UNITED STATES of America, Plaintiff-Appellee, v. David E. MARTINELLI, Defendant-Appellant.
No. 04-13977.
United States Court of Appeals, Eleventh Circuit.
July 10, 2006.
VACATED AND REMANDED.
Nancy J. Hess, Dixie Angela Morrow, U.S. Atty., Pensacola, FL, E. Bryan Wilson, Tallahassee, FL, for Plaintiff-Appellee.
Before DUBINA, MARCUS and COX, Circuit Judges.
MARCUS, Circuit Judge:
David Martinelli appeals from his conviction after a jury trial and the ensuing 210-month prison sentence for conspiring to launder money in violation of
I.
The basic facts developed at trial in this money laundering conspiracy case are these. In 1995, Martinelli and two associates formed Global Business Services, Inc. (GBS),1 a corporation purportedly designed to facilitate the sale of small businesses by putting hopeful sellers in contact with willing buyers. GBS would randomly send letters to small-business owners, attempting to locate those who were interested in selling their business. When a potential seller responded, a GBS representative would meet with the client and gather information about the business. The representative would explain that GBS placed generic advertising in national publications representing that it had businesses for sale; when interested buyers responded, GBS would attempt to match them with compatible sellers.
A seller was required to sign a contract whereby it agreed to pay GBS a certain percentage of the total value of the business in exchange for the advertising. Donald Cox, the original President and CEO of GBS, testified for the government at trial that clients had to immediately pay a small percentage, around 2 percent, and then an additional 5 to 7 percent if the business actually sold. The government also presented evidence of initial fees ranging from $1,900 to $16,900. The contracts stated that GBS would provide advertising until the business sold, but did not guarantee an actual sale. Mr. Cox stayed with GBS for slightly under twelve months and testified that, during this time, GBS did not facilitate the sale of a single business.
Cox also testified concerning numerous misrepresentations made by GBS. Thus, for example, he said that GBS sent direct mailings to small-business owners with testimonials from allegedly satisfied customers describing how GBS helped to sell their businesses. In fact, there were no such customers, and the people pictured in the representations were actually Martinelli and other GBS employees. Cox also described how GBS represented in its mailings to putative sellers that all of its buyers were prequalified to ensure they
The government also presented the testimony of over 100 witnesses at trial, many of whom were businesspeople who signed contracts with GBS in hopes of selling their companies. They generally testified to receiving the false mailings, which advertised previously successful sales and a sophisticated computer matching system, and to the manner they were subsequently treated by Martinelli and other GBS employees. Various sellers said that a GBS employee who visited with them recounted the many sales GBS had facilitated in the past and predicted a quick sell for the business at hand. Many of the sellers never received any match at all, and those who did often found that the person purportedly interested in their business did not exist, had never heard of GBS, had no interest in buying a business, or was interested in a wholly unrelated kind of business. Indeed, sellers were given contact names of fictitious GBS employees and Martinelli placated those who complained by sending them bogus matches. As one GBS employee testified, there was very little emphasis on securing buyers because our income was coming from the sellers. In fact, the evidence established that GBS arranged the sale of only one business between 1995 and 2000, and even that sale occurred only after an ambitious GBS employee scoured the phone book and randomly located a buyer for a seller‘s trash company.
Carl Carr, an indicted co-defendant and GBS operations manager and vice president, pled guilty and also testified for the government. Carr described the fraud at GBS in great detail. He explained that the defendant, Martinelli, employed fake names in GBS correspondence to avoid being recognized as having a role in the organization and to make it appear as if GBS had a large and stable workforce. Martinelli also knowingly placed false statements in GBS mailings, including assurances that buyers would be financially prequalified and promises of a sophisticated computer matching system, all designed to induce sellers to sign a contract with GBS. Carr confirmed that there was no sophisticated computer matching system and that the testimonials from satisfied customers were entirely false. He observed that GBS sales representatives were told of past successes because [w]e wanted them to think that we were a reputable business and that we were doing what we said we were doing.
Moreover, Carr described how Martinelli falsified documents (including the application)3 submitted to the Better Business Bureau so that GBS could become a member of that organization and then tout its membership to prospective customers. Fi-
The government also presented testimony regarding the money that was generated from the fraudulent activities. Among other things, GBS employees testified that when a seller submitted payment after signing a contract, that money was generally deposited into one of several GBS-controlled bank accounts. The money in those accounts was then used to fund the underlying scheme to defraud. Thus, for example, Martinelli used the fraudulently-derived proceeds to pay for more fraudulent brochures and mailings, which would, in turn, then be sent to additional potential customers, thereby generating still more illegal proceeds. Evidence was also presented that Martinelli and his family used funds drawn on GBS accounts for personal expenditures such as clothing for Mrs. Martinelli and cellular phone service for Martinelli‘s children.4
The government also presented evidence that GBS moved funds between various accounts under the guise of loans to and from GBS, even though the loaned money belonged to GBS in the first place. Thus, for example, GBS funds were deposited into a trust fund controlled by Martinelli, withdrawn via a check made out to cash, converted into a cashier‘s check, and then redeposited into a GBS account as the proceeds of a loan. All told, between 1995 and 2000, some $6.6 million was deposited into bank accounts controlled by Martinelli and at least 1,521 customers of GBS were identified.5
A jury found Martinelli guilty of one count of conspiracy to launder money. He now challenges the district court‘s refusal to suppress certain evidence procured from several search warrants, the failure to give certain requested jury instructions, and his sentence.
II.
By early April of 2000, GBS had become World Business Services, Inc. (WBS), WBS had filed for bankruptcy, and Martinelli had re-opened his venture under the name International Business Associates (IBA). On April 12, 2000, investigators with the Bay County Sheriff‘s Office executed search warrants issued by a state judge at the former business location for WBS and the business location for IBA. More than one year later, a United States magistrate judge issued a federal warrant for computers seized during those searches.
Martinelli moved to suppress the proceeds recovered from both the state and federal warrants. The district court conducted an evidentiary hearing, and ultimately ruled that (1) the state search warrants were supported by probable cause; (2) the state search warrants were not overbroad in failing to describe with particularity what was to be seized; (3) Martinelli was not entitled to a hearing pursuant to Franks v. Delaware, 438 U.S. 154, 98 S.Ct. 2674, 57 L.Ed.2d 667 (1978); (4) even
First, Martinelli says that the affidavits used in support of the applications for the state search warrants failed to establish probable cause. In reviewing a district court‘s ruling on a motion to suppress, we review findings of fact for clear error and the application of the law to those facts de novo. United States v. Muegge, 225 F.3d 1267, 1269 (11th Cir. 2000); see also United States v. Jiminez, 224 F.3d 1243, 1248 (11th Cir. 2000) (noting that we review de novo whether there was probable cause to support a search warrant, although we must take care both to review findings of historical fact only for clear error and to give due weight to inferences drawn from those facts by resident judges and local law enforcement officers (internal quotation marks omitted)).
The affidavit supporting the WBS search warrant alleged, among other things, that the affiant, Investigator Steve Harbuck, was contacted in March of 2000 by Loving Enterprises, a business in Tampa. The complainant business claimed that it had been defrauded by WBS of approximately $4,000. Loving Enterprises further stated that other businesses had been similarly defrauded. This caused Harbuck to begin investigating WBS. He learned that WBS was owned and operated by David Martinelli and that the nature of [WBS] was to advertize businesses for sale, and help locate buyers for said businesses.
In April of 2000, Harbuck received a list from the Better Business Bureau detailing some twenty-three complaints filed against WBS. Harbuck said that he verified the information in the list by calling several of the complainants, each of whom indicated that they had contracted with WBS in an effort to sell their business and that, although WBS collected an initial fee from them, it never subsequently performed any services. Harbuck said that he received several similar complaints against WBS from businesses throughout the United States, each of which averred that WBS collected a fee but provided no services in return. Harbuck traveled to the WBS location in Panama City Beach, where a building management representative told him that WBS vacated the office suite on March 31, 2000, but had left behind numerous files and related office equipment. The affidavit observed that [b]usiness related files and correspondence, employee files, [and] computer software and hardware belonging to WBS would be found at the location, and that those items would be evidence of the ongoing scheme to defraud.
The IBA affidavit was similar to the WBS affidavit. However, it added that Martinelli formed IBA, which assumed all of the contracts of WBS. Harbuck said that [t]he material provided by [IBA] states that the operation of their business is identical to the business that was operated by [WBS].
Martinelli argues that the affidavits fail to set forth probable cause because they are silent as to the basis of knowledge of any of the individuals or entities or their veracity or reliability. Martinelli analogizes the information received from the Better Business Bureau to that of a confidential informant and argues that the affidavit does not establish the veracity or the foundation for an informant‘s information. See United States v. Brundidge, 170 F.3d 1350, 1352-53 (11th Cir. 1999) (noting that
The courts have traditionally viewed information drawn from an ordinary witness or crime victim with considerably less skepticism than information derived from anonymous sources. See, e.g., Easton v. City of Boulder, 776 F.2d 1441, 1449 (10th Cir. 1985) (noting that the skepticism and careful scrutiny usually found in cases involving informants, sometimes anonymous, from the criminal milieu, is appropriately relaxed if the informant is an identified victim or ordinary citizen witness). Each of the victims had personal knowledge of the crimes; they had done business with WBS. Moreover, there was a high level of corroboration. Each of the complainants Harbuck spoke with reported that they paid money for the same purpose, but, notably, never received any services. Finally, the affidavit, which was submitted in April of 2000, refers to recent complaints or allegations that had been recently verified. See Jiminez, 224 F.3d at 1249 (noting that even stale information can provide probable cause when the government updates, substantiates, or corroborates the stale material (internal quotation marks omitted)).
Probable cause to support a search warrant exists when the totality of the circumstances allow a conclusion that there is a fair probability of finding contraband or evidence at a particular location. Brundidge, 170 F.3d at 1352. Here, the affiant relied on personal information from many victims. Harbuck observed the offices and described the materials that would provide evidence of the fraud. Quite simply, there was a fair probability that contraband would be found at the locations described, and the warrants were supported by probable cause.
Martinelli also contends that the warrants were overbroad because they permitted the seizure of all business files and because they failed to sufficiently describe the crimes that were committed. See, e.g., United States v. Travers, 233 F.3d 1327, 1329 (11th Cir. 2000) (noting that a warrant which fails to sufficiently particularize . . . the things to be seized is unconstitutionally over broad). Again, we review the district court‘s findings of fact for clear error and its application of law to those facts de novo. Muegge, 225 F.3d at 1269.
Although the Fourth Amendment requires that a warrant sufficiently particularize the things to be seized, we have held that the government may seize all of the business records of an enterprise engaged in a pervasive scheme to defraud. United States v. Sawyer, 799 F.2d 1494, 1508 (11th Cir. 1986). In Sawyer, we upheld a warrant authorizing the seizure of all of the business records of an enterprise where there was substantial evidence from twenty-five customers detailing various fraudulent activities. The fraudulent conduct employed in twenty-five separate instances made it probable that the company was using identical misleading and fraudulent techniques with other customers. Id. Here, the affiant had a list of twenty-three Better Business Bureau complainants, the communication from Loving Enterprises, and several other similar
Martinelli also challenges the breadth of the warrants because they do not identify the crimes that Martinelli allegedly committed. However, the affidavits, which the district judge found were attached to the warrants, describe the fraud in some detail by noting that WBS fraudulently took money from customers although it failed to provide them with any services. When affidavits are attached to a warrant, we will consider the affiant‘s statements in determining whether the warrant sufficiently identifies the crimes that were allegedly committed. Cf. United States v. Bridges, 344 F.3d 1010, 1018-19 (9th Cir. 2003) (finding a search warrant overly broad because it did not describe the crime allegedly committed and the more descriptive affidavits were not attached). The affidavits sufficiently detailed the alleged crimes and the affidavits were attached to the warrants. The warrants were not overbroad.6
III.
Martinelli also claims the district court erred in refusing to instruct the jury
A district court‘s refusal to give a requested instruction is reversible error if (1) the requested instruction was a correct statement of the law, (2) its subject matter was not substantially covered by other instructions, and (3) its subject matter dealt with an issue in the trial court that was so important that failure to give it seriously impaired the defendant‘s ability to defend himself. Id. (internal quotation marks omitted).
Martinelli was indicted for conspiring to launder money pursuant to
(a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity—
(A)(i) with the intent to promote the carrying on of specified unlawful activity; or
(ii) with the intent to engage in conduct constituting a violation of
section 7201 or7206 of the Internal Revenue Code of 1986; or(B) knowing that the transaction is designed in whole or in part—
(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or
(ii) to avoid a transaction reporting requirement under State or Federal law,
shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.
We glean several important points from the plain language of
To obtain a conviction for a money laundering conspiracy . . . the government bears the burden of proving beyond a reasonable doubt that: (1) two or more persons agreed to commit a crime, in this case a . . . money laundering violation; and (2) that [the defendant], knowing the unlawful plan, voluntarily joined the conspiracy. United States v. Johnson, 440 F.3d 1286, 1294 (11th Cir. 2006). See also United States v. Alerre, 430 F.3d 681, 693-94 (4th Cir. 2005) (noting that the government has to prove that (1) a conspiracy to commit promotion money laundering was in existence, and (2) that during the conspiracy, the defendant knew that the proceeds used to further [the] illicit operations had been derived from an illegal activity, and knowingly joined in the conspiracy), cert. denied, U.S., 126 S.Ct. 1925, 164 L.Ed.2d 667 (2006); United States v. Threadgill, 172 F.3d 357, 366 (5th Cir. 1999) (The elements of the offense of conspiracy to commit money laundering are: (1) that there was an agreement between two or more persons to commit money laundering; and (2) that the defendant joined the agreement knowing its purpose and with the intent to further the illegal purpose.).
First, Martinelli says that the district court erred by failing to instruct the jury on the basic elements of mail fraud, the specified unlawful activity underlying the alleged money laundering conspiracy. He argues that mail fraud is a core element of the offense. Martinelli urges that the district judge should have given Eleventh Circuit Criminal Pattern Jury Instruction 50.1, which sets forth four elements for mail fraud: (1) that the defendant knowingly devised or participated in a scheme to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations or promises; (2) that the false or fraudulent pretenses, representations or promises related to a material fact; (3) that the defendant acted willfully and with an intent to defraud; and (4) that the defendant used the United States Postal Service or a private or commercial interstate carrier by mailing or depositing (or causing to be mailed or deposited) some matter or thing for the purpose of executing the scheme to defraud. Moreover, Martinelli says that the district court erred by failing to define the terms scheme to defraud, false, fraudulent, and material fact, all of which are defined in pattern jury instruction 50.1.
The government responds that Martinelli failed to raise this issue before the district court and therefore we should review for only plain error. See United States v. Hasson, 333 F.3d 1264, 1277 (11th Cir. 2003). After thoroughly reviewing the record, we cannot find where Martinelli specifically asked the district judge to instruct on the elements of mail fraud. There is no such request in his proposed jury instructions, and we have been unable to locate any verbal request in the trial transcript. Indeed, Martinelli‘s attorney conceded at oral argument that he did not request the mail fraud pattern jury instruction (which sets forth the elements of mail fraud) or an instruction defining scheme to defraud. Therefore, we review this issue only for plain error. Id.
An appellate court may not correct an error the defendant failed to raise in the district court unless there is: (1) error, (2) that is plain, and (3) that affects
The lack of an instruction on the elements of mail fraud was not error because, as we explain in greater detail below, Martinelli was not charged with mail fraud and the government did not have to prove he committed mail fraud to convict him of conspiring to launder money. See, e.g., United States v. Magluta, 418 F.3d 1166, 1174 (11th Cir. 2005). Had the district court given the pattern mail fraud instruction, it would have incorrectly told the jury to decide whether the defendant, Martinelli, knowingly devised or participated in a scheme to defraud, acted willfully with an intent to defraud, and used [the United States mails] for the purpose of executing the scheme to defraud. Eleventh Circuit Criminal Pattern Jury Instruction 50.1. In fact, the government did not have to prove any of those elements; Martinelli simply had to know the funds were derived from the specified unlawful activity of mail fraud. See
But even if the district court erred by not giving the pattern instructions on mail fraud (which it did not), that error was surely not plain. The district court‘s instructions are nearly identical to those we recently affirmed under plain error review in another money laundering conspiracy case involving the same specified unlawful activity of mail fraud. See United States v. Silvestri, 409 F.3d 1311, 1337 n. 17 (11th Cir. 2005). In Silvestri, just as in this case, the defendant failed to ask the district judge to instruct the jury on the elements of mail fraud. We held that the trial court did not plainly err by simply telling the jury that the mail fraud statute makes it a crime or offense for anyone to use the Unites States mails in carrying out a scheme to defraud. Id. (internal quotation marks omitted). We noted that the term defraud is well within the common understanding of the jury and therefore need not be defined. Id. (internal quotation marks omitted).
If anything, the district judge in the Martinelli case provided a more detailed instruction on the specified unlawful activity of mail fraud than the one we considered in Silvestri. Indeed, here the district court actually paraphrased the language of the mail fraud statute for the jury:
The term specified unlawful activity here as set out in the indictment means mail fraud. Mail fraud is that crime as defined in
Title 18 of the United States Code, Section 1341 as the use of the United States mails for transmitting something by private or commercial interstate carrier in carrying out a scheme to defraud. For purposes of these instructions, it is not important whether the defendant used the mail himself or rather that someone used either the United States Postal Service or some private mail carrier in furtherance of the scheme to defraud as set out in the indictment.
Thus, the district judge provided the jury with a description of mail fraud that closely tracks the language of
Additionally, the lack of an instruction on the elements of mail fraud did not prejudice Martinelli, let alone affect his substantial rights. The jury was fully instructed on the elements of conspiring to launder money, and the district judge made clear that Martinelli had to know the proceeds were derived from the specified unlawful activity of mail fraud. Thus, the absence of instructions on the elements of mail fraud, which were not elements of the charged crime, did not affect Martinelli‘s rights. For similar reasons, the lack of an instruction on the elements of mail fraud did not seriously affect the fairness, integrity, or public reputation of the judicial proceeding.
Martinelli did, however, specifically request jury instructions on one of the elements of mail fraud materiality—and, therefore, we review whether the failure to instruct on that element was an abuse of discretion. Not surprisingly, we conclude again that the trial court did not abuse its discretion by refusing to instruct on materiality because Martinelli was not charged with mail fraud. It is by now abundantly clear that in a money laundering case (or in a money laundering conspiracy case), the defendant need not actually commit the alleged specified unlawful activity. See Magluta, 418 F.3d at 1174 (noting that the government did not have to prove that a defendant charged with laundering and conspiring to launder money committed the underlying felony drug offenses); United States v. De La Mata, 266 F.3d 1275, 1292 (11th Cir. 2001) (A conviction for money laundering does not require proof that the defendant committed the specific predicate offense.); see also United States v. Awada, 425 F.3d 522, 525 (8th Cir. 2005); United States v. Smith, 46 F.3d 1223, 1234 (1st Cir. 1995).8 Indeed, if the district court had instructed as the defendant requested, that any misrepresentation must be shown by the government with proof beyond a reasonable doubt to be a ‘material’ misrepresentation, the jury would have incorrectly assumed that it had to find Martinelli violated the materiality element of the substantive mail fraud offense. That is simply not the law.
More particularly, the basic structure of the Travel Act is similar to the money laundering statute because it too criminalizes a certain act (traveling in interstate commerce or using the mail or any facility in interstate commerce) done with the intent to distribute the proceeds of any unlawful activity.
Thus, for example, in United States v. Conway, 507 F.2d 1047 (5th Cir. 1975), the former Fifth Circuit in binding precedent10 squarely rejected a defendant‘s argument that the trial judge erred by refusing to instruct the jury on the definition of arson under Maryland law when that was the predicate offense underlying a Travel Act conviction. The court held that proof of the violation of the [underlying unlawful activity] to which reference is made for purposes of prosecution under [the Travel Act] is not an essential element to be proved in such a federal prosecution. Id. at 1051. The former Fifth Circuit opined that
Id. at 1051-52; see also United States v. Owens, 159 F.3d 221, 228 (6th Cir. 1998) (finding that the district court did not plainly err by failing to instruct the jury on the elements of the predicate state law offenses in a Travel Act case where the trial judge did read the statutory definitions of the underlying crimes); United States v. McNeal, 77 F.3d 938, 944-45 (7th Cir. 1996) (concluding that the trial court fairly and accurately conveyed to the jury the issues before it by defining the under-lying crime in a Travel Act case by quoting from the Illinois intimidation statute); Cf. United States v. Gallo, 782 F.2d 1191, 1194-95 (4th Cir. 1986) (reversing a Travel Act conviction where the district judge failed to define, in any fashion, the term unlawful activity).[a]rson is a commonly used and understood word. There was sufficient evidence upon which the jury could find that the appellant traveled in interstate commerce with intent to bomb and/or burn a Maryland building. There is no requirement that the jury be instructed on the Maryland definition of arson and there is no reversible error here.
while conducting and causing to be conducted such financial transactions, the defendant and others knew that the property involved represented the proceeds of some form of unlawful activity. . . . The defendant may be convicted of conspiracy on your finding beyond a reasonable doubt that the defendant knew that the proceeds of the specified unlawful activity of mail fraud were designed in whole or in part to either promote or to conceal in the proceeds of the mail fraud or both. . . . Money laundering to promote the carrying on of a specified unlawful activity means that the defendant knowingly conducted or attempted to conduct a financial transaction knowing that the funds or property involved in the financial transaction represented the proceeds of some form of unlawful activity. . . . Money laundering designed . . . to conceal or disguise the nature, location, source, ownership or control of the proceeds of the specified unlawful activity means that the defendant knowingly conducted or attempted to conduct a financial transaction knowing that the funds or property in the financial transaction represented the proceeds of some form of unlawful activity. . . .
(emphasis added).
Thus, the district court, without specifically defining materiality, expressly told the jury that the specified unlawful activity in this case involved the use of the United States mails in carrying out a scheme to defraud. No more was required of the trial court.11
Moreover, Martinelli has not shown that the trial court‘s refusal to instruct on materiality—even if this was somehow erroneous—seriously impaired his ability to defend himself, and that standing alone would be fatal to his argument. The kinds of misrepresentations in this case (i.e., falsely advertising completed sales, satisfied customers, and financially-qualified buyers) were anything but immaterial—they went to the heart of the business services Martinelli offered. See United States v. Neder, 197 F.3d 1122, 1128 (11th Cir. 1999) (noting that a statement is material if it has a tendency to influence or is capable of influencing a decision and finding harmless the district court‘s failure to instruct on materiality in a mail, wire, and bank fraud case).
Next, Martinelli argues that the district court erred in refusing to instruct on the defense of good faith. Martinelli requested this instruction before the district court and, therefore, we review it for abuse of discretion. The government conceded at trial that an instruction on a good faith defense would have been appropriate if there were any facts to support it. The government argued, however, that there was no factual support for a good faith instruction, and the district court agreed. Specifically, the district judge said:
Well, I agree with the government. There‘s been no evidence submitted here in this trial of any good faith on Mr. Martinelli‘s part himself, and if there had been, then I agree with you, Mr. Samuel, that the threshold would be low as to the amount of evidence that would need to be presented in order for this instruction to be given, but there‘s just been flat no evidence of good faith on the part of Mr. Martinelli himself. So this instruction will also not be given.
That finding does not mean, however, that Martinelli has sustained his burden of showing that the district judge committed reversible error. See United States v. Sirang, 70 F.3d 588, 594 (11th Cir. 1995) ([F]ailure to give the proffered instruction on good faith is not per se error [because] we must examine the facts of the case to determine the adequacy of the instructions as a whole and the effect of the omission on the defendant‘s case.). The second prong of our analysis then requires us to ask whether the subject matter of the requested instruction was substantially covered by other instructions. Carrasco, 381 F.3d at 1242.
Although the district judge did not instruct that good faith was a complete defense to mail fraud, she did tell the jury repeatedly—as we have noted already—that Martinelli had to know the money represented the proceeds of the specified unlawful activity of mail fraud. The trial judge then stated that the term knowing that the funds or property involved in the financial transaction represented the proceeds of some form of unlawful activity means that the defendant knew that such funds or property involved in the transaction represented proceeds from some form, though not necessarily which form of activity that constitutes a felony offense under state or federal or foreign law.
Moreover, the district court defined knowingly to mean that the act was done voluntarily and intentionally and not because of accident or mistake. Based on those instructions, the jury plainly had to rule out the possibility that Martinelli actually harbored a good-faith belief in the legitimacy of the business before it could have found that he knew the money represented proceeds of mail fraud. In other words, based on the instructions the district judge gave, if the jury concluded that Martinelli had a good-faith belief in the legitimacy of the business, it could not have found that he knew the funds were the proceeds of mail fraud. See United States v. Giraldi, 86 F.3d 1368, 1376 (5th Cir. 1996) (finding no abuse of discretion in the lack of instruction on good faith where the district court incorporated the idea of
Additionally, and even more basic, Martinelli cannot carry his burden on the third prong of this analysis because the trial court‘s failure to instruct on good faith did not seriously impair his ability to defend himself. See Carrasco, 381 F.3d at 1242. Unlike the situation we found in Morris, the evidence of fraud in this case was overwhelming and the evidence of good faith was slight. Moreover, Martinelli‘s attorney actually argued good faith to the jury in his closing, urging the jury to believe that Martinelli was a salesman just like millions of good salesmen in this country who had a good faith belief that he could build a business. His intent was not criminal. See Giraldi, 86 F.3d at 1376 (considering the extent to which the defendant was able to argue good faith to the jury, even in the absence of a specific good faith instruction). Although it would have been wiser to instruct on the defense of good faith, the district court‘s failure to do so was not an abuse of discretion because the charge was essentially encompassed in other parts of the jury instructions and its absence did not prejudice Martinelli to the extent that it seriously impaired his ability to defend himself. See United States v. Frazier, 387 F.3d 1244, 1259 (11th Cir. 2004) (en banc) (noting that under the abuse of discretion standard of review there will be occasions in which we affirm the district court even though we would have gone the other way had it been our call (quoting Rasbury v. I.R.S. (In re Rasbury), 24 F.3d 159, 168 (11th Cir. 1994))).
Martinelli also argues that the district judge should have instructed on the defense of mere puffing. We have recognized that puffing or sellers’ talk is not actionable under the mail fraud statute. See United States v. Brown, 79 F.3d 1550, 1557 (11th Cir. 1996) (noting that statements that company ‘nationally known’ and that product ‘among the finest in the world’ are ‘not cognizable under the federal mail fraud statute’ (quoting United States v. Pearlstein, 576 F.2d 531, 540 n. 3 (3d Cir. 1978))). Here, the trial judge refused to instruct on the puffing defense, noting that the evidence cannot in any stretch be characterized as mere puffery or just a sales pitch. We agree.
The misrepresentations in this case were not exaggerated opinions or hyped-up sales pitches. See Mfg. Research Corp. v. Greenlee Tool Co., 693 F.2d 1037, 1040 (11th Cir. 1982) (describing puffing, in the context of a common law unfair competition claim, as an expression of opinion not made as a representation of fact). Instead, they were factual statements that were verifiably refutable. Thus, the assertion that all buyers would be prequalified was simply untrue—GBS stopped prequa-
Next, Martinelli says that the trial judge erred by refusing to instruct the jury that, as to the promotion theory of money laundering, making payments for business expenses, such as payroll expenses, payroll taxes, rent and other normal business expenses does not amount to ‘promoting the carrying on of specified criminal activity.’ The trial judge refused to give the proffered request, noting that she did not recall evidence of payment of ordinary business expenses such as rent, payroll, and taxes as are indicated and specified in the proposed instruction, and if there was any such evidence, it was minimal. Moreover, the district judge said that even if my recollection of the evidence is inaccurate, I think that there is a risk with this instruction that the jury would be confused . . . about what constitutes a legitimate business expense.
Martinelli is correct in observing generally that the government must demonstrate the financial transaction was conducted or attempted with the intent to promote the carrying on of specified unlawful activity.
Moreover, we need not address whether Martinelli‘s proffered instruction was a correct statement of the law because, even if it were, the subject matter of the charge was substantially covered by other instructions.13 The district judge correctly stated that [m]oney laundering to promote the carrying on of a specified unlawful activity means . . . that the defendant engaged in the financial transaction with the intent to promote the carrying on of such specified unlawful activity. Additionally, the trial judge used the Eleventh Circuit Pattern Jury Instructions to charge that [t]he term with the intent to promote the carrying on of the specified unlawful activity means that the defendant must have conducted or attempted to conduct the financial transaction for the purpose of facilitating or making easier or helping to bring about the specified unlawful activity as has been defined. See Eleventh Circuit Criminal Pattern Jury Instruction 70.1. Thus, the trial judge properly instructed that the financial transaction had to be conducted or attempted with the intent to promote the mail fraud. Based on those instructions, the jury could not have found Martinelli guilty if it believed the financial transactions were undertaken for legitimate, non-fraudulent business expenses. The requested charge was substantially covered in other instructions. Furthermore, Martinelli has completely failed to demonstrate that the failure to give this requested instruction seriously impaired his ability to defend himself.
With regard to the concealment or disguise the nature, the location, the source, or the control of the proceeds element of the money laundering statute, I instruct you that merely spending money does not amount to money laundering, even if the money is derived from criminal activity. In order to constitute money laundering, the defendant must have had the specific intent to conceal money that was generated from criminal conduct. Moreover, the evidence of concealment must be substantial.
The trial judge instructed that
[m]oney laundering designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of the proceeds of the specified unlawful activity means . . . that the defendant engaged in the financial transaction knowing that the transaction was designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of the proceeds of the specified unlawful activity of mail fraud.
Thus, the jury could not have found the defendant guilty without first determining that he knew the transactions were designed to conceal or disguise. The requested instruction was substantially covered in other parts of the charge; there was no abuse of discretion. Just as with the other requests, we are fully satisfied that the trial court‘s failure to give this charge did not seriously impair Martinelli‘s ability to defend himself.
IV.
Martinelli also says the district court erred at sentencing by using facts neither admitted by him nor found by the jury in determining the amount of loss and in imposing a four-level adjustment for his role in the offense. Martinelli raised a constitutional objection at sentencing based on the Supreme Court‘s decision in Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), and the Sixth Amendment. The district judge ruled that the Sentencing Guidelines were constitutional and declined to impose an alternative sentence.
The government correctly acknowledges that this was error in light of the Supreme Court‘s decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). When a district court commits constitutional Booker error, the government must prove beyond a reasonable doubt that the mandatory, as opposed to the advisory, application of the guidelines did not contribute to the defendant‘s sentence. United States v. Davis, 407 F.3d 1269, 1271 (11th Cir. 2005). The government concedes that it cannot sustain its heavy burden. After independent review we agree and, therefore, vacate Martinelli‘s sentence and remand to the district court for resentencing in light of Booker.14
In short, we conclude that the district court did not err in refusing to suppress evidence or in charging the jury. Accordingly, we affirm Martinelli‘s conviction. However, the district court did commit constitutional Booker error that was not harmless. We vacate Martinelli‘s sentence and remand for resentencing.15
AFFIRMED IN PART; VACATED AND REMANDED IN PART.
COX, Circuit Judge, specially concurring:
I join the court‘s opinion except for the discussion relating to the jury instruction on mail fraud. Martinelli contends that the district court erred by failing to give an instruction informing the jury of the elements of mail fraud. The court finds that Martinelli failed to preserve the error he now alleges because he did not submit such an instruction at trial. I agree, and therefore also agree that the court‘s failure to give such an instruction must be reviewed under our plain error test. However, in performing the plain error review, the majority opinion decides much more than it must. The court holds that the lack of an instruction on the elements of mail fraud: (1) did not seriously affect the fairness, integrity, or public reputation of the judicial proceedings, (2) did not affect Martinelli‘s substantial rights, (3) was not plain error, given our precedent, and (4) was not error at all. I agree with the first three of these holdings. Therefore, I concur in the result. I write separately to express my disagreement with the court‘s holding that the district court did not err in instructing the jury.
I acknowledge that, in United States v. Silvestri, after finding that the defendant in that case had invited any error in the jury instructions and therefore was not entitled to appellate review of them, this court went on to hold that the district court did not err by giving an instruction that only cursorily described mail and wire fraud, the specified unlawful activities in that money laundering conspiracy case.1 409 F.3d 1311, 1337-38 n. 17 (11th Cir. 2005). That holding in Silvestri, though unnecessary to the resolution of the case and confined to a footnote, nevertheless dictates the result in this case. Johnson v. DeSoto County Bd. of Comm‘rs, 72 F.3d 1556, 1562 (11th Cir. 1996) ([W]e are bound by alternative holdings.); McLellan v. Mississippi Power & Light Co., 545 F.2d 919, 925 n. 21 (5th Cir. 1977) (It has long been settled that all alternative rationales for a given result have precedential value.). But, our precedent and common sense counsel that, on that point, Silvestri is wrongly decided.
In United States v. Martinez, 496 F.2d 664 (5th Cir. 1974), a case in which the defendants were tried for conspiracy to import marijuana and conspiracy to possess marijuana with intent to distribute, the court held that the jury charge was plainly erroneous because it failed to apprise [the jurors] of the definition, character or nature of the acts of importing, possessing, or distributing marijuana. Id. at 669. Thus, Martinez requires that the district court tell the jury the essential character of the object of a conspiracy. Here, the object of the conspiracy was money laundering. But, it was not the laundering of just any monies. Rather, it was the laundering of monies generated by the unlawful activity specified in the indictment—mail fraud.
Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity—
(A)(i) with the intent to promote the carrying on of specified unlawful activity; or
(B) knowing that the transaction is designed in whole or in part—
(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; [ ]
shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.
When, in United States v. Miller, 22 F.3d 1075 (11th Cir. 1994), we considered the appeal of a defendant who was convicted of money laundering in violation of
In this case, the jury was told that the specified unlawful activity was mail fraud, but it was never told exactly what mail fraud is. The jury instructions included this brief description of mail fraud:
Mail fraud is a crime as defined in
Title 18 of the United States Code, Section 1341 as the use of the United States mails [or] transmitting something by private or commercial interstate carrier in carrying out a scheme to defraud. For purposes of these instructions, it is not important whether the defendant used the mail himself or rather that someone used either the United States Postal Service or some private mail carrier in furtherance of the scheme to defraud as set out in the indictment.
The jury in this case was required to find, beyond a reasonable doubt, that: (1) the funds Martinelli allegedly conspired to launder were proceeds of mail fraud, and (2) Martinelli had either intent to promote the carrying on of mail fraud or knowledge that the money laundering transactions were designed to conceal the proceeds of mail fraud. I do not believe it could do so absent an instruction that stated the elements of mail fraud.
To the extent Silvestri concludes otherwise, it is wrongly decided. In proclaiming that the district court‘s brief descriptions of mail and wire fraud were enough to apprise the jury of the specified unlawful activity in that case, Silvestri completely ignores Martinez and Miller and fails to explain how a jury could make the required findings. Silvestri relies on the well-accepted premise that terms within the common understanding of the jury need not be defined in the jury instruc-
This holding in Silvestri and its application in this case threaten a defendant‘s right to a jury verdict of guilt beyond a reasonable doubt because they place too much faith in jurors’ common understanding. When a specified unlawful activity is complicated, like mail fraud, a cursory description of it cannot suffice. The jury should be told the essential character of the unlawful activity that yielded the monies allegedly intended to be laundered. Here, the jury had to find, beyond a reasonable doubt, that the monies Martinelli was charged with laundering arose out of a crime, during which someone (not necessarily Martinelli): (1) used the mails, (2) as part of willful participation in, (3) a scheme to defraud others by making false or fraudulent representations or promises, (4) related to material facts.3 The jury also had to find that Martinelli conspired to engage in money laundering either with intent to promote the use of the mails for this purpose or with knowledge that he was acting to conceal monies generated by the use of the mails for this purpose. These are not simple determinations, and the defendant has a right to have the court give the jury detailed guidance.
The problem inherent in giving just a cursory description of the specified unlawful activity is highlighted when we consider Martinelli‘s contention that a good faith jury instruction should have been given. Martinelli argued at trial that the money he allegedly conspired to launder was not the proceeds of any fraud but rather the profits of a legitimate business. In support of that defense, Martinelli requested a jury instruction that good faith is a defense to mail fraud and, in this case, money laundering. The court‘s opinion reasons that, even though there was some evidence of good faith, the district court‘s refusal to give the good faith instruction was not an abuse of discretion, in part because the district court told the jury that Martinelli had to know that the money he allegedly conspired to launder was the proceeds of unlawful activity. But that instruction did not tell the jury that, in order for the monies to be the proceeds of mail fraud, someone had to have willfully made false representations of material
I concur in the result in this case because, given Silvestri, the jury instructions in this case cannot be found deficient. Nevertheless, I think they were deficient. And, I am convinced that Silvestri was wrongly decided.