Opinion ID: 562667
Heading Depth: 1
Heading Rank: 5

Heading: sufficiency of the evidence--money laundering (davis)

Text: 23 Davis next asserts that the evidence the jury heard was insufficient to convict him of laundering funds derived from his narcotics activities. Davis points to his various other sources of income, including the money he made bird-dogging cars, arranging purchase-money loans, and demolishing buildings, all of which produced revenue which was deposited into the Development Corporation account. He argues that no rational juror could decide beyond a reasonable doubt that the individual checks and transactions enumerated in counts three through five of the indictment involved money derived from drug activities. The government responds that the testimony of Internal Revenue Service Agent James Wehrheim established that Davis earned approximately $102,500 from non-drug sources during the period of the drug conspiracy charged in the indictment. During the same period, over $200,000 was deposited in the two church accounts to which Davis had access. In light of the other evidence presented at trial, it argues, jurors could rationally infer that the difference was attributable to drug activities. Second, it contends that the money laundering statute does not require the prosecution to prove that the funds used in the various transactions listed in the indictment came exclusively from drug activities, but only that some of it was derived from these activities. 24 Though Davis styles this argument in terms of the sufficiency of the evidence, we believe that it involves a preliminary question of statutory construction. The question posed is whether a defendant can be convicted under either 18 U.S.C. Sec. 1956(a)(1)(A)(i) or (a)(1)(B)(i) where the transaction that forms the basis of the indictment involves the proceeds of both specified unlawful activity as defined in Sec. 1956(c)(7), and other conduct, either innocent or criminal, but not among the enumerated criminal activities that may serve as a predicate for a money laundering conviction. 25 Both of the money laundering provisions Davis was charged under, Sec. 1956(a)(1)(A)(i) and (a)(1)(B)(i), require only that a transaction involve[ ] the proceeds of an activity which the participant knows is unlawful, and which in fact involves the proceeds of one of the types of criminal conduct identified in Sec. 1956(c)(7). We do not read Congress's use of the word involve as imposing the requirement that the government trace the origin of all funds deposited into a bank account to determine exactly which funds were used for what transaction. Moreover, we cannot believe that Congress intended that participants in unlawful activities could prevent their own convictions under the money laundering statute simply by commingling funds derived from both specified unlawful activities and other activities. Indeed, the commingling in this case is itself suggestive of a design to hide the source of ill-gotten gains that the government must prove under Sec. 1956(a)(1)(B)(i). See United States v. Sutera, 933 F.2d 641, 645 (8th Cir., 1991). 26 The risk that this reading of the statute will have unduly harsh consequences is mitigated by the requirements imposed upon the government by other parts of the statute. To convict under Sec. 1956(a)(1)(A)(i), the government bears the burden of proving beyond a reasonable doubt that the party engaged in the transaction knew that the funds used represented, in whole or in part, proceeds of an unlawful activity and intended the transaction to promote one of the varieties of criminal conduct identified in Sec. 1956(c)(7). In a case under (a)(1)(B)(i), the government must also prove that the transaction was carried out in whole or in part with the design of concealing the nature, the location, the source, the ownership, or the control of the proceeds of one of the forms of criminal conduct enumerated in Sec. 1956(c)(7). It will be a rare case in which these requirements will be satisfied without proof that the funds used in the charged transaction were derived in substantial measure from specified unlawful activities rather than from other legal or illegal conduct. 27 Having concluded that Sec. 1956(a)(1)(A)(i) and (a)(1)(B)(i) allow for convictions where the funds involved in the transaction are derived only in part from specified unlawful activities, we move to the question of whether the evidence at trial was sufficient to convict Davis of violating these provisions when he wrote the various checks identified in the money laundering counts of the indictment. A defendant challenging the sufficiency of the evidence supporting his conviction faces a formidable burden 28 as we must affirm as long as any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. In making this determination we look to all of the evidence and draw all reasonable inferences from that evidence in the light most favorable to the government. We must affirm unless the record is barren of any evidence, regardless of weight, from which the trier of fact could find guilt beyond a reasonable doubt. 29 United States v. Atterson, 926 F.2d 649, 655 (7th Cir.1991) (citations omitted). 30 We have already set out the elements of a conviction under Sec. 1956(a)(1)(A)(i) and (a)(1)(B)(i). Ante at 838-39. We think that a rational juror could find that the government sustained its burden of proving these elements beyond a reasonable doubt as to the transactions charged in counts three through five of the indictment. As to the elements set out in Sec. 1956(a)(1) and common to both (a)(1)(A)(i) and (a)(1)(B)(i), the proof that Davis knew that money derived from his drug organization was deposited in the church account was established, first, by the testimony of Davis' church secretary, who testified that Davis would give her cash to deposit into the Development Corporation bank account. Trial Transcript (Tr.) at 214. Second, Agent Wehrheim testified as to Davis' sources of cash and established that Davis and the Development Corporation made bank deposits equal to approximately twice the amount that could be accounted for out of legitimate sources of income. Tr. at 648-52. Over half the total amount of these deposits was in cash. Tr. at 649-650. 31 The evidence at trial also established that Davis had access to large amounts of cash. For example, Marcie Rupert testified she had helped him count approximately $35,000 in currency. Tr. at 364. Pierre Manley, who worked as a runner transporting cash from the Wabashaw house to Davis, testified that he would often pick up $1500 a day from the house. Tr. at 196. Reasonable jurors could certainly infer that the cash contained in the deposits Davis made or ordered to be made were derived to a large extent from Davis' drug operations and that Davis knew this. The jury was also entitled to conclude, as it did in deciding that Davis was guilty under count one of the indictment, that Davis' drug-derived funds were the proceeds of a drug operation involving a continuing series of narcotics distributions, composed of five or more other persons, and from which Davis derived substantial income. These findings, taken together, established that Davis was guilty of operating a continuing criminal enterprise within the meaning of 21 U.S.C. Sec. 848(c), one of the specified unlawful activit[ies] that may serve as a predicate act under the money laundering statute. 18 U.S.C. Sec. 1956(c)(7)(C). Writing a check, whether for cash or to a vendor who has provided services, falls within the definition of a financial transaction contained in Sec. 1956(c)(4)(B) because it involved Illini Federal, a financial institution ... the activities of which affect[ ] interstate ... commerce. Writing a check drawn on an account maintained in such an institution is also a transaction falling within the very broad[ ] definition given to that term under the money laundering statute. See 18 U.S.C. Sec. 1956(c)(3); S.Rep. No. 433, 99th Cong., 2d Sess. 12-13 (1986); United States v. Martin, 933 F.2d 609, 610 (8th Cir., 1991); United States v. Blackman, 904 F.2d 1250, 1257 (8th Cir.1990). 32 Turning to the elements set out in sub-sections (a)(1)(A)(i) and (a)(1)(B)(i) as applied to the conduct charged in the three money laundering counts contained in the indictment, count three charged Davis with issuing seven Development Corporation checks to vendors providing beeper services and mobile telephone services. Pierre Manley testified that Davis gave him a beeper when he began to serve as one of Davis' runners, and that Davis would call Manley's beeper to tell him to contact Davis. When Manley called back, Davis instructed him to drive to the Wabashaw house to make pickups. Tr. at 191-92. This and other evidence of the use of beepers as an integral part of Davis' conduct of his continuing criminal enterprise suffice to establish that the use of the funds derived from Davis' drug activities to purchase beepers was intended to promote this activity, establishing a violation of Sec. 1956(a)(1)(A)(i). 33 We are, however, unable to view the mobile phone purchases that comprise the remainder of count 3, the rental payments alleged in count 4, or the checks written to cash charged in count 5 as intended to promote the continued operations of Davis' continuing criminal enterprise under Sec. 1956(a)(1)(A)(i). The government did not prove that the cellular phones played the same role--or indeed, any role--in Davis' drug operations as the beepers. Likewise the rental payments and the checks written to cash; certainly these expenditures maintained Davis' lifestyle, but more than this is needed to establish that they promoted his drug activities. These transactions, however, do fall within the second money laundering provision under which Davis was charged, Sec. 1956(a)(1)(B)(i). The conversion of cash into goods and services as a way of concealing or disguising the wellspring of the cash is a central concern of the money laundering statute. This is not to say that the money laundering statute should be interpreted to broadly encompass all transactions, however ordinary on their face, which involve the proceeds of unlawful activity. Sanders, 928 F.2d at 946. To convict under Sec. 1956(a)(1)(B)(i) the government must prove not just that the defendant spent ill-gotten gains, but that the expenditures were designed to hide the provenance of the funds involved. 34 We believe that the government met this burden. Davis chose to place the proceeds of his drug sales not in a personal bank account but in bank accounts ostensibly maintained by the 15th Street Baptist Church and the 15th Street Baptist Church Development Corporation. He nevertheless treated the funds in these accounts as his own, using them to pay for cellular telephones he installed in his many cars and vans, his rent, and his credit card and home phone bills. Tr. 218-222. The jury could reasonably infer that the use of the church accounts was an attempt to hide the ownership and source of Davis' drug money while preserving his ready access to the funds in the accounts, which were as close as the church's checkbook. Moreover, the evidence also established that Davis frequently removed himself still further from the funds in the church accounts by using the church secretary to present Development Corporation checks made out to cash at Illini Federal. She would then hand over cash she received to Davis. Tr. 219-220. A rational juror could certainly conclude that these maneuvers were designed to conceal the source of Davis' ample store of tainted cash, bringing Davis squarely within the ambit of Sec. 1956(a)(1)(B)(i). That the deception was ultimately unsuccessful, and even that it was relatively easy for investigators to pierce, does not mean that it falls beyond the statute's reach. See Sutera, 933 F.2d at 648 ([T]he money laundering statute does not require the jury to find that Sutera did a good job of laundering the proceeds.). 35 Because the money laundering statute is a relatively recent addition to the government's arsenal, and because this case raises unsettling questions about the breadth of its application, we pause to note that the government in its indictment, and the district court in its jury instructions, erroneously read the statute as requiring the government to prove that the transactions charged were both intended to promote Davis' continuing criminal enterprise under Sec. 1956(a)(1)(A)(i), and were designed to conceal the source of the funds used in the transactions under Sec. 1956(a)(1)(B)(i). The statute, however, only requires proof of one or the other. The fact that the government imposed an additional burden on itself does not warrant a reversal. Cf. United States v. Townsend, 924 F.2d 1385, 1413 (7th Cir.1991) (It is only when the jury is instructed that its verdict may rest on any single ground alleged in a charge that, after a ground is invalidated, we cannot discern whether the verdict is based on an invalid ground.). That being said, we are unable to agree with the jury's apparent conclusion that the checks to cellular telephone providers, to Davis' landlord, and to cash, promoted his ongoing sales of crack in any direct way. 36 The error in the indictment and the jury charge does point to another question, however, namely the relationship between Sec. 1956(a)(1)(A)(i) and (a)(1)(B)(i). These two provisions are aimed at different activities, the first at the practice of plowing back proceeds of specified unlawful activity to promote that activity, the second at hiding the proceeds of the activity. The different aims suggest that the prosecution in a money laundering case will generally make its case under one provision or the other; only in the unusual case will the government be able to prove that a single transaction was intended to both promote an illegal activity and conceal the origin of the funds used in that activity. This suggests that the government should advise the district court and defense counsel whether it is proceeding under the former, the latter, or both, and that the jury be charged accordingly. The potential breadth of the statute, and the risk that juries will confuse money laundering with money spending, see United States v. Sanders, 928 F.2d 940, 946 (10th Cir.1991), persuades us that their inquiry should be channelled by more specific instructions than the one given in this case. 37