United States v. George, Jr.

2016 | Cited 0 times | First Circuit | November 7, 2016

United States Court of Appeals For the First Circuit

No. 15-1892





Defendant, Appellant.


[Hon. Denise J. Casper, U.S. District Judge]


Howard, Chief Judge, Selya and Kayatta, Circuit Judges.

William J. Cintolo, with whom Thomas R. Kiley and Cosgrove Eisenberg & Kiley, PC were on brief, for appellant. Ryan M. DiSantis, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for appellee.

November 7, 2016

SELYA, Circuit Judge. It is familiar lore that in Lord

Acton's words, "[p]ower tends to corrupt, and absolute power

corrupts absolutely." John Emerich Edward Dalberg-Acton,

Historical Essays and Studies (1907). The circumstances of this

case remind us of that venerable precept.

Here, the government charges that the defendant — an

entrenched political satrap — used his political clout to divert

federal funds granted to a state agency and, in the bargain,

transgressed federal criminal law. A jury agreed and found the

defendant guilty on charges of conspiracy and embezzlement from a

federally funded organization. See 18 U.S.C. §§ 371,

666(a)(1)(A).1 The district court sentenced the defendant to a

60-month term of immurement on the conspiracy count and a 70-month

term of immurement on the substantive offense count (to run

concurrently). As part of the sentence, the court directed the

defendant to make restitution in the amount of $688,772. Later,

the court ordered the defendant to forfeit an additional $1,382,214

in ill-gotten gains.

In this appeal, the defendant strives to challenge his

conviction, his sentence, and the forfeiture order. After careful

1 We use the term "embezzlement" as a shorthand. The statute of conviction, 18 U.S.C. § 666(a)(1)(A), criminalizes a range of nefarious activities, including embezzlement, theft, fraudulent obtaining, knowing conversion, and intentional misapplication of covered funds.

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consideration of his asseverational array, we conclude that his

variegated challenges to his conviction are without merit. We

also reject his four claims of sentencing error, including one —

a challenge to a position-of-trust enhancement — that requires us

to address a question of first impression in this circuit.

Finally, we do not reach his challenge to the substance of the

forfeiture order because we conclude that the district court lacked

jurisdiction to enter that order. Accordingly, we affirm his

conviction and sentence, vacate the forfeiture order, and remand

so that, once jurisdiction has reattached, the district court may

address the question of forfeiture anew.


"We rehearse the facts in the light most hospitable to

the verdict, consistent with record support." United States v.

Maldonado-Garcia, 446 F.3d 227 , 229 (1st Cir. 2006). In the

process, we draw all reasonable inferences from the evidence in

favor of the verdict. See id.

Defendant-appellant John George, Jr., operated a bus

system on behalf of a regional transit authority funded by the

Commonwealth of Massachusetts and the federal government. This

authority, known as the Southeast Regional Transit Authority

(SRTA), is the governmental body responsible for providing

transportation to certain cities and towns in southeastern

Massachusetts. SRTA is strictly administrative: although it owns

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the buses, facilities, and equipment used to run the system, it

does not itself operate any buses. Instead, SRTA contracts with

a private entity that uses SRTA's resources to operate and maintain

the bus system. SRTA's advisory board, composed of representatives

of the municipalities that it serves, selects this entity.

From 1980 to 1988, the defendant, a former Dartmouth

selectman, served on SRTA's advisory board. In 1988 — after being

elected to the Massachusetts House of Representatives — he resigned

from that advisory board. Simultaneously, he arranged for his

friend and political ally, Joseph Cosentino, to replace him.

The defendant resigned from the legislature three years

later and purchased Union Street Bus Company (USBC). The defendant

effected this purchase through a corporation known as Trans-Ag

Management, Inc. (Trans-Ag). The defendant was the sole owner and

sole employee of Trans-Ag, and — aside from paying the defendant's

salary and contributing to his pension — Trans-Ag's only function

was to serve as the nominal owner of USBC.

At the time of the purchase, USBC had a contract to

operate the SRTA bus system through 1995. After the defendant

assumed control of USBC, the contract was thrice renewed, the last

renewal (for a five-year term) occurring in 2006 (the Agreement).

The evidence of record supports an inference that the defendant

maneuvered his way into the Agreement through collusion with

Cosentino (by then, the defendant had lost the crucial support of

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the City of Fall River, purportedly over his refusal to hire one

of the mayor's cronies, and felt threatened by competition for the

contract from a national company). Among other things, the

defendant brought in a high bidder to make his own bid appear more

attractive and furnished Cosentino with questions meant to

discredit his main competitor's bid.2

Under the Agreement, USBC's expenses were, in effect,

paid by SRTA with public funds: the Agreement bound SRTA to pay

USBC the difference between USBC's operating expenses and USBC's

operating income. Revenue from bus fares was USBC's exclusive

source of operating income; its operating expenses included

payroll, exclusive of the salaries of its corporate officers. In

practice, this exclusion applied only to the defendant, as USBC

had no other corporate officers. Withal, the Agreement

specifically named the defendant as USBC's general manager, and

SRTA separately paid USBC a management fee that gradually rose

from $199,714 for 2006 to $266,711 for 2010. SRTA required

preapproval of any capital expenditures proposed by USBC and funded

approved expenditures as a distinct line item.

The proof adduced at trial indicated that the defendant

misused USBC's funds (reimbursed by SRTA) in several respects.

2In 2008, Cosentino was rewarded for his efforts: the defendant used his influence to secure a position for Cosentino as SRTA's administrator (a "no-show" job paying $95,000 per year plus substantial fringe benefits).

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Three instances involved paying individuals for full-time USBC

jobs while they worked instead for the defendant's (unrelated)

personal business, a farm. Some details follow.

In 2010, USBC paid Sandra Santos, the defendant's

girlfriend, approximately $100,000 in total compensation

(reimbursed by SRTA). At that time, Santos was employed by USBC

as either an "administrative assistant" or "assistant

administrator" (the record is inconclusive as to which title

obtained). In any event, she was only sporadically at her office

between 2005 and 2011: though USBC's office hours were 8:00 a.m.

to 4:30 p.m., she typically appeared only "once or twice a week,

if at all" in the summertime. A USBC employee testified that he

could not recall Santos ever having worked her allotted forty-hour

week. By like token, workers at the defendant's farm testified to

her daily (though not continuous) presence at the farm stand, where

she worked as a supervisor, frequently during USBC's regular

business hours. The evidence at trial permitted a finding that,

from May to September of 2010, Santos was absent from her job at

USBC for 370.25 hours, costing USBC (and, thus, SRTA) $17,772.

Roy Rocha, a night supervisor at USBC and a long-time

friend of the defendant, would routinely abandon his shift shortly

after arriving and take a company car to work at the defendant's

farm or do personal chores for the defendant. Rocha's sole

compensation for this work was his USBC salary (reimbursed by

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SRTA). In 2010, the cost of that salary (including benefits) was

approximately $90,000.

The record tells a similar tale with respect to Ronald

Pacheco, a USBC mechanic. The defendant would peremptorily summon

Pacheco from his USBC duties to do repairs at the farm.

Additionally, Pacheco sanded and painted tractor parts belonging

to the farm at the SRTA-owned garage using SRTA-owned equipment

during his USBC shift. At USBC, the farm came first: when

Pacheco's immediate superior (Al Fidalgo) asked to postpone

Pacheco's assistance on a farm job to focus on urgent bus repairs,

the defendant called Fidalgo's supervisor and insisted that

Pacheco be sent to the farm forthwith.

There was more. In early 2006, USBC paid $10,000 in

SRTA-reimbursable funds to Sousa Construction, ostensibly for

terminal repairs. However, USBC's maintenance supervisor

testified that he knew of no work done by Sousa Construction for

USBC during that period. In addition, there was evidence that

Santos and the defendant were then discussing remodeling the

kitchen at the defendant's home, and that a Sousa Construction

truck was seen there.

Other examples of the defendant's misuse of SRTA

resources populate the record. For instance, the defendant used

SRTA trucks to plow snow at both his home and his farm. So, too,

SRTA equipment for repairing air conditioning systems on buses was

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used by Pacheco at the defendant's farm. What is more, the

defendant had Pacheco (during his USBC shift) install a SRTA-owned

video surveillance system at the farm.

From the defendant's standpoint, matters began to

unravel when Cosentino, having assumed the SRTA administrator

post, got religion. He began pushing back (albeit gently, at

first) against inappropriate uses of SRTA resources. When

Cosentino went further and advertised the upcoming contract

renewal in a national magazine, the defendant threatened to have

him fired — a threat that materialized in September of 2010.

Despite Cosentino's firing, SRTA awarded a new contract to a rival

firm, thus ending the defendant's reign.

An investigation ensued. As a result, a federal grand

jury indicted the defendant on August 5, 2014. The indictment

charged the defendant with embezzling from an organization that

receives federal funds, see 18 U.S.C. § 666(a)(1)(A), and

conspiracy to commit an offense against the United States, see id.

§ 371. After a nine-day trial, the jury convicted the defendant

on both counts.

On July 29, 2015, the district court sentenced the

defendant to a 70-month term of immurement on the embezzlement

count and a 60-month term of immurement on the conspiracy count

(to run concurrently). The court ordered the defendant to pay

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restitution in the amount of $688,772. With the consent of both

parties, the court reserved the question of forfeiture.

The court entered its written judgment on July 30, 2015,

immediately after denying the defendant's post-trial motion for

judgment of acquittal. See Fed. R. Crim. P. 29(c). The defendant

filed his notice of appeal the following day.

On August 13, 2015 — while this appeal was pending — the

district court held a hearing. On September 21, 2015, the court

amended its judgment to direct that the defendant forfeit

$1,382,214. The defendant did not file a second notice of appeal.


The defendant raises a gallimaufry of issues implicating

his conviction, his sentence, and the forfeiture order. We deal

sequentially with the more substantial of these issues. The

defendant's other arguments are insufficiently developed, patently

meritless, or both. As to those arguments, we simply reject them

out of hand, without further elaboration.

A. Sufficiency of the Evidence.

The defendant's flagship claim challenges the

sufficiency of the evidence. With respect to this challenge, we

review the denial of his motion for judgment of acquittal de novo.

See United States v. Chiaradio, 684 F.3d 265 , 281 (1st Cir. 2012).

Our basic inquiry is "whether, after assaying all the evidence in

the light most amiable to the government, and taking all reasonable

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inferences in its favor, a rational factfinder could find, beyond

a reasonable doubt, that the prosecution successfully proved the

essential elements of the crime." Id. (quoting United States v.

O'Brien, 14 F.3d 703 , 706 (1st Cir. 1994)).

In this case, the government had to prove beyond a

reasonable doubt that the defendant was acting as an agent on

behalf of a state agency or organization; that he embezzled, stole,

obtained by fraud, knowingly converted, or intentionally

misapplied $5,000 or more of property belonging to or under the

care, custody, or control of that agency or organization; and that

the agency or organization received, in any one-year period, more

than $10,000 in federal assistance. See 18 U.S.C. § 666. The

defendant concedes that he worked on behalf of SRTA; that SRTA was

(and is) a state agency or organization within the purview of the

statute; and that it received more than $10,000 in federal

assistance during each of the years in question. The question

reduces, then, to the sufficiency of the government's proof of the

second element.

With respect to this element, the defendant asserts that

the government did not prove that the salaries of his helpmeets

were embezzled, stolen, obtained by fraud, knowingly converted, or

intentionally misapplied. He makes this assertion in the face of

abundant evidence that these individuals were routinely absent

from USBC's premises during their normal working hours and were

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instead toiling at the defendant's farm. In the defendant's view,

evidence of absence from the workplace is meaningless without

evidence that the individuals were not getting their jobs done.

After all, he surmises, they could have been doing their USBC work

elsewhere or at other times.

We do not agree. Several witnesses testified to the

work patterns of Santos, Rocha, and Pacheco, and the jury was well-

situated to determine whether it was plausible that employees who

worked a pittance of hours at USBC's offices while regularly

laboring at the defendant's farm during ordinary business hours

actually performed the USBC jobs for which they were being paid.

The jury decided that it was not plausible, and we think that the

record supports such an inference. See, e.g., United States v.

Ransom, 642 F.3d 1285 , 1291 (10th Cir. 2011); United States v.

Sanderson, 966 F.2d 184 , 186-87 (6th Cir. 1992).

In a variation on this theme, the defendant contends

that employee salaries cannot be the res purloined under section

666 because the statute carves out a safe harbor for "bona fide

salary" payments. 18 U.S.C. § 666(c). But this contention sweeps

too broadly and promotes an interpretation of "bona fide salary"

that would swallow the statute in a single gulp. Were this the

law, a fraudster would only have to structure his loot as salary

to evade prosecution. We hold, consistent with the plain language

and evident purpose of the statute, that "bona fide salary" means

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salary actually earned in good faith for work done for the

employer. See United States v. Baldridge, 559 F.3d 1126 , 1139

(10th Cir. 2009) (holding that work paid for by a county but done

at a county official's private residence could not be a "bona fide

wage"); United States v. Valentine, 63 F.3d 459 , 465 (6th Cir.

1995) (rejecting bona fide salary defense under circumstances

analogous to those present in the case at hand).3 Whether wages

are bona fide is ordinarily a question of fact for the jury, see

United States v. Cornier-Ortiz, 361 F.3d 29 , 36 (1st Cir. 2004),

and this case is no exception: the jury reasonably could have found

that the salaries of USBC employees who were not only routinely

absent from their posts during business hours but were also working

at other jobs were not bona fide.

The defendant has one last shot in his sling. Noting

that the government did not offer proof that the misused funds

were spent on an "otherwise legitimate purpose," he argues that he

could not be convicted under an intentional misapplication theory.

This argument depends on a highly technical reading of our decision

in Cornier-Ortiz, 361 F.3d at 36-37 — but it is a reading with

which we need not grapple. The indictment did not charge solely

3 The defendant's reliance on United States v. Harloff, 815 F. Supp. 618 , 619 (W.D.N.Y. 1993), is misplaced. Courts have repeatedly distinguished Harloff in cases like this one, see, e.g., Baldridge, 559 F.3d at 1139; United States v. Williams, 507 F.3d 905 , 909 (5th Cir. 2007); Valentine, 63 F.3d at 465, and we too regard it as off-point.

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an intentional misapplication theory, nor was the jury instructed

solely on such a theory. Rather, the indictment charged, and the

court instructed the jury, in terms of all five potential means of

violating section 666(a)(1)(A). Consequently, the jury's finding

of guilt did not depend on a finding that the defendant

intentionally misapplied the salaries in question. See United

States v. Hernandez-Albino, 177 F.3d 33 , 40 (1st Cir. 1999) ("When

the government alleges in a single count that the defendant

committed the offense by one or more specified means, the Supreme

Court has 'never suggested that in returning general verdicts in

such cases the jurors should be required to agree on a single means

of commission . . . .'" (quoting Schad v. Arizona, 501 U.S. 624 ,

631 (1991))).

The defendant next submits that the government never

proved that he embezzled $10,000 to remodel his kitchen. In this

regard, he calumnizes the government for not calling the

construction company owners as witnesses notwithstanding its

suggestion to the court (when the record of the $10,000 expenditure

was admitted into evidence) that it would do so.

The pertinent facts are straightforward. The evidence

shows that $10,000 was paid to Sousa Construction, purporting to

be for repairs at SRTA terminals. USBC's maintenance supervisor,

however, testified that he did not know of any work done by Sousa

Construction at any SRTA terminal during the relevant time frame.

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The evidence further shows that — at about the time the check was

issued — the defendant was discussing his kitchen renovation plans,

and a Sousa Construction truck was spotted at his home. Though

there is no smoking gun, there are matching bullet holes. Cf.

United States v. Piper, 298 F.3d 47 , 59 (1st Cir. 2002) ("[T]he

government may satisfy its burden of proof 'by either direct or

circumstantial evidence, or by any combination thereof.'" (quoting

United States v. Gifford, 17 F.3d 462 , 467 (1st Cir. 1994))). On

this record, a rational jury could have concluded beyond a

reasonable doubt that the $10,000 payment was for the defendant's

personal kitchen renovations.

The defendant battles on, alleging that the government

failed to prove that the use of equipment, such as SRTA plows or

other resources, violated section 666 because (i) such uses were

allowed by the Agreement, (ii) the government did not prove either

the dates on which these events occurred or the monetary values

assigned to each event, and (iii) the events, even if aggregated,

could not cross the $5,000 statutory threshold. These allegations

lack force.

For one thing, if challenged conduct is in fact illegal,

a contract provision cannot ratify that conduct. See United States

v. Mardirosian, 602 F.3d 1 , 7 (1st Cir. 2010). For another thing,

even without specific dates or precise values, evidence of the

misuse of resources was relevant to the charged conspiracy. See,

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e.g., Sanderson, 966 F.2d at 189. And at any rate, the district

court rejected a proposed jury instruction requiring unanimity as

to what property constituted the $5,000 necessary to cross the

statutory threshold. The defendant has not challenged that ruling

on appeal and, therefore, any argument on this point is waived.

See DeCaro v. Hasbro, Inc., 580 F.3d 55 , 64 (1st Cir. 2009). Since

the statutory threshold is comfortably exceeded by either the bogus

salaries or the wayward kitchen remodeling payment alone, the cost

of the other items is irrelevant. See United States v. Cruzado-

Laureano, 404 F.3d 470 , 484-85 (1st Cir. 2005) (holding that two

transactions totaling over $5,000 were sufficient for conviction

under section 666 even if other potentially illegal transactions

were ignored).

The defendant's final assault on the sufficiency of the

evidence is a dead letter. The government alleged, among other

things, that the defendant illegally sought a pension funded by

SRTA and attempted to boost that pension by giving himself a

generous raise in the final year of the Agreement. Before us, the

defendant complains that the government's proof of these

allegations was too thin.

Here, however, the district court eschewed any mention

of the pension in its charge to the jury, and the government only

obliquely alluded to it in its closing argument. Given the other

evidence that we have discussed, the pension and salary increase

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were immaterial to the jury's verdict. Thus, any error in the

admission of the evidence was manifestly harmless.4 See, e.g.,

United States v. Sasso, 695 F.3d 25 , 29 (1st Cir. 2012).

B. Constructive Amendment.

The defendant claims that a constructive amendment of

the indictment took place at trial. "A constructive amendment

occurs '"when the charging terms of the indictment are altered" at

trial so that they are different from those handed up by the grand

jury.'" United States v. Muñoz-Franco, 487 F.3d 25 , 64 (1st Cir.

2007) (quoting United States v. Rodríguez, 215 F.3d 110 , 118 (1st

Cir. 2000)). Because this claim was not made below, our review is

for plain error. See United States v. Brandao, 539 F.3d 44 , 57

(1st Cir. 2008). That review "entails four showings: (1) that an

error occurred (2) which was clear or obvious 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).

There was no error in this respect, plain or otherwise.

The jury convicted the defendant on exactly the same charges as

4 We add that the district court's sentencing calculus (including its order for restitution) did not include either the unvalued use of SRTA resources or the increased pension. In formulating the defendant's sentence, the district court did not include any proceeds of the fraud apart from Santos's salary, Rocha's salary, and the kitchen renovation payment.

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were laid out in the indictment, which alleged in essence that the

defendant misused SRTA funds and resources for his private benefit.

In light of this congruence between the crimes charged and the

proof at trial, the claim of constructive amendment necessarily

fails. See United States v. DeCicco, 439 F.3d 36 , 47 (1st Cir.


In an effort to blunt the force of this reasoning, the

defendant insists that the government's emphasis gradually shifted

from one means of violating section 666(a)(1)(A) to other means of

violating that statute. But this insistence rings hollow. Where,

as here, all of the means of violating the criminal statute are

properly charged and that broad charge is not limited by a

subsequent stipulation, the government's mid-trial decision to

shift its emphasis from one means to another does not constitute

a constructive amendment of the indictment. See id. at 45-46.

C. Jury Instructions.

Next, the defendant claims that the district court erred

in instructing the jury on mens rea. When — as in this instance

— a party advances a preserved claim "that the court omitted a

legally required instruction or gave an instruction that

materially misstated the law, our review is de novo." United

States v. De La Cruz, ___ F.3d ___, ___ (1st Cir. 2016) [No. 14-

2132, slip op. at 24].

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As said, there are five means through which section

666(a)(1)(A) may be violated. For two of them, the statute

expressly states the necessary mens rea: to "knowingly convert[]"

or "intentionally misappl[y]." 18 U.S.C. § 666(a)(1)(A). The

statute is silent, however, as to the necessary mens rea for a

conviction premised on one of the other three means (stealing,

embezzling, or obtaining by fraud). Faced with this uneven

statutory terrain, the court below instructed the jury on the

meanings of "knowingly" and "intentionally," and then added that

stealing means "to take someone else's money or property without

the owner's consent with the intent to deprive the owner of the

value of that money or property"; that embezzlement "means to

intentionally take . . . [the] money or property of another after

that money or property lawfully came into the possession of the

person taking it by virtue of some office, employment[,] or

position of trust"; and that obtaining by fraud "means to

intentionally take something by false representations, suppression

of the truth[,] or deliberate disregard for the truth."

The defendant argues that these instructions were

deficient because the three statutorily unmodified acts (stealing,

embezzling, and obtaining by fraud) all require a willful mens

rea, which he defines as a "criminal, evil intent." The defendant

cites no authority for his ipse dixit that these offenses always

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require an explicit willfulness instruction.5 More important, his

position defies common sense: the terms "steal," "embezzle," and

"obtain by fraud" by their very nature imply a nefarious intent.

See, e.g., United States v. Kucik, 909 F.2d 206 , 212 (7th Cir.

1990) (recognizing that there is a "presumption evident in ordinary

English usage that when one steals one does so with ill purpose").

Here, the district court's instructions clearly conveyed

the criminal quiddity of these terms. Consider, for example, its

instruction (with respect to stealing) that when one "inten[ds] to

deprive" another of property, he does not do so innocently. So,

too, the court's instruction with respect to obtaining by fraud

made it pellucid that such means included "tak[ing] something by

false representations, suppression of the truth[,] or deliberate

disregard for the truth."

To say more on this point would be supererogatory. We

hold that the district court's instructions sufficiently covered

the mens rea necessary to convict. No magic words were required.6

5 The defendant's citation to Morissette v. United States, 342 U.S. 246 (1952), is far afield. The Morissette Court held that when Congress uses a term of art with a traditional mens rea but does not mention intent, it does not follow that Congress eliminated the element of intent altogether. See id. at 263. That principle has no application where, as here, the challenged instructions do not strip away any traditional requirement of intent.

6As framed, the defendant's asseverations regarding mens rea also bleed into a conclusory suggestion that the indictment may have been duplicitous. Because the defendant's briefs offer no

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D. Sentencing.

The defendant musters a panoply of claims of sentencing

error. He submits that the district court incorrectly calculated

the amount of loss attributable to the crimes of conviction and

applied unfounded sentencing enhancements for sophisticated means,

abuse of a position of trust, and role in the offense. Since these

claims were preserved below, we review de novo "the sentencing

court's interpretation and application of the sentencing

guidelines, assay the court's factfinding for clear error, and

evaluate its judgment calls for abuse of discretion." United

States v. Ruiz-Huertas, 792 F.3d 223 , 226 (1st Cir.), cert. denied,

136 S. Ct. 258 (2015).

1. Amount of Loss. The defendant's challenge to the

sentencing court's loss calculation is easily dispatched. He

maintains that the loss amount used in determining his guideline

sentencing range wrongly included the salaries of Santos and Rocha

as well as the $10,000 allegedly spent on the defendant's personal

kitchen renovations. Each of these items, the defendant says, was

insufficiently proved at trial.

This is old hat. We already have explained that the

evidence was more than adequate to prove the challenged salaries

developed argumentation in support of this suggestion, we deem any claim of duplicitousness waived. See United States v. Zannino, 895 F.2d 1 , 17 (1st Cir. 1990).

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and kitchen renovation payments. See supra Part II(A). It follows

that this claim of sentencing error is hopeless.

2. Sophisticated Means. The district court enhanced

the defendant's offense level by two levels for his employment of

sophisticated means in the commission of the crimes, see USSG

§2B1.1(b)(10)(C), citing the defendant's use of a shell company

(Trans-Ag).7 In terms, a sophisticated means enhancement is

warranted when a defendant has devised "especially complex or

. . . intricate" methods of executing or concealing an offense.

See USSG §2B1.1, cmt. n.9(B). The commentary to the sentencing

guidelines identifies the use of "corporate shells" as a

prototypical example of the type of sophisticated means that may

give rise to the enhancement. See id. The district court found

that Trans-Ag was just such a corporate shell.

The defendant demurs. He argues here, as he did below,

that Trans-Ag is not a shell company but, rather, is merely a

holding company, necessitated by the structure of the Agreement.

The district court heard the parties' conflicting

arguments on this point and considered evidence as to both the

nature of Trans-Ag and the requirements of the Agreement. The

7 In support of this enhancement, the government also points to the defendant's use of his political connections to control the bid process. Because the defendant's use of Trans-Ag is itself sufficient to justify the enhancement, we need not delve into the government's other arguments.

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court did not clearly err in finding that Trans-Ag was a shell

company, not merely a holding company. As we have said, "where

there is more than one plausible view of the circumstances, the

sentencing court's choice among supportable alternatives cannot be

clearly erroneous." United States v. Ruiz, 905 F.2d 499 , 508 (1st

Cir. 1990).

The short of it is that the defendant's scheme to defraud

SRTA was both complex and intricate, and his insertion of Trans-

Ag into the mix was just one manifestation of this complexity. It

is, moreover, clear that he used Trans-Ag both to facilitate and

to help to conceal his perfidy. We conclude, without serious

question, that the defendant's challenge to the sophisticated

means enhancement fails.

3. Position of Trust. The defendant's next plaint

relates to the two-level enhancement imposed by the district court

for abuse of a position of trust. See USSG §3B1.3. To justify

this enhancement, a sentencing court must find that the defendant

held a position of public or private trust and that he used the

position to facilitate or conceal his offense. See United States

v. Pacheco-Martinez, 791 F.3d 171 , 178 (1st Cir. 2015). Here, the

district court found that the defendant, as the person in charge

of the affairs of a closely held corporation (USBC), occupied a

position of trust with respect to SRTA and used that position to

facilitate his embezzlement of SRTA's funds and resources.

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Abuse is manifest, so the issue is whether the district

court supportably found that the defendant occupied a position of

trust at all. The defendant assails the district court's

reasoning, declaring that his "status as an outside contractor" is

not "a per se position of public or private trust." That is true

as far as it goes — but it does not take the defendant very far.

The court did not rely on a per se rule. Instead, it found that,

on this record, the defendant, as the president of a contractor,

occupied a position of trust vis-à-vis SRTA. In reviewing that

finding, our analysis must proceed from the perspective of the

victim. See id. at 178-79; United States v. Chanthaseng, 274 F.3d

586 , 589 (1st Cir. 2001).

This court has not yet considered whether — or under

what circumstances — a high-ranking employee of a government

contractor can be said to occupy a position of trust vis-à-vis a

defrauded government entity.8 Still, we do not write on a pristine

page. Other courts have recognized that a defendant can be found

to have occupied (and abused) a position of trust vis-à-vis the

8 In United States v. Sotomayor-Vázquez, 249 F.3d 1 (1st Cir. 2001), we affirmed a finding that the defendant (an outside consultant to a government contractor) occupied a position of trust when embezzling from the contractor. See id. at 19-20. But there, the contractor was the victim of the crime, and we addressed only whether the defendant's status as a consultant created a position of trust. That is at a considerable remove from this case, in which the district court found SRTA to be the victim and treated the contractor as the instrumentality through which the fraud was perpetrated.

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government when he misuses public funds through a combination of

control over a government contractor and a lack of government

oversight. See, e.g., United States v. Robinson, 198 F.3d 973 ,

978 (D.C. Cir. 2000); United States v. Wright, 160 F.3d 905 , 911

(2d Cir. 1998); United States v. Glymph, 96 F.3d 722 , 728 (4th

Cir. 1996). This construct recognizes a real world problem:

individuals controlling government contractors sometimes grow so

cozy with the contracting agency that they are allowed to exercise

substantial discretionary authority over government funds without

any semblance of meaningful oversight. In other words, a

government agency sometimes may rely too heavily on a high-ranking

employee of a contractor and thereby place that individual in a

position of special trust.

To warrant the application of the position-of-trust

enhancement in such circumstances, a defendant first must have

both substantial control and significant discretion over the

affairs of the government contractor. See Robinson, 198 F.3d at

978; Wright, 160 F.3d at 911. This is consistent with our case

law, which teaches that "the requirement of managerial or

professional discretion is 'paramount'" in regard to the position-

of-trust enhancement. United States v. Sicher, 576 F.3d 64 , 76

(1st Cir. 2009) (quoting Chanthaseng, 274 F.3d at 589)

Of course, application of this enhancement may be

supported by a showing that the government agency placed special

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trust and confidence in the defendant. Courts have treated a lack

of supervision over the use of government funds as a proxy for a

showing that the government agency placed special trust and

confidence in the defendant. To conduct this aspect of the

inquiry, a court must ask "whether the victim reposed additional

trust in the defendant by ceding its ability to confirm compliance

with the contract, thus relying more heavily on the honesty of the

defendant than an ordinary party to a contract would." United

States v. Nathan, 188 F.3d 190 , 206 (3d Cir. 1999).

Applying this reasoning, courts have found positions of

trust when, for example, the government allowed a defense

contractor to self-certify that its shipments met the government's

specifications, see Glymph, 96 F.3d at 728; when the defendant ran

a school on behalf of a public school system with no corresponding

oversight of the school's financial records and little oversight

of its operations, see Robinson, 198 F.3d at 978; and when a

government agency entrusted a coin supplier with carte blanche

authority over substantial amounts of coins belonging to the

agency, see United States v. Boyle, 10 F.3d 485 , 489 (7th Cir.

1993). In each of these cases, the agency imbued the defendant

with broad power over the use of public funds through reduced

oversight; and the use of that power to facilitate or control

criminal activity, by a person who had control over the government

contractor, was found to be an abuse of a position of trust. See

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Robinson, 198 F.3d at 978; Glymph, 96 F.3d at 728; Boyle, 10 F.3d

at 489.

United States v. Nathan is a representative case. See

188 F.3d at 207. There, the Third Circuit affirmed a finding that

the president of a defense contractor held a position of trust

vis-à-vis a government agency, noting that he "held the highest

position in the company," owned a controlling interest in the

company, determined how his company "would fill the government

contracts," and yet was allowed to operate without any effective

governmental check on whether his company's work met government

specifications because the government agency never appointed a

quality assurance representative to monitor the contractor's

performance. See id. at 206-07.

The record in this case shows beyond hope of

contradiction that the defendant dominated USBC. Indeed, his iron-

fisted control is open-and-shut. He was the sole owner of Trans-

Ag (the shell company that, in turn, owned USBC); he served as

USBC's president (indeed, he was its sole corporate officer); and

he exercised virtually unfettered control over USBC's operations,

including personnel and finances.

So, too, the record is replete with evidence from which

a factfinder reasonably could infer that SRTA reposed special trust

in the defendant. Thanks to his political connections, USBC's

performance was subjected to almost no oversight by SRTA.

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According to testimony at trial, the defendant "had exclusive and

sole responsibility for" USBC's employees. He also had exclusive

and sole responsibility for USBC's performance of a cost-plus

contract in circumstances in which the contracting government

agency had no idea which employee was doing what work. What is

more, SRTA's lax financial monitoring allowed him to pay USBC

employees with public funds to work on his private business and to

use public funds to pay for his kitchen renovations. That the

defendant held sway over SRTA is evident from the fact that — in

violation of the Agreement — he was able to rebuff without

consequence an auditor sent by SRTA to inspect USBC's records.

Similarly, Cosentino admitted that when the defendant gave

unsatisfactory explanations for questionable expenses, SRTA "would

do nothing because of [Cosentino's] association and relationship

with" the defendant.

In sum, the defendant's control over USBC was coupled

with a lack of meaningful government oversight over USBC. This

scenario ensured that SRTA ceded to the defendant its

responsibility to oversee the use of public funds. See id. at

206. The upshot was that — as the district court supportably found

— SRTA effectively placed the defendant in a position of trust.

Viewed against this backdrop, the district court did not clearly

err in finding that the defendant held and abused a position of

trust with respect to SRTA.

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4. Role in the Offense. The district court enhanced

the defendant's offense level by four additional levels, finding

that he was the organizer and leader of a criminal enterprise that

included five or more participants. See USSG §3B1.1(a). The

defendant challenges this enhancement, quarreling with the court's

assessment of the size of the enterprise.

The sentencing guidelines call for a four-level

enhancement when "the defendant was an organizer or leader of a

criminal activity that involved five or more participants or was

otherwise extensive." Id. To qualify as a participant, a person

must be criminally responsible for the commission of the offense,

but need not be either prosecuted for or convicted of the offense.

See id., cmt. n.1; United States v. Bey, 188 F.3d 1 , 10 (1st Cir.

1999). Since the defendant himself counts as one of the five

participants, the court must identify at least four other

participants to satisfy the numerosity requirement. See United

States v. Tejada-Beltran, 50 F.3d 105 , 113 n.9 (1st Cir. 1995).

The court below based the enhancement on a finding that

the defendant (at a minimum) directed the actions of Santos, Rocha,

Cosentino, Louis Pettine (Cosentino's predecessor as SRTA

administrator), David Peixoto (USBC's comptroller), and Steven

Robinson (USBC's outside accountant). Inasmuch as we conclude

that the numerosity requirement is satisfied by the district

court's findings with respect to the defendant, Santos, Rocha,

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Peixoto, and Cosentino, we limit our discussion to those


That the defendant himself was a participant requires no

elaboration. In addition, there was no clear error in finding

Santos and Rocha to be participants. As explained above, see supra

Part II(A), those two individuals accepted salaries funded by SRTA

for work they did not do and, thus, knowingly furthered the

criminal enterprise.9 See United States v. McCormick, 773 F.3d

357 , 360 (1st Cir. 2014).

Nor was there clear error in naming Peixoto as a

participant. After all, there was ample evidence that he abetted

the defendant's corrupt activities (for example, he sent a USBC

technologist to the defendant's farm to investigate how SRTA-

funded surveillance cameras could be installed at the farm stand).

Moreover, Peixoto admitted to the grand jury that he willfully

"failed to disclose to federal auditors that USBC employees

. . . were absent from USBC during work hours and instead were

working at [the defendant's f]arm." To cinch matters, he tried to

cover up what had happened by "shredd[ing] USBC records and other

documents around the time that [the defendant] lost the SRTA

contract." No more was needed to ground the finding that Peixoto

9 Although the district court did not identify Pacheco as a participant, his involvement was of the same nature as that of Santos and Rocha (albeit not to the same extent). Consequently, he too qualified as a participant.

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was a participant. See United States v. Starks, 815 F.3d 438 , 441

(8th Cir. 2016) (holding that an "individual only needs to give

'knowing aid in some part of the criminal enterprise'" to be

considered a participant (quoting United States v. Hall, 101 F.3d

1174 , 1178 (7th Cir. 1996))).

Finally, we discern no clear error in the district

court's conclusion that Cosentino participated in the criminal

activities. When the defendant was competing for the Agreement,

Cosentino assisted him in undermining other bidders and said

nothing to his fellow advisory board members about the defendant's

machinations. In return, the defendant arranged for him to succeed

Pettine as SRTA administrator. In that capacity, Cosentino turned

a blind eye to the defendant's use of SRTA resources for improper

purposes. These actions give rise to an inference of complicity

sufficient to ground a finding that Cosentino was a participant in

the criminal activities.10 See McCormick, 773 F.3d at 360; see

also United States v. Al-Rikabi, 606 F.3d 11 , 14 (1st Cir. 2010)

(describing participants as "complicit individuals").

10To be sure, Cosentino eventually got religion and began to resist the defendant's looting of SRTA resources. Nevertheless, he willingly participated in the scheme during several prior years and, thus, could be found to be a participant for purposes of the role-in-the-offense enhancement. See United States v. Guevara, 706 F.3d 38 , 45-46 (1st Cir. 2013).

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That ends this aspect of the matter. We discern no clear

error in the district court's imposition of the four-level role-

in-the-offense enhancement.

E. Forfeiture.

The last leg of our journey takes us to the forfeiture

order. The defendant assigns error; the government counters that

we lack appellate jurisdiction over this assignment of error.

The background facts are undisputed. Following its

pronouncement of sentence, the district court entered judgment on

July 30, 2015. That judgment did not contain any dispositive

provision with respect to forfeiture, but it did note that the

court was deferring any decision on forfeiture "with the consent

of the parties." The next day, the defendant filed his notice of


While the appeal was pending, the district court (on

September 21, 2015) purposed to enter an amended judgment, which

for the first time included an order of forfeiture. The defendant

neither amended his notice of appeal nor served a new notice of

appeal. Over three months later, the defendant submitted his

opening brief on appeal. In it, he attempted for the first time

to challenge the forfeiture order.

The government argues that the forfeiture order is not

properly before us: in its view, the defendant's failure to file

a new notice of appeal after the entry of the forfeiture order

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deprives us of jurisdiction to review that order. See, e.g.,

United States v. Casas, 999 F.2d 1225 , 1232 (8th Cir. 1993). There

is, however, an antecedent question that must be answered.

Although neither party challenges the district court's

jurisdiction to enter its forfeiture order, we have an independent

obligation to explore that issue. See One & Ken Valley Hous. Grp.

v. Me. State Hous. Auth., 716 F.3d 218 , 224 (1st Cir. 2013). Our

review of the district court's implicit conclusion that it

possessed subject-matter jurisdiction to enter the forfeiture

order is de novo. See United Seniors Ass'n, Inc. v. Philip Morris

USA, 500 F.3d 19 , 23 (1st Cir. 2007).

The question that concerns us is whether the pendency of

the defendant's notice of appeal divested the district court of

jurisdiction to enter the forfeiture order. In answering that

question, we start with the abecedarian principle that once a

notice of appeal is filed, the district court is divested of

"authority to proceed with respect to any matter touching upon, or

involved in, the appeal." United States v. Brooks, 145 F.3d 446 ,

455 (1st Cir. 1998) (quoting United States v. Mala, 7 F.3d 1058 ,

1061 (1st Cir. 1993)). This principle "derives from the notion

that shared jurisdiction almost always portends a potential for

conflict and confusion." Id. at 456. Accordingly, shared

jurisdiction is limited to a "circumscribed cluster of situations,

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the handling of which is not inconsistent with the prosecution of

an appeal." Id.

We need not tarry. The defendant's notice of appeal was

filed on July 31, 2015. At that moment, the district court was

divested of jurisdiction regarding "any matter touching upon, or

involved in, the appeal." Brooks, 145 F.3d at 455 (quoting Mala,

7 F.3d at 1061); see Griggs v. Provident Consumer Discount Co.,

459 U.S. 56 , 58 (1982) (per curiam) (explaining that "a notice of

appeal . . . divests the district court of its control over those

aspects of the case involved in the appeal"). This proscription

extended to the court's attempt to introduce into the judgment,

for the first time, a forfeiture order. See United States v.

Pease, 331 F.3d 809 , 816 (11th Cir. 2003).

A close analogy is found in our recent decision in United

States v. Maldonado-Rios, 790 F.3d 62 (1st Cir. 2015) (per curiam).

There, we held that the district court lacked jurisdiction, during

the pendency of an appeal, to grant a sentence modification motion

brought under 18 U.S.C. § 3582(c)(2). See id. at 64. In reaching

that conclusion, we cited, inter alia, United States v. Distasio,

820 F.2d 20 , 23 (1st Cir. 1987), for the proposition that "a

docketed notice of appeal suspends the sentencing court's power to

modify a defendant's sentence." We added that the limited

exceptions to the general rule that an appeal terminates a district

court's jurisdiction all pertain "to district court orders that

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concern matters unrelated to the 'substance of the decision' being

appealed." Maldonado-Rios, 790 F.3d at 64 (quoting 16A Charles A.

Wright et al., Federal Practice and Procedure § 3949.1, at 59 (4th

ed. 2008)); accord United States v. Cardoza, 790 F.3d 247 , 248

(1st Cir. 2015) (per curiam). The forfeiture order in this case

does not concern a matter unrelated to the substance of the

defendant's appeal. Thus, it falls within the general rule, not

within the long-odds exception to it. See Pease, 331 F.3d at 816.

Our decision in United States v. Ferrario-Pozzi, 368

F.3d 5 (1st Cir. 2004), is not to the contrary. That decision

addressed whether a district court retains jurisdiction, under

Federal Rule of Criminal Procedure 32.2(e), to enter a forfeiture

order despite the pendency of a notice of appeal.11 See id. at 11.

There — unlike in this case — the district court's original

judgment included a statement that "forfeiture shall be no less

than $2,000,000 to be determined at a hearing." Id. at 7. While

the defendant's appeal was pending, the district court made a

specific forfeiture award of $3,700,000. See id. at 8. We ruled

that the pending appeal did not deprive the district court of

jurisdiction to issue the award because the award could be

considered "an amendment of an existing order under Rule 32.2(e),

11 Rule 32.2(e) allows a court "at any time" to "amend an existing order of forfeiture to include" substitute property or subsequently located property. Fed. R. Crim. P. 32.2(e)(1) (emphasis supplied).

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and thus within the jurisdiction retained by the court." Id. at

11. Put simply, our holding rested on the fact that forfeiture

"was properly a part of the [initial] judgment." Id.

Here, there was no forfeiture order included in the

original judgment, merely an allusion to the possibility that

forfeiture might be ordered at some unspecified future date. The

district court made clear both at the disposition hearing and in

its written judgment that forfeiture remained an open, unresolved

issue, and took no position as to whether forfeiture would be

ordered at all. Under these circumstances, the pendency of the

appeal deprived the court of jurisdiction to issue its amended


The fact that the parties consented to deferral of the

district court's consideration of the forfeiture issue does not

alter the jurisdictional calculus. A federal court's lack of

subject-matter jurisdiction cannot be repaired by consent of the

parties. See United States v. Horn, 29 F.3d 754 , 768 (1st Cir.

1994) ("Parties cannot confer subject matter jurisdiction on

either a trial or an appellate court by indolence, oversight,

acquiescence, or consent.").

We add a coda. The district court was not powerless to

address the issue of forfeiture despite the pendency of the appeal.

It could have asked us to stay the pending appeal and remand in

order to allow it to make that additional ruling. See Puerto Rico

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v. SS Zoe Colocotroni, 601 F.2d 39 , 42 (1st Cir. 1979); cf.

Maldonado-Rios, 790 F.3d at 64-65 (discussing procedure to be used

when district court wishes to act upon a motion that it lacks

jurisdiction to address because of the pendency of an appeal

(citing Fed. R. App. P. 12.1(a))). We commend this salutary

procedure to district courts that wish to add forfeiture orders to

sentences previously imposed.


We need go no further. For the reasons elucidated above,

we affirm the defendant's conviction and sentence, but vacate the

order of forfeiture as improvidently granted (that is, as granted

without jurisdiction). We remand so that the district court, once

its jurisdiction has reattached, may consider the issue of

forfeiture anew. We take no view, however, as to either the

propriety or amount of a future order of forfeiture.

Affirmed in part, vacated in part, and remanded.

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