United States v. Wert-Ruiz ( 2000 )

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
9-18-2000
United States v. Wert-Ruiz
Precedential or Non-Precedential:
Docket 99-5332
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Filed September 18, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 99-5332
UNITED STATES OF AMERICA
v.
SANDRA WERT-RUIZ, a/k/a THE LADY
Sandra Wert-Ruiz, Appellant
On Appeal From the United States District Court
For the District of New Jersey
(D.C. Crim. No. 96-00073-8)
District Judge: Honorable Dickinson R. Debevoise
Argued: April 24, 2000
Before: BECKER, Chief Judge, WEIS and
OAKES,* Circuit Judges.
(Filed: September 18, 2000)
EDNA B. AXELROD, ESQUIRE
(ARGUED)
76 South Orange Avenue, Suite 305
South Orange, NJ 07079
Counsel for Appellant
_________________________________________________________________
* Honorable James L. Oakes, United States Circuit Judge for the Second
Circuit, sitting by designation.
ROBERT J. CLEARY, ESQUIRE
United States Attorney
GEORGE S. LEONE, ESQUIRE
Assistant United States Attorney
970 Broad Street, Room 700
Newark, NJ 07102
NORMAN J. GROSS, ESQUIRE
(ARGUED)
Assistant United States Attorney
United States Federal Building and
United States Courthouse
401 Market Street, Fourth Floor
Camden, NJ 08101-2098
Counsel for Appellee
OPINION OF THE COURT
BECKER, Chief Judge.
Sandra Wert-Ruiz, the operator of a check cashing and
money remitting agency, appeals her conviction for taking
part in a conspiracy to launder drug money in violation of
18 U.S.C. S 1956(h). The District Court gave a willful
blindness charge--informing the jurors that they could
convict Wert-Ruiz if they concluded that she had
deliberately avoided learning that she was dealing with the
proceeds of illegal activity and that the transactions were
designed to conceal or disguise the nature or source of
those funds. Wert-Ruiz argues on appeal that: (1) there was
sufficient evidence to support a jury conclusion that she
had actual knowledge of the illegal source of the laundered
money, but not that she had willfully blinded herself to the
funds' origin; and (2) the District Court therefore should
not have given a willful blindness charge. We agree that
there was sufficient evidence of actual knowledge, but note
that the jury might have credited only portions of the
government's evidence and concluded that willful blindness
was afoot. Because there was sufficient evidence from
which a jury could find willful blindness, we hold that the
District Court properly charged the jury. We will therefore
affirm Wert-Ruiz's conviction.
2
In reaching our conclusion, we reject Wert-Ruiz's subtle
contention that so long as there is sufficient evidence of
actual knowledge, a willful blindness charge is at all events
inappropriate. Rather, we follow our holding in United
States v. Stewart, 185 F.3d 112, 126 (3d Cir. 1999), that,
assuming there to be sufficient evidence as to both
theories, it is not inconsistent for a court to give a charge
on both willful blindness and actual knowledge. This is so
because, if the jury does not find the existence of actual
knowledge, it might still find that the facts support a
finding of willful blindness. In view of our conclusion, we
need not reach the government's alternative contention that
an erroneous giving of a willful blindness instruction is per
se harmless error.1
I.
Sandra Wert-Ruiz earned a medical degree in the
Dominican Republic. In 1986, she and her husband,
Franklin Ruiz, moved to the United States. Wert-Ruiz
became a United States citizen in 1989. In 1991, Wert-Ruiz
and her husband opened S&F Check Cashing and S&F
Associates. S&F 's main office was in West New York, New
Jersey, and was managed by Wert-Ruiz, while Franklin
_________________________________________________________________
1. Wert-Ruiz makes a number of additional arguments that we dispose of
summarily. She asserts that the prosecutor made improper remarks
during closing arguments on rebuttal. Because Wert-Ruiz's trial attorney
failed to object to these statements, we review them only for plain error
and conclude that they fail to rise to that level. Wert-Ruiz also objects
to
other statements made in the rebuttal that allegedly implied that she
and her counsel had colluded to produce false evidence at trial. Having
reviewed the statements, we do not find a clear implication of such
conduct. At all events, Wert-Ruiz's attorney objected, the District Court
gave a cautionary instruction afterwards, and defense counsel did not
request a further remedy. Under the circumstances, we find no
constitutional error. We also conclude, contrary to Wert-Ruiz's
arguments, that she was not prejudiced by the government's purported
incorporation of evidence into leading questions and that the government
did not improperly vouch for Angel Rayo's credibility and bolster his
testimony. Finally, in light of the preceding, we conclude that there was
not an accumulation of errors that combined to deprive Wert-Ruiz of a
fair trial.
3
Ruiz managed a branch in Guttenberg, New Jersey. S&F
Check Cashing only handled check cashing services,
whereas S&F Associates provided additional services such
as money orders, Western Union transmittals, bill
payments, and phone card sales. Wert-Ruiz testified that
the businesses were dealing with millions of dollars
annually, which included moving thirteen million dollars
through Western Union money transmittals and over
twenty-one million dollars through check cashing activities
in 1994 alone.
In 1994, Wert-Ruiz's portion of the business became
involved in laundering drug money. The conspiracy touched
Wert-Ruiz through the business of money remitting, which
is a legitimate financial service used to send funds from one
country to another. In a typical money remitting
transaction an individual gives cash to a remitting agency
in one country with direction that an individual in another
country be paid. The remitter contacts a similar agency in
the transferee country, provides the name of the funds'
intended recipient, and transmits the funds. The recipient
then collects the money from the transferee agency.
Because the funds entering the remitting system are in the
currency of the transferor country while those paid out are
in the currency of the transferee, the tangible moneys
received by the transferor remitting agency are not sent
directly to the end recipient. Instead, they are sold to
parties who need that particular currency to conduct their
business (such as importers in foreign nations) in exchange
for the currencies needed to pay out the remittances.
Money remitting provides an avenue for placing currency
into the banking system, making it a mechanism through
which illegally obtained funds (like those acquired through
drug trafficking) may be laundered. False receipts generated
to record false remitting transactions create a paper trail
indicating that money sent abroad is "clean," when in fact
the foreign agency gives the transferred funds to the drug
traffickers. Transactions of this nature were at the heart of
the case against Wert-Ruiz. While there were no allegations
that Wert-Ruiz was in any way involved with the actual sale
of illicit drugs, federal prosecutors contended that she was
a participant in a conspiracy to use her business to launder
drug money.
4
Wert-Ruiz's involvement with money launderers arose in
connection with an ongoing operation of Fabio Castro and
Angel Rayo, the owners of a money remitting service known
as International Services. In addition to conducting
legitimate transactions, International Services was
laundering drug money. Because the volume of transfers
handled by International Services was potentially large
enough to attract the attention of law enforcement, Rayo
sought another agency to handle money transfers and
asked Wert-Ruiz to become an agent of International
Services. According to the government's evidence, Wert-Ruiz
participated in the money laundering conspiracy by
generating false receipts designed to conceal transfers of
money. Specifically, drug trafficking proceeds were delivered
in cash form to Wert-Ruiz, who then prepared or directed
the preparation of false remitting receipts. These efforts, in
turn, created a paper trail that suggested that the money
was entering the banking system through legitimate
channels.
After a time, Wert-Ruiz obtained her own license to
function as a remitter, and began operating through a new
corporation she formed named Latin American Services
("LAS"). Wert-Ruiz continued to receive money acquired
through drug trafficking--often packed inside of gym bags
--and continued to prepare fraudulent receipts.
At the time of trial, Castro was a fugitive. Rayo testified
on behalf of the government under a plea agreement. Wert-
Ruiz did not dispute that money had been laundered
through her business, but she denied knowing anything
about the other conspirators' intentions. The government
presented evidence that Wert-Ruiz and her employees
handwrote thousands of fictitious receipts for cash
delivered to LAS that was supposedly going to individuals
in the Dominican Republic. The government presented
expert testimony that Wert-Ruiz attempted to disguise her
handwriting in preparing these receipts. Investigators
testified that out of a sample of well over one hundred
receipts seized from Wert-Ruiz, they had been unable to
find a single person identified on any of the receipts,
indicating that the receipts were false. At trial, Wert-Ruiz
testified that she had prepared the forged receipts from
5
actual receipts provided by International Services that
purportedly reflected real transactions. These latter receipts
were not produced at trial, and the government presented
evidence that Wert-Ruiz had never admitted to writing the
forged LAS receipts during interviews with law enforcement
officials conducted after her arrest but before trial.
Additional evidence established that the conspirators
used codes in conducting phone conversations about
aspects of the conspiracy. Though Wert-Ruiz was not privy
to many of the codes, she knew that the conspirators used
the word "tarjetas" (Spanish for "cards") to mean money,
and she was aware of their practice of dropping zeros when
discussing sums of money, thus describing $10,000 as
$1,000.
A jury convicted Wert-Ruiz of violating 18 U.S.C.
S 1956(h) (conspiracy to commit money laundering).2 She
_________________________________________________________________
2. The statute provides that "[a]ny person who conspires to commit any
offense defined in this section . . . shall be subject to the same
penalties
as those prescribed for the offense the commission of which was the
object of the conspiracy." Id. The relevant portion of the money
laundering statute implicated by this clause is 18 U.S.C. S 1956(a)(1),
which provides for liability for:
Whoever, knowing that the property involved in afinancial
transaction represents the proceeds of some form of unlawful
activity, conducts or attempts to conduct such afinancial
transaction which in fact involves the proceeds of specified
unlawful
activity--
(A)(i) with the intent to promote the carrying on of specified
unlawful activity; or
(ii) with intent to engage in conduct constituting a violation of
section 7201 or 7206 of the Internal Revenue Code of 1986; or
(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; or
(ii) to avoid a transaction reporting requirement under State or
Federal law[.]
The statute provides a list of offenses that qualify as "specified
unlawful
activity," among them the sale or distribution of controlled substances.
6
received a six-year prison sentence and filed a timely notice
of appeal. The District Court had jurisdiction under 18
U.S.C. S 3231. We have appellate jurisdiction under 28
U.S.C. S 1291.
II.
At trial, the District Court instructed the jury on the
issue of willful blindness as follows:
When knowledge of the existence of a particular fact
is an essential part of an offense, such knowledge may
be established if a defendant is aware of a high
probability of its existence, unless she actually believes
that it does not exist.
So with respect to the issue of a defendant's
knowledge in this case, if you find from all the evidence
beyond a reasonable doubt that the defendant
deliberately and consciously tried to avoid learning that
certain currency was the proceeds of some form of
illegal activity, and that the defendants deliberately and
consciously tried to avoid learning that the transaction
was designed in whole or in part to conceal or disguise
the nature, location, source, ownership or control of
the proceeds of the unlawful activity, you may treat
such deliberate avoidance of positive knowledge as the
equivalent of knowledge.
I must emphasize, however, that the requisite proof
of knowledge on the part of a defendant cannot be
established by demonstrating she was negligent,
careless or foolish.
_________________________________________________________________
See id. S 1956(c)(7). Though knowledge that the funds have been
obtained illegally is required, knowledge of what the specified unlawful
activity is is not, for the statute defines "knowing that the property
involved in a financial transaction represents the proceeds of some form
of unlawful activity" as meaning that the person involved "knew the
property involved in the transaction represented proceeds from some
form, though not necessarily which form, of activity that constitutes a
felony under State, Federal, or foreign law, regardless of whether or not
such activity is specified in paragraph (7) [which defines the specified
unlawful activities]." Id. S (c)(1)."
7
Wert-Ruiz argues that the government adduced evidence
only of her actual knowledge of the conspiracy and its
objects, and that there was insufficient evidence of willful
blindness to allow a jury to conclude that she had
deliberately avoided learning about the illegal activities for
which her business was used. Because such evidence was
absent, the argument continues, the instruction was
unjustified, and had the effect of diluting the government's
burden of proof by creating the risk of convicting Wert-Ruiz
if the jury concluded that she merely should have known
about the criminal activities. See United States v. Hilliard,
31 F.3d 1509, 1517 (10th Cir. 1994).
Our review of a challenge to the propriety of the willful
blindness instruction is plenary. See United States v.
Stewart, 185 F.3d 112, 126 (3d Cir. 1999). In evaluating
the charge, we view the evidence and the inferences drawn
therefrom in the light most favorable to the government.
See United States v. Sharpe, 193 F.3d 852, 871 (5th Cir.
1999).
A.
A willful blindness instruction is often described as
sounding in "deliberate ignorance." See United States v. One
1973 Rolls Royce, 43 F.3d 794, 807-08 (3d Cir. 1994). Such
instructions must be tailored, as the District Court's was
here, to avoid the implication that a defendant may be
convicted simply because he or she should have known of
facts of which he or she was unaware. Willful blindness is
not to be equated with negligence or a lack of due care, see
id. at 809 n.13, for "willful blindness is a subjective state of
mind that is deemed to satisfy a scienter requirement of
knowledge," id. at 808. The instruction"must make clear
that the defendant himself was subjectively aware of the
high probability of the fact in question, and not merely that
a reasonable man would have been aware of the
probability." United States v. Caminos, 770 F.2d 361, 365
(3d Cir. 1985). If such a charge is supported by sufficient
evidence, it is not inconsistent for a court to give a charge
on both willful blindness and actual knowledge, for if the
jury does not find the existence of actual knowledge, it
8
might still find willful blindness. See United States v.
Stewart, 185 F.3d 112, 126 (3d Cir. 1999).
Wert-Ruiz does not challenge the legal adequacy of the
instruction as it was worded, but rather the propriety of
giving it under the circumstances of her case.3 She urges
that there was insufficient evidence of willful blindness to
justify the instruction.
B.
Wert-Ruiz concedes that there was sufficient evidence to
convict her of knowingly participating in the conspiracy. As
noted above, however, she maintains that none of the
government's evidence supported a willful blindness
instruction. Wert-Ruiz contends that each piece of the
government's evidence can be interpreted in only one of two
ways: either she was a knowing participant in the
conspiracy (if the government's evidence is believed) or she
was an unknowing innocent who became ensnared in it (if
the government's evidence is not believed). Mindful that we
must interpret each piece of evidence (and draw all
supportable inferences) in favor of the government, and
mindful that the jury was entitled to decide that only part
of the government's evidence was credible, we conclude that
Wert-Ruiz's challenge must fail.
_________________________________________________________________
3. Wert-Ruiz does, however, make an additional legal challenge to the
instruction. She argues that the instruction was error under the
circumstances because it is impossible to be willfully blind to
participation in a conspiracy. Citing United States v. Scotti, 47 F.3d
1237
(2d Cir. 1995), she maintains that it is "logically impossible for a
defendant to intend and agree to join a conspiracy if [s]he does not know
that it exists." Id. at 1243. This contention flounders on our ruling to
the
contrary in United States v. Anderskow, 88 F.3d 245, 254 (3d Cir. 1996),
which affirmed a conspiracy conviction where "the jury had ample
evidence with which to conclude that, at a minimum,[the defendant]
had willfully blinded himself to the fact that" a criminal conspiracy
existed.
9
1.
a.
Wert-Ruiz first points to the testimony of Angel Rayo. At
trial Rayo claimed to have recruited Wert-Ruiz to
participate in illegal laundering activities. Rayo testified
through an interpreter that he recruited Wert-Ruiz to pose
as an agent of International Services by specifically asking
her to engage in activities to support the "illegal aspects" of
International Services' transactions, stating "I also propose
is that she do appear as an agent where transfers would be
done that were not real in order to support the illegal
aspects of International Services." Rayo also testified that
Wert-Ruiz subsequently generated false receipts for
nonexistent money remitting transactions to create a paper
trail that would make sending drug money abroad appear
legal.
Wert-Ruiz characterizes each of these portions of Rayo's
testimony as evidence of actual knowledge, but not willful
blindness. It is true that a jury could find from this
evidence that Wert-Ruiz knew she was participating in a
conspiracy to launder funds that had been generated by
illegal activities. It is essential, however, to remember the
precise contours of the instruction. The District Court
specifically focused the willful blindness instruction on the
source of the laundered funds and the purpose of the
transactions in which she engaged. To be sure, the
evidence recounted above, if believed by the jury, could
have been used to conclude that Wert-Ruiz knew the illegal
source of the money and the precise purpose of her
activities. The evidence is not, however, inconsistent with
the conduct of an individual who willfully blinded herself
from the source of the funds with which she dealt and the
nature of those activities.
"Illegal aspects" (the wording employed by Rayo in his
testimony) is a vague term, encompassing a range of
activities that may not have involved the laundering of drug
money. Wert-Ruiz could have knowingly generated the false
receipts in exchange for the commissions she received while
willfully blinding herself to the source of the cash or the
10
purpose of the transactions even if she knew her activities
had "illegal aspects." Indeed, Rayo himself testified that he
had been willfully blind about the funds that he was
laundering for quite some time. When asked what he
understood about the source of the funds, he stated"I
never asked the question. The truth is I did not want to
know." Similarly, Rayo testified that Wert-Ruiz never asked
him about the source of the money that she would be
transferring. A jury could have credited both Wert-Ruiz's
denial of knowledge and the evidence of her participation in
the concealment activities, concluding that the reason that
Wert-Ruiz did not know of the source of the illicit funds
was her deliberate ignorance of the circumstances
surrounding her activities. Willful blindness instructions
have previously been upheld under similar circumstances.
See United States v. Gonzales, 90 F.3d 1363, 1371 (8th Cir.
1996) (upholding willful blindness instruction where the
defendants, who were charged with laundering drug money,
failed to inquire about the source of the money and used
incorrect names and addresses on documents when wiring
money).
In short, a jury could have credited Rayo's testimony as
implying that Wert-Ruiz knew that she was being invited to
engage in activities designed to conceal the source of
certain moneys without being specifically told the source of
the funds. The fact that Wert-Ruiz did not ask the natural
follow-up question to determine the source of those funds
could be reasonably considered by a jury to be evidence of
willful blindness, especially when combined with the
additional evidence discussed below.
Finally, we must remember that the jury was entitled to
disbelieve all or part of Rayo's testimony. Thus, even if we
were to agree with Wert-Ruiz that Rayo's testimony only
supports a finding of actual knowledge, there was other
evidence in the record on which a jury could have relied to
find that Wert-Ruiz had willfully blinded herself to the
illegal source of the funds she was transferring.
b.
Wert-Ruiz points also to the testimony of Yuri Acosta,
who testified that he delivered bags of money to Wert-Ruiz
11
and claimed that Wert-Ruiz advised him that, if he were
ever caught with the funds, he should say that he was
bringing money from International Services or another
cashier. Wert-Ruiz claims that this is evidence of knowledge
of illegality. Again, in our view, the evidence indicates
knowledge of concealment, but is not exclusively evidence
of knowledge of the illicit source of the money. In light of
Wert-Ruiz's denial that she ever knew the illegal source of
the funds, a jury could accept the denial and conclude that
her conduct evidenced willful blindness. Further, as with
Rayo's testimony, because the jury could selectively
discredit some of the evidence in the prosecution's case, the
existence of evidence that points to actual knowledge does
not preclude consideration of other evidence that points to
a finding that Wert-Ruiz was wilfully blind to the source of
the drug money.
c.
The ability of the jury to have discounted aspects of the
government's case is important in light of the last piece of
evidence that, according to Wert-Ruiz, demonstrates that
her culpability was either knowing or innocent, but not
deliberately ignorant. After Wert-Ruiz's arrest, she spoke to
a customs agent who testified that Wert-Ruiz described her
activities and admitted that she received bags of money in
such large volume that she herself was suspicious about it.
The agent testified that after he asked her if she thought
the money came from the sale of narcotics, "[Wert-Ruiz]
replied that she was an educated woman, and where else
would money come from in that amount."
This statement, if credited by the jury, would indeed
suggest actual knowledge and not willful blindness. Still, in
juxtaposition with Wert-Ruiz's claims at trial not to have
known the source of the funds, it could arguably be viewed
as an example of willful blindness--in other words, she
never asked questions while participating in the conspiracy,
but when the truth was revealed she was not at all
surprised about what really had happened.
2.
Wert-Ruiz further claims that the government's
summation confirms that the evidence previously recounted
12
pertained only to actual knowledge. We do not agree. She
bases her argument on segments of the summation where
the prosecution emphasized Rayo's testimony that he told
Wert-Ruiz that she would be a pretend agent for
International Services and the evidence that Wert-Ruiz
created fake receipts for transactions that never took place.
Again, we do not believe this evidence supports only an
actual knowledge charge, as it could be taken to
demonstrate either that Wert-Ruiz figured out that the
funds with which she was dealing came from an illegal
source or that she willfully avoided drawing that inference
and therefore never "knew" that to be the case. Moreover,
as Wert-Ruiz concedes, the government did indeed argue
that even if the jury accepted some of the defendant's
arguments, the evidence indicated that she still"clos[ed
her] eyes to what was obviously illegal."
3.
Even if some of the evidence discussed above tends to be
consistent only with a finding of actual knowledge, the
government presented ample additional evidence from
which a reasonable inference of willful blindness could be
drawn. The government points out that evidence was
introduced demonstrating that Wert-Ruiz knew that in
many of the transactions the co-conspirators would refer to
large dollar amounts by dropping digits, but still she did
not raise questions as to this practice. Similarly, there is
evidence that she and members of the conspiracy would
refer to money by the code word "tarjetas" (the Spanish
word for cards). A reasonable jury, having discounted
evidence of Wert-Ruiz's actual knowledge of the conspiracy
or its objects, could rationally conclude that the practice of
using code words for transactions and minimizing dollar
amounts--not to mention her receipt of large amounts of
cash in gym bags--must have alerted her to the possibility
that her money transfer activities were actually in service of
a money laundering operation, and that her failure to
inquire further evinced willful blindness. This is not to say
that Wert-Ruiz did not proffer alternative explanations, but
the verdict indicates that the jury did not credit them.
Because the evidence supports that verdict, we will not
second guess that decision.
13
III.
Failing to uphold the District Court's instruction under
these facts could carry harmful results. There was little
direct evidence that Wert-Ruiz specifically knew that she
was helping to launder the proceeds of illegal activity--most
of the evidence in this regard was circumstantial. It would
seem that a reasonable person could have drawn few other
conclusions given the nature of the transactions, yet Wert-
Ruiz claimed not to have known that she was engaging in
money laundering activity. If Wert-Ruiz deliberately avoided
learning the source of the funds, she could have honestly
claimed to have lacked knowledge. In this light, a willful
blindness instruction served the important purpose of
preventing Wert-Ruiz from evading culpability if the jury
concluded that due to a willful refusal to connect the dots,
Wert-Ruiz actually did not know of the purposes of her
money laundering activities. See United States v. Sharma,
190 F.3d 220, 231 (3d Cir. 1999) (approving instruction
when jury could have inferred the defendant's lack of
knowledge, and the willful blindness instruction"ensured
that a juror who believed that a defendant turned a blind
eye toward his co-defendant's conduct would not vote to
acquit the willfully blind defendant"). Deliberate ignorance
cannot become a safe harbor for culpable conduct.
In sum, we conclude that a reasonable jury could have
concluded that Wert-Ruiz deliberately avoided learning
about the source of the enterprise's funds. Because we so
hold, there is no need to address the government's
contention that the giving of a willful blindness instruction
when there is insufficient evidence of the same is per se
harmless error. The judgment of the District Court will be
affirmed.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
14