Opinion ID: 751779
Heading Depth: 3
Heading Rank: 1

Heading: The Promotion Counts.

Text: 18 Counts 12, 13, 14, 16 and 17 charged that the Defendants violated 18 U.S.C. § 1956(a)(1)(A)(i). In order to sustain a conviction under the statute, the government must prove: (1) the defendant conducted or attempted to conduct a financial transaction having at least a de minimis effect on interstate commerce or involving the use of a financial institution which is engaged in, or the activities of which have at least a de minimis effect on, interstate commerce, see United States v. Peay, 972 F.2d 71, 74 (4th Cir.1992); (2) the property that was the subject of the transaction involved the proceeds of specified unlawful activity; (3) the defendant knew that the property involved represented the proceeds of some form of unlawful activity; and (4) the defendant engaged in the financial transaction with the intent to promote the carrying on of specified unlawful activity. See 18 U.S.C. §§ 1956(a)(1)(A)(i) and (c). 19 With respect to counts 12-14 and 16-17, the indictment essentially alleged that the Defendants' transfers of money fraudulently obtained from HLI through MPS to their non-medical businesses constituted financial transactions involving proceeds from a specified unlawful activity, namely wire fraud, conducted with the intent to promote the carrying on of wire fraud. The Defendants take issue with the sufficiency of the evidence with respect to the interstate commerce element and whether the Defendants conducted the transactions with the intent to promote wire fraud. We conclude the evidence is sufficient with respect to each of these elements and address each in turn. 20 The Defendants argue that evidence of a de minimis effect on interstate commerce is lacking, because the Promotion Counts only involved the intrastate transfers of funds. For example, Count 17 was premised on a check drawn on MPS's account at Signet Bank in Virginia in favor of Hawthorne Construction Excavators, Inc., a Virginia company. Although the Promotion Counts only involved the intrastate transfers of HLI line of credit funds, the record contains more than sufficient evidence to establish that those transfers had at least a de minimis effect on interstate commerce. Specifically, the evidence firmly established that the Defendants' transfers affected interstate commerce by violating MPS's loan agreement with an out-of-state company, HLI. 21 Relying on United States v. Heaps, 39 F.3d 479 (4th Cir.1994), and United States v. Jackson, 935 F.2d 832 (7th Cir.1991), the Defendants argue that their unsecured transfers of funds to their nonmedical businesses in no way promoted wire fraud. Rather, the Defendants contend that their unsecured transfers merely amounted to lifestyle expenditures. See Jackson, 935 F.2d at 841 (holding that defendant's expenditure of proceeds from drug sale on items used solely to maintain personal lifestyle did not promote specified crime of drug dealing). 22 We believe there is sufficient evidence of promotion. The Defendants understood that the use of financial transactions from MPS to the non-medical businesses was an essential part of their scheme to misapply funds fraudulently obtained from HLI. Otherwise, HLI would have transferred funds directly to the non-medical businesses. To avoid this result, MPS engaged in these transactions with the nonmedical businesses to promote the overall scheme. Because the transfer of money from MPS to the non-medical businesses was integral to the success of the overall scheme, it is undeniable that these transactions were designed to promote the unlawful activity of wire fraud. That the transactions were part of the overall scheme to defraud or could form the basis of a wire fraud charge is of no consequence. Cf. United States v. Smith, 44 F.3d 1259, 1265 (4th Cir.1995). 23 Furthermore, the facts here are materially distinguishable from the facts in Heaps and Jackson, the two cases relied upon by the Defendants. In Heaps, the promotion counts were based on payments for drugs to a drug dealer, who then placed the money in a box in his apartment. Heaps, 39 F.3d at 485. We held that the receipt of the proceeds of the drug deal could not also serve as the predicate of a promotion count. See id. at 485-86. Otherwise virtually every sale of drugs would be an automatic money laundering violation as soon as money changed hands. Id. at 485. Thus, in Heaps, we required that the money laundering transaction be separate and distinct from the underlying offense generating the money. In the present case, the promotion counts satisfy this requirement. They were predicated, not on the transfers into MPS's account, but rather on the transfers from MPS's account to their non-medical businesses, thus misappropriating HLI line of credit funds to infuse cash into those businesses. 24 Jackson is inapposite as well. In Jackson, the Seventh Circuit held that proof of the defendant drug dealer's purchase of a cellular telephone, making rental payments, and making out checks to cash with funds he obtained from the sale of drugs could not be viewed as promoting his drug dealing for purposes of § 1956(a)(1)(A)(i), because the government did not offer concomitant proof that these expenditures played some role in the defendant's drug dealing operation. Jackson, 935 F.2d at 841. In contrast to Jackson, in the present case the evidence links the transfer of the ill-gotten funds to the specified criminal activity. In the context of a fraud case such as we have here, when proceeds are used in a transaction to commit the next step in a scheme to defraud, it is clear that the financial transaction advances and furthers the progress of the next step. We, accordingly, reject the Defendants' challenge to the sufficiency of the government's proof that they engaged in the financial transactions at issue with the intent to promote the carrying on of wire fraud. 25