Opinion ID: 200912
Heading Depth: 3
Heading Rank: 2

Heading: Counts Three, Four, Five, Six, and Seven

Text: 25 To convict Cornier under Count Three, 4 conspiracy to violate 18 U.S.C. § 666, the government had to prove that there was (1) an agreement, (2) an unlawful objective of the agreement (here, violation of § 666), and (3) an overt act in furtherance of the agreement. United States v. Barker Steel Co., Inc., 985 F.2d 1123, 1127-28 (1st Cir.1993). 26 To convict Cornier under Count Four, 5 the government had to prove that Cornier aided and abetted in a violation of 18 U.S.C. § 666, the elements of which were set forth earlier. 27 To convict Cornier under Count Five, 6 aiding and abetting extortion, 18 U.S.C. § 1951, the government had to prove (1) that Cornier aided the inducement of a victim to part with property; (2) that he did so knowingly and willingly with extortionate means; and (3) that interstate commerce was affected. See United States v. Stephens, 964 F.2d 424, 429 (5th Cir.1992). 28 To convict Cornier under Count Six, 7 money laundering under 18 U.S.C. § 1956(a)(1)(B)(i), the government had to show (1) that Cornier knowingly conducted a financial transaction, (2) that he knew the transaction involved funds that were the proceeds of some form of unlawful activity, (3) that the funds involved were in fact the proceeds of a specified unlawful activity, and (4) that Cornier engaged in the financial transaction knowing that it was designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds of such unlawful activity. See 18 U.S.C. § 1956(a)(1)(B)(i); United States v. Martinez-Medina, 279 F.3d 105, 115 (1st Cir.2002). 29 Count Seven 8 charged conspiracy to launder money. 30 Cornier's appeal of Counts Three through Seven boils down to a single contention — that he was an innocent victim of extortion by Juan Irizarry Valentin (Irizarry). 31 The facts relevant to the remaining counts, described in the light most favorable to the prosecution, are as follows. In 1997, Cornier befriended Irizarry, who was the Director, Operations Division, Office of Public Housing at HUD in Puerto Rico. Irizarry's job at HUD involved visiting and evaluating the public housing projects that were managed by private management agencies. 32 In 1998, CORA received a fee for its management and maintenance of certain shelters that were set up by FEMA in the aftermath of the devastation wrought by Hurricane George. Normally, all the CORA partners shared in management fees. When the management fee from FEMA arrived in this instance, however, Cornier took Carmen Ortiz, one of the CORA board members, to see Irizarry at Irizarry's HUD office. Irizarry falsely told Ortiz that the fee could only be divided among the three CORA partners who had actively worked on the shelters. As a result, the management fee was split among Cornier and only two other CORA board members, so Cornier received a larger share than he should have. Irizarry thus lined Cornier's pocket by making a false statement. 33 Cornier formed his own management agency company, ERCO Enterprises, Inc. (ERCO) in 1998. 9 Irizarry helped Cornier behind the scenes to incorporate ERCO and then to prepare a bid proposal to PRPHA. Irizarry, a HUD official, did not sit on the PRPHA board that would act on the proposal. The proposal budget set forth the allocation of the money that ERCO planned to spend in managing the requested housing projects. Under the public housing project system, federal funds paid the salaries of management agency employees assigned to the particular housing projects. In its proposal, ERCO budgeted a generous salary of about $305,000.00 annually for an assistant general manager; the person named was Roberto Colon. 34 Based on that proposal, PRPHA awarded ERCO a multi-million dollar, five-year contract (April 1999 to March 2004) to manage and maintain certain housing projects. The overall contract was worth $28,676,304.00. There is no evidence that Irizarry influenced the PRPHA to approve the proposal, including its generous salary figure. After the contract was awarded to ERCO, Irizarry arranged for a meeting among Cornier, Samuel Valentin Toro (Irizarry's half-brother, Valentin) and himself. At that meeting, Irizarry introduced Cornier to Valentin as your next boss. Cornier offered Valentin an assistant general manager position for $15,000.00 per month ($180,000.00 annually), plus additional incentives. Valentin accepted the offer and was hired to work as an assistant general manager. Cornier's wife, Raquel Rios, was also hired to work as an assistant general manager; she was paid the same salary as Valentin. So, $360,000 a year was being spent on the position of assistant general manager. Roberto Colon, who had been designated as the assistant general manager in the bid proposal, never held the position. 35 Irizarry then instructed Valentin to open a bank account and to deposit the money from Cornier there each month. Irizarry told Valentin to keep $4,000 each month for himself; it was understood that Irizarry would keep the remaining $11,000. Irizarry received approximately $195,386.36 in payments from Cornier in this way. 36 Even before Valentin started working for ERCO, Cornier made payments to Irizzary by issuing two checks to Valentin and then endorsing the checks to himself by forging Valentin's signature. Cornier deposited these checks in his own bank account and then wrote out checks to Irizarry from that account for comparable amounts. Cornier also created and signed false employment records for Valentin in connection with the two checks. Irizarry later asked Valentin to imitate the forged signature on future checks. 37 Cornier argues that he was an innocent victim of extortion by Irizarry and thus entitled to judgment in his favor on each of the remaining counts. As to Counts Three and Four, the government asserts that there is no innocent victim defense to a violation of § 666. While some case law suggests that mere acquiescence to an extortioner's demands for payments may not be criminal under 18 U.S.C. § 1951 (extortion), see United States v. Spitler, 800 F.2d 1267, 1275-78 (4th Cir.1986), Cornier has pointed to no authority, and we have not discovered any, to support a similar defense to § 666. Cf. Evans v. United States, 504 U.S. 255, 267 n. 18, 112 S.Ct. 1881, 119 L.Ed.2d 57 (1992) (extortion and bribery are not necessarily mutually exclusive). 38 We have already discussed the bona fide exception defense to § 666 liability, and it has no conceivable application to the Irizarry affair. As to Counts Three and Four, then, we take the defendant's innocent victim argument as a claim that there was insufficient evidence that he entered into an agreement with Irizarry and Valentin to intentionally misapply funds in violation of § 666. 39 The government's evidence supporting the existence of an agreement included the following: that Irizarry had helped Cornier to get money while at CORA and then helped him to incorporate ERCO and to prepare a bid proposal for a PRPHA management contract; that the bid proposal included an annual salary of $305,000.00 designated for an assistant general manager named Roberto Colon; that once ERCO was awarded the contract, Valentin, Irizarry's half-brother, was substituted for Colon and paid a salary that even Valentin conceded was grossly inflated; that Valentin gave $11,000 of his monthly salary to Irizarry, who had arranged the meeting among the three men at which Cornier offered Valentin the position; and that Cornier was clearly aware that Valentin was being used to funnel money to Irizarry because even before Valentin began working for ERCO, Cornier paid Valentin, falsely endorsed the payments to himself, and then used the money to pay Irizarry. Based on that evidence, the jury was amply justified in concluding that Irizarry and Cornier had an agreement to submit a bid proposal that included an inflated salary figure for the assistant general manager position, to substitute Valentin for Colon, and to use the inflated salary to channel federal funds to Irizarry. The inflated salary in the bid proposal provided Cornier with the extra federal funds necessary to pay Irizarry, so the jury could logically infer that the men had agreed to include the inflated salary in the bid for that very purpose. That Cornier engaged in the misapplication of funds intentionally is supported by the evidence of his efforts to conceal the scheme — by channeling the payments to Irizarry through Valentin, by using Roberto Colon's name on the bid proposal, and by signing false employment records in connection with the checks he issued before Valentin started working. We affirm the convictions on Counts Three and Four. 40 Cornier's innocent victim defense is more properly asserted as to Counts Five through Seven because they involve extortion and associated offenses. See Spitler, 800 F.2d at 1276 (Congress may not have intended to criminalize the acquiescence of extortion victims); cf. Gebardi v. United States, 287 U.S. 112, 120-23, 53 S.Ct. 35, 77 L.Ed. 206 (1932) (interpreting the Mann Act as not intended to punish the victim of the crime). 41 The defense makes much of the fact that Irizarry pled guilty in another case to conspiring to extort $195,386.36 from Cornier, a fact of which the district court took judicial notice. A victim of extortion can cross the line into illegal behavior if he engages in more active conduct than simply agreeing to pay the extortioner. See Spitler, 800 F.2d at 1276. But here, Cornier argues, Irizarry forced him to hire Valentin for $15,000 per month by using his official position at HUD to threaten Cornier with economic harm, and the evidence shows that he merely acquiesced to the monthly $15,000 payments that Irizarry demanded. He argues that there was no symbiotic relationship between himself and Irizarry and that there is no evidence that he benefitted from or willingly joined in the payments made to Irizarry through Valentin. He emphasizes that Irizarry had nothing at all to do with the approval of ERCO's management contract with PRPHA. Irizarry was a HUD official, and HUD had no input in the awarding of contracts by PRPHA. As a result, he claims, Irizarry's assistance in starting ERCO and in preparing the bid proposal to PRPHA are irrelevant. Put simply, Cornier claims that he got nothing in exchange for the payments he made to Irizarry, thus making unreasonable any conclusion other than that he was an unwilling victim. 42 To resolve this case, we need not delineate the precise location of the line at which a payor's conduct constitutes sufficient activity beyond the mere acquiescence of a victim. Id. at 1278. Wherever that line is drawn, there was sufficient evidence here to conclude that Cornier was on the wrong side of it. 43 The fact of Irizarry's guilty plea does not make the evidence of Cornier's own guilt insufficient. Irizarry's plea was evidence for the jury to consider, and the jury was entitled to conclude, based on the other evidence presented, that Cornier was not an innocent victim at all. 44 The evidence supported the conclusion that some sort of quid pro quo arrangement was in place and that Cornier did more than merely acquiesce to it. Irizarry had used his official position at HUD to help Cornier to receive a larger-than-deserved fee from a FEMA program in 1998. Cornier had taken one of the CORA board members to Irizarry's office to accomplish the fraud. Later, Cornier would again be the beneficiary of Irizarry's help. Irizarry provided his experience and expertise in helping Cornier to incorporate his own management company and to prepare a bid proposal to PRPHA. There is thus no question that Irizarry's help yielded monetary benefits to Cornier, and it would only take a small inference for the jury to conclude that Cornier agreed to the ERCO payment arrangement with Valentin and Irizarry in gratitude for this help. Valentin explained the scheme in just this way, testifying that he got the assistant general manager job through my brother, in gratitude for him having helped Mr. Cornier prepare the bid proposal for the PRPHA contract. He said, I had to believe, and I know for a fact, that he [Irizarry] had a deal with Mr. Cornier. 45 Moreover, there was testimony that Irizarry and Cornier were great friends. Carmen Santiago, who is Irizarry's ex-wife, testified that Cornier and Irizarry had a very close relationship and had been friends since 1997. She said that the two men called each other constantly and that Cornier frequently visited Irizarry at his farm. Valentin's testimony was consistent with Santiago's. He explained that Cornier and Irizarry had an enormous friendship. Similarly, Carmen Ortiz, a member of the CORA board, testified that there was a very close friendship between them. 46 The jury could easily have credited the reinforcing testimony of Santiago, Valentin, and Ortiz and concluded that Irizarry and Cornier were working together, not against one another. The two men looked out for each other and for each other's future. For example, Cornier told Irizarry that if Irizarry ever retired from HUD, Cornier would give him some ERCO shares and have him work for ERCO as a consultant. Cornier and Irizarry often discussed various projects that could be undertaken on Irizarry's farmland. Irizarry constantly advised and counseled Cornier on business matters, and Cornier gave cellular phones to Irizarry. Even if Cornier acted out of friendship for Irizarry, the jury could conclude that there was nothing innocent about it. We affirm the convictions on Counts Five, Six, and Seven.