United States v. Padron

UNITED STATES OF AMERICA v. MICHAEL ANGELO PADRON

No. SA-21-CR-124-XR

United States District Court, W.D. Texas, San Antonio Division

November 28, 2022

ORDER

XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE

On this day came on to be considered Padron's Motion for Judgment of Acquittal pursuant to FED. R. CRIM. P. 29 and alternative Motion for a New Trial pursuant TO FED. R. CRIM. P. 33 (Dkt No. 169). After careful consideration, the Court DENIES the motion.

BACKGROUND

Padron was found guilty by a jury of conspiracy to commit wire fraud and to defraud the government in violation of 18 U.S.C § 371 and six counts of wire fraud in violation of 18 U.S.C. § 1343. He was acquitted by the jury on two counts of wire fraud.

Blackhawk Ventures received various contracts that were set aside for service-disabled veterans. Padron was never a veteran, much less a service-disabled veteran. Accordingly, Padron could not be the majority owner of Blackhawk and receive an award of one of these set-aside contracts. The government brought forth numerous witnesses who testified that, although for “paper purposes,” a service-disabled veteran Ruben Villareal, was named the majority owner of Blackhawk in reality, the day-to-day major business decisions were actually made by Padron.

Initially, Brian Dudley was installed as the “paper” majority owner of Blackhawk. On paper he owned 51% of the company, with Michael Wibracht and Padron owning the remaining 49% of the company. Dudley testified that he paid no monies to obtain his majority interest in the company. He further testified that Wibracht informed him that Padron did not want him to be in charge of anything and that he was only a majority owner on paper. Dudley testified that Padron removed him as majority owner and replaced him with Ruben Villareal.

Villareal was working as a used car salesman when he met Padron. Padron hired him to work for Blackhawk and ultimately made him President and an owner. Villareal likewise testified that he did not pay any monies to Wibracht or Padron to assume any ownership interest.

STANDARD OF REVIEW

“The jury's verdict will be affirmed ‘if a reasonable trier of fact could conclude from the evidence that the elements of the offense were established beyond a reasonable doubt.' In assessing evidentiary sufficiency, [courts] do ‘not evaluate the weight of the evidence or the credibility of the witnesses, but view the evidence in the light most favorable to the verdict, drawing all reasonable inferences to support the verdict.'” United States v. Seekins, No. 21-10556, 2022 WL 3644185, at *1 (5th Cir. Aug. 24, 2022) (assessing the standard under FED. R. CRIM. P. 29).

The judge's ability to grant a motion for new trial under FED. R. CRIM. P. 33 and “override the jury verdict exists only when the evidence weighs ‘heavily against the verdict.' And the authority should be exercised only when the verdict may have resulted in a ‘miscarriage of justice.'” United States v. Crittenden, 46 F.4th 292, 297 (5th Cir. 2022).

ANALYSIS

Defendant argues that Villareal did in fact do real work running the company. Indeed, it is uncontested that Villareal did perform some work, but the relevant question is whether he controlled Blackhawk. The Government's witnesses testified that Padron retained control over Villareal's salary, which contracts to bid upon, and the amount of the bids. Padron and others provided bonding assistance to Blackhawk-circumstantial evidence that he was financially concerned with its performance and not the passive observer he now contends. Padron argues that the bonding assistance does not constitute disqualifying control over the business. Padron, however, fails to recognize that this circumstantial evidence was but one piece of evidence the jury could have considered, along with the testimony of all the witnesses in the case. In addition, the evidence in this case revealed that Padron received kickbacks on the Blackhawk bonding commissions and kept for himself dividend checks intended for Blackhawk. In addition, the unchallenged evidence established that Blackhawk received a tax refund and Villareal was instructed by Padron to turn over those monies in installments to Padron.

Padron argues that his former partners are the real villains in this case and that the jury should have disregarded their testimony. The fact remains that the jury considered the testimony of all the witnesses in this case presented by both the Government and Padron and chose to disbelieve Padron's witnesses and credit the testimony of the witnesses proffered by the Government. Padron also notes that he sought the advice of an attorney on how to “legitimize” Blackhawk after it was challenged as not qualifying as a service-disabled veteran owned business under the Dudley tenure. He argues that, based on this advice, Blackhawk became a qualified business under the Villareal regime as a matter of law. However, whether Blackhawk was actually owned by a service-disabled veteran is properly established by determining whether the management and daily business operations were controlled by a service-disabled veteran, not whether “paper” had been created to show that Villareal held 51% of the stock. The jury was allowed to pierce the paper and determine whether Villareal ever paid any monies for his stock in this ongoing, successful business. The jury further agreed with the Government's position that Padron managed the truly significant parts of Blackhawk, such as salaries, whether to bid on projects, and what the company's bid amount would be. Regarding day-to-day business operations, the unchallenged testimony was that Padron did not even give Villareal access to the company's checking account. As to Padron's argument that Wibracht was the true villain in this scheme, the jury was free to determine that both Padron and Wibracht were co-conspirators.

Padron also argues that no jury could have found that he acted with an intent to defraud. The jury, however, heard testimony that, prior to the creation of Blackhawk, Padron had participated in a set-aside program for veterans using his company called MAPCO. Padron installed Brian Dudley as the service-disabled veteran for purposes of bidding and receiving government contracts. The Small Business Administration ultimately challenged this arrangement. Accordingly, Padron was aware of what he was doing, and Padron was advised by his own lawyer about the control requirements under the SDVOSB program.

Regarding the substantive wire fraud counts, Padron essentially relies upon the arguments restated above. He further argues that there was no evidence that he transmitted or caused to be transmitted any of the documents relied upon in the six counts.

To sustain these convictions the Government was only required to show that the wires were a foreseeable consequence of the fraud scheme. United States v. Snyder, 505 F.2d 595, 601 (5th Cir. 1974). The evidence demonstrated that Blackhawk transmitted three electronic invoices (counts 4, 5 and 6) to the Department of Veterans Affairs for payment on contracts they were awarded through the service-disabled set-aside program. Counts 7, 8, and 9 related to Blackhawk receiving funds from the U.S. Treasury as a result of submitting the invoices. The fact that Padron did not personally transmit the invoices or personally receive the payments does not absolve him. See id., 505 F.2d at 601 (“[The defendant] is guilty of the substantive offense even if he made no calls himself. The trial court properly denied the motion for acquittal.”).

Padron also argues that since there was no evidence that any of his co-conspirators personally transmitted the invoices or received the payments, he cannot be held liable under Pinkerton v. United States, 328 U.S. 640 (1946). The Government responds that after Villarreal departed the company, Padron transferred his nephew, Ethan Padron, from MAPCO to Blackhawk, and Adriane Hilario into a position at Blackhawk. These individuals caused the invoices to be sent to the Government. This chain of events serves as further evidence that Padron controlled Blackhawk. False Form 355s were submitted by Blackhawk. Any argument that Padron had to play a direct role in transmitting the wire is incorrect. See United States v. Jensen, 41 F.3d 946, 955-56 (5th Cir. 1994) (“under the Pinkerton rule ‘[a] party to a conspiracy may be held responsible for a substantive offense committed by a coconspirator in furtherance of a conspiracy, even if that party does not participate in or have any knowledge of the substantive offense.'”).

The Government was required to prove that Padron had the specific intent to defraud the United States. See United States v. Ismoila, 100 F.3d 380, 387 (5th Cir. 1996) (“The intent necessary for wire fraud is the specific intent to defraud or deceive, although proof of such intent can arise ‘by inference from all of the facts and circumstances surrounding the transactions.'”). Sufficient evidence was presented to the jury to allow it to reach a guilty verdict.

Padron also argues that he is entitled to an acquittal because the relevant regulations under 13 C.F.R. 125.12 and .13 are unconstitutionally vague. In relevant part, the regulations state:

125.12 Who does SBA consider to own an SDVO SBC?

Generally, a concern must be at least 51% unconditionally and directly owned by one or more service-disabled veterans. More specifically:

(a) Ownership must be direct. Ownership by one or more service disabled veterans must be direct ownership. A concern owned principally by another business entity that is in turn owned and controlled by one or more service-disabled veterans does not meet this requirement. Ownership by a trust, such as a living trust, may be

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