Case Information
*1 Before TYMKOVICH , ANDERSON , and MATHESON , Circuit Judges.
Defendant Joseph Angelo Sivigliano was convicted of conspiracy to commit wire fraud and securities fraud, as well as numerous counts of wire fraud and money laundering, all of which arose out of a Ponzi scheme he managed involving a real estate flipping operation that promised a very lucrative monthly rate of return to investors. He now appeals, contending that the government’s proof was legally *2 insufficient in certain respects. [1] On de novo review, United States v. Baker , 713 F.3d 558, 562 (10th Cir. 2013), we affirm for the reasons stated below.
FACTUAL BACKGROUND
A brоad summary of the government’s case against Mr. Sivigliano will put his
particularized appellate contentions in focus. Of course we consider the evidence in
a light most favorable to the government.
United States v. MacKay
,
The investment scheme was operated through Helping Hearts and Hands, Inc. (HHH), a previously dormant 26 U.S.C. § 501(c)(3) charitable corporation provided for Mr. Sivigliano’s use by Mr. Pimson, who served as his right-hand man. The government’s case focused on the primary investment program HHH offered: clients invested funds in $10,000 increments that HHH was tо use in purchasing foreclosed properties in Oklahoma City that would promptly be brought up to resale condition and sold at a profit, providing proceeds from which investors whose funds had been *3 used (singly or in combination with others’) tо buy property were to be paid a five percent return each month. Investors received documents reflecting their investments and the properties purportedly securing them. In fact, however, the documents were not rеcorded, so they provided no security. Moreover, the properties were at times worth less than the (sometimes multiple) investments purportedly secured, and in some instances HHH did not even own the designated property.
Initially, this program was offered to investors in Oklahoma, but in late 2006 and early 2007 HHH began marketing to a wider audience through investment seminars in California. Records for 2006-2007 showed participation by more than 65 investors, with some $3.8 million invested. As agent Carver explained, these records also showed that, contrary to what investors were told, their money was actually being used, at least in part, to cover other investors’ returns, in classic Ponzi fashion. This point was made as well in testimony from Vеnus Smith, who as secretary to Mr. Sivigliano provided investors with the documentation for their investments. The same records and testimony showed that investment money was also misdirected to pay personal expenses and fund collaterаl business ventures of Mr. Sivigliano and his co-conspirators.
The scheme collapsed in the summer of 2007, resulting in extensive losses for HHH investors. Upon his conviction, Mr. Sivigliano was ordered to pay $2,214,522 in restitution to his victims.
CONTENTIONS ON APPEAL
Mr. Sivigliano contends that the govеrnment failed to offer sufficient evidence
to prove (1) an intent to defraud investors; (2) an agreement to commit wire and
securities fraud for the conspiracy count; and (3) the offering and sale of securities
for the conspiracy and money laundering counts (the latter require use of proceeds
from unlawful activity, here identified as securities fraud). He also generally
contends that the commingling of funds in HHH accounts left the government
without definitive proof оf particular funds being used for particular transactions. In
addressing these contentions we consider the direct and circumstantial evidence,
along with all reasonable inferences therefrom, in a light most favorable to the
government, deferring to the jury’s determination of guilt unless “no rational trier of
fact could have found the essential elements of the crime beyond a reasonable
doubt.”
United States v. Cornelius
,
A. Proof of Fraudulent Intent
The evidence of intent to defraud was undeniable. Indeed, some of it came
from Mr. Sivigliano himself. He admitted to agent Carter in an interview that he told
investors their money would be used only to purchase properties pursuant to the
*5
investment program outlined above, when in fact he was using it for other purposes
as noted above, including simply covering returns owed to other investors. He was
even using their money to fund strawman purchases (particularly by Ms. Smith) of
the very properties that HHH was purportedly selling to third parties to generate
investor returns. Intent to defraud may be inferred from misrepresentations, attempts
to conceal activity, and conversion of money for the defendant’s own use.
United
States v. Bailey
,
B. Proof of Agreement
The record also contains sufficient evidence from which a jury could properly
infer the existence of the agreement necessary for conspiracy.
United States v.
Dazey
,
C. Proof of Sale of Securities
There was also a sufficient basis tо find that the investments HHH sold were
securities. Mr. Sivigliano contends the investments were nothing more than ordinary
real estate transactions, which are not treated as securities because the purchaser
obtains something of inherent value—land to develop, a home to reside in, a building
to occupy—rather than just an entrepreneurial promise of a return on investment,
see United Hous. Found., Inc. v. Forman
,
We have carefully reviewed the trial record in light of the various contentions advаnced by the parties on appeal. We conclude there was ample evidence to support the jury’s determination that the relevant investments constituted securities.
D. Commingling/Tracing Objection
Finally, Mr. Sivigliano repeatedly voices the genеral objection that the HHH
accounts involved in the charged offenses contained at least some funds from legal
activities and that the government failed to offer definitive evidence tracing funds
derived from illegal activities to their subsequent use by him or HHH. This objection
is irrelevant to the wire fraud counts. These were complete when, as charged in the
indictment, the victims wired their funds
into
the accounts.
United States v.
Kennedy
,
That leaves the money laundering counts, which did require a further financial
transaction involving illegally derived proceeds held in HHH accounts (i.e., some use
of the funds obtained as a result of the securities fraud practiced on investors). 18 U.S.C. §§ 1956(a)(1)(A)(i) (requiring “financial transaction” involving “proceeds
of specified unlawful activity”), 1957(a) (requiring a “monetary transactiоn” in
property “derived from specified unlawful activity”). But in this circuit (as in some
others), when legal and illegal funds are commingled in an account from which
transfers are made, the government is not required to trace particular illegal funds to
particular transfers to prove the use-of-unlawful-proceeds element of money
laundering.
See Dazey
,
The judgment of the district court is affirmed.
Entered for the Court Stephen H. Anderson Circuit Judge
Notes
[*] After examining the briefs and appellate record, this panel has determined unanimously to grant the parties’ request for a decision on the briefs without oral argument. Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estоppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
[1] In his summary of argument, Mr. Sivigliano also states, in passing and without
elaboration, “that his Sixth Amendment confrontation clause rights were violated.”
Opening Br. at 14. But the point is never argued in his brief, so we do not consider
it.
See, e.g.
,
LaFevers v. Gibson
,
[2] Both Mr. Pimson and Ms. Smith pleaded guilty to conspiracy in connection with the scheme.
[3] In his opening brief Mr. Sivigliano also contended that the government did not prove that the purportеd securities were required to be registered under Oklahoma law. We agree with the government that, as failure to register was not a separately charged offense or an element of any of the offenses charged, registration vel non is immaterial to Mr. Sivigliano’s convictions.
[4] Mr. Sivigliano insists he did not, in any event, start out with the intent to defraud investors. Not surprisingly, he cites no authority for his tacit premise that an illegal conspiracy or enterprise is excused if it only turned to fraud because of the failure of an оriginally legal business model. We decline to adopt that facially untenable proposition.
[5] They held themselves out as man and wife, though Ms. Smith (then using the name “Venus Pimson”) was still married to someone else.
[6] We note that the theory on which the case was tried and the jury reached its verdict was framed by instructions agreed upon by the parties and given without objection, either at trial or on appeal.