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No. 95-5964
No. 95-5965
18 U.S.C.A. 1956(a)(2)(A) (West Supp. 1997), ten counts of submitting false claims in violation of 18 U.S.C.A. 287 (West Supp.
1997), and one count of conspiracy to defraud the Government, to
engage in wire fraud and money laundering (based on the transactions
with the German bank), and to submit false claims in violation of 18
U.S.C.A. 371 (West 1966 & Supp. 1997). The jury convicted both
Gillespie and Hines of the conspiracy count; however, it acquitted
Hines of all substantive counts and Gillespie of all but six false claims
counts.
At sentencing, the district court properly looked to the multiple
count rules and determined to "go from" U.S.S.G. 2X1.1 (conspiracy) to U.S.S.G. 2S1.1 (money laundering-- the most heavily punished object of the conspiracy). See U.S. Sentencing Guidelines
Manual 3D1.1-.3 (1994). Section 2S1.1 provides for a base level of
"23, if convicted under 18 U.S.C. 1956(a)(1)(A), (a)(2)(A), or
(a)(3)(A)" and a base level of "20, otherwise." See 18 U.S.C.A.
1956 (West Supp. 1997). Gillespie and Hines argued (and the probation officer concluded) that because they were convicted under the
conspiracy statute, 18 U.S.C.A. 371, not"under 18 U.S.C.A.
1956(a)(1)(A), (a)(2)(A), or (a)(3)(A)," the base level should be 20.
The district court rejected that argument because the object of the
defendants' conspiracy had been to launder money in violation of
1956(a)(2)(A); thus, he considered the proper base level to be 23,
pursuant to 2S1.1(a)(1).
Then, over the defendants' objections, the district court: (1)
increased each defendant's base level by four levels pursuant to
2S1.1(b)(2)(E), accepting the Government's contention that the total
value of the laundered funds, $750,000, should be attributed to each
man; and (2) refused to decrease the defendants' base levels by three
levels pursuant to 2X1.1(b)(2), rejecting their argument that they
did not perform all acts they believed necessary for completion of the
substantive offenses. Thus, the district court calculated the total
offense level for each defendant to be 27. Because neither Gillespie
nor Hines had any criminal record, their presumptive sentencing
range was 70 to 87 months imprisonment. See U.S.S.G. Ch.5, Pt.A
(Sentencing Table).
3
The loss figures, which the Court is also well aware of,
simply grossly overstate Mr. Gillespie's involvement in this
matter, and we ask the Court, in the exercise of its discretion, to depart downward for Mr. Gillespie, to bring this
case to a point recognizing the conduct actually involved
and recognizing what he has been convicted of.
(emphasis added).
Thus, the defense supported the departure principally by arguing
that the crimes at issue here involved "straightforward," "normal"
fraud as opposed to money laundering.2 Combined with the fact that
the district court went to some pains to elicit from the defense counsel, and confirm with the probation officer, what the sentencing range
would have been if the defendants "had just been charged with" and
convicted of "conspiracy to defraud rather than money laundering,"
the record provides some basis for concluding that perhaps the district
court did ultimately use the fraud guideline to sentence.
Such a procedure would clearly be in error. A defendant convicted
of money laundering, in violation of 1956, must be sentenced pursuant to the money laundering guideline, U.S.S.G. 2S1.1, even if the
conviction is based on economic rather than narcotics-related crimes.
Section 1956 broadly criminalizes financial transactions with funds
arising from a multitude of specified unlawful activities. See 18
U.S.C.A. 1956(c)(7) (listing more than sixty federal crimes as triggering money laundering provisions). Thus, as the Eleventh Circuit
recently explained:
Congress intended to criminalize a broad array of money
laundering activity, and included within this broad array is
[transferring fraud profits between bank accounts]. Simply
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2 Gillespie's counsel offered no other argument. The only other comments that Hines' counsel made in support of the departure were that the
amount of laundered money attributed to Hines was overstated and that
Hines had refused to plead guilty to money laundering as a matter of
"principle." The district court did not appear to rely on either of these
arguments, even telling the prosecutor it did not need to hear about the
plea agreement.
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3553(b) (West Supp. 1997). The district court did not, however,
have the benefit of Koon v. United States, 116 S. Ct. 2035 (1996).
There, the Supreme Court provided much needed guidance as to how
courts are to determine whether a potential basis for departure has
been "adequately taken into consideration by the Sentencing Commission."
The Koon Court "explained that when analyzing whether a potential basis for departure was adequately considered by the Commission
in formulating the guidelines, a sentencing court must focus on
whether the factor is taken into account by the guidelines, policy
statements, or commentary and whether it is encompassed within the
heartland of situations to which the applicable guideline was intended
to apply." United States v. Barber, 1997 WL 386103, at *3 (4th Cir.
July 14, 1997) (Nos. 95-5238, 95-5250) (citing Koon, 116 S. Ct. at
2044). "The Commission intend[ed] the sentencing courts to treat
each guideline as carving out a `heartland,' a set of typical cases
embodying the conduct that each guideline describes." Koon, 116 S.
Ct. at 2044 (quoting U.S.S.G. Ch.1, Pt.A, intro. comment. 4(b)
(1995)). Only factors that take a case outside the heartland for the
applicable guideline can be considered as potential bases for departure. See Barber, 1997 WL 386103, at *3.
Guided by these principles, a court must first identify "[w]hat features of this case, potentially, take it outside the Guidelines' `heartland' and make of it a special or unusual case." Koon, 116 S. Ct. at
2045 (citing United States v. Rivera, 944 F.2d 942, 949 (1st Cir.
1993)). Then a court must determine if the special feature is forbidden, encouraged, discouraged, or unmentioned by the Guidelines. Id.
If a factor is forbidden, e.g., race, sex, religion, socio-economic status,
or drug dependency, see U.S.S.G. 5H1.4, 5H1.10, a court may
never rely on it as a basis for a departure. Id. at 2044, 2050. "All other
factors, however, potentially may provide a basis for departure under
appropriate circumstances." Barber, 1997 WL 386103, at *3.
If the Commission has indicated that a departure on the basis of a
certain factor is encouraged, a district court is free to consider departure on that basis provided the applicable guideline has not already
taken that factor into account. Koon, 116 S. Ct. at 2045. If the applicable guideline has already taken an encouraged factor into account, or
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