U.S. v. Silvestri

Decision Date23 May 2005
Docket NumberNo. 03-12820.,03-12820.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Joseph SILVESTRI, Defendant-Appellant.
CourtU.S. Court of Appeals — Eleventh Circuit

Jeanne Baker (Court-Appointed), Jeanne Baker, P.A., Miami, FL, for Defendant-Appellant.

Robert B. Cornell, Diana L. Fernandez, Ft. Lauderdale, FL, Anne R. Schultz and Jeanne Marie Mullenhoff, Asst. U.S. Attys., Miami, FL, for Plaintiff-Appellee.

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

Before BLACK and MARCUS, Circuit Judges, and SMITH*, District Judge.

MARCUS, Circuit Judge:

Joseph Silvestri appeals his conviction after a jury trial for conspiring to launder the proceeds of mail and wire fraud in violation of 18 U.S.C. § 1956(h), and for 30 substantive counts of laundering the proceeds of mail and wire fraud in violation of 18 U.S.C. §§ 1957 and 2. All of the charges arose from Silvestri's involvement in a fraudulent investment program based in South Carolina. Silvestri broadly challenges the sufficiency of the evidence on the conspiracy and substantive money laundering counts, and claims that the jury instructions on the conspiracy charge caused prejudicial error. After thorough review, we are satisfied that the evidence was sufficient to sustain the jury's verdict beyond a reasonable doubt on all counts, and that the trial court did not commit reversible error in its instructions to the jury. Accordingly, we affirm.


On August 14, 2001, a grand jury in the Southern District of Florida charged Silvestri in a second superseding indictment with conspiracy to commit acts of money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and (B)(i) and 1957, all in violation of 18 U.S.C. § 1956(h) (Count 14).1 Paragraphs 2 and 3 of Count 14 explained that the purposes and objects of the conspiracy were: (a) to conduct financial transactions involving the proceeds of mail and wire fraud, a specified unlawful activity — specifically, to cash checks obtained from a South Carolina-based investment fraud — with the intent to promote the specified unlawful activity; and (b) to engage in monetary transactions in property worth more than $10,000, criminally derived from the same South Carolina fraud. In addition, Silvestri was charged in 30 substantive counts with money laundering, in violation of 18 U.S.C. §§ 1957 and 2 (Counts 16-45).2 Silvestri pled not guilty and proceeded to trial, alone.

Construing the evidence in a light most favorable to the jury's verdict, as we must at this stage in the proceedings, the essential facts in this complex fraud case are these.

U.S. Guarantee Corporation in Arizona and Nevada

The story began sometime in 1997, when Alvin Tang,3 a one-time real estate sales associate and sometime "bouncer" for a bar, and Charles Smith, an attorney from California, began working together to pursue various investment opportunities. Eventually, they formed U.S. Guarantee Corporation in Nevada, with offices in Scottsdale, Arizona, where Tang worked. R7 at 96-100.4 U.S. Guarantee failed to produce the income Smith had hoped for, however, and by the end of 1997, Smith ceased doing business with Tang and disassociated himself from U.S. Guarantee, leaving Tang as head of the corporation. Smith took from the corporation the only items of value, some "Ginny Mae" mortgages. Joe Kalisch, another partner of Tang's, also pulled out of U.S. Guarantee, taking with him the $40,000 he had invested. Thus, Tang was left with a small clerical staff, a corporation essentially without assets, and a growing number of debts. Tang observed at trial that, "[w]e didn't have any money, and there were people that were owed money and we were rock bottom, struggling, you know." Id. at 104.

To help bolster U.S. Guarantee's moribund position, Tang sought to originate some mortgages, but the business was inconsequential. Tang testified that, before leaving U.S. Guarantee in 1997, Charles Smith, U.S. Guarantee's erstwhile primary shareholder, had recommended that Tang contact the defendant, Joseph Silvestri, who could help to develop new investment opportunities for the company. Smith told Tang that "if there was a significant transaction that [Tang] had in the area [of] insurance bonding or reinsurance, that [Silvestri] would be the man to see, but it would have to be something that would be very, very special." Id. at 10. In late 1997, Tang spoke to Silvestri concerning a certain "railroad bond," one of U.S. Guarantee's few remaining assets that Tang hoped to use as loan collateral; Silvestri suggested that the bond was "worthless." Id. at 10-11. From that point, the two remained in contact, as Tang sought Silvestri's advice concerning further business opportunities. None proved productive until 1999.

Alliance Trust in South Carolina

Sometime in July 1999, Virgil Womack, an (apparently close) acquaintance of the defendant Joseph Silvestri, operated a company based in Seneca, South Carolina known initially as Alliance Trust, and later renamed Chemical Trust. Alliance Trust was engaged in the marketing and sale of allegedly high-yield, low-risk investment opportunities. The company employed a number of sales agents, who enticed investors to put their money into Alliance Trust, with promises of annual returns ranging from 9.5% to 20%. R7 at 14, 15, 35, 72; R10 at 188; R15 at 56. The agents described Alliance Trust to investors as a sort of "private investment club" that investors could join after paying a fee. When investors asked how Alliance Trust would employ their capital in order to generate such high returns, the agents said that the company was either making "overseas investments," buying specially discounted U.S. Treasury notes, or purchasing "distressed" properties. R15 at 55, 63, 66. No such investments were ever made. R11 at 31, 32; R12 at 72, 115-17, 119-20.

Alliance Trust and U.S. Guarantee Begin to Work Together

In March 1999, Silvestri proposed to Tang that U.S. Guarantee could undertake a course of action that would entail "no risk" to the company. Tang testified that although Silvestri knew U.S. Guarantee was "starving," Silvestri nonetheless suggested that it could issue bonds. R8 at 28-29. Silvestri visited with Tang in Arizona on April 6, 1999. The defendant specifically said that U.S. Guarantee could issue "construction" bonds to a South Carolina firm headed by a friend, Virgil Womack, who had been the owner and head of a construction company. Later, Silvestri changed the proposal and said, instead, that U.S. Guarantee could issue "surety bonds," purporting to secure individual investments made in Womack's organization, Alliance Trust. According to Tang, "Alliance was just a name that was created by Silvestri." Id. at 40-46.

On that visit to Scottsdale, Arizona in early April 1999, Silvestri ate dinner with Tang and Kenneth Turner, another U.S. Guarantee executive who testified at trial.5 Notably, during this meeting Silvestri described himself to Turner as a "liaison between U.S. Guarantee and Alliance." Silvestri said that U.S. Guarantee was "going to guarantee the investment." R9 at 44, 47. U.S. Guarantee's involvement with the Alliance Trust scheme began at approximately that time.

To make the security guarantee facially credible, U.S. Guarantee prepared and distributed bogus brochures and financial statements. The financial statements were attached to the brochures, and each financial statement included a phony balance sheet listing assets, liabilities, and net shareholders' equity. As the materials were created, Silvestri critiqued and marked up drafts, advising Tang what items to include or omit. U.S. Guarantee's brochure described the company, its corporate purpose, and certain individuals affiliated with the company (including Barry Goldwater, Jr.). R8 at 50-67.

Tang testified about two successive and wholly fictitious versions of the financial statement. The first was dated March 15, 1999 (although it continued to be revised and edited in April and May). Its balance sheet listed U.S. Guarantee's total assets at $1.7 billion. Among the assets listed were $167 million in certificates of deposit $100.1 million in real estate, and $1.51 billion in certain "partnerships." R8 at 56-59; Gov. Ex. 4A. Tang said that the company at the time had essentially no assets, or at most "a few thousand dollars in the bank." Id. at 62.

The second financial statement was dated July 13, 1999. The balance sheet in that statement said that the company had $2.4 billion in assets and $2.4 billion in "total net liabilities and net equity ... coming to a grand total of $2.4 billion dollars for U.S. Guarantee." R8 at 80. Among the assets listed were $167 million in certificates of deposit, $1.46 billion in real estate, and $786 million in partnerships. Gov. Ex. 4F. In reality, Tang testified, U.S. Guarantee had "maybe $10,000" in assets at that point. Id. at 73-77, 81; Gov. Ex. 4D.

Tang further testified that Silvestri encouraged him to create the financial statements in order to help the Alliance Trust sales agents promote the investment program. According to Tang, he and Silvestri had "two or three discussions" concerning the preparation of the statements. R8 at 59-60. Tang described the conversations in this way:

Q: Was there any discussion about — with Mr. Silvestri — about what should actually go in these documents, the Profile and the balance sheet?

A: Certainly there was a critique. And in looking at what we submitted to what was finally — to what was perfected at the end.

Q: When you say "a critique," how did this take place? How did the critique take place?

A: We would submit it, and he would look at it, and there were some things that, you know, that, you know, Joe was not happy with.

Q: And what did he say to you when you say he wasn't happy with something?

A: That specifically there were some things that should not be in there, and, you know,...

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