United States v. Francisco Colorado Cessa

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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 13-50849 May 7, 2015
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff–Appellee,
v.
FRANCISCO ANTONIO COLORADO CESSA, also known as Pancho, also
known as Francisco Antonio Colorado-Cessa; JOSE TREVINO MORALES;
EUSEVIO MALDONADO HUITRON, also known as Chevo, also known as
Eusevio Huitron-Maldonado; FERNANDO GARCIA-SOLIS, also known as
Freddy, also known as Fer, also known as Fernando Solis Garcia,
Defendants–Appellants.
-------------------------------------------------
Consolidated with No. 13-51003
UNITED STATES OF AMERICA,
Plaintiff–Appellee,
v.
FRANCISCO ANTONIO COLORADO CESSA, also known as Pancho, also
known as Francisco Antonio Colorado-Cessa,
Defendant–Appellant.
Appeals from the United States District Court
for the Western District of Texas
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Before PRADO, ELROD, and HAYNES, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:
This is an appeal from a money-laundering-conspiracy trial. The Los
Zetas drug cartel entered the U.S. quarter-horse racing business. Los Zetas
used their horse-racing operations to launder money. Four Defendants–
Appellants involved in the horse-racing operations were convicted of
conspiring to launder money in violation of 18 U.S.C. § 1956(h). They appeal,
each challenging the sufficiency of the evidence, the jury instructions, and their
sentences, among other claims of error. For the reasons stated below, we
reverse the conviction of horse trainer Defendant–Appellant Eusevio Huitron
as not supported by sufficient evidence that he joined the conspiracy knowing
its purpose was to conceal the source or nature of illegal funds. We also vacate
Defendant–Appellant Francisco Antonio Colorado Cessa’s (Colorado)
conviction because the jury was improperly instructed and we cannot say
beyond a reasonable doubt that the jury’s verdict as to Colorado would have
been the same absent the error. Because sufficient evidence supports the other
Defendants–Appellants’ convictions and sentences and because the trial court
did not otherwise commit reversible error, we affirm in all other respects.
I. FACTUAL AND PROCEDURAL BACKGROUND
The four Defendants–Appellants, Jose Trevino Morales, Francisco
Antonio Colorado Cessa, Fernando Garcia–Solis, and Eusevio Maldonado
Huitron (collectively “Appellants”), were indicted by a federal grand jury, along
with fifteen other codefendants, for conspiracy to commit money laundering in
violation of 18 U.S.C. § 1956(h). Appellants appeal their convictions following
a three-week jury trial in which fifty-four witnesses testified. The facts
pertaining to each Appellant are recited in greater detail in discussion section
below. An overview of the horse-racing money-laundering conspiracy is
provided as background in Part I(A), and a general description of each
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Appellant’s role in the conspiracy is provided in Part I(B). On review of the
sufficiency of the evidence, we view “the evidence and the inferences drawn
therefrom in the light most favorable to the verdict.” United States v.
Rosbottom, 763 F.3d 408, 417 (5th Cir. 2014) (internal quotation marks
omitted), cert. denied, 135 S. Ct. 985 (2015). As such, in providing an overview
of the criminal conspiracy, we summarize the evidence in that light.
A. Overview of the Conspiracy
According to trial testimony, Los Zetas are a “cartel” that controls
geographic areas within Mexico. The original group of Zetas was formed by the
Mexican government as an armed special-forces unit to combat drug-cartel
operations in Mexico, and the group was designated with the radio call sign
“Zeta.” A group of thirty Zetas deserted from the Mexican military under their
then-commander, known as “Zeta 1,” to work for the Gulf drug cartel as
enforcers. In that role, they committed acts of domestic terrorism, bribed public
officials and law enforcement, and fought other cartels, among other activities.
In about 2007 or 2008, Los Zetas split from the Gulf cartel. Los Zetas
now control several Mexican cities and border-crossing points between Mexico
and the United States. Los Zetas produce marijuana and methamphetamine
in Mexico, import cocaine and methamphetamine precursor chemicals into
Mexico, and export narcotics into the United States. Los Zetas make hundreds
of millions of dollars annually from the import and sale of illegal drugs. 1
Members of Los Zetas are assigned numbers in accordance with the order
in which they joined the armed group, e.g., the seventh member was known as
“Zeta 7.” At the time of the trial, the leader of Los Zetas was Miguel Angel
1 Jesus Rejon–Aguilar, also known as Zeta 7, was the former national supervisor of
Los Zetas, and he estimated that the cartel took in about $350 million per year.
3
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Trevino Morales, also known as “Zeta 40.” His brother Oscar Omar Trevino
Morales, also known as “Zeta 42,” was second-in-command.
1. Money-Laundering Operations
Miguel and Omar Trevino used the proceeds of cocaine sales to purchase
quarter horses 2 in the United States through legitimate-appearing
intermediaries. They did so in part because the quarter-horse business “was a
good business . . . to get clean money” from the proceeds of drug sales in the
United States back into Mexico.
Los Zetas generated “clean money” by repeatedly “selling” horses to
individuals or shell companies controlled by coconspirators. For instance, one
horse, Blue Girls Choice, was initially purchased by Ramiro Villareal for
$15,000 cash. The horse was then repurchased by Villareal at a different horse
sale—this time for $135,000. Later, the horse was purchased for $30,000, and
then repurchased again for $135,000. This same horse was bought and sold
several times over between members of the conspiracy. Each transaction
generated the appearance of legitimate cash proceeds. The horses were held in
the names of multiple individuals and companies to conceal the true identity
of their actual owner: Zeta 40, Miguel Trevino. 3
Los Zetas paid for horse training, breeding, veterinary bills, and racing
expenses with the proceeds of illegal drug sales. Miguel Trevino directed
subordinates Mario Cuellar and Jose Vasquez to deliver cash payments for
these expenses. Cuellar and Vasquez sold cocaine in the United States, and,
2 The American quarter horse is a breed of horse bred to sprint short distances, and
the breed is named for its success in races of a “quarter” of a mile or less.
3 As one witness testified, “The pattern was these horses would change claims of
ownership quite rapidly. Some of the companies are alias companies. The people’s names on
the AQHA [the American Quarter Horse Association] records are alias names. Some of them
are real names. But th[ose] people did not purchase the horses or have anything to do with
the horses.”
4
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rather than delivering all of the profits from these sales back to Mexico, they
would deliver cash to the horse operation. 4
Horse expenses also generated “clean cash.” For instance, Tyler Graham,
a manager at a quarter-horse-breeding farm, testified that members of the
conspiracy would pay each other stud fees for Los Zetas’ horses to inseminate
other horses that Los Zetas already owned, generating “[s]everal hundred
thousand” dollars in “clean money” in one year alone.
2. Murders and Kidnapping
Miguel Trevino ordered the killing of at least two individuals who either
refused to cooperate in the money-laundering scheme or were cooperating with
the authorities. Los Zetas purchased quarter horses through intermediaries.
These intermediaries were often wealthy businessmen who were not under IRS
investigation, so that law enforcement would not ask questions “about where
the money [for the horses] was coming from.” These individuals included
Alejandro Barradas and Ramiro Villarreal. The government alleges that
Appellant Colorado Cessa was among those who purchased horses on Los
Zetas’ behalf; this is discussed in greater detail below. A former leader of Los
Zetas testified that Miguel Trevino ordered the murder of Ramiro Villarreal
“because [Los Zetas’ leaders] realized that he was cooperating with the U.S.
authorities” after his arrest in Houston. 5 Miguel Trevino ordered the murder
of Alejandro Barradas because he refused to allow the organization to register
horses under his name as the owner.
4 One witness described how Vasquez would ordinarily receive “a thousand kilos of
cocaine a month” that he would then sell in the Dallas area, such that he would “send back
maybe [$]3 or $4 million a week” to the cartel; however, he would pay horse expenses “out of
whatever [he] was going to be sending . . . [s]o it was never [his] money. It was always their
money.”
5 A DEA agent’s testimony separately confirmed that Villarreal had indeed been
cooperating with officials before his body was found at the scene of a “fiery” car crash.
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A wealthy Mexican businessman, Alfonso Del Rayo, testified that
members of Los Zetas kidnapped and extorted him, using the horse operation
essentially to launder the ransom money. Several Zetas kidnapped and
tortured Del Rayo and demanded a ransom of the equivalent of $4.5 million.
Del Rayo was released nine days later, after sustaining severe injuries.
Soon thereafter, a Veracruz government official and Carlos Nayen (a
coconspirator) approached Del Rayo “about [his] kidnapping.” They instructed
Del Rayo to travel to Oklahoma City to buy a horse, insisting this was for his
own safety and that of his wife and children. Del Rayo flew to Oklahoma City,
where he was met by Appellant Fernando Garcia–Solis and instructed to make
the winning bid on a horse named Blues Ferrari, a horse purchased for $15,000
as part of the conspiracy. Del Rayo complied, purchasing the horse for
$310,000. The manager of the Oklahoma City auction house testified that Del
Rayo “looked like he had been in an accident.” Indeed, the auction manager
was so struck by Del Rayo’s appearance that he took a photo on his cell phone
(which was shown to the jury). He explained: “I’d never seen this person before
and [he was] buying a very expensive horse, and I was just very concerned with
the transaction at the time.” Carlos Nayen later asked that Del Rayo send
between $600,000 and $700,000 in checks to the operation’s horse-breeding
facility, and after Nayen’s indictment, Nayen demanded the keys to Del Rayo’s
house in San Antonio and money to pay attorney’s fees. Del Rayo
understandably said he felt he could not refuse demands from Nayen or from
other members of Los Zetas.
3. Quarter-Horse Race Fixing
Members of Los Zetas paid bribes to give Miguel Trevino’s horse an
unfair advantage at the 2010 All American Futurity Race—the Kentucky
Derby of quarter-horse races. Mario Cuellar, a Los Zetas subordinate, testified
that Miguel Trevino instructed him to pay $110,000 in bribes to gate starters—
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$10,000 each—to give Trevino’s horse, Mr. Piloto, an advantage in the race.
With Miguel and Omar Trevino and other Los Zetas leaders watching the race
via an internet connection, Mr. Piloto won the race by a nose—even though he
had the slowest qualifying time. As a reward for having successfully paid off
all the starters, Miguel Trevino rewarded Carlos Nayen with 10 kilograms of
cocaine.
B. The Appellants’ Roles in the Money-Laundering Conspiracy
Two of the Appellants were allegedly key players in the horse-racing and
money-laundering operation. Jose Trevino Morales (Jose Trevino) is Miguel
and Omar Trevino’s brother, and he operated a horse ranch and related
companies. With money from Los Zetas, he helped his brothers acquire as
many as 500 horses. Francisco “Pancho” Colorado Cessa (Colorado) is a
wealthy businessman who, the government alleges, acted as an intermediary
through whom Los Zetas purchased horses. Colorado’s relationship with Los
Zetas began with Efrain Torres, also known as “Zeta 14,” a now-deceased
leader of Los Zetas. Torres gave Colorado $6 million in startup capital for
Colorado’s oil-services company, ADT Petro Servicios (ADT).
The other two Appellants, Eusevio Huitron and Fernando Garcia–Solis,
had comparatively minor roles. Garcia–Solis translated for a Los Zetas
subordinate, Carlos Nayen, and assisted Nayen with cash deliveries, auctions,
and other aspects of the horse operations. Eusevio Huitron worked as a horse
trainer for Miguel Trevino for nearly two years. He accepted significant cash
payments from Los Zetas for his horse-training services—$505,007 in total.
Each Appellant’s specific involvement in the conspiracy is discussed in
greater detail below.
II. DISCUSSION
The district court had jurisdiction under 18 U.S.C. § 3231, and this Court
has jurisdiction under 28 U.S.C. § 1291 to review the district court’s final
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judgment. This Court has jurisdiction to review the district court’s application
of the U.S. Sentencing Guidelines under 18 U.S.C. § 3742(a). We analyze the
sufficiency-of-the-evidence challenges first, before discussing the Appellants’
evidentiary and jury-instruction claims of error. Finally, we discuss the
Appellants’ challenges to their sentences and to the money judgment.
A. Sufficiency-of-the-Evidence Challenges
Appellants all raise sufficiency-of-the-evidence challenges on appeal. As
noted, all four Appellants were convicted of conspiracy to commit money
laundering in violation of 18 U.S.C. § 1956(h). “To establish conspiracy to
commit money laundering, the government must prove (1) that there was an
agreement between two or more persons to commit money laundering and
(2) that the defendant joined the agreement knowing its purpose and with the
intent to further the illegal purpose.” United States v. Fuchs, 467 F.3d 889, 906
(5th Cir. 2006) (citing United States v. Meshack, 225 F.3d 556, 573–74 (5th Cir.
2000)).
The indictment alleged “concealment money laundering” under
§ 1956(a)(1)(B)(i) 6 as the object of the conspiracy, meaning the Appellants
conspired to conduct a financial transaction with proceeds of a specified illegal
activity—here, distribution of controlled substances, extortion, and bribery in
sporting contests—with the knowledge that the transaction’s design was to
conceal or disguise the source of the proceeds. As the government
6 The government may indict and prove financial-transaction money laundering in
two ways. See infra note 8 (explaining the difference between financial-transaction money
laundering and transportation money laundering). It may either use the promotion
alternative (intent to promote or further illegal actions) or it may use the concealment
alternative (knowing that the transaction’s design was to conceal or disguise the nature or
source of the illegal proceeds). United States v. Valdez, 726 F.3d 684, 689 (5th Cir. 2013).
Because the indictment here only alleges concealment, the promotion prong does not pertain
to the analysis. See id. (noting that if a defendant is “charged with both prongs in one count,
the government may establish guilt under one prong or the other”).
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acknowledges, each Appellant preserved error by moving for judgment of
acquittal at the end of the government’s case and at the close of the evidence.
1. Standard of Review
The scope of this Court’s review of the evidence supporting the
Appellants’ criminal convictions is narrow. See United States v. Lopez, 74 F.3d
575, 577 (5th Cir. 1996). “In reviewing the sufficiency of the evidence, we view
the evidence and the inferences drawn therefrom in the light most favorable to
the verdict, and we determine whether a rational jury could have found the
defendant guilty beyond a reasonable doubt.” United States v. Mitchell, 484
F.3d 762, 768 (5th Cir. 2007) (citations omitted). “The question is one of the
sufficiency of the evidence, not its credibility.” United States v. Brown, 553 F.3d
768, 780 (5th Cir. 2008).
2. Applicable Law
As an initial matter, Jose Trevino argues that a money-laundering
conspiracy cannot be proven by circumstantial evidence. We disagree. We have
specifically stated in the context of a sufficiency challenge to a money-
laundering conspiracy that direct evidence “is unnecessary; each element may
be inferred from circumstantial evidence.” Fuchs, 467 F.3d at 906 (quoting
United States v. Casilla, 20 F.3d 600, 603 (5th Cir. 1994)). Indeed, as the
Supreme Court has explained, “the knowledge element of the money-
laundering offense—knowledge that the transaction involves profits of
unlawful activity—[is] provable (as knowledge must almost always be proved)
by circumstantial evidence.” United States v. Santos, 553 U.S. 507, 521 (2008).
We have noted more specifically that the agreement element “may be inferred
from a ‘concert of action.’” Fuchs, 467 F.3d at 906 (quoting Casilla, 20 F.3d at
603).
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Contrary to Huitron’s assertion, 7 “[t]he government need not prove an
overt act in furtherance of the conspiracy.” Id. (citing Whitfield v. United
States, 543 U.S. 209, 219 (2005)).
3. Analysis
A principal issue in this appeal is whether sufficient evidence supports
the conviction of Huitron, who worked as a horse trainer for Miguel Trevino
and Los Zetas’ horse-racing operation. Unlike in Huitron’s case, sufficient
evidence supports the conspiracy convictions of the Jose Trevino and Garcia–
Solis. Colorado’s sufficiency challenge presents a close question.
a. Huitron
The key issue is whether there is sufficient evidence to establish that
Huitron joined the conspiracy knowing that the transaction in question—his
horse-training services—was designed in whole or in part to conceal or disguise
the nature, location, source, ownership or control of the proceeds of illegal
activity beyond a reasonable doubt. Our discussion of Huitron’s case informs
our analysis of Jose Trevino’s and Garcia–Solis’s sufficiency challenges.
Huitron maintains he “was paid for performing legitimate horse training
services.” He admits he was paid with drug proceeds, though he contends that
he “was not aware of the money source[] for the legitimate horse training
services [he] rendered.” The government counters that because Huitron’s
client, Miguel Trevino often talked about how he used his horse operation to
7 Huitron argues in his brief that “the government must prove beyond a reasonable
doubt that . . . one of the persons committed an overt act in further[ance] of the conspiracy,”
citing United States v. Armstrong, 550 F.3d 382, 406 (5th Cir. 2008). Huitron’s reliance on
Armstrong is misplaced. As we recognized in United States v. Guillermo Balleza, Armstrong
did state in dicta that an overt act was required; but in so doing, Armstrong mistakenly relied
on a case that had been overruled by the Supreme Court in Whitfield. See 613 F.3d 432, 433
n.1 (5th Cir. 2010) (per curiam) (“We take this opportunity to clarify this court’s jurisprudence
on whether an overt act in furtherance of the conspiracy is an element of the offense of
conspiracy to launder money in violation of 18 U.S.C. § 1956(h). It is not.” (citing, inter alia,
Armstrong, 550 F.3d at 403)).
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clean money, Huitron’s “pattern of receiving bulk cash payments is proof of his
agreement to join the conspiracy.” The government also contends that by
“converting Los Zetas[’] cash into well-trained horses that could earn Miguel
Trevino clean money,” Huitron “voluntarily joined the conspiracy, knowing its
unlawful purpose and with intent to further that purpose.”
i. Applicable law
In the context of a concealment money-laundering conviction for
transportation, the Supreme Court held that “merely hiding funds . . . is not
sufficient to violate the statute, even if substantial efforts have been expended
to conceal the money.” Cuellar v. United States, 553 U.S. 550, 563 (2008). 8 In
Cuellar, the defendant was stopped while driving south toward the Mexican
border. Id. at 553. Police searched the vehicle and discovered a secret
compartment containing $81,000 in cash, and the defendant was convicted for
transportation money laundering. Id. at 554, 568. The Supreme Court
reversed. Id. at 568. The Court explained that evidence of concealment does
not necessarily imply the purpose of the transport is to conceal: “[H]ow one
moves the money is distinct from why one moves the money,” and “[e]vidence
of the former, standing alone, is not sufficient to prove the latter.” Id. at 566.
The Fifth Circuit applied Cuellar’s reasoning to financial-transaction
money laundering 9 in United States v. Brown, 553 F.3d 768, 786 n.56 (2008),
and held that the government must demonstrate that the charged transactions
had the purpose—not merely the effect—of “mak[ing] it more difficult for the
8 Section 1956 enumerates separate offenses for transportation money laundering,
§ 1956(a)(1), and financial-transaction money laundering, § 1956(a)(2). Cuellar addressed the
“designed to conceal” element in the transportation-money-laundering context. The Fifth
Circuit held that “the Cuellar analysis applies with full force to the ‘designed to conceal’
element” in financial-transaction money laundering because the language “is identical in the
two provisions.” United States v. Brown, 553 F.3d 768, 786 n.56 (5th Cir. 2008).
9 See supra note 8.
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government to trace and demonstrate the nature of th[e] funds.” Id. at 787. We
noted that “a mere act of structuring could not support a concealment
conviction.” Id. at 787 n.62 (citing United States v. Stephenson, 183 F.3d 110(2d Cir. 1999)). In Brown, we held that the “numerous acts [of structuring] are
more clearly designed to conceal the nature of the moneys,” and affirmed the
conviction. Id. at 787 & n.62.
We elaborated on financial-transaction money laundering in United
States v. Valdez and explained that “simply spending money in one’s own name
will generally not support a money laundering conviction.” 726 F.3d 684, 690
(5th Cir. 2013) (quoting United States v. Willey, 57 F.3d 1374, 1385 (5th Cir.
1995)). “‘In one sense,’” we said, “‘the acquisition of any asset with the proceeds
of illegal activity conceals those proceeds by converting them into a different
and more legitimate-appearing form. But the requirement that the transaction
be designed to conceal implies that more than this trivial motivation must be
proved.’” Id. (quoting Willey, 57 F.3d at 1384). Because “Valdez did not use
false names, third parties, or any particularly complicated financial
maneuvers, which are usual hallmarks of an intent to conceal,” we held “there
is insufficient evidence” to support his conviction of “concealment money
laundering.” Id.We summarized the case law in United States v. Trejo and concluded
that “these cases exemplify the courts’ consistent reliance on some additional
evidence beyond the bare transaction . . . itself to infer specific intent.” 610 F.3d
308, 314 (5th Cir. 2010). We observed that “courts have often relied on proof
that the defendant was aware of the inner workings of and/or extensively
involved in the drug organization responsible for the criminal activity as
circumstantial proof that he had the specific intent to promote its unlawful
purpose.” Id. at 315. In Trejo, we held that the evidence was insufficient to
support the defendant’s plea in part because the “[e]vidence regarding the
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[defendant’s knowledge of the] inner workings of the organization that hired
him . . . is virtually nonexistent in the record.” Id. at 318. 10
Put another way, as we said in United States v. Leonard, “not every
dollar spent in every transaction that can be traced to a specified criminal
activity violates 18 U.S.C. § 1956(a)(1)(A)(i). ‘To so interpret the statute’ would
‘convert the money laundering statute into a money spending statute.’” 61 F.3d
1181, 1185 n.2 (5th Cir. 1995) (quoting United States v. Sanders, 928 F.2d 940,
944 (10th Cir. 1991)).
By contrast, in United States v. Rosbottom, we affirmed a money-
laundering conspiracy conviction because the evidence showed that the
defendant was “intimately involved with many aspects of [the coconspirator’s]
finances.” 763 F.3d 408, 418 (5th Cir. 2014). Specifically, the defendant was
convicted for conspiring to help conceal funds from a coconspirator’s
bankruptcy proceedings. Id. at 411. The defendant “was the sole member of the
shell corporations she helped establish to purchase the boat and plane, though
both the boat and plane were under [her coconspirator’s] control and neither
was purchased using her funds.” Id. at 418. She also “picked up the funds” used
to purchase cashier’s checks payable to her coconspirator “in a parking lot after
another employee took the funds out of the safe.” Id. We determined that a
reasonable jury could conclude that the defendant and her coconspirator
“worked in concert to conceal funds from the bankruptcy proceedings” and
affirmed. Id. at 419.
10 The defendant transported $330,426.56 in cash (via a hidden compartment in his
car) from a known drug dealer in Florida to a known drug dealer in Mexico for a fee. Trejo,
610 F.3d at 318. Because “the incriminating facts show simply that Trejo signed on for a one-
time trip to transport drug money for a dealer he did not know and . . . had never worked for
in the past,” we found the evidence insufficient. Id. Ultimately, because Trejo did not timely
object, we found the error was not plain. Id. at 318–19.
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ii. Analysis
Drawing all reasonable inferences in favor of the government, the
evidence establishes, at best, that Huitron knowingly accepted drug money
from known drug dealers in exchange for horse-training services. Although
this had the effect of concealing the proceeds of Los Zetas’ illegal activities, that
alone is not enough to show that Huitron joined the conspiracy knowing its
purpose was to conceal the source or nature of the funds. See Cuellar, 553 U.S.
at 567. Every Government witness who testified about Huitron testified that
he was a reputable horse trainer and that he was not involved in Los Zetas’
illegal bribery, extortion, or drug-trafficking activities. For instance, Mario
Cuellar, a former Los Zetas leader turned Government witness, gave the
following testimony:
Q. Do you know if [Huitron] trained horses for “40”?
A. Yes, sir.
Q. And what do you know about that?
A. That that’s what he is. He is one of the best horse trainers in
Texas. He’s the one that really makes all the other trainers in
Texas run for their money. He’s a good trainer.
Mario Cuellar further testified that Huitron did not traffic in cocaine, and that
the bills he submitted to Los Zetas for reimbursement “were for the actual
training and feeding and racing the horses.” Raul Guadalajara, another Los
Zetas subordinate and Government witness, testified that he and Mario
Cuellar never told Huitron that they were drug dealers, and that, in fact, they
tried to keep that fact hidden from Huitron. When asked about whether he
knew Huitron’s role in the organization, Guadalajara testified that “he trained
the horse for ‘40.’ That’s all I knew.” Another Los Zetas subordinate and drug
dealer testified that, when he delivered $40,000 in cash to Huitron per Miguel
Trevino’s instructions, he never told Huitron “this is drug money.” For all the
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subordinate knew, Huitron lived “close to Austin, [and] trained horses.” Jesus
Rejon, another Los Zetas subordinate and government witness, testified that
Huitron trained horses in Ruidoso, New Mexico, and that “he was there
managing, you know, overseeing the [horse] training.” Rejon testified that
Huitron did not give him any information about Los Zetas’ illegal activities in
Mexico, explaining: “We didn’t really talk about that.”
As mentioned above, it is undisputed that Huitron trained horses for
Miguel and Oscar Trevino and other members of Los Zetas for about two years
at a rate of $1,100 per horse. He also received reimbursement for expenses,
stall rentals, entry fees, shoeing, and bonuses if the horses he trained won
races. He had a reputation as being among “the best horse trainers in Texas.”
It is also undisputed that, when Huitron started training horses for Los
Zetas, his inflow of cash substantially increased. An IRS agent reviewed the
bank records of Huitron Homes, a company controlled by Eusevio Huitron and
his brother Jesus. 11 According to the testimony of the IRS agent, in the
eighteen months before Huitron started training the Trevinos’ and Los Zetas’
horses, Huitron Homes’ bank account received a total of $113,000 in cash
deposits. On July 12, 2010, Huitron Homes received a large structured cash
deposit presumably representing a cash payment from Los Zetas. Over the
next twenty-two months, while Huitron trained horses for Los Zetas, Huitron
Homes received a total of $505,007 in structured cash deposits. 12 The
government correctly points out that the evidence that Huitron received large
cash payments is “overwhelming.”
11 Huitron’s brother, Jesus Huitron, was also indicted for conspiracy to commit money
laundering, but the jury found him not guilty.
12 The deposits were “structured” in that each was less than $10,000, ostensibly to
avoid reporting requirements. Though this may constitute the separate crime of structuring,
Huitron was not indicted for committing that crime in this case.
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The question becomes whether receiving large cash payments from
known drug dealers, and subsequently structuring them, can support a
conviction for conspiracy to commit financial-transaction money laundering,
i.e., whether this constitutes sufficient circumstantial evidence that the
financial transactions had the purpose, not merely the effect of “mak[ing] it
more difficult for the government to trace and demonstrate the nature of th[e]
funds.” Brown, 553 F.3d at 787.
As we instructed in Trejo, there must be “some additional evidence
beyond the bare transaction . . . itself to infer specific intent” to join a
conspiracy to commit financial-transaction money laundering. 610 F.3d at 315.
A defendant’s awareness of the inner workings of, or extensive involvement in,
the drug organization responsible for the criminal activity is significant
circumstantial evidence of a defendant’s specific intent. Id.On this point, the government stresses Huitron’s personal relationship
with Los Zetas’ leader, Miguel Trevino, and his knowledge about Los Zetas’
illegal activity as circumstantial evidence of Huitron’s specific intent to join
the money-laundering conspiracy. The government points to testimony that,
on one occasion, Huitron met with Miguel Trevino in Mexico, 13 and that he
trained a horse named Mr. Jess XL (Roman numerals for forty), which by its
name connects the horse—and its trainer—to Miguel Trevino and then to Los
Zetas. The government also points to testimony from a manager of a quarter-
horse breeding farm. The manager testified that Huitron told him, in a
conversation about the deaths of Alejandro Barradas and Ramiro Villareal, 14
that “he heard he’d been kidnapped . . . [a]nd never came back.” The manager
13 A Government witness testified that he saw Huitron and Miguel Trevino together
in Mexico talking at a table, but he did not hear the substance of their conversation.
14 See supra Part I(A)(2).
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also noted that Huitron “didn’t indicate anybody specifically” who might have
killed them.
The government also states that its “best evidence of Eusevio Huitron’s
knowledge came from the testimony of [Raul] Guadalajara,” a Los Zetas
subordinate and Government witness. Guadalajara related an anecdote about
an instance where he dropped off $15,000 in cash and joked to Huitron that he
was delivering “kilos.” Guadalajara testified that Huitron got upset and called
Miguel Trevino to complain, and Guadalajara “got in trouble with that back
there in Mexico.” From this evidence, the government argues, “[t]he jury could
reasonably infer . . . that Eusevio Hutiron knew that Los Zetas dealt in
kilogram quantities of narcotics . . . .” Further, another horse trainer testified
that it was “an open secret in the horse-racing business” that Los Zetas were
involved in the horse business.
This evidence, viewed in the light most favorable to the government,
certainly establishes that Huitron knew he was being paid in drug money by
known drug dealers. But it does not establish that Huitron voluntarily joined
the conspiracy, “knowing its purpose and with the intent to further the illegal
purpose,” Fuchs, 467 F.3d at 906. We have held that merely providing services
to a known drug dealer and accepting the proceeds of the illegal activity as
payment is insufficient as a matter of law to establish criminal liability for
money laundering. See Trejo, 610 F.3d at 318.
There must be some additional circumstantial evidence of intent to
further the illegal conspiracy. See Fuchs, 467 F.3d at 906. As mentioned above,
the evidence in the light most favorable to the government establishes that
Huitron was a horse trainer for Los Zetas for a period of two years—and
nothing more. It does not establish that he was aware of the inner workings of
Los Zetas’ criminal narcotics-trafficking organization. Cf. Trejo, 610 F.3d at
316 (“[E]vidence of a defendant’s knowledge about the internal operations of a
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drug organization . . . may [be] relied upon to establish his specific intent . . . .”).
Here, the evidence merely demonstrates that Huitron had heard that two men
had been kidnapped and one had been killed, and that Huitron contacted
Miguel Trevino about a joke to which he apparently took offense. We hold that
this is not enough circumstantial evidence from which a reasonable jury could
conclude beyond a reasonable doubt that Huitron intended to further Los
Zetas’ illegal activities.
The government also argues that, by training horses that had been
purchased with drug money in exchange for drug money, Huitron was
“converting” Los Zetas’ drug proceeds “into well-trained horses that could earn
Miguel Trevino clean money,” i.e., that the horse operations were part of one
grand money-laundering scheme. We disagree. The Fifth Circuit previously
rejected a similar argument. In United States v. Brown, the government
similarly argued that a defendant who used his car dealership to
systematically overcharge customers in violation of statutes prohibiting mail
fraud also committed money laundering by paying ordinary business expenses
using the fraud proceeds. 186 F.3d 661, 669 (5th Cir. 1999). The government’s
theory was that “the transactions . . . promoted the ongoing and future criminal
activity . . . because the operation of the dealership was one grand scheme to
defraud.” Id. The Fifth Circuit rejected this “creative argument.” Id. at 670.
Absent “evidence of, say, payments for postage for mailing fraudulent
warranty claims,” this Court explained, there was insufficient evidence “to
establish an intent to promote fraud,” and we reversed. Id. at 670–71.
So too here. As in Brown, there is no evidence that Huitron joined the
conspiracy knowing the conspiracy’s purpose was to conceal drug money to be
used, say, to bribe a gate starter; to front money for drug operations; or to send
clean money back to Los Zetas for their personal use. That Los Zetas used the
overall horse-racing scheme to launder money is insufficient to establish
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Huitron’s guilt by mere association—absent additional circumstantial
evidence that Huitron joined the conspiracy knowing that the horse-racing
proceeds would be used to further the conspiracy to conceal the nature or
source of illegal funds. Training racehorses does not, on its face, indicate an
intent to promote or conceal the proceeds of money-laundering, extortion, or
drug trafficking even though the overall conspiracy involved using horse racing
to launder illegal proceeds. See Brown, 186 F.3d at 671.
The government cites several cases in support of Huitron’s conviction,
but these cases are distinguishable. First, the government cites United States
v. Gallo, 927 F.2d 815, 820–21 (5th Cir. 1991), for the proposition that “close
association with co-conspirators” can be “one factor that the jury may rely on.”
The government’s discussion of this case leaves something out; the full quoted
sentence reads: “Although mere presence at the scene of the crime or close
association with co-conspirators will not alone support an inference of
participation in a conspiracy, presence or association is one factor that the jury
may rely on, along with other evidence, in finding conspiratorial activity by a
defendant.” Id. at 820 (emphasis added) (quoting United States v. Magee, 821
F.2d 234, 239 (5th Cir. 1987)). Moreover, in Gallo, we observed that the
defendant’s concerted action—unlike Huitron’s innocuous horse training—was
quintessential drug-trafficking behavior. Id. at 821.
Finally, Fuchs merely holds that a concert of action may support a
conviction. 467 F.3d at 905–06. Here, there was no evidence of concerted action,
but rather a series of transactions in which Los Zetas paid Huitron bulk cash
payments in exchange for his training their horses. Huitron merely trained
horses; he was not also charged under the substantive money-laundering
provisions (that prohibit structuring to avoid reporting requirements, for
instance) or for other criminal acts, but rather for conspiracy to commit money
laundering under § 1956(h). And unlike the defendant in Rosbottom, there is
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no evidence that Huitron was “intimately involved with many aspects of [Los
Zetas’] finances,” or that he formed shell entities to protect the identity of the
true owners. See 763 F.3d at 418. 15
Therefore, we reverse the conviction of Eusevio Huitron and render a
judgment of acquittal because the government’s evidence was not sufficient to
permit a reasonable jury to infer beyond a reasonable doubt that Huitron
voluntarily joined the conspiracy knowing its purpose was to conceal the source
or nature of illegal proceeds. See Cuellar, 553 U.S. at 567–68.
b. Jose Trevino
Jose Trevino similarly argues there is insufficient evidence to show that
he knew the funds involved were the proceeds of illegal activities or that he
knew the transactions he was involved in were designed to conceal or disguise
the nature or source of the funds. We disagree and affirm.
Unlike Huitron, the record viewed in the light most favorable to the
verdict includes additional evidence—beyond transactions involving illegal
proceeds—from which a reasonable jury could conclude Jose Trevino
voluntarily joined the conspiracy knowing its purpose was to conceal the
nature or source of illegal proceeds. See Cuellar, 568 U.S. at 567–68. Jose
Trevino experienced sudden wealth through his involvement in the money-
laundering conspiracy. See United States v. Alaniz, 726 F.3d 586, 603–04 (5th
Cir. 2013) (considering “sudden wealth” in evaluating the sufficiency of the
evidence to support convictions for conspiracy to commit money laundering).
An expert witness testified that, from 1990–2009, Jose Trevino and his wife
15 The government also relies on United States v. Adair, 436 F.3d 520, 524 (5th Cir.
2006) (“It is sufficient for the defendant merely to be aware of the perpetrator’s intent to
conceal or disguise the nature or source of the funds.” (quoting § 1956(h)). But the issue there
was not intent to promote illegal activity, but rather whether a defendant could be convicted
of conspiracy to commit money laundering in a sting operation, even though the money was
not, in fact, the proceeds of actually illegal activity. Id. Thus, Adair is inapplicable.
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earned on average $22,000 a year. During the period of the horse-racing
conspiracy, his income jumped to $5.4 million over 30 months, or $2.1 million
per year.
Circumstantial evidence supports the inference that Jose Trevino was
aware of Los Zetas’ illegal activities. See Trejo, 610 F.3d at 315. Jose Vasquez,
a Los Zetas drug dealer, testified that he delivered hundreds of thousands of
dollars in cash proceeds from the sale of cocaine to Jose Trevino. Mario Cuellar,
a former Los Zetas leader, testified that Jose Trevino was aware of his brothers’
involvement in the drug business, but that initially “Jose wanted nothing to do
with the drugs, [and] he had worked really hard [and] was a straight person.”
But that all changed when a horse named Tempting Dash was purchased for
him.
Additionally, the jury heard testimony that Miguel and Omar Trevino
were particularly well-known leaders of an international drug cartel. The
government also obtained Jose Trevino’s computer on which it found photos of
cash, of Miguel Trevino, and of a person detained in Mexico with a letter ‘Z’ on
his chest. From this evidence, a reasonable jury could conclude Jose Trevino
was aware that Los Zetas were involved in illegal activity.
Finally, circumstantial evidence supports the inference that Jose
Trevino was aware that the transactions were designed to conceal or disguise
the nature or source of the illegal proceeds. Witnesses testified that horses
involved in the conspiracy were registered to Jose Trevino and his various
LLCs. Cf. Rosbottom, 763 F.3d at 418 (affirming money-laundering conspiracy
conviction where the defendant “was the sole member of the shell corporations
she helped establish to purchase the boat and plane, though both the boat and
plane were under [her coconspirator’s] control and neither was purchased
using her funds”). The evidence further shows that Jose Trevino repeatedly
registered horses under various names, and that he set up at least one LLC for
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the horse business. On one occasion, Jose Trevino sold his horse at auction to
Alfonso Del Rayo, who testified that he had been kidnapped, tortured, and
forced to purchase the horse no matter the price. The horse was purchased for
substantially more money than it was worth, generating the appearance of
legitimate funds. A reasonable jury could infer from this evidence that Jose
Trevino was aware of the conspiracy’s purpose to conceal or disguise the nature
of the illegal proceeds.
We reject Jose Trevino’s suggestion that he was convicted for mere guilt
by association vis-à-vis the criminal activities of his brothers. As summarized
above, the evidence shows that Jose Trevino involved himself in the horse-
racing money-laundering operations, and we are convinced the jury
appropriately considered this evidence in returning the guilty verdict.
Therefore, we conclude that Jose Trevino’s conviction is supported by
sufficient evidence.
c. Garcia–Solis
Fernando Garcia–Solis acted as a translator for Los Zetas, and he also
argues insufficient evidence supports his conviction for conspiracy to commit
money laundering. Garcia–Solis contends the government did not prove that
he “knew that the funds used by himself and his clients were the proceeds” of
illegal activity, and did not establish that “he knowingly and willfully joined
into a conspiracy to launder such proceeds.” He argues the evidence merely
shows that he acted as a buyer for Jose Trevino and Colorado, and that he was
unaware of their connection to Los Zetas.
The record does not support Garcia–Solis’s argument. Instead, the
evidence shows that he acted in concert with coconspirators. Specifically,
witnesses testified that Garcia–Solis almost always accompanied and acted as
translator for Carlos Nayen, a key subordinate in the conspiracy who could not
speak English. Together, Nayen and Garcia–Solis attended at least seven
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different horse auctions and purchased numerous “expensive” horses on behalf
of Los Zetas and Miguel Trevino. During the bidding, Nayen was in constant
contact with Miguel Trevino. Further, when Del Rayo—exhibiting serious
injuries—was forced to pay $310,000 for Blues Ferrari at an auction in
Oklahoma City, Del Rayo was escorted by Garcia–Solis and Carlos Nayen.
After horse trainers got wind that federal authorities were looking for Miguel
Trevino at a racetrack, Garcia–Solis received an email instructing him to “toss
your cell.”
From this evidence, the jury could reasonably conclude beyond a
reasonable doubt that Garcia–Solis voluntarily joined the conspiracy, knowing
its unlawful purpose and with intent to further that purpose. See Fuchs, 467
F.3d at 906.
d. Colorado
Colorado also argues that insufficient evidence supports his conviction
because the government failed to prove that Colorado knowingly used illegal
proceeds to purchase horses. Although we agree with Colorado’s argument that
the government failed to introduce sufficient evidence on that point—which
was the government’s theory of the case—we hold that the government’s
evidence supports Colorado’s conviction on a different theory; namely, that
Colorado purchased the horses with the knowledge that they would be used as
part of a larger money-laundering conspiracy. This knowledge is some
circumstantial evidence that he voluntarily joined a conspiracy knowing its
purpose was to conceal the source or nature of illegal funds. See Cuellar, 553
U.S. at 567. However, the issue is close, as the government offered weak
circumstantial evidence based largely on Colorado’s personal relationships
with Los Zetas’ leaders that Colorado’s knew the conspiracy’s purpose was to
conceal the nature or source of illegal proceeds. As we explain infra at Part
II(C), the erroneous jury instruction on commingling, viewed in light of the
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sparse evidence of Colorado’s guilt, requires that Colorado’s conviction be
vacated.
B. Asserted Error in Receiving the Testimony of Spanish-Speaking
Witnesses Before Ruling on Objections
Jose Trevino argues the district court constructively deprived him of his
Sixth Amendment right to effective assistance of counsel by “allow[ing]
witnesses to first answer the question . . . , and then only if the district court
decides that the answer to the question is not admissible, the district court will
sustain the objection (after the jury of course hears the answer).” The
government clarifies that the district judge followed this procedure only with
respect to translated testimony. The government contends that district courts
have broad discretion in the conduct of courtroom procedures, and that a
“constructive denial of counsel occurs in only a very narrow spectrum of cases
where the circumstances . . . are so egregious that the defendant was in effect
denied any meaningful assistance at all,” quoting Gochicoa v. Johnson, 238
F.3d 278, 284 (5th Cir. 2000).
Although Jose Trevino’s argument that the district court abused its
discretion has force, we agree with the government and hold that any error
was harmless. “[A] district judge has broad discretion in managing his docket,
including trial procedure and the conduct of trial.” United States v. Gray, 105
F.3d 956, 964 (5th Cir. 1997) (internal quotation marks omitted). Accordingly,
appellate courts review a district judge’s conduct of the trial to determine
whether the cumulative effect amounts to an abuse of discretion. Id. Moreover,
any prejudicial remarks “may be rendered harmless by curative instructions
to the jury,” United States v. Millsaps, 157 F.3d 989, 993 (5th Cir. 1998), and
“juries are presumed to follow their instructions,” Zafiro v. United States, 506
U.S. 534, 540 (1993) (internal quotation marks omitted).
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We find Jose Trevino’s argument persuasive and agree that the manner
in which the district court received testimony from Spanish-speaking
witnesses was problematic—treading dangerously close to an abuse of
discretion. The district judge expressed frustration with having to ask the jury
to leave each time a defense lawyer wished essentially to make an offer of proof
in response to an objection to a question put to a Spanish-speaking witness,
and the judge suggested an alternative approach:
[THE COURT:] But, counsel, it’s not a good way to proceed to ask
a question, have an objection. I don’t know how many people . . . on
the jury understand Spanish, but I do know some do because they
have indicated in their answers. And so, if I sustain the objection
without an instruction, I don’t know that your objection was very
informative.
But I think we’re going to have to let the answer come, then make
your objection, and then, if I think it’s not admissible, I’ll instruct
them they can’t consider it for any purpose. Now, a lot of people
don’t think that’s a good remedy, but that’s the only one that we
have, as far as I know. And I’m not aware of any jury that’s ever
not done that because I’ve questioned jurors afterwards. But that’s
a very unscientific proof.
MR. WOMACK [Garcia–Solis’s attorney]: Your Honor, now that
we know the answer that’s coming as inadmissible, I would ask
that we do keep it cut off where it is. Your Honor will give the
proper instruction to the members – to the jurors not to consider
whether the answer would have been and for those who –
THE COURT: Oh, I’ll do that now. But I’m talking about the next
question and the one after that.
MR. WOMACK: Oh, yes, sir.
THE COURT: I don’t want the jury having to lea[ve] on each
question and hearing the answer.
MR. ESPER: Your Honor, I concur with the Court. I believe the
jury’s followed the Court’s instructions to disregard. However,
unequivocally, they’re humans, they’ve heard the answer. It’s
walking a fine line. I know they follow the Court’s instructions. I
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believe that. But sometimes they hear an answer and it’s that bell
sometimes doesn’t get – the vibration doesn’t get out of their brain.
....
THE COURT: I’m going to sustain the objection and tell them not
to consider that for any purpose. And then, I will tell them, again,
that the official interpretation is what they have to have.
(emphasis added). Importantly, when the jury returned, the judge instructed
them to consider only the official interpretation and to disregard the answer in
Spanish.
We find that the district judge’s conduct of the trial in this manner was
problematic and may amount to an abuse of discretion, but that any error was
either harmless or not plain. Jose Trevino does not point to any prejudice to
his case—let alone to cumulative prejudice so as to amount to a reversible error
in light of the district court’s significant discretion over the mode and manner
of witness testimony. See Gray, 105 F.3d at 964. Moreover, any prejudice from
the district court’s problematic procedure in this case is presumptively cured
by the judge’s instructions to the jury. Jose Trevino does not attempt to rebut
this presumption—a tall task in light of the substantial evidence of his guilt
summarized above. See Millsaps, 157 F.3d at 993. Third, the record does not
indicate that Jose Trevino objected, 16 so our review is for plain error only.
Because Jose Trevino does not direct the court to authority finding error in
similar circumstances, any error on the district court’s part was not obvious or
plain.
Jose Trevino’s argument that he was constructively deprived of counsel
is also unavailing. “A constructive denial of counsel occurs in only a very
narrow spectrum of cases where the circumstances leading to counsel’s
The only statement indicating disagreement came from Garcia–Solis’s attorney, Mr.
16
Womack, not from Jose Trevino’s counsel. Garcia–Solis does not challenge the manner in
which Spanish-speaking witnesses were questioned on appeal.
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ineffectiveness are so egregious that the defendant was in effect denied any
meaningful assistance at all.” Gochicoa, 238 F.3d at 284 (internal quotation
marks omitted). Because there is no evidence that Jose Trevino’s counsel was
absent from the courtroom or suffered from a material conflict of interest with
his client, see id., Jose Trevino’s asserted constructive deprivation of counsel
does not fit within this narrow spectrum.
Therefore, although we find the manner in which the district court
conducted the trial proceedings in this case problematic for the reasons
identified by Jose Trevino, we do not find a reversible error.
C. Jury Instructions
A close question in this appeal is the asserted jury-instruction error.
Three of the four Appellants—Jose Trevino, Colorado, and Garcia–Solis—
challenge the jury instruction describing the commingling of funds. The district
court instructed the jury regarding the “intent to conceal or disguise” element
as follows: “With respect to the fourth element, the commingling of illegal
proceeds with legitimate business funds is evidence of intent to conceal or
disguise. Therefore, it would not be a defense that legitimate funds were also
involved in a transaction involving illegal and legitimate funds combined.”
(emphasis added). The Appellants contend this instruction (1) “had no support
in the evidence” and (2) “amounted to a mandatory presumption—effectively
directing the jury to infer intent to conceal and disguise from evidence of
commingling.” The government counters the district court correctly stated the
law because “[i]t is well-established that commingling illegal proceeds with
legitimate business funds is evidence of a defendant’s intent to conceal,” citing
United States v. Rodriguez, 278 F.3d 486, 491 (5th Cir. 2002). The government
also argues that “the jury heard evidence that [Colorado] commingled drug
proceeds into his ADT account.”
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We hold that the district court abused its discretion in instructing the
jury in this manner, but that the erroneous jury instruction constituted
harmless error as to Jose Trevino and Garcia–Solis. Because the
circumstantial evidence of Colorado’s guilt is weaker, we cannot say beyond a
reasonable doubt that the verdict would have been the same as to Colorado,
and we vacate his conviction and remand.
1. Standard of Review
This Court reviews jury instructions “for abuse of discretion, affording
substantial latitude to the district court in describing the law to the jury.”
United States v. Wright, 634 F.3d 770, 774 (5th Cir. 2011) (internal quotation
marks omitted). In so doing, we consider “whether the charge, as a whole, was
a correct statement of the law and whether it clearly instructed the jurors as
to the principles of the law applicable to the factual issues confronting them.”
Id. (internal quotation marks omitted). “The trial court’s charge must not only
be ‘legally accurate, but also factually supportable’; ‘the court may not instruct
the jury on a charge that is not supported by evidence.’” United States v.
Mendoza–Medina, 346 F.3d 121, 132 (5th Cir. 2003) (quoting United States v.
Lara–Velasquez, 919 F.2d 946, 950 (5th Cir. 1990)). In assessing whether
evidence sufficiently supports a particular jury instruction, this Court views
“the evidence and all reasonable inferences that may be drawn from the
evidence in the light most favorable to the Government.” Id. (internal
quotation marks omitted). “Any error is subject to harmless-error review.” Id.
2. The District Court’s Commingling Instruction Was an Abuse of
Discretion
We agree with Defendants–Appellants that the district court abused its
discretion by giving the commingling instruction it gave. “A mandatory
presumption instructs the jury that it must infer the presumed fact if the State
proves certain predicate facts. A permissive inference suggests to the jury a
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possible conclusion to be drawn if the State proves predicate facts, but does not
require the jury to draw that conclusion.” Francis v. Franklin, 471 U.S. 307,
314 (1985) (footnote omitted). The analysis turns “initially on the specific
language challenged,” but “the potentially offending words must be considered
in the context of the charge as a whole.” Id. at 315.
The district court’s instruction spoke in mandatory terms: “[T]he
commingling of illegal proceeds with legitimate business funds is evidence of
intent to conceal or disguise.” Cf. Franklin, 471 U.S. at 314. Because the
mandatory language was not clarified with an accompanying caveat—
indicating that the jury may but need not infer intent to conceal from the
commingling of illegal proceeds, see id. (“A permissive inference suggests to the
jury a possible conclusion to be drawn if the State proves predicate facts, but
does not require the jury to draw that conclusion.”)—we conclude that the
instruction treads dangerously close to an unconstitutional mandatory
presumption.
The government is correct that this instruction was a correct description
of the law: our case law does instruct that “[e]vidence that the defendant
commingled illegal proceeds with legitimate business funds is sufficient to
support a conviction under § 1956,” particularly when the defendant also
subsequently used the commingled funds to purchase equipment to further
illegal activities. See Rodriguez, 278 F.3d at 491 (affirming § 1956 conviction
for money laundering in part because the defendant used commingled funds to
purchase a van for his illegal-alien transporting scheme). But we have not
approved this statement of the law as a jury instruction, nor would we. A jury
instruction must make clear that the inference is permissive and not
mandatory, and the instruction given here does not do so.
The government defends the commingling instruction and directs us to
a Ninth Circuit case in which the court evaluated similar language: United
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States v. Washington, 819 F.2d 221, 225 (9th Cir. 1987). There, the court
considered a challenge to a jury instruction reading: “Use of a weapon or other
instrument in a way that causes death is evidence of malice aforethought.” Id.(emphasis added). The court reasoned that “[a]dvising the jury that it may
treat the use of a deadly weapon as evidence of malice aforethought is not the
same as requiring it to presume or infer malice aforethought from that
evidence.” Id. at 225–26.
Colorado in reply points out that the Ninth Circuit’s model instruction
at issue in Washington was accompanied by the following:
If it is shown that the defendant used a deadly weapon in the
commission of a homicide, then you may find, from the use of such
weapon, in the absence of explanatory or mitigating
circumstances, the existence of the malice which is an essential
element of the offense. You are not obliged to so find, however.
Id. at 226. Colorado continues that “[n]o such language accompanied the
district court’s commingling instruction here.”
We agree with Colorado’s interpretation of Washington. Confronted with
the instruction given here, a reasonable juror could conclude that evidence of
commingling obligated the jury to infer intent to conceal. The clarifying
language in Washington distinguishes that case from this one. Unlike in
Washington, the trial court here did not state that the evidence of commingling
merely permitted—but did not oblige or require—the jury to infer intent to
conceal. See Hammontree v. Phelps, 605 F.2d 1371, 1379–80 (5th Cir. 1979).
Moreover, the district court should have followed the reasoning in Washington
and included similar language clarifying that the inference was permissive and
not mandatory. Because the instruction given did not include guidance
clarifying that the inference was permissive and not mandatory, we conclude
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that the district court’s commingling jury instruction constituted an abuse of
discretion. 17
3. Harmless-Error Analysis
Nevertheless, we find that the erroneous jury instruction was harmless
as to Jose Trevino and Garcia–Solis. Erroneous jury instructions are harmless
if a court, “after a ‘thorough examination of the record,’ is able to ‘conclude
beyond a reasonable doubt that the jury verdict would have been the same
absent the error.’” United States v. Skilling, 638 F.3d 480, 482 (5th Cir. 2011)
(quoting Neder v. United States, 527 U.S. 1, 19 (1999)); accord Rose v. Clark,
478 U.S. 570, 580–81 (1986) (holding that harmless-error review applies to
erroneous burden-shifting jury instructions).
Here, as in Clark, there is no doubt that the “trial court properly could
have instructed the jury that it could infer,” 478 U.S. at 581, intent to conceal
from evidence of commingling. Examining the jury instructions “as a whole, as
we must” in assessing the harmlessness of an erroneous instruction, Garcia v.
Quarterman, 454 F.3d 441, 449 (5th Cir. 2006), apart from the challenged
commingling instruction, we see that the jury in this case was clearly
instructed that it had to find Appellants guilty beyond a reasonable doubt as
to every element, see Clark, 478 U.S. at 579. Further, after a thorough
examination of the record, we agree with the government that the record
contains ample circumstantial evidence of Jose Trevino’s and Garcia–Solis’s
knowledge that the money-laundering conspiracy’s purpose was to conceal the
source or nature of illegal proceeds. Accordingly, we conclude beyond a
reasonable doubt that the jury verdict as to Jose Trevino and Garcia–Solis
would have been the same had the jury been properly instructed. See United
17Because we find that the jury instruction constituted an abuse of discretion, we need
not and do not reach Appellants’ alternative argument that the evidence did not support this
instruction.
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States v. Parker, 73 F.3d 48, 52–53 (5th Cir.) (“[B]ecause the trial judge’s ruling
was a correct statement of the law and the jury found that the underlying
predicate acts did occur, the error did nothing to change the outcome of the
case because under a correct application of the law, the verdict would have
been guilty regardless.”), reh’g en banc granted and opinion vacated, 80 F.3d
1042 (5th Cir. 1996), and opinion reinstated in pertinent part on reh’g, 104 F.3d
72 (5th Cir. 1997).
We do not reach the same conclusion with respect to Colorado, however.
The government repeatedly argued that, because Colorado purchased horses
with funds from his company, ADT, and ADT was started with drug money in
2003 and 2004, Colorado therefore knowingly purchased horses in furtherance
of the money-laundering conspiracy. But the horse-racing money-laundering
conspiracy did not begin until 2008. Accordingly, our review of the record
reveals no evidence from which a reasonable factfinder could trace Colorado’s
horse purchases to illegal proceeds—or to illegal proceeds that had been
commingled with legitimate funds. At best, the evidence shows that Colorado
purchased 121 horses on behalf of conspiracy members using ADT funds and
that he was closely associated with members of Los Zetas. While this might be
evidence from which a properly instructed jury could infer that Colorado
knowingly joined the money-laundering conspiracy—an issue on which we
express no opinion—we cannot say “beyond a reasonable doubt that the jury
verdict would have been the same absent the erro[neous]’” jury instruction
given in this case. See Skilling, 638 F.3d at 482. This is particularly so given
that the government’s expert witness specifically testified that Colorado
“commingled personal and business” funds and expenses: a confused jury may
have inferred from this testimony together with the erroneous instruction that
the jury was obligated to infer from this evidence an intent to conceal.
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Therefore, the district court abused its discretion in giving the
commingling jury instruction it gave. The error was harmless as to Jose
Trevino and Garcia–Solis. Because of the centrality of the commingling issue
to Colorado’s conviction and the weak circumstantial evidence of his guilt, we
cannot conclude beyond a reasonable doubt that the jury verdict would have
been the same as to Colorado had the jury been properly instructed.
Accordingly, we affirm the convictions of Jose Trevino and Garcia–Solis, but
we vacate the conviction of Colorado.
D. Sentencing
Garcia–Solis and Jose Trevino challenge their sentences. Specifically,
they contend the district court erroneously increased their offense level for
violation of § 1956 based on the value of the laundered funds under U.S.
Sentencing Guidelines Manual (“U.S.S.G.”) §§ 2S1.1(a)(2); 2B1.1, among other
assorted asserted errors. The district court based its calculation of the offense
level on the presentence investigation report’s (PSR) application of application
note 3(b), which provides: “If the amount of the criminally derived funds is
difficult or impracticable to determine, the value of the laundered funds, for
purposes of subsection (a)(2), is the total amount of the commingled funds.”
The government counters that the Appellants did not meet their burden to
show the calculation was erroneous and that, even if it were, the error was
harmless. We agree with the government. 18
1. Standard of Review
“A sentence within the properly calculated Guidelines range is presumed
reasonable on appeal.” United States v. Fernandez, 559 F.3d 303, 319 (5th Cir.
2009). “Findings of fact used in calculating the Guidelines range are reviewed
18Since we vacate Colorado’s conviction because the jury was improperly and
harmfully instructed, we need not and do not address his challenges to the sentence and to
the money judgment.
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for clear error, while interpretation of the Guidelines themselves is reviewed
de novo.” Id. “Calculation of total laundered funds is a factual finding, which
need only be determined by a preponderance of the evidence, and is reviewed
only for clear error.” United States v. Yassine, 574 F. App’x 455, 466 (5th Cir.)
(per curiam), cert. denied, No. 14-6941, 2014 WL 5502919 (U.S. Dec. 8, 2014).
“A factual finding on a sentencing factor is not clearly erroneous so long as it
is plausible in light of the record read as a whole.” Alaniz, 726 F.3d at 622
(internal quotation marks omitted).
2. Jose Trevino’s Sentence
Jose Trevino argues that the scheme only involved $1,734,000, so the
district court’s finding that he was responsible for $25,000,000 in laundered
funds was clearly erroneous. He also contends the district court erroneously
concluded that he was a leader or supervisor within the meaning of U.S.S.G.
§ 3B1.1(c), that the money-laundering scheme was “sophisticated” under
U.S.S.G. § 2S1.1(b)(3), and that Jose Trevino knew it involved drug proceeds
under U.S.S.G. § 2S1.1(b)(1)(B)(i). We disagree.
Jose Trevino points to no evidence that rebuts the PSR’s analysis or
establishes that the district court’s factual finding was clearly erroneous. As
described in detail above, the money-laundering scheme was sophisticated,
involving multiple layers of leadership and organizations, including fictitious
entities and shell corporations. See U.S.S.G. § 2S1.1 cmt. n.5(A)
(“[S]ophisticated laundering’ means complex or intricate offense conduct
pertaining to the execution or concealment of the 18 U.S.C. [§] 1956 offense.
Sophisticated laundering typically involves the use of (i) fictitious entities; (ii)
shell corporations; [or] (iii) two or more levels (i.e., layering) of transactions,
transportation, transfers, or transmissions, involving criminally derived funds
that were intended to appear legitimate . . . .”). Additionally, the district court
had “no trouble finding” that Trevino “exercised leadership,” citing the thirteen
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or fourteen employees at the horse ranch. The record reflects that Jose Trevino
offered no rebuttal evidence. For the reasons stated above, the district court
could reasonably conclude Jose Trevino was aware that drug proceeds were
involved.
Additionally, Jose Trevino has not shown that the district court’s
conclusion that, in light of the trial evidence, “the calculated base is easily over
[$]20 million” is clearly erroneous either. As the government points out, after
forfeiture, the horses alone sold for about $9 million. The probation officer
described $16,272,011.16 paid for horses and an additional $8,794,264.21 paid
for horse expenses. Jose Trevino does not offer or point to any evidence to rebut
this finding. Accordingly, his sentence is affirmed.
3. Garcia–Solis’s Sentence
Garcia–Solis similarly challenges the twenty-level increase for the value
of the laundered funds. He contends that he entered the conspiracy late, and
therefore, he participated in only “two horse sales with a value of $510,900.”
But, as the government points out, at sentencing Agent Lawson testified that
Garcia–Solis was involved in more than $9 million to $16 million in horse
purchases from 2010–2012. In light of this evidence, the district court’s factual
finding that Garcia–Solis was involved in more than $7,000,000 in money
laundering was “plausible in light of the record as a whole,” Alaniz, 726 F.3d
at 622 (internal quotation marks omitted). Thus, his sentence is affirmed.
III. CONCLUSION
For the foregoing reasons, we REVERSE Eusevio Huitron’s conviction
and RENDER a judgment of acquittal. We also VACATE Francisco Antonio
Colorado Cessa’s conviction, sentence, and money judgment; and we REMAND
for proceedings consistent with this opinion. We AFFIRM the sentences and
convictions in all other respects.
35