Court Opinion

ID: 16538
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:55:20+00
Date Added: 2024-06-11T08:50:02.233233
License: Public Domain

Revised January 7, 1999

             UNITED STATES COURT OF APPEALS
                  For the Fifth Circuit

                      No. 96-20873

                UNITED STATES OF AMERICA,

                                            Plaintiff-Appellee,

                         VERSUS

           WILLIE BURNS; MARTANETTE ALEXANDER;
       GREGORY EUGENE AUGUST; EARLINE MONTGOMERY,

                                       Defendants-Appellants.

*********************************************************

             ______________________________

                      No. 97-20288
             ______________________________

                UNITED STATES OF AMERICA,

                                            Plaintiff-Appellee,

                         VERSUS

                 GREGORY EUGENE AUGUST,

                                            Defendant-Appellant.
            Appeals from the United States District Court
                  for the Southern District of Texas
                                December 9, 1998

Before KING, EMILIO M. GARZA, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:

     In this appeal we are asked to review the convictions of four

appellants who were found guilty of defrauding the Resolution Trust

Company (“RTC”) and the Federal Deposit Insurance Company (“FDIC”).

Two of those appellants also ask us to review the propriety of

their   sentences.        For   the   following      reasons    we    affirm   the

appellants’ convictions and sentences.

                                       I.

     Appellant Gregory August (“August”) was the owner and chief

executive officer of the August Group Incorporated (“TAGI”), a

privately    held    property-management         company      based   in     Texas.

Appellant Earline Montgomery (“Montgomery”) was TAGI’s acting vice-

president    and     secretary.         Appellant      Martanette      Alexander

(“Alexander”) was August’s former girlfriend, but was not formally

employed by TAGI. Appellant Willie Burns (“Burns”) was a friend of

August and, like Alexander, not formally employed by TAGI. Ephraim

Tennie ("Tennie"), a government witness who testified for the

government   at     the   appellants’       trial,   worked    for    TAGI    as   a

maintenance coordinator.

     In 1991 and 1992, TAGI entered four separate contracts to

                                        2
manage various properties that were in receivership of the RTC.

TAGI entered those agreements with companies that were under

contract    with   the     RTC   under    “Standard       Asset       Management     and

Disposition Agreements” (“SAMDA”).              Those companies, which we will

refer to as SAMDA contractors, were engaged by the RTC to perform

asset   management      and   disposition       services     in   connection       with

various loan assets, real estate assets, and other assets held by

the RTC.    In general, a SAMDA contractor’s duties were to restore,

maintain, market, and sell the RTC properties in accordance with

federal policies and procedures.              The SAMDA contractors also were

authorized to select and hire property management companies, like

TAGI, to carry out day-to-day management functions.                     The property

management companies, in turn, were authorized to subcontract with

other   vendors    to    provide    basic      services    for    the       properties;

security,    trash      removal,   lawn       maintenance,      and    so    on.    The

subcontractors’ invoices were submitted for payment to the property

management companies, or to the SAMDA contractors, depending on the

particular arrangement in place.               The SAMDA contractors paid the

property-management fees, expenses, and reimbursables with money

funded by the RTC.

     TAGI    entered      four     contracts      with    the     following        SAMDA

contractors to manage the following RTC properties:                     (1) Benjamin

Franklin Federal Savings Association (“BFFSA”) to manage the Green

Oaks Apartments in Laporte, Texas; (2) the J.E. Robert Company

(“JER”) to manage the Richwood Place Apartments in Houston, Texas;

                                          3
(3) ONTRA, Inc. (“ONTRA”) to manage roughly 500 properties in Texas

and Oklahoma; and (4) National Loan/CRT Joint Venture (“NL/CRT”) to

manage the Spring Cypress Shopping Center in Houston, Texas.           In

accordance with the terms of those contracts, TAGI was barred from

hiring related companies to perform services at the properties

without acquiring RTC approval.1 Additionally, TAGI was limited to

the   monetary   compensation    specifically     provided   under    the

contracts; it was forbidden from realizing additional outside

profits from its management of the properties.

      TAGI entered into a similar management contract with the FDIC

in 1992.2   Under that agreement, TAGI promised to provide property

management services for Cavender’s Boot City (“Cavender’s”) in

Houston, Texas, which was in receivership of the FDIC.               That

contract, like TAGI’s property management contracts for the RTC

properties,   contained   a   conflict   of   interest   provision   that

prohibited TAGI from transacting business with a related company.

      Over the next several years TAGI hired more than a dozen

subcontractors to perform various functions at its contracted

      1
          There is no uniform provision or definition in the four
contracts relating to this requirement; each expresses the
prohibition differently. A common theme in the four contracts,
however, is that TAGI was precluded from hiring a company with
which TAGI would have a conflict of interest. In this appeal the
appellants do not dispute whether TAGI violated this prohibition.
Accordingly, for purposes of this appeal we assume that TAGI in
fact violated those conflict of interest provisions.
      2
          Unlike the contracts relating to the RTC properties,
TAGI’s contract with the FDIC did not involve a SAMDA contractor.
It was entered directly with the FDIC.

                                   4
properties.     Unbeknownst to the RTC, FDIC, and SAMDA contractors,

however, many of those companies were affiliated with August and

TAGI. For example, Guardco Security Company (“Guardco”), Evergreen

Lawn    Care,   and    Alexander     Plumbing    Company,      were     started   by

Alexander, who filed assumed name certificates and opened new bank

accounts for the three companies. CQ&S Enterprise Company (“CQ&S”)

operated with a bank account that August had opened with TAGI’s

address and an assumed name certificate filed years earlier by

Charles Newton, August’s deceased lodge brother.                      Capital City

Contractors     (“Capital      Contractors”),      Capital      City    Management

(“Capital Management”), and Pro-Lawn Service (“Pro-Lawn”), operated

under    assumed      name   certificates       filed   by     Nathaniel      Gordon

("Gordon"), a TAGI employee who also assisted in the management of

those companies.

       The   appellants      never   advised     the    RTC,    FDIC,    or    SAMDA

contractors that TAGI had hired related companies to perform

services on the contracted properties.              When federal authorities

finally grew suspicious, and searched TAGI’s offices in May 1993,

they found blank invoices of various TAGI-affiliated companies,

checkbooks of these companies, and blank insurance certificates.

The next day, August, Montgomery, Burns, Tennie, and Gordon met at

Club Reflections, a bar owned by August, where they sorted through

a box of incriminating documents that had escaped detection.                    They

then burned those documents in an alley outside the club.

       On November 2, 1994, the appellants were charged in a multi-

                                        5
count indictment charging them with conspiracy to defraud the

United States in violation of 18 U.S.C. § 371, in combination with

other fraud-related offenses.             The appellants were then jointly

tried to a jury on November 17, 1995.                 Over the course of that

trial, which lasted for nearly three months, the government came

forward with a mountain of evidence demonstrating that for roughly

two   and    a    half   years   the    appellants    conspired    to    bilk   the

government.       False invoices were generated for work that was never

done.       Valid    invoices    from    legitimate    vendors    were    altered,

falsified, and inflated to show greater amounts of monies owed.

False bids were submitted to boost claimed reimbursables.

      Evidence also showed that the appellants took active measures

to conceal their fraud.              August, for example, terminated the

services of "Guardco, Inc." a properly licensed company that had

been providing security services for the Green Oaks Apartments, and

surreptitiously replaced it with the Guardco that Alexander had

created.     Montgomery instructed Tennie on numerous occasions to

generate fake invoices and alter valid ones.               Alexander, who was

employed     at     an   unrelated     bank,   assisted   in   hiding     August’s

involvement by filing assumed name certificates, and establishing

bank accounts, for several of the related companies.                     Burns, on

August’s instructions, would negotiate and sign contracts as the

sole proprietor of CQ&S, even though August was the actual owner.

      On February 16, 1996, a jury convicted August of one count of

conspiracy (Count 1), four counts of illegal participation (Counts

                                          6
2 - 5), 18 U.S.C. § 1006(2); seven counts of making false claims to

the RTC (Counts 6 - 11 & 13), 18 U.S.C. § 287; four counts of

making false statements to FDIC (Counts 14 - 17), 18 U.S.C. § 1007;

and     one    count       of    money    laundering    (Count   20),    18   U.S.C.

§ 1956(a)(1)(B)(i). August subsequently was sentenced to 96 months

imprisonment.

      Montgomery was found guilty of one count of conspiracy (Count

1), four counts of illegal participation (Counts 2 - 5), 18 U.S.C.

§ 1006(2); seven counts of making false claims to the RTC (Counts

6 - 11 & 13), 18 U.S.C. § 287; and four counts of making false

statements to FDIC (Counts 14 - 17).               She received a sentence of 37

months imprisonment.

      Alexander was convicted of one count of conspiracy (Count 1),

and two counts of illegal participation (Counts 2, 3 & 5), 18

U.S.C. § 1006(2).               The court sentenced Alexander to 15 months

imprisonment.

      Burns was found guilty on one count of conspiracy (Count 1),

and one       count    of       illegal   participation   (Count   4),   18   U.S.C.

§ 1006(2).       He was ordered to serve a 24-month term of imprison-

ment.         Each    of    the    appellants     now   appeal   their   respective

convictions.         Montgomery and Burns also challenge their sentences.

                                            II.

        On appeal August challenges the sufficiency of the evidence

supporting his convictions under Count 20 for money laundering, 18

                                             7
U.S.C.    §    1956(a)(1)(B)(i),    and   aiding     and   abetting    in   the

commission of that crime, 18 U.S.C. § 2.            He does not dispute the

evidentiary basis for any of his other convictions.              August moved

for judgment of acquittal at the close of the government’s case,

and at the end of trial, thus preserving his sufficiency claim for

appellate review.      United States v. Pankhurst, 118 F.3d 345, 351

(5th Cir.), cert. denied, 118 S. Ct. 630 (1997).                The district

court denied those motions.

     We review de novo a district court’s denial of a motion for

judgment of acquittal.       United States v. Myers, 104 F.3d 76, 78

(5th Cir.), cert. denied, 117 S. Ct. 1709 (1997).               In evaluating

the sufficiency of the evidence we must affirm the verdict “if a

reasonable trier of fact could conclude from the evidence that the

elements of the offense were established beyond a reasonable doubt,

viewing the evidence in the light most favorable to the verdict and

drawing all reasonable inferences from the evidence to support the

verdict.”      Id.

     To prove the offense of money laundering under 18 U.S.C.

§ 1956(a)(1)(B)(i), the government must prove that the defendant:

(1) conducted or attempted to conduct a financial transaction, (2)

which    the   defendant   knew    involved   the    proceeds    of   unlawful

activity, and (3) which the defendant knew was designed to conceal

or disguise the nature, location, source, ownership, or control of

the proceeds of the unlawful activity.              18 U.S.C. § 1956(a)(1)

                                      8
(B)(i); United States v. West, 22 F.3d 586, 590-91 (5th Cir.),

cert. denied, 513 U.S. 1020 (1994).

     In this case, August’s money laundering conviction was based

on the following series of financial transactions.                       JER, a SAMDA

contractor   for   the     RTC,    issued      a     $56,250    check    to   CQ&S,    a

subcontractor who was ostensibly hired by TAGI to perform repair

work at the Richwood Place Apartments.                 When JER issued the check

to CQ&S it was unaware that the company was in fact controlled and

operated by August.       That fact was kept hidden from JER through the

efforts of Burns who, on August’s instructions, went to the offices

of JER and posed as CQ&S’s president.

     After   Burns    personally      accepted         the    check    from   JER,    he

deposited it in CQ&S’s bank account.                 August, the only signer on

the CQ&S account, then wrote a check drawn on the account for

$25,000,   which     he   deposited       in    TAGI’s       bank    account.3       The

government   alleged       at     trial       that    August        structured   those

transactions in an effort to conceal the fact that he was illegally

participating in the financial dealings between JER and CQ&S.

     In challenging the evidentiary basis of his money laundering

conviction, August does not dispute the first two elements of the

offense.   He concentrates instead on the third required element of

     3
          The parties do not dispute that the $25,000 that was
transferred from the CQ&S bank account to the TAGI account was a
portion of the $56,250 in proceeds paid by JER to CQ&S for the
repair work.

                                          9
money laundering, the design requirement.         August contends that a

reasonable jury could not conclude that the $25,000 check-transfer

was designed to conceal the fraudulent nature of those funds

because his name and address were plainly listed on both the CQ&S

account and the TAGI account, making his identity readily apparent.

We are unpersuaded.

     In arguing that the design requirement is missing in this

case, August focuses exclusively on the $25,000 transfer, to the

complete exclusion of the events that preceded that transaction.

He is assuming, we think, that those events are not relevant in

determining whether he intended to conceal the illegal proceeds.

That assumption is mistaken.

     Many financial transactions have the effect of concealing

illegal proceeds by converting them into a more legitimate form,

and by adding one more degree of separation between the illegal

proceeds and the original unlawful activity.        See United States v.

Willey, 57 F.3d 1374, 1384 (5th Cir.) (observing that the design

requirement distinguishes the crime of money laundering from the

innocent act of mere money spending), cert. denied, 516 U.S. 1029

(1995).    For that reason this Court has explained that “merely

engaging   in   a   transaction   with   money   whose   nature   has   been

concealed through other means is not itself a crime.”               United

States v. Garcia-Emanuel, 14 F.3d 1469, 1474 (5th Cir. 1994).

“[T]he government must prove that the specific transactions in

                                    10
question were designed, at least in part, to launder money, not

that the transaction involved money that was previously laundered

through other means.”   Id.

     It must be remembered, however, that in examining whether a

specific transaction was designed to launder money, we are not

required to view that transaction in total isolation.       To the

contrary, we have expressly observed that:

           [I]n order to establish the design element of
           money laundering, it is not necessary to prove
           with regard to any single transaction that . .
           . the particular transaction charged is itself
           highly unusual . . . . That is, it is not
           necessary that a transaction be examined
           wholly in isolation if the evidence tends to
           show that it is part of a larger scheme that
           is designed to conceal illegal proceeds.

Willey, 57 F.3d at 1387.

     Contrary to August’s suggestion, a particular transaction must

be viewed in context when determining whether it was designed to

conceal.    As a result, “a design to conceal on a particular

transaction may be imputed to a subsequent transaction” if the

subsequent transaction, while innocent on its face, is part of a

larger money laundering scheme.      Id. at 1386; see also Garcia-

Emanuel, 14 F.3d at 1478 (also acknowledging that design to conceal

may be imputed from one transaction to another). Evidence that may

be considered when determining whether a transaction was designed

to conceal includes:

           statements by a defendant probative of intent
           to conceal; unusual secrecy surrounding the

                                11
          transaction; structuring the transaction in a
          way to avoid attention; depositing illegal
          profits in the bank account of a legitimate
          business; highly irregular features of the
          transaction; using third parties to conceal
          the real owner; a series of unusual financial
          moves cumulating [sic] in the transaction; or
          expert testimony on practices of criminals.

Garcia-Emanuel, 14 F.3d at 1475-76 (emphasis on evidence present in

this case).

     In this case, the record reflects that August was expressly

forbidden from hiring related companies where there was a potential

conflict of interest.     Nonetheless, August opened the CQ&S bank

account at issue here, named himself as the sole signatory, and

proceed to have repair work done at the Richwood Place Apartments

in the name of CQ&S.     To conceal his identity from JER, and to

begin the process of laundering the $56,000 in illegal proceeds,

August instructed Burns to represent himself to JER as the sole

proprietor of CQ&S.    Accordingly, Burns, and not August, appeared

at the offices of JER, acted as the president of CQ&S, and accepted

the $56,250 check.    Those transactions, which undeniably give rise

to an inference of intent to conceal, put the $25,000 check-

transfer in proper perspective.

     After the illegal proceeds were safely deposited in CQ&S’s

account, one final step remained in the money laundering scheme.

August needed to convert those proceeds into a more legitimate form

-- from money belonging to CQ&S, to money which was under the

control of TAGI.   That was accomplished through the $25,000 check-

                                  12
transfer.

     It is true that the $25,000 check-transfer, when viewed in

isolation, appears to be nothing more than an ordinary transaction

between two bank accounts, conducted in plain view.           However, when

we look beyond the face of that transaction, and look at the

transactions which immediately preceded it, we find strong and

compelling evidence that the $25,000 transfer was not an innocent

transaction.   The record gives rise to a strong inference that the

$25,000 transfer was the final step of a larger money laundering

scheme willfully designed to give August access to the illegal

proceeds.   We conclude that there is sufficient evidence of a

design to conceal.      August’s money laundering conviction must

stand.

                                  III.

     Montgomery appeals all of her convictions on sufficiency of

the evidence grounds.      She properly preserved that claim for

appellate review by moving for judgment of acquittal at the close

of the government’s case, and at the end of trial.            The district

court denied   those   motions.    We    review   each   of   Montgomery’s

convictions in turn.

     Montgomery was convicted of conspiracy under count one.            To

establish a conspiracy in violation of 18 U.S.C. § 371, the

government must prove beyond a reasonable doubt:         (1) an agreement

between two or more people, (2) to commit a crime against the

                                   13
United States, and (3) an overt act by one of the conspirators to

further the objectives of the conspiracy.   18 U.S.C. § 371; United

States v. Dupre, 117 F.3d 810, 820 (5th Cir. 1997), cert. denied,

118 S. Ct. 857 (1998).   The government is not required to rely on

direct evidence of a conspiracy, as each element may be proven by

circumstantial evidence.    United States v. Casilla, 20 F.3d 600,

603 (5th Cir.), cert. denied, 513 U.S. 892 (1994).   Moreover, the

agreement need not be an express or formal agreement; a tacit

understanding is sufficient.    United States v. Hopkins, 916 F.2d
207, 212 (5th Cir. 1990).

     Here, Montgomery contends that there is insufficient evidence

to support her conspiracy conviction because the government failed

to prove that she knowingly participated in the conspiracy.    Her

argument is unconvincing.    At trial, there was abundant evidence

that Montgomery falsified invoices, time sheets, and insurance

certificates.   There also was evidence that Montgomery ordered

Tennie to do the same.      The record sufficiently supports the

finding that Montgomery knowingly participated in the alleged

conspiracy.

     Montgomery also was convicted on four counts of illegal

participation with the RTC, in violation of 18 U.S.C. § 1006, with

accompanying convictions for aiding and abetting in the commission

of those crimes, in violation of 18 U.S.C. § 2.   Those counts were

based on various specified transactions involving JER and BFFSA.

                                 14
To prove illegal participation under § 1006, the government must

demonstrate:    (1) the defendant's connection with a protected

institution as specified in the statute; (2) direct or indirect

receipt of some benefit from the transaction in question; and (3)

intent to defraud.    18 U.S.C. § 1006; United States v. Brechtel,

997 F.2d 1108, 1115 (5th Cir.), cert. denied, 510 U.S. 1013 (1993).

We have observed that § 1006 is “a typical conflict of interests

prohibition.”    Brechtel, 997 F.2d at 1116.           “[A] fiduciary who

benefits or causes loss to [a protected institution] by knowingly

subordinating   the   institution's       interests    to    his    own   in   a

transaction for which he has responsibility acts with the ‘intent

to defraud’ required by § 1006.”         Id.

     In this case, Montgomery claims that her illegal participation

convictions cannot stand because there is no evidence that she

intended to defraud the RTC.      Montgomery also argues that there is

insufficient    evidence   that   she     profited    from    her    business

associations with JER, BFFSA, and the RTC.            We have reviewed the

record and find no merit to her arguments.

     Montgomery was also convicted on six counts of submitting

false claims to the RTC through ONTRA, a SAMDA contractor, in

violation of 18 U.S.C. § 287, with accompanying convictions for

aiding and abetting in the commission of these crimes in violation

of 18 U.S.C. § 2.     In order to sustain a conviction under § 287,

the government must prove:        (1) that the defendant presented a

                                    15
false or fraudulent claim against the United States; (2) that the

claim was presented to an agency of the United States; and (3) that

the defendant knew that the claim was false or fraudulent.                       18

U.S.C. § 287; United States v. Okoronkwo, 46 F.3d 426, 430-31 (5th

Cir.), cert. denied, 516 U.S. 833 (1995).

      On     appeal,   Montgomery   argues     that   there     is    insufficient

evidence that she knew the claims were false, or that she knowingly

participated in the fraudulent scheme.            Her argument fails.         There

is sufficient evidence in the record demonstrating that Montgomery

possessed the requisite criminal intent.

      Finally, Montgomery was convicted on four counts of making a

false statement to the FDIC, in violation of 18 U.S.C. § 1007, with

accompanying convictions for aiding and abetting in the commission

of   these    crimes   in   violation   of   18    U.S.C.   §   2.      The   false

statements alleged in the four counts involve false, or grossly

inflated, invoices and checks that were submitted to the FDIC in

connection      with    repair   work    and      maintenance        performed   at

Cavender’s.       To establish guilt under 18 U.S.C. § 1007, the

government must prove: (1) the defendant made a false statement;

(2) the defendant knew the statement was false; and (3) the

statement was made for the purpose of influencing, in any way, the

FDIC's actions. 18 U.S.C. § 1007; see United States v. Taliaferro,

979 F.2d 1399, 1405 (10th Cir. 1992) (listing roughly the same

elements).

                                        16
       Here, Montgomery asserts that there is a lack of evidence that

she knew the specified invoices and checks were false.                 Montgomery

admits that there is evidence that she instructed Tennie and others

to generate those documents, but contends that there is no evidence

that    she     was    aware   of     their    contents.     Her    argument    is

unpersuasive.         There is evidence that Montgomery was aware of the

true costs associated with maintaining Cavender’s, but nonetheless

instructed Tennie to generate false bids and invoices.                 Moreover,

there    is     evidence     that   Montgomery      personally     disbursed    the

incorrect payments that she received. There is sufficient evidence

supporting her convictions for making false statements to the FDIC

in violation of 18 U.S.C. § 1007.

                                         IV.

       August     contends     that    the     government   violated    Brady    v.

Maryland, 373 U.S. 83 (1963), by failing to disclose various pieces

of exculpatory evidence at trial.               Montgomery and Alexander have

adopted this argument pursuant to Rule 28(i) of the Federal Rules

of Appellate Procedure.         See Fed. R. App. P. 28(i) (providing that

in cases involving more than one appellant, any appellant may adopt

by reference any part of the briefs of another).                    This Court’s

review of Brady claims is de novo.              See United States v. Green, 46
F.3d 461, 464 (5th Cir.), cert. denied, 515 U.S. 1167 (1995).

       To establish a Brady claim, an appellant must demonstrate:

                                          17
(1) that    evidence   was   suppressed,    (2)    that   the   evidence   was

favorable to the accused, and (3) that the evidence was material.

United States v. Ellender, 947 F.2d 748, 756 (5th Cir. 1991).              As

to the third element, "the evidence is material only if there is a

reasonable probability that, had the evidence been disclosed to the

defense, the result of the proceeding would have been different.

A ‘reasonable probability’ is a probability sufficient to undermine

confidence in the outcome."     United States v. Bagley, 473 U.S. 667,

682 (1985); United States v. Garcia, 917 F.2d 1370, 1375 (5th Cir.

1990).

     Here, August contends that the government violated Brady by

allegedly engaging in a wide-ranging pattern of evidentiary abuses

at trial.    The first claimed incident is the government’s alleged

failure to produce a case agent’s audit showing that ONTRA owed

TAGI $34,408 in back management fees.             August contends that the

agent’s audit was critical to his defense because it substantiated

his claim that ONTRA did not pay him in a timely manner, forcing

him to move money between accounts, and causing him to submit

duplicate and erroneous invoices.          August’s argument is without

merit.     At trial, there was overwhelming evidence that August

intentionally falsified and inflated invoices in a deliberate

scheme to defraud the government.          In finding August guilty of

conspiracy, illegal participation, and the other related crimes,

the jury implicitly rejected the thrust of his defense, that every

                                   18
incident of fraudulent billing was the innocent byproduct of

untimely reimbursements.

       Furthermore,      August    admits      on    appeal    that   “[o]n    cross-

examination, one government witness stated that ONTRA still owed

TAGI approximately $187,000.”                (Emphasis added.)           Thus, it is

clear      that   the   case    agent’s      audit   showing     $34,408      in   back

management fees was not only cumulative in nature, but it also

would      have   had   the    effect   of     weakening      August’s    defense   by

indicating a lesser amount of back management fees.                   August cannot

make out a Brady claim on this basis.

       August also contends that a Brady violation occurred because

the government initially failed to produce the criminal histories

of its witnesses.4             August places particular emphasis on the

government’s alleged failure to disclose that Victor Ihezukwu, a

government witness who was a former security guard for Guardco, was

a Nigerian national who was possibly residing in the United States

illegally. This argument is without merit. August objected to the

government’s failure to produce the criminal histories of its

witnesses at trial.            In response, the government provided the

criminal histories of all its witnesses before they testified.

With       this   information,     defense       counsel      cross-examined       some

       4
          Burns raises this same issue on appeal.                        His argument
fails for the reasons as discussed.

                                          19
witnesses and declined to cross-examine others.            Accordingly, this

Brady claim fails.

     August next argues that the government violated Brady when it

initially produced only two pages of a seven-page document that

contained a favorable review of TAGI’s management of the Green Oaks

Apartments.     This claim is without merit because the other five

pages were eventually produced by the government, and the entire

document was introduced as evidence with a curative instruction

from the court.

     Finally,    August   calls   our    attention   to    the   government’s

failure to produce a federal agent’s report stating that Tennie had

told the agent that Gordon, a co-defendant and employee of TAGI,

was not present at Club Reflections on the Saturday night following

the search of TAGI’s offices.      This statement conflicted with the

trial testimony of Mitch Robinson, a defendant turned government’s

witness, that Gordon was at Club Reflections that Saturday night

assisting the other defendants in burning incriminating documents.

August’s   argument   fails   because      this   one     statement,   as   it

specifically relates to the four appellants in this case, is not

sufficient “to put the whole case in such a different light as to

undermine confidence in the jury verdict."           Kyles v. Whitley, 514
U.S. 419, 435 (1995).

                                    V.

                                    20
     Alexander and Burns contend that the district court erred by

admitting the trial testimony of two investigating agents -- Murphy

and Lynch -- regarding statements Alexander and Burns made to the

agents during non-custodial interviews.    They also contend that,

once the district court decided to admit the testimony, it erred by

refusing to grant their motions for a severance.      Severance and

evidentiary rulings are reviewed for abuse of discretion.    United

States v. Mulderig, 120 F.3d 534 (5th Cir. 1997).

     In 1993, agent Murphy questioned Alexander in a non-custodial

interview.   In that conversation Alexander told the agent that she

was in charge of Guardco’s paperwork, which entailed writing checks

and submitting invoices.     Alexander, however, also told agent

Murphy that Guardco was managed by August and TAGI.     She advised

the agent that TAGI furnished the information necessary to prepare

Guardco’s invoices; that Guardco’s checking account belonged to

August; that August used Guardco’s checking account; and that she

supplied August with blank, signed Guardco checks.

     In 1993, agent Lynch spoke with Burns in a non-custodial

interview.   During that conversation, Burns told agent Lynch that

he delivered a CQ&S bid to JER, and signed various documents while

he was there.    However, like Alexander, Burns advised the agent

that TAGI and August were managing the operation; TAGI had prepared

the documents; and August had instructed Burns to sign and deliver

them.

                                21
     On December 6, 1995, while the trial was proceeding, the

government advised the parties that it intended to introduce

Alexander’s and Burns’ statements through the testimony of the

interviewing agents.      August objected.           He claimed that, because

neither Alexander nor Burns were taking the stand, the express

mention of his name in the agents’ testimony would deny him his

Sixth Amendment right to confrontation under Bruton v. United

States, 391 U.S. 123 (1968).       In that case, the Supreme Court held

that when the prosecution seeks to admit the statement of a non-

testifying defendant, and portions of the statement incriminate a

co-defendant,    those    portions   must       be   omitted   to   protect   the

co-defendant's Sixth Amendment right of confrontation. Bruton, 391
U.S. at 126.     The district court in this case was persuaded by

August’s    argument,    and    ordered     that     the     agents’   proffered

testimonies be redacted to omit all incriminating references to

August and the other codefendants.             Alexander and Burns objected.

     They   argued,     and   continue    to    argue   on   appeal,   that   the

district court erred in admitting the agents’ testimonies in

redacted form.     Alexander and Burns allege that the redacted

versions fail to include statements in which they advise the agents

that they were working under the orders of TAGI and August.

Alexander and Burns argue that with those exculpatory statements

missing, the jury was left with the false impression that they had

acted alone. Alexander and Burns allege that the redactions, while

                                     22
effective at protecting their codefendants’ Sixth Amendment rights

under Bruton, violated their own Fifth Amendment rights to a fair

trial.      Alexander and Burns also complain they were denied their

right to confrontation under Sixth Amendment because the district

court would not allow cross-examination in areas that had been

redacted.

       Although speaking in general terms of the Fifth and Sixth

Amendments, Alexander and Burns have implicitly recognized that

strict compliance with Bruton may at times violate the evidentiary

rule   of    completeness.      Under      that   long-standing   rule,   "the

opponent, against whom a part of an utterance has been put in, may

in his turn complement it by putting in the remainder, in order to

secure for the tribunal a complete understanding of the total tenor

and effect of the utterance."         7 J. Wigmore, Evidence in     Trials at

Common Law § 2113, p. 653 (J. Chadbourn rev. 1978); see also Beech

Aircraft Corp. v. Rainey, 488 U.S. 153, 171 (1988) (quoting this

passage while discussing the rule of completeness). In addition to

ensuring     that   a   court   has   an     accurate   representation    of   a

declarant’s statement, the rule guards against “the danger that an

out-of-context statement may create such prejudice that it is

impossible to repair by a subsequent presentation of additional

material.”     Beech Aircraft Corp., 488 U.S. at 172 n.14.          Rule 106

of the Federal Rules of Evidence, which partially codifies the rule

of completeness, provides:

                                        23
            When a writing or recorded statement or part
            thereof is introduced by a party, an adverse
            party may require the introduction at that
            time of any other part or any other writing or
            recorded statement which ought in fairness to
            be considered contemporaneously with it.

Fed. R. Evid. 106.

     When it appears that the literal compliance with Bruton may

abridge the rule of completeness, a district court must decide

whether a severance is necessary.         That determination, which is

within the sound discretion of the district court, Zafiro v. United

States, 506 U.S. 534, 538-39 (1993), must be based on whether the

admission of the edited statement would distort the meaning of the

original in a way that gives rise to “a serious risk that a joint

trial would compromise a specific trial right of one of the

defendants, or prevent the jury from making a reliable judgment

about guilt or innocence.”     Id. at 539.

     In this appeal, Alexander and Burns describe several instances

where the agents’ testimonies fail to recount statements in which

Alexander and Burns expressly implicate August.        They contend that

the omitted testimony is exculpatory in nature because it supports

their defense at trial that they were merely acting on August’s

orders and did not possess the necessary criminal intent.            Having

carefully   reviewed   the   agents’    testimony,   and   the   challenged

omissions, we find no reversible error.

     We do not quarrel with the claim that many of the omitted

statements expressly implicate August in the alleged wrongdoing.

                                   24
But very few of those statements are exculpatory, in the true sense

of the word, as to Alexander and Burns specifically.                There is an

important distinction, we think, between statements that implicate

others in shared wrongdoing, and statements that free one from

blame. In this case, most of the omitted statements portray August

as the head of the conspiracy, but do nothing to lessen the guilt

of Alexander and Burns.

      The few omitted statements that are exculpatory in nature are

harmless in light of the record as a whole.                The basic theory of

Alexander’s      and    Burns’   defense      was   that    they    were   minor

participants who were simply following August’s orders.                      What

Alexander and Burns fail to consider in pressing that theory,

however, is that "following orders" can only be a defense when a

person had no idea that his conduct is criminal.               Here, there is an

abundance of evidence that Alexander and Burns knew their conduct

was   illegal.         Thus,   the   fact    that   it   was    authorized   and

orchestrated     by     August   cannot      insulate    them    from   criminal

liability.    See McNamara v. Johnston, 522 F.2d 1157, 1165 (7th Cir.

1975) (“it is well established that an agent cannot be insulated

from criminal liability by the fact that his principal authorized

his conduct”), cert. denied, 425 U.S. 911 (1976).               The omission of

any exculpatory statements was harmless error.

                                       VI.

                                       25
     At sentencing the district court enhanced Montgomery’s offense

level by two levels for obstruction of justice under § 3C1.1 of the

Sentencing Guidelines. See U.S.S.G. § 3C1.1 (1995). Another three

levels were added pursuant to § 3B1.1(b) of the Guidelines, on the

finding that Montgomery occupied a managerial position in criminal

activity involving five or more participants. Id. § 3B1.1(b).                   The

court also held Montgomery responsible for $346,194, the full

amount of the loss minus $34,408, the amount the district court

found ONTRA still owed TAGI, which enhanced her offense level by

another eight levels pursuant to § 2F1.1(b)(1)(J).                 With a total

offense   level    of    21,   and   a    criminal    history   category   of    I,

Montgomery’s guideline range was 37-46 months imprisonment.                     The

court sentenced her to 37 months.

     On   appeal        Montgomery       challenges    those    three   separate

enhancements.      Clear error is our standard of review for the

district court’s finding that Montgomery obstructed justice, United

States v. Velgar-Vivero, 8 F.3d 236, 242 (5th Cir. 1993), cert.

denied, 511 U.S. 1096 (1994), for the finding that Montgomery was

a manager or supervisor, United States v. Valencia, 44 F.3d 269,

271-72 (5th Cir. 1995), and for the district court’s determinations

regarding the amount of loss under U.S.S.G. § 2F1.1.              United States

v. Wimbish, 980 F.2d 312, 313 (5th Cir. 1992), cert. denied, 508
U.S. 919 (1993). Additionally, the commentary to § 2F1.1 provides

that "[f]or the purposes of subsection (b)(1), the loss need not be

                                          26
determined with precision.        The court need only make a reasonable

estimate of the loss, given the available information."               U.S.S.G.

§ 2F1.1 cmt. 8.

     Having    reviewed   the     record,      we   have   little   doubt    that

Montgomery occupied a managerial position in the conspiracy and

obstructed justice after the government began its investigation of

the case.     Further, we do not agree with Montgomery’s contention

that the district court erred in holding her responsible for the

full amount of the loss.        We affirm the district court with regard

to Montgomery’s sentence.

                                     VII.

     Burns contends that the district court erred in giving him a

two-level     increase    for    more        than   minimal   planning      under

§ 2F1.1(b)(2) of the Guidelines.              See id. § 2F1.1(b)(2).        Burns

also complains that the district court wrongly held him responsible

for $48,600 in losses.      We review the district court's determina-

tion regarding minimal planning for clear error.              United States v.

Brown, 7 F.3d 1155, 1159 (5th Cir. 1993).                  Amount of loss is

reviewed under the same standard.             Wimbish, 980 F.2d at 313.

     The Sentencing Guidelines provide for an enhancement of two

offense levels "[i]f the offense involved (A) more than minimal

planning, or (B) a scheme to defraud more than one victim."

U.S.S.G. § 2F1.1(b)(2).         Under the Guidelines "more than minimal

                                        27
planning"        is     defined   as    "more    planning    than   is    typical   for

commission         of    the   offense    in    a   simple   form,"      or   "[taking]

affirmative steps . . . to conceal the offense."                    U.S.S.G. § 1B1.1

cmt. 1(f).             The Guidelines further provide that “‘[m]ore than

minimal planning’ is deemed present in any case involving repeated

acts over a period of time, unless it is clear that each instance

was purely opportune.”            Id.

        Burns argues that the district court erred in finding more

than minimal planning because the record contains no evidence that

he took affirmative steps to conceal his crimes.                         According to

Burns, he was linked to only one scheme, and did not engage in

repeated criminal acts.            Burns argument is plainly contradicted by

the record.            He falsely posed as the owner and president of CQ&S

when he bid on the repair work at Richwood Place Apartments.                      Burns

also went twice to JER’s offices to accept checks that JER had

issued to CQ&S.             On this evidence we cannot conclude that the

district court’s determination of more than minimal planning was

clearly erroneous.

        Burns further asserts that the district court erred in finding

him responsible for $48,600 in losses because he only received

$4,193 for his part in the scheme.                   In support of that argument

Burns relies on United States v. Smithson, 49 F.3d 138, 144 (5th

Cir. 1995), a case where we recognized that under U.S.S.G. § 2F1.1,

application note 8, a sentencing court may utilize the offender’s

g:\opin\96-20873.opn                        28
gain as an alternative valuation method for assessing the amount of

loss when the loss is difficult to determine.                     Burns’ argument

fails because he has not shown that the amount of loss was

difficult to ascertain.               Furthermore, there is more than enough

evidence in            the   record   to   support   the   district   court’s   loss

calculation.           We affirm Burns’ sentence.

                                           VIII.

        Based on the foregoing reasons, we affirm the convictions of

appellants August, Montgomery, Alexander, and Burns.                       We also

affirm the sentences of Montgomery and Burns.

g:\opin\96-20873.opn                         29