United States of America v. Geraldo Colon

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 18‐1233
U NITED STATES OF A MERICA ,
Plaintiff‐Appellee,
v.
G ERALDO COLON,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:15‐cr‐80 — Jane Magnus‐Stinson, Chief Judge.
____________________
A RGUED J ANUARY 18, 2019 — D ECIDED MARCH 22, 2019
____________________
Before EASTERBROOK , BARRETT , and SCUDDER , Circuit
Judges.
SCUDDER , Circuit Judge. Geraldo Colon used his Indianap‐
olis furniture store and a related business as a front to hide his
more lucrative enterprise: buying large quantities of cocaine
and heroin from Arizona and reselling the drugs to local deal‐
ers in Indiana. For his role as a middleman in this scheme, a
grand jury charged Colon with drug conspiracy, money laun‐
dering, and making false statements in a bankruptcy

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2 No. 18‐1233
proceeding. Following two jury trials, Colon was convicted
on all counts and sentenced to 30 years’ imprisonment.
Colon challenges his convictions for money laundering,
arguing that the government’s evidence was insufficient. He
also contends that the district court committed error in calcu‐
lating his advisory sentencing range by applying leadership
enhancements under § 3B1.1 of the Sentencing Guidelines.
The leadership enhancement is inapplicable, as Colon sees the
evidence, because, as an independent middleman, he did not
oversee any participants. Neither challenge succeeds. We af‐
firm Colon’s money laundering convictions. And although
we agree that the district court erred in applying leadership
enhancements, a careful review of the sentencing transcript
reveals that these errors were harmless.
I
Geraldo Colon worked as a middleman in an Arizona‐to‐
Indiana drug trafficking scheme. Beginning in 2013, he pur‐
chased kilogram quantities of cocaine and heroin from a
Phoenix‐based drug trafficker, who dispatched couriers to de‐
liver the shipments to Colon in Indianapolis. Colon then re‐
sold the drugs at higher prices to local dealers.
During this same period, Colon also operated a furniture
store in a mall in Indianapolis. In February 2014, he took over
the lease of the entire mall, which allowed him to rent space
to other vendors. He formed YRG Enterprise Entertainment
to operate the mall and opened a bank account in the name of
the new business. But Colon never segregated the mall’s law‐
ful business from his narcotics trafficking: he instead coordi‐
nated the receipt and distribution of the Arizona drugs from
the mall and, to disguise the drug money, deposited all

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No. 18‐1233 3
sources of income—funds from the mall and proceeds from
his drug dealing—into the YRG business account.
Despite these efforts to conceal the scheme, in March 2016
a grand jury indicted Colon on charges of drug conspiracy,
money laundering, and making false statements in a bank‐
ruptcy proceeding. Relevant to Colon’s appeal of his money
laundering convictions, the indictment in eight separate
counts alleged violations of 18 U.S.C. § 1956(a)(1)(B)(i). The
eight counts tracked eight deposits Colon made into the YRG
Enterprise Entertainment bank account on seven different
dates in July 2014. The deposits—mostly cash ranging from
$1,200 to $8,293—totaled $44,293. The indictment alleged that
each deposit included drug proceeds.
Colon proceeded to trial. While the jury found him guilty
of the three false statement counts, it failed to reach a verdict
on the drug trafficking and money laundering counts. A sec‐
ond trial then ensued. And the government again presented
evidence from 2014 showing that Colon was buying and re‐
selling hundreds of kilograms of cocaine and heroin—and
that he used his business at the mall to receive the drugs and
disguise the proceeds. The evidence also showed that, even
though YRG Enterprise Entertainment operated in the red,
cash deposits continued to flow into the company’s bank ac‐
count. Specifically, in July 2014, the month relevant to the
eight money laundering counts at issue, Colon deposited
nearly $20,000 more than the company received in revenue.
At the close of the government’s case, Colon moved for a
judgment of acquittal on the money laundering counts. He ar‐
gued, as he does on appeal, that there was no way to tell
which deposits in July 2014 involved drug money as opposed
to revenue from the mall. The district court denied the

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4 No. 18‐1233
motion, finding that the government presented ample evi‐
dence from which an inference could be drawn that “there
[was] insufficient cash to support the deposits” Colon made
into the business account. The case then went to the jury,
which convicted Colon of all remaining counts.
At sentencing the district court applied an aggravating
role enhancement under U.S.S.G. § 3B1.1 on both the drug‐
trafficking counts and money laundering counts for the lead‐
ership role Colon played in committing those offenses. The
court recognized that Colon had “somewhat of a unique role”
in the drug operation and this differed from the typical sce‐
narios the court had seen where someone “was a boss and had
minions.” But the leadership enhancement was nonetheless
appropriate, as the court saw it, because of Colon’s key role in
the drug operation: he was the gateway through which large
quantities of cocaine and heroin entered Indianapolis. The
same reasoning led the court to impose a leadership enhance‐
ment on the money laundering counts. The resulting advisory
guidelines range was life imprisonment, and the court sen‐
tenced Colon to 360 months.
II
Colon renews his challenge to the sufficiency of the evi‐
dence on the eight money laundering counts, arguing that the
government focused on the pattern of transactions in July
2014 but failed to produce specific evidence that each of the
eight discrete transactions included drug proceeds. In as‐
sessing this claim, we view the evidence in the light most fa‐
vorable to the government and ask whether a rational jury
could have found that Colon committed the charged offenses.
See Jackson v. Virginia, 443 U.S. 307, 319 (1979).

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No. 18‐1233 5
To sustain convictions for money laundering under
§ 1956(a)(1)(B)(i), the government had to prove that Colon en‐
gaged in financial transactions that involved drug trafficking
proceeds and that he designed each transaction in whole or in
part to disguise the nature or source of the funds. See United
States v. Jackson, 983 F.2d 757, 765 (7th Cir. 1993). The parties
agree that the government was not required to trace or tie the
funds to a particular drug sale. See United States v. Smith, 223
F.3d 554, 576 (7th Cir. 2000). Nor did § 1956(a)(1)(B)(i) require
the government to prove that each transaction involved only
illegal proceeds. See United States v. Rodriguez, 53 F.3d 1439,
1447 n.13 (7th Cir. 1995); Jackson, 983 F.2d at 765. Instead, be‐
cause drug dealers often comingle drug proceeds with legiti‐
mate funds, the government needed to establish that each of
the transactions involved “some” illegal proceeds. See Jackson,
983 F.2d at 765.
In many money laundering prosecutions, the government
meets its burden by focusing on a defendant’s unexplained
wealth and spending decisions, coupled with evidence that
the purchases were designed to hide the source of illegal
funds. Take, for example, United States v. Jackson, where we
affirmed a money laundering conviction based on evidence
that the defendant was selling cocaine, had “unexplained,
substantial wealth,” and paid for a Saab with cashier’s checks
from five different banks and thousands of dollars in cash. Id.
at 766.
The Federal Reporter contains other examples of
defendants charged and convicted of money laundering
based on a similar evidentiary approach. See, e.g., United
States v. Messino, 382 F.3d 704, 712–13 (7th Cir. 2004)
(affirming money laundering conviction based on evidence

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6 No. 18‐1233
that the defendant engaged in an oral sale of land for cash
with the cash installments being paid in amounts that avoided
IRS reporting requirements); United States v. Hall, 434 F.3d 42,
54 (1st Cir. 2006) (affirming money laundering conviction in
part because the evidence showed that the defendant “spent
far in excess of his declared income” on home renovations);
United States v. Heater, 63 F.3d 311, 319 (4th Cir. 1995)
(affirming money laundering conviction based on evidence
that the defendant’s purchases, including real estate, a
motorcycle, and an ATV, exceeded his lawful income); United
States v. Webster, 960 F.2d 1301, 1308 (5th Cir. 1992) (holding
that “[e]vidence of a differential between [a drug dealer’s]
legitimate income and cash outflow is sufficient for a money‐
laundering conviction, even when the defendant claims
income from additional sources”).
This case is different. The government did not focus on
Colon’s lifestyle or his spending habits by, for example, pre‐
senting evidence that he purchased houses or cars or by
showing that he lived beyond his means. The government in‐
stead focused on money flowing into a bank account. The in‐
dictment charged Colon with eight counts of money launder‐
ing based on eight deposits into the YRG Enterprise Entertain‐
ment bank account in July 2014. And the government argued
that, because the eight deposits in July 2014 totaled $44,293
and Colon’s mall business earned only $25,073 that same
month, some of the deposited cash must have been drug pro‐
ceeds.
Viewing the evidence in the light most favorable to the
government, we conclude that the trial record contained suf‐
ficient evidence to support each of the money laundering con‐
victions. The jury heard overwhelming evidence of Colon’s

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No. 18‐1233 7
drug dealing: he bought and resold hundreds of kilograms of
heroin and cocaine, with many transactions taking place at
the mall. Both his drug sales and the mall generated cash in‐
come, but the jury heard evidence that only his drug business
was profitable. In February 2014, the month Colon purchased
the rights to operate the business, the mall was barely break‐
ing even. Its financial situation deteriorated even further after
Colon took over, and a subsequent financial investigation re‐
vealed that the expenses of YRG Enterprise Entertainment
substantially outpaced the company’s revenue. Throughout
the relevant period, however, the corporate bank account re‐
mained funded. In July 2014, the month relevant to the money
laundering counts, the business grossed only $25,073, yet the
eight deposits into the YRG account, the majority of which
were cash, totaled $44,293. All of this evidence allowed the
jury to conclude that Colon used his narcotics trafficking to
keep the mall afloat.
There is more. Given the scope of Colon’s drug
operation—coupled with evidence of the mall’s financial
distress—a reasonable jury could conclude that he used the
mall as a front to facilitate and disguise his drug trafficking
activities, with the two businesses being so intertwined as to
erase any meaningful distinction between the two. Colon
operated the mall and conducted drug transactions at the
same location; both generated cash; and he regularly
dispatched employees from the mall and his furniture store to
make cash deposits into the mall’s bank account. The
government supplied ample evidence to allow the jury to rely
on the difference between Colon’s mall income and bank
deposits to infer that he commingled his drug proceeds with
funds from the mall as he was operating both businesses. The
jury was on equally solid ground inferring that the cash

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8 No. 18‐1233
deposits contained comingled funds—mall and drug
proceeds alike. See United States v. Jackson, 935 F.2d 832, 840–
41 (7th Cir. 1991) (affirming conviction in part because the
defendant “made bank deposits equal to approximately twice
the amount that could be accounted for out of legitimate
sources of income”); see also Webster, 960 F.2d at 1308
(employing similar reasoning).
Colon urges a different reading of the evidence. While
conceding that he deposited more money into the YRG Enter‐
prise Entertainment account than the business earned, he con‐
tends that the government failed to produce evidence that any
of the eight discrete transactions involved any drug proceeds.
While Colon is right that the government must prove each
count beyond a reasonable doubt, he overlooks that the law
allows the proof to come in the form of direct or circumstan‐
tial evidence (or both). Even more to the point, “there is noth‐
ing wrong with circumstantial evidence of guilt.” United
States v. Memar, 906 F.3d 652, 656 (7th Cir. 2018). A jury “is
entitled to employ common sense in making reasonable infer‐
ences from circumstantial evidence.” United States v. Starks,
309 F.3d 1017, 1021–22 (7th Cir. 2002); see also Memar, 906 F.3d
at 656 (“While a verdict based on speculation cannot stand,
one premised on reasonable inferences is sound.”). The gov‐
ernment’s proof, therefore, “need not exclude every reasona‐
ble hypothesis of innocence so long as the total evidence per‐
mits a conclusion of guilt beyond a reasonable doubt”—and
the jury, as the trier of fact, “is free to choose among various
reasonable constructions of the evidence.” Starks, 309 F.3d at
1022.
On the evidence presented at trial, we conclude that a rea‐
sonable jury could have inferred from the differential between

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No. 18‐1233 9
Colon’s mall income and drug proceeds, the scope of his drug
operation, his comingling of drug and mall proceeds, and the
overwhelming evidence showing that the mall was merely a
front to enable and conceal his drug trafficking activities, that
Colon was laundering money in July 2014, and that each cash
deposit included at least some drug proceeds.
III
Colon next contends that the district court erred in apply‐
ing leadership enhancements under U.S.S.G. § 3B1.1 when
determining his advisory guidelines range. The district court
applied a four‐level enhancement (U.S.S.G. § 3B1.1(a)) to the
drug‐trafficking counts for Colon’s role as an organizer or
leader in the drug‐trafficking operation, and a two‐level en‐
hancement (U.S.S.G. § 3B1.1(c)) to the money laundering
counts for Colon’s aggravating role in that operation. This ag‐
gravating role increased Colon’s total offense level and, in
turn, his advisory sentencing range.
At sentencing the district court was quick to recognize that
Colon’s leadership role in the drug‐trafficking scheme was
atypical—it was not, the court explained, an ordinary
situation in which Colon “was a boss and had minions.” But
the court found that the enhancement was warranted because
Colon was a “central figure” through which “huge quantities”
of drugs entered Indianapolis from Arizona. The court also
noted that, on multiple occasions, Colon directed the
Phoenix‐based couriers on how and where to make their
deliveries. On this score, the record reveals that on several
occasions Colon requested that one of the couriers drive him
to the residence of a local dealer to deliver drugs. And on
another occasion, Colon instructed a different courier to place
the drugs inside one of the appliances at his furniture store,

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10 No. 18‐1233
with Colon then wheeling the appliance off the showroom
floor.
While we agree that these facts make clear that Colon re‐
ceived and sold large quantities of drugs and sometimes ne‐
gotiated the terms of their sale by directing others, we cannot
conclude that these facts support an aggravating role adjust‐
ment.
The law requires a sentencing court to find by a prepon‐
derance that the facts support a sentencing enhancement. See
United States v. Tanner, 628 F.3d 890, 907 (7th Cir. 2010). An
aggravating role adjustment under § 3B1.1 increases the of‐
fense level of defendants who organize, lead, manage, or su‐
pervise a criminal enterprise to reflect their greater contribu‐
tions to the illegal scheme. See United States v. Brown, 944 F.2d
1377, 1381 (7th Cir. 1991). Where a crime involves five or more
participants or is “otherwise extensive,” a defendant receives
a four‐level enhancement if he is an “organizer or leader” of
the scheme, and a three‐level enhancement if he is a “manager
or supervisor.” U.S.S.G. § 3B1.1(a)–(b). Defendants that serve
as organizers, leaders, managers, or supervisors in smaller or
less extensive criminal enterprises receive a two‐level en‐
hancement. U.S.S.G. § 3B1.1(c).
While the guidelines do not define these terms, the accom‐
panying commentary provides factors for courts to use in dis‐
tinguishing a leadership and organizational role from one of
management and supervision. See U.S.S.G. § 3B1.1 n.4; see
also United States v. House, 883 F.3d 720, 723–24 (7th Cir. 2018)
(explaining that these factors also help in determining
whether any enhancement applies at all). These factors in‐
clude the exercise of decision‐making authority, the nature of
the defendant’s participation, the recruitment of accomplices,

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No. 18‐1233 11
the share of the fruits of the crime, the degree of participation
in planning or organizing, the nature and scope of the crime,
and the degree of control or authority exercised over others.
U.S.S.G. § 3B1.1 n.4. In the end, whether an enhancement is
warranted (and what level) requires a practical inquiry, with
the district court making a “commonsense judgment about
the defendant’s relative culpability given his status in the
criminal hierarchy.” House, 883 F.3d at 724 (quoting United
States v. Dade, 787 F.3d 1165, 1167 (7th Cir. 2015)).
Our caselaw is not a model of precision when it comes to
informing whether a defendant qualifies as an organizer or
leader or instead as a manger or supervisor. Perhaps the lack
of clear guidance is the product of the guidelines not defining
the pertinent terms and otherwise shedding little light on the
relative distinctions. Or perhaps prior cases have not pre‐
sented facts requiring a clear articulation of the difference be‐
tween organizing and leading on the one hand and managing
and supervising on the other.
Regardless, what is clear from the text and structure of
§ 3B1.1 is that distinctions exist and are matters of degree: an
organizer or leader exercises more decision‐making and lead‐
ership authority, participates to a larger extent in the planning
or organizing of the offense, and exerts a greater degree of
control over others than does a manager or supervisor. See
U.S.S.G. § 3B1.1 n.4. While this case does not require us to go
further, we underscore that the application of any enhance‐
ment under § 3B1.1 requires a showing that a defendant en‐
gaged in affirmative acts of organizing, leading, supervising,
or managing that indicate his greater relative culpability in
the offense than others involved.

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12 No. 18‐1233
On past occasions we have considered whether someone
who acts as an intermediary or middleman—as Colon did
here—should receive a leadership enhancement. In doing so,
we have emphasized that “middleman status alone cannot
support a finding that a defendant was a supervisor, manager
or leader of a criminal activity.” Brown, 944 F.2d at 1382. In‐
stead, an aggravating role adjustment is appropriate for a
middleman only when coupled with other facts indicating the
defendant exercised some control over others involved in the
crime or was responsible for organizing others in carrying out
the operation. Id. at 1381. So, too, have we recognized that
“[s]upplying drugs and negotiating the terms of their sale do
not by themselves justify a Section 3B1.1 increase.” United
States v. Weaver, 716 F.3d 439, 444 (7th Cir. 2013) (quoting
United States v. Vargas, 16 F.3d 155, 160 (7th Cir. 1994)). These
actions alone do not indicate that the middleman had any
greater degree of responsibility for orchestrating the transac‐
tions “than anyone else involved, including the customer.” Id.
Rather, in determining whether a middleman should re‐
ceive a leadership enhancement, the right focus is on the de‐
fendant’s relative role within the criminal enterprise and the
control he exercised over other participants in the operation.
See United States v. Howell, 527 F.3d 646, 649 (7th Cir. 2008). A
defendant who acts as a mere conduit in an operation—even
one that deals in large quantities of drugs—should not (with‐
out more) receive a leadership enhancement. See, e.g., Weaver,
716 F.3d at 444 (concluding that a middleman who fronted
drugs to dealers and urged them to sell quickly did not qual‐
ify for the leadership enhancement because these actions did
not indicate he had any greater degree of responsibility in the
operation than anyone else); see also Brown, 944 F.2d at 1381
(concluding that a leadership enhancement was not

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No. 18‐1233 13
warranted where the middleman did not exercise any control
over the customers to whom he sold drugs, receive a larger
cut of the profits, or recruit dealers to work for him).
Do not read us to say that a middleman can never receive
a leadership enhancement. An enhancement is indeed war‐
ranted for a middleman who plays a meaningful role in struc‐
turing or overseeing a drug operation. See, e.g., United States
v. Vallar, 635 F.3d 271, 281 (7th Cir. 2011) (concluding that the
enhancement was warranted for a mid‐level figure in a drug
conspiracy who took part in the planning of the offense, was
entrusted with substantial sums of money, and oversaw the
receipt of drugs by others in the conspiracy); Howell, 527 F.3d
at 650–51 (concluding that the enhancement was warranted
where the middleman exerted influence over his customers
and planned trips to conduct drug deals).
At the very least, for any leadership enhancement to ap‐
ply, the district court must identify instances where the de‐
fendant orchestrated or oversaw the drug operation and those
involved in it. In the language of § 3B1.1, the record must con‐
tain facts showing that the defendant organized, led, man‐
aged, or supervised the criminal activity.
These facts are not present on the record before us. Con‐
sider, for instance, Colon’s requests that a courier drive him
to the residence of a local dealer to complete a drug sale. With
no indication that the courier was required to comply or that
Colon exercised ongoing supervision over the courier, this ev‐
idence is more consistent with a supplier accommodating the
needs of his customer than an organizer controlling a drug
operation. See Weaver, 716 F.3d at 444 (“[T]he enhancement
requires ongoing supervision, not a one‐off request from one
equal to another during the course of the criminal activity.”).

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14 No. 18‐1233
In short, the record reveals only that Colon dealt in large
quantities of drugs and occasionally made requests about the
terms and locations of drug deliveries. These facts, accurate
though they may be as a descriptive matter, do not suffice to
show that Colon acted as a manager or supervisor, much less
an organizer or leader.
To be sure, the district court was right to emphasize the
gravity and scale of Colon’s drug‐dealing in the Indianapolis
community. But these facts, while certainly relevant in the
consideration of a proper sentence when applying the statu‐
tory factors in 18 U.S.C. § 3553(a), do not themselves prove
that a leadership enhancement is warranted under § 3B1.1.
The quantity of drugs at issue, standing alone, does not an‐
swer the question of what role the defendant played in a crim‐
inal organization. See Brown, 944 F.2d at 1381–82. The guide‐
lines already make quantity relevant to the determination of
a defendant’s base offense level; allowing large drug quanti‐
ties to then require the addition of an aggravating role adjust‐
ment fails to give effect to the separate leadership finding re‐
quired by § 3B1.1. To allow a leadership enhancement to
stand on the present record would permit its application in all
cases involving large‐scale drug dealers.
We reach the same conclusion on the application of the
leadership enhancement to the money laundering counts. In
finding that the facts supported a two‐level enhancement, the
district court relied primarily upon the same evidence pre‐
sented for the enhancement on the drug counts. Yet the gov‐
ernment presented no evidence that anyone but Colon quali‐
fied as a participant under § 3B1.1 in the money laundering
scheme, rendering the application of the leadership enhance‐
ment improper on this factual record.

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No. 18‐1233 15
Accordingly, the district court erred in applying the lead‐
ership enhancement to the drug and money laundering
counts. But we also conclude that the errors were harmless
because the sentencing transcript, read as a whole, demon‐
strates that the district court would have imposed the same
30‐year sentence regardless of the enhancements. See United
States v. Clark, 906 F.3d 667, 671 (7th Cir. 2018), cert. denied,
139 S. Ct. 852 (2019).
After calculating the advisory guidelines range, the
district court proceeded to assess the statutory sentencing
factors and expressly stated that Colon’s sentence was “not
based on the guidelines but on the 3553(a) factors.” The
district court then went on to explain why a 30‐year sentence
was appropriate irrespective of the guidelines calculation,
which included the leadership enhancements. The district
judge emphasized the large scale of Colon’s drug dealing and
its impact on the Indianapolis community. She also pointed
out Colon’s utter disregard for the law, as evidenced by
duration of his narcotics trafficking and his continuing to do
so after others in the scheme were arrested, allowing drugs to
continue to flow into the community. In the district court’s
view, the fact that Colon continued dealing following these
arrests, “in a more impactful way than even the guideline
calculation, point[ed] to the leadership role of Mr. Colon.”
In all of these observations the district judge made clear
that a 30‐year sentence was appropriate regardless of the
guidelines calculation due to Colon’s prominent role as a
wholesale distributor of hundreds of kilograms of heroin and
cocaine, and the resulting harm to the community. This rec‐
ord allows us to conclude that the errors in the advisory
guidelines range were harmless. We therefore can avoid the

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16 No. 18‐1233
unnecessary step of returning this case to the district court for
resentencing. See United States v. Abbas, 560 F.3d 660, 667 (7th
Cir. 2009).
For these reasons, we AFFIRM.

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