not confined to it).

The defendants and amici curiae place great emphasis on the following footnote in House Conference Report No. 95-1778: Some concern was expressed in the course of the conference that the definition of "contraband cigarettes" inadvertently extinguished rights of certain Indians and Indian tribes under current law to engage

in the commercial sale of cigarettes within Indian country free of State taxation. The phrase "applicable State cigarette taxes" makes it clear that this legislation is not intended to affect transportation or sale by Indians or Indian tribes acting in accordance with legally established rights.

The conferees do not intend that this bill address the current exemption from state taxation of cigarette sales on Indian reservations and nothing in this bill is intended to affect this or any other immunity from state tax held by any Indian or Indian tribe. H.R.Conf.Rep. No. 1778, 95th Cong., 2d Sess. 1, 9 n. 1, reprinted in 1978 U.S.Code and Cong.Admin.News 5535, 5538.

We do not interpret this footnote as evidence of congressional intent to create an additional category of persons exempt from the CCTA. But see United States v. Brigman, 874 F.Supp. 1125, 1131 (E.D.Wash. 1994) (relying on this footnote in dismissing the charges against some of the severed coconspirators). A fair reading of the footnote indicates Congress merely intended not to preempt rights granted to Indians by the states to transport and distribute untaxed cigarettes. ^{Footnote 7}

It accomplished this goal by using the phrase "applicable State cigarette taxes" in the statute. Thus, to the extent the states exempt Indians from having to pay cigarette taxes, so does the CCTA.

2.

Defendants' Violation of the CCTA The defendants next argue that, even if the CCTA is applicable to Indians, the Act does not criminalize the activities for which they were prosecuted.

As stated above, the CCTA prohibits shipping, transporting, receiving, possessing, selling, distributing or purchasing contraband cigarettes. The Act defines contraband cigarettes as a quantity in excess of 60,000 cigarettes which do not bear evidence of payment of applicable state taxes in the state in which they are found. 18 U.S.C. §§ 2341-2342. Therefore, a violation of the CCTA requires, as a predicate, the failure to comply with state tax laws.

The State of Washington imposes an excise tax on cigarettes sold, used, consumed, handled, possessed or distributed within its borders. Wash.Rev.Code § 82.24.020 (1995). Washington collects this tax through the sale of cigarette stamps, which must be affixed to all packages of cigarettes possessed within the state which have not been preapproved for tax exemption. Wash.Rev.Code § 82.24.030. Packages of cigarettes not bearing tax stamps and not preapproved are contraband under Washington law. Wash. Rev.Code § 82.24.130(l)(a).

Indian tribal members are permitted to buy tax-free, unstamped cigarettes on Indian reservations located within the State of Washington. Wash.Admin.Code § 458-20192 (1980). However, to ensure only Indians take advantage of this tax exemption, Washington limits the quantity of unstamped cigarettes that may be delivered to the reservations. Wash.Admin.Code § 458-20-192. This quantity is determined by the "probable demand of qualified purchasers." Wash.Admin.Code § 458-20-192. Probable demand, in turn, is calculated in either of two ways. Vendors may submit statistical evidence concerning tribal demand for cigarettes. Wash.Admin.Code § 458-20-192. Alternatively, in the absence of such evidence, the Department of Revenue fixes the untaxed cigarette quota for a tribe by multiplying the tribal population by the national average cigarette consumption per capita. Wash.Admin.Code § 458-20-192.

Any unstamped cigarettes brought into Washington for purposes of sale to Indians must be preapproved by the state's Depart-

ment of Revenue, which ensures the cigarettes are within the reservation's allotment. ^{Footnote 8}

Wash.Admin.Code § 458-20-192. Unapproved, unstamped cigarettes destined for sale to reservation Indians are contraband. Wash.Admin.Code § 458-20-192.

The defendants do not dispute they transported into Washington unstamped cigarettes which were not preapproved by the State's Department of Revenue. Therefore, their activities violated Washington law. ^{Footnote 9}

Because the quantity of cigarettes transported by the defendants exceeded 60,000, their activities also violated the CCTA.

The defendants' arguments to the contrary are without merit. Baker contends that because Indians are permitted to possess unstamped cigarettes and to distribute them to other Indians, Washington law is violated only upon sale of the unstamped cigarettes to a nontribal member. Because there is no proof he engaged in a single transaction with a nontribal member which involved a quantity of cigarettes in excess of 60,000, he contends the CCTA is not implicated. Similarly, Hale contends the indictment does not charge the cigarettes he transported exceeded the quota allotted to the Puyallup Tribe.

In making these arguments, the defendants misapprehend Washington law. Under Washington law, mere possession of unstamped cigarettes, even by an Indian, is prohibited if the cigarettes are not preapproved for tax exemption. Unapproved cigarettes are contraband whether or not the tribe's annual allotment of unstamped cigarettes has been exhausted. The whole purpose of the preapproval requirement is to monitor the amount of unstamped cigarettes brought into the reservation to ensure that amount does not exceed the tribe's annual quota. 1995) The defendants also argue House Bill 1359, which was recently passed by the Washington legislature, supports their contention that at the time their alleged CCTA violation occurred, Washington law did not prohibit the activities for which they were prosecuted.

House Bill 1359 is an amendment to Washington Revised Code §§ 82.24, et seq. As amended, the statute clearly provides that Indians selling cigarettes to other Indians on reservation land are exempt from the tax, but are still required to obtain preapproval for any unstamped cigarettes and to precollect the tax from any non-Indian consumers. The defendants argue the amendment indicates that prior to its effective date, July 1, 1995, no Washington law regulated tribal Indians' on-reservation possession, sale, and distribution of unstamped, unapproved cigarettes. We disagree. "[A]n amendment to a statute does not necessarily indicate that the unamended statute meant the opposite." Hawkins v. United States,  30 F.3d 1077,1082 (9th Cir.1994), cert. denied, ' U.S. -----, 115 S.Ct. 2576, 132 L.Ed.2d 827 (1995). A state legislature "may amend a statute simply to clarify existing law, to correct a misinterpretation, or to overrule wrongly decided cases." Id. In this case, the legislative history of House Bill 1359 indicates the Washington legislature was motivated by all these objectives when it passed the Bill. The Report accompanying the Bill explains that, in 1991, a federal district court dismissed an indictment charging four Indian retailers with violating the CCTA by possessing unstamped cigarettes in the State of Washington without obtaining advance approval from the Department of Revenue. The Report goes on to explain the court's decision was based on its belief that "Washington law does not prohibit an Indian retailer from acquiring cigarettes from an

out-of-state source and holding them without stamps, and without Department of Revenue approval, until sold to non-Indians." The Report then clarifies that, under Washington law, "[a] person may import unstamped cigarettes into th[e] state only after notifying the Department of Revenue in advance." Finally, the defendants contend that even if Washington's preapproval requirement was technically on the books at the time of their alleged CCTA violation, the Court of Appeals of Washington effectively wrote that requirement out of the law in Gord v. Department of Revenue, 50 Wash.App. 646, 749 P.2d 678 (1987)'a civil forfeiture case to which Defendant Baker was a party. They point to language in Gord stating that "Baker would be exempted from affixing stamps to cigarettes ... if the record revealed that the cigarettes he possessed were for sales to 'established governing bodies' of an Indian tribe." ^{Footnote 10}

Id. 749 P.2d at 683. Based on this language, the defendants argue the Washington Supreme Court construed the law at issue as not including a preapproval requirement, and they submit we are required to abide by that court's interpretation of the law. ^{Footnote 11}

Contrary to the defendants' contention, the Washington Supreme Court did not hold in Gord that Washington law permits Indians to possess unstamped, unapproved cigarettes if those cigarettes are intended for sale to other Indians on reservation lands. Rather, the court explicitly recognized that Washington Administrative Code § 458-20-192 "require[d] Indian vendors ... to seek the advance approval of the Department" of Revenue before importing unstamped cigarettes into the State. Id.

In Gord, as is true here of both defendants, Baker failed to comply with this preapproval requirement. Id. It was this omission on Baker's part, not merely the absence of evidence in the record establishing that the unstamped cigarettes were sold exclusively to other Indians, which in Gord made Baker subject to forfeiture of his pickup, trailer, and the unstamped cigarettes found within those vehicles. Id. The defendants' contention that Gord wrote the preapproval requirement out of Washington law is simply incorrect.

We conclude, based on a fair reading of the statutes and their interpretation by the Washington courts, that at the time the defendants were involved in trafficking in unstamped, unapproved cigarettes as charged in this case, the cigarettes were contraband under Washington law. Accordingly, the defendants' conduct violated the CCTA ^{Footnote 12}

3. Validity of Washington's Cigarette Tax Scheme as Applied to Indians

The defendants next argue that even if Washington law prohibits the activities in which they engaged, the law is invalid as applied to Indians because it (a) intrudes upon rights of Indian sovereignty; (b) is preempted by federal law; and (c) violates the Equal Protection Clause of the United States Constitution. We address each of these contentions in turn.

a. Intrusion on Indian Sovereignty

It is undisputed that the states cannot tax cigarettes bought on Indian reservations by tribal members without impermissibly intruding upon rights of Indian sovereignty. But the right of a state to impose and enforce a tax on cigarettes sold by Indians to nontribal members is also clearly established. Washington v. Confederated Tribes of the Colville Indian Reservation (Colville), 447 densome to Indians than it was when Colville U.S. 134, 100 S.Ct. 2069, 65 L.Ed.2d 10 was decided. As the district court found: (1980); Moe v. Salish & Kootenai Tribes,  425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976). Moreover, "the State may impose at least 'minimal' burdens on [Indians] to aid in enforcing and collecting the tax" from nonIndians. Colville, 447 U.S. at 151, 100 S.Ct. at 2080. The defendants argue Washington's cigarette tax scheme unduly burdens Indian sovereignty because it requires tax stamps to be affixed to all cigarette packages, whether destined for sale to Indians or non-Indians, if those cigarettes are not preapproved. We disagree.

In Colville, the Supreme Court approved Washington's previous cigarette tax scheme as a permissible, minor burden on Indians. At the time Colville was decided, Washington law required that cigarettes held for sale on Indian reservations bear proof of tax payment in the form of stamps only if destined for sale to non-Indians. Colville, 447 U.S. at 141-42, 100 S.Ct. at 2074-75. The Court held that, as long as the legal incidence of the tax fell upon nontribal members, the state could require tribal smokeshops to affix tax stamps to individual packages of cigarettes prior to the time of sale. Id. at 159, 100 S.Ct. at 2084. The state also could require smokeshop operators to keep detailed records of both taxable and nont