United States of America v. Seng Tan, a/k/a Seng Kim Srun, a/k/a Seng Srunk

United States Court of Appeals
For the First Circuit
No. 10-2091
UNITED STATES OF AMERICA,
Appellee,
v.
SENG TAN, a/k/a Seng Kim Srun, a/k/a Seng Srunk,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Boudin, Stahl, and Thompson,
Circuit Judges.
Joshua L. Gordon, with whom Law Office of Joshua L. Gordon was
on brief, for appellant.
Jack W. Pirozzolo, First Assistant United States Attorney,
with whom Carmen M. Ortiz, United States Attorney, was on brief,
for appellant.
March 23, 2012

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THOMPSON, Circuit Judge.
SETTING THE STAGE
A federal jury convicted James Bunchan and Seng Tan, a
husband and wife team, of numerous mail-fraud, money-laundering,
and conspiracy crimes committed in furtherance of a classic pyramid
scheme that swindled some 500 people out of roughly $20,000,000 in
the early to mid-2000s. See 18 U.S.C. §§ 1341, 1957, 371. Fellow
scammer Christian Rochon pled guilty to similar charges on the
first day of trial, and his testimony in the prosecution's case
helped seal the couple's fate. We affirmed Bunchan's convictions
in United States v. Bunchan, 580 F.3d 66, 67 (1st Cir. 2009), and
now affirm Tan's. Before we explain why, we present the facts in
the light most favorable to the verdict, see id., borrowing freely
from our earlier opinion in Bunchan.
THE SCHEME
Bunchan founded and owned two self-styled multi-level
marketing (MLM) companies – World Marketing Direct Selling (WMDS)
and Oneuniverseonline (1UOL) – that supposedly made a mint selling
health and dietary supplements. In a legit MLM venture – think
Avon, Mary Kay, Amway (companies Tan had worked for) – each person
who joins the sales force also becomes a recruiter who brings in
other persons underneath her. But the venture survives by making
money off of product sales, not off of new recruits. Not so with
WMDS and 1UOL. Neither sold much of anything, and both raised gobs
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of money almost exclusively by recruiting new investors, also
called members.
Here is how it all worked. Bunchan tasked Tan with
drumming up new members, something she was born to do, apparently.
Both she and Bunchan are Cambodian émigrés. And they focused their
recruitment efforts primarily on Cambodians living here, many of
whom were first-generation Cambodian-Americans who had limited
educations and spoke little English. As "CEO Executive National
Marketing Director," Tan ran informational seminars for potential
investors, meeting them at hotels, their homes, and elsewhere. She
usually made quite an entrance, showing up in a chauffeur-driven
Mercedes. And she spoke to the attendees in their native language
(Khmer), stressing their common background too (including their
shared experiences living in Cambodia during the murderous reign of
the Khmer Rouge).
Tan's pitch was quite attractive. She and Bunchan were
millionaires, she said, and the "gods" had sent her to make "the
Cambodian people" millionaires too. She bragged about how
profitable both companies were thanks to high product sales, which
earned members at the "Distributor" level fantastic sales
commissions. But a member did not have to sell a single item to
make money, she explained. For a lump-sum payment of $26,347.86,
an investor could skip the Distributor level, become a "Director
I," and get an immediate "bonus" of $2,797, plus $300 every month
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for the rest of her life, her children's lives, their children's
lives, and so on. Promotional pamphlets also promised investors
that if they recruited more members and kicked in more money (any
where from $130,000-$160,000), they could become "Gold Directors"
and earn even higher never-ending monthly payouts (something like
$2,500 a month). And Tan urged persons short on cash to take out
second mortgages or home-equity loans or to borrow money from their
retirement accounts to finance their investments, and more than 150
people did. She even had members sign forms so that the loan
proceeds would be wired directly to WMDS or 1UOL.
When prospective investors asked her point-blank whether
they had to sell company merchandise to get money, Tan answered no.
She and Bunchan reduced their promises to writing, with Tan even
signing letters guaranteeing monthly returns basically forever.1
Without correcting spelling or other errors, we quote from 1
a document covering the $26,347.86 lump-sum "investment" that
Bunchan created and Tan discussed with investors:
You will get $300.00 each and every month for the rest of
your life and pass on down to your children after your
death. . . . Our National Marketing Director of [WMDS]
knows exactly how you feel about your $26,347.86 which
becomes a permanent investment with [WMDS]. . . . You
should not be worry about loosing your one of a life time
$26,347.86 investment at all. [WMDS] has an absolute
responsibility to take care you and your family for life.
Your investment can be inherited to your children and
their generation to come. . . . Because you are the
owner of [WMDS] it is completely different from investing
in stock that will go up or down and loose money . . . .
[WMDS] urges you to sign up now or you will miss your
best chance of fulfilling your American Dream.
(Capitalization in original removed.) And we offer this snippet
from one of Tan's many signed letters:
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One member who got cold feet and asked for her investment back
received a letter from Tan saying that she (Tan) would return her
money if WMDS went belly up. At trial Tan claimed that she never
made any promises like these, and when confronted on cross-
examination with one of her many letters that showed just the
opposite, she claimed that she did not have her glasses on when she
signed it and so did not know what it said.
The scheme started out swimmingly. WMDS and 1UOL used
newly-invested money to trick old investors into thinking that the
good times were here to stay. Not knowing any better, members were
ecstatic. Bunchan and Tan were too, obviously. And with cash
pouring in, the pair used the companies' coffers as their own
personal piggy bank. Bunchan lived lavishly – buying expensive
cars, a fancy yacht, and a home in Miami; jet-setting to exciting
vacation destinations; spending $150,000 on diamonds and $23,000 on
hairpieces; and dropping over $3,800,000 at casinos throughout the
country, including $238,370 in one day – mostly by siphoning money
from investor-funded company accounts. Tan was no slouch when it
came to blowing through investor money either (though she was not
quite in Bunchan's league), spending thousands on designer clothes,
In acceptance of $150,000 1UOL promises to remit to Wayne
Peterson the amount of $4400 beginning on October 15, 2005 and
continuing every month for [his] life . . . . Upon [his]
death . . . such payments shall be made to his estate.
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for example. Even the companies' "President," Christian Rochon,
got in on the act.2
But Tan's promises were too good to be true. She started
having trouble signing up new investors. So WMDS and 1UOL stopped
mailing out the monthly checks. Members revolted, naturally. Tan
tried to quell the uprising, blaming the "delay" on banking
glitches caused by Hurricane Katrina and telling members that they
would get their checks soon – out-and-out lies, the record reveals.
Worse still, after getting an earful from irate investors, Tan flew
to Minnesota and raked in hundreds of thousands of dollars –
bilking her son-in-law out of $150,000 and his friend out of
$300,000 – making the same false promises of unending returns she
had made before. And she herself decided which lucky member would
get a check from the new money – an ill-conceived stopgap measure,
it turns out.
By the time the scam imploded, roughly 500 investors had
lost a total of $20,000,000, give or take. Tan's actions led to
A high-school graduate, Rochon became president (in name 2
only, though) for one reason, and one reason only: Bunchan wanted
an "American face" for his companies, and his neighbor Rochon (a
Caucasian of Canadian decent) apparently fit the bill. And after
renting Rochon a suit jacket and taking him to a professional
photographer, Bunchan had Rochon's photo plastered all over the
companies' promotional pamphlets.
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her arrest and indictment, then to her trial and conviction, and
now to her appeal and this opinion.3
TAN'S APPEAL
Tan offers many reasons for reversing her judgment of
conviction. We group her various arguments into two broad
categories: claims of insufficient evidence on certain counts and
of a fatal variance between the conspiracy charged in the
indictment and the proof at trial. None of her arguments has any
merit, however.
(1)
The Sufficiency Issues
Challenging the sufficiency of the evidence is typically
an uphill battle, with a tough standard. A defendant who has
preserved the issue (like Tan) must convince us that even after
crediting the prosecution's witnesses and ceding all reasonable
inferences in its favor, no sensible jury could have convicted on
the evidence presented. See, e.g., United States v. Aranjo, 603
F.3d 112, 116 (1st Cir. 2010). And raising a plausible theory of
innocence does the defendant no good, because the issue is not
whether a jury rationally could have acquitted but whether it
rationally could have found guilt beyond a reasonable doubt. See,
e.g., United States v. Manor, 633 F.3d 11, 13-14 (1st Cir. 2011).
A district judge sentenced Tan to 20 years in prison and 2 3
years of supervised release, and he also ordered her to pay
$19,103,121.73 in restitution, jointly and severally with Bunchan
and Rochon.
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With this in mind, we turn to Tan's sufficiency claims, which we
review de novo. See, e.g., id. at 13.
(a)
Knowledge
As is fairly common in cases of this kind, see United
States v. Griggs, 569 F.3d 341, 343 (7th Cir. 2009) (Posner, J.),
Tan insists that she did not know that she was participating in a
pyramid scam. And, she says, because she had no knowledge of
Bunchan's double-dealing, the evidence could not support her
conspiracy, mail-fraud, and money-laundering convictions.4
Relying principally on her testimony at trial, Tan's no-
knowledge argument runs something like this. She neither owned nor
ran WMDS or 1UOL. She was not involved in their day-to-day
operations either: she did not set company policy, signed no
company checks, and had no access to company financials – all of
which shows that her "CEO" title was nothing more than an
honorific. She may have had a hand in deciding "which checks went
out from WMDS/1UOL," but she did not have any say in who got
"checks forming the mail fraud convictions." Also, she had married
Bunchan because she was lonely, not because she wanted in on his
con game. And because of cultural taboos, she never discussed
Guilty knowledge is a state-of-mind requirement for each of 4
these crimes. See United States v. Yefsky, 994 F.2d 885, 890 (1st
Cir. 1993) (conspiracy); United States v. Pimental, 380 F.3d 575,
584 (1st Cir. 2004) (mail fraud); United States v. Bucci, 582 F.3d
108, 116 (1st Cir. 2009) (money laundering).
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company "issues" with him. Ultimately, she had no reason to
suspect that anything was "rotten" at either company, and she was
as much a victim as the poor investors her husband had duped. Or
so she argues.
But Tan's theory does not hold together, given the
government-friendly standard of review. Witness after witness
testified that Tan was the one who had met them at their homes and
other locales; who had bedazzled them into believing that their
lump-sum investments would get them and their heirs monthly checks
till the end of time, all without their ever having to market or
sell a single company product; who had tried to bluff them into
thinking that everything was and would remain just great, even as
she knew that the companies could not write them checks; and who
had then scammed other innocents out of serious money using the
same phony come-on – a desperate bid to pull the companies out of
their death spiral. At least that is what a levelheaded jury could
have concluded. And a large amount of documentary evidence –
including documents that Tan herself either prepared or signed –
backed up the witnesses' account and undermined Tan's. Critically,
the jury also heard from Tan how honest MLM outfits pay persons for
making sales, not just for recruiting new members – the exact
opposite of WMDS/1UOL's business model. Critically too, Rochon
told the jury that in the companies' last days Tan herself picked
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which members would get checks from any money she pulled in from
her last-gasp recruitment efforts.
Obviously, the jury did not believe Tan's no-knowledge
defense. And having heard her and the other witnesses' testimony,
observed their demeanor, and gauged their truthfulness, the jury
was free to make that call. Tan basically wants us to re-do the
jury's work. But that is not our job. See, e.g., Manor, 633 F.3d
at 14 (collecting cases). And after doing what is our job –
viewing the record in the light most flattering to the government,
accepting all credibility choices and "reasonable inferences from
the evidence (whether or not inevitable)" that tend to support the
government's theory of the case, United States v. Lara, 181 F.3d
183, 200 (1st Cir. 1999) – we hold without difficulty that a
rational jury could have found not only that Tan knew the material
facts of this scam but also that she played a key role in it. So
her no-knowledge argument goes nowhere.5
The government also argues that the evidence supports an 5
inference that Tan deliberately closed her eyes to the true facts
– ostrich-like behavior that also supports an inference of actual
knowledge. See, e.g., United States v. Azubike, 564 F.3d 59, 66
(1st Cir. 2009) (discussing a willful-blindness scenario). But
because there was sufficient evidence that Tan had actual
knowledge, we can skip over that issue.
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(b)
Money Laundering
Tan has two more insufficient-evidence claims, both of
which target her money-laundering convictions under 18 U.S.C.
§ 1957. Neither persuades, however. 6
Section 1957 criminalizes "knowingly engag[ing] . . . in
a monetary transaction" involving "property of a value greater than
$10,000" that was "criminally derived" from certain specified
offenses, including mail fraud. See id. § 1957(a), (f)(2)-(3); id.
§ 1956(c)(7)(A). This proviso makes bank dealings risky business
for persons who have scored money from certain illegal schemes – if
they make a "deposit, withdrawal, [or] transfer" with this loot
they will have broken that law too. See id. § 1957(f)(1) (defining
"monetary transaction" broadly).
For starters, Tan argues that the underlying illegal
activity here was mail fraud "for sending checks" to some of the
persons cheated by the scammers. Oversimplifying slightly, the
essential elements for mail fraud are a scheme to defraud that
involves a use of the mail for the purpose of furthering the
scheme. See, e.g., United States v. Stergios, 659 F.3d 127, 132-33
Section 1957 has the title "Engaging in monetary 6
transactions in property derived from specified unlawful activity."
For easy reading, we will keep calling this crime a money-
laundering crime, even though there is a separate federal crime for
"[l]aundering of monetary instruments." See 18 U.S.C. § 1956; see
generally United States v. Castellini, 392 F.3d 35, 45-46 (1st Cir.
2004) (labeling § 1957 a money-laundering statute).
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(1st Cir. 2011) (providing a more detailed analysis). Jumping off
from there, Tan says that a dividend payment cannot constitute
criminally-derived proceeds – only getting "money can result in a
proceed," she says. And so, she claims, "sending mail cannot form
the predicate convictions from which money laundering proceeds can
be derived."
Tan is wrong on a couple of levels. For one thing, her
description of the record is not quite right. Her mail-fraud
convictions were not limited to checks sent by mail – no, the jury
also convicted her on multiple mail-fraud counts involving letters
sent to investors in the hopes of keeping them from catching on to
the fraud, e.g., communiqués promising members who had been stiffed
out of their monthly checks that they could count on getting their
money soon. For another thing, her argument clashes with the
statutory mosaic because it confuses two concepts: a mailing in
furtherance of a fraud and the proceeds of a fraud. The checks and
letters that the scammers mailed to investors surely helped further
the fraud, which made them the specified illegal activity required
for a § 1957 conviction. And the proceeds of the fraud – the
"criminally derived property," in § 1957 speak – were the millions
upon millions of dollars that scammed investors handed over to the
scammers. An IRS special agent traced millions of these millions
to WMDS/1UOL bank accounts – accounts that the scammers raided for
their own personal needs, which were the "transaction[s]" in mail-
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fraud proceeds needed to cinch Tan's § 1957 conviction.
Ultimately, then, this phase of her sufficiency offensive is a lost
cause.
Tan does no better with her next attack – one that takes
aim at her conviction on a money-laundering count involving a
$255,090 check, dated December 10, 2004, written on a 1UOL account
and payable to a Caesars casino. We will call this the "Caesars-
check count" for simplicity. Tan's argument has three steps.
First, Bunchan was a casino high-roller, but, she says, the
evidence showed that she had nothing to do with his gambling or
with his trips to Las Vegas. Second, the IRS special agent
testified that Tan had not signed any of the WMDS or 1UOL checks
that he had reviewed. And, finally, Bunchan had signed the check
to Caesars, and there was nothing on that check "connecting" her to
it. Adding everything together, she writes, leads to one
conclusion – "no evidence" supports the guilty verdict on the
Caesars-check count.
We see things differently. True, Rochon testified that
Tan did not gamble, and the government tells us that "no financial
evidence" tied her "directly" to the use of investor funds on
gambling. Perhaps that is why the jury acquitted her on every
other money-laundering count involving a check paid to a casino.
But the evidence on the Caesars-check count was different.
Consider what happened just days before Caesars deposited the
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$255,090 check into its account. In early December 2004, Tan
coaxed an investor into writing two checks, one for $131,933 and
the other for $300,000. The $300,000 check was unusual because it
was a loan to 1UOL, apparently – we say "apparently" because the
investor made the check out to 1UOL but added "For S. Tan" on the
memo line. In any event, Tan offered the investor $7,000 if he
would make the loan. Happy to oblige, the investor overnighted the
checks to 1UOL on December 13. 1UOL's bank posted the checks to
1UOL's account on December 14. Without these two checks, 1UOL's
account balance was $268,813.99, enough – but barely enough – to
cover the $255,090 check to Caesars. With them, the account had
plenty of money to cover that check, which Caesars then deposited
on December 18.
Considering the evidence in the light most agreeable to
the prosecution (as we must), we are confident that a rational jury
could have found Tan guilty on the Caesars-check count, violating
the money-laundering statute, at least as an aider and abetter if
not as a principal. One who participates in a criminal venture and
seeks by her actions to make it succeed can be convicted under an
aiding-and-abetting theory. See, e.g., United States v. Bristol-
Mártir, 570 F.3d 29, 39 (1st Cir. 2009) (explaining the concept);
see also 18 U.S.C. § 2 (deeming aiders and abettors punishable as
principals under federal criminal law). As a knowing member of
this scam, Tan participated in a criminal adventure, and she aided
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and abetted Bunchan's money laundering too, beguiling a member out
of a pile of cash to help her husband pay off his Caesars debt with
the $255,090 check. Importantly, the judge had instructed the jury
on the aiding-and-abetting theory of conviction, and, not
surprisingly, the government plays up that theme here. But Tan
says nothing about aiding and abetting in her brief, giving us no
reason why that doctrine should not apply. The upshot of all this
is that this aspect of her insufficiency argument misfires, just
like the others.
(2)
The Variance Issue
With the sufficiency protests out of the way, we turn to
Tan's claim that a prejudicial variance existed between indictment
and proof on the mail-fraud-conspiracy count. Her argument is
simple. That count, she says, only charged her with "receiv[ing]"
items through the mail as part of the conspiracy, not with sending
them. But the trial evidence, she quickly adds, focused on an
exactly opposite theory – that she had only "sent" items through
the mail, not "received" them. And, she continues, the jury
convicted her on the substantive mail-fraud counts for "putting
things in the mail, not taking them out . . . ." For that point,
she relies on the verdict form, which shows "guilty" on the
substantive mail-fraud counts involving letters "mailed from 1UOL,"
"from WMDS," or "from 1UOL and WMDS." Reaching her ultimate
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crescendo, she insists that this discrepancy between the charge
(receiving) and the evidence (sending) requires reversal.
A variance arises when what was alleged in the indictment
differs materially from what was proved at trial. See, e.g.,
United States v. Yelaun, 541 F.3d 415, 419 (1st Cir. 2008). Not
every variance calls for reversal, however. See id. A defendant
must show that the variance prejudiced her first – say, by leaving
her so in the dark about the charge against her that she could not
prepare a defense or plead double jeopardy to stop a second
prosecution for the same crime. Id. Variance arguments are often
made but seldom succeed. And Tan's must overcome a significant
obstacle: because she has débuted it here, our review is limited
to plain error. See United States v. Edelkind, 467 F.3d 791, 796
(1st Cir. 2006). Plain error, of course, requires an appellant to
"show (1) error, (2) plainness, (3) prejudice, and (4) an outcome
that is a miscarriage of justice or akin to it." Id. at 797.
Proving plain error is incredibly difficult, see United States v.
Shoup, 476 F.3d 38, 43 (1st Cir. 2007), and Tan cannot come close
to proving it here.
Tan's prejudice theory turns entirely on her belief that
the variance crippled her ability to defend against the charge.
But in what way? Tan does not say. And we do not think that she
was caught off guard in any way, given that the substantive mail-
fraud counts (which carried higher penalties than the mail-fraud-
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conspiracy count) charged her with both sending and receiving items
via the mail. The bottom line: even if there were a material
variance here – something we need not and do not decide – it did
not prejudice Tan's substantial rights, much less do so plainly.7
Consequently, her variance claim collapses.
SUMMING UP
Our review complete, we affirm Tan's judgment of
conviction in all respects.
Tan also hints at a variance between the indictment and the 7
jury charge, noting that the judge told the jurors that the mail-
fraud statute "prohibits the use of the mails," conceding that the
instruction was literally correct as far as it went, but
nevertheless blasting him for not differentiating "between the two
directions – sending and receiving." Her argument misses the mark
for several reasons. Our review of the instructions reveals that
the judge explained to the jurors that the government had to prove
beyond a reasonable doubt "that the use of the mail, on or about
the dates alleged, was closely related to the scheme because [Tan]
either received something in the mail or caused it to be mailed in
an attempt to carry out or execute the scheme." Also, Tan offers
no assurance that she took the necessary steps below to preserve
her point and provides no developed argument (i.e., no discussion
of on-point authority, for example) as to why this was error, let
alone plain error. We need say no more on this subject. See,
e.g., United States v. González-Mercado, 402 F.3d 294, 301-02 (1st
Cir. 2005).
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