Court Opinion

ID: 9503405
Source: CourtListenerOpinion
Date Created: 2023-08-06 19:44:58.240691+00
Date Added: 2024-06-11T09:03:27.089496
License: Public Domain

DURHAM, J.,
dissenting.
I respectfully dissent from the majority’s decision to disbar the accused due to the Bar’s allegation that the accused violated the federal money-laundering statute, 18 USC § 1956 (1988), with respect to certain funds that he received from a client, Charlesworth, who used an alias, “David McGuire,” among other aliases.
I agree with the majority’s decision to dismiss all money-laundering charges against the accused under the first cause of complaint that arise from his financial transactions with his client Farber. The evidence fails to prove those claims.11 also agree with the majority’s decision to dismiss in their entirety the Bar’s charges against the accused under the fourth cause of complaint. The trial panel dismissed the Bar’s second and third causes of complaint. The Bar does not seek review in this court of those determinations of the trial *548panel. As a result of the foregoing, the only remaining disputed charge against the accused is the Bar’s claim, under the first cause of complaint, that the accused engaged in money laundering, in violation of the federal statute, in connection with the manner in which he dealt with money that he received from Charlesworth.
In deciding the Bar’s claim regarding the accused’s handling of Charlesworth’s money, the majority overrules the accused’s objection that the Bar’s evidence regarding that claim largely consists of secret grand jury records that Federal Rule of Criminal Procedure 6(e) renders inadmissible. I do not address the merits of that objection. Assuming arguendo that the challenged grand jury records are admissible, the record evidence, viewed as a whole, is insufficient to prove by clear and convincing evidence that the accused violated the federal money-laundering statute in receiving or depositing Charlesworth’s money.
I will begin by reviewing briefly the pertinent federal statute, the standard that applies to the knowledge element of the federal statute, and the Bar’s factual allegations regarding Charlesworth. In 1986, Congress passed the Money Laundering Control Act, codified principally at 18 USC §§ 1956, 1957. The Bar alleged that the accused engaged in criminal acts in violation of the following pertinent parts of 18 USC § 1956 (1988):
“(a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity—
******
“(B) knowing that the transaction is designed in whole or in part—
“(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity;
* * * *
*549“shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both.
* * * *
“(c) As used in this section—
“(1) the term “knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity’ means that the person knew the property involved in the transaction represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under State or Federal law, regardless of whether or not such activity is specified in paragraph (7).”
The element of the actor’s knowledge is a key component of the federal statute and of the Bar’s case against the accused. According to the Bar:
“Whether the Accused committed the crime of money-laundering thus turns on the third and fourth elements of 18 USC § 1956(a)(l)(B)(i): whether he knew that he was assisting Farber and ‘McGuire’ with transactions designed to conceal or disguise the ‘nature, location, source, ownership or control’ of proceeds derived from illegal activities. The Bar claims that he did; the Accused denies it.”
(Emphasis in original.)
The money-laundering statute is federal law. Thus, this court is bound to follow federal law in construing the statute. All pertinent federal cases that the parties cite confirm that 18 USC § 1956(a)(l)(B)(i) requires proof that the actor had actual, subjective knowledge that (1) the property in question represents the proceeds of illegal activity and (2) the transaction is designed to disguise the nature of those proceeds. See, e.g., United States v. Campbell, 977 F2d 854, 857 (4th Cir 1992) (illustrating principle). The statutory knowledge requirement prohibits conviction on the basis of an actor’s negligent failure to learn the pertinent facts, or on what the actor objectively should have known. Id.
The federal courts have softened the actual knowledge requirement somewhat by permitting proof of actual *550knowledge under the doctrine of willful blindness. Under that doctrine, the government can impose criminal liability on a person who, while recognizing the likelihood that the facts pertinent to money laundering are present, nonetheless consciously refuses to take basic investigatory steps to discover what otherwise would be obvious. United States v. St. Michael’s Credit Union, 880 F2d 579, 585 (1st Cir 1989). The willful blindness doctrine requires the government to establish that the actor had a conscious purpose to avoid enlightenment. United States v. Barnhart, 979 F2d 647, 651 (8th Cir 1992). Additionally, willful blindness requires proof that the actor took deliberate actions to prevent the obtaining of actual knowledge of the facts. Id. In explaining that aspect of the willful blindness doctrine, the court in Barnhart stated:
“However, the instruction [on willful blindness] should not be given out in all cases because, despite the instruction’s cautionary disclaimer, there is a ‘ “possibility that the jury will be led to employ a negligence standard and convict a defendant on the impermissible ground that he should have known [an illegal act] was taking place.” ’ United States v. White, 794 F.2d 367, 371 (8th Cir. 1986) (quoting United States v. Beckett, 724 F.2d 855, 856 (9th Cir. 1984) (per curiam)). Consequently, if the evidence in the case demonstrates only that the defendant either possessed or lacked actual knowledge of the facts in question — and did not also demonstrate some deliberate efforts on his part to avoid obtaining actual knowledge — a willful blindness instruction should not be given. [Citations omitted.] More succinctly, the instruction should not be given unless there is evidence to
“ ‘support the inference that the defendant was aware of a high probability of the existence of the fact in question and purposely contrived to avoid learning all of the facts in order to have a defense in the event of a subsequent prosecution.’ [United States v. Rivera, 944 F2d 1563, 1571 (11th Cir 1991).]
* * * *
“In order for a defendant’s ignorance to be deliberate or willful, the defendant must have been presented with facts that put him on notice that criminal activity is probably *551afoot, and then the defendant must have failed to investigate those facts, thereby deliberately declining to verify or discover the criminal activity.”
979 F2d at 651-52.
In Campbell, the Fourth Circuit summarized the government’s burden in attempting to prove actual, subjective knowledge through the willful blindness doctrine by reciting the following jury instruction:
“The element of knowledge may be satisfied by inferences drawn from proof that a defendant deliberately closed her eyes to what would otherwise have been obvious to her. A finding beyond a reasonable doubt of a conscious purpose to avoid enlightenment would permit an inference of knowledge. Stated another way, a defendant’s knowledge of a fact may be inferred upon willful blindness to the existence of a fact.
“It is entirely up to you as to whether you find any deliberate closing of the eyes and inferences to be drawn from any evidence. A showing of negligence is not sufficient to support a finding of willfulness or knowledge.
“I caution you that the willful blindness charge does not authorize you to find that the defendant acted knowingly because she should have known what was occurring when the property at 763 Sundown Road was being sold, or that in the exercise of hindsight she should have known what was occurring or because she was negligent in failing to recognize what was occurring or even because she was reckless or foolish in failing to recognize what was occurring. Instead, the Government must prove beyond a reasonable doubt that the defendant purposely and deliberately contrived to avoid learning all of the facts.”
Id. at 857.2
*552The Bar’s second amended complaint set out separate factual allegations regarding the accused’s dealings with his clients, Farber and Charlesworth. The Bar alleged the following facts to establish that the accused engaged in money laundering in connection with his dealings with Charlesworth’s money:
“5.
“Beginning in 1989, the Accused represented an individual, who was using the name ‘David McGuire’, in the purchase of several parcels of real property. The Accused knew that ‘David McGuire’ was an alias for a drug dealer who was associated with Farber and was also engaged in the sale of illegal drugs. The true name of‘David McGuire’ was Brian Charlesworth (hereinafter referred to as ‘Charlesworth’).
“6.
“On or about May 1, 1989, the Accused established a separate client trust account for Farber (hereinafter referred to as the ‘Farber account’).
“7.
“Beginning in about July, 1989, Charlesworth, using the name David McGuire, delivered funds to the Accused in the form of cash and cashiers’ checks payable to David McGuire, Brian Charlesworth or third persons. The Accused knew or had reason to know that these funds were the proceeds from the sale of illegal drugs, that the deposit of these funds into the Farber trust account, and that the real property purchases were intended to disguise the source of the funds.
“8.
“At the instruction of both Farber and Charlesworth, the Accused prepared and later recorded land sale contracts that named as vendees persons other than Farber or Charlesworth. The representations in the land sale contracts that the vendees were persons other than Farber or Charlesworth were false and the Accused knew they were false when he made them.”
*553In determining whether the accused violated 18 USC § 1956(a)(l)(B)(i) in dealing with Charlesworth’s money, this court considers the evidence de novo. ORS 9.536(3). The Bar has the burden to establish the alleged misconduct by clear and convincing evidence. BR 5.2. For purposes of a disciplinary proceeding, evidence is clear and convincing when the truth of the facts asserted by the Bar is highly probable. See In re Blaylock, 328 Or 409, 411, 978 P2d 381 (1999) (stating that definition).
With the foregoing federal statutory scheme and factual allegations in mind, I turn to the evidence presented in this case. The Bar contends that, in 1987,1988, and 1989, the accused willingly agreed, first with Farber and later with Charlesworth, to receive from them and deposit into his trust account cash and checks that were the proceeds of illegal drug transactions and to issue trust account checks to pay for real estate purchases to disguise the true nature of the drug money. By contrast, the accused contends that Farber and Charlesworth were career criminals and accomplished liars who deceived the accused (and several other persons) about the sources of their funds, the nature of their businesses, and their purpose in purchasing various parcels of real property.
The record contains comparatively little evidence concerning the accused’s relationship with Charlesworth, i.e., “David McGuire.” According to the record, the accused first encountered Charlesworth in about 1988. Farber introduced Charlesworth to the accused as “David McGuire” and said that “McGuire” was one of Farber’s wealthy real estate investors. Farber also explained that “McGuire” valued his privacy and wished to leave the details of his property transactions to others. Farber later purchased a parcel of real estate in the name of “McGuire” with the accused’s legal assistance, but the accused did not perform any legal services for “McGuire,” directly, until after May 1989.
Soon after Farber’s May 9,1989, trust account withdrawal, “McGuire” contacted the accused. He indicated that he was seeking a lawyer to provide legal services of the kind that the accused had provided to Farber, and asked the accused to help him. The accused agreed. There is no evidence that “McGuire” discussed any business of an illegal *554nature with the accused at that or any other time. Nothing in the facts known to the accused indicated that the accused had any good reason not to represent “McGuire.”
After contacting the accused, “McGuire” left several trust account deposits of cash or checks with the accused, just as Farber had done, and the accused disbursed funds from the trust account, at “McGuire’s” request, to pay for real estate purchases, just as he had done for Farber.
However, the majority concludes that the accused’s handling of one sum of $76,000, received from “McGuire” on July 18, 1989, indicates that the accused “knew that McGuire’s money was criminally derived.” 333 Or at 540. According to the majority, the accused “structured” the deposits of that money, as demonstrated by what the majority describes as several subsequent deposits to the trust account over the next two months in sums of less than $10,000. On the basis of that conclusion, the majority decides that the accused engaged in money laundering and orders his disbarment.
In my view, clear and convincing evidence does not support the majority’s conclusion. The record contains a copy of a sheet of the accused’s letterhead, introduced into evidence by the accused, on which he had written by hand:
“July 18,1989
“Received $76,000 today from David McGuire to hold in trust for him for investments.
“Nick Albrecht.”
The record, however, contains virtually no other evidence about that money. The Bar did not call Charlesworth (“McGuire”) as a witness, perhaps because of his criminal involvement.
The record also contains copies of several cashier’s checks, dated after July 18,1989, that the accused or his wife deposited in the accused’s trust account. However, the checks follow no telltale pattern of the sort that the majority perceives. Several checks list the purchaser as “David McGuire,” “Nick Albrecht,” other individuals, or “cash.” Several checks list no purchaser. Several of the trust account documents *555either are illegible or display a deposit amount with no other discernible information. One check deposited “$37,500,” thus undermining at least part of the factual inference on which the majority seeks to rely. None of the amounts deposited corresponds with the $76,000 thát the accused received on July 18,1989.
The doubts engendered by those significant gaps in the financial records are magnified by the failure of the Bar to ask any questions of the accused regarding the deposits to his trust account after July 18,1989. The Bar did not ask the accused any questions about the $76,000, whether it consisted of a single check or multiple checks or cash, what it was for, or whether or how the accused deposited it in trust. In my view, the answers to those unasked questions are critical to a clear understanding of the state of the accused’s actual knowledge regarding the sources of Charlesworth’s money.
Other factors also contribute to the difficulty of reconstructing “McGuire’s” financial transaction with the minimal records before the court. The Bar hearing occurred approximately nine years after the accused’s dealings with “McGuire.” The passage of time affected the memory of several witnesses.
The accused also suffered a significant loss of his office records as a result of a computer malfunction in 1995. According to uncontradicted evidence, a power surge destroyed the hard drive in the accused’s computer and rendered several thousand pages of typed text unrecoverable. The computer formerly contained entries regarding the accused’s trust account deposits. All attempts to recover the lost data were unsuccessful.
The record evidence falls well short of demonstrating, as required by the federal law reviewed above, that the accused had actual subjective knowledge that the $76,000 was the product of criminal activity. Contrary to the Bar’s allegation, the accused did not learn, until years later, that “David McGuire” was an alias and that his client’s true name was Charlesworth. The record contains no credible evidence that the accused ever learned, until years later, that *556Charlesworth was purchasing real property with the proceeds of drug sales.
Moreover, the record contains no evidence that the accused consciously took steps to avoid acquiring actual subjective knowledge about Charlesworth’s illegal activities. From all that appears, the accused’s conduct with respect to Charlesworth was indistinguishable in kind from his conduct with respect to Farber. None of that conduct indicates that the accused intentionally planned his activities to avoid learning the truth about his clients.
As noted above, the record justifies at least a degree of suspicion about the accused’s behavior. The accused’s trust account practices at the pertinent time were far less than ideal, although his computer back-up system, which he lost in 1995 by accident, might have supplied much needed organization to his trust account records. But all of the accused’s clients experienced the inadequacies of his trust account record keeping, not only Farber and Charlesworth. There is no basis for concluding that the accused employed lax or incomplete record keeping solely to assist Farber and Charlesworth.
Ultimately, the evidence about what the accused subjectively knew about Charlesworth’s activities is inconclusive. On this record, I cannot conclude that the evidence proves that it is “highly likely” that the accused knew that the $76,000 that he received from Charlesworth on July 18, 1989, was the product of criminal activity. The record contains no evidence about the accused’s knowledge regarding the source of that money.
I agree with the trial panel chairperson, who opined in his dissent below that, although the accused may be guilty of the Bar’s money-laundering charge, the record fails to prove that charge by clear and convincing evidence. Because the Bar failed to prove the accused’s involvement in laundering Charlesworth’s money by clear and convincing evidence, I would dismiss that aspect of the Bar’s first cause of complaint.
I respectfully dissent.

 It is worth noting that the majority’s decision to dismiss the Bar’s money-laundering charges involving the accused’s dealings with Farber signifies that the majority concludes that a significant part of the evidence on which the trial panel relied in determining that the accused was guilty does not provide clear and convincing evidence that the accused violated the money-laundering statute.

 The majority of the trial panel found as a fact that the facts surrounding the Farber and “McGuire” trust account deposits “would have caused the accused and any reasonable person to question the source of funds.” I agree that the accused either should have known what was occurring or was negligent or reckless in failing to recognize what was occurring. But, as the Barnhart and Campbell decisions demonstrate, those observations about the accused’s behavior are insufficient to satisfy the actual knowledge or willful blindness requirements of the federal statute.