U.S. v. Munoz Franco
| Decision Date | 28 January 2005 |
| Docket Number | Criminal No. 95-386(DRD). |
| Citation | 356 F.Supp.2d 20 |
| Parties | UNITED STATES of America, Plaintiff, v. Lorenzo MUNOZ FRANCO, et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Desiree Laborde-Sanfiorenzo, Maria Dominguez-Victoriano, Nereida Melendez-Rivera and Sonia I. Torres-Pabon, United States Attorney's Office, San Juan, PR, for Plaintiff.
Andres Guillemard-Noble, Nachman & Guillemard, Harry Anduze-Montano, Harry Anduze Montano Law Office, Jorge L. Arroyo-Alejandro, Jorge L. Arroyo Law Office, San Juan, PR, R.J. Cinquegrana, Choate, Hall & Stewart, Boston, MA, for Defendants.
Manuel A. Pietrantoni, Fiddler, Gonzalez & Rodriguez, Xiomara I. Cebollero-Davila, Fernandez, Collins & Rivero Vergne, San Juan, PR, for Intervenor.
Kevin G. Little, Kevin G. Little Law Office, for Interested Party.
OPINION AN ORDER AS TO BAIL PENDING APPEAL
Pending before the Court is a plethora of motions filed by all four co-defendants seeking bail pending appeal under 18 U.S.C. 3143(b).
In this case, two bank officers of Caguas Central Federal Savings and Loan, a federal guaranteed savings and loan association, Lorenzo Munoz-Franco and Francisco Sanchez-Aran, and three commercial customers, Ariel Gutierrez, Wilfredo Umpierre Hernandez and Enrique Gutierrez-Rodriguez, were charged with bank fraud, misapplying bank funds, making false entries in banking records and participating in conspiracies to perpetuate those offenses.1 See 18 U.S.C. §§ 371, 657, 1006 & 1344 (1994).
The court received a plethora of motions relating to bail on appeal after sentencing in the middle of February 2004. Some of the motions were filed as late as August/September 2004 as to the impact of Blakely v. Washington, 542 U.S. ___, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004) and Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. at 2348, 147 L.Ed.2d 435 (2000). The Blakely v. Washington controversy became clearer in the First Circuit after the case of United States v. Savarese, 385 F.3d 15 (1st Cir.2004) decided late in September 2004 and United States v. Stearns, 387 F.3d 104, 106 (1st Cir.2004) decided in November 2004. In both of these cases the Court of Appeals determined that if defendants failed to request the jury to decide the sentencing enhancement the matter is potentially waived subject to plain error analysis. This determination is based in the holding of United States v. Cotton, 535 U.S. 625, 631, 122 S.Ct. 1781, 1785, 152 L.Ed.2d 860 (2002) (). The doctrine was recently reiterated by the opinion of the court written by Justice Breyer in the most recent case of United States v. Booker, United States v. Fanfan, 543 U.S. ___, 125 S.Ct. 738, ___ L.Ed.2d ___ (2005). The court has waited patiently for the legal issues as to Apprendi/Blakely/Booker/Fanfan to be finally determined; that occurred on January 12, 2005. The Supreme Court in the last paragraph of the opinion of United States v. Fanfan, Id., Justice Breyer writing for the court, stated that the holding applied to all cases pending on appeal but subject to "prudential doctrines" of "plain error." The court is, hence, ready to rule on all pending bail on appeal issues.
The Indictment charges in Count One that co-defendants Lorenzo Muñoz-Franco, Francisco Sánchez-Aran, acting as Executive Officers of a federally chartered loan association or bank, and Ariel Gutierrez and Wilfredo Umpierre (outsiders/clients) with conspiring in violation of 18 U.S.C. 1344, misapplication of bank funds (18 U.S.C. 657) and/or false entries into the books of the bank, (18 U.S.C. 1006). (Third Superseding Indictment, D. 1275.) All relating to loans granted to construction entities in which Ariel Gutierrez was the President of the bank and/or a principal executive officer and Wilfredo Umpierre was the Vice-president. Those same four defendants were charged with bank fraud under 18 U.S.C. 1344 in Count Three (Muñoz-Franco and Sánchez-Aran as bank executives and/or insiders as aiders and abettors.)
In count two Muñoz-Franco and Sánchez-Aran are charged with a conspiracy to commit bank fraud under 18 U.S.C. 1344, misapplication of bank funds under 18 U.S.C. 657, and false entries in book reports and statements etc. under 18 U.S.C. 1006, as to corporations owned by Francisco Mirandes Rogue.2 The latter plead guilty in 1997 to conspiring to defraud the bank and to defraud Caguas Central and for misapplication of bank funds and was sentenced to thirty-seven months in jail and two years probation by the undersigned judge. Count four is a substantive charge against Muñoz-Franco and Sánchez Aran as to bank fraud under 18 U.S.C. 1344 and false entries on bank records under 18 U.S.C. 1006.
Counts Five to Eight allege a misapplication of bank funds under 18 U.S.C. § 657 against co-defendants Muñoz-Franco, Sánchez-Aran, Ariel Gutierrez and Francisco Umpierre. (A non guideline count, pre November 1, 1987.)
Four co-defendants were found guilty of all counts as to which they were indicted. Another co-defendant Enrique Gutierrez was found innocent by the jury as to all the counts wherein his brother Ariel Gutierrez was found innocent.3
After nearly one and a half contentious years of trial, the jury in this case returned guilty verdicts on May 2002 with respect to all counts against Defendants Lorenzo Munoz-Franco (Counts 1-8), Francisco Sanchez-Aran (Counts 1-8), Ariel Gutierrez-Rodriguez (Counts 1, 3, 5-8), and Wilfredo Umpierre-Hernandez (Counts 1, 3, 5-8). Numerous Rule 29 motions followed after the verdict was rendered which were ultimately decided by the court on February 6, 2003, (Docket No. 1339). The defendants then filed Motions for New Trial which the court also denied in various orders discussed herein. The guilty defendants have all appealed. The only remaining issue is Bail on Appeal which is the object of this order. At this time, the court considers the Bail on Appeal motions with respect to the four guilty Defendants.
The First Circuit has ruled that in bank fraud cases, only "intent to deceive is necessary, not intent to harm the bank." U.S. v. Kenrick, 221 F.3d 19, 26-29 (1st Cir.2000) (en banc) cert. denied 531 U.S. 961, 121 S.Ct. 387, 148 L.Ed.2d 299 (2000) cert. denied Ober v. U.S., 531 U.S. 1042, 121 S.Ct. 639, 148 L.Ed.2d 545 (2000). ( )
The court rendered an Opinion and Order on February 11, 2004, (D. 1502 amended at D. 1517), providing a detailed amount of loss per construction project per defendant. The incriminating evidence per defendant per count was set forth prior thereto by the court at the Opinion and Order denying Rule 29 request, (D.1339). The court now highlights these facts as they affect the pending bail on appeal matter.
Bank loans by Caguas were granted to corporations Transglobe Manufacturing and Modules Manufacturing wherein co-defendants Enrique Gutierrez and Ariel Gutierrez were executives, (hereinafter referred to as Modules or Transglobe).4 Some of the loans were granted prior to the enactment of the criminal law on October 12, 1984. Refinancing of these particular pre October 12, 1984 loans followed after the enactment of the criminal law. As to these refinanced loans moneys were deviated from then without Board approval to other prior non related loans, and/or moneys were deviated to said loans from other later loans granted after the enactment of the criminal law also without Board approval. A series of other construction loans were also granted to said corporations, hereinafter related as "Modules," post enactment of the law on October 12, 1984: Villa Alba Project, Los Caciques Project, Los Mameyes Project, Cerrovista Project. See Docket 1502, Ex. I(a)-(g).
(1) The module houses pre and post October 12, 1984 were not being timely built by the contractor but were paid by the Bank. (Docket 1339, Rule 29, Opinion and Order.)5 (2) Modules was paid for work not completed. In many projects dozens of houses were fully not constructed yet payment was made by the bank. In some of the last construction projects, payments were made covering entire urbanization projects (dozens of houses) but not a single house was built, (Docket 1339, Docket 1502-Ex. I, Ex. II description of incomplete constructions).
(3) Monies destined for a particular building project were used to pay unrelated prior noncomplying loans of Modules/Transglobe all owed to the Caguas Bank and/or used for building expenses of other construction loans of Module also owed to Caguas Bank and even used to pay for land of future construction loans, (Docket 1339; Docket 1502). The result of all monies deviated from one construction loan to another unrelated loan was that the new loans were severely weakened and the construction was destined for inevitable noncompliance. The bank documents of each loan do not contain any reference authorizing the use of moneys for other prior bank loans; nor was there any language of "work out loans" in the loans object of the indictment.6 Further, the bank through the allowance of this procedure hid non compliance loans and took improper credit for the payment of interest as to noncomplying loans thereby creating a fictitious financial situation for the bank.
(4) The Dow phase of the Marina Project, refinanced by the bank post October 1984, after a failed loan to Modules, could not since the inception be timely started because the manufacturing plant of the Modules Corporation was located at the construction site. (Docket 1339, p. 6.)
10. The Board of Directors was...
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