United States v. Corchardo-Peralta

United States Court of Appeals
For the First Circuit

No. 01-2086

UNITED STATES OF AMERICA,

Appellee,

v.

ELENA CORCHADO-PERALTA,

Defendant, Appellant.
___________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Juan M. Pérez-Giménez, U.S. District Judge]

Before

Boudin, Chief Judge,

Howard, Circuit Judge,

and Shadur,* Senior District Judge.

Ramón García-García, by appointment of the court, for
appellant.
Steven N. Siegel with whom Rose A. Briceño, Department of
Justice, Criminal Division, Narcotic and Dangerous Drug Section,
was on brief for the United States.

January 29, 2003

*
Of the Northern District of Illinois, sitting by designation.
 BOUDIN, Chief Judge. Between 1987 and 1996, Ubaldo

Rivera Colon ("Colon") smuggled over 150 kilograms of cocaine into

Puerto Rico, yielding some $4 million in profits, which he then

laundered through a variety of investments and purchases. Colon

was indicted on drug, bank fraud, and conspiracy charges and, based

on a plea agreement, was sentenced in June 2002 to over 20 years in

prison. This case concerns not Colon but three peripheral figures,

including his wife.

Colon's wife, Elena Corchado Peralta ("Corchado"), and

two associates, Basilio Rivera Rodriguez ("Rivera") and Oscar

Trinidad Rodriguez ("Trinidad") were indicted and tried together on

one count of conspiring with Colon to launder money. 18 U.S.C. §§

1956(a)(1)(B) and (h).1 Corchado was also indicted on one count of

bank fraud. 18 U.S.C. § 1344 (2000). During their eight-day

trial, Colon provided extensive testimony about his money

laundering methods, which included a variety of transactions

(purchases, investments, and loans) involving the defendants.

All three defendants were convicted on the charges

against them. Corchado received a 27-month sentence, Rivera, 57

months, and Trinidad, 63 months. All three defendants appealed,

each arguing that the evidence was not sufficient to support

1
In addition to Colon and the three defendants, six other
individuals were indicted on conspiracy or related charges. Of the
six, three had their charges dismissed, two received terms of
probation, and one, Dale Chester Browne, was sentenced to 270
months in prison.

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conviction. Trinidad and Rivera raise other issues as well and we

address their claims in a companion opinion. Corchado appeals

alone, but it is helpful to begin by outlining the criminal offense

that was the principal charge against all of them.

The money laundering statute, 18 U.S.C. § 1956 (2000),

among other things makes it criminal for anyone, "knowing that the

property involved in a financial transaction represents the

proceeds of some form of unlawful activity" to "conduct . . . such

a financial transaction which in fact involves the proceeds of

specified unlawful activity" --

(A)(i) with the intent to promote the carrying
on of specified unlawful activity; or
. . . .
(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;
. . . .

Id. § 1956(a)(1).

The three defendants in this case were charged under

subsection (B)(i), based on knowledge of "design[ ]", and not under

(A)(i), based on an "intent to promote." In each instance, there

is no doubt that the defendant did engage in one or more financial

transactions involving Colon's drug proceeds. The issue turns,

rather, on state of mind elements. Pertinently, as to Corchado,

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she disputes knowing either that the "property" represented

proceeds of drug dealing or that "the transaction" was "designed .

. . to conceal or disguise . . . ." The evidence, taken most

favorably to the government, United States v. Gomez, 255 F.3d 31,

35 (1st Cir. 2001), showed the following.

Elena Corchado Peralta met Colon sometime in the early

1990s and they were married in 1994. Corchado, then about 25 years

old, was a student when they met and later worked part-time in her

mother's jewelry store. She has a college degree in business

administration and some training in accounting. Colon testified

that he held himself out as a successful legitimate businessman

throughout their relationship and that his wife knew about neither

his drug smuggling nor his own money laundering activities.

Corchado performed many transactions involving Colon's

drug proceeds. These transactions fell into two broad categories--

expenditures and deposits. On the expenditure side, Colon directed

Corchado to write and endorse checks to purchase a cornucopia of

expensive cars, boats, real estate, and personal services. Colon

maintained that his wife thought that the money was derived from

legitimate businesses.

The purchases themselves were extensive and expensive,

affording the couple a fancy lifestyle. For example, Corchado

purchased a BMW, a Mercedes Benz, and a Porsche for the couple. At

another time, she made a single monthly payment to American Express

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of $18,384 for interior decorating purchases. And on another day,

she signed three checks totaling $350,000 that were used to

purchase land for one of Colon's businesses. In total, Corchado

signed the majority of 253 checks, representing many hundreds of

thousands of dollars of purchases.

With respect to deposits, Corchado's main responsibility

was to deposit $6,000 checks on a monthly basis into one of Colon's

accounts. Colon testified that he had made a $700,000 loan to an

associate using his drug profits with the understanding that the

associate was to pay him back over the course of many months so as

to dissociate Colon from the illegal proceeds. Under the terms of

the arrangement, the checks came from legitimate businesses, and

Colon testified that his wife was not aware of the circumstances

underlying the monthly payments. At trial, the government also

presented evidence showing that on one occasion Corchado wired

$40,000 to a Florida company at Colon's request.

Tax records signed by Corchado showed that she knew that

her husband's reported income from his legitimate businesses was

far less than the money she was handling. For example, the joint

tax return that Corchado signed for 1995 listed a total amount of

claimed income of only $12,390. The government presented evidence

showing that the couple's total reported income between 1992 and

1997 was only approximately $150,000. Corchado did not testify at

trial.

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 We begin with the first knowledge requirement--namely,

that Corchado was aware, at the time of the transactions she

conducted, that the money she was handling, at least much of the

time, was derived from drug dealings.2 Corchado argues, correctly,

that there is no direct evidence of her knowledge (say, by an

admission by her or testimony from Colon that he told her about his

business). Indeed, he testified repeatedly that she was unaware of

his drug business; that in response to a question from her he had

denied doing anything unlawful; that he never allowed her to attend

meetings involving his drug business; and that he stopped

distributing drugs when they were married.

Needless to say, the jury did not have to accept Colon's

exculpatory testimony. It was clearly self-interested since

Corchado was his wife and mother of their two children. But here,

at least, the jury's disbelief could not count for much in the way

of affirmative proof. See Dyer v. MacDougall, 201 F.2d 265, 269

(2d Cir. 1952) (Hand, L. J.); Janigan v. Taylor, 344 F.2d 781 (1st

Cir.), cert. denied, 382 U.S. 879 (1965). Rather, whether there

was knowledge of drug dealing, or so much awareness that ignorance

was willful blindness, turns in this case on the same

circumstantial evidence.

2
Formally, the charge is "conspiracy," under subsection (h) to
violate subsection (a)(1)(B)(i); but the "agreement" requirement is
undisputed: many, if not all, of the transactions were performed
at Colon's request or with his consent. Thus, the open issue is
Corchado's state of mind.

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 What the evidence shows is that Corchado knew that the

family expenditures were huge, that reported income was a fraction

of what was being spent and that legitimate sources were not so

obvious as to banish all thoughts of possible illegal origin--as

demonstrated by Colon's testimony that Corchado once raised the

issue. Interviewed by an FBI agent, Corchado told him that her

husband had been involved in the cattle business and, more

recently, in real estate development but that none of the

businesses had employees and that Colon had worked mainly out of

his house. And, as the government fairly points out, Corchado was

herself well educated and involved in the family bookkeeping.

This might seem to some a modest basis for concluding--

beyond a reasonable doubt--that Corchado knew that her husband's

income was badly tainted. But the issue turns on judgments about

relationships within families and about inferences that might be

drawn in the community from certain patterns of working and

spending. Further, it is enough to know that the proceeds came

from "some form, though not necessarily which form," of felony

under state or federal law. 18 U.S.C. §1956(c)(1). The jury's

judgment on this factual issue cannot be called irrational.

The other knowledge requirement is harder for the

government. Here, the statute requires, somewhat confusingly, that

Corchado have known that "the transaction" was "designed," at least

in part, "to conceal or disguise the nature, the location, the

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source, the ownership or the control of the proceeds." 18 U.S.C.

§ 1956(a)(1)(B)(i). We will assume that it would be enough if

Corchado herself undertook a transaction for her husband, knowing

that her husband had such a design to conceal or disguise the

proceeds, or if she undertook a transaction on her own having such

a design herself. Other variations might exist, but these two seem

the foremost possibilities.

It may help to treat separately the purchases on the one

hand and the check deposits (and in one case a transfer) on the

other. Any purchase of goods or services, whether by cash or by

check, has a potential to conceal or disguise proceeds simply

because it transforms them from money into objects or dissipates

them in the performance of the services. But if this were enough,

every expenditure of proceeds known to be tainted would itself be

unlawful. Instead, the statute requires that someone--the

instigator or spender--must have an intent to disguise or conceal

and the spender must share or know of that intent. See B. Williams

& F. Whitney, Federal Money Laundering: Crimes and Forfeitures §

5.1.6.13 (1999).

Here, the government showed that from their marriage

onward Corchado wrote most of the checks used by the couple to

purchase expensive items (e.g., several high-priced cars) and pay

off credit card bills and that some of these payments were very

large (one credit card bill exceeded $18,000). And, for reasons

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already given, it is assumed that the jury permissibly found that

Corchado knew that some of the money she was spending was

criminally derived. Finally, the government stresses that she must

have known that Colon was bringing in and spending far more than he

reported on his income tax returns. Is this enough for the jury to

infer a specific intent to conceal or disguise and impute the

intent itself, or knowledge of it, to Corchado?

In this case, nothing about the purchases, or their

manner, points toward concealment or disguise beyond the fact that

virtually all expenditures transform cash into something else.

Here, the purchased assets were not readily concealable (e.g.,

diamonds) nor peculiarly concealed (e.g., buried in the garden) nor

acquired in someone else's name nor spirited away to a foreign

repository (e.g., a Swiss bank deposit box).3 Indicia of this kind

have been stressed in cases upholding money laundering charges and

their absence noted in cases coming out the other way. See, e.g.,

United States v. Martinez-Medina, 279 F.3d 105, 115-16 (1st Cir.),

cert. denied, 122 S. Ct. 2608 (2002).

To hold that a jury may convict on this evidence--that

Corchado spent her husband's money knowing that the money was

tainted--is to make it unlawful wherever a wife spends any of her

husband's money, knowing or believing him to be a criminal. That

3
The evidence indicated that the family apartment had been
purchased by Colon and his mother but was held in her name; but
there is nothing extraordinary about that.

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the purchases here were lavish or numerous hardly distinguishes

this case from one in which a thief's wife buys a jar of baby food;

if anything, Corchado's more flamboyant purchases were less likely

than the baby food to disguise or conceal. Perhaps a hard-nosed

Congress might be willing to adopt such a statute, compare 18

U.S.C. § 1957 (2000), but it did not do so here.

Less need be said about the deposit and transfer side.

So far as we can tell, Corchado mostly did no more than make large

regular deposits in an account given to her by her husband; there

was no inference of concealment or disguise. As for the single

transfer she made to another person at her husband's request,

nothing suspicious about the circumstances is cited to us, let

alone anything that would suggest knowledge on Corchado's part that

the transfer was meant to conceal or disguise proceeds--as opposed

to merely paying off a debt, making an investment, or conducting

some other transaction incident to a business, lawful or

otherwise.4

As to the bank fraud charge, Corchado is less fortunate.

That charge stemmed from an application she made on December 27,

1996, to a bank subsidiary incident to the lease of a car. The

4
To complete the evidence mustered by the government one
freestanding item should be mentioned. When a Lexus was seized
from Corchado by local tax officials, she said that the owner was
her sister-in-law; in fact, Colon had purchased the Lexus but it
was apparently in the name of a third party other than the sister-
in-law. The government does not say why it thinks Corchado's
misstatement helps its money laundering case.

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application said, quite falsely, that Corchado was an employee of

E.J. Auto Sales and earned a salary of $48,000 per year. This

information had apparently been inserted by Colon who faxed the

form to the lender's office, including a fake letter from

Corchado's purported employer; but Corchado signed the form in the

presence of a credit officer with whom she spent somewhere between

5 and 15 minutes.

For this Corchado was indicted for bank fraud under 18

U.S.C. § 1344. This offense requires no more than knowingly to

attempt or execute "a scheme or artifice" to obtain money from a

financial institution by means of false representations.

Indisputably, Corchado signed a loan application to a covered

lender containing material false statements. Corchado's only

argument on appeal, offered without elaboration, is that on the

evidence just described no intent to defraud can be attributed to

her. Since the false statements are patently material, presumably

the defense is that Corchado was not shown to have known that the

application contained the false statements or had a faked letter

attached.

Of course, people sign form documents all the time

without reading the boilerplate--this is notoriously so in many

contexts (hospital admissions; airline tickets); and, despite cases

proffered by the government, see, e.g., United States v. Gomez-

Gutierrez, 140 F.3d 1287, 1288-89 (9th Cir.), cert. denied, 525

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U.S. 889 (1998), the fact that the document may recite that the

signer has read it before signing is not decisive. The strength of

an inference that the signer did read the document, or specific

portions of it, depends on the circumstances: for example, the time

spent, the seriousness of the transaction, whether the material was

filled in or merely boilerplate.

We have reviewed the trial testimony of the bank official

and it is remarkably inconclusive as to whether Corchado read the

credit application that she signed. But the one-page credit

application is itself an exhibit; and the exhibit has, as a

prominent block just following the listing of Corchado's name and

address, a further block for employment information, filled in with

the name of the putative employer, the position held, the telephone

number, the salary, and the number of years employed. It would be

possible, but difficult, for someone signing this form to have

missed the information or--in this instance--to have doubted its

falsity. On this record, a jury could find beyond a reasonable

doubt that Corchado knew that the application misstated her

employment record.

On remand, Corchado must be resentenced on the bank

fraud count. Although formally given the same sentence (27 months)

on both counts due to the peculiar mechanics of the guidelines, see

U.S.S.G. § 5G1.2, the guideline penalty for the bank fraud offense

standing alone is very much less. Based on the calculations in

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Corchado's pre-sentence report (lack of prior criminal history; the

amount of money involved) and the adjustment the judge gave for

acceptance of responsibility, it appears to be in the range of 0 to

6 months, although this is a matter to be resolved in the district

court.

Corchado's bank fraud conviction is affirmed; her money

laundering conviction is reversed; the sentences are vacated; and

the case is remanded for re-sentencing on the bank fraud

conviction.

It is so ordered.

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