United States Court of Appeals
For the First Circuit
No. 00-1863
UNITED STATES OF AMERICA,
Plaintiff, Appellee,
v.
OSCAR FRIGERIO-MIGIANO
AKA OSCAR MIGIANO-FRIGERIO,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Torruella and Selya, Circuit Judges,
Campbell, Senior Circuit Judge.
Benjamín Ortíz-Belaval, for appellant.
Timothy S. Vázquez, Assistant U.S. Attorney, with whom Guillermo
Gil, United States Attorney, Jorge E. Vega-Pacheco, Assistant U.S.
Attorney, and Nelson Pérez-Sosa, Assistant U.S. Attorney, were on
brief, for appellee.
June 29, 2001
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TORRUELLA, Circuit Judge. On December 8, 1999, defendant-
appellant Oscar Frigerio-Migiano stood trial for one count of
conspiracy to launder money in violation of 18 U.S.C. § 1956(a)(1).
After the government rested its case, Frigerio twice filed a motion for
a judgment of acquittal. Although the court agreed that the evidence
against Frigerio was "very thin," both motions were denied and the case
was sent to a jury. On December 13, 1999, the jury returned a verdict
against Frigerio. Frigerio filed another motion to set aside the
verdict based on insufficiency of evidence, which was again denied. We
conclude that there was insufficient evidence to convict Frigerio and
reverse the decision of the district court.
BACKGROUND
On September 7, 1999, a federal grand jury for the District
of Puerto Rico returned a one-count indictment charging Frigerio, Jaime
Rafael Muñoz and Neida Ortíz Acosta with conspiring to launder money in
violation of 18 U.S.C. § 1956(a)(1). The government joined the trial
of Frigerio and Neida Ortíz Acosta, and a jury was impaneled and sworn
for these defendants on December 8, 1999. On that same day, Frigerio
filed a motion for severance under Federal Rule of Criminal Procedure
14, alleging prejudicial joinder of defendants. The court denied the
motion and the trial continued.
The government established at trial that Frigerio began
working at "Phone Home," a money remittance business, around the end of
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October 1998. He was hired to assemble kitchen door hinges and clean
the office. The government evidence showed that in addition to sending
legitimate money from workers employed on cruise ships to their homes
in foreign countries, Phone Home channeled over $26 million of drug
money out of Puerto Rico. Frigerio worked at Phone Home until the
business was shut down by government agents on December 9, 1998.
At trial, the government presented six witnesses. IRS
Special Agent Donald Semesky testified in general terms about the
structure of money laundering operations. José Mercado Febles, a
convicted drug trafficker familiar with Phone Home, testified that a
Colombian national known as "Fabio" sold heroin in Puerto Rico and
brought the proceeds to Phone Home. Jesús Iván Saenz Blanco, another
convicted drug trafficker, testified that he had, on various occasions,
carried $10,000 to $170,000 in small denominations to Phone Home for
the purpose of transmitting the money to Colombia. Saenz Blanco stated
that his money was counted upon arrival, and that he provided the
workers at Phone Home with the fictitious names and phone numbers of
the recipients in Colombia. Special Agent Gene Joseph Driggers, an
agent with the U.S. Customs Service and a computer investigation
specialist, identified the files of money transactions stored in the
Phone Home computer. Finally, government witness Nelson Laracuente,
assistant manager of the Old San Juan branch of Banco Popular,
testified to the large amounts of cash deposited in Phone Home's bank
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accounts. None of these witnesses testified to knowing or meeting
Frigerio, and the government stipulated that Frigerio's name was not
found in Phone Home's computer database.
The only government witness to identify Frigerio was Luis
Rivera Valentín.1 Rivera worked at Phone Home from August 1997 until
it was closed in December 1998. He testified that though at first he
simply ran errands and "did little things," he became involved in money
transactions in January 1998. Rivera explained that the legitimate
part of Phone Home, mostly involving money remittance from workers on
cruise ships, was conducted in the front area of the office. This
money was deposited in an account at First Federal Bank. He further
testified that "flashy" and "suspicious people . . . drug dealers,"
would bring in large amounts of cash -- from $10,000 up to $300,000 --
in book bags, shoe boxes or computer boxes. Rivera understood from a
March 1998 conversation with Neida Ortíz Acosta that the money was from
the sale of drugs. He stated that these individuals were shown to the
back of the office, where the money was counted and a receipt issued,
"stating in code form the amount": for example, $45,000 would be
documented as $45. The money was deposited in an account at Banco
Popular.
1 Rivera was actually the third witness presented by the government,
but since his is the only testimony relevant to this appeal, we explore
it separately.
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According to Rivera, Frigerio accompanied him at night to
deposit cash at Banco Popular. He also testified that Frigerio
assisted in the process of counting money. To this end, the government
presented two videotapes from cameras that federal investigators had
installed and hidden in the back room of Phone Home. The first of
these tapes was taken on November 23, 1998. In this video. Rivera
identified Frigerio counting money and himself entering the room.
Rivera also identified Frigerio as the person counting money in another
videotape taken on November 27, 1998, alongside a man named "Pocho,"
who would bring in large amounts of currency. In addition, he stated
that "every once in a while" Frigerio participated in the issuance of
false receipts. Finally, Rivera testified that Frigerio was present
when Phone Home was scanned for surveillance devices.
After the government rested its case, Frigerio moved for a
judgment of acquittal pursuant to Federal Rule of Criminal Procedure
29(a). Although the court acknowledged that the case against Frigerio
was "very thin," it denied the motion, concluding from Rivera's
testimony regarding the coded receipts that "there [was] at least
something there that the jury could use to impute knowledge to him."
The only defense witness was Neida Ortíz Acosta, to whom the government
presented a rebuttal witness and concluded the evidence. After the
jury left to deliberate, Frigerio renewed his motion for a judgment of
acquittal, which was again denied.
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On December 13, 1999, the jury returned a verdict against
Frigerio as to the only count filed against him. On December 15,
Frigerio filed a third motion under Rule 29, this time asking the court
to set aside the verdict because of insufficiency of evidence. Fed. R.
Crim. P. 29(c). The court denied the motion, and, granting a downward
departure, sentenced Frigerio to a period of twenty-seven months
incarceration and two years of supervised release. This timely appeal
followed.
DISCUSSION
In assessing the sufficiency of the evidence in a criminal
case, we ask "whether the evidence, viewed in the light most favorable
to the prosecution, would permit a rational jury to find each essential
element of the crime charged beyond a reasonable doubt." United States
v. Zanghi, 189 F.3d 71, 79 (1st Cir. 1999) (quoting United States v.
Guerrero, 114 F.3d 332, 339 (1st Cir. 1997)) (internal quotations
omitted). The evidence presented by the government need not
"preclude[] every reasonable hypothesis inconsistent with guilt in
order to sustain a conviction." United States v. Hernández, 218 F.3d
58, 64 (1st Cir. 2000) (quoting United States v. Loder, 23 F.3d 586,
589 (1st Cir. 1994)). However, the jury's verdict must be one that is
"supported by a plausible rendition of the record." Id. (quoting
United States v. Ortíz, 966 F.2d 707, 711 (1st Cir. 1992)). We review
a district court's Rule 29 determination de novo. Id.
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Frigerio concedes that he engaged in "financial transactions"
as defined in 18 U.S.C. § 1956(c)(4), but contends that the government
failed to meet its burden of proving the knowledge elements of the
crime charged. 2 The knowledge requirement under 18 U.S.C. §
1956(a)(1)(B)(i) is twofold: the government must demonstrate (i) that
the defendant knew that the funds involved in the financial transaction
were the proceeds of some unlawful activity; and (ii) that he knew the
transaction itself was "designed in whole or in part to conceal the
nature, location, source, ownership, or control of the proceeds of such
unlawful activity." 18 U.S.C. § 1956(a)(1)(B)(i). We now turn to the
government's case.
Viewing the evidence in the light most favorable to the
government, the jury could have found the following. During the period
that Frigerio worked at Phone Home, he witnessed large amounts of
small-denomination cash, ranging from $10,000 to $300,000, brought in
bags and boxes by "flashy" and "suspicious" individuals. These were
distinct from the smaller amounts of cash -- ranging from $100 to
$5,000 -- brought in by seamen. Frigerio accompanied Rivera on a
regular basis to Banco Popular, where the money was deposited. These
deposits totaled $1,959,068 in the time that Frigerio worked at Phone
Home; since the cash consisted mainly of small bills, Frigerio
2 Frigerio also appeals, in the alternative, the district court's
denial of his severance motion. Our conclusion concerning the
sufficiency of the evidence makes it unnecessary to address this issue.
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regularly carried a considerable and noticeable bulk of money on his
trips to the bank. Frigerio also witnessed the separation of
operations in the front and back of Phone Home, namely, that larger
amounts of cash were counted by machines in the rear while smaller
amounts brought in by seamen were accepted at the front counter.
Frigerio at least twice counted money himself in the rear, and on one
occasion did so in the presence of a known drug dealer (although
perhaps not known to Frigerio). Finally, Frigerio issued false
receipts, which "coded" the amount of money received so that it
appeared to be less than it actually was. Based on these findings, a
jury could infer that Frigerio knew there were unusually large sums of
money, brought into Phone Home on a regular basis, without any
identifiable source. In short, a jury could reasonably conclude that
Frigerio knew he was handling money derived from an illicit activity.
However, this, standing alone, is insufficient. As we have
previously indicated, the government must also prove beyond a
reasonable doubt that Frigerio knew that the transactions in which he
participated were part of a money laundering scheme. Though onerous,
the double-intent requirement serves an important function by shielding
innocent individuals who engage in otherwise legal financial activity.
The government's burden is compounded in the context of this case,
where activities such as counting money, making deposits, and issuing
receipts formed a routine part of the legitimate side of the business.
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Nevertheless, for the verdict to stand, the government must prove this
element of knowledge for at least one of its proffered transactions.
We first address the nightly deposits at Banco Popular. The
government argues that since Phone Home had two bank accounts, "[i]t
could be inferred that Frigerio knew one was to deposit monies obtained
through legal means and the other [Banco Popular] to deposit money
acquired from illegal ventures." This conclusion simply lacks
evidentiary support. It may be true, and indeed the government
established, that Phone Home maintained separate bank accounts for its
legitimate and illegal deposits. However, there is no nexus between
the existence of these accounts and Frigerio's knowledge. The
government presented no evidence, for example, that Frigerio handled or
saw any bank account statements, that he was familiar with the account
numbers, or even that he made any of the deposits himself.3 It is also
conceded by the government that Frigerio did not have access to the
computer files which tracked the money laundering details of the two
accounts. Thus, no reasonable juror could infer that, by accompanying
Rivera to the bank and witnessing the deposits, Frigerio knew that the
purpose of the deposits was to conceal the source and ownership of the
money.
3 In fact, Rivera testified that Frigerio went with him for security
reasons; "[s]o just in case there[ was] an assault or anything, there
would be a witness."
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We next consider the videos showing Frigerio counting money
in the back area of Phone Home. The government concedes that,
regardless of its source, all of the money entering Phone Home was
counted. The evidence does show that money from legitimate and
illegitimate sources varied in amount and were counted in distinct
areas of the office and in different ways: we have noted already that
a jury could conclude from this evidence that Frigerio knew that the
money he was counting came from illegal sources. Even so, one cannot
further conclude that Frigerio knew he was participating in an attempt
to conceal the illicit nature of the money. That is, in a business
that provided the very service of counting money, there is nothing
about the act of machine counting money that is inherently connected to
money laundering activity. Consequently, this transaction also fails
to prove the requisite knowledge element.
The strongest piece of evidence offered by the government
regarding Frigerio's knowledge of the money laundering operation is his
issuance of "coded receipts." Rivera testified that these receipts
represented amounts significantly smaller than those actually received.
In addition, Rivera stated that the receipts indicated where the money
was going, which could have revealed to Frigerio that large amounts of
cash were destined for Colombia. For the government to prevail, it
must be reasonable to infer, based on this evidence, that Frigerio was
aware of the attempts to conceal drug-related money.
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We believe that such an inference is too attenuated to
sustain the verdict. Even if Frigerio issued coded receipts, there
must be something about the receipt itself that would permit the
inference that he knew the meaning and purpose of the code. However,
the government did not present the actual receipts themselves. Instead,
the record contains only Rivera's description of their contents.4 This
description, moreover, is wholly without context: we do not know when
Frigerio issued these receipts, to whom, or even whether they did
indeed indicate suspicious destinations. Frigerio did not participate
in this process regularly, but "every once in a while," in the course
of performing various other, non-financial duties at Phone Home.
Finally, it is a conceded fact that Frigerio was not engaged in the
process of entering these transactions under fictitious names in the
computer. Based on the evidence presented at trial, we do not believe
that a jury could infer Frigerio's knowledge of the money laundering
operation beyond a reasonable doubt.
The government contends, as an alternative argument, that to
the extent Frigerio lacked knowledge of the money laundering
4 Normally, to prove the contents of a writing, the original writing
is required in preference to testimony about its content. Fed. R.
Evid. 1002. However, since no objection was made on these grounds at
trial and the issue is not raised on appeal, we do not address the
admissibility of this testimony. See, e.g., United States v. McMahon,
938 F.2d 1501, 1509 n.4 (1st Cir. 1991) (noting that failure to object
for best evidence below lowers the standard of review when issue is
raised on appeal).
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conspiracy, he was "willfully blind" to the illegal activities around
him. We have indeed stated that where there are prominent "red flags"
that signal criminal activity is afoot, a jury may infer that a
defendant deliberately ignored facts which would have otherwise been
obvious to a reasonable person. United States v. Gabriele, 63 F.3d 61,
66 (1st Cir. 1995). However, no such "red flags" were present here.
Rivera's testimony indicated that even he did not become wary of Phone
Home's business until he had worked there for over seven months. His
knowledge of the money laundering operation, moreover, was gained
through working with the computer. By contrast, Frigerio worked at
Phone Home for less than seven weeks and did not use the computer.
The activity occurring in Phone Home was therefore not a sufficient
"red flag" to permit an inference of willful blindness to the
conspiracy.
Likewise, Frigerio's presence during a scan for surveillance
devices is not a "red flag" in the context of this case. First, even
legitimate businesses -- particularly those dealing with financial
transactions -- might use surveillance devices as a valid security
measure. Even if we were to accept that the use of this equipment was
suspicious, however, we note that there is no evidence that Frigerio
was present on more than one occasion when this scanning occurred. As
a result, we do not believe that the scan rose to the level of a "red
flag" signaling money laundering activity.
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In reaching our conclusion, we acknowledge that this is a
close case. We agree with the district court, however, that the
government's evidence is, even at its best, "very thin" -- and can be
construed just as persuasively in favor of Frigerio. In such a case,
the defendant receives the benefit of the doubt: "[W]here an equal or
near equal theory of guilt and a theory of innocence is supported by
the evidence viewed in the light most favorable to the verdict, 'a
reasonable jury must entertain a reasonable doubt.'" United States v.
Andújar, 49 F.3d 16, 20 (1st Cir. 1995) (citing United States v.
Sánchez, 961 F.2d 1169, 1173 (5th Cir. 1992)). We conclude that the
jury's verdict is unsupported by the evidence.
Reversed.
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