United States v. Valuck

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

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No. 00-41479
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UNITED STATES OF AMERICA,

Plaintiff - Appellee,

VERSUS

WILLIAM MARTIN VALUCK,

Defendant - Appellant.

_________________________

Appeal from the United States District Court
for the Eastern District of Texas
_________________________

March 14, 2002

Before KING, Chief Judge, DAVIS, and MAGILL*, Circuit Judges.

MAGILL, Circuit Judge:

Appellant William Martin Valuck was tried before a jury and

convicted of one count of wire fraud, in violation of 18 U.S.C.

§ 1343, two counts of theft of funds valued $5,000 or more in

interstate commerce, in violation of 18 U.S.C. § 2314, and one

count of money laundering, in violation of 18 U.S.C. § 1956. On

appeal, Valuck claims the evidence supporting his conviction under

Count Five, the money laundering conviction, is insufficient, as a

matter of law, that the government improperly used an accomplice's

*
Circuit Judge of the United States Court of Appeals for the
Eighth Circuit, sitting by designation.
guilty plea to prove his guilt, and that his trial counsel was

ineffective. For the reasons stated below, we affirm.

I.

Valuck, a physician, operated a small ambulance company in

Huntsville, Texas, with Mike Cleveland acting as the operations

manager. Shortly after Valuck's ambulance company went out of

business, Cleveland filed a d/b/a for a new business, Life Guard

Services, and subsequently opened a checking account for the

business at Citizens Bank in Huntsville. Cleveland was the only

signatory on the account because Valuck feared that his previous

tax troubles would raise questions with the Internal Revenue

Service (the "IRS"), possibly resulting in a tax lien on the newly-

opened account.1

After establishing the account, Cleveland and Valuck began

soliciting various individuals in the health care industry for

investment in various prime bank debenture programs. At trial, the

government presented the testimony of several of the individuals

whom Valuck solicited and they testified that Valuck described the

potential investment as a bank trading program with low risk and a

guarantee of quick returns. In particular, Valuck told Emile

Roques, a pharmacist, that returns were guaranteed within 120 days

of investment and that, at the very least, the investment would

earn eight percent interest in a bank account. Furthermore, Valuck

1
In fact, the IRS placed tax liens on another of Valuck's
accounts.

2
told Roques that his previous investments in similar schemes had

yielded successful results when, in fact, they had not.

Significant to this appeal, however, is the investment of Susan

Snow, a physician, and Richard Bratt, Snow's common law spouse, who

was in charge of Snow's finances at the time.

Believing that Valuck, a physician with a high income, would

not steer them in the wrong direction, and because Valuck assured

Bratt that he had previously invested in such programs and that

such investments were successful, Snow and Bratt invested $100,000

in his scheme. Convinced that such an investment was sound, Snow

executed a written agreement with Valuck that called for a $100,000

investment to be made by wire transfer. Per the agreement, and in

accordance with the wiring instructions furnished by Cleveland,

Bratt sent a wire transmission to Muriel Seibert & Company in New

York requesting that $100,000 be transferred to the Life Guard

Services account at Citizens Bank. The funds ultimately reached

the account on February 15, 1996. A summary of the funds going

into the account reveals that Snow's investment was spent within

two weeks of the wire transfer on personal and business expenses by

Valuck, Cleveland, and others. It is this wire transfer that forms

the basis of the wire fraud charged in Count Two of the indictment.

At trial, Cleveland testified that at the time of the

Snow/Bratt wire transfer both he and Valuck were low on cash and

they each took a draw out of the $100,000. Because Valuck was not

a signatory to the account, he did not have direct access to the

3
funds. In order to gain access to the funds, Valuck told Cleveland

to purchase cashier's checks with money withdrawn from the account.

As a result, Valuck obtained $26,000 from the Life Guard Services

account.

Special Agent Paul Geboski testified as to the actual

disposition of the Snow/Bratt investment. Prior to the deposit of

the $100,000, the Life Guard Services account had a balance of

$200. The same day the deposit was made, five cashier's checks,

totaling $25,000, were purchased using the newly acquired funds,

and an additional $1,000 in cash was withdrawn from the account.

In particular, a $10,000, a $5,000, and a $2,500 check were

deposited in the Mid-County Teachers Credit Union Account of Sylvia

Hargroder, Valuck's girlfriend. A $5,000 check was deposited in a

joint account held by Valuck and Hargroder. The final check, in

the amount of $2,500, was cashed by Valuck at Citizens Bank.

Valuck readily admits that he negotiated the checks and eventually

spent the money on personal expenses. The purchase and negotiation

of these checks form the basis for the money laundering charge

alleged in Count Five of the indictment.

On December 16, 1998, Valuck was charged in a five-count

indictment. In particular, Valuck was charged with two counts of

wire fraud, two counts of causing the transmission of money valued

at $5,000 or more in interstate travel, and one count of money

laundering. At trial, the government presented the testimony of

Cleveland. During the presentation of this testimony, the

4
prosecution made numerous references to Cleveland's guilty plea in

its opening statement, on direct examination of Cleveland, and

during its closing argument. Notably, Valuck's trial counsel never

objected to any of these references.

At the close of the government's case, Valuck made a motion

for a judgment of acquittal. The motion was granted as to the

substantive part of Count One (a wire fraud count) and denied as to

the remaining counts. Valuck renewed this objection at the close

of all of the evidence, and that motion was denied in all respects.

The jury returned guilty verdicts on the four remaining counts

charged in the indictment, and Valuck received sixty months'

imprisonment for wire fraud, two seventy-month sentences for

interstate transportation, and seventy months' imprisonment for

money laundering, all to run concurrently, along with concurrent

three-year supervised release terms on each count. Additionally,

the district court ordered Valuck to pay restitution in the amount

of $634,484.91, the total amount lost by various investors, and

special assessments in the amount of $200. A timely notice of

appeal was filed on December 14, 2000. We have jurisdiction in

this case pursuant to 28 U.S.C. § 1291.

II.

Our review of a jury's verdict is tempered with great

deference toward the decision of the jury, and we must evaluate the

evidence in the light most favorable to the jury verdict. United

5
States v. McCauley, 253 F.3d 815, 818 (5th Cir. 2001). A district

court's denial of a motion for acquittal is reviewed de novo.

United States v. De Leon, 170 F.3d 494, 496 (5th Cir. 1999).

When evaluating a challenge to the sufficiency of the

evidence, we must view the evidence in the light most favorable to

the verdict and we will uphold the verdict if a rational juror

could have found each element of the charged offense beyond a

reasonable doubt. McCauley, 253 F.3d at 818. Our review is de

novo, and "[i]f 'the evidence viewed in the light most favorable to

the prosecution gives equal or nearly equal circumstantial support

to a theory of guilt and a theory of innocence,' a defendant is

entitled to a judgment of acquittal." United States v. Brown, 186

F.3d 661, 664 (5th Cir. 1999) (quoting United States v. Schuchmann,

84 F.3d 752, 754 (5th Cir. 1996)).

Valuck challenges the sufficiency of the evidence used to

convict him of money laundering under 18 U.S.C. § 1956. That

statute provides in pertinent part:

(a)(1) Whoever, knowing that the property involved in a
financial transaction represents the proceeds of some
form of unlawful activity, conducts or attempts 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 . . . [shall be guilty of
money laundering].

18 U.S.C. § 1956(a)(1) (1994). To sustain a conviction under this

section, the government must prove beyond a reasonable doubt that

(1) the financial transaction in question involves the proceeds of

6
unlawful activity, (2) the defendant had knowledge that the

property involved in the financial transaction represented proceeds

of an unlawful activity, and (3) the financial transaction was

conducted with the intent to promote the carrying on of a specified

unlawful activity. United States v. Wilson, 249 F.3d 366, 377 (5th

Cir. 2001). For our purposes, the Snow/Bratt transaction

represents the unlawful activity, and the cashing of the checks

represents the financial transaction.

As discussed above, Valuck does not appeal the sufficiency of

the government's evidence as to Count Two of the indictment,

charging him with wire fraud with respect to the Snow/Bratt

transaction. Thus the first element of the offense is established.

Also, Valuck does not contest the sufficiency of the government's

evidence with respect to his knowledge about the illegality of

using the cashier's checks, the funds for which were illegally

obtained from the Snow/Bratt transaction. Thus the second element

of the offense is established. Valuck does, however, challenge the

sufficiency of the evidence regarding the third element of the

offense.

Even though Valuck admits negotiating the cashier's checks in

question, once when he received them from Cleveland and again when

he deposited or cashed the checks, he contends that such

negotiations cannot, as a matter of law, promote the antecedent

wire fraud. In turn, Valuck argues that if we were to uphold his

conviction for money laundering on the evidence before us, we would

7
essentially turn the money laundering statute into a "money

spending" statute. See United States v. Olaniyi-Oke, 199 F.3d 767,

770 (5th Cir. 1999) (using proceeds solely for personal expenses

will not sustain a money laundering conviction). Although

intriguing, we do not find this argument persuasive. Instead, we

agree with the government that the manner in which Valuck spent the

ill-gotten money is irrelevant because it is the deposit of funds,

not the subsequent expenditure of such funds, which is the

transaction intended to promote the predecessor wire fraud.2

To start, we categorically reject any suggestion by Valuck

that a financial transaction cannot promote a completed illegal

activity for purposes of section 1956(a)(1)(A)(i). As we made

clear in United States v. Cavalier, the cashing of an illegally

obtained check can promote the completion of an underlying unlawful

act. 17 F.3d 90, 93 (5th Cir. 1994); see, e.g., United States v.

2
Count Five of the indictment states:

On or about the 15th day of February, 1996, in the
Eastern District of Texas and elsewhere, WILLIAM MARTIN
VALUCK, Defendant herein, knowing that the money or funds
involved in a financial transaction represented the
proceeds of some form of unlawful activity, that being
the wire fraud described in Count 2 of this indictment
which is adopted herein, did knowingly conduct a
financial transaction, with the intent to promote the
carrying on of such specified unlawful activity, said
financial transaction being the purchase and negotiation
of $25,000 of cashier's checks from Citizens Bank of
Texas, in violation of Title 18, United States Code,
Section 1956(a)(1)(A)(1) [sic].

(emphasis added).

8
Paramo, 998 F.2d 1212, 1218 (3d Cir. 1993) ("a defendant can engage

in financial transactions that promote not only ongoing or future

unlawful activity, but also prior unlawful activity"); United

States v. Montoya, 945 F.2d 1068, 1076 (9th Cir. 1991) (same); But

see, United States v. Jolivet, 224 F.3d 902, 909 (8th Cir. 2000)

("We find no logic in the government's suggestion that [defendant]

could promote the carrying on of an already completed crime."). We

now take this opportunity to reaffirm our position in Cavalier and

we note further that this court subscribes to a broad

interpretation of the word "promote" within the context of section

1956. Not only is our view consistent with that of other circuits,

it is also in line with how the word is commonly understood within

the legal community. See Black's Law Dictionary 1214 (6th ed.

1990) (to "promote" something is to "contribute to [its] growth,

enlargement, or prosperity of; . . . to advance"). Here, Valuck's

negotiation of the cashier's checks most certainly advanced the

underlying wire fraud, in that it allowed Valuck to prosper from

his wrongdoing by completing the antecedent wire fraud. Having

said this, we now turn to the merits of Valuck's claim.

To satisfy the "promotion" element of a money laundering

conviction, we require the government to show that a defendant

conducted the financial transaction in question with the specific

intent of promoting the specified unlawful activity. Brown, 186

F.3d at 670. In Brown, a case on which Valuck heavily relies, we

reversed a defendant's convictions pursuant to section

9
1956(a)(1)(A)(i) where the defendant used the proceeds from an

illegal activity to write checks for legitimate business

expenditures. Id. In doing so, we stressed the importance of

avoiding turning the "money laundering statute into a 'money

spending statute.'" Id. (citing United States v. Leonard, 61 F.3d

1181, 1185 n.2 (5th Cir. 1995)); see also United States v. Sanders,

928 F.2d 940, 946 (10th Cir. 1991). Valuck contends that his case

is factually indistinguishable from Brown. We, however, disagree.

In Brown, the government indicted the defendant on the basis

of his "spending transactions," not on the receipt and subsequent

depositing of illegal funds. 186 F.3d at 669 n.12. In this case,

however, the government alleges that the "purchase and

negotiation"3 of the cashier's checks forms the basis for the money

laundering charge. Based on this, by upholding Valuck's conviction

for money laundering we are in no way converting section 1956 into

a "money spending statute," as Valuck suggests, because we focus

solely on the negotiation of the cashier's checks. In fact, other

circuits have upheld similar "receipt and deposit" convictions.4

3
The government alleges both the "purchase and negotiation" of
the cashier's checks; however, it is important to note that Valuck
did not actually purchase the cashier's checks. In actuality,
Cleveland did so at the request of Valuck. Also, Valuck attempts
to draw a distinction between "negotiation" and "deposit," as if
the two can be distinguished in the banking context. In that
context, however, no such distinction exists because in order to
"deposit" a check into a bank account, one must first "negotiate"
the check, i.e., transfer the check to the bank.
4
Although we recognize that "receipt and deposit" prosecutions
(continued...)

10
For example, in Paramo, the Third Circuit upheld a defendant's

conviction for money laundering where the defendant cashed

embezzled checks from the IRS and then spent the ill-gotten gain on

personal expenses. 998 F.2d at 1217-18. The court explained that

because the defendant

understood that the embezzled checks would have been
worthless unless cashed at a bank or otherwise exchanged
for negotiable currency . . . the jury rationally could
have found that the cashing of each check contributed to
the growth and prosperity of each preceding mail fraud by
creating value out of an otherwise unremunerative
enterprise.

Id. at 1218. As noted above, in Cavalier we endorsed this same

approach. 17 F.3d at 93.5 Applying this "receipt and deposit"

4
(...continued)
are "disfavored," Brown, 186 F.3d at 669 n.12, this fact does not
alter the result we reach today. That is, simply because such
prosecutions are disfavored has no bearing on whether we should
sustain convictions based upon such prosecutions.
5
We recognize a split among the circuits on this issue.
Compare United States v. Haun, 90 F.3d 1096, 1100-01 (6th Cir.
1996) (upholding promotion conviction where evidence presented
allowed a reasonable jury to infer that cashing of checks promoted
"not only his prior unlawful activity, but also his ongoing and
future unlawful activity"), United States v. Manarite, 44 F.3d
1407, 1416 (9th Cir. 1995) (upholding promotion conviction because
chip-skimming scheme could not benefit its participants unless
chips were cashed, rational jury could conclude chips were cashed
with intent to promote the chip-skimming scheme), and United States
v. Montoya, 945 F.2d 1068, 1076 (9th Cir. 1991) (upholding
promotion conviction and noting that "depositing the check provided
an opportunity for [defendant] to carry out the illegal bribery"),
with United States v. Jolivet, 224 F.3d 902, 909 (8th Cir. 2000)
(reversing promotion conviction because subsequent activity cannot
"promote the carrying on of an already completed crime"), and
United States v. Heaps, 39 F.3d 479, 486 (4th Cir. 1994) (expressly
rejecting broad statutory interpretation employed by Third and
Ninth Circuits as inconsistent with congressional intent). Cf.
(continued...)

11
approach to Valuck's case, we are left with the clear impression

that his conviction must be upheld.

In this case, Valuck intentionally chose not to include his

own name as a signatory on the Cleveland account so as to avoid the

watchful eye of the IRS. Consequently, Valuck did not have direct

access to the illegally obtained funds that were deposited into the

account. Instead, Valuck's only access to the funds was through

his co-conspirator, Cleveland, and the only way Valuck could

prosper from this scheme was to receive the cashier's checks and

then either deposit or cash the check, ultimately completing the

underlying wire fraud. Valuck chose to deposit $25,000. Absent

such deposits, the uncashed checks would have been worthless.

Thus, a jury could have rationally concluded that the depositing of

the checks promoted both the growth and prosperity of the

antecedent wire fraud by generating "value out of an otherwise

unremunerative enterprise." Paramo, 998 F.2d at 1218. While it is

true that had Valuck's name been on the account in question, and he

withdrew the money and spent the money for personal expenses, our

decision in Brown would cast some serious doubt on the government's

money laundering conviction. This is not, however, the manner in

which Valuck proceeded. Here, the success of Valuck's wire fraud

was predicated on the transfer of money from Cleveland to Valuck.

5
(...continued)
United States v. Calderon, 169 F.3d 718, 722 (11th Cir. 1999)
(questioning whether the decisions of the Third, Sixth, and Ninth
Circuits "were rightly decided," but not deciding the issue).

12
Therefore, it is the absence of Valuck's name on the account that

helped promote the prior unlawful activity by allowing Valuck to

avoid detection by the IRS. Therefore, we conclude that a rational

jury could have found that Valuck's negotiation of the cashier's

checks promoted the antecedent wire fraud, and that in negotiating

the checks Valuck specifically intended to promote the already

completed wire fraud.

III.

Valuck contends that the government improperly introduced

Cleveland's guilty plea as substantive evidence of Valuck's guilt.

Because Valuck's trial counsel did not object to the introduction

of this evidence at trial, our review is for plain error. United

States v. Chung, 261 F.3d 536, 539 (5th Cir. 2001) (citing United

States v. Calverley, 37 F.3d 160, 162-64 (5th Cir. 1994) (en

banc)).

As a general rule, "[a] witness-accomplice guilty plea may be

admitted into evidence if it serves a legitimate purpose and a

proper limiting instruction is given." United States v. Marroquin,

885 F.2d 1240, 1247 (5th Cir. 1989). Here, the plea agreement was

introduced into evidence with an adequate limiting instruction,

which properly advised the jury. In particular, the district court

instructed the jury that "[t]he fact that an accomplice has entered

a plea of guilty to an offense charged is not evidence, in and of

itself, of the guilt of any other person." Further, the district

13
court instructed the jury that such testimony should be "received

with caution and weighed with great care." We have, in the past,

upheld nearly identical instructions to the ones given in this

case. See United States v. Abravaya, 616 F.2d 250, 251-52 (5th

Cir. 1980). Accordingly, based upon our examination of the

district court's instructions, we are convinced that there was

absolutely no error contained within the instruction, plain or

otherwise. Next we must determine whether the government's

introduction of the guilty plea serves a proper purpose.

In support of its introduction of Cleveland's guilty plea, the

government argues that the purpose of introducing the plea was to

show that there was no unduly favorable deal between the government

and Cleveland in exchange for his testimony, and to avoid the

impeachment of Cleveland's testimony. In United States v. Black,

we noted the propriety of disclosing the nature of a plea agreement

on direct examination, so as to ensure that the jury would not be

left with the "impression that the government was not being fully

candid," should the issue be raised first on cross-examination.

685 F.2d 132, 135 (5th. Cir. 1982); see also Marroquin, 885 F.2d at

1247 (introducing plea agreement to show that no "sweetheart deal"

existed between government and witness served a proper purpose).

Furthermore, we also have recognized that where the conviction of

a co-conspirator may be used to impeach that co-conspirator's

testimony, the prosecutor may introduce the plea in order "to

'blunt the sword' of anticipated impeachment by revealing the

14
information first." Marroquin, 885 F.2d at 1246. Here, the

introduction of Cleveland's guilty plea served the dual purpose of

reducing the potential effects of impeachment, while showing the

jury that Cleveland had not been provided any "sweetheart deal" in

exchange for his testimony.

At trial, the government referred to Cleveland's plea

agreement in its opening statement, on direct examination of

Cleveland, and in its closing statement. Surely, the government is

permitted to outline its evidence during opening argument, and

that, of course, includes evidence about an accomplice's guilty

plea. United States v. Magee, 821 F.2d 234, 241 (5th Cir. 1987).

With respect to the direct examination of Cleveland, Cleveland

testified that he had pleaded guilty to wire fraud, completed

almost two years in prison for that crime, was now on supervised

release, and that in exchange for his testimony the court could, at

most, reduce his term of supervised release by two years. This

testimony showed that Cleveland and the government had not brokered

any arrangement that might be conceived as conferring a great

benefit on Cleveland in exchange for his testimony. Finally, in

closing, the government referred to Valuck and Cleveland as

"partners in crime" and noted that because Cleveland has "spent two

years in prison, [his] testimony carries a great deal of

credibility." Although these statements are somewhat overreaching,

they are not, however, the "classic example" of an improper use of

an accomplice's guilty plea in order to show the guilt of the

15
accused, as Valuck suggests. In light of the adequate jury

instructions given by the trial court, and the proper purposes that

were served in introducing Cleveland's testimony, we hold that the

district court did not commit plain error by admitting evidence of

Cleveland's guilty plea.

IV.

Valuck argues that he was denied effective assistance of

counsel in violation of the Sixth Amendment to the United States

Constitution. Specifically, he alleges his trial counsel failed to

(1) object to the introduction of his tax problems, (2) object to

the introduction of Cleveland's guilty plea, (3) investigate the

bases of opinions of Agent Geboski, (4) object to Geboski's

testimony, (5) make an opening statement, and (6) object to the

non-responsive answers of several government witnesses. As a

general rule, Sixth Amendment claims of ineffective assistance of

counsel should not be litigated on direct appeal, unless they were

previously presented to the trial court. United States v.

Delagarza-Villarreal, 141 F.3d 133, 141 (5th Cir. 1998). We do, in

rare cases, grant an exception to this rule. Id. (quoting United

States v. Navejar, 963 F.2d 732, 735 (5th Cir. 1992)). This,

however, is not one of those rare cases. In fact, on the record

before us, any determination as to the reasons for trial counsel's

actions would be speculative in nature and this court does not

decide issues on the basis of speculation alone. Accordingly, we

decline to entertain Valuck's appeal on this ground, but we do so

16
without prejudice to Valuck's right to raise this issue

collaterally in a habeas corpus proceeding. Delagarza-Villarreal,

141 F.3d at 141; United States v. Higdon, 832 F.2d 312, 314 (5th

Cir. 1987).

V.

For the foregoing reasons, we AFFIRM.

17