Opinion
Criminal Action No. 00-20091-01-KHV
February 10, 2003.
MEMORANDUM AND ORDER
On August 14, 2002, a jury found defendant guilty on 15 counts of trafficking in counterfeit goods, one count of conspiracy to traffic in counterfeit goods, six counts of money laundering and one count of engaging in a monetary transaction over $10,000 in property derived from unlawful activity. On December 13, 2002, the Court sustained defendant's motion for judgment of acquittal as to 14 counts of trafficking in counterfeit goods. See Memorandum And Order (Doc. #158). The Court overruled defendant's motion as to one count of trafficking in counterfeit goods, which involved Mont Blanc pens, and the one count of conspiracy to traffic in counterfeit goods. See id. Because the Court had dismissed 14 of 15 counts of trafficking in counterfeit goods, the Court ordered the government to show cause why the Court should not sustain defendant's motion for judgment of acquittal as to the six counts of money laundering and the one count of engaging in a monetary transaction in property derived from unlawful activity. See id. at 13-14. Both sides have now filed memoranda on this issue. For reasons set forth below, the Court sustains defendant's motion for judgment of acquittal as to the money laundering counts (Counts 2-5, 23 and 24) and the one count of engaging in a monetary transaction over $10,000 in property derived from unlawful activity (Count 11).
Standards For Motions For Judgment Of Acquittal
In considering a motion for judgment of acquittal pursuant to Rule 29, Fed.R.Crim.P., the Court cannot weigh the evidence or consider the credibility of witnesses. See Burks v. United States, 437 U.S. 1, 16 (1978). Rather, the Court must "view the evidence in the light most favorable to the government and then determine whether there is sufficient evidence from which a jury might properly find the accused guilty beyond a reasonable doubt." United States v. White, 673 F.2d 299, 301 (10th Cir. 1982). The jury may base its verdict on both direct and circumstantial evidence, together with all reasonable inferences that could be drawn therefrom, in the light most favorable to the government. See United States v. Hooks, 780 F.2d 1526, 1531 (10th Cir.), cert. denied, 475 U.S. 1128 (1986). Acquittal is proper only if the evidence implicating defendant is nonexistent or is "so meager that no reasonable jury could find guilt beyond a reasonable doubt." White, 673 F.2d at 301; see United States v. Brown, 995 F.2d 1493, 1502 (10th Cir.) (evidence supporting the conviction "must be substantial and must not raise a mere suspicion of guilt") (citation omitted), cert. denied, 510 U.S. 935 (1993), overruled on other grounds by United States v. Prentiss, 256 F.3d 971 (10th Cir. 2001).
Factual Background
The Court summarized the factual and procedural background in its order of December 13, 2002, which it incorporates by reference. See Memorandum And Order (Doc. #158) at 2-6.
Analysis
I. Money Laundering ( 18 U.S.C. § 1956)
The money laundering counts (Counts 2 through 5, 23 and 24) charge that on October 6 and November 10 and 24, 1997, April 21 and December 23, 1998 and June 5, 2000, defendant deposited and exchanged money, which involved the proceeds of trafficking and attempting to traffic counterfeit goods, knowing that the transactions were designed to conceal and disguise the nature, location, source, ownership and control of the proceeds. Section 1956(a)(1)(B)(i) provides that
Whoever, 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 . . . knowing that the transaction is designed in whole or in part — to conceal or disguise, the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity . . .
shall be guilty of an offense against the United States. The term "specified unlawful activity" includes a number of felony offenses including violation of 18 U.S.C. § 2320 relating to trafficking in counterfeit goods.
See 18 U.S.C. § 1956(c)(7)(D).
To sustain a conviction under 18 U.S.C. § 1956(a)(1)(B)(i), the government must prove beyond a reasonable doubt the following four essential elements:
FIRST: Defendant knowingly conducted or attempted to conduct a financial transaction;
SECOND: Defendant knew that the funds or property involved in the financial transaction represented the proceeds of trafficking or attempting to traffic in counterfeit goods;
THIRD: The property involved in the financial transaction did, in fact, involve the proceeds of trafficking or attempting to traffic in counterfeit goods; and
FOURTH: Defendant knew that the transaction was designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of the proceeds of trafficking or attempting to traffic in counterfeit goods.
Instructions To The Jury (Doc. #124) at 40; see United States v. McIntosh, 124 F.3d 1330, 1336 (10th Cir. 1997) (government must prove that funds used in transaction were in fact proceeds of specified unlawful acts enumerated in statute); United States v. Massey, 48 F.3d 1560, 1565 (10th Cir.) (same), cert. denied, 515 U.S. 1167 (1995).
The government did not present sufficient evidence as to the third element, i.e. that the property in the financial transactions involved the proceeds of trafficking in counterfeit goods. At trial, the government satisfied its burden of proving that defendant trafficked in counterfeit goods on a single occasion, when his employees sold a Mont Blanc pen to government agents on November 22, 1998. See Memorandum And Order (Doc. #158) at 9-12. None of the money laundering counts, however, involve transactions which occurred shortly after the sale of that pen. Counts 2 through 5 involve transactions which preceded the sale of the pen (October 6 and November 10 and 24, 1997 and April 21, 1998 respectively) and are therefore unsupported by the evidence. See United States v. Kennedy, 64 F.3d 1465, 1477 (10th Cir. 1995) (§ 1956 violated where transaction meeting statutory criteria follows completion of underlying crime). Count 23 involves a transaction on December 23, 1998 in the approximate amount of $6,300. A reasonable jury would not infer that the transaction on December 23 involved the proceeds of the sale on November 22, 1998. Count 24 involved a transaction on June 5, 2000, some 18 months after the sale of the Mont Blanc pen. No evidence suggests that the transaction involved the proceeds of the sale of Mont Blanc pens.
At trial, the government presented evidence that on November 23, 1998, one of defendant's employees purchased $12,700 in money orders with the proceeds of sales from Replicas. The employee testified that on virtually a daily basis, she purchased money orders for defendant's business at the bank. Accordingly, the proceeds from the sale of the Mont Blanc pen were most likely included in the financial transaction on November 23, 1998.
The government argues that even where defendant is not convicted of the underlying "unlawful activity" — because of acquittal, lack of evidence or the statute of limitations — money laundering convictions may be sustained. The Court agrees with this general proposition, see United States v. Gabel, 85 F.3d 1217, 1224 (7th Cir. 1996) (statute does not require that government link money laundered to specific criminal act), but notes that under the statute, the government must show that the property in the financial transaction involved proceeds of "specified unlawful activity." 18 U.S.C. § 1956(a)(1)(B)(i). Courts have recognized that the government may show that the underlying activity was unlawful without separately charging such conduct, but such evidence must be "sufficient to prove that element [unlawful activity] beyond a reasonable doubt." United States v. Blackman, 904 F.2d 1250, 1257 (8th Cir. 1990). For example, in United States v. Jackson, 983 F.2d 757 (7th Cir. 1993), based on testimony that defendant engaged in drug dealing near the time of the purchase and had unexplained, substantial wealth, the Seventh Circuit upheld a money laundering conviction which involved defendant's purchase of a car. See id. at 766-67. Similar evidence is lacking in this case. The only evidence of "specified unlawful activity" involves the sale of a Mont Blanc pen on November 22, 1998. Absent some evidence that defendant sold other counterfeit products, or sold Mont Blanc pens on a routine basis, no reasonable jury could find beyond a reasonable doubt that the property in the financial transactions on October 6 and November 10 and 24, 1997, April 21 and December 23, 1998 and June 5, 2000 "did, in fact, involve the proceeds of trafficking or attempting to traffic in counterfeit goods." Instructions To The Jury (Doc. #124) at 40; see Gabel, 85 F.3d at 1224 (statute requires that laundered money be fruit of illegal activity); see also United States v. Lovett, 964 F.2d 1029, 1041-42 (10th Cir.) (to establish analogous provision of § 1957, prosecution must prove elements of "specified unlawful activity"), cert. denied, 506 U.S. 857 (1992); United States v. Pettigrew, 77 F.3d 1500, 1519 n. 20 (5th Cir. 1996) (to establish that underlying activity is unlawful under § 1957, government must introduce evidence such as federally insured status of financial institution). To find that this element had been satisfied, based on the record evidence, would require the jury to speculate that defendant sold Mont Blanc pens shortly before each transaction.
Richard Smith testified that when he visited defendant's residence on February 6, 1998, he observed various items for sale, and that Mont Blanc was one of many trademarks on the items for sale. Smith did not purchase any items or claim to observe someone else purchase a Mont Blanc pen on that day. Moreover, Count 5 is the money laundering charge which is closest in time to Smith's observation, and it involves a transaction more than two months later on April 21, 1998, in the amount of $6,088. Absent speculation and conjecture, no reasonable jury would find beyond a reasonable doubt that defendant's transaction on April 21 involved the proceeds of the sale of Mont Blanc pens.
In sum, the government did not present sufficient evidence for a reasonable jury to find beyond a reasonable doubt that the financial transactions in question in fact involved the proceeds of trafficking counterfeit goods. Accordingly, the Court sustains defendant's motion for judgment of acquittal on Counts 2-5, 23 and 24.
II. Engaging In A Monetary Transaction Greater Than $10,000 In Property Derived From Unlawful Activity ( 18 U.S.C. § 1957)
Count 11 charges that on November 23, 1998, in violation of 18 U.S.C. § 1957, defendant engaged in a monetary transaction in criminally derived property of $12,700 by and through Citizen's National Bank. Section 1957 provides that whoever "knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity" shall be guilty of an offense against the United States. To establish that defendant violated 18 U.S.C. § 1957, the government must prove beyond a reasonable doubt the following five essential elements:
FIRST: Defendant knowingly engaged or attempted to engage in a monetary transaction, as described in Count 11;
SECOND: Defendant knew that the transaction involved property derived from the trafficking or attempt to traffic in counterfeit goods;
THIRD: The property derived from the trafficking or attempt to traffic in counterfeit goods had a value greater than $10,000.00;
FOURTH: The property was, in fact, derived from the trafficking or attempt to traffic in counterfeit goods; and
FIFTH: The monetary transaction took place in the United States.
Instructions To The Jury (Doc. #124) at 49.
The government did not present sufficient evidence to establish the third element, i.e. that the value of the criminally derived property exceeded $10,000. As explained above, the government established that defendant trafficked or attempted to traffic in counterfeit goods on a single occasion, when his employees sold a Mont Blanc pen to government agents on November 22, 1998. On that day, government agents paid a total of $466.00 for 23 items including the Mont Blanc pen. See Memorandum And Order (Doc. #158) at 3 n. 1. Therefore, a reasonable jury would not conclude beyond a reasonable doubt that the financial transaction on the next day involved more than $10,000 "derived from specified unlawful activity." 18 U.S.C. § 1957. Accordingly, the Court sustains defendant's motion for judgment of acquittal as to Count 11.
IT IS THEREFORE ORDERED that Jerome Daniel Foote's oral motion for judgment of acquittal be and hereby is SUSTAINED in part. The Court sustains defendant's motion as to Counts 2-5, 11, 23 and 24.
IT IS FURTHER ORDERED that sentencing of defendant on Counts 1 and 10 is scheduled for April 28, 2003 at 9:30 a.m.