United States v. Messer

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JOHN F. MESSER,
No. 97-4504
Defendant-Appellant,
TRANSOUTH FINANCIAL CORPORATION;
VIRGINIA EMPLOYMENT COMMISSION,
Parties in Interest.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Richard L. Williams, Senior District Judge.
(CR-97-35)
Submitted: February 3, 1998
Decided: March 16, 1998
Before WILKINS and HAMILTON, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
Thomas K. Maher, RUDOLF & MAHER, P.A., Chapel Hill, North
Carolina, for Appellant. Helen F. Fahey, United States Attorney,
James B. Comey, Assistant United States Attorney, Richmond, Vir-
ginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
John F. Messer was convicted on one count of conspiracy to struc-
ture currency transactions (18 U.S.C. § 371 (1994)); two counts of
structuring currency transactions (31 U.S.C. § 5324(a)(3) (1994));
two counts of money laundering (18 U.S.C. § 1956(a)(1)(B)(I)
(1994)); and one count of obstruction of justice (18 U.S.C. § 1505(1994)). He was sentenced to 100 months' imprisonment and two
years of supervised release and ordered to pay a $15,000 fine and a
$300 assessment. (JA at 644-50). On appeal, Messer raises various
errors with regard to the jury instructions, sufficiency of the evidence
and sentencing enhancement. Finding no error, we affirm.
Viewed in the light most favorable to the Government, see Glasser
v. United States, 315 U.S. 60, 80 (1942), the evidence at trial estab-
lished a series of transactions for the purpose of money laundering
and a series of bank deposits structured to avoid reporting obligations.
Messer owned West Broad Autohaus, a used car dealership specializ-
ing in high-end import automobiles in Richmond, Virginia. Many of
his customers were drug dealers who purchased cars priced in excess
of $10,000 with cash. Messer instructed his employees not to com-
plete IRS Form 8300.1
Many of the purchases involved "straw purchasers" or nominee
buyers. In these instances, the drug dealer would provide the cash for
the sale and have title placed in someone else's name. Messer pre-
pared sales documents disguising the total cash involved in the trans-
action by disclosing false cash rebates or trade-ins or a non-existent
financing agreement. Messer also instructed his employees to do like-
wise. There was evidence that Messer actually knew that many of his
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1 Companies must file Internal Revenue Service Form 8300 for cash
transactions $10,000 or greater.
2
customers were drug dealers. There was also evidence that Messer
chose to remain ignorant of that fact.
In one instance, Messer created a bogus sales record, reflecting a
$1500 credit for trading in a 1983 Volkswagen Rabbit, and forged a
customer's signature. In response to a Drug Enforcement Agency
administrative subpoena, Messer submitted the forged document. This
conduct was the basis for the obstruction of justice charge.
Although the transactions concerned large cash amounts, Messer
divided the cash proceeds into small groups and made a series of
deposits at different banks. Thus, the depositing banks were not com-
pelled to prepare a Currency Transaction Report ("CTR") as required
by 31 U.S.C. § 5313(a) (1994).
On appeal, Messer challenges the court's instructions regarding the
money laundering charges and the obstruction of justice charge. With
regard to the money laundering counts,2 the court instructed the jury:
that when knowledge of the existence of a particular fact is
an element of an offense, as it is in counts four and five,
such knowledge is established if the defendant was aware of
a high probability of its existence, unless you find he actu-
ally believed that it did not exist.
This instruction concerns the conscious avoidance of knowledge and
was derived from Model Penal Code § 2.02(7). See United States v.
Lanza, 790 F.2d 1015, 1021-22 (2d Cir. 1986). During jury delibera-
tions, the jury asked whether willful blindness constitutes knowing
that proceeds came from unlawful activity. Defense counsel asserted
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2 A defendant is guilty of money laundering when he "knowing that the
property involved in a financial transaction represents the proceeds of
some form of unlawful activity, conducts or attempts to conduct such a
financial transaction which in fact involves the proceeds of specified
unlawful activity . . . knowing that the transaction is designed in whole
or in part--to conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of specified unlawful activity."
18 U.S.C. § 1956(a)(1)(B)(i).
3
that the response should be in the negative because willful blindness
could never constitute knowledge. The court instructed the jury:
Willful blindness standing alone does not constitute know-
ing. Willful blindness in the face of awareness of a strong
probability that some of his client's funds used to purchase
cars were derived from their engaging in criminal activity,
then the element of knowledge is satisfied if you believe
beyond a reasonable doubt that willful blindness resulted
from a deliberate effort not to learn what otherwise may
have been obvious.
Messer makes the following four arguments with respect to the
instruction: (1) the original instruction shifted the burden of proof to
the defendant because it did not obligate the Government to show
actual knowledge; (2) the original instruction did not instruct the jury
that if the jury found a high probability of the existence of a fact, to
find actual knowledge, it must find Messer avoided learning the truth;
(3) the willful blindness instruction failed to state that willful blind-
ness could not be found if the jury found that Messer believed the
proceeds were from non-criminal sources; and (4) the evidence did
not support a willful blindness instruction.
To sustain a conviction for money laundering under 18 U.S.C.
§ 1956, the Government must prove beyond a reasonable doubt that
Messer had actual knowledge that the transactions to purchase cars
involved proceeds from illegal activities. See United States v.
Campbell, 977 F.2d 854, 857 (4th Cir. 1992). Generally, one cannot
be convicted based upon what one should have known. See id.; see
also United States v. Heaps, 39 F.3d 479, 484 (4th Cir. 1994) (same).
Actual knowledge can be found if the defendant was aware to a high
probability of the true nature of the transactions and deliberately
chose to avoid finding the truth for fear the true nature would be
revealed. Such "willful blindness" extends the reach of the actual
knowledge requirement. See Campbell, 977 F.2d at 857.
Jury instructions are not evaluated in isolated segments, but are
considered as a whole. See United States v. Cropp, 127 F.3d 354, 360
(4th Cir. 1997), cert. denied, ___ U.S. ___, 1998 WL 23851 (U.S.
Jan. 26, 1998) (No. 97-7265); United States v. Muse, 83 F.3d 672,
4
677 (4th Cir.), cert. denied, ___ U.S. ___, 65 U.S.L.W. 3264 (U.S.
Oct. 7, 1996) (No. 96-5589). We find, when considering the original
jury instruction and the instruction given in response to the jury ques-
tion as a whole, all the necessary elements of the conscious avoidance
instruction were communicated to the jury. There was"reference to
a purposeful avoidance of the truth, an awareness of high probability,
and the absence of the defendant's actual belief in the nonexistence
of the crucial fact." United States v. Aulet , 618 F.2d 182, 190 (2d Cir.
1980) (citations omitted). The elements excluded in the original
instruction were included in response to the jury's question. Similarly,
the element excluded in the response was included in the original
instruction. It is presumed the jurors considered the instructions as a
whole and followed those instructions. See Richardson v. Marsh, 481
U.S. 200, 211 (1987); United States v. Cooley , 1 F.3d 985, 997 (10th
Cir. 1993).
In addition, Messer never objected at trial on the basis that the orig-
inal instruction did not include an element on avoidance of the truth
or that the response did not include a direction that there was no will-
ful blindness if the jury found that Messer actually believed the pro-
ceeds came from legal transactions. Insofar as these errors are
concerned, our review is limited to plain error. Since there was no
error, it follows there was no plain error. See United States v. Cedelle,
89 F.3d 181, 185 (4th Cir. 1996); Fed. R. Crim. P. 52(b).
Messer also did not object to the willful blindness instruction on
the basis that it was unsupported by the evidence. Therefore, this
Court should review only for plain error. See Cedelle, 89 F.3d at 185.
The willful blindness instruction is permitted in those instances where
the defendant asserts a lack of knowledge and the evidence supports
an inference of deliberate ignorance. See United States v. Guay, 108
F.3d 545, 551 (4th Cir. 1997); United States v. Whittington, 26 F.3d
456, 463 (4th Cir. 1994). "[W]hen there is evidence of both actual
knowledge and deliberate ignorance . . . a willful blindness instruction
is appropriate." United States v. Schnabel , 939 F.2d 197, 203 (4th Cir.
1991).
Although there was substantial evidence that Messer had actual
knowledge concerning the source of the proceeds used for the pur-
chases, there was also evidence that he remained deliberately ignorant
5
of the truth. Accordingly, we find there was sufficient evidence to
support the willful blindness instruction.
During deliberations, the jury asked whether "submitting a docu-
ment prepared prior to [a] proceeding which represents a falsification
of an event or transaction [is] obstruction of justice." The court
instructed the jury that "at the time of preparation of documents, rep-
resenting a falsification is of no consequence. However, there are
other elements which must be found by you in order to conclude that
there was an obstruction of justice as charged in count six." Messer
contends that the false document was prepared for a reason unrelated
to obstructing an investigation.
Submitting false documents in response to an administrative sub-
poena with "intent to avoid, evade, prevent, or obstruct compliance,
in whole or in part, with any civil investigative demand" violates 18
U.S.C. § 1505. There is no requirement that the document be prepared
in anticipation of submission pursuant to an administrative subpoena.
Thus, we find the court's instruction proper.
A verdict must be sustained if there is substantial evidence, viewed
most favorably to the government, to support it. See Glasser, 315 U.S.
at 80. Circumstantial, as well as direct evidence, is considered and the
government is given the benefit of all reasonable inferences from the
facts proved to the facts sought to be established. See United States
v. Tresvant, 677 F.2d 1018, 1021 (4th Cir. 1982). The central question
is whether "viewing the evidence in the light most favorable to the
prosecution, any rational trier of fact could have found the essential
elements of the crime beyond a reasonable doubt." Jackson v.
Virginia, 443 U.S. 307, 319 (1979).
With regard to the money structuring convictions, Messer contends
the evidence was insufficient to show he: (1) acted with knowledge
that structuring a deposit to avoid a CTR is illegal; (2) conspired with
anyone to illegally structure bank deposits; and (3) deposited the pro-
ceeds from the sale of the car to Burton with the intent to structure
the deposits.
Financial institutions are required by law to file a CTR for a trans-
action or series of transactions involving currency in excess of
6
$10,000. See United States v. Beidler, 110 F.3d 1064 (4th Cir. 1997);
31 U.S.C. § 5313(a). It is unlawful for a depositor to structure the
deposits for the purposes of avoiding the reporting requirement. See
31 U.S.C. § 5324(a)(3). When the unlawful conduct occurred in this
case the Government was required to show that the defendant will-
fully violated the antistructuring law. See 31 U.S.C. § 5322(a)(b)
(1988). "To establish that a defendant ``willfully violated' the
antistructuring law, the Government must prove that the defendant
acted with knowledge that his conduct was unlawful."3 Ratzlaf v.
United States, 510 U.S. 135, 137 (1994).
In this instance, Messer knew that his deposits were proceeds from
other illegal activity. See United States v. Hurley, 63 F.3d 1, 16 (1st
Cir. 1995). Cash proceeds were often divided into groups of less than
$10,000 and deposited into the same bank account over a period of
days and or deposited at a different bank. He also deliberately
neglected to file IRS Form 8300, a reporting requirement similar to
a financial institution's obligation to file the CTR. Furthermore, he
prepared purchasing documents to reflect cash payments of less than
$10,000. In addition, he was informed of the bank's obligation to file
a CTR.
With regard to the proceeds from the transaction with Burton,
Messer contends that he merely deposited the proceeds in the order
in which he received the cash from Houston. However, there was suf-
ficient evidence to show that Houston was a co-conspirator in the
scheme to structure deposits. Houston joined in Messer's practice of
preparing false purchasing documents and financing agreements. A
reasonable inference of the Burton transaction was that Houston was
providing the proceeds in amounts less than $10,000 for the purpose
of structuring the deposits.
Thus, taking the view most favorable to the Government, we find
that Messer has failed to meet his burden in challenging the suffi-
ciency of the evidence. Although he provides plausible non criminal
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3 Congress has since amended § 5322 to omit the willfulness require-
ment with respect to violations of § 5324. See 31 U.S.C. § 5322(a)(b)
(1994).
7
inferences for his conduct, the jury believed the inferences argued by
the Government. See Beidler, 110 F.3d at 1067.
Messer also contends that the evidence was insufficient to support
one of his convictions for money laundering. In that instance, Messer
contends the drug dealer intended the purchases as gifts for two of his
couriers and there was no evidence of an intention to hide the true
nature of the proceeds. To the contrary, there was evidence that
Messer directed that a false financing agreement be prepared for the
specific purpose to disguise the total cash value of the transactions.
Furthermore, he did not file the IRS Form 8300. He also structured
the deposits of the proceeds. We find there was sufficient evidence to
sustain this conviction.
At sentencing, Messer's offense level was increased by three levels
after the court found the value of funds involved in the money laun-
dering efforts was more than $350,000 and less than $600,000. See
U.S. Sentencing Guidelines Manual § 2S1.1(b)(1) (1997). The court
heard evidence of a series of transactions not contained in the indict-
ment involving cash purchases, straw purchasers, and false purchas-
ing documents. Together with the transactions shown at trial, the total
value of funds involved was $416,000.
Messer contends there was insufficient evidence to support the
court's decision to enhance his sentence because there was no evi-
dence to show that he knew the funds were proceeds from illegal
activities. Factual findings at sentencing are reviewed for clear error.
See United States v. Blake, 81 F.3d 498, 503 (4th Cir. 1996). Such
findings can be shown by a preponderance of evidence. See United
States v. Morgan, 942 F.2d 243, 246 (4th Cir. 1991). In the instant
case, the court heard detailed evidence of numerous transactions
involving much of the same conduct proven at trial. Thus, we find the
court's decision was not clearly erroneous.
Accordingly, we affirm the judgment of the district court. We dis-
pense with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
will not aid in the decisional process.
AFFIRMED
8