Opinion ID: 692966
Heading Depth: 3
Heading Rank: 1

Heading: Jermon Carter

Text: 34 Carter argues that the evidence was insufficient in two respects: first, the evidence did not show that he attempted or conspired to engage in the type of financial transaction outlawed by 18 U.S.C. Sec. 1956(a)(3) and (c)(4), and, second, the evidence did not show that a law enforcement officer explicitly represented the money to be laundered as proceeds of specified unlawful activity, as required by Sec. 1956(a)(3). 35
36 Carter contends that the planned physical transportation of money out of the United States by hand was not a financial transaction within the meaning of Sec. 1956(a)(3) and (c)(4), which in his view encompass only commercial transactions. Moreover, he argues that the planned deposit of the transported funds in a European bank could not have constituted a financial transaction since the statute only covers domestic banks. 37 The plain language of the statute answers Carter's argument. The term financial transaction is defined in the statute applicable at the time of the offense as 38 (A) a transaction (i) involving the movement of funds by wire or other means or (ii) involving one or more monetary instruments, which in any way or degree affects interstate or foreign commerce, or (B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree. 39 18 U.S.C. Sec. 1956(c)(4). The term transaction is defined broadly to include 40 a purchase, sale, loan, pledge, gift, transfer, delivery, or other disposition, and with respect to a financial institution include[ ] a deposit, withdrawal, transfer between accounts, exchange of currency, loan, extension of credit, purchase or sale of any ... monetary instrument, or any other payment, transfer, or delivery by, through, or to a financial institution, by whatever means effected. 41 Id. Sec. 1956(c)(3). 42 The transaction contemplated and attempted by the conspirators fits within both categories of financial transaction specified in Sec. 1956(c)(4)(A). It was a movement of funds by other means than by wire. Id. Sec. 1956(c)(4)(A)(i). It was also a transaction involving one or more monetary instruments, id. Sec. 1956(c)(4)(A)(ii), since the term transaction is defined to include a delivery, or other disposition, id. Sec. 1956(c)(3), and the term monetary instruments is defined to include currency of the United States, id. Sec. 1956(c)(5). Carter's claim that he did not engage in a financial transaction within the meaning of the statute is baseless. 43
44 Carter also contends that the evidence is insufficient to show that a law enforcement officer represented the property to be proceeds of unlawful activity specified in 18 U.S.C. Sec. 1956(c)(7), as required by 18 U.S.C. Sec. 1956(a)(3). Here, to conform to the indictment, the law enforcement officer had to represent that the proceeds derived from criminal violations of the Arms Export Control Act, 22 U.S.C. Secs. 2751-2796(d). See 18 U.S.C. Sec. 1956(c)(7)(D). Carter notes the distinction between the money laundering offense of Sec. 1956(a)(3), which requires that the property be represented to be the proceeds of specified unlawful activity by a law enforcement officer or his agent (emphasis added), and that of Sec. 1956(a)(1), which requires only that the defendant know that the property involved in a financial transaction represents the proceeds of some form of unlawful activity (emphasis added). Carter argues that the heightened specificity required by Sec. 1956(a)(3) serves to protect the innocent from abuse of the sting power that Congress granted to law enforcement agencies. He alleges that neither the Customs agents nor Forster, acting with their authorization, explicitly represented that the proceeds derived from criminal violations of the Arms Export Control Act. 45 Courts have held that Sec. 1956(a)(3) does not require that law enforcement agents explicitly represent that the money or property being laundered derived from an offense specified in Sec. 1956(c)(7). See United States v. Castaneda-Cantu, 20 F.3d 1325, 1331 (5th Cir.1994); United States v. Kaufmann, 985 F.2d 884, 893 (7th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 2350, 124 L.Ed.2d 259 (1993). In Kaufmann, the Seventh Circuit noted that a representation is [a]ny conduct capable of being turned into a statement of fact. Id. at 892 (quoting Black's Law Dictionary 1301 (6th ed. 1990)). It found no indication that Congress intended to require express statements of the illegal source of the funds being laundered. To require such a recitation would be too costly in the verisimilitude vital to sting operations. Id. In Kaufmann, the agents never explicitly told the defendant that the money was drug proceeds; they only told the defendant that a marijuana dealer was interested in buying a Porsche with cash, and that he wanted the car titled in someone else's name. Id. at 893. The Seventh Circuit found those representations sufficient, holding that [i]t is enough that the government prove that an enforcement officer or authorized person made the defendant aware of circumstances from which a reasonable person would infer that the property was drug proceeds. Id. 46 In Castaneda-Cantu, which involved an arms smuggling sting operation similar to this one, the undercover agent represented to defendants that he was  'the middle man for certain individuals ... that were involved in the smuggling of arms and narcotics into and out of the United States.'  He also made numerous other statements indicating that his clients were major arms traffickers. 20 F.3d at 1331-32. In weighing these statements and the clandestine arrangements made by the defendants to launder the money, the Fifth Circuit held that a reasonable jury could find that the agents represented and the defendants believed that the funds they were transferring were the proceeds of a specified illegal activity, i.e., illegal drug or firearm sales or both. Id. at 1332. 47 It is unnecessary for us to say how far we would go in embracing Kaufmann and Castaneda-Cantu. Whether a representation that a client is involved in a specified illegal activity for which he needs money laundered sufficiently conveys that the money is derived from that activity is a fact-specific determination. Here, though, the evidence established a direct nexus between the funds and specified illegal activity. On June 30, 1992, Agent Doyle expressly indicated that the two million dollars that Carter's group was to launder came from the first shipment of arms, and that another four million dollars would soon need to be laundered from the second shipment of arms which was being smuggled into the country. Because smuggling arms into the United States is an activity addressed by the criminal provisions of the Arms Export Control Act, see, e.g., 22 U.S.C. Sec. 2778(b) (setting forth registration and licensing requirements for manufacturers, exporters, or importers of designated defense articles and services); id. Sec. 2778(c) (defining criminal penalties for violation of Secs. 2778-79); cf. United States v. Hendron, 43 F.3d 24 (2d Cir.1994) (per curiam) (defendant convicted of unlawfully importing into the United States defense articles on the United States Munitions List in violation of 22 U.S.C. Sec. 2778(b)(2)), we think the evidence was sufficient to show that a law enforcement officer represented that the funds came from specified unlawful activity, as required by 18 U.S.C. Sec. 1956(a)(3).