U.S. v. Shepard, 03-3293.

• Decision Date: 02 February 2005
• Docket Number: No. 03-3293.,03-3293.
• Citation: U.S. v. Shepard, 396 F.3d 1116 (10th Cir. 2005)
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. George SHEPARD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

396 F.3d 1116

UNITED STATES of America, Plaintiff-Appellee, v. George SHEPARD, Defendant-Appellant.

No. 03-3293.

United States Court of Appeals, Tenth Circuit.

February 2, 2005.

Submitted on the briefs: Eric F. Melgren, United States Attorney, and Brent I. Anderson, Assistant United States, Wichita, KS, for Plaintiff-Appellee.

Larry Dean Kissee, Ash Flat, AR, and Jeremy B. Lowrey, Sheridan, AR, for Defendant-Appellant.

Before EBEL, McWILLIAMS, and HENRY, Circuit Judges.^*

HENRY, Circuit Judge.

In July 2002, a jury found George Shepard guilty of twenty-four counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i); one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h); one count of transportation of stolen property, in violation of 18 U.S.C. § 2314; and one count of wire fraud, in violation of 18 U.S.C. § 1343. On appeal, Mr. Shepard argues that the evidence is insufficient to support his convictions. We exercise jurisdiction under 28 U.S.C. § 1291 and affirm Mr. Shepard's convictions on all counts.

I. BACKGROUND

George Shepard was the chief welding inspector on a natural gas pipeline project between Mobile Oil Corporation and KN Energy near Liberal, Kansas. KN Energy, now doing business as Kinder Morgan, agreed in 1997 to install compressor stations for the project's pipelines. It retained Cisneros Welding and Construction ("CWC") as a contractor for the actual construction. Mr. Shepard oversaw the work performed by CWC to ensure the project's compliance with KN Energy's specifications. He reviewed and mailed daily time sheets for CWC workers to KN Energy's home office for payment. Mr. Shepard was paid salary and per diem by an engineering sub-contractor that invoiced KN Energy. His son, Kim Shepard ("Kim"), was another inspector on the project.

KN Energy's policies prohibited Mr. Shepard or Kim from renting their own welding equipment to CWC or KN Energy for use at the Liberal site. Around January 1998, Mr. Shepard asked a new CWC truck driver, Danny Blood, if Mr. Shepard could put a welding rig in Mr. Blood's name and collect rental checks. Mr. Blood agreed, cashed the first two checks for welding rig rentals, and forwarded the rental money to Mr. Shepard and Kim. Mr. Blood is not a welder and never worked on a welding rig. He remained on the payroll for rig rentals after cashing the initial checks, but payments no longer came to him. All but three rig rental checks made payable to Mr. Blood were deposited into bank accounts of Mr. Shepard or Kim. Rec. vol. III, doc. 111, at 555.

In addition, Mr. Shepard instructed Mr. Blood to haul KN Energy equipment from the Liberal site to Thayer, Missouri. There, Mr. Shepard and Kim owned Country Club Kennels and other property. Mr. Blood hauled a tractor, bobcat, brush hog, and backhoe from Liberal to Thayer. From January through April 1998, another CWC driver, Louis Loya, hauled four or five truck loads of equipment from Liberal to Thayer. This equipment included steel pipe, a small crane, a backhoe, prefabricated frames, and various tools.

Also in 1998, Mr. Shepard placed Jeremy Thomas Wooldridge on the CWC payroll as a welder. Mr. Wooldridge worked for the Shepards in Thayer, Missouri, but he never worked on the Liberal project. Mr. Shepard and Kim deposited Mr. Wooldridge's welder checks into their bank accounts. Rec. vol. III, doc. 111, at 549-50. In addition, Mr. Shepard placed a fictitious employee named "Eloy Moreno" on the CWC payroll and collected payroll checks issued to "Mr. Moreno." Mr. Shepard also created a fictitious rental company, "Moreno Rentals," to generate CWC rental checks. Mr. Shepard and Kim collected the "Moreno Rental" checks and deposited them in the bank accounts of Mr. Shepard, Kim, and Country Club Kennels. Id. at 703.

The Liberal site's project manager became aware of possible problems and notified KN Energy in May or early June 1998. A KN Energy audit discovered that (1) people on the payroll were not actually working; (2) welding equipment that the welder did not own was being charged to the project; (3) materials that did not relate to the project, such as dog feeders and dog food, were being purchased; and (4) some of Mr. Shepard's storage trailers and welding rigs were being used on the project. Rec. vol. I, doc. 109, at 44. KN Energy terminated Mr. Shepard's employment in early June 1998. That same month, KN Energy recovered on Mr. Shepard's Missouri property fifty-five company items with an estimated value of $88,854.

The government charged Mr. Shepard and Kim in a superceding indictment with twenty-nine counts of money laundering, one count of conspiracy to commit money laundering, one count of transportation of stolen goods, and one count of wire fraud. Prior to trial, the district court granted defendants' motions for severance. At the conclusion of the government's evidence at Mr. Shepard's trial, he moved for a judgment of acquittal on all counts. The district court dismissed five counts of money laundering because those checks "were deposited directly into Kim Shepard or George Shepard's accounts" and did not satisfy the necessary concealment element for a money laundering conviction. Rec. vol. III, doc. 111, at 764. The jury found Mr. Shepard guilty of twenty-four counts of money laundering, one count of conspiracy to commit money laundering, one count of transportation of stolen goods, and one count of wire fraud. A separate jury later found Kim guilty of eighteen counts of money laundering, one count of conspiracy to commit money laundering, and one count of wire fraud.

After the jury conviction, Mr. Shepard filed a motion for a judgment of acquittal. The district court denied the motion, sentenced Mr. Shepard to thirty-three months' imprisonment, followed by three years of supervised release, and ordered him to pay $106,328.71 in restitution.

II. DISCUSSION

On appeal, Mr. Shepard contends that the government did not present sufficient evidence as to any of the offenses on which he was convicted. On this question, we review the record de novo. United States v. Delgado-Uribe, 363 F.3d 1077, 1081 (10th Cir.2004). "We must determine whether viewing the evidence in the light most favorable to the Government, any rational trier of fact could have found Mr. Shepard guilty of the crime beyond a reasonable doubt." Id. (internal quotation marks omitted). This court does not weigh conflicting evidence nor consider the credibility of witnesses. United States v. McKissick, 204 F.3d 1282, 1289-90 (10th Cir.2000). We only determine "whether [the] evidence, if believed, would establish each element of the crime." United States v. Vallo, 238 F.3d 1242, 1247 (10th Cir.2001) (internal quotation marks omitted). "We will only overturn a jury verdict if no reasonable juror could have reached the disputed verdict." United States v. Magleby, 241 F.3d 1306, 1312 (10th Cir.2001) (internal quotation marks omitted).

A. Money laundering

The jury found Mr. Shepard guilty of twenty-four counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). That section provides, in part:

Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of a specified unlawful activity — knowing that the transaction is designed in whole or in part — to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity ... shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.

Congress enacted this language in the Money Laundering Control Act of 1986 to target, as the term "laundering" connotes, the transformation of "dirty" funds from illegal activities into a "clean" and usable form. The statutory language, however, has needed some practical clarification. Thus, courts have sometimes referenced an earlier Executive Branch report to define money laundering's manner and objectives.

Money laundering is "the process by which one conceals the existence, illegal source, or illegal application of income, and disguises that income to make it appear legitimate." President's Commission on Organized Crime, The Cash Connection: Organized Crime, Financial Institutions, and Money Laundering, at 7 (Interim Report, Oct. 1984) [hereinafter The Cash Connection]; see also United States v. Cuevas, 847 F.2d 1417, 1419 n. 2 (9th Cir.1988) (adopting The Cash Connection's definition of money laundering); United States v. Heyman, 794 F.2d 788, 789 n. 1 (2d Cir.1986) (same). Money laundering schemes assist criminals who "seek to change large amounts of cash ... into an ostensibly legitimate form, such as business profits or loans, before using those funds for personal benefit." The Cash Connection at 7; see also United States v. Esterman, 324 F.3d 565, 570 (7th Cir.2003) ("In its classic form, the money launderer folds ill-gotten funds into the receipts of a legitimate business...."). This circuit has noted its agreement "with the Executive Branch statements [in The Cash Connection] ... as to the purposes of the money laundering statute." United States v. Garcia-Emanuel, 14 F.3d 1469, 1474 (10th Cir.1994).

On appeal, Mr. Shepard only challenges the sufficiency of the evidence in support of the "design" requirement of the money laundering statute. Aplt's Br. at 30-34. He asserts that the government did not prove that he knew his transactions were "designed in whole or in part [ ] to conceal or disguise" illegal proceeds. 18 U.S.C. § 1956(a)(1)(B)(i). He argues that transaction proceeds were "easily traceable" through the Shepards' deposits, and that their second-endorsement of several checks in question indicates a lack of design to...