United States v. Janice Demmitt, 706 F.3d 665

Demmitt and her son Fry ran an insurance annuity business; Fry defrauded clients using forged Allianz communications.
Fry deposited fraud proceeds into accounts; Demmitt deposited cash proceeds and used funds for personal and business expenses, including large purchases.
Fry funneled client money into an E*TRADE account; Tad Fry (Fry’s brother) later received funds for his business, traced to client money.
Investigators noted many red flags: client complaints about deposits, Demmitt’s control of office operations, and deposits of large cash sums.
Fry pleaded guilty; Demmitt went to trial and was convicted of conspiracy to launder, eight counts of wire fraud, and money laundering counts; Count 27 (money laundering) involved a $3,000 transfer to Tad.
The district court admitted Fry’s factual resume as evidence; Demmitt challenged evidentiary rulings and the jury instruction on deliberate ignorance.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admission of Fry’s factual resume as evidence	Resume is admissible as non-hearsay adoption or prior inconsistent statement.	Resume is hearsay; not adopted on the stand; improper substantive use.	Admission was error but harmless given overwhelming other evidence.
Admission of Streu’s testimony about a loan	Streu’s testimony is probative and admissible.	Testimony lacks proper foundation/unduly prejudicial.	Argument waived; but no reversible error established.
Deliberate ignorance instruction	Evidence supports knowing involvement; instruction proper.	Instruction improperly lowers burden by suggesting knowledge without actual knowledge.	Instruction sustained; two-prong test satisfied; proper given evidence of awareness and conscious avoidance.
Count 27 money laundering (Cuellar standard) sufficiency	Wiring funds to Tad with intent to conceal proceeds satisfies design to conceal.	No evidence that transfers were designed to conceal; transaction lacked concealment techniques.	Conviction for Count 27 vacated for insufficiency; remanded.

Cisneros-Gutierrez, 517 F.3d 751 (5th Cir. 2008) (abuse of discretion review; harmless error standard for evidentiary rulings)
Crawley, 533 F.3d 349 (5th Cir. 2008) (harmless error analysis; substantial influence standard)
El-Mezain, 664 F.3d 467 (5th Cir. 2011) (totality of the record; harmless error when evidence is accumulative)
Chaney v. Dreyfus Serv. Corp., 595 F.3d 219 (5th Cir. 2010) (deliberate ignorance guidance; high probability awareness and conscious avoidance)
Conner, 537 F.3d 480 (5th Cir. 2008) (two-prong test for deliberate ignorance; awareness and contrivance to avoid knowledge)
Mendoza-Medina, 346 F.3d 121 (5th Cir. 2003) (limits on deliberate ignorance instruction; no instruction where only negligence)
Cuellar v. United States, 553 U.S. 550 (U.S. 2008) (design to conceal element requires purpose; not mere concealment during transport)
Brown, 553 F.3d 768 (5th Cir. 2008) (sufficiency when defendants intended to conceal funds; classic money laundering techniques)
Willey, 57 F.3d 1374 (5th Cir. 1995) (unusual transactions illustrating concealment in money laundering cases)
Peterson, 244 F.3d 385 (5th Cir. 2001) (deliberate ignorance related to fraud context; evidentiary considerations)