U.S. v. Estacio
| Decision Date | 31 October 1995 |
| Docket Number | No. 93-10713,93-10713 |
| Citation | 64 F.3d 477 |
| Parties | 95 Cal. Daily Op. Serv. 6606, 95 Daily Journal D.A.R. 11,321 UNITED STATES of America, Plaintiff-Appellee, v. Benito T. ESTACIO, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
David Alkire, Santa Monica, CA, for defendant-appellant.
Daniel S. Linhardt, Asst. U.S. Atty., Sacramento, CA, for plaintiff-appellee.
Appeal from the United States District Court for the Eastern District of California.
Before: SKOPIL, SCHROEDER, and RYMER, Circuit Judges.
Appellant Benito Estacio appeals his conviction after jury trial on a sixteen-count indictment arising out of an elaborate check kiting scheme. The counts of conviction included one count of conspiracy to commit bank fraud (18 U.S.C. Sec. 371), one count of aiding and abetting bank fraud (18 U.S.C. Sec. 1344), and fourteen counts of money laundering (18 U.S.C. Sec. 1956). The sentencing guideline range as calculated in the presentence report was 121-151 months, but the district court made a downward departure to concurrent terms of 40 months on all counts. The government does not cross-appeal.
Estacio functioned as the chief financial officer of a development company that owned several car dealerships in an automotive mall. With Estacio's knowledge, and under his direction, two dealerships conducted the check kiting at issue in this case by exchanging bad checks drawn on each dealership's respective bank. The kite flew at its highest in December of 1990, when the two dealerships exchanged kited checks totaling nearly $1,000,000 daily. In January 1991, the kite crashed when one of the banks refused to honor a check; the other bank ultimately lost more than $3,000,000.
The unusual feature of this prosecution is that the charges against Estacio included money laundering in violation of 18 U.S.C. Sec. 1956, a crime not usually associated with check kites. Estacio was charged with a separate crime of money laundering for each deposit that the dealerships made during the December, 1990 height of the kiting operation. We affirm all of the convictions for bank fraud and conspiracy to commit bank fraud. Estacio's contention that inflated credits in a bank account cannot constitute "proceeds of unlawful activity" within the meaning of the money laundering statute is without merit. We also reject Estacio's further contention that all of his convictions must be reversed because of the prosecutor's handling, before the grand jury, of the issue of immunity for other participants in the scheme who testified at Estacio's trial. Finally, Estacio's contention that the record reflects jury coercion by the trial court after it administered an Allen charge must also be rejected.
In June of 1990 through January of 1991, Estacio worked as a developer and chief financial officer of Transportation Enterprise, an auto plaza service and development company headed by Thomas DePasquale. Two dealerships in the plaza, Love Chevrolet ("Love") and Sunset Oldsmobile ("Sunset"), engaged in the check kiting at issue in this case. Love had its banking account with Security Pacific Bank; Sunset banked with Wells Fargo Bank. Beginning in about June of 1990, Love's account at Security Pacific became increasingly overdrawn. At this time it became apparent to Love's management and Estacio, who acted as an intermediary between Love's owner, DePasquale, and the manager of the Security Pacific Bank branch, that the overdrafts could not be made up.
In order to cover the checks that Love Chevrolet was writing, Love's business manager began to engage in a check swap with her counterpart at Sunset Oldsmobile. Sunset would write insufficient funds checks to Love which, when accepted for deposit, created an artificial increase in Love's balance at Security Pacific. Love, at the same time, would write checks totaling a similar amount to Sunset for deposit at Wells Fargo. The total amount of the checks to be exchanged by each dealership was termed the daily "hit." Runners from Love and Sunset met daily in a parking lot to exchange the checks and travel to their respective banks for deposit.
As the checks continued to flow between the two banks, the inflated balances in the two dealerships' accounts progressively grew. By December of that year, the dealerships exchanged close to $1,000,000 in checks each day. All of these checks were knowingly written on insufficient funds and deposited with the intent to defraud the banks. The evidence showed that Estacio directed the amount of the checks exchanged, assisted by a computer program that showed the status of the Security Pacific account on a daily basis.
While the kite was airborne, the device of exchanging checks totaling approximately matching amounts ensured that neither account became more overdrawn than the other. Until mid-January of 1991, the two banks displayed what in hindsight seems surprising tolerance for the transactions. Then, on January 8, 1991, Wells Fargo refused to honor one of Love's checks, drawn on the Security Pacific account. The check kiting scheme came crashing to the ground with the resultant multi-million dollar loss to Security Pacific. Estacio was indicted after DePasquale pled guilty. His trial proceeded on the basis of a second superseding indictment, the terms of which are important to the issues raised in this appeal.
Count One of the indictment alleged a conspiracy to commit bank fraud in violation of 18 U.S.C. Secs. 371 and 1344. The government alleged that the conspiracy began about June 1, 1990 and continued through January 16, 1991. The conspiracy therefore included the entire period during which the kiting took place as well as the post-crash period in which Estacio allegedly engaged in cover-up activity.
Count Two of the indictment alleged aiding and abetting the commission of bank fraud in violation of 18 U.S.C. Secs. 2 and 1344. That count related only to the period from about January 2, 1991 through January 16, 1991, and included alleged activities designed to cover up DePasquale's and Estacio's involvement in what Security Pacific, by then, knew had been a kite.
Counts Three through Sixteen of the indictment alleged separate incidents of money laundering in violation of 18 U.S.C. Sec. 1956(a)(1)(A)(i) and aiding and abetting money laundering in violation of 18 U.S.C. Sec. 2. In relevant part, the indictment on these counts alleged as follows:
BENITO T. ESTACIO engaged in check kiting which involved the proceeds of a specified unlawful activity, that is, bank fraud, with intent to promote the carrying on of said specific unlawful activity, and that while conducting and attempting to conduct such financial transactions, knew that the property involved in the financial transaction, that is the funds obtained from the check kite in the amounts set forth below, represented the proceeds of some form of unlawful activity.
Amount of Bank in Which The
Count Date Deposited Checks Deposit Was Made
3 12/6/90 $ 981,085.00 Wells Fargo Bank
4 12/6/90 $ 981,085.00 Security Pacific National
5 12/7/90 $ 866,425.68 Wells Fargo Bank
6 12/7/90 $ 855,478.00 Security Pacific National
7 12/10/90 $ 918,000.00 Wells Fargo Bank
8 12/10/90 $ 928,947.68 Security Pacific National
9 12/11/90 $ 686,041.00 Wells Fargo Bank
10 12/11/90 $ 686,041.00 Security Pacific National
11 12/12/90 $ 590,890.00 Wells Fargo Bank
12 12/12/90 $ 590,890.00 Security Pacific National
13 12/13/90 $1,008,454.29 Wells Fargo Bank
14 12/13/90 $ 979,542.00 Security Pacific National
15 12/14/90 $ 910,328.40 Wells Fargo Bank
16 12/14/90 $ 906,417.72 Security Pacific National
Estacio first contends on appeal that the check kiting did not involve "proceeds" of unlawful activities within the meaning of the money laundering statute because the kiting did not involve "real money."
Estacio also challenges the government's handling of witness immunity. During the course of trial, the trial court became concerned that government witnesses involved in the kite were testifying without immunity. The court learned that, prior to appearing before the grand jury, the witnesses had simply been told by the prosecution that they would not be prosecuted if they testified truthfully at Estacio's trial. The judge continued the trial for several days to clear the issue, and during that period the government granted complete immunity to all the prosecution witnesses who had been involved in the kite. When the trial resumed, the jury was made aware that the government witnesses were testifying under immunity. In this appeal, Estacio now claims that because the grand jury was not told that seven of the government's witnesses were testifying under immunity, there was prosecutorial misconduct requiring the dismissal of this indictment.
A final issue on appeal pertains to jury deliberations. After the jury had deliberated for two days, it sent a note to the court indicating that it was deadlocked. The district judge administered an Allen charge and sent the jury out to commence further deliberations at approximately 3:30 in the afternoon. The next day, a Friday, at approximately 2:30, the judge brought the jury members back and inquired as to their progress. Estacio contends on appeal that the colloquy that took place between the court and the jury foreman at that time was coercive in light of the jury's prompt return to render a unanimous verdict of guilty on all counts.
We address each of Estacio's contentions in turn.
18 U.S.C. Sec. 1956(a)(1), originally enacted in 1986, was described in a Senate Committee Report as the "basic money laundering offense." Report 99433, 99th Cong.2nd...
To continue reading
Request your trial
-
Ex Parte Ellis
...the common understanding of what is money laundering, the statute reaches a broad range of financial activities"); United States v. Estacio, 64 F.3d 477, 480 (9th Cir.1995); United States v. Jackson, 935 F.2d 832, 839 (7th Cir.1991). While the language of the federal money laundering statut......
-
Ex Parte Ellis
...the common understanding of what is money laundering, the statute reaches a broad range of financial activities"); United States v. Estacio, 64 F.3d 477, 480 (9th Cir.1995); United States v. Jackson, 935 F.2d 832, 839 (7th Cir.1991). While the language of the federal money laundering statut......
-
U.S. v. Cuellar
...added). See also United States v. Edgmon, 952 F.2d 1206, 1213 (10th Cir.1991) (citing S.REP. No. 99-433, at 4); United States v. Estacio, 64 F.3d 477, 481 (9th Cir.1995) ("The senate report on § 1956 expresses the need for a federal criminal offense aimed directly at the activity of launder......
-
U.S. v. Nunez
...has said that "proceeds" must be from a "previous and completed criminal activity." See Savage, 67 F.3d at 1441-42; U.S. v. Estacio, 64 F.3d 477, 480-81 (9th Cir.1995). The First, Second, Third, Fourth, and Seventh Circuits have applied broader language, to include "an already completed off......
-
MONEY LAUNDERING
...1013 (9th Cir. 2001) (stating that proceeds “need not ‘always consist of money or some tangible asset’” (quoting United States v. Estacio, 64 F.3d 477, 480 (9th Cir. 1995))); United States v. Diaz, 190 F.3d 1247, 1257 (11th Cir. 1999) (finding house purchased with drug money constituted “p......
-
Money laundering.
...v. Ladum, 141 F.3d 1328, 1340 (9th Cir. 1998) (holding rent payments made from stores' profits were "proceeds"); United States v. Estacio, 64 F.3d 477, 480 (9th Cir. 1995) ("A fraudulently obtained line of credit, which results in an artificially inflated bank balance, is within the scope o......