Opinion ID: 793369
Heading Depth: 5
Heading Rank: 8

Heading: Good Faith Execution of a Search Warrant

Text: 136 Even if a search warrant is defective, the Court will not suppress evidence seized pursuant to such warrant if the seizure was based on reasonable, good faith reliance on the warrant. United States v. Frazier, 423 F.3d 526, 533 (6th Cir.2005) (citing United States v. Leon, 468 U.S. 897, 905, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984)). The Supreme Court explained the mechanics of the good faith exception: 137 [O]ur good-faith inquiry is confined to the objectively ascertainable question whether a reasonably well trained officer would have known that the search was illegal despite the magistrate's authorization. In making this determination, all of the circumstances—including whether the warrant application had previously been rejected by a different magistrate—may be considered. 138 Leon, 468 U.S. at 922-23 n. 23, 104 S.Ct. 3405. The rationale behind the exception is that the exclusionary rule is meant to deter unlawful police conduct. See supra. This policy of deterrence is not served by the exclusion of evidence seized in good faith by the police. Leon, 468 U.S. at 918-19, 104 S.Ct. 3405. 139 On the other hand, the good faith exception does not apply in the following specific circumstances: 1) the supporting affidavit contained knowing or reckless falsity; 2) the issuing magistrate wholly abandoned his or her judicial role; 3) the affidavit is `so lacking in probable cause as to render official belief in its existence entirely unreasonable;' or 4) where the officer's reliance on the warrant was neither in good faith nor objectively reasonable. Frazier, 423 F.3d at 533 (quoting Leon, 468 U.S. at 923, 104 S.Ct. 3405). 140 With respect to the additional violations contained in the affidavit but not on the face of the warrant, a police officer could not reasonably rely on the affidavit to validate a search for evidence of these additional violations. The natural reading of the face of the warrant was that the affidavit was incorporated only for the purpose of establishing probable cause for bank fraud. Moreover, the warrant was unclear as to whether the magistrate did indeed find probable cause for these additional violations. Law enforcement may not take advantage of the warrant's equivocal posture to illegally seize evidence. 141 With respect to bank fraud in any year besides 1999, the affidavit's lack of probable cause was obvious to the reasonably trained officer. The affidavit only listed suspicions of check kiting in these other years. 142
143 The ultimate question then becomes what harm Defendant has suffered from the illegality of the warrant. The record is less than clear as to what evidence seized through the warrant was actually used at Defendant's trial. See Blakeney, 942 F.2d at 1027 (holding that the defendant did not suffer prejudice when the evidence illegally seized was not introduced at trial). For purposes of this analysis, we will presume the widest use of the illegal evidence. 144 As stated earlier, the warrant was only valid with respect to bank fraud, and only bank fraud in 1999. This means that evidence with respect to the year 2000 should have been suppressed, possibly implicating Defendant's conviction for violation of 26 U.S.C. § 7203, failure to file an income tax return in 2000. Unfortunately for Defendant, he stipulated to the fact that he did in fact make the threshold amount triggering the requirement to file a tax return. His only defense was lack of intent, which was negated by the government without use of any evidence seized via the overbroad search warrant. See infra. As a result, the admission of any of this illegal evidence would have been harmless error with respect to Defendant's conviction for this charge. 145 Also, with respect to Defendant's conviction for violation of 26 U.S.C. § 7206, filing a false income tax return in 1999, the conviction rested on two forms of evidence: (1) evidence of a failure to report gambling income, and (2) evidence of a failure to report income from his businesses. The evidence listed in (1) was not seized pursuant to the warrant, and the evidence seized in (2) could properly be characterized as evidence of bank fraud legally obtained under the warrant. 146 The evidence seized with respect to the 1999 bank fraud charges was valid; therefore, the Court affirms these convictions. Furthermore, the evidence for the 1999 money laundering charges completely overlapped with the evidence for the 1999 bank fraud charges. The evidence of transfers in the amount of $10,000 or more for the relevant period show both the bleeding of the check kite, which is relevant evidence to the charges of bank fraud, and money laundering in violation of 18 U.S.C. § 1957. Because the jury only considered legally obtained evidence with respect to money laundering, the convictions stand. Likewise, the evidence of bank fraud and conspiracy to commit money laundering completely overlap, and this conviction stands. 147 C. WHETHER THE DISTRICT COURT ERRED IN GRANTING THE GOVERNMENT'S MOTION IN LIMINE THAT PREVENTED DEFENDANTS FROM PRESENTING EVIDENCE OF SELECTIVE PROSECUTION 1. Preservation of the Issue 148 Federal Rule of Criminal Procedure 12(b)(1) requires that [d]efenses and objections based on defects in the institution of the prosecution must be raised by a pretrial motion. Rule 12(f) states that failure to make such a pretrial motion results in waiver of the defense or objection; however, the Court may grant relief from the waiver for cause. Fed.R.Crim.P. 12(f). 149 Here, Defendants did not make a 12(b)(1) motion based on selective prosecution before trial and thus waived the issue. Therefore, the district court did not err in preventing Defendants from presenting evidence of this waived defense at trial. 2. Standard of Review 150 This Court reviews the district court's evidentiary rulings for an abuse of discretion. United States v. Taplin, 954 F.2d 1256, 1258 (6th Cir.1992) (citation omitted). 3. Analysis 151 As stated above, Defendants waived the defense of selective prosecution. Independent of the waiver, the district court's motion in limine was correct because the defense of selective prosecution is a matter that is independent of a defendant's guilt or innocence, so it is not a matter for the jury. As the Third Circuit stated: 152 By both tradition and constitutional mandate the jury is given the responsibility of determining guilt or innocence according to instructions of law delivered by the court. The question of discriminatory prosecution relates not to the guilt or innocence of appellants, but rather addresses itself to a constitutional defect in the institution of the prosecution. 153 United States v. Berrigan, 482 F.2d 171, 175 (3d Cir.1973). Thus, a defense of selective prosecution is a matter for the court, not the jury. 154 We wholeheartedly agree with Defendants' argument that cross-examination plays a vital role in the adversarial system of our country, and the ability to show bias, motive, or prejudice on the part of a witness is an integral part of cross-examination. Defendants, however, seem to conflate the concepts of witness bias and selective prosecution. Witness bias speaks to `the reliability of the witness.' Delaware v. Van Arsdall, 475 U.S. 673, 680, 106 S.Ct. 1431, 89 L.Ed.2d 674 (1986) (quoting Davis v. Alaska, 415 U.S. 308, 318, 94 S.Ct. 1105, 39 L.Ed.2d 347 (1974)). When one exposes bias, motive, or prejudice of a witness, one is calling into question the credibility of that witness' testimony. Selective prosecution is a separate and distinct claim that the defendant has been unconstitutionally selected for prosecution. 155 Defendants made clear in the memorandum in opposition of the motion in limine that the cross-examination sought was to establish selective prosecution: 156 In fact, Defendant's goal sought from the full cross-examination of the witnesses is to support his defense that, for a number of years he had conducted his business activities with bank direction and approval and without governmental interference or objection; that, prior to September 11, 2001, the SAR of November, 1999, led to no criminal prosecution; and, that subsequent to September 11, 2001, the Government, in violation of Defendant's constitutional rights, initiated the instant matter as a result of Defendant's ethnicity. 157 (J.A. at 262.) Surprisingly, Defendants fully admitted that the purpose of the cross-examination was not to test the reliability of the witnesses, but instead to present a defense of selective prosecution. As stated earlier, selective prosecution is not an issue for the jury, so the district court correctly granted the motion in limine. 158 D. WHETHER THE DISTRICT COURT ERRED IN ITS TREATMENT OF 404(b) EVIDENCE THAT DEFENDANTS PAID EMPLOYEES UNDER THE TABLE 1. Standard of Review 159 This Court reviews the district court's legal determination that the evidence was admissible for a legitimate purpose de novo. United States v. Merriweather, 78 F.3d 1070, 1074 (6th Cir.1996) (citing United States v. Johnson, 27 F.3d 1186, 1190 (6th Cir.1994)). The Court reviews the district court's determination that the probative value was not substantially outweighed by the unfairly prejudicial effect for abuse of discretion. Id. 2. Analysis 160 The district court did not err when it admitted evidence that Defendants paid employees under the table. 161 a. Legal Framework Federal Rule of Evidence 404(b) states: 162 Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident, provided that upon request by the accused, the prosecution in a criminal case shall provide reasonable notice in advance of trial, or during trial if the court excuses pretrial notice on good cause shown, of the general nature of any such evidence it intends to introduce at trial. 163 Moreover, even if the other acts evidence is relevant, if the probative value is substantially outweighed by its unfair prejudice, the district court may exclude the evidence. Fed.R.Evid. 403. 164 This Court has outlined a four-step process for the admission of Rule 404(b) evidence. First, the proponent of the evidence must identify the specific purpose of the other acts evidence. Merriweather, 78 F.3d at 1076. Second, the district court must decide whether the identified purpose is at issue in the case. Id. at 1076-77. Third, if the purpose is at issue, the district court must weigh the probative value against the danger of unfair prejudice. Id. at 1077. Finally, if the district court admits the evidence, it must then clearly instruct the jury as to the specific purpose for which the jury may consider the evidence. Id. 165 b. The Evidence Presented 166 The government offered the testimony of two employees of Defendants. They testified that they received their wages in the form of legitimate checks and cash, as under the table payments. 167 c. Application to This Case 168 i. Purpose 169 The government's purpose in offering evidence that Defendants paid employees under the table was to show willfulness, motive, and absence of mistake. 170
171 The violations of failing to file a tax return and filing a false tax return require strict willful conduct. See 26 U.S.C. §§ 7203, 7206. As explained by this Court: 172 The word willfully, as used in this statute, means a voluntary, intentional violation of a known legal duty. In other words, the defendant must have acted voluntarily and intentionally and with the specific intent to do something he knew the law prohibited, that is to say, with intent either to disobey or to disregard the law. Negligent conduct is not sufficient to constitute willfulness. 173 United States v. Tarwater, 308 F.3d 494, 510 (6th Cir.2002) (emphasis supplied). Because of the complexity of the tax system, tax law is one of the few areas where the Supreme Court has held that ignorance of the law is a defense. Cheek v. United States, 498 U.S. 192, 199-200, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991). If the defendant has a good faith belief that he was not violating tax law, the defendant cannot be found guilty of a tax violation, even if the good faith belief is unreasonable. Id. at 202, 111 S.Ct. 604. 174 In this case, willfulness and absence of mistake were in issue with respect to the tax violations. During pretrial discussions, Defendants presented a good faith defense in that the failure to file and the underreporting were caused by sloppy bookkeeping and the illness of an employee. 175 The government sought to present evidence of under the table payments to attack Defendants' good faith defense. The record is clear that Defendants knew of their tax obligations with respect to the payment of employees, as Defendants partially complied by paying a portion of the salaries by checks with proper withholdings. Defendants admit that they committed countless uncharged federal tax crimes. (Elie Abboud Def.'s Br. 29.) The government's implication was that because Defendants had willfully violated tax laws with respect to payment of employees, Defendants also willfully violated tax laws with respect to the failure to file and the underreporting. 176 The government also sought to present the evidence to show motive. The government's theory was that Defendants' motive in perpetrating the check-kiting scheme was based on cash flow problems Defendants were experiencing. The implication was that Defendants' under the table payments were evidence of this cash flow problem. 177
178 The government argued that evidence that Defendants willfully violated the tax laws with respect to the payment of employees was probative as to Defendants' willfulness in connection with the failure to file a tax return and the underreporting of income. We agree. 179 In United States v. Jerkins, the Court found that the district court did not abuse its discretion when, in a tax evasion case in connection with the sale of illegal drugs, it admitted evidence that the defendant had made late filings with respect to his 1969, 1970, and 1971 tax returns. 871 F.2d 598, 604 (6th Cir.1989). The Court found that for other acts evidence, the prior acts generally must be relevant to a matter at issue and must be substantially similar to, and near in time to, the offense charged in the indictment. Id. In that case, the Court found that the failure to file tax returns and the evasion of income tax were sufficiently similar in nature and occurred in close proximity to each other. In this case, the acts of payroll tax violations and income tax return violations are substantially similar so that the district court did not abuse its discretion in the admission of the evidence. 180 With respect to prejudice, the testimony provided by the government's witnesses was sufficiently succinct so as to minimize prejudice. Testimony from former employee Donald Slusher was limited to two questions concerning the form of his payment. Likewise, testimony from former employee Walter Ryder was limited to four questions concerning the form of his payment, and the line of questioning concerning the record keeping of the payroll disbursements was sufficiently limited. 181 Defendants contend that the district court did not properly weigh the evidence in accordance with Rule 403 in that the court did not offer an explanation on the record for its decision. The failure of the district court to make findings on the record with respect to its 404(b) decision does not necessitate remand. If Defendants requested the district court to make such findings on the record, then the district court must do so. United States v. Acosta-Cazares, 878 F.2d 945, 950 (6th Cir. 1989) (citing United States v. Robinson, 700 F.2d 205, 213 (5th Cir.1983)). The record does not show that Defendants made such a request at any point; as a result, their claim must fail. 182
183 Defendants' key argument with respect to the district court's 404(b) decision is that the district court did not offer a limiting instruction to the jury, so that the evidence was used as substantive evidence of guilt against Defendants. In its decision denying Defendants' motion for a new trial, the district court stated, Defendants requested a limiting instruction under Federal Rule of Evidence 404(b) which was denied by the Court. They contend that the Court erred by allowing the introduction of this evidence without a limiting instruction and that the Jury could have considered it as substantive evidence 8 tending to prove the income tax charges. . . . (J.A. at 368.) 184 The district court's conclusion that [a]dmission of this evidence without a limiting instruction does not require an entry of judgment of acquittal, (J.A. at 369), was not entirely correct. As stated, supra, the district court must give a limiting instruction with 404(b) evidence. If the error was not harmless, then we cannot sustain the tax convictions. 185 Strangely, although the district court stated in its decision denying a new trial that it did not give limiting instructions with respect to the 404(b) evidence, in fact the district court gave such instructions. When the evidence was introduced at trial, the district court told the jury: 186 Ladies and gentlemen of the jury, you have heard testimony that the . . . Defendants committed some acts other than the ones charged in the indictment. 187 You cannot consider this testimony as evidence that the Defendants committed the crimes that they are on trial for now. Instead you can only consider it in deciding whether . . . they acted willfully or not by mistake or by accident. 188 You may also consider it in connection with the Defendants' motives. These Defendants are on trial only for the crimes charged in the indictment, not of other acts. Do not return a guilty verdict unless the Government proves the crime charged beyond a reasonable doubt. 189 (J.A. at 539-40.) At the end of the case, the district court repeated its instruction: 190 You have heard testimony that the Defendants committed some acts other than the ones charged in the indictment. You cannot consider this testimony as evidence that either of the Defendants committed the crimes that each is on trial for now. 191 Instead, you can only consider it in deciding whether it evidences proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. 192 Remember that the Defendants are on trial only for the crimes charged in the indictment, no other acts. Do not return a guilty verdict unless the Government proves the crimes beyond a reasonable doubt. 193 (J.A. at 1008.) The record clearly indicates that the district court gave the proper limiting instructions to the jury not once, but twice. Defendants' reliance on the district court's language in its decision to deny a new trial is understandable but misplaced. Having complied with this Court's requirements, the district court's admission of 404(b) evidence was not error. 194 E. THE GOVERNMENT ENGAGED IN PROSECUTORIAL MISCONDUCT IN ITS CLOSING ARGUMENT, BUT THE MISCONDUCT WAS NOT FLAGRANT 1. Standard of Review 195 Because Defendants did not object to the alleged misconduct at trial, this Court reviews for plain error. United States v. Wright, 343 F.3d 849, 861 (6th Cir.2003) (citing United States v. Collins, 78 F.3d 1021, 1039 (6th Cir.1996)). `To establish plain error, a defendant must show (1) that an error occurred in the district court; (2) that the error was plain, i.e., obvious or clear; (3) that the error affected defendant's substantial rights; and (4) that this adverse impact seriously affected the fairness, integrity or public reputation of the judicial proceedings.' Id. (quoting United States v. Koeberlein, 161 F.3d 946, 949 (6th Cir.1998)). 2. Analysis 196 a. Legal Framework 197 The claim of prosecutorial misconduct involves a two-step inquiry. First, the Court must determine if the government's statements were improper. United States v. Cobleigh, 75 F.3d 242, 247 (6th Cir.1996) (quoting United States v. Carroll, 26 F.3d 1380, 1384-90 (6th Cir.1994)). If the statements were improper, the Court must decide whether the statements were flagrant. Id. (quoting Carroll, 26 F.3d at 1385). The flagrancy inquiry requires examination of four factors: 198 (1) whether the remarks tended to mislead the jury or to prejudice the accused [including whether the trial judge gave an appropriate cautionary instruction to the jury]; 199 (2) whether they were isolated or extensive; 200 (3) whether they were deliberately or accidentally placed before the jury; and 201 (4) the strength of the evidence against the accused. 202 Id. (alteration in the original) (quoting Carroll, 26 F.3d at 1385). If the statements were not flagrant, the Court will reverse only if `(1) the proof against the defendant was not overwhelming, (2) opposing counsel objected to the conduct, and (3) the district court failed to give a curative instruction.' Id. (quoting United States v. Brown, 66 F.3d 124, 127 (6th Cir.1995)). 203 b. The Reference to Under the Table Payments 204 In its closing remarks, the government stated, [t]hey knew what their obligations were, and we also know it because they were cheating on a weekly basis with their payroll. Now, that's not a charged offense, but it does give you evidence of what was going on in their minds when they decided not to file their returns. (J.A. at 1006-07.) Defendants argue this statement created an unacceptable risk that these impermissible remarks produced elements of irrationality into the jury's decision making process. (Michel Abboud Def.'s Br. 38.) We disagree. 205 Defendants propose an odd rule: even if evidence is properly admitted as relevant to guilt or innocence, the government may not refer to this evidence a single time in closing remarks. The fact is that the evidence of under the table payments was relevant to establish intent, absence of mistake, and motive. Defendants' statement that the prosecutor went out of her way to make a derogatory argument about things `that had absolutely nothing to do with defendant's guilt or innocence,' (J.A. at 38-39) (quoting United States v. Stahl, 616 F.2d 30, 32 (2d Cir.1980)), is wrong; the evidence went directly to guilt or innocence. As the Second Circuit reasoned, because this evidence was properly admitted, it was not misconduct for the prosecutor to refer to it in summation. United States v. Von Foelkel, 136 F.3d 339, 341 (2d Cir.1998). 206 Moreover, the reference to the payments was made once, and the government properly stated the limitation on the evidence. The statement simply was not made to flame the passions and prejudices of the jury. (Michel Abboud Def.'s Br. 38.) 207 c. The Reference to Defendant's Wealth 208 In its closing arguments, the government referred to Defendant Michel Abboud's expensive home, his recent purchase of a Mercedes Benz, the fact that he shopped at an expensive department store, and the fact that he sent his children to an elite private school. Defendant accuses the government of inciting class bias. 209 We find that the statements were improper. The government contends that Defendant first raised the issue of wealth as evidence of lack of motive to commit bank fraud, and that the government merely rebutted this contention by showing that Defendant's lavish lifestyle would establish motive to commit bank fraud. Had the government made the comments in closing arguments to show motive for bank fraud, the comments would have been proper. See, e.g., United States v. Derman, 211 F.3d 175, 179-80 (1st Cir.2000), superseded by statute on other grounds (finding no misconduct where the prosecution used evidence of the defendant's wealth as motive to commit a crime, and where the defendant had first placed this motive in issue). 210 The government, however, did not comment about Defendant's wealth in connection with the motive to commit bank fraud; the comments were directed towards Defendant's tax violations. In its brief, the government attempts to sidestep this issue by claiming that Defendant's wealth was in fact a motivation for his tax violations. The problem is that the government did not argue this point in closing: 211 Michel achieved the ultimate dream. He was shopping at Sax [sic] Fifth Avenue, sending his children to Hathaway Brown. It is a good life, but with the American dream comes responsibilities, and one of those responsibilities is to file your tax returns. The Abbouds could not be bothered to do that. 212 (J.A. at 1006-07.) The picture painted by the government was not that Defendant needed to commit tax violations to support his lifestyle; instead, the government juxtaposed the fact that Defendant was wealthy with the fact that he did not file his taxes and left the jury to use its imagination. The government did not connect Defendant's wealth to any issue relevant to Defendant's guilt or innocence with respect to the tax violation; its statements in this regard were therefore improper. 213 The statements, however, were not flagrant. Addressing the factors listed, supra, in order, (1) the purpose of the remarks was to prejudice Defendant; the thinly veiled implication was that Defendant was the stereotypical wealthy individual attempting to avoid his tax responsibilities. (2) The statements about Defendant's wealth were isolated; the government did not make repeated attempts to make Defendant's wealth an issue. Sizemore v. Fletcher, 921 F.2d 667, 671 (6th Cir.1990).(3) The statements were part of a deliberate strategy; it was no accident that the government made several consecutive statements concerning Defendant's wealth. (4) As to the strength of the evidence on this charge, Defendant stipulated to failing to file a false tax return and filing a false tax return; his only defense was lack of intent, which the government attacked with the 404(b) evidence. See supra. An error by Defendant's counsel may be the most telling. Defendant challenged the sufficiency of evidence for the tax charges at trial in his motion for judgment of acquittal; however, Defendant's counsel inexplicably did not remove a drafting note in the supporting brief in connection with the argument against the tax convictions, which stated, [NO SUPPORT IN RECORD/NO LEGAL AUTHORITY/DO YOU REALLY WANT TO ARGUE THIS EVEN THOUGH THERE WAS A STIPULATION?] (J.A. at 309.) Apparently, Defendant's counsel conceded that the evidence against Defendant was sufficient to support the conviction, and that there was no evidence or legal authority to prove otherwise. 214 From these factors, Defendant has not shown flagrancy in the government's closing argument, especially because of the Defendant's admission of committing the underlying conduct. This is not a case where the prosecutor's actions `so infected the trial with unfairness as to make the resulting conviction a denial of due process.' Hill v. Brigano, 199 F.3d 833, 847 (6th Cir.1999) (quoting Donnelly v. DeChristoforo, 416 U.S. 637, 643, 94 S.Ct. 1868, 40 L.Ed.2d 431 (1974)). Because the government's conduct was not flagrant, and because Defendant did not object at trial, this Court will not vacate the conviction for failure to file a tax return on this ground. 215 F. THE DISTRICT COURT DID NOT ERR IN ADMITTING THE EXPERT TESTIMONY OF WOLVERTON 1. Preservation of the Issue 216 With respect to the introduction of Wolverton's testimony, Defendant Elie Abboud made two objections at trial: (1) the data upon which [Wolverton] based his opinion was neither collected by him nor prepared by him; and (2) [Wolverton] did not render an opinion based on a reasonable degree of banking certainty. . . . (J.A. at 956-57.) Defendant Michel Abboud adopted Defendant Elie Abboud's arguments on appeal. (Michel Abboud Def.'s Br. 61.) 2. Standard of Review 217 For the two objections made at trial, this Court reviews the admission of the expert testimony for abuse of discretion. Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768, 781 (6th Cir.2002). This Court reviews issues first raised on appeal with respect to the admissibility of the expert testimony for plain error. United States v. Swafford, 385 F.3d 1026, 1031 (6th Cir.2004). 3. Analysis 218 a. Objections Made at Trial 219 i. Collection and Preparation of the Data 220 Defendants contend that Wolverton's testimony was improperly admitted because he did not collect the data and he did not prepare the data used in his expert opinion. This argument ignores Federal Rule of Evidence 703, which states, [t]he facts or data in the particular case upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing.  (emphasis supplied). Wolverton testified that he had reviewed the underlying materials that contained the information inputted into the CKAS system. As a result, Wolverton could properly form an expert opinion based on this evidence. 221 ii. Reasonable Degree of Banking Certainty 222 We are unclear as to what Defendants meant by the phrase reasonable degree of banking certainty. If Defendants' argument was that Wolverton did not express his expert opinion in terms of probability or certainty, we disagree. When asked for his conclusion as to whether check kiting occurred from June 1999 to August 1999, Wolverton testified that his conclusion was that check kiting had occurred, and that the check kite caused a risk of loss to the banking system and caused an actual loss to the banking system. (J.A. at 824.) Wolverton did testify that he would not offer an opinion with respect to the time period of 1996 to 1999, because he did not have the underlying checks for that time period; however, Wolverton expressed the relevant opinion with respect to Defendants' convictions in absolute and certain terms. 223 b. Arguments First Raised on Appeal 224 i. Wolverton's Limited Testimonial Experience 225 According to Defendants, [a]lthough [Wolverton] had previously testified as an expert in money laundering and bank fraud cases, he had not testified in any case involving the money order, check cashing or grocery business. (J.A. at 23.) 226 We agree with the government that Defendants' argument misses the point: Wolverton was proffered as an expert in check kiting, not as an expert in grocery or check cashing businesses. (Pl.'s Br. 83.) As a check kiting expert, Wolverton had extensive experience: he testified as a check kiting expert at 13 trials, and he has worked on 60 to 80 check kiting cases. Admission of Wolverton's testimony based on his experience was not error, let alone plain error. 227 ii. Manual Analysis 228 Defendants claim that Wolverton did not conduct a manual analysis in addition to the CKAS report in order to confirm that report's results. While Wolverton did not conduct a manual confirmation of the CKAS report, this fact is irrelevant. The testimony was as follows: 229 Q. You know [the CKAS analysis] is not perfect by now, correct? 230 A. It is not perfect? It is a system that I trust, and it is a system that works, and it is a system that is reliable. 231 Q. But wouldn't you say that standing alone you could not rely upon the conclusions derived from that to determine whether or not someone was involved in check kiting? 232 A. I think you can get a pretty good idea from looking at that, but I would go farther. 233 Q. In fact, in other cases, even when there was just — instead of a lot of checks like in this case there was just a handful of checks, you, after having gone through the CKAS analysis, would still go ahead and do it manually, correct? 234 A. Correct. 235 Q. You couldn't do it in this case, could you? 236 A. I could do a lot of things in this case. I would not want to attempt to put this type of information on accounting spreadsheets. 237 (J.A. at 886-87.) Defendants' argument seems to be that because Wolverton did not manually confirm the CKAS results, these results are somehow suspect; however, this ignores the fact, raised by Defendants, that this manual confirmation only occurred when instead of a lot of checks like in this case there was just a handful of checks. (J.A. at 887 (emphasis supplied).) Here, when the check kiting scheme was complex, manual confirmation was not standard procedure. Plain error did not occur in this respect. 238 iii. Failure to Include the Income of Some of Defendants' Businesses 239 Defendants quibble with the fact that the income from certain businesses of theirs was not accounted for in Wolverton's analysis. As the government notes, this is because many of these businesses failed to file tax returns. Moreover, the purpose of accounting for income from these businesses is to compare that income to the volume of deposits; if there is a disproportionate amount of deposits, then this is an indication of check kiting. 9 In this case, there was a severe disproportion between Defendants' income and their deposits. Defendants have not shown that the income not accounted for would have been so significant as to alter the proportion such that its omission would have constituted plain error. 240 iv. Carryover 241 Defendants also argue that the CKAS report did not take into account the fact that the banks allowed a negative balance with the carryover feature. As explained, infra, the fact that the banks allowed a negative balance with the carryover feature did not mean that the banks authorized check kiting. Furthermore, the primary purpose of the CKAS report was to compare deposits of third party checks with deposits from accounts of Defendants. The fact that the banks allowed one day of float on the accounts does not change the fact that 92.38% of Defendants' deposits came from their own accounts, and only 7.62% of their deposits came from third parties. 242 Defendants' basic contention is that they were allowed to run negative balances; they point to the fact that they had run a negative balance for 665 consecutive days as of November 29, 1999. This was not considered in the CKAS calculations. (J.A. at 27.) No party disputes the fact that Defendants could run a negative balance. The question is whether Defendants were kiting checks; here, the ability to run a negative balance would be irrelevant. If Defendants had run a negative balance for 665 consecutive days, and 100% of their deposits were from third party checks, then the CKAS analysis would have reflected this information and Defendants would not be guilty of check kiting. The ability to run a negative balance is independent of whether Defendants wrote worthless checks between their accounts to artificially raise the balances. No plain error occurred in this respect. 243
244 Defendants claim that the CKAS methodology was unreliable. They state the reliability has only been established by the FBI and Wolverton. Moreover, they claim that the CKAS system may be used only as an investigative tool but not as substantive evidence. 245 As an initial matter, we note that Defendants bear the burden of proof in demonstrating plain error. United States v. Murdock, 398 F.3d 491, 496 (6th Cir.2005) (citing United States v. Vonn, 535 U.S. 55, 62, 122 S.Ct. 1043, 152 L.Ed.2d 90 (2002)). In other words, the inquiry is not on the failure of the government to demonstrate reliability, but on Defendants to demonstrate unreliability to the threshold of plain error. Defendants cannot meet their burden by merely uttering the words that plain error occurred; they must actually demonstrate the error to this Court. 246 One other circuit has explicitly found the CKAS system reliable. In United States v. Yoon, the Seventh Circuit approved of the system: our independent review of the trial transcript convinces us that Agent Wolverton's expertise, both as to his methodology and his experience, was perfectly fitted to the facts of this case. 128 F.3d 515, 527 (7th Cir.1997) (emphasis supplied). There was a perfect fit in that case because the charge was check kiting, Wolverton was a check kiting expert, and the CKAS system was a check kiting analysis. Id. The same perfect fit exists here. 247 Defendants claim that the CKAS system is an investigative technique and is not admissible as substantive proof of guilt. We agree that [e]very defendant has a right to be tried based on the evidence against him or her, not on the techniques utilized by law enforcement officers in investigating criminal activity. United States v. Hernandez-Cuartas, 717 F.2d 552, 555 (11th Cir.1983). In that case, the Eleventh Circuit denounced the use of a drug courier profile as evidence of guilt or innocence, as innocent people often met such a profile. Id. 248 Defendants' argument fails because the CKAS system analyzes substantive evidence that goes directly to guilt or innocence. The CKAS is not a `profiling' system. It is a detailed analysis of the actual criminal activity Appellants conducted. (Pl.'s Br. 85) (emphasis supplied). This is not an investigative tool whereby law enforcement looks at non-criminal evidence to aid in its investigation; the CKAS analysis looks at check transactions to determine whether these transactions amount to a criminally fraudulent scheme. 249 Defendants have not demonstrated unreliability to the extent of plain error; in fact, Defendants proffer no evidence that suggests the CKAS system is unreliable. 250
251 Defendants claim that the district court failed to properly instruct the jury as to Wolverton's dual role as a fact witness and an expert witness. We find that no instruction was required, because Wolverton was not a fact witness; he was not the investigating agent and he had no role in gathering evidence. Instead, he was supplied with the appropriate evidence and rendered an expert opinion based on this evidence. 252
253 In a reply brief, Defendants raise the argument that computer generated evidence may be unreliable. (Elie Abboud Reply Br. 7.) An argument first presented to the Court in a reply brief is waived. United States v. Moore, 376 F.3d 570, 576 (6th Cir.2004) (citing Priddy v. Edelman, 883 F.2d 438, 446 (6th Cir.1989)). 254 G. THE EVIDENCE WAS SUFFICIENT TO SUPPORT DEFENDANTS' CONVICTIONS FOR BANK FRAUD AND MONEY LAUNDERING 1. Standard of Review 255 When reviewing the sufficiency of evidence in support of a jury verdict, this Court views the evidence in the light most favorable to the prosecution and gives the prosecution the benefit of all reasonable inferences from the testimony. United States v. Sawyers, 409 F.3d 732, 735 (6th Cir.2005). Viewing the evidence in this manner, a jury verdict is supported by sufficient evidence if  any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. United States v. Evans, 883 F.2d 496, 501 (6th Cir.1989) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979)) (internal quotations omitted). In sum, a defendant claiming `insufficiency of the evidence bears a very heavy burden.' United States v. Vannerson, 786 F.2d 221, 225 (6th Cir.1986) (quoting United States v. Soto, 716 F.2d 989, 991 (2d Cir.1983)). 2. Analysis 256 a. Bank Fraud 257 i. Legal Framework 258 Section 1344 of Title 18 of the United States Code states, [w]hoever knowingly executes, or attempts to execute, a scheme or artifice . . . to defraud a financial institution shall be guilty of bank fraud. In order to prove bank fraud, the government must prove three elements: (1) that the defendant knowingly executed or attempted to execute a scheme to defraud a financial institution; (2) that the defendant did so with the intent to defraud; and (3) that the financial institution was insured by the FDIC. United States v. Hoglund, 178 F.3d 410, 412-13 (6th Cir.1999). 259 This Court has held that check kiting is a form of bank fraud. United States v. Stone, 954 F.2d 1187, 1190 (6th Cir.1992). In Stone, the Court outlined the mechanics of check kiting: 260 Check kiting consists of drawing checks on an account in one bank and depositing them in an account in a second bank when neither account has sufficient funds to cover the amounts drawn. Just before the checks are returned for payment to the first bank, the kiter covers them by depositing checks drawn on the account in the second bank. Due to the delay created by the collection of funds by one bank from the other, known as the float time, an artificial balance is created. 261 Id. at 1188 n. 1. Check kiting acts as a substitute for a short-term loan. Id. at 1188. For example, if the defendant needed $100,000 today but would not have sufficient money for three days, he would write a check for $100,000 on Day 1 from an account with Bank A with insufficient funds. If Bank A has a one day float time, then it would find insufficient funds on Day 2. Before Bank A returned the check, the defendant would write a check for $100,000 on Day 2 from an account with Bank B with insufficient funds. If Bank B has a one day float time, then it would find insufficient funds on Day 3. Before Bank B returned the check, the defendant would write a check for $100,000 on Day 3 from the account at Bank A with insufficient funds. Before Bank A returned the check on Day 4, the defendant would hopefully have received sufficient money and deposited this in the account at Bank A. This process can become extremely complicated with multiple accounts and a large transaction volume between these accounts. 262 ii. Bank Officials' Purported Approval of Defendants' Actions 263 Defendants' primary contention is that the bank officials approved of Defendants' check kiting practices. We disagree. 264
265 With respect to PVF accounts, Defendants had specific accounts with PVF for use in their check cashing business. The mechanics of such an account was that Defendants would deposit customer checks that they had cashed into an account on Day 1. PVF would then give instant credit to Defendants, so that they could withdraw the full amount of the checks deposited on Day 1, even though PVF had not received credit from those checks. On Day 2, PVF would find out which checks deposited were actually good and which were returned by the computer. As a result, a possibility existed that Defendants' account would be negative, if they had withdrawn on Day 1 an amount that was greater than the actual amount credited on Day 2. 266 PVF allowed these accounts to become negative, because it had $500,000 in collateral from Defendants. If the account was negative, Defendants on Day 2 had to deposit funds sufficient to place the balance at zero. 267 PVF also charged a fee for the instant credit given to Defendants on Day 1. This was in connection with expenses in handling the accounts and for the time value of money. 268 We agree with Defendants that this system was created for the benefit of Defendants, so that they could have money on Day 1 without having actual deposits until Day 2. Of course, the banks also benefitted from this arrangement through the fees charged. 269 The fact that the banks created this system did not give Defendants free license to abuse the system by check kiting. The purpose of the system was to give Defendants instant credit for checks they had cashed, not for checks from Defendants' other accounts with insufficient funds. Defendants were mixing checks from their own insufficient accounts with checks cashed from customers and depositing these into their accounts. In other words, Defendants were disguising the fact that they were drawing instant credit with checks from their own accounts. 270 Defendants seem to be arguing that because they could run a negative balance on PVF Account 1, and because they could run a negative balance on PVF Account 2, they were authorized to cycle checks between Account 1 and Account 2 to artificially inflate the balances of the two accounts. This is simply incorrect; no one had given them permission to do so. We find our previous decision in Stone to be directly on point. There, the banks allowed the defendant to run a negative balance for a service charge. The defendant argued that this system was essentially bank approval of check kiting between accounts where the bank imposed such a charge. This Court disagreed: 271 [The defendant's] elaborate check-kiting scheme was never authorized, negotiated, secured, or known to the bank. . . . While simple overdrafts by themselves may not rise to the level of misapplication of bank funds, the evidence presented in this case showed a complicated scheme wherein a series of worthless checks were systematically written, none of which had any monetary substance.. . . [The bank's] assessment of a service charge did not in any sense confer a right upon [the defendant] to engage in the otherwise illegal activity of check kiting. 272 Stone, 954 F.2d at 1192-93 (quoting United States v. McKinney, 822 F.2d 946, 948-49 (10th Cir.1987)) (emphasis supplied). Likewise, while bank officials in this case did authorize simple negative balances on Defendants' accounts, no one authorized check kiting. 273 The testimony of the bank officials proved that they did not give such authorization. Schimmelman testified that he was notified by Curschman in June of 1999 about suspiciously heavy activity in Defendants' accounts. Schimmelman and Curschman held a meeting with Defendants in early July to discuss the issue. There, Schimmelman asked Defendant Elie Abboud if he could explain the large volume of transactions, to which Defendant Elie Abboud said he could not. Schimmelman testified that he told [Defendant Elie Abboud] that I thought it looked like it might be kiting, and if it was, it was not legal, and it had to be stopped. 10 (J.A. at 753.) 274 This statement unequivocally shows that Schimmelman did not approve of the check kiting. He did not know that Defendants were depositing checks from their own accounts along with the cashed customer checks until Curschman informed him of this fact in June 1999. In other words, he did not previously know about the check kiting; therefore, he could not have approved of it. Moreover, as soon as he found out about the check kiting, Schimmelman warned Defendants that such a practice was illegal and had to be stopped. 275 The fact is that no bank official approved of the check kiting scheme. Defendant Elie Abboud points to testimony from Schimmelman and Swaney. As explained, supra, Schimmelman approved of the negative balances in Defendants' accounts, not check kiting. Swaney elaborated on this procedure by stating that Defendants could run a negative balance as great as the collateral on the accounts. This meant that bank officials approved negative balances with a maximum of $500,000, the value of Defendants' collateral; this did not mean approval for the actual negative balances of $1.6 to $4.5 million Defendants were running during the three-month period in 1999. 276 Next, Defendant Michel Abboud cites to testimony from John Male as evidence of bank approval of check kiting. The pages to which Defendant cites do not support this contention; in fact, the testimony shows that John Male did not know Defendants were getting the benefit of carryover, i.e., the benefit of the extra day of float created by the system, until the investigation by Curschman and Schimmelman. (J.A. at 743.) If John Male did not even know about the nature of the accounts, Defendant cannot claim that John Male approved such accounts for check kiting purposes. John Male also testified that because of the investigation, he did not trust Defendants. Either Defendant did not correctly cite to John Male's testimony, 11 or Defendant is being disingenuous with the Court. 277 Defendant Michel Abboud further cites to the facts that Defendants had unlimited overdraft protection, and that PVF had the right to offset the negative balances with the collateral. As explained, supra, Defendants did not have unlimited overdraft protection; their protection was the value of the collateral, $500,000. Furthermore, the right to offset could hardly be considered a comfort to PVF, considering that the actual negative balances soared considerably above the collateral it held. 278
279 Defendants had zero balance accounts in connection with a controlled disbursement system with NCB. The zero balance accounts entailed a system that had two types of accounts: a main account, and separate disbursement accounts. Defendants could write checks drawn from the disbursement accounts. In turn, the disbursement accounts would draw from the main account. If the main account was negative, then NCB would ask Defendants to cover the negative amount. 280 This system of controlled disbursement did allow Defendants to run a negative balance, but so long as they covered that balance with good funds. As the government correctly notes, [t]his controlled disbursement account was established with the understanding that `good funds' would be deposited to cover checks clearing from the zero-balance account. But, [Defendants] did not deposit good funds. Instead, they deposited checks that were not collectible. (Pl.'s Br. 73.) 281 No NCB official gave Defendants permission to kite checks; in fact, the officials did not even know about the activity until the kite collapsed. 282
283 Defendants also had zero balance accounts with Star Bank. The policy was similar to that of the NCB controlled disbursement system; Defendants could have a negative balance on the main account, so long as they corrected the negative balance at the bank's request. 284 No official at Star Bank approved of Defendants check kiting practices. In fact, the bank had previously closed Defendants' accounts in 1996 because of suspected check kiting. 285
286 Finally, even if bank officials did approve of the check kiting scheme, which they did not, this approval would not relieve Defendants of criminal liability, because the victim is the bank as an entity. See, e.g., United States v. Rackley, 986 F.2d 1357, 1361 (10th Cir.1993) (Defendant confuses the notion of defrauding a federally insured bank with the idea of defrauding its owner or directors. It is the financial institution itself—not its directors or agents—that is the victim of the fraud the statute proscribes.). 287 iii. Service Fee 288 Defendants erroneously claim that because the banks profited from their check kiting scheme, the banks could not be the victim of bank fraud. Even though PVF was receiving fees for the check kiting transactions, these fees were incomplete. By nature, the check kite hid the actual negative balance on Defendants' accounts, so that the fee was calculated with a smaller negative balance than actually existed. In addition, the purpose of the check kite was to act as a loan substitute; the overnight interest rate attached to Defendants' account was 5.05%, whereas a normal open line of credit would have an interest rate of 9%. As a result, PVF was defrauded in two respects: on the base of the interest calculation and the interest rate itself. 289 In addition, this Court held in Stone that the imposition of a service fee did not amount to an authorization of check kiting. 954 F.2d at 1192. There, the Court reasoned, if we were to adopt [the defendant's] rationale, it would henceforth be perfectly legal for a person to kite checks at any financial institution that levied such a charge. This does not reflect the state of the law, and [the defendant] offers no compelling grounds why it should. Id. Even if PVF charged a service fee for its instant credit, this fact is not a defense for illegal conduct. 290 iv. Good Faith Defense 291 As the district court noted, good faith conduct is a complete defense to bank fraud, as it negates the element of intent. The evidence presented below, however, was sufficient to negate Defendants' defense of good faith. 292 The evidence shows that Defendants were kiting checks between PVF accounts when Schimmelman and Curschman met with Defendants in July 1999 to express their suspicions. Schimmelman testified that he told [Defendant Elie Abboud] that I thought it looked like it might be kiting, and if it was, it was not legal, and it had to be stopped. (J.A. at 753.) The evidence shows that Defendants did not stop the check kiting after this meeting, but instead started using accounts from other banks to perpetrate their scheme. The district court correctly held that this evidence was sufficient to negate the good faith defense. 293 Defendant Elie Abboud also exhibited bad faith in his discussions with NCB officials. Defendant Elie Abboud told NCB officials that he discovered the check kiting activity, he was the one who stopped it and went to Parkview and had explained there was a problem and he was trying to get them to work with him. (J.A. at 484.) This directly conflicts with the testimony of PVF officials who discovered the check kiting scheme and conducted meetings with Defendants to fix the problem. Defendant Elie Abboud tried to portray himself as the discoverer of the problem, when in fact the evidence shows he and Defendant Michel Abboud created the check kite system. If Defendants' actions were truly in good faith, then Defendants would have had no need to try and disguise the events that occurred at the unfolding of the scheme. 294 v. Loss to the Bank 295 Defendants also claim that after the banks discovered the kite, Defendants were fully cooperative with the banks, paid timely payments, and repaid the kited funds. While this may be true, this does not relieve Defendants of criminal liability. 296 For a bank fraud case, the amount of loss is determined at the time of detection, not at the time of sentencing. United States v. Sparks, 88 F.3d 408, 409 (6th Cir.1996) (citing United States v. Scott, 74 F.3d 107, 111-12 (6th Cir.1996)). Moreover, `[t]he fact that a check-kiter enters into a repayment scheme after the loss has been discovered does not change the fact of the loss; such fact merely indicates some acceptance of responsibility.' Scott, 74 F.3d at 112 (quoting United States v. Mau, 45 F.3d 212, 216 (7th Cir. 1995)). As a result, the fact that Defendants repaid the kited amount after detection does not reduce their culpability. 297 b. Money Laundering 298 i. Legal Framework 299 Section 1957 of Title 18 of the United States Code states [w]hoever . . . knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished as provided by law. 300 Defendants provide a framework that is incorrect; they state that to prove money laundering, the government must prove (1) that Michel Abboud not only conducted the transactions involved, which is conceded, (2) that he knew the funds involved were the proceeds of unlawful activity, and (3) that he knew the transactions were designed to conceal or disguise the nature, location, source, ownership and control of the proceeds involved. (Michel Abboud Def.'s Br. 54-55.) 301 First, Defendants concede that Defendants engaged in the questioned transactions. 302 Second, the government is not required to prove Defendants knew the funds were from unlawful activity. The statute explicitly states, In a prosecution for an offense under this section, the Government is not required to prove the defendant knew that the offense from which the criminally derived property was derived was specified unlawful activity. 18 U.S.C. § 1957(c). Knowledge of illegality on the part of Defendants is not a requirement. 303 Third, the statute does not require that the government prove any concealment or disguise of the transaction. United States v. Hill, 167 F.3d 1055, 1069-70 (6th Cir. 1999) (§ 1957 does not require that the defendant know that the transaction was designed to conceal or disguise the nature, location, source, ownership, or control or the subject proceeds or designed to avoid a transaction reporting requirement under state or federal law.). 304 ii. Application to This Case 305 Defendants first contention is that if Defendants are not guilty of bank fraud, they are not guilty of money laundering. Because § 1957 requires a monetary transaction in criminally derived property, we agree that if the transactions did not include fruits of bank fraud, no money laundering occurred. The evidence, however, was sufficient to support Defendants' convictions for bank fraud. 306 Defendants' second contention is that the government did not provide sufficient evidence to show that Defendants concealed or disguised the questioned transactions. As explained above, § 1957 does not require the government to make such a showing. 307 H. THE DISTRICT COURT ERRED IN ITS SENTENCING DECISION IN LIGHT OF BOOKER 1. Standard of Review 308 Defendants made timely objections to their sentences. Because Defendants preserved this issue for appeal, the Court reviews for harmless error. United States v. Hazelwood, 398 F.3d 792, 801 (6th Cir.2005). Under the harmless error test, a remand for an error at sentencing is required unless we are certain that any such error was harmless—i.e. any such error `did not affect the district court's selection of the sentence imposed.' Id. (quoting Williams v. United States, 503 U.S. 193, 203, 112 S.Ct. 1112, 117 L.Ed.2d 341 (1992)). 2. Analysis 309 Defendants correctly argue that the district court committed error when it sentenced Defendants according to the then mandatory Federal Sentencing Guidelines. See United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 764, 160 L.Ed.2d 621 (2005) (eliminating the mandatory nature of the guidelines due to constitutional violation). This error was not harmless, as it did in fact affect the sentences imposed on Defendants. See United States v. Oliver, 397 F.3d 369, 381 (6th Cir.2005). We remand the cases to the district court for resentencing.