our st case which is united states versus robert decker and mr co sell drug transactions which under well settled law clearly would not be subject to prosecution for conspiracy to distribute drugs for conspiracy to distribute drugs or conspiracy to launder drug proceeds make a seller like dekker subject to prosecution for these two conspiracy offenses simply because he sold the drugs on the dark web marketplace i mean that is basically the issue but not quite because this is not a purely sufficiency argument right it's a rule eleven issue it's whether the judge there was a factual conspiracies the two conspiracies i just described then the adjudication of guilt should not have been entered in the case should be remastered what standard of review do you think we should employ judge has an independent duty to do that so well ordinarily plain error would apply no objection already the th circuit case that is in our briefs made a modified analysis saying we're not going to apply domingo's bonito as would the defendant have pled guilty and the reason ordinarily of course i might be fighting  realize that the principles i just opened with in my st sentence here were well settled principles of law that is to say that stuff starting with money laundering it's well settled that money laundering must involve the proceeds of a completed offense that's been the law on the circuit for decades at this point and the answer here was this the proceeds of was the was the transfer of bitcoins from the web to decker which i understand to be the government's theory of where the money laundering is happening here the proceeds this was simply the conclusion of the drug transaction as evidence by the fact that again as the government points out the web marketplace took a commission of the dollar amount before transferring the money to doctor so what we have here is in the words of justice  scalia in the sentosa opinion confederates sharing the proceeds of their crime but that's part of the crime that's not money laundering so and then now turning to the drug distribution the answer there must also muto in your i guess your position is based on the factual proffer which is what we have that there was nothing beyond that because obviously in in certain cases you can launder proceeds of a certain type of unlawful activity right the fact that the proceeds come from a drug transaction doesn't mean that the immune from a money laundering charge in the right case you can launder the proceeds of an unlawful activity so your point is that there is nothing in or there was nothing in the factual pro that explained how or why there was any laundering at all and staying yes and staying with your observation on drug proceeds as the p s i i pointed out this web marketplace dealt not just in drugs but in drug paraphernalia which i understand to be legal activity drug paraphernalia is not could be pipes could be illegal activity stolen goods  guns and even if stolen goods and guns are illegal typically in a conspiracy one requires a kneading of the minds as to the unlawful purpose of the activity of the agreement of the conspiracy so here there is no evidence in the factual proffer and for that matter in the p s i i that this web marketplace as it was giving commissions say to the to mr decker thought that these were commissions for drug sales for drug paraphernalia for guns there was no discussion there's no identification of a of a meeting of conversations of anything like that which by the way i if you read the case law including say pointis hurtado there this court faced a similar issue was there enough evidence to support conspiracy and what the court did it said well let's look at the truck that the defendant was driving it had one million two hundred thousand dollars in it we know those trucks were taking kilos of cocaine to mexico we found a note in the truck saying call right i forget the name now and joe was identified as the head of the drug organization this is fact finding these are facts these are facts that judges look at and if i might raise the stakes a little bit for this case because i think it is an important case what is striking here is the government is trying to get a conviction without facts counsel  are saying that the government is trying to get a conviction without facts but wouldn't it be incumbent upon you or your predecessors representing your cod to bring this to the attention of the district court wouldn't it only a fire that you say something's missing here rather than saying gosh judge everything's great we have no problem with if there is in fact a factual basis this court conviction because isn't that what happened at the district for purposes of this answer i will assume that truck counsel should be standing up and saying even more eloquently than i just did the problem with but he said he or she did not under that's right but under even plain air review one can begin thinking why did the government charge this case as a conspiracy if one looks at the p s i i i think it's a paragraph fifty four dollars p s i recognizes that it has that the government has virtually a seized virtually no drugs in this case so it's drug quantity attribution is based probably just on e mail exchanges it does it cannot prove the completion of the transaction so if the case goes back because there was insufficient factual basis for a conspiracy mr decker could have a significantly reduced sentence why do i bring that up in answer to your question because it obviously not review that's it decker did did mr decker object to now did he object to the quantities that were set out in presents report no in fact the the dark web is is i understand it desi allow for this kind of information to be hid where are different people who use software or is it whatever to to hide their identity to hide the transactions and what they're really about so that government and other people cannot identify not only who is involved but what is going on in the in the payment of bitcoin goes back to the signing process where it's clearly washed just by the participants themselves is am i missing something no judge that's an excellent summary of the of the p s i i in this if your client had objected to the  findings objected to the fact that there's a factual basis would in the government be free to put on witnesses then to go perhaps to go through all this it occurred to me as a answered your question that a lot of what you were  that they and we don't we don't know that yeah but in this most morning that that's not in the record here but we have no way of knowing it because your client basically invited the district judge to do something that you now claim is an error to accept the basis to convict him and then to senate so he made a bargain that now he doesn't want to participate in a sekret i do not agree with the word invited because that's a loaded term and judge as i believe that district judges have an independent duty under rule eleven to decide whether or not there's a factual basis and yes it's extremely helpful if defense counsel stands up and says there's no factual basis here nevertheless the judge has an ongoing duty i mean this is serious business judy caging someone guilty and sentencing them to jail is very serious so on that one judge i i think we have to moderates are  i do not see a defendant pleading guilty as inviting a judge to make a factual basis determine it don't we actually have a process which is available to your client to challenge whether or not his attorney gave him sufficient representation that otherwise would have he wouldn't have pled guilty but for what the attorney did don't we have a process already available for that there are twenty dollars to fifty five dollars for seedings that when and what you're really in effect asking us to do is to go ahead and deal with that now based on some arguments that frankly we don't have the benefit of the counsel representing the defendant testimony or evidence about what actually occurred that we would have in a twenty to fifty five judge plane air as i'm sure you're well aware when defense counsel doesn't object this court applies plan air and so the question is have we demonstrated in our briefs that that was error that it was error under well settled law which that's where i was starting today that it affected the substantial rights of the defendant i understand playing there like it but i just was trying to explain in this particular setting judge eleven final question before you say that you said the government couldn't prove any sales but i'm not sure that's correct they probably couldn't prove any sales for purposes of the conspiracy conviction but the indictment alleges sales purportedly made by mr decker to agents that's i read so you could that's exactly what it could certainly have searched the government certainly has independent proof of disparate sales on different days of certain narcotics yes but when it d point i was trying to make was that when it came to sentencing mr decker was sentenced based on a chart that's in the p s i i of a considerable greater quantity no i get i get that point i understand that point but you aren't you've saved your time for a bottle thank you very much excuse me your honour's i have a terrible cough and i will try not to interfere too much andrea hofmann on behalf of the united states your honour's i would like to start with the court's question about the standard of the i think it's well settled now from this my  are my posing counsels discussion that the standard of you would be playing air however this court could in fact start one step farther back this defendant had four different six distinct substantial opportunities to object to the factual  over the proffer they just said there's a proffer in this case everybody agrees to the proffer and they moved on which is permissible but nobody really discussed the proffer at the change of plea hearing that is correct your honor but all parties did but there is nothing in this proffer st of all it doesn't identify a single person known or unknown that mr decker conspired with nothing it says that the dark web is used by people to conspire but that's not mr decker but it doesn't say on between you know january of two thousand and fifteen and december and sixteen mr decker conspired with unknown persons there unknown to us because they're working on the dark web to do x y and z that language is completely missing from the proffer that's  not for purposes of the result in the case but in my personal opinion i speak for myself and not for my two colleagues that proffer is insufficient on both charges you could have charged substantive offenses and you could have easily prove those up and then try to prove larger drug amounts it at sentencing but you i don't mean you personally the government charged to conspiracy charges and so you've got to prove that he agreed at least one other person to do each of the charged offenses the drug trafficking and the money laundering tell me where in the proffer i can find that for either offense it comes together in a set of stages so let me address all the stages the st one is the proffer does a status that this defendant mr decker was a vendor on the dark web agreed so then we have that the factual proffer states plainly in paragraph one that the dark web has vendors which would be mr decker and administrators working together conspiring together to distribute illegal drugs and to commit a complex series of bit coin transactions which would be the transactions that judge kugler was referencing a moment ago where the members the confederates says opposing counsel called them were washing their own the funds for all of these transactions this complex series bitcoin transactions for example your honor is a short handed description of the numerous paragraphs in the p s i i of the tumbling that was used to launder the monies in the course of this t conspiracy as well as many other conspiracies that are operating on the dark web and the tumbling to use the more complex description of it is the combining of multiple funds from multiple transactions because they're digital bits not actual monies blending them together dispersing them blending them together dispersing them it's an ongoing series of activities before the monies as the monies enter the system for the purchase of the narcotics to the payments to the administrators who are running the operation and then to the trafficker who is going to ship the narcotics so there's a a washing and a blending and an excuse me a coming together in a part of these transactions is that where it is if you conspiring with the same people for both conspiracy offenses yes how do we know that because it's set because it's in the same because it's the same people who are doing the same kind of role that's the blending easily described with respect to the money laundering with respect to the drug trafficking he sis the point of the dark web is to create an anonymous untraceable system and it's the a ministers who created built maintain operate and are paid for that system of communications and transfers of both information and moneys to anybody on the dark web anybody who sells on the dark web as a matter of law engages in a conspiracy i don't think you need to go there your hon that's that's the case right it because they're using the system you just described and they necessarily are dealing with these administrators so not only are you engaged in the substantive offense but you are also necessarily engage in a conspiracy by using the system that these administrators further in this case yes and particularly so because these administrators set up websites that had categorizations of the illegal conduct so they were had a knowing activity they do use contract terms they made an offer here i'm going to devise an easily usable illegal operation come come come play on my platform and decker did it to the tune of nearly eleven thousand trying to actions and almost twenty thousand pills in the course of the dates of the conspiracy so the categorizations the mechanism by which these administrator set up this we demonstrated their knowledge and intent that persons like dekker would join them in using their platform to ga dealing drugs one of my colleagues i categorizations on the dark web system there are categories for drugs weapons malware illegal operations one of my colleagues gave me an analogy as i was prepping for this that i think is actually quite apt grand cayman banks do do legal work do a substantial amount of moving up money and concealing it from people's investigative tasks that does not make the operators of the grand cayman bank necessarily a conspiracy in some operation but if the operators of that bank set out lines outside the front of their bank that said legal transactions here money laundering here drug trafficking here identity theft over there that would make them knowing participants in the kind movement of the kinds of monies because they're aware of the character a source of those moneys by creating these categories and allowing the open sale of named control of schedule two substances on their website these administrators are demonstrating their ongoing intent and intent that decker excepted and shared with him by using their platform here's here's why i have a concern at least at the at the initial level the factual proffer in this case spanned a long time relatively long time as a matter of fact it indicates that he conducted thousands of transactions duras this period of time was he conspiring with the same funds do all three administrators agree to the same unlawful plan that's the problem in this case because none of that is identified at least at the st level i'm not talking about the result of the case because you've got i think plain error standard applies but those sorts of things matter if you had one person in charge of this dark web that ok i can see your argument but as you described it is such a big thing it's not run by one person and if they're compartmentalizing they're probably a lot of people compartmentalizing and i'm sure these people don't have you know ten year contracts on the web i will serve as your administrator for ten years i got a guaranteed salary at this commission rate and whatever whatever and if you're doing drugs one day you might be doing malware the next day and so when he sells in october he might be dealing with me and when he sells in december he might be dealing with judge pryor and when he sells in january he might be dealing with judge kugler and so unless that agreement is the same for all three of us with mr decker there's a problem but it would be the same your honor because when you're selling on why how do i it could be the same but how do you know that again forget about the result in the case at the front end isn't it your obligation to put enough stuff in a factual proffer to not have someone ask these sorts of questions yes right that the answer to that question absolutely are i guess i'm not going to say any more but in my opinion this factual proffer was deficient in a number of ways because of the way the case was charged you could have charged the government could have charged he's made these three sales you don't need a conspirator all you need is him selling and you've got these three sales and then you could have tried to show a drug amount at sentencing through reasonable foreseeability and all sorts of other concepts same thing with the money laundering for the sales but that's not the way the case was charged so i said my piece without question are i think it could have been charged that way and we wouldn't be here had it and charged that way i don't want to belabor the point either but i would like to answer it just briefly for one second and then i'll move on to any other issues other judges have why i don't think i think why i think your factual concern about three different persons being administrators is a red herring for you your honor is that at all points in time the web's the dark webs that this defendant is operating through is the grand cayman example it is a web created specifically to create anonymity specific categories for illegal conduct which matters in this case only as to the drug trafficking because i don't care for the purposes of this plea and nor does  court need to whether there's also malware or firearms or whatever going on this web was created with categories for illegal drug trafficking there is open pharmaceutical sailed drug transactions advertised we know that through the tomorrow in a stranger is running it the next day they're all someone owns and controls that web someone's getting the profit someone's paying for it remember it's a computer system ultimately doing a lot of the trans the scut work and that has to be paid for maintained electrical systems monitored so these people are working for an entity that is deliberate or they are the entity that is deliberately set out creating a platform to sell illegal drugs if the commit means they have the impression structure changes over time that mean that the conspiracy changes over time no it means the payment scale that the percentage of the cut of the proceeds change that doesn't change the character of the underlying illa galloway of us again going back to an earlier question i said i was going to shut up and i haven't i'm sorry everybody who engages in this sort of a transaction on the dark web is as a matter of law engaged in a conspiracy of at least one sort or another everyone who engages in this is what we if what you mean by this kind of transaction in a long haul drug transaction through that is web openly advertised and set up by the web people to be that act they can only be that through dark web if that way you charge the case but i'm saying is you so long as all of those factors are concerned anybody who engages as the administrators did who steps in the role of the administrators as they did in this case would be a conspirator with mr decker if the silicate it is a final distribution of those you think all those people are fungible necessarily fungible i think that anybody who maintains a system that is sole purpose is the illegality of drugs in this case it may have other purposes in other places then they're all sharing the intent of the original person who created it or a subsequent person who comes behind them and i think that's no different th i mean all of the drugs grown in colombia aren't grown by the same four same person this fundable people who work the field the transportation chain there's different people who slept the drugs from the jungle to the water there's different people who moved from the water on that doesn't make every person who did that not a member of that conspiracy weems not human i'd like you to address the money laundering conspiracy issue before you sit down and specifically about the timing we say that money laundering has to occur after a completed offense for example in united states v nolan but here as i understand it the tumbling occurs before the proceeds come out to mr decker on the other and as i write it happens it in multiple stages the tumbling happens when the sell when the buyer puts the money into the system the tumbling happens in the middle when the administrators moving it around to get his cut and the tumbling happens in moving proceeds towards mr decker and then there's financial transactions to move the money out of being bitcoin into being financial funds and so if the pattern of that entire span creates the conspiracy of money laundering but if it gets turned into currency in the end and that's fine a crime is completed that's when you can deter that's when the the money laundering is completed yes your honor well that's when the transaction is completed as well and so the proceeds of the transaction come out after the money laundering occurs that the the crime would be completed when the bitcoin makes it to mr decker's account of when the funds are removed and turned back into actual usable currency would be the next stage of the money laundering your honor that is the money laundering occur at the same time as the transaction action i can't speak to whether i can't say for the for certainty for the court whether mr decker ships the transaction the drugs at hand at the point that the bitcoin hit history of his account or when he turned it into currency i there is sabbath of the timing of that but what i can tell you is that mr bit dekker agreed that that he did this all the way through that it was not insurance is not a situation where you have proceeds from a legal activity which is then money laundered which is then laundered in a subsequent transaction but you agree with that i'm sorry could you say that again your i didn't get so this is not a situation where you have unlawful activity or proceeds from that and then those proceeds in a subsequent transaction  laundered that's not this case right i'm not sure that i fully agree with you i think there are more complex ways that it could happen but the trick the conversion of the money from the bit coined transactions into currency i  during is a it because if you change currency from euro's to dollars that's longer only in this circumstance of your own or do i think it's a stage of the of it because of the tumbling and the concealment and the inability to trace that funds backward and then he to be able to use them he has to convert them at some point into currency uro's could be used in any fashion the bitcoin can't be used to your precious star so we get all this information about tumbling from the record in the factual proffer it talks about it says specifically and i quote through a series that the laundering proceeds occurred through a series of complex bitcoin transactions designed to conceal the nature source and control of the funds so the factual process it has a  factual proffer has a shot shorthand description of the tumbling that is described in greater detail in the p s i i your honor and creates i comes to lead except that lee i do understand that your honor but what is described in greater depth is referenced here in the factual proffer and mr decker is judge cooler acknowledge agreed that that was sufficient to describe the nature of what he was doing and in that category that may get you past the finish line in this case but it doesn't eliminate at least my personal concern that this proffer had problems left and right everything you describing here could have been explained in this proffer none of it was there could be a different p you you acknowledge that this would be a whole lot easier for everybody to deal with if your attorneys had done a better job of developing the factual proffer to begin with diamond and then the diamonds the the person puts them into a big bucket of diamonds they already have and eventually convert those diamonds to cash that they then can spend on their groceries that's what you're saying occurred basically yes  ok if the courts i see on well over my time if the court has no other questions i would ask that you affirm this conviction on all of the grounds that we didn't quite get to but the plain or standard an exception the invited error questions and i thank you are right thank you very much i would going to focus on what judge jordan referred to as the result and i'm going to pick up on the last question that judge cooper asked which is before doing that if this court agrees that this factual proffer simply did not establish conspiracies then and if as the discussion went we agree that perhaps under substantive crimes  mr decker could be prosecuted the question then becomes is the difference between those two prosecutions significant enough in terms of the plane air substantial rights analysis for this court to say we're sending this case back and if i may judge who just point pick up on your last point which is let's say diamonds to currency is a is in is money laundering trying to study to be saying and asking in effect if so i was asking if that's what they were kind of mean right and i think the answer was yes that's sort of what we're saying but in that diamonds to currency transaction only mr decker who's being paid in diamonds not the weapon is involved in converting his diamonds to currency so that might be a substantive offense and as judge jordan hinted there could be some good arguments that it isn't uro's to dollars as that money laundering diamonds the currency is that money laundering but the point is that would be a substantive offense completely different from what we've been hearing from the government today so in terms of the result for money laundering we're looking at a brand new slate and a brand new legal issue in a brand new set of facts and the same i would say is also true for the drug count i acknowledge judge jordan as you pointed out that the indictment identified specific transactions with law enforcement agents but those transactions are a small fraction of what my client has been held accountable for and has been sentenced for if this court says yes prosecute this as it should be as a substantive drug trafficking offense then my client has an opportunity to put on a defense and to say well you're saying your client had an opportunity to put on a defense your client chose not to so i understand what you're saying but let me make sure i get go back to the diamond that you brought up your problem with the scenario would be that there was not a coconspirator involved in converting the diamonds to cash that's right i'm certainly not one that's named in this case but let's suppose as oftentimes there is in the bitcoin market there is someone who is involved in the conversion of the bitcoins to cash in someone that is is involved in purchasing the diamond from a known drug dealer for  small amount of money relative to the to the value if they were selling them on the side you know diamond market in new york knowing that that that was a of the of criminal activity and that's why they were buying them so cheap they were running the risk of being prosecuted themselves and they were giving cash to that to the drug dealer wouldn't they be a coconspirator then  would st let's acknowledge that's a different conspiracy than the way but i got it so now the question is i don't know i was i don't know whether the person doing the conversion did or did not and the government probably does not but i said long the suspect if i may finish they did not know there's no reason for them to know what i but my point is isn't that something that should have been addressed in the district courts of the district court would have had the opportunity to make those kind of decisions and if the district court felt like there was not sufficient basis the air is i think honestly from the discussion today in front of in this court it's pretty plain one looks at the factual proffer i don't have the exact words that judge jordan used to describe it but it's it's not a close call there's just no conspirator identified and you and i as i understand it have just agreed that if there were a conspirator for that final diamonds i think it's not even in the factual proffer at all that's clear so these these are the ingredients of a clear error and given the consequence on my client i would ask this court to remain would your client just and i know you have your time but about who the this other coconspirator is or the advantage the of the of the coconspirators on the on the dark web are you saying there's evidence or any kind of anything that would demonstrate your client would not have pled guilty to points  st the th circuit case that's in our brief says that question doesn't get asked but i will answer it it's not that it's not the right way to approach this particular issue if my client had been told turns out for money laundering just pursuing our conversation the only basis for money laundering would be you're converting diamonds to cash bitcoins to currency and there's nothing in these facts very much miss off and thank you