United States v. Mauricio Javier Puche

Citation: 350 F.3d 1137Docket: 02-12605, 02-12606 and 02-14586

Court: Court of Appeals for the Eleventh Circuit; November 12, 2003; Federal Appellate Court

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Defendants-appellants Enrique Puche, Mauricio Puche, Orlando Puche, and Gloria Exchange Corporation (GEC) appeal their convictions for conspiracy to commit money laundering under 18 U.S.C. § 1956(a)(3) and a forfeiture order totaling $1,628,693.20, imposed for the monetary transactions involved in the conspiracy. Their appeal includes claims of insufficient evidence for the convictions, errors in jury instructions, improper admission of evidence, wrongful replacement of a juror, an improper forfeiture order, and improper sentencing of the individual defendants.

The case centers on circumstantial evidence collected during a DEA undercover operation involving the Puches' ownership and operation of GEC, a money transmittal company in Miami. Mauricio handled advertising, Orlando was responsible for money disbursement, and Enrique oversaw operations. The DEA investigation, initiated in 1999, involved undercover agents posing as drug dealers to expose money laundering activities linked to GEC and its associates. Notably, the agents engaged in multiple transactions, exchanging small bills for larger denominations, which were ultimately traced back to GEC's operations, as individuals associated with GEC facilitated these exchanges under the guise of legitimate business transactions.

Agents seeking to wire larger amounts of money were directed by Rojas to the Puches. On June 21, 2000, Oliva met Orlando at the GEC's main office, where over the following three months, agents made eleven visits, bringing $714,500 in cash on eight occasions. The cash, consisting of $1, $5, $10, and $20 bills, was deposited into GEC’s bank accounts and subsequently wire-transferred to DEA-controlled accounts in Canada and England. During these visits, agents consistently interacted with Orlando and met with Mauricio, Enrique, and Wilder Moreno on multiple occasions, conducting conversations in Spanish and recording nine of these interactions.

Following the investigation, the defendants, along with thirteen others, were arrested and charged with conspiracy to commit money laundering, to which all Puches pleaded not guilty. The district court denied motions for acquittal made by the defendants at the end of the government's case and again after all evidence was presented. The jury found all defendants guilty, and subsequently determined they were jointly and severally liable for a money judgment, which was later reduced. Sentencing resulted in 188 months for Orlando Puche and 151 months for both Enrique and Mauricio, along with three years of supervised release for each.

In reviewing the sufficiency of evidence, the court examined the record favorably toward the government. The defendants claimed insufficient evidence indicated that law enforcement had represented the funds as stemming from illegal drug sales, arguing this was necessary for establishing their knowledge of participating in a money laundering conspiracy. However, the court disagreed, asserting that for money laundering under 18 U.S.C. § 1956(a)(3), the government must show the defendants conducted a financial transaction involving property represented to be from unlawful activity, with intent to promote or conceal such activity. The court clarified that a representation does not need to be explicit; it suffices if the circumstances imply that the property was drug-related proceeds. Establishing conspiracy requires demonstrating that the individual had knowledge of and intended to join the conspiracy.

The government pursued the prosecution against the defendants based on two theories: either they genuinely believed the money was linked to drug trafficking, or they exhibited 'deliberate ignorance' by willfully ignoring its illegal origins. Evidence indicated that GEC and the Puches were known for their ability to wire substantial amounts of cash. They were referred to by DEA agents after prior dealings with other money transfer companies. Oliva had previously proposed to Rojas and Serna-Osorio to transport heroin, which they declined, with Serna-Osorio instead showing interest in the financial operations of Oliva's venture. Oliva expressed a desire to transfer larger cash sums, indicating he would frequent the GEC office.

The Puches, aware of the agents' drug connections, appeared to be cautious in their dealings. A jury could infer that Serna-Osorio informed the Puches of the agents' illegal activities, raising their suspicions due to the volume, frequency, and presentation of cash deliveries. Over three months, agents arranged eight cash wire transfers through GEC, amounting to between $50,000 and $170,000 in small denominations delivered in duffel bags or boxes. Bank records revealed over $92 million passed through GEC from May to November 2000, which would require an unrealistic number of customers to justify. 

Detective LuAnn Smith testified that GEC engaged in 'structuring' its bank deposits, often making multiple deposits under $10,000 to evade currency transaction reporting requirements, suggesting an effort to reduce scrutiny on the large sums involved. Weekly board meetings were held by the Puches to discuss GEC's operations, and while there was no direct evidence of illegal discussions, testimony indicated certain individuals associated with illicit activities were mentioned. This, alongside the Puches' familial ties, allowed the jury to infer that Mauricio and Enrique were likely aware of the ongoing illegal activities, although their convictions were not solely based on familial connections to Orlando.

Orlando Puche had significant interactions with agents regarding cash wire transfers. Initially, during a meeting on June 21, he did not object to Oliva's proposal for bi-weekly transfers of $100,000 to $200,000. On June 23, Oliva presented false identification and inquired about using different names for the transfers, but Orlando insisted that the actual person must be present at the GEC office. Oliva provided a driver's license under the name Leonardo Casamayor but claimed to lack his social security card. He left $50,000 in cash with Orlando for wiring to a designated Canadian account named 'Davidoff.' 

On June 29, Oliva returned with another $50,000, asking if Orlando could facilitate an exchange, which Orlando agreed to but preferred Oliva's personal involvement. On July 7, Miranda arrived with $51,530 in cash, and Orlando assisted him without objection. Later, on July 21, Oliva described his business vaguely and mentioned wiring money to 'Davidoff,' while also indicating that he might be receiving payments in singles. Orlando expressed concern over Moreno's inquiries about Oliva’s business and advised Oliva to refrain from sharing details.

On July 28, Oliva suggested his operations involved drug dealing, which Orlando denied and reiterated the need for secrecy. He processed an additional $79,000 that day. On August 11, Oliva brought in $100,000, and by August 25, agents requested $125,000 for the Canadian account, citing delays in the English account and mentioning drug shipments. The context indicated that if Orlando heard these remarks, it would imply knowledge of the illegal nature of the cash. On September 8, Oliva projected a need for weekly transfers of $400,000 to $600,000 through two transactions, prompting Orlando to suggest specific days for delivery.

On September 25, Orlando expressed a desire to delay money transfers and informed Oliva about the closure of two GEC bank accounts due to excessive transactions. He assured Oliva that past transactions had been problem-free. Prior to this meeting, GEC employee Serna-Osorio had notified Oliva of an IRS letter concerning a currency transaction report related to 'Leonardo Casamayor,' which was deemed inaccurate due to a mismatch of names and social security numbers. Despite receiving this IRS notice, GEC conducted another transaction with Oliva as 'Leonardo' on September 8. Orlando's lack of inquiry about the agents' identities suggested deliberate ignorance, as he could have reasonably inferred illegal activity from the agents' drug-related references and Oliva’s use of multiple identities. The argument that the agents did not make explicit illegal representations was dismissed as impractical, as it would hinder sting operations.

Mauricio Puche met with agents on multiple occasions, including one on June 23 when he counted $50,000 in cash. During a subsequent meeting on August 10, Agent Miranda expressed frustration over delays in transferring money and sought receipts for accountability. Mauricio's inquiry about the legality of the money was met with Miranda's vague response that it was "just money." Mauricio claimed he trusted Oliva's assurances, failing to recognize that a suspected drug trafficker would likely deny illegality. Additionally, three subsequent transactions should have prompted him to question the increasing amounts and discrepancies with 'Casamayor’s' social security number. The jury could conclude that Mauricio's reliance on Oliva's word was unreasonable, especially given his awareness of illegal tobacco importation, which was not mentioned by Miranda. This knowledge, alongside transaction details, suggested communication among the Puches regarding the agents' activities.

Mauricio failed to inquire about the large sums of cash in small denominations or why the agents chose GEC over a bank for wire transfers, despite GEC's higher fees. He did not ask for the agents' identities, even after receiving an IRS letter concerning 'Leonardo.' Evidence suggests Mauricio was aware of 'Leonardo' and expressed reservations about 'tobacco' related to his business, which was not previously mentioned to him. 

Enrique Puche, who assisted in counting over $220,000 in cash during meetings with the agents, also did not question the legitimacy of the cash or the agents' identities. During a meeting, he jokingly discussed a submarine capable of smuggling cocaine, which could imply knowledge of drug trafficking. Enrique referred the agents to Orlando for future wire transfers, indicating a level of complicity. The jury could reasonably conclude that both Mauricio and Enrique either understood the illicit nature of the agents' activities or willfully ignored the signs.

The document also addresses jury instructions, indicating a deferential standard of review for trial court jury instructions. The defendants argued that the jury was improperly instructed regarding the requirement for the agents to represent the cash as proceeds from a specified unlawful activity, claiming the court incorrectly framed the requirement in terms of the defendants' beliefs about the funds' origins. The jury instructions must be considered collectively, and the court will only reverse if there is substantial doubt about the guidance provided to the jury.

Defendants did not object to the district court's jury instructions, resulting in a review limited to plain error, which requires demonstrating (1) an error, (2) that is plain, and (3) that affects substantial rights. The court must then assess whether the error undermines the fairness, integrity, or public reputation of judicial proceedings. The defendants argued that the representation element was crucial and contested at trial, asserting that the evidence did not overwhelmingly establish guilt and that a rational jury could not find the representation element beyond a reasonable doubt, given agents’ claims that the funds were legal. However, the court found the overall jury charge sufficient, as it conveyed the necessity for the jury to determine whether agents represented the funds as drug money, thus not constituting plain error.

Additionally, the defendants challenged the inclusion of a deliberate ignorance instruction. The court instructed the jury that if it proved defendants deliberately avoided knowledge of the funds' origins, this would satisfy the knowledge requirement for the crime. The defendants initially argued against this instruction at trial, claiming the government focused on actual knowledge rather than deliberate ignorance. On appeal, they contended that the instruction was inappropriate since Mauricio inquired about the money's legality. However, the court determined that ample evidence suggested defendants should have been aware of the funds' drug-related origins. The jury could reasonably conclude that the defendants' failure to inquire further and Orlando's suggestion to withhold business details indicated deliberate ignorance.

A party that suspects illicit activity but chooses not to investigate further is deemed to have knowledge of that activity. Although Mauricio asked about the cash source, his trust in the agent's assurances is considered weak, especially given the significant cash transfers and indications of wrongdoing, potentially leading to a finding of intentional ignorance by a jury. Defendants argued that the district court erred by not providing a jury instruction that would have required acquittal if the jury found they had inquired about the legality of the funds and received negative responses from agents. Defendants are entitled to such instructions if evidence supports it, and refusal is reviewed for abuse of discretion. The court's denial of the instruction was not an abuse, as it could have allowed acquittal based on any inquiry despite evident red flags. Additionally, the government contended that reliance on agents' assurances must be objectively reasonable, and courts generally do not require agents in sting operations to clarify the legality of funds. The district court also addressed evidentiary issues, ruling that testimony from witnesses involved in prior agreements with the defendants about transferring drug proceeds was admissible to demonstrate intent and counter claims of ignorance. Since the defendants did not object to this testimony at trial, its admission was reviewed for plain error, which is reserved for particularly egregious mistakes affecting the fairness of the judicial process.

Rule 404(b) prohibits the use of evidence regarding other crimes, wrongs, or acts to demonstrate a person's character or to suggest that they acted in conformity with that character. However, such evidence may be admissible for purposes including motive, opportunity, intent, preparation, plan, knowledge, identity, or to negate mistake or accident. The prosecution must provide reasonable notice to the accused regarding any such evidence it plans to introduce, unless the court grants an exception for good cause.

In the case discussed, the court upheld the admission of testimony related to similar, uncharged offenses, which indicated the defendants' awareness of the illicit nature of their actions. Citing a precedent, the court affirmed that evidence of prior drug transactions was relevant to understanding the structure and origins of a conspiracy.

The court also permitted Detective LuAnn Smith's testimony regarding suspicious deposit patterns designed to evade reporting requirements. Despite defense objections about the indictment not charging structuring and questions about her qualifications, the court found her training adequate to support her testimony as relevant to the defendants' intent and knowledge of the conspiracy.

Lastly, the court addressed the admissibility of Agent Oliva's testimony concerning the term "traqueteo," which he defined as relating to drug dealing, despite his admission of not having verified all possible meanings of the term. The court considered his testimony relevant in the context of the conversations recorded.

Oliva asserted that the term "traqueteo" refers to drug dealing in both Miami and Colombia. The defendants contested Oliva's qualifications as an expert under Federal Rule of Evidence 702 and argued that his testimony about common understanding was an impermissible lay opinion under Rule 701. Even if Oliva's testimony was admitted in error, it was not deemed reversible since DEA translator Nanette Orloff corroborated that "traqueteo" means drug dealing. Consequently, the defendants failed to demonstrate that any error likely influenced the verdict or that sufficient unaffected evidence existed to support the outcome.

Regarding juror replacement, under Federal Rule of Criminal Procedure 24, the district court has the discretion to replace jurors who cannot perform their duties. The court replaced juror Lau, who reported severe cramps and was unable to continue. The court interviewed her privately and decided her condition warranted her excusal. Defendants argued that they should have been present during the interview and that the inquiry was inadequate. However, the court's decision was supported by factual evidence, and no bias or prejudice was shown. The defendants cited a precedent where a juror was improperly excused after deliberations began, but the current case involved a pre-deliberation dismissal. The defendants speculated that the replaced juror might have been more favorable to them, but did not provide evidence of actual prejudice.

On the forfeiture order, the defendants contended it was erroneous for including $1,606,318.60 in legitimate funds from shared accounts with undercover DEA money and argued it violated the Eighth Amendment due to excessiveness. The court affirmed the forfeiture order, noting that it reviews legal conclusions de novo and factual findings for clear error.

Forfeiture orders are subject to de novo review under the Eighth Amendment, as established in United States v. Bajakajian. Under 18 U.S.C. § 982(a)(1), courts must order forfeiture of any property involved in or traceable to an offense under section 1956. Defendants acknowledged that $22,375 in commissions they received was traceable to the offense and thus subject to forfeiture. The district court determined that legitimate funds in GEC's accounts provided cover for illegal funds, while defendants argued that the government failed to prove their intent to commingle funds to facilitate the transfer of drug money. 

The statute defines "property" to include laundered money, commissions, and any property used to facilitate laundering. Facilitation is defined as making illegal conduct less difficult. Simply commingling tainted and untainted funds does not automatically subject all account contents to forfeiture; however, forfeiture is justified if the government shows that the commingling was intended to conceal illegal activities. GEC's accounts were deemed an arrangement facilitating the transfer of tainted funds, consistent with Fifth Circuit rulings emphasizing that commingling aids laundering efforts.

The jury could infer that the legitimate funds helped disguise the source of the illegal proceeds. Additionally, the forfeiture order was found not to be grossly disproportionate to the defendants' offenses, who were liable for a civil penalty based on the value of the involved property. The defendants were found to have conspired to launder approximately $6.7 million, leading to a reduced forfeiture judgment of $8,343,193.60 due to the non-occurrence of some agreed-upon laundering activities. The remaining forfeiture amount included GEC's commissions and commingled funds.

The defendant in a referenced case was convicted solely for a reporting offense rather than money laundering, leading the Supreme Court to determine that the forfeiture of $357,144 was grossly disproportionate to the offense of failing to report transporting over $10,000 outside the U.S. In contrast, the current defendants were convicted of conspiracy to promote and conceal a money laundering scheme, which includes a failure to comply with reporting requirements. Thus, the district court's forfeiture order was upheld as constitutional.

Regarding sentencing, the court's factual findings are reviewed for clear error, while the application of the U.S. Sentencing Guidelines (U.S.S.G.) is reviewed de novo. The defendants argued that the district court improperly used the base offense level for "promotion" money laundering rather than for "concealment," asserting that the government did not prove beyond a reasonable doubt their intent to promote narcotics trafficking. However, the jury found that all three defendants conspired to commit both types of money laundering, justifying the application of the higher base offense level of 23.

Additionally, the defendants contested being held accountable for $524,000 in transactions that occurred before they joined the conspiracy and for $6 million in hypothetical future transactions not part of their agreement. The district court increased their base offense levels by eight levels due to the amount of laundered funds exceeding $6 million. The defendants argued that only transactions after September 8, 2000, should be considered for sentencing. However, under the U.S.S.G., the value of laundered funds includes all reasonably foreseeable acts and omissions of co-conspirators, underpinning the district court's decision.

Defendants' relevant conduct in the conspiracy does not include actions by other members prior to their involvement, despite their awareness of such conduct. The conspiracy, established between May 30, 1999, and October 30, 2000, involved funds delivered to GEC, which justified an eight-level increase in their base offense levels under U.S.S.G. § 2S1.1(b)(2)(I). Defendants contested the government's proof of intent to launder an additional six million dollars, but the jury's special verdict affirmed that this amount was part of their relevant conduct. Additionally, defendants argued for a three-level sentencing reduction under U.S.S.G. § 2X1.1(b)(2), claiming they had not completed necessary acts for the laundering scheme. However, referencing United States v. Khawaja, the court found that since the defendants had not taken significant steps toward completing the laundering of the additional amount, they were entitled to this reduction. Although defendants laundered $714,500, the jury established an agreement to launder six million dollars, but the evidence indicated they did not initiate further crucial actions necessary for completing these future transactions.

Defendants did not believe they had completed all necessary actions for laundering the full $6.7 million, nor were they close to doing so. The government failed to address this argument or differentiate it from the precedent set in Khawaja. The determination of the offense level hinges on whether it would be higher based on their agreement to launder $6.7 million (with a three-level reduction under U.S.S.G. 2X1.1(b)(2)) or based on the actual laundering of $714,500 without any reduction. Under U.S.S.G. 2X1.1, if participants have completed or were about to complete part of the intended offense, the greater offense level applies: either the intended offense level minus three levels or the offense level for the completed acts. In this scenario, the intended laundering of $6.7 million requires an eight-level increase under U.S.S.G. 2S1.1(b)(2), which is reduced by three levels due to the defendants not completing the necessary acts, resulting in a five-level increase. Conversely, the actual laundering of $714,500 leads to a four-level increase. Therefore, the five-level increase becomes the applicable offense level. The district court's failure to apply the three-level reduction under U.S.S.G. 2X1.1 was deemed a clear error, prompting the decision to vacate the defendants' sentences and remand for resentencing in line with these findings, while affirming their convictions.