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United States v. Garcia

December 1, 2009

UNITED STATES OF AMERICA, APPELLEE,
v.
NELSON HERNAN GARCIA, DEFENDANT-APPELLANT.*FN1



SYLLABUS BY THE COURT

Appeal from the judgment of the United States District Court for the Southern District of New York (Cote, Judge), sentencing defendant-appellant Nelson Hernan Garcia principally to 108 months in prison following his guilty plea to participating in a money laundering conspiracy. Because the record lacks a sufficient factual basis to conclude that Garcia participated in any conspiracy with the requisite knowledge of the concealment element of the crime charged, as interpreted by the Supreme Court in Cuellar v. United States, 128 S.Ct. 1994 (2008), we vacate the plea and remand to the district court for further proceedings.

VACATED and REMANDED.

The opinion of the court was delivered by: Gerard E. Lynch, Circuit Judge

Argued: September 30, 2009

Before: JACOBS, Chief Judge, SACK, AND LYNCH, Circuit Judges.

Defendant-Appellant Nelson Hernan Garcia appeals from the March 26, 2008 judgment of the district court sentencing him principally to 108 months in prison, following Garcia's guilty plea to participating in a money laundering conspiracy in violation of 18 U.S.C. § 1956(h). The object of the charged conspiracy was violation of the transaction provision of the money laundering statute, 18 U.S.C. § 1956(a)(1)(B)(i). Garcia admitted that he conspired to transport ill-gotten cash proceeds across the country, that the cash was disguised during this attempted transaction, and that he knew that the money would not be declared as income. On appeal, Garcia argues that this is an insufficient factual basis on which to conclude that he knew that the transaction was designed to conceal the nature, location, source, ownership, or control of the funds involved in the transaction, and that such knowledge is a required element of the charged offense.

Following Garcia's guilty plea, the Supreme Court held in Cuellar v. United States, 128 S.Ct. 1994 (2008), that the concealment element of the money laundering statute requires that the purpose, not merely the effect, of the endeavor must be to conceal or disguise a listed attribute of the proceeds. Id. at 2004-05. We agree that the conduct admitted by Garcia did not provide a sufficient factual basis for finding a violation of the money laundering statute and therefore vacate Garcia's guilty plea and remand the case to the district court for further proceedings.

BACKGROUND

In late 2006, a drug supplier sent approximately 120 kilograms of cocaine to a man who turned out to be a government informant ("CI"). As a result of those shipments, the CI owed the cocaine supplier $2.2 million. Defendant Garcia was a truck driver tasked with retrieving this money from the CI on the east coast and transporting it across the country to either California or Texas.

On February 7, 2007, Garcia called the CI in the Bronx, and the two arranged to meet at Exit 7 on the New Jersey Turnpike for the CI to transfer the funds to Garcia.

Having detected police presence in the designated meeting area, Garcia altered the plan, and the meeting was moved to the parking lot of an abandoned diner in Levittown, Pennsylvania. When the CI arrived at the diner parking lot, he encountered Garcia and another man waiting in a tractor-trailer. The CI gave the men two duffle bags filled with sham United States currency, vacuum sealed and wrapped in clear plastic. After receiving the bags, Garcia and the other man drove away in the trailer. They were apprehended by federal agents shortly thereafter.

A federal grand jury indicted Garcia on one count of conspiracy to launder money in violation of 18 U.S.C. § 1956(h), the object of the conspiracy being to "conduct a financial transaction" with property "represent[ing] the proceeds of some form of unlawful activity . . . 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" in violation of 18 U.S.C § 1956(a)(1)(B)(i). On August 24, 2007, Garcia pled guilty to the money laundering conspiracy charge. During the plea colloquy, the district judge described the elements of the money laundering conspiracy charge, and explained that the indictment charged that Garcia had conspired with others to transfer and deliver a large amount of cash proceeds from unlawful activity, knowing that the transactions were designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of the proceeds. The judge specifically described the allegation that as an overt act in furtherance of the conspiracy, Garcia in February 2007 collected what he believed to be $2.2 million in cash from a person in Pennsylvania.

The judge asked Garcia to state what he did that made him think he was guilty of the charged offense. Garcia responded that he "went to get some money," which he believed was the proceeds of some illegal activity, but that he did not know that it was drug proceeds or how much money was involved. (A. 45.) The judge probed whether Garcia understood "that picking up the cash on that occasion would help disguise the source of that illegal money." (Id.) Garcia asked the judge to repeat the question, whereupon the judge reiterated that the money laundering conspiracy charge involves an agreement to engage in the transfer or delivery of cash with the intent to conceal or disguise the nature, location, source, ownership or control of the proceeds of some specified unlawful activity. The judge then asked whether Garcia understood "that going to Pennsylvania on that occasion to pick up that cash was in fact part of a larger scheme to conceal or disguise the source or ownership of those funds?" (Id.) Garcia responded "no." (Id.)

At that point, the district judge asked defense counsel to assist with the colloquy. Defense counsel stated that Mr. Garcia's role was that he was contacted by an individual that is now known to the government -- and I don't want to mention it on the record for obvious reasons -- called Mr. Garcia and he agreed to and picked up monies. He didn't know the amount that was wrapped up and packaged to be looked [sic] like regular truck cargo that he was supposed to deliver back to an individual. And he knew that those funds were the proceeds of illegal activity, not specifically drug proceeds, but he knew that it was. So concealment of the funds was to be included with the regular shipment of cargo within a truck, taken from point A to point B, not to be declared or a part of any income and taken to an individual, not locally but somewhere back in California, or Texas. (Id. 46-47.) Garcia acknowledged that counsel's recitation of Garcia's involvement was accurate. The judge then confirmed that Garcia understood that the packages of money were wrapped so as to conceal their contents. After both the government and defense counsel agreed that this was a sufficient factual predicate, the judge accepted Garcia's guilty plea.

Prior to sentencing, the district court conducted a hearing pursuant to United States v. Fatico, 579 F.2d 707 (2d Cir. 1978), to resolve the contested factual issue of whether Garcia knew or believed that the funds at issue were narcotics proceeds, so as to trigger a six-level enhancement under Section 2S1.1(b)(1) of the Sentencing Guidelines. Two witnesses testified at the hearing, both for the government: a certified translator who authenticated two recordings of conversations between Garcia and the CI that were introduced as exhibits, and the CI. The CI testified to the sequence of events concerning the underlying conduct described ...


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