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United States v. Kramer
Citations: 73 F.3d 1067; 1996 WL 13778Docket: Nos. 90-5055, 90-5360, 90-5431, 90-5751, 91-5659 and 93-4951
Court: Court of Appeals for the Eleventh Circuit; January 15, 1996; Federal Appellate Court
Benjamin Kramer and Michael Gilbert appeal their convictions related to RICO and Travel Act violations, with Gilbert also contesting charges of money laundering, obstruction of justice, perjury, and a forfeiture judgment. The court reverses Gilbert’s money laundering conviction and the forfeiture judgment but affirms the other convictions. Between 1982 and 1987, Kramer imported large quantities of marijuana, with Sam Gilbert facilitating the laundering of the cash generated. Sam converted cash into cashier’s checks, which Michael Gilbert obtained and delivered through a scheme involving fictitious sales of precious metal coins. These checks were sent to a shell company in Liechtenstein before being disguised through various international transactions. A California entity, CGL, was created by Sam Gilbert to receive the laundered money and purported to be a mortgage broker that financed the Bell Gardens Bicycle Club (BGBC) casino and the Fort Apache Marina in Miami, both overseen by Michael Gilbert. When Kramer requested payment on a mortgage, BGBC obtained a loan and issued a $9.5 million cashier’s check to CGL, which was subsequently transferred from Switzerland to Luxembourg, authorized by Michael Gilbert. He claimed ignorance of the criminal nature of his actions, attributing them to his father's instructions. Michael Gilbert was previously convicted on multiple counts in a 1990 trial and later in 1993 for money laundering and perjury. His appeal argues insufficient evidence for the Travel Act counts, which require proof of intent to promote unlawful activity through interstate travel. His convictions were linked to three trips taken in 1985 to further the laundering operation. Gilbert contends that the evidence presented at trial was insufficient for a reasonable juror to conclude he traveled between California and Miami on the specified dates. The government provided travel-related documentation, including receipts and airline records, that confirmed Gilbert’s presence in Miami during that period. Gilbert claimed his travel was related to supervising the construction of the Fort Apache Marina, which was indeed underway at the time. The jury reasonably inferred that his travel assisted in a money laundering operation financed with drug money channeled through CGL. Gilbert also disputed the government's proof of his intent to promote the illegal scheme. The court noted that intent is typically established through circumstantial evidence. The jury had grounds to conclude that Gilbert possessed guilty knowledge regarding his travels, as evidenced by testimonies from Special Agent Roger Edwards about CGL's unlawful purpose, Gilbert's acknowledgment of CGL's financing role in the Marina, and the reasonable inference that he knew the funds were illicit. The jury was free to accept or reject Gilbert's defense that he was merely an unwitting participant, which they ultimately chose to disbelieve. After deliberating for seven days without reaching a unanimous verdict, the jury received a modified Allen charge, urging them to seek consensus while maintaining their honest beliefs. This charge did not exert undue coercion, as it aligned with previously approved instructions. Subsequently, the jury returned a guilty verdict. Additionally, Gilbert was convicted under 18 U.S.C. § 1956(a)(2) for transporting funds with the intent to conceal their unlawful source. The jury determined he intended to facilitate a laundering scheme involving a $9.5 million transfer from Switzerland to Luxembourg but found that he did not cause the initial transfer from the United States to Switzerland. Gilbert argues that the evidence does not support a conviction for money laundering under 18 U.S.C. § 1956(a)(2)(B)(i) because the transfers in question occurred entirely outside the United States. The government contends that Gilbert's actions in Europe were part of a continuing transaction that began in the U.S.; however, the statute defines each transaction as a separate offense, and a similar precedent confirms that the unit of prosecution is the individual financial transaction. Since the jury found Gilbert involved in only one transaction outside the U.S., and money laundering is not a continuing offense, this conviction cannot stand. Additionally, the government claims Gilbert aided and abetted the transfer of funds from the U.S. through his involvement in the European transaction. However, the jury’s special verdict indicated that Gilbert did not cause the transfer either directly or as an aider, thus failing to support a conviction under section 1956. Regarding his convictions for perjury and obstruction of justice, Gilbert challenges these on two grounds: collateral estoppel and the implications of U.S. v. Gaudin. He argues that allowing these charges would permit the government to revisit arguments that were previously rejected by the jury in 1990. Collateral estoppel, part of double jeopardy protections, bars subsequent prosecutions when a fact determined favorably for the defendant in an earlier trial is essential for conviction in a later case. Gilbert must demonstrate that the jury's 1990 acquittal on conspiracy was based on a finding that he lacked criminal intent, which he is unable to prove. Gilbert's conviction on multiple Travel Act counts indicates that the jury concluded he intended to promote an unlawful scheme, rejecting parts of his testimony. A collateral estoppel claim fails if a rational jury could have based its verdict on a different issue. Here, the jury could have acquitted Gilbert of conspiracy due to a lack of agreement to join it, which means his perjury and obstruction of justice convictions are not barred by collateral estoppel. In the 1993 trial, the jury did not determine the materiality of Gilbert's false statements; this was established as a legal question by the trial court. However, recent case law mandates that juries must evaluate materiality in section 1623 prosecutions. This change applies retroactively to Gilbert's direct appeal. Although Gilbert did not object to the materiality instruction during the trial, he claims that plain error review is inappropriate and seeks a per se reversal for Gaudin violations. The court, following other circuits, states that it is limited to Rule 52(b) plain error review, which allows for reversal if the error is plain and affects substantial rights. The court recognizes that failing to submit materiality to the jury is indeed plain error but concludes that Gilbert cannot demonstrate it affected his substantial rights or the trial's outcome. Gilbert's denials of criminal knowledge were found to be lies by the 1993 jury, and it is presumed that these lies likely influenced the jury in his 1990 trial. Gilbert does not argue that the materiality issue's omission harmed him, and the evidence suggests the district court made the correct determination regarding the influence of his lies on the jury. Gilbert's failure to demonstrate that the omission of the materiality issue from the jury's consideration impacted his trial outcome leads to the affirmation of his perjury and obstruction of justice convictions. The court finds no miscarriage of justice, asserting that the integrity and reputation of judicial proceedings remain intact despite the handling of materiality. Even without Gilbert bearing the burden under the Olano prejudice requirement, the court would likely still decline to reverse the convictions. Regarding the forfeiture of Gilbert's interest in the Bell Gardens Club (BGBC), the court rules that the forfeiture is improper. Gilbert contends that since the jury determined his first racketeering activity occurred after acquiring his BGBC interest, it could not be derived from racketeering. The government argues that Gilbert's RICO conviction confirms his involvement in the racketeering enterprise, justifying the forfeiture due to drug money being used in the BGBC's establishment. However, the jury was instructed that forfeiture required proof beyond a reasonable doubt that Gilbert's interest was obtained from the racketeering activity as specified in the RICO count, with no allowance for forfeiture based on uncharged acts. Given that all racketeering acts found by the jury occurred after Gilbert acquired his BGBC interest, the court concludes that property forfeitable under RICO must directly stem from racketeering activities. Since Gilbert's interest in the BGBC was acquired before any relevant racketeering acts, the forfeiture is ruled invalid. The court's decision results in an affirmation of the convictions but a reversal of the forfeiture. Between January and November 1987, in the Southern District of Florida and other locations, defendants M. Dale Lyon, Stephen B. Fainsbert, Michael S. Gilbert, and co-conspirators engaged in a money laundering scheme involving the transportation of significant sums of money across international borders. Key actions included the transfer of Bank of Beverly Hills cashier’s check #85810 for $9,500,000 from California to Switzerland on February 17, 1987; $9,500,000 from Switzerland to Luxembourg on October 14, 1987; $8,500,000 from Luxembourg to Liechtenstein on November 16, 1987; and approximately $4,000,000 in cash from Liechtenstein to Switzerland on the same date. The defendants were aware that these funds represented proceeds from unlawful activities and that their actions were intended to conceal the nature, source, and ownership of these proceeds, violating 18 U.S.C. §§ 1956(a)(2)(B)(i) and 2. The document also addresses the legal merits of Benjamin Kramer’s Sixth Amendment and Fifth Amendment claims, affirming his convictions related to the importation of approximately 500,000 pounds of marijuana and resulting profits of $60 million. Michael Gilbert facilitated illegal activities by signing checks for fictitious salaries and managing a company account for drug proceeds, thereby obscuring the tracing of these funds. IRS Special Agent Roger Edwards informed the jury about the laundering process, explaining that drug money would return to the U.S. as a 'loan' to CGL, which financed the Fort Apache Marina project in Miami. Evidence showed Gilbert's extensive involvement in the money laundering scheme, including delivering cash, authorizing transfers, and obtaining cashier’s checks. His role as vice president of CGL and participation in its financial decisions further supported the jury's inference that he was aware of the illegal source of the company's funds. Gilbert argues that the jury's inconsistent verdicts, with convictions on only three out of ten Travel Act counts despite similar evidence, undermine his conviction. However, legal precedent establishes that inconsistent verdicts do not permit challenges to specific counts, as noted in Dunn v. U.S. and reaffirmed in U.S. v. Powell. Gilbert further claims the district court improperly allowed rebuttal testimony from Teresa Hurd, the SGA bookkeeper, regarding newly subpoenaed documents, alleging prejudice from not seeing the documents beforehand. The court found no abuse of discretion since Gilbert had access to the documents before Hurd's testimony and was able to cross-examine her. Gilbert was convicted under 18 U.S.C. § 1956(a)(2), with the court noting that Congress intended for each transaction to be treated as a separate crime, despite the absence of explicit references to 'a financial transaction' in that section. Gilbert did not challenge the sufficiency of the evidence for his convictions. He had testified over three days in 1990, with perjury charges arising from only two lines of questioning, making it difficult for him to prove which parts of his testimony the jury relied on. The application of collateral estoppel requires examination of prior proceedings, and Gilbert's closing arguments indicated that a conspiracy conviction depended on finding an agreement, which could explain the inconsistent RICO verdicts. The discussion surrounding whether errors must be "plain" at the time of trial or during review remains contentious, impacting how appellate courts evaluate potential errors in this case. Error is considered 'plain' under Olano when it is evident during direct review. Some courts have indicated that a defendant may not need to demonstrate that a trial could have had a different outcome due to a Gaudin error, but this document asserts that Gilbert must demonstrate that the error affected his substantial rights, adhering to the requirements of Rule 52(b). The court emphasizes that the burden of proof lies with Gilbert as dictated by Olano, which also highlighted that the burden-shifting to the defendant is rooted in the text of Rule 52(b). The case differs from others where prejudice was found, as the district court determined that Gilbert's testimony was material and the government provided conclusive evidence. Gilbert's argument regarding the impact of his conviction for obstruction of justice under 18 U.S.C. § 1503 was rejected because the jury was presumed to have followed instructions that assessed the likelihood of his testimony obstructing a trial. Even if a defendant meets all Olano criteria, appellate courts have limited discretion to correct errors, only doing so to prevent the conviction of an actually innocent defendant or to maintain judicial integrity. Gilbert was acquitted of a RICO conspiracy charge, thus forfeiture must solely relate to his violation of the substantive RICO statute. The jury could not have validly concluded that the government proved Travel Act offenses by a preponderance of the evidence while simultaneously failing to prove them beyond a reasonable doubt. As a result, Gilbert's interest in the BGBC is not subject to forfeiture, nor are the interests of related parties, leading to the set aside of restraining orders against them. The government retains some interest in the BGBC due to other forfeitures, requiring the district court to conduct hearings to address the future operations of the BGBC upon receiving the mandate. The appeal regarding forfeiture by third-party claimants is dismissed as moot due to a settlement.