United States v. Frigerio-Migiano, 254 F.3d 30, 1st Cir. (2001)

254 F.3d 30 (1st Cir.
2001)
UNITED STATES OF AMERICA, Plaintiff, Appellee,

v.
OSCAR FRIGERIO-MIGIANO AKA OSCAR MIGIANOFRIGERIO, Defendant, Appellant.
No. 00-1863
United States Court of Appeals For the First Circuit

Heard March 5, 2001
Decided June 29, 2001
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF PUERTO RICO
[Hon. Jose Antonio Fuste, U.S. District Judge]
Benjamin Ortiz-Belaval, for appellant.
Timothy S. Vazquez, Assistant U.S. Attorney, with whom Guillermo Gil,
United States Attorney, Jorge E. Vega-Pacheco, Assistant U.S. Attorney,
and Nelson Perez-Sosa, Assistant U.S. Attorney, were on brief, for
appellee.
Before Torruella and Selya, Circuit Judges, Campbell, Senior Circuit
Judge.
TORRUELLA, Circuit Judge.
On December 8, 1999, defendant-appellant Oscar Frigerio-Migiano stood trial

for one count of conspiracy to launder money in violation of 18 U.S.C.
1956(a)(1). After the government rested its case, Frigerio twice filed a motion
for a judgment of acquittal. Although the court agreed that the evidence against
Frigerio was "very thin," both motions were denied and the case was sent to a
jury. On December 13, 1999, the jury returned a verdict against Frigerio.
Frigerio filed another motion to set aside the verdict based on insufficiency of
evidence, which was again denied. We conclude that there was insufficient
evidence to convict Frigerio and reverse the decision of the district court.
BACKGROUND
2
On September 7, 1999, a federal grand jury for the District of Puerto Rico
returned a one-count indictment charging Frigerio, Jaime Rafael Munoz and
Neida Ortiz Acosta with conspiring to launder money in violation of 18 U.S.C.
1956(a)(1). The government joined the trial of Frigerio and Neida Ortiz
Acosta, and a jury was impaneled and sworn for these defendants on December
8, 1999. On that same day, Frigerio filed a motion for severance under Federal
Rule of Criminal Procedure 14, alleging prejudicial joinder of defendants. The
court denied the motion and the trial continued.
The government established at trial that Frigerio began working at "Phone

Home," a money remittance business, around the end of October 1998. He was
hired to assemble kitchen door hinges and clean the office. The government
evidence showed that in addition to sending legitimate money from workers
employed on cruise ships to their homes in foreign countries, Phone Home
channeled over $26 million of drug money out of Puerto Rico. Frigerio worked
at Phone Home until the business was shut down by government agents on
December 9, 1998.
At trial, the government presented six witnesses. IRS Special Agent Donald
Semesky testified in general terms about the structure of money laundering
operations. Jose Mercado Febles, a convicted drug trafficker familiar with
Phone Home, testified that a Colombian national known as "Fabio" sold heroin
in Puerto Rico and brought the proceeds to Phone Home. Jesus Ivan Saenz
Blanco, another convicted drug trafficker, testified that he had, on various
occasions, carried $10,000 to $170,000 in small denominations to Phone Home
for the purpose of transmitting the money to Colombia. Saenz Blanco stated
that his money was counted upon arrival, and that he provided the workers at
Phone Home with the fictitious names and phone numbers of the recipients in
Colombia. Special Agent Gene Joseph Driggers, an agent with the U.S.
Customs Service and a computer investigation specialist, identified the files of
money transactions stored in the Phone Home computer. Finally, government
witness Nelson Laracuente, assistant manager of the Old San Juan branch of
Banco Popular, testified to the large amounts of cash deposited in Phone
Home's bank accounts. None of these witnesses testified to knowing or meeting
Frigerio, and the government stipulated that Frigerio's name was not found in
Phone Home's computer database.
The only government witness to identify Frigerio was Luis Rivera Valentin.1
Rivera worked at Phone Home from August 1997 until it was closed in
December 1998. He testified that though at first he simply ran errands and "did
little things," he became involved in money transactions in January 1998.

Rivera explained that the legitimate part of Phone Home, mostly involving
money remittance from workers on cruise ships, was conducted in the front
area of the office. This money was deposited in an account at First Federal
Bank. He further testified that "flashy" and "suspicious people . . . drug
dealers," would bring in large amounts of cash -- from $10,000 up to $300,000 - in book bags, shoe boxes or computer boxes. Rivera understood from a March
1998 conversation with Neida Ortiz Acosta that the money was from the sale of
drugs. He stated that these individuals were shown to the back of the office,
where the money was counted and a receipt issued, "stating in code form the
amount": for example, $45,000 would be documented as $45. The money was
deposited in an account at Banco Popular.
6
According to Rivera, Frigerio accompanied him at night to deposit cash at

Banco Popular. He also testified that Frigerio assisted in the process of
counting money. To this end, the government presented two videotapes from
cameras that federal investigators had installed and hidden in the back room of
Phone Home. The first of these tapes was taken on November 23, 1998. In this
video. Rivera identified Frigerio counting money and himself entering the
room. Rivera also identified Frigerio as the person counting money in another
videotape taken on November 27, 1998, alongside a man named "Pocho," who
would bring in large amounts of currency. In addition, he stated that "every
once in a while" Frigerio participated in the issuance of false receipts. Finally,
Rivera testified that Frigerio was present when Phone Home was scanned for
surveillance devices.
After the government rested its case, Frigerio moved for a judgment of
acquittal pursuant to Federal Rule of Criminal Procedure 29(a). Although the
court acknowledged that the case against Frigerio was "very thin," it denied the
motion, concluding from Rivera's testimony regarding the coded receipts that
"there [was] at least something there that the jury could use to impute
knowledge to him." The only defense witness was Neida Ortiz Acosta, to whom
the government presented a rebuttal witness and concluded the evidence. After
the jury left to deliberate, Frigerio renewed his motion for a judgment of
acquittal, which was again denied.
On December 13, 1999, the jury returned a verdict against Frigerio as to the
only count filed against him. On December 15, Frigerio filed a third motion
under Rule 29, this time asking the court to set aside the verdict because of
insufficiency of evidence. Fed. R. Crim. P. 29(c). The court denied the motion,
and, granting a downward departure, sentenced Frigerio to a period of twentyseven months incarceration and two years of supervised release. This timely
appeal followed.
DISCUSSION
9
In assessing the sufficiency of the evidence in a criminal case, we ask "whether

the evidence, viewed in the light most favorable to the prosecution, would
permit a rational jury to find each essential element of the crime charged
beyond a reasonable doubt." United States v. Zanghi, 189 F.3d 71, 79 (1st Cir.
1999) (quoting United States v. Guerrero, 114 F.3d 332, 339 (1st Cir. 1997))
(internal quotations omitted). The evidence presented by the government need
not "preclude[] every reasonable hypothesis inconsistent with guilt in order to
sustain a conviction." United States v. Hernandez, 218 F.3d 58, 64 (1st Cir.
2000) (quoting United States v. Loder, 23 F.3d 586, 589 (1st Cir. 1994)).
However, the jury's verdict must be one that is "supported by a plausible
rendition of the record." Id. (quoting United States v. Ortiz, 966 F.2d 707, 711
(1st Cir. 1992)). We review a district court's Rule 29 determination de novo. Id.
10
Frigerio concedes that he engaged in "financial transactions" as defined in 18

U.S.C. 1956(c)(4), but contends that the government failed to meet its burden
of proving the knowledge elements of the crime charged.2 The knowledge
requirement under 18 U.S.C. 1956(a)(1)(B)(i) is twofold: the government
must demonstrate (i) that the defendant knew that the funds involved in the
financial transaction were the proceeds of some unlawful activity; and (ii) that
he knew the transaction itself was "designed in whole or in part to conceal the
nature, location, source, ownership, or control of the proceeds of such unlawful
activity." 18 U.S.C. 1956(a)(1)(B)(i). We now turn to the government's case.
11
Viewing the evidence in the light most favorable to the government, the jury
could have found the following. During the period that Frigerio worked at
Phone Home, he witnessed large amounts of small-denomination cash, ranging
from $10,000 to $300,000, brought in bags and boxes by "flashy" and
"suspicious" individuals. These were distinct from the smaller amounts of cash
-- ranging from $100 to $5,000 -- brought in by seamen. Frigerio accompanied
Rivera on a regular basis to Banco Popular, where the money was deposited.
These deposits totaled $1,959,068 in the time that Frigerio worked at Phone
Home; since the cash consisted mainly of small bills, Frigerio regularly carried
a considerable and noticeable bulk of money on his trips to the bank. Frigerio
also witnessed the separation of operations in the front and back of Phone
Home, namely, that larger amounts of cash were counted by machines in the
rear while smaller amounts brought in by seamen were accepted at the front
counter. Frigerio at least twice counted money himself in the rear, and on one
occasion did so in the presence of a known drug dealer (although perhaps not
known to Frigerio). Finally, Frigerio issued false receipts, which "coded" the
amount of money received so that it appeared to be less than it actually was.
Based on these findings, a jury could infer that Frigerio knew there were
unusually large sums of money, brought into Phone Home on a regular basis,
without any identifiable source. In short, a jury could reasonably conclude that
Frigerio knew he was handling money derived from an illicit activity.
12
However, this, standing alone, is insufficient. As we have previously indicated,

the government must also prove beyond a reasonable doubt that Frigerio knew
that the transactions in which he participated were part of a money laundering
scheme. Though onerous, the double-intent requirement serves an important
function by shielding innocent individuals who engage in otherwise legal
financial activity. The government's burden is compounded in the context of
this case, where activities such as counting money, making deposits, and
issuing receipts formed a routine part of the legitimate side of the business.
Nevertheless, for the verdict to stand, the government must prove this element
of knowledge for at least one of its proffered transactions.
13
We first address the nightly deposits at Banco Popular. The government argues
that since Phone Home had two bank accounts, "[i]t could be inferred that
Frigerio knew one was to deposit monies obtained through legal means and the
other [Banco Popular] to deposit money acquired from illegal ventures." This
conclusion simply lacks evidentiary support. It may be true, and indeed the
government established, that Phone Home maintained separate bank accounts
for its legitimate and illegal deposits. However, there is no nexus between the
existence of these accounts and Frigerio's knowledge. The government
presented no evidence, for example, that Frigerio handled or saw any bank
account statements, that he was familiar with the account numbers, or even that
he made any of the deposits himself.3 It is also conceded by the government
that Frigerio did not have access to the computer files which tracked the money
laundering details of the two accounts. Thus, no reasonable juror could infer
that, by accompanying Rivera to the bank and witnessing the deposits, Frigerio
knew that the purpose of the deposits was to conceal the source and ownership
of the money.
14
We next consider the videos showing Frigerio counting money in the back area
of Phone Home. The government concedes that, regardless of its source, all of
the money entering Phone Home was counted. The evidence does show that
money from legitimate and illegitimate sources varied in amount and were
counted in distinct areas of the office and in different ways: we have noted
already that a jury could conclude from this evidence that Frigerio knew that
the money he was counting came from illegal sources. Even so, one cannot
further conclude that Frigerio knew he was participating in an attempt to

conceal the illicit nature of the money. That is, in a business that provided the
very service of counting money, there is nothing about the act of machine
counting money that is inherently connected to money laundering activity.
Consequently, this transaction also fails to prove the requisite knowledge
element.
15
The strongest piece of evidence offered by the government regarding Frigerio's

knowledge of the money laundering operation is his issuance of "coded
receipts." Rivera testified that these receipts represented amounts significantly
smaller than those actually received. In addition, Rivera stated that the receipts
indicated where the money was going, which could have revealed to Frigerio
that large amounts of cash were destined for Colombia. For the government to
prevail, it must be reasonable to infer, based on this evidence, that Frigerio was
aware of the attempts to conceal drug-related money.
16
We believe that such an inference is too attenuated to sustain the verdict. Even
if Frigerio issued coded receipts, there must be something about the receipt
itself that would permit the inference that he knew the meaning and purpose of
the code. However, the government did not present the actual receipts
themselves. Instead, the record contains only Rivera's description of their
contents.4 This description, moreover, is wholly without context: we do not
know when Frigerio issued these receipts, to whom, or even whether they did
indeed indicate suspicious destinations. Frigerio did not participate in this
process regularly, but "every once in a while," in the course of performing
various other, non-financial duties at Phone Home. Finally, it is a conceded fact
that Frigerio was not engaged in the process of entering these transactions under
fictitious names in the computer. Based on the evidence presented at trial, we
do not believe that a jury could infer Frigerio's knowledge of the money
laundering operation beyond a reasonable doubt.
17
The government contends, as an alternative argument, that to the extent Frigerio

lacked knowledge of the money laundering conspiracy, he was "willfully blind"
to the illegal activities around him. We have indeed stated that where there are
prominent "red flags" that signal criminal activity is afoot, a jury may infer that
a defendant deliberately ignored facts which would have otherwise been
obvious to a reasonable person. United States v. Gabriele, 63 F.3d 61, 66 (1st
Cir. 1995). However, no such "red flags" were present here. Rivera's testimony
indicated that even he did not become wary of Phone Home's business until he
had worked there for over seven months. His knowledge of the money
laundering operation, moreover, was gained through working with the
computer. By contrast, Frigerio worked at Phone Home for less than seven
weeks and did not use the computer. The activity occurring in Phone Home was
therefore not a sufficient "red flag" to permit an inference of willful blindness to
the conspiracy.
18
Likewise, Frigerio's presence during a scan for surveillance devices is not a

"red flag" in the context of this case. First, even legitimate businesses -particularly those dealing with financial transactions -- might use surveillance
devices as a valid security measure. Even if we were to accept that the use of
this equipment was suspicious, however, we note that there is no evidence that
Frigerio was present on more than one occasion when this scanning occurred.
As a result, we do not believe that the scan rose to the level of a "red flag"
signaling money laundering activity.
19
In reaching our conclusion, we acknowledge that this is a close case. We agree

with the district court, however, that the government's evidence is, even at its
best, "very thin" -- and can be construed just as persuasively in favor of
Frigerio. In such a case, the defendant receives the benefit of the doubt: "
[W]here an equal or near equal theory of guilt and a theory of innocence is
supported by the evidence viewed in the light most favorable to the verdict, 'a
reasonable jury must entertain a reasonable doubt.'" United States v. Andujar,
49 F.3d 16, 20 (1st Cir. 1995) (citing United States v. Sanchez, 961 F.2d 1169,
1173 (5th Cir. 1992)). We conclude that the jury's verdict is unsupported by the
evidence.
20
Reversed.
Notes:
1
Rivera was actually the third witness presented by the government, but since
his is the only testimony relevant to this appeal, we explore it separately.
Frigerio also appeals, in the alternative, the district court's denial of his
severance motion. Our conclusion concerning the sufficiency of the evidence
makes it unnecessary to address this issue.
In fact, Rivera testified that Frigerio went with him for security reasons; "[s]o
just in case there[ was] an assault or anything, there would be a witness."
Normally, to prove the contents of a writing, the original writing is required in

preference to testimony about its content. Fed. R. Evid. 1002. However, since
no objection was made on these grounds at trial and the issue is not raised on
appeal, we do not address the admissibility of this testimony. See, e.g., United
States v. McMahon, 938 F.2d 1501, 1509 n.4 (1st Cir. 1991) (noting that failure
to object for best evidence below lowers the standard of review when issue is
raised on appeal).

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254 F.3d 30 (1st Cir.

UNITED STATES OF AMERICA, Plaintiff, Appellee,

United States Court of Appeals For the First Circuit

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

On December 8, 1999, defendant-appellant Oscar Frigerio-Migiano stood trial

The government established at trial that Frigerio began working at "Phone

little things," he became involved in money transactions in January 1998.

According to Rivera, Frigerio accompanied him at night to deposit cash at

In assessing the sufficiency of the evidence in a criminal case, we ask "whether

Frigerio concedes that he engaged in "financial transactions" as defined in 18

However, this, standing alone, is insufficient. As we have previously indicated,

further conclude that Frigerio knew he was participating in an attempt to

The strongest piece of evidence offered by the government regarding Frigerio's

The government contends, as an alternative argument, that to the extent Frigerio

Likewise, Frigerio's presence during a scan for surveillance devices is not a

In reaching our conclusion, we acknowledge that this is a close case. We agree

Normally, to prove the contents of a writing, the original writing is required in

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