Petition — Holley v. United States

80-1201 [Seon Bar US

FILED

NOV 14 1980

IN THE

} MICHAEL RODAK, JR., CLERK

Supreme Court of the United States

OCTOBER TERM, 1980

No.

RALPH OLIVER HOLLEY,

Petitioner,

versus

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JOHN DELGADO

FURR & DELGADO

1913 Marion Street

Columbia, South Carolina 29201

Counsel for Petitioner

November 15, 1980

Laurel Printing Company, Columbia, S.C

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QUESTIONS PRESENTED

1. The decision of the Court of Appeals for the Fifth Circuit is in

significant conflict with precedential rulings of this Court as well as

relevant decisions from within the Fifth Circuit.

2. The decision of the Court of Appeals for the Fifth Circuit revives

the ‘‘Slight Evidence Rule’’ once thought buried by the Fifth Circuit

in United States v. Malatesta 590 F.2d 1379 (5 C.A., en banc, 1979)

and thus continues a conflict about the use of the rule among various

circuits.

(i)

oF

INDEX

I ee LUN Cok ea gabe hl Gul a's 's th uo/e a4 oh

RUE Ee 75 Re CIR RA A DIA Tr Ge rake Pe ea Ap

Statutory Provisions Involved. ........3 ..ccccvescscelucee

I ie a baw hie Vic belse anes eveseee es

Ressons for Ciremtins the Wit... ... cece Nie cedteeweeees

1. The Decision Below Is Contradictory to Every Rele-

vant Decision of the Court of Appeals for the Fifth

CN his Sais oa adbe ts Or cit iin wt a4 ie wnens a xe we es

2. The Decision Below Conflicts With Controlling

PT MIN a a na nbs Bp a Kee aes

3. The Decision Below Revives a Conflict Among

Various Circuit Courts F garding the Use of the

‘*Slight Evidence Rule’’ in Judging the Sufficiency

of Evidence in Conspiracy Cases.................

gan nh aatts CA ATID gl eh rinks Ur Bea a i a ce

as Wg Sta o) c's le rd, a Winco koa & Hinges Gk oon wks eee

(ii)

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CITATIONS

Cases:

Causey v. United States, 352 F.2d 293

Cee NE» VL ila eR Cea rma Oh cone LIEW A cele sys

Direct Sales Co. v. United States, 319 U.S. 703............

Ingram v. United States, 360 U.S. 672...........0c ce eeee

Tomplain v. United States, 42 F.2d 202

PD PON Ld eC ERED), vhe ay kn'a-0 oes ok ee

United States v. Avila-Dominquez, 610 F.2d 1266

ee ee ied «eg OU Circa ye va Wines nae ore wlan libels oles

United States v. Barrera, 547 F.2d 1250

See NES eek aine o 0's es rw nek oc cae pue's 3

United States v. Bright, 550 F.2d 240

SEM MRLIT PRC Coil ais Sa Vico ah Wah ae dade’ Seas Cap ie

United States v. DeLazo, 497 F.2d 1168

CG PS he ei eu ee ee Yan cats Ae ocak aU

United States v. Enstam, 622 F.2d 857

EE eS deh bh ky we ehledbe-s Rai ok weeks

United States v. Gutierrez, 559 F.2d 1278

Sp EE ER bees OU oes LEN oad wath als 6 ce 6's ppb de iis

United States v. Hitsman, 604 F.2d 443

I Sie dal «Dela ne a's aero 6d + 3 4.04 4 eens

United States v. Lustig, 555 F.2d 737

TRS ENN ORT i GS ERB SETS A Pr RAE

United States v. Malatesta, 590 F.2d 1379

alr OO ee eked ep ees

United States v. Michel, 588 F.2d 986

Ce ge PN alas Pak, éaibe sv hye y'e.sb aimee es wes

United States v. Pruett, 551 F.2d 1365

SP METER PONE L Sis bawkowkeied a ok be ds deialaa ee

United States v. Reynolds, 511 F.2d 603

es ya aik a a HW aD kk Ghee kB pS he Secs ne

United States v. Schmaltz, 562 F.2d 558

SS ee oe Ns waves a nine pad pw aeaRe

Miscellaneous:

Virginia Law Review 64:881 (1978). ..............00 cues

(iii)

'*

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

No.

RALPH OLIVER HOLLEY,

Petitioner,

versus

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

The Petitioner, RALPH OLIVER HOLLEY, respectfully prays

that a writ of certiorari issue to review the judgement and opinion of

the United States Court of Appeals for ihe Fifth Circuit entered in this

proceeding on July 31, 1980.

OPINION BELOW

The opinion of the Court of Appeals, United States v. Enstam, 622 —

F.2d 857 (1980), appears in the Appendix hereto.

JURISDICTION

The judgment of the Court of Appeals for the Fifth Circuit was

entered on July 31, 1980. A timely petition for rehearing was denied

on September 15, 1980, and this petition for certiorari was filed within

Xs

60 days of that date. This Court’s jurisdiction is invoked under 28

U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

UNITED STATES CODE, TITLE 18:

§ 371. Conspiracy to commit offense or to defraud United States

If two or more persons conspire either to commit any offense

against the United States, or to defraud the United States, or any

agency thereof in any manner or for any purpose, and one or

more of such persons do any act to effect the object of the con-

spiracy, each shall be fined not more than $10,000 or imprisoned

not more than five years, or both.

If, however, the offense, the commission of which is the object

of the conspiracy, is a misdemeanor only, the punishment for

such conspiracy shall not exceed the maximum punishment pro-

vided for such misdemeanor.

STATEMENT OF THE CASE

The Peitioner, Ralph Holley, along with several others, was in-

dicted under 18 U.S.C. § 371 and tried as a result of the investigation

of a Cayman Island corporation, Esmeralda y Mariposas (E. & M.).

E. & M. was created by conspirators Harold Oldham and his attorney,

Raymond Enstam. The corporation was alleged to have been the

foreign conduit through which Oldham had monies from illegal drug

sales laundered. The monies were then alleged to have been transfer-

red back to the United States in the form of loans. While Oldham fled

the jurisdiction before trial, both Enstam and the Petitioner were

found guilty and sentenced to five years incarceration.

The evidence against Holley can be reduced to the following: (1)

Holley, a South Carolinian, bought forty acres of land in Brooksville,

Hernando County, Florida and at the closing of the sale used the

name of a corporation, Brittle Oaks, Inc. (5 R 608); (2) Brittle Oaks,

Inc. was a land development company with Holley as President (5 R

2

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607); (3) E. & M. loaned Brittle Oaks, Inc. sums of money as proven

by signed notes and correspondence between Holley and the head of

E. & M., Derek Price, (4 R 568-571); (4) Drug Enforcement Ad-

ministration agents House and Clayton testified that while they had

never met Holley, they were shown some Brittle Oaks, Inc. stationery

by Harold Oldham (3 R 245); (5) Agents House and Clayton testified

that Oldham also said Brittle Oaks, Inc. had been formed by some

friends to explain where illegally earned money had come from (3 R

245; 4 R 413); (6) When Agents House and Clayton went to Florida to

buy cocaine from Oldham, they were fo/d that the contraband they

were buying was not as good as some intended to be purchased from a

person Oldham knew in Tampa, Florida (4 R 425, 432); (7) Oldham

told House and Clayton that before he could go to the Cayman

Islands to launder some money he had to go to Tampa, Florida to see

an associate who was en route to Tampa from South Carolina (4 R

433); (8) Joseph R. Evans, a former resident of South Carolina and

who lived in Florida, was arrested along with Oldham in December,

1977 (5 R 615-617); (9) Various pieces of correspondence between E. &

M. and Holley as corporate head of Brittle Oaks, Inc., were seized

from Raymond Enstam’s law office.

Both the government and the Fifth Circuit opinion, United States v.

Enstam, 622 F.2d 857 (5 C.A., 1980), conceded that the issue of the

sufficiency of the evidence of a conspiracy alleged under 18 U.S.C. §

371 is the key to the case against Petitioner Holley. In its brief to the

Fifth Circuit the government admits the evidence against Holley to be

‘*circumstantial’’ (Brief at 12) and solely ‘‘documentary’’ (Brief at

13). The opinion of the Fifth Circuit Court of Appeals stated initially

that the insufficiency of the evidence against Holley ‘‘seriously con-

cerned’’ them, Enstam, supra, at 860. The majority opinion even

notes that the government at oral argument ‘‘was unable to point to

any substantial evidence supporting the existence of the conspiracy

alleged in the indictment’’, Enstam, supra, at 861. The insufficiency

of evidence as to Holley’s knowledge of the laundering scheme so con-

cerned Circuit Judge Tuttle that, in dissent, he urged reversal of the

Petitioner’s conviction.

i

REASONS FOR GRANTING THE WRIT

1. THE DECISION BELOW STANDS IN CONTRADICTION

TO EVERY RELEVANT DECISION OF THE FIFTH CIR-

CUIT COURT OF APPEALS ON THE SUFFICIENCY OF

EVIDENCE USED IN CONSPIRACY CASES.

Because of its confusion over the use of the ‘‘substantial evidence’’

rule, as discussed , infra, the Court below failed to consider those

similar cases decided within the circuit that dealt with the issue of the

intent and knowledge of an alleged conspirator. Apparently due to its

geographical location the Fifth Circuit seems to have had an over

abundance of drug smuggling-conspiracy cases and appeals; the in-

evitable consequence has been the misapplication of precedential deci-

sions within the circuit. The future consequences for uniform deci-

sions in the Fifth Circuit requires the granting of this Petition for a

Writ of Certarori to the court below.

The majority opinion in United States v. Enstam , 622 F.2d 857 (5

C.A., 1980) ignores the complete lack of proof of intent to conspire as

relates to the Petitioner, Ralph Holley. The-facts adduced by the

government are circumstantial, equivocal and capable of many factual

interpretations.

To establish the intent essential to a conviction for conspiracy the

evidence of knowledge must be strong and not equivocal. A suspi-

cion, however strong, is not proof and will not serve in lieu of

proof. It is true that the proof may be circumstantial or direct or

both, but it must convince beyond a reasonable doubt that a con-

spiracy existed, that the defendant knew it, and with knowledge

intentionally did some act or thing to further or carry on that con-

spriacy.

Causey v. United States, 352 F.2d 203 (5 C.A. 1965) as quoted in

United States v. Pruett, 551 F.2d 1365 (5 C.A. 1977). While reversing

the cases against the appellants in Causey and Pruett, supra, the

government’s case against Ralph Holley showed that he ‘‘could have

been guilty but it offered no firm proof that hé, in fact, was guilty.”’

Pruett, supra, at 1369 (emphasis in original).

In another related Fifth Circuit case, United States v. Bright, 550

F.2d 240 (5 C.A., 1977) the court reversed the appellant’s conviction

in a marijuana smuggling conspiracy case on the issue of the sufficien-

4

cy of proof of the knowledge of Bright’s intent. Stating that the facts

proven against Bright ‘‘could be given an innocent interpretation’’,

the Court quoted approvingly the earlier Fifth Circuit opinion in

United States v. Barrera, 547 F.2d 1250 (5 C.A. 1970), which also

reversed the trial court’s decision that sufficient evidence had been

proven as to the defendant’s knowledge. See also, United States v.

Gutierrez, 559 F.2d 1278 (5 C.A., 1977) where the court stated,

‘*fw)hile a jury might infer guilty knowledge from the mere fact of the

marked money, it could also have concluded that the money came to

Gutierrez’ possession through any one of a number of innocent cir-

cumstances.’’ Jd. at 1281. The Gutierrez court reversed the conviction

due to the insufficiency of the evidence of the defendent’s intentional

participation in a drug related conspiracy.

Each of the reievant cases advanced by the government to support

its position on appeal relate to Appellant Enstam; none relate to Peti-

tioner Holley. See, United States v. Hitsman, 604 F.2d 443 (5 C.A.,

1979); United States v. Michel, 588 F.2d 986 (5 C.A., 1979), cert.

denied, 100 S.Ct. 47 (1979); United States v. Avila-Dominquez, 610

F.2d 1266 (5 C.A., 1980); and United States v. Reynolds, 511 F.2d 603

(5 C.A., 1975).

The majority decision in Enstam, supra, is prejudicially inconsistent

with other holdings within the same circuit; only the granting of this

Petition will ensure a compliance with uniformity within the Circuit.

2. THE DECISION BELOW CONFLICTS WITH CON-

TROLLING DECISIONS OF THIS COURT.

In a similar case from the Fifth Circuit, this Court in Jngram v.

United States, 360 U.S. 672 (1959) reversed the conviction of two

defendents alleged to have knowingly and intentionally conspired to

violate the same provision (18 U.S.C. § 371) as did Holley. Quoting

from Direct Sales Co. v. United States, 319 U.S. 703, 711 (1943) this

Court stated,

Without the knowledge, the intent cannot exist . . .Further-

more, to establish the intent, the evidence of knowledge must be

clear, not equivocal . . . This, because charges of conspiracy are

not to be made out be piling inference upon inference, thus

fashioning . . . a dragnet to draw in all substantive crimes.

Ingram, supra, at 680.

i

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3. THE DECISION BELOW REVIVES A GENUINE ISSUE

EXISTING AMONG THE CIRCUIT COURTS RELATING

TO THE USE OF THE “SLIGHT EVIDENCE RULE”’ IN

EVALUATING THE SUFFICIENCY OF EVIDENCE

AGAINST ALLEGED CONSPIRATORS.

The Fifth Circuit’s recent burial of the ‘‘Slight Evidence Rule’’ in

United States v. Malatesta, 590 F.2d 1379 (5 C.A., en banc, 1979) may

now be short lived. In affirming the adoption of ‘‘substantial

evidence’’ as a judicial yardstick for evaluation of the sufficiency of

evidence the Fifth Circuit attempted to quiet the confusion surroun-

ding its decisions on the sufficiency of evidence in conspiracy cases.

As noted in Connecting Defendants to Conspiracies: The Slight

Evidence Rule and the Federal Courts, Virginia Law Review 64:881

(1978) the Fifth Circuit’s approach in this area has been one of salient

inconsistency. Since the Fifth Circuit’s introduction of the concept in

Tomplain v. United States, 42 F.2d 202 (5 C.A., 1930) cert. denied,

282 U.S. 886 (1930), the ‘‘Slight Evidence Rule’’ has been adopted by

other circuits which still concur in its viability. Even though the Fifth

Circuit has abandoned ‘‘Slight Evidence’’ in Malatesta, supra, (it

**should not have been allowed to worm its way into the jurisprudence

of the Fifth Circuit. It is accordingly banished as to all appeals

hereafter to be decided by this Court.’’ Jd. at 1382) at least three other

circuits have still retained it. See e.g., United States v. Lustig, 555

F.2d 737 (9 C.A., 1977); United States v. DeLazo, 497 F.2d 1168 (3

C.A., 1974); United States v. Schmaltz, 562 F.2d 558 (8 C.A., 1977).

It seems apparent that Malatesta’s reemphasis on the use of

‘substantial evidence’’ to prove the intent and knowledge of con-

spirators was lost on the Fifth Circuit in the instant case. The ‘‘Slight

Evidence Rule’’ was revived to the detriment of the petitioner. The

dissenting opinion by Judge Tuttle, urging reversal of the conviction,

however, remains true to the holding of Malatesta, supra. The conflict

within the Fifth Circuit itself as well as the Courts of Appeal for the

Third, Eighth and Ninth Circuits is manifestiy apparent. Only a ruling

from this Court on the use of ‘‘Slight Evidence’”’ will serve to provide

conformity among the circuits of the use of this rule.

w=

>.

CONCLUSION

This Petition for a Writ of Certiorari should be granted to conform

the Fifth Circuit’s opinions with each other as well as with preceden-

tial rulings from this Court. Granting this Petition will serve to guide

the various circuits in the use of constitutional standards to be

employed in evaluation of sufficiency of evidence in conspiracy cases

and will clarify the use of the ‘‘Slight Evidence Rule’’ in the circuits.

Respectfully submitted.

John Delgado

Furr & Delgado

1913 Marion Street

Columbia, South Carolina 29201

November 15, 1980 i Counsel for Petitioner

es

“

CERTIFICATE OF SERVICE

I hereby certify that on this 15th day of November, 1980, three

copies of the Petition for Writ of Certiorari were mailed, postage

prepaid, to the Solicitor General of the United States, Department of

Justice, Washington, D.C. 20530, Counsel for the Respondent. I fur-

ther certify that all parties required to be served have been served.

Respectfully submitted,

By

John Delgado

FURR & DELGADO

1913 Marion Street

Columbia, South Carolina 29201

-*

7’

Petitioner herein appends to this Petition a copy of the judgment

and opinion of the United States Court of Appeals for the Fifth Cir-

cuit.

UNITED STATES of America,

Plaintiff-Appellee,

v.

Raymond A. ENSTAM and Ralph Oliver Holley,

Defendants-Appeliants.

No. 79-5537.

United States Court of Appeals,

Fifth Circuit.

July 31, 1980.

Rehearing Denied Sept. 15, 1980.

Before TUTTLE, RANDALL and TATE; Circuit Judges.

TATE; Circuit Judge:

The two defendants in this case were indicted under 18 U.S.C. § 371

for knowingly conspiring ‘‘to defraud the United States by

impeding . . . the lawful Governmental functions of the Internal

Revenue Service . . . inthe . . . computation . . . and collection

of . . . income taxes.’’ Both defendants were convicted, and each

now appeals on various grounds, including, inter alia, sufficiency of

the evidence and improper evidentiary rulings. Although we were in-

itially seriously concerned about the sufficiency of the evidence, we

are now convinced that none of the defendants’ contentions merit

reversal. Therefore, we affirm both convictions.

Context Facts

The two defendants, Raymond Enstam and Ralph Holley, were

indicted, along with several others, as co-conspirators in a com-

plicated money ‘‘laundering’’ scheme. Money illegally received from

9

cocaine sales was first taken out of the United States to a corporation

in the Grand Cayman Islands, part of the British West Indies. This

corporation, Esmeraldas y Mariposas (E & M), then returned the il-

legal money in the form of fictitious loans to American-corporations

that had been created for the purpose of receiving these loans. As a

result of this scheme, income otherwise taxable, albeit illegally obtain-

ed, was disguised as the proceeds of a non-taxable loan. The defen-

dants argue that the object of the conspiracy was only to disguise the

true source of the income and that there was no intent to impair the

computation or collection of taxes. However, the record reveals that

at least one of the objects of the conspiracy, if not the only object, was

to impede the assessment of taxes.'

Several persons were involved in this conspiracy. Harold Oldham, a

cocaine dealer, created the scheme. He was indicted along with the

defendants, but he fled the jurisdiction prior to trial. Raymond

Enstam, one of the defendants, was Oldham’s lawyer. Prior to the ad-

vent of the conspiracy, Oldham asked Enstam to incorporate

Oldham’s Moroccan investment group in Morocco, but Enstam even-

tually recommended incorporation in the Grand Cayman Islands.

Once the conspiracy had begun, it was Enstam who created the

American corporations that were to receive the fictitious loans from E

& M. The other defendant, Ralph Holley, allegedly received several of

these ficititious loans from E & M through Brittle Oaks, Inc. of which

Holley was president. Another co-conspirator, Paul Hodgson, pled

guilty prior to trial and testified for the government.

Much of the testimony at trial came from two undercover agents,

Agents Clayton and House, who had infiltrated the conspiracy. These

agents purchased some cocaine from Oldham, they created a corpora-

tion through Enstam, and they went to the Grand Cayman Islands to

bring $50,000 that the agents supposedly wanted ‘‘laundered.’’ The

' As stated previously, we were initially concerned about whether the government had

proved the existence of the conspiracy alleged in the indictment, which charged the

defendants with conspiring ‘‘to defraud the United States by impeding, impairing,

obstructing, and defeating the lawful Governmental functions of the Internal Revenue

Service ...in the ascertainment, computation, assessment, and _ collection

of . . . income taxes.’’ However, as discussed in Part I(a), infra, a careful review of

the record has resolved our doubts in favor of the government's position.

10

agent’s testimony, together with that of co-conspirator Hodgson,

formed the main basis of the government’s case against Enstam. With

respect to Holley, the agents’ testimony was important, but much of

the evidence was documents that provided circumstantial evidence of

Holley’s participation in the conspiracy.

I

Having briefly outlined the persons involved and the details of the

conspiracy, we turn to the issue that has most concerned us—whether

the evidence is sufficient to support these two convictions. The defen-

dants attack the sufficiency of the evidence on two grounds: 1) that

there was insufficient evidence to show the existence of the conspiracy

alleged in the indictment (i.e., a conspiracy to defraud the United

States by impairing the assessment and collection of income taxes);

and 2) that even assuming the existence of such a conspiracy, there is

insufficient evidence to prove that either one of them knowingly join-

ed such conspiracy.

The evidence reveals no substantial issue as to whether income taxes

were due on the monies (profits) sent to the Grand Cayman corpora-

tion and returned to the United States in the form of fictitious loans.

The issue before us, therefore, is whether the evidence reasonably per-

mitted the jury to find that the defendants knowingly conspired with

others, in the terms of the indictment, for the purpose of

‘‘defraud[ing] the United States by impeding . . . the ‘nternal

Revenue Service . . . inthe . . . computation . . . and collection

of . . . income taxes.”’

(a)

The record is replete with evidence that there was a conspiracy to

launder illegally obtained money. However, in brief and at oral argu-

ment, the defendants convincingly argued that the object of the con-

spiracy was to hide the source of the money but not fo impede the col-

lection or assessment of income taxes. At oral argument, government

counsel was unable to point to any substantial evidence supporting the

existence of the conspiracy alleged in the indictment. Our review of

the testimony, however, reveals that there was indecd sufficient

evidence to support a finding that one of the objects of the conspiracy

was to impair or impede the computation or collection of taxes.

In assessing the sufficiency of the evidence, we must view it in

wm

the light most favorable to the government. Glasser v. United States,

315 U.S. 60, 80, 62 S.Ci. 457, 469, 86 L.Ed. 680 (1942). When viewed

in this light, the testimony leaves little doubt in our mind that the con-

spiracy alleged in the indictment was in fact proved.

Agent Clayton testified that the purpose of the scheme was to pre-

vent the IRS, in the event of an audit, from having any questions

about where the money had come from and that Oldham had told him

that the scheme was ‘‘IRS-tested foolproof.’’ Agent Clayton also

testified that Enstam had told him that he and Agent House should try

to make their corporation look as legitimate as possible so that they

could obtain a company car, receive a salary, receive yearly bonuses,

and arrange for ‘‘business’’ trips abroad.’

Agent House similarly testified that the scheme was designed to pro-

tect them in the event of an audit, that Oldham had said that even the

head of the IRS would not be able to figure out the scheme, and ‘that

Enstam had told them that they could get the money back from the

corporation via a salary and new cars and write these things off as

business expenses. House further testified that Enstam had said that

House and Clayton could pretend to pay interest on the fictitious

2Agent Clayton relevantly testified as follows:

Q_ In your mind, what did the term ‘‘wash’’ mean?

A_ It meant where I could go out and either invest in a business or invest in a

home or invest in an automobile, and if | had—if | was audited by the Internal

Revenue Service, they would look at my expenditures as being valid and I could ac-

count for all my money and where I derived those monies as being legitimate and

no under the table funds.

A [Oldham] assured me it was foolproof, IRS-tested foolproof.

Record on Appeal, Volume III at 204-05.

Q_ Were you to receive any salary or compensation [from the corporation created

for the agents by Enstam]?

A As determined by ourselves. Once this alleged loan came back in the form of a

cashier’s check to the bank, Mr. Enstam encouraged us to make this firm look as

legitimate as possible . . . for instance, an automobile for each of us as president

and chairman of the board, possibly yearly bonuses paid to us, supposedly

business trips or buying trips to abroad, whatever and he directed us in these mat-

ters, you know, to set a salary and the like.

Id., Volume IV at 314.

A_ Probably during the course of our conversations maybe Enstam or House was

asking or conferring about ‘‘What are we going to do with all this money that we

have now that we could spend it without being afraid of an audit"’

Id., at 327.

12

loan, get this interest back in the subsequent fictitious loan, and still

deduct the interest from their federal income taxes.’

The testimony of the two agents strongly indicates that the object of

the conspiracy was to obstruct the functioning of the Internal Revenue

Service. Nevertheless, the defendants argue that the object was only to

hide the true source of the income, which they assert is not unlawful.

Without deciding whether the defendants’ assertion is accurate, we

think that there is sufficient evidence in the record for a reasonable

juror to conclude beyond a reasonable doubt, United States v. Bar-

rera, 547 F.2d 1250, 1257 (Sth Cir. 1977), that one of the objects of the

conspiracy was to impede the computation of income taxes.

We recognize that there is some ambiguity in the testimony of the

two agents as to whether the only intent was to hide the source of the

income. However, Enstam advised them concerning two different

ways to evade taxes—reporting bogus business deductions and deduc-

ting fictitious interest payments. The jury could thus reasonably have

found from the evidence that the purpose of the conspiracy was to

3Agent House relevantly testified as follows:

A_ I had told [Oldham] at that time that we [House and Clayton] felt like we

wanted to get into something like this because we felt like IRS was perhaps either

looking after it, looking at us, or would look at us, you know, in the near future

and we wanted to be able to show where our money came from.

Record on Appeal, Volume IV at 410.

A [Oldham] said this way we sould receive a cashier’s check from a bank down

there [in the Cayman islands] and loan papers to a phony—to our phony company

in the amount, let’s say, $100,000 less [Oldham’s and the bank’s] percentages. We

would deposit that, bring it back in the United States and deposit that check in our

phony company account and utilize that money in any way we wanted to. He also

said that—he said that the scheme is so simple, but it is—the Cayman islands were

utilized because the secrecy tax laws and even the head of the IRS wouldn’t be able

to figure it out. He said you could have them over to your house and show him the

loan papers and check them out because there wasn’t anything they could do about

it. -

Id., 411-12.

A [Enstam] told us that off of this corporation we could give ourselves a salary

by ourselves, new cars, and write everything off . . . He said that the interest we

paid back, we could even pay the interest back, say we paid four or five thousand

dollars interest in one year, that could go back to the Cayman Islands, go back to

another phony account and draw it back as a loan later and also the interest is

deductible on your federal income tax, we were taking our own money and deduc-

ting it from our federal income tax.

Id., at 448-49.

13

permit the recipients of the laundered cash to report the proceeds as

income only when or if received by them as ‘‘income’’ from the cor-

poration—in short, that the conspirators’ taxable income (thus

laundered by the loan) would only be reported to the extent that it was

used in a non-deductible non-business fashion. Further, the jury could

reasonably have inferred that even the part of the income that was to

be reported would probably not be reported in the appropriate taxable

year. All of these considerations, when combined with the repeated

references by the co-conspirators to their fear of the Internal Revenue

Service, lead us to the conclusion that there was sufficient evidence for

the jury to find that one of the objects of the conspiracy was to thwart

the effective functioning of the Internal Revenue Service.

To the extent that any ambiguity remains regarding the object of the

conspiracy, this ambiguity is resolved by the testimony of Paul

Hodgson, himself one of the conspirators. Hodgson admitted that the

scheme had been presented to him as a ‘‘tax dodge,’’ although he

testified that he had only wanted to legitimize the money by hiding its

source. Nevertheless, even Hodgson admitted that he intended to pay

income tax only ‘‘[t]o a degree that [he] would be covered with the

IRS.’’*

“Hodgson relevantly testified as follows:

Q. Now, I believe in effect you have testified that Mr. Oldham’ s idea and these

transactions was to use them as a, quote, tax dodge, end of quote. Is that correct?

A. Yes sir.

Q. But that was not, in fact, your intention, was it?

A. My intention was to legitimize the use for money in use in business.

Q. Your intention was not to avoid taxes but to legitimize the money. Isn’t that

correct?

A. That’s correct.

Q. And you intended to pay taxes on all the money that you made, didn’t you?

A. No, sir, I intended to pay taxes on part of it.

[Hodgson was then questioned about a prior statement that he had made to certain

agents in an interview, in which he had stated that he had intened to pay taxes on the

money. Hodgson acknowledged that he had made that answer.]}

Q. So your intent was to pay taxes?

A. Toa degree that I would be covered with the IRS.

Q. Well I understand that. You wanted to satisfy IRS, you wanted to, and you

told these gentlemen [in the prior interview] back then you were not doing it to

avoid taxes, right?

A. I told them, yes.

Q. Despite the fact that Mr. Oldham presented it to you as a tax dodge?

A. Yes, sir.

Record on Appeal, Volume IV at 544-47(italics ours).

14

The trial judge charged the jury that it is not a crime to conceal the

source of income as long as the income is in fact reported,’ and it was

forcefully contended at oral argument that at most the evidence show-

ed a conspiracy to hide the illegal source of the laundered money. Our

review of the evidence, however, has convinced us that there was suffi-

cient evidence for a reasonable juror to conclude beyond a reasonable

doubt, United States v. Barrera, supra, that the conspirators did not

intend to report all the laundered income, nor necessarily to report

any part of it in the year in which tax liability accrued. Thus, there was

substantial evidence of a conspiracy ‘‘to defraud the United States by

impeding, impairing, obstructing, and defeating the lawful Govern-

mental fucntions of the Internal Revenue Service . . . in the ascer-

tainment, computation, assessment, and collection of . . . income

taxes,’’ as alleged in the indictment.

(b)

The defendants next argue that even if there was sufficient evidence

of the conspiracy alleged in the indictment, the evidence was not suffi-

cient to prove that they knowingly and willfully became members of

the conspiracy. As to Enstam, this contention has virtually no merit.

Agents Clayton and House both testified that Enstam knew

about the conspiracy and helped them launder their money. Enstam

testified differently, but the jury easily could have believed the

testimony of the agents over that of one of the defendants. Enstam

argues that he could not have knowingly joined a conspiracy to evade

income taxes because the agents testified that he advised them to

withdraw their money from the dummy corporation in the form of

salary, which is itself taxable income. However, the previously quoted

testimony of the agents also indicates that Enstam advised them to

pretend to pay interest and then deduct it, Record on Appeal, Volume

IV at 449, and that Enstam advised them to withdraw the money from

the corporation in such a way that the money could be written off as

business expenses, id. at 314, 448, and not reported as income. View-

ing the evidence in the light most favorable to the government, United

States v. Glasser, supra, there was substantial evidence that Enstam

SRecord on Appeal, Volume I at 245. As stated previously, we do not now decide

whether this instruction, in the context of a conspiricy case, was correct.

15

knowingly and willfully joined the conspiracy. United States v.

Malatesta, 590 F.2d 1379 (Sth Cir.) (en banc}, Cert. denied, 440 U.S.

962, 99 S.Ct. 1508, 59 L.Ed.2d 777, and 444 U.S. 846, 100 S.Ct. 91,

62 L.Ed.2d 59 (1979).

With respect to Holley, the evidence was for the most part cir-

cumstantial. Nevertheless, the record reveals that there was substan-

tial evidence to support the jury’s finding that Holley knowingly and

willfully participated in the conspiracy.

The indictment alleges a conspiracy between February 19, 1975 and

December 28, 1977. The bulk of the testimony concerns incidents

whereby co-conspirator Oldham, with the aid of Enstam, laundered

money through E & M for Hodgson or on behalf of Agents Clayton

and House in their undercover identities. Holley’s alleged connection

with the conspiracy arose out of allegedly similar transactions, during

the time alleged, between Brittle Oaks, Holley’s corporation, and E &

M. Documenatry proof, independent of statements made to the agents

by co-conspirator Oldham, afforded a substantial basis for a finding

that Holley’s transactions formed part of the conspiratorial pattern.

This documentary evidence and co-conspirator Oldham’s statements,

Fed.R.Evid. Rule 801(d)(2)(E), constituted an adequate basis for the

jury’s finding of Holley’s guilt.

Both agents testified concerning statements by Oldham that Brittle

Oaks, Inc. had been formed as a part of the conspiracy. Agent

Clayton testified:

Oldham told me that he formed or had caused to be formed this

Brittle Oaks company for some friends who lived in Florida. He

explained that these, whoever had this company had purchased

some land in Florida a while back with money they couldn’t ac-

count for, illegal money, and that this Brittlke Oaks company was

created so as if IRS audited them that the true owners of this land

or how they obtained the money was from this firm Brittle Oaks.

Record on Appeal, Volume III at 245-46. Agent House testified con-

cerning this same statement by Oldham:

He said, ‘‘We have a phony company by the name of—we

started a phony company by the name of Brittle Oaks because [a

friend in Tampa, Florida] wants to buy some property and he has

got all this illegal money, illicit money, and he doesn’t know how

to wash it. What I am going to do is give him a loan through

Esmeraldas y Mariposas, that way he can show IRS how he paid

16

;%

for the property.”’

Record on Appeal, Volume IV at 413. In addition to the agents’

testimony concerning statements by Oldham, the documentary

evidence connecting Holley with both Brittle Oaks and E & M was

substantial. Holley has purchased land in Florida, and he had closed

the deal in the name of Brittle Oaks. Jd., Volume V at 603-08. Fur-

thermore, various notes to E & M signed by Holley were introduced

into evidence. Jd., Volume V at 623-24, Volume I at 195-200. See note

16, infra.

‘*{I]n testing the sufficiency of the evidence in [a] circumstantial

evidence case it was the duty of the trial judge, before sending the case

to the jury, to determine whether a reasonably minded juror must

necessarily entertain a reasonable doubt under the evidence.’’ United

States v. Barrera, supra, 547 F.2d at 1255. Viewing the evidence in the

light most favorable to the government, we think that a reasonable

juror could conclude beyond a reasonable doubt that Holley knowing-

ly and willfully joined the conspiracy, which (as we have held) is ade-

quately preved to have had as its purpose impeding the Internal

Revenue Service in its collection of income taxes.

II

Having resolved the issue that initially concerned us, we now briefly

discuss the three other alleged errors that are asserted by both of the

defendants.

(a)

The defendants contend that the trial judge erred in overruling their

objections to the admission of Government’s Exhibit 114, which was

the minute book of a South Carolina corporation by the name of

Peace River Trading Company. Further background is necessary for

an understanding of the nature and purpose of this evidence and the

defendants’ reasons for objecting to it.

When Oldham first came to Enstam, (at a time prior to the present

conspiracy), he told Enstam that he had a South Carolina corpora-

tion, Peace River Trading Company, that he wanted to have formed

into a Texas corporation of the same name. At that same time,

Oldham said that he was involved with a group of investors in Moroc-

cO, Operating as Mid-Eastern Investment Associates, and that he

wanted Enstam to incorporate this business in Morocco. Enstam in-

17

* *

dicated that he didn’t know anything about Moroccan law and advis-

ed against incorporating there. Oldham asked Enstam to suggest a

foreign location, and after some research, Enstam recommended the

Grand Cayman Islands.

At trial, Enstam testified that Oldham ‘‘had a group called the Mid-

Eastern Investment Associates . . . which owned the stock in this

Peace River Trading Company. It consisted of ‘Oldham] and several

other peonle that [Oldham] never identified.’’ Record on Appeal,

Volume V at 662 (italics ours). The Peace River lrading Company

minute book was ostensibly introduced to impeach this statement by

Enstam, because the minute book was to show that Holley was listed

as one of the shareholders of Peace River Trading Company and thus

to link Holley directly with Oldham. The district attorney first stated

that the minute book was admissible to ‘‘show that the Defendant

Holley knew and dealt with Oldham . . . I think it tends to show

knowledge on the part of the two co-conspirators.’’ Record on Ap-

peal, Volume V at 792.

The defendants object that the minute book was unauthenticated,

that it was hearsay, that it was not in furtherance of the conspiracy,

that it was given to Enstam prior to the existence of the conspiracy,

and that its admission denied the defendants their right to confront

witnesses, their right to effective assistance of counsel, and their right

to due process. Most of these grounds for objection are either er-

roneous or irrelevant.

The government essentially argues that the minute book was on-

ly introduced to impeach Enstam and that therefore, it was not in-

troduced for the truth of the information, but rather to show that a

statement had been made by Oldham to Enstam that arguably told

Enstam the identity of the Mid-Eastern Investment Associates. If the

book was not used to prove the truth of the matter asserted, then it

was not hearsay and it is irrelevant that the book was not part of the

conspiracy. Furthermore, if the statement contained in the book was

not hearsay, then there was no denial of the defendants’ right to con-

front the witnesses against them.

Although there is some confusion in the record as to the trial

judge’s basis for overruling the defendants’ objection to the admission

18

?*>

of this evidence,* the judge appears to have based his ruling on the

ground that the book would only be admitted to prove that Oldham

had made a certain written statement to Enstam’ and not to prove that

the statement was true. Given this limited basis for admission, the

minute book was not hearsay, and most of the defendants’ objections

lack merit. The fact that Oldham made such a statement to Enstam

was relevant to prove that Enstam was not being completely candid

with the jury as to his knowledge of the members of the Mid-Eastern

Investment Associates. The defendants’ argument that the book was

not authenticated is without merit, since Enstam identified the book

as the minute book of Peace River Trading Company that had been

given to him by Oldham. With respect to whether the probative value

of this evidence outweighed any possible prejudicial effect under Rule

403 of the Federal Rules of Evidence, this was a matter within the trial

judge’s discretion, and the judge’s ruling did not constitute an abuse

of discretion.

The only remaining contention that requires any discussion is

defendant Holley’s contention that the minute book was not admissi-

ble as to him. Had the trial judge given a proper instruction limiting

consideration of this evidence to defendant Enstam, defendant

Holley’s contention would be without merit. However, the instruction

actually given arguably allowed the jury to consider the evidence with

respect to Holley, and, to this extent, the instruction was arguably im-

proper. Nevertheless, defendant Holley’s argument is without merit

because Holley’s attorney specifically asked the judge not to give an

instruction stating that the exhibit was only admitted to prove that the

statement had been made and not to prove the truth of the matter

asserted.’ Since defendant Holley himself objected to the proper

limiting instruction, he cannot now be heard to complain that the pro-

per limiting instruction was not given.

Government’s Exhibit 114 was properly admitted against

Enstam to prove that the statement in the minute book had been made

by Oldham to Enstam. To the extent that the limiting instruction was

not altogether correct, any objection by the defendant Holley has been

Record on Appeal, Volume V at 789-805.

7Id., at 801.

8/d., at 801-03.

19

>»

i

waived. Moreover, in view of the evidence linking ihe defendant

Holley with Brittle Oaks, E & M, and Oldham,’ the error, if any, was

harmless under Rule 52 of the Federal Rules of Criminal Procedure.

We do not think that there is a significant possiblility that the admis-

sion of this evidence had a ‘‘substantial impact’’ on the verdict of the

jury. United States v. Gomez, 529 F.2d 412, 417 (Sth Cir. 1976).

(b)

The defendants next contend that the trial judge erroneously ad-

mitted Government’s Exhibit 32, a duplicate copy of a blank piece of

E & M stationery that had been given to Agents Clayton and House by

Oldham. The defendants argue that it was improper to admit the

duplicate instead of the original because under Rule 1003 of the

Federal Rules of Evidence a genuine question was raised as to the

authenticity of the duplicate.

The defendants’ contention is without merit. The xerox duplicate of

the blank letterhead stationery was properly identified as a copy of the

original. The question raised by the defendants as to the authenticity

of the duplicate was spurious. (The defendants attacked its admission

not because the copy was inauthentic, but rather because there was no

explanation for the disappearance of the original and because the

xerox copy did not show the original’s colorings.) Record on Appeal,

Volume IV at 413-418. Consequently, Government’s Exhibit 32 was

properly admitted under Rule 1003 of the Federal Rules of Evidence.

(c)

Both defendants rely on Alford v. United States, 282 U.S. 687,

51 S.Ct. 218, 75 L.Ed. 624 (1931), to support their contention that the

trial judge unduly restricted their cross-examination of the two under-

cover agents by refusing to allow questions concerning the agents’

place of residence. This contention is without merit. United States v.

Alston, 460 F.2d 48 (Sth Cir.), cert. denied, 409 U.S. 871, 93 S.Ct.

200, 34 L.Ed.2d 122 (1972), and United States v. Crockett, 506 F.2d

759 (Sth Cir.) cert. denied, 423 U.S. 824, 96 S.Ct. 37, 46 L.Ed.2d 40

(1975), have held that the A/ford rule generally requiring disclosure of

general background information is not a hard and fast rule. ‘‘[T]he

case in which a witness might be in physical danger [is] an exception to

9See Part I(b), supra, and note 16, infra.

20

/

| A

the preference for disclosure.’’ United States v. Crockett, 506 F.2d at

762. In the instant case, the witnesses were agents rather than in-

formers, they were subjected to vigorous cross-examination, and their

lives had been threatened by co-conspirator Oldham prior to his

flight. Under the facts of this case, the judge’s decision not to force

the government agents to divulge where they lived was not an abuse of

discretion.

Aside from their joint contentions, each defendant complains

separately of certain errors. Defendant Enstam raises three alleged er-

rors relating only to himself.

(a)

Enstam first argues that the trial judge erroneously failed to strike

alleged overt acts 13 and 14 and improperly included these alleged

overt acts in his charge to the jury. These overt acts were alleged in the

indictment as follows:

13. On or about October 6, 1977 RAYMOND A. ENSTAM,

Paul Clayton and Herbert C. House had a conversation in Dallas,

Texas.

14. On November 2, 1977, RAYMOND A. ENSTAM

transported $50,000 in currency from Dallas, Texas to Miami,

Florida and then to the Grand Cayman Island.

Defendant Enstam argues that both of these alleged overt acts should

have been stricken from the indictment and excluded from the charge

because they both involved only Enstam and the government agents

and because overt act 14 was at variance with the evidence. Enstam’s

contention is without merit.

Although it is impossible to conspire with government

agents, Sears v. United States, 343 F.2d 139, 142 (Sth Cir. 1965), it is

only necessary for one co-conspirator to participate in an overt act,

United States v. Veltre, 591 F.2d 347, 350 (Sth Cir. 1979), because

**[a]n overt act need not itself be a criminal act, as its only function is

to demonstrate that the conspiracy is operative,’’ United States v.

Buckner, 610 F.2d 570, 573 (9th Cir. 1979), cert. denied,

——U.S.——, 100 S.Ct. 1646, 64 L.Ed.2d 235 (1980). See United

States v. Wieschenberg, 604 F.2d 326, 335 (Sth Cir. 1979). Therefore,

it is immaterial that only Enstam and the government agents par-

21

ticipated in alleged overt acts 13 and 14 because these acts, if proven,

clearly sufficed to show that the conspiracy was operative; both the

conversation and the trip to the Cayman Islands involved attempts by

Enstam to fulfill the purpose of the conspiracy. The trial judge pro-

perly refused to strike these alleged overt acts from the indictment.

As to the variance between the evidence at trial and alleged

overt act 14, this variance was immaterial. Although the evidence in-

dicates that Enstam did not actually carry the $50,000 from Dallas to

Miami, there is little question that Enstam accompanied the agents on

the entire trip and that he physically carried the money from Miami to

the Cayman Islands. Consequently, despite the legally-immaterial

variance, Enstam’s actions, as proved, sufficed as an overt act. The

trial judge properly ruled that the government is not required to

precisely prove every overt act as alleged. In fact, the judge stated that

defense counsel would be able to emphasize the variance in his closing

argument, and this tactic was used. Record on Appeal, Volume VI at

989-90. Rather than prejudice defendant Enstam, the obvious slight

variance served as additional ammunition for Enstam’s attorney in

closing argument. Jd.

The trial judge properly refused to strike alleged overt acts 13 and

14 from the indictment. The variance between the testimony and overt

act 14 as alleged was legally insignificant, and both alleged acts served

to show that the conspiracy was operative. Since the judge properly

refused to strike these overt acts from the indictment, it was also pro-

per for him to include them in his charge to the jury.

(b)

Defendant Enstam next argues that the trial judge erroneously

refused to grant his motion to suppress all evidence seized from defen-

dant Enstam’s office. Enstam argues that the search warrant was in-

valid because the underlying information used to obtain the search

warrant was obtained by the undercover agents while they were in

Enstam’s officer under false pretenses. Enstam’s reliance on Gouled

v. United States, 255 U.S. 298, 41 S.Ct. 261, 65 L.Ed. 647 (1921), and

Fraternal Order of Eagles v. United States, 57 F.2d 93 (3rd Cir. 1932),

is misplaced.

In Gouled someone obtained entry into a suspect’s home by falsely

representing that he intended to pay only a social visit. When the

suspect had left the room, the intruder ransacked the suspect’s private

22

papers and seized some of them, and the Supreme Court held that the

Fourth Amendment had been violated. However, in Lewis v. United

States, 385 U.S. 206, 87 S.Ct. 424, 17 L.Ed.2d. 312 (1966), the Court

held that an undercover agent could testify as to a drug transaction

that he had witnessed while in a person’s home under false pretenses.

The Court stated that ‘‘to hold the deceptions of the agent in this case

constitutionally prohibited, . . . would come near to a rule that the

use of undercover agents in any manner is virtually unconstitutional

per se,”’ 385 U.S. at 210, 87 S.Ct. at 427, and this the Court refused to

do.

Enstam’s attempt to distinguish Lewis fails.'* Enstam asked

the two agents into his offic to participate in the affairs of the con-

spiracy, and the agents did nothing more than keen their eyes open;

they neither rooted in Enstam’s papers nor seized anything before

leaving. ‘‘The mere fact that [the agents] concealed [their] true identi-

ty did not nullify [Enstam’s] waiver of Fourth Amendment rights.”

United States v. Bullock, 590 F.2d 117, 121 (Sth Cir. 1979). The agents

did not ‘‘see, hear, or take anything that was not contemplated, and in

fact intended, by petitioner as a necessary part of his illegal business,”

Lewis v. United States, supra, 385 U.S. at 210, 87 S.Ct. at 477, and

Enstam’s motion to suppress was properly denied.

(c)

Enstam finally argues that the trial judge erroneously admitted

Hodgson’s testimony that Hodgson, Oldham, and Enstam all snorted

cocaine in Enstam’s office. Enstam admitted at trial that this evidence

of an extraneous offense was relevant to show that Enstam had

knowledge of the illegal source of the money being laundered, Record

on Appeal, Volume VI at 520, but he contended that the prejudicial

effect of this evisence outweighed any minimal probative value under

Rules 403 and 404(b) of the Federal Rules of Evidence.

Enstam’s contention is without merit. In the first place, in view of

the extensive evidence of cocaine-dealing-profits, the evidence that

'0See United States v. Ressler, $36 F.2d 208, 211 (7th Cir. 1976), where a similar at-

tempt to rely on Gouled and Fraternal Order of Eagles and distinguish 1 ewss failed. The

court stated that the rationale of Lewis was ‘‘that an entry by an undercover agent is not

illegal if he entered for the ‘very purpose contemplated by the occupant.” ** fe.

23

Enstam once used cocaine is not, extraneously to the purpose for

which introduced, unduly prejudicial.'' Further, Enstam’s entire

defense was that he had participated in the various alleged acts

without knowledge that the monies laundered were illegal cocaine pro-

fits. Given such a defense, evidence of this extraneous offense was

definitely admissible to show Enstam’s knowledge’? under Rule

404(b), Fed.R.Evid., and the trial judge did not abuse his discretion in

ruling that the probative value of this evidence outweighed any possi-

ble prejudicial effect under Rule 403, Fed.R.Evid.'*

IV

Defendant Holley also raises certain issues separately from defen-

dant Enstam.

(a)

Defendant Holley contends that in closing argument the prosecutor

improperly went outside the record and improperly expressed his per-

sonal belief about the truthfulness of the witnesses when he twice

characterized defendant Holley as a cocaine dealer. Our review of the

record, however, shows that the prosecutor did nothing more, in con-

text, than argue to the jury concerning reasonable inferences to be

drawn from the evidence.

\

!!For instance, admissable evidence showed that Enstam had helped Hodgson cash a

$51,000 check quickly, knowing at the time or immediately thereafter that the proceeds

were to be used for a quick cocaine deal. Record on Appeal, Volume IV at 538-43.

121m arguing that the probative value outweighed any possible prejudicial effect, the

prosecutor represented that Hodgson would further testify that he had ‘‘said to Mr.

Enstam, ‘We might as well snort up some of the profits’ or words to that effect.’’

Record on Appeal, Volume IV at 522. This representation was later borne out when

Hodgson testified , ‘‘I jokingly referred [to Oldham and Enstam] that we may as well

snort up some of my profits or some of the profits.’’ /d. at 543.

13No limiting instruction was given when Hodgson’s testimony was introduced, but

the trial judge gave a general instruction regarding the use of evidence of extraneous of-

fenses to show knowledge in his charge to the jury. Record on Appeal, Volume VI at

1041-42. See Part IV(b), infra. Enstam contends that the trial judge refused to give a

cautionary instruction, Record on Appeal, Volume VI at 523, but this refusal was only

in response to defendant Holley’s request ‘‘that some reference be made to his act con-

spicuously not having anything to do with Ralph Holley,’’ id. There is no indication in

the record that the trial judge would have refused a proper request to instruct the jury

that this evidence could only be used as evidence of Enstam’s knowing participation in

the conspiracy. See generally id. at 513-525.

24

At one point, the prosecutor argued to the jury that defendant

Enstam ‘‘was going to convince the Internal Revenue Service that

$124,000 of [‘‘loans from E & M to] Brittle Oaks was a loan and no[t]

proceeds from cocaine.’’ Record on Appeal, Volume VI at 1014-15.

Although this was not the only reasonable inference to be drawn from

the evidence, we cannot say that this inference was not a reasonable

one.'* In any event, the judge immediately instructed the jury that it

was ‘‘to recall the testimony of the evidence itself and not the argu-

ment of counsel.’’ Record on Appeal, Volume VI at 1015.

Shortly thereafter, the prosecutor described the trial as a search for

truth, and he told the jury that whatever way it decided the case, the

United States would not really win or lose. In this context, the pro-

secutor made the following statements:

What this is all about is this, ladies and gentleman: a jury trial is a

search for the truth. The truth. What happened. The documents

and testimony, the totality of that tells the truth. That is what I

care about. That is what our system is all about. You are to deter-

mine the truth.

Here is what the truth is in just one minute or less. Paul Larue

Hodgson was a cocaine dealer and he needed a way to launder

money. The Defendant Holley was a cocaine dealer and he needed

a method to launder money. The agents—

Record on Appeal, Volume VI at 1016 (italics ours). Defense counsel

for Holley immediately objected, and the judge gave the jury the

following instruction: ‘‘Well, you will recall the evidence, ladies and

gentlemen, and you will make no finding unless it is based on the

evidence and in accordance with my instructions.’’ /d.

Defendant Holley contends that this was an improper assertion

'4 Oldham had told Clayton and House that he had created Brittle Oaks for a friend in

Tampa, Florida so that the friend could purchase some land with illegally earned money

and explain to the Internal Revenue Service, if necessary, where the money had come

from. Record on Appeal, Volume III at 245-46 and Volume IV at 413. In the context of

this case, it would not have been unreasonable to infer that this illegal money had been

derived from cocaine sales. In addition, Oldham had made several references to an

associate in Tampa, Florida from whom he had purchased cocaine. See, e.g., Record on

Appeal, Volume IV at 425, 432-33, 470-71. While the jury could have reasonably con-

cluded that these statements referred to the person arrested with Oldham, it would not

have been unreasonable to reach the conclusion that defendant Holley was the person to

whom Oldham was referring.

25

of the prosecutor’s personal beliefs. However, although the pro-

secutor may have been slightly overzealous in characterizing the

evidence, in context his statement concerning the ‘‘truth’’ was only his

way of summing up the evidence. It was clear to the jury, in context,

that the prosecutor was simply urging them to draw certain conclu-

sions from the evidence.'* To the extent that the prosecutor’s

statements exceeded the proper bounds of argument, the error was

cured by the judge’s immediate instruction and was therefore harmless

under Rule 52 of the Federal Rules of Criminal Procedure.

(b)

The trial judge instructed the jury that evidence

concerning alleged acts related to that charged in the

indictment . . . is admitted for the limited purposes of assisting

[the jury] in determining the intent or knowledge with which a

Defendant may have acted . . . [E]vidence of an alleged related

transaction may not be considered by the jury in determining

whether an accused committed the acts alleged in the

indictment . . . [YJou may consider such evidence of another

transaction of like nature in determining the state of mind, or in-

tent, or knowledge with which an accused may have done the act

charged in the indictment, but only if you first find that the other

evidence standing alone establishes beyond a reasonable doubt

that the Defendant committed the aét alleged in the indictment.

Record on Appeal, Volume VI at 1041-42. Defendant Holley does not

object to the substance of this instruction. Rather, he contends that

the trial judge erred in refusing to specifically outline for the jury the

evidence to which this ‘‘related offenses’? charge referred. Holley

argues that the judge should have told the jury that the charge related

to: 1) Enstam’s snorting cocaine; 2) the admission of the Peace River

Trading Company minute book; and 3) Enstam’s transaction with

Agents Clayton and House. Holley further argues that none of this

evidence applied to him and that the jury should have been so in-

structed. We find, however, that some of this evidence did apply to

15**(A)n attorney’s statements that indicate his opinion or knowledge of the case as

theretofore presented before the court and jury are permissible if the attorney makes it

clear that the conclusions that he is urging are the conclusions to be drawn from the

evidence.’’ United States v. Morris, 568 F.2d 396, 401 (Sth Cir. 1978).

26

>

Holley, that Holley suffered no prejudice, and that the judge did not

abuse his discretion.

‘*[A] trial court is given broad discretion in wording its jury instruc-

tions and will not be reversed as long as the charge correctly states the

substance of the law,’’ United States v. L’Hoste, 609 F.2d 796, 805

(Sth Cir. 1980). The trial judge correctly instructed the jury on the ap-

plicable law, but he refused Holley’s request because he felt that it

would require commenting on the evidence. Record on Appeal,

Volume VI at 956. The judge told the attorneys that analyzing the

evidence would be a more appropriate subject for argument to the

jury. Jd. Under the facts of this case, the judge did not abuse his

discretion. ;

The purpose of instructing the jury concerning related or ex-

traneous offenses is to insure that a defendant will not be convicted

for conduct other than that charged in the indictment. The trial

judge’s instruction adequately served this function. The jury was

specifically told the limited purpose for which evidence could not be

used until after it had been determined beyond a reasonable doubt

that the defendant or defendants had committed the acts alleged in the

indictment. Further elaboration in the context of this case might have

done more harm than good; an attempt by the judge to review the

complicated facts of this case might have caused more confusion than

clarification. At the very least, no prejudice resulted from the trial

judge’s decision not to go beyond an explanation of the applicable

law.

‘With respect to the admission of the Peace River Trading Company

minute book, this evidence was only properly admissible to impeach

Enstam, but defendant Holley specifically requested the judge not to

give such a limiting instruction. See Part II(a), supra. Consequently,

to the extent that the limiting instruction actually given was am-

biguous or confusing, it was attributable to Holley. Further, we doubt

that the minute book was properly includable in the trial judge’s ex-

traneous offense charge because it did ndt constitute evidence of an

extraneous offense; at most the book tended to prove a connection be-

tween Oldham and Holley.

Finally, even if the jury did improperly rely on the minute book as

evidence against Holley, in view of the extensive evidence linking

27

Holley, Brittle Oaks, E & M, and Oldham together,'* there is no

significant chance that such error had a substantial impact on the

jury’s verdict. United States v. Gomez, supra, 529 F.2d at 417.

With respect to evidence of the transaction between Enstam

and Agents Clayton and House, once the jury found that Holley was a

knowing participant in the conspiracy, evidence of Enstam’s transac-

tion with the agents was admissible against Holley as evidence of an

overt act committed by a co-conspirator. See Part III(a), supra. Since

the jury was properly instructed not to hold a defendant responsible

for the acts of any other conspirators until after having determined

that that defendant had knowingly joined the conspiracy, Holley’s

contention that this evidence was not admissible against him is

without merit. We are convinced that no prejudice resulted from the

trial judge’s refusal to specify this evidence in connection with the ex-

traneous offense charge. This evidence was relevant to prove an overt

act, and the jury was not limited to using this transaction as evidence

of intent.

Conclusion

Although we were initially concerned about whether the govern-

ment had proved the existence of the conspiracy alleged in the indict-

ment, a review of the record reveals that this burden was definitely

met. Finding the defendants’ other contentions to be without merit,

we affirm both convictions.

AFFIRMED.

TUTTLE, Circuit Judge, concurring in part and dissenting in part:

I concur in the opinion and judgment of the Court so far as it af-

16 Aside from Oldham’s statements concerning his friend in Tampa. Florida and Brit-

tle Oaks, see Part I(b), supra, there also was the agents’ testimony concerning the Brittle

Oaks stationery showed to them by Oldham, see Part II(b), supra, there also was the

following evidence connecting Holley, Brittle Oaks, E & M, and Oldham: 1) at the re-

quest of Oldham, Enstam created correspondence purporting to be from Holley to

Oldham’s man in E & M, Derek Price, Record on Appeal, Volume V at 818-19; 2)

various notes in favor of E & M and signed by Holley were found in Oldham’s posses-

sion when Oldham was arrested, as were various letters either to Holley from Oldham’s

man in E & M or vice versa, id., Volume V at 614-16 and Volume I at 199; and 3) Holley

initiated a purchase of land in Florida in his own name, but he used the name of Brittle

Oaks when the deal was closed, id., Volume V at 607-08.

28

fects the conviction of Enstam, but with deference I dissent from the

judgment affirming the conviction of Holley, and the part of the opi-

nion dealing with his conviction.

The record here clearly demonstrated that Enstam and Oldham had

conspired to set up a number of corporations, within the United States

and in the Cayman Islands for the purpose of laundering money from

United States citizens to hinder and delay the Internal Revenue Service

in the collection of income taxes. It is also clear that Oldham and

Enstam dealt with IRS agents, thinking they were candidates for such

service. The record also disclosed that Holley was president of a cor-

poration known as Brittle Oaks and that he had taken title to some

land he had bought by placing it in Brittle Oaks. It also discloses that

there were letters purporting to be from Brittle Oaks to the Grand

Cayman corporation which Enstam and Oldham knew to be engaged

in the money washing scheme. There was also evidence that the Grand

Cayman corporation made a series of loans to Brittle Oaks at about

the time that Holley purchased the land whose title he placed in that

corporation. My difficulty is that the IRS agents’ testimony as to what

Oldham told him was the purpose of the Grand C_ yman corporation

and Brittle Oaks cannot be imputed to Holley unless and until it is

shown by substantial evidence that Holley had knowledge of the in-

come tax—money washing scheme. The only evidence we have that

Holley knew of this is from statements made by Oldham to the IRS

agents.

In United States v. James, 590 F.2d 575 (Sth Cir. 1979), this Court

en banc held that before a hearsay statement can be used to inculpate

an alleged co-conspirator:

The court must determine as a factual matter whether the pro-

secution has shown by a preponderance of the evidence indepen-

dent of the statement itself (1) that a conspiracy existed, (2) that

the co-conspirator and the defendant against whom the co-

conspirator’s statement is offered were members of the con-

spiracy, and (3) that the statement was made during the course

and furtherance of the conspiracy .. ..

590 F.2d at 582.

Here, I do not find any evidence in this record from which a jury

could infer that because Oldham and Enstam had set up a scheme to

enable anyone whom they could interest in such a deal to use their cor-

29

porations to wash tseir ill-gotten gains for tax purposes, then Holley

must be deemed to have been aware that these corporations were of

such a character, and that his dealing with them could be the basis of a

jury finding that he paricipated in such conspiracy.

In this case, the only way the jury could properly know of the ex-

istence even of the conspiracy between Oldham and Enstam was the

agent’s testimony as to what Oldham told him. Other than this, there

is nothing in the record from which a jury ‘could infer that when

Holley dealt with Brittle Oaks and when that corporation dealt with

the Grand Cayman corporation, Holley was dealing with members of

a conspiracy to defraud the United States Internal Revenue.

_ I fully agree that the proven transaction that Holley engaged in ap-

pears to be quite similar to the transactions that Oldham had explain-

ed to the revenue agents, and in which they purported to participate. I

simply do not believe that the fact of this similarity of dealings be-

tween Holley and the other two corporations is sufficient to justify the

submission to a jury of the question of Holley’s knowing participation

in the conspiracy.

I would affirm as to Enstam and reverse as to Holley.

30