US v. Day: In this appeal, the Fourth Circuit heard a number of challenges to Day’s convictions and sentence for his scheme to defraud the Department of Defense, over the course of several years, involving his supply of defective and nonconforming goods for use in U.S. military aircraft, vehicles and weapons systems.
Day and three co-conspirators formed companies that bid on government contracts through a custom designed software program, and when his low bids succeeded in earning government contracts, Day would provide similar sounding, but nonconforming items, which cost him just 3.77% of the amount he received in payment from the government. Prior to discovery, Day secured nearly 1,000 government contracts, worth approximately $8.6 million. He operated this scheme from Mexico, where he directed his co-conspirators through email, phone calls, and internet chats.
Additionally, Day would deposit the proceeds of his operation in a Belizean bank account, and when that account was shut down, Day instructed his co-conspirators to convert the proceeds into gold and physically drive the gold to him from the U.S. to Mexico. Day received over $2 million in gold this way.
In August 2008, a federal grand jury indicted Day for conspiracy to commit wire fraud, wire fraud, aggravated identity theft, money laundering conspiracy, smuggling conspiracy, and obstructing justice. Day, in custody of Mexican authorities who captured him at the airport in Cancun in July 2008, was extradited by the Mexican government on all charges other than the identity theft and obstruction counts in December 2010. At the end of his eight-day trial, a unanimous jury found Day guilty on all counts.
On appeal, the Fourth Circuit considered the jury instruction on aiding and abetting liability that the government had requested at trial, and to which the defense did not object. First, Day argued that this jury instruction had the effect of constructively amending the indictment. The Fourth Circuit found that this argument failed because it has repeatedly held that a "defendant may be convicted of aiding and abetting under an indictment which charges only the principal offense." Next, Day argued that this jury instruction violated the extradition rule of specialty, which Circuit Splits discusses here.
Day also challenged his conviction for conspiracy to commit money laundering on the basis that the government did not prove that Day transported gold with the requisite design to conceal; that the gold was not a "monetary instrument or funds;" and that the trial court did not properly instruct the jury on the definition of the term, "proceeds." The Fourth Circuit held that the record was "replete" with evidence showing that Day knew that transporting the gold to Mexico would have the effect of concealing the location, nature, and source of the unlawful proceeds, but also that he transported the gold for precisely that purpose. Further, the Fourth Circuit employed the ordinary meaning of the term "funds" to find that the gold could qualify as "funds" under the money laundering statute, and that Day treated the gold as a cash equivalent.
Day argued that venue for his criminal trial in the Eastern District of Virginia was improper. The Fourth Circuit disagreed, and found that two classes of overt acts took place within the district, specifically, phone calls one conspirator made while within that district, and emails that were sent to government personnel within the district. Day also argued that the district court made two evidentiary errors at trial, by refusing to admit a government report describing mishandled evidence, and by admitting some prior bad acts of his under 404(b). The Fourth Circuit found the government report was properly excluded under 403 as improperly prejudicial, and that the prior bad acts (purchasing expensive watches, using false names, and his use of foreign bank accounts) were intrinsic to Day’s criminal conduct.
Day’s final arguments concerned the length of his sentence (105 years) and the resitution award. Day argued unsuccessfully that his guidelines-range sentence did not account for the two years he spent in custody in Mexico, but the Fourth Circuit disagreed. Sentencing Law and Policy discusses the restitution award here.