CA1 (12.15.04)

Money Laundering, Bankruptcy, and what happens when the government wins an apeople, and converting motions for judgment of acquittal into judgments for a new trial.  Also, a holiday wish.

The difference between Bankruptcy Fraud and Money Laundering

Castillini v. US, No. 03-2252, In a 43-page English-language decision, the First Circuit the court affirmed the sentence of a defendant who was convicted “crime of money laundering... and conspiracy to money launder. 18 U.S.C. §§ 1956(a)(3), (c)(7)(D), (h).” In short, the defendant was nabbed in a sting in which he agreed to help an undercover cop hid a bunch of assets from the bankruptcy court.  He argues, that 1) there was insufficient evidence (based on the definition of bankruptcy fraud); 2) statements were improperly admitted; 3) he didn't get a departure he thought he should; and 4) Blakely.

His argument that there was no evidence that he knew he was laundering money that was derived from an ongoing bankruptcy, in fact, “Castellini argue[d] that the representation then would be only about property, the concealment of which constituted the bankruptcy fraud, but not about property which was itself the proceeds of bankruptcy fraud.”  In particular, he pointed out that the government offered no testimony that the funds were from a criminal enterprise.  The court dismissed this by saying that “The government agent need not expressly state that the funds are proceeds of illegal activity if that is the natural inference to be drawn.”  Alternatively, he argued that his actions were not bankruptcy fraud itself, but rather aiding and abetting the fraud, and therefore couldn’t simultaneously be money laundering.  However, the court found that the “evidence shows that Castellini did conclude, from the representations, that he would be handling the proceeds of an illegal activity.”

Second, he argues that his coconspirator’s statements were improperly admitted under Federal Rule of Evidence 801(d)(2)(E). The district court made the required findings that the statements were, “more likely than not” in furtherance of a conspiracy.  The First Circuit ducked what they concede is a close factual issue, by ruling that the statements by simply not be hearsay, and really showed the time of initial contact between some of the conspirators (or government agents).  And, of course, if it was an error, it was harmless. 

Third he argues that he was entitled to a downward departure under USSG §
5K2.20, because his dalliance into the rough and tumble world of bankruptcy fraud was an aberration, and he wasn’t that kind of person. But, contrary to his assertions, the Court found that the District Court knew it had the power to depart downward, but just didn’t think that he had really behaved in an atypical way (for him, at least).

Fourth, he made a Blakely argument.  Of course, this failed because he didn’t raise it at the District Court.

Second Appeal Fun

This opinion overdoes the Latin. 

Moran v. US, No. 03-2149. Moran was an attorney who engaged in a wild pattern of conflicts of interest: being a mortgage broker, developer, promoter and closing attorney in violation of 18 U.S.C. § 1344 (bank fraud).   (His wife was also convicted and she appeals, but the issues are about the same.)  At the trial court, the first time around, the court set aside the verdict, but the First Circuit reversed here, holding that there was enough evidence.  After the First Circuit  reversed, the defendants asked the trial court to consider a motion they had made for acquittal ( Fed. R. Crim. P. 29(c) , that they had later asked to be converted into a motion for a new trial under Fed. R. Crim. P. 33 that the court did not rule on.

The court rejected the appeals to consider its earlier ruling under the "law of the case" doctrine.  The court rejected the claim that the Fed. R. Crim. P. 33 could simply be converted again, because the First Circuit held that the second bringing of the motion was therefore untimely.  So, as I understand it, because the Trial Court did not rule on the motion, the government appealed, the government won and the case was remanded, the defendants can't ask that it be converted because the time it was on appeal runs against the defendant, and the alternative argument (for a new trial) was not made in the motion for judgment of acquittal.  The court noted District Courts lack the power to convert a motion for a judgment of acquittal into a motion for a new trial, as defendants get to choose whether they want to even ask to undergo a trial again.

Finally, the court did not rule on an effective assistance claim, as it should be made before the trial court. 

Two interesting points, however.  The court appears to have theld that just because an argument has not been raised in the first appeal (by the other party) does not waive it for the second. 

...we need not decide definitively whether a cross-appeal might have been permitted in connection with the government's earlier appeal of the judgments of acquittal. When an appellee fails to contest a point that is irrelevant unless the main appeal results in reversal or remand, this court, even if a cross-appeal theoretically might have been possible, has been reluctant to find preclusion.

Unfortunately, the substance of those points was dismissed as not constituting plan error.

Holiday Wish

Rarely does one case bring everyone together. Indeed, it is even that a case from the First Circuit, indeed a tiny one, has warmed the cockles of everyone. That case, as we know, is Cloutier v. Costco. While it was resolved on what amounts to summary judgment, as a fired employee didn’t offer to prove (in the form of affidavits that fulfilled the "personal knowledge" requirement) that her employer was capable (or in the practice of) accommodating people with similar religiously or secularly-dictated facial-jewelry fashion preferences, it has, in some way, brought us all together.

To the legal nerds (that is me) it has been yet another case to file away under “what is religion” and Title VII. For mouthpieces for the insurance industry and “tort reform”, as you can see in these comments, it has provided a catalyst for, well, screaming at me, or making other comments about starting a "church" as the Oregon Commentator did.  But still, it brought us together in this special time of year.  Indeed, the Equal Employment Advisory Council filed a friend of the court brief in Cloutier which you can read here. They argued that Costo did all it needed to accommodate her religious beliefs.  And we feel a special bond.  Likewise, the Suicide Girls, which, produces what can best be described as “alternative pornography” (which does not demean women, and is therefore good for America or something) provides their commentary on Cloutier here.  Although their headline is misleading, they get the Title VII issue right: the court ducked the issue of whether the Church of Body Modification or CBM (as us hipsters say) is a real religion or not.  However, they did not get the reasonable accommodation argument that Cloutier failed to make as she failed to provide affidavits detailing how knew of or actively tolerated other peoples' piercings (OPP). Indeed, they taught me one thing: The CBM is “arguably defunct.”  Which, of course, raises the issues of: 1) was it ever “funct”; and 2) assuming that it is defunct, would, in the course of one of the rare trials on theses issues, would it matter ?  I felt a special bond with, the EEAC, and the Suicide Girls this week.  So, on these special holidays, we, as Americans should take the time to remember what is important and what binds us together as Americans.*

*Unless you are designated for detention and eating without trial. Then screw you, commies.