U.S. v. Voigt

• Citation: 89 F.3d 1050
• Decision Date: 09 July 1996
• Docket Number: No. 95-5092,95-5092
• Parties: -5577, 96-2 USTC P 50,633 UNITED STATES of America v. John VOIGT, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 1050

89 F.3d 1050

78 A.F.T.R.2d 96-5577, 96-2 USTC P 50,633

UNITED STATES of America v. John VOIGT, Appellant.

No. 95-5092.

United States Court of Appeals,

Third Circuit.

Argued Jan. 25, 1996.

Decided July 9, 1996.

Lawrence S. Lustberg (Argued), Crummy, Del Deo, Dolan, Griffinger & Vecchione, Newark, New Jersey, for Appellant.

Kevin McNulty, Allan Tananbaum (Argued), Faith Hochberg, Office of United States Attorney, Newark, New Jersey, for Appellee.

Before: COWEN and SAROKIN, Circuit Judges, and POLLAK, District Judge. ^*

OPINION OF THE COURT

COWEN, Circuit Judge.

John Voigt appeals from a judgment of conviction and sentence entered by the District Court for the District of New Jersey. The conviction arises from Voigt's role as the mastermind of a pernicious "advance fee" scheme whereby Voigt, operating under the auspices of the Euro-American Money Fund Trust, would obtain substantial fees in advance from, respectively, unsuspecting loan applicants and potential investors for various loans and investments that never materialized. Over a three-year period the Trust took in a total of 18.5 million dollars.

Of Voigt's eight assignments of error, two significant constitutional questions are presented for our review. The first is whether the government's use of acquitted codefendant Mercedes Travis, who Voigt alleges was counsel to the Trust and to him personally, as a confidential informant against him constitutes "outrageous government conduct" in violation of the Fifth Amendment's Due Process Clause. The second is whether the district court violated Voigt's Sixth Amendment right to counsel of choice when, citing potential conflicts, it disqualified a third attorney Voigt sought to add to his defense team without holding a formal evidentiary hearing. We also confront several questions of first impression in this Circuit pertaining to the money laundering statute, 18 U.S.C. § 1956(a)(1), and its forfeiture counterpart. Id. § 982. We must decide whether those statutes require formal "tracing" where laundered funds have been commingled in a bank account with untainted funds. We also must determine what is the proper burden of persuasion for forfeiture proceedings under 18 U.S.C. § 982, a question we have addressed previously in two other contexts. See United States v. Pelullo, 14 F.3d 881 (3d Cir.1994) (RICO; reasonable doubt); see also United States v. Sandini, 816 F.2d 869 (3d Cir.1987) (CCE; preponderance). Finally, Voigt contests the legal sufficiency of his convictions for tax evasion under 26 U.S.C. § 7201, and challenges the orders of the district court requiring him to make restitution in the amount of $7,040,000 and refusing to grant his motions for severance.

For the reasons we set forth below, we will affirm Voigt's conspiracy, money laundering and tax evasion convictions, along with the order of restitution, in all respects. We will vacate the judgment insofar as it incorporates an erroneous order of forfeiture and remand for further proceedings consistent with this opinion.

I. THE FACTS ¹

John Voigt was the mastermind of a scheme to defraud loan applicants and potential investors by inducing them to pay substantial "advance fees" for nonexistent loans and investments. To implement this scheme, Voigt created two fraudulent entities: Euro-American Money Fund Trust, and Meta Trading and Financial International [hereinafter collectively referred to as "the Trust"]. Voigt fabricated a fictitious genealogy for the Trust, claiming that it was a long-established European financial institution affiliated with the Catholic Church and the Knights of Malta and that it had access to billions of dollars. Voigt also falsely claimed that the Trust's headquarters was located in Paris, France, and that he was the U.S. Director. To facilitate the scheme Voigt used various aliases and required loan applicants to fill out bizarre confidentiality agreements that purported to bar customers from disclosing information about the Trust in this life and the afterlife.

The scheme operated from early 1990 until mid-1993. Brokers for the Trust recounted the false genealogy Voigt had concocted to unsuspecting victims. At first, the Trust marketed only "loans." These multi-million dollar loans were supposedly self-liquidating, which meant that, in return for a fee that ranged into the hundreds of thousands of dollars, customers would receive a loan that they did not have to repay. As soon as the fees were received they were distributed among the coconspirators. Eventually, the Trust began to market "Master Collateral Commitments" ("MCCs"), bogus financial instruments that were touted as special promissory notes issued by banks and available only through the Trust. They were marketed to unsuspecting investors for 3.5-4.5 million dollars with the representation that they eventually would yield hundreds of millions of dollars. All told, Voigt's three-year gain from marketing self-liquidating loans and MCCs was approximately seven and one-half million dollars.

On December 13, 1993, Voigt and four alleged coconspirators--Skip Alevy, Mercedes Travis, Ralph Anderskow, and Donald Anchors--were charged in a twenty-eight-count superseding indictment. The indictment charged Voigt personally with one count of conspiracy to commit wire fraud, fifteen counts of wire fraud, four counts of money laundering, two counts of tax evasion, and criminal forfeiture allegations arising out of the money laundering counts. After a three-month trial, a jury convicted Voigt of all counts except one count of wire fraud. ² After a nonjury proceeding at which the district court ordered forfeiture of certain automobiles and pieces of jewelry, the court sentenced Voigt to a term of imprisonment of 188 months and ordered him to make $7,040,000 in restitution. This appeal followed. ³

Voigt challenges the judgment against him on eight grounds. He argues that: (1) the government's use of his alleged attorney, Mercedes Travis, as an informant violated his Fifth Amendment due process rights and his Sixth Amendment right to effective assistance of counsel; (2) the district court erred in disqualifying one of his attorneys due to a potential conflict of interest without first making sufficient findings of fact, in violation of his Sixth Amendment right to counsel of choice; (3) there was insufficient evidence to support his conviction on money-laundering

counts twenty-five and twenty-six; (4) the forfeiture order should be vacated because the district court failed to require the government to prove beyond a reasonable doubt that the forfeited items were "traceable to" laundered money; (5) his convictions on the tax evasion counts should be vacated because the government failed to prove an affirmative act of evasion as required by statute; (6) the district court erred in imposing an order of restitution without making findings of fact regarding his ability to pay; (7) the district court should have granted his motion for a severance because his co-defendants asserted defenses antagonistic to his own; and (8) the district court erred in increasing his Guidelines offense level by two points for obstruction of justice.

II. JURISDICTION

The district court had original jurisdiction over this criminal action pursuant to 18 U.S.C. § 3231. We exercise appellate jurisdiction to review a final judgment of conviction under 28 U.S.C. § 1291.

III. OUTRAGEOUS GOVERNMENT CONDUCT

Voigt argues that the government infringed his Fifth Amendment right to due process by recruiting his attorney as a government informant "in deliberate and flagrant disregard for the attorney-client relationship." Voigt's Br. at 10. The premise of this claim is that codefendant Mercedes Travis, with whom the government had extensive investigative contacts, was his personal attorney during the time of the investigation. The precise nature of Travis' relationship with Voigt and with the government, however, is in dispute.

A.

The relevant facts are as follows. Mercedes Travis began working for the Trust in August, 1990. Voigt contends that she was engaged as an attorney at that time, and points to an engagement letter that supports his claim. The government, however, maintains that it justly and reasonably believed that Travis was not and had never been an attorney for the Trust. In any event, by Travis' own account, she became concerned about the legitimacy of the Trust and feared that she herself was being defrauded. As a result, she left her post in Europe and approached the FBI with her concerns. In June and July, 1991, she met with Special Agent Alvin Powell and voluntarily provided him with a package of relevant documents. Those documents indicated that the Trust was engaged in a fraud.

Over the course of a three-day interview at a New Jersey motel in mid-July of 1991, Travis detailed the fraud for Powell. Noting that Travis was an attorney, and having seen a letter on Trust letterhead purporting to appoint Travis as attorney for the Trust, Powell asked Travis whether she had acted in a legal capacity for the Trust. Travis indicated on several occasions that she had not acted as a legal representative for the Trust but, rather, that she had been primarily responsible for initiating and maintaining contacts with banks. Travis also insisted that the letter purporting to appoint her as an attorney for the Trust was false.

Travis indicated that she went to work for the Trust in 1990, first in the U.S. and later in Europe, believing it to be a bona fide financial institution. Over time, however, she discovered that, notwithstanding Voigt's contention that the Trust possessed $75 billion in assets, the Trust was simply a shell corporation with few assets. Travis then related that the Trust was engaged in an advance-fee scheme for loans in which fees were paid but no loan was ever funded. Based on Travis' allegations, and on Powell's belief that she had not represented the Trust or its...