1 The district court granted the government’s motion to dismiss one of the structuring counts,

Count 14, before the case was submitted to the jury. 

# United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

Argued December 9, 2009

Decided February 2, 2010

Before

JOEL M. FLAUM, Circuit Judge

ANN CLAIRE WILLIAMS, Circuit Judge

DIANE S. SYKES, Circuit Judge

No. 07

‐ 3391

UNITED STATES OF AMERICA,

Plaintiff

‐ Appellee

,

v.

SALEM FUAD ALJABRI,

Defendant

‐ Appellant

. Appeal from the United States

District Court for the Northern

District of Illinois, Eastern Division.

No. 06

‐ CR

‐ 562

Charles R. Norgle, Sr.,

Judge

.

O R D E R

In 2007 the United States charged Salem Fuad Aljabri in a superseding indictment

with nine counts of wire fraud in violation of 18 U.S.C. § 1343, five counts of money

laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i), and eleven counts of structuring

under 31 U.S.C. § 5324(a)(3). The case went to trial and the jury returned a verdict of guilty

on all counts. 1 Aljabri was then sentenced to a prison term of 90 months. On appeal Aljabri

challenges the sufficiency of the evidence supporting his money

‐ laundering and structuring NONPRECEDENTIAL DISPOSITION

To be cited only in accordance with Fed. R. App. P. 32.1No. 07

‐ 3391 Page 2

convictions. The government concedes that Aljabri’s money

‐ laundering convictions must

be vacated, and we accept this concession. The structuring counts were supported by

sufficient evidence however, and we therefore affirm Aljabri’s convictions on those counts.

I. Background

Although it led to a lengthy 25

‐ count indictment, Aljabri’s criminal activity was

rather simple. Aljabri, along with his codefendant Hope Cordova, schemed to defraud and

obtain money from the United States Department of Agriculture Food and Nutrition

Service’s Food Stamp Program (“program”) by purchasing program benefits (“food

stamps”) from customers for discounted amounts of cash. This relatively common form of

food

‐ stamp fraud is sometimes referred to as “trafficking.” Aljabri was the owner of the

Sobba Food Mart, a neighborhood grocery store in Chicago that was enrolled as an

authorized retailer in the federal food

‐ stamp program. From March 2003 to June 2004,

Aljabri, through Sobba, unlawfully purchased program benefits from food

‐ stamp recipients.

After redeeming over $1 million in program benefits, Sobba was terminated from the

program. In 2005 Aljabri was once again able to access program benefits by instructing

Cordova, his girlfriend, to open a new store, the White Bird grocery store. White Bird

successfully enrolled in the program, and Aljabri resumed his trafficking scheme. Aljabri

was arrested in August of 2006 for this fraudulent activity and charged with multiple counts

of wire fraud, money laundering, and structuring.

A. Wire Fraud

The government was able to pursue wire

‐ fraud charges against Aljabri because of

the manner in which program benefits must be processed. While the food

‐ stamp program

was formerly coupon

‐ based, it no longer operates in that manner. Instead, program

recipients—at least those in Illinois—are provided with a “Link card,” which functions

much like a debit card. Benefits are automatically credited to recipients’ Link card accounts

each month. Accredited retailers, such as Sobba and White Bird, are provided with “Link

card machines.” After selecting food items, the program recipient swipes his Link card

through this machine. The machine then interfaces with a computer system located in

Austin, Texas, which maintains data on each Link card account and approves (or rejects) all

program

‐ benefit transactions. At the end of each day, the Texas computer then tallies the

totals owed to each retailer and correspondingly credits that retailer’s account.

The food

‐ stamp program explicitly prohibits the redemption of benefits for cash, but

the government presented overwhelming evidence that Aljabri repeatedly engaged in such

behavior. In addition to testimony from program recipients who admitted selling theirNo. 07

‐ 3391 Page 3

benefits to Aljabri for cash, the government presented convincing circumstantial evidence

that Aljabri was defrauding the program. For instance, from March of 2003 until June of

2004, Sobba redeemed over $1.2 million in program benefits, which accounted for over 97%

of its total business during that time. Many of these Link card transactions involved

“purchases” exceeding $100 in value even though Sobba apparently had a limited food

selection and no shopping carts or baskets. Finally, Mohammad Malkawi, who purchased

Sobba from Aljabri, testified that despite the fact that he had improved the store’s facilities

and expanded its inventory, his successor store averaged $14,000 to $17,000 in monthly

business, and only half of that involved Link transactions. The government presented

similar evidence (both direct testimony from program recipients as well as circumstantial

evidence based on the nature and quantity of Link transactions processed) to show that

Aljabri conducted similar fraud at the White Bird grocery store.

B. Money Laundering

The government pursued money

‐ laundering charges against Aljabri on the theory

that Aljabri would use the cash he received from earlier trafficking transactions in order to

acquire program benefits from subsequent “customers.” The premise was that because each

time Aljabri illegally purchased program benefits he needed to front the cash before getting

reimbursed at the end of the day by the Link system, he required a steady stream of funds

to keep his operation afloat. The government presented evidence that Aljabri would

routinely make large cash withdrawals from his designated Link account in order to

facilitate these illegal payments to program recipients. To bolster its case that these

withdrawals were made for the purpose of trafficking and not for some legitimate pursuit,

the government introduced evidence that Aljabri did not generally use cash to cover other

operational expenses such as inventory purchases, utilities, and rent. The government

argued to the jury that in this way Aljabri knowingly used the “proceeds” of one instance of

wire fraud to “promote” another.

C. Structuring

As we have noted, Aljabri’s trafficking operation required Aljabri to keep large sums

of cash on hand in order to transact business with program recipients. Sobba maintained an

account with the Cole Taylor Bank in Chicago. All of Sobba’s Link reimbursements were

wired to this account. In order to fund future Link purchases, Aljabri obtained cash from

this account by writing checks to cash. The government presented evidence that from

March 2003 through June 2004, Aljabri cashed at least 155 such checks from this account,

withdrawing approximately $942,485 in total. Excluding those checks cashed in the days

immediately preceding Sobba’s disqualification from the program, Aljabri only cashed two

checks in excess of $10,000. Counts 12

‐ 13 and 15

‐ 22 pertained to ten separate transactions

that the government asserted were instances of structuring. In each instance theNo. 07

‐ 3391 Page 4

government alleged that Aljabri structured the transaction to avoid the $10,000 threshold for

currency transaction reporting requirements by purposefully arranging to withdraw an

amount in excess of $10,000 by cashing a series (between two and four) of checks that

summed to a total greater than $10,000 but had individual values below this amount. The

government further alleged that for each count the financial transactions involved were all

“conducted” on a single date. In addition to this circumstantial evidence, Immigration and

Customs Enforcement Special Agent Tamara Yoder testified that following his arrest,

Aljabri, who had waived his right to remain silent, admitted he was aware of the federal

reporting requirements for currency transactions in excess of $10,000.

II. Discussion

On appeal Aljabri argues the evidence was insufficient to convict him of money

laundering and structuring. In considering a sufficiency

‐ of

‐ the

‐ evidence challenge, “[w]e

review the evidence at trial in the light most favorable to the government and ‘will overturn

a conviction based on insufficient evidence only if the record is devoid of evidence from

which a reasonable jury could find guilt beyond a reasonable doubt.’” United States v.

Hampton

, 585 F.3d 1033, 1040 (7th Cir. 2009) (quoting United States v. Severson

, 569 F.3d 683,

688 (7th Cir. 2009)).

A. Money Laundering

Aljabri was convicted of five counts of money laundering in violation of 18 U.S.C.

§ 1956(a)(1)(A)(i), which prohibits the use of “the proceeds of some form of unlawful

activity” in a financial transaction “with the intent to promote the carrying on of specified

unlawful activity.” To convict Aljabri of money laundering, the government was required

to prove the following four elements beyond a reasonable doubt: (1) Aljabri knowingly

conducted the charged financial transactions; (2) those transactions involved the proceeds of

illegal activity; (3) Aljabri knew the property involved in these transactions represented

illegal proceeds; and (4) Aljabri conducted the charged transactions with the intent to

promote the carrying on of the unlawful activity.

Aljabri contends that the government did not present sufficient evidence that the

charged financial transactions involved “proceeds” of illegal activity as that term has been

defined in recent opinions of this circuit and of the Supreme Court. The government

concedes this error and agrees that Aljabri’s money

‐ laundering convictions (Counts 7

‐ 11)

should be vacated.

The term “proceeds” is not defined in the money

‐ laundering statute. In United StatesNo. 07

‐ 3391 Page 5

2 Also, because of the government’s concession, we need not consider whether the jury was

properly instructed as to the correct definition of “net proceeds.” v. Scialabba

, 282 F.3d 475, 475 (7th Cir. 2002), this court held that “at least when the crime

entails voluntary, business

‐ like operations, ‘proceeds’ must be net income [rather than gross

income]; otherwise the predicate crime merges into money laundering (for no business can

be carried on without expenses) and the word ‘proceeds’ loses operational significance.”

The Supreme Court’s recent decision in United States v. Santos

, 128 S. Ct. 2020 (2008),

addressed this issue; unfortunately, Santos yielded a fractured result. As we have recently

explained:

Four Justices in Santos concluded that ‘proceeds’ in § 1956 always means net

income. Four concluded that the word always means gross income. Justice

Stevens concluded that the meaning depends on the nature of the crime—that

it means net income for unlicensed gambling (the subject of Santos and

Scialabba ) but could mean gross income for drug rings.

United States v. Hodge

, 558 F.3d 630, 633 (7th Cir. 2009).

Since the government concedes that the “net income” definition applies in this case,

we need not decide whether, under Justice Stevens’s approach, a conviction for money

laundering involving proceeds from wire fraud (for food

‐ stamp trafficking) would require

the use of “net income” or “gross income” from that fraud. 2 See id. at 634 (“Such a

concession cannot bind the court to one legal rule rather than another, but it can forfeit the

benefit of a particular rule for one case.”). The government further acknowledges that at

trial it failed to introduce sufficient evidence to satisfy its burden of proof concerning this

“net proceeds” element of the money

‐ laundering offense. While the government presented

evidence that Aljabri used Link funds to pay for program benefits, it never articulated a

theory as to why those food

‐ stamp purchases should properly be considered a reinvestment

of the net profits of Aljabri’s fraudulent enterprise.

B. Structuring

Aljabri was convicted of ten counts (Counts 12

‐ 13 and 15

‐ 22) of structuring under

31 U.S.C. § 5324(a)(3). Federal law requires financial institutions to file a Currency

Transaction Report with the government for financial transactions in which a customer

makes a “deposit, withdrawal, exchange of currency or other payment or transfer

. . . involv[ing]

. . . currency of more than $10,000.” 31 C.F.R. § 103.22(b)(1); 31 U.S.C. § 5313(a).

Section 5324(a)(3) then prohibits individuals from deliberately “structuring” their financial

transactions “for the purpose of evading th[ose] reporting requirements.”No. 07

‐ 3391 Page 6

3 Aljabri also argues that his convictions on these five structuring counts should be vacated on

the grounds that the government’s theory at trial was inconsistent with the language of the superceding

indictment, which alleged that each set of structured transactions was “conducted” on the same day.

This “variance” claim was first raised in Aljabri’s reply brief and is therefore forfeited. United States v.

(continued...) Aljabri challenges his structuring convictions on two different grounds. Aljabri first

claims that he cannot legally be found guilty of structuring on Counts 17, 18, 20, 21, and 22

because the financial transactions relating to each of those five counts all took place on

different days. In making this argument, Aljabri seizes on Cole Taylor’s particular method

of processing checks. At Cole Taylor, “banking” activities cease for the week every Friday

at 3 p.m. even though the bank remains open past 3 p.m. on Fridays and is open on

Saturdays as well. Thus a customer can cash a check at Cole Taylor after 3 p.m. on a Friday,

but that check will not be officially processed until the following Monday. In such a

circumstance, the bank’s records will reflect the time that the check was actually presented

to be cashed (say 4:57 p.m.), but will provide the date that corresponds to the following

Monday (or whatever is the next “banking” day).

Aljabri argues that with respect to five of the structuring counts, the government

misled the jury to believe that the alleged transactions took place on a single day when they

were in fact spread out over multiple days. The problem with this argument is that

financial transactions need not occur, or even be processed, on a single date in order to

constitute structuring. Treasury regulations have defined “structuring” as follows:

[A] person structures a transaction if that person

. . . conducts or attempts to

conduct one or more transactions in currency, in any amount, at one or more

financial institutions, on one or more days, in any manner, for the purpose of

evading the reporting requirements under section 103.22 of this part. ‘In any

manner’ includes, but is not limited to, the breaking down of a single sum of

currency exceeding $10,000 into smaller sums, including sums at or below

$10,000, or the conduct of a transaction, or series of currency transactions,

including transactions at or below $10,000. The transaction or transactions need

not exceed the $10,000 reporting threshold at any single financial institution on any

single day in order to constitute structuring within the meaning of this definition.

31 C.F.R. § 103.11(gg) (emphasis added). Additionally, in United States v. Davenport

,

929 F.2d 1169, 1173 (7th Cir. 1991)

, this court held that § 5324(a)(3) can apply to financial

transactions that were conducted on separate days. There is no colorable argument for why

§ 5324(a)(3) should be confined only to transactions that occur during a single day; in fact,

as the government correctly points out, such a construction would undermine the purpose

of the provision by providing a roadmap for legally evading the reporting requirements. 3No. 07

‐ 3391 Page 7

3 (...continued)

Boyle

, 484 F.3d 943, 946 (7th Cir. 2007). Finally, Aljabri attacks his structuring convictions (all of them this time) on the

ground that the government failed to establish that he had the requisite intent to structure.

This argument is without merit. In addition to the hefty circumstantial evidence the

government presented relating to Aljabri’s consistent practice of conveniently withdrawing

large sums of money in short intervals just under the $10,000 reporting threshold, there was

also the testimony of Special Agent Yoder that Aljabri acknowledged his awareness of the

reporting requirements. When viewed in total, there is more than enough evidence to

uphold the jury’s verdict, particularly in light of the high burden Aljabri must meet to

prevail on a sufficiency challenge. See, e.g.

, United States v. Bustamante

, 493 F.3d 879, 884 (7th

Cir. 2007) (“[T]he Court will reverse only if ‘the fact finder ʹ s take on the evidence was

wholly irrational.’” (quoting United States v. Hoogenboom

, 209 F.3d 665, 669 (7th Cir. 2000))).

III. Conclusion

Aljabri’s money

‐ laundering convictions are VACATED, and his structuring

convictions are AFFIRMED. This case is REMANDED to the district court for resentencing

on the surviving wire

‐ fraud and structuring counts.