No. 95-770

In the Supreme Court of the United States

OCTOBER TERM, 1995

PAGE KILDAY TINO, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

DREW S. DAYS, III
Solicitor General

JOHN C. KEENEY
Acting Assistant Attorney
General

JOEL M. GERSHOWTIZ
Attorney

Department of Justice
Washington, D.C. 20530
(202) 514-2217

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QUESTIONS PRESENTED

1. Whether the district court's jury instructions
on the elements of money laundering were defective
because they did not define the knowledge element of
18 U.S.C. 1957, and because they did not define the
words "proceeds" and "promote," as used in 18 U.S.C.
1956(a)(1)(A)(i).
2. Whether the evidence was insufficient to
support petitioner's convictions for money laundering
under 18 U.S.C. 1956(a)(1)(A)(i) and 1957 because the
government failed to show that the funds used in the
pertinent financial transactions were derived from
criminal activity, as required by both statutes, or
that the transactions "promoted" the carrying on of a
specified criminal activity, as required by Section
1956(a)(1)(A)(i).

(I)

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TABLE OF CONTENTS

			                      Page
Opinion below  . . . .  1
Jurisdiction  . . . .  1
Statement . . . . 2
Argument . . . . 6
Conclusion . . . .  13

TABLE OF AUTHORITIES

Cases:
Staples v. United States, 114 S. Ct. 1793 (1994)  . . . .  6
United States v. Banco Cafetero Panama, 797 F.2d
1154 (2d Cir. 1986)  . . . . 12, 13
United States v. Cavalier, 17 F.3d 90 (5th Cir.
1994) . . . .  10
United States v. Dobbs, 63 F.3d 391(5th Cir.
1995)  . . . .  12
United States v. Estacio, 64 F.3d 477(9th Cir.
1995)  . . . .  7
United States v. Gaudin, 115 S. Ct.2310 (1995) . . . . 7
United States v. Heaps, 39 F.3d 479(4th Cir.
1994)  . . . . 9, 10
United States v. Jackson, 935 F.2d 832(7th Cir.
1991)  . . . . 9, 11
United States v. Johnson, 971 F.2d 562(10th Cir.
1992)  . . . . 9, 11, 12
United States v. Lovett, 964 F.2d 1029(10th Cir.),
cert. denied, 113 S. Ct. 169(1992)  . . . .  6
United States v. Montoya, 945 F.2d 1068 (9th Cir.
1991) . . . .  10
United States v. Moore, 27 F.3d 969(4th Cir.), cert.
denied, 115 S. Ct. 459 (1994)  . . . . 11, 12
United States v. Olano, 113 S. Ct. 1770(1993)  . . . .  6
United States v. Paramo, 998 F.2d 1212 (3d Cir.
1993), cert. denied, 114 S. Ct.1076 (1994)  . . . . 10

(III)

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IV

Cases-Continued:                Page
United States v. Piervinanzi, 23 F.3d 670 (2d Cir.),
cert. denied, 115 S. Ct. 259, 267 (1994)  . . . . 10, 11
United States v. Smith, 46 F.3d 1223 (1st Cir.),
cert,denied, 116 S. Ct. 176 (1995) . . . . 12
United States v. Torres, 53 F.3d 1129 (10th Cir.),
cert. denied, 115 S. Ct. 2599, 116 S. Ct. 220 (1995) . . 9

Statutes and rules:

18 U.S.C. 1341  . . . .  2, 4
18 U.S.C. 1956  . . . .   8
18 U.S.C. 1956(a)(1)(A)(i) . . . .  2, 3, 5, 6, 7, 8, 9
18 U.S.C. 1956(a)(2) . . . .  10
18 U.S.C. 1956(c)(7)(A)  . . . .  4
18 U.S.C. 1957 . . . .  2, 4, 5, 6, 8
18 U.S.C. 1957(a)  . . . .  4
18 U.S.C. 1957(f)(2) . . . .  4
18 U.S.C. 1957(f)(3) . . . .  4
18 U.S.C. 1961(1)  . . . .  4
Fed. R. Crim. P.:
  Rule 30  . . . .  6
  Rule 52(b)  . . . .  6

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In the Supreme Court of the United States

       OCTOBER TERM, 1995

   No. 95-770

PAGE KILDAY TINO, PETITIONER

      v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
    FOR THE SIXTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

       OPINION BELOW

The opinion of the court of appeals (Pet. App. 1a-
22a) is unreported, but the judgment is noted at 64
F.3d 664 (Table).

JURISDICTION

The judgment of the court of appeals was entered on
August 17, 1995. A petition for rehearing was denied
on September 25, 1995. Pet. App. 23a. The petition for
a writ of certiorari was filed on November 14, 1995.
The jurisdiction of this Court is invoked under 28
U.S.C. 1254(1).

(1)

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2

        STATEMENT

After a jury trial in the United States District
Court for the Eastern District of Tennessee, peti-
tioner was convicted on 12 counts of mail fraud, in
violation of 18 U.S.C. 1341; 23 counts of laundering
monetary instruments, in violation of 18 U.S.C.
1956(a)(1)(A)(i); and six counts of engaging in
monetary transactions in property derived from
specified unlawful activity, in violation of 18 U.S.C.
1957. She was sentenced to 51 months' imprisonment,
to be followed by a three-year term of supervised
release. The jury also returned a verdict forfeiting
two real properties belonging to petitioner and her
husband that were traceable to the unlawful activity.
Pet. App. 4a-5a. The court of appeals affirmed. Id. at
1a-22a.
1. The evidence `at trial showed that petitioner was
responsible for the overall management of Lifecare
Medical Sales and Rental, a medical equipment
business in Greenville, Tennessee, owned by her
husband, co-defendant Philip Tine.  Petitioner's
responsibilities included ordering supplies and equip-
ment, corresponding with Medicaid, paying bills, and
dealing with customers. Pet. App. 2a.
Lifecare entered into a contract with the Medicaid
Division of the Tennessee Department of Health and
Environment to provide Medicaid recipients with
medical supplies. Under the terms of the contract,
Lifecare was required to submit an authorization
form to Medicaid listing the supplies needed for a
particular patient; after Medicaid approved the
request for supplies, Lifecare was to deliver the
supplies to the patient and submit a claim to Medicaid
for payment. Medicaid would then mail a weekly

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payment check along with remittance advices stating
which claims were being paid by the check. Pet. App.
2a.
 A 1991 Medicaid audit of Lifecare revealed that the
company had engaged in a scheme to defraud Medi-
caid, principally by seeking reimbursement from
Medicaid for supplies that were never delivered. The
auditors also found that Lifecare had improperly
billed supplies under the wrong procedure codes to
maximize its reimbursement. In addition, the audit
revealed evidence of missing delivery tickets, altered
dates, items arbitrarily added to delivery tickets, and
claims submitted before delivery of the equipment.
Pet. App. 3a.        
Once Lifecare received Medicaid reimbursement
checks, including those that had been fraudulently
obtained, it deposited those checks into a checking
account at Sovran Bank. On 23 occasions from July
1989 to December 1990, Lifecare wrote checks of less
than $10,000 on the Sovran account to pay for
business-related expenses, such as utilities, rent,
equipment, and supplies. On six additional occasions
during that period, Lifecare wrote checks in excess of
$10,000 on the Sovran account to pay suppliers and, in
two instances, to make down payments on purchases
of real property. Pet. App. 4a, 12a.
2. Petitioner was convicted on, among other
things, 23 counts of laundering monetary instru-
ments, in violation of 18 U.S.C. 1956(a)(1)(A)(i). That
Section punishes anyone who, "knowing that the
property involved in a financial transaction rep-
resents 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 * * * with the

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intent to promote the carrying on of specified
unlawful activity." She was also convicted on six
counts of engaging in monetary transactions in
violation of 18 U. S. C. 1957(a), which punishes one who
"knowingly engages or attempts to engage in a
monetary transaction in criminally derived property
that is of a value greater than $10,000 and is derived
from specified unlawful activity." In both statutes,
the term "specified unlawful activity" is defined to
include the federal offense of mail fraud. See 18
U.S.C. 1956(c)(7)(A) (defining term by reference to 18
U.S.C. 1961(1), which in turn refers to 18 U.S.C.
1341); 18 U.S.C. 1957(f)(3) (same). The term "crimi-
nally derived property," used in Section 1957, is de-
fined to mean "any property constituting, or derived
from, proceeds obtained from a criminal offense."
18 U.S.C. 1957(f)(2).
On appeal, petitioner contended that the evidence
was insufficient to support her money laundering
convictions. She argued that the evidence failed to
show that she knew that the checks that she drew on
the Sovran account represented the. proceeds of the
fraud scheme rather than the proceeds of Lifecare's
legitimate business. The court of appeals rejected
that contention, observing that it "ignores the
compelling circumstantial evidence of knowledge."
Pet. App. 10a. The court held that the circumstantial
evidence was sufficient for the jury to find, beyond a
reasonable doubt, that petitioner "knew that every
payment from Medicaid represented in whole, or in
part, payment for false claims and, therefore, every
check drawn on the account, in whole or part, involved
the proceeds." Id. at 11a.
Petitioner further argued that the government had
failed to trace the funds involved in the financial

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transactions (i.e., the checks drawn on the Sovran
account) to the fraudulently obtained Medicaid pay-
ments. The court of appeals held that the govern-
ment was not required to trace the funds to specific
underlying unlawful transactions. It observed that
"to hold otherwise would permit participants in un-
lawful activities to prevent conviction simply by com-
mingling funds." Pet. App. 11a-12a, The court con-
cluded that the illicit source of the withdrawn funds
was sufficiently established by the evidence showing
"which checks from Medicaid in payment of fraudu-
lent claims were deposited into the account, when the
checks were deposited, any intervening transactions
(through the account statements), and when the funds
were withdrawn and in what amounts." Id. at 12a.
The court of appeals also rejected petitioner's claim
that the evidence failed to show that she intended to
"promote" the mail fraud scheme, within the meaning
of Section 1956(a)(1)(A)(i), by using the proceeds of
the false claims to pay for Lifecare's rent and
utilities. The court explained that petitioner's intent
to "promote" the mail fraud scheme could properly be
inferred from the fact that "plowing the proceeds of
the mail fraud back into the business permitted the
Tines to submit more false claims to Medicaid." Pet.
App. 12a.
Finally, petitioner contended that the district court
erred in failing to instruct the jury on the meaning
of the terms "promote" and "proceeds" in Section
1956(a)(1)(A)(i), and failed to give a proper instruction
on the knowledge requirement of Section 1957. The
court of appeals summarily rejected those claims,
stating that they were not properly preserved at trial
and that the instructions given "fairly apprised the
jury of the elements of the offenses." Pet. App. 15a.

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6

        ARGUMENT

1. Petitioner contends (Pet. 6-8) that the district
court failed to instruct the jury properly on the
knowledge element of Section 1957, and that the court
should have defined the terms "proceeds" and "pro-
mote," as used in Section 1956(a)(1)(A)(i). Petitioner
did not request jury instructions on those points, nor
did she object to the instructions given on the
grounds now asserted. Accordingly, her contention
may be reviewed only for plain error. Fed. R. Crim.
P. 30, 52(b); see generally United States v. Olano, 113
s. Ct. 1770 (1993).
a. To prove a violation of Section 1957, the govern-
ment must show that the defendant engaged in a
financial transaction in property (having a value in
excess of $10,000] derived from specified unlawful
activity, with knowledge that the property was
criminally derived  See United States v. Lovett, 964
F.2d 1029, 1041 (10th Cir.), cert. denied, 113 S. Ct.
169 (1992). In this case, the district court, tracking
the language of the statute, expressly instructed the
jury that Section 1957 applies to any person who
"knowingly engages or attempts to engage in a mone-
tary transaction in criminally derived property." 10
Tr. 126 (emphasis added) (reprinted at Gov't C.A. Br.
App. A). That instruction adequately informed the
jury of Section 1957's knowledge requirement.
Petitioner invokes cases such as Staples v. United
States, 114 S. Ct. 1.793 (1994), for the proposition that
the district court must instruct the jury on the
pertinent scienter element of an offense. See Pet. 7.
In this case, however, the district court instructed
the jury on that element. Moreover, contrary to peti-
tioner's suggestion (ibid.), this Court has not held

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that the district court's failure to instruct the jury
on scienter is invariably plain error.  See United
States v. Gaudin, 115 S. Ct. 2310, 2322 (1995)
(Rehnquist, C.J., concurring).
b. Section 1956(a)(1)(A)(i), which the district court
read verbatim to the jury in its charge, makes it a
crime, "knowing that the property involved in a
financial transaction represents the proceeds of some
form of unlawful activity, [to] conduct[] * * * such a
financial transaction which in fact involves the
proceeds of specified unlawful activity with the intent
to promote the carrying on of specified unlawful
activity." 10 Tr. 128 (reprinted at Gov't C.A. Br. App.
A). The statute does not define either "proceeds"
or "promote." Petitioner, however, offers no basis
for concluding that the statute employs either term
in anything but its ordinary, everyday sense-
"proceeds" to mean the return on a transaction and
"promote" to mean encourage or advance. Both terms
are within the comprehension of the average juror.
Accordingly, the district court's failure to define the
terms further was not plain error.
Petitioner suggests that courts have adopted
varying definitions of "proceeds" (see Pet. 7 n.1), and
therefore the district court should have defied that
term for the jury. The courts that have considered
the meaning of the term, however, have all "adopted
dictionary definitions that define the term broadly,"
United States v. Estacio, 64 F.3d 477, 480 (9th Cir.
1995), to include (for example) letters of credit as well
as money (ibid.). The money involved in this case fits
squarely within the standard definition of the term
"proceeds," and there is no reason to doubt that the
jury understood the term to have that meaning.

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2. Petitioner contends that the evidence is
insufficient to support her convictions for money
laundering. She first argues (Pet. 8-12) that the
evidence failed to show that she used the proceeds of
her fraudulent scheme to "promote" the carrying on
of that scheme, as required by Section 1956(a)(1)(A)(i).
She also argues (Pet. 12-14) that the government
failed to prove that the funds employed in the financial
transactions were "proceeds" of unlawful activity,
within the meaning of Section 1956, or "criminally
derived property," within the meaning of Section
1957. Both contentions are without merit.
a. The evidence showed that petitioner and her
husband plowed the proceeds of their Medicaid fraud
back into Lifecare by using them to pay business
expenses such as rent and utilities. As the court of
appeals explained, those expenditures "promoted" the
fraudulent scheme in that they "enabled the sub-
mission of more false claims to Medicaid by con-
tinuing the operation of the business." Pet. App. 12a.
Petitioner argues that Section 1956(a)(1)(A)(i) is
not directed at "the payment of routine expenses by a
company * * * engaged in legitimate business
operations" (Pet. 9), and that the government must
show that the proceeds of unlawful activity were
plowed back into "an inherently unlawful venture"
(Pet. 10). The statute does not require, however, that
the promotion of unlawful activity be the sole
motivation for a prohibited financial transaction; if
that were the law, then defendants could escape
liability for money laundering merely by reinvesting
the proceeds. of crime in a business that conducted
both legal and illegal activity. In this case, Lifecare
was engaged in illegitimate as well as legitimate
business, and the evidence was sufficient for the jury

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to conclude that the payments for rent and utilities
were made at least in part to facilitate the illegiti-
mate activity, the continued submission of the false
claims. That showing suffices to support petitioner's
conviction. See United States v. Johnson, 971 F.2d
562,566 (10th Cir. 1992) (finding sufficient evidence of
intent to "promote" a fraudulent scheme where the
defendant used the fraud proceeds to pay his home
mortgage and the fraudulent scheme was conducted
from an office in the home).
The cases on which petitioner relies (Pet. 10) are
not to the contrary, In United States v. Jackson, 935
F.2d 832 (7th Cir. 1991), the defendant was convicted
under Section 1956(a)(1)(A)(i) of using drug proceeds
to buy beepers, to buy a mobile phone, to make rent
payments, and to write checks for cash. The court of
appeals upheld his conviction as to the beepers, since
there was evidence that they were used to further his
drug activities; reversed his conviction as to the
mobile phone, since there was no evidence that mobile
phones played any role in the drug operation; and
reversed his conviction as to the rent payments and
checks, since those were merely "lifestyle" expendi-
tures. Id. at 841. Accord United States v. Torres, 53
F.3d 1129, 1139 (10th Cir.) (reversing conviction for
money laundering based on purchase of car, in
absence of evidence that the car was bought for use in
drug trafficking), cert. denied, 115 S. Ct. 2599, 116 S.
Ct. 220 (1995). In this ease, by contrast, the mort-
gage and utilities payments were not "lifestyle" or
personal expenditures; they facilitated the business
through which petitioner and her husband conducted
their fraudulent scheme.
In United States v. Heaps, 39 F.3d 479 (4th Cir.
1994), the defendant provided drugs to friends without

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requiring advance payment the friends wired money
orders to the defendant after they resold the drugs;
and the defendant then had the money orders cashed
and the cash placed in a box. The government argued
in part that the transfer of the money orders
"promoted" the unlawful activity by "complet[ing] the
antecedent drug transaction." Id. at 485. The court
of appeals rejected that theory, explaining that,
"[w]ere the payment for drugs itself held to be a
transaction that promoted the unlawful activity of
that same transaction virtually every sale of drugs
would be an automatic money laundering violation as
soon as money changed hands." Ibid. (emphasis
omitted). In the instant case, unlike Heaps, the
government's theory was not that the rent and
utilities payments completed an antecedent trans-
action, but that they promoted future illicit activity
by supporting the business used to carry on the
fraudulent scheme. The decision below is therefore
consistent with the proposition, endorsed in Heaps,
that money laundering is "a separate crime from the
underlying offense" (see Pet. 11).
Petitioner errs in suggesting (Pet. 12) that the
court in this case gave a broader meaning to "pro-
mote" than was placed on that term by the courts in
United States. v. Piervinanzi, 23 F.3d 670 (2d Cir.),
cert. denied, 115 S. Ct. 259, 267 (1994), United States
v. Cavalier, 17 F.3d 90 (5th Cir. 1994), United States
v. Paramo, 998 F.2d 1212 (3d Cir. 1993), cert. denied,
114 S. Ct. 1076 (1994), and United States v. Montoya,
945 F.2d 1068 (9th Cir. 1991). Those cases indicate
that the government can satisfy the "promote" ele-
ment of Section 1956(a)(2) without establishing that
the laundering activity would further the commission
of subsequent crimes.  See, e.g., United States v.

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Piervinanzi, 23 F.3d at 681 (discussing Cavalier,
Paramo, and Montoya). None of those decisions
conflicts with the holding here (Pet. App. 12a), that
"plowing the proceeds of the mail fraud back into the
business," thus facilitating the commission of more
crimes, satisfies the "promote" element.
b. Nor was the evidence insufficient to show that
the funds involved in the pertinent transactions were
"proceeds" or "criminally derived property." As the
court of appeals pointed out, the government estab-
lished the criminal derivation of the funds by show-
ing the date and amount of petitioner's deposits of
fraudulently obtained Medicaid checks in the Sovran
account, any intervening transactions, and the date
and amount of the charged withdrawals. Pet. App.
12a.
 Petitioner argues that such proof is insufficient
because not all the funds in the Sovran account at the
time of the withdrawals had a criminal source; some
were derived from legitimate activity. The courts of
appeals have held, however, that when the funds
involved in a financial transaction for money launder-
ing are drawn from a source in which is commingled
lawfully acquired and unlawfully acquired money, the
government need not specifically trace the funds to
the illegal activity. United States v. Moore, 27 F.3d
969, 976-977 (4th Cir.), cert. denied, 115 S. Ct. 459
(1994); United States v. Johnson, 971 F.2d at 570;
United States v. Jackson, 935 F.2d at 840.
As the Fourth Circuit explained in Moore,
"[m]oney is fungible, and when funds obtained from
unlawful activity have been combined with funds from
lawful activity into a single asset, the illicitly-
acquired funds and the legitimately-acquired funds
(or the respective portions of the property purchased

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with each) cannot be distinguished from each other."
27 F.3d at 976-977. As a result, "it may be presumed
in such circumstances * * * that the transacted
funds, at least up to the full amount originally derived
from crime, were the proceeds of the criminal activity
or derived from that activity." Id. at 977. A contrary
interpretation "would allow individuals to avoid
prosecution simply by commingling legitimate funds
with proceeds of crime," thereby "defeat[ing] the very
purpose of the money-laundering statutes." United
States v. Johnson, 971 F.2d at 570.
Decisions of other courts of appeals (see Pet. 13)
are not to the contrary. In United States v. Smith, 46
F.3d 1223, 1236 (1st Cir.), cert. denied, 116 S. Ct. 176
(1995), the court observed that the government was
able to trace the funds used in a financial transaction
to a criminal act, which was held sufficient to support
the money laundering conviction. That case, how-
ever, did not address a situation like this one, in
which the account from which the funds were drawn
contained commingled lawfully acquired and un-
lawfully acquired funds. United States v. Dobbs, 63
F.3d 391 (5th Cir. 1995), also did not involve such
a situation. Although the money laundering con-
victions in that case were reversed because there was
insufficient evidence that the financial transactions
were intended to conceal the criminal source of the
funds, the court there observed that "[t]he purpose of
the money laundering statute is to reach commercial
transactions intended (at least in part) to disguise the
relationship of the item purchased with the person
providing the proceeds and that the proceeds used to
make the purchase were obtained from illegal
activities."  Id. at 397. United States v. Banco
Cafetero Panama, 797 F.2d 1154 (2d Cir. 1986), did not

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involve the money laundering statute; that case
concerned the government's effort to forfeit funds as
proceeds traceable to prohibited narcotics trans-
actions. The court held there that the government
should have a "lenient burden of proof" in com-
mingling cases, and observed that "few [commingling]
cases will present facts that neatly match untainted
deposits with withdrawals." Id. at 1160. The court
concluded that the forfeiture statute applies to any
"credit balance reflecting the cumulative results of
deposits into and withdrawals from an account into
which were deposited proceeds from drug sales." Id.
at 1159.

        CONCLUSION

The petition for a writ of certiorari should be
denied.
Respectfully submitted.

DREW S. DAYS, III
Solicitor General

JOHN C. KEENEY
Acting Assistant Attorney
General

JOEL M. GERSHOWITZ
Attorney

JANUARY 1996

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