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United States v. Penny

July 26, 1995

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,

v.

JONATHAN PENNY, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 92 CR 448--Wayne R. Andersen, Judge.

Before BAUER and RIPPLE, Circuit Judges, and REYNOLDS, District Judge. *fn1

RIPPLE, Circuit Judge.

ARGUED APRIL 18, 1995

DECIDED JULY 26, 1995

After a jury trial, Jonathan Penny was convicted of criminal conspiracy to distribute narcotics and of distribution of narcotics, in violation of 21 U.S.C. secs. 841 and 846. The district court sentenced Mr. Penny to twenty-five years of imprisonment followed by supervised release for the remainder of his natural life. Mr. Penny appeals the conviction. For the reasons set forth in the following opinion, we affirm the judgment of the district court.

I. BACKGROUND

A. Facts

From 1984-90, Jonathan Penny purchased and sold large quantities of narcotics. Starting in the early 1980s, Mr. Penny had begun to accumulate significant wealth due to his drug business. Andre Jackson, a former large-scale buyer and seller of drugs in Chicago, and later a government informant, testified that he had noticed that Mr. Penny's lifestyle reflected an increase in wealth. Mr. Penny, on one occasion, related to Jackson that he was generating income through heroin sales.

The record contains evidence that, as early as 1984, Mr. Penny was involved in a broad-reaching drug distribution scheme. While Mr. Penny was serving a term of imprisonment in the East Moline Correctional Center, he stated to his cell mate, William Bauer, a prisoner sentenced to imprisonment for armed robbery, that he earned his livelihood selling cocaine. He explained to Bauer how he ran his business, including how his wife, Clara, handled the business while he was imprisoned. He also shared with Bauer the manner in which he conducted his drug dealings.

Mr. Penny, on Bauer's suggestion, arranged for a narcotics transaction while he was imprisoned. Mr. Penny was to provide one ounce of cocaine to associates of Bauer who would in turn sell it on the street. To facilitate the transaction, Mr. Penny contacted LaVada Davis, a drug dealer whose services Mr. Penny engaged consistently. Ms. Davis transported the cocaine to Bauer's wife, who then delivered the narcotics to an acquaintance of Bauer's in Peoria. Payment was made to Penny through Bauer's wife who brought the cash to Bauer in jail.

Signs of a large drug distribution network were also demonstrated by the manner in which Mr. Penny directed an independent carpenter, Peter Loeb, to build and rehabilitate his many residences. Starting in 1983, Mr. Penny paid Loeb in cash--weekly for labor and monthly for materials. The work that Loeb performed grew so extensively that, from 1985-88, Loeb worked exclusively for Mr. Penny. No limit was set on the cost of Loeb's work. He gutted and remodeled residences--carpentry work alone for each residence many times exceeding $50,000. Loeb, per Mr. Penny's instructions, constructed concealed rooms and closets with false backs in these properties. Occasionally, Mr. Penny employed Loeb as a consultant, and flew him down to Arizona so that Loeb could evaluate whether it would be advisable to build on various parcels of land. Loeb testified that, for the last three years that he worked for Mr. Penny, he was paid $720,000 for labor and materials. He also stated that, when he traveled to Penny's residence to receive payment for his work, he observed cash and packets of white powder lying on Penny's bed.

Mr. Penny also spent significant sums of money from 1984-1989 on automobile restoration and racing. Mr. Penny paid for the installation of secret compartments in three of his automobiles. Additionally, each year, Mr. Penny paid approximately $25,000 in cash to have an automobile restoration company do general work on his automobiles and to create an insignia Mr. Penny could place in his vehicles. In 1987, Mr. Penny paid a professional race car driver $40,000 to race a car painted with Penny's name and insignia.

Mr. Penny and Andre Jackson continued to associate after Penny left jail. In 1987, Mr. Penny told Jackson that he was selling large amounts of brown heroin. Mr. Penny stated at the time that brown heroin was more profitable than cocaine, and showed Jackson approximately five buildings that he claimed he had purchased and remodelled with proceeds from heroin sales. In May 1987, Jackson purchased 150 pounds of marijuana from Penny. When Jackson took delivery of the drugs, he was led through a secret door concealed in a kitchen closet into a room. In that room, Jackson saw marijuana, drug paraphernalia, and heroin dilution tools. Mr. Penny, Jackson testified, stated that he used the room for mixing and storing drugs. Penny added that the room was fireproof, and that he believed it would go undetected in a police raid.

Through 1987, Jackson continued to purchase marijuana and cocaine from Mr. Penny. Jackson would pick up the drugs at Penny's various residences. By the fall of 1987, Jackson agreed to sell a kilogram of cocaine to Mr. Penny for $20,000. Jackson delivered the drugs, but was never paid. Jackson was arrested by police in December 1987, but his dealings with Penny did not cease. In December 1988, the lawyer Jackson hired to represent him offered to sell fifty kilograms of cocaine to him. The lawyer stated that his supplier was Mr. Penny. Thereafter, Jackson approached Penny directly to purchase cocaine, and arranged for some multi-kilogram purchases.

Mr. Penny, meanwhile, continued narcotics dealings with William Bauer, now released from prison. Penny supplied Bauer with cocaine through the fall of 1988. However, Bauer failed to resell the cocaine to pay ...


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