United States v. White ( 2000 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0186P (6th Cir.)
File Name: 00a0186p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
;

UNITED STATES OF AMERICA,

Plaintiff-Appellee,


Nos. 98-6361/6362
v.

>
JOHN R. PRINCE (98-6361), 

Defendants-Appellants. 
TONY WHITE (98-6362),

1
Appeal from the United States District Court
for the Western District of Tennessee at Jackson.
No. 97-10044—James D. Todd, District Judge.
Argued: December 16, 1999
Decided and Filed: June 1, 2000
Before: MERRITT and* SILER, Circuit Judges;
BECKWITH, District Judge.
*
The Honorable Sandra S. Beckwith, United States District Judge for
the Southern District of Ohio, sitting by designation.
1
2 United States v. Prince, et al. Nos. 98-6361/6362
_________________
COUNSEL
ARGUED: April R. Ferguson, OFFICE OF THE FEDERAL
PUBLIC DEFENDER FOR THE WESTERN DISTRICT OF
TENNESSEE, Memphis, Tennessee, G. William Hymers III,
HARDEE, MARTIN, JAYNES & IVY, Jackson, Tennessee,
for Appellants. Richard Leigh Grinalds, ASSISTANT
UNITED STATES ATTORNEY, Jackson, Tennessee, for
Appellee. ON BRIEF: April R. Ferguson, OFFICE OF THE
FEDERAL PUBLIC DEFENDER FOR THE WESTERN
DISTRICT OF TENNESSEE, Memphis, Tennessee, G.
William Hymers III, HARDEE, MARTIN, JAYNES & IVY,
Jackson, Tennessee, for Appellants. Richard Leigh Grinalds,
ASSISTANT UNITED STATES ATTORNEY, Jackson,
Tennessee, for Appellee.
_________________
OPINION
_________________
BECKWITH, District Judge. Defendant Prince raises on
appeal three issues challenging his convictions. Defendant
White raises on appeal two issues challenging his convictions
and two issues challenging his sentence.
Beginning on or around January 2, 1991, Defendant White
devised and engaged in a scheme to “defraud and obtain
money by means of false and fraudulent pretenses,
representations and promises.” Defendant White represented
to certain individuals that he was “bonded with” the U.S.
Bankruptcy Court and that this enabled him to buy assets
involved in bankruptcies which he could then sell for a
sizeable profit. Defendants Prince and White solicited
individuals to invest in their alleged plan to purchase and then
sell these assets. Investors contributed money for purchasing
property and for covering alleged costs associated with
purchasing property involved in bankruptcies, e.g., taxes,
accountant fees, closing costs, etc. The government
50 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 3
case. Noticing losses in her report that the victims had not established at trial that individuals could not purchase
reported previously, Mr. Appleton contacted the victims and property from the bankruptcy court as was represented by
requested sworn statements. The sworn statements were Defendants.
consistent with the IRS report except for a few inconsistencies
which Mr. Appleton explained. The district court found that According to the evidence presented at trial, Defendants
the victim impact statements used in the preparation of the physically obtained investors’ money through one of three
presentence investigation report were more accurate than the types of arrangements. Under one arrangement, Defendants
referenced pieces of testimony. The court noted that the directed investors to wire transfer the money into the bank
referenced pieces were incomplete and often taken out of accounts of third parties. Per a pre-arranged agreement with
context, and that some testimony related to a time midway in either or both Defendants, the third party wrote a check in the
the scheme. The court found that the victim impact amount of the transfer, cashed that check, and then transferred
statements clearly supported a conclusion that the probation the money in cash to Defendant Prince. On at least a couple
officer’s calculation of over one million was justified. The of occasions, Prince received a personal check, rather than
court was not clearly erroneous in adopting those calculations. cash, from the third party. On at least one occasion the third
party transferred the cash to another third party who then
For the reasons provided above, the judgment of the district transferred the cash to Prince. On all occasions Prince
court is AFFIRMED. eventually transferred the money to White. Prince explained
to some investors that money needed to be wired to a third
party’s account because Prince did not have a bank account
and/or that he was in bankruptcy and a monetary transfer
would cause the bankruptcy court to attach his account.
Under a second arrangement, Defendants directed investors
to wire transfer money via Western Union to third parties.
Per a pre-arranged agreement with either or both Defendants,
the third party signed for and received the money and then
transferred it in cash to Defendant Prince. Prince then
transferred to Defendant White the money received from the
third parties.
Under a third arrangement, Defendants directed investors
to wire transfer money via Western Union to Prince. Prince
signed for and received the money from a Western Union
representative. Prince then transferred the money to White.
It was not established at trial how Defendants disposed of
the money fraudulently obtained. Victims testified that they
had not received any of the money they had invested.
On May 18, 1998, a federal grand jury returned a
superseding indictment in which Counts 1 through 16 charged
4 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 49
both Defendants with wire fraud and aiding and abetting the (B) in the case of a jointly undertaken criminal
commission of wire fraud and Counts 17 through 85 charged activity (a criminal plan, scheme, endeavor, or
both Defendants with money laundering and aiding and enterprise undertaken by the defendant in
abetting the commission of money laundering. A jury trial concert with others, whether or not charged as
commenced against Defendants on June 3, 1998. At the close a conspiracy), all reasonably foreseeable acts
of the government’s case, the court entered a judgment of and omissions of others in furtherance of the
acquittal on Count 33. The jury found Defendants guilty on jointly undertaken criminal activity,
all remaining counts. that occurred during the commission of the offense
of conviction, in preparation for that offense, or in
In the interest of economy, we will provide the remaining the course of attempting to avoid detection or
relevant facts below as we address the issues raised on appeal. responsibility for that offense;
(2) solely with respect to offenses of a character for
A. Sufficiency of the Evidence which § 3D1.2(d) would require grouping of
multiple counts, all acts and omissions described in
Defendant Prince contends that the evidence was subdivisions (1)(A) and (1)(B) above that were part
insufficient to convict him of money laundering. of the same course of conduct or common scheme or
plan as the offense of conviction;
The standard of review for a claim of insufficient evidence (3) all harm that resulted from the acts and omissions
is “whether, taking the evidence in the light most favorable to specified in subsections (a)(1) and (a)(2) above, and
the prosecution, any rational trier of fact could have found the all harm that was the object of such acts and
essential elements of the crime beyond a reasonable doubt.” omissions; and
United States v. Haun, 90 F.3d 1096, 1100 (6th Cir. 1996) (4) any other information specified in the applicable
(citations omitted). A defendant challenging the sufficiency guideline.
of the evidence “‘bears a very heavy burden.’” United States
v. Wright, 16 F.3d 1429, 1439 (6th Cir. 1994) (citations USSG § 1B1.3. The sentencing court must base its relevant
omitted), cert. denied, 512 U.S. 1243, 114 S. Ct. 2759, 129 conduct approximation on reliable information, and the
L.Ed.2d 874 (1994). Circumstantial and direct evidence are approximation must be supported by a preponderance of the
afforded the same weight. United States v. Blakeney, 942 evidence. Brawner, 173 F.3d at 971 (citations omitted).
F.2d 1001, 1010 (6th Cir. 1991) (citations omitted); United Section 2S1.1 of the Sentencing Guidelines prescribes that the
States v. Griffith, 17 F.3d 865, 872 (6th Cir. 1994) (“‘[i]t has sentencing court shall increase the base offense level for
long been recognized ... that circumstantial evidence ... can be money laundering depending on the amount of loss involved.
sufficient to support a jury’s determination...’”) (quoting
United States v. Scruggs, 549 F.2d 1097, 1104 (6th Cir.), cert. Defendant White contends that the trial court erroneously
denied, 434 U.S. 824, 98 S. Ct. 70, 54 L. Ed. 2d 81 (1977)). adopted the loss calculations computed by Bobby Appleton,
We will reverse a judgment for insufficient evidence if, after the United States Probation Officer who prepared the
viewing the record as a whole, we conclude that the judgment presentence report. White claims that testimonies at trial
is not supported by substantial and competent evidence. establish a figure less than one million. At the sentencing
Blakeney, 942 F.2d at 1010 (citing United States v. Ellzey, hearing, the government examined Mr. Appleton. He
874 F.2d 324, 328 (6th Cir. 1989)). explained that he originally based his loss calculations on a
report that he received from an IRS agent investigating the
48 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 5
has failed to illustrate that his is an atypical case “where Defendant Prince challenges his convictions for money
conduct significantly differs from the norm.” Indeed, this laundering under 18 U.S.C. section 1956(a)(1)(B)(i).1 The
scenario is typical, rather than atypical of wire fraud and elements of the charged money laundering offenses are:
money laundering schemes.
(1) use of funds that are proceeds of unlawful activity;
2. Value of losses (2) knowledge that the funds are proceeds of unlawful
activity; and (3) conduct or attempt to conduct a financial
For the purpose of sentencing, the district court found that transaction, knowing that the transaction is designed in
the amount of the loss was more than one million dollars. whole or in part to disguise the nature, location, source,
Defendant White objected to this determination at the time of ownership or control of the proceeds.
sentencing and raises this objection now on appeal. The
determination of amount of loss is important as section United States v. Moss, 9 F.3d 543, 551 (6th Cir. 1993).
2S1.1(b) of the Sentencing Guidelines provides for an
increase of anywhere from one to thirteen offense levels On appeal, Defendant Prince first asserts that the money
depending solely on the amount of loss. obtained through the offense of wire fraud did not become
proceeds of unlawful activity as defined in the money
We review for clear error a district court’s findings of fact laundering statute until he physically obtained the funds of the
in sentencing decisions. United States v. Gort-DiDonato, 109 wire transfer. He concludes that once he obtained these
F.3d 318, 320 (6th Cir. 1997); United States v. Hill, 79 F.3d funds, he did not conduct or attempt to conduct a transaction
1477, 1481 (6th Cir. 1996) (citing 18 U.S.C. § 3742(e); and therefore he did not violate the statute. Second, Prince
United States v. Hamilton, 929 F.2d 1126, 1130 (6th Cir. argues that if a transaction occurred, the proof does not
1991)), cert. denied, 519 U.S. 858, 117 S. Ct. 158, 136
L. Ed. 2d 102 (1996). A finding of fact is clearly erroneous
when “‘although there is evidence to support it, the reviewing
1
court on the entire evidence is left with the definite and firm 18 U.S.C. section 1956(a)(1), provides as follows:
conviction that a mistake has been committed.’” Gort-
DiDonato, 109 F.3d at 320 (quoting United States v. Perez, (a)(1) Whoever, knowing that the property involved in a financial
871 F.2d 45, 48 (6th Cir. 1989)). We review for clear error a transaction represents the proceeds of some form of unlawful
activity, conducts or attempts to conduct such a financial transaction
sentencing court’s factual findings concerning the amount of which in fact involves the proceeds of specified unlawful activity–
loss for which the defendant is to be held accountable as (A)(i) with the intent to promote the carrying on of specified
relevant conduct pursuant to Sentencing Guideline section unlawful activity; or
1B1.3(a)(1). See United States v. Brawner, 173 F.3d 966, 971 (ii) with intent to engage in conduct constituting a violation of
(6th Cir. 1999) (estimating the loss involved pursuant to the section 7201 or 7206 of the Internal Revenue Code of 1986; or
(B) knowing that the transaction is designed in whole or in part–
fraud guidelines prescribed in USSG § 2F1.1). Relevant (i) to conceal or disguise the nature, the location, the source, the
conduct includes: ownership, or the control of the proceeds of specified unlawful
activity; or
(1) (A) all acts and omissions committed, aided, (ii) to avoid a transaction reporting requirement under State
abetted, counseled, commanded, induced, or Federal law,
procured, or willfully caused by the defendant; shall be sentenced to a fine of not more than $500,000 or twice the
and value of the property involved in the transaction, whichever is
greater, or imprisonment for not more than twenty years, or both.
6 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 47
establish that it was conducted in an attempt to conceal the party for the amount transferred to bank accounts, Defendants
nature and source of the money. Third, Prince contends that instructed the third parties to withdraw the money and transfer
there was “no substantial evidence” to support a conviction of cash. This procedure helped prevent any paper trail. As
aiding and abetting.2 further evidence of the intent to conceal the wire fraud,
withdrawals from the bank accounts appeared to be structured
Prince has failed to establish that insufficient evidence so that no withdrawal would amount to $10,000 or more, an
supports the three elements of money laundering. amount which would require the bank to complete a cash
transaction report. None of the Western Union transfers from
1. Use of funds that are proceeds of an unlawful activity the victims identified White as the recipient. Many of the
Western Union transfers identified third parties as the
Under the first element of money laundering, the funds recipient. As stated earlier, statements made by Prince
allegedly laundered by Defendant Prince must be the proceeds suggest an intent to conceal.
of an unlawful activity. Specifically, the funds must represent
proceeds from some form of activity that constitutes a felony. Defendant White fails to explain how this case is atypical
18 U.S.C. § 1956 (c)(1). “Proceeds” include “‘what is of the money laundering cases to which Sentencing Guideline
produced by or derived from something (as a sale, investment, section 2S1.1 applies. White contends that the court should
levy, business) by way of total revenue.’” Haun, 90 F.3d at have considered the affidavit of Defendant Prince. Prince
1101 (quoting WEBSTER’S THIRD NEW INTERNATIONAL executed an affidavit prior to the original indictment. In that
DICTIONARY 1807 (1971)). affidavit, he stated that White was not responsible for the
money loss. Contrary to White’s argument, the district court
In this case, the indictment identifies wire fraud as the did consider the affidavit, and the court concluded that the
underlying felony from which the proceeds were derived. The affidavit was inaccurate, inconsistent with trial testimony, and
elements of wire fraud, as prescribed under 18 U.S.C. section “clearly not true.” Accordingly, the court decided not “to
1343,3 are as follows: (1) a scheme or artifice to defraud; (2) attach much significance” to it.
In addition, White argues that the money wired to third
2
18 U.S.C. section 2 provides as follows: parties went to Defendant Prince and that White had no direct
contact with most of the victims. White appears to be arguing
(a) Whoever commits an offense against the United States or aids, that a departure is warranted because insufficient evidence
abets, counsels, commands, induces or procures its commission, is links him to the money laundering charges. However, we
punishable as a principal.
disposed of this issue above in addressing his sufficiency of
(b) Whoever willfully causes an act to be done which if directly the evidence claim and concluded that the proof at trial
performed by him or another would be an offense against the United established that White initiated and helped perpetuate this
States, is punishable as a principal. fraudulent scheme which evolved into wire fraud and money
3
laundering. At the very least, he aided and abetted the
18 U.S.C. section 1343, provides as follows: commission of wire fraud and the laundering of the proceeds
of that wire fraud. White has failed either to identify a factor
Whoever, having devised or intending to devise any scheme or
artifice to defraud, or for obtaining money or property by means that the guidelines did not consider or to show “any unusual
of false or fraudulent pretenses, representations, or promises, circumstances rendering the guidelines’ consideration
transmits or causes to be transmitted by means of wire, radio, or inadequate in [his] case.” See Ford, 184 F.3d at 586-87. He
television communication in interstate or foreign commerce, any
46 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 7
range. United States v. Haun, 90 F.3d 1096, 1102 (6th Cir. use of interstate wire communications in furtherance of the
1996), cert. denied, 519 U.S. 1059, 117 S. Ct. 691, 136 scheme;4 and (3) intent to deprive a victim of money or
L.Ed.2d 614 (1997). After identifying the offense level, the property. United States v. Merklinger, 16 F.3d 670, 678 (6th
district court adjusts the level as the Guidelines direct and Cir. 1994); United States v. Ames Sintering Co., 927 F.2d
determines the defendant’s criminal history category. Koon, 232, 234 (6th Cir. 1990) (citations omitted). Defendants must
518 U.S. at 88, 116 S.Ct. at 2042. (citing United States have used the proceeds of the acts of wire fraud to commit
Sentencing Commission, Guideline Manual § 1B1.1 (Nov. money laundering.
1992)). The court then coordinates the adjusted offense
level and the criminal history category to arrive at the We conclude that the money, once wired by the victims,
appropriate sentencing range. Id. District courts may depart constituted proceeds of wire fraud. We find instructive the
from the applicable Guideline range if “‘the court finds that following cases decided in other circuits. United States v.
there exists an aggravating or mitigating circumstance of a Savage, 67 F.3d 1435 (9th Cir. 1995), cert. denied, 516 U.S.
kind, or to a degree, not adequately taken into consideration 1136, 116 S. Ct. 964, 133 L. Ed. 2d 885 (1996), supports the
by the Sentencing Commission in formulating the guidelines proposition that Prince did not need to have physical
that should result in a sentence different from that possession of the money before it could be considered
described.’” Koon, 518 U.S. at 92, 116 S.Ct. at 2044 (quoting proceeds. In Savage, the defendant was convicted of various
18 U.S.C. § 3553(b)). The Introduction to the Guidelines offenses including wire fraud and money laundering. Id. at
provides: 1437. The defendant defrauded individuals by promising that
if they sent him $5,000, he would obtain foreign loans and
The Commission intends the sentencing courts to treat earn each investor a return of $10 million. Id. The defendant
each guideline as carving out a ‘heartland,’ a set of recruited assistants to help him raise money, transfer it, and
typical cases embodying the conduct that each guideline launder it. Id. at 1438. The assistant would direct investors
describes. When a court finds an atypical case, one to to send money to the assistant’s bank account. Id. In some of
which a particular guideline linguistically applies but these transactions, the assistant transferred that money to a
where conduct significantly differs from the norm, the foreign bank account; at that point, the money either was sent
court may consider whether a departure is warranted. back to the defendant’s personal accounts in the United States
or was used directly to pay the defendant’s expenses. Id.
Koon, 518 U.S. at 93, 116 S. Ct. at 2044 (quoting 1995
U.S.S.G. Ch.1, pt. A, intro. comment. 4(b)).
The trial court did not err in applying the money laundering writings, signs, signals, pictures, or sounds for the purpose of
executing such scheme or artifice, shall be fined under this title
guidelines to this case. The counts charging Defendant White or imprisoned not more than five years, or both. If the violation
with wire fraud and money laundering involved substantially affects a financial institution, such person shall be fined not
the same harm. The court appropriately grouped the two more than $1,000,000 or imprisoned not more than 30 years, or
crimes and concluded that the money laundering guidelines both.
applied. As the court found, Defendants structured 4
transactions to avoid a paper trail, concealing their fraudulent The defendant does not have to directly or personally perform the
activities. Rather than accepting money directly from the wire communication; it is sufficient that it is foreseeable that a wire
communication could be used to advance the scheme to defraud. United
victims, Defendants directed victims to transfer money to States v. Griffith, 17 F.3d 865, 874 (6th Cir. 1994) (citing United States
third parties. Rather than accepting a check from the third v. Campbell, 845 F.2d 1374, 1382 (6th Cir.), cert. denied 488 U.S. 908,
109 S. Ct. 259, 102 L. Ed. 2d 248 (1988)).
8 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 45
On appeal, the defendant in Savage contended that the original plan and used for the defendants’ own personal
international monetary transfers did not involve proceeds of benefit. At least for their own uses.
unlawful activity as defined in section 1956. Id. at 1441-42. Also, we have a case here where the defendants were
However, the Ninth Circuit concluded that the international going to great lengths to avoid a paper trail. I don’t buy
monetary transfers did involve the proceeds of the previous the argument that bank accounts weren’t possible in this
acts of wire fraud. Id. at 1442. In appealing his convictions case because somebody was in bankruptcy. You can
on 18 U.S.C. section 1957 offenses,5 the defendant argued have a – you can have a checking account while you’re
that he did not have possession of the money when the wire in bankruptcy. People do it all the time. It’s clear in this
transfers were sent because the money was not transferred out case that other people’s bank accounts were being used,
of his personal account. Id. The court held that the funds wires were being used in an effort to avoid a record or a
transferred were criminally derived property at the time they trail of this money. So it seems to me that the
were deposited in accounts under the defendant’s control. Id. circumstances of this case are far closer to Ghosheh than
at 1443. The court found that the funds were at the they are to Caba.
defendant’s disposal because the record indicated that the Even though it’s a difficult question, it’s my
parties named on the accounts transferred the money at the conclusion that the money laundering statute is the
defendant’s request. Id. The court stated that it was appropriate guideline to use as the starting point for the
irrelevant that the accounts were not in the defendant’s name. calculations in this case.
Id.
(JA at 1059-62).
A case in the Fourth Circuit also supports the proposition
that funds may constitute proceeds even though the defendant While the district judge did not refer to his authority under
is not at that point in physical possession of those funds. In the guidelines to exercise discretion in deciding whether to
United States v. Smith, 44 F.3d 1259, 1263 (4th Cir. 1995), depart, we do not require him to state that he has this
the defendants Smith, Grimm, and Palmer were convicted of discretion. We conclude that the district judge did exercise
wire fraud in violation of 18 U.S.C. section 1343 and money his discretion in refusing to downward depart. Even if the
laundering in violation of 18 U.S.C. section 1957. Smith and district judge presumed himself bound by precedent and
Grimm carried out a scheme in which they fraudulently precluded from granting the requested departure, the result
was correct because the facts of this case are not outside the
heartland of the guidelines’ considerations.
5
18 U.S.C. section 1957 prohibits anyone from “knowingly A district court, applying the Sentencing Guidelines,
engag[ing] or attempt[ing] to engage in a monetary transaction in identifies the base level offense assigned to the crime. Koon
criminally derived property that is of a value greater than $10,000 and is
derived from specified unlawful activity.” This statute does not require v. United States, 518 U.S. 81, 88, 116 S. Ct. 2035, 2042, 135
that the defendant knew that the offense from which the criminally L.Ed.2d 392 (1996) (citing United States Sentencing
derived property was derived was specified unlawful activity. 18 U.S.C. Commission, Guideline Manual § 1B1.1 (Nov. 1992)). The
§ 1957(c). Section 1957(f)(2) defines criminally derived property as “any court must group together into a single group all counts
property constituting, or derived from, proceeds obtained from a criminal involving substantially the same harm. United States
offense.”
Stating that the legislative history applicable to section 1956 also Sentencing Commission, Guidelines Manual § 3D1.2 (Nov.
applies to section 1957, the Ninth Circuit in Savage concluded that 1998). Under the grouping rules, the offense guideline that
“criminally derived property” under section 1957 is equivalent to gives rise to the highest offense level dictates the sentencing
“proceeds” under section 1956. Savage, 67 F.3d at 1442.
44 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 9
I have to decide whether or not money laundering is the induced lenders to advance money to Lagusa, Inc., for the
appropriate guideline to use as a starting point. And I stated purpose of financing a corporation controlled by
have read – while Ms. Ferguson was discussing it, I have Smith. Id. at 1262-63. Lagusa’s president, Palmer, in
read the opinion in the Ghosheh – that’s G-H-O-S-H-E-H exchange for kickbacks, transferred the loans to an account
– from the Sixth Circuit, and the Court of Appeals for controlled by Smith, who later withdrew the money. Id. at
our circuit used the following language in the Ghosheh 1263.
case. The Court of Appeals said that ‘The defendant in
Caba, unlike the defendant in the instant case’ – that is, On appeal, Smith argued that the money transfers from
the Ghosheh case – ‘was redeeming food stamps that Lagusa to the bank account controlled by him could not
actually had been used to purchase food. Thus, in Caba, constitute both wire fraud and transactions in criminally
the court properly could conclude that the purpose for derived property. Id. The Fourth Circuit concluded that when
which the stamps had been intended – to purchase Smith and Grimm fraudulently induced the lenders to wire
foodstuffs – was not defeated by the defendant’s actions. loan proceeds to Lagusa, the wire fraud offenses were
‘Here, on the other hand, the food stamps redeemed by completed. Id. at 1265. Thus, at that point, the money in the
the defendant were never used for their actual purpose. hands of Lagusa constituted proceeds from unlawful activity,
This led to a complete diversion of government funds, despite the fact that the wire fraud scheme included further
which passed directly to the defendant, without ever transactions. Id.
having been used by those for whose benefit the food
stamps had been issued. The defendant, moreover, does Smith also argued that when Lagusa received the proceeds
not refute the government’s contention that he went to of the fraudulently obtained loans, Smith neither possessed
great lengths to conceal his deposits and withdrawals, nor controlled these loans and thus he could not be charged
used multiple bank accounts in the name of nominees, with money laundering. Id. In rejecting this argument, the
and usually closed bank accounts after a short period of Fourth Circuit held that the transfer from the lenders to
time. Thus, defendant’s actions are much closer to the Lagusa was effected pursuant to a scheme to defraud, which
heartland of the money laundering statute because those Smith participated in and devised. Id. at 1266. Smith was in
actions manifest a desire on his part to conceal the constructive control of the entire scheme and was therefore in
source, flow and destination of unlawfully obtained constructive possession and control of the fraudulently
funds. procured funds at the time those funds were transferred in
‘Because the defendant’s conduct here is readily violation of the money laundering statute. Id. Further, the
distinguishable from that of the defendant in Caba, that appellate court held that as Smith was charged with aiding
case does not support, much less require, reversal of the and abetting, he would not be required to be in possession of
district court’s sentence in this case.’ the money as it was being laundered. Id.
It seems to me that the Ghosheh opinion lends support
for the proposition that the defendant in this case was, in A Fifth Circuit case, United States v. Leahy, 82 F.3d 624
fact, closer to money laundering than the defendant was (5th Cir. 1996), is instructive on the proposition that a
in Caba. In this case, the money was diverted from the defendant needs only sufficient control, not actual, physical
purpose for which it was sent. The victims sent the possession, of the funds. In Leahy, the defendants Leahy,
money thinking that they were engaging in a financial Nece, and Flanagan were convicted of offenses including wire
investment plan through the bankruptcy court. That was fraud in violation of 18 U.S.C. section 1343 and money
never the case. The money was diverted from that laundering in violation of 18 U.S.C. section 1957. Id. at 629.
10 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 43
Nece owned and operated Great Western Roofing (“GWR”), downward is considered an issue of Guidelines interpretation
which successfully bid on a project for a Veterans that we review de novo. Ebolum, 72 F.3d at 37 (citations
Administration (“the VA”) building. Id. at 628. Because of omitted). We examine the sentencing hearing transcript to
GWR’s poor record of paying two of its main suppliers, those determine whether the district court’s refusal to depart
suppliers insisted that GWR establish an escrow account. Id. downward was an exercise of discretion or a legal
The escrow agreement required the escrow agent to transfer determination that it lacked the authority to depart. Ebolum,
the money paid by the VA, to GWR and the two suppliers, 72 F.3d at 37. The district court judge has no duty to state
according to set percentages. Id. Approximately six weeks affirmatively that he knows he possesses the power to depart
after receiving instructions to begin the project, GWR downward but declines to do so. United States v. Byrd, 53
presented fraudulent invoices to the VA and requested F.3d 144, 145 (6th Cir. 1995). When reviewing a ruling
approximately half of the contract price. Id. Unaware of the which fails to affirmatively state that the judge knew he could
fraud, the VA wired the requested money to the escrow depart downward, “it should be assumed ‘that the court, in the
account. Id. As per the escrow agreement, the escrow agent exercise of its discretion, found downward departure
transferred the money to GWR and the two suppliers. Id. On unwarranted.’” Id. (quoting United States v. Barrera-Barron,
appeal of his conviction, Leahy argued that GWR did not 996 F.2d 244, 245 (10th Cir.), cert. denied, 510 U.S. 937, 114
possess the funds wired from the VA until they were S.Ct. 358, 126 L. Ed. 2d 321 (1993)).
deposited in GWR’s account. Id. at 635. Thus, according to
Leahy, the wire fraud was not complete until that point, and At the sentencing hearing both Prince and White articulated
therefore, the transfer of funds from the escrow account to objections to the use of the money laundering guidelines. The
GWR’s account did not involve criminally derived proceeds. court entertained arguments from both defendants on the issue
Id. Noting that the escrow agent had no discretion as to how of whether the wire fraud or money laundering guidelines
to distribute the funds, the court found that GWR had should apply. In ruling on the issue, the court explained its
sufficient control over the escrow account and thus wire fraud role in sentencing:
was complete when the money was deposited in the escrow
account. Id. at 635-36. The subsequent transfers involved * * *
illegally obtained proceeds. Id. at 636. In so finding, the
court noted that the Ninth Circuit in Savage upheld a section the guidelines say that in a case such as this, under
1957 conviction even though funds had not been transferred normal circumstances you use the guideline for the most
to the defendant’s account because the “‘funds were clearly at serious offense. In this case, that would be money
Savage’s disposal at the time of the deposit–the record laundering.
indicates that the parties named on the accounts transferred But that’s not always the case because it could be that
the money at his request.’” Id. at 636 (quoting Savage, 67 there are cases in which a defendant is technically
F.3d at 1443). convicted of money laundering, but the real substance of
his crime was wire fraud. In that case – Such as the
In the present case, Defendants had sufficient control over Caba case that was cited by Mr. Ferguson. In that case,
the funds wired to Prince as well as the funds wired to third even though there was a technical violation of the money
parties. In the instances in which victims transferred money laundering statute, the guideline for wire fraud more
to Prince directly, once the victims wired the money, it closely approximated the defendant’s conduct.
constituted proceeds. The same is true when victims But our circuit had an opportunity to address the Caba
transferred money to a third party because Prince had case. And it’s true that the defendant was guilty of both.
42 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 11
that, at the very least, White aided in the commission of wire sufficient control over that money. In every case in which
fraud and the money laundering that occurred with the money was transferred to a third party, the third party was
proceeds of the wire fraud. White has failed to sustain his someone with whom Prince had a relationship. Prince
“very heavy burden” that no rational trier of fact could have solicited the help of his sister, his brother, a niece, two sister-
convicted him. in-laws, his accountant, two of his employees, and an
individual who Prince had known his whole life. Prince had
F. Sentencing reached a prior agreement with each of them in which the
third party had agreed to transfer the money to Prince. On all
The district court sentenced Defendant White under the occasions, the third party complied. On all occasions,
money laundering guidelines, United States Sentencing whether the victim transferred the money to a third party or
Guideline 2S1.1 (a)(2). The base offense level under these Prince, Prince transferred the money to White. The
guidelines is 20, and the court, finding the value of the funds Defendants devised, participated in, and were in constructive
involved as more than $1,000,000, added five levels pursuant control of this elaborate scheme.
to U.S.S.G. 2S1.1(b)(2)(F). The court used a level of twenty-
five and a criminal history category of II. Imposing a Even if, arguendo, the money did not constitute proceeds
sentence at the maximum end of the guidelines, the court until the money was in Prince’s hands, Prince fails to satisfy
sentenced White to 60 months for the wire fraud counts and his burden on his claim of insufficient evidence. As is
78 months for the money laundering counts to be served addressed below, Defendants conducted transactions after
concurrently. White filed an objection to the pre-sentence Prince had physical possession of the proceeds. Evidence
report contesting the use of the money laundering guidelines, established that Prince transferred each payment or
as opposed to the wire fraud guidelines, and contesting the contribution to White. Sufficient evidence supports the first
calculation of loss. White articulated these objections at the element of money laundering.
sentencing hearing as well. On appeal, White raises both
these issues. 2. Knowledge that the funds are proceeds of unlawful
activity
1. Sentencing under the money laundering guidelines
Prince does not argue that this element was not supported
Ordinarily, a defendant may not appeal a district court’s by sufficient evidence.
discretionary decision not to depart downward from the range
provided in the Sentencing Guidelines. United States v. 3. Conduct or attempt to conduct a financial transaction
Ebolum, 72 F.3d 35, 37 (6th Cir. 1995) (citations omitted). knowing that the transaction is designed in whole or in
However, a defendant may appeal when the district court part to disguise the nature, location, source,
believed that it lacked authority to depart downward as a ownership, or control of the proceeds
matter of law. Id. (citing United States v. Landers, 39 F.3d
643, 649 (6th Cir. 1994); United States v. Dellinger, 986 F.2d On appeal, Defendant Prince argues that the government
1042, 1044 (6th Cir. 1993)). If the court’s refusal to depart failed to present any proof of a subsequent financial
stemmed from its legal conclusion that the circumstance transaction designed to conceal the nature of the funds. The
argued by the defendant was not a valid reason for departure, term “financial transaction” means
the decision is reviewable. United States v. Ford, 184 F.3d
566, 585 (6th Cir. 1999) (citations omitted). The district (A) a transaction which in any way or degree affects
court’s determination that it lacked authority to depart interstate or foreign commerce (i) involving the
12 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 41
movement of funds by wire or other means or (ii) property through the bankruptcy courts. Prince testified that
involving one or more monetary instruments, or (iii) White instructed him on the amounts of money to request
involving the transfer of title to any real property, from the victims. Prince transferred all of the money he
vehicle, vessel, or aircraft, or (B) a transaction involving fraudulently received to White. Defendant Prince sent to
the use of a financial institution which is engaged in, or White, via Western Union, the following: (1) $1,250 on
the activities of which affect, interstate or foreign April 22, 1993; (2) $1,000 on May 25, 1993; (3) $2,455 on
commerce in any way or degree; May 29, 1993; (4) $2,000 on July 9, 1993; (5) $1,000 on
December 17, 1993; (6) $350 on October 30, 1994; (7) $395
18 U.S.C. § 1956 (c)(4). on December 2, 1994.
The term “transaction” George Stevenson, a Chapter 7 and 13 Bankruptcy trustee
in the Western District of Tennessee, testified that he did not
includes a purchase, sale, loan, pledge, gift, transfer, know either defendant and that the bankruptcy court offered
delivery, or other disposition, and with respect to a no plan whereby an individual could purchase property from
financial institution includes a deposit, withdrawal, the bankruptcy court at a cheap rate. O n t h e i s s u e o f
transfer between accounts, exchange of currency, loan, sufficiency of evidence, White argues that (1) only Max
extension of credit, purchase or sale of any stock, bond, Osborne, Debra Gates, and Robert Howard gave White
certificate of deposit, or other monetary instrument, use money directly; (2) money wired into the accounts of third
of a safe deposit box, or any other payment, transfer, or parties was always given to Prince; (3) there is no indication
delivery by, through, or to a financial institution, by that White received the money involved in the money
whatever means effected; laundering counts; (4) Mrs. Bell gave to Prince the cashier’s
check offered to Mr. Stephens during White’s state criminal
18 U.S.C. § 1956 (c)(3). proceeding; and (5) there was no substantial evidence that
White committed wire fraud in his dealings with Mr. Crawley
The term “monetary instruments” means and Mr. Stephens.
(i) coin or currency of the United States or of any other Sufficient circumstantial and direct evidence has
country, travelers’ checks, personal checks, bank checks, established that White initiated and, at the very least, helped
and money orders, or (ii) investment securities or perpetuate this fraudulent investment scheme which evolved
negotiable instruments, in bearer form or otherwise in into wire fraud and into the laundering of the proceeds of that
such form that title thereto passes upon delivery; fraud. While some of the victims directly tied to White might
18 U.S.C. § 1956 (c)(5). not have been victims of the wire fraud or the money
laundering, the evidence of the fraud perpetrated against them
In the present case, Defendant Prince, in violation of the by White connects him to the overall scheme and provides
wire fraud statute, induced victims to wire money. The circumstantial evidence of his involvement in the wire fraud
subsequent transactions involving the proceeds of wire fraud and money laundering offenses. The testimonies of
constitute financial transactions as defined in section 1956. Defendant Prince, his wife, and some of the victims of the
In the first of the three types of arrangements, Prince directed wire fraud establish that White remained an active participant
the victims to wire money to the bank accounts of third when the scheme evolved into acts of wire fraud and money
parties. He typically directed the third party to either laundering. Substantial and competent evidence established
40 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 13
When Prince stated that there was no way that he could reach withdraw money from the bank account or write a check on
White, Mr. Dieruf, Jr. stated that he would not contribute any that account and cash that check. Then, the third party would
more money. Ten minutes later, White phoned Mr. Dieruf, Jr. transfer the cash to Prince. The act of withdrawing the money
and assured him that there would be no future requests for from the bank account constitutes a transaction, specifically
money and that, if Mr. Dieruf, Jr. would send the requested a withdrawal, involving the use of a financial institution. The
money, White would personally guarantee that in twenty days act of transferring cash from the third party to Prince is a
the investors would receive half of their money back. During transaction as6defined in section (c)(3) in that it is a transfer
Mr. Dieruf, Jr.’s involvement in the scheme, he wire or disposition of a monetary instrument, i.e., cash. Likewise,
transferred money to the bank accounts of third parties on those few occasions when the third party wrote Prince a
including Dorothy Hamby, Roxanna Hawes, Chris Mathis, check, that constituted a transfer or disposition of a monetary
Gene Gordon Auto Sales, Kelly Barber, and Gene Gordon. instrument, i.e., a personal check. Prince caused two
Mr. Dieruf, Jr. also transferred money via Western Union to transactions to be conducted -- one between the third party
Prince. and the bank and one between the third party and Prince . See
United States v. Cavalier, 17 F.3d 90 (5th Cir. 1994).7 Upon
Defendant Prince contacted William Dieruf, III about completion of the transactions or dispositions, Prince then
investing in the plan. Prince explained to Mr. Dieruf, III that, transferred the funds to White. This constitutes yet another
through Defendant White, Prince had a special arrangement disposition of the proceeds of wire fraud.
with the bankruptcy court whereby he could pay cash to buy
bankrupt companies. Per Prince’s instructions, Mr. Dieruf, III Under the second type of arrangement, Defendant Prince
wire transferred money to the bank accounts of Chris Mathis instructed victims to wire money to third parties via Western
and Dorothy Hamby.
According to Joan Howard, Defendant Prince informed her 6
that the money that she and her husband transferred to Mrs. A disposition means “‘a placing elsewhere, a giving over to the care
Bell’s bank account or sent via Western Union was going to or possession of another.’” United States v. Garcia Abrego, 141 F.3d 142,
161 (5th Cir. 1998) (citations omitted).
be received by Prince who was to give it to White. Ms.
Howard and her husband also transferred money to the bank 7
In United States v. Cavalier, 17 F.3d 90, 91 (5th Cir. 1994), the
accounts of third parties including Wayne Prince, Ruby Prince defendant had possession of a van that was insured by Allstate Insurance
and Kelly Barber. Corporation (“Allstate”) and financed by General Motors Acceptance
Corporation (“GMAC”). The defendant shipped the vehicle to Honduras
Virginia Prince, Defendant Prince’s wife, testified that where it was sold, and then he reported to Allstate that it had been stolen.
when her husband received money he would give that money Id. Based on the mailed, false theft report, Allstate paid GMAC to satisfy
either to White or to an individual who was instructed to give the lien on the van. Id. The indictment charged the defendant, among
other offenses, with causing the conducting of a financial transaction
the money to White. She witnessed her husband deliver some involving the proceeds of mail fraud, in violation of 18 U.S.C. sections
of the money to White. Her husband informed her that the 1956(a)(1)(A)(i); 2. Id. On appeal of his guilty plea, the defendant
money was “going to Tony White.” White discussed the argued that he did not cause a financial transaction between Allstate and
“plan” with Virginia Prince as well as others. Virginia Prince GMAC to be conducted because he had no dominion or control over
was present when White talked to Mrs. Bell about the plan. Allstate. Id. at 92. The Fifth Circuit found that the mailing of the false
theft claim to Allstate caused Allstate to send a check to GMAC, thereby
extinguishing GMAC’s lien. Id. The court “therefore reject[ed] the
Defendant Prince testified that Max Osborne and White argument that [the defendant] did not cause to be conducted a financial
asked Prince if he wanted to get involved in their plan to buy transaction between Allstate and GMAC.” Id.
14 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 39
Union. Prince effected a disposition or transfer by directing balked, but White convinced him to contribute money by
the third party, who had been instructed to retrieve the money offering to write Mr. Stephens a check to assure him that
from Western Union, to transfer the cash to him. Through White was not “going to beat” Mr. Stephens. Each time he
such conduct, Prince has effected a disposition of the gave White money, White would write Mr. Stephens a check.
proceeds of the wire fraud. See United States v. Reed, 77 F.3d At one point, Mr. Stephens attempted to cash the checks, and
139, 143 (6th Cir. 1996) (en banc) (overruling United States the bank refused to honor them. Mr. Stephens approached the
v. Oleson, 44 F.3d 381 (6th Cir. 1995) and United States v. district attorney, and eventually, state criminal charges were
Samour, 9 F.3d 531 (6th Cir. 1993) to the extent that those brought against White. At some point during those criminal
cases held that the conduct of delivering drug proceeds or proceedings, Defendant Prince approached Mr. Stephens and
money intended to purchase drugs to a courier did not offered him a check for the money owed him. Mr. Stephens
constitute a financial transaction under section 1956). In tried unsuccessfully to cash the check.
United States v. Baez, 87 F.3d 805, 810 (6th Cir. 1996), we
held that the following facts as provided in the plea agreement Mrs. Bell, Defendant Prince’s sister, testified that both
constituted a “financial transaction” in violation of 18 U.S.C. Defendants approached her about investing money in their
section 1956(a): “Baez violated the money laundering statute plan. Mrs. Bell admitted that she and her husband had given
when he sent another individual from New Jersey to Ohio for a lot of money to Prince and White. When other victims of
the purpose of picking up approximately $349,417.00 in drug the scheme would transfer money to her bank account, Mrs.
trafficking proceeds and delivering the money to a place Bell would write a check on that account in order to withdraw
outside the state of Ohio.” money and give cash to Prince. Mrs. Bell would receive
Western Union wire transfers and transfer the cash to Prince.
Upon completion of the transaction or disposition from the On one occasion, Mrs. Bell picked up money wire transferred
third party to Prince, Prince then transferred the funds to into Roxanna Hawes’ account and delivered it to Prince. Mrs.
White. This constitutes a second disposition of the proceeds Bell recalled an occasion in which she accompanied Prince to
of wire fraud. Kentucky to retrieve money from Robert Howard, a victim in
this scheme. Mrs. Bell witnessed Prince transfer that money
Under the third type of arrangement, Defendant Prince to White. In response to Mrs. Bell’s, request, her daughter,
instructed victims to transfer money to him via Western Debra Gates, gave $6,500 in cash directly to White.
Union. Prince testified that all of the money that victims
transferred to him he transferred to Defendant White. This Mr. William Dieruf, Jr., was introduced to Defendant
delivery of the wire fraud proceeds to White constitutes a Prince who convinced Mr. Dieruf, Jr. to invest in a plan to
financial transaction. purchase assets of bankruptcy estates with a substantial
projected profit. At one point, Mr. Dieruf, Jr. refused to give
Defendant Prince contends that no evidence supports the Prince $17,900 that Mr. Dieruf, Jr. had collected for the
allegation that he conducted the transactions in an attempt to investment plan. In response, Prince arranged for Defendant
conceal the funds. The evidence presented suggests that White to call Mr. Dieruf, Jr. During the course of the
Prince, at the very least, aided in a scheme in which there was approximately twenty minute conversation, White stated that
an attempt to conceal the true owner and controller of funds. he was in charge and that Mr. Dieruf, Jr. could have
See United States v. Elder, 90 F.3d 1110, 1125 (6th Cir.), confidence that the investment plan would proceed as
cert. denied, 519 U.S. 1016, 117 S. Ct. 529, 136 L. Ed. 2d 415 discussed. The next day, Mr. Dieruf, Jr. informed Prince that
(1996). he would not send the money until he talked to White again.
38 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 15
the bankruptcy court, he could purchase this property. Max On some occasions, Prince directed victims to contribute
Osborne, Ruth Osborne’s husband, also testified that White money to the scheme through a third party. This arrangement
claimed he was “bonded to buy property through the involved explaining the use of a third party to the potential
bankruptcy court.” White drove Mr. Osborne to pieces of investor, soliciting the assistance of a trusted third party,
property that White claimed were assets in a bankruptcy and requiring the third party to go to their bank or to a Western
would be sold at a reasonable price. White suggested that a Union office to obtain the money, effecting the transfer to
profit could be made by purchasing, “fixing up”, and then Prince, and then arranging the transfer from Prince to White.
renting the properties. White quoted prices for purchasing the This elaborate arrangement protected Defendants from a
properties. Based on the representations White made about potential paper trail. Prince usually instructed the third
his relationship with the bankruptcy court, Mr. Osborne gave parties to whom money had been transferred, to give him
White money for over two years. Mr. Osborne gave checks cash. Mrs. Bell, Prince’s sister, testified 8that Prince requested
and sometimes cash directly to White. Mr. Osborne believed that he receive the money in cash. At times, these
he was buying property. White was in Defendant Prince’s instructions required the third parties to go to their bank and
store at the time that Prince met with Mr. and Mrs. Osborne withdraw the money rather than simply writing a check
there to re-assure them that the plan was legitimate. When payable to Prince, White, or the bankruptcy court for which
Mr. and Mrs. Osborne requested that White return their the money was allegedly collected. Again, this prevented a
money, White reassured them that they would get back their paper trail.
approximately $228,000 investment. They never received any
money. The government presented testimony which suggested that
Prince structured transactions so that a third party would
White approached Clarence Crawley with an alleged plan never withdraw more than $10,000 from their bank account
to purchase property in bankruptcy and then sell it, doubling in one transaction. Chris Mathis, one of these third parties as
Mr. Crawley’s investment. White signed a promissory note well as Prince’s accountant, testified that a transaction in
stating that Mr. Crawley had given White $7,300 and that he excess of $10,000 would require the bank to send a cash
would pay Mr. Crawley $16,000. Per White’s instructions,
Mr. Crawley gave White $5,300 in cash and a cashier’s check
for $2,000 payable to “Chapter 13 BC court.” At some point, 8
The following is an excerpt from the government’s direct
White gave Mr. Crawley a check for him to hold and to cash examination of Mrs. Bell:
in the event that he grew concerned that White would not
return the money. Some months later, Mr. Crawley took the Q And then why wouldn’t you write a check out of your account to give
check to the bank and discovered that no bank account it to your brother instead of giving him cash?
corresponded to the number on the check. When Mr. Crawley A Why would I – Well, see, I did give him cash.
approached White about getting the money back, White
drafted a signed and notarized agreement which detailed a Q I know. Why did you give him the cash?
repayment plan.
A Well, that’s the way they wanted it. They wanted it in cash.
White introduced Silas Stephens to the scheme. Claiming
Q Did they ever give you a receipt, Ms. Bell?
to have a special relationship with the bankruptcy court,
White claimed that he could purchase, for a cheap price, cars A I did not get any sort of receipt for it.
impounded by the bankruptcy court. At first, Mr. Stephens
(Joint Appendix at 464).
16 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 37
transaction report to the Internal Revenue Service. Mrs. Bell, In his motion, White argued that (1) he did not have adequate
one of the third parties and Prince’s sister, testified that on time to consult with his attorney; (2) the government had not
one occasion where she gave Prince $19,000, she wrote two produced adequate discovery, i.e., the endorsement on the
separate checks, each for $9,500, so that the transaction cashier’s check attached as an exhibit to the above-referenced
would not be reported. On one occasion, $10,700 was wire Rule 404(b) motion and certain information concerning a civil
transferred to Chris Mathis’ account, but to withdraw the lawsuit filed by Clarence Crawley; and (3) he would not have
money, Mr. Mathis wrote two checks, one for $700 and one time to produce this evidence. More specifically, White
for $10,000. complained that he did not have adequate time to produce
records illustrating that the check made payable to “Chapter
The few Western Union transfers sent by victims which 13 BC Court” for $2,000 did go to the court for the
identified Prince as the recipient still helped conceal, as they reinstatement of his bankruptcy.
did not identify White who, as Prince testified, was the final
recipient of the proceeds of all of the transfers. By directing Not only did the superseding indictment only add an
the transfers to himself, Prince aided White by concealing the additional overt act to the overall scheme to defraud, as
fact that White was the true controller of the proceeds of this opposed to adding a new charge, but the superseding
scheme. During the sentencing hearing, the district court indictment only added the act of defrauding Mr. Crawley, an
found that it was “clear in this case that other people’s bank act which was revealed in the government’s motion filed
accounts were being used, wires were being used in an effort April 3, 1998. That motion alerted Defendant to the
to avoid a record or a trail of this money.” allegations surrounding Mr. Crawley and to the fact that the
government intended to introduce at trial those four
The government elicited testimony that Prince, on at least documents which supported a claim of fraud perpetrated
two occasions, stated that due to the structure of the9 against Mr. Crawley. White had adequate time to consult
transactions it could not be proven that he received money. with his attorney and to prepare his defense.
White has failed to establish that the district court’s denial
9 of White’s motion for continuance was so arbitrary as to
The following is an excerpt from the government’s direct violate due process.
examination of Mr. William C. Dieruf, Jr., who was a victim in this case:
Q Did [Defendant Prince] ever make a statement to you, sir, to the E. Sufficiency of the Evidence
effect that you couldn’t prove that you sent money to him?
Defendant White contends that the evidence was
A Several times he said there’s nobody can prove that he had ever insufficient to convict him of wire fraud, money laundering,
received any money, period. and aiding and abetting. We review a sufficiency of the
(Joint Appendix at 599). evidence claim as articulated above in Section A.
Prince arranged for money to be wire transferred to Chris Mathis’ Evidence established that White, at the very least, aided in
account, and Mr. Mathis withdrew the cash and gave it to Prince. The the overall scheme to defraud from which arose the acts
following is an excerpt from the government’s direct examination of Mr. constituting wire fraud and money laundering. Ruth Osborne
Mathis: testified that she and her husband gave White money so that
Q Did you talk to him about talking to the investigators? Did you tell he could purchase property from the bankruptcy court. White
him you talked to the investigators in this case? assured Mrs. Osborne that, because he was bonded through
36 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 17
v. Gallo, 763 F.2d 1504, 1523 (6th Cir. 1985) (quoting United One witness, who on two occasions had received money in
States v. Mitchell, 744 F.2d 701, 704 (9th Cir. 1984)), cert. her account and transferred it to Prince, testified that Prince
denied, 474 U.S. 1068, 106 S. Ct. 826, 88 L. Ed. 2d 798 (1986). called her and told her the IRS was auditing the bank and
“‘Broad discretion must be granted trial courts on matters of instructed her not to mention his name. The structuring of the
continuances; only an unreasoning and arbitrary ‘insistence transactions combined with Prince’s statements adequately
upon expeditiousness in the face of a justifiable request for support the theory that Prince, at the very least, aided in a
delay’ violates the right to the assistance of counsel.’” Frost, scheme involving transactions conducted in an attempt to
914 F.2d at 765 (citations omitted). We do not apply any conceal the proceeds of wire fraud.
mechanical tests for determining when a denial of a request
for continuance is so arbitrary as to violate due process. On the issue of sufficiency of the evidence on the money
Frost, 914 F.2d at 765 (citations omitted). Rather, we laundering counts, we hold that Prince has failed to satisfy his
consider the circumstances present in the case, particularly the very heavy burden.
reasons presented to the trial court at the time of the request.
Id. “‘[W]e look for a showing from the defendant of
prejudice, i.e., a showing that the continuance would have
made relevant witnesses available, or would have added
something to the defense.’” Frost, 914 F.2d at 765 (citations
omitted). A Yes, sir.
18 U.S.C. section 3161 (c)(2) provides as follows: “[u]nless Q What was his reaction to that?
the defendant consents in writing to the contrary, the trial A I can’t remember any specific reaction other than he didn’t like the
shall not commence less than thirty days from the date on folks that were doing the investigating, maybe. Although, I believe
which the defendant first appears through counsel or at the time they hadn’t talked to him.
expressly waives counsel and elects to proceed pro se.” The
Supreme Court has held that this 30-day trial preparation Q Didn’t he tell you that he didn’t want you telling them that he got the
period does not commence from the date of filing of a money?
superseding indictment as “[t]he statute clearly fixes the A He might have said that; yes.
beginning point for the trial preparation period as the first
appearance through counsel.” United States v. Rojas- Q Also told you that they were trying to stir up trouble, didn’t he?
Contreras, 474 U.S. 231, 234, 106 S. Ct. 555, 557, 88 L. Ed. 2d
537 (1985). Thus, a defendant is not automatically entitled to A Yes, sir.
a thirty-day continuance upon the filing of a superseding Q Now, did he also make the statement that no one could prove that he
indictment. The district court has the authority, under 18 had got the money?
U.S.C. section 3161(h)(8), to grant a continuance if the “‘ends
of justice served by taking such action outweigh the best A Yes. But all along I told him I was going to tell exactly what
interest of the public and the defendant in a speedy trial.’” Id. happened to the money.
at 236, 106 S. Ct. at 558. Q But he told you that no one could prove he got the money.
Defendant White has failed to establish that the trial court A Yes, sir.
abused its discretion in denying his motion for continuance.
(Joint Appendix at 715-16).
18 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 35
B. Constructive Amendment of the Indictment following four documents: (1) copy of a promissory note
written to Clarence Crawley signed by White; (2) copy of a
Defendant Prince contends that the district court’s money order receipt purchased by Clarence Crawley and
instructions on money laundering combined with the evidence payable to “Chapter 13 BC Court”; (3) copy of a check for
at trial constituted a constructive amendment to the $7,300 payable to Clarence Crawley signed by White; and (4)
indictment. Count seventeen of the indictment provides as copy of a notarized agreement between Clarence Crawley and
follows: White, dated April 2, 1993, directing White to pay Mr.
Crawley $13,500. The court considered the “motion” to be
On or about March 10, 1995, in the Western District of the notice that is mandated by Rule 404(b), and, to the extent
Tennessee, the defendants, being aided and abetted, that the motion requested a pre-trial determination that the
counseled and induced by the other, did knowingly and evidence would be admissible under Rule 404(b), the court
wilfully conduct and attempt to conduct a financial denied the motion. On May 18, 1998, the grand jury returned
transaction which involved the proceeds of a specified a superseding indictment which added paragraph three to
unlawful activity, to wit, wire fraud, in violation of Title Count 1. Paragraph three charged that
18, United States Code, Section 1343, said activity being
punishable under the laws of the United States, knowing It was further a part of the aforesaid scheme and artifice
that the transaction was designed to conceal and disguise to defraud and obtain money by means of false pretenses
the nature, the location, the source, the ownership, and and representations and promises that TONY WHITE
the control of the specified unlawful activity, and that approached Clarence L. Crawley in August of 1992 with
while conducting and attempting to conduct such the aforementioned scheme and artifice to defraud and
financial transactions knew the property involved in the persuaded Clarence F. [sic] Crawley to invest
financial transaction, to wit, a $13,750.00 cash transfer, approximately $8,500.00 in furtherance of the scheme.
represented the proceeds of some form of unlawful
activity, all in violation of Title 18, United States Code, The court arraigned White on May 28, 1998. On May 29,
Section 1956(a)(1)(B)(i) and Section 2. 1998, White moved for a dismissal of the superseding
indictment or for a continuance of the trial date of June 3,
(Joint Appendix at 64). Counts eighteen through eighty-five 1998. The court denied this motion, stating that the
reallege the allegations presented in Count seventeen except superseding indictment did not make a material change to the
for the dates and amounts, which the indictment then charges as it added only one additional overt act. Further, the
enumerates. The district court charged the jury, in pertinent court rejected White’s argument that he needed additional
part, as follows: time to investigate, finding that White had been aware of the
accusation involving Mr. Crawley since the government filed
The crimes alleged in counts 17 through 32 and 34 its motion in limine on April 3, 1998.
through 85 are commonly called money laundering.
Each of those counts charge defendants with a separate We review for abuse of discretion matters within the
violation of Title 18, United States Code, Section discretion of the district court. United States v. Frost, 914
1956(a)(1)(B)(i). Each of those counts allege – each of F.2d 756, 764 (6th Cir. 1990). Granting or denying a
those counts alleges a specific violation on the date continuance is a matter within the discretion of the court. Id.
alleged and in the amount alleged. You must consider at 765. We will not reverse a denial of a motion for a
each count separately and return a separate verdict on continuance absent a clear abuse of discretion. United States
each count.
34 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 19
evidence that Defendant, despite a strong suspicion, closed Now I want to read to you count 17 and then
his eyes for fear of what he would learn. summarize the remaining counts. Count 17 says that on
or about March 10, 1995, in the Western District of
Defendant contends that the court erred in failing to instruct Tennessee, the defendants Tony White and John Richard
the jury that “‘carelessness or negligence or foolishness’” is Prince, being aided and abetted, counseled and induced
insufficient. We have upheld a jury instruction which stated by the other, did knowingly and willfully conduct and
that the element of knowledge may be inferred from evidence attempt to conduct a financial transaction which involved
that the defendants “‘acted with a reckless disregard for the the proceeds of a specified unlawful activity – to wit,
truth or with a conscious purpose to avoid learning the truth wire fraud – in violation of Title 18, United States Code,
about the unlawful transaction involving the checks.’” United Section 1343, said activity being punishable under the
States v. Gullett, 713 F.2d 1203, 1212 (6th Cir. 1983), cert. laws of the United States, knowing that the transaction
denied, 464 U.S. 1069, 104 S. Ct. 973, 79 L. Ed. 2d 211 (1984). was designed to conceal and disguise the nature, location,
In Gullett, we rejected the defendant’s contention that this source, ownership and control of a specified unlawful
instruction authorized a conviction based on negligent activity and that while conducting and attempting to
behavior. Id. Just as the language in Gullett did not permit a conduct such financial transactions knew the property
conviction based on negligence, neither does the language involved in the financial transaction – to wit, a $13,750
here -- deliberately failing to inquire despite a strong cash transfer – represented the proceeds of some form of
suspicion and shutting his eyes for fear of what he would unlawful activity, all in violation of Title 18, United
learn. See United States v. Thomas, 484 F.2d 909, 912-13 States Code, Section 1956(a)(1)(B)(i) and Section 2.
(6th Cir.) (where the defendant was charged with knowingly Now, counts 18 through 85, with the exception of 33,
making false statements in purchasing a handgun, we upheld which has been dismissed, all allege – reallege and
an instruction that to find the defendant knowingly made a readopt all the facts alleged in count 17 of the indictment
false statement, the jury need not find that the defendant except that the date is different and the amount of the
actually read the form or had it read to him “if the jury finds wire is different.
from the evidence beyond a reasonable doubt that the That code section provides, in relevant part: Whoever,
Defendant acted with reckless disregard of whether the knowing that property involved in a financial transaction
statements made were true or with a conscious purpose to represents the proceeds of some form of unlawful
avoid learning the truth.”), cert. denied, 414 U.S. 912, 94 activity, conducts or attempts to conduct such a financial
S.Ct. 253, 38 L. Ed. 2d 151 (1973). transaction which, in fact, involves the proceeds of a
specified unlawful activity, knowing that the transaction
Reviewing as a whole the jury instructions provided in the is designed, in whole or part, to conceal or disguise the
Joint Appendix, we find that Prince has failed to establish that nature, the location, the source, the ownership or the
the jury instructions, as a whole, were confusing, misleading, control of the proceeds of a specified unlawful activity,
or prejudicial. shall be guilty of a crime.
In order to prove the crime of money laundering
D. Denial of Motion for a Continuance alleged in counts 17 through 85, except 33, the
government must establish beyond a reasonable doubt
Defendant White was originally indicted on October 20, each of the following elements:
1997. On April 3, 1998, the government filed a motion under * * *
Federal Rule of Evidence 404(b) to admit certain evidence
pertaining to Clarence Crawley. That motion contained the
20 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 33
And, third, that the defendant knew that the transaction single provision of the instructions can be reviewed in
was designed, in whole or in part, either to conceal or isolation; we must consider the charge as a whole. United
disguise the nature, the location, the source, the States v. Lee, 991 F.2d 343, 350 (6th Cir. 1993) (quoting
ownership or the control of the proceeds of the specified United States v. Horton, 847 F.2d 313, 322 (6th Cir. 1988)).
unlawful activity or to avoid a transaction reporting
requirement under state or federal law. Defendant finds fault in the fact that the jury was not
* * * instructed that it had to find “‘beyond a reasonable doubt that
The third element of the offense which the government the defendant was aware of a high probability’ of criminal
must prove beyond a reasonable doubt is that the activity.” We found no error in the instruction that “‘a
defendant acted with knowledge that the transaction was defendant’s knowledge of a fact may be inferred from willful
designed to conceal or disguise the nature, location, blindness to the existence of the fact. A showing of
source, ownership or the control of the proceeds of a negligence or mistake is not sufficient to support a finding of
specified unlawful activity – wire fraud – or to avoid a willfulness or knowledge.’’” United States v. Hoffman, 918
transaction reporting requirement. F.2d 44, 46-47 (6th Cir. 1990) (per curiam). In Hoffman, we
The term “transaction” includes a purchase, sale, loan, held that because the instructions as a whole required the jury
pledge, a gift, transfer, delivery or other disposition and, to find that the defendant had committed all the elements of
with respect to a financial institution, includes a deposit, the crime beyond a reasonable doubt, any error in an
withdrawal, transfer between accounts, exchange of individual instruction was harmless. Id. at 47. In the present
currency, loan, extension of credit, purchase or sale of case, the court instructed the jury on numerous occasions that
any stock, bond, certificate of deposit or other monetary the burden of proof was beyond a reasonable doubt and that
instrument, use of a safe depository, or any other the government must satisfy that burden on each element of
payment, transfer or delivery by, through or to a financial the crimes charged. When instructing the jury on the second
institution by whatever means effected. element of money laundering, the court stated that the
If you find that the evidence established beyond a government must prove that element beyond a reasonable
reasonable doubt that the defendant knew of the purpose doubt.
of a particular transaction in issue and that he knew that
the transaction was either designed to conceal or disguise We also have upheld deliberate ignorance instructions
the true origin of the property in question or to avoid a which did not contain the “high probability” language. See
requirement of reporting the transaction, then this United States v. Holloway, 731 F.2d 378, 380-81 (6th Cir.
element is satisfied. However, if you find that the 1984) (upholding the instruction that 14 a knowledge of
defendant knew of the transaction but did not know that falsehood element in 18 U.S.C. section 287 may be inferred
it was either designed to conceal or disguise the true from “‘proof that the defendant deliberately closed his eyes or
origin of the property in question or to avoid a her eyes to what would otherwise have been obvious to him
requirement of reporting the transaction but, instead, or her.’”). This instruction in Holloway is comparable to the
thought that the transaction was intended to further an instruction in the present case permitting an inference from
innocent transaction, you must find that this element has
not been satisfied and find the defendant not guilty of this
crime.
14
(Joint Appendix at 1011-1016). 18 U.S.C. section 287 prohibits making and presenting fraudulent
tax refund checks to the Department of the Treasury.
32 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 21
Prince contends that the deliberate ignorance instruction Defendant Prince argues that while the indictment charged
was contrary to the pattern instruction13 and an erroneous him under 18 U.S.C. section 1956(a)(1)(B)(i), the government
statement of law. According to Prince, the instruction presented evidence to support a conviction under section 1956
permitted the jury to convict him on a negligence standard. (a)(1)(B)(i) or (ii) and the court instructed the jury that they
could convict Defendant Prince under either section 1956
This court reviews jury instructions as a whole to determine (a)(1)(B)(i) or (ii). Defendant Prince refers to the above-
whether they fairly and adequately inform the jury of relevant quoted jury instructions and to testimony regarding the
considerations and explain the applicable law to assist the jury structuring of transactions that were greater than $10,000.
in reaching its decision. United States v. Layne, 192 F.3d The testimony of Chris Mathis provides, in pertinent part, as
556, 574 (6th Cir. 1999) (citations omitted); United States v. follows:
Harrod, 168 F.3d 887, 890 (6th Cir. 1999) (citations omitted).
Trial courts have broad discretion in drafting jury instructions, Q Are you aware that $10,700 and these other amounts
and we reverse only for abuse of discretion. United States v. in excess of $10,000 required a CTR to be – a cash
Moore, 129 F.3d 873, 876-77 (6th Cir. 1997) (citing United transaction report to be reported to the IRS?
States v. Busacca, 863 F.2d 433, 435 (6th Cir. 1988)). We A No, sir.
will not reverse the trial court unless the jury charge “‘fails Q You were not aware of that?
accurately to reflect the law.’” Layne, 192 F.3d at 574 A If I received the money I was supposed to report it?
(quoting United States v. Busacca, 863 F.2d 433, 435 (6th Q No; that the bank would report it.
Cir. 1988)). We may reverse a judgment based on an A I’m assuming they would; yes.
improper jury instruction “‘only if the instructions, viewed as Q Okay. You knew that that report would be made.
a whole, were confusing, misleading, or prejudicial.’” A Yes.
Harrod, 168 F.3d at 892 (quoting Beard v. Norwegian Q Now, on the same exhibit there are two checks made
Caribbean Lines, 900 F.2d 71, 72-73 (6th Cir. 1990)). No out on the same date, one for $700 and one for
$10,000.
A Yes.
13 Q Why are there two checks instead of just one?
Sixth Circuit Pattern Jury Instruction 2.09 provides as follows:
A I don’t remember. I’m assuming that one came in
(2) No one can avoid responsibility for a crime by deliberately and wasn’t correct and I went back and got – and got
ignoring the obvious. If you are convinced that the defendant the – what money I was supposed to get.
deliberately ignored a high probability that ____, then you may Q Um-hum. Now, that would be the first wire transfer
find that he knew ____. reflected on the other page; is that correct? February
(3) But to find this, you must be convinced beyond a reasonable the 13th?
doubt that the defendant was aware of a high probability that
____, and that the defendant deliberately closed his eyes to what A Yes; ten thousand seven hundred.
was obvious. Carelessness, or negligence, or foolishness on his * * *
part is not the same as knowledge, and is not enough to convict. Q Mr. Mathis, some of these transactions occurred
This, of course, is all for you to decide. within – either on the same day or within very short
United States v. Lee, 991 F.2d 343, 350 n. 2 (6th Cir. 1993) (citing Pattern
days, and they’re almost $10,000. Did that not send
Criminal Jury Instructions, U.S. Sixth Circuit District Judges Ass’n, any flags up to you that something wasn’t quite
(West 1991)). We have upheld an instruction derived from this pattern kosher?
instruction. See United States v. Mari, 47 F.3d 782, 785 (6th Cir. 1995)
(citations omitted).
22 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 31
A No. Initially, the first couple of times I didn’t think (Joint Appendix at 1014).12
anything about it. And then the third time, I
indicated I didn’t want – that it didn’t seem correct
to me to be doing this, and I asked that it not be done
again, and then I was talked into doing it one more
time.
12
* * * In his appellate brief, Defendant Prince fails to specifically identify
Q Did you tell him it was a violation of law to the jury instructions to which he objects. As quoted above, the court
structure transactions? instructed the jury on willful blindness when it instructed the jury on the
A No, sir. second element of money laundering. The court also instructed the jury
on deliberate ignorance in explaining the second element of wire fraud,
Q You know what structuring is, don’t you? i.e., defendant was a knowing participant and acted with a specific intent
A No. to defraud. Those instructions provide as follows:
Q You don’t know that it’s illegal to have cash
transactions barely less than $10,000 so that it’s As a practical matter, then, in order to sustain the charges
avoided for reporting? against the defendants, the government must establish beyond a
reasonable doubt that defendant knew that his conduct as a
A No, sir, I didn’t know that. participant in the scheme was calculated to deceive, and,
* * * nonetheless, he associated himself with the alleged fraudulent
[on cross-examination by counsel representing Prince] scheme for the purpose of causing some loss to another.
The government can also meet its burden of showing that
Q I believe you said when Mr. Grinalds first asked you the defendant had knowledge of the falsity of the statements if
it establishes beyond a reasonable doubt that he acted with
about the bank reporting transactions of $10,000 or deliberate disregard of whether the truths -- of whether the
more, you said you assumed they would be reported; statements were true or false or with a conscious purpose to
is that right? avoid learning the truth.
A If they – yeah, if they legally have to. I didn’t know If the government establishes that the defendant acted with
exactly what the breakdown was, but – I don’t get deliberate disregard for the truth, the knowledge requirement
involved in that type thing at all. would be satisfied unless the defendant actually believed the
statements to be true. This guilty knowledge, however, cannot
Q It didn’t concern you that this would be reported? be established by demonstrating that the defendant was merely
A No, it did not. Didn’t think about it. I wish I had of, negligent or foolish.
by the way. To conclude on this element, if you find that the defendant
was not a knowing participant in the scheme, or that he lacked
(Joint Appendix at 707-08, 712-13, 721). the specific intent to defraud, you should acquit him. On the
other hand, if you find that the government has established
beyond a reasonable doubt not only the first element – namely,
Although Defendant Prince does not refer to her testimony in the existence of the scheme to defraud – but also the second
his appellate brief, Mary Lucille Bell’s testimony provides, in element – that the defendant was a knowing participant and
pertinent part, as follows: acted with specific intent to defraud – and if the government also
establishes the third element, which I am about to instruct you,
* * * then you have a sufficient basis upon which to convict the
defendant.
Q And the check amount – check number is 1549; is
that correct? (Joint Appendix at 1009-10). Based on Prince’s argument, it appears that
A Right. he contests only the willful blindness instruction provided in the
instructions on money laundering which is quoted in the text above.
30 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 23
inconsistencies constituted a variance which did not rise to Q Check 1548 is for the same amount on the same
the level of a constructive amendment. day?
A Right.
C. Deliberate Ignorance Instruction Q And there are two checks for $9,500; is that correct?
A That is right.
Defendant Prince contends that the district court committed Q Why didn’t you write one check for $19,000?
reversible error when it instructed the jury on deliberate A Well, I was told at – the bank said if I wrote the
ignorance. The court instructed the jury on willful blindness checks for less than $10,000 that they would not be
while defining the second element of money laundering, i.e., reported. And that’s what I did: I wrote the checks
knowledge that the property involved in the financial for less than ten. I also had checking accounts in
transaction was the proceeds of some form of unlawful both of these banks, too.
activity. The pertinent instructions provide as follows: Q Okay. Exhibit 20 shows a withdrawal of $18,000, a
deposit ticket, and then a withdrawal of – if my math
* * * is correct – $18,000.
The second element of the offense which the government * * *
must prove beyond a reasonable doubt is that the Q What are the dates on those checks, please, ma’am?
defendant knew that the property involved in the A September the 1st, ‘95.
financial transaction was the proceeds of some form of Q Again, you wrote two checks instead of one?
unlawful activity. I instruct you that this element refers A Right.
to a requirement that the defendant knew the property Q On August 9th of ‘95 how much did you give John?
that was involved in the transaction represented proceeds A The amount of those two checks.
from some form, though not necessarily which form, of Q What’s the total amount? Fifteen thousand?
activity that constitutes a felony under state, federal or A Fifteen thousand is correct.
foreign law. I instruct you as a matter of law that wire Q October 24th, two checks. How much were those?
fraud is a felony. A Nineteen thousand, it looks like, or twenty.
You may infer that the defendant had knowledge from
circumstantial evidence or from evidence showing willful (Joint Appendix at 449-50).
blindness by the defendant. Willful blindness exists
when a defendant, whose suspicion has been aroused, Defendant Prince failed to object to the evidence and the
deliberately fails to make further inquiry. If you find that jury instructions which he alleges amended the indictment. In
the defendant had a strong suspicion that someone its appellate brief, the government does not raise the issue of
withheld important facts, yet shut his eyes for fear of waiver. In United States v. Beeler, 587 F.2d 340, 343 (6th
what he would learn, you may conclude that he acted Cir. 1978), we held that the defendant did not waive objection
knowingly. to the variance between the indictment and proof at trial by
not raising the issue at trial. We later explained this ruling in
United States v. Williams, 962 F.2d 1218, 1225 (6th Cir.
1992), while addressing whether an objection to an alleged
variance between a bill of particulars and proof offered at trial
must be made when the evidence is offered. We held that
right to the assurance that a group of independent citizens had concluded Williams, by failing to object at trial, did not preserve this
that the allegations were worthy of being presented to a jury. Id.
24 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 29
issue for appeal. Id. Williams cited Beeler in support of his assurance that independent citizens have concluded that the
contention that it was unnecessary for him to object at trial. allegations are “‘worthy of being presented to a jury’” for a
Id. We responded that the purpose of an objection is to allow determination of guilt or innocence. See Moore, 129 F.3d at
the court to correct its mistakes. Id. at 1225-26. While the 878 (citations omitted). There is not a substantial likelihood
Federal Rules of Criminal Procedure permit the amendment that the jury convicted Prince of an offense other than that
of a bill of particulars at any time that justice requires, charged in the indictment. See Flowal, 163 F.3d at 962;
indictments “may not be amended because doing so would Manning, 142 F.3d at 339 (“A variance crosses the
‘substitute the prosecutor’s judgment for that of the constructive amendment line only when the variance creates
constitutional body, the Grand Jury, in framing the charge ‘a substantial likelihood’ that a defendant may have been
against a defendant.’” Id. at 1226. Therefore, we concluded convicted of an offense other than that charged by the grand
that an objection to an alleged variance from a bill of jury”) (citing United States v. Hathaway, 798 F.2d 902, 911
particulars “serves a useful function” and must be raised at (6th Cir. 1986)).
trial in order to preserve the issue for appeal. Id.
None of the purposes behind the constructive amendment
In the present case, the alleged mistake was allowing rule were frustrated here. See Moore, 129 F.3d at 873.11 Any
certain testimony and inserting section 1956 (a)(1)(B)(ii) in
the jury instructions. Both of these alleged errors could have
11
been corrected. See United States v. Garguilo, 554 F.2d 59, In Moore, 129 F.3d at 874, the defendant contended that the trial
63 (2nd Cir. 1977) (holding that “[b]y failing to object to the court’s instructions on three mail fraud counts constructively amended the
introduction of the evidence on capital gains, by conceding indictment. The mail fraud counts of the indictment charged that the
that the capital gains could properly be used as proof of items defendant “‘devised and intended to devise a scheme and artifice to
defraud and obtain money’ by means of fraudulent pretenses,
of income in 1969, and by failing to argue to the trial judge representations, and processes.” Id. In describing the manner in which
that this constituted an impermissible variance of the the defendant used the Postal Service, the indictment referred to “‘the
indictment, appellant waived his right to raise that portion of aforesaid scheme and artifice to defraud,’ omitting the words ‘and to
his variance argument on appeal.”). According to the obtain money’ that were included in the two earlier and several later
transcripts provided on appeal, Prince failed to object. descriptions of the scheme.” Id. In the jury instructions, the court
defined the first element of the mail fraud offense as “‘the act or acts of
having devised or having intended to devise a scheme or artifice to
Even if, arguendo, Prince preserved this issue for appeal, defraud or attempt to defraud or obtain money by false or fraudulent
there was no amendment or fatal variance to the indictment. representations as charged in the indictment....’” Id. at 874-75. The
We review de novo whether there was an amendment or a court further instructed the jury that “‘[t]he government need not establish
variance to the indictment. United States v. Flowal, 163 that all the pretenses, that all the representations, statements and acts set
F.3d 956, 962 (6th Cir. 1998). forth in the indictment occurred. But must show beyond a reasonable
doubt that one or more acts or statements occurred such as will satisfy you
of the existence of the scheme to defraud or obtain money.’” Id. at 875.
“‘[A]n amendment involves a change, whether literal or in We rejected the defendant’s argument of constructive amendment
effect, in the terms of the indictment.’” Id. (quoting United reasoning that anyone reading the mail fraud counts would understand the
States v. Barrow, 118 F.3d 482, 488 (6th Cir. 1997)). In charges alleged, the defendant would know what charges he would face
contrast, “‘[a] variance occurs when ‘the charging terms [of at trial, and the court would understand what was required for a
the indictment] are unchanged, but the evidence at trial proves conviction. Id. at 878. We also found that the court’s instructions did
not change the charge or broaden the scope of the indictment, they raised
facts materially different from those alleged in the no possibility that the defendant could be prosecuted later for the same
indictment.’” Id. If a variance infringes too strongly upon the offense, and they did not require the defendant to defend against an
uncharged scheme. Id. We found no infringement of the defendant’s
28 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 25
of the proceeds of the wire fraud. Proof that Prince avoided defendant’s Sixth Amendment right to be informed of the
transactions that would require a bank to submit a cash nature and cause of the accusation, the variance is considered
transaction report to the Internal Revenue Service supports the a “constructive amendment.” Martin v. Kassulke, 970 F.2d
conclusion that Prince was intending to conceal the 1539, 1542 (6th Cir. 1992) (citing United States v. Ford, 872
transactions. In its closing argument, the government stated F.2d 1231, 1235 (6th Cir. 1989)). A constructive amendment
that the elements of money laundering were that the occurs when “‘the terms of the indictment are in effect altered
defendants “committed a transaction in an effort to conceal by the presentation of evidence and jury instructions which so
the proceeds of the criminal activity.” At least three times modify essential elements of an offense charged that there is
during its closing argument, the government stated that Prince a substantial likelihood that the defendant may have been
conducted the transactions in an effort to hide and to conceal. convicted of an offense other than that charged in the
The government did not argue that Prince conducted the indictment.’” United States v. Manning, 142 F.3d 336, 339
transactions in an effort to avoid a reporting requirement. (6th Cir. 1998) (quoting United States v. Hathaway, 798 F.2d
902, 910 (6th Cir. 1986)). Both amendments and constructive
Prince has not provided this Court with transcripts from his amendments are considered per se prejudicial and warrant
counsel’s opening or closing arguments, but from his reversal. United States v. Ford, 872 F.2d 1231, 1235 (6th Cir.
testimony on direct examination it appears10that Defendant’s 1989) (citations omitted); United States v. Beeler, 587 F.2d
theory was that he was an innocent victim. Mr. Mathis and 340, 342 (6th Cir. 1978) (citing United States v. Somers, 496
Mrs. Bell’s testimonies as to the transactions involving more F.2d 723, 744 (3rd Cir. 1974)). The harmless error test
than $10,000 was, arguably, proof of an intent to conceal. generally applies to variances. Martin, 970 F.2d at 1542;
Thus, Prince had an incentive to challenge these testimonies Beeler, 587 F.2d at 342 (citations omitted).
on cross-examination. Likewise, he had an incentive to rebut
these testimonies. He testified and thus had the opportunity In this case, there was no actual amendment as Defendant
to rebut these testimonies by stating that he did not instruct Prince was indicted on and convicted of money laundering.
Mr. Mathis or Mrs. Bell on how to structure the transactions, See Martin, 970 F.2d at 1542 (“This case does not present us
that there was an innocuous reason for the structure of those with an actual amendment; Martin was charged with aiding a
transactions, or that he did not know that a cash transaction rape, and Jameson was clearly convicted for committing a
report would be generated. We conclude that Prince’s rape.”). Thus, we must determine whether the variance rises
defense was unaffected as he had the motive and opportunity to the level of a constructive amendment.
to rebut the only evidence presented that could support an
argument for an intent to avoid a transaction reporting To obtain reversal of a conviction because of a variance
requirement and he chose not to rebut that evidence. between the indictment and the evidence produced at trial, a
defendant must satisfy a two-prong test: (1) the variance must
Prince has not argued nor do we find that the court’s be demonstrated and (2) the variance must affect some
instructions raised the possibility that he could be prosecuted substantial right of the defendant. United States v.
later for the same offense. Prince has not argued nor do we Maliszewski, 161 F.3d 992, 1014 (6th Cir. 1998) (quoting
find that there has been an infringement on his right to the Manning, 142 F.3d at 339 (citations omitted)). A substantial
right is affected only when the defendant establishes prejudice
in his ability to defend himself or to the overall fairness of the
10 trial. Manning, 142 F.3d at 339 (citing United States v.
In his appellate brief, Defendant Prince stated that he
“emphatically testified that he did not have knowledge of an illegal Bouquett, 820 F.2d 165, 168 (6th Cir. 1987)).
scheme to defraud.”
26 United States v. Prince, et al. Nos. 98-6361/6362 Nos. 98-6361/6362 United States v. Prince, et al. 27
The purposes underlying the rule against amendments physically helpless. Id. We defined the “key question” in
and constructive amendments include notice to the determining whether the case involved a variance or a
defendant of the charges he will face at trial, notice to the constructive amendment as whether rape by forcible
court so that it may determine if the alleged facts are compulsion and rape due to physical helplessness should be
sufficient in law to support a conviction, prevention of seen as two alternative crimes or merely two alternative
further prosecution for the same offense, and finally, of methods by which the one crime, rape, could have been
‘paramount importance,’ the assurance that a group of committed. Id. at 1543. If they should be seen as two
citizens independent of prosecutors or law enforcement alternative methods, then the addition of the physically
officials have reviewed the allegations and determined helpless charge would be a variance. Id. We rejected
that the case is worthy of being presented to a jury for a Martin’s argument that the due process right to clear notice of
determination of the defendant’s guilt or innocence. criminal charges includes notice of the exact method by
which the criminal actions were alleged to have been
United States v. Moore, 129 F.3d 873, 878 (6th Cir. 1997) committed. Id. We held that the rape elements constituted
(citations omitted). alternative methods and thus the addition was a variance. Id.
at 1545. Finding that the evidence supported the forcible
Prince has illustrated a variance between the indictment and compulsion theory and that the presented defense of consent
the jury instructions. It is not so clear whether he has represented a full defense to both methods, we held that no
illustrated a variance between the indictment and the evidence prejudicial error occurred. Id. at 1546-47.
presented at trial. Arguably, the evidence to which Prince
now objects was evidence establishing that the transactions In the present case, Defendant Prince has failed to establish
were designed to conceal – an element of the money a violation of a substantial right, and thus he has failed to
laundering offense charged in the indictment. However, since establish that the variance between the indictment and the jury
we acknowledge a variance between the indictment and the instructions along with the evidence at trial constituted a
jury instructions, we will proceed to the second prong of the constructive amendment. The indictment provided notice to
test, i.e., whether the variance affected some substantial right Prince and the trial court of the money laundering charges
of the defendant. Prince faced at trial. As in Martin, the added instruction
provided an alternative method to one offense, here, money
In Martin, 970 F.2d 1539, one of the defendants, Martin, laundering. Prince was not prejudiced even by this alternative
who was convicted of aiding and abetting first-degree rape, method, as it appears that the government did not pursue this
sought habeas corpus relief contending that the variance theory either during the evidence or argument phases of the
between the indictment and the jury instructions constituted trial. Nowhere in the portions of the transcript provided to
a constructive amendment. The indictment charged Martin this Court does the government argue to the jury that it would
with the offense of “RAPE IN THE FIRST DEGREE by establish or has established that Prince engaged in money
knowingly and unlawfully engaging in sexual intercourse with laundering to avoid a transaction reporting requirement. In
Nancy Bellamy by forcible compulsion and further causing the transcript of the government’s cross-examination of
said Nancy Bellamy serious physical injury.” Id. at 1542. Prince, there are no questions designed to elicit testimony
The jury instruction by which Martin was found an accessory regarding his knowledge of or intent to avoid a reporting
to the rape listed the elements of rape as engaging in sexual requirement. Arguably the above testimony of Mr. Mathis
intercourse and doing so by forcible compulsion or doing so and Mrs. Bell was elicited to support the allegation that Prince
while the victim was incapable of consent because she was engaged in money laundering in order to conceal the location