United States v. Phillips

The prohibition on “frequent[ing] places” utilized in the trade or use of illegal drugs prohibits a person from “knowingly going to a specific place where drugs are illegally used or sold,” but not incidental contact with a “neighborhood simply because a person is selling drugs somewhere within that neighborhood.”

Defendant, Mark Phillips, was convicted of multiple counts which included convictions of wire fraud, mail fraud and money laundering. Mr. Phillips, in his former position as CEO of MOD Systems, Inc. (“MOD”), used false invoices to steal over $1.5 million from MOD. Among other challenges reviewed by the Ninth Circuit for plain error, Mr. Phillips challenged a condition of his supervised release. The challenged condition prohibited Mr. Phillips from “frequent[ing] places where controlled substances are illegally sold, used, distributed or administered.” Mr. Phillips maintained the term “frequent[ing] places” was “so vague and overbroad” that it prohibited him from “frequenting ‘entire neighborhoods’” in Seattle because of the pervasive drug culture in certain areas of Seattle. The Ninth Circuit, upholding the validity of this condition, held that a reasonable person understood that the prohibition on “frequent[ing] places” utilized in the trade or use of illegal drugs prohibits a person from “knowingly going to a specific place where drugs are illegally used or sold,” but not incidental contact with a “neighborhood simply because a person is selling drugs somewhere within that neighborhood.” The Court also reversed Mr. Phillips mail fraud conviction, affirmed his money laundering convictions, found no error in the prosecutor’s use of the word “lied” in closing arguments, and remanded to the district court a forfeiture judgment against Mr. Phillips. AFFIRMED in part; REVERSED in part; and REMANDED in part.