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United States v. Colon

United States Court of Appeals, Seventh Circuit

March 22, 2019

United States of America, Plaintiff-Appellee,
v.
Geraldo Colon, Defendant-Appellant.

          Argued January 18, 2019

          Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:15-cr-80 - Jane Magnus-Stinson, Chief Judge.

          Before Easterbrook, Barrett, and Scudder, Circuit Judges.

          Scudder, Circuit Judge.

         Geraldo Colon used his Indianapolis furniture store and a related business as a front to hide his more lucrative enterprise: buying large quantities of cocaine and heroin from Arizona and reselling the drugs to local dealers in Indiana. For his role as a middleman in this scheme, a grand jury charged Colon with drug conspiracy, money laundering, and making false statements in a bankruptcy proceeding. Following two jury trials, Colon was convicted on all counts and sentenced to 30 years' imprisonment.

         Colon challenges his convictions for money laundering, arguing that the government's evidence was insufficient. He also contends that the district court committed error in calculating his advisory sentencing range by applying leadership enhancements under § 3B1.1 of the Sentencing Guidelines. The leadership enhancement is inapplicable, as Colon sees the evidence, because, as an independent middleman, he did not oversee any participants. Neither challenge succeeds. We affirm Colon's money laundering convictions. And although we agree that the district court erred in applying leadership enhancements, a careful review of the sentencing transcript reveals that these errors were harmless.

         I

         Geraldo Colon worked as a middleman in an Arizona-to-indiana drug trafficking scheme. Beginning in 2013, he purchased kilogram quantities of cocaine and heroin from a Phoenix-based drug trafficker, who dispatched couriers to deliver the shipments to Colon in Indianapolis. Colon then resold the drugs at higher prices to local dealers.

         During this same period, Colon also operated a furniture store in a mall in Indianapolis. In February 2014, he took over the lease of the entire mall, which allowed him to rent space to other vendors. He formed YRG Enterprise Entertainment to operate the mall and opened a bank account in the name of the new business. But Colon never segregated the mall's lawful business from his narcotics trafficking: he instead coordinated the receipt and distribution of the Arizona drugs from the mall and, to disguise the drug money, deposited all sources of income-funds from the mall and proceeds from his drug dealing-into the YRG business account.

         Despite these efforts to conceal the scheme, in March 2016 a grand jury indicted Colon on charges of drug conspiracy, money laundering, and making false statements in a bankruptcy proceeding. Relevant to Colon's appeal of his money laundering convictions, the indictment in eight separate counts alleged violations of 18 U.S.C. § 1956(a)(1)(B)(i). The eight counts tracked eight deposits Colon made into the YRG Enterprise Entertainment bank account on seven different dates in July 2014. The deposits-mostly cash ranging from $1, 200 to $8, 293-totaled $44, 293. The indictment alleged that each deposit included drug proceeds.

         Colon proceeded to trial. While the jury found him guilty of the three false statement counts, it failed to reach a verdict on the drug trafficking and money laundering counts. A second trial then ensued. And the government again presented evidence from 2014 showing that Colon was buying and reselling hundreds of kilograms of cocaine and heroin-and that he used his business at the mall to receive the drugs and disguise the proceeds. The evidence also showed that, even though YRG Enterprise Entertainment operated in the red, cash deposits continued to flow into the company's bank account. Specifically, in July 2014, the month relevant to the eight money laundering counts at issue, Colon deposited nearly $20, 000 more than the company received in revenue.

         At the close of the government's case, Colon moved for a judgment of acquittal on the money laundering counts. He argued, as he does on appeal, that there was no way to tell which deposits in July 2014 involved drug money as opposed to revenue from the mall. The district court denied the motion, finding that the government presented ample evidence from which an inference could be drawn that "there [was] insufficient cash to support the deposits" Colon made into the business account. The case then went to the jury, which convicted Colon of all remaining counts.

         At sentencing the district court applied an aggravating role enhancement under U.S.S.G. § 3B1.1 on both the drug-trafficking counts and money laundering counts for the leadership role Colon played in committing those offenses. The court recognized that Colon had "somewhat of a unique role" in the drug operation and this differed from the typical scenarios the court had seen where someone "was a boss and had minions." But the leadership enhancement was nonetheless appropriate, as the court saw it, because of Colon's key role in the drug operation: he was the gateway through which large quantities of cocaine and heroin entered Indianapolis. The same reasoning led the court to ...


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