Opinion ID: 2967751
Heading Depth: 3
Heading Rank: 2

Heading: The Grouping Issue

Text: The Boldens contend that the sentencing court erroneously grouped their fraud and money laundering convictions. Pursuant to U.S.S.G. § 3D1.2(d) of the Guidelines, all counts involving substantially the same harm shall be grouped together into a single group. In construing § 3D1.2(d), we have concluded that fraud and money laundering offenses should only be grouped when they are ‘closely related.’ United States v. Walker, 112 F.3d 163, 167 (4th Cir. 1997) (quoting United States v. Porter, 909 F.2d 789, 792-93 (4th Cir. 1990)). According to the Boldens, their fraud and money laundering offenses are not so closely related as to warrant grouping. We disagree. In Porter, we first considered whether fraud and money laundering may be so closely related as to warrant being grouped together. 909 F.2d 789. Porter had obtained the proceeds of an illegal gambling operation and laundered those proceeds by purchasing a home. We declined to group his offenses because the money laundering was not in any way integrated with the fraud scheme, i.e., the gambling operation. Id. at 793. The only connection between the gambling 32 UNITED STATES v. BOLDEN operation and his money laundering activity was that Porter had laundered the proceeds of the scheme. We concluded that, in such a situation, the fraud and money laundering offenses were not so closely related as to justify grouping. Id. We observed, however, that the grouping of such offenses would be appropriate where an enterprise generated monies through illegal activities and simultaneously laundered those monies as part of the same continuing transaction or common scheme. Id. In Walker, we approved the grouping of fraud and promotion money laundering offenses because the money laundering activities were an essential aspect of the fraud scheme. 112 F.3d at 167. Walker, an insurance salesman, had diverted funds from his customers to his personal use and made fictitious interest payments to his customers with the proceeds. In so doing, he both concealed and promoted the fraud scheme. In making the fictitious interest payments, he used the proceeds of his fraud scheme to avoid suspicion that fraudulent activity was afoot and to encourage customers to continue paying their premiums. Id. The Walker principles are applicable here. The Boldens were found to have engaged in both promotion and concealment money laundering, and the Industrial Check Transactions not only concealed the Related Party Transactions from Medicaid, they promoted those transactions as an essential component of the fraud scheme. By obtaining funds from the Industrial Check Transactions, the Boldens were able to provide Emerald Health with a portion of the supplies reflected on the Industrial invoices. These actions gave an aura of legitimacy to their criminal endeavor and enabled their scheme to continue. As such, the money laundering and the Related Party Transactions were not only closely related, they were inextricably intertwined. In every aspect of the fraud scheme, the Boldens’ goal was the same: the improper extraction of monies from Medicaid. Their money laundering activities were essential to achieving that goal, and their money laundering and fraud activities were part of a continuous, common scheme to defraud Medicaid. Thus, the fraud and money laundering offenses are closely related and, in the context of the Guidelines, were properly grouped together by the sentencing court.30 30 Ms. Bolden also contends that grouping is inappropriate here because the sum of money laundered (approximately $50,000) was small in comUNITED STATES v. BOLDEN 33 See United States v. Emerson, 128 F.3d 557, 566 (7th Cir. 1997) (approving grouping when defendant had embarked upon his money laundering scheme with the intent of promoting his mail fraud swindle); United States v. Landerman, 167 F.3d 895 (5th Cir. 1999) (upholding grouping when money laundering was used to promote and enhance fraud scheme). In these circumstances, the contention that the court erred on the grouping issue must be rejected.