United States v. Manuel Rodriguez ( 2013 )


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  •                Case: 11-15911       Date Filed: 10/16/2013      Page: 1 of 17
    [PUBLISH]
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE ELEVENTH CIRCUIT
    ________________________
    No. 11-15911
    ________________________
    D.C. Docket No. 0:11-cr-60062-WPD-1
    UNITED STATES OF AMERICA,
    Plaintiff-Appellee,
    versus
    MANUEL RODRIGUEZ,
    Defendant-Appellant.
    ________________________
    Appeal from the United States District Court
    for the Southern District of Florida
    ________________________
    (October 16, 2013)
    Before HULL and MARTIN, Circuit Judges, and BOWEN, * District Judge.
    MARTIN, Circuit Judge:
    Manuel Rodriguez appeals his convictions and 120-month sentence of
    *
    Honorable Dudley H. Bowen Jr., United States District Judge for the Southern District of
    Georgia, sitting by designation.
    Case: 11-15911    Date Filed: 10/16/2013   Page: 2 of 17
    imprisonment for conspiracy to commit wire fraud, in violation of 
    18 U.S.C. § 1349
    , and wire fraud, in violation of 
    18 U.S.C. § 1343
    . On appeal, Mr.
    Rodriguez raises two issues. First, Mr. Rodriguez argues that there was not
    sufficient evidence at trial to support his convictions. Second, Mr. Rodriguez says
    that the record did not establish that his offense involved more than 50 victims, so
    the District Court erred when it applied a 4-level sentence enhancement under
    United States Sentencing Guidelines (USSG) § 2B1.1(b)(2)(B).
    We affirm Mr. Rodriguez’s convictions because there was sufficient
    evidence for a reasonable trier of fact to find Mr. Rodriguez guilty beyond a
    reasonable doubt. However, because the record does not support a finding that his
    offense involved more than 50 victims, we vacate Mr. Rodriguez’s sentence and
    remand to the District Court for resentencing with a 2-level enhancement under
    USSG § 2B.1.1(b)(2)(A) rather than a 4-level enhancement under
    § 2B1.1(b)(2)(B).
    I.
    On March 24, 2011, a federal grand jury sitting in the Southern District of
    Florida returned a nine-count indictment against Mr. Rodriguez. The indictment
    charged Mr. Rodriguez with one count of conspiracy to commit wire fraud, in
    violation of 
    18 U.S.C. § 1349
    , and eight counts of wire fraud, in violation of 
    18 U.S.C. § 1343
    . Before trial, the District Court dismissed one count of wire fraud
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    (Count 4). Mr. Rodriguez proceeded to trial on the remaining counts on September
    12, 2011.
    A.
    The evidence at trial showed that between 2003 and 2007, Mr. Rodriguez
    owned, operated, and participated in four different companies that sold coffee
    machines and other vending machines to the public. Mr. Rodriguez’s companies
    tried to generate sales by posting ads on the Internet seeking investors who were
    looking to own and operate their own small businesses. When a possible investor
    responded to an ad, one of Mr. Rodriguez’s associates would contact them and
    inform them about their golden opportunity to invest in a new coffee machine,
    vending machine, or drinking water machine.
    In order to induce prospective customers to buy his products, Mr. Rodriguez
    and his associates gave a number of guarantees, both over the phone and in
    promotional materials created by Mr. Rodriguez. For example, sales people would
    routinely guarantee the amount of money that customers would make each day and
    how quickly they could recoup their investment. The companies also promised
    that they would provide experienced professional location specialists who would
    use advanced market analytics and demographic research to secure high-end
    locations where the machines would have lots of potential patrons. The companies
    promised that if the customers were to encounter any problems, they would be
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    provided with technical support and assistance. Best of all, the customers were
    told that if they were not satisfied with their purchase, they could return the
    machines and receive a full refund.
    Mr. Rodriguez’s customers found out the hard way that these guarantees
    were too good to be true. After sending their money to Mr. Rodriguez, customers
    were told that they could expect to have their businesses up and running in weeks.
    But in fact, many waited for months for their machines to arrive, if they ever
    arrived at all. When the machines did finally arrive, many customers found that
    they did not work or that they cost more to operate than had been advertised.
    Mr. Rodriguez’s customers were also disappointed by the locations secured
    by the professional location specialists. Instead of having their machines placed at
    high-end venues where they could sell hundreds of items each day, customers were
    forced to settle for remote locations where they could barely cover their
    operational costs. Many customers testified that the machines generated zero
    profits or substantial losses. This, in the face of the 300-700% profit they had been
    promised. None of the customers said they had been able to recoup the cost of
    their initial investment.
    Unsurprisingly, customers became frustrated and asked Mr. Rodriguez for
    help. Most of these customers, however, discovered that the technical support and
    assistance they had been promised was nowhere to be found. When they asked for
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    a change in location, it didn’t happen. And when customers asked for refunds, Mr.
    Rodriguez almost never honored his money-back guarantee.
    Finally, the evidence at trial also showed that Mr. Rodriguez knew that all of
    this was happening, yet he continued to sell his machines to customers and
    guarantee profit figures which he knew were not real. Despite the number of
    complaints that Mr. Rodriguez received, new customers were told that failure was
    not a possibility. When prospective customers asked to speak to current investors,
    Mr. Rodriguez routinely supplied fake references. Sometimes Mr. Rodriguez even
    falsely stated that he owned the machines himself and that they were profiting and
    doing well for him. Beyond that, even after Mr. Rodriguez was served a cease and
    desist order from the Maryland Attorney General and told his customers that he
    was closing his company due to bankruptcy, Mr. Rodriguez simply created new
    companies selling different machines. In the Articles of Incorporation for one of
    his later companies, Mr. Rodriguez named his mother the President and CEO so
    that prospective customers could not tie the troubles of his earlier companies back
    to him. Mr. Rodriguez also drafted disclosure documents without mention of prior
    litigation, prior sanctions, or bankruptcies, and sent them to his prospective
    customers.
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    At the close of the government’s case, the District Court dismissed an
    additional wire fraud count. On September 28, 2011, the jury returned its verdict,
    convicting Mr. Rodriguez of all remaining counts.
    B.
    Mr. Rodriguez was sentenced on December 7, 2011. The government
    sought a 4-level sentence enhancement under USSG § 2B1.1(b)(2)(B), arguing that
    Mr. Rodriguez’s offense involved 50 or more victims. In support of this
    enhancement, the government submitted 42 affidavits from victims who sustained
    a loss after buying Mr. Rodriguez’s machines, as well as a summary chart
    indicating a total of 238 victims. Mr. Rodriguez objected and argued that there
    was insufficient evidence in the record to show that the offense involved more than
    50 victims. Nevertheless, the District Court reasoned that out of 238 customers
    who bought machines from Mr. Rodriguez, there must have been at least 50
    victims. As a result, the District Court applied a 4-level sentence enhancement
    under USSG § 2B1.1(b)(2)(B).
    II.
    A.
    Mr. Rodriguez first argues that there was not sufficient evidence to support
    his convictions. He suggests that the government’s evidence at most establishes
    that he engaged in “mere puffery” in connection with the sale of his business
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    opportunities, but not fraud. This is especially true, he claims, because he told all
    of his customers up front that there was substantial risk involved in purchasing one
    of his machines.
    We review de novo a district court’s denial of judgment of acquittal on
    sufficiency of evidence grounds. United States v. Browne, 
    505 F.3d 1229
    , 1253
    (11th Cir. 2007). In reviewing a sufficiency of the evidence challenge, we
    consider the evidence in the light most favorable to the government, drawing all
    reasonable inferences and credibility choices in the government’s favor. 
    Id.
     A
    jury’s verdict cannot be overturned if any reasonable construction of the evidence
    would have allowed the jury to find the defendant guilty beyond a reasonable
    doubt. United States v. Herrera, 
    931 F.2d 761
    , 762 (11th Cir. 1991). The evidence
    need not be inconsistent with every reasonable hypothesis except guilt, and the jury
    is free to choose between or among the reasonable conclusions to be drawn from
    the evidence presented at trial. United States v. Poole, 
    878 F.2d 1389
    , 1391 (11th
    Cir. 1989) (per curiam). But when the government relies on circumstantial
    evidence, the conviction must be supported by reasonable inferences, not mere
    speculation. United States v. Friske, 
    640 F.3d 1288
    , 1291 (11th Cir. 2011)
    (quotation marks omitted).
    We have held that in order to support a conviction for wire fraud, the
    evidence at trial must show that a defendant (1) intentionally participated in a
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    scheme or artifice to defraud another of money or property, and (2) used or caused
    the use of wires for the purpose of executing the scheme or artifice. United States
    v. Ward, 
    486 F.3d 1212
    , 1222 (11th Cir. 2007). Similarly, in order to sustain a
    conviction for conspiracy to commit wire fraud, the government must prove that
    the defendant “knew of and willfully joined in the unlawful scheme to defraud.”
    United States v. Maxwell, 
    579 F.3d 1282
    , 1299 (11th Cir. 2009).
    It is true that “puffing” or “sellers’ talk” is not a crime under federal fraud
    statutes. See United States v. Martinelli, 
    454 F.3d 1300
    , 1317 (11th Cir. 2006); see
    also United States v. Brown, 
    79 F.3d 1550
    , 1557 (11th Cir. 1997) (quoting with
    approval United States v. Pearlstein, 
    576 F.2d 531
    , 540 n. 3 (3d Cir. 1978) for
    proposition that statements that a company is “nationally known” and that the
    product is “among the finest . . . in the world” are not cognizable under the federal
    mail fraud statute) (overruled on other grounds by United States v. Svete, 
    556 F.3d 1157
     (11th Cir. 2009)). Instead, fraud requires proof of a “material
    misrepresentation, or the omission or concealment of a material fact calculated to
    deceive another out of money or property.” Maxwell, 
    579 F.3d at 1299
    .
    We affirm Mr. Rodriguez’s convictions because a reasonable jury could
    have found that his misrepresentations to his customers surpassed mere puffery or
    “sellers’ talk.” The evidence at trial showed that Mr. Rodriguez did not simply
    puff up the profitability of his machines to prospective customers. Rather, he made
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    material misrepresentations of fact in the course of an ongoing scheme to defraud
    them. See United States v. Majors, 
    196 F.3d 1206
    , 1211 (11th Cir. 1999)
    (defendant surpassed puffing or sellers’ talk by serving as an officer of fraudulent
    corporations, signing newsletters and corporate literature with false statements,
    attending meetings, and knowingly and voluntarily participating in scheme to
    defraud investors).
    For example, Mr. Rodriguez’s customers did not testify that they were
    simply given an opinion or an assurance that their investments were going to be
    successful. Rather, Mr. Rodriguez guaranteed specific profit figures and provided
    a definitive time frame for when his customers would recoup their investments.
    He did this even though he knew his representations were completely unfounded.
    Mr. Rodriguez’s sales associates also promised expert location specialists who
    would use advanced research analytics to secure profitable locations for the
    machines. Mr. Rodriguez knew all the while, however, that his locators used
    absolutely no research and placed his customers’ machines haphazardly in
    unprofitable locations. On top of all this, even though a number of customers
    asked for refunds and received nothing, Mr. Rodriguez continued to promise
    prospective customers that if they were not satisfied with their machines, they
    could get a full refund and all their money back. The jury could reasonably infer
    that these patently false promises far surpassed “sellers’ talk” or “mere puffery.”
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    The evidence at trial also showed that Mr. Rodriguez was not just
    overstating the facts to sell his products to customers. He was also actively
    concealing relevant information from potential customers as part of his scheme to
    defraud. When prospective customers asked to speak to current investors, Mr.
    Rodriguez frequently gave fake references or falsely stated that he owned the
    machines himself. And even after the Maryland Attorney General ordered him to
    cease and desist from selling his products and telling his customers that he was
    filing for bankruptcy, Mr. Rodriguez simply formed a new company—naming his
    mother as CEO—so that he could continue his scheme. Because a reasonable jury
    could find that these types of concealments surpassed “sellers’ talk” or “mere
    puffery,” we conclude that there was sufficient evidence to support Mr.
    Rodriguez’s convictions.
    B.
    In fraud cases, the Sentencing Guidelines provide for certain enhancements
    to the base offense level depending on the number of victims. If there are 10 or
    more victims, there is a 2-level enhancement; if there are 50 or more victims, there
    is a 4-level enhancement; and for 250 or more victims, there is a 6-level
    enhancement. See USSG § 2B1.1(b)(2)(A)–(C).
    Mr. Rodriguez argues that the District Court clearly erred when it found that
    his offense involved more than 50 victims. Although he acknowledges that the
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    government presented 42 affidavits of victims who suffered a loss and a summary
    chart indicating that there were 238 victims total, he points out that the
    government provided no witnesses or underlying data to authenticate the
    government’s summary chart. For this reason, Mr. Rodriguez argues that the
    District Court’s finding is not supported by reliable and specific evidence. We
    agree.
    This Court reviews de novo the interpretation and application of the
    Guidelines, and reviews underlying factual findings, including the District Court’s
    calculation of the number of victims, for clear error. United States v. Foley, 
    508 F.3d 627
    , 632 (11th Cir. 2007); United States v. Lee, 
    427 F.3d 881
    , 892, 894–95
    (11th Cir. 2005) (applying clear error review to the District Court’s determination
    of number of victims). “Although review for clear error is deferential, a finding of
    fact must be supported by substantial evidence.” United States v. Robertson, 
    493 F.3d 1322
    , 1330 (11th Cir. 2007).
    “When a defendant challenges one of the factual bases of his sentence . . .
    the Government has the burden of establishing the disputed fact by a
    preponderance of the evidence.” United States v. Lawrence, 
    47 F.3d 1559
    , 1566
    (11th Cir. 1995). “It is the district court’s duty to ensure that the Government
    carries this burden by presenting reliable and specific evidence.” 
    Id.
     While
    estimates are permissible, courts “must not speculate concerning the existence of a
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    fact which would permit a more severe sentence under the guidelines.” United
    States v. Sepulveda, 
    115 F.3d 882
    , 890 (11th Cir. 1997) (quotation marks omitted).
    Additionally, “the law of this Circuit clearly provides that reliable hearsay can be
    considered during sentencing.” United States v. Zlatogur, 
    271 F.3d 1025
    , 1031
    (11th Cir. 2001); United States v. Wilson, 
    183 F.3d 1291
    , 1301 (11th Cir. 1999)
    (“A court may consider any information (including hearsay), regardless of its
    admissibility at trial, in determining whether factors exist that would enhance a
    defendant’s sentence, provided that the information is sufficiently reliable.”).
    Absent a stipulation or agreement between the parties, however, an attorney’s
    factual assertions alone do not constitute evidence that a District Court can rely on.
    United States v. Washington, 
    714 F.3d 1358
    , 1361 (11th Cir. 2013).
    The District Court clearly erred when it found that Mr. Rodriguez’s offense
    involved more than 50 victims. The only evidence presented to the Court
    suggesting that there were more than 50 victims was the summary chart proffered
    by the government. The prosecution presented no witnesses to authenticate what
    the chart represented, how it was prepared, or by whom. While the district court
    could consider trial evidence, there was no testimony or evidence tying the
    summary chart to any of the trial evidence either. Neither did the prosecution
    present any witnesses or evidence to verify that the information in the chart was
    correct. In essence, the summary chart amounted to little more than an allegation
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    by the government on a piece of paper that Mr. Rodriguez’s offense involved more
    than 50 victims. See Washington, 714 F.3d at 1361 (representations by the
    government at sentencing that there were more than 250 victims were insufficient);
    United States v. Lawrence, 
    47 F.3d 1559
    , 1568 (11th Cir. 1995) (holding that
    “perfunctory summaries of the evidence that the Government stood ready to
    present” were not evidence). The government failed to present any evidence to
    establish that Mr. Rodriguez’s offense involved more than 50 victims. See
    Sepulveda, 
    115 F.3d at 890
    . Therefore, Mr. Rodriguez’s sentence should not have
    been enhanced by four levels based on such a finding. 1
    III.
    We affirm Mr. Rodriguez’s convictions. However, the 4-level enhancement
    under USSG § 2B1.1(b)(2)(B) is set aside, and the case is remanded for
    resentencing without that enhancement. The District Court should impose a 2-
    level enhancement under USSG § 2B1.1(b)(2)(A) because Mr. Rodriguez has
    conceded on appeal that there were 10 or more victims of his conduct.
    AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
    1
    We reject the government’s argument that Mr. Rodriguez waived his objection to the summary
    chart as evidence of the number of victims. When the government proffered the chart to the
    district court, counsel for Mr. Rodriguez expressly objected to the chart as an improper way to
    prove the amount of victims.
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    BOWEN, Senior District Judge, specially concurring:
    I concur in the opinion in full. I write specially to comment on the
    Government’s treatment of the sentencing proceedings.
    This is another case wherein the Government has failed to come forward
    with evidence at a critical time. Unfortunately, important objections made by a
    defendant at a sentencing hearing are often dealt with as an afterthought. The
    Government’s cavalier disregard for the need of further evidence, specific
    references to a trial transcript, or another basis upon which the district court may
    make sustainable findings is all too typical. In this case, after a laboriously
    conducted two-week trial, resulting in a conviction we readily affirm, the
    Government’s willingness to allow the matter to conclude resting upon
    extrapolation, conjecture, and innuendo left the district court stranded with a well-
    prepared Presentence Investigation Report, some commentary, and little else.
    A district court’s factual findings at a sentencing hearing are reviewed using
    the deferential standard of “clear error.” United States v. Foley, 
    508 F.3d 627
    , 632
    (11th Cir. 2007). Here, as a consequence of the Government’s lackadaisical
    approach, we are ultimately “left with the definite and firm conviction that a
    mistake has been committed.” United States v. McDaniel, 
    631 F.3d 1204
    , 1209
    (11th Cir. 2011). The Government’s inaction encouraged the district court to
    speculate as to the amount of loss and the number of victims. Why the Executive
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    Branch would expend its resources in extensive, indeed intricate, investigation and
    prosecution of this case, only to approach its culmination (the sentencing event)
    with such laxity, is a mystery.
    It is true that a sentencing proceeding is more flexible and less formalized
    than a trial to a jury. See, e.g., Foley, 
    508 F.3d at 633
     (“[T]he [Sentencing]
    Guidelines require a district court to take into account not merely the charged
    conduct, but rather all relevant conduct, in calculating a defendant’s offense
    level.”) (citation and internal quotation marks omitted); United States v. Zlatogur,
    
    271 F.3d 1025
    , 1031 (11th Cir. 2005) (observing that a district court may consider
    “reliable hearsay” during sentencing). During sentencing, The Government need
    only establish a disputed fact by a preponderance of the evidence. United States v.
    Lawrence, 
    47 F.3d 1559
    , 1566 (11th Cir. 1995). Further, the district court can rely
    upon its recollection of the evidence of the trial to make its findings. United States
    v. Hamaker, 
    455 F.3d 1316
    , 1338 (11th Cir. 2006) (“The district court’s factual
    findings for purposes of sentencing may be based on, among other things, evidence
    heard during trial, undisputed statements in the [Presentence Investigation Report],
    or evidence presented during the sentencing hearing.”) (citation and internal
    quotation marks omitted).
    I fear that the latitude allowed in sentencing proceedings often lulls the
    Government’s lawyers into a species of spectator. However, the lower standard of
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    proof, the district court’s wide discretion, and the degree of informality in no way
    lessen the importance or the due process implications of the event. See United
    States v. Gupta, 
    572 F.3d 878
    , 887-88 (11th Cir. 2009) (observing that “the
    Government[‘s] burden of establishing the disputed fact by a preponderance of the
    evidence . . . must be satisfied with reliable and specific evidence” and that “a
    district court must make factual findings sufficient to support the government’s
    claim . . . .”) (emphasis added) (citations and internal quotation marks omitted).
    Thus, the significance of the Government’s participation continues from the
    commencement of the case to its conclusion.
    In fairness to the district court, findings made at a sentencing hearing are
    often entered months after a trial, following other trials, adversary proceedings,
    contested matters, and numerous matters in litigation. The United States Probation
    officers correctly concentrate on the preparation of a Presentence Investigation
    Report, which may include evidentiary matters, opinions, conclusions, and
    recommendations based on subjective criteria. When facts in the Presentence
    Investigation Report are disputed, however, the district court needs more. No one
    is better positioned than trial counsel for the Government to anticipate and satisfy
    the need for articulation, protection, and supplementation of the record with the
    testimony of witnesses, necessary exhibits, or other evidence. Too often,
    energetic, successful prosecutors approach what is arguably the most important
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    part of the case with a surprising level of inexactitude. Responsible advocacy
    demands more.
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