Court Opinion

ID: 1000965
Source: CourtListenerOpinion
Date Created: 2013-07-04 17:48:41.892534+00
Date Added: 2024-06-11T15:10:55.936832
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellant,

v.                                                                No. 98-4866

RONNIE CHRISTOPHER DAVIS,
Defendant-Appellee.

Appeal from the United States District Court
for the Western District of North Carolina, at Asheville.
Lacy H. Thornburgh, District Judge.
(CR-98-200)

Argued: January 28, 2000

Decided: March 2, 2000

Before LUTTIG and KING, Circuit Judges, and
Norman K. MOON, United States District Judge for the
Western District of Virginia, sitting by designation.

_________________________________________________________________

Vacated and remanded by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Brian Lee Whisler, Assistant United States Attorney,
OFFICE OF THE UNITED STATES ATTORNEY, Charlotte, North
Carolina, for Appellant. Stephen Paul Lindsay, LINDSAY & HENS-
LEY, Asheville, North Carolina, for Appellee. ON BRIEF: Mark T.
Calloway, United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Charlotte, North Carolina, for Appellant.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

The district court dismissed an indictment against defendant-
appellee Ronnie Davis for money laundering and conspiracy to
money launder, and the United States appeals. Because the district
court was in error as to its understanding of the elements of money
laundering, and therefore as to its decision to dismiss two counts of
the nine-count indictment, we vacate the order of dismissal with
respect to those counts.

I.

The government alleged in its bill of indictment that Davis amassed
a $23,000 gambling debt to Richard McMahan, who operated an ille-
gal gambling and bookmaking business. In order to satisfy partially
this debt, Davis agreed to borrow $15,000 to purchase an automobile,
the title to which would be in his name, for McMahan's use. From
1990 to 1994, Davis made most of the payments on the loan, by
checks drawn on his credit-union account, while McMahan retained
exclusive possession of the automobile. The government alleged that
McMahan used the automobile in conducting his illegal gambling
business, and that the arrangement whereby Davis retained title to and
made payments on the loan for the vehicle was designed to conceal
the true owner and use of the automobile. In 1994, McMahan sold the
Jeep for $8,000, kept the proceeds, and directed Davis to transfer title
to the new owner.

In April 1998, Davis was indicted for conspiracy to money launder.
The government obtained a superseding bill of indictment, which
added substantive money laundering and bank fraud charges to the
money laundering conspiracy charge, and Davis moved to dismiss the
indictment in full. The district court granted the motion to dismiss,
and the government now appeals with respect to two of the nine

                    2
counts included in the indictment: one for substantive money launder-
ing and one for conspiracy to money launder.

II.

With respect to the substantive money laundering count at issue on
appeal (count nine of the superseding bill of indictment), the govern-
ment alleged that Davis' involvement in the sale of the vehicle by
McMahan to a third party constituted money laundering. Apparently
believing that money laundering occurs, within the meaning of 18
U.S.C. § 1956(a)(1), only where the property involved in the transac-
tion at issue constitutes the proceeds of a felony committed by the
defendant, the district court noted that Davis had not committed a fel-
ony and dismissed the indictment. Because we conclude that section
1956(a)(1) does not require that a person charged with money laun-
dering actually have committed the felony that produced the proceeds
at issue, we vacate the district court's order of dismissal with respect
to this count.

Section 1956(a)(1) provides that money laundering occurs only
where an individual "know[s] that the property involved in a financial
transaction represents the proceeds of some form of unlawful activ-
ity." Section 1956(c)(1) defines "unlawful activity" as "activity that
constitutes a felony under State, Federal, or foreign law." Although
a defendant thus must know that the property involved in the transac-
tion constitutes the proceeds of a felony, nothing in the text of section
1956 suggests that the defendant must have committed that felony
himself, and Circuit precedent confirms that such is not required. See
United States v. Campbell, 977 F.2d 854, 857-59 (4th Cir. 1992)
(affirming the money laundering conviction of a defendant who
engaged in a real estate transaction involving the proceeds of drug
sales but who did not participate in the drug sales).

The question remains whether the indictment raises allegations
that, if proven at trial, will satisfy the requirement that Davis knew
that the transaction upon which this count of the indictment was based
-- the sale of the vehicle and attendant transfer of title -- involved
the proceeds of a felony. A reasonable jury could find that both the
vehicle and the title thereto were proceeds of McMahan's illegal gam-
bling and bookmaking business, and the operation of such a business

                     3
constitutes a felony under section 1955.1 Moreover, given that the
government has alleged that Davis purchased the vehicle at issue for
McMahan to satisfy gambling debts incurred to McMahan's gambling
and bookmaking business, a reasonable jury could find that Davis
knew that the sale of the car and attendant transfer of title involved
the proceeds of that business. We therefore conclude that the district
court erred in dismissing the money laundering charge based on
Davis' involvement in the sale of the automobile. 2

III.

With respect to the conspiracy count now on appeal (count two of
the superseding bill of indictment), the government alleged that Davis
conspired to launder money, in violation of sections 1956(a)(1)(A)(i)
and (B)(i). The court dismissed both of these allegations for the same
reason it dismissed the substantive money laundering count discussed
above: because Davis had not committed a felony. As we have
explained, a defendant need not actually have committed a felony to
be charged with money laundering, and we therefore vacate the dis-
trict court's order of dismissal with respect to the section 1956 con-
spiracy charges.

The government also alleged that Davis conspired to violate sec-
tion 1957, which prohibits the knowing engagement"in a monetary
transaction in criminally derived property that is of a value greater
than $10,000." 18 U.S.C. § 1957(a). In dismissing this allegation, the
district court merely stated, in apparent reliance on its earlier conclu-
sion that a defendant who has not committed a felony cannot be
charged with money laundering, that "the federal money laundering
statute was not intended to encompass the payment of a gambling
debt." J.A. 80. We need not address the question of Congress' intent
with regard to gambling debts in enacting the money laundering stat-
_________________________________________________________________
1 Section 1955 provides, in relevant part:

          Whoever conducts, finances, manages, supervises, directs, or
          owns all or part of an illegal gambling business shall be fined
          under this title or imprisoned not more than five years, or both.
2 In so holding, we need not reach the question whether any of Davis'
own gambling activities amounted to a felony under state or federal law.

                    4
utes because, as we have noted, this is not a case involving merely the
discharge of such a debt. Rather, this case involves the proceeds of
an illegal gambling and bookmaking business, an independent federal
felony that serves as the criminal activity underlying the section 1957
charge against Davis.

Indeed, Davis abandons the district court's reasoning in defending
the dismissal of the section 1957 conspiracy charge, arguing instead
that the charge should have been dismissed because the vehicle was
sold for $8,000, whereas section 1957 only applies to transactions
involving more than $10,000, and because no "monetary transaction"
occurred, within the meaning of section 1957. First, we reject Davis'
argument that he did not engage in a transaction involving property
worth more than $10,000 because the vehicle was clearly worth more
than $10,000 at the time of the transaction wherein Davis purchased
it, given that a $15,000 loan was required to finance the purchase.
Second, with regard to Davis' claim that no "monetary transaction"
occurred, that term is defined as including transactions considered "fi-
nancial transaction[s]" under section 1956(c)(4)(B). See 18 U.S.C.
§ 1957(f)(1). Section 1956(c)(4)(B), in turn, defines "financial trans-
action" as including "a transaction involving the use of a financial
institution which is engaged in . . . interstate or foreign commerce."
Because Davis' purchase of the vehicle involved the procurement of
a loan from such a financial institution, we conclude that he was
involved in a "monetary transaction" within the meaning of section
1957, and therefore vacate the district court's dismissal of the section
1957 conspiracy charge against him.3
_________________________________________________________________
3 We find the remainder of Davis' arguments to be without merit. First,
Davis argues that the district court's order of dismissal should be
affirmed because the government failed to introduce evidence to support
its allegations when prompted to do so by the court. However, the evi-
dence that Davis contends the government should have introduced
regarded disputed facts properly considered by a jury at trial, rather than
by the district court at the indictment stage. Second, Davis appears to
suggest that dismissal was an appropriate response to a vindictive prose-
cution. However, we find nothing in the record that even arguably sug-
gests prosecutorial misconduct of any kind.

                    5
CONCLUSION

For the reasons stated herein, the order of dismissal entered by the
district court with respect to counts two and nine of the superseding
bill of indictment is vacated, and the case is remanded for further pro-
ceedings.

VACATED AND REMANDED

                    6