United States v. Grullon, 19-1780

• Decision Date: 27 April 2021
• Docket Number: No. 19-1780,19-1780
• Citation: 996 F.3d 21
• Parties: UNITED STATES, Appellee, v. Francisco Oscar GRULLON, a/k/a Frank, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

996 F.3d 21

UNITED STATES, Appellee,

v.Francisco Oscar GRULLON, a/k/a Frank, Defendant, Appellant.

No. 19-1780

United States Court of Appeals, First Circuit.

April 27, 2021

Andrew S. Dulberg, Boston, MA, with whom Russell Spivak, New York, NY, Felicia H. Ellsworth, Boston, MA, and Wilmer Cutler Pickering Hale and Dorr LLP, were on brief, for appellant.

Elysa Q. Wan, Assistant United States Attorney, with whom Andrew E. Lelling, United States Attorney, was on brief, for appellee.

Before Lynch, Lipez, and Thompson, Circuit Judges.

THOMPSON, Circuit Judge.

Francisco Oscar Grullon is one of at least several coconspirators the government has prosecuted for participating in a massive scheme to defraud the federal government by falsifying tax returns.¹ Once arrested, Grullon faced charges commensurate with his coconspirators, some of whom had already pleaded guilty or had been convicted. Grullon proceeded to trial where a jury convicted him of multiple counts. Now, he appeals several evidentiary rulings by the district court as well as the district court's application of two sentencing enhancements. Discovering no errors, we affirm.

Background

The Scheme

Beginning in October 2011, Grullon, a native of the Dominican Republic who immigrated to the United States when he was nine, conspired with a Massachusetts lawyer named David Cohen and others to defraud the United States. The conspiracy, labeled a Stolen Identity Refund Fraud scheme by IRS agents, was relatively simple. In the first step, coconspirators stole personal identification information, such as social security numbers, names, and birthdates. With the stolen data in hand, other conspirators executed the second stage, using the information to file fraudulent tax returns such that the IRS sent refund checks to addresses in Massachusetts.²

With checks in hand, the third stage began. And this is where Grullon and Cohen became useful by laundering the checks into cold hard cash through bank accounts at various banks in Massachusetts.³ The government put forward circumstantial evidence that, starting in October 2011, Cohen and Grullon conspired to deposit some of the checks into Cohen's Interest on Lawyers Trust Accounts, known as IOLTAs, which are accounts that lawyers arrange to hold onto their clients' funds. See Mass. R. Prof. C. 1.15(e). To suspicious tellers, Cohen insisted the money came from his legal clients, but bank employees observed Cohen writing himself checks from the IOLTA account into which he had just deposited the alleged client funds. The checks' amounts approximated what he had just put into the bank.

Other times, Cohen established accounts in the name of Grullon's business, American Dominican Professional Association, Inc. ("AD Professional") (Grullon only once went with Cohen to open an account and even then he kept his name off of the account).⁴ AD Professional purported to be a legitimate business, and indeed it sometimes operated a function hall. When Cohen opened the AD Professional accounts, he variously claimed the business was a commercial real estate company or a check-cashing company.

For one AD Professional account, Cohen told bank employees that Grullon had the necessary check-cashing license from the Commonwealth of Massachusetts to operate a check-cashing business. If he were telling the truth, the pair could have deposited the fraudulent third-party tax refund checks with less scrutiny from the bank because the nature of a check-cashing business is to take checks from third parties. Grullon also later told one bank teller that he had a check-cashing license that allowed him to deposit the third-party tax refund checks (he did not). When the license never materialized, the bank closed the account because of the suspicious check-cashing activity.

Cohen alternatively claimed that the third-party tax refund checks came from AD Professional. In this telling, Cohen deposited tax refund checks for members of the association into the AD Professional accounts to hold onto the money for future real estate or land purchases the association might want to make. When a bank asked for a signed contract to verify the arrangement -- the IRS had issued reclamation notices to the bank for some of the tax refund checks Cohen had deposited⁵ -- Cohen could not produce one. The bank thereafter closed the account based on the suspicious check-cashing activity.

Sometimes banks hesitated before opening accounts in the name of AD Professional. Wanting to ensure the AD Professional accounts were legitimate, employees from a couple of the banks independently investigated the company's listed address and found a nearly empty building with some sort of function space on the second floor, and very little resembling either the check-cashing or real estate businesses Cohen purported it to be. The banks thereafter either refused to open AD Professional accounts or closed ones they had opened before looking into the company.

Although eyewitness testimony and security camera footage only placed Grullon in one of the target banks in January 2013 at the earliest, bank employees at some of those banks testified to Grullon thereafter depositing multiple fraudulent tax return checks into the AD Professional and IOLTA accounts multiple times a week (Grullon, though not a signatory on the accounts, could still deposit checks). The jury also heard about bank tellers confronting Grullon regarding the validity of the third-party checks he was depositing, which Grullon sometimes claimed he was handling for friends. At least one bank official examined the checks and noticed that many of Grullon's "friends" happened to live at the same address.

Additionally, Cohen's officemate, a fellow lawyer who had known Cohen for around 40 years, testified to having met Grullon about five times when Grullon showed up at the office to discuss business ventures he and Cohen were arranging. The officemate recounted several heated conversations between Grullon and Cohen about whether they were setting up too many accounts and depositing too many checks too quickly, especially because Grullon had not yet received the check-cashing license he had promised to obtain.

As for direct evidence of Grullon's involvement, the prosecution enlisted one of his coconspirators, Dubin Eduardo Gonzalez-Pabon, as their star witness. In early 2013, Cohen recruited Gonzalez-Pabon, an attorney from Venezuela and a friend of Cohen's girlfriend (she and Cohen even attended Gonzalez-Pabon's wedding), to participate in the conspiracy. Gonzalez-Pabon lived at and worked from Cohen's house.

According to Gonzalez-Pabon, Grullon instructed the new coconspirator to become a treasurer and secretary of AD Professional, purportedly to help the company with investments. On the day Gonzalez-Pabon signed the paperwork to officially join the company in those roles, Grullon and Cohen directed him to open multiple accounts at multiple banks in the name of AD Professional, and to deposit checks into those accounts. Gonzalez-Pabon complied. Grullon gave Gonzalez-Pabon the majority of checks he was to deposit. Grullon also provided Gonzalez-Pabon money to deliver to the unknown coconspirators who procured the fraudulent refund checks for the scheme. At some point later in 2013, a bank official confronted Gonzalez-Pabon about the third-party checks he was depositing into the AD Professional accounts, telling Gonzalez-Pabon that the checks were made out to "fictitious people." Grullon and Cohen thereafter told Gonzalez-Pabon to close the accounts. A jury could easily have found they did so because the duo knew the checks were fraudulent and because they worried the IRS would reclaim the money they had deposited now that the bank had discovered the scam.

The conspiracy lasted until December 2014, but Grullon stopped participating in November 2013 when he fled to the Dominican Republic, allegedly to begin a fruit and vegetable export business. Between October 2011 and November 2013, the trio defrauded the U.S. Government of at least $1,604,000.28 across five banks in Massachusetts using 246 fraudulent checks, cashing around $400,000 in October 2013 alone.

The Investigation

Grullon's departure was not necessarily coincidental. After banks voiced suspicions about Grullon and Cohen depositing United States Treasury checks in other people's names and after the IRS issued a number of reclamation notices to those banks, the IRS's Criminal Investigations Division began investigating the conspiracy in July 2013. Special agents Ryan J. Talbot and James Clarke conducted most of the on-the-ground investigation, gathering evidence from the banks and interviewing witnesses. Towards the end of 2014, Gonzalez-Pabon was arrested and almost immediately began to cooperate. He participated in three interviews, the first of which the special agents recorded. In the latter two, at which special agent Clarke took notes, Gonzalez-Pabon contradicted earlier statements. He had initially admitted to knowing the scheme was criminal when he deposited the checks, but in the subsequent interviews Gonzalez-Pabon claimed he found out about the illegality only upon his arrest.

On May 5, 2015, a federal grand jury indicted Grullon and Cohen, charging them with conspiracy to commit "theft, conversion, or embezzlement of government property" starting in October 2011 ( 18 U.S.C. § 371 ), with seventeen counts of conversion of government property ( 18 U.S.C. § 641 ), and with one count of conspiracy to commit money laundering starting in October 2011 ( 18 U.S.C. § 1956(h) ).⁶ Grullon was apprehended in the Dominican Republic on March 20, 2018, and extradited to the United States in June.

Events Before Grullon's Trial

In between Grullon's indictment and his arrest, several events germane to his appeal occurred. First, by the time Grullon unwillingly returned to the United States, the government had already successfully tried Cohen and convicted him. For his role in the crimes, Cohen received...