Take the Fifth

Designated for publication

• U.S. v. Shaughnessy, 24-10126, appeal from N.D. Tex.
  • per curiam (Stewart, Dennis, Haynes) (oral argument), criminal, evidence, sufficiency of evidence, sentencing
  • Affirming conviction and 293-month sentence for drug trafficking and distribution offenses and possession of child pornography.
  • Sean Shaughnessy appealed his conviction and sentence after a jury found him guilty of two drug-conspiracy counts, one drug-distribution count, and one count of possessing child pornography. His case arose from his use of dark web marketplaces (DWMs) to traffic narcotics while concealing his identity through pseudonyms and cryptocurrency. On appeal, he challenged the sufficiency of the evidence supporting his conspiracy convictions, the admission of certain trial evidence, and the application of a sentencing enhancement.
  • The evidence against Shaughnessy was extensive, stemming from a multi-year federal investigation. Authorities tied him to large quantities of controlled substances and analogues, detailed narcotics ledgers, intercepted packages, and digital records on multiple laptops linking him to DWM vendor accounts. His activities involved bulk purchases from overseas suppliers, coordinated sales through online drug marketplaces, and cash conversions of Bitcoin proceeds via undercover agents. In addition, forensic reviews revealed child pornography files on his devices, leading to his separate conviction. Customers also testified about buying fentanyl and related substances from Shaughnessy, and at least one fatal overdose was traced back to his shipments.
  • On appeal, Shaughnessy argued that the Government failed to prove the conspiratorial agreements necessary for conviction, but the court held that the evidence showed tacit coordination with both DWM administrators and foreign suppliers who facilitated his sustained trafficking operations. He also objected to testimony about his Bitcoin-to-cash dealings, claiming it improperly suggested uncharged money laundering, but the court found the evidence intrinsic to the conspiracy since it explained how he converted drug proceeds. Likewise, the admission of two uncharged child-pornography videos was upheld, with the court concluding they were probative of knowing possession, not substantially more prejudicial than the charged files, and carefully limited by jury instructions.
  • Finally, the appellate court addressed his challenge to the five-level sentencing enhancement for possession of 600 or more images of child pornography. The enhancement was based on the guideline equivalency that counts each video as seventy-five images, yielding a total of 614 images from Shaughnessy’s collection. The district court credited the testimony of a forensic analyst who explained his methodology in detail, and the appellate court found no clear error in that credibility determination.

• U.S. v. Constantinescu, 24-20143, appeal from S.D. Tex.
  • Engelhardt, J. (Higginson, Willett, Engelhardt) (oral argument), criminal, securities fraud
  • Reversing district court’s dismissal of indictment in securities fraud matter.
  • The government indicted several defendants—including Edward Constantinescu, Perry “PJ” Matlock, John Rybarczyk, Gary Deel, Stefan Hrvatin, Tom Cooperman, Mitchell Hennessey, and Daniel Knight—for participating in a social media–driven “pump and dump” securities fraud scheme. The indictment alleged that defendants purchased securities, used their large online followings to artificially inflate prices through false and misleading posts, and then profited by selling at the inflated prices—netting an estimated $114 million. Knight pleaded guilty, but the others moved to dismiss. The district court granted dismissal, reasoning that the indictment failed to allege deprivation of a traditional property interest and instead alleged only that followers were deprived of economic information. The government appealed, and the Fifth Circuit reviewed the sufficiency of the indictment de novo.
  • The appellate court reversed, holding that the indictment adequately alleged both a scheme and intent to defraud under 18 U.S.C. §§ 1348 and 1349. Unlike the “right-to-control” theory rejected in Ciminelli v. United States, which improperly treated economic information as property, the indictment here was based on a fraudulent-inducement theory—alleging that defendants tricked followers into parting with their money by buying securities under false pretenses. The court also rejected defendants’ argument that intent to profit was not intent to harm, reaffirming the Supreme Court’s ruling in Kousisis v. United States that fraud statutes require only proof that defendants sought to obtain victims’ money or property through deception, not that victims were left economically worse off. Because the indictment sufficiently alleged that defendants fraudulently induced their followers to purchase securities, the Fifth Circuit reinstated the charges.

• Airlines for America v. Department of Transportation, 24-60231, c/w Spirit Airlines, Inc., 24-60373, petition for review of DOT order
  • per curiam (en banc), administrative law, en banc
  • Vacating January 28, 2025, panel decision (Southwick, Haynes, Douglas) remanding DOT rule requiring up-front disclosure of certain airline fees, on finding that DOT failed to fully comply with the APA (though also finding that DOT did have authority to make such rules, rejecting argument to impose the major questions doctrine); and ordering en banc rehearing.

Unpublished decisions

• U.S. v. Webster, 25-10243, appeal from N.D. Tex.
  • per curiam (Higginbotham, Engelhardt, Ramirez) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Moore, 25-10768, appeal from N.D. Tex.
  • per curiam (Stewart, Willett, Wilson) (no oral argument), criminal, compassionate release
  • Dismissing as frivolous appeal from denial of motion for compassionate release.

• Metropolitan Life Insurance Co. v. Vasquez, 24-11024, appeal from N.D. Tex.
  • per curiam (Elrod, Clement, Haynes) (oral argument withdrawn), insurance
  • Reversing summary judgment in interpleader action on life insurance proceeds, holding that witness testimony on when a beneficiary designation form was received was sufficient to create a fact issue; and remanding for further proceedings.

• Swanson v. Brown County Sheriff Department, 24-11052, appeal from N.D. Tex.
  • per curiam (Smith, Higginson, Wilson) (no oral argument), sec. 1983
  • Affirming dismissal of plaintiff’s sec. 1983 claim, noting the complaint was “replete with rambling incoherence,” claiming “collusion among, inter alia, attorneys, the mayor, and a judge by means such as cyberwarfare and computer crimes. At one point in her brief, she claims ‘the theft of assets totaling approximately 500,000,000.00 dollars’ worth of digital assets, slander and pornographic videos published on the world wide web, and television, totaling into the thousands, and continuing accumulations to this day.'”

• U.S. v. Jackson, 24-30233, appeal from M.D. La.
  • per curiam (Southwick, Oldham, Ramirez) (oral argument), criminal, search and seizure
  • Affirming conviction on drug and firearm charges, upholding denial of motion to suppress.

• Estate of Coates v. Hawthorne, 24-40561, appeal from S.D. Tex.
  • per curiam (Stewart, Clement, Wilson) (oral argument), Stewart, J., dissenting in part; sec. 1983
  • Affirming dismissal of claim by detainee’s surviving family arising from detainee’s death while in custody
  • Judge Stewart dissented in part. While agreeing “with the panel majority’s decision to affirm the district court’s dismissal of Coates’s claims pursuant to 42 U.S.C. § 1983 for violations of the Fourth and Eighth Amendments, 42 U.S.C. § 1985(3), and state law”; Judge Stewart “would reverse the district court’s dismissal of Coates’s due process claim pursuant to § 1983 based on Appellees’ deliberate indifference to Coates’s serious medical needs.”

• U.S. v. Efevwerha, 25-50077, appeal from W.D. Tex.
  • per curiam (Smith, Higginson, Wilson) (no oral argument), criminal, compassionate release
  • Affirming denial of motion for compassionate release.

• U.S. v. Valenzuela-Uyoa, 24-50980, appeal from W.D. Tex.
  • per curiam (Higginbotham, Engelhardt, Ramirez) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Massey, 25-60155, c/w 25-60159, appeal from S.D. Miss.
  • per curiam (Stewart, Graves, Oldham) (no oral argument), criminal, supervised release, sentencing
  • Affirming revocation of supervised release, and sentence upon revocation.

• U.S. v. Wallace, 24-60584, appeal from S.D. Miss.
  • per curiam (Barksdale, Graves, Duncan) (no oral argument), criminal, guilty plea
  • Affirming guilty-plea conviction for enticement of a minor, rejecting argument that district court abused its discretion in denying defendant’s motion to withdraw his plea.