In the Courts

International Money Laundering Requires a Design to Disguise the Nature of the Funds

In the United States v. Cuellar, 2006 WL 399581 (5th Cir. Feb. 22, 2006), the Fifth Circuit held that a conviction for international money laundering required more than a showing that defendant was taking illicitly obtained money out of the country; the government must show that the defendant's actions were designed to conceal or disguise the illegal nature of the funds.

Defendant was stopped on his way to Mexico driving a car with $83,000 secreted in a hidden compartment. The government introduced evidence sufficient to prove that the money represented proceeds from drug trafficking and that the defendant was aware of the source of the funds. But the Fifth Circuit held that to support a conviction for international money laundering under 18 U.S.C. ' 1956(a)(2)(B)(i), the government must also prove that the transportation of the funds was designed to conceal or disguise the nature, location, source, or control of the money, and that the defendant knew that such concealment was the design of the enterprise. There was no evidence introduced to show that the money was being transported to Mexico to disguise its source, that is, to make it appear to be legitimate wealth. Merely smuggling drug money across the border is not in itself laundering. Moreover, the court noted that even if there had been evidence that the money was being taken to Mexico to be laundered, the government must also show that the defendant was aware of that. The court reversed the money laundering conviction.

Counterfeiting Requires Evidence That Fake Securities Were of Existing Legal Entities

In United States v. Lee, 2006 WL 488395 (7th Cir. Mar. 2, 2006), the Seventh Circuit held that a conviction for counterfeiting checks requires a showing that the bank the checks purported to be drawn on was an existing legal entity.

Defendants were convicted of uttering and possessing counterfeit or forged securities of an organization, pursuant to 18 U.S.C ' 513, for a scheme that involved passing counterfeit payroll checks. Checks drawn on three banks were involved in the scheme, but at trial the government only offered evidence concerning the first two banks, and presented no evidence related to the third bank. The appellate court noted that the statute only applies to counterfeits of the securities of an existing legal entity. Holding that no jury could reasonably infer the existence of one bank from evidence of the existence of unrelated banks, the court reversed the convictions for counterfeiting the checks from the third bank.

Ninth Circuit Allows Conduct Not Proven to Jury to Serve As Basis of Sentence Enhancement

In United States v. Lynch, No. 02-30216 (9th Cir. Feb. 10, 2006), the Ninth Circuit held that despite a jury finding that a crime had not been proved beyond a reasonable doubt, the conduct underlying that charge could serve as the basis of a sentence enhancement.

The defendant was convicted at trial of a violation of the Hobbs Act and of using or carrying a firearm in the commission of a crime of violence. Defendant had previously been convicted of murder in a state court proceeding concerning the same acts and occurrences, but that conviction was overturned on appeal. The jurors in the federal proceeding, when presented with a special interrogatory on the matter, found that they could not unanimously agree that the government had established murder beyond a reasonable doubt. Nonetheless, the district court found at sentencing that there was clear and convincing evidence that the defendant had participated in the murder, and used that determination to enhance his sentence. Although some district courts have suggested that in the wake of Blakely v. Washington, 542 U.S. 296 (2004) and United States v. Booker, 543 U.S. 220 (2005), acquitted conduct should no longer be used for sentence enhancement, the Ninth Circuit, relying on United States v. Watts, 519 U.S. 148 (1997), and without discussing Booker or Blakely, held that it was not error for the trial court to make its own finding under a clear and convincing evidence standard.

Ohio Supreme Court Holds Ohio Sentencing Structure Unconstitutional

In State of Ohio v. Foster, 2006 WL 509549 (Ohio Feb. 27, 2006), the Ohio Supreme Court held that, because the Ohio felony sentencing structure requires judicial fact finding, the structure is unconstitutional.

The Ohio Supreme Court reviewed the state's sentencing scheme in light of recent U.S. Supreme Court decisions Apprendi v. New Jersey, 530 U.S. 466 (2000), Blakely v. Washington, 542 U.S. 296 (2004), and United States v. Booker, 543 U.S. 220 (2005). Most Ohio courts had found that the state's sentencing system was constitutional under these cases because, although some judicial fact-finding was involved, judge-found facts could not result in a sentence harsher than the statutory maximum. The Ohio Supreme Court disagreed, noting that the current structure mandates that the judge find certain facts before imposing certain sentence enhancements and before imposing certain types of sentences, such as consecutive sentences. The court found that the system therefore creates a narrow presumptive sentencing range that the judge may depart from only on the basis of judge-found facts. The court also found this reliance on judicial fact finding to be unconstitutional, but severable from the bulk of the sentencing system. After severance, trial courts have full discretion to impose a prison sentence within the statutory range and are no longer required to make findings or give their reasons for imposing maximum, consecutive, or more than the minimum sentences. The court ordered the cases at hand and all cases pending direct review to be remanded to the trial courts for new sentencing hearings.

Eighth Circuit Holds Government to Signed
Plea Agreement

In United States v. Norris, 04-2073 (8^th Cir. Mar. 10, 2006), the Eighth Circuit held, in a case of first impression in the circuit, that a defendant can compel specific performance of a signed plea agreement even if the government attempts to withdraw from the agreement before it has been accepted by the court.

The defendant had agreed to plead guilty to a single count of an eight- count drug charge, and signed a plea agreement to that effect, as did the federal prosecutor. After a new prosecutor took over the case, the government announced that it was withdrawing from the plea agreement and issued a superseding 21-count indictment. The only reason given for withdrawing from the agreement was the prosecutor's opinion that the agreement was 'too good ' a deal' for the defendant. The district court granted the defendant's motion to compel specific performance of the plea agreement and dismissed the superseding indictment. The appeals court upheld the trial court's ruling. The court noted that defendants do not have a due process right to enforce a plea agreement until the agreement is approved by a judge; but the court applied general contract principles and found that defendants do have a right to rely on the good faith of the government in plea negotiations.

International Money Laundering Requires a Design to Disguise the Nature of the Funds

In the United States v. Cuellar, 2006 WL 399581 (5th Cir. Feb. 22, 2006), the Fifth Circuit held that a conviction for international money laundering required more than a showing that defendant was taking illicitly obtained money out of the country; the government must show that the defendant's actions were designed to conceal or disguise the illegal nature of the funds.

Defendant was stopped on his way to Mexico driving a car with $83,000 secreted in a hidden compartment. The government introduced evidence sufficient to prove that the money represented proceeds from drug trafficking and that the defendant was aware of the source of the funds. But the Fifth Circuit held that to support a conviction for international money laundering under 18 U.S.C. ' 1956(a)(2)(B)(i), the government must also prove that the transportation of the funds was designed to conceal or disguise the nature, location, source, or control of the money, and that the defendant knew that such concealment was the design of the enterprise. There was no evidence introduced to show that the money was being transported to Mexico to disguise its source, that is, to make it appear to be legitimate wealth. Merely smuggling drug money across the border is not in itself laundering. Moreover, the court noted that even if there had been evidence that the money was being taken to Mexico to be laundered, the government must also show that the defendant was aware of that. The court reversed the money laundering conviction.

Counterfeiting Requires Evidence That Fake Securities Were of Existing Legal Entities

In United States v. Lee, 2006 WL 488395 (7th Cir. Mar. 2, 2006), the Seventh Circuit held that a conviction for counterfeiting checks requires a showing that the bank the checks purported to be drawn on was an existing legal entity.

Defendants were convicted of uttering and possessing counterfeit or forged securities of an organization, pursuant to 18 U.S.C ' 513, for a scheme that involved passing counterfeit payroll checks. Checks drawn on three banks were involved in the scheme, but at trial the government only offered evidence concerning the first two banks, and presented no evidence related to the third bank. The appellate court noted that the statute only applies to counterfeits of the securities of an existing legal entity. Holding that no jury could reasonably infer the existence of one bank from evidence of the existence of unrelated banks, the court reversed the convictions for counterfeiting the checks from the third bank.

Ninth Circuit Allows Conduct Not Proven to Jury to Serve As Basis of Sentence Enhancement

In United States v. Lynch, No. 02-30216 (9th Cir. Feb. 10, 2006), the Ninth Circuit held that despite a jury finding that a crime had not been proved beyond a reasonable doubt, the conduct underlying that charge could serve as the basis of a sentence enhancement.

The defendant was convicted at trial of a violation of the Hobbs Act and of using or carrying a firearm in the commission of a crime of violence. Defendant had previously been convicted of murder in a state court proceeding concerning the same acts and occurrences, but that conviction was overturned on appeal. The jurors in the federal proceeding, when presented with a special interrogatory on the matter, found that they could not unanimously agree that the government had established murder beyond a reasonable doubt. Nonetheless, the district court found at sentencing that there was clear and convincing evidence that the defendant had participated in the murder, and used that determination to enhance his sentence. Although some district courts have suggested that in the wake of Blakely v. Washington , 542 U.S. 296 (2004) and United States v. Booker , 543 U.S. 220 (2005), acquitted conduct should no longer be used for sentence enhancement, the Ninth Circuit, relying on United States v. Watts , 519 U.S. 148 (1997), and without discussing Booker or Blakely , held that it was not error for the trial court to make its own finding under a clear and convincing evidence standard.

Ohio Supreme Court Holds Ohio Sentencing Structure Unconstitutional

In State of Ohio v. Foster, 2006 WL 509549 (Ohio Feb. 27, 2006), the Ohio Supreme Court held that, because the Ohio felony sentencing structure requires judicial fact finding, the structure is unconstitutional.

The Ohio Supreme Court reviewed the state's sentencing scheme in light of recent U.S. Supreme Court decisions Apprendi v. New Jersey , 530 U.S. 466 (2000), Blakely v. Washington , 542 U.S. 296 (2004), and United States v. Booker , 543 U.S. 220 (2005). Most Ohio courts had found that the state's sentencing system was constitutional under these cases because, although some judicial fact-finding was involved, judge-found facts could not result in a sentence harsher than the statutory maximum. The Ohio Supreme Court disagreed, noting that the current structure mandates that the judge find certain facts before imposing certain sentence enhancements and before imposing certain types of sentences, such as consecutive sentences. The court found that the system therefore creates a narrow presumptive sentencing range that the judge may depart from only on the basis of judge-found facts. The court also found this reliance on judicial fact finding to be unconstitutional, but severable from the bulk of the sentencing system. After severance, trial courts have full discretion to impose a prison sentence within the statutory range and are no longer required to make findings or give their reasons for imposing maximum, consecutive, or more than the minimum sentences. The court ordered the cases at hand and all cases pending direct review to be remanded to the trial courts for new sentencing hearings.