Vol. 10, No. 2
Covering Cases Published in the Advance Sheets through January 13, 2003

Note: The full text of all of the decisions noted below has been incorporated in our on-line data base which is available for subscribers only. Thus, while the names of some of the cases are highlighted in blue, they are not hypertext-linked to the official decision in this Visitor's Edition of Punch and Jurists.

Highlights of this Issue:

Lavish Lifestyle Held Insufficient to Support Money Laundering Conviction

Drug Conspiracy Conviction Voided for Lack of Sufficient Evidence

U.S.S.G. and Sentencing

 

Public Defender Can Be Sued For Ineffective Assistance of Counsel


We have noted in our News From the Internet Section a new online subscription service from
Trac Reports, Inc. that offers an exhaustive range of new data about federal judges,
federal prosecutors, and federal law enforcement agencies.


U.S. v. Corchado-Peralta, No. 01-2086 (1st Cir. 01/29/03) (Judge Boudin)

Since the enactment of the Sentencing Reform Act of 1984, we can’t recall a single defendant who experienced a more charmed Federal criminal prosecution than Elena Corchado-Peralta (“Elena”), the defendant in this case.

Elena is the wife of Ubaldo Rivera Colon (“Colon”), a convicted drug dealer. They met in the early 1990s, and were married in 1994, when Elena was 25 years old. Colon was ultimately indicted and charged with importing more than 150 kilos of cocaine into Puerto Rico between 1987 and 1996. He pled guilty and, in June, 2002, was sentenced to more than 20 years in prison. During their time together, the couple lived an extraordinarily lavish lifestyle. For example, as part of the many “extensive and expensive” purchases she made, Elena purchased a BMW, a Mercedes Benz, and a Porsche that she and her husband used.

Because Elena had a college degree in business administration and some training in accounting, she was intricately involved in Colon’s banking activities. In the words of the Court, she “performed many transactions involving Colon’s drug proceeds.” For example, she deposited $6,000 on a monthly basis into one of her husband’s accounts; and she frequently made large deposits as directed by her husband - once wiring $40,000 to a Florida company. “On the expenditure side, Colon directed [Elena] to write and endorse checks to purchase a cornucopia of expensive cars, boats, real estate, and personal services. . . In total, [Elena] signed the majority of 253 checks, representing many hundreds of thousands of dollars.”

After Colon was convicted, the Government decided to go after Elena and two other business associates, all of whom were charged with one count of conspiring with Colon to launder money, in violation of 18 U.S.C. § 1956(a)(1)(B). Elena was also indicted on one count of bank fraud, in violation of 18 U.S.C. § 1344, arising out of a false statement that she made in a car-lease loan application that she earned $48,000 per year.

Elena and the two business associates were convicted of all the counts against them. The first sign of Elena’s good fortune was that she received a sentence of only 27 months in prison - and that after an eight day trial on money laundering extensive drug proceeds and bank fraud!

Despite that relatively mild sentence, Elena and her two co-defendants appealed, each arguing that the evidence was insufficient to support the money laundering conviction. The co-defendants also raised a number of other issues, and the First Circuit decided to deal with their appeal in a separate companion opinion, U.S. v. Rivera-Rodriguez, No. 01-2134 (1st Cir. 01/29/03), which is noted below for a separate issue. Thus, the instant decision deals only with the issues pertinent to Elena’s appeal.

Elena’s defense at trial was that she knew nothing about Colon’s drug smuggling activities or his money laundering activities. During her eight-day trial, Elena never testified on her own behalf, but Colon testified at length about his money laundering methods “which included a variety of transactions (purchases, investments, and loans) involving the defendants.” The jury apparently rejected Elena’s defense as implausible, probably at least in part because Elena had signed numerous tax returns which showed that “her husband’s reported income from his legitimate businesses was far less than the money she was handling. For example, the joint tax return that [Elena] signed for 1995 listed a total amount of claimed income of only $12,290” - which probably barely covered the maintenance costs of the 3 fancy cars she owned.

The second sign of Elena’s good fortune was that the three judges on her panel agreed with her position that the Government had not presented sufficient evidence to support the money laundering conviction. The Court arrived at that decision by noting still a third sign of Elena’s good fortune - namely that she had not been indicted under the “hard-nosed” strict-liability provisions of 18 U.S.C. § 1957 (Engaging in monetary transactions in property derived from specified unlawful activity); or even under other more broadly sweeping provisions of 18 U.S.C. § 1956 - such as § 1956(a)(1)(A). Rather, she was indicted under “knowledge of design” provisions of § 1956(a)(1)(B) - which contains two very specific “knowledge requirements.”

That statute provides that it shall be unlawful for anyone,

“knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity” to “conduct . . . such a financial transaction which in fact involves the proceeds of specified unlawful activity” --

(A)(i) with the intent to promote the carrying on of specified unlawful activity; or . . .

(B) knowing that the transaction is designed in whole or in part --

(i) to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of specified unlawful activity . . . .

Under the provisions § 1956(c), the defendant is not required to know what type of felony spawned the proceeds, but only that some felony did so. In addition, it is clear that the requisite degree of “knowledge” can be established by showing that a defendant was “willfully blind” to facts patently before him. (See. e,g., U.S. v. Frigerio-Migiano, 254 F.3d 30, 25 (1st Cir. 2001)). However, in another indication of Elena’s good fortune, the panel never even discussed the application of the “willful blindness” test to her appeal, although in the companion Rivera-Rodriguez case, the same panel not only discussed that concept but cited it as one of the bases for affirming the money laundering convictions of Elena’s two co-defendants.

In the instant case, the Court also explained that §§ 1956(a)(1)(A) and 1956(a)(1)(B) both deal with financial transactions “which in fact involve[ ] the proceeds of specified unlawful activity” - and, on that issue, the Court concluded that “there is no doubt that the defendant did engage in one or more financial transactions involving Colon’s drug proceeds.” However, the Court then explained that the difference between §§ 1956(a)(1)(A) and (a)(1)(B) is that § (a)(1)(A) is based on an “intent to promote,” while § (a)(1)(B) “turns on [two] state of mind elements.”

The first of those “knowledge” elements required the Government to prove that Elena “was aware, at the time of the transactions she conducted, that the money she was handling, at least much of the time, was derived from drug dealings.” Looking at the evidence presented by the Government on that first element, the Court noted that, because there was no “direct evidence” of Elena’s knowledge that the funds came from drug dealing (such as an admission by her to that effect), the Court had to look at the cumulative effect of the circumstantial evidence that was presented in this case. It then concluded:

“What the evidence shows is that [Elena] knew that the family expenditures were huge, that reported income was a fraction of what was being spent and that legitimate sources were not so obvious as to banish all thoughts of possible illegal origin . . . . This might seem to some a modest basis for concluding -- beyond a reasonable doubt -- that [Elena] knew that her husband's income was badly tainted. But the issue turns on judgments about relationships within families and about inferences that might be drawn in the community from certain patterns of working and spending.”

With that statement, the Court appeared to suggest that the Government may not have even met its burden of proof on the first “knowledge element” - but it emphatically concluded that the Government absolutely failed to meet its burden on the second “knowledge element.”

The Court explained: “The other knowledge requirement is harder for the government. Here, the statute requires, somewhat confusingly, that [Elena] have known that ‘the transaction’ was ‘designed,’ at least in part, ‘to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds’.” (Emphasis added).

After reviewing the evidence presented by the Government on that second prong, the Court made a specific ruling that we found sweeping and significant - namely that:

“To hold that a jury may convict on this evidence -- that [Elena] spent her husband's money knowing that the money was tainted -- is to make it unlawful wherever a wife spends any of her husband's money, knowing or believing him to be a criminal. That the purchases here were lavish or numerous hardly distinguishes this case from one in which a thief's wife buys a jar of baby food; if anything, [Elena’s] more flamboyant purchases were less likely than the baby food to disguise or conceal. Perhaps a hard-nosed Congress might be willing to adopt such a statute, compare 18 U.S.C. § 1957 (2000), but it did not do so here.”

Based on those findings, the Court reversed Elena’s money laundering conviction (although, as noted above, it also affirmed the money laundering convictions of her two co-defendants in the companion Rivera-Rodriguez case). At the same time, the Court did affirm Elena’s separate conviction for bank fraud - although in doing so it made clear that her surprisingly good fortune would continue. The Court observed that, while Elena had been given the same concurrent sentence of 27 months on both the money laundering and the bank fraud counts, “due to the peculiar mechanics of the guidelines, . . . the guideline penalty for the bank fraud offense standing alone is very much less.” Thus, it directed that she be resentenced on the bank fraud count, suggesting that the appropriate sentence “appears to be in the range of 0 to 6 months” - particularly in light of the fact that Elena was given a sentence reduction for acceptance of responsibility. To receive an acceptance of responsibility sentence reduction after an eight day trial is most rare - and it represents the final piece of Elena’s extraordinarily good fortune in this case.

While the facts of this case were indeed unique, the decision is noteworthy and significant to anyone facing money laundering charges under § 1956(a)(1)(B) because of the Court’s sweeping and unstinting language about the Government’s burden of proof under that section.


U.S. v. Sandlin, 313 F.3d 351 (6th Cir. 2002) (Per Curiam)

Here the Sixth Circuit held that the district court had committed plain error when it sentenced the defendant to a mandatory minimum sentence under 21 U.S.C. § 841(b)(1)(A)(viii) by aggregating the methamphetamine he had manufactured on three separate occasions over a three month period. The Court firmly held that a mandatory minimum sentence under § 841(b)(1)(A) “applies only to a defendant who has committed a single violation of § 851(a)(1) involving more than the threshold amount of drugs required by § 841(b)(1)(A).” (Id., at 354).

In reaching that conclusion, the Court looked at the legislative history of the statute and determined that, “in using the term ‘a violation’ in § 841(b)(1)(A), Congress intended to target major drug dealers and manufacturers as opposed to small-time dealers and users. . . . If we were to construe 21 U.S.C. § 841(b)(1)(A) as applying to aggregate amounts of drugs held on various separate occasions, it could be used against small-time dealers or users who never possess more than a few grams at a time.” (Id., at 355).

As a matter of interest, in U.S. v. Santos, 195 F.3d 549, 551 (10th Cir. 1999), the Tenth Circuit cited this same rule with approval and noted that all other Circuits to decide that issue have determined that the drug quantities triggering the mandatory sentences prescribed in § 841(b) are determined exclusively by reference to the offense of conviction, citing cases from the Second, Fourth, Sixth and Seventh Circuits.

Of significance, even though the defendant failed to object to the imposition of the mandatory minimum sentence at the time of his sentencing, the Court held that the error was plain and that it required reversal because it resulted in the imposition of a sentence “almost twice as long as the applicable guideline range.” (Id., at 356).


Miranda v. Clark County, No. 00-15734 (9th Cir. 02/03/03) (En banc) (Judge Schroeder)

In a decision with potential far-reaching impact on the ever expanding activities of public defenders (who now represent more than 80% of all criminal defendants in America), a divided en banc court from the Ninth Circuit held that the head of a county public defender's office, as the administrative head of an organization formed to represent criminal defendants, may be held accountable under 42 U.S.C. § 1983 for a policy that leads to a denial of an individual's right to effective assistance of counsel.

The plaintiff, Roberto Miranda, was represented in murder trial by an assistant public defender “fresh out of law school,” who had never tried a murder case. He was convicted and spent fourteen years in prison before a Nevada state court overturned his conviction after finding that Miranda had not received effective assistance of counsel because his lawyer had failed to investigate the case. Miranda ultimately sued the lawyer who represented him, the head of the public defenders office, and the county for damages under § 1983. The district court dismissed the lawsuit for failure to state a claim upon which relief could be granted, noting that § 1983 (which is entitled “Civil action for deprivation of rights”) only applies to persons who act “under color of state law.”

After a panel affirmed the dismissal of the lawsuit in a decision reported at 279 F.3d 1102 (9th Cir. 2002), the en banc court affirmed the dismissal of the lawsuit against the actual lawyer who represented Miranda, on the grounds that, based on existing Supreme Court precedent, “a public defender representing a client in the lawyer’s traditional adversarial role [is] not a state actor” within the meaning of § 1983. (Polk County v. Dodson, 454 U.S. 312 (1981). However, the majority of the court reversed as to the head of the public defenders’ office and the county on the grounds that, in determining how the overall resources of the public defenders office were to be spent, those parties did “act under color of state law” within the meaning of § 1983 and thus they could be sued for damages.


NEWS FROM THE INTERNET

Although this may be an example of the Internet making available more information than can intelligently be digested and used, we note that Trac Reports, Inc., a data-gathering research and distribution organization located at Syracuse University has announced the availability on-line of a broad range of new materials concerning Federal judges, prosecutors, and law enforcement agencies. The site, which is located at http://tracfed.syr.edu, provides, for example, information about judges - such as their caseloads and how often criminal defendants were convicted by particular judges; and information about prosecutors - such as the percentage of investigative matters that they decline to prosecute. The stated fee for these services is $50 a month.


Scorecard Of Published Federal Criminal Cases Reviewed By Our Staff:

Court

This Week

Year to Date

Since 1996

Courts of Appeal

34

78

16,586

District Courts

25

54

   8,992


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