United States v. Martinez

2015 | Cited 0 times | First Circuit | December 11, 2015

United States Court of Appeals For the First Circuit

Nos. 13-2462 14-1127 UNITED STATES,




Defendants, Appellants.


[Hon. Rya W. Zobel, U.S. District Judge]


Barron, Selya, and Lipez, Circuit Judges.

Amy M. Belger for appellant Dzhanikyan. Derege B. Demissie, with whom Demissie and Church was on brief, for appellant Martinez. Kelly Begg Lawrence, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for appellee.

December 11, 2015

BARRON, Circuit Judge. In these consolidated criminal

appeals, Karapet Dzhanikyan and Ronald Martinez raise a number of

challenges to their convictions, including some that concern the

District Court's decision to try the two men together. For the

reasons set forth below, we affirm each of the convictions except

for Martinez's conviction for conspiring to use extortionate means

to collect an extension of credit in violation of 18 U.S.C. §



The initial indictment charging Dzhanikyan and Martinez

was handed down in 2011 and arose out of a year-long wiretap

investigation of a suspected drug trafficker named Safwan

Madarati. A superseding indictment, containing eleven total

counts and naming fifteen defendants, was handed down in 2012.

Five counts of the superseding indictment named

Dzhanikyan or Martinez. Dzhanikyan was charged with one count of

conspiring with Madarati and others to distribute oxycodone, in

violation of 21 U.S.C. § 846 (Count 1). Martinez was charged with

two counts of conspiring with Madarati and others to attempt to

collect a debt through extortionate means, in violation of 18

U.S.C. § 894(a) (Counts 2 and 3), and two counts of possessing

crack cocaine with intent to distribute it, in violation of 21

U.S.C. § 841(a)(1) (Counts 10 and 11).

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Before trial, Martinez moved to be tried separately from

all of his co-defendants, including Dzhanikyan. Martinez also

moved to be tried separately on each of the four counts he faced.

In January of 2013, the District Court denied Martinez's motions

for severance. Dzhanikyan made no pre-trial severance motion.

By the time the trial began on June 3, 2013, all of the

co-defendants of Dzhanikyan and Martinez had pleaded guilty. The

trial thus proceeded with only Dzhanikyan and Martinez as


After the presentation of the evidence at trial,

Martinez moved under Federal Rule of Criminal Procedure 29(a) for

acquittal on all the counts for which he had been charged. The

District Court granted Martinez's motion as to the first of the

two counts that had charged him with using extortionate means to

collect an extension of credit (Count 2). That extortion count

charged Martinez with conspiring to use extortionate means to

collect an extension of credit by Madarati to a jewelry store

owner. The alleged extortionate means involved shooting the

store's windows and resulted in injuries to several people.

The District Court denied Martinez's motion as to the

remaining counts against him, including as to the second extortion

count (Count 3). That extortion count charged Martinez with

conspiring to use extortionate means to collect a separate

extension of credit by Madarati. The alleged extortionate means

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involved an attempted break-in of the house of the purported


Following the District Court's ruling on the Rule 29(a)

motion, jury deliberations began. In the midst of the

deliberations, the jury submitted two questions to the District

Court. One of those questions is at issue in these appeals: "Can

we use all the evidence presented during the trial as we evaluate

each individual charge?" The District Court proposed to answer

that question by saying simply, "Yes."

Martinez's counsel raised a concern about the proposed

answer. She requested that the District Court make clear that the

jury could not rely on evidence from Martinez's by-then dismissed,

jewelry-store extortion count in considering (at least) the

remaining extortion count against Martinez. Martinez's counsel

did not actually propose such an instruction, however. Martinez's

counsel explained that she would need some time to come up with

the right wording. The District Court made clear that in its view

there was no need for any limiting instruction. Dzhanikyan raised

no objection to the District Court's proposed answer to the jury's


The District Court called the jurors back into the

courtroom and told them that the answer to their question was,

"Yes." After addressing the jury's other question, the District

Court asked the jury: "And you understand the use of all of the

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evidence with respect to each charge as it applies to that charge?"

The jury responded by "nodding."

The jury returned guilty verdicts against Dzhanikyan and

Martinez on all four remaining counts. Following the verdicts,

the defendants moved for both a judgment of acquittal under Federal

Rule of Criminal Procedure 29(a) and a new trial under Federal

Rule of Criminal Procedure 33.1 The motion for a new trial

contended that the District Court's "Yes" response to the jury's

question resulted in "evidentiary spillover," a "variance," and

"retroactive misjoinder." The District Court denied the

defendants' Rule 29(a) motions and their joint motion for a new


In considering the defendants' challenges on appeal, we

start with their individual challenges to the District Court's

initial decision to try them together and to the District Court's

denial of their joint motion for new trial. We then consider

Martinez's separate challenges to his extortion conviction on

Count 3.


"[A] trial judge has 'considerable latitude' in deciding

severance questions," and thus, even when a challenge to a decision

to try a defendant jointly has been properly preserved, "the

1 Technically, Martinez filed a motion for a new trial and then Dzhanikyan moved to join that motion.

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judge's resolution of [those questions] 'will be overturned only

if that wide discretion is plainly abused.'" United States v.

O'Bryant, 998 F.2d 21 , 25 (1st Cir. 1993) (quoting United States

v. Natanel, 938 F.2d 302 , 308 (1st Cir. 1991)). An abuse of

discretion in declining to sever a trial may be found, however, if

a defendant "who seeks a separate trial can . . . mak[e] a strong

showing of evident prejudice." Id. And that strong showing may

be made "if there is a serious risk that a joint trial would . . .

prevent the jury from making a reliable judgment about guilt or

innocence." Id. (quoting Zafiro v. United States, 506 U.S. 534 ,

539 (1993)). With that background in place, we now turn to the

challenges the defendants bring -- both individually and jointly --

to the decision to try them together.


Dzhanikyan contends that there was a serious risk here

that, in consequence of the joint trial, the jury would not be

able to render a reliable verdict because the evidence the

government intended to put forth about Martinez's involvement in

the two alleged extortion schemes was "highly inflammatory and

prejudicial."2 Dzhanikyan did not raise this challenge below,

2 The evidence concerning Count 2 included testimony that a man the government maintained was Martinez shot bullets through the windows and display cases of a jewelry shop, injuring several bystander employees of the shop. The evidence concerning Count 3 included testimony that a man the government named as Martinez

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however, and so his challenge, if not waived, is subject to review

only for plain error. See United States v. Magana, 127 F.3d 1 , 7

(1st Cir. 1997) (reviewing unpreserved misjoinder claim for plain


To satisfy the demanding plain-error standard,

Dzhanikyan must show that "(1) an error occurred, (2) the error

was obvious, (3) the error affected substantial rights, and (4)

the error seriously impaired the fairness, integrity, or public

reputation of judicial proceedings." United States v. Lanza-

Vázquez, 799 F.3d 134 , 145 (1st Cir. 2015) (citation and internal

quotation marks omitted). But he cannot make that showing.

It is not obvious that the government's evidence about

Martinez's use of extortionate means to collect an extension of

credit would create a serious risk that the jury would be prevented

from making a reliable judgment about Dzhanikyan's role in

committing the distinct and unrelated drug conspiracy crime for

which he was charged. That evidence, to be sure, did involve

attempted to break into the home of a purported debtor in the middle of the night. 3 The government argues in its brief that this argument has actually been waived because Dzhanikyan made no timely motion for severance under Federal Rule of Criminal Procedure 12(b)(3). See United States v. Oquendo-Rivas, 750 F.3d 12 , 17 (1st Cir. 2014) (finding waiver in the context of another untimely 12(b)(3) motion). But we need not decide here when a failure to file a pre-trial motion to sever might constitute a waiver, because Dzhanikyan's challenge fails even if we apply the plain-error standard.

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descriptions of very violent activity. But given the minimal risk

that the jury would believe that the evidence against Martinez

pertaining to extortion was relevant to the government's case

against Dzhanikyan for drug distribution, we conclude that

Dzhanikyan has not shown that the District Court plainly erred in

exercising its broad discretion to decide whether to sever

Dzhanikyan's trial from that of Martinez. See United States v. De

La Paz-Rentas, 613 F.3d 18 , 23 (1st Cir. 2010) (rejecting a

defendant's severance challenge where the trial included

"substantial" evidence of his co-defendants' gun dealings -- with

which the defendant had no involvement -- but where "there was no

reason for the jury to be confused about [the defendant's] role").


Before trial, Martinez offered a different reason for

contending that the District Court should try the two defendants

separately. Martinez contended that the decision to try the two

of them together risked prejudicing the jury's ability to make a

reliable judgment about whether Martinez intended to distribute

the crack cocaine that he was charged with possessing.

On appeal, the government contends that Martinez has

failed to renew this challenge to us and that this challenge has

therefore been waived. But even assuming the government is wrong

on that score, Martinez's challenge to the District Court's

decision not to sever his trial from Dzhankiyan's still fails.

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Martinez bases his severance argument on the evidence

that the government was to put forth concerning Dzhanikyan's

alleged involvement in Madarati's alleged drug-distribution

conspiracy. That evidence concerned Dzhanikyan's alleged travel

to California to make substantial purchases of oxycodone pills on

behalf of Madarati. Martinez contends that this evidence regarding

his co-defendant's alleged involvement in drug distribution would

prejudice the jury's evaluation of whether Martinez possessed the

requisite intent to distribute the drugs that he was charged with


Martinez points out that other evidence supported his

contention that he possessed the drugs for personal use. And he

points in that regard to the trial testimony of an expert witness

that the amount of crack cocaine with which Martinez was charged

with possessing -- 3.25 grams of crack cocaine -- was consistent

with possession for personal use rather than with possession with

an intent to distribute.

But Martinez does not contend on appeal that his trial

on the extortion counts should have been severed from his trial on

the crack cocaine possession count. And thus Martinez necessarily

concedes that even if his trial had been severed from Dzhanikyan's,

the jury still would have been exposed to evidence about Madarati's

drug distribution conspiracy. After all, to show that Martinez

conspired to use extortionate means to collect an extension of

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credit, as Count 3 alleged, the government needed to put forward

evidence that there was an "extension of credit." And the

government's case in that regard consisted, in significant part,

of evidence that a man named Victor Loukas had traveled more times

to California on behalf of Madarati than had Dzhanikyan, and as

part of Madarati's drug-distribution conspiracy, to buy more total

oxycodone pills for more money than had Dzhanikyan.

In consequence, any severance challenge Martinez makes

on appeal necessarily amounts only to a complaint about the

incremental additional risk of prejudice that would arise from the

jury hearing more about a topic about which the jury would already

have heard much. We thus do not see how Martinez can successfully

contend that the jury's exposure to the additional evidence about

drug distribution that pertained to Dzhanikyan created the kind of

"serious" risk of prejudice that could suffice to show that the

District Court abused its discretion in deciding to try Martinez

and Dzhanikyan together. See O'Bryant, 998 F.2d at 25, 27. We

thus reject Martinez's challenge to the District Court's initial

decision to decline to sever his trial from that of his co-



Looking past the District Court's initial decision not

to sever the trials of Martinez and Dzhanikyan, the defendants

contend -- as they did in their joint motion for new trial -- that

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they were impermissibly prejudiced once the trial began by the

"yes" answer that the District Court gave to the jury's question

about which evidence the jury could use. Specifically, the

defendants renew their contention that the District Court's answer

to the jury's question caused "evidentiary spillover," resulting

in a "variance," in which the crimes charged against them varied

from the crimes for which they were ultimately convicted, see

United States v. Dellosantos, 649 F.3d 109 , 116 (1st Cir. 2011),

or a "retroactive misjoinder," in which trying the defendants

together was rendered improper by developments at trial, see United

States v. Mubayyid, 658 F.3d 35 , 72 n.39 (1st Cir. 2011).

But the defendants' contention does not hold up.

"[I]nstructions must be evaluated not in isolation but in the

context of the entire charge." Jones v. United States, 527 U.S.

373 , 391 (1999). And once the District Court's answer to the jury

is considered in this way, it becomes clear that the District

Court's answer to the jury's question did not give rise to the

concern about the claimed "evidentiary spillover" on which the

defendants' variance and retroactive misjoinder challenges depend.

In its main charge, the District Court expressly

instructed the jury that the defendants were "charged with

different crimes" and that the jury had a duty to "consider the

evidence separately as to each defendant and as to each count which

a defendant is charged." The District Court then explained each

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count as it related to each defendant and instructed the jury what

it would need to find to convict each defendant on each count.4

And, finally, the District Court sought to confirm the jury's

proper understanding of the instructions as a whole. The District

Court did so by saying, after offering its "yes" answer to the

4 On Dzhanikyan's conspiracy charge, the District Court explained as follows: "Let me turn now to Count 1, which is the specific conspiracy to distribute OxyCodone, and only Mr. Dzhanikyan is charged in that. . . . So, review the evidence, what was Mr. Dzhanikyan's conduct in connection with the purchase and sale of any pills, what conversations did he have with Mr. Madarati or others, what did he know about any agreement among Madarati and others to distribute drugs, and then determine whether there was an agreement to distribute OxyCodone as charged, and then whether the government has proven that Mr. Dzhanikyan did knowingly and intentionally join in the conspiracy." On Martinez's conspiracy-to-extort charge, the court explained: "The next count is Count 3, which pertains to only Mr. Martinez. . . . Again, review the evidence, consider evidence of Mr. Madarati's and Kabba's conversations. What, if anything, did Mr. Martinez do or attempt to do? What, if any, financial arrangements existed between Mr. Loukas and Madarati? In particular, had Madarati made a loan to Loukas or agreed to defer repayment of an existing debt? That is, was there a loan or an extension of credit to Loukas by Madarati or any co-conspirator? If there was not, then the defendant cannot be found guilty." And on Martinez's charges of possession with intent to distribute, the court explained: "You need to look at all the evidence and decide whether he intended to sell it or give it away or transfer it to somebody else or whether he had this cocaine only for his personal use. . . . You may take into account how much cocaine he had, and you must certainly look at his state of mind about this, because intent to distribute, again, involves the defendant's state of mind. So, you need to infer that from his words, his conduct, and all of the surrounding circumstances . . . ." Finally, the court concluded the charge by reiterating: "And, again, the government has to prove each and every element of each offense and only if the government proves each element of each offense, can you find the defendant guilty."

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jury's question about what evidence could be "used": "And you

understand the use of all of the evidence with respect to each

charge as it applies to that charge?"

Thus, considered in the context of the instructions as

a whole, the District Court's one-word affirmative answer to the

jury's question did not effectively instruct the jury that it could

use evidence of one crime to make a judgment of guilt about a

separate crime to which that evidence had no relation.

Accordingly, the defendants' challenge to the District Court's

denial of the motion for a new trial must fail.


We now turn to Martinez's separate challenges to his

conviction on Count 3. In that count, the government charged

Martinez with violating 18 U.S.C. § 894(a) by conspiring with

Madarati and another man (named Kabba) to use extortionate means

to attempt to collect an "extension of credit" that had been made

by Madarati.


Martinez raised his sufficiency-of-the-evidence

challenge in his motion for acquittal, and so we review the record

de novo. See United States v. Munyenyezi, 781 F.3d 532 , 536 (1st

Cir. 2015). In doing so, we view the evidence and all reasonable

inferences that can be drawn from it in the light most favorable

to the verdict. Id. We may reverse the conviction only if on the

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basis of this evidence "no rational jury could have" found Martinez

guilty beyond a reasonable doubt. Id.

Thus, to sustain Martinez's conviction on this count,

the government must show that there was sufficient evidence from

which a rational jury could find not only that Martinez conspired

to use extortionate means, but also that Martinez had used those

means to collect payment for an underlying "extension of credit"

from Madarati. Martinez contends that there was not sufficient

evidence to support the conviction because the record provides too

little evidence that Madarati had made an "extension of credit."

And we agree with Martinez on this point.5


In evaluating Martinez's challenge, we start with the

text of the criminal statute and how it defines what an "extension

of credit" is. Under 18 U.S.C. § 894(a)(1), it is a crime to

"knowingly participate[] in any way, or conspire[] to do so, in

the use of any extortionate means . . . to collect or attempt to

collect any extension of credit." The statute then defines "[t]o

extend credit" as "to make or renew any loan, or to enter into any

agreement, tacit or express, whereby the repayment or satisfaction

5 We thus need not consider Martinez's other ground for challenging this conviction -- his contention that he was subjected to a retroactive misjoinder on Counts 2 and 3 after the District Court granted his motion for acquittal on Count 2, due to the prejudicial effect of the jury's exposure to the evidence the government put forth against him on the acquitted count.

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of any debt or claim, whether acknowledged or disputed, valid or

invalid, and however arising, may or will be deferred." Id. § 891


The government charged Martinez with conspiring with

Madarati to use extortionate means (making threats and planting

evidence) to attempt to collect an alleged "extension of credit"

that Madarati had made to Victor Loukas. Loukas was the man who

took two trips to California to purchase thousands of dollars of

oxycodone pills for Madarati with Madarati's money.

In giving Loukas money to buy pills for Madarati,

Madarati was not fronting money to Loukas for his personal use.

Madarati was supplying Loukas with the means to perform a service

for Madarati -- namely, purchasing drugs that Madarati could then

re-sell. Thus, consistent with its presentation to the jury below,

the government does not argue on appeal that, in giving the money

to Loukas to make the purchases, Madarati made a "loan" within the

meaning of § 891. Cf. United States v. Bruce, 405 F.3d 145 , 149-

50 (3d Cir. 2005).6

But, as the plain text of § 894 reveals, the statute has

a broad reach and clearly bars the use of extortionate means to

6 In addition to the money that Loukas received from Madarati to buy the pills for Madarati, Loukas also testified that Madarati paid him $10,000 for the two solo trips to California that Loukas made on Madarati's behalf. The government does not argue that such a payment for services constituted a loan within the meaning of § 894, and we agree that it did not.

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collect payment for more than traditional "loans." See United

States v. Hoyle, 237 F.3d 1 , 6 (1st Cir. 2001) (citing United

States v. Sedlak, 720 F.2d 715 , 720 (1st Cir. 1983)). In

particular, the statute covers any attempt to use extortionate

means to collect "an extension of credit." And the statute defines

that phrase expansively, so that it encompasses any "agreement,

tacit or express, whereby the repayment or satisfaction of any

debt or claim, whether acknowledged or disputed, valid or invalid,

and however arising, may or will be deferred." 18 U.S.C. § 891(1).

The key question, therefore, is whether the record

supplies "sufficient indicia" of such an agreement. See Hoyle,

237 F.3d at 7 (finding "sufficient indicia of agreement . . . to

conclude that an agreement to defer payment of the debts existed").

Before delving into what the record shows about whether such an

"agreement" existed here, however, we need to say more about what

is meant by the requirement that there be an "agreement."

In our last case addressing the issue, Hoyle, 237 F.3d

at 6-7, we noted that the Third Circuit has reasoned (in upholding

the sufficiency of an indictment under § 894) that "[w]hen a self-

styled creditor appears before his 'debtor' and demands

satisfaction, the creditor posits both a debt and the prior

deferral of its repayment." United States v. DiPasquale, 740 F.2d

1282 , 1287 (3d Cir. 1984); see Hoyle, 237 F.3d at 6. And the Third

Circuit has cited the rule of DiPasquale in finding sufficient

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evidence of an "agreement to defer" payment -- and thus an

"extension of credit" -- to support convictions under § 894 on at

least two occasions. See Bruce, 405 F.3d at 149-50; United States

v. Traitz, 871 F.2d 368 , 387-88 (3d Cir. 1989); cf. Hoyle, 237

F.3d at 6 (finding it unnecessary under the circumstances to rely

on DiPasquale to uphold the conviction).

But to the extent DiPasquale suggests that a mere demand

for payment, or even that a demand for payment that is not

immediately followed by the use of extortionate means, suffices to

show that there has been an agreement to defer payment and thus an

"extension of credit," we disagree. By its plain terms, the

statute distinguishes a mere debt from an "extension of credit" on

the basis of whether there has been an agreement to defer payment.

See United States v. Boulahanis, 677 F.2d 586 , 590 (7th Cir. 1982)

("Section 894 does not make it a crime to use extortion to collect

debts, but only to exact repayment of credit previously


Thus, when there is not a loan, we hold -- consistent

with the decisions of a number of our sister circuits -- that the

government must prove that the creditor manifested an assent (even

if only unilaterally and even if only tacitly) to defer payment.

See United States v. Wallace, 59 F.3d 333 , 339-40 (2d Cir. 1995);

United States v. Stokes, 944 F.2d 211 , 215 (5th Cir. 1991)

("[P]roof of some manifestation by the creditor of his assent to

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defer, however minimal, burdens the government's case.");

Boulahanis, 677 F.2d at 590 ("The extension of credit is a

deliberate act by a creditor.").7 Only then is there sufficient

evidence of an "agreement . . . whereby the repayment or

satisfaction of any debt or claim . . . may or will be deferred."

18 U.S.C. § 891(1).

Accordingly, in reviewing the record here, we are

looking not merely for evidence of a demand for immediate payment.

We are looking for what we found in Hoyle: "sufficient indicia of

agreement . . . to conclude that an agreement to defer payment of

the debt [] existed." See Hoyle, 237 F.3d at 7. Absent such

evidence, the conviction must be reversed.

The question of exactly what constitutes evidence of an

"agreement" for legal purposes is often not susceptible to a rule-

like answer. Rather, one must consider the facts in light of the

context. And this is true for the "agreement" referenced in § 891.

The same actions or communications may carry different

implications depending on that context. In some circumstances,

7 We recognize that in Hoyle, we expressly "decline[d] to give [] much weight" to Boulahanis, Stokes, and Wallace, in part because we thought they "require[d] more than [wa]s required in our decision in Sedlak." Hoyle, 237 F.3d at 6. On further review, however, we do not see a meaningful conflict between those cases and Sedlak, at least with respect to the kind of evidence that suffices to show an "agreement to defer." In fact, Sedlak did not address that issue at all, because it found a loan, not an agreement to defer. See Sedlak, 720 F.2d at 720-21.

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for example, a creditor's silence might fairly be characterized as

a tacit agreement to defer payment -- such as where the creditor

faces his debtor and stays silent rather than making or implying

a demand for immediate payment. See Hoyle, 237 F.3d at 6-7. But

in others, the creditor's silence may indicate only an intent not

to alter whatever message the creditor had most recently

communicated to the debtor. And where that message was a demand

for immediate payment, silence may indicate only that the prior

demand has not been withdrawn.

Thus, as the relevant precedents amply demonstrate,

determining whether the record in a given case includes "sufficient

indicia of agreement" to support the inference that a creditor

agreed to defer payment will often require a particularized review

of both the creditor's conduct and the surrounding context. Here,

our review of the record leads us to the conclusion that Madarati

never agreed -- tacitly or expressly -- to defer Loukas's payment.


The government's brief is less than clear in identifying

the evidence in the record that suffices to show that Madarati

agreed to defer the payment of what Loukas owed. But at oral

argument, the government explained that it "doesn't contend that

the deferral occurred at the time Loukas took off to California

with the money." The government contended instead that the

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agreement to defer "repayment or satisfaction" occurred later,

when Loukas returned from California.

At that point, the government contends, Loukas did owe

Madarati either the pills that Loukas was to buy with Madarati's

money or the money itself. And, in the government's view, when

Madarati made contact with Loukas following his return to Boston

but then waited more than a week before undertaking extortionate

means to collect payment, Madarati tacitly agreed to defer payment

by Loukas.8

In pressing this contention, the government identifies

certain specific actions that Madarati took (or, in some cases,

failed to take) that allegedly show that he was tacitly agreeing

to give Loukas more time to pay. But, we conclude, the record

does not supply sufficient evidence of such a tacit agreement on

Madarati's part.

8 In his opening brief, Martinez argued that there was no "debt" at all, because Loukas was merely Madarati's agent. But Martinez does not explain why a jury could not reasonably find that Loukas became Madarati's debtor, at the latest, upon Loukas's return from California when he failed to provide Madarati with either the pills or the money, and we see no basis for concluding that a jury could not so find. See United States v. Bonanno, 467 F.2d 14 , 15-17 (9th Cir. 1972) (finding a debt on similar facts). Martinez also argues that Loukas's decision to steal Madarati's money "did not create an extension of credit," because it was "simply a theft." But the key issue is whether Madarati agreed to give Martinez more time to pay, and the reason for Loukas's default -- namely, whether he stole the pills -- has no bearing on that issue.

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To see why, it first helps to describe what the record

shows about what had transpired before Madarati met with Loukas

when Loukas came back to Boston from his trip to California.

Loukas testified that on March 29, 2011, as he was on his way to

the airport in Los Angeles at the end of his second solo trip to

California on Madarati's behalf, he called Madarati. In that call,

Loukas testified, he told Madarati that the police had pulled

Loukas over while Loukas was heading to the airport and confiscated

all the pills that Loukas had just purchased with Madarati's money.

In truth, however, according to Loukas's testimony,

Loukas had purchased the pills for Madarati as requested but then

given the pills to a friend who sold the pills on his own and split

the profit with Loukas. In other words, Loukas testified, the

police had not confiscated the pills. Instead, Loukas stole the

pills from Madarati and then came up with a cover story to tell

Madarati in order to hide his theft.

There is no evidence in the record about how Madarati

responded to Loukas's false story when he first heard it. But

Loukas conceded in his testimony that the story he told Madarati

was an "outrageous" one that no one would likely believe. And

thus it is not surprising that the record shows that when Loukas

arrived in Boston, he "basically disappeared for a day," such that

Madarati "had no idea where I was."

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In light of what the record shows regarding these events,

a rational jury could not find that Madarati assented -- even

tacitly -- to give Loukas more time to provide the pills or the

money as of the first day after Loukas had returned to Boston.

The record shows only that, as of that time, Loukas had told

Madarati an "outrageous" lie to explain why he did not have the

pills or the money and that Loukas then effectively hid from

Madarati upon returning to Boston.

Nor does the record provide sufficient evidence from

which a jury could reasonably find that Madarati assented to the

deferral of Loukas's payment thereafter. To explain why we reach

this conclusion, we begin with what the record shows about the

first contact that Loukas made with Madarati after Loukas came

back to Boston.

Loukas testified that "about a day" after he got back

from Los Angeles, Loukas turned his phone back on, called Madarati,

and "told him to meet me at my home." According to the testimony

given by Loukas, he and Madarati talked for about an hour when

they met on March 30. At that meeting, according to Loukas's

testimony, Loukas repeated the same false story that he had relayed

to Madarati over the phone from California. Then, Loukas

testified, at Madarati's suggestion the two men left Loukas's house

in Madarati's wife's car and drove to a convenience store.

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Loukas testified that during that ride, Madarati made no

threats to Loukas and that "[a]t that moment I thought he was

buying the story." But, Loukas's testimony reveals, Madarati

quickly changed his tone once the two men arrived at the

convenience store. Loukas testified that when the two men got to

the parking lot of the convenience store, "[Madarati] proceeded to

let me know that he hoped it wasn't me [who took the pills] because

he would take care of the problem like he did at the jewelry

store," referring to the jewelry-store shooting incident that

resulted in injuries to innocent bystanders (and provided the basis

for Count 2 of the indictment in this case).

Neither completely excusing a debt or claim, nor

threatening violence if no payment is made, can fairly be

characterized by itself as assenting to the deferral of the payment

of what is owed. And thus, on these facts, it would be "overly

speculative" for a jury to conclude that, in making clear the dire

consequences that would befall Loukas if he was lying about what

had happened to the pills, Madarati was actually agreeing to give

Loukas more time to pay the debt. See Wallace, 59 F.3d at 339

("[N]one of the evidence presented at trial amounted to the

formation of a credit agreement, because Wallace and his

representatives never agreed to defer the collection of their

money. After making their threats, they merely (and temporarily)

left Capri intact." (alterations and internal quotation marks

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omitted)); United States v. Morillo, 158 F.3d 18 , 22-23 (1st Cir.

1998) ("We must conduct a close review of the record and 'reject

those evidentiary interpretations and illations that are

unreasonable, insupportable, or overly speculative.'" (citation


That leaves only the time period between the parking-

lot conversation and the actual use of extortionate means. But

the record does not show that Madarati did anything during that

time period that would provide sufficient evidence for a jury to

find that Madarati was agreeing (even tacitly) to give Loukas more

time to pay.

The record shows that on March 31, the day after the two

men spoke in the convenience store parking lot, Madarati called

Loukas and repeatedly demanded his "shit," even telling Loukas he

would "see [him] today." Moreover, in the only other conversation

between the two men reflected in the record, Madarati spoke to

Loukas in Loukas's driveway and made clear to Loukas that Madarati

"wanted his money or he wanted the pills."9 Thus, Madarati did

not in these interactions in any way suggest that Loukas had more

time to pay.

9 The record is not clear on exactly when that conversation took place, but Loukas's testimony appears to indicate that it occurred shortly after the March 31 phone conversation.

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In arguing that Madarati nevertheless tacitly agreed to

defer the payment following the parking-lot conversation, the

government cites to a series of conversations between Madarati and

the third man charged in the conspiracy, Kabba, between April 1

and April 9. In those conversations, the two men discussed ways

to intimidate Loukas and to induce him to pay. The government

notes in particular an April 1 call between Kabba and Madarati

during which Madarati expressly chose not to go through with a

plan to frame Loukas by planting cocaine in his house and calling

the police. And the government contended at oral argument that

the delay between that call and the ultimate execution by Madarati

and Kabba of another version of their plan -- which led to

Martinez's arrest near Loukas's house on April 10 -- provides a

sufficient evidentiary basis for a jury to find that Madarati

tacitly agreed to a deferral given the time that passed before

Madarati resorted to the use of extortionate means.

But the record evidence concerning Madarati's

conversations with Kabba between April 1 and April 9 is not

sufficient to support a finding beyond a reasonable doubt that

Madarati was, despite his demands for immediate payment, actually

agreeing to allow Loukas to take more time to pay. In plotting

how best to effect the collection of what he was owed and what he

had demanded be paid, Madarati did not at any point withdraw his

earlier, clearly stated demand for immediate payment, which

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followed right on the heels of the parking-lot threat. Indeed,

during each conversation between Madarati and Loukas in the period

in question, Madarati demanded immediate payment from Loukas.

To be sure, as the government emphasizes, Madarati did

delay the use of extortionate means to collect payment for a number

of days. But it is the use of extortionate means to collect "an

extension of credit" -- and not their use to collect a debt --

that the statute prohibits. See Boulahanis, 677 F.2d at 590. And

thus evidence of a delay in using extortionate means to collect a

debt for which a demand for immediate payment has been made does

not itself suffice to show that credit has been extended. See

Wallace, 59 F.3d at 339.10

For these reasons, this case is not just like Hoyle, 237

F.3d at 6, even though the government, like the District Court,

relies on that precedent to support the conviction. In that case,

an electrician had provided electrical contracting services to

multiple customers without a written contract and without then

demanding "immediate payment." Id. Some months later, the

indictment charged, the electrician used extortionate means to

collect on the services. Id.

10 We note that the government, in its opening statement and closing argument below, consistently characterized Martinez as a "debt collector" or a "debt collection subcontractor" and as having "enter[ed] a conspiracy to collect a debt by use of extortionate means." At no point in the trial did it argue to the jury that Madarati agreed to defer repayment of Loukas's debt to him.

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In sustaining a conviction under § 894 against a

sufficiency-of-the-evidence challenge, we held that on the record

in that case it was "logical to infer, at the very least, that

there was a tacit agreement to defer repayment of the debt" there

at issue. Id. And in explaining that "[o]nce the services were

provided and immediate payment was not demanded, an extension of

credit was established," we noted that it would have been

unreasonable for the beneficiaries of the services to have assumed

that the services were provided at no cost or that a bill would

not be forthcoming in "due course." Id.

But while in Hoyle the agreement to defer payment could

be "logical[ly]" inferred from the electrician's silence upon

providing the services, id., no similar logical inference can be

drawn from Madarati's actions (or inaction). The electrician chose

not to present a bill within any expected time frame. Id.

Madarati, by contrast, was not silent upon Loukas's return to

Boston. Instead, Madarati threatened him during their first

meeting and then made two explicit demands for payment in the only

two conversations that the record shows they had thereafter. And

while Madarati took a little more than a week to make good on his

threat, he did nothing in between that could reasonably be

understood as a withdrawal of the threat-backed demand for payment

he had just made.

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The District Court did also note that this case was

"arguably" similar to Hoyle for the separate reason that "it would

have been unreasonable for Loukas to assume that Madarati was

paying him (and providing resources) for services that would not

be performed." On that reasoning, the deferral of payment occurred

at the very outset of the transaction, when Madarati first gave

his money to Loukas, as Madarati would receive the pills (or the

money he had handed over) only later.

But, as we have explained, the government affirmatively

represented at oral argument that it was not contending that "the

deferral occurred at the time that Loukas took off to California

with the money," and the government instead has urged us to find

an extension of credit on the basis of the evidence of Madarati's

words and actions in the time period after Loukas returned to

Boston. Consistent with the government's view of when any

"deferral" could have occurred, the record shows that, in providing

the money to Loukas to buy pills on his behalf, Madarati was

providing the funds necessary for Loukas to carry out a task which

gave rise to a debt. The record provides insufficient evidence

that Madarati was at that time assenting to the deferral of its

repayment. Thus, on these facts, we agree with the government's

concession that there was no assent by Madarati to defer a deadline

for re-payment -- and thus no "extension of credit" -- prior to

Loukas's return from California.

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Congress has made clear that § 894 is to be construed

broadly. H.R. Rep. No. 1397, at 31 (1968) (Conf. Rep.) ("[T]he

conferees wish to leave no doubt of the congressional intention

that chapter 42 is a weapon to be used with vigor and imagination

against every activity of organized crime that falls within its

terms."). And an agreement to defer payment need not be express

or even bilateral. See Hoyle, 237 F.3d at 6 (citing Sedlak, 720

F.2d at 720). Thus, on some facts, a creditor's delay in

collecting a prior demand for payment might suffice to show an

agreement to defer payment. But, consistent with Hoyle and the

plain text of § 891(a), the record in each instance must show

"sufficient indicia of agreement . . . to conclude that an

agreement to defer payment of the debts existed" in order for there

to be sufficient evidence to sustain that element of the crime.

See Hoyle, 237 F.3d at 7. And here, the record reveals only that

Madarati threatened harm to Loukas if he failed to pay what he

owed and then quickly followed up that threat by twice demanding

immediate payment while he finalized his preferred method of using

extortionate means to collect on the debt. We therefore cannot

conclude that the record supplies sufficient indicia that Madarati

agreed to defer payment at any point, and thus we must reverse

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Martinez's conviction as to Count 3 due to a lack of sufficient

evidence of any underlying "extension of credit."11


For the reasons set forth above, we reverse the

conviction of Ronald Martinez as to Count 3 and affirm in all other


11 The remaining published precedents on which the government relies do not provide support for finding sufficient evidence of an extension of credit on the record in this case. In United States v. Garcia, 135 F.3d 951 , 954 (5th Cir. 1998), the creditors "manifest[ed] an assent to defer payment" by permitting the debtor to pay for a portion of his purchase (of marijuana) and "allow[ing] him to pay for the balance at a later date," which was consistent with a prior course of dealing. There is no similar evidence in the record here. In Bonanno, 467 F.2d at 15, the creditor demanded that "at least $2,500" of a $5,000 debt "had to be repaid immediately" and allowed the debtor additional time to pay the balance. Here, there was no such express agreement. In United States v. Charles, No. 92-3513, 1993 WL 299361 , at *3 (7th Cir. Aug. 3, 1993) (unpublished), the defendant challenged the sufficiency of the evidence but not specifically whether the government had proved an "extension of credit." And in United States v. Neal, 692 F.2d 1296 , 1301-03, 1308 (10th Cir. 1982), the defendant raised a number of challenges relating to the sufficiency of both the indictment and the trial evidence, but the court did not specifically address the evidence sufficient to prove an "extension of credit." The government does also cite to an unpublished case from the Tenth Circuit, United States v. Enriquez, No. 96-6185, 1997 WL 31567 , at *2 (10th Cir. Jan. 28, 1997) (unpublished), which upheld a conviction because the "defendant several times set deadlines for payment which he later postponed." But that opinion does not describe what evidence was in the record that led it to conclude that "deadlines" had been "postponed."

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