U.S. v. Bunchan

• Decision Date: 02 September 2009
• Docket Number: No. 08-1022.,08-1022.
• Citation: 580 F.3d 66
• Parties: UNITED STATES of America, Appellee, v. James A. BUNCHAN, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

580 F.3d 66

UNITED STATES of America, Appellee, v. James A. BUNCHAN, Defendant, Appellant.

No. 08-1022.

United States Court of Appeals, First Circuit.

Heard February 3, 2009.

Decided September 2, 2009.

James M. Fox, for appellant.

Jack W. Pirozzolo, Assistant United States Attorney, with whom Michael J. Sullivan, United States Attorney, was on brief, for appellee.

Before LYNCH, Chief Judge, BOUDIN and LIPEZ, Circuit Judges.

LIPEZ, Circuit Judge.

Appellant James Bunchan masterminded a devastating pyramid scheme that stole nearly twenty million dollars from over five hundred people, most of them of Cambodian origin living in the United States. Following a jury trial, he was convicted of conspiracy, sixteen counts of mail fraud, and fifteen counts of money laundering. He was sentenced to a term of imprisonment of thirty-five years and ordered to pay restitution in the amount of $19,103,121.73. He now challenges: 1) his convictions, arguing that he was deprived of a fair trial due to the district court's restriction on impeachment of a government witness, and 2) the reasonableness of his sentence. We affirm.

I.

We recount the facts in the light most favorable to the jury's verdict. United States v. Gonzalez-Ramirez, 561 F.3d 22, 24 (1st Cir.2009). Appellant was the founder, owner, and director of two "multilevel marketing companies," World Marketing Direct Selling ("WMDS") and Oneuniverseonline ("1UOL"). Bunchan represented to investors that the companies made a profit through selling cosmetics, health and diet supplements, and other products. In reality, the companies sold little of anything and generated money almost exclusively through the recruitment of new investors, or "members."

Appellant met co-defendant Seng Tan in 1999, around the time that he started WMDS, at a WMDS promotional seminar. Tan quickly became the principal recruiter of new investors, and was eventually given the title of "CEO Executive National Marketing Director" on WMDS and 1UOL promotional materials. Appellant and Tan were married in 2002.

Also in 1999, appellant met Christian Rochon, who was a neighbor in his apartment complex. He asked Rochon to help him create promotional materials for WMDS. Appellant, who is from Cambodia, said he wanted an "American face" for the company and soon made Rochon "President" of WMDS. (Rochon, who is originally from Canada, is Caucasian.) After taking Rochon to be professionally photographed, appellant put Rochon's photograph on WMDS's promotional materials. When 1UOL was created in about 2001, Rochon was also made "President" of that company.¹ Correspondence to investors often carried Rochon's name and signature, although Rochon was instructed not to interact with investors.

Appellant and Tan, who is also Cambodian, marketed investments in WMDS and 1UOL primarily to members of the Cambodian community living in the United States. Many of the investors spoke poor English and had little formal education. To recruit new investors, appellant and Tan held informational seminars, usually hosted by Tan at the homes of investors. They often spoke to the prospective investors in Khmer, the Cambodian language, and emphasized their shared experiences as Cambodian immigrants.

Appellant and Tan represented that WMDS and 1UOL were profitable because they generated revenues from the sales of products, and that members earned commissions based on their sales. Investors could achieve different levels within the company, either by making sales, providing a lump-sum payment, recruiting new investors, or doing some combination of the three. For example, investors could skip the "Distributor" level — and avoid the requirement of selling products — by investing $26,347.86 and becoming a "Director I". "Director I's" were told that they would receive an immediate "bonus" of $2,797, followed by a $300 monthly payment for the rest of their lives and, some were told, through the lives of their children and grandchildren. Appellant created a document that described the "Director I" level to distribute at promotional seminars. The document read, in part:

You will get $300.00 each and every month for the rest of your life and pass on down to your children after your death ... You will see this money working for you while you are sleeping.... Our National Marketing Director of W.M.D.S., Inc., knowing exactly how you feel about your $26,347.86 which becomes a permanent investment with W.M.D.S. .... you should not be worry [sic] about loosing [sic] your one [sic] of a life time $26,347.86 investment at all. W.M.D.S., Inc., has an absolute responsibility to take care you [sic] and your family for life. Your investment can be inherited to your children and their generation to come.... Because you are the owner of the W.M.D.S., Inc., it is completely different from investing in stock that will go up or down and loose [sic] money.... Do not forget that you are a special person who has the best opportunity to meet this company first.... W.M.D.S. urges you to sign up now or you will miss your best chance of fulfilling your American Dream.

Investors were also encouraged to become "Gold Directors" by investing $130,000 to $160,000. Gold Directors were promised $2,500 in unending monthly payments.

Appellant and Tan encouraged people who did not have enough cash to borrow money by taking out second mortgages and home investment loans, and many investors did so. The government submitted at sentencing that more than 150 people had secured mortgages or borrowed from their retirement accounts to finance their investments in WMDS or 1UOL.

Internal Revenue Service ("IRS") Special Agent Troy Niro testified at trial that while investors were contributing money to WMDS, appellant was using the company coffers like a personal bank account to pay for personal expenses and furnish a lavish lifestyle. He owned several luxury cars, a home in Miami, Florida, and an expensive yacht named after himself (the "James B"). Other expenses reflecting his lavish lifestyle, as testified to by Agent Niro, included: $5,000 spent on hotel room service for two people in one night, $150,000 spent on diamonds, and $23,000 spent on hairpieces.² Between 2000 and 2005, appellant also spent over $3.8 million at casinos. He often wrote large checks to casinos from company accounts containing investor funds, at one time writing a single check for $238,370 from the 1UOL account to a Las Vegas casino.³ Agent Niro's investigation revealed that Bunchan appropriated at least $3.7 million of investors' funds for himself and spent an additional $280,000 of investor money on his ex-wife and other family members.⁴ Appellant also kept family members, such as his ex-wife and his son, on the payroll of the company even though they did not work there.

Beginning in early 2005, Bunchan and Tan began having difficulties recruiting enough new members to meet WMDS and 1UOL's obligations to existing members. By June 2005, the companies had altogether ceased making monthly payments to most of their investors, and investors began to complain. On August 15, 2005, Bunchan had a letter sent to investors falsely blaming the delay on technological problems and asking for investors' patience until September. In September, appellant directed that another letter be sent to investors, again blaming the delay on technological problems, and explaining that the company was installing "costly" new upgrades to its check-writing technology. Meanwhile, Tan told investors that the delay was caused by computer problems and, later, by a disruption in the companies' bank accounts caused by Hurricane Katrina. During this time, appellant hired attorneys to threaten investors who were complaining about their missed payments. The letters stated, in part, "[Y]our continued interference with WMDS and 1UOL's business affairs will be met with the full force of the law and WMDS and 1UOL will make you pay for your transgressions with all of your personal assets, including your personal residence."

In mid-November 2005, appellant, Tan, and Rochon were arrested by the federal authorities for mail fraud due to their activities with WMDS and 1UOL. While in jail awaiting trial, appellant initiated a murder-for-hire plot that targeted people he believed might testify against him, such as Rochon, several investors who had vociferously complained, and eventually the Assistant United States Attorney prosecuting his case. Appellant discussed his intentions with another inmate, who eventually notified the authorities and agreed to cooperate as a confidential informant in an undercover investigation. In the course of the investigation, undercover operators gave appellant the name of a "hit man," actually an undercover FBI agent, to whom appellant mailed a list of people he wanted killed. He had grouped his targets into three tiers, in order of priority, and included the prices he was willing to pay for each "hit" (ranging from $10,000 to $20,000). The FBI also recorded a conversation between the confidential informant and appellant in which appellant explained that he also wished the hired killer to assassinate the spouses and children of several people named on the list.⁵

A federal grand jury returned a second superseding indictment against appellant, Tan, and Rochon on August 17, 2006. Appellant was indicted on all forty counts of the indictment, which included one count of conspiracy in violation of 18 U.S.C. § 371, twenty-four counts of mail fraud in violation of 18 U.S.C. § 1341, and fifteen counts of engaging in monetary transactions in proceeds of an unlawful activity, a form of money laundering, in violation of 18 U.S.C. § 1957. On June 4, 2007, the first day of trial, Rochon agreed to plead guilty to seven counts of the indictment, including the conspiracy count, some mail fraud counts, and some counts of engaging in monetary transactions in proceeds of an unlawful activity. Rochon testified for the government...