Court Opinion

ID: 1086821
Source: CourtListenerOpinion
Date Created: 2013-10-24 16:09:45.924475+00
Date Added: 2024-06-11T12:31:15.113171
License: Public Domain

Case: 11-15911       Date Filed: 10/16/2013      Page: 1 of 17

                                                                                [PUBLISH]

                 IN THE UNITED STATES COURT OF APPEALS

                           FOR THE ELEVENTH CIRCUIT
                             ________________________

                                    No. 11-15911
                              ________________________

                        D.C. Docket No. 0:11-cr-60062-WPD-1

UNITED STATES OF AMERICA,

                                                                         Plaintiff-Appellee,

                                           versus

MANUEL RODRIGUEZ,

                                                                      Defendant-Appellant.

                              ________________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            ________________________

                                    (October 16, 2013)

Before HULL and MARTIN, Circuit Judges, and BOWEN, * District Judge.

MARTIN, Circuit Judge:

       Manuel Rodriguez appeals his convictions and 120-month sentence of

*
 Honorable Dudley H. Bowen Jr., United States District Judge for the Southern District of
Georgia, sitting by designation.
              Case: 11-15911    Date Filed: 10/16/2013   Page: 2 of 17

imprisonment for conspiracy to commit wire fraud, in violation of 18 U.S.C.

§ 1349, and wire fraud, in violation of 18 U.S.C. § 1343. On appeal, Mr.

Rodriguez raises two issues. First, Mr. Rodriguez argues that there was not

sufficient evidence at trial to support his convictions. Second, Mr. Rodriguez says

that the record did not establish that his offense involved more than 50 victims, so

the District Court erred when it applied a 4-level sentence enhancement under

United States Sentencing Guidelines (USSG) § 2B1.1(b)(2)(B).

      We affirm Mr. Rodriguez’s convictions because there was sufficient

evidence for a reasonable trier of fact to find Mr. Rodriguez guilty beyond a

reasonable doubt. However, because the record does not support a finding that his

offense involved more than 50 victims, we vacate Mr. Rodriguez’s sentence and

remand to the District Court for resentencing with a 2-level enhancement under

USSG § 2B.1.1(b)(2)(A) rather than a 4-level enhancement under

§ 2B1.1(b)(2)(B).

                                          I.

      On March 24, 2011, a federal grand jury sitting in the Southern District of

Florida returned a nine-count indictment against Mr. Rodriguez. The indictment

charged Mr. Rodriguez with one count of conspiracy to commit wire fraud, in

violation of 18 U.S.C. § 1349, and eight counts of wire fraud, in violation of 18

U.S.C. § 1343. Before trial, the District Court dismissed one count of wire fraud

                                          2
             Case: 11-15911     Date Filed: 10/16/2013   Page: 3 of 17

(Count 4). Mr. Rodriguez proceeded to trial on the remaining counts on September

12, 2011.

                                        A.

      The evidence at trial showed that between 2003 and 2007, Mr. Rodriguez

owned, operated, and participated in four different companies that sold coffee

machines and other vending machines to the public. Mr. Rodriguez’s companies

tried to generate sales by posting ads on the Internet seeking investors who were

looking to own and operate their own small businesses. When a possible investor

responded to an ad, one of Mr. Rodriguez’s associates would contact them and

inform them about their golden opportunity to invest in a new coffee machine,

vending machine, or drinking water machine.

      In order to induce prospective customers to buy his products, Mr. Rodriguez

and his associates gave a number of guarantees, both over the phone and in

promotional materials created by Mr. Rodriguez. For example, sales people would

routinely guarantee the amount of money that customers would make each day and

how quickly they could recoup their investment. The companies also promised

that they would provide experienced professional location specialists who would

use advanced market analytics and demographic research to secure high-end

locations where the machines would have lots of potential patrons. The companies

promised that if the customers were to encounter any problems, they would be

                                         3
              Case: 11-15911     Date Filed: 10/16/2013    Page: 4 of 17

provided with technical support and assistance. Best of all, the customers were

told that if they were not satisfied with their purchase, they could return the

machines and receive a full refund.

      Mr. Rodriguez’s customers found out the hard way that these guarantees

were too good to be true. After sending their money to Mr. Rodriguez, customers

were told that they could expect to have their businesses up and running in weeks.

But in fact, many waited for months for their machines to arrive, if they ever

arrived at all. When the machines did finally arrive, many customers found that

they did not work or that they cost more to operate than had been advertised.

      Mr. Rodriguez’s customers were also disappointed by the locations secured

by the professional location specialists. Instead of having their machines placed at

high-end venues where they could sell hundreds of items each day, customers were

forced to settle for remote locations where they could barely cover their

operational costs. Many customers testified that the machines generated zero

profits or substantial losses. This, in the face of the 300-700% profit they had been

promised. None of the customers said they had been able to recoup the cost of

their initial investment.

      Unsurprisingly, customers became frustrated and asked Mr. Rodriguez for

help. Most of these customers, however, discovered that the technical support and

assistance they had been promised was nowhere to be found. When they asked for

                                           4
              Case: 11-15911     Date Filed: 10/16/2013   Page: 5 of 17

a change in location, it didn’t happen. And when customers asked for refunds, Mr.

Rodriguez almost never honored his money-back guarantee.

      Finally, the evidence at trial also showed that Mr. Rodriguez knew that all of

this was happening, yet he continued to sell his machines to customers and

guarantee profit figures which he knew were not real. Despite the number of

complaints that Mr. Rodriguez received, new customers were told that failure was

not a possibility. When prospective customers asked to speak to current investors,

Mr. Rodriguez routinely supplied fake references. Sometimes Mr. Rodriguez even

falsely stated that he owned the machines himself and that they were profiting and

doing well for him. Beyond that, even after Mr. Rodriguez was served a cease and

desist order from the Maryland Attorney General and told his customers that he

was closing his company due to bankruptcy, Mr. Rodriguez simply created new

companies selling different machines. In the Articles of Incorporation for one of

his later companies, Mr. Rodriguez named his mother the President and CEO so

that prospective customers could not tie the troubles of his earlier companies back

to him. Mr. Rodriguez also drafted disclosure documents without mention of prior

litigation, prior sanctions, or bankruptcies, and sent them to his prospective

customers.

                                          5
             Case: 11-15911    Date Filed: 10/16/2013   Page: 6 of 17

      At the close of the government’s case, the District Court dismissed an

additional wire fraud count. On September 28, 2011, the jury returned its verdict,

convicting Mr. Rodriguez of all remaining counts.

                                        B.

      Mr. Rodriguez was sentenced on December 7, 2011. The government

sought a 4-level sentence enhancement under USSG § 2B1.1(b)(2)(B), arguing that

Mr. Rodriguez’s offense involved 50 or more victims. In support of this

enhancement, the government submitted 42 affidavits from victims who sustained

a loss after buying Mr. Rodriguez’s machines, as well as a summary chart

indicating a total of 238 victims. Mr. Rodriguez objected and argued that there

was insufficient evidence in the record to show that the offense involved more than

50 victims. Nevertheless, the District Court reasoned that out of 238 customers

who bought machines from Mr. Rodriguez, there must have been at least 50

victims. As a result, the District Court applied a 4-level sentence enhancement

under USSG § 2B1.1(b)(2)(B).

                                        II.

                                        A.

      Mr. Rodriguez first argues that there was not sufficient evidence to support

his convictions. He suggests that the government’s evidence at most establishes

that he engaged in “mere puffery” in connection with the sale of his business

                                         6
              Case: 11-15911     Date Filed: 10/16/2013   Page: 7 of 17

opportunities, but not fraud. This is especially true, he claims, because he told all

of his customers up front that there was substantial risk involved in purchasing one

of his machines.

      We review de novo a district court’s denial of judgment of acquittal on

sufficiency of evidence grounds. United States v. Browne, 505 F.3d 1229, 1253

(11th Cir. 2007). In reviewing a sufficiency of the evidence challenge, we

consider the evidence in the light most favorable to the government, drawing all

reasonable inferences and credibility choices in the government’s favor. Id. A

jury’s verdict cannot be overturned if any reasonable construction of the evidence

would have allowed the jury to find the defendant guilty beyond a reasonable

doubt. United States v. Herrera, 931 F.2d 761, 762 (11th Cir. 1991). The evidence

need not be inconsistent with every reasonable hypothesis except guilt, and the jury

is free to choose between or among the reasonable conclusions to be drawn from

the evidence presented at trial. United States v. Poole, 878 F.2d 1389, 1391 (11th

Cir. 1989) (per curiam). But when the government relies on circumstantial

evidence, the conviction must be supported by reasonable inferences, not mere

speculation. United States v. Friske, 640 F.3d 1288, 1291 (11th Cir. 2011)

(quotation marks omitted).

      We have held that in order to support a conviction for wire fraud, the

evidence at trial must show that a defendant (1) intentionally participated in a

                                          7
              Case: 11-15911     Date Filed: 10/16/2013    Page: 8 of 17

scheme or artifice to defraud another of money or property, and (2) used or caused

the use of wires for the purpose of executing the scheme or artifice. United States

v. Ward, 486 F.3d 1212, 1222 (11th Cir. 2007). Similarly, in order to sustain a

conviction for conspiracy to commit wire fraud, the government must prove that

the defendant “knew of and willfully joined in the unlawful scheme to defraud.”

United States v. Maxwell, 579 F.3d 1282, 1299 (11th Cir. 2009).

      It is true that “puffing” or “sellers’ talk” is not a crime under federal fraud

statutes. See United States v. Martinelli, 454 F.3d 1300, 1317 (11th Cir. 2006); see

also United States v. Brown, 79 F.3d 1550, 1557 (11th Cir. 1997) (quoting with

approval United States v. Pearlstein, 576 F.2d 531, 540 n. 3 (3d Cir. 1978) for

proposition that statements that a company is “nationally known” and that the

product is “among the finest . . . in the world” are not cognizable under the federal

mail fraud statute) (overruled on other grounds by United States v. Svete, 556 F.3d

1157 (11th Cir. 2009)). Instead, fraud requires proof of a “material

misrepresentation, or the omission or concealment of a material fact calculated to

deceive another out of money or property.” Maxwell, 579 F.3d at 1299.

      We affirm Mr. Rodriguez’s convictions because a reasonable jury could

have found that his misrepresentations to his customers surpassed mere puffery or

“sellers’ talk.” The evidence at trial showed that Mr. Rodriguez did not simply

puff up the profitability of his machines to prospective customers. Rather, he made

                                           8
              Case: 11-15911    Date Filed: 10/16/2013    Page: 9 of 17

material misrepresentations of fact in the course of an ongoing scheme to defraud

them. See United States v. Majors, 196 F.3d 1206, 1211 (11th Cir. 1999)

(defendant surpassed puffing or sellers’ talk by serving as an officer of fraudulent

corporations, signing newsletters and corporate literature with false statements,

attending meetings, and knowingly and voluntarily participating in scheme to

defraud investors).

      For example, Mr. Rodriguez’s customers did not testify that they were

simply given an opinion or an assurance that their investments were going to be

successful. Rather, Mr. Rodriguez guaranteed specific profit figures and provided

a definitive time frame for when his customers would recoup their investments.

He did this even though he knew his representations were completely unfounded.

Mr. Rodriguez’s sales associates also promised expert location specialists who

would use advanced research analytics to secure profitable locations for the

machines. Mr. Rodriguez knew all the while, however, that his locators used

absolutely no research and placed his customers’ machines haphazardly in

unprofitable locations. On top of all this, even though a number of customers

asked for refunds and received nothing, Mr. Rodriguez continued to promise

prospective customers that if they were not satisfied with their machines, they

could get a full refund and all their money back. The jury could reasonably infer

that these patently false promises far surpassed “sellers’ talk” or “mere puffery.”

                                          9
             Case: 11-15911    Date Filed: 10/16/2013    Page: 10 of 17

      The evidence at trial also showed that Mr. Rodriguez was not just

overstating the facts to sell his products to customers. He was also actively

concealing relevant information from potential customers as part of his scheme to

defraud. When prospective customers asked to speak to current investors, Mr.

Rodriguez frequently gave fake references or falsely stated that he owned the

machines himself. And even after the Maryland Attorney General ordered him to

cease and desist from selling his products and telling his customers that he was

filing for bankruptcy, Mr. Rodriguez simply formed a new company—naming his

mother as CEO—so that he could continue his scheme. Because a reasonable jury

could find that these types of concealments surpassed “sellers’ talk” or “mere

puffery,” we conclude that there was sufficient evidence to support Mr.

Rodriguez’s convictions.

                                         B.

      In fraud cases, the Sentencing Guidelines provide for certain enhancements

to the base offense level depending on the number of victims. If there are 10 or

more victims, there is a 2-level enhancement; if there are 50 or more victims, there

is a 4-level enhancement; and for 250 or more victims, there is a 6-level

enhancement. See USSG § 2B1.1(b)(2)(A)–(C).

      Mr. Rodriguez argues that the District Court clearly erred when it found that

his offense involved more than 50 victims. Although he acknowledges that the

                                         10
               Case: 11-15911     Date Filed: 10/16/2013   Page: 11 of 17

government presented 42 affidavits of victims who suffered a loss and a summary

chart indicating that there were 238 victims total, he points out that the

government provided no witnesses or underlying data to authenticate the

government’s summary chart. For this reason, Mr. Rodriguez argues that the

District Court’s finding is not supported by reliable and specific evidence. We

agree.

         This Court reviews de novo the interpretation and application of the

Guidelines, and reviews underlying factual findings, including the District Court’s

calculation of the number of victims, for clear error. United States v. Foley, 508

F.3d 627, 632 (11th Cir. 2007); United States v. Lee, 427 F.3d 881, 892, 894–95

(11th Cir. 2005) (applying clear error review to the District Court’s determination

of number of victims). “Although review for clear error is deferential, a finding of

fact must be supported by substantial evidence.” United States v. Robertson, 493

F.3d 1322, 1330 (11th Cir. 2007).

         “When a defendant challenges one of the factual bases of his sentence . . .

the Government has the burden of establishing the disputed fact by a

preponderance of the evidence.” United States v. Lawrence, 47 F.3d 1559, 1566

(11th Cir. 1995). “It is the district court’s duty to ensure that the Government

carries this burden by presenting reliable and specific evidence.” Id. While

estimates are permissible, courts “must not speculate concerning the existence of a

                                           11
             Case: 11-15911     Date Filed: 10/16/2013    Page: 12 of 17

fact which would permit a more severe sentence under the guidelines.” United

States v. Sepulveda, 115 F.3d 882, 890 (11th Cir. 1997) (quotation marks omitted).

Additionally, “the law of this Circuit clearly provides that reliable hearsay can be

considered during sentencing.” United States v. Zlatogur, 271 F.3d 1025, 1031

(11th Cir. 2001); United States v. Wilson, 183 F.3d 1291, 1301 (11th Cir. 1999)

(“A court may consider any information (including hearsay), regardless of its

admissibility at trial, in determining whether factors exist that would enhance a

defendant’s sentence, provided that the information is sufficiently reliable.”).

Absent a stipulation or agreement between the parties, however, an attorney’s

factual assertions alone do not constitute evidence that a District Court can rely on.

United States v. Washington, 714 F.3d 1358, 1361 (11th Cir. 2013).

      The District Court clearly erred when it found that Mr. Rodriguez’s offense

involved more than 50 victims. The only evidence presented to the Court

suggesting that there were more than 50 victims was the summary chart proffered

by the government. The prosecution presented no witnesses to authenticate what

the chart represented, how it was prepared, or by whom. While the district court

could consider trial evidence, there was no testimony or evidence tying the

summary chart to any of the trial evidence either. Neither did the prosecution

present any witnesses or evidence to verify that the information in the chart was

correct. In essence, the summary chart amounted to little more than an allegation

                                          12
               Case: 11-15911      Date Filed: 10/16/2013       Page: 13 of 17

by the government on a piece of paper that Mr. Rodriguez’s offense involved more

than 50 victims. See Washington, 714 F.3d at 1361 (representations by the

government at sentencing that there were more than 250 victims were insufficient);

United States v. Lawrence, 47 F.3d 1559, 1568 (11th Cir. 1995) (holding that

“perfunctory summaries of the evidence that the Government stood ready to

present” were not evidence). The government failed to present any evidence to

establish that Mr. Rodriguez’s offense involved more than 50 victims. See

Sepulveda, 115 F.3d at 890. Therefore, Mr. Rodriguez’s sentence should not have

been enhanced by four levels based on such a finding. 1

                                              III.

       We affirm Mr. Rodriguez’s convictions. However, the 4-level enhancement

under USSG § 2B1.1(b)(2)(B) is set aside, and the case is remanded for

resentencing without that enhancement. The District Court should impose a 2-

level enhancement under USSG § 2B1.1(b)(2)(A) because Mr. Rodriguez has

conceded on appeal that there were 10 or more victims of his conduct.

       AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

1
 We reject the government’s argument that Mr. Rodriguez waived his objection to the summary
chart as evidence of the number of victims. When the government proffered the chart to the
district court, counsel for Mr. Rodriguez expressly objected to the chart as an improper way to
prove the amount of victims.
                                              13
             Case: 11-15911     Date Filed: 10/16/2013    Page: 14 of 17

BOWEN, Senior District Judge, specially concurring:

      I concur in the opinion in full. I write specially to comment on the

Government’s treatment of the sentencing proceedings.

      This is another case wherein the Government has failed to come forward

with evidence at a critical time. Unfortunately, important objections made by a

defendant at a sentencing hearing are often dealt with as an afterthought. The

Government’s cavalier disregard for the need of further evidence, specific

references to a trial transcript, or another basis upon which the district court may

make sustainable findings is all too typical. In this case, after a laboriously

conducted two-week trial, resulting in a conviction we readily affirm, the

Government’s willingness to allow the matter to conclude resting upon

extrapolation, conjecture, and innuendo left the district court stranded with a well-

prepared Presentence Investigation Report, some commentary, and little else.

      A district court’s factual findings at a sentencing hearing are reviewed using

the deferential standard of “clear error.” United States v. Foley, 508 F.3d 627, 632

(11th Cir. 2007). Here, as a consequence of the Government’s lackadaisical

approach, we are ultimately “left with the definite and firm conviction that a

mistake has been committed.” United States v. McDaniel, 631 F.3d 1204, 1209

(11th Cir. 2011). The Government’s inaction encouraged the district court to

speculate as to the amount of loss and the number of victims. Why the Executive

                                          14
             Case: 11-15911       Date Filed: 10/16/2013   Page: 15 of 17

Branch would expend its resources in extensive, indeed intricate, investigation and

prosecution of this case, only to approach its culmination (the sentencing event)

with such laxity, is a mystery.

      It is true that a sentencing proceeding is more flexible and less formalized

than a trial to a jury. See, e.g., Foley, 508 F.3d at 633 (“[T]he [Sentencing]

Guidelines require a district court to take into account not merely the charged

conduct, but rather all relevant conduct, in calculating a defendant’s offense

level.”) (citation and internal quotation marks omitted); United States v. Zlatogur,

271 F.3d 1025, 1031 (11th Cir. 2005) (observing that a district court may consider

“reliable hearsay” during sentencing). During sentencing, The Government need

only establish a disputed fact by a preponderance of the evidence. United States v.

Lawrence, 47 F.3d 1559, 1566 (11th Cir. 1995). Further, the district court can rely

upon its recollection of the evidence of the trial to make its findings. United States

v. Hamaker, 455 F.3d 1316, 1338 (11th Cir. 2006) (“The district court’s factual

findings for purposes of sentencing may be based on, among other things, evidence

heard during trial, undisputed statements in the [Presentence Investigation Report],

or evidence presented during the sentencing hearing.”) (citation and internal

quotation marks omitted).

      I fear that the latitude allowed in sentencing proceedings often lulls the

Government’s lawyers into a species of spectator. However, the lower standard of

                                           15
             Case: 11-15911     Date Filed: 10/16/2013    Page: 16 of 17

proof, the district court’s wide discretion, and the degree of informality in no way

lessen the importance or the due process implications of the event. See United

States v. Gupta, 572 F.3d 878, 887-88 (11th Cir. 2009) (observing that “the

Government[‘s] burden of establishing the disputed fact by a preponderance of the

evidence . . . must be satisfied with reliable and specific evidence” and that “a

district court must make factual findings sufficient to support the government’s

claim . . . .”) (emphasis added) (citations and internal quotation marks omitted).

Thus, the significance of the Government’s participation continues from the

commencement of the case to its conclusion.

      In fairness to the district court, findings made at a sentencing hearing are

often entered months after a trial, following other trials, adversary proceedings,

contested matters, and numerous matters in litigation. The United States Probation

officers correctly concentrate on the preparation of a Presentence Investigation

Report, which may include evidentiary matters, opinions, conclusions, and

recommendations based on subjective criteria. When facts in the Presentence

Investigation Report are disputed, however, the district court needs more. No one

is better positioned than trial counsel for the Government to anticipate and satisfy

the need for articulation, protection, and supplementation of the record with the

testimony of witnesses, necessary exhibits, or other evidence. Too often,

energetic, successful prosecutors approach what is arguably the most important

                                          16
             Case: 11-15911    Date Filed: 10/16/2013   Page: 17 of 17

part of the case with a surprising level of inexactitude. Responsible advocacy

demands more.

                                        17