United States v. Lynroy Gayle , 353 F. App'x 268 ( 2009 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
Nov. 17, 2009
No. 08-12826 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 07-80119-CR-DMM
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
LYNROY GAYLE,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(November 17, 2009)
Before BIRCH, BLACK and BARKETT, Circuit Judges.
PER CURIAM:
Lynroy Gayle (“Gayle”) appeals his convictions and sentences for
conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), and
for 78 counts of concealment money laundering, in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i). Gayle challenges the sufficiency of the evidence as to certain
counts. He also contends that the testimony of Kevin Olson amounted to bad
character evidence. Finally, Gayle maintains the district court erred in sentencing
him based on a total laundered amount of between $200,000 and $400,000. After a
thorough review of the record, we AFFIRM.
I. BACKGROUND
Gayle was indicted in count one for conspiring with Sabino Rosario, Frank
Rosario, and others, to commit money laundering of drug proceeds from July 2004
through October 2005 in Palm Beach County, Florida. Counts 2 through 56
involved cash deposits made by Frank Rosario, a heroin dealer, into Gayle’s bank
accounts. Counts 57 to 80 pertained to checks deposited by Gayle into Frank
Rosario’s “Didi Services” business account. After the government voluntarily
dismissed Count 16 at trial, a jury found Gayle guilty of all remaining counts. The
jury also determined that Gayle should forfeit $310,644 in assets and properties
that were traceable to the money-laundering offenses.
A. The Trial
Frank Rosario (“Frank”) testified at trial that he began helping his older
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brother, Sabino Rosario (“Sam”), sell heroin in 2000. Frank was best friends with
Gayle. Although Gayle never sold heroin, he knew that Frank did. Frank bragged
to Gayle about his success in selling heroin and even showed Gayle a hole in his
bedroom wall where he had stored thousand-dollar stacks of cash. Gayle, a
financial advisor who owned a company called Gayle Financial Services (“GFS”),
told Frank he should invest the money instead. Gayle also witnessed Frank bag
heroin and give heroin to a street supplier.
Frank eventually asked Gayle to help him legitimize his drug proceeds. In
January 2004, Gayle assisted Frank in starting an auto detailing business named
Didi Services. Though the business did some legitimate work, mainly for family
members, it “ended up being just a front for the heroin business.” R3 at 346.
Frank believed that the business made just enough lawful income to break even. In
order to boost the income, Frank began writing fake invoices and putting drug
money into the business account.
Frank and Gayle also concocted a plan to launder Frank’s drug money.
Frank would deposit cash into Gayle’s bank accounts, and Gayle would then
deposit bi-monthly $1500 checks from GFS into Didi Services’ bank account. The
checks from GFS were ostensibly for “marketing and services” but, in reality, Didi
Services did no marketing or recruiting of clients for GFS. Id. at 352. The sole
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purpose of transferring money from Frank to GFS, and then back to Didi Services,
was to show income for Didi Services. To avoid suspicion, Frank would use
different bank branches to make his cash deposits, sometimes making multiple
deposits per day. After Gayle was advised by his bank that Frank had made a
single cash deposit exceeding $10,000, thereby triggering notification to the
Internal Revenue Service (“IRS”), Gayle cautioned Frank to limit the amount of
his deposits. This incident also prompted Frank to vary the bank accounts he used
in order to avoid detection. Frank estimated that 85 to 90 percent of his deposits
were from drug proceeds. In all, Frank made 55 cash deposits totaling $203,225
into Gayle’s bank accounts between July 2004 and October 2005. Frank stated that
he received approximately $35,000 to $36,000 back from GFS.
In October 2004, Frank became a partner in GFS pursuant to an oral
agreement. Frank then began paying one-third of GFS’ overhead costs, which
Gayle claimed were $4500 a month. Frank expected a return on his investment in
GFS, including $25,000 in profits that Gayle promised him in December 2005, but
Frank never received any returns. Frank never had an official job with GFS and
never did anything to earn the money GFS returned to Frank through Didi
Services.
Didi Services was located next door to Budget Floors, a carpet store run by
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Sam. Like Didi Services, Budget Floors made very little legitimate income and
was supported primarily by Sam’s booming drug business. During 2004 and 2005,
Sam earned $60,000 a month as a heroin supplier. Sam paid Gayle, using drug
money funneled through Frank, for Gayle’s preparation of back taxes owed for the
carpet business. Gayle told Sam in a recorded telephone conversation that making
his store more successful would “bring [Sam] back into civilization” and take him
off of “ghost status,” referring to Sam’s need to have legitimate credit status. R4 at
621-22, 627-28. Sam also gave Gayle, via Frank, approximately $20,000 in
August 2005 to pay off his daughter’s car, although Gayle never did so.
Both Sam and Frank invested drug proceeds into properties they jointly
purchased with Gayle in a further attempt to legitimize their drug proceeds. These
properties included a condominium on Lakeside Drive, for which the Rosarios
each contributed $13,000 for the down payment, and a property on B street, for
which the Rosarios each contributed $18,000. All of their down payment money
came from heroin proceeds. Gayle told Frank that the down payment for the B
Street property was $54,000, but it was actually only $18,000. Frank sent Gayle
the rental money he collected from the B Street property, and he was supposed to
receive ten percent of that income back. Both Frank and Sam paid for
improvements to the two properties using drug money, but Gayle did not
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contribute. Frank also paid for utilities and split the mortgage with Sam and Gayle
on the Lakeside condo. Gayle never informed Frank that he later sold the B Street
property to Kevin Olson and had pocketed Olson’s down payment of
approximately $78,500. Similarly, Gayle failed to notify Frank when he sold the
Lakeside condo, resulting in a cash payment to Gayle of nearly $63,700.
Kevin Olson testified that he bought the B Street property for approximately
$429,900 upon Gayle’s advice that it was “undervalued” and “a good deal.” R4 at
562-63. The sellers of the property were listed on the closing statement as Ralston
and Shirley Swasey. Ralston Swasey is Gayle’s step-father and Shirley Swasey is
Gayle’s mother. Olson had no idea at the time of purchase that Gayle was related
to the Swaseys, that Gayle had an ownership interest in the property, or that Gayle
had received the cash payment of $78,579.93 that Olson had paid to the Swaseys.
Olson had expected to receive rental income through Gayle for the B Street
property, but Olson only received $3000. After Olson sued Gayle, Olson learned
that Gayle was related to the Swaseys and that the property had been purchased a
year earlier for only $320,000. On cross-examination, Olson testified that a
judgment was entered against Gayle for the rent payments, though Olson has yet to
receive the money.
Federal investigators discovered Gayle’s participation in the money
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laundering scheme while surveilling Sam’s narcotics activities. Recorded phone
calls between Sam and Gayle revealed discussions of financial transactions related
to the flow of drug money. Investigators also intercepted a call during which Sam
told Gayle that Danny Rosario, Sam’s brother, had been arrested for selling drugs.
When another heroin dealer named Terrell was arrested, Sam likewise informed
Gayle. Investigators could find no documents at GFS indicating that GFS had
employed Didi Services, Frank, or Sam. They did discover invoices showing that
Frank was sending money to GFS, however.
Gayle denied at trial discussing or witnessing any drug-related activity
involving the Rosarios. Gayle explained that the bi-monthly $1500 checks to Didi
Services were to pay for client referral fees and Frank’s services as the manager of
the Lakeside condo and B Street property, rather than to launder money. Gayle
also claimed he was unaware that Frank was making all deposits to him in cash.
Although Gayle discussed co-investing in properties with Frank and Sam, Gayle
said he ultimately purchased the Lakeside property by himself and the B Street
property with his parents. Gayle testified that his parents intended to reside at the
B Street property and rent out one of the bedrooms. Gayle admitted selling the B
Street property to Kevin Olson and collecting rent from the property, but he stated
that he could not disperse the rental income because of the ongoing money-
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laundering investigation.
B. Sentencing
The initial presentence investigation report (“PSI”) set Gayle’s base offense
level at 22, premised on Gayle’s laundering of funds between $400,000 and
$1,000,000. Gayle filed a written objection to this amount, noting that the jury’s
forfeiture verdict was for $310,644. Based on Gayle’s calculations, the total
amount of laundered funds fell between $200,000 to $400,000, which
corresponded to a base offense level of 20.
During sentencing, the government argued that the total laundered amount
was $401,000 based on the tainted rental income and personal cash exchanges
between Frank Rosario and Gayle. Gayle replied, “I stand on . . . my written
pleading.” R9 at 16. Gayle then added that, because the government’s proposed
amount was only $1,000 over the threshold for that level, and because the evidence
supported a finding that $219,000 was laundered, the “safe bet” was to sentence
Gayle according to the amount of more than $200,000 but not more than $400,000.
Id. at 16-17, 19. The district court adopted Gayle’s request and decreased his base
offense level to 20. The court ultimately sentenced Gayle within his guidelines
range1 to concurrent terms of 120 months of imprisonment on each count and 3
1
Based on Gayle’s total offense level and criminal history category, his guidelines range
was 108 to 135 months of imprisonment.
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years of supervised release.
II. DISCUSSION
A. Sufficiency of the Evidence
Gayle argues that there was insufficient evidence to convict him of
concealment money laundering under 18 U.S.C. § 1956(a)(1)(B)(i), as charged in
counts 2 through 56 (excluding count 16).2 These counts pertained to the cash
deposits Frank Rosario made into Gayle’s bank accounts. Gayle contends the
evidence only showed that he stole, not laundered, the drug money.
We review de novo the sufficiency of the evidence to support a conviction.
United States v. Campa, 529 F.3d 980, 992 (11th Cir. 2008). Although the jury has
leeway to choose between the reasonable conclusions the evidence at trial may
establish, “we do not enjoy the same freedom. We must accept all reasonable
inferences . . . made by the jury.” Id. at 1010 (quotation marks and citation
omitted). In addition, we must view the evidence, including all credibility choices
by the jury, in the light most favorable to the government. See id. at 992.
In order to convict Gayle of money laundering under 18 U.S.C.
2
Gayle does not challenge the sufficiency of the evidence as to count one, the conspiracy
count, or counts 57 through 80. He has therefore abandoned any claims concerning the
sufficiency of the evidence with respect to those counts. See Sepulveda v. U.S. Att’y Gen., 401
F.3d 1226, 1228 n.2 (11th Cir. 2005) (per curiam) (“When an appellant fails to offer argument
on an issue, that issue is abandoned.”).
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§ 1956(a)(1)(B)(i), the government had to prove beyond a reasonable doubt that:
(1) the defendant conducted or attempted to conduct a financial
transaction; (2) the transaction involved the proceeds of a statutorily
unlawful activity; (3) the defendant knew the proceeds were from
some form of illegal activity; and (4) the defendant knew a purpose of
the transaction was to conceal or disguise the nature, location, source,
ownership, or control of the proceeds.
United States v. Miles, 290 F.3d 1341, 1355 (11th Cir. 2002) (per curiam). As
defined by § 1956(c), a “transaction” includes a deposit to a financial institution.
18 U.S.C. § 1956(c)(3). A person “conducts” a financial transaction by “initiating,
concluding, or participating in initiating, or concluding a transaction[.]” Id.§ 1956(c)(2). Evidence of concealment includes “unusual secrecy surrounding the
transaction” and “structuring the transaction in a way to avoid attention.” Miles,
290 F.3d at 1356 (quotation marks, citation, and bracket omitted).
Gayle does not specify on appeal which of these four elements are absent,
and our review of the record reveals sufficient evidence as to each element.
Specifically, the evidence establishes that Gayle initiated and participated in a
scheme wherein Frank deposited drug-related proceeds into Gayle’s bank accounts,
and Gayle redeposited that money back into Frank’s business account. There is
ample evidence, which Gayle does not contest on appeal, that Gayle knew the
deposited funds were from Frank and Sam’s heroin dealings. Gayle also structured
the transactions so as to avoid attention by having Frank use multiple branches and
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bank accounts to make his deposits. Gayle further advised Frank to limit the
amount of his deposits to avoid being red-flagged by the IRS. There was thus
sufficient evidence that Gayle acted to conceal the illegal origin of the proceeds by
disguising them as legitimate business transactions. Contrary to Gayle’s argument,
there is no statutory requirement that Gayle must have returned all of the drug-
related money in order to have laundered it. Accordingly, we find more than
sufficient evidence to support Gayle’s challenged convictions for money
laundering under § 1956(a)(1)(B)(i).
B. Bad Character Evidence
Gayle contends that Kevin Olson’s testimony about his purchase of the B
Street property was irrelevant to the money laundering charges and served no
purpose except to prove Gayle’s bad character. As such, Gayle contends Olson’s
testimony was inadmissible under Rule 404(b). The government counters that
Rule 404 does not apply because Olson’s testimony was not extrinsic character
evidence, but rather evidence of Gayle’s conduct that was inextricably related to
the charged offenses. We agree with the latter.
We review a district court’s admission of other crimes or bad acts under
Rule 404 for abuse of discretion. See United States v. Lamons, 532 F.3d 1251,
1265 n.26 (11th Cir. 2008). Rule 404(b) excludes extrinsic evidence of uncharged
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acts as follows:
Evidence of other crimes, wrongs, or acts is not admissible to prove
the character of a person in order to show action in conformity
therewith. It may, however, be admissible for other purposes, such as
proof of motive, opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident . . . .
Fed. R. Evid. 404(b) (emphasis added). However, evidence is not extrinsic to the
charged offense, and thus does not fall within Rule 404(b)’s ambit, if the bad act
“arose out of the same transaction or series of transactions as the charged offense,”
the evidence is “necessary to complete the story of the crime,” or the evidence is
“inextricably intertwined with the evidence regarding the charged offense.” United
States v. Edouard, 485 F.3d 1324, 1344 (11th Cir. 2007) (quotation marks and
citation omitted). Such evidence is admissible if it explains the context or set-up of
the crime, and is linked in time and circumstances with the crime. See id.Regardless of whether such evidence falls inside or outside the scope of Rule
404(b), the evidence must still comport with Rule 403's requirements that its
probative value outweighs the danger of unfair prejudice. See id.In this case, Olson’s testimony was relevant and integral to flushing out
Gayle’s criminal acts of money laundering. According to Frank and Sam, Gayle
persuaded them to invest their money in properties in order to legitimize their drug
proceeds. However, at trial Gayle denied using Frank and Sam’s drug money to
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purchase the B Street property. Gayle instead claimed that he bought the property
with his parents for them to live in and to earn rental income. Olson’s testimony
was necessary to show that Gayle sold the B Street property under his parents’
names to Olson, without telling Frank or Sam, and then retained the entire
proceeds from the sale unbeknownst to Frank, Sam, or Olson. The fact that Gayle
deceived Olson concerning the ownership of the property refuted Gayle’s defense
that he and his parents had bought the property for a legitimate purpose. Olson’s
testimony was thus relevant to the charges of money laundering because it
reflected Gayle’s active concealment of the tainted funds used to purchase the
property, and it showed the trail of the Rosarios’ drug money. Additionally,
Olson’s testimony that Gayle withheld rental income due him, just as Gayle had
done with the Rosario brothers, was relevant to show that Gayle was continuing to
usurp any money gained from the property and that Gayle made profits using the
tainted funds. Because the evidence formed “an integral and natural part of an
account of the crime,” the evidence fell outside the scope of Rule 404(b) and was
properly admitted by the district court. Id. at 1346 (concluding that witness’
testimony that the defendant threatened to kill her if she did not return his deposit
was an integral part of how the defendant laundered those funds).
Further, the probative value of Olson’s testimony was not substantially
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outweighed by a danger of unfair prejudice. We have said that “Rule 403 is an
extraordinary remedy, which should be used only sparingly, and the balance should
be struck in favor of admissibility.” Id. at 1344 n.8 (quotation marks, citation, and
brackets omitted). Viewing the evidence in the light most favorable to its
admission, and considering the overwhelming evidence of Gayle’s guilt, we find
no abuse of discretion in its admission. See id. at 1346 (“[I]t is doubtful that this
testimony caused any unfair prejudice considering the overwhelming evidence of
Edouard’s guilt.”)
C. Sentencing Guidelines
Gayle asserts the district court erred in finding that Gayle was responsible
for laundering an amount of more than $200,000 but not more than $400,000. He
submits that the only funds laundered were the bi-monthly $1500 payments to
Frank and a $5000 cash payment that Frank gave Gayle to reimburse him for a car
payment. Consequently, Gayle calculates that the total amount of laundered
money was approximately $40,000, which would have changed his Sentencing
Guidelines computation. The government responds that Gayle invited any error by
requesting the district court to sentence him based on the amount of $200,000 to
$400,000. We agree with the government that the invited error doctrine precludes
this issue from review.
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“The doctrine of invited error is implicated when a party induces or invites
the district court into making an error.” United States v. Silvestri, 409 F.3d 1311,
1327 (11th Cir. 2005) (quotation marks and citation omitted). A party who invites
an error may not later challenge that error on appeal. See id. Furthermore, we are
precluded from reviewing an invited error or invoking the plain error rule and
reversing. See id. at 1327, 1337 (concluding that the defendant invited the claimed
error in the jury instructions by expressly accepting them, and he thereby waived
his right to challenge those instructions).
Here, the record reflects that the government attempted during sentencing to
persuade the district court that Gayle should be responsible for a total laundered
amount of over $400,000. Gayle, in response, urged the court to find against the
government’s position and sentence him according to the amount of more than
$200,000 but not more than $400,000. Accordingly, because Gayle invited any
error resulting from the district court’s adoption of his proposed laundered amount,
we are precluded from reviewing the alleged error. See id.III. CONCLUSION
For the reasons stated herein, we AFFIRM Gayle’s convictions and
sentences.
AFFIRMED.
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