United States v. Charles Kim, AKA "Yong Chull Kim,"

Citations: 246 F.3d 186; 2001 U.S. App. LEXIS 6178; 2001 WL 356792Docket: 00-1364

Court: Court of Appeals for the Second Circuit; April 10, 2001; Federal Appellate Court

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Charles Kim was convicted of wire fraud and conspiracy for approving inflated travel invoices submitted to the United Nations for its peacekeeping mission in Bosnia-Herzegovina. His conviction, based on a jury verdict in the Southern District of New York, was affirmed by the Second Circuit Court of Appeals. Kim contested the jurisdiction and venue of the Southern District, as well as the district court's evidentiary rulings and sentencing calculations. The court found both jurisdiction and venue proper under the wire fraud statute and identified no errors in the district court's proceedings.

The case background reveals that Kim served as the Chief of Travel and Traffic for the UNMIBH from 1995 to 1998, overseeing travel arrangements and invoice approvals. Despite being aware of substantial baggage discounts offered by airlines, he approved over half a million dollars in improper charges through schemes involving Zagrebtours and Air France, which occurred from 1996 to 1998. Payments for these invoices were made via wire transfer, including payments from Chase Manhattan Bank in New York City.

Prior to trial, Kim's motion to dismiss the indictment due to alleged jurisdictional and venue issues was denied. He subsequently sought mandamus relief, which was also denied. After the trial, in which he was convicted on five counts of wire fraud and conspiracy, Kim's request for bail pending appeal was rejected. The appeal was filed following his sentencing on May 12, 2000.

Kim challenges his conviction on the grounds that neither he nor his co-conspirators engaged in any fraudulent acts within the United States, arguing that this negates jurisdiction and venue for prosecution in the Southern District of New York. The court reviews issues of jurisdiction and venue de novo, as they are legal questions. Kim claims the district court lacked jurisdiction because his actions and those of his co-conspirators occurred entirely outside the U.S., and he contends that the wire fraud statute, 18 U.S.C.A. § 1343, does not apply to foreign fraud. The government counters that the statute applies to frauds committed by American citizens that involve wire communications into or out of the U.S.

The court notes that while there is a presumption against the extraterritorial application of U.S. criminal laws, this presumption can be overcome if Congress clearly intended for the statute to apply to conduct occurring outside the country. The wire fraud statute was amended in 1956 to include "foreign commerce," allowing for the prosecution of fraudulent schemes involving foreign wires, in response to a failed prosecution case where the defendant successfully argued that the statute did not cover a fraudulent call from Mexico to the U.S.

Kim argues that the amendment indicates a focus on domestic fraud rather than an extension to foreign frauds. However, the court emphasizes that the fraudulent scheme involved an American perpetrator and a victim in New York, and the fraudulent conduct was facilitated by wire communications. Drawing parallels to the prior case that led to the amendment, the court concludes that Congress intended to include such conduct within U.S. criminal jurisdiction, asserting that it is logical to protect foreign commerce from harmful acts, regardless of where they occur.

The court's conclusion follows precedent established in United States v. Gilboe and United States v. Trapilo regarding jurisdiction under § 1343 for wire fraud. In Gilboe, the court affirmed jurisdiction for a nonresident alien involved in international shipping fraud, emphasizing that wire communications between Hong Kong and Manhattan sufficed to establish jurisdiction. In Trapilo, the court determined that § 1343 encompasses tax fraud against the Canadian government, clarifying that the statute prohibits the use of U.S. telecommunication systems for fraudulent schemes, irrespective of the victim's identity or scheme success.

The court finds these precedents directly applicable to Kim's case, rejecting Kim's argument that they should not apply because he did not directly use the wires. The statute defines guilt for wire fraud as including those who "transmit or cause to be transmitted" wires, and the jury established that Kim knew the fraudulent invoices he approved were paid by a New York bank, satisfying the causation requirement.

Kim also cites two civil cases (North South Finance Corp. and Butte Mining PLC), claiming they demonstrate a lack of jurisdiction. However, the court distinguishes these cases, noting that they pertain to RICO complaints without extraterritorial application and that the wire transmissions in those cases were merely preparatory, unlike in Kim's case where they were essential to the fraud's completion. Additionally, the parties in those cases were primarily foreign, contrasting with Kim's American citizenship.

Ultimately, the court asserts that the aim of § 1343 is to prevent the use of U.S. telecommunications for fraud, and therefore, the district court had jurisdiction over Kim's actions.

Kim argues that venue in the Southern District of New York is improper because neither he nor his co-conspirators performed acts in furtherance of their wire fraud scheme within that district. He contends that faxes and wire transfers involving Chase Manhattan Bank do not constitute essential conduct to support venue. However, the court finds Kim's arguments lacking. According to the Sixth Amendment and Fed. R. Crim. P. 18, venue is proper in any district where a crime was "committed." The determination of what constitutes "committed" relies on identifying the key verbs defining the crime. The Supreme Court has cautioned against a rigid application of this test, emphasizing the need to recognize where the conduct constituting the offense occurred. 

The district court determined that wire fraud is a continuing violation under 18 U.S.C. § 3237(a), allowing for venue in any district where the offense began, continued, or concluded. It established that the act of transmitting a wire in furtherance of fraud can occur at both the sending and receiving locations. Consequently, the transmissions to and from Chase Manhattan Bank justified venue in the Southern District. 

The court referenced its ruling in Gilboe, where venue was upheld based on communications to and from New York, despite the defendant's absence from the district. Kim's objections, which argue that he did not personally perform acts in Manhattan and attempt to distinguish Gilboe, are deemed unpersuasive. He also cites cases suggesting that actual conduct in the district is necessary for venue, but the court rejects these positions.

Kim's argument that his lack of personal involvement in sending fraud-related faxes to Chase Manhattan negates venue in the Southern District is rejected. The precedent set in Gilboe, which emphasized the significance of communications rather than personal conduct, is deemed applicable. Kim's approval of fraudulent invoices, knowing they would be paid through New York banks, established a connection to the Southern District, regardless of his physical location at the time of the wire transmissions. 

Kim's attempt to extend the rulings in Brennan and Beech-Nut to his case is unsuccessful. In Brennan, the court ruled that venue does not exist in districts where mail merely passes through after being sent. However, the district court clarified that Brennan's findings do not affect the first paragraph of § 3237(a) and that wire fraud constitutes a continuing violation, making venue appropriate in Manhattan, where the communications originated and continued. Kim's characterization of the wires as merely passing through the Southern District is rejected, as these wires were integral to the fraudulent scheme.

The Beech-Nut case, where venue was denied for acts deemed preparatory to a crime, is also distinguished. Unlike the defendants in Beech-Nut, Kim's actions directly contributed to the fraud, as he approved the invoices intended for payment in the Southern District, thus establishing a legitimate venue connection.

Lastly, the Bezmalinovic case cited by Kim is distinguished due to its focus on ministerial acts not anticipated by the defendant, whereas Kim's actions were foreseeable and under his control. The conclusion aligns with the precedent in Saavedra, affirming that venue is proper in a district essential to the criminal conduct, thereby affirming that venue lies in the Southern District due to the critical role of the wire communications in the fraudulent scheme.

Kim challenges the district court's sentencing, arguing it improperly calculated the offense level by including losses incurred by the UNMIBH before wire transmissions to New York commenced, and also contends there was an evidentiary error regarding a co-conspirator's statement. However, these arguments are found to lack merit. The court affirms Kim's conviction, confirming jurisdiction over the wire fraud counts, which extends to the conspiracy counts as established in prior case law. Under 18 U.S.C. § 3237(a), offenses occurring in multiple districts can be prosecuted in any district where the offense was initiated, continued, or completed. The court notes that the fraud proceeds moving through New York qualify as foreign commerce under this statute. Kim's venue argument concerning the conspiracy charges is not strongly pursued, but it is asserted that venue was also improper for those counts. Citing precedent, the court emphasizes that venue for conspiracy can be established based on any overt act by co-conspirators within the district, and since wire communications were integral to the conspiracy and constituted a continuing violation, venue was deemed proper.