The opinion of the court was delivered by: TRAGER
At sentencing, the court had before it the Rule 29 motion of defendant, Juan Manuel Ortiz, requesting a dismissal of Counts Five through Thirteen and Fourteen of the indictment -- as submitted to the jury -- alleging acts which caused false entries to be made in bank records in violation of 18 U.S.C. § 1005. The motion was granted. This opinion sets forth the reasons for the court's determination.
On June 28, 1995, the defendant, Juan Manuel Ortiz, was convicted, after a jury trial, of eighteen counts of money laundering, drug trafficking, structuring financial transactions and causing false entries into bank records.
The defendant objects to the counts in the indictment relating to 18 U.S.C. § 1005. Specifically, Counts Five through Thirteen charged that the defendant:
did knowingly and willfully cause false entries to be made in books, reports and statements of insured banks, as set forth below, with intent to injure and defraud such banks. . . 18 U.S.C. §§ 1005, 2b, and 3551. (emphasis added).
Count Fourteen charged that the defendant:
did knowingly and willfully engage and attempt to engage in monetary transactions in criminally derived property of a value greater than $ 10,000, to wit: the deposit of fraudulently obtained replacement money orders, which property was derived from a specified unlawful activity, to wit: causing false entries in bank records, in violation of [ 18 U.S.C. § 1005]. (citing 18 U.S.C. §§ 1957, 3551).
The counts in question are all based on the same provisions of 18 U.S.C. § 1005 which, in relevant part, states:
Whoever makes any false entry in any such book, report or statement of such bank . . . with intent to injure or defraud such bank . . . or to deceive any officer of such bank, . . . or the Comptroller of the Currency, or the Federal Deposit Insurance Corporation, . . . shall be fined not more than $ 1,000,000 or imprisoned not more than 30 years, or both. (emphasis added).
An expert in money laundering, Special Agent Don Semesky, defined money laundering as: "a term that is given to the various financial transactions that are designed to accomplish the concealment of funds that are earned illegally, and also, to give those funds the appearance of coming from a legitimate source." Tr. at 42. He explained the money launderer's role as: "having to take that money from the [drug] trafficker, convert it to [a] more easily concealable and transportable form, such as, money order, bank check, cashier's check, or to get that money -- that currency into the banking system at which point it can be transferred through wire transfers service to anywhere in the world within a matter of seconds." Tr. at 43.
Money laundering is a three step process, according to Semesky, in which completing any portion constitutes the crime. The first step is placing the currency into the banking system, generally through a deposit or bank check or money orders. Second, the individual "layers" a number of transactions so that the original source of the money becomes unknown. Tr. at 44. Generally, the individuals involved in layering are known as "smurfs" because "their jobs are to go to bank to bank to bank or wherever and buy the money orders or cashier check." Tr. at 83. The third step in the process is the actual spending of the money by the owner.
The primary method to complete step one without having the authorities notified, due to detailed banking regulations in which federal authorities are alerted to any deposits or requests for money orders, cashier's checks, etcetera of $ 10,000 or more is through "structuring," "simply purchasing the cashier's checks or money orders or making deposits under $ 10,000 or as it relates to monetary instruments which are the money orders or cashier's check under $ 3,000.
Tr. at 57. The money orders are then, often, "block smuggled through express mail packages out of the country." Tr. at 62. Semesky further explained ...