United States v. Garza

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________

No. 93-7703 _______________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

MARCO GARZA, SR. and MARCO GARZA, JR.,

Defendants-Appellants.

_________________________

Appeals from the United States District Court for the Southern District of Texas _________________________

(December 27, 1994)

Before HIGGINBOTHAM, SMITH, and PARKER, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

I.

Marco Garza, Jr., and Marco Garza, Sr., father and son

(hereinafter "Junior" and "Senior," respectively, or, collectively,

"the Garzas"), ran Marco Garza Chevrolet. The dealership sold a

number of vehicles to David Mills, a drug trafficker. These sales

were made for combinations of cash and other valuables in patterns

that avoided their being reported by banks on currency transaction

reports ("CTRs") or by the dealership itself under its statutory

reporting duty. Additionally, the sales were made to Mills under

several assumed names. The proceeds for the purchase of these cars came from Mills's profits as a drug trafficker.

Mills testified against the Garzas, who were charged with

seven counts of money laundering in violation of 18 U.S.C.

§ 1956(a)(1)(B)(1), a conspiracy to launder money, four counts of

structuring a transaction in violation of 31 U.S.C. § 5324, and a

second conspiracy embracing the structuring transactions. After a

jury trial, Senior was found guilty on all counts. Junior was

found guilty of the money laundering and conspiracy to money

launder charges only, and acquitted on the other counts.

II.

A.

Senior challenges his convictions on the structuring counts

and on the conspiracy to structure count on the basis of Ratzlaf v.

United States, 114 S. Ct. 655 (1994), which interprets the

willfulness element of structuring to require knowledge that the

structuring itself is illegal. The Court examined the structuring

statute and squarely held that it required proof of specific intent

to violate the law. The Court went so far as to say that the

structuring statute is one of the rare instances in which an

ignorance of the law defense is viable. Id. at 656.

Ratzlaf cleanly rejects the theory embodied in the district

court's instructions to the jury, that "[t]he defendant need not

know that structuring itself is unlawful, only that the bank has a

duty to report, and that he understood an act to evade with bad

purpose the submission of enough information so that the bank could

2 file its report." Because, as the government concedes, Ratzlaf

makes this instruction plain error, we reverse Senior's structuring

convictions (counts 9 through 12) and his structuring conspiracy

conviction (count 13) and remand for a new trial. We note that the

district court's instruction was consistent with the precedents of

this circuit at the time it was given, which was before the Supreme

Court handed down Ratzlaf.

B.

The Garzas assert that the evidence offered in support of each

of their convictions at trial was insufficient. This court affirms

a jury verdict if a reasonable trier of fact could conclude from

the evidence that the elements of the offense were established

beyond a reasonable doubt, viewing all evidence in the light most

favorable to the jury's verdict and drawing all reasonable

inferences from the evidence to support that verdict. The evidence

need not exclude every reasonable possibility of innocence. United

States v. Faulkner, 17 F.3d 745, 768 (5th Cir. 1994); United States

v. Gadison, 8 F.3d 186, 189 (5th Cir. 1993); United States v.

Menesses, 962 F.2d 420, 425 (5th Cir. 1992). We do not make

credibility determinations in ordinary circumstances, even where

evidence introduced against defendants is from their co-conspira-

tors. Gadison, 8 F.3d at 190.

To obtain a conviction for money laundering, the government

must prove that "the defendant 1) conducted or attempted to conduct

a financial transaction, 2) which the defendant knew involved the

3 proceeds of unlawful activity, 3) with the intent [either] to

promote or further unlawful activity" or to conceal or disguise the

nature, location, source, ownership, or control of the proceeds of

unlawful activity. United States v. West, 22 F.3d 586, 590-91 (5th

Cir.), cert. denied, 1994 WL 649888 (Nov. 28, 1994).

The government introduced evidence tending to prove that

Senior authorized cash sales of vehicles to Mills and advised Mills

that if the dealership were to take a lien on his car or truck, he

would be able to get it back if it were seized by a governmental

entity. The government also introduced evidence tending to prove

that Senior directed his staff to sign false names to Mills's

certificates of title. This evidence is adequate to support the

verdict as to the existence of an agreement between the parties in

the conspiracy count.

To support a conviction under 18 U.S.C. § 1956(a)(1)(B)(1),

the government must prove, inter alia, that the defendant knew that

the source of the funds was illicit and that the laundering was

done with the intent to conceal or disguise the nature, location,

source, ownership, or control of the property. United States v.

Fuller, 974 F.2d 1474, 1478 (5th Cir. 1992), cert. denied,

114 S. Ct. 112 (1993). The jury verdicts against Senior on the

conspiracy to launder money and substantive money laundering counts

are supported by the evidence. Senior knew that Mills was AWOL and

therefore was very unlikely to have a legitimate source of income

for his seven automobile purchases.

The evidence against Junior on the money laundering and

4 conspiracy to money launder counts is even stronger than that

against his father, as Junior enjoyed a closer relationship with

Mills and was more directly involved in the transactions in

question. His conviction is also supported by sufficient evidence.

C.

The Garzas argue that the testimony of Mills regarding use of

cocaine by Junior and Mills at the dealership was admitted in

violation of FED. R. EVID. 404(b). They further assign error to the

court's refusal to give the jury a limiting instruction governing

its consideration of the evidence. Since there was an objection at

trial, we review the both the admission of this evidence and the

refusal to give a limiting instruction for abuse of discretion.

The government claims that the drug use is relevant, as it

bears on the Garzas' claim that they had no idea the funds they

laundered were drug proceeds. In the context of Mills's obvious

lack of wage-earning employment (being AWOL), heavy use of drugs

shows an impressive source of income and therefore is relevant to

the Garzas' intent with regard to the money laundering charge.

The Garzas argue that the government introduced the evidence

because of its potential to prejudice the jury against them. In

light of the fact that this use was of cocaine, whereas the

government's theory of the case was that Mills trafficked in

marihuana, we tend to agree. Without endorsing the government's

questionable judgment in putting on the evidence of the drug use,

we find no reversible error, in that the district court did not

5 abuse its discretion in admitting the evidence. We disapprove,

however, of the introduction of such highly prejudicial evidence

where, as here, the evidence of guilt is so overwhelming that there

is no real need for its introduction.

The Garzas also challenge the admission of evidence concerning

a lien that had been placed on a vehicle sold to Sylvia Garza even

though she owed the dealership no money on the vehicle. The trial

court found that the evidence went to Senior's involvement in the

structuring conspiracy count. It was also relevant to rebut

Senior's claim that he was uninvolved in the management of his

business in many ways. In light of the fact that the district

court gave the jury a limiting instruction confining the use of the

evidence to permissible purposes under rule 404(b), we find no

abuse of discretion.

D.

Senior challenges his conviction on the structuring conspir-

acy, count 13, claiming ineffective assistance of counsel. As we

are reversing this conviction and remanding for a new trial because

of the erroneous jury instruction, we do not reach this issue.

E.

Senior complains of the four-point enhancement of his base

offense level under the sentencing guidelines for being the

"leader" of an operation that involves five or more people or is

"otherwise extensive." See U.S.S.G. § 3B1.1. The district court

6 found that Senior was in charge of the operation and that it

involved more than five people including bookkeepers, clerks, and

salesmen. These findings of fact are reviewed for clear error, and

there is none here. In light of these facts found by the district

court, the sentence enhancement was appropriate. Senior's argument

regarding the one-point enhancement of sentence for a total amount

of money involved in excess of $100,000 is meritless.

III.

Because Ratzlaf makes the jury instruction on the willfulness

requirement of the structuring statute plain error, Senior's

convictions on counts 9 through 13 are REVERSED, and the case is

REMANDED for a new trial on those counts. The district court

committed no reversible error with regard to the money laundering

and conspiracy to money-launder counts as to both defendants, and

those convictions are therefore AFFIRMED.