Opinion ID: 2967751
Heading Depth: 4
Heading Rank: 3

Heading: The Promotion and Concealment Issues

Text: Similarly unavailing is the contention that the Industrial Check Transactions failed to constitute either promotion money laundering or concealment money laundering. According to the Boldens, the Industrial Check Transactions were only used to carry on the legitimate business of Carolina Supply, and they thus did not qualify as promotion or concealment money laundering. Indeed, several courts have vacated money laundering convictions where the financial transactions were utilized for legitimate purposes. See e.g., United States v. Olaniyi-Oke, 199 F.3d 767, 770 (5th Cir. 1999) (concluding there was no evidence that computers purchased in financial transaction charged as money laundering were to be used for anything other than fully legal personal use); United States v. Calderon, 169 F.3d 718, 721-22 (11th Cir. 1999) (determining there was no evidence that Appellant’s conduct furthered the alleged underlying narcotics trafficking). For the reasons explained below, we reject this contention.
Under the evidence, the Industrial Check Transactions were designed to avoid disclosing the Related Party Transactions to Medicaid, allowing the Boldens to evade Medicaid’s regulatory requirements and charge Medicaid inflated costs. Further, Emerald Health’s payments to Industrial compensated Nelson for his part in the scheme, encouraging his continued participation therein. Finally, Carolina Supply used the money it received from Industrial to purchase and UNITED STATES v. BOLDEN 21 deliver part of the supplies Industrial billed to Emerald Health. These partial deliveries provided an aura of legitimacy to Emerald Health’s payments to Industrial, allowing the Boldens to further conceal their scheme. Thus, the circumstances underlying the Industrial Check Transactions are sufficient to justify the finding that the Boldens committed promotion money laundering. In other decisions, we have ruled similarly. For example, in United States v. Wilkinson, 137 F.3d 214 (4th Cir. 1998), we found the evidence sufficient to sustain convictions for promotion money laundering. There, the defendants had obtained loans from an insurance company by misrepresenting that the funds would be used to finance accounts receivable for physicians. The funds were instead employed to promote risky non-medical businesses. In their scheme, the defendants created a sham business for the purpose of handling the loans. The insurance company wired loan proceeds to the sham business, which transferred those proceeds to the non-medical businesses. We found the transactions to constitute promotion money laundering, in contravention of § 1956(a)(1)(A)(i), because, as Judge Hamilton explained, the transfer of money from [the sham business] to the non-medical businesses was integral to the success of the overall scheme. Id. at 221. In this case, Industrial was a sham business, used solely to deceive Medicaid on the Related Party Transactions, and it was thus integral to the success of the scheme.
The evidence also established that the Industrial Check Transactions constituted concealment money laundering, pursuant to § 1956(a)(1)(B)(i). On this point, the Boldens maintain that, while the Industrial Check Transactions were designed to avoid the requirements of the Medicaid regulations, they were not designed to conceal the fact that Emerald Health had obtained prospective payments from Medicaid. On this basis, they assert that their convictions for concealment money laundering are invalid. Viewed in the proper light, however, the Industrial Check Transactions concealed the fact that the payments Medicaid made to Emerald Health were being used in the Related Party Transactions. As related above, supra Part II.B.2, the Boldens and Nelson created Industrial to 22 UNITED STATES v. BOLDEN hide the fact that Emerald Health was ordering supplies from Carolina Supply, a related party. The Industrial Check Transactions concealed this arrangement and enabled Medicaid to be billed at inflated prices for the supplies ordered from Carolina Supply. Those transactions also concealed the fact that the money flowing into Carolina Supply, and ultimately to the Boldens, was derived from Medicaid funds. The creation and use of sham businesses is highly relevant to the proof of concealment money laundering. The Fifth Circuit, in United States v. Willey, 57 F.3d 1374, 1385 (5th Cir. 1995), observed that the use of a third party, for example, a business entity or a relative, to purchase goods on one’s behalf or from which one will benefit usually constitutes sufficient proof of a design to conceal. And in United States v. Ladum, 141 F.3d 1328, 1333 (9th Cir. 1998), the Ninth Circuit, in an analogous situation, concluded that a defendant who concealed his ownership in a business from a bankruptcy trustee, through the use of nominees who held themselves out as owners of the stores, had committed concealment money laundering. The court reasoned that the use of nominees prevented the bankruptcy trustee from knowing that [the defendant] was the legitimate owner of the stores. Id. at 1340. Likewise, the Boldens’ use of Industrial concealed the fact that Emerald Health was billing Medicaid (at inflated prices) for the Related Party Transactions. In sum, the evidence sufficiently proves the allegations of concealment money laundering.