Court Opinion

ID: 9487502
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:18:06.409154+00
Date Added: 2024-06-11T17:52:18.368826
License: Public Domain

NIEMEYER, Circuit Judge,
concurring in part and dissenting in part:
With respect to Ira Heaps’ convictions on Counts 5 and 7 of the indictment, Part III B of the majority opinion concludes that the government failed to carry its burden of proving that Heaps engaged in a financial transaction with intent to promote unlawful activity within the meaning of the money laundering. statute, 18 U.S.C. § 1956(a)(l)(A)(i). For the reasons that follow, I dissent from that portion of the opinion. In all other respects, I concur.
A jury convicted Heaps on Counts 5 and 7 of the indictment for money laundering in violation of 18 U.S.C. § 1956(a)(l)(A)(i). Count 5 alleges that on November 13, 1991, Gillian Beck transferred $1,500 by wire to *488Heaps “with the intent to promote the carrying on of such specified unlawful activity [illegal drug distribution],” and Count 7 alleges a similar transaction on the same date in the amount of $500. Our review, therefore, must take the facts presented to the jury in the light most favorable to the government and determine whether a reasonable jury could convict the defendant under the applicable standard of proof. I conclude that ample evidence supported the jury’s verdict of conviction on those two counts and would therefore affirm.
Beginning in June 1991 and continuing until November 1991, Heaps, who was located in New York City, was the regular supplier of the illegal drug “ecstaey,” which is sold in tablets or pills, to Gillian Beck and Geoffrey Boccia, who were located in the Washington, D.C. area. Beck and Boccia bought the drugs, often on consignment, and sold them to customers in small portions. Beck, a friend of Heaps, visited him in New York City regularly and even travelled with him to Jamaica at Heaps’ expense on two occasions. Typically, Beck and Boccia paid for a portion of the tablets or other drugs in advance and remitted the balance owed from the profits after the drugs were sold.
Indeed, the payments of $1,500 and $500 in November 1991 were derived from the proceeds of drug sales and were remitted to Heaps to cover the balance of the amounts owed to him for previous drug purchases. On Heaps’ instructions, Beck wired the $2,000 at 11:25 p.m. on November 13, 1991, via Western Union to Stacy Maire, Heaps’ girlfriend. Maire then cashed the money orders and placed the cash in the “money box” in Heaps’ apartment.
Heaps does not dispute that the jury could conclude that the November money orders were the proceeds of illegal drug activities sent by wire in interstate commerce and that Heaps knew of the illegal nature of the proceeds. The point Heaps does argue is that he did not engage in the financial transactions “with the intent to promote the carrying on of specified unlawful activity.” 18 U.S.C. § 1956(a)(l)(A)(i).
Heaps argues, and the majority opinion agrees, that this transaction was nothing more than a payment for drugs. The majority notes, ‘Were the payment for drugs itself held to be a transaction that promoted the unlawful activity of that same transaction virtually every sale of drugs would be an automatic money laundering violation as soon as money changed hands.” Cf. United States v. Edgmon, 952 F.2d 1206, 1213 (10th Cir.1991) (“Congress appears to have intended the money laundering statute to be a separate crime distinct from the underlying offense that generated the money to be laundered.”)
While I agree that the payment constituting a drug violation cannot serve as the basis for money laundering, that does not mean that a financial transaction after completion of the illegal drug activity, even if closely connected, cannot constitute money laundering. A violation of 18 U.S.C. § 1956(a)(1)(A)© requires a “financial transaction” (1) that is not necessary to the establishment of the underlying illegal activity; and (2) that supports or promotes the illegal activity.* This is typically revealed by evidence that the proceeds of a drug sale are “plowed back” into the purchase of drugs or equipment or in other ways used to continue the illegal conspiracy. See United States v. Jackson, 935 F.2d 832, 841-42 (7th Cir.1991). Additionally, in circumstances where non-monetary proceeds are received in the form of a security, a violation may occur when the security is converted (by a financial transaction) into money, thereby yielding a benefit by a transaction which is distinct from the independently illegal underlying activity.
In this case, the most obvious demonstration of money laundering is the loan payback by Beck to Heaps which, in effect, continued the credit arrangement that facilitated the underlying illegal drug conspiracy. While there is no direct evidence that the $2,000 was actually “plowed back” into the illegal drug activity, the circumstantial evidence clearly supports the conclusion that the $2,000 supported an ongoing drug conspiracy *489through a “fronting” scheme by which Heaps distributed drugs to Beck and Boccia. Without the $2,000 payment, such a scheme would not have continued. The $2,000 payment satisfied a credit arrangement agreed to as part of the “fronting” scheme. The jury was presented with evidence of similar prior and subsequent transactions and could well have concluded that the $2,000 promoted the scheme which had been in existence for the entire summer and fall of 1991. Significantly, after her arrest in January 1993, Beck placed an undercover telephone call to Heaps in which the two coordinated the next installment of money owed for previously completed drug transactions, thus demonstrating the ongoing nature of their financial arrangement. In similar circumstances, the Second Circuit concluded, in United States v. Skinner, 946 F.2d 176 (2nd Cir.1991), that the purchase of U.S. Postal Service money orders from the proceeds of drug sales and the transmission of those money orders to the drug supplier constituted money laundering because that financial transaction facilitated the drug conspiracy. Id. at 177-78.
Although the above evidence is sufficient to support the jury’s verdict on the money laundering counts, I note that the verdict is further buttressed by the transaction with Western Union, which was (1) separate from the necessary elements of the drug violation and (2) supported it. In November 1991, after she had already received and distributed drugs, Beck transferred cash in Washington, D.C. to Western Union in exchange for a promise that Western Union pay cash in New York to a designated payee, i.e. Stacy Maire. This commercial transaction was more than the payment of money for drugs; it was a “financial transaction” in the private sector which fully supported the ongoing drug conspiracy, but was not necessary to establish the drug violation. Similar conclusions have been reached in somewhat distinguishable but no less apposite factual circumstances by the Third, Fifth, and Ninth Circuits. See United States v. Paramo, 998 F.2d 1212 (3rd Cir.1993), cert. denied, — U.S. -, 114 S.Ct. 1076, 127 L.Ed.2d 393 (1994); United States v. Cavalier, 17 F.3d 90 (5th Cir.1994); and United States v. Montoya, 945 F.2d 1068 (9th Cir.1991). In each of these cases, the defendants fraudulently obtained checks which they cashed to realize the benefits of their illegal conduct, and in each, the court held that by showing that the checks were cashed, money laundering had been established. As the court in Paramo said:
In the present case, Paramo understood that the embezzled checks would have been worthless unless cashed at a bank or otherwise exchanged for negotiable currency. Given this fact, the jury rationally could have found that the cashing of each check contributed to the growth and prosperity of each preceding mail fraud by creating value out of an otherwise unre-munerative enterprise.
998 F.2d at 1218. Similarly, in this case Beck created a fund with Western Union on which Heaps (through his girlfriend) drew to obtain cash in furtherance of his credit arrangement with Beck and Boccia.
The lifeblood of any business is the resupply of capital, particularly when credit is extended, and for this reason, I conclude that the evidence was sufficient to allow a jury to conclude that the $2,000 money-order transactions between Beck and Heaps on November 13,1991, promoted the carrying on of the alleged illegal drug conspiracy and therefore violated 18 U.S.C. § 1956(a)(1)(A)®.
I would therefore affirm the Heaps conviction under Counts 5 and 7 of the indictment, and, with respect to the majority’s decision on those counts, I respectfully dissent.

 Cashing a money order falls within the definition of "financial transaction" because it involves "the movement of funds by wire or other means.” 18 U.S.C. § 1956(c)(4)(A)(i).