USA v. David McQueen

Filing

OPINION filed : AFFIRMED, decision not for publication. Eugene E. Siler , Jr., Authoring Circuit Judge; Karen Nelson Moore, Circuit Judge and Julia Smith Gibbons, Circuit Judge.

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 16a0033n.06

FILED

Case No. 14-2561

Jan 19, 2016
DEBORAH S. HUNT, Clerk

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
DAVID MCQUEEN,
Defendant-Appellant.

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ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF
MICHIGAN

BEFORE: SILER, MOORE, and GIBBONS, Circuit Judges.
SILER, Circuit Judge. David McQueen appeals his conviction and sentence for six
counts of mail fraud, four counts of spending money laundering, one count of structuring, and
one count of concealment money laundering. For the reasons explained below, we AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
In 2006, McQueen used a home equity loan acquired from the purchase of a rental home
to personally invest in Maximum Return Trading (MRT).1 Jim Clements, the owner of MRT,
represented to McQueen that Clements was earning returns of forty to fifty percent per month
from currency trading. Clements told McQueen that he would receive a twenty-percent return,

1

Although the government identifies MRT as “Multiple Return Transactions” in its brief, both Trent
Francke and McQueen referred to the company as Maximum Return Trading in their testimony.

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but it would eventually drop to ten percent.

Soon after his initial investment with MRT,

McQueen started accepting funds from others on behalf of his own company, Accelerated
Income Group (AIG), to invest in MRT. In turn, he paid a five-percent return to those who had
invested in AIG from the total ten percent he was receiving from MRT.
For a short period of time, MRT fulfilled its obligations by making the promised returns
to AIG.

However, in mid-2007, MRT ceased making payments to AIG.

Subsequently,

McQueen stopped sending his investors’ funds to MRT in mid-2007. Except for some nominal
amount, MRT was insolvent. Despite the lack of returns from MRT, which were the only
significant source of revenue for AIG at that time, McQueen managed to meet his payment
obligations to preexisting AIG investors from the only source available to him: funds from new
investors.
McQueen also established three other investment funds, International Opportunity
Consultants (IOC), Diversified Global Finance (DGF), and Diversified Liquid Asset Holdings
(DLAH). With the help of his bookkeeper, Tricia Rice, McQueen comingled the funds from
these newly created entities, paid himself a monthly salary ranging from $75,000 to $120,000,
and compensated agents who helped him find new investors. McQueen personally received
about $3.2 million in investor funds and spent an additional $3.1 million for business-related
travel and other miscellaneous expenses.

In addition, McQueen disbursed approximately

$3.6 million in commissions for agents, who were paid between one and five percent for every
month an investor’s money remained with one of McQueen’s entities.
Following a tip from a financial institution in early 2008, IRS Agent Barbara Birdsong
started investigating McQueen. In 2009, the IRS and the FBI executed a search warrant for
McQueen’s home, a home of one of McQueen’s associates, and several business locations tied to

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McQueen. The search revealed severely depleted assets; the agencies recovered only $433,467
from McQueen’s accounts.
In 2011, a grand jury indicted McQueen and Trent Francke, McQueen’s business
associate since 2007, for mail fraud, money laundering, and structuring.

A superseding

indictment added Jason Juberg, Donald Juberg, and Penny Hodge as codefendants and new
allegations of securities fraud. Prior to trial, Francke, Hodge, Jason Juberg, and Donald Juberg
pleaded guilty. McQueen was convicted at trial on six counts of mail fraud, four counts of
spending money laundering, one count each of structuring and concealment money laundering,
and three counts of misdemeanor failure to file tax returns. The jury acquitted McQueen of one
count each of mail fraud, spending money laundering, and concealment money laundering. 2 The
district court sentenced McQueen to 360 months of imprisonment, $32,036,997.63 in restitution,
and three years of supervised release.
ANALYSIS
On appeal, McQueen raises nine issues falling into three main categories. First, he
argues that there was insufficient evidence to convict him of twelve counts related to his
investment scheme.3

In connection with his sufficiency-of-evidence argument, McQueen

contends that the government failed to disprove his reliance-on-counsel defense. Second, he
asserts that his sentence violated the Eighth and Fourteenth Amendments and was procedurally
and substantively unreasonable. Lastly, he maintains that he is entitled to a new trial based on
cumulative error.

2

Prior to the jury verdict, the government dismissed all counts related to securities fraud and one count of
mail fraud.
3
Although McQueen initially challenged the three counts of misdemeanor failure to file tax returns in his
Rule 29 motion, his brief is bereft of any dispute as to those convictions.

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I. Sufficiency of the Evidence
“We ‘review de novo a challenge to the sufficiency of the evidence supporting a criminal
conviction.’” United States v. Howard, 621 F.3d 433, 459 (6th Cir. 2010) (quoting United States
v. Carson, 560 F.3d 566, 579 (6th Cir. 2009)).
A. Mail Fraud
Pursuant to 18 U.S.C. § 1341, it is a criminal offense to use the mail for the purposes of
defrauding another. To prove a violation of § 1341, the government must establish three
elements: “(1) devising or intending to devise a scheme to defraud (or to perform specified
fraudulent acts); (2) involving a use of the mails; and (3) for the purpose of executing the scheme
or attempting to do so.” United States v. Hartsel, 199 F.3d 812, 816 (6th Cir. 1999) (citing
United States v. Frost, 125 F.3d 346, 354 (6th Cir. 1997)).
1. Intent to Defraud
McQueen argues there was insufficient proof that he intended to defraud his investors
because “[t]he evidence made clear that very few lenders actually spoke or communicated with
[him],” and he “believed in many of the deals that [his] companies invested in.” Testimony at
trial, however, directly contradicts the former contention; multiple witnesses recalled speaking
with McQueen about the investments and hearing him speak to groups of investors. McQueen’s
belief in the eventual success of some of these companies is not an acceptable defense to fraud.
See United States v. Stull, 743 F.2d 439, 446 (6th Cir. 1984) (“[C]ourts have consistently held
that a defendant's honest belief in the ultimate success of a venture is not in itself a defense to a
charge of mail fraud. . . . ‘[N]o matter how firmly the defendant may believe in the plan, his
belief will not justify baseless, false, or reckless representations or promises.’” (quoting Sparrow
v. United States, 402 F.2d 826, 828 (10th Cir. 1968)).

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The government contends that McQueen made four types of material misrepresentations
by telling investors that: “(1) he would actually invest their money, (2) the investments were
safe, (3) he was solvent, and (4) he was making money.”

Briefly, we explore the facts

supporting the “intent to defraud” element.
McQueen invested only approximately thirty percent4 of the funds entrusted to him. In
fact, DLAH, one of McQueen’s companies, had no record of investments. Notwithstanding the
investment of only a small portion of the funds, investors received statements in the mail bearing
a “Money Trading” line item, engendering their belief that McQueen was investing their funds.
Unsurprisingly, McQueen’s clients said they would not have used his services if they had known
that he was not going to invest all of their money.
Additionally, investors testified that McQueen assured them that their funds were safe.
Raymond Boerema, who invested in DLAH, specifically recalled McQueen describing his
investment as “fully guaranteed” and “risk free.” However, many of McQueen’s investments
were speculative in nature and often failed—a fact not communicated to his clients. Investors
were also told and provided written statements reflecting that their funds were guaranteed by a
reinsurance company and backed by gold.

While McQueen did have some gold, Francke

testified that it was an insufficient amount to fully back the investors’ accounts. When asked
about the existence of a reinsurance company, Francke testified that he was “unaware of [a
reinsurance company] except conceptually that there was to be [one] someday.”
Lastly, McQueen represented to his investors that his business ventures were successful.
Of the investments McQueen made, the vast majority yielded a negative return. In fact, once

4

Testimony at trial reflected that McQueen initially invested about $26 million, or a little over fifty
percent, of investor funds, but then lost $13 million in investments. The remaining $13 million was redirected for
purposes other than investment.

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MRT stopped making interest payments to AIG, McQueen satisfied redemption requests and
interest payments only by using money from new investors.
The evidence revealed that McQueen made false representations to investors concerning
the risk involved in their investments, the amount of their funds actually being invested, his
ability to fulfill their redemption requests, and the success of his investments. Therefore, a
rational factfinder had ample proof to conclude beyond a reasonable doubt that McQueen
intended to defraud investors.
2. Reliance on Counsel
McQueen claims that the government could not have met its burden of showing that he
intended to defraud investors because evidence demonstrated that he acted in reliance on
counsel. The government’s response is twofold. First, the government argues that McQueen
failed to raise this issue in his Rule 29 motion for acquittal, thereby waiving the argument and
rendering it reviewable under only the manifest-miscarriage-of-justice standard. See United
States v. Guadarrama, 591 F. App'x 347, 351 (6th Cir. 2014). Second, the government asserts
that McQueen neither fully disclosed all the details of his operations nor relied on advice of
counsel in good faith, both of which are prerequisites to the reliance-on-counsel defense.
The reliance-on-counsel defense requires a showing of “(1) full disclosure of all pertinent
facts to counsel, and (2) good faith reliance on counsel’s advice.” United States v. Moss, 69 F.
App’x 724, 732 (6th Cir. 2003). In the present matter, the district court instructed the jury that
good faith reliance on counsel constituted a complete defense to mail fraud and money
laundering.
Turning first to the issue of waiver, McQueen does not dispute that he failed to raise his
claim of reliance on counsel in his Rule 29 motion; instead, he asserts that he was not required to

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raise this issue because it is an affirmative defense. To support his argument, McQueen relies on
United States v. Phillips, 477 F.3d 215 (5th Cir. 2007), but Phillips has nothing to do with a
defendant’s obligation to raise a defense on a Rule 29 motion. See id. at 219 (finding that
because the defendant first raised the issue of loss in his Rule 29 motion, any argument
concerning intent would be considered newly raised and reviewed only for a “manifest
miscarriage of justice” (quoting United States v. Green, 293 F.3d 886, 895 (5th Cir. 2002))).
Ultimately, this issue need not be resolved. Even applying a standard of review more favorable
to McQueen,5 we find McQueen failed to meet the burden of establishing this defense.
McQueen claims to have relied primarily on the advice of two attorneys, Bob Rutgers
and Thayer Lindauer.

McQueen explains that Rutgers’ firm, Rhoades McKee, “advised

McQueen extensively on how to raise money using exceptions (exemptions) under the United
States securities laws as well as counseling and assisting in developing an off-shore Bahamian
company and researching the New Zealand entity.” In sum, McQueen asserts that Rutgers knew
about his businesses but never advised him to change his investor disclosures or the account
statements sent to the investors. However, McQueen was not convicted of securities violations;
instead, a jury found him guilty of defrauding his investors by running a Ponzi scheme.
Rutgers testified that he was not involved in investigating McQueen’s investments,
directing the flow of money, or monitoring McQueen’s bank accounts. McQueen told Rutgers
that his businesses were successful and that his net worth was $20 to $30 million. Even
assuming that McQueen completely disclosed all aspects of his businesses, this would not
5

It should be noted that McQueen fails to articulate a more favorable standard of review in this
circumstance. However, because the jury, not the district court, rejected McQueen’s reliance-on-counsel defense,
we review under the “any rational trier of fact” standard. See Jackson v. Virginia, 443 U.S. 307, 319 (1979) (“Once
a defendant has been found guilty of the crime charged, the factfinder's role as weigher of the evidence is preserved
through a legal conclusion that upon judicial review all of the evidence is to be considered in the light most
favorable to the prosecution.”).

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absolve McQueen of the fact that he lied to investors by telling them that their investments were
safe, failed to invest their funds, and sent statements informing them that their money was
growing. Such an argument would be inconsistent with the second prong of the defense; that is,
McQueen could not have acted in good faith while also being dishonest with investors. United
States v. Poludniak, 657 F.2d 948, 959 (8th Cir. 1981) (“[No] man can willfully and knowingly
violate the law, and excuse himself from the consequences thereof by pleading that he followed
the advice of counsel.” (quoting Williamson v. United States, 207 U.S. 425, 453 (1908))). The
evidence supports the conclusion that McQueen failed to fully disclose all pertinent facts to
Rutgers.
Lindauer started working with McQueen in 2008 to help McQueen “structure his
businesses.” According to McQueen, although Lindauer suggested in July 2008 that McQueen
needed to improve his disclosures, Lindauer told him to continue with business as normal, failing
to provide specific direction as to how to make disclosures compliant. McQueen claims that
Lindauer told him that new investor deposits could be used to pay old investors.
When asked about one of the initial meetings with McQueen, Lindauer recalled as
follows:
I had asked Tri[cia Rice] to . . . bring me some jackets from . . . people who put
money on it. And I see, well, five or ten of them and I started looking through
them. And I didn’t like the way it was done. I didn’t think there was enough
disclosure. And I told David and Rutgers you can’t do this. This is not right. I
won’t work for you if this is the way you are going to raise money. You have to
hire securities counsel and you will have to pay all these people back. And I’ll
work for you as long as you are willing to do that, period.
By the time McQueen engaged Lindauer as counsel, McQueen had already been operating his
Ponzi scheme for a full year by using new investor funds to satisfy payments to old investors.
However, at Lindauer’s insistence, McQueen contacted a securities lawyer, Kim Baber, to assist
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in making necessary disclosures to investors. Nevertheless, while Baber was working on a
private placement memorandum for McQueen, McQueen continued to raise funds from investors
without Lindauer’s knowledge. McQueen claims that “Ted Lindauer was 100% involved with
[McQueen’s] companies,” but this is hard to reconcile with Lindauer’s testimony disclaiming
knowledge of several of McQueen’s investments. Therefore, there was sufficient evidence to
reject McQueen’s assertion that he fully disclosed all pertinent facts to Lindauer.
In addition to Rutgers, Lindauer, and Baber, McQueen received advice from other
attorneys.

In 2009, Ron Geffner counseled McQueen on securities issues and informed

McQueen that he had concerns that McQueen was violating securities laws and engaging in
fraud. Geffner expressly told McQueen that he believed McQueen may be engaged in a Ponzi
scheme and that McQueen should make a self-disclosure to the SEC.

But McQueen’s

conversation with Geffner was not the first time that an attorney had suggested to McQueen that
he was running a Ponzi scheme. Jeff Gery met with McQueen in 2008 to interview for a job.
Although McQueen did not retain Gery as counsel, Gery sent McQueen a letter that enclosed
material about recent Ponzi schemes because he was concerned that McQueen and Francke were
potentially involved in fraud. Notwithstanding the advice of multiple attorneys and even the
execution of a search warrant, McQueen remained undeterred from operating his scheme,
continuing to squander investors’ funds in speculative investments and to pay his personal
expenses.
Moreover, there are numerous other instances where McQueen either failed to fully
disclose the extent of his operation or ignored advice of counsel. In sum, a rational trier of fact
could have concluded that there was sufficient evidence demonstrating that McQueen did not act
on reliance of counsel.

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3. “Use of Mails” Element
McQueen contends that “[t]here was insufficient evidence produced that at the time that
[the] mailings in question went out, false, material, information was included or omitted by [him]
for the purpose of defrauding the lenders in Counts 2, 3, 4, 5, 7, and 8.”
During McQueen’s Rule 29 motion, McQueen addressed only whether there was
sufficient evidence to establish the “intent to defraud” element in challenging the charges of mail
fraud. McQueen does not appear to contest that he failed to raise an argument about the “use of
mails” element. “Although specificity in a Rule 29 motion is not required, where the defendant
makes a Rule 29 motion on specific grounds, all grounds not specified in the motion are
waived.” United States v. Love, 553 F. App’x 548, 553 (6th Cir. 2014) (quoting United States v.
Chance, 306 F.3d 356, 369 (6th Cir. 2002)). Therefore, we review McQueen’s challenge to the
“use of mails” element under the manifest-miscarriage-of-justice standard, warranting reversal
“only . . . if the record is devoid of evidence pointing to guilt.” Guadarrama, 591 F. App’x at
351 (quoting United States v. Carnes, 309 F.3d 950, 956 (6th Cir. 2002)).
To be convicted under the mail fraud statute, the mailings must be used in the “execution
of the fraud,” but “the use of the mails need not be an essential element of the scheme.”
Schmuck v. United States, 489 U.S. 705, 710 (1989) (citing Pereira v. United States, 347 U.S. 1,
8 (1954)). “It is sufficient for the mailing to be ‘incident to an essential part of the scheme.’” Id.
at 710-11 (quoting Pereira, 347 U.S. at 8)). Further, both “‘innocent’ mailings—ones that
contain no false information—and “routine” mailings may suffice to satisfy the mailing element
under the statute. Id. at 715 (citation omitted). “The relevant question at all times is whether the
mailing is part of the execution of the scheme as conceived by the perpetrator at the time . . . .”
Id.

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One of the key ways that McQueen defrauded his investors was by assuring them that
their money was safe and growing, even though this was impossible since McQueen had no real
source of income other than new investors once MRT stopped making payments. Nevertheless,
investors Raymond and Mildred Boerema (count 4), Joyce Neideffer (count 5), Jeff Roede
(count 7), and Brian Beckett (count 8) all received mailings accounting for their investments and
showing that their money was growing. As the government succinctly notes, if the statements
had accurately reflected the amount in these investors’ accounts, the investors would have
demanded their money back and the Ponzi scheme would have come to an abrupt end.
It is less clear whether the mailings received by William Surridge (Count 2) and Robert
Nykamp (Count 3) contained fraudulent statements. The government asserts that the letters
informing Surridge and Nykamp that DLAH had established a “separate account” for them
constituted a material misstatement. However, it would have been impossible for Surridge and
Nykamp to have had a separate account because McQueen comingled funds and moved money
between investment companies. Nonetheless, the mailing in question must only be a part of the
execution of the scheme to defraud, not actually fraudulent itself. DLAH was one of the vehicles
McQueen used to run the Ponzi scheme. Therefore, the mailings received by Surridge and
Nykamp—while potentially only routine or innocent—formed an integral part of the execution
of McQueen’s fraudulent scheme.
B. Spending Money Laundering
To establish that McQueen violated 18 U.S.C. § 1957 for spending money laundering, the
government must establish five elements: (1) McQueen “knowingly engage[d] or attempt[ed] to
engage in a monetary transaction”; (2) he knew the funds involved “criminally derived
property”; (3) the derived property had a value greater than $10,000; (4) the property was

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“derived from specified unlawful activity”; and (5) the offense took place in the United States.
18 U.S.C. § 1957; see also United States v. Rayborn, 491 F.3d 513, 517 (6th Cir. 2007).
McQueen asserts that because there was insufficient evidence to show that he acted with intent to
defraud under the mail fraud statute, the government failed to establish that he derived property
from a specified unlawful activity. Additionally, McQueen claims that there is no evidence to
show that the items identified in counts 9 through 12 were purchased with money derived from
mail fraud.
As previously discussed, we found sufficient evidence to establish that McQueen
committed multiple acts of mail fraud. This leaves only the question of whether McQueen used
funds derived from mail fraud to make the purchases identified in counts 9 through 12. The
government contends that McQueen waived this argument by not properly raising it in his Rule
29 motion. A review of McQueen’s Rule 29 argument confirms the government’s assertion, as
McQueen addressed only the “specified unlawful activity” element for money laundering at that
time. Thus, McQueen’s newly raised issues regarding the purchase of items with criminally
derived funds are reviewed only for a manifest miscarriage of justice. See Guadarrama, 591 F.
App’x at 351.
At trial, Agent Birdsong testified that in December 2008, McQueen made a wire transfer
to New House Title in the amount of $274,874.96 for the purchase of a condominium in Fort
Lauderdale, Florida. McQueen titled the property in his and his wife’s name. On appeal,
McQueen asserts that he used the condominium for business purposes, evidenced by the fact that
“Lindauer included the property when marshaling assets from the McQueen companies.” But
McQueen offers no explanation as to why it matters if the funds are characterized as a business
expense, especially since his business involved running a Ponzi scheme. Additionally, McQueen

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claims there was no evidence that funds derived from mail fraud were used to purchase the
condominium. However, the government provided evidence tracing funds in AIG and IOC
investor accounts to McQueen’s private account for the purchase of the condominium and
showed that McQueen jointly titled property with his wife. McQueen fails to demonstrate that
his conviction on count 9 constituted a manifest miscarriage of justice.
Next, McQueen challenges his conviction on count 10 for use of a cashier’s check to
purchase a diamond engagement ring from Sako Diamond Corp., claiming that the government
presented no evidence that the funds used here derived from mail fraud. Agent Birdsong
testified that McQueen lacked revenue other than investor funds in 2008 when he made the final
$14,083 payment to Sako Diamond Corp. for the purchase of the ring. Therefore, the record
contained enough evidence to establish his conviction on count 10 to satisfy the manifestmiscarriage-of-justice standard.
As to count 11, McQueen asserts that the government failed to demonstrate that he used
criminally derived funds to purchase Harley Davidson motorcycles because Agent Birdsong
could provide only a bank statement with an outgoing wire transfer but no destination for the
transferred funds. Agent Birdsong testified that in July 2008, McQueen purchased two Harley
Davidson motorcycles in Florida using money from McQueen Financial Account, solely deriving
its funds from AIG and IOC investor accounts. Then, McQueen exchanged the motorcycles he
purchased in Florida for motorcycles in Michigan, the motorcycles identified in count 11. While
it is correct that Agent Birdsong could trace only a wire transfer from the McQueen Financial
Account to the Harley Davidson store in Florida, she provided the necessary link from that
transfer to the eventual acquisition of the motorcycles in Michigan.

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McQueen’s denial at trial that he used criminally derived funds to purchase the motorcycles, his
conviction on count 11 did not constitute a manifest miscarriage of justice.
Lastly, McQueen contends that there was insufficient evidence linking criminally derived
funds to the tuition payment made for his son’s private boarding school. Agent Birdsong
testified that she traced a cashier’s check drawn on McQueen Financial Account in August 2008
and made payable to Riverside Academy in the amount of $29,850. The check was used to pay
for McQueen’s son’s private boarding school. At that time, an IOC account provided the sole
source of funds for McQueen Financial Account. McQueen fails to show a manifest miscarriage
of justice for his conviction on count 12.
C. Concealment Money Laundering
To prove a violation of 18 U.S.C. § 1956 for concealment money laundering, the
government must establish three elements6: “(1) use of funds that are proceeds of unlawful
activity; (2) knowledge that the funds are proceeds of unlawful activity; and (3) conduct or
attempt to conduct a financial transaction, knowing that the transaction is designed in whole or in
part to disguise the . . . source, ownership or control of the proceeds.” United States v. Marshall,
248 F.3d 525, 538 (6th Cir. 2001) (alteration in original) (quoting United States v. Prince,
214 F.3d 740, 747 (6th Cir. 2000)).

Count 32 of the indictment charged McQueen with

transferring money through Bertuca Bonding and Insurance (“Bertuca Bonding”) to Fifth Third
Bank in order to make a payment on his 1999 Avenger boat. McQueen claims there was
insufficient evidence to show that he intended to conceal these funds. Because McQueen raised

6

Both of the parties listed four elements for concealment money laundering, which parallels the Sixth
Circuit Pattern Jury Instructions § 11.01, but this court has generally used only three elements in its opinions. See,
e.g., United States v. Prince, 214 F.3d 740, 747 (6th Cir. 2000).

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this argument in his Rule 29 motion, we review under the sufficiency-of-evidence standard. See
Jackson v. Virginia, 443 U.S. 307, 318 (1979).
At trial, John Bertuca, the former owner of Bertuca Bonding, testified that McQueen sent
him a check for $345,000 “[t]o help pay some of the bills.” Bertuca pitched the idea for
McQueen to pay him for marketing because McQueen “said that he was making money and he
needed [tax] write-offs.” Bertuca admitted that he “ended up doing very little” marketing for
McQueen and that he instead used the $345,000 to pay some of McQueen’s loans. When asked
about the check written for $48,451.44 to Fifth Third Bank, Bertuca confirmed that the money
was not related to marketing but that he was unaware of its exact use. Despite Bertuca’s lack of
knowledge concerning the purpose of the check, the government presented financial documents
linking the check to payment for McQueen’s boat.
On appeal, McQueen describes the rationale for the transaction with Bertuca as being “a
bit hazy in both men’s minds.” McQueen adds that “the entire transaction got away from [him],”
but “there was no evidence produced that Bertuca’s payment was for the purpose of hiding the
source of any of the funds.” Further, McQueen offers the following explanation:
Defendant testified that the boat was to be used in the Bahamas, within [sic]
connection with the Bahamas office, and that Bertuca was increasingly involved
in vetting opportunities, such as California and Oklahoma. Bertuca had not been
paid directly but had received loans from the companies for business creation.
The relevant determination on appeal is whether there was sufficient evidence for the jury
to find McQueen guilty of concealment money laundering, not to assess credibility of testimony.
United States v. Henley, 360 F.3d 509, 514 (6th Cir. 2004) (“It is not the province of this Court,
however, to weigh the credibility of witnesses—particularly in the context of determining
whether sufficient evidence supports a conviction.” (citing United States v. Hilliard, 11 F.3d 618,
620 (6th Cir. 1993))). Evidence at trial demonstrated that McQueen funneled money through
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Bertuca in order to pay McQueen’s personal bills, including $48,451.44 for a 1999 Avenger
boat. Based on Bertuca’s testimony and the government’s tracing of funds, there was sufficient
evidence to demonstrate that McQueen used Bertuca as a “front man” in order to disguise the
source of the funds. See United States v. Beddow, 957 F.2d 1330, 1335 (6th Cir. 1992) (finding
that the use of a “front man” to disguise the sale of emeralds constituted a violation of 18 U.S.C.
§ 1956). As such, viewing the evidence in the light most favorable to the government, a rational
trier of fact could have found McQueen guilty beyond a reasonable doubt for concealment
money laundering.
D. Structuring
Federal law mandates that banks submit transaction reports for each deposit, withdrawal,
or currency transaction that exceeds $10,000. 31 U.S.C. § 5313; 31 C.F.R. §§ 1010.311, .313.
To prove a defendant committed the crime of “structuring” in violation of 31 U.S.C. § 5324, the
government must establish the following elements:
(1) the defendant must, in fact, have engaged in acts of structuring; (2) he must
have done so with knowledge that the financial institutions involved were legally
obligated to report currency transactions in excess of $10,000; and (3) he must
have acted with the intent to evade this reporting requirement.
United States v. Sutton, 387 F. App’x 595, 599 (6th Cir. 2010) (quoting United States v.
MacPherson, 424 F.3d 183, 189 (2d Cir. 2005)).

A person structures a transaction by

“conduct[ing] or attempt[ing] to conduct one or more transactions in currency, in any amount, at
one or more financial institutions, on one or more days, in any manner, for the purpose of
evading the reporting requirements.” 31 C.F.R. § 1010.100(xx); see also Ratzlaf v. United
States, 510 U.S. 135, 136 (1994) (“It is illegal to ‘structure’ transactions—i.e., to break up a
single transaction above the reporting threshold into two or more separate transactions—for the
purpose of evading a financial institution’s reporting requirement.” (citing 31 U.S.C. § 5324)).
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McQueen argued in his Rule 29 motion that the government lacked sufficient evidence to
demonstrate that he intended to evade reporting requirements. He contends the same on appeal.
As such, we review for sufficiency of evidence. Jackson, 443 U.S. at 318.
In January 2010, McQueen went to Huntington Bank to cash a $23,163.04 check from
the sale of his SUV. He had to open a new account with the bank in order to deposit the check
because his existing account was frozen. McQueen then withdrew $9,000, $9,000, and $3,600
from the new account on three consecutive days. According to Nora Popma, the teller who
assisted McQueen, McQueen indicated that he did not want her to file a currency transaction
report related to his withdrawals.
McQueen contends Popma only has a “vague recollection of [the] conversation she had
with [him] when he made a withdrawal” because “it makes no sense that he would attempt to
bypass the reporting requirement, when the report would already have issued the day he
deposited the check.” The government asserts that McQueen’s argument is undermined by the
fact that the depositing of a check does not trigger the filing of a currency transaction report
because a check does not constitute currency under the statute. This is probably true, see
31 C.F.R. § 1010.100(bbb)(2), but only offers half of the explanation for the jury’s verdict.
Rather, we find that the district court provided a succinct factual explanation for McQueen’s
conviction during its denial of his Rule 29 motion:
Regarding the structuring, I think the evidence of Ms. Popma, if that is believed
by the jury, is sufficient to convince them of that based on he tried to cash a check
at the beginning and he couldn’t do it because of the wait. But then when he came
back he had, as far as the deposits go, broken that down. I think it was 9, 9 and 3
and so it could be intentional structuring and that particular situation. Regarding
not the deposit but the withdrawals.
There was sufficient evidence to find that McQueen violated 31 U.S.C. § 5324 by
structuring.
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II. Sentencing
McQueen claims that his 360-month sentence: (1) violated the Eighth and Fourteenth
Amendments because it was grossly disproportionate to the severity of the offenses he
committed, the sentences received by his codefendants, and sentences received by others for
committing similar offenses; (2) was substantively unreasonable since it did not take into
account this was McQueen’s first crime, it was nonviolent, and he is the sole parent to his son
and a caretaker for his father; and (3) was procedurally unreasonable because the district court
failed to deduct the $1.5 million invested in BRS Labs from the total loss of investor funds in
calculating his offense level.
A. Constitutional Challenge
We review preserved constitutional challenges de novo, United States v. Hughes,
632 F.3d 956, 959 (6th Cir. 2011), while unpreserved objections fall under plain error review.
See United States v. Ellis, 483 F. App’x 940, 941 (6th Cir. 2012). Although McQueen raised
several procedural and substantive objections during sentencing, he failed to preserve his
constitutional challenge. Therefore, it is reviewed on appeal for plain error.
We evaluate Eighth Amendment claims with a “narrow proportionality principle” in
noncapital cases. Graham v. Florida, 560 U.S. 48, 59-60 (2010) (quoting Harmelin v. Michigan,
501 U.S. 957, 997 (1991) (Kennedy, J., concurring in part and concurring in judgment)). Under
this standard, “punishment for crime should be graduated and proportioned to [the] offense,” id.
at 59 (quoting Weems v. United States, 217 U.S. 349, 367 (1910)), but the proportionality
principle “forbids only extreme sentences that are ‘grossly disproportionate’ to the crime,” id. at
60 (quoting Harmelin, 501 U.S. at 997). In noncapital cases, “successful challenges to the
proportionality of particular sentences have been exceedingly rare.”

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538 U.S. 11, 21 (2003) (quoting Rummel v. Estelle, 445 U.S. 263, 272 (1980)). One of the most
important factors in determining whether a sentence is grossly disproportionate involves
comparing the “gravity of the offense” to “the harshness of the penalty.” United States v. Young,
766 F.3d 621, 626 (6th Cir. 2014) (“The Supreme Court has identified three ‘objective criteria’
for assessing proportionality . . . . But, in most cases, a gravity-versus-harshness analysis will
answer the question . . . .” (citations omitted)), cert. denied, 135 S. Ct. 1475 (2015).
“The gravity of an offense depends heavily on the nature and circumstances of a
particular case, including the harm or risk of harm, magnitude of the crime, degree of culpability,
motive, and any other facts specific to the offense.” Id. at 626-27 (citing Solem v. Helm,
463 U.S. 277, 291, 293-94 (1983)). If the defendant is able to show that his sentence is grossly
disproportionate, the court should examine the other “objective criteria”: “the sentences imposed
on others in the same jurisdiction,” and “the sentences imposed for the same offense in other
jurisdictions.” Id. at 626. “[O]nly if we reach an initial inference of gross disproportionality
must we consider the other criteria.” Id. (citing Harmelin, 501 U.S. at 1004-05).
In the instant matter, McQueen acknowledges the “loss is tragic” for those who invested
in his company but claims that it was others who worked for him that “made gross
misrepresentations to clients who trusted them.” McQueen’s scheme netted him approximately
$3.2 million, not including money disbursed for business and travel expenses, while his investors
lost about $32 million. It is evident, as the government observed in its brief, that McQueen
demonstrated almost no remorse, even during sentencing; instead, he continued to blame others,
as he continues to do now, for the substantial losses incurred by his investors. And despite the
magnitude of his crime, McQueen received a sentence of 360 months—well below the
Guidelines range of life imprisonment. Generally, sentences within the statutory limitations do

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not violate the Eighth Amendment. See United States v. Moore, 643 F.3d 451, 455 (6th Cir.
2011). Therefore, due to the combination of the magnitude of the harm caused by McQueen’s
actions and the below-Guidelines sentence imposed, McQueen is unable to show a grossly
disproportionate sentence, especially since the constitutional challenge is reviewed for plain
error. Because McQueen fails to establish the first factor, the other “objective criteria” need not
be discussed.
Even assuming that McQueen could establish the first factor, he must then meet the other
two “objective criteria.” McQueen’s brief supplies the court with a table containing a list of
fourteen defendants, the amount of loss resulting from each of their Ponzi schemes, and the
sentences imposed. However, McQueen failed to provide any citations to these cases even after
the omission was noted by the government, inviting McQueen to provide the citations in his
reply brief.

Notwithstanding these omissions, it is not entirely clear that the defendants

identified by McQueen provide appropriate comparisons. For example, McQueen lists Jeffrey
Toft, Chad Sloat, and Michael Murphy as engaging a $40 million Ponzi scheme and receiving
only 66, 70, and 48 months, respectively, but this is misleading without more information.
Further research reveals that Toft, Sloat, and Murphy were only a part of a Ponzi scheme devised
by Keith Simmons. Indictment at 3, United States v. Davey, No. 3:12-cr-68 (W.D.N.C. Feb. 22,
2012).

Simmons provides a better comparison than his codefendants:

he was ultimately

sentenced to 40 years’ imprisonment for his operation of a Ponzi scheme that cost investors $35
million. United States v. Simmons, 737 F.3d 319, 320 (4th Cir. 2013); Amended Judgment at 2,
United States v. Simmons, 3:10-cr-23 (W.D.N.C. Dec. 8, 2014). We find this list of little
assistance and fairly unsupportive of McQueen’s claim that his sentence was disproportionate to
others convicted of the same offenses.

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McQueen also provides a table of sentences received by the codefendants in this case,
arguing that his sentence is disproportionate to theirs. However, “[t]his court has held that the
Constitution does not require proportionality between defendants.” United States v. Odeneal,
517 F.3d 406, 414 (6th Cir. 2008) (citing United States v. Layne, 324 F.3d 464, 474 (6th Cir.
2003)). Even if that were not the case, McQueen’s actions are easily distinguishable from the
codefendants, as McQueen was the leader of the Ponzi scheme at issue and his codefendants
pleaded guilty to the charges against them.
B. Procedural and Substantive Reasonableness
“We review a sentence imposed by the district court for reasonableness.” United States v.
Webb, 616 F.3d 605, 608 (6th Cir. 2010) (citing United States v. Richardson, 437 F.3d 550, 553
(6th Cir. 2006)). Challenges to the substantive or procedural reasonableness of sentences are
reviewed under the abuse-of-discretion standard. Id. at 609. “A sentence may be procedurally
unreasonable if the district judge fails to consider the applicable Guidelines range or neglects to
consider the other factors listed in 18 U.S.C. § 3553(a), and instead simply selects what the judge
deems an appropriate sentence without such required consideration.” United States v. Borho,
485 F.3d 904, 908 (6th Cir. 2007) (quoting United States v. Collington, 461 F.3d 805, 808 (6th
Cir. 2006)). A sentence may be considered substantively unreasonable “when the district court
selects the sentence arbitrarily, bases the sentence on impermissible factors, fails to consider
pertinent § 3553(a) factors or gives an unreasonable amount of weight to any pertinent factor.”
Id. (quoting Collington, 461 F.3d at 808).
In the instant matter, the district court imposed a below-Guidelines sentence, finding life
imprisonment inappropriate. A defendant who challenges a below-Guidelines sentence, as here,
faces a very heavy burden in showing unreasonableness. United States v. Greco, 734 F.3d 441,

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450 (6th Cir. 2013). The district court specifically noted McQueen’s criminal history category
during sentencing and was surely aware of the nonviolent nature of these crimes. McQueen fails
to offer any further explanation as to how the district court erred. He cannot meet his heavy
burden of showing substantive unreasonableness.
Next, McQueen asserts that his sentence was procedurally unreasonable because of the
inclusion of the investment in BRS Labs as a loss in the presentence investigation. According to
McQueen, testimony by two employees of BRS Labs showed that the company remains
“a viable business.” The district court considered McQueen’s argument and found that while the
ultimate success of BRS Labs may impact the calculation of the restitution owed, it did not
change his term of imprisonment. Even on appeal, McQueen cannot explain how the future
viability of BRS Labs would result in a different sentence. Regardless, given that the range of
loss associated with McQueen’s offense level starts at $20 million, see USSG § 2B1.1(b)(1)(L)
(2014) (increasing the offense level to 22 for losses more than $20 million), and McQueen was
assessed a total loss of approximately $32 million related to his crimes, the district court’s
inclusion of $1.5 million as a loss attributable to BRS Labs would not have lowered his offense
level. As a result, McQueen’s sentence was not procedurally unreasonable.
III. Cumulative Error
“The cumulative effect of errors that are harmless by themselves can be so prejudicial as
to warrant a new trial.” United States v. Adams, 722 F.3d 788, 832 (6th Cir. 2013) (quoting
United States v. Sypher, 684 F.3d 622, 628 (6th Cir. 2012)). “In order to obtain a new trial based
upon cumulative error, a defendant must show that the combined effect of individually harmless
errors was so prejudicial as to render his trial fundamentally unfair.” United States v. Trujillo,

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376 F.3d 593, 614 (6th Cir. 2004) (citing United States v. Parker, 997 F.2d 219, 221 (6th Cir.
1993)).
McQueen contends that the district court erred in four ways: (1) permitting Agent
Birdsong to explain the reason why her investigation into McQueen was initiated; (2) hurrying
the defense counsel but not the government; (3) correcting defense counsel in front of the jury;
and (4) overruling defense counsel’s objection to the government’s rebuttal. Based on the
cumulative effect of these errors, McQueen asserts that a new trial is warranted.
A. Agent Birdsong’s Testimony
At trial, the government asked Agent Birdsong how her investigation into McQueen first
started. Defense counsel objected to the question on the basis of hearsay. The district court
overruled the objection, stating, “[T]his does not go to the truth of what she heard, but this just
goes to why she further acts; in other words, what caused her to do something. It’s limited to
that.” In answering the question, Agent Birdsong explained that she received a tip from a bank
concerning James Wiederhold, who had a “financial relationship” with McQueen.

The

investigation into Wiederhold and McQueen’s financial relationship revealed the “movement of
money in amounts ranging from 20 to 50 to $100,000” between Wiederhold’s and McQueen’s
accounts.

Agent Birdsong also testified that the investigation into Wiederhold resulted in

Wiederhold’s conviction, but the district court struck that statement.
McQueen claims that the district court erred in overruling his hearsay objection and for
permitting testimony about the conviction of Wiederhold. However, McQueen does not offer
any analysis as to the district court’s alleged error. The government maintains that Agent
Birdsong’s testimony constituted res gestae evidence since it was offered to explain why the IRS
started its investigation.

Although there is the potential for abuse of res gestae evidence,

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“[t]ypically, such evidence is a prelude to the charged offense, is directly probative of the
charged offense, arises from the same events as the charged offense, forms an integral part of a
witness’s testimony, or completes the story of the charged offense.” Adams, 722 F.3d at 810
(quoting United States v. Hardy, 228 F.3d 745, 748 (6th Cir. 2000)). We find that the district
court did not err in overruling McQueen’s objection.
Finally, McQueen’s claim that the district court erred regarding testimony about
Wiederhold’s conviction is without merit. The district court struck the testimony, and we
presume that the jury followed this instruction. See, e.g., Weeks v. Angelone, 528 U.S. 225, 234
(2000).
B. Hurrying Defense Counsel
McQueen identifies five instances in which he believes the district court attempted to
rush his defense counsel. The government responds by noting that the district court also urged it
on multiple occasions to present its case efficiently.
The record reveals that the district court urged McQueen’s counsel and the government
to move their cases along both in front of the jury and outside its presence. The Federal Rules of
Evidence specifically direct courts to “exercise reasonable control over the mode and order of
examining witnesses and presenting evidence so as to . . . avoid wasting time.” Fed. R. Evid.
611(a)(2). Here, considering the number of witnesses and amount of evidence, it was well
within the district court’s discretion to urge the parties to use their time wisely. See Davis v. City
of Memphis Fire Dep’t, 576 F. App’x 464, 469 (6th Cir. 2014) (“The Federal Rules of Evidence
grant district courts wide latitude to exercise control over the mode of examining witnesses.”).
Furthermore, McQueen has not made any claim that the district court cut short his questioning of
witnesses or placed time constraints on the presentation of his case.

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C. Correcting Defense Counsel in Front of Jury
According to McQueen, “[t]he court erupted when Mr. Graham made an assertion about
dividends related to Verizon.” McQueen claims that this interruption by the district court “gave
an appearance that the Defense was attempting to mislead.”
The district court asked the attorneys to approach the bench following a question by
defense counsel concerning dividends associated with Verizon. After a short discussion with the
parties, the district court held a short conference in chambers to clarify defense counsel’s
confusion between a dividend growth rate and a dividend. The district court then brought the
jury back into the courtroom and explained that defense counsel “made an honest mistake of
confusing the dividend growth rate for the [Verizon] stock with the dividend as a percent of the
current market value for the stock.”
McQueen offers no substantive explanation as to how this prejudiced his case, simply
contending that the interruption was “unnecessary.” We cannot conclude that the district court
erred in this instance.
D. Rebuttal Argument
McQueen contends that the district court permitted the government to summarize its
closing argument during its rebuttal, essentially “allow[ing] the government to give the first and
last closing.” Although McQueen acknowledges that the district court permitted his counsel to
respond to the government’s rebuttal, “the damage had been done.”
During the government’s rebuttal, it stated the following:
And [McQueen] lived off their money as well. He is taking a salary. This is not
just about paying old investors with new investor money. . . . [H]e is living off the
revenue. He has got no revenue. He has got no income. Why does he get
$110,000 a month?

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Defense counsel objected, arguing that this material was beyond the permissible scope of the
rebuttal. Though the district court agreed, it chose not to interfere. Instead, the district court
offered defense counsel a chance to respond to any new arguments raised by the government, but
defense counsel indicated that he was satisfied.
The government maintains that its rebuttal was simply a response to McQueen’s closing
argument that he acted in “good faith,” not an attempt to summarize its closing. However, we
find no reason to explore whether this contention is true or not.

Even assuming the

government’s arguments were beyond the scope of its rebuttal, the district court provided
McQueen the opportunity to respond. And any damage that had been done could have been
rectified by McQueen.
For those reasons, we find no cumulative error that was so prejudicial as to render
McQueen’s trial fundamentally unfair.
CONCLUSION
In sum, sufficient evidence existed to convict McQueen of six counts of mail fraud, four
counts of spending money laundering, one count of structuring, and one count of concealment
money laundering. Additionally, McQueen’s sentence did not violate the Eighth or Fourteenth
Amendments nor was it substantively or procedurally unreasonable. Finally, the district court
did not err in such a way as to constitute cumulative error.
AFFIRMED.

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