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State v. Rust

Court of Appeals of Utah

September 21, 2017

State of Utah, Appellee,
Robert Thomas Rust, Appellant.

         Third District Court, Salt Lake Department The Honorable Paul B. Parker No. 131901697

          Samuel J. Hanseen and Alexandra S. McCallum, Attorneys for Appellant

          Sean D. Reyes and Karen A. Klucznik, Attorneys for Appellee.

          Judge Stephen L. Roth authored this Opinion, in which Judges Michele M. Christiansen and Jill M. Pohlman concurred. [1]

          ROTH, Judge.

         ¶1 Robert Thomas Rust appeals his convictions for one count of money laundering, a second degree felony, see Utah Code Ann. § 76-10-1903 (LexisNexis 2012); one count of conspiracy to distribute a controlled substance, a third degree felony, see id. § 58-37-8(1)(a)(ii), (1)(b)(ii); id. § 76-4-201; and two counts of filing a false tax return, a third degree felony, id. § 76-8-1101(1)(c)(i). We affirm.


         ¶2 In early 2012, police began surveilling Rust's home after receiving a tip regarding his involvement in narcotics distribution. On two separate occasions, police observed "short stay vehicle traffic" at Rust's home. Police followed each vehicle until they could make a traffic stop and ultimately discovered methamphetamine in both vehicles.

         ¶3 While police were investigating Rust, they received a report from a casino in Wendover, Nevada, "as part of a routine reporting process of . . . suspicious gambling habits of persons who frequent gaming establishments." The report indicated that Rust "had recently lost a considerable amount of money" at the casino. Police went to the casino to gather documentation of Rust's gambling activities and discovered "an excessive amount of gambling occurring at the casino on the part of . . . Rust" that involved a loss of approximately $150, 000.

         ¶4 Police obtained a warrant to search Rust's vehicle, his residence, a new residence into which Rust and his wife were moving, and the residence of Rust's stepson. In Rust's vehicle, police found a "glass pipe with some burnt white residue inside" and "[o]we sheets . . . documenting numerical transactions, money out, money owed." The investigating officer testified, based on his experience in narcotics investigations,

Owe sheets are an item used by persons involved in the trafficking or distribution of narcotics to keep track of drugs that are sold and those drugs that have been paid for, the amounts they were sold for and the amounts that are still holding, who owes the amounts, [and] who the drugs . . . were received by.

         In searching Rust's residences, police found more owe sheets, wire transfer receipts, W-2G tax forms for reporting gambling proceeds, expensive stolen property, a large quantity of cash, a fake ID for Rust's wife, gambling receipts, a syringe, and a baggie with white residue. At the residence of Rust's stepson, officers found a bank account receipt registered to Rust's wife hidden inside a gaming device case behind an entertainment center. Officers also observed surveillance equipment at one of the residences, which the investigating officer testified is "a common tool used by persons engaged in the activity of narcotics distribution as a form of counter surveillance against law enforcement."

         ¶5 Rust was arrested and charged with money laundering, conspiracy to distribute a controlled substance, and two counts of filing a fraudulent tax return. A trial was held in April 2015.

         ¶6 At trial, in addition to the evidence outlined above, the State presented testimony from the girlfriend of one of Rust's alleged associates (Witness). Witness agreed to testify against Rust in exchange for a reduced sentence after she was arrested for a drug-related charge in 2012. Witness testified that her boyfriend sold drugs for a living and that she also participated. She further testified her boyfriend regularly purchased drugs from Rust. The boyfriend would communicate with Rust via text message about Witness's and her boyfriend's desire to buy drugs; then, Witness and the boyfriend would pick up the drugs from a third party that Rust identified and send the purchase money to Rust via wire transfer. She testified that the first time she met Rust was when she and her boyfriend went to Rust's house "to get drugs." They "got high, " and then a third party arrived. Rust and Witness's boyfriend "split" the methamphetamine that she assumed they obtained from the third party, though she did not actually see an exchange take place. On another occasion, Witness's boyfriend asked Rust to meet him at a restaurant parking lot "so he could pick up a quarter pound." The boyfriend took $4, 000 with him. Witness observed Rust pull into the parking lot in his vehicle, but she stayed in the car while her boyfriend got into Rust's vehicle. The boyfriend stayed in Rust's vehicle for approximately ten minutes and then returned without the money but with drugs he did not have before he entered Rust's vehicle. On a third occasion, Witness and her boyfriend waited for Rust at a hotel. Her boyfriend received a text message from Rust indicating that he was waiting outside. Witness saw Rust outside the hotel, but she did not observe the exchange between her boyfriend and Rust. When her boyfriend came back from meeting with Rust, "he had another quarter pound" that he did not have before the meeting. Witness also testified that at the time she was arrested, she and her boyfriend were on their way to Rust's residence to pay Rust's wife $17, 000 for drugs.

         ¶7 The State called an expert witness with expertise in money laundering who had examined Rust's financial records from the sixteen-month period between January 2011 and May 2012. The expert witness explained that gambling can be used to hide funds earned illegally: individuals "transfer money into an account at one of the casinos" and "will then gamble at that casino, put any winnings into that account and then transfer that money into other accounts that they have outside of the casino to make it look like the money that's in those new accounts came from winnings out of a casino." The State asked the expert witness whether specific hypothetical activities constituted money laundering. The expert testified that using cash from drug sales for a vehicle purchase, casino gambling, a wire transfer, a prepaid debit card, or a credit union account all constitute money laundering. The State presented evidence that Rust had done each of those activities.

         ¶8 The State also entered Rust's tax records into evidence. In the course of their investigation, police discovered that in 2011 and 2012, Rust earned legitimate income from Panda Express and the Rusts' janitorial business, Jani-King. The State called a tax expert to testify regarding Rust's tax returns. The tax expert testified that Rust's tax returns for 2011 reported income from a job at Panda Express, but failed to report any gambling losses or winnings, illegal income earned from distributing narcotics, or self-employment ...

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