The opinion of the court was delivered by: WILLIAM M. SKRETNY
On February 22, 1990, the United States of America (hereinafter "the government") filed a forty-six count Indictment against the defendants Ted W. Gleave ("Gleave") and David R. Knoll ("Knoll") (collectively referred to as "the defendants"). The indictment charges the defendants with conspiracy (18 U.S.C. § 371); concealment of assets in bankruptcy (18 U.S.C. § 152); making false statements to a department of the United States (18 U.S.C. § 1001); money laundering (18 U.S.C. § 1956); and interstate transportation of monies obtained by fraud (18 U.S.C. § 2314).
(1) The defendants move to dismiss Counts Seven and Eight of the indictment, arguing that they are impermissibly duplicitous.
(2) Knoll also moves to dismiss Count One on duplicity grounds.
(3) Knoll moves to dismiss Counts Four, Five and Six, arguing that those counts are barred by the statute of limitations.
(4) The defendants move to dismiss Counts Nine through Thirty-Three of the indictment arguing that the Money Laundering Control Act of 1986, 18 U.S.C. § 1956, the statute on which those counts are charged, is unconstitutional. Knoll also argues that this Court must dismiss Counts Nine through Thirty-Three because, according to Knoll, the conduct which those counts charge does not violate § 1956.
(5) The defendants move to dismiss Counts Thirty-Five through Forty-Six of the indictment on the grounds that those counts are legally insufficient. Counts Thirty-Five through Forty-Six charge the defendants with violations of the National Stolen Property Act, 18 U.S.C. § 2314. Specifically, the defendants argue that the alleged stolen property was part of a bankruptcy estate in Chapter 11 where, according to the defendants, Gleave maintained title ownership of the property. Therefore, the defendants contend, Counts Thirty-five through Forty-six do not charge that the defendants' alleged conduct deprived another of an ownership interest in property.
(6) The defendants move for an Order excluding as evidence certain bank records from Barclays Bank International, Ltd. Grand Cayman, Cayman Islands. The government seeks to introduce the foreign bank records pursuant to 18 U.S.C. § 3505.
(7) Knoll moves to dismiss the entire indictment against him on the grounds of prejudicial pre-indictment delay.
(8) Daniel Nowak, a witness called by the defense at a suppression hearing in this case, seeks an Order form this Court requiring that the government pay him witness fees pursuant to 28 U.S.C. §§ 1821 and 1825.
(9) Finally, the defendants move to suppress certain physical evidence.
This Court shall address each motion in turn and, for the reasons stated below, denies the defendants' motions. This Court also denies Daniel Nowak's request for witness fees.
In August 1982, Gleave individually, and his corporation, 747 Kenmore Avenue, Inc., filed Chapter 11 bankruptcy petitions which commenced the following two bankruptcy cases: In Re Ted W. Gleave, BK. No. 82-12238, and In Re 747 Kenmore Avenue, Inc., BK No. 82-12256M. On January 12, 1984, the Bankruptcy Court ordered the two bankruptcy cases converted to liquidation proceedings under Chapter 7 of the Bankruptcy Code (hereinafter collectively referred to as "the bankruptcy proceedings").
The central thrust of the indictment is that the defendants entered into a conspiracy to conceal assets, in excess of $ 600,000.00, from the trustee and creditors in the bankruptcy proceedings.
Count One, charging conspiracy under 18 U.S.C. § 371, details the alleged agreement between Knoll and Gleave to commit various criminal acts. According to the indictment, Gleave, aided and abetted by Knoll, concealed assets from the trustee and creditors in the bankruptcy proceedings, and laundered the monies, initially through two bank accounts in the Cayman Islands and then transferring the monies to banks in Canada, and the United States. According to the indictment, the defendants used these monies, once laundered, to repurchase real estate which Gleave owned prior to the bankruptcy proceedings and to conduct other business and real estate transactions through various corporate entities.
Counts Two through Five charge the defendants with bankruptcy fraud violative of 18 U.S.C. § 152, by virtue of their alleged concealment of assets from the trustee and creditors in the bankruptcy proceedings and, in connection with these alleged acts, their submission of false financial statements submitted in the Ted W. Gleave, BK. No. 82-12238, bankruptcy proceeding.
Counts Six through Eight charge the defendants with falsely representing to the United States Probation Service and the United States Department of Justice, in violation of 18 U.S.C. § 1001, that Gleave was without substantial financial assets, although, according to the indictment, Gleave along with Knoll maintained bank accounts in the Cayman Islands.
Counts Nine through Thirty-Three charge the defendants with money laundering violative of 18 U.S.C. § 1956, by conducting financial transactions affecting interstate and foreign commerce, involving the proceeds of monies concealed in the Caymanian bank accounts from the trustee and creditors in the bankruptcy proceedings, knowing the transactions designed to conceal the nature, location, source, ownership and control of the proceeds.
Count Thirty-four, charging the criminal forfeiture statute, 18 U.S.C. § 982, seeks forfeiture of certain properties allegedly placed beyond the jurisdiction of this Court and other assets which the government charges are traceable to the money laundering transactions allegedly engineered by the defendants.
Counts Thirty-five through Forty-six charge the defendants with interstate transportation of monies taken by fraud violative of 18 U.S.C. § 2314, by virtue of the defendants' transfers of the monies concealed from the bankruptcy proceedings in interstate and foreign commerce to the Caymanian bank accounts.
All Counts also charge aiding and abetting under 18 U.S.C. § 2. The government's theory is that, at minimum, each defendant aided and abetted the other's criminal conduct.
I. The Defendants' Motions To Strike Counts Seven And Eight As Duplicitous
The defendants move to dismiss Counts Seven and Eight of the indictment on the grounds that those counts are impermissibly duplicitous under Fed.R.Crim.P. 7(c).
Counts Seven and Eight charge the defendants with making fraudulent statements in two separate documents (collectively referred to as "the documents") submitted to the Department of Justice in violation of 18 U.S.C. § 1001. Specifically, those counts charge that Gleave, ". . . aided, abetted, counseled, commanded, induced and procured . . ." by Knoll, did ". . . conceal and cover up by trick, scheme and devise material facts and make false, fictitious and fraudulent statements and representations in a matter within the jurisdiction of the Department of Justice. . ." in violation of 18 U.S.C. § 1001. Count Seven alleges that the offense occurred on October 30, 1986 in an "Examination of Judgment Debtor (Form W351)" ("Form W351"). Count Seven contains nine questions from the Form W351 and the allegedly false answers supplied by the defendants to each of these nine questions. Count Eight alleges that the offense occurred on June 2, 1987 in a "Financial Statement of Debtor" form. Count Eight contains seven questions from the "Financial Statement of Debtor" and the allegedly false answers supplied by the defendants to each of these seven questions.
Moving for dismissal of Counts Seven and Eight, the defendants contend that each count is not one offense but actually nine and seven separate offenses, respectively. Defendants argue that any one of the allegedly false answers would establish the offense under 18 U.S.C. § 1001 and, therefore, proving the falsity of each statement would involve evidence of dissimilar facts, a prospect which, according to the defendants mandates dismissal of Counts Seven and Eight.
Opposing the defendants' motions, the government contends that Counts Seven and Eight do not each contain several separate offenses but instead, as authorized by Fed.R.Crim.P. 7(c)(1), each count ". . . charges but a single offense which is alleged to have been committed by multiple means as part of a single scheme. . . ." Along these lines, the government argues that Counts Seven and Eight ". . . merely set forth different means by which fraudulent statements were made to the Department of Justice. . . ."
Duplicity is the joinder of two or more distinct offenses in a single count. It is a rule of pleading and ". . . would in no event be fatal to the count." United States v. Droms, 566 F.2d 361, 363, n.1 (2d Cir. 1977); United States v. Duncan, 850 F.2d 1104, 1108, n.4 (6th Cir. 1988).
Not every count which charges multiple acts, any one of which could alone constitute a separate offense and be charged in a separate count, is duplicitous. The Advisory Committee notes accompanying Fed.R.Crim.P. 7(c) emphasize that the framers of the rule ". . . intended to eliminate the use of multiple counts for the purpose of alleging the commission of the offense by different means or in different ways." Therefore, two or more acts, each which alone could be charged as a separate offense in a separate count, may be charged in a single count if ". . . those acts could be characterized as part of a single continuing scheme." United States v. Shorter, 608 F. Supp. 871, 876 (D.D.C. 1985), aff'd, 257 App. D.C. 358, 809 F.2d 54 (D.C. Cir. 1987), cert. denied, 484 U.S. 817, 108 S. Ct. 71, 98 L. Ed. 2d. 35 (1987); See United States v. Droms, 566 F.2d 361, 363 (2d Cir. 1977) (". . . Fed.R.Crim.P. 7(c)(1) permits allegation in a single count that an offense has been committed in a multiplicity of ways. . . .").
In this case, therefore, even if each of the allegedly false statements made in the two documents standing alone could be charged in separate counts, if the statements contained in any one count ". . . are part of a single continuing scheme . . ." with respect to that count, the government may, as it has done in this case, properly charge them in a single count.
In determining whether a single offense or separate offenses are charged, this Court consults the language of the statute and the legislative intent of Congress, if any can be discerned. If legislative intent is ambiguous, ". . . the rule of lenity prescribes that doubt will be resolved against turning a single transaction into multiple offenses, and therefore in favor of combining multiple factual predicates into the same count." United States v. Duncan, 850 F.2d at 1108 (citing Bell v. United States 349 U.S. 81, 83-4, 75 S. Ct. 620, 622-23, 99 L. Ed. 905 (1955)). See 1 Charles A. Wright, Federal Practice & Procedure, § 142 ("Unless Congress has indicated clearly that it contemplates separate crimes doubt will be resolved against turning a single transaction into multiple offenses.")
It is true that proving the falsity of each statement would require proof of somewhat dissimilar facts. It is also true that the falsity of any one answer would constitute a violation. However, this Court finds that the multiple acts charged in Counts Seven and Eight -- the alleged false answers supplied by the defendants on the two respective documents -- are part of a single alleged scheme to defraud the government.
18 U.S.C. § 1001, makes it unlawful to defraud "any department or agency of the United States" via concealment or affirmative representation with respect to any matter within the jurisdiction of any department or agency of the United States. On its face, the statute targets the act of defrauding the government through any one of various means and does not suggest a congressional intent to constitute more than one offense. See United States v. UCO Oil Co., 546 F.2d 833, 836 (9th Cir. 1976), cert. denied, 430 U.S. 966, 97 S. Ct. 1646, 52 L. Ed. 2d 357 (1977) (18 U.S.C. § 1001 ". . . is directed at a single evil, i.e. the 'perversion' of 'the authorized functions of governmental departments and agencies . . . which might result from the deceptive practices described.'") (quoting United States v. Gilliland, 312 U.S. 86, 93, 61 S. Ct. 518, 522, 85 L. Ed. 598 (1941)).
In United States v. Berardi, 675 F.2d 894, 897 (7th Cir. 1982), the Seventh Circuit affirmed the district court's denial of the defendant's motion to dismiss the indictment on duplicity grounds. In that case, charging the defendant with obstruction of justice for corruptly attempting to influence grand jury testimony, the government utilized a single count containing three separate instances of corrupt influence, any one of which could sustain a single count. The Court said:
the three acts of obstruction . . . could have constituted independent violations . . . and could have been charged in separate counts. Had the government taken this route, of course, Berardi would have been subjected to multiple statutory penalties. The government, however, declined this opportunity to cumulate these punishments and the indictment, fairly interpreted, charges Berardi with a continuing course of conduct, during a discrete period of time. . . .
Id., at 898. The Seventh Circuit found the government's characterization of the facts as a single continuing offense ". . . fair . . . under the circumstances . . ." particularly because the obstruction of justice statute contemplates ". . . a continuing course of conduct." Id. See United States v. Mangieri, 224 App. D.C. 295, 694 F.2d 1270, 1282 (D.C. Cir. 1982) (Court held not to be duplicitous a count alleging multiple false statements made to a lending institution on a single loan application in violation of 18 U.S.C. § 1014; statute targeted ". . . fraudulent loan transactions, rather than the particular falsehoods used to achieve the illegal transaction.") (emphasis in original).
Just as in Mangieri which addressed 18 U.S.C. § 1014, this Court concludes that in enacting 18 U.S.C. § 1001, Congress targeted the act of defrauding the federal government and not the particular falsehoods used to achieve the fraud.
Finally, the defendants argue that submission of Counts Seven and Eight to the jury, as is, may confuse the jury to the extent the jury is unable to agree upon which statements were false. However, this Court concludes that the prospect of confusion amongst the jury can be remedied by an appropriate jury instruction. See, e.g., United States v. Finley, 705 F. Supp. 1272, 1295 (N.D.Il. 1988) (Court utilized jury charge requiring jurors to unanimously agree on which offenses were committed to safeguard against juror confusion).
Therefore, this Court denies the defendants' motions to dismiss Counts Seven and Eight as duplicitous.
II. Knoll's Motion To Dismiss Count One As Duplicitous2
In Count One, the indictment charges Knoll with conspiracy to commit an offense against the United States under 18 U.S.C. § 371. Count One alleges several underlying offenses allegedly committed by means of the alleged conspiracy, including offenses under 18 U.S.C. §§ 152, 1001, 1956 and 2314. Knoll argues that the ". . . government may only charge one crime in each count so that the jury can properly focus on each claim without becoming confused."
Under 18 U.S.C. § 371, the conspiracy itself is the crime, not the underlying offenses committed via the conspiracy. A single conspiracy count under 18 U.S.C. § 371 may allege several crimes committed by means of the conspiracy. See Braverman v. United States, 317 U.S. 49, 54, 63 S. Ct. 99, 102, 87 L. Ed. 23 (1943) ("The allegation in a single count of a conspiracy to commit several crimes is not duplicitous, for 'The conspiracy is the crime, and that is one, however diverse its objects.'") (citations omitted).
Therefore, this Court denies Knoll's motion to dismiss Count One as duplicitous.
III. Knoll's Motion To Dismiss Counts Two, Four, Five and Six As Barred By The Statute of Limitations
Counts Two, Four and Five charge Knoll with aiding and abetting the concealment of Gleave's assets and the assets of 747 Kenmore Avenue, both bankruptcy debtors, in violation of 18 U.S.C. §§ 2 and 152. Count Six charges Knoll with aiding and abetting Gleave's false material statements to the United States Probation Service in violation of 18 U.S.C. §§ 2 and 1001.
Knoll argues that where the government charges aiding and abetting, as it has done in Counts Two, Four, Five and Six here, the statute of limitations begins to run when the particular acts of aiding and abetting took place. Because, Knoll argues, the acts of aiding and abetting in Counts Two, Four, and Five are alleged to have been accomplished by Knoll ". . . on or about July 28, 1982. . ." and the acts of aiding and abetting in Count Six are alleged to have taken place ". . . about April 14, 1983. . .,"
these are time barred by the five year general statute of limitations contained at 18 U.S.C. § 3282.
This Court rejects Knoll's argument. 18 U.S.C. § 2, the aiding and abetting statute charged in Counts Two, Four, Five and Six is not a separate substantive crime but it ". . . makes punishable as a principal one who aids or abets the commission of a substantive crime." United States v. Campbell, 426 F.2d 547, 553 (2d Cir. 1970). In Campbell, the Second Circuit, rejecting the same argument Knoll makes here, held a defendant charged with aiding and abetting was not subject to the five year statute of limitations under 18 U.S.C. § 3282 but was instead subject to the six year limitation period supplied by the substantive crime. See United States v. Oates, 560 F.2d 45, 55 (2d Cir. 1977) (". . . one who aids and abets the commission of a crime is not only punishable as a principal but is a principal.") (emphasis in original).
18 U.S.C. § 3282 by its own terms may be modified ". . . as otherwise expressly provided by law." See U.S. v. Heinze, 361 F. Supp. 46 (D. Del. 1973). In this case, 18 U.S.C. § 3282 must be read in conjunction with 18 U.S.C. § 3284 which provides:
The concealment of assets of a debtor in a case under Title 11 shall be deemed to be a continuing offense until the debtor shall have been finally discharged or a discharge denied, and the period of limitations shall not begin to run until such final discharge or denial of discharge.
Gleave did not receive a discharge in bankruptcy until September 8, 1986. The government filed the indictment on February 22, 1990, well within the five year statute of limitations which did not begin to run until Gleave's discharge in September 1986.
Therefore, this Court denies Knoll's motion to dismiss Counts Two, Four, Five, and Six on statute of limitations grounds.
IV. The Defendants' Motions To Dismiss Counts Nine Through Thirty-three On The Grounds That 18 U.S.C. § 1956 Is Unconstitutional
Counts Nine through Thirty-Three of the indictment charge that the defendants violated 18 U.S.C. § 1956(a)(1)(B)(i) ("§ 1956),
(B) knowing that the transaction is designed in whole or in part -
(i) to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of specified unlawful activity
shall be sentenced to a fine of not more than $ 500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than 20 years, or both.
The defendants attack the constitutionality of § 1956 on essentially three grounds: A) that the statute is overbroad; B) is vague; and C) lacks an adequate mens rea requirement. This Court now addresses each in turn.
The defendants challenge § 1956 as unconstitutionally overbroad because, according to the defendants, it suppresses a citizen's right to freedom of association within the First Amendment. Specifically, the defendants argue that § 1956 discourages a person from doing business with another whom the person ". . . even suspects . . . is a criminal . . ." because criminal liability under the statute may result. The defendants also contend that a person could be subject to civil liability for terminating business with another whom the person "vaguely suspects" of engaging in criminal activity.
This Court rejects the defendants' argument. Criminal liability under § 1956(a)(1)(B)(i) requires proof that a defendant "knows" the property involved in the financial transaction represents ". . . proceeds of some form of unlawful activity. . ." and that the defendant "knowing . . . that the transaction is designed in whole or in part . . . to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of specified unlawful activity." Therefore, to establish § 1956(a)(1)(B)(i) liability in this case, the defendants must be proven to have known, not merely to have suspected as the defendants argue, that they conducted or attempted to conduct a financial transaction with the proceeds of unlawful activity.
The defendants also argue that § 1956 is overbroad because ". . . guilt may be inferred from [a defendant's] willful blindness" to the fact that a defendant conducts business with the proceeds of unlawful activity. However, this Court agrees with the Government that ". . . criminal knowledge under § 1956 may include instances of 'willful blindness, but, even in that case, the Government still must prove defendants were on notice of a high probability of the existence of a fact. United States v. Gurary, 860 F.2d 521, 52 (2d Cir. 1988), cert. denied, 490 U.S. 1035, 109 S. Ct. 1931, 104 L. Ed. 2d 403 (1989) (conscious avoidance satisfies knowing intent requirement where the matter involves existing facts) (and discussion therein); See United States v. Ortiz, 738 F. Supp. 1394, 1400, n. 3 (S.D.Fla. 1990) (rejecting defendant's argument that a possible application of the "willful blindness" doctrine to prosecutions under § 1956 renders the statute void for vagueness).
Finally, this Court finds unavailing the defendants' argument that § 1956 is overbroad because it may expose to civil liability persons discouraged from doing business with another whom the person suspects might deal in proceeds of unlawful activity. This vague argument, unsupported by any case law which this Court can locate or which the defendants have provided, is speculative at best and, more importantly, does not establish any unconstitutional overbreadth of § 1956. See United States v. Mainieri, 691 F. Supp. 1394, 1397 (S.D.Fla. 1988) (§ 1956 does not implicate constitutionally protected conduct).
The defendants do cite Ricci v. Key Bancshares of Maine, Inc, 662 F. Supp. 1132 (D. Me. 1987). Ricci, however, remains easily distinguishable. In that case, the plaintiffs alleged that the defendant terminated a lending relationship with the plaintiffs based on allegations, heard by the defendant, connecting one plaintiff to organized crime. A jury found the defendant liable under the Equal Credit Opportunity Act, 15 U.S.C. § § 1691-1691f, for discriminating against the plaintiffs due to one plaintiff's national origin and for failing to provide a timely written statement of reasons for terminating a banking relationship under the statute. The defendant was also found liable for intentional infliction of emotional distress under state law.
Ricci simply does not stand for the proposition for which the defendants cite it and merits no further discussion.
Therefore, this Court denies the defendants' motions to dismiss Counts Nine though Thirty-Three of the indictment on the grounds that § 1956 is unconstitutionally overbroad.
Next, the defendants argue that § 1956 is unconstitutional because it has an ". . . insufficient knowledge requirement. . ." and therefore is unconstitutionally vague. In making this argument the defendants focus on the language of § 1956(a)(1), providing that:
Whoever, knowing that the property involved in a financial transaction represents proceeds of some form of unlawful activity. . . .
Specifically, the defendants argue that under § 1956(a)(1)
. . . a defendant need not know exactly what crime generated the monies involved in a transaction, but only that the funds are the proceeds of some crime. Such standard is impermissibly vague. . . . By use of the inherently vague term 'some', § 1956 fails to provide sufficient notice of what circumstances may justify an inference of guilty knowledge. . . .
To establish that § 1956 is unconstitutionally vague, the defendants must establish that the statute does not
. . . define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement Although the doctrine focuses both on actual notice to citizens and arbitrary enforcement . . . the more important aspect of the vagueness doctrine 'is not actual notice, but the other principal element of the doctrine -- the requirement that a legislature establish minimal guidelines to govern law enforcement.'
Kolender v. Lawson, 461 U.S. 352, 357, 103 S. Ct. 1855, 1858, 75 L. Ed. 2d 903 (1983) (quoting Smith v. Goguen, 415 U.S. 566, 94 S. Ct. 1242, 39 L. Ed. 2d 605 (1974) (further citations omitted)).
Because this Court concludes, as discussed above, that § 1956 implicates no a constitutionally protected conduct, this Court only upholds the defendants' challenge on vagueness grounds ". . . if the [statute] is impermissibly vague in all its applications." Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495, 102 S. Ct. 1186, 1191, 71 L. Ed. 2d 362 (1982). Restated, the defendants must ". . . establish that no set of circumstances exists under which the [statute] would be valid." United States v. Salerno, 481 U.S. 739, 745, 107 S. Ct. 2095, 2100, 95 L. Ed. 2d 697 (1987) (Bail Reform Act held facially valid.).
Initially, however, this Court must examine the defendants' vagueness challenge against the particular facts of this case, because if § 1956 clearly proscribes the defendants' alleged conduct, the defendants may not challenge the vagueness of the statute. Village of Hoffman Estates, 455 U.S. at 495, 102 S. Ct. at 1191; Parker v. Levy, 417 U.S. 733, 756, 94 S. Ct. 2547, 2561, 41 L. Ed. 2d 439 (1974).
. . . did knowingly and willfully conduct and attempt to conduct, through the use of various monetary instruments and wire transfers, certain financial transactions affecting interstate and foreign commerce which involved the proceeds of a specified unlawful activity, that is, the proceeds of funds concealed from the Trustee and creditors in bankruptcy in violation of Title 18, United States Code, Section 152, knowing that the transactions were designed in whole and in part to conceal and disguise the nature, location, source, ownership and control of the proceeds of said specified unlawful activity in the manner set forth in Count One of the Indictment, the allegations of which are incorporated by reference herein, and that while conducting and attempting to conduct such financial transactions knew that the property involved in the financial transactions represented the proceeds of some form of unlawful activity, as more fully described [herein]. . . .
The indictment then lists the 25 alleged transactions which the government charges violate § 1956.
Based on the plain language of § 1956, compared against the alleged activities of the defendants according to the language of the indictment on its face, this Court concludes that the defendants' alleged conduct is exactly that which the statute proscribes. Therefore, this Court denies the defendants' vagueness challenge to § 1956.
As may be distilled from the plain language of § 1956, to establish a violation of the statute, the government must prove that the defendants conducted or attempted to conduct a financial transaction involving proceeds of specified unlawful activity where the defendants: 1) knew the property involved in the transaction to represent proceeds of unlawful activity; and 2) knew the transaction to be designed ". . . to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of specified unlawful activity." This Court concludes that § 1956 defines the offense with sufficient definiteness so that the defendants can understand what conduct the statute prohibits. Furthermore, the statute provides detailed definitions such that "law enforcement officers are not free to apply the money laundering statute guided solely by their likes and dislikes." United States v. Jackson, 935 F.2d 832, 838-839 (7th Cir. 1991) (§ 1956 held not unconstitutionally vague).
These statutory elements have been sufficiently charged in the indictment. The indictment charges that the defendants knowingly and wilfully conducted and attempted to conduct transactions involving the proceeds of specified unlawful activity. The indictment delineates the specified unlawful activity which generated the proceeds: according to separate counts in the indictment, the defendants' alleged concealment of funds from the Trustee and creditors in bankruptcy, in violation of 18 U.S.C. § 152. The indictment then charges that the defendants engaged in the alleged laundering transactions through the use of various monetary instruments and wire transfers, knowing the transactions designed in whole and in part to conceal and disguise the nature, location, source, ownership and control of the proceeds of the unlawful activity. Moreover, § 1956(c)(7)(D) defines "specified unlawful activity" as contained in § 1956(a)(1), to include ". . . an offense under [18 U.S.C.] § 152 (relating to concealment of assets). . . ." See United States v. Levine, 750 F. Supp. 1433, 1441-42 (D. Colo. 1990) (the Court rejected one defendant's argument that the indictment failed to allege a violation of § 1956(a)(1)(B)(i); specified unlawful activity includes proceeds alleged to stem from the defendant's separate violation of 18 U.S.C. § 152).
Several recent federal cases have rejected similar vagueness challenges to § 1956. United States v. Jackson, supra.; United States v. Sierra-Garcia, 760 F. Supp. 252, 258 (E.D.N.Y. 1991); United States v. Ortiz, supra. ; United States v. Kimball, 711 F. Supp. 1031, 1034-35 (D.Nev. 1989); United States v. Mainieri, supra., 691 F. Supp. at 1396-97.
Where a criminal statute fails to define a term, a court must interpret the term ". . . as taking [its] ordinary, contemporary, common meaning." Perrin v. United States, 444 U.S. 37, 42, 100 S. Ct. 311, 314, 62, 62 L. Ed. 2d 199 L. Ed. 2d (1979). In United States v. Ortiz, after surveying the common definitions of the term proceeds, and emphasizing that ". . . a statute is not facially void for vagueness simply because there might be marginal situations in which the statutory meaning would be questionable[,]" the Court concluded that ". . . the term 'proceeds' has a commonly accepted meaning, and additionally [was] clear in the context. . ." of that case. Id., at 1400. This Court agrees with the reasoning of Ortiz and similarly concludes that the term "proceeds" as used in § 1956, and under the facts of this case, is not so vague as to render § 1956 unconstitutional. See United States v. Sierra-Garcia, supra., 760 F. Supp. at 259 (concluding that the term "proceeds" as used in § 1956 is not vague); United States v. Mainieri, supra., 691 F. Supp at 1397 (same).
Therefore, this Court denies the defendants' motions to dismiss Counts Nine through Thirty-Three of the indictment on the grounds that § 1956 is unconstitutionally vague.
The defendants further argue that § 1956 is unconstitutional because the statute contains no intent requirement and improperly incorporates the doctrine of transferred intent.
For the same reasons that the Court in United States v. Ortiz, supra., 738 F. Supp. at 1401, found these contentions groundless, so too does this Court.
First, § 1956 contains a mens rea requirement: knowledge; a defendant may not be convicted under § 1956(a)(1)(B)(i) unless the defendant conducts or attempts to conduct a financial transaction involving property where the defendant knows the proceeds represent unlawful activity. The defendant must also know ". . . that the transaction is designed in whole or in part . . . to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds of specified unlawful activity. . . ."
Second, this Court rejects the defendants' argument that § 1956 improperly incorporates the doctrine of transferred intent. The defendants' liability under § 1956 depends on proof that the defendants, not another individual, knew the proceeds involved in the particular transaction to stem from unlawful activity. Therefore, by the statute's own terms, "this knowledge must be personal to the defendant." United States v. Ortiz, supra., 738 F. Supp. at 1401 (rejecting same transferred intent argument).
Therefore, this Court denies the defendants' motion to dismiss Counts Nine through Thirty-Three of the indictment on the grounds that § ...