United States District Court, Southern District of New York
August 6, 2003
UNITED STATES OF AMERICA AGAINST SAMUEL NESS, DEFENDANT
The opinion of the court was delivered by: Alvin Hellerstein, District Judge
OPINION & ORDER DENYING DEFENDANT'S MOTION TO
DISMISS THE INDICTMENT
Defendant Samuel Ness was convicted, on May 15, 2003, of conspiring to launder money in violation of 18 U.S.C. § 1957(a), 1956(a)(1)(B)(i), and 1956(a)(2)(B)(i), and of receiving at least $50,000 in cash narcotics proceeds for shipment abroad in violation of 18 U.S.C. § 1956(a)(1)(B)(i) and 2. He now moves for a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29, arguing that (1) the Government offered proof of multiple, separate conspiracies rather than the single conspiracy alleged in the Indictment, a material variance that caused him substantial prejudice, and (2) the Government failed to present sufficient evidence to support the convictions because it did not demonstrate beyond a reasonable doubt that he transported money in connection with an offense involving or affecting interstate or foreign commerce, or concealed and disguised the nature and source of the money he transported.
The evidence at trial showed that Samuel Ness conspired with his business partner, Robert David, and at least two other associates, to transport money for several Ecstasy-dealers, and that he actually transported these illegally gotten funds across the country and to Belgium, Canada, and Israel. While members of the conspiracy may have changed, the core of [ Page 2]
the conspiracy (Ness, David, and the other associates) remained the same; this single group embraced all of the drug enterprises with which they dealt, making it possible for them to pay their suppliers abroad and continue to import Ecstasy into the country. The Ecstasy-dealers with whom Ness dealt depended on Ness and his associates to keep their illegal enterprises going, and they and Ness and his associates shared a common purpose: to transport the proceeds of their Ecstasy distributions out of the country in order to pay the suppliers abroad, thus completing the supply and distribution chain to enable ever-more imports of Ecstasy into, and distribution within, the United States. The jury was properly instructed, without objection by defendant (and as set out in full in the footnotes to this opinion), as to the elements of the single conspiracy alleged in the Indictment, and fairly and properly found Ness guilty of both counts, of the conspiracy and of the money laundering counts. For the reasons discussed in this Opinion, Ness' motion is denied.
I. The Facts Adduced at Trial
By superseding indictment S2 01 Cr. 699, Samuel Ness, also known as "Shmuel," "Shmulik," and "David," was charged with conspiring to launder the proceeds of narcotics trafficking, and with substantive money laundering, specifically, receiving, in February 2001, approximately $50,000 in cash narcotics trafficking proceeds for shipment abroad. Count One of the Indictment — the conspiracy charge — alleged five overt acts, including receiving $315,000 in cash narcotics proceeds in Brooklyn, New York in about June 2000; receiving more than $850,000 in cash narcotics proceeds in July 2000; meeting with a co-conspirator at a hotel in Manhattan in February 2001; and receiving approximately $100,000 in cash narcotics proceeds at 580 Fifth Avenue, in Manhattan, in the Spring of 2001. As the facts showed at trial, the narcotics traffickers who brought Ness their ill-gotten gains in each of these incidents did not all [ Page 3]
work together, and did not necessarily know each other. However, they all brought their proceeds to Ness for one reason: because they each knew that he and his associates would take the illegally gotten funds and transport them abroad.
Five Ecstasy traffickers, Timothy Malinowski, Guy Madmon, Haim Abikzer, Christopher Vidal and Stanley Vazquez, testified at Ness' trial, as well as Ness' former business partner and co-conspirator, Robert David. Timothy Malinowski testified that between Fall 2000 and July 2001, he worked for an Ecstasy-distribution ring run by Guy Madmon. Malinowski testified that on approximately three different occasions he picked up cash payments totaling $161,000 from his customers and delivered them to Samuel Ness. On the first of these deliveries, Ness picked up the cash from Guy Madmon at the Millennium Towers Hotel, where Madmon introduced Malinowski to Ness as "Pappy," Malinowski's nickname. On that occasion, Ness left put the money packed in a paper bag inside his jacket, and left. On two other occasions, Malinowski delivered Ecstasy proceeds from Guy Madmon's enterprise to 580 Fifth Avenue, where Ness had an office from which he ran his courier business, Protective Logistics. On both of those occasions, Malinowski called, introduced himself as "Pappy," and, following Ness' instructions, brought the cash to Ness' 580 Fifth Avenue office. Malinowski brought the cash in gift-wrapped packages to avoid suspicion: $85,000 on the first visit and $26,000 on the second visit. An associate of Ness took the cash from Malinowski, counted the cash in a money-counting machine, and Malinowski left without providing identification or receiving a receipt.
Malinowski's boss, Guy Madmon also testified. He stated that between early 2000 and early 2002, he worked for an Amsterdam-based Ecstasy distribution organization headed by Yakov "The Dog" Elchik. Madmon met the couriers whom Elchik sent with Ecstasy pills into the United States, picked up the pills from the couriers, distributed them to customers in [ Page 4]
various parts of the country, and ensured that the proceeds were sent back to Elchik in Amsterdam to pay for the shipments. Madmon testified that Elchik directed him to contact "Shmulik," or Samuel, to transfer the money for him, and provided Madmon with a telephone number at which to reach "Shmulik." "Shmulik," Madmon testified, was Samuel Ness. Madmon testified that he regularly made deliveries of cash to Ness' office at 580 Fifth Avenue, ranging in amounts from $12,000 to $240,000, which Ness sent to Elchik in Amsterdam. Madmon testified that Ness also met him at the Millennium Hilton Hotel and on the street near a bridge in Manhattan to pick up money. Madmon, and an associate of his, Angel Cordero, also made deliveries to Ness at an office in Los Angeles, where Vivian Weider, an associate of Ness, received the cash. Madmon stated that he never received a receipt, was never asked to complete any paperwork, and never learned Ness' last name on any of the occasions that he delivered money to Ness or to Weider. Madmon estimated that in total Ness moved approximately $10 million in cash narcotics proceeds to Elchik.
Haim Abikzer, who, between 2000 and 2001, worked for an Ecstasy distribution organization headed by Jackie Aderi, testified that he arranged for the delivery of drug proceeds to Ness, for the purpose of shipping those proceeds to Europe and Israel. The first time he met Ness, he accompanied an associate by the name of "David" to Ness' office at 580 Fifth Avenue, in order to deliver approximately $100,000 in drug proceeds to Ness for shipment to Israel. On that occasion, Ness gave "David" an Israeli telephone number and a code word so that "David" could arrange to have the cash picked up in Israel from Ness' contact. On another occasion Abikzer went to Ness' office with Aderi to drop off approximately $100,000 to be shipped to Belgium. Upon receiving the money, Ness gave Aderi a Belgian telephone number and the code word "Luba" so that Aderi and Abikzer could arrange for the money to be picked up in Belgium. [ Page 5]
On yet another occasion, Abikzer dropped off $30,000 in cash narcotics proceeds at Ness' office. Although Ness was not there at the time, Abikzer spoke to him on the phone, and Ness instructed Abikzer to give the money to his associate at the office and to call Ness later to get a name and telephone number. Abikzer testified that he was never given a receipt and was not asked to fill out any paperwork. He was never asked for identification, and Ness only knew him as "Haim."
Christopher Vidal and Stanley Vazquez testified about their interactions with Ness when they were working for a Brooklyn-based Ecstasy distribution organization headed by Moshe Marigin. Both Vidal and Vazquez picked up Ecstasy pills from couriers, delivered pills to customers, counted the proceeds of their narcotics trafficking, and delivered the proceeds to Ness. On the two occasions that Vidal delivered cash proceeds to Ness, whom he knew as "David," Ness told Vidal to meet him at an industrial block in Williamsburg, Brooklyn. Vidal drove up behind Ness' car, which was parked on the block, got into Ness' car with the cash, and handed it over to Ness. Vidal delivered approximately $191,000 in cash to Ness in a shopping bag on the first occasion and $315,000 in cash to Ness in a duffel bag on the second occasion. Ness did not ask Vidal for identification and did not provide him with a receipt.
Stanley Vazquez testified that he made, at Moshe Marigin's behest, about six deliveries of cash narcotics proceeds to Ness. Following Marigin's instructions, Vazquez brought a cache of money — the proceeds of Ecstasy trafficking — to Marigin's auto repair shop, where he found Marigin, Ness, and another associate counting money with a money counter. Vazquez dropped off the bag of cash he was carrying, and they counted that as well. After they finished counting all the money, Ness packed it into a large book bag, placed the money counter into a box, and left with both. The other deliveries of narcotics proceeds that Vazquez made to Ness all took place in the parking lot of a McDonald's restaurant in Williamsburg. On those [ Page 6]
occasions, Marigin asked Vazquez to contact Ness to arrange the deliveries. After meeting in the parking lot of McDonald's, Vazquez got into Ness' car, handed Ness the money, and then Ness drove through the parking lot and dropped off Vazquez down the block, so as not to attract attention. Again, Ness never asked Vazquez for identification, did not ask him to fill out any paperwork, and did not give him a receipt.
Robert David, a former business partner of Ness, testified that he went into business with Ness in around April 2000, opening a Los Angeles branch of Ness' courier business, Protective Logistics. Although the purpose of the business was to transport and ship jewelry for jewelry dealers in the Los Angeles area, David began also to receive cash that was brought to the office at Ness' direction for transportation and shipment. The first cash delivery took place on about April 12, 2000. Ness called David from Israel, advised him that someone was coming to the Los Angeles office with currency, and told David to count it and send it to him in New York. David agreed, and soon received a call from an individual whom he did not know to arrange the delivery. The individual then arrived at the office with a black duffle bag containing bundles of $10 and $20 bills secured with rubber bands. David counted the money, shipped it to Ness in New York, and provided the individual with a receipt. Ness later chastised David for providing the receipt, advising him, "You never give receipts, you just take it in and you count everything." Following this first delivery, individuals would arrive every three to four weeks — and later even more often — with cash they wanted sent to New York or abroad. David testified that Ness arranged all these deliveries, in amounts from $100,000 to approximately $1.25 million. Ness directed David to pack the cash into containers of gold jewelry that the business was legitimately shipping by air to Ness in New York on behalf of a company called OroAmerica, and to fill out the airway bill to reflect only the jewelry being shipped, not the cash [ Page 7]
Ness told David that the cash contents would thus be "confidential." Ness, as part of his courier business, had access to the airplane runways at the New York City airports, which allowed him to offload the shipments of jewelry, and to move them to other airplanes flying to offshore locations. In the process, he broke open the packages sent to him by David, removed the cash, and moved the containers of gold to the destinations of OroAmerica's consignees.
As the cash deliveries became more frequent, David's assistant Vivian Weider also became involved in accepting, counting, and shipping the money for Ness. David testified that he and Weider did not provide receipts for any of the deliveries, but recorded the cash deliveries and shipments in ledgers. These ledgers, which were admitted into evidence, recorded cash deliveries to Belgium, Canada, and Israel. Five of the deliveries recorded on the ledgers were by an individual named "Atzmon."
State Trooper David Chatfield and Agent Leonard Propps, Wyoming law enforcement officers, testified concerning the arrest near Cheyenne, Wyoming on March 22, 2001, of Atzmon Gerby, with 147 pounds, or 200, 000 pills, of Ecstasy in the trunk of his car. Among the items seized from Gerby upon his arrest were Vivian Weider's business card and a handwritten note with two of Ness' telephone numbers and the name "Samuel" written in Hebrew next to them. Telephone records introduced at trial showed contacts between Ness and Atzmon Gerby.
Finally, the government introduced translations of transcripts of telephone conversations that Ness had with Yakov Elchik after Ness' arrest in Belgium on July 4, 2001. The calls reflected Elchik's complaints that Ness had not sent him all the money Elchik claimed that he was owed by the Ecstasy distributors. Ness promised to have the money sent. Both expressed concern that their organizations had been infiltrated, and perhaps compromised. [ Page 8]
A. Single Conspiracy
Ness seeks to overturn his conviction under Rule 29 of the Federal Rules of Criminal Procedure on the basis that the evidence at trial was insufficient in that it did not prove the single conspiracy charged in the Indictment, but showed instead that there were multiple conspiracies.
A defendant seeking to overturn a conviction on the grounds that the evidence was insufficient bears a heavy burden. United States v. Russo, 74 F.3d 1383, 1395 (2d Cir. 1996); United States v. Wallace, 59 F.3d 333, 338 (2d Cir. 1995). A conviction challenged on sufficiency grounds will be affirmed if, viewing all the evidence in the light most favorable to the prosecution, a reviewing court finds that "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979); United States v. Pitre, 960 F.2d 1112, 1120 (2d Cir. 1992). Where, as here, the defendant contends that multiple conspiracies were proven, rather than the single one charged in the Indictment, this means that the defendant bears the burden of showing that "no rational trier of fact could have concluded that a single conspiracy existed based on the evidence presented." United States v. Sureff, 15 F.3d 225, 230 (2d Cir. 1994). In analyzing defendant's claim, a reviewing court must view the evidence as a whole, and give deference to the jury's resolution of the credibility of witnesses where there is conflicting testimony. United States v. Desimone, 119 F.3d 217, 223 (2d Cir. 1997).
The question whether the government's proof shows a single conspiracy or multiple conspiracies is one of fact for a properly instructed jury. United States v. Johansen, 56 F.3d 347, 350 (2d Cir. 1995). The jury's verdict will not be disturbed if the evidence, viewed in [ Page 9]
the light most favorable to the government, "could have led a reasonable juror to conclude beyond a reasonable doubt `(1) that the scope of the criminal enterprise proven fits the pattern of the single conspiracy alleged in the indictment, and (2) that the defendant participated in the alleged enterprise with a consciousness of its general nature and extent.'" United States v. Rosa, 11 F.3d 315, 340 (2d Cir. 1993) (quoting United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1192 (2d Cir. 1989)).
In the instant case, I gave an instruction on single and multiple conspiracies, to which defense counsel did not object, and during deliberations the jury sought further guidance on the meaning of single and multiple conspiracies, which I provided after consultation with counsel for both sides and without objection by the defense.*fn1 The jury's conclusion that there [ Page 10]
was one conspiracy will therefore not be disturbed unless it is clear that no rational trier of fact could have concluded that a single conspiracy was presented.
In order to prove a conspiracy, the government must show that two or more persons agreed to participate in a joint venture intended to commit an unlawful act. Desimone, 119 F.3d at 223. In addition, a single conspiracy may be found "where there is mutual dependence among the participants, a common aim or purpose . . . or a permissible inference from the nature and scope of the operation, that each actor was aware of his part in a larger organization where others performed similar roles equally important to the success of the venture." United States v. Vanwort, 887 F.2d 375, 383 (2d Cir. 1989) (omission in the original). A single conspiracy "is not transformed into multiple conspiracies merely by virtue of the fact that it may involve two or more phases or spheres of operation, so long as there is sufficient proof of mutual dependence and assistance." United States v. Maldonado-Rivera, 922 F.2d 934, 963 (2d Cir. 1990). [ Page 11]
There was sufficient evidence in the case before me to show that Ness participated in a joint venture, along with Robert David, Vivian Weider, and others, in laundering money for Ecstasy-dealers to pay suppliers abroad. Although the customers and some of the associates of the conspiracy may have changed over time, Ness and his associates had the same overriding goal, to transport illegally gotten funds on behalf of the narcotics dealers who were their "clients," and used the same or similar methods and means in collecting and shipping the money for each transaction, providing no receipts and requiring no identification from their clients. Ness led and directed the conspiracy, and although sometimes he worked with associates at his 580 Fifth Avenue office, sometimes with David, and sometimes with Weider, he was always involved. The conspiracy operated on trust, and each of its customers and participants knew to find Ness and to entrust him with huge sums of money. See United States v. Berger, 224 F.3d 107, 115 (2d Cir. 2000) (finding that evidence that showed that schemes served the same overriding goal, shared common participants, were led by the same core group of conspirators, and that those conspirators used the same distinctive methods and means in pursuing the schemes, supported a jury finding of a single conspiracy). Accordingly, it is clear that a rational juror could find that the scope of the criminal enterprise proven fits the pattern of the single conspiracy alleged in the Indictment. See id. Moreover, since Ness was the leader of the conspiracy, it is patent that he participated in the enterprise with a consciousness of its comprehensive nature and extent.
Ness' overall conspiracy subsumed other, smaller conspiracies, but that does not mean there were multiple conspiracies. There was the overall money-laundering operation that included Ness, Robert David, Vivian Weider, and others as co-conspirators. This conspiracy also embraced other actors who worked with it. The testimony at trial showed four Ecstasy [ Page 12]
operations using Ness to ship the proceeds of their narcotics trafficking abroad: (1) Yakov Elchik's operation, which included Guy Madmon and Timothy Malinowski; (2) Jackie Aderi's operation, which included Haim Abikzer; (3) Moshe Marigin's operation, which included Stanley Vazquez and Christopher Vidal; and (4) Atzmon Gerby's operation. It was not necessary for the Government to have proved that the four operations knew of each other; it was sufficient that each knew of Ness and his operation, for Ness provided a vital function for all in shipping narcotics proceeds abroad, and thus enabled each operation to engage in continuing, illegal Ecstasy operations. These groups operated similarly in relation to Ness, had the same purpose in their dealings with Ness, and Ness handled them all in a similar fashion. The jury, having been properly instructed, without objection by defendant, found there was a single conspiracy; the transactions had the same overriding goal, shared common participants, and were led by the same core group of conspirators. See Berger, 224 F.3d at 107. There is sufficient evidence to support the jury's verdict.
This is not the typical multiple conspiracy case. Since Samuel Ness was the leader and the "hub" of the conspiracy, and he was the only one charged with conspiracy in the Indictment, this case is distinguishable from the multiple conspiracy cases that defendant cites and which courts can find problematic. In Kotteakos v. United States, 328 U.S. 750 (1946), for example, the alleged conspiracy was one in which the defendants sought to induce various financial institutions to grant credit, with the intent that the loans or advances would be offered to the Federal Housing Administration for insurance upon applications containing false and fraudulent information. Id. at 752. The main conspirator, Simon Brown, who was the key figure in all of the transactions, pled guilty. The government then indicted, in the same indictment, thirty-two conspirators (nineteen of whom went to trial), each of whom had engaged in a [ Page 13]
separate transaction with Brown to defraud the Federal Housing Administration, but none of whom knew that Brown was conducting like transactions with others. The defendants did not have any relationship with one another, independent of Brown's connection with each transaction; instead, there were several "separate and independent groups, none of which had any connection with any other, though all dealt independently with Brown as their agent." Id. at 754-55. As the Court described it, the pattern was that of separate spokes meeting in a common center, a "wheel" conspiracy, but as the Court noted, a wheel without the rim to enclose the spokes. Id. at 755. The Supreme Court found that the proof made out a case, not of a single conspiracy, but of several independent conspiracies, id., and that the variance prejudiced the defendants. See also Berger v. United States, 295 U.S. 78 (1935); Berger, 224 F.3d 107.
The difficulty in Kotteakos was that the "spokes" of the wheel were prosecuted for membership in a larger conspiracy of which none of them was aware. In such cases, it is patent that in order to find that the indicted individual was a conspirator in a single conspiracy, the individual must know that he is part of the overarching conspiracy. The size of the conspiracy and the amount of interdependence and assistance between the various individuals or groups involved in the conspiracy can inform whether that knowledge existed. In Kotteakos, then, there were several conspiracies, rather than one, because there was no evidence that the separate defendants were aware of any other defendant's transaction or of a larger scheme, and they therefore did not know they were participating in the overall conspiracy alleged in the indictment. In contrast, in the instant case, the prosecution is not of one of the "spokes" of the conspiracy, such as Moshe Marigin or Jackie Aderi, but of Ness, the ringleader or "hub" of the conspiracy. Ness was not an outlier, like the defendants in Kotteakos; the evidence at trial showed that he personally directed the effort to transport the narcotics proceeds across the [ Page 14]
country and abroad, and conspired with David and Weider, among others, to do so. He was therefore fully aware of the entire scope of the conspiracy as alleged in the Indictment. Under such circumstances, the jury's finding of one conspiracy will not be disturbed. Cf. Sureff, 15 F.3d at 229-30 (holding, in prosecution of "hub" of conspiracy, that there was a single conspiracy).
Even if Ness could show that the evidence proved multiple conspiracies, rather than a single one, there is no ground to reverse his conviction because he cannot show that this variance denied him a fair trial. A conviction will be reversed where the defendant can show that (1) the indictment charged a single conspiracy, but the proof disclosed several independent conspiracies, and (2) defendant was so prejudiced by this variance as to be denied a fair trial. Johansen, 56 F.3d at 350; United States v. Bertolotti, 529 F.2d 149, 155 (2d Cir. 1975). In evaluating prejudice in this context, the essential question is whether the jury convicted the defendant "on evidence unrelated to his own alleged activity." United States v. Washington, 48 F.3d 73, 80 (2d Cir. 1995). More specifically, a court will look at:
(1) whether the trial court gave a jury charge,
pursuant to Pinkerton v. United States,
328 U.S. 640 (1946), allowing the defendant to be
convicted for substantive offenses committed by
another; (2) whether statements of persons not in
a conspiracy with the defendant were used against
him; (3) whether there was a prejudicial
"spillover" because of a large number of
improperly joined defendants; and (4) whether
shocking or inflammatory evidence came in against
[ Page 15]
Johansen, 56 F.3d at 351. None of these elements is present in the instant case. No Pinkerton charge was given,*fn2
Ness was the only defendant charged in the case, and all of the testimony related to transactions in which Ness himself was personally involved. Ness claims, however, that he was prejudiced because he lacked notice and an ability adequately to prepare to meet the proof that three entirely separate and distinct groups were alleged to have used him to process their illegally gotten funds. However, the Indictment gave Ness sufficient notice of the scope of the conspiracy, in that the overt acts alleged therein are not all with one Ecstasy enterprise, but represent transactions with several of them.
B. Sufficiency of Evidence Generally to Sustain Ness' Conviction
A conviction for money laundering under 18 U.S.C. § 1956(a)(1)(B)(i) will be sustained if the government proves "that the specific transactions in question were designed, at least in part, to launder money." United States v. Garcia-Emanuel, 14 F.3d 1469 (10th Cir. 1994). Ness argues that the Government failed to prove that the financial transactions described at trial were designed to conceal and disguise the nature, location, source, ownership or control of the proceeds. Moreover, he asserts that there was no proof that the moneys involved were actually transported abroad.
In fact, there was more than sufficient proof at trial, not only that the transactions were designed to conceal and disguise their nature, but also that Ness transported the funds abroad. First, the evidence showed that no paperwork was done for any of the transactions, and no receipts were given. David testified that the funds were shipped along with OroAmerica's gold jewelry, but were not put on the airway bill along with the jewelry, and that Ness told him [ Page 16]
he wanted the cash transfers to be "confidential." Such evidence could lead a reasonable juror to infer that the transactions were designed to conceal the nature, location, source, ownership and control of the proceeds. See id. at 1475-76 (holding that unusual secrecy surrounding a transaction, structuring the transaction in a way as to avoid attention, and highly irregular features of a transaction are all evidence supportive of intent to disguise and conceal). Furthermore, ledgers admitted at trial showed that the funds were shipped to Belgium, Canada, and Israel, and Haim Abikzer's testimony indicates that Ness provided Jackie Aderi with code words and contacts to reach the couriers who were transporting Aderi's illegally gotten funds to Belgium and Israel. Ness' jailhouse conversations with Yakov "The Dog" Elchik indicate that Ness had been shipping drug-money to Elchik, and that, even after he was arrested, Ness intended to continue transporting such narcotics proceeds abroad. Such evidence could lead a reasonable juror to infer that the funds were actually being transported abroad.
The evidence at trial was that during the period between around April 2000 until about November 2001, Samuel Ness, with the help of his associates, sent millions of dollars of Ecstasy-proceeds abroad, allowing the Ecstasy enterprises he aided to continue their operations. Ness structured the transactions so that their nature would be hidden, and in doing so, allowed the Ecstasy dealers with whom he worked to distribute narcotics extensively and with impunity. Ness and his associates were the vital link between suppliers and distributors, providing the means by which distributors of Ecstasy in the United States made payments to their suppliers in Belgium, Canada, and Israel, assuring additional supplies, and continuing the flow of contraband and payments. The evidence offered was more than sufficient to find Ness guilty of conspiracy to launder money as charged in Count One of the Indictment, as well as to find him guilty of the [ Page 17]
substantive count of money laundering charged in Count Two. His motion for a judgment of acquittal is denied.