Opinion ID: 711057
Heading Depth: 3
Heading Rank: 2

Heading: Exclusion of Tracing Evidence

Text: 46 Amigable argues the district court erred by precluding him from cross-examining a bank representative to establish that the funds paid to the cappers for the referrals were not the actual dollars acquired from the mail fraud. The district court determined this proffered evidence was irrelevant because under section 1956(a)(1) the government need only prove that tainted funds were commingled in an account and, at some point, funds from that account were used to pay the referral fees. 47 Our standard of review depends upon whether this evidentiary issue presents predominately factual or legal questions. United States v. Owens, 789 F.2d 750, 753 (9th Cir.1986), rev'd on other grounds, 484 U.S. 554, 108 S.Ct. 838, 98 L.Ed.2d 951 (1988). In Owens, we set forth the applicable analysis: 48 Questions of the admissibility of evidence which involve factual determinations, rather than questions of law, are reviewed for an abuse of discretion. When a mixed question of law and fact is presented, the standard of review turns on whether factual matters or legal matters predominate. If an essentially factual inquiry is present, or if the exercise of the district court's discretion is determinative, then we give deference to the decision of the district court; otherwise, we conduct a de novo review. 49 Id. (citation omitted). 50 To resolve the evidentiary issue whether Amigable's tracing evidence is relevant to his defense, we must interpret section 1956(a)(1) of the money laundering statute. Specifically, we have to decide whether this statute requires the government to prove the financial transaction of issuing the checks from the Ragasa Financial Corporation account involved actual tainted dollars or whether the statute is satisfied by showing the tainted dollars were commingled in that account and funds from the account were used to make the payments. Because this is primarily a legal question of statutory interpretation, we apply the de novo standard of review. See United States v. Jackson, 935 F.2d 832, 839 (7th Cir.1991); cf. United States v. Thompson, 37 F.3d 450, 452 (9th Cir.1994). 51 A representative of the bank testified the Fong and Young settlement checks were deposited in Amigable's client trust account in October 1991. In November 1991, funds were drawn from this trust account and deposited into Amigable's operating account. Funds from this operating account were then deposited into the Ragasa Financial Corporation account. Shortly after this last transfer, the two referral fees were paid using checks drawn on the Ragasa Financial Corporation account. Both of these checks referenced the Fong and Young cases. 52 Amigable contends his proffered evidence would show that it was factually impossible that the funds used to pay the referral fees were proceeds derived from the mail fraud because the Ragasa Financial Corporation account reached a zero balance after proceeds from the mail fraud were deposited in the account and before the checks for the referral fees were written. Therefore, Amigable argues, there were no tainted funds in the Ragasa account at the time the referral fee checks were actually issued. 53 Amigable's argument is predicated upon the assumption that the government must demonstrate the financial transaction of issuing the referral checks involved at least some of the very dollars illegally acquired. We addressed a similar contention in United States v. Garcia. In Garcia, the defendant argued the government had to prove that all the money used in the financial transaction was from the illegal activity and that the financial transaction did not involve any untainted funds from a commingled account. Garcia, 37 F.3d at 1364. We rejected this argument and concluded that under the money laundering statutes, due to the fungibility of money, it is sufficient to prove that the funds in question came from an account in which tainted proceeds were commingled with other funds. Id. at 1365. 54 We reasoned a rule requiring the government to segregate tainted from untainted funds would defeat the purposes of the money laundering statute. Id. Such a rule would permit individuals to avoid prosecution simply by commingling funds, id. (quoting United States v. Johnson, 971 F.2d 562, 570 (10th Cir.1992)); or in the present case, simply by disbursing the illegally obtained funds from the Ragasa Financial Corporation account, depositing clean funds into that account, and then using the clean money to complete the referral fee transaction. This is a classic example of money laundering. 55 We conclude the government did not have to establish that the proceeds used in the financial transaction to pay the referral fees were part of the actual dollars obtained from the illegal activity. The government established a direct relationship between the illegally acquired settlement proceeds and the subsequent payment of the referral fees. Amigable designated a portion of the proceeds for payment of the referral fees. The government need not prove the account used to pay the fees maintained a positive balance between the time the illegal proceeds were deposited and when the referral fees were paid. 4 A contrary rule would permit laundering the proceeds of an unlawful activity through a bank account by the simple expedient of flushing the account with clean money as an intermediary step in the money laundering cycle. This is the kind of activity Congress targeted in enacting the money laundering statute. See United States v. Savage, 67 F.3d 1435, 1441 (9th Cir.1995). 56 AFFIRMED.