United States of America v. David McQueen

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,

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 manifest

miscarriage-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. As a result, despite



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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.

Case No. 14-2561, United States v. McQueen

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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.” Ewing v. California,



Case No. 14-2561, United States v. McQueen



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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



Case No. 14-2561, United States v. McQueen



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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.



Case No. 14-2561, United States v. McQueen



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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,



Case No. 14-2561, United States v. McQueen



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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,



Case No. 14-2561, United States v. McQueen



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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.



Case No. 14-2561, United States v. McQueen



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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?



Case No. 14-2561, United States v. McQueen



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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.

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.