Opinion ID: 768508
Heading Depth: 3
Heading Rank: 2

Heading: Downward Departure on Money Laundering

Text: 51 In response to Ross' motion, the district court made a three-level downward departure under U.S.S.G. § 5K2.0 (the general grounds for departure) concluding that the case fell outside the guideline heartland for money laundering. On cross-appeal, the Government argues that the district court abused its discretion in so departing when it (1) relied on an impermissible factor for downward departure, namely, the court's finding that not all of the $3.2 million wire fraud proceeds were put to fraudulent use; and (2) determined that Ross' conduct fell outside the guideline heartland 11 for money laundering. 52 The Supreme Court instructs that if a case is an ordinary one, the district court must impose a sentence within the applicable Guideline range. Koon, 518 U.S. at 92. If however, the case is an unusual or atypical one, the sentencing court may 53 depart from the applicable Guideline range if the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described. 54 Id. (quoting 18 U.S.C. § 3553(b)). Thus, the Guidelines require a district court to determine whether the case at bar presents aggravating or mitigating circumstances of a kind or degree not adequately taken into consideration by the Commission when formulating the Guidelines. Id. at 94. 55 A fair reading of the sentencing transcript indicates the court departed downward for two reasons. First, because it found not all the advance fees were put to a fraudulent use, and second, due to the unfortunate variation between the Guidelines' treatment of basic fraud and money laundering. 12 These two factors, the court reasoned, supported a conclusion that the case presented characteristics taking it outside the heartland money laundering guideline. 56 We find that the district court abused its discretion in departing from the guideline money laundering sentence by departing, at least in part, due to what it viewed as an unfortunate disparity between and the particular problem with the Guidelines' treatment of wire fraud and of money laundering, concluding that the original guidelines amount is - or level, is outside of the heartland of the cases considered by the Sentencing Commission. The Guidelines make clear that dissatisfaction with the available sentencing range or a preference for a different sentence than that authorized by the guidelines is not an appropriate basis for a sentence outside the applicable guideline range. U.S.S.G. § 5K2.0, comment. (1998); see also, United States v. Wong, 127 F.3d 725, 727 (8th Cir. 1997) (reversing court's downward departure due to court's disagreement with Guideline range applicable to defendants). 57 The Guidelines fix the base offense level at 23 for Ross' violation of § 1956(a)(1), a full three levels higher than convictions for other money laundering violations that do not involve the reinvesting of illegal proceeds to further criminal activity. See U.S.S.G. § 2S1.1(a) (1998) (base offense level of 23 for § 1956(a)(1) violations as compared to base offense level of 20 for other money laundering violations). This variance reflects Congress' intent that money laundering crimes which promote further illegal activity should be punished more severely than those that do not. See Hildebrand, 152 F.3d at 763 (Guidelines punish more severely the form of money laundering that involves reinvesting of proceeds to further illegal activity). Based on our case law, the plain language of the Guidelines, and the court's statements at sentencing, we find the court abused its discretion in departing due to its disagreement with the disparity between a money laundering sentence under § 2S1.1 and one for wire fraud under § 2F1.1. 58 Additionally, we question the court's departure based on its finding that not all of the $3.2 million proceeds were put to fraudulent use. As stated in Koon, a district court may depart if the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Commission. 518 U.S. at 93 (emphasis added). A violation of 18 U.S.C. § 1956(a)(1) is predicated on the commission of specified unlawful activity which expressly includes a financial transaction involving fraud or any scheme to defraud. See 18 U.S.C. § 1956(a)(1), (c)(7). The Commission, in consideration of the increased harm resulting from money laundering activity that promotes or furthers illegal activity, established a guideline that imposed a higher base offense level for § 1956(a)(1) violations than for other money laundering violations. Compare U.S.S.G. § 2S1.1(a)(1) with U.S.S.G. § 2S1.1(a)(2) (1998). Additionally, the Commission has taken into consideration the factor of the amount of funds laundered by including in the guideline specific offense characteristics that impose increasingly higher sentences for crimes involving correspondingly increasing amounts of proceeds. See U.S.S.G. § 2S1.1 (1998) (e.g., no increase if less than $100,000 laundered; six-level increase if funds laundered exceed $2 million but less than $3.5 million). Where, as here, the Commission has taken a factor into consideration, a sentencing court may use the considered factor as a basis for departure only if it determines that, in light of unusual circumstances, the weight attached to that factor under the guidelines is inadequate or excessive. U.S.S.G. § 5K2.0, p.s. at p. 357 (1998). 59 In urging affirmance on this point, Ross suggests that his case is closely aligned with United States v. Woods, 159 F.3d 1132 (8th Cir. 1998). In Woods, we affirmed a court's determination that the case fell outside the heartland money laundering guideline. The defendant in Woods pleaded guilty to one count of bankruptcy fraud under 18 U.S.C. § 152 and one count of money laundering in violation of 18 U.S.C. § 1957 for failing to disclose to a bankruptcy trustee certain stock assets valued at less than $20,000. 159 F.3d at 1133. After filing for bankruptcy, Woods liquidated her stocks and deposited the proceeds into her husband's bank account and thereafter used the money to pay personal expenses. Id. 60 We do not read Woods as support for the district court's departure and note the significant factual dissimilarity between Woods and the present case. Woods involved concealment of assets in a bankruptcy action and subsequent liquidation and deposit of approximately $20,000 in proceeds. Ross' conviction, however, was based on his actions as the leader of an international scheme to defraud that transpired over two years and fraudulently induced over two hundred people to pay in excess of $3.2 million in fees in a futile effort to obtain a loan, the proceeds of which were used to maintain Consortium's operation. 61 We believe that the evidence was sufficient to support the jury's determination that the illegal proceeds of wire fraud were thereafter used to promote the carrying on of the illegal scheme as alleged in the money laundering counts of the indictment. The proceeds generated from the underlying wire fraud were, in large part, the income stream that allowed Consortium to continue to maintain the appearance of legitimacy for a number of years. Indeed, the evidence showed that virtually all of the $3.2 million in fees was reinvested into Consortium's business and expended to maintain the operation. 62 While we appreciate the court's apparent discomfort with the proportionately larger sentence for money laundering than for the crime of wire fraud, for the purpose of resentencing we caution that the variation represents Congress' intent that money laundering crimes that promote further illegal activity are more dangerous to society and therefore should be punished more severely. We are not, however, foreclosing the possibility that the court may find Ross' case presents additional unique or atypical features that take it outside the money laundering guideline heartland similar to those in United States v. Smith, 186 F.3d 290 (3d Cir. 1999) (Gibson, John R., J.); we merely find that the sentencing transcript does not set forth an adequate basis for such a departure. 63 Accordingly, we reverse the district court's downward departure on the money laundering sentence and remand for resentencing.