UNITED STATES OF AMERICA, Plаintiff-Appellee, VERSUS RONALD W. HUGHES, SR., BETTY L. ALLEN, and JERRI D. ALLEN, Defendants-Appellants.
No. 95-10861
United States Court of Appeals, Fifth Circuit
October 30, 1996
Appeal from the United States District Court for the Northern District of Texas (3:94-CR-075-X)
Before POLITZ, SMITH, and DUHÉ, Circuit Judges. JERRY E. SMITH, Circuit Judge:
Ronald Hughes, Sr. (“Hughes“), ran his family‘s funeral home business near Dallas. In June 1989, Hughes was visiting with Harry Pierce, an old acquaintance who was at the time doing odd jobs for Hughes, at the site of a church in Cedar Hill, Texas, that Hughes had purchased recently and intended to convert into a funeral home. At this meeting, Pierce asked whether Hughes knew “where a person could invest some money on a long-term basis and where they could earn some interest.” Piercе stated that he knew Betty Allen (“Allen“), who had about $1 million that she was looking to invest. Hughes responded that he was in fact looking for approximately that amount to complete the financing on his new funeral home conversion project.
Shortly thereafter, Pierce arranged a meeting with Hughes and Allen, at which meeting Allen agreed to loan Hughes $1 million. Allen related to Hughes that the money had come from a now-deceased, former lover (Joe Brown) who had been distrustful of banks and who liked to keep large sums of cash around. Hughes and Allen closed the loan transaction on July 1, 1989, and a local attorney prepared the necessary documentation. Allen instructed the attorney to make the note payable to Allen and Robert Chambers, explaining that Chambers was a friend of hers and Joe Brown‘s who
On July 20, 1989, Pierce telephoned Hughes and explained that Allen had asked Pierce to meet her in Scottsdale and then fly back with her to Dallas. Because he was unable to do so, Pierce requested that Hughes go in his place. Hughes agreed and flew the following day to Scottsdale аboard a chartered plane that had been arranged by Pierce.
Upon his arrival, Hughes met Allen, who said she needed him to accompany her on an errand, at which time the two drove to a storage facility in Phoenix and removed approximately $2 million in cash from a safe located in the facility.2 Hughes and Allen
Hughes subsequently received a second call from Allen in which she indicated that she had an additional $1.9 million to invest with Hughes.3 The money that formed the basis of this second loan had been brought from Alpine, Texas, by Pierce, Allen, and Jerri Allen (“Jerri“), Allen‘s daughter. The three passengers had flown to Alpine abоard Allen‘s airplane, where a pickup truck pulled up to the plane and loaded the money aboard in trunks and bags. Hughes met the group at the Dallas airport upon their return and took the money—again all of it in cash. The note evincing this loan transaction was executed on November 1, 1989.
Although it is undisputed that Chambers came to Dallas on August 8, 1989, to meet with Hughes, the parties dispute virtually every facet of the meeting. The government claims that at this meeting Chambers told Hughes that the money belonged to him and that he had had an extensive relationship with Acosta and was “the last soldier left in the [Acosta] organization.” According to the government, Hughes then told Chambers that he had had a former FBI agent friend of his run a check on Chambers and that this friend would help them stay аpprised of whether the IRS was conducting any money laundering investigations in the area.
Hughes had no further contact with Chambers until April 1990, when the two met with Allen and Jerri. Ostensibly, the meeting was called to figure out where all the money (nearly $5 million in total) had gone and who was responsible. The meeting degenerated into a shouting match between all of the parties and was followed by Chambers‘s mad search through a mausoleum owned by Hughes in which Chambers believed that Allen and Hughes had hid the money. To everyone‘s knowledge except Hughes, the meeting was recorded on audio tape.
Chambers was arrested in 1991 and, after being convicted, agreed to testify in the instant case in exchange for leniency in sentencing. Hughes was charged with various counts of money laundering and structuring, Allen with various counts of money laundering, Hughes‘s son with various counts of structuring, and
Hughes was convicted by a jury on all but one of the laundering charges and acquitted on all of the structuring charges. Allen was convicted on all counts, while Jerri was convicted only on the laundering counts. Hughes‘s son was acquitted on all charges.
II.
A.
Hughes, Allen, and Jerri first contend that the district court erred in failing to instruct the jury that, as to the money laundering counts, the government was required to show that each possessed actual knowledge that the funds involved in those counts were the product of criminal activity. According to the defendants, the court‘s failure to adopt their instruction permitted the jury to convict upon a showing of the lesser standard of constructive knowledge.
We review the district court‘s decision for abuse of discretion. United States v. Sellers, 926 F.2d 410, 414 (5th Cir. 1991). The refusal to give a jury instruction constitutes reversible error only where the instruction (1) was substantially correct, (2) was not substantially covered in the charge delivered to the jury, and (3) concerned an important issue so that the failure to give it
The defendants’ proposed instruction was substantially correct.4 The government does not dispute that “actual knowledge” that the proceeds of unlawful activity were involved in the laundering is an element of the crime. Actual knowledge requires at a minimum a showing of the defendant‘s subjective belief that the fact at issue existed. See United States v. Breque, 964 F.2d 381, 389 (5th Cir. 1992), cert. denied, 507 U.S. 909 (1993). The defendants’ jury instruction elucidated as much and thus was substantially cоrrect.
We conclude, however, that the defendants’ proposed instruction was substantially covered in the charge delivered to the jury. The actual charge given was as follows:
In order to establish a violation of the statute, the government must prove beyond a reasonable doubt . . . Second: That the Defendant under consideration knew that the property involved in the financial transaction represented the proceeds of some form of unlawful activity . . . . The phrase “knowing that the property involved in the financial transaction represented some form of unlawful activity” means that the person knew the property involved in the transaction represented the proceeds from some form, though, not necessarily which
form, or аctivity that constitutes a felony under State or Federal law. . . . [The government] need only prove that he or she knew that it represented the proceeds of some form, though not necessarily which form, of felonious activity under State or Federal law. [Emphasis added.]
The statute requires that the government prove actual knowledge, and the court so instructed the jury, using the word “knew” three times in two paragraphs of the instruction. The court did not instruct that the government could prevail by demonstrating that the defendants “should have known” that the money was criminally tainted, and we do not conclude from the court‘s failure to define the term “knew” that the jurors were permitted implicitly to assign guilt based upon a “should have known” standard.
“Terms which are reasonably within the commоn understanding of juries, and which are not technical or unambiguous, need not be defined in the trial court‘s charge.” United States v. Anderton, 629 F.2d 1044, 1048-49 (5th Cir. 1980) (citation omitted). “Knew” is such a self-defining term, and, when used in common parlance, connotes actual or direct cognition, not constructive awareness attributed to an individual because of his own negligence, gross negligence, or recklessness. Irrespective of whether it is in fact “better practice . . . to instruct the jury on the meaning of all terms of operative significance, even if they are in ordinary parlance,” id. at 1049 n.5 (citation omitted), we find no error in the instant instruction.
Jerri next challenges the jury instruction on the
The court instructed the jury that, in addition to the other four elements that they were required to find in order to convict, they must also find “[t]hat the monetary transaction was of a value greater than $10,000; [and] Fourth: That the criminally derived property was in fact derived from the specified unlawful activity of importation, sale or distribution of cocaine.” Jerri contends, and the government concedes, that the instruction wrongly informed the jury that they must find only that the monetary transaction in which the criminally derived monies were used was in excess of $10,000, where in fact a correct statement of the law would require that the jury find that the amоunt of criminally derived money used in the transaction must exceed $10,000.
As Jerri failed to object timely, we review for plain error. United States v. Restivo, 8 F.3d 274, 278-79 (5th Cir. 1993), cert. denied, 115 S. Ct. 54 (1994). Because the government concedes error—“a deviation from a legal rule in the absence of a valid
Jerri argues that the instruction was indeed prejudicial because the government presented at trial only one cashier‘s check that was allegedly used in the purchase of her $90,000 home and that had any clear derivation from illicit funds. That check, in the amount of $8,000, listed Pierce as the remitter. Jerri thus contends that there is a substantial likelihood that the jury wrongly convicted her on Count 15 based upon the $90,000 purchase price of the home and that a different result would have been obtained had the jury been instructed to focus on the $8,000 cashier‘s check only.
Jerri‘s own discussion of the facts of this case, however, undermines this argument. Even if we assume that only this single cashier‘s check had any derivation from criminal activity, Jerri admits that she made currency deposits (the subject of a separate
Even though we acknowledge that Jerri disputes vigorously the notion that this cash was criminally tainted, this argument is unavailing to an inquiry of prejudice on the jury instruction. That is, the jury‘s decision to convict Jerri on the
C.
Hughes, Allen, and Jerri also assert as error the district court‘s failure to instruct the jury on the elements of the specified unlawful activity—the importation, sale, or distribution of cocaine—that formed the predicate act of the money laundering
Assuming arguendo that the proposed instruction was a correct statement of law, we conclude that it was covered sufficiently in the court‘s instruction. The court instructed that it must find “[t]hat the property involved in the financial transaction did in fact represent the proceeds of some specified unlawful activity,” defining “specified unlawful activity” as “any activity relating to the sale and distribution of controlled substances.” The court further remarked that “I advise you that the importation, sale, or distribution of cocaine is a felony under federal law.” Given that the drug traffickers themselves were not on trial and that the instructions track the statutory language and embody all of the essential elements of the crime, the instructions incorporate the defendants’ proposed instruction substantially. See United States v. Golb, 69 F.3d 1417, 1429 (9th Cir. 1995), cert. denied, 116 S. Ct. 1369 (1996).
McDuff is also distinguishable, both because the predicate act was bank fraud, a crime for which, unlike cocaine importation and distribution in the instant case, most jurors would require a precise explication of the elements, and because the district court in McDuff never even mentioned the predicate act in the instructions on the money laundering claims. Id. at 8 (“FOURTH, the criminally derived property must also, in fact, have been derived from a specified unlawful activity.“). In contrast, the court in the instant case made clear to the jurors that the predicate act was cocaine importation and distribution.
Finally, even if we assume that the defendants have satisfied the second prong of the Pennington test, they have not demonstrated
[S]muggling drugs and importing cocaine, is not a concept that I think is so foreign that you would have to sit and quote verbatim every statute that deals with that . . . . I meаn, there is supposed to be some common sense in this, and the purpose of the jury charge is to tell people what the law is so that they can make a common sense factual determination, not to mire them.
We can find no evidence that raises any doubt that the jury would have found differently on the laundering claims had the elements been spelled out explicitly. In fact, we agree with the district court that doing so would “confuse them and . . . make their fact-finding mission more difficult by obfuscating common sense determination of the facts.”
III.
Each of Hughes, Allen, and Jerri next contends that because there was insufficient evidence, the district court erred in allowing the money laundering claims to go to the jury. In particular, the defendants allege that the government presented insufficient evidence of their actual knowledge of the criminal taint of the money involved. In deciding whether there was
A.
Hughes first challenges the sufficiency of the knowledge evidence with respect to Counts 4 (the July 21 Phoenix money pick-up) and 5 (the August 1 secondary loan of $1.9 million from Allen). Hughes contends that, because he did not meet with Chambers until August 8, a rational jury could not have found that he knew about the illegal origin of the monies prior to that time. The government points us to several pieces of evidence from which it contends that the jury could have inferred that Hughes had actual knowledge of the criminal source of the funds, including Hughes‘s structuring activity that began almost immediately after his receipt of the initial $1 million, the fact that the proceeds of the loans were delivered in cash, Hughes‘s traveling with Allen to Phoenix to pick
According to Hughes, the jury could not have ascribed any significanсe to the structuring because the jury declined to convict Hughes on Count 2 (the original $1 million loan from Betty Allen on June 27) but so convicted him on Count 4 (the $2 million Phoenix incident on July 21), notwithstanding the fact that the jury was aware that Hughes began making structuring transactions almost immediately after receiving the first $1 million. Had the jury found the structuring important, Hughes asserts, it would have convicted on Count 2 as well. We disagree.
Hughes‘s suggestion misunderstands the application of a money laundering charge to the events in question. The government properly noted in the indictment, and the court so instructed the jury, that Hughes could be found guilty of Count 2 only if he knew of the illegality of the proceeds at the time of his receipt of the money. Had the jury determined solely from the structuring evidence, all of which followed in time the June 27 receipt of $1 million, that Hughes had actual knowledge of the illegal source of the money at the time that he received the money, the jury would have been concluding, impermissibly, that Hughes should have known at the time he accepted the money that it was from an illegal source, because actions that he took subsequent to the receipt evinced such knowledge, not that he actually knew of its illegality
Thus, the government notes correctly that, with respect to all counts that temporally followed Count 2, it posited a theory from which the jury could infer actual knowledge of the illegality of the proceeds—evidence of Hughes‘s structuring—and that Hughes‘s failure to debunk this theory when he took the stand entitled the jury to make such an inference.7 We agree that Hughes‘s failure to present the jury with a competing explanation for the structuring entitled the jury to infer that his reason for so doing was to avoid government scrutiny about the illicit source of money.
In addition to Hughes‘s structuring, the jury also could have inferred knowledge from the all-cash nature of the transactions, Hughes‘s accompanying Allen to a storage warehouse in Phoenix wherein they found $2 million in cash that Hughes brought to Dallas, and the jury‘s own disbelief of Allen‘s Joe Brown story. Whether the jury believed, as Hughes wanted them to, that “[a]dmit-
B.
Allen also challenges the sufficiency of the evidence to support the finding that she had knowledge of the criminal origin of the money. Allen notes correctly that Chambers testified that he never actually told her that his money was drug-tainted, and thus she concludes that the jury should have believed her Joe Brown story. What Allen neglects, however, is the additional evidence that Betty knew that Chambers had a drug problem, that she had testified at his detention hеaring in May 1989, during which time
C.
We similarly reject Jerri‘s sufficiency challenge.9 Again, Jerri contends that Chambers‘s testimony that he never told her that he was in fact a drug dealer compels a reversal. The evidence did establish, however, that Jerri was aware of the large sums of
D.
Hughes and Jerri next challenge the sufficiency of the evidence presented to prove that the financial transactions at issue were designed “to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity.”
This objection is without merit, as the following exchange on
Q. And why did you start stashing your money in Marathon, Texas, with Betty Allen?
A. Because I trusted her. She was my friend and I felt it was the safest place for my money at the time.
Q. Did you have any intent to hide the money from law enforcement officers?
A. Yes, ma‘am.
Q. And why is that, sir?
A. Well, I wouldn‘t have any means to prove that it was mine.
The government need only prove that Hughes and Jerri were aware of Chambers‘s and Allen‘s intention to conceal or disguise the nature of the money, not that Hughes and Jerri themselves so intended. See United States v. Campbell, 977 F.2d 854, 858 (4th Cir. 1992), cert. denied, 507 U.S. 938 (1993). Additionally, the fact that Allen‘s and Chambers‘s names were listed on the promissory notes documenting the purported loan transactions does not undermine the government‘s case. See Lovett, 964 F.2d at 1034 n.3 (noting that the money laundering statute is “not aimed solely at commercial transactions intended to disguise the relationship of the item purchased with the person providing the proceeds; the statute is aimed broadly at transactions designed in whole or in part to conceal or disguise in any manner the nature, location, source, ownership or control of the proceeds of unlawful activity.). The jury was entitled to infer from the defendants’
We disagree with defendants that United States v. Dobbs, 63 F.3d 391 (5th Cir. 1995), and United States v. Gonzalez-Rodriguez, 966 F.2d 918 (5th Cir. 1992), require anything different. In Gonzalez-Rodriguez, we reversed a money laundering conviction against the girlfriend of an alleged drug dealer because we noted that her disclosure to law enforcement officials that she was carrying $8,000 in cash followed by her turning the money over to the officials to count hardly evinced an intent to conceal or disguise the funds. Id. at 926. Where, as here, such intent is present, Gonzalez-Rodriguez is inapposite. Similarly, Dobbs merely reiterates the general requirement that the government must рrove that the transactions were designed at least in part to launder money, “or otherwise to conceal the nature of funds so that it might enter the economy as legitimate funds.” Dobbs, 63 F.3d at 397. The government has met its Dobbs burden.
V.
A.
Hughes next challenges the enhancement of his sentencing offense by four levels under U.S.S.G. § 3B1.1(a). He asserts both that the district court erred because it failed to find that Hughes
We review the factual finding that a defendant is a leader or organizer for clear error. See United States v. Valencia, 44 F.3d 269, 271-72 (5th Cir. 1995). “A factual finding is not clearly erroneous if it is plausible in light of the record read as a whole.” Id. at 272.
Section 3B1.1(a) has two requirements: (1) The defendant must have been an organizer or leader of one or more other participants in the criminal activity, and (2) the scheme must have either included five or more participants or been otherwise extensive. U.S.S.G. § 3B1.1(a). The commentary defines a “participant” as a person who is criminally responsible for the commission of the offense, but who need not have been convicted. Id. commentary n.1.; United States v. Gross, 26 F.3d 552, 554-55 (5th Cir. 1994).
We do not find clear error in the conclusion that the criminal activities were “otherwise extensive.” The court noted that the record reflected the participation of numerous people conducting numerous transactions, including structuring 199 deposits in more than eleven financial institutions over a seven-month period. In light of the record as a whole, the court‘s findings are more than plausible.
Similarly, we reject Hughes‘s argument that the court failed to make a finding that he was a leader or organizer of one or more
With respect to a finding regarding the criminal responsibility of those to whom Hughes gave directions, the district court adopted the presentence report (“PSR“), which contains a finding of criminal responsibility on the part of the Hughes children and the company comptroller. Specifically, the court stated, “All other objections affecting the guidlеine calculations are overruled, and I accept the presentence report and the addendums thereto.” Although the finding could have been made more specific, we do not see clear error in the determination of criminal responsibility.10
B.
Jerri objects to the district court‘s findings at her sentencing hearing. We have held that under the sentencing guidelines for conspiratorial conduct, a district court must find both (1) that the defendant agreed to undertake jointly criminal
Although a court must make an express finding that the conspiratorial activity at issue satisfies these requirements, we nevеrtheless have rejected the proposition that the court must make a “catechismic regurgitation of each fact determined.” United States v. Sherbak, 950 F.2d 1095, 1099 (5th Cir. 1992). Courts may adopt the findings of the PSR, but they must make it clear that they have so adopted the PSR, in order that the reviewing court is not left to second-guess the basis for the sentencing decision. United States v. Carreon, 11 F.3d 1225, 1231 (5th Cir. 1994).
We disagree with Jerri that the court failed to make findings that the monies attributed to her were within the scope of the agreement and were reasonably foreseeable to her. The probation office, in preparing the PSR, enhanced Jerri‘s sentence based upon her participation in the conspiracy to launder in excess of $3.5 million. In a written objection to the PSR, Jerri argued that she should not be held accountable for that entire amount, but rather that her liability was limited to the $90,000 used in the purchase of her home. The probation office, in response, filed a written addendum noting that the court was entitled to make such a finding, but, in any event, Jerri would not be entitled to a role reduction.
Jerri again argued at the hearing that her responsibility was limited to the $90,000 home purchase “although she assisted her mother by attending that [August 8 Chambers] meeting much later after all the events were pretty well concluded.” After a long colloquy with Jerri and with the government, the court finally overruled Jerri‘s objections, noting:
I find the tape recording, clearly that alone—plus there was other еvidence in this case. As I recall, there was the Sons of the West theater and the involvement with that.
And, again, her participation, which certainly the participation in the discussion on that tape, as I recall it, would not be considered minimal. I mean, I seem to recall she was a player in the conversation.
The court‘s findings are not clearly erroneous. We agree with the government that “while the finding is not a model of clarity, it is plain enough when read in context” and demonstrates attention to the two Evbuomwan factors. Unlike the court in Hooten, 942 F.2d at 881, which summarily refused to address the defendant‘s objections to the PSR and thereby left no basis for the appellate court to review its factual findings, the instant court entertained Jerri‘s objections and ultimately found them factually erroneous. Thus, with an amplе predicate for the court‘s findings on record, we find no clear error.
Finally, Jerri argues that although the jury found that she knew the monies were derived from some specified unlawful activity, it never found expressly that she knew that the monies were derived from the importation, sale, or distribution of narcotics. Thus, she asserts, the enhancement of her sentence for involvement with narcotics or controlled substances is clearly erroneous. The PSR addressed this argument in a written addendum, noting that each of Count 1 and Count 15 under which Jerri was convicted required that the jury find that Jerri had knowledge that the source of the monies was from “some specified unlawful activity, that is, the sale and distribution of narcotics.” Furthermore, the PSR made its own factual findings in this regard, pointing to the evidencе in the record to support Jerri‘s awareness of the drug taint of the money.11
As noted above, the district court need not undertake a “catechismic regurgitation of each fact determined,” Sherbak, 950 F.2d at 1099, but may adopt the factual findings of the PSR. The court so adopted the PSR in the instant case, and we do not see
The judgments of conviction and sentence are AFFIRMED.