U.S. v. Richard

• Decision Date: 01 August 2000
• Docket Number: 99-1774,Nos. 99-1773,99-1776,s. 99-1773
• Citation: 234 F.3d 763
• Parties: (1st Cir. 2000) UNITED STATES, Appellee, v. PAUL B. RICHARD, Defendant, Appellant. UNITED STATES, Appellee, v. CATHERINE DUFFY PETIT, Defendant, Appellant. UNITED STATES, Appellee, v. ROLAND L. MORIN, Defendant, Appellant. UNITED STATES, Appellee, v. DAVID J. HALL, Defendant, Appellant. , and 99-1777 Heard
• Court: U.S. Court of Appeals — First Circuit

Page 763

234 F.3d 763 (1st Cir. 2000)

UNITED STATES, Appellee, v. PAUL B. RICHARD, Defendant, Appellant.

UNITED STATES, Appellee, v. CATHERINE DUFFY PETIT, Defendant, Appellant.

UNITED STATES, Appellee, v. ROLAND L. MORIN, Defendant, Appellant.

UNITED STATES, Appellee, v. DAVID J. HALL, Defendant, Appellant.

Nos. 99-1773, 99-1774, 99-1776, and 99-1777

United States Court of Appeals For the First Circuit

Heard August 1, 2000

Decided December 18, 2000

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE

[Hon. D. Brock Hornby, U.S. District Judge.]

[David M. Cohen, U.S. Magistrate Judge]

[Copyrighted Material Omitted] Marc W. Griffin, by appointment of the Court, for appellant Paul B. Richard.

Michael A. Tucker, by appointment of the Court, for appellant Catherine Duffy Petit.

David J. Van Dyke, by appointment of the Court, with whom Berman & Simmons, P.A., was on brief, for appellant Roland L. Morin.

Jennifer A. Appleyard, by appointment of the Court, for appellant David J. Hall.

Margaret D. McGaughey, Assistant U.S. Attorney, with whom

Jay P. McCloskey, United States Attorney, was on brief, for appellee.

Before Torruella, Chief Judge, Wallace,^* Senior Circuit Judge, and Boudin, Circuit Judge.

WALLACE, Circuit Judge.

Richard, Petit, and Hall (defendants) appeal from their respective convictions and sentences imposed after a jury returned guilty verdicts for conspiracy, bankruptcy fraud, mail fraud, money laundering, and securities fraud in violation of 18 U.S.C. §§ 371, 152, 1314, 1956(a)(1)(A)(i), 1956(a)(1)(B)(i), 1957, and 15 U.S.C. § 77q. The district court had jurisdiction pursuant to 18 U.S.C. § 3231, and we have jurisdiction over these timely filed appeals pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a). We affirm.

I

Between 1989 and 1997, Catherine Duffy Petit, Paul Richard, David Hall, and several associates participated in a multifarious criminal scheme pivoting around an effort to finance Petit's multi-million dollar civil lawsuit against Key Bank of Maine (Key Bank) and the law firm of Bernstein, Shur, Sawyer and Nelson (Bernstein Shur).

In the late 1980's Petit became involved in a series of legal battles with Key Bank and her former attorneys, Bernstein Shur. In 1989 Petit persuaded Thomas Blackburn, a Maine attorney, to assist her in raising money to maintain her lawsuit against Key Bank and Bernstein Shur, and to pay her living expenses. Blackburn began locating investors willing to purchase stakes in the outcome of the litigation. Investors were told that the lawsuit was a "sure thing" and were promised that payments would be made when the case was settled. In addition, they were told that the investments were backed by a multi-million dollar escrow account. In return for their investment, investors were given assignments, signed by Petit and witnessed by Blackburn, that agreed to pay up to double the investment, plus 18% of the lawsuit proceeds, usually within six months of the investment.

In October 1990, Bernstein Shur settled with Petit. The lawsuit continued against Key Bank. The settlement was used by Petit and Blackburn to entice yet more investors, and, between 1990 and 1995, Petit and Blackburn expanded the scheme, recruiting several individuals to enlarge its fund-raising capacity. Petit and her associates continued to raise money even after the last remaining count of the lawsuit was dismissed in May of 1995. The dismissal of the lawsuit was never divulged to the investors. After the lawsuit was dismissed, Blackburn extricated himself from the operation. He had helped Petit raise approximately $4.2 million.

During this period, Richard played an important and versatile role in the operation, acting variously as Petit's companion, liaison, and enforcer, among other things. He arranged meetings, subdued anxious investors, and threatened Blackburn when he announced his desire to withdraw.

The scheme broadened in 1993 to include further criminal conduct when Petit was forced into Chapter 7 involuntary bankruptcy (later converted into Chapter 11) by creditors unrelated to the instant case. Maintaining that the lawsuit was her only asset, Petit directed Richard and two other associates to set up a dummy corporation, HER, Inc., with which to conceal assets from the bankruptcy court. During the course of the bankruptcy proceedings, Petit falsely denied receiving any income from the sale of her interest in the litigation, and she and her associates acted to conceal assets from the bankruptcy court, the trustee, and her creditors in the bankruptcy proceedings, primarily through the use of HER, Inc.

In late 1994, David Hall, a licensed broker-dealer for Sun Life Assurance of Canada, joined the scheme, soliciting funds from several of his clients, many of whom were elderly. Arguing that their Sun Life investments were not performing adequately, Hall suggested a risk-free, high-interest alternative. He specifically told two investors that the investment was in Petit's lawsuit, which he asserted was secured by a large escrow account. He informed neither of them that Petit was in bankruptcy, nor did he inform them of the lawsuit's dismissal in 1995. As Hall solicited more investors, he became yet more duplicitous, often asserting that the investment was in real estate. Hall forwarded the funds he received from investors to HER, Inc., via Richard and other associates, keeping a percentage for himself.

The fund-raising and money laundering scheme continued until 1997, when a Maine state investigation into HER, Inc. led to the arrests of Petit and several of her associates. The operation had raised over $8 million between 1989 and 1997, the bulk of which was used to finance Petit's profligate lifestyle.

A federal grand jury in the District of Maine indicted defendants for a multitude of offenses. Count 1 charged Petit, Richard, and Hall with conspiracy to commit bankruptcy fraud, mail fraud, money laundering, and securities fraud in violation of 18 U.S.C. §§ 371 and 2. Counts 2 through 13 charged them with bankruptcy fraud in violation of 18 U.S.C. §§ 152 and 2. Counts 14 through 26 charged them with mail fraud in violation of 18 U.S.C. §§ 1314 and 2. Counts 27 through 47 charged them with money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(A) and 2. Counts 48 through 62 charged them with money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and 2. Counts 63 through 75 charged them with money laundering in violation of 18 U.S.C. §§ 1957 and 2. Counts 76 through 87 charged them with securities fraud in violation of 15 U.S.C. § 77q and 18 U.S.C. § 2. Count 88 alleged criminal forfeiture pursuant to 18 U.S.C. §§ 1956(a)(1), 1957, 982, and 2.

At the end of the government's case at trial, each of the defendants moved for a judgment of acquittal, which were granted on Counts 10, 15, 20, 23 through 26, and 86 of the indictment. The court also granted a judgment of acquittal with respect to Hall on the bankruptcy fraud counts (Counts 2 through 13, and Counts 27 through 62). Motions directed at other counts were denied. The jury found Petit guilty on all counts submitted to them (Counts 1, 2-3, 5-9, 11-13, 14, 16-19, 21-22, 27-85, 87). They found Richard guilty on Count 1 (conspiracy), Counts 2, 4, and 9 through 13 (bankruptcy fraud), but not guilty on Count 7 (bankruptcy fraud). He was found guilty of all remaining mail fraud, money laundering and securities fraud counts (Counts 14, 16 through 19, 21, 22, 27 through 85, and 87). The jury found Hall guilty of conspiracy (Count 1), three counts of mail fraud (Count 16, 17, and 19), five counts of money laundering (Counts 65, 68, 71, 72, and 74), and ten counts of securities fraud (Counts 76 through 85). He was found not guilty of four counts of mail fraud (Counts 14, 18, 21, and 22), eight counts of money laundering (Counts 63, 64, 66, 67, 69, 70, 73, and 75), and one count of securities fraud (Count 87).

Each defendant submitted a Rule 29 motion for judgment of acquittal on several counts and the court acquitted defendants on the money laundering charges alleged in Counts 48 through 53, 55 through 57, 59 through 67, 69 through 71, and 73 through 75.

II

We first address Hall's contentions. He argues that the district court erred in denying his Rule 29 motion for a judgment of acquittal of the remaining money laundering counts in violation of 18 U.S.C. § 1957. He alleges that the government failed to prove all of the elements of an 18 U.S.C. § 1957(a) offense. Pursuant to section 1957(a), the government must show that Hall (1) knowingly engaged or attempted to engage in a monetary transaction (2) in criminally derived property (3) of a value greater than $10,000, and (4) derived from specified unlawful activity. First, Hall argues that the government did not prove that he engaged in a monetary transaction. Second, he argues that his acquittal on all bankruptcy fraud counts requires an acquittal on all money laundering counts because the money laundering counts listed bankruptcy fraud as the specified underlying offense. Third, he contends that the funds he received from his investors and transferred to his associates were not the proceeds of the bankruptcy fraud at the time of the transfer and, therefore, were not criminally derived property at the time of Hall's transfers.

"The denial of a Rule 29 motion for judgment of acquittal is reviewed de novo to determine whether any rational factfinder could have found that the evidence presented at trial, together with all reasonable inferences, viewed in the light most favorable to the government, established each element of the particular offense beyond a reasonable doubt." United States v. Gabriele, 63 F.3d 61, 67 (1st Cir. 1995).

A.

Hall's first argument raises a discrete question of statutory interpretation: whether the delivery or transfer of a check, which is the proceeds of unlawful activity, to another person is a monetary transaction...