United States v. John R. Prince (98-6361), Tony White (98-6362)
Docket: 98-6361, 98-6362
Court: Court of Appeals for the Sixth Circuit; August 10, 2000; Federal Appellate Court
Defendants John R. Prince and Tony White were convicted of wire fraud and money laundering in a scheme to defraud investors by falsely representing their ability to purchase bankruptcy assets for resale at a profit. White initiated the scheme around January 2, 1991, claiming he was 'bonded with' the U.S. Bankruptcy Court, thereby soliciting investments for property purchases. Investors contributed funds for various costs, but the government established that such purchases were not possible as represented.
The defendants employed three methods to obtain investor funds. In the first, investors were instructed to wire money to third-party accounts, whereupon those third parties would cash checks and transfer the money to Prince, who then passed it to White. In the second method, funds were sent via Western Union to third parties, who similarly transferred cash to Prince. The third arrangement involved investors wiring money directly to Prince, who signed for it and subsequently transferred it to White.
Victims testified they received none of their invested money. A federal grand jury indicted both defendants, charging them with multiple counts of wire fraud and money laundering. A jury trial began on June 3, 1998, resulting in convictions on all counts, except for one count on which the court granted acquittal. The case was decided by the United States Court of Appeals for the Sixth Circuit, with appeals and rehearings subsequently denied.
Defendant Prince argues that the evidence was insufficient to support his conviction for money laundering under 18 U.S.C. § 1956(a)(1)(B)(i). The legal standard for evaluating claims of insufficient evidence requires assessing whether a rational trier of fact could find the essential elements of the crime beyond a reasonable doubt, with both circumstantial and direct evidence treated equally. To reverse a judgment based on insufficient evidence, the court must conclude that the judgment lacks substantial and competent evidence.
Prince's arguments against his conviction include: (1) the funds from wire fraud did not qualify as proceeds of unlawful activity until he physically received them, and thus he did not conduct a transaction violating the statute; (2) if a transaction did occur, it was not proven to be conducted to conceal the nature and source of the funds; and (3) there was insufficient evidence to support a conviction for aiding and abetting.
For the money laundering charge, the prosecution must establish that the funds were proceeds of unlawful activity, specifically from a felony. The indictment identifies wire fraud as the underlying crime. The elements of wire fraud include a scheme to defraud, use of interstate wire communications in furtherance of the scheme, and intent to deprive a victim of money or property. Defendants must have used the proceeds from wire fraud to engage in money laundering activities.
The funds wired by the victims are deemed proceeds of wire fraud. Relevant case law from other circuits supports this conclusion. In *United States v. Savage*, 67 F.3d 1435 (9th Cir. 1995), the court determined that physical possession of the money by the defendant was not required for it to be considered proceeds. The defendant had defrauded investors by promising exorbitant returns in exchange for funds, which were funneled through assistants to various accounts, ultimately benefiting the defendant. The Ninth Circuit ruled that the funds were criminally derived property once they were under the defendant's control, regardless of account ownership.
Similarly, in *United States v. Smith*, 44 F.3d 1259 (4th Cir. 1995), the court held that money transferred under fraudulent pretenses constituted proceeds of unlawful activity, even if the defendant did not directly possess the funds at that moment. The defendant, part of a scheme that induced lenders to fund a corporation controlled by him, was found to have constructive control over the fraudulently obtained funds, allowing for a money laundering charge despite the lack of direct possession during the transfer. The appellate court emphasized that aiding and abetting charges did not necessitate physical possession of the laundered money.
In United States v. Leahy, 82 F.3d 624 (5th Cir. 1996), the court established that a defendant need not have actual physical possession of funds to be deemed in control of them for the purposes of wire fraud and money laundering. The case involved defendants Leahy, Nece, and Flanagan, who were convicted of wire fraud and money laundering related to fraudulent activities by Great Western Roofing (GWR) concerning a Veterans Administration project. GWR, due to its poor payment history, was required to establish an escrow account for project funds, with the escrow agent mandated to distribute payments according to a set percentage.
Approximately six weeks after the project commenced, GWR submitted fraudulent invoices to the VA, which unknowingly wired the funds to the escrow account. The court ruled that GWR had sufficient control over the funds once they were deposited into the escrow account, making the wire fraud complete at that point, regardless of whether GWR physically possessed the funds. The ruling referenced a similar Ninth Circuit case where control over funds at the time of deposit was sufficient for conviction.
The court further found that the defendants, including Prince, had enough control over funds wired to both themselves and third parties, as they had prior agreements with those third parties to transfer the money to Prince. Evidence indicated that Prince consistently transferred the money to an individual named White. The court concluded that the defendants were involved in a structured scheme that evidenced their constructive control over the funds, and there was sufficient evidence to support the money laundering charge. Prince did not contest the assertion that he knew the funds were proceeds of unlawful activity.
Conducting or attempting a financial transaction with knowledge that it aims to disguise the nature, location, source, ownership, or control of proceeds is prohibited. Defendant Prince contends that the government did not provide evidence of a subsequent financial transaction meant to conceal fund origins. A "financial transaction" encompasses activities affecting interstate or foreign commerce, including wire transfers, monetary instruments, or real property transfers, as defined under 18 U.S.C. § 1956(c)(4). The term "transaction" covers a wide range of activities involving financial institutions, including deposits and withdrawals (§ 1956(c)(3)). "Monetary instruments" include various forms of currency, checks, and securities (§ 1956(c)(5)). In this case, Prince violated the wire fraud statute by inducing victims to wire money. The subsequent transactions involving these wire fraud proceeds qualify as financial transactions under § 1956. Prince directed victims to wire funds to third-party bank accounts, from which the third parties would withdraw money or write checks to cash and transfer to him. These actions—withdrawals from banks and cash transfers—constitute financial transactions as per the statutory definitions. Additionally, checks written to Prince also represent monetary instrument transfers. Ultimately, Prince facilitated transactions between the third party and the bank, and between the third party and himself, further transferring the funds to another individual, White, which constitutes another disposition of the wire fraud proceeds.
Defendant Prince directed victims to wire funds to third parties via Western Union, subsequently instructing these third parties to transfer the cash to him. This conduct constitutes a disposition of wire fraud proceeds, as established by case law, including United States v. Reed and United States v. Baez, which define similar actions as financial transactions under 18 U.S.C. § 1956. After receiving the funds from the third parties, Prince transferred them to Defendant White, representing a second disposition of the wire fraud proceeds.
Prince also instructed victims to send money directly to him, claiming he subsequently transferred all received funds to White, categorizing this as a financial transaction as well. Although Prince argues there is no evidence he intended to conceal the funds, evidence suggests he aided in obscuring the true ownership and control of these funds, aligning with precedent established in United States v. Elder.
Prince's operations involved using third parties to facilitate transactions, requiring them to withdraw cash rather than writing checks to avoid creating a paper trail. Testimonies indicated Prince instructed third parties to limit withdrawals to under $10,000 to evade mandatory reporting to the IRS. For example, his sister, Mrs. Bell, testified that she issued two checks of $9,500 instead of one for $19,000 to avoid detection, and a similar strategy was employed by Chris Mathis, who split a $10,700 wire transfer into two checks to maintain the same threshold.
Victims' Western Union transfers naming Prince as the recipient helped to obscure the true recipient, White, who ultimately controlled the proceeds. Testimony revealed that Prince structured these transactions to avoid detection, claiming on multiple occasions that the transaction setup prevented proof of his receipt of funds. A witness stated that Prince instructed her to withhold his name during an IRS audit. The evidence supports the conclusion that Prince facilitated a scheme to conceal wire fraud proceeds.
Prince argued that the district court's jury instructions on money laundering effectively amended the indictment. Count seventeen of the indictment details that, on March 10, 1995, Prince and co-defendant White knowingly conducted a financial transaction involving wire fraud proceeds, intending to conceal their nature and control. Subsequent counts reiterated these allegations with different dates and amounts. The district court instructed the jury to consider each count separately, emphasizing that each represented a distinct violation of federal money laundering statutes.
Counts 18 through 85 of the indictment, except for count 33, replicate the allegations made in count 17 but with different dates and wire amounts. The relevant legal provision states that an individual is guilty of a crime if they knowingly engage in a financial transaction involving property derived from unlawful activity, intending to conceal its nature, location, source, ownership, or control. To prove money laundering under counts 17 through 85, the government must demonstrate beyond a reasonable doubt that the defendant knew the transaction was designed to conceal the proceeds of unlawful activity or evade reporting requirements. The term "transaction" encompasses various financial activities, including purchases, loans, and transfers. If the evidence shows the defendant was aware of the transaction's purpose to conceal or disguise the property's origin, this element is satisfied. Conversely, if the defendant believed the transaction was innocent despite knowing of its occurrence, they must be found not guilty.
Defendant Prince maintains that the indictment under 18 U.S.C. § 1956(a)(1)(B)(i) allows for conviction under either § 1956(a)(1)(B)(i) or (ii) based on the evidence presented. The jury was instructed accordingly. Testimony from Chris Mathis indicated a lack of awareness regarding the requirement to report cash transactions over $10,000, although he acknowledged that he assumed the bank would report such transactions.
Two checks dated the same day were issued, one for $700 and another for $10,000. Mr. Mathis acknowledged that several transactions occurred either on the same day or within a short timeframe, often close to $10,000, but initially did not view this as suspicious. However, after expressing concerns about the legitimacy of the transactions, he was persuaded to proceed with them one more time. He confirmed he was unaware that structuring transactions to avoid reporting requirements was illegal.
Mary Lucille Bell's testimony indicated she wrote multiple checks under $10,000 based on advice from the bank, believing that amounts below this threshold would not trigger reporting. She confirmed transactions involving multiple checks that totaled amounts just below $20,000, consistent with similar structuring practices.
Defendant Prince did not object to the evidence or jury instructions that he claims amended the indictment. The appellate brief from the government did not address the waiver of the issue. Previous case law, specifically United States v. Beeler and United States v. Williams, established that failing to object at trial generally waives the right to appeal on those grounds. The rules allow for amendments to bills of particulars but not to indictments, as this would undermine the Grand Jury's role in framing charges. Therefore, objections must be raised at trial to preserve them for appeal.
The alleged errors in this case involve the admission of certain testimony and the inclusion of section 1956(a)(1)(B)(ii) in the jury instructions, both of which could have been rectified. The case references *United States v. Garguilo*, establishing that failure to object to evidence regarding capital gains or to contest its use in relation to the indictment results in a waiver of the right to raise such arguments on appeal. The appellant, Prince, did not object during trial, and even if the issue was preserved, the indictment experienced neither amendment nor fatal variance.
A de novo review assesses whether an amendment or variance occurred, where an amendment reflects a change in the indictment's terms, and a variance signifies that the evidence presented differs materially from the indictment's allegations. A variance can become a "constructive amendment" if it significantly alters the essential components of the charged offense, potentially leading to the conviction of an offense not specified in the indictment. Both amendments and constructive amendments are inherently prejudicial and warrant reversal.
In this case, no actual amendment was identified, as Prince was indicted and convicted for money laundering. The distinction between actual and constructive amendments is crucial; for reversal based on a variance, a two-prong test requires demonstrating the variance and showing that it affected a substantial right of the defendant, which involves proving prejudice to the defense or overall trial fairness. The purposes of the rules against amendments and constructive amendments include ensuring the defendant is aware of the charges, allowing the court to evaluate the sufficiency of the evidence for conviction, preventing double jeopardy, and guaranteeing independent jury evaluation of the case's merits.
A variance has been identified between the indictment and the jury instructions in Prince's case, but it remains unclear whether a variance exists between the indictment and the trial evidence. The evidence Prince contests was relevant to establishing a concealment element of the money laundering offense. Given the acknowledged variance with the jury instructions, the analysis shifts to whether this variance affected a substantial right of the defendant.
In a related case, Martin, the defendant argued that a variance led to a constructive amendment of the indictment. The indictment charged Martin with first-degree rape, while the jury instructions included an alternative basis for the charge—rape due to physical helplessness. The court determined that these represented alternative methods of committing the same crime, rather than separate offenses, and rejected Martin's claim of insufficient notice. It concluded that no prejudicial error occurred since the evidence supported the original charge of forcible compulsion, and the defense of consent applied to both methods.
In Prince's situation, he has not proven a violation of a substantial right, and thus, has not established that the variance constituted a constructive amendment. The indictment adequately informed him and the trial court of the money laundering charges. Similar to Martin, the additional jury instruction presented an alternative method for the money laundering offense. Prince faced no prejudice from this alternative, as the prosecution did not pursue this theory during trial. The government's cross-examination and presented evidence did not focus on establishing Prince's intent to evade reporting requirements, indicating that the variance did not impact his defense.
Prince's avoidance of transactions that would trigger a cash transaction report to the IRS supports the inference that he intended to conceal these transactions. The government emphasized in its closing argument that the elements of money laundering include conducting a transaction to disguise the proceeds of criminal activity. Although the government did not claim that Prince aimed to evade reporting requirements, evidence presented by witnesses Mr. Mathis and Mrs. Bell suggested an intent to conceal, which Prince had the opportunity to challenge during cross-examination but did not. He claimed he was an innocent victim and did not instruct others on structuring transactions or was unaware of any reporting implications. The court concluded that his defense was unaffected, as he had both motive and opportunity to contest the evidence of intent to avoid reporting but chose not to. Furthermore, there was no indication that the jury convicted him of a different offense than that charged, and any discrepancies in the evidence did not constitute a constructive amendment that would undermine the indictment's validity. Regarding the jury's instruction on deliberate ignorance, Prince argued it was erroneous; however, the court provided a clear definition of the required knowledge regarding the unlawful nature of the transaction proceeds, aligning with the legal standards for money laundering.
Wire fraud is classified as a felony, and knowledge of the crime by the defendant can be inferred from circumstantial evidence or willful blindness, which occurs when a defendant, suspecting wrongdoing, intentionally avoids further inquiry. If the defendant is found to have had a strong suspicion of withheld facts but chose to remain ignorant due to fear of the truth, this can be interpreted as acting knowingly.
The defendant, Prince, argues that the instruction on deliberate ignorance contradicted standard jury instructions and allowed for a conviction based on negligence rather than knowledge. The court reviews jury instructions collectively to ensure they provide adequate legal guidance to the jury. Trial courts have considerable discretion in formulating these instructions, with reversals occurring only when there is a clear abuse of discretion or when the instructions misrepresent the law.
Prince contended that the jury wasn't explicitly told it had to find beyond a reasonable doubt that he was aware of a high probability of criminal activity. However, the court found no error in allowing knowledge to be inferred from willful blindness and emphasized that negligence or mistake does not equate to knowledge. The overall jury instructions mandated that the jury must find all elements of the crime beyond a reasonable doubt, and prior cases have upheld similar deliberate ignorance instructions that did not include "high probability" language.
In the case under review, the court found that jury instructions were appropriate, permitting an inference of knowledge based on a defendant's deliberate avoidance of the truth, rather than mere carelessness or negligence. The court cited the precedent set in United States v. Gullett, affirming that knowledge can be inferred from reckless disregard for the truth. The instructions were consistent with the legal standard that requires evidence of reckless behavior or a conscious effort to remain ignorant. The defendant, Prince, did not establish that the jury instructions were confusing or prejudicial when considered in entirety.
Additionally, regarding Defendant White, who was indicted on October 20, 1997, the government filed a motion on April 3, 1998, to admit evidence related to Clarence Crawley under Federal Rule of Evidence 404(b). This motion included several documents, such as a promissory note and a check signed by White. The court viewed this motion as adequate notice under Rule 404(b) and denied the request for pre-trial admissibility. Following this, a superseding indictment was issued on May 18, 1998, adding allegations against White related to a fraudulent scheme involving Crawley. White was arraigned on May 28, 1998, and subsequently filed a motion to dismiss the superseding indictment or to continue the trial originally set for June 3, 1998.
The court denied White's motion for a continuance, determining that the superseding indictment only added one additional overt act, which did not materially change the charges. The court rejected White's claims for additional time to investigate, noting he had been aware of the allegations against Mr. Crawley since April 3, 1998. The standard of review for such matters is for abuse of discretion, with the district court having broad authority to grant or deny continuances. A denial will not be reversed unless it is deemed a clear abuse of discretion, particularly if it violates the right to counsel by being unreasonably expeditious in the face of a justified request for delay. The court considers the specific circumstances and the reasons presented at the time of the request.
Under 18 U.S.C. § 3161(c)(2), a trial cannot commence less than thirty days from a defendant's first appearance through counsel, but this period does not automatically extend upon the filing of a superseding indictment. The Supreme Court has clarified that the thirty-day preparation period begins with the first appearance through counsel, not the indictment filing date. The district court can grant a continuance if it serves the interests of justice more than those of a speedy trial. White's motion failed to demonstrate that the trial court abused its discretion in denying his request. He cited insufficient time to consult with his attorney, inadequate government discovery, and the inability to produce evidence related to a bankruptcy check as reasons for his motion.
The superseding indictment primarily added one overt act related to defrauding Mr. Crawley, which had been previously disclosed in a government motion from April 3, 1998. This motion informed the defendant about the allegations against Mr. Crawley and indicated that four supporting documents would be presented at trial. White had sufficient time to prepare his defense, and the court found no due process violation in denying his motion for a continuance.
White argued that the evidence was insufficient for convictions of wire fraud, money laundering, and aiding and abetting. Testimony indicated that White participated in a scheme to defraud, wherein he misled Ruth and Max Osborne into believing he could purchase bankruptcy properties on their behalf, leading them to invest over $228,000 without receiving any returns. Additionally, White convinced Clarence Crawley to invest $7,300 with false promises of doubling his investment through property purchases, ultimately leaving Crawley unable to cash a check White provided. White also introduced Silas Stephens to the scheme, falsely claiming he could buy impounded cars from the bankruptcy court, further reinforcing his deceptive practices by issuing checks that were later dishonored by the bank.
Mr. Stephens initiated contact with the district attorney, leading to state criminal charges against White. During the proceedings, Defendant Prince offered Mr. Stephens a check for money owed, which Mr. Stephens could not cash. Mrs. Bell, Prince's sister, testified that both defendants solicited her for investments in their scheme, to which she and her husband contributed significant funds. She facilitated the transfer of victim funds to Prince by writing checks and receiving Western Union wire transfers, which she then delivered in cash to him. On one occasion, she accompanied Prince to Kentucky to collect money from a victim, Robert Howard, which was then transferred to White. Additionally, Mrs. Bell's daughter provided $6,500 in cash directly to White.
William Dieruf, Jr. was introduced to Prince and persuaded to invest in a plan concerning bankruptcy assets, but initially hesitated to transfer $17,900. Prince had White contact Dieruf, Jr., assuring him of the plan’s legitimacy. After refusing to send money until further communication with White, Dieruf, Jr. received a call from White who guaranteed a return on investment. Throughout his participation, Dieruf, Jr. wire transferred funds to various third-party accounts, including those of Dorothy Hamby and Roxanna Hawes, and sent money via Western Union to Prince.
Defendant Prince also reached out to William Dieruf, III for investment, claiming a unique arrangement with the bankruptcy court. Following Prince's guidance, Dieruf, III wire transferred money to accounts belonging to Chris Mathis and Dorothy Hamby. Joan Howard reported that funds sent to Mrs. Bell's account were intended for Prince to deliver to White. The Howards also sent money to various third-party accounts linked to the defendants. Virginia Prince, Defendant Prince's wife, testified that her husband would hand over received funds to White or someone designated to do so, confirming her presence during discussions about the scheme involving White and Mrs. Bell.
Defendant Prince testified that he was approached by Max Osborne and White to participate in a scheme to acquire property through bankruptcy courts. White directed Prince on the amounts to solicit from victims and received all the money Prince fraudulently obtained. Prince transferred various amounts to White via Western Union over several dates, totaling $8,450.
George Stevenson, a bankruptcy trustee, stated he was unfamiliar with either defendant and noted that no bankruptcy court plan allowed individuals to purchase property at discounted rates. White's defense argued there was insufficient evidence linking him directly to the money involved in the fraud, emphasizing that only specific individuals gave money directly to him and that transactions through third parties were given to Prince.
However, the evidence presented, including testimonies from Prince, his wife, and some victims, indicated that White played a substantial role in the fraudulent scheme, which expanded to include wire fraud and money laundering. The court found significant circumstantial evidence connecting White to these offenses, leading to the conclusion that he aided in the commission of wire fraud and money laundering.
At sentencing, the court applied money laundering guidelines, resulting in a base offense level of 20, which was increased due to the value of funds involved exceeding $1,000,000. White received a 60-month sentence for wire fraud and 78 months for money laundering, to be served concurrently. White objected to the use of money laundering guidelines over wire fraud guidelines and contested the loss calculation, raising these issues on appeal. Additionally, it was noted that typically, a defendant cannot appeal a district court's decision against a downward departure from the Sentencing Guidelines.
A defendant can appeal if a district court erroneously believes it lacks the authority to depart downward in sentencing. If the refusal to depart is based on a legal conclusion regarding the validity of the defendant's arguments for departure, this decision is subject to review. The determination by the district court that it cannot depart downward is considered a matter of Guidelines interpretation, reviewed de novo. The appellate court examines the sentencing transcript to distinguish between a discretionary refusal to depart and a legal conclusion of lack of authority. A judge is not required to explicitly state awareness of the power to depart; it is assumed that a silent ruling reflects an exercise of discretion finding departure unwarranted.
During sentencing, defendants Prince and White challenged the application of money laundering guidelines. The court clarified its role, indicating that typically the guideline for the most serious offense applies, which would be money laundering. However, it acknowledged that in some cases, the true nature of the crime might be better reflected by the wire fraud guideline. The court referenced the Caba case, noting that while both offenses could apply, its circumstances were distinct from the current case, where the defendant's actions led to a complete diversion of government funds without fulfilling the intended purpose of the food stamps.
The defendant engaged in actions indicative of money laundering, including concealing deposits and withdrawals, using multiple nominee bank accounts, and frequently closing accounts. These behaviors demonstrate a clear intention to hide the source and movement of illicit funds, distinguishing his conduct from that in the case of Caba. Unlike in Caba, the funds in this case were misappropriated from intended financial investments, benefiting the defendants personally rather than serving the victims' interests. The defendants took significant measures to avoid creating a paper trail, utilizing other individuals' bank accounts and wire transfers to obscure transactions. The circumstances align more closely with the precedent set in Ghosheh than with Caba, supporting the application of the money laundering statute as the appropriate guideline for sentencing calculations.
The district court exercised discretion in determining the sentence without explicitly stating its authority to do so. Even if it operated under the assumption that it lacked the discretion to grant a downward departure, the outcome remains justified as the case facts fall within the standard guidelines. The court identified the base offense level for the crime, grouped counts with similar harm, and used the highest offense level to dictate the sentencing range. Adjustments to the offense level were made in accordance with the Guidelines, and the criminal history category was established to determine the final sentencing range, with the option for district courts to depart from the guideline range if warranted.
The court identified an aggravating or mitigating circumstance that the Sentencing Commission did not adequately consider, which could warrant a different sentence than that prescribed. The guidelines are intended to reflect typical cases, but atypical cases may justify a departure from these guidelines. In the case of Defendant White, the court correctly applied money laundering guidelines, as the crimes of wire fraud and money laundering involved similar harm. The defendants deliberately structured transactions to evade detection, directing victims to transfer money to third parties and withdrawing funds in amounts under $10,000 to avoid reporting requirements. None of the Western Union transactions identified White as the recipient, further indicating an intent to conceal fraudulent activities.
White failed to demonstrate that his case was atypical under the money laundering guidelines. Although he referenced an affidavit from Defendant Prince asserting that White was not responsible for the losses, the court found the affidavit to be inaccurate and inconsistent with trial testimony. White's argument that insufficient evidence linked him to the money laundering charges was previously addressed and rejected. The court concluded that evidence showed White played a significant role in the fraudulent scheme, thereby aiding and abetting the wire fraud and money laundering. White did not identify any factors overlooked by the guidelines or demonstrate unusual circumstances that would render their application inadequate in his case.
The district court determined that the loss amount exceeded one million dollars for sentencing purposes, a finding that Defendant White objected to both at sentencing and on appeal. This amount is significant because it can lead to an increase of one to thirteen offense levels under section 2S1.1(b) of the Sentencing Guidelines. The appellate review of the district court's factual findings, including the loss amount, is conducted for clear error. A finding is deemed clearly erroneous if the reviewing court is left with a firm conviction that a mistake has been made, even if some evidence supports the finding.
Relevant conduct for determining loss includes all actions taken by the defendant and foreseeable actions of co-conspirators during the offense or while trying to evade detection. The sentencing court must rely on reliable information and support its approximations with a preponderance of the evidence. Defendant White contends that the trial court inaccurately accepted loss calculations from Bobby Appleton, the Probation Officer, arguing that trial testimonies indicated a loss figure below one million. At the sentencing hearing, Appleton explained that his calculations were based on a report from an IRS agent involved in the case.
Mr. Appleton identified unreported losses in a victim's report and sought sworn statements from the victims, which aligned with IRS findings but contained some inconsistencies that he clarified. The district court determined that the victim impact statements used in the presentence investigation report were more accurate than the testimonies referenced, which were deemed incomplete and often miscontextualized, particularly regarding their timing in relation to the scheme. The court concluded that these victim statements justified the probation officer’s calculation of over one million dollars in losses, and upheld the accuracy of these calculations without error. Consequently, the district court's judgment was affirmed.
The document further outlines various legal statutes: 18 U.S.C. § 1956(a)(1) criminalizes financial transactions involving proceeds from unlawful activities, with penalties including fines up to $500,000 or imprisonment for up to 20 years. 18 U.S.C. § 2 establishes that individuals who aid or cause offenses against the United States can be punished as principals. 18 U.S.C. § 1343 addresses wire fraud, imposing fines or imprisonment for devising fraudulent schemes, with harsher penalties if financial institutions are affected. It clarifies that direct communication by the defendant is unnecessary if wire communication is foreseeable. Finally, 18 U.S.C. § 1957 prohibits engaging in monetary transactions of over $10,000 in criminally derived property, without requiring knowledge that the underlying offense was unlawful.
Criminally derived property is defined under Section 1957(f)(2) as property obtained from criminal offense proceeds. The Ninth Circuit in *Savage* established that "criminally derived property" in Section 1957 aligns with "proceeds" in Section 1956. A disposition refers to transferring property to another's possession. In *United States v. Cavalier*, the defendant shipped a van, falsely claimed it was stolen, and caused Allstate to pay GMAC to settle a lien, leading to an indictment for conducting a financial transaction involving mail fraud proceeds. The Fifth Circuit ruled that the defendant's actions indeed caused a financial transaction between Allstate and GMAC.
Direct examination excerpts reveal testimonies regarding cash transactions, lack of receipts, and statements made by Defendant Prince, who claimed that no one could prove he received money. Prince arranged for wire transfers to Chris Mathis, who withdrew cash and handed it to Prince. Mathis recounted that Prince expressed a desire to avoid investigators and doubted that his receipt of money could be proven.
Defendant Prince asserted in his appellate brief that he lacked knowledge of an illegal scheme to defraud. The reference to the case Moore illustrates a precedent where the defendant argued that trial court instructions on mail fraud counts effectively amended the indictment. The indictment originally described a scheme to defraud, but specific language regarding obtaining money was omitted in certain references. The jury was instructed that the government needed to prove beyond a reasonable doubt that at least one act or statement related to the fraudulent scheme occurred. The court rejected the defendant's constructive amendment argument, concluding that the charges were clear and that the instructions did not alter the indictment's scope or require the defendant to defend against uncharged schemes. Furthermore, no violation of the defendant's rights to jury assessment of the allegations was found.
Prince's brief does not specify which jury instructions he objects to, though the court had instructed on willful blindness and deliberate ignorance regarding the elements of money laundering and wire fraud. The jury was told that to convict, the government must prove that Prince knowingly participated in the scheme with intent to defraud, and that knowledge could be shown if he acted with deliberate disregard for the truth of statements involved. If the government demonstrated that Prince consciously avoided learning the truth, the knowledge requirement would be met unless he genuinely believed the statements were true.
Guilty knowledge cannot be established solely through evidence of negligence or foolishness. A defendant must be shown to be a knowing participant in the fraudulent scheme with specific intent to defraud for a conviction. If the government proves the existence of the scheme, the defendant's knowing participation, and the specific intent to defraud beyond a reasonable doubt, a conviction is warranted. The argument presented by Prince specifically contests the willful blindness instruction related to money laundering. According to the Sixth Circuit Pattern Jury Instruction 2.09, a defendant cannot evade liability by ignoring obvious facts; the jury must be convinced beyond a reasonable doubt that the defendant was aware of a high probability of wrongdoing and deliberately chose to ignore it. Carelessness or negligence does not equate to knowledge sufficient for a conviction. This instruction has been upheld in prior cases. Additionally, 18 U.S.C. § 287 prohibits the making and presenting of fraudulent tax refund checks to the Department of the Treasury.
