Opinion ID: 2799450
Heading Depth: 4
Heading Rank: 1

Heading: Huitron

Text: The key issue is whether there is sufficient evidence to establish that Huitron joined the conspiracy knowing that the transaction in question—his horse-training services—was designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of the proceeds of illegal activity beyond a reasonable doubt. Our discussion of Huitron’s case informs our analysis of Jose Trevino’s and Garcia–Solis’s sufficiency challenges. Huitron maintains he “was paid for performing legitimate horse training services.” He admits he was paid with drug proceeds, though he contends that he “was not aware of the money source[] for the legitimate horse training services [he] rendered.” The government counters that because Huitron’s client, Miguel Trevino often talked about how he used his horse operation to 7 Huitron argues in his brief that “the government must prove beyond a reasonable doubt that . . . one of the persons committed an overt act in further[ance] of the conspiracy,” citing United States v. Armstrong, 550 F.3d 382, 406 (5th Cir. 2008). Huitron’s reliance on Armstrong is misplaced. As we recognized in United States v. Guillermo Balleza, Armstrong did state in dicta that an overt act was required; but in so doing, Armstrong mistakenly relied on a case that had been overruled by the Supreme Court in Whitfield. See 613 F.3d 432, 433 n.1 (5th Cir. 2010) (per curiam) (“We take this opportunity to clarify this court’s jurisprudence on whether an overt act in furtherance of the conspiracy is an element of the offense of conspiracy to launder money in violation of 18 U.S.C. § 1956(h). It is not.” (citing, inter alia, Armstrong, 550 F.3d at 403)). 10 Case: 13-50849 Document: 00513035268 Page: 11 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 clean money, Huitron’s “pattern of receiving bulk cash payments is proof of his agreement to join the conspiracy.” The government also contends that by “converting Los Zetas[’] cash into well-trained horses that could earn Miguel Trevino clean money,” Huitron “voluntarily joined the conspiracy, knowing its unlawful purpose and with intent to further that purpose.”
In the context of a concealment money-laundering conviction for transportation, the Supreme Court held that “merely hiding funds . . . is not sufficient to violate the statute, even if substantial efforts have been expended to conceal the money.” Cuellar v. United States, 553 U.S. 550, 563 (2008). 8 In Cuellar, the defendant was stopped while driving south toward the Mexican border. Id. at 553. Police searched the vehicle and discovered a secret compartment containing $81,000 in cash, and the defendant was convicted for transportation money laundering. Id. at 554, 568. The Supreme Court reversed. Id. at 568. The Court explained that evidence of concealment does not necessarily imply the purpose of the transport is to conceal: “[H]ow one moves the money is distinct from why one moves the money,” and “[e]vidence of the former, standing alone, is not sufficient to prove the latter.” Id. at 566. The Fifth Circuit applied Cuellar’s reasoning to financial-transaction money laundering 9 in United States v. Brown, 553 F.3d 768, 786 n.56 (2008), and held that the government must demonstrate that the charged transactions had the purpose—not merely the effect—of “mak[ing] it more difficult for the 8 Section 1956 enumerates separate offenses for transportation money laundering, § 1956(a)(1), and financial-transaction money laundering, § 1956(a)(2). Cuellar addressed the “designed to conceal” element in the transportation-money-laundering context. The Fifth Circuit held that “the Cuellar analysis applies with full force to the ‘designed to conceal’ element” in financial-transaction money laundering because the language “is identical in the two provisions.” United States v. Brown, 553 F.3d 768, 786 n.56 (5th Cir. 2008). 9 See supra note 8. 11 Case: 13-50849 Document: 00513035268 Page: 12 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 government to trace and demonstrate the nature of th[e] funds.” Id. at 787. We noted that “a mere act of structuring could not support a concealment conviction.” Id. at 787 n.62 (citing United States v. Stephenson, 183 F.3d 110 (2d Cir. 1999)). In Brown, we held that the “numerous acts [of structuring] are more clearly designed to conceal the nature of the moneys,” and affirmed the conviction. Id. at 787 & n.62. We elaborated on financial-transaction money laundering in United States v. Valdez and explained that “simply spending money in one’s own name will generally not support a money laundering conviction.” 726 F.3d 684, 690 (5th Cir. 2013) (quoting United States v. Willey, 57 F.3d 1374, 1385 (5th Cir. 1995)). “‘In one sense,’” we said, “‘the acquisition of any asset with the proceeds of illegal activity conceals those proceeds by converting them into a different and more legitimate-appearing form. But the requirement that the transaction be designed to conceal implies that more than this trivial motivation must be proved.’” Id. (quoting Willey, 57 F.3d at 1384). Because “Valdez did not use false names, third parties, or any particularly complicated financial maneuvers, which are usual hallmarks of an intent to conceal,” we held “there is insufficient evidence” to support his conviction of “concealment money laundering.” Id. We summarized the case law in United States v. Trejo and concluded that “these cases exemplify the courts’ consistent reliance on some additional evidence beyond the bare transaction . . . itself to infer specific intent.” 610 F.3d 308, 314 (5th Cir. 2010). We observed that “courts have often relied on proof that the defendant was aware of the inner workings of and/or extensively involved in the drug organization responsible for the criminal activity as circumstantial proof that he had the specific intent to promote its unlawful purpose.” Id. at 315. In Trejo, we held that the evidence was insufficient to support the defendant’s plea in part because the “[e]vidence regarding the 12 Case: 13-50849 Document: 00513035268 Page: 13 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 [defendant’s knowledge of the] inner workings of the organization that hired him . . . is virtually nonexistent in the record.” Id. at 318. 10 Put another way, as we said in United States v. Leonard, “not every dollar spent in every transaction that can be traced to a specified criminal activity violates 18 U.S.C. § 1956(a)(1)(A)(i). ‘To so interpret the statute’ would ‘convert the money laundering statute into a money spending statute.’” 61 F.3d 1181, 1185 n.2 (5th Cir. 1995) (quoting United States v. Sanders, 928 F.2d 940, 944 (10th Cir. 1991)). By contrast, in United States v. Rosbottom, we affirmed a moneylaundering conspiracy conviction because the evidence showed that the defendant was “intimately involved with many aspects of [the coconspirator’s] finances.” 763 F.3d 408, 418 (5th Cir. 2014). Specifically, the defendant was convicted for conspiring to help conceal funds from a coconspirator’s bankruptcy proceedings. Id. at 411. The defendant “was the sole member of the shell corporations she helped establish to purchase the boat and plane, though both the boat and plane were under [her coconspirator’s] control and neither was purchased using her funds.” Id. at 418. She also “picked up the funds” used to purchase cashier’s checks payable to her coconspirator “in a parking lot after another employee took the funds out of the safe.” Id. We determined that a reasonable jury could conclude that the defendant and her coconspirator “worked in concert to conceal funds from the bankruptcy proceedings” and affirmed. Id. at 419. 10 The defendant transported $330,426.56 in cash (via a hidden compartment in his car) from a known drug dealer in Florida to a known drug dealer in Mexico for a fee. Trejo, 610 F.3d at 318. Because “the incriminating facts show simply that Trejo signed on for a onetime trip to transport drug money for a dealer he did not know and . . . had never worked for in the past,” we found the evidence insufficient. Id. Ultimately, because Trejo did not timely object, we found the error was not plain. Id. at 318–19. 13 Case: 13-50849 Document: 00513035268 Page: 14 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003
Drawing all reasonable inferences in favor of the government, the evidence establishes, at best, that Huitron knowingly accepted drug money from known drug dealers in exchange for horse-training services. Although this had the effect of concealing the proceeds of Los Zetas’ illegal activities, that alone is not enough to show that Huitron joined the conspiracy knowing its purpose was to conceal the source or nature of the funds. See Cuellar, 553 U.S. at 567. Every Government witness who testified about Huitron testified that he was a reputable horse trainer and that he was not involved in Los Zetas’ illegal bribery, extortion, or drug-trafficking activities. For instance, Mario Cuellar, a former Los Zetas leader turned Government witness, gave the following testimony: Q. Do you know if [Huitron] trained horses for “40”? A. Yes, sir. Q. And what do you know about that? A. That that’s what he is. He is one of the best horse trainers in Texas. He’s the one that really makes all the other trainers in Texas run for their money. He’s a good trainer. Mario Cuellar further testified that Huitron did not traffic in cocaine, and that the bills he submitted to Los Zetas for reimbursement “were for the actual training and feeding and racing the horses.” Raul Guadalajara, another Los Zetas subordinate and Government witness, testified that he and Mario Cuellar never told Huitron that they were drug dealers, and that, in fact, they tried to keep that fact hidden from Huitron. When asked about whether he knew Huitron’s role in the organization, Guadalajara testified that “he trained the horse for ‘40.’ That’s all I knew.” Another Los Zetas subordinate and drug dealer testified that, when he delivered $40,000 in cash to Huitron per Miguel Trevino’s instructions, he never told Huitron “this is drug money.” For all the 14 Case: 13-50849 Document: 00513035268 Page: 15 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 subordinate knew, Huitron lived “close to Austin, [and] trained horses.” Jesus Rejon, another Los Zetas subordinate and government witness, testified that Huitron trained horses in Ruidoso, New Mexico, and that “he was there managing, you know, overseeing the [horse] training.” Rejon testified that Huitron did not give him any information about Los Zetas’ illegal activities in Mexico, explaining: “We didn’t really talk about that.” As mentioned above, it is undisputed that Huitron trained horses for Miguel and Oscar Trevino and other members of Los Zetas for about two years at a rate of $1,100 per horse. He also received reimbursement for expenses, stall rentals, entry fees, shoeing, and bonuses if the horses he trained won races. He had a reputation as being among “the best horse trainers in Texas.” It is also undisputed that, when Huitron started training horses for Los Zetas, his inflow of cash substantially increased. An IRS agent reviewed the bank records of Huitron Homes, a company controlled by Eusevio Huitron and his brother Jesus. 11 According to the testimony of the IRS agent, in the eighteen months before Huitron started training the Trevinos’ and Los Zetas’ horses, Huitron Homes’ bank account received a total of $113,000 in cash deposits. On July 12, 2010, Huitron Homes received a large structured cash deposit presumably representing a cash payment from Los Zetas. Over the next twenty-two months, while Huitron trained horses for Los Zetas, Huitron Homes received a total of $505,007 in structured cash deposits. 12 The government correctly points out that the evidence that Huitron received large cash payments is “overwhelming.” 11 Huitron’s brother, Jesus Huitron, was also indicted for conspiracy to commit money laundering, but the jury found him not guilty. 12 The deposits were “structured” in that each was less than $10,000, ostensibly to avoid reporting requirements. Though this may constitute the separate crime of structuring, Huitron was not indicted for committing that crime in this case. 15 Case: 13-50849 Document: 00513035268 Page: 16 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 The question becomes whether receiving large cash payments from known drug dealers, and subsequently structuring them, can support a conviction for conspiracy to commit financial-transaction money laundering, i.e., whether this constitutes sufficient circumstantial evidence that the financial transactions had the purpose, not merely the effect of “mak[ing] it more difficult for the government to trace and demonstrate the nature of th[e] funds.” Brown, 553 F.3d at 787. As we instructed in Trejo, there must be “some additional evidence beyond the bare transaction . . . itself to infer specific intent” to join a conspiracy to commit financial-transaction money laundering. 610 F.3d at 315. A defendant’s awareness of the inner workings of, or extensive involvement in, the drug organization responsible for the criminal activity is significant circumstantial evidence of a defendant’s specific intent. Id. On this point, the government stresses Huitron’s personal relationship with Los Zetas’ leader, Miguel Trevino, and his knowledge about Los Zetas’ illegal activity as circumstantial evidence of Huitron’s specific intent to join the money-laundering conspiracy. The government points to testimony that, on one occasion, Huitron met with Miguel Trevino in Mexico, 13 and that he trained a horse named Mr. Jess XL (Roman numerals for forty), which by its name connects the horse—and its trainer—to Miguel Trevino and then to Los Zetas. The government also points to testimony from a manager of a quarterhorse breeding farm. The manager testified that Huitron told him, in a conversation about the deaths of Alejandro Barradas and Ramiro Villareal, 14 that “he heard he’d been kidnapped . . . [a]nd never came back.” The manager 13 A Government witness testified that he saw Huitron and Miguel Trevino together in Mexico talking at a table, but he did not hear the substance of their conversation. 14 See supra Part I(A)(2). 16 Case: 13-50849 Document: 00513035268 Page: 17 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 also noted that Huitron “didn’t indicate anybody specifically” who might have killed them. The government also states that its “best evidence of Eusevio Huitron’s knowledge came from the testimony of [Raul] Guadalajara,” a Los Zetas subordinate and Government witness. Guadalajara related an anecdote about an instance where he dropped off $15,000 in cash and joked to Huitron that he was delivering “kilos.” Guadalajara testified that Huitron got upset and called Miguel Trevino to complain, and Guadalajara “got in trouble with that back there in Mexico.” From this evidence, the government argues, “[t]he jury could reasonably infer . . . that Eusevio Hutiron knew that Los Zetas dealt in kilogram quantities of narcotics . . . .” Further, another horse trainer testified that it was “an open secret in the horse-racing business” that Los Zetas were involved in the horse business. This evidence, viewed in the light most favorable to the government, certainly establishes that Huitron knew he was being paid in drug money by known drug dealers. But it does not establish that Huitron voluntarily joined the conspiracy, “knowing its purpose and with the intent to further the illegal purpose,” Fuchs, 467 F.3d at 906. We have held that merely providing services to a known drug dealer and accepting the proceeds of the illegal activity as payment is insufficient as a matter of law to establish criminal liability for money laundering. See Trejo, 610 F.3d at 318. There must be some additional circumstantial evidence of intent to further the illegal conspiracy. See Fuchs, 467 F.3d at 906. As mentioned above, the evidence in the light most favorable to the government establishes that Huitron was a horse trainer for Los Zetas for a period of two years—and nothing more. It does not establish that he was aware of the inner workings of Los Zetas’ criminal narcotics-trafficking organization. Cf. Trejo, 610 F.3d at 316 (“[E]vidence of a defendant’s knowledge about the internal operations of a 17 Case: 13-50849 Document: 00513035268 Page: 18 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 drug organization . . . may [be] relied upon to establish his specific intent . . . .”). Here, the evidence merely demonstrates that Huitron had heard that two men had been kidnapped and one had been killed, and that Huitron contacted Miguel Trevino about a joke to which he apparently took offense. We hold that this is not enough circumstantial evidence from which a reasonable jury could conclude beyond a reasonable doubt that Huitron intended to further Los Zetas’ illegal activities. The government also argues that, by training horses that had been purchased with drug money in exchange for drug money, Huitron was “converting” Los Zetas’ drug proceeds “into well-trained horses that could earn Miguel Trevino clean money,” i.e., that the horse operations were part of one grand money-laundering scheme. We disagree. The Fifth Circuit previously rejected a similar argument. In United States v. Brown, the government similarly argued that a defendant who used his car dealership to systematically overcharge customers in violation of statutes prohibiting mail fraud also committed money laundering by paying ordinary business expenses using the fraud proceeds. 186 F.3d 661, 669 (5th Cir. 1999). The government’s theory was that “the transactions . . . promoted the ongoing and future criminal activity . . . because the operation of the dealership was one grand scheme to defraud.” Id. The Fifth Circuit rejected this “creative argument.” Id. at 670. Absent “evidence of, say, payments for postage for mailing fraudulent warranty claims,” this Court explained, there was insufficient evidence “to establish an intent to promote fraud,” and we reversed. Id. at 670–71. So too here. As in Brown, there is no evidence that Huitron joined the conspiracy knowing the conspiracy’s purpose was to conceal drug money to be used, say, to bribe a gate starter; to front money for drug operations; or to send clean money back to Los Zetas for their personal use. That Los Zetas used the overall horse-racing scheme to launder money is insufficient to establish 18 Case: 13-50849 Document: 00513035268 Page: 19 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 Huitron’s guilt by mere association—absent additional circumstantial evidence that Huitron joined the conspiracy knowing that the horse-racing proceeds would be used to further the conspiracy to conceal the nature or source of illegal funds. Training racehorses does not, on its face, indicate an intent to promote or conceal the proceeds of money-laundering, extortion, or drug trafficking even though the overall conspiracy involved using horse racing to launder illegal proceeds. See Brown, 186 F.3d at 671. The government cites several cases in support of Huitron’s conviction, but these cases are distinguishable. First, the government cites United States v. Gallo, 927 F.2d 815, 820–21 (5th Cir. 1991), for the proposition that “close association with co-conspirators” can be “one factor that the jury may rely on.” The government’s discussion of this case leaves something out; the full quoted sentence reads: “Although mere presence at the scene of the crime or close association with co-conspirators will not alone support an inference of participation in a conspiracy, presence or association is one factor that the jury may rely on, along with other evidence, in finding conspiratorial activity by a defendant.” Id. at 820 (emphasis added) (quoting United States v. Magee, 821 F.2d 234, 239 (5th Cir. 1987)). Moreover, in Gallo, we observed that the defendant’s concerted action—unlike Huitron’s innocuous horse training—was quintessential drug-trafficking behavior. Id. at 821. Finally, Fuchs merely holds that a concert of action may support a conviction. 467 F.3d at 905–06. Here, there was no evidence of concerted action, but rather a series of transactions in which Los Zetas paid Huitron bulk cash payments in exchange for his training their horses. Huitron merely trained horses; he was not also charged under the substantive money-laundering provisions (that prohibit structuring to avoid reporting requirements, for instance) or for other criminal acts, but rather for conspiracy to commit money laundering under § 1956(h). And unlike the defendant in Rosbottom, there is 19 Case: 13-50849 Document: 00513035268 Page: 20 Date Filed: 05/07/2015 No. 13-50849; cons. w/ No. 13-51003 no evidence that Huitron was “intimately involved with many aspects of [Los Zetas’] finances,” or that he formed shell entities to protect the identity of the true owners. See 763 F.3d at 418. 15 Therefore, we reverse the conviction of Eusevio Huitron and render a judgment of acquittal because the government’s evidence was not sufficient to permit a reasonable jury to infer beyond a reasonable doubt that Huitron voluntarily joined the conspiracy knowing its purpose was to conceal the source or nature of illegal proceeds. See Cuellar, 553 U.S. at 567–68.