United States v. Brijido Padilla-Reyes

United States Court of Appeals,
Eleventh Circuit.
Nos. 93-3058, 94-3261.
UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant,
v.
Goldean ADAMS, Bruce Raybon Jones, Warren E. Adams, Defendants-
Appellants, Cross-Appellees.
UNITED STATES of America, Plaintiff-Appellee,
v.
$22,264.90 IN UNITED STATES CURRENCY, Defendant,
Warren E. Adams; Goldean Adams, Claimants-Appellants.
Feb. 12, 1996.
Appeals from the United States District Court for the Middle
District of Florida. (No. 92-293-CR-T-99A), Anne C. Conway,
District Judge.
Before EDMONDSON, Circuit Judge, HILL, Senior Circuit Judge, and
MILLS*, District Judge.
RICHARD MILLS, District Judge:
All parties appeal—including the Government.
A jury convicted Warren Adams, Goldean Adams and Bruce Raybon
Jones of conspiring to commit an offense against or to defraud the
United States (18 U.S.C. § 371).
The Adamses were also convicted of making false statements to
the Resolution Trust Corporation (RTC) (18 U.S.C. § 1001),
misapplying funds belonging to the RTC (18 U.S.C. § 657), impeding
the lawful functions of the RTC (18 U.S.C. § 1032(2)), and money
laundering (18 U.S.C. §§ 1956(a)(1)(A)(i) & 1957).
*
Honorable Richard Mills, U.S. District Judge for the
Central District of Illinois, sitting by designation.
The district court sentenced Warren Adams to 46 months in
prison, Goldean Adams to 27 months imprisonment, Jones to 1 month
in prison, and all three to 3 years of supervised release and
payment of restitution. In a later proceeding, the district court
ordered $22,264.09 previously belonging to Warren and Goldean Adams
forfeited.
Asserting numerous errors, the Adamses and Jones challenge
their convictions and the forfeiture. And the Government appeals
the sentences given to Warren and Goldean Adams.
We affirm all three convictions, Jones' sentence, and the
forfeiture, but we vacate the Adamses' sentences and remand for
further sentencing proceedings.
I. FACTS
On June 1, 1990, the failed Investors Federal Savings and Loan
Association (IFS) was placed under the conservatorship of the RTC
which then assumed responsibility for managing IFS assets,
including the Palma Ceia Apartments and the Briarwood Apartments
(The RTC properties).
Warren and Goldean Adams owned and operated a property
management business known as Golco Management Company (Golco). In
December of 1990, the RTC entered into an agreement with Golco to
manage the RTC properties. Pursuant to the agreement, Golco
handled the day-to-day operations of the properties, including
collecting rents and paying general operating expenses. The
agreement also authorized Golco—with the Adamses having signatory
authority—to open and maintain two bank accounts (RTC accounts)
which were the property of the RTC. The contracts also required
Golco to submit detailed monthly statements accounting for expenses
and income.
Unfortunately, the Adamses failed to abide by the agreements
and used Golco to defraud the RTC. Specifically, the record shows
that Warren and Goldean Adams altered invoices in order to have the
RTC pay for goods and services that were not used to maintain the
RTC properties, used a dormant company—SWAT Development Corporation
(SWAT)—as a vehicle for billing the RTC for work that was never
performed or performed prior to the RTC contract, and improperly
profited by falsifying bids on projects paid by the RTC.
The record also shows that the Adamses laundered money.
Specifically, on April 8, 1991, Warren Adams withdrew the balance
of one account at the Fortune Savings Bank (Fortune) that contained
funds fraudulently induced from the RTC and purchased a cashier's
check paid to the order of Golco in the amount of $11,798.09.
After purchasing the check, Adams deposited it in an account at the
Great Western Bank (Great Western). Fortune, however, refused to
honor the check because it was not endorsed by Golco. Thereafter,
Great Western debited the $11,789.09 and returned the check to
Adams. Undaunted, Adams then deposited the check in another
account at Fortune and wrote a new check on that account for
$11,789.09. He then deposited that check in the Great Western
account.
Bruce Raybon Jones' role in the scheme was less direct. In
March 1991, Warren Adams gave to Charles McGuire, his son-in-law,
and Jones the dormant SWAT. Following the transaction, McGuire and
Jones each owned 50 percent of the company. Thereafter, Jones and
McGuire opened a bank account on behalf of SWAT. SWAT then
performed services at various properties—including but not
exclusive to the RTC properties—that were managed by the Adamses.
For these services, the Adamses paid SWAT by checks drawn on the
RTC accounts.
On December 10, 1991, after two disgruntled Golco
employees—Ronald and Karen Pyle—told law enforcement officers about
what was occurring at Golco, Federal authorities executed a search
warrant of the Adamses' home.1 Following the search, Warren Adams,
McGuire and Jones held a meeting at which Adams told McGuire and
Jones that he had been billing the RTC for SWAT work that was never
performed.2 Adams also asked McGuire and Jones to lie to law
enforcement investigators regarding how SWAT operated. On March 2,
1992, Jones followed Warren Adams' instructions. McGuire, however,
after initially going along with the scheme, broke down and
confessed.3
II. ANALYSIS
The Adamses and Jones raise a total of eight issues on appeal.
The first four assert prosecutorial misconduct, the second two
challenge the validity of the money laundering convictions, and the
final two contest the forfeiture and Jones' conviction. On
cross-appeal, the Government maintains that the district court
erred when it refused to sentence Warren and Goldean Adams based
1
Both Ronald and Karen Pyle pleaded guilty to conspiracy
under 18 U.S.C. § 371.
2
The jury acquitted Jones of submitting false invoices and
of causing the misapplication of funds.
3
McGuire was not indicted.
upon their money laundering convictions.
A. Prosecutorial Misconduct
The Adamses and Jones claim that the prosecutor and one of the
Government's witnesses made improper comments that denied them a
fair trial. Specifically, they maintain that: (1) the prosecutor
improperly referred to statements made by Karen Pyle; (2) the
prosecutor deliberately violated the trial judge's instruction not
to refer to Warren Adams' military record; (3) the prosecutor
allowed Special Agent Wayne Lewis of the Office of Inspector
General of the RTC to violate the district court's Bruton
instruction during direct examination; and (4) even if none of the
three errors standing alone denied them a fair trial, that
combined, the cumulative effect of the errors created enough
prejudice to deny them due process.
1. Karen Pyle
During opening statements, closing arguments, and during the
course of the trial, the prosecutor and prosecution witnesses on a
number of occasions referred to statements made by Karen Pyle.
4
Karen Pyle, however, was never called as a witness. Defendants
assert that this prejudiced them because it improperly established
guilt by association and because it turned the prosecutor into an
unsworn witness. In response, the Government maintains that in the
opening and closing statements the prosecutor only referred to
evidence that was properly presented at trial, and that all
references by witnesses at trial to out-of-court statements made by
Karen Pyle were admissible because the statements were not
4
Pyle was on the Defendants' witness list.
presented for the truth of the matter asserted. The Government
also argues that Defendants failed to timely object.5
A prosecutor's remarks mandate a new trial only if they are
improper and prejudicially affect the defendant's substantial
rights. United States v. Thomas, 62 F.3d 1332, 1343 (11th
Cir.1995). A defendant's substantial rights are prejudiced if
there is a reasonable probability that, but for the remarks, the
outcome would be different. Kennedy v. Dugger, 933 F.2d 905, 914
(11th Cir.1991), cert. denied, 502 U.S. 1066, 112 S.Ct. 957, 117
L.Ed.2d 124 (1992). "A reasonable probability is a probability
sufficient to undermine confidence in the outcome." Strickland v.
Washington, 466 U.S. 668, 694, 104 S.Ct. 2052, 2068, 80 L.Ed.2d 674(1984).
In this case, both in her opening statement and during the
questioning of Agent Lewis, the prosecutor referenced statements
made by Karen Pyle that the Adamses were engaging in fraud.6 These
5
In fact, at one point in the trial, counsel for Warren
Adams did object to testimony by Agent Lewis that Karen and
Ronald Pyle had told him that they had previously falsified
documents and that Mr. and Mrs. Adams were continuing to commit
fraud. That counsel noted that "Karen Pyle has not been brought
here to testify as a witness. She's not been presented for this
jury. And now he's testifying as to what Karen Pyle told him
about the Adamses." The district court sustained the objection
and asked the prosecutor to rephrase the question.
6
In her opening statement, the prosecutor remarked:
And Karen Pyle talked to Wayne Lewis and she admitted
that she had falsified invoices and she said that also,
the Adamses had falsified invoices and she told Mr.
Lewis that she was fired so she was no longer doing it
but that the Adamses were continuing to do it and
continue to steal from the RTC. Mr. Lewis opened up an
investigative case on this and one of the things he
tried to do was think of a way to see whether this was
still happening. Whether this whiting out or the
statements were improper because they went beyond what was needed
to establish why Agent Lewis commenced an investigation. See
United States v. Novak, 918 F.2d 107, 109 (10th Cir.1990)
(prosecutor's statement that a citizen informant had reported and
provided information to the police that the defendant was selling
cocaine was improper hearsay that went beyond the scope of "
"routine testimony' used by police officers to establish why they
commenced an investigation."). Moreover, even if the statements
were not hearsay, during opening statements prosecutors should
avoid referring to evidence that is even of questionable
admissibility. United States v. Hernandez, 779 F.2d 456, 459-60
(8th Cir.1985).
Nevertheless, because the record contains sufficient
independent evidence establishing guilt, we conclude that the
improper references to statements made by Karen Pyle do not raise
a reasonable probability that, but for the remarks, the outcome
would be different.
2. Warren Adams' Military Record
Shortly before trial the Government filed a motion in limine
asking that the district court exclude evidence of Warren Adams'
acts of heroism in Vietnam. Because the motion was filed just
prior to trial, the issue was deferred until after opening
statements. In the meantime, in their opening statements, both
parties agreed to limit remarks regarding Adams' military service
to the fact that he had served in the Army.
alterations that Karen Pyle was talking about, first of
all, was true and, secondly, whether it was still
happening.
Nevertheless, in her opening, the prosecutor made the
following remark:
Mr. Adams spent 20 years in the United States Army some 25
years ago. He retired from the United States Army some 25
years ago. But the leadership skills that he developed in the
United States Army 25 years ago, he began using in his
management company in order to manipulate really other people
to commit fraud on the RTC with him.
Defendants did not object. Instead, counsel for Warren Adams noted
in his opening statement:
Now, the Government, and I quote, just told you Adams spent 20
years in the Army. Skills he learned in the Army, he used to
manipulate other people to commit a fraud on the RTC. Are
those the skills people learn when they're serving the defense
of this country? Do you learn skills to manipulate people to
commit frauds or do you learn skills about being a manager, do
you learn skills about leading people, do you learn skills
about honesty, integrity, trustworthiness? What do you learn
in the Army?
Do you learn that if you have a secret clearance, do you learn
that what you do when you have documents that are very
incriminating, like that were up there and you saw those
documents were very incriminating, when you have a secret
clearance to do certain confidential materials when you're in
the service, you learn that you just rip them into four
squares and throw them in a trash bag and throw them out in
the trash?
Do you think by any concept of your imagination that a career
service person would destroy documents the way they say they
destroyed them? That he doesn't know better than that? He
doesn't know how to conduct an operation better than that?
During closing arguments the prosecutor compounded the error
by going further into the area of military service, an area that
was in no way relevant to the trial. The prosecutor stated:
Now 25 years later, in a different season of his life. And by
no means did I mean that the leadership skills that he used in
the Army, that he learned in the Army, were not wonderful
leadership skills that people learn in the military. My
husband's a Navy pilot I would—
Immediately following the remark about the prosecutor's husband,
counsel for Warren Adams objected and moved for a mistrial. The
district court sustained the objection, denied the motion, and
instructed the jury to disregard the prosecutor's personal
comments.
We find that the prosecutor's comments concerning the skills
Warren Adams developed in the Army and her remark about her husband
were improper. There was absolutely no reason why the United
States Military needed to be interjected into this trial. The
prejudice resulting from the improper comments, however, was
minimal and the district court gave a curative instruction
regarding the remark about the prosecutor's husband being a Navy
pilot. See Thomas, 62 F.3d at 1343 (prejudicial remarks may be
rendered harmless by a curative instruction). Therefore, viewed in
context and against the entire record, there is simply not a
reasonable probability that, but for the comments, the outcome
would have been different.
3. Agent Lewis
Prior to trial, Warren Adams filed a motion for severance.
The district court denied the motion but instructed the Government
that it could not make reference to Warren Adams when presenting
out-of-court statements uttered by Jones. See Bruton v. United
States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968).
Despite the district court's ruling, during direct examination
of Agent Lewis the following occurred:
Q: Did you speak to Mr. Jones in that March 2nd interview
regarding the SWAT Great Western Bank Account?
A: Yes.
Q: And what Did Mr. Jones tell you?
A: He, he told me that when they took over SWAT, Mr. Adams had
a SWAT Bank account at Great Western Bank. And that he told
me—
Following Agent Lewis' response, counsel for Warren Adams objected
and moved for a mistrial. The district court sustained the
objection and instructed the jury "to disregard any statement that
Mr. Adams might have made or that Mr. Jones might have made about
Mr. Adams."
On appeal, the Adamses and Jones maintain that the district
court's decision not to grant a mistrial was error. They
specifically contend that the prosecutor emphasized the Great
Western account in her closing argument and that the Bruton
violation cannot be viewed as harmless. Conversely, the Government
maintains that if there was error, the error was harmless because
other evidence presented at trial established that Warren Adams
maintained a SWAT account at Great Western.
We hold that no Bruton violation occurred and that the
district court's curative instruction sufficiently addressed the
problem. No Bruton violation occurred because the statement was
not facially incriminating. It was not facially incriminating
because the reference to the bank account required linkage to other
evidence. See Richardson v. Marsh, 481 U.S. 200, 208, 107 S.Ct.
1702, 1707, 95 L.Ed.2d 176 (1987) ("[w]here the necessity of such
linkage is involved, it is a less valid generalization that the
jury will not likely obey the instruction to disregard evidence.").
Moreover, even if there was a Bruton violation, it was
harmless. See United States v. Foree, 43 F.3d 1572, 1579 (11th
Cir.1995) (Bruton violations subject to the harmless error
doctrine). This statement was clearly harmless. First, the
curative instruction immediately followed the statement. See
United States v. Marolla, 766 F.2d 457, 460 (11th Cir.1985) ("[t]he
fact that the corrective instructions were contemporaneous with the
out-of-court statements increases the effectiveness of the
corrective instructions."). Second, the statement regarding Warren
Adams having a SWAT bank account at Great Western was cumulative
because other evidence showed that he had opened and maintained the
account. Specifically, documentary evidence and the testimony of
Charles McGuire demonstrated Adams' involvement with the account.
Compare United States v. Key, 725 F.2d 1123, 1126-27 (7th Cir.1984)
(Bruton violation existed because codefendant's confession was the
only evidence that defendant committed fraud).
Therefore, when the prejudicial effect of the statement is
compared to the properly admitted evidence of guilt, it appears
clear that there is no reasonable probability that the improper
statement contributed to the conviction. Schneble v. Florida, 405
U.S. 427, 432, 92 S.Ct. 1056, 1060, 31 L.Ed.2d 340 (1967).
4. Cumulative Error
The Adamses and Jones also submit that even if standing
alone, the improper prosecutor statements and the Bruton violation
do not warrant a new trial, that combined, the errors so prejudiced
them that a new trial is mandated. See United States v. Preciado-
Cordobas, 981 F.2d 1206, 1215 n. 8 (11th Cir.1993) (noting that
"the cumulative effect of several errors that are harmless by
themselves could so prejudice the defendant's right to a fair trial
that a new trial might be necessary."). In response, the
Government asserts that the alleged errors represent only an
insignificant portion of the trial, and could not have influenced
the jury's verdict or affected the Defendants' substantial rights.
We agree with the Government. "A defendant is entitled to a
fair trial not a perfect one." Lutwak v. United States, 344 U.S.
604, 619, 73 S.Ct. 481, 490, 97 L.Ed. 593 (1953). In this case,
errors were made but the substantial rights of the Defendants were
not affected by those errors because properly admitted evidence
sufficiently established their guilt.
B. Money Laundering
The Adamses make two challenges to their money laundering
convictions. First, they contend that there was insufficient
evidence to convict them because the purchase of the $11,789.09
7
cashier's check from Fortune did not promote the fraud. They
assert that there was no promotion because the fraud had already
been completed. Second, they maintain that the jury was improperly
instructed regarding the $10,000 requirement in 18 U.S.C. § 1957.81. 18 U.S.C. § 1956"The gravamen of a § 1956(a)(1)(A)(i) violation is the intent
to promote specified unlawful activity." United States v. Miller,
22 F.3d 1075, 1080 (11th Cir.1994). The Adamses assert that there
7
To sustain a conviction, the Government must prove that:
(1) the proceeds of specified unlawful activity were generated;
and (2) that the defendant, knowing the proceeds to be tainted,
conducted or attempted to conduct a financial transaction with
the proceeds with the intent to promote specified unlawful
activity. 18 U.S.C. § 1956(a)(1)(A)(i).
8
A valid conviction pursuant to 18 U.S.C. § 1957 requires
evidence that the defendant "knowingly engaged or attempted to
engage in a monetary transaction in criminally derived property
that is of value greater than $10,000 and is derived from
specified unlawful activity."
was no intent because there was no evidence that the financial
transactions in question promoted the misapplication of funds
belonging to the RTC. More specifically, the Adamses maintain that
the simple act of purchasing a cashier's check did not promote
anything because the fraud had already been completed.
Conversely, the Government argues that the transactions at
issue—the purchase of the $11,798.09 cashier's check from Fortune
and the deposit of $11,798.09 into the Great Western account—were
both intended to promote the continued misapplication of RTC funds.
In the alternative, the Government maintains that even if the fraud
did not continue, this Court should adopt the reasoning of the
other circuits that have held that it is possible to promote prior
unlawful activity. See, e.g., United States v. Paramo, 998 F.2d
1212, 1218 (3rd Cir.1993) ("a defendant can engage in financial
transactions that promote not only ongoing or future unlawful
activity, but also prior unlawful activity."), cert. denied, ---
U.S. ----, 114 S.Ct. 1076, 127 L.Ed.2d 393 (1994).
Because the evidence reviewed in a light most favorable to the
Government demonstrates that the transactions promoted ongoing
fraud, we decline to address whether promoting prior activity is
sufficient. Specifically, the evidence showed that the
transactions at issue helped the Adamses conceal their fraudulent
practices by allowing them to deposit RTC funds into the Great
Western account instead of directly into their personal accounts.
2. § 1957
The Adamses assert that the district court improperly
instructed the jury regarding their money laundering conviction
pursuant to 18 U.S.C. § 1957. They maintain that the district
court erred because it did not instruct the jury that the
criminally derived property must have a value greater than $10,000.
In response, the Government contends that the district court's
instruction adequately explained the elements of § 1957.
In regard to jury instructions, "[s]o long as the
instructions accurately reflect the law, the trial judge is given
wide discretion as to the style and wording employed in the
instructions." United States v. Starke, 62 F.3d 1374, 1380 (11th
Cir.1995). Moreover, the instructions are reviewed as a whole
without taking any part out of context. United States v. Cohen,
631 F.2d 1223, 1227 (5th Cir.1980).9
The Adamses' primary challenge to the instruction is that it
included the following: "The Government need not prove that all of
the property involved in the transaction was the proceeds of
specified unlawful activity. It is sufficient if the Government
proves that at least part of the property represents such
proceeds." According to the Adamses, that language allowed the
jury to convict even if they found only $1.00 to be from criminally
derived property, and effectively negated the $10,000 requirement.
Prior to the above quoted instruction, however, the district
court had instructed the jury that "[t]he Defendant[s] can be found
guilty of that offense [§ 1957] only if all of the following acts
are proved beyond a reasonable doubt: First, that the Defendant[s]
engaged in a monetary transaction in criminally derived property of
9
Fifth Circuit decisions issued prior to October 1, 1981 are
precedent in this circuit. Bonner v. City of Prichard, 661 F.2d
1206, 1207 (11th Cir.1981) (en banc).
a value greater that $10,000...."
We hold that—viewed as a whole—the instructions sufficiently
instructed the jury as to the law. See Starke, 62 F.3d at 1380.
Nevertheless, to avoid possible confusion, in the future we
recommend that district courts make it clear that although not all
of the property at issue must be criminally derived, at least
$10,000 worth of it must be derived from the criminal activity.
See 18 U.S.C. § 1957.
C. Additional Defense Contentions
The Adamses and Jones each raise one additional challenge to
the propriety of the district court's proceedings. The Adamses
challenge the forfeiture because the district court refused to
grant a continuance, and Jones contests the sufficiency of the
evidence supporting his conspiracy conviction.
There is no merit to either challenge and we reject both
without additional discussion.
D. Government's Cross-Appeal
The Government challenges the sentences given Warren and
Goldean Adams, arguing that the district court erred when it failed
to calculate the Adamses' base offense levels using their 18 U.S.C.
§ 1956 convictions. The Government notes that by not applying the
§ 1956 convictions, which were contained in the Presentence
Investigative Report (PSR), the district court reduced the
respective base offense levels by ten levels. In a written
sentencing order, the district court justified the decision in the
following manner:
The gravamen of the Adams' unlawful scheme is fraud and
misapplication of RTC funds. It is difficult to conceive of
a situation in which a bank account would not be used in some
manner in a fraud of this type. Therefore, it is the opinion
of the Court that the base offense level of 13, which is the
appropriate base offense level adjusted for specific offense
characteristics for Counts 1 through 5 and 8 through 11,
should be used in this instance, rather than the usual base
offense level of 23 for money laundering.
Alternatively, the Court would depart downward 10 levels under
5K2.11 and sentence each of Defendants at a level 13. The
conduct of the Defendants did not cause or threaten the harm
or evil sought to be prevented by the law proscribing the
money laundering offense. The sentences received by
Defendants are more than adequate to reflect the seriousness
of the offenses of which they were convicted, and provide just
punishment for those offenses. The statutory purposes of
sentencing are satisfied by the imposition of a sentence at a
Level 13, which reflects the guideline range for the intended
crime. See 18 U.S.C. § 3553.
Unless factual resolutions cloud the issue, the question of
which base offense level is applicable is reviewed de novo. United
States v. Acanda, 19 F.3d 616, 618 (11th Cir.1994). Similarly, the
issue of whether a district court has the authority to depart
downward from the applicable guideline range is subject to plenary
review. United States v. Godfrey, 22 F.3d 1048, 1053 (11th
Cir.1994).
The primary justification used by the district court to lower
the base offense levels is contrary to the law. The jury found the
Adamses guilty of violating § 1956. Therefore, the § 1956
convictions must be included in the sentence, and U.S.S.G. § 2S1.1
must be applied. The district court cannot simply ignore the fact
that the Adamses were convicted of violating § 1956. See 18 U.S.C.
§ 3551. See also United States v. Costales, 5 F.3d 480, 488 (11th
Cir.1993) ("a district court cannot use the post-trial sentencing
process to call the jury's verdict into question.").
Accordingly, the only possible justification for the lowered
base offense levels is a downward departure. Moreover, because the
district court predicated respective downward departures on the
second prong of U.S.S.G. § 5K2.11, whether the departures are
warranted hinges on the legal issue of whether § 1956 seeks to
prevent the harms caused by the Adamses' conduct. See United
States v. Rojas, 47 F.3d 1078, 1080 (11th Cir.1995).10
As noted by the Tenth Circuit, "[t]he legislative history
behind the Money Laundering Control Act of 1986 is fairly sparse."
United States v. Johnson, 971 F.2d 562, 568 (10th Cir.1992).
However, the examples cited in the legislative history describe
"classic" money laundering activities. Id. On the other hand, the
plain language of the act itself "prohibits a much broader range of
conduct than just the "classic' example of money laundering." Id.
at 569. See United States v. LeBlanc, 24 F.3d 340, 346 (1st Cir.)
("[t]he language of the statute, in conjunction with the
definitions provided in 18 U.S.C. § 1956(c), indicates that
Congress intended to criminalize a broad array of transactions
designed to facilitate numerous federal crimes."), cert. denied, --
- U.S. ----, 115 S.Ct. 250, 130 L.Ed.2d 172 (1994).
The First and Eighth Circuits have addressed cases with very
similar facts to this one and have concluded that the money
laundering at issue did not warrant a downward departure. United
States v. Pierro, 32 F.3d 611, 620 (1st Cir.1994), cert. denied, --
- U.S. ----, 115 S.Ct. 919, 130 L.Ed.2d 799 (1995); LeBlanc, 24
10
A departure predicated on "lesser harm" is a variation of
the more typical "heartland" approach usually employed by
district courts when justifying a downward departure in a money
laundering case. See e.g., United States v. Baker, 19 F.3d 605,
615 (11th Cir.1994).
F.3d at 347; United States v. Morris, 18 F.3d 562, 569 (8th
Cir.1994).
For example, in Morris, the Eighth Circuit remanded for
resentencing after the district court failed to apply U.S.S.G. §
2S1.1 to a defendant who committed bank fraud, and then for the
purposes of concealment transferred the proceeds of the bank fraud
into a separate account. 18 F.3d at 569.
Additionally, the Second, Fifth, and Ninth Circuits have
affirmed district courts that refused to depart downward because
the money laundering at issue was considered to be "heartland"
money laundering.11 United States v. Piervinanzi, 23 F.3d 670, 685
(2nd Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 259, 130 L.Ed.2d
179, and cert. denied, --- U.S. ----, 115 S.Ct. 267, 130 L.Ed.2d
185 (1994), United States v. Leonard, 61 F.3d 1181, 1185 (5th
Cir.1995); United States v. Willey, 57 F.3d 1374, 1391-92 (5th
Cir.1995); United States v. Rose, 20 F.3d 367, 374-75 (9th
Cir.1994).
The Second Circuit in United States v. Skinner, 946 F.2d 176(2nd Cir.1991), however, did remand a case back to the district
court after the district court rejected a "heartland" argument.
Id. at 179. Later Second Circuit cases, however, clarified that
Skinner is an exception to the general rule that district court
decisions not to downward depart are only reviewable if the
district court erroneously concluded that it did not have legal
authority to downward depart. See Piervinanzi, 23 F.3d at 685.
11
In all three circuits, as in this one, the failure to
grant a discretionary downward departure is not subject to
appellate review. See e.g., Leonard 61 F.3d at 1185.
We agree with our colleagues in the First and Eighth Circuits
that Congress intended to criminalize a broad array of money
laundering activity, and included within this broad array is the
activity committed by the Adamses.12 Simply stated, the money
laundering engaged in by the Adamses is of the type considered by
Congress and the Sentencing Commission. Therefore, a departure
that completely negates the effect of their money laundering
convictions is clearly erroneous and an incorrect application of
the Guidelines. See Williams v. United States, 503 U.S. 193, 200,
112 S.Ct. 1112, 1119, 117 L.Ed.2d 341 (1992).
We do not, however, foreclose the possibility that on remand
the district court might be able to articulate mitigating
circumstances of a kind or degree that the Sentencing Commission
did not adequately take into account when promulgating the
Guidelines. See Baker, 19 F.3d at 616 (remanding because district
court failed to adequately articulate mitigating circumstances upon
which it relied). Specifically, the district court needs to
identify how or why the Adamses' conduct caused or threatened to
cause less harm than typical money laundering.
Finally, even if the district court finds that mitigating
circumstances exist and warrant a departure, the district court
does not have the authority to grant a departure that completely
nullifies the effect of the jury finding the Adamses guilty of
money laundering. Costales, 5 F.3d at 488 (11th Cir.1993).
III. CONCLUSION
12
Fraud and money laundering convictions, however, can be
grouped under U.S.S.G. § 3D1.2(d). United States v. Mullens, 65
F.3d 1560 (11th Cir.1995).
For the foregoing reasons, we AFFIRM the convictions of the
Adamses and Jones, the forfeiture, and the sentence of Jones, but
VACATE the sentences of the Adamses, and REMAND the case to the
district court for re-sentencing.