# Appendix — Umpierre-Hernandez v. United States (Nos. 07-518, 07-530, 07-536)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2007

## Text

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APPENDIX A

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

Nos. 04-1532, 04-1533, 04-1534, 04-1535

UNITED STATES OF AMERICA,
Appellee,
V.

LORENZO MUNOZ-FRANCO, FRANCISCO SANCHEZ-ARAN,
ARIEL GUTIERREZ-RODRIGUEZ, and
WILFREDO UNPIERRE-HERNANDEZ,

Defendants, Appellants.

APPEALS FROM THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF PUERTO RICO
(Hon. Daniel R. Dominguez, U.S. District Judge]

Before
Boudin, Chief Judge,
Cyr, Senior Circuit Judge,
and Lipez, Circuit Judge.

May 22, 2007

LIPEZ, Circuit Judge. Appellants Lorenzo Munoz-
Franco, Francisco Sdanchez-Aran, Ariel Gutiérrez-
Rodriguez, and Wilfredo Umpierre-Hernandez appeal
their convictions for bank fraud, conspiracy, and
misapplication of bank funds, stemming from conduct
that persisted for nearly a decade. Munoz-Franco and
Sanchez-Aran appeal their convictions for bank fraud

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and conspiracy for a similar but separate series of
transactions also involving the improper use of bank
funds. Appellants challenge the sufficiency of the
evidence and raise many other substantive and pro-
cedural claims relating to their fifteen-month trial.
After careful review of this immense record, we
affirm.

A. Factual Overview

We provide here an overview of the relevant con-
duct drawn from the record, saving additional details
for our sufficiency analysis. Throughout the opinion,
we consider the evidence “in the light most favorable
to the prosecution.” See Jackson v. Virginia, 443 US.
307, 319 (1979).

1. The Gutiérrez Loans

During the relevant time period charged in the
Third Superseding Indictment, Mufioz-Franco was
President and Chief Executive Officer of Caguas Cen-
tral Federal Savings Bank of Puerto Rico (“Caguas”),
a federally chartered savings and loan association.
Sanchez-Aran was Executive Vice President and
Chief Lending Officer of Caguas. Gutiérrez was a
land developer who owned several companies that
received loans from Caguas. Umpierre-Hernandez
was an officer of several companies belonging to
Gutiérrez.

For nearly a decade, Mufioz-Franco and Sanchez-
Aran supervised a scheme to use proceeds from vari-
ous loans for purposes not authorized by Caguas’
Board of Directors (“Board”).' The loans were granted

' The Board was a body of ten to fifteen members responsible
for establishing policy for the operation of Caguas and oversee-

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for land development projects involving companies
that Gutierrez owned and Umpierre-Hernandez
helped to operate, including Transglobe, Modules,
and Transhore. In many instances the appellants
used proceeds from loans to Gutiérrez-cwned com-
panies to make payments on prior loans to Gutierrez-
owned companies without Board approval. In other
instances Mufioz-Franco and Sanchez-Ardn_ sub-
mitted loans to Gutiérrez-owned companies to the
Board for approval without disclosing the Gutiérrez-
owned companies’ failure to complete work on pre-
vious projects. On many occasions Gutiérrez and
Umpierre-Hernandez submitted certifications for
construction work that had not yet been completed,
and Munoz-Franco and Sdanchez-Aran accepted the
certifications and ordered disbursement of funds for
the projects. The Board also was not informed of this
practice. In January 1988, Munoz-Franco drafted and
obtained Board approval to send a letter to Richard
Denby, the Federal Home Loan Bank Board auditor
supervising Caguas, which responded to Denby’s
concerns regarding Caguas’ lending practices (“Denby
letter”). The letter contained many misrepresen-
tations regarding the status of Gutiérrez-related
projects and loans.

As the government explained in its opening state-
ment, this scheme contributed to the appearance that
Caguas remained a financially viable institution
under the leadership of Mufioz-Franco and Sanchez-
Aran. If the problems with the bank became known

ing the general operation of the bank. The Board oversaw the
Executive Committee (which reviewed and approved commercial
and real estate construction loans in excess of $500,000) and the
Loan Committee (which reviewed and approved commercial and
real estate loans under $500,000).

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and Mufoz-Franco and Sanchez-Aradn were removed
from their positions, “not only would that have de-
prived them of a very lucrative job, but it also would
have made it very difficult for them to obtain new
employment in the banking industry.” The scheme
also maintained the appearance of solvency for the
Gutiérrez companies, thus protecting the liveli-
hood and professional reputation of Gutiérrez and
Umpierre-Hernandez. |

The projects for which Gutierrez-owned companies
received loans included La Marina, Los Mameyes,
Cerrovista, and Jardines de Villa Alba. We provide a
brief overview of these projects here.”

a. La Marina

In June 1980, Mufioz-Franco and Sdanchez-Aran
caused Caguas to grant a $1,450,000 loan to Trans-
globe to finance the construction of seventy-five units
of residential housing, with construction to begin
within one month and to be completed within one
year. As of September 1981, the loan limit had been
increased four times, adding a total of $1.8 million,
yet not a single house had been built. Funds were dis-
bursed from the loan for the project based on certi-
fications submitted by Gutiérrez and Umpierre-
Hernandez and approved by Sanchez-Aran, and ap-
proximately $2 million was used to pay unrelated
Gutiérrez debts with a different bank. In October
1984, Mufnoz-Franco and Sdanchez-Ardn caused
Caguas to finance the sale of the La Marina project to
DO.W Group. The agreement for this sale provided
that Transglobe would remain the contractor for the

* Similar conduct also occurred on other Gutiérrez projects,
including Levittown, Country Club, Los Caciques, Quintas de
Humacao, and Quintas de Fajardo.

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project despite its failure to build a single house in
the preceding four years. In approving the loan, the
Board was not informed of Transglobe’s prior poor
performance. After this sale, appellants continued to
} apply funds from the La Marina loan to other projects
and to disburse funds for work not completed. Not a
single house was ever built on the project, and, in
1989, Caguas entered into a settlement agreement
with DO.W releasing DO.W’s debt on the project,
which totaled over $2 million.

b. Los Mameyes

In late 1985, Munoz-Franco and Sdanchez-Aran
caused the Board to grant Modules a commercial line
of credit to build two hundred housing units. Between
December 1985 and March 1986, Gutiérrez and
Umpierre-Hernandez submitted a series of certifi-
cations stating that a total of two hundred housing
units had been built. Even though Caguas’ inspector
reported that only fifty-five units had been com-
pleted, Sanchez-Aran approved disbursements total-
ing about $800,000. In March 1986 Gutiérrez and
Umpierre-Hernandez submitted a certification re-
questing $69,000 for “payment of subcontractors,” but
attached a list of interest payments due on the
Jardines de Villa Alba, Levittown, Country Club, La
Marina, and Los Caciques projects totalling exactly
$69,000. Sanchez-Ardan approved the certification and
Caguas disbursed the funds.

c. Cerrovista

In the spring of 1986, John Burns, a developer,
applied to Caguas for a loan to build residential
housing on land he owned but his application was
denied. After meeting with UmpierreHernandez and
agreeing to use Modules as a contractor, Caguas

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approved Burns’ application for a loan to build
twenty-three units of housing in what became known
as the Cerrovista project. Burns’ loan was approved
on the condition that he sign a $2 million note as a
down payment to Modules. Burns signed the note.
Shortly thereafter, however, Umpierre-Hernandez
told Burns that the project needed a new “sponsor”
because Burns had been “gossiping.” Umpierre-Her-
nandez then began to negotiate the sale of Cerrovista
to lantho, a company owned by Walter Frambes. In
August or September 1986, Burns read newspaper
articles indicating that the Cerrovista project might
be affected by the Puerto Rico Department of
Transportation’s plans to build a hospital and an
expressway. He inquired with the Department and
received confirmation that the development of four
lots would be “frozen.” When Burns brought this
information to Umpierre-Hernandez, Umpierre-Her-
nandez told him to “hide it, boy.”

On September 10, 1986, Sdanchez-Aran received
Board approval to offer Iantho an $8.9 million loan,
specifying that $1,412,177 would be used to purchase
land for the Cerrovista project. The sale was then
finalized on September 28. However, the actual land
cost was only $480,000, and the remaining $932,000
was used to make principal and interest payments on
other loans to Gutiérrez-owned companies. Over the
next few months Gutiérrez and Umpierre-Hernan-
dez submitted certifications showing approximately
$908,000 for “premanufacture” of housing units, and
Sanchez-Aran authorized disbursement of these
funds. As of May 1988, however, not a single unit
had been built on the project.

Ta
d. Jardines de Villa Alba

In 1985, a developer named Emilio Montilla sought
financing to build housing units on land he owned, —
and Caguas repeatedly denied his requests. Montilla
then met with UmpierreHernandez, who told him
that if he used Modules as a contractor his request
would be approved. In July 1985, the Board con-
sidered a proposed loan to Montilla with Modules as
contractor. Although by this time Modules had failed
to perform on the La Marina project for several years,
the Board was not informed_.of this information when
it considered the Jardines de Villa Alba project.
Moreover, over $231,000 was disbursed before the
Jardines de Villa Alba loan agreement was signed.
Although the Board eventually approved the loan,
this prior disbursement took place without Board
knowledge or approval. Only one unit was ever com-
pleted on the Jardines de Villa Alba project. How-
ever, the Board was not informed of this fact. The
Denby letter, which was drafted by Mufioz-Franco in
January 1988 and signed by the Board members,
refers to the “units” completed on this project.

2. The Mirandes Loans

As will be described in more detail in our suf-
ficiency discussion, Mufioz-Franco and Sanchez-Aran
supervised a similar scheme to use loan proceeds for
purposes not authorized by the Board with respect to
companies owned by Francisco Mirandes.” Mirandes
received construction loans from Caguas for at least
fourtezn different projects. In December 1989, the
Mirandes corporations collapsed due to insolvency,
owing Caguas a total of $23 million. In 1997, Miran-

* The Third Superseding Indictment did not charge Gutiérrez
and Umpierre-Hernandez with involvement in this scheme.

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des pled guilty to charges of participating in a
conspiracy to defraud Caguas, the Board, and the
regulatory institution, and to misapplication of bank
funds. As part of his plea agreement, he testified for
the government at appellants’ trial.

B. Procedural History

On November 22, 1995, the government filed an in-
dictment charging appellants with conspiracy, bank
fraud, misapplication of bank funds, and making
false entries. Three superseding indictments subse-
quently were filed on March 5, 1997; May 13, 1997;
and March 6, 1998.‘ The third superseding indict-
ment charged Munoz-Franco, SAnchez-Aran, Gutiér-
rez, Umpierre-Hernandez, Enrique Gutiérrez (Ariel
Gutiérrez’s brother, who was also involved in running
the Gutiérrez corporations), and Rafael Dominguez
Wolff (who purchased several projects from the
Gutiérrez brothers)’ with bank fraud, in violation of
18 U.S.C. 1344; conspiracy to commit bank fraud,
misapply bank funds, and make false entries, in
violation of 18 U.S.C. 371; and misapplication of bank
funds, in violation of 18 U.S.C. § 657. The indictment
also charged: Munoz-Franco and Sanchez-Aran with
bank fraud under 18 U.S.C. § 1344 and conspiracy
under § 18 U.S.C. § 371 with respect to the Miran-
des loans.

The trial began in federal district court in Puerto
Rico in January 2001 and the presentation of evi-
dence concluded in April 2002. On May 16, 2002, the

* Appellants protest the delay both preceding and resulting
from this series of superseding indictments on Fifth and Sixth
Amendment grounds. We will discuss the events surrounding
this series of indictments in more detail in Section IV.C, infra.

* Wolff died prior to trial.

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jury convicted Munoz-Franco, Sanchez-Aran, Ariel
Gutiérrez, and Umpierre-Hernandez on all charged
counts, but acquitted Enrique Gutiérrez. Following
the verdict, appellants filed motions for a judgment of
acquittal pursuant to Federal Rule of Criminal Pro-
cedure 29, raising numerous grounds, including the
sufficiency of the evidence. In a thoughtful seventy-
seven page opinion, the district court denied all of the
motions.”

Sentencing proceedings began on December 15,
2003. On February 12, 2004, the district court sen-
tenced Munoz-Franco and Sanchez-Aran to a term of
forty-six months on the conspiracy and bank fraud
counts and a concurrent term of sixty months on
the misapplication count. It also imposed a fine of
$50,000 on each defendant. The court sentenced |
Gutierrez to a term of thirty-seven months on the
conspiracy and bank fraud counts, and imposed a
_ concurrent term of sixty months on the misappli-
cation count. It also imposed a $60,000 fine. Fin-
ally, it sentenced Umpierre-Hernandez to a term of
twenty-four months on all counts.

C. Issues on Appeal

Appellants raise thirteen major issues for our con-
sideration on appeal. Three of these claims—con-
cerning the statute of limitations, the Ex Post Facto
Clause, and the pre-indictment and pre-trial delay—
implicate what might be termed the validity of the
entire proceedings. Although courts often begin by

* In addition to the sufficiency of the evidence, the district
court considered and rejected claims of prosecutorial miscon-
duct, improper jury instructions, inconsistent verdicts, and
violation of the right to a speedy trial, as well as challenges to
the admission of certain evidence and testimony.

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addressing such issues, we find, in light of the
exceptionally large record, that we must review the
sufficiency of the evidence in order to assess the
viability of any of appellants’ other claims. Thus, we
will first resolve two evidentiary issues to determine
the content of the record properly before us. We will
then employ that record in conducting our analysis of
the sufficiency of the evidence. Informed by a full
understanding of the record, we will then turn to the
host of other issues raised by appellants.

i.

We begin with two evidentiary issues: whether the
district court allowed witnesses to testify beyond
their personal knowledge, and whether the minutes
from the Board meetings were improperly admitted.

A. Personal Knowledge

Appellants argue that the district court improperly
permitted prosecution witnesses to testify beyond
their personal knowledge, in violation of Federal Rule
of Evidence 602. Rule 602 states, in pertinent part:
“A witness may not testify to a matter unless evi-
dence is introduced sufficient to support a finding
that the witness has personal knowledge of the
matter.” Fed. R. Evid. 602. Interpretation of the
Federal Rules of Evidence is a question of law subject
to de novo review, but the ‘application of a rule is
reviewed for abuse of discretion. United States v.
Sposito, 106 F.3d 1042, 1046 (1st Cir. 1997).

1. Arturo Somohano

Appellants argue that Arturo Somohano (the vice
president of Caguas’ commercial loan department
until 1988, at which time he became Caguas’ chief
lending officer) testified beyond his personal knowl-

lla

edge on three occasions: (1) in claiming that the
bank’s outside auditors were replaced for improper
reasons; (2) in stating that Caguas’ loan classifi-
cations for the loans to Modules were improper; and
(3) in questioning the propriety of certain construc-
tion loans. The district court excluded the first of
these statements after appellants objected, and we
therefore do not consider it further.’

With respect to Somohano’s testimony that Caguas’
loan classifications for Modules were improper,
appellants objected on the ground that Somohano
had previously stated that he was unaware of the
bank’s classifications for those loans. Somohano
acknowledged that he did not remember seeing the
loan classifications for Modules while at Caguas, but
his testimony did not rely on such knowledge of
_Modules’ status. Instead, Somohano explained that
loans at Caguas were classified from one (best) to ten
(worst) based on the amount of risk involved in the
loan, and that the bank would attach greater
reserves to riskier loans. While still on the witness
stand, Somohano then reviewed financial statements
indicating that Modules had a negative net worth of
$7.6 million at the end of 1986, and that Caguas’

" With respect to the replacement of the bank’s outside
auditors, appellants object to Somohano’s testimony that he
knew why Caguas’ outside auditors were replaced because
“someone told me.” This characterization is incomplete. Upon
further questioning, Somohano stated that he also knew this
information based on “[m]y own personal observations,” spe-
cifically, the fact that “the reserves were totally inadequate to
guarantee that the bank would not shake if a loss could occur.”
After the government asked how Somohano’s observation re-
lated to the auditors’ removal, however, appellants objected,
and, after a lengthy sidebar and research, the court excluded
the testimony altogether.

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reserves would not cover the loans to Modules be-
cause the reserves equalled only ten or fifteen per-
cent of the loans Modules was sustaining. Based
strictly on the amount of reserves, Somohano would
expect the Modules loan to have received a favorable
classification of either two or three; however, he
testified that, based on Modules’ “insolvent” financial
status, such classification would have been improper.

According to Federal Rule of Evidence 701, a lay
witness may offer opinions that are “(a) rationally
based on the perception of the witness, (b) helpful to
a clear understanding of the witness’ testimony or
the determination of a fact in issue, and (c) not based
on scientific, technical, or other specialized knowl-
edge within the scope of Rule 702.” Fed. R. Evid. 701.
Under Rule 701, courts have allowed lay witnesses to
express opinions about a business “based on the
witness’s own perceptions and ‘knowledge and par-
ticipation in the day-to-day affairs of [the] business.”
_ United States v. Polishan, 336 F.3d 234, 242 (3d Cir.
2003) (alternation in original) (quoting Lightning
Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1175 (3d Cir.
1993)); see also Medforms, Inc. v. Healthcare Mgmt.
Solutions, Inc., 290 F.3d 98, 110-11 (2d Cir. 2002)
(allowing a computer programmer to testify about the
meaning of terms used in the copyright registra-
tions for programs he had helped design); Williams
Enters., Inc. v. Sherman R. Smoot Co., 938 F.2d 230,
233-34 (D.C. Cir. 1991) (allowing an insurance broker
who had personal knowledge of an insured’s business
to offer lay opinion testimony on the cause of an
increase in the insured’s premiums). Here, Somo-
hano’s testimony was based on knowledge of Caguas’
banking practices that he acquired during his em-
ployment there, and thus the opinions he expressed

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were properly within the scope of Federal Rule of
Evidence 701.

Finally, appellants protest, without providing
specific examples, that Somohano “was permitted to
testify about the propriety of certain construction
loans even though he was not part of the construction
loan department and has no firsthand knowledge of
those loans.” We find this generalized objection
unfounded. Somohano’s opinions about the loans
were based on his firsthand observations of Caguas’
practices with respect to these loans. He testified
that, when the Modules loan was restructured, he did
not think Caguas ever would be repaid, and he
provided other examples of Gutiérrez loans receiving
special treatment. Given Somohano’s banking ex-
perience and his particular knowledge about the
Gutiérrez loans, his testimony about these loans also
was properly admissible as a lay opinion within the
scope of Rule 701. Consequently, we find no abuse
of discretion in the district court’s handling of
Somohano’s testimony.

2. Anabel Enriquez

Appellants also argue that Anabel Enriquez (the
senior vice president of Caguas’ mortgage depart-
ment from 1980-87, who reported directly to Sanchez-
Aran) testified beyond her personal knowledge when
she stated, based on her review of the minutes of
Board and Executive Committee meetings, that
certain information was not discussed at the meet-
ings that should have been discussed. This objection
is unfounded. At trial, Enriquez read the Board
meeting minutes into evidence, including minutes for
meetings at which she was not present. Appellants
objected, and, after considerable debate, the district
court ruled “that [Enriquez] may literally read what

l4a

each paragraph [of the minutes] says. If the United
States then wants an explanation as to the
paragraph she must then have an independent
source of knowledge.” Thus, Enriquez did not testify
whether certain events actually happened at a Board
meeting unless she was present; for meetings she did
not attend, she testified only “whether the minutes
reflect” that certain information was discussed. The
district court enforced this limitation, and required
the prosecutor to rephrase questions on more than
one occasion.’ Similarly, Enriquez’s testimony that
the Board “should have been told” certain infor-
mation was a lay opinion properly admitted under
Rule 701. Her position as a senior vice president
of Caguas’ mortgage department and her regular
attendance at Board meetings established her fa-
miliarity with Caguas’ business operations and made
it appropriate for her testify about information the
Board needed to make its decisions. Again, the
district court did not abuse its discretion in allowing
such testimony.

3. Victor Lugo

As part of its case, the government sought to prove
that Mufioz-Franco and Sanchez-Aran concealed ma-
terial information relating to the Gutiérrez loans
from the Board. Victor Lugo, the Board president,
offered testimony that he was not told or was not

* For example, when the prosecutor asked whether the Board
was told certain information about Modules, the court inter-
rupted: “You don’t know what the board was told unless you're
there. The most you can state is whether or not the minutes
reflect that information.” The prosecutor rephrased the ques-
tion, and Enriquez then responded that “from what I remember
of having reviewed the minutes, there is no mention anywhere
of that fact.”

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aware of significant information. Appellants claim
that Lugo’s testimony showed that he had no
independent recollection of the events in question,
some of which occurred nearly twenty years before
trial. However, appellants misconstrue Lugo’s testi-
mony about his own memory. For example, when
asked whether he was informed of Modules’ per-
formance history when the Board was making deci-
sions on the company’s loans in July 1985, he stated:
“I don’t recall that it was discussed. I believe that if it
was discussed I would remember and it is not re-
flected in the minutes.” Similarly, when asked
whether the number of houses built on Modules
projects was discussed when the Board was again
making decisions on the loans in September 1986, he
stated definitively: “No . . . that was not discussed.”
These statements show that Lugo had sufficient
recall to testify from his personal knowledge about
the information given to the Board.

Appellants also complain that the government
improperly suggested the truth of hypothetical
scenarios presented in certain questions to Lugo. The
purpose of these questions was to probe whether the
Board would have considered Gutiérrez companies’
past performance in deciding to approve later loans.
For example, the prosecutor asked Lugo: “[I|f the
Gutiérrez company, out of these 96 [housing] units
only built 22, would that have been information .. .
which you would have been interested in knowing for
purposes of voting on the approval of this loan?” The
court explained at sidebar that it would only allow
such hypotheticals when the government had already
introduced evidence that was the basis for the
hypothetical—specifically, when “there is a document
from the bank that clearly establishes a certain fact.”
It also instructed the jurors that they should not take

16a

the facts that were the basis for the hypotheticals
as true:

Okay. The fact that the Court has authorized
that question, ladies and gentlemen of the jury,
does not mean .. . that the Court is concluding it
is a foregoing fact that you should take those
facts as true. Those facts are subject to your
analysis and your credibility.

In other words, you have to decide in your
deliberations whether or not this project called
for 96 houses and you have to decide whether or
not actually 22 were built or whatever number
was built, that is subject to your credibility.

The fact that the Court is authorizing that this
question be expressed in these terms does not at
all mean that the Court has already determined
that it is a fact at-all. You have to decide. That’s
one of the issues that you're going to have to
decide in this case.

The court reiterated this instruction several times.
This detailed instruction was sufficient to advise the
jury that it should not accept the facts set forth in the
hypotheticals as true. Thus, Lugo’s response to these
questions did not have the effect of allowing him to
testify beyond his personal knowledge to the factual
correctness of the hypothetical. The district court did
not abuse its discretion in allowing such testimony.

4. Victor Kareh

Finally, appellants assert that Victor Kareh (the
assistant vice president of the construction loan de-
partment from 1980 to 1990) “was permitted . . . to
opine about what the project documents and ledger
cards indicated, without-any clear memory of the

17a

events and mixing summary testimony with what
was improper expert testimony.” To support this
proposition, appellants cite to three thirty-page
sections of the trial transcript, without specifying the
testimony to which they object or the grounds for
their objections. Although Kareh did not author all of
the documents about which he testified, this in itself
is not a basis for excluding his testimony about the
documents. Without developed argumentation on this
issue, we cannot conclude that the district court
abused its discretion in allowing Kareh’s testimony.
United States v. Zannino, 895 F.2d 1, 17 (1st Cir.
1990) (“[I]Jssues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argu-
mentation, are deemed waived.”).

B. Admission of Minutes from Board Meetings

At trial, the prosecution introduced the Board and
Executive Committee meeting minutes under Federal
Rule of Evidence 803(6), which states that business
records are not excluded by the rule against hearsay
“if kept in the course of a regularly conducted
business activity, and if it was the regular practice of
that business activity to make the... record...
unless the source of information or the method or
circumstances of preparation indicate lack of trust-
worthiness.” Appellants do not claim that the min-
utes themselves were improperly admitted, but
rather protest the prosecution’s reliance on the
absence of certain information from the minutes to
prove that the Board was not informed about such
matters. Appellants argue that this use violated their
rights under the Confrontation Clause and the rule
against hearsay. We examine these claims in turn.
We review alleged violations of the Sixth Amend-
ment’s Confrontation Clause de novo. United States

18a

v. Rondeau, 430 F.3d 44, 47 (1st Cir. 2005). As
discussed above, interpretation of the Federal Rules
of Evidence is subject to de novo review, but
application of a rule is reviewed for abuse of dis-
cretion. Sposito, 106 F.3d at 1046.

1. Confrontation Clause

The Confrontation Clause of the Sixth Amendment
guarantees defendants the right to confront adverse
witnesses. The Supreme Court has explained that
only “testimonial” statements “cause the declarant to
be a ‘witness’ within the meaning of the Confron-
tation Clause.” Davis v. Washington, 126 S. Ct. 2266,
2273 (2006) (citing Crawford v. Washington, 541 U.S.
36, 51 (2004)).’ Thus, “[i]t is the testimonial character
of the statement that separates it from other hearsay
that, while subject to traditional limitations upon
hearsay evidence, is not subject to the Confrontation
Clause.” Jd. Although the Court has yet to articulate
a precise definition of “testimonial,” it is beyond
debate that the Board minutes are nontestimonial in
character and, consequently, outside the class of
statements prohibited by the Confrontation Clause.

* Appellants filed their briefs before the Court’s decision in
Davis, and thus do not discuss its significance.

The Court has held that the term “testimonial” includes “at
a minimum ... prior testimony at a preliminary hearing, before
a grand jury, or at a former trial; and. . . police interrogations.”
Crawford, 541 U.S. at 68. In the context of police interrogations,
the Court indicated that a key factor is whether “the primary
purpose of the interrogation is to establish or prove past events
potentially relevant to later criminal prosecution.” Davis, 126 S.
Ct. at 2274. In United States v. Hansen, 434 F.3d 92, 100 (ist
Cir. 2006), we also found that statements that “the declarant
would not reasonably expect to be available for use at a later
trial” were nontestimonial in character.

19a

The Court in Crawford plainly characterized busi-
ness records as “statements that by their nature [are]
not testimonial.” 541 U.S. at 56. If business records
are nontestimonial, it follows that the absence of
information from those records also must be non-
testimonial. Thus, the Confrontation Clause presents
no bar to reliance on the absence of certain .in-
formation from the Board meeting minutes to prove
that the Board was not given that information.

2. Hearsay

Appellants also complain that, once the minutes
were admitted, the prosecution used the absence of
certain information from the minutes to demonstrate
that Munoz-Franco and Sdanchez-Aran failed to in-
form the Board of these matters in violation of the
rule against hearsay. Appellants argue that the
minutes were intended to be a summary, rather than |
an exhaustive record, of the events that took place at
Board meetings, and that, consequently, the minutes
do not indicate whether such information was dis-
closed to the Board.

Federal Rule of Evidence 803(7) states that the
rule against hearsay does not exclude

[e]vidence that a matter is not included in the...
records . . . kept in accordance with the provi-
sions of [Fed. R. Evid. 803(6)], to prove the
nonoccurrence or nonexistence of the matter, if
the matter was of a kind of which a... record...
was regularly made and preserved, unless the
sources of information or other circumstances
indicate lack of trustworthiness.

Fed. R. Evid. 803(7). The Advisory Committee Note to
Rule 803(7) also states that the “[flailure of a record
to mention a matter which would ordinarily be

20a

mentioned is satisfactory evidence of its nonsexist-
ence.”" Thus, the absence of certain information in
minutes admissible under Rule 803(6) would be
admissible to show that the Board was not given that
information unless the circumstances indicated some
reason that these omissions from the record were

untrustworthy.

We note that Rule 803(6) excludes business records
if “the source of information or the method or cir-
cumstances of preparation indicate lack of trust-
worthiness,” Fed. R. Evid. 803(6), while Rule 803(7)
excludes records otherwise admissible under Rule
803(6) if “the sources of information or other cir-
cumstances indicate lack of trustworthiness,” Zd.
803(7). We think this repetition indicates that even if
a business record is deemed sufficiently trustworthy
to be admissible for its contents under Rule 803(6),
other circumstances might render omissions in that
record untrustworthy to show that the events omitted
did not occur. Thus, appellants’ concession that
the records are admissible under Rule 803(6) does
not necessarily preclude them from arguing that
omissions from the records are not admissible under
Rule 803(7).

'' The Advisory Committee Notes leave open the possibility
that the absence of evidence from a record is not hearsay at all.
Fed. R. Evid. 803(7) advisory committee notes (“While probably
not hearsay as defined in Rule 801, decisions may be found
which class the evidence not only as hearsay but also as not
within any exception. In order to set the question at rest in
favor of admissibility, it is specifically treated here.”). Moreover,
at least one court recently has noted the possibility that “evi-
dence that a record does not exist arguably is not hearsay at
all.” United States v. Cervantes-Flo.es, 421 F.3d 825, 832 n.4
(9th Cir. 2005). For present purposes we assume that such
evidence is hearsay, but admissible under Rule 803(7).

2la

The government introduced testimony from Enri-
quez, the vice-president who reported directly to
Sdnchez-Ardn, explaining that the minutes were
prepared by one of the executive vice presidents
before 1982, by Luis Pastor (an administrative as-
sistant to Mufoz-Franco) from 1982 to 1986, and by
Enriquez after that time. Enriquez stated that the
records prior to 1982 “were prepared and reviewed by
the board, they were set forth in a record book and
the secretary of the board and the president would
sign them.” The government submitted an affidavit
from Pastor, dated March 21, 2001, verifying that the
documents it introduced were, in fact, the minutes
from 1982 to 1986 and explaining that the minutes
“consist of transcriptions made from notes taken by
someone who was present at each meeting” and that
the minutes “were kept in the regular course of
business of Caguas .... [I]t was the regular business
practice of Caguas to compile and prepare [the
minutes] and to maintain them in its files.”

Finally, Enriquez explained that, after 1986,
“(w]lhen I was present I would take notes, subject to
the agenda and what was approved.” When Enriquez
was not present, Eliza Salina, the executive secretary
for Mufioz-Franco, would take notes at the meetings,
and Enriquez would then “review the files that were
prepared for use by the directors. And upon that
review, if there was something I did not understand
then I could ask the president.” Enriquez noted that
the minutes “were always ratified at the following
board meeting,” and that, after ratification, the
minutes would be stored either in the president’s
office or in the bank vault.

Appellants emphasize that Lugo (the president of
the Board) acknowledged on cross-examination that

22a

the minutes were only a summary of the meetings
and did not “word for word report discussions.”
However, a review of the Board and Executive Com-
mittee minutes reveals that, while not word for word
renditions of the meetings, the minutes capture more
than a skeletal outline of each meeting and include
descriptions of the considerations relevant to each
loan rather than simply the fact that the loan was
discussed and approved.”

After considering this evidence. we conclude that
the district court did not abuse its discretion in
allowing the use of the minutes to demonstrate that
the Board did not receive material information about
many of the transactions it considered. Enriquez’s
testimony and Pastor’s affidavit demonstrate that the
business records were prepared regularly after every
meeting, reviewed and ratified by the Board, and
stored securely following ratification. These circum-
stances do not indicate lack of trustworthiness.
Indeed, they permit a finding of trustworthiness.
Moreover, given the minutes’ thorough description of
information discussed at the meetings, we conclude
that the missing information relating to the loan
transactions was a “matter... of a kind of which a

* In a typical example involving a loan to a developer on a
project that did not involve any of the appellants, the Executive
Committee Minutes report: “Mr. Kareh explained that as a
result of discrepancies between the developer and the builder,
this project was parlyllized for many months. The developer
requested that he be allowed to substitute builders in order to
finish the project. Original builder was Las Américas Construc-
tion and the new builder would be a local small contractor
known as D.C. Inc. with ample experience in this field. Mr.
Kareh also explained that further delay in the conclusion of the
project would probably affect the final outcome of the project.”

23a

memorandum, report, record, or data compilation
was regularly made and preserved.” Fed. R. Evid.
803(7)."°

Il.

We proceed to the sufficiency of the evidence,
including in our analysis the previously-discussed
witness testimony and the absence of certain in-
formation from the Board minutes.

In considering the sufficiency of the evidence to
support a guilty verdict, “the relevant question is
whether, after viewing the evidence in the light most
favorable to the prosecution, any rational trier of fact
could have found the essential elements of the
crime beyond a reasonable doubt.” United States v.
Woodward, 149 F.3d 46, 56 (1st Cir. 1998) (quoting
Jackson v. Virginia, 443 U.S. 307, 319 (1979)). In
performing this inquiry, we “neither weigh|] the
credibility of the witnesses nor attempt [] to assess
whether the prosecution succeeded in eliminating
every possible theory consistent with the defendant’s
innocence.” United States v. Noah, 130 F.3d 490, 494
(1st Cir. 1997). Similarly, we “review {] a district
court’s denial of a defendant’s motion for a judgment
of acquittal ‘using the identical standard employed to
measure the sufficiency of evidence supporting a
guilty verdict.” United States v. Loder, 23 F.3d 586,
590 (1st Cir. 1994) (quoting United States v. Sanchez,
943 F.2d 110, 114 (1st Cir. 1991)).

Appellants wisely do not attempt to argue that it was
unnecessary for them to present such information to the Board.
As we will discuss more thoroughly in Section III, infra, this
information was highly material to the Board’s decisions re-
garding the loans.

24a
A. Bank Fraud with Respect to the Gutierrez Loans

The jury found all four appellants guilty of bank
fraud with respect to the Gutierrez loans. To prove
bank fraud under 18 U.S.C. 1344, the government
must show that the appellants knowingly engaged in
a scheme or artifice to defraud or obtain money from
a federally insured financial institution by means of
materially false statements or misrepresentations.
See United States v. Kenrick, 221 F.3d 19, 30 (1st
Cir. 2000). We first consider the evidence against
bank officers Mufoz-Franco and Sanchez-Aran, and
then the evidence against Gutiérrez and Umpierre-
Hernandez

1. Mufioz-Franco and Sanchez-Aran

In their positions as President and Executive Vice
President, respectively, Murfioz-Franco and Sanchez-
Aran were responsible for keeping the Board in-
formed of information relevant to current and pro-
spective loans. Moreover, Sanchez-Aradn was the
primary supervisor of the construction and com-
mercial loans to Modules, a Gutiérrez-owned com-
pany involved in many of the fraudulent trans-
actions. Munoz-Franco supported Sdanchez-Aran’s
recommendations on these projects. At trial, Lugo,
the president of the Board of Directors, explained
that he and the other Board members relied on the
reports prepared by Munoz-Franco and Sdanchez-

In full, 18 U.S.C. 1344 provides: “Whoever knowingly exe-
cutes, or attempts to execute, a scheme or artifice (1) to defraud
a financial institution; or (2) to obtain any of the moneys, funds,
credits, assets, securities, or other property owned by, or under
the custody or control of, a financial institution, by means of
false or fraudulent pretenses, representations, or promises;
shall be fined not more than $1,000,000 or imprisoned not more
than 30 years, or both.”

25a

Aran in making decisions regarding loans. Lugo
explained that it was not his job to “verify the
accuracy of information that was being given” to him
by the management of the bank, and added that he
“trusted fully that the information that was being
provided me was whole and true.”

Despite their responsibility to keep the Board fully
apprised, Mufioz-Franco and Sdnchez-Aran concealed
important information on many occasions. For exam-
ple, in July 1985 Caguas considered the Jardines de
Villa Alba project, for which Modules would be the
contractor. As of October 29, 1984, Modules had
completed none of the 212 units planned for the La
Marina project, even though the original loan
agreement from June 25, 1980 called for construction
to begin in thirty days and for seventy-five units to be
completed within twelve months. Despite the lack of
progress, the loan amount had been increased four
times between August 7, 1980 and September 17,
1981. Lugo testified that this poor performance
history was not discussed during the loan presen-

tation for the Jardines de Villa Alba project. Lugo
stated unequivocally that he would have wanted to
know Modules’ performance history in evaluating the
Jardines de Villa Alba loan, demonstrating the
materiality of such information.

Lugo further testified that, after the original loan
presentation, Mufioz-Franco and Sanchez-Aran con-
tinued to withhold information from the Board
regarding the Jardines de Villa Alba loan. Although
the record shows $231,000 was paid to Modules
before the Jardines de Villa Alba loan agreement was
signed, even at trial Lugo expressed surprise that
this had happened and stated that “it would have
been difficult for me to believe that” this occurred.

26a

More than a year after the Jardines de Villa Alba
loan was approved, in September 1986, Lugo did not
know that only one house had been built on the
project. Lugo also testified that as of September 1986
the performance history of Modules “as to con-
struction of homes that were to be constructed versus
the ones that were constructed . . . was not dis-
cussed.” Finally, on January 10, 1988, Lugo signed
the Denby letter, which was prepared by Munoz-
Franco and which referred to the “units” built on.
Jardines de Villa Alba, without realizing that only
one house had been built on the project.

Lugo also testified that Mufioz-Franco and San-
chez-Ardn did not inform him and the Board of
other material information relating to Modules. For
example, he did not know that Modules remained the
contractor after the La Marina, Country Club, and
Levittown projects were sold from Transglobe to
DO.W in October 1984. He also did not know that,
between 1984 and 1986, Modules did not make any
principal or interest payment on any loan to Caguas
with funds generated from its own business as
opposed to proceeds from other loans. Likewise, he
was not informed, when the Board approved the sale
of Modules to Camero on September 10, 1986, in
conjunction with a restructuring of its loans, that
approximately seventy percent of Modules’ debt was
with Caguas and that over seventy-one percent of
Modules’ assets were intangibles.”

' The high percentage of assets that were intangible might
raise concerns about the ability of Modules to pay off its debts.
Such information would be relevant to the Board’s decision

process.

27a

Finally, Lugo testified that when the board ap-
proved a loan of $1,412,077 for land acquisition for
the Cerrovista project, for which Modules also was
the contractor, Mufioz-Franco and Sanchez-Aran did
not advise him or the Board that the cost of the land
was actually only $480,000—in other words, that
$932,177 would be used to make principal and in-
terest payments on other Modules loans.

Lugo’s testimony is corroborated by the absence of
this and other material information from the Board
minutes. Although the government did not rely
heavily on the absence of such information, we have
found these omissions properly admissible under
Federal Rule of Evidence 803(7) and note that they
lend support to the prosecution’s case.

There was substantial evidence that Mufoz-Franco
and Sanchez-Aran withheld all of this information
from the Board with full knowledge of the problems
with Modules and other Gutierrez companies. Anabel
Enriquez, who reported directly to Sanchez-Aran,
explained that the handling of Gutiérrez certifi-
cations at Caguas concerned her “[bJecause prac-
tically monthly, each time they invoiced[,] the
certifications would be ahead of the construction.”
She discussed her concerns with Mufioz-Franco at
least by the time La Marina was going to be sold to
DO.W in 1984, and with Sanchez-Aran around the
same time. She also discussed her concern with
Munioz-Franco that, following the sale, Modules
would remain a contractor for La Marina, Levittown,
and Country Club. However, Munoz-Franco and
Sanchez-Aran took no action in response to En-
riquez’s concerns.

Finally, Mufoz-Franco and Sdanchez-Aran took
steps to conceal their misrepresentations from both

28a

internal and external auditors. Juan Hernandez,
Caguas’ internal auditor, testified that, in 1981,
Kareh (the assistant vice president of the construc-
tion loan department) initially provided information
in connection with an audit of the construction loan
department, but, after a short meeting with Sanchez-
Aran, Kareh stopped providing the information
Hernandez requested. Hernandez further testified
that, although he requested the auditing committee
“several times” between 1980 and 1990 to allow him
to audit the construction loan department, Mujfioz-
Franco and Sanchez-Aran did not allow the audit to
take place. In a letter dated January 22, 1985, an
external auditing firm, Stephen P. Bradics and
Company, recommended “that the scope of internal
auditing be expanded to include . . . construction
loans.” After Caguas received this letter, Hernandez
again recommended to the audit committee on
several occasions that he should be allowed to audit
the construction department, but he still was not
allowed to do so. The audit committee minutes reflect
his recommendation at several meetings at which
Munioz-Franco and Sanchez-Aradn were present. At
one meeting, on January 28, 1988, Mufnoz-Franco
responded by telling Hernandez that “construction
loans was the area most audited by senior manage-
ment.””*° Sdnchez-Ard4n heard and agreed with
Mujfioz-Franco’s response, and Sdanchez-Ardn had
also made similar statements to Hernandez in the
past. How-
ever, Hernandez was never provided with any in-
ternal audit conducted by either Mufioz-Franco or
Sanchez-Aran.

* Hernandez testified that “senior management” consisted of
Munoz-Franco and Sanchez-Aran.

29a

Munoz-Franco and Sanchez-Aran also concealed
information regarding Caguas’ lending practices
from external authorities. Critically, Mufioz-Franco
drafted and obtained Board approval to send the
Denby letter, which states: “This Board of Directors
wishes to state in no unclear and uncertain terms
that it has never considered and much less approved
any policy or practice of permitting borrowers to use
construction loan proceeds to satisfy or make interest
payment(s] on other unrelated loans.””’ At the time of
the letter, however, Munoz-Franco and Sanchez-Aran
had, as discussed above, approved loans for such
purposes on many occasions.

Taken in the light most favorable to the govern-
ment, the evidence demonstrates that Mufoz-Franco
and Sanchez-Aran repeatedly concealed material
information regarding the status of the Gutierrez.
loans from the Board, approved disbursements for
work that was not completed, and prevented audits.
Such conduct caused Caguas to continue lending
money to Gutiérrez-owned companies despite the
companies’ financial instability, which demonstrates
appellants’ knowing scheme to defraud Caguas by
means of material misrepresentations within the
meaning of 18 U.S.C. 1344. Consequently, we affirm
the district court’s finding that a rational jury could
have found Munoz-Franco and Sanchez-Aran guilty
of bank fraud.

2. Gutiérrez and Umpierre-Hernandez

The record also contained considerable evidence
from which a reasonable jury could have found

" At trial, Joseph Gonzalez (an examiner for the Federal
Home Loan Bank) testified that “{a] loan that has a different
borrower, different property to me would be an unrelated loan.”

30a

beyond a reasonable doubt that Gutiérrez and
Umpierre-Hernandez knowingly engaged in a scheme
to defraud Caguas by misrepresenting material
information. The certifications they submitted and
signed contained many misrepresentations. For ex-
ample, on the Los Mameyes project, between
December 9, 1985 and January 10, 1986, Gutiérrez
and Umpierre-Hernandez submitted nine certifi-
cations attesting to the manufacture of 74 housing
units and requesting payments totaling $380,000,
even though the inspector’s report stated that only 19
houses had been built. Between January 16 and
February 21, 1986, Gutiérrez and Umpierre-Hernan-
dez submitted 10 more certifications attesting to the
manufacture of 90 additional housing units and.
requesting payment of approximately $500,000, at
which point payment had been disbursed for at least
164 housing units even though only 40 units had
been manufactured. As of February 25, 1986, Gutiér-
rez and Umpierre-Hernandez had certified the com-
pletion of 200 units, but an inspection report dated
March 23, 1986, indicated that only 55 units had
been built. On March 31, 1986, Gutiérrez and
Umpierre-Hernandez submitted a certification re-
questing $69,000 for “payment of subcontractors”
along with a list of interest payments they had made
on other projects, including Jardines de Villa Alba,
Levittown, Country Club, La Marina, and Los
Caciques, which equalled exactly $69,000. Finally, on
June 26, 1986, Gutierrez and Umpierre-Hernandez
submitted a “special certification” of $85,000 with no
justification for work allegedly completed; Kareh
testified that such a certification was not a usual
practice. Sanchez-Aran authorized the disbursements
based on these certifications.

sla

Gutiérrez and Umpierre-Herndndez submitted
similar certifications for work not completed on other
projects. For example, on the Jardines de Villa Alba
project, Modules hud installed only one unit as of the
time of the Denby letter on January 10, 1988; how-
ever, on October 22, 1985 Gutierrez and Umpierre-
Hernandez certified that twenty-two units had been
completed, causing $626,000 to be disbursed to
Modules.

Gutiérrez and Umpierre-Hernandez perpetuated
their scheme by recruiting other developers to obtain
loans from Caguas on the condition that they use
‘Modules as the contractor. This conduct allowed
Gutiérrez and Umpierre-Hernandez to obtain new
funding for Modules, which they would then use to
pay down prior loans and -keep Modules from
collapsing. Developer Burns, the original owner of the
‘Cerrovista project, was a typical example. After
unsuccessfully applying to Caguas for a loan to build
residential housing on land he owned, Burns met
with Umpierre-Hernandez, who told him that if he
used Modules as his contractor and'signed a $2
million note he would be approved for a loan. A week
later Burns received financing for the Cerrovista
project. He testified that the approval was “[dle-
finitely[] because of the use of Modules.” Burns met
with Umpierre-Hernandez on “many other occa-
sions,” and, after problems arose with the Cerrovista
project, with UmpierreHernandez and Sanchez-Aran
in Sanchez-Aran’s office. Subsequently, Umpierre-
Hernandez told Burns that the project would be sold
to Iantho, and explained that “this project was going
to contribute to paying off some interest for some of
the projects that were in default,” which caused

32a
Burns to understand “that was the reason... I was

918

rejected as sponsor.

On September 10, 1986, Sanchez-Ardn presented,
and the Board approved, a loan of $8.9 million to
Iantho Corporation to take over the Cerrovista proj-
ect; the loan agreement specified that Modules would
be the contractor for the project’s two hundred units.
Burns testified that, around the time the project was
being sold, he received confirmation that the De-
partment of Transportation’s plans to build a hospital
and expressway would cause the development of four
lots of the project to be “frozen.” When told the news,
Umpierre-Hernandez responded, “hide it, boy.” On
September 28, 1986, Cerrovista was sold to Iantho
with no mention of the impending development.

Taken in the light most favorable to the govern-
ment, the evidence shows that Gutiérrez and Um-
pierre-Hernandez knowingly concealed information
relevant to the viability of the Cerrovista project and
submitted many certifications for work that was not
completed. To sustain their schemes, they recruited
other developers and helped them receive funding
from Caguas on the condition that these developers
use Modules as a contractor. These activities caused
Caguas to continue lending money to Gutiérrez
owned companies despite the companies’ financial
instability, providing an ample basis for a jury to find
that appellants knowingly schemed to defraud
Caguas by means of material misrepresentations
within the meaning of 18 U.S.C. § 1344. Conse-

‘* Gutiérrez and Umpierre-Hernandez implemented similar
schemes involving developer Montilla on the Jardines de Villa
Alba project and developer Santiago on the Caciques project.
The contours of these schemes are similar to that involving
Burns, and thus we need not recount them in detail here.

33a

quently, we conclude that a reasonable jury could
have found beyond a reasonable doubt that both
Gutiérrez and Umpierre Hernandez were guilty of
bank fraud.

B. Conspiracy with Respect to the Gutiérrez Loans

The four appellants were charged with conspiring,
in violation of 18 U.S.C. § 371, to commit bank fraud
(18 U.S.C. § 1344), misapply bank funds (18 U.S.C.
§ 657), and make false entries in the books and
records of the bank (18 U.S.C. § 1006). To establish a
conspiracy, the government must prove beyond a
reasonable doubt that (1) a conspiracy existed; (2) the
defendant knew of and voluntarily participated in the
conspiracy; and (3) there was an overt act in fur-
therance of the conspiracy. United States v. Blasini-
Lluberas, 169 F.3d 57, 67 (1st Cir. 1999). The -
government must prove both intent to agree and
intent to commit the substantive offense. United
States v. Rivera-Santiago, 872 F.2d 1073, 1079 (1st
Cir. 1989). A formal agreement is not required, Am.
Tobacco Co. v. United States, 328 U.S. 781, 809
(1946); rather, “(t]he agreement may be shown by a
concert of action, all the parties working together
understandingly, with a single design for the ac-
complishment of a common purpose.” Am. Tobacco
Co. v. United States, 147 F.2d 93, 107 (6th Cir. 1944);
see also Adver. Special Nat'l Ass’n v. FTC, 238 F.2d
108, 115 (1st Cir. 1956). Where, as here, the in-
dictment alleges a conspiracy to commit multiple

‘* In pertinent part, 18 U.S.C. 371 states: “If two or more
persons conspire either to commit any offense against the
United States, or to defraud the United States, ... and one or
more of such persons do any act to effect the object of the
conspiracy, each shall be fined under this title or imprisoned not
more than five years, or both.”

34a

offenses, the charge may be sustained by sufficient
evidence of conspiracy to commit any one of the
offenses. See Griffin v. United States, 502 U.S. 46, 56-
57 (1991); see also United States v. Wedelstedt, 589
F.2d 339, 341-42 (8th Cir. 1978) (“[Plroof that
[defendant] agreed to commit one of the multiple
illegal objectives of the conspiracy sufficed to sustain
the conviction on that count.”).

On the verdict form, the jury found Mufioz-Franco,
Sadnchez-Aran, Gutiérrez, and Umpierre-Hernandez
guilty of conspiracy “as charged in the indictment.”
Docket Nos. 1291, 1292, 1294, 1295. In considering
appellants’ motion for judgment of acquittal, the
district court found that there was more than enough
evidence with respect to bank fraud to sustain the
conspiracy conviction, and thus did not review the
evidence concerning the misapplication and false
entry crimes.

We agree with the district court’s assessment.
First, there was substantial evidence of an agreement
among the four men to defraud the bank. Sanchez-
Aran directly supervised the Gutiérrez loans and
worked closely with Mufioz-Franco on the loans.
Enriquez testified that Mufioz-Franco and Sanchez-
Aran always reached an agreement regarding the
treatment of these loans. Gutiérrez and Umpierre-
Hernandez submitted many certifications for work
not yet completed, and Sanchez-Aran then repeatedly
approved disbursements for this work. SAnchez-Aran
also facilitated Gutiérrez’s efforts to secure new
borrowers by ensuring that a loan would be approved
if Modules was used as a contractor. Sanchez-Aran
and Umpierre-Hernandez met frequently regarding
the status of the Gutiérrez companies. Burns testi-
fied, for example, that he met with Umpierre-Her-

35a

nandez many times in Sanchez-Aran’s office regard-
ing the Cerrovista project. Finally, Mufoz-Franco
and Sdanchez-Aran failed to disclose material infor-
mation to the Board on many occasions, and this joint
failure further demonstrates their collaboration in
defrauding the bank.

Given the many instances of concealing the
Gutiérrez companies’ performance from the Board of
Directors, submitting certifications for work not
completed, authorizing disbursements for such work
and preventing audits, a reasonable jury could easily
find the other two elements of conspiracy: that
appellants knew of and participated voluntarily in
the conspiracy, and that each committed overt acts in
furtherance of the conspiracy. Viewed as a whole, this
synchronized pattern of conduct demonstrates appel-
lants’ agreement to maintain the appearance of
financial viability of the Gutiérrez corporations by
securing new loans to make payments on outstanding ©
loans. Thus, we find that a reasonable jury could
have found each element of conspiracy beyond a
reasonable doubt with respect to each of the four
appellants.

C. Misapplication of Bank Funds

The jury found all four appellants guilty of mis-
application of bank funds under 18 U.S.C. 657 for a
single transaction related to the Cerrovista project.
The crime of misapplication eludes easy definition.”

” In pertinent part, 18 U.S.C. § 657 provides: “Whoever, being
an officer, agent or employee of or connected in any capacity
with the Federal Deposit Insurance Corporation . . . or savings
and loan corporation or association authorized or acting under
the laws of the United States . . . embezzles, abstracts, purloins
or willfully misapplies any moneys, funds, credits, securities or

36a

As we have previously noted, “(t]he problem that has
confronted and perplexed the courts is that there is
no statutory definition or common law heritage that
gives content to the phrase ‘wiilfully misapplies.“
United States v. Wester, 90 F.3d 592, 595 (1st Cir.
1996). However, we have held that misapplication
has two key elements: (1) wrongful use of bank funds;
and (2) intent to injure or defraud a bank. Blasini-
Lluberas, 169 F.3d at 63. We have also explained that
“the same facts can easily be the basis for deeming
the conduct to be wrongful and the intent fraudulent;
both misapplication and scienter are required.”
Wester, 90 F.3d at 595. Finally, the misapplication
statute applies only to officers, agents, and employees
of a bank. Thus, appellants who do not hold one
of these positions—here Gutiérrez and Umpierre-
Hernandez—may not be convicted as principals for
misapplication, but may be convicted as aiders and
abettors. See Giragosian v. United States, 349 F.2d
166, 167 (1st Cir. 1965) (“Since [defendant] was not
an officer, director, agent or employee of the bank, he
could not be guilty as a principal . . . for mis-
application of the bank’s funds, but only as an cider
and abettor.”).”

A reasonable jury could have concluded that ap-
pellants’ handling of the Cerrovista loan constituted
misapplication. The original loan offering, which was

other things of value belonging to such institution . . . [is guilty
of misapplication of bank funds)].”

*' Giragosian construed 18 U.S.C. § 656, which deals with
banks rather than savings and loan associations. However, “[i]n
the absence of legislative history to suggest that there is any
substantive difference in meaning, we find the reasoning in
cases construing § 656 equally applicable to our reasoning” in
cases involving 657. Blasini-Lluberas, 169 F.3d at 63 n.8.

37a

prepared according to Sanchez Aran’s instructions,
designated $1,412,177 for land costs and $855,323 for
“partial assumption of other loans.”” This document
did not disclose the purpose for which the funds were
actually used. Of the $1,412,177 designated for land,
only $480,000 was used to purchase land for the
project. The remaining $932,177 was disbursed to
the Gutiérrez-owned Quintas de Humacao company
and immediately applied to other Gutiérrez projects:
principal and interest on the Quintas de Fajardo
loan, interest on the Las Gaviotas loan, and interest
on a Modules commercial loan.

The documents associated with the Cerrovista loan
demonstrate appellants’ intent to defraud Caguas by
redirecting these funds. Although the. settlement
statement” for the Cerrovista loan, dated Sep-
tember 29, 1986, lists a disbursement of $932,177 for
“repayment of other loan” and lists the payee as
“Quintas de Humacao Inc. & Caguas Federal Sav-
ings,” these disclosures appear in a markedly dif-
ferent type, as does the total loan amount. Kareh
testified that this different type indicates that “the
entry was made later or at another place,” allowing
an inference that the document was amended to
make it appear that the Board had approved the use

” The loan offering was a document prepared by bank man-
agement (often Sanchez-Aran) that proposed the terms of a loan
to be offered to a borrower and was then submitted to the. Board
for approval.

* Kareh testified that the settlement statement “sums up the
conditions for the loan, the amount of the money, the payouts
that have been made for the loan and whatever pending bai-
ances may remain for the loan in process” and was “created and
maintained in the regular course of business of the construction
loan department.”

38a

of loan proceeds to make payments on other loans.
This inference is bolstered by the fact that the loan
settlement statement was not prepared until after
the Board had approved a loan. Kareh also testified
that, although the $855,323 amount designated for
“partial assumption of other loans” was listed on the
loan offering and disbursed on the date of closing,
the $855,323 amount was omitted from the settle-
ment statement at Sanchez-Aran’s instruction.” This
omission concealed the fact that two separate
disbursements, in the amounts of $932,177 and
$855,323, were used to pay down other loans.

Each appellant was sufficiently involved in con-
cealing the use of funds to allow an inference of
intent to defraud. Sanchez-Aran drafted the original
loan offering, which did not disclose that the
$932,177 difference between the amount allocated for
land purchase and the amount spent on land would
be used to pay principal and interest on other loans.
Moreover, according to Kareh, Sanchez-Aran explic-
itly instructed him to omit the $855,323 amount from
the loan settlement document. A jury could infer that
Munoz-Franco helped to conceal this wrongful use of
funds, thereby intentionally defrauding Caguas,
based on his supervisory role on the Gutiérrez loans
and his regular responsibility of conveying infor-
mation to the Board. Gutiérrez and Umpierre-
Hernandez were also involved in the wrongful use of
funds: they endorsed the checks, accepted the funds,
and immediately applied these funds to pay down
their other loans with the bank. Although appellants

“ The district court’s discussion of this issue suggests that
$932,177 was disbursed instead of $855,323, when in fact both
amounts were disbursed but the $855,323 was not disclosed on
the settlement statement.

39a

assert that the loan settlement documents demon-
strate that the transaction was disclosed to the
Board, the record indicates that the loan settlement
statement was prepared after the loan had already
been approved.

Appellants attempt to counter the charge by
segregating the activities relating to the Cerrovista
loan into two separate transactions: the disburse-
ment of the $932,177 land purchase differential to
Quintas de Humacao, and the use of those funds to
pay down other Gutiérrez loans. They argue that, at
the time the funds were disbursed to the Gutiérrez-
owned Quintas de Humacao, they ceased to be “bank
funds” under 18 U.S.C. § 657 and thus cannot ied
port a misapplication violation.

We do not find this technicality pertinent. The
disbursement of funds from the Cerrovista loan to
Gutiérrez-owned companies, and the subsequent use
of these loans to pay down other Gutiérrez loans,
was a single unified transaction. The district court
explained:

The funds did not cease to be controlled by the
express purpose for which they were disbursed.
The fact the $932,177 check was endorsed does .
not change the express purpose for which said
funds were to be used. The second transfer, the
Gutierrez’s endorsement back to Caguas Central
for the repayment of four separate loans, is still
the use of bank funds and subject to mis-
application.

By expressly designating these funds for “repayment
of other loan([s],” Munoz-Franco and Sanchez-Aran
retained control over the funds even if the funds
nominally changed hands. Moreover, Mufioz-Franco

40a

and Sanchez-Aran supervised the entire transaction,
as demonstrated by four entries in Caguas’ ledgers
showing the transfer of funds to the Gutiérrez
accounts.

Critically, appellants also ignore the separate con-
cealment of the $855,323, which although it was
listed on the original loan application, was left off, of
the loan settlement statement of September 29, 1986
at Sanchez-Aran’s explicit instruction. Although the
disbursement of the $855,323 was disclosed to the
Board, the fact that this disbursement was left off the
loan settlement statement indicates the bank
officials’ efforts to conceal the fact that two separate
disbursements, in the amounts of $855,323 and
$932,177, were used to pay down other loans. In
short, there was more than sufficient evidence for a
reasonable jury to conclude that appellants engaged
in wrongful use of bank funds with the intent to
defraud the bank.

D. Bank Fraud with Respect to Mirandes Loans

The jury also found appellants Mufioz-Franco and
Sanchez-Aram guilty of bank fraud in violation of 18
U'S.C. § 1344 with respect to the Mirandes loans.
The Mirandes scheme involved many of the same
elements as the Gutiérrez loans. In September 1981,
Munoz-Franco asked Mirandes to take over owner-
ship of a project called Reparto Valenciano, and
Mirandes, then the contractor for the project, agreed.
At the time the project was in debt to Caguas for $2.2
million, and delays and other problems continued
after Mirandes assumed ownership. On an ongoing
basis, Mufioz-Franco and Sanchez-Aran supervised
the transfer of funds from other projects to pay down
the debt on the Reparto Valenciano project. For
example, on September 30, 1986, approximately $2.2

4la

million was applied to the Reparto Valenciano project
from other Mirandes projects.” Mufioz-Franco and
Sanchez-Aran did not disclose these transfers of.
money among various Mirandes projects to the
Board. After the Reparto Valenciano debt increased
to $3.2 million, Mirandes received five contracts from
the Puerto Rico Housing Department to build basic
housing. Although Caguas initially denied Mirandes’
application for funding for these projects, it sub=
sequently agreed to finance the Villas de Gurabo
project if Mirandes would agree to apply the profits of
that project to the debt and interest of the Reparto
Valenciano project. These transfers temporarily
sustained the Mirandes projects, but the decreased
funds available to successive projects ultimately
made it impossible for those projects to be completed
or to yield profits.

Both Munoz-Franco and Sanchez-Aran were inti-
mately involved with the administration of the
Mirandes loans. Sanchez-Aran met with Mirandes on
many occasions, including, during one seven or eight
month period, meetings every fifteen days. Sanchez-
Aran was involved in most of the disbursements for
the Mirandes projects, whereas for other loans he
was typically involved only if a problem arose.
Munioz-Franco was also involved in the Mirandes
loans: he originally met with Mirandes to get him
to take over the loans, met with Mirandes several
times thereafter, was regularly informed of the loans’

progress, and reported on the loans’ status to the
Board.

* These transfers occurred on the last day of the’ bank’s fiscal
year, thus improving the appearance of Caguas’ finances to
anyone reviewing the bank’s records.

42a

Beginning thirty days after the Reparto Valenciano
loan agreement was signed, Sanchez-Aran authorized
many certifications for completed work. With two
exceptions, no work on the project had been com-
pleted at the time of the authorizations. On several
occasions, a transfer of funds from one loan to
another or an increase in the amount of a loan was
authorized without the approval of the loan com-
mittee or the Board. Mirandes also testified that the
disbursement schedule for loans “normally . . . wasn’t
complied with because money was taken out to pay
interest.” Thus, the disbursement schedule that the
Board approved was not the schedule that Munoz-
Franco and Sanchez-Aran subsequently followed.

Enriquez testified such practices were not standard
at Caguas; along with the Gutiérrez loans, the
Mirandes loans were the only ones for which
disbursements were authorized for work that was not
completed. According to Enriquez, the Mirandes
projects commonly received “special” certifications,
which meant that “[w]hen one project didn’t have a
line [of credit] it would be taken from another
project.” When regular certifications were submitted,
they would have an itemization of expenses attached;
special certifications would not include such an
itemization and thus would not disclose the des-
tination of the funds.

Sanchez-Aradn also caused Caguas to finance the
sale of land from one Mirandes company to another
in order to pay interest en the Reparto Valenciano
loan. On September 11, 1984, Mirandes’ company
Deproco purchased property for $60,000, and, three
months later, sold the property to Bubao, another
Mirandes company, for $94,000. The proceeds from
the sale were used to pay interest on the Reparto

43a

Valenciano loan. The sale occurred despite the fact
that, according to Mirandes, the land was not worth
the purchase price and no improverments to the land
were made in the interim. The minutes did not reflect
that the Board was informed of the transaction.

After Mirandes was unable to improve the finances
of the Reparto Valenciano project, he was awarded
five projects from the Housing Department, including
Villas de Gurabo, but was denied funding from
Caguas. At that point, Mirandes met with Mufnoz-
Franco and Sanchez-Aran and asked to be released
from the debt on the Reparto Valenciano project
because he “felt that the debt was not my problem”
and “needed to seek financing for the project from
another bank.” Mufioz-Franco and Sdanchez-Aran
refused to release Mirandes from the debt. Sub-
sequently, however, Kareh informed Mirandes that
Caguas would give him financing on Villas de
Gurabo, but that the proceeds from that loan would
have to be used to pay off the debt on the Reparto
Valenciano project. Mirandes reluctantly agreed, and
this plan was implemented. Again, the minutes did
not reflect that the Board was informed of this
transaction.

The Denby letter provides further support for the
jury’s finding of fraud. Drafted and signed by Munioz-
Franco, it explicitly denies that Caguas’ Board
approved the practice of borrowers using construction
loan proceeds to pay interest on unrelated loans. At
the time of the letter, however, Mufoz-Franco and
Sanchez-Aran had on many occasions authorized the
payment of debts on the Reparto Valenciano project
with funds from other Mirandes loans. The fact that
the Denby letter was signed by all the members of
the Board would allow a reasonable jury to conclude

44a

beyond a reasonable doubt that Mufioz-Franco mis-
represented the practices associated with the Miran-
des loans to the Board.

This circumstantial evidence of the requisite intent
was bolstered by more explicit evidence of appellants’
knowledge. Mirandes was concerned that, on the
Reparto Valenciano project, “some projects were
being emptied out in order to deal with others” and
worried that “it was going to become paralyzed.”
Mirandes testified that he and Sanchez-Aran “spoke
constantly” about his concerns, and that he also
expressed his concerns to Mufoz-Franco. Despite
Mirandes’ repeated statements of concern, Sanchez-
Aran explicitly told Mirandes that the practices had
to continue. In many cases, the bank authorized the
disbursements directly rather than seeking authori-
zation from Mirandes, and Mirandes testified that,
although he knew of these disbursements; he was not
in agreement with them. The evidence that ap-
pellants continued with their scheme even over
Mirandes’ objections demonstrated that they acted
deliberately to defraud the bank.

Taken in the light most favorable to the govern-
ment, the evidence shows that Mufioz-Franco and
Sanchez-Aran repeatedly authorized disbursements
for work that was not completed and concealed
relevant information from the Board. As a result of
these activities, Caguas continued lending money to
Mirandes-owned companies despite their financial
instability. This course of conduct constitutes a
knowing scheme to defraud Caguas by means of
material misrepresentations within the meaning of
18 U.S.C. § 1344. Consequently, we conclude that a
reasonable jury could have found beyond a rea-
sonable doubt that Munoz-Franco and Sanchez-Aran

45a

were guilty of bank fraud with respect to the Miran-
des loans.

E. Conspiracy with Respect to Mirandes Loans

The jury also found Mufioz-Franco and Sdanchez-
Aran guilty of conspiracy with respect to the
Mirandes loans. Although there was no formal
agreement among Munoz-Franco, Sanchez-Aran aid
Mirandes, the three acted in concert to defraud the
bank. As described above, Mufioz-Franco originally
approached Mirandes to assume the Reparto Valen- |
ciano loans, and Mirandes agreed. After this initial
agreement, Mirandes met frequently with Sanchez-
Aran and on several occasions with Mufioz-Franco.

The appellants participated voluntarily in the
conspiracy and took overt actions in its furtherance.
When the Reparto Valenciano project was unable to
pay its debts, Mufioz-Franco and Sdanchez-Aran
always attempted to find solutions to sustain the
project, frequently by transferring funds from one
project to another. Such transfers, as well as their
approval! cf certifications for work not completed,
constituted overt acts in furtherance of the con-
spiracy. Thus, we find sufficient evidence to sustain
the jury’s verdict on charges of conspiracy to commit
- bank fraud in violation of 18 U.S.C. § 1344 with
respect to the Mirandes loans.

The district court held that the evidence of
conspiracy to commit bank fraud was sufficient in
itself to sustain the conspiracy charges, but also
noted that there was sufficient evidence that ap-
pellants conspired to misapply bank funds in
violation of 18 U.S.C. § 657 and make false entries in
violation of 18 U.S.C. § 1006. However, because we
agree with that court’s assessment of the bank fraud

46a

conspiracy, we need not discuss the other two bases
for the conspiracy conviction.

IV.

Having found sufficient evidence to support the
convictions, we must now address three of appellants’
claims that challenge the validity of the proceedings.
First, appellants claim that the charges filed against
them were barred by the statute of limitations.
Second, they argue that their convictions violated
the Ex Post Facto Clause. Finally, they contend
that their convictions were invalid because of pre-
indictment and pre-trial delay.

A. Statute of Limitations

Under 18 U.S.C. § 3293, an individual may not be
charged with bank fraud or conspiracy to commit
bank fraud unless the indictment is returned within
ten years after the commission of the offense.”
Appellants raise three arguments regarding this
statute of limitations. First, they argue that the
original indictment was untimely. Next, they argue
that the First, Second, and Third Superseding
Indictments substantially amended the original
indictment, do not relate back, and consequently
were untimely. Finally, they argue that the district
court erred in failing to instruct the jury on the
statute of limitations.

1. Timeliness of Original Indictment

We review de novo a district court’s decision not to
dismiss on statute of limitations grounds. Lépez-
Gonzdles v. Mun. of Comerio, 404 F.3d 548, 551 (1st

* Appellants do not contend that the misapplication charges
against them were outside the statute of limitations.

47a

Cir. 2005). Here, the original indictment was re-
turned on November 22, 1995. Appellants contend
that.the Board was fully informed of the practices at
issue in two of the alleged violations—bank fraud and
conspiracy on the Gutiérrez loans—by a regulator
report dated August 31, 1985. Consequently, they
argue, any deception in the scheme ended more than
ten years prior to the original indictment, making the
indictment untimely for those charges.

In light of the activities discussed in Section III,
supra, most of which took place after November 22,
1985, appellants’ argument overstates the signifi-
cance of the regulator report in question. The report
describes several Modules loans and expresses gen-
eral concern about Modules’ financial state. The
report notes that the loans “are considered to be
substandard loans subject to special comment since
the future viability of the main borrower, Modules,
could be impaired by uncertainties involving the
collectibility of an accounts receivable due from an
affiliated party.” These general statements do
nothing to inform the Board of such practices as the
use of proceeds from one loan to make payments on
another loan or the ongoing certification of and
payment for work that was not completed. Moreover,
the report itself contains certain misleading state-
ments by Sanchez-Ardn. For example, despite his
knowledge of Modules’ uncertain financial status and
poor performance on several projects, he defended the
loans to Modules by explaining that “the borrower
should have sufficient funds to satisfy the loans in a
timely manner.” Thus, the district court did not err in
ruling that the original indictment was timely.

48a
2. Relation Back of Superseding Indictments

Appellants next argue that each of the three
superseding indictments materially broadened and
substantially amended the charges against them
and, consequently, do not relate back to the date of
the original indictment. As a result, they argue
that these indictments are untimely because they
allege conduct that concluded more than ten years
previously.

In United States v. O’Bryant, 998 F.2d 21, 23 (1st
Cir. 1993), we held that “a superseding indictment
which supplants a timely-filed indictment . . . is itself
to be regarded as timely . . . so long as it neither
materially broadens nor substantially amends the
charges against the defendant.” Consequently, “the
superseding indictment relates back to the filing date
of the original indictment so long as a strong chain of
continuity links the earlier and later charges.” Id. at
24. We emphasized that “notice-related concerns .. .
comprise the touchstone for determining when a
superseding indictment materially broadens or
substantially amends earlier charges,” explaining
that a timely indictment serves notice by apprising
defendants “that they will be called to account for
their activities and should prepare a defense.” Id.
(quoting United States v. Grady, 544 F.2d 598, 601
(2d Cir. 1976)).

In this case, the original indictment charged the
four appellants with bank fraud and conspiracy, ©
alleging fifty-eight overt acts spanning nearly a
decade and involving unlawful disbursement of bank
funds by Mufioz-Franco and Sanchez-Aran, unlawful
receipt of the funds by Gutiérrez, Umpierre-Her-
nandez, and Mirandes, and concealment of these
activities from Caguas’ Board of directors and reg-

49a

ulatory agencies. The First Superseding Indict-
ment, returned on March 5, 1997, added allegations
concerning five additional loan projects and forty-four
overt acts and added two additional defendants.”
It also changed the alleged starting date of the
conspiracy from December 1981 to June 1980,
lengthening the duration of the conspiracy from eight
years and five months to nine years and eleven
months. The Second Superseding Indictment, re-
turned on May 13, 1997, added allegations about two
more loan projects and ten overt acts. Finally, the
Third Superseding Indictment, returned on March 6,
1998, separated the allegations relating to the
Gutiérrez and Mirandes loans, which the previous
indictments had presented as a single unitary
conspiracy, into two separate conspiracies set forth in
separate counts.

We conclude that these revisions do not materially
broaden or substantially amend the original indict-
ment. The government “is not limited in its proof at
trial to those overt acts alleged in the indictment.”
United States v. Adamo, 534 F.2d 31, 38 (3d
Cir. 1976). Therefore, allegations of additional loan
projects and overt acts in the superseding indict-
ments do not broaden the original indictment; they
simply provide more specific examples to substan-
tiate the original fraud and conspiracy charges.

Similarly, the addition of eighteen months to the
beginning of a conspiracy spanning nearly a decade
does not materially broaden the scope of the
indictment. Virtually none of the conduct supporting
appellants’ convictions occurred between June 1980

* Defendant Enrique Gutierrez was acquitted by the jury,
and defendant Rafael Dominguez Wolff died before trial.

50a

and December 1981, and the dates were expanded
primarily to allow factual completeness by including
the dates of the original loans Caguas extended to
various companies. Thus, appellants had adequate
notice of the charges against them despite the
expanded time frame.”

Finally, we find that the separation of the original
unitary bank fraud and conspiracy scheme into two
separate schemes, one alleging bank fraud and
conspiracy with respect to the Gutierrez loans and
one alleging bank fraud and conspiracy with respect
to the Mirandes loans, did not materially broaden or
substantially amend the indictment. Mufoz-Franco
and Sanchez-Aran still had to explain the same set of
actions. With respect to Gutierrez and Umpierre-
Hernandez, the division also provided adequate
notice. The only difference was that they no longer
had to contend with the allegations that related only
to the Mirandes loans. Thus, we conclude that
the Third Superseding Indictment relates back to
November 22, 1995, the date of the original in-
dictment, and find no error in the district court’s
_refusal to dismiss the indictment for untimeliness.”

* Courts have réeognized an expanded time span as a sub-
stantial amendment on!y when the expansion was far more
significant than the ome here, and then only in conjunction with
numerous other factors. See, e.g., United States v. Ratcliff, 245
F.3d 1246, 1253-54 (11th Cir. 2001) (finding that a superseding
indictment materially broadened or substantially amended the
original indictment when it increased the length of time of the
conspiracy from six or seven months to thirteen years, increased
the number of conspirators from five to fifteen, and increased
the amount of marijuana imported from 1,500 pounds to 6,800
pounds).

*” Appellants present various arguments that the alleged
conduct concluded more than ten years prior to the dates of the

5la
3. Jury Instruction on Statute of Limitations

Appellants also argue that the district court erred
-in failing to instruct the jury on the statute of
limitations on the ground that the jury could have
relied on conduct outside the limitations period
in finding defendants guilty. At trial, however,
Gutiérrez’s attorney explicitly declined to seek a
statute of limitations instruction, and the other
appellants made no request for such an instruction.

We addressed a similar situation in United States
v. Walsh, 928 F.2d 7, 11-12 (1st Cir. 1991). There, we
rejected the defendant’s claim that the district court
should have issued an instruction on the statute of
limitations, explaining that the defendant “failed to
identify any point in the record where such an
instruction was requested. Absent such a request, the
point was waived.” Jd. at 12. This holding is logical
because “{a] statute of limitations claim presents ‘an
affirmative defense’ that is ‘not cognizable on appeal
unless properly raised below.” United States v. Spero,
331 F.3d 57, 60 n.2 (2d Cir. 2003) (quoting United
States v. Walsh, 700 F.2d 846, 855-56 (2d Cir. 1983)).
The situation here is identical. We hold that because
appellants failed to request an instruction, the dis-
trict court had no-obligation to instruct sua sponte on
the limitations issue.”

First, Second, and Third Superseding Indictments. However,
because we find that the superseding indictments did not
materially broaden or substantially amend the charges, we need
not address these arguments.

* We also note that there was more than sufficient evidence
to allow a reasonable jury to conclude that the alleged offenses
were completed within the limitations period, see supra Section
III, and thus our holding that appellants waived their right to .
request an instruction on the statute of limitations in no way
risks a miscarriage of justice.

52a
B. Ex Post Facto

Appellants claim that their convictions for bank
fraud and conspiracy violated the Ex Post Facto
Clause, U.S. Const. art. I, § 9, cl. 3, because the bank
fraud statute, 18 U.S.C. § 1344, was not enacted until
October 12, 1984, and the jury could have convicted
them entirely on the basis of conduct that occurred .
prior to that date.”

The Ex Post Facto Clause “forbids the application
of any law or rule that increases punishment for pre-
- existing conduct.” United States v. Regan, 989 F.2d -
44, 48 (lst Cir. 1993) (quoting United States v.
Havener, 905 F.2d 3, 5 (1st Cir. 1990)). For “con-
tinuing offenses” such as the bank fraud and con-
spiracy charges at issue here, however, the critical
question is when the conduct ended.” As we have

* With respect to the Gutiérrez loans, the indictment alleged
a conspiracy to commit bank fraud among all four appellants
from approximately June 25, 1980 through May 25, 1990. It also
charged those appellants with bank fraud with respect to those
loans “on or about the dates listed below” and listed a series of
fifty-eight overt acts, of which the earliest took place on March
24, 1977, and the latest took place on December 19, 1989. With
respect to the Mirandes loans, the indictment alleged a con-
spiracy to commit bank fraud between Mufioz-Franco and
Sanchez-Aran from approximately December 1981 through May
25, 1990. It also charged Mufioz-Franco and Sanchez-Aran with
bank fraud with respect to the Mirandes loans “on or about the
dates listed below” and listed a series of forty-seven overt acts,
of which the earliest took place in December 1981 and the latest
took place on December 7, 1989.

* We have held that conspiracy is “often a continuing
offense,” United States v. Welch, 15 F.3d 1202, 1207 (1st Cir.
1993), and, in the context of determining venue, we have
acknowledged that “[bjank fraud is also a continuing offense,”
United States v. Scott, 270 F.3d 30, 36 (1st Cir. 2001). The other
circuits that have considered the issue generally have agreed

53a

explained, “[w]here a ‘continuing offense’ straddles
the old and new law .. . applying the new is
recognized as constitutionally sound.” Jd. In other
words, “[a] conviction for a continuing offense
straddling enactment of a statute will not run afoul of
the Ex Post Facto clause unless it was possible for
the jury, following the court’s instructions, to con-
vict ‘exclusively’ on pre-enactment conduct.” United
States v. Monaco, 194 F.3d 381, 386 (2d Cir. 1999)
(citation omitted). As suggested, “the question of
whether the violation extended beyond the effective
date of [the statute is] one that ha[s] to be resolved by
the jury.” United States v. Tykarsky, 446 F.3d 458,
480 (3d Cir. 2006).

Appellants contend that the district court should
have issued instructions informing the jury that it
must find beyond a reasonable doubt that the bank
fraud and the conspiracy to commit such fraud
continued past October 12, 1984. In the absence of
such an instruction, they argue, the jury’s verdict
was ambiguous because it could have been premised
exclusively on conduct that occurred prior to the date.
of enactment. Under such circumstances, a conviction
either for bank fraud or conspiracy to commit bank
fraud would violate the Ex Post Facto Clause.

Appellants failed to raise the possibility of an ex
post facto violation at any time prior to or during

that both conspiracy and bank fraud are continuing offenses.
See, e.g., United States v. Lemmon, 372 F.3d 535, 541 n.8 (3d
Cir. 2004) (conspiracy); United States v. Nash, 115 F.3d 1431,
1440-41 (9th Cir. 1997) (bank fraud); United States v. Duncan,
42 F.3d 97, 104 (2d Cir. 1994) (bank fraud and conspiracy).
Under the circumstances present here, there is no question
that the conspiracy and bank fraud charges reflect continuing
offenses.

54a

trial, including in their proposed jury instructions.
They also failed to raise the issue in their post-trial
Rule 29 motions. In their pre-sentencing briefs, they
argued for the first time that their convictions should
be vacated on ex post facto grounds. The district
court rejected the claim.”

An unpreserved ex post facto claim is subject to
plain error review. See, e.g., Tykarsky, 446 F.3d at
479; United States v. Julian, 427 F.3d 471, 481 (7th
Cir. 2005). Under such review, an appellant must
show: “(1) that an error occurred (2) which was clear
or obvicus and which not only (3) affected the
defendant’s substantial rights, but also (4) seriously
impaired the fairness, integrity, or public reputation
of judicial proceedings.” United States v. Duarte, 246
F.3d 56, 60 (1st Cir. 2001).

In its brief, the government agrees that the district
court should have issued an instruction that the jury
must find that the conduct continued past the
enactment date of the bank fraud statute. Its position
is consistent with recent circuit court decisions
holding that the failure to issue such an instruction
satisfies the first two prongs of the plain error
analysis by establishing that an error occurred that
was obvious. See Tykarsky, 446 F.3d at 479-80
(“[Blecause the communications spanned two differ-
ent versions of the statute with different minimum
penalties, the question of whether the violation

“ The court applied plain error review, finding that: (1) the
overwhelming weight of the evidence established bank fraud
continuing beyond the date § 1344 was enacted; (2) the con-
spiracy statute, § 371, was valid prior to any of the conduct
alleged; and (3) the jury’s conviction on the misapplication
counts occurring in 1986 substantiated a finding of culpable
conduct continuing beyond the date § 1344 was enacted.

55a

extended beyond the effective date of the amended
version was one that had to be resolved by the jury. .
. . We also conclude that the error in not requiring a
special jury finding was ‘plain’ in that it was an
obvious mistake in retrospect.”); Julian, 427 F.3d at
482 (“This was a plain error in the sense of being an
obvious mistake in retrospect.”). Thus, our task is to
determine whether this error affected appellants’
substantial rights, and, if so, whether the fairness,
integrity or public reputation of -the judicial
proceedings was impaired.

The other circuits have taken varying approaches
to applying these prongs of the plain error test in
assessing a claimed ex post facto violation. In United
States v. Calabrese, 825 F.2d 1342, 1346 (9th Cir.
1987), the Ninth Circuit held that the “jury’s verdict
represents a finding that a crime was committed
as alleged in the indictment.” Because the indict-
ment alleged an offense that continued past the date
of enactment, the court concluded that there was
no plain error in the court’s failure to issue an
instruction. Id.

The Fifth Circuit has examined the record to see
whether the bulk of the evidence occurred after the
enactment of the statute. In United States v. Todd,
735 F.2d 146 (5th Cir. 1984), that court held that
where “(mlost of the evidence focused on events that
occurred within the effective date of the amend-
ments,” and “the record . . . clearly establishes
violations of the amended act by the appellants
during the relevant time period,” the failure to give
the jury instruction did not “result in the likelihood-of
a grave miscarriage of justice or circumstances that
seriously affect the fairness, integrity, or public
reputation of judicial proceedings.” Jd. at 150.

56a

The Second and Third Circuits have adopted an
approach in which prejudice is established if there
was a reasonable possibility that the jury convicted
appellant on the basis of pre-enactment conduct. In
Tykarsky, for example, the Third Circuit explained
that a district court’s failure to issue an instruction
means that a defendant “has been prejudiced if there
is a reasonable possibility that a jury, properly
instructed on this point, might have found [the
defendant] guilty based exclusively on acts that
occurred before the increased penalty took effect.”
446 F.3d at 480. The court noted that “(t]he most that
can be said here is that it is improbable, rather than
impossible, as a factual matter, that the jury con-
victed Tykarsky exclusively on the basis of” pre-
enactment conduct, which was “insufficient to
persuade us that [the defendant’s] substantial rights
were not affected.” Id. at 482.“ The court concluded
that this prejudice “tainted the integrity and repu-
tation of the judicial process” and consequently

“ The Third Circuit’s holding is similar to that of the Second
Circuit. See United States v. Harris, 79 F.3d 223, 229 (2d Cir.
1996) (“Because the | | statute is a continuing crime statute, we
must determine whether it was possible for the jury, following
the district court’s instructions, to convict [the defendant]
exclusively on pre-{ Jenactment conduct. After examining the
jury instructions, we think that such a scenario was im-
possible.”). Appellants also refer to United States v. Torres, 901
F.2d 205 (2d Cir. 1990). However, that case is distinguishable
because appellants did raise a general ex post facto challenge
before the district court. Jd. at 228. On appeal, the Second
Circuit discussed plain error review but did not explicitly apply
such review. Jd. It concluded only that “it is inappropriate to
impose a mandatory life sentence upon [the defendants] where
there was an ex post facto violation in the instruction actually
given, and the defendants brought the general ex post facto
question to the attention of the district court.” Jd. at 229.

57a

vacated the defendant’s sentence and remanded to
the district court. Jd. at 483.

Finally, in Julian, the Seventh Circuit considered
an alleged conspiracy and found, on the third prong
of the plain error analysis, that a court’s failure to
issue an ex post facto instruction “affected [the
defendant’s} substantial rights in the sense that it
exposed him to a longer sentence.” 427 F.3d at 482. It
then focused on the fourth prong, explaining that “[iJf
a jury, properly instructed on this point, might have
found that the conspiracy had come to an end before
the increased penalty took effect or that [defendant]
had withdrawn from the conspiracy before that date,
then the error is one that implicates the fairness,
integrity, or public reputation of the judicial process.”
Id. It concluded that a reasonable jury could not have
found that the conspiracy at issue ended prior to the
enactment date of the statute. Jd. at 483.

Ultimately, we need not settle on a rule here. The
plain error analysis used by the Second and Third
Circuits is most favorable to defendants because it
requires a finding of prejudice if there was a
“reasonable possibility” that the jury convicted ap-
pellants solely on the basis of pre-enactment conduct.
Here, even under that test, appellants cannot dem-
onstrate an ex post facto violation because no reason-
able jury would have convicted appellants based
exclusively on conduct that occurred prior to the
enactment date. Moreover, even if we were to apply
the “miscarriage of justice” approach of the Seventh
Circuit, we would conclude there was no miscarriage
of justice here because the government presented so
much evidence of the involvement of the defendants
in the ongoing conspiracy and bank fraud following
the enactment of the bank fraud statute in 1984.

58a

As the district court correctly noted, the govern-
ment presented overwhelming evidence of appellants’
conduct, the majority of which occurred after October
12, 1984. Re:atively few of the overt acts for any of
the charges alleged in the indictment occurred prior
to October 12, 1984: only twelve of fifty-eight overt
acts on the charges of conspiracy and bank fraud
with respect to the Gutiérrez loans, and only ten of
forty-seven acts om the charges of conspiracy and
bank fraud with respect to the Mirandes loans. The
government presented considerable evidence of
activities occurring after October 12, 1984, including
all of the transactions involving the Los Mameyes
project, all of the transactions involving the Jardines
de Villa Alba project, and many of the transactions
involving the Reparto Valenciano project. The Denby
letter, which contained several material misrepre-
sentations, was not signed until 1987. Indeed, the
bulk of our sufficiency aralysis details conduct
occurring after the enactment date. See Section
Ill, supra.

Moreover, we find nothing to differentiate appel-
lants’ pre-enactment conduct from subsequent con-
duct. The government’s key witnesses—Lugo, Miran-
des, Enriquez, Somohano and Kareh—testified to
conduct that occurred both before and after the
enactment date. Given that the testimony of these
witnesses spanned the enactment date, we find it
implausible that the jury would find such testimony
compelling only for events that occurred prior to
October 12, 1984. Similarly, no transformative event
occurred prior to October 12, 1984 that would alter a
reasonable jury’s perception of the nature of any
appellant’s involvement. Although appellant Gutiér-
rez protests that he sold his construction loans with
Caguas on October 29, 1984, and sold Modules on

59a

December 31, 1985, it is uncontested that he and
Umpierre-Hernandez remained employed by the
company, and the record contains evidence that their
culpable conduct (such as submitting certifications
for incomplete work) continued uninterrupted after
the sale of the company.

Because we see no reason to differentiate the
conduct occurring prior to the enactment date, we
find that a reasonable jury would not have convicted
the appellants based solely on pre-enactment con-
duct. Thus, appellants were not prejudiced, nor did
their convictions implicate the fairness or integrity of
the judicial process. We conclude that there is no
plain error from the absence of a limiting instruction
on the ex post facto issue.

C. Pre-Indictment and Pre-Trial Delay

Appellants argue that the district court erred in
refusing to dismiss on the grounds that (1) the
five-year pre-indictment delay violated their Fifth
Amendment right to due process, and (2) the five-
year pre-trial delay violated their Sixth Amendment
right to a speedy trial. We review both claims for
abuse of discretion. United States v. Picciandra, 788
F.2d 39, 43 (1st Cir. 1986) (“[T]he district court did
not abuse its discretion in holding that the pre-
indictment delays did not violate the defendants’ fifth
amendment rights of due process.”); United States
v. Salimonu, 182 F.3d 63, 69 (lst Cir. 1997)
(“This circuit reviews a district court’s ruling on a
Sixth Amendment speedy trial claim for abuse of
discretion.”).

1. Pre-Indictment Delay

In United States v. Lovasco, 431 U.S. 783 (1977),
the Supreme Court noted that “statutes of lim-

60a

itations, which provide predictable, legislatively
enacted limits on prosecutorial delay, provide the
primary guarantee[] against bringing overly stale
criminal charges.” Jd. at 789 (citations and internal
quotation marks omitted). However, the Court also
acknowledged that “the Due Process Clause has a
limited role to play in protecting against oppressive
delay.” Jd. A prosecutor is not obliged to file charges
as soon as probable cause exists, id. at 791, and has
“wide discretion” in delaying indictment “limited only
by the requirement that it not violate those
‘fundamental conceptions of justice which lie at the
base of our civil and political institutions,“ United
States v. Ciampaglia, 628 F.2d 632, 639 (1st Cir.
1980) (quoting Lovasco, 431 U.S. at 790). To show a
violation of “those ‘fundamental conceptions of jus-
tice’ a defendant must. prove that (1) pre-indictment
delay caused substantial prejudice to his right to a
fair trial and, (2) the Government intentionally
delayed indictment in order to gain a tactical
advantage over the accused.” Picciandra, 788 F.2d at
42 (citation omitted). With respect to prejudice, a
defendant must do more than allege that witnesses’
memories had faded or that evidence had been lost
that might have been helpful to him. United States v.
Lieberman, 608 F.2d 889, 902 (1st Cir. 1979).

Appellants have failed to meet that burden here.
They assert that they suffered prejudice from the
unavailability of nineteen potential defense wit-
nesses.” However, we find that the unavailability of
these nineteen individuals did not impair appellants’
defense, either because appellants could have, but did
not, obtain testimony from similarly situated in-

* Of these nineteen unavailable witnesses, fifteen had died,
three were seriously ill, and one could not be located.

6la

dividuals who were available to testify; or because
appellants failed to demonstrate that the testimony
of these individuals would have included exculpatory
evidence.

Of the nineteen unavailable witnesses, appellants
contend that the deaths of two individuals—Phillip
Saffold and Luis Dorta—prevented cross-examination
relating to reports these witnesses prepared. Saffold
was an invéstigatur who authored reports that
appellants claim would have allowed them to im-
peach Roman Cruz, a plant manager who testified
that buildings were not built at the Modules plant;
however, Cruz’s testimony was a minor part of the
government’s case against appellants and appellants’
inability to impeach Cruz did not significantly
prejudice them. Similarly, Dorta inspected the
Transglobe and Modules sites and prepared reports
that were admitted at trial; appellants emphasize
that his death prevented them from cross-examining
him, but do not specify how this opportunity would |
have helped their case.

Appellants claim that nine other unavailable wit-
nesses (Gilberto Pol Segarra, Luis Acevedo Gonzalez,
Jaime Sitiriche, Juan Hernandez, Celestino Seneriz,
Pedro Bull Nater, Francisco Susoni Lens, Jose
Feliciano, and Rafael Toro Nazario) were members of
the Board who “could have testified to the extent of
the disclosures made to the Board, in response to
Lugo []’s imprecise testimony.” However, appellants
offer no reason to believe that these Board members
would have offered testimony contradictory to Lugo’s.
Moreover, appellants do not explain why they did not
call as witnesses other Board members who were
available to testify throughout the trial.

62a

Finally, appellants contend that the remaining
eight unavailable witnesses (Gilberto Mayo Aguayo,
Nelson Soto Velasquez, Stephen P. Radics, Emil de
Pentima, Troy Chapman, Stanley Orenstein, Hugo
Lopez, and Fernando Rivera) “could have testified” or
“could have confirmed” information relating to
financial practices at Caguas, without offering any
evidence that these individuals would, in fact, have
been able to provide such testimony.

Similarly, appellants protest the unavailability of
three sets of documents: inspection reports, com-
mercial loan files, and miscellaneous Modules docu-
ments. With respect to the first two sets of docu-
ments, however, appellants make no attempt to
establish that the reports disappeared after indict-
ment but prior to trial. With respect to the third,
appellants claim only that “the unavailability of the
Modules documents made it impossible to fairly cross
examine [Transhore and Modules accountant Jorge]
Fabrigas” and that, generally, the evidence might
have allowed them to refresh witness recollection and
corroborate their defense. However, Fabrigas’ testi-
mony was a minor part of the trial, and these
generalized objections do not establish prejudice
resulting from an impaired defense.

Even if appellants had demonstrated some degree
of prejudice from the delay, they have made no
concomitant showing that the government inten-
tionally delayed indictment to gain tactical advan-
tage. Thus, we conclude that the district court did not
abuse its discretion in denying their motion to
dismiss for pre-indictment delay.

63a
2. Pre-Trial Delay

The Sixth Amendment right to a speedy and public
trial attaches upon arrest or indictment, whichever
occurs first. United States v. MacDonald, 456 U.S. 1,
6-7 (1982). Thus, the time frame relevant to ap-
pellants’ claim extends from the date of indictment,
November 22, 1995, until the date of trial, January
29, 2001—a span of over five years. We note that
appellants do not raise a claim under the Speedy
Trial Act, 18 U.S.C. § 3161, and thus their claim is
based exclusively on constitutional rather than
statutory grounds.

In Barker v. Wingo, 407 U.S. 514 (1972), the
Supreme Court established a four-part balancing test
to determine whether a defendant’s Sixth Amend-
ment right to a speedy trial has been violated. Under
Barker, a court should consider: (1) the length of the
delay; (2) the reasons for the delay; (3) the de-
fendant’s assertion of his speedy trial right; and (4)
the prejudice to the defendant caused by the delay.
Id. at 530. However, the Court identified the first
factor, the length of the delay, as “to some extent a
triggering mechanism. Until there is some delay
which is presumptively prejudicial, there is no
necessity for inquiry into the other factors that go
into the balance.” Id. The Court also has indicated
that post-accusation delay approaching one year is
presumptively prejudicial. Doggett v. United States,
505 U.S. 647, 652 n.1 (1992). Consequently, the five-
and-a-half year delay in this case creates a
presumption of prejudice.

Under Barker, we must then consider the remain-
ing three factors. We have described the second
factor, the reasons for the delay, as “the focal in-
quiry.™ See, e.g., United States v. Santiaqgo-Becerril,

64a

130 F.3d 11, 22 (1st Cir. 1997) (citation omitted).
Here, there are two main reasons for the pre-trial
delay. First, the appellants filed numerous requests
for continuances,. some of which the district court
granted, as well as many motions requiring time and
consideration by the district court.” Second, two days
before the trial was originally scheduled to begin on
May 26, 1998, the government filed a motion to
disqualify the trial judge assigned to the case on the
ground that she had a banking relationship with
Caguas that might prejudice her in the trial of the
case. The district court originally denied the motion
to disqualify and the government sought mandamus
from this court. We denied mandamus, but noted that
“the judge would have been well-advised either to
bow out of the case or to ask that the recusal motion
be assigned to a different judge for hearing” and that
“the government hardly can be faulted for bringing”
the motion. In re United States, 158 F.3d 26, 33-34
(1st Cir. 1998).” The trial judge assigned to the case

* For example, on August 27, 1997, Mujioz-Franco filed
seventeen separate motions, including one entitled “Motion
Requesting Order Concerning Additional Motions.” Similarly, on
March 24, 1998, Gutiérrez filed what the district court termed
a “deluge” of “ten separate and distinct motions of varying
complexity.”

” Appellants imply that the government acted in bad faith by
waiting to file the recisal motion until immediately prior to
trial. However, the government explains that it did not learn
about the banking relationship until one year prior to trial, and
was delayed in learning the details of the relationship due to
resistance to the subpoenas it filed. In fact, the government still
had not been able to obtain some of the documents it requested
by the time it filed the recusal motion. In light of this ex-
planation, and the fact that appellants produced no evidence of
bad faith on the part of the government below, we still have no
basis for questioning the government's explanation.

65a

then recused herself voluntarily, resulting in a delay
in the proceedings of approximately one year. In sum,
the pre-trial delay arose largely from the complexity
of the case and the events related to the recusal.

The third Barker factor weighs in favor of ap-
pellants. They raised their speedy trial objection
three times during the proceedings below, and now
renew that objection.

The Supreme Court has held that the final Barker
factor—prejudice to appellants—“should be assessed
in the light of the interests of defendants which the
speedy trial right was designed to protect.” Barker,
407 U.S. at 532. The Court identified three such
interests: “(i) to protect oppressive pretrial incar-
ceration; (ii) to minimize anxiety and concern of the
accused; and (iii) to limit the possibility that the
defense will be impaired.” Jd. The first of these
interests has no bearing here because appellants
remained free prior to trial. With respect to the
second interest, “considerable anxiety normally
attends the initiation and pendency of criminal
charges; hence only ‘undue pressures’ are consid-
ered.” Santiago-Becerril, 130 F.3d at 23 (citations
omitted). Appellants allege no such “undue pressure,”
and therefore we assign negligible weight to this
interest. Finally, in our discussion of pre-indictment
delay, we have already analyzed appellants’ argu-
ments that their defense was impaired. These
arguments are equally applicable to the pre-trial time
frame, and we find no materia! prejudice resulting
from the delay.”

* We note that, of the nineteen unavailable witnesses that
appellants name in their brief, five of these witnesses (Hugo
Lopez, Celestino Seneriz, Pedro Bull Nater, Francisco Susoni

66a

The five years that elapsed between indictment
and trial is a troublesome length of time. None-
theless, our inquiry has revealed no constitutional
violation. Thus, after considering the factors listed in
Barker, we conclude that the district court did not
abuse its discretion in denying appellants’ motion to
dismiss for pre-trial delay.

¥.

Appellants also raise several challenges to evidence
they contend was improperly admitted. We address
these claims in turn.

A. Evidence Regarding Loss

Appellants challenge three aspects of the admis-
sion and treatment of evidence regarding financial
loss to Caguas. First, they protest that such evidence
was irrelevant and prejudicial in violation of Federal
Rule of Evidence 403. Second, they argue more
specifically that the government’s Exhibit 40, aspects
of which were later shown to be inaccurate, was
erroneously admitted. Finally, they argue that, even
if evidence of loss and Exhibit 40 were properly
admitted, the district court erred in refusing to guide
the jury with an instruction about the enactment of
the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (“FIRREA”), Pub. L. No.
101-73, 103 Stat. 183 (codified in scattered sections
of 12 U.S.C.).

Lens, and Jose Feliciano) died prior to indictment and, con-
sequently, their unavailability does not implicate the Sixth
Amendment analysis under Barker. See MacDonald, 456 U.S.
at 7 (“[NJo Sixth Amendment right to a speedy trial arises until
charges are pending.”).

67a
1. General Evidence of Loss

We review evidentiary rulings on relevance and
unfair prejudice for abuse of discretion. United States
v. Richardson, 421 F.3d 17, 37-38 (ist Cir. 2005).
Loss is not an element of bank fraud. United States v.
Blasini-Lluberas, 169 F.3d 57, 65 (1st Cir. 1999).
However, courts have held repeatedly that loss is
relevant in fraud cases to demonstrate a defendant’s
knowledge or intent to commit fraud. See, e.g., United
States v. Heimann, 705 F.2d 662, 669 (2d Cir.
1983)(“While technically the success or failure of a
scheme to defraud is irrelevant in a mail fraud case,
realistically, when the contested issue is intent,
whether or not victims lost money can be a sub-
stantial factor in a jury’ determination of guilt or
innocence.” (citation omitted)). Thus, while “an
ultimate purpose of either causing some financial loss
to another or bringing about some financial gain to
oneself is not the essence of fraudulent intent,”
United States v. Kenrick, 221 F.3d 19, 29 (1st
Cir. 2000) (citation and internal quotation marks
omitted), the knowledge that one’s actions are, in
fact, bringing about such losses may demonstrate
one’s intent to commit fraud.

In this case, the government referred to loss
throughout the trial to demonstrate appellants’
knowledge of the consequences of their ongoing
practices of using loan proceeds to make principal
and interest payments on unrelated loans, author-
izing disbursements for work not completed, and
using funds for purposes not authorized by the
Board. For example, during its opening statement
and closing argument, the government noted that
federal regulators closed Caguas in 1990 due to the
bank’s lack of funds. On a few occasions, the

68a

government also questioned witnesses about the
amount of loss that certain projects sustained and
whether those losses would have caused concern.
However, these references did not dominate the evi-
dence because the government also presented
considerable other evidence of defendants’ conduct, as
we have discussed at length in Section III, supra.
Moreover, the district court carefully managed the
effect of evidence relating to loss on the jury by
preventing both parties from addressing loss in their
closing arguments and instructing the jury that
loss was not an element of the offenses charged.
Finally, the court permitted appellants to cross-
examine vigorously the government witnesses who
discussed loss.

In sum, the general references to loss were relevant
as a means of demonstrating appellants’ intent to
defraud Caguas, and, given the carefully limited
presentation of this evidence to the jury, were not
unduly prejudicial. The district court did not abuse
its discretion in admitting this evidence.

2. Exhibit 40

Following Caguas’ closure in 1990, Banco San-
tander acquired many of its assets, and prepared a
document—government Exhibit 40—listing hundreds
of Caguas’ loans, the outstanding balances on those
loans, Banco Santander’s valuation of the loans, and
the resulting discount (the difference between the
outstanding balance of the loan and the loan’s value).
At trial, Banco Santander’s comptroller attested that
the bank had acquired all of the loans summarized in
Exhibit 40, and the exhibit served as part of the basis
for expert testimony regarding accounting practices
by Kathy McKinless, a partner at an accounting firm.
By the time of sentencing, however, the government

{

69a

discovered that the Resolution Trust Company
(“RTC”), a government-owned asset management
company, had retained many of the loans. Thus, the
exhibit could not actually have reflected valuations of
the loans made by Banco Santander upon purchase,
and was not a reliable means of establishing the
magnitude of the loss experienced by Caguas.

Appellants now contend that Exhibit 40 was both
testimonial, in violation of the Confrontation Clause,
and that the exhibit was improperly admitted under
the Federal Rules of Evidence. The government’s
acknowledgment that Exhibit 40 contained inac-
curate information indicates that the exhibit should
have been excluded on that basis alone. However, we
agree with the district court that any error in its .
admission was harmless. Under Fahy v. Connecticut,
375 U.S. 85, 86-87 (1963), the critical question in
assessing harmless error is “whether there is a
reasonable possibility that the evidence complained
of might have contributed to the conviction.”

Several circumstances indicate that there is no
reasonable possibility that Exhibit 40 contributed to
the convictions here. First, the exhibit was relevant
only to prove appellants’ fraudulent intent, and the
government presented considerable evidence of this
intent from other sources. Second, the court explicitly
instructed the jury that loss was not an element of
bank fraud. Third, the exhibit was the subject of
direct examination for less than one-half of one day of
a trial spanning fifteen months. Fourth, defense
counsel subjected McKinless to searching cross-
examination regarding the exhibit, revealing several
typographical errors and inaccuracies and eliciting
McKinless’ acknowledgment that she could not con-
firm the document’s completeness. Finally, even if

70a

the loss calculations in Exhibit 40 were not entirely
accurate, other evidence at trial dernonstrated that
Caguas suffered large losses on many of the loans at
issue. To some extent, the Exhibit 40 calculations
replicated evidence already in the record. Taking into
account all of these circumstances, there is no
reasonable-possibility that the isolated use of Exhibit
40 could have contributed to appellants’ convictions,
and thus any error in its admission was harmless.

3. Jury Instruction on Loss

Appellants also challenge the district court’s re-
fusal to give an instruction explaining that, when
FIRREA was enacted in 1989, “many institutions
immediately fell out of compliance with regulatory
capital requirements, making them subject to seizure
by thrift regulators.” United States v. Winstar Corp.,
518 U.S. 839, 857-58 (1996). Appellants contend that,
given the admission of evidence relating to financial
loss, the jury should have been instructed that bank
failures were common in the aftermath of FIRREA’s
enactment. In other words, the jury should have been
told that banks commonly lost money in the absenc

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1604%3A2. Public record. Not legal advice.