Opinion ID: 770562
Heading Depth: 3
Heading Rank: 1

Heading: Including the proceeds involved in the conspiracy.

Text: 34 The Sentencing Guidelines provide that 23 is the base offense level for someone convicted under 18 U.S.C. sec. 1956(h) of conspiracy to launder money in violation of 18 U.S.C. sec. 1956(a)(1)(A)(i). See U.S.S.G. sec. 2S1.1(a); House, 110 F.3d at 1287-88. If the volume of funds involved in the money laundering exceeds $100,000, then the base level is enhanced, depending upon the amount. See U.S.S.G. sec. 2S1.1(b)(2). And since the value of funds involved in a money laundering offense is a specific offense characteristic, we must look to a defendant's relevant conduct to determine that value. See United States v. Sokolow, 91 F.3d 396, 410 (3d Cir. 1996) (citing U.S.S.G. sec.sec. 1B1.3(1) and 2S1.2(b)). The Relevant Conduct section of the Sentencing Guidelines requires courts to consider: 35 (A) all acts and omissions committed, aided, abetted, counseled, commanded, induced procured, or willfully caused by the defendant; and 36 (B) in the case of a jointly undertaken criminal activity (a criminal plan, scheme, endeavor, or enterprise undertaken by the defendant in concert with others, whether or not charged as a conspiracy), all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity, that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense; 37 U.S.S.G. sec. 1B1.3(a)(1) (emphasis added). The Commentary to sec. 2S1.1 states that the amount of money involved is included as a factor because it is an indicator of the magnitude of the criminal enterprise, and the extent to which the defendant aided the enterprise. (Emphasis added.) 38 The district court determined that about $4.4 million was involved in Baker's conspiracy to launder money from his prostitution business, so it increased his base level by seven. See id. at sec. 2S1.1(b)(2)(H). The court arrived at this figure by focusing on the amount of income Baker received from his massage parlor business from 1990 to 1997; it declined to include monies that Baker received from his related legal businesses, although it concluded that the money from these ventures was also involved in Baker's money laundering conspiracy. Baker argues that it was excessive to include the income from his prostitution business over eight years because: 1) the government charged in the indictment that the specified unlawful activity of his laundering of his prostitution proceeds was $2,590 in specific credit card transactions; and 2) the conspiracy only lasted for the six months he shared control with his son. 39 As to Baker's first contention, Baker was not just convicted of money laundering; he was also convicted of conspiring to launder money. For purposes of the conspiracy, the indictment charged fifteen specific instances of credit card usage (the $2,590) to establish some of the overt acts of the conspiracy and to show that interstate wires were in fact used to obtain prostitution services (indeed, the primary purpose of the credit card and ATM system was to facilitate the prostitution business). These specific credit card transactions do not serve to limit the amount of money involved in Baker's conspiracy. Baker was in fact convicted of laundering amounts much larger than $2,590 (about $206,000), and he was convicted of conspiring over the years to launder a lot more than that. 40 Indeed, the amount of funds that are included as part of Baker's relevant conduct is not even limited by the funds charged in the money laundering counts themselves. See Sokolow, 91 F.3d at 411 (Funds associated with uncharged instances of money laundering can be added in to determine the offense level under sec. 2S1.1 if those acts are within the scope of relevant conduct under sec. 1B1.3(a)(2). Thus, in determining the 'value of funds' under sec. 2S1.1, the district court is not necessarily limited only to the funds identified with the counts of conviction.). In a conspiracy spanning several years, the value of funds is determined by the amount of money that is reasonably foreseeable to Baker, including monies that were generated (and then laundered) to further or facilitate the conspiracy. See House, 110 F.3d at 1284-85 (Because a sentencing court is required to take into account not only the acts of a defendant charged with conspiracy, but also 'all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity,' these total amounts would be attributable to a defendant found to have reasonably foreseen the scope of the conspiracy.) (quoting U.S.S.G. sec. 1B1.3(a)(1)(B)). Here, the district court did not clearly err in concluding that the millions of dollars from Baker's massage parlor business, which over the years he conspired to launder by depositing into and withdrawing from dummy accounts, were reasonably foreseeable to him as furthering and facilitating his conspiracy. These funds bankrolled his prostitution business and thereby his money laundering conspiracy, including the conspiracy's receipt and use of credit card and ATM transactions. Cf. United States v. $448,342.85, 969 F.2d 474, 477 (7th Cir. 1992) (Money need not be derived from a crime to be 'involved'; perhaps a particular sum is used as the bankroll facilitating the fraud.). As the head and mastermind of the operation, Baker was obviously privy to the funds that were generated and used in the conspiracy. See U.S.S.G. sec. 1B1.3(a)(B). 41 Furthermore, it is not necessary, as Baker contends, for the government to separate out income from bona fide massages (whatever those were) from income from sexual services. The clean money was also involved in the conspiracy in that, as noted, it helped further and facilitate the operation. Cf. $448,342.85, supra; United States v. Tencer, 107 F.3d 1120, 1134 (5th Cir. 1997) (because clean money that is commingled with unclean money facilitates the money laundering operation, the clean money is involved in the offense and is therefore forfeitable); United States v. Jackson, 935 F.2d 832, 840 (7th Cir. 1991) (Section 1956(a)(1)(A)(i) allows for convictions where the funds involved in the transaction are derived only in part from 'specified unlawful activities.' We cannot believe that Congress intended that participants in unlawful activity 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 . . . .). Nor is it necessary for the government to attempt to separate proceeds from ATM and credit card transactions in the prostitution business from other proceeds. The other proceeds from prostitution also helped further and facilitate the operation and thus were part of the money laundering conspiracy. To determine the value of funds, the government need not trace each dollar of income by the means of payment, and it need not trace each dollar to a specific instance of laundering. Cf. id. (To prove money laundering under 18 U.S.C. sec. 1956(a), [w]e do not read Congress's use of the word 'involve' as imposing the requirement that the government trace the origin of all funds deposited in a bank account to determine exactly which funds were used for what transaction.). 42 As to Baker's second contention, the money laundering conspiracy was much longer than the six months that Baker's son had nominal control. It lasted for several years. Baker complains that the government stipulated that his son was a part of the conspiracy only for several months and that during this time the only proven amount of financial transactions was $235,000. But Baker was not part of the stipulation, and the stipulation did not purport to deal with all of Baker's activities. The government's stipulation as to the involvement of Baker's son in the conspiracy does not preclude it from showing that Baker conspired with others for much longer. And the district court did not clearly err in finding that from 1990 to 1997 Baker conspired with at least seven others-- upper-level and mid-level managers, supervisors, and lower-level employees- -to launder money from his prostitution business (the involvement of whom we shall discuss next). 43