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UNITED STATES v. GAMEZ

April 6, 1998

UNITED STATES OF AMERICA against JAIME GAMEZ and GALO POLO, Defendants


The opinion of the court was delivered by: WEINSTEIN

MEMORANDUM, JUDGMENT, AND ORDER

 WEINSTEIN, Senior District Court Judge:

 I. Introduction :

 Defendants Jaime Gamez and Galo Polo were convicted of conspiring to engage in money laundering in violation of 18 U.S.C. § 1956. They assisted Colombian narcotics traffickers using drug money to purchase automobiles in the United States for export to Colombia. Presented is the question -- apparently of first impression -- of whether conscious avoidance of knowledge that the money came from drugs suffices to enhance a sentence for knowledge of drug relatedness under the Guidelines.

 For the reasons indicated below, conscious avoidance can substitute for knowledge equivalents under the Guidelines. Nevertheless, the government has failed to present sufficient evidence to warrant enhancement. Downward departure is appropriate.

 II. Facts :

 Defendants Gamez and Polo, in addition to their regular employment as car salesmen, operated an automobile brokerage company in Queens between June 1992 and June 1996. Their intended market was South Americans who sought to buy automobiles in the United States and ship them to Colombia in contravention of that country's tax and monetary laws.

 Sixty-two deposits of funds were made to the company's bank account, totaling hundreds of thousands of dollars, almost exclusively in cash. The deposits were structured in this manner to avoid bank reporting requirements for cash deposits in excess of $ 10,000. See 31 U.S.C. § 5324; 31 C.F.R. § 103.22.

 With the monies, defendants purchased more than a score of cars from a number of dealerships in New York, New Jersey, and Connecticut. The purchases were made either in cash or with a combination of cash and checks from the company's account. Every vehicle was purchased at a cost of more than $ 10,000.

 To facilitate these purchases, defendants were provided with identification documentation such as driver's licenses or social security numbers from their clients. Although it does not appear that defendants were aware of it, most of the identification was fictitious. At least one of their clients, "Fat Man," was a notorious drug trafficker, though neither defendant had specific knowledge of this fact or knew the client by that nickname.

 Defendants voluntarily surrendered in January, 1997. In May 1997, they pleaded guilty. They must now be sentenced.

 III. Guidelines Computation :

 Under the Guidelines, the base offense level for these defendants is 20. U.S.S.G. § 2S1.1(a)(2). Three points are added for the amount of money involved, U.S.S.G. § 2S1.1(b)(2)(D). Three points are deducted for acceptance of responsibility. U.S.S.G. § 3E1.1(a), (b)(2). With an adjusted offense level of 20, defendants face 33 to 41 months' imprisonment.

 IV. Request for Enhancement :

 The government urges that an additional three point enhancement be imposed pursuant to section 2S1.1(b)(1) because these are drug-related offenses. The Guideline reads:

 
If the defendant knew or believed that the funds were the proceeds of an unlawful activity involving the manufacture, importation, or distribution of narcotics or other controlled substances, increase [the base offense level] by 3 levels.

 The defendants, the government asserts, knew or believed that the cash they received was derived from drug trafficking activities. While it acknowledges no direct evidence of actual knowledge of the genesis of the funds, circumstantial and other proof, it contends, establishes that the defendants knew they were dealing with drug money. The government further claims that even if the defendants did not have actual knowledge, they consciously avoided the truth, with the same effect as full awareness.

 Defendants concede that they knew the funds they received had an illegal source, but they contend they did not know of any drug relationship. In fact, evidence in many of the cases in this court suggests that a good deal of the cash spent by foreign and domestic criminals in New York is generated by illegal activities other than narcotics trafficking. Cf. President's Commission on Organized Crime, The Cash Connection: Organized Crime, Financial Institutions, and Money Laundering 7-8 (1984)(criminal organizations other than those engaged in drug trafficking use money laundering schemes to funnel money). Thus, defendants' position can not be rejected out of hand.

 A. Law :

 1. Mens Rea Generally :

 Evaluation of mens rea is critical in sentencing. Guilty state of mind is "a moral prerequisite to the imposition of punishment." Susan L. Pilcher, Ignorance, Discretion and the Fairness of Notice: Confronting "Apparent Innocence" in the Criminal Law, 35 Am. Crim. L. Rev. 1, 1 (1995); see also United States v. Cordoba-Hincapie, 825 F. Supp. 485, 521 (E.D.N.Y. 1993)("operation of the mens rea principle takes on a special character at sentencing"); Fred A. Bernstein, et al., The Denigration of Mens Rea in Drug Sentencing, 7 Fed. Sent. Rep. 121, 121 (1994)("Mens rea, a principle central to our criminal law, is crucial in linking punishment to individual culpability."). Moreover it is critical in predicting future dangerousness of the defendant.

 2. Conscious Avoidance Generally :

 Yet, divining what a person knew presents great difficulty. See Rumely v. United States, 293 F. 532, 560 (2d Cir.), cert. denied, 263 U.S. 713, 68 L. Ed. 520, 44 S. Ct. 38 (1923)("Knowledge, being a mental condition, undisclosed, cannot always be proven by direct or express testimony."); Robin Charlow, Wilful Ignorance and Criminal Culpability, 70 Tex. L. Rev. 1351, 1359-60 (1992)("There is rarely direct evidence of knowledge, such as an admission by a defendant.").

 Substituting conscious avoidance of the truth as a proxy for knowledge is one way in which the law has dealt with the problem of proof. See Model Penal Code Section 2.02(7) and Wilful Blindness, 102 Yale L.J. 2231, 2233-34 (1993)(origins of wilful blindness rules in English Common Law). The Supreme Court first addressed the concept almost a century ago in Spurr v. United States, 174 U.S. 728, 735, 43 L. Ed. 1150, 19 S. Ct. 812 (1899), explaining that "evil design may be presumed if the [defendant] purposely keeps himself in ignorance . . . ." Since then, other cases have developed and refined the general rules relating to conscious avoidance, sometimes referred to as wilful blindness or deliberate ignorance of fact.

 The recommendations of the Model Penal Code based on probability of awareness have played a large role in this evolution. See, e.g. Leary v. United States, 395 U.S. 6, 46 n.93, 23 L. Ed. 2d 57, 89 S. Ct. 1532 (1969)(applying the Model Penal Code's definition of knowledge which provides "knowledge [of a fact] is established if a person is aware of a high probability of its existence"); Turner v. United States, 396 U.S. 398, 416, 24 L. Ed. 2d 610, 90 S. Ct. 642 (1970)(specific knowledge of a particular fact can be inferred from defendant's awareness of high probability that it is so); see also United States v. Squires, 440 F.2d 859, 864 (2d Cir. 1971)("whenever . . . ignorance of fact is claimed, it is recognized that one may not deliberately close his eyes to what otherwise would have been obvious to him"); Jonathan L. Marcus, Note, Model Penal Code Section 2.02(7) and Willful Blindness, 102 Yale L.J. 2231, 2232 (1993)(federal courts' use of Model Penal Code's test for willful blindness determination). Distillation of this authority results in the maxim: "deliberate ignorance and positive knowledge are equally culpable." United States v. Jewell, 532 F.2d 697, 700 (2d Cir.), cert. denied, 426 U.S. 951, 49 L. Ed. 2d 1188, 96 S. Ct. 3173 (1976).

 For purposes of finding criminal liability it is common to charge juries in criminal trials that under certain circumstances knowledge can be inferred when a defendant intentionally remains ignorant of pertinent facts. See, e.g., United States v. Boothe, 994 F.2d 63, 69-70 (2d Cir. 1993); United States v. Shareef, 714 F.2d 232, 233-34 (2d Cir. 1983); see also Leonard B. Sand, et al., Modern Federal Jury Instructions 3A-4 (1997)(instruction 3A-2, ...


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