United States v. Hurley

August 25, 1995
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 93-1511
No. 93-2206
No. 94-1508
UNITED STATES OF AMERICA,
Appellee,
v.
VINCENT HURLEY,
Defendant, Appellant.
No. 93-1560
UNITED STATES OF AMERICA,
Appellee,
v.
CARLO DeMARCO,
Defendant, Appellant.
No. 93-1561
UNITED STATES OF AMERICA,
Appellee,
v.
JAMES SACCOCCIO,
Defendant, Appellant.
No. 93-1562
UNITED STATES OF AMERICA,
Appellee,
v.
STANLEY CIRELLA,
Defendant, Appellant.
No. 93-1563
UNITED STATES OF AMERICA,
Appellee,
v.
KENNETH SACCOCCIO,
Defendant, Appellant.
No. 93-1616
UNITED STATES OF AMERICA,
Appellee,
v.
STEPHEN PIZZO,
Defendant, Appellant
No. 93-1617
No. 93-2207
No. 94-1507
UNITED STATES OF AMERICA,
Appellee,
v.
DONNA SACCOCCIA,
Defendant, Appellant.
No. 94-1388
UNITED STATES OF AMERICA,
Appellee,
v.
ANTHONY DeMARCO,
Defendant, Appellant.
ERRATA SHEET
The opinion of the Court, issued on July 24, 1995, is amended as
follows.
On cover sheet, change government's counsel listing to read:
"Kathleen A. Felton, Criminal Division, Appellate Section, Department
of Justice and Michael P. Iannotti, Assistant United States Attorney,
with whom Sheldon Whitehouse, United States Attorney, James H. Leavey
and Michael E. Davitt, Assistant United States Attorneys, and John P.
Elwood, Criminal Division, Department of Justice, were on joint brief
for the United States."
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
No. 93-1511
No. 93-2206
No. 94-1508
UNITED STATES OF AMERICA,
Appellee,
v.
VINCENT HURLEY,
Defendant, Appellant.
No. 93-1560
UNITED STATES OF AMERICA,
Appellee,
v.
CARLO DeMARCO,
Defendant, Appellant.
No. 93-1561
UNITED STATES OF AMERICA,
Appellee,
v.
JAMES SACCOCCIO,
Defendant, Appellant.
No. 93-1562
UNITED STATES OF AMERICA,
Appellee,
v.
STANLEY CIRELLA,
Defendant, Appellant.
No. 93-1563
UNITED STATES OF AMERICA,
Appellee,
v.
KENNETH SACCOCCIO,
Defendant, Appellant.
No. 93-1616
UNITED STATES OF AMERICA,
Appellee,
v.
STEPHEN PIZZO,
Defendant, Appellant
No. 93-1617
No. 93-2207
No. 94-1507
UNITED STATES OF AMERICA,
Appellee,
v.
DONNA SACCOCCIA,
Defendant, Appellant.
No. 94-1388
UNITED STATES OF AMERICA,
Appellee,
v.
ANTHONY DeMARCO,
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ernest C. Torres, U.S. District Judge]
Before
Selya, Cyr and Boudin,
Circuit Judges.
Terrance Reed and Edward C. Roy with whom Reed & Hostage, Roy &
Cook, James T. McCormick, McKenna & McCormick, Michael C. Andrews,
Mary June Ciresi, Vincent Indeglia, Indeglia & Associates, Richard
Inglis, and Garguilo, Rudnick & Garguilo were on joint briefs for
appellants Donna Saccoccia, Stanley Cirella, Kenneth Saccoccio,
Vincent Hurley, James Saccoccio, Carlo DeMarco and Stephen Pizzo.
Robert D. Watt, Jr. for appellant Anthony DeMarco.
Kathleen A. Felton, Criminal Division, Appellate Section,
Department of Justice and Michael P. Iannotti, Assistant United States
Attorney, with whom Sheldon Whitehouse, United States Attorney, James
H. Leavey and Michael E. Davitt, Assistant United States Attorneys,
and John P. Elwood, Criminal Division, Department of Justice, were on
joint brief for the United States.
July 24, 1995
BOUDIN, Circuit Judge. The eight appellants challenge
their convictions, sentences and forfeitures for their
participation in an extensive money laundering operation
organized by Stephen Saccoccia. His conviction and sentence
were affirmed in United States v. Saccoccia, No. 93-1618,
slip. op. (1st Cir. June 28, 1995). In this case, we affirm
the convictions of the eight appellants before us, their
sentences, and the forfeiture orders entered against them.
I. BACKGROUND
I. BACKGROUND
The eight appellants are Donna Saccoccia (wife of
Stephen), her brother Vincent Hurley, James Saccoccio and his
brother Kenneth Saccoccio, Carlo DeMarco and his brother
Anthony DeMarco, Stanley Cirella and Stephen Pizzo. Along
with Stephen Saccoccia and others, appellants were indicted
on November 18, 1991, and were charged with conspiracy to
violate the Racketeer Influenced and Corrupt Organizations
Act ("RICO"), 18 U.S.C. 1962(d). Certain of them were also
charged with substantive counts of money laundering, 18
U.S.C. 1956-57, currency reporting offenses, 31 U.S.C.
5324, and interstate travel in aid of racketeering, 18 U.S.C.
1952.
One conspirator originally charged, David Izzi, pled
guilty before trial and testified for the government.
Stephen Saccoccia was severed and tried separately due to the
illness of his counsel. Alfred Gabriele, added as a
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conspirator in a superseding indictment, was also tried
separately, and his appeal is still pending. United States
v. Gabriele, No. 94-1215 (1st Cir.). The end result was that
the eight appellants in this case were tried together in the
district court in Rhode Island. Trial began on November 6,
1992, and ended in a jury verdict on December 18, 1992.
At trial, the government's evidence consisted primarily
of the testimony of other participants in the money
laundering activities, of Colombian nationals involved in the
international drug trade, and of bank employees. The
government also offered bank records of financial
transactions and numerous court-ordered wiretap recordings.
Viewed in the light most favorable to the verdicts, United
States v. Valerio, 48 F.3d 58, 63 (1st Cir. 1995), the
evidence permitted a reasonable jury to find the following.
Stephen Saccoccia owned and controlled a number of
precious metals businesses, including Saccoccia Coin Company
in Cranston, Rhode Island ("Saccoccia Coin"); Trend Precious
Metals in Cranston and in New York, New York ("Trend"); and
International Metal Marketing ("International Metal") and
Clinton Import/Export in Los Angeles, California ("Clinton
Import/Export"). In the late 1980s, after some indirect
dealings, Stephen Saccoccia began laundering drug money for
Duvan Arboleda, a Colombian narcotics dealer. The laundering
operation, ultimately expanded to serve a second drug ring as
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well, took several forms but each began with Stephen
Saccoccia receiving large amounts of cash in New York,
generated from the sale of cocaine. Often, Saccoccia would
send one of his employees, usually unindicted co-conspirator
Richard Gizzarelli, to a prearranged location, such as a
street corner, to meet a customer's courier. Gizzarelli
would bring the cash to the Trend office in New York or to
Saccoccia's apartment in New York to count it.
The money then followed two different routes. Some of
the cash would be used to purchase money orders or gold; the
gold and some of the remaining cash would then be shipped to
International Metal in Los Angeles. Much of the rest of the
cash--up to $200,000 per day--would be sent to Trend and
Saccoccia Coin in Rhode Island, either through armored car
service or in the car of a Saccoccia employee.
Once the cash reached Rhode Island, it was counted by
Saccoccia employees and divided into a number of packets in
amounts either greater than or less than $10,000. Most of
the cash went to the Trend office in Cranston. Saccoccia
employees, directed by Izzi, then drove to local banks where
they purchased cashier's checks in amounts less than $10,000
payable to Trend, or cashier's checks in amounts greater than
$10,000 payable to companies nominally owned by Hurley. The
purpose of these maneuvers--called "smurfing" in law
enforcement parlance--was to avoid or minimize the filing of
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accurate currency transaction reports, which are required by
federal law for cash deposits in amounts of $10,000 or more.
Ultimately the local Rhode Island checks would be
deposited in, and money from the Hurley accounts wired to,
the Trend account at Citizens Bank in Rhode Island. A
smaller portion of the cash sent to Rhode Island went to
Saccoccia Coin. That cash was used to buy gold without
documentation; the gold was then resold to legitimate
companies in exchange for checks recorded as payments for
gold sales. Some of the cash was also used in the ordinary
operations of the Saccoccia Coin Shop, a heavily cash-based
enterprise.
At the Los Angeles end, the gold sent to International
Metal was sold, and the proceeds were wired back to the Trend
account at Citizens Bank. Cash received by International
Metal was used to purchase gold covertly, the gold was then
sold, and the proceeds were also wired to the Trend account.
Thus, the bulk of the cash that Saccoccia sent out of New
York eventually ended up in the Trend account at Citizens.
Citizens Bank closed the Trend account in April 1991.
Thereafter, cash was still transported from New York and
"smurf" employees in Rhode Island still obtained cashier's
checks from various banks, but the checks were sent to
International Metal and Clinton Import/Export in Los Angeles.
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Donna Saccoccia assisted her husband in most aspects of
the operation, relayed his instructions to the others and
wired funds abroad to Colombian banks. Hurley and Anthony
DeMarco picked up cash from couriers in New York and
transported it to Rhode Island. Hurley, Anthony and Carlo
DeMarco, Kenneth and James Saccoccio, Cirella and Pizzo
received the cash deliveries in Rhode Island, counted the
money, and separated it into packets of smaller amounts for
transport to local banks. Anthony DeMarco and James and
Kenneth Saccoccio bought the bulk of the cashier's checks.
A staggering amount of money moved through this
laundering operation. Between March 1, 1990, and August 22,
1991, Stephen or Donna Saccoccia wired over $136 million to
foreign bank accounts primarily in Colombia; more than $97
million of this amount was wired from the Trend account in
Citizens Bank jointly controlled by Donna and Stephen. Apart
from the $136 million, substantial sums were retained by the
Saccoccias and their employees as compensation.
All eight appellants were convicted of RICO conspiracy.
All but Carlo DeMarco and Pizzo were convicted of substantive
offenses. After post-trial motions, appellants were
sentenced in May 1993, and forfeiture judgments against each
appellant were entered pursuant to the RICO forfeiture
statute, 18 U.S.C. 1963, and in some cases under the money
laundering forfeiture statute. 18 U.S.C. 982. Appellants'
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substantive convictions (in addition to RICO conspiracy),
their sentences,and their forfeiture amountsare listed below:
Name Substantive Sentence Forfeiture
conviction amount
Donna 13 counts of money 14 yrs., 2 $136,344,231.86
Saccoccia laundering (18 yrs.
U.S.C. 1956), supervised
and 47 counts of release
unlawful
transactions (
1957).
Vincent 1 count 18 yrs., 3 $136,344,231.86
Hurley structuring (31 yrs.
U.S.C. 5324(3)), supervised
and 1 count of release
interstate travel
in aid of
racketeering (18
U.S.C. 1952).
James 15 counts of 10 yrs., 3 $37,456,100.79
Saccoccio structuring. yrs.
supervised
release
Kenneth 14 counts of 12 yrs., 3 $37,456,100.79
Saccoccio structuring. yrs.
supervised
release
Stanley 1 count of 9 yrs., 2 $37,456,100.79
Cirella structuring. yrs.
supervised
release
Anthony 5 counts of filing 7 yrs., 3 $136,344,231.86
DeMarco false currency yrs.
transaction supervised
reports (31 U.S.C. release
5324(2)); 2
counts of
structuring.
Carlo No substantive 6.5 yrs., $3,927,357.55
DeMarco conviction. 2 yrs.
supervised
release
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Stephen No substantive 8.5 yrs., $37,456,100.79
Pizzo conviction. 3 yrs.
supervised
release
These appeals followed.
II. THE RICO ISSUES
II. THE RICO ISSUES
The RICO conspiracy offense charged in this case
required the government to prove an agreement by appellants
"to conduct or participate . . . in the conduct of [an]
enterprise's affairs through a pattern of racketeering
activity"; and the pattern alleged in this case required
proof of two or more criminal acts by an appellant (e.g.,
money laundering or structuring). See 18 U.S.C. 1961(1),
1962(c), (d). Appellants here challenge the indictment, the
instructions and the evidence relating to RICO.
A. The RICO Indictment
A. The RICO Indictment
The RICO conspiracy count alleged the formal requisites
of the offense including the assertion that each appellant
agreed to commit at least two racketeering acts; but it did
not specify which predicate acts each appellant committed or
agreed to commit. Hurley, Cirella, Pizzo and Carlo DeMarco
argue that this lack of specificity is fatal to the
indictment because a sufficient indictment must "fairly
inform[ ] a defendant of the charge against which he must
defend . . . ." Hamling v. United States, 418 U.S. 87, 117
(1974).
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In count I, the indictment identified the enterprise,
its precise method of operation, the role played by each
appellant, and the nature of the predicate acts charged. In
appended lists specifically referenced in count I, the
indictment also set forth thousands of individual bank
transactions and wire transfers. What was lacking was any
identification of the particular transactions in which the
four complaining appellants were involved, since they acted
mainly as counters and subdividers of money deposited and
transferred by others.
But if a defendant were charged with conspiring to
distribute drugs, it would surely be enough to show that he
had acted as a packer in the drug-making "factory" during the
period in which a series of identified shipments were made.
The government might never know which particular shipments
had been packed by the defendant; but his agreement to
participate in distributing multiple shipments could fairly
be inferred. The same principle applies in this case. There
is, we note, no indication that appellants were misled or
left in ignorance about what the government intended to
prove.
United States v. Winter, 663 F.2d 1120 (1st Cir. 1981),
cert. denied, 460 U.S. 1011 (1983), relied on by appellants,
is not in point. In that case we held that the indictment of
two defendants failed because "a RICO conspiracy count must
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charge as a minimum that each defendant agreed to commit two
or more specified predicate crimes." Id. at 1136. In Winter
the indictment did not charge even in the most general terms
that certain defendants had agreed to commit two predicate
acts. Here, the indictment did so charge, and Winter is not
in point.
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B. The RICO Instructions: "Conduct or Participate"
B. The RICO Instructions: "Conduct or Participate"
The gravamen of the underlying offense is "to conduct or
participate, directly or indirectly, in the conduct of [an]
enterprise's affairs" through a pattern of racketeering
activity. 18 U.S.C. 1962(c). In Reves v. Ernst & Young,
113 S. Ct. 1163, 1172 (1993), the Supreme Court interpreted
the words "conduct or participate" and held that they require
the defendant's "participat[ion] in the operation or
management of the enterprise itself." Reves involved a civil
RICO suit against an outside accounting firm hired to audit
the books of an allegedly corrupt enterprise. Construing
Reves, we held in United States v. Oreto, 37 F.3d 739, 750
(1st Cir. 1994), cert. denied, 115 S. Ct. 1161 (1995), that
insider employees who are "plainly integral to carrying out"
the racketeering activities fit within section 1962(c).
Here, appellants claim that the district court's
instruction on the meaning of "conduct or participate" was
erroneous in light of Reves. No objection to the instruction
was made at trial, so we review only for "plain error," Fed.
R. Crim. P. 52(b), which requires appellants to show that an
error was made, the error was clear or obvious, and the error
resulted in prejudice--that is, it affected the defendant's
substantial rights. United States v. Olano, 113 S. Ct. 1770,
1777-78 (1993). Even then, an appeals court need not notice
the error unless it caused "a miscarriage of justice" or
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undermined "the fairness, integrity or public reputation of
judicial proceedings." Id. at 1778-79.
The instruction in this case was similar to the one we
upheld in Oreto. 37 F.3d at 750. The difference--which
appellants deem crucial--is that the Oreto instruction
encompassed defendants who perform acts "necessary to or
helpful in the operation of the enterprise," whereas the
instruction in this case encompassed defendants who perform
acts "related to the operation of the enterprise."
Appellants argue that the court's language embraced precisely
the view that Reves rejected: "that almost any involvement in
the affairs of an enterprise [satisfies] the 'conduct or
participate' requirement." Reves, 113 S. Ct. at 1169.
In the abstract, the relatedness reference might pose a
problem if a defendant were arguably an outsider, such as the
independent auditor in Reves. But in this case the
government's version of the evidence placed appellants
squarely in the role of employees of the enterprise. The
jury's verdict shows that the jury accepted that version of
events, making the alleged ambiguity in the instructions
harmless. To the extent that appellants are challenging
Oreto's reading of Reves, Oreto is the law of this circuit.
See United States v. De Jongh, 937 F.2d 1, 6 (1st Cir. 1991)
(newly constituted panels bound by prior panel decisions in
point).
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C. The RICO Instructions: Knowledge
C. The RICO Instructions: Knowledge
Appellants complain about two aspects of the district
court's instructions on knowledge. First, they challenge the
use of a general "willful blindness" instruction and the
court's refusal to instruct the jury that willful blindness
did not apply to the RICO conspiracy count. They say that
one cannot simultaneously be willfully blind to a conspiracy
and also intend and agree to join the conspiracy.
The district judge first instructed the jury on the
substantive counts. He then gave a detailed explanation of
the RICO conspiracy count, including the requirement that the
government prove both "an intent to agree" and "an intent to
commit the substantive offenses that are the objects of the
conspiracy." The judge told the jury that they could not
infer knowledge of the conspiracy from negligence, mistake,
or ignorance; instead, the defendant must act "voluntarily
and intentionally." After lengthy instructions on the RICO
count, the judge moved on to more general propositions. Only
then did he give the "willful blindness" instruction:
In deciding whether a Defendant acted knowingly,
you may infer that the Defendant had knowledge of a
fact if you find that the Defendant deliberately
closed his eyes to a fact that would have been
obvious to him.
The willful blindness instruction appears to have been
aimed at the "knowing" requirements of substantive counts.
E.g., 18 U.S.C. 1956 (money laundering). Appellants have
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given us no reason to think that it diluted the express
"intent" requirement for the conspiracy count. Here the
trial judge adequately guarded against that risk with
cautionary instructions stressing that the defendants must
have joined the conspiracy intentionally, see United States
v. Brandon, 17 F.3d 409, 451-54 (1st Cir.), cert. denied, 115
S. Ct. 80 (1994), and we see no way that the jury could have
convicted without finding deliberate agreement.
Second, appellants object to the district court's
refusal of their request for an instruction that each
appellant had to know of the existence and general nature of
the enterprise. When this request was made after the charge,
it was entangled with other requests and the district court
may not have focused on the request or may have thought it
had in substance been given. Although nothing in the statute
explicitly requires such knowledge, there is some precedent,
including a comment from this court, suggesting it is
appropriate. See, e.g., Brandon, 17 F.3d at 428; 2 L. Sand,
J. Siffert, W. Loughlin & S. Reiss, Modern Federal Jury
Instructions 52.04 at 52-39 & comment (1995).
We think that in substance the jury was told, although
somewhat indirectly, that appellants had to be aware of the
enterprise and its general character in order to be guilty
under the RICO conspiracy charge. The court instructed that
the first element that the jury had to find was that a
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conspiracy existed "to conduct or participate in the affairs
of an enterprise through a pattern of racketeering activity."
The court subsequently told the jury that the government must
also prove "that the defendant knew the conspiracy existed
and knew of its unlawful purpose."
Perhaps in theory one might imagine a defendant who knew
of and joined in a conspiracy to conduct an enterprise but
did not know the nature of the enterprise. In this case,
however, the government's evidence showed that appellants
knowingly engaged in structuring transactions on an ongoing
basis within the framework of Stephen Saccoccia's business
venture. Given the evidence accepted by the jury, there is
no doubt that appellants knew what they were doing and knew
they were doing it within the framework of the Saccoccia
organization. If the instruction deviated from perfection,
the deviation was assuredly harmless.
D. The RICO Instructions: Single or Multiple Conspiracies
D. The RICO Instructions: Single or Multiple Conspiracies
At trial, the government offered evidence of out-of-
court statements by several persons whom it characterized as
unindicted co-conspirators. The most important were two
regional managers of rival drug cartels each of which
supplied money to be laundered by Stephen Saccoccia's
organization. The district court admitted the hearsay under
the co-conspirator exception, Fed. R. Evid. 801(d)(2)(E),
pursuant to United States v. Petrozziello, 548 F.2d 20 (1st
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Cir. 1977). The court found that the regional managers were,
more probably than not, members of the Saccoccia conspiracy
and rendered a final Petrozziello ruling at the close of
evidence.
Appellants say first that the two drug ring managers
could not conceivably be members of the same conspiracy with
each other because the rings were rivals. The government
responds that the hearsay exception does not require that the
conspiracy used to support the hearsay evidence be the same
as that charged, see United States v. Dworken, 855 F.2d 12,
24 (1st Cir. 1988), and that at the very least that each drug
dealer necessarily conspired with the members of the
Saccoccia organization. Whether the government's premise of
separate conspiracies is sound or squares with what the
district court found is not evident from its brief.
Nevertheless, appellants--who bear the burden on appeal
of showing error in the Petrozziello finding--make no serious
effort to show that the two drug dealers could not have been
part of the same conspiracy; their alleged rivalry is hardly
conclusive because it is not necessary that all co-
conspirators know of each other's existence, Brandon, 17 F.3d
at 428. Whether a conspiracy's customers are also members of
the conspiracy is a fact-based question, see United States v.
Moran, 984 F.2d 1299, 1303 (1st Cir. 1993), and once again
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appellants make no effort to muster the evidence on this
issue, or even to argue it.
Alternatively, appellants argue that the court should at
least have given a multiple conspiracy instruction, an
argument reinforced--although perhaps only superficially--by
the government's defense of the hearsay declarations. The
government says that this issue was not raised in a timely
fashion and that there was no factual basis for a multiple
conspiracy instruction. In declining to give such a charge,
the trial judge rested on both of these grounds and found, in
addition, that the proposed multiple conspiracy instruction
was itself deficient.
The district court could be sustained on any one of
these three grounds but we think that untimeliness is
sufficient, United States v. Akers, 987 F.2d 507, 513 (8th
Cir. 1993); Yoffe v. United States, 153 F.2d 570, 576 (1st
Cir. 1946), and add two further points. First, the request
for such an instruction was not made until after government
counsel had completed his closing argument, making it
impossible for him to address the jury on this point.
Second, the core of the government's case tended to show an
overarching conspiracy; and appellants make little effort in
their brief to show that multiple conspiracies were a serious
possibility.
E. Sufficiency of the Evidence
E. Sufficiency of the Evidence
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In reviewing sufficiency claims, we normally consider
the evidence "in the light most favorable to the prosecution"
and then ask whether the evidence "would allow a rational
jury to determine beyond a reasonable doubt that the
defendants were guilty as charged." United States v. Mena
Robles, 4 F.3d 1026, 1031 (1st Cir. 1993), cert. denied, 114
S. Ct. 1550 (1994). Although appellants deny that any of
them "directed" the enterprise, we rejected this legal
premise in Oreto, holding that an employee can "conduct" or
"participate" in the conduct of an enterprise by playing an
integral role in its operation. 37 F.3d at 750. By Oreto's
test, a rational jury could convict each appellant.
Donna Saccoccia relayed her husband's instructions to
other appellants on numerous occasions, helped count money,
and personally authorized the wire transfer of more than $38
million from the Trend account to foreign bank accounts.
Hurley and Anthony DeMarco received and counted the large
cash deliveries in New York and helped transport the cash to
Rhode Island. James and Kenneth Saccoccio and Anthony
DeMarco did most of the legwork involved in money laundering,
exchanging millions of dollars in cash for cashier's checks
at various banks. Carlo DeMarco travelled to New York and
Connecticut to transport the cash; Cirella and Stephen Pizzo
received and counted money at the coin shop.
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Four appellants argue that apart from their low levels
of responsibility, the evidence was insufficient to show
knowledge on their part that the Saccoccia organization was
engaged in money laundering or that the money being laundered
was derived from narcotics. These claims are made by
Cirella, Pizzo and James and Kenneth Saccoccio in order to
defeat the showing of predicate acts available to the jury to
underpin their RICO convictions. Each of the four says or
implies that he was unaware of money laundering but working
for what he understood to be a legitimate business.
The jury was entitled to find that these four appellants
knew that they were engaged in unlawful money laundering.
Stephen Saccoccia discussed with Cirella and Pizzo, among
others, how to avoid police detection; and Pizzo and Cirella
discussed "washing . . . the money" and means of avoiding
jail. James and Kenneth Saccoccio were involved in so many
deposits and manipulative subdividings of funds that
laundering was the only plausible explanation. Further, in
one instance (July 10, 1990), discussing the division of
$54,000 into packages of $9,000 for deposit, James and
Kenneth Saccoccio conducted the following (recorded)
conversation with Izzi:
James: 54, I can't do that. He wants me to do
$9,000 at every bank, that's stupid!
(voices fade out)
James: KENNY, you want me to do 9 at every bank?
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Kenneth: (unintelligible) $54,000 that's the way I
been doing it. Use VOGUE, do VOGUE,
(unintelligible).
Izzi: Not all of it, do a couple of TRENDS if
you could.
As for the drug-based origins of the cash, the direct
evidence of knowledge among the underlings is much thinner
since none of the conspirators were directly involved with
the narcotics sales. Kenneth Saccoccio is an exception since
he was recorded, while counting cash at Trend, referring to
it as "drug money"; and in one conversation with Pizzo,
Cirella said something that the jury might have taken as
referring to the drug origins of the proceeds. In the case
of James Saccoccio, the imputation of knowledge of drugs
rests on the vast sums involved in the laundering and James'
close association with Kenneth.
There are plenty of cash-generating businesses but among
those that require the illicit laundering of funds, the drug
business is notorious and preeminent. In this case, the
evidence showed that narcotics were the source of the cash
and that this fact was well known to Stephen Saccoccia and
Kenneth Saccoccio, among others. We think that a rational
jury could conclude that James too knew of the money's
origins, either from the size and continuing nature of the
deliveries, or from being told that the money came from
drugs; and Cirella and Pizzo are a fortiori cases.
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III. CURRENCY TRANSACTION REPORT ISSUES
III. CURRENCY TRANSACTION REPORT ISSUES
The Bank Secrecy Act requires domestic banks to report
any transactions involving more than $10,000 in cash, 31
U.S.C. 5313; 31 C.F.R. 103. The statute also prohibits
customers from providing false information for a bank's
report. 31 U.S.C. 5324(2).1 Further, under the 1986
amendments, "[n]o person shall for the purpose of evading the
reporting requirements of [the Act or its regulations] . . .
(3) structure or assist in structuring . . . any transaction
with one or more domestic financial institutions." Id.
5324. The most common method of "structuring" is to divide
sums of cash into amounts that are either under the $10,000
reporting threshold or into amounts that are larger but still
less likely to attract attention.
Structuring is a criminal act, 31 U.S.C. 5322(a), and
a violator is subject to double the fine and sentence if he
or she structures while violating another federal law or as
part of a pattern of crime. Id. 5322(b). Appellants
Hurley, James and Kenneth Saccoccio, and Cirella were
convicted of structuring under 31 U.S.C. 5324(3) and
1In late 1992, Congress recodified sections 5324(1)-(3)
as sections 5324(a)(1)-(3) without substantive change, Pub.
L. 102-550, 525(a), 106 Stat. 3672, 4064 (Oct. 28, 1992).
For simplicity, we refer to the earlier codification, under
which appellants were indicted and convicted, unless
otherwise noted.
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5322(b), and now challenge their convictions on several
grounds.
A. Due Process and Self-Incrimination
A. Due Process and Self-Incrimination
Appellants first contend that the reporting requirement
violates the Fifth Amendment by requiring them to provide
incriminating information to the government about themselves.
The Supreme Court has not directly decided this issue as to
bank customers, see California Bankers Ass'n v. Shultz, 416
U.S. 21, 73 (1974), but every circuit to consider the claim
has rejected it on one of several alternative grounds. E.g.,
United States v. Camarena, 973 F.2d 427, 428 (5th Cir. 1992);
United States v. Mickens, 926 F.2d 1323, 1331 (2d Cir. 1991),
cert. denied, 502 U.S. 1060 (1992); United States v. Hoyland,
914 F.2d 1125, 1130 (9th Cir. 1990).
In our complex society, individuals are called upon to
provide information to the government on countless occasions
and under a great variety of circumstances. Where Congress
has framed a disclosure requirement narrowly focused upon
criminal conduct, the Supreme Court has on occasion struck
down such statutes. Haynes v. United States, 390 U.S. 85(1968); Marchetti v. United States, 390 U.S. 39 (1968);
Albertson v. Subversive Activities Control Bd., 382 U.S. 70(1965). But where the conduct is not inherently criminal,
the Court has upheld the statutes even where the reporting
could in due course lead the government to uncover criminal
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conduct. California v. Byers, 402 U.S. 424 (1971); United
States v. Sullivan, 274 U.S. 259 (1927).
Byers, the most recent of the cases on point, upheld a
California hit and run law that required motorists involved
in an accident to halt and provide their names and addresses
to authorities. Needless to say, a fair portion of those
involved in such accidents may be identifying themselves in
situations that could result in criminal jeopardy. But the
Court found that the report required was not itself a
confession of criminal conduct, and that the law was directed
to all auto drivers in the state rather than a more limited
group "inherently suspect of criminal activities." Byers,
402 U.S. at 430 (quoting Albertson, 382 U.S. at 79).
Of course, a witness may invoke the Fifth Amendment
based on fairly remote risks, see In re Kave, 760 F.2d 343,
354 (1st Cir. 1985), but reporting statutes play a central
role in the administration of government (e.g., taxes), and
the jurisprudence that governs them has followed a different
course. And although the 1986 structuring amendments were
aimed at money laundering, see Ratzlaf v. United States, 114
S. Ct. 655, 660-61 n.11 (1994), they reinforce a reporting
statute--the Bank Secrecy Act--that has larger aims including
tax and regulatory concerns. Many of the reports are filed
by legitimate cash-oriented businesses and the report itself
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is not inherently more incriminating than the accident report
upheld in Byers.
Anthony DeMarco makes a different constitutional attack
on the statute. He was convicted of five counts of willfully
"caus[ing] or attempt[ing] to cause" a bank to file a false
report. 31 U.S.C. 5324(2). The bank report, based on
information that the teller secures from the customer, asks
"on whose behalf" the transaction is being conducted.
Anthony DeMarco told bank tellers that the transactions were
being conducted on his own behalf but the evidence showed
that they were being conducted for Stephen Saccoccia.
Anthony DeMarco claims that the "on whose behalf" language is
unconstitutionally vague.
Due process requires that criminal statutes define
offenses with sufficient clarity that an ordinary person can
understand what conduct is prohibited. Kolender v. Lawson,
461 U.S. 352, 357 (1983). The "on whose behalf" language is
reasonably clear and, on the present facts, plainly pointed
to Stephen Saccoccia. The cases DeMarco cites all involve
prior versions of the reporting form, which used different
language. E.g., United States v. Murphy, 809 F.2d 1427, 1430
(9th Cir. 1987) ("for whose account"). The current version
of the form was promulgated to remedy this ambiguity. United
States v. Belcher, 927 F.2d 1182, 1186-88 (11th Cir.), cert.
denied, 502 U.S. 856 (1991).
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B. Instructions: Willfulness
B. Instructions: Willfulness
Appellants next argue that the district court erred in
instructing the jury on willfulness as an element in a
structuring violation. Last year, the Supreme Court rejected
the majority view of the circuits and held that for a
structuring conviction a defendant must know that what he is
doing is illegal. Ratzlaf, 114 S. Ct. at 658.2 The
district court's instruction, given before Ratzlaf, told the
jury that, in addition to knowledge, willfulness was required
and continued:
An act is done willfully if its done knowingly and
with an intent to do something the law forbids. It
requires something more than mere negligence or
mistake. It requires proof that a Defendant acted
with the purpose of either disobeying or
disregarding the law.
No objection was made to this instruction, so we review
for plain error. This case does not present the conundrum of
a failure to object followed by a wholly unexpected change of
law; one month before the trial in our case, this court had
an en banc argument to consider the scienter requirement in
the structuring statute. See United States v. Aversa, 984
F.2d 493 (1st Cir. 1993) (en banc) (anticipating Ratzlaf's
2Following the Supreme Court's decision in Ratzlaf v.
United States, Congress deleted the statutory willfulness
requirement for structuring offenses. 31 U.S.C. 5322(a),
(b), 5324(c); Pub. L. 103-325, 411, 108 Stat. 2160, 2253
(Sept. 23, 1994); see H.R. Conf. Rep. No. 652, 103d Cong.,
1st Sess. 147 (1994). This recent change does not affect
appellants' appeals.
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result), vacated, 114 S. Ct. 873 (1994). In United States v.
Marder, we recently applied the plain error standard to a
pre-Ratzlaf instruction, 48 F.3d 564, 572 & n.5 (1st Cir.),
cert. denied, 115 S. Ct. 1441 (1995), as have a number of
circuits. E.g., United States v. Retos, 25 F.3d 1220, 1228-
32 (3d Cir. 1994).
It is not certain that the district court erred at all.
Aversa held that "reckless disregard" of the law satisfied
the willfulness requirement of the structuring statute. 984
F.2d at 502. The Supreme Court in Ratzlaf referred to Aversa
as a case requiring knowledge, 114 S. Ct. at 657 n.1; and it
cited with approval, id. at 659, another First Circuit case
in which we agreed that a jury could "infer knowledge if a
defendant consciously avoided learning about the reporting
requirements." United States v. Bank of New England, N.A.,
821 F.2d 844, 855 (1st Cir.), cert. denied, 484 U.S. 943(1987).
Ratzlaf did not formulate any precise instruction.
Should the Supreme Court address the issue again, it might
insist on actual knowledge and nothing less. But "disobey or
disregard" is part of a standard instruction on willfulness.
See 1 L. Sand, supra, 3A.01 at 3A-18. See also United
States v. Oreira, 29 F.3d 185, 188 (5th Cir. 1994) ("disobey
or disregard" accords with Ratzlaf). Further we are dealing
at this point with nuances in language, and state of mind is
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usually based on inference rather than on direct evidence.
The instruction in this case, if error at all, is neither
plain nor the cause of a miscarriage of justice.
C. Count 67
C. Count 67
Hurley and Cirella were convicted of structuring while
violating another federal law or as part of a pattern of
illegal activity involving more than $100,000 within a 12-
month period. 31 U.S.C. 5322(b), 5324(3). The indictment
charged that they, together with James and Kenneth Saccoccio,
structured a set of six bank deposits of $8,000 to $9,000
each in several different bank accounts on October 2, 1990.
The indictment said:
[T]he defendants structured, assisted in
structuring and attempted to structure and assist
in structuring the transaction by dividing a
quantity of currency in excess of $10,000 into two
or more portions and using those smaller portions
to purchase cashiers checks or other instruments in
amounts under $10,000 at two or more financial
institutions on the same day . . . .
The evidence at trial showed that on October 2, 1990,
Izzi told Hurley and Cirella to give him $35,000 in $10 bills
and later in the day to give Kenneth Saccoccio $30,000 in $20
bills. Bank records showed that after the conversation and
later that day Kenneth Saccoccio made two $9,000
transactions. The jury convicted Hurley and Cirella on count
67, and on appeal they raise a bevy of arguments.
The first argument is based on the fact that the trial
judge, without objection, instructed the jury that
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structuring can occur either by dividing a sum over $10,000
into deposits under that figure or by dividing the original
sum into amounts that are over $10,000 but reduce the
reportable amount. Appellants read the indictment language
as limiting the offense to the "under $10,000" theory and
argue that the "over $10,000" theory permitted the jury to
convict on a different theory of the offense, impermissibly
causing a constructive amendment of the indictment. See,
e.g., United States v. Atisha, 804 F.2d 920, 927 (6th Cir.
1986), cert. denied, 479 U.S. 1067 (1987).
The apparent strength of the argument is that the taped
evidence showed these two appellants being told to assemble
amounts over $10,000 and the "over $10,000" instruction
appears to dovetail with this evidence. But the "over
$10,000" instruction was a general one, describing one method
of structuring, and had nothing in particular to do with
count 67. Further, the "over $10,000" theory fit those
instances (involving DeMarco, Kenneth and James Saccoccio)
where a deposit occurred that was over $10,000 but less than
the original sum. On the other hand, the only deposits
alleged in relationship to count 67 were under $10,000.
Thus, reading the instructions in relation to evidence,
we think that the jury had to understand that the
government's case on count 67 amounted to this: Hurley and
Cirella, to facilitate specified unreported deposits of under
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$10,000 on October 2, provided larger sums (as directed) in
aid of and with the expectation that they would be subdivided
into amounts under $10,000 to avoid reports and then
deposited, as in fact they were. The practice of giving
general instructions in multiple count cases, and letting the
jury sort out their application according to the facts, is
common and permissible. Given this interpretation of
what happened, we have no reason to consider whether there
would have been a constructive amendment rather than a
variance if the jury had been instructed to apply the "over
$10,000" theory to count 67. See generally 3 C. Wright,
Federal Practice and Procedure 516, at 26 (2d ed. 1982)
(describing distinction as "shadowy"). We do consider, but
reject, appellants' claim that the evidence was inadequate to
connect their delivery of $30,000 to Kenneth Saccoccio with
his later deposits of amounts under $10,000 that day. The
timing made the connection a permissible inference.
In a different attack, appellants argue that count 67
was facially defective because it alleged, but failed to
specify, the other federal law concurrently violated or the
pattern of illegal activity involving over $100,000 within 12
months. This additional allegation was not needed to prove
the violation but was needed to trigger the enhanced penalty
provided by section 5322(b). Appellants rely on United
States v. Hajecate, 683 F.2d 894, 901-02 (5th Cir. 1982),
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cert. denied, 461 U.S. 927 (1983), where the Fifth Circuit
overturned a structuring conviction because the structuring
count did not specify the other illegal act or pattern.
Here, count 67 did incorporate by cross reference the 22
introductory paragraphs of count 1 where the government
described the smurfing operation in detail, identified the
role of each appellant, and noted that large volumes of cash
were involved. Hurley and Cirella had to know that the
pattern of illegal activity alleged by the government was the
vast smurfing enterprise of which count 67 was but a single
example. Cross references are permissible in indictments.
United States v. Yefsky, 994 F.2d 885, 894 (1st Cir. 1993).
There is no showing that either appellant was prejudicially
misled.
D. Counts 54-68
D. Counts 54-68
Kenneth and James Saccoccio make a more promising attack
on their own convictions for structuring. They say that
there is insufficient evidence that they knew structuring to
be illegal, as Ratzlaf required, and that they were thus
entitled to judgments of acquittal. In Ratzlaf itself, the
dissent contended that the majority's knowledge requirement
would frustrate the statute; the majority said that
reasonable inferences could be drawn. 114 S. Ct. at 663
n.19, 669-70. Our case presents just this issue.
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There is no direct evidence that either appellant knew
that structuring was a crime. At the same time, the evidence
permitted the jury to conclude that both knew that drug money
was involved; that both knew that the break-downs of the cash
were designed to disguise proceeds; and that both were paid
in proportion to the deposits they made. In addition,
Kenneth Saccoccio made a recorded statement indicating that
he knew that his own activity was criminal; and given their
common role and association a jury could reasonably infer
that James had the same level of apprehension.3
We think that the thrust of Ratzlaf's wilfulness
requirement is met if persons engaged in depositing broken
down amounts are generally conscious that their laundering
operation is illegal, even if they do not know the precise
requirements of the law. This circuit in Aversa was the only
one to anticipate Ratzlaf and we are fully sympathetic with
its aims. But those aims were to screen out persons who
structured transactions to disguise amounts in situations
where the actor might reasonably have no idea that the course
of conduct was unlawful. See Ratzlaf, 114 S. Ct. at 660-61;
Aversa, 984 F.2d at 499-500.
3After hearing that Hurley had encountered a police
roadblock, Kenneth Saccoccio said, "Imagine if we went by
yesterday," referring to a day (July 2, 1990) on which he had
engaged in various structuring transactions.
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Here, there is ample evidence as to Kenneth, and enough
as to James, to persuade us that a reasonable jury could find
that both knew that their own activities were unlawful. This
is not countered, as their brief suggests, by the fact that
they generally gave their names and identifying information
when requested by banks: couriers in their position could
reasonably think that an individual deposit standing alone
would not appear irregular, while remaining aware that anyone
with a full knowledge of their activities would condemn them.
Ratzlaf dealt with an abstract jury instruction in yes
or no terms; and in its wake, courts and juries must try to
answer more concrete questions of how much is enough. Where
a defendant's structuring is genuinely innocent of criminal
intent, we think that under Ratzlaf a judgment of acquittal
is proper no matter how unattractive the context. Cf.
Aversa, 984 F.2d at 499-500. But where the context is itself
saturated with consciousness of illegality, we do not think
that Ratzlaf requires the jury to ignore it in assessing the
defendant's state of mind.
IV. MISCELLANEOUS TRIAL ISSUES
IV. MISCELLANEOUS TRIAL ISSUES
A. Donna Saccoccia's Continuance Request
A. Donna Saccoccia's Continuance Request
After contesting extradition, Donna Saccoccia was
returned by Switzerland to the United States, arriving on
July 15, 1992, and was arraigned on that date. The
government turned over the bulk of its discovery in late
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July. In September, her counsel requested a 60-day
continuance, he was instead granted 30 days, and trial was
set to begin on November 2.
Ten days before trial Donna Saccoccia's attorney asked
for another continuance, which was denied. As a result, her
team of lawyers had just over 100 days after arraignment to
prepare for her trial. Pointing to the length of the
government investigation, the number of charges and the
quantity of evidence (over 1600 hours of surveillance tape
and 10,000 pages of financial documents), Donna Saccoccia
claims that the denial of the second continuance was
prejudicial error.
Although the government asserts that Donna Saccoccia's
counsel were able to prepare during the extradition
proceedings, this is at least open to dispute. Still, many
of the issues were common to all of the defendants, so that
Donna Saccoccia benefited from the work of her co-defendants'
counsel, who had eight months to prepare, examine the
government's tapes and documents, search for exculpatory
evidence and do research. Although a few issues were
peculiar to Donna Saccoccia, the common issues bulked large.
Given the broad discretion enjoyed by trial judges, see
United States v. Lussier, 929 F.2d 25, 27 (1st Cir. 1991)--
especially in the complex task of organizing a multi-
defendant trial--we have no hesitance in upholding the
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district court's denial of a second continuance. Her lead
counsel appears to have performed ably and there is no
indication of prejudice. The time allowed was generally
adequate see United States v. Waldman, 579 F.2d 649 (1st Cir.
1978), and the cases overturning convictions for lack of
preparation time involve more severe circumstances. E.g.,
United States v. Gallo, 763 F.2d 1504 (6th Cir. 1985) (RICO
count added eleven days before trial), cert. denied, 475 U.S.
1017 (1986).
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B. Carlo DeMarco's Severance Request
B. Carlo DeMarco's Severance Request
Carlo DeMarco, an employee of Stephen Saccoccia for only
about three months, was convicted of RICO conspiracy but not
charged with any substantive offense. Midway through the
trial he moved for a severance on the ground that Anthony
DeMarco, his brother and co-defendant, would testify on his
behalf in a separate trial. Carlo offered the affidavit of
his counsel that Anthony would testify (along with a few less
important facts) that Carlo "was not to be told anything
except that he was working for a gold dealer." The district
court held that the motion was untimely and without merit.
In United States v. Drougas, 748 F.2d 8, 19 (1st Cir.
1984), we held that to show an abuse of discretion in these
circumstances, a defendant must show that the proffered
testimony is genuinely necessary, exculpatory, and will in
fact be forthcoming in a severed trial. It is doubtful that
the affidavit from counsel satisfied this requirement. See
United States v. Perkins, 926 F.2d 1271, 1280-81 (1st Cir.
1991). In all events, Fed. R. Crim. P. 12(b)(5) specifies
that motions to sever must be made where feasible before
trial. Defense counsel's claim that he had not previously
had a chance to consult adequately with his co-defense
counsel is manifestly lame.
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C. Minimization of Electronic Surveillance
C. Minimization of Electronic Surveillance
Cirella, Hurley and Anthony DeMarco moved at trial to
suppress the government's recordings made by telephone taps
and listening devices installed in Trend and Saccoccia Coin.
They charged the government failed to comply with 18 U.S.C.
2518(5), which requires that surveillance shall be conducted
"in such a way as to minimize the interception of
communications not otherwise subject to interception under
this chapter . . . ." We uphold the trial judge's denial of
the suppression motion without reaching the question of
whether the remedy for a violation would be suppression. See
Scott v. United States, 436 U.S. 128, 135-36 n.10 (1978)
(raising but not deciding the issue).
Scott made clear that the statute does not forbid
interception of non-pertinent conversations but requires a
reasonable effort to minimize such interceptions. 436 U.S.
at 137-40. Here, the government described the agents'
directives to turn off monitoring equipment for irrelevant
conversations; it supplied statistics showing that about
three-quarters of the time that the agents turned off the
monitoring device, they did so because the conversation was
deemed non-pertinent; and it pointed to regular reports made
to the district court, and to ongoing contacts between the
agents and the prosecutors sometimes involving guidance on
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monitoring. See United States v. Angiulo, 847 F.2d 956, 979
(1st Cir.), cert. denied, 488 U.S. 928 (1988).
The Saccoccia enterprise was a widespread and
complicated operation in which the illegal conduct was
deliberately disguised by the company's legitimate
activities. The conspirators employed code phrases that
mimicked industry terminology and used code names for each
other, banks and clients. Many of the participants were
related by blood or marriage, and incriminating exchanges
were often interspersed with personal conversation. It is
hard to see how the agents could have done more than make a
good-faith determination to turn off recording devices when a
conversation was seemingly unrelated to the laundering
operation.
Here, as in United States v. Uribe, 890 F.2d 554, 558
(1st Cir. 1989), "[d]efendants [have] offered no evidence
tending to show, or even to suggest, a pattern of listening
to calls after it became clear that the calls were
innocuous." A so-called survey conducted by the son of
Hurley's lawyer purported to show that a substantial number
of non-pertinent conversations were recorded; but the survey
was flawed by his subjective criteria of pertinence (for
example, the son classified conversation regarding gold as
non-pertinent even though the Saccoccia employees regularly
employed gold industry words as code phrases for money
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laundering transactions). The district court properly
disregarded the study.
D. Count 143
Count 143 charged Hurley with a Travel Act violation for
transporting $248,000 on a specified date from New York to
Rhode Island, to promote specified unlawful activity, namely,
structuring and money laundering. Hurley admits that the
indictment charged the first two requisites--interstate
travel and intent to promote an unlawful activity. 18 U.S.C.
1952. But, he says, there is no allegation that (in the
statutory phrase) he "thereafter" performed or attempted an
act to further the unlawful activity. Id.This is a legitimate argument. But we think that the
quoted statutory phrase must be read in light of its apparent
purpose: to screen out interstate travel by a racketeer who,
however malign his purpose, ultimately does nothing to
advance the illegal activity. Here, Hurley's transportation
of the money from New York to Rhode Island was a central part
of the ongoing laundering operation. The particular trip was
not only interstate travel but also comprised--"thereafter"--
the delivery of funds for laundering. Accord United States
v. Brown, 770 F.2d 768, 772 (9th Cir.) (importation of
heroin), cert. denied, 474 U.S. 1036 (1985).
Given our reading of the "thereafter" language, there is
thus no need to consider whether (as claimed by the
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government) the general descriptions of Hurley's activities
(incorporated in count 143 by reference to count 1) could
independently supply a subsequent act. We also think it
unnecessary to discuss Hurley's argument that the evidence
was insufficient to show that he participated in the
particular trip which unquestionably occurred. While
Hurley's involvement depended on inferences from different
pieces of evidence, the jury was entitled to draw those
inferences.
E. Donna Saccoccia's Mental Competence
E. Donna Saccoccia's Mental Competence
At Donna Saccoccia's rearraignment on July 23, 1992, her
trial counsel made and then abandoned a suggestion that she
be examined professionally in relation to her current mental
condition. The trial proceeded with no further request for
such an examination or suggestion of incompetency, until--
about six months after the trial--the presentence report
alluded to a possible sentence reduction for diminished
mental capacity. The defense then retained a clinical
psychologist who examined Donna Saccoccia and concluded that
she was mentally incompetent and had been throughout the
trial.
Two days before sentencing, trial counsel filed a motion
seeking a competency hearing, which is required where there
is "reasonable cause" to believe that a defendant is
"mentally incompetent to the extent that he is unable to
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understand the nature and consequences of the proceedings
against him or to assist properly in his defense." 18 U.S.C.
4241(a). In a two-day preliminary proceeding, the
psychologist testified that Donna Saccoccia was able to
understand the proceedings but opined that she did not have
the ability to assist counsel because of depression, anxiety
and passivity. The district court found that a full-scale
competency hearing was not required and Donna Saccoccia now
appeals that decision.
This is a close issue. The fact that a reputable expert
gives his opinion does not resolve the matter, even if there
is no countervailing expert evidence on the other side. See
Figueroa-Vazquez v. United States, 718 F.2d 511, 512 (1st
Cir. 1983). But here the expert appears to have made a
substantial examination and his concerns--although not his
specific conclusions--have a degree of support in trial
counsel's comment at the arraignment and the concerns
expressed in the presentence report. For obvious reasons,
competency claims are not subject to ordinary waiver
doctrine. Pate v. Robinson, 383 U.S. 375, 384 (1966).
On the other hand, the focus of the incompetency claim
in this case is upon Donna Saccoccia's ability or inability
to assist in her defense. The trial judge had some basis for
doubting whether the psychologist understood the issues in
the case well enough to make a judgment, but far more
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important is the silence of defense counsel on this point
during the trial. An experienced trial lawyer ought to be
the first to notice a lack of cooperation or ability to
assist so severe as to raise competency questions. There was
no complaint from trial counsel until after trial when the
presentence report reawakened counsel's interest in the
matter.
Neither at the preliminary competency hearing nor on
appeal has counsel been able to point to any specific
problems with Donna Saccoccia's assistance during trial.
This is not a conclusive objection since (in theory) the
impairment might prevent counsel from ever learning of
information helpful to the defense; but the generalized
character of the claim weakens its force. The district
judge, who presided over the trial and the preliminary
hearing, is entitled to some latitude in making judgment on
the need for a full-scale competency hearing. United States
v. Garrett, 903 F.2d 1105, 1116 (7th Cir.), cert. denied, 498
U.S. 905 (1990). Having reviewed the transcript of that
hearing, we sustain the district court's ruling.
V. SENTENCING ISSUES
V. SENTENCING ISSUES
A. Ex Post Facto Claim
A. Ex Post Facto Claim
Under the RICO sentencing guidelines, the district judge
properly employed the money laundering guideline in
sentencing appellants on the RICO conspiracy count. U.S.S.G.
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2E1.1. The money laundering guideline in effect at the
time of sentencing increased a defendant's base offense level
for money laundering by three levels if the defendant "knew
or believed" that the laundered money was the proceeds of
narcotics sales. Id. 2S1.1(b)(1). That provision became
effective on November 1, 1991; previously, the increase
applied only if the defendant "knew" that the money came from
narcotics.
In a claim not raised at sentencing, appellants now
argue that the district court erred by applying the new and
broader guideline, because (they say) the last actual money
laundering offense occurred in April 1991 before the new
guideline took effect. See United States v. Cousens, 942
F.2d 800, 801 n.1 (1st Cir. 1991). The government responds
that the RICO conspiracy itself continued at least until
November 1991, asserting that no ex post facto problem exists
where the crime continues after the effective date of a new
guideline sentence. E.g., United States v. David, 940 F.2d
722, 739 (1st Cir.), cert. denied, 502 U.S. 989 (1991).
David can arguably be distinguished, but the issue need not
be decided here.
The new guideline language was intended to apply the
enhancement to cases in which a defendant "knew" that drug
trafficking was involved, but the knowledge turned out to be
mistaken because (for example) the operation was a government
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sting and no real narcotics were involved. See U.S.S.G. app.
C, amend. 378 (1994). Here, the money was in fact the
proceeds of narcotics trafficking so belief and knowledge
were the same thing. A defendant who merely believed the
drug proceeds were involved would (because of the correctness
of that belief) also know that drug proceeds were involved.
Appellants contend that the district court
misinterpreted the phrase "knew or believed" to allow an
increase based on a showing that appellants merely suspected
or should have known that drug money was involved. We have
examined the transcript of the sentencing and reject this
conjecture. In some cases, an appellant was shown to have
direct knowledge, and in others, knowledge was inferred from
circumstances; but in each case a fair reading of the trial
court's remarks show that the judge determined that the
appellant knew the source of the laundered funds.
Pizzo and James Saccoccio assert that even if the court
did not misunderstand the standard, the evidence was
inadequate to show that they knew that the laundered money
was the proceeds of narcotic sales. As explained earlier in
the opinion, the evidence on this point was sufficient. Even
apart from Pizzo's disputed reference to "the coke," the
volume of funds, the duration, the geographic source, the use
of small bills and other circumstances made it entirely
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reasonable to infer that direct participants in the
enterprise knew that the funds were derived from drugs.
B. Other Sentencing Errors
B. Other Sentencing Errors
The offense level for money laundering offenses is keyed
to the value of the laundered funds. U.S.S.G. 2S1.1(b)(2).
Appellants contend that in various respects the sentencing
court erred in determining the value of the funds and in
determining the varying amounts that it found each individual
appellant reasonably had foreseen. U.S.S.G.
1B1.3(a)(1)(B). These are largely factual issues, reviewable
only for clear error. United States v. LaCroix, 28 F.3d 223,
231 (1st Cir. 1994). We have examined each of these claims
of error and think that the district court's findings are
supportable, and that none involves any issue of law
requiring discussion.
Something closer to an issue of law is presented by the
district court's determination that Carlo DeMarco was
entitled to a two-level reduction as a minor participant
rather than to the four-level decrease as a minimal
participant. See U.S.S.G. 3B1.2. The issue arises because
DeMarco participated for only a few months in the RICO
conspiracy and was held responsible for only $3.9 million of
the $136 million conspiracy. But as to that segment of the
conspiracy, the court found that the range of DeMarco's
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activities made him a minor rather than a minimal
participant.
On appeal DeMarco argues that he was entitled to have
his role determined in light of the entire conspiracy. The
government argues that his role should be measured only
against the foreseeable conduct for which he has been held
responsible. No case law discussing this issue has been
cited. But we think that common sense permitted the district
judge to determine that DeMarco--who participated quite
actively in several roles over a significant period and was
involved with a substantial amount of laundered funds--was a
minor and not a minimal participant.
VI. FORFEITURE ISSUES
VI. FORFEITURE ISSUES
Between January 1990 and April 1991, Stephen and Donna
Saccoccia wired $136,344,231.86 to foreign bank accounts
apparently controlled by Colombian drug suppliers. In the
indictment, the government took the position that each
appellant was jointly and severally liable for this amount
under one of RICO's several forfeiture provisions, 18 U.S.C.
1963(a)(3). This subsection requires a defendant to
forfeit "any property constituting, or derived from, any
proceeds which the person obtained, directly or indirectly,
from racketeering activity . . . ." Id. By special verdict,
the jury imposed such a forfeiture in this amount on Hurley,
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the other appellants having waived a jury trial on forfeiture
issues.4
The district court imposed separate forfeitures on the
other appellants. United States v. Saccoccia, 823 F. Supp
994 (D.R.I. 1993). The court held that proceeds under
section 1963(a)(3) included laundered funds obtained by an
appellant even though later passed along to the Colombians,
and that each appellant was responsible for funds foreseeably
obtained by other co-conspirators. The court found that
Hurley, Stephen and Donna Saccoccia, and Anthony DeMarco were
aware of most or all aspects of the conspiracy and liable for
the full amount; that the Saccoccio brothers, Cirella and
Pizzo were aware mainly of the Rhode Island operation and
therefore liable only for the $37,456,100.79 laundered
through Trend and Saccoccia Coin; and that Carlo DeMarco,
active only from August through November 1991, was
responsible for $3,927,357.55 that he had deposited or
otherwise known about.
After appellants filed notices of appeal, the government
filed a motion seeking forfeiture of substitute assets, 18
U.S.C. 982(b), 1963(m); following various proceedings, the
4The jury also imposed a separate forfeiture on Hurley
of $52,800 under the money laundering provision, 18 U.S.C.
982, in connection with a reporting violation. Neither this
nor other section 982 forfeitures imposed on three other
appellants by the district judge have been challenged on
appeal except on grounds identical to those discussed below
in connection with the RICO forfeitures.
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district court ultimately determined that because the $136
million had been transferred out of the jurisdiction, each
appellant was liable to pay the amounts in question out of
any other assets of that appellant. Both the original
forfeiture orders and their extension to substitute assets
are the subject of a number of attacks in this case.
A. "Proceeds . . . Obtained"
A. "Proceeds . . . Obtained"
The opening question is whether the $136 million wired
to the Colombians constituted, at least as to the appellants
who handled or controlled these funds before they were wired,
"any property constituting, or derived from, any proceeds
which the person obtained, directly or indirectly, from
racketeering activity . . . in violation of section 1962."
18 U.S.C. 1963(a)(3). Appellants argue that "proceeds"
means net profits, see United States v. Masters, 924 F.2d
1362, 1369-70 (7th Cir.) (semble), cert. denied, 500 U.S. 919(1991), in which case $136 million vastly overstates the 5 to
15 percent commission apparently retained by the Saccoccias
and the (presumably smaller) amounts passed along to other
appellants. Alternatively, appellants contend that none of
the $137 million could fairly be regarded as "obtained" by
them since it represents amounts transmitted by the
Saccoccias to the drug owners themselves.
Section 1963(a)(3) was added by Congress to other RICO
forfeiture provisions in 1984, and its legislative history
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explains without qualification that "the term ``proceeds' has
been used in lieu of the term ``profits' in order to alleviate
the unreasonable burden on the government of proving net
profits." S. Rep. No. 225, 98th Cong., 2d Sess. 199 (1984).
In Russello v. United States, 464 U.S. 16 (1983), the Supreme
Court made clear its desire for generous construction of the
RICO forfeiture provisions, in line with Congress' unusual
command that RICO (although a criminal statute) be broadly
interpreted. See id. at 27. Given the legislative history
and Russello, the broader definition of "proceeds" seems to
us a rather easy call.
The point is borne out by imagining that Stephen
Saccoccia had been caught with the $136 million in cash or
gold just before delivering it to the Colombians. The cash
or gold could surely be described as property representing
"proceeds" which Stephen Saccoccia had "obtained" from
racketeering activity in violation of section 1962, namely,
through money laundering. As a matter of policy, there is
every reason why the booty in that situation ought to be
forfeit, and that Congress would desire such a result. See
United States v. Lizza Indus., Inc., 775 F.2d 492, 497-99 (2d
Cir. 1985), cert. denied, 475 U.S. 1082 (1986).
The more difficult question is whether property should
be regarded as "obtained" by the money launderer when it has
merely been held in custody by that individual and has been
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passed along to its true owner. To read "obtained" to cover
property once held by a defendant on behalf of another has
the effect--when combined with the substitute assets
provision--of converting the forfeiture into a fine. Thus,
at first, the temptation is to read the word "obtained"
narrowly, having in mind the low level courier who merely
transports the money and could face death if any of the funds
were diverted.
Yet, on reflection, it is only in degree that the
courier who gets a very small cut differs from intermediaries
who get a larger one, and from the leader of the drug ring
who is effectively paying much of the money back to suppliers
and servitors of various kinds. Looking at criminal
forfeiture under RICO as a kind of shadow fine, the size of
the amount transported is some measure of the potential harm
from the transaction. And since temporary custody is
certainly enough for a possession charge in a drug case, see
United States v. Zavala Maldanado, 23 F.3d 4, 6-8 (1st Cir.),
cert. denied, 115 S. Ct. 451 (1994), it is hard to see why
"obtained" should be read more narrowly.
Finally, it is very hard to escape the implications of
18 U.S.C. 982(b)(2). There, Congress has expressly carved
out a narrow safe harbor, which protects against forfeiture a
defendant who "acted merely as an intermediary who handled
but did not retain the property" unless the defendant
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conducted three or more separate transactions involving a
total of $100,000 or more in a twelve-month period. This
provision indicates that Congress itself thought that a
separate statute was necessary for a "passing on" defense.
There is no counterpart safe harbor provision in RICO nor, in
view of the amounts involved, could such a provision help any
appellants in this case.
B. Vicarious Liability
B. Vicarious Liability
The question remains whether a defendant's forfeiture is
limited to the laundered funds that the defendant himself
obtained or whether it extends to funds obtained by other
members of the conspiracy. The district court took the
latter position with one important qualification: laundered
funds obtained by other members of the conspiracy would be
attributed only to the extent that they were reasonably
foreseeable to the particular defendant. Saccoccia, 823 F.
Supp. at 1004. This is a sensible resolution of a very close
issue, and we follow the district court's lead.
The arguments for limiting forfeiture solely to funds
personally obtained by an individual defendant are several.
The statutory language speaks of a violator forfeiting
"proceeds which the person obtained" by violating section
1962. 18 U.S.C. 1963(a)(3) (emphasis added). In addition,
the plight of a defendant who was merely a temporary
custodian of cash and passed it on is even starker than that
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of a person who never possessed the cash at all. Thus, there
is a respectable basis for holding that vicarious liability
for co-conspirator behavior does not exist under section
1963.
The arguments pointing the other way seem to us
stronger. Under established case law, members of a
conspiracy are substantively liable for the foreseeable
criminal conduct of the other members of the conspiracy.
Pinkerton v. United States, 328 U.S. 640 (1946). Using the
same concept, the Sentencing Guidelines attribute to a
defendant at sentencing the foreseeable conduct of co-
conspirators. U.S.S.G. 1B1.3(a)(1)(B). It would be odd,
although not impossible, to depart from this principle of
attributed conduct when it comes to apply the forfeiture
rules, which have aspects both of substantive liability and
of penalty.
It is largely fortuitous whether an individual co-
conspirator happened to possess the laundered funds at a
particular point. If conclusive weight were given to who
physically handled the money, a low-level courier or money
counter could be liable for vast sums, while other higher
level conspirators could easily escape responsibility. So
long as the amount handled by others is foreseeable as to a
defendant, the foreseeable amount represents the sounder
measure of liability.
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Finally, we have to give some weight to the fact that
each court of appeals that has addressed the topic has
concluded that the forfeiture provisions involve joint and
several liability. E.g., Masters, 924 F.2d at 1369-70;
Fleischhauer v. Feltner, 879 F.2d 1290, 1301 (6th Cir. 1989),
cert. denied, 493 U.S. 1074 (1990); United States v.
Benevento, 836 F.2d 129, 130 (2d Cir. 1988); United States v.
Caporale, 806 F.2d 1487, 1506-09 (11th Cir. 1986), cert.
denied, 482 U.S. 917 (1987). This is a somewhat backward way
of putting the matter, since "joint and several" roughly
describes the result without explaining the underlying theory
of liability. Here, we think the theory is the familiar rule
that a member of a conspiracy is responsible for the
foreseeable acts of other members of the conspiracy taken in
furtherance of the conspiracy. Pinkerton, 328 U.S. at 646-
47; U.S.S.G. 1B1.3(a)(1)(B).
Appellants appear to think that their vicarious
liability for amounts they did not physically touch rests on
the assumption that the Colombian drug lords who ultimately
"obtained" $136 million were members of the same conspiracy.
On this premise, appellants advance a number of arguments as
to why such a conspiracy cannot be made out under the
indictment or evidence in this case. The short answer is
that the premise is mistaken; individual appellants are
liable because their convicted American co-conspirators
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obtained the funds, regardless of the status assigned to the
Colombians.
Nor do we see any basis for the claim that the
forfeiture violates the "excessive fines" clause of the
Eighth Amendment. Although the provision is applicable to
forfeitures, see Alexander v. United States, 113 S. Ct. 2766(1993), holding a defendant liable for an amount of money
foreseeably laundered by himself and his own co-conspirators
is quite rational based on a proportionality analysis.
Harmelin v. Michigan, 501 U.S. 957 (1991). In this case none
of the appellants was separately fined, so we can leave for
another day forfeitures imposed on top of separate fines.
We appreciate the fact that a formidable penalty can be
inflicted when one disallows a passing-on defense then
imposes vicarious liability for the foreseeable acts of co-
conspirators. The government can collect its $136 million
only once but, subject to that cap, it can collect from any
appellant so much of that amount as was foreseeable to that
appellant. But there is no reason to think that this result
is unattractive to Congress, which requested a broad
construction of RICO, or to the Supreme Court, which followed
this policy in Russello.
C. Substituted Assets
C. Substituted Assets
The indictment in this case sought forfeitures against
each of the appellants of approximately $140 million and
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expressly invoked 18 U.S.C. 1963(m). Section 1963(m)
provides that if property subject to forfeit cannot be found
or has been transferred then "the court shall order the
forfeiture of any other property of the defendant up to the
value of" the property subject to forfeit. See also 18
U.S.C. 982(b) (similar provision in money laundering
statute incorporated from 21 U.S.C. 853(p)). In this case,
the original jury verdicts contain a determination of
forfeiture only as to Hurley; forfeiture findings against the
other appellants were made thereafter by the district court,
as earlier described.
Appellants filed notices of appeal from their
convictions in May and June 1993. On July 16, 1993, the
government moved in the district court to amend the
forfeiture provisions of its judgments to substitute other
property of the appellants for the $137 million in laundered
funds. After a hearing, the court granted these motions. On
appeal, appellants argue that the district court lacked
jurisdiction to enter those orders because appeals had
already been taken.
This claim rests on the "general rule" that "entry of a
notice of appeal divests the district court of jurisdiction
to adjudicate any matters related to the appeal." United
States v. Distasio, 820 F.2d 20, 23 (1st Cir. 1987). But the
rule is not absolute, for even after the appeal is filed the
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district court retains authority to decide matters not
inconsistent with the pendency of the appeal. See Spound v.
Mohasco Indus., Inc. 534 F.2d 404, 411 (1st Cir.) cert.
denied, 429 U.S. 886 (1976). A district court may, for
example, determine attorneys' fees after an appeal has been
taken or act in aid of execution of a judgment that has been
appealed but not stayed. See In re Nineteen Appeals, 982
F.2d 603, 609 n.10 (1st Cir. 1992); International Paper Co.
v. Whitson, 595 F.2d 559, 561-62 (10th Cir. 1979). We think
that the substitution of assets orders fit within this
general category.
Criminal forfeiture orders are something of a mongrel.
The initial forfeiture is sought in the indictment and,
absent a waiver of jury trial, is specified in the jury
verdict. See Fed. R. Crim. P. 7(c)(2); 31(e). But the
statute says that an order substituting assets is to be made
by "the court." 18 U.S.C. 1963(m). The implication is
that such an order may commonly be entered after the initial
forfeiture has been determined. Indeed, the government might
not even know that substitution is necessary until it seeks
to take possession of the property specified in the initial
forfeiture order.
Under these circumstances, we see no reason why the
taking of the appeal should divest the district court of
authority to enter an order forfeiting substitute property.
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Appellants do not provide any reason to think that this would
interfere with, or contradict, the court of appeals'
consideration of the original judgment of a conviction and
sentence, including the initial forfeiture order. Avoiding
such interference and inconsistency is the purpose of the
general rule barring district court proceedings during the
pendency of an appeal. Venen v. Sweet, 758 F.2d 117, 121 (3d
Cir. 1985). There is no reason to extend this ban further
than its own rationale.
Of course, the substitute assets order, if one is
eventually made, may give rise to new issues for appeal, but
a new appeal can be taken directly from this order.
Similarly, a decision of the appeals court on the original
conviction could undermine the substitute assets order (e.g.,
by overturning the conviction itself or the initial
forfeiture), but a substitute assets order can then be undone
or overturned. After all, determination of counsel fees in a
section 1983 case presents the same problem and is resolved
in precisely this manner. See, e.g., Casa Marie Hogar
Geriatrico, Inc. v. Rivera-Santos, 38 F.3d 615 (1st Cir.
1994) (separate appeal of counsel fees subsequent to original
judgment on the merits).
Appellants' other attack on the substitute assets orders
is that those orders countervail the double jeopardy clause,
U.S. Const. amend. V, and principles of fundamental fairness.
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Appellants' basic argument is that the original RICO
forfeiture orders were limited to forfeitures of the
laundered monies and that the orders extending forfeiture to
substitute assets constituted either a second prosecution for
the same offense or multiple punishments for that offense.
See North Carolina v. Pearce, 395 U.S. 711, 717 (1969); see
also Witte v. United States, 63 U.S.L.W. 4576 (U.S. June 14,
1995).
We found no case law directly in point but see no reason
in principle why the substitute assets provision should be
regarded either as a second prosecution or as a forbidden
multiple punishment. The fact that the substitute assets
order may be entered at some time after the original
conviction does not make it a second prosecution, any more
than sentencing after conviction is a second prosecution.
The substitution order is entered in the original proceeding
as one of a number of steps, primarily relating to post-
conviction sanctions, that are known to the defendant from
the outset.
As for the claim of multiple punishment, the
Constitution does not prevent multiple sanctions for one
offense where the sanctions are specified in advance by
Congress and imposed in reasonable proximity to the
conviction: a fine and imprisonment is a common federal
sentence. The situations in which later increased penalties
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have been condemned as multiple punishments are quite remote
from this case and involve aggravating elements that are not
even arguably present here. Arizona v. Rumsey, 467 U.S. 203,
209-12 (1984) (death sentence); Pearce, 395 U.S. at 723-26(penalty for appeal).
VII. CONCLUSION
VII. CONCLUSION
A number of the remaining arguments made by appellants
have been addressed by the court in the decision affirming
Stephen Saccoccia's conviction and need not be discussed
again. These include attacks on certain references to the
Colombians, on the admission of dog sniff evidence, on
testimony by Agent Shedd, and on tape excerpts claimed to
refer to cocaine and drug money. Similarly, Donna
Saccoccia's claims relating to extradition, to the extent not
waived, are in substance covered by the earlier opinion's
discussion of Stephen Saccoccia's counterpart claims.
Several additional arguments (e.g., Kenneth Saccoccio's
"theory of the defense" instruction) have been considered but
deemed not to require separate treatment.
The charges in this case involved a web of multi-
paragraph statutes with intricate provisions that the jury
had to apply to numerous transactions involving multiple
defendants and occurring over a considerable period of time.
In these circumstances, we have reviewed appellants' claims
not only as individually presented, but also with an eye to
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making certain that no innocent person has been wrongly
enmeshed in criminal proceedings. We are satisfied that
while several debatable issues have been raised on appeal,
there was no prejudicial error and that the verdict returned
by the jury was a just one.
Affirmed.
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