United States v. Aguasvivas-Castillo

United States Court of Appeals
For the First Circuit

No. 10-1460

UNITED STATES,

Appellee,

v.

BEPSY O. AGUASVIVAS-CASTILLO,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF PUERTO RICO

[Hon. Carmen Consuelo Cerezo, U.S. District Judge]

Before

Lynch, Chief Judge,
Stahl and Thompson, Circuit Judges.

Anita Hill Adames for appellant.
Myriam Y. Fernandez-Gonzalez, with whom Rosa Emilia
Rodriguez-Velez, United States Attorney, Nelson Pérez-Sosa,
Assistant United States Attorney, and Thomas F. Klumper, Assistant
United States Attorney, were on brief, for appellee.

January 17, 2012
 LYNCH, Chief Judge. Bepsy Aguasvivas-Castillo, the

owner of a supermarket chain in Puerto Rico, was convicted on one

count of conspiracy to commit food stamp fraud and one count of

money laundering. He had engaged in and enlisted his family in an

illegal scheme in which the supermarkets he owned and operated

provided cash for food stamps beyond Puerto Rico's permissible

limits. Some fourteen defendants were originally charged.

Several, including some of Aguasvivas-Castillo's family members,

pled guilty and testified against him.

All told, the supermarkets' illegal receipts from the

fraud, conservatively estimated to be over $4 million, were

intermingled with over $20 million in food stamp funds.

Aguasvivas-Castillo was sentenced to 108 months in prison and

ordered to forfeit the amount of $20 million. He appeals only from

his sentence, arguing that two sentencing guideline enhancements

were erroneously applied, and he challenges the amount of the

forfeiture order under the Excessive Fines Clause of the Eighth

Amendment. We affirm the district court's application of the

sentence enhancements as well as its forfeiture order.

I.

The Food Stamp Program is administered by the U.S.

Department of Agriculture's Food and Nutrition Service. Each year,

the Food and Nutrition Service assigns a block grant of

approximately $1.5 billion to Puerto Rico's Administration for

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Socioeconomic Development of Families (ASEDF) to provide nutrition

assistance to low income families. ASEDF administers Puerto Rico's

Program of Nutrition Assistance (NAP), which awards food stamps to

families and individuals on a monthly basis in an amount based on

the family's number of dependents and overall income.

NAP deposits the monthly food stamp amount for each

family or individual onto an Electronic Benefit Transfer (EBT)

debit card, which can then be used to purchase food at NAP-

certified establishments. Food stamp recipients in Puerto Rico are

permitted to withdraw 25% of the amount deposited on their EBT-

debit cards as cash for purchases of food at other establishments,

but they may not use the remaining 75% to get cash. This

restriction was implemented by Puerto Rico and the U.S. Department

of Agriculture to try to reduce instances of fraud and error in

Puerto Rico's food stamp program. See Food and Nutrition Serv.,

U.S. Dep't of Agric., Implementing Supplemental Nutrition

Assistance Program in Puerto Rico: A Feasibility Study 71 (2010)

[hereinafter "Implementing SNAP in Puerto Rico"]; Office of Mgmt.

and Budget, Detailed Information on the Nutrition Assistance for

Puerto Rico Assessment ¶ 3.7 (2005).

Not all food retailers in Puerto Rico are NAP-certified,

so one purpose of the 25% cash allowance is to allow participants

without ready access to certified retailers a way to purchase food

elsewhere. Implementing SNAP in Puerto Rico 71. While the program

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requires that the cash be used only to purchase eligible food

items, actual use of the cash is unmonitored. Id.

Businesses wishing to obtain certification to accept food

stamps must file an application and submit various documents

including a criminal record certificate, use permits, municipal

patents, a Treasury Department Certificate of Filed Income Tax

Returns for the last five years, and a certificate of

incorporation.

When food stamp recipients purchase food at a business

that has been certified, the money from their EBT-debit card is

automatically transferred to the business's account. This

electronic transfer is managed by Evertec Inc., a subcontractor

hired by the government to manage the money transfers and store the

account data of food stamp participants and certified businesses.

Aguasvivas-Castillo was the president, owner, and sole

shareholder of Aguasvivas Food Market, Inc. (AFMI) and Aguasvivas

Borinquen, Inc. (ABI). AFMI owned a grocery store located in San

Juan, Puerto Rico, and another in Canóvanas, Puerto Rico. ABI

owned an additional grocery store in San Juan, Puerto Rico. In

2001, Aguasvivas-Castillo applied for NAP-certification for each of

the three supermarkets, and received the certifications in

September of 2001. From that point until his indictment in 2007,

he owned and operated the three NAP-certified stores, at which food

stamp participants could use their EBT-debit cards to obtain food

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and cash. The fraudulent scheme started as soon as the

certifications issued and only slowed down after the fraud

investigation began and a search warrant was served in 2006.

Aguasvivas-Castillo exercised control over the three

stores' finances, cash flows, and employment decisions. He also

exercised at least some managerial control over store operations

and received regular reports from the stores' managers as to sales,

deposits, and other financial operations in the three stores.

In 2007, a grand jury indicted Aguasvivas-Castillo and

thirteen other defendants for conspiracy to commit food stamp fraud

(Count 1), in violation of 7 U.S.C. § 2024(b) and 18 U.S.C. § 371,

and for knowingly conducting and attempting to conduct financial

transactions affecting interstate commerce involving the proceeds

of unlawful activity (Count 2), in violation of 18 U.S.C.

§§ 1956(a)(1)(A)(i) and 1956(a)(1)(B)(i), and 2. The grand jury

indicted all fourteen defendants, including Aguasvivas-Castillo,

for committing food stamp fraud; it also indicted Aguasvivas-

Castillo and four other defendants for money laundering. The

indictment also sought an asset forfeiture of $20 million under

each substantive count (Counts 3 and 4). The jury convicted

Aguasvivas-Castillo on all counts.

At trial, the government proved that during the length of

the four and a half year conspiracy, food stamp recipients used

their EBT-debit cards to obtain cash in excess of the 25% limit at

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Aguasvivas-Castillo's three stores. In exchange for this illegal

service, Aguasvivas-Castillo and his co-conspirators profited: they

collected a commission of approximately 20-25% of every $100

cashed. Their commissions totaled, at a minimum, $4,440,744.29.

Aguasvivas-Castillo waived the right to have the asset

forfeiture determinations made by the jury and asked the court to

make the final forfeiture determinations. The court held the

forfeiture hearing on September 19, 2008.

The government argued that under 18 U.S.C. §§ 981 and

982, the total forfeitable amount was at least $20 million. Under

§ 982, the court "shall order that [a person convicted under 18

U.S.C. § 1956] forfeit to the United States any property, real or

personal, involved in such offense, or any property traceable to

such property." 18 U.S.C. § 982(a)(1). The government argued that

Aguasvivas-Castillo should forfeit $20 million under 18 U.S.C. §

982 because that was the total sum involved in the fraud.

In fact, the stores received $28,038,985.98 (not $20

million) in government food stamp funds over the course of the

conspiracy, which Aguasvivas-Castillo placed in six different

accounts. Aguasvivas-Castillo intermingled and concealed the

fraudulent food stamp proceeds within the total sum of $28 million

in these accounts, in order to shield the fraud. Throughout the

conspiracy, Aguasvivas-Castillo regularly withdrew cash from these

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accounts to operate the cash-intensive food stamp fraud/money

laundering venture.

Aguasvivas-Castillo argued at the forfeiture hearing that

because there was no way to quantify the total fraudulent amount,

he should not be ordered to forfeit $20 million. He also initially

argued that the fraudulent amount was $24,310 at most.

After permitting the parties to submit additional

briefing, the district court entered a preliminary order of

forfeiture on October 30, 2008. The court found that the United

States had proven by a preponderance of the evidence that the

amount of $20 million constituted "proceeds traceable to the

conspiracy to commit food stamp fraud . . . [and] money

laundering," and therefore was subject to forfeiture.

In his February 23, 2009, sentencing memorandum,

Aguasvivas-Castillo objected to this amount and requested a

downward sentence departure and/or variance. He argued that the

allegedly criminally-derived funds amounted to no more than

$334,4931 and that any money laundering was "incidental and

therefore, de minimis" to the scheme.

The January 27, 2009, pre-sentence report (PSR)

recommended that Aguasvivas-Castillo's convictions on Counts 1 and

2 be grouped together pursuant to U.S.S.G. § 3D1.2(d) since both

1
Aguasvivas-Castillo did not account for the difference
between this figure and his argument at the sentencing hearing that
the fraud amounted to no more than $24,310.

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offenses were based on a common loss amount, and that Count 2 be

used to determine the calculation under U.S.S.G. § 3D1.3(b) because

it produced the highest offense level. It recommended a base

offense level of eight under § 2S1.1(a)(2), plus a twenty-level

increase under § 2B1.1 based on the total loss amount; a two-level

increase under § 2S1.1(b)(2)(B), because Aguasvivas-Castillo was

convicted of 18 U.S.C. § 1956; a four-level increase pursuant to

U.S.S.G. § 2S1.1(b)(2)(C), because Aguasvivas was in the business

of laundering money; and a four-level increase under § 3B1.1(a),

because Aguasvivas-Castillo was a leader and organizer in a fraud

which involved five or more participants or was otherwise

extensive. Thus, with a total offense level of thirty-eight, and

a Criminal History Category of I, the PSR calculated

Aguasvivas-Castillo's guidelines range as 235 to 293 months of

imprisonment.

Aguasvivas-Castillo filed a supplemental objection to the

PSR and a motion for reconsideration of the court's preliminary

order of forfeiture, in which he argued for the first time that the

forfeiture violated the Excessive Fines Clause of the Eighth

Amendment on grounds of disproportionality.

On March 5, 2010, the court denied both of

Aguasvivas-Castillo's motions, applied the two recommended four-

level enhancements and ordered Aguasvivas-Castillo to forfeit $20

million.

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 For the sentencing calculation, the court relied on

§ 2S1.1(a) of the Sentencing Guidelines, which calculates the base

offense level applicable to money laundering crimes, including

theft, property destruction, and fraud. The court applied

§ 2S1.1(a)(2), which instructs courts to apply a base level of

eight "plus the number of offense levels from the table in § 2B1.1

. . . corresponding to the value of the laundered funds" where "the

defendant committed the underlying offense . . . but the offense

level for the underlying offense is impossible or impracticable to

determine." U.S.S.G. § 2S1.1 cmt. n.3(A).

The district court found that the offense level for the

fraud was impossible or impracticable to determine because an

accurate loss amount from the fraud was impossible to calculate:

"it could not be established which of the [NAP] transactions at the

three Aguasvivas supermarkets property of defendant were for actual

food purchases and which did not involve actual food purchases but

were recorded as such."

The court thus used the total value of the laundered,

fraudulent funds to determine the number of additional levels to

add to Aguasvivas-Castillo's base offense level of eight. In

calculating this amount, the court relied on evidence that

Aguasvivas-Castillo's stores had conducted 29,486 "food" purchase

transactions of $75.00 or more within sixty seconds or less of

prior food purchase transactions. Crediting the government's

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theory that these transactions could not be legitimate grocery

purchases, and that they thus established a minimum loss amount,

the court determined that, at a minimum, the fraudulent

transactions totaled $4,440,744.29. The court stated that it was

"keenly aware that the total amount of money laundered by defendant

through his illegal scheme was probably a lot more, . . . given the

impossibility to distinguish between the legitimate and

illegitimate food purchases and the particular definition of

laundered funds applicable to the guideline section at issue." As

a result, the court applied eighteen additional levels under

U.S.S.G. § 2B1.1(b)(1)(J) to the § 2S1.1(a)(2) base offense level

of eight, corresponding to the $4,440,744.29 loss amount, to reach

an adjusted base offense level of twenty-six.

The court overruled Aguasvivas-Castillo's objections to

the two four-level sentence enhancements, finding, with respect to

the § 2S1.1(b)(2)(C) enhancement, that under the totality of the

circumstances, Aguasvivas-Castillo was engaged in the business of

laundering funds, and further, that with respect to the § 3B1.1(a)

enhancement, Aguasvivas-Castillo had exercised a supervisory role

over five or more participants in the conspiracy. Based on a

calculated offense level of thirty-four and a Criminal History

Category of I, the court determined that the advisory guidelines

range for both counts, grouped together pursuant to U.S.S.G.

§ 3D1.2(d), was 151 to 188 months of imprisonment.

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 Later, at the sentencing hearing, the court gave

Aguasvivas-Castillo a downward variance, sentencing him to 60

months of imprisonment as to Count 1, and 108 months of

imprisonment as to Count 2, with the two sentences to be served

concurrently.

The court also ordered Aguasvivas-Castillo to "forfeit to

the United States the amount of $20,000,000 which is the proceeds

traceable to the conspiracy to commit food stamps fraud and the

money laundered."

II.

Aguasvivas-Castillo, well-represented on appeal, raises

three arguments. With respect to his sentence, he challenges the

district court's imposition of the two four-level enhancements, one

under U.S.S.G. § 3B1.1(a), for Aguasvivas-Castillo's status as a

leader or organizer in the offense, and the other under U.S.S.G.

§ 2S1.1(b)(2)(C), for his being in the business of laundering

funds. He also challenges the district court's $20 million

forfeiture order under the Eighth Amendment's Excessive Fines

Clause.

A. Sentence Enhancements

We review the district court's interpretation and

application of the Sentencing Guidelines de novo and any predicate

factual findings for clear error. United States v. Pol-Flores, 644

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F.3d 1, 4 (1st Cir. 2011) (quoting United States v. Bailey, 405

F.3d 102, 113 (1st Cir. 2005)).

Aguasvivas-Castillo argues that the court's application

of a § 2S1.1(b)(2)(C) four-level sentence enhancement for being in

the business of laundering funds should not have been applied to

him because he was not "in the business of laundering funds on

behalf of others thus gaining financially from engaging in such

transactions."

The district court held that under "[t]he totality of the

circumstances," Aguasvivas-Castillo "was clearly engaged in the

business of laundering funds." The court considered the six

factors listed in the Application Notes to § 2S1.1(b)(2)(C) for

determining whether a defendant is "in the business of laundering

funds": whether the defendant (1) regularly engaged in laundering

funds; (2) laundered funds for an extended period of time; (3)

laundered funds from multiple sources; (4) generated a substantial

amount of revenue in return for laundering funds; (5) had a prior

conviction for a money laundering related offense; or (6) made

statements during the course of an undercover government

investigation that he had engaged in any of the conduct listed in

factors (1), (2), (3), or (4). U.S.S.G. § 2S1.1 cmt. n.4(B).

For the first time on appeal, Aguasvivas-Castillo argues

that in order for § 2S1.1(b)(2)(C) to apply, the district court was

required to determine that he "did not commit the underlying

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offense." See id. § 2S1.1 cmt. n.4(A). Because he was convicted

of the underlying offense, food stamp fraud, he argues, the

enhancement cannot be applied to him. This is different from his

argument to the district court, which was that § 2S1.1(b)(2)(C)

should not be applied to him because, under the totality of the

circumstances, he was not engaged in the business of laundering

funds.

Aguasvivas-Castillo's new argument is either forfeited or

waived since he failed to raise it before the district court.

United States v. Falu-Gonzalez, 205 F.3d 436, 440 (1st Cir. 2000)

(applying this court's waiver rule in the sentencing context).

However, even assuming he is entitled to plain error review and his

failure to present the argument was not a strategic choice, he

nonetheless fails to meet the criteria for relief. See United

States v. Olano, 507 U.S. 725, 732-35 (1993).

It is far from clear that there was any error, even had

the issue been properly raised. Guideline § 2S1.1(a)(1) applies

where the defendant committed the underlying offense or would be

accountable for the underlying offense as relevant conduct.

Guideline § 2S1.1(a)(2) applies where the defendant did not commit

the underlying offense, or where the defendant did commit the

underlying offense, "but the offense level for the underlying

offense is impossible or impracticable to determine." Id. § 2S1.1

cmt. n.3(A). The latter is true here. The defendant committed the

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underlying offense of fraud, but his offense level was impossible

or impracticable to determine. Where Guideline § 2S1.1(a)(2)

applies, a four-level increase may be imposed if the defendant "was

in the business of laundering funds." Id. § 2S1.1(b)(2)(C).

However, there is some tension between the text of Guideline §

2S1.1(b)(2)(C) and its Application Notes and legislative history.

The text of Guideline § 2S1.1(b)(2)(C) does not limit its

application to the first prong of Guideline § 2S1.1(a)(2), where

the defendant did not commit the underlying offense. But the

Application Notes to Guideline § 2S1.1(a)(2) seem to so limit its

application: "The court shall consider the totality of the

circumstances to determine whether a defendant who did not commit

the underlying offense was in the business of laundering funds, for

purposes of subsection (b)(2)(C)." U.S.S.G. § 2S1.1 cmt. n.4(A)

(emphasis added).

The Commentary to Amendment 634, which revised § 2S1.1

and consolidated the money laundering guidelines in 2003, purports

to further define what is meant, under subsection (b)(2)(C), by "in

the business of laundering funds." See U.S.S.G. app. C, vol. II,

at 223 (2003). It says, "[t]he Commission determined that, similar

to a professional 'fence', see § 2B1.1(b)(4)(B), defendants who

routinely engage in laundering funds on behalf of others, and who

gain financially from engaging in such transactions, warrant

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substantial additional punishment because they encourage the

commission of additional criminal conduct." Id.

Defendant says he was not like a professional fence

because his business was selling groceries and not laundering funds

for others, and so he should not be punished under

§ 2B1.1(b)(2)(C).

The parties have cited no case law interpreting this

guideline, nor is it obvious what the outcome should be where the

same business from which the fraud arose is used to launder the

funds, and where a number of co-conspirators commit the fraud and

assist each other in laundering the fraudulent proceeds into the

business's larger pool of assets in order to hide the fraud. So

even if there was an error, we cannot say it was plain under Olano,

507 U.S. at 732-35.

It is also not clear that this issue mattered to the

sentence ultimately imposed. The four-level enhancement increased

the range from 97 - 121 months to 151 - 188 months. Had this

enhancement not been applied, most likely a two-level increase

would have been applied under § 2S1.1(b)(2)(B), since

Aguasvivas-Castillo was convicted under 18 U.S.C. § 1956. In any

event, the district court gave him a significant downward variance,

and sentenced him to 108 months. It found 108 months to be the

appropriate sentence under 18 U.S.C. § 3553(a).

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 Aguasvivas-Castillo did challenge in the district court

the application of the § 3B1.1(a) four-level enhancement for being

"an organizer or leader of a criminal activity that involved five

or more participants or was otherwise extensive." U.S.S.G.

§ 3B1.1(a).2 The district court found, and we agree, reviewing the

district court's factual findings for clear error, Pol-Flores, 644

F.3d at 4, that the evidence established Aguasvivas-Castillo's

supervisory role in the conspiracy.

A defendant acts as a leader where he "exercise[s] . . .

some degree or dominance of power in a hierarchy" and has

"authority to ensure other persons will heed commands," and he "may

be classified as an organizer, though perhaps not as a leader, if

he coordinates others so as to facilitate the commission of

criminal activity." United States v. Arbour, 559 F.3d 50, 55 (1st

Cir. 2009)(quoting United States v. Tejada-Beltran, 50 F.3d 105,

111 (1st Cir. 1995)) (internal quotation marks omitted).

The district court correctly considered the commentary to

§ 3B1.1 and its non-exhaustive list of seven factors in determining

whether the defendant exercised a supervisory role in the offense:

(1) the exercise of decision-making authority; (2) the nature of

the participation in the commission of the offense; (3) the

recruitment of accomplices; (4) the claimed right to a larger share

2
Aguasvivas-Castillo admirably concedes on appeal:
"[t]here is no doubt that more than five-participants [sic]
participated in the conduct alleged in the Indictment," so that
prong of the test is not at issue.

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of the fruits of the crime; (5) the degree of participation in

planning or organizing the offense; (6) the nature and scope of the

illegal activity; and (7) the degree of control and authority

exercised over others. U.S.S.G. § 3B1.1 cmt. n.4; see also Arbour,

559 F.3d at 55.

The evidence clearly established that Aguasvivas-Castillo

exercised a supervisory role over the conspiracy regardless of the

fact that certain store managers may also have exercised

supervisory roles over portions of the conspiracy because they were

in charge of the day-to-day operations of the stores. Aguasvivas-

Castillo was the president, owner, and sole shareholder of the two

corporations, AFMI and ABI, which owned the three supermarkets. He

certified the supermarkets as NAP-establishments and provided the

extensive documentation required. Although the three stores had

their own managers, Aguasvivas-Castillo received regular reports

from these managers as to the sales, deposits, and other financial

business occurring at the store. In addition, he exercised control

over employment decisions including the hiring, firing, and

relocations of the stores' managers.

Significantly, Aguasvivas-Castillo also controlled the

finances for the three stores. He was the sole signatory of the

stores' bank accounts, and exercised control over each account. He

received bank statements for the three accounts and prepared the

tax returns for the two holding corporations.

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 Aguasvivas-Castillo well knew about the illegal

operations. He was present on a number of occasions when illegal

food stamp transactions were being conducted, and he instructed the

store managers to conduct the illegal transactions. He provided

the stores with cash for the illegal transactions from the stores'

accounts and set the kickback fee amount. Finally, after the

execution of the federal search warrant at the stores, Aguasvivas-

Castillo provided instructions to the store managers to gradually

reduce the number of and eventually stop the illegal transactions.

B. The $20 Million Forfeiture

On appeal, Aguasvivas-Castillo makes two arguments that

the imposition of a $20 million forfeiture violates the Excessive

Fines Clause of the Eighth Amendment, only one of which, an

argument as to the disproportionality of the forfeiture, was raised

in the district court.

Aguasvivas-Castillo argues, for the first time on appeal,

that the $20 million forfeiture is unconstitutional under this

court's decisions in United States v. Levesque, 546 F.3d 78 (1st

Cir. 2008), and United States v. Jose, 499 F.3d 105 (1st Cir.

2007), because, he newly alleges, it will "deprive [him] of his

livelihood." We review only for plain error. Fed. R. Crim. P.

52(b) ("A plain error that affects substantial rights may be

considered even though it was not brought to the court's

attention."); Olano, 507 U.S. at 731-32; Jose, 499 F.3d at 108; see

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also United States v. Fogg, Nos. 09-1094, 09-1132, 2011 WL 5988232,

at *4-5 (1st Cir. Dec. 1, 2011) (to be published in F.3d). To

establish plain error, Aguasvivas-Castillo must demonstrate that

(1) there was error; (2) the error was plain; and (3) the error

affected the defendant's substantial rights. Olano, 507 U.S. at

732-35. Where there is plain error, the court must next consider

whether the error adversely impacted the fairness, integrity, or

public reputation of judicial proceedings. Id. at 735-37.

In Levesque, we held that defendants may raise whether

the forfeiture order is so excessive under the Eighth Amendment

that it would, in extreme cases, effectively deprive the defendant

of his or her future livelihood. 546 F.3d at 83. "This question

is separate from the three-part test for gross disproportionality

and may require factual findings beyond those previously made by

the district court." Id. at 85.

It is the defendant's burden, not the government's, to

raise the issue of future deprivation of livelihood. Fogg, 2011 WL

5988232, at *5. Aguasvivas-Castillo neither raised the issue in

the trial court nor put facts into the record on the topic. "[A]

defendant's inability to satisfy a forfeiture at the time of

conviction, in and of itself, is not at all sufficient to render a

forfeiture unconstitutional, nor is it even the correct inquiry."

Id. (quoting Levesque, 546 F.3d at 85). Even where a "defendant

does not have sufficient funds to cover the forfeiture at the time

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of the conviction, the government may seize future assets to

satisfy the order." United States v. Hall, 434 F.3d 42, 59 (1st

Cir. 2006); see also United States v. Katz, No. 10–1138, 2010 WL

4627872, at *1 (1st Cir. Nov. 15, 2010) (finding no plain error in

district court's forfeiture order where defendant argued for the

first time on appeal, without citing authority, that

"excessiveness" may be established with reference to the financial

burden created by the forfeiture order).

As the government notes, the Attorney General and

Secretary of the Treasury may remit a forfeiture on the grounds of

hardship to the defendant under 21 U.S.C. §§ 853(j), 881(d), and 19

U.S.C. § 1618, should a reason to do so exist. See United States

v. Ortiz-Cintrón, 461 F.3d 78, 82 (1st Cir. 2006).

Our review of Aguasvivas-Castillo's second argument,

which he raised in the district court, is de novo with due

deference given to any factual findings made by the district court.

Id. at 81. Aguasvivas-Castillo argues that the forfeiture amount

is disproportional to the gravity of his offense.

"A criminal forfeiture is unconstitutional under the

Excessive Fines Clause if it is grossly disproportional to the

gravity of the defendant's offense." Levesque, 546 F.3d at 83

(quoting United States v. Bajakajian, 524 U.S. 321, 337 (1998)

(original quotation marks omitted)). To determine whether a

forfeiture is grossly disproportional, courts should consider the

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following factors: "(1) whether the defendant falls into the class

of persons at whom the criminal statute was principally directed;

(2) other penalties authorized by the legislature (or the

Sentencing Commission); and (3) the harm caused by the defendant."

United States v. Heldeman, 402 F.3d 220, 223 (1st Cir. 2005)

(citing Bajakajian, 524 U.S. at 337-40).

The first factor is not at issue: Aguasvivas-Castillo

concedes that the criminal statute is principally directed at

offenders like him. As to the second, it is true that his gain

from the fraud was conservatively estimated at $4.4 million.

However, Aguasvivas-Castillo was also convicted of money

laundering, which explains the higher forfeiture amount. The

penalty amount authorized under the money laundering statute, 18

U.S.C. § 1956(b)(1)(A), is "the value of the property, funds, or

monetary instruments involved in the transaction." (Emphasis

added). In other words, the total funds "involved in" and

"traceable to" the money laundering includes any commingled funds.

See United States v. McGauley, 279 F.3d 62, 76-77 (1st Cir. 2002)

(citing United States v. Bornfield, 145 F.3d 1123, 1135 (10th Cir.

1998)). As we said in McGauley, "even legitimate funds that are

commingled with illegitimate funds can be forfeited if the

legitimate funds were somehow involved in the offense, such as by

helping to conceal the illegal funds." Id. at 76 (quoting United

States v. Baker, 227 F.3d 955, 970 n.4 (7th Cir. 2000); see also

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Bornfield, 145 F.3d at 1135 ("[F]orfeiture of legitimate and

illegitimate funds commingled in an account is proper as long as

the government demonstrates that the defendant pooled the funds to

facilitate, i.e., disguise the nature and source of, his scheme.").

Finally, there was no error in the court's weighing of

the harm caused by Aguasvivas-Castillo's crime. Puerto Rico

implemented the 25% limit on cash withdrawals on each food stamp

recipient's EBT-card in order to ensure that the recipients spend

the money on food. The 25% allowance for cash is meant to provide

flexibility to individuals for whom finding good prices is

especially important. The 75%/25% system is also meant to reduce

opportunities for fraud, and was directly subverted by defendant

and his co-conspirators. His actions had the real effect of

diverting food stamp funds from feeding people and introduced waste

into the program.

The deterrent effect of the forfeiture on other certified

retailers is also relevant. One study reported that in 2008, 2,725

retailers, approximately 10 percent of all retailers in Puerto

Rico, were NAP-certified. Implementing SNAP in Puerto Rico 74.

Aguasvivas-Castillo's actions also normalized the

defrauding of the government and the tolerance of criminal

behavior. The fraud occurred for many years and it involved

numerous food stamp recipients and store employees. All of this

was done out of greed by someone in a position of leadership who

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should have been a role model of proper and right behavior.

Instead, he was a role model for corruption. The forfeiture order

stands.

III.

For these reasons, we affirm the sentence and the

forfeiture order.

So ordered.

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