United States v. Tee , 881 F.3d 1258 ( 2018 )

FILED
United States Court of
PUBLISH Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
February 6, 2018
FOR THE TENTH CIRCUIT Elisabeth A. Shumaker
_________________________________ Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 16-3243
KAY TEE,
Defendant - Appellant.
_________________________________
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 6:15-CR-10078-JTM-1)
_________________________________
Kurt P. Kerns of Ariagno, Kerns, Mank & White, LLC, Wichita, Kansas
(Melanie S. Morgan of Morgan Pilate LLC, Kansas City, Missouri, with
him on the brief), for Defendant-Appellant.
Jason W. Hart, Assistant United States Attorney (Thomas E. Beall, United
States Attorney, with him on the brief), Wichita, Kansas, for Plaintiff-
Appellee.
_________________________________
Before BACHARACH, McKAY, and MURPHY, Circuit Judges.
_________________________________
BACHARACH, Circuit Judge.
_________________________________
Mr. Kay Tee appeals his conviction on three federal criminal counts:
(1) attempted coercion and enticement to travel to engage in prostitution,
(2) interstate transportation in aid of racketeering enterprises, and (3)
money laundering. These counts grew out of Mr. Tee’s discussions with a
government informant (known as “Lucy”) who had contacted Mr. Tee,
ostensibly for help in opening a massage parlor in Wichita, Kansas. The
government’s trial theory was that Mr. Tee had tried to help Lucy, thinking
that she wanted to buy a massage parlor and operate it as a prostitution
business. Mr. Tee denied guilt and pressed an affirmative defense of
entrapment. The jury rejected the entrapment defense and found guilt on
the three counts, leading Mr. Tee to appeal.
This appeal involves four issues:
1. Sufficiency of the Evidence: Mr. Tee contends that he was
entrapped and that the evidence was insufficient to convict on
any of the counts. We disagree. A reasonable jury could have
found that Mr. Tee had tried to help Lucy buy a prostitution
business and had a criminal intent and predisposition to commit
the crimes. Consequently, the government presented sufficient
evidence to prove the crimes and overcome the defense of
entrapment.
2. Racial Discrimination During Voir Dire: The expected trial
evidence included numerous references to the Asian-American
community in Wichita. For example, the government’s trial
theory was that massage parlors in Wichita’s Asian-American
community were largely fronts for prostitution. In addition, Mr.
Tee and the government’s two informants were of Asian
descent. These facts led the prosecutor in voir dire to focus
certain questioning on one venireperson who appeared to be
Asian-American. With this venireperson and the others, the
prosecutor asked about possible prejudice against Asian-
Americans. Mr. Tee argues that this questioning involved racial
discrimination. Because the issue was not preserved in district
court, we review the challenge under the plain-error standard.
2
In our view, the district court did not commit plain error in
allowing this questioning.
3. Display of a Website (Rubmaps) as Demonstrative Evidence: At
trial, the government elicited testimony that Mr. Tee had told
Lucy to look at reviews on Rubmaps to decide which massage
parlor to buy. The government presented testimony that
Rubmaps’s reviews involved ratings on sexual activity, not
massages. To explain this testimony, the prosecution displayed
screenshots from Rubmaps as a demonstrative exhibit. Mr. Tee
argues that the demonstrative exhibit was unfairly prejudicial.
We disagree, for the demonstrative exhibit helped the jury
understand the sexual nature of the website.
4. Introduction of Advertisements from Backpage: The government
presented advertisements prepared by Mr. Tee for a website,
Backpage. Mr. Tee contends that the advertisements constituted
hearsay and were unfairly prejudicial. We reject both
contentions. Mr. Tee waived his hearsay objection, and the
district court could reasonably conclude that the advertisements
had not been unfairly prejudicial.
I. Mr. Tee was convicted based on his discussions with Lucy.
Mr. Tee was a Wichita businessman. Being Chinese and bilingual,
Mr. Tee often worked as a middleman between Mandarin-speaking business
owners and local vendors. Some of the businesses were massage parlors
that were suspected fronts for prostitution.
To investigate these suspicions, the Wichita police arranged a series
of telephone calls between Mr. Tee and Lucy. Lucy pretended to be a New
York businesswoman interested in buying a massage parlor in Wichita. For
over two months, Mr. Tee advised Lucy by telephone as she pretended to
look for a massage parlor to buy.
3
The police also used another informant, a prostitute known as
“Jenny,” to investigate Mr. Tee. The police directed Jenny to seek Mr.
Tee’s help in selling her business. When Mr. Tee did not try to connect
Lucy and Jenny, the police instructed Jenny to tell Mr. Tee that she had
found a buyer. Jenny complied, telling Mr. Tee that the buyer was Lucy.
Mr. Tee tried to discourage Lucy from buying Jenny’s business. He
explained that Jenny had been busted once for prostitution and that another
bust would lead the police to close the business. Instead, Mr. Tee
encouraged Lucy to look for other available shops. But when Lucy
continued to express interest in buying Jenny’s massage parlor, Mr. Tee
assured Lucy that he would help her finalize the purchase. In their last
telephone call, Mr. Tee agreed to pick up Lucy at the airport.
Afterward Jenny paid Mr. Tee $100, but the parties disagree on the
purpose of the payment. Mr. Tee told authorities that the fee was to pick
up Lucy at the airport; the government characterizes the payment as a fee
to broker the sale of Jenny’s prostitution business to Lucy.
When Mr. Tee arrived at the airport to pick up Lucy, he was arrested.
He was later convicted on the three counts.
II. The evidence of guilt was sufficient to convict on each count.
Mr. Tee challenges the sufficiency of the evidence on each count and
contends that the government failed to overcome his entrapment defense.
In our view, a reasonable jury could find that Mr. Tee
4
 had been predisposed to commit the crimes and
 had intended to help Lucy buy and maintain a massage parlor,
knowing that it would offer prostitution services.
A. Standard of Review
Sufficiency of the evidence entails a legal issue that we review de
novo. See United States v. Thomas, 849 F.3d 906, 909 (10th Cir. 2017). In
undertaking this review, we consider the evidence in the light most
favorable to the government, asking whether any rational trier of fact could
find every element of a given offense. Id. In answering this question, we
cannot weigh conflicting testimony or consider the credibility of witnesses.
United States v. Rodebaugh, 798 F.3d 1281, 1296 (10th Cir. 2015).
B. Entrapment
To find Mr. Tee guilty, the jury had to find each element of the
crimes beyond a reasonable doubt. Alleyne v. United States, 570 U.S. 99,
104 (2013). Mr. Tee pleaded an entrapment defense; therefore, the
government also had to disprove entrapment beyond a reasonable doubt.
United States v. Nguyen, 413 F.3d 1170, 1178 (10th Cir. 2005).
Entrapment occurs when
 the government induces the defendant to commit the offense
and
 the defendant is not predisposed to commit the offense.
Id.
5
Mr. Tee does not dispute inducement; instead, he contests the
government’s evidence on predisposition. 1 Predisposition may be shown by
evidence of similar prior illegal acts or it may be inferred from
defendant’s desire for profit, his eagerness to participate in the
transaction, his ready response to the government’s inducement
offer, or his demonstrated knowledge or experience in the
criminal activity.
Id. (quoting United States v. Duran, 133 F.3d 1324, 1335 (10th Cir. 1998))
(quotation marks omitted).
C. Persuasion of Interstate Travel To Engage in Prostitution
A crime is committed by knowingly attempting to persuade, induce,
entice, or coerce a person to travel in interstate commerce to engage in
prostitution. 18 U.S.C. § 2422(a). To prove this crime, the government
needed to present sufficient evidence that Mr. Tee
 had knowingly attempted to persuade, induce, entice, or coerce
Lucy to travel in interstate commerce, and
 had made this attempt with the intent for Lucy to engage in
prostitution.
See id.; United States v. Rashkovski, 301 F.3d 1133, 1136 (9th Cir. 2002).
And to overcome Mr. Tee’s entrapment defense, the government needed to
1
Mr. Tee’s failure to address the element of inducement could
arguably doom his entrapment defense. See United States v. Ford, 550 F.3d
975, 982 (10th Cir. 2008) (“both ‘elements [are] required to find
entrapment’” (quoting United States v. Young, 954 F.2d 614, 616 (10th Cir.
1992)) (alteration in original)). But we will assume, for the sake of
argument, that the failure to address the element of inducement is not fatal
to the defense.
6
prove beyond a reasonable doubt that Mr. Tee had been predisposed to
commit the crime. See Part II(B), above.
Mr. Tee contends that the government failed to prove that
 he had tried to persuade Lucy to come to Wichita and
 he had been predisposed to commit the crime.
We reject Mr. Tee’s contentions.
First, the government presented sufficient evidence that Mr. Tee had
tried to persuade Lucy to travel from New York to Wichita. Mr. Tee argues
that it was Lucy’s idea to come to Wichita. Because the idea to travel
originated with Lucy, he claims that a reasonable jury could not have
found guilt. Mr. Tee is mistaken. Regardless of who originated the idea,
Mr. Tee consistently encouraged Lucy to come to Wichita, boasting about
how quickly and cheaply he could get her massage parlor ready:
 “I am very serious when it comes to doing work for other
people, do you understand. . . . I don’t mess around when it
comes to doing work for other people.” Appellant’s App’x at
119.
 “There won’t be any problems with the shop. I’ll do everything
and I’ll take care of everything else. I have been taking care of
things from beginning to end every time.” Id. at 125.
 “Right now . . . the one you have will also be very quick. If
you let us handle it, your expenses will not even be 16,000. I
can get everything ready for you for 12,000.” Id. at 144
(omission in original).
7
 “To be honest with you, for a new shop, all it needs is to post
some ads and you’ll get business right away. . . . If you want it,
I can get it done for you in a week.” Id. at 145.
 “Let me tell you. It’s very easy to get business if you open a
shop over here. All I have to do is to post an ad and it’s easy to
get business. And you’ll get it very quickly . . . .” Id. at 153.
 “[W]e don’t need a month or two because we do all the work
ourselves, okay? We can get it ready for you in one week.” Id.
at 155.
 “The contacts would be another $500. I usually charge people
2,000.” Id. at 160.
From these boasts, a reasonable jury could have found an intent to
lure Lucy to Wichita to buy a prostitution business. But Mr. Tee did more
than boast; he also expressly encouraged Lucy to come:
 “When are you coming down here to see [the massage parlor]?”
Id. at 143.
 “If you get a chance, just come down here.” Id. at 153.
 “The location that you are looking for, there are a lot of them
available. Just come down to Wichita and we’ll make
arrangements for you to see them. And then you’ll make a
decision. There are lots of nice places.” Id. at 154.
Mr. Tee knew that he could obtain a fee only if Lucy came to
Wichita. So Mr. Tee repeatedly offered deals to Lucy, emphasizing how
much he would help her, boasting about the Wichita massage-parlor
market, and encouraging her to come to Wichita. Based on these statements
to Lucy, a reasonable jury could have found an attempt to persuade Lucy to
travel from New York to Wichita.
8
Second, a reasonable jury could have found that Mr. Tee had been
predisposed to commit the crime. Mr. Tee makes three arguments for why
he was not predisposed to commit the crime:
1. There was no evidence that he had committed similar crimes in
the past.
2. The trial evidence proved only that he had conducted a lawful
business for legitimate massage parlors.
3. He demonstrated a lack of interest in helping Lucy buy a
business.
These arguments fail.
The government did not need to provide evidence of similar crimes.
Even without this evidence, predisposition can be inferred from a
“‘defendant’s desire for profit, his eagerness to participate in the
transaction, his ready response to the government’s inducement offer, or
his demonstrated knowledge or experience in the criminal activity.’”
United States v. Nguyen, 413 F.3d 1170, 1178 (10th Cir. 2005) (quoting
United States v. Duran, 133 F.3d 1324, 1335 (10th Cir. 1998)).
Though evidence of earlier criminality was unnecessary, it was
present here. For example, the trial testimony reflected Mr. Tee’s past
associations with massage parlors known to engage in prostitution. And
Mr. Tee’s statements to Lucy showed his experience in brokering the sale
of massage parlors. The evidence of past associations and Mr. Tee’s
9
statements to Lucy allowed the jury to reasonably infer that Mr. Tee had
brokered similar deals in the past.
In addition, the jury could reasonably infer that Mr. Tee had known
that the massage parlors were fronts for prostitution. For example, Mr. Tee
used slang that was commonplace in the prostitution business, such as
“small acts,” “big acts,” “full body,” and “half set.” Appellant’s App’x at
130, 147. The testimony explained that these slang terms referred to
various sexual acts. And when Lucy revealed that her employees would
give hand jobs, Mr. Tee remained interested in brokering a sale.
He further displayed an understanding of how massage parlors
operate as prostitution fronts. For example, Mr. Tee told Lucy that “after
[some people] have made money, . . . they don’t want to do this type of
business anymore . . . .” Id. at 122. The implication was that once some
individuals made enough illegal money, they leave the prostitution
business. And when Lucy asked where she could read reviews about the
shops being recommended, he advised her to consult Rubmaps, which was
an internet forum about the sexual services obtained at massage parlors.
Mr. Tee also appeared to understand the risks of buying a
prostitution business that had already been busted. For example, Mr. Tee
tried to stop Lucy from buying Jenny’s shop because it had already been
busted once. Mr. Tee explained to Lucy that a second bust would lead the
police to close the business. This explanation reflected Mr. Tee’s
10
familiarity with the risks of running a massage parlor as a prostitution
front. See United States v. Dyke, 718 F.3d 1282, 1292 (10th Cir. 2013)
(recognizing as evidence of predisposition that the defendant was “all too
aware of the risk and reward calculus”).
Notwithstanding these risks, Mr. Tee displayed a willingness to help
Lucy buy a massage parlor to traffic in prostitution. Though Lucy initiated
the contact, Mr. Tee was willing to assist. Lucy sometimes had to leave
voicemails for Mr. Tee and ask him to move more quickly. But Mr. Tee
also left voicemails for Lucy and encouraged her to act, telling her that
 buying a shop “will also be very quick” and
 “you’ll get it very quickly.”
Appellant’s App’x at 144, 153.
Mr. Tee points to instances in which he discouraged Lucy from
buying Jenny’s shop. But Mr. Tee cautioned Lucy about Jenny’s massage
parlor only because he knew that it was under police surveillance and had
been busted before. If the massage parlor were shut down, Mr. Tee might
stop profiting from his relationship with Lucy. And even as Mr. Tee
discouraged the purchase of Jenny’s massage parlor, he encouraged Lucy
to continue looking for another massage parlor to buy.
In our view, the evidence was sufficient to convict Mr. Tee of
attempting to induce Lucy to travel across state lines to engage in
prostitution. And the government presented sufficient evidence to
11
overcome Mr. Tee’s entrapment defense. Therefore, we reject Mr. Tee’s
challenge to the sufficiency of the evidence on this count.
D. Use of a Telephone to Promote Prostitution
Mr. Tee also contends that the government presented insufficient
evidence to prove the use of a telephone to promote prostitution. 18 U.S.C.
§ 1952(a)(3). To establish the commission of this crime, the government
needed to show that
 Mr. Tee had used a facility in interstate commerce,
 he had used the facility in interstate commerce with the intent
to facilitate the promotion, management, establishment, or
carrying out of an unlawful activity, and
 he had attempted to promote, manage, establish, or carry out an
unlawful activity.
See United States v. Welch, 327 F.3d 1081, 1090 (10th Cir. 2003). And to
overcome the entrapment defense, the government needed to prove beyond
a reasonable doubt that Mr. Tee had been predisposed to commit the crime.
See Part II(B), above.
Mr. Tee does not contest
 the use of a telephone, which is a facility in interstate
commerce, or
 the illegality of prostitution under Kansas law.
But he does contest the sufficiency of the evidence on three grounds:
1. There was insufficient evidence to prove that he had used a
telephone with the intent to facilitate the promotion,
management, establishment, or carrying out of prostitution.
12
2. There was insufficient evidence to prove that he had attempted
to perform an act promoting, managing, establishing, or
carrying out prostitution.
3. There was insufficient evidence to prove predisposition.
These challenges are invalid.
First, a reasonable jury could find that Mr. Tee had intended to
promote prostitution during the telephone calls with Lucy. In these calls,
Mr. Tee showed awareness that Lucy had planned to offer sexual services
at her massage parlor. Yet he continued to help her look for a massage
parlor to buy. And Mr. Tee repeatedly assured Lucy that he would
renovate, register, and advertise for her massage parlor, knowing that it
would be a front for prostitution. This willingness to help Lucy buy a shop
offering sexual services could lead a reasonable jury to find that Mr. Tee
had intended to promote prostitution.
Second, the government presented sufficient evidence that Mr. Tee
had acted on this intent when he attempted to pick up Lucy at the airport.
Mr. Tee alleges that he attempted to pick up Lucy in order to dissuade her
from buying a massage parlor linked to prostitution, but the jury could
reasonably reject this explanation. After trying to discourage the purchase
of Jenny’s massage parlor, Mr. Tee continued to encourage Lucy to come
to Wichita, explaining that there were other good massage parlors that she
13
could buy. A reasonable jury could find that Mr. Tee had intended to
continue helping Lucy find a prostitution business to buy.
Finally, a reasonable jury could find that Mr. Tee had been
predisposed to commit the crime. Mr. Tee responded to Lucy’s initial call
with an offer to help and demonstrated his experience with massage parlors
operating as prostitution fronts. For example, Mr. Tee used slang terms to
refer to sexual acts performed in massage parlors. And he understood the
process used by police when investigating and closing down a massage
parlor linked to prostitution. In addition, Mr. Tee displayed an eagerness to
profit from the transaction, offering deals to Lucy so that she would
continue working with him.
Because the jury could reasonably find each element of this crime,
the evidence was sufficient to convict.
E. Money Laundering
Finally, Mr. Tee contends that the government presented insufficient
evidence to convict on money laundering. See 18 U.S.C.
§ 1956(a)(1)(B)(i).
For this offense, the government needed to prove that
 Mr. Tee had conducted a financial transaction,
 the transaction had involved the proceeds of an unlawful
activity,
 Mr. Tee had known that the proceeds derived from an unlawful
activity, and
14
 Mr. Tee had conducted the financial transaction with
knowledge that it was designed at least in part to conceal the
nature of the proceeds of an unlawful activity.
United States v. Caldwell, 560 F.3d 1214, 1221 (10th Cir. 2009).
Mr. Tee argues that the government failed to prove that the
transaction involved the proceeds of an unlawful activity. For this
argument, Mr. Tee denies that Jenny continued to engage in prostitution
and insists that Jenny’s payment was only to pick up Lucy at the airport.
This argument is invalid.
First, Mr. Tee denies the existence of evidence that Jenny continued
to engage in prostitution after she was arrested. Without evidence of
continued prostitution, according to Mr. Tee, the government failed to
prove that Jenny’s payment had involved the proceeds of prostitution. But
the jury could reasonably view the evidence differently. For example, the
jury could have regarded the $100 as a fee for brokering the sale of a
prostitution business to Lucy. Because this transaction would have been for
an unlawful act, the proceeds themselves would have derived from an
unlawful activity. Thus, a reasonable jury could have found money
laundering regardless of whether Jenny had continued to engage in
prostitution.
15
Second, Mr. Tee argues that the $100 was paid just to pick up Lucy
at the airport. 2 But contrary evidence existed. For example, an officer
testified that Mr. Tee had admitted that the $100 was paid to connect Lucy
and Jenny. With this testimony, the jury could reasonably reject Mr. Tee’s
explanation for the $100 payment.
Because the jury could reasonably reject Mr. Tee’s arguments, we
conclude that the evidence sufficed to convict on the count of money
laundering.
The dissent disagrees, contending that § 1956(a)(1)(B)(i) was
violated only if Mr. Tee conducted a transaction with the $100 after
2
As noted above, one element of this offense includes an intent to
conceal the nature of the proceeds of an unlawful activity. Mr. Tee does
not question satisfaction of this element; he instead defends his
explanation for the $100 payment, insisting that it was to pick up Lucy at
the airport rather than to broker the sale of a prostitution business.
We have little reason to question the sufficiency of the evidence on
the element of concealment. Mr. Tee directed Jenny to wire transfer the
$100 to an account for Alert America, a separate, legitimate computer-
security company that Mr. Tee owned. Mr. Tee’s invoices for Alert
America described the company as “Security Camera & POS Systems
Alarm Monitoring Service, Repair Computer & Networking, Business
Sign.” Appellant’s App’x at 225-27. But Mr. Tee has never suggested that
the $100 related to a business that monitored alarms, repaired computers,
or dealt with business signage. Thus, the jury could reasonably infer that
Mr. Tee had directed payment to his Alert America account to conceal the
purpose of the payment. See United States v. Shepard, 396 F.3d 1116, 1121
(10th Cir. 2005) (“This circuit has noted that depositing illegal proceeds
into the bank account of a legitimate business may support the inference of
an intent to conceal.”).
16
receiving it. But Mr. Tee did not make this argument either in district court
or in our court.
On the money-laundering count, Mr. Tee states that he challenged the
sufficiency of the evidence in district court, relying on pages 677 to 683 of
the appendix. There he argued only that the government had not presented
evidence of an attempt to conceal or disguise the proceeds because they
had been “openly deposited in a business account.” Appellant’s App’x at
680. Mr. Tee did not say anything to suggest that guilt required a separate
transaction after receiving the $100 from Jenny. Consequently, this
potential argument was forfeited. See United States v. Goode, 483 F.3d
676, 681 (10th Cir. 2007).
Though forfeited, this argument could be reviewable under the plain-
error standard. Id. at 681 n.1 (en banc footnote); see p. 24, below. But Mr.
Tee has not argued for plain-error review, so we would ordinarily decline
to consider the potential argument even if it had been raised here. See
United States v. Lamirand, 669 F.3d 1091, 1098 n.7 (10th Cir. 2012).
But Mr. Tee didn’t just fail to present this argument in district court;
he also failed to raise this argument in our court. After identifying the
elements and summarizing the government’s theory, Mr. Tee presented his
argument in a single paragraph in his opening brief:
By the time Lucy decided to “travel” to Wichita, she and
Tee had been engaged in discussions for about two months. For
this stranger who contacted him out of the blue, he had taken
17
and placed numerous phone calls, looked for locations for her
to purchase, and had agreed to take time out of his work day to
pick her up at the airport. The only evidence offered by the
government to explain the $100 transaction is Tee’s statement –
that the money was to pay for a taxi ride to pick Lucy up at the
airport. Notably Jenny didn’t testify. And there is no evidence
that Jenny’s business continued to engage in prostitution
activities or only engaged in prostitution activities such that
Tee would know that the money came from prostitution. The
“finder’s fee” that Tee had discussed with Lucy was $500. And
the government offered no evidence to suggest that amount had
changed hands. The notion that the $100 was partial payment is
purely speculative. Thus, the evidence is insufficient as to
money laundering and Tee’s conviction must be set aside.
Appellant’s Opening Br. at 43-44. This paragraph bears no suggestion of
an argument involving the absence of a transaction after Jenny’s payment
of the $100.
We ordinarily consider only the grounds presented by the appellant,
wary of searching out our own reasons to reverse when the ground is not
presented by the appellant:
In our adversary system, in both civil and criminal cases, in
the first instance and on appeal, we follow the principle of
party presentation. That is, we rely on the parties to frame the
issues for decision and assign to courts the role of neutral
arbiter of matters the parties present. To the extent courts have
approved departures from the party presentation principle in
criminal cases, the justification has usually been to protect a
pro se litigant’s rights.
Greenlaw v. United States, 554 U.S. 237, 243-44 (2008); see also United
States v. Burkholder, 816 F.3d 607, 620 n.11 (10th Cir. 2016) (“In our
adversary, common-law system, courts properly answer only the questions
18
that the parties present to them and that are necessary for the resolution of
the case at hand.”).
The dissent points out that in certain circumstances, a federal
appellate court can decide an issue that was not decided in district court.
Dissent at 5-6. For this proposition, the dissent relies on a passage in
Singleton v. Wulff: “Certainly there are circumstances in which a federal
appellate court is justified in resolving an issue not passed on below, as
where the proper resolution is beyond any doubt or where ‘injustice might
otherwise result.’” 428 U.S. 106, 121 (1976) (quoting Hormel v. Helvering,
312 U.S. 552, 557 (1941)).
This passage does not support sua sponte consideration of the
dissent’s argument. In a few civil appeals, we have raised grounds sua
sponte to reverse. See Margheim v. Buljko, 855 F.3d 1077, 1088-89 (10th
Cir. 2017); Planned Parenthood of Kan. & Mid-Mo. v. Moser, 747 F.3d
814, 836-38 (10th Cir. 2014). But we exercise that power “sparingly,”
reversing sua sponte only when the circumstances are exceptional and the
parties are given an opportunity to address the issues raised by our court.
Margheim, 855 F.3d at 1088-89; Planned Parenthood of Kan. & Mid-Mo.,
747 F.3d at 836-38.
Here the circumstances are not exceptional and the government has
not had an opportunity to address the argument raised by the dissent.
Indeed, in the single opinion relied on by the dissent (Singleton), the
19
Supreme Court reversed the Court of Appeals for deciding the issue in the
first instance. After announcing the Court of Appeals’ discretion to avoid
an injustice by deciding an issue in the first instance, the Supreme Court
added:
Suffice it to say that this is not such a case. The issue resolved
by the Court of Appeals has never been passed upon in any
decision of this Court. This being so, injustice was more likely
to be caused than avoided by deciding the issue without
petitioner’s having had an opportunity to be heard.
Singleton, 428 U.S. at 121.
The dissent sees little downside to addressing the issue, viewing its
conclusion as undebatable. Dissent at 6. We are not so sure. For its view,
the dissent relies solely on opinions interpreting 18 U.S.C. § 1957. Id. at 2-
5 (citing United States v. Seward, 272 F.3d 831, 836-37 (7th Cir. 2001);
United States v. Butler, 211 F.3d 826, 830 (4th Cir. 2000); United States v.
Johnson, 971 F.2d 562, 569-70 (10th Cir. 1992)). But Mr. Tee was
convicted under § 1956, not § 1957, and the two statutes bear different
elements. See United States v. Bush, 626 F.3d 527, 536 (9th Cir. 2010)
(“Sections 1956 and 1957 contain different elements . . . .”); see also
United States v. Hill, 167 F.3d 1055, 1069-70 (6th Cir. 1999) (stating that
§§ 1956(a)(1)(B) and 1957 “each requires proof of an element the other
does not”). Section 1956 punishes individuals for conducting financial
transactions with the proceeds of specified unlawful activities, knowing
that the transactions are designed to conceal or disguise the nature,
20
location, source, ownership, or control of the proceeds. 18 U.S.C.
§ 1956(a)(1)(B)(i). In contrast, § 1957 addresses “monetary transactions in
criminally derived property.” 18 U.S.C. § 1957(a).
The term “criminally derived property” refers to funds obtained from
a criminal offense. 18 U.S.C. § 1957(f)(2); see Johnson, 971 F.2d at 568
(“Under § 1957, ‘criminally derived property’ means any property
constituting or derived from proceeds obtained from a criminal offense.”).
Thus, § 1957 is violated only if the transaction generating the criminally
derived proceeds is distinct from the money-laundering transaction. United
States v. Seward, 272 F.3d 831, 836 (7th Cir. 2001). Section 1956 is
different:
All that is required to violate § 1956 is a transaction meeting
the statutory criteria that takes place after the underlying crime
has been completed. Thus, the central inquiry in a money
laundering charge is determining when the predicate crime
became a “completed” offense . . . .
United States v. Kennedy, 64 F.3d 1465, 1477-78 (10th Cir. 1995).
This difference is illustrated by the sole Tenth Circuit opinion
invoked by the dissent: United States v. Johnson, 971 F.2d 562 (10th Cir.
1992). There the underlying crime, wire fraud, consisted of inducement to
send wire transfers to the defendant’s account. Johnson, 971 F.2d at 567.
The receipt of those wire transfers did not involve proceeds obtained from
a criminal offense. Id. at 568. Section 1957 would have been violated only
if the recipient of the wire transfers had later conducted some transaction
21
with the funds. Id. at 568-70. There were no subsequent transactions, so
the defendant did not violate § 1957. Id. at 569-70.
We distinguished Johnson in United States v. Kennedy, 64 F.3d 1465
(10th Cir. 1995). There the defendant obtained funds from mail fraud and
was convicted of money laundering under § 1956(a)(1)(A)(i). Kennedy, 64
F.3d at 1477. The defendant challenged the money-laundering conviction
based on Johnson, arguing that guilt under § 1956(a)(1) required a
transaction after completion of the underlying crime. Id. We rejected this
challenge, concluding that the required transaction had taken place. Id. at
1477-78.
In Johnson, the underlying crime had been wire fraud, which was not
completed until the funds were wired into the defendant’s account. Id. at
1478. Thus, “the wirings could not also be used to support convictions for
§ 1957 money laundering crimes.” Id. In contrast, the Kennedy defendant
obtained funds from the previously completed crime of mail fraud. Id. “It
was the subsequent and distinct transfers of funds that were alleged as the
separate transactions involving ‘proceeds of specified unlawful activity’
which constituted the alleged money laundering under § 1956.” Id. This
difference proved critical in Kennedy because §§ 1956 and 1957 had been
designed to criminalize “new conduct that occurs after the completion of
certain criminal activity, rather than simply to create an additional
punishment for that criminal activity.” Id.
22
Under Kennedy, Jenny’s wire transfer of $100 to Mr. Tee may have
constituted a new financial transaction with the proceeds from a previously
committed offense (the brokering of a sale of a prostitution business). We
need not decide this question, however, because it was not raised either in
district court or on appeal. Had this question been presented, it would have
entailed a thorny issue of first impression in our circuit. Unlike the
dissent, we decline to decide this issue sua sponte after Mr. Tee bypassed
opportunities to raise the issue in district court and on appeal.
III. The prosecutor’s questioning in voir dire did not create an
obvious constitutional violation.
Mr. Tee also challenges the prosecutor’s questioning during voir
dire. The prosecutor’s evidence suggested that many local massage parlors
owned by Asian-Americans were actually houses of prostitution. In
addition, Mr. Tee, Lucy, and Jenny are of Asian descent. Ostensibly for
these reasons, the prosecutor focused on the single venireperson who
appeared to be Asian-American, questioning
 him about the impact of his ethnicity and
 others about whether this venireperson’s involvement would be
troublesome.
Mr. Tee challenges these lines of questioning as a denial of due process
and equal protection. We reject these challenges.
23
A. Standard of Review
Mr. Tee did not object to the prosecutor’s questioning of the venire.
Thus, we consider the due-process and equal-protection challenges under
the plain-error standard. See United States v. Taylor, 514 F.3d 1092, 1095-
96 (10th Cir. 2008) (stating that when there is no objection, “our precedent
limits us to plain error review”). “‘Plain error occurs when there is (1)
error, (2) that is plain, which (3) affects substantial rights, and which (4)
seriously affects the fairness, integrity, or public reputation of judicial
proceedings.’” United States v. Portillo-Vega, 478 F.3d 1194, 1202 (10th
Cir. 2007) (quoting United States v. Gonzalez-Huerta, 403 F.3d 727, 732
(10th Cir. 2005)). An error is plain when it is “clear” or “obvious.” United
States v. Olano, 507 U.S. 725, 734 (1993). And an error is clear or obvious
only when “contrary to well-settled law.” Taylor, 514 F.3d at 1100.
B. No Clear or Obvious Error
The government defends the questioning as an effort to check for
possible prejudice against Asian-Americans. This explanation was
plausible because of the nature of the evidence and the ethnicity of Mr.
Tee, Lucy, and Jenny.
As Mr. Tee points out, the Constitution forbids the government from
striking a venireperson based on race. See Batson v. Kentucky, 476 U.S. 79,
89 (1986) (“[T]he Equal Protection Clause forbids the prosecutor to
challenge potential jurors solely on account of their race . . . .”). But the
24
prosecutor did not strike the Asian-American venireperson. Instead, the
prosecutor simply asked about racial bias, and the Supreme Court has
permitted questioning of venirepersons about racial bias. See, e.g., Turner
v. Murray, 476 U.S. 28, 36-37 (1986) (plurality) (holding that a defendant
charged with an interracial capital crime is entitled to question
venirepersons about racial bias); Ristaino v. Ross, 424 U.S. 589, 594-98
(1976) (stating that inquiry into racial bias can be required in certain
circumstances); Ham v. South Carolina, 409 U.S. 524, 526-27 (1973)
(concluding that the defendant’s right to due process was violated by the
state court’s refusal to permit questioning about racial bias).
Against this backdrop, Mr. Tee fails to identify a single opinion
condemning the sort of questioning that took place here. In the absence of
any cited authority, we cannot regard the district court’s failure to step in
as an obvious constitutional error. See United States v. Muñoz, 812 F.3d
809, 815 (10th Cir. 2016) (rejecting an appeal point under the plain-error
standard based on the appellant’s failure to cite any supporting opinions).
Thus, we reject this appeal point under the plain-error standard.
IV. The district court did not err in allowing the prosecution to use
the Rubmaps website as a demonstrative exhibit.
While talking with Lucy, Mr. Tee suggested that she use a website
(Rubmaps) to research potential massage parlors. The district court allowed
the prosecution to use screenshots from Rubmaps to help jurors understand
25
the nature of the reviews on this website. These screenshots were limited
to
 the opening page,
 sample portions of the glossary, and
 two sample reviews.
Mr. Tee argues that the government’s demonstration was improper for
three reasons:
1. The jury perceived the Rubmaps screenshots as substantive
evidence.
2. The Rubmaps screenshots were irrelevant.
3. The danger of unfair prejudice substantially outweighed any
probative value.
These arguments fail, for the district court had the discretion to allow use
of the screenshots to help the jury understand the sexual nature of the
website.
A. Standard of Review
We consider this evidentiary ruling under the abuse-of-discretion
standard. See United States v. Blechman, 657 F.3d 1052, 1063 (10th Cir.
2011) (“‘We review a district court’s evidentiary rulings for an abuse of
discretion, considering the record as a whole.’” (quoting United States v.
Ledford, 443 F.3d 702, 707 (10th Cir. 2005))). Under this standard, we will
reverse if the district court rules in a manner that is beyond “‘the bounds
of permissible choice’” or is “‘arbitrary, capricious or whimsical.’” United
26
States v. Willis, 826 F.3d 1265, 1270 (10th Cir. 2016) (quoting United
States v. Sturm, 673 F.3d 1274, 1286 (10th Cir. 2012)).
B. The Jury’s Understanding of the Screenshots as Substantive
Evidence
Mr. Tee contends that the jury asked “whether there were any
legitimate reviews on Rubmaps.” Appellant’s Opening Br. at 55. Mr. Tee
argues that this question shows that the jury perceived the demonstration
as substantive evidence. But Mr. Tee is mistaken about the question; it
referred to testimony about Rubmaps: “What was the testimony in relation
to legitimate massage businesses in Wichita being reviewed on
Rubmaps.com?” Appellant’s App’x at 74. We have no reason to think that
the jury treated the Rubmaps exhibit as substantive evidence rather than as
an aid to understand the testimony about the website.
C. The Relevance of the Screenshots
Mr. Tee also challenges the use of the screenshots on the ground of
relevance. We reject the challenge because the district court could
reasonably view the screenshots as relevant to defeat Mr. Tee’s entrapment
defense. To counter this defense, the government needed to show Mr. Tee’s
predisposition to commit the offense. See Part II(B), above. This showing
could come from Mr. Tee’s experience in brokering the sale of massage
parlors that sold sex as well as massages. To show this experience, the
government presented evidence that Mr. Tee had suggested to Lucy that
27
she look for potential businesses through Rubmaps. But what was
Rubmaps?
The government presented testimony about the sexual nature of
Rubmaps, which served to counter Mr. Tee’s theory of entrapment. For this
theory, Mr. Tee had denied knowledge of sexual activity at the massage
parlors. The government presented contrary testimony, but the district
court could reasonably conclude that testimony alone would not fully
explain the implausibility of Mr. Tee’s alleged naiveté. The opening page
of the Rubmaps website stated that here is where “fantasy meets reality.”
Appellant’s App’x at 170. Then, a random sampling of four pages from the
website’s glossary contained explicit sexual terms that left little to the
imagination. The two customer reviews were littered with explicit sexual
terminology. And the website’s standard review form allowed reviewers to
specify whether the masseuse had offered certain services, including
fellatio, intercourse, and other sexual acts.
With the insight gleaned from the screenshots, the jury could
understand that Mr. Tee had prior experience working with massage parlors
that sell sex. Consequently, the district court reasonably considered the
screenshots as relevant.
D. The Danger of Unfair Prejudice
Mr. Tee also contends that the district court should have excluded the
screenshots based on the danger of unfair prejudice.
28
This issue involves the application of Federal Rule of Evidence 403.
This rule allows the district court to exclude evidence if the probative
value is substantially outweighed by the danger of unfair prejudice. Fed. R.
Evid. 403. We review the district court’s ruling for an abuse of discretion.
United States v. Cerno, 529 F.3d 926, 935-36 (10th Cir. 2008). And in
reviewing the district court’s exercise of discretion, we give the evidence
its maximum reasonable degree of relevance and its minimum reasonable
danger of unfair prejudice. Id. at 935.
The jury might have been shocked by the screenshots. But the
screenshots allowed jurors to understand that Rubmaps is not a legitimate
website with a few reviewers making inappropriate comments; Rubmaps is
a website that targets individuals interested in hiring a prostitute.
Therefore, when we assign the evidence its maximum reasonable degree of
relevance and its minimum reasonable danger of unfair prejudice, we
conclude that the district court acted within its discretion in allowing the
use of the website as a demonstrative exhibit.
V. The district court did not err in allowing introduction of Mr.
Tee’s Backpage advertisements.
Mr. Tee also challenges the introduction of prior advertisements
posted on a website known as Backpage. The government presented
evidence that (1) Mr. Tee had prepared these advertisements and (2) they
had highlighted the sexual qualities of the massage therapists rather than
29
their ability to give legitimate massages. According to Mr. Tee, the
exhibits constituted hearsay and were unfairly prejudicial. We reject both
arguments.
A. The Advertisements
The exhibits comprised eight advertisements on Backpage; all were
posted by Mr. Tee on behalf of Asian massage parlors. Each advertisement
contained pictures of young, scantily clad Asian women in provocative
poses, focusing on their physical attributes rather than their ability to give
legitimate massages. The captions highlighted the masseuses’ physical
attributes and sexual qualities: “Beautiful and sweet Chinese therapists,”
“Cute & Hot Asian Girls Waiting For You,” “Every Man’s Fantasy,”
“Asian Hotties For U,” and “Sexy Lady Must Come.” Appellant’s App’x at
199, 203, 209, 213, 215.
B. Hearsay
Mr. Tee contends that these advertisements constituted inadmissible
hearsay. But Mr. Tee waived this contention.
Out-of-court statements can constitute hearsay if they are used to
prove the truth of the matter asserted. Fed. R. Evid. 801(c). But at trial,
Mr. Tee specifically disavowed any challenge to “the content” of the
advertisements or “the substance” of whether Mr. Tee had placed the
advertisements. Appellant’s App’x at 391. Thus, Mr. Tee voluntarily
relinquished any objection to the government’s use of the advertisements
30
on hearsay grounds. In these circumstances, we consider the hearsay
contention to be waived. See United States v. Aptt, 354 F.3d 1269, 1280-81
(10th Cir. 2004). 3
C. Unfair Prejudice
Mr. Tee also contends that the probative value of the advertisements
was substantially outweighed by the danger of unfair prejudice. According
to Mr. Tee, the unfair prejudice came from the stereotype that Asian
massage parlors engage in prostitution. But the government’s evidence was
based on experience rather than a stereotype. At trial, a police officer
testified that “[t]he vast majority of parlors we investigate involve people
who are of Chinese origin and speak Mandarin Chinese.” Appellant’s
App’x at 422. This testimony lent significance to the nature of Mr. Tee’s
advertisements on Backpage, focusing on Asian massage parlors and the
physical attributes of the masseuses.
The advertisements also tend to show Mr. Tee’s predisposition
through his prior work for prostitution fronts before he was contacted by
3
Even if Mr. Tee had not waived the hearsay contention, we would
decline to consider it. Mr. Tee objected at trial based on relevance, not
hearsay. Thus, even if he did not waive the hearsay objection, he failed to
preserve it. See United States v. Cornelius, 696 F.3d 1307, 1319 (10th Cir.
2012). We would ordinarily consider an unpreserved challenge under the
plain-error standard. United States v. Battles, 745 F.3d 436, 445 n.9 (10th
Cir. 2014); see p. 17, above. But Mr. Tee has not urged plain error. As a
result, we would decline to consider the hearsay contention even if it had
not been voluntarily relinquished. United States v. Lamirand, 669 F.3d
1091, 1100 n.7 (10th Cir. 2012); see p. 17, above.
31
Lucy. The advertisements focus on the masseuses’ physical attributes and
sexual qualities rather than an ability to give legitimate massages. These
advertisements could lead a reasonable jury to regard Mr. Tee as an
entrepreneur experienced in selling houses of prostitution masquerading as
massage parlors. Consequently, the district court could reasonably
conclude that the danger of unfair prejudice had not substantially
outweighed the advertisements’ probative value. See United States v. Al-
Maliki, 787 F.3d 784, 795 (6th Cir. 2015) (rejecting a challenge to
evidence on the ground that it involved a Middle Eastern stereotype
because the evidence, in context, was relevant and not unduly prejudicial).
VI. Conclusion
We reject each of Mr. Tee’s four appeal points. First, the government
presented sufficient evidence for a reasonable jury to find guilt on each
count and to reject Mr. Tee’s defense of entrapment. Second, the
prosecutor’s questioning of the venire about potential bias against Asian-
American individuals did not constitute plain error. Third, the district
court did not abuse its discretion in allowing the government to present a
demonstrative exhibit explaining the Rubmaps website. Finally, the district
court did not abuse its discretion in admitting the Backpage
advertisements. Having rejected each appeal point, we affirm the
conviction.
32
16-3243, United States v. Tee
McKAY, concurring in part and dissenting in part.
I join the majority’s opinion as to all issues except Mr. Tee’s conviction for
money laundering. On that count, I would reverse because Mr. Tee’s charged
conduct cannot constitute money laundering as a matter of law.
As an initial matter, it is important to reiterate what evidence the
government presented at trial, and what evidence it did not present. According to
the government’s evidence, the police department provided Jenny with $100 in
police department funds as part of its sting operation. Using the account
information provided by Mr. Tee, Jenny took this $100 to a bank and deposited
the funds into Mr. Tee’s business bank account. That is the extent of the
government’s evidence about financial transactions involving the $100. The
government presented no evidence that Mr. Tee conducted any further
transactions with the $100 once Jenny deposited it into his account. Rather, the
government contends that Mr. Tee laundered the $100 simply by instructing Jenny
to deposit it into his bank account.
It is also important to clarify the government’s theory on how the $100
constituted criminal proceeds, since the statutory language plainly states that an
individual cannot be convicted of money laundering unless he conducts a
financial transaction “which in fact involves the proceeds of specified unlawful
activity.” 18 U.S.C. § 1956(a)(1). The indictment specified that the unlawful
activity which generated the $100 in criminal proceeds was Mr. Tee’s use of a
telephone to promote prostitution; in other words, the $100 was criminal proceeds
because—and only because—it was paid to Mr. Tee for the help he had provided
to Jenny and Lucy in arranging the sale of a known prostitution front. Thus, it
did not become criminal proceeds until the moment of payment; up until the point
when Jenny paid the money to Mr. Tee, the $100 was police department money
that (presumably) had not been illegally derived from criminal activity.
Given these facts, Mr. Tee’s conduct cannot, as a matter of law, constitute
money laundering. Several different circuits have all taken the position that
“[t]he transaction or transactions that created the criminally-derived proceeds
must be distinct from the money-laundering transaction, because the money
laundering statutes criminalize transactions in proceeds, not the transactions that
create the proceeds.” United States v. Seward, 272 F.3d 831, 836 (7th Cir. 2001)
(internal quotation marks omitted); see also, e.g., United States v. Butler, 211
F.3d 826, 830 (4th Cir. 2000) (“Put plainly, the laundering of funds cannot occur
in the same transaction through which those funds first became tainted by
crime.”). Here, Mr. Tee was unquestionably convicted of money laundering
based on the same financial transaction that allegedly generated the criminal
proceeds.
Although this circuit has not applied this legal principle to a conviction
under § 1956 before, in United States v. Johnson, 971 F.2d 562 (10th Cir. 1992),
we considered an analogous issue involving similar statutory language for the
-2-
related crime of engaging in monetary transactions with criminally derived
property in violation of 18 U.S.C. § 1957. The defendant in that case was
convicted of sixty counts of violating § 1957 through a scheme in which he
received funds from investors and periodically sent them smaller payments of
purported profits, while withdrawing the rest of the funds for his own purposes.
On appeal, we reversed all of the convictions that were based on the defendant’s
receipt of the investors’ funds, while affirming the convictions that were based on
his wiring of funds back to investors.
In so doing, we first noted that one could conceivably construe the statutory
phrase “proceeds obtained from a criminal offense” more broadly than other
courts had construed it. Id. at 569. As we explained:
One might logically infer that Congress could have intended § 1957
to apply when the underlying criminal activity occurs simultaneously
with a monetary transaction with the proceeds of the activity. In this
case, the result achieved by causing the investors to wire the funds
directly into the defendant’s account was no different than if the
defendant had first obtained the funds and then deposited them
himself. This latter transaction would clearly have violated § 1957.
It would be logical, then, to assume that the former transaction would
also be proscribed by the statute. Yet, both the plain language of §
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. At the very least, the
statute is ambiguous on this point because, after examining all the
relevant material which might aid us in construing its provisions, a
reasonable doubt persists as to the statute’s intended scope.
Accordingly, the “rule of lenity” requires that we adopt the more
lenient interpretation.
Id. (citations omitted). We then held:
-3-
Whether or not the funds that were wired to the defendant were
“criminally derived property” depends upon whether they were
proceeds obtained from a criminal offense at the time the defendant
engaged in the monetary transaction. We find they were not. Section
1957 appears to be drafted to proscribe certain transactions in
proceeds that have already been obtained by an individual from an
underlying criminal offense. The defendant did not have possession
of the funds nor were they at his disposal until the investors
transferred them to him. The defendant therefore cannot be said to
have obtained the proceeds of the wire fraud until the funds were
credited to his account. Thus, the transfers alleged in counts four
through thirty-one of the indictment were not transactions in
criminally derived property and the defendant’s convictions on those
counts are reversed.
Id. at 569–70. We noted that this interpretation of § 1957 was consistent with our
discussion of § 1956 in an earlier case, in which we “concluded that ‘Congress
aimed the crime of money laundering at conduct that follows in time the
underlying crime rather than to afford an alternative means of punishing the prior
specified unlawful activity.’” Id. at 569 (quoting United States v. Edgmon, 952
F.2d 1206, 1214 (10th Cir. 1991)).
The same reasoning is applicable in this case. Mr. Tee’s money-laundering
conviction cannot be sustained because, until the financial transaction had been
completed and the funds came into his control and possession, the $100 did not
constitute “proceeds” of criminal activity, and there is no evidence that he
engaged in any financial transactions with the $100 once it was deposited into his
account and thus became criminal proceeds. See id. at 569–70; see also, e.g.,
Seward, 272 F.3d at 837 (“[T]he defendant must have control of the proceeds of a
-4-
fraudulent transaction before he can engage in money laundering with those
proceeds.”). While Congress could perhaps have drafted the statute “to apply
when the underlying criminal activity occurs simultaneously with a monetary
transaction with the proceeds of the activity,” 971 F.2d at 569, it did not
unambiguously do so, and the statute accordingly must be construed to proscribe
only financial transactions that occur after the transaction that generates the
criminal proceeds has been completed. See id.; see also, e.g., Seward, 272 F.3d at
836. Mr. Tee’s conviction clearly violates this well-settled principle of law.
The majority is of the view that we need not address this issue because,
both before the district court and on appeal, Mr. Tee has failed to raise this
nuance of the law in his challenge to the government’s evidence of money
laundering. I respectfully dissent. The question of whether the government’s
evidence was sufficient to sustain his money-laundering conviction is clearly at
issue in this appeal: Mr. Tee has raised two different arguments to challenge the
government’s theory of the case, and the government has contended in response
that the $100 constituted proceeds of Mr. Tee’s illegal activities and that Mr. Tee
laundered his criminal proceeds by “provid[ing] Jenny his Alert America business
account in order to disguise the nature and source of the proceeds.” (Appellee’s
App. at 22.) I believe it is the duty of this court to resolve the issues before us
correctly, even if they have not been briefed well by the parties. Moreover, even
if Mr. Tee’s arguments on appeal were insufficient to raise this specific legal
-5-
challenge to his conviction, I believe the circumstances of this case warrant an
exercise of our discretion to consider this issue and resolve it correctly.
The Supreme Court has held that there are certainly “circumstances in
which a federal appellate court is justified in resolving an issue not passed on
below, as where the proper resolution is beyond any doubt or where injustice
might otherwise result.” Singleton v. Wulff, 428 U.S. 106, 121 (internal quotation
marks and citations omitted). It is difficult for me to conceive of a situation in
which injustice is more likely to result than when this court will let stand a
conviction for conduct which is not criminal as a matter of law, on the slim
ground that the defendant did not argue a particular nuance of the law in
contesting his criminal conviction.
Nor do I see any doubt as to the proper resolution of this case. The
majority’s attempts to distinguish this case from Johnson are unpersuasive. For
instance, the majority argues that United States v. Kennedy, 64 F.3d 1465 (10th
Cir. 1995), stands for the proposition that money-laundering convictions under
§ 1956, unlike money-laundering convictions under § 1957, may be sustained
even where the supposed money laundering occurred in the same financial
transaction that caused the money to become criminal proceeds. However,
nothing in Kennedy is inconsistent with the reasoning or result of Johnson. In
Kennedy, the § 1956 counts were each based on the defendant’s action of
depositing funds he had previously received from defrauded investors into his
-6-
account; thus, his receipt of the profits of his criminal activities occurred prior to
the financial transactions that gave rise to his money-laundering convictions. See
id. at 1477. As we noted in Johnson, “the result achieved by causing the
investors to wire the funds directly into the defendant’s account [as occurred in
Johnson] was no different than if the defendant had first obtained the funds and
then deposited them himself [as occurred in Kennedy].” 971 F.2d at 569. And
yet, while the latter transaction “would clearly have violated § 1957” or § 1956,
the former transaction does not. Id. “[T]he money laundering statutes”—both §
1956 and § 1957—“criminalize transactions in proceeds, not the transactions that
create the proceeds.” United States v. Seward, 272 F.3d 831, 836 (7th Cir. 2001).
Our holding in Kennedy is in accordance with this settled legal principle.
Perhaps the majority is of the view that affirming Mr. Tee’s money-
laundering conviction despite its lack of a permissible legal foundation is
unimportant because it is just one of three counts Mr. Tee was convicted for and
because he has already completed his concurrent 18-month sentence on these
counts. I cannot agree with such reasoning.
First, such an argument would “incorrectly assume[] that the total sentence
imposed is all that matters, and that the number of convictions that can be
obtained is of no relevance.” Missouri v. Hunter, 459 U.S. 359, 371–72 (1983).
This argument “overlooks the fact that, quite apart from any sentence that is
imposed, each separate criminal conviction typically has collateral consequences,
-7-
. . . [and t]he number of convictions is often critical to the collateral
consequences that an individual faces.” Id. at 372–73. Moreover, “[b]ecause a
criminal conviction constitutes a formal judgment of condemnation by the
community, each additional conviction imposes an additional stigma and causes
additional damage to the defendant’s reputation.” Id. at 373.
Second, by affirming a criminal conviction for conduct that as a matter of
law is not criminal, the majority muddies an already complicated area of law and
substantially increases the risk of further instances of prosecutorial overreach.
The majority expressly holds that the $100 constitutes proceeds of an unlawful
activity because a jury could find that it was paid to Mr. Tee for brokering the
sale of the prostitution business, and the majority further holds that the money-
laundering conviction may be upheld on the basis that Mr. Tee directed Jenny to
deposit the $100 into his bank account. Although the majority then notes that it is
declining to address the issue of whether money-laundering convictions may be
based on the same financial transaction that created the criminal proceeds, the
majority’s opinion may be misread in the future as allowing convictions to be so
based, deviating from this court’s precedent in Johnson and creating a split from
the well-settled law in our sister circuits.
Third, affirming a criminal conviction for conduct that is not criminal
under the charged statute “seriously affects the fairness, integrity[, and] public
reputation of judicial proceedings,” regardless of whether the conviction affected
-8-
the total sentence or not. United States v. Olano, 507 U.S. 725, 732 (1993)
(internal quotation marks and brackets omitted). In my view, affirming a criminal
conviction for non-criminal conduct based on defense counsel’s procedural
forfeiture of a nuanced legal argument is unfair, unjust, and will erode public
trust in the judiciary.
I would exercise this court’s discretion to consider the legal foundations of
Mr. Tee’s money-laundering conviction and hold as a matter of well-settled law
that his conviction must be reversed because the purported money laundering
occurred in the same transaction in which the funds became criminal proceeds. I
therefore dissent from this portion of the majority’s opinion.
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