United States of America v. Carol Aranjo

United States Court of Appeals
For the First Circuit
No. 08-2307
UNITED STATES OF AMERICA,
Appellee,
v.
CAROL ARANJO,
Defendant, Appellant.
No. 08-2341
UNITED STATES OF AMERICA,
Appellee,
v.
ALPHONSO SMITH,
Defendant, Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge]
Before
Lynch, Chief Judge,
Boudin and Stahl, Circuit Judges.
Judith H. Mizner, Assistant Federal Public Defender, Federal
Defender Office, for appellant Carol Aranjo.
Jane Elizabeth Lee, by appointment of the court, for appellant
Alphonso Smith.

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Daniel Steven Goodman, Criminal Division, Appellate Section,
Department of Justice, with whom Lanny A. Breuer, Assistant
Attorney General, Department of Justice, Gary G. Grindler, Deputy
Assistant Attorney General, Department of Justice, Michael K.
Loucks, Acting United States Attorney, and Karen L. Goodwin,
Assistant United States Attorney, were on brief for appellee.
May 3, 2010

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BOUDIN, Circuit Judge. Carol Aranjo was chief executive
officer, treasurer, and a director of the D. Edward Wells Federal
Credit Union ("Wells"), a federally chartered financial institution
in Springfield, Massachusetts. Wells was regulated by the National
Credit Union Administration ("NCUA"), an independent federal agency
that regularly examines credit unions for compliance with
regulatory requirements.
Between 1999 and 2002, two NCUA examiners discovered
problems with Wells' books, including an unusually high and under-
documented loan to a Wells-related entity, Friends of the Credit
Union ("Friends"), the treasurer of which was Aranjo's husband
Alphonso Smith. Aranjo resisted the examiners' investigation,
refusing to permit them to view the credit union's financial
information such as members' loan and deposit data and the Friends
loan documentation.
Partly because of the Friends loan, NCUA decided in late
2002 that it could no longer conclude that Wells was sound and, in
February 2003, NCUA placed Wells in conservatorship in order to
return it to solvency. During conservatorship, NCUA discovered
significant negative balances on several Wells accounts, including
Aranjo's and her husband's personal accounts, which showed negative
balances of $71,000 and $88,000, respectively, as well as large
suspicious transfers among Wells accounts that made negative
accounts appear positive.

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NCUA was forced to liquidate Wells, and Aranjo and Smith
were indicted and tried in federal district court on charges that
included conspiracy to embezzle and to make false entries in a
federal credit union's books, 18 U.S.C. § 371 (2006), embezzlement,
id. § 657, bank fraud, id. § 1344, and filing false tax returns, 26
U.S.C. § 7206(1) (2006). Some of the counts were directed at
Aranjo alone or Smith alone. Aranjo was additionally charged with
making false entries, 18 U.S.C. § 1006, and obstructing the
examination of a financial institution, id. § 1517.
A five-week trial ensued and the jury convicted both
Aranjo and Smith of conspiracy to embezzle and to make false
entries, as well as of four counts of embezzlement. Aranjo was
also convicted of separate counts charging substantive offenses
(embezzlement, filing false tax returns, bank fraud, fraudulent
false entries, and obstructing the examination of a financial
institution) and Smith of two other substantive offenses (four
counts of filing false tax returns and one count of bank fraud).
There were acquittals on a few other counts.
Aranjo was sentenced to 54 months in prison and Smith to
12 months and one day. Both were ordered to provide $400,000 in
restitution to NCUA, with Aranjo to provide an additional $1
million to a credit union insurer. Both now appeal and each argues
that the government's peremptory challenge of an African-American
juror violated their rights under Batson v. Kentucky, 476 U.S. 79

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(1986). Smith makes several other claims, but we begin with the
Batson challenge common to both appellants.
During jury selection, Aranjo's counsel (joined by
Smith's counsel) objected to one of the prosecutor's peremptory
challenges, noting that the prospective juror was "seemingly the
one African American woman on the jury panel . . . which implicates
both classes [race and gender]." Aranjo's counsel pointed out
that--contrary to the court's suggestion--a different, male juror
probably was not African-American, and that there were very few
women on the jury.
The court then asked the prosecutor to explain her
challenge. She replied that there were
two reasons, both relating to [the juror's]
employment with the Job Corps, which is a
federally funded organization that has some
government regulatory oversight. It also
serves a population of . . . juveniles who
have been in trouble with the law, and treats
them at a residential setting. So I am
concerned about her identification with
individuals who have been charged with crime,
as well there's going to be a lot of testimony
here with respect to dealing with federal
regulators and the federal government as part
of the defense in this case.
After some back and forth, the prosecutor explained that,
based on her prior experience with Job Corps cases, she knew that
Job Corps employees are not strictly speaking federal employees or
part of a federal agency but instead are "hire[d] . . . from the
outside" by the Department of Labor, such that their relationship

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No juror had admitted a juvenile conviction, but one--whom 1
defense counsel ultimately struck--had admitted to being
"criminally charged with vandalism and work[ing] through that as a
kid" 26 years earlier. Another had been accused and acquitted of
arson at age 18.
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with federal supervisors can be "contentious." Aranjo's counsel
noted that the prosecutor had not struck a white male juror who had
admitted a juvenile conviction, and claimed that this showed the 1
prosecutor's proffered reasons were in this respect a pretext for
racial discrimination.
The court then allowed the government's peremptory
challenge, accepting that the prosecutor acted on the race-neutral
reason that the juror "is associated with an entity that is under
the eye of the federal government and . . . would be unduly
affected by that." After the court ruled, the prosecutor noted
that there would be testimony about Aranjo's work with the Youth
Credit Union, the mission of which included helping to "keep kids
out of trouble."
The format in the trial court for framing and deciding a
Batson challenge is as follows:
First, a defendant must make a prima facie
showing that a peremptory challenge has been
exercised on the basis of race. Second, if
that showing has been made, the prosecution
must offer a race-neutral basis for striking
the juror in question. Third, in light of the
parties' submissions, the trial court must
determine whether the defendant has shown
purposeful discrimination.

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Miller-El v. Cockrell, 537 U.S. 322, 328-29 (2003) (citations
omitted). The defendant ultimately bears the burden of persuasion
as to discriminatory purpose. Johnson v. California, 545 U.S. 162,
170-71 (2005). Where the trial judge has found that the burden has
not been carried, review of a preserved Batson claim is for clear
error. United States v. Girouard, 521 F.3d 110, 115 (1st Cir.
2008).
The parties dispute whether the defendants established a
prima facie case of discrimination and whether the district court
so found, but as the prosecutor offered an explanation and the
judge accepted it, we do not pursue the issue. Some case law
suggests that this sequence makes it unnecessary to decide the
prima facie issue. Hernandez v. New York, 500 U.S. 352, 359
(1991); United States v. Perez, 35 F.3d 632, 635 (1st Cir. 1994).
Certainly that is true where, as here, we uphold the trial judge's
finding that the explanation was adequate.
Aranjo and Smith argue that the prosecutor's concern
about the struck juror's Job Corps affiliation was pretextual,
pointing to two sets of white jurors that they claim were
"similarly situated" but were not struck: the two jurors who had
reported being accused of crimes in their youth, see note 1 above,
and two who had ties to the banking industry. True enough, "[i]n
considering Batson claims, courts may examine . . . whether
similarly situated jurors from outside the allegedly targeted group

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were permitted to serve." Aspen v. Bissonnette, 480 F.3d 571, 577
(1st Cir. 2007).
But the connections between two jurors and the banking
industry were more attenuated than the challenged juror's
connection to the Job Corps: one had a father-in-law on a savings
bank board and another had a daughter who worked for a bank; by
contrast, the challenged juror in this case worked directly for the
Job Corps. Several of the charges against Aranjo involved alleged
obstruction of supervisory officials, so a concern about an
antagonistic relationship between Job Corps employees and federal
managers could be legitimate.
The prosecutor gave no specifics beyond a general
reference to her own experience, but none were sought. Further,
a Batson challenge is a preliminary matter handled by the judge
with few formalities. Nor is the accuracy of the prosecutor's
assessment critical; it is enough if her explanation was race-
neutral and reflected her true motive. Purkett v. Elem, 514 U.S.
765, 768-69 (1995) (per curiam); Mitleider v. Hall, 391 F.3d 1039,
1049 (9th Cir. 2004); United States v. Thomas, 320 F.3d 315, 320
(2d Cir. 2003). Peremptory challenges are regularly based on
counsel's prior experience with jurors.
As for the jurors criminally accused as youth, the
accusations were decades earlier for both, while the prosecutor
said she was concerned about a juror who did or had worked with an

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Smith's motion for judgment of acquittal appears to have 2
aimed at all of these counts, but Smith's brief on appeal focuses
on the conspiracy. Nothing in his brief disputes the evidence for
his conviction on four counts of filing false tax returns and on
one count of bank fraud. The tax counts were for failing to report
the income that the government claimed he had embezzled; the bank
fraud concerned unrelated matters.
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organization that might identify with those charged with crime.
Further, the struck juror was the only one who fit both of the
prosecutor's negative concerns: possible identification with those
criminally accused and potential antagonism toward federal
regulators. In all, the district judge did not clearly err in
accepting the proffered reasons.
Smith alone makes a number of other claims of error. We
begin with Smith's claim that the evidence against him was
insufficient. With some basis, the government treats this as a
challenge only to Smith's conviction for conspiracy and not to the
substantive counts on which he was convicted; but Smith's brief is
imprecise and certain of his arguments, if successful, might
logically undermine his aiding and abetting convictions on the four
embezzlement counts. In any event, the facts that support them 2
are building blocks for the conspiracy count.
An attack on the sufficiency of the evidence is normally
an uphill struggle: although the jury must find the elements of the
offense beyond a reasonable doubt, the defendant's burden on appeal
is to show that, crediting the government's witnesses and drawing
all reasonable inferences in its favor, no reasonable jury could

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For example, Smith used money from his negative balance Wells 3
account to pay for a sauna for his and Aranjo's home and wrote
checks for hundreds of thousands of dollars from the negative
balance D.A.T. Construction account, some made out to himself.
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have reached a guilty verdict. United States v. Marin, 523 F.3d
24, 27 (1st Cir. 2008). In this case the four substantive
embezzlement convictions are secure and their evidence bears on the
conspiracy charge as well.
Each count rested on one or more transactions through
which Smith or an entity he controlled improperly received money
from Wells. Three concerned Smith's expenditure of funds in excess
of amounts on deposit in his personal account or the account of one
of his companies. The fourth concerned a $225,000 transfer into 3
one of the company accounts, which constituted an undocumented
"loan" from Wells against which only one $10 payment was ever made
(as to this, an IRS agent with a corporate accounting background
offered testimony that it was "not a true loan").
Proof of these transactions and their impropriety was
coupled with evidence that Smith was regularly receiving cashier's
checks or making withdrawals unsupported by funds in his personal
account or others he controlled; that his wife was involved in
giving approval for such transactions; that some payments occurred
immediately after he had conferred with her at the bank; and that
the negative balances were sufficiently large that he had to know
that his withdrawals were misappropriating bank funds, particularly

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since he received and possessed information revealing those
negative balances.
Smith's theory is that at worst he was merely the
recipient of funds embezzled by his wife and not himself an
embezzler or a co-conspirator. One can be a knowing recipient of
stolen goods without necessarily being an aider and abettor of the
theft or a co-conspirator, see, e.g., Baker v. United States, 393
F.2d 604, 609 (9th Cir. 1968); but these four counts do not charge
wrongful transfers to or withdrawals by Aranjo subsequently passed
on to Smith; in each instance he or his company obtained money from
Wells with Aranjo's cooperation, directly aiding and abetting an
embezzling transaction that she facilitated.
Each of these transactions is also evidence of a
conspiracy to embezzle. Perhaps a jury could view them as separate
conspiracies; but their number, the common use of Wells' funds and
Aranjo's authority, the benefit that each defendant might receive
from the funds the other obtained from Wells, and the similarity in
methods permitted the jury to infer an arrangement between them to
fleece Wells for their mutual benefit. United States v. Rivera
Calderon, 578 F.3d 78, 89-91 (1st Cir. 2009); United States v.
Soto-Beniquez, 356 F.3d 1, 18-19 (1st Cir. 2004).
If the government's case is thin at all, it is solely
insofar as the government charged that the objects of the
conspiracy were both "to fraudulently obtain and convert to their

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own personal use and to the personal use of others, money from
Wells" and "to prevent detection of the fraud." While the former
was amply proved as to both defendants, little direct proof exists
of Smith's involvement with or even his direct knowledge of
Aranjo's falsifications and obstructions. But the primary purpose-
-to embezzle--is all that is needed to convict.
Probably the government charged the secondary objective
in order to ensure that the rich evidence of Aranjo's falsification
and obstruction reached the jury; but the evidence was admissible
against Aranjo even in a joint trial and even if preventing
detection were not charged as an objective of the conspiracy. It
may even be arguable--we need not decide the point--that the jury
could reasonably infer that Aranjo and Smith discussed Aranjo's
false book or record entries or that Smith had to know that they
would occur as part of the embezzlement.
Yet even if we assume that evidence was lacking as to a
common purpose to falsify books and obstruct detection, a
conspiracy based on a common purpose to embezzle was both charged
and proved. As a matter of common sense, the conspiracy conviction
had to rest on the evidence of this common purpose to embezzle--
which we have noted is ample--and not instead simply on a secondary
purpose as to which very little was proved against Smith. See
Griffin v. United States, 502 U.S. 46, 56-57 (1991); United States
v. Lanoue, 71 F.3d 966, 982-83 (1st Cir. 1995).

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Thus, the most Smith might have obtained--assuming that
the secondary purpose had been originally omitted from the
conspiracy charge against Smith or struck by the judge at the close
of the government's case--was an instruction not to consider
against him evidence of false entries and obstructive acts by
Aranjo that scarcely inculpated him at all. No such instruction
was sought and, given the thinness of the latter evidence as to
Smith, the lack of such an instruction could scarcely have
prejudiced Smith on the conspiracy charge or on any other.
Smith's remaining arguments all concern a statement in a
report that was made by a NCUA examiner--Michelle Thibault--who was
assigned to examine Wells in 1999; the report documented
discussions that occurred at a NCUA-Wells joint conference. At
issue is a single sentence in the report that reads, "[Aranjo] also
stated [at the joint conference] that she spoke with her husband
last night and that if the credit union does not sue NCUA, she may
pursue legal action on her own," which Thibault also read aloud in
her testimony at trial.
The context was efforts by Aranjo to halt or limit NCUA's
endeavors, and the government mentioned Aranjo's statement to the
jury in closing as one indication that Smith had knowledge of and
therefore conspired in efforts his wife was making to conceal the
embezzlements. The statement is weak proof either that Smith knew
his wife was aiming to conceal wrongdoing or that he joined in that

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Seemingly the jury's attention had already been drawn to the 4
statement without objection during preliminary questions to
Thibault, and the report itself was admitted into evidence without
objection and was therefore available to the jury in any event.
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purpose; it does little more than say she might sue NCUA,
confirming that he and his wife talked about Wells and the
investigation.
But this, of course, is something that the jury could
reasonably infer from other evidence. A number of the diversions
of Wells' assets involved both of the defendants, and some of the
funds were spent for purchases from which they both benefitted.
And, as part of the investigation concerned entities in which Smith
was involved--Friends of the Credit Union, of which he was
treasurer, and D.A.T. Destiny and D.A.T. Construction, two
companies he controlled--he could not reasonably have been ignorant
of it.
In all events, when the government asked Thibault about
the sentence on direct examination, Smith objected without giving
any reason; the judge overruled the objection while offering
counsel the opportunity for a side bar conference if he wanted
further argument, but counsel did not take up the invitation.4
Smith now says that the admission of the statement was improper
hearsay that violated his Confrontation Clause rights under
Crawford v. Washington, 541 U.S. 36 (2004), and Bruton v. United
States, 391 U.S. 123 (1968).

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As to hearsay, Smith concedes that the report was
admissible as a business record, Fed. R. Evid. 803(6), but, as the
reported statement was made by Aranjo and yet used as well against
Smith, Smith complains that there was no finding by the judge that
the statement within the report was admissible against Smith as one
made by a co-conspirator during the conspiracy and in furtherance
of it. United States v. Petrozziello, 548 F.2d 20, 23 (1st Cir.
1977). But Smith never requested such a finding, either upon his
objection or at the close of all evidence, nor did he complain of
its absence in moving for judgment of acquittal.
Although we could remand for a finding if we thought it
necessary, United States v. Machor, 879 F.2d 945, 950-51 (1st Cir.
1989), the evidence of a conspiracy to embezzle by Aranjo and Smith
was very strong; the statement added little, save as it allowed the
government to suggest that Smith was aware of one specific step in
the cover-up. Indeed, as already explained, evidence of the cover-
up is almost beside the point as to Smith, while the adequacy of
the evidence against Aranjo is not even challenged on appeal.
Anyway the objection has been forfeited.
As for Smith's claim that the statement's admission
violated the Confrontation Clause as interpreted by Crawford and
Bruton, neither the concept nor either case was mentioned in
opposing the admission of the statement. Thus, we review this
claim only for plain error. United States v. Ziskind, 491 F.3d 10,

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See United States v. Olano, 507 U.S. 725, 734-36 (1993); 5
United States v. Cotton, 535 U.S. 625, 632 (2002); Ziskind, 491
F.3d at 14.
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13-14 (1st Cir. 2007). Given the powerful evidence of a conspiracy
to embezzle, and the fact that the statement added almost nothing
beyond what a jury would infer, we think the supposed
constitutional error--if there was any--could not have changed the
outcome, let alone caused a miscarriage of justice.5
Affirmed.

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