United States v. Bollin

Filed: September 19, 2001
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Nos. 00-4337(L)
(CR-98-152)
United States of America,
Plaintiff - Appellee,
versus
Gary D. Bollin, et al.,
Defendants - Appellants.
O R D E R
The court further amends its opinion filed June 7, 2001, and
amended September 6, 2001, as follows:
On page 21, first full paragraph, line 11 -- the court infor-
mation for United States v. Fulbright is corrected to read “(5th
Cir. 1986).”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk
Filed: September 6, 2001
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Nos. 00-4337(L)
(CR-98-152)
United States of America,
Plaintiff - Appellee,
versus
Gary D. Bollin, et al.,
Defendants - Appellants.
O R D E R
The court grants the unopposed motion for publication and
amends its opinion filed June 7, 2001, as follows:
On the cover sheet, section 1 -- “UNPUBLISHED” is changed to
read “PUBLISHED.”
On page 2, section 2 -- the status line is corrected to begin
“Affirmed by published opinion. . . .”
On page 3 -- the reference to use of unpublished opinions as
precedent is deleted.
For the Court - By Direction
/s/ Patricia S. Connor
Clerk
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 00-4337
GARY D. BOLLIN,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 00-4347
ERNST N. TIETJEN,
Defendant-Appellant.
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 00-4406
JAMES GORMLEY,
Defendant-Appellant.
Appeals from the United States District Court
for the Southern District of West Virginia, at Huntington.
Robert C. Chambers, District Judge.
(CR-98-152)
Argued: March 2, 2001
Decided: June 7, 2001
Before WILKINSON, Chief Judge, MOTZ, Circuit Judge, and
Cynthia Holcomb HALL, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Senior Judge Hall wrote the opin-
ion, in which Chief Judge Wilkinson and Judge Motz joined.
_________________________________________________________________
COUNSEL
ARGUED: Jane Moran, JANE MORAN LAW OFFICES, William-
son, West Virginia, for Appellant Bollin; George A. Mills, III, Hun-
tington, West Virginia, for Appellant Tietjen; Mark Jeffery Kadish,
THE LAW OFFICE OF MARK J. KADISH, Atlanta, Georgia, for
Appellant Gormley. Philip Henry Wright, Assistant United States
Attorney, Charleston, West Virginia, for Appellee. ON BRIEF:
Rebecca A. Betts, United States Attorney, Charleston, West Virginia,
for Appellee.
_________________________________________________________________
_________________________________________________________________
OPINION
HALL, Senior Circuit Judge:
Appellants raise numerous challenges to their convictions and sen-
tences stemming from their involvement in an investment fraud
scheme and the subsequent coverup. We conclude that their chal-
lenges lack merit and therefore affirm the judgments below. We also
conclude that pursuant to the Supremacy Clause, federal forfeiture
law supersedes the garnishment protections that Georgia state law
provides for funds in an individual retirement account.
2
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arose out of a wide-ranging investment fraud scheme,
carried out by a network of conspirators, who bilked millions of dol-
lars from investors across the country. The investments were pro-
grams that promised enormous profits, supposedly derived from
secret trading in debentures issued by European "prime" banks. The
conspirators included Stephen Oles, a self-described"trader" in the
fraudulent investment programs; appellant Ernst Tietjen, another
trader; Ramona Holcombe and Stanie Benz, who served as "project
managers" or "directors" for the programs; appellant Gary Bollin, a
"broker" for the fraudulent investments; Roger Damron, who offered
the investments in and near Huntington, West Virginia; David Raimer
and his wife, Jennifer, who conducted numerous bank transactions
involving investors' funds; and appellant James Gormley, an attorney
from Atlanta, Georgia, who advised and assisted Oles, David Raimer,
Bollin, and Damron with the fraudulent investments and money laun-
dering. The cast of characters relevant to Appellants also included
Finbar F. Dempsey & Company, a law firm in the Turks and Caicos
Islands; Robert Edwards, an escrow agent and attorney in Atlanta; Dr.
Ralph and Rita Touma, investors; and other investors in the programs.1
1
In mid-1995, David Raimer and Oles began offering investment
programs under the name "Exodus International." The programs
involved supposed trading of European "prime bank" debentures and
promised very high rates of return with little or no risk to investors.
According to the Exodus literature that they distributed, the programs
were available on a limited basis to groups of investors whose money
would be pooled and delivered to a "prime" bank. The investment
principal was supposedly secured by a bank guarantee and, therefore,
was never at risk. Millions of dollars in profits were to be generated
within a few months from the trading of debentures. For example, one
program, "Program 39," offered a profit of $73,000,000 in ten
months, based on an investment of $400,000.
_________________________________________________________________
1 Because only the appeals of Bollin, Tietjen, and Gormley are before
us, we limit our discussion of the facts to those facts relevant to Appel-
lants.
3
To carry out the scheme, bank accounts were established with the
guidance and assistance of Oles's attorney, appellant Gormley.
Raimer established an escrow account in Orlando, Florida, under the
name "Exodus International." Per Gormley's advice, the account was
to be non-interest bearing so as to avoid attracting the IRS's attention.
The account was to be used ostensibly to deliver investors' funds into
a debenture trading program. Gormley also helped establish an off-
shore account in the Turks and Caicos Islands in the name of "BCI
Corporation," which was part of a so-called "three-tiered" offshore
trust. According to Gormley, the offshore trust would shield income
from taxation and was the "vehicle" through which the debenture
trading program was to be conducted.
Appellant Bollin learned about Exodus International Program 39 in
May 1995. At Oles' suggestion, Bollin discussed the program with
Gormley. Gormley explained to Bollin how the program worked and
drew a sketch for him showing how funds would move through the
program. Gormley told Bollin that debenture trading programs work
"if they're handled right" and that "once they start paying, they pay
forever." After Bollin gave Gormley literature about Program 39,
Gormley told him that the program looked "pretty good."
Gormley also recommended the Exodus International Program to
Stanie Benz. Gormley told Benz that he had extensive experience
reviewing debenture trading programs and that he had reviewed the
Exodus Program and found it to be a good investment. Gormley
explained the relationship between debenture trading programs and
offshore trust accounts, and described how such an account could be
used as a holding point for pooling investors' funds and for transfer-
ring funds without their being traceable.
Bollin introduced the Exodus Program 39 to Roger Damron. At
Bollin's recommendation, on July 20, 1995, Damron met with Gorm-
ley. Gormley advised Damron concerning the Program 39 literature
and debenture trading programs in general, and advised him on for-
eign grantor trusts to facilitate the investments and avoid tax liability.
Gormley had Finbar F. Dempsey & Company set up foreign grantor
trusts in the Turks and Caicos Islands for Damron and Bollin. Gorm-
ley also established international business corporations for Damron
and Bollin and advised them about their use in conducting business
4
for the trusts. In addition, Gormley prepared several documents for
Bollin and Damron, such as profit sharing agreements. The idea was
that Damron would bring investors into the programs, Bollin would
act as the broker, and Ramona Holcombe would serve as the program
manager and link to the trader, Stephen Oles, who would conduct the
actual trading.
Damron approached a couple with whom he had a previous invest-
ment relationship, Dr. Ralph and Rita Touma, and sought money to
place in Exodus Program 39.22 The Toumas decided to invest, and, in
late July 1995, gave Damron $750,000. Damron put $400,000 in an
escrow account held by Robert Edwards, another Atlanta attorney,
awaiting an opening in Program 39. Unbeknownst to the Toumas,
Damron paid Bollin $75,000 from this money.
On September 13, 1995, Holcombe faxed to Gormley the wire
coordinates to transfer funds into Program 39. Gormley forwarded the
fax to Bollin, who then faxed it to Damron.3
3 Then, on September 19,
1995, Gormley drafted a letter for Damron's signature, directing the
transfer of the $400,000 from Edwards' escrow account to Bollin's
foreign grantor trust in the Turks and Caicos Islands, an account set
up by Gormley. Damron signed the letter and sent it to Edwards.
Edwards wired the money as instructed on September 20, 1995.4 4A
few days later, the money was again transferred, this time from Bol-
lin's trust account to Damron's trust account, also set up by Gormley
in the Turks and Caicos Islands. From Damron's account, the money
was sent to the BCI Corporation account in the Turks and Caicos
Islands, an account controlled by Oles and Raimer.
After the Toumas' money was sent off, Damron began collecting
money from other people for investment in another, similar trading
program, the "second deal." Bollin told Damron that the second deal
would again involve Oles as the trader, but would involve Benz as the
_________________________________________________________________
2 According to Damron, Dr. and Mrs. Touma were his "best customers"
in the Gold Eagle Program, a program run by Damron that involved
investments in gold coins.
3 This fax is the basis for the wire fraud charge in Count Three.
4 The transfer of the $400,000 is the basis for the money laundering
charge in Count Six.
5
"project director." Oles later "lateraled" his role as the trader to appel-
lant Tietjen. Although the second deal was similar to Exodus Program
39, instead of the money going to Oles' BCI Corporation account in
the Turks and Caicos Islands, the money was transferred to an
account in England.
Oles had introduced Tietjen to Benz. Tietjen was the head of a
church known as the Apostolic Order of the Remnant House of Israel
(AORHI). According to Tietjen, AORHI existed wherever he lived,
supposedly for the purpose of funding humanitarian projects. To ful-
fill its purpose, AORHI created other entities, which Tietjen called
limited trusts, to hold assets, and an entity called General Securities,
Ltd. (GSL), to "assist in the money-making." Under cover of these
entities, Tietjen created official-looking financial documents, such as
a "Zero Coupon Prime Capital Note," and offered debenture trading
programs with very high rates of return. In all, Tietjen received, or
expected to receive, $2.4 million of investors' funds for placement in
his debenture trading program.
After Damron sent the money for the second deal, he collected
another $140,000 from investors in November and December 1995
for placement in yet another debenture trading program, the "third
deal." In January 1996, Damron wired $130,000 of the investors'
money to his account in the Turks and Caicos Islands. The money
was to be sent off for investment.
As it turned out, the debenture trading programs were complete
frauds. The Government's expert explained that investment programs
involving the trading of debentures or other financial instruments
issued by so-called "prime banks" do not exist. Indicators of the
fraudulent nature of such programs include the use of the term "prime
bank;" convoluted and nonsensical descriptions of the investment pro-
gram itself; very unrealistic rates of return with little or no risk; an
assertion that investors' funds represented "good, clean cleared funds
of non-criminal origin;" and the claim that entities such as the Federal
Reserve Bank or the World Bank had approved the programs or
accepted the documents. These characteristics of fraud were present
in the Exodus Program 39 documents.
Instead of placing the money into bank debentures, Oles transferred
the money from the BCI Corporation account to the Exodus Interna-
6
tional account in Orlando. David Raimer withdrew funds from the
account and sent cash to Oles upon request. Oles used these funds for
himself, and Raimer also kept large sums. The funds sent to Tietjen
similarly were not placed in a debentures trading program, but instead
worked their way through various accounts in the names of AORHI
and others, with much of the money being used by Tietjen for his own
purposes.
When the Toumas, Damron's investors in Program 39, did not
receive payments as promised, they began to call Damron regularly
to find out when their payouts would materialize. Oles reportedly
assured Bollin that payments were imminent. In turn, Bollin reassured
Damron, who, in turn, reassured the Toumas. After more time passed
without a payout, the Toumas eventually spoke with Bollin and Gor-
mley. Bollin assured them that the payout would come and that he,
like them, was waiting for money. He also told them that he had pre-
viously traded in these programs and that while it was normal for pay-
ment to be delayed, the programs always paid. Bollin said that he
would get paid only if the investment paid out, failing to disclose that
Damron had already paid him $75,000 out of the Toumas' money.
Gormley told the Toumas that he did not know much about their
investment, but that he knew these programs did pay out in the past,
and that the delays "usually work themselves out in a week or so."
Gormley told the Toumas that they had the option to sue Oles for
their money, but warned that a law suit would only lead to more
delays in receiving their money.
Bollin also spoke with another investor, Marianne Bradley, who
had invested as part of the second deal. When Bradley asked about
the status of her investment, Bollin stated that "trades are being
made," that trading had started on January 16, and that "we" had "fro-
zen the account to protect the money." Bollin also stated that he had
invested $100,000 in the same program as Bradley and that he would
occasionally get involved in a trading program with $100,000 to
$500,000. He stated that based on his experience, the program would
either pay out as promised in ten days or Bradley would get her
money back. Bollin, however, did not invest any of his own money
in the second deal, and his only investment experience had been a
$100 investment several years before.
7
Finally, in January 1996, the Toumas reported their dealings with
Damron to the FBI. On February 9, 1996, the FBI conducted a search
of Damron's house. Shortly thereafter, a grand jury investigation was
commenced in Huntington, West Virginia.
Damron decided to return to the investors the $130,000 sent to his
account in the Turks and Caicos Islands for the third deal. Damron
wired over $120,000 of the money to Gormley and $8,000 to himself
so that Gormley could arrange for checks to the investors. Gormley
also arranged for backdated paperwork to be created by the attorneys
in the Turks and Caicos Islands to explain the earlier transfer of
$130,000 as a "loan" from one of Damron's companies to another.
The loan paperwork was created in March 1996, but was backdated
to January 17, 1996, the date of the $130,000 transfer.
Damron was eventually indicted for his involvement in the invest-
ment fraud scheme. After the indictment, Oles decided to send Dam-
ron $50,000. Damron was then under a financial reporting
requirement with the court. He contacted Gormley, who advised him
how to structure the transaction so as to avoid the court-imposed
reporting requirement. On Gormley's advice, the transfer was struc-
tured as a loan from Bollin's wife to Damron's wife. Bollin kept
$10,000 for himself and sent the remaining $40,000 to Damron in
increments of $5,000. Gormley also assisted in Damron's receipt of
an additional $100,000 from Oles, again funneled through the Turks
and Caicos Islands.
In August 1997, Gormley informed Damron that Oles was again
sending money to Damron, $400,000, to be used to pay back certain
investors. Gormley and Damron discussed how to use the money for
"damage control." They decided to repay Damron's numerous inves-
tors in the second deal but not the Toumas. Damron prepared a list
of investors who had invested in the program and how much they had
invested. He gave the list to Gormley. Later, Damron sent a separate
letter to Paul Dempsey in the Turks and Caicos Islands, detailing the
investors who were to receive payments and directing that the pay-
ments be made. A copy of that letter with Damron's handwritten nota-
tion that it had been faxed to Dempsey was found in Gormley's
office. The investors listed in Damron's letter were all paid, receiving
checks from the Turks and Caicos Islands in plain envelopes with no
8
return address and no cover letter. Approximately $400,000 was
repaid to twenty investors. Gormley was paid $20,000 by Oles for his
services.
When the Government learned of the payments to the investors,
who were potential witnesses against Damron, it sought to have the
money placed in escrow pending resolution of Damron's case. At a
hearing in October 1997, Gormley testified that to his knowledge,
Damron had not directed, coordinated, or orchestrated the payments
to investors.
Damron eventually pleaded guilty to mail fraud and money laun-
dering and agreed to cooperate with the United States in its investiga-
tion of the other conspirators. On September 9, 1998, Appellants Gary
Bollin, Ernst Tietjen, and James Gormley were charged in a fourteen-
count indictment, along with co-defendants Stephen Oles, Ramona
Holcombe, Stanie Benz, David Raimer, and Jennifer Raimer, for
criminal acts stemming from the fraudulent investment scheme.
Count One charged all defendants with conspiring to commit wire
fraud, securities fraud, and obstruction of justice, in violation of 18
U.S.C. § 371. Count Two charged all defendants with violating 18
U.S.C. § 1956(h), conspiracy to launder money. The indictment also
included a forfeiture provision as to all defendants, premised upon a
conviction for money laundering, and included a notice to seek substi-
tute assets. Tietjen was not named in any of the other counts.
Both Gormley and Bollin faced additional charges. Both were
charged in Count Three with aiding and abetting wire fraud, in viola-
tion of 18 U.S.C. §§ 1343 and 2. Count Six charged them with aiding
and abetting money laundering, in violation of 18 U.S.C.
§§ 1956(a)(1)(A)(i) and 2. Bollin was also charged in Count Four
with an additional count of wire fraud, and in Counts Seven and Eight
with two more counts of money laundering. In Counts Nine and Ten,
Bollin was charged with selling securities without having registered
with the Securities and Exchange Commission, in violation of 15
U.S.C. §§ 78o(a)(1) and 78ff. Gormley was charged in Counts Thir-
teen and Fourteen with perjury, in violation of 18 U.S.C. § 1623. The
district court dismissed Count Fourteen at trial.
9
Before trial, defendants David Raimer and Stanie Benz pleaded
guilty to charges in the indictment. The charges against Jennifer
Raimer were dismissed. Stephen Oles fled and remained a fugitive
throughout the trial. On November 19, 1999, a jury returned a guilty
verdict against the remaining defendants on each count submitted to
the jury. The jury also returned a $1.2 million forfeiture verdict. The
district court denied the post-trial motions for judgment of acquittal
and/or a new trial made by Gormley, Bollin, and Tietjen.
The district court sentenced Bollin to 108 months imprisonment,
three years supervised release, and restitution in the amount of
$783,535.55 The court sentenced Tietjen to 135 months imprisonment,
two years supervised release, and $1,761,035 in restitution.6
6 The court
sentenced Gormley to 97 months imprisonment, three years super-
vised release, and $783,545 in restitution.7
7 Each defendant was also
found jointly and severally liable for the $1.2 million forfeiture.8
8 Fol-
lowing the entry of judgment against each defendant, each defendant
filed a timely notice of appeal.
II. SUFFICIENCY OF THE EVIDENCE
Appellant Gormley challenges the sufficiency of the evidence sup-
porting his convictions on Counts One, Two, Three, Six, and Thir-
teen. In reviewing the sufficiency of the evidence, a reviewing court
must take the evidence in the light most favorable to the government
and must determine whether any rational juror could have found the
_________________________________________________________________
5 Bollin was sentenced to 108 months imprisonment on Counts Two,
Six, Seven, Eight, Nine and Ten, and 60 months on Counts One, Three
and Four, to run concurrently.
6 Tietjen was sentenced to 60 months imprisonment on Count One and
135 months on Count Two, to run concurrently.
7 Gormley was sentenced to 60 months imprisonment on Counts One,
Three, and Thirteen, and 97 months on Counts Two and Six, to run con-
currently.
8 In an interlocutory appeal, Gormley challenged the district court's rul-
ing that he could be held jointly and severally liable for any forfeitable
assets possessed by his codefendants. This court affirmed in an unpub-
lished opinion. United States v. Gormley, 176 F.3d 476, 1999 WL
212008 (4th Cir. 1999) (per curiam) (unpublished).
10
elements of the offense beyond a reasonable doubt. United States v.
Burgos, 94 F.3d 849, 862 (4th Cir. 1996).
A. Sufficiency of the Evidence on Count One--
Conspiracy to Commit Wire Fraud, Securities Fraud,
and Obstruction of Justice
To support a conviction for conspiracy, "the government must
show, first, that a conspiracy existed; then that the defendant had
knowledge of the conspiracy; and finally, that the defendant voluntar-
ily became a part of the conspiracy." United States v. Bell, 954 F.2d
232, 236 (4th Cir. 1992), overruled on other grounds by Burgos, 94
F.3d at 862. Gormley contends that the Government proved three dis-
tinct conspiracies instead of the single conspiracy alleged in Count
One of the indictment: one conspiracy to commit wire fraud, a second
conspiracy to commit securities fraud, and a third conspiracy to
obstruct justice. Gormley argues that the Government's proof resulted
in a material variance.
A "variance" occurs when "the evidence at trial establishes facts
materially different from those alleged in the indictment." United
States v. Kennedy, 32 F.3d 876, 883 (4th Cir. 1994). A defendant may
establish that a material variance occurred "by showing that the
indictment alleged a single conspiracy but that the government's
proof at trial established the existence of multiple, separate conspira-
cies." Id.; see also Kotteakos v. United States, 328 U.S. 750, 755-56
(1946). The question whether the evidence shows a single or multiple
conspiracies is for the jury, and the finding of a single conspiracy
must stand unless the evidence, taken in the light most favorable to
the Government, would not allow any reasonable juror to reach such
a verdict. United States v. Urbanik, 801 F.2d 692, 695 (4th Cir. 1986).
We are satisfied that the jury's finding of a single conspiracy was
supported by substantial evidence. Although the conspiracy had mul-
tiple objects--wire fraud, securities fraud, and obstruction--the
objects clearly were related to the overall goal of defrauding investors
through fraudulent offshore debentures trading programs. See United
States v. Squillacote, 221 F.3d 542, 574 (4th Cir. 2000) (explaining
that a close relation between the objects of alleged separate conspira-
cies supports a finding of a single conspiracy), cert. denied, 121 S. Ct.
11
1601 (2001); United States v. Walsh, 544 F.2d 156, 161 (4th Cir.
1976) (noting that a single conspiracy may have multiple objects).
The co-conspirators obtained funds from investors through securities
fraud. The wire fraud was used to move the investors' funds into the
hands of Oles, the Raimers, and Tietjen. The obstruction was part of
controlling the damage after Damron came under investigation for his
role in the fraudulent debentures trading program.
The fact that some of the co-conspirators, including Gormley,
never marketed the debentures trading programs to the actual inves-
tors does not prevent a finding of a single conspiracy because a defen-
dant may be a member of a conspiracy without taking part in all of
its activities. See United States v. Banks, 10 F.3d 1044, 1054 (4th Cir.
1993). Similarly, a single conspiracy may be found even though Tiet-
jen, Holcombe, and Benz were not active in returning money to inves-
tors. The very structure of the scheme in this case required the
conspirators to play different roles--brokers, project managers, and
traders--to carry out the fraud and obscure the disposition of funds
placed in the trading programs. Gormley prepared the different instru-
ments used to carry out the scheme to defraud investors and directed
the opening of the offshore trusts. Further, because a shifting mem-
bership in the conspiracy does not preclude a finding of a single con-
spiracy, a single conspiracy may be found even though Benz and
Tietjen were involved only in later deals. United States v. Lozano, 839
F.2d 1020, 1023 (4th Cir. 1988). Finally, regardless of whether "hos-
tility" arose between Oles on one side and Damron, Gormley and Bol-
lin on the other after Damron was indicted in 1997, Oles was the
source of the funds sent to Damron and the source of the funds used
to repay investors, thus supporting the conclusion that they were par-
ticipating in a common scheme. In sum, the evidence was sufficient
to support the jury's finding of a single conspiracy.99
_________________________________________________________________
9 The evidence also was sufficient to support the jury's conclusion that
Gormley was part of the conspiracy. Gormley was involved with Oles,
the Raimers, Bollin, and Damron from the very beginning. Gormley
knew how the Exodus Program worked, as we discuss in more detail
below, knew the program was fraudulent, and took actions in furtherance
of the scheme. After Damron was placed under investigation, Gormley
also played a role in the return of funds to investors.
12
Moreover, even if the evidence established separate conspiracies,
a variance is grounds for reversal only if it infringed the defendant's
"`substantial rights' and thereby resulted in actual prejudice." Ken-
nedy, 32 F.3d at 883. "In order to show actual prejudice stemming
from a multiple conspiracy variance, an appellant must prove that
`there are so many defendants and so many separate conspiracies
before the jury' that the jury was likely to transfer evidence from one
conspiracy to a defendant involved in an unrelated conspiracy." Id.
(quoting United States v. Caporale, 806 F.2d 1487, 1500 (11th Cir.
1989)).
In Kennedy, we held that an alleged variance had no prejudicial
effect because there was "no possibility that evidence from unrelated
conspiracies would be improperly attributed to individual defen-
dants." Kennedy, 32 F.3d at 883. Kennedy involved eight defendants
and, at most, three related conspiracies. We recognized that "cases
involving similar numbers of defendants and conspiracies are `not so
complex by definition that the jury will be unable to segregate the evi-
dence properly.'" Id. (quoting Caporale, 806 F.2d at 1501 (eleven
defendants and two conspiracies)). Further, the fact that the district
court ordered a severance, and each defendant thus faced trial alone,
virtually eliminated any likelihood of prejudicial "spillover" of evi-
dence. Id.
Like in Kennedy, this case involves only eight named defendants
and, if there was a variance, at most three conspiracies. Although the
district court did not order a severance, only four of the eight defen-
dants named in the indictment were tried together. Further, the district
court granted Gormley's request for a multiple objects jury instruc-
tion, instructing the jury to consider each defendant's role in the con-
spiracy. The verdict form required the jury to make particularized
findings about which objects each defendant conspired to violate, fur-
ther helping the jury to compartmentalize the evidence as to each
defendant. Any risk of a "spillover effect" was slight. Gormley's con-
viction on Count One is affirmed.
B. Sufficiency of the Evidence on Count Three, Wire Fraud
To convict Gormley for wire fraud in violation of 18 U.S.C.
§ 1343, "the government must prove: `1) a scheme to defraud and 2)
13
the use of a wire communication in furtherance of that scheme.'"
United States v. ReBrook, 58 F.3d 961, 966 (4th Cir. 1995) (quoting
United States v. Brandon, 50 F.3d 464, 467 (7th Cir. 1995)); see also
18 U.S.C. § 1343. Gormley argues that the evidence is insufficient to
prove that he transmitted or caused to be transmitted to Damron a
September 13, 1995, memorandum, which furnished the wire coordi-
nates for investors to send funds to Oles' offshore Exodus account.
Gormley also argues that the Government failed to prove that Gorm-
ley knew the funds to be sent to Oles' offshore account came from
the Toumas, and thus the Government failed to prove that Gormley
had the requisite fraudulent intent. We conclude that the evidence was
sufficient to support the jury's verdict.
Holcombe testified that she faxed the memorandum containing the
wire coordinates to Gormley's office on September 13, 1995, and the
fax headers on the document confirm her testimony. Damron testified
that he received the memorandum from Bollin on September 13,
1995. Bollin testified that he could not recall how he obtained the
document. Holcombe, however, testified that she faxed the memoran-
dum only to Gormley because she believed that he was the person
controlling the funds. Although Gormley shared office space with
seven to nine other attorneys, he was a sole practitioner, and the attor-
neys in Gormley's space-sharing arrangement did not share clients.
There is no evidence that Bollin worked with any of the other attor-
neys in Gormley's office. The evidence supports the conclusion that
Gormley received the memorandum from Holcombe and furnished it
to Bollin, who in turn sent the memorandum to Damron.
Further, assuming that Gormley did not know the $400,000 came
from the Toumas,1010 Gormley's lack of knowledge is irrelevant
because, as the Government points out, it was not required to prove
that anyone had put up any money and had actually been defrauded
in the wire fraud scheme (i.e., that the scheme succeeded), so long as
the act of wire fraud was in furtherance of the scheme. See United
States v. Bryan, 58 F.3d 933, 943 (4th Cir. 1995), abrogated on other
grounds by United States v. O'Hagan, 521 U.S. 642, 650 (1997). Gor-
_________________________________________________________________
10 As we discuss below, there was sufficient evidence from which the
jury could infer that Gormley was aware that the Toumas had contributed
to the $400,000.
14
mley's delivery of the wire coordinates for Oles' offshore account
was in furtherance of the fraudulent investment scheme. Moreover,
there is sufficient evidence from which the jury could infer that, by
the time of the September 13, 1995, fax, Gormley knew the scheme
was fraudulent. Gormley was a self proclaimed securities lawyer, and
he claimed to be an expert on investment programs. Gormley
reviewed the Exodus Program documents and was aware that the Pro-
gram was a prime bank debentures trading program. The Govern-
ment's expert testified that there were numerous indicators of fraud
in the Exodus Program documents that should have raised a red flag
to an experienced securities lawyer. If Gormley was not already
aware that the debentures trading program was a scam, on August 17,
1995, Gormley met with Agent David Caruso of the Federal Bureau
of Investigations, who explained the fraudulent nature of investment
programs involving "prime bank" financial instruments, like the Exo-
dus Program. We conclude that Gormley's wire fraud conviction was
supported by the evidence.
C. Sufficiency of the Evidence on Count Six, Money Laundering,
and Count Two, Money Laundering Conspiracy
A money laundering conviction under 18 U.S.C. § 1956 requires:
(1) that the defendant conduct a financial transaction with at
least a de minimis effect on interstate commerce; (2) that the
transaction involved the proceeds of a specified unlawful
activity; (3) that the defendant knew that those proceeds
were derived from that specific unlawful activity; and (4)
that the defendant engaged in the transaction intending to
promote that unlawful activity.
United States v. France, 164 F.3d 203, 208 (4th Cir. 1998), cert.
denied, 527 U.S. 1010 (1999); 18 U.S.C. § 1956(a)(1)(A)(i). Funds
are the proceeds of unlawful activity if they "are derived from an
already completed offense, or a completed phase of an ongoing
offense." United States v. Conley (Conley I), 37 F.3d 970, 980 (3d
Cir. 1994); see also United States v. Butler, 211 F.3d 826, 829 (4th
Cir. 2000), cert. denied, 121 S. Ct. 1091 (2001). "This is true even if
the money laundering transaction can also be considered a part of the
continuing specified unlawful activity." United States v. Morelli, 169
15
F.3d 798, 804 (3d Cir.), cert. denied, 528 U.S. 820 (1999). A defen-
dant must have subjective knowledge that the funds were the proceeds
of unlawful activity. United States v. Campbell, 977 F.2d 854, 857
(4th Cir. 1992).
Gormley's money laundering conviction is based on the September
20, 1995, transfer of $400,000 from Edwards' escrow account to Bol-
lin's trust account in the Turks and Caicos Islands. Gormley drafted
a letter dated September 19, 1995, from Damron to Edwards directing
Edwards to release the $400,000.1111 Gormley disputes only whether the
Government proved that he knew the funds were the proceeds of
fraud. Gormley argues that the evidence failed to establish that Gorm-
ley knew the Toumas had put up the $400,000, but instead established
that Gormley had been informed by Damron that the money came
from Damron's profits from trading in Gold Eagle coins. There was
substantial evidence, however, from which the jury could reasonably
infer that Gormley knew the $400,000 was the proceeds of fraud.
In July 1995, Damron discussed with Gormley the Exodus Program
documents, foreign bank debenture trading programs, and foreign
grantor trusts. Damron testified that he wanted a foreign grantor trust
because the money he planned to place in the Exodus Program would
be his clients' money: "If I participated in the program, it would be
with money from my clients. So I felt that I should have control over
it, I should have my own foreign grantor trust." Damron's client with
regard to the $400,000 was Dr. Touma. To protect Dr. Touma's inter-
est, Damron asked Gormley about designating beneficiaries of his for-
eign grantor trust:
Q: When did you have your discussion with Mr. Gormley
about foreign grantor -- beneficiaries of foreign
grantor trusts?
_________________________________________________________________
11 Gormley suggests that the evidence showed that Damron drafted the
release letter, not Gormley. We disagree. Damron testified on direct
examination that Gormley drafted the release letter, which Damron then
signed and sent to Edwards. Damron did not repudiate his testimony that
Gormley drafted the letter, but merely confirmed on cross examination
that he instructed Edwards in a letter that the $400,000 was to be trans-
ferred.
16
A: That was -- would be just probably late July. It was
before Dr. Touma -- or maybe shortly thereafter--
when Dr. Touma was getting ready to make that large
investment, he was concerned that if I was okay, it was
okay, but what if something happened to me. He
wanted some protection for his money. And so I asked
Mr. Gormley what could we do.
Q: What did Mr. Gormley tell you?
A: Well, that's what we did. We set up that successor ben-
eficiary thing so that if something happened to me, it
was all spelled out who would get what percentage of
the money.
This testimony supports an inference that Gormley knew Dr. Touma
had contributed to the $400,000.
Further, Gormley confirmed in a letter dated July 24, 1995, that Dr.
Touma was set up as the beneficiary of the trust. In the same letter,
Gormley mentioned that "as to the investment matter we discussed,"
the funds would be held in Gormley's escrow account pending receipt
of documents and a bank guarantee. Damron testified that the "invest-
ment matter" was the placement of $400,000 into the Exodus Pro-
gram. Gormley was aware that Damron had deposited the $400,000
with an escrow agent, Edwards, in preparation for the investment. At
this point, Gormley refused to give Damron the "green light" because
no bank guarantee had yet been provided.
A short time later, in August 1995, Gormley met with Agent
Caruso of the FBI, who explained to Gormley the fraudulent nature
of prime bank debenture trading programs. By this point, if not ear-
lier, Gormley knew these debenture trading programs were fraudu-
lent. Nonetheless, on September 13, 1995, in furtherance of a program
he knew was a scam, Gormley sent to Bollin the fax from Oles and
Holcombe containing the wire coordinates to Oles' offshore Exodus
account, thereby participating in wire fraud.
Gormley then prepared and faxed a profit sharing agreement
between Damron and Bollin, dated September 18, 1995. The agree-
17
ment noted that "Damron has introduced Bollin [sic] certain individu-
als who have placed U.S. $400,000 in Escrow for investment." This
agreement contemplated Damron and Bollin splitting profits of over
$1.8 million per week. Gormley then prepared for Damron the Sep-
tember 19, 1995, letter instructing Edwards to transfer the $400,000
to Bollin's foreign grantor trust. The funds were transferred the next
day.
There is sufficient evidence to establish that Gormley knew the
Exodus Program was a fraud, knew the $400,000 was being invested
in this fraud, and knew he was facilitating the transfer of the funds
to the perpetrators of this fraud. Furthermore, based on his knowledge
that Dr. Touma was the beneficiary of Damron's foreign grantor trust,
the reference to "certain investors" in the Bollin/Damron profit shar-
ing agreement, and Gormley's connections with and knowledge of the
relationships among Oles, Bollin, Damron, their offshore accounts,
and the Exodus Program, the jury could reasonably infer that, at the
time Gormley participated in the transfer of the $400,000 to Bollin's
offshore account, Gormley knew the money was the proceeds of fraud.12 12
We are satisfied that there was sufficient evidence to support Gorm-
ley's money laundering conviction.
Gormley raises the same arguments as to the sufficiency of the evi-
dence on Count Two, the money laundering conspiracy charge. For
the same reasons, we conclude that there was sufficient evidence to
support the jury's verdict.
D. Sufficiency of the Evidence on Count Thirteen, False
Declarations before the Court
Gormley was convicted of making false declarations before the
court under 18 U.S.C. § 1623(a), based on two allegedly false state-
ments that he made at an October 23, 1997, contempt hearing. In
1997, after Damron was placed under investigation, a financial
_________________________________________________________________
12 Thus, it is irrelevant whether Gormley, as an attorney, had a duty to
inquire as to the source of his client's funds because he knew the
$400,000 was the proceeds of fraud. Indeed, Gormley knew the $400,000
was the proceeds of a fraudulent scheme when he participated in wire
fraud in furtherance of that scheme on September 13, 1995.
18
restraining order was issued against Damron. While that restraining
order was in effect, approximately $400,000 was repaid to certain
investors. When questioned about the $400,000 in repayments, Gorm-
ley testified as follows:
Q: And what is your understanding as to those disburse-
ments and how they occurred?
A: And I believe that those are the bank drafts that these
individuals received. And from everything I know, that
money was not Mr. Damron's money, he didn't own it,
he didn't control it.
And I don't know what this word "expectancy interest"
is in the Court's order, exactly what that means, but I
don't believe that Mr. Damron had any such interest in
that money.
Q: Did Roger A. Damron direct or coordinate or orches-
trate the disbursement of these funds to these individual
investors?
A: To my knowledge he did not.
The indictment alleged that at the time of his testimony, Gormley
knew Damron had an interest in the $400,000 and knew Damron had
coordinated, orchestrated and directed the repayments. Gormley con-
tends that his perjury conviction should be reversed because (1) there
was insufficient evidence to show that Gormley knew of Damron's
role in the repayment; (2) the examiner's questions before the grand
jury were fundamentally ambiguous and were insufficient as a matter
of law to support a perjury conviction; and (3) his responses were lit-
erally true.
The evidence was sufficient to show that, at the time of his testi-
mony, Gormley knew of Damron's role in returning the money to the
investors. Before any money was sent to the investors, Damron and
Gormley discussed who should be paid. Damron prepared a list of the
amounts due to the investors and sent the list to Gormley. The persons
19
on that list were the persons who were eventually paid. Further, dis-
covered in Gormley's office was a copy of a handwritten fax from
Damron to Paul Dempsey in the Turks and Caicos Islands, directing
the repayment of money to the investors. The fax was dated August
27, 1997, and a notation indicated that it was faxed "before 10:30
am." Damron testified that it was his practice to make a notation in
the upper right corner of a document when he faxed it. Moreover,
based on the presence of the notation on faxes that Gormley received
from Damron, the jury could reasonably infer that Gormley was fully
aware of Damron's practice. Although Damron testified that Gormley
refused to forward to Dempsey the list of investors to be repaid and
advised Damron not to do it himself, there is sufficient evidence to
support the conclusion that, at the time of his October 23, 1997, testi-
mony, Gormley knew Damron had directed Dempsey to send the
money to the investors.
Gormley argues that the examiner's question whether Damron "di-
rected, coordinated, or orchestrated" the disbursement of funds to the
investors was fundamentally unclear and impossible to answer, and
therefore an improper basis for a perjury charge. Gormley argues that
the question asked of him is like the question found insufficient to
support a perjury conviction in United States v. Rendon-Marquez, 79
F. Supp. 2d 1361 (N.D. Ga. 1999), aff'd mem., 228 F.3d 416 (11th
Cir. 2000). In Rendon-Marquez, the defendant was asked on an INS
form, "Have you knowingly committed any crime or offense, for
which you have not been arrested; or have you been arrested, cited,
charged, indicted, convicted, fined, or imprisoned for breaking or vio-
lating any law or ordinance, including traffic violations?" The form
provided for only a "yes" or a "no" response. The defendant answered
in the negative, but had once been arrested. The district court granted
a judgment of acquittal because it found the question to be a confus-
ing compound question that asked two separate and distinct questions,
but provided for only a yes/no response. Id. at 1363. The result was
that the defendant would give a partially false answer no matter how
he responded, making the defendant's response to the question an
improper basis for a perjury conviction. Id.
"[P]recise questioning is imperative as a predicate for the offense
of perjury." Bronston v. United States, 409 U.S. 352, 362 (1973).
Unlike in Rendon-Marquez, Gormley was asked a single question, to
20
which he gave a fully false response. The question asked of Gormley
presented three possibilities, all of which--direct, coordinate, and
orchestrate--are similar in meaning. All three refer to some conduct
on Damron's part intended to bring about the repayment of investors.
The evidence showed that Damron engaged in such conduct and that
Gormley knew Damron engaged in such conduct. We find the ques-
tion to be perfectly intelligible.13
13 The question asked of Gormley was
not ambiguous or unanswerable, and the matter was properly submit-
ted to the jury. See United States v. Heater, 63 F.3d 311 (4th Cir.
1995) (affirming a perjury conviction based on the defendant's false
response to the question whether he had ever "bought or sold mari-
juana" because the question did not contain any fundamental ambigu-
ity that would have prevented the jury from considering the question).
Gormley next argues that his response to the second question was
literally true because it was Oles, not Damron, who provided the
funds to be used for repayment. "A literally true answer, even though
unresponsive or `shrewdly calculated to evade,' cannot form the pred-
icate for a perjury conviction." United States v. Sainz, 772 F.2d 559,
563 (9th Cir. 1985) (quoting United States v. Cowley, 720 F.2d 1037,
1042 (9th Cir. 1983)). However, "`an answer that is responsive and
false on its face does not come within [a] literal truth analysis simply
because the defendant can postulate unstated premises of the question
that would make his answer literally true.'" United States v. Ful-
bright, 804 F.2d 847, 851 (5th Cir. 1986) (quoting United States v.
Cuesta, 597 F.2d 903, 920 (5th Cir. 1979)). Even though Oles pro-
vided the $400,000, there was sufficient evidence to establish that
Damron was the one who instructed Dempsey to repay certain inves-
tors and how much to pay them. Gormley knew of Damron's role in
the repayment but testified to the contrary.14 14 Gormley's perjury con-
viction is affirmed.
_________________________________________________________________
13 Moreover, the question appears to have been perfectly intelligible to
Gormley. As his response to the first question indicates, when Gormley
did not understand a question or a term, he communicated his lack of
understanding.
14 We need not reach Gormley's argument that his response to the first
question was literally true because his false response to the second ques-
tion was sufficient to support his conviction. The jury was entitled to find
21
III. TRIAL ERRORS
Bollin and Tietjen challenge several of the district court's evidenti-
ary rulings. Decisions regarding the admissibility of evidence are
committed to the sound discretion of the trial court and will not be
reversed absent an abuse of discretion. United States v. Bostian, 59
F.3d 474, 480 (4th Cir. 1995). Where a defendant fails to object to an
asserted error at trial, the "plain error" standard applies. United States
v. Olano, 507 U.S. 725, 731-32 (1993); Fed. R. Crim. P. 52(b).
A. Attorney-Client Privilege
Bollin contends that Robert Edwards' testimony was admitted in
violation of Bollin's attorney-client privilege. The district court's
decision whether certain evidence is subject to the privilege is a
mixed question of law and fact subject to de novo review. In re Grand
Jury Proceedings, 33 F.3d 342, 353 (4th Cir. 1994). The party claim-
ing the privilege bears the burden of demonstrating that: "the
attorney-client privilege applies; (2) the communications were pro-
tected by the privilege; and (3) the privilege was not waived." United
States v. Aramony, 88 F.3d 1369, 1389 (4th Cir. 1996). Assuming that
an attorney-client relationship existed between Bollin and Edwards,15 15
Bollin does not identify any particular testimony that allegedly was
privileged, but instead argues that Edwards should not have been
allowed to testify at all. It is well-established, however, that the
_________________________________________________________________
Gormley guilty for either response because the United States charged in
the conjunctive, charging that Gormley falsely testified about whether
Damron had an interest in the $400,000 and whether he had, in fact,
coordinated, orchestrated, and directed the repayment of investors. See
Turner v. United States, 396 U.S. 398, 420 (1970) (reaffirming the "gen-
eral rule" that where an indictment charges several acts in the conjunc-
tive, a guilty verdict stands if the evidence is sufficient with respect to
any one of them); United States v. Sarihifard, 155 F.3d 301, 310 (4th Cir.
1998) (applying the Turner rule to a perjury charge).
15 The record shows that Bollin contacted Edwards to act as an escrow
agent and not for the purpose of seeking legal advice. The district court
assumed, without finding, that an attorney-client relationship existed
between Bollin and Edwards.
22
attorney-client privilege protects only confidential communications
made for the purpose of seeking legal advice. E.g., United States v.
Tedder, 801 F.2d 1437, 1441-42 (4th Cir. 1986). The privilege does
not prevent an attorney from testifying as to non-confidential matters.
Moreover, we agree with the district court that Bollin waived any
privilege that may have attached when he testified to the grand jury
regarding the same transactions and communications about which
Edwards testified. See United States v. Plache, 913 F.2d 1375, 1380
(9th Cir. 1990) (finding a waiver of the attorney-client privilege
where the defendant testified before the grand jury regarding his con-
versations with counsel). The fact that Bollin was testifying before the
grand jury pursuant to a subpoena does not preclude effective waiver.
See id. The district court did not err in allowing Edwards to testify.
B. Exclusion of Evidence of Oles' Flight
Bollin further contends that the district court abused its discretion
by excluding evidence that co-defendant Stephen Oles absconded.
Bollin argues that the evidence of Oles' flight would have shown Oles
to be a man who manipulated Bollin into participating in the events
in this case, and would have been highly probative of Bollin's intent.
Although a co-defendant's flight may be relevant to show the guilt of
that defendant, see United States v. Porter, 821 F.2d 968 (4th Cir.
1987), it does not tend to show that another defendant is innocent, at
least not where, as here, there can be more than one guilty party. See
United States v. Ortland, 109 F.3d 539, 545 (9th Cir. 1997). Further,
any probative value of Oles' flight was substantially outweighed by
the danger of confusing the issues where Oles was not being tried
with the rest of the defendants. See Fed. R. Evid. 403. The district
court did not abuse its discretion.
C. Admission of Bollin's Grand Jury Testimony
Bollin contends that the district court abused its discretion when it
allowed the Government to present a redacted version of his grand
jury testimony but refused to allow him to present the omitted por-
tions under the rule of completeness or the former testimony excep-
tion to the hearsay rule. We find no abuse of discretion.
23
1. Former Testimony Exception
Federal Rule of Evidence 804(b)(1) provides an exception to the
hearsay rule for the former testimony of a declarant where the declar-
ant is unavailable as a witness.16
16 A declarant is "unavailable" when
the declarant "is exempted by ruling of the court on the ground of
privilege from testifying concerning the subject matter of the declar-
ant's statement." Fed. R. Evid. 804(a)(1). Bollin contends that he was
"unavailable" because he had invoked his Fifth Amendment privilege
against self-incrimination.
A criminal defendant who invokes his Fifth Amendment privilege
makes himself unavailable to any other party. United States v. Bum-
pass, 60 F.3d 1099, 1102 (4th Cir. 1995). Rule 804(a) provides, how-
ever, that "[a] declarant is not unavailable as a witness if exemption,
refusal, claim of lack of memory, inability, or absence is due to the
procurement or wrongdoing of the proponent of a statement for the
purpose of preventing the witness from attending or testifying." Fed.
R. Evid. 804(a). By invoking his Fifth Amendment privilege, Bollin
made himself unavailable for the purpose of preventing his testimony,
and he therefore cannot invoke the exception in Rule 804(b)(1).
Accord United States v. Peterson, 100 F.3d 7, 13 (2d Cir. 1996)
(holding that a defendant who exercises his privilege not to testify at
a second trial of his case is not entitled to introduce the testimony he
gave at the first trial); United States v. Kimball, 15 F.3d 54, 55-56
(5th Cir. 1994) (same).
2. Rule of Completeness
The "rule of completeness" is found in Federal Rule of Evidence
106, which provides:
When a writing or recorded statement or part thereof is
introduced by a party, an adverse party may require the
_________________________________________________________________
16 Bollin also argues that his grand jury statements are not hearsay. His
statements to the grand jury were made out of court, and Bollin would
introduce them to prove the truth of the matter asserted. They are hear-
say. See Fed. R. Evid. 801(c). The statements were admissible by the
Government as admissions under Rule 801(d)(2).
24
introduction at that time of any other part or any other writ-
ing or recorded statement which ought in fairness to be con-
sidered contemporaneously with it.
Fed. R. Evid. 106. The purpose of the rule is "to prevent a party from
misleading the jury by allowing into the record relevant portions of
the excluded testimony which clarify or explain the part already
received." United States v. Wilkerson, 84 F.3d 692, 696 (4th Cir.
1996). The portions of the excluded testimony thus must be relevant
to an issue in the case, and the court need only admit the portions that
are necessary to clarify or explain the portion of the testimony already
admitted. Id.
Bollin identifies several portions of his grand jury testimony that
he contends should have been admitted under Rule 106. We have
reviewed Bollin's grand jury testimony as admitted and his unredac-
ted grand jury testimony. Like the district court, we conclude that the
omitted testimony was not necessary to avoid misleading the jury or
otherwise place the admitted testimony in context. The fact that some
of the omitted testimony arguably was exculpatory does not, without
more, make it admissible under the rule of completeness.
D. Admission of Tietjen's Grand Jury Testimony
The Government introduced against Tietjen a redacted version of
his grand jury testimony. Because Tietjen did not raise at trial his
objections to the admission of his grand jury testimony, the plain error
standard of review applies. See Olano, 507 U.S. at 731-32.
Tietjen first argues that his grand jury testimony was taken in vio-
lation of his Fifth Amendment right against self-incrimination, and
therefore should not have been admitted. His claim is foreclosed by
United States v. Washington, 431 U.S. 181, 188 (1977). Like in
Washington, after being sworn, Tietjen was explicitly advised that he
had the right not to incriminate himself and that if any questions
tended to incriminate him, he had the right under the Fifth Amend-
ment not to answer the question. He was advised that anything he said
could be used against him by the grand jury or in subsequent legal
proceedings, and was advised of his right to counsel. The Government
correctly and completely answered Tietjen's later questions regarding
25
his Fifth Amendment privilege. These warnings eliminated any possi-
ble compulsion to self-incrimination. See id. at 188. Whether Tietjen
was a target of the grand jury investigation is irrelevant under Wash-
ington. See id. at 189; United States v. Goodwin, 57 F.3d 815, 818-19
(9th Cir. 1995).
Tietjen also maintains that his Sixth Amendment right to counsel
had attached at the time of his grand jury testimony. But at the time
Tietjen testified to the grand jury, no adversary judicial proceedings
against him had yet been initiated. See United States v. Gouveia, 467
U.S. 180, 187 (1984) ("[The Sixth Amendment] right to counsel
attaches only at or after the initiation of adversary judicial proceed-
ings against the defendant."). The Government's warnings to Teitjen
regarding his Fifth Amendment rights do not show that a prosecution
had commenced. Indeed, no indictment was returned against Tietjen
until over one year after he testified to the grand jury. His Sixth
Amendment right to counsel thus had not yet attached.
Tietjen further contends that his redacted grand jury testimony,
read at trial, was not sufficiently complete under the "rule of com-
pleteness." Tietjen's grand jury testimony was redacted to remove all
references to co-defendant Stanie Benz in order to comply with the
rule in Bruton v. United States, 391 U.S. 123 (1968). Benz entered a
plea on the day before trial and then testified against Tietjen. The
redacted version of Tietjen's testimony nonetheless was introduced.
However, the omitted portions of Tietjen's testimony were not neces-
sary to avoid misleading the jury or to clarify or explain any portion
of the admitted testimony, and the rule of completeness does not
require the court to admit Tietjen's complete grand jury testimony
solely because some portions might be exculpatory. See Wilkerson, 84
F.3d at 696. Moreover, Tietjen suffered no prejudice. Stanie Benz tes-
tified at trial, and Tietjen had full opportunity to cross examine her.
The district court did not err.
IV. SENTENCING
The district court's factual findings underlying sentencing enhance-
ments are reviewed for clear error. The district court's legal interpre-
tations are reviewed de novo. United States v. Akinkoye, 185 F.3d
192, 201 (4th Cir. 1999), cert. denied, 528 U.S. 1177 (2000).
26
A. Two-Level Enhancement for Abuse of a Position of Trust
Both Bollin and Tietjen appeal the district court's application of a
two-level enhancement under U.S.S.G. § 3B1.3 for abuse of a posi-
tion of trust. Under § 3B1.3, a defendant's sentence is increased by
two levels "if [the district court] determines that the defendant abused
a position of trust and that abuse significantly contributed to the com-
mission or concealment of the crime." Id. at 203; U.S.S.G. § 3B1.3.
"Whether a defendant occupied a position of trust warranting a two-
level enhancement under U.S.S.G. § 3B1.3 is a factual determination
reviewable for clear error." United States v. Glymph, 96 F.3d 722, 727
(4th Cir. 1996).
Whether a defendant held a position of trust must be "approached
from the perspective of the victim." United States v. Gordon, 61 F.3d
263, 269 (4th Cir. 1995). Thus, the § 3B1.3 adjustment may be
applied "in a case in which the defendant provides sufficient indicia
to the victim that the defendant legitimately holds a position of pri-
vate or public trust when, in fact, the defendant does not." U.S.S.G.
§ 3B1.3, cmt. n.2; see also United States v. Queen, 4 F.3d 925, 929
(10th Cir. 1993) (holding that the § 3B1.3 enhancement may apply to
imposters). In the case of an imposter, it is not merely the defendant's
misrepresentation that justifies the § 3B1.3 enhancement. In every
case of fraud, the defendant will have created confidence and trust in
the victim. But fraud alone does not justify the enhancement. We
must "carefully distinguish between those arms-length commercial
relationships where trust is created by the defendant's personality or
the victim's credulity, and relationships in which the victim's trust is
based on the defendant's position in the transaction." United States v.
Koehn, 74 F.3d 199, 201 (10th Cir. 1996). Section 3B1.3 penalizes
defendants who take advantage of a position that provides them with
the "freedom to commit a `difficult-to-detect wrong.'" United States
v. Moore, 29 F.3d 175, 179 (4th Cir. 1994) (quoting United States v.
Hill, 915 F.2d 502, 506 (9th Cir. 1990)).
Tietjen argues that he does not qualify for the § 3B1.3 enhance-
ment because he did not have a trust relationship with the investors
and because the enhancement may not be applied by imputing to him
a co-conspirator's abuse of a position of trust. The district court
applied the enhancement based on Tietjen's own abuse of a position
27
of trust; the court did not impute to him Benz's alleged abuse of a
position of trust. See Moore, 29 F.3d at 179 (holding that one co-
conspirator's abuse of a position of trust is not attributable to another
co-conspirator). The district court found that Tietjen falsely held him-
self out as having a high level of skill and experience in debentures
trading. Although it was Benz who actually solicited the investors,
Tietjen caused the impression that he was a legitimate, experienced
debentures trader to be passed on to the ultimate investors to induce
them to invest. See Queen, 4 F.3d at 930 (affirming an enhancement
under § 3B1.3 where the defendant caused his employees to hold him
out as a legitimate investment advisor/broker). In entrusting Tietjen
with their money, the investors provided Tietjen with the discretion
to invest on their behalf and expected Tietjen to make trades in their
best interest, which he did not do. See United States v. Davuluri, 239
F.3d 902, 909 (7th Cir. 2001) (noting that what distinguishes situa-
tions in which § 3B1.3 should apply is "whether the defendant has
broad discretion to act on behalf of the victim and the victim believes
the defendant will act in the victim's best interest"). The district court
did not clearly err in finding that Tietjen had abused a position of trust
justifying an enhancement under § 3B1.3.
Bollin also argues that the district court erred in applying the
§ 3B1.3 enhancement to him because he did not actually possess any
specialized knowledge and did not actually assume a position of trust
vis-a-vis the victims. The district court found that although Bollin
may have lacked the specialized knowledge of an actual investment
broker, Bollin represented that he knew about debentures trading pro-
grams, knew their track record, and had experience investing in them.
Bollin held himself out as experienced in debentures trading and
caused that impression to be extended to the ultimate investors. Bollin
represented that he was the "broker" in the investment program, and
the investors' funds were entrusted to him when they were transferred
to his offshore trust account. Bollin demonstrated that, as far as the
investors were concerned, he was vested with discretionary authority
over their money when he falsely claimed to have "frozen" the funds
in order to protect them. Bollin used his position as the "broker" in
the transaction to lull the investors into delaying going to the authori-
ties or suing to recoup their losses. Although Bollin also falsely repre-
sented that he was a co-investor in the debentures trading program,
we cannot say the district court clearly erred in finding that Bollin
28
occupied and abused a position of trust justifying the § 3B1.3
enhancement.
B. Two-Level Enhancement for Obstruction of Justice
Tietjen contends that the district court erred by applying a two-
level enhancement under U.S.S.G. § 3C1.1 for obstruction of justice.
Because Tietjen failed to raise his objection at sentencing, we review
for plain error. See United States v. Kinter, 235 F.3d 192, 199 (4th
Cir. 2000), cert. denied, 121 S. Ct. 1393 (2001). The district court did
not err. Tietjen was convicted of conspiracy to obstruct justice under
18 U.S.C. § 1503. The applicable Guideline for obstruction of justice
is § 2J1.2. Note 3 of the § 2J1.2 Commentary provides: "In the event
the defendant is convicted under this section as well as for the under-
lying offense (i.e., the offense that is the object of the obstruction),
see the Commentary to Chapter Three, Part C (Obstruction), and to
§ 3D1.2(c) (Groups of Closely Related Conduct)." U.S.S.G. § 2J1.2,
cmt. n.3. Tietjen argues that Note 7 of § 3C1.1 governs his sentence
and precludes the enhancement. We disagree. Because Tietjen was
also convicted of conspiracy to commit fraud and money laundering,
the offenses with respect to which the obstruction conduct occurred,
Note 8 governs. Note 8 provides:
If the defendant is convicted both of an obstruction offense
. . . and an underlying offense (the offense with respect to
which the obstruction conduct occurred), the count for the
obstruction offense will be grouped with the count for the
underlying offense under subsection (c) of § 3D1.2 . . . . The
offense level for that group of closely related counts will be
the offense level for the underlying offense increased by the
2-level adjustment specified by this section. . . .
U.S.S.G. § 3C1.1, cmt. n.8. The enhancement for obstruction of jus-
tice was proper.
C. Relevant Conduct
Tietjen contends that the district court erred by using $2.4 million
as the relevant conduct amount in the Guidelines calculations for
29
Counts One and Two. Tietjen objects to the inclusion of $1 million
that he never actually received because the funds were returned to
Benz by Dean Witter, who refused to complete the transfer.17 17 Tietjen,
however, expected to receive the $1 million from Benz. He did not
actually receive the funds only because the bank refused to complete
the transfer. The $1 million thus was properly attributed to Tietjen.
Further, there is no error in the district court's calculation under
Apprendi v. New Jersey, 530 U.S. 466 (2000), because Tietjen's
sentence--60 months on Count One and 135 months on Count Two
to run concurrently--did not exceed the statutory maximums. See 18
U.S.C. § 371 (maximum 5 years); 18 U.S.C. § 1956(a), (h) (maximum
20 years); Kinter, 235 F.3d at 199-200 (recognizing that the Apprendi
holding is limited to factual determinations that increase the penalty
for a crime beyond the prescribed statutory maximum, and holding
that the prescribed statutory maximum is found by looking to the lan-
guage of the statute criminalizing the offense). The district court did
not err.
D. $1.2 Million Forfeiture Judgment
Gormley contends that his $1.2 million forfeiture judgment violates
the Excessive Fines Clause of the Eighth Amendment to the United
States Constitution. This court considers de novo whether a forfeiture
is a constitutionally excessive fine. United States v. Bajakajian, 524
U.S. 321, 336-37 (1998). The burden is on the party challenging the
constitutionality of the forfeiture to demonstrate its excessiveness.
United States v. Ahmad, 213 F.3d 805, 813 (4th Cir.), cert. denied,
121 S. Ct. 573 (2000). "[A] punitive forfeiture violates the Excessive
Fines Clause if it is grossly disproportional to the gravity of a defen-
dant's offense." Bajakajian, 524 U.S. at 334. To determine the pro-
portionality of a forfeiture, a court should consider "the nature and
extent of the criminal activity, its relation to other crimes, its penal-
_________________________________________________________________
17 Tietjen also objects to the inclusion of a $250,000 sum that was also
returned to Benz by the bank. Because the threshold for the relevant con-
duct is $2 million, see U.S.S.G. § 2S1.1(b)(2)(G), and the district court
attributed to Tietjen $2.4 million, only the $1 million sum could affect
Tietjen's sentence. We therefore do not reach his challenge to the inclu-
sion of the $250,000.
30
ties, and the harm it caused." Ahmad, 213 F.3d at 813; see also
Bajakajian, 524 U.S. at 337-40.
Gormley argues that his $1.2 million forfeiture judgment is exces-
sive under United States v. Van Brocklin, 115 F.3d 587 (8th Cir.
1997), in which the Eighth Circuit held that a forfeiture judgment of
over $1.3 million against a defendant who played a secondary role in
the fraudulent scheme violated the Excessive Fines Clause. Id. at 601-
02. Gormley argues that his forfeiture judgment is excessive in light
of his minor role in the money laundering activities, the small per-
sonal benefit that he received, approximately $30,000 in legal fees,
and his lesser culpability compared to that of the other defendants.
In United States v. Bajakajian, the defendant pleaded guilty to fail-
ure to report exported currency in the amount of $357,144. 524 U.S.
at 337. Although 18 U.S.C. § 982(a)(1) required forfeiture of the
entire amount involved in the offense, the Supreme Court concluded
that forfeiture of the entire $357,144 violated the Excessive Fines
Clause because the amount of the forfeiture was grossly dispropor-
tional to the gravity of the defendant's offense. Id. The defendant's
crime was "solely a reporting offense," and his violation was "unre-
lated to any other unlawful activities." Id. at 337-38. Although the
maximum statutory sentence was five years and/or a $250,000 fine,
the maximum sentence that could have been imposed on the defen-
dant under the Sentencing Guidelines was six months and a $5,000
maximum fine, thus indicating a minimal level of culpability. Id. at
338. Moreover, the defendant caused only minimal harm, merely
depriving the government of information, but causing no loss to the
public fisc. Id. The gravity of the defendant's offense thus was low,
while the amount of the forfeiture was very high. Id. at 339-40. The
forfeiture of the entire $357,144 therefore violated the Excessive
Fines Clause. Id. at 340.
After considering the factors set forth in Bajakajian, we are satis-
fied that Gormley's $1.2 million forfeiture judgment is not grossly
disproportional to the gravity of his offense.18
18 Unlike in Bajakajian,
_________________________________________________________________
18 Gormley's forfeiture was imposed under 18 U.S.C. § 982(a)(1), the
same provision at issue in Bajakajian, and as part of his criminal sen-
tence. Thus, there is no question that the forfeiture ordered against Gor-
mley is punitive and therefore subject to analysis under the Excessive
Fines Clause.
31
the nature of Gormley's criminal activity in this case was not merely
a reporting violation. Gormley was involved in money laundering,
and the money laundering arose out of and involved a continuing
securities fraud scheme that defrauded multiple investors out of mil-
lions of dollars. See Ahmad, 213 F.3d at 817 (finding the defendant's
reporting offense to be serious in part because it was part of a larger
customs fraud scheme). The forfeiture judgment was not based on a
single occurrence of money laundering. Instead, the defendants con-
ducted multiple transactions over a period of nearly two years. Fur-
ther, the statutory maximum for Gormley's offense was twenty years
and/or a $500,000 fine, thus indicating that Congress has found the
offense to be serious. See Bajakajian, 524 U.S. at 336 (noting that
"judgments about the appropriate punishment for an offense belong
in the first instance to the legislature"). Under the Sentencing Guide-
lines, Gormley faced a sentence of ninety-seven to 121 months and
a $500,000 fine. See U.S. Sent. Guidelines Manual, Sent. Table.
Although the district court found Gormley eligible for a reduction in
his sentence based on his "minor role" in the offense, the significant
penalties Gormley faced demonstrate the gravity of his offense.
Moreover, although Gormley received only about $30,000, he is
liable in a forfeiture judgment for the foreseeable criminal conduct of
his co-conspirators. See United States v. McHan, 101 F.3d 1027, 1043
(4th Cir. 1996); United States v. Hurley, 63 F.3d 1, 22 (1st Cir. 1995);
see also United States v. Gormley, 176 F.3d 476, 1999 WL 212008
(4th Cir. 1999) (per curiam) (unpublished) (affirming in Gormley's
interlocutory appeal the district court's ruling that Gormley may be
held jointly and severally liable for any forfeitable assets possessed
by his co-defendants). As the First Circuit has noted, "holding a
defendant liable for an amount of money foreseeably laundered by
himself and his own co-conspirators is quite rational based on a pro-
portionality analysis." Hurley, 63 F.3d at 23. In light of the extent of
the money laundering, its relationship to the securities fraud scheme,
and the harm caused, Gormley's $1.2 million forfeiture judgment is
not excessive.
E. $783,545 in Restitution
Gormley contends that the order to pay restitution in the amount of
$783,545 violates the Excessive Fines Clause based on the same argu-
32
ments that he raised regarding his forfeiture judgment. For the same
reasons that Gormley's forfeiture judgment is not excessive, we find
that the restitution order is not excessive.
Gormley also argues that remand is in order because the district
court failed to make factual findings that Gormley has, or may have,
an ability to pay restitution. Under the Victim and Witness Protection
Act (VWPA), the sentencing court must make specific factual find-
ings with respect to a defendant's financial resources, financial needs,
and earning abilities before ordering restitution. See 18 U.S.C.
§ 3663(a) (1994); United States v. Karam, 201 F.3d 320, 329 (4th Cir.
2000). In his reply brief, Gormley suggests for the first time that the
district court ordered restitution pursuant to the Mandatory Victims
Restitution Act of 1996 (MVRA). The MVRA amended the VWPA
by requiring sentencing courts to impose "full" restitution without
considering the defendant's economic circumstances. See 18 U.S.C.
§§ 3663A, 3664(f)(1)(A) (Supp. V 1999); Karam, 201 F.3d at 330.
Under the VWPA, the court must first consider the defendant's finan-
cial situation before determining the amount of restitution to be paid.
See 18 U.S.C. § 3664(a) (1994). Because Gormley's restitution was
based on criminal activity that occurred before the MVRA's effective
date, Gormley contends that application of the MVRA would violate
the Ex Post Facto Clause of the United States Constitution.19 19
_________________________________________________________________
19 The MVRA provides that it "shall, to the extent constitutionally per-
missible, be effective for sentencing proceedings in cases in which the
defendant is convicted on or after [April 24, 1996]." 18 U.S.C. § 2248,
statutory notes. The circuits are split on whether applying the MVRA to
criminal conduct committed before the MVRA's enactment violates the
Ex Post Facto Clause. Compare United States v. Edwards, 162 F.3d 87
(3d Cir. 1998) (holding that applying the MVRA to criminal conduct
committed before the MVRA's enactment violates the Ex Post Facto
Clause); United States v. Siegel, 153 F.3d 1256, 1259-61 (11th Cir. 1998)
(same); United States v. Williams, 128 F.3d 1239, 1241 (8th Cir. 1997)
(same); United States v. Baggett, 125 F.3d 1319, 1322 (9th Cir. 1997)
(same); United States v. Thompson, 113 F.3d 13, 15 n.1 (2d Cir. 1997)
(same); with United States v. Nichols, 169 F.3d 1255, 1279-80 (10th Cir.)
(holding that restitution is not criminal punishment for the purposes of
the Ex Post Facto Clause), cert. denied, 528 U.S. 934 (1999); United
States v. Newman, 144 F.3d 531, 538-40 (7th Cir. 1998) (same). This cir-
cuit has not yet decided the issue.
33
Assuming without deciding that the district court was required to
apply the VWPA, Gormley failed to object to the district court's
alleged failure to make the required findings at the time of sentencing.
Because Gormley failed to object at sentencing, we review only for
plain error.20
20 See Karam, 201 F.3d at 330. We conclude that Gormley
has failed to show that the alleged lack of factual findings prejudiced
his rights in any way.
A sentencing court "satisfies its duty [under the VWPA] to make
specific findings if it adopts a presentence report`that contains ade-
quate factual findings to allow effective appellate review of the fine
or restitution.'" Id. (quoting United States v. Castner, 50 F.3d 1267,
1277 (4th Cir. 1995)). The district court adopted the factual findings
of Gormley's presentence report (PSR). The PSR indicates that Gor-
mley is well-educated and industrious. Gormley obtained scholarships
for his preparatory and college education. He worked his way through
college and law school. Although Gormley likely will lose his law
license as a result of his conviction and will no longer have earning
potential as a lawyer, the loss of his license does not render him com-
pletely unable to earn a living, particularly because Gormley is well-
educated, is in good health, and has no history of substance abuse.
The PSR recommended that an installment plan be established so that
Gormley could pay a restitution obligation, which the district court
ordered. Moreover, Gormley does not explain how, or even whether,
the district court's restitution order would have been different had the
court made factual findings. See Castner, 50 F.3d at 1278 (noting that
under the plain error standard, appellants bear the burden of proof
with respect to prejudice of their rights); 18 U.S.C. § 3664(d) (1994)
("The burden of demonstrating the financial resources of the defen-
dant and the financial needs of the defendant and such defendant's
dependents shall be on the defendant."). The PSR contained sufficient
_________________________________________________________________
20 In order to correct plain error, four conditions must be met: (1) there
must be an error; (2) the error must be plain, meaning obvious or, at a
minimum, clear under current law; (3) the error must affect substantial
rights; and (4) the reviewing court must determine if the error "seriously
affects the fairness, integrity or public reputation of judicial proceed-
ings." United States v. Olano, 507 U.S. 725, 736 (1993); see also Cast-
ner, 50 F.3d at 1277. "Appellants bear the burden of proof with respect
to prejudice of their rights." Id. at 1278 (citing Olano, 507 U.S at 735).
34
facts to support the imposition of restitution. Gormley fails to demon-
strate a probability that the amount of restitution would have been dif-
ferent had the court made specific findings regarding his ability to
pay.
Gormley also argues that the district court violated the requirement
in United States v. Johnson, 48 F.3d 806, 808-09 (4th Cir. 1995), that
the district court retain authority over restitution orders. At sentenc-
ing, the district court ordered the full amount of restitution payable in
monthly installments. The district court also ordered that Gormley's
"ability to pay restitution will be reassessed by the probation officer
after his release from custody. And if a modification is in order, report
that modification to this Court for action." The court clearly stated
that the probation officer should report to the court, but that the court
would take any action. Thus, the court "retained both the right to
review the probation officer's findings and to exercise ultimate
authority regarding the payment of restitution." United States v.
Dawkins, 202 F.3d 711, 717 (4th Cir.), cert. denied, 529 U.S. 1121
(2000). The district court did not improperly delegate its authority.
Gormley's restitution order is affirmed.
F. Use of IRA Funds to Retain Appellate Counsel
Gormley's assets were subject to a restraining order that required
him to obtain court permission for expenditures beyond ordinary liv-
ing expenses. After he was convicted, Gormley asked the court for
permission to spend $80,000 from his individual retirement account
(IRA) to retain appellate counsel. Gormley argued that the funds in
his IRA were protected from levy under Georgia law. The district
court denied Gormley's request, holding that the funds in Gormley's
IRA were potentially subject to forfeiture as substitute assets under 18
U.S.C. § 982(b)(1), which incorporates the substitute asset provision
of 21 U.S.C. § 853(p), and that the protections for IRAs provided by
Georgia law would not extend to IRA funds subject to criminal forfei-
ture. Gormley appeals the district court's denial of his motion. The
district court's order is an order denying modification of an injunc-
tion, which we review for an abuse of discretion. See United States
v. Snepp, 897 F.2d 138, 141 (4th Cir. 1990). We conclude that the dis-
trict court did not abuse its discretion.
35
Gormley's forfeiture judgment was entered pursuant to 18 U.S.C.
§ 982(a)(1). Section 982(b)(1) incorporates the forfeiture provisions
of 21 U.S.C. § 853. Under § 853(p), where the property initially sub-
ject to forfeiture is unavailable, the government may forfeit substitute
assets:
If any of the property described in subsection (a) of this sec-
tion, as a result of any act or omission of the defendant--
(1) cannot be located upon the exercise of due dili-
gence;
(2) has been transferred or sold to, or deposited
with, a third party;
(3) has been placed beyond the jurisdiction of the
court;
(4) has been substantially diminished in value; or
(5) has been commingled with other property
which cannot be divided without difficulty;
the court shall order the forfeiture of any other property of
the defendant up to the value of any property described in
paragraphs (1) through (5).
21 U.S.C. § 853(p). In money laundering cases, § 982(b)(2) places a
narrow limitation on the forfeiture of substitute assets by protecting
against forfeiture a defendant who "acted merely as an intermediary
who handled but did not retain" the laundered funds, unless the defen-
dant conducted "three or more separate transactions involving a total
of $100,000 or more in any twelve month period." 18 U.S.C.
§ 982(b)(2).
The Government has not yet moved to amend Gormley's forfeiture
judgment to forfeit substitute assets. The order that Gormley appeals
is an order leaving in place a restraining order under 21 U.S.C.
§ 853(e), not an order forfeiting Gormley's IRA funds. Under
36
§ 853(e), the district court may issue a restraining order to preserve
the availability of the assets for forfeiture, "based on a finding of
probable cause to believe that the assets are forfeitable." United States
v. Monsanto, 491 U.S. 600, 615 (1989); 21 U.S.C.§ 853(e); see also
In re Billman, 915 F.2d 916, 919 (4th Cir. 1990). The probable cause
found by the grand jury satisfies the government's burden of proving
the allegations of the indictment. Id. This court has held that the pre-
trial restraint provision of the RICO forfeiture statute, 18 U.S.C.
§ 1963(d), permits the restraint of substitute assets under § 1963(m)
pending resolution of the defendant's case. Id. at 921. The restraint
and substitute assets provisions of § 853 are identical to those in the
RICO statute, and we see no reason to construe them differently. See
id. (noting that "[§ 853] and RICO forfeiture statutes should be simi-
larly construed"). Gormley's substitute assets thus were subject to
restraint to preserve their availability for forfeiture pending the out-
come of his case.
The jury found Gormley liable for forfeiture of $1.2 million, and
the indictment included a notice to seek substitute assets.21
21 There is
probable cause to believe that at least a significant portion of the $1.2
million in laundered funds is no longer available; the funds were
transferred to overseas accounts beyond the jurisdiction of the district
court and were used to repay investors and other individuals. As a
member of a conspiracy, Gormley is vicariously liable for the reason-
ably foreseeable conduct of his co-conspirators, both substantively
and at sentencing. See McHan, 101 F.3d at 1042-43; Hurley, 63 F.3d
at 23. His substitute assets thus may be subject to forfeiture in the
event the laundered funds are determined to be unavailable. See id.
(affirming the forfeiture of substitute assets where the defendants
were held vicariously liable for a $136 million forfeiture based on the
reasonably foreseeable money laundering activities of their co-
conspirators). Gormley argues that he was merely an intermediary and
is therefore entitled to the benefit of the safe harbor provided by
_________________________________________________________________
21 We reject Gormley's argument that his IRA is not subject to forfei-
ture because it was not included in the indictment's list of proposed sub-
stitute assets. The indictment did not purport to set out an exhaustive list
of substitute assets, but instead set out a list"including but not limited
to" certain identified assets. See United States v. Moffitt, Swerling &
Kemler, P.C., 83 F.3d 660, 664 (4th Cir. 1996).
37
§ 982(b)(2). Gormley did not raise this argument before the district
court, however, and we decline to address it at this time. We leave it
to the district court to address this argument and make the appropriate
findings if and when the Government moves for an order to forfeit
Gormley's substitute assets.
Gormley further argues, however, that the district court should
have released his IRA funds because Georgia law insulates all but
25% of the funds from forfeiture. Under Georgia Code § 18-4-22,
funds in an IRA are "exempt from the process of garnishment until
paid . . . . Such funds or benefits, when paid . . ., shall be exempt from
the process of garnishment only to the extent provided in Code Sec-
tion 18-4-20 for other disposable earnings, unless a greater exemption
is otherwise provided by law." Ga. Code Ann.§18-4-22. Section 18-
4-20 limits the garnishment to 25%. Ga. Code Ann.§ 18-4-20. We
have found no federal or state case applying § 18-4-22 to a criminal
forfeiture, and Gormley provides no such authority. As the district
court noted, the cases that address §§ 18-4-20 and 18-4-22 discuss
shielding an IRA from a creditor attempting to collect a debt. See,
e.g., Davis v. Davis, 288 S.E.2d 748 (Ga. Ct. App. 1982); Cooper v.
Atlanta Policemen's Pension Fund, 249 S.E.2d 684 (Ga. Ct. App.
1978). Gormley's forfeiture judgment is not merely a debt, but is part
of his criminal sentence. See 18 U.S.C.§ 982(a)(1) (instructing the
court to order forfeiture of property involved in the offense "in impos-
ing sentence" on a person convicted of a money laundering offense).
Moreover, under the Supremacy Clause of the United States Con-
stitution, Georgia law could not insulate Gormley's assets from forfei-
ture to the extent that federal law provides otherwise. A state law is
preempted to the extent that it conflicts with federal law. Silkwood v.
Kerr-McGee Corp., 464 U.S. 238, 248 (1984). In making the determi-
nation of whether state law conflicts with federal law, "the test to
apply is whether `it is impossible to comply with both state and fed-
eral law' or whether `the state law stands as an obstacle to the accom-
plishment of the full purposes and objectives' of the relevant federal
law." National Home Equity Mortgage Ass'n v. Face, 239 F.3d 633,
637 (4th Cir. 2001) (quoting Silkwood, 464 U.S. at 248).
As noted above, a forfeiture under 18 U.S.C. § 982 is ordered as
part of a defendant's sentence for a federal money laundering convic-
38
tion. See 18 U.S.C. § 982(a)(1). Federal sentencing laws supersede
state laws that purport to place limits on a federal defendant's crimi-
nal sentence when federal law provides otherwise. See United States
v. Daniels, 929 F.2d 128, 130 (4th Cir. 1991) (noting that under the
Supremacy Clause, state law could not prevent consideration of juve-
nile proceedings by a federal court in determining a sentence, when
federal law provides otherwise).
Further, under federal law, the funds in Gormley's IRA may be for-
feited in their entirety. Section 982(a)(1) states that "any property,
real or personal, involved in" the money laundering offense, without
limitation or qualification, is subject to forfeiture. 18 U.S.C.
§ 982(a)(1) (emphasis added). The statute makes no allowance for
property protected by state law. Similarly, the substitute assets provi-
sion provides that the court "shall order the forfeiture of any other
property up to the value of" the initially forfeited property, in the
event the original property is unavailable. 21 U.S.C. § 853(p) (empha-
sis added); 18 U.S.C. § 982(b)(1). Congress requires the forfeiture of
any other property as substitute assets and again makes no allowance
for protections offered under state law. Cf. United States v. Lot 5, 23
F.3d 359, 363 (11th Cir. 1994) (holding that because 21 U.S.C.
§ 881(a)(7) makes no exception for property protected by state law,
the Florida homestead exemption does not protect real property from
forfeiture under federal law). As this court has recognized, the substi-
tute assets provision in § 853(p) "was enacted to make the govern-
ment's forfeiture efforts more effective." United States v. Moffitt,
Swerling & Kemler, P.C., 83 F.3d 660, 669 (4th Cir. 1996). Because
Georgia law would insulate all but 25% of a defendant's IRA funds
from forfeiture while federal law provides for full forfeiture, Georgia
law conflicts with federal law and "stands as an obstacle to the
accomplishment of the full purposes and objectives" of the federal
money laundering forfeiture laws.
Although state law "has traditionally been relied upon to resolve
questions of property rights and interests arising under [the forfeiture
laws]," once a defendant's property interest has been identified, fed-
eral forfeiture law determines whether the property may be forfeited.
Id. at 670; accord United States v. Dicter, 198 F.3d 1284, 1290 (11th
Cir. 1999) (holding that 21 U.S.C. § 853(a) applies "irrespective of
any provision of state law"), cert. denied , 121 S. Ct. 77 (2000);
39
United States v. 18755 North Bay Road, 13 F.3d 1493, 1498 (11th
Cir. 1994) (holding that federal forfeiture law preempts the Florida
homestead exemption); United States v. Curtis, 965 F.2d 610, 616
(8th Cir. 1992) (holding that § 853(a) supersedes the Iowa homestead
exemption); see also United States v. Rodgers, 461 U.S. 677 (1983)
(holding that federal tax collection laws supersede state homestead
laws); United States v. Allen, 247 F.3d 741, 794 (8th Cir. 2001)
("[W]e think the legal principles are clear that state law determines
whether a property interest exists in the first instance, but federal law
determines whether and how that property may be attached."). Indeed,
to hold otherwise would virtually destroy the uniformity of applica-
tion of the money laundering forfeiture laws and would interfere with
Congress' intent. See Curtis, 965 F.2d at 616-17. We conclude that
federal forfeiture law supersedes Georgia's statutory protections for
IRAs. The district court did not abuse its discretion in declining to
modify its restraining order.
V. CONCLUSION
For the foregoing reasons, we affirm the convictions and sentences
of appellants Gormley, Bollin, and Tietjen. We also affirm the district
court's order denying Gormley permission to spend funds from his
IRA pending the outcome of his case.
AFFIRMED
40