Court Opinion

ID: 1042522
Source: CourtListenerOpinion
Date Created: 2013-10-01 19:36:23.811162+00
Date Added: 2024-06-11T13:02:17.013640
License: Public Domain

PRECEDENTIAL

       UNITED STATES COURT OF APPEALS
            FOR THE THIRD CIRCUIT
                 ____________

                     No. 12-3109
                    ____________

          UNITED STATES OF AMERICA

                           v.

                 MORDCHAI FISH,
                   a/k/a Martin Fisch,
                 a/k/a Mordechai Fisch,

                                  MORDCHAI FISH,

                                                Appellant

    On Appeal from the United States District Court
             for the District of New Jersey
             (D.C. No. 3-11-cr-00210-001)
       District Judge: Honorable Joel A. Pisano

               Argued on May 15, 2013

Before: SLOVITER, FUENTES and ROTH, Circuit Judges

           (Opinion filed: October 01, 2013)

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Harvey Weissbard, Esquire (Argued)
Genova Burns Giantomasi & Webster
494 Broad Street, 6th Floor
Newark, NJ 07102

                    Counsel for Appellant

Mark E. Coyne, Esquire
David W. Feder, Esquire (Argued)
Caroline A. Sadlowski, Esquire
Office of United States Attorney
970 Broad Street
Newark, NJ 07102

                    Counsel for Appellee

                       O P I N I ON

ROTH, Circuit Judge:

       Mordchai Fish appeals the District Court’s July 5,
2012, judgment of sentence. He argues that the District Court
erred by imposing a two-level enhancement for sophisticated
money laundering under U.S.S.G. § 2S1.1(b)(3). For the
reasons that follow, we will affirm the judgment of sentence.

I.    Background

      Fish, a rabbi in Brooklyn, New York, was a target of a

                             2
large investigation into public corruption and money
laundering in Brooklyn and New Jersey. The investigation
began when Solomon Dwek, a cooperating witness who was
charged with bank fraud in 2006, informed law enforcement
that several rabbis, including Fish, were laundering money
through tax-exempt Jewish charities known as “gemachs.”

       Dwek, under law enforcement supervision, approached
Fish about laundering what Dwek claimed were the proceeds
of illegal endeavors, namely a bank fraud scheme and an
operation that produced and sold counterfeit handbags. The
“proceeds” were in fact funds provided by the government.
Between May 2008 and July 2009, Fish participated in
approximately twelve money laundering transactions
involving over $900,000. To execute these transactions,
Dwek would deliver to Fish bank checks made out to
gemachs and rabbis, and Dwek would receive cash in
exchange, less a commission (usually 10% of the check
value). These check-for-cash exchanges took place at various
locations, including a residence, a pizzeria, a bakery, a
grocery store, a mikva (ceremonial bath house), and an office
where Fish’s contacts had a safe, cash-counting machines,
and checks and currencies from different countries. The
exchanges were at times scheduled only hours in advance and
often involved numerous couriers.

       Fish made efforts to conceal the money laundering
operations by giving Dwek SIM cards for his cell phone.1 He
warned Dwek to sweep his car and phones for detection
devices and to use code when speaking to associates about

1
  A cell phone user can change the number on a cell phone by
inserting a new SIM card.

                             3
transactions. In recordings made by Dwek, Fish stated that he
had a number of money laundering connections, could
launder money through several different rabbis, knew how
much cash certain individuals had available at specified
times, and had met with the “main guy” running one of the
networks. Fish and another participant in the scheme, Levi
Deutsch, said that the cash came from the diamond and
jewelry business, and Deutsch indicated that the operation
extended to Israel and Switzerland.2

       On April 8, 2011, pursuant to a plea agreement, Fish
pled guilty to a one-count Information charging him with
conspiracy to commit money laundering, in violation of 18
U.S.C. § 1956(h). The parties agreed that the total offense
level applicable to Fish under the U.S. Sentencing Guidelines
would be at least 21. The government reserved the right to
argue for a two-level enhancement under U.S.S.G. §
2S1.1(b)(3) for sophisticated money laundering, and Fish
reserved the right to argue against this enhancement.

       In the presentence report, the Probation Department
recommended that Fish should receive the two-level
enhancement under U.S.S.G. § 2S1.1(b)(3) and calculated a
total offense level of 23. At sentencing on July 3, 2012, the
District Court reviewed the sentencing submissions, including
a video of meetings between Fish, Dwek, and others, and
applied the two-level enhancement under U.S.S.G. §
2S1.1(b)(3). The offense level of 23 resulted in an advisory

2
  Fish objected to specific paragraphs in the presentence
report that mentioned his references to “Israel.” He claimed
that these references were to a person named “Israel” and not
to the country.

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Guidelines range of 46 to 57 months, and the District Court
sentenced Fish to 46 months imprisonment. This appeal
followed.

II.    Discussion3

       A.     Standard of Review

       The parties disagree regarding the appropriate standard
of review: Fish urges us to exercise plenary review over the
District Court’s application of U.S.S.G. § 2S1.1(b)(3) while
the government asserts that we should review for clear error.
Only two courts of appeals have articulated a standard of
review for a district court’s application of U.S.S.G. §
2S1.1(b)(3): the Eighth Circuit reviews the application of
U.S.S.G. 2S1.1(b)(3) de novo, United States v. Pizano, 421
F.3d 707, 732 (8th Cir. 2005), and the Fifth Circuit reviews
for clear error, United States v. Miles, 360 F.3d 472, 481 (5th
Cir. 2004).

       This is an issue of first impression in this Court.
While we have not addressed this precise question, we find
instructive how we have reviewed challenges to a district
court’s application of the Guidelines in other contexts. In
cases, like this one, in which there is no dispute over the
factual determinations but the issue is whether the agreed-
upon set of facts fit within the enhancement requirements, we
have reviewed for clear error the district court’s applications
of those facts to the Guidelines. See, e.g., United States v.

3
 The District Court had jurisdiction pursuant to 18 U.S.C. §
3231, and we have jurisdiction pursuant to 18 U.S.C. §
3742(a) and 28 U.S.C. § 1291.

                              5
Richards, 674 F.3d 215, 223 (3d Cir. 2012). We will adopt
that same standard here in reviewing the application of the
undisputed facts to the requirements for the enhancement for
sophisticated money laundering.
B.     Application of Enhancement

      Fish argues that the District Court erred by imposing
the two-level enhancement for sophisticated money
laundering under U.S.S.G. § 2S1.1(b)(3). This section
provides, “[i]f . . . the offense involved sophisticated money
laundering, increase by 2 levels.” U.S.S.G. § 2S1.1(b)(3).
Application Note 5 further explains:

      For      purposes   of    subsection    (b)(3),
      ‘sophisticated laundering’ means complex or
      intricate offense conduct pertaining to the
      execution or concealment of the 18 U.S.C. 1956
      offense.

      Sophisticated laundering typically involves the
      use of
      (i) fictitious entities;
      (ii) shell corporations;
      (iii) two or more levels (i.e., layering) of
      transactions, transfers, or transmissions,
      involving criminally derived funds that were
      intended to appear legitimate; or
      (iv) offshore financial accounts.

U.S.S.G. § 2S1.1(b)(3), App. Note 5.

      Fish argues that the District Court erred in concluding
that he engaged in sophisticated money laundering for

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purposes of U.S.S.G. § 2S1.1(b)(3) because his conduct was
not “complex or intricate” and involved none of the factors of
sophisticated money laundering listed in the Application Note
5. We agree that the determinative factors of sophistication in
this case are not any the five factors listed in Application
Note 5. We disagree, however, that a finding of the existence
of those listed facts is necessary to a determination that a
particular scheme to launder money was sophisticated.

        The District Court imposed the two-level enhancement
after noting that it “[did] not feel constrained to find the
factors in the guidelines to be exhaustively shown.” We
agree with that conclusion. The factors listed in Application
Note 5 are illustrative but not required; they are typical but
non-exhaustive. When the modus operandi of a money
laundering scheme is not made up of the Application Note 5
factors, the district court must establish the relevant facts
concerning the operation of the scheme and then determine
from a review of those facts whether the scheme is complex
or intricate.

        In making this determination, the District Court made
the following factual findings:

      This was a long-running scheme, . . . [,] it
      became difficult to uncover because it used
      multiple outlets for cash exchanges, used
      multiple couriers, multiple locations for the
      transactions[,] [t]here was an effort made by the
      perpetrators to keep even from Dwek some of
      the knowledge of the underlying aspects of the
      case . . . [,] there was an effort made to evade
      detection because there [was] the use of codes

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       and there [were] electronic devices which had
       been changed and moved around, changing SIM
       cards, et cetera, and we also know that the
       incoming cash necessarily originated from
       numerous other accounts or sources.

The District Court reviewed the “entire scenario involving
other conspirators and other perpetrators and the fact that Fish
was able to conduct these transactions over a long-running
period with such facility, with so many different participants
and so many unknown sources of money.”

       The court found these facts by a preponderance of the
evidence and applying them to the standards of complexity
and intricacy required for sophisticated money laundering,
concluded with “no difficulty . . . from a simple common-
sense point of view, this [scheme] had to be sophisticated.”

        It is clear from the reasoning of the District Court that
the elements of complexity and intricacy of the scheme that
the District Court found to be relevant were the duration of
the scheme, the difficulty in uncovering it because of the use
of multiple outlets for cash exchanges, multiple couriers and
other participants, and multiple locations; the secrecy of the
underlying aspects of the scheme; the efforts to evade
detection by the use of codes and untraceable electronic
devices; and the multiple sources of cash. Our clear error
review convinces us that the District Court appropriately
considered the factors that make a scheme sophisticated and
that it did not err in establishing that the facts of the scheme
supported the determination of sophistication.4

4
    Fish argues that we should be wary of setting the

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        Few courts of appeals have analyzed U.S.S.G. §
2S1.1(b)(3), and most have done so in cases involving at least
one of the factors of sophisticated money laundering
identified in Application Note 5. See United States v.
Fernandez, 559 F.3d 303, 320 (5th Cir. 2009) (affirming the
application of the enhancement because the district court
“could have concluded that the charged transactions involved
. . . ‘layering’ [and] . . . shell corporations”); Charon, 442
F.3d at 891-92 (affirming the district court’s application of
U.S.S.G. § 2S1.1(b)(3) where the district court found that the
defendant’s actions constituted layering); Pizano, 421 F.3d at
731 (holding that the district court did not err in applying the
sophisticated laundering enhancement “because the district
court found that the [defendant] engaged in layering and she
does not dispute that finding”); Miles, 360 F.3d at 482
(affirming the application of the enhancement because
“[w]hen an individual attempts to launder money through
‘two or more levels of transactions,’ the commentary clearly
subjects an individual to the sophisticated laundering
enhancement”).

       The Fifth Circuit Court of Appeals, however, affirmed
the application of U.S.S.G. § 2S1.1(b)(3) in a case, similar to
this one, that did not involve any of the factors of
sophisticated money laundering identified in Application
Note 5. See United States v. Chon, 713 F.3d 812, 823 (5th
Cir. 2013). In that case, the court rejected the defendant’s

sophistication bar too low. We do not believe that allowing
district courts to look beyond the “typical” examples of
sophisticated money laundering identified in Application
Note 5 sets the bar too low.

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argument that his actions “[did] not constitute ‘sophisticated
means’ as defined in the sentencing commentary” to U.S.S.G.
§ 2S1.1(b)(3) and held that “[m]aintaining two sets of books,
skimming income on a daily basis, and disguising alien-
smuggling proceeds as ‘parking income’ in an attempt to
make the criminally derived funds appear legitimate are
sufficiently complex to support the enhancement . . ..” Id.

      Similarly here we reject Fish’s argument that his
conduct does not constitute sophisticated money laundering.
There are adequate facts here to support the District Court’s
conclusion that the elements and procedures of the scheme
made it a sophisticated one.

III.   Conclusion

      For the foregoing reasons, we will affirm the District
Court’s judgment of sentence.

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