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United States v. Annamalai

United States Court of Appeals, Eleventh Circuit

September 24, 2019

UNITED STATES OF AMERICA Plaintiff - Appellee,
ANNAMALAI ANNAMALAI, Defendant-Appellant.

          Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:13-cr-00437-TCB-ECS-1

          Before WILSON and JORDAN, Circuit Judges, and MOORE, [*] District Judge.

          JORDAN, Circuit Judge:

         Annamalai Annamalai appeals his convictions and 327-month sentence for numerous offenses related to his operation of a Hindu temple in Georgia. After reviewing the record, and with the benefit of oral argument, we reverse his convictions for bankruptcy fraud, conspiracy to commit bankruptcy fraud, money laundering (which were based on the underlying specified unlawful activity of bankruptcy fraud), and conspiracy to harbor a fugitive. We also conclude that the government established by a preponderance of the evidence that the loss resulting from Mr. Annamalai's bank fraud scheme was just over $100, 000, but did not prove that it exceeded $400, 000. We affirm in all other respects and remand for resentencing.


         Mr. Annamalai is a self-proclaimed Hindu priest. In 2005, he opened the Hindu Temple and Community Center of Georgia, Inc. in an office building in Norcross, Georgia. The Hindu Temple generated income in part by charging fees for religious and spiritual products and services, including religious ceremonies and horoscopes. See generally Laurence R. Iannaccone & Feler Bose, Funding the Faiths: Toward a Theory of Religious Finance, in The Oxford Handbook of the Economics of Religion 9 (2010) ("[E]ven in the United States, where Hindu temples are more congregationally oriented, fee-for-service financing remains the norm. Visit an[y] Hindu temple or website and you will almost always encounter an explicit menu of price and products.").

         The Hindu Temple advertised its services online and in magazines (including one that Mr. Annamalai published) that were distributed in Indian grocery stores and other temples. In typical transactions, followers called the advertised phone number for the Hindu Temple and spoke with Mr. Annamalai or one of the priests he employed. Followers who agreed to purchase a service (like a horoscope reading or prayers) would then provide a credit card number to complete the transaction.


         The evidence at trial showed that Mr. Annamalai used the Hindu Temple as part of a criminal scheme to defraud his followers and commit bank fraud. Mr. Annamalai used the fraud proceeds to fund a lavish lifestyle, including multiple homes and expensive cars.

         For example, Mr. Annamalai charged unauthorized amounts-for services not requested or provided-on his followers' credit cards. If the followers complained about the unauthorized charges, he would claim that the charges fell under the Hindu Temple's "no refund" policy. If the followers then disputed the charges with their banks, he would submit false documents with the followers' signatures-which he had obtained by sending magazines to their homes through certified mail-to the banks. He would tell the banks that the signatures were proof that the followers had ordered the disputed services.

         Sometimes, Mr. Annamalai would publish detailed stories of the followers' confidential personal struggles in his magazine. He would also create altered audio recordings of conversations with the followers and submit them to law enforcement to justify the disputed charges.

         In August of 2009, the Hindu Temple filed for Chapter 11 bankruptcy. On November 4, 2009, the bankruptcy court appointed a trustee who became the administrator of the Hindu Temple's bankruptcy estate. Following his appointment, the trustee quickly closed the Hindu Temple, shut its doors, and did not conduct any more business on its behalf.

         A few days after the trustee's appointment, Mr. Annamalai caused the incorporation and registration of a new temple called the Shiva Vishnu Temple of Georgia, Inc. Mr. Annamalai had previously used that name in magazine advertisements and other documents as an alternative name for the Hindu Temple.

         Like the Hindu Temple, the Shiva Vishnu Temple provided religious and spiritual products and services for a fee. A number of followers paid the Shiva Vishnu Temple for religious and spiritual services it provided to them after the Hindu Temple filed for bankruptcy and was shut down by the trustee. These payments formed the basis for the bankruptcy fraud charges against Mr. Annamalai.


         In 2013, a grand jury in the Northern District of Georgia returned an indictment against Mr. Annamalai and others. The government subsequently obtained two superseding indictments. The second superseding indictment charged Mr. Annamalai with 34 criminal offenses: conspiracy to commit bank fraud in violation of 18 U.S.C. §§ 1349 and 1344 (Count 1); bank fraud in violation of 18 U.S.C. §§ 1344 and 2 (Counts 2–8); filing a false federal income tax return in violation of 26 U.S.C. § 7206(1) (Count 9); conspiracy to commit bankruptcy fraud in violation of 18 U.S.C. §§ 371 and 152(1) (Count 10); bankruptcy fraud in violation of 18 U.S.C. §§ 152(1) and 2 (Counts 11–20); money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and 2 (Counts 21–30); making a false statement in writing in violation of 18 U.S.C. §§ 1001(a)(3) and 2 (Count 31); obstruction of justice in violation of 18 U.S.C. §§ 1503 and 2 (Count 32); making false statements under oath in a bankruptcy proceeding in violation of 18 U.S.C. §§ 152(2) and 2 (Count 33); and conspiracy to harbor a fugitive in violation of 18 U.S.C. §§ 1071 and 371 (Count 34).

         Mr. Annamalai sought to dismiss several of the charges, and/or to sever some of the counts, but the district court denied his motions and the case proceeded to trial. After an 11-day trial, and four hours of deliberations, the jury convicted Mr. Annamalai of all 34 charges.

         At sentencing, the district court determined that Mr. Annamalai had a total offense level of 39 (based in part on a loss amount of over $400, 000 for the bank fraud offenses) and a criminal history category of I, which under the 2013 Sentencing Guidelines produced an advisory recommended imprisonment range of 262 to 327 months. The district court sentenced Mr. Annamalai to 327 months in prison, to be followed by five years of supervised release. It also ordered him to pay restitution in the amount of $550, 527.92.


         Mr. Annamalai challenges the joinder of the 34 offenses and the district court's denial of his motion to sever several charges that he asserts were unrelated. "We undertake a two-step analysis to determine whether separate charges were properly tried at the same time." United States v. Hersh, 297 F.3d 1233, 1241 (11th Cir. 2002). First, we review de novo whether the charges were properly joined under Federal Rule of Criminal Procedure 8(a). Id. Second, we review the district court's denial of the defendant's motion to sever for abuse of discretion. Id.

         Rule 8(a) permits an indictment to charge a defendant with multiple offenses when they "are of the same or similar character, or are based on the same act or transaction, or are connected with or constitute parts of a common scheme or plan." We construe Rule 8(a) "broadly in favor of initial joinder" so that charges that are similar may be tried together "even if [the] offenses do not arise at the same time or out of the same series of acts or transactions." Hersh, 297 F.3d at 1241. We reverse only if improper joinder "affect[ed] substantial rights" and "result[ed] in actual prejudice because it had substantial and injurious effect or influence in determining the jury's verdict." United States v. Zitron, 810 F.3d 1253, 1257 (11th Cir. 2016) (quotations omitted).

         Separate charges in complex cases are properly joined as long as they arise out of the same underlying conduct. For example, in United States v. Dominguez, 226 F.3d 1235, 1237 (11th Cir. 2000), we refused to reverse the joinder of 28 counts-conspiracy to possess cocaine with intent to distribute, conspiracy to commit money laundering, money laundering, use of a telephone facility in commission of a felony, and mortgage fraud. Although the charges were seemingly unrelated, the government theorized and later proved at trial that the defendant "submitted fraudulent income tax returns when applying for mortgage loans in order to conceal the fact that his income had been derived from drug activity." Id. at 1239.

         Given Dominguez, Mr. Annamalai's improper joinder argument fails. We determine whether joinder is proper by looking at "the allegations stated on the face of the indictment, " id. at 1238 (quoting United States v. Weaver, 905 F.2d 1466, 1476 (11th Cir. 1990)), and here the grand jury charged that Mr. Annamalai used the Hindu Temple-which later filed for bankruptcy-to carry out a fraudulent scheme and then committed a number of offenses related to that scheme. The indictment alleged that Mr. Annamalai defrauded followers of the Hindu Temple, misled the financial institutions that charged those followers, moved the fraud proceeds (proceeds which he failed to report on his income tax return) to a foreign bank account, improperly concealed property belonging to the Hindu Temple's bankruptcy estate, committed money laundering with the proceeds of that bankruptcy fraud, and committed a number of illegal acts related to the criminal investigation into his fraudulent activities (submitting a false document to the IRS, obstructing justice, providing false statements under oath, and conspiring to conceal a fugitive). All of these claims arose out of and were connected to the same general fraudulent scheme. Where, as here, there is an "explicit connection between the groups of charges, " we need not look outside "the four corners of the indictment." Id.

         Under Rule 14(a), "[i]f the joinder of offenses or defendants in an indictment . . . appears to prejudice a defendant . . . the court may order separate trials of counts, sever the defendants' trials, or provide any other relief that justice requires." Fed. R. Crim. P. 14(a). "The decision whether to grant a severance lies within the district court's sound and substantial discretion." United States v. Mosquera, 886 F.3d 1032, 1041 (11th Cir. 2018). We reverse only when the defendant demonstrates "a clear abuse of discretion resulting in compelling prejudice against which the district court could afford no protection." Id. (quoting United States v. Ramirez, 426 F.3d 1344, 1352 (11th Cir. 2005)). Compelling prejudice occurs when, "under all the circumstances of a particular case, " it is apparent that the average juror could not follow the "court's limiting instruction and appraise the independent evidence against a defendant solely on that defendant's own acts, statements, and conduct in relation to the allegations contained in the indictment and render a fair and impartial verdict." United States v. Walser, 3 F.3d 380, 386–87 (11th Cir. 1993).

         Mr. Annamalai argues that he meets this demanding standard because the jury convicted him of several charges despite insufficient evidence, convicted him of every single offense charged, and returned its decision after only four hours. The jury's quick deliberation and straight-ticket conviction on all charges give us some pause, but we presume that juries will follow the instructions given by the district court. See Mosquera, 886 F.3d at 1042 (citing Ramirez, 426 F.3d at 1352). Although complex charges make for complicated trials, the intricacy of a case alone does not require severance. That is why we have "declined to find that severance was required in some complex, multi-defendant cases." United States v. Lopez, 649 F.3d 1222, 1235 (11th Cir. 2011) (citing examples). Absent other indications of prejudice, "the complexity of the case and the speed of deliberation alone [do] not constitute prejudice." United States v. Hernandez, 921 F.2d 1569, 1580 (11th Cir. 1991). See also id. (noting that "relatively short jury deliberations are an ambiguous indicator" because "[r]ather than indicating haste, it could also indicate strong evidence."). Here, Mr. Annamalai has not shown an abuse of discretion or compelling prejudice, and to the extent that his severance argument is premised on the lack of evidence on certain charges, we address that matter below and set aside some of his convictions.


         Mr. Annamalai contends that his prosecution, conviction, and sentencing violated his constitutional rights to due process, equal protection, and freedom of religion. Exercising plenary review, see, e.g., Agan v. Vaughn, 119 F.3d 1538, 1541 (11th Cir. 1997) (applying de novo review to First Amendment challenge to conviction), we reject these contentions.[1]

         The First Amendment prohibits a criminal charge of fraud from being based on "the truth or verity of [a person's] religious doctrines or beliefs." United States v. Ballard, 322 U.S. 78, 86 (1944). But the government's case here was not an impermissible attack on the Hindu religion or on the truth or verity of Mr. Annamalai's beliefs. Rather, the government prosecuted Mr. Annamalai for a scheme in which he abused his position as a Hindu priest by, among other things, causing his followers' credit cards to be charged in excess of agreed amounts and without authorization, and submitting false documents to financial institutions to substantiate the unauthorized charges. See D.E. 86 at 2–5. The government's description of Mr. Annamalai and his temple as "a scam" was a fair comment on the evidence-given the testimony presented at trial about the fraud perpetrated on followers who sought and paid for spiritual help-and did not constitute an improper hostility towards Hinduism. See Cantwell v. Connecticut, 310 U.S. 296, 306 (1940) (noting that "penal laws are available to punish" those who, "under the cloak of religion, . . . commit frauds upon the public"); Church of Scientology Flag Service Org., Inc. v. City of Clearwater, 2 F.3d 1514, 1544 (11th Cir. 1993) (explaining that "the state does indeed have a compelling interest in protecting church members from affirmative, material misrepresentations designed to part them from their money"); United States v. Rasheed, 663 F.2d 843, 847 (9th Cir. 1981) ("The First Amendment does not protect fraudulent activity performed in the name of religion."). See also Ballard, 322 U.S. at 95 (Jackson, J., dissenting) ("I do not doubt that religious leaders may be convicted of fraud for making false representations on matters other than faith or experience, as for example if one represents that funds are being used to construct a church when they in fact are being used for personal purposes.").

         We acknowledge that some of the government's comments during closing argument went too far. For example, the government twice referred to the individuals who served as priests at the Hindu Temple as "so-called priests." D.E. 390 at 2078, 2085. Although there was evidence that some of those priests were former salesmen for Mr. Annamalai's business in India and had no religious training, see D.E. 384 at 813–15, generally it is not for the government to pass on religious qualifications. Cf. Gonzalez v. Roman Catholic Archbishop of Manila, 280 U.S. 1, 16 (1929) (explaining that "it is the function of the church authorities to determine what essential qualifications of a chaplain are and whether [a] candidate possesses them, " and that such determinations are conclusive on courts). But Mr. Annamalai did not object to these comments when they were made, and on this record there is no plain error warranting reversal. Assuming that there was error, and that the error was plain, the error did not affect Mr. Annamalai's substantial rights. See United States v. Olano, 507 U.S. 725, 732–37 (1993) (articulating plain error standard); United States v. Young, 470 U.S. 1, 14–20 (1985) (applying plain error standard to government's improper remarks during rebuttal closing argument).

         We also take Mr. Annamalai's point that the government exaggerated at sentencing by saying that "every dollar that was deposited into the [Hindu Temple] was in fact a fraud." D.E. 467 at 93. Indeed, some of the followers who testified at trial acknowledged that certain services they paid for-such as horoscope readings and prayers-were performed as requested and promised. See D.E. 381 at 103, 113; D.E. 382 at 212. Cf. Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1298 (11th Cir. 2007) ("Simply put, judges and juries must not inquire into the validity of a religious doctrine, and the task of courts is to examine whether a plaintiff's beliefs are, 'in his own scheme of things, religious.'") (citation omitted). But the district court ultimately did not use all of the Hindu Temple's revenue as a proxy for loss, so the government's "oratorical exaggeration, " Vanskike v. Union Pac. R.R. Co., 725 F.2d 1146, 1149 (8th Cir. 1984), did not prejudice Mr. Annamalai.


         Count 10 charged Mr. Annamalai with conspiracy to commit bankruptcy fraud in violation of 18 U.S.C. § 371. Counts 11–20 charged him with substantive bankruptcy fraud in violation of 18 U.S.C. § 152(1), which prohibits knowingly and fraudulently concealing from a Chapter 11 bankruptcy trustee "any property belonging to the estate of a debtor."

         All of the substantive bankruptcy fraud charges were based on funds that the Shiva Vishnu Temple acquired or received after the Hindu Temple filed for bankruptcy in August of 2009 and after the trustee shut it down in early November of 2009. Counts 11–14 and 16–20 concerned credit card receivables for transactions spanning from November 25, 2009, to October 25, 2010. An illustrative example is Count 20, which was based on credit card receivables of $2, 428.42 that the Shiva Vishnu Temple received through American Express on October 25, 2010. Count 15 was different; it concerned a donation check for $3, 000 made out to the Hindu Temple in January of 2010 and deposited into the Shiva Vishnu Temple bank account.

         Mr. Annamalai argues that the government failed to introduce sufficient evidence to support his convictions on Counts 10–20. See Appellant's Br. at 38. The district court acknowledged that the matter was "close, " D.E. 389 at 1792, but denied the Rule 29 motion for judgment of acquittal. See D.E. 390 at 2071–72; D.E. 256 at 3–4.

         Exercising de novo review, and viewing the evidence "in the light most favorable to the government, " United States v. Robertson, 493 F.3d 1322, 1329 (11th Cir. 2007), we agree with Mr. Annamalai that the new income generated by the Shiva Vishnu Temple, for post-bankruptcy religious or spiritual services provided to and paid for by followers, did not constitute property of the bankruptcy estate of the Hindu Temple. We also agree with him that the post-petition donation check made out to the Hindu Temple did not constitute property of the estate. And because the ...

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