United States v. Mario Naranjo ( 2011 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 08-13814 MARCH 2, 2011
________________________ JOHN LEY
CLERK
D. C. Docket No. 06-80151-CR-DTKH
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MARIO NARANJO,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(March 2, 2011)
Before EDMONDSON and PRYOR, Circuit Judges, and EVANS,* District Judge.
PRYOR, Circuit Judge:
*
Honorable Orinda D. Evans, United States District Judge for the Northern District of
Georgia, sitting by designation.
The main issue in this appeal is whether there is sufficient evidence to
support Mario Naranjo’s convictions for concealment money laundering related to
his operation of a Ponzi scheme that caused over one hundred victims to lose
collectively over $2.7 million. The government presented evidence that Naranjo
made three large cash withdrawals from bank accounts that contained fraudulently
obtained proceeds of the Ponzi scheme and that Naranjo attempted to hide his
association with the account holders. Viewed in the light most favorable to the
government, this evidence supports a finding that Naranjo intended to conceal the
ownership and source of funds obtained by fraud.
Naranjo also makes four other arguments. First, Naranjo argues that the
government failed to prove that he intended to defraud his victims and that we
should vacate his convictions for fraud and for various charges that relate to his use
of proceeds of the Ponzi scheme. Second, Naranjo contends that the government
failed to disclose evidence in violation of the Jencks Act, 18 U.S.C. § 3500, and the
Due Process Clause of the Fifth Amendment, see Brady v. Maryland, 373 U.S. 83,
83 S. Ct. 1194 (1963). Third, he argues that the district court violated his rights to
due process under the Fifth Amendment and to confront his accusers under the
Sixth Amendment by admitting summary evidence of financial records at trial.
Fourth, Naranjo argues that the district court erred when it enhanced his sentence
2
based on estimates of the losses he caused. These arguments lack merit. We
affirm Naranjo’s convictions and sentence.
I. BACKGROUND
On March 8, 2000, Naranjo incorporated MRNA Financial, Inc., in Florida
for the purpose of operating a check cashing and payday loan business. On June
28, 2001, Naranjo opened an account for MRNA at First Union Bank (later
Wachovia Bank) and designated himself as a signatory on the account. Although
MRNA was administratively dissolved on September 21, 2001, Naranjo kept the
MRNA account open and began to solicit capital from investors purportedly to
fund the business venture. MRNA received its first contributions from investors in
May 2002.
On January 29, 2003, Naranjo and Charles Carver incorporated in Florida
The Loan Shoppe, Inc., for the stated purpose of providing check cashing, payday
loan, and car loan services. Carver served as the sole officer and director of The
Loan Shoppe. Corporate filings listed Carver as the incorporator and originally
listed Naranjo as the registered agent, but a third person replaced Naranjo as the
registered agent on February 21, 2003. Thereafter, Naranjo was not listed on
corporate filings of The Loan Shoppe.
On February 7, 2003, Naranjo and Carver purchased an existing check
3
cashing business from Ouri Kahn for $24,000. Naranjo negotiated and financed
the purchase, but Carver signed the purchase agreement. Under the agreement,
Kahn assigned his leases for two stores in Miami and Davie, Florida, to Carver to
operate as The Loan Shoppe. Florida law did not allow Kahn to transfer his check
cashing license, so The Loan Shoppe submitted an application for a license to the
Florida Department of Financial Services soon after the acquisition of Kahn’s
stores. The license application represented that Carver would operate the business
and made no reference to Naranjo.
On February 24, 2003, Naranjo and Carver opened a bank account for The
Loan Shoppe at Wachovia Bank in Florida. The account listed both Naranjo and
Carver as signatories. After The Loan Shoppe began its operations, Carver helped
manage the business, but Naranjo, among other responsibilities, determined how
much working capital to provide the stores. Naranjo gave checks to Carver, who
cashed the checks and delivered cash to the stores.
In May 2003, the Florida Department of Financial Services requested
additional information about The Loan Shoppe and its owners to process the
license application. Instead of providing the requested information, The Loan
Shoppe withdrew its application for a state license. The Loan Shoppe continued to
provide check cashing services, but the Department later issued a cease and desist
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letter that stated that The Loan Shoppe could not cash checks without a license.
The Loan Shoppe never obtained a license to cash checks or issue payday loans in
Florida and instead affiliated with another check cashing company called
Intertransfers, Inc., in June 2003. This affiliation allowed The Loan Shoppe to
cash checks legally.
In the summer of 2003, Naranjo dispatched Carver to Alabama to develop
plans for the expansion of The Loan Shoppe into the Birmingham metropolitan
area. Carver and Naranjo soon announced that they were closing their Florida
stores and relocating their business to Alabama. Carver applied for a certificate of
existence for The Loan Shoppe and, on August 13, 2003, Carver registered The
Loan Shoppe, L.L.P., in Alabama. Registration documents listed Carver as the
president and agent. On September 26, 2003, Carver and a third party opened a
bank account for The Loan Shoppe, Inc. at the National Bank of Commerce in
Alabama. The Loan Shoppe never obtained an Alabama license, but operated three
check cashing stores in Pelham, Irondale, and Alabaster, which are suburbs of
Birmingham. The Loan Shoppe completed its relocation to Alabama and closed its
Florida stores in the late summer or early fall of 2003. Carver opened two more
bank accounts for The Loan Shoppe in Alabama in 2004. Carver and a third
person were largely responsible for managing the Alabama stores. Naranjo never
5
visited the Alabama stores.
Naranjo remained in Hollywood, Florida, where he oversaw a multi-million
dollar capital investment operation, created allegedly to finance the expansion of
his small chain of check cashing and payday loan stores. After the establishment
of MRNA and continuing after the incorporation of The Loan Shoppe, Naranjo
issued bonds and promissory notes to investors that promised high interest rates in
exchange for their investments. Naranjo hired several salesmen to help solicit
investments, purchased “lead sheets” that listed potential investors, prepared a
scripted sales pitch for his salesmen, and instructed salesmen not to contact
individuals named on a list of “undercover regulators” he had developed. Naranjo
told his salesmen that The Loan Shoppe was “very profitable,” and salesmen
promised investors annual returns of 10 percent on the bonds and 18 or 24 percent
on the promissory notes. Salesmen told investors that their investments would be
held in segregated accounts and would be refunded if the company had financial
troubles. Naranjo prepared packets of information for the salesmen to send to
potential investors. These packets contained, among other items, a business license
from the City of Pelham, Alabama, a Wall Street Journal article that described the
profitability of payday loan businesses, and a short biography of Carver that
exaggerated his military record. A private placement memorandum informed
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purchasers of bonds that about 16 percent of investor funds would cover overhead
costs associated with the issuance of the bonds, but The Loan Shoppe did not make
any such disclosure to the purchasers of promissory notes. Salesmen mailed the
packets to potential investors and sometimes faxed additional information to
investors. In return for their services, the salesmen received sales commissions of
15 or 20 percent.
Investors contributed $4,440,620 to Naranjo’s capital investment
campaign. This amount reflects investments from 139 investors in the United
States and Colombia who provided capital contributions that ranged from $2000 to
$750,000. Investors either wired funds to the MRNA or The Loan Shoppe
accounts or mailed checks payable to the companies. Even though MRNA
dissolved eight months before the first investments arrived, the MRNA account
received deposits of more than $1.5 million. Funds also were transferred from the
Florida bank account of The Loan Shoppe to the MRNA account over two years
after the dissolution of MRNA. Other funds that investors had contributed were
transferred from the MRNA account to the Florida bank account of The Loan
Shoppe.
Despite Naranjo’s ability to obtain millions of dollars from investors, The
Loan Shoppe was a failure. The Loan Shoppe, during its two years of existence,
7
earned only $506,876 in operating income. This income did not cover amounts
The Loan Shoppe paid customers through check cashing and loans, and the
business suffered an operational loss of $64,444.09, excluding payroll, insurance,
and other overhead expenses.
The investors did not finance the expansion of a legitimate business, but
instead funded a Ponzi scheme, which covered the considerable overhead expenses
of The Loan Shoppe and enriched Carver and Naranjo. The Loan Shoppe used
$1,346,573.49—approximately 30 percent of its capital contributions—to pay
interest to investors or return investments. The Loan Shoppe spent another
$1,060,864.19—approximately 24 percent of its capital contributions—to pay
commissions to its salesmen. The Loan Shoppe also spent $381,586.91 on payroll
expenses and $896,299.84 on general business expenses. Carver received more
than $50,000 and Naranjo received a total of $450,531.08. Naranjo’s receipts
included funds from the accounts of The Loan Shoppe and MRNA that Naranjo
had diverted to another business venture called Advance America and funds that
Naranjo had paid directly to his personal creditors. Naranjo paid his landlord
$24,000 for one year of rent, $32,431.04 toward the purchase of a new BMW car,
and $22,000 for dental work, all from funds deposited by investors in MRNA.
Naranjo also made three large cash withdrawals from MRNA and The Loan
8
Shoppe accounts that corresponded with deposits from investors. On March 21,
2003, an investor deposited $15,000 into the MRNA account. Three days later,
Naranjo cashed a $5000 check drawn on the MRNA account. MRNA received a
total of $6500 from investors on March 25, 2003, and March 27, 2003. On March
28, 2003, Naranjo cashed a $6000 check drawn from the MRNA account. On
November 18, 2003, an investor deposited $30,000 into the Florida account of The
Loan Shoppe. That same day, Naranjo cashed a $20,000 check drawn from that
account.
The investors in The Loan Shoppe did not fare as well as Naranjo. Although
The Loan Shoppe paid a considerable portion of its funds to investors, most
investors did not receive the interest payments that Naranjo and his salesmen had
promised. In April 2004, after receiving a complaint from a Michigan investor
who had not received his promised interest payments, Special Agent Christopher
Young of the Alabama Securities Commission began investigating The Loan
Shoppe. Young eventually received complaints from about 20 investors. Young
learned that The Loan Shoppe was cashing checks without a license, but he did not
warn investors to withdraw their investments. He turned his investigation over to
Florida authorities after determining that no Alabama citizens had invested in The
Loan Shoppe.
9
A series of events in late 2004 and early 2005 marked the downfall of The
Loan Shoppe. In November 2004, The Loan Shoppe dissolved, but Carver
revoked the dissolution the following month. On November 29, 2004, Naranjo
incorporated another business in Florida, Advance America, Inc., and named
himself the agent, incorporator, and president of the new corporation. In
December 2004, two checks drawn on the Wachovia account of The Loan Shoppe,
both for amounts exceeding $20,000, were made for the benefit of Advance
America. On January 5, 2005, Naranjo resigned as president of Advance America.
On January 26, 2005, The Loan Shoppe mailed investors a letter, purportedly
signed by Carver, but not written by him, that stated that The Loan Shoppe had
become the victim of “a corporate identity thief” when another company solicited
investments under the same name. In the spring of 2005, federal authorities ceased
operation of The Loan Shoppe. In May 2005, Agent James Grunwald of the
Federal Bureau of Investigation began to examine business records of The Loan
Shoppe.
In 2006, a federal grand jury indicted Naranjo and Carver on one count of
conspiracy to commit mail fraud and wire fraud, 18 U.S.C. § 1349; seven counts of
mail fraud, id. §§ 2, 1341; three counts of wire fraud, id. §§ 2, 1343; one count of
conspiracy to commit money laundering activity, id. § 1956(h); and nine counts of
10
promotional money laundering, id. §§ 2, 1956(a)(1)(A)(i). The grand jury also
indicted Naranjo for three counts of concealment money laundering, id. §§ 2,
1956(a)(1)(B)(i), based on his three checks for cash from the MRNA and The Loan
Shoppe accounts. The grand jury also indicted Naranjo on five counts of engaging
in monetary transactions in property derived from specified unlawful activity, id.
§§ 2, 1957. The grand jury indicted Carver for two counts of concealment money
laundering, id. §§ 2, 1956(a)(1)(B)(i).
At Naranjo and Carver’s trial, the government presented testimony from
twenty-one witnesses, including former salesmen, investors in The Loan Shoppe,
Grunwald, and Young. Carver took the stand in his defense, but Naranjo did not
testify. During Grunwald’s testimony, the government introduced charts that
provided summaries of the financial transactions of The Loan Shoppe that were
based largely on business records. Naranjo’s lawyer objected on the ground that
the charts should be used only for demonstrative purposes. The district court
overruled the objection and allowed the charts to be introduced as summary
evidence.
During Young’s testimony, Naranjo requested, under the Jencks Act, id. §
3500, any reports Young had prepared during his investigation. Young, who was
employed in Nevada at the time of the trial, had prepared a closing memorandum
11
upon the termination of his investigation, but he no longer had access to it because
it was in the possession of Alabama authorities. Young further testified that he had
not given the memorandum to federal authorities, and the prosecutor stated that
federal authorities did not have possession of any memorandum prepared by
Young. The district court found that the requested documents were not in the
possession of federal authorities and denied Naranjo’s motion.
The jury convicted Naranjo of one count of conspiracy to commit mail and
wire fraud, six counts of wire fraud, three counts of mail fraud, one count of
conspiracy to commit money laundering, five counts of promotional money
laundering, three counts of concealment money laundering, and five counts of
engaging in monetary transactions with property derived from criminal activity.
The jury acquitted Naranjo of one count of wire fraud and four counts of
promotional money laundering. The jury acquitted Carver of all charges. The
district court granted Naranjo’s motion to vacate his two conspiracy convictions on
the ground that Naranjo’s alleged co-conspirator, Carver, had been acquitted of all
charges. Naranjo also moved to set aside his concealment money laundering
conviction on the ground that the government had presented insufficient evidence
to support the convictions, but the district court denied this motion. The district
court later granted Naranjo’s motion to dismiss his lawyer and to proceed pro se.
12
The district court held three sentencing hearings to address various pro se
motions made by Naranjo. The district court denied, among other motions,
Naranjo’s multiple motions for acquittal or for a new trial that related to Young’s
testimony, including a motion that alleged that the government had failed to
disclose the report prepared by Young in violation of Brady v. Maryland, 373 U.S.
83, 83 S. Ct. 1194 (1963). Naranjo attached to another motion for a new trial
based on newly discovered evidence a police report summary that stated that
Florida officials had received information from Young and then shared this
material with Grunwald. The district court also denied this motion.
Naranjo objected to the recommendation in his presentence investigation
report to enhance his sentence based on the total number of investors and the total
amount invested. Naranjo argued that investors who received payouts from The
Loan Shoppe should not be included in the number of victims and that amounts
returned to investors should not be included in the loss calculation. Agent
Jonathan Ostroman of the Federal Bureau of Investigation examined Grunwald’s
reports and testified at sentencing that 30 investors were refunded their full
investments. Ostroman testified that Naranjo had defrauded 109 investors of a
total of $2,747,137.47. The district court accepted Ostroman’s calculation even
though Grunwald had testified at trial that he had not closely examined every
13
document he obtained from The Loan Shoppe and MRNA. The district court
enhanced Naranjo’s sentence based on findings that he defrauded between 50 and
250 investors, U.S. Sentencing Guidelines Manual § 2B1.1(b)(2)(B) (2005), and he
caused a loss of more than $2.5 million but less than $7 million, id. §
2B1.1(b)(1)(J). The district court also applied an enhancement for Naranjo’s
leadership role in the criminal activity, id. § 3B1.1(c), and cited the extensive
nature of Naranjo’s criminal activity as an alternate basis for the enhancement, 18
U.S.C. § 3553(a)(1).
The sentencing guidelines provided a sentence range of 108 to 135 months
of imprisonment. The district court sentenced Naranjo to 120 months of
imprisonment for each offense and ordered that the sentences run concurrently.
The district court also ordered Naranjo to serve concurrent three-year terms of
supervised release on each conviction, to pay a special assessment of $2200, to pay
restitution of $175,478, and to forfeit $2.5 million.
II. STANDARDS OF REVIEW
Several standards of review govern this appeal. “We review a verdict
challenged for sufficiency of the evidence de novo, resolving all reasonable
inferences in favor of the verdict.” United States v. Yost, 479 F.3d 815, 818 (11th
Cir. 2007). “We cannot disturb the verdict ‘unless no trier of fact could have found
14
guilt beyond a reasonable doubt.’” Id. at 818–19 (quoting United States v. Lyons,
53 F.3d 1198, 1202 (11th Cir. 1995)). We review a denial of a motion for a new
trial based on an alleged violation of Brady or the Jencks Act for abuse of
discretion. United States v. Isaac Marquez, 594 F.3d 855, 859–60 (11th Cir.), cert.
denied, 130 S. Ct. 3373 (2010). We review the calculation of losses by the district
court for clear error. United States v. Woodard, 459 F.3d 1078, 1087 (11th Cir.
2006). We review an argument made for the first time on appeal for plain error.
See United States v. Emmanuel, 565 F.3d 1324, 1333 (11th Cir.), cert. denied, 130
S. Ct. 1032 (2009).
III. DISCUSSION
We divide our discussion in four parts. First, we discuss Naranjo’s
argument about the sufficiency of the evidence used to support his convictions.
Second, we discuss Naranjo’s motion for a new trial based on alleged violations of
the Jencks Act and Brady. Third, we discuss Naranjo’s arguments about the
admission of summary evidence of financial records. Fourth, we discuss Naranjo’s
argument that the district court clearly erred at sentencing when it based its
findings on estimates of the number of victims and amount of loss.
A. Sufficient Evidence Supports Each of Naranjo’s Convictions.
Naranjo raises two arguments about the sufficiency of the evidence the
15
government presented to support his convictions. First, Naranjo argues, for the
first time on appeal, that the district court should have vacated all of his
convictions because the government failed to prove that he intended to participate
in a fraud. Second, Naranjo argues that the district court erred when it denied his
motion for acquittal on the charges of concealment money laundering because the
three checks for cash drawn from the MRNA and The Loan Shoppe bank accounts
are insufficient evidence of concealment money laundering when his business
required cash for its daily operations. Both of these arguments fail. We discuss
each argument in turn.
1. The Record Supports a Finding That Naranjo Intended to Participate in a Fraud.
Naranjo argues that all of his convictions should be vacated because the
evidence failed to support a factual finding that Naranjo intended to participate in a
fraud, but we disagree. Naranjo contends that he operated a legitimate business
that would have “flourished” if not for “Young and his misguided investigation
and tactics that caused investors to demand refunds.”
Proof of an intent to defraud is necessary to support Naranjo’s mail and wire
fraud convictions. 18 U.S.C. §§ 1341, 1343; United States v. Jennings, 599 F.3d
1241, 1250 (11th Cir. 2010). Proof of fraud also is necessary to support Naranjo’s
convictions for concealment money laundering, 18 U.S.C. § 1956(a)(1)(B)(i);
16
promotional money laundering, id. § 1956(a)(1)(A)(i); and engaging in monetary
transactions in property derived from specified unlawful activity, id. § 1957. Proof
of fraud is necessary because these crimes prohibit certain uses of illegal proceeds,
and the government did not allege that Naranjo derived income from any illegal
activities other than mail and wire fraud. “A scheme to defraud requires proof of a
material misrepresentation, or the omission or concealment of a material fact
calculated to deceive another out of money or property.” United States v.
Maxwell, 579 F.3d 1282, 1299 (11th Cir. 2009). “A jury may infer an intent to
defraud from the defendant’s conduct.” Id. at 1301. Evidence that a defendant
personally profited from a fraud may provide circumstantial evidence of an intent
to participate in that fraud. See United States v. Navarro-Ordas, 770 F.2d 959,
966–67 (11th Cir. 1985).
The jury reasonably found that Naranjo intended to participate in a
fraudulent scheme. Evidence presented at trial established that Naranjo operated a
check cashing and payday loan business without a state license; mailed copies of a
city business license to prospective investors because he did not have a state
license for check cashing; hid his connection to the business by omitting his name
on corporate records and license applications; told his salesmen that the business
was “very profitable” when it did not generate a profit; invested only a small
17
portion of investor funds on expansion of The Loan Shoppe; promised high rates
of return that few, if any, investors actually received; exaggerated Carver’s military
record to potential investors; spent a majority of investor funds on debt service and
sales commissions without informing investors; and personally profited over
$450,000 from a business that did not generate a profit.
The jury was entitled to reject any inference that The Loan Shoppe failed
because Young warned investors to withdraw their investments, but even if we
could evaluate the credibility of this defense, the record gives no support to
Naranjo’s argument. Young testified that he did not tell investors to request
refunds of their investments and that he did not even communicate with investors
who did not contact him first. The record supports the finding of the jury that
Naranjo intended to participate in a fraud.
2. The Record Establishes That Naranjo Purposefully Concealed the Source or
Ownership of Funds.
Naranjo argues that his concealment money laundering convictions must be
vacated because the government did not prove that he purposefully concealed
funds, but we again disagree. The concealment money laundering statute prohibits
financial transactions conducted for the purpose of concealing unlawfully obtained
funds:
Whoever, knowing that the property involved in a financial transaction
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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 . . . (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
. . . or imprisonment . . . .
18 U.S.C. § 1956(a)(1). Wire fraud and mail fraud are both “specified unlawful
activit[ies]” subject to the concealment money laundering statute. See id. §§
1956(c)(7)(A), 1961(1)(B). Because Naranjo concedes that a financial transaction
occurred and we have already concluded that the evidence supports a finding that
Naranjo knowingly participated in a fraud, our discussion addresses only whether
the government presented sufficient evidence to prove that Naranjo knew that a
purpose of his transactions was to conceal the location, source, ownership, or
control of the funds he obtained by fraud.
The government must present substantial evidence of purposeful
concealment to support a conviction for concealment money laundering. United
States v. Majors, 196 F.3d 1206, 1213 (11th Cir. 1999). The spending of illegal
proceeds alone is insufficient to prove concealment money laundering. Id. This
Court has provided a non-exhaustive list of examples of evidence that may support
a finding that a defendant purposefully sought to conceal funds, which includes
“[‘]structuring the transaction in a way to avoid attention; depositing illegal profits
19
in the bank account of a legitimate business; highly irregular features of the
transaction; using third parties to conceal the real owner; [and] a series of unusual
financial moves cumulating in the transaction.[’]” Id. at 1213 n.18 (quoting United
States v. Garcia-Emanuel, 14 F.3d 1469, 1475–76 (10th Cir. 1994) (emphasis
omitted)).
Naranjo argues that his transactions were not secretive or irregular because
he signed and endorsed the pertinent checks and cashed these checks to provide
working capital for the daily operations of The Loan Shoppe. Naranjo argues that
his transactions were not complex arrangements structured to hide the source of the
funds. To support his position, Naranjo relies on United States v. Johnson, where
this Court held that a transfer of funds to a foreign bank account did not support a
conviction for concealment money laundering. 440 F.3d 1286, 1293 & n.5 (11th
Cir. 2006).
Naranjo’s arguments fail. The government presented evidence that Naranjo
hid his connection to the relevant bank accounts and made three large cash
withdrawals from them. The record does not support Naranjo’s argument that he
made cash withdrawals to provide operating capital for The Loan Shoppe, and
Johnson is distinguishable.
Efforts to “conceal . . . the ownership[] or the control” of illegal proceeds
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constitute concealment money laundering. 18 U.S.C. § 1956(a)(1)(B)(i). This
Court has held that evidence that a defendant placed or directed the deposit of
illegal income into a bank account held by a third person or corporation and then
received the benefit of those proceeds is sufficient to support a conviction of
concealment money laundering. See, e.g., United States v. Miles, 290 F.3d 1341,
1356 (11th Cir. 2002); United States v. Thayer, 204 F.3d 1352, 1354–55 (11th Cir.
2000); United States v. Flynt, 15 F.3d 1002, 1005 n.7, 1007 (11th Cir. 1994).
Similarly, payments by check from accounts held by third parties may support a
finding of concealment money laundering because these transactions misrepresent
the source of wealth and produce documentary evidence that “could mislead an
investigator.” Garcia-Emanuel, 14 F.3d at 1476–77. Transfers of illegal proceeds
to an account held in the name of an individual doing business as a corporation do
not support a finding of purposeful concealment. See United States v.
Blankenship, 382 F.3d 1110, 1128–29 (11th Cir. 2004). The cashing by a
defendant of checks payable to entities controlled by the defendant has been held
to provide sufficient evidence of concealment money laundering because the use of
the account may “cloak [a defendant’s] activities with a semblance of legitimacy.”
See United States v. Hairston, 46 F.3d 361, 375 (4th Cir. 1995).
The jury reasonably found that Naranjo purposefully concealed the source or
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ownership of funds he obtained fraudulently. The evidence establishes that
Naranjo had tried to conceal his association with the relevant bank accounts and
used these accounts to conduct unusual financial transactions. Naranjo directed the
deposit of funds into bank accounts held by either MRNA or The Loan Shoppe, but
none of these accounts bore Naranjo’s name, either as an individual or as an
individual doing business as MRNA or The Loan Shoppe. About a month after
incorporation, Naranjo removed his name from corporate filings of The Loan
Shoppe. Additionally, Naranjo dissolved MRNA over a year and a half before the
relevant cash withdrawals, and Naranjo’s use of a bank account of a nonexistent
corporation provides further support that he sought to conceal his association with
illegal proceeds.
Naranjo’s signatory status on the accounts and signature on the checks that
provide the bases of the concealment money laundering charges do not affect our
conclusion that the record supports Naranjo’s conviction. Unlike the situation in
Blankenship, where the defendant placed his name on an account for anyone
dealing with the account to see, 382 F.3d at 1128–29, Naranjo did not reveal his
true relationship to the accounts by signing the checks for cash because The Loan
Shoppe and MRNA could authorize anyone to sign checks drawn from the
corporate account. This appeal is more analogous to the circumstances in Garcia-
22
Emanuel, 14 F.3d at 1476–77, and Hairston, 46 F.3d at 374–75, where our sister
circuits upheld convictions of concealment money laundering based on evidence
that the defendants signed checks that were drawn from or payable to bank
accounts that were controlled by the defendants but did not bear the name of the
defendants. The record establishes that Naranjo took efforts to hide his connection
to the fraudulently obtained funds. It is irrelevant that Naranjo left enough
evidence to allow a novice investigator to trace these cash withdrawals to Naranjo
and his wire and mail fraud activities because the statute requires only that
proceeds be concealed, not that they be concealed well.
Evidence that a defendant converted funds into a form that is more difficult
to trace, easier to hide, or less suspicious may also support a conviction for
concealment money laundering. We have upheld convictions for concealment
money laundering or conspiracy to commit concealment money laundering where a
defendant exchanged small-denomination bills for large-denomination bills, United
States v. Farese, 248 F.3d 1056, 1060 (11th Cir. 2001); exchanged cash for
jewelry, United States v. Seher, 562 F.3d 1344, 1365 (11th Cir. 2009); exchanged
cash for cashier’s checks, United States v. Starke, 62 F.3d 1374, 1377, 1384 (11th
Cir. 1995); and invested income from drug sales into a legitimate business, United
States v. Saget, 991 F.2d 702, 713 (11th Cir. 1993). Concealment money
23
laundering prosecutions frequently involve defendants who allegedly converted
cash from illegal activities into less suspicious assets, but the opposite transaction
may also constitute concealment money laundering. A fraudfeasor commits
concealment money laundering by converting documented, yet illegally obtained,
funds into cash for the purpose of impeding the tracing of the funds. “[A]lthough
not dispositive, [evidence of cash withdrawals] does lend greater support to the
jury’s finding that the withdrawals were made with the intent to conceal the
location of the funds for the simple reason that cash cannot be traced.” United
States v. Dvorak, 617 F.3d 1017, 1024 (8th Cir. 2010).
A reasonable jury could have inferred that Naranjo made cash withdrawals
so that the funds could not be easily traced to their source. By converting funds
into cash, Naranjo would have been able to spend illegal proceeds without leaving
a paper trail connecting his purchases to his mail fraud and wire fraud. Evidence
that Naranjo withdrew cash supports his concealment money laundering
conviction. The jury had additional justification to convict Naranjo because he
withdrew cash “within one week of the deposits” by investors and “the cash
withdrawals were large.” Id. Cash withdrawals of $5000, $6000, and $20,000
could suggest to a reasonable jury that Naranjo withdrew cash not merely to cover
everyday expenses but to hide the source of the funds and his connection to them.
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The timing of the withdrawals also provides “circumstantial evidence” of the
“intent of concealing the location of the funds.” Id.
The record gives no support to Naranjo’s argument that Carver’s testimony
established that Naranjo withdrew cash from the bank accounts to provide working
capital for The Loan Shoppe stores. Carver testified that he would routinely “go to
the bank, take out X amount of cash, [and] take it to the store” to “keep the check
cashing stores funded with cash.” No evidence established that Naranjo also
cashed checks to supply cash for The Loan Shoppe. Carver testified that The Loan
Shoppe closed its Florida stores by the late summer or early fall of 2003 and
verified that “Naranjo never actually went to Alabama,” but Naranjo made the
$20,000 cash withdrawal from an account of The Loan Shoppe on November 18,
2003. Even if Naranjo presented evidence that established he used the cash for
legitimate purposes, the correct inquiry is whether a reasonable jury could have
convicted Naranjo of concealment money laundering, not whether Naranjo had a
plausible and legitimate explanation for his three large cash withdrawals. The jury
also was entitled to reject Carver’s testimony. See United States v. Hasner, 340
F.3d 1261, 1272 (11th Cir. 2003). The jury’s “finding [relating to credibility] is
binding on this Court” as long as it is supported by sufficient evidence, United
States v. Tate, 586 F.3d 936, 945 (11th Cir. 2009), cert. denied, 131 S. Ct. 634
25
(2010).
We also reject Naranjo’s argument that Johnson demands reversal. In
Johnson, we held that the transfer of funds from a corporate account to a foreign
bank account did not support a conviction of concealment money laundering when
the government had failed to present evidence that the transfer of funds to foreign
bank accounts impeded the tracing of funds. 440 F.3d at 1293 & n.5. This appeal
is distinguishable from Johnson because Naranjo did more than transfer money
between bank accounts. He made large cash withdrawals, and a reasonable jury
could have found that cash is more difficult to trace than funds transferred between
bank accounts. See Dvorak, 617 F.3d at 1024. Naranjo also tried to conceal his
ownership of the funds by hiding his association with the bank accounts.
B. Naranjo’s Jencks Act and Brady Arguments Fail.
Naranjo alleges that Young prepared a report of his investigation and that
the government violated both the Jencks Act, 18 U.S.C. § 3500, and Brady, 373
U.S. 83, 83 S. Ct. 1194, by refusing to provide this report to Naranjo. Naranjo
contends that the correct remedy for the alleged violations of the Jencks Act and
Brady is a new trial, and we construe his pro se motions as requests for such relief.
Naranjo’s argument lacks merit. Naranjo fails to establish that the district
court abused its discretion when it denied Naranjo’s motion for acquittal or for a
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new trial. Naranjo also fails to establish that federal authorities had possession of
such a report as required by both the Jencks Act and Brady, or that the report
would have been exculpatory and material as required under Brady.
Naranjo’s argument that the district court abused its discretion when it
denied his motions for a new trial based on an alleged Jencks Act violation fails
because the record does not establish that federal authorities possessed the report
prepared by Young. The Jencks Act provides that, on a defendant’s motion, a
district court shall “order the United States to produce any statement . . . of the
witness in the possession of the United States which relates to the subject matter as
to which the witness has testified.” 18 U.S.C. § 3500(b). “A statement is ‘in the
possession of the United States’ for Jencks Act purposes if it is in the possession of
a federal prosecutorial agency.” United States v. Cagnina, 697 F.2d 915, 922 (11th
Cir. 1983). Naranjo alleges that Young prepared a report that was included in
investigative findings sent from Alabama authorities to Florida authorities and then
to federal authorities, but the district court found that “the document in question
[was] not in possession of the . . . federal prosecuting authorities.”
The government also did not violate Brady because it did not possess any
report prepared by Young. In Brady, the Court ruled that the Due Process Clause
requires prosecutors to disclose “evidence favorable to an accused . . . where the
27
evidence is material either to guilt or to punishment, irrespective of the good faith
or bad faith of the prosecution.” 373 U.S. at 87, 83 S. Ct. at 1196–97. “Three
elements establish a Brady violation: (1) the evidence must be favorable to the
accused, because it is either exculpatory or impeaching; (2) the evidence must have
been suppressed by the State, either willfully or inadvertently; and (3) the evidence
must be material so as to establish prejudice.” Stephens v. Hall, 407 F.3d 1195,
1203 (11th Cir. 2005). “[M]ere speculation or allegations that the prosecution
possesses exculpatory information will not suffice to prove ‘materiality.’” United
States v. Jordan, 316 F.3d 1215, 1252 n.81 (11th Cir. 2003). As with the Jencks
Act, Brady “applies only to information possessed by the prosecutor or anyone
over whom he has authority.” United States v. Meros, 866 F.2d 1304, 1309 (11th
Cir. 1989). “A prosecutor has no duty to undertake a fishing expedition in other
jurisdictions in an effort to find potentially impeaching evidence every time a
criminal defendant makes a Brady request for information regarding a government
witness.” Id.
Naranjo’s argument fails for a second reason: Brady applies only to
exculpatory and impeachment evidence, and Naranjo’s argument that the report
contains exculpatory information is, at best, speculative. Naranjo asserts that
Young’s report would be exculpatory because Young concluded that Naranjo did
28
not violate Alabama law, but this argument misconstrues the record. Young
testified that he terminated the investigation as “a matter of resources” because no
“residents of the State of Alabama were participants or had been allegedly harmed
by The Loan Shoppe” and referred the matter to Florida authorities. Young did not
testify about whether Naranjo violated Alabama law. Naranjo submitted a
summary report, allegedly prepared by Florida investigators, that suggests that
Florida authorities shared Young’s investigative findings with Grunwald, but this
report contains no evidence that any of Young’s documents would be exculpatory.
Naranjo argues that United States v. Antone, 603 F.2d 566 (5th Cir. 1979),
requires the government to disclose Brady material possessed by state
investigators, but we disagree. Antone held that Brady required federal
prosecutors to disclose the payment of a witness’s attorney fees by a state when
federal and state authorities “pooled their investigative energies to a considerable
extent,” id. at 569, and “the state investigators functioned as agents of the federal
government under the principles of agency law,” id. at 570. Knowledge of
information that state investigators obtain is not imputed for Brady purposes to
federal investigators who conduct a separate investigation when the separate
investigative teams do not collaborate extensively. See Moon v. Head, 285 F.3d
1301, 1310 (11th Cir. 2002) (holding that knowledge obtained by investigators in
29
one state is not imputed to investigators that conduct a separate investigation in
another state). Because Grunwald conducted a federal investigation separate from
Young’s investigation, the government did not possess Young’s report for Brady
purposes.
C. Naranjo’s Arguments About Summary Evidence Fail.
Naranjo argues for the first time on appeal that the admission of summary
evidence violated his rights under the Due Process and Confrontation Clauses of
the United States Constitution. Naranjo argues that the summary evidence that the
government presented in charts was inaccurate and violated his right to due
process. Naranjo also argues that the introduction of summary evidence deprived
him of his Sixth Amendment right to challenge the accuracy of this evidence
through cross-examination, as articulated in Davis v. Alaska, 415 U.S. 308, 94 S.
Ct. 1105 (1974), and Crawford v. Washington, 541 U.S. 36, 124 S. Ct. 1354
(2004), because the summary evidence concerned investments made by investors
who did not testify.
Naranjo’s due process argument fails. “[T]his Court will permit the use of
summary charts incorporating certain assumptions ‘so long as supporting evidence
has been presented previously to the jury . . . and where the court has “made it
clear that the ultimate decision should be made by the jury as to what weight
30
should be given to the evidence.”’” United States v. Richardson, 233 F.3d 1285,
1294 (11th Cir. 2000) (alteration in original) (quoting United States v. Francis, 131
F.3d 1452, 1458 (11th Cir. 1997) (quoting United States v. Means, 695 F.2d 811,
817 (5th Cir. 1983))). “[W]here the defense has the opportunity to cross-examine a
witness concerning the disputed issue and to present its own version of the case,
‘the likelihood of any error in admitting summary evidence diminishes.’” Id.
(quoting United States v. Norton, 867 F.2d 1354, 1363 (11th Cir. 1989)). The
introduction of charts as summary evidence by the government was consistent with
Richardson. The government admitted into evidence the checks and bank records
on which the summary charts were based, and Naranjo cross-examined Grunwald
and elicited an admission that the charts were based on some assumptions. The
district court later instructed the jury to refer to the charts “only as an aid . . . and
not for the truth.” Naranjo did not suffer a violation of his right to due process.
Naranjo cites United States v. Alzate, 47 F.3d 1103 (11th Cir. 1995), in
support of a second due process argument, but that decision is irrelevant to the
issue at hand. In Alzate, we ordered a new trial due to a Brady violation. Id. at
1110–11. Naranjo does not argue that the government violated Brady by
introducing summary evidence.
Naranjo’s Confrontation Clause claim also fails. The Sixth Amendment
31
affords criminal defendants an opportunity to cross-examine witnesses who present
testimonial evidence. Crawford, 541 U.S. at 68, 124 S. Ct. at 1374. A statement is
testimonial if “made under circumstances which would lead an objective witness
reasonably to believe that the statement would be available for use at a later trial.”
Id. at 52, 124 S. Ct. at 1364 (internal quotation marks omitted). See also United
States v. Caraballo, 595 F.3d 1214, 1228 (11th Cir. 2010) (quoting United States v.
Baker, 432 F.3d 1189, 1203 (11th Cir. 2005)). The district court admitted into
evidence the bank records and checks that provided the basis for the summary
charts without any objection from Naranjo. These bank records and checks were
admissible under the business records exception to the hearsay rule, Fed. R. Evid.
803(6). Business records are not testimonial. Crawford, 541 U.S. at 56, 124 S. Ct.
at 1367 (discussing “statements that by their nature were not testimonial—for
example, business records”); United States v. Morgan, 505 F.3d 332, 339 (5th Cir.
2007); United States v. Feliz, 467 F.3d 227, 233–34 (2d Cir. 2006); United States
v. Baker, 458 F.3d 513, 519–20 (6th Cir. 2006). Summary evidence also is not
testimonial if the evidence underlying the summary is not testimonial. See United
States v. Jamieson, 427 F.3d 394, 411–12 (6th Cir. 2005). Because the
Confrontation Clause only provides a right to cross-examination of testimonial
statements, the district court did not plainly err by admitting summary evidence
32
based on bank records and checks.
D. The District Court Did Not Err When It Enhanced Naranjo’s Sentence Based
on Estimates of the Number of Victims and Total Losses.
Naranjo argues that the district court erred and imposed an unreasonable
sentence when it enhanced Naranjo’s sentence based on estimations of the number
of victims and total amount of losses, but this argument fails. “For sentencing
purposes, the loss amount does not need to be precise and may only be a
reasonable estimate of the loss based on the available information.” Woodard, 459
F.3d at 1087. Naranjo fails to cite any portion of the record that suggests that the
district court accepted an erroneous estimate of the number of victims and total
loss, nor does he contest the assertion of the government that Grunwald based his
estimates largely on bank records. The record instead establishes that the district
court rejected the loss calculation provided in the presentence investigation report
and, based on Ostroman’s testimony, lowered the loss estimate. The district court
did not err when it relied at sentencing on estimates of the number of victims and
amount of losses. Naranjo’s sentence, within the guidelines range, is reasonable.
IV. CONCLUSION
We AFFIRM Naranjo’s convictions and sentence.
33