United States v. Greenidge ( 2007 )

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
8-20-2007
USA v. Greenidge
Precedential or Non-Precedential: Precedential
Docket No. 05-4887
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-4887
UNITED STATES OF AMERICA
v.
CARLEEN GREENIDGE,
Appellant
(D.N.J. Criminal No. 03-cr-00253-4)
No. 05-5083
UNITED STATES OF AMERICA
v.
MARIO PALLITTA,
Appellant
(D.N.J. Criminal No. 03-cr-00253-3)
No. 06-2506
UNITED STATES OF AMERICA
v.
JOSEPH DIGREGORIO,
Appellant
(D.N.J. Criminal No. 03-cr-00253-6)
Consolidated Appeal from the United States District Court
for the District of New Jersey
District Judge: Honorable Joseph A. Greenaway, Jr.
Submitted Under Third Circuit L.A.R. 34.1(a)
June 29, 2007
Before: BARRY, FUENTES, and GARTH, Circuit Judges
(Opinion Filed: July 17, 2007)
Rena Rothfeld, Esq.
19-21 West Mt. Pleasant Avenue
Livingston, NJ 07039
Counsel for Appellant Carleen Greenidge
Kevin F. Carlucci, Esq.
Office of Federal Public Defender
972 Broad Street
Newark, NJ 07102
Counsel for Appellant Mario Pallitta
Henry E. Klingeman, Esq.
2
Greenberg, Dauber, Epstein & Tucker
One Gateway Center
Suite 600
Newark, NJ 07102-5311
Counsel for Appellant Joseph DiGregorio
George S. Leone, Esq.
Sabrina G. Comizzoli, Esq.
Office of United States Attorney
970 Broad Street
Room 700
Newark, NJ 07102
Counsel for Appellee
OPINION
GARTH, Circuit Judge:
Appellants Joseph DiGregorio, Carleen Greenidge, and
Mario Pallitta appeal their convictions and DiGregorio appeals his
sentence. We have jurisdiction over the challenges to the
convictions pursuant to 28 U.S.C. § 1291, and over the challenge
to the sentence pursuant to 18 U.S.C. § 3742(a). We will affirm.
I.
In October 2001, the Federal Bureau of Investigation began
an investigation into the bank deposits of stolen and altered
corporate checks and the wire transfers of proceeds from those
checks. The investigation revealed a bank fraud and money
laundering conspiracy involving approximately 20 co-conspirators
and a theft of over $5 million.
The conspiracy involved essentially three tiers. At the top
was Melvyn Waldron, a/k/a “Rankin,” who, along with other co-
3
conspirators, obtained stolen checks from mail rooms and post
offices and arranged for those checks to be altered and deposited
into various accounts and for the proceeds to be withdrawn.
Rankin handed the checks off to Samuel Massaquoi, who served as
a liaison between Rankin and Emmanuel Deji, the co-conspirator
who altered the payee names on the checks in exchange for a fee.
In the middle tier of the conspiracy were the “recruiters.” These
recruiters solicited “depositors,” people on the bottom tier of the
conspiracy who were willing to use their personal or business bank
accounts to deposit the stolen and altered checks in order to make
them appear legitimate.
DiGregorio
DiGregorio was recruited into this conspiracy by his bookie,
John Elsis, who cooperated with the government and testified at
trial. DiGregorio told Elsis that the company for which he worked,
KnowYourStuff.com (“KYS”), was struggling financially. Elsis
suggested DiGregorio join this scheme in order to obtain cash for
the company, telling DiGregorio that “you can erase the name of
the company and put your company’s name on the check.” (Pallitta
App. 413.) Elsis told DiGregorio that if he recruited a depositor,
the depositor could keep 50% of the proceeds from the check.
DiGregorio recruited the CEO of KYS, William Nash, at a
November 2001 meeting also attended by Daniel McGowan, head
of sales for KYS. DiGregorio told Nash that he could keep a third
of the funds. Nash, who cooperated with the government, testified
that in order to keep KYS afloat, he would need approximately
$420,000, and so asked DiGregorio to obtain a check for
approximately $1.4 million. DiGregorio relayed this request to
Rankin, who agreed.
To explain to KYS’s employees and investors this large
infusion of cash, DiGregorio, McGowan, and Nash invented a
business deal with Samsung Electronics and a fictitious third
company, “B & D Systems.” They memorialized the deal in a fake
contract, and asked Rankin to set up a bank account for the phony
B & D Systems in order to make a future wire transfer to that
account seem legitimate. Rankin registered the fake business with
the state, and opened a bank account in the name of B & D
4
Systems.
On November 26, 2001, Rankin and Elsis picked up
DiGregorio and Nash and drove to a Merrill Lynch branch office
where KYS maintained a bank account. Rankin had a stolen check
in the amount of $1,401,647.28. The payee’s name had been
altered by Deji, and after examining the check, DiGregorio and
Nash commented that it looked “good.” Nash deposited the check.
During the ride back to KYS, Nash told Rankin, in DiGregorio’s
presence, that if Rankin gave him his account number, Nash would
wire a portion of the funds to the B & D Systems account.
DiGregorio informed Elsis when the check cleared. On
December 6, 2001, Nash wired $980,000 from the KYS account to
the B & D Systems account. Nash used $260,000 of the proceeds
for business expenses, including employee backpay. From this
$260,000, DiGregorio received $10,500 to represent his purported
“sales commission” from the phony Samsung/B & D Systems deal,
and another $8,000 in salary and backpay.
On December 21, 2001, Nash’s Merrill Lynch broker called
him to inform him that the check had been fraudulent. Merrill
Lynch froze the remaining $160,000 in the account. Nash informed
DiGregorio and McGowan, and they agreed to continue
representing that the source of the money was a legitimate business
deal between Samsung Electronics and B & D Systems. Nash
typed a script and gave DiGregorio and McGowan copies. When
interviewed by members of the United States Attorney’s Office,
DiGregorio told this story, which became the basis of an
obstruction of justice enhancement at sentencing.
Greenidge
Greenidge was recruited by Kenson Gilbert, who cooperated
with the government and testified at trial. In October 2001,
Greenidge met with Gilbert and co-conspirator George Nicholas.
At this meeting, Gilbert explained that Rankin would deposit a
stolen and altered check into the account of the moving and storage
company Greenidge owned and operated, Signature Van Lines.
Gilbert said that they would split the proceeds of the check, with
50% going to Greenidge and 50% to Rankin. Greenidge agreed to
5
the plan, and Gilbert told her that she would be instructed how and
when to withdraw the money from her business account in order to
avoid suspicion by the bank.
A few days later, Greenidge met with Gilbert, Nicholas, and
Rankin. Greenidge gave Rankin her business name, business
account number at HSBC Bank, and personal identification number
(“PIN”).
On November 17, 2001, Rankin deposited a stolen check for
$253,000.00 into the Signature Van Lines account. Deji had altered
the name of the payee on the check.
A week later, the check cleared. Greenidge met with Rankin
and Gilbert and gave Rankin an envelope containing several checks
from Signature Van Lines. Rankin gave Greenidge the account
number for B & D Systems and told Greenidge to transfer his
remaining share of the proceeds there. On November 30, 2001,
Greenidge wire transferred $68,047.21 from her business account
into the B & D Systems account.
Pallitta
Pallitta, like DiGregorio, was recruited into the conspiracy
by Elsis. Pallitta knew Elsis because Pallitta placed bets with Elsis
and Elsis’s bookmaking partner, Joe Bellero. In November 2001,
Elsis and Bellero recruited Pallitta to be a depositor on behalf of
Anthony Dunlock, a construction worker who had been performing
work on Elsis’s home. Dunlock asked Elsis if Elsis could help him
“get rid” of some stolen checks. (Pallitta App. 408.) Elsis
approached Bellero, who recruited Pallitta. They decided that
Pallitta would earn 50% of the check’s proceeds, while Rankin
would keep 40%, and Bellero and Elsis would each keep 5%.
Elsis discussed with Pallitta the specifics of the scheme,
telling him that the checks were stolen and that the names of the
payees were electronically altered so that the bank could not detect
the fraud, and, on Rankin’s instruction, asked Pallitta how much he
would be willing to deposit into his business account. Pallitta
responded that because his account was frequently overdrawn, he
did not want a large check which would arouse the bank’s
6
suspicion. Pallitta and Elsis agreed that Pallitta would deposit a
check for approximately $130,000.
On November 26, 2001, Rankin, Elsis, and Pallitta met at an
empty dry cleaning business next door to Amici’s Restaurant, the
pizzeria Pallitta owned. Rankin gave Pallitta a stolen check in the
amount of $138,494.30. Deji had altered the name of the check’s
payee. Pallitta examined the check and said that it looked “good.”
(Pallitta App. 410.)
Pallitta provided Rankin with a pre-printed deposit slip for
Amici’s Restaurant’s bank account, and Rankin deposited the check
in the bank across the street. When Rankin returned, Pallitta gave
him his business account number, PIN, and the bank’s telephone
number so that Rankin could call to find out when the check
cleared.
Later that day, Pallitta called the assistant bank manager to
ask when the funds would be available for withdrawal. The
assistant manager became suspicious because the deposit was so
large compared to the $11.30 account balance and the fact that the
account was frequently overdrawn. She examined the check and
noticed that the name of the payee was typed in a slightly larger and
darker font than the other print on the check. After showing the
check to the bank manager, the bank put a hold on the account.
None of the funds were withdrawn.
Arrests and Procedural History
The arrests began with Rankin, in January 2002. The arrests
continued in February (Gilbert and Massaquoi); August (Elsis);
and September (DiGregorio, Nash, Pallitta, and Bellero). In April
2003, Greenidge, Deji, and Dunlock were arrested.
On October 23, 2003, DiGregorio, Greenidge, and Pallitta
were charged in a nine-count superseding indictment with other
defendants including Deji and McGowan. Count One charged
Pallitta, Greenidge, and Deji with conspiracy to commit bank fraud,
contrary to 18 U.S.C. § 1344 and in violation of 18 U.S.C. § 371.
Count Six charged Pallitta with aiding and abetting the crime of
bank fraud, in violation of 18 U.S.C. § 1344 and 18 U.S.C. § 2.
7
Count Seven charged Pallitta, Greenidge, DiGregorio, and
McGowan with conspiracy to engage in a monetary transaction
involving the proceeds of criminally derived property, contrary to
18 U.S.C. § 1957(a) and in violation of 18 U.S.C. § 1956(h).
Trial began on January 18, 2005 before the Honorable
Joseph A. Greenaway.1 Co-conspirators Massaquoi, Gilbert, Elsis,
and Nash testified for the government at trial. On March 1, 20005,
the jury found DiGregorio, Pallitta, and Greenidge guilty on all
applicable counts,2 but acquitted McGowan. DiGregorio was
sentenced to 41 months of imprisonment; Pallitta to 30 months;
and Greenidge to 33 months. All three defendants appeal their
convictions, and DiGregorio appeals his sentence as well.
II.
A. Variance between the Indictment and the Proof at Trial
Claiming a variance between the indictment and the proof at
trial, all three appellants challenge their convictions for conspiracy
to engage in a monetary transaction involving the proceeds of
criminally derived property (Count Seven), and Greenidge and
Pallitta also challenge their convictions for conspiracy to commit
bank fraud (Count One).3 According to appellants, while the
indictment alleged a single conspiracy for each count, the evidence
1
Judge Greenaway also accepted the guilty pleas of, among
others, Rankin, Nash, Elsis, Gilbert, Bellero, Dunlock, and
Massaquoi. These defendants have either not yet been sentenced,
not filed notices of appeal of their sentences, or, in the case of
Bellero, died before sentencing.
2
The jury convicted Deji on Counts One through Four,
Eight, and Nine. This Court dismissed Deji’s appeal on August 29,
2006 because he is a fugitive.
3
Although Pallitta did not raise this issue in his opening
brief, pursuant to Rule 28(i) of the Federal Rules of Appellate
Procedure, in his reply brief he joined the argument made by
Greenidge and DiGregorio on this issue.
8
at most demonstrated separate conspiracies—a conspiracy per
appellant per count. They contend that the District Court erred by
finding no variance between the proof and the indictment and by
refusing to give appellants’ proposed jury instruction on whether
the evidence established a single conspiracy or multiple
conspiracies.4
This Court will vacate a conviction “where a variance
between the indictment and proof at trial exists to the prejudice of
a defendant’s substantial rights.” United States v. Salmon, 944 F.2d
1106, 1116 (3d Cir. 1991) (citing United States v. Kelly, 892 F.2d
255, 258 (3d Cir. 1989)). The “variance doctrine is intended to
prevent a situation in which the jury might be unable to separate
offenders and offenses and easily could transfer the guilt from one
alleged co-scheme to another.” United States v. Barr, 963 F.2d
641, 648 (3d Cir. 1992) (internal citations and citations omitted).
We examine alleged variances “on a case-by-case basis.”
United States v. Perez, 280 F.3d 318, 346 (3d Cir. 2002). If,
viewing the evidence in the light most favorable to the government,
see Barr, 963 F.2d at 648, a rational trier of fact could have
concluded from the proof adduced at trial the existence of the single
conspiracy alleged in the indictment, there was no variance.
Furthermore, a district court can properly refuse a defendant’s
request for a jury instruction on single versus multiple conspiracies
if there is insufficient evidence to support such an instruction. See
Barr, 963 F.2d at 650.
In United States v. Kelly, 892 F.2d 255 (3d Cir. 1989), this
Court set forth a three-step test to aid in distinguishing between
single and multiple conspiracies.
4
A relevant portion of the proposed jury instruction read:
Even if the evidence in the case shows that Defendant _________ was
a member of some conspiracy, but that this conspiracy is not the single
conspiracy charged in the indictment, you must acquit Defendant
__________ of this charge.
2 Fed. Jury Prac. & Instr. (Crim.) § 31.09 (5th ed.).
9
First, we examine whether there was a common
goal among the conspirators. Second, we look at
the nature of the scheme to determine whether the
agreement contemplated bringing to pass a
continuous result that will not continue without the
continuous cooperation of the conspirators. Third,
we examine the extent to which the participants
overlap in the various dealings.
Id. at 259 (citations and internal quotations omitted). The absence
of one of these factors “does not necessarily defeat an inference of
the existence of a single conspiracy.” United States v. Padilla, 982
F.2d 110, 115 (3d Cir. 1992).
We now turn to the issue of whether, applying the Kelly
factors, the jury had a reasonable basis for finding the existence of
a single conspiracy to commit bank fraud (Count One). There was
certainly evidence of a common goal among these co-conspirators:
to make money by depositing stolen and altered corporate checks
into business accounts. As to the whether the “nature of the
scheme” indicates a single conspiracy, we look to whether there
was evidence that “the activities of one group . . . were ‘necessary
or advantageous to the success of another aspect of the scheme or
to the overall success of the venture.’” Kelly, 892 F.2d at 259
(quoting United States v. DeVarona, 872 F.2d 114, 118 (5th Cir.
1989)). There was evidence to support this factor as well: the
activities of Greenidge and Pallitta as depositors—including having
access to corporate bank accounts and providing Rankin with
account numbers, PINs, and deposit slips—were necessary to the
overall success of the venture. Without a constant supply of willing
depositors, the operation would necessarily have ceased. Finally,
there was a great degree of participant overlap in this plan. The
checks Greenidge and Pallitta deposited came from the same source
(Rankin), and they were altered by the same person (Deji) for the
same reason (to pass the scrutiny of the banks). They worked with
a network of recruiters, including Gilbert and Elsis, to find
depositors, such as Greenidge and Pallitta. Keeping in mind that
“the government need not prove that each defendant knew all the
details, goals, or other participants in order to find a single
conspiracy,” Kelly, 892 F.2d at 260 (internal citation omitted), we
find that here there was sufficient evidence to demonstrate a single
10
conspiracy.
The evidence also supported the jury’s finding of a single
conspiracy to engage in a monetary transaction involving the
proceeds of criminally derived property (Count Seven). The
common goal here was to share in the illegal proceeds resulting
from the deposit of the stolen and altered checks. The participants
in the deposit of $1.4 million to KYS agreed to a division of funds,
from which DiGregorio received $18,500; Rankin and Greenidge
agreed to split evenly the proceeds from the Signature Van Lines
deposit, with Gilbert’s commission coming from Rankin’s share;
and the participants in the Amici’s Restaurant deposit agreed that
Pallitta would receive half of the proceeds, whereas Rankin would
keep 40%, and Bellero and Elsis would each keep 5%.
Furthermore, the nature of the scheme indicates a single conspiracy.
For instance, DiGregorio assisted Nash in conceiving of the phony
“B & D Systems” company so that Nash could transfer the funds to
a dummy account Rankin could set up in that name; Greenidge wire
transferred $68,047.21 from the Signature Van Lines account into
Rankin’s B & D Systems account six days after the deposited stolen
check cleared; and Pallitta gave Rankin his business account
number, PIN, and the bank’s telephone number so that Rankin
could call to find out when the check cleared. Finally, there was a
great degree of participant overlap here as well. For example, all
three appellants intended to split the proceeds with Rankin, and
Elsis profited from the transactions involving both DiGregorio and
Pallitta.
Appellants contend that this case is analogous to Kotteakos
v. United States, 328 U.S. 750 (1946). That case involved a scheme
where one person, Simon Brown, sold his services in falsifying loan
applications on behalf of numerous unrelated applicants. Despite
no evidence of any connection between the loan applicants other
than the fact that they had used Brown to obtain their loans, id. at
755, the indictment charged that the applicants participated in only
a single conspiracy. The Court, analogizing this plan to a rimless
wheel, in which Brown was the hub and the other alleged co-
conspirators were unrelated spokes, id. at 755, found that the
variance “affect[ed] the substantial rights of the parties,” id. at 775,
and was reversible error.
11
Contrary to appellants’ contention, however, the
circumstances here are readily distinguishable from those in
Kotteakos. We agree with the government that this scheme did not
resemble a wheel-hub-spoke conspiracy, but instead could be more
accurately depicted as a pyramidal corporate structure. At the base
of the pyramid were the depositors, such as Pallitta and Greenidge.
Above them were the recruiters, including DiGregorio, Elsis, and
Gilbert, who received a finder’s fee for every depositor they
recruited who successfully deposited a stolen and altered check.
And at the top, were Rankin, the source of the stolen checks, Deji,
the check alterer, and Massaquoi, their liason. Unlike in Kotteakos,
the depositors did not represent independent customers, but were an
integral part of this “corporate” structure. See Perez, 280 F.3d at
346 (“a finding of a master conspiracy with sub-schemes does not
constitute a finding of multiple, unrelated conspiracies and,
therefore, would not create an impermissible variance”) (citation
and internal quotations omitted).
We thus find that the evidence did not demonstrate the
existence of “separate independent networks,” but rather, as the
indictment charged, a single conspiracy, and thus the District
Court’s refusal to give a multiple conspiracies jury instruction was
proper. Barr, 963 F.2d at 650. Furthermore, “even if a multiple
conspiracies charge should have been given, reversal on appeal is
not automatic.” Id. (citation omitted). The convictions cannot be
vacated unless appellants show “both the likelihood of multiple
conspiracies having existed, and substantial prejudice resulting
from the failure to give the requested charge.” Id. (quotation and
citation omitted). Appellants have not demonstrated that there was
prejudice here from any “spillover” evidence.5 First of all, the
government compartmentalized its presentation of evidence,
presenting evidence as to each defendant separately. Secondly, the
District Court properly charged the jury to consider the evidence
5
No appellant claims any other type of prejudice, such as
unfair notice or the erroneous admission of co-conspirator
statements.
12
against each defendant separately.6 Most importantly, the fact that
the jury acquitted McGowan is critical proof that the jury was “able
to separate the offenders and the offenses.” Id.
B. Evidentiary Rulings
1. The Admission of Pallitta’s Prior Conviction
Pallitta claims the District Court erred by admitting into
evidence a stipulation that Pallitta had been convicted of theft in
2001. We review for abuse of discretion. See United States v.
Saada, 212 F.3d 210, 220 (3d Cir. 2000).
The conviction at issue concerned Pallitta’s theft from his
employer. As a delivery person for a liquor distributor, Pallitta
made deliveries and accepted payment on behalf of his employer.
Instead of turning those payments over to his employer, however,
Pallitta kept them for himself. On January 2, 2001, he pled guilty
in New Jersey state court to theft for failure to make required
disposition of property, a third degree felony.
Before deciding whether to testify in his own defense,
Pallitta moved in limine to exclude this evidence so that it could not
be used to impeach him. He conceded that the theft conviction was
6
The District Court instructed:
Each count and the evidence pertaining to it should
be considered separately. Also, the case of each
defendant should be considered separately and
individually. The fact that you may find one
defendant guilty or not guilty of any of the
offenses charged should not control your verdict as
to any other offense charged or any other
defendant. And even though I will discuss related
charges together because they share common legal
and factual elements, you must consider each
count and each defendant separately.
(Pallitta App. 1612.)
13
probative of his credibility, but argued that its similarity to the
alleged bank fraud rendered it overly prejudicial, so that it should
be excluded under Rule 609(a)(1) of the Federal Rules of
Evidence.7 The District Court disagreed that the offense of stealing
from one’s employer and committing a fraud on a bank were so
similar as to lead to a propensity inference, that is, an inference that
because “he stole once, he’ll steal again.” (Pallitta App. 624.) The
District Court ruled that the conviction was admissible under Rule
609(a)(1) for impeachment purposes if Pallitta chose to testify.
While Pallitta did not take the stand, he did subpoena
Anthony Dunlock to testify. Dunlock testified that when, after the
check had been deposited but he had not received his cut from the
proceeds, he went to see Pallitta to attempt to collect his share.
Pallitta’s counsel then attempted to elicit from Dunlock an out-of-
court statement made by Pallitta to Dunlock. Over the
government’s objection that this statement was hearsay which did
not fall within any exception to the hearsay rule, the District Court
permitted Pallitta’s counsel to ask what Pallitta said in that
conversation:
Q: Mr. Dunlock, what was Mr. Pallitta’s response when you
attempted to collect money from him?
7
Rule 609(a)(1) states:
For the purpose of attacking the character for
truthfulness of a witness, evidence that a witness
other than an accused has been convicted of a
crime shall be admitted, subject to Rule 403, if the
crime was punishable by death or imprisonment
in excess of one year under the law under which
the witness was convicted, and evidence that an
accused has been convicted of such a crime shall
be admitted if the court determines that the
probative value of admitting this evidence
outweighs its prejudicial effect to the accused[.]
Fed. R. Evid. 609(a)(1).
14
A: He had informed me that he didn’t know it was going to be
something like this. You know, that Joseph [Bellero] had lied
to him.
Q: When he said he didn’t know it was going to be like this, what
was your understanding?
***
A: [Pallitta] said he thought it was coming from overseas, or
something. And if he had known that, he wouldn’t use his
account, set up a dummy account, or something.
***
Q: By “had known this,” do you know what he was talking about?
A: I guess knowing that it was going to be like this, the way it was.
Q: What way was it?
A: The way the checks were deposited in his account.
Q: Was it that the checks were fraudulent or stolen?
A: I guess so, yes.
***
Q: So if he told you, if he knew it was like that, that is, the checks
were stolen or fraudulent, he would not have deposited it in his
own account. Correct?
A: Correct.
(Pallitta App. 630.)
As the District Court noted, through Dunlock Pallitta
succeeded in his “attempt to introduce exculpatory evidence.”
(Pallitta App. 821.) As the government points out, this statement,
offered for its truth, suggested that Pallitta did not act
“knowingly”—that he did not have a specific intent to defraud and
that he did not knowingly attempt to engage in a monetary
transaction in criminally derived property—and therefore supplied
15
a complete defense to an essential element of both charged crimes.8
After Pallitta’s statements were admitted, the government
moved, per Rule 806 of the Federal Rules of Evidence, that
Pallita’s theft conviction be admitted to challenge the credibility of
the declarant (Pallitta), just as the conviction would have been
admitted, per the District Court’s earlier decision, if Pallitta had
testified himself. Rule 806 provides, in relevant part, that “[w]hen
a hearsay statement . . . has been admitted in evidence, the
credibility of the declarant may be attacked, and if attacked may be
supported, by any evidence which would be admissible for those
purposes if the declarant had testified as a witness.” Fed. R. Evid.
806. As the Advisory Committee Notes emphasize, “[t]he declarant
of a hearsay statement which is admitted in evidence is in effect a
witness. His credibility should in fairness be subject to
impeachment and support as though he had in fact testified.” Fed.
R. Evid. 806 Advisory Committee Notes. See also Saada, 212 F.3d
at 221 (noting that pursuant to Rule 806, “the credibility of the
hearsay declarant . . . may be impeached with . . . evidence of
criminal convictions under Rule 609").
The District Court, having already ruled the prior conviction
admissible under Rule 609 if Pallitta testified, admitted the
conviction under Rule 806. Pallitta claims this was an abuse of
discretion. We disagree.
In determining whether “the probative value of admitting
[the conviction] outweigh[ed] its prejudicial effect”9 to Pallitta, Fed.
8
In fact, in his closing argument Pallitta’s counsel invoked
Dunlock’s testimony, see Pallitta App. 1442 (“[Dunlock] said that
Mario Pallitta said he wouldn’t have done this had he known this
check was stolen.”), to argue that Pallitta did not act knowingly.
9
Pallitta argues that “the introduction of prior convictions
under Rule 609 is subject to Rule 403.” Pallitta Br. 24. This
contention is overbroad. The Rule 403 considerations apply to
“evidence that a witness other than an accused has been convicted
of a crime,” Fed. R. Evid. 609(a)(1) (emphasis added), while
“evidence that an accused has been convicted of such a crime” is
16
R. Evid. 609(a)(1), the District Court engaged in its analysis using
the four factors set forth in Gov’t of the Virgin Islands v. Bedford,
671 F.2d 758 (3d Cir. 1982), namely (1) the kind of crime involved,
(2) when the conviction occurred, (3) the importance of the
witness’ testimony to the case, and (4) the importance of the
credibility of the defendant. Bedford, 671 F.2d at 761 n.4. The
District Court noted that the prior conviction was not remote in
time from the instant offense, see Pallita App. 625, that the
importance of the witness/defendant’s credibility was
“overwhelming,” see Pallitta App. 624, and, with regard to the
kinds of crimes involved, stated that it was “not convinced that
these [crimes] are sufficiently similar . . . [that the jury] will come
to the same conclusion with regard to the instant charge based on
the introduction of the prior conviction.” (Pallitta App. 624.) In
addition, the District Court minimized any prejudice that may have
resulted from the conviction’s admission by having the fact of the
conviction admitted via a stipulation which simply read: “on or
about January 2nd of 2001, defendant Mario Pallitta entered a plea
of guilty to the offense of theft by failure to make required
disposition of property, received in New Jersey Superior Court in
Hudson County, New Jersey.” (Pallitta App. 1272.) The Court
also issued a limiting instruction accompanying the stipulation,
instructing the jury that it could only consider the prior conviction
in regard to Pallitta’s credibility and not as evidence that he is a
“bad person or has a propensity to commit crimes” or as evidence
that he committed the crimes charged in the indictment. (Pallitta
App. 1273.) Finally, the Court gave a second limiting instruction
to the same effect in its final instructions to the jury. See Pallitta
App. 1622.
There was no abuse of discretion here. Pallitta conceded
that his earlier conviction had probative value regarding his
credibility. Furthermore, due to the fact that the out-of-court
statements, if believed, provided a complete defense to the crimes,
both Pallitta’s credibility and the statements’ importance to the case
cannot be overstated. We also cannot conclude that the crime of
admissible if “the probative value of admitting this evidence
outweighs its prejudicial effect to the accused.” Id. (emphasis
added).
17
stealing money from one’s employer is so similar to the crimes of
committing a fraud on a bank and money laundering that the
probative value of the conviction’s admission is outweighed by the
conviction’s prejudicial effect to Pallitta.10 The limiting
instructions were a proper countermeasure to any improper uses of
the evidence the jury may have been tempted to make. In sum,
Pallitta’s appeal on this ground must be rejected.
2. The Impeachment by Contradiction of Greenidge
Greenidge claims that the District Court erred by allowing
the government to cross-examine her about a consumer complaint
and a criminal complaint against her. We review this evidentiary
ruling for abuse of discretion. See Saada, 212 F.3d at 220.
During her direct testimony, Greenidge sought to portray
herself as an honest businessperson. She testified that at the time
of the alleged criminal activity, she was negotiating to acquire
various businesses and was seeking out funding for those
acquisitions. Greenidge explained that she was merely negotiating
a legitimate loan from Rankin, and knew nothing about Rankin’s
scheme or that the $253,000 check Rankin deposited into her
account had been stolen or altered. She emphasized her
10
We reject Pallitta’s policy argument that a court’s
evaluation, pursuant to Rule 609, of the probative value and
prejudicial effect of an accused’s conviction is somehow altered
when the conviction is to be used, pursuant to Rule 806, to impeach
a non-testifying defendant-declarant. Pallitta offers no case law in
support of his argument, and the one law review article he cites
makes the point that “where the defendant has chosen to tell his
story through his own hearsay statements rather than by taking the
witness stand . . . it is arguably more important to allow
impeachment [by conviction] in this context, because the defendant
has avoided the rigors of cross-examination by introducing his
hearsay statements rather than testifying.” Margaret Meriweather
Cordray, Evidence Rule 806 and the Problem of Impeaching the
Nontestifying Declarant, 56 Ohio St. L. J. 495, 504 (1997). We see
no basis for altering the Rule 609 balancing in the circumstances
of a non-testifying defendant-declarant.
18
professionalism, noting that she had been in the moving and storage
business for 15 years and telling the jury: “I’m not a thief. I do not
steal. I was raised with very strong convictions and I did business
honestly.” (Pallitta App. 764.) Greenidge also unequivocally
denied ever having had any criminal problems or receiving any
complaints about her honesty in business:
Q: Have you ever, in those 15 years, had any problems, any
criminal problems?
A: No.
Q: With respect to yourself, or this business, any business that you
were in?
A: Never.
Q: Have you ever had anybody complain about you to a company
and say, don’t deal with her, she’s not honest?
A: Never did.
(Pallitta App. 761.)
The government moved for permission to impeach
Greenidge’s statements with both a customer complaint from 2004
that Greenidge had refused to relinquish the customer’s furniture
until the customer paid $500 beyond what was owed, and a criminal
complaint charging Greenidge with theft. The criminal complaint
charged Greenidge with theft “by unlawfully taking or exercising
control over certain immovable property,” and arose when Budget
Rental reported to the Newton, New Jersey Police Department that
Greenidge had rented its trucks but failed to return them, accruing
a debt of approximately $4,000. Greenidge’s counsel told the Court
that the Newton Police Chief agreed that this dispute was a civil,
not a criminal, matter; that the Chief had agreed to hold the
complaint pending the parties’ negotiation of a payment schedule;
and that Greenidge had not been arrested on the complaint and that
the arrest warrant had been withdrawn.
The District Court decided that, due to Greenidge’s
19
“unequivocal statement” that there had never been any complaints
about the way she conducted business, the government’s proposed
cross-examination was “a fair area of inquiry.” (Pallitta App. 773.)
Nevertheless, the Court, seeking to find an “appropriate middle
ground” between the probative value of the questioning and the
prejudice to Greenidge, allowed Greenidge to be cross-examined on
the existence of the complaints but not on the arrest warrant, and
did not admit the documents into evidence. (Pallitta App. 770.)
“Where a defendant testifies on direct examination regarding
a specific fact, the prosecution may prove on cross-examination that
the defendant lied as to that fact.” United States v. Gambino, 951
F.2d 498, 503 (2d Cir. 1991) (citation and internal quotation
omitted). In this way, impeachment by contradiction is a means of
“arriving at the truth in criminal trials” by policing the “defendant’s
obligation to speak the truth in response to proper questions.”
United States v. Havens, 446 U.S. 620, 626 (1980).
Impeachment by contradiction is permitted by Rule 607 of
the Federal Rules of Evidence, which provides that “[t]he
credibility of a witness may be attacked by any party, including the
party calling the witness.” Fed. R. Evid. 607. The court, in
deciding whether to allow an instance of impeachment by
contradiction, engages in a Rule 403 analysis, see United States v.
Castillo, 181 F.3d 1129, 1133 (9th Cir. 1999) (noting that Rule 607
allows admission of extrinsic evidence to impeach by contradiction,
subject to Rule 403 considerations), whereby the offered evidence
can be excluded if “its probative value is substantially outweighed
by the danger of unfair prejudice, confusion of the issues, or
misleading the jury, or by considerations of undue delay, waste of
time, or needless presentation of cumulative evidence.” Fed. R.
Evid. 403.
The District Court did not abuse its discretion in allowing
the government to cross-examine Greenidge about the two
complaints. Greenidge concedes that her volunteered denials
“opened the door” to this area of inquiry. Greenidge Br. 21; see
also Castillo, 181 F.3d at 1133 (“Courts are more willing to permit,
and commentators more willing to endorse, impeachment by
contradiction where . . . testimony is volunteered on direct
examination.”). Furthermore, as the government argues,
20
Greenidge’s unqualified denial in her direct testimony rendered the
impeachment by contradiction more probative of her credibility. In
addition, the District Court sought to minimize any unfair prejudice
to Greenidge by not allowing the government to introduce the
complaints into evidence, nor to mention the existence of the arrest
warrant. Finally, Greenidge was given the opportunity to explain
her seemingly inconsistent answers to the jury. We cannot
conclude that this evidence was erroneously admitted.
C. Motion for Judgment of Acquittal
Pallitta and DiGregorio both appeal the District Court’s
denial of their motions, under Rule 29 of the Federal Rules of
Criminal Procedure, for a judgment of acquittal on the charge of
conspiracy to engage in a monetary transaction involving the
proceeds of criminally derived property (Court Seven). We review
the appellants’ claim that there was insufficient evidence to sustain
their conviction on this count using the same standard the District
Court applied, that is, viewing the evidence in the light most
favorable to the government, we “will sustain the verdict if any
rational trier of fact could have found the essential elements of the
crime beyond a reasonable doubt.” United States v. Dent, 149 F.3d
180, 187 (3d Cir. 1998) (internal citation omitted). This standard
“places a very heavy burden on an appellant.” Id. (citation
omitted).
The elements of a conspiracy under 18 U.S.C. § 1956(h) are:
(1) that an agreement was formed between two or more persons;
and (2) that the defendant knowingly became a member of the
conspiracy. 18 U.S.C. § 1956(h); see also Whitfield v. United
States, 543 U.S. 209, 214 (2005) (finding that the government need
not prove an overt act in order to obtain a conviction under 18
U.S.C. § 1956(h)). The elements of the substantive crime the
appellants were charged with conspiring to commit are: (1) the
defendant engaged or attempted to engage in a monetary
transaction;11 (2) involving criminally derived property of at least
11
The statute defines a “monetary transaction” to be a
“deposit, withdrawal, transfer, or exchange, in or affecting
interstate or foreign commerce, of funds . . . by, through, or to a
21
$10,000; (3) that the property was in fact derived from specified
unlawful activity; (4) that the defendant acted knowingly, that is,
with knowledge that the property was derived from the proceeds of
a criminal offense; and (5) that the transaction occurred in the
United States. 18 U.S.C. § 1957(a), (d).
Pallitta claims that there was insufficient evidence to convict
him of conspiracy to engage in money laundering (Count Seven)
because the financial transaction used to support the money
laundering charge was the same transaction as that used to support
the bank fraud charge (Count One). In other words, he argues that
Count Seven was indistinct from Count One, and because “[m]oney
laundering must be a crime distinct from the crime by which the
money is obtained,” United States v. Abuhouran, 162 F.3d 230, 233
(3d Cir. 1998) (citation omitted), his conviction on Count Seven
must be reversed.
We agree, of course, that in order to support a charge of
money laundering, there must have been a “discrete predicate
crime” which “produced proceeds in acts distinct from the conduct
that constitutes money laundering.” United States v. Mankarious,
151 F.3d 694, 705 (7th Cir. 1998). See also United States v.
Conley, 37 F.3d 970, 980 (3d Cir. 1994) (commenting that before
“proceeds” can be laundered, they must be “derived from an
already completed offense, or a completed phase of an ongoing
offense”). Drawing on this principle, Pallitta contends that the
bank fraud conspiracy produced no “proceeds” until the funds were
withdrawn, and thus there was only a single transaction, not the
completion of one followed by another which used the proceeds
from the first.
We disagree, and instead are persuaded by the government’s
argument that the conspiracy to commit bank fraud was complete
when the stolen and altered check was deposited. The bank fraud
statute involved here makes it a crime to “knowingly execute[], or
attempt[] to execute, a scheme or artifice to defraud a financial
institution.” 18 U.S.C. § 1344(1). When the check was deposited,
the “scheme . . . to defraud” the bank had been “execute[d].” As
financial institution.” 18 U.S.C. § 1957(f).
22
the Eleventh Circuit has stated:
Here [the defendant] was in the same position as
if he had robbed the bank and placed the proceeds
of the robbery into his own account with the
intent to use the money for his own purposes.
The crime was completed at that point, without
any actual withdrawal of the money.
United States v. Gregg, 179 F.3d 1312, 1315 (11th Cir. 1999). See
also United States v. Hord, 6 F.3d 276, 281 (5th Cir. 1993) (bank
fraud indictment that charged withdrawals as well as deposits not
multiplicitous because “[i]t is the deposits, not [the] withdrawal
attempts, that constitute executions of the scheme”). Because we
conclude that the conspiracy to commit bank fraud was “executed”
when the check was deposited, the proceeds from that completed
crime qualified as the “criminally derived property” used to support
the charge of conspiracy to engage in money laundering. In sum,
we find Counts One and Seven to be based on two distinct events.
Furthermore, there was sufficient evidence for the jury to
convict Pallitta of conspiracy to engage in a monetary transaction
involving the proceeds of criminally derived property. Elsis
testified that the co-conspirators agreed how to split the proceeds
from the altered check after the money was withdrawn. (Pallitta
App. 421.) Pallitta thus knew, when he joined the conspiracy, that
either he or a co-conspirator would withdraw proceeds of the stolen
check from the bank once the check cleared. In fact, there was
evidence that Pallitta, knowing the check was stolen, called the
bank several times on the day of the check’s deposit to determine
if it had cleared. (Pallitta App. 591.) Because there was evidence
that Pallitta, knowing the check had been stolen and altered, agreed
to help facilitate the withdrawal of the check’s illegal $134,494.30
proceeds, a jury could have found each element of the crime
beyond a reasonable doubt and so we will affirm the denial of his
Rule 29 motion on Count Seven.12
12
It is, of course, of no consequence that the bank recognized
the fraud and the proceeds were never actually withdrawn, because
the “illegality of the agreement does not depend on the
23
Next, DiGregorio contends that there was insufficient
evidence for the jury to convict him on Count Seven. He maintains
that though he was present when Nash deposited the altered check,
he had no later involvement in Rankin’s efforts to collect the funds,
and because, he argues, the bank fraud proceeds did not exist until
Rankin withdrew them, there was insufficient evidence that
DiGregorio participated in the conspiracy to engage in this
monetary transaction.
This argument is rejected. As we discussed above, the bank
fraud proceeds existed when the check was deposited. In addition,
there was evidence that in November 2001, DiGregorio agreed with
Elsis to propose the plan to Nash whereby a stolen and altered
check would be deposited into the KYS account, and that the
withdrawn illegal proceeds would be used both to keep KYS afloat
and to compensate the conspirators for their role in the scheme.
Indeed, in order to ensure that there were sufficient proceeds from
this illegal venture, there was evidence that DiGregorio asked Elsis
for a check for approximately $1.4 million. In this way, there was
evidence from which the jury could have found that DiGregorio
knowingly entered into an agreement to withdraw the proceeds
from a criminal offense, and so we will affirm the denial of his Rule
29 motion on Count Seven.
D. Reasonableness of Sentence
DiGregorio appeals his sentence as unreasonable, arguing
that the District Court, in its analysis of the 18 U.S.C. § 3553(a)
sentencing factors, both did not adequately consider his limited role
in the offense and overemphasized his obstruction of justice.
In reviewing a sentence for reasonableness, our inquiry
proceeds in three stages. See United States v. Cooper, 437 F.3d
324 (3d Cir. 2006). We first look to whether the District Court
correctly calculated the applicable advisory guidelines range. Id.
at 330. Next, we determine whether the record shows the District
achievement of its ends.” United States v. Hsu, 155 F.3d 189, 203
(3d Cir. 1998) (citation omitted).
24
Court gave “meaningful consideration to the § 3553(a) factors,”
which includes the consideration of “any sentencing grounds
properly raised by the parties which have recognized legal merit
and factual support in the record.” Id. at 329, 332. Lastly, we
evaluate whether the District Court reasonably applied the §
3553(a) factors to the particular circumstances of the case. Id. at
330. In this final step, our review is, to a great degree, deferential,
because we recognize that “the trial court [is] in the best position to
determine the appropriate sentence.” Id.
DiGregorio does not challenge the calculation of his
advisory guidelines range.13 Instead, he argues that his 41-month
sentence, 37 months below the bottom of the advisory guidelines
range, is unreasonable. DiGregorio maintains that his role was
essentially limited to introducing Nash to Rankin and that he
received a relatively small payment for his role, most of which, he
claims, was for wages owed.14 He further claims that the District
Court afforded his obstruction of justice undue consideration in
fashioning a sentence; in this regard, DiGregorio seems to be
arguing that because the advisory guidelines range took his
obstruction of justice into account, the District Court was
prohibited from further considering that conduct when fixing a
sentence.
We find that DiGregorio’s sentence was not unreasonable.
The District Court heard DiGregorio’s argument regarding his
limited involvement, but reasonably rejected it. The Court noted
that even though DiGregorio’s financial gain from the plan was
13
DiGregorio’s base offense level of eight was increased: by
16 levels for an intended loss of $1,401,647.28 pursuant to
U.S.S.G. § 2B1.1(b)(1)(I); by two levels for his conviction under
18 U.S.C. § 1956 pursuant to U.S.S.G. § 2S1.1(b)(2)(B); and by
two levels for obstruction of justice pursuant to U.S.S.G. § 3C1.1.
His total offense level of 28 combined with a Criminal History
Category of I to yield an advisory guidelines range of 78 to 97
months’ imprisonment.
14
DiGregorio does not claim that he was entitled to a
mitigating role adjustment pursuant to U.S.S.G. § 3B1.2.
25
relatively insubstantial, his role was nevertheless essential.
DiGregorio was responsible for introducing Nash to Rankin;
without him, this sub-scheme of the conspiracy would not have
occurred. Furthermore, as the Court discussed, despite
DiGregorio’s limited financial gain, he set in motion a sub-scheme
of the conspiracy which succeeded in withdrawing $ 1.24 million,
an amount far larger than the loss or intended loss attributed to
DiGregorio’s co-conspirators here (e.g., $253,000 for Greenidge
and $138,000 for Pallitta). Moreover, despite DiGregorio’s
contention that his role here was minimal, the Court heard evidence
that DiGregorio was the continuous liaison between Nash and
Rankin and Elsis, and was present during discussions of the
planned withdrawal, the splitting of the proceeds, and the
possibility of another transaction. DiGregorio also helped
formulate the cover story to explain to the company’s investors the
source of the cash infusion.
Contrary to DiGregorio’s contention, the District Court did
not overemphasize DiGregorio’s obstruction of justice. We
emphasize that a sentencing court is not prohibited from
considering the factual basis underlying a defendant’s sentence
enhancements, and indeed, should consider those facts in order to
tailor the sentence to the defendant’s individual circumstances.
Here, the Court, having heard evidence that DiGregorio both helped
to invent a fictitious company in order to make the transaction
appear legitimate, and then lied to the U.S. Attorney in a proffer
session, determined that the “deliberate thought” behind
DiGregorio’s obstructive conduct set him apart from his co-
defendants and warranted a more severe sentence. (DiGregorio
App. 48.)
In imposing sentence, the District Court articulated the §
3553(a) factors and reasonably applied them to this case. The
Court balanced the fact that DiGregorio had no criminal history
with his conduct here, including his obstruction of justice. The
Court also took into account the instruction to “avoid unwarranted
sentence disparities among defendants with similar records who
have been found guilty of similar conduct,” 18 U.S.C. § 3553(a)(6),
as reflected in the fact that DiGregorio, who had a higher offense
level than his co-defendants because of the amount of loss and his
obstruction of justice, received a longer sentence than they did.
26
Finally, the Court showed substantial leniency to DiGregorio by
sentencing him to 37 months below the bottom of the advisory
range, a sentence 47% less than the minimum advisory sentence.
In light of this record, we cannot say the District Court imposed an
unreasonable sentence here.
III.
For the above reasons, we will affirm all appellants’
convictions and DiGregorio’s sentence.
27