U.S. v. Turner, 02-1193.

• Decision Date: 03 March 2005
• Docket Number: No. 02-1193.,02-1193.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James M. TURNER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

400 F.3d 491

UNITED STATES of America, Plaintiff-Appellee, v. James M. TURNER, Defendant-Appellant.

No. 02-1193.

United States Court of Appeals, Seventh Circuit.

Argued April 9, 2004.

Decided March 3, 2005.

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Esteban F. Sanchez, Office of the United States Attorney, Springfield, IL, for Plaintiff-Appellee.

Reino C. Lanto, Jr., Rantoul, IL, for Defendant-Appellant.

Before BAUER, EASTERBROOK, and KANNE, Circuit Judges.

BAUER, Circuit Judge.

James Turner was indicted for conspiracy to launder money, in violation of 18 U.S.C. § 1956(h), and conducting a monetary transaction with the proceeds of a specified unlawful activity, in violation of 18 U.S.C. §§ 1957(a) and 2. After a jury trial, Turner was found guilty of the conspiracy charge. His appeal includes issues related to his conviction, sentence, and various evidentiary rulings.

I. Background

James M. Turner was a friend of Clyde D. Hood who masterminded the Omega fraud. We discussed the scheme at length in United States v. Diamond, from which we now quote.

In 1994, Clyde Hood, a man who claimed to be one of only eight people experienced enough to trade international "Prime Bank Notes" announced that he had received a message from God who told him to use his expertise in the secretive and lucrative trading of Prime Bank Notes to "help the little people." Accordingly, Hood would allow investors to make as many hundred dollar loans as they liked to Omega Trust and Trading, Ltd. The money would be used to facilitate trades in Prime Bank Notes. Each unit, at one hundred dollars a piece, was promised a fifty to one return in less than a year. Furthermore, an investor could roll over their profits by reinvesting them into Omega, guaranteeing millions of dollars in return for a small initial investment.

That was the pitch. Like most things that sound too good to be true, it was; it was a scam. Hood was actually a retired electrician who had come up with the idea for a Prime Bank Notes scam through his association with other scam artists. Sad to relate, God had not spoken to Hood. The whole thing was completely fabricated.

Nevertheless, Hood worked hard in creating an image of legitimacy. For example, he created a database of the investors to facilitate communication between the investors (more properly, victims) and himself. Later, he set up a recorded message hotline to keep investors up to date on the status of Omega. The status of Omega was always the same; pay-out was just around the bend. Other written communications stated the same, often times including religious references and biblical quotations.

To accomplish this fraud, Hood enlisted the help of others. These individuals would market the scam and explain to potential investors that they could join Omega by sending their monies to Clyde Hood in cash, money order, or cashier's check. The investor would then receive a "Private Party Loan Agreement" that purported to represent their interest in the Omega funds.

United States v. Diamond, 378 F.3d 720, 722 (7th Cir.2004).

The entire Omega conspiracy loss was estimated at around thirteen million dollars. With all of this money, Hood and the other conspirators needed a way to launder the proceeds of the scam. They did so in a number of ways. For one thing, they simply deposited Omega funds in personal or business bank accounts controlled by Hood's associates. These associates would then, at Hood's direction, withdraw the funds in cash and give it to whomever Hood designated. Another method of laundering Omega proceeds was to give interest-free loans to various individuals. This is how Defendant Turner entered the story.

In early 1997, Hood offered to lend Turner $97,000 interest free. Shortly after offering the loan, Hood presented Turner with $15,000 in cash and nine $9,000 cashier's checks. The checks were payable to William Revelle but Hood endorsed them over to Turner by signing Revelle's name to the checks. Hood gave Turner some advice — Turner was not to deposit the checks in any of the local banks for fear that those banks may question the source of the funds. Hood also explained that any transaction over $10,000 would be reported to the Internal Revenue Service.

Upon receiving the money, Turner executed a Promissory Note and Mortgage on 2913 Walnut, Mattoon, Illinois ("Walnut property"), as security for the loan. The documents named Patricia Hood, Hood's wife, as the lender, who was entitled to eight hundred dollars per month in repayment of the loan. Turner regularly made these payments.

In late 1997, Hood again "loaned" Turner a large sum of money to purchase land located at 3120 Marshall, Mattoon, Illinois, and various trucks and equipment for Turner's landscaping business ("Marshall property"). Turner paid $146,000 for the property, trucks, and equipment. The interest-free loan was to be repaid on a monthly basis to Patricia Hood in $1,300 increments.

In early 1999, Turner wanted to purchase a house at 3900 Western Avenue, Mattoon, Illinois ("Western property"). In need of approximately $156,000, Turner again obtained an interest-free loan from Hood. This time, Turner, Hood, and Chris Engel, one of Hood's co-conspirators, went to Hood's daughter's house to get the funds. While there, Turner and Engel watched as Hood removed approximately $156,000 in cash from a safe in the garage. When he gave the money to Engel, Hood informed him that he should take the cash to an out-of-town bank and purchase a cashier's check. Engel ultimately obtained a check from a bank in Farina, Illinois where he named the remittor as Advantage Information Technologies. Turner then used the check to complete the purchase of the Western property.

Turner wished to improve his property and hired Engel, who was both a contractor and a co-conspirator in the Omega scam, to build a bigger garage. Turner saw Hood pay Engel $40,000 for this work. The Western property also had an in-ground pool that needed repair and Hood gave Turner $7,000 to fix it.

Hood testified that the money used for these loans was obtained from Omega proceeds.

Turner's involvement with Hood did not end with the above-described transactions. In addition to the loans, Turner allowed his name to be put on the titles of various properties that Hood had purchased, performed collections for Hood, delivered thousands of dollars of Omega money in cash to various persons, instructed others to structure deposits to avoid the attention of the IRS, structured deposits into his own bank account, and instructed others to destroy documents recording loans Hood had made.

Turner was ultimately indicted together with nineteen other individuals involved in the Omega scheme. Turner and Arlene Diamond were the only two who pleaded not guilty and went to trial. Turner was convicted of conspiracy to commit money laundering. The district court sentenced him to one-hundred-fifty-one months imprisonment and two years supervised release. This sentence was based on the entire amount of money involved in the Omega conspiracy. Turner appeals.

II. Discussion

Turner takes a buckshot approach to this appeal, arguing nine full issues with subparts. We will address only those arguments which merit discussion.

A. Sufficiency of the Evidence to Convict for Conspiracy to Launder Money

The first issue we address is an attack on the sufficiency of the evidence. The relevant question on appeal is whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. We reverse only when the record contains no evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt.

To prove a conspiracy to launder money, the government must "demonstrate that [the defendant] was knowingly involved with two or more people for the purpose of money laundering and that he knew the proceeds used to further the scheme were derived from an illegal activity." United States v. Gracia, 272 F.3d 866, 873 (7th Cir.2001); 18 U.S.C. § 1956(h). To prove the substantive offense of money laundering, the government must prove that the defendant engaged or attempted to engage in a financial transaction, knowing that the transaction involved the proceeds of specified unlawful activity, and that the defendant intended to promote the unlawful activity or knew that the transaction was designed to conceal the source, nature, location, ownership, or control of the proceeds. Gracia, 272 F.3d at 873; 18 U.S.C. § 1956.

As we noted in Diamond,

When a defendant joins a conspiracy, she joins an agreement rather than a group. United States v. Townsend, 924 F.2d 1385, 1390 (7th Cir.1991). An agreement need not be explicit; a tacit agreement is sufficient to support a conspiracy conviction. United States v. Clay, 37 F.3d 338, 341 (7th Cir.1994). There is no bar to using circumstantial evidence in proving the agreement. Id. A conspiracy may be shown by evidence which shows that the conspirator embraced the criminal objective of the conspiracy. United States v. Severson, 3 F.3d 1005, 1010 (7th Cir.1993).

Diamond, 378 F.3d at 728.

Within this legal framework, it is clear that Turner was part of the conspiracy to launder money. Under this court's decision in United States v. Esterman, 324 F.3d 565 (7th Cir.2003), we know that certain types of transactions may be indicative of a design to conceal. These include transactions surrounded in unusual secrecy, structured transactions, depositing ill-gotten funds into another's bank accounts, using third parties to conceal the real owner, or engaging in unusual financial moves which culminate in a transaction. Esterman, 324 F.3d at 573. Multiple acts show that Turner was actively involved with Hood — and Engel to a lesser extent — in concealing the source of Omega funds. His convoluted, seller-financed and interest-free loan for the Marshall property; allowing his name to be placed on the...