United States Court of Appeals
For the First Circuit
No. 05-1593
UNITED STATES OF AMERICA,
Appellee,
v.
GEORGE L. UPTON,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Lynch, Chief Judge,
Lipez and Howard, Circuit Judges.
Richard B. Klibaner, with whom Klibaner & Sabino, was on brief
for appellant.
John-Alex Romano, Attorney, Criminal Division, United States
Department of Justice, with whom Michael J. Sullivan, United States
Attorney and William F. Bloomer, Assistant United States Attorney,
were on brief, for appellee.
March 5, 2008
HOWARD, Circuit Judge. A jury convicted George Upton of
conspiracy to commit money laundering. In this appeal, he argues
that, by the time of his indictment, the statute of limitations
period had run on all of his conduct except for the filing of a
false tax return and the failure to file a tax return. Upton
asserts that, under governing Supreme Court precedent cabining the
government's ability to charge continuing conspiracies based on
subsequent acts of cover-up, the two tax offenses were not part of
the conspiracy. From this premise he contends both that he was
entitled to a jury instruction on the statute of limitations and
that the evidence was insufficient to convict him of conspiracy to
launder money within the applicable limitations period. He also
claims that the district court erred in admitting a hearsay
statement as an excited utterance. We affirm.1
I.
A. Background Facts
For purposes of assessing the sufficiency claim, we
recite the facts in the light most favorable to the verdict. See
United States v. Boulanger, 444 F.3d 76, 89 (1st Cir. 2006).
Upton owned Look Motors, Inc., a used car lot in Hyannis,
Massachusetts that sold automobiles and offered financing to
1
After oral argument in this case, the Supreme Court decided
Cuellar v. United States, 128 S. Ct. 1994 (2008). The case is
pertinent to the limitations issue raised and required further
consideration.
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customers who could not afford to make large down payments. In
connection with this enterprise, he had a business relationship
with Steven Queen, a lender.
On July 9, 1997, Queen traveled to Florida and removed a
large amount of cash from his parents' safe deposit box. Queen had
told several people of his plans prior to making this trip,
claiming that the money was his inheritance. Upton had heard about
Queen's trip and its purpose.
Upon returning from Florida on the evening of July 12,
1997, Queen left a suitcase containing $900,000 in cash in the
trunk of a car that was parked in the Look Motors parking lot and
went to dinner. Upton's daughter saw Queen place the suitcase in
the trunk of the car. She told Upton and his girlfriend of twenty
years, Lynn Alberico, about the suitcase. While Queen was at
dinner, Upton and Alberico removed the suitcase from the car. When
Queen returned to Look Motors and discovered that the suitcase was
missing, he accused Upton of stealing the money. Upton denied the
accusation and told Queen to leave. Distraught, Queen went to the
apartment of a friend and told her that the money he had taken from
his parents was gone.
Queen accused Upton of stealing the money on several
occasions, in public confrontations. Upton did not admit to Queen
that he had taken the money. During the fall of 1997, however,
Upton did admit to an acquaintance that he had stolen a suitcase
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with more than $900,000 in cash from Queen. In 1999, Alberico made
the same admission to her best friend.
On August 19, 1997, a month after the theft, Upton signed
a purchase and sale agreement to buy the property located at 89
Iyanough Road in Hyannis, Massachusetts for $120,000. He made a
$12,000 down payment by check; that check was returned for
insufficient funds, and Upton replaced it with $12,000 in cash.
Upton paid the $108,000 balance of the purchase price with thirteen
cashier's checks.
The cashier's checks had been acquired in several stages,
over the span of three days. Upton's brother, two friends, and a
Look Motors employee assisted Upton and Alberico. Upton provided
cash to these four people. Then, each person deposited the cash
into his or her personal bank account to purchase one or more
cashier's checks. Most of the deposits and checks were for sums
less than $10,000 and involved visits to multiple bank branches or
multiple visits to the same branch, in order to avoid federal
reporting requirements.2 The checks variously were made out to
Upton or to Alberico.
Alberico took title to the property in the name of "AU
Trust." That trust, created on the day of the closing, August 29,
1997, bears Alberico's and Upton's initials. Also on the day of
2
Pursuant to 31 U.S.C. § 5313(a) and 31 C.F.R. § 103.22, domestic
financial institutions are required to report currency transactions
involving more than $10,000 to the Internal Revenue Service.
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the closing, Alberico granted a sham mortgage on the property to
"Bostonians Trust of Florida," which did not then even exist. The
property was then rented out for $1,000 per month.
The 89 Iyanough Road property was sold on January 5,
1999, for $202,000. On January 6, the real estate attorney wrote
separate checks to Upton and Alberico for $39,850 each, and, less
than a week later, purchased bank checks made out to Upton and
Alberico for $52,948.21 each. Bank records indicate that these
checks were deposited into the accounts of Look Motors and
Alberico, respectively, in January 1999.
Upton eventually filed his 1997 federal income tax return
in July 2000, reporting a total income of $14,165. At the same
time, he also filed returns for 1994, 1995, and 1996. All of his
returns were prepared by his accountant, based on information
provided by Upton. The 1997 return was false in that it did not
disclose any portion of the $900,000 stolen from Queen, nor did it
disclose any portion of the rental income from 89 Iyanough Road for
the partial year 1997. Alberico's tax return for 1997, filed in
August 1998, also neglected to report any portion of the stolen
money or the rental income. Upton did not file a return for 1998.
Alberico filed a false return for 1998 in October 1999, again
failing to report rental income. Neither Upton nor Alberico filed
a tax return for 1999, the year in which each earned a substantial
capital gain from the sale of the property.
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B. Procedural History
In August 2002, a grand jury indicted Upton and Alberico
for money laundering and for structuring financial transactions to
evade reporting requirements, as well as for conspiracy to engage
in such structuring. On May 12, 2004, a superseding indictment
added counts of conspiracy to commit money laundering, in violation
of 18 U.S.C. §§ 1956(a)(1)(B), (h) and 1957(a); filing a materially
false income tax return for the year 1997, in violation of 26
U.S.C. § 7206(1); and failing to file an income tax return for the
year 1999, in violation of 26 U.S.C. § 7203.
The general five-year statute of limitations, 18 U.S.C.
§ 3282, applies to prosecutions for violations of the money
laundering and structuring statutes. For reasons not material to
this appeal, the filing of the superseding indictment established
May 12, 2004 as the relevant date for statute of limitations
purposes. Prosecution for alleged crimes committed prior to May
12, 1999 was thus barred by the statute of limitations.
Accordingly, the district court dismissed the counts carried over
from the original indictment alleging money laundering, structuring
and conspiracy to engage in structuring. Upton, 339 F. Supp. 2d at
196. Upton went to trial on the remaining charges of conspiracy to
commit money laundering and the two tax violations.3
3
Upton was tried in October 2004. Alberico's motion to sever had
been granted previously; she was tried separately in July 2005.
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During the charge conference, Upton did not request a
jury instruction on a statute of limitations defense to the
conspiracy count. The next day, however, at the completion of the
government's case in chief, he did request such an instruction.
The trial judge denied this request on the basis that Upton had
waived the request by failing to raise it at the charge conference.
At the completion of the government's case, Upton moved
unsuccessfully for judgment of acquittal on the basis that the
money laundering conspiracy charge was time-barred. After the jury
had been instructed at the close of the evidence, Upton objected to
the denial of his request for a statute of limitations instruction.
The court again ruled that Upton had waived his right to a jury
instruction on the statute of limitations because he did not raise
it at the charge conference.
The jury found Upton guilty on each of the three counts:
conspiracy to commit money laundering, filing a false tax return,
and failure to file a tax return. Following the verdict, the
district court denied Upton's renewed motion for judgment of
acquittal, United States v. Upton, 352 F. Supp. 2d 92, 100 (D.
Mass. 2005), and sentenced him to 162 months' imprisonment.
II.
Upton appeals only his conviction for conspiracy to
commit money laundering. He does not challenge his tax
convictions. As to the conspiracy conviction, he claims that the
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district court erred in not instructing the jury on the statute of
limitations; erred in denying his motion for acquittal on statute
of limitations grounds; and abused its discretion in admitting a
statement as an excited utterance.
A. Jury Instruction on Statute of Limitations
Upton contends that the district court erred by failing
to instruct the jury on the statute of limitations applicable to
the money laundering conspiracy. He argues that he has preserved
his objection to the court's failure to so instruct, and therefore
that harmless error is the appropriate standard of review. While
he acknowledges that he failed to request a written instruction at
the charge conference, Upton presses the fact that he raised his
objection after the charge conference but before the jury was
instructed, and again after the instructions were delivered to the
jury. Beyond this, he asserts that even if he has not preserved
his objection, the court's failure to give the instruction was
plainly erroneous. See United States v. Thurston, 358 F.3d 51 (1st
Cir. 2004), vacated on other grounds.
The appellant is not entitled to relief on this ground.
First, the claim of error is unpreserved. The requirements for
requesting a jury instruction are clear. Fed. R. Crim. P. 30(a)
provides as follows:
Any party may request in writing that the
court instruct the jury on the law as
specified in the request. The request must be
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made at the close of evidence or at any time
that the court reasonably sets.
(emphasis added). Upton concedes that he did not submit in writing
a request for an instruction on the statute of limitations; indeed,
he acknowledges that he withheld the request for a jury instruction
at the charge conference as part of his trial strategy. As he did
not meet the requirements for requesting a jury instruction, his
later objections to the jury instructions were deemed waived by the
trial judge.
That brings us to the question of how to treat the
unpreserved jury instruction issue. In United States v. Muñoz-
Franco, 487 F.3d 25, 54 (1st Cir. 2007), we held that the failure
to request a jury instruction constitutes waiver. The defendants
in Muñoz-Franco claimed that the district court erred in not
instructing the jury on the applicable statute of limitations, but
they had not raised that issue at any time prior to or during
trial, including in their post-trial Rule 29(a) motion. We held
that their claim was waived and thus not reviewable on appeal.
Pointing to Thurston, Upton argues that plain error
review is appropriate in this case. 358 F.3d at 63. It is not
necessary, however, to resolve any potential conflict between
Muñoz-Franco and Thurston here. Waiver is the "intentional
relinquishment or abandonment of a known right." United States v.
Olano, 507 U.S. 725, 733 (citation omitted) (emphasis added). The
right to a jury instruction can be waived by not requesting the
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instruction, or not objecting at the proper time. Fed. R. Crim. P.
30(a), (d). Upton deliberately chose not to request a statute of
limitations jury instruction at the charge conference as a matter
of trial strategy.4 The informed decision to decline to exercise
the right to request a specific jury instruction is a
straightforward example of an "intentional relinquishment" subject
to waiver.
Even were we to consider this an instance of forfeiture
and review the failure to instruct the jury on the statute of
limitations for plain error, we would conclude that there was no
plain error. Under the plain error standard, Upton must show that
"the trial court committed an error, that the error was 'plain,'
and that the error affected the substantial rights of the
appellant." United States v. Colon-Nales, 464 F.3d 21, 25 (1st
Cir. 2006) (citing Olano, 507 U.S. at 732). Further, error is to
be corrected only if it "seriously affects the fairness, integrity
4
Upton points out that a defendant may face a difficult decision
when a charge conference is held before the close of the
government's case: raising a defense at that point might alert the
government to a weakness in its case and encourage the government
to seek additional evidence. Nevertheless, the district court is
vested with the authority to manage trials, United States v.
Saccoccia, 58 F.3d 754, 770 (1st Cir. 1995), including setting a
time for the charge conference that parties must adhere to or face
the consequences. Here, the charge conference was the day before
the government closed the evidence in its case. The timing of the
conference was entirely reasonable, and we need not explore
application of the rule to situations presenting an extreme gap in
timing between the conference and the close of the evidence.
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or public reputation of judicial proceedings." Olano, 507 U.S. at
736 (internal citation and quotation marks omitted).
The trial court did not commit plain error in declining
to instruct the jury on the statute of limitations. Rule 30(a) is
clear, and Upton failed to meet its strictures. The district judge
acted within her discretion to deny Upton's requested instruction
because the request was untimely.
B. Motion for Acquittal on Statute of Limitations
Presented as a challenge to the sufficiency of the
evidence, Upton argues that the district court should have granted
his motion for acquittal on the conspiracy count because the
statute of limitations bars his conviction. The essence of this
sufficiency claim is that there was no evidence that the conspiracy
continued to a time that was within five years of the May 12, 2004
superseding indictment. Upton argues that the money laundering
objective of the conspiracy was achieved no later than when the
conspirators sold the Iyanough Road property in January 1999. His
failure to file a return for 1999 and his July 2000 filing of a
false tax return for 1997 were, he says, at most unilateral acts
intended to cover up the conspiracy after its termination. Relying
on Grunewald v. United States, 353 U.S. 391 (1957), Upton argues
that the tax violations must be viewed as no more than attempts at
covering up a completed conspiracy. As such, under Grunewald they
cannot constitute acts in furtherance of the conspiracy.
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The government counters that Grunewald does not bar this
prosecution. Rather, because the indictment charged a conspiracy
the main objective of which was concealment, Grunewald's limiting
principle has no applicability to this case.
1.
We review de novo the denial of a motion for judgment of
acquittal based on the insufficiency of the evidence. United
States v. Hatch, 434 F.3d 1, 4 (1st Cir. 2006). A motion for
judgment of acquittal is only granted if "the evidence and all
reasonable inferences to be drawn from the evidence, both taken in
the light most favorable to the government, are insufficient for a
rational factfinder to conclude that the prosecution has proven,
beyond a reasonable doubt, each of the elements of the offense."
United States v. Pimental, 380 F.3d 575, 583 (1st Cir. 2004).
To determine whether Upton's motion for acquittal based
on the statute of limitations should have been granted, we look
backward from the date of the superseding indictment and assess
whether the evidence, taken in the light most hospitable to the
verdict, was such that the jury could reasonably have concluded
that the conspiracy did not end until May 12, 1999 or later. See
United States v. Walsh, 928 F.2d 7, 11-12 (1st Cir. 1991). The
question boils down to whether the jury could have supportably
found that either or both of the tax offenses that Upton committed
in 2000 were part of the conspiracy, and the wrinkle is Upton's
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assertion that Grunewald requires us to view the tax violations as
acts of cover-up beyond the scope of the conspiracy.
A conspiracy endures as long as the co-conspirators
endeavor to attain the "central criminal purposes" of the
conspiracy. Grunewald, 353 U.S. at 401. In this case, the
indictment charged that Upton and Alberico conspired to violate 18
U.S.C. §§ 1956(a)(1)(B) and 1957(a). Section 1956(a)(1)(B)
prohibits engaging in financial transactions involving the proceeds
of unlawful activities:
knowing that the transaction is
designed in whole or in part–-
(i) to conceal or disguise the nature,
the location, the source, the ownership, or
the control of the proceeds of specified
unlawful activity ...
18 U.S.C. § 1956(a)(1)(B) (emphasis supplied). The focus of the
prohibition is thus trained on the design to conceal or disguise.
The concealment feature distinguishes § 1956(a)(1)(B) from §
1957(a). Section 1957(a) prohibits monetary transactions in
criminally derived property, but does not contain an element of
concealment or disguise.
The Supreme Court has recently examined language in §
1956(a)(2) that is identical to the language of the section at
issue in this case, § 1956(a)(1)(B)(i). In Cuellar, 128 S. Ct.
1994, the Court considered whether certain conduct violated §
1956(a)(2)'s proscription against "transportation" of proceeds with
knowledge that the transportation was designed to conceal or
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disguise the nature, location, source, ownership or control of the
proceeds. The Court emphasized that in the phrase "designed ... to
conceal or disguise," "'design' means purpose or plan"; i.e., the
intended aim of the transportation. 128 S. Ct. at 2003. As the
pertinent language of § 1956(a)(1)(B) is identical to that of §
1956(a)(2)(B), we conclude that Congress's use of "designed ... to
conceal or disguise" in (a)(1)(B) likewise requires the government
to prove that there was a purpose or plan to conceal or disguise.
See Gustafson v. Alloyd Co., Inc., 513 U.S. 561, 562 (1995) ("The
normal rule of statutory construction [is] that identical words
used in different parts of the same Act are intended to have the
same meaning."); see also Finnegan v. Leu, 456 U.S. 431, 438 n.9
(1982) (noting that "if Congress had intended identical language to
have substantially different meanings in different sections of the
same enactment it would have manifested its intention in some
concrete fashion.").
The conspiracy count in the indictment explicitly
invoked the concealment money laundering prohibition of 18 U.S.C.
§§ 1956(a)(1)(B), charging Upton with the intent to conceal
material characteristics of the stolen money. The indictment
alleged, as the "manner and means" of carrying out the conspiracy,
that the defendants used the stolen monies to make the multi-
layered purchase of 89 Iyanough Road in August of 1997; that Upton
commingled additional theft proceeds with business receipts of Look
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Motors on more than twenty occasions during the remainder of 1997;
that Alberico filed a false tax return for 1997 in 1998 that did
not disclose the theft income or her rental income from the
Iyanough road property; and that:
"It was part of the conspiracy that
[defendants] attempted to conceal or disguise
the nature, location, source, ownership, or
control of the illegal cash proceeds by
failing to file income tax returns, or declare
a capital gain from the sale of the commercial
property, for the tax year 1999 [and Upton
attempted to conceal or disguise] by filing a
materially false federal income tax return . .
. that failed to declare the receipt of the
illegal income or the rental income from the
property in 1997."
The indictment thus put Upton on notice, at a minimum,
that his concealment of the capital gain from the sale of 89
Iyanough Road was part and parcel of the alleged means of carrying
out the charged conspiracy.5 To sustain its burden of proof, the
government had to establish that Upton conspired to engage in
transactions with the intended aim of concealing or disguising
certain attributes of the funds involved. And to avoid the statute
of limitations bar, it also had to prove that one of the tax
offenses was in furtherance of the central objective of the
conspiracy.
5
The indictment did not expressly allege the sale of the Iyanough
Road property in January 1999 as a money laundering transaction,
but as we have noted, the indictment did allege that the
concealment of capital gain on the sale was part of the conspiracy.
In any event, Upton does not make any claim of variance and does
not contest that the sale was part of the conspiratorial object.
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Determining the contours of the conspiracy ordinarily is
a factual matter entrusted largely to the jury. United States v.
Moran, 984 F.2d 1299, 1303 (1st Cir. 1993). Consistent with the
allegations in the indictment, the government introduced evidence
that Upton and Alberico purchased the 89 Iyanough Road property in
August 1997 and sold it in January 1999. The pair converted cash
into cashier's checks to finance the initial purchase of the
property, set up the sham mortgage, and took title in the name of
"AU Trust." Upton commingled additional theft proceeds with
business income. Alberico filed a false 1997 tax return, omitting
the theft proceeds and rental income. Neither Upton nor Alberico
filed tax returns for 1999 -- the year in which they were required
to report a capital gain on the sale.
From this evidence the jury reasonably could have found
that Upton's failure to file the 1999 return was in furtherance of
the central objective of the conspiracy. Specifically, the jury
supportably could have concluded that the failure to file his 1999
return in the ordinary course facilitated the concealment aim of
the money laundering transactions. That act of omission may have
had special significance to the jury, because in his 1999 return
Upton was required to disclose not only any rental receipts but
also the capital gain he realized on the sale of the property. The
jury may have also found it significant that Alberico, too, did not
file a return for 1999, contrary to her practice in previous years.
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The capital gains disclosures they were required to make easily
could have unraveled the entire money-laundering scheme, not only
subjecting them to prosecution, but also resulting in the
forfeiture of the proceeds. See 18 U.S.C. § 981(a). Avoiding such
an outcome, whereby their use of the proceeds would be thwarted,
was a primary goal of the concealment money laundering conspiracy,
or so the jury could have found.6
2.
In the face of this evidence, Upton argues that the
Grunewald imposes a limitation on the ability of subsequent acts of
6
The government says that Upton's filing in 2000 of a false 1997
return was also an act in furtherance of the conspiracy. It may
have been, although the act occurred more than two years after
Upton would have been expected to file a return, and almost two
years after his coconspirator Alberico similarly filed a false
return. We need not definitively resolve whether that Upton's false
filing was in furtherance of the conspiracy. The evidence of the
conspirators' parallel failures to file 1999 tax returns was
sufficient for the jury to conclude that the conspiracy lasted at
least until May 12, 1999. But that does not by any stretch render
Upton's 2000 filing irrelevant. At a minimum, the fact of the
false filing was admissible to show, and was strong evidence of,
Upton's knowledge that the 1997 purchase was designed to conceal
characteristics of the unlawful proceeds. In addition, coming as
it did in the same time frame as Upton's failure to file a tax
return for 1999, his guilty knowledge associated with the June 2000
false filing solidifies the inference that the reason for the
failure to file was in fact to prevent discovery of the money
laundering conspiracy. The 1997 returns filed by both conspirators
were false in that they did not disclose the receipt of the stolen
funds. Pointedly, they also failed to disclose the rental income
from the Iyanough Road property, further cementing the inference
that ownership of that property was part of a design to disguise or
conceal.
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concealment to extend the life of a conspiracy.7 At bottom, as we
have noted, the argument is that acts that constitute an attempt to
cover up a completed crime do not extend the duration of the
conspiracy. See Grunewald, 353 U.S. at 401 (it is not enough that
the defendants "took care to cover up their crime in order to
escape detection and punishment"). According to Upton, his failure
to file a 1999 tax return and his July 2000 filing of a false 1997
tax return were, at most, attempts to cover up completed financial
transactions, namely, the buying and selling of the Iyanough Road
property in August 1997 and January 1999. Thus, he maintains,
under Grunewald the acts of concealment represented by the two tax
offenses could not extend the life of the conspiracy. In support
of this argument, Upton cites United States v. LaSpina, 299 F.3d
165, 176 (2d Cir. 2002), for the proposition that a conspiracy with
an economic transaction as its objective lasts only until the
"anticipated economic benefits" of that transaction are received.
Id.
7
In Grunewald, decided under the general conspiracy statute, 18
U.S.C. § 371,the defendants had been charged with conspiracy in
connection with a scheme to obtain "no prosecution" rulings by
bribing an IRS official in two discrete tax cases. Based primarily
on a concern that the statute of limitations otherwise would be
open-ended, the Court concluded that later acts of cover-up did not
extend the duration of the conspiracy. Subsequently, in Forman v.
United States, the Court held a conspiracy to have continued into
the relevant limitations period, where the indictment alleged that
the conspiracy included the acts of concealment, and where the
concealment was necessary for the successful completion of the
scheme. 361 U.S. 416, 423-24 (1960).
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If covering up a completed conspiracy to violate 18
U.S.C. § 1957(a), by engaging in monetary transactions in
criminally derived property, were all that the two tax offenses
accomplished, the argument might have merit. Here, however, as we
have noted, Upton was also charged with conspiring to violate §
1956(a)(1)(B) by engaging in financial transactions designed to
conceal or disguise certain characteristics of the proceeds of
unlawful activity. The objective of the conspiracy was more than
the specific monetary transactions of buying and selling 89
Iyanough Road. The objective was to engage in concealment money
laundering in order to obscure the illicit source of the funds and
the conspirators' continued control of the proceeds. Accordingly,
Upton's argument fails to gain traction.8
To be sure, in some cases the crime of concealment money
laundering may be completed at the time the transaction itself is
consummated. In this case, for example, there was a wealth of
evidence that the purchase of the Iyanough Road property in 1997
constituted concealment money laundering. But that the evidence
might have shown that the 1997 purchase of property constituted
concealment money laundering does not mean that the conspiracy to
8
Upton's citation to LaSpina is inapposite. The conspiracy in
LaSpina differed materially from the conspiracy in this case.
LaSpina involved a conspiracy whose purpose was to engage in
monetary transactions in criminally derived property, in violation
of 18 U.S.C. § 1957(a). The reasoning in LaSpina thus applies to
conspiracies without an element of concealment.
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commit concealment money laundering ceased at that time or, for
that matter, with the sale of the property in 1999.9
Where, as we have established is the case here, the
substantive crime that is the object of the conspiracy has the
intent to conceal as an element, the success of the conspiracy
itself may depend on further concealment. Consequently, additional
acts of concealment that facilitate the central aim of the
conspiracy are in furtherance of the conspiracy. See, e.g., United
States v. Goldberg, 105 F.3d 770, 774 (1997) (acts of tax evasion
were "integral and self-evident part of" fraud conspiracy charged
under 18 U.S.C. § 371); United States v. Mann, 161 F.3d 840, 859
(5th Cir. 1998) (acts designed to frustrate regulatory oversight
were "central" to conspiracy involving fraud within savings and
loan institution); United States v. Esacove, 943 F.2d 3, 5 (5th
Cir. 1991) (acts designed to protect money laundering conspiracy
against government investigation held "necessary" part of
conspiracy). And, as noted above, the jury was entitled to infer
that the conspirators' parallel failures to file tax returns for
9
In Grunewald, the court observed that subsequent acts of
concealment may well facilitate the success of the substantive
crime and thus be in furtherance of the conspiracy, as when a car
thief repaints the stolen vehicle. 353 U.S. at 405. The purpose
of concealment money laundering is to make proceeds appear
legitimate, especially to the government. Preventing the
authorities from discovering the illicit nature of the proceeds, by
concealing the existence or financial impact of the money
laundering transactions, is as much a part of the ongoing
conspiracy to launder money as repainting the car is a part of a
theft conspiracy.
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1999 were part of an ongoing plan to engage in concealment money
laundering, rather than merely being later attempts to cover up a
completed crime. See United States v. Dazey, 403 F.3d 1147, 1159
(10th Cir. 2005) ("[T]he jury may infer conspiracy from the
defendants' conduct and other circumstantial evidence indicating
coordination and concert of action.").
3.
Upton presents another argument. Even assuming that he
engaged in acts of concealment that could be considered to be in
furtherance of the main objectives of the conspiracy, no conspiracy
could have existed in this case because he and Alberico never
expressly agreed to engage in acts of concealment. The Court's
decision in Grunewald, he posits, requires that the government
present proof of defendant's express agreement to conceal. See
United States v. Twitty, 72 F.3d 228, 234 (1st Cir. 1999). The
government, Upton contends, failed to present such evidence. In
fact, Upton argues that the record evidence actually supports his
contention that no such express agreement existed and that, as a
result, any acts of concealment were undertaken unilaterally. This
is because the record indicates that, by the summer of 1999, he and
Alberico were estranged.
Upton's argument misses the point. In Grunewald, the
Court drew a distinction between "acts of concealment done in
furtherance of the main objectives of the conspiracy," and "acts of
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concealment done after these central objectives have been attained
for the purposes of covering up after the crime." 353 U.S. at 405.
Where the latter is involved, the government must present some
proof of an express original agreement to engage in the acts of
concealment. See Twitty, 72 F.3d at 234. However, nothing in the
case law imposes a requirement that conspirators expressly agree to
engage in acts of concealment where those acts are done in
furtherance of the main objectives of the conspiracy.10 Rather, the
acts of concealment committed by one co-conspirator need only have
been "foreseeable" to the other co-conspirator. See United States
v. Hansen, 434 F.3d 92, 103 (1st Cir. 2006); United States v.
Pinillos-Prieto, 419 F.3d 61, 69 (1st Cir 2005).
Here, as established above, a reasonable jury could
conclude that the acts of concealment in this case, specifically
the failure of Upton and Alberico to file 1999 tax returns, were
done in furtherance of the main objectives of the conspiracy.
And, moreover, these acts would have plainly been foreseeable to
both conspirators. Not filing returns was an "integral and
self-evident part of" the conspiracy -- had either Upton or
Alberico not hidden the proceeds of the house sale, this would have
10
In fact, cases like Mann, 161 F.3d at 859 and Davis, 623 F.2d at
192 indicate that no such requirement exists.
-22-
defeated the primary purpose of the conspiracy. Goldberg, 105 F.3d
at 774.11
4.
In his final attempt at excluding the tax offenses from
consideration, Upton suggests that his estrangement from Alberico
in the summer of 1999, alluded to above, amounted to a withdrawal
from the conspiracy. This argument is waived. See United States
v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("[I]ssues adverted to
in a perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived."). In any event, the standard
for recognizing a conspirator's withdrawal from a conspiracy is
exacting. Even were this argument not waived, Upton cannot
demonstrate his withdrawal from the conspiracy. See United States
v. Dunn, 758 F.2d 30, 38 (1st Cir. 1985) ("[A] conspirator must act
affirmatively to either defeat or disavow the purpose of the
11
Although it is unnecessary to our analysis, we note further that
a reasonable jury could have concluded that Upton and Alberico had
expressly agreed to engage in acts of concealment. Upton and
Alberico acted in tandem when they both failed to file returns in
1999. This concerted activity is circumstantial evidence that an
express agreement to conceal was in place.
Of course, Upton and Alberico did not act in complete concert
at all times. For example, in 1998 Alberico filed a false return
for 1997 omitting the stolen Queen money, whereas Upton waited
until 2000 to file a false return for 1997. But that other
evidence conceivably supports the absence of an express agreement
to conceal is not dispositive in this sufficiency of the evidence
case. See United States v. Ortiz, 447 F.3d 28, 34 (1st Cir. 2006)
("[C]ompeting inferences are not enough to disturb a jury's
verdict").
-23-
conspiracy"; mere disagreement with co-conspirators is insufficient
to constitute withdrawal.).12
C. Hearsay Evidence
Upton argues that the district court erred in admitting
as an excited utterance Queen's hearsay statement to his friend
Janet Hoell that "the money was gone" on the night of the theft of
the suitcase. Fed. R. Evid. 803(2) creates an exception to the
rule against hearsay for "[a] statement relating to a startling
event or condition made while the declarant was under the stress of
excitement caused by the event or condition." Upton contends that
because six hours elapsed between the startling event -- the
disappearance of the suitcase full of money -- and Queen's
statement to Hoell, the statement could not have been made while
Queen was "under the stress of excitement" of the loss of the
money. Fed. R. Evid. 803(2).
12
Upton does present an additional argument that merits only
summary treatment. He contends that, for statute of limitation
purposes, the indictment in this case barred consideration of his
tax crimes because it failed to: (1) allege that he and Alberico
agreed to commit those tax crimes and (2) charge him with
conspiring to commit money laundering with the intent to evade
taxes or file a false return in violation of 18 U.S.C. §
1956(a)(1)(A)(ii). "[A]n indictment is sufficient if it, first,
contains the elements of the offense charged and fairly informs a
defendant of the charge against which he must defend, and, second,
enables him to plead an acquittal or conviction in bar of future
prosecutions for the same offense." United States v. Cianci, 378
F.3d 71, 81 (1st Cir. 2004) (citation and internal quotations
omitted). A review of the indictment in this case makes plain
that the indictment's language was sufficient to put Upton on
notice of the conspiracy charge against him.
-24-
We review the admission of evidence after an objection
for an abuse of discretion. See United States v. Garcia, 452 F.3d
36, 38 (1st Cir. 2006). We will only vacate a jury verdict if an
improperly admitted statement was not harmless -- that is, if its
admission "'likely affected the outcome of trial.'" United States
v. Castellini, 392 F.3d 35, 52 (1st Cir. 2004) (quoting United
States v. Torres-Galindo, 206 F.3d 136, 141 (1st Cir. 2000)).
If the admission of the statement was error at all, which
we needn't decide, it was harmless for two reasons. First, the
statement itself likely did little to influence the jury.
Conspiracy to commit concealment money laundering involves an
agreement to conceal the nature of proceeds that were unlawfully
obtained. Here, in order to prove the element that the proceeds
had been illegally obtained, the government had to show that Upton
stole the money that he subsequently laundered. Queen's statement
does not demonstrate that the money was even stolen, much less that
Upton was the one who stole it. While Queen's statement does
provide support for the idea that the money disappeared from the
trunk of the car during a specific time frame, it does not
implicate Upton.
Second, the government presented plenty of evidence that
Upton did in fact steal the money. Upton's friend Phidias Dantos
testified that Queen accused Upton of stealing the money shortly
after the theft occurred. More significantly, Colleen Otto
-25-
testified that Alberico told her that Alberico and Upton had taken
the money, and Edwin Jones testified that Upton revealed to him
that he had stolen the money. Look Motors's bookkeeper, Lucy Webb,
testified that Upton declined to tell her where he got the money to
purchase 89 Iyanough Road, saying that he wanted to "maintain her
innocence." And the additional evidence of Upton's money
laundering activities provided strong support for the inference
that he and Alberico had obtained a large sum of money around the
time the suitcase was stolen from Queen. If it was anything,
Queen's statement was merely icing on the cake.
Upton nevertheless contends that the admission of Queen's
statement cannot constitute harmless error. He argues that Queen's
statement bolstered the testimony of Otto and Jones, witnesses who
he says were in need of bolstering because of their dubious
credibility.13 There are two problems with this argument. First,
the bolstering complaint applies only to Otto and Jones. As we
have explained, the testimony of Otto and Jones was not the only
evidence indicating that Upton stole the money from Queen. Second,
in addition to credibility being a matter for the jury to
determine, it is doubtful that the credibility of Otto and Jones
13
Upton challenges Jones's credibility in two aspects: Jones was
serving time on drug charges and testified in return for a
reduction in his sentence; and, Jones may have been seeking revenge
against Upton because Upton tipped off the police to Jones's drug
dealing activities several years ago. Upton also challenges
Alberico's comments to Otto as potentially motivated by a desire to
incriminate Upton following their breakup.
-26-
needed bolstering from Queen's statement in any event. Their
testimony was supported by other evidence. Otto's testimony that
Alberico admitted that she and Upton took the suitcase of money to
a hotel was supported by hotel records introduced at trial
revealing that Upton rented a hotel room for two people on the
night Queen returned from Florida. Otto's further testimony that
Alberico said she had spent part of her share of the money during
a trip to Italy was corroborated by airline and credit card records
showing that Alberico was in Italy during February 1999. Jones
testified that in 1997 Upton gave him cash from a "shoebox full of
money" and that the money "looked old" and was dated from the
1950s; this description is consistent with the proposition that the
money was earned by Queen's father throughout his life and
subsequently stored in a safe deposit box.
In short, Queen's statement to Hoell is cumulative of
other evidence in the record. Regardless of whether admitting the
statement as an excited utterance may have been error, any such
error was harmless.
For the reasons expressed above, we uphold Upton's
conviction.
Affirmed.
-Dissenting Opinion Follows-
-27-
LIPEZ, Circuit Judge, dissenting in part. The
relationship between the concealment at issue in Upton's conspiracy
to commit money laundering and the concealment associated with his
subsequent tax crimes is complex. The majority misapplies the
relevant legal principles and, consequently, wrongly concludes that
Upton's failure to file a 1999 tax return was conduct within the
scope of the money laundering conspiracy. In so doing, the
majority embraces the government's misguided attempt to remedy a
statute of limitations problem by stretching the money laundering
conspiracy beyond its justifiable limits to include Upton's
independent tax crime.
As the majority notes, the district court had dismissed
before trial, on statute of limitations grounds, counts alleging
money laundering, structuring, and conspiracy to engage in
structuring. To salvage its money laundering conspiracy charge,
the government sidestepped the Supreme Court's teaching in
Grunewald v. United States, 353 U.S. 391 (1957), which – given the
evidence presented – bars treating the tax fraud as conduct that
furthered the conspiracy. If, as Grunewald requires, Upton's tax
evasion were eliminated from the scope of the conspiracy, no act in
furtherance of the money laundering scheme would fall within the
five-year statute of limitations period – and the jury's guilty
verdict on the conspiracy count could not stand. Because the
-28-
majority's decision to uphold the verdict conflicts with the
governing precedent, I respectfully dissent.14
I.
In Grunewald, the Supreme Court drew a distinction
between acts of concealment that furthered a charged conspiracy and
subsequent acts of concealment done "for the purpose only of
covering up after the crime." Id. at 405. If the acts at issue
were of the latter type – i.e., they did not further "the main
criminal objectives of the conspiracy" – the concealment would not
extend the duration of the conspiracy for purposes of the statute
of limitations. Id.; see also United States v. Twitty, 72 F.3d
228, 233 (1st Cir. 1995).
That distinction, the Court explained, was governed by
"important considerations of policy" that hearkened back to prior
cases "repeatedly warn[ing] that we will view with disfavor
attempts to broaden the already pervasive and wide-sweeping nets of
conspiracy prosecutions." Grunewald, 353 U.S. at 404. Routinely
viewing concealment efforts as part of a conspiracy would "wipe out
the statute of limitations in conspiracy cases" and "result in a
great widening of the scope of conspiracy prosecutions" because
"every conspiracy will inevitably be followed by actions taken to
14
My objections to the majority's reasoning also apply to its
decision in the separate appeal of Upton's co-defendant, Alberico,
who also challenged her conviction for conspiracy to commit money
laundering on statute of limitations grounds.
-29-
cover the conspirators' traces." Grunewald, 353 U.S. at 402.
Hence, the Court rejected "the proposition that the duration of a
conspiracy can be indefinitely lengthened merely because the
conspiracy is kept a secret, and merely because the conspirators
take steps to bury their traces, in order to avoid detection and
punishment after the central criminal purpose has been
accomplished." Id. at 405.
Thus, if Upton's tax evasion were conduct designed to
cover up the money laundering conspiracy after the crime had been
accomplished, rather than conduct undertaken to further the
conspiracy's central criminal purpose – laundering the stolen money
– the money laundering conspiracy charge would be time-barred. Two
possible theories, however, could support a conclusion that the
failure to file a 1999 tax return furthered the charged conspiracy
for purposes of the statute of limitations. First, if the evidence
showed that the conspiracy embraced "an express original agreement
among the conspirators to continue to act in concert in order to
cover up" the crime, those acts of concealment could "properly be
regarded as in furtherance of the conspiracy." Id. at 404, 397.
In such instances, the cover-up would be not only foreseeable – as
it would be with all crimes – but the explicit objective of "a
subsidiary conspiracy to conceal." Id. at 402.
Second, the tax fraud would be within the scope of the
money laundering conspiracy if it could be viewed as an act of
-30-
concealment done in furtherance of the main criminal objective of
the conspiracy. In Grunewald, the defendants had fraudulently
obtained "no prosecution" rulings from the Bureau of Internal
Revenue on behalf of two companies seeking to avoid tax evasion
charges, and the defendants later took steps to conceal their
fraudulent activity. Id. at 395-96. The Supreme Court observed
that the "no prosecution" rulings obtained in 1948 and 1949 had
been the main objective of the conspiracy presented to the jury,
and the subsequent efforts to conceal the irregularities – the
conduct occurring within the statute of limitations period – could
only have been for the purpose of avoiding apprehension, rather
than to further the conspiracy's already completed objective. Id.
at 405-06. The Court acknowledged, however, that some acts of
concealment are so closely linked in time and purpose to the
accomplishment of the conspiracy that they are "in furtherance of
the objectives of the conspiracy itself." Id. at 405. The Court
cited the concealment of kidnappers who hide while awaiting ransom
and the repainting of a stolen car as instances in which "the
successful accomplishment of the crime necessitates concealment."
Id.
The majority premises its analysis primarily on the
second theory, concluding that "[n]ot filing returns was an
'integral and self-evident part of' the conspiracy," but it asserts
in a footnote that a reasonable jury could have concluded as well
-31-
that Upton and Alberico had expressly agreed to engage in acts of
concealment. I therefore consider both theories, looking first at
the possibility of an express agreement to conceal.
II.
In asserting that the conspiracy in this case embraced
the acts of concealment in the aftermath of the money laundering
transactions, the majority emphasizes that, pursuant to the money
laundering statute, the indictment charged Upton with conspiring
"to conceal or disguise," inter alia, the source and control of the
stolen $900,000. See 18 U.S.C. § 1956(a)(1)(B).15 The majority
concludes that, because of this concealment language, "[t]he
objective of the conspiracy was more than the specific monetary
transactions of buying and selling 89 Iyanough Road," but included
the purpose "to obscure the illicit source of the funds and the
conspirators' continued control of the proceeds." It reasons that,
because the money laundering crime that was the objective of the
15
That provision states, in relevant part:
(a)(1) Whoever, knowing that the property involved in a
financial transaction represents the proceeds of some
form of unlawful activity, conducts . . . such a
financial transaction which in fact involves the proceeds
of specified unlawful activity––
(B) knowing that the transaction is designed in
whole or in part––
(i) to conceal or disguise the nature, the location,
the source, the ownership, or the control of the proceeds
of specified unlawful activity . . . .
shall be sentenced to a fine . . . or
imprisonment . . . .
-32-
conspiracy included a concealment element, the tax fraud was within
the conspiracy's scope.
The concealment element in the money laundering statute
does not, however, bring within the scope of the money laundering
conspiracy all conduct undertaken by the defendants to conceal the
theft of the $900,000. The concealment element of section
1956(a)(1)(B) goes to the defendant's state-of-mind when engaging
in the prohibited transactions. The statute makes unlawful the
conduct of a financial transaction "knowing that the transaction is
designed in whole or in part . . . to conceal or disguise" the
origin or control of unlawfully obtained property. In other words,
the jury in this case had to find that Upton conspired to commit
money laundering transactions that were undertaken for the purpose
of concealing the crime from which the laundered proceeds were
derived (here, the theft of the $900,000). The statutory state-of-
mind requirement does not, however, transform subsequent acts of
concealment that do not involve financial transactions – whether
designed to hide the money laundering activity or, like the money
laundering itself, to hide the original theft – into conduct that
is within the money laundering conspiracy.
Under Grunewald, efforts to conceal the money laundering
conspiracy after the conspiracy's primary aim (the deceptive
financial transactions) has been achieved may be included within
the scope of the conspiracy only if the evidence permits the jury
-33-
to find that the defendants' "original agreement" explicitly
included a subsidiary objective to cover up their crime. See
Grunewald, 353 U.S. at 404 (emphasis added). In other words, there
must be some evidence of an agreement between the defendants,
entered into before they commit the crime that is the object of the
conspiracy, to continue to act jointly to cover up their unlawful
activity. Only where there is such a pre-crime agreement will acts
of covering up after the crime reveal "more than that the
conspirators do not wish to be apprehended – a concomitant . . . of
every crime since Cain attempted to conceal the murder of Abel from
the Lord." Id. at 406.
As in Grunewald, "[t]here is not a shred of direct
evidence in this record to show anything like an express original
agreement among the conspirators to continue to act in concert in
order to cover up, for their own self-protection, traces of the
crime after its commission." Id. at 404. Nor does the fact that
both Upton and Alberico failed to file 1999 tax returns reporting
the gain earned from the stolen funds constitute indirect evidence
of such an agreement to conceal. The Supreme Court in Grunewald
unequivocally held that such post-crime evidence was insufficient
to show the required pre-crime agreement:
[A] conspiracy to conceal is being implied [by
the government] from elements which will be
present in virtually every conspiracy case,
that is, secrecy plus overt acts of
concealment. . . .
-34-
Acts of covering up, even though done in the
context of a mutually understood need for
secrecy, cannot themselves constitute proof
that concealment of the crime after its
commission was part of the initial agreement
among the conspirators.
Id. at 404, 402; see also SEC v. Papa, No. 08-1172, Slip op. at 11-
12 (1st Cir. Feb. 6, 2009) (noting that "an agreement to conceal
after the fact could be viewed as inherent in a conspiracy or any
wrongful fraudulent scheme[,] but then all covert joint wrongdoing
would be a permanently continuing offense . . . an approach that
the Supreme Court has rejected"); United States v. Goldberg, 105
F.3d 770, 773 (1st Cir. 1997) (holding that "mere collateral
effects of jointly agreed-to activity, even if generally
foreseeable, are not mechanically to be treated as an object of the
conspiracy"); id. at 774 (noting that, in the case of a band of
bank robbers, "[a]ll know that the agreed-upon robbery will
generate 'income' that none of the robbers will report[, y]et it
would be straining to describe interference with the IRS as a
purpose or object of the conspiracy"). The inference of an
original agreement to conceal is particularly unwarranted here
given that, as the majority acknowledges, Upton and Alberico did
not consistently act in tandem following the money laundering.
Alberico filed a false return for 1997 that omitted the stolen
$900,000, while Upton filed his false return for that year in 2000.
In sum, "the essential missing element is a showing
that the act [of concealment] was done in furtherance of a prior
-35-
criminal agreement among the conspirators." Grunewald, 353 U.S. at
404 n.16. Because there is no evidence permitting the jury to find
that Upton and Alberico entered into an "express original
agreement" to cover up their money laundering activity, the tax
fraud may not be considered within the scope of the conspiracy on
that basis.
III.
Nor can the failure to file the 1999 tax return be viewed
as an act of concealment done in furtherance of the main objective
of the money laundering conspiracy. Although tax evasion is a
foreseeable consequence of virtually every financial crime,
Goldberg, 105 F.3d at 773, it is not inevitably within the scope of
every conspiracy to commit such crimes. The question is whether,
consistent with the second theory permitted by Grunewald, the jury
could find that "the successful accomplishment of the crime
necessitate[d]" that act of concealment.16 Id. at 405.
16
Count Four of the indictment alleged the following tax-related
conduct by Upton as part of the money laundering conspiracy:
5. It was a part of the conspiracy that defendants
George L. Upton and Lynn M. Alberico attempted to conceal
or disguise the nature, location, source, ownership, or
control of the illegal cash proceeds by failing to file
income tax returns, or declare a capital gain from the
sale of the commercial property, for the tax year 1999.
6. It was a part of the conspiracy that George L.
Upton attempted to conceal or disguise the nature,
location, source, ownership, or control of the illegal
cash proceeds by filing a materially false federal income
tax return in or about July 2000 that failed to declare
the receipt of the illegal income or the rental income
-36-
The majority states that, because the purpose of the
money laundering conspiracy was to conceal the Queen theft,
"additional acts of concealment that facilitate the central aim of
the conspiracy are in furtherance of the conspiracy." The majority
asserts that the tax evasion meets this description: "[C]oncealing
the existence or financial impact of the money laundering
transactions[] is as much a part of the ongoing conspiracy to
launder money as repainting the car is a part of a theft
conspiracy."
This case does not, however, involve an "ongoing
conspiracy" that allegedly was intended to last beyond the set of
transactions that laundered the stolen $900,000. Such a continuous
conspiracy was described in United States v. Gardiner, 463 F.3d
445, 463 (6th Cir. 2006), where the court discussed crimes with
"'no specific terminating event'" – such as a conspiracy to fix
court cases or generalized loan-sharking activity – in which mid-
conspiracy concealment is necessary for the scheme to continue.
See id. (recognizing that, "[i]n conspiracies where a main
objective has not been attained or abandoned and concealment is
from the property in 1997.
The government argues that Upton's filing of a false return for
1997 also was an act in furtherance of the conspiracy, although the
majority does not rely on that conduct. I would have the same
objections to any such reliance as I do for Upton's failure to file
the 1999 return.
-37-
essential to success of that objective, attempts to conceal the
conspiracy are made in furtherance of the conspiracy") (citation
omitted); see also United States v. Esacove, 943 F.2d 3, 5 (5th
Cir. 1991) (noting that "'concealment is sometimes a necessary part
of a conspiracy'" to "'protect it from those investigative agencies
which threatened its continuation'" (quoting United States v. Del
Valle, 587 F.2d 699, 704 (5th Cir. 1979))). The money laundering
conspiracy charged here, focused as it is on transactions designed
to conceal a single crime, ended at a fixed point in time – when
those specific transactions were completed. See Papa, slip op. at
12 ("'[T]hough the result of a conspiracy may be continuing, the
conspiracy does not thereby become a continuing one.'" (quoting
Fiswick v. United States, 329 U.S. 211, 216 (1946)).
The flaw in the majority's reasoning is further revealed
by considering the Supreme Court's illustrative crimes in
Grunewald. With its stolen car and kidnaping examples, the Supreme
Court was describing acts of concealment that occur – as with
"ongoing" conspiracies – in tandem with the criminal conduct that
is the object of the charged conspiracy. In such cases, where the
concealment occurs before the object of the conspiracy is completed
(as with the kidnapers awaiting ransom) or coincident with its
completion (as with the new paint job on a stolen car), the
concealment is closely related in time to the commission of the
crime that is the conspiracy's goal. Such concealment directly
-38-
facilitates the crime's completion and, as such, it is properly
viewed as part of the original criminal undertaking rather than as
post-conspiracy cover-up.
Indeed, the Court in Grunewald extended its kidnaping
example by noting that the concealment addressed by the
government's proof at trial in that case was "[m]ore closely
analogous to . . . conspiring kidnapers who cover up their traces
after the main conspiracy is finally ended – i.e., after they have
abandoned the kidnaped person and then take care to escape
detection." 353 U.S. at 405. By confining "necessary" acts of
concealment to those that occur contemporaneously with the overt
acts that comprise the substantive crime, the Supreme Court's
concern in Grunewald – that acts of concealment not be used to
indefinitely extend the duration of a conspiracy – does not arise.
Here, too, the concealment relied upon by the government
to extend the duration of the conspiracy is more akin to the cover-
up conduct of kidnapers who have pocketed their ransom and
abandoned their victim. There is no dispute that the overt acts
that were the objective of the charged conspiracy – the financial
transactions prohibited by section 1956(a)(1)(B) – had ended, at
the latest, with the sale of the Iyanough Road property in January
1999.17 The failure to file a tax return more than a year later –
17
Although Upton appears to presume that the money laundering
transactions included the house sale, the list of transactions in
the indictment concludes with the purchase of the house.
-39-
assuming the usual April 15th deadline – is materially different
from either of the Supreme Court's examples of within-the-
conspiracy concealment. First, the tax evasion was remote in time
from the targeted transactions. Second, the tax conduct did not
facilitate those transactions. Upton and Alberico successfully
changed the cash into cashiers' checks and purchased the house in
1997, completing the money laundering conduct that was the
objective of the charged conspiracy. Their failure to file returns
showing the gain from the house protected the scheme after the fact
by concealing it, but that function is not enough to bring the tax
evasion within the scope of the money laundering conspiracy.
Indeed, that tax evasion is precisely the sort of post-
conspiracy concealment that the Court in Grunewald – as a matter of
policy – deemed insufficient to extend the statute of limitations.
By contrast, a car thief's repainting of the car – and, even more
so, the hiding of kidnapers waiting for ransom – is necessary for
the successful accomplishment of the crime that is the object of
the conspiracy.
The problem with the majority's logic is demonstrable by
applying it to a scenario in which Upton and Alberico had sold the
Iyanough Road house ten years later, in 2009, and similarly failed
to file tax returns reporting their gain. The majority's analysis
leads to the conclusion – impermissible under Grunewald – that the
money laundering conspiracy would have continued for another
-40-
decade, despite the lack of money laundering transactions
throughout that period. The majority disclaims such a conclusion
in its opinion in Alberico's appeal, noting that "the failure to
file [returns for 1999] was within a short time and thus likely to
be part of the conspirators' agreement."
The majority offers no principled basis, however, for
drawing a distinction between a failure to file a return disclosing
gain earned in 1999 and a failure to file a return reporting that
same gain earned at a later date. The concealment function
performed by the tax evasion is the same in both instances, and I
do not see how such concealment can be deemed an essential part of
the money laundering conspiracy at the earlier time but not later.18
Moreover, in both instances the objective of the money laundering
conspiracy – the commission of the crime of money laundering – had
18
Beyond highlighting the flaw in the majority's reasoning, the
hypothetical shows the problem in viewing the sale of the Iyanough
Road house – as distinguished from its purchase – as part of the
money laundering conspiracy. The laundering was accomplished by
converting the cash to cashier's checks that were then converted
into real estate, from which Upton and Alberico earned rent of
$1,000 a month. As Upton points out, if the failure to report
down-the-line profits from the laundered money (such as gain from
the house sale) is held to be within the scope of the original
money laundering conspiracy, the result would be an open-ended
statute of limitations – the Supreme Court's concern in Grunewald.
See 353 U.S. at 402 ("Sanctioning the Government's theory would for
all practical purposes wipe out the statute of limitations in
conspiracy cases . . . ."); see also United States v. Magluta, 418
F.3d 1166, 1180 (11th Cir. 2005) (holding that purchases using
laundered proceeds years after the payment that constituted the
original laundering could not be considered part of the money
laundering conspiracy).
-41-
already been completed. Hence, the timing of the tax evasion does
not support the majority's conclusion that it was within the scope
of the original money laundering conspiracy. To the contrary, the
tax conduct's remoteness from the charged objective of the
conspiracy – to launder the $900,000 by means of financial
transactions – confirms that it was not necessary to the
accomplishment of the conspiracy in the sense required by
Grunewald.
IV.
The majority's confusion undoubtedly stems in part from its
failure to appreciate the critical difference between the
conspiracy alleged here and the type of conspiracy charged in
Grunewald and other cases on which the majority relies, including
Goldberg and United States v. Mann, 161 F.3d 840, 859 (5th Cir.
1998). Those cases involved conspiracies brought under 18 U.S.C.
§ 371, which criminalizes any conspiracy "to defraud the United
States, or any agency thereof in any manner or for any purpose."
18 U.S.C. § 371. Such a conspiracy "can have multiple objects, and
any agreed-upon object can be a purpose of the conspiracy and used
to define its character." Goldberg, 105 F.3d at 774 (citing Ingram
v. United States, 360 U.S. 672, 679-80 (1959)).
Thus, under section 371, a defendant may be charged and
found guilty of conspiring to defraud the government by means of
tax conduct whose purpose was to conceal earlier illicit activity
-42-
that was charged as a separate object of the same conspiracy. In
Mann, for example, the government alleged five separate objects of
the single conspiracy charged under section 371 in the indictment's
first count, including misuse of bank funds and the filing of false
income tax returns. Mann, 161 F.3d at 847-48. The court rejected
the defendants' Grunewald argument because "[t]he central aim of
the conspiracy" – as alleged in the indictment – included a purpose
to evade taxes. Mann, 161 F.3d at 859.
Grunewald also illustrates the potential breadth of
conspiracies under section 371. Although the case was tried on the
theory that the defendants' conspiratorial objective was to obtain
"no prosecution" rulings for certain taxpayers, the indictment
embraced the theory that the conspiracy's central object extended
beyond those provisional rulings "to immunize the taxpayers
completely from prosecution for tax evasion." Grunewald, 353 U.S.
at 408. The Supreme Court concluded that, under the limited theory
presented to the jury, the acts of concealment following the "no
prosecution" rulings could only be viewed as post-conspiracy cover-
up to protect the defendants. Under the broader theory, however,
those acts could be viewed as conduct in furtherance of the
conspiracy to fully protect the taxpayers from tax liability. Id.
at 409-411.
The Court remanded the case for a new trial because the
jury charge did not distinguish between concealment in order to
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achieve the central purpose of the more broadly stated conspiracy
(immunization of the taxpayers from tax-evasion prosecution), and
concealment intended solely to cover up a completed crime
(obtaining the "no prosecution" rulings). Id. at 413-14. To find
that the acts of concealment that took place within the limitations
period were in furtherance of the conspiracy, the jury needed to
find that "the basic aim of the conspiracy was not yet attained" at
that time – a determination the jury was not asked to make. Id. at
414.
As far as we know, therefore, the present
convictions were based on the impermissible
theory . . . that a subordinate agreement to
conceal the conspiracy continued after the
central aim of the conspiracy had been
accomplished. . . .
[T]he judge's charge left it open for the jury
to convict even though they found that the
acts of concealment were motivated purely by
the purpose of the conspirators to cover up
their already accomplished crime. And this,
we think, was fatal error.
Id.
The majority fails to recognize that the indictment here
is not similarly elastic. The indictment charged a conspiracy to
commit money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B),
not a more general conspiracy under section 371 "to defraud the
United States, or any agency thereof" by concealing, through
various unlawful actions, the theft of Queen's money. Although the
indictment's conspiracy allegations included, under the heading
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"Manner and Means," that "[i]t was part of the conspiracy that
[defendants] attempted to conceal or disguise the . . . source
. . . or control of the illegal cash proceeds by failing to file
income tax returns . . . for the tax year 1999," the government's
description of a subsequent tax fraud that shared the same
concealment objective of the money laundering transactions cannot
turn the specific conspiracy alleged – to commit money laundering
– into a general conspiracy to conceal funds.19
Unlike the section 371 conspiracy charged in Mann, which
included a separate tax fraud objective, or the conspiracy charged
in Grunewald, whose general purpose to defraud the United States
could embrace acts of concealment subsequent to the "no
prosecution" ruling, a conspiracy to commit money laundering –
i.e., a conspiracy to conduct financial transactions – cannot, by
its terms, include a "central criminal purpose" to conceal income
from the IRS. Grunewald, 353 U.S. at 405. Put most simply, the
tax evasion did not further the "central aim" of the conspiracy,
which was to conduct financial transactions in order to conceal the
source of the $900,000. Hence, the tax evasion was not within the
19
The indictment originally included a count under section 371
alleging a conspiracy to structure transactions for the purpose of
evading federal currency reporting requirements. See 31 U.S.C.
§§ 5324(a)(3), 5322. As noted earlier, the district court
dismissed that count on the basis of the statute of limitations.
See United States v. Upton, 339 F. Supp. 2d 190, 196 (D. Mass.
2004).
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scope of the charged conspiracy. The conspiracy charge was
therefore barred by the statute of limitations.
V.
The majority is correct, of course, that Upton's failure
to file the 1999 tax return bears some relationship to the money
laundering conspiracy. As I have noted, both crimes share a
purpose to cover up the theft from Queen, with the tax evasion
presumably having the added purpose to cover up the money
laundering. Both the facts and the law, however, preclude a
finding by the jury that there was an express original subsidiary
agreement among the conspirators to cover up their crime, or a
finding that the failure to file the 1999 return was an act of
concealment done in furtherance of the money laundering conspiracy
within the meaning of Grunewald. Thus, while Upton was charged and
properly convicted of the separate crime of failing to file a tax
return, the majority errs in treating that independent crime as a
part of the money laundering conspiracy.
Because the conspiracy charge was time-barred, Upton's
conviction on Count 4 of the indictment should be reversed.
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United States v. Upton
Court: Court of Appeals for the First Circuit
Date filed: 2009-03-05
Citations: 559 F.3d 3
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