United States v. Alfonzo-Reyes

United States Court of Appeals
For the First Circuit

Nos. 06-1484 & 06-1501

UNITED STATES,

Appellee,

v.

ISMAEL ALFONZO-REYES and VANESSA MORALES-HERNÁNDEZ,

Defendants, Appellants.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Jay A. Garcia-Gregory, U.S. District Judge]

Before

Lynch, Chief Judge,
Gajarsa* and Lipez, Circuit Judges.

Raymond L. Sanchez Maciera for Appellant Alfonzo-Reyes.

Rachel Brill for Appellant Morales-Hernández.

Rosa Emilia Rodríguez-Velez, with whom Nelson Perez-Sosa was
on the brief, for Appellee.

January 25, 2010

*
Honorable Arthur J. Gajarsa, Circuit Judge, United States
Court of Appeals for the Federal Circuit, sitting by designation.
 GAJARSA, Circuit Judge. Ismael Alfonzo-Reyes ("Alfonzo")

and Vanessa Morales-Hernández ("Morales") (collectively

"appellants") appeal judgments of the United States District Court

for the District of Puerto Rico. The judgments found appellants

guilty of defrauding the Farm Service Agency ("FSA") of emergency

loans and incentives to qualified farmers following the damage

inflicted on the Commonwealth of Puerto Rico by Hurricane Georges.

Following an 82-day jury trial, appellants were convicted of fraud

and bribery relating to various FSA loan applications. Appellants

timely appealed their convictions. For the reasons stated below,

the judgments are affirmed.

I.

On September 21, 1998, Hurricane Georges swept through

Puerto Rico causing significant structural and environmental damage

to the island. The President of the United States declared the

island a major disaster area, entitling the Commonwealth to various

federal aid programs. In the wake of the hurricane, numerous Puerto

Rican farmers applied for emergency loans through the FSA, the

federal agency responsible for administering aid to eligible farmers

after a natural disaster.

Under the FSA program, farmers may qualify for an

emergency loan up to $500,000 or for an operating loan up to

$200,000 for rebuilding farming operations. Farmers may also

qualify for loans under the Livestock Indemnity Program for perished

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livestock and the Emergency Conservation Program for debris removal

and for fence and road repairs. The FSA program has several

eligibility requirements, including the farm size and a farmer's

ability to obtain commercial loans.

Appellants Alfonzo and his wife1 Morales were residents of

Puerto Rico when Hurricane Georges struck the island. Alfonzo was

employed as a FSA loan manager and Morales worked as a FSA contract

employee in Ponce, Puerto Rico. Morales had previously worked at

the law office of Efrén Irizarry-Colon ("Irizarry") in Arecibo,

Puerto Rico preparing FSA loan applications and earning a four

percent commission on the loans.

Because appellants challenge the sufficiency of the

evidence used to convict them on various counts, we recount the

facts in the light most favorable to the verdict. United States v.

DeCologero, 530 F.3d 36, 47 (1st Cir. 2008). We outline the case

here in general and analyze further facts as relevant to the

sufficiency claims later in the analysis.

In October 1998, Alfonzo met with José Torres-Correa

("Torres"), the FSA Program Director, to reveal his plan to defraud

the FSA. Alfonzo explained that Morales would process the

cattlemen's applications out of Irizarry's law firm for a four

percent commission on the loans. Alfonzo offered Torres kickbacks

of one percent of the loans, or approximately $130,000 ($80,000 in

1
Appellants are no longer married.

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cash and forgiveness of $50,000 in debt) for expediting, approving,

and disbursing these loans. Alfonzo needed Torres' participation

in the scheme because Torres was authorized to approve loans in

excess of $300,000 as the FSA Program Director.

Between September 28, 1998, and January 22, 1999,

appellants submitted FSA loan and incentive applications bearing

false information on behalf of thirteen dairy farmers for alleged

damage to various dairy farms owned by the Toledo family.2 Morales

inflated the damage and loss amounts in each application, and

Alfonzo instructed the farmers to obtain falsified invoices,

estimates, and certifications to support their claimed losses.

Torres approved approximately $10 million in FSA relief. In

exchange for approving the fraudulent loan applications, Torres

received $18,000 in kickbacks and forgiveness of $50,000 in debt.

According to numerous witnesses at trial, the criminal

scheme was pervasive and systemic. It involved multiple actors

throughout the Arecibo region of Puerto Rico. Farmers were required

to obtain invoices demonstrating damage to their farms caused by the

hurricane to support their FSA loan applications. As a result, a

group of contractors, suppliers, and agronomists provided invoices,

certifications, and estimates containing information they knew to

2
The dairy farms owned by various Toledo family relatives
include the Toledo Dairy, Inc., Gregorio Toledo, Inc., J. Dairy,
Inc., and Café Dairy, Inc. (hereinafter, "the Toledo family dairy
farms").

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be false or simply chose not to verify. Veterinarians provided

false certifications to dairy farmers concerning the number of

livestock killed as a result of Hurricane Georges. Doctor

Rivera-Hernández ("Rivera"), a veterinarian, spoke to Alfonzo on the

telephone to express his concern that a cattleman asked him to

certify untrue information regarding the number of perished

livestock. Alfonzo assured Rivera that he would not be held

responsible for providing a false certification.

Appellants accepted various bribes from cattlemen for

their assistance in procuring fraudulent FSA loans. Alfonzo

received hefty cash bribes. In January 2000, a number of cattlemen

pooled together $10,000 in cash and gave it to Alfonzo in the

Arecibo FSA office parking lot. The farmers included a list of the

names of the contributors so that Alfonzo would know who gave him

the money. The farmers provided cash donations to Alfonzo to put

them in a "better position" to obtain future benefits through the

FSA. They also made certain payments to Alfonzo "in appreciation"

for helping them obtain the federal aid. In the fall of 2000,

Morales accepted a bribe in the form of free auto body repairs from

two cattlemen in Hatillo, Puerto Rico. The cattlemen provided the

complimentary repairs of Morales' automobile "in appreciation" for

Alfonzo's assistance in procuring past and future FSA incentives.

Alfonzo also committed fraud regarding various loans

provided by commercial banks in the Arecibo region. To obtain

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emergency loans through the FSA, farmers were required to show that

they were financially unable to obtain a commercial loan. In July

1999, Alfonzo requested commercial loan denial letters from the

Arecibo branch of Puerto Rico Farm Credit. Esther Morales, a

manager of the Arecibo branch, testified that Alfonzo requested loan

denial letters for the Toledo Family dairy farms. Ester Morales had

never before provided such a letter for a FSA employee. Other

employees of commercial banks in the Arecibo region testified that

cattlemen applied for loans with no serious expectation of receiving

them because they offered insufficient collateral and sought a rate

of interest well below prevailing market rates.

FSA employees in the Arecibo office began to develop

suspicions regarding statements and information contained in the

loan applications. Arlette Arana, a contract employee in the

Arecibo office, performed on-site farm inspections to verify the

claimed damages used to calculate the Emergency Conservation Program

incentive awards. Arana's estimates of the farmers' damages did not

correlate with the farmers' invoices for repair costs. Despite the

discrepancies, Alfonzo instructed Arana to increase the Emergency

Conservation Program incentive awards even in cases where a farmer

presented invoices claiming greater repair costs than her on-site

damage estimates. Jorge Ramírez, a clerk in the FSA Arecibo office,

also worked on Emergency Conservation Program payments. Ramírez

spoke with Arana about the irregularities contained in the Emergency

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Conservation Program files. Ramírez and Arana shared their concerns

with Alfonzo. Alfonzo instructed them to accept the files as

submitted, told them it was not their duty to investigate, and

assured them they were not responsible for the farmers providing

false information.

Employees from other FSA offices also developed

suspicions. In December 1998, an unannounced investigation team of

FSA employees led by Melissa Cummings reviewed some of the Arecibo

office's files. Cummings issued a memorandum outlining the

deficiencies and dearth of documentary support for damage claims.

She noted the possibility of fraudulent inflation of the loan

amounts based on the fact that Irizarry's office charged a

commission based on the disbursed loan amount.

In January 2000, Clarence Ropp, a senior loan officer of

the United States Department of Agriculture ("USDA"), visited the

Arecibo office to review the loan applications handled by Irizarry's

firm. In reviewing the loan applications, Ropp could not find any

closing documentation. When Ropp questioned Alfonzo about the

missing documents, Alfonzo admitted to handling those applications

differently. Ropp observed that the investigation team's notes

outlining the application deficiencies had been removed from the

files. Alfonzo told Ropp that he discarded the notes after

reviewing them and after making the necessary corrections in the

loan files. Ropp also noted that the loan applications failed to

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disclose Irizarry's fee, although that information should have been

clearly listed on the loan's settlement statement. Ropp's review

concluded that Alfonzo had been approving loans based upon improper

and incomplete loan applications.

In March 2000, Ropp returned for a second visit to the

Arecibo office to perform an internal review of all FSA loans made

in Puerto Rico from 1999 to 2000. Ropp noted that, while a number

of applications filed by other FSA offices contained inadvertent

errors, the files from the Arecibo office contained intentional

errors and deficiencies, e.g., lack of closing documents, untracked

funds, and ambiguity regarding whether the files were open or

closed. The mistakes Ropp observed in the Arecibo applications were

not the type of mistakes made by the other FSA offices in Puerto

Rico. Accordingly, Ropp requested that the Arecibo applications be

referred to an investigator. Ropp also testified that the

fraudulent loans made as a result of Hurricane Georges' disaster

depleted the FSA emergency funds in a single fiscal year for the

first time in the program’s history.

Alfonzo was also involved in procuring a fraudulent loan

for Angel Ramón Alvarez-Rodríguez ("Alvarez"), a produce farmer

whose farm was damaged by Hurricane Georges. When Alvarez visited

Alfonzo at the FSA office in Ponce, Alfonzo recommended that Alvarez

apply for a commercial loan from Banco Santander ("Santander").

Alvarez applied for a $150,000 loan. Alfonzo provided Alvarez with

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a letter dated January 14, 1999, stating that Alvarez's FSA loan for

$100,000 had been approved, and when issued, the proceeds could be

used to repay the bank loan. This was false information because

Alvarez's FSA loan was in fact not approved until almost a year

later on December 13, 1999.

After A1varez applied for the Santander loan, A1fonzo

asked him to personally lend him $100,000 to avoid losing his farms

that were financially vulnerable. When Alvarez told Alfonzo that

he did not have the funds to make such a loan, Alfonzo suggested

that his Santander loan could be increased to $250,000. Alvarez

agreed and amended his loan application requesting a loan for

$250,000.

Alfonzo subsequently sent a letter to Santander on January

21, 1999, stating that Alvarez had been approved for a $250,000 FSA

loan. This letter was submitted to the bank's credit committee.

Alfonzo later advised Fernando Fernández-Cintron ("Fernández"), the

manager of the Ponce branch of Santander, that the earlier letter

stating that Alvarez had been approved for only a $100,000 FSA loan

was an error. Premised on the amended FSA letter, Alvarez received

a $250,000 loan from Santander. He testified that Alfonzo was at

the bank when he closed on the loan, asking for a $100,000 check.

The check, however, was made payable to Ignacio Pintado, a

well-reputed coffee farmer from Yauco to conceal the true nature of

the transaction. Fernández corroborated Alvarez's story, testifying

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that Alfonzo and Pintado were present at the closing and had asked

for temporary checks to be issued to Alvarez. Fernández also

testified that if Santander knew Alvarez's FSA loan had not been

approved, his loan through Santander would have been denied.

On April 2, 2004, a grand jury returned a true bill on a

superseding indictment3 charging Alfonzo and Morales with various

acts of fraud and bribery relating to the FSA loan applications.

Count 1 charged appellants with willful conspiracy to defraud the

FSA of $10 million in the process of evaluating, approving, and

disbursing emergency and operating loans and incentives to qualified

farmers following the Hurricane Georges disaster. Counts 2 through

19 charged appellants with making false statements to the FSA

regarding emergency and operating loans for the Toledo dairy farms.

Counts 20 and 21 charged Morales and Alfonzo, respectively, with

bribery of the FSA Program Director, and Count 22 charged Alfonzo

with violation of 18 U.S.C. § 208 for assisting a farmer in

obtaining a commercial loan in which Alfonzo had a personal

financial interest. Counts 23 through 42 charged Morales and

Alfonzo with additional violations of 18 U.S.C. § 1014 in connection

with emergency and operating loans for numerous cattlemen in the

Arecibo region. Counts 43 through 62 charged Alfonzo with assisting

3
The original indictment issued approximately a year
earlier on April 25, 2003 and charged Alfonzo and Morales with
similar but fewer Counts relating to their fraudulent conduct
involving various FSA loan applications.

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in the submission of false applications for livestock indemnities

and other FSA incentives, improper supplementation of income, and

assisting in making false statements on the loan applications of two

Toledo family members.

Following an 82-day trial, a jury found appellants guilty

of all Counts with the exception of Counts 41 and 47.4 Morales was

sentenced on February 13, 2006, and judgment was entered on February

17, 2006. Alfonzo was sentenced on February 17, 2006, and a

judgment was entered on March 13, 2006. Appellants filed timely

notices of appeal. We have jurisdiction pursuant to 28 U.S.C.

§ 1291.

II.

Appellants raise multiple issues regarding their

convictions. Morales and Alfonzo jointly appeal three issues:

(A) whether appellants were charged with non-existent federal

offenses in violation of the Constitution's Ex Post Facto Clause,

(B) whether the evidence was sufficient to support appellants'

convictions, and (C) whether the district court erred in submitting

certain sentencing guideline enhancements to the jury. Morales

individually raises two additional issues specific to her case,

4
Count 41 charged Morales with making false statements on
a FSA loan application in violation of § 1014; Count 47 charged
Alfonzo with assisting with the submission of false applications
for livestock indemnities in violation of § 1014. The trial judge
dismissed these Counts for insufficient evidence as a result of
appellants' Rule 29 motions.

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namely (D) whether the district court abused its discretion in

disqualifying her attorney before trial, and (E) whether the

district court committed reversible error by imposing an

unreasonable sentence. Alfonzo individually appeals only an

additional issue, namely (F) whether the district court erred in

assessing a four-point leadership role enhancement to his sentence.

We consider these issues in turn.

A. Appellants' Convictions Do Not Violate The Ex Post Facto
Clause

Counts 1¯19, 23¯58 and 61¯62 and Counts 2¯13 and 23¯42

charged Alfonzo and Morales, respectively, for submitting fraudulent

reports to the FSA, a successor agency to the Farmers Home

Administration ("FHA"), in violation of 18 U.S.C. § 1014.

Appellants argue that § 1014 does not encompass fraud on the FSA

before October 22, 1999, the date on which the statute was first

amended to include the term "successor agency." See Pub. L. No.

106-78, Title VII § 767, 113 Stat. 1135 (codified as amended in

18 U.S.C. § 1014 (2000)). Appellants assert that prior to that

date, § 1014 encompassed false statements or reports made only

through the FHA, but not its successor agency, the FSA. Under this

theory, a false statement to the FSA prior to October 22, 1999, did

not qualify as a violation of § 1014; thus, appellants' acts were

not criminal when they were committed.

Between September 1998 and January 1999, the period when

appellants were submitting fraudulent FSA applications, § 1014 read:

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 Whoever knowingly makes any false statement or
report . . . for the purpose of influencing in
any way the action of . . . the Secretary of
Agriculture acting through the Farmers Home
Administration . . . upon any application
. . . or loan . . . shall be fined not more
than $1,000,000 or imprisoned not more than 30
years, or both . . . .

In 1994, however, Congress had eliminated the Farmers Home

Administration, had provided for the creation of the FSA as its

successor, and had given the FSA jurisdiction over all pre-existing

FHA disaster loan programs and other lending programs. See

7 U.S.C. § 6932; see also Barreto-Barreto v. United States,

551 F.3d 95, 97 (1st Cir. 2008). In October 1999, Congress

eventually amended § 1014 to reflect this change by adding the

phrase "or successor agency" after "the Farmers Home

Administration." See Pub. L. No. 106-78, Title VII § 767,

113 Stat. 1135.

Both before and after the 1999 amendment, § 1014 by its

terms criminalized knowingly making any false statements "for the

purpose of influencing in any way the action of . . ." the

Secretary of Agriculture, as well as a number of federal agencies,

banks, and credit unions. See 18 U.S.C. § 1014. It is clear from

the comprehensive list of entities in § 1014 that the statute's

primary concern is to protect a range of federal and affiliated

lenders against the common harm of fraud perpetuated by third

parties. It is also clear from 7 U.S.C. § 6932 that the FSA

inherited substantive responsibility for the FHA disaster loan

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programs.

In light of this context, we conclude that the 1999

amendment to § 1014 to include "successor agency" was merely a

housekeeping statute that made § 1014 consistent with the transfer

of responsibilities that 7 U.S.C. § 6932 had already effectuated.

Whether the FSA or the FHA is the agency administering the loan

program does not change the wrongfulness of the third party's

fraudulent statements and does not affect the essential

characteristics of the crime as defined in § 1014. See Blum v.

United States, 212 F.2d 907, 908-09 (5th Cir. 1954) (finding no ex

post facto violation where a defendant was convicted of knowingly

filing false reports with the Public Housing Administration,

previously known as the U.S. Housing Authority, despite the fact

that the criminal statute was not amended to reflect the name

change for four years). There is no statutory ambiguity that would

warrant application of the rule of lenity here, as appellants urge.

Because the 1999 amendment to § 1014 created no new

criminal liability, imposed no greater punishment, and did not

alter the rules of evidence, we hold that appellants' convictions

do not violate the Ex Post Facto Clause.

B. The Evidence Is Sufficient To Support Appellants' Convictions

Appellants argue that the evidence is insufficient to

convict them. Alfonzo challenges the sufficiency of evidence for

Counts 2¯13, 22¯30, 42, 44, 53 and 58¯60, and Morales challenges

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the sufficiency of evidence for Count 20. This Court reviews Rule

29 motions for acquittal de novo. United States v. Godin, 534 F.3d

51, 62 (1st Cir. 2008).

Rule 29 of the Federal Rules of Criminal Procedure

provides that a court may acquit a defendant after the close of the

prosecution's case if the evidence is insufficient to sustain a

conviction. In evaluating the sufficiency of the evidence, we

consider whether, in viewing the evidence in the light most

favorable to the jury's verdict, "a rational fact finder could find

that the government proved the essential elements of its case

beyond a reasonable doubt." United States v. Marin, 523 F.3d 24,

27 (1st Cir. 2008). We review appellants' challenges in turn.

1. The Bribery Charge Against Morales

Count 20 charged both Morales and Alfonzo with aiding and

abetting each other in bribing, and with directly and indirectly

bribing and attempting to bribe, Torres, the FSA Program Director.

The substantive offense against Morales was a violation of

18 U.S.C. § 201(b)(1); the aiding and abetting offense was a

violation of 18 U.S.C. § 2. The bribery charged was promising

$130,000, and giving $18,000 in cash, to Torres to influence him to

approve and authorize disbursement of unqualified loans to

cattlemen in Arecibo.

Morales argues that even if there were enough evidence

that Alfonzo made a direct cash payment of $18,000 to Torres and

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forgave a $50,000 debt, there was insufficient evidence that she

was directly involved or that she knew any money she was earning

would be used to pay a bribe to Torres. Of course, she need not

have actually been the person to pay the bribe to be culpable, see

United States v. Dixon, 658 F.3d 181, 191 (3d Cir. 1981), and she

does not contend that. More specifically, she argues there was

testimony that she was not present at the meeting where the scheme

was hatched and that her arrangement with Irizarry was not

sufficient to show her involvement with the scheme to bribe Torres.

The mere fact that she and Torres were married alone would not be

sufficient. But there was more evidence than that, and it was

sufficient.

The government introduced circumstantial evidence showing

that Alfonzo coordinated the criminal scheme with Torres and

Morales, and sent the cases to the Arecibo office for Morales to

process. At the Arecibo office, Morales compiled the fraudulent

loan applications, inflated the claimed damages, and submitted

falsified documents to substantiate the claimed losses. There is

also evidence showing that Alfonzo told Torres that he would get

paid "little by little as the cases were closed," and that Morales

deducted money from the accounts to pay Torres. This is sufficient

evidence for the jury to conclude that Morales consciously shared

Alfonzo's knowledge of the scheme to defraud the FSA, and worked to

further the scheme by processing numerous FSA applications with

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inflated damages and falsified invoices.

2. The Banco Santander Fraudulent Loan Charge

Count 22 alleged that Alfonzo helped Alvarez obtain a

commercial loan from Santander in which Alfonzo had a personal

financial interest in violation of 18 U.S.C. §§ 208 and 216(a)(2).

The government asserted that Alfonzo, in his capacity as a FSA loan

manager, wrote a letter falsely stating that Alvarez had been

approved for a $100,000 FSA loan that would be used to repay the

commercial loan from Santander.

Alfonzo argues that there is insufficient evidence to

show that he participated in the processing of the emergency loan

request. However, whether Alfonzo personally participated in the

processing of the emergency loan request is immaterial. To

establish a violation of § 208, the government must prove beyond a

reasonable doubt that the defendant (1) was an officer or employee

of the executive branch or an independent agency; (2) participated

personally and substantially in his official governmental capacity

in a matter; and (3) knew that he had a financial interest in that

particular matter. United States v. Nevers, 7 F.3d 59, 52 (5th

Cir. 1993). The elements of the crime under § 208 are supported by

sufficient evidence. Alfonzo, while employed as a FSA loan

manager, personally and substantially participated in his official

capacity by sending a letter on behalf of the FSA to Santander.

Alfonzo's letter falsely stated that Alvarez's FSA loan had been

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approved, when in fact, Alfonzo knew that it had not been approved.

The government also established that Alfonzo had a personal

financial interest in the Santander loan, which he intended to use

to save his financially vulnerable farms. Accordingly, there is

sufficient evidence to support Alfonzo's conviction on Count 22.

3. The Fraudulent Loan Charges

Counts 2¯13, 23¯30 and 42 charged Alfonzo with making

false statements in violation of 18 U.S.C. §§ 2(a) and 1014.

Counts 2-13 concerned the Toledo family's emergency and operating

loans for alleged damage to their dairy farms. Counts 23-30

concerned the Barreto family's loans. Count 42 concerned Jorge

Delgado-Peréz's emergency loan for $500,000.

To establish a violation of § 2(a), the government must

prove that (1) the principal knowingly submitted false statements;

and (2) the accomplice consciously shared knowledge of it,

associated himself with it, and intended to help ensure its

success. García-Carrasquillo, 483 F.3d at 130. To establish a

violation of § 1014, the government must prove that (1) the

defendant made a false statement; (2) the defendant acted

knowingly; and (3) the false statement was made for the purpose of

influencing action on the loan. Tierney, 266 F.3d at 40.

Alfonzo argues there is insufficient evidence to support

his conviction in the absence of direct evidence showing his

participation in submitting the fraudulent loan applications. In

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particular, Alfonzo asserts that in order to find him guilty, the

jury improperly inferred that Morales "told him about the

infirmities" in the loan applications. Direct evidence is not

required to find him guilty, and juries are entitled to draw

reasonable inferences at trial based on circumstantial evidence.

See Rodríguez-Durán, 507 F.3d at 758; Downs-Moses, 329 F.3d at 261.

There is sufficient circumstantial evidence to support

the jury's finding that Alfonzo was guilty of making false

statements to obtain FSA loans. Multiple witnesses at trial

testified that Alfonzo's wife Morales intentionally inflated the

damages on the loan applications and instructed the cattlemen to

obtain falsified invoices. Other witnesses testified that they met

with Alfonzo after applying for FSA loans and that he was concerned

about their loan applications being investigated. The investigator

testified that Alfonzo made excuses for failing to turn over the

files in question and also made excuses for why these files

contained discrepancies. Based on this evidence, the jury was

permitted to infer that Alfonzo shared knowledge of the cattlemen's

false statements in the loan applications.

4. The Fraudulent Livestock Indemnity And Emergency Conservation
Application Charges

Counts 44, 53 and 58 charged Alfonzo with making false

statements in connection with applications relating to the

Livestock Indemnity and Emergency Conservation Programs in

violation of §§ 2(a) and 1014. Counts 44 and 58 alleged that

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Alfonzo knowingly and willfully made false statements in connection

with applications for Livestock Indemnity funds in the amount of

$18,868, and for Emergency Conservation funds in the amount of

$14,837, on behalf of Nelson Ramos-Irizarry ("Ramos"). Count 53

alleged that Alfonzo knowingly and willfully made false statements

and overvalued land, property, and security to fraudulently obtain

Emergency Conservation funds in the amount of $19,200 for Teodoro

Alfonzo-Toledo ("Toledo").

Alfonzo argues that the government did not elicit any

testimony concerning Alfonzo's direct participation in the

submission of false information. We disagree. For Count 44, there

is sufficient circumstantial evidence including: the close

relationship between Alfonzo and Ramos; several meetings between

Alfonzo and Ramos to discuss intentional inflation of losses in

cattle; and Alfonzo's instructions to obtain a letter from a

veterinarian certifying the number of perished cattle to receive

additional FSA incentives. For Count 58, there is also sufficient

circumstantial evidence that Alfonzo met with Toledo on several

occasions to discuss expediting falsified loans under the FSA, and

that they shared tips on how to increase amount of falsified

damages on the loan applications. For Count 53, Toledo testified

that he contributed a $1,000 "donation" to Alfonzo for expediting

the loans. Toledo also testified that he personally attended the

"donation" meeting to ensure that Alfonzo would help the cattlemen

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obtain FSA benefits. Accordingly, there is sufficient

circumstantial evidence upon which the jury can infer Alfonzo's

guilt for Counts 44, 53, and 58.

5. The Improper Income Supplementation Charge

Counts 59 and 60 charged Alfonzo with knowingly and

willfully receiving improper payments from FSA clients in violation

of 18 U.S.C. §§ 209 and 216. Count 59 alleged that Alfonzo

received a cash payment of $10,000. Count 60 alleged that Alfonzo

received payment in the form of auto body repairs to his wife's

automobile.

To establish a claim under § 209, the government must

establish the following four elements: (1) a non-government party

(2) makes a contribution or supplementation to (3) the salary of an

executive branch official (4) as compensation for his services as

an officer or employee of the executive branch. See United States

v. Project on Gov't Oversight, 543 F. Supp. 2d 55, 62 (D.D.C.

2008). The last element requires two inquiries: (1) what the

disputed payment is for, i.e., what activity prompted the

compensation; and (2) the subjective intent of the parties to

determine what the payment was actually for, especially where there

are various activities that could have motivated the payment. Id.

Alfonzo argues that there is insufficient evidence to

support his convictions on Counts 59 and 60 because the $10,000

cash payment and automobile repairs were "gifts." Alfonzo also

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argues that no witnesses testified that they paid Alfonzo for his

FSA services. These assertions are without merit. In support of

Count 59, numerous cattlemen testified that they provided the cash

payment to Alfonzo to place them "in a better position to obtain"

future benefits through the FSA, and that they donated the money to

Alfonzo "in appreciation, because he had helped [them] get those

benefits." In support of Count 60, several witnesses testified

that they paid for the repairs performed on Alfonzo's wife's

automobile to get on Alfonzo's "good side" and "to please" Alfonzo.

Accordingly, there is sufficient evidence that non-government

parties improperly supplemented Alfonzo's income in exchange for

the services he rendered as a FSA employee. This is sufficient to

support Alfonzo's convictions on Counts 59 and 60.

C. The District Court Did Not Abuse Its Discretion By Instructing
The Jury On Sentencing Enhancements

Appellants argue that the district court erred in

instructing the jury on definitions regarding certain sentencing

enhancements. Appellants' trial commenced on June 8, 2004. At

that time, Apprendi v. New Jersey, 530 U.S. 466, 490 (2000)

governed the law on sentencing. The Apprendi standard requires

that "[o]ther than the fact of a prior conviction, any fact that

increases the penalty for a crime beyond the prescribed statutory

maximum must be submitted to a jury and proved beyond a reasonable

doubt." Apprendi, 530 U.S. at 490. On June 24, 2004, during the

middle of the trial, the Supreme Court issued Blakely v.

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Washington, 542 U.S. 296 (2004), which held that "a sentence that

was enhanced on the basis of factors found by the judge, rather

than the jury, violated the defendant's constitutional right to a

trial by jury." United States v. Lopez, 380 F.3d 538, 541 n.1

(1st Cir. 2004). It was unclear at the time whether Blakely

applied to the Federal Sentencing Guidelines or had retroactive

effect. To resolve the issue, the parties agreed to rely on the

Apprendi standard. As a prophylactic measure, the judge asked the

jurors to fill out a special verdict form.

Appellants assert that they were prejudiced by the jury's

consideration of certain sentencing enhancement questions. Morales

objects to the jury's consideration of whether she took significant

affirmative steps to conceal the offense; whether she applied more

than minimal planning to accomplish the scheme; and whether Morales

used "a skill not possessed by members of the general public [that]

usually requires substantial education, training or licensing."

Alfonzo challenges the jury's consideration of whether he had a

leadership role in the offense; the amount of loss; whether he

applied more than minimal planning; and whether he abused the

public trust.

We understand the arguments to fall into two basic

categories. The first is a claim that, since the case was not

bifurcated into a guilt phase and then a penalty phase, it was

error to have the jury focus on issues that assumed guilt. The

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district court, avoiding this risk, instructed that the jury should

deliberate on these issues if and only if they had already

concluded the defendants were guilty. This is not a situation in

which a jury might reasonably do the reverse, as in United States

v. Spock, 416 F.2d 165, 183 (1st Cir. 1969). Further, there was

strong evidence of guilt.

Second, there is an objection to the content of the loss

instruction, which Morales claims misstated the definition of the

term "loss" as it was used in the Sentencing Guidelines. It is

unclear that Morales timely objected to this instruction.

Regardless of whether we review this instruction for an abuse of

discretion rather than plain error, however, the district court's

definition of loss did not materially diverge from the

then-governing definition in the Sentencing Guidelines, and there

is no indication of prejudice.

D. The District Court Did Not Abuse Its Discretion In Its
Pre-Trial Disqualification Of Morales' Attorney

Morales argues that her Sixth Amendment right to counsel

was violated because the district court disqualified her chosen

attorney, Maria Sandoval, before trial. She was represented by

other counsel at trial. The district court found that there was an

actual and potential conflict of interest because Attorney Sandoval

previously represented a government witness who was scheduled to

testify against Morales' husband and co-defendant, Alfonzo. We

review the district court's disqualification decision for abuse of

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discretion. United States v. Lanoue, 137 F.3d 656, 663

(1st Cir. 1998).

The Sixth Amendment guarantees the right to the

assistance of counsel in a trial for any serious crime. Gideon v.

Wainwright, 372 U.S. 335, 343 (1963). An element of that right is

"the right of the defendant who does not require appointed counsel

to choose who will represent him." United States v. Gonzalez-

Lopez, 548 U.S. 140, 144 (2006). In evaluating Sixth Amendment

claims, "the appropriate inquiry focuses on the adversarial

process, not on the accused's relationship with his lawyer as

such." United States v. Cronic, 466 U.S. 648, 657 n.21 (1984).

Accordingly, although a defendant may generally waive his Sixth

Amendment right to a non-conflicted attorney, "the essential aim of

the [Sixth] Amendment is to guarantee an effective advocate for

each criminal defendant rather than to ensure that a defendant will

inexorably be represented by the lawyer whom he prefers." Wheat v.

United States, 486 U.S. 153, 159 (1998); see also Morris v. Slappy,

461 U.S. 1, 13-14 (1983). Against this background, our review is

deferential and the district court has broad latitude. Lanoue,

137 F.3d at 663.

Before trial, the magistrate judge disqualified Attorney

Sandoval, finding that an "actual conflict of interest exists" and,

in addition, warned of "other potential conflicts which may

metamorphose into actual conflicts as the case progresses." In

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support of this decision, the magistrate judge, after a hearing,

found five "crucial" facts5:

(i) Attorney Sandoval, previous to her
involvement in this case, represented
[government witness] "GW" in a drug conspiracy
and money laundering case unrelated to this
case;
(ii) Following his sentence in a drug case, GW
became a government cooperator;
(iii) At the time GW approached the government
to become a cooperator, Attorney Sandoval
continued to represent him;
(iv) Besides cooperating in the drug-related
matters subject of an ongoing investigation, GW
was present at the time a co-defendant in this
case was bribed. This co-defendant is Ismael
Alfonzo-Reyes who is the defendant's husband;
(v) the [g]overnment has announced that GW will
be a witness in the present case, which
involves a conspiracy charge[] [sic].

Morales argues that there was no actual conflict

warranting disqualification, and even if there were, any potential

conflict could have been waived by both clients. In particular,

she asserts that the government witness was willing to waive the

attorney-client privilege and represented this willingness to the

district court. There is no record that such a waiver actually

occurred, so that argument is hypothetical.

With respect to a potential conflict of interest, this

Court has noted that such a conflict "is a matter that is uniquely

5
Following oral argument, the parties submitted letter
briefing to clarify an alleged "factual dispute" material to the
disqualification issue. After a careful review of the record, we
conclude that the trial court based its decision on sound factual
findings relating to the conflict of interest.

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factual and presents a special dilemma for trial courts." Lanoue,

137 F.3d at 663. Accordingly, "[t]he evaluation of the facts and

circumstances of each case . . . must be left primarily to the

informed judgment of the trial court." Wheat, 486 U.S. at 164.

In this case, Attorney Sandoval’s representation may have

placed her in the position of having to cross-examine her former

client, a witness with whom she shared confidences protected by

attorney-client privilege. The district court could conclude the

matters were sufficiently related given some evidence linking the

government’s potential witness, GW, to co-defendant Morales.

Morales argues that "the prosecution neither called nor

alluded to this purportedly 'important' witness during the entire

course of the trial," which "only compound[ed] the error" of

disqualification. But a court's decision on disqualification is

not made with the clarity of hindsight. The Supreme Court in Wheat

explained that a district court's decision to disqualify counsel is

based on the facts presented at the time of the disqualification

motion, and does not turn upon subsequent events at trial — i.e.,

whether the witness ultimately takes the stand:

[W]e think the district court must be allowed
substantial latitude in refusing waivers of
conflicts of interest not only in those rare
cases where an actual conflict may be
demonstrated before trial, but in the more
common cases where a potential for conflict
exists which may or may not burgeon into an
actual conflict as the trial progresses . . . .

486 U.S. 153, 163 (1998) (emphasis added). Under these

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circumstances, the district court did not abuse its broad

discretion in disqualifying Attorney Sandoval.

E. Appellant Morales' Sentence Is Not Unreasonable

Morales asserts that her 27-month sentence is

unreasonable because the district court judge improperly treated

the Federal Sentencing Guidelines as mandatory, in violation of

United States v. Booker, 543 U.S. 220 (2005). We review the

reasonableness of sentences for abuse of discretion. Gall v.

United States, 552 U.S. 38, 56 (2007).

Morales contends that the trial judge's statement that

Booker "directs sentencing courts to resort to the guidelines in

order to structure a reasonable sentence" demonstrates that the

judge improperly treated the Federal Sentencing Guidelines as

mandatory, instead of advisory. We disagree. In light of the

district court's reference to the "now advisory Federal Sentencing

Guidelines," we find that the district court treated them as

advisory. Nor did the court's analysis fail to consider the

18 U.S.C. § 3533(a) factors. Indeed, the district court described

Morales as "a first time offender" and a "productive member within

her community." As a result, the district court imposed a sentence

at the bottom end of the Federal Sentencing Guidelines range,

demonstrating the individualized assessment. For these reasons,

the district court did not abuse its discretion.

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F. The District Court Did Not Err In Awarding A Four-Point
Leadership Role Enhancement

Alfonzo argues that the district court erred in giving

him a four-point leadership role enhancement during sentencing. A

court's decision to impose a sentencing enhancement for a

leadership role based on the facts is reviewed for clear error.

United States v. Rodríguez-Lozada, 558 F.3d 29, 44 (1st Cir. 2009).

Under the Federal Sentencing Guidelines, a defendant's

base offense level is raised by four levels if he "was an organizer

or leader of a criminal activity that involved five or more

participants . . . ." U.S. Sentencing Guidelines Manual § 3B1.1

(2004). We must also consider the following factors:

the exercise of decision making authority, the
nature of participation in the commission of
the offense, the recruitment of accomplices,
the claimed right to a larger share of the
fruits of the crime, the degree of
participation in planning or organizing the
offense, the nature and scope of the illegal
activity, and the degree of control and
authority exercised over others.

Id. at cmt. 4. Alfonzo argues the evidence at trial showed that

there were only four participants to the crime, which he asserts

does not include his co-conspirators. This is not correct.

Alfonzo's leadership role over his co-conspirators may be

considered for a sentencing enhancement. See Rodríguez-Lozada,

558 F.3d at 44. The evidence at trial showed that Alfonzo had a

leadership role in the criminal scheme involving five or more

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participants. Alfonzo recruited twenty cattlemen in Puerto Rico

who testified that Alfonzo participated in inflating their damages

and instructed them to obtain falsified estimates. Alfonzo also

directed Morales to falsify the loan applications submitted by the

cattlemen. Furthermore, Alfonzo bribed Torres for the required

FSA authorization for loans over $300,000. Accordingly, based on

this evidence, we find that Alfonzo's four-point leadership role

enhancement was not clear error.

III.

For the foregoing reasons, we affirm on all issues.

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