United States v. Burns ( 1999 )


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  •                  Revised January 7, 1999
    UNITED STATES COURT OF APPEALS
    For the Fifth Circuit
    No. 96-20873
    UNITED STATES OF AMERICA,
    Plaintiff-Appellee,
    VERSUS
    WILLIE BURNS; MARTANETTE ALEXANDER;
    GREGORY EUGENE AUGUST; EARLINE MONTGOMERY,
    Defendants-Appellants.
    *********************************************************
    ______________________________
    No. 97-20288
    ______________________________
    UNITED STATES OF AMERICA,
    Plaintiff-Appellee,
    VERSUS
    GREGORY EUGENE AUGUST,
    Defendant-Appellant.
    Appeals from the United States District Court
    for the Southern District of Texas
    December 9, 1998
    Before KING, EMILIO M. GARZA, and DeMOSS, Circuit Judges.
    DeMOSS, Circuit Judge:
    In this appeal we are asked to review the convictions of four
    appellants who were found guilty of defrauding the Resolution Trust
    Company (“RTC”) and the Federal Deposit Insurance Company (“FDIC”).
    Two of those appellants also ask us to review the propriety of
    their   sentences.        For   the   following      reasons    we    affirm   the
    appellants’ convictions and sentences.
    I.
    Appellant Gregory August (“August”) was the owner and chief
    executive officer of the August Group Incorporated (“TAGI”), a
    privately    held    property-management         company      based   in     Texas.
    Appellant Earline Montgomery (“Montgomery”) was TAGI’s acting vice-
    president    and     secretary.         Appellant      Martanette      Alexander
    (“Alexander”) was August’s former girlfriend, but was not formally
    employed by TAGI. Appellant Willie Burns (“Burns”) was a friend of
    August and, like Alexander, not formally employed by TAGI. Ephraim
    Tennie ("Tennie"), a government witness who testified for the
    government   at     the   appellants’       trial,   worked    for    TAGI    as   a
    maintenance coordinator.
    In 1991 and 1992, TAGI entered four separate contracts to
    2
    manage various properties that were in receivership of the RTC.
    TAGI entered those agreements with companies that were under
    contract    with   the     RTC   under    “Standard       Asset       Management     and
    Disposition Agreements” (“SAMDA”).              Those companies, which we will
    refer to as SAMDA contractors, were engaged by the RTC to perform
    asset   management      and   disposition       services     in   connection       with
    various loan assets, real estate assets, and other assets held by
    the RTC.    In general, a SAMDA contractor’s duties were to restore,
    maintain, market, and sell the RTC properties in accordance with
    federal policies and procedures.              The SAMDA contractors also were
    authorized to select and hire property management companies, like
    TAGI, to carry out day-to-day management functions.                     The property
    management companies, in turn, were authorized to subcontract with
    other   vendors    to    provide    basic      services    for    the       properties;
    security,    trash      removal,   lawn       maintenance,      and    so    on.    The
    subcontractors’ invoices were submitted for payment to the property
    management companies, or to the SAMDA contractors, depending on the
    particular arrangement in place.               The SAMDA contractors paid the
    property-management fees, expenses, and reimbursables with money
    funded by the RTC.
    TAGI    entered      four     contracts      with    the     following        SAMDA
    contractors to manage the following RTC properties:                     (1) Benjamin
    Franklin Federal Savings Association (“BFFSA”) to manage the Green
    Oaks Apartments in Laporte, Texas; (2) the J.E. Robert Company
    (“JER”) to manage the Richwood Place Apartments in Houston, Texas;
    3
    (3) ONTRA, Inc. (“ONTRA”) to manage roughly 500 properties in Texas
    and Oklahoma; and (4) National Loan/CRT Joint Venture (“NL/CRT”) to
    manage the Spring Cypress Shopping Center in Houston, Texas.           In
    accordance with the terms of those contracts, TAGI was barred from
    hiring related companies to perform services at the properties
    without acquiring RTC approval.1 Additionally, TAGI was limited to
    the   monetary   compensation    specifically     provided   under    the
    contracts; it was forbidden from realizing additional outside
    profits from its management of the properties.
    TAGI entered into a similar management contract with the FDIC
    in 1992.2   Under that agreement, TAGI promised to provide property
    management services for Cavender’s Boot City (“Cavender’s”) in
    Houston, Texas, which was in receivership of the FDIC.               That
    contract, like TAGI’s property management contracts for the RTC
    properties,   contained   a   conflict   of   interest   provision   that
    prohibited TAGI from transacting business with a related company.
    Over the next several years TAGI hired more than a dozen
    subcontractors to perform various functions at its contracted
    1
    There is no uniform provision or definition in the four
    contracts relating to this requirement; each expresses the
    prohibition differently. A common theme in the four contracts,
    however, is that TAGI was precluded from hiring a company with
    which TAGI would have a conflict of interest. In this appeal the
    appellants do not dispute whether TAGI violated this prohibition.
    Accordingly, for purposes of this appeal we assume that TAGI in
    fact violated those conflict of interest provisions.
    2
    Unlike the contracts relating to the RTC properties,
    TAGI’s contract with the FDIC did not involve a SAMDA contractor.
    It was entered directly with the FDIC.
    4
    properties.     Unbeknownst to the RTC, FDIC, and SAMDA contractors,
    however, many of those companies were affiliated with August and
    TAGI. For example, Guardco Security Company (“Guardco”), Evergreen
    Lawn    Care,   and    Alexander     Plumbing    Company,      were     started   by
    Alexander, who filed assumed name certificates and opened new bank
    accounts for the three companies. CQ&S Enterprise Company (“CQ&S”)
    operated with a bank account that August had opened with TAGI’s
    address and an assumed name certificate filed years earlier by
    Charles Newton, August’s deceased lodge brother.                      Capital City
    Contractors     (“Capital      Contractors”),      Capital      City    Management
    (“Capital Management”), and Pro-Lawn Service (“Pro-Lawn”), operated
    under    assumed      name   certificates       filed   by     Nathaniel      Gordon
    ("Gordon"), a TAGI employee who also assisted in the management of
    those companies.
    The   appellants      never   advised     the    RTC,    FDIC,    or    SAMDA
    contractors that TAGI had hired related companies to perform
    services on the contracted properties.              When federal authorities
    finally grew suspicious, and searched TAGI’s offices in May 1993,
    they found blank invoices of various TAGI-affiliated companies,
    checkbooks of these companies, and blank insurance certificates.
    The next day, August, Montgomery, Burns, Tennie, and Gordon met at
    Club Reflections, a bar owned by August, where they sorted through
    a box of incriminating documents that had escaped detection.                    They
    then burned those documents in an alley outside the club.
    On November 2, 1994, the appellants were charged in a multi-
    5
    count indictment charging them with conspiracy to defraud the
    United States in violation of 18 U.S.C. § 371, in combination with
    other fraud-related offenses.             The appellants were then jointly
    tried to a jury on November 17, 1995.                 Over the course of that
    trial, which lasted for nearly three months, the government came
    forward with a mountain of evidence demonstrating that for roughly
    two   and    a    half   years   the    appellants    conspired    to    bilk   the
    government.       False invoices were generated for work that was never
    done.       Valid    invoices    from    legitimate    vendors    were    altered,
    falsified, and inflated to show greater amounts of monies owed.
    False bids were submitted to boost claimed reimbursables.
    Evidence also showed that the appellants took active measures
    to conceal their fraud.              August, for example, terminated the
    services of "Guardco, Inc." a properly licensed company that had
    been providing security services for the Green Oaks Apartments, and
    surreptitiously replaced it with the Guardco that Alexander had
    created.     Montgomery instructed Tennie on numerous occasions to
    generate fake invoices and alter valid ones.               Alexander, who was
    employed     at     an   unrelated     bank,   assisted   in   hiding     August’s
    involvement by filing assumed name certificates, and establishing
    bank accounts, for several of the related companies.                     Burns, on
    August’s instructions, would negotiate and sign contracts as the
    sole proprietor of CQ&S, even though August was the actual owner.
    On February 16, 1996, a jury convicted August of one count of
    conspiracy (Count 1), four counts of illegal participation (Counts
    6
    2 - 5), 18 U.S.C. § 1006(2); seven counts of making false claims to
    the RTC (Counts 6 - 11 & 13), 18 U.S.C. § 287; four counts of
    making false statements to FDIC (Counts 14 - 17), 18 U.S.C. § 1007;
    and     one    count       of    money    laundering    (Count   20),    18   U.S.C.
    § 1956(a)(1)(B)(i). August subsequently was sentenced to 96 months
    imprisonment.
    Montgomery was found guilty of one count of conspiracy (Count
    1), four counts of illegal participation (Counts 2 - 5), 18 U.S.C.
    § 1006(2); seven counts of making false claims to the RTC (Counts
    6 - 11 & 13), 18 U.S.C. § 287; and four counts of making false
    statements to FDIC (Counts 14 - 17).               She received a sentence of 37
    months imprisonment.
    Alexander was convicted of one count of conspiracy (Count 1),
    and two counts of illegal participation (Counts 2, 3 & 5), 18
    U.S.C. § 1006(2).               The court sentenced Alexander to 15 months
    imprisonment.
    Burns was found guilty on one count of conspiracy (Count 1),
    and one       count    of       illegal   participation   (Count   4),   18   U.S.C.
    § 1006(2).       He was ordered to serve a 24-month term of imprison-
    ment.         Each    of    the    appellants     now   appeal   their   respective
    convictions.         Montgomery and Burns also challenge their sentences.
    II.
    On appeal August challenges the sufficiency of the evidence
    supporting his convictions under Count 20 for money laundering, 18
    7
    U.S.C.    §    1956(a)(1)(B)(i),    and   aiding     and   abetting    in   the
    commission of that crime, 18 U.S.C. § 2.            He does not dispute the
    evidentiary basis for any of his other convictions.              August moved
    for judgment of acquittal at the close of the government’s case,
    and at the end of trial, thus preserving his sufficiency claim for
    appellate review.      United States v. Pankhurst, 
    118 F.3d 345
    , 351
    (5th Cir.), cert. denied, 
    118 S. Ct. 630
    (1997).                The district
    court denied those motions.
    We review de novo a district court’s denial of a motion for
    judgment of acquittal.       United States v. Myers, 
    104 F.3d 76
    , 78
    (5th Cir.), cert. denied, 
    117 S. Ct. 1709
    (1997).               In evaluating
    the sufficiency of the evidence we must affirm the verdict “if a
    reasonable trier of fact could conclude from the evidence that the
    elements of the offense were established beyond a reasonable doubt,
    viewing the evidence in the light most favorable to the verdict and
    drawing all reasonable inferences from the evidence to support the
    verdict.”      
    Id. To prove
    the offense of money laundering under 18 U.S.C.
    § 1956(a)(1)(B)(i), the government must prove that the defendant:
    (1) conducted or attempted to conduct a financial transaction, (2)
    which    the   defendant   knew    involved   the    proceeds    of   unlawful
    activity, and (3) which the defendant knew was designed to conceal
    or disguise the nature, location, source, ownership, or control of
    the proceeds of the unlawful activity.              18 U.S.C. § 1956(a)(1)
    8
    (B)(i); United States v. West, 
    22 F.3d 586
    , 590-91 (5th Cir.),
    cert. denied, 
    513 U.S. 1020
    (1994).
    In this case, August’s money laundering conviction was based
    on the following series of financial transactions.                       JER, a SAMDA
    contractor   for   the     RTC,    issued      a     $56,250    check    to   CQ&S,    a
    subcontractor who was ostensibly hired by TAGI to perform repair
    work at the Richwood Place Apartments.                 When JER issued the check
    to CQ&S it was unaware that the company was in fact controlled and
    operated by August.       That fact was kept hidden from JER through the
    efforts of Burns who, on August’s instructions, went to the offices
    of JER and posed as CQ&S’s president.
    After   Burns    personally      accepted         the    check    from   JER,    he
    deposited it in CQ&S’s bank account.                 August, the only signer on
    the CQ&S account, then wrote a check drawn on the account for
    $25,000,   which     he   deposited       in    TAGI’s       bank    account.3       The
    government   alleged       at     trial       that    August        structured   those
    transactions in an effort to conceal the fact that he was illegally
    participating in the financial dealings between JER and CQ&S.
    In challenging the evidentiary basis of his money laundering
    conviction, August does not dispute the first two elements of the
    offense.   He concentrates instead on the third required element of
    3
    The parties do not dispute that the $25,000 that was
    transferred from the CQ&S bank account to the TAGI account was a
    portion of the $56,250 in proceeds paid by JER to CQ&S for the
    repair work.
    9
    money laundering, the design requirement.         August contends that a
    reasonable jury could not conclude that the $25,000 check-transfer
    was designed to conceal the fraudulent nature of those funds
    because his name and address were plainly listed on both the CQ&S
    account and the TAGI account, making his identity readily apparent.
    We are unpersuaded.
    In arguing that the design requirement is missing in this
    case, August focuses exclusively on the $25,000 transfer, to the
    complete exclusion of the events that preceded that transaction.
    He is assuming, we think, that those events are not relevant in
    determining whether he intended to conceal the illegal proceeds.
    That assumption is mistaken.
    Many financial transactions have the effect of concealing
    illegal proceeds by converting them into a more legitimate form,
    and by adding one more degree of separation between the illegal
    proceeds and the original unlawful activity.        See United States v.
    Willey, 
    57 F.3d 1374
    , 1384 (5th Cir.) (observing that the design
    requirement distinguishes the crime of money laundering from the
    innocent act of mere money spending), cert. denied, 
    516 U.S. 1029
    (1995).    For that reason this Court has explained that “merely
    engaging   in   a   transaction   with   money   whose   nature   has   been
    concealed through other means is not itself a crime.”               United
    States v. Garcia-Emanuel, 
    14 F.3d 1469
    , 1474 (5th Cir. 1994).
    “[T]he government must prove that the specific transactions in
    10
    question were designed, at least in part, to launder money, not
    that the transaction involved money that was previously laundered
    through other means.”   
    Id. It must
    be remembered, however, that in examining whether a
    specific transaction was designed to launder money, we are not
    required to view that transaction in total isolation.       To the
    contrary, we have expressly observed that:
    [I]n order to establish the design element of
    money laundering, it is not necessary to prove
    with regard to any single transaction that . .
    . the particular transaction charged is itself
    highly unusual . . . . That is, it is not
    necessary that a transaction be examined
    wholly in isolation if the evidence tends to
    show that it is part of a larger scheme that
    is designed to conceal illegal proceeds.
    
    Willey, 57 F.3d at 1387
    .
    Contrary to August’s suggestion, a particular transaction must
    be viewed in context when determining whether it was designed to
    conceal.    As a result, “a design to conceal on a particular
    transaction may be imputed to a subsequent transaction” if the
    subsequent transaction, while innocent on its face, is part of a
    larger money laundering scheme.      
    Id. at 1386;
    see also Garcia-
    
    Emanuel, 14 F.3d at 1478
    (also acknowledging that design to conceal
    may be imputed from one transaction to another). Evidence that may
    be considered when determining whether a transaction was designed
    to conceal includes:
    statements by a defendant probative of intent
    to conceal; unusual secrecy surrounding the
    11
    transaction; structuring the transaction in a
    way to avoid attention; depositing illegal
    profits in the bank account of a legitimate
    business; highly irregular features of the
    transaction; using third parties to conceal
    the real owner; a series of unusual financial
    moves cumulating [sic] in the transaction; or
    expert testimony on practices of criminals.
    
    Garcia-Emanuel, 14 F.3d at 1475-76
    (emphasis on evidence present in
    this case).
    In this case, the record reflects that August was expressly
    forbidden from hiring related companies where there was a potential
    conflict of interest.     Nonetheless, August opened the CQ&S bank
    account at issue here, named himself as the sole signatory, and
    proceed to have repair work done at the Richwood Place Apartments
    in the name of CQ&S.     To conceal his identity from JER, and to
    begin the process of laundering the $56,000 in illegal proceeds,
    August instructed Burns to represent himself to JER as the sole
    proprietor of CQ&S.    Accordingly, Burns, and not August, appeared
    at the offices of JER, acted as the president of CQ&S, and accepted
    the $56,250 check.    Those transactions, which undeniably give rise
    to an inference of intent to conceal, put the $25,000 check-
    transfer in proper perspective.
    After the illegal proceeds were safely deposited in CQ&S’s
    account, one final step remained in the money laundering scheme.
    August needed to convert those proceeds into a more legitimate form
    -- from money belonging to CQ&S, to money which was under the
    control of TAGI.   That was accomplished through the $25,000 check-
    12
    transfer.
    It is true that the $25,000 check-transfer, when viewed in
    isolation, appears to be nothing more than an ordinary transaction
    between two bank accounts, conducted in plain view.           However, when
    we look beyond the face of that transaction, and look at the
    transactions which immediately preceded it, we find strong and
    compelling evidence that the $25,000 transfer was not an innocent
    transaction.   The record gives rise to a strong inference that the
    $25,000 transfer was the final step of a larger money laundering
    scheme willfully designed to give August access to the illegal
    proceeds.   We conclude that there is sufficient evidence of a
    design to conceal.      August’s money laundering conviction must
    stand.
    III.
    Montgomery appeals all of her convictions on sufficiency of
    the evidence grounds.      She properly preserved that claim for
    appellate review by moving for judgment of acquittal at the close
    of the government’s case, and at the end of trial.            The district
    court denied   those   motions.    We    review   each   of   Montgomery’s
    convictions in turn.
    Montgomery was convicted of conspiracy under count one.            To
    establish a conspiracy in violation of 18 U.S.C. § 371, the
    government must prove beyond a reasonable doubt:         (1) an agreement
    between two or more people, (2) to commit a crime against the
    13
    United States, and (3) an overt act by one of the conspirators to
    further the objectives of the conspiracy.   18 U.S.C. § 371; United
    States v. Dupre, 
    117 F.3d 810
    , 820 (5th Cir. 1997), cert. denied,
    
    118 S. Ct. 857
    (1998).   The government is not required to rely on
    direct evidence of a conspiracy, as each element may be proven by
    circumstantial evidence.    United States v. Casilla, 
    20 F.3d 600
    ,
    603 (5th Cir.), cert. denied, 
    513 U.S. 892
    (1994).   Moreover, the
    agreement need not be an express or formal agreement; a tacit
    understanding is sufficient.    United States v. Hopkins, 
    916 F.2d 207
    , 212 (5th Cir. 1990).
    Here, Montgomery contends that there is insufficient evidence
    to support her conspiracy conviction because the government failed
    to prove that she knowingly participated in the conspiracy.    Her
    argument is unconvincing.    At trial, there was abundant evidence
    that Montgomery falsified invoices, time sheets, and insurance
    certificates.   There also was evidence that Montgomery ordered
    Tennie to do the same.      The record sufficiently supports the
    finding that Montgomery knowingly participated in the alleged
    conspiracy.
    Montgomery also was convicted on four counts of illegal
    participation with the RTC, in violation of 18 U.S.C. § 1006, with
    accompanying convictions for aiding and abetting in the commission
    of those crimes, in violation of 18 U.S.C. § 2.   Those counts were
    based on various specified transactions involving JER and BFFSA.
    14
    To prove illegal participation under § 1006, the government must
    demonstrate:    (1) the defendant's connection with a protected
    institution as specified in the statute; (2) direct or indirect
    receipt of some benefit from the transaction in question; and (3)
    intent to defraud.    18 U.S.C. § 1006; United States v. Brechtel,
    
    997 F.2d 1108
    , 1115 (5th Cir.), cert. denied, 
    510 U.S. 1013
    (1993).
    We have observed that § 1006 is “a typical conflict of interests
    prohibition.”    
    Brechtel, 997 F.2d at 1116
    .           “[A] fiduciary who
    benefits or causes loss to [a protected institution] by knowingly
    subordinating   the   institution's       interests    to    his    own   in   a
    transaction for which he has responsibility acts with the ‘intent
    to defraud’ required by § 1006.”         
    Id. In this
    case, Montgomery claims that her illegal participation
    convictions cannot stand because there is no evidence that she
    intended to defraud the RTC.      Montgomery also argues that there is
    insufficient    evidence   that   she     profited    from    her    business
    associations with JER, BFFSA, and the RTC.            We have reviewed the
    record and find no merit to her arguments.
    Montgomery was also convicted on six counts of submitting
    false claims to the RTC through ONTRA, a SAMDA contractor, in
    violation of 18 U.S.C. § 287, with accompanying convictions for
    aiding and abetting in the commission of these crimes in violation
    of 18 U.S.C. § 2.     In order to sustain a conviction under § 287,
    the government must prove:        (1) that the defendant presented a
    15
    false or fraudulent claim against the United States; (2) that the
    claim was presented to an agency of the United States; and (3) that
    the defendant knew that the claim was false or fraudulent.                       18
    U.S.C. § 287; United States v. Okoronkwo, 
    46 F.3d 426
    , 430-31 (5th
    Cir.), cert. denied, 
    516 U.S. 833
    (1995).
    On     appeal,   Montgomery   argues     that   there     is    insufficient
    evidence that she knew the claims were false, or that she knowingly
    participated in the fraudulent scheme.            Her argument fails.         There
    is sufficient evidence in the record demonstrating that Montgomery
    possessed the requisite criminal intent.
    Finally, Montgomery was convicted on four counts of making a
    false statement to the FDIC, in violation of 18 U.S.C. § 1007, with
    accompanying convictions for aiding and abetting in the commission
    of   these    crimes   in   violation   of   18    U.S.C.   §   2.      The   false
    statements alleged in the four counts involve false, or grossly
    inflated, invoices and checks that were submitted to the FDIC in
    connection      with    repair   work    and      maintenance        performed   at
    Cavender’s.       To establish guilt under 18 U.S.C. § 1007, the
    government must prove: (1) the defendant made a false statement;
    (2) the defendant knew the statement was false; and (3) the
    statement was made for the purpose of influencing, in any way, the
    FDIC's actions. 18 U.S.C. § 1007; see United States v. Taliaferro,
    
    979 F.2d 1399
    , 1405 (10th Cir. 1992) (listing roughly the same
    elements).
    16
    Here, Montgomery asserts that there is a lack of evidence that
    she knew the specified invoices and checks were false.                 Montgomery
    admits that there is evidence that she instructed Tennie and others
    to generate those documents, but contends that there is no evidence
    that    she     was    aware   of     their    contents.     Her    argument    is
    unpersuasive.         There is evidence that Montgomery was aware of the
    true costs associated with maintaining Cavender’s, but nonetheless
    instructed Tennie to generate false bids and invoices.                 Moreover,
    there    is     evidence     that   Montgomery      personally     disbursed    the
    incorrect payments that she received. There is sufficient evidence
    supporting her convictions for making false statements to the FDIC
    in violation of 18 U.S.C. § 1007.
    IV.
    August     contends     that    the     government   violated    Brady    v.
    Maryland, 
    373 U.S. 83
    (1963), by failing to disclose various pieces
    of exculpatory evidence at trial.               Montgomery and Alexander have
    adopted this argument pursuant to Rule 28(i) of the Federal Rules
    of Appellate Procedure.         See Fed. R. App. P. 28(i) (providing that
    in cases involving more than one appellant, any appellant may adopt
    by reference any part of the briefs of another).                    This Court’s
    review of Brady claims is de novo.              See United States v. Green, 
    46 F.3d 461
    , 464 (5th Cir.), cert. denied, 
    515 U.S. 1167
    (1995).
    To establish a Brady claim, an appellant must demonstrate:
    17
    (1) that    evidence   was   suppressed,    (2)    that   the   evidence   was
    favorable to the accused, and (3) that the evidence was material.
    United States v. Ellender, 
    947 F.2d 748
    , 756 (5th Cir. 1991).              As
    to the third element, "the evidence is material only if there is a
    reasonable probability that, had the evidence been disclosed to the
    defense, the result of the proceeding would have been different.
    A ‘reasonable probability’ is a probability sufficient to undermine
    confidence in the outcome."     United States v. Bagley, 
    473 U.S. 667
    ,
    682 (1985); United States v. Garcia, 
    917 F.2d 1370
    , 1375 (5th Cir.
    1990).
    Here, August contends that the government violated Brady by
    allegedly engaging in a wide-ranging pattern of evidentiary abuses
    at trial.    The first claimed incident is the government’s alleged
    failure to produce a case agent’s audit showing that ONTRA owed
    TAGI $34,408 in back management fees.             August contends that the
    agent’s audit was critical to his defense because it substantiated
    his claim that ONTRA did not pay him in a timely manner, forcing
    him to move money between accounts, and causing him to submit
    duplicate and erroneous invoices.          August’s argument is without
    merit.     At trial, there was overwhelming evidence that August
    intentionally falsified and inflated invoices in a deliberate
    scheme to defraud the government.          In finding August guilty of
    conspiracy, illegal participation, and the other related crimes,
    the jury implicitly rejected the thrust of his defense, that every
    18
    incident of fraudulent billing was the innocent byproduct of
    untimely reimbursements.
    Furthermore,      August    admits      on    appeal    that   “[o]n    cross-
    examination, one government witness stated that ONTRA still owed
    TAGI approximately $187,000.”                (Emphasis added.)           Thus, it is
    clear      that   the   case    agent’s      audit   showing     $34,408      in   back
    management fees was not only cumulative in nature, but it also
    would      have   had   the    effect   of     weakening      August’s    defense   by
    indicating a lesser amount of back management fees.                   August cannot
    make out a Brady claim on this basis.
    August also contends that a Brady violation occurred because
    the government initially failed to produce the criminal histories
    of its witnesses.4             August places particular emphasis on the
    government’s alleged failure to disclose that Victor Ihezukwu, a
    government witness who was a former security guard for Guardco, was
    a Nigerian national who was possibly residing in the United States
    illegally. This argument is without merit. August objected to the
    government’s failure to produce the criminal histories of its
    witnesses at trial.            In response, the government provided the
    criminal histories of all its witnesses before they testified.
    With       this   information,     defense       counsel      cross-examined       some
    4
    Burns raises this same issue on appeal.                        His argument
    fails for the reasons as discussed.
    19
    witnesses and declined to cross-examine others.            Accordingly, this
    Brady claim fails.
    August next argues that the government violated Brady when it
    initially produced only two pages of a seven-page document that
    contained a favorable review of TAGI’s management of the Green Oaks
    Apartments.     This claim is without merit because the other five
    pages were eventually produced by the government, and the entire
    document was introduced as evidence with a curative instruction
    from the court.
    Finally,    August   calls   our    attention   to    the   government’s
    failure to produce a federal agent’s report stating that Tennie had
    told the agent that Gordon, a co-defendant and employee of TAGI,
    was not present at Club Reflections on the Saturday night following
    the search of TAGI’s offices.      This statement conflicted with the
    trial testimony of Mitch Robinson, a defendant turned government’s
    witness, that Gordon was at Club Reflections that Saturday night
    assisting the other defendants in burning incriminating documents.
    August’s   argument   fails   because      this   one     statement,   as   it
    specifically relates to the four appellants in this case, is not
    sufficient “to put the whole case in such a different light as to
    undermine confidence in the jury verdict."           Kyles v. Whitley, 
    514 U.S. 419
    , 435 (1995).
    V.
    20
    Alexander and Burns contend that the district court erred by
    admitting the trial testimony of two investigating agents -- Murphy
    and Lynch -- regarding statements Alexander and Burns made to the
    agents during non-custodial interviews.    They also contend that,
    once the district court decided to admit the testimony, it erred by
    refusing to grant their motions for a severance.      Severance and
    evidentiary rulings are reviewed for abuse of discretion.    United
    States v. Mulderig, 
    120 F.3d 534
    (5th Cir. 1997).
    In 1993, agent Murphy questioned Alexander in a non-custodial
    interview.   In that conversation Alexander told the agent that she
    was in charge of Guardco’s paperwork, which entailed writing checks
    and submitting invoices.     Alexander, however, also told agent
    Murphy that Guardco was managed by August and TAGI.     She advised
    the agent that TAGI furnished the information necessary to prepare
    Guardco’s invoices; that Guardco’s checking account belonged to
    August; that August used Guardco’s checking account; and that she
    supplied August with blank, signed Guardco checks.
    In 1993, agent Lynch spoke with Burns in a non-custodial
    interview.   During that conversation, Burns told agent Lynch that
    he delivered a CQ&S bid to JER, and signed various documents while
    he was there.    However, like Alexander, Burns advised the agent
    that TAGI and August were managing the operation; TAGI had prepared
    the documents; and August had instructed Burns to sign and deliver
    them.
    21
    On December 6, 1995, while the trial was proceeding, the
    government advised the parties that it intended to introduce
    Alexander’s and Burns’ statements through the testimony of the
    interviewing agents.      August objected.           He claimed that, because
    neither Alexander nor Burns were taking the stand, the express
    mention of his name in the agents’ testimony would deny him his
    Sixth Amendment right to confrontation under Bruton v. United
    States, 
    391 U.S. 123
    (1968).       In that case, the Supreme Court held
    that when the prosecution seeks to admit the statement of a non-
    testifying defendant, and portions of the statement incriminate a
    co-defendant,    those    portions   must       be   omitted   to   protect   the
    co-defendant's Sixth Amendment right of confrontation. 
    Bruton, 391 U.S. at 126
    .     The district court in this case was persuaded by
    August’s    argument,    and    ordered     that     the     agents’   proffered
    testimonies be redacted to omit all incriminating references to
    August and the other codefendants.             Alexander and Burns objected.
    They   argued,     and   continue    to    argue   on   appeal,   that   the
    district court erred in admitting the agents’ testimonies in
    redacted form.     Alexander and Burns allege that the redacted
    versions fail to include statements in which they advise the agents
    that they were working under the orders of TAGI and August.
    Alexander and Burns argue that with those exculpatory statements
    missing, the jury was left with the false impression that they had
    acted alone. Alexander and Burns allege that the redactions, while
    22
    effective at protecting their codefendants’ Sixth Amendment rights
    under Bruton, violated their own Fifth Amendment rights to a fair
    trial.      Alexander and Burns also complain they were denied their
    right to confrontation under Sixth Amendment because the district
    court would not allow cross-examination in areas that had been
    redacted.
    Although speaking in general terms of the Fifth and Sixth
    Amendments, Alexander and Burns have implicitly recognized that
    strict compliance with Bruton may at times violate the evidentiary
    rule   of    completeness.      Under      that   long-standing   rule,   "the
    opponent, against whom a part of an utterance has been put in, may
    in his turn complement it by putting in the remainder, in order to
    secure for the tribunal a complete understanding of the total tenor
    and effect of the utterance."         7 J. Wigmore, Evidence in     Trials at
    Common Law § 2113, p. 653 (J. Chadbourn rev. 1978); see also Beech
    Aircraft Corp. v. Rainey, 
    488 U.S. 153
    , 171 (1988) (quoting this
    passage while discussing the rule of completeness). In addition to
    ensuring     that   a   court   has   an     accurate   representation    of   a
    declarant’s statement, the rule guards against “the danger that an
    out-of-context statement may create such prejudice that it is
    impossible to repair by a subsequent presentation of additional
    material.”     Beech Aircraft 
    Corp., 488 U.S. at 172
    n.14.          Rule 106
    of the Federal Rules of Evidence, which partially codifies the rule
    of completeness, provides:
    23
    When a writing or recorded statement or part
    thereof is introduced by a party, an adverse
    party may require the introduction at that
    time of any other part or any other writing or
    recorded statement which ought in fairness to
    be considered contemporaneously with it.
    Fed. R. Evid. 106.
    When it appears that the literal compliance with Bruton may
    abridge the rule of completeness, a district court must decide
    whether a severance is necessary.         That determination, which is
    within the sound discretion of the district court, Zafiro v. United
    States, 
    506 U.S. 534
    , 538-39 (1993), must be based on whether the
    admission of the edited statement would distort the meaning of the
    original in a way that gives rise to “a serious risk that a joint
    trial would compromise a specific trial right of one of the
    defendants, or prevent the jury from making a reliable judgment
    about guilt or innocence.”     
    Id. at 539.
    In this appeal, Alexander and Burns describe several instances
    where the agents’ testimonies fail to recount statements in which
    Alexander and Burns expressly implicate August.        They contend that
    the omitted testimony is exculpatory in nature because it supports
    their defense at trial that they were merely acting on August’s
    orders and did not possess the necessary criminal intent.            Having
    carefully   reviewed   the   agents’    testimony,   and   the   challenged
    omissions, we find no reversible error.
    We do not quarrel with the claim that many of the omitted
    statements expressly implicate August in the alleged wrongdoing.
    24
    But very few of those statements are exculpatory, in the true sense
    of the word, as to Alexander and Burns specifically.                There is an
    important distinction, we think, between statements that implicate
    others in shared wrongdoing, and statements that free one from
    blame. In this case, most of the omitted statements portray August
    as the head of the conspiracy, but do nothing to lessen the guilt
    of Alexander and Burns.
    The few omitted statements that are exculpatory in nature are
    harmless in light of the record as a whole.                The basic theory of
    Alexander’s      and    Burns’   defense      was   that    they    were   minor
    participants who were simply following August’s orders.                      What
    Alexander and Burns fail to consider in pressing that theory,
    however, is that "following orders" can only be a defense when a
    person had no idea that his conduct is criminal.               Here, there is an
    abundance of evidence that Alexander and Burns knew their conduct
    was   illegal.         Thus,   the   fact    that   it   was    authorized   and
    orchestrated     by     August   cannot      insulate    them    from   criminal
    liability.    See McNamara v. Johnston, 
    522 F.2d 1157
    , 1165 (7th Cir.
    1975) (“it is well established that an agent cannot be insulated
    from criminal liability by the fact that his principal authorized
    his conduct”), cert. denied, 
    425 U.S. 911
    (1976).               The omission of
    any exculpatory statements was harmless error.
    VI.
    25
    At sentencing the district court enhanced Montgomery’s offense
    level by two levels for obstruction of justice under § 3C1.1 of the
    Sentencing Guidelines. See U.S.S.G. § 3C1.1 (1995). Another three
    levels were added pursuant to § 3B1.1(b) of the Guidelines, on the
    finding that Montgomery occupied a managerial position in criminal
    activity involving five or more participants. 
    Id. § 3B1.1(b).
                      The
    court also held Montgomery responsible for $346,194, the full
    amount of the loss minus $34,408, the amount the district court
    found ONTRA still owed TAGI, which enhanced her offense level by
    another eight levels pursuant to § 2F1.1(b)(1)(J).                 With a total
    offense   level    of    21,   and   a    criminal    history   category   of    I,
    Montgomery’s guideline range was 37-46 months imprisonment.                     The
    court sentenced her to 37 months.
    On   appeal        Montgomery       challenges    those    three   separate
    enhancements.      Clear error is our standard of review for the
    district court’s finding that Montgomery obstructed justice, United
    States v. Velgar-Vivero, 
    8 F.3d 236
    , 242 (5th Cir. 1993), cert.
    denied, 
    511 U.S. 1096
    (1994), for the finding that Montgomery was
    a manager or supervisor, United States v. Valencia, 
    44 F.3d 269
    ,
    271-72 (5th Cir. 1995), and for the district court’s determinations
    regarding the amount of loss under U.S.S.G. § 2F1.1.              United States
    v. Wimbish, 
    980 F.2d 312
    , 313 (5th Cir. 1992), cert. denied, 
    508 U.S. 919
    (1993). Additionally, the commentary to § 2F1.1 provides
    that "[f]or the purposes of subsection (b)(1), the loss need not be
    26
    determined with precision.        The court need only make a reasonable
    estimate of the loss, given the available information."               U.S.S.G.
    § 2F1.1 cmt. 8.
    Having    reviewed   the     record,      we   have   little   doubt    that
    Montgomery occupied a managerial position in the conspiracy and
    obstructed justice after the government began its investigation of
    the case.     Further, we do not agree with Montgomery’s contention
    that the district court erred in holding her responsible for the
    full amount of the loss.        We affirm the district court with regard
    to Montgomery’s sentence.
    VII.
    Burns contends that the district court erred in giving him a
    two-level     increase    for    more        than   minimal   planning      under
    § 2F1.1(b)(2) of the Guidelines.              See 
    id. § 2F1.1(b)(2).
           Burns
    also complains that the district court wrongly held him responsible
    for $48,600 in losses.      We review the district court's determina-
    tion regarding minimal planning for clear error.              United States v.
    Brown, 
    7 F.3d 1155
    , 1159 (5th Cir. 1993).                  Amount of loss is
    reviewed under the same standard.             
    Wimbish, 980 F.2d at 313
    .
    The Sentencing Guidelines provide for an enhancement of two
    offense levels "[i]f the offense involved (A) more than minimal
    planning, or (B) a scheme to defraud more than one victim."
    U.S.S.G. § 2F1.1(b)(2).         Under the Guidelines "more than minimal
    27
    planning"        is     defined   as    "more    planning    than   is    typical   for
    commission         of    the   offense    in    a   simple   form,"      or   "[taking]
    affirmative steps . . . to conceal the offense."                    U.S.S.G. § 1B1.1
    cmt. 1(f).             The Guidelines further provide that “‘[m]ore than
    minimal planning’ is deemed present in any case involving repeated
    acts over a period of time, unless it is clear that each instance
    was purely opportune.”            
    Id. Burns argues
    that the district court erred in finding more
    than minimal planning because the record contains no evidence that
    he took affirmative steps to conceal his crimes.                         According to
    Burns, he was linked to only one scheme, and did not engage in
    repeated criminal acts.            Burns argument is plainly contradicted by
    the record.            He falsely posed as the owner and president of CQ&S
    when he bid on the repair work at Richwood Place Apartments.                      Burns
    also went twice to JER’s offices to accept checks that JER had
    issued to CQ&S.             On this evidence we cannot conclude that the
    district court’s determination of more than minimal planning was
    clearly erroneous.
    Burns further asserts that the district court erred in finding
    him responsible for $48,600 in losses because he only received
    $4,193 for his part in the scheme.                   In support of that argument
    Burns relies on United States v. Smithson, 
    49 F.3d 138
    , 144 (5th
    Cir. 1995), a case where we recognized that under U.S.S.G. § 2F1.1,
    application note 8, a sentencing court may utilize the offender’s
    g:\opin\96-20873.opn                        28
    gain as an alternative valuation method for assessing the amount of
    loss when the loss is difficult to determine.                     Burns’ argument
    fails because he has not shown that the amount of loss was
    difficult to ascertain.               Furthermore, there is more than enough
    evidence in            the   record   to   support   the   district   court’s   loss
    calculation.           We affirm Burns’ sentence.
    VIII.
    Based on the foregoing reasons, we affirm the convictions of
    appellants August, Montgomery, Alexander, and Burns.                       We also
    affirm the sentences of Montgomery and Burns.
    g:\opin\96-20873.opn                         29