DILLON & FINDLEY,
510 L Street, Suite 603
Anchorage, AK 99501
(907) 277-5400
FEDERAL PUBLIC DEFENDER
FOR THE DISTRICT OF ALASKA
Federal Public Defender
Rich Curtner
550 West 7Ih Avenue, Suite 1600
Anchorage, AK 99501
(907) 271-2277
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA,
Plaintiff,
vs.
xxxxxxxxxxxxxxxxxxxxxxx
Defendants.
MOTION TO DISMISS
COUNTS 21 THROUGH 27
Case No. A96-0096-2 CR (JWS)
Defendants xxxx and xxxxxxxx , through their respective counsel, move the court for an order dismissing Counts 21 through 27 of the Indictment in this case.
This motion is brought pursuant to Rules 7(c)(1) and 12(b) of the Federal Rules of Criminal Procedure, and the attached memorandum of authorities and exhibits. A period of excludable delay under 18 U.S. C. § 31610(f) m occur as a result of the filing/granting/denying of this motion.
DATED this 6th day of June, 1997.
Ray R. Brown
DILLON & FINDLEY, P.C.
51 0 L Street, Suite 603
Anchorage, AK 99501
(907) 277-5400
FEDERAL PUBLIC DEFENDER
FOR THE DISTRICT OF ALASKA
Federal Public Defender
Rich Curtner
550 West 7Ih Avenue, Suite 1600
Anchorage, AK 99501
(907) 271-2277
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA,
Plaintiff,
vs.
xxxxxxxxxxxx, MEMORANDUM OF AUTHORITIES I
xxxxxxxxxxx, and SUPPORT OF MOTION TO DISMIS
xxxxxxxxxxxxx, COUNTS 21 THROUGH 27
Defendants.
Case No. A96-0096-2 CR (JWS)
Defendants have been charged in Count 21 with conspiracy to commit money laundering offenses under 18 USC § 1956(h). The substantive money laundering offenses have been charged in Counts 22 through 27 under 18 USC § 1956(a)(1)(B)(i). For reasons stated herein, it is respectfully submitted that the conduct alleged in Counts 21 through 27 does not violate the provisions of 18 USC § 1956(a)(1)(B)(i) or 18 USC § 1956(h).
Federal Rule of Criminal Procedure 7(c)(1) mandates that this court must enter an order of dismissal because the facts contained in the four corners of the Indictment do not support the criminal offenses as charged. Due to the development of common sense pleading rules, this particular Rule of Criminal Procedure is not frequently relied on. It provides, in pertinent part:
The indictment or the information shall be a plain, concise and definite written statement of the essential facts constituting the offense charged. Over the years, with more "common offenses," pattern indictment language has been found to be sufficient. The language is intended to provide adequate notice for pre-trial preparation and to permit the pleading of the count and the indictment as a bar for double jeopardy purposes. That is, however, not the only purpose of the factual allegations in an indictment. As noted in Moore's Federal Practice 3d. § 7.04[2](ii]:
The two main criteria for testing the sufficiency of the
indictment are:
(1) whether the facts stated showed the essential elements of the offense; and
(2) whether the facts alleged are sufficient to permit the defendant to plead former jeopardy in any subsequent prosecution.
(footnote omitted).
That makes explicit that this court is not simply empowered,
but directed to evaluate the four corners of the indictment to determine whether the
essential elements of the offense are stated. Should those elements not be stated within
the four corners of the indictment, it must be dismissed.
In the present case, the facts as stated in the indictment do not demonstrate the essential elements of the offenses charged in Counts 21 through 27. Moreover, the facts as alleged in the Indictment in support of these counts negate these offenses under applicable 9th Circuit law.'
ARGUMENT
The factual basis as alleged in support of Counts 22, 23, 24 and 25 is
summarized as follows:
Count 22: A February 1992 $70,000 check paid to Carthage Properties, Inc. by Tinker, Inc. purportedly for consulting fees. That check was allegedly negotiated by a Mexican national at a Mexican bank. (See Exhibit A and Indictment, paragraph 79.)
Count 23: A December 1992 wire transfer in the amount of $110,000 from Timer, Inc. to Carthage Properties, Inc. which was later disbursed to cash ($1,500), William D. Herron ($3,000) and an entity known as Plovalco($105,500 in the form of two cashier's checks). The $105,500 was allegedly negotiated by a Mexican national at a Mexican bank. (See Exhibits B, C, D, E and Indictment, paragraph 80.)
Count 24: The attempted sale of property purportedly owned in Wyoming by defendant Robert Kubick by defendant Carol Birdwell's listing the property with a real estate agent in Casper, Wyoming and Herron's counter-offer to sell the property for $450,000. (See Indictment, paragraph 82.)
Count 25: The sale and disbursement of proceeds from Independence Park Property by Carthage, Inc. in May 1993 with net proceeds totaling $61,526.57. According to the government, the proceeds were distributed to an entity known as Plovalco ($52,773.55), defendant William Herron ($7,500) and to the treasurer of Natrona County, Wyoming ($1,253.02). The check made payable to Plovalco was allegedly negotiated by a Mexican citizen through a Mexican bank. (See Exhibits F, G, H and Indictment, paragraph 81.)
1 Federal Rule of Criminal Procedure 12(b)
provides that 'Any defense, objection, or request which is capable of determination
without trial of the general issue may be raised before trial by motion." Though an
indictment is ordinarily deemed sufficient if it contains the essential elements of the
offense and therefore may not be challenged by a pre-trial motion to dismiss, an
indictment may be challenged and dismissed pre-trial if the indictment allegations are
insufficient to state a crime. See U.S. v. Risk, 843 F.2d 1059, 1061 (7th Cir.
1988) (the indictment was dismissed 'not because the government could not prove its case,
but because there was no case to prove.") Accordingly, this motion is brought
pursuant to both Rule 7(c)(1) and Rule 12(b).
Under the government's theory of this case, all of the money from these sales (and
attempted sale) were from assets belonging to the bankruptcy estate. Indeed, all of the
dates of the purported transactions occurred following the filing of defendant Robert
Kubick's first petition in bankruptcy, August 20,1991.2 As stated above, both defendants
are charged under 18 USC 1956(a)(1)(B)( i).3 That statute states in pertinent part that-.
(a)(1) whoever, knowing that the property involved in a financial transaction
represents the proceeds of some form of unlawful activity, conducts or attempts to conduct
such a financial transaction which in fact involves the proceeds of specified unlawful
activity...
(B) knowing that the transaction is designed in whole or in part ...
(i) to conceal or disguise the nature, the location, the source, the ownership or the
control of the proceeds of specified unlawful activities ...shall be sentenced to a fine
of not more than $500,000 or twice the value of the property involved in the transaction,
whichever is greater, or imprisonment for not more than 20 years, or both ...
Subparagraph (c) defines various terms and phrases contained in the statutory language. It defines the phrase "knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity" as follows:
__________________________
2Mr. Kubick filed an amended petition during August 1993 which has no bearing on the legal basis for this motion. Defendants Herron and Birdwell are not charged in Counts 26 or 27, however, the same argument would apply to those counts as well.
3 The face of the Indictment charging Counts 21-27
delineates violations of 18 USC § 1956(a)(1)(B)(i). The government also references
paragraph 2 of that statute on page 36 of the Indictment. It is unclear whether or not the
government intends to prosecute this case under paragraph 2 but, if so, it appears that
this theory was not presented to the grand jury nor was that body (apparently) instructed
on the elements required under paragraph 2 (see paragraph 85). If it is the government's
intention to proceed under that theory, then defendants also incorporate in this motion a
separate motion to dismiss any prosecution under paragraph 2 for failure to set forth all
of the necessary elements as required by law. See
U.S. v. Keith, 605 F.2d 462, 464 (9th Cir. 1979); U.S. v. Cecil, 608 F.2d 1294, 1297 (9th Cir.
1979).
that the person knew the property involved in the transaction represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under state, federal, or foreign law, regardless of whether or not such activity is specified in paragraph (7).
It also includes and defines, among other things, "specified unlawful activity" (as applied to this case) under (c)(7)(D) offenses under § 152 (concealment of property in connection with bankruptcy). The statute does not, however, define the term "proceeds." As the court might surmise, the definition of this term is pivotal in determining whether or not the acts as alleged in the Indictment constitute money laundering as defined under the statute.
This issue was addressed in U.S. v. Savage, 67 F.3d 1435 (9th Cir. 1995); cert. denied 116 S. Ct. 964, 133 L.Ed.2d 885 (1996). The defendant in that case argued that the international monetary transfer alleged in his indictment did not involve "proceeds of specified unlawful activity." Id. at 1441. Savage argued that "proceeds" (as used in the statute) constituted funds from previous and completed criminal activity (emphasis added). Id. The Savage court agreed. Id. at 1441-42. In reviewing the legislative history of the money laundering statutes, the court concluded that Congress considered money laundering to be separate conduct occurring after completion of the underlying criminal offense. As a result, the court concluded that "proceeds" were funds obtained from prior, separate criminal activity. Id. at 1441.
The Savage holding is in accord with other decisions from the 10th Circuit. In U.S. v. Edqmon, 952 F.2d 1206 (10th Cir. 1991); cert. denied 505 U.S. 1223, 112 S. Ct. 3037, 120 L.Ed.2d 906 (1992), the court analyzed the congressional intent embodied in 18 USC § 1956. In emphasizing that the money laundering statute was intended to be a separate crime distinct from the underlying offense that generated the money, the court concluded that Congress aimed the crime of money laundering at conduct that follows in time the underlying crime rather than to afford an alternative means of punishing the prior specified unlawful activity. Id. at 1214. In a later case, U.S. v. Johnson, 971 F.2d 562 (10th Cir. 1992), the court interpreted Edqmon as suggesting that Congress intended that money laundering statutes apply to transactions occurring after the completion of the underlying criminal activity (emphasis added). Id. at 562.
In Johnson, the underlying criminal activity which formed the predicate offense for money laundering was wire fraud which the defendant accomplished by causing investors to wire funds to his bank account. The court ruled that to determine whether or not the funds were "criminally derived property" depended upon whether or not the proceeds were obtained from a criminal offense at the time the defendant engaged in the monetary transaction. Id. at 569-570. In other words, whether the underlying predicate offense had been completed at the time of the alleged act of money laundering.
In the present case, under the government's theory, the money laundering allegations in Counts 22 through 27 all involve predicate offenses of concealing or attempting to conceal property in connection with a bankruptcy proceeding (18 USC § 152(l)). Concealment of property in connection with a bankruptcy proceeding is a continuing offense. See 18 USCA § 3284. It is not completed until the debtor is discharged in bankruptcy. Id. Since all of the above acts were ongoing, the money laundering allegations did not occur after the completion of the underlying criminal activity. As such, Counts 21 through 27 fail to charge an offense prosecutable under 18 USC § 1956(a)(1)(8)(i) under the rationale of U.S. v. Savage, supra; U.S. v. Edqmon, supra and U.S. v. Johnson, supra.
Since the substantive counts alleging money laundering fail to state an offense, there is no basis for the conspiracy. Specifically, both defendants charged under 18 USC § 1956(h), which states that:
any person who conspires to commit any offense defined in this section or § 1957 shall be subject to the same penalties as those prescribed for the offense the commission of which was the object of the conspiracy.
_____________________
4Compare U.S. v. West, 22 F.3d 856, 591 (5th Cir. 1994), wherein the Fifth Circuit upheld convictions on money laundering counts in conjunction with bankruptcy fraud, but on different grounds.
If the object of a conspiracy is neither a crime nor an act to defraud, there is no criminal conspiracy. U.S. v. Baker, 61 F.3d 317, 325 (5th Cir. 1995). If the object of the conspiracy is not unlawful, there is no basis for a conspiracy. U.S. v. Aloi,, 511 F.2d 585, 592 (2nd Cir. 1975); cert. denied 423 U.S. 1015, 96 S. Ct. 447, 46 L.Ed.2d 386 (1975). Since the object of this conspiracy (money laundering) fails to charge an offense under the applicable predicate Code provision, there can be no conspiracy. As a result, like the substantive counts, Count 21 must also be dismissed.
For the above stated reasons, it is respectfully requested that this court dismiss Counts 21 through 27 of the Indictment.
Ray R. Brown
510 L Street, Suite 603 AT'TO
Anchorage, AK 99501
(907) 277-5400
FEDERAL PUBLIC DEFENDER
FOR THE DISTRICT OF ALASKA
Federal Public Defender
Rich Curtner
550 West 7th Avenue, Suite 1600
Anchorage, AK 99501
(907) 271-2277
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA,
Plaintiff,
vs.
xxxxxxxxxxxxxxxxxxxxxxx
Defendants.
REPLY TO OPPOSITION TO
MOTION TO DISMISS COUNTS
21 THROUGH 27
Case No. A96-0096-2 CR (JWS)
Counts 21 through 27 of the Indictment should be dismissed if this court determines that the facts as stated therein do not demonstrate the essential elements of the offenses charged. Fed. R. Crim. Proc. 7(c)(1); Moore's FederPractice 3d. sec. 607.04[2][ii]. The parties are in agreement that the offense charged in Counts 22 through 27 is in violation of 18 U.S.C. sec. 1956(a)(1)(B)(I) (money laundering), and in Count 21, violation of 18 U.S.C. sec. 1956(h) (conspiracy to commit money laundering). At issue is whether the Indictment sufficiently sets forth the required element of the offense of money laundering that defendants Birdwell and Herron, "knowing that the property involved in a financial transaction represent[ed] the proceeds of some form of unlawful activity," conduct[ed] or attempt[ed] to conduct such a financial transaction which in fact involve[d] the proceeds of specified unlawful activity. . . " 18 U.S.C. sec. 1956(a)(1).
In reliance upon U.S. v. Savage, 67 F.3d 1435 (9th Cir. 1995); cert. denied, 116 S.Ct. 964, 133 L.Ed.2d 885 (1996), U.S. v. Edgmon, 952 F.2d 1206 (10th Cir. 1991); cert. denied 505 U.S. 1223, 112 S.Ct. 3037, 120 L.Ed.2d 906 (1992), and U.S. v. Johnson, 971 F.2d 562 (10th Cir. 1992), defendants Birdwell and Herron argued that the Indictment fails to satisfy this element because the conduct alleged to comprise the offense of money laundering does not follow in time the underlying crime of concealing or attempting to conceal property in connection with a bankruptcy proceeding (18 U.S.C. sec. 152(l)). In other words, because Congress intended money laundering to be a separate and distinct offense from the "specified unlawful activity" that is its predicate offense, the predicate offense must be completed before its proceeds can be used in the separate and distinct money laundering offense. If, as in this case, both the predicate offense and the offense of money laundering (as alleged) involve the same ongoing criminal activity, then no claim can be stated for money laundering as a separate offense, and those counts should be dismissed.
In its opposition, the government fails to articulate how the conduct alleged to have constituted money laundering is separate and distinct from the conduct charged as the underlying criminal bankruptcy concealment. At least one other case in the 9th Circuit supports defendants' position. The "proceeds" analysis in Edgmon, supra and Savage, supra was again addressed in U.S. v. Estacio, 64 F.3d 477, 480 (9th Cir. 1995). In that case, however, the defendant did not argue whether or not the conduct which was alleged to have constituted money laundering was separate from the conduct charged as the underlying criminal or predicate offense. Instead, the defendant argued that "proceeds" under the statute would not include a fraudulently obtained line of credit. The court disagreed. Id. While agreeing with the Edgmon decision, the Estacio court found that the deficiency in the Indictment (failure to establish separate criminal activity) did not prejudice the defendant.
As conceded in defendants' original motion, other courts have found sufficient evidence to sustain money laundering convictions based upon concealment of bankruptcy assets albeit on different grounds. See U.S. v. West, 22 F.3d 586 (5th Cir. 1994); see also U.S. v. Levine, 970 F.2d 681, 686 (10th Cir. 1992). Another analogous case (not involving bankruptcy concealment but defining "proceeds") is U.S. v. Haun, 90 F.3d 1096, 1100 (1996). Again, the arguments posited by the respective defendants in those cases were not based upon the rationale addressed in Edgmon and Savage and were decided on different grounds.
As a final point, the government did not respond to the argument posited in footnote 3 on page 4 of defendants' original motion to dismiss counts 21 through 27. Given the government's failure to address this issue, it is assumed that any reference to 18 U.S.C. sec. 1956(a)(2) will be deleted from the Indictment and that the government will not proceed under that theory at trial.For the above-stated reasons, it is respectfully requested that this court grant defendants' motion to dismiss counts 21 through 27 of the Indictment and to issue an order prohibiting the government from proceeding under 18 U.S. C. sec.1956(a)(2) as an alternative theory of money laundering at trial.
DATED this 30th day of June, 1997.
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