U.S. v. Diaz-Munoz

• Decision Date: 19 December 1980
• Docket Number: No. 79-5689,DIAZ-MUNO,A,79-5689
• Citation: 632 F.2d 1330
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Silvio R.lfredo Garcia and Eduardo Garcia, Defendants-Appellants. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1330

632 F.2d 1330

UNITED STATES of America, Plaintiff-Appellee, v. Silvio R. DIAZ-MUNOZ, Alfredo Garcia and Eduardo Garcia,

Defendants-Appellants.

No. 79-5689.

United States Court of Appeals,

Fifth Circuit.

Unit B

Dec. 19, 1980.

Harvey D. Rogers, Miami, Fla., for Diaz-Munoz.

Lyons & Farrar, Marsha L. Lyons, Miami, Fla., for Alfredo Garcia.

Jose E. Martinez, Miami, Fla., for Eduardo Garcia.

Carolyn L. Gaines, Atty., Appellate Section, Crim. Div., Dept. of Justice, Washington, D.C., for plaintiff-appellee.

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

Before JONES, FAY and HENDERSON, Circuit Judges.

FAY, Circuit Judge:

In this criminal appeal appellants seek reversal of convictions on nineteen counts. Appellant Diaz-Munoz was found guilty on counts one through four: conspiracy to defraud an insurance company through the mails in violation of 18 U.S.C. § 371 (1976) and causing documents containing a fraudulent claim for money to be mailed for the purpose of defrauding an insurance company in violation of 18 U.S.C. §§ 1341, 1342 (1976). Appellant Alfredo Garcia was found guilty of the above four counts and four additional counts of causing the false filing of tax returns on behalf of himself and a corporation in violation of 26 U.S.C. § 7206(1), (2) (1976). Appellant Eduardo Garcia was convicted on the four insurance counts and three counts involving embezzlement with mail fraud in violation of 18 U.S.C. § 1341 (1976) and preparing false documentation in violation of 49 U.S.C. § 121 (1976) and 18 U.S.C. § 2 (1976). In addition, Eduardo Garcia was found guilty of embezzlement from a common carrier in violation of 18 U.S.C. § 660 (1976), two counts of advising the preparation of false tax returns in violation of 26 U.S.C. § 7206(2) (1976), and three counts of causing the filing of false tax returns on behalf of himself in violation of 26 U.S.C. § 7206(1) (1976). We set aside the judgment of the trial court and remand for new trials, reversing the trial court's handling of Brady materials.

FACTS

Insurance Fraud

During 1973, Ocean Trailer Transport (O.T.T.), a subsidiary of Reynolds Metals, operated the M/V SIBONEY, a vessel carrying cargo between San Juan, Puerto Rico and Miami. Appellant Eduardo Garcia was general manager of O.T.T. in Miami, and appellant Alfredo Garcia handled operations in San Juan.

On her voyage beginning August 11, 1973, the M/V SIBONEY encountered difficulty and four containers owned by Meteoro Express Company were lost overboard. Appellant Silvio Diaz-Munoz, an officer of Meteoro, filed a claim on behalf of Meteoro against O.T.T. and its insurance carrier, Insurance Company of North America (INA).

Meteoro claimed that various merchandise had been packed in the lost containers along with the primary cargo of steel wire. Meteoro's claims and documentation on behalf of various merchants were received and eventually paid by INA. The government claimed that the lost containers held only steel wire. The merchants involved were unable to testify conclusively whether their merchandise was or was not in the containers.

Persons handling the loading of the containers testified that at one time Meteoro Insurance adjusters and personnel testified that they dealt with appellant Eduardo Garcia and Pete Sosa, general traffic and sales manager of O.T.T., in handling the claim. Sosa provided the only direct testimony concerning the fraud. He testified that the insurance claims came about through a series of conversations between himself, Silvio Diaz-Munoz, Eduardo Garcia and Alfredo Garcia and that he, Sosa, had helped Julio Hernandez and Silvio Diaz-Munoz prepare false documents with the knowledge of Eduardo Garcia. ¹ Diaz-Munoz, Fuentes and Hernandez denied preparing false documents. Eduardo Garcia denied having any discussions with anyone or having anything to do with preparation of the claims documents.

and Puerto Rican Freight Company had an agreement whereby operations were combined for the convenience of the two companies. Pursuant to this agreement, both companies would ship goods in the same container if the container was not fully packed by either. Diaz-Munoz' position was that this procedure was followed with the M/V SIBONEY. Roberto Faith of Puerto Rican Freight testified that the containers were sealed on his lot and sent to the docks. Ruben Fuentes, who was in charge of documentation at Meteoro, testified that the containers were always brought back to Meteoro where packing was completed and seals affixed.

Scheme Against Reynolds Metals

This scheme involved three shipments of pipe to the Dominican Republic in 1974. The shipper, D.A.F., was required to pay $1.00 per cubic foot. On the first two shipments, this amount was forwarded to Reynolds Metals, but certain "commissions" were paid to a freight forwarder (Alas Cargo Services) and eventually found their way back to O.T.T. According to Pete Sosa, he and Eduardo Garcia agreed to charge the shipper $1.00 a cubic foot for the third voyage but to prepare documents that would indicate that the charge was only .40 a foot. Pete Sosa described in detail his preparation of the false documents and alleged that he did so with the approval of Eduardo Garcia and the knowledge of Alfredo Garcia. O.T.T. was paid $88,000 for the shipments. Augustin Serralta of Alas Cargo Services testified that he deposited the $88,000 in the Alas account, and on the instructions of Eduardo Garcia, made one check for O.T.T., one for Caribbean Cargo, and kept the remainder as expenses for preparation of the papers.

Eduardo Garcia testified that he had discussed with his immediate supervisor at Reynolds the possibility of getting sufficient income from this third voyage to defray expenses of the voyage and to provide severance pay for O.T.T. employees as this was to be the SIBONEY's last voyage. Garcia's position was that because he had authority as general manager of O.T.T. to do what he had done, and because there was full disclosure to his superiors at Reynolds, there was no embezzlement.

The charges in the embezzlement counts against Alfredo Garcia were dropped at the end of the government's case but not before the evidence had been presented to the jury.

Income Tax Counts

The substance of counts ten and eleven was that Eduardo Garcia approached Francisco Vidal and asked if Vidal would accept certain money due Eduardo Garcia. Garcia arranged for certain checks to be delivered to Vidal for his own use and that money was then reported on Vidal's returns.

Rose Vidal, Eduardo Garcia's wife and the mother of Francisco Vidal, testified In establishing its case against Eduardo and Alfredo Garcia the government relied on the disbursement method of proof. Seeking to establish that the Garcias exercised control over money that was unreported as income, the government alleged that the accounts of Caribbean Cargo, a Panamanian corporation, were used to launder money. The appellants argued that any disbursements out of Caribbean Cargo were, in fact, loans. They argued that the Caribbean Cargo accounts contained funds originally deposited by the C.I.A. for use in anti-Castro activities.

that checks were received by her for use for general household expenses in the house in which Francisco, Eduardo, Rosa and others lived. As far as she knew she paid taxes on all the money she received. She identified $20,000 in checks from Caribbean Cargo and said she had repaid that money.

Count fifteen, an individual tax fraud count against Eduardo Garcia, was dismissed when it was discovered that the government failed to support it with proof.

The government abandoned its claims as to part of the monies questioned in counts sixteen and seventeen against Alfredo Garcia when it learned, after the grand jury indictment, that some of the funds in question had been reported on Alfredo Garcia's tax returns in Puerto Rico. The government again sought to prove that monies deposited into Caribbean Cargo accounts had been disbursed by this defendant.

In the final two counts charging Alfredo Garcia with causing income of Intermodal Cargo Services to be underreported, the government again tried to show that income of Intermodal had been deposited into Caribbean Cargo accounts. Alfredo Garcia testified that the monies questioned were repayment to Caribbean Cargo of loans previously made to Intermodal.

BRADY VIOLATIONS

Throughout this trial the government sought to prove that money obtained by fraud was deposited into accounts over which appellants Alfredo and Eduardo Garcia had control. According to the government, the primary vehicle for laundering this money was the account of Caribbean Cargo, a Panamanian corporation. Alfredo had signature power over accounts of that company. Alfredo and Eduardo Garcia contended that these accounts were set up to fund anti-Castro activities and that monies from the C.I.A. had been deposited into the accounts. Loans from the accounts were made from time to time to members of the Garcia family and such moneys were always to be paid back. Neither appellant regarded the money as his own.

Prior to trial a specific request was made that the government search records of the C.I.A., F.B.I. and military intelligence organizations for materials relating to anti-Castro activities of the appellants. In the motion, Alfredo Garcia argued that if such information were in the hands of any government agency, the information would have a direct and immediate bearing on whether funds going into and out of Caribbean Cargo accounts were monies Alfredo Garcia was required to report to the Internal Revenue Service.

The record indicates that the prosecutor did go to Washington, D.C. to review a C.I.A. file but was given only excerpts from the file. On the first day of trial, counsel for Alfredo Garcia asserted that because the prosecutor had not personally seen the file, no officer of the District Court for the Southern...