584 F.3d 351 (1st Cir. 2009), 07-1044, United States v. Garcia-Pastrana

Docket Nº:07-1044, 07-1094, 07-1095, 07-1096, 07-1097, 07-1098, 07-1177, 07-1232, 07-1501, 07-1557, 07-1558.
Citation:584 F.3d 351
Opinion Judge:TORRUELLA, Circuit Judge.
Party Name:UNITED STATES of America, Appellee, v. Elba GARC
Attorney:Linda Backiel, with whom Jos
Judge Panel:Before TORRUELLA, Circuit Judge, LEVAL,[*] Senior Circuit Judge, and LIPEZ, Circuit Judge.
Case Date:October 20, 2009
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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Page 351

584 F.3d 351 (1st Cir. 2009)

UNITED STATES of America, Appellee,

v.

Elba GARCÍA-PASTRANA, Defendant, Appellant.

United States of America, Appellee,

v.

Héctor RenéLugo-Ríos, Defendant, Appellant.

United States of America, Appellee,

v.

Juan Ramos-Hernández, Defendant, Appellant.

United States of America, Appellee,

v.

Felipe Román-Lozada, Defendant, Appellant.

United States of America, Appellee,

v.

Juan Roldán-Vega, Defendant, Appellant.

United States of America, Appellee,

v.

Andrés Carrasquillo-Colón, Defendant, Appellant.

United States of America, Appellee,

v.

Enrique Vázquez-Préstamo, Defendant, Appellant.

United States of America, Appellee,

v.

Francisco Martínez-Irizarry, Defendant, Appellant.

United States of America, Appellee,

v.

Jorge L. Urbina-Acevedo, Defendant, Appellant.

United States of America, Appellee,

v.

Jesús Caraballo-Ortiz, Defendant, Appellant.

United States of America, Appellee,

v.

Luis Andino-Delbrey, Defendant, Appellant.

Nos. 07-1044, 07-1094, 07-1095, 07-1096, 07-1097, 07-1098, 07-1177, 07-1232, 07-1501, 07-1557, 07-1558.

United States Court of Appeals, First Circuit

October 20, 2009

Heard March 6, 2009.

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Linda Backiel, with whom José R. Aguayo Caussade and Víctor P. Miranda Corrada, were on joint brief for appellants Ramos, Román, and Roldán.

Rafael F. Castro-Lang, was on brief for appellants García and Vázquez.

Anita Hill-Adames, for appellant Lugo.

Laura Maldonado-Rodríguez, with whom Lydia Lizarribar and Francisco Dolz-Sánchez, were on joint brief for appellants Urbina, Caraballo, and Andino.

Lydia Lizarribar, with whom Laura Maldonado-Rodríguez and Francisco Dolz-Sánchez, were on joint brief for appellants Urbina, Caraballo, and Andino.

Carlos E. Montañez, for appellant Carrasquillo.

Miguel E. Miranda-Gutiérrez, for appellant Martínez.

Joseph F. Palmer, with whom Stephan E. Oestreicher, Jr., Attorney, Appellate Section, Criminal Division, U.S. Department of Justice, Rosa E. Rodríguez-Vélez, United States Attorney, District of Puerto Rico, and José A. Ruiz-Santiago, Assistant United States Attorney, District of Puerto Rico, were on brief for appellee.

Before TORRUELLA, Circuit Judge, LEVAL,[*] Senior Circuit Judge, and LIPEZ, Circuit Judge.

TORRUELLA, Circuit Judge.

This consolidated appeal concerns a scheme to embezzle and launder funds for a union health plan. The eleven defendants-appellants were employees of the Puerto Rico Aqueducts and Sewer Authority (the Autoridad de Acueductos y Alcantarillados de Puerto Rico, hereinafter the " AAA" ) and officials of the Unión Independiente Auténtica de Empleados de la AAA (hereinafter the " Union" ). Each defendant was convicted after a jury trial of embezzling and laundering funds designated for a health plan administered by the Union. The appeal raises numerous issues concerning the sufficiency of the evidence, the jury instructions, trial procedure, and sentencing. After careful consideration, we affirm in part, reverse in part, and remand for further proceedings.

I. Background 358
A. Dramatis Personae 358
B. 1998 to 2001 Conduct 360
C. 2002 to 2003 Conduct 363
D. 2004 to 2006 Conduct 365
E. The Proceedings 366
II. Discussion 367
A. Sufficiency of Evidence 367
1. The Embezzlement Convictions 367
a. " funds ... of a health care benefit program" 368
b. " without authority" 375
c. " knowingly and willfully" 377
2. The Money Laundering Convictions 379
B. Jury Instructions 381
1. Embezzlement Instruction 382
a. instruction that AAA's contributions belonged to Health Plan 382
b. commingling instruction 383
c. " legal principles" instruction 384
2. Money Laundering Instruction 385
3. Good Faith Instruction 386
4. Rejection of Tax Evasion Instruction 387
C. Trial Procedure 388
1. Mid-Trial Severance Challenge 388
2. Misstatement in Closing Argument 389
3. Post-Trial Threats and Harassment 390
D. Sentencing 391
1. Loss Calculation Enhancement 391
2. Lugo Enhancements 392
a. sophisticated means 392
b. $1,000,000 in gross receipts from a " financial institution[ ]" 392
c. " organizer or leader" 393
3. Substantive Reasonableness 393
III. Conclusion 394

Page 358 I. Background The following facts are based on the evidence presented at trial. A. Dramatis Personae There are eleven appellant-defendants in this consolidated appeal (together, the " Defendants" ). They are:

(1) Héctor RenéLugo-Ríos (" Lugo" )

(2) Andrés Carrasquillo-Colón (" Carrasquillo" )

(3) Elba García-Pastrana (" García" )

(4) Felipe Román-Lozada (" Román" )

(5) Jesús Caraballo-Ortiz (" Caraballo" )

(6) Luis Andino-Delbrey (" Andino" )

(7) Francisco Martínez-Irizarry (" Martínez" )

(8) Juan Ramos-Hernández (" Ramos" )

(9) Enrique Vázquez-Préstamo (" Vázquez" )

(10) Jorge L. Urbina-Acevedo (" Urbina" )

(11) Juan Roldán-Vega (" Roldán" )

The Defendants were non-management, " regular" employees of AAA, a public utility company providing water and sewer services to Puerto Rico's residents. Each defendant was also a member of the Union, which represented AAA's non-management employees. Management employees of AAA were members of a different union, called Hermandad Independiente Empleados Profesionales de la AAA (" HIEPPA" ). At all times relevant to this appeal, the Union had approximately 4,500 total members, and each member paid $7 per month in membership dues. The Union had other funds. Apart from the health plan contributions at issue in this appeal, the Union also received (1) monthly contributions to " a temporary disability insurance" program known as the " SINOT and Uniform Benefits program" (hereinafter " SINOT" ); 1 (2) monthly contributions to an Page 359 employee savings and retirement program; and (3) money received by the Union for renting out a parking lot. The Union's composition, activities, and finances were governed by two documents: (1) a constitution and (2) a collective bargaining agreement with the AAA.2 The Union's constitution established a Central Executive Committee (" CEC" ) responsible for the Union's finances and day-to-day administration. The CEC consisted of a president, vice president, executive secretary, and treasurer, as well as a single representative from each of the Union's seven local chapters. At all times relevant to this appeal, Lugo, Carrasquillo, García, and Román served as the president, vice president, executive secretary, and treasurer, respectively, of the CEC (together, the " Top Four Defendants" ). At all times relevant to this appeal, Caraballo, Andino, Martínez, Ramos, Vázquez, Urbina, and Roldán were presidents of the Union's seven local chapters (together, the " Chapter Presidents" ). The Union did not provide a salary for CEC officers. Instead, the officers were paid under a labor leave with pay provision in the collective bargaining agreement. Under that " labor leave" provision, also referred to as a " labor license," the AAA paid the officers their full salaries, but excused the officers from their AAA jobs to work full time for the Union.3 Under the collective-bargaining agreement, the AAA agreed to contribute a fixed amount per month to a " health insurance plan" for every Union member. 4 At all times relevant to this appeal, the monthly contributions ranged from $232 to $355 per member. Until 1993, the Union used the AAA's contributions to administer a health plan called Plan de Salud UIA (the " Old Health Plan" ). The Old Health Plan was not incorporated as a " health service organization" and thus was not subject to the jurisdiction of Puerto Rico's Office of the Insurance Commissioner (the " OIC" ). In late 1993, the CEC incorporated the Union-operated plan as a health service organization, Plan de Salud UIA (the " Health Plan" or " Plan" ). Defendants Lugo, Carrasquillo, García, and Román filed paperwork certifying that the Union would administer the AAA's medical contributions " in compliance with" and otherwise be subject to " the Puerto Rico Insurance Code." In incorporating the Health Plan, the Union complied with provisions of the collective bargaining agreement that required that " [t]he Union ... contract the services of a medical plan that is authorized by the [OIC]" and that " the medical plan fully compl[y] with all the requirements imposed by the [OIC]." 5 Page 360 The Health Plan's bylaws provided that the Health Plan was a " non-profit corporation with the fundamental purpose of providing health care services to the employees of [the AAA] who are members of the [Union]." They further stated that " [t]he principal source of financing of [the Health Plan] shall be the contributions negotiated by means of the Collective Bargaining Agreement, to be made by the [AAA]." Under the collective bargaining agreement, the AAA would disburse each monthly Health Plan contribution to the Union via a check in the Union's name.6 Although the funds were not directly sent to the Health Plan, the AAA's monthly checks stated on their face that they were " health plan contribution[s]," 7 and the collective bargaining agreement further provided that AAA " agree[d] to contribute to the medical plan...

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