U.S. v. Pacheco-Ortiz, PACHECO-ORTI

• Decision Date: 01 August 1989
• Docket Number: D,PACHECO-ORTI,No. 88-2073,88-2073
• Citation: 889 F.2d 301
• Parties: UNITED STATES of America, Appellee, v. Francisco J.efendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 301

889 F.2d 301

58 USLW 2342

UNITED STATES of America, Appellee, v. Francisco J. PACHECO-ORTIZ, Defendant, Appellant.

No. 88-2073.

United States Court of Appeals, First Circuit.

Heard Aug. 1, 1989.

Decided Nov. 1, 1989.

Jeffrey A. Miller with whom Miller & Beilly, P.A., Fort Lauderdale, Fla., was on brief, for defendant, appellant.

Salixto Medina-Malave, Asst. U.S. Atty., Santurce, P.R., with whom Daniel F. Lopez-Romo, U.S. Atty., Hato Rey, P.R., was on brief, for the U.S.

Before CAMPBELL, Chief Judge, TORRUELLA, Circuit Judge, and WOODLOCK, ^* District Judge.

PER CURIAM.

Francisco J. Pacheco-Ortiz, the appellant, was convicted of one count of conspiracy to commit mail fraud and three counts of aiding and abetting mail fraud for his part in an insurance fraud scheme involving arson of warehouses. On appeal, he argues that the evidence at trial was insufficient to sustain his conviction; that the government failed to disclose exculpatory evidence; and that the district court should have excluded his grand jury testimony because he had testified without benefit of either Miranda or target warnings.

We affirm on all but one of the aiding and abetting counts. But we also find it necessary again to express our profound dissatisfaction with the failure of a United States Attorney's Office in this Circuit to abide by Department of Justice policies and procedures prescribing the giving of certain warnings prior to obtaining grand jury testimony from targets of an investigation. While this failure will not justify any adverse action by us on this appeal, it does cause us to give notice that future violations of this policy--even when not justifying adverse action on the appeal--will likely result in official public reference of the matter by this court to the attention of the Office of Professional Responsibility of the United States Department of Justice.

I

A

On June 29, 1982, El Sol de America Express, Inc. ("Sol"), a moving and storage company owned by Angel Luis Ortiz-Colon, insured its main warehouse with Royal Insurance Company for $600,000. Later, after renting a secondary warehouse, Ortiz-Colon asked his insurance broker to extend the original policy to cover the new facility, to which he transferred various goods of modest value.

On November 18, 1982, the secondary warehouse burned down.

Ortiz-Colon filed an insurance claim for approximately $200,000 in losses at the secondary warehouse. Among the supporting documents were two contracts, one in the name of appellant and one in the name of his wife. However, because a misunderstanding had prevented the extension of coverage to the secondary warehouse, Royal Insurance Company denied Ortiz-Colon's claim and cancelled his policy.

On April 4, 1983, Ortiz-Colon bought new coverage for Sol's main warehouse from Santiago Rentas Martinez, a broker he had met at appellant's real estate office. The policy was issued by Sun Alliance Insurance Company. Rentas testified at trial that he would not have issued the policy had Pacheco or anyone else told him about the November 1982 fire.

On April 24, 1983, Sol's main warehouse burned down.

Sun Alliance referred the resulting claim to Benjamin Acosta, the same adjustor who had investigated the earlier fire. After examining supporting documents supplied by Ortiz-Colon, Acosta, suspecting in his words "that the whole thing was a fraud but [having] no evidence to prove it," settled the claim for $125,000.

One of the supporting documents supplied by Ortiz-Colon to Acosta in support of the claim was a contract in the name of Antonio Gonzalez. At trial, Gonzalez testified that he had signed the document at the urging of appellant, and that it had been blank when he signed it. Gonzalez stated that he had neither lost any merchandise with Sol nor authorized the filing of the contract to support an insurance claim.

Sun Alliance filed an action in the Superior Court of Puerto Rico, apparently in the nature of interpleader, in which, as its lawyer testified, it attempted

to consign in the Superior Court of Bayamon the sum of $125,000 to Sol de America Express so that the Superior Court of Bayamon could consign or distribute those $125,000 to Sol de America Express and the third parties who stored the property in the warehouses.

Sol answered the Sun Alliance consignment complaint on June 1, 1983, and moved to be permitted to recover the entire $125,000. By a judgment entered the same day all the monies were turned over to Sol. Sun Alliance thereafter found itself embroiled in disputes with third parties who alleged that they were entitled to a portion of those settlement proceeds.

B

Appellant appeared before the grand jury on November 16, 1987. The record does not disclose that the prosecutor provided any warnings regarding either appellant's right against self-incrimination or his status as a target of the grand jury's investigation. ¹

Two days later, on November 18, 1987, the grand jury charged Ortiz-Colon, appellant, and several others with conspiracy to commit mail fraud and mail fraud; Ortiz-Colon was also charged with arson and obstruction of justice. The grand jury returned a superseding indictment on January 13, 1988.

The fraud scheme as alleged in the superseding indictment was one to "obtain money and property, by means of false and fraudulent pretenses, representations, and promises from the Royal Insurance Company of Puerto Rico, Inc., the Sun Alliance Insurance Company of Puerto Rico, Inc., and the Superior Court of Puerto Rico, Bayamon District."

Trial commenced on May 9, 1988. On May 10, Ortiz-Colon and two other defendants entered guilty pleas. After trial, all remaining defendants except appellant were acquitted of all counts against them. Pacheco was convicted of Count I, the conspiracy count, and Counts 22-24, three mail fraud counts relating to the fire at the main warehouse.

II

Appellant's argument regarding sufficiency of the evidence has two components. First, Pacheco contends that the government proved only a "legitimate arms length business relationship," Appellant's Brief at 24, between him and Ortiz-Colon, not a conspiracy. Second, he claims that the mailings which form the basis of Counts 22-24 were not in furtherance of the scheme.

On appeal, we will hold "the evidence ... sufficient if a reasonable person could fairly find [Pacheco] guilty beyond a reasonable doubt, viewing the evidence in the light most favorable to the government." United States v. Santiago, 828 F.2d 866, 870 (1st Cir.1987), cert. denied, 485 U.S. 969, 108 S.Ct. 1244, 99 L.Ed.2d 442 (1988).

A Conspiracy

"The gist of conspiracy is an agreement to disobey or to disregard the law." United States v. Drougas, 748 F.2d 8, 15 (1st Cir.1984). The government must prove "intent to agree and intent to commit the substantive offense." Id. The evidence need not be direct; agreement and intent may be proved circumstantially. Id.; United States v. Alemany Rivera, 781 F.2d 229, 234 (1st Cir.1985), cert. denied, 475 U.S. 1086, 106 S.Ct. 1469, 89 L.Ed.2d 725 (1986). Moreover, "a conspiratorial agreement need not be express, but may consist of no more than a tacit understanding." Id. However, the government must prove "that each defendant knowingly and intentionally joined th[e] conspiracy." United States v. Hensel, 699 F.2d 18, 33 (1st Cir.), cert. denied, 461 U.S. 958, 103 S.Ct. 2431, 77 L.Ed.2d 1317; 464 U.S. 823, 104 S.Ct. 91, 78 L.Ed.2d 99; 464 U.S. 824, 104 S.Ct. 94, 78 L.Ed.2d 100 (1983).

Several witnesses supported the conspiracy charge against Pacheco. Although appellant testified before the grand jury that he had visited Ortiz-Colon at Sol's warehouse no more than twice, government witnesses testified at trial that Pacheco had visited Sol "many times" or "often," and had had private conversations with Ortiz-Colon in the latter's office. Additionally, there was evidence suggesting that appellant helped Ortiz-Colon obtain new insurance when his policy was cancelled after the first fire.

Most damaging to Pacheco was the testimony of Antonio Gonzalez Ramos. Gonzalez testified that after the second fire, he was asked by Pacheco to sign a blank Sol contract. Gonzalez testified further that he at first refused, but Pacheco "assured me that this document wouldn't get me into any trouble because after this was presented to the insurance company that's where it would stay and nothing else would happen with it." The contract was later filled out and presented to the insurance adjustor as evidence of loss, even though Gonzalez never lost any merchandise with Sol nor authorized filing of the contract to support Sol's claim.

Appellant tells us that we "must necessarily discount" Gonzalez's testimony because of its many flaws and inconsistencies. ² 2] However, it is hornbook law that "[w]e must resolve any issue of credibility in favor of the jury's verdict, and we must defer to the jury's verdict if the evidence can support varying interpretations." United States v. McNatt, 813 F.2d 499, 502 (1st Cir.1987) (citations omitted).

Considering all of the evidence in the light most favorable to the government, we have no difficulty holding that the jury had before it sufficient evidence to support the verdict.

B Mail Fraud

Appellant's second sufficiency contention is that the mailings which form the basis of Counts 22-24 were not sent or caused to be sent "for the purpose of executing [the fraudulent] scheme." 18 U.S.C. Sec. 1341.

That language from the mail fraud statute has been given a "liberal construction" by this court and others. United States v. Serino, 835 F.2d 924, 928 (1st Cir.1987).

It is not necessary ... that each mailing guarantee the success of the scheme, or even significantly advance it. "A mailing need only be closely related to the scheme and reasonably foreseeable as a result of the defendant's actions." ... It is sufficient that the mailings are incident to defendants' efforts in furtherance of the scheme....