Court Opinion

ID: 9493539
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:11:05.230991+00
Date Added: 2024-06-11T17:55:53.719844
License: Public Domain

WILKINSON, Chief Judge,
dissenting:
I respectfully dissent from the grouping of the conspiracy offenses of which Bartley was convicted. There is a square conflict among the circuits regarding whether to group money laundering and narcotics distribution offenses under U.S.S.G. § 3D1.2(b). Compare United States v. Harper, 972 F.2d 321, 322 (11th Cir.1992) (refusing to group under subsection (b)); United States v. Gallo, 927 F.2d 815, 824 (5th Cir.1991) (same); with United States v. Lopez, 104 F.3d 1149 (9th Cir.1997) (grouping under subsection (b)). Likewise, there is a disagreement among the circuits as to which offenses are sufficiently related to merit grouping under U.S.S.G. § 3D1.2(c). Compare United States v. Lombardi, 5 F.3d 568 (1st Cir.1993) (refusing to group money laundering and mail fraud offenses under subsection (c)); with United States v. Rice, 185 F.3d 326, 329 (5th Cir.1999) (grouping money laundering and narcotics offenses under subsection (c)).
I believe that money laundering and drug trafficking are sufficiently different crimes that merit no grouping at all. Because grouping in this situation underestimates the range of harms that narcotics enterprises inflict upon society, I would affirm the district court’s judgment that the defendant be punished for all of the offenses of which he was .convicted.
I.
Bartley contends that his money laundering and drug offenses should be grouped under U.S.S.G. § 3D1.2(b). I disagree.
Subsection (b) mandates grouping “[w]hen counts involve the same victim and two or more acts or transactions [are] connected by a com-mon criminal objective or constitute] part of a common scheme or plan.” U.S.S.G. § 3D1.2(b). In cases such as this, where society at large is the victim, the “victim” for purposes of subsection (b) “is the societal interest that is harmed.” Id. § 3D1.2, comment, (n.2). The guidelines explain that in such cases, the counts are grouped together only when “the societal interests that are harmed are closely related.” Id.
The basic problem with grouping under subsection (b) is that the narcotics statutes and the money laundering statute protect separate societal interests. See United States v. Harper, 972 F.2d 321, 322 *675(11th Cir.1992) (holding that narcotics distribution increases violence and threatens public health while money laundering threatens the integrity of lawfully operating financial institutions); United States v. Gallo, 927 F.2d 815, 824 (5th Cir.1991) (same). Quite simply, one may launder money without participating in a narcotics conspiracy, and one may participate in a narcotics conspiracy without laundering money. Each crime is different, and each inflicts distinct harms upon society.
Congress recognized as much when it passed the money laundering statute. See Money Laundering Control Act of 1986 § 1352, 18 U.S.C. §§ 1956-57 (1994). The Senate report makes clear that the bill was intended to create a “new Federal offense against money laundering.” S. Rep. No. 99-433, at 4 (1986). For this reason, Congress designed the money laundering statute to target conduct other than that which generated the “dirty” money. The Act provides a punishment for conduct undertaken subsequent to the underlying crime rather than merely affording an alternative means of punishing the underlying crime itself. See United States v. Holmes, 44 F.3d 1150, 1154 (2d Cir.1995); United States v. Pierro, 32 F.3d 611, 620 (1st Cir.l994); United States v. Edgmon, 952 F.2d 1206, 1213-14 (10th Cir.1991).
The societal interests protected by the money laundering statute thus differ from the societal interests protected by the drug laws. See United States v. Heaps, 39 F.3d 479, 486 (4th Cir.1994) (in creating the money laundering statute, “Congress intended to prevent an ill other than those already prohibited by other laws”). The differences are at least threefold. First, in contrast to the narcotics laws, the money laundering statute is concerned with collecting tax revenue on income from illicit sources. Section 1956 applies to individuals who launder money “with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986.” 18 U.S.C. § 1956(a)(l)(A)(ii). The Senate report on the bill noted that although it was already possible under the Internal Revenue Code to prosecute individuals for facilitating tax evasion, Congress determined that there existed a need for “a special penalty for those whose job it is to launder unreported income.” S. Rep. No. 99-433, at 11.
Second, the money laundering statute aims to protect the integrity of financial institutions. There is a wholly separate societal interest in protecting the integrity of such institutions given their key role in the country’s economy. “While both [narcotics distribution and money laundering] taint our polity, the former taints our people; it injures their bodies and then-minds. The latter taints our institutions; it uses otherwise legitimate means to transfer or hide illegitimate gains.” United States v. Lopez, 104 F.3d 1149, 1152 (9th Cir.1997) (Fernandez, J., dissenting). Congress recognized that money laundering placed financial institutions at risk. See S.Rep. No. 99-433, at 2 (“[Organized crime today uses banks and other financial institutions as routinely, if not as frequently, as legitimate businesses.”). Bank employees could be enticed to aid criminals in their schemes to launder money. Public confidence in financial institutions could be undermined if it were revealed that they served underworld clients. In order to protect financial institutions, the money laundering statute creates a good faith defense for financial institutions that inform law enforcement officials about customers they suspect of money laundering. See Money Laundering Control Act of 1986 § 1353, 12 U.S.C. § 3403(c) (1994). The Act also requires the Attorney General to report to bank regulators the money laundering convictions of any financial institution’s officer or employee. See 18 U.S.C. § 1956(g).
Finally, and.most importantly, the money laundering statute is designed to prevent a variety of criminals, not just drug dealers, from enjoying the profits of their illicit activities. Section 1956’s prohibitions do not extend solely to the proceeds *676of narcotics distribution. Rather, section 1956 applies to profits from, among other things, illegal gambling, prostitution, murder-for-hire, loansharking, embezzlement, bribery, and extortion. See 18 U.S.C. § 1956(c)(7) (1994 & Supp. III 1997).
This wide net of section 1956 illuminates the shortcomings of the Ninth Circuit’s analysis in United States v. Lopez, 104 F.3d 1149 (9th Cir.1997) (per curiam), upon which Bartley relies. In that case, the Ninth Circuit determined that the societal interests protected by the money laundering statute and the drug trafficking statutes are closely related because money laundering allows drug dealers “to obtain the benefits of income gained from illicit activities.” Lopez, 104 F.3d at 1150-51. Under the Ninth Circuit’s view, the societal interest protected by the money laundering statute is that of eliminating the drug trade.
Treating narcotics distribution and money laundering as “closely related,” however, misstates the societal interest protected by section 1956 — namely, to protect society from the disbursement of capital earned by criminals. This is why section 1956 applies to so many crimes besides narcotics distribution. The Ninth Circuit’s analysis would have us group the money laundering and gambling charges for a bookie who launders his proceeds, since money laundering allows bookies “to obtain the benefits of income gained from illicit activities.” Likewise, the Ninth Circuit’s analysis would have us group the money laundering and murder offenses for a hitman, since money laundering allows assassins “to obtain the benefits of income gained from illicit activities.”
This simply cannot be. The facts of this case illustrate the separate societal interests invaded. First, several of Bart-ley’s coconspirators engaged in only the drug distribution conspiracy, while others engaged only in the money laundering enterprise. Second, Bartley’s girlfriend transported drug money to New York, suggesting that Bartley could conduct his narcotics operation independently of his money laundering activities. Finally, the integrity of the Western Union’s wire transfer business was tested by Bartley’s money laundering. Bartley exploited Western Union’s reputation and good will in order to deceive the authorities about his role in the narcotics enterprise.
Because the societal interests protected by the money laundering and narcotics statutes are distinct, the district court properly refused to group Bartley’s offenses under subsection (b).
II.
The majority contends that Bartley’s money laundering and drug offenses should be grouped under U.S.S.G. § 3D1.2(c). It argues that Bartley’s drug offenses were doubly counted — once as the basis of his drug conviction under 21 U.S.C. § 846, and once as a specific offense characteristic of his money laundering count.
I again disagree. Subsection (c) mandates grouping “[w]hen one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts.” U.S.S.G. § 3D1.2(c). As the guidelines state, the purpose of subsection (c) is to prevent “‘double counting’ of offense behavior.” U.S.S.G. § 3D1.2, comment, (n.5). However, the guidelines also make clear that subsection (c) “applies only if the offenses are closely related.” Id.
I am persuaded neither by the majority’s analysis nor by United States v. Rice, 185 F.3d 326 (5th Cir.1999), upon which the majority relies. Both analyses disregard the text of § 3D 1.2(c) in determining that a defendant’s knowledge of the drug proceeds’ origin counts as “conduct” for purposes of subsection (c). Furthermore, both analyses fail to adequately consider whether money laundering and narcotics distribution are “closely related” as re*677quired by the guidelines. See U.S.S.G. § 3D1.2, comment, (n.5).
The majority disregards the plain text of subsection (c), in its attempt to call Bart-ley’s knowledge conduct for purposes of § 3D1.2(c). Subsection (c) mandates grouping “when one of the counts embodies conduct that is treated as a specific offense characteristic” in another of the counts. U.S.S.G. § 3D1.2(e) (emphasis added). The majority argues that the term “conduct” should be interpreted broadly to include everything alleged in Bartley’s drug conspiracy charge. Specifically, the majority argues that since the drug conspiracy charge alleged Bartley laundered money in order to finance his ongoing drug activities, Bartley’s “knowledge” that the laundered funds were the proceeds of narcotics activity should somehow count as “conduct” for purposes of § 3D1.2(c). See ante at 671-72.
In the course of avoiding the clear text of the guidelines, my good colleagues emphasize the language used in Bartley’s indictment rather than the legal elements of his two offenses. See ante at 672. The majority offers no support from the guidelines or the caselaw for its view that the factual averments of the indictment are dispositive. The guidelines suggest that, if anything, the elements of particular offenses are the critical factor in the § 3D1.2(c) grouping determination. Indeed, the guidelines use the words “counts” and “offenses” interchangeably. See e.g., U.S.S.G. § 3D, Introductory Commentary, (“[Cjounts that are grouped together are treated as constituting a single offense for purposes of the guidelines.”). By contrast, the majority’s approach would force sentencing courts to pore over the specific averments in every indictment in order to determine whether grouping is appropriate. This reading makes the grouping inquiry even more complex than it already is. Moreover, the majority’s indictment-specific inquiry affords prosecutors the opportunity to manipulate a defendant’s sentence simply by artfully drafting indictments. That state of affairs directly contradicts the guidelines’ stated purpose to “limit the significance of the formal charging decision.” See e.g., U.S.S.G. § 3D, Introductory Commentary. Above all, the majority’s analysis has diverted the grouping inquiry away from the plain text of the guidelines. Simply put, § 3D1.2(c) hinges on Bartley’s conduct, while the specific enhancement for money laundering under § 2Sl.l(b)(l) hinges on Bartley’s knowledge.1
The majority’s mistake is thus fundamental. It fails to apply the guidelines as written. By its very terms, subsection (c) is not applicable to Bartley. To repeat, subsection (c) mandates grouping “when one of the counts embodies conduct that is treated as a specific offense characteristic” in another of the counts. U.S.S.G. § 3D1.2(c) (emphasis added). The “conduct” embodied in Bartley’s narcotics count is his distribution of drugs, coupled with the conspiracy to distribute. See 21 U.S.C. §§ 841(a)(1), 846 (1994). The specific offense characteristic in Bartley’s money laundering crime is his knowledge that the money being laundered came from the proceeds of narcotics transactions. See U.S.S.G. § 2Sl.l(b)(l). While the majority attempts to characterize Bartley’s knowledge as “conduct” embodied in the drug count, this not only ignores the clear text of § 3D1.2(c), but also conflates the two theoretical pillars of criminal law— actus reus and mens rea. See United States v. Lombardi 5 F.3d 568, 571 (1st Cir.1993) (“It happens that [the defendant’s] knowledge of the funds’ source derives from the fact that he committed [mail fraud], but that does not make the fraudulent acts the same thing as knowledge of *678them.”)-2
Despite the fact that the First Circuit’s opinion in Lombardi involved the interplay of money laundering and mail fraud, rather than money laundering and narcotics distribution, that case offers valuable insights on the subsection (c) analysis. The Lombardi court determined that to group the defendant’s money laundering and mail fraud offenses would create a disturbing anomaly in the guideline’s application. “One who commits a fraud and launders the money (thereby knowing of its source) is normally more culpable than one who merely launders the money knowing of its source. Yet if Lombardi’s interpretation were adopted, a defendant would get exactly the same total offense level whether the defendant committed the mail fraud or merely knew that someone else had committed it.” Lombardi, 5 F.3d at 571.
The majority’s analysis ignores the anomaly the First Circuit identified in Lombardi. If Bartley’s offenses are grouped, Bartley would receive the same total offense level for his drug conspiracy as would a run-of-the-mill drug dealer who did not launder money. Both would receive a total offense level of 31. Under the majority’s analysis, Bartley and the drug dealer are equally culpable and deserve the same sentence despite the facts that the drug dealer had nothing to do with the money laundering activities, and Bartley coordinated both the drug distribution and the money laundering. Indeed, if the majority is correct that the money laundering count should be grouped with the narcotics count, there would be no accounting in Bartley’s sentence for the fact that he laundered money. In effect his conviction on that count would be washed away. See United States v. Vitale, 159 F.3d 810, 814 (3d Cir.1998).
I am also not persuaded by the majority’s explanation of why Bartley’s narcotics and money laundering offenses are “closely related.” See U.S.S.G. § 3D1.2, comment. (n.5) (grouping under subsection (c) is only permissible “if the offenses are closely related.”). The guidelines provide examples of just which offenses count as “closely related.” For instance, the guidelines note that the “use of a firearm in a bank robbery and unlawful possession of that firearm are sufficiently related to warrant grouping.” Id. By contrast, “if the defendant were convicted of one count of securities fraud and one count of bribing a public official to facilitate that fraud, the two counts would not be grouped together.” Id.
It appears to me that charges for the use of a firearm in a bank robbery and for possession of that same firearm are more closely related than charges for money laundering and drug distribution. As noted above, Congress intended the money laundering statute to constitute a “new Federal offense,” S. Rep. No. 99-433, at 4 (1986), and it designed the statute to target conduct other than that which generated the “dirty” money. See, e.g., United States v. Holmes, 44 F.3d 1150, 1154 (2d Cir.1995). The money laundering statute applies to proceeds from many different types of illegal activities, not just narcotics offenses. This is the difference between the crimes the guidelines suggest are closely related, and the crimes of which Bartley was convicted. It is nearly impossible to become eligible for prosecution for the use of a firearm in a bank robbery without also becoming eligible for prosecution for possession of a firearm. As a result, grouping these two offenses is appropriate under subsection (c). By contrast, it is possible to participate in a narcotics conspiracy without laundering money, just as it is possible to launder money without participating in a narcotics conspiracy. Therefore, Bartley’s two offenses are not *679“closely related” in the way the guidelines envisioned..
The majority argues, however, that Bartley’s offenses are closely related since Bartley laundered money in order to facilitate additional narcotics purchases. See ante at 673. Neither the guidelines nor the money laundering statute, however, provide any basis for this distinction. The guidelines considered a similar example where a second crime was committed in order to facilitate the first. The guidelines determined that grouping was not appropriate in that case. See U.S.S.G. § 3D1.2, comment, (n.5). Likewise, the plain text of the money laundering statute applies equally to money laundering committed with an intent to facilitate ongoing criminal activity and money laundering that does not facilitate such activity. See 18 U.S.C. § 1956(a)(1).
The majority decries the two point increase in Bartley’s total offense level that results from § 3D1.2’s unwillingness to group his offenses.3 It should be noted, however, that the same guideline grouping rules manage to combine a level 31 offense (for narcotics distribution) with a level 29 offense (for money laundering) to produce a combined offense of only 33 (instead of 60) before the final'adjustment.4 This is a show of “charity far more significant than the two point increase that is at issue here.” United States v. Lombardi, 5 F.3d 568, 571 (1st Cir.1993).
III.
That Bartley’s money laundering offense is loosely related to his narcotics activities is no reason to group his two crimes for sentencing purposes. Congress intended for drug trafficking and money laundering to constitute separate crimes, and the Sentencing Commission intended not to group them. Bartley committed two separate offenses and inflicted two distinct harms upon society. The majority’s approach consolidates these harms. In doing so, it has underestimated the full extent of personal devastation and institutional corruption that narcotics enterprises cause.
I would affirm the judgment.

. Contrary to the majority's assertion, this interpretation of subsection (c) does not seek to promote a "one-size-fits-all” grouping scheme. Rather, it simply follows the grouping analysis that the guidelines require.

. The majority’s argument over the term "offense characteristic” again fails to address the point that it has attempted to treat knowledge as conduct in violation of the textual mandate of the guidelines.

. U.S.S.G. § 3D1.2(d) lists individual offenses, including money laundering and narcotics distribution, that are eligible for grouping. However, offenses may only be grouped under subsection (d) if they are "closely related.” United States v. Walker, 112 F.3d 163, 167 (4th Cir. 1997) (citing United States v. Porter, 909 F.2d 789, 792-93 (4th Cir.1990)); see also United States v. Napoli, 179 F.3d 1, 9 n. 4 (2d Cir. 1999) ("[T]he mere appearance of fraud and money laundering on subsection (d)'s list of counts 'to be grouped’ is insufficient to establish that they should be placed in a single group.”). For the reasons stated above, I believe money laundering and narcotics distribution are not closely related. See also United States v. Harper, 972 F.2d 321, 322 (11th Cir.1992) (refusing to group these offenses under subsection (d)); United States v. Lopez, 104 F.3d 1149, 1153-54 (9th Cir. 1997) (Fernandez, J., dissenting) (same).

. If the counts are grouped, Bartley's total offense level would be 31 rather than 33, before the final adjustment for acceptance of responsibility.