Judge Kelly died on October 21, 1998. This opinion is consistent with the vote 1 he cast at conference on this case. The Hon. Russell G. Clark, United States District Judge for the Western District 2 of Missouri. 

## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 98-1884WM

_____________ United States of America, * * Appellant, * * On Appeal from the United v. * States District Court * for the Western District * of Missouri. Nanci Carter Woods, * * Appellee. *

___________ Submitted: September 22, 1998 Filed: November 5, 1998

___________ Before RICHARD S. ARNOLD, WOLLMAN, and KELLY, Circuit Judges. 1

___________ RICHARD S. ARNOLD, Circuit Judge.
Pursuant to an agreement with the United States, Nanci Carter Woods pleaded guilty to one count of bankruptcy fraud under 18 U.S.C. § 152 and one count of money laundering under 18 U.S.C. § 1957. The District Court sentenced Ms. Woods to a 2-2-

three-year term of pro bation, six months of which were required to be served in home confine ment. The government appeals the sentence, arguing that the Court erred b y using th e fraud provision of the Sentencing Guidelines, rather than the money

laundering provision, to determine the offense level for sentencing. The government also argues that the Court erred in awarding a one-level departure for Ms. Woods’ s charitable activity. We affirm.

I.
The events that led to Ms. Woods’s conviction began in 1996, when she filed for bank ruptcy. Ms. Woods was required to list all of her assets and to turn over certain of them forliquidation. Among these, she identified to the Bankruptcy Court an d turned over to the Trustee 200 shares of Wal-Mart stock and 100 shares of Food Lion stock. In fact, Ms. Woods owned 800 shares of Wal-Mart stock and 500 shares o f Food Lion stock. She sold the other 600 shares of Wal-Mart stock for $16,045, and, without reporting the transaction to the Bankruptcy Trustee, deposited the proceeds , in the form of a check, into her husband’s bank account. The next day, Ms . Woods and her husban d obtained four $2,500 cashier’s checks from the account, and used th e money to pay personal expenses and to repay a l oan from a relative. When confronted by the Tr ustee about the Wal-Mart stock, Ms. Woods admitted the diversion, bu t claimedthat she had disclosed all of her other assets. According to the government, however, Ms. Woods had also sold the other 400 unreported share s of Food Lion stock for $3,274.25, and had used that money to pay personal expenses. The diversion of the Fo od Lion stock was not discovered until the matter had been referred to the Unite d States Attorney by the Trustee.

In 1997, the United States filed a two-count indictment against Ms. Woods , alleging that she committed: 1) bankruptcy fraud, under 18 U.S.C. § 152, when sh e knowingl y and fraudulently concealed the Wal-Mart stock from the Bankruptc y Trustee; and 2) money laundering, under 18 U.S.C. § 1957, when she knowingly-3-

depos itedthe check representing the proceeds of the sale of this stock into he r husband’s bank account.
Ms. Woods agreed

to plead guilty. The plea agreement contained a stipulation that the offense level under the Sentencin g Guidelines was 13 for the bankruptcy fraud
count and 19 for the money-laundering count, before any reduction for acceptance of respons ibility. The agreement also stated that “[t]he parties further agree that th e sentence ultimately imposed is within the sole discretion of the Court.” Appellant’ s Add. at 11. Before sentencing, Ms. Woods moved for departure from the money

laund ering guideline, U.S.S.G. § 2S1.2, arguing that the case presented factors tha t to ok it outside the “heartland” of money-laundering cases, and that the appropriat e level for sentenci ng should take into account § 2F1.1, the guideline for the underlying
o f fense, bankruptcy fraud. Specifically, Ms. Woods argued that the main purpose of the money-laundering statutes was to combat drug traffickingand organized crime, that the money-laun dering guidelines were designed to be used principally in that context, andthat her deposit of proceeds from the sale of the Wal-Mart stock was not typical of t he conduct the Sentencing Commission intended to punish under § 2S1.2. Th e District Court agreed, finding that “[t]he statute on money laundering was not intended to be imposed in this type of case,” and that “the offense committed in this case i s outside the heartland of cases.” Appellant’s Add. at 6. Ms. Woods also argued that her exte nsive charitable activity warranted an additional departure under § 5H1.11

. Again, the Court agreed, and granted a one-level downward departure. Ms. Wood s was sentenced to three years’ probation.

II.
In this appeal, the United States argues t hat the District Court erred in departing below the money-laundering guidelines becaus e the activity engaged in by Ms. Woods (depositing the check into her husband’s bank account and using the funds to purchase cashier’s checks) falls within the range of conduct prohibited by 18 U.S.C. § 1957.-4-

That statut e, in pertinent part, provides that: “Whoever . . . knowingly engages o r attempts to engage in a monetary transaction in criminally derived property that is of
avalue greater than $10,000 and is derived from specified unlawful activity, shall be pun ished. . ..” 18 U.S.C. § 1957(a). The term “specified unlawful activity ” encompasses a wide range of criminal conduct, including bankruptcy fraud. See 1 8 U.S.C. § 1956(c)(7)(D). Ms. Woods does not argue that her conduct did not violate the money-laundering statute. It clearly did. Her argument is that the deposit of th e chec k was not serious money laundering as contemplated by the Sentencin g Commission when it promulgated the money-laundering guidelines.

Under Koon v. United States , 518 U.S. 81 (1996), a district court may depar t from the Sentencing Guidelines if “the court finds that there exists an aggravating o r mitigating circumstance of a kind, or to a degree, not adequately taken int o consideration by the Sentencing Commission in formulating the guidelines that should
re sult in a sentence different from that described.” Id . at 92 (quoting 18 U.S.C. § 3553( b)). The Supreme Court noted that the Sentencing Commission “did no t adequately take into account cases that are, for one reason or another, ‘unusual,’ ” 518 U.S. a t 93 (citing 1995 U.S.S.G. ch. 1, pt. A, intro. comment. 4(b)), and said that , under the Guidelines, departures may be considered in “atypical” cases.

Before departing from the Guidelines, a sentencing court first must determin e whethe r a particular case presents features that “take it outside the Guidelines ’ ‘hea rtland’ and make of it a special, or unusual, case.” Koon , 518 U.S. at 95. Th e court must then decide whether the Sentencing Commission has forbi dden, encouraged, or discourag ed departures based on those features. While a forbidden factor may not be us ed as a basis for departure, an encouraged factor may be considered if th e Guidelines have not already taken it into account. A discouraged factor -- or a n encourag ed factor already taken into account -- may also be used as a basis fo r departure if the factor is present to an exceptional degree. If the factor is unmentioned, the sentencing court must consider the “structure and t heory of both relevant individual-5-

gu idelines and the Guidelines taken as a whole,” and decide whether the factor i s sufficient to take the case out of the heartland. Id . at 96 (cit ing United States v. Rivera , 994 F.2d 942, 949 (1 st Cir. 1993)). The Commission specifically said that it did “not int endto limit the kind of factors, whether or not mentioned anywhere else in th e guide lines, that could constitute grounds for departure in an unusual case.” U.S.S.G. ch. 1, pt. A, intro. comment. 4(b).

In M s. Woods’s case, the District Court found that, because the underlyin g offense was bankruptcy fraud, and not drug trafficking or some other offense typical of organized cri me, the facts of her money laundering did not fall into the “heartland” of ca ses involving that offense. The Court thought the sentence for bankruptcy fraud woul d more appropriately reflect the severity of the money-laundering offense. W e believe ample evidence exists in the record, in the case law, and in the legislative and administ rative history of the money-laundering guidelines to support the Distric t Court’s downward departure. Under Koon , “[t]he appellate court should not review the departure decision de novo , but instead should ask whether the sentencing court abused its discretion.” 518 U.S. at 91.
Signific ant

support for Ms. Woods’s position can be found in the work of th e Sent encing Commission. In 1995, the Commission proposed amendments to th e money-laundering guidelines. The Commission had conducted an extensive study of sentencing results under those guidelines, and found that “the broad and inconsistent
use of m oney laundering charges, coupled with an inflexible, arbitrarily determine d guide line structure, [had] result[ed] in substantial unwarranted disparity an d dis proportionality in the sentencing of money laundering conduct.” Report to th e Congress: Sentencing Policy for Money Laundering Offenses, including Comments on Department of Jus tice Report , United States Sentencing Comm’n (Sept. 18, 1997), p. 9. Notably, the Commissio n concluded that money-laundering sentences were “being imposed for a muc h broader scope of offense conduct, including some conduct that is substantially less serious than the conduct contemplated when the . . . guidelines were-6-

first f ormulated.” Id . at 5. The proposed amendments to the guidelines would hav e tied the punishment for money laundering tothe level of punishment for the underlying crime. Und er the new guidelines, according to the Commission, penalties would b e “more proportionate to both the seriousness of the underlying criminal conduct fro m which the laundered funds were derived and to the nature and seriousness of th e laundering conduct itself.” Id . at 2.
Congress, however, disapproved the amendments. See Act of October 3 0, 1995, Pub. L. No. 104-38, § 1, 109 Stat. 334. The report of the House Judiciary Committee
recomme nding disapproval of the amendment said that the Sentencing Commission’s changes “appear to respond in part to the class of money laundering cases in which the money laundering activity is not extensive, including ‘receipt and deposit’ cases -

- th ose in which the money laundering conduct is limited to depositing the proceeds of unlaw fulactivity in a financial institution account identifiable to the person wh o committed

the underlying offense. While the application of the current guidelines to recei pt-and-deposit

cases, as well as to certain other cases that do not involv e aggravated money laundering activity, may be problematic . . . past sentencin g anomal ies arising from relatively few cases do not justify a sweeping downwar d adjustm ent

in the money laundering guidelines.” H.R. Rep. No. 104-272, at 14-15 , reprinted in 1995 U.S.C.C.A.N. 335, 348-49. We believe these statements support Ms. Woods’s co ntention that her case is outside the Guidelines’ “heartland.” In addition,
we fin d nothing in the report that suggests Congress, in disapproving the propose d amendments, also intended to prohibit sentencing courts from departing downward , where appropriate, in receipt-and-deposit cases or in those individual cases “that do not involve aggravated money laundering activity.”
Congress, moreover, took another step: it directed the Department of Justice to prepare a report on the prosecution of money-laundering offenses and to ensure that the statu tes against money laundering were being prosecuted consistently and uniforml y by the United States Attorneys’ offices. See Report for the Senate a nd House Judiciary-7-

Committees on the Charging and Plea Practices of Federal Prosecutors with Respect to the Off

ense of Money Laundering , Dept. of Justice (June 17, 1996). The repor t prep ared by the Department stated that the money-laundering statutes “should not be used in cases where the money laundering activity is minimal or incidental to th e underlying crime. . . . The money laundering statutes should be used only where they reflect the nature and extent of the criminal conduct involved . . ..” Id . at 14. Th e pro cedures implemented to ensure consistent and uniform prosecutions amon g jurisdictions involve various approval, consultation, and notification requirements. Id

. at12-16. In addition, the United States Attorney’s Manual provides that “onl y particul arly complex and sensitive cases should be prosecuted” under the money

lau ndering statutes. United States v. Bart , 973 F. Supp. 691, 697 (W.D. Tex. 1997 ) (citing U.S. Dept. of Justice, United States Attorney’s Manual , Section 9-3.400.)
Congress also directed the Sentencing Commission to respond to the D epartment of Justice’s report. See Report to the Congress: Sentencing Policy for Mone y Launde ring Offenses, including Comments on Department of Justice Report , Unite d States Sentencing Comm’n (Sept. 18, 1997). In this report, the Commission noted that the current se ntencing structure for money-laundering offenses had been promulgated less than six months after the two primary money-laundering statutes had becom e effective, and that “no actual prosecutorial experience or judicial guidance existed to inform the Co mmission’s formulation of the initial money laundering guidelines.” Id

. at 3. The Commission wrote that it set the “relatively high” base offense levels “t o penalize the conduct about which Congress seemed most concerned when it enacted the m oney laundering statutes, namely: 1) situations in which the ‘laundered’ fund s derived from serious underlying criminal conduct such as a significant drug trafficking operatio n or organized crime; and 2) situations in which the financial transaction was separate from the underlying crime and was undertaken to either : a) make it appear that the funds were legitimate, or b) promote ad ditional criminal conduct by reinvesting the proceeds in additional criminal conduct.” Id . at 4. The Commission re viewed the steps taken by the Department of Justice to ensure that money-laundering offenses were-8-

be ing prosecuted uniformly, but concluded that the Department’s efforts, without a “properly restructured money laundering guideline,” were not adequate to avoi d “unwarranted sentencing disparity.” Id . at 13.

The g overnment cites United States v. Morris , 18 F.3d 562 (8th Cir. 1994) , where a panel of this Court reversed the District Court for departing downward from the money-launderin g guidelines. In Morris , the financial transaction was intended to promote the carrying on of a complex bank fraud scheme involving an officer of a financial institution. We believe Ms. Woods’s case is distinguishable, because he r deposit of the check had the effect of concluding, rather than promoting , the bankruptcy fraud.
The government also cites United S tates v. O’Kane , 1998 WL 568813 (8th Cir. 1998). In O’Kane , this Court, in reversing a sentence arriv ed at after the District Court gro upedmail-fraud and money-laundering counts together, held that the offense s invaded different interests and were “ not so closely related as to justify grouping . . ..” 1998 WL 56 8813 at * 3. O’Kane is not a departure case, however. And while w e agree that bankruptcy fraud and money laundering in vade different interests, we do not read O’Kane to prohibit a District Court from departing from the Guidelines when it determines that a case is outside the “heartland.”
In summary, we do not b elieve the deposit of the check by Ms. Woods into her husband’s account, or their obtaining of the cashier’s checks, constitutes seriou s money- laundering conduct as contemplated by the Sentencing Commission fo r punis hment under the money-laundering guidelines. At least the District Court could have so found within its discretion. This i s not the sort of conduct one normally thinks of as money laundering. Accordingly, we hold that the District Court did not abuse its discretion when it found that Ms. Woods’s case fell outside the “heartland ” and granted her motion for a downward departure.-9- III.
The government also appeals the one-level downward departure granted by the District Court for Ms. Woods’s charitable activity. The Sentencing Guidelines provide that a defendant’s charitable conduct is not an appropriate basis for a downwar d departure unless it is ex ceptional. See Koon , 518 U.S. at 95-96. Ms. Woods brought into her own home two troubled young women, one of whom was a former employee who had sto len from Ms. Woods. The other was the defendant’s niece, who had had difficulty living at home, and who had dropped out of school. Ms. Woods paid fo r them to attend a private high school, both were graduated, an d they are now productive members of society. Ms. Woods also helped an elderly friend, who was unhappy living in a nursing home, move into an apartment near her home. She helped to care for him, and he was able to live out his remaining years with greater independe nce. The District Court thought these efforts by Ms. Woods were exceptional, and we have no basis for holding that they were not.

VI.
For the reasons given above, the judgment of the District Court is affirmed.
A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.