United States v. Gonzales , 918 F.3d 808 ( 2019 )


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  •                                                                                 FILED
    United States Court of Appeals
    PUBLISH                               Tenth Circuit
    UNITED STATES COURT OF APPEALS                       March 12, 2019
    Elisabeth A. Shumaker
    FOR THE TENTH CIRCUIT                           Clerk of Court
    _________________________________
    UNITED STATES OF AMERICA,
    Plaintiff - Appellee,
    v.                                                          No. 18-8017
    DARREN GONZALES,
    Defendant - Appellant.
    _________________________________
    APPEAL FROM THE UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF WYOMING
    (D.C. No. 1:17-CR-00082-ABJ-1)
    _________________________________
    William D. Lunn, Tulsa, Oklahoma, for Defendant-Appellant.
    Eric J. Heimann, Assistant United States Attorney (Mark A. Klaassen, United States
    Attorney, with him on the briefs), District of Wyoming, Cheyenne, Wyoming, for
    Plaintiff-Appellee.
    _________________________________
    Before MATHESON, MURPHY, and CARSON, Circuit Judges.
    _________________________________
    MURPHY, Circuit Judge.
    _________________________________
    I. INTRODUCTION
    Darren Michael Gonzales owned and operated Concrete Specialists, Inc. in
    Cheyenne, Wyoming. As a side business, he sold cocaine and methamphetamine.
    Gonzales used his personal and business bank accounts to launder the proceeds of
    his drug sales. After extensive investigations by state and federal law
    enforcement, a federal grand jury charged Gonzales with committing a multitude
    of drug and financial crimes. He eventually agreed to plead guilty to ten of the
    fifty-four counts set out in the indictment, specifically including seven counts of
    concealment money laundering. See 
    18 U.S.C. § 1956
    (a)(1)(B)(i); see also
    United States v. Majors, 
    196 F.3d 1206
    , 1211 (11th Cir. 1999) (noting that
    § 1956(a)(1)(B)(i) is “referred to as the ‘concealment’ . . . provision of the money
    laundering statute.”). On appeal, Gonzales asserts, for the first time, that the
    guilty pleas underlying two of his money laundering convictions, Counts 50 and
    52, are not supported by a sufficient factual basis. See Fed. R. Crim. P. 11(b)(3).
    This court rejects Gonzales’s arguments at the first step of plain-error review. 1
    See United States v. Carillo, 
    860 F.3d 1293
    , 1300 (10th Cir. 2017) (holding that
    1
    The parties on appeal vigorously contest whether Gonzales’s merits-based
    appeal is subject to either one or both of two potential waivers of appellate rights.
    Appeal waivers do not, however, affect this court’s “constitutional or statutory
    jurisdiction.” United States v. Black, 
    773 F.3d 1113
    , 1115 n.2 (10th Cir. 2014).
    Because Gonzales’s Rule 11(b)(3) claims plainly fail on the merits, “this court
    exercises its discretion to bypass the relatively complex waiver issue[s] and
    resolve [Gonzales’s] appeal on the merits. 
    Id.
     Such a course of action is
    appropriate here because the government did not raise the waiver issue until its
    response brief, a brief that also addressed the merits of Gonzales’s appeal. Thus,
    the decision to bypass resolution of the potential appellate waivers does not cause
    the government any additional burden. United States v. Garcia-Ramirez, 
    778 F.3d 856
    , 857 (10th Cir. 2015). In undertaking this path, however, this court
    again emphasizes it is only appropriate to bypass resolution of a waiver issue in a
    particularly narrow set of circumstances. See 
    id.
     (cataloging circumstances).
    Gonzales’s appeal just happens to be such a case.
    2
    to satisfy the plain error standard, the appellant must, as the first step in a four-
    step journey, demonstrate the district court committed an error). That is, we
    conclude the district court did not err in finding that Gonzales’s guilty pleas to
    Counts 50 and 52 were supported by a sufficient factual basis. The conduct
    Gonzales admitted as part of his plea agreement and at the plea colloquy establish
    the existence of every element of a violation of § 1956(a)(1)(B)(i) as to both
    relevant counts. Thus, exercising jurisdiction pursuant to 
    28 U.S.C. § 1291
    , this
    court affirms the district court’s judgment of conviction as to Counts 50 and 52.
    II. ANALYSIS
    A. Standard of Review
    Gonzales asserts his concealment money laundering convictions for Counts
    50 and 52 are not, in violation of the dictates of Rule 11(b)(3), supported by a
    sufficient factual basis. “This court reviews alleged violations of Rule 11(b) that
    were not objected to in the district court under the exacting plain error standard.”
    Carillo, 860 F.3d at 1300. To satisfy that exacting standard, Gonzales must show
    “(1) an error; (2) the error is plain or obvious; (3) the error affects the appellant's
    substantial rights (i.e., the error was prejudicial and affected the outcome of the
    proceedings); and (4) the error seriously affects the fairness, integrity, or public
    reputation of judicial proceedings.” Id. Gonzales’s appeal can be easily resolved
    at the first step of plain error review because his guilty pleas are supported by an
    adequate factual basis.
    3
    B. Discussion
    “Before entering judgment on a guilty plea, the court must determine that
    there is a factual basis for the plea.” Fed. R. Crim. P. 11(b)(3). “To determine
    whether a factual basis exists for the defendant's plea, the district court must
    compare the conduct admitted or conceded by the defendant with the elements of
    the charged offense to ensure the admissions are factually sufficient to constitute
    the charged crime.” Carillo, 860 F.3d at 1305. The statutory provision
    criminalizing concealment money laundering provides, in relevant part, as
    follows:
    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 sentenced to a fine of not more than $500,000 or
    twice the value of the property involved in the transaction,
    whichever is greater, or imprisonment for not more than twenty
    years, or both.
    
    18 U.S.C. § 1956
    (a)(1)(B)(i). Section 1956(a)(1)(B)(i) contains the following
    four elements: (1) defendant “engaged in a financial transaction”; (2) defendant
    knew “the property involved in that transaction represented the proceeds of his
    unlawful activities”; (3) “the property involved was in fact the proceeds of that
    criminal enterprise”; and (4) defendant knew “the transaction was 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 activities.”
    4
    United States v. Garcia-Emanuel, 
    14 F.3d 1469
    , 1473 (10th Cir. 1994) (quotation
    and alteration omitted); see also Pattern Crim. Jury Instr. 10th Cir. 2.73.1 (2011
    ed. updated Feb. 2018).
    The question then becomes whether the “conduct admitted or conceded by”
    Gonzales is sufficient to create a factual basis for each of these four elements as
    to Count 50 and Count 52. Carillo, 860 F.3d at 1305. “In assessing factual
    sufficiency under the plain error standard, this court may look beyond those facts
    admitted by [Gonzales] during the plea colloquy and scan the entire record for
    facts supporting his conviction.” Id.
    1. Count 50
    Count 50 charged Gonzales with wire transferring “$79,836 from Meridian
    Trust Federal Credit Union account ending in 879 to Meridian Trust Federal
    Credit Union account ending in 763.” The indictment noted the account ending
    in 763 (i.e., the account into which the funds were transferred) was held in the
    name of M.G. 2 Finally, the indictment alleged Gonzales conducted this wire
    transfer knowing (1) it affected interstate commerce; (2) it involved the proceeds
    of the unlawful distribution of controlled substances, in violation of 
    21 U.S.C. § 841
    ; (3) the proceeds did, in fact, flow from the illegal distribution of drugs;
    2
    These initials refer to Gonzales’s daughter Michelle. The PSR notes that
    Michelle, who is “learning disabled” is twenty-two years of age and lives with
    Gonzales. Both parties in their briefs on appeal contend that the account into
    which the money was transferred was in Michelle’s name.
    5
    and (4) the wire transfer was “designed at least in part to conceal and disguise the
    nature, source, ownership, and control of the proceeds.” Paragraph 7.f. of the
    plea agreement included the following factual basis for Count 50:
    Count 50 - Money Laundering - On February 17, 2016, the
    Defendant transferred $79,836 from one Meridian Trust Federal
    Credit Union account he controlled to another Meridian Trust FCU
    account he controlled. At the time, the Defendant knew that some of
    the $79,836 involved in this financial transaction had been earned
    from unlawful drug sales. And the Defendant conducted this
    financial transaction at least in part to conceal the nature, source,
    ownership and control of the proceeds of his unlawful drug sales.
    Paragraph 7.j. of the plea agreement stipulated that “Meridian Trust Federal
    Credit Union . . . [is a] financial institution[] engaged in, and whose activities
    affect, interstate commerce.” See 
    18 U.S.C. § 1956
    (c)(4)(B) (providing that a
    “‛financial transaction’ means,” inter alia, “a transaction involving the use of a
    financial institution which is engaged in, or the activities of which affect,
    interstate or foreign commerce in any way.”). 3 At the change of plea hearing, the
    district court read the charge as set out in the indictment and asked Gonzales how
    he pleaded to the charge. After Gonzales stated he pleaded guilty, the district
    court asked Gonzales if he adopted the factual basis set out in the plea agreement
    3
    In advance of the change-of-plea hearing, the government also filed a
    document titled “Prosecutor’s Statement and Elements of the Crime.” This
    document reiterated the factual basis underlying each of the concealment money
    laundering counts to which Gonzales was pleading guilty and specifically
    delineated the elements necessary to obtain a conviction for that crime. Thus, to
    be clear, Gonzales was provided with accurate and easily understood explanations
    of the elements and key facts of each count of conviction well before the plea
    colloquy.
    6
    as his own. Gonzales responded “I adopt the statement.” He further stipulated
    during the hearing that Meridian Trust Federal Credit Union was a “financial
    institution[] engaged in and whose activities affect interstate commerce.”
    These admitted facts satisfy all the elements of concealment money
    laundering. Gonzales admitted wire transferring $79,836 from one account to
    another at the Meridian Trust Federal Credit Union, a credit union engaged in
    interstate commerce. For purposes of § 1956, a “transaction” includes a transfer
    and, “with respect to a financial institution,” a transaction includes a “transfer
    between accounts.” 
    18 U.S.C. § 1956
    (c)(3). A “financial institution” includes
    “any credit union.” 
    Id.
     § 1956(c)(6) (providing that the term “financial
    institution” includes those institutions defined in 
    31 U.S.C. § 5312
    (a)(2)); see
    also 
    31 U.S.C. § 5312
    (a)(2)(E) (providing that “financial institution” means . . .
    any credit union”). A “financial transaction” includes any “transaction involving
    the use of a financial institution which is engaged in, or the activities of which
    affect, interstate or foreign commerce in any way or degree.” 
    18 U.S.C. § 1956
    (c)(4). Based on these statutory definitions, Gonzales’s admission that he
    transferred money from one account (in his name) to another account (in his
    daughter’s name) undoubtedly qualifies as conducting a financial transaction for
    purposes of § 1956(a)(1)(B)(i). Additionally, Gonzales admitted he knew the
    transaction did, in fact, include money earned from drug sales, satisfying the
    second and third elements of concealment money laundering. Finally, Gonzales
    admitted he made the transfer at least in part to conceal the nature, source,
    7
    ownership, and control of the drug proceeds. This admission satisfies the final
    element of § 1956(a)(1)(B)(i). 4
    Strangely enough, especially given his admission as to his criminal state of
    mind in undertaking the financial transaction at issue in Count 50, Gonzales
    objects to the existence of a sufficient factual basis by asserting the factual basis
    could, hypothetically, describe a lawful transfer of money from one account to
    another. In so arguing, Gonzales asserts “People transfer money from one bank
    account to another every day for a variety of perfectly legitimate reasons.”
    Appellant’s Opening Br. at 25. As set out above, however, Gonzales specifically
    admitted the transferred money included drug proceeds and that he made the
    transfer with intent to conceal its nature (drug proceeds), source (drug sales),
    ownership (himself), and control (himself). 5 Since all of the elements of the
    4
    Although Gonzales’s admission as to his state of mind is fully sufficient to
    support the existence of the fourth element of concealment money laundering, the
    existence of the element is further supported by Gonzales’s admission that the
    credit union account receiving this transfer was held in the name of his daughter
    Michelle. That is, the fact Gonzales moved the money from an account in his
    name to one not in his name, but in his control, fully supports Gonzales’s
    admission that his intent in undertaking the transfer was to conceal the ownership
    or control of the proceeds.
    5
    This court recognizes that if a defendant goes to trial on a charge of
    concealment money laundering, the government must present substantial evidence
    of concealment to support a verdict in its favor. United States v. Garcia-
    Emanuel, 
    14 F.3d 1469
    , 1473-76 (10th Cir. 1994). By pleading guilty, however,
    Gonzales specifically “relieved the government of its burden of proving the
    necessary factual predicate.” United States v. Roe, 
    913 F.3d 1285
    , 1294 (10th
    Cir. 2019). To the extent Gonzales’s brief could be read as asserting that to
    establish a factual basis for the concealment element the government must do
    more than demonstrate Gonzales’s admission of intent, his argument is
    8
    crime were admitted, the district court did not err when it accepted Gonzales’s
    plea to Count 50. See United States v. Roe, 
    913 F.3d 1285
    , 1294 (10th Cir. 2019)
    (holding that “a knowing and voluntary guilty plea is an admission of all the
    elements of a formal criminal charge” (quotation omitted)); see also United
    States v. DeFusco, 
    949 F.2d 114
    , 120 (4th Cir. 1991) (holding that when a
    defendant was repeatedly informed of the elements of the crime, specifically
    including the intent element, and then admitted the existence of those elements,
    factual basis for crime was established); United States v. Guichard, 
    779 F.2d 1139
    , 1146 (5th Cir. 1986) (same). 6
    inconsistent with the binding case law cited above. Indeed, rather than cite to
    cases arising under Rule 11(b)(3), Gonzales’s opening brief relies on cases
    addressing whether various jury verdicts are supported by sufficient evidence. As
    noted above, however, by pleading guilty, Gonzales specifically relieved the
    government of that burden. 
    Id.
     In any event, even in the context of sufficiency
    of the evidence, Gonzales’s admission that he acted with the intent to conceal
    would be sufficient to support a guilty verdict. See Garcia-Emanuel, 
    14 F.3d at 1475
     (noting such a guilty verdict can be supported by, inter alia, “statements by
    a defendant probative of intent to conceal”).
    6
    In holding that Gonzales’s challenge to the factual basis of his guilty plea
    as to the fourth element (intent to conceal) is foreclosed by his guilty plea, this
    court notes as follows: (1) the elements of Count 50 (as well as Count 52) were
    set out specifically and explicitly in the plea agreement, to which Gonzales was a
    signatory; (2) at the plea hearing, Gonzales stated he had an opportunity to
    discuss the plea agreement with his attorney before signing it and stated he
    understood its terms; (3) at no point in the plea hearing did Gonzales equivocate
    as to the fact that he intended the financial transaction to conceal, at least in part,
    the nature, source, ownership, and control of the proceeds of his illegal drug
    distribution. In these circumstances, Gonzales’s admissions as to each element of
    the charged count of concealment money laundering form a sufficient factual
    basis for his guilty plea for purposes of Rule 11(b)(3). United States v. Covian-
    Sandoval, 
    462 F.3d 1090
    , 1094 (9th Cir. 2006) (holding that defendant’s
    admission as to his state of mind as he crossed the border satisfied the mens rea
    9
    2. Count 52
    Count 52 charged Gonzales with knowingly accessing and using safety
    deposit box 42N, located at Meridian Trust Federal Credit Union, to hold cash
    earned from the unlawful distribution of controlled substances. The indictment
    further alleged that he did so, at least in part, to conceal the nature, source, and
    location of these drug proceeds. Finally, the indictment alleged the use of the
    safety deposit box “affected interstate commerce.” Paragraph 7.h. of the plea
    agreement contained the following factual basis for Count 52:
    Count 52 - Money Laundering - On December 21, 2015, the
    Defendant accessed safety deposit box 42N located at Meridian Trust
    FCU in Cheyenne, Wyoming. At the time, the Defendant was
    knowingly using the safety deposit box to hold cash earned from
    unlawful drug sales. And the Defendant conducted this financial
    transaction at least in part to conceal the nature, source, ownership
    and control of the proceeds of his unlawful drug sales.
    Paragraph 7.j. of the plea agreement further stated that “Meridian Trust Federal
    Credit Union . . . [is a] financial institution[] engaged in, and whose activities
    affect, interstate commerce.” At the change of plea hearing, the district court
    read the charge as set out in the indictment and asked Gonzales how he pleaded to
    the charge. After Gonzales stated he pleaded guilty, the district court asked
    Gonzales if he adopted the factual basis set out in the plea agreement as his own.
    requirement for the crime of illegal reentry); see also United States v. O’Hara,
    
    960 F.2d 11
    , 13 (2d Cir. 1992) (“[A] reading of the indictment to the defendant
    coupled with his admission of the acts described in it [provides] a sufficient
    factual basis for a guilty plea, as long as the charge is uncomplicated, the
    indictment detailed and specific, and the admission unequivocal.” (quotation
    omitted)).
    10
    Gonzales responded “Yes, I do.” He further stipulated during the hearing that
    Meridian Trust Federal Credit Union was a “financial institution[] engaged in and
    whose activities affect interstate commerce.”
    These admitted facts satisfy all elements of concealment money laundering.
    Gonzales admitted to knowingly using safety deposit box 42N at the Meridian
    Trust Federal Credit Union, a credit union engaged in interstate commerce, “to
    hold cash earned from unlawful drug sales.” For purposes of § 1956, a
    “transaction” is defined to include, “with respect to a financial institution . . . use
    of a safe deposit box.” 
    18 U.S.C. § 1956
    (c)(3). Furthermore, as set out more
    fully above, supra at 7, a financial institution includes any credit union. Id.
    § 1956(c)(6); 
    31 U.S.C. § 5312
    (a)(2)(E). Thus, Gonzales’s use of safety deposit
    box 42 is a transaction for purposes of § 1956. 7 Furthermore, as noted above, a
    transaction amounts to a financial transaction as long as it involves “the use of a
    financial institution which is engaged in, or the activities of which affect,
    interstate or foreign commerce in any way or degree.” 
    18 U.S.C. § 1956
    (c)(4).
    Gonzales specifically admitted Meridian Trust Federal Credit Union is such an
    7
    In arguing for a contrary result, Gonzales improperly focuses on the
    indictment’s allegation he accessed the safety deposit box on, or around,
    December 21, 2015. He asserts that “accessing a safety deposit box does not
    describe any financial transaction.” Appellant’s Opening Br. at 22. The fact that
    he accessed the safety deposit box on that date, however, merely demonstrates
    that he was “using” it on, or around, that date. As the statutory definitions set out
    above demonstrate, it is the use of the box that constitutes a transaction for
    purposes of § 1956 and the mere fact Gonzales did not deposit or withdraw funds
    from the box on that day is irrelevant.
    11
    institution. For these reasons, Gonzales’s admissions clearly evidenced a
    financial transaction for purposes of § 1956. Gonzales further admitted he knew
    the safety deposit box did, in fact, contain the proceeds of unlawful drug sales.
    This admission satisfies the second and third elements of concealment money
    laundering. Finally, Gonzales admitted he accessed and used the safety deposit
    box with intent to conceal the nature, source, ownership, and control of the drug
    proceeds. This admission satisfies the intent-to-conceal element of § 1956. See
    supra at 7-9 & accompanying notes (explaining why, under the facts of this case,
    Gonzales’s knowing and voluntary guilty plea to the intent-to-conceal element is
    sufficient to provide a factual basis for Gonzales’s guilty plea).
    In attempting to overcome this conclusion, Gonzales raises two related
    arguments. First, he claims the “facts suggest that [he] either had the safety
    deposit box in his name or the name of a close family member. As a result, his
    identity could be easily traced to the box.” Appellant’s Opening Br. at 22. This
    argument fails because, to obtain a conviction for concealment money laundering,
    there is no requirement that the financial transaction conceal anyone’s identity.
    United States v. Lovett, 
    964 F.2d 1029
    , 1034 n.3 (10th Cir. 1992) (holding that
    “the money laundering statute is not aimed solely at commercial transactions
    intended to disguise the relationship of the item purchased with the person
    providing the proceeds; the statute is aimed broadly at transactions designed in
    whole or in part to conceal or disguise in any manner the nature, location, source,
    ownership or control of the proceeds of unlawful activity”). Gonzales also
    12
    contends the factual basis failed “to describe how [he] did anything with the
    illegally-obtained funds kept in the safety deposit box to convert them to some
    form of legitimate wealth.” Appellant’s Opening Br. at 23. Gonzales is simply
    wrong in asserting the government must prove such conduct (conversion to
    legitimate wealth) to obtain a conviction for concealment money laundering. A
    defendant is guilty of violating § 1956(a)(1)(B)(i) if he conducts a financial
    transaction involving criminal proceeds with intent to conceal in any manner the
    nature, source, location, ownership, or control of the criminal proceeds. Lovett,
    
    964 F.2d at
    1034 n.3; Garcia-Emanuel, 
    14 F.3d at 1473
    . It is not necessary that
    the money laundering transaction make the criminal proceeds appear to be
    legitimate; it is enough that the transaction is intended to conceal one of the
    statutory attributes. Gonzales specifically admitted that he undertook the
    transaction with just such an intent.
    III. CONCLUSION
    For those reasons set out above, the judgment of conviction as to Counts 50
    and 52 entered by the United States District Court for the District of Wyoming is
    hereby AFFIRMED.
    13