United States District Court, D. Utah
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION FOR A NEW TRIAL
BENSON UNITED STATES DISTRICT JUDGE.
the Court is Defendant Adam Michael Webber's (“Mr.
Webber”) Motion for a New Trial. Having reviewed
the parties' briefs and the relevant law, the court
renders the following Memorandum Decision and
Webber has a long and litigious history with the government
and the Bureau of Alcohol, Tobacco, Firearms and Explosives
(“ATF”). In 2007, after the ATF conducted an
investigation into Mr. Webber's alleged illegal firearm
sales, Mr. Webber and the ATF entered into a civil settlement
the terms of the 2007 settlement agreement, the ATF partially
dismissed the civil forfeiture action against Mr.
Webber. In return, Mr. Webber agreed “never
to apply for a Federal firearms license or be a responsible
person for any Federal firearms licensee or business, ”
and further agreed that he would “not engage in the
business of manufacturing, importing, or dealing in
firearms.” Additionally, Mr. Webber acknowledged that
not engaging in the business of dealing in firearms meant Mr.
Webber could not “repetitively” acquire and
resell firearms “with the intent to make a
the 2007 settlement, Mr. Webber began selling firearms parts
through his business called HK Parts, Inc. (“HK
Parts”). Mr. Webber operated HK Parts out of his
home in Salt Lake City, Utah. As Mr. Webber's business
grew and prospered, the ATF grew suspicious of Mr.
Webber's activities, including the possibility that Mr.
Webber was selling firearms. An investigation into Mr.
Webber's business was opened in 2010 and concluded in
August of 2014.After the investigation, a grand jury in
Salt Lake City returned a thirteen count indictment charging
Mr. Webber with various firearms, export, false statement,
and tax offenses.
on motions from the government and Mr. Webber, the
government's thirteen count indictment was reduced to a
six count indictment. Count 1 charged Mr. Webber with
dealing in firearms without a license as follows:
On a date unknown to the grand Jury, but beginning no later
than 2007, through in or about May 2012, in the Central
Division of the District of Utah,
ADAM MICHAEL WEBBER,
defendant herein, willfully engaged in the business of
dealing in firearms without a license; in violation of 18
U.S.C. § 922(a)(1)(A).
2, 3, and 4 charged Mr. Webber with filing false Individual
U.S. Income Tax Returns for the 2007, 2008, and 2009 tax
years in violation of 26 U.S.C. § 7206(1). Similarly,
Counts 5 and 7 charged Mr. Webber with filing false
U.S. Income Tax Returns for HK Parts for the 2009 and 2010
tax years in violation of 26 U.S.C. §
September 13 to September 23, 2016, the government's case
against Mr. Webber was presented to a jury.
Count 1, Violation of the Gun Control Act
trial, the government's evidence showed that Mr. Webber
sold his first firearm through HK Parts in 2008 and by 2012
Mr. Webber had bought and sold approximately 2, 000 firearms
through HK Parts. Between 2008 and 2012, Mr. Webber never
applied for a Federal Firearms License (“FFL”).
Rather, at trial it was revealed that beginning in 2009, Mr.
Webber operated his business under the FFL of Midnight Labs,
LLC (“Midnight Labs”), which was owned by Mr.
evidence showed that on September 30, 2009, Mr. Webber
entered into an agreement with Midnight Labs entitled
“Employment Contract.” The Employment Contract
purported to make Mr. Webber an employee of Midnight
Labs. However, evidence presented by the
government demonstrated that Mr. Webber did not receive any
financial compensation from Midnight Labs. Mr. Webber
financed the firearms purchased through Midnight Labs'
FFL.Additionally, Mr. Webber and HK Parts
retained any profit generated from the firearms purchased and
resold using Midnight Labs' FFL.
government's evidence also demonstrated that Mr. Croft
performed a number of tasks for Mr. Webber and HK Parts. Mr.
Croft maintained Midnight Labs' Acquisition and
Disposition Book (“A&D book”). An A&D
book is required by the holder of a FFL to track the firearms
that come into the possession of the FFL and where the
firearms are subsequently transferred. Mr. Croft
testified that when Mr. Webber purchased firearms to be
resold to HK Parts' customers, the firearms were
delivered to Mr. Croft. Once received by Mr. Croft, Mr. Croft
entered the firearms into Midnight Labs' A&D
book. After Mr. Croft entered the firearms
into Midnight Labs' A&D book, the firearms were
delivered to Mr. Webber's home.Mr. Croft testified that
he routinely delivered firearms purchased by Mr. Webber to
Mr. Webber's home. Additionally, Mr. Croft testified
that he would often help Mr. Webber package firearms to be
sold to HK Parts' customers. Mr. Croft and Midnight
Labs did not receive any monetary compensation from Mr.
Webber. Rather, Mr. Croft testified that, in
exchange for his services, he obtained access to Mr.
Webber's industry contacts and
the government's evidence demonstrated that in comparison
to Mr. Webber, Mr. Croft bought and sold very few firearms
through Midnight Labs' FFL. For example, between the time
Midnight Labs was issued a FFL and when the ATF executed a
search warrant in this case, Mr. Webber purchased
approximately 2, 066 firearms. Conversely, Mr. Croft only
purchased 170 firearms through Midnight Labs'
the government presented evidence that Mr. Webber directed
all of the business activities for HK Parts. Mr. Webber
decided which firearms to purchase and at what price the
firearms should be resold through HK Parts. Additionally,
Mr. Webber determined the content on HK Parts' website,
hkparts.net. Mr. Croft testified that he did not make
any business decisions for HK Parts.
government's evidence demonstrated that from the
public's perspective, HK Parts was not operating under
the umbrella of Midnight Labs. Throughout Mr. Webber's
relationship with Midnight Labs, HK Parts' website
represented that HK Parts had a FFL and the firearms
purchased through HK Parts would be facilitated by HK
Parts' FFL. Moreover, two HK Parts' customers,
including an undercover ATF agent, testified that when they
purchased firearms from HK Parts, Midnight Labs was not
mentioned during the transaction.
to trial, it was readily apparent that Mr. Webber's
defense to Count 1 was that Mr. Webber, as an employee of
Midnight Labs, was not engaged in the business of dealing in
firearms without a license. In other words, Mr. Webber sought
to put forth an agency defense that he was not engaged in the
business of dealing in firearms without a license because he
was an employee of Midnight Labs and Midnight Labs had a FFL.
government argued that Mr. Webber's agency defense was
unsupported by the law and the facts and motioned for the
Court to prohibit Mr. Webber from presenting an agency
defense to the jury.
Court agreed with the government that there were insufficient
facts to allow Mr. Webber to present an agency defense to the
jury. The Court's finding was bolstered by
the fact that Mr. Webber had previously agreed with the ATF
not to apply for a FFL or engage in the business of dealing
this factual backdrop in mind, the government proposed the
following instruction to inform the jury about the law
surrounding Mr. Webber's use of Midnight Labs' FFL:
An agent or employee of a company possessing a federal
firearms license, who could not have legitimately obtained a
license to deal firearms, may not deal firearms by
positioning himself as a consultant or agent for the company.
In other words, an agent or employee is not insulated from
criminal liability by the fact that his principal or employer
authorized his conduct.
Court found that the government's proposed instruction
was overly broad and was a misstatement of the law.
Therefore, after much discussion with counsel on the matter,
the Court instructed the jury as follows:
INSTRUCTION NO. 24
A person prohibited from obtaining a federal firearms
license, who ‘engages in the business' of dealing
in firearms as defined in Instruction Number 20, may not
avoid the licensing requirement by positioning himself as an
employee, consultant, or agent of a company possessing a
federal firearms license. In other words, an employee,
consultant, or agent who engages in the business of dealing
in firearms is not insulated from criminal liability by the
fact that his principal or employer, who has a federal
firearms license, authorized his conduct.
20 defined “engaged in the business” of dealing
in firearms as:
a person who devotes time, attention, and labor to dealing in
firearms as a regular course of trade or business with the
principal objective of livelihood and profit through the
repetitive purchase and resale of firearms, but such term
shall not include a person who makes occasional sales,
exchanges, or purchases of firearms for the enhancement of a
personal collection or for a hobby, or who sells all or part
of his personal collection of firearms.
trial, the evidence showed that from 2007 to 2010, there was
considerable discrepancy between the revenue received by Mr.
Webber and HK Parts and the amount of gross receipts reported
to the Internal Revenue Service.
example, on Mr. Webber's 2007 and 2008 U.S. Individual
Income Tax Returns, Mr. Webber reported gross receipts in the
amount of $23, 185 and $22, 039 respectively. Similarly, on
HK Parts' 2009 and 2010 corporate tax returns, Mr. Webber
reported gross receipts in the amount of $49, 742 and $84,
749 respectively. Conversely, the government presented
evidence that the gross receipts for Mr. Webber and HK Parts
were underreported. For example, the government put forth
evidence that Mr. Webber had gross receipts in the amount of
$1, 048, 475 and $2, 597, 283 for the 2007 and 2008 tax
years. Similarly, the government offered
evidence that Mr. Webber and HK Parts had gross receipts in
the amount of $3, 627, 471 for the 2010 tax
year. These discrepancies formed the basis for
the five tax counts against Mr. Webber.
Excluded Witness Testimony
trial, the Court excluded two witnesses: Mr. José Diaz
and Ms. Jessica Filippi. The defense purported that Mr. Diaz
would have testified that some of the firearms sold through
Mr. Webber's website in 2008 and 2009 were in the
possession of Mr. Diaz's company, Michael's
Machines. At the beginning of trial, the
government invoked the exclusionary rule pursuant to Federal
Rule of Evidence 615.
government's case progressed, the government notified the
Court that Mr. Webber's mother was present in the gallery
and had been communicating via text message to Mr.
Webber's wife about the progression of the
trial. Mr. Webber's wife was slated to act
as a witness for the government. The Court admonished both
sides to monitor their witnesses to make sure the
exclusionary rule was honored.
the defense's case, the defense called Mr. Diaz to the
stand. Before Mr. Diaz could testify, the
government notified the Court that Mr. Diaz had been present
during opening statements and during the government's
first witness. The government moved to exclude Mr. Diaz
for the defense's violation of the exclusionary
rule. Mr. Diaz was an acquaintance of Mr.
Webber. Therefore, the Court rejected the defense's
argument that the defense was wholly unaware of Mr.
Diaz's presence. Additionally, it was brought to the
Court's attention that the defense did not disclose that
Mr. Diaz was going to testify until the night before Mr. Diaz
took the stand. The Court found that Mr. Diaz heard
enough critical information to color his testimony and,
therefore, sustained the government's objection to
exclude Mr. Diaz.
Filippi is an employee of the accounting firm Cook Martin
Poulson P.C. Since 2011, Ms. Filippi has been employed by Mr.
Webber to prepare Mr. Webber's individual and business
tax returns. During the defense's case, the
defense called Ms. Filippi to testify. Shortly after her
testimony began, the government motioned to exclude Ms.
Filippi's testimony on relevance grounds. The defense
offered that Ms. Filippi would testify to the following: (1)
Mr. Webber asked Ms. Filippi in 2011 to prepare his taxes
going forward; (2) Mr. Webber's bookkeeping and
accounting was in disarray; (3) Mr. Webber lacked records
that an accountant would expect to adequately prepare a tax
return; and (4) Ms. Filippi, after reviewing Mr. Webber's
2010 tax return, offered to amend Mr. Webber's 2010
Court sustained the government's objection. The Court
found that Ms. Filippi's proposed testimony was minimally
relevant. However, the Court held that Ms.
Filippi's testimony was cumulative, risked confusing and
misleading the jury, and risked directing the jury on Mr.
Webber's consciousness of guilt or lack of consciousness
of guilt. Moreover, the Court was concerned that
Ms. Filippi's testimony would run afoul of the propensity
ban.Therefore, Ms. Filippi was
Jury Verdict and Motion for a New Trial
September 23, 2016, the Jury returned a unanimous verdict
finding Mr. Webber guilty on all counts. Following the
verdict, the government sought to detain Mr. Webber pending
sentencing. The Court denied the government's
motion and Mr. Webber was permitted to remain on pretrial
release. On October 7, 2016, Mr. Webber filed a
Motion for a New Trial pursuant to Rule 33 of the Federal
Rules of Criminal Procedure. Mr. Webber's sentencing is
presently set for January 24, 2017.
33(a) provides, “[u]pon the defendant's motion, the
court may vacate any judgment and grant a new trial if the
interest of justice so requires.” Fed. R. Crim. P.
33(a). “A motion for a new trial is not regarded with
favor and is only issued with great caution.”
United States v. Herrera, 481 F.3d 1266, 1269-70
(10th Cir. 2007) (citations omitted). When reviewing a motion
for a new trial, a conviction should not be disturbed if a
“‘reasonable jury could find a defendant guilty
beyond a reasonable doubt, viewing the evidence in the light
most favorable to the government and drawing reasonable
inferences therefrom.'” United States v.
Irving, 665 F.3d 1184, 1193 (10th Cir. 2011) (quoting
United States v. Vigil, 523 F.3d 1258, 1262 (10th
Cir. 2008)). With respect to the jury's factual
determinations, the Court is not permitted to
“‘weigh conflicting evidence or second-guess the
fact-finding decisions of the jury.'” Id.
(quoting United States v. Sells, 477 F.3d 1226, 1235
(10th Cir. 2007)).
Rule 33 places discretion with the trial judge to review the
trial record and grant a new trial in the “interests of
justice.” See United States v. Patterson, 41
F.3d 577, 579 (10th Cir. 1994) (noting that “the
decision to grant or deny a motion for new trial rests within
the trial court's discretion . . . .”).
Webber points to three of the Court's rulings as grounds
for a new trial on all counts. First, Mr. Webber argues that
Instruction No. 24 incorrectly described the law with respect
to the Gun Control Act's licensing requirement and
improperly withheld a factual question from the
jury. Second, Mr. Webber claims he was
unfairly prejudiced by the exclusion of Mr. Diaz because Mr.
Diaz could have testified that Mr. Diaz was in physical
possession of the firearms receivers sold through HK Parts
prior to Mr. Webber's relationship with Midnight
Labs.Finally, Mr. Webber claims he was
prejudiced by the exclusion of Ms. Filippi's testimony
because Ms. Filippi would have provided “critical
evidence” of Mr. Webber's lack of willfulness to
submit false tax returns. Each of Mr. Webber's
arguments will be discussed in turn.
Instruction No. 24
axiomatic that the Court's duty is to instruct the jury
on the state of the law. When a party challenges the validity
of a jury instruction, the Court may “only order a new
trial if an error in the instructions resulted in a
miscarriage of justice.” Pers. Dep't, Inc. v.
Prof'l Staff Leasing Corp., 297 Fed. App'x 773,
784 (10th Cir. 2008) (unpublished) (citing Aspen
Highlands Skiing Corp. v. Aspen Skiing Co., 738 F.2d
1509, 1516 (10th Cir.1984)). In reviewing a jury instruction
for error, the Court reviews the instructions as a whole
“‘to determine whether the jury may have been
misled, upholding the judgment in absence of substantial
doubt that the jury was fairly guided.'” United
States v. Magleby, 241 F.3d 1306, 1310 (10th Cir. 2001)
(quoting United States v. Fabiano, 169 F.3d 1299,
1302-03 (10th Cir. 1999)). Furthermore, “[t]he
admission or exclusion of a jury instruction is within the
discretion of the trial court . . . .” Craig
v. Murphree, 35 F. App'x 765, 769 (10th Cir.
2002) (unpublished) (citing Richards v. Attorneys'
Title Guar. Fund, Inc., 866 F.2d 1570, 1575, 1573 (10th
general principle, “a party is entitled to an
instruction based on its theory of the case whenever [the
party] produces sufficient evidence to support it and submits
an instruction that is a correct statement of the law.”
Id. (citing F.D.I.C. v. Schuchmann, 235
F.3d 1217, 1222 (10th Cir. 2000)). Indeed, the Tenth Circuit
has held that denying a defendant the right to submit a
factually and legally supported theory to the jury is grounds
to overturn the defendant's conviction. See Steiger
v. United States, 373 F.2d 133, 135-36 (10th Cir. 1967);
United States v. Migliaccio, 34 F.3d 1517, 1525
(10th Cir. 1994).
factual underpinnings of this case are unique to the typical
cases the Court hears under the Gun Control Act. Indeed, Mr.
Webber's past dealings with the ATF and his subsequent
use of Midnight Labs presented a matter of first impression
under the Gun Control Act. For the reasons that follow, the
Court finds that Mr. Webber is entitled to a new trial on
Count 1. The Court agrees with the defense that denying Mr.
Webber an agency defense was improper. Mr. Webber should have
been allowed to argue to the jury that Midnight Labs, not Mr.
Webber, was engaged in the business of dealing in firearms.
to 18 U.S.C. § 922(a)(1)(A) of the Gun Control Act, it
is unlawful “for any person-except a licensed importer,
licensed manufacturer, or licensed dealer, to engage in the
business of importing, manufacturing, or dealing in
firearms.” A willful violation of 18 U.S.C. §
922(a)(1)(A) may result in criminal liability. See
18 U.S.C. § 924(a)(1)(D). Liability under §
922(a)(1)(A) centers on the Gun Control Act's definition
of what it means to be engaged in the business of dealing in
to Mr. Webber's case, a “dealer” for purposes
of § 922(a)(1)(A) is “any person engaged in the
business of selling firearms at wholesale or retail . . .
.” 18 U.S.C. § 921(a)(11)(A). In turn, a dealer