UNITED STATES OF AMERICA, Appellee, v. ASTRID COLÓN LEDÉE, Defendant, Appellant. UNITED STATES OF AMERICA, Appellee, v. EDGARDO COLÓN LEDÉE, Defendant, Appellant.
Nos. 13-1067, 13-1078
United States Court of Appeals For the First Circuit
November 5, 2014
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Aida M. Delgado Colón, U.S. District Judge]
Before Lynch, Chief Judge, Torruella and Lipez, Circuit Judges.
Rafael F. Castro-Lang, with whom Nicolás Nogueras Cartagena was on brief, for appellant Edgardo Colón Ledée.
Charles Robert Walsh, Jr., Assistant United States Attorney, with whom Rosa Emilia Rodríguez-Vélez, United States Attorney, Nelson Pérez-Sosa, Assistant United States Attorney, Chief, Appellate Division, and John A. Mathews II, Assistant United States Attorney, were on brief, for appellee.
LIPEZ, Circuit Judge. Appellants in this consolidated appeal are a brother and sister who were found guilty of multiple bankruptcy-related crimes designed to conceal the brother‘s assets and thereby avoid his obligations to creditors. The pair assert a host of trial and sentencing errors, none of which we find meritorious. Accordingly, we affirm both siblings’ convictions and sentences.
I. Factual Background
We present the facts as the jury could have found them, reserving additional detail for our analyses of appellants’ claims.
In August 2002, Edgardo Colón Ledée, a plastic surgeon, and his sister, Astrid Colón Ledée, a bankruptcy attorney, collaborated on the transfer of Edgardo‘s oceanfront residence and office to Investments Unlimited (“IU“), a corporation wholly owned and controlled by Edgardo. Astrid drafted the deed and represented IU in the transaction as its president. The property, known as Málaga #1, had an outstanding mortgage of about $720,000, and the deed states that Edgardo sold it to IU to extinguish a $40,000 debt. Edgardo reported in his later filings in bankruptcy court that he leased the property from the corporation after the transfer, but the mortgage remained in his name and he continued to take the mortgage interest deduction on his personal tax return.
In May 2003, approximately nine months after the transfer of Málaga #1, Edgardo filed a voluntary petition for Chapter 7 bankruptcy, with Astrid serving as his attorney. At that time, he reported a debt of $100,000 to the Puerto Rico Treasury Department and faced about twenty malpractice suits. In the Statement of Financial Affairs (“SOFA“) filed with his bankruptcy petition, Edgardo did not disclose his ownership of IU and Málaga #1 or that he had transferred the property to IU less than a year earlier.1
In October 2003, Edgardo filed an amended petition whose supporting documents disclosed some additional properties, but he again failed to report the Málaga #1 transaction or his ownership of IU. The newly disclosed properties were heavily encumbered, and therefore did not add to the funds available for creditors. Astrid also signed the amended petition as Edgardo‘s legal representative in the bankruptcy. In both the original and amended petitions, Edgardo reported that he rented Málaga #1 from IU.
In July and August 2006, during the pendency of the bankruptcy case and without notice to the trustee or bankruptcy court, Edgardo arranged for IU to purchase three pieces of property: a penthouse condominium known as Laguna Gardens V PHP (for $195,000), a building known as El Convento (for $490,000), and an adjacent lot next to El Convento identified as Antonsanti (for $68,000). Edgardo deposited cash into IU‘s bank account to fund the purchases, and Astrid paid the amounts due at the closings with manager‘s checks drawn on IU‘s account.2 Astrid represented IU as its president for each of the three transactions, executing the deeds at each closing.
The deception began to unravel in late 2006 when a creditor‘s objection to the Report of No Distribution led the bankruptcy trustee to look more closely at the Málaga #1 property. A realtor hired by the trustee discovered a “for sale” sign on the property and, upon inquiring, learned that the seller was Edgardo. The trustee‘s ensuing investigation revealed Edgardo‘s prior sale of the property to IU and Astrid‘s role in the transaction, prompting the filing of an adversary complaint in the bankruptcy case on December 14. The trustee alleged in the complaint that Edgardo had transferred the property to IU “with an actual intent to hinder, delay or defraud” creditors, and he demanded that the transfer be set aside and the property declared part of Edgardo‘s bankruptcy estate. The trustee also sought sanctions against Astrid, including damages and attorney‘s fees in favor of the bankruptcy estate, and filed a notice in the real property registry alerting third parties to the title claim against Málaga #1. Later in the month, Astrid, as IU‘s president, signed annual reports for the company for the years 2001 to 2005.3
Developments on two fronts quickly followed the filing of the adversary proceeding. On January 5, 2007, Astrid withdrew from the bankruptcy case and informed the bankruptcy court that she had resigned her position as IU‘s president. Meanwhile, Edgardo arranged a hurried sale of Málaga #1 to his girlfriend‘s parents, with the closing taking place on January 6, Three Kings Day, a significant holiday in Puerto Rico and an unusual day for such a transaction. Representing IU at the closing was Myrna Cintrón Estrada (“Cintrón“), Edgardo‘s cousin who served as his housekeeper and who had been newly installed as IU‘s president to replace
On January 8 and 12, manager‘s checks totaling $410,000 and made out to Investments Unlimited were deposited into IU‘s bank account, one in the amount of $205,000 on the earlier date and two for $102,500 on the later date. The larger check and one of the two smaller ones was obtained in Santiago‘s name, and the third check was obtained in Lebrón‘s name. On each of the two days the deposits were made, or shortly thereafter, Edgardo wrote four checks on IU‘s account for $51,250 each -- a total of eight checks4 -- to the following individuals: Cintrón, Rafael Vaquer, Maria Bonilla Hernández, and Reynaldo Cordero Cintrón.5 Each of the eight IU checks was used to purchase a manager‘s check in the same amount made out to the same individuals. Although the manager‘s checks contained endorsement signatures on the back, all four payees -- all family members of Edgardo -- denied receiving or endorsing the checks. All of the checks apparently were returned to the accounts of Santiago and Lebrón.
The adversary proceeding in Edgardo‘s bankruptcy case was resolved in March 2008. Edgardo and Astrid both accepted a Partial Settlement Agreement finding that Málaga #1 was property of the bankruptcy estate and requiring Edgardo to rescind the sale to Santiago and Lebrón. Edgardo further agreed that, if the proceeds from the trustee‘s sale of Málaga #1 did not suffice to pay all claims and costs,6 the trustee could reactivate the adversary proceeding and seek the shortfall from sale of the properties Edgardo purchased in 2006 -- the Laguna Gardens V PHP, El Convento, and Antonsanti.7 Edgardo subsequently filed amended schedules with the bankruptcy court that reported, inter alia, his 100 percent ownership of IU.8
A year later, in April 2009, Edgardo and Astrid were charged in an eight-count indictment with various bankruptcy-related crimes, including conspiracy to conceal property belonging to Edgardo‘s bankruptcy estate and to fraudulently conceal and transfer his and IU‘s property with the intent to defeat the bankruptcy laws, as well as a substantive offense alleging that they concealed the property. See
After a seventeen-day trial in January and February 2012, a jury found Edgardo guilty on Counts One through Seven and Astrid guilty on all five counts against her. Edgardo was acquitted of the fraudulent transfer alleged in Count Eight. The district court sentenced Edgardo to sixty months’ imprisonment on each of Counts One through Six and seventy-two months’ imprisonment on Count Seven, the money-laundering crime, all to be served concurrently. The court sentenced Astrid to a term of thirty-six months. The district court granted Astrid‘s request for release on bail pending appeal so that she could care for her ailing mother, conditioned on her mother‘s continuing need for help. Edgardo began serving his term in May 2013.
On appeal, appellants challenge both their convictions and sentences, each asserting multiple claims of error. They insist that the evidence was insufficient to support their convictions on some or all counts, and their common claims also include an objection to the district court‘s sixteen-level increase in their base offense levels under the sentencing guidelines. Edgardo includes among his claims a contention that the Partial Settlement Agreement, which brought Málaga #1 into his bankruptcy estate, constituted a waiver by the government of all charges based on conduct that was cured by his corrective actions. Astrid includes among her claims a contention that the district court abused its discretion by denying her motion in limine to exclude prejudicial evidence relating to her own bankruptcy proceedings in 2000.
We address these arguments in turn, identifying in each instance whether the challenge is brought by Edgardo, Astrid, or both siblings.
II. Edgardo: Government Waiver
Edgardo asserts that the Partial Settlement Agreement in his bankruptcy case effected a waiver by the government of the fraud, concealment, and money laundering charges lodged against him and, hence, entitled him to a judgment of acquittal on all counts. He frames this argument in terms of estoppel: the government is estopped from charging him criminally for concealing his ownership of Málaga #1 and IU and failing to disclose the transactions associated with them, because the trustee and bankruptcy court accepted the amended bankruptcy schedules that remedied any illegality in his prior conduct. In advancing this argument, Edgardo invokes both equitable estoppel and judicial estoppel.
A. Equitable Estoppel
In general, courts apply equitable estoppel “to prevent injustice when an
Edgardo suggests that the misrepresentation requirement is met through the bankruptcy court‘s allowance of his amendments, which he equates with a statement by the court that his conduct had become acceptable and, consequently, immune from criminal liability. Edgardo, however, reads far too much into the bare fact that the bankruptcy court approved his amendments. Under the
B. Judicial Estoppel
To establish judicial estoppel, a litigant must show that an opposing party is pressing a litigation position inconsistent with a position the party successfully asserted previously, and the new position would unfairly advantage that party if the court accepted it. See Knowlton v. Shaw, 704 F.3d 1, 10 (1st Cir. 2013); Perry v. Blum, 629 F.3d 1, 9 (1st Cir. 2010). Edgardo argues that the government‘s filing of criminal charges was inconsistent with the bankruptcy court‘s prior judgment to accept the Partial Settlement Agreement. He asserts that the settlement “benefited the Trustee and the creditors beyond what
Edgardo offers no case support, however, for his contention that the decision of a bankruptcy trustee or bankruptcy court to settle claims of misconduct in a bankruptcy case -- here, the concealment set forth in the adversary proceeding that was resolved with the Partial Settlement Agreement -- can estop the United States Attorney from subsequently filing criminal charges. The government emphasizes the requirement that the same party assert contradictory positions, and it insists that the Chapter 7 trustee and the United States Attorney are not interchangeable. See United States v. Modanlo, 954 F. Supp. 2d 384, 388 (D. Md. 2013) (stating that the United States Attorney “is not the same party as nor is it in privity with the U.S. Trustee,” as the two officials “operate pursuant to completely different statutory purposes, powers, and interests, with distinct agendas“). Indeed, courts have recognized in the preclusion context the folly of treating the government as a single entity in which representation by one government agent is necessarily representation for all segments of the government. See United States v. Alky Enters., Inc., 969 F.2d 1309, 1314-15 (1st Cir. 1992) (holding that the Interstate Commerce Commission was not in privity with the U.S. Attorney General, and rejecting applicability of res judicata because the ICC “did not have statutory authority to represent the United States’ interest” in the earlier proceeding); see also United States v. Hickey, 367 F.3d 888, 893 (9th Cir. 2004) (holding that the Securities and Exchange Commission and the United States Attorney were “not the same party” for purposes of collateral estoppel because, inter alia, the SEC “was not acting as the federal sovereign vindicating the criminal law of the United States” (internal quotation marks omitted)).11 Likewise, in the context of judicial estoppel, the government in all its guises cannot inevitably be viewed as a single party.
We need not compare the roles of the government parties in the proceedings at issue here, however, because, as explained above, there simply were no inconsistent positions taken. In bankruptcy court, Edgardo secured a stay of the adversary proceeding and, assuming his compliance with the Partial Settlement Agreement, he gained protection from the possibility of sanctions under bankruptcy law. See, e.g., Law v. Siegel, 134 S. Ct. 1188, 1198 (2014) (noting that bankruptcy courts have “authority to respond to debtor misconduct with meaningful sanctions,” including denying the debtor a discharge and ordering payment of attorney‘s fees and other expenses (internal quotation marks omitted) (citing
The sole settlement case on which Edgardo relies, Hoseman v. Weinschneider, 322 F.3d 468 (7th Cir. 2003), is inapposite. There, a trustee‘s declaratory judgment action was filed in bankruptcy court against a debtor who had failed to disclose his interest in a business during negotiations to settle an adversary proceeding. Id. at 471. The Seventh Circuit ruled that the trustee must adhere to the terms of a release and covenant not to sue that had been executed as part of the settlement, rejecting the trustee‘s post-settlement attempt to secure the business interest for the debtor‘s bankruptcy estate. Id. at 473-74. The court‘s enforcement of the settlement in Hoseman is nothing like Edgardo‘s proposed bar of a criminal prosecution based on his bankruptcy settlement. Not only did the agreement in Hoseman cover “all claims, known or unknown” and expressly protect the debtor from “any suit or action, at law or in equity,” id. at 473 (internal quotation marks omitted) -- the very type of proceeding later filed by the trustee -- but it was the trustee who both signed the agreement and sought to escape from its limitations. In addition, both the settlement and the court action in Hoseman were part of the bankruptcy proceedings. Here, by contrast, the settlement agreement did not promise Edgardo immunity from prosecution in exchange for his surrender of Málaga #1, and two different arms of the federal government are implicated.
Finally, to the extent Edgardo‘s briefing can be construed to raise the doctrine of collateral estoppel, that effort too is unavailing.12 The bankruptcy court issued no ruling on the legality of Edgardo‘s conduct that could possibly implicate collateral estoppel, which bars relitigation of previously decided issues that were “essential to the [earlier] judgment,” Piñeiro v. United States, 713 F.3d 688, 692 (1st Cir. 2013). See, e.g., United States v. Tatum, 943 F.2d 370, 382 (4th Cir. 1991) (rejecting application of collateral estoppel in a criminal case based on bankruptcy discharge where “[t]he only adjudication necessary to the discharge . . . was approval of the settlement agreement as an acceptable compromise in the interests of the estate and its creditors“); cf. United States v. Modanlo, 493 B.R. 469, 475 (D. Md. 2013) (noting parties’ acknowledgment that “collateral estoppel may bar the Government from litigating, in a criminal case, an issue previously litigated and decided in a civil bankruptcy proceeding“).13 The bankruptcy judge did not address the criminality of Edgardo‘s conduct, and whether Edgardo committed crimes was not “essential” to the decision approving the Partial Settlement Agreement.
III. Edgardo and Astrid: Sufficiency of the Evidence
Both appellants argue that the evidence adduced by the government was insufficient to support their conspiracy convictions under Count One and the fraudulent transfer convictions under Counts Three through Five based on IU‘s acquisition in 2006 of Laguna Gardens V PHP, El Convento and Antonsanti. Edgardo additionally challenges the adequacy of the record to support his conviction for money laundering.
We apply de novo review to evidentiary sufficiency claims, examining whether “‘a rational factfinder could find, beyond a reasonable doubt, that the prosecution successfully proved the essential elements of the crime.‘” United States v. DiRosa, 761 F.3d 144, 150 (1st Cir. 2014) (quoting United States v. Hatch, 434 F.3d 1, 4 (1st Cir. 2006)). We review the evidence, and all reasonable inferences drawn from it, in the light most favorable to the government. Id.
A. The Conspiracy Count
Both appellants claim that the evidence presented by the government at trial fell short of establishing a conspiracy between them to conceal and fraudulently transfer Edgardo‘s assets in violation of the bankruptcy laws. See
We find none of appellants’ arguments persuasive. To sustain a conspiracy conviction, the government must show that the defendant knowingly agreed with at least one other person to commit a crime, intending that the underlying offense be completed. See United States v. Rodríguez-Adorno, 695 F.3d 32, 41 (1st Cir. 2012); United States v. García-Pastrana, 584 F.3d 351, 377 (1st Cir. 2009). The indictment charges a conspiracy that extended from about August 17, 2002 -- the date Málaga #1 was transferred from Edgardo to IU -- through mid-January 2007 -- following the Three Kings Day sale of Málaga #1, and after Astrid withdrew from the bankruptcy case and relinquished the presidency of IU. The record shows continuous collaboration by the siblings throughout that period. Both were involved in the 2002 transfer: Edgardo was the seller and, in effect, the buyer as well, and Astrid drafted the deed and formally represented IU in the transaction as its president.
When Edgardo filed for bankruptcy
This evidence of the siblings’ activities is sufficient to permit a reasonable jury to conclude that the pair worked jointly throughout the period charged in the indictment to unlawfully conceal and transfer property belonging to Edgardo‘s bankruptcy estate. Appellants attempt to discount the import of their obvious collaboration by claiming a lack of proof that their actions were taken pursuant to a conspiratorial agreement. The government, however, need not produce “evidence of an explicit agreement to ground a conspiracy conviction.” United States v. Pesaturo, 476 F.3d 60, 72 (1st Cir. 2007). Rather, “[a]n agreement to join a conspiracy ‘may be express or tacit . . . and may be proved by direct or circumstantial evidence.‘” Id.
Liriano, 761 F.3d 131, 135 (1st Cir. 2014) (omission in original) (quoting United States v. Rivera Calderon, 578 F.3d 78, 88 (1st Cir. 2009)).Based on the evidence described above, a jury reasonably could infer that the siblings had agreed to mislead the bankruptcy court about Edgardo‘s assets, including his ownership of IU, and took numerous steps designed to protect his resources, beginning with the transfer of Málaga #1 in anticipation of the bankruptcy filing.15 See Rodriguez-Adorno, 695 F.3d at 41-42 (noting that findings of knowledge and intent may rest on inferences drawn from the defendant‘s commission of acts furthering the conspiracy‘s purposes). Accordingly, “there is no question that the government presented sufficient evidence to support appellant[s‘] convictions.” Id. at 43.16
B. The Property Purchases in 2006
Both appellants claim that judgments of acquittal should have been entered on the three counts charging them with the fraudulent transfers of Laguna Gardens V PHP (Count Three), El Convento (Count Four), and Antonsanti (Count Five), in violation of
We agree with the government, whose position is supported by the plain language of the statute. Unlike
The facts here illustrate why the fraud provisions of the Bankruptcy Code reach post-petition earnings. The jury reasonably could have found that Edgardo used post-petition earnings to fund IU‘s account -- a bankruptcy estate asset that should have been disclosed initially -- and then used that IU account to acquire the three properties. It is inconceivable that such a blatant scheme to manipulate an estate asset could be insulated from criminal consequences simply because the funds at issue derived from post-petition earnings. Indeed, because IU should have been included in the bankruptcy estate, appellants presumably were obliged to bring to the trustee‘s attention any funds moving through the company. See
Ultimately, however, appellants’ challenge to their convictions under Counts Three through Five does not depend on the source of the funds used to purchase the three properties. Regardless of how the acquisitions were financed, the jury could have found that the transactions were deliberately structured to conceal assets from the trustee and, hence, were done “with intent to defeat the provisions of [the Bankruptcy Code].”
C. Money Laundering
Count Seven of the indictment charged Edgardo with money laundering, in violation
This claim warrants little discussion. The government sought to show that Edgardo committed money laundering when he converted the proceeds of the Málaga #1 “sale” in January 2007 into eight manager‘s checks payable to four of his relatives.20 By that time, the trustee‘s investigation into the ownership of Málaga #1 was underway and the adversary proceeding had been filed. The circumstances of the closing itself bespoke a suspicious foundation: the unusual scheduling on Three Kings Day to finalize the sale, indicating urgency to get the deal done, with Edgardo‘s cousin/housekeeper serving as IU‘s president following Astrid‘s resignation. Notations on the eight IU checks that funded the manager‘s checks suggested that the four payees were connected to the company, but each denied any such relationship or receiving the funds. This evidence, taken in the light most favorable to the government, supports a finding that Edgardo initiated the sham sale of Málaga #1, and arranged the convoluted handling of the proceeds, to further his earlier fraudulent transfer and concealment of the property.21
The evidence was thus sufficient for the jury to find Edgardo guilty of unlawful money laundering.
IV. Astrid: Rule 404(b) Evidence
Astrid claims that the district court erred in allowing the jury to hear evidence that she had failed to disclose that she owned the apartment in which she lived when she filed for personal bankruptcy in 2000. The government maintains that this evidence was admissible to show the defendant‘s knowledge and intent with respect to the conduct alleged in the indictment, and thereby to rebut any suggestion that
Under
To review the admission of prior bad acts evidence we ordinarily follow a two-step inquiry. We first determine whether the disputed evidence is specially relevant under
Astrid argues that the government may not justify admission of the challenged evidence based on its need to prove her state of mind because she advised the court that she would not rely on any defense related to unfamiliarity with bankruptcy law. She further asserts that the evidence was substantially more prejudicial than probative.
Although Astrid predictably disclaimed reliance on ignorance of the Bankruptcy Code as a defense -- given her experience as a bankruptcy attorney -- that disclaimer does not account for a possible defense that she was an unknowing collaborator in her brother‘s scheme to defraud the bankruptcy court. See, e.g., United States v. Landry, 631 F.3d 597, 602 (1st Cir. 2011) (finding prior acts relevant to show intent or knowledge “because the evidence rebuts an innocent involvement defense“). Indeed, her briefing on appeal suggests such a strategy. She emphasizes her limited role in, and knowledge of, IU‘s business, points to Edgardo‘s admission that IU was his alter ego, and notes that her response to the complaint in the adversary proceeding reported reliance on information provided by the debtor.
We have observed that “[e]vidence of uncharged fraud activity that is substantially similar to the activity underlying a charged fraud scheme often is admitted to show knowledge or intent to defraud with respect to the charged fraud scheme.” United States v. Sebaggala, 256 F.3d 59, 68 (1st Cir. 2001). Here, the district court supportably concluded that the disputed evidence “relating to [Astrid‘s] own bankruptcy is substantially similar to the charged concealment of assets in the instant case.” Order Adopting Report and Recommendation, at 7 (May 12, 2011) (“Order“). Hence, we agree with the court‘s finding that Astrid‘s decision not to pursue a defense based on unfamiliarity
The second step, requiring us to review the court‘s balancing of probative value against the risk of “unfair prejudice, confusing the issues, [or] misleading the jury,”
Here, the district court concluded that the “predominant effect” of the challenged evidence “would be to demonstrate knowledge or intent,” and it found “little risk that the proffered evidence would be likely to elicit a strong emotional response from jurors and cause them to act irrationally based upon it.” Order at 7. The court further noted that the evidence “might only incidentally indicate a propensity to commit wrongs,” and it observed that any prejudice stemming from introduction of the evidence “may be mediated with a jury instruction.” Id.
The court was correct to conclude that the evidence of an earlier bankruptcy violation would not engage the jurors’ emotions in an unsettling way. However, given the substantial similarity between Astrid‘s prior conduct and the charged concealment, the district court may have understated the risk of a propensity inference linking the two bankruptcy cases. Yet, we have recognized that “all prior bad act evidence involves some potential for an improper propensity inference,” Varoudakis, 233 F.3d at 122, and we frequently have observed that, “[b]y design, all evidence is meant to be prejudicial,” DiRosa, 761 F.3d at 153 (alteration in original) (internal quotation marks omitted). Admissibility thus turns not on whether the evidence will harm the defendant, but on whether it would provoke “an undue tendency to suggest decision on an improper basis.”
The evidence in this case unmistakably showed that Astrid was a key player in Edgardo‘s bankruptcy proceedings and in most of the allegedly fraudulent transactions charged in the indictment. Hence, in all likelihood, the pivotal question for the jury in deciding Astrid‘s guilt was whether she was an informed and willing participant in Edgardo‘s endeavors. The evidence of Astrid‘s conduct in her own bankruptcy was highly probative on that question, reinforcing the circumstantial evidence of knowledge that could be inferred from her conduct. In concluding that the evidence was properly admissible, the district court did not neglect the potential for unfair prejudice to Astrid. It took the risk into account and was prepared to give a limiting instruction to guard against the possibility of unfair prejudice.23
In these circumstances, we are satisfied that the district court acted within its broad discretion when it concluded that the probative value of the challenged evidence was not “substantially outweighed by a danger of . . . unfair prejudice.”
V. Edgardo and Astrid: The Guideline Loss Calculation
Both appellants argue that the district court erred in finding them responsible for
In calculating the intended loss, the district court combined the $1.4 million sale price of Málaga #1 in 2008 minus its outstanding mortgage (roughly $750,000) -- with the approximately $750,000 in cash payments for the three properties Edgardo purchased through IU in 2006 (Laguna Gardens V PHP, El Convento, and Antonsanti). The sum, $1.4 million, fell within the guidelines range for a sixteen-level enhancement (more than $1 million, but less than $2.5 million). We review de novo the method chosen by the court to calculate loss, but we review only for clear error “[t]he mathematical application of this methodology.” Appolon, 695 F.3d at 66.
Astrid‘s only argument, unsupported by any citations to authority, is that she cannot be held responsible for the amounts involved in the property transfers because she neither received nor intended to receive any pecuniary gain from those transactions. She relies solely on cases in which the enhancement was applied to defendants who did in fact realize some economic benefit, but those cases do not establish that a benefit is a required condition for the enhancement. Indeed, the guidelines provision also applies to crimes involving property damage or destruction, see
Edgardo argues that the district court used the wrong value for Málaga #1, and he claims the correct amount of loss for that property was the approximately $175,000 equity he held at the time he sought bankruptcy protection in 2003. In addition, he asserts that the cost of the three properties acquired in 2006 should not be part of the loss calculation, effectively reiterating his contention that those purchases are irrelevant to this case because they were funded with post-petition resources. Based on his preferred calculation -- i.e., a total of $175,000 -- the loss figure would trigger a ten-level increase in the base offense level. See
We can reject summarily Edgardo‘s assertion that the 2006 purchases should be excluded from the loss calculation, having already rejected Edgardo‘s attempt to insulate those purchases from criminal consequences based on his claim that they were purchased with post-petition earnings. As we have found that concealing the purchase of the three properties was properly charged as bankruptcy fraud, it necessarily follows that the purchase
We also find no error in either the district court‘s decision to set the loss amount as the combined values of the concealed properties or its selection of the specific amount attributable to Málaga #1. The approach itself, focusing on the properties hidden from the bankruptcy estate, is a sensible way to appraise the harm attributable to Edgardo‘s unlawful concealment. Málaga #1 should have been in the bankruptcy estate from the outset, with its value available to pay creditors, and the use of IU to acquire the other properties provides a basis for also treating their values as amounts Edgardo intended to deny creditors. In settling on the $1.4 million sale price for Málaga #1 (less the mortgage), the court chose the middle of three possible valuations; in addition to Edgardo‘s proposed $175,000, the court noted that Edgardo had listed the property at $1.8 million in the amended schedules he filed pursuant to the settlement agreement. The court‘s choice was both pragmatic and fair. The price at which the trustee sold the property provided objective evidence of value, and the court reasonably could presume that, when Edgardo concealed the property in 2003, he expected the oceanfront property to appreciate in value. See generally Appolon, 695 F.3d at 68-69 (noting that district court, in calculating loss, could properly rely on defendants’ anticipation of changing real estate prices). There was no clear error in the court‘s judgment.
VI. Edgardo: Money Laundering Sentence
The district court sentenced Edgardo to a sixty-month term of imprisonment on Counts One through Six -- the concealment charges -- and to a concurrent seventy-two month term for the Count Seven money laundering offense related to the sham sale of Málaga #1. Edgardo argues that the court improperly sentenced him on the money laundering count to a term beyond the five-year statutory maximum applicable to the underlying concealment offenses. He claims the court should have treated the money laundering as part of the concealment and, hence, not subject to greater punishment.
We see no basis for overturning the sentence imposed on Count Seven. Most importantly, the district court did not err in treating Edgardo‘s money laundering as distinct from his actions to conceal his ownership of Málaga #1. After orchestrating the transfer of the property to Santiago and Lebrón, Edgardo arranged the elaborate conversion of the three checks that comprised the sales proceeds into eight checks that contained false references to the payees’ connections with IU. By disguising the proceeds of the sale with cashier‘s checks made out to recipients who would never receive the funds, Edgardo constructed a second level of concealment separate from the simple property transfer. Hence, he was properly subjected to punishment for the money laundering itself, and his sentence was therefore not limited to the five-year statutory maximum for the underlying bankruptcy fraud. See
Neither of the two cases on which Edgardo relies supports a different result. In United States v. Woods, 159 F.3d 1132, 1136 (8th Cir. 1998), the court found no abuse of discretion in the district court‘s decision to depart downward from the money laundering guidelines where the underlying offense was bankruptcy fraud. Id. at 1136. That decision does not say, however, that a district court must reduce a sentence in such circumstances. In the other case, United States v. Smith, 186 F.3d 290 (3d Cir. 1999), involving fraud in the operation of a lottery, the court held that a sentence imposed under the money laundering guideline was disproportionately harsh. Id. at 300. Not only have basic guidelines principles changed since Smith, see United States v. Chilingirian, 280 F.3d 704, 713-14 (6th Cir. 2002),25 but that case also is distinguishable because the challenged money-laundering guideline there produced a much harsher sentence than otherwise would have applied, see Smith, 186 F.3d at 297 (noting the fourteen-level difference in base offense level). Here, the money-laundering guideline on which the district court relied prescribes only a two-level increase in the base offense level. See
In sum, we find no error in the sentence imposed on the money-laundering count.
VII. Edgardo: Procedural and Substantive Sentencing Error
Edgardo claims that his seventy-two-month sentence was procedurally flawed because the district court failed to properly weigh mitigating factors, and he also challenges that term of imprisonment -- twice the length of his sister‘s -- as unjustifiably harsh. We employ the deferential abuse-of-discretion standard in evaluating both the court‘s balancing of the sentencing factors and the substantive reasonableness of the district court‘s sentencing judgment. United States v. Suarez-Gonzalez, 760 F.3d 96, 101 (1st Cir. 2014).
A. Procedural Error
Edgardo argues that the court erred by giving insufficient weight to the many reasons he offered for leniency, including his mother‘s poor health and her need for help, his eight employees’ dependence on their salaries, and his ex-wife‘s and minor children‘s reliance on his support. He also cites the sixty-five letters submitted on his behalf by friends, neighbors, family members, and clients describing him as generous, hard-working, and responsible. With respect to the criminal activity itself, he protests that the court unfairly emphasized his initial actions concealing property and failed to credit his voluntary participation in the settlement of
The district court has broad discretion to balance the pertinent sentencing factors, see
Indeed, the district court explained that its choice of sentence took into account the rationales Edgardo offered for a lenient sentence -- including his mother‘s and children‘s needs, the small impact of his fraud on creditors, and the letters of recommendation -- along with the countervailing need to “convey the message that the laws are to be obeyed.” The court stated that, notwithstanding the mitigating factors, it “cannot overlook the seriousness of the offense, the actions of this defendant,” and the apparent absence of “clear repentance or remorse” for criminal conduct that Edgardo undertook knowingly and with deliberation. The court‘s moderate approach is reflected in its decision to impose a sentence below the bottom of the guideline range of 87 to 108 months.27
In sum, the district court met its obligation to weigh the competing sentencing considerations, and it did not commit procedural error when it rejected Edgardo‘s differing assessment of the balance. See Suarez-Gonzalez, 760 F.3d at 101-02.
B. Substantive Error
Edgardo also attacks his sentence as substantively unreasonable, arguing that his circumstances justify a downward departure to a sentence of probation with home confinement, yet the court imposed a term of imprisonment twice as long as his sister‘s. In so arguing, Edgardo depicts Astrid as the “mastermind” of the bankruptcy fraud, pointing to her legal experience and prior similar conduct in her own bankruptcy.
As explained in the preceding section, however, the district court took a measured approach to the pertinent sentencing factors, and its “choice of emphasis . . . is not a basis for a founded claim of sentencing error.” United States v. Ramos, 763 F.3d 45, 58 (1st Cir. 2014) (omission in original) (internal quotation marks omitted). Significantly, the court sided with Astrid in assessing the siblings’ efforts to lay primary blame on the other. Pointing to Astrid‘s testimony that Edgardo was “the instigator [and] master mind,” the court noted that she “didn‘t benefit or receive extra money from this, but this was all
As we have noted on multiple occasions, “[t]he linchpin of a reasonable sentence is a plausible sentencing rationale and a defensible result.” Ramos, 763 F.3d at 58 (internal quotation marks omitted). The district court provided both here. We therefore reject Edgardo‘s claim that his sentence was substantively unreasonable.
VIII.
For the reasons that we have explained, each of appellants’ claims is unavailing. We therefore affirm their convictions and sentences.
So ordered.
Notes
United States v. Hall, 434 F.3d 42, 50 (1st Cir. 2006).(1) that [the defendant] knowingly conducted a financial transaction, (2) that he knew that the transaction involved funds that were proceeds of some form of unlawful activity, (3) that the funds were proceeds of a specified unlawful activity, and (4) that [the defendant] engaged in the financial transaction knowing that it was designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds of such unlawful activity.