U.S.A. v. Alfredo Pacheco-Martinez

Summarized by William Amann , Amann Burnett, PLLC
10 years 8 months ago

Citation:

USCA (1st Cir.) No. 13-2154

Tag(s):

Ruling:

Affirmed. Defendant Alfredo Pacheco- Martinez was convicted of various offenses arising from his multi-year effort to swindle scores of unsuspecting victims out of over a million dollars and to manipulate the U.S. Bankruptcy Code in order to shield his ill-gotten gains from creditors. He now appeals from one of the counts of conviction, arguing that there was insufficient evidence to support the jury's guilty verdict. He also attacks his sentence, arguing that the district court improperly calculated the applicable Sentencing Guidelines range and imposed a procedurally and substantively unreasonable sentence. We find no merit in any of these contentions and affirm Pacheco's conviction and sentence.

Procedural context:

Because Pacheco challenges the sufficiency of the evidence supporting his conviction on one count, we recite the facts relevant to that claim in the light most favorable to the jury verdict. See United States v. Burgos-Montes, ___ F.3d ___,2015 WL 2223304, at *1 (1st Cir. May 13, 2015). In discussing facts relevant to Pacheco's claims of sentencing error, we rely in part on unchallenged portions of the Presentence Investigation Report (PSR). See United States v. Vázquez-Larrauri, 778 F.3d 276, 291 (1st Cir. 2015).

Facts:

In 2003, the Defendant formed a limited liability company, International Business Group and Affiliates (IBGANV). He was the sole manager. Also in 2003 the Defendant formed a corporation in Puerto Rico called International Business Group and Affiliates (which we will call simply IBGA), for which he was the president and registered agent. Pacheco's daughter Leyda was listed as the vice president of IBGA, and his other daughter Mayra was listed as the treasurer. IBGA was not registered to make investments in Puerto Rico. Lastly, in July 2005, Pacheco formed a third entity, Liberty Dollars of Puerto Rico, Inc. (LDPR). Pacheco was listed as LDPR's registered agent and its only director and officer. Pacheco used these entities to engage in two fraudulent schemes: the "Liberty Dollar program" and the "Debt Elimination program." Under the first program, Pacheco sold medallions with a small silver content to individuals as a "substitute form of coinage." He obtained the Liberty Dollars from NORFED, a "national organization dedicated to the repeal of the Federal Reserve Act and the Internal Revenue [C]ode." Pacheco marketed the Liberty Dollars as protection against inflation, telling potential buyers that the Liberty Dollars, unlike U.S. currency, could not lose value based on the actions of the Federal Reserve. Pacheco also marketed a variant on the Liberty Dollar called the "Boricua Dollar" that specifically targeted Puerto Rico. The evidence at trial demonstrated that the Liberty Dollars and Boricua Dollars operated much like a pyramid scheme: IBGA "would sell them through distribution channels, with each subsequent buyer paying a higher amount until the [dollars] reached a final user." Pacheco told prospective buyers that they could either market the Liberty Dollars or use them as currency at certain businesses. The marketing materials Pacheco issued in connection with the Liberty Dollars predicted that the annual returns for buyers would range from 6 percent to over 25 percent. Using a fairly complicated scheme with the Defendant's three companies, he led the investors to believe that he was backed by a large United States corporation, when in fact "no actual business programs or operations took place out of IBGANV." After an individual invested with him, Pacheco would for a short period of time make "lulling" interest payments to the investor in order to give him or her the mistaken impression that the investment was safe and would generate the promised return. But the investments were never fully -- or even mostly -- repaid. Twelve individuals ultimately invested over $1 million with Pacheco and sustained losses of over $750,000. While these fraudulent schemes were ongoing, in September 2003, Pacheco and his wife filed a joint petition for Chapter 13 bankruptcy. During the pendency of that bankruptcy proceeding, Pacheco opened a bank account with the former Western Bank in the name of "IBGA" and an account with Wells Fargo in the name of "IBGA, LLC." The bankruptcy case was dismissed with no discharge in May 2004 on the recommendation of the Trustee. A month later, in June 2004, Pacheco and his wife once again filed for Chapter 13 bankruptcy. This case, too, was dismissed with no discharge on the recommendation of the Trustee. On October 4, 2005, the couple filed for bankruptcy a third time, this time under Chapter 7. The case was assigned to a different Trustee, and that Trustee granted the discharge of Pacheco's debts. In connection with the third bankruptcy proceeding, Pacheco represented (untruthfully) that he had no interest in any incorporated or unincorporated businesses. He failed to disclose his position or ownership interest in IBGANV, IBGA, or LDPR, and likewise failed to disclose the activities in which he had been engaging through those entities. On October 5, 2005, the day after the third bankruptcy petition was filed, several checks were drawn from the Western Bank checking account Pacheco had opened in the name of IBGA. Pacheco had his daughters use some of those funds (all proceeds of Pacheco's fraudulent schemes) to buy, in IBGA's name, an office condominium which Pacheco had previously lost to foreclosure. In December 2005, while the third bankruptcy proceeding was pending, Pacheco opened three more bank accounts: one in the name of "IBGAPR," one in the name of LDPR, and one in the name of "IBGA-GEFC." Various checks were drawn on these accounts referencing what the government characterizes as "thinly-disguised personal uses." The FBI ultimately uncovered Pacheco's fraud after an investigation. Pacheco was arrested and charged with securities fraud, mail fraud, conspiracy to conceal assets and make fraudulent transfers, concealment of assets, fraudulent transfer, uttering coins, and money laundering. A jury convicted Pacheco on all counts and the district court sentenced him to a top-of-the guidelines sentence of 235 months imprisonment. The court's guidelines calculation included a two-level enhancement for abuse of a position of trust and a two-level enhancement for sophisticated means. Pacheco first challenges the district court's denial of his Rule 29 motion for judgment of acquittal on Count 8 of the indictment, which charged him with making a fraudulent transfer in violation of 18 U.S.C. §§ 2, 152(7). We review the denial of a Rule 29 motion "de novo, examining the evidence in the light most favorable to the verdict, and asking whether a rational jury could find guilt beyond a reasonable doubt." Burgos-Montes, 2015 WL 2223304, at *13 (citations omitted). Pacheco's conduct fits the statute like a glove. He commenced a bankruptcy proceeding, failed to disclose his interest in an entity which he owned, and then used that entity's funds (funds Pacheco had obtained by defrauding investors) to buy back a property which he had previously owned but had been foreclosed upon. In other words, Pacheco, "in a personal capacity or as an agent [of IBGA] . . . with intent to defeat the provisions of [the Bankruptcy Code], knowingly and fraudulently transfer[ed] or conceal[ed]. . . his property or the property of [IBGA]." 18 U.S.C. § 152(7). The evidence presented at trial showed that the money Pacheco obtained by duping investors flowed freely among Pacheco, his relatives, and the various corporations that he set up. Indeed, it was precisely because Pacheco put the money in the IBGA account that he was able to shield it from his creditors in the bankruptcy proceeding (through his failure to disclose his interest in IBGA) and use it to buy back the condominium. The evidence presented at trial showed that the money Pacheco obtained by duping investors flowed freely among Pacheco, his relatives, and the various corporations that he set up. Indeed, it was precisely because Pacheco put the money in the IBGA account that he was able to shield it from his creditors in the bankruptcy proceeding (through his failure to disclose his interest in IBGA) and use it to buy back the condominium. The district court did not err in denying Pacheco's Rule 29 motion.

Judge(s):

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Aida M. Delgado-Colón, U.S. District Judge Before Howard, Chief Judge, Selya and Lynch, Circuit Judges

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