Court Opinion

ID: 78124
Source: CourtListenerOpinion
Date Created: 2010-04-27 03:59:45+00
Date Added: 2024-06-11T17:21:20.714412
License: Public Domain

[PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS
                                                                FILED
                         FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                          ________________________  ELEVENTH CIRCUIT
                                                           AUGUST 6, 2008
                                 No. 07-10380             THOMAS K. KAHN
                           ________________________           CLERK

                       D. C. Docket No. 03-20526-CV-FAM

UNITED STATES OF AMERICA,

                                                           Plaintiff-Appellee,

                                      versus

$125,938.62
Proceeds of certificates of deposit
number 1271734730,
$60,851.73
number 1271736329, et al.,

                                                                 Defendants,

ARNOLDO JOSE ALEMAN CARDENAL,
ANA EUGENIA FLORES,
JOSE GRULLON,
NORMA L. FLORES,
MARIA ALEJANDRA ALEMAN CARDENAL,
CARLOS MIGUEL ALEMAN CARDENAL,
MARIA DOLORES ALEMAN CARDENAL,

                                                      Claimants-Appellants.
                              ________________________

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

                                      (August 6, 2008)

Before TJOFLAT and BLACK, Circuit Judges, and RESTANI,* Judge.

BLACK, Circuit Judge:

       In this civil forfeiture action brought under the Civil Asset Forfeiture

Reform Act of 2000 (CAFRA), 18 U.S.C. § 983, the district court found seven

certificates of deposit held in the names of Claimant-Appellants Maria Alejandra

Alemán, Norma Flores, José Grullon, and Ana Flores were subject to forfeiture

under 18 U.S.C. § 981(a)(1)(B) because they were derived from funds stolen from

the Nicaraguan treasury during the presidency of Arnoldo Alemán.

       On appeal, Appellants contend the Government failed to meet its burden of

linking the certificates of deposit to embezzled funds. Although the Government

now concedes that key evidence on which it relied at trial was inadmissible, it

asserts the properly admitted evidence was sufficient to show, by a preponderance

of the evidence, that the funds are subject to forfeiture. Having reviewed the

       *
          Honorable Jane A. Restani, Chief Judge, United States Court of International Trade,
sitting by designation.

                                               2
entire record, we affirm the judgment of the district court with respect to

certificates number 1275218528 and 1263604528 because the evidence properly

presented to the court with respect to those funds was minimally sufficient to meet

the Government’s burden of proof. However, because the Government failed as a

matter of law to meet its burden of proving by a preponderance of the evidence

that certificates number 127173430, 1256700028, 1279734728, 1271734729, and

1271737129 were derived from funds embezzled from the Nicaraguan treasury,

we reverse the district court’s order of forfeiture with respect to those certificates.

                                 I. BACKGROUND

A. The Certificates of Deposit

      During the late 1990s, while Arnoldo Alemán was President of Nicaragua,

millions of dollars disappeared from the Nicaraguan national treasury. Around the

same time, Byron Jerez, a friend of the Alemán family and a high-ranking official

working in the Nicaraguan Treasury Department, withdrew funds from two

entities, Consultores Corporativos (a company with which he was affiliated) and

the Nicaraguan Democratic Foundation (of which he was a founding member).

Jerez used the money to purchase certificates of deposit from Terrabank in Coral

Gables, Florida, in the name of Alemán and several of his relatives. Alemán and

his wife also opened several certificates of deposit at Terrabank during this period.

                                           3
Some of these certificates of deposit were later assigned to other members of the

Alemán family.

         In March 2003, the United States Government filed a civil forfeiture action

in the United States District Court for the Southern District of Florida, contending

that eight of the Terrabank certificates of deposit were subject to forfeiture

because they were derived from funds stolen from the Nicaraguan treasury.1 The

chart below summarizes the relevant details of each certificate at issue in this case:

Certificate No.   Amount     Opened    Original Owner Present Owner   Purchased by     Funds from
 127173430        $100,000   4/17/98    Arnoldo or    Maria            Byron Jerez      Nicaraguan
                                        Maria         Alejandra                         Democratic
                                        Alejandra     Alemán                            Foundation
                                        Alemán

 1256700028       $75,000    3/6/98     Arnoldo or    Norma Flores     Arnoldo and      Milerstone
                                        Amelia                         Amelia Alemán    Business
                                        Alemán

 1279734728       $100,000   4/17/98    Arnoldo       José Grullon     Byron Jerez      Nicaraguan
                                        Alemán or                                       Democratic
                                        Carlos                                          Foundation
                                        Alemán

 1271734729       $100,000   4/17/98    Arnoldo       Ana Flores       Byron Jerez      Nicaraguan
                                        Alemán or                                       Democratic
                                        Arnoldo                                         Foundation
                                        José
                                        Alemán

 1271737129       $75,000    5/26/98    Arnoldo       José Grullon     Arnoldo          Milerstone
                                        Alemán or                      Alemán           Business
                                        Carlos
                                        Alemán

         1
         The Government later abandoned its claim with respect to one of the certificates,
leaving only seven at issue in this action.

                                                     4
 1275218528   $75,999   4/22/99   Arnoldo     José Grullon   Byron Jerez   Consultores
                                  Alemán or                                Corporativos
                                  Carlos
                                  Alemán

 1263604528   $75,000   4/22/99   Arnoldo     Ana Flores     Byron Jerez   Consultores
                                  Alemán                                   Corporativos

(Dist. Ct. Findings of Fact & Conclusions of Law, at 2-3.)

       After a few procedural false starts (including an appeal to and remand from

this Court), the case proceeded to a bench trial.

B. The Government’s Case

       At trial, the Government attempted to present several summary witnesses,

including Francisco Saavedra, a member of the U.S. Customs Asset Forfeiture

Group, and Ivan Lara, the Nicaraguan lawyer who had prosecuted Alemán and

Jerez on charges of embezzlement, money laundering, and other fraud. (Alemán

was convicted of the charges against him; Jerez was acquitted.)

       Unfortunately, many of the Government’s key witnesses, including

Saavedra and Lara had minimal non-hearsay testimony to offer; therefore, the

Government’s case turned primarily on the adequacy of the documentary evidence

admitted at trial. Among that evidence was an audit conducted by the Nicaraguan

Government and prepared by witness José Calderón. According to Calderón’s

testimony and portions of the audit, which were translated into English and

admitted into evidence, millions of dollars were illegally removed from the

                                              5
Nicaraguan treasury between 1997 and 2002, and were diverted to unauthorized,

“extra-budgetary” funds controlled by the Ministry of the Presidency. Calderón

testified that the audit did not trace any pilfered funds to the Terrabank accounts.

      In addition to the audit evidence, the Government introduced through Lara

numerous authenticated checks and other financial documents which Lara had

obtained from Nicaraguan banks. The checks and their accompanying notations

were not translated into English, and the district court did not permit the

prosecutor to provide testimony regarding the meaning or relevance of the

financial documents on the ground that such testimony would be hearsay coming

from someone other than the records custodian. The Government argued the

documents revealed money had been routed from presidential funds to a changing

house and from the changing house to Consultores Corporativos, a business with

which Jerez was affiliated. The Government produced no financial documents

linking embezzled money to either Milerstone Business or the Nicaraguan

Democratic Foundation.

      Of central importance to the Government’s case was Exhibit 67, a copy of

the final judgment of criminal conviction in Jerez and Alemán’s Nicaraguan

prosecution. Over the Claimants’ strong objection, and after extensive discussion

regarding the admissibility of the evidence, the district judge admitted two small

                                          6
portions of the judgment under the public records exception to the hearsay rule.

Specifically, the court admitted the fact of Alemán’s conviction for “laundering of

money and/or assets proceeding from illegal activities, fraud, embezzlement of

public monies, peculation, and association and instigation to commit crimes and

electoral crime.” (See generally Trial Trans. at 54:3-21, 80:19-81:9; see also

Certified Translation of Final Decision of the Nicaraguan First Criminal Court of

the District, penultimate page.) The court also admitted a portion of the judgment

acquitting Jerez, but suggesting he was guilty in fact of aiding and abetting the

crimes of which Alemán had been convicted and that Jerez had done so in

furtherance of Alemán’s financial interests.

      To bolster its claim that the money in the certificates of deposit could not

have come from Alemán’s personal holdings, the Government admitted financial

disclosure statements filed by Alemán in 1997 and 2000, which list modest real

property holdings and income.

C. The Claimants’ Case

      After the Government rested, the district court heard testimony from each of

the claimants and from a friend of the Alemán family, who argued the money in

the certificates of deposit had come from legitimate family business endeavors and

from legitimate expenditures from the Nicaraguan Democratic Foundation. Maria

                                          7
Alejandra Alemán testified that her family had been in the coffee and cattle

business for more than a century; she could not, however, provide any details

regarding the family business. The other claimants and the remaining witnesses

provided similarly vague testimony regarding the origin of the funds used to open

the certificates of deposit.

D. The District Court Order

      On December 21, 2006, the district court issued an opinion holding the

Government had met its burden of proving funds from the Nicaraguan Democratic

Foundation, Milerstone Business, and Consultores Corporativos (the monetary

sources for the certificates of deposit) were “traced to illicit activities by President

Aleman and Byron Jerez.” (See Dist. Ct. Findings of Fact & Conclusions of Law,

dkt. #165, at 3.) Specifically, the district court found:

      [With respect to the five certificates of deposit purchased by Jerez],
      there was clear commingling of illicit funds with stolen money in the
      accounts of “Consultores Corporativos” and the Nicaraguan
      Democratic Foundation. The United States established that the
      certificates of deposit were purchased shortly after President
      Aleman’s assumption of the Presidency of Nicaragua and millions of
      dollars were removed from Presidency accounts by his subordinates,
      specifically Byron Jerez, the actual purchaser of the certificates. The
      evidence showed that funds moved from the office of the Nicaraguan
      Presidency to a money exchange house, Multicombrios [sic], and then
      to Jerez’s corporations, including Consultores Corporativos. Until
      then, Aleman’s financial transactions in the United States had been
      modest. The Government also proved that the majority of the

                                           8
      certificates of deposit were not purchased by the Alemán family and
      that Aleman’s financial disclosure did not reflect the existence of a
      large amount of cash.

      In addition, the Government introduced the December 6, 2003
      conviction and twenty year sentence of President Alemán for money
      laundering and embezzlement. Byron Jerez was “acquitted,” but the
      Nicaraguan Court found that he did participate in the crime of fraud
      and used his “resourcefulness” to execute the illicit complex financial
      transactions. His “acquittal” was based upon a [sic] “principles of
      Proportionality and Opportunity.” This evidence is clearly sufficient
      for the Government to meet its burden.

(Id. at 4-5.) Additionally, the district court found the testimony of the claimants

not credible, and determined none had succeeded in proving he or she was an

innocent owner of the funds in question. (Id. at 7.) Consequently, the court

ordered all seven certificates forfeited to the Government. (Id. at 8.)

                                 II. DISCUSSION

      On appeal, Appellants raise several challenges to the district court’s

forfeiture decision. Two require discussion: Appellants’ contention that (1) the

district court erred by admitting facts contained in the Nicaraguan judgment of

conviction; and (2) the Government failed to adduce sufficient evidence to meet

its burden of connecting the certificates of deposit to embezzled money.

A. Admissibility of Foreign Judgment of Conviction

      We begin with the question whether the district court erred by admitting the

                                          9
Nicaraguan judgment of conviction and facts found in it and by relying on those

facts to find Byron Jerez embezzled funds for the purpose of advancing Alemán’s

financial interests. We review evidentiary rulings for an abuse of discretion;

“[h]owever, basing an evidentiary ruling on an erroneous view of the law

constitutes an abuse of discretion per se.” United States v. Henderson, 409 F.3d

1293, 1297 (11th Cir. 2005).

      The district court admitted the foreign judgment and facts found in it under

the hearsay exception permitting courts to consider “factual findings resulting

from an investigation made pursuant to authority granted by law . . . .” Fed. R.

Civ. P. 803(8)(C). Before oral argument, we invited the parties to address the

applicability of this Court’s decision in United States v. Jones, 29 F.3d 1549 (11th

Cir. 1994), which holds that Rule 803(8)(C), by its plain language, does not apply

to judicial findings of fact. Id. at 1554.

      In response, the Government concedes that the factual findings in the

Nicaraguan judgment were improperly admitted. The fact of Alemán’s conviction

and the sentence he received remain admissible pursuant to Fed. R. Evid. 803(22);

however, none of the relevant facts found in the judgment of conviction were

admissible in the district court. Consequently, when evaluating Appellants’

challenge to the sufficiency of the evidence, we may not consider facts drawn from

                                             10
the Nicaraguan judgment of conviction.

B. Sufficiency of the Evidence

      Property located in the United States is subject to civil forfeiture when it is

“derived from, or traceable to, any proceeds obtained directly or indirectly from an

offense against a foreign nation,” 18 U.S.C. § 1956(c)(7)(B), so long as the

offense against the foreign nation (1) involved “embezzlement of public funds by

or for the benefit of a public official,” id. § 1956(c)(7)(B)(iv); (2) would be

punishable within the jurisdiction of the foreign nation by death or imprisonment

for more than one year; and (3) would be punishable under the laws of the United

States by imprisonment for more than one year if the act or activity constituting

the offense had occurred within the jurisdiction of the United States. 18 U.S.C. §

981(a)(1)(B)(i)-(iii).

      At trial, the Government contended Alemán, assisted by his friend and

former internal revenue secretary Byron Jerez, embezzled money from the

Nicaraguan treasury, and after laundering it, purchased the seven certificates of

deposit which are the subject of this forfeiture action. Embezzlement is an offense

that is punishable by more than one year’s imprisonment in both Nicaragua and

the United States, see Ex. 67 (Alemán’s judgment of conviction for 20 years’

imprisonment) and 18 U.S.C. § 641 (embezzlement of more than $1,000 in federal

                                          11
funds or property punishable by up to ten years’ imprisonment); therefore, if the

money used to fund the certificates of deposit was embezzled, the certificates are

forfeitable to the United States Government.

       Before the Civil Asset Forfeiture Reform Act took effect, in order to prevail

at a forfeiture hearing, the Government was required to establish only probable

cause to believe the property in question was connected to a crime. United States

v. Bowman, 341 F.3d 1228, 1233-34 (11th Cir. 2003). The burden then shifted to

the claimant to establish by a preponderance of the evidence that the property was

not connected. Id. CAFRA was “designed to rectify an unfairness to the

individual vis-a-vis the government” by “forcing the Government to prove that

property is subject to forfeiture as opposed to forcing the property owner to prove

his property is not subject to forfeiture.” United States v. Bowman, 341 F.3d 1228,

1236 (11th Cir. 2003) (citing United States v. Real Property in Section 9, Town 29

North, 241 F.3d 796, 799 (6th Cir. 2001)). Under CAFRA the Government bears

a heavier burden: it must now prove by a preponderance of the evidence that

property is subject to civil forfeiture. 18 U.S.C. § 983(c)(1).2

       2
          When the government claims that property is subject to forfeiture because it “was used
to commit or facilitate the commission of a criminal offense,” the Government must “establish
that there was a substantial connection between the property and the offense.” 18 U.S.C.
§ 983(c)(3). Claimants contend § 983(c)(3) is relevant to this case; however, the Government
does not contend the certificates of deposit were “used to commit or facilitate” embezzlement: it
argues the certificates were purchased with the fruits of the embezzlement. Consequently, the

                                               12
       In an appeal from an in rem civil forfeiture, we review the district judge’s

factual findings for clear error, and his conclusions of law de novo. See United

States v. Carrell, 252 F.3d 1193, 1198 (11th Cir. 2001). At oral argument, we

asked the Government to submit to us what should have been provided to the

district court: a chart showing the evidentiary connection between money stolen

from the Nicaraguan treasury and the money used to fund the certificates of

deposit at issue in this case. Appellee’s submission clarifies the relevance of the

financial documents submitted at trial relating to payments made from the

presidential treasury, through Multicambios, to foreign businesses and ultimately

to Consultores Corporativos. From Consultores Corporativos, Jerez drew the

funds used to purchase certificates of deposit numbers 1275218528 and

1263604528. The district court did not clearly err by finding this evidence was

sufficient to meet the Government’s burden of proof with respect to those

certificates.3

Government was required to demonstrate only that the funds were derived from or were traceable
to, any proceeds obtained directly or indirectly from the embezzlement of public funds from the
Nicaraguan treasury.
       3
           Certificates number 1275218528 was owned by José Grullon, while certificate number
1263604528 was owned by Ana Flores. At trial, both claimants raised an innocent owner
defense under 18 U.S.C. § 983(d)(1). Innocent ownership is an affirmative defense defined
narrowly by the statute. Under the statutory definition, an innocent owner must be either an
owner whose interest in the property exists at the time the conduct giving rise to the forfeiture
takes place, id. § 983(d)(2)(A), or one who acquired a property interest after the conduct giving
rise to the forfeiture has taken place, id. § 983(d)(3)(A). With respect to this second class, the

                                                13
       The same cannot be said with respect to the evidentiary support for

forfeiture of the remaining certificates of deposit. As the Government’s charts

themselves reveal, there is no direct evidence connecting certificates of deposit

numbers 127173430, 1256700028, 1279734728, 1271734729, and 1271737129 to

money embezzled from the Nicaraguan treasury.

       The Government contends their case with respect to these certificates was

circumstantial, and points to the following evidence: the audit which showed

money was stolen from the Nicaraguan treasury during Alemán’s presidency;

Alemán’s financial statements, which showed he had modest personal holdings at

the time the certificates of deposit were purchased; evidence that other certificates

purchased by Jerez were derived from embezzled funds and that some of Jerez’s

personal assets were forfeited to the United States in an unrelated forfeiture action;

documents from Terrabank showing Jerez purchased three of the five certificates

statute defines an innocent owner as one who, at the time that person acquired the interest in the
property,

               (i) was a bona fide purchaser or seller for value (including a purchaser or
       seller of goods or services for value); and
               (ii) did not know and was reasonably without cause to believe that the
       property was subject to forfeiture.

Id. § 983(d)(3)(A) (emphasis added). Neither Grullon nor Flores testified that he or she was a
“bona fide purchaser or seller for value” of the certificates of deposit. Under the plain language
of the statute, then, they would not have been entitled to raise an innocent ownership defense
even if the district court had credited their testimony.

                                                14
at issue; and the fact Jerez had a connection to the Nicaraguan Democratic

Foundation.

      Circumstantial evidence is one thing; speculation another. The

Government’s case with respect to funds derived from the Nicaraguan Democratic

Foundation amounted to little more than an invitation for the district court to

conclude that because Jerez used embezzled funds to purchase certificates of

deposit 1275218528 and 1263604528, he must have done the same when he

purchased certificates 127173430, 1279734728, and 1271734729, with funds from

the Nicaraguan Democratic Foundation, an organization which, according to the

uncontroverted testimony presented at trial, had no restrictions on the use of its

funds. The evidence was insufficient as a matter of law to meet the Government’s

burden with respect to these three certificates.

      With respect to certificates 1256700028 and 1271737129—purchased by

Arnoldo and Amelia Alemán in the amount of $75,000 each—the Government

places considerable emphasis on Appellants’ failure to produce business records

proving the certificates were funded with proceeds from the Alemán family’s

coffee or livestock business, rather than with embezzled funds. Appellants,

however, were under no obligation to come forward with evidence of their rightful

ownership. Rather, it was the Government’s burden to show the money used to

                                          15
purchase the certificates of deposit was derived from embezzled funds—and that it

did not do. Consequently, we hold the evidence was insufficient as a matter of

law to support the district court’s forfeiture order with respect to these two

certificates, as well.

                                 III. CONCLUSION

       Given the evidence adduced at trial, the district court did not clearly err in

finding the Government met its burden of proving certificates of deposit

1275218528 and 1263604528 were subject to forfeiture because they were derived

from funds stolen from the Nicaraguan treasury. We affirm the court’s order of

forfeiture with respect to those two certificates. With respect to certificate

numbers 127173430, 1256700028, 1279734728, 1271734729, and 1271737129 ,

however, the Government failed to meet its burden to present evidence of a

connection between those funds and funds stolen from the Nicaraguan treasury.

Therefore, we reverse the denial of the district court with respect to those five

certificates.

       AFFIRMED IN PART and REVERSED IN PART.

                                          16