Opinion ID: 1435633
Heading Depth: 2
Heading Rank: 4

Heading: Challenge to Money Laundering Conspiracy Convictions

Text: Defendants appeal their Count 8 convictions under 18 U.S.C. § 1956(h) for conspiracy to commit money laundering, asserting instructional error. As Defendants did not raise their objections to the § 1956 jury instructions in the district court, we review for plain error. Peterson, 538 F.3d at 1070. Though Count 8 of the Indictment charged the Defendants with conspiring to commit four different money laundering offenses, the jury was instructed that Defendants allegedly conspired to commit only one violation of 18 U.S.C. § 1956(a)(2)(B)(I). A person violates this provision if he transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States ... knowing that the monetary instrument or funds involved in the transportation, transmission, or transfer represent the proceeds of some form of unlawful activity and knowing that such transportation, transmission, or transfer is designed in whole or in part ... to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity. 18 U.S.C. § 1956(a)(2)(B)(i) (emphasis added). Section 1956 further provides that the term knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity means that the person knew the property involved in the transaction represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under State, Federal, or foreign law. Id. § 1956(c)(1) (emphasis added). Both the Indictment and jury instructions specify that the some form of unlawful activity was Defendants' conduct violating 18 U.S.C. § 1037(a)(3) and (a)(4) and that the specified unlawful activity was Defendants' conduct violating 18 U.S.C. §§ 1462 and 1465. Defendants raise two interrelated assertions of instructional error. First, Defendants argue that if the court overturns its 18 U.S.C. §§ 1037, 1462, and 1465 convictions pursuant to the other aspects of its appeal, it must also reverse its § 1956(h) conviction because Defendants' § 1956(h) conviction relied on a finding that Defendants' related activity was unlawful. As we do not sustain these other aspects of Defendants' appeal, we may reject this argument without further discussion. Second, Defendants argue that even if their 18 U.S.C. §§ 1037, 1462, and 1465 convictions are upheld, the fact that their 18 U.S.C. § 1037 convictions are properly categorized as misdemeanors, see supra Section II.C, requires reversal because § 1956 defines some form of unlawful activity as felonious activity. 18 U.S.C. § 1956(c)(1). We conclude that the district court's instruction was in error. The district court's Jury Instruction Number 46 on what constitutes a violation of § 1956(a)(2)(B)(i) included the following requirement: The person knows that the money represents the proceeds of some form of unlawful activity, in this case, the a[sic] violation of 18 U.S.C. § 1037(a)(3) or § 1037(a)(4) as set forth in Counts Two and Three of the Indictment[.] The instruction further stated: To know that money involved in a financial transaction represents the proceeds of some form of unlawful activity, the person must know that the money represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under State, Federal, or foreign law. As set forth in the Indictment, Counts Two and Three included allegations of conduct that would warrant application of felony-level penalties under § 1037(b)(2). However, Jury Instructions Number 25 and 29 related to these counts state clearly that [i]n order to prove the charge for each the jury needed only to find conduct sufficient to support application of the misdemeanor level penalties under § 1037(b)(3). Such instructions allowed the jury to convict Defendants of Count 8 by finding related activity that constituted only a misdemeanor violation of § 1037. We conclude it is unlikely that the jury interpreted the as set forth in the Indictment language in Jury Instruction Number 46 as requiring them to define a violation of § 1037(a)(3) and (a)(4) for purposes of finding a violation of § 1956 by reference to all the factual allegations made in Counts 2 and 3 of the Indictment. The jury more likely simply referred to Jury Instructions Number 25 and 29 to define a violation of those provisions for purposes of all counts. At a minimum, the instructions created serious ambiguity as to what was required. Furthermore, the instruction to the jury that the unlawful activity must be a felony could not have cured this error because there was no instruction given to the jury as to what was required to render a § 1037 violation a felony or as to whether any violation alleged in the Indictment was or was not a felony. Having determined there was error, we must determine whether it was plain. We find it is not, as it did not seriously affect the fairness, integrity or public reputation of the proceedings. See Peterson, 538 F.3d at 1072. Section 1037(b)(2)(C) provides for felony-level penalties if ... the volume of electronic mail messages transmitted in furtherance of the offense exceeded 2,500 during any 24-hour period, 25,000 during any 30-day period, or 250,000 during any 1-year period. 18 U.S.C. § 1037(b)(2)(C). This is the basis on which the Indictment charged felony violations of § 1037. Defendants' employees Jennifer Clason and Kirk Rogers each provided uncontradicted testimony that Defendants were transmitting emails in volumes well exceeding 250,000 in 2004. Hence, we conclude that the evidence at trial shows beyond a reasonable doubt that Defendants committed felony-level violations of § 1037. As a result, the instructional error identified by Defendants had no impact on the proceedings and therefore does not require reversal. See Nash, 115 F.3d at 1437.