Opinion ID: 3010240
Heading Depth: 3
Heading Rank: 2

Heading: The defendant knew the transaction involved in

Text: this case, I am going to use the word money, monies that were criminally received. 3. The criminally derived property must have a value in excess of $10,000. 4. The criminally derived property must have been in fact derived from a specified unlawful activity. That's the money laundering counts. 5. The money transaction must have taken place in the United States of America. App. at 944-45. 20 That section makes it unlawful for a person to  knowingly engage[] or attempt[] to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity. Id. The elements necessary to prove a violation of § 1957 are that (1) the defendant engage or attempt to engage (2) in a monetary transaction (3) in criminally derived property that is of a value greater than $10,000 (4) knowing that the property is derived from unlawful activity, and (5) the property is, in fact, derived from 'specified unlawful activity.' United States v. Johnson, 971 F.2d 562, 567 n.3 (10th Cir. 1992). Defendant contends that the knowledge requirement of § 1957 requires proof that Sokolow knew his conduct was prohibited by law. As Sokolow never objected to the instructions at issue, the court's review is limited to plain error, that is, the error must be plain and affect[] substantial rights. See United States v. Retos, 25 F.3d 1220, 1228-29 (3d Cir. 1994) (quoting United States v. Olano, 113 S.Ct. 1770, 1777 (1993); see also Fed. R. Crim. P. 52(b) (Plain errors or defects affecting substantial rights may be noticed although they were not brought to the attention of the court.). In support of his argument, Sokolow relies primarily upon the Supreme Court decision in Ratzlaf v. United States, 114 S.Ct. 655 (1994). In Ratzlaf, the defendant was charged with violating 31 U.S.C. § 5324, which makes it unlawful for a person to structure numerous transactions with several banks to evade the banks' obligation to report cash transactions exceeding $10,000. 21 See id. at 658. Section 5322(a), Title 31, United States Code, imposes criminal penalties for a person willfully violating the antistructuring provision. At issue was the trial court's instruction that the government did not have to prove the defendant knew the structuring in which he engaged was unlawful, but only that the defendant knew of the reporting obligation and attempted to evade that obligation. In reversing the court of appeals, which upheld the conviction, the Supreme Court held that in order to give effect to § 5322(a)'s willfulness requirement, the government must prove that the defendant knew the structuring in which he was engaged was unlawful. 114 S.Ct. at 663. The Court was unpersuaded by arguments that the offense of structuring is so obviously 'evil' or inherently 'bad' that the 'willfulness' requirement [of § 5324 is] satisfied irrespective of the defendant's knowledge of the illegality of structuring. Id. at 662. Sokolow claims that the offense of money laundering is analogous to the offense at issue in Ratzlaf. He argues that engaging in monetary transactions, such as bank depositing, with known criminal proceeds is not conduct that is obviously evil or inherently bad. Sokolow contends the jury must find that he knew his spending and regular bank transactions were prohibited by law. Absent a willfulness requirement, however, we will not require proof of knowledge of illegality to sustain a conviction under the money laundering provision of 18 U.S.C. § 1957. In United States v. Zehrbach, 47 F.3d 1252, 1261 (3d Cir.), cert. 22 denied, 115 S.Ct. 1699 (1995), in discussing the proof necessary for bankruptcy fraud, we stated that [t]he statutory requirement that the underlying acts be performed 'knowingly' requires only that the act be voluntary and intentional and not that a person knows that he is breaking the law. In Zehrbach, we distinguished Ratzlaf on the basis of the willfulness element required under the structuring offense. Id.; see also United States v. Hilliard, 31 F.3d 1509, 1518 (10th Cir. 1994) (Ratzlaf proof of knowledge of illegality requirement not applicable to, inter alia, § 1957 money laundering provision); United States v. Santos, 20 F.3d 280, 284 n.3 (7th Cir. 1994) (Ratzlaf not applicable to § 1956 money laundering provision because of absence of willfulness requirement). Similarly, as § 1957 does not contain a willfulness requirement, we decline to adopt Ratzlaf for the money laundering provision at issue in this case. Moreover, Sokolow's citation to our decision in United States v. Curran, 20 F.3d 560 (3d Cir. 1994), is distinguishable. In Curran, we followed Ratzlaf in construing the willfulness component of 18 U.S.C. § 2(b), which makes it unlawful to deliberately cause another person to perform an act that would violate federal criminal law. 20 F.3d at 566-68. In that case, defendant was charged with causing election campaign treasurers to submit false reports to the Federal Election Commission in violation of 18 U.S.C. §§ 2(b) and 1001, the false statement statute. Id. at 562. Thus, unlike the money laundering statute involved here, willfulness was an element of the crime at issue in Curran. See id. at 567-68. In sum, we find the district 23 court properly instructed the jury on the scienter element of Sokolow's money laundering violation. 2. Criminally Derived Property Element of § 1957 Sokolow asserts that the district court committed plain error in the jury instruction as to the element of § 1957 that requires the criminally derived property in a monetary transaction to have a value in excess of $10,000. Specifically, Sokolow asserts that in the court's explanation of tracing criminal proceeds, the district court erred in stating the following: [T]he Government need not prove that there [sic] $20,000 came from this sale over here, because as I understand it, the Government's theory is these different sums -- they have to initially prove they came from NIBA. It has to prove that it came from NIBA, initially, but not what NIBA account. So the matter goes from $20,000 from NIBA to Sokolow & Associates and then Sokolow & Associates spends the money or spends a similar sum of money some places. They don't have to prove it's the same $20,000 that went from Sokolow's [account] to Sokolow & Associates. The Government need not prove that all the property involved in the transaction was the proceeds of the money laundering. It is sufficient if the Government proves at least part of the property represents such proceeds. App. at 945 (emphasis on alleged error). Sokolow alleges that the instruction allowed the jury to convict simply on a showing that even $1 of the proceeds of fraud were deposited into a Sokolow account and later used to pay, in part, for the items charged [in the counts] of the indictment. We find this contention is without merit. It is clear from the full context of the district judge's explanation of the concept of proceeds that he is addressing the absence of a legal requirement that the government trace the 24 funds constituting criminal proceeds when they are commingled with funds obtained from legitimate sources. See United States v. Johnson, 971 F.2d at 570 (noting that there is no requirement that government show that funds withdrawn from the defendant's account could not possibly have come from any source other than the unlawful activity.). We find no error in the district court's jury instructions in this regard. 3. Sokolow's Responsibility for Actions of His Agents Sokolow alleges error in the district court's jury instructions as to Sokolow's responsibility for actions of his agents, particularly as it relates to insurance agents' improper use of the Blue Cross logo on advertisements as part of the fraud scheme. The instruction read as follows: In order to sustain the burden of proof in this matter, it is not necessary in either of these counts to prove -- these types of crimes -- to prove that the defendant did everything, every act. A person can act through his agent, and therefore, if the acts or conduct of another were ordered by the defendant or directed by the defendant or authorized by the defendant, the law holds the defendant responsible for the acts, just as if he had personally done them. That includes both human beings and corporate agents. App. at 945. According to Sokolow, the jury instruction is erroneous in that the jury could have found Sokolow guilty of mail fraud if he authorized employees to prepare marketing materials for his plan, and those employees on their own misrepresented the extent of Blue Cross underwriting in such materials. No proof that Sokolow directed the misrepresentations with an intent to defraud was demanded. Appellant's Br. at 26. Sokolow quotes the court in Curran, 20 F.3d at 567, which stated that, Section 2(b) [of Title 18, United States Code] imposes criminal liability on those persons 25 who possess the mens rea to commit an offense and cause others to violate a criminal statute. As defendant did not object to the jury instruction, we review the district court's failure to provide a specific instruction for plain error only. See United States v. Xavier, 2 F.3d 1281, 1287 (3d Cir. 1993). Reading the jury instructions in context, the district judge clearly explains the scienter requirements to convict Sokolow of both the mail fraud and money laundering offenses. See App. at 941 ([T]he defendant, Mr. Sokolow, is charged with knowingly and unlawfully devising and intend[ing] to defraud the members of [NIBA] . . . and that he knowingly caused the United States [mails] to be used to execute these schemes or this scheme.); App. at 944 ([T]he Government must prove beyond a reasonable doubt that there was -- that not only was there a fraudulent activity, but the defendant had a conscious intent to defraud. . . . [T]he defendant himself did not have to mail anything. He may or he can order someone to do it.); App. at 945 (The Government must prove that the 26 defendant knew that property involved in the money transaction constituted or was derived, either directly or indirectly from a criminal offense . . . . [H]e has to know he received this money through fraudulent means. He has to be conscious of that.). The jury was instructed properly that intent to defraud was required. Thus, we find no plain error in the district court's instruction and we affirm Sokolow's conviction.