United States v. Aybar-Peguero ( 2023 )

21-1711(L)
U.S. v. Aybar-Peguero
In the
United States Court of Appeals
For the Second Circuit
________
AUGUST TERM 2022
ARGUED: NOVEMBER 1, 2022
DECIDED: JULY 6, 2023
No. 21-1711(L), 21-1847(Con)
UNITED STATES OF AMERICA,
Appellee,
v.
FRANCIS JOSE AYBAR-PEGUERO, AKA GRENA,
Defendant-Appellant.
________
Appeal from the United States District Court
for the District of Connecticut.
________
Before: WALKER, LEE, and NATHAN, Circuit Judges.
________
1
Defendant-Appellant Francis Jose Aybar-Peguero pled guilty
to drug trafficking in violation of 21 U.S.C. §§ 841 and 846 and
concealment money laundering in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i). During his plea colloquy, speaking through a
Spanish-English interpreter, Aybar-Peguero repeatedly failed to
acknowledge that he had intended to conceal the proceeds of his drug
trafficking, an element of concealment money laundering. On appeal,
Aybar-Peguero contends that his conviction for concealment money
laundering should be reversed because an insufficient factual basis
existed for his guilty plea pursuant to Rule 11 of the Federal Rules of
Criminal Procedure. We agree.
For the reasons that follow, we VACATE Aybar-Peguero’s
§ 1956(a)(1)(B)(i) conviction and sentence, and REMAND for
proceedings consistent with this opinion.
________
ELIZABETH A. LATIF, West Hartford, CT, for
Defendant-Appellant Francis Jose Aybar-Peguero.
JOCELYN C. KAOUTZANIS (Marc H. Silverman, on
the brief), Assistant United States Attorneys, for
Leonard C. Boyle, United States Attorney for the
District of Connecticut, New Haven, CT, for
Appellee the United States of America.
________
2
JOHN M. WALKER, JR., Circuit Judge:
Defendant-Appellant Francis Jose Aybar-Peguero pled guilty
to drug trafficking in violation of 21 U.S.C. §§ 841 and 846 and
concealment money laundering in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i). During his plea colloquy, speaking through a
Spanish-English interpreter, Aybar-Peguero repeatedly failed to
acknowledge that he had intended to conceal the proceeds of his drug
trafficking, an element of concealment money laundering. On appeal,
Aybar-Peguero contends that his conviction for concealment money
laundering should be reversed because an insufficient factual basis
existed for his guilty plea pursuant to Rule 11 of the Federal Rules of
Criminal Procedure. We agree.
For the reasons that follow, we VACATE Aybar-Peguero’s
§ 1956(a)(1)(B)(i) conviction and sentence, and REMAND for
proceedings consistent with this opinion.
BACKGROUND
Between May 2019 and October 2019, Aybar-Peguero
conspired with members of a drug trafficking organization to sell
narcotics out of his convenience store, the Corner Mini Market in
Waterbury, Connecticut. Following an extensive investigation, law
enforcement agents arrested Aybar-Peguero and searched his store.
They found large quantities of heroin and fentanyl, other evidence of
drug trafficking such as digital scales and a concealed compartment,
and, in the store’s cash register, drugs packaged for distribution.
Although the agents noted the absence of a point-of-sale system and
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cash register receipts as well as outdated and dusty merchandise—
indicia that the store was a front for drug trafficking—they concluded
that the store also did legitimate business as its shelves were stocked
and it had heavy foot traffic. The parties later stipulated that Aybar-
Peguero was responsible for trafficking approximately one kilogram
of heroin and 400 grams of fentanyl.
During the relevant period, Aybar-Peguero maintained three
bank accounts, a business checking account, a personal checking
account, and a personal savings account. Law enforcement financial
analysts concluded that Aybar-Peguero concealed the proceeds of his
drug trafficking by depositing them into these accounts along with
his store’s legitimate earnings.
Aybar-Peguero agreed to plead guilty to one count of
conspiracy to distribute and to possess with intent to distribute heroin
and fentanyl in violation of 21 U.S.C. §§ 841 and 846 and one count of
concealment money laundering in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i). 1 In his petition to change his plea from not guilty
to guilty, Aybar-Peguero stated that he “knowingly conducted [and]
was involved in a financial issue, and knew that [it] was from illegal
acts.” App’x 59.
1The parties agree that the plea agreement’s appeal waiver does not
bar an appeal that, as here, “challenges . . . the process leading to the plea.”
United States v. Lloyd, 901 F.3d 111, 118 (2d Cir. 2018).
4
On September 30, 2020, Aybar-Peguero appeared before
Magistrate Judge Donna F. Martinez (the matter having been referred
to her by District Judge Vanessa L. Bryant) to plead guilty to the two
agreed-upon counts. At the plea proceeding, Aybar-Peguero,
through a Spanish-English interpreter, first allocuted to drug
trafficking, which is not at issue in this appeal. With respect to the
concealment money laundering count, the prosecutor outlined the
elements of that crime, including that the defendant conducted a
financial transaction “with the intent to conceal the proceeds of the
specified unlawful activity.” App’x 114. Aybar-Peguero began his
allocution by stating that he “was involved in this financial
transaction through illegal acts, and I know that I did this and that it’s
illegal.” App’x 116. The magistrate judge then engaged
Aybar-Peguero in a further colloquy:
THE COURT: I’m trying to understand what the conduct
was underneath the money laundering count. Did you
. . . get money from the drug dealing?
THE DEFENDANT: Yes, I did receive money.
THE COURT: And what did you do with it?
THE DEFENDANT: I put it in the bank.
THE COURT: And why did you do that? Why did you
put it in the bank?
THE DEFENDANT: I don’t know. It was a way to save
my money.
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THE COURT: Did you want to hide that it was from the
drug dealing?
THE DEFENDANT: It wasn’t so much hiding it from
drugs. I was also working. I wanted to put it with the
money that I was making.
THE COURT: So you put it with money from legitimate
sources. Is that what you’re saying?
THE DEFENDANT: What do you refer to with
legitimate accounts?
THE COURT: Okay. So I don’t know what the
Defendant is trying to tell me, Mr. DiLibero. Why don’t
you take a moment with him so that he can tell me a little
bit more about the money laundering, the concealment.
App’x 117. After the break, the hearing continued:
THE COURT: All right. What do you want to tell me,
Mr. Aybar?
THE DEFENDANT: I was putting money from my work
and I was joining it with money from the drugs.
App’x 118.
The magistrate judge moved on, asking the government to
summarize its evidence. With respect to money laundering, the
prosecutor stated that Aybar-Peguero had deposited cash linked to
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drug trafficking in both his business and personal accounts “to
conceal his illegally owned profits in that he was using the mini
market as a front.” App’x 120. The government also pointed to the
store’s lack of a point-of-sale system and the absence of cash register
receipts as suggesting that “there appeared to be no legitimate
business.” App’x 120. When asked whether he agreed with the
government’s position, Aybar-Peguero answered:
THE DEFENDANT: I’m not too much in agreement
because not all of that money came from drugs. There
was some of it that came from my work. So both of them
were there.
App’x 121. The government then acknowledged that the store did
some legitimate business.
Without any additional discussion or mention of the
defendant’s intent in commingling drug and legitimate business
proceeds, the magistrate judge recommended that the district court
accept Aybar-Peguero’s guilty plea. The district court later adopted
the magistrate judge’s Findings and Recommendations, accepted the
plea, and found Aybar-Peguero guilty of conspiracy to distribute and
possession with intent to distribute controlled substances as well as
concealment money laundering. The district court sentenced Aybar-
Peguero to concurrent prison terms of 87 months for the two counts
of conviction as well as a period of supervised release, a fine, and a
special assessment.
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DISCUSSION
Rule 11 of the Federal Rules of Criminal Procedure sets forth
the procedures by which guilty pleas may be entered and accepted.
As we “have long emphasized, a guilty plea is no mere formality, but
a grave and solemn act.” United States v. Lloyd, 901 F.3d 111, 118 (2d
Cir. 2018) (internal quotation and alteration marks omitted). Because
“[c]lose and regular adherence to the Rule’s demands bears heavily
on the legitimacy of the plea-bargaining system as a whole,” id. at 119,
we “examine critically even slight procedural deficiencies to ensure
that the defendant’s guilty plea was a voluntary and intelligent
choice, and that none of the defendant’s substantial rights ha[s] been
compromised,” United States v. Livorsi, 180 F.3d 76, 78 (2d Cir. 1999)
(internal quotation marks omitted).
At issue here is Rule 11(b)(3), which requires the district court
to “determine that there is a factual basis for the plea” “[b]efore
entering judgment on a guilty plea.” This is not a difficult standard
to meet—the court need not scrutinize the evidence or personally
conclude that the defendant is guilty—but it is an essential one. See
United States v. Maher, 108 F.3d 1513, 1524 (2d Cir. 1997). Specifically,
the court must “assure itself . . . that the conduct to which the
defendant admits is in fact an offense under the statutory provision
under which he is pleading guilty.” Id. The Rule also requires the
district court to assess whether, based on the “facts at its disposal”
including but not limited to “the defendant’s own admissions,” the
offense conduct satisfies the elements of the statute under which the
defendant seeks to plead guilty. Irizarry v. United States, 508 F.2d 960,
8
967 (2d Cir. 1974). As part of this process, it is critical that the
defendant’s colloquy with the district court include an admission that
covers the elements of the offense charged. See Brady v. United States,
397 U.S. 742, 748 (1970) (“Central to the plea and the foundation for
entering judgment against the defendant is the defendant’s admission
in open court that he committed the acts charged in the indictment.”).
Where, as here, “a defendant raises on appeal a claim of Rule
11 error that he did not raise in the district court, that claim is
reviewable only for plain error.” United States v. Torrellas, 455 F.3d 96,
103 (2d Cir. 2006). To satisfy this “heavy burden,” an appellant “must
demonstrate that (1) there was error, (2) the error was plain, and (3)
the error prejudicially affected his substantial rights; if such error is
demonstrated, we will reverse . . . only when (4) the error seriously
affected the fairness, integrity or public reputation of judicial
proceedings.” Lloyd, 901 F.3d at 119–20 (internal quotation marks
omitted). To demonstrate prejudice under the third prong, “a
defendant who seeks reversal of his conviction after a guilty plea, on
the ground that the district court committed plain error under Rule
11, must show a reasonable probability that, but for the error, he
would not have entered the plea.” United States v. Dominguez Benitez,
542 U.S. 74, 83 (2004).
Aybar-Peguero’s sole argument on appeal is that the district
court erred by accepting his guilty plea for concealment money
laundering without a factual basis for the plea. Specifically, he
contends that there was no basis for the court to conclude that he had
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the mens rea required by the statutory provision under which he was
convicted. That provision, § 1956(a)(1)(B)(i), provides that:
Whoever, knowing that the property involved in a
financial transaction 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 . . .
knowing that the transaction is designed in whole or in part
. . . to conceal or disguise the nature, the location, the
source, the ownership, or the control of the proceeds of
specified unlawful activity . . . shall be [guilty].
18 U.S.C. § 1956(a)(1)(B)(i) (emphasis added). The parties agree that
this “concealment element of [the] statute requires that the purpose,
not merely the effect, of the endeavor must be to conceal or disguise”
the proceeds of illicit activity. Government’s Br. 24 (quoting United
States v. Garcia, 587 F.3d 509, 512 (2d Cir. 2009).
According to Aybar-Peguero, “the record does not provide a
sufficient factual basis to conclude that [he] knew the relevant
transactions were intended to conceal the nature, source, or
ownership of the laundered funds.” Appellant’s Br. 10. The
government disagrees, arguing that the defendant’s statements at the
plea hearing as well as the subsequently completed presentence
report (PSR) provided the district court with an adequate basis for
accepting the plea.
After a careful examination of the entire record, we agree with
Aybar-Peguero that the evidence in the record at the time of the plea
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hearing did not satisfy the mens rea requirement for concealment
money laundering. Aybar-Peguero never acknowledged a
concealment purpose, and there was not sufficient evidence
elsewhere in the record to warrant accepting the plea. Thus, the
district court lacked a sufficient basis to accept his guilty plea.
In both his pre-plea petition and his initial oral statement to the
magistrate judge, Aybar-Peguero stated only in the most general
terms that he had engaged in illegal financial transactions; he did not
speak to his intent in doing so. In the former, he wrote: “I was
involved in a financial issue, and I knew that [it] was from illegal acts.
I did this and it is illegal.” App’x 59. Similarly, at the hearing, when
the magistrate judge asked him to describe his conduct, he said: “I
was involved in this financial transaction through illegal acts, and I
know that I did this and that it’s illegal.” App’x 116. But a
defendant’s characterizing his conduct as “illegal” does not make it
so. A defendant may characterize his conduct as illegal yet be
unaware of the elements of the offense. As the advisory committee’s
note to the 1966 amendments to Rule 11 explains, the Rule’s factual
basis requirement “protect[s] a defendant who is” pleading guilty but
does not “realiz[e] that his conduct does not actually fall within the
charge.”
Aybar-Peguero’s subsequent colloquy with the magistrate
judge undermines the government’s claim that he admitted to the
necessary mens rea. In response to the court’s questioning, Aybar-
Peguero stated that his purpose in depositing the drug trafficking
proceeds in the bank was “to save my money.” App’x 117. When the
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court specifically queried whether his motivation had been “to hide
that [the money] was from the drug dealing,” he replied in substance
that it was not. Id. He said: “It wasn’t so much hiding it from drugs.
I was working. I wanted to put it with the money that I was making.”
Id.The government argues that Aybar-Peguero’s opening phrase,
“[i]t wasn’t so much hiding it,” means that he had both the motive to
hide the funds and the motive to save the funds. We disagree. Read
in the context of the entire hearing, it is clear that Aybar-Peguero
never agreed that he engaged in the transactions with the purpose of
concealment. That the first six words of his response, which were
filtered through an interpreter, were not an outright denial is not
significant. In our view, the clear import of his response was that his
true intent was to save his money by putting it into a bank as he did
with his legitimate income.
Apart from the colloquy, the government argues that the record
at the plea hearing contained a sufficient factual basis because the
intent element was included in the information and plea agreement.
While it is true that “[w]e have accepted a reading of the indictment
to the defendant coupled with [an] admission of the acts described in
it as a sufficient factual basis for a guilty plea,” we require more “if
the defendant denies an element of the offense or generally maintains
his innocence.” Godwin v. United States, 687 F.2d 585, 590 (2d Cir.
1982). Here, Aybar-Peguero’s non-acknowledgement of intent to
conceal made it incumbent on the court to ensure that the record of
the plea proceeding contained evidence that the motive, and not just
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the effect, of Aybar-Peguero’s conduct was concealment. The
magistrate judge did not do so. Moreover, “a reading of the
indictment . . . coupled with . . . admission of the acts” is only
sufficient if “the charge is uncomplicated, the indictment detailed and
specific, and the admission unequivocal.” Id. In Garcia, we held that
this “principle is inapplicable” to the concealment element of money
laundering and rejected “[a]ny argument that the charge is
uncomplicated and readily understandable by the average layman.”
587 F.3d at 518. Thus, “[Aybar-Peguero’s] supposed understanding
of the nature of the charge does not take the government far.” Id.The government’s assertion that Aybar-Peguero’s
intermingling of illicit and legitimate funds “reinforces the
concealment purpose underlying the deposits” is likewise
unconvincing. Government’s Br. 31 (emphasis added). Aybar-
Peguero had not acknowledged any concealment purpose that this
intermingling could reinforce. It is not enough that the financial
transactions had the effect of concealing them; the defendant must
have had the purpose of doing so. Here, the defendant’s purpose in
doing so was not established by the colloquy in court and no other
evidence supported it.
The government argues in the alternative that the presentence
report, which was developed after the hearing but before the district
judge accepted the guilty plea, provided an adequate factual basis for
the concealment money laundering charge under Rule 11.
At the outset, we do not think that facts adduced after a plea
hearing may properly be considered by a district judge in accepting a
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plea. See Garcia, 587 F.3d at 514, 519–20. Here, the PSR was not
docketed until March 2021, many months after the plea hearing. In
Irizarry, we expressly disallowed consideration of such “[p]ost hoc”
evidence—that is, “material [that] was not made a part of the record
of the proceedings at which the plea was entered”—because “to
bifurcate the inquiry in this manner would be counterproductive and
could lead to confusion.” 508 F.2d at 967–68 & n.7. As we have
reiterated on several occasions, the facts on which the district court
relies “must . . . be . . . on the record at the time of the giving of the
plea.” United States v. Adams, 448 F.3d 492, 499 (2d Cir. 2006)
(emphasis omitted); accord Garcia, 587 F.3d at 514, 519–20; Maher, 108
F.3d at 1524–25; Irizarry, 508 F.2d at 967–68; see also McCarthy v. United
States, 394 U.S. 459, 465 (1969) (“Rule [11] is intended to produce a
complete record at the time the plea is entered.” (emphasis added)). It is
true that in Lloyd, the panel permitted consideration of the post-plea-
hearing PSR without addressing our precedents to the contrary. See
901 F.3d at 123–24 & n.9. Thus, as we noted the following year in
United States v. Murphy, Lloyd is in tension with our prior precedents.
942 F.3d 73, 87 n.8 (2d Cir. 2019).
To be sure, Rule 11(b)(3) states simply, “[b]efore entering
judgment on a guilty plea, the court must determine that there is a
factual basis for the plea.” But this general statement does not speak
to precisely how and when, before entering judgment on the plea, the
factual basis should be determined. Those questions have been
resolved, however, by the above precedents, which hold that the
factual basis for the plea must be placed on the record at the plea
hearing. Only in this way can the judge be assured that the defendant
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is aware not only of the elements of the crime with which he is
charged, but also that the specific conduct committed satisfies those
elements. In Lloyd, where the panel permitted consideration of the
post-plea-hearing PSR, it relied solely on the language of the rule
without regard to prior precedent and thus the analysis was
incomplete. Accordingly, we conclude that materials not in the
record at the time of the plea hearing cannot properly be considered
and Irizarry remains good law.
In any event, the record here bears no indication that the district
court considered the PSR in determining whether there was a factual
basis for the concealment money laundering plea. In its docket order
accepting the plea, the district court noted that it had reviewed the
plea agreement, magistrate judge’s recommendation, and several
other documents, but it made no mention of the PSR. Rule 11 requires
the district court to “develop, on the record, the factual basis for the
plea.” Santobello v. New York, 404 U.S. 257, 261 (1971) (emphasis
added). Thus, in assessing whether the district court complied with
Rule 11’s strictures, we may not consider whether any facts that the
court did not rely on could have furnished the necessary basis. 2
The district court’s error in accepting the plea to concealment
money laundering does not end our inquiry. To secure vacatur of his
2 In any case, we are doubtful that, even considering the PSR, an
adequate factual basis existed to accept the plea. Aside from the conclusory
statement that Aybar-Peguero made the transactions “to conceal the income
source,” PSR ¶ 30, the PSR is silent as to his mens rea.
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conviction under plain error review, Aybar-Peguero must also show
that the district court’s error was “plain,” “prejudicially affected his
substantial rights,” and “seriously affected the fairness, integrity or
public reputation of judicial proceedings.” Lloyd, 901 F.3d at 119. We
are convinced that Aybar-Peguero meets this standard.
First, the district court’s error is “plain.” To be “plain,” an error
must be “clear” or “obvious,” United States v. Olano, 507 U.S. 725, 734
(1993), or “contrary to law that was clearly established,” United States
v. Donziger, 38 F.4th 290, 303 (2d Cir. 2022) (internal quotation marks
omitted). Rule 11(b)(3) unmistakably requires a district court to
ascertain whether a factual basis for a plea exists before accepting a
guilty plea. “Central to the plea and the foundation for entering
judgment against the defendant is the defendant’s admission in open
court that he committed the acts charged in the indictment.” Brady,
397 U.S. at 748. In this case, Aybar-Peguero did not admit to a
concealment purpose—an offense element—and the other evidence
did not establish that intent either. Thus, it is clear and obvious that
Rule 11(b)(3) was not satisfied.
Second, the district court’s error prejudicially affected
Aybar-Peguero’s substantial rights. “In the context of a Rule 11
error,” the prejudice standard “requires ‘a reasonable probability
that, but for the error, the defendant would not have entered the
plea.’” Garcia, 587 F.3d at 520 (alteration marks omitted) (quoting
United States v. Vaval, 404 F.3d 144, 151 (2d Cir. 2005)). In making this
assessment, we, unlike the district court, are not limited to the record
evidence at the time of the plea. See Torrellas, 455 F.3d at 103 (“In
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determining whether the defendant has” shown prejudice, “we
consider . . . any record evidence . . . as well as the overall strength of
the Government’s case.” (internal quotation marks omitted)). It
appears likely that Aybar-Peguero would not have pled guilty to
violating § 1956(a)(1)(B)(i) had he understood its mens rea requirement
and been told that he needed to state a concealment purpose.
Aybar-Peguero was consistent and persistent in maintaining that his
purpose was otherwise.
Last, the plain and prejudicial error seriously harmed the
legitimacy of the judicial proceeding. As we observed in Lloyd, a lack
of close adherence to Rule 11’s requirements, as occurred here, “bears
heavily on the legitimacy of . . . plea-bargaining.” 901 F.3d at 119. The
district court’s acceptance of the guilty plea without Aybar-Peguero’s
acknowledgement that he intended to conceal the source of his funds
casts serious doubt upon the “fairness, integrity [and] public
reputation of [the] judicial proceedings.” Id. (internal quotation
marks omitted).
In sum, we hold that it was plain error for the district court to
accept Aybar-Peguero’s guilty plea to concealment money laundering
without a sufficient factual basis in the record at the time of the plea
hearing.
CONCLUSION
For the foregoing reasons, we VACATE Aybar-Peguero’s
conviction under § 1956(a)(1)(B)(i) and the sentences for both counts
17
of conviction. 3 The case is REMANDED to the district court for
proceedings consistent with this opinion.
3The parties agree that vacating the § 1956(a)(1)(B)(i) conviction
necessitates vacating the concurrent sentences imposed for both
convictions. See United States v. Sperling, 506 F.2d 1323, 1343 (2d Cir. 1974).
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