United States v. Majors , 196 F.3d 1206 ( 1999 )


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                      IN THE UNITED STATES COURT OF APPEALS
                                                                                    FILED
                                 FOR THE ELEVENTH CIRCUIT
                                                                         U.S. COURT OF APPEALS
                                                                           ELEVENTH CIRCUIT
                                                                                11/19/99
                                              No. 97-2803                    THOMAS K. KAHN
                                                                                 CLERK
    
    
                             D. C. Docket No. 5:95-CR-05036-1/LAC
    
    
    UNITED STATES OF AMERICA,
    
                                                                         Plaintiff-Appellee,
                                                  versus
    
    FENNIS OLEACH MAJORS a.k.a. F. O. Majors;
    GARETH EUGENE MAJORS,
                                                                         Defendants-Appellants.
    
    
    
    
                           Appeal from the United States District Court
                               for the Northern District of Florida
    
    
                                        (November 19, 1999)
    
    Before ANDERSON, Chief Judge, and HILL, Senior Circuit Judge, and COOK*,
    Senior District Judge.
    
    ____________________
    *Honorable Julian Abele Cook, Jr., Senior U. S. District Judge for the Eastern District of Michigan,
    sitting by designation.
    
    HILL, Senior Circuit Judge:
          Father and son appellants, F.O. Majors and Gareth Majors, were convicted by
    
    a jury in 1996 on sixteen counts of conspiracy to commit mail fraud; conspiracy to
    
    commit securities fraud; conspiracy to commit money laundering; mail fraud; and
    
    money laundering. While appellants raise eleven issues on appeal,1 we find that only
    
    three trial-related issues merit discussion: (1) sufficiency of the evidence on the fraud
    
    counts, as to Gareth Majors only; on the money laundering counts, as to both Gareth
    
    Majors and F.O. Majors; (2) admissibility of the government’s expert witness
    
    testimony; and (3) admissibility of evidence seized pursuant to a search warrant.
    
    Based upon the following, we affirm the judgments of conviction and sentences of
    
    both appellants.
    
                                               I.
    
          The thirty-six page indictment alleged that, over a twenty-year period, using
    
    four corporations,2 F.O. and Gareth Majors, conspired to defraud investors by selling
    
    
    
          1
              We affirm the eight remaining issues without discussion. See 11th Cir. R. 36-
    1.
          2
            The corporations, also named as defendants in the indictment, were Alliance
    Fuel Corporation (AFC) [where F.O. Majors was president and a director]; Alliance
    Petroleum, Inc. [where F.O. Majors was a director; and Gareth Majors was president
    and a director]; I.R.M. Corporation, Inc. [where F.O. Majors was a director and
    resident agent; and Gareth Majors was president and a director]; and Virex
    Corporation [where F.O. Majors was chief executive officer and chairman of the board
    of directors].
                                                2
    millions of dollars of worthless securities, bogus licenses and phoney distributorships,
    
    by representing: (1) that they possessed the rights to a patented new “secret formula”
    
    for producing a synthetic fuel additive;3 (2) that they were building a blending plant
    
    which would use as fuel buffalo gourds grown by local farmers;4 and (3) that they held
    
    the formula rights to a new cleaning fluid that killed the HIV virus.5
    
          Aided by classic con-man methods and unmitigated gall, appellants claimed to
    
    be successful entrepreneurs who, through gilded representations, duped unwary
    
    investors to invest in their corporations, which were falsely touted to be viable,
    
    profitable, and manned by full staffs of office and laboratory personnel. Supplied
    
    with inconsistent, unsubstantiated and inflated balance sheets, stockholders were
    
    guaranteed large profits and dividends. From 1984 through 1996, they invested
    
    $3,296,900.72 with appellants. In turn, appellants used these funds6 for their own
    
    personal living and European travel expenses.
    
          3
             Tests by the State of Florida determined the additive to be worthless,
    consisting of plain alcohol.
          4
            Although elaborate ground-breaking ceremonies were held, no plant reached
    the planning stages.
          5
            Investors learned that the solution was merely a generic disinfectant home-
    bottled into a few samples.
          6
            Before reaching appellants’ pockets, monies would be transferred several
    times between corporations in what, the indictment alleged, was an attempt to launder
    funds.
                                               3
                                              II.
    
          In 1996, pursuant to an investigation by the Federal Bureau of Investigation, an
    
    FBI special agent submitted an affidavit in support of a request for search warrant to
    
    search the premises of one of appellants’ corporations, Alliance Fuel Corporation
    
    (AFC). A search warrant was issued authorizing the search of the AFC premises for
    
    “[b]ooks, [l]edgers, [r]eceipts, [i]nvoices, [b]usiness records, the identification of
    
    [f]inancial accounts and any other evidence which is evidence in violation of Title 18
    
    United States Code Sections 1341 and 1343.” As a result of the search, thousands of
    
    documents were seized by the government.
    
          After months of analyzing these documents, FBI financial analyst Mr. Michael
    
    Root testified as an expert witness for the government at trial. It was his opinion that
    
    $3.3 million approximated the dollar amount of fraud perpetrated by appellants upon
    
    investors for the relevant twelve-year time period.
    
          At the conclusion of a two-week trial, the jury convicted appellants on all
    
    counts as charged. F.O. Majors was convicted of conspiracy to commit crimes against
    
    the United States, 18 U.S.C. § 371 (count 1)7; mail fraud, 18 U.S.C. § 1341 (counts
    
    
    
          7
            Count 1 charged defendants with participating in a conspiracy that had three
    objects: (1) to commit mail fraud, in violation of 18 U.S.C. § 1341; (2) to commit
    securities fraud, in violation of 15 U.S.C. § 77 (q); and (3) to commit money
    laundering, in violation of 18 U.S.C. § 1956.
                                               4
    2-4); and laundering of monetary instruments, 18 U.S.C. § 1956(a)(1) (counts 5-8, 10
    
    and 14-16). He was sentenced to a total term of ninety-six months’ imprisonment.
    
    Gareth Majors was convicted of conspiracy to commit crimes against the United
    
    States, 18 U.S.C. § 371 (count 1); and money laundering, 18 U.S.C. § 1956(a)(1)
    
    (counts 9 and 11).     He was sentenced to sixty-three months’ imprisonment.
    
    Appellants now appeal their convictions and sentences.
    
                                             III.
    
                                             A.
    
          We limit our discussion of the sufficiency of the evidence of a scheme to
    
    defraud as to Gareth Majors only. We discuss the sufficiency of the evidence on the
    
    money laundering counts, as to both appellants.
    
          Whether there is sufficient evidence to support the convictions is a question of
    
    law subject to our de novo review. United States v. Fischer, 
    168 F.3d 1273
    , 1276
    
    (11th Cir. 1999), petition for cert. filed, 
    68 U.S.L.W. 3080
     (July 15, 1999) (No. 99-
    
    11). In reviewing the sufficiency of the evidence to support the jury verdict, we view
    
    the evidence in the light most favorable to the government . . . all reasonable
    
    inferences and credibility choices are made in the government’s favor. Id. Accepting
    
    all reasonable inferences from the evidence which support the verdict, we will affirm
    
    the convictions if a reasonable fact-finder could have reached a conclusion of guilt
    
    
                                              5
    beyond a reasonable doubt. United States v. Lopez, 
    985 F.2d 520
    , 524 (11th Cir.
    
    1993). It is not necessary for the government to disprove every reasonable hypothesis
    
    of innocence, as a jury is “free to choose among reasonable constructions of the
    
    evidence.” United States v. Jones, 
    913 F.2d 1552
    , 1557 (11th Cir. 1990).
    
                                              1.
    
          Gareth Majors adopts his father’s argument on appeal that he is not guilty of
    
    conspiracy to commit fraud because he made “no real misrepresentations” and that “to
    
    the extent any statements were inaccurate or misleading, any reasonable person could
    
    have - and would have investigated or evaluated the claims and the investment before
    
    handing over thousands of dollars.” He claims that shareholders knew that the
    
    projects would not succeed unless financing was obtained; that European travel
    
    expenses were incurred in an attempt to obtain financing; and that shareholder
    
    investments were, by their very nature, risky.
    
          Gareth characterizes his actions as “just puffing, misunderstandings, and . . .
    
    failed business efforts,” United States v. Brown, 
    79 F.3d 1550
    , 1557 (11th Cir. 1996),
    
    not actionable under the mail fraud statute. “[W]ithout some objective evidence
    
    demonstrating a scheme to defraud, all promotional schemes to make money, even if
    
    ‘sleazy’ or ‘shrewd,’ would be subject to prosecution on the mere whim of the
    
    
    
    
                                              6
    prosecutor. More is required under our criminal law.” Id. at 1562 n. 20 (quoting
    
    United States v. Goodman, 
    984 F.2d 235
    , 240 (8th Cir. 1993)).
    
          The government contends that at trial it presented objective evidence of a
    
    scheme to defraud and proved Gareth’s participation in the conspiracy beyond a
    
    reasonable doubt. See United States v. High, 
    117 F.3d 464
    , 468 (11th Cir. 1997) (to
    
    support a conviction for conspiracy, the government must prove only that two or more
    
    persons agreed to commit a crime, that the defendant knew of the conspiratorial goal,
    
    and that he voluntarily participated in helping to accomplish that goal). The existence
    
    of such an agreement may be proved by either direct or circumstantial evidence; a
    
    common scheme or plan may be inferred from the conduct of the alleged participants
    
    or from other circumstances. Jones, 913 F.2d at 1557.8
    
          We have reviewed the entire record, including the trial transcript. Evidence of
    
    Gareth’s participation in the conspiracy to defraud investors is present throughout.
    
    He was president and a director of two of the four corporations involved. He had
    
    
    
          8
            The government, citing United States v. Harris, 
    20 F.3d 445
    , 452 (11th Cir.
    1994), urges upon us the proposition that, having established the existence of a
    conspiracy, it need come forward with only “slight evidence” to connect a particular
    defendant with it. It is unfortunate that misleading language to that effect may be
    found in some cases, even after the “slight evidence” concept was “banished” in
    United States v. Malatesta, 
    590 F.2d 1379
    , 1382 (5th Cir. 1979). For an exposition
    of the correct rule, read United States v. Toler, 
    144 F.3d 1423
    , 1426-1428 (11th Cir.
    1998).
                                              7
    signatory authority on stock certificates. He signed fraudulent newsletters and
    
    corporate literature misrepresenting the financial condition of the companies. He
    
    signed at least one letter of investor inducement and provided inflated financial
    
    statements to potential investors. In addition, Gareth participated in the European
    
    trips, stockholder meetings and board meetings. When his father was absent from the
    
    office, he served as office manager, accountant and signatory, answering stockholder
    
    inquiries by telephone. It is clear from the evidence presented that there was a scheme
    
    to defraud investors; that Gareth knew of its general purpose; and that he knowingly
    
    and voluntarily participated in it. High, 117 F.3d at 468. Instead of disassociating
    
    himself from on-going illegal activity, Gareth knowingly associated himself,
    
    furthering its purpose. See United States v. Rudisill, — F.3d — (11th Cir. Sept. 3,
    
    1999).
    
          In short, the record is replete with objective evidence of actions by Gareth
    
    which far surpass puffing or sellers’ talk. Brown, 79 F.3d at 1557. While perhaps
    
    Gareth was not the ringleader of the conspiracy, the apple did not fall far from the
    
    tree. Viewed in the light most favorable to the government, the evidence is pervasive
    
    to support the jury’s verdict. Fischer, 168 F.3d at 1276.
    
                                              2.
    
                                              a.
    
    
                                              8
           We next examine the sufficiency of the evidence supporting the convictions of
    
    the appellants on the money laundering counts. Counts V through XVI9 of the
    
    indictment charge appellants with money laundering under Section 1956
    
    (a)(1)(B)(I).10
    
    
    
    
           9
            The concealment element of money laundering alleged in the indictment is
    that investors’ funds were indirectly funneled into appellants’ own personal bank
    accounts after passing through AFC or Virex; through AFC (via two different
    accounts at two different banks); or through Virex to IRM (via two different accounts
    at two different banks).
           10
                Section 1956 (a)(1)(B)(i) provides as follows:
    
           (a)(1) Whoever, knowing that the property involved in a financial
           transaction represents the proceeds of some form of unlawful activity,
           conducts or attempts to conduct such a financial transaction which in fact
           involves the proceeds of specified unlawful activity --
    
                                               ***
    
           (B) knowing that the transaction is designed in whole or in part --
                 (i) to conceal or disguise the nature, the location, the
                 source, the ownership or the control of the proceeds of
                 specified unlawful activity
                                             ***
                 shall be sentenced to a fine of not more than $500,000 or
                 twice the value of the property involved in the transaction,
                 whichever is greater, or imprisonment for not more than
                 twenty years, or both.
    
    
    
                                                9
          Section 1956 (a)(1)(B)(I) is sometimes referred to as the “concealment” or
    
    “design” provision of the money laundering statute. See United States v. Calderon,
    
    
    169 F.3d 718
    , 720 (11th Cir. 1999);11 United States v. Burns, 
    162 F.3d 840
    , 848 (5th
    
    Cir. 1998).12 A violation of the concealment provision must “follow in time” the
    
    completion of the underlying transaction as an activity designed to conceal or disguise
    
    the origins of the proceeds. See United States v. Dimeck, 
    24 F.3d 1239
    , 1246 (10th
    
    Cir. 1994).13 This section of the money laundering statute was designed to punish
    
          11
             Section 1956 (a)(1)(A)(I) has been referred to as the promotion prong of the
    money laundering statute. Calderon, 169 F.3d at 722 n.5. For sentencing purposes,
    a defendant convicted under the promotion prong receives a base offense level of 23,
    U.S.S.G. § 2S1.1, while one convicted under the concealment prong, Section 1956
    (a)(1)(B)(I), receives a base offense level of 20. Id. A greater punishment is applied
    to those defendants who encourage or facilitate the commission of further crimes.
    U.S.S.G. § 2S1.1, commentary.
          12
              Section 1956 (a)(1)(B)(I) is a provision structured to reach those types of
    money laundering activities designed to conceal or disguise the attributes of proceeds
    produced by unlawful activity. United States v. Tokars, 
    95 F.3d 1520
    , 1539 (11th Cir.
    1996), citing United States v. Miller, 
    22 F.3d 1075
    , 1079 (11th Cir. 1994) (where it is
    “illegal to knowingly enter into a financial transaction involving the proceeds of a
    ‘specified unlawful activity’ with the intent to conceal or disguise the nature, location,
    source, ownership, or control of those proceeds”). The activity that Section 1956
    (a)(1)(B)(I) seeks to prevent is the injection of illegal proceeds into the stream of
    commerce while obfuscating their source. United States v. Wynn, 
    61 F.3d 921
    , 927
    (D.C. Cir. 1995).
          13
             Before the primary offense of money laundering can occur, the underlying
    criminal activity must be complete, generating proceeds to be laundered. United
    States v. Christo, 
    129 F.3d 578
    , 580 (11th Cir. 1997) (where the withdrawal of bank
    funds charged as money laundering was one and the same as the underlying criminal
    activity of bank fraud and misapplication of bank funds).
                                               10
    defendants who thereafter take the additional step of attempting to legitimize their
    
    proceeds so that observers think their money is derived from legal enterprises. Id.
    
    (citations omitted).14 In this case, the government had to prove to the jury that: (1)
    
    that appellants conducted or attempted to conduct a financial transaction; (2) that the
    
    transaction involved the proceeds of a statutorily specified unlawful activity; (3) that
    
    appellants knew the proceeds were from some form of illegal activity; and (4) that
    
    appellants knew a purpose of the transaction was to conceal or disguise the nature,
    
    location, source, ownership, or control of the proceeds. Section 1956 (a)(1)(B)(I). In
    
    this appeal, appellants claim insufficient evidence only as to part (4).15
    
    
    
                                               b.
    
          Appellants contend that the government failed to prove the concealment charges
    
    under the indictment. They claim their facts are similar to those in United States v.
    
    Dobbs, 
    63 F.3d 391
    , 397 (5th Cir. 1995), where the court found that money laundering
    
    
    
          14
             Money laundering is not a continuing offense. See United States v. Kramer,
    
    73 F.3d 1067
    , 1072 (11th Cir. 1996). The statutory language and legislative history
    indicate that each transaction or transfer of money constitutes a separate offense. Id.
    citing S.Rep. No. 433, 99th Cong.2d Sess. 12-13 (1986).
          15
            We find Gareth’s claim that he did not know that the property involved
    represented the proceeds of criminal enterprise to be without merit. See Part III.A
    supra.
                                              11
    was not present when a husband deposited funds into his wife’s bank account to pay
    
    ordinary household expenses. Similarly here, they claim that there was no intent to
    
    disguise or conceal the inter-company transfers,16 that there was nothing inappropriate
    
    about the open and notorious transfers, and that the transfers were simply payments
    
    for reasonable and necessary business expenses.           Appellants argue that the
    
    government’s expert witness, Mr. Root, based his opinion that concealment was
    
    present on the sheer volume of inter-company transfers, nothing else. Contrary to Mr.
    
    Root’s opinion, appellants assert that evidence of their concealment was not
    
    substantial. See United States v. Garcia-Emanuel, 
    14 F.3d 1469
    , 1476 (10th Cir.
    
    1994). They claim that the government’s broad interpretation has turned the money
    
    laundering statute into a “money spending statute,” contrary to Congressional intent.
    
    Id.
    
    
    
                                             c.
    
          The government contends that it proved the concealment prong at trial. In an
    
    elaborate shell game, appellants moved ill-gotten funds in and out of various corporate
    
    
    
          16
            The indictment charged that funds were transferred either through AFC or
    Virex directly to appellants or through AFC (two different accounts at two different
    banks) or Virex to IRM (two different accounts at two different banks), and then to
    appellants.
                                              12
    bank accounts, previously set up in multiple signatory names. These moves were
    
    designed to make the funds ultimately enjoyed by appellants appear as legitimate
    
    income not derived from the company in which an investor had invested. Appellants
    
    received “sanitized” funds.17 The sheer volume of these transfers and the number of
    
    lies uttered by appellants to investors, claims the government, satisfies the
    
    substantiality test of Garcia. See also United States v. Hurley, 
    63 F.3d 1
     (1st Cir.
    
    1995). Once the concealment element is proven, the government has met its burden
    
    of proof. See United States v. Wilson, 
    77 F.3d 105
    , 108-109 (5th Cir. 1996); United
    
    States v. Manarite, 
    44 F.3d 1407
     (9th Cir. 1995).
    
                                             d.
    
          Authority as to the sufficiency of the evidence of money laundering under
    
    Section 1956 (a)(1)(B)(I) is sparse in this circuit. See United States v. Gregg, 
    179 F.3d 1312
    , 1315-16 (11th Cir. 1999). Accordingly we must turn to the case law of
    
    other circuits for guidance.
    
    
    
    
          17
             These transfers were allegedly concealed from investors in order to further
    the conspiracy and keep the money flowing. Any type of exposure would have alerted
    investors, as it was counter to appellants’ continuous requests for additional funds.
    Appellants allegedly told investors that they never took any money for their own use
    out of the companies. Investors were apparently told that appellants were using their
    own private funds just to keep the companies solvent.
                                             13
          In 1994, the Tenth Circuit in Garcia-Emanuel, attempted to discern certain
    
    principles governing Section 1956 (a)(1)(B)(I) appeals, a “difficult task of separating
    
    money laundering, which is punishable by up to twenty years in prison, from mere
    
    money spending, which is legal.” Id. at 1473. Because the statute is aimed at
    
    transactions that are engaged in for the purpose of concealing assets, “[m]erely
    
    engaging in a transaction with money whose nature has been concealed through other
    
    means is not in itself a crime . . . [i]f transactions are engaged in for present personal
    
    benefit, and not to create the appearance of legitimate wealth, they do not violate the
    
    money laundering statute.” Id. at 1469.
    
          The Tenth Circuit concluded that no list of categories18 can govern a jury’s
    
    decision about what is sufficient evidence to sustain a conviction of money laundering
    
    beyond a reasonable doubt, but that juries, upon proper instruction, must rigorously
    
    enforce two disciplines. Garcia-Emanuel, 14 F.3d at 1476. That first is that Section
    
    1956 (a)(1)(B)(I) is a concealment statute, not a spending statute. The second is the
    
    
    
          18
              Evidence that may be considered when determining whether a transaction was
    designed to conceal includes, among others, statements by a defendant probative if
    intent to conceal; unusual secrecy surround the transaction; structuring the transaction
    in a way to avoid attention; depositing illegal profits in the bank account of a
    legitimate business; highly irregular features of the transaction; using third parties
    to conceal the real owner; a series of unusual financial moves cumulating in the
    transaction; or expert testimony on practices of criminals. Garcia-Emanuel, 14 F.3d
    at 1475-76 (emphasis on evidence present in this case).
                                               14
    requirement that the evidence of concealment must be substantial.19 Id. We subscribe
    
    to both these disciplines.
    
          We next turn to case authority from the Fifth Circuit. Appellants liken their
    
    factual setting to that of Dobbs, 63 F.3d at 391. In Dobbs, the court reversed a money
    
    laundering conviction because the transactions were as open and notorious as typical
    
    bank transactions can be. Id. at 397. The cattle rancher in Dobbs had been charged
    
    with money laundering when he deposited illegal cattle sale proceeds in his wife’s
    
    bank account used to pay ordinary household and ranch expenses.
    
          The facts here are unlike those in Dobbs. The Dobbs transactions were not
    
    disguised by the use of third parties. See id. Here the deposit of checks made payable
    
    to IRM from AFC or Virex were disguised by the use of a third party, namely IRM.
    
    Appellants’ connection to IRM could be discovered only by accessing bank or
    
    corporate records of IRM, and then tracing the funds from the IRM account to the
    
    personal accounts of appellants.
    
          In United States v. Powers, 
    168 F.3d 741
    , 747-48 (5th Cir. 1999), petition for
    
    cert. filed, (Sept. 3, 1999) (No. 99-6112), the deposit of checks made payable to the
    
    
    
          19
              The Tenth Circuit reversed convictions in United States v. Sanders, 
    928 F.2d 940
     (10 Cir. 1991) and United States v. Lovett, 
    964 F.2d 1029
     (10th Cir. 1992), both
            th
    
    cases involving purchases of vehicles with proceeds from illegal transactions with
    titles registered in family members’ names.
                                             15
    ITEX corporation from the Long Valley corporation were disguised by the use of a
    
    third party, ITEX. Id. at 748. Checks from Long Valley to ITEX did not reveal that
    
    Powers or his wife were involved in the transactions. Powers’ connection to ITEX
    
    could be discovered only by accessing the bank records of ITEX, finding out that Mrs.
    
    Powers had an interest in the account, and then tracing the funds from the ITEX
    
    account to the couple’s personal account. Id. The Fifth Circuit found that Powers’
    
    use of ITEX evidenced a sufficient intent to conceal the source of illegal funds and
    
    confirmed Powers’ money laundering convictions. Id. The facts here are very
    
    similar. See Burns, 162 F.3d at 847-49 (where an ordinary check transfer between two
    
    bank accounts conducted in plain view was the final step of a larger money laundering
    
    scheme willfully designed to give the defendant access to the illegal proceeds); United
    
    States v. Jackson, 
    935 F.2d 832
    , 842 (7th Cir. 1991) (evidence that defendant treated
    
    the illegal funds commingled in legitimate church accounts as his own sufficient to
    
    support finding of design to conceal); United States v. Termini, 
    992 F.2d 879
    , 880 (8th
    
    Cir. 1993) (commingling illegal gambling proceeds in legitimate corporate bank
    
    accounts sufficient to establish a design to conceal); United States v. Nattier, 
    127 F.3d 655
    , 658-59 (8th Cir. 1997) (depositing embezzled funds in the seemingly legitimate
    
    business account of IRI and then transferring them to another account in the name of
    
    defendant and his father). Moving money through a large number of accounts has, in
    
    
                                               16
    light of other evidence, has also been found to support the design element of money
    
    laundering, even when all the accounts to which the defendant transferred the money
    
    and from which he withdrew were in his own name. United States v. Willey, 
    57 F.3d 1374
    , 1385 (5th Cir. 1995) citing Lovett, 964 F.2d at 1036.
    
             By depositing illegitimate funds in the business accounts of AFC and Virex,
    
    then, by transferring monies from AFC and Virex to legitimate business accounts of
    
    IRM, and then by transferring the monies from IRM directly into their own pockets,
    
    appellants knew they were concealing the nature or source of the proceeds of an
    
    unlawful activity under the terms of the statute. See Nattier, 127 F.3d at 658-59. The
    
    evidence, viewed in the light most favorable to the government, supports the jury’s
    
    finding that the appellants had a specific intent to structure their financial transactions
    
    so as to conceal or disguise the true nature and source of the transfer of funds between
    
    corporations and, ultimately, to them. See United States v. Wilkinson, 
    137 F.3d 214
    ,
    
    222 (4th Cir. 1997). We reject appellants’ challenge to the sufficiency of the
    
    government’s proof under Section 1956 (a)(1)(B)(I) and conclude that there is
    
    sufficient evidence of a design to conceal. Appellants’ money laundering convictions
    
    stand.
    
                                                B.
    
    
    
    
                                                17
          We now turn to the admissibility, under Fed. R. Evid. 702, of Mr. Root’s
    
    testimony as the government’s financial expert. Appellants contend that Mr. Root
    
    should not have been accepted as an expert as he was not a certified public accountant,
    
    holding only an associate’s degree in accounting. They also claim he had no
    
    experience in small business management or in the preparation of consolidated
    
    financial statements.
    
          Appellants strongly assert that Mr. Root’s opinion, that $3.3 million was the
    
    amount of the fraud, was erroneous, not supported by the facts, and caused them great
    
    prejudice. Gareth argues that the district court’s failure to conduct a hearing on the
    
    admissibility of Mr. Root’s testimony and to make specific fact findings concerning
    
    the application of Rule 702 in this case rendered his trial unfair. United States v. Lee,
    
    
    25 F.3d 997
    , 998 (11th Cir. 1994), citing Daubert v. Merrell Dow Pharmaceuticals,
    
    Inc., 
    113 S. Ct. 2786
     (1993).
    
          The government’s response to these assertions is that Mr. Root’s expertise
    
    qualified him to render an opinion based upon his analysis of appellants’ financial
    
    records. It was shown that Mr. Root worked as a financial analyst with the FBI for
    
    eight and one-half years; that he had performed financial analyses in more than fifty
    
    previous cases. In short, the government contends that Mr. Root possessed special
    
    skills and knowledge not possessed by ordinary witnesses, sufficient to meet the
    
    
                                               18
    guidelines of Fed. R. Evid. 702; that he was not required to be a certified public
    
    accountant; United States v. Barker, 
    553 F.2d 1013
    , 1024 (6th Cir. 1977), and that his
    
    testimony was properly admitted by the district court.
    
           The Federal Rules of Evidence provide for the admission of expert testimony
    
    when “scientific, technical, or other specialized knowledge will assist the trier of fact.”
    
    Fed. R. Evid. 702. Under Rule 702, in such situations a witness “qualified as an
    
    expert by knowledge, skill, experience, training, or education may testify . . . in the
    
    form of an opinion or otherwise.” Id.
    
           In 1993, the Supreme Court, in Daubert, 113 S. Ct. at 2786, focused upon the
    
    admissibility of scientific expert testimony, finding that such testimony is admissible
    
    only if it is both relevant and reliable. In order to ensure that both of these elements
    
    are present, the Supreme Court held that, under Fed. R. Evid. 702, the trial judge
    
    serves as a “gatekeeper.” Id. at 2796-97. Then, in 1999, in Kumho Tire Co., Ltd. v.
    
    Carmichael, 
    119 S. Ct. 1167
     (1999), the Supreme Court extended Daubert’s
    
    gatekeeping obligation beyond scientific experts. The trial judge is required to inquire
    
    into the areas of relevance and reliability whether the expert testimony is “scientific”
    
    or otherwise. Id. at 1174; United States v. Paul, 
    175 F.3d 906
     (11th Cir. 1999).
    
    “[F]ederal district courts . . . perform [this] important gatekeeping function by
    
    screening the reliability of all expert testimony, but they have substantial discretion
    
    
                                                19
    in deciding how to test an expert’s reliability and whether the expert’s relevant
    
    testimony is reliable.” Forklifts of St. Louis, Inc. v. Komatsu Forklift, USA, Inc., 
    178 F.3d 1030
    , 1034 (8th Cir. 1999), citing Kumho, 119 S. Ct. at 1174-76.
    
          A district court’s decision to admit or exclude expert testimony under Rule 702
    
    is reviewed for abuse of discretion. General Elec. Co. v. Joiner, 
    118 S. Ct. 512
    , 517
    
    (1997); United States v. Gilliard, 
    133 F.3d 809
    , 812 (11th Cir. 1998). Here Mr. Root
    
    had previously performed financial analyses for the FBI in over fifty cases for more
    
    than eight and one-half years. He had testified in certain of these cases involving bank
    
    fraud, mail fraud and money laundering investigations. By virtue of training and
    
    experience, he possessed special knowledge and skill not available to the ordinary
    
    witness. Fed. R. Evid. 702. We conclude that the district court did not err in
    
    admitting Root’s testimony.
    
                                              C.
    
          The final trial-related issue of this case is the admissibility of evidence seized
    
    by the search warrant. We have reviewed the original record in this case, including
    
    the application for search warrant and attached affidavit. The search warrant was
    
    supported by probable cause set forth in the ten-page affidavit. Marx v. Gumbinner,
    
    
    905 F.2d 1503
    , 1506 (11th Cir. 1990). It was not over-broad. Due to the peculiar
    
    nature of a charge of fraud, especially where corporations are used as vehicles of
    
    
                                              20
    fraud, an application to search the premises of AFC for “[b]ooks, [l]edgers, [r]eceipts,
    
    [i]nvoices, [b]usiness records, the identification of [f]inancial accounts and any other
    
    evidence which is evidence in violation of Title 18 United States Code Sections 1341
    
    and 1343," describes with particularity the items to be seized. See United States v.
    
    Accardo, 
    749 F.2d 1477
    , 1479 n.3 (11th Cir. 1985) (where there is probable cause to
    
    believe that an enterprise is engaging in a pervasive scheme to defraud, all corporate
    
    records may be seized).
    
          Based upon our review of the record, under the particular facts and
    
    circumstances of this case, the constitutional search and seizure requirements of the
    
    Fourth Amendment have been satisfied. The district court did not err in allowing
    
    admission of evidence seized pursuant to the execution of the AFC search warrant.
    
                                              IV.
    
          The judgments of conviction and sentences of F.O. Majors and Gareth Majors
    
    are AFFIRMED.
    
    
    
    
                                              21
    

Document Info

DocketNumber: 97-2803

Citation Numbers: 196 F.3d 1206

Filed Date: 11/19/1999

Precedential Status: Precedential

Modified Date: 3/3/2016

Authorities (39)

United States v. Powers , 168 F.3d 741 ( 1999 )

United States v. Tokars , 95 F.3d 1520 ( 1996 )

United States v. High , 117 F.3d 464 ( 1997 )

United States v. Christo , 129 F.3d 578 ( 1997 )

United States v. Toler , 144 F.3d 1423 ( 1998 )

United States v. Calderon , 169 F.3d 718 ( 1999 )

United States v. Paul , 175 F.3d 906 ( 1999 )

Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579 ( 1993 )

General Electric Co. v. Joiner , 522 U.S. 136 ( 1997 )

Kumho Tire Co. v. Carmichael , 526 U.S. 137 ( 1999 )

United States v. Phillip Brooks Barker , 553 F.2d 1013 ( 1977 )

united-states-v-daniel-danny-blue-eyes-billie-blue-eyes-malatesta , 590 F.2d 1379 ( 1979 )

United States of America, Cross-Appellee v. Anthony Accardo,... , 749 F.2d 1477 ( 1985 )

Richard Marx, Individually, and Kristina Marx, a Minor v. ... , 905 F.2d 1503 ( 1990 )

united-states-v-anthony-keith-jones-aka-kenneth-r-jones-david-michael , 913 F.2d 1552 ( 1990 )

United States v. Johnny Lee Sanders , 928 F.2d 940 ( 1991 )

United States v. Mandell Jackson, Joseph Davis, and Romano ... , 935 F.2d 832 ( 1991 )

United States v. Aaron Keith Lovett , 964 F.2d 1029 ( 1992 )

United States v. Ellis B. Goodman, United States of America ... , 984 F.2d 235 ( 1993 )

United States v. Alenjandro Lopez A/K/A Flaco, John Doe A/K/... , 985 F.2d 520 ( 1993 )

View All Authorities »