Appendix — Ford v. United States

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IN THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Nos. 97-6097, 97-6270, 97-6271

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UNITED STATES OF AMERICA, Plaintiff-Appellee,

V.

DONALD G. FORD (97-6097/6270); SANDRA HUTCHINS FORD

(97-6271), Defendants-Appellants.

Argued: October 29, 1998.

Decided and Filed: July 23, 1999.

Appeal from the United States District Court

for the Western District of Kentucky at Louisville.

Nos. 93-00081; 93-0082—Charles R. Simpson, III, Chief

District Judge.

Before: NELSON, CLAY, and John R. GIBSON,” Circuit

Judges.

OPINION

ad The Honorable John R. Gibson, Circuit Judge of the United States

Court of Appeals for the Eighth Circuit, sitting by designation.

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JOHN R. GIBSON, Circuit Judge.

Don Ford and his wife, Sandra Hutchins Ford,” appeal

their convictions for operation of an illegal gambling business,

18 U.S.C. § 1955 (1994), and money laundering, 18 U.S.C.

§§ 1957 (1994) (both defendants) and 1956(a)(1)(B)(1994)

(Ford only). Ford also appeals his conviction under 26

U.S.C. § 7206(1) (1994) for filing a false income tax return.

Both raise numerous claims of error in denying various

motions and in sentencing. Ford and Hutchins raise Fourth

Amendment issues concerning the search of Ford’s bingo hall

and another building. They also contend that the district court

erroneously determined that there were no permissible bases

for departure from the Guidelines sentencing range. We

reverse Ford’s tax conviction because it is based on evidence

that was seized in violation of his Fourth Amendment rights.

We affirm Ford’s and Hutchins’s gambling and money

laundering convictions, but remand Ford’s case for

resentencing in light of the reversal of his tax conviction.

Don Ford owned and operated the Arcade Bingo Plaza,

which was in the business of conducting bingo games for the

benefit of charities. Under Kentucky law, it is illegal to

promote gambling (which includes bingo) other than

“charitable gaming” subject to complex rules that were

amended twice during the time periods relevant to this case.

See Ky. Rev. Stat. Ann. §§ §28.010(10) (Michie 1985); 1990

Ky. Rev. Stat. and R. Serv. ch. 469 (Banks-Baldwin)

(effective July 13, 1990); 1992 Ky. Rev. Stat. and R. Serv.

Y The Fords married after the crimes in this case were committed. To

make it easier to distinguish between the defendants, we will refer to

Sandra Hutchins Ford as Hutchins, which was her name at the time of the

events in question.

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ch. 461 (Banks-Baldwin) (effective April 13, 1992).

Throughout the time in question, gambling could only be legal

“charitable gaming” if it was operated by a tax exempt

organization; if that organization had maintained tax exempt

status for five years before the gaming; if the gaming was

conducted exclusively by unpaid volunteers for the charity;

and if the proceeds were used solely for the charitable

purposes of the organization. During various times there

were many other requirements for the conduct of charitable

gaming, including a limitation of $5,000 per day in prizes and

limitations on the number of days and hours per week the

organization could conduct gaming.

Ford first operated the Arcade Bingo Plaza in Louisville,

Kentucky in 1990, conducting bingo games for various

charities, such as the Knights of Columbus. Ford would

charge the charities rental and overhead for use of the hall.

Hutchins was Ford’s second in command at the Arcade Plaza,

and when he was not there she conducted the business.

Instead of using volunteers from the sponsoring charities to

run the bingo games in accordance with Kentucky law, Ford

hired workers. The workers were paid from money “cut” or

“skimmed” from the bingo proceeds. The skim was made by

the controller for the session, then given to Hutchins. The

workers were paid in cash, often surreptitiously handed to

them in a handshake. The amount of money skimmed varied

with the size of the crowd, because the more players there

were, the larger the amount that could be skimmed without

the players detecting the diminution of the prize money.

Sometimes there was cash left over from the skim after the

workers were paid; this money would be put in the safe in

“Mr. Ford’s compartment.”

In November 1990 Ford sold the Arcade Plaza to his

employee Clay Ballinger, for $1 down and $249,999 in credit.

Ford had no further role in the operation of the bingo hall,

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except to collect payments from Ballinger, until the end of

1991.

At that time Ford came up with the idea of controlling his

own charitable sponsor. Ford bought the Arcade Plaza back

from Ballinger. Ford reactivated a lapsed post of the Regular

Veterans Association on December 16, 1991. Later, he

registered several other RVA Posts and suborganizations.

Because of the statutory limitations on the number of sessions

one organization could sponsor and the amount of prize

money an organization could award in one day, once the

limits had been reached for one RVA sponsor, Ford would

substitute another RVA sponsor. At a Christmas party for the

Arcade workers in 1991, Ford told the workers that the RVA

was going to sponsor bingo games at the Arcade Plaza. The

workers testified that Ford expected them to join the RVA in

order to work at the Arcade Plaza. Bingo patrons at the hall

were invited to join the RVA, and the RVA subsidized their

$5 dues with a bingo pass worth $5.

Ford made himself treasurer and Sandra Hutchins secretary

of the RVA entities he controlled. Ford and Hutchins were

the signatories on the various RVA bank accounts. The other

officers were Ford’s employees or long-time associates who

had virtually no knowledge of the RVA posts’ operation or

function. For instance, Clay Ballinger was president of one

post, although he couldn’t say which. He testified at trial,

“To this day, I really can’t tell you what RVA is.” Roy

Bunch, president of RVA Post No. 1, stated: “I was

President of the club, but I had no position ... Well, I had no

authority, let’s put it that way.”

After the RVAs began sponsoring bingo at the Arcade

Plaza, the method of paying non-RVA charitable sponsors

changed. Rather than the old system of paying the sponsors

the net proceeds, Ford and Hutchins began paying a flat fee

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of $500 in the form of a check and $500 cash “discreetly”

handed to the sponsor’s representative. The result of the new

System was that the non-RVA sponsors made less and the

Arcade Plaza kept more of the proceeds. In addition, Ford

began giving the RVA the proceeds of the pull-tab games sold

by vendors on the bingo floor during other sponsors’ sessions.

After Kentucky law was changed in April 1992 to forbid

the award of more than $5,000 in prizes in one day, 1992 Ky.

Rev. Stat. and R. Serv. ch. 461, Hutchins altered Arcade

Plaza records to eliminate any record of prizes exceeding the

$5,000 limit.

After police executed a search warrant on the Arcade Bingo

Plaza and the RVA Hall across the street, Ford and Hutchins

were indicted on two counts of operating a gambling business

in violation of state law, 18 U.S.C. § 1955. Ford was also

indicted on twenty-eight counts of engaging in monetary

transactions in criminally derived property for transactions

involving gambling proceeds, 18 U.S.C. § 1957; three counts

of engaging in transactions undertaken to disguise the nature,

location, source, ownership or control of criminally derived

money, 18 U.S.C. § 1956(a)(1)(B)(i) and (ii); and one

forfeiture count. Hutchins was indicted on two counts of

engaging in monetary transactions with criminally derived

proceeds, 18 U.S.C. § 1957, and one forfeiture count.

(Offenses under both section 1956 and section 1957 are

referred to as “money laundering” offenses.)

Ford was also indicted in a separate case of eleven counts

of tax offenses completely unrelated to the bingo operation.

During the search of the RVA Hall at 2902 South Seventh

Street Road, across from the Arcade Plaza, police seized

documents that had no relation to the bingo operation,

including files from 1984 to 1988 relating to a real estate

transaction known as the “Huber’s deal.” In the Huber’s

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deal, Ford had sold land to Huber’s, Incorporated for $1.5

million, in the form of $400,000 down and a note for $1.1

million. Ford sold the $1.1 million note to his accountant for

$800,000 and took a $300,000 loss from the sale transaction

on his 1986 income tax. The accountant paid Ford for the

note with the proceeds of a bank loan; simultaneously, Ford

used the $800,000 to purchase a certificate of deposit which

Ford pledged to secure the accountant’s bank loan. When

Huber’s paid the $800,000, the accountant paid off the loan

and the bank released its lien on Ford’s certificate of deposit.

The accountant then assigned the Huber’s, Inc. note back to

Ford, who eventually received the remaining $330,969.33

payment from Huber’s, Inc. in 1988. Ford did not report that

payment as income on his 1988 tax return.

After a jury trial on the gambling and money laundering

charges, Ford was convicted of both gambling counts,

twenty-six counts of section 1957 money laundering and one

count of section 1956 money laundering. Hutchins was

convicted of one of the gambling counts and two counts of

section 1957 money laundering. In the separately tried tax

case, Ford was convicted of one count of filing a false income

tax return, 26 U.S.C. § 7206(1), for failing to report income

on his 1988 return.

Ford was sentenced to twenty months’ imprisonment in the

tax case, and 108 months in the gambling and money

laundering case, to be served concurrently with each other.

Hutchins was sentenced to forty-one months’ imprisonment.

Both appeal from their convictions and their sentences.

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I.

Ford contends that the search of his buildings violated his

Fourth Amendment rights because the warrant was not

sufficiently particular and because federal agents improperly

took advantage of a search conducted under a state warrant.

Louisville Police Department officers conducted the search

under a state warrant based on an affidavit. Three IRS agents

also assisted in executing the warrants. The affidavit

supporting the warrant described the Louisville Police

Department’s investigation of Donald Ford’s bingo

operations. Police had visited the Arcade Bingo Plaza

building. where Donald Ford and his subordinates Sandra

Hutchins and Clay Ballinger conducted bingo games, which

they claimed were for the benefit of charities. The affidavit

described numerous violations of the statutory requirements

for charitable gaming, such as payment of the “volunteer”

workers, payment of prizes exceeding $5,000 per day, and

operation of bingo games supposedly sponsored by charities

that had no representatives present during the game. The

affidavit also stated facts indicating that the RVA sponsors

were actually shells having no charitable or fraternal function,

but existing only as alter egos of Donald Ford. The affiant

recited facts that would support an inference that Hutchins and

Ballinger had taken home the proceeds from the bingo games,

and that Ford kept numerous lock boxes at various banks

containing cash.

The warrant contained ten clauses listing items to be

seized. Some of the clauses were expressly limited by

reference to illegal gambling or bingo. However, some

clauses had no such limitation, in particular the category

authorizing seizure of: “Books, records, receipts, bank

Statements and records, money drafts, letters of credit, money

orders and cash checks, money wrappers, passbooks, bank

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checks, automatic teller machine receipts, Western Union

receipts, safety deposit box keys, and other items evidencing

the obtaining, secreting, transfer, and/or concealment of assets

and the obtaining, secreting, transfer, concealment and or

expenditure of money.”

The police executing the warrant seized several file

cabinets and eleven boxes of documents. The officer in

charge testified at the suppression hearing that they seized

“basically most of the documents” at 2902 South Seventh.

Another officer agreed that they “pretty much took

everything.” Many of the documents related to Ford

Industries and Durrett Investigations, auto-financing and

private investigation businesses, respectively, also owned by

Ford. Among the documents seized were promissory notes,

deeds, and related papers, all dated between 1984 and 1988,

concerning the Huber’s deal, which was completely unrelated

to the gambling operation.

The search took place in the late night and early morning

of August 28 and 29, 1992. The documents seized were kept

at the Louisville Police headquarters until September 23,

when they were transferred to the IRS offices. In November

1992, the IRS officially obtained custody of the documents by

grand jury subpoena.

A.

The tax prosecution was based on documents seized in the

August 28-29 search. Ford moved to suppress the documents

on the grounds that if the documents were within the scope of

the search warrant, the search warrant was overbroad, and if

the search warrant was read narrowly enough to be valid, the

documents were not within its scope. The government did not

contend that the warrant should be narrowed by construction,

see Andresen v. Maryland, 427 U.S. 463, 480-81 (1976), and

therefore limited to documents related to bingo. Instead, the

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government contended that it needed all Ford’s financial

documents in order to determine his “overall financial

picture” and thus establish what money he had available,

where the money came from, and what happened to it. This

could require law enforcement officials to go back “ten years

or more.” Therefore, according to the government, the

warrant properly permitted seizure of all financial documents

in the buildings, whether or not related to the bingo

operations in time or subject matter.

The magistrate judge recommended that the warrant be held

valid “in view of the complex nature of the investigation, the

pervasive presence of fraud, and the inability of the

investigating officers to determine more specifically what

items would be subject to seizure.”” The district court

conducted a de novo review and held that the affidavit on

which the warrant was based “implicitly established” that

Ford’s organization was “permeated with fraud” and that the

warrant was therefore not overbroad, citing United States v.

Oloyede, 982 F.2d 133, 141 (4th Cir. 1993).

We review de novo the district court’s conclusion on the

overbreadth issue. United States v. Durk, 149 F.3d 464, 465

(6th Cir. 1998) (deciding whether description of premises was

overbroad); Davis v. Gracey, 111 F.3d 1472, 1478 (10th

Cir.1997) (deciding whether description of items to be seized

was overbroad).

The Fourth Amendment guarantees that “no Warrants shall

issue, but upon probable cause, supported by Oath or

¥ The magistrate did identify three clauses that contained no limitation

either to gambling or money as “arguably” overbroad; however, no

evidence was seized under those clauses, so there was nothing to suppress.

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affirmation, and particularly describing the place to be

searched, and the persons or things to be seized.” (Emphasis

added.) The particularity requirement prohibits the issuance

of warrants that would let officers seize “one thing under a

warrant describing another.” Davis, 111 F.3d at 1478

(quoting Marron v. United States, 275 U.S. 192, 196 (1927)).

“A general order to explore and rummage through a person’s

belongings is not permitted.” United States v. Blakeney, 942

F.2d 1001, 1026 (6th Cir.) (quotation omitted), cert. denied,

502 U.S. 1008.

The degree of specificity required in a warrant depends on

what information is reasonably available to the police in the

case. Id. at 1027. A general description may suffice when

the police could supply no better information, but fail when a

narrower description was available. Jd. In particular, when

the suspect himself has made it difficult to describe

particularly the items to be seized, a broad warrant is

permissible. See United States v. Bentley, 825 F .2d 1104,

1110 (7th Cir.) (criminal enterprise does not get extra

protection from the Fourth Amendment by choosing a form of

operation that generates huge amounts of paper), cert. denied,

484 U.S. 901 (1987); United States v. London, 66 F.3d

1227, 1238 (1st Cir. 1995) (general search permitted where

suspect had mingled legitimate business documents with

documents probative of crime), cert. denied, 517 U.S. 1155

(1996).

We have recently upheld a warrant containing a paragraph

identical to the broadest language in the warrant before us

(“Books, records, receipts, bank statements and records,

money drafts, letters of credit, money orders and cashier’s

checks, money wrappers, passbooks, bank checks, automatic

teller machine receipts, Western Union receipts,’ safety deposit

box keys, and other items evidencing the obtaining, secreting,

transfer, and/or concealment of assets and the obtaining,

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secreting, transfer, concealment and/or expenditure of

money”). In United States v. Ables, 167 F.3d 1021 (6th

Cir.), cert. denied, --- U.S. ----, 1999 WL 319434 (June 21,

1999), another Louisville bingo hall search case, we held that

the language quoted above did not authorize a general search.

Id. at 1033-34. Notably, there was no suggestion in Ables

that the warrant was used to seize documents that could not

have pertained to bingo proceeds.

However, in this case, the quoted language authorized a

broader search than was reasonable given the facts in the

affidavit supporting the warrant. The affidavit stated that the

first of Ford’s RVA posts was incorporated in December

1991, and there was no indication in the affidavit of criminal

activity before that date. The affidavit described an

investigation beginning on April 24, 1992. It also reported an

interview with Clay Ballinger, who said he had operated the

bingo himself but had “sold the Arcade Plaza Bingo back to

Mr. Ford in 1991.” However, the police seized promissory

notes, deeds, and related papers dated between 1984 and

1988, which had no relation to the bingo operation. In

Blakeney a warrant authorizing a search for “iewelry” was

overbroad because the agent applying for the search warrant

had available an inventory of the specific items of jewelry that

had been stolen. 942 F.2d at 1027. Failure to limit broad

descriptive terms by relevant dates, when such dates are

available to the police, will render a warrant overbroad.

United States v. Cardwell, 680 F.2d 75, 78 (9th Cir. 1982);

United States v. Abrams, 615 F.2d 541, 545 (ist Cir.

1980)(“A time frame should also have been incorporated into

the warrant.”); In re Application of Lafayette Academy, 610

F.2d 1, 6 (ist Cir.1979). We have held as much in an

unpublished case. United States v. Nagalingam, No.

97-6433, 1998 WL 739822, at *3 (6th Cir. Oct. 6, 1998); see

also United States v. Sissler, No. 91-2113, 1992 WL 126974,

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at *6-7 (6th Cir. June 10, 1992), cert. denied, 506 U.S. 1079

(1993).

The government argues that it was necessary to seize

documents antedating the bingo operation to establish what

money Ford had before the bingo business started. This

would help the government to identify which of his present

assets could be bingo proceeds. This argument would allow

virtually unlimited seizure of a lifetime’s worth of

documentation, which is extremely intrusive. Moreover, the

impracticability of tracing the origin of every dollar Ford

owned to show whether it came from some enterprise other

than bingo, casts doubt on whether the government really

means to take on such a herculean task. At any rate, this

rationale was not articulated in the affidavit, and therefore we

need not decide whether it would have provided a justification

for the warrant if it had been presented to the magistrate. See

Lafayette Academy, 610 F.2d at 6 n.9 (rejecting justification

for the seizure of records predating offense as being

unsupported in affidavit).

Similarly, we reject the government’s argument that it

seized the Huber’s, Inc. documents because the storage of

Ford’s personal documents at the RVA Hall showed Ford and

the RVA were alter egos. Again, this argument would allow

an extreme intrusion for evidence of very little probative

value. The government at trial used the documents for an

entirely different purpose than simply to prove that they were

stored at the RVA Hall.

The government further argues that there was probable

cause to seize all the documents at the RVA Hall because the

business carried on there was “permeated with fraud.” Other

circuits have upheld extremely broad warrants on such a

theory. E.g., United States v. Humphrey, 104 F.3d 65, 69

(5th Cir.), cert. denied, 520 U.S. 1235 (1997); Oloyede, 982

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F.2d at 140-41; United States v. Sawyer, 799 F.2d

1494,1508 (11th Cir.1986), cert. denied, 479 U.S. 1069,

(1987); United States v. Kail, 804 F.2d 441, 445 (8th

Cir.1986); United States v. Brien, 617 F.2d 299, 309 (ist

Cir.), cert. denied, 446 U.S. 919 (1980). The affidavit

definitely contained evidence that Ford was abusing the form

of charitable organizations in order to run bingo games for

personal profit. However, the affidavit did not disclose any

reason to believe that the scheme began before December

1991, the date given in the affidavit as the date when Ford

reactivated his first RVA post. Even if one business carried

on at a site is permeated with fraud, if other businesses run at

the same site are separable and are not shown to be related to

the suspected crime, a warrant permitting seizure of all

documents at the site is not justified. Voss v. Bergsgaard,

774 F.2d 402, 406 (10th Cir. 1985); Bentley, 825 F.2d at

1110. As in Voss, 774 F.2d at 405, the overbreadth of the

warrant in this case is illustrated by the items actually seized

under it--here, documents dating from years before the bingo

operation began and which pertain to an entirely unrelated

crime.

The government argues that even if the warrant was

overbroad, the documents relating to the Huber’s, Inc. deal

would inevitably have been discovered in the course of the

IRS’s pending civil investigation of Ford’s 1988 tax return.

Under the inevitable discovery doctrine, illegally seized

evidence may be admitted despite the exclusionary rule if the

government can prove that it would have obtained the

evidence from lawful sources even if the illegal seizure never

happened. United States v. Kennedy, 61 F.3d 494, 499 (6th

Cir.1995), cert. denied, 517 U.S. 1119 (1996). The

government can prove this either by showing that “an

independent, untainted investigation ... inevitably would have

uncovered the same evidence or [by showing] other

compelling facts establishing that the disputed evidence

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inevitably would have been discovered.” Jd. Application of

this doctrine necessarily requires some speculation about what

would have happened if events had unfolded differently than

they did. United States v. Leake, 95 F.3d 409, 412 (6th Cir.

1996). However, we must keep speculation at a minimum by

focusing on “demonstrated historical facts capable of ready

verification or impeachment.” /d. (quoting Nix v. Williams,

467 U.S. 431, 444-45 n.5, (1984)). The government can

satisfy its burden by showing that routine procedures that

police would have used regardless of the illegal search would

have resulted in the discovery of the disputed evidence.

Kennedy, 61 F.3d at 500. However, if the defendant shows

that the police were not in fact following those routine

procedures in the particular case, the government’s evidence

about what police would have done must bow to contrary

evidence about what they actually did. For instance, in

Leake, 95 F.3d at 418 n.17 and 418 n.19, the government

argued that police would inevitably have acted on certain

leads. However, the evidence showed that the police did not

in fact take action on those leads in a “reasonably timely

manner,” 95 F.3d at 418 n.17, and therefore the court held

that the government had not carried its burden of proving

inevitable discovery.

The district court’s application of the inevitable discovery

rule is a mixed question of fact and law which we review de

novo. Kennedy, 61 F.3d at 497.

In this case, before the illegal search took place, the IRS

had issued a notice of deficiency to Ford for the 1988 tax

year, based on his claimed net operating loss carryforward

from 1986. Ford petitioned the United States Tax Court for

relief on November 2, 1992, contending that the IRS had

incorrectly disallowed the net operating loss carryforward.

On December 28, 1992, the IRS filed an answer conceding

the case: “[RJeview of taxpayer’s records, not available to

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respondent’s agent at the time notice was issued, has

persuaded respondent that petitioners’ 1988 return was

substantially correct as filed.”

At the suppression hearing, the government did not call

William Shouse, the IRS attorney who had actually handled

the tax court case. Instead, it called another IRS attorney,

Jennifer Decker, who did not handle the Ford suit, and asked

her what she would have done had she been handling the case.

She testified about how she would have tracked down the

same documents that were illegally seized, obtaining them

from IRS files and from Huber’s, Inc., if Ford did not

produce them. The district court credited this testimony in

holding that the seized documents would have inevitably been

discovered without the illegal search.

Here, the testimony about what the IRS would have done

in investigating this case is inconsistent with what the IRS

actually did--it conceded the correctness of Ford’s position,

undertook no discovery in the case, and ultimately entered an

agreed dismissal of the case. As in Leake, the record does not

substantiate the government’s claim that it was hot on the trail

of the disputed evidence. The government has not carried its

burden of proving the inevitability of discovery.

We therefore hold that the documents seized from 2902

South Seventh Street Road pertaining to the Huber’s deal, the

sale of the Huber’s note to the accountant and the accountant’s

reassignment of the note to Ford must be suppressed because

they were seized in violation of Ford’s Fourth Amendment

rights.” Ford’s tax conviction must be reversed.

¥ The government does not argue that the Huber’s, Inc. documents should

be admitted under the good faith exception to the exclusionary rule. See

United States v. Leon, 468 U.S. 897 (1984); United States v. Savoca, 761

F.2d 292, 295-96 (6th Cir.), cert. denied, 474 U.S. 852 (1985). Even

B.

Ford and Hutchins contend that the district court should

have suppressed the evidence seized in the August 28-29

search in the gambling case as well as the tax case. They

argue that since the warrant was overbroad, all the evidence

seized under it should be suppressed. To the contrary, the

remedy for an overbroad warrant is to sever the overbroad

portions of the warrant from those portions that are

sufficiently particular. United States v. Blakeney, 942 F.2d

1001, 1027 (6th Cir.), cert. denied, 502 U.S. 1008 (1991).

The portions of the warrant limited to fruits and evidence of

gambling are sufficiently particular; even though those

portions do not contain a time limitation, their subject-matter

limitation (fruits and evidence of gambling) fulfills the same

function as a time limitation would have done, by limiting the

warrant to evidence of the crimes described in the affidavit.”

The portions of the warrant limited to fruits and evidence of

bingo can be severed from the part of the warrant which is not

appellees waive arguments by failing to brief them. See Thaddeus-X v.

Blatter, 175 F.3d 378, 403 at n.18 (6th Cir. 1999) (en banc).

4 The sentences under which the government justified seizure of the

documents antedating gambling activities were the second and fourth

clauses in the portion of the warrant describing property to be seized:

“Books, records, receipts, bank statements and records, money drafts,

letters of credit, money orders and cashier’s checks, money wrappers,

passbooks, bank checks, automatic teller machine receipts, Western Union

receipts, safety deposit box keys, and other items evidencing the obtaining,

secreting, transfer, and/or concealment of assets and the obtaining,

secreting, transfer, concealment and/or expenditure of money” and

“Indicia of occupancy, residency, and/or ownership of the premises

described above, including but not limited to, utility and telephone bills,

canceled envelopes, and keys”. Additionally, the magistrate stated that

three other clauses were “arguably” overbroad, but that no property had

been seized pursuant to those clauses. Supra, n.3.

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so limited. Therefore, seizure of the documents pertaining to

the gambling and the closely related money laundering

charges was permissible.

In another argument related to the overbreadth issue, Ford

and Hutchins argue that the search was invalid because federal

agents “tagged along” with Louisville Police Department

officers executing a state warrant. Citing United States v.

Sanchez, 509 F.2d 886 (6th Cir. 1975), Ford and Hutchins

contend that the lack of a federal warrant invalidated the

search. Sanchez does not prohibit federal officers from being

present during execution of a state warrant, see generally

United States v. Searp, 586 F.2d 1117 (6th Cir.1978), cert.

denied, 440 U.S. 921 (1979), but only prevents officers from

using a warrant describing one kind of evidence as a pretext

for searching for evidence outside the warrant. In Sanchez,

officers had a warrant to search for narcotics evidence, when

they learned that there was also probable cause to search for

explosives at the same house. Rather than obtain a warrant to

search for explosives, they simply used the narcotics warrant

to search for explosives. Since the explosives were outside

the scope of the warrant, Sanchez moved to suppress the fruits

of the warrantless search for the explosives. The government

then claimed the explosives were in plain view during

execution of the narcotics warrant and therefore could be

seized even though they were outside the warrant. We

rejected the plain view argument, holding that the explosives

search was actually a “distinct intrusion” from the narcotics

search. 509 F.2d at 889. We held that seizure of property

unrelated to what was described in the warrant was exactly the

harm that the Fourth Amendment’s particularity clause was

meant to prevent. Jd. at 889-90. We therefore ordered the

explosives suppressed. Jd. at 890. We have just used similar

reasoning to condemn the seizure of the Huber’s, Inc.

documents under a warrant based on an affidavit about illegal

gambling. Supra at 575-78. However, in this case the

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gambling and money laundering documents were covered by

the valid portions of the warrant, which we have held are

separable from the invalid portions. The government is

making no attempt to excuse a warrantless seizure by a

plain-view argument. The gambling documents were not

seized under a warrant describing something else; they were

seized by state officers under a state warrant describing

gambling documents. Sanchez therefore provides no authority

for suppressing them.

Il.

Although we have already held that Ford’s tax conviction

must be reversed because evidence was admitted in violation

of the exclusionary rule, we will address issues that are likely

to arise in the event of retrial of the tax case. Ford argues

that the district court erred in the tax case by refusing to give

the _reliance-on-advice-of-accountant instruction Ford

proffered. The district court refused the instruction because

there was no evidence that Ford relied on his accountant in

deciding not to report the $330,969.93 in his 1988 return.

A court’s refusal of a defendant’s proffered instruction is

reversible if the instruction is a correct statement of the law,

not otherwise covered in the court’s charge, and if the failure

to give the instruction substantially impairs the defendant’s

defense. United States v. Frost, 125 F.3d 346, 372 (6th Cir.

1997), cert. denied, --- U.S. ----, 119 S.Ct. 40 (1998). A

court should refuse a jury instruction if no evidence supports

it, United States v. Lindo, 18 F.3d 353, 356 (6th Cir. 1994),

but even weak evidence will suffice. Frost, 125 F.3d at 372.

A defendant is entitled to a reliance-on-advice instruction if he

shows (1) he made full disclosure of all pertinent facts and (2)

he relied in good faith on the advice. Lindo, 18 F.3d at 356.

Specifically, we have held that a reliance-on-advice-of

accountant instruction is warranted even without per se

19a

testimony that the defendant relied on the accountant’s advice,

so long as the circumstances support an inference that he did

so rely. United States v. Duncan, 850 F.2d 1104, 1115-19

(6th Cir. 1988).

Ford argues that the accountant structured the transaction

in which Ford sold the note to the accountant, and since Ford

effected the transaction as the accountant planned, he

necessarily relied on the accountant’s advice. Actually, Ford

was simply convicted for failing to report the $300,000, not

for any other aspect of the transaction. The accountant

testified that the plan as he formulated it was to delay Ford’s

receipt of the $300,000, but to report the $300,000 as income

when received. Ford’s failure to report the $300,000 was not

part of the transaction planned by the accountant. The district

court did not abuse its discretion in denying the reliance

instruction.

Il.

Ford argues that the district court in the tax case did not

afford him his full rights to disclosure of jurors’ tax audit

information under the former 26 U.S.C. § 6103(h)(5)

(1994). The district court ordered release of the venire list

twelve days before trial so that Ford could request audit

histories under the former section 6103(h)(5); Ford contends

that this was not sufficiently in advance of trial to preserve his

rights. To the contrary, the record shows that there was

plenty of time for the IRS to supply the required information,

which was made available four days after the release of the

venire list and twelve days before jury selection. Under

Y The former section 6103(h)(5) was repealed by The Taxpayer Relief Act

of 1997, 111 Stat. 788, 1038. However, the Act states that the repeal is

effective as to cases commenced after August 5, 1997, 111 Stat. 1038,

whereas this case was begun in 1993.

20a

United States v. Spine, 945 F.2d 143, 148 (6th Cir. 1991), a

defendant was entitled to have the venire information

disclosed in time to “permit the IRS to conduct a search of its

records for potential jurors’ tax histories.” The time allowed

in this case was sufficient for that purpose.

Ford also contends that the district court erred in limiting

the IRS’s disclosure obligation to the last six years’ audit

history. The district court supplemented the IRS information

with a full voir dire on the subject of audit histories, and this

satisfied Ford’s rights under section 6103(h)(5). See Spine,

945 F.2d at 148.

IV.

A.

Ford contends that the district court erred in denying his

motion for new trial in the gambling case on the ground that

he was mentally incompetent to stand trial. Ford’s first

mention of the competence issue came after trial; his trial

counsel filed an affidavit opining that he himself had provided

ineffective assistance of counsel by failing to recognize Ford’s

incompetence and bring it to the court’s attention during trial.

The district court held a hearing in order to ascertain

retrospectively whether Ford had been competent at trial.

Ford and the United States produced medical experts who

agreed that Ford had some brain damage from strokes and

brain atrophy, but who expressed conflicting opinions about

Ford’s ability to understand the proceedings and assist in his

own defense.

The district court articulated the proper legal standard

governing the competence issue: the test is whether Ford had

sufficient ability to consult with his lawyers and a reasonable

degree of rational and factual understanding of the

proceedings against him (quoting Dusky v. United States, 362

2la

U.S. 402, 402 (1960) (per curiam)). The district court

considered the testimony of the medical and other witnesses,

tapes of Ford made during state court proceedings, and thé

court’s own extensive observation of Ford during the

proceedings in these related cases. The court found that Ford

did suffer from the effects of strokes and brain atrophy.

However, the judge recounted at length his own observations

of Ford during the time in question and concluded that Ford

was “extremely interested, knowledgeable, and informed

about his case, about the proceedings, and about his desire to

have his views and his positions known.” The court observed

that Ford’s tendency to speak out in the courtroom and to

assert control over his own defense may have been

strategically inopportune, but that if Ford’s decisions were

“irrational,” they showed only poor trial strategy, not

incompetence. The judge found that Ford “did understand the

nature and the consequences of these proceedings; and I think

that he was able to assist properly in his defense to an extent

that was greater and at a higher level than most defendants

that I see.” The court then denied Ford’s motion for a new

trial, stating, “From everything that I have in front of me, I

will find that retrospectively during the trial, that Mr. Ford

had a mental defect or defects but they were not such as to

render him mentally incompetent to the extent of inability to

understand the nature and consequences of the proceedings

and to assist in his defense.”

Ford argues that our cases conflict with each other about

the proper standard of review of the competency

determination. In United States v. Branham, 97 F.3d 835

(6th Cir. 1996), in which we reviewed a competency

determination on direct appeal, we stated: “Because a district

court’s determination of competency is a factual finding we

apply a clearly erroneous standard of review.” Jd. at 855;

accord United States v. Murphy, 107 F.3d 1199, 1203 (6th

Cir. 1997). On the other hand, in habeas cases we have

22a

characterized the competency determination as a mixed

question of law and fact, which is not entitled to the

presumption of correctness given to state court findings of

fact. See Cremeans v. Chapleau, 62 F.3d 167, 169 (6th Cir.

1995), cert. denied, 516 U.S. 1096 (1996); Levine v. Torvik,

986 F.2d 1506, 1514 (6th Cir.) (relying in part on Card v.

Singletary, 963 F.2d 1440, 1443-44 (11th Cir.1992), which

was vacated and amended in relevant part, 981 F.2d 481,

483-84 (11th Cir. 1992), cert. denied, 510 U.S. 839 (1993)),

cert. denied, 509 U.S. (1993). These cases are apparently

focusing on different aspects of the competency decision. To

determine which standard of review is applicable in this case

we must ascertain what aspect of the competency

determination Ford attacks.

Ford has not shown that the district court applied the wrong

legal standard in deciding the competency question. The

district court made no legal error in concluding that Ford was

competent notwithstanding evidence that his behavior in court

was “cantankerous” or “difficult [for his lawyers] to deal

with.” See Vogt v. United States, 88 F.3d 587, 591 (8th Cir.

1996).

Other than this possible legal point, Ford’s argument

consists primarily of attacks on the testimony of Dr. Denney,

the government’s expert. The district court relied not only on

Denney’s testimony, but also on the court’s extensive

observation of Ford. Ford also argues that his own attorneys’

testimony deserves to be credited, but those attorneys’ failure

to mention the possibility of incompetence until after trial

undercuts the reliability of their more recent opinions that

Ford was incompetent during trial. See Owens v. Sowders,

661 F.2d 584, 586 (6th Cir. 1981). The district court’s

choice between conflicting evidence is a factual finding and it

is not clearly erroneous.

23a

B.

In a related argument Hutchins contends that the district

court erred in denying her motion for new trial based on

newly discovered evidence of Ford’s incompetence. She

argues that Ford’s incompetence affected her adversely by

preventing her from testifying because: she knew if she

testified, Ford would insist on testifying as well, and he

lacked the mental capacity to testify without harming both of

them before the jury; she was deprived of Ford’s testimony

that she acted only at his direction in running the gambling

business; and she was deprived of a juror she wanted,

because Ford tampered with that juror and caused him to be

dismissed. Hutchins argues that the district court should have

granted her a new trial on these grounds. The district court

denied the new trial motion because it was premised on Ford’s

incompetence, and the court had just found Ford was

competent.

We review the denial of Hutchins’s motion for new trial

based on newly discovered evidence for abuse of discretion.

See United States v. Seago, 930 F.2d 482, 488 (6th Cir.

1991). We have already upheld the district court’s finding

that Ford was not incompetent. Moreover, Hutchins’s claims

about the effect of Ford’s incompetence on her trial strategy

were not “newly discovered” after trial, as she argued in her

motion. See id. at 489. She obviously was aware of her trial

strategy decisions during the trial. Finally, the district court

conducted an adequate voir dire to assure that Hutchins

suffered no prejudice from Ford’s jury tampering. We

therefore see no abuse of discretion in the district court’s

denial of Hutchins’s motion.

24a

V.

Ford argues that his convictions under 18 U.S.C. § 1955

are invalid because they are predicated on violation of a

Kentucky law that conflicts with the Kentucky Constitution.

Section 1955 makes it a federal crime to conduct a

gambling business that is illegal under state law (except that

the federal statute exempts games of chance run by charitable

organizations, 18 U.S.C. § 1955(e)). Bingo and similar “gift

enterprises” are prohibited by the Kentucky Constitution,

section 226:

Except as provided in this section, lotteries and gift

enterprises are forbidden, and no privileges shall be

granted for such purposes, and none shall be exercised,

and no schemes for similar purposes shall be allowed.

The general assembly shall enforce this section by

proper penalties. All lottery privileges or charters

heretofore granted are revoked.

(The Kentucky Constitution was amended in November 1992,

after the date of the offenses in this case, to permit charitable

lotteries and gift enterprises.) Kentucky statutes provided

criminal penalties for gambling, but provided a charitable

gaming defense. Ky. Rev. Stat. Ann. §§ 528.010.10(b)-.120

(Michie 1985); 1990 Ky. Rev. Stat. & R. Serv. ch. 469

(Banks-Baldwin); 1992 Ky. Rev. Stat. & R. Serv. ch. 461

(Banks-Baldwin). The United States suggested in the district

court that the charitable gaming defense in the statute

conflicted with the Kentucky Constitution, which did not

allow a charitable exception to the prohibition of gambling at

the time of the events in question. The district court held that

it would allow Ford and Hutchins to rely on the charitable

gaming exception in the statute on due process and ex post

facto grounds, even if the charitable gaming exception were

unconstitutional (under the Kentucky Constitution).

25a

Accordingly, the court instructed the jury that the United

States had to prove that the bingo games were not charitable

gaming activity, as defined by Kentucky law.

Despite receiving the benefit of the charitable gaming

defense, Ford and Hutchins argued that the defense was

unconstitutional and that it rendered the entire Kentucky

gambling statute invalid. Without a violation of the Kentucky

gambling statute, there would be no violation of 18 U.S.C. §

1955, which is predicated on a violation of State gambling

law.

The district court held that, if the charitable gaming defense

were unconstitutional, that would not invalidate the rest of the

gambling statute. The court relied on Ky. Rev. Stat. §

446.090, which provides:

It shall be considered that it is the intent of the General

Assembly, in enacting any statute, that if any part of the

statute be held unconstitutional the remaining parts shall

remain in force, unless the statute provides otherwise, or

unless the remaining parts are so essentially and

inseparably connected with and dependent upon the

unconstitutional part that it is apparent that the General

Assembly would not have enacted the remaining parts

without the unconstitutional part, or unless the

remaining parts, standing alone, are incomplete and

incapable or being executed in accordance with the

intent of the General Assembly.

The court held that the charitable exception was separable

from the rest of the statute and therefore did not affect the

remaining part of the statute prohibiting gambling.

Ford and Hutchins can point to nothing in Ky. Rev. Stat.

chapter 528 stating that the provisions of the chapter are

inseparable. Ford and Hutchins argue that it is apparent that

26a

the General Assembly would not have enacted the gambling

prohibition without the charitable exception, but this argument

is untenable. First, the Kentucky Constitution prohibited

gambling without a charitable exception before the statute was

enacted; it was therefore hardly unthinkable that the General

Assembly would obey the command of the constitutional

provision to enforce that provision by enacting proper

penalties. Moreover, the provisions of chapter 528 making it

illegal to promote gambling were enacted in 1974, 1974 Ky.

Acts. ch. 406, whereas the charitable exception was not

enacted until 1980. 1980 Ky. Rev. Stat. & R. Serv. ch. 267.

Accordingly, we reject Ford and Hutchins’s Kentucky

constitutional argument and their suggestion that we certify

the issue to the Kentucky Supreme Court.

VI.

Ford and Hutchins contend: (1) that the government failed

to prove a transaction in interstate commerce to support their

money laundering convictions; and (2) that the district court

erroneously instructed the jury that it could infer a transaction

affected interstate commerce if it involved a bank that was

federally insured. The money laundering convictions were

based on the deposit in or withdrawal of money from the Bank

of Louisville; there was evidence that the Bank of Louisville

was insured by the FDIC.

In a challenge to the sufficiency of the evidence, we must

affirm if “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) (emphasis in

original). We review the jury instructions to ascertain if the

charge as a whole fairly and adequately presents the issues

and the law. United States v. Newcomb, 6 F.3d 1129, 1132

(6th Cir. 1993).

27a

Ford and Hutchins were convicted under 18 U.S.C. § 1957

and Ford was also convicted of one count under 18 U.S.C. §

1956(a)(1)(B)(i). Section 1956(a)(1)(B) forbids knowingly

conducting a “financial transaction” with the proceeds of

specified unlawful activities knowing that the transaction is

designed to conceal or disguise the nature, location, source,

ownership, or control of such proceeds. “Financial

transaction” is defined to include any transactions involving

“the use of a financial institution which is engaged in, or the

activities of which affect, interstate or foreign commerce in

any way or degree.” Section 1956(c)(4)(B). Section 1957

forbids certain “monetary transactions” in criminally derived

property. Under section 1957(f)(1) “monetary transaction”

includes any “financial transaction under section

1956(c)(4)(B)” (except those transactions necessary to

preserve a person’s Sixth Amendment right to representation).

Thus, both section 1956 and section 1957 contain interstate

commerce elements, which can be satisfied by use of a bank

whose activities affect interstate commerce.

Ford and Hutchins argue that proof of a transaction with a

federally insured bank does not satisfy the government’s

burden of proving a transaction with a bank whose activities

affected interstate commerce, citing United States v. Lopez,

514 U.S. 549 (1995). In United States v. Owens, 159 F.3d

221, 226 (6th Cir. 1998), pet’n for cert. filed, 67 U.S.L.W.

3749 (May 20, 1999) (No. 98-1912), we rejected a challenge

to section 1956 under Lopez. We held that section 1956

regulated the instrumentalities of interstate commerce, and

therefore was a permissible exercise of Congress’s power to

regulate interstate commerce. Jd. We specifically remarked

that “the use of federally insured banks and/or the transport

of monies across state borders to facilitate the money

laundering create a sufficient nexus to commerce to allow

application of § 1956.” We have recently reiterated that

Lopez did not raise the standard for proving the interstate

28a

commerce nexus in section 1956 and 1957 prosecutions.

United States v. Ables, 167 F.3d 1021, 1030 (6th Cir.), cert.

denied, --- U.S. ----, 1999 WL 319434 (June 21, 1999).

We therefore hold that the proof of the interstate commerce

element and the jury instruction on that subject were adequate.

Vil.

Ford and Hutchins were sentenced using the base offense

level prescribed by U.S.S.G. § 2S1.2(a) (Nov.1996), the

guideline for “Engaging in Monetary Transactions in Property

Derived from Specified Unlawful Activity,” which applies to

convictions under 18 U.S.C. § 1957. They claim that the

district court erred in declining to depart downward from the

guidelines sentencing ranges because transactions in gambling

proceeds are atypical of section 1957 offenses and because

state law required Ford to deposit the gambling proceeds in

the bank. The government’s sole response is that the district

court’s decision not to depart is unreviewable.

At sentencing, Ford and Hutchins argued that their offenses

fell outside the heartland of section 2S1.2. The district court

concluded that their offenses were not outside the heartland;

accordingly, the court reasoned that it was not authorized

under 18 U.S.C. § 3553(b) to depart. The court stated:

[I]f this conduct is outside the heartland, ! would

consider a downward departure. So that my holding is

that because I believe that it is not outside the heartland

that I am not able to depart. That will give you the

opportunity of raising my failure to depart downward

with the Court of Appeals. Otherwise, I think if the

court fails to depart, it’s pretty tough to get appellate

review. }

29a

The court articulated three bases for its decision that the

offenses were within the heartland of section 2S1.2. First, it

rejected Ford’s suggestion that the guideline should only apply

to transactions connected with drugs or organized crime. The

court observed that gambling is included as a kind of activity

that generates proceeds subject to section 1957. The court

stated:

The Court believes that the best evidence of legislative

intent is the plain language of the statute in the first

instance.... [H]Jere in 1956, the term, specified unlawful

activity, is defined as: “Any act or activity constituting

an Offense listed in Section 1961(1) of that title.”

Now 1961(1), of course, mentioned gambling. Section

1957 references 1956. So I think that the coverage here

of gambling in a general sense militates against the

Court concluding that in a generic sense gambling

activity is outside the heartland of the money-laundering

Statuies.

Second, after concluding that transactions in gambling

proceeds were not per se outside the heartland, the court

considered whether the particular transactions in this case

were outside it. The court held that the magnitude of Ford’s

aggregated transactions put Ford squarely within the

heartland: “I think that here we have significant amounts of

cash, large amounts of cash, well over a million dollars worth

of money-laundering activity. We have a, what must be

described as a fairly large scale operation by Mr. Ford. This

was not a backyard dice game.” In sentencing Hutchins, the

* Section 1957 applies to transactions in proceeds from “specified

unlawful activity” as defined in section 1956, which in turn incorporates

by reference the lists of offenses found in 18 U.S.C. § 1961(1). That list

includes operation of an illegal gambling business under section 1955.

30a

court pointed to the much smaller magnitude of Hutchins’s

convictions:

We are talking about $94,000 here. . . . The fact that

there is a smaller amount of money involved is a point

to be made. On the other hand, I think looking at the

matter as a whole, I am of the opinion that there is not

a showing that this conduct is outside the heartland of

the money laundering statutes.

Third, the court rejected as a factual matter Ford’s

explanation of his conduct--that he was required by state law

to deposit the charitable gambling proceeds in the bank:

The argument that there was a lot of money laundering

as opposed to a little because Mr. Ford had to deposit

money into a bank in order to comply with state law is

interesting. I’m not sure that in the context of this entire

matter, I can view Mr. Ford’s conduct as paying a

tremendous amount of attention to obeying the law. In

fact, he clearly didn’t, at least with respect to the

charges in this case.

Although the court made this statement referring to Ford

individually, Hutchins’s counsel’s downward departure

argument for the most part simply incorporated Ford’s earlier

argument by reference, and did not reiterate the

compelled-by-state law argument explicitly. The court did not

make separate findings on this argument in Hutchins’s case,

but simply declined to depart “looking at the matter as a

whole.”

Ordinarily, a district court’s decision not to depart is not

reviewable. United States v. Hill, 167 F.3d 1055, 1071 (6th

Cir. 1999). However, if the district court’s refusal to depart

stemmed from its legal conclusion that the circumstance urged

by the defendant was not a valid reason for departure, the

3la

decision is reviewable. United States v. Ebolum, 72 F.3d 35,

37 (6th Cir. 1995); United States v. Hamilton, 949 F.2d 190,

193 (6th Cir. 1991). See also United States v. Watkins, No.

97-6232, 1999 WL 374114 at *10 (6th Cir, June 10, 1999).

The district court’s legal determination that it lacked authority

to depart on the basis of a certain factor is reviewed de novo.

Ebolum, 72 F.3d at 37. See United States v. Koon, 518 U.S.

81, 100 (1996) (whether particular factor is ever a permissible

basis for departure is “a question of law”).

In determining whether the district court’s refusal to depart

downward was an exercise of discretion or a legal

determination, we must review the sentencing transcript. Jd.

If the record gives us no reason to doubt that the district court

properly apprehended its discretion to depart, we will assume

it understood that discretion. Hill, 167 F.3d at 1071.

Here, the district court’s conclusion that transactions in

gambling proceeds are not per se outside the heartland is a

question of law reviewable on appeal. However, the court’s

determination that Ford was not simply trying to comply with

state law when he engaged in the transactions at issue is a

refusal to depart based on the exercise of discretion, not

reviewable on appeal. Although the court did not make

separate findings as to Hutchins on the compelled-by-state-law

argument, the record gives us no reason to think the court

misunderstood its discretion to depart on the issue. The

court’s determination that the magnitude of Ford’s and

Hutchins’s transactions did not warrant departure was

apparently an exercise of discretion since the court did not

reject the relevance of magnitude to departure, but merely

determined that the magnitude in this particular case did not

take the offenses out of the heartland of section 2S1.2.7

Y The question of magnitude could have been a legal issue if the district

court had made its decision on the basis that the threshold amount of

32a

Therefore, the court’s rejection of magnitude as a basis for

departure in this case is not reviewable.

Ford and Hutchins contend that their cases are outside the

heartland of section 2S1.2 because the money did not come

from “serious underlying criminal conduct such as a

significant drug trafficking operation or organized crime.”

They further argue that their case is outside the heartland

because they did not undertake the financial transactions to

“make it appear that the funds were legitimate” or “to

promote additional criminal conduct by reinvesting the

proceeds in additional criminal conduct.” The government

does not brief the merits of the sentencing issues, but confines

its discussion of the sentencing issues to its argument that the

district court’s refusal to depart is not reviewable on appeal.

Under 18 U.S.C. § 3553(b) (1994), a court must sentence

within the guidelines range unless the court finds that there

exists an aggravating or mitigating circumstance of a kind, or.

to a degree, not adequately taken into consideration by the

Sentencing Commission in formulating the guidelines that

should result in a sentence different from that described. In

determining whether a circumstance was adequately taken into

consideration, the court shall consider only the sentencing

guidelines, policy statements, and official commentary of the

Sentencing Commission.

The policy statement at Ch.1, Pt. A 4(b) refers to these

unforeseen circumstances as taking the offense out of the

“heartland” of the guideline:

$10,000 is listed in section 1957 and the background commentary to

section 2S1.2, and that the Sentencing Guidelines had therefore already

taken magnitude into account. Cf. United States v. Bifield, 42 F.Supp. 2d

477, 485 n.4 (M.D.Pa.1999) (money laundering guidelines take into

account monetary amount). The district court did not take this tack.

33a

The Commission intends the sentencing courts to treat

each guideline as carving out a “heartland,” a set of

typical cases embodying the conduct that each guideline

describes. When a court finds an atypical case, one to

which a particular guideline linguistically applies but

where conduct significantly differs from the norm, the

court may consider whether a departure is warranted.

Section 5H1.10 (Race, Sex, National Origin, Creed,

Religion, and Socio-Economic Status), § 5H1.12 (Lack

of guidance as a Youth and Similar Circumstances), the

third sentence of § 5H1.4 (Physical Condition, Including

Drug or Alcohol Dependence or Abuse), and the last

sentence of § 5K2.12 (Coercion and Duress) list several

factors that the court cannot take into account as grounds

for departure. With those specific exceptions, however,

the Commission does not intend to limit the kinds of

factors, whether or not mentioned anywhere else in the

guidelines, that could constitute grounds for departure in

an unusual case.

If a factor is already taken into account in the guidelines,

the court “should depart only if the factor is present to an

exceptional degree or in some other way makes the case

different from the ordinary case where the factor is present.”

Koon, 518 U.S. at 96. Accord, U.S.S.G. § 5K2.0 (Policy

Statement) (“[T]he court may depart from the guidelines, even

though the reason for departure is taken into consideration in

determining the guideline range (e.g., as a specific offense

characteristic or other adjustment), if the court determines

that, in light of unusual circumstances, the weight attached to

that factor under the guidelines is inadequate or excessive. ”)

Ford and Hutchins argue that a departure was warranted

because there was no showing of intent to conceal the origin

of the funds or that the funds were used to promote further

illegal activity. The background note to section 2S1.2

34a

specifically states that section 1957 “does not require that the

recipient . . . have any intent to further or conceal [the

specified unlawful activity].” Lack of intent to conceal or

promote the unlawful activity has already been considered in

the guideline and commentary, and Ford and Hutchins have

not shown any unusual circumstances rendering the

guidelines’ consideration inadequate in their case.

They also contend that the thrust of the

“money-laundering” guidelines is to punish money laundering

resulting from “serious underlying criminal conduct such as

drug trafficking and organized crime.” If they mean to

suggest that transactions in gambling proceeds are not

qualitatively the sort of conduct meant to be punished, the

guidelines must also be said to address this question; the

application note to section 2S1.2 references section 1961(1),

which includes operation of a gambling business. Though the

application of section 1957 to transactions stemming from

offenses unrelated to drug trafficking and organized crime is

clearly not unforeseen, either by Congress or the Sentencing

Commission, some courts justifying a departure have noted

the absence of these prototypes. For instance, in United

States v. Woods, 159 F.3d 1132, 1134-35 (8th Cir. 1998);

United States v. Hemmingson, 157 F.3d 347, 361-63 (Sth Cir.

1998); and United States v. Caba, 104 F.3d 354 (table), No.

96-1069(L), 1996 WL 685764 at *3 (2d Cir. 1996)

(unpublished), Courts of Appeals affirmed departures based

in part on the fact that the underlying offenses, though

literally within the statute, were not drug- trafficking,

“organized crime,” “serious money-laundering,” or

“unusually severe fraud.” On the other hand, in United States

v. Adams, 74 F.3d 1093,1102 (11th Cir. 1996), the Eleventh

Circuit reversed a district court that departed on the ground

that the case before it did not involve “classic money

laundering.” Similarly, in United States v. LeBlanc, 24 F.3d

340, 346-47 (1st Cir.), cert. denied, 513 U.S. 896 (1994), the

35a

First Circuit held it was error not to sentence deposit of

gambling proceeds under the money laundering guidelines,

since section 1956 covers a far broader array of crimes than

“classic money laundering” involving drug proceeds. See

also United States v. Conley, 37 F.3d 970, 981 (3d Cir. 1994)

(legislative history of Money Laundering Control Act of 1986

indicates illegal gambling was an area of concern).

The Sentencing Commission itself has attempted to modify

the guidelines to narrow the money-laundering provisions,

which, the Commission discovered, were so wide-ranging that

severe money-laundering sentences were “being imposed for

a much broader scope of offense conduct, including some

conduct that is substantially less serious than the conduct

contemplated when the . . . guidelines were first formulated.”

United States Sentencing Comm’n, Report to the Congress:

Sentencing Policy for Money Laundering Offenses, including

Comments on Department of Justice Report, 5 (Sept. 18,

1997). In 1995, the Commission proposed a comprehensive

revision of the money-laundering guidelines in an attempt to

make the punishment fit the crime. Jd. at 2. Specifically, the

Commission sought to “recalibrate the penalties to the

seriousness of the underlying offense.” Jd. at 10.

Tie Commission’s proposed guideline changes, unlike

the current guidelines, were also designed to avoid

arbitrarily determined, heightened penalty levels in those

situations where a financial transaction may technically

violate the money laundering statutes but not present

additional societal harm sufficient to merit substantially

more severe sanctions than those appropriate for the

underlying offense from which the illicit funds were

generated.

Id. at 11. However, Congress disapproved the revision, and

section 2S1.2 remains in place substantially unaltered. Jd. at

36a

2. In determining whether a circumstance was adequately

taken into consideration by the Sentencing Commission, 18

U.S.C. § 3553(b) limits our consideration to the guidelines

themselves, the official commentary and the policy statements;

we therefore may not base our decision on the Commission’s

proposed amendment. See United States v. Morelli, 169 F.3d

798, 809 n.13 (3d Cir. 1999) (“[P]roposed amendments to the

Sentencing Guidelines do not provide independent legal

authority for a downward departure.”), pet’n. for cert. filed,

67 U.S.L.W. 3758, (June 7, 1999) (No. 98-1969).

We conclude that the inclusion of gambling offenses within

the money laundering statutes as “specified unlawful

activities” shows conclusively that an offense is not outside

the heartland merely because it involves gambling proceeds

rather than drug or organized crime proceeds. There may, of

course, be articulable reasons why a particular gambling case

does not threaten the kind of harm Congress aimed at

preventing, but Ford and Hutchins have not shown any.

Without some showing of particular factors “of a kind, or to

a degree, not adequately taken into consideration by the

Sentencing Commission in formulating the guidelines,”

United States v. Reed, 167 F.3d 984, 995 (6th Cir. 1999)

(quoting section 3553(b)), the district court should not depart.

VI.

Hutchins argues that the district court erred in denying her

motion for severance and mistrial after there was an allegation

that Ford had contacted a juror during trial. The district court

removed the juror whom Ford had allegedly contacted. The

court examined the remaining jurors individually and assured

itself that they had not been affected by the impropriety. The

court denied Hutchins’s severance and mistrial motion.

The jury acquitted Hutchins on Count I, but convicted Ford

on that count.

37a

We review the district court’s ruling on severance and

mistrial motions for abuse of discretion. United States v.

Lloyd, 10 F.3d 1197, 1215 (6th Cir.1993) (severance), cert.

denied, 511 U.S. 1043 (1994); United States v. Chambers,

944 F.2d 1253, 1263 (6th Cir.1991) (mistrial), cert. denied,

502 U.S. 1112 (1992). The record shows the district court

conscientiously investigated the effect of Ford’s impropriety

on the remaining jurors and reasonably concluded that they

were not tainted. The court’s conclusion that the jurors could

consider Hutchins’s guilt separately from Ford’s was borne

out by the jury’s acquittal of Hutchins and conviction of Ford

on Count I. There was no abuse of discretion.

IX.

Hutchins was convicted of two counts of aiding and

abetting transactions with criminal proceeds, 18 U.S.C. §

1957, for her deposit of two checks drawn on the RVA

Ladies’ Auxiliary account, in the amounts of $75,000 and

$19,000, into the RVA Post No.1 Bank of Louisville account.

Both checks were signed by Hutchins and Ford and both

checks were imprinted: “Checks over $2,000.00 require two

signatures.” Hutchins contends that for checks over $2,000,

Ford’s signature was required, but that hers was not. She

cites a bank signature card for the Ladies’ Auxiliary with

these instructions: “Don Ford may sign any checks- Checks

over $2000.00 signed by Sandy Hutchins requires signature

of Don Ford too.” Hutchins argues that her signature was

gratuitous and therefore of no legal effect.

Leaving to one side the legal impossibility conundrum

Hutchins poses, her argument fails on the facts. Regardless

of what the bank signature card said, the check itself was

printed with the instruction that two signatures were needed

for checks over $2,000. Hutchins’s signature would have

38a

avoided the obvious difficulty of negotiating a check in

contravention of instructions printed on the face of that check.

Her part in negotiating the check satisfies the actus reus

requirement of 18 U.S.C. § 1957 and 18 U.S.C. § 2 of aiding

and abetting a monetary transaction with criminally derived

funds.

In sum, we reverse Ford’s tax conviction, but affirm Ford’s

and Hutchins’s gambling and money laundering convictions.

We reject their challenges to the district court’s refusal to

depart downward. However, because Ford’s tax conviction

evidently affected the criminal history category used in his

sentencing on the gambling and money laundering

convictions, we remand for resentencing.

39a

IN THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Nos. 97-6097, 97-6270, 97-6271

UNITED STATES OF AMERICA, Plaintiff-Appellee,

V.

DONALD G. FORD (97-6097/6270); SANDRA HUTCHINS FORD

(97-6271), Defendants-Appellants.

JUDGMENT

On Appeal from the United States District Court

for the Western District of Kentucky at Louisville.

Before: NELSON, CLAY, and GIBSON,” Circuit Judges.

THIS CAUSE was heard on the record from the district

court and was argued by counsel.

IN CONSIDERATION WHEREOF, it is ORDERED that

defendant Donald Ford’s tax conviction is REVERSED,

defendants Donald Ford and Sandra Hutchins’s gambling and

money laudering convictions are AFFIRMED. MIT IS

~” The Honorable John R. Gibson, Circuit Judge of the United States Court

of Appeals for the Eighth Circuit, sitting by designation.

40a

FURTHER ORDERED that the sentence of defendant Ford is

REMANDED for resentencing.

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green

Leonard Green, Clerk

4la

IN THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Nos. 97-6097, 97-6270, 97-6271

UNITED STATES OF AMERICA, Plaintiff-Appellee, ©

V.

DONALD G. FORD (97-6270); SANDRA HUTCHINS FORD

(97-6271), Defendants-Appellants.

Appeal from the United States District Court

for the Western District of Kentucky at Louisville.

Nos. 93-00081; 93-0082—Charles R. Simpson, III, Chief

District Judge.

ORDER

[Filed October 8, 1999]

Before: NELSON, CLAY, and GIBSON,” Circuit Judges.

The court having received a petition for rehearing en banc,

and the petition having been circulated not only to the original

panel members but also to all other active judges of this court,

” The Honorable John R. Gibson, Circuit Judge of the United States Court

of Appeals for the Eighth Circuit, sitting by designation.

42a

and no judge of this court having requested a vote on the

suggestion for rehearing en banc, the petition for rehearing

has been referred to the original panel.

~ The panel has further reviewed the petition for rehearing

and concludes that the issues raised in the petition were fully

considered upon the original submission and decision of the

cases. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green

Leonard Green, Clerk

43a

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

No. 3:93-CR-0082-S

UNITED STATES OF AMERICA, Plaintiff,

Vz

DONALD G. FORD AND SANDRA HUTCHINS FORD,

Defendants.

TRANSCRIPT OF PROCEEDINGS

**e* kk *

BEFORE HONORABLE CHARLES R. SIMPSON III,

CHIEF JUDGE, UNITED STATES DISTRICT COURT,

WESTERN DISTRICT OF KENTUCKY, AT

LOUISVILLE, KENTUCKY, BEGINNING ON

OCTOBER 4, 1996.

VOLUME XXI

NOVEMBER 15, 1996

*e kek *

. 44a

Now with respect to Counts 34 and 35, Mr. Ford has

moved for judgment of acquittal as to those counts on the

basis that there has been no showing of interstate commerce.

The government’s evidence did prove through Witness Frazier

at Volume IX on Page 49 that the Bank of Louisville was an

F.D.I.C.-insured institution, and the Fourth Circuit has

decided a case of United States v. Peay, at 972 F.2d 71, for

the proposition that proof that an institution is F.D.I.C.

insured justifies the inference that there is an effect on

interstate commerce.

45a

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

Nos. 97-6097, 97-6270, 97-6271

UNITED STATES OF AMERICA, Plaintiff,

V.

DONALD G. FORD AND SANDRA HUTCHINS FORD,

Defendants.

TRANSCRIPT OF SENTENCING

**x* *& k *

BEFORE HONORABLE CHARLES R. SIMPSON III,

UNITED STATES DISTRICT JUDGE, WESTERN

DISTRICT OF KENTUCKY AT _ LOUISVILLE,

KENTUCKY, ON OCTOBER 8, 1997 AND OCTOBER 9,

1997.

**x£ e£ * *

VOLUME II

OCTOBER 9, 1997

(Tr. 45] * * * THE COURT: All right. Well, I think it’s

clear that the analysis here is fact specific and case specific;

and I think certainly it was in the Koon case and would appear

to be in all these cases rather fact-specific.

46a

The Court believes that the best evidence of legislative

intent is the plain language of the statute in the first instance.

Sometimes the language in the statute is not plain, and

sometimes it is confusing and written in a circular or weird

way that all lawyers have come to in their practices deal with

from time to time. But where the language is specific, I think

that it must be assumed that the legislature intended what it

wrote and what it enacted; and certainly here in 1956, the

term, specified unlawful activity, is defined as:

“Any act or activity constituting an offense listed in

Section 1961(1) of that title.”

Now 1961(1), of course, mentioned gambling. 19 -

Section 1957 references 1956. So I think that the coverage

here of gambling in a general sense militates against the Court

concluding that in a generic sense [Tr. 46]* * * gambling

activity is outside the heartland of the money-laundering

statutes.

I am aware of the context in which the statute was enacted

and also the quotations from the legislators and the very

excellent thought processes that have gone into the various

opinions that the courts have created on these issues.

Under these circumstances here and cognizant of what is

written into the statute as constituting specified unlawful

activity, I am going to decline to depart downward on the

heartland argument.

I think that here we have significant amounts of cash,

large amounts of cash, well over a million dollars worth of

money-laundering activity. We have a, what must be

described as a fairly large scale operation by Mr. Ford. This

was a back yard dice game. This was a large scale operation

generating large amounts of money.

I believe that it is true that Mr. Ford could have taken this

money and put it in the mattress, but obviously many people

generating large amounts of illegal cash do not wish to do that

because then they become susceptible to being separated from

47a

their money by other criminals as well as by catastrophic

events like fires, whatever.

So people who generate large amounts of cash [Tr.

47] * * * through illegal operations many times feel the

necessity of laundering it, to cleanse it, to be able to use it,

and not always in furtherance of their business. There is -

think Mr. Mazzoli pointed out not a 100 percent dividend

reinvestment plan that many criminals follow. They like to

use money for their own purposes as well as to perhaps

finance their businesses, and that seems to be what we have in

this case.

This is not a drug case. It is not an organized crim: “>.

but it does bear some of the badges of the organivcd crime

case because it is illegal activity. It is an illegal act: \’ that

generated a large amount of cash. I think in one oi -uese

opinions, one of the judges said that people drown in cash.

Now it may have been in the context of the drug dealer rather

than something along this line, but we have here an

extraordinarily large amount of cash and coins that we heard

about generated from this business; and Mr. Ford, taking

these monies and doing things with it to - in conduct which

constituted money laundering.

In fact, it was generated in gambling rather than organized

crime for drugs. I think, as I said, it’s not particularly

motivated here because of the fact that gambling is referenced

as a specified unlawful activity.

And under the particular facts here, I think [Tr. 48]* * *

we have a large enterprise. We have a large amount of cash.

We have illegal activity, and we have laundering the money

in really the classic sense. This was classic money

laundering. There’s no question about it.

The argument that there was a lot of money laundering as

opposed to a little because Mr. Ford had to deposit money

into a bank in order to comply with state law is interesting.

I’m not sure that in the context of this entire matter, I can

48a

view Mr. Ford’s conduct as paying a tremendous amount of

attention to obeying the law. In fact, he clearly didn’t, at

least with respect to the charges in this case.

But he did set up a number of so-called charitable

Veterans organizations, obviously for his own reasons of

business rather than to have lots of charities. He set them up

in order to ease and make easier the conduct of his operation.

And the fact that that may have then generated additional

money-laundering charges I don’t think militates in and of

itself against considering this inside the heartland of the

money-laundering statutes.

In some of the cases that I read, there were relatively

small amounts of money. There was conduct that was rather

peculiar. I’m thinking, for instance, of the Louisiana case

involving Espy and - the lawyer, and things like that that

really perhaps could not be described as [Tr. 49] * * * classic

money laundering but involved literal compliance or, shall we

say, literal identity with the words in the statute but could not

- did not have the flavor and the classic attributes of money

laundering. This case does.

And so I am going to decline to depart on that, but I will

give you this. I will make the finding that this case is within

the heartland and not outside the heartland of the money-

laundering statutes and indicate that I would consider the

matter further were it outside. So you have at least the ability

to raise this with the Court of Appeals and to allow them to

consider otherwise failures of the trial Court to depart or have

a difficult time being reviewed on appeal. So by making that

finding, I’ll certainly give you the opening to raise it with the

Sixth Circuit and see if the Sixth Circuit will agree with your

view under the facts of this case, this particular comment by

Mr. Ford outside what you believe is the heartland of these

Statutes. ‘

49a

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

AT LOUISVILLE

Nos. 97-6097, 97-6270, 97-6271

UNITED STATES OF AMERICA, Plaintiff,

V.

DONALD G. FORD AND SANDRA HUTCHINS ForRD,

Defendants.

TRANSCRIPT OF SENTENCING

VOLUME II-B

SENTENCING

October 9, 1997

LOUISVILLE, KENTUCKY

BEFORE HONORABLE CHARLES R. SIMPSON, III

APPEARANCES:

For the United States: ALEXANDER T. TAFT, JR.

MICHAEL MAZZOLI

CANDACE HILL

U.S. Attorney’s Office

510 W. Broadway

Louis**"2, KY 40202

50a

For Donald G. Ford: JOHN D. CLINE

20 First Piaza, Suite 700

Albuquerque, NM 87102

Robert C. Webb

3200 Providian Center

Louisville, KY 40202

R. Kent Westberry

1550 Providian Center

400 W. Market

Louisville, KY 40202

For S. Hutchins Ford: C. FRED PARTIN

2000 Kentucky Home Life Bidg.

Louisville, KY 40202

[Defendants present.]

x*“* *£ *& *

[Tr. 30] * * * THE COURT: Was there something else you

wanted to bring up before I impose sentence in this case?

MR. CLINE: No, Your Honor. When you do impose a

sentence of imprisonment, which I understand you have to do

here, I would ask that you recommend FCI Lexington. I

would also like to make the point -- I understand this is not a

finding for the court to make, but I simply want to state on the

record that Mr. Ford has been confined on this case since I

believe November 22nd of ‘96 at the time of the jury verdict.

When you finish -- sorry to keep anticipating, but when you

do finish, we do have a motion to stay the fine and forfeiture,

but that is probably premature at this point.

THE COURT: I’ll ask your client to join you there.

S5la

All right. At this time I would intend to propose --

impose sentence in this case, if there is no other argument to

be made, which apparently there is not.

Then pursuant to the Sentencing Reform Act of 1984, it is

the judgment of the court that the defendant, Donald G. Ford,

is committed to the custody of the Bureau of Prisons for a

term of 60 months as to each of Counts 1 and 2 and for [Tr.

31]* * * a term of 108 months as to each of Counts 4, 7

through 31 and 34. Those terms would be served

concurrently, each with the other, for a total term of

imprisonment of 108 months. This sentence will be served

concurrently to the 20-month term of imprisonment imposed

in Criminal Action Number 3:93-CR-81.

It is further ordered that the defendant will pay fines. The

fine imposed in this case will be a fine of $500,000 as to

Count 34 in the indictment, plus $192,168 as an additional

fine for the costs of incarceration computed at the amount of

$21,352 per year, plus $7,030.80 for the costs of supervision

computed at the rate of $2,343.60 per year for three years.

Now, there is some overlap here with the other case. The

costs of supervision are ordered concurrently with the costs of

supervision imposed in Criminal Action 3:93-CR-81, for a

total of $7,030.80. An additional fine is imposed in the

following sums, since I don’t have an adding machine on the

bench, $372, $4,400.14, $266.18, $228.18, and $1,000 as the

costs of prosecution pursuant to 28 U.S.C. Section 1918(b).

It is further ordered that the defendant pay special penalty

assessments in the amount of $50 as to each of Counts 1, 2,

4, 7 through 31, and 34 in the indictment, for a total of

$1,450.

52a

[Tr. 32] * * * The fines and the special penalty assessments

are due to be paid to the U.S. District Court Clerk on this

date.

Pursuant to the jury verdict, the items listed in Counts 4

and 7 through 34 of the indictment are ordered forfeited.

Restitution is not necessary to be addressed in this case.

Upon release from imprisonment, the defendant is placed

on supervised release for a term of three years as to each of

Counts 1, 2, 4, 7 through 31, and 34 in the indictment.

Those terms will be concurrent for a total term of supervised

release of three years.

While on supervised release, the defendant will abide by

the conditions of supervised release which will be explained

to him by the probation officer and filed in the record in this

case.

As justification, the offense level in this case is 30, the

criminal history category is II. The guideline range for

imprisonment is 108 to 135 months, and the guideline range

for supervised release is two to three years, and the guideline

fine range is $15,000 to $500,000.

The sentence of 108 months custody, total fines as

indicated, and the three-year term of supervised release are

within the appropriate guideline ranges and are sufficient to

[Tr. 33] * * * meet sentencing objectives and punishment,

incapacitation and general deterrence.

The court has selected a sentence at the low end of the

guideline range in view of all the factors that have been

brought to the court’s attention in this matter, and the court

feels that that is the just sentence within that range.

53a

The fines that have been imposed here, Mr. Ford has

refused to provide consistently financial information to the

court through the Probation Office and has refused to disclose

to the court his financial picture, but all the information

available to the court, including information contained in the

presentence report and other information, convinces the court

that the defendant is and remains a wealthy individual who

can afford to pay the fine imposed in this case -- the fines

imposed in this case, and therefore, the court will impose the

fines as stated and justify as stated.

I will order the presentence report in this case sealed and

available to counsel on appeal, and I will order that the

sentencing recommendation of the Probation Office be sealed

and not available to counsel on appeal.

x**xe kk *

[Tr. 49] * * * THE COURT: I’m going to overrule your

objection. [Tr. 50] * * * I have commented already on the

general heartland situation and the notion that gambling is a

specified unlawful activity specifically referenced in the

money laundering statutes, both of them, and that this was a

large operation and there was a significant amount of money

laundered by Mr. Ford.

Now, this was a large operation, and I found that the

specific actions of Mr. Ford, and I believe in this case Mrs.

Ford with respect to this matter, look like classic money

laundering of the proceeds of an illegal operation.

There is some difference between this case and Mr.

Ford’s. Number one, I suppose the fact-that it was a large

operation is interesting, but Mrs. Ford has only been

convicted on two counts, which together constitute, in

comparison to the money laundering charges and convictions

544

of Mr. Ford, a relatively small sum of money. We are talking

about $94,000 here.

There have been some cases that I have looked at in which

the amounts were fairly small, and the courts in those cases

found that it was outside the heartland. I was thinking of the

$20,000 matter in Louisiana involving, as I mentioned earlier,

the Espy case, involving I think former Agriculture Secretary

Espy’s brother.

The fact that there isa smaller amount of money involved

is a point to be made. On the other hand, I think (Tr.

51] * * * looking at the matter as a whole, I am of the opinion

that there is not a showing that this conduct is outside the

heartland of the money laundering statutes.

Now, I will rule as I did in Mr. Ford’s case, that is, I will

indicate that if this matter -- if this conduct is outside the

heartland, I would consider a downward departure. So that

my holding is that because I believe that it is not outside the

heartland that I am not able to depart. That will give you the

opportunity of raising my failure to depart downward with the

Court of Appeals. Otherwise, I think if the court fails to

depart, it’s pretty tough to get appellate review.

MR. PARTIN: Yes, sir.

THE COURT: So if the court should hold that it is within

-- outside the heartland, then there is at least an issue there

that would come back, and therefore, I think the Court of

Appeals would review it.

Even though there is a much smaller amount of money

involved here, I looked at the context of the whole matter, I

believe that this conduct -- I indicated earlier in Mr. Ford’s

case that it was clear that there was a fact specific inquiry on

heartland issues, but as with Mr. Ford, this appears to have

~ 55a

the flavor of what I consider to be in the heartland of money

laundering, transferring of ill-gotten gains in such a way that

it can be translated into profits [Tr. 52] * * *through the

laundering of the money. I think that’s what occurred here.

So for that reason, I will deny your objection, Mr. Partin.

x“ xe ee

(Tr. 62] * * * THE COURT: All right. Then the court will

impose judgment in this matter.

Pursuant to the Sentencing Reform Act of 1984, it is the

judgment of the court that the defendant, Sandra Hutchins

Ford, is committed to the custody of the Bureau of Prisons for

a term of 41 months as to Counts 2, 32 and 33 in the second

superseding indictment. Those terms will be served

concurrently, each with the other, for a total term of

imprisonment of 41 months.

It is further ordered that the defendant pay special penalty

assessments in the amount of $50 as to each of Counts 2, 32

and 33. The special penalty assessment is due to be paid to

the U.S. District Court Clerk on this date.

We need not address restitution.

Upon release from imprisonment, the defendant is placed

on supervised release for a term of three years as to each of

Counts 2, 32 and 33. Those terms will be served

concurrently for a total term of supervised release of three

years. While on supervised release, the defendant will abide

by the conditions of supervised release which will be

explained by the probation officer and filed in the record.

(Tr. 63] * * * The costs of incarceration and supervised

release are waived.

56a

In this case I cannot see why we would have mandatory

drug testing.

PROBATION OFFICER: Your Honor, this predates the

mandatory drug testing.

THE COURT: So there’s not mandatory drug testing.

PROBATION OFFICER: It’s not required.

THE COURT: As justification, the offense level in this

case is 22, the criminal history category is I. The guideline

range for confinement is 41 to 51 months, and the fine range

is $7500 to $75,000, and the guideline range for supervised

release is two to three years.

As Mr. Partin pointed out, the defendant has been

forthcoming with respect to financial matters, and the court

has found that defendant does not have the ability -- apparent

present ability to pay a fine with the asset that she has listed

as her only significant asset. Therefore, the court has waived

the fine and will waive the costs of incarceration and

supervised release as well.

The sentence of 41 months custody and three years of

supervised release are within the appropriate guideline ranges,

and I believe are sufficient to meet the sentencing objectives

of punishment, incapacitation and general deterrence.

57a

STATUTORY PROVISIONS INVOLVED

18 U.S.C. § 1956. Laundering of monetary instruments

(a)(1) Whoever, knowing that the property involved in

a financial transaction represents the proceeds of some form

of unlawful activity, conducts or attempts to conduct such a

financial transaction which in fact involves the proceeds of

specified unlawful activity—

(A)(i) with the intent to promote the Carrying on of

specified unlawful activity; or

(ii) with intent to engage in conduct constituting a

violation of section 7201 or 7206 of the Internal Revenue

Code of 1986; or

(B) knowing that the transaction is designed in whole or

in part—

(i) to conceal or disguise the nature, the location, the

source, the ownership, or the control of the proceeds of

specified unlawful activity; or

(ii) to avoid a transaction reporting requirement

under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or

twice the value of the property involved in the transaction,

whichever is greater, or imprisonment for not more than

twenty years, or both.

(2) Whoever transports, transmits, or transfers, or attempts

to transport, transmit, or transfer a monetary instrument or

funds from a place in the United States to or through a place

outside the United States or to a place in the United States

from or through a place outside the United States—

58a

(A) with the intent to promote the carrying on of

specified unlawful activity; or

(B) knowing that the monetary instrument or funds

involved in the transportation, transmission, or transfer

represent the proceeds of some form of unlawful activity and

knowing that such transportation, transmission, or transfer is

designed in whole or in part—

(i) to conceal or disguise the nature, the location, the

source, the ownership, or the control of the proceeds of

specified unlawful activity; or

(ii) to avoid a transaction reporting requirement

under State or Federal law,

shall be sentenced to a fine of not more than $500,000 or

twice the value of the monetary instrument or funds involved

in the transportation, transmission, or transfer whichever is

greater, or imprisonment for not more than twenty years, or

both. For the purpose of the offense described in

subparagraph (B), the defendant’s knowledge may be

established by proof that a law enforcement officer

represented the matter specified in subparagraph (B) as true,

and the defendant’s subsequent statements or actions indicate

that the defendant believed such representations to be true.

(3) Whoever, with the intent—

(A) to promote the carrying on of specified unlawful

activity;

(B) to conceal or disguise the nature, location, source,

ownership, or control of property believed to be the proceeds

of specified unlawful activity; or

(C) to avoid a transaction reporting requirement under

State or Federal law,

Sarit dienbS Naa RO ested SAG ook AE WA wi eS es See ae hey Lae

59a

conducts or attempts to conduct a financial transaction

involving property represented to be the proceeds of specified

unlawful activity, or property used to conduct or facilitate

specified unlawful activity, shall be fined under this title or

imprisoned for not more than 20 years, or both. For purposes

of this paragraph and paragraph (2), the term “represented”

means any representation made by a law enforcement officer

or by another person at the direction of, or with the approval

of, a Federal official authorized to investigate or prosecute

violations of this section.

(b) Whoever conducts or attempts to conduct a

transaction described in subsection (a)(1) or (a)(3), or a

transportation, transmission, or transfer described in

subsection (a)(2), is liable to the United States for a civil

penalty of not more than the greater of—

(1) the value of the property, funds, or monetary

instruments involved in the transaction; or

(2) $10,000.

(c) As used in this section—

(1) the term “knowing that the property involved in a

financial transaction represents the proceeds of some form of

unlawful activity” means that the person knew the property

involved in the transaction represented proceeds from some

form, though not necessarily which form, of activity that

constitutes a felony under State, Federal, or foreign law,

regardless of whether or not such activity is specified in

paragraph (7);

(2) the term “conducts” includes initiating, concluding,

or participating in initiating, or concluding a transaction;

(3) the term “transaction” includes a purchase, sale, loan,

pledge, gift, transfer, delivery, or other disposition, and with

60a

respect to a financial institution includes a deposit,

withdrawal, transfer between accounts, exchange of currency,

loan, extension of credit, purchase or sale of any stock, bond,

certificate of deposit, or other monetary instrument, use of a

safe deposit box, or any other payment, transfer, or delivery

by, through, or to a financial institution, by whatever means

effected;

(4) the term “financial transaction” means (A) a

transaction which in any way or degree affects interstate or

foreign commerce (i) involving the movement of funds by

wire or other means or (ii) involving one or more monetary

instruments, or (iii) involving the transfer of title to any real

property, vehicle, vessel, or aircraft, or (B) a transaction

involving the use of a financial institution which is engaged

in, or the activities of which affect, interstate or foreign

commerce in any way or degree;

(5) the term “monetary instruments” means (i) coin or

currency of the United States or of any other country,

travelers’ checks, personal checks, bank checks, and money

orders, or (ii) investment securities or negotiable instruments,

in bearer form or otherwise in such form that title thereto

passes upon delivery;

(6) the term “financial institution” has the definition

given that term in section 5312(a)(2) of title 31, United States

Code, or the regulations promulgated thereunder;

(7) the term “specified unlawful activity” means—

(A) any act or activity constituting an offense listed

in section 1961(1) of this title except an act which is indictable

under subchapter II of chapter 53 of title 31;

ha ALOE RE IIRL RECN ort hs WD tak tiees uN tO CAE eA

were

pL nara

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(B) with respect to a financial transaction occurring

in whole or in part in the United States, an offense against a

foreign nation involving—

(i) the manufacture, importation, sale, or

distribution of a controlled substance (as such term is defined

for the purposes of the Controlled Substances Act);

(ii) murder, kidnapping, robbery, extortion, or

destruction of property by means of explosive or fire;

(iii) fraud, or any scheme or attempt to defraud,

by or against a foreign bank (as defined in paragraph 7 of

section 1(b) of the International Banking Act of 1978;

(C) any act or acts constituting a continuing criminal

enterprise, as that term is defined in section 408 of the

Controlled Substances Act (21 U.S.C. 848);

(D) an offense under section 32 (relating to the

destruction of aircraft), section 37 (relating to violence at

international airports), section 115 (relating to influencing,

impeding, or retaliating against a Federal official by

threatening or injuring a family member), section 152

(relating to concealment of assets; false oaths and claims;

bribery), section 215 (relating to commissions or gifts for

procuring ioans), section 351 (relating to congressional or

Cabinet officer assassination), any of sections 500 through

503 (relating to certain counterfeiting offenses), section 513

(relating to securities of States and private entities), section

542 (relating to entry of goods by means of false statements),

section 545 (relating to smuggling goods into the United

States), section 549 (relating to removing goods from Customs

custody), section 641 (relating to public money, property, or

records), section 656 (relating to theft, embezzlement, or

misapplication by bank officer or employee), section 657

(relating to lending, credit, and insurance institutions), section

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658 (relating to property mortgaged or pledged to farm credit

agencies), section 666 (relating to theft or bribery concerning

programs receiving Federal funds), section 793, 794, or 798

(relating to espionage), section 831 (relating to prohibited

transactions involving nuclear materials), section 844(f) or (i)

(relating to destruction by explosives or fire of Government

property or property affecting interstate or foreign

commerce), section 875 (relating to interstate

communications), section 956 (relating to conspiracy to kill,

kidnap, maim, or injure certain property in a foreign country),

section 1005 (relating to fraudulent bank entries), 1006

(relating to fraudulent Federal credit institution entries), 1007

(relating to fraudulent Federal Deposit Insurance

transactions), 1014 (relating to fraudulent loan or credit

applications), 1032 (relating to concealment of assets from

conservator, receiver, or liquidating agent of financial

institution), section 1111 (relating to murder), section 1114

(relating to murder of United States law enforcement

officials), section 1116 (relating to murder of foreign officials,

official guests, or internationally protected persons), section

1201 (relating to kidnapping), section 1203 (relating to

hostage taking), section 1361 (relating to willful injury of

Government property), section 1363 (relating to destruction

of property within the special maritime and territorial

jurisdiction), section 1708 (theft from the mail), section 1751

(relating to Presidential assassination), section 3113 or 2114

(relating to bank and postal robbery and theft), section 2280

(relating to violence against maritime navigation), section

2281 (relating to violence against maritime fixed platforms),

section 2319 (relating to copyright infringement), section 2320

(relating to trafficking in counterfeit goods and services),

section 2332 (relating to terrorist acts abroad against United

States nationals), section 2332a (relating to use of weapons of

mass destruction), section 2332b (relating to international

terrorist acts transcending national boundaries), or section

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2339A (relating to providing material support to terrorists) of

this title, section 46502 of title 49, United States Code, a

felony violation of the Chemical Diversion and Trafficking

Act of 1988 (relating to precursor and essential chemicals),

section 590 of the Tariff Act of 1930 (19 U.S.C. 1590)

(relating to aviation smuggling), section 422 of the Controlled

Substances Act (relating to transportation of drug

paraphernalia), section 38(c) (relating to criminal violations)

of the Arms Export Control Act, section 11 (relating to

violations) of the Export Administration Act of 1979, section

206 (relating to penalties) of the International Emergency

Economic Powers Act, section 16 (relating to offenses and

punishment) of the Trading with the Enemy Act, any felony

violation of section 15 of the Food Stamp Act of 1977

(relating to food stamp fraud) involving a quantity of coupons

having a value of not less than $5,000, or any felony violation

of the Foreign Corrupt Practices Act; or

(E) a felony violation of the Federal Water Pollution

Control Act (33 U.S.C. 1251 et seq.), the Ocean Dumping

Act (33 U.S.C. 1401 et seq.), the Act to Prevent Pollution

from Ships (33 U.S.C. 1901 et seq.), the Safe Drinking Water

Act (42 U.S.C. 300f et seq.), or the Resources Conservation

and Recovery Act (42 U.S.C. 6901 et seq.).

(F) Any act or activity constituting an offense involving

a Federal health care offense.

(8) the term “State” includes a State of the United States,

the District of Columbia, and any commonwealth, territory,

or possession of the United States.

(d) Nothing in this section shall supersede any provision of

Federal, State, or other law imposing criminal penalties or

affording civil remedies in addition to those provided for in

this section.

64a

(€) Violations of this section may be investigated by such

components of the Department of Justice as the Attorney

General may direct, and by such components of the

Department of the Treasury as the Secretary of the Treasury

may direct, as appropriate and, with respect to offenses over

which the United States Postal Service has jurisdiction, by the

Postal Service. Such authority of the Secretary of the

Treasury and the Postal Service shall be exercised in

accordance with an agreement which shall be entered into by

the Secretary of the Treasury, the Postal Service, and the

Attorney General. Violations of this section involving offenses

described in paragraph (c)(7)(E) may be investigated by such

components of the Department of Justice as the Attorney

General may direct, and the National Enforcement

Investigations Center of the Environmental Protection

Agency.

(f) There is extraterritorial jurisdiction over the conduct

prohibited by this section if—

(1) the conduct is by a United States citizen or, in the

case of a non-United States citizen, the conduct occurs in part

in the United States; and

(2) the transaction or series of related transactions

involves funds or monetary instruments of a value exceeding

$10,000.

(g) Notice of conviction of financial institutions.—If any

financial institution or any officer, director, or employee of

any financial institution has been found guilty of an offense

under this section, section 1957 or 1960 of this title, or

section 5322 or 5324 of title 31, the Attorney General shall

provide written notice of such fact to the appropriate

regulatory agency for the financial institution.

65a

(h) Any person who conspires to commit any offense defined

in this section or section 1957 shall be subject to the same

penalties as those prescribed for the offense the commission

of which was the object of the conspiracy.

66a

18 U.S.C. § 1957. Engaging in Monetary Transactions in

Property Derived from Specified Unlawful Activity

(a) Whoever, in any of the circumstances set forth in

subsection (d), knowingly engages or attempts to engage in a

monetary transaction in criminally derived property that is of

a value greater than $10,000 and is derived from specified

unlawful activity, shall be punished as provided in subsection

(b).

(b)(1) Except as provided in paragraph (2), the

punishment for an offense under this section is a fine under

title 18, United States Code, or imprisonment for not more

than ten years or both.

(2) The court may impose an alternate fine to that

imposable under paragraph (1) of not more than twice the

amount of the criminally derived property involved in the

transaction.

(c) In a prosecution for an offense under this section, the

Government is not required to prove the defendant knew that

the offense from which the criminally derived property was

derived was specified unlawful activity.

(d) The circumstances referred to in subsection (a) are --

(1) that the offense under this section takes place in the

United States or in the special maritime and territorial

jurisdiction of the United States; or

(2) that the offense under this section takes place outside

the "'nited States and such special jurisdiction, but the

de*e:iant is a United States person (as defined in section

3077 of this title, but excluding the class described in

paragraph (2)(D) of such section).

67a

(€) Violations of this section may be investigated by such

components of the Department of Justice as the Attorney

General may direct, and by such components of the

Department of the Treasury as the Secretary of the Treasury

may direct, as appropriate and, with respect to offenses over

which the United States Postal Service has jurisdiction, by the

Postal Service. Such authority of the Secretary of the

Treasury and the Postal Service shall be exercised in

accordance with an agreement which shall be entered into by

the Secretary of the Treasury, the Postal Service, and the

Attorney General.

(f) As used in this section --

(1) the term “monetary transaction” means the deposit,

withdrawal, transfer, or exchange, in or affecting

interstate or foreign commerce, of funds or a monetary

instrument (as defined in section 1956(c)(5) of this title)

by, through, or to a financial institution (as defined in

section 1956 of this title), including any transaction that

would be a financial transaction under section

1956(c)(4)(B) of this title, but such term does not include

any transaction necessary to preserve a person’s right to

representation as guaranteed by the sixth amendment to

the Constitution;

(2) the term “criminally derived property” means any

property constituting, or derived from, proceeds obtained

from a criminal offense; and

(3) the term “specified unlawful activity” has the

meaning given that term in section 1956 of this title.

68a

18 U.S.C. § 3553. Imposition of a Sentence

(a) Factors to be considered in imposing a sentence. --

The court shall impose a sentence sufficient, but not greater

than necessary, to comply with the purposes set forth in

paragraph (2) of this subsection. The court, in determining

the particular sentence to be imposed, shall consider --

(1) the nature and circumstances of the offense and the

history and characteristics of the defendant;

(2) the need for the sentence imposed --

(A) to reflect the seriousness of the offense, to

promote respect for the law, and to provide just

punishment for the offense;

(B) to afford adequate deterrence to criminal

conduct;

(C) to protect the public from further crimes of

the defendant; and

(D) to provide the defendant with needed

educational or vocational training, medical care, or

other correctional treatment in the most effective

manner;

(3) the kinds of sentences available;

(4) the kinds of sentence and the sentencing range

established for --

(A) the applicable category of offense committed by

the applicable category of defendant as set forth in the

guidelines issued by the Sentencing Commission

pursuant to section 994(a)(1) of title 28, United States

Code, and that are in effect on the date the defendant

is sentenced; or

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(B) in the case of a violation of probation or

supervised release, the applicable guidelines or policy

Statements issued by the Sentencing Commission

pursuant to section 994(a)(3) of title 28, United States

Code;

(5) any pertinent policy statement issued by the

Sentencing Commission pursuant to 28 U.S.C. 994(a)(2)

that is in effect on the date the defendant is sentenced;

(6) the need to avoid unwarranted sentence disparities

among defendants with similar records who have been

found guilty of similar conduct; and

(7) the need to provide restitution to any victims of the

offense.

(b) Application of guidelines in imposing a sentence. --

The court shall impose a sentence of the kind, and within the

range, referred to in subsection (a)(4) unless the court finds

that there exists an aggravating or mitigating circumstance of

a kind, or to a degree, not adequately taken into consideration

by the Sentencing Commission in formulating the guidelines

that should result in a sentence different from that described.

In determining whether a circumstance was adequately taken

into consideration, the court shall consider only the sentencing

guidelines, policy statements, and official commentary of the

Sentencing Commission. In the absence of an applicable

sentencing guideline, the court shall impose an appropriate

sentence, having due regard for the purposes set forth in

subsection (a)(2). In the absence of an applicable sentencing

guideline in the case of an offense other than a petty offense,

the court shall also have due regard for the relationship of the

sentence imposed to sentences prescribed by guidelines

applicable to similar offenses and offenders, and to the

applicable policy statements of the Sentencing Commission.

70a

U.S.S.G. Ch. 1, Pt. A, Comment 4(b)

(b) Departures.

The sentencing statute permits a court to depart from a

guideline-specified sentence only when it finds “an

aggravating or mitigating circumstance of a kind, or to a

degree, not adequately taken into consideration by the

Sentencing Commission in formulating the guidelines that

Should result in a sentence different from that described.” 18

U.S.C. § 3553(b). The Commission intends the sentencing

courts to treat each guideline as carving out a “heartland,” a

set of typical cases embodying the conduct that each guideline

describes. When a court finds an atypical case, one to which

a particular guideline linguistically applies but where conduct

Significantly differs from the norm, the court may consider

whether a departure is warranted. Section 5H1.10 (Race,

Sex, National Origin, Creed, Religion, and Socio-Economic

Status), § 5H1.12 (Lack of Guidance as a Youth and Similar

Circumstances), the third sentence of § 5H1.4 (Physical

Condition, Including Drug Dependence and Alcohol Abuse),

and the last sentence of § 5K2.12 (Coercion and Duress) list

several factors that the court cannot take into account as

grounds for departure. With those specific exceptions,

however, the Commission does not intend to limit the kinds

of factors, whether or not mentioned anywhere else in the

guidelines, that could constitute grounds for departure in an

unusual case.

The Commission has adopted this departure policy for

two xeasons. First, it is difficult to prescribe a single set of

guidelines that encompasses the vast range of human conduct

potentially relevant to a sentencing decision. The

Commission also recognizes that the initial set of guidelines

need not do so. The Commission is a permanent body,

empowered by law to write and rewrite guidelines, with

Tla

progressive changes, over many years. By monitoring when

| courts depart from the guidelines and by analyzing their stated

| reasons for doing so and court decisions with references

thereto, the Commission, over time, will be able to refine the

guidelines to specify more precisely when departures should

and should not be permitted.

Second, the Commission believes that despite the courts’

legal freedom to depart from the guidelines, they will not do

So very often. This is because the guidelines, offense by

offense, seek to take account of those factors that the

Commission’s data indicate made a significant difference in

pre-guidelines sentencing practice. Thus, for example, where

the presence of physical injury made an important difference

in pre-guidelines sentencing practice (as in the case of robbery

or assault), the guidelines specifically include this factor to

enhance the sentence. Where the guidelines do not specify an

augmentation or diminution, this is generally because the

sentencing data did not permit the Commission to conclude

that the factor was empirically important in relation to the

particular offense. Of course, an important factor (2.g.,

physical injury) may infrequently occur in connection with a

particular crime (¢.g., fraud). Such rare occurrences are

precisely the type of events that the courts’ departure powers

were designed to cover—unusual cases outside the range of

the more typical offenses for which the guidelines were

designed.

It is important to note that the guidelines refer to two

different kinds of departure. The first involves instances in

which the guidelines provide specific guidance for departure

by analogy or by other numerical or non-numerical

Suggestions. For example, the Commentary to § 2G1.1

(Transportation for the Purpose of Prostitution or Prohibited

Sexual Conduct) recommends a downward departure of eight

levels where a commercial purpose was not involved. The

72a

Commission intends such suggestions as policy guidance for

the courts. The Commission expects that most departures will

reflect the suggestions and that the courts of appeals may

prove more likely to find departures “unreasonable” where

they fall outside suggested levels.

A second type of departure will remain unguided. It may

rest upon grounds referred to in Chapter Five, Part K

(Departures) or on grounds not mentioned in the guidelines.

While Chapter Five, Part K lists factors that the Commission

believes may constitute grounds for departure, the list is not

exhaustive. The Commission recognizes that there may be

other grounds for departure that are not mentioned; it also

believes there may be cases in which a departure outside

suggested levels is warranted. In its view, however, such

cases will be highly infrequent.

73a

U.S.S.G. § 2S1.1. Laundering of Monetary Instruments

(a) Base Offense Level:

(1) 23, if convicted under 18 U.S.C. § 1956(a)(1)(A),

(a)(2)(A), or (a)(3)(A);

(2) 20, otherwise.

(b) Specific Offense Characteristics

(1) 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 by 3 levels.

(2) If the value of the funds exceeded $100,000,

increase the offense level as follows:

Value (Apply the Greatest) Increase in Level

(A) $100,000 or less no increase

(B) More than $100,000 add 1

(C) More than $200,000 add 2

(D) More than $350,000 add 3

(E) More than $600,000 add 4

(F) More than $1,000,000 add 5

(G) More than $2,000,000 add 6

(H) More than $3,500,000 add 7

() More than $6,000,000 add 8

(J) More than $10,000,000 add 9

(K) More than $20,000,000 add 10

(L) More than $35,000,000 add 11

(M) More than $60,000,000 add 12

(N) More than $100,000,000 add 13.

(c) Special Instruction for Fines -- Organizations

(1) In lieu of the applicable amount from the table in

subsection (d) of § 8C2.4 (Base Fine), use:

74a a

(A) the greater of $250,000 or 100 percent of the

value of the funds if subsections (a)( 1) and (b)(1) are

used to determine the offense level; or

(B) the greater of $200,000 or 70 percent of the

value of the funds if subsections (a)(2) and (b)(1) are

used to determine the offense level; or

(C) the greater of $200,000 or 70 percent of the

value of the funds if subsection (a)(1) but not (b)(1)

is used to determine the offense level; or

(D) the greater of $150,000 or 50 percent of the

value of the funds if subsection (a)(2) but not (b)(1)

is used to determine the offense level.

Commentary

Statutory Provision: 18 U.S.C. § 1956.

Background: The statute covered by this guideline is a part

of the Anti-Drug Abuse Act of 1986, and prohibits financial

transactions involving funds that are the proceeds of

“specified unlawful activity,” if such transactions are intended

to facilitate that activity, or conceal the nature of the proceeds

or avoid a transaction reporting requirement. The maximum

term of imprisonment authorized is twenty years.

In keeping with the clear intent of the legislation, this

guideline provides for substantial punishment. The

punishment is higher than that specified in § 2S1.2 and

§ 2S1.3 because of the higher statutory maximum, and the

added elements as to source of funds, knowledge, and intent.

A higher base offense level is specified if the defendant is

convicted under 18 U.S.C. § 1956(a)(1)(A), ‘(a)(2) (A), or

(a)(3)(A) because those subsections apply to defendants who

encouraged or facilitated the commission of further crimes.

75a

Effective November 18, 1988, 18 U.S.C. § 1956(a)(1)(A)

contains two subdivisions. The base offense level of 23

applies to § 1956(a)(1){i) and (ii).

The amount of money involved is included as a factor

because it is an indicator of the magnitude of the criminal

enterprise, and the extent to which the defendant aided the

enterprise. Narcotics trafficking is included as a factor

because of the clearly expressed Congressional intent to

adequately punish persons involved in that activity.

76a

U.S.S.G. § 2S1.2. Engaging in Monetary Transactions in

Property Derived from Specified Unlawful Activity

(a) Base Offense Level: 17

(b) Specific Offense Characteristics

(1) If the defendant knew that the funds were the

proceeds of:

(A) an unlawful activity involving the manufacture,

importation, or distribution of narcotics or other

controlled substances, increase by 5 levels; or

(B) any other specified unlawful activity (see 18

U.S.C. § 1956(c)(7)), increase by 2 levels.

(2) If the value of the funds exceeded $100,000, increase

the offense level as specified in § 2S1.1(b)(2).

(c) Special Instruction for Fines -- Organizations

(1) in lieu of the applicable amount from the table in

subsection (d) of § 8C2.4 (Base Fine), use:

(A) the greater of $175,000 or 60 percent of the

value of the funds if subsection (b)(1)(A) is used to

determine the offense level; or

(B) the greater of $150,000 or 50 percent of the

value of the funds if subsection (b)(1)(B) is used to

determine the offense level.

77a

Commentary

Statutory Provision: 18 U.S.C. § 1957.

selinettin Mate

I. “Specified unlawful activity” is defined in 18 U.S.C.

§ 1956(c){7) to include racketeering offenses (18 U.S.C.

§ 1961(1)), drug offenses, and most other serious federal

crimes but does not include other money-laundering offenses.

Background: The statute covered by this guideline is a part of

the Anti-Drug Abuse Act of 1986, and prohibits monetary

transactions that exceed $10,000 and involve the proceeds of

“specified unlawful activity” (as defined in 18 U.S.C. § 1956),

if the defendant knows that the funds are “criminally derived

property.” (Knowledge that the property is from a specified

unlawful activity is not an element of the offense.) The

maximum term of imprisonment specified is ten years.

The statute is similar to 18 U.S.C. § 1956, but does not

require that the recipient exchange or “launder” the funds,

that he have knowledge that the funds were proceeds of a

specified unlawful activity, nor that he have any intent to

further or conceal such an activity. In keeping with the intent

of the legislation, this guideline provides for substantial

punishment. The offense levels are higher than in § 2S1.3

because of the higher statutory maximum and the added

element of knowing that the funds were criminally derived

property.

The 2-level increase in subsection (b)(1)(B) applies if the

defendant knew that the funds were not merely criminally

derived, but were in fact the proceeds of a specified unlawful

activity. Such a distinction is not made in § 2S1.1, because

the level of intent required in that section effectively precludes

78a

an inference that the defendant was unaware of the nature of

the activity.

79a

U.S.S.G. § 5K2.0. Grounds for Departure (Policy

Statement)

Under 18 U.S.C. § 3553(b) the sentencing court may

impose a sentence outside the range established by the

applicable guideline, if the court finds “that there exists an

aggravating or mitigating circumstance of a kind, or to a

degree, not adequately taken into consideration by the

Sentencing Commission in formulating the guidelines that

should result in a sentence different from that described.”

Circumstances that may warrant departure from the guidelines

pursuant to this provision cannot, by their very nature, be

comprehensively listed and analyzed in advance. The

controlling decision as to whether and to what extent

departure is warranted can only be made by the courts.

Nonetheless, this subpart seeks to aid the court by identifying

some of the factors that the Commission has not been able to

take into account fully in formulating the guidelines. Any

Case may involve factors in addition to those identified that

have not been given adequate consideration by the

Commission. Presence of any such factor may warrant

departure from the guidelines, under some circumstances, in

the discretion of the sentencing court. Similarly, the court

may depart from the guidelines, even though the reason for

departure is taken into consideration in the guidelines (e.g.,

as a specific offense characteristic or other adjustment), if the

court determines that, in light of unusual circumstances, the

guideline level attached to that factor is inadequate.

Where, for example, the applicable offense guideline and

adjustments do take into consideration a factor listed in this

subpart, departure from the applicable guideline range is

warranted only if the factor is present to a degree substantially

in excess of that which ordinarily is involved in the offense.

Thus, disruption of a governmental function, § 5K2.7, would

have to be quite serious to warrant departure from the

80a

guidelines when the applicable offense guideline is bribery or

obstruction of justice. When the theft offense guideline is

applicable, however, and the theft caused disruption of a

governmental function, departure from the applicable

guideline range more readily would be appropriate.

Similarly, physical injury would not warrant departure from

the guidelines when the robbery offense guideline is

applicable because the robbery guideline includes a specific

adjustment based on the extent of any injury. However,

because the robbery guideline does not deal with injury to

more than one victim, departure would be warranted if several

persons were injured.

Also, a factor may be listed as a specific offense

characteristic under one guideline but not under all guidelines.

Simply because it was not listed does not mean that there may

not be circumstances when that factor would be relevant to

sentencing. For example, the use of a weapon has been listed

as a specific offense characteristic under many guidelines, but

not under immigration violations. Therefore, if a weapon is

a relevant factor to sentencing for an immigration violation,

the court may depart for this reason.