United States Court of Appeals

For the First Circuit 

No. 13-2154 

UNITED STATES OF AMERICA, 

Appellee, 

v. 

ALFREDO PACHECO-MARTINEZ, 

Defendant, Appellant. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

[Hon. Aida M. Delgado-Colón, U.S. District Judge] 

Before 

Howard, Chief Judge, 

Selya and Lynch, Circuit Judges. 

Robert Herrick for appellant. 

Susan Z. Jorgensen, Assistant United States Attorney, with 

whom Rosa Emilia Rodríguez-Vélez, United States Attorney, and 

Nelson Pérez-Sosa, Assistant United States Attorney, Chief, 

Appellate Division, were on brief, for appellee. 

____________________ 

June 15, 2015

____________________ 
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Lynch, Circuit Judge. Defendant Alfredo PachecoMartinez was convicted of various offenses arising from his multiyear effort to swindle scores of unsuspecting victims out of over 

a million dollars and to manipulate the U.S. Bankruptcy Code in 

order to shield his ill-gotten gains from creditors. He now 

appeals from one of the counts of conviction, arguing that there 

was insufficient evidence to support the jury's guilty verdict. 

He also attacks his sentence, arguing that the district court 

improperly calculated the applicable Sentencing Guidelines range 

and imposed a procedurally and substantively unreasonable 

sentence. We find no merit in any of these contentions and affirm 

Pacheco's conviction and sentence. 

I. 

Because Pacheco challenges the sufficiency of the 

evidence supporting his conviction on one count, we recite the 

facts relevant to that claim in the light most favorable to the 

jury verdict. See United States v. Burgos-Montes, ___ F.3d ___, 

2015 WL 2223304, at *1 (1st Cir. May 13, 2015). In discussing 

facts relevant to Pacheco's claims of sentencing error, we rely in 

part on unchallenged portions of the Presentence Investigation 

Report (PSR). See United States v. Vázquez-Larrauri, 778 F.3d 
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276, 291 (1st Cir. 2015). We confine our discussion here to the 

background necessary to frame the issues raised on appeal. 

In 2003,1 Pacheco formed a limited liability company, 

International Business Group and Affiliates (IBGANV), in Nevada 

through a registered agent service, Corporate Services of America 

(CSA). CSA offered a "virtual headquarters program" that gave 

entities which were not physically in Nevada a legal presence in 

the state. Pacheco was listed as the sole manager of IBGANV. 

Also in 2003, Pacheco formed a corporation in Puerto 

Rico called International Business Group and Affiliates (which we 

will call simply IBGA), for which he was the president and 

registered agent. Pacheco's daughter Leyda was listed as the vice 

president of IBGA, and his other daughter Mayra was listed as the 

treasurer. IBGA was not registered to make investments in Puerto 

Rico.

Finally, in July 2005, Pacheco formed a third entity, 

Liberty Dollars of Puerto Rico, Inc. (LDPR). Pacheco was listed 

as LDPR's registered agent and its only director and officer. The 

 1 Pacheco has a history of dubious dealings that began 

well before the conduct that gave rise to this conviction. In 

2002, the Puerto Rico entity responsible for securities regulation 

filed a cease and desist order against Pacheco based on his 

marketing of "rebate coupons" that purported to allow the purchaser 

to be relieved of his or her mortgage in three to five years. 

Pacheco was ultimately fined $50,000 for a violation of Puerto 

Rico's securities laws. 
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corporation's physical address was a P.O. Box in Yauco, Puerto 

Rico.

Pacheco used these entities to engage in two fraudulent 

schemes: the "Liberty Dollar program" and the "Debt Elimination 

program." Under the first program, Pacheco sold medallions with 

a small silver content to individuals as a "substitute form of 

coinage." He obtained the Liberty Dollars from NORFED, a "national 

organization dedicated to the repeal of the Federal Reserve Act 

and the Internal Revenue [C]ode." Pacheco marketed the Liberty 

Dollars as protection against inflation, telling potential buyers 

that the Liberty Dollars, unlike U.S. currency, could not lose 

value based on the actions of the Federal Reserve. Pacheco also 

marketed a variant on the Liberty Dollar called the "Boricua 

Dollar" that specifically targeted Puerto Rico. 

The evidence at trial demonstrated that the Liberty 

Dollars and Boricua Dollars operated much like a pyramid scheme: 

IBGA "would sell them through distribution channels, with each 

subsequent buyer paying a higher amount until the [dollars] reached 

a final user." Pacheco told prospective buyers that they could 

either market the Liberty Dollars or use them as currency at 

certain businesses. The marketing materials Pacheco issued in 

connection with the Liberty Dollars predicted that the annual 

returns for buyers would range from 6 percent to over 25 percent. 
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In 2006, the U.S. Mint notified Pacheco that the 

introduction of Liberty Dollars into circulation was illegal, but 

he nevertheless continued to market and sell the coins. Pacheco's 

companies ultimately received $59,512 from the sale of the Liberty 

Dollars and Boricua Dollars to the public. 

Under the Debt Elimination program, IBGA marketed and 

sold, for a fee of $3,000-$3,500, a program which purported to 

allow buyers to pay off their debts in a short amount of time. 

IBGA obtained the program from a company called Mortgage 

Alternatives. Between 2004 and 2005, some 225 people bought the 

debt elimination program, but their debts were not relieved. The 

program in fact "did not work."

Pacheco also sold "Investment Contracts" pursuant to 

which an individual would buy "blocks" of investments for $25,000 

each. Pacheco represented that the money would be used to promote 

the marketing and sales of the debt elimination program, and 

guaranteed investors a minimum return of $500 per month or 24 

percent per year for each "block." 

Pacheco provided prospective investors with a "Proposal 

and Business Plan" in Spanish and a copy of the Investment Contract 

in English. The two documents differed in crucial ways: the 

contract itself included a section advising that the investment 
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was "speculative" and involved a "substantial degree of risk of 

loss," while the Spanish document omitted any mention of risk.

Pacheco told prospective investors "that he was IBGANV's 

representative in Puerto Rico, working under the local subsidiary 

IBGA[]." He thus led the investors to believe that he was backed 

by a large United States corporation, when in fact "no actual 

business programs or operations took place out of IBGANV." After 

an individual invested with him, Pacheco would for a short period 

of time make "lulling" interest payments to the investor in order 

to give him or her the mistaken impression that the investment was 

safe and would generate the promised return. But the investments 

were never fully -- or even mostly -- repaid. Twelve individuals 

ultimately invested over $1 million with Pacheco and sustained 

losses of over $750,000. 

While these fraudulent schemes were ongoing, in 

September 2003, Pacheco and his wife filed a joint petition for 

Chapter 13 bankruptcy. During the pendency of that bankruptcy 

proceeding, Pacheco opened a bank account with the former Western 

Bank in the name of "IBGA" and an account with Wells Fargo in the 

name of "IBGA, LLC." The bankruptcy case was dismissed with no 

discharge in May 2004 on the recommendation of the Trustee.
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A month later, in June 2004, Pacheco and his wife once 

again filed for Chapter 13 bankruptcy. This case, too, was 

dismissed with no discharge on the recommendation of the Trustee.

On October 4, 2005, the couple filed for bankruptcy a 

third time, this time under Chapter 7. The case was assigned to 

a different Trustee, and that Trustee granted the discharge of 

Pacheco's debts. In connection with the third bankruptcy 

proceeding, Pacheco represented (untruthfully) that he had no 

interest in any incorporated or unincorporated businesses. He 

failed to disclose his position or ownership interest in IBGANV, 

IBGA, or LDPR, and likewise failed to disclose the activities in 

which he had been engaging through those entities.

On October 5, 2005, the day after the third bankruptcy 

petition was filed, several checks were drawn from the Western 

Bank checking account Pacheco had opened in the name of IBGA. 

Pacheco had his daughters use some of those funds (all proceeds of 

Pacheco's fraudulent schemes) to buy, in IBGA's name, an office 

condominium which Pacheco had previously lost to foreclosure. 

In December 2005, while the third bankruptcy proceeding 

was pending, Pacheco opened three more bank accounts: one in the 

name of "IBGAPR," one in the name of LDPR, and one in the name of 

"IBGA-GEFC." Various checks were drawn on these accounts 
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referencing what the government characterizes as "thinly-disguised 

personal uses."

The FBI ultimately uncovered Pacheco's fraud after an 

investigation. Pacheco was arrested and charged with securities 

fraud, mail fraud, conspiracy to conceal assets and make fraudulent 

transfers, concealment of assets, fraudulent transfer, uttering 

coins, and money laundering. A jury convicted Pacheco on all 

counts and the district court sentenced him to a top-of-theguidelines sentence of 235 months imprisonment. The court's 

guidelines calculation included a two-level enhancement for abuse 

of a position of trust and a two-level enhancement for 

sophisticated means. 

II. 

Pacheco first challenges the district court's denial of 

his Rule 29 motion for judgment of acquittal on Count 8 of the 

indictment, which charged him with making a fraudulent transfer in 

violation of 18 U.S.C. §§ 2, 152(7). We review the denial of a 

Rule 29 motion "de novo, examining the evidence in the light most 

favorable to the verdict, and asking whether a rational jury could 

find guilt beyond a reasonable doubt." Burgos-Montes, 2015 WL 

2223304, at *13 (citations omitted). 

The statute of conviction, § 152(7), makes it illegal 

for any person to 
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in a personal capacity or as an agent or 

officer of any person or corporation, in 

contemplation of a case under [the Bankruptcy 

Code] by or against the person or any other 

person or corporation, or with intent to 

defeat the provisions of [the Bankruptcy 

Code], knowingly and fraudulently transfer[] 

or conceal[] any of his property or the 

property of such other person or 

corporation[.] 

Count 8 of the indictment alleges that Pacheco 

in his personal capacity and as an agent of 

IBGA[], with the intent to defeat the 

provisions of [the Bankruptcy Code], knowingly 

and fraudulently transferred and concealed 

property belonging to him, without 

authorization and unbeknownst to the 

bankruptcy trustee, creditors, and the United 

States Trustee, to wit: the defendant used 

IBGA[] monies, approximately [$50,000], to 

purchase an office building, Condominio Las 

Torres Navel, Yauco, Puerto Rico.

Pacheco argues that "IBGA's purchase of the office condominiums 

could not constitute a fraudulent transfer of Pacheco's own 

property" (emphasis added), and so he should have been granted a 

judgment of acquittal on Count 8. 

Pacheco's conduct fits the statute like a glove. He 

commenced a bankruptcy proceeding, failed to disclose his interest 

in an entity which he owned, and then used that entity's funds 

(funds Pacheco had obtained by defrauding investors) to buy back 

a property which he had previously owned but had been foreclosed 

upon. In other words, Pacheco, "in a personal capacity or as an 
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agent [of IBGA] . . . with intent to defeat the provisions of [the 

Bankruptcy Code], knowingly and fraudulently transfer[ed] or 

conceal[ed]. . . his property or the property of [IBGA]." 18 

U.S.C. § 152(7). 

As we read Pacheco's brief, he does not dispute this 

analysis. Instead, his argument is that his conduct did not fit 

the language of the indictment, which charged him with transferring 

or concealing his own property, rather than IBGA's property. We 

reject this contention for two reasons. 

First, a jury could have reasonably found that the money 

Pacheco used to buy the foreclosed condominium was Pacheco's 

property, even though it was nominally in a bank account under 

IBGA's name. The evidence presented at trial showed that the money 

Pacheco obtained by duping investors flowed freely among Pacheco, 

his relatives, and the various corporations that he set up. 

Indeed, it was precisely because Pacheco put the money in the IBGA 

account that he was able to shield it from his creditors in the 

bankruptcy proceeding (through his failure to disclose his 

interest in IBGA) and use it to buy back the condominium.2 As we 

said in United States v. Ledée, 772 F.3d 21 (1st Cir. 2014), "[i]t 

 2 For this reason, Pacheco's claim that "the purchase of 

the office condominium had no conceivable effect on Pacheco's 

bankruptcy estate" is flatly wrong. 
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is inconceivable that such a blatant scheme to manipulate an estate 

asset could be insulated from criminal consequences simply because 

the funds at issue" were nominally held in IBGA's name rather than 

Pacheco's. Id. at 34. 

Second, even if we were to assume that the money did not 

belong to Pacheco, it would mean only that there was a variance 

between the crime charged in the indictment and the evidence 

adduced at trial. See United States v. Yelaun, 541 F.3d 415, 419 

(1st Cir. 2008). But a variance warrants reversal only if "it is 

prejudicial, e.g., by undermining the defendant's right 'to have 

sufficient knowledge of the charge against him . . . to prepare an 

effective defense and avoid surprise at trial, and to prevent a 

second prosecution for the same offense.'" Id. (alteration in 

original) (quoting United States v. DeCicco, 439 F.3d 36, 47 n.4 

(1st Cir. 2006)). There was no prejudice here. Pacheco knew 

exactly what he was charged with doing. The indictment could 

hardly have spelled it out more clearly: it alleges that "the 

defendant used IBGA[] monies, approximately [$50,000], to purchase 

an office building, Condominio Las Torres Navel, Yauco, Puerto 

Rico."3

 3 Pacheco obliquely suggests in a footnote in his reply 

brief that a constructive amendment of the indictment took place. 

This argument is waived for lack of adequate briefing. See United 
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The district court did not err in denying Pacheco's Rule 

29 motion. 

III. 

We now turn to Pacheco's claims of sentencing error. 

The district court calculated Pacheco's total offense level as 36 

and his criminal history category as I, yielding a guidelines range 

of 188 to 235 months in prison. The court sentenced Pacheco to a 

top-of-the-guidelines sentence of 235 months. 

Pacheco argues that the district court erred in its 

guidelines calculation in two ways: in applying a two-level 

enhancement for abuse of a position of trust, U.S. Sentencing 

Guidelines § 3B1.3 (2012), and in applying a two-level enhancement 

for a fraud offense "involv[ing] sophisticated means," id. 

§ 2B1.1(b)(10)(C). He also contends that the court failed to take 

account of key mitigating factors in sentencing him and imposed a 

sentence that was procedurally and substantively unreasonable. 

In considering challenges to a sentence, we review legal 

conclusions de novo and factual findings for clear error. United 

States v. Zehrung, 714 F.3d 628, 631 (1st Cir. 2013). We review 

a district court's "application of the guidelines to a particular 

case on a 'sliding scale,' with the intensity increasing the 'more 

 

States v. Torres, 162 F.3d 6, 11 (1st Cir. 1998); United States v. 

Zannino, 895 F.2d 1, 17 (1st Cir. 1990). 
- 13 - 

law-oriented' -- as opposed to 'fact-driven' -- the judge's 

conclusion is." Id.; see also United States v. Sicher, 576 F.3d 

64, 70 (1st Cir. 2009). With respect to the procedural 

reasonableness inquiry, "we look to whether the district court 

properly calculated the Guidelines range, treated the Guidelines 

as advisory, considered the various 18 U.S.C. § 3553(a) factors, 

and adequately explained the chosen sentence." United States v. 

Morales-Machuca, 546 F.3d 13, 25 (1st Cir. 2008). And we review 

the substantive reasonableness of a sentence "under a highly 

deferential abuse of discretion standard." Id. 

Applying these standards, we find no merit to any of 

Pacheco's arguments as to his sentence. 

A. Abuse of a Position of Trust Enhancement 

"To apply the [abuse of a position of trust] enhancement, 

'the district court must first decide that the defendant occupied 

a position of trust and then find that [he] used that position to 

facilitate or conceal the offense.'" Sicher, 576 F.3d at 71 

(quoting United States v. Gill, 99 F.3d 484, 489 (1st Cir. 1996)). 

The guidelines commentary provides that a position of trust "is 

'characterized by professional or managerial discretion.'" Id. at 

72 (quoting U.S. Sentencing Guidelines § 3B1.3 cmt. n.1 (2012)). 

We may also consider whether the defendant used a personal 
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relationship with the victim in order to facilitate the fraud. 

See United States v. O'Connell, 252 F.3d 524, 529 (1st Cir. 2001). 

Pachecho contends that the district court erred in 

applying the abuse of trust enhancement because he did not have a 

special relationship with his investors. Instead, Pacheco argues, 

he merely "relied on his powers of persuasion" and "distinguished 

bearing" in order to induce individuals to give him their money. 

Pacheco has not persuaded us that the district court 

erred. As the government correctly notes, Pacheco did have 

preexisting relationships with at least some of his victims.4 One 

victim was a family friend who "rel[ied] on [Pacheco's] word" that 

the Investment Contract (which was in English) was consistent with 

the Spanish-language document Pacheco gave her. Pacheco 

represented to the victim that he was giving her "an exclusive 

opportunity" because he knew her uncle. Pacheco in fact had 

 4 For this reason, the cases upon which Pacheco relies are 

inapposite. In neither United States v. Jolly, 102 F.3d 46 (2d 

Cir. 1996), nor United States v. Mullens, 65 F.3d 1560 (11th Cir. 

1995), did the defendant have a preexisting personal relationship 

with his victims. See Jolly, 102 F.3d at 49 (noting that the 

record did not "disclose any relationship with particular 

investors in which [the defendant] occupied a position of influence 

beyond that enjoyed by garden-variety borrowers"); Mullens, 65 

F.3d at 1566 (noting that there was no "evidence suggesting that 

Mullens had a special, close, or personal attachment, or fiduciary 

relationship, with any member of the country club that 

significantly contributed to his ability to perpetrate or conceal 

the ponzi scheme"). 
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persuaded the uncle and his wife to invest with him as well. These 

victims gave Pacheco the authority to "invest" large amounts of 

their money, based on their friendship with him and on Pacheco's 

assurances of the returns that would accrue. 

Based on this evidence, the district court reasonably 

concluded that Pacheco occupied a position of trust as to at least 

some of his victims and abused that trust to further his scheme. 

See United States v. Willeumier, 98 F. App'x 558, 560 (7th Cir. 

2004). 

B. Sophisticated Means Enhancement 

The guidelines commentary describes the sophisticated 

means enhancement as follows: 

"[S]ophisticated means" means especially 

complex or especially intricate offense 

conduct pertaining to the execution or 

concealment of an offense. For example, in a 

telemarketing scheme, locating the main office 

of the scheme in one jurisdiction but locating 

soliciting operations in another jurisdiction 

ordinarily indicates sophisticated means. 

Conduct such as hiding assets or transactions, 

or both, through the use of fictitious 

entities, corporate shells, or offshore 

financial accounts also ordinarily indicates 

sophisticated means. 

U.S. Sentencing Guidelines § 2B1.1 cmt. n.8(B) (2012). The list 

in the commentary of conduct that warrants the enhancement is not 

exhaustive. The defendant need not have done any of the things 

listed in order to qualify for the enhancement, so long as the 
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offense as a whole shows "'a greater level of planning or 

concealment' than a typical fraud of its kind." United States v. 

Knox, 624 F.3d 865, 870-72 (7th Cir. 2010) (quoting United States 

v. Wayland, 549 F.3d 526, 528-29 (7th Cir. 2008)). 

The district court's conclusion that this enhancement 

applied is unassailable. Pacheco set up multiple corporate 

entities in order to facilitate his fraudulent schemes and hide 

his ill-gotten gains from creditors during the bankruptcy 

proceeding. He convinced investors to participate in a scheme by 

having them sign a contract in English that differed from the 

Spanish-language document they had been given, and he made 

"lulling" payments to them at the outset so they would think that 

their investment would in fact make a return. We could go further,

but we need not. These facts provide an ample basis for 

application of the enhancement. Cf. United States v. Foley, 783 

F.3d 7, 25-26 (1st Cir. 2015) (upholding district court's 

application of the enhancement where the defendant used fake checks 

and fictitious payments in order to make his "'scheme more 

effective and difficult to thwart'" (quoting United States v. 

Evano, 553 F.3d 109, 113 (1st Cir. 2009)). 

C. Procedural and Substantive Reasonableness 

Pacheco's basic argument as to the reasonableness of his 

sentence is that "the district court failed to consider crucial 
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mitigating factors," such as Pacheco's age, his "efforts to bring 

the coin scheme into compliance with federal law," and the fact he 

himself was purportedly "deceived by the charlatans who actually 

conceived the investment vehicles."

As to the latter two purported "mitigating factors," the 

district court simply rejected the premises. It found that 

Pacheco, far from being a victim, was a "leader and organizer" of 

the fraudulent scheme. And it found that Pacheco did not merely 

fail to comply with the law with respect to the "coin scheme"; he 

"defiantly continued" the scheme even after the U.S. Mint ordered 

him to stop. Those findings are supported by the evidence. 

The district court also explicitly considered Pacheco's 

age. But it considered other relevant factors too -- Pacheco's 

history of fraudulent conduct, his targeting of vulnerable 

individuals, his repeated attempts to manipulate the proceedings, 

his total lack of remorse -- and decided that a sentence of 235 

months was appropriate. That conclusion easily passes muster under 

our deferential standard of review. 

Indeed, Pacheco's age could cut both ways in the 

sentencing calculus. It is true that, in general, "[t]he 

propensity to engage in criminal activity declines with age," and 

so persons convicted of a crime late in life may be unlikely to 

recidivate. United States v. Johnson, 685 F.3d 660, 661-62 (7th 
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Cir. 2012). Perhaps for this reason, the guidelines explicitly 

provide that advanced age may warrant a downward departure in 

sentencing. See id. But it is also true that "engaging in criminal 

activity at such an age provides evidence that [the defendant] may 

be one of the few oldsters who will continue to engage in criminal 

activity until [he] drop[s]." Id. at 662.5 That may well be the 

case here; Pacheco has been swindling unwary victims for years and 

has shown no sign of changing his ways. At the sentencing hearing, 

he used his opportunity to allocute not to express any contrition, 

or apologize to the victims whose life savings he stole, but rather 

to assert that the court lacked jurisdiction over him. Cf. J.W. 

Barnard, Securities Fraud, Recidivism, and Deterrence, 113 Penn 

St. L. Rev. 189, 223 (2008) (listing the following factors as 

predictive of future misconduct in the securities fraud context: 

"(1) a pattern of wrongdoing as opposed to an isolated act; (2) 

lack of remorse or contrition; (3) possession of specific skills, 

coupled with conditions providing opportunity for harm (such as 

employment as an investment advisor or in a brokerage firm); and 

(4) recent conduct indicating an intent to recidivate"). The 

 5 Indeed, while the recidivism rate declines with age, the 

decline is much less pronounced among those individuals with a 

significant criminal history. See U.S. Sentencing Comm'n, 

Measuring Recidivism: The Criminal History Computation of the 

Federal Sentencing Guidelines 28 (2004). 
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district court could have reasonably found that only a sentence of 

this magnitude would potentially deter Pacheco from returning to 

his illicit pursuits. 

IV. 

Affirmed.