Court Opinion

ID: 28601
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:25:28+00
Date Added: 2024-06-11T14:56:30.363889
License: Public Domain

UNITED STATES COURT OF APPEALS
                            FOR THE FIFTH CIRCUIT

                                  No. 01-50670

                         UNITED STATES OF AMERICA,

                                                          Plaintiff-Appellee,

                                     versus

          PATRICIA DAVIS PETERS MURIEL; FERNANDO MURIEL, III,

                                           Defendants-Appellants.
_________________________________________________________________

           Appeal from the United States District Court
                 for the Western District of Texas
                          (A-01-CR-2-2-SS)
_________________________________________________________________
                           August 14, 2002

Before HIGGINBOTHAM, JONES, and BARKSDALE, Circuit Judges.

PER CURIAM:*

      Fernando and Patricia Muriel having been convicted for, inter

alia, wire fraud and money laundering, primarily at issue is

whether, on this record, the payment of routine business expenses,

as   well   as    a   substantial    payment   to   the    defrauded   entity,

constitute “promotion” money laundering.               Also at issue are:

whether     the   jury   charge     should   have   included   a   good   faith

instruction; and whether claimed prosecutorial misconduct at trial

mandates reversal.       AFFIRMED.

      *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
                                  I.

      In 1996, Fernando Muriel founded Full Service Staffing (FSS),

a   sole   proprietorship   providing   temporary   workers   to    client

businesses.    After FSS paid the temporary employee, it billed the

client that amount, plus a mark-up.

      In 1997, Muriel contracted with Phillips Financial Corporation

for it to fund FSS’ payroll through a factoring agreement. Weekly,

FSS provided Phillips a list of the hours and billing rate for its

employees who worked for clients; Phillips would advance FSS

approximately 90 percent of this amount (holding 10 percent in

reserve), less a commission of approximately 5 percent.

      Phillips, in turn, would collect from the clients.           If they

did not pay, FSS was assessed a service charge to ensure its help

in collection.    And, Phillips had full recourse against FSS for

uncollected amounts.

      In early 1998, Phillips began experiencing serious problems in

collecting from FSS’ clients.      When Wiggs, Phillips’ president,

contacted Muriel about these problems, Muriel assured Wiggs he

would “get them [employees helping run FSS that Muriel relied upon]

back in shape and advise them if we needed to get things back

current”.    Muriel also told Wiggs:    he was hiring Patricia Peters

(now Muriel’s wife); she “was a super bookkeeper” and a “super

collector”; and “he was going to get everything straightened out”.

                                   2
     In fact, FSS was submitting payroll data to Phillips for

several fictitious clients, in addition to doing so for legitimate

ones.   Accordingly, Phillips paid FSS for work that never occurred

and was left to bill entities that did not exist.         Between January

and July 1998, approximately 60 percent of all factored sales by

FSS were fraudulent.

     Concerning Muriel, employees brought billing irregularities to

his attention at least twice; each time, he assured them he would

“investigate it and rectify the situation”.       When Muriel’s brother

began receiving invoices from Phillips addressed to a fictitious

client, Muriel told his brother he needed to use his address

“because he had some things to clear up”.

     Muriel also placed a laminated card on his brother’s mail box

with the name of a fictitious client and instructed his brother to

bring him the Phillips invoices when received.          When an FBI agent

contacted Muriel’s brother, Muriel instructed him not to discuss

the invoices.

     As   for   Mrs.   Muriel,   she   prepared   and    filed   the   DBA

certificates for several of the fictitious clients.          The address

for one was an office rented in her name.    When Phillips’ president

(Wiggs) talked with her concerning the collection problems, she

told him she was on her way to job sites to retrieve time cards

from clients that, unknown to Wiggs, did not exist.

                                   3
     The    Muriels     were    charged     with    wire    fraud,     interstate

transportation of fraudulently obtained property, money laundering,

and related conspiracy counts. Muriel was convicted on all counts;

Mrs. Muriel, all but several substantive counts. Their motions for

judgment    of    acquittal    were   granted      on   several   of   the   money

laundering counts.

                                      II.

     At issue is whether:         a good faith instruction should have

been given; the prosecutor’s claimed improper questioning and

remarks mandate reversal; and payments of routine business expenses

and one payment to the defrauded entity constitute “promotion”

money laundering.

                                       A.

     The Muriels contend two instructions should have been given

concerning their claimed good faith.            The first stated:       the “good

faith of a defendant” is a complete defense to the charges; “good

faith” means “a belief or opinion honestly held, an absence of

malice or ill will, and an intention to avoid taking unfair

advantage of another”; and an “honest mistake in judgment or an

honest error in management does not rise to the level of intent to

defraud”.        The second, entitled “FRAUDULENT INTENT”, contained

similar language.

                                       4
                                     1.

     Mrs. Muriel concedes she neither requested a good faith

instruction    nor   objected   to   not   giving   one.   She   contends

“objections made by one defendant in a multiple defendant trial are

generally presumed to have been made by all”.         She also adopts by

reference, pursuant to Federal Rule of Appellate Procedure 28(i),

the portion of Muriel’s brief addressing this issue.

     The Government responds:        such adoption is ineffective here,

because the inquiry is highly fact specific for each defendant;

and Muriel’s objection did not preserve this issue for Mrs. Muriel.

For the reasons stated infra, we need not resolve these points

raised by the Government’s response.       In any event, the applicable

standard of review is plain error; and the claim fails even if we

allow Mrs. Muriel to adopt that portion of Muriel’s brief.

                                     2.

     Usually, we review for abuse of discretion the district

court’s refusal of Muriel’s proposed good faith instructions. See,

e.g., United States v. Storm, 36 F.3d 1289, 1294 (5th Cir. 1994),

cert. denied, 514 U.S. 1084 (1995). That standard, however, is not

applicable in this instance.      The Muriels’ contention on appeal is

that the good faith instructions were necessary because the charge

included a deliberate ignorance instruction.        Muriel states in his

reply brief:      “The government’s brief never joins issue with Mr.

Muriel’s   main    point:   the   ‘deliberate   ignorance’   instruction

                                      5
distinguishes this case from all other cases in this Circuit in

which this Court has held the absence of the good faith instruction

to be harmless”.    (Emphasis added.)     This contention, however, was

not presented in district court.

     Accordingly, because this contention is raised for the first

time on appeal, we review only for plain error.         See United States

v. Threadgill, 172 F.3d 357, 370 (5th Cir.), cert. denied, 528 U.S.
871 (1999). Plain error occurs where there is “clear” or “obvious”

error that affects the Muriels’ substantial rights (the outcome).

E.g., United States v. Olano, 507 U.S. 725, 732-735 (1993); United

States v. Calverley, 37 F.3d 160, 162-64 (5th Cir. 1994) (en banc),

cert. denied, 513 U.S. 1196 (1995).       Moreover, in our discretion,

we will correct plain error only if it “seriously affect[s] the

fairness, integrity, or public reputation of judicial proceedings”.

Calverley, 37 F.3d at 164 (internal quotation marks omitted).

(Even if the usual standard of review (abuse of discretion) were

applicable, and even assuming error, the result would be the same

under a harmless error analysis.)

     For a refused instruction, error occurs when:                  it is a

substantially correct statement; the charge did not substantially

cover   the   requested   instruction’s    content;   and     the   omission

“seriously    impair[s]   the   defendant’s   ability    to    present   his

defense”.     Storm, 36 F.3d at 1294.

                                    6
     The Muriels contend that, in the light of the deliberate

ignorance instruction, their good faith instructions were necessary

to instruct that, if the failure to investigate the possibility of

fraudulent conduct was an “honest mistake in judgment” or an

“honest error in management”, there would be no basis for guilt.

(Internal quotation marks omitted.)

     Even assuming these instructions are correct statements, their

substance was covered by the charge.      In defining “knowingly”, the

charge stated:    “While knowledge on the part of the defendant

cannot be established merely by demonstrating that the defendant

was negligent, careless, or foolish, knowledge can be inferred if

the defendant deliberately blinded himself to the existence of a

fact”.   (Emphasis added.)     This instruction allowed the jury to

acquit if the Muriels negligently, carelessly, or foolishly chose

not to investigate, so long as it was not a deliberate attempt to

blind themselves to the existence of fraud within FSS.          It goes

without saying that deliberate ignorance of fraud is inconsistent

with any claimed good faith on their part.

     Next, according to the Muriels, the absence of the requested

instructions   substantially   impaired    their   defense   because   it

allowed the Government “to capitalize on the deliberate ignorance

instruction”, even if Muriel “believed in good faith that [FSS] was

not engaged in fraud”. (Emphasis added.) As discussed, deliberate

ignorance of fraudulent conduct is at odds with a contention of

                                  7
subjective good faith.           The existence of one necessarily negates

the existence of the other.          Therefore, refusing the instructions

did not prevent the Muriels from attempting to persuade the jury

that they did believe, in good faith, that no fraudulent conduct

was occurring.      See United States v. Giraldi, 86 F.3d 1368, 1376

(5th   Cir.     1996)    (“a   district    court    may    refuse    to    submit   an

instruction regarding good faith if ... the defendant has had the

opportunity to argue good faith to the jury”).

       In short, there was no error. Even assuming error in refusing

the instructions, for the reasons stated above, the error is

certainly not “clear” or “obvious”.               Moreover, given the evidence

against the Muriels, they have not shown the refusal affected their

substantial rights.            Restated, the instructions would not have

changed the trial’s outcome.

                                          B.

       Muriel     next    claims     three       instances     of     prosecutorial

misconduct.      Under the regular standard of review, a prosecutor’s

improper      comments     warrant   reversal       only     if     they   affect   a

defendant’s substantial rights.                United States v. Lowenberg, 853
F.2d 295, 302 (5th Cir. 1988), cert. denied, 489 U.S. 1032 (1989).

We consider:      “(1) the magnitude of the prejudicial effect of the

statements; (2) the efficacy of any cautionary instruction; and (3)

the strength of the evidence of the defendant’s guilt”.                     Id.

                                          8
     Muriel concedes no objection was made.                Therefore, again we

review only for plain error.

     The first claim concerns the cross-examination of Muriel. The

prosecutor asked him whether witnesses whose testimony conflicted

with his were lying.

     Muriel cites United States v. Thomas, 246 F.3d 438, 439 n.1

(5th Cir. 2001), which stated that forcing a defendant to “call a

number of prosecution witnesses liars” was “inexcusable”; but held

that,   in    the    context   of     the   entire    trial,   reversal   was   not

warranted.         (Any error may well have been invited; on direct,

Muriel’s counsel asked him to comment on testimony inconsistent

with his.      See United States v. Young, 470 U.S. 1, 12-13 (1985)

(“if the prosecutor’s remarks were ‘invited,’ and did no more than

respond substantially in order to ‘right the scale,’ such comments

would not warrant reversing a conviction”).)

     In      his    second   claim,    Muriel   points    to   the   prosecutor’s

statements during closing argument:                  “I don’t believe what Mr.

Muriel told us on the witness stand”; and

                   Part of this scheme was to make ...
              Muriel inaccessible and insulated, and you
              want to know why that is in my opinion?  I
              believe he’s a coward....

                   Is that a strong word?    It is, but I
              can’t come up with another one, and I’m not
              about to start lying to y’all.

     United States v. Anchondo-Sandoval, 910 F.2d 1234, 1237-38

(5th Cir. 1990), stated a prosecutor’s comment that “the defendant

                                            9
in this case is one of the most artful liars I have ever met” was

“improper” and “inexcusable”, but held it did not constitute

reversible error.     It noted any prejudice was neutralized by the

court’s cautionary instructions after defendants objected.            Again,

however, Muriel did not object, much less request an instruction.

     Concerning the prosecutor’s stating he believed Muriel is a

coward, United States v. Diecidue, 603 F.2d 535, 553 (5th Cir.

1979), cert. denied, 445 U.S. 946 (1980), and cert. denied, 446
U.S. 912 (1980), held that use of the term “coward” in describing

defendants who used others to do their “dirty work” was not

reversible   error   because   it   was   not   the   “type   of   shorthand

characterization of an accused, not based on evidence, [which] is

especially likely to stick in the minds of the jury and influence

its deliberations”.    (Internal quotation marks omitted; alteration

in original.) It also noted that “the characterization of ‘coward’

does not have the specific legal connotation of a description like

‘fugitive’ and carries no risk of being misconstrued as a legal

conclusion”.   Id.

     Finally, Muriel points to the prosecutor’s closing argument

statement concerning Muriel’s contention he acted foolishly, but

not criminally.      The prosecutor recounted to the jury:          he once

remarked to a judge for whom he worked that he could not believe

that a criminal in a particular case could be “so foolish or

stupid”; and the judge responded that, but for foolish criminals,

                                    10
there would be none.    The prosecutor told the jury that it is the

foolish criminals who are caught and the smart ones who get away.

Muriel contends the statement alludes to evidence that was not

introduced at trial and was hearsay.

     As described above, and for purposes of our plain error

review, the prosecutor’s challenged conduct was not “clear” or

“obvious” error.     Even assuming it was, Muriel must show his

substantial rights were affected.      Accordingly, he contends that,

because his conviction “hinged” upon his testimony that he was not

aware of the fraud, the questioning and comments struck “at the

heart of [his] defense”.

     The evidence, however, supports not just Muriel’s knowledge of

the fraudulent scheme, but his personal participation as well.         In

sum, in the absence of the contested conduct, the trial result

would not have been different.

                                  C.

     The   Muriels   challenge   several   of   the   substantive   money

laundering convictions.    They claim insufficient evidence for two

office rent payments (Counts 25 and 31) and one for copying costs

(Count 26) being intended to promote the fraudulent scheme.          Mrs.

Muriel makes the same contention for an approximate $32,000 wire

transfer to Phillips (Count 30).

     The Muriels moved for judgment of acquittal at the close of

the Government’s case and at the close of all the evidence.         Those

                                  11
motions were denied by written opinion.            (Although Mrs. Muriel

moved for judgment of acquittal on all counts in both her oral and

written motions, she did not specifically challenge the evidence

concerning Count 30 ($32,000 wire transfer), even though she did so

for several other money laundering counts.          We need not determine

whether she adequately preserved the claimed error for that count

— her contention fails even under the traditional sufficiency-of-

the-evidence standard of review.)

     The denial of an acquittal motion is reviewed de novo. United

States v. Carbajal, 290 F.3d 277, 289 (5th Cir. 2002).              “Viewing

the evidence in the light most favorable to the government, we must

determine   whether   any    rational    jury   could   conclude    from   the

evidence presented at trial that the government had proven all of

the elements of the offense beyond a reasonable doubt.” Id.                All

“reasonable inferences from the evidence must be construed in favor

of the jury verdict”.       United States v. Runyan, 290 F.3d 223, 238

(5th Cir. 2002) (internal quotation marks and citation omitted).

     Pursuant to 18 U.S.C. § 1956(a)(1)(A)(i), the Muriels were

convicted    of   “promotion”    money     laundering.       That    statute

criminalizes conduct where the defendant,

            knowing that the property involved in a
            financial transaction represents the proceeds
            of some form of unlawful activity, conducts or
            attempts   to   conduct   such   a   financial
            transaction which in fact involves the
            proceeds of specified unlawful activity ...
            with the intent to promote the carrying on of
            specified unlawful activity[.]

                                    12
18 U.S.C. § 1956(a)(1)(A)(i).

     The Government must prove the defendant:    (1) “conducted or

attempted to conduct a financial transaction”; (2) “which the

defendant knew involved the proceeds of illegal activity”; (3)

“with the intent to promote or further unlawful activity”.   United

States v. Cavalier, 17 F.3d 90, 92 (5th Cir. 1994).    The Muriels

contest only the last element; they claim insufficient evidence for

the payments being made with intent to promote the fraudulent

scheme.

     Concerning this last element, there must be “some evidence

that a dirty money transaction that in fact promoted specified

unlawful activity was conducted with the intent to promote such

activity”.   United States v. Brown, 186 F.3d 661, 670 (5th Cir.

1999) (first emphasis added).     Although the Government is not

required to offer direct proof of the Muriels’ intending these

payments to promote the scheme, the payments must nevertheless

constitute “proof of a type of transaction ... that, on its face,

indicates an intent to promote such activity”.   Id. at 670-71.

                                1.

     In resolving whether the rent and copying expense payments are

such transactions, we must determine whether this conduct is more

akin to that in Brown, which held the payment of such expenses did

not constitute promotion, or to that in United States v. Peterson,

                                13
244 F.3d 385 (5th Cir.), cert. denied, 122 S. Ct. 133 (2001), and

cert. denied, 122 S. Ct. 142 (2001), which held such payments did.

      In Brown, defendants engaged in several side schemes to

defraud customers of a legitimate car dealership. For example, one

scheme involved overcharging for document and license/title fees.

In holding that payments for routine business expenses such as

office and photocopier supplies were not made with the intent to

promote these fraudulent schemes, we noted that the “nexus between

the charged expenditures and any fraud activity is non-existent or

weak”.     Brown, 186 F.3d at 669.

      In   Peterson,   defendants    challenged    their   promotion   money

laundering convictions for the payment of, inter alia, “office and

administrative expenses”. 244 F.3d at 390.    Yet, in Peterson, the

fraudulent scheme accounted for all but a minute portion of the

enterprise’s revenues.        The entity solicited fees from landowners

to advertise the sale of their land.        For such advertisements, the

entity spent only three percent of the revenue received.

      Peterson held: when “the business as a whole is illegitimate,

even individual expenditures that are not intrinsically unlawful

can support a promotion money laundering charge”.                Id. at 392.

Accordingly, Peterson distinguished Brown on the basis that, in

Brown, “[t]he expenditures in question, for the basic operations of

the   dealership,      only    indirectly   supported      the    fraudulent

operations”.    Id. at 391.     In contrast, in Peterson, “the fraud was

                                     14
not restricted to isolated instances — the evidence ... supports a

conclusion that essentially all of the property owners who paid ...

were treated to the same fraudulent misrepresentations”.               Id.

     Unlike Brown and Peterson, we are not faced with an entity

that is   nearly   either   100   percent   legitimate   or   100   percent

fraudulent.   Instead, during the period these expenses were paid

with the fraudulently received funds, the Muriels acknowledge that

“the government’s own analysis shows that [FSS’] illegitimate

business accounted for approximately 60% of total sales”. Needless

to say, a business that is 60 percent fraudulent is far removed

from the situation in Brown, where the schemes were ancillary to an

otherwise legitimate business.

     Under these facts, the payments of the contested expenses are

the types of transactions that can support a promotion money

laundering conviction.      To continue defrauding Phillips to the

extent that it did, FSS had to maintain office space to continue to

appear legitimate.   Items such as copying expenses were necessary

to maintain this illusion.

     We acknowledge “the importance of not turning the money

laundering statute into a money spending statute”, Brown, 186 F.3d

at 670 (internal quotation marks omitted); this is not such a case.

Instead, the routine business expenses of a 60 percent fraudulent

entity do more than “indirectly” support the fraudulent scheme —

they are at its heart.      Therefore, a reasonable juror could find

                                    15
beyond a reasonable doubt that these payments are of the type

intended to promote the scheme.

                                      2.

     For FSS’ approximate $32,000 payment to Phillips in April

1998, Mrs.    Muriel   maintains     that,   because    FSS   owed      money    to

Phillips for client businesses’ delinquencies, the payment was not

made with the intent to promote the fraudulent scheme.               Unlike the

above-discussed payments, this transaction did not involve the

payment of a routine business expense.         Instead, it was a payment

to the defrauded entity.

     Even assuming there is no direct proof this payment was

intended to promote the scheme, it is certainly the type of

transaction that, by its nature, evinces such intent.                    Without

question, the payment directly perpetuated the fraud. A reasonable

juror could    infer   that   this   payment   was     designed    to    placate

Phillips’ growing frustration and induce it to continue to pay into

the fraudulent    scheme.      Therefore,    because     we   must    draw      all

reasonable inferences in favor of the verdict, this claim fails.

                                     III.

     For the foregoing reasons, the judgments are

                                                                  AFFIRMED.

                                      16