United States v. Sivigliano

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT August 2, 2013
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 12-6247
(D.C. No. 5:11-CR-00319-R-1)
JOSEPH ANGELO SIVIGLIANO, (W.D. Okla.)
Defendant-Appellant.
ORDER AND JUDGMENT*
Before TYMKOVICH, ANDERSON, and MATHESON, Circuit Judges.
Defendant Joseph Angelo Sivigliano was convicted of conspiracy to commit
wire fraud and securities fraud, as well as numerous counts of wire fraud and money
laundering, all of which arose out of a Ponzi scheme he managed involving a real
estate flipping operation that promised a very lucrative monthly rate of return to
investors. He now appeals, contending that the government’s proof was legally
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
insufficient in certain respects.1 On de novo review, United States v. Baker, 713 F.3d
558, 562 (10th Cir. 2013), we affirm for the reasons stated below.
FACTUAL BACKGROUND
A broad summary of the government’s case against Mr. Sivigliano will put his
particularized appellate contentions in focus. Of course we consider the evidence in
a light most favorable to the government. United States v. MacKay, 715 F.3d 807,
812 (10th Cir. 2013). The case against Mr. Sivigliano was presented primarily
through his co-conspirators, Dwight Pimson and Venus Smith,2 several defrauded
investors, and FBI agent Ron Carver. The defense presented no witnesses.
The investment scheme was operated through Helping Hearts and Hands, Inc.
(HHH), a previously dormant 26 U.S.C. § 501(c)(3) charitable corporation provided
for Mr. Sivigliano’s use by Mr. Pimson, who served as his right-hand man. The
government’s case focused on the primary investment program HHH offered: clients
invested funds in $10,000 increments that HHH was to use in purchasing foreclosed
properties in Oklahoma City that would promptly be brought up to resale condition
and sold at a profit, providing proceeds from which investors whose funds had been
1
In his summary of argument, Mr. Sivigliano also states, in passing and without
elaboration, “that his Sixth Amendment confrontation clause rights were violated.”
Opening Br. at 14. But the point is never argued in his brief, so we do not consider
it. See, e.g., LaFevers v. Gibson, 182 F.3d 705, 725 (10th Cir. 1999); Phillips v.
Calhoun, 956 F.2d 949, 954 (10th Cir. 1992).
2
Both Mr. Pimson and Ms. Smith pleaded guilty to conspiracy in connection
with the scheme.
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used (singly or in combination with others’) to buy property were to be paid a five
percent return each month. Investors received documents reflecting their investments
and the properties purportedly securing them. In fact, however, the documents were
not recorded, so they provided no security. Moreover, the properties were at times
worth less than the (sometimes multiple) investments purportedly secured, and in
some instances HHH did not even own the designated property.
Initially, this program was offered to investors in Oklahoma, but in late 2006
and early 2007 HHH began marketing to a wider audience through investment
seminars in California. Records for 2006-2007 showed participation by more than
65 investors, with some $3.8 million invested. As agent Carver explained, these
records also showed that, contrary to what investors were told, their money was
actually being used, at least in part, to cover other investors’ returns, in classic Ponzi
fashion. This point was made as well in testimony from Venus Smith, who as
secretary to Mr. Sivigliano provided investors with the documentation for their
investments. The same records and testimony showed that investment money was
also misdirected to pay personal expenses and fund collateral business ventures of
Mr. Sivigliano and his co-conspirators.
The scheme collapsed in the summer of 2007, resulting in extensive losses for
HHH investors. Upon his conviction, Mr. Sivigliano was ordered to pay $2,214,522
in restitution to his victims.
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CONTENTIONS ON APPEAL
Mr. Sivigliano contends that the government failed to offer sufficient evidence
to prove (1) an intent to defraud investors; (2) an agreement to commit wire and
securities fraud for the conspiracy count; and (3) the offering and sale of securities
for the conspiracy and money laundering counts (the latter require use of proceeds
from unlawful activity, here identified as securities fraud).3 He also generally
contends that the commingling of funds in HHH accounts left the government
without definitive proof of particular funds being used for particular transactions. In
addressing these contentions we consider the direct and circumstantial evidence,
along with all reasonable inferences therefrom, in a light most favorable to the
government, deferring to the jury’s determination of guilt unless “no rational trier of
fact could have found the essential elements of the crime beyond a reasonable
doubt.” United States v. Cornelius, 696 F.3d 1307, 1316 (10th Cir. 2012) (internal
quotation marks omitted).
A. Proof of Fraudulent Intent
The evidence of intent to defraud was undeniable. Indeed, some of it came
from Mr. Sivigliano himself. He admitted to agent Carter in an interview that he told
investors their money would be used only to purchase properties pursuant to the
3
In his opening brief Mr. Sivigliano also contended that the government did not
prove that the purported securities were required to be registered under Oklahoma
law. We agree with the government that, as failure to register was not a separately
charged offense or an element of any of the offenses charged, registration vel non is
immaterial to Mr. Sivigliano’s convictions.
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investment program outlined above, when in fact he was using it for other purposes
as noted above, including simply covering returns owed to other investors. He was
even using their money to fund strawman purchases (particularly by Ms. Smith) of
the very properties that HHH was purportedly selling to third parties to generate
investor returns. Intent to defraud may be inferred from misrepresentations, attempts
to conceal activity, and conversion of money for the defendant’s own use. United
States v. Bailey, 327 F.3d 1131, 1140 (10th Cir. 2003). Here the jury could easily
infer an intent to defraud investors.4
B. Proof of Agreement
The record also contains sufficient evidence from which a jury could properly
infer the existence of the agreement necessary for conspiracy. See United States v.
Dazey, 403 F.3d 1147, 1159 (10th Cir. 2005) (noting conspiracy conviction may be
based on “circumstantial evidence indicating coordination and concert of action”).
Mr. Pimson and Ms. Smith (ostensibly married at the time5) both played substantial
supporting roles in the HHH operation, all at Mr. Sivigliano’s direction (and, of
course, both admitted to the jury that they had pleaded guilty to participating in the
4
Mr. Sivigliano insists he did not, in any event, start out with the intent to
defraud investors. Not surprisingly, he cites no authority for his tacit premise that an
illegal conspiracy or enterprise is excused if it only turned to fraud because of the
failure of an originally legal business model. We decline to adopt that facially
untenable proposition.
5
They held themselves out as man and wife, though Ms. Smith (then using the
name “Venus Pimson”) was still married to someone else.
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conspiracy). Mr. Pimson met with potential investors and showed them properties.
Ms. Smith prepared and sent documentation to investors and served as their initial
point of contact by phone and email. In addition to such day-to-day activities, they
attended the California investment seminars with Mr. Sivigliano and helped him
recruit new investors there. And Ms. Smith, at least, acknowledged that she knew
investor funds were not being used in the manner that Mr. Sivigliano represented to
investors. This was an ample showing of coordination and concert of action on
which to find conspiratorial agreement.
C. Proof of Sale of Securities
There was also a sufficient basis to find that the investments HHH sold were
securities. Mr. Sivigliano contends the investments were nothing more than ordinary
real estate transactions, which are not treated as securities because the purchaser
obtains something of inherent value—land to develop, a home to reside in, a building
to occupy—rather than just an entrepreneurial promise of a return on investment, see
United Hous. Found., Inc. v. Forman, 421 U.S. 837, 852-53 (1975) (distinguishing
ordinary real estate transactions from investment contracts qualifying as securities);
Aldrich v. McCulloch Props., Inc., 627 F.2d 1036, 1039-40 (10th Cir. 1980) (same).
This characterization of the investment program is simply not borne out by the facts.
As noted earlier, the properties identified in the HHH documentation did not even
serve as security for, much less the end purpose of, participants’ investments; rather,
investors participated for the lucrative monthly returns Mr. Sivigliano promised them
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in return for the use of their money. The real estate purchases characterized as
non-securities in Forman were exactly the opposite: “investors were attracted solely
by the prospect of acquiring a place to live, and not by financial returns on their
investments.” Forman, 421 U.S. at 853.
We have carefully reviewed the trial record in light of the various contentions
advanced by the parties on appeal. We conclude there was ample evidence to support
the jury’s determination that the relevant investments constituted securities.6
D. Commingling/Tracing Objection
Finally, Mr. Sivigliano repeatedly voices the general objection that the HHH
accounts involved in the charged offenses contained at least some funds from legal
activities and that the government failed to offer definitive evidence tracing funds
derived from illegal activities to their subsequent use by him or HHH. This objection
is irrelevant to the wire fraud counts. These were complete when, as charged in the
indictment, the victims wired their funds into the accounts. See United States v.
Kennedy, 707 F.3d 558, 566 (5th Cir.) (where indictment charges wire fraud based on
fraudulently induced transfer of funds, it “is a consummated crime when the illicitly
obtained funds are transmitted”), cert. denied, Nos. 12-9922 & 12-10100, 2013 WL
1787794 & 2013 WL 1858225 (U.S. June 3, 2013); see also United States v.
Johnson, 971 F.2d 562, 570 (10th Cir. 1992) (wire fraud offense incomplete until
6
We note that the theory on which the case was tried and the jury reached its
verdict was framed by instructions agreed upon by the parties and given without
objection, either at trial or on appeal.
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fraudulently elicited funds are transmitted to defendant). It is obviously also
irrelevant to the conspiracy count, which was satisfied by proof of agreement and any
act in furtherance thereof (for which any of the conspirators’ acts prompting investors
to transfer funds into the HHH account sufficed).
That leaves the money laundering counts, which did require a further financial
transaction involving illegally derived proceeds held in HHH accounts (i.e., some use
of the funds obtained as a result of the securities fraud practiced on investors). See
18 U.S.C. §§ 1956(a)(1)(A)(i) (requiring “financial transaction” involving “proceeds
of specified unlawful activity”), 1957(a) (requiring a “monetary transaction” in
property “derived from specified unlawful activity”). But in this circuit (as in some
others), when legal and illegal funds are commingled in an account from which
transfers are made, the government is not required to trace particular illegal funds to
particular transfers to prove the use-of-unlawful-proceeds element of money
laundering. See Dazey, 403 F.3d at 1163 (following Johnson, 971 F.2d at 570, to
hold that “[t]he government need not meticulously trace the funds involved in a
monetary transaction offense or prove that the funds could not have come from a
legitimate source”); accord United States v. Ward, 197 F.3d 1076, 1083 (11th Cir.
1999) (holding “the government must only prove that the tainted proceeds were
commingled with other funds” in account from which money laundering transactions
were made). As we explained in Johnson, “allow[ing] individuals to avoid
prosecution simply by commingling legitimate funds with proceeds of crime . . .
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would defeat the very purpose of the money-laundering statutes.” Johnson, 971 F.2d
at 570 (citing United States v. Jackson, 935 F.2d 832, 840 (7th Cir. 1991) (making
same point)); see Ward, 197 F.3d at 1083 (“Congress did not intend for participants
in unlawful activities to escape conviction for money laundering simply by
commingling funds derived from both specified unlawful activities and other
activities. Commingling of funds is itself suggestive of a design to hide the source of
ill-gotten gains[.]” (internal quotation marks omitted)). Here the government offered
proof that for the time period in question, HHH and Mr. Sivigliano received over
$3.8 million in fraudulently obtained funds from investors and that, on average, some
eighty-seven percent of the money in HHH accounts derived from this activity. That
was ample proof of illegally derived funds to support the money laundering counts.
The judgment of the district court is affirmed.
Entered for the Court
Stephen H. Anderson
Circuit Judge
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