U.S. v. Fernandez

• Decision Date: 11 February 2009
• Docket Number: No. 07-50513.,07-50513.
• Citation: 559 F.3d 303
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Horacio FERNANDEZ; Diana Marquez; Hector Leonel Marquez-Ramos, also known as Hector Marquez, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

559 F.3d 303

UNITED STATES of America, Plaintiff-Appellee, v. Horacio FERNANDEZ; Diana Marquez; Hector Leonel Marquez-Ramos, also known as Hector Marquez, Defendants-Appellants.

No. 07-50513.

United States Court of Appeals, Fifth Circuit.

February 11, 2009.

Joseph H. Gay, Jr., Asst. U.S. Atty., San Antonio, TX, Mark Randolph Stelmach (argued), Asst. U.S. Atty., Austin, TX, for U.S.

John F. Carroll (Argued), San Antonio, TX, for Fernandez.

Ray Ray Velarde (argued), El Paso, TX, for Marquez.

Joseph Sib Abraham, Jr. (argued), El Paso, TX, for Marquez-Ramos.

Appeals from the United States District Court for the Western District of Texas.

Before JONES, Chief Judge, and OWEN and SOUTHWICK, Circuit Judges.

LESLIE H. SOUTHWICK, Circuit Judges.

Three jointly tried defendants appeal their convictions and sentences relating to a major drug-trafficking conspiracy. We AFFIRM.

I. BACKGROUND

Horacio Fernandez, Diana Marquez, and Hector Leonel Marquez-Ramos were each convicted by a jury of multiple counts— some overlapping, others unique—resulting from their involvement in a marijuana importation conspiracy based in Juarez, Mexico and El Paso, Texas. Production and distribution networks extended considerably deeper into each country.

Taking the evidence in the light most favorable to the government, all were part of a group known as the Marquez Drug Trafficking Organization (the "Organization"), whose leader was Mario Marquez. While not a defendant, Mario played a central role in the relevant events. Hector Marquez-Ramos is Mario's brother; Diana Marquez was his wife; Horacio Fernandez was a long-time associate convicted of serving as the Organization's money-laundering expert.

Fernandez was charged solely with money-laundering counts. He was sentenced to two concurrent terms of 160 months' imprisonment. Diana Marquez was charged with money laundering and with drug distribution and importation. She was sentenced to multiple concurrent terms of imprisonment, the longest of which were for 360 months. Hector Marquez-Ramos was charged with multiple drug counts as well as the most serious offense, conspiracy to murder in a foreign country. He was sentenced to multiple terms of life imprisonment and one term of 40 years' imprisonment, all to run concurrently. We separately address the contentions of each defendant.

II. DISCUSSION

A. Horacio Fernandez

1. a. Sufficiency of the Evidence on Money Laundering Counts

Fernandez argues that the evidence was insufficient to support the jury verdict convicting him of one count of conspiracy to launder money and another of substantive money laundering. See 18 U.S.C. § 1956(h), 1956(a)(1)(B)(i), (ii). Because Fernandez objected to the sufficiency of the evidence at the trial level, we evaluate whether a reasonable jury could have found that the evidence established the guilt of the defendant beyond a reasonable doubt. United States v. Lewis, 476 F.3d 369, 377 (5th Cir.2007). Due to the jury verdict of guilt, the evidence is viewed in the light most favorable to the government, which receives all reasonable inferences and credibility choices. Id.

The specific nature of this conspiracy required the government to show that Fernandez knowingly conspired with at least one other person to (1) conduct or attempt to conduct a financial transaction; (2) with the knowledge that it involved proceeds of specified unlawful activity (here, controlled substance offenses); and (3) with the knowledge that the transaction was designed in whole or in part to conceal the nature, source, ownership, or control of the proceeds, or to avoid a federal or state reporting requirement. United States v. Adair, 436 F.3d 520, 524 (5th Cir.2006).

The government's conspiracy case was that Fernandez served as a conduit for the proceeds of the Organization, using real estate transactions as a cover. The conspiracy was alleged to have existed from August 1988 until July 2005.

A major part of the government's case was the testimony of an undercover agent, Liss, who met with Fernandez on numerous occasions while posing as a Colombian "high-level drug trafficker." Liss began meeting with Fernandez in July 1995. He testified that Fernandez was paranoid about potential surveillance by law enforcement, insisting meetings take place outdoors with only one other person, and scanning police frequencies for evidence of detection. Fernandez was justified in his paranoia. After Liss said he had "large sums of money that needed to be laundered," Fernandez responded that he could help with real estate and investment transactions. According to this testimony, Fernandez responded to a request for more details about his money laundering techniques by saying, "I don't ask you about your drug business, you should not ask me about my money laundering business, or how I move the money." Fernandez also mentioned that most of his experience was with the proceeds of marijuana, while Liss presumably would be dealing in cocaine.

The government also introduced approximately two hours of recorded phone calls between Liss and Fernandez, during which Fernandez offered to introduce Liss to Fernandez's "friend," a Mexican "high-level drug trafficker." The government asserts this was a reference to Mario Marquez. Liss testified that the conversations contained various mutually understood coded references to the drug trade, including discussions of "real estate."

The government next alleges that a number of particular transactions show Fernandez's use of "shell companies" to receive money from Mario and Diana Marquez, launder it, and then return it to them. Examples supported by evidence at trial are said to be these:

• real estate was transferred from the Marquez family to a Fernandez-controlled company, then used as collateral for a half-million dollar loan;

• numerous high-value cashier's checks were exchanged between Fernandez and the Marquezes, which Fernandez could not explain at trial;

• Diana Marquez lived rent free in a house owned by Fernandez;

• Diana Marquez also received false W-2 forms from a Fernandez-controlled corporation by which she was not employed; and

• Mario Marquez wrote Fernandez from prison directing him to deposit immediately as much money as possible in Diana Marquez's account.

One agent summarized the government's case by testifying that "there was a `flow of money' from Mario Marquez to Horacio Fernandez, `and everything has shown that the money has come back to the Marquezes.'"

We just reviewed the evidence as to a conspiracy. The substantive money laundering count, also based on Section 1956(a)(1)(B)(i), involved a $17,000 down payment used to purchase a house in El Paso in August 2003. The evidence was that Fernandez, through one of his corporations, sold a note on another property for $80,000, and directed the buyer to remit part of the payment as a $17,000 check to Mario Marquez. The check was deposited in Diana Marquez's account, from which a cashier's check of just under $17,000 was written a few days later to purchase the house that is the subject of the count.

Fernandez argues that he was involved in a legitimate real estate business focused on purchasing properties at foreclosure sales; the cashiers checks that were introduced in the government's case were for legal purposes. Fernandez lists various checks contained in the government exhibits, repeating the basic description of them while stating, with respect to most, that "[n]o tracing was offered to establish the source of these funds or the use made of the funds." Fernandez explains his possession of the funds as resulting from the "substantial revenues" of his real estate business and a "substantial inheritance" he received on his father's death. He also argues that the prosecution's theory was not matched by the evidence, because one government witness testified that Marquez told him that Marquez had transferred ten million dollars to a "real estate person," and that this was shorthand for Fernandez. Since the total amount the court attributed to him at sentencing was just $452,394.15, he argues that the government's theory was contradicted by its own evidence.

Fernandez has not made the high showing required to show the evidence was insufficient to convict him of the conspiracy charge. "Circumstantial evidence may establish the existence of a conspiracy, as well as an individual's voluntary participation in it, and `circumstances altogether inconclusive, if separately considered, may, by their number and joint operation . . . be sufficient to constitute conclusive proof.'" United States v. Garcia Abrego, 141 F.3d 142, 155 (5th Cir. 1998) (quoting United States v. Roberts, 913 F.2d 211, 218 (5th Cir.1990)). Specifically responsive to Fernandez's assertion that the government failed to "trace" the origins of particular checks, the prosecution "is under no duty to trace the individual funds" involved in particular transactions, or to examine a transaction "wholly in isolation if the evidence tends to show that it is part of a larger scheme that is designed to conceal illegal proceeds." United States v. Rodriguez, 278 F.3d 486, 491 (5th Cir.2002).

Given the overwhelming evidence that Mario Marquez was the head of an international drug cartel, the jury could have concluded that the large-scale transfers of money from the Marquezes, through Fernandez or various shell corporations and back again, proved that the funds were the proceeds of the specified drug offenses and that the transactions were designed to conceal the funds' origins. Evidence of Fernandez's close contact with the Marquezes and Liss's testimony were sufficient to permit a reasonable jury to conclude that he was aware of the origins of the proceeds and conscious that he was engaged in money laundering. Fernandez did engage in some legitimate business, but the government had evidence he also engaged in this criminal conduct. He and the Marquezes had a shared interest in...