Court Opinion

ID: 155568
Source: CourtListenerOpinion
Date Created: 2010-08-14 04:19:06+00
Date Added: 2024-06-11T13:26:58.251248
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F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit

                                                                        NOV 18 1997
                                  PUBLISH
                                                                     PATRICK FISHER
                                                                             Clerk
              UNITED STATES COURT OF APPEALS
                       TENTH CIRCUIT

 UNITED STATES OF AMERICA,

       Plaintiff-Appellee,

 v.                                                    No. 96-5147

 SHARON KAY ALLEN,

       Defendant-Appellant.

                  Appeal from the United States District Court
                    for the Northern District of Oklahoma
                            (D.C. No. 95-CR-81-H)

Art Fleak, Tulsa, Oklahoma, for Defendant/Appellant.

Kevin C. Leitch, Assistant United States Attorney, (Stephen C. Lewis, United
States Attorney and Gordon B. Cecil, Assistant United States Attorney, with him
on the brief), Tulsa, Oklahoma, for Plaintiff/Appellee.

Before SEYMOUR, Chief Judge, MCKAY, Senior Circuit Judge, and
MURPHY, Circuit Judge.

SEYMOUR, Chief Judge.
      Sharon Allen was convicted after a jury trial on three counts of uttering a

forged instrument in violation of 18 U.S.C. § 513(a), and three counts of engaging

in a monetary transaction with criminally derived property in violation of 18 U.S.C.

§ 1957(a). She was sentenced to seventy-four months in prison and three years of

supervised release, and ordered to pay restitution in the amount of $10,000. On

appeal, Mrs. Allen contends the trial court erred in instructing the jury with respect

to the section 1957 counts and erred in denying her motion for acquittal on those

counts, arguing that section 1957 does not apply to the facts of her case. Mrs.

Allen also contends the trial court erred in several regards in calculating her

sentence under the Sentencing Guidelines. We affirm.

                                           I

      Mrs. Allen’s arguments on appeal raise issues of law that do not require an

extensive recitation of the facts underlying her convictions. Briefly, Mrs. Allen’s

criminal history reveals her chronic inability to keep her fingers out of the funds of

others. Her present troubles began when she allegedly embezzled over $81,000

from her prior employer in California, Koll Management Services. Koll did not

prosecute when Mrs. Allen agreed to pay back the money. Her current convictions

arise from allegations that she embezzled $131,794.00 from a subsequent employer,

                                          -2-
Berendsen Fluid Power, Inc., of Tulsa, Oklahoma, which she used in part to make

restitution to Koll.

       The three forgery counts are based on three checks against Berendsen that

Mrs. Allen either wrote herself or knew were fraudulently prepared by others.

These checks were deposited in an account opened by Mrs. Allen, from which she

later withdrew funds that she converted to three cashier’s checks and used to pay

back the money she had taken from Koll. Two of the cashier’s checks were

payable to Koll and one of them was payable to Prudential Insurance Company.

All of the checks were sent out of state and deposited in bank accounts in states

other than Oklahoma. The section 1957 counts are based on Mrs. Allen’s

withdrawing the funds from the Tulsa account, converting them to cashier’s checks,

and sending them out-of-state for deposit.

                                          II

       Mrs. Allen asserts that in instructing the jury on the elements of a section

1957 violation, the trial court erred in two regards. First, she contends the court’s

instruction on the requisite nexus with interstate commerce erroneously told the

jury it did not have to find her actions actually affected interstate commerce.

Second, she contends the court improperly instructed the jury with respect to the

“knowledge” element of section 1957.

                                          -3-
      Section 1957 imposes criminal penalties on “[w]hoever . . . knowingly

engages or attempts to engage in a monetary transaction in criminally derived

property that is of a value greater than $10,000 and is derived from specified

unlawful activity.” 18 U.S.C. § 1957(a). The statute further provides that “the

term ‘monetary transaction’ means the deposit, withdrawal, transfer, or exchange,

in or affecting interstate or foreign commerce, of funds or a monetary instrument

. . . by, through, or to a financial institution.” Id. § 1957(f)(1) (emphasis added).

      The portion of the interstate commerce instruction which Mrs. Allen

challenges on appeal instructed the jury as follows:

            It is not necessary for the government to show that the
      defendant actually intended or anticipated an effect on interstate or
      foreign commerce, or that commerce was actually affected. All that is
      necessary is that the natural and probable consequences of the
      defendant’s actions would be to affect interstate or foreign commerce,
      no matter how minimal.

Rec., vol. I at A-62. Mrs. Allen asserts that because an effect on interstate

commerce is an essential element of a section 1957 violation, the jury was required

to make a finding on it. She argues that her section 1957 convictions must be

reversed because the court’s instruction here eliminated that requirement, citing

United States v. Aramony, 88 F.3d 1369, 1385-87 (4th Cir. 1996), cert. denied,

117 S. Ct. 1842 (1997), which reversed section 1957 convictions on the basis of an

instruction virtually identical to that given here.

                                           -4-
       We begin our discussion of this argument by pointing out that this appeal

differs from Aramony in at least one critical regard. The defendants in that case

specifically objected to the above instruction on the ground that it did not require

the jury to make a finding on the interstate commerce element. Mrs. Allen made no

such objection. While the government indicated to the trial court its general

dissatification with the standard jury instructions on section 1957, and the parties

and the court discussed an instruction on another element of that offense, neither

Mrs. Allen nor the government even mentioned the interstate commerce instruction.

Although counsel for Mrs. Allen stated that he wanted “to object to everything to

preserve my record,” rec., vol. XVII at 923, such a general objection does not, of

course, do so. The Rules of Criminal Procedure state that “[n]o party may assign

as error any portion of the charge or omission therefrom unless that party objects

thereto before the jury retires to consider its verdict, stating distinctly the matter to

which that party objects and the grounds of the objection.” Fed. R. Crim. P. 30.

See, e.g., United States v. Agnew, 931 F.2d 1397, 1401 n.3 (10th Cir. 1991) (“the

heart of the rule” requires objection be made with specificity and distinctness).

Absent such an objection, we review only for plain error. See United States v.

Freeman, 813 F.2d 303, 305 (10th Cir. 1987).

       The government asserts there was no error, much less a plain one, because

the interstate nexus requirement of section 1957 is not an element of the crime and

                                            -5-
therefore need not be submitted to the jury. In this regard, we have previously

stated “[t]he requirement that the transaction be ‘in or affecting interstate

commerce’ must be met in order to confer jurisdiction on federal courts. Such,

however, is not an essential element of the crime charged.” United States v.

Kelley, 929 F.2d 582, 586 (10th Cir. 1991); see also United States v. Kunzman, 54
F.3d 1522, 1527 (10th Cir. 1995); United States v. Lovett, 964 F.2d 1029, 1038

(10th Cir. 1992). All of these cases, however, made that statement in the context of

considering a challenge to the sufficiency of the evidence regarding that

requirement; none of the cases address whether the issue is one for the jury or for

the court.1 Indeed, it is impossible to determine whether the issue in those cases

was in fact decided by the court or by the jury. Even assuming that our description

of the requirement as jurisdictional rather than an essential element of the offense

necessarily implied that the jury need not decide the issue, our statements on the

nature of the element in those cases were clearly dicta.

      1
         Although the court in United States v. Van Brocklin, 115 F.3d 587, 596
(8th Cir. 1997), read our opinion in Kelley as holding both that the “affecting
interstate commerce” requirement is a jurisdictional requirement and that it
therefore need not be submitted to the jury, neither Kelley nor the other cases
cited above dealt with the second issue. Indeed, in United States v. Grey, 56 F.3d
1219 (10th Cir. 1995), involving the interstate commerce requirement of 18
U.S.C. § 1956, the sister statute of section 1957, we stated that “[t]he necessary
underpinning to establish the way or degree that a transaction affects interstate or
foreign commerce is always factual in nature.” Id. at 1225. We further stated that
we could affirm only if the record evidence was sufficient to allow a trier-of-fact
to find that element satisfied. Id. at 1224.

                                           -6-
      We believe the better view is to consider the “affecting interstate or foreign

commerce” requirement of section 1957 as both jurisdictional and an essential

element of the offense. See United States v. Ripinsky, 109 F.3d 1436, 1443-44 (9th

Cir. 1997); United States v. Leslie, 103 F.3d 1093, 1101 (2d. Cir.), cert. denied,

117 S. Ct. 1713 (1997); Aramony, 88 F.3d at 1386. We further hold that the issue

is one for the jury to resolve. We agree with those courts that have found support

for this conclusion in the Supreme Court’s decision in United States v. Gaudin, 515
U.S. 506 (1995), which holds that an element of a crime requiring the application

of the law to the facts must be decided by a jury. See Aramony, 88 F.3d at 1386;

see also United States v. Spriggs, 102 F.3d 1245, 1260 (D.C. Cir. 1996)

(suggesting but not deciding that Gaudin supports requiring jurisdictional elements

of crime to be decided by jury), cert. denied, 66 U.S.L.W. 3256 (U.S. Oct. 6, 1997)

(No. 96-9082).

      We must therefore assess whether the instruction on interstate commerce

given in this case rises to reversible plain error in light of the above discussion.

Under the plain error analysis set out by the Supreme Court in United States v.

Olano, 507 U.S. 725 (1993), and interpreted recently in Johnson v. United States,

117 S. Ct. 1544 (1997),

      before an appellate court can correct an error not raised at trial, there
      must be (1) error, (2) that is plain, and (3) that affect[s] substantial
      rights. If all three conditions are met, an appellate court may then
      exercise its discretion to notice a forfeited error, but only if (4) the

                                           -7-
      error seriously affect[s] the fairness, integrity, or public reputation of
      judicial proceedings.

Id. at 1549 (citation and internal quotations omitted).

      Mrs. Allen argues that the challenged instruction relieved the government

from proving to the jury that her transactions actually had at least a minimal effect

on interstate commerce. The government, on the other hand, asserts that the

instruction properly informed the jury in the first sentence that the government

need not prove defendant intended to actually affect interstate commerce, and in

the second sentence that the government must prove the natural and probable

consequences of defendant’s actions would be to affect interstate commerce at least

minimally. See supra p.4.

      Jury instructions must be assessed as a whole. United States v. Voss, 82
F.3d 1521, 1529 (10th Cir.), cert. denied, 117 S. Ct. 226 (1996). The jury here was

also instructed that the government was required to prove Mrs. Allen engaged or

attempted to engage in a monetary transaction, and defined “monetary transaction”

as “the deposit, withdrawal, transfer, or exchange, in or affecting interstate or

foreign commerce of funds or a monetary instrument by, through or to a financial

institution.” Rec., vol. I at A-61. Under this instruction the jury was required to

find an effect on interstate commerce in order to find that Mrs. Allen engaged in a

monetary transaction as required for a substantive violation.

                                          -8-
       We need not determine whether the jury instructions as a whole misled the

jury or removed the issue from the jury’s determination. Even assuming that a

plain error affecting substantial rights occurred here, under Johnson the forfeited

error does not meet the final requirement of Olano. In Johnson, the trial court

removed from the jury’s consideration the issue of materiality in a perjury

prosecution. The Supreme Court ruled that plain error occurred and assumed that it

affected substantial rights. The Court nonetheless held that because the evidence

of materiality was overwhelming and essentially undisputed, the record contained

no basis for concluding the error seriously affected the fairness, integrity or public

reputation of judicial proceedings. Johnson, 117 S. Ct. at 1550.

       In this case, as the government points out, the evidence establishing the

requisite effect on interstate commerce is also overwhelming and essentially

uncontroverted. It is undisputed that Mrs. Allen deposited proceeds from the

forged checks in a financial institution as defined in the statute, withdrew those

funds, and transferred them by using cashier’s checks to be deposited out of state.

These uncontested facts establish the essential nexus with interstate commerce.

Under these circumstances, the challenged jury instruction does not meet the Olano

test for reversible error.

       Mrs. Allen also asserts the trial court erred in instructing the jury on the

knowledge element of section 1957. The statute forbids “knowingly engag[ing]

                                           -9-
. . . in a monetary transaction in criminally derived property that is . . . derived

from specified unlawful activity.” 18 U.S.C. § 1957(a). The statute further

provides that “[i]n a prosecution for an offense under this section, the Government

is not required to prove the defendant knew that the offense from which the

criminally derived property was derived was specified unlawful activity.” Id. §

1957(c). “The knowledge element of the offense requires that the defendant know

that the property in question is ‘criminally derived,’ although it does not require

knowledge that the property was derived from ‘specified unlawful activity.’”

United States v. Pettigrew, 77 F.3d 1500, 1513 (5th Cir. 1996).

      The district court instructed the jury without objection that “the government

must prove only that defendant knew that the property involved in the monetary

transaction constituted, or was derived from, directly or indirectly, proceeds

obtained by some criminal offense. It need not prove that she knew the precise

nature of the criminal offense from which the proceeds derived.” Rec., vol. I at A-

62. This instruction is a correct statement of the applicable law. Mrs. Allen’s

attempt to equate the instruction here with the one reversed in Pettigrew, 77 F.3d at

1513 & n.10, is unavailing. There the knowledge instruction given could “most

reasonably be read to permit conviction if Pettigrew knowingly engaged in the

transaction and the funds involved were in fact criminally derived without requiring

any showing by the government that Pettigrew knew that the funds in question were

                                           -10-
criminally tainted.” Id. at 1513. Here the court specifically instructed the jury that

the government had to prove Mrs. Allen knew that the proceeds were obtained from

some criminal offense. Pettigrew is simply distinguishable on that critical ground.

                                          III

      Mrs. Allen contends the trial court erred in denying her motion for a

judgment of acquittal. She argues section 1957 does not apply when, as here, the

evidence shows that a defendant is merely spending illegally obtained money with

no attempt to conceal the transfers at issue. This argument is contrary to the plain

language of the statute.

      Section 1956, the companion statute to section 1957, prohibits money

laundering as that activity is commonly understood. Section 1956 punishes

conducting a financial transaction with the proceeds of specified unlawful activity

knowing that the transaction is designed to conceal or disguise the nature, location,

source, ownership or control of the proceeds, or intending that the transaction be so

designed. See 18 U.S.C. § 1956(a)(1)(B)(i), (a)(2)(B)(i), (a)(3)(B). Section 1957,

on the other hand, prohibits engaging in monetary transactions in property from

specified unlawful activity, and contains no requirement that the transaction be

designed to conceal anything. A defendant must know only that she is engaging in

                                         -11-
a transaction and that the subject of the transaction is criminally derived property.

See 18 U.S.C. § 1957(a).

      Thus, Section 1957

      differs from section 1956 in two critical respects: It requires that the
      property have a value greater than $10,000, but it does not require that
      the defendant know of a design to conceal aspects of the transaction or
      that anyone have such a design. Due to the omission of a “design to
      conceal” element, section 1957 prohibits a wider range of activity than
      money “laundering,” as traditionally understood.

United States v. Wynn, 61 F.3d 921, 926-27 (D.C. Cir. 1995).

      The description of [a section 1957 violation] does not speak to the
      attempt to cleanse dirty money by putting it in a clean form and so
      disguising it. This statute applies to the most open, above-board
      transaction. The intent to commit a crime or the design of concealing
      criminal fruits is eliminated.

United States v. Rutgard, 116 F.3d 1270, 1291 (9th Cir. 1997) (citation omitted).

As the court in Rutgard explained,

      [section 1957] is a powerful tool because it makes any dealing with a
      bank potentially a trap for the drug dealer or any other defendant who
      has a hoard of criminal cash derived from the specified crimes. If he
      makes a “deposit, withdrawal, transfer or exchange” with this cash, he
      commits the crime; he’s forced to commit another felony if he wants
      to use a bank. This draconian law, so powerful by its elimination of
      criminal intent, freezes the proceeds of specific crimes out of the
      banking system. As long as the underlying crime has been completed
      and the defendant “possesses” the funds at the time of deposit, the
      proceeds cannot enter the banking system without a new crime being
      committed.

Id.

                                         -12-
      Mrs. Allen’s argument that section 1957 requires an intent to conceal is thus

without merit. 2 “Section 1957 could apply to any transaction by a criminal with his

bank.” Id. The trial court did not err in denying the motion for acquittal.

                                         IV

      Mrs. Allen asserts the trial court made several errors in calculating her

sentence. She argues that her two-point upward adjustment for more than minimal

planning constitutes impermissible double counting; that she should have been

given a downward adjustment for acceptance of responsibility; that her two-point

upward adjustment for knowing the proceeds were from a specified unlawful

activity constituted double-counting; and that the forgery counts and the section

1957 counts should have been grouped for sentencing purposes. These arguments

      2
        Mrs. Allen’s reliance on United States v. Johnson, 971 F.2d 562 (10th Cir.
1992), is misplaced. In that case, we held the transactions at issue did not fall
within section 1957 because they did not involve proceeds that had already been
obtained through an underlying criminal offense. Id. at 569-70. Although we
observed in passing that the legislative history of section 1957 shows Congress
had in mind “the ‘classic’ case” of money laundering in drafting the provision, we
also pointed out that “the Act itself prohibits a much broader range of conduct
than just the ‘classic’ example of money laundering.” Id. at 568-69. Mrs. Allen’s
reference to United States v. Massey, 48 F.3d 1560 (10th Cir. 1995), is likewise
unavailing because that case merely applied the holding in Johnson. Moreover,
Massey’s reference to the “‘post-crime hiding of illgotten gains,’” id. at 1566,
was directed at section 1956, not section 1957.

                                        -13-
challenge the district court’s legal interpretation of the guidelines, which we review

de novo. See Kunzman, 54 F.3d at 1531. We address them in order.

      The district court adopted the recommendation of the presentence report that

Mrs. Allen receive an adjustment under U.S.S.G. § 2F1.1(a)(2), which provides that

forgery offenses are subject to a two-level increase in offense level if they involve

more than minimal planning as defined in the Commentary to U.S.S.G. § 1B1.1.

The Commentary in turn states that “‘[m]ore than minimal planning’ is deemed

present in any case involving repeated acts over a period of time, unless it is clear

that each instance was purely opportune. Consequently, this adjustment will apply

especially frequently in property offenses.” U.S.S.G. § 1B1.1, comment. (n.1(f)).

      Mrs. Allen concedes, as she must, that because her conduct consisted of

repeated acts of uttering forged documents over a period of time, she falls within

the language of the commentary deeming the presence of more than minimal

planning. Nonetheless, she contends that because her actions in violating section

1957 could also have been used to support the enhancement, she was unfairly

punished twice for the same conduct. This argument is utterly lacking in merit.

The fact that other conduct, violative of section 1957, could have been used to

support an enhancement for more than minimal planning is simply irrelevant when

repeated acts over a period of time are also present. Moreover, as we have pointed

out in a related context, “Congress intended to impose separate punishments for the

                                          -14-
money-laundering transactions and for the underlying criminal activity.” Johnson,
971 F.2d at 569. The enhancement for more than minimal planning therefore did

not result in impermissible double punishment.

      Second, Mrs Allen argues the court erred in refusing to grant her a

downward departure for acceptance of responsibility under U.S.S.G. § 3E1.1(a).

The commentary to that guideline provides:

      This adjustment is not intended to apply to a defendant who puts the
      government to its burden of proof at trial by denying the essential
      factual elements of guilt, is convicted, and only then admits guilt and
      expresses remorse. Conviction by trial, however, does not
      automatically preclude a defendant from consideration for such a
      reduction. In rare situations a defendant may clearly demonstrate an
      acceptance of responsibility for his criminal conduct even though he
      exercises his constitutional right to a trial. This may occur, for
      example, where a defendant goes to trial to assert and preserve issues
      that do not relate to factual guilt (e.g., to make a constitutional
      challenge to a statute or a challenge to the applicability of a statute to
      his conduct). In each such instance, however, a determination that a
      defendant has accepted responsibility will be based primarily upon
      pre-trial statements and conduct.

U.S.S.G. § 3E1.1, comment. (n.2).

      Our consideration of Mrs. Allen’s argument that the court erred in denying

her the benefit of this provision requires that we set out the relevant procedural

history. Mrs. Allen originally entered into a plea agreement with the government

under which she pled guilty to one count of uttering a forged check and one count

of violating section 1957. The plea agreement expressly provided that Mrs. Allen

waived “the right to appeal the sentence, directly or collaterally, on any ground

                                          -15-
except to challenge the single legal issue of the lack of scienter as an element of

violation of 18 U.S.C. § 1957.” Rec., vol. I at A-27. After the district court

accepted the plea and convicted Mrs. Allen but before she was sentenced, Mrs.

Allen, through new counsel, filed several pleadings seeking dismissal of the section

1957 count for, among other things, lack of evidence of scienter. At a hearing on

the motions, new defense counsel made clear to the court his concern that the

issues he wished to challenge on appeal might not be properly preserved by the plea

agreement. Rec., vol. VII at 14-18. Agreeing with counsel, the district court

solved the problem by vacating the guilty plea and scheduling a trial date. The

court made plain its view that Mrs. Allen now had all her options open: she could

file motions to dismiss certain counts raising legal or evidentiary matters so as to

clearly preserve issues for appeal, and then make a new plea agreement; or she

could choose to go to trial to test the sufficiency of the evidence. Id. at 19.

      Mrs. Allen chose the latter course and proceeded to trial. After her

conviction, she objected to the recommendation in the presentence report that she

not be given a reduction for acceptance of responsibility. Mrs. Allen did not argue

that she went to trial in order to preserve her legal challenge to section 1957.

Rather, she stated that “[t]he thrust of the defense involved the conduct and

activities of two of the government witnesses . . . . The Defendant had the right to

have an ultimate determination by a jury without being required to forfeit the 2

                                          -16-
point downward adjustment for acceptance of responsibility in light of the defense

asserted.” Rec., vol. I at A-72. Thus Mrs. Allen went to trial not to preserve a

legal issue but to test the government’s evidence. Under these circumstances, the

district court did not err in denying an adjustment for acceptance of responsibility.

See United States v. Portillo-Valenzuela, 20 F.3d 393, 394 (10th Cir. 1994)

(pleading not guilty and forcing the government to prove guilt at trial demonstrate

denial of responsibility despite pre-trial confession).

      Mrs. Allen also argues that her two-level upward adjustment under U.S.S.G.

§ 2S1.2(b)(1)(B) amounted to impermissible double counting. That guideline

requires an enhancement for a section 1957 violation “if the defendant knew that

the funds were not merely criminally derived, but were in fact the proceeds of a

specified unlawful activity.” Id. comment. (backg’d); see also United States v.

Lowder, 5 F.3d 467, 473 (10th Cir. 1993). Mrs. Allen contends this enhancement

impermissibly punishes her for the same conduct that served as the basis for her

convictions for uttering false checks. We disagree.

      We reiterate that “Congress intended to impose separate punishments for the

money-laundering transactions and for the underlying criminal activity.” Johnson,
971 F.3d at 569. Moreover, “‘[t]here is nothing in the Constitution which prevents

Congress from punishing separately each step leading to the consummation of a

transaction . . . and punishing also the completed transaction.’” Lowder, 5 F.3d at

                                          -17-
473 (quoting Garrett v. United States, 471 U.S. 773, 779 (1985)). Even assuming

the challenged enhancement punishes Mrs. Allen for the same conduct underlying

her other convictions, application of the enhancement is not improper for that

reason.3

      Finally, Mrs. Allen asserts the district court should have grouped the counts

of uttering forged checks with the section 1957 counts. Although other circuits

have adopted Mrs. Allen’s position, this court has expressly and repeatedly rejected

her argument. See Kunzman, 54 F.3d at 1530-31; United States v. Smith, 13 F.3d
1421, 1428-29 (10th Cir. 1994); Johnson, 971 F.2d at 575-76.

      We AFFIRM the judgment of the district court.

      3
         Mrs. Allen also challenges application of this enhancement as contrary to
Congressional intent. It may be true that Congress’ primary concern in enacting
section 1957 was with “third persons--bankers, brokers, real estate agents, auto
dealers and others--who have aided drug dealers by allowing them to dispose of
the profits of drug activity.” Johnson, 971 F.2d at 568. Nonetheless, the statute
also reaches the conduct of wrong-doers like Mrs. Allen who use financial
institutions in transactions with the fruits of their own criminal activity. See
Rutgard, 116 F.3d at 1291. Because both the plain language of the statute and the
enhancement apply to Mrs. Allen, the court did not err in enhancing her section
1957 sentence under the challenged guideline. Nevertheless, the trial court did
accept the argument that Congress may not have intended to deal so harshly with
defendants such as Mrs. Allen despite the inclusion of their conduct in the ambit
of the enhancement. Accordingly, it granted a two-level downward departure on
that basis, a ruling the government has not appealed. See rec., vol. XVIII at 26.

                                        -18-