67 F.3d 1435 (9th Cir. 1995), 93-10667, United States v. Savage

Docket Nº:93-10667.
Citation:67 F.3d 1435
Party Name:95 Daily Journal D.A.R. 13,841 UNITED STATES of America, Plaintiff-Appellee, v. Michael Eugene SAVAGE, Defendant-Appellant.
Case Date:October 13, 1995
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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67 F.3d 1435 (9th Cir. 1995)

95 Daily Journal D.A.R. 13,841

UNITED STATES of America, Plaintiff-Appellee,

v.

Michael Eugene SAVAGE, Defendant-Appellant.

No. 93-10667.

United States Court of Appeals, Ninth Circuit

October 13, 1995

Argued and Submitted Dec. 12, 1994.

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[Copyrighted Material Omitted]

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George C. Boisseau, Santa Rosa, California, for defendant-appellant.

Sandra L. Teters, Assistant United States Attorney, San Francisco, California, for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before: TANG [*], SCHROEDER, and REINHARDT, Circuit Judges.

TANG, Senior Circuit Judge:

Michael Savage appeals his judgment of conviction and sentence following a jury trial. Savage defrauded people of over $6 million by claiming that if they sent him $5000, he could obtain foreign loans and eventually pay each investor $10 million. Savage was convicted of mail and wire fraud, international money laundering, transferring criminally derived proceeds, and several other counts not at issue on appeal. Savage's appeal focuses solely on his convictions and sentence under 18 U.S.C. Sec. 1956, international money laundering, and 18 U.S.C. Sec. 1957, transfer of criminally derived proceeds. We have jurisdiction, and we affirm the judgment of conviction and the sentence.

From mid-1986 through mid-1991, Michael Savage defrauded investors by offering them the opportunity to participate in the "Savage Program," an investment program that promised a return of $10 million for a $5000 fee. In the "funding agreement," Savage provided the following explanation of the program. For each $5000 "unit" an investor purchased, Savage would negotiate an $80 million loan from unidentified foreign "principals" who wished to invest their vast wealth in the United States and Europe. Savage would invest $70 million of each loan in U.S. and European securities and "currency arbitrages"

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and the profits from these investments would pay off the entire $80 million loan, with interest. Savage would transfer the $10 million remaining from the original loan, called "funding," back to the investor along with a refund of the $5000 investment. Investors who wanted to leave the program could obtain a refund of their $5000 investment at any time. In a series of "solicitation drives," Savage collected over $6 million through this scheme. Savage and the people working with him spent virtually the entire amount.

As time passed, Savage sent investors frequent newsletters to explain why they had not yet received their "funding," and to discuss the necessity of bringing additional people into the program. The newsletters contained numerous false representations about the delays in "funding," typically relating unanticipated problems with the principals or banks. Savage also had contact with the "Task Force," a group of investors that initially formed to obtain information about why the program had not funded. Savage was vague about the details of the program and cautioned individual investors and Task Force members not to discuss the program with unauthorized persons.

Over the years, several other people helped Savage raise money, transfer it, and launder it. These people always worked under Savage's directions. In early 1987, Savage began working with Marlin Harris. First, Harris opened accounts at F & M bank in Kansas. Investors sent over $1 million to an account at this bank. Harris transferred the money to another account in the bank, and thereafter to accounts at the Royal Trust Bank in Vienna, Austria. The money in Austria was sent back to Savage's personal accounts in the United States, or was used directly to pay Savage's bills.

Dave Buck became involved in the Savage Program in late 1987. Buck also received over $2.5 million from investors, deposited into to the Wealth Information Network ("WIN") bank account at First Interstate Bank in Walnut Creek, California. Buck transferred this money to Austria or used it to pay Savage's expenses. Jim Peterson collected nearly $1 million of investors' money at his Aguilar bank account and also sent that money to Austria or to Savage's personal accounts, beginning in late 1989. Pat Garner collected and transferred Savage Program investments through the "P & M trust" at Spring National Bank in Texas, beginning in late 1990. Most of these funds were sent to the account of an attorney who paid Savage's personal expenses.

Savage was arrested on July 26, 1991. A federal district court order in a civil action restrained transfer of Savage's personal property. Nonetheless, Savage pledged his property as security for a corporate surety bond with a bail bonding company. Further, in an attempt to derail the investigation, Savage submitted false documents about the Savage program to the United States Attorney's office.

Savage was charged in a 101-count first superseding indictment filed September 13, 1991. Jury trial for Savage and codefendants J. David Buck and Pat Garner began on March 9, 1993. On May 24, 1993, the jury found Savage guilty of the following:

(1) mail fraud, 18 U.S.C. Sec. 1341, counts 1-13, 16, 18, 20-35, 37-45;

(2) wire fraud, 18 U.S.C. Sec. 1343, counts 46-47, 50-69;

(3) money laundering by transferring funds to foreign bank accounts, 18 U.S.C. Sec. 1956(a)(2)(A), (a)(2)(B)(i), counts 70, 72-74, 76-79;

(4) engaging in monetary transactions (here, wire transfers) in criminally derived property, 18 U.S.C. Sec. 1957, counts 81-93. 1

On October 8, 1993, Savage was sentenced to a 210-month prison term, five years of supervised released, and a $50 special assessment on each of the eighty-nine counts of conviction. Savage appeals the district

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court's judgment of conviction under 18 U.S.C. Secs. 1956, 1957, and the sentence imposed on that portion of the conviction.

I. Duplicitous Counts

Savage argues that his convictions on the Sec. 1956 counts, 70, 72-74, and 76-79, for international money laundering should be reversed because each of these counts was duplicitous, i.e. each count contained two distinct offenses. See United States v. Aguilar, 756 F.2d 1418, 1420 n. 2 (9th Cir.1985). Savage did not object to defects in the indictment before trial. Therefore, he has waived his right to raise an objection to the form of the indictment. United States v. Gordon, 844 F.2d 1397, 1400 (9th Cir.1988); Fed.R.Crim.P. 12(b)(2), (f). 2

Savage argues that the jury instructions did not correct the deficiency. Although Savage did not object to the indictment, he could have objected to the jury instructions. See Gordon, 844 F.2d at 1400-01 and n. 1. However, Savage did not object to the jury instructions below and has therefore waived his right to raise the adequacy of jury instructions on appeal. See United States v. Kessi, 868 F.2d 1097, 1102 (9th Cir.1989); Fed.R.Crim.P. 30. 3

Although Savage waived his right to raise the duplicity problem, we note that Savage has a right, under the Sixth Amendment, to a unanimous jury verdict. Duplicity raises the concern that Savage could have been convicted without a unanimous verdict as to each offense contained in the counts at issue, in violation of the Sixth Amendment. Aguilar, 756 F.2d at 1420 n. 2. Because a substantial right is at issue, we review the jury instructions for plain error even though Savage failed to object to the instructions below. Fed.R.Crim.P. 52(b); United States v. Anguiano, 873 F.2d 1314, 1319 (9th Cir.1989) (in case involving multiple conspiracies, failure to provide specific unanimity instruction is reviewed for plain error when the adequacy of the instructions was not raised during trial). When we review for plain error, we will reverse only if clear error prejudiced the defendant's substantial rights so as to affect seriously the fairness or integrity of the judicial proceedings. United States v. Rose, 20 F.3d 367, 373 (9th Cir.1994).

Each of the Sec. 1956 counts charges (1) the offense of transferring funds outside the United States with the intent to promote the underlying acts of mail and wire fraud, 18 U.S.C. Sec. 1956(a)(2)(A)(i), and (2) the offense of transferring funds outside the United States to conceal or disguise the nature, the location, the source, the ownership or the control of the mail and wire fraud proceeds, 18 U.S.C. Sec. 1956(a)(2)(B)(i). These counts do not raise the concern that the jury could have convicted Savage with less than a unanimous verdict. The jury instructions were not disjunctive. Rather, the instructions required the jury to find the elements of both offenses. 4

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Our conclusion is consistent with the Seventh Circuit's analysis of the identical problem with respect to a charge brought under Sec. 1956(a)(1), which, like Sec. 1956(a)(2), has both a promotion subsection, Sec. 1956(a)(1)(A)(i), and a concealment subsection, Sec. 1956(a)(1)(B)(i). In United States v. Jackson, 935 F.2d 832, 842 (7th Cir.1991), the indictment and jury instructions interpreted Sec. 1956(a)(1) as requiring the government to prove that the charged transactions were both intended to promote a continuing criminal enterprise and were designed to conceal the source of the funds. The Seventh Circuit concluded that combining the two offenses did not warrant reversal because the government had merely imposed an additional burden on itself. Id. This conclusion applies equally to Savage's case.

Savage argues that the jury could not have found him guilty of violating both Secs. 1956(a)(2)(A) and 1956(a)(2)(B)(i) because the elements of each subsection are mutually exclusive. He claims that he could not transport money both (1) with the intent to promote mail or wire fraud and (2) with the knowledge that the transaction was designed to conceal the nature, source, ownership, location or control of proceeds of mail or wire fraud. We disagree. The circumstances in which...

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