United States v. Rodriguez

• Decision Date: 16 October 2013
• Docket Number: No. 11–15911.,11–15911.
• Citation: 732 F.3d 1299
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Manuel RODRIGUEZ, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

732 F.3d 1299

UNITED STATES of America, Plaintiff–Appellee,

v.Manuel RODRIGUEZ, Defendant–Appellant.

No. 11–15911.

United States Court of Appeals,Eleventh Circuit.

Oct. 16, 2013.

John Claud, U.S. Department of Justice, Washington, DC, Kathleen Mary Salyer, Anne Ruth Schultz, U.S. Attorney's Office, Miami, FL, for Plaintiff–Appellee.

Michael Caruso, Federal Public Defender, Federal Public Defender's Office, Miami, FL, Timothy Cone, Federal Public Defender's Office, Fort Lauderdale, FL, Manuel Rodriguez, USP Pollock–Inmate Legal Mail, Pollock, LA, Anne Ruth Schultz, for Defendant–Appellant.

Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 0:11–cr–60062–WPD–1.

Before HULL and MARTIN, Circuit Judges, and BOWEN,^* District Judge.

MARTIN, Circuit Judge:

Manuel Rodriguez appeals his convictions and 120–month sentence of imprisonment for conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and wire fraud, in violation of 18 U.S.C. § 1343. On appeal, Mr. Rodriguez raises two issues. First, Mr. Rodriguez argues that there was not sufficient evidence at trial to support his convictions. Second, Mr. Rodriguez says that the record did not establish that his offense involved more than 50 victims, so the District Court erred when it applied a 4–level sentence enhancement under United States Sentencing Guidelines (USSG) § 2B1.1(b)(2)(B).

We affirm Mr. Rodriguez's convictions because there was sufficient evidence for a reasonable trier of fact to find Mr. Rodriguez guilty beyond a reasonable doubt. However, because the record does not support a finding that his offense involved more than 50 victims, we vacate Mr. Rodriguez's sentence and remand to the District Court for resentencing with a 2–level enhancement under USSG § 2B1.1(b)(2)(A) rather than a 4–level enhancement under § 2B1.1(b)(2)(B).

I.

On March 24, 2011, a federal grand jury sitting in the Southern District of Florida returned a nine-count indictment against Mr. Rodriguez. The indictment charged Mr. Rodriguez with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and eight counts of wire fraud, in violation of 18 U.S.C. § 1343. Before trial, the District Court dismissed one count of wire fraud (Count 4). Mr. Rodriguez proceeded to trial on the remaining counts on September 12, 2011.

A.

The evidence at trial showed that between 2003 and 2007, Mr. Rodriguez owned, operated, and participated in four different companies that sold coffee machines and other vending machines to the public. Mr. Rodriguez's companies tried to generate sales by posting ads on the Internet seeking investors who were looking to own and operate their own small businesses. When a possible investor responded to an ad, one of Mr. Rodriguez's associates would contact them and inform them about their golden opportunity to invest in a new coffee machine, vending machine, or drinking water machine.

In order to induce prospective customers to buy his products, Mr. Rodriguez and his associates gave a number of guarantees, both over the phone and in promotional materials created by Mr. Rodriguez. For example, sales people would routinely guarantee the amount of money that customers would make each day and how quickly they could recoup their investment.The companies also promised that they would provide experienced professional location specialists who would use advanced market analytics and demographic research to secure high-end locations where the machines would have lots of potential patrons. The companies promised that if the customers were to encounter any problems, they would be provided with technical support and assistance. Best of all, the customers were told that if they were not satisfied with their purchase, they could return the machines and receive a full refund.

Mr. Rodriguez's customers found out the hard way that these guarantees were too good to be true. After sending their money to Mr. Rodriguez, customers were told that they could expect to have their businesses up and running in weeks. But in fact, many waited for months for their machines to arrive, if they ever arrived at all. When the machines did finally arrive, many customers found that they did not work or that they cost more to operate than had been advertised.

Mr. Rodriguez's customers were also disappointed by the locations secured by the professional location specialists. Instead of having their machines placed at high-end venues where they could sell hundreds of items each day, customers were forced to settle for remote locations where they could barely cover their operational costs. Many customers testified that the machines generated zero profits or substantial losses. This, in the face of the 300–700% profit they had been promised. None of the customers said they had been able to recoup the cost of their initial investment.

Unsurprisingly, customers became frustrated and asked Mr. Rodriguez for help. Most of these customers, however, discovered that the technical support and assistance they had been promised was nowhere to be found. When they asked for a change in location, it didn't happen. And when customers asked for refunds, Mr. Rodriguez almost never honored his money-back guarantee.

Finally, the evidence at trial also showed that Mr. Rodriguez knew that all of this was happening, yet he continued to sell his machines to customers and guarantee profit figures which he knew were not real. Despite the number of complaints that Mr. Rodriguez received, new customers were told that failure was not a possibility. When prospective customers asked to speak to current investors, Mr. Rodriguez routinely supplied fake references. Sometimes Mr. Rodriguez even falsely stated that he owned the machines himself and that they were profiting and doing well for him. Beyond that, even after Mr. Rodriguez was served a cease and desist order from the Maryland Attorney General and told his customers that he was closing his company due to bankruptcy, Mr. Rodriguez simply created new companies selling different machines. In the Articles of Incorporation for one of his later companies, Mr. Rodriguez named his mother the President and CEO so that prospective customers could not tie the troubles of his earlier companies back to him. Mr. Rodriguez also drafted disclosure documents without mention of prior litigation, prior sanctions, or bankruptcies, and sent them to his prospective customers.

At the close of the government's case, the District Court dismissed an additional wire fraud count. On September 28, 2011, the jury returned its verdict, convicting Mr. Rodriguez of all remaining counts.

B.

Mr. Rodriguez was sentenced on December 7, 2011. The government sought a 4–level sentence enhancement under USSG § 2B1.1(b)(2)(B), arguing that Mr. Rodriguez's offense involved 50 or more victims. In support of this enhancement, the government submitted 42 affidavits from victims who sustained a loss after buying Mr. Rodriguez's machines, as well as a summary chart indicating a total of 238 victims. Mr. Rodriguez objected and argued that there was insufficient evidence in the record to show that the offense involved more than 50 victims. Nevertheless, the District Court reasoned that out of 238 customers who bought machines from Mr. Rodriguez, there must have been at least 50 victims. As a result, the District Court applied a 4–level sentence enhancement under USSG § 2B1.1(b)(2)(B).

II.

A.

Mr. Rodriguez first argues that there was not sufficient evidence to support his convictions. He suggests that the government's evidence at most establishes that he engaged in “mere puffery” in connection with the sale of his business opportunities, but not fraud. This is especially true, he claims, because he told all of his customers up front that there was substantial risk involved in purchasing one of his machines.

We review de novo a district court's denial of judgment of acquittal on sufficiency of evidence grounds. United States v. Browne, 505 F.3d 1229, 1253 (11th Cir.2007). In reviewing a sufficiency of the evidence challenge, we consider the evidence in the light most favorable to the government, drawing all reasonable inferences and credibility choices in the government's favor. Id. A jury's verdict cannot be overturned if any reasonable construction of the evidence would have allowed the jury to find the defendant guilty beyond a reasonable doubt. United States v. Herrera, 931 F.2d 761, 762 (11th Cir.1991). The evidence need not be inconsistent with every reasonable hypothesis except guilt, and the jury is free to choose between or among the reasonable conclusions to be drawn from the evidence presented at trial. United States v. Poole, 878 F.2d 1389, 1391 (11th Cir.1989) (per curiam). But when the government relies on circumstantial evidence, the conviction must be supported by reasonable inferences, not mere speculation. United States v. Friske, 640 F.3d 1288, 1291 (11th Cir.2011) (quotation marks omitted).

We have held that in order to support a conviction for wire fraud, the evidence at trial must show that a defendant (1) intentionally participated in a scheme or artifice to defraud another of money or property, and (2) used or caused the use of wires for the purpose of executing the scheme or artifice. United States v. Ward, 486 F.3d 1212, 1222 (11th Cir.2007). Similarly, in order to sustain a conviction for conspiracy to commit wire fraud, the government must prove that the defendant “knew of and willfully joined in the unlawful scheme to defraud.” United States v. Maxwell, 579 F.3d 1282, 1299 (11th Cir.2009).

It is true that “puffing” or “sellers' talk” is not a crime under federal fraud statutes. See United States v. Martinelli, 454 F.3d 1300, 1317 (11th Cir.2006); see also United States v. Brown, 79 F.3d 1550, 1557 (11th Cir.1996) (quoting with approval United States v. Pearlstein, 576 F.2d 531, 540 n. 3 (3d Cir.1978) for proposition...