Summary
finding that email correspondence satisfies "use of the wires" element of wire fraud
Summary of this case from U.S. v. BistrianOpinion
Case No. 01-10116-02-JTM.
August 3, 2004
MEMORANDUM AND ORDER
On July 24, 2002 a jury found defendant Kim Shepard guilty of 19 counts of money laundering and one count of wire fraud. On July 25, 2003, the court denied the defendant's renewed motion for judgment of acquittal. This matter comes before the court on the defendant's motion for a new trial (Dkt. No. 83). The matter is fully briefed and ripe for disposition. For the reasons stated below, the court denies the defendant's motion.
I. Standard for Motions for New Trial
Fed.R.Crim.Pro. 33(a) provides, in part, "upon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires." "Courts do not view motions for a new trial with favor and only grant such motions with great caution." U.S. v. Pearson, 203 F.3d 1243, 1274 (10th Cir. 2000).
As an initial matter, the government contends the court should not reconsider the issues the defendant raised in his motion for judgment of acquittal. The government argues that the defendant fails to assert new theories for consideration or changes in the existing law. However, the court finds it proper to consider the defendant's argument as a motion for new trial involves application of a different standard. Namely, a motion for new trial does not require the court to weigh the evidence in the light most favorable to the non-movant.
II. Analysis
A. Status of venue challenge
First, the defendant argues the proper venue for his trial was Missouri rather than Wichita, Kansas. The defendant argues Missouri would be the locus of the crime; the government asserted money laundering occurred as a result of the defendant's deposit and funds commingling in a Missouri bank account. The defendant cites United States v. Cabrales, 524 U.S. 1 (1998), where the Court considered the proper venue in money laundering cases. The Cabrales Court held that since the defendant was charged only with illegal activity confined to Florida, it was the proper place for trial. Id. at 10. The Court reached this decision despite the fact that the money the defendant allegedly deposited was derived from illegal narcotics activity in Missouri. Id. at 7.
However, the court finds the defendant's argument fails because Cabrales did not involve a defendant also charged with the crime underlying the money laundering. Here, the defendant was charged with acquiring and receiving the proceeds of a wire fraud scheme, the receipt taking place in Kansas. As the defendant was charged with the "anterior criminal conduct that yielded the funds allegedly laundered," venue in Kansas was proper. Cabrales, 524 U.S. at 7.
The court previously noted the inapplicability of Cabrales to the defendant's case in its order denying the defendant's motion to dismiss his superceding indictment.
B. Status of money laundering challenge
Next, the defendant argues that he is entitled to a new trial on his money laundering charges. The defendant contends: 1) the government failed to prove they engaged in an act separate and distinct from the underlying wire fraud scheme; 2) there is no proof of concealment concerning the transactions conducted by the defendant and defendant George Shepard.
In United States v. Lovett, 964 F.2d 1029, 1043 (10th Cir. 1992), the court determined that money laundering is a separate offense from the underlying specified offense stating:
Our review of the legislative history convinces us that through the monetary transaction statute, § 1957, Congress intended to separately punish a defendant for monetary transactions that follow in time the underlying specified unlawful activity that generated the criminally derived property in the first place.
The defendant argues the government failed to prove they engaged in a separate offense stating "the cashing and/or mailing of checks alleged as the wire fraud scheme is the same event as the original concealment money laundering allegation." Upon review, the court finds this argument fails. The wire fraud scheme was premised on information wired to Cisneros Welding and Construction (CWC) in order to generate check number 17735 and involved telephone conversations, e-mails, and facsimiles. The money laundering offense was based on separate and distinct transactions; the cashing and depositing of the checks constituting the proceeds of the wire fraud.
A conviction for money laundering requires proof that the transactions were "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 the specified unlawful activity." 18 U.S.C. § 1956(a)(1)(B)(i). The defendant argues there is no evidence he intended to conceal the source or nature of the checks involved in the scheme. As stated in the court's order denying the defendant's motion for acquittal, the evidence clearly showed the transactions in question involved the deposit of criminally derived proceeds into a joint bank account. This account was used partially for the defendant and defendant George Shepard's dog kennel business. Commingling of funds occurred in this account between legitimate receipts and illegal proceeds; commingling is evidence of intent to conceal or disguise. United States v. Ward, 197 F.3d 1076 (11th Cir. 1999); United States v. Griffith, 85 F.3d 284, 288 (7th Cir. 1996); United States v. Termini, 992 F.2d 879, 881 (8th Cir. 1993). Accordingly, the concealment element of the money laundering offense was satisfied.
The defendant also argues commingling didn't occur, because the checks are not of a fungible nature. This argument fails. The court finds no requirement commingled funds only result from the deposit of cash proceeds. Further, the defendant contends the deposit of a CWC check into the account does not constitute concealment because it is clearly identifiable. However, the defendant's argument is misplaced. The court focuses on the intent to conceal the nature or the source of the funds; the defendant's deposits into the joint business account evidence the defendant's intent to commingle the proceeds from the wire fraud scheme and legitimate business receipts. The fact that the defendant was not successful in concealing the nature of the funds does not negate his intent. United States v. Vanhorn, 296 F.3d 713, 718 (8th Cir. 2002) ("even though the funds remained traceable to Vanhorn, `his intent to conceal the nature or source of the funds . . . was evident'") (quoting United States v. Nattier, 127 F.3d 655, 659 (8th Cir. 1997)).
The court denies this portion of the motion.
C. Status of wire fraud challenge
The defendant also argues he is entitled to a new trial on his conviction for wire fraud, count 9. Count 9 charged that the defendant for the purpose of executing the fraudulent scheme transmitted information by wire communication concerning wages to be paid to Danny Blood by CWC in Odessa, Texas. Specifically, the defendant argues: 1) the government impermissibly charged him with a continuous offense; 2) the court's responses to jury questions were misleading; 3) the government offered no direct proof that wire communications were used; 4) the government failed to prove any fraud in connection with count 9; 5) the evidence failed to support the defendant's conviction on count 9.
The defendant argues that the government impermissibly charged him with a continuous offense from May 1, 1998 through June 10, 1998. The defendant contends that wire fraud is a discrete crime rather than a continuing one. However, the court disagrees with the defendant's contention he was charged with a continuous offense. Count 9 related to information wired to CWC in order to generate check number 17735. Accordingly, the charge was related to a specific series of events set into motion by the defendant and defendant George Shepard.
Throughout the course of deliberations, the jury asked several questions. The defendant argues the court's responses to these questions misled the jury. However, the court finds this argument fails. In its response, the court instructed the jury that the government must prove the proceeds were obtained as a result of wire fraud. The court also instructed the government must prove its allegations in the superseding indictment. These responses were appropriate and consistent with precedent.
The defendant also argues the government offered no direct proof that wire communications were used in connection with count 9. The defendant's argument fails. The government offered testimony from Mr. Alvarez regarding long distance telephone conversations with the defendant concerning the work sheets emailed by the defendant. Mr. Alvarez testified the conversations allowed him to verify that he received necessary information for the payroll. Both the telephone conversations and the e-mail correspondence satisfy the "use of the wires" element of count 9.
Considering defendant's last two points, the court finds the evidence supports a finding of fraud and defendant's conviction on count 9. At trial, testimony from Mr. Alvarez, Mr. Hernandez, and the defendant showed that the defendant participated in a scheme where pay period work sheets were created classifying Mr. Blood as a welder. The defendant knew this classification was false; it allowed Mr. Blood to be improperly paid for the use of a welding rig. Evidence was presented showing the defendant and defendant George Shepard caused check number 17735 from CWC to be generated in payment for a "rig rental," which neither Mr. Blood nor defendants were entitled to receive. The defendant and defendant George Shepard did not receive this check, however they transmitted or caused the transmission of fraudulent information through interstate commerce.
The court denies this portion of defendant's motion.
D. Status of the challenge regarding necessity of a victim
Next, the defendant renews his argument that KN Energy was not a victim of fraud. The court has discussed this issue at many points throughout the case; neither the court's pretrial rulings, case law nor the superseding indictment required the government to select between CWC and KN Energy and designate one victim. Examining the charges, the court finds one offense requiring a specific victim, interstate transportation of stolen property. The indictment and the evidence presented at trial indicated KN Energy as the necessary victim for this charge.
E. Status of good faith defense challenge
Finally, the defendant argues the court failed to give the jury an instruction concerning whether his actions were taken in good faith. The defendant admits that he did not request a good faith defense instruction, but argues the court on its own should have included this instruction. Reviewing the record, the court finds a good faith defense instruction was not required.
Based on the aforementioned, the court denies the defendant's motion.
IT IS, THEREFORE, BY THE COURT, ORDERED this 3d day of August, 2004 that the court denies the defendant's motion for a new trial (Dkt. No. 83).