United States v. Charles Marzano and Daniel Marzano

160 F.3d 399

• Court: Court of Appeals for the Seventh Circuit
• Decided: December 28, 1998
• Docket: 97-3635, 97-3732
• Status: Published

Opinions

POSNER, Chief Judge.

A single indictment charged Charles Mar-zano with drug offenses, and him and his cousin Daniel with laundering money in violation of 18 U.S.C. § 1956(a)(l)(B)(i). Both were convicted, and Charles was sentenced to 15 years in prison and Daniel to a shade under 4 years. The facts, briefly, are as follows. Charles Marzano was involved in a drug conspiracy with Mark Davino and James Gentile, the latter a bank officer who embezzled money from his bank and invested it in the drug conspiracy. Daniel Marzano was an unsuccessful trader on the Chicago Mercantile Exchange. The conspirators decided to launder their ill-gotten drug and embezzlement funds through Daniel’s firm. The resulting infusion of capital was very welcome to him. The plan was that the conspiracy would contribute money to the firm and would get it back both through trading profits and through salaries to Charles and Davino, who would be put on the firm’s payroll. As it happened, however, the only money that the conspirators contributed to Daniel’s firm was money that Gentile had embezzled; no money derived from the sale of drugs was contributed. There was evidence that Daniel knew that Charles was involved in drug trafficking, but knowledge is not participation and he was not charged with participation in the drug conspiracy.

There was some, though not much, evidence that Daniel believed that the money that Charles and Davino were contributing to the firm was money from such dealing. When a partner in Daniel’s laundering (who testified against him) asked him “about the monies and where we were going to get it,” Daniel told him not to worry; the partner persisted: “Well, when, and where?” And Daniel replied, “He [Charles] fucks around with drugs.” None of the money that he laundered, however, was in fact drug money. We need not decide whether there was enough evidence to enable a reasonable jury to infer with the requisite certitude that Daniel intended to launder drug money, for there was sufficient evidence that he intended to launder embezzled funds. But it is worth noting that even if Daniel did intend to launder drug money' — and just drug money — in violation of 18 U.S.C. §§ 1956(c)(7)(A), 1961(1)(D), the fact that he actually laundered embezzled funds would not exculpate him. Embezzled funds are another type of illegal proceeds encompassed by the laundering statute, 18 U.S.C. §§ 1956(c)(7)(A), 1961(1)(B), and all that the statute requires is an intent to launder specified types of ill-gotten gain and the laundering of one of the specified types. United States v. Stavroulakis, 952 F.2d 686, 690-92 (2d Cir.1992); United States v. Maher, 108 F.3d 1513, 1527 (2d Cir.1997). This is an application of the principle of transferred intent: if you deliberately shoot and kill A, intending to kill B, you are guilty of murdering A, even though you had no intention of harming him. United States v. Martinez, 16 F.3d 202, 207 (7th Cir.1994); Guam v. Quichocho, 973 F.2d 723, 728 (9th Cir.1992); United States v. Sampol, 636 F.2d 621, 674 (D.C.Cir.1980). Both the forbidden state of mind (intending to kill a person) and the forbidden consequence (killing a person) are present.

We need not pause over Charles Marzano’s appeal. He argues that the evidence was insufficient to prove his guilt; in fact the evidence was overwhelming. He argues that he should have been tried separately from his cousin, but his cousin has the stronger argument for severance, yet not strong enough, as we are about to see. So let us turn immediately to Daniel’s appeal.

He argues first that Rule 8(b) of the Federal Rules of Criminal Procedure, which governs the joinder of two or more defendants in the same indictment, forbade charging him and his cousin together, since their crimes were different; in particular, he was not involved (as we noted) in his cousin’s drug offenses. The test set forth in the rule is whether the indictment “alleges” that the defendants “participated in the same act or transaction or in the same series of acts or. transactions constituting an offense or offenses.” Notice the reference to allegation; the test is what the indictment charges, not what the evidence shows. United States v. Curry, 977 F.2d 1042, 1049 (7th Cir.1992); United States v. Sophie, 900 F.2d 1064, 1084 (7th Cir.1990); United States v. Morrow, 39 F.3d 1228, 1237 (1st Cir.1994). Notice also that it is neither necessary nor sufficient under Rule 8(b) that the defendants be charged with the identical crimes. The focus is on the underlying acts that constitute criminal offenses. The defendants must be charged with crimes that well up out of the same series of such acts, but they need not be the same crimes. United States v. Curry, supra, 977 F.2d at 1049-50; United States v. Alvarez, 860 F.2d 801, 824 (7th Cir.1988). And obviously the fact that they are the same crimes doesn’t mean they can be charged in the same indictment if they bear no relation to each other. United States v. Schweihs, 971 F.2d 1302, 1322 (7th Cir.1992); United States v. Velasquez, 772 F.2d 1348, 1353 (7th Cir.1985); United States v. MacDonald & Watson Waste Oil Co., 933 F.2d 35, 60 (1st Cir.1991). Otherwise the government could indict together every person who committed a federal drug offense in the Northern District of Illinois between January 1,1997, and December 31,1997.

The simplest ease for joinder is where the defendants are charged with having conspired with each other, period, and thus, in the language of the first clause of the rule, with having “participated in the same act or transaction.” United States v. Diaz, 876 F.2d 1344, 1355-56 (7th Cir.1989); United States v. Velasquez, supra, 772 F.2d at 1353. The indictment alleges that the Marzano cousins conspired with Davino and others to launder money derived from “specified unlawful activity” and that Daniel Marzano in fact deposited in his trading account money that he knew had been embezzled by Gentile. Elsewhere the indictment alleges that Charles Marzano and Davino intended to launder both drug money and the money embezzled by Gentile. So far, so good; the allegations that we have just summarized are sufficient to charge Daniel with participation in a conspiracy with his cousin and Davino to launder proceeds of embezzlement. But there is more to the indictment. The indictment alleges that Gentile had embezzled the money that Daniel laundered in order to help finance a drug conspiracy with which the indictment charges him, Charles Marzano, and Davino. Daniel was not charged with any drug offenses, and so if those offenses are unrelated to the laundering conspiracy they could not properly be joined with the laundering charge under Rule 8(b).

We thus are in the second rather than the first clause of Rule 8(b) and must decide whether the drug offenses can be considered part of the same “series of [illegal] acts or transactions” as the laundering. The answer is yes. We have a chain or circle that connects at one end Charles Marzano’s drug dealings, in which his cousin was not involved and at the other end the cousin’s laundering of the proceeds of Gentile’s embezzlement incident to the drug conspiracy. This linkage, missing in United States v. Velasquez, supra, 772 F.2d at 1353, satisfies Rule 8(b). United States v. Delpit, 94 F.3d 1134, 1143 (8th Cir.1996).

Although there was no misjoinder, we add for completeness that the defendants are wrong to argue that Rule 8(b) is not subject to the doctrine of harmless error. The Supreme Court in recent years has narrowed the classes of case in which error is reversible per se to a handful consisting of eases in which the elementary forms of criminal law, as they are currently understood, are withheld (for example, the right to a jury trial), Sullivan v. Louisiana, 508 U.S. 275, 281-82, 113 S.Ct. 2078, 124 L.Ed.2d 182 (1993); Arizona v. Fulminante, 499 U.S. 279, 309-10, 111 S.Ct. 1246, 113 L.Ed.2d 302 (1991); Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749 (1927); Rosa v. Peters, 36 F.3d 625, 634 n. 17 (7th Cir.1994); Tankleff v. Senkowski, 135 F.3d 235, 248 (2d Cir.1998); Riley v. Deeds, 56 F.3d 1117 (9th Cir.1995), and has explicitly excluded misjoinder. United States v. Lane, 474 U.S. 438, 449, 106 S.Ct. 725, 88 L.Ed.2d 814 (1986); see also United States v. Schweihs, supra, 971 F.2d at 1322; United States v. Randazzo, 80 F.3d 623, 628 (1st Cir.1996). It would no doubt be bizarre for the government in one indictment to indict two people for wholly unrelated offenses; but apart from the fact that the government would not save significant resources by doing such a thing, there might not be significant harm to either defendant. There might be; the jury might assume that the fact of joinder indicated some sinister connection warranting more severe punishment for the lesser of the two criminals than if he had been tried alone. That would be one possible construal but another would be that it was as if the grand jury had indicted the defendants separately but to save paper the government printed one indictment on the reverse of the sheet of paper on which the other one was printed. We need not pursue the issue; the point is only that mis-joinder does not fall into the small class of eases of error so severe as to require reversal even if not shown to have made any difference in the outcome of the defendant’s trial.

Even if defendants are properly joined in an indictment, they can be severed for trial under Rule 14 if the economy of the joint trial is outweighed by the prejudicial effect of such a trial on one or more (sometimes all) of the defendants. E.g., Zafiro v. United States, 506 U.S. 534, 113 S.Ct. 933, 122 L.Ed.2d 317 (1993); United States v. Marshall, 75 F.3d 1097, 1105 (7th Cir.1996); United States v. Zafiro, 945 F.2d 881, 885-86 (7th Cir.1991), aff'd under the name of Zafiro v. United States, supra; United States v. Miller, 116 F.3d 641, 679 (2d Cir.1997). In this case the judge acted well within the scope of his authority in denying the defendants’ motions. The economy is considerable because of the interrelatedness of the offenses. In a trial limited to Daniel it would still be proper to prove the drug activities of Charles and of Davino, because those activities furnished their motivation for wanting to launder money through Daniel’s firm, and the jury would want to know that motivation in order to have a complete picture. So there would in all likelihood have been considerable duplication of evidence if Daniel had been tried separately from his cousin and such duplication is a cost to society and a major consideration in the joinder of criminal defendants. Zafiro v. United States, supra, 506 U.S. at 537, 113 S.Ct. 933; Richardson v. Marsh, 481 U.S. 200, 210, 107 S.Ct. 1702, 95 L.Ed.2d 176 (1987); United States v. Buljubasic, 808 F.2d 1260, 1263 (7th Cir.1987); United States v. Golb, 69 F.3d 1417, 1425-26 (9th Cir.1995). And the prejudice of the joint trial to Daniel (and a fortiori to Charles) probably was slight. The very fact on which the defendants harp in arguing that they were misjoined in the indictment—the distinctness of Daniel’s offense from his cousin’s drug offenses—was bound to reduce the harm to Daniel’s chances of an acquittal from being tried together with a drug dealer. It was explained to the jury and was easy for them to understand that Daniel was neither a member of the drug conspiracy nor a launderer of drug proceeds. He was the launderer of bank funds embezzled by a member of the drug conspiracy. We doubt that a jury would think that since Daniel was the cousin of a drug dealer, he must be guilty of something too.

The remaining and most difficult issue has to do with the impeachment of Daniel by evidence that he had failed to disclose on his application for a seat on the Chicago Mercantile Exchange, as required by the application form, that he had been convicted of a crime. He testified that it was a 12-year-old misdemeanor which he had forgotten. But he was not allowed to explain on redirect examination that the “conviction” was merely the forfeiture of a $50 bond that he had posted when arrested on a charge of buying a ticket to a Cubs game from a scalper in violation of an obscure Chicago ordinance, and was realistically the equivalent of a traffic violation. Had Daniel been allowed to explain the nature of his conviction, the credibility of his testimony that he had forgotten it when he filled out the form would have been enhanced. We cannot think of any reason why he was not permitted to explain. This was an error, but it was harmless. Not only was the evidence of Daniel’s participation in the laundering scheme compelling, but there were other misstatements in the application for the CME seat that could not be explained away as memory lapses — notably, and most damning, concealing the source of the money for the seat he wanted to buy, the source being money embezzled by Gentile from his bank.

Nevertheless, we are distressed that at the oral argument of the appeal the government’s lawyer claimed not to have harped on the conviction in his closing argument; the transcript clearly shows that he did (and he was the government’s lawyer at the trial)— he referred to “prior convictions” (there was only one) and to “a criminal conviction” and to “his [Daniel’s] conviction.” Also at argument he said that Daniel had waived in this court any argument that the bond forfeiture was technically a conviction. This is not true; the argument is made in Daniel’s opening brief. It does not help Daniel, because at trial he conceded that the bond forfeiture was a conviction. In fact, it is not, but the court can enter a judgment for conviction on the basis of the forfeiture. Ill. S. Ct. R. 556(c), (d). We assume that this is what happened and is why the issue was not presented at trial; in any event, Daniel’s brief on appeal does not address the issue with sufficient specificity to preserve it. Still, the government’s lawyer should not have misrepresented his closing argument and his opponent’s brief. We expect better from the Department of Justice.

The sentencing issues that Daniel raises have insufficient merit to warrant discussion.

AFFIRMED.