Revised January 7, 1999

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 96-20873

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

WILLIE BURNS; MARTANETTE ALEXANDER;

GREGORY EUGENE AUGUST; EARLINE MONTGOMERY,

Defendants-Appellants.

*********************************************************

______________________________

No. 97-20288

______________________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

GREGORY EUGENE AUGUST,

Defendant-Appellant.2 Appeals from the United States District Court

for the Southern District of Texas

December 9, 1998

Before KING, EMILIO M. GARZA, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

In this appeal we are asked to review the convictions of four

appellants who were found guilty of defrauding the Resolution Trust

Company (“RTC”) and the Federal Deposit Insurance Company (“FDIC”).

Two of those appellants also ask us to review the propriety of

their sentences. For the following reasons we affirm the

appellants’ convictions and sentences.

I.

Appellant Gregory August (“August”) was the owner and chief

e xecutive officer of the August Group Incorporated (“TAGI”), a

privately held property-management company based in Texas.

Appellant Earline Montgomery (“Montgomery”) was TAGI’s acting vicepresident and secretary. Appellant Martanette Alexander

(“Alexander”) was August’s former girlfriend, but was not formally

employed by TAGI. Appellant Willie Burns (“Burns”) was a friend of

August and, like Alexander, not formally employed by TAGI. Ephraim

Tennie ("Tennie"), a government witness who testified for the

government at the appellants’ trial, worked for TAGI as a

maintenance coordinator.

In 1991 and 1992, TAGI entered four separate contracts to3

manage va rious properties that were in receivership of the RTC.

TAGI entered those agreem ents with companies that were under

contract with the RTC under “Standard A sset Management and

Disposition Agreements” (“SAMDA”). Those companies, which we will

refer to as SAMDA contractors, were engaged by the RTC to perform

asset management and disposit ion services in connection with

various loan assets, real estate assets, and other assets held by

the RTC. In general, a SAMDA contractor’s duties were to restore,

maintain, marke t, and sell the RTC properties in accordance with

federal policies and procedures. The SAMDA contractors also were

authorized to select and hire property management companies, like

TAGI, to carry out day-to-day management functions. The property

management companies, in turn, were authorized to subcontract with

other vendo rs to provide basic services for the properties;

security, trash removal, lawn maint enance, and so on. The

subcontractors’ invoices were submitted for payment to the property

management companies, or to the SAMDA contractors, depending on the

particula r arrangement in place. The SAMDA contractors paid the

property-management fees, expenses, and reimbursables with money

funded by the RTC.

TAG I entered four contracts with the following SAMDA

contractors to manage the following RTC properties: (1) Benjamin

Franklin Federal Savings Association (“BFFSA”) to manage the Green

Oaks Apartments in Laporte, Texas; (2) the J.E. Robert Company

(“JER”) to manage the Richwood Place Apartments in Houston, Texas;1 There is no uniform provision or definition in the four

contracts relating to this requirement; each expresses the

prohibition differently. A common theme in the four contracts,

however, is that TAGI was precluded from hiring a company with

which TAGI would have a conflict of interest. In this appeal the

appellants do not dispute whether TAGI violated this prohibition.

Accordingly, for purposes of this appeal we assume that TAGI in

fact violated those conflict of interest provisions.

2 Unlike th e contracts relating to the RTC properties,

TAGI’s contract with the FDIC did not involve a SAMDA contractor.

It was entered directly with the FDIC.

4 (3) ONTRA, Inc. (“ONTRA”) to manage roughly 500 properties in Texas

and Oklahoma; and (4) National Loan/CRT Joint Venture (“NL/CRT”) to

manage the Spring Cypress Shopping Center in Houston, Texas. In

accordance with the terms of those contracts, TAGI was barred from

hiring re lated companies to perform services at the properties

without acquiring RTC approval. 1 Additionally, TAGI was limited to

the monetary compensation specifically provided under the

contracts; it was forbidden from realiz i ng additional outside

profits from its management of the properties.

TAGI entered into a similar management contract with the FDIC

in 1992. 2 Under that agreement, TAGI promised to provide property

managem ent services for Cavender’s Boot City (“Cavender’s”) in

Houston, Texas, which was in receivership of the FDIC. That

c ontract, like TAGI’s property management contracts for the RTC

properties, contained a conflict of interest provision that

prohibited TAGI from transacting business with a related company.

Over the next several years TAGI hired more than a dozen

s u bcontractors to perform various functions at its contracted5

properties. Unbeknownst to the RTC, FDIC, and SAMDA contractors,

however, many of those companies were aff iliated with August and

TAGI. For example, Guardco Security Company (“Guardco”), Evergreen

Lawn Care, and Alexander Plum bing Company, were started by

Alexander, who filed assumed name certificates and opened new bank

accounts for the three companies. CQ&S Enterprise Company (“CQ&S”)

operated with a bank account that August had opened with TAGI’s

address and an assumed name certificate filed years earlier by

C harles Newton, August’s deceased lodge brother. Capital City

Contractors (“Capital Contractors”), Capital City Management

(“Capital Management”), and Pro-Lawn Service (“Pro-Lawn”), operated

under assumed name certificates filed by Nathaniel Gordon

("Gordon"), a TAGI employee who also assisted in the management of

those companies.

The appellants never advised the RTC, FDIC, or SAMDA

contracto rs that TAGI had hired related companies to perform

services on the contracted prop erties. When federal authorities

finally grew suspicious, and searched TAGI’s offices in May 1993,

they found blank invoices o f various TAGI-affiliated companies,

checkbooks of these companies , and blank insurance certificates.

The next day, August, Montgomery, Burns, Tennie, and Gordon met at

Club Reflections, a bar owned by August, where they sorted through

a box of incriminating documents that had escaped detection. They

then burned those documents in an alley outside the club.

On November 2, 1994, the appellants were charged in a multi-6

count indictment charging them with conspiracy to defraud the

United States in violation of 18 U.S.C. § 371, in combination with

other fraud-related offenses. The appellants were then jointly

tried to a jury on November 17, 1995. Over the course of that

trial, which lasted for nearly three mo nths, the government came

forward with a mountain of evidence demonstrating that for roughly

two and a half years the appellants conspired to bilk the

government. False invoices were generated for work that was never

done. Valid invoices from legitimate vendors were altered,

falsified, and inf lated to show greater amounts of monies owed.

False bids were submitted to boost claimed reimbursables.

Evidence also showed that the appellants took active measures

to conceal their fraud. August, for example, terminated the

services of "Guardco, Inc." a pro perly licensed company that had

been providing security services for the Green Oaks Apartments, and

surreptitiously replaced it with the Guardco that Alexander had

crea ted. Montgomery instructed Tennie on numerous occasions to

generate fake invoices and alter valid ones. Alexander, who was

employed at an unrelated bank, assisted in hiding Aug ust’s

involvement by filing assumed name certificates, and establishing

bank accounts, for several of the related companies. Burns, on

August’s instructions, would negotiate and sign c ontracts as the

sole proprietor of CQ&S, even though August was the actual owner.

On February 16, 1996, a jury convicted August of one count of

conspiracy (Count 1), four counts of illegal participation (Counts7

2

- 5), 18 U.S.C. § 1006(2); seven counts of making false claims to

the RTC (Coun ts 6 - 11 & 13), 18 U.S.C. § 287; four counts of

making false statements to FDIC (Counts 14

- 17), 18 U.S.C. § 1007;

and one count of money laundering (Count 20), 18 U.S.C.

§ 1956(a)(1)(B)(i). August subsequently was sentenced to 96 months

imprisonment.

Montgomery was found guilty of one count of conspiracy (Count

1), four counts of illegal participation (Counts 2

- 5), 18 U.S.C.

§ 1006(2); seven counts of making false claims to the RTC (Counts

6

- 11 & 13), 18 U.S.C. § 287; and four cou nts of making false

statements to FDIC (Counts 14

- 17). She received a sentence of 37

months imprisonment.

Alexander was convicted of one count of conspiracy (Count 1),

and two counts of illegal participation (Counts 2, 3 & 5), 18

U.S.C. § 1006(2). The court sentenced Alexander to 15 months

imprisonment.

Burns was found guilty on one count of conspiracy (Count 1),

and one count of illegal participation (Count 4), 18 U.S.C.

§ 1006(2). He was ordered to serve a 24-month term of imprisonment. Each of the appellants now appeal their respective

convictions. Montgomery and Burns also challenge their sentences.

II.

On appeal August challenges the sufficiency of the evidence

supporting his convictions under Count 20 for money laundering, 188

U.S.C. § 1956(a)(1)(B)(i), and aiding and abetting in the

commission of that crime, 18 U.S.C. § 2. He does not dispute the

evidentiary basis for any of his other convictions. August moved

for judgment of acquittal at the close of the government’s case,

and at the end of trial, thus preserving his sufficiency claim for

appellate review. U nited States v. Pankhurst

, 118 F.3d 345, 351

(5th Cir.), cert. denied

, 118 S. Ct. 630 (1997 ). The district

court denied those motions.

We review de novo a district court’s denial of a motion for

judgment of acquittal. U nited States v. Myers , 104 F.3d 76, 78

(5 th Cir.), c ert. denied

, 117 S. Ct. 1709 (1997). In evaluating

the sufficiency of the evidence we must affirmthe verdict “if a

reasonable trier of fact could conclude from the evidence that the

elements of the offense were established beyond a reasonable doubt,

viewing the evidence in the light most favorable to the verdict and

drawing all reasonable inferences from the evidence to support the

verdict.” Id.

To prove the offens e of money laundering under 18 U.S.C.

§ 1956(a)(1)(B)(i), the government must prove that the defendant:

(1) conducted or attempted to conduct a financial transaction, (2)

which the defenda nt knew involved the proceeds of unlawful

activity, and (3) which the defendant knew was designed to conceal

or disguise the nature, location, source, ownership, or control of

the proceeds of the unlawful activity. 18 U.S.C. § 1956(a)(1)3 The parties do not dispute that the $25,000 that was

trans ferred from the CQ&S bank account to the TAGI account was a

portion of the $56,250 in proc eeds paid by JER to CQ&S for the

repair work.

9 (B)(i); United States v. West

, 22 F.3d 586, 590-91 (5th Cir.),

cert. denied , 513 U.S. 1020 (1994).

In this case, August’s money laundering conviction was based

on the following series of financial transactions. JER, a SAMDA

contractor for the RTC, issued a $56,250 check to CQ&S, a

subcontractor who was ostensibl y hired by TAGI to perform repair

work at the Richwood Place Apartments. When JER issued the check

to CQ&S it was unaware that the company was in fact controlled and

operated by August. That fact was kept hidden from JER through the

efforts of Burns who, on August’s instructions, went to the offices

of JER and posed as CQ&S’s president.

After Burns personally accepted the c heck from JER, he

depos ited it in CQ&S’s bank account. August, the only signer on

the CQ&S account, then wrote a check drawn on the account for

$25,000, which he deposited in TAGI’s bank account. 3 The

gov ernment alleged at trial that August structured those

transactions in an effort to conceal the fact that he was illegally

participating in the financial dealings between JER and CQ&S.

In challenging the evidentiary basis of his money laundering

conviction, August does not dispute the first two elements of the

offense. He concentrates instead on the third required element of10

money laundering, the design requirement. August contends that a

reasonable jury could not conclude that the $25,000 check-transfer

was designe d to conceal the fraudulent nature of those funds

because his name and address were plainly listed on both the CQ&S

account and the TAGI account, making his identity readily apparent.

We are unpersuaded.

In arguing that the design requirement is missing in this

case, August focuses exclusively on t he $25,000 transfer, to the

complete exclus ion of the events that preceded that transaction.

He is assuming, we think, that those events are not relevant in

determining whether he intended to conceal the illegal proceeds.

That assumption is mistaken.

Many financial transactions ha ve the effect of concealing

illegal proceeds by converting th em into a more legitimate form,

and by adding one more degree of separation between the illegal

proceeds and the original unlawful activity. S ee United States v.

Willey

, 57 F.3d 1374, 1384 (5th Cir.) (observing that the design

requirement distinguishes the crime of money laundering from the

innocent act of mere money spending), cert. denied , 516 U.S. 1029

(1995). For that reason this Court has explained that “merely

e ngaging in a transaction with money whose nature has b een

concealed through other means is not itself a crime.” U nited

States v. Garci a-Emanuel , 14 F.3d 1469, 1474 (5th Cir. 1994).

“[T]he governme nt must prove that the specific transactions in11

question were designed, at least in part, to launder money, not

that the transaction involved money that was previously laundered

through other means.” Id.

It must be remembered , however, that in examining whether a

specific transaction was designed to launder money, we are not

required to view that transaction in total isolation. To the

contrary, we have expressly observed that:

[I]n order to establish the design element of

money laundering, it is not necessary to prove

with regard to any single transaction that

. .

. the particular transaction charged is itself

highly unusual

. . . . That is, it is not

necessary that a transaction be examined

wholly in isolation if the evidence tends to

show that it is part of a larger sch eme that

is designed to conceal illegal proceeds.

Willey , 57 F.3d at 1387.

Contrary to August’s suggestion, a particular transaction must

be viewed in context when determining whether it was designed to

con ceal. As a result, “a design to conceal on a particular

transaction may be imputed to a subsequent transaction” if the

subsequent transaction, while innocent on its face, is part of a

larger money laundering scheme. I d. at 1386; see also GarciaEmanuel

, 14 F.3d at 1478 (also acknowledging that design to conceal

may be imputed from one transaction to another). Evidence that may

be considered when determining whether a transaction was designed

to conceal includes:

statements by a defendant probative of intent

to conceal; unusual secrecy surrounding the12 transaction ; structuring the transaction in a

way to avoid attention; depositing illegal

profits in the b ank account of a legitimate

business; highly irregular features of the

transaction; using third parties to conceal

the real owner ; a series of unusual financial

moves cumulating [sic] in the transaction ; or

expert testimony on practices of criminals.

Garcia-Emanuel

, 14 F.3d at 1475-76 (emphasis on evidence present in

this case).

In this case, the record reflects that August was expr essly

forbidden from hiring related companies where there was a potential

conflict of interest. Nonetheless, August opened the CQ&S bank

account at issue here, named himself as the sole signatory, and

proceed to have repair work done at the Richwood Place Apartments

in the name of CQ&S. To conceal his identity from JER, and to

begi n the process of laundering the $56,000 in illegal proceeds,

August instructed Burns to represent himself to JER as the sole

proprietor of CQ&S. Accordingly, Burns, and not August, appeared

at the offices of JER, acted as the president of CQ&S, and accepted

the $56,250 check. Those transactions, which undeniably give rise

to an inference of intent to conceal, put the $25,000 checktransfer in proper perspective.

Afte r the illegal proceeds were safely deposited in CQ&S’s

account, one final s tep remained in the money laundering scheme.

August needed to convert those proceeds into a more legitimate form

-- from money belonging to CQ&S, to money which was under the

control of TAGI. That was accomplished through the $25,000 check-13

transfer.

It is true that the $25,000 check-transfer, when viewed in

isolation, appears to be nothing more than an ordinary transaction

between two bank accounts, conducted in plain view. However, when

we look beyond the face of that transaction , and look at the

transactions which immediately preceded it, we find s trong and

compelling evidence that the $25,000 transfer was not an innocent

transaction. The record gives rise to a strong inference that the

$25,000 transfer was the final step of a larger money laundering

scheme willfully designed to give August access to the illegal

proceeds. We conclude that there is sufficient evidence of a

design to conceal. August’s money laundering conviction must

stand.

III.

Montgomery appeals all of her convictions on s ufficiency of

the evidence grounds. She properly preserved that claim for

appellate review by moving for judgment of acquittal at the close

of the government’s case, and at the end of trial. The district

court denied those motions. We review each of Montgomery’s

convictions in turn.

Montgomery was convicted of consp iracy under count one. To

establish a conspiracy in violation of 18 U.S.C. § 371, the

government must prove beyond a reasonable doubt: (1) an agreement

between two or more people, (2) to commit a crime against the14

United States, and (3) an overt act by one of the conspirators to

further the objectives of the conspiracy. 18 U.S.C. § 371; U nited

States v. Dupre , 117 F.3d 810, 820 (5th Cir. 1997), cert. denied,

118 S. Ct. 857 (1998). The government is not required to rely on

direct evidence of a conspiracy, as each element may be proven by

circumstantial evidence. U nited Sta tes v. Casilla , 20 F.3d 600,

603 (5th Cir.), cert. denied , 513 U.S. 892 (1994). Moreover, the

agreement need not be an express or formal agreement; a tacit

understanding is sufficient. U nited States v. H opkins , 916 F.2d

207, 212 (5th Cir. 1990).

Here, Montgomery contends that there is insufficient evidence

to support her conspiracy conviction because the government failed

to prove that she knowingly participated in the conspiracy. Her

argumen t is unconvincing. At trial, there was abundant evidence

that Montgomery falsified invoices, time sheets, and insurance

certificates. There also was evidence that Montgomery ordered

Tennie to do the same. The record sufficiently supports the

finding that Montgomery knowingly parti c ipated in the alleged

conspiracy.

Montgomery also was convicted on four counts of illegal

participation with the RTC, in violation of 18 U.S.C. § 1006, with

accompanying convictions for aiding and abetting in the commission

of those crimes, in violation of 18 U.S.C. § 2. Those counts were

based on various specified transactions inv olving JER and BFFSA.15

To prove illegal participation under § 1006, the government must

demonstrate: (1) the defendant's connection with a protected

institution as specified in the statute; (2) direct or indirect

receipt of some benefit from the transaction in question; and (3)

intent to defraud. 18 U.S.C. § 1006; U nit ed States v. Brechtel

,

997 F.2d 1108, 1115 (5th Cir.), cert. denied

, 510 U.S. 1013 (1993).

We have o bserved that § 1006 is “a typical conflict of interests

prohibition.” B rechtel

, 997 F.2d at 1116. “[A] fiduciary who

benefits or causes loss to [a protected institution] by knowingly

subordinating the institution's interests to his own in a

transaction for which he has responsibility acts with the ‘intent

to defraud’ required by § 1006.” Id.

In this case, Montgomery claims that her illegal participation

convictions cannot stand because there is no evidence that she

intended to defraud the RTC. Montgomery also argues that there is

insufficient evidence that she profi ted from her business

associations with JER, BFFSA, and the RTC. We have reviewed the

record and find no merit to her arguments.

Montgomery w as also convicted on six counts of submitting

false claims to the RTC through ONTRA, a SAMDA contractor, in

violation of 18 U .S.C. § 287, with accompanying convictions for

aiding and abetting in the commission of these crimes in violation

of 18 U.S.C. § 2. In order to sustain a conviction under § 287,

the government must prove: (1) that the defendant presented a16

false or fraudulent claim against the United States; (2) that the

claim was presented to an agency of the United States; and (3) that

the defendant knew that the claim was false o r fraudulent. 18

U.S.C. § 287; United States v. Okoronkwo

, 46 F.3d 426, 430-31 (5th

Cir.), cert. denied , 516 U.S. 833 (1995).

On appeal, Montgomery argues that there is insufficient

evidence that she knew the claims were false, or that she knowingly

participated in the fraudulent scheme. Her argument fails. There

is sufficient evidence in the record demonstrating that Montgomery

possessed the requisite criminal intent.

Finally, Montgomery was convicted on four counts of making a

false statement to the FDIC, in violation of 18 U.S.C. § 1007, with

accompanying convictions for aiding and abetting in the commission

of these crimes in violation of 18 U.S.C. § 2. The false

statements alleged in the four counts involve false, or grossly

inflated, invoices and checks that were submitted to the FDIC in

connection with repair work and maintenance performed at

Cavender’s. To establish guilt under 18 U.S.C. § 1007, the

g overnment must prove: (1) the defendant made a false statement;

(2) the defendant knew the statement was false; and (3) the

statement was made for the purpose of influencing, in any way, the

FDIC's actions. 18 U.S.C. § 1007; see United States v. Taliaferro

,

979 F.2d 1399, 1405 (10th Cir. 1992) (listing roughly the same

elements).17

Here, Montgomery asserts that there is a lack of evidence that

she knew the specified invoices and checks were false. Montgomery

admits that there is evidence that she instructed Tennie and others

to generate those documents, but contends that there is no evidence

that she was aware of their contents. Her argument is

unpersuasive. There is evidence that Montgomery was aware of the

true costs associated with maintaining Cavender’s, but nonetheless

instructed Tennie to generate false bids and invoices. Moreover,

there is evidence that Montgomery personally disbursed the

incorrect payments that she received. There is sufficient evidence

supporting her convictions for making false statements to the FDIC

in violation of 18 U.S.C. § 1007.

IV.

August contends that the government violated Brady v.

Maryland

, 373 U.S. 83 (1963), by failing to disclose various pieces

of exculpatory evidence at trial. Montgomery and Alexander have

adopted this argument pursuant to Rule 28(i) of the Federal Rules

of Appellate Procedure. S ee Fed. R. App. P. 28(i) (providing that

in cases involving more than one appellant, any appellant may adopt

by reference any part of the briefs of another). This Court’s

review of Brady claims is de novo

. S ee United States v. Green

, 46

F.3d 461, 464 (5th Cir.), cert. denied , 515 U.S. 1167 (1995).

To establish a Brady claim, an appellant m ust demonstrate:18

(1) that evidence was suppressed, (2) that the evidence was

favorable to the accused, and (3) that the evidence was material.

United States v. Ellender , 947 F.2d 748, 756 (5th Cir. 1991). As

to the third element, "the evidence is material only if there is a

reasonable probability that, had the evidence been disclosed to the

defense, the result of th e proceeding would have been different.

A ‘reasonable probability’ is a probability sufficient to undermine

confidence in the outcome." U nited States v. Bagley

, 473 U.S. 667,

682 (1985); United States v. Garcia

, 917 F.2d 1370, 1375 (5th Cir.

1990).

Here, August co ntends that the government violated B rady by

allegedly engaging in a wide-ranging pattern of evidentiary abuses

at trial. The first claimed incident is the government’s alleged

failure to produce a case agent’s audit showing that ONTRA owed

TAGI $34,408 in back management fees. August contends that the

agent’s audit was critical to his defense because it substantiated

his claim that ONTRA did not pay him in a timely manner, forcing

him to move money between accounts, and causing him to submit

d uplicate and erroneous invoices. August’s argument is without

m erit. At trial, there was overwhelming evidence that August

intentionally falsified and inflated invoices in a deliberate

scheme to defraud the government. In finding August guilty of

conspiracy, illegal participation, and the other related cr imes,

the jury implicitly rejected the thrust of his defense, that every4 Bur ns raises this same issue on appeal. His argument

fails for the reasons as discussed.

19 incident of fraudulent billing was the innocent byproduct of

untimely reimbursements.

Furthermore, August admits on appeal that “[o]n crossexamination, one government witness stated that ONTRA still owed

TAGI approximately $187,000. ” (Emphasis added.) Thus, it is

clear that the case agent’s audit s howing $34,408 in back

management fees was not only cumulative in nature, but it also

would have had the effect of weakening August’s defen se by

indicating a lesser amount of back management fees. August cannot

make out a Brady

claim on this basis.

August also contends that a Brady violation occurred because

the government initially failed to produce the criminal histories

of its witnesses. 4 August places particular emphasis on the

government’s alleged failure to disclose that Victor Ih ezukwu, a

government witness who was a former security guard for Guardco, was

a Nigerian national who was possibly residing in the United States

illegally. This argument is without merit. August objected to the

government’s failure to produce the criminal histories of its

witness es at trial. In response, the government provided the

criminal histories of all its witnesses before they testified.

With this information, defense counsel cross-examined some20

witnesses and declined to cross-examine others. Accordingly, this

Brady claim fails.

August next argues that the government violated Brady when it

initially produced only two pages of a seven-page document that

contained a favorable review of TAGI’s management of the Green Oaks

Apartments. This claim is without merit because the other five

pages were eventually produced by the government, and the entire

document wa s introduced as evidence with a curative instruction

from the court.

Finally, Augus t calls our attention to the government’s

failure to produce a federal agent’s report stating that Tennie had

told the agent that Gordon, a co-defendant and employee of TAGI,

was not present at Club Reflections on the Saturday night following

the search of TAGI’s offices. This statement conflicted with the

trial testimony of Mitch Robinson, a defendant turned government’s

witne ss, that Gordon was at Club Reflections that Saturday night

assisting the other defendants in burning incriminating documents.

August’s argument fails because this one statement, as it

specifically relates to the four appellants in this case, is not

sufficient “to put the whole case in such a different light as to

undermine confidence in the jury verdict." Kyles v. Whitley , 514

U.S. 419, 435 (1995).

V.21

Alexander and Burns contend that the district court erred by

admitting the trial testimony of two investigating agents

-- Murphy

and Lynch -- regarding statements Alexander and Burns made to the

agents during non-custodial interviews. They also contend that,

once the district court decided to admit the testimony, it erred by

refusing to grant their motions for a severance. Severance and

evidentiary rulings are reviewed for abuse of discretion. United

States v. Mulderig , 120 F.3d 534 (5th Cir. 1997).

In 1993, agent Murphy questioned Alexander in a non-custodial

interview. In that conversation Alexander told the agent that she

was in charge of Guardco’s paperwork, which entailed writing checks

and submitting invoices. Alexander, however, also told agent

Murphy that Guardco was managed by August and TAGI. She advised

the agent that TAGI furnished the information necessary to prepare

Guardco’s invoices; that Guardco’s checking account belonged to

August; that August used Guardco’s checking account; and that she

supplied August with blank, signed Guardco checks.

In 1993, agent Lynch spoke with Burns in a non-cu stodial

interview. During that conversation, Burns told agent Lynch that

he delivered a CQ&S bid to JER, and signed various documents while

he was there. However, like Alexander, Burns advised the agent

that TAGI and August were managing the operation; TAGI had prepared

the documents; and August had instructed Burns to sign and deliver

them.22

On December 6, 1995, wh ile the trial was proceeding, the

government advised the pa rties that it intended to introduce

Alexander’s and Burns’ statements through the testimony of the

i nterviewing agents. August objected. He claimed that, because

neither Alexander nor Burns were taking the stand, the express

mention of his name in the agents’ testimony would deny him his

Sixth Amendment right to confrontation under Bruton v. United

States

, 391 U.S. 123 (1968). In that case, the Supreme Court held

that when the prosecution seeks to admit the statement of a nontestifying defendant, and portions of the statement incriminate a

co-d efendant, those portions must be omitted to protect the

co-defendant's Sixth Amendment right of confrontation. B ruton, 391

U.S. at 126. The district court in this case was persuaded by

August’s argument, and ordered that the agents ’ proffered

testi monies be redacted to omit all incriminating references to

August and the other codefendants. Alexander and Burns objected.

They argued, and continue to argue on appeal, that the

distr ict court erred in admitting the agents’ testimonies in

redacted form. Alexander and Burns allege that the redacted

versions fail to include statements in which they advise the agents

that they were working under the orders of TAGI and August.

Alexander and Burns argue that with those exculpatory statements

missing, the jury was left with the false impression that they had

acted alone. Alexander and Burns allege that the redactions, while23

effective at protecting their codefendants’ Sixth Amendment rights

under Bruton , violated their own Fifth Amendment rights to a fair

trial. Alexander and Burns also complain they were denied their

right to confrontation under Sixth Amendment because the district

court would not allow cross-examination in areas that had been

redacted.

Although speaking in general terms of the Fifth and Sixth

Ame ndments, Alexander and Burns have implicitly recognized that

strict compliance with Bruton may at times violate the evidentiary

rule of completeness. Under that long-standing rule, "the

opponent, against whom a part of an utterance has been put in, may

in his turn complement it by putting in the remainder, in order to

secure for the tribunal a complete understanding of the total tenor

and effect of the utterance." 7 J. Wigmore, Evidence in Trials at

Common Law § 2113, p. 653 (J. Chadbourn rev. 1978); see also Beech

Aircraft Corp. v. Rainey

, 488 U.S. 153, 171 (1988) (quoting this

passage while discussing the rule of completeness). In addition to

ensuring that a court has an accurate representation of a

declarant’s statement, the rule guards against “the danger that an

out-of-context statement may create such prejudice that it is

impossible to repai r by a subsequent presentation of additional

material.” Beech Aircraft Corp. , 488 U.S. at 172 n.14. Rule 106

of the Federal Rules of Evidence, which partially codifies the rule

of completeness, provides:24 When a writing or recorded statement or part

thereof is introduced by a party, an adverse

party may require the introduction at that

time of any other part or any other writing or

recorded statement which ought in fairness to

be considered contemporaneously with it.

Fed. R. Evid. 106.

When it appears that the literal compliance with B ruton m a y

abridge the rule of completeness, a district court must decide

whether a sev erance is necessary. That determination, which is

within the sound discretion of the district court, Zafiro v. United

States , 506 U.S. 534, 538-39 (1993), must be based on whether the

admission of the edited statement would distort the meaning of the

original in a way that gives rise to “a serious risk that a joint

trial would compromise a specific trial right of one of the

defendants, or prevent the jury fro m making a reliable judgment

about guilt or innocence.” Id. at 539.

In this appeal, Alexander and Burns describe several instances

where the agents’ testimonies fail to recount statements in which

Alexander and Burns expressly implicate August. They contend that

the omitted testimony is exculpatory in nature because it supports

their defense at trial that they were merely acting on August’s

orders and did not possess the necessary criminal intent. Having

carefully reviewed the a gents’ testimony, and the challenged

omissions, we find no reversible error.

We do not quarrel with the claim th at many of the omitted

statements expressly impli cate August in the alleged wrongdoing.25

But very few of those statements are exculpatory, in the true sense

of the word, as to Alexander and Burns specifically. There is an

important distinction, we think, between statements that implicate

others in shared wrongdoing, and statements that free one from

blame. In this case, most of the omitted statements portray August

as the head of the conspiracy, but do nothing to lessen the guilt

of Alexander and Burns.

The few omitted statements that are exculpatory in nature are

harmless in lig ht of the record as a whole. The basic theory of

Alexander’s and Burns’ defense was that they were minor

participants who were simply following August’s orders. What

Alexander and Burns fail to consider in pressing that theory,

however, is that "following orders" can only be a defen se when a

person had no idea that his conduct is criminal. Here, there is an

abundance of evidence that Alexander and Burns knew their conduct

was illegal. Thus, the fact that it was authorized and

o rchestrated by August cannot insulate them from crimin a l

liability. S ee McNamara v. Johnston

, 522 F.2d 1157, 1165 (7th Cir.

1975) (“it is well established that an agent cannot be insulated

from criminal liability by the fact that his principal authorized

his conduct”), cert. denied

, 425 U.S. 911 (1976). The omission of

any exculpatory statements was harmless error.

VI.26

At sentencing the district court enhanced Montgomery’s offense

level by two levels for obstruction of justice under § 3C1.1 of the

Sentencing Guidelines. S ee U.S.S.G. § 3C1.1 (1995). Another three

levels were added pursuant to § 3B1.1(b) of the Guidelines, on the

finding that Montgomery occupied a managerial position in criminal

activity involving five or more participants. I d. § 3B1.1(b). The

court also held Montgomery responsible for $346,194, the full

amount of the loss minus $34,408, the amount the district court

found ONTRA still owed TAGI, which enhanced her offense level by

another eight levels pursuant to § 2F1.1(b)(1)(J). With a total

offense level of 21, and a criminal history category of I,

Montgomery’s guideline rang e was 37-46 months imprisonment. The

court sentenced her to 37 months.

On appeal Montgomery challenges those three separate

enhancements. Clear error is our standard of review for the

district court’s finding that Montgomery obstructed justice, United

States v. Velgar-Vivero

, 8 F.3d 236, 242 (5th Cir. 1993), cert.

denied , 511 U.S. 1096 (1994), for the finding that Montgomery was

a manager or supervisor, United States v. Valencia

, 44 F.3d 269,

271-72 (5th Cir. 1995), and for the district court’s determinations

regarding the amount of loss under U.S.S.G. § 2F1.1. United States

v. Wimbish

, 980 F.2d 312, 313 (5th Cir. 1992), c ert. denied

, 508

U.S. 919 (1993). Additionally, the commentary to § 2F1.1 provides

that "[f]or the purposes of subsection (b)(1), the loss need not be27

determined with precision. The court need only make a reasonable

estimate of the loss, given the available information." U.S.S.G.

§ 2F1.1 cmt. 8.

Hav ing reviewed the record, we have little doubt that

Montgomery occupied a managerial position in the conspi racy and

obstructed justice after the government began its investigation of

the case. Further, we do not agree with Montgomery’s contention

that the district court erred in holding her responsible for the

full amount of the loss. We affirm the district court with regard

to Montgomery’s sentence.

VII.

Burns contends that the district court erred in giving him a

two-level increase for more than mini mal planning under

§ 2F1.1(b)(2) of the Guidelines. S ee id

. § 2F1 .1(b)(2). Burns

also complains that the district court wrongly held him responsible

for $48,600 in losses. We review the district court's determination regarding minimal planning for clear error. U nited States v.

Brown

, 7 F.3d 1155, 1159 (5th Cir. 1993). Amount of loss is

reviewed under the same standard. Wimbish , 980 F.2d at 313.

The Sentencing Gui delines provide for an enhancement of two

offense levels "[i]f the offense involved (A) more than minimal

planning, or (B) a scheme to defraud more than one victim."

U.S.S.G. § 2F1.1(b)(2). Under the Guidelines "more than minimal28 g:\opin\96-20873.opn p lanning" is defined as "more planning than is typical for

comm ission of the offense in a simple form," or "[taking]

affirmative steps

. . . to conceal the offense." U.S.S.G. § 1B1.1

cmt. 1(f). The Guidelines further provide that “‘[m]ore than

minimal planning’ is deemed present in any case involving repeated

acts over a period of time, unless it is clear that each instance

was purely opportune.” Id

.

Burns argues that the district court erred in finding more

than minimal planning because the record contains no evidence that

he took affirmative steps to conceal his crimes. According to

Burns, he was linked to only one scheme, and did not engage in

repeated criminal acts. Burns argument is plainly contradicted by

the record. He falsely posed as the owner and president of CQ&S

when he bid on the repair work at Richwood Place Apartments. Burns

also went twice to JER’ s offices to accept checks that JER had

issued to CQ&S. On this evidence we cannot conclude that the

district court’s determination of more than minimal planning was

clearly erroneous.

Burns further asserts that the district court erred in finding

him responsible for $48,600 in losses because he only received

$4,193 for his part in the scheme. In support of that argument

Burns relies on U nited States v. Smithson

, 49 F.3d 138, 144 (5th

Cir. 1995), a case where we recognized that under U.S.S.G. § 2F1.1,

application note 8, a sentencing court may utilize the offender’s29 g:\opin\96-20873.opn gain as an alternative valuation method for assessing the amount of

loss when the loss is difficult to determine. Burns’ argument

fails because he has not shown that the amoun t of loss was

difficult to ascer tain. Furthermore, there is more than enough

evidence in the record to support the district court’s loss

calculation. We affirm Burns’ sentence.

VIII.

Based on the foregoing reasons, we affirm the convictions of

appellants August, Montgomery, Alexander, and Burns. We also

affirm the sentences of Montgomery and Burns.