# Appendix — Ford v. United States

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_0842%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2000
- **Citation:** 528 U.S. 1161

## Text

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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.

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

Sa

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.

Ta

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.

10a

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

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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;

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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.

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(€) 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.

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(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.

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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.

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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

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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.

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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.

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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.

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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.

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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
C

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_0842%3A2. Public record. Not legal advice.