United States v. Bartley ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 98-4317
RORY BARTLEY, a/k/a Roy Bailey,
Defendant-Appellant.

Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CR-97-157)
Argued: June 5, 2000
Decided: October 26, 2000
Before WILKINSON, Chief Judge, and MICHAEL and
MOTZ, Circuit Judges.
Affirmed in part, reversed in part, vacated in part, and remanded by
published opinion. Judge Motz wrote the majority opinion, in which
Judge Michael joined. Chief Judge Wilkinson wrote a dissenting
opinion.
COUNSEL
ARGUED: Kevin B. Burgess, HAMILTON, BURGESS, YOUNG &
POLLARD, P.L.L.C., Oak Hill, West Virginia, for Appellant. Louise
Anna Crawford, OFFICE OF THE UNITED STATES ATTORNEY,
Charleston, West Virginia, for Appellee. ON BRIEF: Rebecca A.
2 UNITED STATES v. BARTLEY
Betts, United States Attorney, John C. Parr, Assistant United States
Attorney, Charleston, West Virginia, for Appellee.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
Rory Bartley pled guilty to one count of conspiracy to distribute
marijuana and one count of conspiracy to launder money. On appeal,
Bartley challenges only his sentence. Because the district court erred
in refusing to group Bartley’s offenses, but did not err in finding Bart-
ley’s managerial role in the conspiracy justified an enhancement, we
affirm in part, reverse in part, and vacate and remand for resentenc-
ing.
I.
Edwin Bruce recruited Bartley to participate in a marijuana distri-
bution network based in Charleston, West Virginia. Bruce introduced
Bartley to a number of interested buyers, including street dealers.
Bartley regularly distributed marijuana to these dealers from Bruce’s
supply and made wire transfers to California to purchase marijuana
on Bruce’s behalf.
Bartley eventually disaffiliated from Bruce and located another
marijuana supplier, but he maintained his associations with some of
Bruce’s street dealers and at times obtained marijuana from Bruce’s
distributors. Ultimately, Bartley expanded his drug distribution activi-
ties to Parkersburg, West Virginia, and directed one of his street deal-
ers to identify addresses there to which marijuana could be mailed.
Bartley’s street dealers would distribute the marijuana and wire
transfer the proceeds on Bartley’s instruction, often to his uncle Clau-
dius Pryce in New York. Bartley himself would also wire funds from
his drug proceeds to various family members.
Bartley was charged with conspiracy to distribute marijuana, distri-
bution of marijuana, conspiracy to launder money, and two counts of
UNITED STATES v. BARTLEY 3
money laundering. After plea negotiations, he pled guilty to the two
conspiracy counts and the district court proceeded to sentence him. In
calculating Bartley’s offense level under the Sentencing Guidelines,
the court began with the drug distribution conspiracy and assigned a
base offense level of 28 predicated upon the amount of marijuana
involved in the offense. See U.S. Sentencing Guidelines Manual
§ 2D1.1(a)(c) (1998). The court then applied a three-level enhance-
ment for Bartley’s role as a supervisor or manager in the conspiracy,
see id. § 3B1.1(b), resulting in an adjusted offense level of 31 for the
drug distribution count. For the money laundering conspiracy, the dis-
trict court assigned a base offense level of 23 under U.S.S.G.
§ 2S1.1(a)(1) and applied the same three-level enhancement based on
Bartley’s role in the offense. The court then applied another three-
level enhancement based on Bartley’s knowledge that the laundered
funds were drug proceeds under U.S.S.G. § 2S1.1(b)(1), resulting in
an adjusted offense level of 29 for this count.
The district court did not group the two conspiracy counts together
into a single "Group" under Part D of Chapter 3 of the Sentencing
Guidelines. Instead, the court treated the two counts as distinct, and,
in accordance with U.S.S.G. § 3D1.4(a), the court started with the
greater of the two offense levels — 31, for the drug conspiracy — and
then added two more levels because the adjusted offense level for the
money laundering conspiracy was only two levels less serious than
that for the drug conspiracy. This resulted in a combined adjusted
offense level of 33. Finally, the court credited Bartley with a three-
level downward adjustment for his acceptance of responsibility, see
id. § 3E1.1, for a total offense level of 30, and sentenced him to 109
months imprisonment.
On appeal, Bartley contends that the district court erred in failing
to group the two conspiracies for sentencing purposes. He also con-
tends that the government offered insufficient evidence to support the
district court’s imposition of the enhancements for his alleged role in
the conspiracies. We review a district court’s legal interpretation of
the Sentencing Guidelines de novo, see United States v. Williams, 152
F.3d 294, 302 (4th Cir. 1998), and its underlying factual determina-
tions in applying the Guidelines for clear error. See 18 U.S.C.
§ 3742(e); United States v. France, 164 F.3d 203, 209 (4th Cir. 1998),
cert. denied, 527 U.S. 1010 (1999).
4 UNITED STATES v. BARTLEY
II.
Bartley first argues that the two conspiracy counts should have
been grouped in calculating his combined adjusted offense level. Sec-
tion 3D1.2 of the Sentencing Guidelines provides for the grouping of
closely related counts, or those that "involv[e] substantially the same
harm." The Guidelines identify four situations in which counts should
be grouped together for sentencing purposes:
(a) When counts involve the same victim and the same act
or transaction.
(b) When counts involve the same victim and two or more
acts or transactions connected by a common criminal
objective or constituting part of a common scheme or
plan.
(c) When one of the counts embodies conduct that is
treated as a specific offense characteristic in, or other
adjustment to, the guideline applicable to another of
the counts.
(d) When the offense level is determined largely on the
basis of the total amount of harm or loss, the quantity
of a substance involved, or some other measure of
aggregate harm, or if the offense behavior is ongoing
or continuous in nature and the offense guideline is
written to cover such behavior.
U.S.S.G. § 3D1.2.
In an addendum to Bartley’s Presentence Report (PSR), the proba-
tion officer cited subsection (b) and application note 2 to explain why
he treated the two conspiracy counts as separate groups. In the offi-
cer’s opinion, the conspiracies harmed distinct societal interests and
therefore did not involve "the same victim." Bartley objected to the
PSR. Although the government agreed with the probation officer’s
analysis of subsection (b), it also brought to the district court’s atten-
tion the potential relevance of subsection (c) as a basis for treating the
UNITED STATES v. BARTLEY 5
conspiracy counts as one group. Nonetheless, in refusing to group the
offenses, the district court simply determined that each of the conspir-
acies harmed a distinct societal interest and did not involve "the same
victim" as required by subsection (b); the court never reached the
question of grouping on the basis of subsection (c).
For purposes of this appeal, we assume, without deciding, that the
conspiracies impact different societal interests, and so grouping the
counts under subsection (b) would be improper. See United States v.
Harper, 972 F.2d 321, 322 (11th Cir. 1992) (refusing to group under
subsection (b)); United States v. Gallo, 927 F.2d 815, 824 (5th Cir.
1991) (same). But see United States v. Lopez, 104 F.3d 1149, 1150-
51 (9th Cir. 1997) (grouping under subsection (b) proper); United
States Sentencing Commission, Most Frequently Asked Questions
About the Sentencing Guidelines, 20-21 (7th ed. 1994) ("Most Fre-
quently Asked Questions") (grouping under subsections (a), (b), or (c)
proper).1 The commentary to § 3D1.2, however, provides that
"[c]ounts are to be grouped . . . if any one or more of the subsections
provide for such grouping." U.S.S.G. § 3D1.2, comment. (n.1)
(emphasis added); see also id., comment. (backg’d.) ("Counts involv-
ing different victims (or societal harms in the case of ‘victimless’
crimes) are grouped together only as provided in subsection (c) or
(d)."). Thus, even if grouping would be improper under subsection
(b), it may be proper under another subsection.
To prevent "double counting," subsection (c) requires offenses to
be grouped when one count "embodies conduct that is treated as a
specific offense characteristic in, or other adjustment to," the offense
level calculation of the other count. U.S.S.G. § 3D1.2(c); see also id.
§ 3D1.2, comment. (n.5). In calculating Bartley’s offense level for the
conspiracy to launder money, the district court, as recommended in
the PSR, applied a three-level enhancement because Bartley "knew or
believed that the funds were the proceeds of an unlawful activity
involving the . . . distribution of narcotics or other controlled sub-
stances." U.S.S.G. § 2S1.1(b)(1). In this case, grouping under subsec-
tion (c) was required. As the only circuit to consider grouping money
laundering and drug distribution charges, explained:
1
Accordingly, we do not reach the issue addressed at length in Part I
of the dissent.
6 UNITED STATES v. BARTLEY
Rice’s drug offenses were counted twice toward his sen-
tence; once as the basis for his conviction on his drug
counts, and again as a specific offense characteristic of the
money laundering count. This had the effect of increasing
Rice’s money laundering offense level by three pursuant to
§ 2S1.1(b) because he knew or believed the funds he was
receiving were the proceed[s] of the unlawful distribution of
marijuana. . . . Therefore, we find that Rice’s offense behav-
ior was impermissibly double counted. Accordingly, we
hold that the district court erred in failing to group Rice’s
counts for sentencing purposes as required by subsection
(c).
United States v. Rice, 185 F.3d 326, 329 (5th Cir. 1999).
In reaching this holding the Fifth Circuit relied on its earlier deci-
sion in United States v. Haltom, 113 F.3d 43, 46 (5th Cir. 1997),
which involved one count of mail fraud and four counts of tax eva-
sion. The Haltom court held that subsection (c) required the counts to
be grouped where the district court applied a two-level enhancement
under U.S.S.G. § 2T1.1(b)(1) in calculating the offense level for the
tax evasion counts because the defendant’s unreported income
derived from criminal activity, i.e., mail fraud. The court explained
that "[b]y requiring the grouping of Haltom’s [offenses], the guide-
lines spare him any incremental punishment for his tax crimes. . . .
[T]he guidelines clearly forbid . . . using the mail fraud count to
enhance the offense level for tax evasion and then using the enhanced
tax evasion offense level to increase the offense level for mail fraud."
113 F.3d at 47 (emphasis added).
Bartley, like Rice, received the three-level enhancement under
U.S.S.G. § 2S1.1(b)(1) for his knowledge that the laundered funds
were the proceeds of unlawful drug distribution activities. As such,
here, as in Rice, conduct embodied by the conspiracy to distribute
marijuana conviction was double counted: "the enhanced . . . count
was directly responsible for the ultimate 2-level increase in his total
offense level" — from 31 to 33 — under U.S.S.G. § 3D1.4. Haltom,
113 F.3d at 46.2 Of course, subsection (c) "applies only if the offenses
2
Had the three-level enhancement under U.S.S.G. § 2S1.1(b)(1) not
been imposed, Bartley’s offense level for the money laundering conspir-
UNITED STATES v. BARTLEY 7
are closely related." U.S.S.G. § 3D1.2(c), comment. (n.5). Although
the district court found that the counts were not "inter-related[ ]" for
purposes of subsection (b) because each conspiracy caused a different
societal harm, obviously the drug and money laundering conspiracies
were "closely related" under subsection (c). Indeed, both the indict-
ment and the PSR explicitly refer to the association of the two con-
spiracies, and the district court found that the money laundering "was
to conceal and move the proceeds . . . [and] to get those proceeds to
other individuals who were in the consignment or fronting chain of
command of the drugs."
Nevertheless, the government and the dissent maintain that subsec-
tion (c) does not apply to Bartley’s case because the specific offense
characteristic at issue does not punish for the actual distribution or
transport of drugs, but rather for the knowledge that the laundered
funds were drug proceeds. According to the government and the dis-
sent, this knowledge is a separate act of criminal conduct not mirrored
in the drug conspiracy count. To adopt this argument would promote
an approach to the Sentencing Guidelines that would require district
courts to unnecessarily "split hairs" or guess congressional intent in
evaluating which specific offense characteristics or other adjustments
are covered by subsection (c). Moreover, if we followed this
approach, we could never group a money laundering offense with a
drug offense. But see Most Frequently Asked Questions, supra, 21
("§ 3D1.2 would call for grouping of related drug trafficking and
money laundering counts under one or more of rules (a), (b), or (c).").
Furthermore, whatever the merit of this approach in a given case
— and our good friend Judge Wilkinson in dissent makes about as
good a case for this approach as possible — we cannot conclude it
should be followed here. Subsection (c), after all, requires a court,
when determining whether to group offenses, to consider the conduct
embodied in each of a defendant’s multiple counts. In this case, the
acy would have been 26. His offense level for the drug distribution con-
spiracy would have remained at 31. According to U.S.S.G. § 3D1.4(b),
the combined offense level would have been 32, not 33, because the
money laundering conspiracy would have been counted as only one-half
unit, thus requiring an increase of only one level rather than two.
8 UNITED STATES v. BARTLEY
conduct embodied by the drug conspiracy count is extremely expan-
sive. Indeed, the indictment specifically alleges that "[i]t was further
a part of the [drug] conspiracy that in order to finance their ongoing
illegal activity, the defendants . . . would and did use Western Union
money transfers, United Parcel Service, and other couriers" to transfer
proceeds from marijuana sales "in order to finance their ongoing ille-
gal activity." In considering whether to group the offenses, we cannot
treat the "conduct" embodied in the drug conspiracy count as consti-
tuting only acts of drug distribution when in fact the offense conduct
the indictment actually charges in this conspiracy count includes laun-
dering drug proceeds to facilitate illegal drug distribution activities.
The dissent contends that because "the guidelines use the words
‘counts’ and ‘offenses’ interchangeably," post at 17, the Guidelines
intend a court to confine its grouping analysis to the legal elements
of an "offense" rather than the conduct charged in the indictment.
Examination of the terms "count" and "offense" as used throughout
the Guidelines, however, leads inevitably to the contrary conclusion
that those terms encompass more than the elements of a crime.
Indeed, Chapter Two of the Guidelines repeatedly uses the term "of-
fense characteristics," and a review of what the Commission consid-
ers "characteristics" of an "offense" makes clear that "offense"
includes aspects of a crime other than its elements. For example, the
Commission states that whether a defendant "knew" the source of
laundered funds is a "characteristic" of the "offense" of money laun-
dering. § 2S1.1. Since knowledge of the source of laundered funds is
not an "element" of the "offense" of money laundering, the Commis-
sion obviously included more than the "elements" of a crime within
its definition of "offense."3
Nor does our holding that a court, when grouping, must examine
3
We also note that defining "offense" or "count" as the dissent suggests
would contradict the commentary of the Guidelines pertaining to
§ 3D1.2(a) and (b). That commentary supports grouping of auto theft and
alteration of a vehicle’s identification when those "counts involve . . . a
common scheme or plan." § 3D1.2, comment. (n.4). Were a court to limit
analysis of those two offenses to their legal elements, and not look at the
facts as established in an indictment, it would always be unable to find
that these two crimes involved a common scheme or plan.
UNITED STATES v. BARTLEY 9
the facts charged in the indictment cede power to prosecutors or allow
them to "manipulate" a defendant’s sentence. Post at 17. Rather, by
restricting the grouping analysis to the "elements" of an offense, the
dissent would advance a one-size-fits-all scheme in which certain
offenses, and only those offenses, can be grouped. Leaving aside the
fact that the Commission likely would have provided such a list had
it intended courts to apply the Guidelines in this manner (as it simi-
larly did in § 3D1.2(d)), the dissent’s approach would rob a sentenc-
ing judge of any means to check a prosecutor’s power to manipulate
the required grouping by picking and choosing under which statutes
to indict. Moreover, preserving authority in the sentencing court to
examine the specific conduct charged in the indictment does not
create the "complexity" the dissent fears, post at 17; a judge ought to
be familiar with the indictment whenever he imposes a sentence and
should naturally consider the facts contained therein during sentenc-
ing.
This case thus significantly differs from United States v. Lombardi,
5 F.3d 568 (1st Cir. 1993), on which the dissent heavily relies. Lom-
bardi involved no conspiracy counts but charges of mail fraud and
money laundering that were separable; Lombardi fraudulently secured
insurance proceeds and then deposited the proceeds in a bank. There
is no indication that Lombardi’s deposits in any way facilitated ongo-
ing or future mail fraud, or that the indictment specifically charged
that they did. The rationale of Lombardi simply does not apply here.4
4
We also note that although Bartley would have received the same
enhancement for the money laundering count had he not been involved
in the actual distribution of the marijuana but had come to know that the
laundered funds were drug proceeds, that situation creates no "anomaly"
in this case. See post at 18. Bartley will receive a longer sentence for par-
ticipating in the drug conspiracy than he would have had he merely
known the source of the laundered funds. If Bartley had been charged
with (or pled guilty to) only the money laundering conspiracy, his total
offense level would have been 26, assuming the district court would have
applied the same adjustments for his role in the offense, knowledge that
the funds were drug proceeds, and acceptance of responsibility. But, hav-
ing pled guilty to both conspiracies, the drug distribution count results in
a higher adjusted offense level, 31, which is the starting point for the cal-
culation of the offense level for multiple counts. If the counts are
10 UNITED STATES v. BARTLEY
Although there may be conceptual difficulty in some cases in char-
acterizing "knowledge" that the laundered funds were drug proceeds
as "conduct" embodied in a count charging drug violations, there is
none here. Unlike Lombardi, in this case the indictment quite clearly
charges a drug conspiracy that includes use of drug proceeds in
money laundering to facilitate illegal drug distribution. Therefore,
after the district court enhanced Bartley’s money laundering sentence
because of his knowledge that laundered funds were proceeds of a
drug conspiracy, the court should have grouped the two conspiracy
counts.
The Sentencing Commission has explained that the Guidelines pro-
visions governing the grouping of multiple counts are intended to
enhance a defendant’s sentence only if the multiple counts "represent
additional conduct that is not otherwise accounted for by the guide-
lines." U.S.S.G. Ch. 3, Pt. D, intro. comment. Therefore, grouping is
appropriate in Bartley’s case because the drug conspiracy count, as
set forth in the indictment, "embodies conduct" — money laundering
of funds that were proceeds from illegal drug distribution (and knowl-
edge of that conduct) — "that [wa]s treated as a specific offense char-
acteristic in" calculating the offense level for the money laundering
conspiracy count. U.S.S.G. § 3D1.2(c); see also id. § 2S1.1, com-
ment. (backg’d). Accordingly, the district court erred in failing to
group the two conspiracy counts.
III.
Bartley contends that the district court also erred in finding that he
exercised a managerial or supervisory role in the conspiracies, a find-
ing the court used to justify a three-level enhancement in calculating
the adjusted offense level for each count. See U.S.S.G. § 3B1.1(b).
grouped, the total offense level would be 28 (again assuming an adjust-
ment for acceptance of responsibility); not grouping the counts results in
a total offense level of 30. Either way, Bartley’s greater degree of culpa-
bility for participating in both conspiracies is reflected in a higher total
offense level.
UNITED STATES v. BARTLEY 11
Section 3B1.1(b) of the Guidelines provides for a sentencing
enhancement "[i]f the defendant was a manager or supervisor (but not
an organizer or leader) and the criminal activity involved five or more
participants or was otherwise extensive." U.S.S.G. § 3B1.1(b). The
commentary to this section also states that "[a]n upward departure
may be warranted . . . in the case of a defendant who did not organize,
lead, manage, or supervise another participant, but who nevertheless
exercised management responsibility over the property, assets, or
activities of a criminal organization." Id. § 3B1.1, comment. (n.2); see
also id. comment. (n.4) (identifying relevant factors to consider in
evaluating the role of a defendant in criminal activity). In addition,
the enhancement is justified if the defendant managed or supervised
the activities of at least one other person in a scheme that involved
five or more participants. See United States v. Capers, 61 F.3d 1100,
1108-09 (4th Cir. 1995); United States v. Brown, 147 F.3d 477, 485-
86 (6th Cir. 1998); United States v. Payne, 63 F.3d 1200, 1212 (2d
Cir. 1995).5
The record supports the district court’s finding that Bartley was a
manager or supervisor in each of the conspiracies. The government
presented evidence that Bartley controlled the activities of other par-
ticipants in the drug distribution conspiracy by directing one of his
street dealers to identify addresses in Parkersburg, West Virginia,
where the packages of marijuana could be sent, and by sending his
girlfriend to West Virginia on at least one occasion to transport the
drugs. The record also indicates that from the time Bartley became
involved in the conspiracy, he "exercised management responsibility"
by setting prices and terms of payment, handling proceeds, arranging
the logistics of the deliveries, and giving advice to his street dealers
on how to market the product. With regard to the money laundering
conspiracy, Bartley repeatedly directed others to wire transfer pro-
ceeds from the drug distribution activities or to receive such transfers
of funds on his behalf.
This is not a case in which a defendant simply supplied drugs and
negotiated their sale. Rather, the evidence clearly indicates that Bart-
ley "arrang[ed] the logistics of [marijuana] deliveries or payments,"
and at the very least "coordinate[d]" the activities of others. United
5
Bartley does not contest that the conspiracies involved five or more
participants.
12 UNITED STATES v. BARTLEY
States v. Vargas, 16 F.3d 155, 160 (7th Cir. 1994). This alone is suffi-
cient to warrant the enhancement. See, e.g., United States v. Harriott,
976 F.2d 198, 202 (4th Cir. 1992).
Therefore, the district court did not clearly err in finding that Bart-
ley’s role in the offenses justified a three-level enhancement under
U.S.S.G. § 3B1.1(b).
IV.
For the above reasons, we reverse the district court’s refusal to
group the conspiracy counts, but we affirm the sentencing enhance-
ments imposed for Bartley’s role in each conspiracy. We vacate the
sentence and remand the case to the district court for re-sentencing
consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART,
VACATED IN PART, AND REMANDED
WILKINSON, Chief Judge, dissenting:
I respectfully dissent from the grouping of the conspiracy offenses
of which Bartley was convicted. There is a square conflict among the
circuits regarding whether to group money laundering and narcotics
distribution offenses under U.S.S.G. § 3D1.2(b). Compare United
States v. Harper, 972 F.2d 321, 322 (11th Cir. 1992) (refusing to
group under subsection (b)); United States v. Gallo, 927 F.2d 815,
824 (5th Cir. 1991) (same); with United States v. Lopez, 104 F.3d
1149 (9th Cir. 1997) (grouping under subsection (b)). Likewise, there
is a disagreement among the circuits as to which offenses are suffi-
ciently related to merit grouping under U.S.S.G. § 3D1.2(c). Compare
United States v. Lombardi, 5 F.3d 568 (1st Cir. 1993) (refusing to
group money laundering and mail fraud offenses under subsection
(c)); with United States v. Rice, 185 F.3d 326, 329 (5th Cir. 1999)
(grouping money laundering and narcotics offenses under subsection
(c)).
I believe that money laundering and drug trafficking are suffi-
ciently different crimes that merit no grouping at all. Because group-
UNITED STATES v. BARTLEY 13
ing in this situation underestimates the range of harms that narcotics
enterprises inflict upon society, I would affirm the district court’s
judgment that the defendant be punished for all of the offenses of
which he was convicted.
I.
Bartley contends that his money laundering and drug offenses
should be grouped under U.S.S.G. § 3D1.2(b). I disagree.
Subsection (b) mandates grouping "[w]hen counts involve the same
victim and two or more acts or transactions [are] connected by a com-
mon criminal objective or constitut[e] part of a common scheme or
plan." U.S.S.G. § 3D1.2(b). In cases such as this, where society at
large is the victim, the "victim" for purposes of subsection (b) "is the
societal interest that is harmed." Id. § 3D1.2, comment. (n.2). The
guidelines explain that in such cases, the counts are grouped together
only when "the societal interests that are harmed are closely related."
Id.
The basic problem with grouping under subsection (b) is that the
narcotics statutes and the money laundering statute protect separate
societal interests. See United States v. Harper, 972 F.2d 321, 322
(11th Cir. 1992) (holding that narcotics distribution increases violence
and threatens public health while money laundering threatens the
integrity of lawfully operating financial institutions); United States v.
Gallo, 927 F.2d 815, 824 (5th Cir. 1991) (same). Quite simply, one
may launder money without participating in a narcotics conspiracy,
and one may participate in a narcotics conspiracy without laundering
money. Each crime is different, and each inflicts distinct harms upon
society.
Congress recognized as much when it passed the money laundering
statute. See Money Laundering Control Act of 1986 § 1352, 18
U.S.C. §§ 1956-57 (1994). The Senate report makes clear that the bill
was intended to create a "new Federal offense against money launder-
ing." S. Rep. No. 99-433, at 4 (1986). For this reason, Congress
designed the money laundering statute to target conduct other than
that which generated the "dirty" money. The Act provides a punish-
ment for conduct undertaken subsequent to the underlying crime
14 UNITED STATES v. BARTLEY
rather than merely affording an alternative means of punishing the
underlying crime itself. See United States v. Holmes, 44 F.3d 1150,
1154 (2d Cir. 1995); United States v. Pierro, 32 F.3d 611, 620 (1st
Cir. 1994); United States v. Edgmon, 952 F.2d 1206, 1213-14 (10th
Cir. 1991).
The societal interests protected by the money laundering statute
thus differ from the societal interests protected by the drug laws. See
United States v. Heaps, 39 F.3d 479, 486 (4th Cir. 1994) (in creating
the money laundering statute, "Congress intended to prevent an ill
other than those already prohibited by other laws"). The differences
are at least threefold. First, in contrast to the narcotics laws, the
money laundering statute is concerned with collecting tax revenue on
income from illicit sources. Section 1956 applies to individuals who
launder money "with intent to engage in conduct constituting a viola-
tion of section 7201 or 7206 of the Internal Revenue Code of 1986."
18 U.S.C. § 1956(a)(1)(A)(ii). The Senate report on the bill noted that
although it was already possible under the Internal Revenue Code to
prosecute individuals for facilitating tax evasion, Congress deter-
mined that there existed a need for "a special penalty for those whose
job it is to launder unreported income." S. Rep. No. 99-433, at 11.
Second, the money laundering statute aims to protect the integrity
of financial institutions. There is a wholly separate societal interest in
protecting the integrity of such institutions given their key role in the
country’s economy. "While both [narcotics distribution and money
laundering] taint our polity, the former taints our people; it injures
their bodies and their minds. The latter taints our institutions; it uses
otherwise legitimate means to transfer or hide illegitimate gains."
United States v. Lopez, 104 F.3d 1149, 1152 (9th Cir. 1997) (Fernan-
dez, J., dissenting). Congress recognized that money laundering
placed financial institutions at risk. See S. Rep. No. 99-433, at 2
("[O]rganized crime today uses banks and other financial institutions
as routinely, if not as frequently, as legitimate businesses."). Bank
employees could be enticed to aid criminals in their schemes to laun-
der money. Public confidence in financial institutions could be under-
mined if it were revealed that they served underworld clients. In order
to protect financial institutions, the money laundering statute creates
a good faith defense for financial institutions that inform law enforce-
ment officials about customers they suspect of money laundering. See
UNITED STATES v. BARTLEY 15
Money Laundering Control Act of 1986 § 1353, 12 U.S.C. § 3403(c)
(1994). The Act also requires the Attorney General to report to bank
regulators the money laundering convictions of any financial institu-
tion’s officer or employee. See 18 U.S.C. § 1956(g).
Finally, and most importantly, the money laundering statute is
designed to prevent a variety of criminals, not just drug dealers, from
enjoying the profits of their illicit activities. Section 1956’s prohibi-
tions do not extend solely to the proceeds of narcotics distribution.
Rather, section 1956 applies to profits from, among other things, ille-
gal gambling, prostitution, murder-for-hire, loansharking, embezzle-
ment, bribery, and extortion. See 18 U.S.C. § 1956(c)(7) (1994 &
Supp. III 1997).
This wide net of section 1956 illuminates the shortcomings of the
Ninth Circuit’s analysis in United States v. Lopez, 104 F.3d 1149 (9th
Cir. 1997) (per curiam), upon which Bartley relies. In that case, the
Ninth Circuit determined that the societal interests protected by the
money laundering statute and the drug trafficking statutes are closely
related because money laundering allows drug dealers "to obtain the
benefits of income gained from illicit activities." Lopez, 104 F.3d at
1150-51. Under the Ninth Circuit’s view, the societal interest pro-
tected by the money laundering statute is that of eliminating the drug
trade.
Treating narcotics distribution and money laundering as "closely
related," however, misstates the societal interest protected by section
1956 — namely, to protect society from the disbursement of capital
earned by criminals. This is why section 1956 applies to so many
crimes besides narcotics distribution. The Ninth Circuit’s analysis
would have us group the money laundering and gambling charges for
a bookie who launders his proceeds, since money laundering allows
bookies "to obtain the benefits of income gained from illicit activi-
ties." Likewise, the Ninth Circuit’s analysis would have us group the
money laundering and murder offenses for a hitman, since money
laundering allows assassins "to obtain the benefits of income gained
from illicit activities."
This simply cannot be. The facts of this case illustrate the separate
societal interests invaded. First, several of Bartley’s coconspirators
16 UNITED STATES v. BARTLEY
engaged in only the drug distribution conspiracy, while others
engaged only in the money laundering enterprise. Second, Bartley’s
girlfriend transported drug money to New York, suggesting that Bart-
ley could conduct his narcotics operation independently of his money
laundering activities. Finally, the integrity of the Western Union’s
wire transfer business was tested by Bartley’s money laundering.
Bartley exploited Western Union’s reputation and good will in order
to deceive the authorities about his role in the narcotics enterprise.
Because the societal interests protected by the money laundering
and narcotics statutes are distinct, the district court properly refused
to group Bartley’s offenses under subsection (b).
II.
The majority contends that Bartley’s money laundering and drug
offenses should be grouped under U.S.S.G. § 3D1.2(c). It argues that
Bartley’s drug offenses were doubly counted — once as the basis of
his drug conviction under 21 U.S.C. § 846, and once as a specific
offense characteristic of his money laundering count.
I again disagree. Subsection (c) mandates grouping "[w]hen one of
the counts embodies conduct that is treated as a specific offense char-
acteristic in, or other adjustment to, the guideline applicable to
another of the counts." U.S.S.G. § 3D1.2(c). As the guidelines state,
the purpose of subsection (c) is to prevent "‘double counting’ of
offense behavior." U.S.S.G. § 3D1.2, comment. (n.5). However, the
guidelines also make clear that subsection (c) "applies only if the
offenses are closely related." Id.
I am persuaded neither by the majority’s analysis nor by United
States v. Rice, 185 F.3d 326 (5th Cir. 1999), upon which the majority
relies. Both analyses disregard the text of § 3D1.2(c) in determining
that a defendant’s knowledge of the drug proceeds’ origin counts as
"conduct" for purposes of subsection (c). Furthermore, both analyses
fail to adequately consider whether money laundering and narcotics
distribution are "closely related" as required by the guidelines. See
U.S.S.G. § 3D1.2, comment. (n.5).
UNITED STATES v. BARTLEY 17
The majority disregards the plain text of subsection (c), in its
attempt to call Bartley’s knowledge conduct for purposes of
§ 3D1.2(c). Subsection (c) mandates grouping "when one of the
counts embodies conduct that is treated as a specific offense charac-
teristic" in another of the counts. U.S.S.G. § 3D1.2(c) (emphasis
added). The majority argues that the term "conduct" should be inter-
preted broadly to include everything alleged in Bartley’s drug con-
spiracy charge. Specifically, the majority argues that since the drug
conspiracy charge alleged Bartley laundered money in order to
finance his ongoing drug activities, Bartley’s "knowledge" that the
laundered funds were the proceeds of narcotics activity should some-
how count as "conduct" for purposes of § 3D1.2(c). See ante at 7-8.
In the course of avoiding the clear text of the guidelines, my good
colleagues emphasize the language used in Bartley’s indictment rather
than the legal elements of his two offenses. See ante at 8. The major-
ity offers no support from the guidelines or the caselaw for its view
that the factual averments of the indictment are dispositive. The
guidelines suggest that, if anything, the elements of particular
offenses are the critical factor in the § 3D1.2(c) grouping determina-
tion. Indeed, the guidelines use the words "counts" and "offenses"
interchangeably. See e.g., U.S.S.G. § 3D, Introductory Commentary,
("[C]ounts that are grouped together are treated as constituting a sin-
gle offense for purposes of the guidelines."). By contrast, the majori-
ty’s approach would force sentencing courts to pour over the specific
averments in every indictment in order to determine whether grouping
is appropriate. This reading makes the grouping inquiry even more
complex than it already is. Moreover, the majority’s indictment-
specific inquiry affords prosecutors the opportunity to manipulate a
defendant’s sentence simply by artfully drafting indictments. That
state of affairs directly contradicts the guidelines’ stated purpose to
"limit the significance of the formal charging decision." See e.g.,
U.S.S.G. § 3D, Introductory Commentary. Above all, the majority’s
analysis has diverted the grouping inquiry away from the plain text
of the guidelines. Simply put, § 3D1.2(c) hinges on Bartley’s conduct,
while the specific enhancement for money laundering under
§ 2S1.1(b)(1) hinges on Bartley’s knowledge.1
1
Contrary to the majority’s assertion, this interpretation of subsection
(c) does not seek to promote a "one-size-fits-all" grouping scheme.
Rather, it simply follows the grouping analysis that the guidelines
require.
18 UNITED STATES v. BARTLEY
The majority’s mistake is thus fundamental. It fails to apply the
guidelines as written. By its very terms, subsection (c) is not applica-
ble to Bartley. To repeat, subsection (c) mandates grouping "when
one of the counts embodies conduct that is treated as a specific
offense characteristic" in another of the counts. U.S.S.G. § 3D1.2(c)
(emphasis added). The "conduct" embodied in Bartley’s narcotics
count is his distribution of drugs, coupled with the conspiracy to dis-
tribute. See 21 U.S.C. §§ 841(a)(1), 846 (1994). The specific offense
characteristic in Bartley’s money laundering crime is his knowledge
that the money being laundered came from the proceeds of narcotics
transactions. See U.S.S.G. § 2S1.1(b)(1). While the majority attempts
to characterize Bartley’s knowledge as "conduct" embodied in the
drug count, this not only ignores the clear text of § 3D1.2(c), but also
conflates the two theoretical pillars of criminal law — actus reus and
mens rea. See United States v. Lombardi, 5 F.3d 568, 571 (1st Cir.
1993) ("It happens that [the defendant’s] knowledge of the funds’
source derives from the fact that he committed [mail fraud], but that
does not make the fraudulent acts the same thing as knowledge of
them.").2
Despite the fact that the First Circuit’s opinion in Lombardi
involved the interplay of money laundering and mail fraud, rather
than money laundering and narcotics distribution, that case offers
valuable insights on the subsection (c) analysis. The Lombardi court
determined that to group the defendant’s money laundering and mail
fraud offenses would create a disturbing anomaly in the guideline’s
application. "One who commits a fraud and launders the money
(thereby knowing of its source) is normally more culpable than one
who merely launders the money knowing of its source. Yet if Lom-
bardi’s interpretation were adopted, a defendant would get exactly the
same total offense level whether the defendant committed the mail
fraud or merely knew that someone else had committed it." Lombardi,
5 F.3d at 571.
The majority’s analysis ignores the anomaly the First Circuit iden-
tified in Lombardi. If Bartley’s offenses are grouped, Bartley would
2
The majority’s argument over the term "offense characteristic" again
fails to address the point that it has attempted to treat knowledge as con-
duct in violation of the textual mandate of the guidelines.
UNITED STATES v. BARTLEY 19
receive the same total offense level for his drug conspiracy as would
a run-of-the-mill drug dealer who did not launder money. Both would
receive a total offense level of 31. Under the majority’s analysis,
Bartley and the drug dealer are equally culpable and deserve the same
sentence despite the facts that the drug dealer had nothing to do with
the money laundering activities, and Bartley coordinated both the
drug distribution and the money laundering. Indeed, if the majority is
correct that the money laundering count should be grouped with the
narcotics count, there would be no accounting in Bartley’s sentence
for the fact that he laundered money. In effect his conviction on that
count would be washed away. See United States v. Vitale, 159 F.3d
810, 814 (3d Cir. 1998).
I am also not persuaded by the majority’s explanation of why Bart-
ley’s narcotics and money laundering offenses are "closely related."
See U.S.S.G. § 3D1.2, comment. (n.5) (grouping under subsection (c)
is only permissible "if the offenses are closely related."). The guide-
lines provide examples of just which offenses count as "closely
related." For instance, the guidelines note that the "use of a firearm
in a bank robbery and unlawful possession of that firearm are suffi-
ciently related to warrant grouping." Id. By contrast, "if the defendant
were convicted of one count of securities fraud and one count of brib-
ing a public official to facilitate that fraud, the two counts would not
be grouped together." Id.
It appears to me that charges for the use of a firearm in a bank rob-
bery and for possession of that same firearm are more closely related
than charges for money laundering and drug distribution. As noted
above, Congress intended the money laundering statute to constitute
a "new Federal offense," S. Rep. No. 99-433, at 4 (1986), and it
designed the statute to target conduct other than that which generated
the "dirty" money. See, e.g., United States v. Holmes, 44 F.3d 1150,
1154 (2d Cir. 1995). The money laundering statute applies to pro-
ceeds from many different types of illegal activities, not just narcotics
offenses. This is the difference between the crimes the guidelines sug-
gest are closely related, and the crimes of which Bartley was con-
victed. It is nearly impossible to become eligible for prosecution for
the use of a firearm in a bank robbery without also becoming eligible
for prosecution for possession of a firearm. As a result, grouping
these two offenses is appropriate under subsection (c). By contrast, it
20 UNITED STATES v. BARTLEY
is possible to participate in a narcotics conspiracy without laundering
money, just as it is possible to launder money without participating
in a narcotics conspiracy. Therefore, Bartley’s two offenses are not
"closely related" in the way the guidelines envisioned.
The majority argues, however, that Bartley’s offenses are closely
related since Bartley laundered money in order to facilitate additional
narcotics purchases. See ante at 10. Neither the guidelines nor the
money laundering statute, however, provide any basis for this distinc-
tion. The guidelines considered a similar example where a second
crime was committed in order to facilitate the first. The guidelines
determined that grouping was not appropriate in that case. See
U.S.S.G. § 3D1.2, comment. (n.5). Likewise, the plain text of the
money laundering statute applies equally to money laundering com-
mitted with an intent to facilitate ongoing criminal activity and money
laundering that does not facilitate such activity. See 18 U.S.C.
§ 1956(a)(1).
The majority decries the two point increase in Bartley’s total
offense level that results from § 3D1.2’s unwillingness to group his
offenses.3 It should be noted, however, that the same guideline group-
ing rules manage to combine a level 31 offense (for narcotics distribu-
tion) with a level 29 offense (for money laundering) to produce a
combined offense of only 33 (instead of 60) before the final adjustment.4
3
U.S.S.G. § 3D1.2(d) lists individual offenses, including money laun-
dering and narcotics distribution, that are eligible for grouping. However,
offenses may only be grouped under subsection (d) if they are "closely
related." United States v. Walker, 112 F.3d 163, 167 (4th Cir. 1997) (cit-
ing United States v. Porter, 909 F.2d 789, 792-93 (4th Cir. 1990)); see
also United States v. Napoli, 179 F.3d 1, 9 n.4 (2d Cir. 1999) ("[T]he
mere appearance of fraud and money laundering on subsection (d)’s list
of counts ‘to be grouped’ is insufficient to establish that they should be
placed in a single group."). For the reasons stated above, I believe money
laundering and narcotics distribution are not closely related. See also
United States v. Harper, 972 F.2d 321, 322 (11th Cir. 1992) (refusing to
group these offenses under subsection (d)); United States v. Lopez, 104
F.3d 1149, 1153-54 (9th Cir. 1997) (Fernandez, J., dissenting) (same).
4
If the counts are grouped, Bartley’s total offense level would be 31
rather than 33, before the final adjustment for acceptance of responsibil-
ity.
UNITED STATES v. BARTLEY 21
This is a show of "charity far more significant than the two point
increase that is at issue here." United States v. Lombardi, 5 F.3d 568,
571 (1st Cir. 1993).
III.
That Bartley’s money laundering offense is loosely related to his
narcotics activities is no reason to group his two crimes for sentencing
purposes. Congress intended for drug trafficking and money launder-
ing to constitute separate crimes, and the Sentencing Commission
intended not to group them. Bartley committed two separate offenses
and inflicted two distinct harms upon society. The majority’s
approach consolidates these harms. In doing so, it has underestimated
the full extent of personal devastation and institutional corruption that
narcotics enterprises cause.
I would affirm the judgment.