United States v. Aruna Matai

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 97-4129
ARUNA MATAI,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
No. 97-4130
SANDEEP MATAI, a/k/a Nick Matai,
a/k/a Sondi Matai,
Defendant-Appellant.
Appeals from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
James C. Fox, District Judge.
(CR-96-8-F)
Argued: April 10, 1998
Decided: February 10, 1999
Before MOTZ, Circuit Judge, STAMP, Chief United States District
Judge for the Northern District of West Virginia, sitting by
designation, and DOUMAR, Senior United States District Judge for
the Eastern District of Virginia, sitting by designation.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Joseph Blount Cheshire, V, CHESHIRE & PARKER,
Raleigh, North Carolina, for Appellants. Scott L. Wilkinson, Assistant
United States Attorney, Raleigh, North Carolina, for Appellee. ON
BRIEF: Janice McKenzie Cole, United States Attorney, Anne M.
Hayes, Assistant United States Attorney, Raleigh, North Carolina, for
Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Aruna Matai and Sandeep Matai appeal their convictions in the dis-
trict court on charges of credit card fraud and money laundering. They
also appeal the district court's order directing forfeiture of the inven-
tory of two stores owned by Aruna Matai. Finding no error, we
affirm.
I.
On October 28, 1996, Aruna Matai and Sandeep Matai were con-
victed of conspiracy to commit credit card fraud, credit card fraud,
and money laundering in violation of 18 U.S.C. §§ 371, 1029, and
1956. Included in that verdict was a special verdict of forfeiture of
$11,284.55 in currency and the inventories of Home Boys of New
York and Dan Hills Clothing store, the two Raleigh, North Carolina
clothing stores owned by Aruna Matai and operated by her and
Sandeep Matai, her son. On November 13, 1996, the district court
denied a motion for judgment notwithstanding the verdict filed by
Aruna Matai.
Evidence introduced at the trial showed that stolen credit cards
were presented and used at the clothing stores owned and operated by
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the appellants between July 1993 and July 1994. The resulting sales
amounted to $11,284.55. Evidence also established that Aruna Matai
deposited the transaction slips produced through the use of the stolen
credit cards into a merchant account at Wachovia Bank. The deposit
slips from the stolen credit cards were then commingled with the
deposits of other cash and checks received at the Matais' stores. Also,
the Matais drafted checks on the merchant account in an effort to dis-
guise the illegal source of the funds obtained from use of the stolen
credit cards.
In January 1994, Steve Holloman, a branch manager at Wachovia
Bank, met with Aruna Matai to warn her about what he believed to
be unusually large transactions for the business typically done at
Home Boys of New York and Dan Hills. At that meeting, Holloman
reminded Aruna Matai that she should compare signatures on the
cards with the signatures made on the transaction slips.
Individuals who had stolen the credit cards used at the appellants'
stores testified that they presented the stolen cards to Sandeep Matai,
occasionally to Aruna Matai, or to both of them. After presentation
of the stolen cards, the Matais permitted the credit card thieves to
select and take clothing from either Home Boys of New York or Dan
Hills. This clothing was then charged to the stolen credit cards. The
amount charged to the stolen credit cards was generally higher than
the value of the clothing given to the credit card thieves as their "re-
ward."
The credit card thieves also testified that they were assisted in their
use of the stolen credit cards by David Morgan and Gregory Wood-
ard, employees of the Matais. The thieves testified that the Matais
rarely checked the signatures on the transaction slips, and that, when
they did, they checked only to ensure that the signatures were "similar
enough" to the signatures on the cards. Although several of the credit
card thieves testified that they dealt primarily with Sandeep Matai,
several of these witnesses also had significant contact with Aruna
Matai.
Witness Ronald Brice testified, for example, that after presenting
a stolen card at one of the Matais' stores, Aruna Matai told Brice that
he should bring stolen cards to the store after 5:00 p.m. when the
3
employees would be gone. Witness Jay Mays testified that he dealt
both with Sandeep and Aruna Matai, but that Aruna Matai was more
likely to make him re-sign a signature on a transaction slip so that it
would more closely resemble the signature on the credit card. Addi-
tionally, the Matais' former employee, David Morgan, testified that
when stolen credit cards were brought into the store, either Sandeep
or Aruna Matai would run the credit card through the processing
machine to determine whether the card had been reported stolen. If
the card was still valid, charges would be made to the stolen card.
At the trial, there was no question that stolen credit cards were used
at the Matais' stores and that the use of those cards was unauthorized.
The Matais did not dispute that transaction slips from the stolen cards
were deposited into the merchant checking account of Home Boys of
New York and that withdrawals were made from that account. Fur-
thermore, there was no dispute that the Matais compensated, with
merchandise, those persons who brought the stolen credit cards to the
stores. The only significant issue at trial was the knowledge of the
Matais.
The government alleged that, at the time the cards were presented
in the stores, the Matais knew that the cards had been stolen. They
claimed that they did not know of the unauthorized status of the credit
cards until after the transactions had been made and they were
informed by their bank that the cards had been stolen.
II.
Aruna and Sandeep Matai make three arguments on appeal. They
argue that they are entitled to a new trial because the district court (1)
wrongfully issued a willful blindness instruction to the jury, and (2)
failed to define reasonable doubt when it charged the jury. The Matais
also assert that there was insufficient evidence to support a finding
that their stores' inventory was subject to forfeiture.
At trial, Aruna Matai objected to the willful blindness instruction
and to the district court's decision not to define the term "reasonable
doubt." Sandeep Matai did not object on either ground, and he raises
those issues before this Court for the first time. Accordingly, the
"harmless error" standard governs review of Aruna Matai's claims on
4
those arguments, Fed. R. Crim. P. 52(a), and review of Sandeep
Matai's claims is appropriate under the "plain error" standard, Fed. R.
Crim. P. 52(b).
The Matais first argue that the district court erred in instructing the
jury on the concept of willful blindness. A willful blindness instruc-
tion allows a "jury to impute the element of knowledge to [a] defen-
dant if the evidence indicates that he purposely closed his eyes to
avoid knowing what was taking place around him." United States v.
Schnabel, 939 F.2d 197, 203 (4th Cir. 1991). A willful blindness
instruction is proper where the evidence presented supports both
actual knowledge and deliberate ignorance on the part of a defendant.
United States v. Abbas, 74 F.3d 506, 513 (4th Cir.), cert. denied, 517
U.S. 1229 (1996). A district court must ensure, however, that a jury
is not permitted to infer a defendant's guilty knowledge based upon
a showing of mere careless disregard or mistake. United States v.
Guay, 108 F.3d 545, 551 (4th Cir. 1997); United States v. Mancuso,
42 F.3d 836, 846 (4th Cir. 1994). In the money laundering context,
we have stated that the knowledge element of the crime may be satis-
fied by a showing that the defendant either knew, or was "wilfully
blind to the fact, that the transaction was designed for an illicit pur-
pose." United States v. Campbell, 977 F.2d 854, 858 (4th Cir. 1992),
cert. denied, 507 U.S. 938 (1993).
Neither of the Matais contested the accuracy of the willful blind-
ness instruction, but only whether, under the facts in this case, it was
appropriate to give the instruction. Aruna Matai contends that the
willful blindness instruction was erroneously given because there was
no evidence of deliberate ignorance, but instead, only of actual
knowledge on her part. As we stated in Abbas, however, "[a] willful
blindness instruction is appropriate when the defendant asserts a lack
of guilty knowledge but the evidence supports an inference of deliber-
ate ignorance." Abbas, 74 F.3d at 513 (quoting United States v.
Gruenberg, 989 F.2d 971, 974 (8th Cir.), cert. denied, 510 U.S. 873(1993)).
Aruna Matai asserted a lack of knowledge that the stolen credit
cards were being presented or used at her stores. The evidence indi-
cates, however, that she was present at her stores on several occasions
when the stolen credit cards were used. Testimony also suggested that
5
on at least several occasions she had a role in processing the cards.
Furthermore, Aruna Matai was responsible for the financial manage-
ment of her stores, including the deposit of slips generated during the
use of credit cards at Home Boys of New York and Dan Hills. Many
of the illegal transactions involved purchases of substantially greater
amounts than the typical purchase from those stores. Moreover, her
failure to act following her conversation with Steve Holloman of
Wachovia Bank, who spoke with her on the issue of questionable
activity in her merchant's account, suggests a deliberate avoidance of
knowledge of the use of stolen credit cards.
The district court properly concluded that evidence existed both of
Aruna Matai's actual knowledge and of her deliberate ignorance of
the illegal activity that occurred at her stores. Thus, the district court's
inclusion of a willful blindness instruction was appropriate as to
Aruna Matai. See Abbas, 74 F.3d at 513. Also, based upon the con-
vincing evidence of Sandeep Matai's participation in the credit card
fraud and, therefore, of his actual knowledge of that activity, we can-
not say that the court committed "plain error" in instructing the jury
on willful blindness as to him. The evidence supports the jury's find-
ings on the knowledge element of the crimes of which he was con-
victed.
The Matais' next assignment of error, comprised of two separate
but related arguments, focuses on the district court's refusal to define
reasonable doubt in its final jury instructions. The Matais contend that
the court erred by failing to include further instruction on reasonable
doubt after earlier in the trial stating that it would do so. The Matais
note that, in the district court's preliminary instructions to the jury,
the court stated that it would give "further instruction on [reasonable
doubt] later." During the parties' review of the proposed jury charge,
counsel for Aruna Matai noted that the court's charge did not include
a definition of "reasonable doubt." The court denied her request to
include such a definition.
The Matais also contend that, although this Court has expressed its
disapproval of the inclusion of an explanation as to reasonable doubt,
this Court has not prohibited such an explanation. According to the
Matais, a district court has some discretion to define reasonable
6
doubt, and, in this case, the district court abused that discretion by
declining to do so.
The Matais correctly note that, as a rule, we caution district courts
against defining reasonable doubt. See, e.g., United States v. Oriakhi,
57 F.3d 1290, 1300 (4th Cir.), cert. denied, 516 U.S. 952 (1995);
United States v. Ricks, 852 F.2d 885, 894 (4th Cir. 1989), cert.
denied, 493 U.S. 1047 (1990). We do not agree, however, with the
Matais' argument as to the discretionary authority that district courts
possess to define reasonable doubt. Instead, simply because our cases
have not absolutely prohibited a district court from defining reason-
able doubt, the district courts are not bound to instruct a jury on rea-
sonable doubt simply because a party requests that instruction. See
United States v. Reives, 15 F.3d 42, 44 (4th Cir.), cert. denied, 512
U.S. 1207 (1994) ("We have never found a refusal of a party's request
for a clarifying instruction to be error."). Furthermore, the only excep-
tion that we have recognized to the general rule against defining rea-
sonable doubt is in the context of responding to a jury's specific
request for a definition. Reives, 15 F.3d at 45-46.
In this case, the district court recognized, and adhered to, our
strong policy against a reasonable doubt instruction. The Matais had
no right to a jury instruction on reasonable doubt even if they believed
that the court planned to issue such an instruction. Accordingly, this
Court concludes that the district court did not err with respect to either
of the Matais on this issue.
Finally, the Matais argue that under 18 U.S.C. § 982(a)(1) there
was insufficient evidence to support the jury's special verdict on for-
feiture of the inventory of Home Boys of New York and Dan Hills
Clothing. Section 982(a)(1) states that, "in imposing sentence on a
person convicted of an offense in violation of [18 U.S.C. § 1956] . . .
[a court] shall order that the person forfeit to the United States any
property, real or personal, involved in such offense, or any property
traceable to such property." 18 U.S.C. § 982(a)(1).
The Matais argue that no evidence showed that the store invento-
ries were "involved in" the money laundering scheme. The Matais
also contend that the court's instruction that forfeiture could be
7
ordered if the jury found that the inventories "facilitated" the money
laundering was improper under the meaning of § 982(a)(1).
In United States v. Schifferli, 895 F.2d 987 (4th Cir. 1990), this
Court held that, under the forfeiture provision at 21 U.S.C.
§ 881(a)(7), a dentist's office building was forfeitable following the
dentist's conviction for conspiracy to distribute and dispense illegally
certain prescription drugs. That section makes subject to forfeiture
"[a]ll real property . . . used . . . to facilitate the commission of" a vio-
lation of Title 21 of the United States Code that is punishable by more
than a year of imprisonment. 21 U.S.C. § 881(a)(7). The Court went
on to state that "facilitation" required that there be a "``substantial con-
nection between the property and the underlying criminal activity.'"
Schifferli, 895 F.2d at 989 (quoting United States v. Santoro, 866 F.2d
1538, 1542 (4th Cir. 1989)). Furthermore, "``facilitate' implies that the
property need only make the prohibited conduct ``less difficult or
"more or less free from obstruction or hindrance."'" Id. at 990 (quot-
ing United States v. Premises Known as 3639-2nd St., N.E., Minneap-
olis, Minnesota, 869 F.2d 1093, 1096 (8th Cir. 1989)).
Other courts have borrowed Schifferli's construction of "facilitate"
in construing 18 U.S.C. § 981(a)(1), the civil forfeiture analog to
§ 982(a)(1). See, e.g., United States v. All Monies ($477,048.62) in
Account No. 90-3617-3, Israel Discount Bank, New York, New York,
754 F. Supp. 1467, 1473 (D. Haw. 1991); United States v. Certain
Funds on Deposit in Account No. 01-0-71417, Located at the Bank of
New York, 769 F. Supp. 80, 84 (E.D.N.Y. 1991). In All Monies, the
court found that, although § 981(a)(1) does not expressly include the
word "facilitate," it was reasonable to conclude that "property
involved in" included property that "facilitated" illegal money laun-
dering. All Monies, 754 F. Supp. at 1473. As part of a further analyti-
cal development, several courts that have interpreted § 982 have
relied on § 981 case law. See United States v. Tencer, 107 F.3d 1120,
1134 n.5 (5th Cir. 1997) (citing United States v. Voigt, 89 F.3d 1050,
1087 (3d Cir.), cert. denied, ___ U.S. ___, 117 S. Ct. 623 (1996)).
In this case, we, also, look to the foundation set in Schifferli. The
reasoning in that case and in the other cases cited above is persuasive.
In fact, those cases justify our conclusion that, under § 982(a)(1),
"property involved in" criminal activity includes property that is sub-
8
stantially connected to that activity, in that it furthered, facilitated, or
aided in the commission of the activity. As a result, property that is
substantially connected to the commission of a money laundering
offense, such that it assisted those convicted of the offense in commit-
ting the crime, is forfeitable under § 982(a)(1).
We believe that the evidence at trial proved a substantial connec-
tion between the inventories of Home Boys of New York and Dan
Hills Clothing and the money laundering offense. The Matais used the
inventories of these stores to reward their employees and the credit
card thieves for their respective roles in procuring the stolen credit
cards, which provided the mechanism for the money laundering
scheme. The fact that store employees and the credit card thieves
received store merchandise charged to the credit cards, but worth
much less than the amounts billed to the cards, permitted additional
funds to be laundered. Also, the use of the stores for the credit card
fraud and money laundering operation provided a facade of respect-
ability and lawfulness to the conduct that occurred within.*
In summary, we believe that the government produced substantial
evidence to support a finding of forfeiture of the inventories of the
Matais' stores. The forfeited property need not have been "indispens-
able" to the commission of a crime as long as it played a significant
role in the prohibited activity. Schifferli, 895 F.2d at 990. Accord-
ingly, we find that the district court's forfeiture order was proper.
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*After this appeal was filed, the Supreme Court decided United States
v. Bajakajian, 118 S. Ct. 2028 (1998). There, the Court held that a crimi-
nal forfeiture under § 982(a)(1) that was"grossly disproportional" to the
gravity of the harm violated the Excessive Fines Clause of the Constitu-
tion. Id. While the record does not reveal the exact value of the forfeited
inventory of clothing, it certainly does not exceed $500,000, the fine
available for violation of the money laundering statute. See 18 U.S.C.
§ 1956(a). The scheme continued for over a year and involved nine
stolen credit cards. Furthermore, while the amount of monetary harm
caused by the credit card fraud scheme until the time of arrest was only
approximately $11,000, there is little doubt that the defendants would
have continued the fraudulent scheme had they not been caught. We find,
therefore, that the value of the forfeited goods was not grossly dispropor-
tional to the gravity of the fraud.
9
III.
For the reasons stated above, the district court did not err in
instructing the jury on willful blindness, nor did it err by refusing to
define reasonable doubt when charging the jury. Furthermore, the dis-
trict court's forfeiture order regarding the inventories of the two stores
owned by Aruna Matai rests upon sufficient evidence.
AFFIRMED
10