U.S. v. Naranjo

• Decision Date: 02 March 2011
• Docket Number: No. 08–13814.,08–13814.
• Citation: 634 F.3d 1198
• Parties: UNITED STATES of America, Plaintiff–Appellee,v.Mario NARANJO, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

634 F.3d 1198
22 Fla. L. Weekly Fed. C 1830

UNITED STATES of America, Plaintiff–Appellee,
v.
Mario NARANJO, Defendant–Appellant.

No. 08–13814.

United States Court of Appeals, Eleventh Circuit.

March 2, 2011.

[634 F.3d 1201]

Manuel Vasquez (Court–Appointed), Miami, FL, for Defendant–Appellant.Lisette M. Reid; Anne R. Schultz and Jeanne Marie Mullenhoff, Asst. U.S. Attys., Miami, FL, for U.S.Appeal from the United States District Court for the Southern District of Florida.Before EDMONDSON and PRYOR, Circuit Judges, and EVANS,^* District Judge.PRYOR, Circuit Judge:

The main issue in this appeal is whether there is sufficient evidence to support Mario Naranjo's convictions for concealment money laundering related to his operation of a Ponzi scheme that caused over one hundred victims to lose collectively over $2.7 million. The government presented evidence that Naranjo made three large cash withdrawals from bank accounts that contained fraudulently obtained proceeds of the Ponzi scheme and that Naranjo attempted to hide his association with the account holders. Viewed in the light most favorable to the government, this evidence supports a finding that Naranjo intended to conceal the ownership and source of funds obtained by fraud.

Naranjo also makes four other arguments. First, Naranjo argues that the government failed to prove that he intended

[634 F.3d 1202]

to defraud his victims and that we should vacate his convictions for fraud and for various charges that relate to his use of proceeds of the Ponzi scheme. Second, Naranjo contends that the government failed to disclose evidence in violation of the Jencks Act, 18 U.S.C. § 3500, and the Due Process Clause of the Fifth Amendment, see Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). Third, he argues that the district court violated his rights to due process under the Fifth Amendment and to confront his accusers under the Sixth Amendment by admitting summary evidence of financial records at trial. Fourth, Naranjo argues that the district court erred when it enhanced his sentence based on estimates of the losses he caused. These arguments lack merit. We affirm Naranjo's convictions and sentence.

I. BACKGROUND

On March 8, 2000, Naranjo incorporated MRNA Financial, Inc., in Florida for the purpose of operating a check cashing and payday loan business. On June 28, 2001, Naranjo opened an account for MRNA at First Union Bank (later Wachovia Bank) and designated himself as a signatory on the account. Although MRNA was administratively dissolved on September 21, 2001, Naranjo kept the MRNA account open and began to solicit capital from investors purportedly to fund the business venture. MRNA received its first contributions from investors in May 2002.

On January 29, 2003, Naranjo and Charles Carver incorporated in Florida The Loan Shoppe, Inc., for the stated purpose of providing check cashing, payday loan, and car loan services. Carver served as the sole officer and director of The Loan Shoppe. Corporate filings listed Carver as the incorporator and originally listed Naranjo as the registered agent, but a third person replaced Naranjo as the registered agent on February 21, 2003. Thereafter, Naranjo was not listed on corporate filings of The Loan Shoppe.

On February 7, 2003, Naranjo and Carver purchased an existing check cashing business from Ouri Kahn for $24,000. Naranjo negotiated and financed the purchase, but Carver signed the purchase agreement. Under the agreement, Kahn assigned his leases for two stores in Miami and Davie, Florida, to Carver to operate as The Loan Shoppe. Florida law did not allow Kahn to transfer his check cashing license, so The Loan Shoppe submitted an application for a license to the Florida Department of Financial Services soon after the acquisition of Kahn's stores. The license application represented that Carver would operate the business and made no reference to Naranjo.

On February 24, 2003, Naranjo and Carver opened a bank account for The Loan Shoppe at Wachovia Bank in Florida. The account listed both Naranjo and Carver as signatories. After The Loan Shoppe began its operations, Carver helped manage the business, but Naranjo, among other responsibilities, determined how much working capital to provide the stores. Naranjo gave checks to Carver, who cashed the checks and delivered cash to the stores.

In May 2003, the Florida Department of Financial Services requested additional information about The Loan Shoppe and its owners to process the license application. Instead of providing the requested information, The Loan Shoppe withdrew its application for a state license. The Loan Shoppe continued to provide check cashing services, but the Department later issued a cease and desist letter that stated that The Loan Shoppe could not cash checks without a license. The Loan Shoppe never obtained a license to cash checks or issue

[634 F.3d 1203]

payday loans in Florida and instead affiliated with another check cashing company called Intertransfers, Inc., in June 2003. This affiliation allowed The Loan Shoppe to cash checks legally.

In the summer of 2003, Naranjo dispatched Carver to Alabama to develop plans for the expansion of The Loan Shoppe into the Birmingham metropolitan area. Carver and Naranjo soon announced that they were closing their Florida stores and relocating their business to Alabama. Carver applied for a certificate of existence for The Loan Shoppe and, on August 13, 2003, Carver registered The Loan Shoppe, L.L.P., in Alabama. Registration documents listed Carver as the president and agent. On September 26, 2003, Carver and a third party opened a bank account for The Loan Shoppe, Inc. at the National Bank of Commerce in Alabama. The Loan Shoppe never obtained an Alabama license, but operated three check cashing stores in Pelham, Irondale, and Alabaster, which are suburbs of Birmingham. The Loan Shoppe completed its relocation to Alabama and closed its Florida stores in the late summer or early fall of 2003. Carver opened two more bank accounts for The Loan Shoppe in Alabama in 2004. Carver and a third person were largely responsible for managing the Alabama stores. Naranjo never visited the Alabama stores.

Naranjo remained in Hollywood, Florida, where he oversaw a multi-million dollar capital investment operation, created allegedly to finance the expansion of his small chain of check cashing and payday loan stores. After the establishment of MRNA and continuing after the incorporation of The Loan Shoppe, Naranjo issued bonds and promissory notes to investors that promised high interest rates in exchange for their investments. Naranjo hired several salesmen to help solicit investments, purchased “lead sheets” that listed potential investors, prepared a scripted sales pitch for his salesmen, and instructed salesmen not to contact individuals named on a list of “undercover regulators” he had developed. Naranjo told his salesmen that The Loan Shoppe was “very profitable,” and salesmen promised investors annual returns of 10 percent on the bonds and 18 or 24 percent on the promissory notes. Salesmen told investors that their investments would be held in segregated accounts and would be refunded if the company had financial troubles. Naranjo prepared packets of information for the salesmen to send to potential investors. These packets contained, among other items, a business license from the City of Pelham, Alabama, a Wall Street Journal article that described the profitability of payday loan businesses, and a short biography of Carver that exaggerated his military record. A private placement memorandum informed purchasers of bonds that about 16 percent of investor funds would cover overhead costs associated with the issuance of the bonds, but The Loan Shoppe did not make any such disclosure to the purchasers of promissory notes. Salesmen mailed the packets to potential investors and sometimes faxed additional information to investors. In return for their services, the salesmen received sales commissions of 15 or 20 percent.

Investors contributed $4,440,620 to Naranjo's capital investment campaign. This amount reflects investments from 139 investors in the United States and Colombia who provided capital contributions that ranged from $2000 to $750,000. Investors either wired funds to the MRNA or The Loan Shoppe accounts or mailed checks payable to the companies. Even though MRNA dissolved eight months before the first investments arrived, the MRNA account received deposits of more than $1.5

[634 F.3d 1204]

million. Funds also were transferred from the Florida bank account of The Loan Shoppe to the MRNA account over two years after the dissolution of MRNA. Other funds that investors had contributed were transferred from the MRNA account to the Florida bank account of The Loan Shoppe.

Despite Naranjo's ability to obtain millions of dollars from investors, The Loan Shoppe was a failure. The Loan Shoppe, during its two years of existence, earned only $506,876 in operating income. This income did not cover amounts The Loan Shoppe paid customers through check cashing and loans, and the business suffered an operational loss of $64,444.09, excluding payroll, insurance, and other overhead expenses.

The investors did not finance the expansion of a legitimate business, but instead funded a Ponzi scheme, which covered the considerable overhead expenses of The Loan Shoppe and enriched Carver and Naranjo. The Loan Shoppe used $1,346,573.49—approximately 30 percent of its capital contributions—to pay interest to investors or return investments. The Loan Shoppe spent another $1,060,864.19—approximately 24 percent of its capital contributions—to pay commissions to its salesmen. The Loan Shoppe also spent $381,586.91 on payroll expenses and $896,299.84 on general business expenses. Carver received more than $50,000 and Naranjo received a total of $450,531.08. Naranjo's receipts included funds from the accounts of The...