Opinion
405CR59.
March 15, 2006
ORDER
This criminal RICO prosecution arises from an alleged prescription-drug-based fraud scheme advanced in varying degrees by eight individual and two corporate defendants. Doc. # 228. Defendants Martin Bradley Jr. and Martin Bradley III move for an F.R.Cr.P. 29 judgment of acquittal on all money laundering counts, arguing that the predicate "unlawful activities" of mail and wire fraud are not separate from the conduct charged in the money laundering counts. Doc. # 491.
The Court heard oral argument on the motion. As a starting point, the Court notes that to support an 18 U.S.C. § 1956 money laundering count, the government must show, inter alia, (1) a specified "unlawful activity" and (2) that the unlawful activity was completed before the money laundering transactions occurred. U.S. v. Christo, 129 F.3d 578, 580 (11th Cir. 1997); U.S. v. Nolan, 223 F.3d 1311, 1315 (11th Cir. 2000); U.S. v. Maali, 358 F.Supp.2d 1154, 1157 (M.D.Fla. 2005) (money laundering charge must be based on use of funds "from a completed predicate offense"); U.S. v. Johnson, 971 F.2d 562, 569 (10th Cir. 1992) ("[B]oth the plain language of [18 U.S.C.] § 1957 and the legislative history behind it suggest that Congress targeted only those transactions occurring after proceeds have been obtained from the underlying unlawful activity") (emphasis added).
"The legislative history setting forth Congressional concerns regarding money laundering is applicable to both § 1956 and § 1957." U.S. v. Savage, 67 F.3d 1435, 1442 (9th Cir. 1995).
The government concedes this general rule, but argues that the mail and wire fraud acts charged as the underlying "unlawful activity" here are distinct from the money laundering transactions. In U.S. v. Silvestri, 409 F.3d 1311, 1332-35 (11th Cir.), cert. denied, 126 S.Ct. 772 (2005), the defendant orchestrated a Ponzi scheme in which investors mailed checks to a "trust" that claimed to make high-yield investments. Silvestri argued that the cashing of checks received in the mail — obtained through fraud — itself created the proceeds of the fraud, rather than involving a post-fraud transaction using the fraud's proceeds. Id. at 1333.
The Eleventh Circuit disagreed, noting that mail fraud is completed when a person places into the mail anything for the purpose of executing a fraudulent scheme. Id. at 1334. It thus held that the mailed checks themselves constituted "proceeds" of the unlawful activity, and it therefore concluded that Silvestri was properly convicted of money laundering based on the deposit of the checks obtained through mail fraud. Id. at 1333-1334.
The only difference between this case and Silvestri is that here the money laundering charges are predicated on someone else — the unindicted co-conspirators in California — cashing the laundered checks. See generally doc. # 228 counts 83-283. However, that difference does not lead to a different result, for a money laundering count is based on any financial "transaction," which includes any payment, transfer, or delivery, "by whatever means effected." 18 U.S.C. § 1956(c)(3); see, e.g., U.S. v. Majors, 196 F.3d 1206, 1212 (11th Cir. 1999) (upholding money laundering conviction over defendant's argument that structured payments to another corporation were "simply payments for reasonable and necessary business expenses").
In accordance with Silvestri, the Court finds that the government has presented sufficient evidence in this case to go to the jury. Yet that reasoning applies only as to those money laundering counts which are predicated on cashing checks received through the mail fraud racketeering acts — that is, Counts 83 to 283, which identify specific, deposited checks that were alleged as instances of mail fraud in racketeering acts 66-82. Accordingly, the Court DENIES the Bradleys' motion as to Counts 83 to 283. Doc. # 491.
Note that not every Count between 83 and 283 overlaps with conduct alleged in the mail fraud racketeering acts. See counts 83, 100, 130-132, 137-142, 209-216, and 283. Obviously, then, those Counts would not be subject to dismissal under this reasoning in the first place, and the defendants have stated no other convincing basis on which such counts should now be dismissed.
Similarly, the acts of money laundering alleged in racketeering acts 223-245 are distinct from the "unlawful activity" alleged elsewhere in the indictment. Doc. # 228 at 48-51. Thus, the defendants' motion as to those racketeering acts is also DENIED. Doc. # 491.
However, the situation is different as to the money laundering charges alleged in Counts 55 to 82. Doc. # 228 at 66-70. In those counts, the government names as money laundering offenses the exact same wire transfers named as wire fraud racketeering acts in Count One. Compare doc. # 228 at 13-16 with id. at 66-70. This type of "double-dipping" is precisely what is prohibited under a long line of cases defining the scope of the money laundering statutes. See, e.g., Christo, 129 F.3d at 580; U.S. v. Howard, 271 F.Supp.2d 79, 87 (D.D.C. 2002) (upholding money laundering counts when alleged laundering transactions "occurred after the predicate offenses of mail fraud and wire fraud had been committed") (emphasis added); Maali, 358 F.Supp.2d at 1157; U.S. v. McGahee, 257 F.3d 520, 528 (6th Cir. 2001); Johnson, 971 F.2d at 569 (noting that money laundering statutes could be construed to apply when underlying criminal activity occurs simultaneously with monetary transaction, but citing legislative history, in conjunction with rule of lenity, in interpreting statute more narrowly). Those wire transfers, then, can only constitute racketeering acts under a wire fraud theory; those same transfers may not also be charged as instances of money laundering.
As described in the indictment, Count 81 and racketeering act 28 do not match up exactly — the dates and accounts are the same, but the wire transfer in Count 81 is for "$65,850.00" while RA 28 is for "$66,850.00." Given the circumstances, though, the Court finds that Count 81 and RA 28 relate to the same transaction.
Therefore, the Court GRANTS the Bradleys' motion (doc. # 491) as to Counts 55 to 82. It follows, then, that the Court also STRIKES racketeering acts 1 to 29 and Counts 55 to 82 as "overt acts" under the money laundering conspiracy count, Count 54. The parties shall ensure that the indictment is redacted appropriately in time for the jury's deliberations.