Opinion ID: 22771
Heading Depth: 1
Heading Rank: 5

Heading: Application of the Money Laundering Guideline

Text: 35 Dadi argues that the district court erred in its application of the Sentencing Guidelines by failing to apply the more lenient fraud guidelines instead of the money laundering guideline. Dadi finds his strongest support from United States v. Smith, a Third Circuit opinion in which that court determined that the initial choice of sentencing guideline should be governed by a heartland analysis: whether the offense is outside the heartland of the conduct normally punished using a particular guideline. 186 F.3d 290, 297-300 (3d Cir. 1999). Dadi argues that the money laundering guidelines, U.S.S.G. §§ 2S1.1 and 2S1.2, are intended to apply to large scale drug and organized crime enterprises that launder large amounts of money---not simple fraud cases. A district court's choice of a Sentencing Guideline is a matter of law, and therefore the decision is subject to de novo review. See Smith, 186 F.3d at 297; see also United States v. Franklin, 148 F.3d 451, 459 (5th Cir. 1998). 36 Here, the district court was required to group the fraud and money laundering offenses because those crimes involved multiple offenses that were linked by a common illegal objective. See United States v. Leonard, 61 F.3d 1181, 1185 (5th Cir. 1995) (noting that § 3D1.2(d) explicitly provides for grouping of offenses covered by the fraud and money laundering guidelines). Further, the district court properly imposed a sentence under the money laundering guideline, which produced the higher offense level. See id. The district court did not err in this application of the guidelines. 37 Dadi correctly notes that a court is authorized to depart downward if the offense falls outside the heartland of the conduct for which a Sentencing Guideline was intended. Dadi argues that departure from money laundering and use of the more lenient fraud guideline as a guide is appropriate here. He cites our decision in United States v. Hemmingson, in which we held that the district court did not err in applying the fraud guideline where the money laundering offenses did not fall within the heartland of the money laundering guideline. 157 F.3d 347, 361-63 (5th Cir. 1998). And in United States v. Bart, a Texas district court used the fraud guideline as a guide for its downward departure from the money laundering guideline. 973 F.Supp. 691, 695-96 (W.D. Tex. 1997). The court determined---based on the legislative history of the money laundering statutes---that the guideline was targeted at large scale drug and organized crime enterprises laundering large amounts of money. 973 F.Supp. at 696. Dadi claims further support from cases in which the money laundering statutes were deemed inapplicable because the money laundering was incidental to the underlying offense; the underlying offense in this case, Dadi asserts, is bank fraud. See United States v. Threadgill, 172 F.3d 357, 377-78 (5th Cir. 1999), cert. denied, 120 S.Ct. 172 (1999); Smith, 186 F.3d at 299. 38 The cited cases, while interesting, are clearly inapplicable here. They discuss when a downward departure is permissible, i.e., when a reviewing court will decline to interfere with a district court's decision to depart. But that invokes an entirely different standard from the one applied when a district court declines to depart downward. Because the district court here made no mistake about whether it was permitted to depart downward, we leave the sentence intact. 39 A decision not to depart downward is not subject to review in this circuit. See Leonard, 61 F.3d at 1185. In United States v. Powers, 168 F.3d 741 (5th Cir. 1999), this court declined to invalidate a refusal to depart downward absent a district court misunderstanding of the law. Thus, unless the refusal to depart is premised upon the [sentencing] court's mistaken assumption that the Guidelines do not permit such a departure, we have no jurisdiction to review the sentence. Id. at 753 (citing United States v. Palmer, 122 F.3d 215, 222 (5th Cir. 1997)). Here, there was no such erroneous belief, and therefore the choice not to depart downward is not subject to our review. 8 40 We also note that---unlike in Smith---Dadi's case involves violations that fall within the heartland of a violation of § 1957. In Smith, the defendants were involved in an embezzlement/kickback scheme, for which money laundering was incidental, and for which the money laundering guideline was inappropriate. 186 F.3d at 300. The defendant in Powers argued against this reasoning---claiming, like Dadi, that the court should have departed downward because his conduct fell outside the heartland of offenses intended to be the object of the guideline. 168 F.3d at 753. That argument did not work for Powers, and it does not work here. 41