Court Opinion

ID: 9484517
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:55:37.490268+00
Date Added: 2024-06-11T17:50:16.848446
License: Public Domain

ROSENN, Circuit Judge,
dissenting.
I believe that the defendant.in this case did not engage in money laundering within the terms of 18 U.S.C. § 1956(a)(1)(A)(i) (1988) bécause he did not plough back the proceeds into purchases to promote the mail fraud scheme. Consequently, I would reverse his conviction, and on this count I therefore respectfully dissent.
I.
The Money Laundering and Control Act provides that one is guilty of violating the statute if he or she:
(a)(1) 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—
(A)(i) with the intent to promote the ■ carrying on of specified unlawful activity;
18 U.S.C. § 1956(a)(1)(A)(i) (1988).
"Section 1956(a)(1)(B)(i) provides that it is unlawful for any person to engage in a financial transaction knowing that it is designed to conceal or disguise the nature, source, ownership, or control of the proceeds of specified unlawful activity.
To obtain a conviction under § 1956(a)(l)(A)(i), the Government must prove that the defendant (1) conducted a financial transaction that 'involved the proceeds of specified unlawful activity, (2) knew that the proceeds involved in the transaction were derived from some form of unlawful activity, and (3) participated in the financial transaction with the intent to promote or further that unlawful activity. 18 U.S.C. § 1956(a)(1)(A)(i); United States v. Munoz-Romo, 947 F.2d 170, 178 (5th Cir.1991).
The term “financial transaction” is defined as, inter alia, the deposit of a check in any federally insured bank. 18 U.S.C. § 1956(c)(3), (4). The phrase “specified unlawful activity” encompasses a broad array of federal and criminal offenses, including mail fraud. Id. at § 1956(c)(7). Therefore, there is no question that Paramo violated the first two prongs of § 1956(a)(1)(A)(i), a point that Paramo readily concedes..
Paramo claims, however, that the Government failed to carry its burden with respect to the third element of the crime, i.e., that the Government did not prove that he aided, abetted, and caused the deposit of the cheeks with the specific intent to promote the mail fraud scheme.
Paramo primarily relies upon United States v. Jackson, 935 F.2d 832 (7th Cir.1991). In that case, the defendant operated a drug distribution operation. The cash proceeds from the illegal operation were deposited in a bank account, and the defendant drew checks against the account to buy telephone beepers and mobile phones. Id. at 841. The Government presented evidence that the beepers were used by the defendant to contact drug couriers in furtherance of his business. Therefore, reasoned the court, the defendant purchased the beepers with the intention of promoting the continuing criminal enterprise in violation of § 1956(a)(1)(A)(i).
The court continued:
We are, however, unable to view the mobile phone purchases ... as intended to promote the continued operations of [defendant’s] continuing criminal enterprise under § 1956(a)(1)(A)(i). The government did not prove that the cellular phones played the same role — or indeed any role — in ‘ [defendant’s] drug operations as the beepers.

Id.

Thus, the Seventh Circuit held that § 1956(a)(1)(A)(i) is not violated unless the defendant intends to use illegally obtained money to advance the illegal operation from which the money was derived because the provision in question is aimed at;the “practice of plowing back proceeds of ‘specified *1223unlawful activity’ to promote that activity.” Jackson, 935 F.2d at 842.
The Jackson court instead found the defendant guilty of violating § 1956(a)(1)(B)(i) because “[t]he conversion of cash into goods and services as a way of concealing or disguising the wellspring of the cash' is a central concern of the money laundering statute.” Id.
In the case sub judice, the majority concedes:
The government presented no evidence suggesting that any of the participants funnelled their cash proceeds back into the mail fraud scheme or purchased any equipment, devices, or other objects to assist them in continuing the scheme.
Maj. Opinion at 1217. Therefore, argues Paramo, Jackson teaches that he did not “promote” the scheme by aiding, abetting, and causing the checks to be deposited in the bank.
The Government counters with United States v. Montoya, 945 F.2d 1068 (9th Cir.1991). In that case, a former state legislator was. convicted of accepting a bribe in-the form of a check from an undercover FBI agent and depositing the check into his bank account. “According to [the defendant], the deposit of the check could not have ‘promoted’ the unlawful activity, namely the bribe, because the activity had been completed upon receipt of the check from the undercover FBI Agent.” Id. at 1078.
The Ninth Circuit disagreed, affirming the trial court’s holding that the defendant could not have made use of the bribery funds unless the check was deposited and thus the mere act of depositing the check was sufficient to establish an intent to promote. Id. The district court in the case sub judice adopted the reasoning of the Ninth Circuit, holding that depositing the checks constituí-' ed promotion of the mail fraud because it provided the defendants with the only way possible to convert otherwise worthless checks into- cash.
The majority in this case adopts the reasoning of Montoya* -holding that Paramo is guilty of promoting the fraud because the checks would have been worthless had Para-mo failed to cash them. Moreover, the majority claims that this case is distinguishable from Jackson:
Here, however, the government presents a different theory [from Jackson ]. The government does not argue that Paramo intended to promote the carrying on of mail fraud when, he used cash derived from embezzled treasury checks to purchase personal items. Rather, the government contends that he intended to promote mail fraud at an earlier point: when he converted the embezzled checks into cash.
Maj. Opinion at 1217. Finally, the majority concludes that a person can promote not only future or ongoing unlawful activity, but also prior unlawful activity. Opinion Id. at 1218. I believe that such a conclusion is faulty, and I would adopt the Seventh Circuit’s analysis in Jackson.
According to Black’s Law Dictionary, to “promote” something is to “contribute to [its] growth ... or prosperity.” Black’s Law Dictionary 1214 (6th ed. 1990). It seems fundamental that one can only contribute to the growth of a venture that is ongoing or to be conducted in the future: It does not logically follow that one can promote an enterprise that has already terminated.1
Moreover, as the Jackson court recognized, a person promotes a scheme only when he or she ploughs back the proceeds thereof to purchase implements, such as beepers, to further the illegal enterprise. However, as in the case sub judice, when a person simply uses illegally obtained funds to purchase per*1224sonal items, such purchases do not constitute promotion of the crime. Simply enjoying the fruits of illegal conduct does not further promote that conduct; rather, that is part of the original crime for which the'defendant has typically already received punishment. To justify additional punishment, there must be promotion of future criminal conduct, rather than attainment of the fruits of past criminal conduct.
It is undisputed that Paramo defrauded the IRS. Moreover, Paramo does not take, issue with the punishment that he received for committing that crime. However, he did not aid, abet, and cause the checks to be cashed in order to buy implements to commit further fraudulent schemes; rather, he paid bills and bought personal items. Therefore, it is. duplicitous to punish him for simply retrieving the money that he stole absent an intent to promote future illegal schemes with such proceeds. See Jackson, 935 F.2d at 842 (section 1965(a)(1)(A)(i) is aimed at the “practice of plowing back proceeds of ‘specified unlawful activity’ to promote that activity.”).
Although Paramo may be guilty of concealing the proceeds in violation of § 1956(a)(1)(B)(i), he was not charged with that crime. Moreover, “[tjhese two provisions are aimed at different activities, the first at the practice of plowing back proceeds of ‘specified unlawful activity’ to promote that activity, the second at hiding the proceeds of the activity.” Jackson, 935 F.2d at 842.
In sum, there was not sufficient evidence to convict Paramo of aiding, abetting, and causing money laundering, and thus his conviction on that count must be reversed. I would affirm his conviction on all other counts.

. The Government alternatively argues that the defendants gained the confidence and inclination to further defraud the IRS each time Paramo aided, abetted, or caused a check to be cashed, thus promoting the illegal scheme. This argument is wide of the mark because the issue is whether there was sufficient evidence that Para-mo acted with an intent to promote the scheme at the time the checks were cashed. 18 U.S.C. § 1956(a)(1)(A)(i) (the defendant must conduct a financial transaction "with the intent to promote the carrying on of specified unlawful activity.”). Any confidence that the defendants may have gained as a result of obtaining the proceeds of the checks came about after the checks were cashed and therefore after the crime with which Paramo is charged.