Opinion ID: 202222
Heading Depth: 2
Heading Rank: 1

Heading: sufficiency of the evidence

Text: 11 Morales challenges the sufficiency of the evidence to support his conviction for mail fraud, conspiracy to commit mail fraud, embezzlement, structuring monetary transactions, and conspiracy to commit money laundering. We consider them seriatim. To assess a challenge to the sufficiency of the evidence, we `review the record to determine whether the evidence and reasonable inferences therefrom, taken as a whole and in the light most favorable to the prosecution, would allow a rational jury to determine beyond a reasonable doubt that the defendants were guilty as charged.' United States v. Sullivan, 85 F.3d 743, 747 (1st Cir.1996) (quoting United States v. Mena-Robles, 4 F.3d 1026, 1031 (1st Cir.1993)). 12 1. Counts One and Three through Ten: Mail Fraud and Conspiracy to Commit Mail Fraud 13 Morales claims that the evidence presented at trial was insufficient to support his convictions for mail fraud and conspiracy to commit mail fraud. The mail fraud convictions (Counts Three through Ten) were based on eight separate membership dues checks, mailed between 2000 and 2002, the period during which Morales regularly transferred funds from FUPO's First Bank account to FUPO's BPPR account and then issued checks from FUPO's BPPR account to himself, De Jesús, or one of their personal interests. 14 To demonstrate a violation of the mail fraud statute, 18 U.S.C. § 1341, the prosecution must prove (1) the devising or attempting to devise a scheme or artifice to defraud; (2) the knowing and willing participation in the scheme with the specific intent to defraud; and (3) the use of the mails in furtherance of the scheme. United States v. McCann, 366 F.3d 46, 51 (1st Cir.2004) (citation and internal quotation marks omitted), vacated on other grounds, McCann v. United States, 543 U.S. 1104, 125 S.Ct. 986, 160 L.Ed.2d 1017 (2005). The government must also show, in order to prove causation, that the defendant knew, or could have reasonably foreseen, that `the use of the mails [would] follow in the ordinary course of business.' United States v. Pimental, 380 F.3d 575, 584 (1st Cir.2004) (quoting Pereira v. United States, 347 U.S. 1, 9, 74 S.Ct. 358, 98 L.Ed. 435 (1954)). Finally, [i]t is not necessary to prove that the defendant personally executed the mailings, but merely that the defendant caused the mailing by doing some act from which it is reasonably foreseeable that the mails will be used. Id. (citation and internal quotation marks omitted). 15 As to the first requirement, we have held that [i]n order to find a `scheme to defraud,' the jury simply had to determine that [Morales] was attempting to `wrong[ ] one in his property rights by dishonest methods or schemes.' Id. at 585 (quoting McNally v. United States, 483 U.S. 350, 358, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987)). The facts of this case indicate that FUPO membership dues were misappropriated for the personal gain of Morales and De Jesús, rather than put to use for the intended purpose of improving the working conditions, professional growth, and legal resources of FUPO members. There is little doubt that a rational jury could find that Morales devised a scheme to defraud within the meaning of the statute. 16 As to the second requirement of § 1341, Morales does not contend — and the record does not suggest — that his participation was in any way unwilling or unknowing. Under the third requirement, a conviction for mail fraud must be supported by evidence that the mail was used in furtherance of the scheme. We have held that [t]he mailing `need not be an essential element of the scheme'; it can be merely `incident to an essential part of the scheme'. Id. at 586 (quoting Schmuck v. United States, 489 U.S. 705, 710-11, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989)). Here, promotional materials sent by mail were used to recruit new members, whose dues — often sent by mail — Morales misappropriated. New members authorized the deduction of FUPO fees from their salaries via forms sent by mail, and Morales and De Jesús in turn sent letters to the relevant agencies, instructing that members' fees be deducted from their salaries, as authorized. It seems quite clear that a rational jury could deduce from these facts that mailing was at least incident to an essential part of the fraudulent scheme. 17 Finally, it is patently clear that a reasonable jury could have found that the use of the mail was foreseeable. In this circuit, it is simply the `use of the mails' in the course of the scheme rather than the particular mailing at issue that must be reasonably foreseeable for the causation element of a mail fraud offense to be satisfied. Pimental, 380 F.3d at 589. Once new members had authorized automatic deductions of their FUPO membership dues from their paychecks, FUPO would send a letter — signed by Morales or De Jesús — to the relevant agencies and municipalities. FUPO received some fifty checks per month in membership dues through the mail. Morales and De Jesús personally sorted through the mail received at FUPO, kept the checks, and handed over the remainder of the mail to Cabrera. We have no trouble concluding that a jury could have found the use of the mails to be reasonably foreseeable in the course of this scheme. 18 Morales raises two arguments in support of his contention that the evidence was insufficient to support his mail fraud conviction. First, he claims that because FUPO is a charitable organization engaged in a lawful enterprise, the mail fraud statute is inapplicable. Second, he argues that because no witness testified at trial that he used the mail to defraud FUPO, no rational jury could have convicted him of mail fraud. 19 In support of his contention that the mail fraud statute does not apply where funds were received through the mail by a legitimate non-profit organization and then misapplied by its officers, Morales cites only one fifty-year-old case from the Northern District of California. United States v. Beall, 126 F.Supp. 363 (N.D.Cal. 1954). This is not the law of our circuit, and Morales does not persuade us that it should be otherwise. 20 Morales next contends that because no witness testified at trial as to his use of the mail to further his fraudulent scheme, there was insufficient evidence to support his conviction as to the mail fraud charges. However, direct evidence is not necessary to prove mail fraud. See Pimental, 380 F.3d at 585. We find that the evidence was sufficient to support Morales's mail fraud conviction as to Counts Three through Ten. 21 To support a guilty verdict as to the conspiracy count under 18 U.S.C. § 371, the evidence must show beyond a reasonable doubt the existence of a conspiracy, the defendant's knowledge of it, and his voluntary participation in it. United States v. Yefsky, 994 F.2d 885, 890 (1st Cir.1993). To prove voluntary participation, the government must prove that the defendant had an intent to agree and an intent to effectuate the object of the conspiracy. United States v. Royal, 100 F.3d 1019, 1029 (1st Cir.1996). Further, when the commission of mail fraud is a goal of the conspiracy, the government must show either an intent to use the mails or the reasonable foreseeability of such use. Yefsky, 994 F.2d at 890 (emphasis added). 22 Evidence introduced at trial revealed that Morales and De Jesús worked together to execute the fraud and that they kept it hidden from all other FUPO members and employees. Morales personally deposited membership checks in FUPO's First Bank account each week and issued checks to himself and De Jesús from FUPO's BPPR account every month. A reasonable jury could have found that there was a conspiracy, of which Morales was aware, and in which Morales participated. 23 Morales claims that a conviction for conspiracy to commit mail fraud must be supported by a showing of an intent to use the mail to effect the scheme. This position is simply incorrect, as it directly contravenes the law of this circuit. The government need only show the reasonable foreseeability of the use of the mail in the execution of the conspiracy. Id.; see also United States v. Dray, 901 F.2d 1132, 1137 (1st Cir.1990); United States v. Delgado Figueroa, 832 F.2d 691, 696 (1st Cir.1987). 24 2. Counts Eleven and Twelve: Embezzlement of Labor Union Funds 25 Morales claims there was no federal jurisdiction as to Counts Eleven and Twelve because they were based on the premise that FUPO is a labor organization engaged in an industry affecting interstate commerce, as defined by § 402(j) of the Labor Management Reporting and Disclosure Act (LMRDA). Section § 501(c) of the LMRDA is violated by [a]ny person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use, or the use of another, any of the moneys, funds, securities, property, or other assets of a labor organization of which he is an officer, or by which he is employed, directly or indirectly. 29 U.S.C. § 501(c) (emphasis added). The term labor organization is defined by the LMRDA as an organization engaged in an industry affecting commerce and includes any organization . . . in which employees participate and which exists for the purpose, in whole or part, of dealing with employers . . . 29 U.S.C. § 402(i) (emphasis added). 26 Morales appeals his conviction as to Counts Eleven and Twelve on the ground that FUPO is not a labor organization under the LMRDA because it is not engaged in an industry affecting commerce. 3 For its part, the government does not respond to this argument at all. 4 27 The LMRDA deems a labor organization to be engaged in an industry affecting commerce if it 28 (1) is the certified representative of employees under the provisions of the National Labor Relations Act, as amended [29 U.S.C.A. § 151 et seq.], or the Railway Labor Act, as amended [45 U.S.C.A. § 151 et seq.]; or 29 (2) although not certified, is a national or international labor organization or a local labor organization recognized or acting as the representative of employees of an employer or employers engaged in an industry affecting commerce; or 30 (3) has chartered a local labor organization or subsidiary body which is representing or actively seeking to represent employees of employers within the meaning of paragraph (1) or (2); or 31 (4) has been chartered by a labor organization representing or actively seeking to represent employees within the meaning of paragraph (1) or (2) as the local or subordinate body through which such employees may enjoy membership or become affiliated with such labor organization; or 32 (5) is a conference, general committee, joint or system board, or joint council, subordinate to a national or international labor organization, which includes a labor organization engaged in an industry affecting commerce within the meaning of any of the preceding paragraphs of this subsection, other than a State or local central body. 33 29 U.S.C. § 402(j). Morales argues that FUPO does not meet any of the above requirements because the vast majority of FUPO's members are police officers employed by the Commonwealth of Puerto Rico and thus FUPO is not the representative of employees of an employer or employers engaged in an industry affecting commerce. The LMRDA defines the phrase industry affecting commerce as 34 any activity, business, or industry in commerce or in which a labor dispute would hinder or obstruct commerce or the free flow of commerce and includes any activity or industry affecting commerce within the meaning of the Labor Management Relations Act, 1947, as amended [29 U.S.C. §§ 141 et seq. ], or the Railway Labor Act, as amended [45 U.S.C. §§ 151 et seq. ]. 35 29 U.S.C. § 402(c). At trial, the government presented evidence to the jury of FUPO's activities affecting commerce, consisting of the following: the majority of FUPO's members are members of the police force in Puerto Rico, which uses Smith and Wesson firearms, Crown Victoria cars, and helicopters, none of which are manufactured in Puerto Rico; and FUPO has six or seven dues-paying members who work for J.R. Bodyguard, a private security company that uses armored trucks purchased in Canada, cars manufactured by Suzuki, arms manufactured by Smith and Wesson, and which services national companies like Sam's Club and Office Max. Morales cites nary a case to support his contention that these activities do not constitute engagement in an industry affecting commerce and are thus not sufficient to qualify FUPO as a labor organization under the statute. Our standard of review constrains us to consider the evidence in the light most favorable to the verdict. A reasonable jury could conclude that FUPO was sufficiently engaged in commerce to satisfy the statute, and we affirm Morales's conviction as to Counts Eleven and Twelve. 36 3. Count Thirteen: Structuring Monetary Transactions 37 Morales argues that there was insufficient evidence to sustain his conviction for structuring monetary transactions. The Bank Secrecy Act requires domestic banks to report any transactions involving more than $10,000 in cash (such reports are known as cash transaction reports, or CTR). See 31 U.S.C. § 5313. Further, [n]o person shall, for the purpose of evading the reporting requirements of section 5313(a) . . . structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions. Id. § 5324(a)(3). The Supreme Court has defined structuring as to break up a single transaction above the reporting threshold into two or more separate transactions for the purpose of evading a financial institution's reporting requirement. Ratzlaf v. United States, 510 U.S. 135, 136, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994). A person willfully violating this antistructuring provision is subject to criminal penalties. See 31 U.S.C. § 5322. 38 Morales contends 1) that the evidence was insufficient because none of the government witnesses testified as to any willful violation of the structuring statute, and 2) that because the transactions in question involved checks, not cash, they do not fall within the ambit of 31 U.S.C. § 5324. 39 Evidence introduced at trial reveals that BPPR never filed a CTR for any of Morales's transactions because he never issued a check in excess of $10,000, despite the fact that he often issued several checks to himself on the same day, whose total value exceeded that amount. Similarly, of the numerous handwritten checks made out to cash signed by Morales and drawn upon FUPO's First Bank account, none exceeded $10,000, even when the total value of checks cashed in a single day exceeded $10,000. Additionally, the checks that Morales's brothers cashed from FUPO's First Bank account never exceeded $10,000. 40 Morales maintains that there was insufficient evidence to support his conviction because none of the government witnesses testified that Morales ever willfully caused a financial institution to fail to file a CTR. Although this argument is quite poorly developed, we assume that its intention is to suggest that his violation of § 5324 was not willful. In Ratzlaf, the Supreme Court held that a structuring conviction requires a showing that the defendant acted with knowledge that his conduct was unlawful. 510 U.S. at 137, 114 S.Ct. 655. However, we previously have recognized that willfulness, as a state of mind, can rarely be proved by [direct] evidence; instead, `it is usually established by drawing reasonable inferences from the available facts.' United States v. Marder, 48 F.3d 564, 574 (1st Cir.1995) (quoting United States v. Bank of New England, N.A., 821 F.2d 844, 854 (1st Cir.1987)). 41 Drawing all reasonable inferences in favor of the verdict, we have no doubt that the evidence presented in this case would permit a rational jury to find that Morales wilfully violated the anti-structuring statute. During the period between January 2000 and December 2002, Morales prepared dozens of BPPR checks, drawn against FUPO's account and made out to cash, for a total value of well over $1,000,000. Not a single check exceeded $10,000 in value. The deliberate and specific avoidance of the $10,000 threshold over a period of almost three years would, in our view, permit a jury to conclude that Morales was aware of the legal consequences of his actions. Further, a rational jury could surely have found that Morales knew his conduct was unlawful in light of the fact that he concealed his actions from FUPO's leaders, high-ranking officers, and finance personnel. 42 Morales next argues that the transactions that served as the basis for his conviction do not come within the ambit of sections 5314 and 5324 of Title 31 because they involved checks and not cash. This argument fails because many of the transactions in question involved cashing checks, such that Morales — or someone sent on his behalf — would routinely exit the bank with thousands of dollars in cash. We have observed that [t]he most common method of `structuring' is to divide sums of cash into amounts that are either under the $10,000 reporting threshold or into amounts that are larger but still less likely to attract attention. United States v. Hurley, 63 F.3d 1, 12 (1st Cir.1995). The evidence in this case suggests that Morales acted exactly as Hurley describes. Morales develops no argument as to why this activity does not fall within the purview of the Bank Secrecy Act, which requires domestic banks to report any transactions involving more than $10,000 in cash. Id. (emphasis added). We find that his activity was exactly the sort that 31 U.S.C. § 5324(a)(3) proscribes. 43 4. Count Fourteen: Conspiracy to Commit Money Laundering 44 Morales was convicted of conspiracy to commit money laundering under 18 U.S.C. § 1956(h). To find Morales guilty, the jury had to find that the government proved beyond a reasonable doubt that Morales conspired with De Jesús to commit the offense of money laundering, which is comprised of four elements: 45 (1) that [Morales] 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 [Morales] 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. 46 United States v. Cruzado-Laureano, 404 F.3d 470, 483 (1st Cir.2005) (internal quotation marks omitted). 47 Morales claims that no rational jury could have convicted him of money laundering because 1) he did not conduct any financial transactions that affected interstate commerce; 2) he did not engage in any 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; and 3) the government did not present any direct evidence to establish that he conducted financial transactions to conceal the nature of his mail fraud activities. 48 Morales first maintains that he was not properly convicted under the money laundering statute because he did not conduct a financial transaction within the meaning of 18 U.S.C. § 1956(c)(4). That section defines a financial transaction as 49 (A) a transaction which in any way or degree affects interstate or foreign commerce (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments, or (iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft, or (B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree; 50 18 U.S.C. § 1956(c)(4) (emphases added). Morales only addresses part (A), claiming that he was involved in no transaction that affected interstate or foreign commerce. He entirely ignores the remainder of this subsection. 51 Even if we accept, arguendo, Morales's contention that he was involved in no financial transaction affecting interstate commerce within the meaning of subsection (A), we find that a jury could have determined that he was involved in financial transactions as defined in subsection (B). The government's case included evidence that Morales and De Jesús retained exclusive control of the membership dues checks received by mail, that they deposited the majority of the checks so received in FUPO's First Bank account each month, that they then transferred funds — using manager's checks — from FUPO's First Bank account to its BPPR account, and that Morales and De Jesús regularly issued checks to themselves from the BPPR account. Each of these actions — depositing checks at a bank, transferring funds from one bank to another, and issuing checks — involved one or more financial institutions engaged in interstate commerce. Given these facts, we think a rational jury could easily have found that Morales conducted a financial transaction within the plain meaning of 18 U.S.C. § 1956(c)(4)(B). 52 Morales next challenges the sufficiency of the government's evidence as to the fourth element of the Cruzado-Laureano test, claiming that absolutely no evidence — either direct or circumstantial — was presented at trial to establish that he engaged in any 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. Morales points to United States v. Dimeck, 24 F.3d 1239 (10th Cir.1994), to support his argument that, even if the checks that he issued to himself and De Jesús were the proceeds of illegal activity, his activities did not constitute money laundering. In Dimeck, the court found that the mere transportation of concealed drug money did not constitute money laundering because the money laundering statute was designed to punish those ... who thereafter take the additional step of attempting to legitimize their proceeds so that observers think their money is derived from legal enterprises. Id. at 1247. We find the facts of Dimeck to be easily distinguishable from the present case. The facts, when considered in a light most favorable to the verdict, suggest that Morales did far more than simply transport ill-gotten wealth. A rational jury could have found the evidence sufficient to indicate that Morales's monthly secretive transfer of FUPO membership funds between three separate bank accounts — FUPO's First Bank account, FUPO's BPPR account, and Morales's personal BPPR account — was an attempt to conceal the nature, location, source, ownership, and control of proceeds. Further, a jury could have found that Morales's practice of limiting the value of each check issued to himself or De Jesús to $10,000 so as to avoid bank reporting, indicates an effort to conceal the true nature, source, and ownership of the proceeds. Specifically, we think it quite clear that a jury could have found that these complicated machinations were intended to create the appearance of legitimate income. 53 Finally, Morales suggests that the evidence at trial was insufficient to support his conviction because no government witness directly testified as to his participation in any money laundering activity. However, we have held that circumstantial evidence can be sufficient to support a money laundering conviction. Cruzado-Laureano, 404 F.3d at 483 (A conviction requires evidence of intent to disguise or conceal the transaction, whether from direct evidence, like the defendant's own statements, or from circumstantial evidence, like the use of a third party to disguise the true owner, or unusual secrecy.). In this instance, the lack of direct evidence is a direct result of the secret conspiracy between Morales and De Jesús. The fact that only Morales and De Jesús knew of the scheme only emphasizes its secretive nature and the deceit involved with its execution. Everyone else at FUPO — from top-level officers to administrative secretaries — was kept in the dark. For these reasons, we find that a rational jury could have found the evidence at trial sufficient to convict Morales of conspiracy to commit money laundering.