Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-07-03021/USCOURTS-caDC-07-03021-0/pdf.json

Parties Involved:
Kesetbrhan M. Keleta
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 4, 2008 Decided January 23, 2009

No. 07-3021

UNITED STATES OF AMERICA,

APPELLEE

v.

KESETBRHAN M. KELETA,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 05cr00371-01)

Tony Axam Jr., Assistant Federal Public Defender, argued

the cause for appellant. With him on the briefs was A. J.

Kramer, Federal Public Defender.

Leslie Ann Gerardo, Assistant U.S. Attorney, argued the

cause for appellee. With her on the brief were Jeffrey A. Taylor,

U.S. Attorney, and Roy W. McLeese III, Florence Pan, and Jay

I. Bratt, Assistant U.S. Attorneys.

Before: SENTELLE, Chief Judge, and HENDERSON, Circuit

Judge, and WILLIAMS, Senior Circuit Judge

Opinion for the Court filed by Chief Judge SENTELLE.

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Dissenting opinion filed by Senior Judge WILLIAMS.

SENTELLE, Chief Judge: Kesetbrhan M. Keleta was

convicted of operating a money-transmitting business without a

license, in violation of 18 U.S.C. § 1960. He was sentenced

pursuant to United States Sentencing Guidelines §§ 2S1.3 and

2B1.1. At sentencing, the district court denied reduction of

Keleta’s sentence in accordance with § 2S1.3(b)(3), a “safe

harbor” provision permitting a sentence reduction when

specified conditions are met. On appeal he argues that his

sentence pursuant to Sentencing Guidelines §§ 2S1.3 and 2B1.1

was unreasonable, that the district court erred in denying him

safe harbor, and that his counsel was ineffective for failing to

object to alleged shifts in burdens of proof and for failing to

present safe harbor evidence. 

Because we conclude that Keleta’s sentence was reasonable,

that there was no error in denying him safe harbor, and that his

attorney was not ineffective, we affirm the judgment of the

district court.

Background

The Embassy of Eritrea established a money-transmitting

business in Washington, D.C., in the mid-1990s to enable

Eritrean citizens living in the United States to send money back

to Eritrea. In August 2000, the business was taken over by a

company called “Himbol Financial Services.” Himbol enabled

customers to send money not only to Eritrea but also to Eritrean

nationals in other parts of the world. In 2001 Himbol hired the

appellant, Kesetbrhan M. Keleta, to manage the business. One

of his duties was to obtain a license for the money-transfer

business. He filed a license application, which was pending

between May 2001 and February 2002. Keleta left Himbol’s

employ at the end of 2002. In October 2005, he was charged

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with two counts of violating 18 U.S.C. § 1960, which prohibits

conducting, controlling, managing, supervising, or directing an

unlicensed money-transmitting business. The first count related

to conduct occurring between March 2001 and October 25,

2001. Reflecting amendment of the statute on October 26, 2001,

the second count related to conduct occurring between October

26, 2001, and September 2002. Following a jury trial, Keleta

was convicted on both counts.

The district court sentenced Keleta pursuant to § 2S1.3

(a)(2) of the United States Sentencing Guidelines (“USSG” or

“Guidelines”). That section provides for a base offense level of

6 plus additional levels “corresponding to the value of the

funds.” Those additional levels are to be determined using the

table in § 2B1.1 of the Guidelines, with increased levels

depending upon the “loss” incurred. The government offered

evidence that, during the time of alleged illegal conduct, Keleta

had sent or authorized over $10 million in wire transfers. This

amount under § 2B1.1 resulted in an enhancement of 20 levels,

bringing Keleta’s base offense level to 26. Keleta argued to the

district court that there was no basis for using the table in §

2B1.1 because there was no “loss” in his case. The district court

disagreed, stating that loss to a victim was not an issue in

punishing violations of 18 U.S.C. § 1960, which were “more

akin to money laundering.” The district court noted that the

Guidelines range at this point was 63 to 78 months.

The court also considered whether USSG § 2S1.3 (b)(3), the

so-called “safe harbor” provision, applied. Under that provision,

if the defendant did not act with reckless disregard of the source

of the funds, the funds were the proceeds of lawful activity, and

the funds were to be used for a lawful purpose, then the base

offense level was to be decreased back to 6. The court found,

however, that Keleta did not meet any of these criteria and

therefore denied him a sentence reduction under the “safe

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harbor” provision.

The court gave Keleta a 3-level reduction for acceptance of

responsibility as well as an additional 2-level reduction for

mitigating circumstances, including Keleta’s belief that he

would receive some protection from the Eritrean Embassy for

his involvement with Himbol, as well as Keleta’s belief that he

thought he was helping his country and those who lived there.

His base offense level was therefore 21, with a corresponding

sentencing range of 37 to 46 months. The court then subtracted

six months, for Keleta’s status as a deportable alien, from the

bottom of the range. His final sentence was therefore 31

months.

Discussion

Keleta now appeals his sentence, arguing that it was

unreasonable, that the district court improperly denied him the

benefit of the safe harbor provision, and that his lawyer at

sentencing was ineffective.

Unreasonable sentence

Keleta was convicted of violating 18 U.S.C. §

1960(b)(1)(A) and (B). In determining Keleta’s base offense

level for sentencing, the district court applied USSG §

2S1.3(a)(2). That section calls for a base offense level of “6

plus the number of offense levels from the table in § 2B1.1 . . .

corresponding to the value of the funds.” Because there was

testimony presented at trial that the value of the funds

transferred by Keleta was approximately $10 million, Keleta’s

offense level under the table in § 2B1.1(b)(1) was increased by

20 points. USSG § 2B1.1(b)(1)(K). Keleta objected to any

increase under § 2B1.1(b)(1), noting that that section

specifically refers to increases in the offense level for specific

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amounts of “loss” and there was no loss involved in the funds he

had transferred. At the sentencing colloquy the district court

rejected Keleta’s argument, stating:

Loss to a victim is not a requirement. Loss is clearly

not an issue in these 1960 transaction[s]. They are

more akin to money laundering. And the table in

[§]2B1 is used really only to indicate the levels to be

increased by the funds.

Keleta’s primary focus on this appeal is the district court’s

“akin to money laundering” statement. That statement shows,

he argues, that the court’s rationale for using the value of the

transferred funds to increase his sentence was to equate his

crime to money laundering. But, he asserts, money laundering

was not a part of the nature and circumstances of his crime,

contending that money laundering is “a specific intent crime”

and the subsections of 18 U.S.C. § 1960 under which he was

convicted have a much narrower focus than general money

laundering statutes. He asserts that those subsections were

enacted to punish businesses that fail to register, not to punish

the actual transfer of money. He further asserts that in 2001

Congress amended 18 U.S.C. § 1960 to add a provision for

punishing money laundering, subsection (b)(1)(C), and that this

addition indicates that Congress did not intend to use the

licensing and registration provisions of the subsections he was

convicted under–i.e., (b)(1)(A) and (b)(1)(B)–to punish

defendants for the value of the funds transferred. 

Given his individual facts and circumstances, Keleta argues

that his sentence was not reasonable. He notes that in United

States v. Booker, 543 U.S. 220 (2005), the Supreme Court

directed sentencing courts to consider the factors set forth in 18

U.S.C. § 3553(a) in addition to any applicable Guidelines, and

that among those factors are the nature and circumstances of the

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offense. Keleta claims that here the district court explicitly

adopted the rationale that the nature and circumstances of his

offense involved money laundering and the court thus

incorporated the value of the funds from the table in § 2B1.1 in

determining his base offense level. He asserts that the value of

the funds he transferred had no relationship to the individual

nature and circumstances of his crime of operating an unlicensed

money-transmitting business. Consequently, he claims that any

increase to his sentence based upon the value of the transferred

funds was unreasonable.

Responding to Keleta’s claim, the government contends that

the district court in fact did not increase his sentence because of

a presumption of money laundering. The government asserts

that the district court’s “akin to money laundering” remark was

not a factual finding but rather was made in response to an

argument raised by Keleta, and was only intended to explain

why the table in § 2B1.1 is incorporated into § 2S1.3 when there

is no loss to a victim. The government further argues that §

2S1.3 establishes a sentencing scheme for unlicensed money

transmission which does not require proof that the monies

involved in the offense be classified as laundered funds. The

government finally contends that the district court did not

assume that Keleta had engaged in money laundering, and that

in fact the court discussed at sentencing the lack of evidence that

Keleta was involved in funding terrorism and other illegal

enterprises.

Regardless of the district court’s use of the term “akin to

money laundering,” its calculation of Keleta’s base offense level

was correct. In Gall v. United States, 128 S.Ct. 586, 596 (2007),

the Supreme Court explained that “a district court should begin

all sentencing proceedings by correctly calculating the

applicable Guidelines range.” As the government notes, USSG

§ 2S1.3, under which Keleta was sentenced, prescribes the very

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methodology employed here by the district court: the

commentary to that section references its application to

violations of 18 U.S.C. § 1960(b)(1)(A) and (B), under which

Keleta was convicted. The base offense level is to be calculated

under § 2S1.3(a)(2) by adding “the number of offense levels

from the table in § 2B1.1 . . . corresponding to the value of the

funds.” In the Application Notes to § 2S1.3, “value of the

funds” is defined as “the amount of the funds involved in the

structuring or reporting conduct. The relevant statutes require

monetary reporting without regard to whether the funds were

lawfully or unlawfully obtained.” In U.S. v. Abdullahi, 520 F.3d

890 (8th Cir. 2008), the defendant was also sentenced for, inter

alia, operating an unlicensed money transmitting business in

violation of 18 U.S.C. § 1960(b)(1)(A) and (B). The Eighth

Circuit recited the sentencing scheme established by §

2S1.3(a)(2), and then noted that the defendant’s base offense

level was increased, as here, by the amount of funds involved in

the unlicensed money transmitting business. Id. at 896 n.7. We

agree with the approach of the Eighth Circuit. The sentencing

scheme established by § 2S1.3(a)(2) does not require proof that

the monies involved in the offense were themselves the product

of illegal activity, were being transmitted for illegal means, or

could be classified as laundered funds. We conclude that the

district court correctly applied the Guidelines. “[A] sentence

within a properly calculated Guidelines range is entitled to a

rebuttable presumption of reasonableness.” United States v.

Dorcely, 454 F.3d 366, 376 (D.C. Cir. 2006). Keleta has not

met his burden of rebutting the presumption of reasonableness

in the district court’s sentence.

Safe harbor provision

As noted above, during sentencing Keleta was sentenced

pursuant to USSG § 2S1.3(a)(2), which provides for a base level

of 6 plus the appropriate enhancement from the table in § 2B1.1.

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Also provided for in § 2S1.3 is subsection (b)(3), the so-called

“safe harbor” provision, which states the following:

If (A) subsection (a)(2) applies and subsections (b)(1)

and (b)(2) do not apply; (B) the defendant did not act

with reckless disregard of the source of the funds; (C)

the funds were the proceeds of lawful activity; and (D)

the funds were to be used for a lawful purpose,

decrease the offense level to level 6.

The safe harbor provision essentially permits the district

court to disregard the value of the funds involved in the offense

and return the offense level to 6 when specified circumstances

exist. In order for Keleta to benefit from the safe harbor

provision, he was required to prove that he did not act with

reckless disregard of the source of the funds being transferred,

that the funds were the proceeds of lawful activity, and that the

funds were to be used for a lawful purpose. Keleta argues that

the district court erred in denying him safe harbor when it found

the safe harbor provision inapplicable because he failed to prove

that he met the provision’s requisites. In doing so Keleta claims

that the court operated under a presumption that the funds he

transferred were related to money laundering, and he claims that

because neither the crime he was convicted of nor the trial

evidence supported a presumption that the funds were related to

an unlawful source, activity, or purpose, the burden was on the

government at sentencing to prove criminal acts that would

support this presumption. He consequently argues that the

district court erred when it relieved the government of this

burden and instead shifted it to him. We disagree. 

As Keleta admits, under United States v. Burke, 888 F.2d

862, 869 n.10 (D.C. Cir. 1989), the government bears the burden

of proof in seeking sentencing enhancements under the

Guidelines, but the defendant bears the burden in seeking

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sentencing reductions. The safe harbor provision of USSG §

2S1.3 provides a possible sentencing reduction, and therefore it

is the defendant’s burden to prove that he is entitled to that

reduction. In United States v. Abdi, 342 F.3d 313 (4th Cir.

2003), the defendants also claimed that they were entitled to the

benefit of the reduction of the safe harbor provision. The Fourth

Circuit succinctly stated that “in order to benefit from the safe

harbor provision, the defendants must carry the burden of

showing that the funds were derived from lawful activity and

were to be used for lawful purposes.” Id. at 317. We agree. It

was Keleta’s burden to prove that he was entitled to the

sentencing reduction of the safe harbor provision, and the

district court did not err in failing to shift the burden to the

government to prove otherwise.

Ineffective assistance of counsel

Keleta argues that his attorney’s representation of him at

sentencing was ineffective. Under Strickland v. Washington,

466 U.S. 668, 687-88 (1984), an attorney is ineffective if, first,

his performance fell below an objective standard of

reasonableness, and, second, the deficiencies in his

representation were prejudicial to his defense. First, Keleta

argues that his counsel was ineffective for failing to object to the

shift in the burden of proof requiring him to disprove that he

laundered money, and for failing to object when the burden of

proof was shifted to him to prove that his behavior fell within

the safe harbor. He claims that if his attorney had argued that

these burdens of proof were improperly allocated, the

government would have had to present evidence in support of

the separate criminal acts implied by the Guidelines and the only

appropriate outcome would have been for the court to impose a

lower sentence. As we already discussed, the burden to prove

his eligibility for the safe harbor was in fact Keleta’s.

Consequently, Keleta’s attorney was not ineffective for failing

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to make these objections.

Second, Keleta argues that his counsel was ineffective for

failing to present evidence during sentencing to satisfy the safe

harbor provision of § 2S1.3(b)(3). He claims that there was no

strategic reason not to present such evidence, and that since he

met all of the requirements of the safe harbor provision, he

would have been given a shorter sentence had his attorney

presented such evidence. In order to show that he has met the

prejudice standard of Strickland, Keleta “must show that there

is a reasonable probability that, but for counsel’s unprofessional

errors,” his sentence would have been different. 466 U.S. at

694. Although Keleta did not raise the safe-harbor issue with

the district court, the government presented it in its sentencing

memorandum. The district court then addressed the issue during

the sentencing colloquy, discussing whether Keleta met the

criteria of § 2S1.3(b)(3). Of the four criteria listed, the court

found that Keleta could not meet three of them. The court stated

that Keleta acted with reckless disregard of the source of the

funds, and that there was no way to determine whether the funds

were the proceeds of lawful activity or were to be used for a

lawful purpose, because Himbol did not have in place a control

system to verify the nature or source of the transferred funds and

there was no information on who received the funds or the

purpose of the transfer.

Keleta argues, however, that the district court erred in

finding that he did not meet the criteria because the court used

the wrong standard in determining that he acted with reckless

disregard of the funds, controls tracking the funds were in fact

in place, the business was established by and operated through

the Embassy of Eritrea, it operated openly, and the funds were

meant to help people back in Eritrea. Because these specific

claims raised by Keleta were not presented to the district court,

we will review them only for plain error. Under that standard

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the district court’s error must be “obvious.” See United States

v. Bolla, 346 F.3d 1148, 1152-53 (D.C. Cir. 2003). After review

of the district court’s findings and consideration of Keleta’s

arguments, we do not find any obvious errors in the district

court’s determination that he failed to meet the criteria of §

2S1.3(b)(3).

We conclude that even if Keleta’s attorney had presented

evidence concerning the criteria of the safe harbor provision,

there is no “reasonable probability” that the district court would

have given Keleta a different sentence. On the record and

argument before us, we cannot conclude that Keleta’s counsel

could have offered evidence to meet the criteria of the safe

harbor provision so as to entitle Keleta to the reduction provided

by that provision. He has shown us nothing to support a

reasonable probability that the district court would have found

controls establishing lawful origin of the funds, or that the

purpose of aiding Eritrean citizens was ultimately for assisting

lawful activities of those citizens, as opposed to unlawful ones.

In short, there is no “reasonable probability” that a more

thorough and aggressive counsel could have convinced the court

to sentence any differently than it did. Keleta’s attorney was

therefore not ineffective for failing to present such evidence.

Conclusion

The judgment of the district court is affirmed.

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WILLIAMS, Senior Circuit Judge, dissenting: In 

reviewing sentences for reasonableness, one of our first tasks 

is to make sure the district court did not “improperly 

calculat[e] the Guidelines range.” Gall v. United States, 128 

S. Ct. 586, 597 (2007). Here the district court added 20 levels 

to Keleta’s base offense level, bringing it to 26, in what seems 

to me a clear misapplication of the pertinent guideline, U.S. 

Sentencing Guidelines (“USSG”) § 2S1.3(a)(2). Accordingly, 

I would reverse and remand for resentencing. 

Section 2S1.3(a)(2) states that the base offense level for a 

variety of crimes, including the offenses of conviction here 

(18 U.S.C. § 1960), shall be “6 plus the number of offense 

levels from the table in § 2B1.1 . . . corresponding to the value 

of the funds.” Application Note 1 defines the term “value of 

the funds” as “the amount of the funds involved in the 

structuring or reporting conduct.” § 2S1.3 application n.1 

(emphasis added). The conduct for which Keleta was 

convicted—managing an “unlicensed money transmitting 

business”—involves neither “structuring” nor “reporting.” 

Those offenses are covered by other statutes to which § 2S1.3 

applies. See, e.g., 31 U.S.C. §§ 5313 (reporting), 5324 

(structuring). Keleta, however, was not charged with, much 

less convicted of, failing to report financial transactions or 

structuring transactions to evade reporting requirements. As 

the term is properly understood, therefore, the “value of the 

funds” involved in his offense is zero, with a resulting base 

offense level of 6 and an advisory sentencing range of zero to 

six months (much lower than the 63–78-month range 

corresponding to offense level 26 or even Keleta’s actual 

sentence of 31 months). 

No published opinion in our circuit or elsewhere has dealt 

with the application of USSG § 2S1.3(a)(2) to § 1960. United 

States v. Abdullahi, 520 F.3d 890, 896 n.7 (8th Cir. 2008), 

applied the table to funds transmitted through an unlicensed 

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money transmitting business, but did not discuss or explain 

how such conduct could be said to involve either “structuring” 

or “reporting.” One unpublished district court opinion, United 

States v. Bariek, No. 05-150, 2005 WL 2334682, at *2 (E.D. 

Va. Sept. 23, 2005), applied the table to a licensing offense, 

reasoning that the application was correct because the 

Sentencing Commission listed § 1960 among the offenses 

addressed by § 2S1.3. Id. But this evades the question: Did 

the Commission mean for the increment based on the amount 

of funds to apply to § 1960 offenses? The Commission could 

easily have intended that such offenses be assigned a uniform 

offense level of 6; otherwise, why limit amount-based 

increases to “the funds involved in the structuring or reporting 

conduct”?

The court in Bariek also argued that “it would be illogical 

to penalize unlicensed money transmitters without regard to 

the amount of money they transmitted.” Id. In a vague sense 

the argument has some merit: the more money an unlicensed 

business transmits, the higher the odds of some of the 

transmissions defeating some public interest, such as the 

policies trying to thwart the financial activities of terrorist 

organizations. But the link is far more attenuated than the one 

between such risks and a failure to report a financial 

transaction—or structuring to avoid reporting—which directly

undermines the government’s ability to track the money. 

Treasury regulations identify types of transactions required to 

be reported, obviously the ones perceived as posing the 

greatest risks, but the government neither charged nor proved 

a violation of any of those provisions. In its brief here the 

government claimed that 31 C.F.R. § 103.20 (promulgated 

pursuant to 12 U.S.C. §§ 1829b, 1951–59; 31 U.S.C. 

§§ 5311–14, 5316–32) required reporting of Keleta’s 

transactions, but in oral argument it acknowledged that the 

facts shown satisfied none of § 103.20’s provisions. 

Reporting requirements simply do not track licensing 

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requirements. Thus, equating failure to secure a license with 

failure to report misses the obvious difference in the 

likelihood of harm resulting from each offense. The language 

of § 2S1.3 does not equate the two; it makes complete sense. 

We should follow it.

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