Opinion ID: 548379
Heading Depth: 2
Heading Rank: 2

Heading: Money Laundering: Base Offense Level and Specific Offense Characteristics

Text: 15 Mourning challenges the findings of the district court regarding application of the guidelines for money laundering offenses. See U.S.S.G. Sec. 2S1.3. This guideline provides that the base offense level will be (1) 13, if the defendant: (A) structured transactions to evade reporting requirements; (B) made false statements to conceal or disguise the activity; or (C) reasonably should have believed that the funds were the proceeds of criminal activity; (2) 5, otherwise. Id. Sec. 2S1.3(a). The specific offense characteristics of this guideline provides: [i]f the defendant knew or believed that the funds were criminally derived, increase by 5 levels. Id. at Sec. 2S1.3(b)(1). 16 The application note indicates that funds or other property are the proceeds of criminal activity or are criminally derived if they are property derived from or constitute proceeds obtained from a criminal offense. Id. Sec. 2S1.3, application note 1. See 18 U.S.C. Sec. 1957(f)(2). The background notes make clear that 13 will be the base level for the great majority of cases. The base offense level of 5 is reserved only for those cases in which these offenses may be committed with innocent motives and the defendant reasonably believed that the funds were from legitimate sources. U.S.S.G. Sec. 2S1.3, background (emphasis in original). 17 The district court accepted the PSI recommendation that the base offense level be 13 in this case because the defendant reasonably should have believed that the funds he laundered were the proceeds of criminal activity. The district court further accepted the PSI recommendation that a specific offense characteristic existed to warrant a five-level increase, namely that the defendant actually knew or believed that the funds were criminally derived. Mourning argues that his base offense level should be five, without any specific offense enhancement.
18 District courts are accorded no deference for legally incorrect applications of the sentencing guidelines, although their findings of fact merit considerable deference under the 'clearly erroneous' standard of review. United States v. Barbontin, 907 F.2d 1494, 1497 (5th Cir.1990). We review the application of the guidelines fully for errors of law. United States v. Otero, 868 F.2d 1412, 1414 (5th Cir.1989). Sentences imposed as a result of incorrect application of guidelines must be reversed. United States v. Mejia-Orosco, 868 F.2d 807 (5th Cir.), clarified, 868 F.2d 807 (5th Cir.), cert. denied, --- U.S. ----, 109 S.Ct. 3257, 106 L.Ed.2d 602 (1989). We find no such misapplication here.
19 The crux of Mourning's argument is that neither the criminal information nor the factual basis, nor any other part of the record, supports the contention that he knew or should have known that the money he was laundering was criminally derived property. He suggests that the evidence regards only intended future use of the funds, and not their derivation. Whether he contests only the finding of knowledge, or also objects to the sufficiency of the evidence supporting the source of the funds, the district court correctly applied section 2S1.3(a)(1)(C) to his case. The government met its burden to prove that the defendant reasonably should have believed that the funds were the proceeds of criminal activity. 20 Mourning told his probation officer that he, Mourning, was aware that this large sum of money was directly related to illegal drug activities.... Mourning made no objection to this statement in the PSI. At the sentencing hearing, Mourning assumed that his base offense level was correctly calculated, and he restricted his arguments to the correctness of the five-point increase the PSI recommended under the specific offense characteristic. Applying the clearly erroneous standard of review to this factual determination, we find that the district court has not erred in its assessment of the base offense level. 21 Since Mourning did not object, the district court made no finding concerning the source of funds, and his knowledge thereof, contained in this record on appeal. This issue cannot be raised for the first time on appeal.
22 Mourning argued before the district court that the Sentencing Commission exceeded its authority by making knowledge a factor in the specific offense characteristics under section 2S1.3(b)(1). He does not pursue this issue on appeal. Instead, he asserts again that there was no evidence that the laundered dollars were criminally derived. He also may be challenging the finding of knowledge on his part by the district court. However, the same facts which support fixing the base offense level at 13 support the five-level enhancement for this special offense characteristic. The uncontested portions of the PSI support not only the criminal derivation of the funds, but also his knowledge thereof. 23 This sort of factual determination must be objected to at sentencing if it is to be an issue on appeal. Mourning could have objected and allowed the district court to make a reviewable finding of fact. In a plea bargain case, this court will not review challenges to the factual basis of a guideline's applicability which has not been preserved by objection in the district court.