Opinion ID: 706022
Heading Depth: 1
Heading Rank: 2

Heading: Sufficiency of the Evidence on 18 U.S.C. Sec. 1956 Convictions

Text: 20 By moving for acquittal pursuant to Rule 29(a) of the Federal Rules of Criminal Procedure, Savage preserved his right to appeal on the grounds of insufficient evidence. United States v. Atkinson, 990 F.2d 501, 502-503 (9th Cir.1993) (en banc). In reviewing sufficiency of the evidence claims, we review the record to determine  'whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.'  Id. at 502 (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979)). 21 A. Sufficiency of the evidence that the international money transfers were made with the intent to promote the mail and wire fraud. 22 In the combined Sec. 1956 counts, 70, 72-74, and 76-79, the jury found Savage guilty of the conduct proscribed by 18 U.S.C. Sec. 1956(a)(2)(A), under which the government was required to show that Savage did: 23 transport[ ], transmit[ ], or transfer[ ] ... a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States--(A) with the intent to promote the carrying on of specified unlawful activity.... (Emphasis added). 24 Here, the specified unlawful activity is the mail fraud in violation of 18 U.S.C. Sec. 1341 and the wire fraud in violation of 18 U.S.C. Sec. 1343. Savage claims that there is insufficient evidence that he intended to promote the mail and wire fraud by transferring funds overseas. 25 We agree with the analysis of the Tenth Circuit, which has concluded that circumstantial evidence of intent to promote a fraudulent scheme exists if the transfer lends an aura of legitimacy to the scheme. United States v. Johnson, 971 F.2d 562, 566 (10th Cir.1992). In Johnson, the Tenth Circuit determined that a defendant who laundered money by paying his mortgage with wire fraud proceeds had the intent to promote his fraudulent scheme. The defendant used an office in his home to carry out the scheme and his aura of legitimacy was bolstered in the mind of investors who saw his house. Id. 26 Counts 70 and 72-74 charge transfer of money from the United States to bank accounts in Austria. Looking at the evidence in the light most favorable to the prosecution, a rational jury could have concluded that Savage instructed people to transfer money to Austria to make the Savage program appear legitimate, thereby promoting further domestic mail and wire fraud. The success of the Savage program depended on the investors' belief that Savage could somehow utilize their $5,000 investment to obtain $80 million in loans from foreign principals. Savage told investors that the $10 million in funding was coming from these foreign principals. Everything Savage did to show that he had contacts with foreigners and expected money from them lent legitimacy to his scheme. 27 At trial, some of the parties involved in transferring money overseas explained how the transfers promoted the Savage program. Marlin Harris opened trust accounts in the Austrian bank to receive the funding from the foreign investors and transferred money from the U.S. to these accounts per Savage's instructions. [1341, 1407.] Harris testified that he transferred money from the U.S. to keep the trust accounts up to a certain standard and to pay for Savage program expenses. [1333.] Savage testified that money was transferred to facilitate the overseas transactions and pay for expenses. [24 RT 3734.] Savage told Dave Buck to transfer money from the United States to the Austrian accounts because the latter accounts were going to be used for the transactions. [3843.] 28 Investors were aware that Savage, through the people reporting to him, transferred money to open and maintain bank accounts in Austria. Savage could have transferred the money with the intent of fostering investors' belief that Savage's foreign contacts would send their loans to these accounts. The transfers made the program appear legitimate and increased the confidence of people who had spent money to join the program. Investors' confidence reduced the possibility that they would ask for a refund and increased the possibility that they would encourage others to join the program. 29 Counts 76-79 involved transfer of money from Austrian bank accounts back to Savage in the United States. Looking at the evidence in a light most favorable to the prosecution, a rational juror could conclude that these money transfers provided Savage with resources to travel and continue contacting investors, thereby promoting the Savage program. 30 B. Sufficiency of the evidence that the international money transfers involved proceeds of the domestic mail and wire fraud. 31 On the combined Sec. 1956 counts, the jury also found Savage guilty of conduct proscribed by 18 U.S.C. Sec. 1956(a)(2)(B)(i), under which the government was required to prove that Savage: 32 did transport[ ], transmit[ ] or transfer[ ] ... a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States-- ... knowing that the monetary instrument or funds ... represent the proceeds of some form of unlawful activity and knowing that such transportation is designed ... to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity. (Emphasis added). 33 Savage argues that the international monetary transfers did not involve proceeds of specified unlawful activity. Although characterized as an argument concerning sufficiency of the evidence, this argument requires that we begin by construing Sec. 1956 to determine what is meant by proceeds. Savage asserts that proceeds constitute funds from previous and completed criminal activity. Although the statute contains no definition of proceeds, legislative history is consistent with Savage's position. Congress considered money laundering to be separate conduct occurring after completion of the underlying criminal offense. The Senate report indicates, The growth of money laundering has been a corollary of the spread of profitable illegal enterprises. The criminals involved in these enterprises have devised complex schemes to disguise the illegal nature and true source of their income. S.Rep. No. 433, 99th Cong., 2d Sess. (1986).  '[I]llegal drugs, gambling and vice generate $150 billion annually. It is readily apparent that criminals rely on laundering schemes to hide the identity and true source of these proceeds.'  Id. at 4 (quoting Senator Strom Thurmond). 34 The legislative history indicates that Congress passed the money laundering statutes to criminalize the means criminals use to cleanse their ill-gotten gains. We conclude that proceeds are funds obtained from prior, separate criminal activity. The Tenth Circuit has reached the same conclusion: Congress appears to have intended the money laundering statute to be a separate crime distinct from the underlying offense that generated the money to be laundered. United States v. Edgmon, 952 F.2d 1206, 1213 (10th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 3037, 120 L.Ed.2d 906 (1992). 35 Savage further argues that the transferred money was not proceeds of the wire and mail fraud charged in counts 1-69, the specified unlawful activity, because the mail and wire fraud were not complete until the money was transferred overseas and then back to the United States into Savage's personal account. Savage's argument fails. The predicate offenses of domestic mail fraud and wire fraud were complete before funds were transferred outside the United States. The mail fraud charges involved mail sent to promote the Savage program, such as newsletters and membership applications. None of these charges involved transfer of funds. All of the wire fraud charges involved transfer of money within the United States. Each act of mail and wire fraud was complete at the point at which Savage or someone acting under his direction mailed the promotional information or wired the money in the United States. The money that investors sent to the Savage program constitutes the proceeds of the mail fraud. The money wired domestically is the proceeds of the wire fraud. Ample evidence in the record indicates that the international money transfers involved the proceeds of these previous acts of mail and wire fraud. 36 III. Did the transactions charged under 18 U.S.C. Sec. 1957 involve criminally derived property from the mail or wire fraud? 37 In counts 81-93, the jury found Savage guilty of the conduct proscribed by 18 U.S.C. Sec. 1957, which provides in relevant part, Whoever ... knowingly engages or attempts to engage in a monetary transaction in criminally derived property that is ... derived from specified unlawful activity shall be punished.... Savage's challenge to the sufficiency of the evidence supporting his convictions under Sec. 1957 requires that we construe the definition of criminally derived property. According to the statute,  'criminally derived property' means any property constituting, or derived from, proceeds obtained from a criminal offense.... 18 U.S.C. Sec. 1957(f)(2). 38 The legislative history setting forth Congressional concerns regarding money laundering is applicable to both Sec. 1956 and to Sec. 1957. Therefore, we conclude that criminally derived property under Sec. 1957 is equivalent to proceeds under Sec. 1956, i.e., funds obtained from prior, separate criminal activity. Our conclusion is consistent with the Tenth Circuit's conclusion that criminally derived property is the proceeds, from an underlying criminal offense, obtained by a defendant before the defendant engages in the monetary transaction prohibited by Sec. 1957. United States v. Johnson, 971 F.2d at 569-70. 39 In Johnson, the defendant was charged with 28 counts of violating Sec. 1957 based on twenty-eight separate wire transfers of funds from investors to the defendant's bank account. Id. at 567. The same wire transfers also constituted the underlying offense. The court reversed the judgment of conviction under Sec. 1957 because the wire transfers did not involve criminally derived property. The court reasoned that the defendant did not have proceeds of an underlying criminal offense until the defendant received the wire transfers from the investors. Id. at 569-70. 40 Savage claims the wire transfers that are the basis of his Sec. 1957 convictions did not involve criminally derived property, relying on the following quote from Johnson, 971 F.2d at 570: 41 Section 1957 appears to be drafted to proscribe certain transactions in proceeds that have already been obtained by an individual from an underlying criminal offense. The defendant did not have possession of the funds nor were they at his disposal until the investors transferred them to him. 42 Savage claims that he did not have possession of the money when the wire transfers were sent because the money was not transferred out of his own personal account. Savage reads Johnson too narrowly. In Johnson, investors sent money directly to Johnson's account. The funds did not constitute property criminally derived from mail and wire fraud until they were deposited. Similarly, the funds transferred in the Sec. 1957 counts were criminally derived property at the time they were deposited in accounts under Savage's control. The funds were clearly at Savage's disposal at the time of deposit--the record indicates that the parties named on the accounts transferred the money at his request. It is irrelevant that the accounts were not in Savage's name. 43