Opinion ID: 199005
Heading Depth: 3
Heading Rank: 2

Heading: Application of Restitution to Money Laundering

Text: At sentencing, both Paradis and the government argued that because in the usual case--laundering of the proceeds of drug transactions--the victim is society, restitution is improper in a case where money laundering is the only offense. The district court, however, concluded that because Paradis's money laundering deprived the bankruptcy trustee of the ability to distribute the laundered funds to Petit's creditors, restitution was appropriate and the trustee was a victim for purposes of 18 U.S.C. § 3663A. The court ordered Paradis to pay restitution of roughly $3 million--the aggregate of the laundered funds--to the trustee in Petit's bankruptcy case. On appeal, Paradis urges us to reverse the restitution order on the same ground he argued in the district court, i.e., that there can be no identifiable victim for purposes of § 3663A because the victim of money laundering is society. Although the government also took that position in the district court, on appeal it defends the district court's order to facilitate our consideration of this issue. Paradis's argument rests on decisions applying the grouping provisions of United States Sentencing Guideline § 3D1.2, under which offenses are grouped for sentence calculation where they are based on different acts but harm the same victims. He relies principally on United States v. Lombardi, 5 F.3d 568 (1st Cir. 1993). The issue there was whether a defendant's sentence for mail fraud and for money laundering should have been included in a single group. In rejecting the defendant's argument that his mail fraud and money laundering convictions involved the same victims for purposes of grouping under the guidelines, we said, [t]he guidelines are clear that, for purposes of these subsections, the victim of fraud is the insurance company and the victim of money laundering is society. The decision is not apposite; it does not implicate the construction of the restitution statute, 18 U.S.C. § 3663A, nor does it purport to decide that money laundering could not produce an identifiable victim. For the same reasons, the other decisions on which Paradis relies are inapposite. See, e.g., United States v. Kunzman, 54 F.3d 1522, 1531 (10th Cir. 1995) (securities fraud and money laundering); United States v. Gallo, 927 F.2d 815, 824 (5th Cir. 1991) (drug offenses and money laundering). We turn now to the statute. Under 18 U.S.C. § 3663A, restitution is mandatory where the defendant is convicted of any . . . offense against property under [Title 18], including any offense committed by fraud or deceit . . . in which an identifiable victim or victims has suffered a . . . pecuniary loss. 18 U.S.C. § 3663A(c)(1); id. § 3663A(a)(1). Paradis does not dispute that money laundering is an offense against property. See 18 U.S.C. § 1956(a)(1) (Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts . . . a financial transaction . . .) (emphasis added). A victim under the statute is a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered . . . . 18 U.S.C. § 3663A(a)(2). Here, Paradis diverted funds he knew were the proceeds of Petit's fraud on thebankruptcy court from the bankruptcy estate. To conceal the existence of those funds from the bankruptcy court, Paradis channeled them through his own accounts, out of which he paid Petit's personal and business expenses. The direct result of Paradis's actions was to conceal from the bankruptcy court and from the estate $3 million that could have been available to satisfy claims of creditors. On these facts, Paradis's argument that society alone was the victim is untenable and restitution may be appropriate to the extent identifiable victims exist.