United States v. Martinez , 808 F.3d 97 ( 2015 )

United States Court of Appeals
For the First Circuit
Nos. 13-2462
14-1127
UNITED STATES,
Appellee,
v.
KARAPET DZHANIKYAN AND RONALD J. MARTINEZ,
Defendants, Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Barron, Selya, and Lipez,
Circuit Judges.
Amy M. Belger for appellant Dzhanikyan.
Derege B. Demissie, with whom Demissie and Church was on
brief, for appellant Martinez.
Kelly Begg Lawrence, Assistant United States Attorney, with
whom Carmen M. Ortiz, United States Attorney, was on brief, for
appellee.
December 11, 2015
BARRON, Circuit Judge. In these consolidated criminal
appeals, Karapet Dzhanikyan and Ronald Martinez raise a number of
challenges to their convictions, including some that concern the
District Court's decision to try the two men together. For the
reasons set forth below, we affirm each of the convictions except
for Martinez's conviction for conspiring to use extortionate means
to collect an extension of credit in violation of 18 U.S.C. §
894(a).
I.
The initial indictment charging Dzhanikyan and Martinez
was handed down in 2011 and arose out of a year-long wiretap
investigation of a suspected drug trafficker named Safwan
Madarati. A superseding indictment, containing eleven total
counts and naming fifteen defendants, was handed down in 2012.
Five counts of the superseding indictment named
Dzhanikyan or Martinez. Dzhanikyan was charged with one count of
conspiring with Madarati and others to distribute oxycodone, in
violation of 21 U.S.C. § 846 (Count 1). Martinez was charged with
two counts of conspiring with Madarati and others to attempt to
collect a debt through extortionate means, in violation of 18
U.S.C. § 894(a) (Counts 2 and 3), and two counts of possessing
crack cocaine with intent to distribute it, in violation of 21
U.S.C. § 841(a)(1) (Counts 10 and 11).
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Before trial, Martinez moved to be tried separately from
all of his co-defendants, including Dzhanikyan. Martinez also
moved to be tried separately on each of the four counts he faced.
In January of 2013, the District Court denied Martinez's motions
for severance. Dzhanikyan made no pre-trial severance motion.
By the time the trial began on June 3, 2013, all of the
co-defendants of Dzhanikyan and Martinez had pleaded guilty. The
trial thus proceeded with only Dzhanikyan and Martinez as
defendants.
After the presentation of the evidence at trial,
Martinez moved under Federal Rule of Criminal Procedure 29(a) for
acquittal on all the counts for which he had been charged. The
District Court granted Martinez's motion as to the first of the
two counts that had charged him with using extortionate means to
collect an extension of credit (Count 2). That extortion count
charged Martinez with conspiring to use extortionate means to
collect an extension of credit by Madarati to a jewelry store
owner. The alleged extortionate means involved shooting the
store's windows and resulted in injuries to several people.
The District Court denied Martinez's motion as to the
remaining counts against him, including as to the second extortion
count (Count 3). That extortion count charged Martinez with
conspiring to use extortionate means to collect a separate
extension of credit by Madarati. The alleged extortionate means
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involved an attempted break-in of the house of the purported
debtor.
Following the District Court's ruling on the Rule 29(a)
motion, jury deliberations began. In the midst of the
deliberations, the jury submitted two questions to the District
Court. One of those questions is at issue in these appeals: "Can
we use all the evidence presented during the trial as we evaluate
each individual charge?" The District Court proposed to answer
that question by saying simply, "Yes."
Martinez's counsel raised a concern about the proposed
answer. She requested that the District Court make clear that the
jury could not rely on evidence from Martinez's by-then dismissed,
jewelry-store extortion count in considering (at least) the
remaining extortion count against Martinez. Martinez's counsel
did not actually propose such an instruction, however. Martinez's
counsel explained that she would need some time to come up with
the right wording. The District Court made clear that in its view
there was no need for any limiting instruction. Dzhanikyan raised
no objection to the District Court's proposed answer to the jury's
question.
The District Court called the jurors back into the
courtroom and told them that the answer to their question was,
"Yes." After addressing the jury's other question, the District
Court asked the jury: "And you understand the use of all of the
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evidence with respect to each charge as it applies to that charge?"
The jury responded by "nodding."
The jury returned guilty verdicts against Dzhanikyan and
Martinez on all four remaining counts. Following the verdicts,
the defendants moved for both a judgment of acquittal under Federal
Rule of Criminal Procedure 29(a) and a new trial under Federal
Rule of Criminal Procedure 33.1 The motion for a new trial
contended that the District Court's "Yes" response to the jury's
question resulted in "evidentiary spillover," a "variance," and
"retroactive misjoinder." The District Court denied the
defendants' Rule 29(a) motions and their joint motion for a new
trial.
In considering the defendants' challenges on appeal, we
start with their individual challenges to the District Court's
initial decision to try them together and to the District Court's
denial of their joint motion for new trial. We then consider
Martinez's separate challenges to his extortion conviction on
Count 3.
II.
"[A] trial judge has 'considerable latitude' in deciding
severance questions," and thus, even when a challenge to a decision
to try a defendant jointly has been properly preserved, "the
1 Technically, Martinez filed a motion for a new trial and
then Dzhanikyan moved to join that motion.
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judge's resolution of [those questions] 'will be overturned only
if that wide discretion is plainly abused.'" United States v.
O'Bryant, 998 F.2d 21, 25 (1st Cir. 1993) (quoting United States
v. Natanel, 938 F.2d 302, 308 (1st Cir. 1991)). An abuse of
discretion in declining to sever a trial may be found, however, if
a defendant "who seeks a separate trial can . . . mak[e] a strong
showing of evident prejudice." Id. And that strong showing may
be made "if there is a serious risk that a joint trial would . . .
prevent the jury from making a reliable judgment about guilt or
innocence." Id. (quoting Zafiro v. United States, 506 U.S. 534,
539 (1993)). With that background in place, we now turn to the
challenges the defendants bring -- both individually and jointly --
to the decision to try them together.
A.
Dzhanikyan contends that there was a serious risk here
that, in consequence of the joint trial, the jury would not be
able to render a reliable verdict because the evidence the
government intended to put forth about Martinez's involvement in
the two alleged extortion schemes was "highly inflammatory and
prejudicial."2 Dzhanikyan did not raise this challenge below,
2
The evidence concerning Count 2 included testimony that a
man the government maintained was Martinez shot bullets through
the windows and display cases of a jewelry shop, injuring several
bystander employees of the shop. The evidence concerning Count 3
included testimony that a man the government named as Martinez
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however, and so his challenge, if not waived, is subject to review
only for plain error. See United States v. Magana, 127 F.3d 1, 7
(1st Cir. 1997) (reviewing unpreserved misjoinder claim for plain
error).3
To satisfy the demanding plain-error standard,
Dzhanikyan must show that "(1) an error occurred, (2) the error
was obvious, (3) the error affected substantial rights, and (4)
the error seriously impaired the fairness, integrity, or public
reputation of judicial proceedings." United States v. Lanza-
Vázquez, 799 F.3d 134, 145 (1st Cir. 2015) (citation and internal
quotation marks omitted). But he cannot make that showing.
It is not obvious that the government's evidence about
Martinez's use of extortionate means to collect an extension of
credit would create a serious risk that the jury would be prevented
from making a reliable judgment about Dzhanikyan's role in
committing the distinct and unrelated drug conspiracy crime for
which he was charged. That evidence, to be sure, did involve
attempted to break into the home of a purported debtor in the
middle of the night.
3
The government argues in its brief that this argument has
actually been waived because Dzhanikyan made no timely motion for
severance under Federal Rule of Criminal Procedure 12(b)(3). See
United States v. Oquendo-Rivas, 750 F.3d 12, 17 (1st Cir. 2014)
(finding waiver in the context of another untimely 12(b)(3)
motion). But we need not decide here when a failure to file a
pre-trial motion to sever might constitute a waiver, because
Dzhanikyan's challenge fails even if we apply the plain-error
standard.
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descriptions of very violent activity. But given the minimal risk
that the jury would believe that the evidence against Martinez
pertaining to extortion was relevant to the government's case
against Dzhanikyan for drug distribution, we conclude that
Dzhanikyan has not shown that the District Court plainly erred in
exercising its broad discretion to decide whether to sever
Dzhanikyan's trial from that of Martinez. See United States v. De
La Paz-Rentas, 613 F.3d 18, 23 (1st Cir. 2010) (rejecting a
defendant's severance challenge where the trial included
"substantial" evidence of his co-defendants' gun dealings -- with
which the defendant had no involvement -- but where "there was no
reason for the jury to be confused about [the defendant's] role").
B.
Before trial, Martinez offered a different reason for
contending that the District Court should try the two defendants
separately. Martinez contended that the decision to try the two
of them together risked prejudicing the jury's ability to make a
reliable judgment about whether Martinez intended to distribute
the crack cocaine that he was charged with possessing.
On appeal, the government contends that Martinez has
failed to renew this challenge to us and that this challenge has
therefore been waived. But even assuming the government is wrong
on that score, Martinez's challenge to the District Court's
decision not to sever his trial from Dzhankiyan's still fails.
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Martinez bases his severance argument on the evidence
that the government was to put forth concerning Dzhanikyan's
alleged involvement in Madarati's alleged drug-distribution
conspiracy. That evidence concerned Dzhanikyan's alleged travel
to California to make substantial purchases of oxycodone pills on
behalf of Madarati. Martinez contends that this evidence regarding
his co-defendant's alleged involvement in drug distribution would
prejudice the jury's evaluation of whether Martinez possessed the
requisite intent to distribute the drugs that he was charged with
possessing.
Martinez points out that other evidence supported his
contention that he possessed the drugs for personal use. And he
points in that regard to the trial testimony of an expert witness
that the amount of crack cocaine with which Martinez was charged
with possessing -- 3.25 grams of crack cocaine -- was consistent
with possession for personal use rather than with possession with
an intent to distribute.
But Martinez does not contend on appeal that his trial
on the extortion counts should have been severed from his trial on
the crack cocaine possession count. And thus Martinez necessarily
concedes that even if his trial had been severed from Dzhanikyan's,
the jury still would have been exposed to evidence about Madarati's
drug distribution conspiracy. After all, to show that Martinez
conspired to use extortionate means to collect an extension of
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credit, as Count 3 alleged, the government needed to put forward
evidence that there was an "extension of credit." And the
government's case in that regard consisted, in significant part,
of evidence that a man named Victor Loukas had traveled more times
to California on behalf of Madarati than had Dzhanikyan, and as
part of Madarati's drug-distribution conspiracy, to buy more total
oxycodone pills for more money than had Dzhanikyan.
In consequence, any severance challenge Martinez makes
on appeal necessarily amounts only to a complaint about the
incremental additional risk of prejudice that would arise from the
jury hearing more about a topic about which the jury would already
have heard much. We thus do not see how Martinez can successfully
contend that the jury's exposure to the additional evidence about
drug distribution that pertained to Dzhanikyan created the kind of
"serious" risk of prejudice that could suffice to show that the
District Court abused its discretion in deciding to try Martinez
and Dzhanikyan together. See O'Bryant, 998 F.2d at 25, 27. We
thus reject Martinez's challenge to the District Court's initial
decision to decline to sever his trial from that of his co-
defendant.
C.
Looking past the District Court's initial decision not
to sever the trials of Martinez and Dzhanikyan, the defendants
contend -- as they did in their joint motion for new trial -- that
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they were impermissibly prejudiced once the trial began by the
"yes" answer that the District Court gave to the jury's question
about which evidence the jury could use. Specifically, the
defendants renew their contention that the District Court's answer
to the jury's question caused "evidentiary spillover," resulting
in a "variance," in which the crimes charged against them varied
from the crimes for which they were ultimately convicted, see
United States v. Dellosantos, 649 F.3d 109, 116 (1st Cir. 2011),
or a "retroactive misjoinder," in which trying the defendants
together was rendered improper by developments at trial, see United
States v. Mubayyid, 658 F.3d 35, 72 n.39 (1st Cir. 2011).
But the defendants' contention does not hold up.
"[I]nstructions must be evaluated not in isolation but in the
context of the entire charge." Jones v. United States, 527 U.S.
373, 391 (1999). And once the District Court's answer to the jury
is considered in this way, it becomes clear that the District
Court's answer to the jury's question did not give rise to the
concern about the claimed "evidentiary spillover" on which the
defendants' variance and retroactive misjoinder challenges depend.
In its main charge, the District Court expressly
instructed the jury that the defendants were "charged with
different crimes" and that the jury had a duty to "consider the
evidence separately as to each defendant and as to each count which
a defendant is charged." The District Court then explained each
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count as it related to each defendant and instructed the jury what
it would need to find to convict each defendant on each count.4
And, finally, the District Court sought to confirm the jury's
proper understanding of the instructions as a whole. The District
Court did so by saying, after offering its "yes" answer to the
4 On Dzhanikyan's conspiracy charge, the District Court
explained as follows: "Let me turn now to Count 1, which is the
specific conspiracy to distribute OxyCodone, and only Mr.
Dzhanikyan is charged in that. . . . So, review the evidence, what
was Mr. Dzhanikyan's conduct in connection with the purchase and
sale of any pills, what conversations did he have with Mr. Madarati
or others, what did he know about any agreement among Madarati and
others to distribute drugs, and then determine whether there was
an agreement to distribute OxyCodone as charged, and then whether
the government has proven that Mr. Dzhanikyan did knowingly and
intentionally join in the conspiracy."
On Martinez's conspiracy-to-extort charge, the court
explained: "The next count is Count 3, which pertains to only Mr.
Martinez. . . . Again, review the evidence, consider evidence of
Mr. Madarati's and Kabba's conversations. What, if anything, did
Mr. Martinez do or attempt to do? What, if any, financial
arrangements existed between Mr. Loukas and Madarati? In
particular, had Madarati made a loan to Loukas or agreed to defer
repayment of an existing debt? That is, was there a loan or an
extension of credit to Loukas by Madarati or any co-conspirator?
If there was not, then the defendant cannot be found guilty."
And on Martinez's charges of possession with intent to
distribute, the court explained: "You need to look at all the
evidence and decide whether he intended to sell it or give it away
or transfer it to somebody else or whether he had this cocaine
only for his personal use. . . . You may take into account how
much cocaine he had, and you must certainly look at his state of
mind about this, because intent to distribute, again, involves the
defendant's state of mind. So, you need to infer that from his
words, his conduct, and all of the surrounding
circumstances . . . ."
Finally, the court concluded the charge by reiterating: "And,
again, the government has to prove each and every element of each
offense and only if the government proves each element of each
offense, can you find the defendant guilty."
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jury's question about what evidence could be "used": "And you
understand the use of all of the evidence with respect to each
charge as it applies to that charge?"
Thus, considered in the context of the instructions as
a whole, the District Court's one-word affirmative answer to the
jury's question did not effectively instruct the jury that it could
use evidence of one crime to make a judgment of guilt about a
separate crime to which that evidence had no relation.
Accordingly, the defendants' challenge to the District Court's
denial of the motion for a new trial must fail.
III.
We now turn to Martinez's separate challenges to his
conviction on Count 3. In that count, the government charged
Martinez with violating 18 U.S.C. § 894(a) by conspiring with
Madarati and another man (named Kabba) to use extortionate means
to attempt to collect an "extension of credit" that had been made
by Madarati.
A.
Martinez raised his sufficiency-of-the-evidence
challenge in his motion for acquittal, and so we review the record
de novo. See United States v. Munyenyezi, 781 F.3d 532, 536 (1st
Cir. 2015). In doing so, we view the evidence and all reasonable
inferences that can be drawn from it in the light most favorable
to the verdict. Id. We may reverse the conviction only if on the
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basis of this evidence "no rational jury could have" found Martinez
guilty beyond a reasonable doubt. Id.
Thus, to sustain Martinez's conviction on this count,
the government must show that there was sufficient evidence from
which a rational jury could find not only that Martinez conspired
to use extortionate means, but also that Martinez had used those
means to collect payment for an underlying "extension of credit"
from Madarati. Martinez contends that there was not sufficient
evidence to support the conviction because the record provides too
little evidence that Madarati had made an "extension of credit."
And we agree with Martinez on this point.5
B.
In evaluating Martinez's challenge, we start with the
text of the criminal statute and how it defines what an "extension
of credit" is. Under 18 U.S.C. § 894(a)(1), it is a crime to
"knowingly participate[] in any way, or conspire[] to do so, in
the use of any extortionate means . . . to collect or attempt to
collect any extension of credit." The statute then defines "[t]o
extend credit" as "to make or renew any loan, or to enter into any
agreement, tacit or express, whereby the repayment or satisfaction
5 We thus need not consider Martinez's other ground for
challenging this conviction -- his contention that he was subjected
to a retroactive misjoinder on Counts 2 and 3 after the District
Court granted his motion for acquittal on Count 2, due to the
prejudicial effect of the jury's exposure to the evidence the
government put forth against him on the acquitted count.
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of any debt or claim, whether acknowledged or disputed, valid or
invalid, and however arising, may or will be deferred." Id. § 891
(1).
The government charged Martinez with conspiring with
Madarati to use extortionate means (making threats and planting
evidence) to attempt to collect an alleged "extension of credit"
that Madarati had made to Victor Loukas. Loukas was the man who
took two trips to California to purchase thousands of dollars of
oxycodone pills for Madarati with Madarati's money.
In giving Loukas money to buy pills for Madarati,
Madarati was not fronting money to Loukas for his personal use.
Madarati was supplying Loukas with the means to perform a service
for Madarati -- namely, purchasing drugs that Madarati could then
re-sell. Thus, consistent with its presentation to the jury below,
the government does not argue on appeal that, in giving the money
to Loukas to make the purchases, Madarati made a "loan" within the
meaning of § 891. Cf. United States v. Bruce, 405 F.3d 145, 149-
50 (3d Cir. 2005).6
But, as the plain text of § 894 reveals, the statute has
a broad reach and clearly bars the use of extortionate means to
6
In addition to the money that Loukas received from Madarati
to buy the pills for Madarati, Loukas also testified that Madarati
paid him $10,000 for the two solo trips to California that Loukas
made on Madarati's behalf. The government does not argue that
such a payment for services constituted a loan within the meaning
of § 894, and we agree that it did not.
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collect payment for more than traditional "loans." See United
States v. Hoyle, 237 F.3d 1, 6 (1st Cir. 2001) (citing United
States v. Sedlak, 720 F.2d 715, 720 (1st Cir. 1983)). In
particular, the statute covers any attempt to use extortionate
means to collect "an extension of credit." And the statute defines
that phrase expansively, so that it encompasses any "agreement,
tacit or express, whereby the repayment or satisfaction of any
debt or claim, whether acknowledged or disputed, valid or invalid,
and however arising, may or will be deferred." 18 U.S.C. § 891(1).
The key question, therefore, is whether the record
supplies "sufficient indicia" of such an agreement. See Hoyle,
237 F.3d at 7 (finding "sufficient indicia of agreement . . . to
conclude that an agreement to defer payment of the debts existed").
Before delving into what the record shows about whether such an
"agreement" existed here, however, we need to say more about what
is meant by the requirement that there be an "agreement."
In our last case addressing the issue, Hoyle, 237 F.3d
at 6-7, we noted that the Third Circuit has reasoned (in upholding
the sufficiency of an indictment under § 894) that "[w]hen a self-
styled creditor appears before his 'debtor' and demands
satisfaction, the creditor posits both a debt and the prior
deferral of its repayment." United States v. DiPasquale, 740 F.2d
1282, 1287 (3d Cir. 1984); see Hoyle, 237 F.3d at 6. And the Third
Circuit has cited the rule of DiPasquale in finding sufficient
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evidence of an "agreement to defer" payment -- and thus an
"extension of credit" -- to support convictions under § 894 on at
least two occasions. See Bruce, 405 F.3d at 149-50; United States
v. Traitz, 871 F.2d 368, 387-88 (3d Cir. 1989); cf. Hoyle, 237
F.3d at 6 (finding it unnecessary under the circumstances to rely
on DiPasquale to uphold the conviction).
But to the extent DiPasquale suggests that a mere demand
for payment, or even that a demand for payment that is not
immediately followed by the use of extortionate means, suffices to
show that there has been an agreement to defer payment and thus an
"extension of credit," we disagree. By its plain terms, the
statute distinguishes a mere debt from an "extension of credit" on
the basis of whether there has been an agreement to defer payment.
See United States v. Boulahanis, 677 F.2d 586, 590 (7th Cir. 1982)
("Section 894 does not make it a crime to use extortion to collect
debts, but only to exact repayment of credit previously
extended.").
Thus, when there is not a loan, we hold -- consistent
with the decisions of a number of our sister circuits -- that the
government must prove that the creditor manifested an assent (even
if only unilaterally and even if only tacitly) to defer payment.
See United States v. Wallace, 59 F.3d 333, 339-40 (2d Cir. 1995);
United States v. Stokes, 944 F.2d 211, 215 (5th Cir. 1991)
("[P]roof of some manifestation by the creditor of his assent to
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defer, however minimal, burdens the government's case.");
Boulahanis, 677 F.2d at 590 ("The extension of credit is a
deliberate act by a creditor.").7 Only then is there sufficient
evidence of an "agreement . . . whereby the repayment or
satisfaction of any debt or claim . . . may or will be deferred."
18 U.S.C. § 891(1).
Accordingly, in reviewing the record here, we are
looking not merely for evidence of a demand for immediate payment.
We are looking for what we found in Hoyle: "sufficient indicia of
agreement . . . to conclude that an agreement to defer payment of
the debt [] existed." See Hoyle, 237 F.3d at 7. Absent such
evidence, the conviction must be reversed.
The question of exactly what constitutes evidence of an
"agreement" for legal purposes is often not susceptible to a rule-
like answer. Rather, one must consider the facts in light of the
context. And this is true for the "agreement" referenced in § 891.
The same actions or communications may carry different
implications depending on that context. In some circumstances,
7 We recognize that in Hoyle, we expressly "decline[d] to give
[] much weight" to Boulahanis, Stokes, and Wallace, in part because
we thought they "require[d] more than [wa]s required in our
decision in Sedlak." Hoyle, 237 F.3d at 6. On further review,
however, we do not see a meaningful conflict between those cases
and Sedlak, at least with respect to the kind of evidence that
suffices to show an "agreement to defer." In fact, Sedlak did not
address that issue at all, because it found a loan, not an
agreement to defer. See Sedlak, 720 F.2d at 720-21.
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for example, a creditor's silence might fairly be characterized as
a tacit agreement to defer payment -- such as where the creditor
faces his debtor and stays silent rather than making or implying
a demand for immediate payment. See Hoyle, 237 F.3d at 6-7. But
in others, the creditor's silence may indicate only an intent not
to alter whatever message the creditor had most recently
communicated to the debtor. And where that message was a demand
for immediate payment, silence may indicate only that the prior
demand has not been withdrawn.
Thus, as the relevant precedents amply demonstrate,
determining whether the record in a given case includes "sufficient
indicia of agreement" to support the inference that a creditor
agreed to defer payment will often require a particularized review
of both the creditor's conduct and the surrounding context. Here,
our review of the record leads us to the conclusion that Madarati
never agreed -- tacitly or expressly -- to defer Loukas's payment.
C.
The government's brief is less than clear in identifying
the evidence in the record that suffices to show that Madarati
agreed to defer the payment of what Loukas owed. But at oral
argument, the government explained that it "doesn't contend that
the deferral occurred at the time Loukas took off to California
with the money." The government contended instead that the
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agreement to defer "repayment or satisfaction" occurred later,
when Loukas returned from California.
At that point, the government contends, Loukas did owe
Madarati either the pills that Loukas was to buy with Madarati's
money or the money itself. And, in the government's view, when
Madarati made contact with Loukas following his return to Boston
but then waited more than a week before undertaking extortionate
means to collect payment, Madarati tacitly agreed to defer payment
by Loukas.8
In pressing this contention, the government identifies
certain specific actions that Madarati took (or, in some cases,
failed to take) that allegedly show that he was tacitly agreeing
to give Loukas more time to pay. But, we conclude, the record
does not supply sufficient evidence of such a tacit agreement on
Madarati's part.
8 In his opening brief, Martinez argued that there was no
"debt" at all, because Loukas was merely Madarati's agent. But
Martinez does not explain why a jury could not reasonably find
that Loukas became Madarati's debtor, at the latest, upon Loukas's
return from California when he failed to provide Madarati with
either the pills or the money, and we see no basis for concluding
that a jury could not so find. See United States v. Bonanno, 467
F.2d 14, 15-17 (9th Cir. 1972) (finding a debt on similar facts).
Martinez also argues that Loukas's decision to steal Madarati's
money "did not create an extension of credit," because it was
"simply a theft." But the key issue is whether Madarati agreed to
give Martinez more time to pay, and the reason for Loukas's
default -- namely, whether he stole the pills -- has no bearing on
that issue.
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To see why, it first helps to describe what the record
shows about what had transpired before Madarati met with Loukas
when Loukas came back to Boston from his trip to California.
Loukas testified that on March 29, 2011, as he was on his way to
the airport in Los Angeles at the end of his second solo trip to
California on Madarati's behalf, he called Madarati. In that call,
Loukas testified, he told Madarati that the police had pulled
Loukas over while Loukas was heading to the airport and confiscated
all the pills that Loukas had just purchased with Madarati's money.
In truth, however, according to Loukas's testimony,
Loukas had purchased the pills for Madarati as requested but then
given the pills to a friend who sold the pills on his own and split
the profit with Loukas. In other words, Loukas testified, the
police had not confiscated the pills. Instead, Loukas stole the
pills from Madarati and then came up with a cover story to tell
Madarati in order to hide his theft.
There is no evidence in the record about how Madarati
responded to Loukas's false story when he first heard it. But
Loukas conceded in his testimony that the story he told Madarati
was an "outrageous" one that no one would likely believe. And
thus it is not surprising that the record shows that when Loukas
arrived in Boston, he "basically disappeared for a day," such that
Madarati "had no idea where I was."
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In light of what the record shows regarding these events,
a rational jury could not find that Madarati assented -- even
tacitly -- to give Loukas more time to provide the pills or the
money as of the first day after Loukas had returned to Boston.
The record shows only that, as of that time, Loukas had told
Madarati an "outrageous" lie to explain why he did not have the
pills or the money and that Loukas then effectively hid from
Madarati upon returning to Boston.
Nor does the record provide sufficient evidence from
which a jury could reasonably find that Madarati assented to the
deferral of Loukas's payment thereafter. To explain why we reach
this conclusion, we begin with what the record shows about the
first contact that Loukas made with Madarati after Loukas came
back to Boston.
Loukas testified that "about a day" after he got back
from Los Angeles, Loukas turned his phone back on, called Madarati,
and "told him to meet me at my home." According to the testimony
given by Loukas, he and Madarati talked for about an hour when
they met on March 30. At that meeting, according to Loukas's
testimony, Loukas repeated the same false story that he had relayed
to Madarati over the phone from California. Then, Loukas
testified, at Madarati's suggestion the two men left Loukas's house
in Madarati's wife's car and drove to a convenience store.
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Loukas testified that during that ride, Madarati made no
threats to Loukas and that "[a]t that moment I thought he was
buying the story." But, Loukas's testimony reveals, Madarati
quickly changed his tone once the two men arrived at the
convenience store. Loukas testified that when the two men got to
the parking lot of the convenience store, "[Madarati] proceeded to
let me know that he hoped it wasn't me [who took the pills] because
he would take care of the problem like he did at the jewelry
store," referring to the jewelry-store shooting incident that
resulted in injuries to innocent bystanders (and provided the basis
for Count 2 of the indictment in this case).
Neither completely excusing a debt or claim, nor
threatening violence if no payment is made, can fairly be
characterized by itself as assenting to the deferral of the payment
of what is owed. And thus, on these facts, it would be "overly
speculative" for a jury to conclude that, in making clear the dire
consequences that would befall Loukas if he was lying about what
had happened to the pills, Madarati was actually agreeing to give
Loukas more time to pay the debt. See Wallace, 59 F.3d at 339
("[N]one of the evidence presented at trial amounted to the
formation of a credit agreement, because Wallace and his
representatives never agreed to defer the collection of their
money. After making their threats, they merely (and temporarily)
left Capri intact." (alterations and internal quotation marks
- 23 -
omitted)); United States v. Morillo, 158 F.3d 18, 22-23 (1st Cir.
1998) ("We must conduct a close review of the record and 'reject
those evidentiary interpretations and illations that are
unreasonable, insupportable, or overly speculative.'" (citation
omitted)).
That leaves only the time period between the parking-
lot conversation and the actual use of extortionate means. But
the record does not show that Madarati did anything during that
time period that would provide sufficient evidence for a jury to
find that Madarati was agreeing (even tacitly) to give Loukas more
time to pay.
The record shows that on March 31, the day after the two
men spoke in the convenience store parking lot, Madarati called
Loukas and repeatedly demanded his "shit," even telling Loukas he
would "see [him] today." Moreover, in the only other conversation
between the two men reflected in the record, Madarati spoke to
Loukas in Loukas's driveway and made clear to Loukas that Madarati
"wanted his money or he wanted the pills."9 Thus, Madarati did
not in these interactions in any way suggest that Loukas had more
time to pay.
9
The record is not clear on exactly when that conversation
took place, but Loukas's testimony appears to indicate that it
occurred shortly after the March 31 phone conversation.
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In arguing that Madarati nevertheless tacitly agreed to
defer the payment following the parking-lot conversation, the
government cites to a series of conversations between Madarati and
the third man charged in the conspiracy, Kabba, between April 1
and April 9. In those conversations, the two men discussed ways
to intimidate Loukas and to induce him to pay. The government
notes in particular an April 1 call between Kabba and Madarati
during which Madarati expressly chose not to go through with a
plan to frame Loukas by planting cocaine in his house and calling
the police. And the government contended at oral argument that
the delay between that call and the ultimate execution by Madarati
and Kabba of another version of their plan -- which led to
Martinez's arrest near Loukas's house on April 10 -- provides a
sufficient evidentiary basis for a jury to find that Madarati
tacitly agreed to a deferral given the time that passed before
Madarati resorted to the use of extortionate means.
But the record evidence concerning Madarati's
conversations with Kabba between April 1 and April 9 is not
sufficient to support a finding beyond a reasonable doubt that
Madarati was, despite his demands for immediate payment, actually
agreeing to allow Loukas to take more time to pay. In plotting
how best to effect the collection of what he was owed and what he
had demanded be paid, Madarati did not at any point withdraw his
earlier, clearly stated demand for immediate payment, which
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followed right on the heels of the parking-lot threat. Indeed,
during each conversation between Madarati and Loukas in the period
in question, Madarati demanded immediate payment from Loukas.
To be sure, as the government emphasizes, Madarati did
delay the use of extortionate means to collect payment for a number
of days. But it is the use of extortionate means to collect "an
extension of credit" -- and not their use to collect a debt --
that the statute prohibits. See Boulahanis, 677 F.2d at 590. And
thus evidence of a delay in using extortionate means to collect a
debt for which a demand for immediate payment has been made does
not itself suffice to show that credit has been extended. See
Wallace, 59 F.3d at 339.10
For these reasons, this case is not just like Hoyle, 237
F.3d at 6, even though the government, like the District Court,
relies on that precedent to support the conviction. In that case,
an electrician had provided electrical contracting services to
multiple customers without a written contract and without then
demanding "immediate payment." Id. Some months later, the
indictment charged, the electrician used extortionate means to
collect on the services. Id.
10 We note that the government, in its opening statement and
closing argument below, consistently characterized Martinez as a
"debt collector" or a "debt collection subcontractor" and as having
"enter[ed] a conspiracy to collect a debt by use of extortionate
means." At no point in the trial did it argue to the jury that
Madarati agreed to defer repayment of Loukas's debt to him.
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In sustaining a conviction under § 894 against a
sufficiency-of-the-evidence challenge, we held that on the record
in that case it was "logical to infer, at the very least, that
there was a tacit agreement to defer repayment of the debt" there
at issue. Id. And in explaining that "[o]nce the services were
provided and immediate payment was not demanded, an extension of
credit was established," we noted that it would have been
unreasonable for the beneficiaries of the services to have assumed
that the services were provided at no cost or that a bill would
not be forthcoming in "due course." Id.
But while in Hoyle the agreement to defer payment could
be "logical[ly]" inferred from the electrician's silence upon
providing the services, id., no similar logical inference can be
drawn from Madarati's actions (or inaction). The electrician chose
not to present a bill within any expected time frame. Id.
Madarati, by contrast, was not silent upon Loukas's return to
Boston. Instead, Madarati threatened him during their first
meeting and then made two explicit demands for payment in the only
two conversations that the record shows they had thereafter. And
while Madarati took a little more than a week to make good on his
threat, he did nothing in between that could reasonably be
understood as a withdrawal of the threat-backed demand for payment
he had just made.
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The District Court did also note that this case was
"arguably" similar to Hoyle for the separate reason that "it would
have been unreasonable for Loukas to assume that Madarati was
paying him (and providing resources) for services that would not
be performed." On that reasoning, the deferral of payment occurred
at the very outset of the transaction, when Madarati first gave
his money to Loukas, as Madarati would receive the pills (or the
money he had handed over) only later.
But, as we have explained, the government affirmatively
represented at oral argument that it was not contending that "the
deferral occurred at the time that Loukas took off to California
with the money," and the government instead has urged us to find
an extension of credit on the basis of the evidence of Madarati's
words and actions in the time period after Loukas returned to
Boston. Consistent with the government's view of when any
"deferral" could have occurred, the record shows that, in providing
the money to Loukas to buy pills on his behalf, Madarati was
providing the funds necessary for Loukas to carry out a task which
gave rise to a debt. The record provides insufficient evidence
that Madarati was at that time assenting to the deferral of its
repayment. Thus, on these facts, we agree with the government's
concession that there was no assent by Madarati to defer a deadline
for re-payment -- and thus no "extension of credit" -- prior to
Loukas's return from California.
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D.
Congress has made clear that § 894 is to be construed
broadly. H.R. Rep. No. 1397, at 31 (1968) (Conf. Rep.) ("[T]he
conferees wish to leave no doubt of the congressional intention
that chapter 42 is a weapon to be used with vigor and imagination
against every activity of organized crime that falls within its
terms."). And an agreement to defer payment need not be express
or even bilateral. See Hoyle, 237 F.3d at 6 (citing Sedlak, 720
F.2d at 720). Thus, on some facts, a creditor's delay in
collecting a prior demand for payment might suffice to show an
agreement to defer payment. But, consistent with Hoyle and the
plain text of § 891(a), the record in each instance must show
"sufficient indicia of agreement . . . to conclude that an
agreement to defer payment of the debts existed" in order for there
to be sufficient evidence to sustain that element of the crime.
See Hoyle, 237 F.3d at 7. And here, the record reveals only that
Madarati threatened harm to Loukas if he failed to pay what he
owed and then quickly followed up that threat by twice demanding
immediate payment while he finalized his preferred method of using
extortionate means to collect on the debt. We therefore cannot
conclude that the record supplies sufficient indicia that Madarati
agreed to defer payment at any point, and thus we must reverse
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Martinez's conviction as to Count 3 due to a lack of sufficient
evidence of any underlying "extension of credit."11
IV.
For the reasons set forth above, we reverse the
conviction of Ronald Martinez as to Count 3 and affirm in all other
respects.
11 The remaining published precedents on which the government
relies do not provide support for finding sufficient evidence of
an extension of credit on the record in this case. In United
States v. Garcia, 135 F.3d 951, 954 (5th Cir. 1998), the creditors
"manifest[ed] an assent to defer payment" by permitting the debtor
to pay for a portion of his purchase (of marijuana) and "allow[ing]
him to pay for the balance at a later date," which was consistent
with a prior course of dealing. There is no similar evidence in
the record here. In Bonanno, 467 F.2d at 15, the creditor demanded
that "at least $2,500" of a $5,000 debt "had to be repaid
immediately" and allowed the debtor additional time to pay the
balance. Here, there was no such express agreement. In United
States v. Charles, No. 92-3513, 1993 WL 299361, at *3 (7th Cir.
Aug. 3, 1993) (unpublished), the defendant challenged the
sufficiency of the evidence but not specifically whether the
government had proved an "extension of credit." And in United
States v. Neal, 692 F.2d 1296, 1301-03, 1308 (10th Cir. 1982), the
defendant raised a number of challenges relating to the sufficiency
of both the indictment and the trial evidence, but the court did
not specifically address the evidence sufficient to prove an
"extension of credit." The government does also cite to an
unpublished case from the Tenth Circuit, United States v. Enriquez,
No. 96-6185, 1997 WL 31567, at *2 (10th Cir. Jan. 28, 1997)
(unpublished), which upheld a conviction because the "defendant
several times set deadlines for payment which he later postponed."
But that opinion does not describe what evidence was in the record
that led it to conclude that "deadlines" had been "postponed."
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