U.S. v. Delgado

Decision Date20 February 2003
Docket NumberNo. 01-15299.,01-15299.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Miguel Arnaldo DELGADO, Deepak Kumar, Defendants-Appellants.
CourtU.S. Court of Appeals — Eleventh Circuit

Philip Louis Reizenstein, Philip L. Reizenstein, P.A., Marcia J. Silvers, Miami, FL, for Defendants-Appellants.

Harriet R. Galvin, Anne R. Schultz, Stephen Schlessinger, Miami, FL, for Plaintiff-Appellee.

Appeals from the United States District Court for the Southern District of Florida.

Before WILSON and FAY, Circuit Judges, and MILLS*, District Judge.

RICHARD MILLS, District Judge:

On April 11, 2001, a jury convicted Appellants Deepak Kumar and Miguel Delgado of engaging in an "alcohol diversion" scheme whose purpose was to evade federal liquor taxes.

The Appellants timely appealed.

I. FACTS
A. Synopsis of Scheme

In brief, the Government's evidence showed that Kumar ordered 15 shipments of liquor in Missouri and directed it to be sent to Delgado's bonded warehouse in Miami. Delgado then shipped the liquor to Honduras, but it only remained there until he could bring it back to his Miami warehouse. Once the liquor arrived in Miami, Delgado prepared paperwork indicating that it was re-exported to South America. In most instances, a shipping company owned by Jose Bermudez1 was the designated shipper. Bermudez, however, did not ship the liquor to South America. Instead, his non-bonded trucking company delivered the liquor to transport companies owned by unindicted co-conspirator William Coleman. Coleman's companies transported the alcohol by rail to Buffalo, N.Y. in exchange for cash payments of $2,000 he received from an unknown party. When the liquor arrived in Buffalo, Kumar sold it to Fabian Hart for between $75,000.00 and $85,000.00 per shipment. The payments Hart made to Kumar were cash transactions.

The jury convicted Kumar on all 29 counts of the indictment and it convicted Delgado of 28 counts. The Court sentenced Kumar to six months incarceration for each charge he was convicted of and ordered his sentences to run concurrently. The Court likewise sentenced Delgado. The District Court determined the amount of loss to the United States in unpaid liquor taxes to be $681,519.15. Thus, it ordered Kumar and Delgado to pay restitution in this amount.

B. Evidence Presented at Trial

The Government used numerous witnesses to detail the alcohol diversion scheme. Jerry Bowerman, the Bureau of Alcohol, Tobacco, and Firearms' ("ATF") chief of alcohol and tobacco diversion, testified as an expert in the area of alcohol diversion. Agent Bowerman explained that taxes are due on liquor once a distillery produces it. But if the liquor is going to be exported and it is secured in a bonded warehouse or transported "in bond," no taxes are assessed until the liquor is removed from its bonded status and enters the United States' stream of commerce. Once this happens, taxes must be paid. According to Agent Bowerman, a liquor smuggler's typical load consists of 1,700 cases of 1.75 liter bottles. The load consists of about 850 1.75 liter bottles of Canadian whiskey, and equal amounts of vodka and rum. By illegally diverting a load such as this, smugglers avoid paying about $52,424.55 in taxes.

During an 18 month period beginning on October 30, 1995, Kumar placed 15 orders with a Missouri liquor producer, McCormick's Distillery, Inc. ("McCormick's Distillery"). Each order consisted of 900 cases of Canadian whiskey, 450 cases of vodka, and 400 cases of rum. The orders were supposed to be exported to Inversiones Sula, S.A. de CV ("Sula"), Mr. Kumar's client in Honduras. The exporter named on the bills of lading was "McCormick Distilling Company, Inc., on behalf of Isle Trading Company, Inc. (`Isle Trading')"— a company owned by Kumar.

McCormick Distillery's Customer Service Supervisor, Eula Jean Hunt, testified that she filed ATF Form 5100.11 and prepared bills of lading to show that all Multinational's orders were exported. Schenker International's Ocean Export Manager, Michael Long, then arranged to have Kumar's orders exported. Upon reviewing the draft invoice McCormick Distillery prepared for the first of these shipments, Long advised Kumar that there might be a problem because it showed that the liquor was "sold" to Multinational in Miami and "ship[ped] to" Multinational in Miami. Kumar told Long that the shipper of the liquor was Isle Trading in Nassau, Bahamas, not Multinational in Miami. Kumar also said that the shipment was consigned to Sula and that Miguel Delgado, Sula's gerente (the Spanish word for General Manager), was the contact person. Based on this information, McCormick Distillery prepared final invoices stating that the liquor was sold to Isle Trading and that it was shipped to Sula in Honduras. Long put this same information on the bills of lading.

On August 5, 1996, Kumar told Long to change the consignee from Sula to "H.C.S. (Zona Libre)" in Honduras, but to keep Delgado as the contact person. Shipments 5 through 10 were shipped according to Kumar's August 5 instructions. When it came to make shipment number 11 in March of 1997, Kumar told Long to change the consignee back to Sula, but to once again list Delgado as the contact person. Kumar also told Long that all future shipments to Honduras were to be consigned to Sula unless otherwise noted. The bills of lading for shipments 11 through 15 were changed to reflect Kumar's directive.2

In late April or early May 1997, the ATF began investigating Kumar. An ATF inspector named Schieferdecker met with Kumar, Delgado, and Bermudez. During the meeting, Kumar acknowledged that he owned Isle Trading and Multinational. Delgado said that he was president of Lancer International Corporation in Miami and of Lancer International de Honduras. Bermudez said that he was the president of TransOcean Carrier in Venezuela and Miami, a shipping line, and OceanTransport, a trucking company that operated out of the same office as TransOcean.

The Government acquired documents from the truckers and shippers who transported Kumar's 15 liquor shipments. These documents showed that Delgado's Lancer International de Honduras contracted with King Ocean Shipping to transport all 15 liquor shipments from Honduras back to the United States. Kumar paid Delgado $3,350.00 to ship the alcohol from Miami to Honduras. He paid Delgado another $1,650.00 to have the liquor shipped from Honduras back to Miami. Thus, by shipping the liquor in such a round-about fashion, Kumar incurred additional expenses of $5,000.00 per load.

The Government called Inspector Schieferdecker to testify early in the Appellants' two-week trial. Inspector Schieferdecker, a non-expert, testified that his analysis of thousands of documents "led to only one possible outcome. It pointed to the diversion of alcoholic beverages...." The Appellants objected because Inspector Schieferdecker had not been qualified as an expert and, therefore, could not properly render an opinion about an ultimate issue. They also moved for a mistrial. Judge Middlebrooks sustained the Appellants' objection as unresponsive and because the Government had not sought to qualify Inspector Schieferdecker as an expert. He reserved on the mistrial motion. Thereafter, the Appellants had an opportunity to cross-examine the Inspector and present additional evidence. When Kumar called their expert witness, he too stated that the evidence pointed to an alcohol diversion scheme. Ultimately, Judge Middlebrooks chose to deny the Appellants' mistrial motion and issue a curative instruction.

Based on Inspector Schieferdecker's review of the bills of lading for the 15 shipments, he was able to determine the path each shipment took. The 15 shipments were purchased by Kumar's Isle Trading Company, and shipped to Delgado's care at either Sula or H.C.S. in Honduras. Delgado then "sold" the liquor back to Kumar and re-shipped it to Miami for Kumar. A bonded trucking company transferred the liquor from the ship to Delgado's bonded warehouse. It was kept at Delgado's bonded warehouse and designated for export to Venezuela or Guatemala. Except for one occasion, none of the liquor was actually shipped to either of those countries. If this was a record-keeping error, a still more serious irregularity became apparent when the Government discovered that liquor shipments 1-6 (whose bills of lading had been prepared by Delgado's company) falsely described the shipments as "foodstuffs" even though other shipping and warehouse records reported that the shipments contained 1,700-plus cartons of whiskey, vodka, and rum.

For shipments 7-14, Kumar arranged for Delgado to transport liquor back from Honduras to Miami. A Customs Form 7512 was filed for each of the shipments, accurately identifying the contents as liquor. Nevertheless, Customs agents became suspicious of these shipments because they were brought back to Miami so soon after they were shipped to Honduras. Upon investigation, the Customs Department discovered that shipment number 10's bill of lading was, like shipments 1-6, falsely identified as "foodstuffs."

Unindicted co-conspirator William Coleman testified that he recalled "roughly" fourteen occasions in 1996 and 1997 when Coleary Transport, a transloading company, received containers with cases of liquor, all in plastic bottles, from Lancer. According to Coleman, Coleary broke the seals of the containers it received and put the liquor in new containers with new seals. Coleman shipped these containers to Buffalo, N.Y. by rail on Lancer's order. When the liquor arrived in Buffalo, Coleman called a beeper number with a 305 area code to inform a man named "Jose" that the Lancer shipment had arrived. Coleman also provided "Jose" with a pickup number so that the railroad company would release the shipment to whoever the shipment had been consigned.

Once the liquor arrived in Buffalo, Kumar had someone contact Fabian Hart. Hart was a...

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