United States v. Eldon Gene Nattier

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 96-2380
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United States of America, *
*
Plaintiff-Appellee, *
*
v. *
*
Eldon Gene Nattier, *
*
Defendant-Appellant. *
___________
Appeals from the United States
No. 96-2451 District Court for the
___________ Eastern District of Missouri.
United States of America, *
*
Plaintiff-Appellee, *
v. *
*
James Franklin Coley, *
*
Defendant-Appellant. *
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Submitted: January 13, 1997
Filed: October 3, 1997
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Before WOLLMAN and HANSEN, Circuit Judges, and MONTGOMERY,1
District Judge.
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HANSEN, Circuit Judge.
Eldon Gene Nattier and James Franklin Coley were convicted by a jury on
several counts of conspiracy, money laundering, and making false statements in
violation of federal law. They appeal their convictions and sentences. We affirm.
I.
Count I of the 19-count indictment in this case charged Eldon Nattier, James
Coley, and Nattier's son Jonathan Marc Nattier (Marc) with conspiracy (1) to embezzle
funds from Mercantile Bank of St. Louis, in violation of 18 U.S.C. § 656 (1994), and
(2) to launder the embezzled funds in violation of 18 U.S.C. § 1956(a)(1)(A)(i) and
(a)(1)(B)(i) (1994). Count I listed 19 overt acts in furtherance of the conspiracy,
including that the three men opened a new bank account in Cape Girardeau, Missouri,
some distance from St. Louis, in the name of International Realty Investments, Inc.
(IRI), which was a legitimate Missouri corporation with Eldon Nattier as the president,
Coley as the chief operating officer, and Marc as the secretary/treasurer. The
corporation was formed years before the conspiracy began and existed as a real estate
1
The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota, sitting by designation.
2
investment company. Marc fraudulently caused Mercantile Bank (his employer) to
issue to IRI checks totaling $479,341.19. This money did not belong to IRI but to
another corporation having a name similar to IRI. The conspiracy count charged that
the defendants deposited the embezzled checks into IRI's newly established bank
account and caused IRI to purchase various parcels of real property in St. Louis with
the embezzled funds.
Counts III through VI2 charged Nattier and Coley with making false statements
to obtain food stamps. Count VII charged Nattier with making false statements to the
Internal Revenue Service (IRS). The remainder of the indictment charged Nattier and
Coley with specific counts of money laundering, in violation of 18 U.S.C.
§ 1956(a)(1)(A)(i) and (a)(1)(B)(i). These instances of money laundering included the
same purchases of real property in St. Louis referenced as overt acts in count I, along
with one property in Kentucky and one 1991 Ford Explorer -- all purchased with
checks drawn on IRI's newly established corporate account which contained the
embezzled funds.
A jury convicted Nattier and Coley on all counts against them. The district
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court grouped all of the counts for sentencing, with the money laundering counts being
the most serious offenses. The district court imposed on Nattier a sentence of 78
months of imprisonment on the money laundering counts. Because the conspiracy and
the false statement counts were limited by a statutory maximum penalty, the district
court imposed separate concurrent sentences of 60 months of imprisonment for these
offenses. Likewise, the district court sentenced Coley to 63 months of imprisonment
2
Count II related solely to Marc, who pleaded guilty and is not a party to this
appeal.
3
The Honorable Jean C. Hamilton, Chief Judge, United States District Court for
the Eastern District of Missouri.
3
on the money laundering counts and concurrent 60-month sentences on the conspiracy
and the false statement counts.
Nattier and Coley appeal, challenging the denial of Nattier's motion to dismiss
count I, the sufficiency of the evidence to sustain their money laundering convictions,
the jury instructions, and the district court's calculation of their sentences. Additionally,
Coley contends that the government coerced him into not presenting expert testimony
concerning the effects of domestic violence.
II.
A. Motion to Dismiss
Nattier contends that the district court erred by denying his motion to dismiss
count I of the indictment as duplicitous, arguing that count I charged two separate
objects of the conspiracy. We review de novo the district court's denial of Nattier's
motion to dismiss count I of the indictment. See United States v. Sykes, 73 F.3d 772,
773 (8th Cir.), cert. denied, 116 S. Ct. 2503 (1996). Federal Rule of Criminal
Procedure 8(a) provides that the government may charge two or more connected
offenses in the same indictment, provided each is charged in a separate count.
"Duplicity is the joining in a single count of two or more distinct and separate
offenses." United States v. Street, 66 F.3d 969, 974 (8th Cir. 1995) (internal quotations
omitted). "The principal vice of a duplicitous indictment is that the jury may convict
a defendant without unanimous agreement on the defendant's guilt with respect to a
particular offense." United States v. Karam, 37 F.3d 1280, 1286 (8th Cir. 1994), cert.
denied, 513 U.S. 1156 (1995). The risk inherent in a duplicitous count, however, may
be cured by a limiting instruction requiring the jury to unanimously find the defendant
guilty of at least one distinct act. Id.
The jury instructions in this case acknowledged that count I of the indictment
charged a conspiracy to commit two separate offenses -- conspiracy (1) to embezzle
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funds and (2) to launder the unlawful proceeds of the embezzlement. The relevant
instruction stated as follows:
It would be sufficient if the Government proves, beyond a reasonable
doubt, a conspiracy to commit one of those offenses; but, in that event, in
order to return a verdict of guilty, you must unanimously agree upon
which of the two offenses was the subject of the conspiracy. If you
cannot agree in that manner, you must find the defendants not guilty.
(Appellant Nattier's Adden., Jury Instr. No. 14.). "We assume, as we must, that the
jury followed these instructions." Karam, 37 F.3d at 1286. We conclude that this
limiting instruction was sufficient to cure the risk of a nonunanimous verdict on the
conspiracy charge, and the district court did not err by denying Nattier's motion to
dismiss count I.
B. Sufficiency of the Evidence
We next address the defendants' contention that the government presented
insufficient evidence to sustain their convictions on the substantive counts of money
laundering. When considering whether the evidence is sufficient to support a guilty
verdict, "we view the evidence in the light most favorable to the government, giving the
government the benefit of all reasonable inferences." United States v. Herron, 97 F.3d
234, 236 (8th Cir. 1996), cert. denied, 117 U.S. 998 (1997). We reverse only "if no
reasonable jury could have found the defendant[s] guilty beyond a reasonable doubt."
United States v. Taylor, 82 F.3d 200, 201 (8th Cir. 1996) (internal quotations omitted).
Nattier and Coley argue that the general verdicts on the money laundering counts
must be set aside because the government did not prove every element of each form of
money laundering charged. Each money laundering count charged that the specified
conduct violated two subsections -- 18 U.S.C. § 1956(a)(1)(A)(i) and 18 U.S.C.
§ 1956(a)(1)(B)(i). The two subsections, each requiring proof of three elements, share
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two common elements. Both subsections require the government to prove that the
defendants (1) engaged in the specified transactions involving illegal proceeds and (2)
knew that the funds were illegal proceeds. See United States v. Rounsavall, 115 F.3d
561, 565 (8th Cir. 1997) (setting forth the requirements under 18 U.S.C.
§ 1956(a)(1)(B)(i)), petition for cert. filed (Aug. 20, 1997) (No. 97-5687); United
States v. Jenkins, 78 F.3d 1283, 1288 (8th Cir. 1996) (setting forth the requirements
under 18 U.S.C. § 1956(a)(1)(A)(i)). Nattier and Coley do not dispute that they
engaged in the specified financial transactions and knew that the proceeds of unlawful
activity were involved. Thus, the first two elements of each subsection are satisfied.
Nattier and Coley challenge only the government's proof on the final element of
each subsection. The final element of subsection (a)(1)(A)(i) requires proof that the
defendants intended to promote the carrying on of embezzlement, and the final element
of subsection (a)(1)(B)(i) requires proof that the defendants knew that the transaction
was designed to conceal the illegal proceeds. Because the general verdict on each
money laundering count does not indicate which alternative the jury found in this case,
we examine the sufficiency of the evidence under each subsection.
First, the defendants argue that the transactions specified in the indictment could
not have furthered or promoted the carrying on of the embezzlement within the meaning
of subsection (a)(1)(A)(i), because the embezzlement was complete by the time these
transactions took place. We disagree. Nattier and Coley were engaged in an
embezzling and money laundering scheme designed to promote the goals of and to reap
a profit for IRI, their real estate investment company. The scheme was devised and
carried out after the defendants discovered a similarity in name between IRI and one
of Mercantile Bank's customers to whom dividends were owing but unclaimed. Due
to this similarity in name between the two companies, IRI and its financial transactions
were integral to the embezzlement scheme. While the unlawful act of embezzlement
may have been complete at the time Marc obtained the checks for IRI, the funds could
not benefit the overall criminal scheme until successfully deposited in IRI's bank
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account and made available for the real estate and other financial transactions specified
in the indictment. All of the defendants' financial transactions after first depositing the
embezzled checks in IRI's account furthered this scheme and contributed to the overall
prosperity of the conspiracy and the act of embezzlement. See United States v.
Cavalier, 17 F.3d 90, 93 (5th Cir. 1994) (holding a defendant can conduct a financial
transaction to promote, or contribute to the prosperity of, a completed unlawful activity
for purposes of section 1956(a)(1)(A)(i)); See also United States v. Montoya, 945 F.2d
1068, 1076 (9th Cir. 1991) (holding deposit of bribery proceeds into a bank account
was a transaction intended to promote the carrying on of the bribery by characterizing
the proceeds as legitimate funds) (cited with approval in United States v. Morris, 18
F.3d 562, 569 (8th Cir. 1994)); United States v. Pellulo, 961 F. Supp. 736 (D.N.J.
1997) (holding even if embezzlement was completed when funds were transferred to
account, additional financial transactions were necessary to realize a benefit from the
embezzlements, so transactions were within the scope of 18 U.S.C. § 1956(a)(1)(A)(i)).
But see United States v. Heaps, 39 F.3d 479, 485-86 (4th Cir. 1994) (criticizing and
disagreeing with both Montoya and Cavalier).
Second, Nattier and Coley contend that their actions did not demonstrate an
intent to conceal their identity and relationship to the funds because they were readily
identifiable as officers of the corporation through which they were spending the funds.
Regardless of whether Nattier and Coley attempted to conceal their ownership of or
relationship to the funds, their intent to conceal the nature or source of the funds within
the meaning of section 1956(a)(1)(B)(i) was evident. Nattier and Coley concealed the
nature and source of the funds by placing the embezzled funds in the seemingly
legitimate business account of IRI and passing them off as funds of a legitimate
business. Also, Count XIX charged that Nattier laundered funds by settling an $86,539
tax debt with payment of $3,600 of embezzled funds. Nattier concealed the source and
ownership of the funds used to extinguish his tax debt by depositing them first in IRI's
account, then transferring them to an account in Harlingen, Texas, in the name of his
father and himself. Nattier told the IRS that he had no funds with which to pay the tax
7
debt and further represented to the IRS that he had borrowed the money from his father
to pay the settlement amount. Thus, even though the defendants did not use false
names in an attempt to conceal their identity, they used their legitimate real estate
business and Nattier's father in an attempt to conceal the source of the funds within the
meaning of subsection (a)(1)(B)(i).
The defendants also argue that allowing their convictions to stand would turn the
money laundering statute into "a money spending statute," contrary to our prior holding
in United States v. Rockelman, 49 F.3d 418, 422 (8th Cir. 1995). See also Herron, 97
F.3d at 237. We conclude that Rockelman and Herron are distinguishable from this
case. In Rockelman, we reversed a money laundering conviction for lack of
concealment where the defendant purchased a cabin with cash, which consisted of
illegal proceeds, placed the title in the name of his business, and made no attempt to
conceal either his own identity or the source of the funds. 49 F.3d at 422. In Herron,
we reversed a money laundering conviction for lack of concealment where the financial
transaction at issue was a wire transfer of funds and the defendant made no attempt to
conceal his identity. 97 F.3d at 237. In the present case, however, the defendants first
deposited the embezzled Mercantile Bank’s checks in IRI's business bank account and
then invested the illegal proceeds in property by drawing checks on IRI's account, thus
representing the illegal proceeds as funds of their legitimate business. Additionally,
Nattier transferred some of the illegal funds from IRI's account to the Texas bank
account and represented the funds as money borrowed from his father. "This was not
a case of a person simply using illegally obtained funds to purchase personal items,"
Cavalier, 17 F.3d at 93; therefore, an affirmance of these convictions will not convert
the money laundering statute into a money spending statute.
We conclude that a reasonable jury could have found beyond a reasonable doubt
that, by investing the illegal proceeds through their business, Nattier and Coley
intended "to promote the carrying on of specified unlawful activity" within the meaning
of section 1956(a)(1)(A)(i), and also that they knew they were concealing the nature
8
or source of the proceeds of the unlawful activity within the meaning of section
1956(a)(1)(B)(i).
C. Jury Instruction
Nattier and Coley challenge the separate money laundering convictions on the
basis of the jury instructions. Coley contends that the instructions did not correctly
state the difference between the two types of money laundering charged. As already
indicated, each money laundering count charged that the specified conduct violated two
different subsections of the money laundering statute -- 18 U.S.C. § 1956(a)(1)(A)(i)
and 18 U.S.C. § 1956(a)(1)(B)(i) -- and Instruction No. 17 permitted the jury to enter
a general guilty verdict if it found either an intent to promote the carrying on of
embezzlement or knowing concealment of the source, ownership, or nature of the
embezzled funds. Instruction No. 17 advised the jury that the defendants could be
found guilty of conducting an illegal financial transaction if (1) they engaged in the
specified financial transactions involving the proceeds of embezzlement, (2) they knew
that the funds were proceeds of some form of unlawful activity, and (3) they either (a)
intended to promote the carrying on of the embezzlement (necessary for subsection
(a)(1)(A)(i) money laundering) or (b) knew the transaction was designed to conceal the
nature, ownership, source, or control of the embezzled funds (necessary for subsection
(a)(1)(B)(i) money laundering). In this manner, Instruction No. 17 accurately set forth
the elements of proof required for each subsection and properly instructed the jury on
each element of the crime. See Rounsavall, 115 F.3d at 565 (setting forth the
requirements under 18 U.S.C. § 1956(a)(1)(B)(i)); Jenkins, 78 F.3d at 1288 (setting
forth the requirements under 18 U.S.C. § 1956(a)(1)(A)(i)).
Nattier contends that Instruction No. 17 failed to require the jury to unanimously
agree on which statutory alternative the defendants violated. Because Nattier did not
object at trial to Instruction No. 17, we review for plain error. See Herron, 97 F.3d at
238; Fed. R. Crim. P. 52(b). Under plain error review, we must determine whether the
9
district court committed an error that is plain under current law and whether it "'affected
the defendant's substantial rights.'" Id. (quoting United States v. Olano, 507 U.S. 725,
732 (1993)). When a plain error has affected substantial rights, we have discretion to
correct the forfeited error "if the error seriously affects the fairness, integrity or public
reputation of judicial proceedings." Olano, 507 U.S. at 736 (internal quotations
omitted).
The district court did not commit plain error in this case. Instruction No. 17
specifically provided that "[t]o find the defendants . . . guilty of the offenses, you must
agree unanimously that one or more of the objectives charged were proved beyond a
reasonable doubt." (Appellant Nattier's Adden. at Def.'s Ex. 3.) "The court
conceivably might have been clearer in its explanation of the workings of the unanimity
principle in this case, but we cannot conclude that this instruction constituted error,
much less plain error." United States v. Blumeyer, 114 F.3d 758, 770 (8th Cir. 1997).
See United States v. Gruenberg, 989 F.2d 971, 975 (8th Cir.) ("A general unanimity
instruction usually protects a defendant's sixth amendment right to a unanimous
verdict."), cert. denied, 510 U.S. 873 (1993).
D. Sentencing
The defendants contend that the district court erred in calculating their sentences,
because the general verdicts are ambiguous and the Sentencing Guidelines calculation
provides disparate sentencing ranges for the two types of money laundering charged
and the two possible objects of the single charged conspiracy. On count I, the jury did
not specify whether embezzlement, money laundering, or both were found to be the
object of the conspiracy; likewise, on each money laundering count, there is no
indication from the verdict whether the jury found money laundering through promotion
of the specified unlawful activity under subsection (a)(1)(A)(i), through concealment
of the source of the funds under subsection (a)(1)(B)(i), or both. While we agree with
10
the defendants that the verdicts are ambiguous, we do not believe resentencing is
required.
Generally, we have held that where more than one possible object of a drug
conspiracy is stated in the indictment, a district court should use a special verdict form
to permit the jury to indicate its finding as to what drug was the object of the
conspiracy where the establishment of the defendant's base offense level requires such
a determination and where the Sentencing Guidelines provide disparate sentencing
ranges for each. See United States v. Owens, 904 F.2d 411, 415 (8th Cir. 1990). If
a general jury verdict is utilized in such a case, the district court should sentence the
defendant on the alternative that yields a lower sentencing range. Id.; see also United
States v. Wiggins, 104 F.3d 174, 177-78 (8th Cir. 1997) ("When defendants are
convicted by a verdict that is ambiguous as to what type of drug they possessed or
distributed, they may not be sentenced based upon the alternative producing the higher
sentencing range."); United States v. Baker, 16 F.3d 854, 858 (8th Cir. 1994) (noting
this principle "has frequently been applied to general verdicts in conspiracy cases").
"When a defendant is convicted by an ambiguous verdict that is susceptible of two
interpretations for sentencing purposes, he may not be sentenced based upon the
alternative producing the higher sentencing range." Id. at 857-58; see Owens, 904 F.2d
at 415.
Where, however, the trial evidence is so strong that we can confidently say the
jury must have been convinced beyond a reasonable doubt that one particular drug
carrying a heavier penalty, as opposed to another carrying a lower penalty, was
involved in the criminal activity, we have affirmed the imposition of the higher
sentence. See Wiggins, 104 F.3d at 178 (“However, when trial evidence leaves no
doubt as to the substance involved, it is not error to sentence a defendant consistent
with that evidence.”); accord United States v. Watts, 950 F.2d 508, 514 (8th Cir. 1991)
(distinguishing Owens as a case where the trial evidence was unclear as to the type of
drug involved in the conspiracy); Baker, 16 F.3d at 858 n.4 (“Because the trial
11
evidence does not permit us to clear up the ambiguity in the verdict, this case is
distinguishable from [Watts].”).
At the time of the original sentencing, the district court properly grouped all the
counts together and determined the sentences based upon the substantive money
laundering counts, which were the most serious offenses of conviction. See U.S.
Sentencing Guidelines Manual, §§ 3D1.2, 3D1.3 (1995) (describing the method of
grouping closely related counts and mandating that the offense level for the group will
be the highest offense level of the highest individual count in the group). The base
offense level is 23 for a financial transaction under subsection (a)(1)(A)(i), which
involves money laundering by promoting a specified unlawful activity. See USSG
§ 2S1.1(a)(1). In contrast, the base offense level is 20 for a financial transaction under
subsection (a)(1)(B)(i), which involves knowing concealment of the proceeds. See
USSG § 2S1.1(a)(2). Pursuant to USSG 2X1.1 the base offense level for the
conspiracy count would be the same as that determined for the substantive offenses
charged as the object of the conspiracy, i.e., embezzlement of bank funds and money
laundering. Because the jury found the defendants guilty of the substantive money
laundering counts, we have no difficulty in determining that the jury found that money
laundering was an object of the convicted conspiracy. Accordingly, the offense level
calculation for the conspiracy count would be the same as that for the money laundering
counts.
The district court concluded that both types of money laundering alleged -- (1)
promoting unlawful activity and (2) concealing the proceeds -- were supported by the
evidence offered for each money laundering count. Indeed, the district court was of the
opinion that the evidence at trial proved both types of money laundering beyond a
reasonable doubt. (Sent. Tr. at 836.) Thus, the district court based its sentencing
calculations for the group on a base offense level of 23, the higher offense level of the
two types of money laundering.
12
The money laundering counts controlled the sentencing determination for the
whole group of counts involved in this case, except to the extent that the actual
sentences which could be imposed on the conspiracy and the false statement counts
were capped by a statutory maximum five-year (60-month) sentence applicable to each.
18 U.S.C. §§ 371, 1001. Although the conspiracy count’s calculated offense level was
tied to and the same as that determined for the money laundering counts, the existence
of the statutory five-year cap also meant that the conspiracy count was of no real
consequence in determining the applicable sentencing range for the grouped counts.
The calculation of the range for the money laundering counts drove the length of the
total punishment to be imposed on the grouped counts. In other words, the longer
statutory maximum sentence available for the money laundering counts (20 years)
would accommodate the total punishment indicated by the identified guideline ranges
of 78-97 months for defendant Nattier and 63-78 months for defendant Coley on the
money laundering counts if the district court was correct in its view that it could
determine based on the strength of the trial evidence that the jury was convinced
beyond a reasonable doubt that the defendants violated § 1956(a)(1)(A)(i), money
laundering through the promotion of the specified unlawful activity, as well as violating
§ 1956(a)(1)(B)(i), money laundering by concealment of the source of the illegal funds.
We have already determined that the evidence was sufficient for the jury to have
convicted both defendants of the more serious (a)(1)(A)(i) mode of committing the
offense, ante at 5-8, and we have noted that the district judge specifically found at
sentencing that the trial evidence proved beyond a reasonable doubt that both types of
money laundering had been committed by both defendants. Our own review of the trial
evidence has convinced us that the district judge’s observation about the strength of the
trial evidence is correct -- we likewise conclude that the trial evidence was so strong
on each mode of violation that the jury must have found that the defendants did in fact
violate both prongs of § 1956. Hence we conclude that, like in Watts and Wiggins, the
district court was correct in imposing the guidelines sentence based on a violation of
the (a)(1)(A)(i) alternative. It should be remembered that we are dealing with
13
alternative ways of violating a single statute, and that for either way the statute may be
violated the maximum potential penalty is the same, i.e., 20 years in prison.
The commentary to USSG § 1B1.2(d), in particular application note 5, lends
support to our conclusion. In conspiracy cases where the jury’s verdict does not clearly
indicate which of two or more offenses were found to be the object of the conspiracy,
note 5 authorizes a sentencing judge to impose the sentence based on each object of the
offense that the court, were it sitting as the trier of fact, would have convicted the
defendant of conspiring to commit. As already mentioned, the district court in this case
found that both methods of violating the money laundering statute were proven by
evidence beyond a reasonable doubt. Thus, the defendants' challenge to the sentencing
ramifications of the ambiguous verdict on the conspiracy count, contending that the two
different objects of the conspiracy each yield different base offense levels, does not
amount to reversible error. The same is true for their challenge to the sentences
imposed on the money laundering counts.
Defendant Nattier also argues that his sentences on the false statement counts
were incorrectly determined. He contends that he should have been sentenced on those
counts at the lower offense levels which the false statement counts standing alone
would generate. His argument is of no avail. First, he made no objection to the
grouping of all of his counts of conviction for sentencing purposes as proposed in the
presentence investigation report. He can not be heard to complain now absent a
showing of plain error. See United States v. Montanye, 996 F.2d 190, 192 (8th Cir.
1993) (en banc). Nattier cannot show plain error because such a grouping was correct.
See USSG § 3D1.2(d). Furthermore, the district court’s sentencing order was in full
compliance with USSG § 5G1.2, Sentencing on Multiple Counts of Conviction, and its
commentary providing, “Usually, at least one of the counts will have a statutory
maximum adequate to permit imposition of the total punishment as the sentence on that
count. The sentence on each of the other counts will then be set at the lesser of the
total punishment and the applicable statutory maximum . . . .” As indicated, ante at 13,
14
the 20-year statutory maximum on the money laundering counts accommodated the
guidelines range of 78-97 months determined to be the total punishment for Nattier’s
conduct, and a sentence of 78 months was imposed on Nattier’s money laundering
convictions. Because the false statement counts carried a five-year statutory maximum
punishment, the 60-month sentences on those counts were, in compliance with the
quoted commentary, correctly imposed at the lesser of the total punishment (78 months)
and the statutory maximum (60 months).
E. Waiver of Expert
Finally, Coley argues that the government coerced him to withdraw his intent to
use an expert witness, in violation of his right to a fair trial. We find no merit in this
contention, and Coley's failure to raise this claim before the district court constitutes
a waiver. See United States v. Hathcock, 103 F.3d 715, 719 n.4 (8th Cir.), cert.
denied, 117 S. Ct. 2528 (1997).
III.
For the reasons stated, we affirm the judgment of the district court with respect
to each defendant.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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